Office of Communications Bill [Lords]

HC Deb 14 January 2002 vol 378 cc54-119

Order for Second Reading read.

5.31 pm

The Minister for E-Commerce and Competitiveness (Mr. Douglas Alexander)

I beg to move, That the Bill be now read a Second time.

Madam Deputy Speaker, I am pleased to be able to open the debate on this Bill.

In December 2000, the Government published the White Paper "A New Future for Communications", which set out their vision for the future of telecommunications and broadcasting in the United Kingdom. The White Paper recognised that the world of communications is changing rapidly. People now have access to ever more sophisticated technological devices providing an increasing range of high-quality services.

The huge popularity of mobile phones and text messaging, the high penetration of digital television in the United Kingdom, combined with the new interactive services now being offered, and the increasing number of people accessing and using the internet have brought enormous changes in a very short period to the way in which we all communicate and obtain information. Those rapid technological advances, together with growing convergence between the broadcasting and telecommunications industries, are creating further choice for consumers and new openings for British business. We must therefore ensure that the United Kingdom continues to be able to take full advantage of the opportunities that such developments bring.

The White Paper affirmed the Government's aim of making the United Kingdom home to the most dynamic and competitive communications and media market in the world; of ensuring universal access to a choice of diverse, high-quality services; and of ensuring proper safeguards to protect the interests of citizens and consumers. Central to the achievement of that vision was the creation of a unified regulator—the Office of Communications, shortened to Ofcom—that would take over the responsibilities of five existing regulators operating in the telecommunications and broadcasting sectors: the Broadcasting Standards Commission, the Independent Television Commission, the Office of Telecommunications or Oftel, the Radio Authority and the Radio Communications Agency.

Michael Fabricant (Lichfield)

I congratulate the Government on finally introducing the Bill, which was recommended as long ago as May 1998 by the Select Committee on Culture, Media and Sport. Why does not the Minister's long list of the organisations that will be encompassed by Ofcom include the BBC board of governors?

Mr. Alexander

The hon. Gentleman will no doubt be glad to hear that I shall deal with that issue later in my speech.

The current system of regulation, in which a number of separate bodies have responsibility for different aspects of different sectors, grew over a number of years and, indeed, over the last century, when such a separation of responsibilities made much more sense. Today, with increasing convergence between broadcasting and telecommunications, the Government believe that it is time to create a completely new unified regulatory body to meet the challenges of this new century. The regulator should be able to make strategic decisions across the sectors, based on expert knowledge of complex, cross-cutting technical, economic and cultural issues. It should also promote competition and high standards, and safeguard the interests of citizens and consumers.

The publication of the White Paper led to a further round of consultation with key stakeholders and other interested parties. The majority of respondents welcomed the Government's overall aims and there was almost universal support for the establishment of Ofcom. Many believed that it would help to simplify the current regulatory regime. The general consensus has been reflected in cross-party support from the main political parties for a unified regulator.

The pace of technological change and convergence has not been as rapid as some people may have predicted only a year or two ago, but it remains vital to ensure that the conditions are right to allow United Kingdom businesses to compete in global markets and provide high-quality infrastructure and content. We must therefore ensure that we have the right regulatory framework to allow business to develop and grow.

The Queen's Speech announced the Government's intention to publish a draft communications Bill later in the Session. It will set out in detail the proposals for the new regulatory regime that Ofcom will oversee in time. Such regulation is by definition complex and it is vital to get the detail of the draft Bill right. When it is ready in the spring, we will undertake full consultation with industry and other stakeholders on its contents to enable them to consider and comment fully on the proposals.

The draft Bill's publication should provide ample opportunity for Parliament to debate the proposed regulatory regime. In discussion in another place, the Government said that time will be found for a Joint Committee of both Houses to undertake the task, should Parliament wish it. We shall therefore invite Parliament to establish such a Committee nearer the time.

Mr. Richard Allan (Sheffield, Hallam)

Will the Minister clarify his proposals for a Joint Committee, especially whether he is considering Select Committee or Standing Committee procedure? There is a crucial difference: in the House of Commons, members of Select Committees do not normally serve on Standing Committees. If membership of a Joint Committee is confined to those who serve on the Select Committee, Standing Committee members, who need expertise, do not have it when they scrutinise measures in detail.

Mr. Alexander

Procedures for the Joint Committee will be a matter for Parliament. We have offered pre-legislative scrutiny if both Houses want it.

The Office of Communications Bill is a paving measure, which will enable us to make progress on the essential practical work that is necessary to create Ofcom. The work needed for the new statutory body to evolve out of five existing regulators is complex. We must bring together three statutory organisations, one non-ministerial Department and an agency. They are based in 20 or more offices around the country, with differing pay systems, pension schemes and organisational cultures. That must be done with the minimum disruption to those who are regulated and the staff, while ensuring that the interests of consumers and citizens are safeguarded.

The Ofcom Bill will allow the essential preparatory work to begin so that the new regulator will be in a position to take on regulatory functions quickly once the regime that is set out in the main communications Bill has been fully discussed and come into force. The Ofcom Bill is straightforward. It establishes Ofcom as a statutory corporation. The new regulator will be a corporate board comprising executive and non-executive members, who will bring a range of knowledge and expertise to the organisation.

Appointment of the chairman and other non-executive members will be made jointly by my right hon. Friend the Secretary of State for Trade and Industry and my right hon. Friend the Secretary of State for Culture, Media and Sport. The Bill proposes that initially there should be a small board of between three and six members, including the chairman and the chief executive.

Mr. Gerald Kaufman (Manchester, Gorton)

My hon. Friend has set out the procedure for appointing Ofcom. The Select Committee report to which the hon. Member for Lichfield (Michael Fabricant) referred proposed a body that is similar to the organisation that the Government are establishing. It stated that all appointments would be subject to "the Nolan procedures". Will my hon. Friend confirm that that will apply to appointments to Ofcom?

Mr. Alexander

I am happy to give my right hon. Friend the assurance that the appointments will conform to public appointments procedures, as he indicated.

The Bill proposes that Ofcom will initially have between three and six members, including the chairman and the chief executive. However, the Bill also provides the Secretary of State with the power to change the size of that board. It is envisaged that that power might be used at a later stage to widen the range of expertise available to the board, once Ofcom takes on its regulatory functions.

The Bill will provide Ofcom with just one function—that of preparing to assume its regulatory functions at a later stage. These preparations will include schemes for the transfer of staff, property and other assets and liabilities from the existing regulators to Ofcom. The schemes themselves, however, will not be made until the main communications Bill has been passed. Regulatory functions will be conferred on Ofcom only when the communications Bill is brought into force after receiving Royal Assent.

This necessary preparatory work can be undertaken successfully only with the full co-operation of the existing regulators. The Bill therefore contains provisions to ensure that Ofcom has a duty to co-operate effectively with the existing regulators during the transitional period. Similarly, the Bill places an additional duty on the existing regulators to do everything necessary for Ofcom to make its preparations.

To avoid regulatory uncertainty during the transitional period, provision is made in the Bill to prevent Ofcom from interfering with the carrying out by any of the existing regulators of their current regulatory functions. It will therefore remain clear during the transition period that the current regulators will continue to carry on with their day-to-day duties until Ofcom assumes its regulatory responsibilities.

Brian White (Milton Keynes, North-East)

On that point, if one of the existing regulators were to take action that would compromise Ofcom, how would the Government deal with that?

Mr. Alexander

As I have said, there is an expectation that the present regulators will work effectively with the body being constituted by the Bill. We were keen to avoid any regulatory uncertainty, and the present regulators will retain their full regulatory powers to perform their functions until the point, following the passage of the main communications Bill, at which those powers are transferred.

The Bill contains provisions to give Ofcom the power to establish committees, and to govern how they operate. Ofcom will have the flexibility to determine its own internal working arrangements and to establish committees that are advisory in nature, as well as ones that will have decision-making functions delegated to them. Ofcom will be able to appoint members to the committees from outside, to benefit from their particular expertise or from the representation of particular interests.

Angus Robertson (Moray)

I draw the Minister's attention to chapter 8, section 6, paragraph 2 of the White Paper, "A New Future for Communications", which states: We will also particularly wish to ensure that OFCOM's work on content issues is organised so that it takes into account a wide variety of interests, including the interests of different parts of the UK, and reaches consensual judgements. Effective mechanisms will be required to satisfy these points. Will the Minister explain what specific mechanisms are to be created, given that there are no provisions in the Bill to secure direct Scottish or Welsh representation on Ofcom?

Mr. Alexander

I hear the hon. Gentleman's point. The single purpose of the Bill is to equip Ofcom with the means of assuming the powers provided by the communications Bill. The issue of the appropriate relationships between Ofcom and the nations and regions of the United Kingdom would be better dealt with during pre-legislative and legislative scrutiny of the communications Bill, when there will be provision for exactly that kind of discussion to take place.

Michael Fabricant

I am grateful for the Minister's generosity in giving way a second time. My question follows on from the point raised by the hon. Member for Moray (Angus Robertson). It is not so much about regional or national interests as about the interests of the different aspects within Ofcom. I recall from my previous career how radio was very much the poor sector of the old Independent Broadcasting Authority. In my opinion, it was only when the Radio Authority came out of the IBA that commercial radio thrived in this country. How does the Minister envisage the separate committees working in Ofcom to ensure that radio is not sidelined once again by bigger industries such as television and information technology?

Mr. Alexander

The hon. Gentleman makes a serious point, and the Towers Perrin report suggests a cross-cutting structure to address specifically the needs of radio. There is interest in that proposal, although it is merely one based on the work of the existing regulators and consultants to date. I affirm the view that radio should not and will not be regarded by Ofcom as a Friday afternoon job. There is a determination to ensure that all the current regulator's interests are appropriately reflected in the work of the organisation and interesting proposals in the Towers Perrin report speak specifically to the hon. Gentleman's point.

Clause 5 allows the Secretary of State to wind up Ofcom. That, on the face of it, may appear to be a surprising commitment—indeed, the Government do not anticipate the measure being required—but it has been included purely as a safeguard to provide assurance that should any unforeseen circumstances prevent progress in introducing the policies in the main communications Bill, the Government may take the necessary steps to dissolve Ofcom should the need arise. After 2003, the Secretary of State would have a duty to act if no progress were in prospect.

The Bill will give Ofcom the power to establish committees and to govern how they operate. It will have the flexibility to determine its internal working arrangements and to establish committees that are both advisory and have decision-making functions. We expect Ofcom to operate according to the highest standards. Therefore, following debate in another place, we have included a new provision in clause 3 to ensure that Ofcom has regard to the principles of good governance in managing its affairs. We have also included provisions to introduce transparency to Ofcom's proceedings by requiring it to publish the regulations and procedures under which it and its committees will operate.

In summarising the main purpose of the Ofcom Bill, it is important to stress to the House that it will provide Ofcom with a single function—that of preparing itself. Ofcom will have no regulatory functions until Parliament considers precisely what those functions should be when the draft communications Bill is available. Nothing in the Ofcom Bill prejudges Parliament's consideration of those substantive issues.

Mr. Andrew Lansley (South Cambridgeshire)

I am sorry to interrupt, but the Minister said that he would refer to the BBC and it seems to me that the time has come. He says that the Bill does not prejudge the communications Bill, but does not its structure prejudge whether the responsibilities of BBC governors will fall under the remit of Ofcom? If they were to do so, the Bill would pave the way for such a possibility, but it clearly does not.

Mr. Alexander

I fear that the hon. Gentleman does not fully comprehend the Bill's purpose in that the structure envisaged does not prejudge the relationship between the BBC and Ofcom. Indeed, it is of no structural importance to Ofcom whether it does or does not regulate.

Michael Fabricant

On a point of order, Madam Deputy Speaker. It may help you and the Minister if I refer the House to clause 6(1), which specifically states which areas —

Madam Deputy Speaker (Sylvia Heal)

Order. That is a matter for debate, not a point of order.

Mr. Alexander

It is of no structural interest to Ofcom whether it does or does not regulate the BBC, and the Bill deals with the structure of Ofcom in its preparatory stages. On the basis of the White Paper, however, I point out that the BBC will be subject to greater external regulation and its position brought much closer to that of other broadcasters.

Mr. David Cameron (Witney)

I should declare an interest as I am a consultant to Carlton Communications, where I worked for seven years before being elected to this place. Is not the Minister offering us an empty shell of a Bill? He is saying, "I shall not tell you whether Ofcom will regulate the BBC," but people want to know that those who produce content, whether commercial companies or the BBC, will be treated fairly and be regulated and fined by Ofcom if they do wrong. Is not that the point?

Mr. Alexander

We are certainly confident that there will be fairness. The paving Bill strikes the appropriate balance between maintaining momentum behind proposals that have wide—indeed, all-party—support and recognising that serious issues need to be debated. There will be pre-legislative scrutiny and a draft Bill is to be published, so the House will have the opportunity to consider all the proposals in the main communications Bill. That should give the hon. Gentleman comfort.

Michael Fabricant

Will the Minister give way a third time?

Mr. Alexander

I give way one last time.

Michael Fabricant

The Minister is more than generous in giving way for a third time. I had hoped that he would pick up on my point of order, but he chose not to do so. In an attempt to be helpful, may I refer him to clause 6, which interprets the term "existing regulator" under the Bill? It lists four regulators, and does not include the BBC board of governors. Was not the Minister inadvertently wrong when he said that the issue is not covered by this paving Bill? It is.

Mr. Alexander

I merely make the point that clause 6 reflects the fact that the BBC is not only a regulator, but a broadcaster. The regulators listed in that clause have exclusive regulatory functions. It is common sense to acknowledge the fact that, although the board of governors has responsibilities, the BBC is also a principal public service broadcaster for the whole of the United Kingdom.

There is great scope for the House to discuss these matters.

Mr. Kaufman

I am sorry to interrupt my hon. Friend, but I am something of an authority on interpretation clauses. As the kind of Back Bencher such as the hon. Member for Lichfield (Michael Fabricant), I have spent hours disrupting parliamentary business on interpretation clauses. My hon. Friend is right to say that the British Broadcasting Corporation is a broadcaster, but its board of governors is, among other things, a regulator.

Mr. Alexander

I recognise the point that my right hon. Friend makes, and I respect his expertise in this area. I merely point out that, as presently drafted, the White Paper recognises the fact that the BBC will fall within the scope of the functions undertaken by Ofcom. Some of the changes to the work of the BBC governors, not least the increase in transparency, is entirely consistent with the work that the Bill has set out for the BBC and other broadcasters.

I shall try to make some progress, because I have been generous in giving way.

Mr. Chris Bryant (Rhondda)

Will my hon. Friend give way?

Mr. Alexander

As I say, I must make some progress.

The Government remain committed to having Ofcom operational by the end of 2003. In order to achieve that, work has already started on the initial planning stages for establishing this new regulator. A steering group has been set up, comprising representatives of the existing regulators and the Department of Trade and Industry and the Department for Culture, Media and Sport.

The results of an initial scoping study have recently been published in the Towers Perrin report, which was undertaken by independent consultants. It considers the type of organisation Ofcom could be and how the complex task of transition could be managed. Further work will be necessary to begin to create that new organisation. Once the chairman and other board members are in place, they will need to be able to take speedy decisions on the new structure of staff appointments, human resource policies, the vision, the organisational culture and many other important issues.

The existing regulators, the DCMS and the DTI will continue to work closely together to provide a sound basis for the Ofcom board to consider these issues and to take the key decisions necessary.

The Bill will enable us to start work on establishing Ofcom. That will include beginning the process of making appointments to the Ofcom board. It will be important to ensure that the chairman and other board members are in place, and are able to contribute fully to that process. In making the appointments of the chairman and other non-executive members, we will of course follow the full public appointments procedure. The appointment of the chairman of Ofcom will take place in the spring. Subsequently, we hope to have the full Ofcom board in place by the autumn of this year.

We hope to publish the draft communications Bill in the spring. That will be followed by a full period of consultation on the draft Bill, and pre-legislative scrutiny should Parliament so wish. Thereafter, we will aim to introduce the Bill as soon as parliamentary time allows.

The Office of Communications Bill will allow Ofcom to begin to prepare itself so that it will be in a good position to assume its regulatory functions once Parliament has determined, through consideration of the main communications Bill, precisely what those functions should be.

Mr. Lansley

Will the Minister give way?

Mr. Alexander

I will not give way this time, as I have already been generous to the hon. Gentleman.

The Bill will allow us to begin the essential work needed to create a modern, forward-looking regulator who is able to operate a flexible, effective and proportionate regime, which is crucial to creating the conditions in which a vigorous communications sector can flourish.

Mr. Lansley

Will the Minister give way on that point?

Mr. Alexander

I have already said that I will not give way.

The Bill lets us make a start on this important work, and I commend it to the House.

5.54 pm

Mr. Tim Yeo (South Suffolk)

Those of us who came to the House this afternoon with some background residual concerns about the Bill will have had them profoundly deepened by the Minister's speech. I say that not just because of the hon. Gentleman's failure, for whatever reason, to deal with most of the points raised by my hon. Friends, but because the whole debate has emphasised the Alice in Wonderland nature of the proposal.

The Bill takes the preparatory steps to establishing Ofcom. We are told that the chairman of Ofcom will be appointed quite soon, and its members not long thereafter. The functions of Ofcom remain to be debated by the House. The Minister declined to answer points raised by my hon. Friends on the basis that Parliament will have its say. That presumably leaves open the possibility, in theory at least, that, as a result of what Parliament says, the functions will change from what is currently in the Government's mind—although we do not know what that is—to something else. However, it is proposed that members of Ofcom will be appointed before we even know what that body will do. That is an extraordinary sequence of events.

The Bill is jointly sponsored by two Departments. The Government claim that it fulfils a promise made in their election manifesto in 1997 and in the White Paper. However, neither of the Cabinet Ministers responsible for these proposals will be taking part in this debate. Ministers are not usually so coy, and there will be astonishment inside and outside Parliament at their reluctance to speak. Indeed, the Secretary of State for Culture, Media and Sport was not present at the start of the debate. Are Ministers' hearts not in the Bill, or are the proposals so complex that they have not been able to master them? [Interruption.] Yes, possibly. I am grateful to the Under-Secretary of State for Culture, Media and Sport for saying that I have put my finger on it. No doubt that is why the hon. Gentleman has been entrusted with the task of winding up the debate. This is the only substantial Bill in which the DCMS is involved this Session, so it can scarcely be a heavy work load that prevents the Secretary of State from taking part in this debate.

I believe that if a Bill is important a Cabinet Minister should come to the House to explain it. If it is not important, the Government have no business asking Parliament to spend time considering it. Perhaps the silence of Cabinet Ministers is not so hard to fathom given that, on examination, the Bill turns out to be an extraordinarily timid measure. It is a mouse of a Bill. It fails to recognise the scale of changes to the regulatory framework that are required, or the urgency of the need for those changes.

The industries that are affected by the proposals are immensely important to the British economy. The changes that are taking place in those industries are equally great, but the Government are sitting on their hands, unable or unwilling to move with the speed that is required.

James Purnell (Stalybridge and Hyde)

I am grateful to the hon. Gentleman for giving way, and I hope that he will not be timid in his answer. Does he support the privatisation of Channel 4 or the BBC?

Mr. Yeo

I shall certainly reflect on the position of Channel 4 and the BBC. I have a completely open mind at this stage: it is early in the Parliament, and we are considering every aspect of policy as part of our policy review. If the hon. Gentleman has views about those matters and would like to write to me setting them out, I would consider them.

It is almost five years since these words appeared in the Labour manifesto: The regulatory framework for media and broadcasting should reflect the realities of a far more open and competitive economy, and enormous technological advance, for example with digital television. Labour will balance sensible rules, fair regulation and national and international competition, so maintaining quality and diversity for the benefit of viewers. I agree with that.

It is more than a year since we read in the foreword to the White Paper "A New Future for Communications", signed by the two previous Secretaries of State, the right hon. Members for Tyneside, North (Mr. Byers) and for Islington, South and Finsbury (Mr. Smith): We are committed to reforming the rules which protect media plurality, in the light of the new converging market conditions. … We will create a new regulator … OFCOM … with the expertise and the vision to understand the converging communications landscape and to act according to a clear set of principles. I agree with most of that as well.

Despite those statements about what the Government intend to do, we are no nearer to the promised land than we were when either of the passages that I have quoted first saw the light of day. Time is passing, the industry is changing, and the Government are doing nothing. The Bill will have no practical effect whatever on regulation.

Until we see the substantive Bill later this year—I was concerned when the Minister said that it would be published "later in the spring", since it means we still have no clear commitment or timetable, and there is a suspicion that the timetable is already slipping—no one who is making decisions about future investment, and no one who is seeking guidance about the Government's intentions on such crucial issues as cross-media ownership or digital switchover, will be any the wiser.

We are told that the substantive Bill will be published in draft form, and Ministers in another place conceded through gritted teeth that the draft Bill would be available for scrutiny by a Committee of both Houses—a commitment that the Minister just about repeated today, although there seemed to be a degree of qualification. Following an Opposition intervention, it became plain that the Minister was not at all clear about the form that the scrutiny should take. In the meantime, we must make do with the thin gruel of a paving Bill that does nothing that the substantive Bill could not have done had it been introduced in a timely and efficient way.

Michael Fabricant

Does my hon. Friend realise that the position is worse than that? While we debate the matter here, advertising revenues are falling—perhaps heralding a bust, as in "boom and bust". Is my hon. Friend aware that City analysts now say that revenues received by ITV—my figures are from Carlton Television—are likely to be 15 per cent. lower this year than they were last year? Last year's, in turn, were down 12 per cent. on the previous year. At the end of the day, what will that make of public service broadcasting?

Mr. Yeo

My hon. Friend has raised an important point. I shall say something about ITV in a moment.

The Government have given no sign that they recognise the urgent need to give a clear lead on the issue of digital switchover, an issue in regard to which many in the industry are currently hanging fire. Of the millions of new television sets sold last year, more than 19 out of 20 were analogue. We have no indication of the criteria that the Government expect Ofcom to employ to determine the success of applications to provide radio and television broadcast services. Given the high level of public interest in the issues, it would have been helpful to have some clue about the Minister's thinking—if, indeed, Ministers are thinking about these subjects at all.

The Government's snail-like progress does little to serve the needs of a rapidly evolving industry. The distinctions between television, computers and telephones are quickly disappearing, and the array of information, entertainment and services available to people at home, at work and on the move is increasing at a bewildering rate. Every aspect of the industry, including newspapers and radio as well as television, is affected by the helter-skelter of new technology. The Government give the impression of lumbering breathlessly behind an express train that is disappearing into the distance. They are dithering—which is becoming the defining characteristic of the Department for Culture, Media and Sport.

Mr. Parmjit Dhanda (Gloucester)

The hon. Gentleman mentioned the switchover from analogue to digital. The Government have already set a time frame. When would the hon. Gentleman like the switchover to take place?

Mr. Yeo

I must correct the hon. Gentleman: the Government have not set a timetable. There is no firm date for the switch-off of analogue television. Not only have the Government not named the date on which analogue will be switched off; they have not even named the date on which they will name the date. The Government are in a state of complete indecision.

I will give my support if the Government give a clear lead for a realistic timetable. What the industry needs is a firm framework in which it can make its own investment decisions, and it can do that only when we have a firm timetable from the Government.

When he winds up the debate for the Opposition, my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) will focus on the DTI aspects of the Bill. I apologise for the fact that I shall have to leave just before the end of the debate, although I hope to hear the bulk of the exchanges before I do so.

The economic importance of the media has increased enormously, and continues to do so. Very few people have accurately forecast either the direction or the pace of change. The speed of technological innovation and the changes in public taste and consumer preferences have left even the best-informed and most sensitive experts sometimes looking very flat-footed. What is beyond doubt, however, is that in this industry Britain has many natural advantages: a proud tradition of high-quality public-service and other broadcasting, a good record of innovation, a large pool of creative and entrepreneurial talent, the English language, and a country in which people from all over the world like to live and work.

I believe that it is the Government's duty to create a legislative framework in which people and businesses can exploit those advantages for the benefit of the British people, in their roles both as consumers and as producers, to enhance their leisure hours and their work opportunities. As it happens, doing that will also benefit people abroad who can enjoy the product that originates here in Britain.

Amid all the confusion and change, another certainty stands out—that this is an industry that will go on being increasingly global in nature. We want it to include players in whose case Britain's influence is prominent. It should do so, but it will not unless the Government get their act together.

Brian White

Is the hon. Gentleman arguing that we should have the equivalent of what is happening in Germany, where Deutsche Telekom has become a national champion? Is that the route down which we should go?.

Mr. Yeo

I am arguing that the Government should set out what they are proposing a great deal more clearly than they have, and in a more timely and efficient way. It is very difficult for businesses in this industry to make long-term investment decisions when there is still so much uncertainty about the Government's plans.

Let us consider the other global industry in which Britain has a leading role: the financial services industry. We have done well in that highly competitive market. London has remained one of the world's great financial centres, in large part because of the light regulatory touch and the way in which that has allowed intense competition within the sector. Financial services is now having to live under a super-regulator—the Financial Services Authority is a year or two ahead of Ofcom—but some of the anxieties in that industry about the bureaucracy and the costs of regulation may well apply when we have Ofcom.

Mr. Lansley

My hon. Friend will know, as should other Members, that light regulation is an essential part of maintaining internationally competitive industries. Does he share a concern of mine about which I had no opportunity to ask the Minister?

In one of its annexes, the Towers Perrin report—considering the scope of Ofcom—said that this analysis shows that far more work is likely to start than stop", meaning that, even in its preparatory stages, Ofcom will be setting up a large number of additional processes, many entailing extra regulatory burdens on industry. Very few will be lost as a consequence of bringing five regulators together.

Mr. Yeo

My hon. Friend makes an important point. Exactly the sort of phrase that he has quoted reinforces the anxieties of many in the industry.

I believe that we have reached something of a threshold. We have an opportunity to see Britain and our media industry continue to flourish, but that will occur only if we do not fall into the trap to which my hon. Friend has rightly referred. We must not allow too heavy a hand to be used, and too bureaucratic a burden to be placed on businesses that must be extremely flexible and entrepreneurial.

Opposition Members do not object to Ofcom in principle, but we do want to know a great deal more about how it will work—certainly more than can be learned from even the most minute study of the Bill, whose seven clauses seem to be mostly concerned with matters of administration such as arrangements for the appointment of members.

Given the amount of discretion that the Bill gives the Secretary of State, I wonder why the Government are bothering with a Bill at all. As the Minister himself pointed out, the Bill contains provisions giving the Secretary of State power to overturn those very same provisions. It sets a minimum and a maximum number of members for Ofcom, and then specifically empowers the Secretary of State to increase the number at will.

The Bill does not address quite a number of urgent issues: for example, the rules relating to media and cross-media ownership. Since Parliament last considered primary legislation dealing with broadcasting, huge changes have taken place. Millions of households have access to hundreds of television channels, compared with only three 20 years ago. A similar expansion has taken place in radio.

One consequence of that wider consumer choice is that the special regime imposing onerous restrictions on who can own what in the media industry is no longer needed or justified. The Government's consultation paper published last November was another timid document. It set out the options but gave little lead. The industry should be governed by the same competition rules that apply to other industries. Existing competition laws are a sufficient safeguard against excessive concentration of ownership.

Mr. Kaufman

I agree with the hon. Gentleman that the current legislative framework for restricting media ownership is out of date. When the right hon. Member for South-West Surrey (Virginia Bottomley) introduced the Broadcasting Bill in 1996, I told her that it was out of date even before it was enacted. Is the hon. Gentleman disowning the parts of the 1996 Act that contain the restrictions that he now denounces?

Mr. Yeo

The right hon. Gentleman will be delighted to know that I am certainly not going to defend that legislation. We are here to debate the Office of Communications Bill, which saw the light of day in 2001. With his great expertise on this subject, the right hon. Gentleman would at least acknowledge that the situation today, five and a half years later, is very different. As I say, the proliferation of radio and television channels now available to consumers means that some of the concerns that were properly felt at the time of the 1996 Act no longer apply.

I stress that sweeping away the regime that imposes special ownership restrictions on the industry does not mean that the content of radio and television programmes should suddenly become completely unregulated. Licensing procedures should remain. The authorities should continue to scrutinise content through their codes and duty to promote diversity and choice, but it is disappointing that the Government are moving so slowly on the issue of ownership; the earliest date on which the substantive Bill can receive Royal Assent is the middle of 2003. Given the history of the five years since the commitments to introduce legislation were first made by Labour, there must be a risk that that timetable will slip still further.

Miss Julie Kirkbride (Bromsgrove)

My hon. Friend lists some of the important features that the Bill needs to clarify. I hope that he will look at the role of the BBC and the lack of a level playing field that we uniquely have in Great Britain because of the BBC's role and the fact that it provides services for free that free-marketeer companies have to provide out of their own pockets.

Mr. Yeo

My hon. Friend is right. I will come to the BBC in a moment, because it is an important omission from the Bill. Before doing so, I shall say a word about ITV. I will shortly publish a very brief Bill to allow at least one relaxation of the present ownership rules so that they would no longer prevent ITV from being owned by a single company. I do not pretend that that change is a magic wand that would solve all the difficulties to which my hon. Friend the Member for Lichfield (Michael Fabricant) referred, but it would be a common-sense move to give the companies a little more freedom of manoeuvre as they decide how to respond to current market trends.

I invite the Government to support my Bill. If they do not do so, I trust that they will explain why they oppose it. After that Bill, I intend to bring forward further deregulatory proposals to ensure that other parts of the industry enjoy the same freedoms.

The BBC, which quite a number of my hon. Friends have mentioned, is excluded from Ofcom's remit. Nothing that we have heard today and nothing that I found in studying the debates on the Bill in another place, explained why that anomalous position has been proposed. The chance for primary legislation does not arise often. The statutory framework that this Bill and the substantive Bill will create will remain in place long after the current BBC charter expires in 2006. In an increasingly competitive marketplace, it is essential that the BBC, which is a powerful player and which enjoys a uniquely privileged funding base and controls a widely recognised and respected brand name, is treated in the same way as the rest of the industry.

Michael Fabricant

Is my hon. Friend aware that the BBC is arguing that Ofcom will not be a suitable organisation to control the BBC? I quote from a BBC briefing: Ofcom could not be relied upon not to bring outside interests to bear on decisions about the BBC remit which have nothing to do with the public interest in the BBC". Does he not think that that is the ultimate in sanctimony and is being patronising?

Mr. Yeo

My hon. Friend makes his point powerfully, but there is a further confusion in the Government's mind. They talk about the three tiers of regulation. It appears that, when it comes to the BBC, Ofcom is entrusted with the first two tiers but not the third. It seems that the arguments are completely contradictory. Either Ofcom is suitable to regulate all three tiers or it is not suitable to regulate at all, perhaps for the reasons alleged in the briefing from which my hon. Friend has quoted.

I hope that the omission of the BBC will be rectified during the Bill's passage. If it is not, I hope that Ministers will give a more convincing explanation of why they think that that unlevel playing field should be enshrined in primary legislation for the foreseeable future.

Another serious concern is the power that the Secretary of State will exercise. The Secretary of State has the power to increase at will the size of Ofcom's membership. Given the Prime Minister's fondness for filling every public body in sight with his cronies, there are obvious worries about the scope for abuse that that power entails. A regulator must be independent and seen to be independent of Government. There seems no reason why the maximum size of Ofcom's membership should not realistically be fixed in advance in the Bill. That is one of the amendments that we shall seek to introduce in Committee.

A number of questions arise from the Bill. The seriousness of the Government's intentions is already called into doubt by the extraordinary inclusion of clause 5, which provides for the possibility of a U-turn on the policy. Will the Government confirm that, if the proposal is abandoned, no cost will be borne by the industry? I understand that it is intended that the taxpayer should not bear Ofcom's running costs but that there will be setting-up costs. I should be grateful if the Minister would give us an assurance that if for any reason the proposal did not go ahead, those costs would not fall on the industry.

Can the Secretary of State say a little about the way in which the chairman will be appointed? What criteria will be used to select that person, particularly since the appointment will be made before we have even seen the substantive Bill in draft form? It would be reassuring to know what qualifications the Government will seek for that important post, beyond perhaps the inclusion of someone who is known to be a supporter of the Labour party.

I would like to ask many other detailed questions, but time does not permit. I hope that the Minister will find an opportunity to explain what role Ofcom may have in such matters as deciding the future of the radio points system, in relation to which the Government said in the White Paper they were considering changes.

This is a disappointing Bill but the Opposition do not wish to do anything to delay progress towards a substantive measure. For that reason, we will not vote against it this evening.

6.19 pm

Mr. Gerald Kaufman (Manchester, Gorton)

I congratulate my hon. Friend the Minister for E-Commerce and Competitiveness on the crisp and clear way in which he introduced what is a necessary paving Bill towards the major communications Bill that we are looking forward to later this year. He introduced the Bill in the best possible way; that was somewhat of a contrast with the mini-tirade in which the Opposition spokesman, the hon. Member for South Suffolk (Mr. Yeo), indulged. He reminded me very much of my own performances on that Front Bench when we were in opposition.

The hon. Gentleman's situation was summed up by Abba Eban, the former Israeli Foreign Minister, when his party was thrown out after many years in office. He was asked what was the difference between being in government and not being in government any more. Mr. Eban said that when someone is in government, they get up in the morning saying, "What shall I do today?" In opposition, they get up and say, "What shall I say today?" Unfortunately, that is the quandary in which the shadow spokesman is placed today. Since I went through it for 18 years, I sympathise with him. He will have rather more than 18 years to get used to it.

Mr. Yeo

The right hon. Gentleman may have heard me say that I will be introducing a Bill to relax the ownership restrictions. That is something that we are doing that the Government are not doing. Will the right hon. Gentleman support that Bill?

Mr. Kaufman

I shall read it with great care. If it contains provisions with which I agree, I shall certainly support it. As the hon. Gentleman said to my hon. Friend the Member for Stalybridge and Hyde (James Purnell), if he cares to write to me about it, I will write back to him.

As the hon. Member for Lichfield (Michael Fabricant) pointed out, the Bill comes forward as a consequence of a recommendation made in a report by the Select Committee on Culture, Media and Sport just under four years ago. That is quite fast in terms of a Government considering a Committee's recommendations. The Bill is important because it creates a framework for one of the most important industries that this country has.

The Department is a sponsor of the most important private sector industry in this country; namely tourism. It is a co-sponsor of the most important technological and manufacturing industry in this country; namely the converged industry of telephones, television and computers that we are looking at today. The more we consider those matters, the more we see that the convergence that the Select Committee looked forward to is, day by day, becoming a more discernible fact.

I regret that, so far, the Prime Minister has not followed up another recommendation that the Select Committee has twice made; namely that an industry of such great importance should have a single Government Department sponsoring it. We have two extremely able and efficient Ministers on the Front Bench tonight, but they come from two different Departments. It is difficult to co-ordinate adequately how the Government should approach such a major industry as this when two Departments themselves must co-ordinate.

The Select Committee report of 1998 recommended a separate Department of Communications—with its own Secretary of State—to assume the broadcasting and media responsibilities of the DCMS, the telecommunications and internet responsibilities of the Department of Trade and Industry and the Cabinet Office's responsibilities for electronic delivery of Government services. I believe that that is the best way forward. Both of my hon. Friends on the Front Bench would make admirable Secretaries of State in such a Department; therefore, I have a feeling that neither will dissent from my proposal.

This is a small Bill, but it has huge implications. I welcome what my hon. Friend the Minister said about the method by which the appointments will take place. I very much hope that as the Government consider who should be appointed to take charge of Ofcom, they will dispense with their list of the usual suspects; the great and the good whom both parties have consistently had on their lists year after year. With the Bill, we are beginning to turn over a new page in one of the most important developments that this country will see in the 21st century.

I very much hope that we get somebody who is not only knowledgeable about the industry, but has a dynamic and forward-looking view about where the industry should go. I very much hope that this office will not be added to the multifarious responsibilities of Lord Birt, who has so much to do now that he could not possibly fit in that particular responsibility.

In looking at those who will serve on Ofcom, and at its much wider remit, which the Government may propose in the major and substantive Bill, I hope that the Government will, as has been said earlier, look carefully at the regional dimension. The Independent Television Commission disappointed a great many people—

Mr. Allan

indicated assent.

Mr. Kaufman

I see that the hon. Gentleman agrees. A great expert from Sheffield was in correspondence with us about the way in which the ITC was closing down regional representation and regional libraries. I very much hope that when Ofcom is set up, the Government will make clear that there is a requirement to have a regional dimension—if necessary, they should include that requirement in the major legislation.

We are in a curious position at the moment. The hon. Member for Lichfield referred to the decline of ITV. There has been a massive burgeoning of communications, but the main way of watching television—certainly until analogue is switched off—is through terrestrial stations. Whatever the ownership regulations for ITV may be—whether it continues as it is, or whether a single owner of ITV is allowed—I very much hope that the requirement on ITV to maintain regional companies will remain.

Even if the regulations removing the right to have a single owner of ITV are brought forward—I believe that there is a strong argument for that—that should not mean that there is one ITV company. There should be holding companies for those regional companies. As long as we have the present structure, it is important that the regional aspect be maintained.

Mr. Derek Wyatt (Sittingbourne and Sheppey)

My right hon. Friend made an important point about regional broadcasting. Is he disappointed that ITV2 is not ITV regional? Through digital, we could have had 11 separate regional television stations and created huge hubs and digital centres for the whole of Britain.

Mr. Kaufman

One of my disappointments with ITV is that it has thought so little about its own future. Give or take one tenth of a percentage point, ITV is still the most-watched channel. The latest figures, over which there was argument a couple of weeks ago, show that it is pretty much neck and neck with BBC1.

It is disappointing that a company that has the ability to be dynamic and has a public service remit mixed with a commercial incentive should have been so unimaginative. There is a dullness and complacency about ITV that will limit its future as a viable company.

Michael Fabricant

I note that the May 1998 report stated: We note with a certain degree of scepticism that commercial terrestrial broadcasters remain optimistic about their prospects. That concern has sadly proved to be well founded.

Despite his remarks about ITV's public service remit, will the right hon. Gentleman pay at least some tribute to regional ITV news? Does he agree that both Yorkshire Television in his region and Carlton in mine have been able to present news on a more local basis than ever before thanks to electronic news gathering, and that they are fulfilling their remit in that respect?

Mr. Kaufman

The hon. Gentleman has got it mildly wrong, as the regional news in my constituency is provided by Granada, although Granada used to own what is now Yorkshire Television. In those days, Granada provided a very good service, but I now find its general service somewhat disappointing. I was discussing with someone only today the really great days of Sidney Bernstein and David Plowright, which produced "The Jewel in the Crown" and "Coronation Street" and made Granada one of the most exciting and innovative television companies. Those days are gone. I strongly believe that we need regional news, but with digital television we can localise even further.

The Select Committee is to begin an inquiry into the major Bill later this month. I am interested in the nature of what is or is not to be regulated. As long as we can regulate terrestrial TV, we should do so, but we should understand the limitations of regulating converged visual communications. Once the internet takes over even more than it has done so far, the ability to regulate visual communications will be severely limited, and it would be foolish to foist on Ofcom functions and duties that it is physically incapable of fulfilling. I hope that the new Bill will be sensible in that respect.

I was surprised that the hon. Member for South Suffolk did not say more about the future of the BBC and Ofcom's role in regulating it. The Government need to think extremely carefully about that and take a much wider perspective. It is interesting that, a few weeks ago, in a letter to The Times in reply to an article about the need for Ofcom to regulate the BBC, Gavyn Davies said: the BBC will be 'under Ofcom' where it is appropriate that it should be so. Clearly, a level playing field should exist on economic regulation and on content regulation for basic standards and quotas. In these areas, the BBC will and should be subject to Ofcom control. That is news to me, and it may be news to Ministers, too. Perhaps they should urge Mr. Davies to read the legislation a little more carefully. I hope that it is not a signal of the approach that he intends to take.

Gavyn Davies went on to say: No other broadcaster pursues public service as its sole objective, so a level playing field would be inappropriate. He is wrong on that, too. Whatever one thinks of the quality of programmes on ITV, it has a specific public service remit on which the award of the licences is conditional, and Channel 4 has a statutory public service remit of a kind that no other broadcaster has, including the BBC. Quality on Channel 4 fluctuates, as quality on almost anything will, but I believe that it fulfils its remit admirably and is in many ways the best of the terrestrial channels.

My hon. Friend the Member for Stalybridge and Hyde asked the hon. Member for South Suffolk about his views on the privatisation of Channel 4 and of the BBC. I believe that it would be outrageous to privatise Channel 4, because I cannot conceive of any private owner being willing to go along with its statutory remit, which I think is very precious.

My views on the privatisation of the BBC may be known to some hon. Members, but I will not state them here, as I do not want to offend my hon. Friend the Member for Stalybridge and Hyde even in his absence. I hope, however, that when the Government produce the major Bill, they will accept that it is an utter anomaly for the BBC not to be regulated by Ofcom. The governance of the BBC is wildly out of date. The BBC was formed 80 years ago as the sole broadcaster of what was then only sound broadcasting. It was a company, then a corporation, of a unique nature, doing a unique thing. That is no longer the situation.

The BBC is now one of the most important broadcasting organisations in the world, and it is no longer appropriate for it to be run by a group of amateurs with very few qualifications in the world of broadcasting who give the chairman and the director-general their head because they have inadequate knowledge to control them.

I know that Sir Christopher Bland was enraged when I raised this in the Chamber before, but one need only look at what happened when the BBC launched its programme to publicise and promote Camelot's scratch cards. That the board of governors was willing to go ahead with turning the BBC into a branch of commercial advertising was deplorable. After I had been subject to the usual abuse, the governors then did exactly what I told them they should do. Ministers, too, may abuse me as much as they like, if they only go on to do what I recommend.

The BBC board of governors is a total anomaly. It is utterly out of date and should be got rid of and replaced with a board of directors with an executive chairman and a chief executive. My beloved friend Mr. Dyke should be the chief executive and no longer the director-general. Part of the rethink when the major Bill is introduced should be that the BBC should be subject to Ofcom in every particular that every other broadcaster is. It is about time the BBC stopped repeating the exordium that it is special, great and noble. It gets £2.5 billion of public money that many members of the public would not want to pay if they were not forced to do so. It is about time it was accountable in exactly the same way as every other broadcaster in the country.

Mr. Lansley

In an earlier intervention on the Minister, the right hon. Gentleman correctly said that the BBC governors have a regulatory responsibility. The answer that the Minister should have given him is that there is no need for additional statutory change for the board of governors of the BBC to assist Ofcom in the transfer of responsibilities to that body, if the Government and Parliament should provide for that. The issue is whether the BBC will be prepared to co-operate with Ofcom under the Bill to prepare for such a transfer. Does the right hon. Gentleman agree that discussions should have taken place to ensure that the BBC is compliant in talking to Ofcom and preparing for the transfer of responsibilities?

Mr. Kaufman

That is why I should like to see in Committee an amendment to clause 6, which the hon. Member for Lichfield mentioned, to include the BBC board of governors. It is irritating that the BBC is always ready to take the money but is not always willing then to conform to public policy. That was demonstrated when Sir Christopher Bland was asked about something that my right hon. Friend the Member for Islington, South and Finsbury (Mr. Smith)—then Secretary of State for Culture, Media and Sport—had said. Sir Christopher said that the Secretary of State was just another licence payer. I hesitate to say so because I had a lovely Christmas card from Sir Christopher, but that is the sort of arrogance to which BBC chairmen are only too prone.

When I ask for the BBC to be included within the remit of Ofcom, I am not simply pursuing what people seem to regard—most inexplicably—as a vendetta that I conduct against the BBC. The National Consumer Council submitted evidence to the Culture, Media and Sport Committee last year in which it said: We are disappointed that the White Paper does not present an over-arching framework … including the BBC … It is illogical. I received today a document from the Consumers Association that says that the BBC should be included in the remit of the Bill and of Ofcom. I am sure that my hon. Friends have seen a copy of that document, but if they have not I will gladly send them one.

It is time that the Government tackled the problem, because they will have to do so soon anyway. Before the end of this Parliament, the Government and the Committee will have to consider whether there should be another BBC charter, because it expires on 30 June 2006. The period of the present charter has more than half gone. In my view, the days for a charter are gone, whether the BBC continues in its present form or not, and it should be governed by statute. Whatever view the Government reach, they will have to consider the BBC's future definitively before the end of this Parliament. I hope that the Government will take into account the views of the Select Committee.

The members of the Committee and I feel a certain amount of exuberance that the Bill has been introduced as a consequence of a recommendation that we made. We look forward to the major Bill and we hope that the Government will be able to provide us with legislation that will move forward this country's technology, employment, profitability and exports during the 21st century.

6.44 pm

Dr. Vincent Cable (Twickenham)

I broadly welcome the Bill, which is uncontroversial in many respects. It is a paving Bill and we support it with many of the same qualifications outlined by the hon. Member for South Suffolk (Mr. Yeo). For instance, I question the speed with which the Government are approaching the issue. We had a slight advantage over the Minister in that we were reading his speech in advance. I do not know whether he knew—or whether his officials had told him—that he was reading verbatim large extracts from Baroness Blackstone's speech in the House of Lords, even including at one point a split infinitive. However, there was one revealing absence in the Minister's speech compared with Baroness Blackstone's version. The sentence omitted said: The Government remain committed to the target of having Ofcom operational by the end of 2003."—[Official Report, House of Lords, 15 October 2001; Vol. 1849, c. 353.] Perhaps the Minister will enlighten us as to whether that omission represents a policy statement.

We have apprehensions about the pace of reform and the Government's commitment to the legislation. It has been said several times already that we are not dealing with the substance of the main Bill; we are considering the harness rather than the horse. However, in order to talk sensibly about the harness one needs to talk a little about the horse.

Since I entered the House in 1997 I have been involved in the establishment of two major regulators—the Monetary Policy Committee of the Bank of England and the Financial Services Authority. In both cases, but especially that of the MPC—which I regard as a great success story—the shape, structure, governance and accountability of the bodies were heavily influenced by the clarity of the objectives. Those objectives must be discussed alongside the structure, otherwise the structure will make no sense. That is why we attached some importance to Baroness Blackstone's remarks in the other place that the Government would this spring establish a Joint Committee to review the main Bill. I hope that we shall hear more from the Government about how that Joint Committee will work.

I participated in the Joint Committee on the FSA Bill, which was a great success and a big step forward for parliamentary accountability. The Joint Committee undertook a deep examination of the Bill and managed to avoid many of the pitfalls that the Government might otherwise have encountered. We would welcome some explanation of how the process will work and an assurance that it will cover the wide range of expertise that the two Houses contain.

An obvious point, but one that is often overlooked, is the fact that although we may talk enthusiastically about regulation, it is only a small part of what happens in the industry. For example, we had a statement from the Secretary of State for Transport, Local Government and the Regions earlier about the state of the railways. However, the establishment of a Rail Regulator has done nothing for long-term strategic investment in the railway system. The same is true in telecommunications and the media. We have a splendid example in this country, because Britain pioneered independent regulation of telecommunications through Oftel. However, a decade and a half later, we have largely failed in that area. The European Commissioner, Mr. Liikanen, who is responsible for implementing the Lisbon summit recommendations on telecommunications, reckons that Britain has relegated itself from the premier league of European telecoms regulations to the relegation zone of the second division, and I am sure that many people in the industry here would agree.

Oftel singularly failed to grasp sufficiently early the problems associated with the need for unmetered access, local loop deregulation and so on. The whole process of the evolution of broadband access was severely retarded because Oftel did not perform its functions satisfactorily. Changing Oftel's nature and placing it within the new regulator will not solve such problems. Regulation creates a structure, but it does not solve the technical problems associated with the industry.

The essential argument is whether we should have an integrated regulator. The two arguments that have been put forward are basically sound. The first is that the nature of the technology is changing rapidly in the direction of convergence. That is apparent through the mergers that have taken place. The AOL-Time Warner merger was a classic example of how the industry is developing. We should not get too carried away, because the share price of Time Warner has fallen by 33 per cent. since the original decision, which is more than the rest of the media industry, so that merger might have taken place ahead of the game. BT has announced its intention of moving into the media business, and Bill Gates has expressed his wish to use his technology and proprietary ideas in the media business. Clearly, we have an integrated business and an integrated technology, and the regulator must reflect that.

The other reason for bringing the two things together is that although it is neat in theory to put economic regulation on one side and content regulation on the other, they have major implications for each other. The classic example is that changes in sporting rights or sporting programming have major implications for the advertising revenue of the channel concerned and its competitors. Content has major implications for the economics of regulation.

Conversely, an issue of particular concern to Liberal Democrats is regional programming, particularly regional news. That issue, which is looming up, arises from the switch from analogue to digital. It was hinted at in the contribution of the right hon. Member for Manchester, Gorton (Mr. Kaufman). The phase-out of analogue television will mean that the price of analogue will rise, making it uneconomic for independent television companies to provide regional television news. We see that happening in the decline of regional programming. That is the kind of issue with which the new regulator is designed to grapple. However, it cannot do so if each of the regulators continues to live under the same roof but they do not co-operate. Working together is an essential challenge, but there is nothing in the structure to predetermine that.

As our job is to be critical, we must spell out some of the dangers of a mega-regulator. By being aware of the dangers, we can perhaps head them off. The regulator could become overly preoccupied with the concerns of the big interests, while some of the smaller, specialised concerns get overlooked. A classic example is radio, which is enormously popular. It has changed a great deal since I was a kid; as we did not have television in the home, the family used to gather round to listen to "Journey into Space", "Family Favourites" and the like. Many of us who spend a lot of time on the road spend more time listening to radio channels—Classic FM, in my case—than looking at television output.

Radio is important; it has special problems, but as the smallest and most specialised of the regulators in Ofcom, there is a danger that it will not be represented on the board and its special concerns will not be taken into account. Indeed, the submission on the Bill shows that the radio industry in particular felt that it had not been properly consulted. That is one danger.

Another danger is that in practice the Government will not respect the regulator's independence. That may not matter with a small regulator, but if one bonds together all the different regulators and the body's political independence is compromised, the consequences will be serious. That is why the Bill should contain an independent mechanism for the appointment of the chairman and the board members.

I commend to Ministers the experience of the Bank of England. I sat on the Select Committee on the Treasury when the Monetary Policy Committee was being set up. There is an excellent mechanism whereby the chairman and the Chancellor's individual nominees are grilled, and painfully so. If they fail the test they either stand down or are reprimanded. There is real parliamentary accountability and independence in the choice of the members of the board. I hope that when designing the structure, some of those lessons will be learned and applied to this aspect of the Bill.

Mr. Wyatt

Is the hon. Gentleman suggesting that each member of the board of directors should hold a specific remit—one for radio, one for broadband and one for the internet, for example? If so, I think that that is quite a good idea.

Dr. Cable

I was not recommending that specifically. The structure does not have to be so formalised and compartmentalised. One is looking for expertise on the board and for people who represent different interests. I would not want to prescribe a specialist for each area. I was simply trying to establish that Parliament can give critical reviews to major appointments—in other words, board members—to safeguard the organisation's independence.

On the related issue of parliamentary accountability, I hope that the Minister will indicate how he intends Ofcom to be accountable to Parliament. Perhaps it might be useful to specify in the Bill exactly how that would occur. At present, there is the occasional requirement to report to the Public Accounts Committee—often a rather narrow and technical form of accountability—and occasionally to the relevant Select Committee. However, perhaps this should be spelled out and we should specify annual debates. The whole area of parliamentary accountability is vague, and this needs to be made clear.

We get into difficulties once we separate discussions on structure and discussions on the Bill's principles and purposes. What is the purpose of regulation? What are we trying to achieve by it? The answer is not self-evident. The Government's objectives, as set out in their preparatory paper, were to strike a balance between the interests of the industry, which are effectively unfettered commercial activity, and the protection of the consumers. However, consumer protection is very complex, as opposed to the protection in the financial services area. We are talking about quality, regional balance and access for old and disabled people. Defining those factors will be difficult.

The liberal and economic view would be to argue that the nature of the technology makes regulation less necessary, because one is creating choice through digital technology and in other ways. There is a vast cornucopia of choice; people can pick and choose. That suggests the advantage of light regulation, but it needs to be backed up by regulation of a different kind. I want to make the case for that, because the real need for proper and effective regulation is often overlooked.

There is no reason to assume that the industries that will emerge in this new business will be competitive. The nature of many multi-media and telecommunications activities is to generate monopoly. They generate economies of scale. A major concern about the growth of new media communications is what people in the industry call the secret garden problem. Major providers in the satellite communications business and elsewhere create directories which will, in turn, direct viewers to content. The providers will effectively have monopoly control over who sees what through their ownership of the media system. That is a hypothetical concern at present; none the less, it underlines the problem that in this industry there may be a natural tendency to monopolise. That is already the case with software systems and standards. Therefore, we need clarification about how monopoly and breaches of competition will be dealt with. The Bill does not make clear the link between Ofcom and the Office of Fair Trading. Which organisation will take the lead in investigating a serious breach of competition?

The Parliamentary Under-Secretary of State for Culture, Media and Sport (Dr. Kim Howells)

That is not in the Bill because this is a paving Bill to set up Ofcom. However, I understand and share the hon. Gentleman's concerns about competition. I give him an undertaking that the issue of concurrency, which is at the heart of this matter as far as the Office of Fair Trading and Ofcom are concerned, will be addressed in the main communications Bill, which will be published in the spring.

Dr. Cable

I thank the Minister for his helpful intervention, which demonstrates his awareness of and concern about the problem. I hope that he will bear in mind the complex problem in the media and telecommunications business of ensuring that monopolies and mergers are regulated appropriately at both a European and national level.

The second issue relates to content. As I have said, there is a wide variety of concerns about quality, regional balance, unacceptable material and so on. I should have thought that one of the board's purposes was to capture some of these various public concerns about broadcasting. That is why I do not fully understand why the number of three to six has been chosen. What was the Government's rationale for that? Why is it so restrictive? Does it encompass the range of representations that will have to be made, particularly on content? It seems unnecessarily rigid, and it would be useful to have an explanation of the reasoning behind it.

Finally, and linked to that point, there is the debate that has been going on during our proceedings about the role of the BBC. There is certainly a debate to be had. The right hon. Member for Manchester, Gorton made several particularly valid points. The BBC's normal programming—quite apart from its specialist commercial activities—has major knock-on effects on the commercial competitors. The BBC is part of the industry; it cannot be considered separately. At the same time, it has a separate remit with a host of social obligations.

The Liberal Democrats certainly believe in public service broadcasting, but getting the balance right will not be easy. We are debating not whether the BBC should be in or out of Ofcom, but how far in or out it should be. At this stage, however, we do not want to prejudge that issue. That is why we argue against including it in the Bill at present—it should be part of subsequent debates.

To summarise, we broadly support the Bill. We regard it as a step forward. It is a useful paving measure. We shall table amendments to strengthen accountability and to ensure the independence of the regulators from day-to-day political interference. With those qualifications, the Government can count on our support.

7.1 pm

Mr. Chris Smith (Islington, South and Finsbury)

I draw the attention of the House to the declaration of interests in the register in relation to both Disney and Classic FM.

It is sensible to change, simplify and modernise the regulatory structure in the light of changing and fast moving circumstances. We live in a world in which the fields of communications as a whole—encompassing both broadcasting in the traditional sense and the development of internet communication, telephony and telecommunications—are merging, converging, changing, developing and improving at a very fast rate. It makes complete sense that Parliament and the Government should examine the regulatory structures that apply to those various fields and try to bring the structures up to date.

It makes sense to rationalise them by creating one regulatory body. Given that there is such a fast-converging set of fields, it no longer makes sense to regulate something called telecommunications separately from something called broadcasting. Bringing the existing five regulators together in one body—Ofcom—as the Bill presages is the sensible thing to do.

It is also sensible to make preparations early, so a paving Bill that will enable some of the changes to be introduced as rapidly as possible is also a wise approach. I certainly hope that we shall soon see the detail of the main communications Bill so that we have a clearer idea of exactly what Ofcom is going to do and precisely what its powers will be.

The existing five regulators have been working together extremely well since the publication of the White Paper a year ago—as they had been doing even before that. Their willingness to participate readily in the development of Ofcom is a real tribute to their experience and expertise.

At the heart of what we are doing lies the acknowledgement that some special regulation is required for this range of industries. Broadcasting in particular is not like a material good for sale on a supermarket shelf. The media industries are special in that they rely on a limited range of means of communication with the public. They are part of the very fabric of our democracy. They form part of the means whereby the citizen gains information as well as entertainment.

As a result, it is important that there are some special rules for the media. Simply to rely on competition policy—however strong and fierce it may now be—is not sufficient. However, it is right for the Government to want to employ that special regulation with a lighter touch than may have been the case in the past. When spectrum was scarce and there was a limited number of means of communication with the public, there was a clear role for very strict regulation. Nowadays, with the development of satellite and cable, the opening up—we hope—of broad band and the development of a more efficient use of even analogue spectrum, there is a much broader range of opportunities to reach the public and communicate with them, so it follows that it is right to go for a lighter touch as regards regulation. I very much hope that that is the way in which Ofcom will develop.

When we are enacting that new legislation we need to ensure that the structures will be flexible. In the past, there has always been a tendency for broadcasting legislation in particular to be catching up with the past rather than preparing for the possibilities of the future. I trust that the full communications Bill will be a mechanism that can itself adapt as technology and the marketplace change and as competition delivers new ways of serving the public. I hope that the mechanisms to be set up can be adapted with relative ease and with speed as the world around us changes.

I hope that Ofcom will be a small and tightly focused body. In many ways, the Government are right to consider that a board of six people will be about the right size. It is important that Ofcom is not an unwieldy bureaucracy; it should also be fleet of foot. I hope that the Government will resist calls, which will be made eloquently in all quarters, for different interests to be represented on the Ofcom board. The board must be focused specifically on its remit from Parliament; it should not be a gathering together of a multitude of interests representing different parts of the country or particular types of communication.

The board must be small and focused, but it must also be given the specific duty of ensuring that it consults deeply with every part of the country and of the industries that it regulates. The organisation should be flexible and nothing like as rigid in its operation as some of the present structures.

I offer the House a small example. At present, there are strict rules—in many ways they are sensible—to deal with the dangers of the promotion of products and the undue prominence that particular commercial products can be given in television programmes. However, a broadcaster cannot go to the Independent Television Commission and say, "We are thinking of making a programme in which there will be a particular product placement. What are the rules about whether we can do that?"

The ITC cannot give prior advice to the broadcaster. All it can say is, "There are the rules; you put the programme out; and we will then decide whether to fine you." That inability to have a prior discussion seems to be daft. Surely it would be sensible to ensure that Ofcom can act flexibly and rationally, so that broadcasters can discuss with it exactly how a certain set of rules will apply to any programme or set of programmes. That would give broadcasters greater certainty and ensure that they could take more creative risks because they would not be frightened of offending the ITC without knowing whether they would actually do so.

Much has been made in the debate so far about Ofcom's role in relation to the BBC. That is a crucial issue. The BBC is our largest broadcaster and, in many ways, the most important cultural institution in this country. It is therefore important that the BBC fulfils the remit that Parliament has placed on it not only effectively, but fairly. It is worth reminding ourselves that a very substantial role is envisaged in the White Paper for Ofcom in relation to many of the BBC's functions.

In the first and second tiers of regulation envisaged in the White Paper, Ofcom's role is very clear and, with one exception, there is more or less a level playing field between the BBC and the other public service broadcasters. The important difference in the White Paper relates to tier 3—the tier where the broad public service responsibilities of the public service broadcasters are carried forward.

It is envisaged in the White Paper that all the broadcasters will effectively operate on a self-regulatory basis; that at the start of a year, they will issue of set of commitments and a promise of performance about how they intend to fulfil their obligations. That will be monitored towards the end of the year, and Ofcom will have a backstop power to intervene if it believes that the broadcaster is failing to fulfil the obligations placed on it. That self-regulation, coupled with Ofcom's backstop power, seems to be a sensible approach; it will lighten the burden on the broadcasters, but it will keep the public interest firmly in place, if necessary. In the White Paper, Ofcom's backstop power does not apply to the BBC.

The backstop power envisaged in the White Paper lies in the hands of the Secretary of State. As the White Paper states, the Secretary of State is responsible for approving new services and for approving, or withholding approval, changes in services provided by the BBC. That is why my right hon. and hon. Friends have rightly identified, for example, the need to review News 24 in the near future to determine whether it is fulfilling the obligations that were placed on it when initial approval was given for it to go ahead. At the moment, that role lies with the Secretary of State.

I put it to my right hon. and hon. Friends that it is worth considering whether it might be better for that backstop power to rest with Ofcom, rather than with the Secretary of State, to achieve a more level playing field between the different broadcasters. I say that not only because it could create a more even-handed approach between the different broadcasters, but because it might be beneficial for the BBC; it would remove the possibility a political judgment being made in relation to the BBC's services and put it in the independent regulator's hands. I say that in the knowledge that I was largely responsible for writing the White Paper, but I have had the opportunity to reflect further on those matters since then, and I believe that that would make a substantial difference to the BBC's interests.

Nick Harvey (North Devon)

Is the right hon. Gentleman arguing that Ofcom should therefore have the sole right of approval for new BBC services and that the Secretary of State should not have that right; or is he talking only about that general backstop power?

Mr. Smith

I'm talking about the general backstop power, but I accept that the point that the hon. Gentleman makes represents a logical extension of my argument and that it may well be sensible to consider putting the power to approve or disapprove new services in Ofcom's hands as well. There should be clear parliamentary accountability, and Ofcom should be answerable, through the Select Committee on Culture, Media and Sport and the reports that Ofcom makes to Parliament, for the decisions that it takes, but there is an argument for saying that that route should be considered.

None of this removes from the BBC's board of governors the responsibility for the day-to-day control over how the BBC fulfils its public service remit. Of course, as with Channel 4's board and the independent boards of the ITV companies, the board of governors will have a role to carry on the basic functions of ensuring that the BBC is run effectively and in accordance with its remit.

Dr. Howells

I obviously place great store by what my right hon. Friend says, but, on a point of clarity, he is not agreeing with my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) that the present regulatory structure, which allows the BBC's board some independence that no one else enjoys, should continue. He is saying that that should continue, but that small changes should take place.

Mr. Smith

In fact, I am saying that the independence that the White Paper seeks to create for the ITV companies and Channel 4 would enable them to be largely self-regulatory, which the BBC is at the moment, and that Ofcom's reserve backstop power should apply to the BBC, as it will to the other broadcasters. While the other broadcasters are moving towards greater freedom under these proposals, the BBC should swap the Secretary of State's ultimate responsibility for that of Ofcom. That could provide a sensible way forward in the interests of the BBC itself, as well as in those of the whole broadcasting landscape. I say that because I believe passionately in the importance of public service broadcasting.

Michael Fabricant

In addition to believing in public service broadcasting, does the right hon. Gentleman believe in public perception? Does he agree that the current public perception in some quarters is that the BBC is its own judge and jury and that, if Ofcom were to be the backstop, it would be seen as an impartial, third party judge and jury for the BBC?

Mr. Smith

The hon. Gentleman is partly right in that the board of governors acts jointly as a regulator and, ultimately, as a manager. However, the ultimate judge in relation to the BBC is, at present, the Secretary of State. I suggest that that judge should be Ofcom rather than the Secretary of State.

The importance of public service broadcasting should not be underestimated. I was deeply concerned by the answer that the hon. Member for South Suffolk (Mr. Yeo) gave to my hon. Friend the Member for Stalybridge and Hyde (James Purnell) who asked about the future of the BBC and Channel 4. Both the BBC and Channel 4 are public assets, must remain public assets and must remain publicly owned. Even to be considering, as the hon. Gentleman appears to be, the prospect of privatisation of not just one but both fills me with deep dismay.

The role of public service broadcasting is to do the things that the commercial sector either cannot or will not do. It is also to ensure that there is regional strength to what the major broadcasters do in terms of the origin of their programmes, the focus of news and the way in which the regions are brought to the attention of the country as a whole. However, perhaps most important, public service broadcasters are there to act as a benchmark of quality against which the whole of the broadcasting environment must be judged. The role of ensuring that the rest of broadcasting is kept honest and of high quality is one to which the BBC, Channel 4 and ITV, in their public service responsibilities, must hold fast.

I hope that Ofcom, as it takes shapes under the proposals in the main Bill, will, first, have a duty to promote commercial competition coupled with the duty to preserve and enhance public service broadcasting. Secondly, I hope that it will have a duty of fairness between and to the broadcasters. Thirdly, I hope that it will have a duty to promote a broad band future for this country. I stress that point strongly because I am extremely worried that Britain, which was apparently set fair three or four years ago to be in the lead of the broad band environment in the future, is in danger of slipping behind. A sound and exciting future for broad band will happen only if the infrastructure providers and the owners of the infrastructure systems talk with, work with, share with and enter into ventures with the content providers.

In broad band, as in broadcasting generally, the synergy between economic infrastructure and rich and varied content is the secret of success. One has to make sure that the two go hand in hand. Having the ability to deliver new ways of absorbing information and entertainment across telephone wires or any other means of communication into the household is no good unless one simultaneously thinks about how one ensures that rich and varied material can be conveyed.

Ofcom's aim is fundamentally to provide a framework in which both infrastructure and content are brought together and are considered in the same environment and with the same set of aims and objectives. That is partly why it will be such an essential feature of the new regulatory environment that we must seek to create. The bringing together of infrastructure and content is part and parcel of what Ofcom is all about. That is important for the world of broadcasting and telecommunications and for the broad band future that we all want to occur.

Because of that and because the Bill takes us the first tiny step along the road towards bringing infrastructure and content firmly together in the same environment, I wish the Bill well. I also wish the Government well in taking it forward.

7.25 pm

Michael Fabricant (Lichfield)

I do not know whether the right hon. Member for Islington, South and Finsbury (Mr. Smith) saw a blinding flash on the road to Damascus or merely on the road from Trafalgar square or to Disneyworld, but—whatever the reason—I agree with much of what he said. In particular, I agree with him about the BBC, about the need for broad band, and on many other aspects of the issue.

It is unattractive to say, "I told you so," but, as I said in interventions previously, the Select Committee on Culture, Media and Sport told the House so in May 1998 when it recommended that a single body should be responsible for regulation. It said: We recommend the absorption of all current regulatory bodies into one Communications Regulation Commission". We now know that that will be Ofcom. Interestingly enough, the report went on to say that there should be oversight of all broadcasters, including the BBC. That is what the right hon. Member for Islington, South and Finsbury and the chairman of the Select Committee, the right hon. Member for Manchester, Gorton (Mr. Kaufman), have called for too.

I disagree with the remarks of the right hon. Member for Manchester, Gorton about the possible privatisation of the BBC. Apart from anything else, that would be wholly impractical at a time when net advertising receipts to ITV, Channel 4 and the independent sector in general are falling. God only knows where one would find an extra £2.5 billion—the BBC's current receipts from the licence fee—from advertising.

There is no question but that an organisation such as Ofcom must come into being. We have recently heard much about convergence—about the need for broad band and about convergence between the television set and the computer. Let me give two simple examples of how that exists at present. I often listen in my office in the House to KING, a classical music radio station in Seattle that is broadcast on the internet. Similarly, I sometimes go to York in Maine and I am able to watch the BBC 10 o'clock news on my computer there. The news is sent on the web via Real Networks, and, as a friend of mine, who is the vice-president of Real Networks, would say, the picture is rather "herky-jerky"—that is the expression he uses—at the moment. With the introduction of broad band, however, we shall undoubtedly be able to watch programming from anywhere in the world with quality as good as we can watch from the United Kingdom already.

I welcome the creation of Ofcom, as do my right hon. and hon. Friends on the Opposition Front Bench. However, I pointed out in an intervention on the Minister that I am a little concerned that radio will be overshadowed. The hon. Gentleman gave me some assurance that it will not be, and I have no interest to declare other than my interest in the subject. I used to work in radio broadcasting and, as I told the hon. Gentleman, I am only too aware of how it was overshadowed by television in the old Independent Broadcasting Authority. That is why radio was separated from television and the Radio Authority and the Independent Television Commission were founded. Some might say that it is a retrograde step to combine them again. I do not think that it is. Provided that the structures are in place to ensure that radio and other organisations which will be controlled by the new Ofcom are not overshadowed, there needs to be one regulatory organisation. There are clear interests that need to be maintained.

Mr. Bryant

Will the hon. Gentleman give way?

Michael Fabricant

I have great pleasure in giving way to the hon. Gentleman, who also serves on the Culture, Media and Sport Committee.

Mr. Bryant

Is the hon. Gentleman convinced by the Towers Perrin report, which recommends—I am not precisely sure what it means by this—a horizontal radio group within the new Ofcom? Will that be sufficient to meet the needs that he mentions?

Michael Fabricant

The hon. Gentleman does not understand exactly what is meant in the report. I suspect that it is referring to the structure that was foreshadowed in the Select Committee report, which said that sub-committees within Ofcom should have definite and different responsibilities for the various areas that it covers. If that is what it means, it is a step in the right direction and one that is necessary to ensure that those interests are well looked after by Ofcom.

The Bill is, of course, a paving Bill only, as the Minister explained. It has been introduced so that people are appointed for when the communications Bill itself goes through Parliament, if indeed it does. Presumably, the communications Bill will be announced in the next Queen's Speech.

I have one or two concerns about the Bill. Clause 1(3)(a) says, innocently enough, that the Secretary of State will appoint the chairman. The current Secretary of State appointed the chairman of the BBC. I said to the right hon. Member for Islington, South and Finsbury that fairness has to be seen to be observed, and it does not help when a well-known subscriber to the party in power is made chairman of an independent broadcasting organisation. Although I do not doubt the independence and integrity of Gavyn Davies, such an appointment does not look good, so the Secretary of State should not be tempted to do it.

Mr. Bryant

Will the hon. Gentleman give way?

Michael Fabricant

With my customary generosity, I give way for a second time to the hon. Gentleman.

Mr. Bryant

I thank the hon. Gentleman for his customary generosity, but I am not going to be generous in return. He witters on about the supposed impartiality of the present board of governors, which has a member of the Conservative party as a vice-chair, but he does not mention Marmaduke Hussey or Christopher Bland.

Michael Fabricant

Apart from the fact that I never witter, the hon. Gentleman has a short memory. He cannot tell me of a precedent where people subscribing to the political party in power have been appointed both as chairman and as director general. That is the imbalance.

Mr. Bryant

rose—

Michael Fabricant

Much as it is part of my customary nature, I am not going to be generous for a third time.

For that reason, I am worried about the proposal that the Secretary of State should appoint the chairman of Ofcom. As the right hon. Member for Manchester, Gorton said, it is imperative that someone is appointed who can do the job and who is perceived to be politically neutral. The same goes for the chief executive. It would be a sad state of affairs if two of Tony's cronies were appointed to Ofcom. [Interruption.] It is no good Labour Members groaning, because it is precisely that which happened recently with the BBC.

The issue of the BBC was addressed admirably by the former Secretary of State for Culture, Media and Sport, the right hon. Member for Islington, South and Finsbury. The Bill does not give equal control of the BBC. The Minister admitted as much. As I said in an intervention, the BBC's briefing notes give all sorts of spurious reasons why it should not be governed by the Ofcom board.

It is true that ultimately the Secretary of State can intervene, but that is the nuclear option. No Secretary of State anxiously intervenes on the BBC for a number of reasons. To be most charitable, the Government would not be seen to be supporting the independence of the corporation if they constantly intervened in the operations of the BBC. It is in the interests of this and future Governments that there should be vicarious control through Ofcom. There is no reason why Ofcom cannot have the same controls over the BBC as it will have over other public service broadcasters.

The BBC often claims, and it is frequently repeated in the House, that it is the only public service broadcaster in the United Kingdom. That is not the case. Many excellent programmes are produced by Channel 4 and ITV. They are occasionally produced even by Channel 5 and, perhaps, by Sky, which has spent a lot of money on the film industry. It is perfectly acceptable to say that those broadcasters are also public service broadcasters, the only difference being that one group is funded by advertising and subscription while the other is funded by the licence fee payer. The fact that they are funded differently does not of itself mean that the BBC can enjoy a monopoly on the "public service broadcaster" epithet.

The BBC should be controlled by Ofcom. Not only would that give it independence from the Government, who would not be seen to be in control, but, far more important, it would give the impression that the BBC was not being its own judge and jury. That has been the greatest criticism of the BBC. Even when the board of governors makes judgments about programming, which it is right to do, people still doubt whether its decisions are independent because it is an integral part of the BBC and appoints the board of management.

Dr. Howells

Is the hon. Gentleman saying that it is a problem of perception rather than of fact, and that previous Conservative Governments—no more than this Government—never sought to control the BBC?

Michael Fabricant

To a large extent I am talking about perception. Let me be clear about this. On the whole, the BBC does govern itself well. I am not attacking it, and I do not share all the views of the Chairman of the Culture, Media and Sport Committee on the BBC. As I said, I do not believe that it should be privatised; nor do I believe that its board of governors are especially arrogant or especially neglectful of their duties. What I do believe is that justice has to be seen to be done, and that is not the case when the BBC is its own judge and jury. That is why I am calling on the Government to ensure that Ofcom has the same rights of control over the BBC as it does over independent broadcasters. For the reasons that I have given, which I shall not rehearse again, it would be to the Government's advantage if they did just that.

As my hon. Friend the Member for South Suffolk (Mr. Yeo) said, those on the Conservative Front Bench are considering whether Channel 4 should be privatised. I have the luxury of not being on the Front Bench. When Channel 4 was established, it was set up and owned by the Independent Broadcasting Authority because it was thought that it could not make a profit. People underestimated the great power, strength and ability of Michael Grade. To me, it is a great pity that Michael Grade is not currently involved in broadcasting. Now, there is an idea for the great and the good—an idea for someone to be chairman of Ofcom.

Michael Grade changed Channel 4 so that, far from Channel 4 having to be subsidised by ITV through ITV revenues paid to the Independent Broadcasting Authority and later the Independent Television Commission, it is now Channel 4, through its advertising revenues, which to some degree subsidises independent television, by virtue of the fact that ITV fees are reduced because of the contribution made by Channel 4. [Interruption.] It is indeed a subsidy: ITV pays less because Channel 4 is making a contribution to the ITC.

Mr. Cameron

There used to be a subsidy under the Channel 4 funding formula, which has been abolished. It was set up so that ITV could support Channel 4 or Channel 4 could support ITV, but that has now gone. The ITV companies all pay contributions to the Exchequer; Channel 4 does not.

Michael Fabricant

My hon. Friend is missing the point. ITV companies do, however, pay a fee to the funding of the Independent Television Commission, and Channel 4's profits go to the ITC because it is owned by the ITC. I am merely observing that the contributions that need to be made by ITV companies to support the ITC are less because of the profits made by Channel 4. That is straightforward and simple enough. I see that my hon. Friend disagrees with me, but if he checks in the Library, he will see that I am right.

Channel 4 meets its programming requirements as set down by Parliament, yet it makes a profit. There is no reason why Channel 4, which is now, in effect, a nationalised industry through the Independent Television Commission, cannot be privatised. The money resulting from that privatisation could be put into the Exchequer or better still, could be ring-fenced, possibly to support still more public service broadcasting by ITV or other organisations. Parliament could still maintain strict controls over the programming remit of Channel 4, as it does at present, to ensure that Channel 4's programming does not suffer as a result.

Mr. Wyatt

The hon. Gentleman is generous in giving way. He mentioned in an intervention that £3 billion could not be found to privatise the BBC, so how would he find £1 billion to privatise Channel 4? He cannot have it both ways.

Michael Fabricant

The hon. Gentleman completely misunderstands what I am saying. He has plucked a figure of £1 billion out of the air. I am speaking of £2.5 billion in revenue costs—the income derived by the BBC. The income derived by Channel 4 comes from advertising, not from the licence fee. That is an entirely different matter. The hon. Gentleman is confusing revenue income with capital charge that would have to be made if the shares were sold. The two do not relate at all.

I spoke earlier about the parlous state of ITV. I contacted Carlton Television for some figures. In my experience in broadcasting, it is often advertising revenues that suffer first when the economy gets weaker. People perceive—falsely, in my opinion—that that is the first thing that they can save on their operating budget. The current position gives cause for concern.

In the 12 months to September 2001, which is the year-end for Carlton Television, net receipts were down by 12.7 per cent. For the 12 months to September 2002—these figures come from Carlton Television—City analysts reckon that the range of the further fall in net advertising receipts will be between 15 per cent. down at worst, and 4 per cent. down at best. According to Carlton Television, the figures for ITV as a whole would have been down 12 per cent. in 2001. The introduction of Ofcom could not come at a better time. As the right hon. Member for Islington, South and Finsbury said, this is indeed the time for a light regulatory touch.

My hon. Friend the Member for South Suffolk, speaking from the Front Bench, asked the Minister how many people will be working for Ofcom. That is an important question for a number of reasons. There are only 40 or 50 people working for the Federal Communications Commission in Washington DC, which is ably chaired by Michael Powell, son of Secretary of State Colin Powell.

I wonder how many people will work for Ofcom. If the numbers are too high, there will be a temptation for the staff to show that they are well employed by introducing too strong a regulatory burden on broadcasters. That will also put up the cost to broadcasters, who have to pay for the funding of Ofcom. The Minister will no doubt confirm that once it is up and running, Ofcom will not be funded by the Treasury, but will be self-financing. The Under-Secretary of State for Culture, Media and Sport nods. The body will be self-funding from fees paid by those whom it is trying to regulate. For that reason, too, it is important that the operating costs of Ofcom are kept down. We all know that the largest contribution to the costs to any organisation arises from the number of staff employed in it.

Finally, various organisations have lobbied us, including the Royal National Institute for the Blind, which emphasises the need for commentary to be available, over and above television programming, which is possible on digital TV. Furthermore, the RNIB asks what high-level discussions Ministers and officials are planning to initiate with disability organisations on the scope and detail of the draft Bill". That was not addressed by the Minister in his introductory speech, and I hope that the matter will be dealt with by the Under-Secretary when he winds up.

There is much to be said about the structure of Ofcom, but this is neither the place nor the debate in which to do that. We are merely debating the paving Bill, which sets up Ofcom. I could have gone into much more detail, but I am showing considerable restraint, as I know that others wish to speak, and as the debate started rather late today.

I am pleased that the former Secretary of State now agrees that there ought to be equal controls over the BBC. I am pleased that, so far, there seems to be general agreement in the House that Ofcom should be a light regulator. Most of all, I am pleased that the Government recognise, some four years after the Select Committee wrote its report, that because of the advance of technology and because of a changing world, Ofcom needs to be introduced. I echo the words of the former Secretary of State by saying that the legislation must not only mirror the existing position but try to anticipate technological and economic changes that will happen over the next five or 10 years. That will be a real challenge for the Government.

Mr. Deputy Speaker (Sir Alan Haselhurst)

Order. Let me offer some advice to the House. If all hon. Members who are seeking to catch my eye are to be successful, it would be helpful if, in the remaining time, speeches were nearer 10 minutes than 20. In order to help in that regard, hon. Members might like to bear in mind that they should not stray too far into the territory of the anticipated Bill, and that they should stick more broadly within the confines of the present paving Bill.

7.49 pm

Mr. Derek Wyatt (Sittingbourne and Sheppey)

I should put it on record that I am non-executive chairman of Spafax. We sell media to the airlines, including British airlines, but sadly also including Swissair.

A hundred years ago, there was a major debate in Europe about electricity. British politicians and scientists recommended that a 1 amp system should go into businesses and homes because they confused electricity with lighting. German politicians and scientists decided to introduce a 3 amp and then a 13 amp system. They jumped to the 13 amp system very quickly. When the scientists were asked about the change, they said "We are not sure exactly what electricity can be used for, but we know that it is more than lighting." That is exactly where we are in terms of the Bill because of the debate about broad band. The Bill is an enabling measure for broad band, but I want to ask a few questions about how it can be enabled through this Ofcom paving Bill.

It is clearly very important to have a digital terrestrial box for the 24 public-service channels that are free to air and to the population. We should be keen for that public service to be available. If we were to sponsor the process, we could go from analogue to digital overnight without having to worry about television sets, as we could provide the box in each home, but where can we get the money and who will pay? The change could be paid for fairly quickly by adding to the licence fee. The facility could be given away free in the next financial year and then clawed back in the two following financial years through a £20 surcharge to the licence fee. Very quickly, this country would be broad band and digital, and we would be leading the rest of the world. That would be a huge and important development for the British economy and would take us into first position.

If the BBC is not inside Ofcom, however, how on earth will broad band be paid for and how will we move to a digital environment? I want the BBC to be included in Ofcom. I do not think that the licence fee should be the BBC's territory 100 per cent. That is what part of the fight is about. The BBC has got wind of something: if Ofcom takes over the reins, who will control the licence fee? Will it be the chief executive of Ofcom, or will the BBC governors remain in charge? That is why there is some reluctance on the part of the BBC regarding inclusion in the Bill.

The matter creates a conundrum for the Government. We have friends at the BBC and they are resolutely opposed to having anything to do with this paving Bill. Yet, if we want the best media environment in the world and aim to attract increasing investment, we must have a single point of call for business and it must be Ofcom, which must regulate the digital future and digital broad-band players. We cannot have one of the biggest players, if not the third or fourth biggest player in the world, half a leg in and half a leg out. That makes no sense whatever.

Asking questions about the BBC in this place is nearly impossible. I wrote to the former Speaker asking whether I could table such questions for inclusion on the Order Paper and she referred me to the then Secretary of State for Culture, Media and Sport. He referred me to the then chairman of the governors at the BBC, who referred me back to the Speaker. If it is incredibly difficult to ask questions about the BBC in the House, how is it democratically controlled and how do we have any authority over it? We do not have such authority. Is that right? I do not think so, and one of the ways in which we can move the goalposts is to include the BBC in Ofcom. I liked the suggestion made by the hon. Member for Twickenham (Dr. Cable) in relation to the Bank of England. I like the analogy of an all-party or Joint Committee before which Ofcom would appear once a year.

I suspect that the reason why the BBC is playing hard to get is not too difficult to work out. The next licence fee is due. As I understand it, the review will take place next year, for implementation on 1 July 2006. The BBC does not want to discuss the matter with Ofcom. It wants to discuss it only with the Secretary of State for Culture, Media and Sport and friends at No. 10. That is why it does not want to be inside Ofcom. Let us get real. It wants to get the matter out of the way before it comes and plays with Ofcom at all. I think that that has constantly to be resisted. The BBC must be in the paving Bill and it must be Ofcom that deals with it.

Hon. Members have pointed out that five players that are currently outside Ofcom will form its constituent parts. I see that only the chief executive of Oftel is present to listen to the debate, which I find instructive. I wonder where the other four chief executives are. On a cautionary note, I am very nervous that the Independent Television Commission currently feels that it will be Ofcom and is making a lot of play in that regard. We wish the chairman and chief executive to be new people who come from outside the existing five bodies. That is very important.

I want to mention two other issues, as time is short. One of the biggest developments occurring in the new technologies is community television and radio. There has been an anomaly with regard to school radio. When a radio station was situated in a school, the airwaves had to stop at four o'clock. They were switched off because somebody from the community was not allowed to come into the station and open it for community use beyond that time. I am glad to say that the previous Secretary of State changed that situation and we are piloting some community radio and television channels.

Piloting is one thing, but every community needs community radio and television. It is not clear to me where the remit resides in Ofcom, how such community services will be paid for and where responsibility lies in terms of the directors. I would like one of the directors to be concerned specifically with community television and radio and regional broad-band hubs and television, because television as we know it will be broad band. I would like one dedicated person inside Ofcom to have the remit. I think that the BBC and ITV have missed a real trick by not creating regional broad-band hubs and becoming the focus in terms of regional development agencies in Northern Ireland, Wales and Scotland. We, too, have missed a trick, because we could have created through such services many more jobs in the creative industry.

It is pretty obvious that if we do not include the BBC in this paving Bill, it will not be a paving Bill at all.

7.57 pm

Mr. Alistair Carmichael (Orkney and Shetland)

Like all other hon. Members who have spoken this evening, I welcome the Bill—or at least what we have been given so far. The hon. Member for South Suffolk (Mr. Yeo) said that it was something of a thin gruel, which was to my mind a tad ungenerous. I think that this point will bear being made again: the devil will come in the detail of the later legislation. Briefly, I associate myself with the comments of my hon. Friend the Member for Sheffield, Hallam (Mr. Allan) on the establishment of a Joint Committee to consider that legislation. The point that he made was extremely valuable. I hope that, although such a proposal will ultimately be a matter for Parliament, the Minister will give it serious consideration.

My concern is that there is a great deal in the current regulatory framework that works very well. Although I applaud the Government for the general thrust of bringing together the framework under one umbrella, I must ask whether the specific position of regional broadcasting can be considered at a later stage. It is very important that we provide an exact definition of such broadcasting. I know that many hon. Members and people in southern England would regard Scotland as a broadcasting region. We view things rather differently in the northern isles.

We have been very well served by BBC local radio and in terms of the BBC television output north of the border. We have also been well served by the local ITV companies that operate in Scotland: Border, Scottish Television and Grampian. The latter is a very good example of the way in which the current regulatory framework has been made to work. The Minister will no doubt recall that not that long ago, the company was taken over by the Scottish Media Group. The very fine practice of providing strong news and local affairs coverage, based in Aberdeen and Inverness, which Grampian had built up over many years, covering north-eastern Scotland, the highlands and islands and the northern isles in particular, came under threat. It is as a result of a strike by journalists at Grampian and subsequent intervention by the ITC that the threat has been removed and the Scottish Media Group has been unable to pursue its agenda of insisting that those outwith the central belt must suffer hearing what is going on in Glasgow, Edinburgh and even, dare I say it, Paisley, when we have much more local and direct concerns.

The other point that I wished to make was raised by the right hon. Member for Islington, South and Finsbury (Mr. Smith). I gave a silent cheer when he mentioned the most neglected aspect of the debate: broad-band access. The right hon. Gentleman said that the focus and purpose of Ofcom would be to bring together infrastructure and content. I am delighted to hear that, but I shall be even more delighted if current Front-Bench Members express that view. That important aspect of broad-band regulation is currently in the hands of Oftel. I am mindful of the presence of that body's chief executive in the Chamber, and I therefore say gently that regulation of broad-band access has not been the greatest advert for regulation by Oftel.

Broad-band access and its regulation marks the Bill as being more than a measure for broadcasting wonks. It is a significant social inclusion measure from the point of view of my constituency and many others. The hon. Member for Rhondda (Mr. Bryant) indicates that the Welsh valleys are in a similar position. Access for people in remote and island communities is crucial. We are told that we should move towards teleworking and telecrofting. I invite the Minister to visit Foula in Shetland and tell the people that. They ask simply for a microwave, digital link to replace the current analogue link, which is useless for access to the internet and broad-band communications.

As I have said previously, the Shetland Islands council charitable trust is pursuing a scheme to lay a fibre-optic cable from Shetland through Orkney to the Scottish mainland to allow us to have proper broad-band access. We have long resigned ourselves to the fact that we shall be at the end of the queue for help from anyone else to gain broad-band access. We have therefore taken the initiative.

We are putting in money that the Government might arguably invest. Yet they are threatening to take no less than £64,000 a year out of the scheme to pay rates to the Crown Estate Commissioners. When will they get to grips with the conduct of the Crown Estate in dealing with such projects? It presents a good opportunity for the Government to show that joined-up government, about which we have heard much in the past, has some practical application.

I could speak about other aspects, but other hon. Members wish to speak, and they are probably better qualified than me. I shall therefore end simply by saying that Liberal Democrat Members support the Bill and wish it well.

8.4 pm

Ms Claire Ward (Watford)

I support the Bill, which will bring about much needed reform in regulating our broadcasting and communications industry. It may not provide the detail of regulation—several hon. Members have mentioned that—but that will come in the future. I hope that it is the near future. The measure will allow a newly formed Ofcom to prepare for a difficult but none the less exciting task of regulating the fast-moving broadcasting and communications industry.

Since the previous broadcasting measure, the industry has changed almost beyond recognition. The latest Independent Television Commission figures show that investment in programming increased from £4.5 billion in 1994 to £7 billion in 2000 as the number of channels has grown. We have access to a plethora of channels, and more than 40 per cent. of United Kingdom homes have multi-channel TV. If we turn on our televisions, we can watch almost anything at any time of night and day, although we cannot guarantee its quality. Expansion has even allowed for the proceedings of the House and its Committees to be broadcast, although I am not sure that viewing figures could compete with one episode of "EastEnders" or "Coronation Street", despite some of the characters in the House.

Michael Fabricant

Speaking of characters, will the hon. Lady give way?

Ms Ward

I shall.

Michael Fabricant

Is she aware that the Parliamentary Communications Directorate started a webcasting experiment only yesterday? It is therefore possible that people in New Zealand are currently watching our debate on the beach or elsewhere.

Ms Ward

I applaud the hon. Gentleman and his colleagues for making such a leap forward. However, if members of the public in New Zealand are watching the debate in such beautiful weather, they need their heads examined.

It is interesting that 60 per cent. of those with access to multi channels prefer public service, free-to-air channels.

The convergence of broadcasting and other media has become commonplace. Mobile phones carry radio, and text messages have become the most popular form of communication among the young. We can gain access to the internet through our television sets, and we can see almost any film that we want at almost any time through video on demand. Internet access opens the door to all forms of media and communications. A revolution has occurred, and if we are to support the industry, we must recognise the changes and provide a framework for even greater support.

I am sure that in a future debate, we shall have more views to express about the detail of the regulatory powers. However, the principle of a single regulator, taking on powers currently held by the ITC, Oftel, the Broadcasting Standards Commission, the Radio Authority and the Radio Communications Agency, has received widespread support throughout the industry and among viewers and consumers. The five regulatory agencies already collaborate, but the Bill will make a statutory duty of assisting Ofcom in preparing for its new powers.

I support the establishment of Ofcom, and I want to say a little about what I believe it should do. I appreciate that we are considering a two-stage process, and that the draft communications Bill will be available for debate here and in the other place in due course. However, we are debating the establishment of a body, and it is important to have some thoughts about what it should do. I am pleased that many hon. Members attempted to do that in the early part of the debate.

The scope of Ofcom as it stands is not as wide as I would wish. I believe that the BBC should be included in Ofcom if the body is to be the single source of regulation of the industry. It is not fair and it does not make sense to consider establishing a single regulator and leave out our most important public sector broadcaster.

I served on the Select Committee on Culture, Media and Sport during the whole of the previous Parliament. I was a member when it produced the report in 1998 under the chairmanship and, in my case, under the wing of my hero and right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman). Despite that, I still support the BBC and wish it well. However, its unique role should not mean that it continues to be maintained at great public expense—more than £2.5 billion of guaranteed funding a year—outside the regulatory regime. It is not the only public sector broadcaster. As we have heard, ITV and Channel 4 also have statutory roles.

The BBC is a public sector broadcaster with not only a proud past but the potential for as great a future. It should have the confidence to welcome regulation with its competitors, rather than shy away from it. If we are to make these major reforms to the industry, we must do it right, and I hope that, when we come to the fuller discussions on the details of the communications Bill, the Government will reconsider this issue.

The direction that Ofcom receives in the year before it gains its regulatory powers will be essential. It will not be an easy task to appoint a chairman—or chairwoman—and executive directors of the new board. I know that the Nolan procedures will be in place, but we need someone who can command the confidence of consumers and the industry, and be independent of political influence. Will the directors have security of tenure and, if so, for how long? What will we know about the chairman's role? Whoever is appointed will have an important dual role. They will be responsible for protecting the interests of citizens as well as for ensuring that the industry receives the support that it needs to flourish.

We must not forget that the ultimate purpose of regulation is to ensure that the consumer benefits, and is protected. That will be tested in many ways in due course—for example, through the role currently held by the Broadcasting Standards Commission in relation to the content of programmes. That will be controversial, to say the least. I hope that Ofcom will ensure that the balance of representation on any committee that it establishes reflects the broad range of views that exist not only in the House but throughout the rest of the country.

Michael Fabricant

Will the hon. Lady give way?

Ms Ward

I want to move on, because I know that other hon. Members wish to speak.

We shall also need to consider how we expand in the digital age to ensure that many more of our constituents benefit from the real revolution taking place. This paving Bill is a start, but I look forward to the next debate, and to seeing the detail of what Ofcom will be responsible for. Then we will know that the promises that the Government made in their manifesto to establish Ofcom will have been kept, and that the work that the Select Committee did in 1998 in producing its report will have made an important and beneficial contribution to the overall debate.

8.12 pm

Mr. Boris Johnson (Henley)

I thought that I was not going to have to declare an interest in this debate—as I am merely the editor of an "old-technology" magazine—until I looked at the awesome powers to be assumed by this Ofcom that will apply to The Spectator online, which I also edit. I do not necessarily resent the wide powers that are to be taken. If this body is to take over five separate regulatory bodies, producing a smaller number of bureaucrats overseeing the media, that will be all to the good. However, I confess that I have some anxieties about Ofcom and, in particular, its establishment, which is what we are discussing tonight.

Whoever is in charge of Ofcom—Mr. or Mrs. Ofcom—will be a very powerful person. This regulator will, as has repeatedly been said, have authority over the most various and dynamic sector of the British economy. He or she will be ultimately responsible not only for all kinds of difficult questions of taste and decency—and content generally—but for vast competition issues. I ask Ministers to consider what will take priority in the mind of this person in the case of a conflict between, say, questions of competition and of decency. Who will vet the appointment of this person, and who will ensure that they are not the toady of some Government or other, as suggested earlier by my hon. Friend the Member for South Suffolk (Mr. Yeo)? I do not believe that the House has had convincing answers to those questions. It would be a good thing if this person were in some way accountable to Parliament, perhaps to some Committee or other—why not?

That is my first anxiety about the great Ofcom creation: that whoever is in charge will be unaccountable. However, I have a more profound anxiety, which has also been well rehearsed by the right hon. Member for Manchester, Gorton (Mr. Kaufman) in his excellent speech, the former Secretary of State for Culture, Media and Sport, as well as by several Conservative Members. That is that this new body does not include the BBC within its remit. Five regulatory bodies have been folded in, but not the BBC board of governors. It is difficult to see how any sensible decision can be taken about competition when the BBC falls outside the purview of Ofcom.

Let us consider this extraordinary anachronism, the BBC, in which one has—the country has—20,000 taxpayer-funded journalists. It would be fair to say that many of them, because they are state funded, have an inbuilt tendency to favour the case in support of state control or state interference. They continue to produce 37 per cent. of the terrestrial TV programmes that we watch, and 27 per cent. of all cable and satellite programmes. That is an extraordinary achievement, but it is made slightly less extraordinary by the fact that they receive £2.5 billion of state aid to do so.

I am not saying that the BBC should be abolished or privatised, but I do not see how this anachronism can last. Indeed, I am not sure how well it coheres with the state aid articles of the treaty of Rome. I often wonder whether the BBC's decidedly gentle approach to matters such as the single European currency—and to Europe generally—might be linked to some deep cultural awareness on the part of its 20,000 journalists that they depend for their very existence on the leniency of Brussels. If we look at articles 85 and 90 of the treaty of Rome, we see that many of the things that the BBC does in its current form do not cohere with state aid rules.

On the BBC news the other night there was a flagrant plug for—[HON. MEMBERS: "Boris Johnson!"] On the contrary, it was a plug for a film about Iris Murdoch, which was partly funded by the BBC. The corporation does this all the time. Whenever one turns it on, one sees a plug for the Radio Times or some commercial arm of the BBC or other, which is competing in a commercial market with other concerns. I am not saying that the Radio Times competes with a magazine with which I am associated—far from it. It does, however, compete on commercial terms with other magazines and, in so far as it is in receipt of state money, that is unfair. It is absolutely absurd that these competition questions should not fall within the scope of Ofcom. I hope that the Minister, having heard a fusillade of comments on this from both sides of the House, will address the matter in a slightly more robust way than he did at the outset of the debate.

I shall finish by examining one body that is being wound up and folded into Ofcom—the Radio Authority. I know that this is a paving Bill, but I want to make a point about what I hope Ofcom will do when it takes over the functions of that authority. I hope that it will change the policy on religious broadcasting. I am not suggesting that I would listen to a national Christian radio station, were one to be created. I would probably not listen to it as much as would be good for my immortal soul, but I cannot see why we should not have such a station in this country. It seems absurd to imagine that there could be any disadvantage or danger involved in having one.

The only example I have been able to think of, of anyone being adversely influenced by listening to a Christian radio station is in the famous Mick Jagger song "Far Away Eyes". In it, he sings about someone listening to a gospel radio station and driving through 20 red lights because he is so confident that the Lord is holding him in his arms. However, I do not think that anyone else is likely to be so influenced.

Michael Fabricant

I am listening to my hon. Friend with great rapture and there seems to be support in the Chamber for permitting a Christian radio station, but if one is allowed, should not Muslim, Hindu, Jewish and other religious radio stations also be permitted? If they are, where will the frequencies come from, as national frequencies are not available?

Mr. Johnson

My hon. Friend makes an excellent point. I merely draw it to the House's attention that there are national Christian radio stations in Argentina, New Zealand and even Iraq, I am told. If we are moving to a new era of broad-band radio—the hon. Member for Sittingbourne and Sheppey (Mr. Wyatt) made a good point about electric light and how people did not know how much would he needed—it is wholly possible that there will be scope on the spectrum for a variety of religious broadcasting. If hon. Members feel seriously worried that its content may influence them in some way, I suggest that they could always turn it off. Ofcom is about freedom, choice, diversity and all the rest of it. If that is true, I hope that changing that policy will be among its first moves when it is called into existence. I would be grateful for an indication from the Minister of whether I am right to hope that that will be so.

8.21 pm

John Robertson (Glasgow, Anniesland)

I do not think that my contribution will be as entertaining as the last one, but I shall do my very best. I am delighted to participate in the debate, but I must declare an interest. Before entering Parliament, I worked for BT for 31 years and I am a member of Connect, the union for professionals in communications, which part-sponsors a researcher to assist me with research on the communications industry. I am also chair of the newly established all-party telecommunications group. Therefore, I have a long-term interest in communications and I have experienced at first hand the rapid change of the communications sector.

I shall not go into the figures that some Members have mentioned, but people understand that the communications industry has come a long way over the years. It is interesting to note that it took about 38 years to build up a figure of 50 million television watchers in America—a country run by television—yet it took only a decade for the number of mobile phones to increase from 1 million to 30 million today. It took only four years for the internet system to achieve 50 million users, so the communications industry has moved on from a can and two bits of string. That is why Ofcom must take over from the previous regulatory bodies and why the Government's introduction of a Bill that proposes the creation of a unified regulator is timely.

The industry, in terms of service providers and content, is becoming increasingly convergent, and separate regulation will not be able effectively to monitor areas that are now essentially intertwined. I want to consider first the way in which the new regulator should work. Ofcom needs to be able to act independently, as many have said, but I agree that the new body must work closely with the Department of Trade and Industry and the Department for Culture, Media and Sport to ensure that the transition is smooth. However, Ofcom must be able to respond to changing circumstances in what is new terrain.

The White Paper set out the Government's proposals for the creation of Ofcom and attracted more than 250 responses from interested parties—broadcasters and service providers as well as trade unions, which look after people who work in the industry, and consumer groups, which protect users. I am glad that there is widespread support for the proposals. The general feeling is that the creation of Ofcom will simplify the complex web of existing regulators, removing problems in the current framework such as regulatory overlap and double jeopardy whereby the same issue can be investigated in parallel through different regulators. However, concerns have been raised and I seek clarification from the Minister.

First, how will we ensure that the concentration of authority in one regulatory body does not lead to unchallenged industry control? We must ensure that the checks and balances that exist where bodies have different remits are not lost through the creation of a single entity. Others have expressed concern that content regulation might overshadow competition and that those two aspects must be examined separately. Perhaps the Minister can put meat on the bones of that perceived problem.

We need to ensure that Ofcom is properly resourced; some companies complain that there have been difficulties with the current system due to the high staff turnover at Oftel. We must put checks in place to ensure that ongoing investigations by the new body are as smooth as possible.

The Scottish Consumer Council has raised concerns of particular importance to me. It is disappointed that the initial proposals failed to acknowledge the realities of constitutional change in Scotland. Ofcom can perform its role in Scotland only if the framework takes account of the specific political, social and economic environment in Scotland, and the SCC points out that for Scotland's interests to be represented and addressed in the new structure, the organisation must have a positive relationship with the Scottish Parliament and the Scottish Executive.

The SCC also stresses that Ofcom must maintain an office in Scotland to ensure that the protection of consumers in Scotland is addressed at UK level. Many respondents to the White Paper argued that Ofcom must maintain local offices and ensure that the relevant issues are devolved as much as possible, to reflect the cultural diversity of regions and communities.

We must address the way in which the new body will work alongside the Office of Fair Trading. I am pleased that the Minister made a contribution on that matter and that it will be considered. If I put my two pennyworth in, that might help him on the way. The proposed reorganisation of the regulatory structure will better suit the converging market place, and I support that. Multiple bodies have created a regulatory patchwork, so we need a clear description of Ofcom's mandate to act, especially on competition.

It is important that the OFT continues to lead on issues relating to competition regulation, and the OFT leadership must ensure continuity and consistency in decisions about market definition and market power. It would be detrimental to the entire process to transfer the lead role in investigations into competition from the OFT to the new regulatory body.

In some countries, such as Australia, where the industry regulator and the general competition functions are combined, overall regulation can be achieved under one roof. However, as in the United Kingdom where responsibility for competition and for industry-specific regulation is separate, the competition regulator should maintain primary responsibility for issues relating to competition. Perhaps we should consider a system similar to that in Australia. It was helpful to hear the Minister's views on the OFT, and I hope that this matter will be taken care of in the future Bill.

I want to deal with Ofcom's role in consumer protection, as I have been disappointed in the amount of attention that has been paid to the consumer in the debate. I hope to rectify that. In the United Kingdom, 4 per cent. of consumer spending goes on telecommunications, television and other communications services. As the White Paper rather nicely points out, that is more than we spend annually on beer. I have to tell the House that I do not spend that much on beer.

British businesses increasingly rely on new technology to thrive, irrespective of the sector to which they belong. However, when things go wrong their reliance is highlighted in a very alarming way. I was approached by a number of constituents who had been hugely affected by the demise of Atlantic Telecom, which went into receivership in November. Businesses that used Atlantic Telecom's services were suddenly without phone lines. All material, such as stationery and advertising, was wasted because it contained a non-existent telephone number. Some companies still face the possibility of going out of business.

The Office of Telecommunications was of no use to the people who were affected, and PricewaterhouseCoopers, which was in charge of the receivership, was also unhelpful. In fact, as they say where I come from, and as I said to the Leader of the House in business questions in November, in this respect the current system is about as much good as a chocolate fireguard.

BT wanted to take on responsibility for the service provided by Atlantic Telecom, but unfortunately that was at a cost, and nothing could or would be done. No one was willing to pick up the tab. Regulation exists to protect the consumers' interest, but this example has highlighted that that is not always the case under the current system. I disagree with my right hon. Friend the Member for Islington, South and Finsbury (Mr. Smith). We need to be rigid on consumer protection. The introduction of this legislation is an excellent opportunity to provide more effective protection for consumers.

Mr. Alexander

I hope that my hon. Friend will bear in mind the fact that joint action was taken by the Department of Trade and Industry and the Scottish Executive to ensure the extension of the service for Atlantic Telecom customers, and that when this issue was addressed in an Adjournment debate I gave an undertaking to consider the specific issue of regulation thrown up by the Atlantic Telecom case after I had put the rescue package in place.

John Robertson

I thank the Minister for that information. I did not know that, and I will take his comments on board. I realised that the Scottish Executive had done something, but it only provided service on an incoming call basis for about six weeks. Although that helped businesses over the initial period when they were trying to get their communications systems sorted out, many of them that did not have that extra money to take on the new operator were left in a bit of a state. I am glad that the Minister has taken that on board, and perhaps he will do the same regarding the next item I want to raise.

There is little point in having any regulatory framework if consumer interest does not underpin its entire operation. I would welcome Ofcom having powers along the lines of those of the Association of British Travel Agents, which investigates claims for compensation for people with a complaint against a travel agent. Although I welcome the creation of Ofcom, my concern is that it will be a toothless tiger, and we need to ensure that the consumer is not left to flounder when things go wrong. Ultimately, we need to make sure that there is sufficient scope for customer redress.

For example, there could be a bond for a licence based on projected turnover. That would ensure proper cover for the consumer, and would pick out the cowboys as they would not be bonded. I am sure that the Minister could think of other ways to look after the consumer, and I would be interested to hear his ideas on the subject.

Mr. Alexander

I can give my hon. Friend an assurance that we are considering all the options in the light of the Atlantic Telecom case. We will examine the specific example that he has given, not just in relation to this Bill but as part of the Department's ongoing work.

John Robertson

I thank the Minister once again. I welcome the Bill. I have raised a number of issues. We need to ensure that the design of the new body is right: it must be transparent, the regulation process must be clear, its objectives must be clear and it must be governed to the highest possible standards. Most of all, it must protect the customer and the industry.

8.34 pm

Angela Watkinson (Upminster)

I should like to state my qualified support for the Bill. There is an urgent need for a major revision of, and general deregulation in, broadcasting and communications. It is good news that the Government are taking steps in the right direction. However, those steps are yet to be defined, so the Government should get on as quickly as possible with producing the main Bill on the communications sector. As Ofcom will undertake its regulatory role when the communications legislation receives Royal Assent, I look forward to seeing the draft Bill. As ever when complicated subjects such as this are involved, the real interest of the House will be in the detail of the future legislation.

The creation of Ofcom as a single, all-encompassing regulator is welcome, but it should of course include the BBC, which will be an essential component. This is a wonderful opportunity for the Government, once and for all, to stop interfering in the media and communications industries.

We need to ensure that the legislation is right not just for now, but for years to come. The speed of development of digital technology, and the convergence of communications, have highlighted the inability of the regulatory framework to keep up with the rapid pace of change. After all, the current framework was designed at a time when the full implications of the digital age could not have been predicted either by politicians or by the industry. We need to get right—and get right for a generation—the proposals in this paving Bill, as well as those in the communications Bill. The structure and span of control therefore need to be flexible and open to change, just as businesses regulated by Ofcom need to be.

We should be proud of the lead taken by the industry in this country, in both telecommunications and broadcasting, and should be waiting impatiently for the next stage of convergence of the sectors. Let us hope that the legislation we pass allows the industry to be something of which we can be proud in years to come.

Without doubt, there should be a coherent and consistent approach to regulation of the converging communication industries. At the same time, the Government need to ensure that Ofcom adopts a restrained approach in regulation. A light touch is essential to allow the various media industries to thrive, and to exploit the new levels of competition that we are witnessing across the globe. Competition should be embraced actively. I hope that the hon. Member for Twickenham (Dr. Cable) will be pleased to note that I do not split my infinitives.

A positive approach to legislation should be the foundation on which Ofcom is based. An example might be an abiding desire to avoid interference in emerging markets unless significant disadvantages to consumers are apparent, and no credible way for the market itself to deal with such problems is in sight. The Commercial Radio Companies Association has said that the commercial-radio industry in this country has experienced improved revenue and audience figures owing to reduced regulation since 1990. The Government must ensure that there is no reversal in the trend because of the application of excessive burdens and regulations to an industry in which they would be wholly unwanted and unwarranted.

As I am sure the House knows, over-regulation and excessive burdens on industry have become the Government's forte. As I said earlier, as ever in the case of complicated subjects, the real interest of the House will be in the detail of future legislation. I hope that the scope of the legislation will not be too detailed, allowing the media and communications industries to operate without Big Brother watching over them. Ofcom should be a new and fresh regulatory body, reflecting the new opportunities and challenges facing the communications sector.

In connection with the delicate but important issue of appointments and general accountability, the Centre for Policy Studies expressed valid and succinct concerns in its document "OFCOM is watching you": OFCOM will be remote from democratic control. Its chief executive will be a political appointment, making him or her one of the most powerful unelected figures in the land. Like my hon. Friend the Member for Lichfield (Michael Fabricant), I hope that all appointments to these powerful positions will be achieved through considered, apolitical debate. That will ensure that OFCOM is led by individuals with the good of the whole communications industry and of consumers, rather than the wishes of their political masters, in mind.

The Government have had more than five years since they started drafting their 1997 general election manifesto to formulate detailed proposals in that sphere. However, whatever the drafting problems, we cannot establish an elaborate and potentially powerful organisation, with an equally powerful chairman and chief executive, without knowing precisely what qualifications may be best suited to the performance of their duties, what the organisation will do or even when it will do it. Indeed, we could witness a ludicrous situation: if there are considerable delays, the officers of the new organisation could be sitting around with very little to do while drawing pay. The only way of aligning Ofcom with the eventual substantive legislation that it will administer is to link them by ensuring that Ofcom starts to operate only when its brief and duties have been fully defined.

I finish on a positive note. Prior to the various stages of debate in the other place, the concerns on accountability that were held by many people in the communications sector were numerous and valid. I applaud the sensible revisions to the Bill that were carried out in the other place, notably requiring Ofcom to keep a register of members' interests, to publish its regulations and procedures, to record decisions and to maintain those records. I hope that with further scrutiny and debate in the House we will ensure that the communications industry is regulated by an organisation with a broad remit that expresses a light touch with its regulation. Ofcom promises to have the opportunity to become extremely powerful. It will have an impact on every part of society through the very nature of the industry that it will oversee. Let us ensure that Ofcom does just that: oversee and not over-regulate.

8.41 pm

Mr. John Grogan (Selby)

I want to concentrate on the comments about the BBC made by my right hon. Friends the Members for Manchester, Gorton (Mr. Kaufman) and for Islington, South and Finsbury (Mr. Smith). I make two preliminary remarks. First, I welcome the concept of a board of regulators, which seems to be winning through. The hon. Member for Henley (Mr. Johnson) spoke as if there were a single regulator. There is a board of regulators; that is an important concept. That will ensure greater consistency in regulation. I hope that the Government are firmly committed to that model.

Secondly, I endorse the points that were made by the hon. Members for Twickenham (Dr. Cable) and for Lichfield (Michael Fabricant) about the importance of radio. The hon. Member for Twickenham said that he listened more to the radio during the week than he watched television. He is not alone. Some interesting figures over the weekend show that he is representative of the British population. Television viewing went down last year. Radio listening was maintained. People spend more hours listening to the radio than watching television during the week.

The radio sector is buoyant. Incidentally, it is characterised by strong co-operation between the public service, the BBC, which has about 50 per cent. of the market, and the independent sector, particularly in driving forward new technology and digital radio. There will be a powerful role for Ofcom in ensuring that that development continues in the years ahead.

The BBC has been one of the principal matters of contention in the debate. If one took at face value what my right hon. Friend the Member for Manchester, Gorton said, one would believe that there was going to be no relationship between the BBC and Ofcom. In fact, as various hon. Members have said, there will be a direct relationship between Ofcom and the BBC if the White Paper proposals are followed.

In terms of tier one regulation, the BBC will in matters of taste, decency and programme content, be subject to an external regulator. After all, the Broadcasting Standards Commission has that role at the moment and that will transfer to Ofcom. Ofcom will have a direct role in the economic regulation of the BBC, as it will in that of all other broadcasters. The BBC has recently combined the management of the World Service with that of BBC World. It will have to be careful in that regard. It will have to be careful to keep distinct and transparent the different revenue streams: the licence fee, the grants from the Foreign Office and commercial income. That is right and proper.

Under tier two regulation, for the first time, like other public service broadcasters, the BBC will have to provide prime time news and be subject to Ofcom regulation for that purpose. It will also be subject to Ofcom regulation in terms of programme quotas produced by independent television companies.

The expression "a level playing field" does not fully describe our broadcasting ecology. If there were a completely free market, there would be no BBC. It is there to distort the market, in the same way as the NHS is there to distort the health market. It is there to raise standards and aspirations and to increase equity. We should not forget that role.

Clearly there is a cross-party debate on the matter. I was delighted to see the hon. Member for Lichfield supporting the retention of the BBC in the public sector. I hope that that is the conclusion that his party—which, quite properly at this point in the parliamentary cycle, is reviewing its policy—will reach also. Given that Channel 4, with its mix of private and public sectors, was a prime achievement of the last Conservative Government, I hope that the Conservatives will come to the same conclusion regarding Channel 4.

We then come to the contentious third tier. I listened carefully to what my right hon. Friend the Member for Islington, South and Finsbury suggested. He said that the backstop regulator for the third tier should be Ofcom for the BBC. He also said that new channels and changes to channels should be approved not by the Secretary of State, but by Ofcom. There is a danger in that.

Let us take as an example the recent approval of the three new digital television channels and five new digital radio channels by my right hon. Friend's successor as Secretary of State. That was a courageous decision, against a lot of commercial lobbying. In the case of the new children's digital channels, some of the lobbying came from the Disney corporation, which runs the Fox Kids channel. The corporation has extensive lobbying capabilities, which have been extended recently. In addition, Nickelodeon—a joint venture of BSkyB and Viacom—argued fiercely against the proposal because it provides children's television channels.

However, the Secretary of State decided that there was a market failure. He decided that public enterprise should lead the way; it should keep the private sector honest and provide two children's channels of largely British content that did not consist of American cartoons. For those reasons, he approved the channels. It would be difficult for a regulator who, quite properly, was looking at promoting commercial channels to weigh those questions in the balance and take such a judgment.

Listening to some hon. Members today, one would have thought that the BBC governors should be abolished; some Members would undoubtedly want that. That would be a retrograde step, as the governors have an important role in protecting the ethos of public service broadcasting. However, the governors should reform themselves. They should have a separate secretariat and should not be dependent on BBC personnel who serve the Director-General. They need to modernise but they have a crucial role.

On the roll-out of digital television, it is important that digital terrestrial television thrives and that we have the three platforms; satellite, digital terrestrial and cable. I am heartened by newspaper reports that ITV, the BBC and other terrestrial broadcasters are involved in talks about how to popularise digital television, particularly non-subscription digital television. My hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) said that digital set-top boxes should be given away free. I think that they could at least be provided cheaply by a consortium of broadcasters.

Is it necessary to have one date or "big bang" for the complete digital switchover? Or is it worth considering whether, transmitter by transmitter, we have a process over a number of years by which the switch-off takes place? There is merit in having some pilot schemes and in getting the technology right. There is merit in not just having a final end date, but in working over a period of years, as different areas will have a different take-up of digital television.

I welcome the Bill and look forward to the full Bill coming before the House in due course.

8.49 pm

Mr. Richard Allan (Sheffield, Hallam)

In describing the legislation, my hon. Friend the Member for Twickenham (Dr. Cable) used what I thought was a good analogy, of a harness and a horse. I have picked a different analogy, seeing it as a legislative meal: this Bill is the starter, with the principal Bill coming along later. In common with the approach that many of us who have been here throughout the debate would take to physical food, we have been waiting so long for the legislation that we are tempted to devour the Bill as quickly as possible and get our cutlery poised for the main course.

It is right to be concerned about the gap that will follow, just as too long a gap between courses can spoil a meal. We have been told that something will be introduced in the spring. That sounds rather like a software developer's timetable, with quarter 1 and quarter 2. In 2001, we have been told that the beta version of the legislation will be along in Q1 2002, with the expected product delivery date towards the end of year 3. Those of us who have had experience of dealing with software developers know that Q1, especially when it is described as "the spring", can become Q2 and then Q3.

The Bill may end up being more significant than we think, because the Ofcom that we are setting up may have to make do in its shadow form with the existing powers of the regulators for which it will be acting as an umbrella for far longer than we have anticipated. One of my pleas is that we do not simply say that everything can wait until the main legislation, because even on the most optimistic timetable, we will have missed the boat on many issues if we do not deal with them until we have the new framework at the end of 2003. I remind hon. Members that the existing regulators still have all their statutory powers, and I hope that Ofcom will set a new direction for the use of those powers, rather than being an adjunct waiting for any future powers.

The legislation is complex and it is important to get it right, so I sympathise with the Government to some extent on delay. I have positive experience of pre-legislative scrutiny from the Special Standing Committee on the Asylum and Immigration Bill. Those who considered the legislation in detail had the opportunity to hear expert evidence. That was especially beneficial for Government Back Benchers, because those who hear expert testimony in a Select Committee are often not appointed to the Standing Committee, whereas Opposition Members more often share duties and serve on both the Select and the Standing Committee.

I understand that Parliament will have to decide, but I hope that those who will deal with the legislation in detail will get the expert testimony. That expertise should not be presented to some other group, however beneficial that may be in itself, leaving the Standing Committee members inexperienced in what will be complex technical matters.

The Ofcom framework will be in place as the principal regulatory game in town for some time to come, regardless of whether it has the powers under the new legislation. The coming two or three years will be critical. It is right, as my hon. Friend the Member for Twickenham said, that every time we create a new regulator we should examine the rationale for our regulation. We do not want regulation for its own sake. Liberal Democrats believe that in many aspects of telecoms and entertainment the market will provide, but we see a role for a regulator, not to delve into every aspect of how people carry out their business but to act as the consumer's champion and in particular to challenge strongly when there is market failure.

In radio advertising, as I understand it, the authority does not set down a fixed number of adverts per hour, because it feels that the market can decide, as we have a good range of radio stations to choose from in any part of the United Kingdom: if there is too much advertising, people can turn over. The same applies to the internet: if there are too many banners on a website, we can go to one with fewer adverts.

To date, we have not felt confident about doing that for television, and we have spelled out in detail how many adverts there can be per hour at peak and off-peak hours. We may reach the stage at which we do not need to regulate in such minute detail, but until we have a genuine market in which people can choose between attractive options—which is not yet true of television for most people, who do not have the option simply to switch over if a channel has gone over the top with advertising—we will need some sort of consumers' champion.

I hope that one of the briefs that Ofcom will have will be to be as open and accessible to the consumer as possible. Our constituents should not have to come to us to ask about the regulation of those issues, be they connected with radio, television or the internet, that will increasingly impact on their lives. Our constituents should feel confident about approaching the regulator to deal with technical problems, so the regulator should have a public, open and accessible remit.

We should not lose sight of the telecoms issue either. The tendency in the debate today has been to lay into the BBC, which is an emotive issue. However, what happens to the future governance of the BBC pales into insignificance next to the broad-band debate. The BBC recognises that with its offerings, including its digital services and the BBCi offering. That is a positive approach, with a great product, and the BBC knows where the future lies. The legislative process should also reflect that future, which lies with the BBC and outside in broad-band access. Those issues should be prominent in our debate and in Ofcom's approach.

The regulator will face key priorities before the main legislation comes into force. The Minister is well versed on the technical issues, as I know because I heard him speak on them at a dinner. Despite his busy schedule, he came to speak to us and showed that he has a grasp of the issues. The first priority is broad-band roll-out, but the Government should take the leadership role. The role of Oftel, and later Ofcom, will be to respond to the steer that it gets from the Government. Important decisions will need to be made, for example, on the future structure of British Telecom, on new entrants into the market and how to ensure a level playing field. On all those questions, Oftel will need to take a clear steer from the Government, despite being an independent regulator.

The second issue is that of digital television. The Government will not be able to advance their objectives without some form of free-to-air digital service. People need to be able to go into their high street store, buy a box for £99 or less, install it and watch a digital service without paying a penny more. Such a service might reinvigorate the BBC licence fee, because people would compare the cost of £99 for the box and £100-odd for their television licence with Sky's offering. Unless and until a free-to-air service is available, the analogue switch-off is not a realistic option. Consumer resistance will be high, and that issue will need to be addressed sooner rather than later.

The third issue is the development of narrowcast television. We have focused on broadcast television in the debate, but much of the future of the new media will be in narrowcast television. People will choose their options and perhaps store them offline to be watched at a later date. That service was originally called video on demand, but it has gone a lot further and has the potential to become hugely important in the evolution of the new media. A similar process has happened in the music industry, which is in some ways ahead of television. The music industry had traditional distribution channels via record shops and CDs, but it was threatened by Napster, which offered a new delivery mechanism. The industry took Napster on and now the big boys such as Sony are developing their own mechanisms for the new media channels. AOL Time Warner is poised to do that and the big UK media channels will also do so, sooner rather than later.

Ofcom will have to deal with two key features of that development. The first is that the content will be unregulated, and, in a way, that is right. If data come over a wire, not the airwaves, they are unregulated. The second feature is that it is global. Even if we seek to regulate it in the United Kingdom, we cannot, because I can go to a provider anywhere and access those services.

I hope that the Government will ensure that there is not too great a gap between the legislative courses and that they will be clear that Ofcom has a big job to do through its constituent regulators. We must all keep our eye on the ball because this matter is very important for the UK; it is not a political football that we can kick around. Opposition Members are acting as the gadfly on the body politic, if I remember my Socrates correctly, pricking the Government into action rather than trying to kick the ball off the pitch.

9 pm

Mrs. Helen Clark (Peterborough)

As time is short, I shall make just a few points, having shredded the rest of my speech.

My first point deals with the issue that was the subject of extensive debate in the other place—the omission of the BBC governors' regulatory remit from Ofcom. The BBC has long been a great source of national pride and an example of excellence in broadcasting worldwide. However, it has an enormously privileged position. It receives significant sums annually of what is effectively a regressive tax, without the licence payers having the full redress on taxation that they would expect through Parliament. That fee has been rising for some time in advance of inflation.

The BBC has privileged access to scarce spectrum and to cable and satellite, and it has been able to launch new services even where those have been virtual clones of commercial channels. I am thinking in particular of Network Z, which was set up with an almost identical format to One Word Radio, the future of which is now in doubt. I wrote to the BBC to protest at that last summer and found its reply dismissive and rude to the point of arrogance. It is relevant to note the disturbing number of in-house lobbyists that the BBC employs—40, I believe—in addition to a number who work out of house. All are presumably paid out of public money.

I do not understand why the BBC needs or indeed deserves the privileged position of self-regulation outside Ofcom to maintain its deserved reputation and status, particularly as it is publicly funded.

The National Consumer Council has pointed out that excluding the BBC from the full remit of Ofcom limits the potential benefits to consumers of an improved regulatory system. Lord Dubs argued in the other place that inclusion would be in the interests of the BBC, as it would mean that any future dispute over regulation would be between the BBC and Ofcom rather than the Secretary of State.

One does not have to raise the spectre of state-controlled radio, as did Lord Eatwell, to agree that inclusion in Ofcom should lead to greater accountability. I understand that there are examples elsewhere, notably in Canada, of the communications regulator having public service broadcasting as part of its remit. We desperately need a debate on the nature of public broadcasting. In any case, if Parliament decides that the BBC should be brought fully under Ofcom's remit, the Bill will have to recognise that.

My second point is about the protection of diversity and independence in regional broadcasting. The Welsh language channel, S4C, has its own authority. That is generally considered to be better than when Welsh language broadcasting was on a national basis with a remote regulator and a centralised approach. That may seem inconsistent after what I have said about the BBC. However, I understand that S4C has established strong and functional links with the Welsh Assembly, and that could suggest a precedent. I certainly believe that Ofcom must be sensitive and able to respond flexibly to regional needs. It must therefore have direct links to the devolved bodies. It must not be, or appear to be, a centralised body born and bred in London.

If these precautions are not taken, there is a serious risk that good local political coverage will disappear and local debate will therefore be stifled. It would surely be a sad—indeed, a tragic—irony if the main casualty of the ever more diverse and interactive forms of communication was their varied content.

I have no doubt that these matters will be much debated when the proposed communications Bill is introduced. At present, however, we should be sure and certain that the body that we are establishing through this Bill to regulate our communications does so in a way that serves the best interests of our society.

9.5 pm

Mr. David Cameron (Witney)

I declare my interest. I am a consultant at Carlton Communications where I worked for seven years before becoming a Member.

As many Members have said, the Bill is quite empty. It has been described as a paving measure and many Members have put the key question, "What happens next?" Many people in the industry are asking, "Will one body with a board of only six people be able to do the job?"

My hon. Friend the Member for Lichfield (Michael Fabricant) asked whether radio would suffer from regulation by this megalith. The answer is that we do not know because we do not know exactly what job the body will be asked to do. As the hon. Member for Twickenham (Dr. Cable) said, the cart has been well and truly put before the horse.

The answer from Ministers on the Treasury Bench is that everything is in the White Paper—that what comes next is in the White Paper, so we know what is coming. However, in many ways, we do not. That is the point I want to emphasise. What will be the exact format for regulating the BBC? We do not know exactly.

The right hon. Member for Islington, South and Finsbury (Mr. Smith) said that he had changed his mind. Many other people will probably also change their mind. It is wholly illogical for the BBC to be regulated differently. The BBC, Channel 4 and ITV do the same things: they make programmes and broadcast the news, so they should be regulated in the same way.

When there is only one regulator—as Ofcom will be—that regulator will be doing different things, such as economic regulation, competition regulation and content regulation; yet although the BBC, Channel 4 or Channel 5 are doing many of the same things, they will not be regulated in the same way. That makes little sense.

We do not know what the rules will be for cross-media ownership. By and large, they were not covered by the White Paper. The Government are holding consultations about them, so we do not know exactly what the rules will be.

What about the big question? Do we actually want one regulatory body? The standard industry view, which I broadly share, is a strong yes. There are too many bodies. When I worked at Carlton, I frequently dealt with regulators. We had the BSC, the BCC, the ITC, the board of governors of the BBC, Oftel, the OFT and then of course the DG IV of the EC. That is enough regulatory bodies to put anybody into a spin, although as they will not all be amalgamated under the Bill there will still be a certain amount of alphabet soup to deal with.

Some people in the industry hold a second view. They are concerned about pluralism and think that just as we need a variety of media companies and media outlets, so we should also have some pluralism among regulators. The creation of Ofcom will place a great deal of power and responsibility in one pair of hands, so I offer this cautionary note. Let us imagine that a broadcaster has a disagreement with Ofcom about the content of a programme that has been broadcast. The broadcaster is having a row with Ofcom and will be worried that that will affect Ofcom's judgment about something else—a competition issue or a future regulatory issue. That is important.

My hon. Friend the Member for Lichfield referred to radio broadcasters. Let us imagine that a small radio station wants Ofcom to deal with an urgent problem. How high up the organisation will that radio broadcaster be able to go? Will they be dealt with by a regulator in a small room on the 12th floor of a 25-storey megalith? Some people in the industry are concerned about how quickly they will obtain a decision. That is why, when we discussed the issue when I worked in the industry, the body was often described as "Offyawn"—

Dr. Howells

I thank the hon. Gentleman for giving way as I know that he does not have much time, but I am fascinated by the point he is making. No one has raised it and it is important. In the light of the hon. Gentleman's experience, how does he assess the performance of the existing regulators? Can they respond to a small company when it needs help or guidance at present?

Mr. Cameron

That depends on the issue, but companies at least know which body to approach with content or advertising issues. The Office of Fair Trading deals with competition issues and the ITC deals with content issues, but I am concerned about smaller companies worried about dealing with this megalith.

The key point—this is my conclusion—is that what matters is not that a single body will be set up, but that we must have light-touch regulation, as many hon. Members have said. If we try to make Ofcom do too many things, with just six people on its board, it will have a queue of decisions stacked up like jumbo jets outside Heathrow and media companies that need decisions will not get them, so we must have light-touch regulation.

I am proud of the fact that I worked in the media industry for many years. It is a great industry in this country, and we need to set it free. We must try to allow the people who work in that industry to make decisions without always having a copy of one of many broadcasting Acts by their side.

I finish by referring to what the hon. Member for Sheffield, Hallam (Mr. Allan) said when he made his food analogy. Broadcasting Acts are sometimes like Chinese meals—when people have just finished one, they become pretty hungry for the next. We must try to ensure that the regulatory system that we set up endures for longer.

9.11 pm

Brian White (Milton Keynes, North-East)

I declare an interest as chairman of EURIM—the European Informatics Market group—an organisation that brings together parliamentarians, the industry and civil servants in talking about forthcoming draft Bills.

I welcome the Bill, and several of my comments follow on from those of the hon. Member for Witney (Mr. Cameron). I share several of the same concerns, but my experience comes from Oftel, rather than from the media industry. I am concerned that several of the problems with the way that Oftel operated may be carried forward into Ofcom, and it is important that we do not do that. I have cut out a large amount of my speech because of the length of time that Privy Councillors took earlier, so I shall be brief.

We need to recognise that convergence is happening, but not universally or at the same speed. We also need to recognise that divergence is happening in the marketplace and that new products are distorting the current market. We need to be aware that the situation is far more complex than simply one in which everything is converging.

As the hon. Member for Witney said, the proposed Ofcom will have to deal with myriad interests—economic, social, content, the protection of new entrants to the market and the creation of new markets. The way that Ofcom is set up must allow it to react quickly to those issues. One of the problems with Oftel was that it did not react to broad band quickly enough, and my fear is that that could be repeated with Ofcom.

The assumption is that a regulator independent of Government represents the way to proceed. If I had more time, I would have challenged that assumption and begun to talk about some of the issues. I wish to make the point that it is important to consider that assumption very carefully.

Ofcom will have to deal with a number of issues. It needs to take on competition, but competition is not a panacea. It needs to take on consumer interests, but there is no single consumer interest. It also needs to support the industry, and I was interested to hear the hon. Member for South Suffolk (Mr. Yeo), the shadow Secretary of State, argue for a British champion along the lines of Deutsche Telecom, as that would completely undermine the Conservative party's original privatisation proposals.

How will Ofcom respond to Government policy and the leadership role that the Government will play, which the hon. Member for Sheffield, Hallam (Mr. Allan) talked about? There is a role for each of those, but there are conflicts of interest. How will Ofcom be set up? How will it deal with those conflicts of interest? Will it be a neutral umpire, a catalyst, an arbiter or a restrainer? What will its exact role be? All those questions must be addressed.

Hon. Members on both sides of the House have talked about light-touch regulation, but there are as many definitions of that as there are vested interests, and we need to be careful.

There is not much competition between the different platforms—between satellite, cable and terrestrial—nor is there much competition within them. The area where I live has cable, satellite and digital television, but there is no competition between the companies. I cannot get an ASDL line from BT or cable from NTL because the places that lose out do so to all the organisations, and we need to address that issue.

Ofcom also needs to examine differences, because differences enhance competition and innovation. If my Darwinian analysis is correct, is a single regulator—albeit a board—the right body to deal with the matter? Will it be able to recognise diversity or will it seek bland conformity? Will there be a level playing field and the promotion of opportunity? The answers to such key questions about the way in which Ofcom will operate will determine whether it is successful. At present, there are myriad appeal processes. How they come together to recognise the interests that I mentioned earlier is critical.

Much of the legislation relates to the United Kingdom only, but there is a wider debate. The European debate and the global aspects of the internet have not been touched on in this debate because it has been dominated by an archaic, if interesting, debate about the BBC. We must talk about structures and some of the other serious issues. If Ofcom is involved only in an argument about the BBC and commercial television, it will fail. It must have far wider horizons than that and it must deal with the issues of broad band that my hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) mentioned.

Many analogies have been used in the debate and I would use the analogy of a jigsaw. It is the interrelationship of the pieces, and not necessarily the picture, that is important. The Bill is welcome and I support it. However, a number of key issues will be debated in the spring and they will be fundamental to the setting up of the shadow Ofcom and to the way in which it relates to the existing regulators and the new Bill.

9.16 pm

Mr. Parmjit Dhanda (Gloucester)

Like my colleagues, I shall be brief. I associate myself with the remarks of my hon. Friend the Member for Milton Keynes, North-East (Brian White) in that this should be a debate not about the BBC, but about a whole manner of issues. They include the role of Ofcom, the way in which it will work, digital television and broad band.

I will restrict my comments to the consumer and to the needs of the consumer. However, I must declare an interest as a former employee of Connect—the union for professionals in communications—where I was assistant national organiser and to whom I am grateful for ongoing assistance in research on issues relating to the communications industry.

With Connect, I have witnessed at first hand the impact that an increasingly expanding and developing industry has on not just the consumer, but the business as well. Some businesses have grasped the importance of the new technology and individual customers enjoy the wealth of information and entertainment that it provides.

Many Members—I include myself among them—were brought up in a world where there were very few television channels to choose from and where mobile phones and, bless them, pagers, e-mail and the internet were in scarce supply. However, the way in which we communicate with our constituents is changing. My website had 800 hits in December, twice the number that it had the month before, which was twice the number in the month before that. If I do nothing else in my speech, I shall give www.parmjitdhanda.co.uk a plug, because I anticipate something like 10,000 hits. One in fifty of my constituents who make a hit on the website invariably leave an e-mail message as well.

We now have more than 250 television channels in the UK. In 1980, the British viewer could chose from 300 hours of television; today, we can choose from more than 40,000 hours. More than 30 million people in the UK now have a mobile phone, which is more than double the number who had one just two years ago. Two thirds of British households have more than one television and most of them have a land line and a mobile telephone line.

We live in a world in which hand-held computers can operate as mobile phones, as music players and as digital cameras. Laptop computers can be used to play film and television footage. The new computer game consoles allow people to access the internet through televisions. We are surrounded by new technologies that have brought all these different forms of media together in a way that we never thought possible.

The communications industry is increasingly intertwined. With broadcasters moving into e-commerce and internet service providers offering television channels, there is a need for a regulatory body that can cover all such activities. Nine separate regulators cover the communications industry, with different regulators dealing with issues such as decency in content, and economics and competition. That system of regulation dates from the last century. Back then, telecommunications, television and radio developed more or less independently and could be monitored individually. The question is how the separate regulators can continue to cover an industry that is converging. The answer is that they cannot.

The existing framework for regulation is immensely complex and technology is moving too quickly for current regulations to keep up with it. The pace of convergence is accelerating and unless regulation is simplified the complexity of new technology will cause more confusion and uncertainty within the industry and, in particular, for the consumer. We are starting to see that, which is why the Bill is welcome.

The creation of a unified regulatory body is essential to keep the industry alive, to allow it to thrive and to encourage innovation. However, a complete overhaul of the system of regulation is not the way forward either. I am glad that the Government do not intend to do that with the creation of Ofcom because we need the balance between current methods of regulation to continue, with some co-regulation and self-regulation for print media and external regulation for broadcast media, as well as the obvious continuation of the legal aspects that cover all media, such as libel law and the use of obscene publications.

The consumer is interested in the new opportunities that new technology offers them, such as choice, accessibility and quality television. They are also interested in cheap telephone calls and free internet access. I welcome the Bill and hope that the creation of Ofcom will iron out some of the complexities and enhance some of the opportunities for the consumer.

9.22 pm

Mr. Chris Bryant (Rhondda)

I want to begin by thinking about my constituents' expectations of communications policy. Above all, they want programmes that reflect their lives, interests and passions rather than television and radio programmes that were bought off the shelf from the United States of America, Canada or Australia. My constituents want Channel 4 and S4C, not Channel 4 rather than S4C or S4C rather than Channel 4. I hope that the Government will ensure that my election pledge in my constituency will become a reality and that my hon. Friend the Under-Secretary of State for Culture, Media and Sport appeases me on that in the near future.

My constituents also want affordable sports channels that are not bundled together in such a way that they have to fork out £35 or £40 a month for them. As the hon. Member for Orkney and Shetland (Mr. Carmichael) said, they also want access to the broadband economy. My hon. Friend will know that that is a phenomenal problem in my constituency. It seems impossible to get BT to address it, and I hope that we will make progress on it soon. In addition, my constituents want telephone bills that they can understand. If an hon. Member is present who can understand his bill, perhaps he could explain mine to me.

The Bill will help to provide all those things to my constituents. Ofcom will be robust, resilient, strategic and simplify the system. To use a valleys word, it will be "tidy". Some specific issues, however, should be examined. First and foremost, I want to congratulate the Government on making the board of Ofcom small. It should have a membership of no more than six individuals and I urge the Government to resist the entreaties of the Scottish National party, which called for national members to sit on the board. I do not want a board that grows to 10, 11 or 12 members because it would be too difficult for it to do its business swiftly and expeditiously.

As always happens in any debate about communications anywhere in the United Kingdom, we have ended up talking about the BBC, even though the BBC is not mentioned in the Bill, as several hon.

Members observed. I do not believe that the issue is the BBC, in or out. In answer to the hon. Member for Lichfield (Michael Fabricant), who ungenerously refused to take an intervention from me—

Michael Fabricant

I took two.

Mr. Bryant

The hon. Gentleman took two interventions from me, but he would not take a third, which was by far the most important. Every regulator mentioned in clause 6, which the hon. Gentleman said does not affect the BBC, already regulates the BBC in some shape or form. As my hon. Friend the Member for Selby (Mr. Grogan) said, it is unfortunate if we believe in that dichotomy—the BBC, in or out.

The Consumers Association is wholly wrong when it calls for the abolition of the governors of the BBC. Even if the entire BBC were under the remit of Ofcom, there would still have to be governors to play the shareholder function within the organisation. With regard to state aid and the nonsense spouted by the hon. Member for Henley (Mr. Johnson), who I notice is not in the Chamber, the issue of state aid and the BBC licence fee has been addressed on numerous occasions by the European Commission, which rightly found that the licence fee in this country and in every other country in Europe bar Spain and Portugal does not constitute a state aid; it is a service of general economic interest. It provides something which the market cannot, and that is right and proper.

Pulling in a slightly different direction, I offer some comments about the BBC. Having said that the issue is not the BBC, in or out, I agree with my hon. Friend the Member for Selby that it is time that the BBC governors were separated to some degree from the BBC management. It is wholly inappropriate that the secretary to the governors is the secretary to the board of management. The governors should be housed separately and funded separately. Only then can they provide the shareholder function within the BBC that stands up for the rights of my constituents. That recommendation is hardly news. It was first made in the Dearing report in 1948.

Regulation of the BBC might change in another respect. It is my experience that the BBC tends to hoard its radio spectrum. It is time that the whole radio spectrum was managed by Ofcom, rather than the BBC managing parts of the radio spectrum for itself. That would be wiser and more efficient.

I end my remarks on the point made by several hon. Members today about the nature of public service broadcasting. Whether one believes that public service broadcasting is performed solely by the BBC or also encompasses ITV or, heaven forfend, Channel 5 and Sky, as was mentioned earlier, the point that I would make fiercely is that when politicians speak about public service broadcasting, they start with Shakespeare, Schiller and Shostakovich and work down, whereas when my constituents think about public service broadcasting and what their licence fee buys, they start with "EastEnders" and work their way upwards.

In the political debate about broadcasting, we must understand that the British people have had a profound love affair with the BBC throughout its history, and that that love affair is probably at its strongest now. We can make pious and sententious remarks about the BBC, but it is delivering against that remit, and I would oppose any attempt to make the BBC licence fee solely a fee that should be paid for something that is not available anywhere else in the market.

There are many issues that we will face in the debate over the next few months. In the pre-legislative scrutiny of the full Bill, we will consider whether it is possible to legislate to create a single ITV, without letting other broadcasters take over the entire communications sector. We will consider whether gateway regulation should be left to competition law, or whether, as I believe, we will need robust gateway regulation, which should be maintained by Ofcom as a means of making sure that consumers have access to the programmes that they want, and that broadcasters have access to the audiences that they need.

We will be considering many issues in relation to regulation of the internet. I know that some hon. Members will believe that it is physically and morally impossible to regulate the internet. A few years ago, it was suggested that all spam should have the prefix "zz". For hon. Members who do not know what spam is, I should say that it is all those unsolicited e-mails that we get, which are sent out in large numbers and directed to thousands of names gathered from the internet. Unfortunately, the proposal bit the dust, but it would have allowed people to edit spam from their inbox. It would be good if we could consider still further issues relating to regulation of the internet. Many people will say that we should have light-touch regulation, but we also need regulation in every part of the converged communications sector where it is necessary for our constituents' needs to be met.

9.31 pm

Mr. Philip Hammond (Runnymede and Weybridge)

This has been a wide-ranging debate that has certainly not been limited to the specific scope of the Bill. It was right and probably necessary for it to range so widely. Although many of the issues that have been addressed relate to the more substantive matters that will be considered in relation to the communications Bill, they are relevant in determining how Ofcom should look and be structured—the precise purpose of the Bill.

I suppose it was inevitable that the debate would focus on the BBC, partly because it is such a politically sensitive topic but also because its role and its relationship with Ofcom raise very important and much wider competition issues. I agree with my hon. Friend the Member for South Suffolk (Mr. Yeo) that, in view of the importance of these subjects, it is a pity that the Government did not put forward either of the two Secretaries of State who are involved with the Bill to open the debate. I am delighted to see that the Secretary of State for Culture, Media and Sport is present for the winding-up speeches, but it is a pity that she did not take part in the debate, as she may have had the opportunity to clarify some of the issues that are clearly troubling many hon. Members in all parts of the House with regard to the future relationship of the BBC and Ofcom. She could also have clarified some of the comments that she is reported to have made about the possible extension of Ofcom's scope to embrace more control over the BBC.

Even if the BBC was the overarching theme of the debate, as it will be reported to have been, a couple of other significant issues were raised by many hon. Members. The regional agenda was mentioned and we heard questions about how Ofcom's structure would reflect it. Comments were also made about consumer protection and the proper role of economic regulation in ensuring that proper consumer protection is delivered. I was especially grateful to the hon. Member for Sittingbourne and Sheppey (Mr. Wyatt), who livened up the debate with a novel and Machiavellian explanation of the BBC's apparent desire to remain outside the full control of Ofcom. Time will tell whether he is on the right track.

I thank my hon. Friends the Members for Henley (Mr. Johnson), for Upminster (Angela Watkinson) and for Witney (Mr. Cameron) for their contributions. In particular, I thank my hon. Friend the Member for Lichfield (Michael Fabricant), who, as always, spoke knowledgeably about these subjects. We heard valuable contributions—they were often informed by expert knowledge—from hon. Members in all parts of the House.

Twenty years ago, UK television viewers had access to three channels and 300 hours of television a week. I could recite statistics that several other hon. Members have given during the debate, but I shall not take up the time of the House by doing so. The point is that we are approaching what the right hon. Member for Manchester, Gorton (Mr. Kaufman) described as convergence becoming a discernible fact. In those circumstances, the objective of converging the regulatory environments of the broadcasting and telecommunications industries must be sensible. The Government's White Paper promises to make the UK home to the most dynamic and competitive communications and media market in the world".

Those are fine words, but half a dozen years ago, that is all we had. The Government's lack of urgency in tackling the modernisation of the regulatory regime must be at least partly to blame for our relative decline. Our challenge now is to put in place the structures that will stimulate development of access infrastructure and content provision to ensure the re-establishment of our pre-eminence.

The Government promised a communications Bill in their 1997 election manifesto. They subsequently decided to remove telecommunications from the Utilities Bill in 2000. That decision may have been embarrassing at the time, but it was right, given that few characteristics of the industry as it is developing could be described as "utility". The decision to deal with telecommunications and the broadcast media through a single regulatory body is probably also right. We shall not know for sure until we see the substantive communications Bill.

The Government claim that they need a paving Bill to avoid unnecessary delay in implementing the communications Bill. The logical way to proceed would have been to publish the communications Bill earlier, get it on the statute book and subsequently establish the necessary structures, properly reflecting the functions that Parliament had determined to give Ofcom. To use the analogy of the hon. Member for Twickenham (Dr. Cable), we are putting the cart before the horse.

We are being asked to approve a structure for and give the Secretary of State powers to appoint members to Ofcom, an organisation whose remit we do not precisely know. Of course, the White Paper provides an outline of the Government's thinking, and we have the benefit of the debate that took place in another place. A clear advantage of that is that we can all agree that many aspects remain wide open for debate—for example, the relationship of Ofcom to the BBC and to the economic regulation function of the Office of Fair Trading, and the relative weight that should be given to the different objectives that Ofcom will be required to pursue.

Hon. Members will wish to consider many other issues in greater depth when the substantive Bill is published. Today's debate has provided a flavour of some of them. I appreciate that it is not the right time to discuss them in detail, but they are relevant to this Bill. It is clear from our debate that hon. Members from all parties wish to scrutinise carefully the Government's contention that the BBC needs to be excluded from the full scope of Ofcom's powers to create a level playing field for broadcasting.

We want to ensure that the body that the Ofcom Bill and the substantive Bill create is efficient and that the whole costs less than the sum of its parts. We should have liked Ofcom to have a specific duty to identify cost savings from the merger of the regulatory functions. We want to ensure that the regime has a light touch and is sufficiently flexible to respond to the rapidly changing needs of the converging marketplace. It should also be properly independent from the Secretary of State.

We want to know how Ofcom will approach its two distinctive roles of content and economic regulation. We especially want to ensure that Ofcom is structurally designed to focus on the active promotion and development of access infrastructure—the broad-band roll-out—and that that is at least as important as content regulation. Politicians are perhaps more familiar with dealing with the latter.

We are conscious of the dangers of different parts of a body being effectively owned by different Departments. The right hon. Member for Manchester, Gorton mentioned that when he reminded us of the recommendation of the Select Committee on Culture, Media and Sport that a single Department should deal with such matters.

Ofcom should have a clearly ordered set of priorities so that when different priorities and targets conflict—I can envisage that happening in respect of regional content and analogue switch-off—it is clear where they should lie. Only when we know how these and other issues should be resolved will it be clear what the appropriate structure, membership and staffing of Ofcom should be. It is not clear how Ofcom will prepare for a function as yet undetermined, or how the Secretary of State can properly appoint people with the right skills to a body whose remit is not fully defined.

The approach that the Government are taking in setting up Ofcom, appointing its members and getting the whole enterprise up and running with staff seconded from the existing five regulators, which will all remain in existence, is fraught with risk. If Ofcom is to be a success, creating and nurturing an environment in which Britain can resume its leading role, it needs to be a genuinely radical and innovative body. It needs to be a product of the converged world, not merely the bolting together of pieces of the old-world regulatory apparatus.

I fear that quangos can take on a life of their own. By creating Ofcom before Parliament has finally defined the regime that it is to regulate, by staffing it with secondees, by giving the existing regulators the power to make payments to Ofcom and by giving Ofcom an explicit role in developing the scope, extent and accountability of its own future activities, we risk creating an organisation that will be riven from the outset by internal turf wars. Convergence of technologies is probably rather easier to achieve than convergence of people's thinking after years of adhering to tribal loyalties and territorial instincts in different regulatory bodies. I would suggest to the Minister that it is unrealistic to expect such thinking to be set aside on the day that Ofcom is created. The practical danger is, therefore, that as Ofcom becomes established, as its institutional structure becomes entrenched and as personnel are appointed, it will effectively begin to limit the discretion of Parliament in relation to the substantive communications Bill that is to follow.

The Minister with responsibility for e-commerce said earlier that the Bill had a single function: to establish Ofcom. That is certainly not my reading of the Bill. It suggests quite clearly that Ofcom is not just a body charged with setting up structures and administrative organisations. Clause 2(1) gives Ofcom the function not only of facilitating the implementation of any relevant proposals about the regulation of communications but of "securing the modification" of any such proposals.

In other words, Parliament is being asked to establish, staff and pay for a body that will explicitly be given a lobbying role in relation to the substantive legislation that will define the regime that it is to enforce. It does not seem excessively cynical to suggest that those appointed to membership of Ofcom, and those seconded from the other organisations, will use the resources available to them to lobby for a regulatory regime in their own image. That strikes me as a fairly unusual, and perhaps unwise, way for us to proceed.

The Bill also tells us that Ofcom's functions will be complementary to the current regulatory regime, and specifically that Ofcom shall not interfere with the effective carrying out by the existing regulators of the functions conferred on them". Contradictorily, the Bill requires each of the existing regulators to carry out their functions in such manner as appears to that regulator best to secure that Ofcom is able to carry out its functions and future functions. In my interpretation, that subordinates the work of the existing regulators to the requirements of Ofcom from the date that the body is created. Indeed, it will go further, in requiring the existing regulators to second-guess Ofcom's functions and subordinate their current functions to the facilitation of those of Ofcom.

This debate has identified important issues in relation to the Bill and issues that will come before the House when the substantive legislation is available to us. We are being asked to approve a paving Bill because of the delay in bringing the substantive communications Bill before the House. The Government must take a large share of the responsibility for that situation. We, on this side, having endured a Government delay of five years in that respect, do not wish to do anything that would hinder the recovery of the pre-eminent position in communications and broadcasting that Britain enjoyed just a few years ago.

We therefore reluctantly accept the need for the paving Bill in an unsatisfactory situation wholly of the Government's making. However, the Government must be in no doubt that the substantive issues must be dealt with when the communications Bill is debated. The challenge for Parliament is to ensure that that Bill genuinely promotes the future of the converged industry in Britain.

We believe that the job will be made more, not less, difficult by Ofcom being created before the underlying legislation is in place, but we must minimise any negative impact that that causes. The way to achieve that is to get the Bill in Committee as quickly as possible so that we can scrutinise its detailed provisions. Therefore, we shall not oppose Second Reading. I have outlined some of our concerns and I assure the Minister that we shall make constructive proposals in Committee to address them.

9.45 pm

The Parliamentary Under-Secretary of State for Culture, Media and Sport (Dr. Kim Howells)

I thank the hon. Member for Runnymede and Weybridge (Mr. Hammond) for his constructive approach and I am glad that he talked about timing. He warns us of the risks of introducing this paving Bill before the details of the main communications Bill are finalised, but I have to tell him that we are aware of those dangers. We remember, for example, that in 1992 the Conservative Government introduced the British Coal and Rail Transport paving Bill before even a White Paper had been published. What was the legislation about? It effectively paved the way for rail privatisation. We do not need any warnings, as we have been dealing with that disaster ever since.

I have listened with interest to the wide range of views expressed by right hon. and hon. Members throughout the debate. We heard a great deal about broadcasting and the part played by one broadcaster in particular—the BBC. As many hon. Members reminded the House, Ofcom's responsibilities will range much wider than what appears on our screens or is heard over our airwaves. A range of complex economic and technological issues relating to telecoms and the spectrum will also play a vital part in Ofcom's remit. We shall expect it to treat all its duties, be it safeguarding consumers and citizens, promoting competitiveness or ensuring access to high-quality services, in a balanced and transparent way.

Much of what has been said today does not relate directly to the Ofcom paving Bill. In fact, very little of it does, as the main communications Bill will deal with those matters. The debate on them will, quite properly, continue to evolve over the coming months and, as we have promised, Parliament will have the opportunity to revisit them when the communications Bill is published next spring. None the less, I am grateful for the comments made today, and in the few minutes available I shall try to deal with some matters that have arisen. I hope that right hon. and hon. Members will forgive me if I do not get to their point, as so many have been made. We have been debating the Bill for a long time.

First, I thank my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) for his most vivid comments. He said that the governance of the BBC is wildly out of date and run by a group of amateurs. There were sentences in between those remarks, but that is essentially what he said. The BBC, of course, retains the broadest and most obvious public service remit, although, as many hon. Members said, it is by no means the only broadcaster with such a remit.

That historic role and the fact that the BBC receives the benefits of a unique tax—the licence fee—have made its relationship with successive Governments very special. For those reasons, the form and extent of self-regulation will differ and it is being proposed that the BBC governors retain their core responsibilities. As it stands, they serve to protect the BBC's political and editorial independence and they will be expected to call BBC management to account. Under the proposals, which will go out for consultation, the governors' internal role will be unchanged, but the BBC will, in addition, be subject to new external requirements policed by Ofcom.

Broadly speaking, the BBC will be subject to the same external standard setting and monitoring as all other public service broadcasters for each of the three tiers regulated by Ofcom. In addition, the introduction of self-regulatory measures for commercial broadcasters, which will require them to review their own performance, will also help to create a common framework for all broadcasters. Broadly the same balance of self-regulation and external regulation will be struck for the BBC and other broadcasters. That is an important difference.

The overall result will be that the BBC will be subject to greater external regulation, and its position will be brought much closer to that of other broadcasters.

The debate has been a good start to a profoundly important and much larger debate. It will not be ignored. I have great sympathy with the views that have been expressed about the relationship between the BBC and Ofcom, and I hope that the BBC gets the message on that front. I still believe that we must be careful when it comes to ditching a form of regulation that has served this country well for a long time.

The hon. Member for South Suffolk (Mr. Yeo) asked about the costs of setting up Ofcom and then winding it up if the whole project were to fail. That is dealt with in the Bill. I assure the House that those costs would not fall on industry.

My right hon. Friend the Member for Manchester, Gorton emphasised the huge importance of the communications industry. It is instructive that the great bulk of the debate has been about what we see on our screens, and not about the vital issues of broad-band access and the need to make that technological change. Ofcom must have a duty to get on with that agenda.

My right hon. Friend said that when it comes to picking people for Ofcom we should not choose from the usual suspects. One of the most dismal features of going into a Department as a new Minister is being confronted with books of usual suspects for placing on quangos. It really is appalling, and we must do something about it. We must ensure that we get fresh people with ideas, and not just the great and the good and the recently retired. That is not entirely unheard of—I have appointed some good people recently—but it is almost unheard of.

I thank the hon. Member for Twickenham (Dr. Cable) for his usual thoughtful contribution, and tonight it was exceptionally good. He emphasised how important it is to ensure that the debate focuses not merely on what is on the screen, but considers the much larger picture. I endorse his argument that Ofcom must be independent. The Competition Act 1980, the enterprise Bill and the independence given to the Bank of England are proof that we have been moving in that direction over the past five years, and I see no sign that that will not continue. I agree with the hon. Gentleman that Ofcom must be accountable to Parliament.

The hon. Gentleman and his hon. Friend the Member for Sheffield, Hallam (Mr. Allan) asked about the Joint Committee of the two Houses. I was fascinated, because I did not know how its membership is chosen, and I doubt whether many hon. Members in the Chamber know. Apparently, the usual channels—

Mr. Allan

Digital or analogue?

Dr. Howells

I wish we could switch the usual channels off. I am told that a pre-legislative Committee comprises members nominated in the same way as members of a Standing Committee. Members of a pre-legislative Committee can be from all parts of the House, and membership of a Select Committee does not preclude any Member from serving on such a body. That is good news. I hope that the very best Members are nominated, and chosen, for the Joint Committee, because we need them.

The hon. Member for Twickenham, to whom I have devoted much time, mentioned the importance of getting the competition issue right. I entirely agree: we must make certain that whatever Committee is established ensures that the concurrent powers operate properly and responsibly.

Call me old-fashioned, but I do not think we will ever achieve the digital switchover if people do not consider the content offered by digital broadcasting to be better than that currently offered by analogue. As my hon. Friend the Member for Rhondda (Mr. Bryant) pointed out, that is true regardless of the number of technological anoraks working on the system. I am sure that I speak for every hon. Member present when I say that what our constituents want is the best television and radio possible. That does not mean turning it over to the "techies", and it does not mean figuring out how to turn up the juice on the transmitters. We must do all that; but, much more important, we must ensure that the content is the best that can be offered. That is the way in which we continue to nurture the creative industries that are such an important part of our economy—and let me add, returning to the point made by my right hon. Friend the Member for Manchester, Gorton, that we cannot do it by appointing the usual suspects to quangos and committees, wherever they are.

The Bill provides for three to six board members, because we think that a small board is appropriate for the preparatory stage. I know we have not talked much about the Bill, but that is what it is about. The Secretary of State has power, subject to negative resolution, to vary the number. As the time approaches when Ofcom will be regulating, it may be necessary to increase the board's size and expand its range of expertise, but we want to keep it fairly small so that it remains effective. It should be remembered that it is essentially a substitute for one regulator, although five or six may be involved in this instance.

My right hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) said that we might be able to approach the whole question of the relationship between the BBC and Ofcom by looking at the backstop powers in the tier 3 regulation. We will take that suggestion very seriously, and I am sure it will be debated when we discuss the main Bill—the communications Bill.

My right hon. Friend also said that we must protect the remit for public-service broadcasting, wherever it is on the spectrum—whether it happens to be with the BBC at one end, or with Channel 5 at the other. Channel 5 has been vilified for not having much of a public service remit, but it is currently transmitting a very good arts series, which is more than I can say for the other end of the spectrum.

My hon. Friends the Members for Milton Keynes, North-West (Mr. White), for Gloucester (Mr. Dhanda) and for Sittingbourne and Sheppey (Mr. Wyatt), the hon. Member for Orkney and Shetland (Mr. Carmichael) and many others spoke of the importance of bringing together the content and infrastructure providers. That is indeed enormously important if we are to achieve our ambition of "broad-band Britain". I acknowledge the challenge, as do the Government. Only last month, my hon. Friend the Minister for E-Commerce and Competitiveness convened a summit entitled "Broad-band Britain: the content challenge" specifically to advance the important dialogue between the providers. That was an important step, and I sense that the message is getting through everywhere.

I think this is an excellent Bill, and I commend it to the House.

Question put and agreed to.

Bill accordingly read a Second time.