§ Order for Second Reading read.4.38 pm
§ The Minister for Science, Energy and Industry (Mr. John Battle)
I beg to move, That the Bill be now read a Second time.
This is a short Bill, but it is of central importance for growth, competitiveness, innovation and jobs, and for maintaining the United Kingdom's position at the leading edge of the information revolution. It deals with the management of the radio spectrum. While that may sound a narrow, perhaps rather technical, matter, the provisions are crucial for ensuring the continued success of some of the most dynamic sectors of our economy, including radio, telephony, broadcasting and information technology.
Those technologies are not only growing rapidly, but converging at an increasing rate. What they all have in common is that they use the radio spectrum as a medium for the transmission of information. The Bill deals with the provision of that rare resource, the radio spectrum, on which the communications and information revolution so crucially depends.
The measure will allow the Government to charge for the right to use certain waves by mobile phone, pager, cab or other radio-based services, particularly in congested areas such as cities and the main communication corridors. Frequencies offered would be leased. The aim is to use commercial pricing as a means to effective spectrum price management.
§ Mr. John Redwood (Wokingham)
Given that the Minister could make more spectrum available without tax increases, can he tell the House how there can be more jobs if he takes £1,500 million of much needed money out of the industry? Will he come clean and agree that that means fewer jobs, fewer opportunities, and damage to the industry?
§ Mr. Battle
I am amazed at such an early intervention from the right hon. Gentleman. I remind him that his party proposed the measure to give a boost to this sector of the economy, as I shall spell out in detail. No, we do not see it as a tax measure. We see it as a means of opening space on the spectrum. That has been widely welcomed by the industry, as was clear from the consultation. As right hon. and hon. Members will be aware, the Bill started life in another place, where it was well received and constructively debated. I should like to think that that approach will be taken this afternoon.
§ Mr. David Chidgey (Eastleigh)
Although we well understand that the intention of the Bill is better management of the radio spectrum, and that auctioning access to the spectrum is part of that process, there is a fear in the House that the Bill may become a tax-raising measure. It sets out the objectives to which the Minister must have regard, but it is not exclusive. It would be helpful if he could give the House some guarantee that it is entirely a matter of management, not a measure for raising taxes through whatever process may follow.
§ Mr. Deputy Speaker (Sir Alan Haselhurst)
Order. Before the Minister resumes, may I say that, when hon. 922 Members are seeking to interrupt the Minister at the Dispatch Box, it would be helpful if they would identify the fact that they are trying to interrupt, rather than standing like statues. It would equally be helpful if the Minister would indicate to which of several hon. Members he is giving way.
§ Mr. Battle
With so many interventions after one sentence, Mr. Deputy Speaker, it is hard to keep pace.
The hon. Member for Eastleigh (Mr. Chidgey) can have the assurance he seeks. The purpose of the Bill is to break open the spectrum, to manage it better and to ensure that it can be used at all in the future. That is why many companies have welcomed the Bill. It is worth pointing out that the majority of users will face no increases, and will even pay less under the Bill. That is often not made sufficiently clear.
§ Mr. Norman A. Godman (Greenock and Inverclyde)
With reference to clause 1 and my hon. Friend's last remarks, will he confirm that clause 1 does not refer to the use of radio equipment on United Kingdom-registered fishing vessels?
§ Mr. Battle
I am grateful to my hon. Friend for that detailed point. Fishing vessels will come within the scope of the Bill, but it will not have an impact on the planned charges. The frequencies for maritime use and the standards for equipment and services used were determined internationally, so they will not be directly affected as my hon. Friend fears.
§ Mr. Anthony Steen (Totnes)
Is the Minister aware that the previous Government stated that they had no plans to introduce spectrum pricing to the 3.5 and 10 GHz bands used for fixed radio access by Ionica and other companies? As much of the equipment for fixed radio access is made in Nortel in my constituency, I am concerned about the policy of the previous Government, which was enlightened and well accepted by the work force of 800 at Nortel. Will the Minister confirm that the new Government will accept the principles established by the previous Administration in this field?
§ Mr. Battle
After lots of consultation, we have come to that view. In fact, Ionica welcomed the legislation when it was introduced. As I have said, we have accepted amendments that were made in the other place. Several amendments to the Bill reflect the comments and concerns expressed by the noble Lords, not least on behalf of some of the companies, particularly Orange. The Bill also takes account of the views expressed by a wide range of radio users in the course of extensive consultation by the Radiocommunications Agency.
I shall explain later the changes that we have made to the Bill, which have reinforced, and in no way undermined, the thrust of the legislation. I attach great importance to consultation and dialogue with those affected by the Bill regarding all the measures that my Department may bring forward. In order to emphasise our commitment to consultation, the Bill now provides specifically for statutory consultation on draft regulations.
It is tempting to say that the legislation has emerged from a series of consultations, including "The Future Management of the Radio Spectrum", published in March 923 1994; the White Paper entitled "Spectrum Management: into the 21st Century", published in June 1996—both endeavours of the previous Government—and "Implementing Spectrum Pricing", which was released within weeks of Labour's coming to office in May 1997. We intend to maintain wide-ranging, informed consultation with those affected by this measure, and later I shall announce new arrangements to take the process further forward and give users an even stronger voice in this vital area.
Radio has proved to be one of the key technologies of the 20th century. It is perhaps an appropriate time to introduce a Bill that will dramatically modernise the management of the radio spectrum, as this year marks the centenary of the establishment of the first stations in this country for wireless telegraphy. The first legislation regulating radio, the Wireless Telegraphy Act 1904, was put in place more than 90 years ago. The legal framework was updated through the Wireless Telegraphy Act 1949, but it remains essentially unchanged.
The world has changed rather dramatically since then, and radio has played a key part in many of those changes. Back in 1949, radio was used essentially for one purpose: sound broadcasting. There were then just three radio stations. Of course, radio was also used for some maritime communications—as my hon. Friend the Member for Greenock and Inverclyde (Mr. Godman) emphasized—and for radio astronomy, which was then in its infancy.
Developments in the use of the radio spectrum over the past 50 years have been astonishing. In broadcasting, we have seen the enormous growth of radio and television, which rely equally on the radio spectrum. As an illustration of this, the Radio Authority recently awarded its 200th licence for a local commercial station.
It is important to add that radio is no longer just about broadcasting. An enormous range of businesses now depend crucially on the radio spectrum—from the giants of telecommunications and computing to small businesses, such as taxi firms, which are crucially dependent on radio for their day-to-day operations. In future, we can expect the boundaries between radio, telephony and computing to become increasingly blurred, allowing, for example, portable computers to communicate more quickly and to convey greater quantities of information. Multimedia convergence is the brave new world facing us as we approach the new century.
§ Mr. John Bercow (Buckingham)
I am following the Minister's historical reflections with the closest possible interest, but I return us to the present for a moment. Can he tell the House how much the Bill will cost the public sector? Health and emergency services, for example, are extremely reliant upon radio systems—as I hope the Minister is well aware. What action do the Government propose to take to ensure that those vital services have the access to the airwaves that they undoubtedly need?
§ Mr. Battle
It is important to emphasise that the concessions for services that use the radio spectrum for emergencies will remain. That was made absolutely clear in the debate in the other place. The whole purpose of the Bill is spectrum management. The public sector will have 924 similar incentives for spectrum management efficiency. In other words, the Ministry of Defence will have to pay a comparable amount, but the pricing for emergency services will be considered in the light of the consultation. The aim is not to price people out but to price them in, to use the spectrum more effectively, to open up space. That is the whole point, intent and purpose of the Bill.
§ Mr. Ian Bruce (South Dorset)
I apologise for stopping the Minister from getting into his full flow, but many people are interested in the Bill. For several years before the last general election, my local fishermen were very upset that pleasure craft users, who effectively use the same radio licence as fishermen, were getting it very much cheaper. The fishermen felt that it would be better if pricing was more even.
I know that the Bill contains powers to make variation. The Conservative Government said that they were about to decide which way it should go, and I have a letter written in April—just before the hon. Gentleman took over. Has his Department made a determination about fairer fees between fishermen and pleasure craft owners, who in effect are using the same licence?
§ Mr. Battle
I am grateful to the hon. Gentleman. We do not see the correspondence of the previous Administration, as he well knows, but I shall be happy to take his point further. His point has been taken on board. The aim is to have fair use of the spectrum as well as ensuring that more of it is used, because—as I think he hints—demand for services will increase. Radio is likely to remain the indispensable means of providing multimedia convergence and mobility. In other words, the radio spectrum, as the raw material of the information revolution, will be vital.
Nor is the question one of marginal, purely technological concern. I want to emphasise—the right hon. Member for Wokingham (Mr. Redwood) raised this point with me—the importance of radio to the economy. In 1995–96, radio contributed £13 billion to gross domestic product, and more than 400,000 jobs were created. The contribution to GDP is growing at a rate of £1 billion a year, and jobs are being created in these industries at the rate of 1,000 a week. Radio also provides some £12 billion to £15 billion a year of efficiency gains and other user benefits, as businesses now rely on radio to facilitate their communications in a whole host of new ways, so it benefits the economy.
The whole purpose of the Bill—to open up the use of the spectrum—is to create space for that sector of the economy to grow. It is certain that pressures on the radio spectrum will increase as society demands ever greater mobility and as new services continue to become available, because demand in Britain for the radio spectrum is starting to outstrip its availability. That is the key point, and it is particularly true in the major conurbations and in the corridors between them where radio use is most concentrated.
In other words, we need to act now for the benefit of all radio users, private and business. I am tempted to say that, if we do not open up the space, we will not be able to use it at all, because it will be too congested, and we will all fail. That is the whole point of introducing the Bill at this time.
If we fail to do that, the result will be increased spectrum prices and congestion. Businesses will be denied access to the radio services on which they now depend.
925 Introducing new technologies will be delayed, and the cost to the economy will be incalculable, because businesses will grind to a halt. They will not be able to improve, because they will not have the space to take advantage of new technologies to move further forward. The cost to the economy could be billions of pounds a year, and thousands of jobs could go, or at least be jeopardised, if we do not open up the space now.
The legislative framework for managing the radio spectrum was designed for an era when spectrum availability was not a problem. Up to now, it has served us relatively well, but it does not provide us with the tools we need to manage the spectrum effectively to provide the basis for continued growth and innovation. That is the purpose of the Bill—to update the spectrum management framework, set up in the early 20th century, to take us forward to meet the challenges of the 21st.
Under current legislation, the radio spectrum is managed by regulation, and licence fees have to be based on the administrative costs of the Radiocommunications Agency in carrying out its licensing and spectrum management functions in respect of each licence class. That has two perverse effects.
First, because licence fees are not priced according to the value of the spectrum used, demand becomes distorted. Users do not have an incentive to use the spectrum more efficiently, for example by investing in more spectrum-efficient equipment, and may also be tempted to hang on to spectrum that they are not currently in a position to use to the full—or in some instances to use at all—because the cost to them of using it is minimal. In other words, the present system generates an attitude of hoarding spectrum space.
Secondly, as a consequence of the cost-recovery principle, the fee structure discriminates heavily against small businesses, because their fees are much higher in terms of the amount of radio spectrum they use. For example, small businesses such as taxi firms or couriers pay on average 30 times more than one of the large telecommunications operators for the same amount of spectrum. I think that we would all agree that that is obviously unfair.
The Bill will bring about a radical change in the way in which the spectrum is managed. It will enable—indeed, require—my right hon. Friend the Secretary of State, when setting fees, to take account of a range of criteria connected with the efficient management of the spectrum, rather than, as at present, simply applying administrative costs.
§ Mr. David Prior (North Norfolk)
If existing users of spectrum do not have to pay a fee, and if new users will have to bid in an auction and pay a fee to use the spectrum, how will that encourage new entrants?
§ Mr. Battle
Existing services will not be subject to an auction. There are no plans to subject current users to auctions for existing arrangements. Auctions will apply to the new space that is opened up. We envisage auctions being used on rare occasions, when there are many intensive bids for the same amount of space. I shall say a little more about the detail of auctions, but I do not see everyone rushing down the auction route. That is not the intention or purpose behind the Bill.
Before outlining the main provisions of the Bill, I should explain that it contains enabling powers. The detailed implementation of these powers in relation to 926 licence fees and auctions will be through regulations. That will provide the flexibility that is essential to respond to the pace of change in this sector. If we set the rules now and hope that they will last for another 100 years, we shall be caught out by the changing pace of technology and its converging world.
§ Mr. Bercow
I am grateful to the Minister, because he has been generous in giving way.
Has the Minister made any estimate of the likely proceeds that will be realised as a consequence of the Bill? Will he share with the House any estimate that has been made? Is it a matter that he has discussed with the Chancellor of the Exchequer?
§ Mr. Battle
Much depends, of course, on decisions that are taken on auctions, and I shall spell out later the decisions that are involved. About £500 million to £1.5 billion could be raised over many years. That will not happen overnight, because the process will be phased. Surely that is the proper way in which to proceed. Some revenue will be generated, and we should not apologise for that. I shall return later to the detail.
The intention behind the Bill is to open up space. What will happen if we do nothing? The answer is that cities and main corridors will be left clogged, so that no one can use them. What is the option apart from shutting down the economy? That is not a sensible way in which to proceed.
There will be licensing, and in terms of spectrum space, we have a right to look after taxpayers' interests and to say that they should have a revenue take. The main purpose is to manage the spectrum well. If we do not prise it open, nothing will happen. Indeed, things will get worse.
Clause 1 contains a general power to allow the Secretary of State to set fees by regulations. The clause will replace regulation-making powers as set out in section 2 of the 1949 Act.
Clause 2 is the core of the Bill. In particular, clause 2(1) breaks the link between the fees under the Wireless Telegraphy Act 1949 and the Radiocommunications Agency's administrative costs. That will allow the Secretary of State, if she thinks fit, to set fees higher than those set on the basis of cost recovery.
Concerns have been expressed in the other place and by industry that higher fees could, in effect, become a form of taxation, but those fears are unfounded. I am sad that the hon. Member for Buckingham (Mr. Bercow) has left the Chamber, because I would like to spell out why, as my right hon. Friend recognises, it would be counter-productive to impose unnecessarily high fees on a sector that contributes enormously to the growth of the national economy.
I stress that the clause contains important provisions that will constrain the level of fees charged by my right hon. Friend or any of her successors. There is a built-in break clause. I suggest to the hon. Gentleman that, if he reads clause 2(1), he will find an answer to his question.
The clause requires that, in setting fees, the Secretary of State shall have regard to the matters specified in subsection (2). In setting fees, the Secretary of State must take account of the extent to which the required fee level will promote the efficient use of the electro-magnetic 927 spectrum, the economic benefits arising from the use of radio, and the development of innovative services and competition in the provision of telecommunication services.
If charges are increased from current levels, it will be because such charges are necessary to balance supply and demand in support of the objectives set out in clause 2. I cannot emphasise enough that the purpose of the Bill is to optimise the use of radio spectrum.
§ Mr. Michael Fallon (Sevenoaks)
I hope that the Minister was not inadvertently misleading the House when he read out subsection (1), because he missed out the two words "in particular". Given the amendment that was carried in the other place, which I hope he will accept, he will have to concede that the Secretary of State can have regard to matters other than those referred to in subsection (2), so he can increase the charges for other purposes that are not listed in the Bill. Is that not the position?
§ Mr. Battle
Of course that is the position, but, as I said, it would not be sane to price out the very sector that contributes massively to the growth of the national economy. That is not the purpose and intent of the Bill. It is unbelievable for Conservative Members to say that they are against it because it may lead to revenue for the Government.
I shall put the issue into a different context. Article 11 of the European telecommunications licensing directive, which was adopted by the previous Government on 10 April and which all member states must implement, deals with fees and charges for individual licences. The directive recognises that, where scarce resources, such as the radio spectrum, are to be used, member states should be allowed to impose charges that go beyond cost recovery, to reflect the need to ensure the optimal use of those resources. The proposals in the Bill are fully in line with that directive, which underpins the safeguards in clause 2.
If the Bill becomes law, it is proposed to introduce new fees by regulation next year. We want the implementation of spectrum pricing to take full account of the views of radio users. We attach great importance to consultation. It has happened before, and we have continued that process in good faith so that industry can be fully prepared for the likely changes that will be required and so that the new fee proposals, which will ultimately be contained in regulations, take full account of the views of users. I do not know what more we can practically do.
That is why, on 29 May, the Radiocommunications Agency issued a consultation document called "Implementing Spectrum Pricing", which set out in some detail how it is proposed to implement the new approach. The proposals in that document represent the culmination of a great deal of on-going discussion with the industry, and in particular the results of the consultations that took place under the previous Government. Consultation is a sensible way to take this debate and these policies 928 forward, so that the proposal is practical and breaks open the spectrum without pricing people out. The idea is to price people in.
§ Mr. Fallon
Is it or is it not the case that, under clause 2, revenue could be raised through extra charges for matters that are not specified in the clause?
§ Mr. Battle
Yes, but we felt that the range set out for the more efficient use of the spectrum, and enabling innovation to be considered, was not wide enough to ensure that we allowed for the possibilities of the future.
The hon. Gentleman may not realise that, given the current merger of telecommunications services, we need some space so that we can try to anticipate the shape of the future in an incredibly dynamic area. I accept that I shall never convince the hon. Gentleman; he believes that this is purely a tax measure, he will stick to that view, and will presumably oppose the measure. I challenge him, however, to say in opposing it what he would do instead. If we do not break open that space, there will be a massively damaging effect on business.
§ Mr. Battle
I have already given way to the hon. Gentleman, but I shall do so again, for the last time.
§ Mr. Battle
The whole point of the Bill is to support existing entrants. If we can prise open the spectrum, new entrants will be able to go into it without any problem. I do not see how, when we are changing the fee structure across the board, there is any differentiation to be made. There would be if there were auctions, but I have the impression from what the hon. Gentleman and his hon. Friends have said that they believe that the purpose of the legislation is not spectrum management, but the introduction of a tax measure.
§ Mr. Battle
The hon. Gentleman presses me, but even the amendment to which he referred stated that any other reasons taken into account by my right hon. Friend would have to have reference and be related to spectrum management objectives. Clause 2 is not a clause under which revenue can be raised for anything; the point is to link it directly to the spectrum management objectives.
As for the specific proposals, as I have explained, the agency will take fully into account the comments that were made on the consultation document, and the revised proposals will take account of comments made then, and here, during this debate. Under the revised proposals, higher charges will be focused on the services and geographical areas where the spectrum is under most pressure, and where there is a spectrum management need to use the spectrum pricing tool. We estimate that most licensees will pay no more than they do now, and may 929 pay up to 50 per cent. less. This is good news, not the bad news that Conservative Members seem to want to make it out to be.
Safety of life" charities such as the Royal National Lifeboat Institution and St. John Ambulance benefit from concessionary licence fees now. I emphasise—because some concern has been expressed—that those arrangements will continue under the new powers.
The other main plank of the Bill is the provision in clause 3 for licences to be auctioned. Hon. Members have raised the question of auctioning. We see auctions as a new tool. We do not intend them to be introduced across the board—that would be impractical—but there may be circumstances in which, in relation to a particular service, there will be more competing service providers than can be licensed. In such circumstances, the Secretary of State will have to choose who can be given a licence.
We believe that, in such circumstances, auctions have the real attractions of speed and transparency. They represent a more objective means of licensing than the alternative of what could be described as a beauty contest, which would require the Secretary of State or another person to choose between competing providers on the basis of criteria that would inevitably involve an element of subjective judgment. Although I would not rule that out in all conceivable circumstances, it is proving increasingly complex and contentious as the number of players in the industry continues to grow. An auction, however, would provide an objective basis for selection and ensure the selection of people who attach the highest value to the spectrum and are likely to use it to generate the greatest economic benefit.
In addition, auctions offer the possibility of substantial benefits to the Exchequer. As I have spelt out, income maximisation is not the reason for that approach, but I have no problem at all with the idea that the taxpayer should benefit from the provision to industry of this valuable resource.
I have referred to the consultation last year by the agency. Although that revealed fairly widespread support for spectrum pricing, concerns were expressed about the widespread use of auctions. Many of the same concerns have been expressed subsequently by industry and in another place. All I can do is repeat our assurances about how we propose to use the powers in clause 3.
§ Mr. Andrew Lansley (South Cambridgeshire)
In the context of an auction, what does the Minister foresee might be added under clause 3(3)(e), which says that the Secretary of State may, in relation to the issue of such a licence,specify matters to be taken into account by the Secretary of State"?How will those additional matters that are specified be taken into account in the context of an auction?
§ Mr. Battle
Again, we do not intend to require the many small and medium businesses that use radio through, for example, self-provided systems to start competing in auctions, because that approach would be neither practical nor desirable, given the number of businesses involved. Nor do we propose to require existing licensees to enter an auction for the right to 930 continue to provide their services within their existing spectrum allocation. I know that the four main mobile telecommunications operators have expressed concern—
§ Mr. Battle
Yes, but we do not intend to require a mass auction. That is part of the mythology. Having said that, even the major telecommunications operators have welcomed the Bill and accept it.
We are happy to discuss the detail, including the comments by the hon. Member for Sevenoaks (Mr. Fallon), in Committee—if he still feels that there is a problem in relation to third generation—to find out how we can come to a compromise and ensure that the Bill passes into law, so that the spectrum is managed properly and beneficially. As I have emphasised, if we do not do it now, we will hold back economic and business development.
We do not intend to require broadcasters who have already entered into an auction for the right to provide their service under the provisions of the Broadcasting Act 1990, to enter another auction to have continued access to the radio spectrum they need. I accept that that would be double jeopardy.
§ Mr. Lansley
I fear that I have to return to the point that I put to the Minister, because I do not think that he has answered it. Clause 3 seems to foresee that, even in relation to an auction, there will be circumstances in which matters other than the bid made under the prescribed procedure will be the basis on which a licence is issued. That is not about simply specifying requirements in advance. Something other than the greatest bid may be taken—for example, because of the investment that will be put into efficient spectrum use—but what is the Minister's intention in presenting the Bill in this form?
§ Mr. Battle
Consultation continues on auctioning, but we envisage that the auctions will most likely be used for new national or regional services, where there are more competing players than can be realistically accommodated in the spectrum and where selection is therefore necessary.
It is likely—although the Government have not taken a decision on this—that the first auction will be for licences for the so-called third generation mobile telephony, also known as the universal mobile telecommunications service. That service uses terrestrial and satellite telephone links. As I am sure the hon. Member for South Cambridgeshire (Mr. Lansley) knows, it combines mobile telephony systems with flexible features such as the possibility of high-speed access to many information and entertainment services.
In July, the Minister for Small Firms, Trade and Industry issued a consultation document called "Multimedia Communications on the Move". That explained that, although the first UMTS services are unlikely to come on stream until about 2000, we accept that there is a case for much earlier licensing certainty—the industry has asked for stability and certainty so that it knows where it is—in view of the scale of investment needed by service providers. 931 The closing date for comments on "Multimedia Communications on the Move" was the middle of this month. As I have said all along in the debate, we will take account of the comments in deciding the next steps, but there is a clear case for assigning UMTS licences by auction. I hope that the hon. Member for South Cambridgeshire could envisage such a situation. The aim is not to move to mass auctions for everyone else. A mythology has built up around the Bill.
Clause 4 is designed to give enhanced security of tenure to licence holders. It enables the Secretary of State to include in a licence terms restricting her power to revoke or to vary the licence. At present, a Wireless Telegraphy Act licence may, in most cases, be revoked or varied at any time by the Secretary of State. That would normally be done only where the licensee had conspicuously failed to respect the terms of the licence.
In practice, it is rare for the Secretary of State to revoke or to vary a licence other than at the request of the licensee. Where there is a need to move a licensee to a different frequency, for spectrum management reasons, the approach of the Radiocommunications Agency is to do that over time, in consultation with the licensee.
We accept, however, that different considerations are likely to apply where licences for a considerable number of years may be auctioned and licensees may need to undertake large investment. We accept that, in those circumstances, licensees will want a firmer, legally binding guarantee that they will have security of tenure and that their licence will not be unexpectedly revoked by the Secretary of State.
That is why the power in clause 4 will enable the Secretary of State to include conditions that will give licensees the certainty that their licences will not be revoked, except in the exceptional circumstances set out in subsection (5)—for purposes of national security, or to enable the United Kingdom to comply with European Community obligations, international agreements or the like.
Clause 5 will allow the Secretary of State to undertake expenditure in support of the objective of efficient spectrum management. Although the Bill's main purpose, as I have repeatedly emphasised, is to use spectrum pricing as a tool for more efficient spectrum management, it will also produce increased revenues for the Government. There is certainly no question of hypothecation of those revenues.
However, the clause gives the Secretary of State the power to make grants to persons where, in her opinion, that is likely to support the objective of better spectrum management. The whole point is that the power of the Secretary of State is to back up better spectrum management.
There are ways in which the power could be used. For example, it could take the form of support of research into more spectrally efficient technologies. It might also be used to support courses provided by universities for the training of radio engineers in spectrally efficient techniques. Any expenditure that is proposed under that power would have to satisfy normal public expenditure and value-for-money criteria.
Clause 6 deals with the power to make regulations. As I have explained, both licence fees and proposals in relation to auctions will be set out in regulations. Under 932 subsection 6(2), which we introduced in another place to respond to concerns about the need for consultation on regulations made under the powers in the Bill, the Secretary of State will be obliged to publish a notice, in the London, Edinburgh and Belfast Gazettes, setting out the gist of any regulations made under the power, specifying an address from which copies of the proposed regulations may be obtained, and setting a time limit of at least 28 days during which representations may be made. There is also an obligation on the Secretary of State to consider any representations that are made to her within that time.
We have introduced this provision in response to concerns. However, I emphasise that we see it as supplementary to, and in no way a substitute for, the non-statutory consultation to which we are fully committed. [Interruption.] We are going wider by saying, "Let us open the doors and work together to get this right."
The DTI and the Radiocommunications Agency have consulted extensively about proposals in this area. I have referred to recently published consultation documents on administrative pricing and on the licensing of the universal mobile telecommunications service. That consultation on specific proposals will continue. The new power simply provides a statutory guarantee that there must be a final phase of consultation before regulations are made. That is because consultation and partnership are at the heart of our approach to the development of industrial policy.
We recognise that there are enormous resources of knowledge, expertise and experience in the radio industry. It is to everyone's advantage that we draw upon them in getting the Bill right. Therefore, I am pleased to announce the establishment of a high-level spectrum management advisory group which will be drawn from radio users. The group's purpose will be to provide independent impartial advice directly to Ministers on a broad range of issues that will affect this fast-developing industry.
In particular, the group's role will be to advise on the Radiocommunications Agency's spectrum strategy, on major national allocation decisions, on the application of spectrum pricing, and on the policy objectives to be pursued in the relevant international arena. That will benefit industry and users of the radio spectrum, by bringing an informed industry perspective into the heart of our policy-making process. I shall lay the group's full terms of reference in the Library of both Houses. Appointments to the committee will be made by my right hon. Friend the Minister for Small Firms, Trade and Industry.
The decision to set up the spectrum management advisory group, together with the Bill's provisions and the agency's commitment to consultation, should demonstrate beyond any doubt our total commitment to ensuring that the interests of users are placed at the heart of policy making in this area. In the light of their interventions, I ask Opposition Members simply to ask themselves what will happen if they oppose the Bill and we do nothing. That will effectively clog up the whole system and damage the development of industry and business into the next century.
This short but important Bill provides a balanced package of spectrum management tools to ensure the optimum development of the radio spectrum to the benefit 933 of business, consumers and our economy as a whole. It will not only ensure the continued prosperity of our most successful world-leading telecommunication industries but provide the necessary headroom for the development of those industries into the 21st century. I commend the Bill to the House.
§ Mr. John Redwood (Wokingham)
"Good news," says the Minister, "A tax increase." "Good news," says the Minister, "The 18th tax increase from new Labour, and the money will not go back to the successful industry that pays it—it will go somewhere else." He says, "This will be the first £1,500 million tax raid in history that has created jobs rather than destroyed them in the industry that will have to pay the bill."
I pay tribute to the Minister for accepting my interventions and those of my hon. Friends and for his patience. However, it would have been better if he had been able to answer our powerful interventions. We asked how the details of the legislation would work, but he was unable to tell us. We asked for reassurances on sensitive services and important businesses in various constituencies, but again there were no satisfactory reassurances.
§ Mr. Battle
I am absolutely clear that we gave assurances on essential services, but perhaps the right hon. Gentleman missed them. He supported the measure when he was in government. Does he now intend to oppose it and jeopardise business as a result?
§ Mr. Redwood
We shall oppose it, but we shall not jeopardise business because I shall shortly reveal to the Minister how to handle the matter much better. In his two-part intervention he mentioned emergency services, but they are not in the Bill. Will he put them in the Bill?
§ Mr. Redwood
I will finish the point and perhaps the Minister who raised the issue will clarify it. Will he reassure the House that there will be no adverse cost consequences for the health service, for instance, as a result of the increased charges under the legislation? The Minister does not respond, so the point is made and my right hon. and hon. Friends will draw their own conclusions.
§ Dr. Nick Palmer (Broxtowe)
Is it correct that the right hon. Gentleman supported these proposals or similar ones when he was in government? If so, does he propose to explain what led to his change of heart?
§ Mr. Redwood
I am afraid that the hon. Gentleman has walked straight into an elephant trap. As he knows, the legislation has a chequered history. Officials in the Department tried to persuade me of its merits some years ago when I was Minister with responsibility for telecommunications. I am sure that Labour Members will 934 be disappointed to hear that I turned it down. I refused to recommend it and continued my opposition to it from then until the present day.
§ Mrs. Roche
I assure the right hon. Gentleman and the House that I am not impatient but courteous and always willing to put the right hon. Gentleman out of his misery. Plainly, the attitude of Conservative Members is not just a turnaround from when they were in government. Let us look at what they said in opposition. When the Bill was introduced in the other place, their shadow Minister, Lord Inglewood, said:I should begin by telling the House that we support the principle of the Billand:I conclude by reiterating our support for the approach that the Government are adopting. Although we shall obviously be looking at the Bill with a critical eye, we shall be doing so with a view to being constructive, not destructive."—[Official Report, House of Lords, 5 June 1997; Vol. 580, c.727-30.]Perhaps the right hon. Gentleman would like to take a lesson from his noble Friend.
§ Mr. Redwood
That was also a poor point. Of course we support the principle of better spectrum management, but we are unhappy about many of the powers and details in the legislation. My hon. Friends and I will demonstrate that in the debate and in Committee.
Officials tried the legislation on my successors after I ceased to have responsibility for telecommunications, but most of them also turned it down. Towards the end of the Conservative period in office the then Secretary of State came round to the Bill's principle, but even he did not think it sufficiently important to put it in his legislative programme nor did he ever put a figure as big as £1,500 million on the amount to be taken from the pockets of a successful industry. How wise he was.
We strongly object to the wide-ranging powers in this draft of the legislation to tax-raid people without proper recourse to Parliament for primary legislation. At least the Chancellor's 17 tax rises were in the Finance Bill and were debated, up to a point, in the House and in Committee. The idea behind this Bill is to give to Ministers, through statutory instruments and secondary legislation, enormously wide-ranging powers to tax-raid the honeypot of a successful industry that was created by the policies that Conservatives put into practice in the 1980s and 1990s by breaking the monopolies and opening up to innovation a most important industrial sector.
§ Mrs. Roche
I am grateful to the right hon. Gentleman for giving way to me for a second time. I am perplexed by what he says. He clearly states that he supports the principle of spectrum management and efficiency but not the Bill. Can he explain why in a debate in July on the Information Society initiative the hon. Member for Esher and Walton (Mr. Taylor) said:Opposition and Government can sometimes find common ground and I warmly support what the Minister is doing with regard to that Bill."—[Official Report, 11 July 1997; Vol. 297, c. 1203.]935 That comment was about the Bill that is currently before the House. Is that not yet another example of the Opposition being split down the middle?
§ Mr. Redwood
No, I am sure that the quotation has been taken out of context and that my hon. Friend fully supports what I am saying today as this is the agreed shadow Cabinet and shadow team policy of Her Majesty's loyal but effective Opposition. This is a policy based on principle, which I have always held. I note that Ministers do not suggest that I was in favour of the legislation when I was in the Department. If they care to check with their officials privately later, when the rules with regard to what went on in the previous Administration can be bent a little, I am sure that they will be put right on that point.
What is curious—I put it no more strongly than that—is that this Opposition-turned-Government, still behaving on most occasions as an Opposition with a majority rather than as a Government, should have forgotten how strongly they objected to the statement of principle by my right hon. Friend the then Secretary of State when he announced it, how they opposed it vigorously in those early days and how they have now turned right round and have come up with this as their first piece of legislation, presumably their most important piece of legislation, the thing which the DTI, under this new team, brings to the House of Commons as its priority for this new Session of Parliament and this new Government.
How odd that thast should be the Government's conclusion out of all the things they could have done, should have done, might have done, out of all the things that they could have done to satisfy their colleagues on the Benches behind them and all those things that they promised to do in their manifesto.
The DTI under this Government has come to stand for the Department of total incompetence. Here is the Department dedicated to greater openness in government in which one is not even allowed to know which Minister is handling the issue. This is the Department so keen on greater transparency that one is not even allowed to know which Ministers have gone on holiday and which have stayed in the office to man the fort. This is the Department of greater honesty where one is not even allowed to know which Ministers are shareholders in which companies. Will the Government today tell us if any Ministers are missing because they have shareholdings in relevant companies and therefore cannot support or comment on the Bill? Will the Minister answer that point?
§ Mr. Battle
All DTI Ministers behave entirely properly, in accordance with the ministerial code, to ensure that there is no conflict of interest between their private interests and their ministerial responsibilities. It is about time that the right hon. Gentleman stopped raising that smear and canard across the Floor.
§ Mr. Redwood
The matter can easily be cleared up. If the Minister and his colleagues will now publish a full list of the things that they cannot do because they have ruled themselves out for fear of conflict, I will end my campaign and I shall be grateful for the information. That is information that the public deserve to know. If the public wish to write to a Minister at the DTI, it is a 936 courtesy to write to the one who is handling the issue. I have had to find out by persistent questioning what the Minister for Competition and Consumer Affairs is or is not allowed to do. Why do they not clear the matter up here and now by telling the House today which Ministers do what and which things they cannot do?
Meanwhile, the Department of tragic inconsequence is busily giving away its powers to Brussels, to the Department of the Environment, Transport and the Regions to the Prime Minister, to the Treasury, to anyone else who will take away its work and responsibilities. The Bill was shunted around the Department and the President, having approved it, has now washed her hands of it. She does that for practically everything going on in the Department. I am amazed that she bothered to pop into the House this afternoon, although I note that she did not hear most of her Minister's speech and has now disappeared again. She has no speaking part in launching the most important Bill that she has chosen for this Session of Parliament. [Interruption.] Well, where is the President of the Board of Trade?
§ Mr. Battle
My right hon. Friend is at a meeting of one of the Cabinet Committees, at which she is entitled to be present. Under the previous Government, about six Bills were put through by Under-Secretaries of State. There was no sign of any member of the Cabinet anywhere near them. For the right hon. Gentleman to make such a miserable point belittles a contribution in which I was becoming interested.
§ Mr. Redwood
I am glad that the Minister realises that I have some strong points on the Bill, but there are wider points that we must make because we need to know how the Bill is being handled. We can see that the President is not interested in it. I think that she read some of it for the first time on the Treasury Bench when she popped in. I should be at a meeting of the shadow Cabinet this evening, but I thought it more important to be in the House of Commons debating the priority measure chosen by the DTI ministerial team.
The President of the Board of Trade has shown contempt for the House in many ways—by refusing to answer questions, by refusing to come clean about what her Ministers can and cannot do, and now by refusing to be here during most of the proceedings on her chosen piece of legislation.
§ Mrs. Roche
First, I thank the right hon. Gentleman for giving way again. I appreciate his courtesy in doing so. I am not usually one of the world's pleaders, but I plead with the right hon. Gentleman not to say anything nice about me because I would hate my credibility with my colleagues behind me to sink and be damaged.
I have listened carefully to the right hon. Gentleman. Did the then President of the Board of Trade show contempt for the House and neglect when on 12 February 1991 the right hon. Gentleman, as Minister of State, introduced the British Technology Group Bill? Is this not a case of one rule for the Conservatives when they were 937 in government and another for us now that we are in government? I am sorry that the Opposition have to go to such lengths to make the points that they have made today.
§ Mr. Deputy Speaker
I plead with right hon. and hon. Members to recall that this is the Wireless Telegraphy Bill.
§ Mr. Redwood
That warning will be well heeded by the Opposition, Mr. Deputy Speaker. I hasten to reassure you that I have spent most of my time on remarks on the Bill and on the handling of the Bill. It is important, however, to establish which Minister or Ministers will be handling the Bill and why, and how they might be handling it.
From memory, I think that the then Secretary of State for Trade and Industry was in the House in support. I cannot be sure about that, but my right hon. Friend was a courteous Secretary of State who answered the Opposition's questions, oral and written, whereas I have had terrible trouble getting any answers out of the present DTI, making me wonder why Ministers are so reluctant to answer such straightforward questions. Why could I not be told during the summer who was on duty and who was on holiday? That is not a terribly difficult question to answer, but I was told that the information was a state secret and that the question could not be answered. Why can we not be told what Ministers can and cannot do?
I return to the Bill, as I have been enjoined to do. I should like to know what happened in the United States when spectrum auctions were introduced. Has the Minister studied that? Has he followed the way in which the bids got out of control and bankruptcies followed? Has he factored that into his calculations?
I see that the one semi-competent Minister in the Department has been drafted in, in part, to help on the Bill. The normal pattern of life at the DTI is that the President decides or dithers, she then passes the matter to the Minister of State, he then gets into a muddle and we have to call upon the Minister for Small Firms, Trade and Industry. I am afraid that I am about to flatter the Minister because I am well aware that it could do her untold damage with her hon. Friends and that would help our cause further. It was no idle slip when the Minister of State called his hon. Friend right honourable. He obviously felt that she was calling the shots and that that dignity should soon pass to her. I predict that we may well find that in Committee the Minister for Small Firms, Trade and Industry does a lot of the work. I look forward to discovering whether that comes true.
The Bill is what civil servants call a brave Bill. "Well, Minister," say the civil servants, "it's the right thing to do and it's very brave of you to take it on." This is a simple measure to tax people for being successful—to tax all those new businesses in telephony, paging and messaging which need access to the airwaves. It may be the first step on the road to that most perfect of all Labour taxes: a tax on breathing—a tax on air itself.
It will be part of the Government's style that they impose back-door taxes on everyone who moves and on quite a few who do not. We have seen it in the Budget and now they are back for more. They are starting with the microwave fixed links and the mobile radio concerns. We need to know why it should be them. Why are the Government discriminating in this way? Why is there an injustice in the Bill and in their intentions?
938 Considering the events of the past three weeks, I wondered whether the Bill was perhaps a part of a larger plan—to discipline the spin doctors who have spun so out of control. I have been told that spin doctors do most of their work on mobile telephones, and that they are some of the biggest users of the airwaves. What better way of bringing them to heel than by taxing their little game?
§ Mr. Redwood
They are central to the Bill, because the Bill is a tax on spin doctoring, and it will impose a cash limit on the Department that employs them. Even some Labour Members understand the point of my comments. If that is the Government's objective in passing the Bill, however, I should tell them that it will not work. The first law of spin doctoring is that of its own indispensability. If there are cuts to be made in departmental budgets, they will be made not among the spinners but elsewhere.
I then wondered whether the President of the Board of Trade and her men have decided to pursue a vendetta against the new methods of control over Labour Members, because the Bill will impose a pager tax. Perhaps there is seething indignation over the way in which Labour Members are being silenced and fed the daily banality on their pagers. It is the President's revenge, striking at the very nerve centre—for there is no heart—of new Labour: the command and control module at the Mandelsonian core. The policy will not work.
§ Dr. Palmer
I am grateful to the right hon. Gentleman for allowing me to intervene once more. I should like merely to return the debate from his increasingly frivolous comments to the subject of the Bill. Did he disagree with the Conservative party's general election manifesto, in which Conservatives decided to call for competitive pricing in large parts of radio management—so that substantial revenue increases would result?
§ Mr. Redwood
As I said, my principal objection to the Bill is its wide-ranging tax-raising powers and the likelihood of a £1,500 million tax increase.
§ Mr. Redwood
I will not go into my views on the details of the most recent Conservative manifesto, which was put to the electorate and rejected. We are now working on a much better model to present next time to the electors. Meanwhile, our job is to try to hold this miserable Government to account and to discover why and by how much they wish to tax those in the telecommunications industry. I think that we shall find that new Labour lives by pagers alone, whatever the cost—which I am sure that Ministers will pass on.
It is a pity that the President of the Board of Trade thinks that this Bill is the most important legislation when we could be debating competition legislation or some 939 other measure in new Labour's job destruction programme. Her dithering for almost half a year over the P and O and Stena matter threatens jobs and livelihoods on cross-channel services. Why can she not be in the Chamber today to debate that matter? In the brewing industry, 1,500 jobs have been lost because of one of her few decisions. There has been no debate in the House about those job losses, although Labour Members in affected constituencies are quietly seething. It is time for those hon. Members to speak up for their constituents.
The President's Department is busily watching the collapse of the coal industry, and there has been no vigorous response to the unfair German competition which is threatening our pits. The President did nothing when Asfordby closed, and she stands poised to do nothing as other pits close. It is no wonder that the new President's old friends on the left feel that she has abandoned them.
What a pity it is that the President cannot spare any of her own time to look into the plight of the Cornish tin industry when it, too, is threatened with closure. Instead, she confines herself to taxing success.
§ Mr. Deputy Speaker
Order. My previous pleadings seem to have failed. May I please direct the right hon. Gentleman to the fact that we are debating the Wireless Telegraphy Bill. His comments do not fall within the wide title of that Bill.
§ Mr. Redwood
Mr. Deputy Speaker, you are right to remind me of that fact. I was attempting to demonstrate the fact that this Bill was an unfortunate choice for a Department that is so burdened with problems and wrong policies. As the President of the Board of Trade will not be in the Chamber for the reply, I will not have an opportunity to ask her in person about those matters, and that will be a great pity for the House. Hon. Members would like occasionally to see their President of the Board of Trade so that they can hold her to account.
The Minister of State, Department of Trade and Industry asked me what else, if not this Bill, could be done to provide the spectrum that our growing industry needs. He might look in the history books through which he has been trawling to discover what the previous Government did in recent years. When I was a Minister, we reviewed the spectrum and negotiated with the public bodies that were holding too much of it. They shed that spectrum, which we made available for other users.
Why does the Minister not start there? In his own remarks, he said that the current system has worked pretty well up to this point. We made it work by removing spectrum from public bodies that had been hoarding too much of it. Today, he himself has said that spectrum hoarding is occurring. Much of that hoarding must still be in the public sector, because that sector tends to be the dominant holder of spectrum which has been passed down over the years.
The House needs to know how the President will sort out the mess over powers in this legislation, how she will find sufficient spectrum for the exciting new services that will be available and how she will claim that she will be fair to the different parts of the industry in a Bill that is currently lopsided and unfair.
940 The Bill states that between £500 million and £1,500 million will be raised, and that there will be another £75 million on top of that. Why cannot Ministers decide now how much money they wish to raise with the Bill—how much they wish to plunder from the industry—and tell the House? The Minister of State, Department of Trade and Industry says that the amount will depend on the auction prices. Of course it will depend on the prices, but Ministers have it within their power to decide how long to run the auctions and how much spectrum to sell in them. Therefore, why does not the Minister tell the House the limits of his ambition for raising money from a very successful industry?
Why has the Minister not done any homework on how many jobs will be lost and how many businesses could be closed by taxation on this scale and by shifting systems to provide spectrum to a crucial industry? Why have not Ministers worked out how much the measure will cost the public sector? Why have they not included in the Bill safeguards for the emergency services that require special frequencies? When will they strengthen all the assurances given in another place, and given again in today's debate, and include them in the Bill for which they are responsible? The Bill is a sloppy measure, poorly drafted and not properly thought through. The Minister would be well advised to take it away and try to improve it.
Has the Minister consulted the health service about the extra costs that will be imposed on it? Will the Government increase the budgets of Departments that will be affected, such as the Department of Health and the Ministry of Defence—or will there be more ward and bed closures to pay the bills? Perhaps the President's budget should again be raided, as it was the other day, to pay for mistakes elsewhere.
After weeks of surrender of territory by the DTI, there is a rumour that the President is to become overlord of regional grants—not to give out more to the telecommunications industry, which may be in need of a handout after her Department is finished with it, but to scale back the passion, particularly of the Secretary of State for Wales, for spending more. I believe that the President has to come to the defence of the northern region to protect the Prime Minister and his northern interests.
The President's new role, however, is not the end of her territorial ambitions. After five months of burying her head in the sands of the DTI, her ultimate reward has been to become one of the five people entrusted with preparing the United Kingdom for economic and monetary union and the abolition of the pound. It must have been her enthusiasm, in 1980, for complete withdrawal from the European Economic Community that led to her appointment. She said then that none of the arguments for staying in the EEC could be sustained. Perhaps her appointment was a result of her remarks, in 1990, that Britain should be "global rather than European". How can anyone say that new Labour is without a sense of humour when the President has been appointed to deal with EMU rather than to get on with the more crucial job in her Department of straightening out the Bill and answering a few questions in the House about her real responsibilities?
The UK requires a strong telecommunications industry and more spectrum to open up new services. As a Minister, one of the tasks that I was most pleased to perform was finding more spectrum to allow more new services, putting us ahead of the world in many spheres. 941 I did not require a tax to accomplish that objective; I simply found more spectrum in the public sector's horde.
§ Mr. Battle
I do not wish to take away anything from the right hon. Gentleman. When he was a Minister, he did find space in the public sector. I seem to recall, however, that the public sector accounts for about 40 per cent. of the total. Although some efficiencies were made in the public sector, we must deal with the private sector, which accounts for the other 60 per cent. That is the purpose of the Bill. We have introduced the Bill because we cannot squeeze more spectrum out of the public sector. If he thinks that he could have found more spectrum in the public sector, why on earth did he not do so?
§ Mr. Redwood
I set up a continuing review programme which would have progressively squeezed more out. I wonder whether the Minister has even tried to do that. I think that he has blundered into the Bill and has been given this excuse for it by his officials. I doubt whether he has had any meetings to try to free spectrum from any parts of the economy. He thinks that it can all be done by imposing tax increases.
The Bill sums up all that is wrong with the Department of Trade and Industry. It is bad for business and will cost us jobs and technical leadership. It is mean-minded and badly drafted. Ministers cannot even tell us to the nearest billion pounds what the tax will raise. The Opposition cannot support the Bill. We will demand improvements and we will harry it here and in Committee. It is not good enough. The industry and Britain deserve better. Labour is bad for business.
§ Mr. Stephen Timms (East Ham)
I am pleased to follow the right hon. Member for Wokingham (Mr. Redwood)—I followed his speech with interest. It is extraordinary that he launched such a savage attack on a measure that was in the Conservative party's manifesto. It will be interesting to see whether other Conservative Members follow his line and oppose their manifesto, or whether some of them agreed with the manifesto on which they fought the election.
I want to confine my remarks to three specific points. I want to talk about some of the newly emerging demands for radio spectrum that underline the Bill's importance in ensuring that spectrum is available in a properly managed way; I want to ask my hon. Friend the Minister for clarification about the Bill's impact on existing operators, because some confusion about that was raised in interventions from Conservative Members; and I want to make a suggestion for an addition to the Bill.
Many new demands for spectrum are emerging. Many of the points I want to make arise from discussions with the Telecommunications Users Association of which I have been the honorary president for a couple of years. It is an entirely unpaid role, which I have already declared, but I do so again now. It keeps me in touch with developments in the telecommunications industry and with the needs of small and large telecommunications users. One of the central contentions of the association is that for many users, particularly small business users, there is very little competition between suppliers of telecommunications services.
942 The previous Government talked a great deal about introducing competition to the telecommunications marketplace. In the City of London, there is a great deal of competition between rival suppliers and that is welcome. For big business pretty well anywhere in the country, there are plenty of suppliers from which to choose. However, in many parts of the country, and in many towns outside the major metropolitan areas, there is all too often no real choice of supplier in practice for small businesses.
New uses of the radio spectrum, commercialised as the Bill envisages, may provide the means to offer the variety and choice of services that has been lacking. One of the important benefits of the Bill will be to ensure that radio spectrum is available in an efficient way to provide for the new services that have not been secured under the previous arrangements.
The Broadband Wireless Association promotes wireless as thelow cost gateway to interactive television.It has a conference about that in a couple of months. It says that the build cost per customer of a cable-type service provided by wireless will be about half that of a traditional digging-up-the-pavement cable solution. Assuming that about 30 per cent. penetration is achieved, that significant cost reduction can be secured. A wireless approach to cable transforms the economics of the cable industry. It will make cable economic in rural and other areas where it has been impossible to provide traditional cable services so far.
One of the cable companies with a franchise in Devon wants to use spectrum currently unallocated in the 43 GHz range. There is an impressive new technology, manufactured in the United Kingdom by Philips in Manchester and GEC Marconi among others, which will provide cable-type services by wireless. It is an interesting approach and a good example of the band width-hungry new technologies we will see emerging in the near future. It illustrates how cable operators, confined to their existing franchise areas, could expand to cover other areas quite quickly and relatively inexpensively using wireless technology. Ionica of Cambridge has been mentioned; it is already rolling out local telephone services based on wireless.
All such developments underscore the need for better management of the radio spectrum, including appropriate mechanisms for charging. That is why I support the Bill. It will provide a properly ordered approach to this issue.
§ Mr. Ian Bruce
I am following the hon. Gentleman's speech carefully—I almost called him my hon. Friend because we sit on so many Committees together. Does he agree with the Government's view that about £1.5 billion can be raised from the industry? Does he think that that is a good idea or does he think that the money could be better spent within the industry, expanding the service and making it cheaper for consumers?
§ Mr. Timms
It is difficult to say how much money will be raised by the Bill, but there is no doubt that an orderly approach to spectrum allocation, which is enshrined in this Bill and which was in the Conservative party's manifesto, is the right way to go. My discussions with people in the industry suggest that that is overwhelmingly 943 their view as well. The mobile operators do not oppose the Bill in the way suggested by the right hon. Member for Wokingham a moment ago.
I want to ask my hon. Friend the Minister about the way in which the Bill will be put into effect. My hon. Friend said that there will not be blanket auctions for every piece of the spectrum, but I wonder what consultation he envisages will take place before a decision is made to auction any given piece of spectrum. I have two concerns and I shall use as my example the 43 GHz range for broadband wireless to which I have already referred. If that piece of the spectrum was auctioned, there could be a danger of undermining a promising new technology. I know that the Government would not wish to stifle that by piling on heavy charges too early in its development.
Equally, as I understand it, the technology would allow competitors to share the same piece of band width with different companies using the same parcel of band width. An auction would probably not be the most appropriate charging mechanism in that case. What steps will be taken to consult potential participants in the industry before any decision is made to auction a piece of the spectrum? Can the Minister confirm that, before there is an auction of any new part of the spectrum, there will be consultation about the appropriateness of that approach?
I want to clarify the impact of the Bill on existing operators. I welcome what my hon. Friend said about the establishment of a spectrum management advisory group. That will be widely welcomed in the industry because it has been pressing for that. What will be the impact on the existing mobile operators? The House of Commons briefing paper suggests that there will not be an impact on existing operators. It gives the example of Vodafone, where the licence has more than 20 years to run. That is almost certainly a misunderstanding, as it relates to its Office of Telecommunications licence. I understand that the Radiocommunications Agency's licence for the use of spectrum by existing operators is renewable each year.
The Bill will lead to a change in the way in which existing operators are charged for the use of spectrum from next year. I believe that that answers the concerns raised by the hon. Member for South Dorset (Mr. Bruce). The Bill does not mean that charges will not be imposed on existing operators; instead, a level playing field is created for them. Perhaps the Minister can spell out how far thinking has gone on that matter.
My hon. Friend repeated the commitment made in another place that there will be no auctions for existing operators. How will charges for existing operators be computed? Is it realistic to expect that mechanism to be in place by next year?
§ Mr. Prior
I am grateful to the hon. Gentleman for raising the point that I tried to raise earlier and to which I did not receive a proper answer. As I understand it, the existing licensees, who tend to be big companies, will not be contributing to the £1.5 billion. All the additional money will come from new entrants who, by definition, will be smaller companies.
§ Mr. Ian Bruce
If the hon. Gentleman considers the financial effects of the Bill, it will be clear to him—it is about the only thing that is clear about the Bill—that the sums of between £500 million and £1.5 billion which will possibly come from auctions are set against an increase in charges to existing operators of only £75 million a year. Even if the industry thinks that that is fair, it wants to know whether one group of operators using a piece of spectrum should pay only an extra £75 million a year, while the new entrants will have to pay £1.5 billion to use exactly the same sort of spectrum.
§ Mr. Timms
The hon. Gentleman is supporting my argument; there will be charges on existing operators. I want to know how those charging mechanisms will be established.
I do not know whether Conservative Members agree with their spokesman, but I have no objection to charging for the radio spectrum or to the competitive mechanism that is enshrined in the Bill. Those proposals are entirely appropriate and I do not believe that anyone in the industry or throughout the country seriously objects to them. They are entirely right.
My third concern relates to protecting consumers' interests. I should like to take up the debate initiated in another place, where it was proposed that the Bill should contain an explicit reference to the interests of consumers in relation to the spectrum allocation process. I know that the Telecommunications Users Association supports that idea, but it was opposed by the Minister in another place on the ground that the existing protection of user interests in the Telecommunications Act 1984, which requires Oftel and the Secretary of State to promote the interests of consumers, is sufficient. I am not entirely convinced and I wonder whether the Minister can comment further on that issue. It appears to me that Oftel has no significant locus to look after consumer interests when it comes to spectrum allocation. Is it the Government's intention that consumer interests should be taken into account in that connection? If so, and I am absolutely certain that it is, such consumer interest should be catered for in the Bill.
The Community Media Association—it was known as the Community Radio Association but it was renamed at the weekend—includes a large number of interesting and enterprising members who represent community-based radio and media initiatives. It has stated:Information technology is essential to assuring freedom of information and expression, social inclusion and cultural diversity. The CMA would like to see amendments brought forward in Committee to take account of the social and cultural benefits of use of the radio spectrum.No doubt the Committee will wish to consider its concerns.
I have three concerns. First, can we be assured that there will be consultation before a decision is made to auction any given piece of radio spectrum? Secondly, how will the new, different charges be computed for existing mobile operators? Is it realistic to expect such a mechanism to be in place by next year? Thirdly, when determining such matters, will the Bill contain an explicit reference to ensure that consumer interests should be taken into account?
945 I support the Bill. I am astonished by the stance taken by the Opposition spokesman when it was the Government he supported who started down that road. I warmly commend the Minister for introducing the Bill.
§ 6.5 pm
§ Mr. Ian Bruce (South Dorset)
I am most grateful to be called so early in the debate. One of the silver linings, albeit unwanted, of the defeat of so many of my colleagues has been that I have been catapulted into being a senior member of the Conservative party. I therefore now get to make my speeches earlier in proceedings. That is a rather sad reflection, but at least it reveals some modesty on our Benches.
I declare an interest as a paid adviser to the Telecommunications Managers Association. On this occasion, however, I specifically asked it not to brief me so that I could feel free to make my views known.
I am glad to follow the hon. Member for East Ham (Mr. Timms), who probed the Minister in exactly the same way as my right hon. Friend the Member for Wokingham (Mr. Redwood) and other colleagues have sought to do. It is not as though hon. Members and the industry cannot agree on how to go forward to get a good return for the taxpayer while allowing the industry to go forth and multiply. I do not believe that the Minister or his Department have any nasty intent, but I do not trust the Treasury perhaps as much as he does because the Treasury exists to get the maximum return for the taxpayer.
On Second Reading and in Committee, we will try to probe the Minister more about what the Government intend to do. A new entrant to the industry needs to know the Government's intentions to plan for the type of approaches that might be made.
It is easy for existing operators using existing spectrum to rush to cuddle the Government warmly, and even the Opposition, and say that they are keen on the idea of auctioning the rest of the spectrum. Once that is done, the spectrum that those operators already own is instantaneously given a capital value. The farmers hated their milk quotas until they suddenly realised that, overnight, the Government had created a capital asset that they could sell on. After all, they had their milk quotas for nothing. We must be careful about how we deal with such proposals.
My right hon. Friend said that the Opposition were deeply critical of the Bill because we want to get the proposals right. The Bill must not allow the Treasury to rub its hands with glee, saying, "On the first bid we will go for £1.5 billion and see what we can get later." The balance between existing operators and new entrants is crucial and it is a difficult one to strike successfully.
The history of the previous Government's efforts to allocate spectrum and allow television companies to bid for franchises reveals that the most difficult aspect was making the process fair. The arithmetic and problems will not change for the Labour Government. We will therefore be keen to probe the Government to determine what they have in mind. We will want to get as much information as possible, if not on the face of the Bill, at least discussed in Committee. I give Ministers fair notice that we want to hear in Committee exactly what they are thinking of doing. Ministers have benefited from the consultation put 946 in train by the previous Minister, my hon. Friend the Member for Esher and Walton (Mr. Taylor), and the information that that has provided.
Many consultation papers were put out by the Radiocommunications Agency and other bodies, so it is not good enough for the Government to say that they will continue with the consultation. If that is what they want to do, let us leave the Bill for a few months and get the consultation over. We and the industry need to know what the Government intend to do.
Although I am sure that the information appears on the face of the Bill, I can never read these things properly, so I want to know whether we are to have the affirmative or the negative resolution procedure for the regulations the Secretary of State will be empowered to make. Often, we receive telephone calls from a business or organisation asking, "Why did you vote to put this charge or this amount of extra tax on me?" and we do not remember doing anything of the sort because the measure disappeared in a resolution that would have needed a prayer laid against it for it to have been brought before us.
It is important that we should know, because we are dealing with a crucial industry that is one of the fastest-expanding parts of our economy. The Minister was somewhat aggressive towards my right hon. and hon. Friends in trying to suggest that we are here simply to oppose the Government. In fact, we are trying to get to the facts and it is important that we do so.
I received a letter from the Federation of Communication Services, which represents existing operators—those who already have spectrum—especially businesses in the mobile telephony sector and those in related fields, such as radio. It is worth reading to the House the list of concerns set out in the letter, although the Minister will be pleased to learn that he has already acceded to the fourth request or demand in the list, which is to the good. The first concern is thatthe new spectrum pricing regime should be fair, equitable and transparent and should apply to all users in order to maximise efficient spectrum use".I have already remarked on the difficulty of achieving fairness and avoiding imposing double taxation or charging people for things of which they had free use in the past while allowing new entrants in and ensuring equity between them and existing operators. That is a difficult balance to strike.
The second point is that there should be aclear statement of Government policy as to where it will apply auctions and administrative pricing, now and in the future".The Minister says that that is still being discussed, but before we give the Government the powers they seek, we want to know what they and the Treasury have in mind. We must get clear statements from Ministers.
The FCS's third point is thatthe Radio Agency's (RA) ideas for implementing spectrum pricing are at an early stage and require much more thorough analysis of spectrum congestion, monitoring mechanisms and the derivation of the Spectrum Tariff Unit before licence fees can be set. In a combined response to the RA's May 1997 consultative document, the mobile communication industry and radio users proposed a partnership approach with the Agency to develop this new mechanism".I hope that the Government will look carefully at how to work in partnership with the industry.
947 The fourth point is one to which, as I said, the Minister has just acceded. It was thatthere should be a new consultation body, the Spectrum Management Advisory Group reporting directly to the Minister.I am keen that the Minister should understand that the existing industry will want to advise Ministers and it is right that it should do that, but I hope that Ministers will take independent advice from users and potential new entrants.
The European Informatics Market Group, which operates within the House, has all of the industry on board and its representatives get together and come up with wonderful reports. As a member of the editorial board, one of my roles is to say, "Hang on a minute. This is the view of the people already here, but we also have to think about the people who may want to come in and, even more important, about the user—the person who has one mobile phone and does not really know what is available, but who has a real interest in ensuring that the products are available at a sensible price." That is extremely important.
The key questions posed by the FCS are:what is Government policy on the application of administrative pricing and auctions; whether Government can give assurance to small and medium sized businesses that the spectrum they currently use, or may wish to access in future to provide the same services, will not be auctioned;andwhether the Government will adopt a partnership approach with industry and users to develop the implementation mechanisms for administrative pricing.Those are valid questions and they must be addressed in Committee.
I turn now to the interesting case of the fishermen. The amount of money involved is small, but the fishing industry is deeply annoyed and we all know how much pressure the industry has been under in recent years. Fishermen are now subject to additional expense because—quite rightly—we have demanded that the safety of those who work on fishing boats must be paramount. In addition to normal safety gear, which almost requires boats to be extended to carry all that the Government want them to have on board, they must have access to radios.
In many cases, the radios that boats are required to have on board—some requirements are already mandatory, while some are still being pushed through the system—are used only in emergencies. Many of my fishermen are inshore fishermen and the best way for them to ring up their wives or their fish merchant is to use a mobile phone, not to use the radio to which they often do not have immediate access. However, to get in touch with the emergency services when they see someone else in trouble—another vessel reports a vessel in trouble in the vast majority of cases—they have to have the radios on board.
A long time ago, it was brought to my attention that the sum fishermen had to pay for their licences under the existing regime was subsidising those who install in their fancy yacht radios for leisure and other purposes. Providers of services for leisure fishermen who used their radios far more often got a cheaper licence than professional fishermen who required a radio for safety reasons.
948 I had a good response from my hon. Friend the Member for Esher and Walton when he was the Minister. He met representatives from the fishing industry and felt that changes should be made to regulations. I am sure that my hon. Friend will not be upset if I offer to supply copies of the correspondence between us; the last letter I received directly from him was dated 29 October 1996, in which he agreed that a case had been made out.
The current Minister may have access to a copy of the letter dated 3 April 1997 from the chief executive of the Radiocommunications Agency, Jim Norton, in which he said that the agency was ready to make a decision. If the Conservative Government had been re-elected, we would probably have enacted that decision by now, but I shall give the new Ministers time to look at the evidence. They should try to do something for the fishermen, who are using the radios for their own safety and for that of others on the high seas.
This is an important Bill, but it could slow the wonderful expansion of our mobile communications and other types of communication. In many countries, the Government have said that only so much spectrum is available, held an auction and people have paid vast sums for it. Then, suddenly, the Treasury has said "Oh, hang on—there's another lump of spectrum over here." Suddenly, twice as much spectrum has become available, and the people who have paid a high price for what they have are stuck with it and have to pass on high charges to their customers, whereas other operators entering the market later have paid a much lower price because of the greater availability of spectrum. It is, as I say, a difficult balance to strike and we must be careful not to repeat the mistakes that have been made by other countries.
§ Dr. Lewis Moonie (Kirkcaldy)
Speaking as a former psychiatrist, I must begin by wondering what the shadow Secretary of State was on today. There have been times in my life when I could have done with some of it.
I have a confession to make: I am a closet technology user. I even joined the internet this summer. I do not yet have a page on it, but that will come once I learn to use it properly. I even have a pager—although I am not sure where it is at the moment. I put it away somewhere at the start of the summer recess and have never found it again. I also have a mobile phone. I hasten to add, Mr. Deputy Speaker, that I do not have it with me in the Chamber; I would not want to incur your displeasure if it went off in the middle of my short speech this evening.
I want first to refer to the question of job losses and to try to put it in context. Just one company, Orange, has in the past two or three years spent £1.5 billion on developing its mobile telephony network. It was prepared to put up that much money, which I would call a huge sum. Indeed, it may be an over-optimistic sum given how much the company may expect to recoup, but it is small beer compared with the money that large companies will invest in the development of telecommunications over the next 10 years. The sums we are talking about pale into insignificance compared with the sums involved in setting up networks.
The shadow Secretary of State, for reasons of his own, was being somewhat malicious today. I do not seriously believe that Conservative Members think that there will be serious job losses as a result of this relatively minor—although important—measure.
949 In line with what we tend to do in the Labour party these days, I want to stress a point about education. It is clear that the shadow Minister and his colleagues learned nothing from the speech by the Minister for Science, Energy and Industry. As I am a great traditionalist in educational matters, I intend to resort to traditional methods and to repeat what the Minister said in a slightly different form, in the hope that, by means of rote learning, some of it may stick in the minds—if they have them—of Conservative Members. Thereafter we may not hear so much nonsense from them. I hasten to dissociate that remark from the hon. Member for South Dorset (Mr. Bruce), who as always made a sensible speech.
After 10 years of attending these technology debates, I know that the same old suspects turn up for all of them. I am glad to say that there are some new faces around today; perhaps they will enlighten us, perhaps not—I live in hope.
I offer a whole-hearted welcome to the Bill, and I congratulate my right hon. Friend the Secretary of State and her departmental colleagues on the clarity of its provisions. Like most modern Bills, this is largely an enabling measure. Many of the detailed provisions will emerge later. That follows the example given us in full measure by the Tories, and we intend to follow it ruthlessly now that we are in government. While the use of statutory instruments may be deplored when one disagrees with their contents, when one does agree with them they are a convenient way of putting legislation into practice. They allow us time to get the Bill on the statute book and then to unravel some of the knotty problems that turn up, as they always do, at a later date.
The Bill establishes certain principles of which I am wholly in favour. Indeed, I argued forcefully for them before the last election, and I was pleased that the then Secretary of State, Ian Lang, took them up. I am only sorry that his successor in the Tory party seems to have disowned what Ian Lang said. I wonder how many more of the former Government's policies will be disowned by Conservative spokesmen in the coming weeks and months.
I also congratulate my colleagues on the speed with which the Bill has been introduced. The Bill had its Second Reading in another place on 5 June, a mere four weeks after Parliament reassembled. It is a sensible and long overdue legislative measure that will help to establish some order in what is rapidly becoming, if left uncontrolled, a chaotic and crowded market.
That market is probably our key economic sector—communications, both broadcast and point-to-point. I look forward keenly to future DTI Bills. I understand that there is to be one on competition policy shortly. We strenuously advocated such a measure when in opposition, but shamefully the Conservative Government avoided such a Bill. If I may be permitted a small passing indulgence, Mr. Deputy Speaker, might I ask if it is too much to hope for a Bill or a statement on energy policy, another of my major interests? The Minister has a rather resigned look on his face at that suggestion, so perhaps he will not get to his feet to grant my request. I regret that, but perhaps once these other Bills are out of the way he will be able to devote his energies to a subject that is of great strategic importance to this country.
Radio-based communication is a key component in the rapidly converging field of the information super-highway which, as everyone in the Chamber will know—those not 950 interested in the subject do not bother to attend these debates—is an amalgamation of telecommunications, broadcasting and computing in one huge and rather diverse entity. If successfully developed, it will bring vast economic and social benefits to our country.
I am well aware of all the hype surrounding convergence. As I said at the outset, I am a rather reluctant user of technology even though I understand it well enough. Sometimes I do not have the time to be bothered with it. It brings problems as well as solutions, but overall it will be beneficial and it is to be encouraged for that reason.
It is no exaggeration to say that our future economic success will depend on how well and how quickly the super-highway becomes fully established. It was the previous Administration, I admit, who were responsible for the rapid introduction of full competition to our telecommunications market. That has given us a competitive advantage over our slower European neighbours. It is fun to watch the antics in Germany and France as they reluctantly attempt to privatise just a small part of their telecommunications system. It makes one realise that it is just as well that ours was privatised when it was. It pays to recognise that not everything done by previous Administrations was bad, and there is no doubt that the early freeing up of our telecommunications market was a very good thing.
Now that we have this competitive advantage, it is up to us to exploit it to the full. I honestly believe that the Bill is a significant step towards maximising that advantage. By reducing the influence of one of the key obstacles to progress, the shortage of radio spectrum, the Bill will give us a better chance to develop the market quickly.
Radio-based communication on a mass scale is a relatively recent phenomenon. It has grown up in little more than a decade from a patchy service mainly based around major conurbations to a virtually universal service—although some of the wilds of Scotland are still not covered. The phones do not always work up there, which is a great pity. The ubiquitous mobile phone accompanies us everywhere, except into this Chamber. Mobile phones are not much use, however, on the east coast rail network, which seems to have more black spots than—I am not quite sure what comparison to use: too many, in any case. The development of networks and the use of more spectrum will allow increased coverage of such areas. I do not enjoy having to try six times to get through when I am on a train journey. I resent that all the more because I use a digital phone which is not supposed to encounter such problems.
Radio-based communications are used widely by businesses and private users. They are used by taxi companies, by the new system for tracing stolen vehicles, by the emergency services and in new technologies such as global positioning. I know that I cut a rather unlikely figure as a hillwalker in Scotland, but people do get caught out by fog, rain and snow in the hills. On such occasions this type of technology can even be life-saving. Global positioning, traffic management and all types of things will add to the future load—quite apart from developments in broadcasting, which I shall come to shortly.
Radio communication competes with and is complementary to a fixed-link communication system based on copper wire, fibre-optic and co-axial cables, with 951 which we are familiar. Within the next few years, the introduction of the universal mobile telecommunications service will revolutionise personal communications in this country in a way that few of us imagine. It will reduce costs and should serve to allow access to the technology to anyone who wants it.
Some observers believe that a combination of radio links to the home and a fibre-optic fixed-link network for longer-distance transmission of information is the way in which the country should go, and that it could drive out the slower competitive systems, especially if considerable cost advantages are quickly gained by introducing a system that is cheaper to install.
Digital services have developed in parallel with that general increase in the use of radio spectrum. Digital phones are now commonplace. The Broadcasting Act 1996 was aimed at encouraging the rapid introduction of digital television and radio services, offering us more channels, better reception and enhanced services. We are still waiting, but some time in the next year the television should come limping along. Who knows—perhaps some time in the following year, radio will follow suit. One can only hope.
Digital services have the advantage of requiring less spectrum than their analogue counterparts, and once they completely replace them will allow us a massive increase in the volume of radio-based traffic, as will new technologies such as the compression techniques, which have been developed at Stamford and other universities, that will allow us to transmit far more data over a relevant piece of spectrum than has been possible. Unfortunately, at the same time we must continue to broadcast the older analogue services, which are greedy in the use of spectrum. In the first instance, therefore, the introduction of digital technology merely adds more to the burden—it does not help us much in the short term.
Analogue services will continue to be broadcast for a considerable time, as I reckon that the changeover will be relatively slow. Market research has shown that the people who are likely to switch to digital television are those who already hold a cable or satellite contract, and that those who do not are far less likely to do so. However, some time in future they may—perhaps in the third or fourth Labour Government after this one, about 10 or 15 years from now. I am glad to see that the Opposition still have a sense of humour—they will need it in years to come. The hon. Member for South Cambridgeshire (Mr. Lansley) has a reasonable majority, so he may well still be in the House then, remembering these remarks; I may be here myself.
[Interruption.] This is a brief summary of the present technological situation—the base on which we are working. We have a scarce resource, radio spectrum, which until now has been treated almost as a free good. We know what happens to free goods. The hon. Member for South Dorset has just left, but hon. Members should take fish as an example if they want to know what happens to a free good when it is ruthlessly exploited. We need a form of effective management. The most effective system of management is through price, and I cannot understand how the Conservative party can reject a pricing mechanism for establishing a market in a service. It strikes me as basic economics and common sense. When we cannot think of another way of doing it 952 effectively, there is no alternative. I wonder where I have heard that phrase before. Come on; we are slow tonight. [Laughter]. That's better.
We have a scarce resource, which a growing number of users wish to exploit. We have a new technology, digitally based, which will ultimately ease the problem but which exacerbates it in the short term. That is the rationale for the Bill. We need a coherent strategy for managing radio spectrum. It depends on several key elements, but effective allocation by an economic pricing mechanism must be the basic component.
Quite simply, the Bill introduces a necessary pricing mechanism and sets up a framework for the future allocation. By insisting that price is used to maximise the efficient allocation of spectrum rather than as a means of maximising revenue, I hope that the Department has managed to avoid the pitfalls and problems manifested by recent US attempts to do the same thing. I admit that it disappoints me. I see nothing wrong in seeking new sources of revenue. That is the Government's job. If they find new sources of revenue, they can tax people less in other areas, which strikes me as common sense. I accept, however, that in this instance—
§ Mr. Lansley
Is it the hon. Gentleman's view, therefore, that the Government should be thinking of compensating reductions in business taxation to offset the increase in business costs that derives from the pricing of the radio spectrum?
§ Dr. Moonie
Certainly not. The present market in mobile communications has shown us that companies are enormously profitable and can well stand to bear a bit more for the resources that they use. It will have not the slightest impact on their business, it will have minimal impact on their customers and everyone benefits from a better mechanism. That strikes me as a commonsense mechanism to introduce, and one which deserves support from all quarters of the House.
The fact that the Department has concentrated on using price as an effective allocation mechanism rather than purely as a means of raising additional revenue may help us to avoid the pitfalls that befell the US system. The US Government were less effective—too greedy. They tried to maximise revenue instead of maximising efficient allocation of spectrum and, in doing so, encouraged companies to overstep the mark and submit bids that were too high. Some of the companies failed to survive as a result. The mechanisms that we are introducing by means of the Bill should avoid that.
It is right that Governments should retain the power not to accept only the highest bid—that they should examine the bids and decide which one it is appropriate to accept. Before any hon. Member tries to intervene, I should say that I accept that that raises problems in itself, and I trust that the Government will carefully consider those problems in Committee and thereafter before they introduce the appropriate regulations that govern how the system works.
Existing users are exempted for the duration of present licences, but not for ever. That is a source of some self-congratulation to them and some disappointment to those who might wish the Government to maximise their revenue more quickly. It is a generally accepted principle, however, that existing contracts are honoured, so good 953 luck to those existing users, however advantageous it is for them; they managed to get the contract for the spectrum. Although they will not get it again, they can take full advantage of it in the next few years.
Ultimately, almost all users will have to pay a realistic market price for the spectrum that they wish to use. People talk about new entrants to the market as though a tuppenny-ha'penny company will be set up in a back room. It will not be like that. The existing companies may decide to expand into other areas and find themselves bidding for additional spectrum. That will have the additional advantage that they will seek to use the spectrum that they have more effectively before entering the market, which should reduce the pressure on the new spectrum that we are trying to allocate. It will ensure that every piece of spectrum that has been allocated already is used to maximum effect.
Would that some of the users who have had spectrum allocated to them, such as the BBC and the Ministry of Defence—the arch-hoarder of spectrum in this country—could be encouraged, through an appropriate pricing mechanism, to disgorge some of the spectrum that they have. I am sure that my hon. Friend the Minister for Science, Energy and Industry is well aware of the problem and I am sure that he has at the back of his mind a way of ensuring that they are gently encouraged to cough up the bits that they do not need, so that other people may get access to them and use them more effectively.
I hope that my hon. Friends the Ministers will consider a small suggestion. There is a plethora of regulators in broadcasting and communication. In the past we advocated rationalisation, and I believe that the system that is proposed—in addition to the advisory committee, which I welcome—might work better, allocating licences on a qualitative assessment of bids, if it were made part of the remit of an external regulator, such as the Ofcom that was proposed to replace the Office of Telecommunications. Ministers might care to consider that in detail. The provisions in clause 4 give the Secretary of State the power to do something along those lines, should she wish. I certainly hope that it will be given careful consideration.
I should like now to say a few words on behalf of the Commercial Radio Companies Association, the chief executive of which, Paul Brown, wrote to me last week. I have had a close association with him over many years and told him that I was happy to put the points that he wanted to raise to my colleagues in the Department in the hope that they could give some satisfaction when summing up on the Bill. I shall quote from the letter of 22 October because that will be easier than trying to paraphrase it. It says:I remain sure that there is a case for an amendment to the legislation which the Government might feel able to consider…Spectrum is a national asset. Its use should be well controlled and priced. Commercial radio welcomes the Government's move towards increasing the efficiency with which spectrum is used. The Secretary of State's powers over spectrum usage, as laid down in the Wireless Telegraphy Act 1949, have always been significant and wide. They have been handled sensitively and responsibly and there is no reason to believe that they will not continue to be so.The proposed new legislation rejects the old idea that spectrum users should only be charged pretty much the price associated with its management. In the future, prices will be based on the commercial value of the spectrum being used by each Wireless Telegraphy licensee. As it says in the preamble, 'the Bill provides for fees, other than fees for licences for television reception, to be set by regulations having regard to various other factors or by auction'.954It is clearly right for the Government to have flexible powers to ensure that space is made swiftly available to new digital technologies and new ideas for spectrum use as yet unthought of. It is also right that changes in charges and usage should be preceded by consultation as clause 6 of the Wireless Telegraphy Bill requires so that the fairness of price increases or usage changes can be fully debated before they occur …We have also been gratified to read and hear the statements that have been made that the Bill is not intended to require UK broadcasters to bid for spectrum in the same way as, for example, mobile telephone companies will be required to do. We note, however, that this protection is not afforded on the face of the Bill. We would therefore like to propose an amendment which the Government might favour and put forward as its own.An amendment to clause 3(1) would suffice: we have in mind something in line of 2 of page 3 of the Bill…along the lines…applications for the grant of wireless telegraphy licences, except those for the broadcast of a television or radio service for reception by the general public, must be made in accordance with a procedure which.I should be grateful if the Government would look at that. I shall send them a copy of the letter so that they need not comb through Hansard for it, and I hope that they will give it a sympathetic hearing. The suggested amendment is a small change but it would be greatly appreciated by those concerned.
I conclude my remarks by referring to a sector that is often overlooked as being too unimportant for active consideration. I refer to the developing field of community radio and local television, now known as the Community Media Association after a conference which I attended and spoke at last week in Edinburgh. The association has become an umbrella organisation for several bodies concerned with small-scale broadcasting. Those bodies provide local services and often information, are usually non-commercial in nature and serve a clearly defined small geographic area or part of a large urban conurbation. They provide a much needed community resource.
The sector might be forgiven for seeing itself permanently cast in the biblical role of Lazarus, condemned to pick up the crumbs from the rich man's table. However, it is far too valuable a resource to our society for that and is destined to play a clear role in this country. A party such as ours, dedicated to the inclusion of all our communities in our plans for society, must afford it some recognition. I see no other reason, other than a slight oversight, why there should not be specific reference somewhere in the Bill to the needs of small-scale broadcasters.
Spectrum pricing will, after all, raise resources. I take it that it is not intended that those resources should be raised from small-scale operators as their needs must be met in areas where there is tremendous commercial competition for the bigger chunks of spectrum that are needed for larger services. It is good that we are to raise that money. The question remains whether a little of it could filter through to the worthwhile people on whose behalf I am speaking this evening. I am sure that I shall get a sympathetic hearing, if not a completely positive response, from my hon. Friends on the Front Bench.
May I outline the aims of the community media charter, as they could be usefully incorporated into our thinking? I shall not quote the charter in its entirety as it is rather long, but it says:To promote the right to communicate, to assist the free flow of information and opinions, to encourage creative expression and to contribute to the democratic process and a pluralistic society;955To provide access to training, production and distribution facilities, to encourage local creative talent, to foster local traditions, and to provide services for the benefit, entertainment, education and development of their audience;To seek to have their ownership representative of local geographically recognisable communities or of communities of common interest;To be editorially independent of government, commercial and religious institutions and political parties in determining their programming policy;To provide a right of access to minority and marginalised groups and to promote and protect cultural and linguistic diversity;To honestly inform their audience on the basis of information drawn from a variety of sources and to provide a right of reply to any person or organisation subject to serious misrepresentation;To be established as organisations which are not run with a view to profit and to ensure their independence by being financed from a variety of sources"—one of which is before us today—To recognise and respect the contribution of volunteers, to recognise the right of paid workers to join trade unions and to provide satisfactory working conditions for both;To operate management, programming and employment practices which oppose discrimination".It is a worthy charter which the whole House should be prepared to support. Its aims should, on consideration, receive at least a nod from Ministers, if not definite inclusion in this small Bill. The hundreds of groups in all our constituencies, which are involved in trying to develop those worthwhile new services, would welcome some reference to it.
As I said earlier, I welcome the Bill. I trust that, in the light-hearted way in which I have tried to deliver this speech, I may have imparted a little more learning to the hon. Members who are left on the Opposition Benches. I wish my hon. Friends on the Government Front Bench every success in the progress of this measure.
§ Mr. Colin Breed (South-East Cornwall)
Much of what I wanted to say has been said in one way or another, which is almost inevitable. This relatively short Bill, which will have a profound effect on people during the next few decades, is broadly welcomed by the Liberal Democrats, if not others. We have a few concerns, however, which I shall outline in a moment.
There can be no doubt that the management of the radio spectrum and encouragement of its efficient use are vital to the future of communications, particularly as the resource is clearly under considerable pressure due to the enormous expansion of radio wave usage in recent years. Technological advances in the radio spectrum have increased its availability, and services are now provided at much higher frequencies, which has increased the usable spectrum. Even so, demand continues to exceed availability.
We recognise, therefore, the imperative to improve the management and efficiency of the radio spectrum, and we accept that changes to the present regulatory system, which is based on the administrative costs of managing the spectrum and not on its economic value, are a realistic way forward. We accept that, because charging has not been related to value, a distortion in demand has been caused, with users having no real incentive to use the spectrum to which they currently have access in the most efficient way.
956 The need to increase the availability of spectrum and use it more efficiently is overwhelming. We accept the essential provision of the Bill, which changes the method of charging from one based on cost to a more economic value, even if it raises more money, which will make the Treasury happy.
The Bill's other main provision gives the power to auction some licences. We have concerns about that, some of which have already been raised today. I accept that assurances have been given that auctions will not be applied to existing operators, at least not during the period of their current operational licences, but we are concerned about the principle of auctions for future allocations of spectrum.
Most hon. Members will remember the experience of the auction process in the television sector in the recent past. Although there was a quality threshold before companies were even allowed to enter the auction process, it clearly favoured those with the greatest financial muscle. Some bidders paid far too much, and others acquired their licences for next to nothing. That could happen again, and if it did, it would be less than positive for consumers.
There are always dangers in the auction process when it is used in a new marketplace, and one where bidders are conscious of the need to retain their market share or obtain new market share. There is an obvious danger that spectrum will be purchased not only by those wishing to use it, but by those wishing to have it as an investment in a resource with clear scarcity value. They may want to retain their allocation and sell it at a profit. That, surely, is not the object of the exercise.
It remains far from clear what is proposed for the existing licences if they are not to be exposed to the auction process, and whether and how those licences will be brought into line with the new charges. If they are not, there will be a major distortion in the market, which will probably favour those who were in first.
Therefore, one of the most important details will be the way in which competition is to be established between those who already hold spectrum and those who wish to enter this new marketplace. That is particularly important for the new companies, of which there are quite a few, which are developing the leading-edge technologies, such as fixed radio access. Uncertainty about the future costs could severely deter new capital investment for the development of new services, so it is vital that those companies know exactly what they are letting themselves in for in the auction process.
It is essential to control the on-selling of licences, if that is possible—perhaps it will not be possible—to avoid the creation of a secondary market, which is often almost entirely unregulated, at least at the beginning. Subsequent attempts to regulate it would not meet with much success.
The hon. Member for Greenock and Inverclyde (Mr. Godman) mentioned the use of radios by fishermen. Perhaps we can learn lessons from the fishing quota licences. The debacle that was caused in our fishing industry should make us mindful of the consequence of creating marketplace conditions for a national asset, which can then be exploited by commercial concerns in a secondary marketplace.
Another lesson often learnt far too late is the need to consult industry before far-reaching legislation is enacted. I am delighted to hear of the new advisory board that is 957 to be set up. I am sure that that will be welcomed by the industry as a whole, which will have to operate within the new legislative environment. That is essential if we are to get the efficient use of the spectrum to deliver the commercial and public benefits to all of us. Broad agreement on all aspects will be necessary, and the industry must be aware of Government intentions.
I believe that the industry broadly agrees with the measures in the Bill. Although it may not be delighted at having to pay more charges, the industry will recognise that it is a sensible way forward. Future policy developments must be subject to the proper consultation.
The interests of the consumer must be given due weight. The Government's review of utility regulation will closely examine consumer representation. The competition Bill will give new rights to consumers and organisations representing consumers. In the light of measures to enshrine consumer interests within telecom regulation, it seems a little odd that they are being overlooked in the regulation of the radio spectrum. Perhaps that aspect could be developed.
§ Mr. Fallon
Does that mean that the hon. Gentleman would welcome an amendment in Committee to include in clause 2 specific reference to consumer interests?
§ Mr. Breed
That is one of the matters that we shall raise in Committee. It is important that consumer interests are properly represented. I shall certainly seek some amendment in Committee.
On such a technical subject, it is sensible that independent advice through a statutory requirement for consultation should be incorporated in the Bill at the outset. Perhaps the Government will consider that slight tweak.
In view of the transparency of the auction and charging process, which will be vital if it is to receive the support of industry, it will surely be necessary to ensure that the current culture of secrecy in the Radiocommunications Agency is changed to a culture of greater openness. I recognise that, because of the Ministry of Defence involvement, there has been a culture of secrecy, but I am not sure that that can continue if people are expected to operate in an auction process in a more transparent environment.
Sensible measures properly to manage the nation's asset, together with realistic charges based on value rather than cost, should not become the open-ended tax-raising measure, concern about which dominated the early part of the debate. The measure could be milked by successive Chancellors as a cash cow, but I do not believe that that is the Government's intention.
If licences are to cost more, and the aim is to increase efficiency, a clear link should be established between increases in cost and the improved efficiency of the spectrum. That could be written into the Bill. It would provide a mechanism to reinforce what the Minister said, and creating a link between increased efficiency and increased cost would ensure that in future money is not raised solely for tax purposes. If that is not done, it could leave the door open to abuse of the powers by increasing licence charges without commensurate improvement in the management of the spectrum.
The length of the Bill is no indication of its likely consequences for the country. Although they have considerable merit and are broadly supported by the 958 industry, and by Liberal Democrats, important points of detail are raised and must be tackled. I have raised some of those and intend to pursue them in Committee. At this stage, however, I am delighted to assure the Minister of our support for the Bill.
§ Ms Linda Perham (Ilford, North)
My reason for speaking in the debate is to raise the concerns of many of my constituents in Ilford, North who are licensed taxi drivers and who work on radio taxi circuits. I am grateful to my hon. Friend the Minister for referring in his opening remarks to the importance of radio to the taxi industry.
I have spoken to the Joint Radio Taxicab Association, the trade body that represents London's five licensed radio taxi circuits—Computer Cab, Radio Taxis, Dial-a-Cab, Datacab and Harrow Radio Taxis. I am grateful for the association's advice.
It is difficult to appreciate the accelerating pace at which the taxi industry is developing. One hundred years ago, in August 1897, the London Electric Cab company of Juxton street, Lambeth, began operating in the west end and City with 12 environmentally friendly electric cabs, which could be hired for the day for 25 shillings. That was probably a lot of money then. Fifty years ago this year, the last horse-cab driver handed in his licence. In that same year, 1947—in which I was born—the first radio cab service in Great Britain began operating in Cambridge, which is now represented by my hon. Friend the Member for Cambridge (Mrs. Campbell), who sits next to me.
The radio taxi industry at present employs more than 6,500 licensed taxi drivers and more than 550 administrative staff. It has an annual turnover of more than £100 million and has invested more than £23 million in the past three years—following consultation with the Radiocommunications Agency—in updating its radio systems. That investment means that taxi orders are now dispatched by data rather than voice control, which has provided great efficiency gains in the spectrum that taxis utilise.
Issues affecting this sector of the radiocommunications industry were not raised during the passage of the Bill in the other place, so I am pleased to have the opportunity to highlight some of them now. With this legislation, the Government are rightly seeking to introduce effective management and fair pricing of the radio spectrum. As the Minister said, effective management of the finite spectrum resource is essential if growth and innovation are to be sustained. I congratulate the Government on the reassurances that they have provided already about their intentions regarding fees, auctions and security of tenure for small and medium-sized businesses that already use spectrum frequencies.
Members of the Joint Radio Taxicab Association are grateful for the open and constructive way in which officials and Ministers have approached those issues during their consultations. They are particularly reassured that the proposed fee increases to be incurred by businesses, such as taxi firms, will be modest and subject to an industry consultation exercise. I welcome that. The industry is also reassured that there are no proposals to require existing licensees to enter into auctions for the right to continue to provide their current services within their existing spectrum allocation.
959 I shall now address the principal change in the legislation: spectrum pricing will be charged on its economic value to the holder rather than on administrative cost, as occurs under current provision. The new legislation will permit the Secretary of State to apply pricing differentials to the allocation of spectrum frequencies. As I understand it, spectrum fees will be set having regard to the amount of spectrum bandwidth occupied, the location where the frequencies are to be used, whether the frequencies are to be exclusive to a single user or shared, and according to market demand.
While that is a sensible move, which will no doubt encourage many users to use the spectrum more efficiently, it seems to me that we should take the final step to ensure optimum usage of frequencies by monitoring the efficiency of spectrum usage and by encouraging the most efficient users of spectrum in some way. I urge the Secretary of State to consider utilising, or adding to, the powers in the Bill so that she may monitor the efficient usage of frequencies that are already possessed. When a company bids for further frequencies, the application could be judged not just on price, but on the applicant's record of using the spectrum allocation efficiently.
A system that relies on price alone to promote efficiency will inevitably have certain flaws. Under such a system, the cost of efficiency is left to the individual company to decide. The company with the ability to absorb or pass on any increased licensing costs will have no real incentive to become a more efficient channel user. Indeed, the exclusivity of a channel, rather than the cost, may be the key element for the user.
There is also a danger that a company will overstretch when purchasing its spectrum capacity and not have sufficient resources to invest in the technology necessary for managing the spectrum well. Such situations—for reasons of strategy, ineptitude or a lack of resources—will have a major detrimental effect on the growth of successful, efficient companies, including radio taxi circuit members, who have just spent more than £20 million moving from voice to data dispatch of taxi orders.
If the Government are to prevent such problems, there must be a process for assessing spectrum usage. I understand that the technology exists to undertake that kind of exercise. The Radiocommunications Agency is able to monitor channel occupancy regularly, and therefore remove exclusive spectrum assignments from users who do not meet designated usage criteria. I believe that that is neither a difficult nor an expensive activity to undertake, and the costs of such an exercise could be built into the fees of the industries that would benefit from promoting efficiency. I look forward to hearing the Government's view about that suggestion.
I am concerned that, as demand for taxi services grows, radio taxi circuits—which have spent millions improving their spectral efficiency—will be outbid for extra spectrum space by companies that may have more funds to spend, but not nearly such a good record in using their spectrum allocation efficiently; or that the necessary frequencies will not be available because other companies are using their allocations inefficiently.
960 There is little doubt that demand for the services of radio taxi companies will continue to increase. The taxi is set to play a vital role in the Government's proposals to develop an integrated transport policy for London. The taxi provides a realistic alternative to the private car in London, and it fills gaps in services that public transport cannot meet. Most importantly, more than 95 per cent. of taxis on the radio circuits are already wheelchair-accessible. That provides a public transport service option for disabled people that most bus, train and tube services cannot match.
I am sure that hon. Members will agree that London is rightly renowned, nationally and worldwide, for the high vehicle and service standards provided by our licensed taxi trade. I would welcome a reassurance from the Minister that the Government recognise the vital public service and transport role that taxi companies provide, and that this factor will always be taken into account when applying the provisions of the Bill.
§ 7.6 pm
§ Mr. Andrew Lansley (South Cambridgeshire)
During my time at the Department of Trade and Industry more than a decade ago, I was involved occasionally in radio matters. In those days, we were engaged in the business of trying to shut down pirate radio stations—so I am rather pleased that we have moved to a more liberal frame of mind. That is due largely to Conservative Governments, and we are now beginning to see some of the market and commercial benefits to be derived from a more liberal telecommunications field.
There is something slightly curious about the way in which Ministers and Labour Back Benchers have approached the question of manifestos in terms of the Bill. I have often heard Labour Members insist that they must proceed quickly with a course of action because they have a mandate through their manifesto. They imply that it is rather presumptuous of Conservative Members to seek to question, criticise or impede the progress of legislation when the Government are proceeding in accordance with their manifesto mandate. Yet, this evening, Labour Members say that we must proceed quickly and that Conservative Members must not offer constructive criticism or question the legislation because it was part of the Conservative manifesto. I am struck by the sense of irony and the role reversal—perhaps that will develop further as the evening progresses.
The Labour manifesto did not cover this measure—the Labour party did not see fit to tell the electorate that it proposed to introduce legislation in this area so soon after the election. None the less, it has proceeded. Having chosen to introduce the Bill, we must examine whether the Government have addressed all the issues arising from it, not so much as a point of principle but as a point of practice. Many such matters were not addressed adequately in the Minister's introductory speech or in his responses to interventions.
I begin with the view that we should have an efficient method of allocating the radio spectrum, and that markets generally are an efficient method of resource allocation. However, the method of pricing and the extent and character of the marketplace that it created are of the essence in determining whether it remains an efficient method of allocating spectrum. I shall raise two points in relation to this before moving on to a number of points of detail.
961 If a purchaser has bought spectrum but is unable effectively to use it during the life of the licence, will they be able to assign it, and what freedoms of use would be attached were they to do so? Could a secondary market be created? If it could, I suspect that we could expect the economic efficiency of spectrum allocation to be maximised. If not, we run the risk of under-utilisation or under-investment by licence holders, who may not, in the later stages of the life of their licence, be the operators at the cutting edge of technology or commercial development.
Secondly, how long will the licences last? Once a licence is sold, the character of market pressure to improve spectrum utilisation for a particular operator changes. Licence holders will become aware, rightly, of the need to secure maximum value from their use of the spectrum over the licence period, but they will also be aware that alternative users will be able to bid in due course to take over that spectrum. Over the life of a licence, therefore, the balance of these considerations will shift from the former to the latter, reducing in some cases the potential and returns from new investment. Short-term licences, therefore, hold the risk of under-investment by licence holders. Longer licences run the risk of creating barriers to market entry for new and innovative operators. That is why we should look for licences of a realistic length, but—I emphasise but—with real scope to assign the spectrum to others in a secondary market.
That brings me to a related point. The Government have stressed that existing licensees will not be required to enter an auction—indeed, the Minister reiterated this in his opening speech—for the right to continue to provide their current services within their existing spectrum allocation. Fair as that may seem, we have to recognise that, for the life of existing licences—and some of them are quite lengthy—there will be a clear market benefit to existing licensees, and, depending on the cost to new operators of the spectrum they acquire, the latter could be at a significant market disadvantage.
That may be sufficient in some circumstances to deter new entrants to the marketplace and hence frustrate the objectives of the legislation in stimulating new commercial and technological developments. It is therefore very important that, in their licensing of spectrum use for new—I emphasise new—generation services, especially third generation mobile telephony, to which the Minister referred, existing and new operators should, so far as possible, be required to bid for spectrum use for this purpose on an equivalent basis.
There are a number of specific matters on which I should be grateful if the Minister would comment when she replies. First, will the Government undertake to protect the interests of radio astronomy, such as the Mullard radio astronomy observatory in my constituency, which provides valuable scientific information and research? The efficient use of radio spectrum could assist the process of moving from analogue to digital. What does the Minister believe the consequences of the Bill will be in that respect?
Thirdly, my right hon. and hon. Friends have rightly said this is a substantial revenue-raising measure. Although I would not dispute the Minister's contention that hypothecation directly should not arise, industry should reasonably look for a commitment that revenue raising is not the principal purpose of the measure, and that therefore, when the opportunity arises, corresponding 962 reductions in business costs should occur elsewhere, or there should be an expectation that the stimulation of technological and commercial support to industry from the Department of Trade and Industry should reflect the fact that industry is making a further significant contribution to Government revenues in this area. I see no evidence of that at the moment from the Government; merely the smile on the Treasury's Cheshire cat.
Fourthly, what measures do the Government propose to take to frustrate collusion at auctions for spectrum? In that area, some of the experience in the United States was unhappy. The Government would need to combat that possibility.
Fifthly, in an intervention, I referred to clause 3 and asked what further matters the Secretary of State would take into account when determining to whom licences would be given at an action. In subsequent debate, we have heard from Liberal Democrat Members and Labour Members that consumer and other interests are being pressed on Ministers as relevant to the decision whether to give a licence to a particular bidder at auction, and that it should not simply be the highest bidder.
We need to know—if not on Second Reading, in Committee—what matters will be specified and under what circumstances Ministers would regard it as right not to award a licence to the highest bidder at an auction. I reiterate a point made, rightly, by my hon. Friend the Member for Buckingham (Mr. Bercow) relating to the cost to the public sector. There are significant uses of radio spectrum in the public sector. The public sector will be required to meet the costs. We need to know what the costs will be. How will they be met? What will be the implications for public services?
I was glad to hear my right hon. Friend the Member for Wokingham (Mr. Redwood) set the Bill in its proper context. Where the Government have picked up on the policies of the previous Government, they have so far added little, and lost something in translation.
§ Dr. Palmer
Does the hon. Gentleman agree with his Front-Bench colleague that the Conservative policy in this area was a mistake?
§ Mr. Lansley
When the hon. Gentleman comes to look at it, he will see that my right hon. Friend was not saying that the previous Government's policy had been a mistake. He simply said that he was skeptical—and always had been—of the policy of spectrum pricing. The point that I am making is that the Government have chosen to go down this route, but we need to look very carefully at the implementation of spectrum pricing. The questions that I have raised would be very much in the minds of my right hon. and hon. Friends, and until they are resolved, it would not be right to proceed with the legislation in the way proposed.
As I understand it, it was not my right hon. Friends' intention before the election to proceed with the Bill in this form at this time. They undertook an initial consultation, and there may well have been issues that would have arisen in response to consultation and on reflection after the election which would have led to different conclusions in relation to legislation. We have to explore legislation, and that is the purpose of this debate and the subsequent Standing Committee.
The President of the Board of Trade has somewhat underwhelmed industry, not least by her published document on competitiveness, which was a shallow and 963 insubstantial effort in comparison with the competitiveness White Papers and subsequent measures of her predecessors. The Minister of State, like his colleagues at the DTI, promises much but so far has delivered little. What they have done they largely owe to their predecessors, as in the Bill. No doubt they have been distracted by the troubles into which the Department has fallen, almost from day one. However, the time is fast approaching when business will say, "Where's the beef?"
Valuable as the Bill may be, Ministers will not be able to point to it for an answer. If they fail to flesh out the detail adequately, even some of the potential benefits of this measure, for the development of an important industry, which undeniably exist, may be lost.
§ Mr. Brian White (Milton Keynes, North-East)
I shall talk about the importance of the Bill, converging technologies and some of the new entrants that will result from the Bill. There is widespread support for the measure, and the hon. Member for South Cambridgeshire (Mr. Lansley) has demonstrated that there is widespread support among Conservatives for the principles of spectrum management. I was surprised by the shadow Secretary of State's comments, but he would not recognise widespread support if it was in front of him.
Before I came to the House, I spent 20 years in information technology as an assistant analyst designing systems. The United Kingdom was able to achieve a lead in that technology despite legislation and not because of it. A great deal has been achieved because those involved have been able to get round regulations and not because of Government support. Too often, innovations and new technologies are introduced in this country that run foul of the way in which it is organised. The procedures of this place result in laws that prevent innovation and thereby prevent us from moving forward. It is incredible that we achieve so much despite the restrictions that are in place.
I am pleased that the Bill will increase flexibility. If some of the restrictions that have been advocated are put in place, new technologies that we shall see being introduced in the next century will not be able to use the radio spectrum.
My hon. Friend the Member for Kirkcaldy (Dr. Moonie) talked about Germany and France and our lead over them, but they are not the only countries in Europe. The Nordic countries also have a lead. Finland, for example, has 98 per cent. usage of mobile phones. Surely we have something to learn from the innovations of Nordic countries, with public sector companies competing with other public sector companies as well as with private sector companies. The dynamic market that has been created has led to a 39 per cent. use of the Internet, for example. There are many lessons that we can learn so that the lead and leading-edge technologies that we have developed can remain in place.
The Nordic countries have learnt that outdated dogma, from wherever it comes, is a barrier to innovation. I am pleased that the Bill does not rely on that dogma.
There will be a convergence of technologies. We will not be talking about only radio, television or cable. I can already e-mail via my digital phone, and it will not be long before that and other technologies improve, providing access to many more people.
964 There will not merely be a convergence of technology but a mix-and-match approach. The individual will be able to use part wireless, part cable and part satellite technology all in one transaction. Apart from convergence, we should talk about the appropriateness of technology to enable someone in a rural area to use appropriate technology in the same way as those who live in inner-city conurbations. It is important that we build in flexibility so that licences allow for mix and match. We should not push people down a particular route. A problem of the past is that we have seen things in isolation and not as ways of communicating. Technology has been perceived as a way of sending a message by means of a certain medium and it is important that in future we see things in the round.
My hon. Friend the Member for East Ham (Mr. Timms) talked about some of the technologies to which I intended to refer. I know, of course, that it is not compulsory in the Chamber not to repeat ourselves, but I shall be abstemious and not repeat some of my hon. Friend's remarks. There will be new technologies, and I am not talking about third generation mobile telephony, which is already here and being developed. There will be new technologies that go beyond that and we must not make short-sighted mistakes. Instead, we must consider allowing new entrants to use wireless in the century ahead. It will be a mistake to confine ourselves to what we already know about.
New technologies will be introduced, and the Bill must provide for new entrants. We must not erect barriers against technologies that we do not yet know about. Some of those who have contributed to the debate seemed to be suggesting that we should put in place barriers based on current technology instead of looking to the future.
I welcome clause 5 and the giving of grants for future research. It is important that we provide support for research in the early days. All too often, however, we have put money into research and stopped before that research can lead to products. It is important that money is made available for new companies that are setting up new technologies. In the early days when things are a struggle, when banks do not want to know and when sufficient capital is not available, the Government should provide support.
When I read about auctions back in June, I thought, "My God, here we go again. Have we learnt nothing from the television debacle and experience in the United States?" I have been reassured by comments made in the other place and by those of my hon. Friend the Minister this afternoon.
It is important that our approach is selective and appropriate and not one that is used for anything and everything. Conservative Members seem not to recognise that it is appropriate in some circumstances to use auctions. At the same time, I think that it would be inappropriate to use them in every circumstance.
I am pleased that the Minister gave reassurance to existing companies based on the investment that they have already made. He has said that they will not be subject to auctions for existing services. It is an important message which needs repeating. We are talking not of a tax but of the management of the spectrum.
My experience of the Ministry of Defence is that it is not likely to give up the bands that it already has. A small dose of commercial reality would be especially appropriate for the MOD.
965 We need to be aware of what happens in terms of costs and benefits when new technologies are introduced. It has been said that costs will be passed on to the consumer. However, new technologies rapidly give value to the consumer, and prices fall quickly. The new technologies that will be introduced by means of the Bill will be no different.
There has been a good deal of consultation with industry, but I make the plea that practitioners are also involved. We should not confine ourselves to company directors. It is important that we talk to those who are developing technology and who are involved at the sharp end, who will maintain our leading edge.
Consultation must have appropriate time scales. Companies should know in advance what the issues are and what they must plan for. Consultation has too often taken place at an inappropriate time. It has either been too far in advance and nothing has happened or it has been far too quick and no one has had time to plan. We must ensure that we get the balance right.
I accept that there are some concerns that should be expressed in Committee, but I accept that the Bill is an important measure which will set us up for the next century, ensuring that we maintain the leading edge that has been developed over the past century.
§ Dr. Nick Palmer (Broxtowe)
I support the general principles that are set out in the Bill, which represent a useful step forward. They have been described fluently by my hon. Friend the Member for Milton Keynes, North-East (Mr. White) and by many others.
I welcome the generally high standard of debate. Many hon. Members on both sides of the House have advanced serious arguments. I should perhaps exempt the absent shadow Secretary of State, who made up for seriousness with a particularly entertaining speech. I enjoyed his description of the history of Conservative policy in the area covered by the Bill. Apparently, there was a shining light during the time when he was last responsible for these matters, followed by a dark tunnel leading all the way to the general election, including the drafting of the Conservative party manifesto. A new light has now returned and we can bask in it.
The right hon. Member for Wokingham (Mr. Redwood), the shadow Secretary of State, criticised my right hon. Friend the Secretary of State for not being present throughout the debate. Having said that, he immediately disappeared.
I shall introduce a note of dissent in the consensus that appears to rule between the two Front Benches and the Liberal Democrats. I hesitate to do that, because new Members have been told that our maiden speeches should be non-controversial, and although this is my second speech, I have not yet got used to the idea of being controversial. There seems to be a broad consensus between all the parties that fee increases should be made only as far as is necessary for spectrum management. The Conservative party wants that principle to be established, but it does not trust us to keep to it. The Labour and Liberal Democrat Front-Bench teams want to stick to it.
That reminds me of the first experiments under the late President Leonid Brezhnev. He started to introduce market principles into the Soviet economy. He said, 966 "We're not actually going to introduce profit or make money. We're just trying to introduce small reforms that will help with bottlenecks in the market. Relax comrades, nothing will happen." He was right; nothing did happen.
There are two problems with that self-denying ordinance: it is undesirable in principle and illusory in practice. I apologise, Mr. Deputy Speaker, because I have one of these machines in my hand, but it is switched off. I brought it in to show that I am not opposed in principle to mobile telephones. When I see people in the street speaking into mobile telephones, I do not react with horror like most people do. I am pleased that the British people are learning to do two things at once and increasing the gross national product.
Nevertheless, it would be idle to pretend that companies, such as Vodafone and Agent Orange or whatever it calls itself, are desperately short of money and are threatened by the smallest increase in the cost of wavelengths, especially as it may be 20 years before they pay it.
Given the priorities that the Labour Government have set in education, unemployment reduction and health, we should take more seriously the need to raise revenue from appropriate areas. Wavelengths are currently general public property, so if we are unable to raise revenue from that area, where should we do so?
The European directive seems to put up a barrier to that. It says:Member States may set fees at a level higher than cost recovery only where this is justified to ensure the optimal use of scarce resources (such as radio spectrum).All of us who have worked in business know that it does not happen like that. If there is a scarce resource, either the fees are set at the market level, or the attempt to raise fees to clear the market will not work. Each company will calculate the cost to it of entering this market. It will consider the fees that we set, and will take part in the auction, application or whatever procedure we require to the point where it makes sense in the market in marginal terms. When we say that we will use this measure only for the purpose of spectrum management when the European Union says that we should use it only for that purpose, we are either limiting ourselves to the extent that we will fail in spectrum management, or deluding ourselves and, in practice, we will have to put up prices to the market level to get an orderly market. Ministers should be willing to accept that and regard it as a natural part of Labour Government policy.
The waveband spectrum belongs to the British people, and they should get a fair price for it, which is what we would expect in any other commercial transaction not involving destitute groups. I reiterate that Vodafone and Orange are not destitute groups: they are happy to work in the market on this basis.
It could be argued that that creates an undesirable precedent, but there is already the precedent of the oil industry. When the oil industry started in the North sea, entrance costs were very low. Consequently, the early period of exploitation of North sea oil was characterised by extraordinarily high levels of profit. Successive Governments raised the level of revenue that they obtained from levies on North sea oil because they felt that it was reasonable for such a collective asset to produce a reasonable return for the British Government.
967 I believe that we should not be apologetic. We should accept that the Government would be right to charge what the wavebands are worth. I hope that in the years to come they will choose to do so.
§ Mr. Lawrie Quinn (Scarborough and Whitby)
I represent a rural and fishing constituency. The Bill commends itself to many people in my constituency, as it affects their life style and their safety. They will be staggered that the party that they formerly supported has turned its face against the provision in its manifesto to widen the management of radio spectrum. I am fairly firm on this point, because the effectiveness of the police force in North Yorkshire suffered as a consequence of the narrowing and so-called freeing up that the right hon. Member for Wokingham (Mr. Redwood) instigated when he had his time at the Department of Trade and Industry. The Leader of the Opposition represents a constituency in North Yorkshire, so he knows what happened, even if the right hon. Member for Wokingham does not.
I have talked to policemen on the beat in the streets of Scarborough, Whitby and in the vast rural areas. Police constables often carry their own Vodafone mobile phones in their pockets, because as a consequence of the measures that were instigated by the previous Government, the radio system used by the North Yorkshire police force is outdated and ineffective, and about 40 per cent. of my constituency is a radio-free zone. That would probably commend itself to some of my colleagues on the Front Bench, particularly if it involved receiving radio signals through pagers or through radio telephones.
Like other hon. Members, I procured a digital telephone expecting to receive 95 per cent. coverage in my area, but when I am on my patch I have difficulty receiving appropriate communications. I am no different from the vast majority of people who live in those rural areas and work in those fishing communities. My constituents believe that this measure will afford them opportunities to get better access to communications.
I hope that the right hon. Member for Wokingham will explain later why he set his face so firmly against the previous Government's clear manifesto commitment. It was offered to my constituents as a fairly significant plank of their policy that affected people's life styles and safety.
I shall never forget the story told to me by a farmer in one of the dales, who had had an accident. He was in his tractor, on his own, and had he not been able to use a mobile telephone to gain access to the emergency services—which, incidentally, took more than 40 minutes to reach him—he probably would have lost his life. I believe that the Bill offers the possibility of innovation on the part of the industry, and thus offers life-saving measures to many of my constituents.
I ask the Minister to give serious consideration to a point that was made by the hon. Member for South Dorset (Mr. Bruce) about the fishing industry. Unlike some 968 earlier speakers who may have found reasons for hilarity in that industry, I firmly believe that it is important for us to review the licensing charges presented to fishermen. I can confirm that they tend to use mobile phones more often than radios to telephone their homes, for instance, and that they use their radios only in emergencies—in circumstances of life and death. I hope that we will give due consideration to that in Committee.
As for the rural community, I understand from the research that I undertook in preparation for my speech that the National Farmers Union was one of the organisations that were consulted about the Bill. I believe that the NFU speaks for the agricultural community in supporting the Bill—and that is why I think that it was right that the previous Government made a commitment to the rural communities in their manifesto, saying that they would ensure that communications would be opened up for them.
Often, the size of the market is the reason why rural communities do not have access to the telecommunications market in the more restricted areas in which they live. I certainly believe in the idea of community, and I know that my constituents do. I believe that measures that will allow small-scale radio operators to enter the market for the first time, and to afford rural communities life-and-death safety procedures, will be beneficial.
Before I became a Member of Parliament, I was a civil engineer. I am a chartered civil engineer. Unlike some earlier speakers, I am not particularly expert in any electrical or even mechanical procedures, but I am a user: I have had to use the devices that we are discussing when doing my job out in the construction industry. I see tremendous advantages for the public utilities—the gas, electricity and water companies—and, indeed, for their customers. They will have access to services when there is an emergency, and that will have a direct result on life styles.
Let me emphasise a point that has come across in the debate. I believe that I was elected, rather than the last Conservative Member of Parliament for Scarborough, because I presented a programme that tried to solve problems rather than making larger problems. I believe that I was elected because I represented a party that spoke up for the whole British community, not just for sectional interests. I also believe that we now have a Government who try to represent all the British people, and all the people in my constituency of Scarborough and Whitby. The Bill was ready to be debated—thanks, ironically, to the work of the previous Government—but the fact that it has been presented says loud and clear to my constituents that the new Government are serious about benefiting their life styles.
Unlike Conservative Members, I believe that there is a possibility of our bringing real advantage and benefit to the whole British community, not just to sectional interests. I believe that the Bill firmly shows that the Labour party speaks for the whole of that community, not just for the narrow, sectional, urban and suburban interests that we heard represented earlier this evening.
§ Mr. Nigel Beard (Bexleyheath and Crayford)
The Bill exemplifies how fast technological change has been taking place, and the speed with which it has been absorbed into everyday use in society. Looking at the statistics involved in radiocommunication, anyone would think that, with 100 billion cycles per second to allocate, the radio spectrum could be treated almost like air, free to everyone. Of course, it is not: not all parts of the spectrum can be used for all purposes. When there are more than 30 billion cycles per second, the spectrum cannot be used much more than for transmissions from the couch for the television, and the majority of users—or, at least, significant users—use less than that.
Equally, the lower-range frequencies will spread all over Europe and, indeed, the world. They are also in need of regulation, because there will be interference. Then there is the fixed use of radio astronomy, which has already been mentioned. Radio astronomers cannot pick the spectrum in which a particular star will radiate, and we would not want the local taxi service to blot out the latest development in cosmology. Those are all good reasons why the frequencies should be well regulated.
The allocation of frequencies is therefore far more complicated than it appears at first sight. That was recognised in the Wireless Telegraphy Acts 1904 and 1949, and in the provision of the Radiocommunications Agency to regulate such matters. Since then, however, there has been a huge increase in the number of radio devices. I am not thinking just of the communications devices of which we all know; as well as mobile telephones, there are devices connected with taxis and television. Radio communciations has had a huge impact on the public services, and the speed with which they can reach the sites of accidents and emergencies where police, ambulances or the fire brigade are called. Without regulation, some of the spectrum would be overcrowded and one user would interfere with another. Sometimes the effect would be trivial, but potentially it could be tragic.
The original concept of allocation reflected the relative freedom that appeared to be there in the spectrum. It was a standing charge for anyone who wanted a licence, and there was therefore no incentive to economise on the way in which the licence was operated, and the way in which bands could be used—pretty liberally. There was no reason why they should not have been given that apparent freedom. The huge increase in the use of devices needing radio frequencies, however, has changed all that, and the change is now widely recognised. It has been widely recognised in the almost unanimous approval of this measure in the consultation that took place; it was even recognised by the previous Government, who did not always recognise wisdom when it was in front of them; and users generally will support the measure and consider it necessary.
The Bill will not be an impediment to those who operate now. The clauses make it clear that most current users will experience reduced charges, and that to others the increase will be hardly noticeable. It has been quoted as 20p per taxi per week, and 15p per mobile phone per week. Hardly anyone will notice such an increase, and along with the changes will come greater security for people using such devices.
This is not a revenue-raising Bill, but an enabling measure. The intention is to promote rational and efficient use of radio spectrum. We can thereby expect a 970 burgeoning of the jobs that are associated with radio-based industries. It is estimated that 400,000 jobs are already associated with those industries and that that will expand by 1,000 a week.
There have been times when technological development has been frustrated because the law, social circumstances or administration frustrated it. They put too tight a rein around the development. The Bill is intended to avoid that. It is intended to give the tremendous drive for technological development in this sector an open space that is properly regulated and governed and in which boundaries are set and people can compete in a civilised way.
The Bill is worthy of support on all those counts and everyone who has considered it and the situation it represents appears to support it. However, it also exemplifies the way in which a democratic Government who are in tune with the times and determined to modernise can bring this country up to date and allow conditions for technological innovation to flourish.
§ Mr. Michael Fallon (Sevenoaks)
I congratulate all hon. Members who have contributed to the debate, whether voluntarily or not. In particular, I pay tribute to my hon. Friends the Members for South Dorset (Mr. Bruce) and for South Cambridgeshire (Mr. Lansley) for their contributions. I also welcome the contribution by the hon. Member for South-East Cornwall (Mr. Breed) and look forward to exploring with him some of the issues to which he has rightly drawn attention—in particular, the failure of clause 2 to recognise consumer interests adequately.
We have had a useful debate. The Bill has become clearer and clearer as the evening has worn on. Conservative Members accept the principle that the spectrum should be managed properly and in such a way as to encourage the development of new services. That is what we did successfully in government. That is what my right hon. Friend the Member for Wokingham (Mr. Redwood) did when he was a Minister in the Department. If there is a problem of crowding on the spectrum, it is a problem of success, which was created by the last Conservative Government.
We do not accept the Bill, partly because it is poorly drafted and partly because it gives the Secretary of State significant powers over one of our most successful industries. It taxes those industries arbitrarily and in an indiscriminate way, and it leaves unclear the whole question of the various taxing mechanisms—the so-called administrative pricing under clause 2 and the use of auctions under clause 3.
I have said that the industry is going to be treated unfairly and in an unworkable way. There is no better illustration of that than the Bill's complete failure to address the problem of international satellite operators, who will not pay United Kingdom spectrum charges, who do not pay UK company taxes and who are outside UK telecommunications regulations. The Minister will be hard pressed to explain why our operators should be taxed twice over—first, under normal fiscal policy and again under his regime—and also regulated, and then be told that they are to share that access with operators who are untaxed and entirely unregulated.
Hon. Members on both sides of the House accept that the essential emergency services—not just gas, electricity and water, but national health service trusts, for 971 example—should be given access to the spectrum. We have received various assurances about the charging regime that might apply to them. The point is that that access must be guaranteed. Emergency services cannot be trifled with. They must have access to the amount of spectrum that they require. Warm words will not suffice and did not suffice in the other place. I give Ministers notice that in Committee we shall seek to place in the Bill guarantees in regard to access for our emergency services.
There are two principal pricing mechanisms in the Bill. The first, under clause 2, is ingeniously described as "administrative pricing". Conservative Members will savour that phrase constantly over the next few months. We call it taxation and it might have been to the Minister's or the parliamentary draftsman's credit if they had recognised taxation for what it is and been honest enough to spell it out as taxation. Clause 2 gives us serious problems, as their lordships in another place revealed.
In four specific areas, we are going to have to amend clause 2. First, the tests—the matters to which the Secretary of State must refer and shall now have regard: that amendment is useful—are deficient. As the hon. Member for South-East Cornwall has said, there is no reference to consumer interests. We shall want to put that right in Committee. I advise the Minister for Small Firms, Trade and Industry to improve on the defence offered by her noble Friend when resisting the amendment in Committee in another place. It is simply not good enough to say that writing consumer interests into the Bill will somehow duplicate the remit of the Office of Telecommunications. That will not wash. This is taxation and there should be some regard to the consumer interest.
There is no reference either to the need to promote stability of investment. That is important in this new market of growing businesses. We shall want to examine that, too, in Committee.
Our second concern with clause 2 is that the tests are not in any sense verifiable because the Secretary of State will be the sole arbiter. Unless companies go expensively to law, it will be the Secretary of State who decides exactly how much regard she pays to each of the matters listed in subsection (2). Conservative Members would like a better test—a more independent test—and a vehicle for that lies in the new advisory group that the Minister for Science, Energy and Industry has proposed.
Conservative Members welcome the proposal to form a spectrum management advisory group, but it should not be merely at the service of the Minister. The industry will rightly require the Minister's management of the spectrum and his justification for the additional taxation to be capable of being put to the test by the spectrum management advisory group. I give him notice that we shall insist that the Secretary of State must at least pay attention to an annual report by that group commenting on the success of the management of the spectrum and seeking to ensure that users' interests are fully taken into account before the additional taxation is levied on them. We shall table amendments in Committee along those lines. I am sure that the advisory group will want to monitor and advise on the United Kingdom's position on negotiations in Europe and internationally on spectrum management.
972 As I said during an intervention on the Minister our third concern about clause 2 relates to the addition of the two qualifying words in subsection (1). They were added almost by sleight of hand in another place at the same time as the phrase "have regard" was made mandatory rather than discretionary. By adding those words, the Secretary of State is giving herself complete scope to have regard to any other matters that are not specified in the subsection. That is the point I was trying to get over to the Minister of State. Because of the peculiar linguistic construction of clause 2(1), the Secretary of State will be able to prescribe sums that are greater than she needs for purposes that she is not prepared to specify. That is wrong and her hand ought to be tied much more tightly in the legislation. We shall address that in Committee.
The most serious defect of clause 2 is the general ability to raise money for unspecified purposes. From a close look at the clause as a whole, it seems that additional money could be raised for any purpose whatever, quite outside the remit of telecommunications. Presumably money could be raised to suit the broad economic interest or the interests of the Treasury rather than those of the industry that the Department and its Ministers are supposed to look after. If that is not true, perhaps the Minister will explain how he has already been able to present to the House a carefully detailed compliance cost assessment—perhaps it is only for illustration—showing exactly how the first £75 million of revenue will be raised.
My hon. Friends may be interested to know that the Minister intends to raise £42 million more from personal communication networks—I declare an interest as a user of an Orange telephone—£26 million more from cellular telephone operators, £7 million more from fixed link users and so on. Perhaps in her winding-up speech the Under-Secretary of State will tell us whether that compliance cost assessment still stands—it was compiled some time ago—and whether she still intends these quite dramatic increases to be phased over only three years. Is that still the Government's thinking?
We shall certainly seek to ensure some kind of cap on the Secretary of State's taxation power. Even without the deficiencies in clause 2 we would have sought that. It is not right that under the Bill, which I understand is not a money Bill, the Secretary of State will be allowed to impose unlimited future increases on the industry simply by statutory instrument.
§ Mr. John M. Taylor (Solihull)
I am following my hon. Friend's argument closely. Does he wish me to go all the way and conclude that because the DTI, which has always had a fairly tight budget, has been raided again and again by the Treasury, the Government are inventing some compensating form of income? Should I banish that thought? My hon. Friend is not asking me to believe that, is he?
§ Mr. Fallon
No, I am not. Perhaps the Department of Trade and Industry and the President of the Board of Trade are simply doing what they do best, which is to comply with any demand that is put upon them by the Treasury. Perhaps they have been told to raise a specific sum—who knows? The money raised by taxation from the new industries, which the Department ought to put back into them, will go who knows where. Perhaps it will be used to support the Mandelson dome at Greenwich. These are serious additional sums.
973 I shall now deal with clause 3 and the introduction of the principle of auctions or market pricing for new pieces of the spectrum. Some of the pitfalls of that approach have been well illustrated by hon. Members, and especially by my hon. Friend the Member for South Dorset, who has an international engagement this evening. However, I am sure that he will address those pitfalls in Committee.
Perhaps the Minister can finally give us some information. She has heard from her hon. Friends that auctions may not be best in all circumstances, or may not even be appropriate in most circumstances. Under what circumstances are auctions proposed and what is the timetable for raising the formidable sums that are described in the financial memorandum? Is there perhaps some hidden Treasury edict that £500 million or £1 billion must be raised by a particular year to bail out some emerging black hole in the Government's public expenditure plans?
§ Dr. Palmer
Does the Conservative party oppose all auctions? The hon. Gentleman has drawn attention to the fact that Labour might not wish to use them in all circumstances. Are there circumstances in which the hon. Gentleman would favour their use?
§ Mr. Fallon
We are opposed to auctions as described in the Bill for these purposes. As my right hon. Friend the Member for Wokingham said, we did not introduce the legislation. The Bill has been presented by the hon. Gentleman' s Government, and it is for them to defend the use of auctions and to tell the House—because these are serious sums of public money—exactly into which financial and budget years the sums raised will be allocated. Perhaps the Minister could sketch out her thinking about when the first auctions might take place and say whether any tranches of this £1.5 billion—a mouthwatering sum to the Treasury—have to be raised and handed over to the Treasury by the end of any particular year.
There is an area in which I can help the hon. Gentleman. We have always argued that as the industry has grown and more new companies have come into it, we should always consider the extent to which licences can be made more transferable and the whole process of assignment made easier. One of the purposes of our White Paper was precisely to encourage the Radiocommunications Agency to ensure an easier and swifter transfer of licences when, for example, one business was taken over by another or any part of a business was transferred to the ownership of another company. Perhaps the Minister could tell us, before we get to auctions, what the Radiocommunications Agency will be doing to ensure that the process of transferring licences will be made easier when businesses are bought and sold.
Finally, on the question of auctions, perhaps the Minister will tell us whether work is in hand in the Department, or perhaps being commissioned by the Radiocommunications Agency, to learn from some of the experiences of auctions to which a number of hon. Members have referred. There have been some bad experiences with auctions in this area and I wonder whether any research has been commissioned and whether the Government are now learning the lessons from experience elsewhere.
974 The Bill is not as it is described. It is not about the management of the spectrum. It is a rather old-fashioned Bill of the kind that you, Mr. Deputy Speaker, and I learned to recognise some time ago. This is a Bill about taxation. It is a Bill about arbitrary taxation, not least in the way in which clause 3 is drafted. The Bill is about unfair taxation, in the way that that taxation, left in the hands of the President of the Board of Trade, could operate. Saddest of all, it leaves the Department of Trade and Industry, once a great Department, simply as a bag carrier for the Treasury.
That may be a role that the President of the Board of Trade prefers—it is certainly the role that seems to come easiest to her—but it is not a role that best serves the revolution in communications businesses that we have seen. I can assure the Minister and you, Mr. Deputy Speaker, that we shall do everything possible in Committee to improve the Bill and to ensure that it better serves the industries that it now proposes to tax.
§ Mr. Tony Colman (Putney)
I understand that other hon. Members, certainly on the Government Benches, wish to discuss this important Bill further. One reason why I wish to speak is because of the importance of radio to the UK economy. It contributed some £13 billion to our gross domestic product in 1994, and more than 400,000 jobs. Those jobs have been growing at the rate of 1,000 a week and the contribution to the economy at the rate of £1 billion a year.
The hon. Member for Sevenoaks (Mr. Fallon) made an interesting speech. I was not in the Chamber earlier, but I watched the debate with interest. The right hon. Member for Wokingham (Mr. Redwood) made an extraordinary contribution. It was one of the most extraordinary outbursts that I have heard in my short time in the House from an Opposition Front-Bench spokesman. He made an extraordinary attack which had nothing to do with the Bill but, as another hon. Member said, everything to do with his own rather extraordinary state in the Commons. Perhaps we should draw a veil over that. However, I commend the hon. Member for Sevenoaks for his suggestions and his apparent general support for the Bill.
That support is shared by the Federation of Communication Services, the trade body that covers those organisations affected by the Bill. There is also support from the four major mobile phone companies—Orange, Vodafone, Cellnet and Mercury. They have had every opportunity to suggest changes to the Bill, but they have not done so and we have seen general support for the Bill.
What has been requested is more consultation. I was pleased to hear my hon. Friend the Minister talk about the setting up of the spectrum management advisory group, adding to the consultation which is already included in clause 6. As my hon. Friend said, that clause refers to a range of consultations that will have to take place under the legislation, on top of which will be this important advisory group, giving impartial advice on strategy, allocations of the spectrum and policy. I welcome that as a way forward and a fulfilment of the new Government's pledge to listen to business and to all the interests affected by legislation.
The hon. Member for South Dorset (Mr. Bruce), who I understand is absent pursuing matters outside the House, made an interesting speech. In particular, he commended 975 the setting up of the spectrum management advisory group. He suggested that it was important that independent people should be appointed to that group. In winding up, I hope that the Minister will support that. It should not be made up simply of the crowd currently involved, but should comprise potential newcomers, those interested in this huge new industry that will be so important to Britain. In particular, the hon. Gentleman suggested that it should comprise the new entries, the people who at the moment are planning for their future.
If it does not make the hon. Gentleman blush on reading this in Hansard tomorrow, I congratulate him on his excellent contribution, which showed a more significant and analytical approach than that of the right hon. Member for Wokingham.
I also strongly support the views of my hon. Friend the Member for Ilford, North (Ms Perham). In particular, I share her concerns for the taxi industry. She may feel that that industry has a tremendous dominance in north Ilford, but I can assure her that her concerns are shared certainly in Putney and, I think, in many other areas of London and in many other conurbations in Britain.
It is important that the way in which we go forward on the matter of the auction should not militate against smaller industries and businesses. I hope that when my hon. Friend the Minister for Small Firms, Trade and Industry replies, she will take account of the small taxi operator. I understand that already they can pay up to 30 times more than the major telecommunication operations, and that should not be so.
I also support other hon. Members' concerns for the fishing industry. A cousin of mine fishes for crab and lobster in the North sea. His boat is at Sheringham and his only means of communication is his mobile phone. I have previously told the House that I come from Norfolk and I am proud of it, and the fishermen of the North sea are important to the local communities. Like the taxi drivers, they should not be priced out of the market by this legislation. That is an extremely important part of the Bill.
The concessionary fees arrangement is important to our future. Services which at the moment receive concessionary fee arrangements, such as the ambulance services, are crucial to the delivery of health care. I have already mentioned the fishermen of the North sea and it is crucial that the lifeboat service, in its use of the wavelengths, is not priced out of the market. Again, I ask my hon. Friend to give assurances on that.
As a business man, I very much welcome the certainty provided by clause 4. It will provide enhanced security of tenure, which is desired by all business people in the telecommunications industry. I welcome also the reassurances given in this debate by my hon. Friend the Minister of State that there will be licence changes only on very rare occasions, such as when it is in the interests of national security or in compliance with Community obligations or international agreements to do so. There will be situations in which a person may wish to give up a licence, but the House should nevertheless applaud the enhanced security of tenure provided by clause 4.
I am extremely pleased that in clause 5 we are considering how grants might promote efficient spectrum management. My hon. Friend the Member for East Ham 976 (Mr. Timms) mentioned the need to look after the Community Media Association, which is very concerned to ensure that future spectrum use does not exclude community radio and community spectrum use. I should very much like community groups in my own constituency to be able to approach the Secretary of State under clause 5 for grants to develop facilities.
Clause 6 deals with consultation, which I have already dealt with at length. I should like, however, to reiterate the need to take account of consumer interest—which was mentioned by my hon. Friend the Member for East Ham and by the hon. Member for Sevenoaks and is a matter of concern for hon. Members on both sides of the House. Assurances were given in another place that consumer interests were covered by the Telecommunications Act 1984. However, I ask the Minister to reassure the House that pledges to consider consumers' interests will be copper-bottomed.
The Bill not only shows the way for the future but it anticipates it. The Bill will promote the efficient use and management of the spectrum. The hon. Member for Sevenoaks said that the Bill is all about money, but I do not believe that that is so. It is about fairness and about providing a way forward that will make sense to taxi drivers in Ilford and to fishermen in the North sea.
The Bill is also about ensuring that the big boys pay their proper part of the charges. As I said, it is very interesting that, during the debate on the Bill in another place, the big operators did not say that they do not support it. The Bill offers charge reductions of up to 50 per cent. for groups that require our support. I therefore support the Bill.
§ Mr. Brian Jenkins (Tamworth)
I was struck by what my hon. Friend the Member for Putney (Mr. Colman) said about local radio. I am not sure whether the Minister realises it, but I have a local radio station in my constituency. Perhaps I should say that for four months it was a local station that operated four restricted service licences. Then came the point at which the operators had to apply for a licence. As soon as they reached that stage, in moved the big boys. The station will now be local only in name.
Unfortunately, the telecommunications industry is all about the big boys, because the little boys are swept aside. We must remember that the industry is all about big firms that have the money. What worries me and many other people in the United Kingdom is that we have reached a situation in which not monopolies, but oligarchies, prevail. Individual firms can come together and collude, which leads to fewer firms and creates more problems for us to contain. I am therefore pleased to speak in the debate on the Second Reading of the Bill, which examines the cost-based fees that distort the market, encouraging the hoarding that is so unfair to small businesses.
My hon. Friend the Minister for Small Firms, Trade and Industry is fully aware of the current situation because she has taken the opportunity to visit my constituency. I am very grateful for that visit, during which she made a tremendous impression on my local chamber of commerce. She is a warm person and all hon. Members know how committed she is to her job, in which she has done tremendously well. She has come to the fore and made such a good impression that, for the first time, members of my local chamber of commerce believe that they have a Government who are listening to them.
977 Let us ensure that the consultation is taken seriously. It will be no good listening and not acting. Ministers are now going back to the firms and companies that they have already consulted to say, "We listened to you the first time round; now will you explain what you meant, because we are not quite sure if we are doing what you want us to do. Do we have it right?"
I represent a town that was built on small firms, and we prided ourselves on our resolve that large companies would not move into our area. We believe that we must allow our little companies an opportunity to show their entrepreneurial skill and to develop. They have grown from small to medium companies. The Bill will help in the objective of allowing small companies that are disadvantaged because of a lack of economies of scale to prove themselves. Large firms currently enjoy economies of scale which mean that they can sweep aside the competition, allowing no development opportunities for small firms.
Last night, with several other hon. Members, I attended a meeting at which the Office of Telecommunications regulator spoke about the competition Bill and about the future of the telecommunications industry. He said that neither he nor anyone else in the industry knew where the industry was going. Although they had an idea of where they are headed, they cannot be sure because of the tremendous speed of development in the telecommunications industry. Although the Bill deals with what we think will be the future, we had better plan on revisiting the issue in another three to five years. Technological advances in the industry are so great that channels in the spectrum will soon be condensed.
We must be very careful not to fall into old traps. I hope that another hon. Member will help me out, because I cannot remember the name of a company that submitted a bid for a railway franchise to move freight. About a year to 18 months later—almost overnight—those who won the franchise sold their assets and became millionaires.
I know that my hon. Friend the Minister for Science, Energy and Industry will be very careful in future auctions to ensure, first, that companies do not overextend themselves. However, I do not believe that British firms are so stupid as to overextend themselves. I think that they will offer a realistic price and avoid the trap mentioned by Opposition Members. The hon. Member for Sevenoaks (Mr. Fallon) told the House that British firms are so stupid that they will make bids that are so high that they will not be able to pay the licence fee or operate the franchise. I have no doubt that the business skills of those companies are quite acute. I have seen them operating, and they are very good. My great concern is that, if they are not careful, the Minister and his team may not see the collusion that can occur among bidders in the market and that British taxpayers may not get the best deal.
I can mention many people who have an interest in telecommunications matters—I have a list of some of them. As hon. Members will know, many people have cable in their homes., but companies are developing radio-controlled mobile telephones that can be switched from the car to the house. So, Mr. R. Longstaff of Shelton will hope that the Minister will look after his interests. Mr. D. Longwell will take an acute interest in the matter. Mr. A. P. Longworth, Mr. D. Lonsdale, Mr. F. G. Looker and Mr. G. Loomes will all be interested.
§ Mr. John M. Taylor
On a point of order, Mr. Deputy Speaker. We all know that there are necessary 978 conventions that make the House work. My hon. Friend the Member for Sevenoaks (Mr. Fallon) rose in good faith to wind up on behalf of the Opposition. Other hon. Members have since come into the Chamber, who have not been privy to the debate, and are now clearly filibustering, to the point of reading out lists of names from telephone directories. That may be entertaining, but it is not the way to run the House of Commons. The debate is running wrongly now and we look to your authority to ensure that it is properly wound up.
§ Mr. Deputy Speaker
It is not for Opposition Members to dictate the course of the debate. The debate can go on until 10 o'clock and hon. Members will be allowed to make their contributions in the normal way.
§ Mr. Taylor
Further to that point of order, Mr. Deputy Speaker. I intended no disrespect to you, as you know. It is not for me to presume to advise how the debate should be run, but I am aware of the conventions. My hon. Friend the Member for Sevenoaks rose in good faith to wind up and we are now hearing contributions from people who did not even hear what he had to say.
§ Mr. Deputy Speaker
I have dealt with that point of order already. Everything has been done as it should have been done, even if all the conventions have not perhaps been observed as they normally are.
§ Mr. Jenkins
Thank you, Mr. Deputy Speaker. For the benefit of the hon. Member for Solihull (Mr. Taylor), I can confirm that I was here until just after 7 o'clock, when I had to leave. I watched the debate on the monitor while I was telephoning some people whom I had promised to telephone and I returned as soon as I could. I am sorry if the hon. Gentleman felt that I missed part of the debate—
§ Mr. Patrick McLoughlin (West Derbyshire)
On a point of order, Mr. Deputy Speaker. It is obvious what the Government are doing. They are so embarrassed by what will be discussed in the Adjournment debate that they do not wish it to start early. That is an abuse of the Chamber and of the parliamentary process and it should be on the record.
§ Mr. Jenkins
The individuals I have mentioned have an interest in the Bill, because it involves their future. I am sure that the Government will safeguard their future. At the moment, they may not feel that they are part and parcel of the industry, but they are. The industry is coming their way fast.
Today we have certain technology and techniques, but in the future we will need to be quicker and more flexible to ensure that the appropriate instruments are put in place. I want a Government who are prepared to listen and act fast. If we do not act fast, we will lose our position. Britain is now the number one country in Europe for technology. Americans say that our technology is moving so fast that they come here to see how we operate and to take ideas back to America. We do not want to lose that position. We want to ensure that our industry is given the flexibility and the right to expand and develop.
979 I do not want a small oligopoly to determine the pace at which the industry moves. I know that my hon. Friend the Minister will watch carefully the allocation of licences and the use of the spectrum. He has said that spectrum pricing is driven by the spectrum management and is not revenue raising. The allocation will raise money, but that will be for the management of the spectrum. We must ensure that our universities, which are at the cutting edge of technology, are given the necessary funding to carry out the research and development that will allow us to maintain our position as the forerunner in the use of the spectrum.
As my hon. Friend the Member for Putney said, small firms, especially local radio stations, should be given grants. We can raise prices to ensure that some of the spectrum is handed over by the Ministry of Defence, but we must be aware—as I am sure all Labour Members are—that that will create a marketplace. We will create an asset that can be sold, but we must be sure that we can control the process. If company A makes a legitimate bid for air slots, how can we ensure that it does not turn around and sell those slots to company B in the future? Company B could buy up sections of the spectrum and we would end up with a monopoly. What safeguards will the Minister put in place to ensure that that does not happen in Britain today? We know that the dead hand of monopoly has stifled British industry time and again. That is why we believe that the cutting edge of competition is vital to our industry and we must ensure that small firms are not squeezed out.
§ Mr. Deputy Speaker (Mr. Michael J. Martin)
Order. Perhaps the hon. Gentleman should face, the Chair and address his remarks to the Chair.
§ Mr. Jenkins
I will address the Chair, Mr. Deputy Speaker.
It causes me some concern that licences are allocated annually. We know that we face a difficult situation, because people will not make large investments unless they have some security of tenure. However, security of tenure should not turn into a licence to print money. We should be able to take action against firms that do not safeguard the interests of the British people and foreclose them. We should ensure that we are able to compensate firms, if necessary, and put their share back on to the marketplace to ensure competition. The auctions should be run properly and the licences allocated to the right people. We must ensure at the same time that the Government are in control and can ensure that competition remains alive and the industry thrives.
I am glad to see that no new tax has been put on the mobile phone. What has not been mentioned is the cost of mobile phones today. Competition is supposed to drive prices down, but it sometimes seems that the mobile phone companies have a comfortable gentlemen's agreement between them. We do not always ensure that the companies use the airways to the best advantage.
When I travel round my constituency, I see not one mobile phone mast but two, three or four, and I am sure that other hon. Members do too. Will the Minister consider creating a national grid for those masts? The duplication must be terribly costly and that cost must be 980 borne by the consumer, you and me, Mr. Deputy Speaker—well, it would be if I used my mobile phone, but I leave it switched off in my bag so that no one can get to me. As the Government, we must not be prepared to leave everything to the market.
§ Dr. Ian Gibson (Norwich, North)
Would my hon. Friend care to comment on the fact that schools and other organisations are bribed to put masts, those monstrosities, on top of their buildings? Does he know of any similar examples in his constituency? I could relate some stories.
§ Mr. Jenkins
My hon. Friend is absolutely correct. One of the amazing things that caught us out totally was the fact that when an application to erect a mast is made, the local authority has just 28 days to raise objections. If it does not, it is deemed to have agreed to the application. One mast was erected alongside a person's house. He sued the local authority for negligence because it failed to put in an objection.
The system has caused chaos. We have had to plead to move masts. The companies act in such a manner that we get the impression that they have a God-given right to stick a mast wherever they want. They are all over the place.
§ Dr. Gibson
Can my hon. Friend tell me whether there are any health hazards associated with those masts? Such hazards have been documented in Australia and elsewhere and masts are banned in certain states of America.
§ Mr. Jenkins
I do not purport to be an expert on the use of high-frequency radio waves, but everyone is now aware of the medical advice not to carry the mobile in the top left-hand pocket because it discolours certain parts of the body. We are also told that if we keep it to the ear for too long, the radio waves start cooking the brain. I do not know whether that is true, but I have certainly seen many people walking around with them held to their ears—some people in the House have obviously held them there for too long.
With any new technology we have problems. The masts can be quite low, so high-frequency radio waves can bombard certain people. I would not wish, however, to start a scare about houses near such masts, not least because people whose houses are under electricity power cables cannot sell them because others do not want to live there. I would not wish to suggest that there is any physical risk to health from the radio masts—I will leave that to be drawn from evidence supplied at a later date. The phones worry me, however, which is why I carry mine in a bag and not in my pocket.
If no new tax is to be imposed on mobile phones, who will suffer under the Bill? It is estimated that more than 80 per cent. of users will pay no more in charges. In fact, some will pay less than they do now. Some small firms will pay less, so they will be at an advantage. Large firms, which enjoy tremendous advantages from economies of scale, pay so much less per unit cost that they, too, have a tremendous built-in advantage.
It would be good if we could help the small firms. I can assure the Minister that every taxi driver in my town will thank me if the bill for his radio is cut. When taxi drivers start thanking us, they tell the public. If they tell the public, they are telling my voters. The more they tell 981 them what a good bloke I am, the more I like it. Truth will out, as they say, but I need that support. If, however, we get it wrong and they start saying what a rotten lot we are, I will be back in here to say to the Minister, "Look, you'd better get this right, I have got problems because my taxi drivers out there are against me."
There have been great developments in radio use and we will witness a tremendous extension of that technology. I want to ensure that the House is kept fully aware of all those developments. I know that that can be done via the Select Committee procedure, but hon. Members like me are getting a little bit old in the tooth now. In some instances we have let technology pass us by. To be honest, we need more information if we are to legislate for this specific market.
I now have a machine that I can plug into my laptop which, at the press of a button, transmits radio waves. Via my laptop and printer I can obtain a wiring diagram for a piece of equipment. Just 10 years ago that was impossible; in my father's time that would have been thought science fiction. The pace we are moving at is so fast that, as I have said for years, soon we will be able to walk about with a small device, point it upwards and pick up a transmission from a satellite or a mainframe computer. We will be able to give instructions to our boxes and get answers back to any question.
Even the House of Commons Library has a tremendous amount of information on disk and the retrieval rate is rapid. The information age is here. The one thing I know about business and life is that information is power. As a country, we are at the leading edge: so much power at our fingertips will put us at a great advantage. That is why the Government, to whom I am fully committed, will put a computer in every school—a modern, up-to-date computer linked to the internet so that our children can see today what tomorrow will be like. When many of us were at school, computers did not exist—in fact, some probably used the old slate and chalk, so we can see how fast things have changed during our lifetime. We should be fully aware of the importance of this Bill.
It says somewhere in the documentation that, after three years, the higher fees for taxi drivers may mean paying less than 20p extra per week. Most taxi drivers will wear that—they will not have a problem with it. The Government say that there are no current plans to apply administrative pricing to other services without consultation. We all know that if we ask people outside whether they want a price increase, not many will raise their hand. Just as no one votes for a tax increase, no one votes for a price increase.
We have to ensure, therefore, that we get value for money. The firms have been consulted and they can see the possible advantage; once we give them that advantage, they must not be able to rip us off. The valuable asset we have given them must be monitored closely. I know that my hon. Friend the Minister will say that that point has been taken on board, but the framework may not be fully in place. Either the regulator's role in pricing and monitoring must be expanded or—as I would prefer—the House, through its Committees, should be able to monitor the situation. We should be able to question those responsible regularly so as to monitor our rate of progress as a country. That rate of progress is our future.
The industry is currently very competitive and can continue to be so. A regulatory framework is instrumental to the growth of the telecommunications industry.
982 The third generation of mobile systems will deliver a wide range of innovative multimedia services and we will have a significant opportunity to build on the success of the second generation. The United Kingdom must continue to be at the forefront of that development and I want an assurance that, as a Government, we will do everything in our power to afford our industry every technical support.
§ Mr. Jenkins
I could not agree more and I was leading up to that very point—it is not about what we have, but about the future. If we are to develop centres of excellence, who is to fund them and who will fund research and development? If it is left to individual firms, can they afford to do it? Or is the Minister prepared to feed money, through the fee system, to the cutting edge so that we remain at the forefront of technology?
The fees charged on public broadcasters' transmissions will reflect public service obligations. I realise that television licences are not covered by the Bill, but our public service television is rated as being among the best, if not the best, in the world. I want guarantees that everything will be done to ensure that the public service providers are not starved of resources or priced out of the market, but are given resources to ensure that we remain at the forefront.
The Bill opens up the possibility of offering incentives to broadcasters to switch to digital. It has already been pointed out that the people most likely to switch to digital are those who already have cable or satellite. I do not have enough time to watch television at home; I seem to spend my time either here or out in my constituency. It is therefore not worth my while to buy a digital set. Indeed, my sets are so old that they switched from 425 to 625 not so long ago. I can only hope that I will still be able to receive signals for my sets in 10 years' time.
Be that as it may, the digital revolution to come is so great and so magical that it is essential to keep our eye on the situation and to ensure that progress is made. It will become possible to broadcast to very small numbers of viewers in the form of highly localised or specialised transmissions. In 10 years' time, the British Medical Association will be able to transmit at a given time to every doctor in the country. Material will be flashed to them, perhaps overnight, and recorded ready for viewing the next morning. Such will be the sophistication of these systems that they will be able to target very small numbers of subscribers.
§ Mr. David Taylor (North-West Leicestershire)
Does my hon. Friend agree that the welcome technological advances that he is painting so colourfully are fine in their place, but that there is also much that the public service broadcasters can do to harness the new technology in the areas we inhabit? I refer to the no-man's land between the west midlands and the east midlands, which experiences real problems receiving television signals carrying the stories that people want to know about their localities. We seem to get information about the west 983 midlands—Walsall, Birmingham and so on—yet Leicestershire and the counties to the east, for which the broadcasting media are based in Nottingham, cannot for topological reasons receive adequate broadcasting of a high quality—
§ Mr. Jenkins
I can understand my hon. Friend's going on for so long; he feels passionately about the services in his area. I too feel passionate about the fact that I receive television signals from Nottingham and the west midlands even though I do not live there. Unfortunately, the cameras are not sent far outside Nottingham and the west midlands—they cover local stories, but not stories for my area.
The coming revolution presents the opportunity of much more localised services—and better services. The price of cameras and recording equipment has tumbled in the past decade. One reporter can now do the work that used to be performed by a crew of five. When I was elected to the House, a photographer took some pictures of me, put them into his computer, pressed a few keys, plugged in his modem, and the picture ended up on the editor's desk two minutes after it had been taken. We all remember how it used to be done: we took the pictures down to the chemist to have them developed and they were sent back to us through the post. Imagine how rapidly news can change if it can be recorded so quickly. Even the London Evening Standard, which comes out three or four times a day, would be slow compared with that technology. That is what I am saying.
The speed of technological change is such that we must be sure that we can cope with it. I am not sure whether, in essence, the Bill copes with it. The Minister must do more work in Committee to ensure that he has the power to cope with it, because tremendous changes are in the pipeline.
We cannot allow someone to take a licence and then say that it will be their property for ever and a day. There must he some public accountability. There must be some service to our country. I shall look for that in the final detail.
The process of legislating on this subject will not end this year; it will carry on a bit longer. Every year, as technology changes, we shall find ourselves chasing the industry. I, as a member of the party in government, want not to chase the industry but to lead it. The Bill is a first-class attempt at putting the Government in the position of leading the industry—hand in glove with industry, not dominating it but consulting it, always looking after its interests because, in the long term, the interests of that industry are the same as those of our people. That is why we have a Government today who look after all our people, because our future, the Government's future and the industry's future are tied together.
I shall support the Bill; I am proud to do so.
§ Mr. Tony Clarke (Northampton, South)
I give my assurances to Conservative Members that I have no intention of using up parliamentary time. As a new 984 Member, I am not familiar with the filibustering and the various other procedures that it is suggested that hon. Members may wish to use to intervene and prolong the business of the House. My hon. Friend the Member for Tamworth (Mr. Jenkins) has already said many of the things that many of us would want to say, so you can be assured, Mr. Deputy Speaker, that my comments will be brief and to the point.
I came into the Chamber not necessarily wanting to speak but I was goaded into speaking by Conservative Members' over-concentration on the Bill's financial aspects—the revenue-raising powers. They concentrated on them so much that they increased the revenue each time that they spoke, and made ridiculous suggestions as to how such revenue would be spent, including ludicrous suggestions about money and revenue being focused on the millennium dome.
The only connection that I envisage between the millennium dome and the Bill is that when the dome is opened and thousands upon thousands of visitors turn up with their mobile phones, unless there is management of the spectrum—unless the Bill is allowed to succeed—the chaos that would ensue at Greenwich would probably bring even Greenwich mean time to a standstill because of our inability as a Government and as a nation to cope with the technology that confronts us and stands before us.
My main reason for speaking is to suggest to Conservative Members that this is more than a revenue-raising Bill. It is about the management of the spectrum. It is designed to ensure that revenue is available for research, and for expenditure that may be needed in relation to that growing technology and in relation to the various related works that need to be undertaken in the years ahead. Clause 5 will make it possible for the Government to provide financial support for the training of radio engineers in efficient spectrum management techniques—something that cannot and should not be afforded from present funds.
§ Mr. Lansley
Does not the hon. Gentleman seem to be implying that the revenue raised by administrative pricing, or taxation as it is rightly described, as my hon. Friend the Member for Sevenoaks (Mr. Fallon) said, will be spent on the purposes outlined in clause 5? Yet the Minister has said precisely the opposite. He said—I believe that I have it accurately—that there is no question of hypothecation, so the revenue goes to the Exchequer. It is general taxation and can be spent on everything and anything. My hon. Friend is right when he refers to things as widespread as the millennium dome.
§ Mr. Clarke
I am sure that there is no exclusive reason why the hon. Gentleman should suppose that all of the moneys raised will automatically go back into those aspects that I mentioned, but clause 5 clearly says thatThe Secretary of State maywish tomake grantsto ease and aid funding for training. If the Government are to do that, it would be sensible to ensure that revenue is available. If the hon. Gentleman suggests that that revenue should come from other sources and therefore that money should be taken away from other services, he should say so. If not, he must accept that clause 5 provides that, should grants be made available, that money could come from the revenue-raising powers. 985 My main reason for speaking was to say that, if money is to be made available, I hope that it goes into research to ease the public's concern about a wide range of issues related to the new technology. I had a strange week of visits in my constituency of Northampton, South. One day I visited a school that was fighting hard to stop a radio mast being erected in its playground. The local parents had mixed feelings about the benefits to the school in terms of the revenue that would be raised through rent from the radio company, but they also had concerns that were probably not fully warranted about how the mast could affect the health of their children playing in close proximity to it. On the Friday, I visited a school that was happy to have a mast on its site. Indeed, it was so happy that it was looking forward to having a second mast to raise more revenue so that it could take advantage of the new technologies that are upon us.
There was thus a certain confusion: should we or should we not; and what are the benefits and deficits of such technology? A huge job needs to be done to explain to the general public the benefits of the increase in radio and spectrum traffic. We need definitive research studies on the subject.
§ Mr. John Hayes (South Holland and The Deepings)
Could the hon. Gentleman enlighten us on what he thinks are the benefits of digital convergence in relation to education? He says that they should be explained to other people. Will he give us some clues?
§ Mr. Clarke
There are many benefits, but those expressed to me on my visits were, unfortunately, all financial. Due to the under-funding of education by the previous Government, schools need to raise revenue quickly to sustain their budgets.
Research needs to be carried out and the public should be informed about any possible health risks. If the studies show that there is none, the public should be told that they are safe. All that work must be funded, as must the training of radio engineers. I would feel uncomfortable if such a Bill suggested that all the work would be funded only from the existing budgetary provisions and if we did not provide for further funding.
I hope that, in replying to the debate, my hon. Friend the Minister will concentrate on issues other than simply the revenue-raising powers, which seem to be so important to Opposition Members. I hope that she will concentrate on issues which, I hope, will enable the Government to ensure that we face the increase in traffic and in the use of technology such as mobile phones in a way that is managed and acceptable to the nation.
§ 9.2 pm
§ Mr. Kerry Pollard (St. Albans)
This is my maiden speech. I did not intend to make my maiden speech on this issue because I know as much about wireless telegraphy as the seat that I have been sitting on for the past three and a half hours. I rise because I have been enlivened by tonight's debate. I have learnt a tremendous amount and thought that I may be able to add a little to the debate.
My constituency of St. Albans is 20 miles north of London, according to my calculation. The Fees Office has a different perspective on it and says that it is 18 miles 986 from London. We are arguing over the last two miles and I am sure that, in due course, we shall reach a compromise—probably 19 miles.
St. Albans is rich in history. Archbishops of Canterbury—try saying that when you have had a couple of sherbets—are trained there. We are also unique in the world, in that we have had an Archbishop of Canterbury, we are training another one and we have provided the only English pope, Adrian IV.
The war of the roses, and the peasants' revolt led by Watt Tyler, took place in and around St. Albans. People were beheaded for standing up for the rights of working people. We also had the first English martyr, St. Alban, which is how our city got its name.
James Corbett has just written a book that chronicles the history. His brother is my hon. Friend the Member for Birmingham, Erdington (Mr. Corbett). I promised that I would mention James tonight. I was at the launch of his book last Saturday, when James, Robin and I signed books and he gave them out. He said that if I gave him a plug tonight, he would give me a free copy of the book for my Christmas present.
Previously, I worked as a director of a housing association that specialised in housing people with mental health problems. This is where wireless telegraphy comes in. In that profession, we relied heavily on communications, especially mobile phones. If one goes out visiting someone with a mental health problem, it is vital to be in contact with one's base, to be safe and secure, and it is vital to be able to communicate quickly with the emergency services—fire, police, ambulance and, most importantly, the crash mental health team, which often had to come out and look after our clients when they got into deep trouble.
I understand that I am obliged by protocol to praise my predecessor, who is a Member of the House still, the right hon. Member for Hitchin and Harpenden (Mr. Lilley). It was unkindly alleged that he had done a chicken run and moved from the seat that I now represent to another seat. I would not suggest that for one second. There is no doubt that if he had stayed, I would have beaten him, but that is by the bye. He moved to another seat.
I must say, to the right hon. Gentleman's credit, that on the two or three occasions that I went to see him at his surgeries, he was always courteous. He always sent me a Christmas card. I have 12 Christmas cards from Peter Lilley. They are not still on the mantelpiece, but I saved them because they are precious to me. He was kind, courteous and always gave a reasoned response if one wrote to him, whatever the issue was.
I am receiving a lot of letters about an issue in the right hon. Gentleman's constituency, concerning a motorway service station that is due to be built in Redbourn. I take great delight in telling people that it is not in my constituency and passing them on to the right hon. Gentleman. I have sent him 70 already, and as more come in, I will keep sending them to him.
I have a rather unusual first name—Kerry. It is an Irish name. I am very proud of it now, although when I was a lot younger, I had a little difficulty with it because, until I was about 12 years old, I regularly had to drop my trousers to show that I was a male. I was born a male, I am a male now, and I am going to stay a male until I die, unless of course the party decides that quotas mean that we might need to—but if we do, I might do the other thing.
987 According to an Irish translation that I have, the name Kerry means firm of purpose, generous and kind of spirit. I could not possibly say that I was all those things, but others might.
To return to the Bill, I am pleased to support it. Our Government are making steady progress in a way that is right for the country and right for the industry. I urge hon. Members to support the Bill.
§ 9.7 pm
§ Mr. John Healey (Wentworth)
I congratulate my hon. Friend the Member for St. Albans (Mr. Pollard) on an excellent and perhaps impromptu maiden speech. It is clear from his performance tonight that he will serve his St. Albans constituents with great distinction in the coming years. I congratulate him on the result in that constituency on 1 May. I am especially glad that he will be able to close his collection of Christmas cards from the right hon. Member for Hitchin and Harpenden (Mr. Lilley), and I wish him well in his negotiations with the Fees Office.
I hesitate to rise so soon after such a tour de force from my hon. Friend the Member for Tamworth (Mr. Jenkins), who gave us a tremendously wide-ranging and detailed analysis of the challenges confronting the radio communications industry, and a persuasive argument for the Bill. He also gave us an eclectic examination of the potential impact of the Bill.
My hon. Friend may claim to be long in the tooth and from the old school, but in the case that he put for the Bill this afternoon and this evening—I think that it was this afternoon and this evening—he was advocating in the strongest terms a measure that will serve the new generation, not just the old.
I, too, welcome the Bill. As we move into the next century, we simply cannot run our radiocommunications system with legislation that was passed in the first half of this century. The radio spectrum is a national asset and a communications resource whose time is still to come.
The Bill may appear obscure to some. On Second Reading on 5 June 1997 at column 714, in another place, the Minister described it as an "arid, arcane, technical" matter concerning management of the radio spectrum. People may wonder why radio occupies a prime place in the first legislative programme and the first Queen's Speech of the first Labour Government for almost 20 years. For most of us, radio is background noise while we are having a bath, a shower, or breakfast. To many, it may be a source of argument with the children as to whether to listen to Radio 1 or Radio 4, Radio 3 or Hallam FM. In my family, we often compromise on BBC Radio Sheffield.
This Bill occupies a prime place in the first Queen's Speech and the first legislative programme of the first Labour Government for nearly 20 years because radio is a key component of our communications infrastructure. It is a key factor in our communications future. As the importance of mobile communications increases, so does the importance of radio.
With the blurring of boundaries between telephony and computing, radio and the case for legislation such as this become even more important. In the end, radio is the only 988 medium capable of delivering real mobility. The radio spectrum will be the master route to the information super-highway and the information revolution. A modern economy depends on effective access to, and management of, its radio spectrum.
Research conducted by the Radiocommunications Agency states that 400,000 jobs in the United Kingdom currently depend directly on radio. That number is predicted to grow by 1,000 per week. Not enough of those jobs are to be found in the constituency that I represent in Rotherham and the Dearne: we could do with some new technology, modern industry and economic growth. The Radiocommunications Agency research also establishes that the industry contributes £13 billion per year to gross domestic product, and grows at a rate of £1 billion per year. The industry and the Bill are critical to the future of this country.
The radio spectrum is a finite resource facing growing demands. Government have a responsibility to act to ensure that the resource is managed properly. That is what the Bill sets out to do, and that is why it is so important and long overdue. The legislation is designed to dispel the spectre of spectrum shortages and to eliminate the crisis of spectrum congestion. It is designed to put the industry, which, if we are honest, has outgrown its legislation, on a modern footing.
That is why I welcome clause 1, which will allow us to move from an antiquated system of administrative charging based on the bureaucratic costs of raising the licences to one that will allow us to tailor charges to the pressures of spectrum management; to move to a system in which we can fit charges to spectrum demand, a system where we can use charges to deal with spectrum congestion.
Clause 2 concerns matters that the Secretary of State should take into account when she sets the fees within the new system. I shall return to clause 2 later.
I shall make a couple of points about the charging system. I welcome the commitment that fees will be no higher than necessary, for reasons of spectrum management. I welcome the fact that the best estimates available suggest that the extra charge will be no more than 20p per taxi per week, or 15p per mobile phone per week, or 1p per exchange line per week. The majority of people using the radio spectrum will, of course, pay less under the new regime. The new system will price business into the radio spectrum, not out of it.
The Bill will also provide security of tenure for users of the spectrum. Security of tenure is not legally, fully and properly founded at present. It is a welcome and refreshing change to see a Secretary of State willingly give up powers that she already has under existing legislation in order that those using the services within the system may be more secure. It is one of the most encouraging and strongest signs that we do indeed have a change of Government. We have a new Government and a new approach.
Clause 3 introduces the concept of auction. This part of the Bill could bring greater flexibility and greater financial returns to Government management of the radio spectrum. Auctions have important potential advantages, but, as the Government have made amply clear, they are not appropriate in all cases. They should not, as some fear and have argued, increase operators' costs excessively, because bidders will bid only what they think the value of the franchise to be.
989 There has been much argument today over the sums that this measure may raise, with some wild calculations from Opposition Members. This is an important potential source of revenue. We should not turn up our noses at it. That said, I welcome the assurances by Ministers that auctions will not be used for existing licensees to continue to provide existing services; that they will not be used for broadcasters who have already gone through an auction or competitive bidding process under the Broadcasting Act 1990 to provide the broadcasting services for which they are responsible. Auctions will not be used for small and medium businesses, such as the excellent Al taxi firm, which operates right across my constituency in Rotherham and the Dearne.
We will, however—this is the part of the Bill with real potential—be able to apply the auction process to new national and regional services. I hope that we are looking at and talking about actively considering third generation mobile telephony. There are the prospects of the universal mobile telecommunications service—UMTS. That is where the mobile telephone needs computer technology. That is where use is made of both terrestrial and satellite links. That is where the future of our communications industry lies. That is where also we have an obvious candidate for auction.
I recognise that the Government have given no commitments on that score so far. They are consulting on the possibility of applying auction to the development and I encourage Ministers in that process.
We should be aiming for a framework for radio spectrum use, as well as one for management, that is foresighted and flexible enough for future developments well into the next century. Through the Bill we aim for better commercial use of a national asset. We should aim also for provision for better cultural and social use of a national asset.
I return briefly to clause 2, which sets out the matters that the Secretary of State may have regard to in setting fees. These matters include availability, demand, promoting efficient use, economic benefits, innovation and competition. In addition to the list of matters that the Secretary of State may take into account, however, we should have social and cultural use.
§ Mr. Fallon
Inadvertently, I am sure, the hon. Gentleman has not noticed that the Secretary of State must have regard to the matters that are listed in clause 2. Is the hon. Gentleman proposing to volunteer to serve in Committee, which may be something that is volunteered on his behalf, and to move an amendment to include social and cultural use? How will he define the social and cultural matters to which he refers?
§ Mr. Healey
My reading of the Bill is rather different from that of Conservative Members. I read clause 2 as providing an enabling power for the Secretary of State to take the matters listed into account without placing an obligation on her to do so.
I am talking about voluntary sector organisations, which will be faced with difficulties. I have in mind organisations whose very mission in life is social inclusion and cultural diversity, which could be priced out of the market if they have to pay market rates. I urge the Government to consider that as they examine the Bill during its progress through the House.
§ Mr. Healey
If that be the case, I would add social and cultural diversity to the list of matters that the Secretary of State takes into account. I consider that my case has been made all the stronger.
§ Mr. Healey
No, I must press on.
Without the powers that are provided by the Bill we risk restricting the growth of some of the most important sectors of our economy. Without such powers, we risk depriving people throughout the country of some of the potential benefit of a new generation of communications technology.
§ Ms Joan Walley (Stoke-on-Trent, North)
I shall be brief. I wish merely to draw to the attention of Ministers and of the House generally my concerns about the implications of the Bill for the environment.
Excellent contributions to the debate have shown just how much United Kingdom industry can benefit from the Bill and how important it is that we keep abreast of new technology. The Minister of State has an onerous brief and a huge work load at the Department of Trade and Industry, and I have enormous respect for him. We need to keep abreast of new technology, and we will have opportunities for better management of the spectrum, but my plea to him is that we should also consider environmental concerns as the Bill goes through its various parliamentary stages. I understand that the DTI, like all other Government Departments, puts the environment at the heart of its proposals.
Will the Under-Secretary explain how planning legislation and planning controls will be strengthened in respect of any additional telecommunications masts that may be required? It is a matter of great concern to me that current planning legislation does not enable local communities to be properly consulted about where any additional telecommunications masts may be sited. Further advances in new technology, such as satellite communications, have enormous environmental implications. If we are to grasp the precautionary principle, the DTI should at least have regard to these most important environmental considerations.
I am grateful for the opportunity to make a small contribution to this important debate.
§ The Minister for Small Firms, Trade and Industry (Mrs. Barbara Roche)
We have had a wide-ranging and generally constructive debate. I thank all right hon. and hon. Members for having taken part in this important debate.
I am sad that the right hon. Member for Wokingham (Mr. Redwood) has not seen fit to be present for the conclusion of the debate, given that he opened for the Opposition. I wondered where he was, because I know 991 what it is like being in opposition. He recently explained to the Conservative party conference how Oppositions spend their time. He talked about ringing the office of the Minister for Competition and Consumer Affairs, my hon. Friend the Member for Edinburgh, South (Mr. Griffiths). He said:I rang his office the other day. Well, there's not much else to do in opposition, is there? I thought it was a wet Tuesday, so I'll ring Nigel Griffiths's office and ask what he's up to.As we speak, the right hon. Gentleman is probably using his phone, or his mobile phone, to ring my hon. Friend. It is a great pity that he cannot be with us now, but I am sure that he is with us in spirit.
I was also fascinated by the contribution of the hon. Member for Sevenoaks (Mr. Fallon). His speech was constructive in parts. He quite properly raised one or two issues. He made great play of the term "administrative pricing", as if it was an invention of the new Government. He had some time out of the House during the previous Parliament, so it may have escaped his attention, but I remind him that this term was used in the Conservative Government's 1996 White Paper.
The hon. Gentleman referred to auctions, and asked, "Isn't this a tremendously new thing? Why is it being introduced?" The document published by the previous Government in June 1996 called "Spectrum Management: into the 21st Century" says:Auctions are, in principle, the Government's preferred method of spectrum pricing.It would be good to have consistency from the hon. Gentleman and from the Conservative party.
Conservative Members also make great play of the implications for industry, and argue that this measure is terrible for industry. I remind them of what industry has said during the consultation process. Ionica says:Ionica welcomes the Government's proposals for the introduction of spectrum pricing, outlined both in this Consultative Document and in the Wireless Telegraphy Bill.Cable and Wireless says:
Cable and Wireless Communications supports the use of administrative pricing as a means of achieving a fairer and more rational basis for pricing spectrum that takes into account the value of the resource that is used and provides incentive for spectrum efficiency.We have also had comments from the Federation of Communication Services. Vodafone says that there is no new tax on mobile phones. What more reassurance does the hon. Gentleman want? I suggest to him that he and his right hon. Friend the Member for Wokingham would be better occupied not in telephoning the office of my hon. Friend—delighted though I am sure he is to have conversations with them—but in going out and talking to industry, because it is industry that will put them right.
§ Mr. Fallon
I am extremely grateful to the Minister, and I thank her for all her kind references to me. I hope that she was not attempting to mislead the House by 992 suggesting that the Federation of Communication Services whole-heartedly welcomed the Bill. The federation's document states:Neither the full impact of the legislation nor how the Government intends to use its new powers are clearly understood. There are many small and medium sized companies … who fear that their future access to spectrum may only be by an auction process. They believe this will jeopardise their businesses.One would be hard stretched to describe that as a welcome for the Bill.
§ Mrs. Roche
I hope to reassure the hon. Gentleman, but let me also remind him that the federation said:The concept of a spectrum pricing tool, available to support the implementation of a well-defined spectrum management strategy, is most welcome.We welcome the federation's comments, and its contribution to the debate.
I cannot emphasise too strongly that the Bill is all about ensuring the supply of the raw material on which one of the most successful and dynamic sectors of the economy relies. In today's debate, we have heard about the truly remarkable contribution that the radio industry makes to economic success, competitiveness and jobs; we have heard about the rapid and accelerating rate of progress in the century since radio began to be exploited. My hon. Friend the Member for Wentworth (Mr. Healey) made that point very strongly.
We have also discussed one of the latest examples—the next generation of mobile communications systems, known as "third generation", or the universal mobile telecommunications service. First generation analogue and second generation digital mobile telephone technology have brought the benefits of mobile communications to millions of business and domestic users.
The third generation now offers the exciting prospect of full interactive multimedia capabilities with high-speed mobile access to a wide range of entertainment and information services. They will include full mobile office services, home shopping, real-time video and the wealth of material on the internet, leading us, in part, to the information age and the information society that we all want to embrace. The hon. Member for South Dorset (Mr. Bruce)—who is a great expert, like my hon. Friend the Member for East Ham (Mr. Timms)—portrayed that new age very well.
The United Kingdom has been in the vanguard of the mobile communications revolution. We are now maintaining our position at the cutting edge of the communications revolution by becoming the first country in Europe to start the process of consulting on third generation licensing. It was a proud moment when, on behalf of the Government, I was able to begin that process.
Our aim is to provide licensing certainty for 1998–99. We are currently considering the responses to our consultative document "Multimedia Communications on the Move", which was issued on 31 July and sought comments by 17 October. I am delighted to tell the House that a number of useful comments have been received, which we will take fully into account in developing the next stages of the process. The Department will continue to consult the industry on the details as they are developed.
993 We note what was said about consultation. The hon. Member for Sevenoaks and others drew attention to the need for consultation for all in the industry. Clearly, Government and industry need to be in partnership to ensure that the United Kingdom's competitive edge is fully realised. Meanwhile, I am keen to promote debate. The responses—except where confidentiality was requested—will shortly be placed on the Radiocommunications Agency's internet site. I hope that that will reassure the hon. Member for South-East Cornwall (Mr. Breed), who raised questions about secrecy. The Radiocommunications Agency prides itself on being as open as possible, and we will seek to use new technology to further that openness.
Britain is a world leader in the use of radio, but maintaining that position and future success and progress depend critically on ensuring adequate supplies of radio spectrum. It is a finite resource, yet demand is increasing as new applications come on stream and existing services grow. Shortages and congestion are developing over time.
If spectrum cannot be made available to allow the speedy introduction of new radio-based services, the cost to the economy can be substantial. That was pointed out in some excellent speeches by my hon. Friends. It has been estimated, for example, that, in the United States, delays in allowing fully fledged competition in mobile telecommunications cost about $50 billion a year in lost consumer welfare.
Closer to home, consultants have calculated that a two-year delay in the introduction in the UK of personal communication network services, such as Orange and One-2-One, would have cost the economy £2.5 billion a year and more than 7,000 jobs. This new Government, with their commitment to our country's welfare, to British industry and to jobs and competitiveness, have no intention of allowing that to happen. We will make progress.
As has been pointed out, at the other end of the scale, a taxi driver denied access to mobile radio because an assignment cannot be found could face additional costs of several thousand pounds a year. Spectrum shortages are extremely costly for businesses of all sizes, from multinational telecommunication corporations to taxi drivers.
Spectrum management is key to making the most effective use of the finite spectrum resource and to reaping the full economic benefits from it. The Bill acts decisively to provide the modern spectrum management tools that we require, to make available the radio spectrum that businesses of all sizes need.
Concerns have been expressed about changes to licence fees. It is true that some fees will go up, but, under our proposals, fee increases will be focused on areas and services where spectrum congestion is worst.
§ Mr. Ian Bruce
I am grateful to the Minister for saying that she has some firm proposals about how licence fees will go up. Will she publish those before we get to the later stage of the Bill?
§ Mrs. Roche
As the hon. Gentleman knows, we are consulting hard. When we reach the later stages of the Bill, we will allow a full debate on that matter. Conservative Members will press us on it—rightly: it is their job to do so—and, under the normal procedure, we will make available all the details we can.
994 Concern has been expressed this evening about the impact on small business. I am grateful to my hon. Friends and to Conservative Members who have talked about small business. As I am sure hon. Members will appreciate, small and medium enterprises are dear to my heart. In an excellent and wide-ranging speech, my hon. Friend the Member for Tamworth (Mr. Jenkins) focused on small business and what that meant. The majority of small business users will pay no more than at present or they may pay less—some may pay nearly 50 per cent. less.
I assure hon. Members that fee increases will be no more than those necessary for spectrum management. That assurance is buttressed by clause 2. Hon. Members have made great play of the fact that that requires various factors to be taken into account in assessing fees. Like my hon. Friend the Minister of State, I assure the House that our aim is not to price businesses out of spectrum, but to price them into it by promoting greater spectrum efficiency, thereby making more spectrum available.
§ Mr. Fallon
The Minister will recall that I asked her—perhaps she is coming to it—whether the compliance cost assessment deposited with the Bill is still valid. She will read in that that an increase of more than 70 per cent is proposed for taxi firms in London, Birmingham and Manchester. How does that help a small business? The compliance cost assessment specifically refers to a taxi firm with only 10 mobiles.
§ Mrs. Roche
I am glad to hear about the hon. Gentleman's concern for small businesses. He will remember that the previous Government published an assessment. We shall publish an up-to-date one.
I assure the House that our aim is not to price businesses out of spectrum but to price them into it—that theme has been echoed by some of my hon. Friends. That will especially benefit small firms that currently have to be denied access to the spectrum they require. I also assure the House that, as my hon. Friend the Minister of State has said, fees under the new system will be fairer, and current distortions against small businesses will be removed. Users will no longer be charged so much more than large businesses for a given amount of spectrum.
The Bill will be good for business. Spectrum pricing will be used to promote greater efficiency in the way in which spectrum is used. In turn, that will provide the headroom that industry needs for future innovation and growth. Many hon. Members have spoken about innovation and creativity, and have dealt particularly with what new market entrants can offer.
The Bill will encourage innovation and creativity. The legislation is vital for the future prosperity of those industries and for our country. Under our proposals, the fee increases that radio users in congested areas face will in all probability be far outweighed by the economic benefits of making more spectrum available.
I am sorry that the right hon. Member for Wokingham is not in his place, because he suggested that the Bill would be unnecessary if the Government managed their spectrum more effectively. [HON. MEMBERS: "Where is he?"] I do not know where he is: perhaps he is making the phone calls about which I spoke earlier. I am delighted that my right hon. Friend the President of the Board of Trade and Secretary of State for Trade and Industry is present and is taking such a close interest in the legislation.
995 The right hon. Member for Wokingham said that, if only the Government managed their spectrum more effectively, everything would be fine and the legislation would not be needed. That statement is surprising for a number of reasons. I remind the House that Government spectrum is dedicated to essential users such as the armed forces and the emergency services. I am sure that the right hon. Gentleman would not wish to compromise the operational effectiveness of our armed forces or our emergency services.
I do not accept that there is gross inefficiency in the way that spectrum is used in the public sector. For example, the Ministry of Defence has been generally co-operative in returning spectrum to non-military use and sharing spectrum. If the right hon. Member for Wokingham has any hard evidence that the public sector is hoarding spectrum, I should be interested to receive it. I look forward to hearing from him.
Some of the military spectrum is subject to NATO obligations on civil use, and that imposes real constraints on the extent to which it can be used for non-military purposes. I repeat that it cannot be unilaterally converted to non-military use. Much Government use of spectrum is outside major conurbations where main congestion occurs. Looking at the overall division of spectrum without taking account of geographical variations is simplistic and inaccurate. Even if it were possible to transfer more Government spectrum to private sector use, it would be unlikely to meet all the demands in congested areas. If the right hon. Gentleman thinks differently, I should be grateful to hear from him.
I assure the House that we are not complacent. Like other public sector users, the Ministry of Defence will have financial incentives under spectrum pricing to continue to strive to improve spectrum efficiency.
We have received more than 60 responses to our consultation from a broad cross-section of radio users and others, and I am grateful to everyone who participated. The responses confirmed the industry's broad agreement in principle with the use of spectrum pricing as a spectrum management tool.
There was wide recognition of the progress that has been made since the previous Government's White Paper was published. That reflects the fact that we have had the opportunity to hold further discussions with the industry and have listened to what it has said. We place great store on consultation and shall continue our approach of working with industry. I recognise that a number of important issues concerning the application of spectrum pricing remain to be resolved, and that has been referred to in a number of speeches this evening. The responses made a number of helpful and constructive suggestions for further improving the proposals, and we shall be following those up.
I can inform the House that the Radiocommunications Agency will be discussing the proposals and responses with users and industry during the coming weeks, and we shall review them further in the light of that work. We hope to publish later this year a further consultative document which will take account of industry's views, outlining proposals for the introduction of spectrum pricing in 1998. That is vital, and shows our commitment to open discussion in this area. I also expect that the 996 spectrum management advisory group, which my hon. Friend the Minister of State announced today, will play a role in that process.
Subject to the enactment of the Bill, our aim is to lay before Parliament the first fees regulations under the new regime early in the next financial year. Those will address the most significant distortions and anomalies arising from the present cost-based fees, whereby the largest users pay far less per unit of spectrum than the smallest.
Again, in the spirit of openness and transparency, and to respond to the hon. Member for South-East Cornwall, I can further inform the House that I shall place in the Library copies of a document summarising the responses. In addition, as I have said, the Radiocommunications Agency will use the internet site in order further to make available the responses, so that as wide a section of the public as possible can see them.
My hon. Friend the Member for Ilford, North (Ms Perham) raised two important issues. First, with regard to monitoring, she suggested that the Radiocommunications Agency should monitor spectrum usage so that efficient users can be rewarded when future allocations or reviews are conducted.
I totally agree that monitoring is an essential component of spectrum management. The agency has a facility that provides a range of terrestrial and satellite monitoring services around the clock, 365 days a year. Its work is key to effective management of the radio spectrum and to dealing with radio interference. I am sure that all hon. Members would want to pay tribute to the agency's hard work in that area.
My hon. Friend also referred to the application of spectrum pricing to small businesses, in particular to taxis. As a fellow London Member, I share her appreciation of our taxis. Radio communications are extremely important to small firms and the efficient conduct of their business. Given my other ministerial responsibilities, it will come as no surprise that in that respect I am happy to reassure my hon. Friend that spectrum pricing will be considerably fairer to small business users of radio than the present cost-based fees.
My hon. Friend the Member for East Ham, among others, raised the subject of new entrants to the market. I make it clear that, with regard to auctions, we are talking about new services, such as the third generation of mobile phones. I can reassure my hon. Friend that the advisory group announced this evening will have a key role in advising Ministers on the subjects that he discussed.
§ Mr. Ian Bruce
Is the Minister saying that there will be spectrum auctions not for systems that are currently in place—for the normal form of mobile communications—but only for systems comprising a completely new technology?
§ Mrs. Roche
The hon. Gentleman raised that point in his important speech, and I am delighted to give him the assurance he seeks.
The hon. Member for South-East Cornwall also raised the issue of competition, which is an important factor that must be taken into account in considering clause 2.
The hon. Member for South Cambridgeshire (Mr. Lansley) asked what should be taken into account in conducting auctions. Important factors in considering 997 auctions include the feasibility of roll-outs and infrastructure investment. We believe that the third generation of mobile telephones will certainly require a great deal of investment by industry, and the Bill provides it with the reassurance it requires.
The hon. Member for South Cambridgeshire raised the issue of radio astronomy. I can assure him that it will be protected. He also mentioned digital technology. New powers in the Bill can certainly be used to provide incentives in the move to digital. I hope that I have reassured him on that matter. He and other hon. Members mentioned clause 5, which provides a new power that will be very important for research.
My hon. Friend the Member for Milton Keynes, North-East (Mr. White) made a very good speech about auctions, and I hope that my comments will reassure him on that matter. He made very good points about the convergence of broadcasting, telecommunications and the information technology industries, and about how they could win for British industry and for Britain. The success of those industries is important also to the Government.
My hon. Friend the Member for Broxtowe (Dr. Palmer) made an excellent speech about spectrum management.I hope that I have been able to reassure him on that matter.
My hon. Friend the Member for Scarborough and Whitby (Mr. Quinn) made an interesting speech dealing with the arguments for spectrum efficiency and with how such efficiency can help small business.
I am grateful to my hon. Friend the Member for Bexleyheath and Crayford (Mr. Beard) for his warm welcome for the legislation. I am also grateful for his description of the legislation as an engine that will help to drive British industry in the necessary direction. He also mentioned the important fact that the Bill will help to modernise the infrastructure, enabling our industries to prosper. Those aspects are very important to the Government.
I very much welcome the speech of my hon. Friend the Member for Wentworth, who said that the Bill can be regarded as not only very technical but of vital importance to the economy. It will provide us with a platform for developing the economy.
My hon. Friend the Member for Putney (Mr. Colman), who is a distinguished business man, spoke up for small business and told the House what it requires. I thank him very much for his speech.
My hon. Friend the Member for Northampton, South (Mr. Clarke) expressed his support for the Bill, and made the important point that it is not about raising revenue but about efficient spectrum management. He spoke also about another important aspect of the Bill, which is that it will help in research.
I was also delighted to hear the maiden speech from my hon. Friend the Member for St. Albans (Mr. Pollard). It was a wonderful speech, in which he showed, when he talked about the importance of radio and communications and made connections with his constituency, what an able and articulate Member of Parliament he is and what an asset he will be to the House. I am delighted to be able to pay tribute to him.
The question of the attitude of consumers to the Bill has also arisen this evening. I assure the House that the National Consumer Council and the Consumers 998 Association did not feel that the implications for consumers were significant. The National Advisory Council on Employment of People with Disabilities thought that people with disabilities were unlikely to be deterred from using mobile telephones. As has already been mentioned, the National Farmers Union, which was consulted, also supports the Bill.
This evening, we have had a good, far-reaching debate, which has covered many areas. The Bill is a technical one and is necessary for the industry, but it goes wider than that. If this country is to prosper and maintain its competitive position in a global market, we need to exploit our business potential, and the Government have to work in partnership with industry to push forward the technology. We cannot stand still. We cannot, as the Opposition seem to wish, carry on as before and do nothing. We must move forward with the industry, which warmly welcomes the Bill. I am delighted that the majority of speeches we have heard today also welcome it.
The Bill will provide the country with the spectrum management tools we need if we are to meet the challenges that lie ahead and maintain the United Kingdom's place at the cutting edge of the digital communications revolution. We really do face a revolution, and this country can lead the way in the use of the new technology.
We have had some discussion about the meaning of information technology and its effects. A true information society cannot be made up of the information haves and the information have-nots. That is why the Government are dedicated to ensuring that the information society is for all citizens. We want to build a truly competitive society, and the Bill will help to do so. I thank all the hon. Members who have taken part in the debate tonight, and I commend the Bill to the House.
§ Question put and agreed to.
§ Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 63 (Committal of Bills).