SECRETARY OF STATE GUARANTEES FOR OFCOM BORROWING (Hansard, 4 March 2003)

§ The Minister for E-Commerce and Competitiveness (Mr. Stephen Timms)
I beg to move, That the clause be read a Second time.

§ Mr. Speaker
With this it will be convenient to discuss the following: Government new clause 25—Power of OFCOM to retain costs of carrying out spectrum functions.
Government amendments Nos. 241 to 243, 256.

§ Mr. Timms
Clause 1(3) and (4) of the Bill will allow Ofcom to borrow money commercially. That will enable Ofcom to smooth out uneven cash flows that may arise as the result of the unevenness of receipts. New clause 23 will allow the Secretary of State to guarantee Ofcom borrowing to ensure that it is able to obtain the most advantageous terms.
New clause 25 will enable Ofcom to retain out of its spectrum receipts an amount to cover the costs of carrying out its spectrum functions. Clause 390 of the Bill requires amounts received by Ofcom under the Wireless Telegraphy Act 1998 to be paid to the appropriate consolidated fund. In practice, an administrative arrangement will allow the necessary amount to meet the costs of Ofcom carrying out its spectrum functions to be netted-off from those moneys and paid to Ofcom. Under the new arrangement proposed in new clause 25, Ofcom would make a statement of principles, which would be approved by the Treasury, setting out the basis on which it would calculate the costs of carrying out its spectrum functions and retain the necessary amounts accordingly. I hope that the House will welcome that.
Amendment No. 243 requires that Ofcom should include in the account prepared under clause 390(4) the amount retained by it in accordance with any statement of principles it may make under new clause 25, and the cost to Ofcom of carrying out the functions to be covered by that retained amount. Amendments Nos. 241 and 242 are minor consequential amendments.
As a result of the requirements of clause 390 that some of the amounts received by Ofcom should be paid to the consolidated fund, Ofcom will be unable to comply with the duty in paragraph 8(1) of the schedule to the Office of Communications Act 2002 to secure that its revenues are at least sufficient to meet its obligations. Amendment No. 256, therefore, amends paragraph 8(1) to require Ofcom to conduct its affairs so as to secure that revenues from fees and charges which do not fall to be paid to the consolidated fund are at least sufficient to cover the cost of carrying out the functions to which they relate.

§ Mr. John Greenway (Ryedale)
We welcome the new clauses, although we should prefer new clause 25 to go further. If the new clauses are accepted, the Bill will have more than 400 clauses. I hope that the House will recognise that this afternoon's debate brings to an end a lengthy process. Some of us have been engaged in it for the best part of three months, but it has been a happy time. As we progress through the afternoon, we will discover the joy of Government amendments that put into effect changes that we advocated in Committee. That shows that the Committee debate was a constructive process. The past 24 hours has been quite good, as we have seen that all our work did not come to nothing. We are grateful to the Minister for that.
684 However, if new clause 23 is relatively uncontroversial, new clause 25 addresses an issue that I raised with the Minister in Committee—the extent to which all the income payable to Ofcom could be used to defray some of the costs of its activities, instead of all of it being paid to the consolidated fund. I do not want to delay the House, as there is a lot of business to get through. However, the Minister will recall that I impressed on him my thought that, although I understand that Ofcom would not necessarily have an incentive to impose penalties if it could keep the money, it still seems a mistake for new clause 25(5) specifically to except the imposition of penalties and fines and some of Ofcom's enforcement powers.
We still believe that a lot of activity will be involved in policing the provisions of the Bill and ensuring that Ofcom achieves proper enforcement. The cost of that will still fall on all the organisations that must pay fees and administration expenses to the regulator, as we discussed in Committee.
Although there is not a complete meeting of minds between us on that matter, we are nonetheless grateful that the Government have accepted some of what we said. I hope that the Minister will recall the Opposition argument as the Bill progresses through the other place and when it receives Royal Assent. If I am right about it, we may need to return to the matter in the future.

§ Mr. Timms
I agree with the hon. Gentleman about the happiness of the past three months. He is right that the House has before it a number of amendments that reflect the discussions that we had in Committee. They deal with matters raised by the hon. Gentleman and other hon. Members, which is how the process should work.
We debated in Committee the matter that the hon. Member for Ryedale (Mr. Greenway) raises, and I think that he will welcome the change proposed in new clause 25, as far as it goes. It means that the arrangement will be much more transparent, and that people will be able to see how payments are being used to fund the work that Ofcom needs to do. We disagreed about penalties, for the reasons that the hon. Gentleman set out. I am satisfied that the proposals before the House today are the right ones, and I am grateful for the hon. Gentleman's general welcome for the changes.