GENERAL DUTIES OF OFCOM

HC Deb 14 July 2003 vol 409 cc44-84

Lords amendment: No 1

The Secretary of State for Culture, Media and Sport (Tessa Jowell)

I beg to move, That this House disagrees with the Lords in the said amendment.

Mr. Deputy Speaker

With this we may discuss Government amendments (a) to (c) in lieu thereof and Lords amendments Nos. 4, 6 to 10, 151 and 152.

Tessa Jowell

When Lords amendment No. I was considered in another place, it was the will of their lordships that Ofcom be given a principal duty to the citizen and consumer and that, within that duty, the citizen's interest should take precedence. The amendment went on to say that Ofcom should discharge its duty to the consumer and citizen, where appropriate, by promoting competition. The Government can see the appeal of the amendment, particularly the strong attraction of placing the word "citizen" in the legislation. As hon. Members will be aware, the Government had sought not to use that as a legislative term for fear of confusion with legislation on nationality. However, so much has been said in both Houses on the subject that we believe that we can rely on the courts to understand that the citizen interest runs deep through the Bill in the civic sense of the word, applying to such matters as high standards in television and radio, public service broadcasting, universal service for telecoms and the optimal allocation of spectrum.

However, the Government can also see the dangers of such an amendment. Lord Currie, chairman of Ofcom, said in another place: The amendment…had a second impact, which was to put the citizen's interest above that of the consumer in the area of broadcasting and spectrum, but not in that of telecoms. That creates different duties in different parts of Ofcom's activities, which will cause difficulty. It will make Ofcom subject to judicial review and may reduce the effectiveness of Ofcom. It will be the big players, not the small players, who will take advantage of that."— [Official Report, House of Lords, 8 July 2003; Vol. 651, c. 260.] The Government agree with him. An over-rigid hierarchy of duties could well become a licence for judicial review.

Ofcom must, like the existing broadcast regulators, strive to further the interests of consumers and citizens as appropriate, and with equal vigour. It must also have the necessary flexibility to achieve its aims. We absolutely believe that the consumer interest is usually best served by the promotion of competition, but I am advised that keeping the Bill as it stands will leave Ofcom vulnerable to legal challenge. In citizen interest issues, competition is only one possible solution and, more often than not, Ofcom will need to act under its licensing powers. I can assure the House that the Government clearly understand the difference between the interests of consumers and the interests of providers.

Therefore, the Government ask the House to disagree with Lords amendment No. 1 and agree instead with our proposal in amendments (a), (b) and (c). Our amendments would remove any potential dangers in differing interpretations of the previous amendments while retaining the concept that Ofcom shall have a primary duty to citizens and consumers, whose interests shall be equal.

Furthermore, when the duty to the consumer and the duty to the citizen come into conflict, there will be transparency and accountability as a result of our amendments. Ofcom will publish a reasoned statement as soon as possible after a decision, explaining how the duties came into conflict, how Ofcom resolved the conflict, and the reasons behind its decision. The Government believes that that strikes the right balance. The communications industry is not like any other industry; it is central to the health of our society and the health of our democracy.

This is something in which the Government believes, head and heart. It is hard to imagine any Government of this country taking a contrary view. It is also something that the Ofcom board must feel in its head and heart, as was reflected by what Lord Currie said in another place. We understand how important it is for the legislation to reflect it as well, and I believe that, as amended, it will.

When the pre-legislative scrutiny Committee set about its work, it said that it wanted to make a good Bill better. I believe that the whole process of parliamentary scrutiny has made the Bill better, and the changes that the Government are making today will ensure that from beginning to end, our concern to protect the interests of both citizen and consumer will be reflected throughout the Bill.

Beginning at clause 3, with the duty as nom formulated, there is a clear link in the logic of the Bill. It now encompasses increased protections for content standards, and proceeds to the plurality test that we will debate later. I commend the changes to the House. I can confirm that, if carried here, they would command the support of both Lord Currie, chairman of Ofcom, and Lord Puttnam, Chairman of the pre-legislative scrutiny Committee, who moved the amendment in another place.

Lords amendment No. 4 requires Ofcom to have regard to the principles of better regulatory practice in all cases. The Government listened to concerns in both Houses and in industry, and were persuaded that the previous drafting left Ofcom a degree of discretion on whether to apply the principles. The amendment removes that element of discretion. We have, however, retained the concept that Ofcom should have regard to the matters set out in this part of the general duties.

It may be helpful if I explain, as my noble Friend Lord Davies of Oldham did in another place, why we believe that that concept is the right one to use here. It will not be sufficient for Ofcom to consider the principles of good regulatory practice for the sake of form only, or to consider them and then reject them for no good reason. That is because for a person or body to have regard to a matter when taking specified action is a substantial legal obligation. If a person or body fails to have regard to the matter in deciding what action to take, or has regard to it in the wrong way, the action taken is liable to be held by a court to be unlawful or legally ineffective.

Lords amendment No. 8 closes a gap by including the interests of the different ethnic communities in the list of things to which Ofcom must have regard when carrying out its functions. We do not envisage Ofcom's having any kind of interventionist role when it comes to the representation of ethnic minorities on screen. I firmly believe that this is a matter for the broadcasting industry to tackle itself, and indeed it is already addressing it, but the amendment strengthens Ofcom's commitment under existing race relations legislation, and will help it to embed diversity in the culture of its organisation.

Lords amendment No. 10 requires Ofcom to include an impact assessment of how the proposal will further or secure the performance of its general duties, or how the performance of those duties will be furthered or secured in relation to the proposal. It is one more provision to ensure that Ofcom operates openly and transparently.

Mr. John Whittingdale (Maldon and East Chelmsford)

We are on the home straight, after a long race, which has occupied about eight months. However, we are reaching the point where we can probably achieve consensus on almost every amendment before us. I hope that that is an indication that we are succeeding in improving the Bill.

Looking around the Chamber, I see many of the familiar faces that I have come to know over the past eight months. Both Front-Bench teams have seen some changes. I pay particular tribute to my hon. Friend the Member for Ryedale (Mr. Greenway) who will be joining in the debate from the Back Benches. I note that changes to the Government Front-Bench team mean that the Secretary of State has had to join us this afternoon, as ministerial responsibilities for broadcasting have been translated to the House of Lords. I welcome the Secretary of State's presence and many of us will find it helpful that she is in the Chamber to set out the Government's background thinking about the amendments with an authority that we might otherwise lack. Many people will be interested to hear what she has to say.

The first group of amendments, on general duties, goes to the very heart of Ofcom. We have already spent a great deal of time debating such issues. The main question covers whether Ofcom should necessarily have a general duty to promote the interests of citizens, or the whole of the community, or whichever phrase of the day the Government have chosen, as against the interests of consumers. In Committee, the Opposition tabled an amendment that Ofcom should have regard to the interests of citizens.

Part of the difficulty in considering such issues are that they reflect the general problem of establishing a single regulator with both an economic function and a content function. We have always been sympathetic to bringing the five regulators together in a single body, but it is nevertheless the case that the regulator will have to undertake two very different functions, which may, occasionally, come into conflict.

In considering whether there should be a general duty to promote the interests of citizens, we believe that there will always be cases when the national interest will extend beyond the narrower interest of consumers. In Committee, I referred to the desirability of public service broadcasting as an example. Public service broadcasting often caters for extremely small groups, almost by definition in some cases; it does not cater for majority tastes. That is part of the reason why we need public service programmes. We certainly accept that there are wider interests that go beyond those of the few consumers who watch such programmes. It is in the national interest that public service broadcasting should be available for those who might want to watch it in the future.

Similarly, although the roll-out of broadband benefits individual consumers, there is also a wider economic national interest. That, too, should be properly reflected by giving Ofcom these wider responsibilities. The Government amendments accept that Ofcom should have that wider regard—to citizens as well as to consumers. We have argued for that for a long time, so obviously we strongly welcome that idea.

Going beyond that proposal, it has also been argued that a hierarchy of duties is needed and that the interests of citizens should be given primacy over considerations. The House of Lords argued for that and, indeed, amended the Bill to take it into account. Furthermore, colleagues on both sides of the House have signed an early-day motion calling on the Government to accept the proposal. However, I, like the Secretary of State, have been influenced by the comments of those whom we are asking to undertake the job of regulating the industry.

The Secretary of State referred to the recent speech by Lord Currie, who is the chairman of Ofcom. She was right to draw attention to the fact that, in his Third Reading speech, he pointed out that if the interests of citizens were given priority over the interests of consumers, it would cause him real difficulties in carrying out his duties as the chairman of Ofcom.

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I also recently heard Stephen Carter give a speech to the Incorporated Society of British Advertisers, in which he went a little further, saying that he saw real problems if the existing parity between the duties were removed and priority had to be given to one over the other. He gave examples of possible conflicts that might occur in the future. For instance, Ofcom might want to allocate additional spectrum to free view, and it might be argued that that would be desirable, not only in the interests of citizens, but in those of consumers in due course. He pointed to the fact that several existing regulators—particularly the Independent Television Commission and the Radio Authority—have a twin duty, and that that has not caused a problem. The regulators are well used to dealing with twin duties, but if one duty were given priority over the other, as the Secretary of State suggested, a decision could be challenged by judicial review, which could cause real difficulties.

I therefore welcome the fact that the Government have attempted to meet the concern expressed in the House of Lords with the amendments that they have tabled today, especially with the additional requirement that Ofcom will have to publish a decision if it sees a conflict between those two objectives. It will need to set out precisely where that conflict lies and why the decision has been reached accordingly. That is an improvement. Given that the Government have proposed that requirement and the fact that Ofcom's chairman and chief executive have expressed concern, I accept the Government's argument that we should riot support Lords amendment No. 1, and I am willing to support the Government amendments.

I wish to touch on only one other issue. Among the many listed duties that Ofcom will have to perform, Lords amendment No. 4 will give priority to the requirement that Ofcom abide by the better regulatory principles. Before that amendment, that requirement was No. 2 on a list of 14, and concern was expressed in the industry that it had not been given the importance that it deserved. We argued very strongly in Committee that the better regulation requirement should be put right at the front of Ofcom's general duties, but the Government were not persuaded at the time. I am delighted that the Government now appear to have been persuaded about that because I continue to believe that it is extremely important.

There is no doubt that Ofcom will be an enormously powerful body. I believe and hope that it will be a force for good, but nevertheless safeguards need to be built into its operating principles. In particular, the requirements that regulations should not be excessive and that there should be transparency and accountability are very important. I draw attention to the fact that chairman of the Better Regulation Task Force, David Arculus, recently wrote an article in which he drew attention to the tidal wave of regulation affecting businesses and said: Some of the problem lies with independent regulators, who are keen to make the most of the new powers they have been given". I am sure that Lord Currie and Mr. Carter will not adopt that practice.

Mr. John Greenway (Ryedale)

My hon. Friend very generously paid tribute to my efforts as part of the Front-Bench team, and, likewise, I wish to do the same for him, but does he recall making a lengthy arid extremely well argued speech on this very matter at the beginning of the process? The length and vigour of his argument was misinterpreted at the time, but does not this example show that the Government now appear to accept most of the arguments that we put from the Opposition Front Bench in Committee? I am very glad that they have done so.

Mr. Whittingdale

My hon. Friend is entirely correct. We may find that a recurring theme in our debates this afternoon is the number of occasions on which arguments that we put in Committee, which appeared not to find favour with the Government, have been adopted by them subsequently. This late conversion is of course extremely welcome—there is nothing like a sinner who repenteth. My hon. Friend is right to draw to the House's attention that Lords amendment No. 4, accepted by the Government, and was first advanced by us in Committee, and I am delighted that the Government have now seen the wisdom of it. It is extremely important.

Brian White (Milton Keynes, North-East)

Does the hon. Gentleman accept that the whole question of independent regulators being subject to the Better Regulation Task Force came out of the Puttnam report, and a number of references were made when we expressed concern about the independent regulator following Government policy?

Mr. Whittingdale

I would not want to claim exclusive authorship. As the hon. Gentleman, who sat through our debates in Committee, will recognise, however, we advanced the proposal at the time but were sadly unsuccessfully in persuading the Government in Committee. I will not dwell on the matter any longer, however, as we are all now united on the fact that it is important that Ofcom should operate under the better regulatory principles and that those should be given priority. I therefore welcome that amendment. Indeed, I will not oppose the amendments tabled by the Government.

Brian White

Unlike the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale), I have been involved in this Bill for two years, as I was involved in the pre-legislative scrutiny Committee and some of the other preparatory work. One of the recurring themes of the White Paper and the Puttnam committee, however, was the issue of citizens. It was disconcerting in Committee to have the parliamentary counsel's advice that judges could not distinguish between "citizen" in terms of how we now understand it and in terms of the amendment, and the narrow definition in terms of nationality. I am glad that that taboo has finally been broken. That raises some questions, however, about the quality of parliamentary counsel's advice and about whether the kind of alternative advice that went to the Puttnam committee means that the monopoly on providing such advice to Government should be subject to some form of competition. No doubt we will return to that issue in due course.

A conflict of interest has always existed among the general duties of Ofcom. It is particularly important that Ofcom will have to explain why it makes particular decisions and how it resolves its conflicts of interests and the decisions that it has made. The part of the Government's amendment that requires that to be reported is therefore extremely important. I hope that it is also included in Ofcom's annual report to Parliament. With that, I welcome the Government amendments.

Nick Harvey (North Devon)

As has already been observed, we have followed a long course to get to this point, and it is no surprise that we find ourselves yet again addressing questions of the main duties and citizenship. Those were raised, as has already been observed, in the pre-legislative scrutiny Committee, in the debate on Second Reading and several times in Committee. I am glad that eventually the rather more telling arithmetic in the House of Lords has had the effect that it has, and that the Government have had a late conversion to various points that they stoutly resisted earlier. In particular, they displayed a bizarre reluctance to concede the word "citizen", as has just been mentioned, yet here we are considering at this late stage Government amendments with the word "citizen" in them. I welcome that because it is the right formula and the right approach.

The process has been something of a battle. The first battle was to get the Government to accept that a general public interest—as I think that it was first formulated— existed. Initially, there was great resistance to the idea that there was anything other than a consumer interest. Of course, the two things are very different, and the interests of the wider public are not necessarily the same as the interests of the consumer of a particular product or service.

Brian White

Does the hon. Gentleman accept that that was highlighted in the Government's White Paper that gave rise to the Bill?

Nick Harvey

It might indeed have been highlighted in the Government's White Paper but nevertheless previous amendments that would have inserted such provisions into the Bill were stoutly resisted. I am pleased that we are proceeding by stages. Although such provisions are included in later clauses, the amendments to clause 3 will have far more effect. Lords amendment No. 1 would provide that citizenship issues would be Ofcom's primary responsibility, and the formula in the Government amendments strikes a perfectly sensible balance. We must bear in mind the possible effect of agreeing to a measure that could lead to many cases of judicial review. The Government have framed their amendments sensibly by putting the two duties alongside each other and I am happy enough to support those amendments.

I am pleased that Lords amendment No. 4 provides that better regulation principles will be absolutely at the top of Ofcom's agenda because I spoke up for such a provision in Committee. Ofcom has an incredibly important role and it is only right for it to work in such a way.

I add to the consensus by saying that I am delighted that we have reached a sensible view, even at this late stage. I am happy to support the formula that the Government have suggested.

Mr. Chris Bryant (Rhondda)

The hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) said that we had been going through the Bill for some two years. I remember attending a meeting during my second day at the BBC in 1998 in which we debated how we could affect the Government's then forthcoming Bill on communications, so I have been engaged in the process for five years. There has been much talk of sinners repenting—incidentally, we are delighted that Conservative Members have repented their views on the national minimum wage—but I am more reminded ofthe quotation about the battle done.

The important point behind Lords amendment No. 1 and Government amendments (a) to (c) is that citizens' rights in society should be considered in addition to those of consumers. Many licence payers do not feel like citizens but subjects because the BBC, or whatever body designs the broadcasting ecology around them, often treats them as though they have no rights at all. I am struck by how important it will be for Ofcom to ensure that the broadcasting ecology delivers for ordinary citizens and consumers when it puts the provisions of the amendments into practice.

A matter of immediate concern faces many ordinary consumers and citizens throughout the country, especially those in rural and semi-rural areas where the BBC has made no Freeview service available and there is no provision for cable television. Such people and households had no choice about how to get most of the free-to-air channels unless they bought a digital satellite box and got the free solus card from the BBC. However, they might not get such a card anymore because the BBC decided last week to unilaterally withdraw from the agreement with other broadcasters to deliver all free-to-air channels to households throughout the country.

The problem for Ofcom will be the same as that faced by the Independent Television Commission. The ITC says that it does not have a role to ensure that ITV, Channel 4, S4C and Channel 5 are made available to households that have taken the free-to-air option via satellite television. About 1 million households are directly affected by the situation. If Sky chooses to switch off the solus cards in the next few weeks, those people might be unable to watch "Big Brother" or "Coronation Street" at all. Ironically, having gone down the digital television route, they will have to return to analogue thereby incurring the additional expenditure of buying a new aerial, costing in the region of £150 to £200, and, more importantly, undermining the Government's strategy of getting people to go digital so that we reach analogue switch off in the next five to seven years.

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It is vital that Ofcom takes the issue seriously in terms not just of delivering for consumers through competition rules, but of considering the needs of citizens to have access to a diversity of programming, especially news, from a variety of sources with a variety of voices. I hope that the amendments will enable Ofcom to do precisely that.

Mr. Andrew Lansley (South Cambridgeshire)

I am glad to have the opportunity to comment on the amendments. As other hon. Members observed, those of us who sat on the pre-legislative scrutiny Committee have spent at least 14 months on the subject. The amendments reflect the fourth recommendation of the Committee that there should be a hierarchy of duties and that the principal duty should reflect the necessity to further the interests of citizens and consumers. I am grateful that the Government have seen fit to take on board the substance of that recommendation.

Although the Secretary of State rightly did not bore us with the full process, when I moved an amendment in Standing Committee to reflect the views of the pre-legislative scrutiny Committee, the Government resisted the word "citizen", but they intended to accept part of our argument by including a reference to promoting the interests of the community as a whole. It is worth noting that they reflected that thought on Report, but they have rightly gone on to abandon their resistance to the use of the word "citizen". Lords amendment No. 9 defines citizen as a member of public in the UK. As the Secretary of State set out, the terms in which Ministers have explained their amendments in lieu make it clear that that is not to be defined in the context of nationality, but as applying to any member of the public. That is an important provision, which I welcome.

I also welcome the better regulatory principles, which are to be given substance and applied in all cases. That reflects recommendation 24 of the pre-legislative scrutiny Committee to introduce the Better Regulation Task Force principles and to apply them in all cases. It is good to see that. I thank the Secretary of State for taking that recommendation on board.

Members in another place might want to determine whether the substance of their aims has been achieved. I am certain that it has and, as the Secretary of State said, Lord Puttnam would no doubt concur. In so far as there are differences with the Lords proposals, it is possible that those could have given rise to difficulties. The respective interests of citizens and consumers would have been defined in cases before courts rather than by Ofcom, which can take a flexible approach to the merits of individual cases and is accountable directly to us in Parliament.

Members of another place, especially on Third Reading, said there was a lack of appropriate scrutiny of the Bill in this House. That is true to an extent, but it was not so much a case of whether the issues were raised in the House and Standing Committee, because in general they were; it was more a case of the extent to which the Government were willing to consider amendments, especially those with the backing of the pre-legislative scrutiny Committee. I believe that if the Opposition clearly have the better of the argument, the Government should accede to it. That happens pretty rarely. Although the Government regarded the pre-legislative scrutiny as having substantial merit and accepted 120 recommendations, they did not accept some of the most important recommendations. It has been a long time since then.

I share Lord Puttnam's view that it was a pity that Departments did not perceive the Bill as legislation that had made progress through both Houses in co-operation with members of the pre-legislative scrutiny Committee. Pre-legislative scrutiny might have been better in that respect, and should be so in future. If a future Committee is anything like the one in which we participated, its members will become thoroughly familiar with the content of the legislation and how it is intended to work, and issues will be raised in order to give better effect to policy and Parliament's intentions. Members of such Committees could be worked with to a much greater extent than I fear was the case for many months before, as the hon. Member for North Devon (Nick Harvey) said, the arithmetic in the other place made the Government feel that they had no choice but to co-operate positively and actively. The amendments clearly demonstrate the benefits that flow when that happens.

Mr. John Grogan (Selby)

I welcome the Government's amendments on general duties. I particularly celebrate the use of the word "citizen", which has a lineage of at least 2,000 years. It is a progressive and egalitarian term. Now that we have created a precedent for its use in this context, I very much hope that it can be used in other contexts and by other regulators. The Post Office regulator, Postcomm, would probably benefit from assuming some duties towards citizens and, indeed, consumers.

As the hon. Member for North Devon (Nick Harvey) said, this has been something of a battle. It would be churlish not to recognise the role of their lordships in sticking to their guns on a cross-party basis. When the Bill left this House with the support of both Front-Bench teams, Lords of all parties, but led by Lord Puttnam, required a certain steel and determination in order to give us a chance to discuss these amendments. They used as a reference point the Puttnam committee report. I welcome the fact that the Government listened.

There is one point that I should like to explore a little more with the Secretary of State. She drew a distinction between consumers and the interests of service providers. The dual duty in favour of consumers and citizens puts Ofcom very much on the side of the little guy or girl as opposed to big businesses. I wonder whether she acknowledges that. Ofcom will be operating in the interests of ordinary members of the public and customers. It will represent the interests of businesses—whether big or small—only as customers of service providers. That gives a clear and welcome focus to Ofcom's work, and is very much in line with the Puttnam committee's original aims.

Tessa Jowell

I thank hon. Members on both sides of the House for their contributions. I endorse the points that have been made about the benefits, particularly for legislation such as this, of pre-legislative scrutiny. I hope that the lessons that have been identified as beneficial to the development of good legislation will be applied in future.

The Government have seriously engaged with the arguments that have been made from whatever source. Disputes in consideration of this Bill have not broken on traditional party political lines. That has been one reason why, especially in another place, we have engaged with such a large number of Members.

To pick up the point made by my hon. Friend the Member for Milton Keynes, North-East (Brian White), the origins of the debate about citizens and consumers lie in debates in Committee in this House. The Government sought to respond to the well argued points by inserting in the Bill before it went to another place a reference to the community as a whole. That was for a simple technical reason. We were advised that "citizen" had, as my hon. Friend the Member for Selby (Mr. Grogan) has made clear, a specific and narrow use. We have overcome that obstacle, which is why "citizen" now appears in the Bill. I am glad that there is a broad welcome for that.

I am delighted that the proposed amendment to the general duties of Ofcom has attracted such wide support on both sides of the House. I commend the amendment to the House.

Lords amendment disagreed to.

Government amendments (a) to (c) in lieu agreed to.

Lords amendments Nos. 4 and 6 to 10, 151 and 152 agreed to.

Lords amendment: No. 2

Tessa Jowell

I beg to move, That this House agrees with the Lords in the said amendment.

Mr. Deputy Speaker

With this we may discuss Lords amendments Nos. 153, 154, 155 and amendments (a) and (b) thereto, 156 to 187, 189, 191, 192, 231 to 234 and 278.

Tessa Jowell

The amendments will extend the public interest test in the Enterprise Act 2002 to enable a media plurality test to be carried out in the event of a qualifying media merger. The Secretary of State will be able to intervene in such a merger when he or she believes that it will have a damaging effect on plurality. The test will prevent unacceptable levels of cross-media dominance and ensure a minimum level of plurality. The Government will wish to publish guidance setting out our policy on when the Secretary of State is likely to intervene. This guidance, which we hope will be available for consultation in the autumn, will explain that that intervention will normally be only in areas that are not covered by media ownership rules, in particular: national newspapers with more than 20 per cent. of the market and Channel 5; national newspapers with more than 20 per cent. of the market and national radio service; Channel 3; Channel 3 and national radio, Channel 5 and national radio; national radio and national radio.

We do not believe that intervention would normally be necessary where there has never been media ownership restriction, or in areas where there continue to be ownership rules, as the continuing rules will themselves protect plurality.

Mr. Greenway

The introduction of the plurality issue at this late stage has understandably given rise to concern in some parts of the media world, and particularly local radio. The Secretary of State will recall accepting before we commenced consideration of the Bill in Committee that the concentration of ownership of local radio should be moved down from three plus one, the BBC, to only two plus one. Can the right hon. Lady give an assurance to the House that the new subsection (2C) in amendment No. 155 does not undermine the commitment that she gave in respect of two plus one? It concerns local radio that the plurality test, which I do not believe is aimed at it, might nevertheless affect it.

Tessa Jowell

I thank the hon. Gentleman for that intervention. I reiterate that it is not anticipated that the plurality test would apply in those areas where rules have been included in the Bill. It is not intended that there should be further regulation on top of the rules that have been much debated and now form part of the legislation. However, intervention through the plurality test will be at the Secretary of State's discretion, and we would not rule out wider use in extreme or rare cases. There may be some cases including, for instance, satellite news services, where exceptionally—I underline the exceptional nature of such cases, which were raised by my right hon. Friend the Member for Islington, South and Finsbury (Mr. Smith)—the Secretary of State may have an interest. However, we do not anticipate frequent intervention in those areas. The Secretary of State will be able to intervene in a media merger to ensure that first, there is sufficient plurality of persons with control of media enterprises serving any audience; secondly, that there is a wide range of high-quality broadcasting that appeals to different tastes and interests; and, thirdly, that there is a genuine commitment to Ofcom's standards code under clause 312.

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Let me now move on to amendments (a) and (b) to Lords amendment No. 155, which were tabled by the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale). They seek to ensure that the plurality test will be applicable only to changes of control involving Channel 3, Channel 5 and national radio multiplex licences. We considered writing a narrow test into the Bill. However, in the vital area of media plurality, we consider that the test should be available in the widest range of situations. We concede that on the face of it there is a price to be paid in terms of uncertainty but, as I have already said, the Secretary of State will publish advice and guidance as to the application of the test, which should go a long way towards informing the industry about the Government's proposed approach. That is a much better tactic than adopting a narrow test, which might not be available in a case that merits investigation on plurality grounds but falls outside the criteria that the amendments would insert in the Bill.

We have indicated the cases where we would expect to use the test, and that will be reflected in guidance. I hope that I have made it clear that in exceptional circumstances and if there are genuine plurality concerns, we may want to apply the test more widely. It should also be recognised that, however wide the power, a decision to intervene will still be at the discretion of the Secretary of State. With that explanation, I hope that the amendments will not be pressed to a vote.

Mr. Whittingdale

The Lords amendments introduce a plurality or public interest test that, in many ways, is biggest change to the Bill. However, that change is very late—when the issue was first debated in the Commons, the Government decided that they were not in favour of a change, but their reasons for deciding that it is now necessary are clear to all of us. They have more to do with the Government making sure that they got their business through the House of Lords than any sudden conversion to the merits of the argument. Given that the test has been added to the Bill, it is important to the many broadcasters and, indeed, newspaper groups that may be affected that the Secretary of State make a clear statement about the precise way in which it will operate.

When we talked about the desirability of a plurality test in Committee, my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) made the case for it. While I did not agree with everything that he said, he made some strong points, especially when he pointed out that as the test already exists for newspapers, it is curious not to extend it to broadcasters. At the time, I agreed that that was a contradiction—why should something apply in one case, but not the other? It can be argued that the case for a test is stronger for broadcasters than newspapers, especially as there are no harriers to entry in the newspaper industry. On the other hand, an extensive regime in the broadcasting industry already controls content and puts obligations on broadcasters. We have already dealt with that at considerable length elsewhere in the Bill.

Our general approach has always been that the Government were originally correct in their view that the best way to ensure that the broadcasters provided the kind of programming that was thought to be desirable would be through content obligations, rather than by trying to address the issue of ownership. That was the reason originally given for the deregulation that the Bill still achieves, through the removal of some of the existing ownership restrictions. As the Secretary of State knows, we have always supported that.

Nevertheless, we are concerned that the introduction at the last minute of an additional hurdle for anybody seeking to acquire a broadcasting company will undermine the thrust of the Bill, which was to introduce a lighter-touch media ownership regime. At the same time, it will introduce a degree of uncertainty, which it was hoped the Bill would remove. I noticed that the Secretary of State said that the introduction of uncertainty was a price that would have to paid— [Interruption.] The right hon. Lady corrects me by saying a small price, but when we debated the matter in Committee, the then Minister with responsibility for broadcasting, the hon. Member for Pontypridd (Dr. Howells), said that it inevitably leads to uncertainty…Although businesses may be used to dealing with uncertainty daily, they do not actively seek out uncertainty. We should make clear rules when they are appropriate. If we accepted the amendment"— which would have introduced a plurality test— we would effectively be putting those who wanted to acquire media assets in a worse position. In addition to complying with the clear and transparent ownership rules and satisfying the competition authorities, an owner would face the further obstacle of satisfying a plurality test. The Bill is intended to remove regulations, not impose new and unnecessary ones."— [Official Report, Standing Committee E, 6 February 2003; c. 1002–04.] I found the Minister quite persuasive on that occasion. I still find him persuasive, so I regret the fact that the Government have retreated from that position and have accepted the calls in another place for the introduction of a plurality test. It is important that we see precisely how it is intended to operate. Much of our concern lies with the scope of the Government's proposals in response to the narrow set of concerns expressed by those who have been arguing for the introduction of such a test.

It is clear from the debates in another place and from the remarks of the Secretary of State this afternoon that those concerns relate to the ownership of Channel 3, Channel 5 and national radio. It has been confirmed that the cases in which the Secretary of State would consider intervening, perhaps with the application of the plurality test, are those where national newspapers with more than 20 per cent. of the market were seeking to acquire Channel 5, where national newspapers with more than 20 per cent. of the market were seeking to acquire a national radio service, mergers and acquisitions affecting Channel 3, Channel 3 seeking to acquire a national radio service, or a merger between national radio services.

Concerns have been expressed about how that will work. In some areas, it seems that restrictions beyond the existing ones will apply. In particular, as the House knows, there is the possibility of a merger between two Channel 3 companies. It would be helpful if the Government could make it clear that the plurality test would not be applied retrospectively if a Carlton-Granada merger, which is currently under consideration by the Competition Commission, went through.

At present, there is no legislative barrier to a merger between regional Channel 3 companies and national radio licensees. The existing restrictions apply only to the national Channel 3 licensee, which is GMTV, and a national radio franchise. Can the Government confirm that it is not their intention to introduce a new restriction by applying the plurality test to regional ITV and national radio mergers? Or will the Government break their pledge to restrict the plurality test to areas where previous rules are being lifted?

As drafted, the plurality test can be applied to all mergers involving broadcasters, or broadcasters and newspapers that qualify for investigation under the Enterprise Act 2002. That could mean that the test will apply to mergers and acquisitions among cable and satellite channels, which have been launched in the UK without any of the special privileges or protections given to broadcasters that use terrestrial frequencies and have until now been subject not to any ownership restrictions, but only to the application of competition law.

Such provision will again create a new layer of regulation and introduce uncertainty into a sector in which there has never been any previous expression of concern. For example, the acquisition of the National Geographic Channel or the History Channel by Discovery Networks is now potentially within the scope of the plurality test, as is the acquisition of additional music channels by MTV. Given the Government's clearly stated aims, why did they not simply produce a test that focused directly and exclusively on the identified problem instead of suddenly introducing at the last minute a sweeping new rule for all broadcasters and then saying that they will disapply it in respect of most of them? The purpose of our amendments is to put in practice what the Secretary of State has said and to limit the plurality test to a relevant merger situation that involves only a change of control in respect of Channels 3 or 5 or a national radio multiplex licence.

The Secretary of State went on to repeat what has already been said by the Minister for Tourism, Film and Broadcasting in another place. She said that the Government had considered taking a narrow power, but that there were extreme and rare circumstances in which they might wish to apply the test more widely. She seemed to indicate that it was conceivable that the Government might want to apply the test in respect of satellite news services. However, I am surprised that they wish to apply a plurality test to any cable and satellite channels, even in exceptional circumstances. After all, those considerations have never been applied to those channels before and no one has been pressing for their application. As we heard from the Minister in another place, the Government have made clear in the past their view that such a test is unnecessary.

I am aware that the Government have indicated that they intend to produce guidance on the plurality test that will set out more narrowly how it will be applied in practice. We have made it plain that that is not satisfactory and that, as the guidance has not yet been produced, it is very difficult to judge the merits of the amendments without what will undoubtedly be the most significant part of the Government's proposal. Of course, we understand that the amendments have appeared only in the past few days, so there has not been enough time to produce the guidance, but that is another reason why the Government should have introduced a more targeted plurality test in the Bill. In coming to debate the amendments, we would then at least have had a full package of policy proposals to hand instead of having to rely on the Government's promise of guidance to come.

We have considerable concerns about the fact that the Government have introduced at the last minute a test that they have until now argued was unnecessary, while it also appears that the scope of the test goes considerably further than the areas about which major concern has been expressed. For that reason, we hope that the Secretary of State will give as much detail as she possibly can about precisely how she envisages that the test will operate. I must say to her that its introduction has caused widespread concern throughout the media industry—in the television broadcasting world and among the radio stations and many newspapers.

Nick Harvey

I welcome the arrival of the plurality test even at this late stage. The introduction of such a test was suggested in the report of the pre-legislative scrutiny Committee. I applaud the endeavours of Lord Puttnam, Lord McNally and Lord Crickhowell, among others, in pressing the case for the plurality test and in marshalling their arguments on ownership issues in a way that led the Government to agree that such a test should be introduced.

I listened with interest to the remarks of the Secretary of State and the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale), who has tabled what I presume to be probing amendments dealing with the scope of the plurality test and how it will apply. He raises interesting and worthwhile points that we should stop to consider. I hope, however, that the Secretary of State will not allow him to tempt her too far in the direction of ruling out the test in all sorts of circumstances. We will start to undermine it if, even at this early stage, we rule out its use in certain circumstances.

5.45 pm

The Secretary of State gave a measured account of the circumstances in which she anticipates that the test will be used. Her remarks will form part of the parliamentary record and, as that is increasingly brought up in legal proceedings, will serve as an indication of what Parliament intended. She also explained that there will be guidance. I am not seeking to minimise the concerns expressed by the hon. Member for Maldon and East Chelmsford—they have some merit—but I appeal to the Secretary of State to address them in her guidance notes, not to get into the business of saying that the plurality test would never be used for A, B or C, because that would undermine the whole point of having it. I admit that it would be inappropriate to use it in some of the instances that the hon. Gentleman described, but that is a decision, come the time, for the Secretary of State of the day and for Ofcom, which should use common sense in applying it. It would not be at all helpful unnecessarily to minimise its scope at this stage.

I very much welcome the arrival of the plurality test. The hon. Member for South Cambridgeshire (Mr. Lansley) has spoken about it on many occasions, not least during the proceedings of the pre-legislative scrutiny Committee, and I am delighted that it is finally here.

Mr. Grogan

I, too, welcome the arrival of the plurality test, which puts strict limits on the deregulatory nature of the Bill. The other place has lined up with Parliaments in other parts of the world in rebelling a little against the efforts of the Executive to deregulate the media sector. For example, in Australia the federal Parliament is resisting similar efforts by the Australian Government to deregulate cross-media ownership; and in the United States, Republican and Democrat Senators are asking the Federal Communications Commission to pause in relation to similar proposals.

If we are honest, the motivation for the changes in another place was based on fears about the deregulation of cross-media controls on the ownership of Channel 5. It was felt that it would perhaps be inappropriate to allow, without a pause for thought, someone who owned, shall we say, 40 per cent. of our Sunday newspaper market, 30 per cent. of our daily newspaper market, and—I throw it in for the sake of another example—our major satellite provider to own a terrestrial television station as well. The plurality test provides the potential for such a pause for thought. I hope that the Secretary of State will stick to a general plurality test. If we started to restrict it to particular circumstances, we would, for example, restrict its application if Ofcom decided to liberalise ownership restrictions in other areas. The plurality test will operate as a safeguard in such a situation. Given that it will be subject to strict guidance, I hope that in extreme circumstances it can have more general application.

I followed with interest every word that the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) said. In 1995, he wrote that famous deregulatory pamphlet, and until this debate I had always seen him as the touchstone of advocating market forces in every possible situation. I think that he has been got at in accepting the general plurality test. I am sure that it is not genuinely in his soul. On 2 July, he wrote in the Financial Times, as described in another place, that the plurality test undermined the government's desire to relax the laws governing the media. The whole thrust of the communications bill is to liberalise the rules on ownership. A plurality test erects another obstacle in the way of takeovers within the media sector. A few days previously, he showed a little more uncertainty when he told The Guardian: My view is that a plurality test has some merit, but it is very difficult to define. I would rather the test applied across the board, however, rather than just to certain companies. The hon. Gentleman displayed some confusion, and I hope that the plurality test is safe in the hands of any future Conservative Government. However, I am not sure about that.

Let me deal with the charge that the test creates some uncertainty. It does, but Lord Borrie, who has some experience in those matters, is cited in column 909 of the Official Report, House of Lords as saying in Committee: One cannot deny that during a period of reference there must be uncertainty as to the outcome—otherwise what would be the point of the reference? However, I would suggest that that is a small price to pay for ensuring a free and diverse media. Once ownership is changed, it is exceedingly difficult to revert to square one; the damage may have been done"— [Official Report, House of Lords, 2 July 2003; Vol. 650, c. 909.] As I said earlier, our debates have a resonance throughout the world. I tried, with varying success, to translate some French, Spanish and Italian newspaper articles on the debates in the other place this morning. I note that an article in a Spanish newspaper about last week's debate translates as, Blair is all for foreign investment in the media, but not Murdoch. Although I am not sure whether Alastair Campbell would have portrayed the plurality test in that light, I believe that, should Rupert Murdoch try to buy Channel 5, the plurality test would have a similar effect to the public interest test, which applied when he tried to buy Manchester United some years ago. After referring the bid to the competition authorities, the Secretary of State decided that it was not in the public interest. Many analysts expect a similar outcome under the plurality test if such a move were made for Channel 5.

Mr. Greenway

I raise a technical point so that the Minister has time to check the matter before 6 pm. Amendment No. 155 refers to clause 368. A group of amendments—I believe that they are Nos. 156 to 187—change "newspaper" to "media". However, there is no amendment to replace the title of the clause, "Newspaper public interest considerations" with "Media public interest considerations". That may be an oversight, or I may have misunderstood, but amendment No. 155 adds an important proposed new subsection to the clause. In that context, the clause's title appears too narrow.

I want to make two brief points. First, I agree with my hon. Friend the Member for Maldon and East Chelmsford (Mr. Whittingdale) that introducing the plurality test at this late stage changes the structure. However, unlike other hon. Members who contributed to the debate, I believe that clarity about its application is crucial. I therefore welcome the Secretary of State's confirmation that it does not override the specific competition issues and media ownership aspects in the Bill. It is crucial to understand where Ofcom's first duty lies when it is considering such matters. Clarity is important, and I therefore welcome the Secretary of State's comments, although others clearly did not.

Secondly, it is important to realise that amendment No. 155 deals with not only plurality but two other issues. Paragraph (b) covers the need to ensure that broadcasting is both of a high quality and calculated to appeal to a wide variety of tastes and interests". Paragraph (c) deals with the need for persons carrying on media enterprises … to have a … commitment to the attainment … of … standards".

The Committee's general view, across the party political divide, is that the objectives are worthy. I introduce only one note of caution, which is covered in other clauses. In imposing obligations on media enterprises, we must have regard to what is affordable. Hon. Members can sometimes become too fixed on what they would like in an ideal world and lose sight of reality and what is affordable. A merger of the two main ITV companies appears to be required because that is economically necessary in the current climate. When we passed the Broadcasting Act 1990, we had to rely on licences to enforce standards. That will remain the case; the licences are the mechanism for enforcing standards.

Some hon. Members may believe that, in the campaign to restrict the size of the media empire that specific people—I shall not name them—may own, a victory has been won over the Government. I am not sure whether they can claim such a victory, but a provision in the measure about economic and commercial viability will be important when Ofcom considers the Bill in future and the way in which it will apply the new powers in amendment No. 155. After all, why do we have the BBC and pay it £2 billion of public money through the licence fee? The answer is, so that we retain a broadcaster to provide programmes that are not commercially viable. We should not always apply such a threshold to commercial broadcasters.

Mr. Lansley

As Lord Puttnam kindly referred to me in another place as the architect of the concept, I am grateful for two minutes in which to speak about it. My hon. Friend the Member for Ryedale (Mr. Greenway) mentioned a problem with the title of a clause. I understand that the crossheads are not part of the measure; they derive from the subject matter of the clause, but they do not dictate it. The title of the clause will change automatically.

I am grateful to the Government for acceding to the arguments for the plurality test. Members of the Joint Scrutiny Committee will recall my argument that its purpose was never to create another hurdle for media mergers that would be the subject of ex ante ownership rules. The intention was for a structure that is designed for long-term future proofing. Ofcom, which is intended to help deregulation, should be able to remove the ownership rules that currently apply, consider subsequent ownership rules, and remove ex ante ownership rules as it can. As my hon. Friend the Member for Maldon and East Chelmsford (Mr. Whittingdale) pointed out, the merger regime should recognise that broadcasting, like newspapers, has characteristics that relate to the health of our democracy. We unanimously accept that the principal duty is to consumers and citizens. Any merger consideration should also be about consumer interest, as expressed through competition, and the health of our democracy, as expressed through the plurality test. I therefore support amendment No. 155.

Tessa Jowell

I shall be brief. The arguments have been expressed clearly and well. The debate has continued for approximately 18 months since the Bill's scrutiny began. The consideration has focused essentially on the best way in which to secure deregulation, future proofing of the provisions and protection of the public interest in recognition of the specific role that the media play in our society. By general consent, the plurality test in the Bill is an important safeguard. The measure remains deregulatory; it does not add a further layer of regulation and I commend the amendment to the House.

Lords amendment agreed to.

6 pm

Lords amendment: No. 3

The Minister for Energy, E-Commerce and Postal Services (Mr. Stephen Timms)

I beg to move, That this House disagrees with the Lords in the said amendment.

Mr. Deputy Speaker

With this, it will be convenient to consider Government amendment (a) in lieu thereof.

Mr. Timms

Throughout the passage of the Bill, we have made clear our commitment to broadband. We have a target of achieving the most competitive and extensive broadband market in the G7 by 2005, and we have backed that up with a variety of actions and with funding. We now have well over 2 million broadband connections in the United Kingdom, and the rate of growth of more than 100,000 a month is one of the fastest in the world.

We had reservations about whether to include a reference to broadband in the Bill, but we are strongly committed to broadband and we also agree that Ofcom will have a role in encouraging the fair development of the broadband market and in contributing to its competitiveness. As we are giving Ofcom a duty to secure the availability of a wide range of electronic communications services—including broadband services—we questioned whether it was necessary specifically to include the term "broadband" on the face of the legislation. However, given the importance that we attach to broadband, and the widespread support in both Houses for giving Ofcom an obligation to encourage its roll-;out and take-up, we have accepted the principle of including a specific reference to it in the general duties. Amendment (a) does no more than ensure that that fits properly within the structure of clause 3 by requiring Ofcom to have regard to the desirability of encouraging the roll-out and take-up of broadband.

I have used the term "broadband" because it is easier to use than "high-speed data transfer" services—the term used in the amendment. The two terms are probably interchangeable in everyday usage, but we have taken the view that "high-speed data transfer services" is preferable as a term for legislation.

Mr. Bryant

Is not this one of the problems with the language involved? Whether we use "broadband" or "high-speed data transfer services", each is a relative term, depending on whether we are talking about 512 kilobytes per second, or 1,000, 1,500, or whatever. This illustrates one of the problems involved in writing this particular element into the Bill.

Mr. Timms

My hon. Friend makes a fair point. The term that we have adopted—"high-speed data transfer services"—is more likely to retain its currency for longer. The term "broadband" could well prove to be an expression of the moment, or at least of the period, in a way that "high-speed data transfer services" will not.

Brian White

Will my hon. Friend give way?

Mr. Timms

Yes, I will gladly give way to my hon. Friend, who has taken a close interest in this matter.

Brian White

Will it be Ofcom that decides what constitutes high speed, or will the Government recommend what the definition of that should be?

Mr. Timms

Ofcom will need to take a view on what this duty entails. It will do that in the light of what is happening in the data communications market in relation to those services that one could fairly regard as high speed, given the current state of the market. Of course, that will change as time goes on.

I invite the House to agree to amendment (a) in lieu of Lords amendment No. 3.

Michael Fabricant (Lichfield)

Well, we had a high speed debate there from the Minister. He has rightly seen the light on the road to Damascus, or certainly on the road to the other place. It was the noble Lord, Lord Northesk who raised this issue in the House of Lords. Yet a rather rocky path has been trod with regard to getting this measure recognised in the Bill.

When my hon. Friend the Member for South Suffolk (Mr. Yeo) raised the issue in the Chamber, the normally polite Minister slapped him down, saying there is nothing in that new clause that is not already in the Bill, except for the specific reference to broadband. The Bill refers to promoting innovation and encouraging investment—broadband will certainly be the beneficiary of that". I am glad that the Minister now realises that he might not have been quite right on that occasion. On the promotion of broadband, the Minister went on to say: That is, of course, the basis of the Bill. The regulator will have all the powers that the hon. Gentleman advocated"— that was a reference to my hon. Friend the Member for South Suffolk— as his colleagues who sat through the Committee stage will tell him; but we want the legislation to last, and I therefore think our current formula is right."— [Official Report, 4 March 2003; Vol. 400, cc. 738–740.1 I am pleased to hear the Minister tell the House that he now knows that the Bill was wrong. We welcome any sinner who repenteth, and he is right to repent.

The Minister rightly mentioned what the Government have done to promote broadband, but I believe that he protests too much. According to data published as recently as August 2002, South Korea has 9.2 broadband connections per 100 inhabitants, while Britain lags way behind in 20th place. I know that the Minister will say that that information is out of date—he has said such things in the past—and that Britain is now performing well in comparison with its neighbours. But that all comes down to the definition of broadband, as the hon. Member for Rhondda (Mr. Bryant) pointed out earlier.

Mr. Bryant

I am grateful to the hon. Gentleman for giving way. It is a delight to see him speaking from the Front Bench, I think for the first time. [HON. MEMBERS: "Hear, hearr] In Committee, he made the point that many rural parts of the country—and mining constituencies such as my own—will find it difficult to get broadband rolled out. I would like to point out that my office in Porth is now broadbanded at 512 kilobytes per second, and that Treorchy and Tonypandy will be done later next month.

Michael Fabricant

I am delighted to hear that, although I wonder whether it will really be 512 kilobytes per second. The hon. Gentleman will know that when a number of people are online at the same time, the 512 kilobytes are shared.

That brings me to another point that I wanted to raise. We must acknowledge the value of British Telecom's decision to reduce the trigger level at which it will install broadband, according to the number of people who have expressed an interest in having it. Previously, BT had said that 600 people had to register their interest, but in many areas—including my own constituency of Lichfield—it has now reduced that number, making broadband far more accessible. We welcome that.

The hon. Member for Rhondda asked a very good question earlier about what actually constituted broadband. That was echoed by the hon. Member for Milton Keynes, North-East (Brian White). What is broadband? One of the problems is that both BT and the Government define it as being as slow—not fast—as 112 kilobytes per second. That is slow! Those of us who have integrated services digital network connections—perhaps to access Citrix, which is the method that we use to access the House of Commons server when we are not in our offices on the parliamentary estate—will know that we need ISDN to provide a reasonably fast connection for that purpose. Those of us who broadcast from our homes need ISDN for that, too. A double ISDN circuit, provided by packages such as BT Home Highway, operates at 112 kilobytes per second. Nobody would say that that was broadband, however; it is merely ISDN2. I give way to the hon. Member for Glasgow, Anniesland (John Robertson), who used to work for British Telecom.

John Robertson (Glasgow, Anniesland)

The hon. Gentleman is chastising the Minister, but does he not agree that it does not matter how good the equipment is, because people depend on the distant end and how good that is? A lot of his figures sound good but, in effect, we all need to be in the same system for it to work as he is saying.

Michael Fabricant

The hon. Gentleman is absolutely right. I chastised the Minister only for claiming that we are doing so well in the international league. Patently, we are not. That is because the definition of broadband that the Government use is patently wrong. It includes very slow mechanisms for transmitting data. That is why Lord Northesk introduced the definition of highspeed data transfer. ISDN is low-speed data transfer; broadband does not include ISDN.

Brian White

The hon. Gentleman will be aware that many of the countries to which he refers have had Government intervention to secure their advantage in broadband. Is he advocating Government intervention, or does he believe that the market will supply broadband?

Michael Fabricant

I never believe that the market alone can provide all that is required in modern society. The Government always have to intervene in one way or another. Whether this Government should intervene by helping to fund BT to ensure the wider and more rapid expansion of true broadband is a matter that the hon. Gentleman will have to put to the Minister.

Mr. Adrian Flook (Taunton)

It is a great pleasure to see a fellow member of the Select Committee on Culture, Media and Sport at the Dispatch Box. I believe that that is a first for my hon. Friend.

Will my hon. Friend join me in my concern over rural areas? Even if we have a rough idea of what broadband will be in urban areas—I am very glad that BT has, after my intervention, reduced the level of indicated subscriptions required in Wellington in Somerset—in rural areas there are still huge problems about what broadband will be, let alone what size it will be. Could it be satellite or micro-link? In places such as Exmoor, there is no chance whatever of BT building superhighways through the hills.

Michael Fabricant

My hon. Friend is absolutely right. He is known as a strong advocate for the people of Taunton, and I do not mean just the town of Taunton—or is it the city?

Mr. Flook

The town.

Michael Fabricant

I am always careful about that because Lichfield, although a very small town, is also a cathedral city.

My hon. Friend is also a strong advocate for people who live in rural areas. The Countryside Alliance, among other organisations, has pointed out the huge divide between urban and rural societies over access to broadband. When the Earl of Northesk introduced his amendment No. 5 in another place, which we now welcome, in this great Government conversion, and asked that this matter be included as a function of Ofcom and that the expression "high-speed data transfer" be used instead of "broadband", he pointed out that 95 per cent. of urban households have access to a broadband connection, as compared with 7 per cent. for rural households."— [Official Report, House of Lords, 23 June 2003; Vol. 650, c. 58.] That is a real problem. It is not a party political difficulty, and it must be addressed.

My hon. Friend the Member for Taunton (Mr. Flook) asked about other means of broadband connection than cable. Yes, that can be achieved by low-orbit satellite systems—although they have their disadvantages—and by wireless matrix connections.

Mr. Geoffrey Clifton-Brown (Cotswold)

I am delighted to intervene on my hon. Friend and congratulate him very heartily indeed on his promotion to the Front Bench. He and I entered the House together and I am delighted to see him in his post.

My hon. Friend knows that I have been campaigning for a long time to get broadband rolled out in the Cotswolds. I held a conference a week ago last Friday with the Federation of Small Businesses to try to provoke BT into more action on reducing its target thresholds for the small rural exchanges in my constituency. It is quite clear from that conference that alternative wireless technologies, including low-orbiting satellites, are being rolled out rapidly. If BT is not more proactive in its various technologies such as piggybacking exchanges, which we learnt about at the conference, it will simply be left behind. The business men in my constituency consider that there will be technological apartheid, compared with their urban counterparts, if broadband is not rolled out in rural areas.

6.15 pm

Michael Fabricant

My hon. Friend is absolutely right, and I am grateful for his kind comments. We indeed entered the House at the same time. He is a very doughty advocate for his constituents who live in rural areas that are not served by broadband. When the countryside is experiencing such economic difficulty, the Government are quite rightly asking people working in the countryside, particularly farmers, to diversify. One of the means by which they can do that is using web services, but they can use web services, and download pictures quickly only if they are able to use broadband. That is not possible using double ISDN, which, in any other country, would not be classified as broadband. Again, I remind the House that the false claims made by the Government about the expansion of broadband in this country are patently not true.

Another good reason why it is important not to use the term "broadband" was raised by the hon. Member for Rhondda when he mentioned the possibility of there being much faster speeds. I argue that there will be faster speeds. I would use the term "wideband", and there is no doubt in my mind that a time will come, perhaps five, 10 or 15 years from now, when television stations will be able to stream video from any part of the world. Whereas at present we can watch that through services such as Real Networks, which produces a rather herkyjerky picture, as it is known, we will then be able to enjoy pictures every bit as good as digital television is now. Incidentally, that means that the Bill will become almost irrelevant to broadcasting. At that stage, viewers will be able to watch television from any television station in the world that chooses to transmit its systems through wideband.

Mr. Bryant

One is reminded of a song, "You say wideband, I say broadband". None the less, the important point is that the hon. Gentleman seems to be advocating giving widespread grants in rural areas to BT. That would wholly undermine the competitive nature of the market that we are trying to develop. Surely, if there is no killer application that people want to use, the idea of having broadband passing by their houses is almost irrelevant. We need to try to get all the public services in rural areas together to ensure that the applications that could be useful to them are delivered.

Michael Fabricant

Just to put the matter straight. I have advocated no such thing. When I was asked about it by the hon. Member for Milton Keynes, North-East, I suggested that he ask his Front Benchers about it.

Mr. Clifton-Brown

I am grateful to follow the hon. Member for Rhondda (Mr. Bryant), because it is exactly on his point that I want to intervene on my hon. Friend. We could encourage greater roll-out of broadband by using the roll-out that the Government will inevitably have to undertake for schools and to meet their e-commerce targets. Ofcom has a role here, so this Lords amendment is highly pertinent. It was raised during my conference that Chipping Campden school in my constituency gets broadband through a broad pipe, but that businesses surrounding that school cannot get it. Ofcom has a role in ensuring that such anomalies can be sorted out.

Michael Fabricant

My hon. Friend raises an interesting point. He is not the only one to have had that argument presented to him. There is a whole argument over whether schools given access to ADSL through a broad pipe should become a node, from which links could be provided to businesses and other people who wish to access broadband. There are some technical difficulties with that over the speed at which data can be transmitted to and fro.

I am sure that the Minister will go into considerable detail about the technical difficulties applying to both ADSL and local networks. One possibility, though, was mentioned earlier by my hon. Friend the Member for Taunton (Mr. Flook), who suggested the use of cells and microwave links for the provision of broadband on a broad—512 kilobytes per second—basis.

Let me stress again the importance of the Government amendment, notwithstanding the lateness of the conversion. We owe a debt of gratitude to Lord Northesk—who was, I believe, one of the first to coin the phrase "high-speed data transfer", recognising that there would be wideband in the future. I hope that the Government will now finally recognise that a speed of 128 kilobytes per second does not constitute broadband. Let me paraphrase what was said by an American senator, changing it ever so slightly: "I have seen broadband, I have met broadband, and believe me, 128 kilobytes per second is no broadband."

John Robertson

I draw the House's attention to my entry in the Register of Members' Interests—and, unlike some Members who have spoken, I shall try not to rewrite history.

The Bill covers an enormous number and a wide range of issues. As chair of the all-party group on telecommunications, I am pleased to have an opportunity to express my wish for all who want access to broadband to have it. I feel, however, that "broadband" is essentially a brand name: at the end of the day, it is not what communications are about. In Committee, I wanted an assurance from the Minister that the Bill would deal not just with what was currently covered by broadband, but with what would be covered by any band width in the future. Who knows? In the not too distant future there may be infinite band widths covering anything and everything. We probably cannot imagine what might be covered even in the next 50 years.

Significant action will be required from Ofcom. I share the Government's goal of making Britain the most dynamic broadband market in the G7 countries. I appreciate what the Government have already done in appointing an e-envoy charged with the task of promoting roll-out and take-up of broadband, but huge areas of the country have no access to broadband, and we need to do more. The Government must invest in broadband to ensure that it exists in those areas.

Broadband allows access to a greater range of services, and it is about more than just personal need and empowerment. It is of huge economic importance to the United Kingdom. Studies have shown the obvious benefits to community regeneration, but there will be wider economic benefits to the whole nation if we can achieve much wider broadband access than we have now. Without the necessary investment, some parts of the country will have fewer services and perhaps even a lower standard of living. Words are not as important as deeds, and the Government should invest, but—unlike other Members—I do not think that a single company should benefit from all the investment.

I share the Government's commitment to widespread broadband provision by 2005. Given its regulatory role, it is essential for Ofcom's general remit to include making universal access to broadband a priority, and for flexible regulation to contribute to that aim. Ofcom should therefore be set specific clear and continuing objectives in regard to broadband development, to ensure the success of broadband in Britain and to overcome the troubles that have been experienced with local loop unbundling. That should feature expressly in the policy framework that Ofcom is set annually by the Government. We should also ensure that universal service is specifically protected and extended.

The Bill will set a framework for the communications industry for the next decade. It should take account of the fact that making broadband available is a huge challenge. We must look ahead. I want to ensure that the Bill covers broadband and its extra use and increasing width, and that we do not have to stick to a limit that is, as it were, bought off the shelf in the marketplace. Future expansion must be covered.

As I have said, I welcome the Bill and endorse the Government's amendment. I am glad that these provisions will soon be on the statute book, but I am keen to enable the Government to improve the Bill further.

Mr. Richard Allan (Sheffield, Hallam)

I too congratulate the Government on conceding the need for a specific reference to high-speed data transfer services. We have spent a good deal of time discussing a specific form of communications—broadcasting—and an inordinate amount of that time talking about one particular broadcaster, the BBC. I expect that we shall return to that subject later, but many of us consider the internet side of the Bill equally if not more important to where we are going with the communications industry.

Network services continue to become more important. The idea of a dotcom boom followed by a bust, suggesting that the dotcom issue has gone away, is nonsense in the context of what is actually happening to economic growth, and the amount of the economy that now depends on network services in the broadest sense. I believe that the importance of those services to broadcasting will grow over time, and that they deserve a high profile in the Bill.

The term "high-speed data transfer" is correct, although it will and should change over time. I think it right to leave Ofcom as the organisation on the ground, with contact with the industry and able to decide how "high speed" should be defined at any particular stage. I understand that, according to the legally mandated minimum requirement, telecoms providers should currently provide a line that transfers data at 2.4 kilobytes per second, while BT has a self-imposed minimum of 9.6. That provides us with something that is more or less useless as a universal minimum standard.

I see no reason not to have realistically high-speed minimum standards, imposed in a way that would allow the industry to deliver. It makes no sense to say that ADSL must be delivered everywhere via BT lines, because the technology simply does not allow that, but it does make sense to have a floor standard enabling investment decisions to provide technology on an even basis, and to enable that floor to be raised over time. I hope that Ofcom will interpret "high-speed data services" in that sense.

John Robertson

I entirely agree with what the hon. Gentleman is saying, but surely the state of the plant that companies must use would not allow the service for which he asks. Should not the Government invest in the network so that it can be provided?

Mr. Allan

There are instances in which specific Government investment is helpful. That has been taken up by regional development agencies, and I consider it an appropriate form of intervention. My colleagues in Cornwall used objective 1 money for a project to make up for the difference between the cost of BT's putting in the standard equipment that it would have put in anywhere else and the upgrade cost in Cornwall. That, I think, makes sense. I am more worried about cases in which Government investment constitutes a substitute, or creates competitors where there is an existing business—disrupts the market, in other words.

I have mentioned to the Minister concerns raised with me about Scottish Enterprise activity. Providers, including those based in Scotland, argue that the intervention is creating spare capacity where capacity already exists. Our interventions should be carefully targeted. We should recognise that for the vast majority of people in the United Kingdom, the market will provide. I agree with the hon. Gentleman that where it does not provide intervention is appropriate, but intervention should not be in lieu of the market; it should happen in specific cases of market failure.

6.30 pm

Mr. Lansley

Can the hon. Gentleman help to clear up a slight confusion? He says that, as the definition of high-speed data transfer services changes over time, Ofcom will be able to do something in relation to it, but I cannot for the life of me work out what precisely Ofcom is supposed to do in relation to those services that, according to its other duties, it will not be doing in relation to other communications services and networks.

Mr. Allan

The hon. Gentleman makes the case that the Minister made in Committee. He refers back to the general duties of Ofcom, whereby it has responsibility for electronic communications in the wider sense. However, it would be helpful to include the additional wording the desirability of encouraging…high speed data transfer throughout the United Kingdom as an objective, as proposed. For example, Oftel has had to adjudicate in a dispute about the relative pricing the IPStream and DataStream services provided by BT, which are two ways of offering broadband services. The arguments made by the players in that field, who are all in the private sector, are about the way in which Oftel's adjudication will affect the development of the market. If Ofcom has that explicit objective—that it is desirable that those high-speed data transfer services spread throughout the UK—it can use that in making such adjudications.

Mr. Lansley

Ofcom's responsibility is, as Oftel's has been, to determine access pricing into BT's network, and the gap between the BT retail price and the wholesale price would apply regardless of the availability of that duty. The hon. Gentleman keeps talking about the requirement that the service be available right across the country, so surely he is talking about a universal service obligation. Is he talking about that, or is he not?

Mr. Allan

The amendment proposes something that is short of a universal service obligation but would be a clear objective for Ofcom. The situation is not the same for Oftel. When Ofcom is making an adjudication and dealing with telecom providers such as BT, it will do so on the basis that one of its objectives is the desirability of access throughout the UK. If there is a clear steer from Ofcom, because it has that objective, it will help to shape the investment decisions of all the companies in the sector, but it is not a substitute for those decisions.

If we all have a common interest in ensuring access to high-speed data services throughout the UK, that additional objective can do no harm. One might argue that it is unnecessary, but to argue that it takes us back is entirely wrong. It could take us forward and it would be helpful to include a specific reference to such access. It does not mean that there is a universal service obligation. That is a separate debate and relates to other clauses that we discussed in Committee.

The key point to note about the desirability of broadband access provision is that broadband is not just faster narrow band; it allows new forms of functionality. Obviously, additional functions kick in with every speed increase. One can do some things at ADSL, the normal BT broadband speeds, while other things can be done only at faster speeds. The hon. Member for Lichfield (Michael Fabricant) referred to video, for example, which will not kick in until a later date. However, as we climb this ladder, new forms of functionality are available on every rung, which are key to the competitiveness of UK industry.

Competitiveness is the basis for South Korean investment decisions. It stands to reason that businesses that can act more effectively and speedily have a significant competitive advantage over those that are on a slower track.

Michael Fabricant

Does the hon. Gentleman agree that if firms are to diversify and to be able to offer certain services by web, they will have to transmit even still pictures relatively fast? Whether they use a local or a distance server, minimum standards of broadband are required, at least something of the order of 400 kilobytes per second and not the low levels that are currently included in the definition of broadband.

Mr. Allan

The hon. Gentleman is right to say that different definitions are used. That relates to the target arguments. The Government have a target to increase use and so they are casting the definition as widely as possible. My sense is that all the telecom providers want to give as fast a service as they can—the faster the service, the more they can charge for it—so there is the prospect of, if not universal coverage, fairly high rates of coverage at 512 kilobytes per second, which is a functional rate for moving around large graphics files. That prospect is within reach.

I hope that the amendment will enable Ofcom to instruct the telecoms on all the issues referred to in other parts of the Bill, as the hon. Member for South Cambridgeshire (Mr. Lansley) pointed out. There will be a framework so that the companies know that highspeed data transfer throughout the UK is one of Ofcom's desirable objectives and that that will influence its actions as a regulator. Its decisions will be made through the lens of that provision. That will add something, and I am pleased that there is a specific reference to data transfer, as opposed to broadcasting.

Brian White

I fear that we are in danger of repeating the debate on broadband that we held in the Chamber on I May. I am astounded by what I have heard. The hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) admitted that public interest tests were reasonable, and then the hon. Member for Lichfield (Michael Fabricant) agreed that Government intervention in the market was an acceptable way forward, thus turning on its head 20 years of the Tory ideology that the free market will deliver.

Mr. Whittingdale

I should hate the hon. Gentleman go away with the impression that I welcome a public interest test. I made it fairly clear that I was not in favour of the Government's adoption of a public interest test.

Brian White

Some of the other parts of the debate that I found incredible were the references to other countries. The hon. Member for Lichfield talked about South Korea without putting his remarks in the context of that country's economic structure or talking about Government involvement in companies there; for example, the tower blocks are constructed so as to encourage broadband connection. In Germany, the regulator acquiesced in the stifling of competition by Deutsche Telekom. Are the Tories seriously advocating that we should have a national championing of broadband through BT, as some of their comments in the debate suggest? If so, there will be serious problems and we need to address that point.

Michael Fabricant

The hon. Gentleman is right to note the intervention of the Government of South Korea, but there has been no such intervention in the Netherlands, in Denmark, in Australia nor, surprisingly, in Portugal. All those countries—in fact, 19 countries—are ahead of Britain in the broadband stakes.

Brian White

Earlier, the hon. Gentleman cited figures from August 2002. If he actually looked at the rate of broadband growth over the past few months, he would see that the UK is at the forefront. He should look at those figures rather than relying on historical, out-of-date figures.

Michael Fabricant

The hon. Gentleman is being generous in giving way to me for a second time.

As I pointed out earlier, the more recent figures are based on definitions of broadband that no other country would accept and that many scientists in this country—including, I suspect, the hon. Gentleman—would never accept. All that has happened is that the definition of broadband has been expanded by the Government to include more services.

Mr. Timms

indicated dissent.

Michael Fabricant

The Minister may say no, but the Minister knows the truth of the matter.

Brian White

I am sorry to disagree with the hon. Gentleman, with whom I have held several discussions on broadband over the years, but my understanding is that the figures are based on comparable definitions. If I am wrong, I will apologise, but that is my understanding. That is what the Organisation for Economic Co-operation and Development and other studies have put forward. The hon. Gentleman should look at the definitions again.

One of my concerns is that although the Lords amendment encouraged competition and markets, the Government amendment does not. Can my hon. Friend the Minister tell us how Ofcom will deal with the provision? Will it have a duty to encourage the markets? If this is about encouraging an incumbent supplier to do more, that is a very different prospect from allowing entrants into the market and the kind of data-stream and internet protocol competition that the hon. Member for Sheffield, Hallam (Mr. Allan) mentioned earlier.

These are serious issues. The House is in danger of latching on to the latest fashion. We did so with local loop unbundling; we are in danger of doing so with broadband. I am very concerned that we will create more problems for ourselves if we accept the amendment. At best, it is neutral. At worst, it is the thin end of the wedge. I am concerned that we will not give Ofcom clear instructions that broadband should be delivered by competition and creating markets. That is the only sustainable way to deliver it.

Mr. Lansley

I had feared, before I heard the hon. Member for Milton Keynes, North-East (Brian White) speak, that I would be in a minority of one on this subject. I have to say hesitantly that, not for the first time, he and I see things more closely than perhaps some of members of our pre-legislative scrutiny Committee and, sometimes, even those who served on the Standing Committee.

Before I enter into the subject matter, I want to join in congratulating and welcoming my hon. Friend the Member for Lichfield (Michael Fabricant) to the Front Bench. Once again, as he did in Committee on many occasions, he has demonstrated the extent and, often, the depth of his knowledge of technological matters.

I fear that, on this occasion, enthusiasm and knowledge of the technology have diverted some Members from the debate at hand. The debate is not about the desirability or otherwise of further broadband roll-out, or the desirability of functionality at higher speeds and developing new forms of broadband or highspeed data transfer services. All those things are very important and interesting subjects for longer discussions, and they are not least the responsibility of the Government. The question is whether Ofcom should have an additional specific duty, as proposed either by the Lords or by the Government.

My view is that neither of the amendments is necessary and both may be undesirable. Why is that true? Essentially, the problems that might arise are these: if we accept the Lords amendment and give Ofcom the responsibility to consider what are the best means of gaining access to those systems, we introduce to Ofcom an element of picking technological winners that is not evident elsewhere in the Bill and is completely inappropriate to the responsibilities of an independent regulator. If we include, as the Lords amendments does, the specific reference to encouraging competitive markets in such systems, we have to ask why that is necessary. As Ofcom will have a wider responsibility to encourage competitive markets in all electronic networks and services, why is it necessary to specify that requirement? Doing so will simply cause confusion about the nature of the Bill in other respects. Although well motivated, the Lords amendment is deficient in those two respects.

Let us move to the Government amendment, which raises the harmful possibility that the Government could give Ofcom a duty about the development, availability and use of high-speed data transfer services that could conflict with its other duties that relate to the promotion of consumer interests through competition. That would be highly undesirable. We want Ofcom's pro-competitive duty to be clear. Even if we wanted to give Ofcom that duty, is Ofcom the right body to exercise it? It is not; the Government should do so.

Almost everything that I have heard about the desirability of different forms of intervention—we can argue about how much there should be and whether it should simply involve aggregating public sector purchasing, promoting certain technology with grants or developing access in certain areas using subsidy—suggests that those are matters for the Government, not for Ofcom. Ofcom will not have the powers or the resources to do those things.

6.45 pm

The most harmful aspect is that—as the hon. Member for Sheffield, Hallam (Mr. Allan) said in response to my intervention—the proposal might be short of a universal service obligation. The idea that we must give Ofcom responsibility short of a universal service obligation in relation to high-speed data transfer will simply allow the Government to say, "We gave Ofcom the duty to promote broadband; it may not have done it well enough." I shall not try to interpret the history too much, but Oftel picked local loop unbundling as the way to try to promote broadband. It subsequently said, "If we aren't going to do it, we'll let BT do it, by cutting prices. That will do it for us." Neither of those approaches represents the simple pro-competitive operations on which Oftel should have focused.

Oftel's job was not to promote broadband. Oftel's job was to ensure that the markets were competitive. In so far as that involved diminishing the monopoly aspects of BT's operation, that was what Oftel needed to do. Unfortunately, other questions got left on one side, especially those related to spectrum allocation and the availability of alternative technology, because everyone became focused on local loop unbundling.

The issue now is to define Ofcom's role. Ofcom's role is to provide a competitive market in all electronic communications, networks and services, but if the Government conclude that the economic or social necessity suggests that there should be a universal service in high-speed data transfer services, clause 62 will allow the Government to establish a universal service obligation by order. That is how the Government would need to act. The Government could get off the hook because Ofcom had a subsidiary duty but no power to give effect to it. That could be damaging.

Mr. Bryant

I think that the hon. Gentleman has slightly missed his grammar. Neither the Lords amendment, nor the Government amendment would give Ofcom a new duty. Surely it would have only to exercise its other duties with regard to the desirability of encouraging the availability and use of high-speed data services.

Mr. Lansley

That is not a matter of grammar; it is a matter of interpretation. In relation to clause 3, yes, furthering the interests of citizens and consumers is subsequently qualified by the things to which Ofcom must have regard. We have to consider the way in which Ofcom exercises those duties. The hon. Gentleman will find that, so long as Ofcom asserts the primacy of its consumer interests, it will also have to show that it is giving effect to the subsidiary aspects of its general duties.

All those things are Ofcom's general duties. The risk—I put it no higher than that—is that the Ofcom's subsidiary duty in this respect will come into conflict with its primary duties, and we ought not to countenance that. Moreover, many hon. Members are extolling the benefits of broadband roll-out, and they perhaps think something should be provided for the 10 per cent. of the population that will not have access to BT's broadband or cable. However, when they find that it is uneconomic do to so and they come knocking on the door called "universal service obligation" and the Government say, "Oh no, we can't do that, but we have given Ofcom some responsibility", they will find that this debate will ring hollow because it will not have served our purpose at all; it will have inhibited us from going down the path that will probably be necessary in due course.

Sir Robert Smith (West Aberdeenshire and Kincardine)

I certainly found the last few speeches quite informative about the range of tensions involved in trying to achieve what is best for our constituents, especially in trying to get new technology and broadband into rural areas. The Minister will know, from having met my hon. Friend the Member for Gordon (Malcolm Bruce) and myself recently, just how important such things are in areas such as the north-east of Scotland.

The great challenge for that area is that its rurality involves a dispersed population. In many parts of northeast Scotland, there is no constraining physical geography that, as in the highlands, forces people into nodes of population that can be tackled by conventional connections. The population is more dispersed, so the attempt to get such technology into the area is even more challenging, yet it should be a very tempting area, given the importance of the oil and gas industry and the amount of data handled by many people who commute to the city of Aberdeen. The benefits of high-speed data links should be apparent, but there is a worry in the community about how to press forward.

Just lately, the pressure on BT and others seems to have had some effect. For example, the exchange in Drumoak has had its target level reduced to 150 registrations, which is achievable. Another community, Kemnay, already has 300 people signed up, but a target has not been issued. Having listened to the debate, I do not know whether the amendment will improve the situation, but—as the hon. Member for South Cambridgeshire (Mr. Lansley) said—the universal service obligation is a long-term aspiration. It is certainly a challenge to reach the last bits of the really rural areas.

BT lobbied Members of Parliament last week and told us that it could cover 90 per cent. of the country under the conventional rules that affect the market. It felt that it could cover up to 97 per cent. of the country with some tweaking, but in those last exchanges the number of years that would be needed to see a return on BT's investment would need to be changed. Would the amendment affect Ofcom's ability to allow BT to run the market in a way that would allow that last 7 per cent. of exchanges to be enabled?

Michael Fabricant

The hon. Gentleman mentioned exchanges, but BT are doing good work by spreading broadband out in the highlands and islands, and other parts of north-west and north-east Scotland, using the low earth orbit satellite constellation system. It does not involve exchanges and it is another way to supply broadband, but it is costly.

Sir Robert Smith

It also has a problem with the return of data and the ability for two-way communication. A company in my constituency is developing satellite systems, and it is another solution for some rural areas. However, if the regulator can be convinced by BT, the ability to provide the conventional solution for more people will mean that they can use the same equipment in their houses to access the network. They can be on the same wavelength as everyone else and make best use of broadband. In another interesting innovation in my constituency, Scottish Hydro-Electric is using power lines to carry broadband.

Mr. Bryant

The hon. Gentleman will be aware that BT has argued that the reason it has to have the thresholds is for reasons of competition law. It cannot be seen to be subsidising an exchange because that would be anti-competitive against other suppliers. Will the Bill make it possible for BT to surrender that feeble reason for not rolling out broadband?

Sir Robert Smith

That is what I want to hear from the Minister, when he replies. Will the amendment allow those exchanges that BT argues need a greater rate of return to be enabled? That would be the quickest way to ensure that even more constituents gain access to broadband.

John Robertson

The hon. Gentleman mentioned the Scottish Hydro-Electric scheme, but that is not a new idea. Companies such as Thus plc have tried to do it in the past. Even British Rail tried it. The problem is that it comes at a cost, and where will the money come from?

Sir Robert Smith

We will find out, because the commercial trials are taking place in my constituency in Stonehaven, where the cost is roughly comparable to that of the BT equipment. It is two-way broadband, and the speed in both directions is the same. One of the greatest complaints that I received at the meeting I held with my hon. Friend the Member for Gordon was what ADSL is not the product that businesses want. They want to be able to send large data files as well as receive them.

The good news from BT was that our exchanges happen to be made by Fujitsu, so it is possible to use a patch to make them into two-way fast exchanges. However, I want to know whether the hon. Member for South Cambridgeshire is right and the Government have accepted the amendment to get themselves off the hook and removed from any role in driving broadband forward in rural areas. Will the amendment have any effect on the regulator? Will it allow the regulator to adopt a different model in rural areas to ensure that the maximum number of people benefit in the quickest possible time from this new market?

Mr. Timms

I welcome the fact that we have had a lively and interesting debate about broadband—as we often do. I also welcome the hon. Member for Lichfield (Michael Fabricant) to the Front Bench. We enjoyed his contribution and look forward to many more, on these topics and others, in the months ahead. He quoted me correctly when he said that I had argued against the inclusion of the term "broadband" in the Bill, but the amendment uses the alternative term "high-speed data services". That is helpful. The data that we use to compare progress on broadband in the UK are compiled on a consistent basis with the way in which data are compiled in Europe and elsewhere. That is one of the arguments in favour of using the definition in the Bill, because it is used elsewhere.

When I joined the DTI last year, I was greeted by a headline in one of the computing newspapers that claimed that the UK was neck and neck with Croatia on broadband. We have come a long way since then, as the hon. Gentleman will—I am sure—acknowledge. He appeared to suggest at one stage that we might include basic rate ISDN in the broadband figures, and that double rate ISDN was equivalent to broadband. We are not including ISDN basic access in the broadband figures, and indeed there is a fundamental difference in that ISDN is not always on, as broadband is. That is a significant benefit of broadband.

Michael Fabricant

Double ISDN is in the order of 112 kilobytes per second—

Sir Robert Smith

It is 128.

Michael Fabricant

Yes, that is right. That rate is included in the broadband definition, and that is the point that I was making. The Minister is right to say that ISDN is not always on and has to be dialled up, but that bandwidth is not fast and cannot be used for the projection of graphic images. Therefore, that speed does not fit the definition of broadband and it should not be included.

Mr. Timms

It can be used, but it is slower. We are looking for consistency, to allow us to make comparisons with other countries, as the current definition allows. My hon. Friend the Member for Glasgow, Anniesland (John Robertson) was right to emphasise the importance of the roll-out of broadband across the country. My hon. Friend the Member for Rhondda (Mr. Bryant) was also right to draw the House's attention to the importance of aggregating the public sector demand—not through subsidy, but with the public sector as a customer for broadband—to increase the level of demand, including in rural areas, to allow the service to be rolled out there.

We are making rapid progress. I have established a rural broadband team in the DTI, which works closely with my right hon. Friend the Minister for Rural Affairs and Local Environmental Quality. I am confident that the rapid rate of progress that we have seen lately will continue. I agree with the hon. Member for Sheffield, Hallam (Mr. Allan) about the importance of the internet. One does sometimes hear ill-informed comments about boom and bust, suggesting that the importance of the internet has waned. He is right to remind the House that that is not the case. We see greater realism in people's approach to the internet, but it will still be extremely important in the future. I also agree about the dangers of distortion of the market through inappropriate subsidies, which the hon. Gentleman also mentioned.

My hon. Friend the Member for Milton Keynes, North-East (Brian White) speaks with great authority on these matters, and did so again this evening. He and the hon. Member for South Cambridgeshire (Mr. Lansley) spoke of some possible unhelpful approaches to the issue. It is fair enough to question whether the amendment adds much to the Bill, but I do not agree that it is potentially damaging. I suggest that if they look at clause 3, they will see that subsection (2)(b) already refers to the availability throughout the United Kingdom of a wide range of electronic communications services". Subsection (3)(e) refers to the desirability of encouraging investment and innovation in relevant markets". 7 pm

What the amendment will do is impose a duty on Ofcom to have regard to the desirability of encouraging broadband in exercising its functions, which will require it to take other decisions, such as the setting of general conditions with which communications providers must comply, in a way that would be more likely than not to encourage broadband. The hon. Gentlemen's misgivings about potential downsides should therefore not cause them concern. The provision will, of course, sit alongside all the existing requirements, including that in subsection (3) about the desirability of promoting competition in relevant markets.

Mr. Lansley

How confident is the Minister, therefore, that were Ofcom to set its general conditions in ways that were designed around that objective, as distinct from those that are provided for in the EU directives, that setting of general conditions would not become subject to legal challenge?

Mr. Timms

I do not think that Ofcom will do that in isolation. It will have regard to all those matters that are required of it, including those, as the hon. Gentleman rightly says, that have been derived directly from the directives. Perhaps I ought to agree, too, that this is entirely separate from the universal service obligation process, which, as he says, comes from another part of the Bill. It is important not to confuse those two.

Lords amendment disagreed to.

Government amendment (a) in lieu of Lords amendment No. 3 agreed to.

Lords amendment No. 4 agreed to.

Lords amendment: No. 5

Tessa Jowell

I beg to move, That this House agrees with the Lords in the said amendment.

Madam Deputy Speaker (Sylvia Heal)

With this it will be convenient to take Lords amendments Nos. 33 to 38, 43, 47 to 54, 147, 194, 196, 198 and 205.

Tessa Jowell

Lords amendment No. 5 amends clause 3(3), which sets out a number of matters to which Ofcom must have regard, in particular, in performing its duties under clause 3(1). The amendment adds the purposes of public service television broadcasting to those matters. Those purposes are detailed in clause 260(4) of the Bill.

The Government listened to the strength of argument in another place that the position of public service broadcasting, to which we are fully committed, within Ofcom's general duties should be secured. This amendment does that. I should explain that the reference is to the purposes of public service television broadcasting because that is provided for and defined in the Bill. Put* service radio broadcasting, which is not mentioned in the Bill, is provided by the BBC and is secured through the BBC charter and agreement. Amendments Nos. 43, 54 and 198 simply tidy up related parts of the Bill. Amendment No. 198 provides for the construction of the purposes of public service television broadcasting in the United Kingdom in the Bill, allowing the ad hoc definitions in clauses 226 and 266 to be removed. Amendment No. 33, coupled with the new definition of the BBC Charter and Agreement in amendment No. 147, enables the BBC charter to confer functions on Ofcom to the same extent as the BBC agreement.

Amendments Nos. 34 to 38, 52, 194, 196 and 205 are consequential and ensure that the policy is applied consistently throughout the Bill. Having reflected further on the arguments put forward by the Opposition on this issue in the House, and again in another place, the Government felt able to accept the principle that it would be right to keep open the possibility of Ofcom's regulatory functions in respect of the BBC—other than those contained in the Bill—being placed in the BBC charter and not solely in the BBC agreement, as the Bill originally provided. Amendments Nos. 47 to 53 add detail to the definition of public service broadcasting in clause 260. The areas to which changes are made are educational programmes, programmes facilitating civic understanding, programmes dealing with religion and other beliefs, and children's and young people's television and drama. I will now set out briefly what each of those changes will achieve.

Amendment No. 47 requires broadcasters to provide comprehensive and authoritative coverage of news and current affairs to facilitate civic understanding, in addition to the requirement that such programmes should facilitate fair and well-informed debate on news and current affairs. This amendment has been made following intense discussion in another place of the importance of broadcasters facilitating understanding of democratic and civic processes, such as proceedings in Parliament.

Amendment No. 48 expands the requirement for broadcasters to provide programmes on educational matters to include programmes of an educational nature and… other programmes of educative value". This change was introduced to reflect more accurately the Department's policy on this issue, again following concerns both in this House and in another place. The purpose of the amendment is to clarify that the programming covered in clause 260(6)(e) should extend to programmes whose purpose is to educate and which have educational value.

Amendments Nos. 49, 50 and 53 relate to programmes dealing with religion in the public service remit. Two broad changes have been made to this provision. The first, in amendment No. 49, expands the reference to religion in the matters listed in subsection (6) to "religion and other beliefs". Amendment No. 53 defines "belief" to include collective belief in or adherence to ethical systems or philosophies or mystical or transcendental doctrines. The second change, in amendment No. 50, makes it clear that the reference to religion within the remit encompasses both factual programmes about religion—such as news, information or the history of different religions and other beliefs—and programmes of a religious nature, including those portraying acts of worship and other ceremonies and practices. Amendment No. 53 also defines the term "drama", in response to concerns raised in another place. The definition makes it clear that the term "drama" as used in clause 260(6)(b) includes contemporary and other drama in a variety of different formats. We consider that this new provision encompasses new ideas and new writing, as well as the wide range of formats of television drama.

Amendment No. 51 expands the requirement for programming for children and young people from a suitable quantity of high quality and original programmes to a suitable quantity and range of such programmes. Despite the unique status of the provision for children's programming in the public service remit, since it specifies that programming should be both high-quality and original, we accepted that additional safeguards should be made to protect programming for young people. This amendment therefore ensures that a suitable quantity and range of programmes for children and young people will be provided. I commend the amendments to the House.

Mr. Whittingdale

I might have given the impression during earlier proceedings on the Bill that I wish to speak at considerable length whenever the BBC is mentioned. Indeed, that was the impression given by the hon. Member for Sheffield, Hallam (Mr. Allan), who has now left the Chamber. However, I do not propose to speak at length this evening.

I welcome the fact that the Government have listened to arguments suggesting that the charter should be allowed to incorporate future developments that might lead to Ofcom taking additional responsibilities for the BBC, which my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) suggested in Committee. The Secretary of State knows that one of our principal complaints about the Bill is the fact that the biggest broadcaster in the country is excluded from Ofcom's full regulatory remit. We continue to believe that that is wrong and that it should be corrected in the future. The Government have argued that it would be suitable for the issue to be considered at the time of charter renewal. The amendment is helpful because if the Government decide to extend Ofcom's role to oversee the BBC's activities, the Bill will facilitate that.

Given that everything is wrapped up in the renewal of the BBC's charter, is the Secretary of State able to say more about precisely how that will be undertaken and, especially, about how her Department intends to review the charter's current operation before conclusions are reached about future changes? She knows that we have strong feelings about that. She said in public that there will be a far-reaching review but she has given few details about how it will be carried out.

It is an appropriate time to welcome strongly the Government's agreement in the House of Lords that the BBC should be subject to scrutiny by the National Audit Office. We argued strongly for that and although we have not achieved 100 per cent. of what we wanted, at least the door of the BBC has been opened to the NAO for the first time. That is in the BBC's interests and certainly in those of the taxpayer, so we have achieved a vastly improved situation.

Mr. Lansley

I, like my hon. Friend the Member for Maldon and East Chelmsford (Mr. Whittingdale), welcome the Government's acceptance that when the BBC charter is renewed, it might be appropriate for Ofcom to be given functions that would be best specified in the charter rather than in the agreement and the licence. Indeed, the amendments head off at the pass a risk that might have otherwise arisen because subsequent to charter renewal, the BBC governors could have been invited under the agreement to accept Ofcom's responsibilities and functions yet wish, or think that they had a duty, to resist that due to the framing of the agreement. If Parliament wants Ofcom to have responsibilities, it may advise Ministers and they can decide that such responsibilities should be reflected directly in the charter. I welcome that because I argued for it in Committee.

The hon. Member for Milton Keynes, North-East (Brian White) earlier chided parliamentary counsel for their lack of imagination about the word "citizen". One must recognise that parliamentary counsel occasionally must go above and beyond the call of duty—defining beliefs in legislation is certainly beyond the call of duty. I hope that the definition is not tested too much in the courts.

Tessa Jowell

I shall respond briefly to the points that have been made. I expect that we shall publish proposals on how we intend to approach the charter review before Christmas. The process will be wide-ranging and thorough and I hope that it will provide an opportunity for wide-ranging debate so that the public and all those with an interest in the BBC's future may express their view.

7.15 pm

Mr. Lansley

I neglected to mention a point to which the Secretary of State might wish to respond. The Bill suggests that Ofcom will undertake its first review of public service broadcasting probably during the latter part of next year. How does she think that the review will relate to consultation on the BBC charter? Could we reasonably expect that formal consultation on the charter would follow Ofcom's first such review?

Tessa Jowell

It is important to distinguish between the formal and informal process. Of course, a formal process will allow parliamentary scrutiny of early proposals on the charter. The Bill provides for the review of public service broadcasting to be held within a time scale that allows it to inform the charter review process, which is what we intend. We need to get the sequence right, so I can tell the hon. Gentleman that we intend to announce the way in which we aim to approach the process before the end of the year. The first stage is to secure legislation to enable Ofcom to undertake the wide-ranging review of public service broadcasting at an appropriate time. As I said, the review will be an important source of information that may be fed into the charter review process. I promise the House that there will be plenty of opportunities to discuss the methodology and approach of the charter review in addition to the content of the review itself.

I pay tribute to Lord Sharman for his deft and skilful negotiations in another place. The solution that found considerable favour in another place to the vexed question of NAO access to the BBC accounts has taken us to a good position to which we will return at the time of charter review. I have made that position clear throughout the process.

Lords amendment agreed to.

Lords amendments Nos. 6 to 10 agreed to.

Lords amendment: No. 11

Tessa Jowell

I beg to move, That this House agrees with the Lords in the said amendment.

Madam Deputy Speaker

With this it will be convenient to consider Lords amendments Nos. 17 and 18, Lords amendment No. 42, and the Government motion to disagree thereto and Government amendment (a) in lieu thereof, Lords amendment No. 72 and consequential amendments (a) to (e), and Lords amendments Nos. 73 to 93, 119 to 126 and 206.

Tessa Jowell

The amendments, although not directly related, have been grouped together because they deal with a wide range of disability, equal opportunity and training issues. They include placing a new duty on Ofcom to promote equipment that is convenient for use by the widest practical range of users, including people with disabilities. Ofcom will also be required to establish and maintain a committee to advise on the interests of disabled people and of elderly people across its remit.

The reference to the "fair treatment" of disabled people has been replaced with a reference to "equalisation of opportunities", which is the preferred term in recent disability legislation. Lords amendment No. 42 was introduced to require Ofcom to include conditions in the public Teletext licence to ensure that people with sight and/or hearing disabilities can use the service for all the same purposes as people without such disabilities. Though we agree with the spirit of the amendment, we had to address some technical difficulties with the drafting and the placement of the amendment. So we drafted a new amendment in lieu of Lords amendment No. 42, which will be inserted in the correct place.

Lords amendment No. 72 requires Ofcom's code on provisions for the deaf and visually impaired to give guidance on the extent to which applicable services should promote the understanding and enjoyment of programmes by people with a dual sensory impairment. Amendments (a) to (e) are minor consequential amendments. They provide that consultation on the code, and accessibility to it, applies to people who have a dual sensory impairment.

Ofcom will have a duty to include in its code on access to television for people with sensory impairments a requirement that broadcasters make adequate information about the assistance that is available to those who are likely to want to make use of it. In addition, a fixed five-year interim target of 60 per cent. for subtitling has been introduced to ensure that progress towards meeting the main target by the 10th anniversary is accelerated in the early years, with the Secretary of State able to set, by order, a more challenging target where appropriate.

Amendments have been tabled to close a loophole that related to the provision for thresholds in clause 330, below which the requirements for equal opportunities and training would not apply.

Mr. Whittingdale

We spent considerable time in this House and the other place ensuring that the Bill properly caters for the needs of those with hearing or sight disabilities. The Opposition pressed that on a number of different occasions and it is gratifying to find, once again, that one of the things of which we were keen to persuade the Government has been taken up in a Lords amendment. My hon. Friend the Member for Ryedale (Mr. Greenway) asked in Committee for a new clause to give a duty to promote inclusive design. That has resurfaced in a similar form to encourage the wide availability of accessible, easy-to-use equipment. The issue is important. The disability groups feel strongly that the measure is necessary. I am all in favour of giving Ofcom the duty to encourage equipment to be as accessible as possible to people who are deaf or visually impaired and, equally, to ensure that their needs are properly taken into account by the establishment of the panel.

I have a couple of slight concerns. There is always a balance to be struck between ensuring that the broadcasters pay due heed to the needs of people with disabilities while not loading them with too great a burden. There is a requirement that all cable and satellite channels subtitle 80 per cent. of their programmes within 10 years of the legislation coming into force. That target was agreed in discussions with the industry and the disability groups. All the broadcasters have signed up to it.

The Government have gone further, however, by imposing a new interim target of 60 per cent. subtitling for all programming after five years. That front loads the demand on the broadcaster to move towards greater subtitling so that they have to achieve more than 50 per cent. of the target within five years rather than 10. The full target of 80 per cent. subtitling could cost nearly £900,000 per channel annually. I am not going to disagree with the amendment, but I hope that the Government will bear in mind that the target is demanding and will have considerable cost implications. For many broadcasters, £900,000 is an easily affordable sum, but small struggling niche channels will find it hard to meet that cost.

I am also concerned that amendment No. 88 provides that if a channel has voluntarily fulfilled its 60 per cent. interim subtitling requirement before the five-year deadline, the interim requirement can be increased by the Secretary of State. That would give those who have acted in a thoroughly commendable fashion by reaching their target early an even more demanding target to meet on top. That could act as a disincentive to channels to reach the target of 60 per cent. before the five years have expired. Apart from those points, however, I do not disagree with the amendments.

John Robertson

I want the Secretary of State to assure me that the needs of disabled persons working in the telecommunications industry will be addressed. The Bill mentions broadcasters, but does not mention telecommunications. I raised that in Committee. When Lord Gordon tried to amend the Bill, he said: If the object of this Bill is to bring together telecommunications and broadcasting, it seems a little lopsided, to say the least, that the training provision applies solely to broadcasting."—[Official Report, House of Lords, 26 June 2003; Vol. 650, c. 396.] I ask the Secretary of State to consider that.

Tessa Jowell

The hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) is right: we are front loading the cost of subtitling. I hope that I have made clear our reasons for that. Other hon. Members on both sides of the House and in another place have certainly made the reasons clear. The cost of subtitling is decreasing all the time. That is why we have acted as we have. It is also worth noting that Ofcom has the power to exempt services, taking into account the cost if that is properly justified.

In response to the point raised by my hon. Friend the Member for Glasgow, Anniesland (John Robertson). the Government are constrained by legislation. I remind him that last week we published the White Paper on skills, the focus of which is to ensure not only that our industries maximise productivity through a trained and skilled work force, but that we draw from the widest range of people across the community in developing access to skills and training. I attended an event earlier today at which Barbara Cassani, the chair of the London Olympic bid committee, forcefully made the point that diversity in recruiting for the Olympics is important because in that way we recruit the best. The same applies to telecoms and broadcasters in recruiting from the range of talent, which obviously also includes people with disabilities.

Lords amendment agreed to.

Lords amendment No. 12 agreed to.

It being half-past Seven o'clock, MADAM DEPUTY SPEAKER put forthwith the Questions necessary to dispose of the business to be concluded at that hour, pursuant to Order [this day].

Lords amendments Nos. 3 to 38 agreed to.