HL Deb 08 July 1997 vol 581 cc537-59

3.20 p.m.

The Minister of State, Department of Trade and Industry (Lord Clinton-Davis)

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Clinton-Davis.]

On Question, Motion agreed to.

House in Committee accordingly.


Clause 1 agreed to.

Clause 2 [Matters to be taken into account]:

Lord Mottistone moved Amendment No. 1: Page 2, line 21, leave out ("may") and insert ("shall").

The noble Lord said: In moving my amendments, I declare an interest as an adviser to the Federation of Electronic Industries. That body has helped me with the amendments. I apologise to the Minister and the Committee for not having taken part in Second Reading. I had not at that stage been alerted to the interests which the FEI had in this Bill. For me, this Bill returns to a subject with which I was concerned 35 years ago when as deputy director of the signals division in the Admiralty I had to defend the frequencies allocated to naval shipboard communications and radar from predatory moves by the Post Office and, in the 1960s, only a few commercial interests. The latter have certainly multiplied extensively since.

I turn to Amendment No. 1. I am delighted to note that the Minister has added his name to this amendment which is grouped with Amendment No. 2. I and FEI members are particularly concerned that as the Bill currently stands there is no explicit commitment to consult the radio industry when setting fees above cost recovery published in regulations. If the primary aim of this Government is to use administrative pricing as opposed to auctions covered in Clause 3 to ensure more efficient use of the spectrum rather than as a form of covert taxation on the radio industry, the reasons given in subsection (1)(a) to (c) of the clause are the only arguments in favour of fees exceeding cost.

If the Secretary of State is required to take into account the matters listed in Clause 2(2) it will be incumbent upon him to gather the necessary supporting information which will of necessity require consultation with the radio industry. Fears regarding the imposition of a tax rather than administrative pricing were expressed by many of the organisations who responded to the previous Government's White Paper of June 1996. That being so, perhaps the Secretary of State will welcome the opportunity to ensure that there is support from the industry in the form of participation in the necessary consultation process. I beg to move.

Lord Clinton-Davis

I note the careful way in which the noble Lord has introduced this amendment. Both I and the Committee will note his own expertise and antecedent interests in this area of policy. As the noble Lord has pointed out, I have added my name to this amendment. I have also tabled an amendment in my name on this matter. I believe that the two must be closely linked together. Both amendments are acceptable to the Government on the understanding that they stand or fall together. I am glad to see that the noble Lord affirms that that is the position.

On Second Reading I said that I had carefully reflected on the question whether the Secretary of State should be required to have regard to the matters in Clause 2 when setting licence fees. It was the noble Lord, Lord Derwent, who made that suggestion in the debate. I am grateful to him for having done so because it has enabled me to reflect further on the matter. I am also grateful to the noble Lord, Lord Mottistone, for tabling his own amendment.

The intention of the Government is that spectrum pricing must be driven by spectrum management. I have said that on numerous occasions, and I believe that it has been accepted by your Lordships. I do not propose to argue that case in any detail. We believe that the noble Lord is right in principle. For that reason I have added my name to his amendment, subject to the addition of some words in the second of the two amendments. The drafting of Clause 2 is a matter of considerable legal complexity. That has been indicated by the representations that have been made on behalf of the industry to my department about these issues. Simply to replace the word "may" with "shall" has a very serious negative effect; namely, that the list of matters set out in Clause 2(2) will become closed. In the particular circumstances of this industry I believe it is undesirable that that should be the case.

In those circumstances, the Secretary of State would be required to have regard to the matters listed and would be foreclosed from making any allowance for changes in the market or technology. That situation is bound to occur from time to time. If that were to be the case, it might well be desirable to take other spectrum management considerations into account. Such changes are by their very nature unpredictable but also inevitable given the dynamic nature of the business that we are talking about here and the diversity of the services that are brought into question. Moreover, the replacement of "may" with "shall" would make the situation mandatory and prevent the Secretary of State from allowing fee concessions for deserving cases, for example safety of life charities, as such concessions are granted for broad social or policy reasons that strictly speaking are not directly connected with spectrum management. That situation was welcomed by the noble Lord, Lord McNally, on Second Reading. I believe that your Lordships would wish that that should continue to be offered under the Bill. I believe that most of all in this industry inflexibility and rigidity would be inadvisable.

It is for that reason that I have tabled a complementary amendment that adds the words "in particular". That would foreclose the problems about which I have been speaking. While emphasising the matters listed as those to which the Secretary of State should have regard, nonetheless this will provide an element of necessary flexibility which will enable the Secretary of State to respond to unpredictable changes in the circumstances that may prevail and allow for concessionary fees. I believe that both amendments will be acceptable to your Lordships but both stand or fall together.

I hope that the noble Lord will regard that as a helpful reply. Things can only get worse later this afternoon, but at least we start on a very helpful basis.

Lord Derwent

I declare an interest as a director of Orange PLC, which is directly affected by this Bill. In speaking to this and other amendments, I shall also be reflecting the reviews of all four mobile telephone operators and the Federation of Communication Services, which is their trade body.

My chief purpose in rising to speak on this amendment is to thank the Minister for the courteous way in which he listened to my suggestions at Second Reading. We believe that his Amendment No. 2 is an improvement and we enthusiastically accept the second amendment as well as the first.

Lord Inglewood

Perhaps I may enter into the spirit of the afternoon by saying that what has been proposed sounds eminently sensible. However, I should like to refer to one matter arising from the Minister's remarks. At Second Reading on 5th June, he gave an assurance relating to the emergency services when he said (col. 717): We are committed to ensuring the continued availability of spectrum to essential public sector users: the Armed Forces, emergency services, police, fire", and so on. I should be grateful if the Minister could amplify that statement and make it clear whether that assurance relates also to providers of essential services, such as electricity, gas, water and sewerage, which are not only vital to modern life but which also have major safety implications. I shall, of course, fully understand if the Minister does not want to make a precise response now.

3.30 p.m.

Lord Clinton-Davis

I thank the noble Lord for introducing the question of the emergency services. However, I should prefer to deal with that in its proper sequence. We shall come to that matter later. I believe that the noble Lord will get a pretty affirmative reply then.

Lord Mottistone

I am grateful to the Minister for his encouraging response to my amendment. I fully agree that his amendment, Amendment No. 2, is totally complementary to it. In fact, it both strengthens and makes possible my amendment achieving what was intended in the first place. Therefore, I hope that other noble Lords will agree that that amendment should be accepted also. I commend Amendment No. 1 to the Committee.

On Question, amendment agreed to.

Lord Clinton-Davis moved Amendment No. 2: Page 2, line 21, after ("regard") insert ("in particular").

On Question, amendment agreed to.

Lord Derwent moved Amendment No. 3: Page 2, line 24, at end insert ("but he shall not prescribe sums which are greater than are in his opinion necessary to promote the optimal use of the electro-magnetic spectrum").

The noble Lord said: Both the President of the Board of Trade and the Minister on Second Reading and just now have stated that the powers in this Bill are intended to be exercised only for the purpose of improving spectrum efficiency and that the sums payable—I think that I quote the President of the Board of Trade correctly—should not be regarded as a tax. That is a very important and welcome assurance which is fundamental to the way in which the Act will be enforced. For that reason, we feel that the provision should be on the face of the Bill. This amendment is intended simply to do that. I beg to move.

Lord Clinton-Davis

I thank the noble Lord for tabling this amendment which helps me to clarify the situation and to underline the points that he has already stressed which have been set out by my right honourable friend the President of the Board of Trade and myself on numerous occasions. The noble Lord is right to express the concerns that he has. However, I submit, with respect, that the amendment is unnecessary. Perhaps I may explain why. It is not a question of simply making assurances, although I hope that appropriate credence will be given to the assurances that have been given in this regard.

There are provisions in this Bill and elsewhere which safeguard the situation that the noble Lord is seeking to achieve. The commitment that we have given over and over again that the use of the new powers will be driven by spectrum management considerations is beyond doubt. I believe that the industry has noted that. The Government would be extremely imprudent if they were to go back on their word and, as far as I am concerned, there is no question of that happening.

Clause 2, as amended, sets out the matters to which the Secretary of State shall have regard in particular in setting fees under the clause. The factors listed, the demand for and availability of spectrum, spectrum efficiency, innovation and competition are all related to spectrum management. The amendments that have been made to Clause 2 underpin my assurances that spectrum management considerations will be at the heart of administrative pricing.

There is an additional safeguard in European law in the shape of the licensing directive, which also constrains the power to set licence fees above cost in relation to telecommunications services. That is a very important provision. If fees were raised to a level higher than could be justified under Clause 2 or in contravention of the directive, the Secretary of State— the President—could be open to challenge in the courts. It is, therefore, wholly superfluous to state explicitly in statute that the Secretary of State should not act in a way that would conflict with the law. As a matter of law, the Secretary of State cannot legally exceed her powers.

I readily appreciate the concerns that the noble Lord has expressed on behalf of the industry. The further amendments that have been tabled to Clause 2 should, I hope, be sufficient to meet those concerns. If reinforcement is necessary, there is the licensing directive. That is why I do not believe that further belts and braces are necessary. In those circumstances, I hope that the noble Lord will feel able to withdraw his amendment. I repeat that I readily understand why he tabled it.

Lord Inglewood

I am grateful for the Minister's remarks about spectrum management considerations being paramount in this context and for his confirming the link between pricing and administrative efficiency. It was helpful that he drew attention to the European licensing directive, to which, as he pointed out, it is not necessary in law to refer specifically in this context, but it is important at the same time to draw it to the attention of the wider public because some anxiety has been expressed outside the Chamber on that point.

Lord Derwent

I thank the Minister for his remarks. I should like to study particularly what he said about European law, on which I confess that I am not fully briefed. It would be churlish not to accept what the Minister has said by way of assurance, and at this stage I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Derwent moved Amendment No. 4: Page 2, line 32, after ("of") insert ("the part of").

The noble Lord said: In moving Amendment No. 4, I should like to speak also to Amendment No. 5. These amendments relate to the question of cross-subsidy between different users of the spectrum. As we read it, it is possible for the Government, using the powers under Clause 2, to apply price increases to one class of spectrum user in order to raise funds which would then be used to support spectrum management goals for a different class of spectrum user. A typical example might be cross-subsidies between that part of the spectrum used by broadcasters and that part used by mobile telephone operators. The amendments seek to prevent such cross-subsidies.

Under the Bill as drafted, it would be possible for a levy to be raised on profitable but very efficient spectrum users to enable grants to be made to less efficient users to re-equip their system. In such a case, the efficient users will have been penalised and the less efficient users will have been rewarded by such grants or equipment subsidies. The amendments would remove the possibility of such cross-subsidies by directing the Government's consideration to the promotion of efficient use in that part of the spectrum subject to the price changes in question. I beg to move.

Lord Clinton-Davis

It is right that the noble Lord should ventilate this point, although I hope that when he has listened to my explanation he will feel it appropriate not to press the issue. The amendment as drafted would not have quite the effect that the noble Lord postulates because it would remove the possibility of cross-subsidies from the factors to which the Secretary of State is required to have regard in setting fees, but it would not prevent her from taking that course.

In any case, all licence fee income has to be paid into the Consolidated Fund. The level of fees will be determined under Clause 2. The payment of financial assistance under Clause 5 is quite separate from that. That would be decided independently of those previous considerations. It would be done on the merits of the case for the additional expenditure contemplated. There is no necessary relationship between the two procedures, as I stated on Second Reading in these memorable words: There can be no question of direct hypothecation of spectrum pricing revenues".—[Official Report, 5/6/97; col. 721.] In view of that explanation, I hope that the noble Lord, who has, as I say, appropriately put down the amendment because it is useful to have the amendment and the discussion on the record, will feel able to withdraw it.

Lord Derwent

I thank the Minister for that reply. I suspected that there might be what I would call accounting difficulties because the funds obviously belong to the Consolidated Fund. If the Minister could give me some comfort that when considering these various charges he will be regarding each part of the spectrum, as it were, by itself and that we need not fear as a matter of policy that the Government would seek to cross-subsidise, that would give me considerable reassurance.

Lord Clinton-Davis

I cannot go beyond saying what the Secretary of State is required to do. That is already set out. I do not want to say anything which would in any way depart from that state of affairs. The situation is clear. I hope therefore that the noble Lord will not pursue the matter.

Lord Derwent

I thank the Minister. It is useful to have this short debate on the record. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No.5 not moved.]

Lord Haskel moved Amendment No. 6: Page 2, line 37, leave out ("services which use wireless telegraphy") and insert ("telecommunication services").

The noble Lord said: I shall speak at the same time to Amendments Nos. 8 and 9. In Clause 2 we deal with matters to be taken into account when setting fees.

The amendments have been tabled to meet concerns expressed by the industry that the competition considerations to be taken into account in setting fees have been defined too narrowly. We have been listening. The present wording is restricted to the supply of services using radio, but it may also be relevant for the Secretary of State to consider modern developments such as competition between radio and non-radio telecommunications services; for example, the use of radio to make the final connection from a telecommunication network to subscribers in competition with a wired network.

The amendments are self-explanatory. The definition of "telecommunications service" is a broad one taken from the Telecommunications Act. I beg to move.

On Question, amendment agreed to.

Lord Inglewood moved Amendment No. 7: Page 2, line 38, at end insert?— ("() the interests of consumers, purchasers and other users in respect of the prices charged for, and the quality and variety of, services provided by means of wireless telegraphy or apparatus supplied in connection with such services.").

The noble Lord said: This is a probing amendment which I believe is self-explanatory. It is supported by Oftel, the Consumers' Association and the NCC. If the Minister were to resist the amendment, I hope that it will be because he tells me that it is unnecessary bearing in mind the other wording of the Bill. I beg to move.

3.45 p.m.

Lord Clinton-Davis

The noble Lord has put a powerful argument in favour of the amendment. I shall deal with it in a rather longer way than the noble Lord sought to deploy. The amendment raises some important issues. Among those important issues are consumer issues. They need to be taken clearly into account when setting fees. I argue that the amendment is unnecessary, and I cannot support it for reasons that I shall give.

The amendment is unnecessary because Oftel and the Secretary of State have a duty under the Telecommunications Act 1984 to promote the interests of consumers, purchasers and other users in relation to telecommunications services which cover the important business radio services. In fact, the proposed amendment is based on wording from that Act, as the noble Lord will recognise. After all, if he does not recognise it, who will?

The Act concerns the regulation of telecommunication services and networks. It is the appropriate place therefore for the duty and the powers to enforce it. The Wireless Telegraphy Act 1949, on the other hand, concerns the management of the radio spectrum. Adding a similar duty to that Act could lead to duplication and there would then be a risk of confusing the roles of the agency and Oftel. My officials have consulted Oftel, which does not support the amendment. We consulted also the NCC, and it has no comments on it. I am not seeking to snub the noble Lord. He knows that well. However I think it right to point that out because concerns were not expressed by those organisations.

The amendment is not appropriate in the context of spectrum pricing which is concerned with the pricing of the raw material to provide a wide range of services. Some of those are self-provided—for example, private business radio—and others, such as mobile telephony, are provided for end customers.

Whether licence fee increases or reductions are passed on to radio users' customers, and how that is done, should surely be a matter for their own commercial judgment. For example, a mobile telephony operator may decide to absorb fee changes or to pass them on in the form of call charges or rental. The effect on subscribers will be different in each case. It would be difficult for the Secretary of State to predict and have regard to the interest of consumers, purchasers and other users in the degree of detail required by the amendment.

Consumers' and users' interests are already catered for in the context of spectrum pricing by Clause 2(2). For example, economic benefit in paragraph (c)(ii) includes the benefits to both consumers and users. Work carried out for the Radio Communications Agency on the economic impact of radio contains broad estimates of the quantity known as "consumer surplus" which measures the benefits for consumers and the efficiency gains accruing to users which could be taken into account.

In addition, consumer interests will be promoted by virtue of the duty to have regard to the development of competition which is a potent force working to consumers' advantage. The Government are fully committed to consumer protection and consumer interests within the Bill and under the existing provisions of the Telecommunications Act. The amendment is therefore unnecessary. It is not altogether appropriate, and I hope that the noble Lord will feel able to withdraw it.

Lord Inglewood

I am grateful to the Minister for his full response to the points inherent in the amendment. If I have in any way misled the Committee or the Minister I apologise. I made my remarks upon the basis of information that I had, which I understood to be correct. Having heard all the Minister has said about the point, I shall agree with the advice that he gave me and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Haskel moved Amendments Nos. 8 and 9: Page 2, line 39, leave out ("subsection (1)") and insert ("this section"). Page 2, line 40, at end insert— (""telecommunication service" means a service falling within paragraph (a) of the definition of such a service in section 4(3) of the Telecommunications Act 1984").

On Question, amendments agreed to.

On Question, Whether Clause 2, as amended, shall stand part of the Bill?

Lord Renton

I wish to make a short, important drafting point. It occurred to me only while listening to the interesting discussions in Committee. The noble Lord, Lord Clinton-Davis, rightly described Clause 2 as giving rise to complexity. It certainly does when read in connection with Clause 1, where we find that there is power to make regulations. In the first line of Clause 2, we find that: In exercising his powers under section 1 to prescribe sums payable in respect of wireless telegraphy licences… the Secretary of State may have regard to the matters specified in subsection (2)". However, it is important to note that Clause 1(3) refers to regulations which must be made and which affect the application of Clause 2.

I turn to my main point of difficulty. Clause 2(3), as amended by Amendment No. 8, now reads: In this section 'prescribe' means prescribe by regulations or determined in accordance with regulations". It may be that I am speaking from ignorance, but I do not believe that I am. I do not recollect a phrase such as: prescribe by regulations or determine in accordance with regulations". Whoever must determine the outcome may from time to time vary in opinion or from the opinion of other people who have to determine. The use of the expression "or determine in accordance with regulations" when used as an alternative to "prescribe by regulations" could give rise to uncertainty of legal effect. I do not ask for an answer now. I ask Members on the Government Front Bench carefully to consider between now and the Report stage the effect of lines 39 and 40 as now drafted.

I wish to make a further suggestion, which I hope is helpful. Clearly, the regulations mentioned in line 39 must be regulations under Clause 1(3) and not a fresh set of regulations made under Clause 2. Therefore, in order to remove the uncertainty, I suggest that after the word "regulations" in line 39 the words "made under Clause 1(3)" should be inserted. Those are my two specific suggestions. Of course, there may be better ways of dealing with the matter, but as it stands it may result in confusion.

Lord Clinton-Davis

I always pay close attention to the arguments of the noble Lord, who I know is assiduous in such matters. I frequently agreed with him when I was on that side of the House. I do not know whether on those occasions he wanted me to do so, but I frequently did.

I am not sure that the noble Lord has a good point, but of course I shall reflect on the matter. The regulations set out in Clause 1 specifically refer to "regulations under this section". Clause 2(3) states: 'prescribe' means prescribe by regulations or determine in accordance with regulations". That is an all encompassing situation. However, it is right that we should clear up any ambiguity that might exist. I am not convinced that the noble Lord is right, but, as he anticipated, it would be wrong of me to make up my mind on the spur of the moment. Consequently, I shall probably write to him before the Report stage, otherwise he has his remedy at that stage.

Clause 2, as amended, agreed to.

Clause 3 [Bidding for licences]:

Lord Derwent moved Amendment No. 10: Page 4, line 8, at end insert ("except that regulations made under this section shall not apply in relation to any application for the renewal of any wireless telegraphy licence which is in force immediately before the passing of this Act").

The noble Lord said: The amendment is of great importance to the four mobile telephone operators. On Second Reading, I warmly welcomed the Government's reassurance that there was no intention to apply auctions to the four existing mobile operators in respect of the radio spectrum currently allocated to them. However, the industry would feel more secure if it could see that reassurance repeated on the face of the Bill. It would clearly state that auctions would not be applied to the current spectrum allocations.

The Minister will realise that that is fundamental to all the current operations and operators. If the Bill were to give such a reassurance all the operators would be allowed and encouraged to continue their extensive additional network investment. As the Minister generously acknowledged, that investment helps to maintain the UK's position in the forefront of world mobile telecommunications, providing employment and increased competitiveness. I therefore hope that in this instance the Minister will feel able to accept the amendment, which does no more than enshrine in the Bill what he has already assured us is the Government's policy. I beg to move.

Lord Clinton-Davis

Once again, I find it possible to express sympathy with what underlies the noble Lord's argument, but I am afraid that I must withhold my support. I hope that my reasons for that will be satisfactory to him.

I have given undertakings, which I am happy to repeat, that we do not intend to require existing licensees to enter an auction for the right to continue to provide current services within their existing spectrum allocation. The noble Lord, Lord Inglewood, was also concerned about that point.

As the noble Lord sought to underline, we need stability and certainty, especially when one is thinking of large investments in networks and systems, which is frequently the case. A technical and important issue arises from the reference in the amendment to the "renewal" of licences. The mobile telecommunications operators' wireless telegraphy licences will continue in force, so long as the appropriate fee is paid annually, until revoked or surrendered. The amendment could not apply to such licences because, technically, they are not renewed but continue in force from year to year.

I do not wish to quibble about the drafting of the amendment. That is not what we are about in a discussion of this kind. However, I mention the matter as an alternative way of meeting the noble Lord's concern that existing licensees might find themselves having to bid for the spectrum which they occupy in order to continue to provide their current service. To hold an auction, it will be necessary first to revoke the existing licence. Security against that may be conferred under Clause 4, as indeed it is under Section 3A of the Wireless Telegraphy Act which Clause 4 replaces.

The mobile telecommunications operators have been given certain assurances about the circumstances in which revocation or variation will be enforced without the consent of the licensees. I am happy to provide an undertaking that the operators will be given exactly the same security under Clause 4 which they currently enjoy. That will protect them effectively against having to undergo an auction in the circumstances which the noble Lord's amendment seeks to identify.

I hope that that will be sufficient to satisfy the noble Lord. I hope that the further undertaking which I have given will also buttress the position that he has sought to address. In those circumstances, I ask the noble Lord to withdraw the amendment.

4 p.m.

Lord Renton

Before the noble Lord sits down, and before my noble friend Lord Derwent withdraws the amendment, I must say that having listened to the Minister carefully I was hoping that he would give an assurance that the application of Clause 3 would not be retrospective in any way. The amendment would prevent it from being retrospective and that is its virtue. Will the Minister give an assurance that there will be no question of retrospection of effect?

Lord Clinton-Davis

The noble Lord has more experience than I of this Chamber. However, we are in Committee and it is not necessary for the noble Lord to say, "Before the noble Lord sits down" while we are still on the amendment. There is no intention here to be retrospective. I thought that I had said that, although perhaps not in quite the precise terms which the noble Lord wanted. But I think I am able to satisfy him now.

Lord Inglewood

I am grateful to the Minister for his response. I am grateful too to my noble friend for raising the matter. It seems to us that the issue we are discussing is of very considerable, practical importance. I am grateful to the Minister for what he said about that and for the undertaking that he gave to the Committee in relation to it.

Perhaps I may raise one consequential point. Were the position to appear unsatisfactory as regards possible security of tenure, if I can express it that way, of those holding licences, it seems to me that one would then logically have to consider what, if any, question of compensation there may be for what one might describe as the loss of legitimate expectations. I am sure that everyone would agree that the right way to proceed, if we can, is by not entering a world where one needs to consider that matter. That can be achieved by ensuring that everyone is clear, satisfied and happy with the legal and, if I may so describe it in a non-legal sense, the equitable position we are in.

Lord Clinton-Davis

The question of compensation is a very broad area. I believe that we should be opening a can of worms if we were to inject the subject of compensation here. There is no question that others would then seek compensation and there would be real problems, as I believe the noble Lord appreciates. I repeat that we have had intensive discussions. The noble Lords, Lord Derwent and Lord Mottistone, are very well aware of that. The industry's anxieties were put to rest as a result of those discussions.

Lord Derwent

I am grateful to the Minister for the repetition of his assurances. However, I am very conscious also that, quite correctly, he has chosen his words extremely carefully in answering the amendment. I hope that he will not take it amiss when I say that, of course, I shall withdraw the amendment at this stage but I should like to study carefully in Hansard what he has said in case it seems wise to return to the matter on Report.

Lord Clinton-Davis

Before the noble Lord withdraws the amendment, perhaps I may say that I never take it amiss when someone says that he will consider what I have said.

Lord Derwent

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 agreed to.

Lord Mottistone had given notice of his intention to move Amendment No. 11:

After Clause 3, insert the following new clause—

GEOGRAPHIC AND TECHNICAL INFORMATION (" . The Secretary of State may, subject to the interests of national security, make available on enquiry by third parties, and following payment of such charge as may be provided by regulations, geographic and technical details of licensed radio systems.").

The noble Lord said: I am advised from the Table that I am not allowed to move Amendments Nos. 11, 12 and 13 because, as I informed the Committee on Amendment No. 1, I advise the people who provided it to me. I have been trying to help the House for the past 30 years by obtaining proper advice from outside in order to contribute to discussions on legislation. In that area I have had, to a certain extent, success over many years; in particular, when I was advising the CBI. I now find that the rules of the House are such that I cannot move my remaining amendments. I got away with it in moving Amendment No. 1 because, luckily, the Government liked that amendment. I am deeply sorry about this. I was not aware of the situation. The rules have been introduced in a way which does not give proper opportunity for Members of this Chamber to help industry and other spheres of activity outside the House. I believe that it is helpful to the House that Members should be advised properly when speaking to amendments. Therefore, I shall make arrangements for the amendment to be moved on Report. I obviously shall not be able to move the amendment and I shall try to find some splendid chap to do it for me.

Lord Inglewood

It may be for the convenience of the Committee if I were to move the amendments instead of the noble Lord, Lord Mottistone. I may not be able to describe the amendment with the exactness and precision of my noble friend but the Minister would have an opportunity to respond and let us know what he would have said in response to the amendment.

Lord Derwent

Does anyone intend to speak to the amendment because I should like to make some comments on it?

Lord Inglewood

I have some understanding of the argument behind the amendment. I understand that there has been concern about the lack of transparency in the current licensing process, in particular as regards major users who self manage spectrum. While fees are known via the published fees order, it is impossible to assess the efficiency of spectrum use without additional technical information. For historical reasons, such information is currently classified as confidential, although if an organisation is prepared to invest the time and money it can be readily gathered using modern scanners and survey equipment.

I understand that for several years it has been the stated intention of the agency to facilitate access to fixed link and base station details by external spectrum management organisations in line with what happens in Australia. If that information is provided, then, along with publication of the fees for systems in different regions, the industry will have full visibility of fees being charged for a spectrum used, and, given the efficiency of spectrum utilisation that is achieved, will be able to identify opportunities for frequency sharing. It is believed that the change as proposed by the amendment would, on balance, be beneficial.

Lord Derwent

I understand the general sentiment behind the amendment with which we are not unsympathetic. However, we feel that the wording of the amendment may be too broad. The mobile telephone operators have some concern, both from a practical point of view and also because of commercial confidentiality. In particular, the companies would not welcome detailed information about each of our mast sites and what frequencies they radiate being made available so readily both to our competitors and, indeed, to possible protestors who may have objections to a mast for environmental or other reasons.

If the Minister is minded to accept something along the lines of the amendment, with which, as I say, we are in broad sympathy, we would welcome the opportunity between now and Report stage further to discuss, both with his officials and also with my noble friend Lord Mottistone, the possibility of a slightly more restrictive wording.

Lord Clinton-Davis

We have had an interesting debate. The last thing in the world that any of us would want is to see the noble Lord, Lord Mottistone, in the Tower, or anywhere else quite as draconian, for offending against the rules of this place. I do not know the nature of the relevant sanctions, but I am sure that they would have been extremely draconian. Indeed, for one moment I thought that the noble Lord, Lord Inglewood, was going to find himself in a similar position when he singularly identified himself with the noble Lord, Lord Mottistone, by suggesting that he should move the amendment for him. As a result, he too would have ended up in the Tower. The debate has been made possible by the ingenuity of the noble Lord, Lord Inglewood, and of the noble Lord, Lord Derwent.

I am not unfamiliar with the arguments involved with this amendment because they have been postulated to my officials and, therefore, so far as concerns any further discussions which may take place, I think it would be better if I were to read into the record the position that the Government take on such matters. We can then forget the slight embarrassment suffered by the noble Lord, Lord Mottistone. I must say that I sympathise with the noble Lord because the rules of this Chamber can sometimes be very arcane and he is obviously completely unfamiliar with them.

It is helpful that the amendment has been tabled, although I am not sure whether the noble Lord is even permitted to table it in the circumstances. However, it has at least been spoken to and that is good enough. It enables me to set out how the Radiocommunications Agency manages the radio spectrum in a transparent way. Transparency in the spectrum management process is a desirable objective. On Second Reading, I stressed our commitment to consultation on spectrum management matters. That would include the use to be made of the new charging powers that the Bill would confer. So far as concerns consultation, that is a matter which we can address later in our discussions in relation to other amendments. However, it is relevant to the question of transparency, which goes to the heart of the amendment.

The agency already undertakes extensive consultation via a network of standing consultative committees and ad hoc consultation exercises; and, indeed, such an exercise is currently under way in relation to the implementation of spectrum pricing. Each year the agency publishes and consults on a comprehensive survey of the use of the radio spectrum combined with its strategic plans for managing that spectrum. It has invested heavily in advanced mobile equipment to monitor the use being made of the airwaves and also makes available detailed reports of the results of its monitoring, which has concentrated in particular on congested areas in major cities—a point that I made during the previous debate. All those documents are available free of charge, whereas the amendment contemplates charging as the cost is covered by licence fees.

However, the agency is already able under common law to recover the costs it incurs in providing information if it is appropriate so to do. All that consultation necessarily involves making available a considerable amount of information about the current use of the spectrum and the agency's future plans. I reaffirm the commitment to consultation, openness and transparency. I believe that that is what the noble Lord, Lord Derwent, was seeking.

In future, the agency aims to make even more information available about the use of frequencies at specific sites. However, there are practical constraints on the speed with which this can be accomplished. It would be necessary to hold the data in a format that is useful and easily accessible. The agency could not easily do that at present. It is in the process of implementing major developments in its information technology systems, but there is some way to go before the work will be completed.

I turn now to the amendment. The first specific comment that I should like to make is that, as drafted, it would do absolutely nothing to enhance transparency as it states only that the Secretary of State "may" make information available. The agency already has the power to disclose information from its databases, subject to overriding considerations of national security, law enforcement, commercial confidentiality—a point rightly made by the noble Lord, Lord Derwent— competition and the provisions of the Code of Practice on Access to Government Information and the Data Protection Act. Therefore, it already makes copious amounts of material available and it intends to do even more in the future in that direction.

Secondly, the amendment does not allow for the legitimate expectations of licensees regarding commercial confidentiality and security. That is a most important point and one which has been underlined to us many times in our discussions. Indeed, the noble Lord, Lord Derwent, made the same point here this afternoon.

The question of greater access to the agency's database of assignments was one of the issues which arose in a wide-ranging consultation carried out under our predecessors back in 1994. The responses showed significant concern, not just about national security— and provision is made in the amendment for that—but also commercial confidentiality. It would be possible for a competitor to gain information from the database about frequencies used and the disposition of transmitters and hence the extent and nature of licensees' businesses. I believe that that could lead to very damaging commercial revelations. Regrettably, the amendment makes no allowance for it.

I do not wish to be unduly critical of drafting because I suffered from the same fate when speaking from the other side of the Chamber. However, I hope that the noble Lords who have addressed the matter will realise that this is a significant point; indeed, it could be very damaging if we were to ignore it. Moreover, the amendment does not provide for those licensees, such as security companies, which have a very good reason not to disclose details of their assignments in case the information could assist criminals. Many other users could have legitimate concerns if the agency made more information freely available, and it would not be right to proceed without full consultation to ensure that necessary safeguards can be provided. I am sure that the industry would wish me to make that point, and I do so readily. There are difficulties and complexities in legislating on this topic. However, I believe that what we have here is a careful balance between what can be achieved and the difficulties and the concerns that the industry has expressed about revealing too much.

I do not want my department—or, indeed, myself—to be unduly secretive when requests for information about spectrum assignments or use are made; quite the contrary. However, all requests for information about licensed radio systems, as for any government information, must be dealt with in accordance with the Code of Practice on Access to Government Information. Under the code of practice, information must be provided unless withholding it can be justified in terms of the exemptions in the code.

I have one further point to mention; namely, that we shall be considering a freedom of information Act in the relatively near future. The arrangements in the code in terms of openness are to be strengthened and placed on a statutory footing when that legislation is enacted. I hope that the noble Lord will accept that the agency does operate within the spirit of the amendment. I also hope that no one, although I am not sure who, will decide to press the amendment further today.

Lord Inglewood

I am most grateful to the Minister. I for one shall read his remarks with great care. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 [Restriction on revocation or variation of licences]:

Lord Inglewood moved Amendment No. 12: Page 4, line 36, at end insert— ("() The Secretary of State shall, with the consent of the Treasury, consider making a grant to licensees whenever a licence is revoked or varied under subsection (5)(b) in a frequency hand where equipment has been installed within five years previous to the revocation or variation, and warning of the revocation or variation has not been given to the licensee prior to installation of the equipment.").

The noble Lord said: I move this amendment on behalf of my noble friend Lord Mottistone. In responses to both the consultative document published by the DTI and the White Paper of June last year, many respondents stressed the competitive advantage which could be gained for United Kingdom industry and operators on the global stage by rapidly "refarming" spectrum when it is allocated to a new use internationally. To encourage the heavy investment often necessary for new systems there is a need for "clean" spectrum for the incoming user. In the past the Department of Trade and Industry has attempted to clear bands for new applications by giving as much notice as possible of the change of use— sometimes up to 15 years. In the dynamic information technology and communications industry which exists today the timescales currently required to change use of bands can mean that the opportunity for an innovative service is lost.

While it is reasonable to argue that the new user of spectrum should pay the incumbent to vacate a band— an approach often advocated by the Ministry of Defence and at least one large foreign administration—there is also a strong argument in favour of the moneys paid by the industry above cost recovery being used to support refarming. In June last year the White Paper suggested in paragraph 4.17 that payments could be used to assist users to move to alternative frequencies and also that payments could be used to encourage users to re-equip with more spectrally efficient equipment before existing equipment is fully depreciated. During all of the debates following publication of the White Paper it was understood that this was a benefit that would result from administrative spectrum pricing and as such it should be highlighted in the primary legislation. This subsection will oblige the Secretary of State to consider the use of a grant to facilitate refarming of spectrum when band use changes unexpectedly, for example owing either to Community obligations or international treaty. I beg to move.

Lord Haskel

I congratulate the noble Lord, Lord Inglewood, on the erudite way in which he proposed this amendment, particularly as he had only about 10 minutes' notice.

We understand the thinking behind the amendment and the concern that the speed of change in the radio industry may require speeding up the rate at which radio frequency bands have to be converted from one radio application to another, necessitating the clearance of existing users from those bands. However, Clause 5(2) already provides for the payment of financial assistance with the consent of the Treasury where the grant is likely to promote the efficient use or management of the radio spectrum. This power might on particular facts extend to circumstances in which it became necessary to clear a band to give effect to an international obligation or Community requirement. In the normal course of events the agency would hope to be able to give maximum notice of the change because such developments normally unfold over a period of years and involve full consultation and discussion with those affected.

Any application made to the Secretary of State would have to receive careful consideration as a matter of good administrative practice. Surely there is no need to oblige the Secretary of State to consider applications. Moreover, Clause 1(3)(c) would provide for licence fees to be refunded where this was appropriate. On a matter of detail I query the rationale for the cut-off of five years in the amendment. Differentiating in this way seems slightly arbitrary and risks creating anomalies. There is the further point that the amendment does not distinguish between equipment that has been installed for some time and is already depreciated, if not obsolete, and equipment that was installed just before the variation and revocation. Five years is a long time in a fast-moving industry such as telecommunications.

I appreciate that the amendment would not require the Secretary of State to make a grant in the circumstances postulated, but, nonetheless, it does seem excessively prescriptive. I hope the noble Lord will feel able to withdraw his amendment and consider my explanation.

Lord Inglewood

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 agreed to.

Clause 5 [Promotion of efficient use and management of spectrum]:

Lord Inglewood moved Amendment No. 13: Page 4, line 45, at end insert ("and to provide for the training and education of radio engineers in efficient spectrum management techniques").

The noble Lord said: Some may argue that the existing subsection (5)(2) of Clause 5 covers the point which is the subject of this amendment. However, it is worth highlighting the need to ensure that there is a record of the Government's intent. Several members of the Federation of Electronic Industries are finding it increasingly difficult to recruit engineers with the correct skills and are having to look abroad for staff where previously they have been able to recruit locally. As this amendment is in line with the Government's declared intention to provide education for work, I hope that they may look favourably on additional wording in support of that policy. I beg to move.

Lord Haskel

The amendment as proposed narrows the scope of Clause 5(2). I am not sure how the noble Lord can doubt our commitment to training. That was the centrepiece of the Chancellor's Budget only last week. Clause 5 of the Bill provides the Secretary of State with power to make grants to persons where, in her opinion this is likely to promote the efficient use or management of the radio spectrum. This is a broad enabling power and there are a number of ways in which we envisage that it might be used. For example, it might, in certain circumstances, be used to provide assistance to businesses to enable them to adopt more spectrum efficient technologies. It might also be used to make payments to businesses which are required to relinquish spectrum where the Radiocommunications Agency, for whatever reason, is not able to provide the period of notice which it normally aims to provide in such circumstances. The power might also be used, as was explained during our Second Reading debate, to enable the agency to support courses provided by universities for the training of radio engineers in spectrally efficient techniques.

The amendment tabled by the noble Lord is therefore fully in line with the way in which we envisage that the power may be used. However, his amendment covers only one possible form of assistance among the many which might be envisaged. Things change. There are also no doubt possible uses of the power which will emerge in the future which no one has yet thought of. For these reasons, therefore, I consider that it would be better not to seek to define narrowly the way in which the power is to be used. I therefore invite the noble Lord to withdraw his amendment.

Lord Mottistone

At the risk of being sent to the Tower I wish to thank my noble friend Lord Inglewood for moving these three amendments standing in my name, and indeed the Government for giving such a full answer to all three.

Lord McIntosh of Haringey

I hope the noble Lord will forgive me but I understood that he was under an obligation not to take part in debates on these matters because of his consultancy arrangements.

Lord Inglewood

In the circumstances I hope that it will have been in the best interests of the Chamber for the matters discussed in response to my amendments to have been considered by the Committee. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 agreed to.

Clause 6 [Regulations]:

Lord Clinton-Davis moved Amendment No. 14: Page 5, line 4, at end insert— ("(1A) Before making regulations under any provision of this Act, the Secretary of State shall—

  1. (a) publish in the London, Edinburgh and Belfast Gazettes a noticex2014;
    1. (i) stating that he proposes to make regulations under that provision,
    2. (ii) setting out the general effect of the proposed regulations,
    3. (iii) specifying an address from which copies of the proposed regulations may be obtained, and
    4. (iv) specifying a time (not being less than 28 days from the date of publication of the notice) within which representations with respect to the proposed regulations may be made to him, and
  2. (b) consider any representations which are made to him within that time.
(1B) Subsection (1A) does not apply in respect of any regulations if it appears to the Secretary of State that by reason of the urgency of the matter it is inexpedient to publish a notice under that subsection.").

The noble Lord said: On Second Reading I was asked by a number of noble Lords whether the Government would consider adding a duty to consult on the face of the Bill. I explained in reply that the Government believe in full consultation on spectrum pricing—I have asserted that over and over again—as indeed on other aspects of spectrum management. I undertook to consider that matter sympathetically. I hope the Committee will agree that I have done so. What I have decided is reflected in the amendment to Clause 6. Perhaps I may briefly explain the provisions of the amendment.

The amendment requires the Secretary of State, except in cases of urgency, to publish a notice in the London Gazette, Edinburgh Gazette and Belfast Gazette before making any regulations under the Bill. That applies both to fees regulations under Clause 2 and auction regulations under Clause 3.

The notice will state the intention to make regulations, explain the gist of such regulations, declare where copies can be obtained and set a deadline for those representations. This would have to be at least 28 days from publication of the notice. There is then a duty imposed on the Secretary of State to consider all representations made to her.

I understand that that is a standard form of consultation procedure. I asked whether businessmen and businesswomen actually read the notices in the various gazettes; I am sure they do little else. However, there are precedents. The Telecommunications Act 1984 provides such a precedent; and there are precedents relating to the making of regulations. I shall not go into the details of that. I simply state it. But I noted the extraordinary interest in the various gazettes.

There is no intention that this form of consultation procedure will in any way supplant or detract from the importance of existing extensive non-statutory consultation. In many ways that is as important as, if not more important than, statutory forms of consultation. This the Radiocommunications Agency carries out diligently already. As I said in relation to a previous debate, the agency has an established series of consultative committees. To complement these, officials are in discussion with the industry about establishing a high level committee to maintain strategic oversight of spectrum management overall. Such a committee would provide a useful reinforcement of current consultative arrangements.

There is no doubt—it is reinforced by discussions that my officials have had with the agency—that it will continue to consult very widely indeed. The agency will take appropriate steps to publicise prospective regulations more extensively, for example, by publishing consultative documents or drawing them to the attention of the trade press through press notices—which is a way of supplementing that which appears in the gazettes. The statutory procedure will provide a long stop to make sure that all proposals for regulations are placed firmly in the public domain.

I hope that the amendment gives the added reassurance that noble Lords sought when we discussed the matters previously. I commend the amendment to the Committee.

4.30 p.m.

Lord Derwent

I should like to take the opportunity of expressing the industry's gratitude to the Minister for this firm commitment for consultation over pricing. The amendment meets all the matters for which I asked at Second Reading, and we are most grateful.

I am even more grateful for the undertakings in the Minister's remarks about the wider consultation. Clearly we should not be limited to statutory consultation. The kinds of issues on which we should like to continue to consult are spectrum allocation, spectrum management and international aspects.

I wish to mention one aspect as regards the international scene. We should avoid a situation where UK operators have their access to spectrum unnecessarily restricted by the reservation of spectrum in international treaties to satellite operators based outside the United Kingdom. Such operators would pay no UK spectrum fees and no UK taxes. That kind of issue does not arise out of regulations under this or any other Bill. However, we might suddenly find ourselves limited by other negotiations outside the United Kingdom on which we would welcome the continuing consultation which we have enjoyed with the department.

Lord Inglewood

I wish to join with the remarks made by my noble friend Lord Derwent about the steps ' that the Government have taken to ensure wide consultation in this regard.

Perhaps I may take this opportunity to ask whether the Government have any further thoughts about the possibility of the proposed spectrum management advisory group, an idea put to them, I understand, by the industry.

Lord Clinton-Davis

On the international matters to which the noble Lord, Lord Derwent, alluded, this Government have no wish to see our own industry impeded or embarrassed. Indeed, we wish to ensure its success. The very matters to which he has referred should be issues which are discussed openly in the consultation to which I have alluded.

The agency issue to which the noble Lord, Lord Inglewood, referred, is still under discussion. Perhaps I may bring the noble Lord up-to-date on the matter by correspondence. That may be the most appropriate way to deal with the issue.

On Question, amendment agreed to.

Lord Derwent moved Amendment No. 15: Page 5, line 5, after ("Act") insert—("(a) in the case of regulations under section 1,").

The noble Lord said: Amendments Nos. 15 and 16 relate to the procedures as regards regulations. At present the Bill provides that all regulations under the powers of the Bill should be made under the negative resolution procedure. Such procedure may well be appropriate for regulations made under the powers of Clause 2 of the Bill because those regulations will consist largely of detailed technical considerations of one set of users' spectrum efficiency and therefore the appropriate fee level for that set of users. However, regulations made under the powers of Clause 3 of the Bill appear to be quite different in principle. These regulations will govern the establishment of new radio services in the United Kingdom—services that will form the basis of the future communications infrastructure of the country.

Moreover, the Government have indicated that they anticipate raising sums of as much as £1.5 billion through the auction powers set out in Clause 3. This is a considerable sum, comparable to that which could be raised through a reduction of 1p on income tax, which I believe is £1.8 billion. We therefore believe it appropriate that Parliament should have the opportunity of debating regulations issued under the powers of Clause 3 because of their fundamental and new nature.

These amendments provide for affirmative resolution procedures for regulations under Clause 3 only. I beg to move.

Lord Clinton-Davis

The noble Lord is right to be concerned about the issues raised in the amendments, in particular the introduction of spectrum auctions, in view of their possible impact on telecommunications services and the amounts that might be raised.

As I have frequently said, we are committed to full consultation before regulations are made under Clause 3 of the Bill. In addition, the government amendment to which I have referred will add a statutory duty to publish a notice of those regulations, including those under Clause 3, and we are under a duty to take those representations fully into account.

There will also continue to be extensive non-statutory consultation, as I have already said, and a consultative document on the introduction of advanced digital mobile telecommunications services—known as "third generation mobile" or the "universal mobile telephone system"—is to be issued which will put forward for comment options for spectrum auctions.

There should thus be ample opportunity for those who may be affected by auction regulations to be alerted in advance and to draw the attention of noble Lords to any aspects of concern. It would then be open to noble Lords to pray against the regulations if those concerns are not met.

I believe that this process of consultation, the statutory duty I have described and the negative resolution procedure should provide a sufficient and appropriate degree of parliamentary scrutiny of the use of the powers in Clause 3. I believe that that view is right because the delegated powers in the Bill were scrutinised by your Lordships' Select Committee on Delegated Powers and Deregulation. In its first report, ordered to be printed on 9th June, the committee reported that: There is nothing in the Bill to which we draw the House's attention". The committee clearly agreed with the memorandum which we submitted to the effect that the negative resolution procedure was appropriate for regulations made under Clause 3.

I hope that the noble Lord will feel that the way in which the committee dealt with the matter gives emphasis to my points and that the negative resolution procedure is suitable for auction regulations. I hope therefore he will withdraw his amendment.

Lord Derwent

I do not doubt for a moment that there is adequate provision both for consultation with the industry and for the industry to make its views known. But that all lies in the future; it may even be some years ahead. We are not sure of the full ramifications of the regulations that will be made. In view of the very large sums of money that might be involved, it is important to ensure that there is a possibility of debate in Parliament as well as consultation within the industry. It is in a way paradoxical that I should be saying that it is not enough to consult with us but that this is a question of wide political interest. Will the Minister explain why he would object to the affirmative resolution procedure for these important points of principle under Clause 3?

Lord Clinton-Davis

I thought I had explained why that is the case; I have obviously not satisfied the noble Lord. My experience indicates that if, in the course of following the consultation procedures which I have explained at considerable length, the industry comes to the conclusion that something has gone amiss to which Parliament's attention should be directed, it is rare that industry is slow to advise Members of your Lordships' House or honourable members in another place, with a view to their raising the matter. The fact that we are not arguing for the affirmative resolution procedure does not mean that we are against scrutiny; but it seems to me that it will be inappropriate, particularly where these are complex matters which will undoubtedly be the subject of full consultation with the industry, to deploy the affirmative resolution procedure in the circumstances.

Lord Derwent

I should like to study in Hansard exactly what the Minister said and the spirit in which he said it. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 16 not moved.]

Lord Clinton-Davis

I believe I owe an apology to the noble Lord, Lord Inglewood. I had said that we would come to the question of the position of utilities. I am sure that it has some relevance to this which escapes me. Perhaps I may say, in case I am right about that, that it is not our intention that the introduction of spectrum pricing should affect the access of utilities to the radio spectrum that they require. That, I think, was the point that the noble Lord adverted to earlier.

Lord Inglewood

I am most grateful to the noble Lord, Lord Clinton-Davis. I was congratulating myself on having got my point in. I thought he had more or less addressed it when we previously touched on the matter.

Clause 6, as amended, agreed to.

Remaining clauses and schedules agreed to.

House resumed: Bill reported with amendments.