§ 3.7 p.m.
§ The Minister of State, Department for Culture, Media and Sport (Baroness Blackstone)
My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
§ Moved, That the House do now again resolve itself into Committee.—(Baroness Blackstone. )
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The CHAIRMAN OF COMMITTEES in the Chair.]
§ Clause 3 [Functions of existing regulators ]:
§ [Amendments Nos. 26 and 27 not moved. ]
Baroness Miller of Hendon moved Amendment No. 28:
Page 4, line 4, leave out from "functions" to end of line 6.
§ The noble Baroness said: As we have constantly been reminded, this is a paving Bill to set up Ofcom in preparation for it assuming the functions to be set out in the substantive Bill. The existing regulators have a duty to assist Ofcom, to liaise with it and to give guidance and advice with regard to the proposed structure and the future operation of the new super-regulator. They will need to discuss with Ofcom the 134 best way to implement the new regulatory regime which it is expected that the substantive Bill will produce.
§ We are also concerned, as is my noble friend Lord Crickhowell—he mentioned the point on the first day of the Committee stage—about the role of the seconded staff. Perhaps the Minister can tell the Committee how Ofcom will deal with the competing issues of which staff are to be seconded from which regulatory body to carry out whichever function.
§ We are concerned that during the setting up of Ofcom money will be requested from the existing regulators, while at the same time they will be expected to continue to perform their function unabated. During that interim period, Ofcom will not be operational and will not take over any of the functions of existing regulators, so it can be assumed that any money provided will result in extra costs to the communications industry. The existing regulators would in effect be asked to pay for a shadow regulator that may never come into existence, if the substantive Bill is not passed. I remind the Committee that paragraph 24 of the Explanatory Notes states that the extra transitional costs of establishing Ofcom will be of the order of£5 million. There is no justification for the sort of creative accounting that the provision authorises to subsidise that figure—for subsidy it surely is. It is like asking a condemned man to pay the hangman for the rope.
Indeed, the Explanatory Notes admit that that is the object of the provision. They state:
'By adding to the existing regulators' statutory functions, the Bill will allow the existing regulators to recover a proportion of the establishment cost from the communications sector. These powers will mean that the net cost to public expenditure will be significantly less than the overall gross cost of the practical transition".
§ In other words, we have the hands of the Treasury trying to get something for nothing. Although the transitional costs will be kept from public expenditure, because we cannot get anything for nothing, it will be the communications industry that has to pay—twice. It will have to pay once for the existing regulators' current function and once for the duplication of function during the transitional period.
I shall read a final quotation from the Explanatory Notes:
In the long term this Bill and the subsequent Communications Bill is expected to have little impact on net public expenditure, but will be more fully assessed in the draft Explanatory Notes which will accompany the draft Communications Bill".
In other words, "Trust us. We are the Government and we know what we are doing". Since a communications Bill was promised in the 1997 manifesto, all that the Government have done is dither. We certainly do not yet have the Bill. There is no real evidence of what is to happen, but we are told that all will become clear when we have the real communications Bill and the real Ofcom—not the virtual Ofcom with which we are being presented. We do not want to give Ofcom a blank cheque or carte blanche to tax the existing regulators and, through them, the communications
industry and consumers. That could be detrimental to the existing regulators who are at present fulfilling their functions. I beg to move.
§ Baroness Blackstone
The power provided to existing regulators in Clause 3(3)is a general one, to enable them to do such things as appear to them to be conducive to the duty placed on them by the Bill to help Ofcom to prepare itself. The provision sets out some examples of the type of things existing regulators might do under that power—for example, making payments to Ofcom, seconding staff and providing information.
It may help the Committee if I provide some examples of where the existing regulators might make use of the provision. They might make payments to Ofcom to help with the costs of obtaining specialist advice. Relevant information might be provided—perhaps on holders of particular types of licences—to enable Ofcom to prepare for the smooth transfer of responsibilities. They might second staff to Ofcom who have a particular expertise—in information technology procurement, for example—that would be needed by Ofcom during the transition.
To answer the question posed by the noble Baroness about how such decisions will be made, that will be a matter for the embryonic Ofcom that the Bill will set up, working with the existing regulators—after all, that is the whole purpose of the Bill—to decide what makes sense and where such secondments are useful. There will be sensible discussion about what is needed in the transitional period. Such decisions will be for Ofcom, along with the existing regulators.
The list in Clause 3(3) is not, of course, all-inclusive. Removing the references would not prevent the existing regulators from deciding to do such things. However, retaining the provision makes clear the type of thing that they could do, should they so decide. It may be helpful if I set out in writing for the noble Baroness greater detail of how the finances will work, so I shall do so, in so far as we are clear about it.
§ Baroness Miller of Hendon
I thank the noble Baroness for her explanation, and look forward to receiving her written explanation in due course. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 29 not moved. ]
§ Clause 3 agreed to.
§ [Amendment No. 30 not moved. ]
§ 3.15 p.m.
§ Clause 4 [Winding up of OFCOM on abandonment etc of proposals ]:
Baroness Miller of Hendon moved Amendment No. 31:
Page 4, line 24, leave out paragraph (b).
§ The noble Baroness said: In moving Amendment No. 31, I shall speak also to Amendment No. 35, which is purely consequential to it.136
§ Clause 4 deals with the winding-up of Ofcom in certain circumstances. It is paradoxical to find in a paving Bill setting up a body provisions to wind it up before it even begins to operate. Why should the Government need the power to wind up Ofcom merely because they have modified their proposals to regulate the communications industry? Either a communications Bill will be proposed, pursuant to Clause 2(3), or it will not. If not, Ofcom will be wound up in any case.
§ Subsection (1)(b) is therefore unnecessary. Perhaps the Minister will explain in what circumstances it could become effective. I beg to move.
§ Baroness Blackstone
I had thought that including the subsection would help the Committee, rather than the reverse. I remind the Committee that the Government hope that the powers in the clause will never have to be used. We do not intend to have to use them. They are included in the Bill simply to reassure the Committee that we have a sensible way of dealing with a situation in which the whole project of regulating the sector through Ofcom had, for some completely unforeseen reason, to be dropped. I cannot give the noble Baroness a list of such reasons, because I am optimistic that we will never be in such a situation. The clause provides reassurance.
Amendment No. 31 would confine the use of the power to a case in which at least one proposal to confer powers on Ofcom had been abandoned. While it is difficult to discuss the matter in the abstract. there could also be a case in which a series of proposals to confer functions had been watered down to the point at which the Secretary of State decided that there was no longer value in proceeding with Ofcom. It would be appropriate to be able to wind up Ofcom in such a situation.
As I believe this to be a probing amendment, what I have said may be of no great significance.
§ Baroness Miller of Hendon
I thank the Minister for her explanation. She is right that the amendment is a probing amendment, because I could not think of any circumstances in which Clause 4(1)(b) would be necessary. Either a Bill will come forward or it will not; if it does not, Ofcom will be unnecessary, so I could not see the need for the subsection. However, given the Minister's brave attempt to give some kind of explanation, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Baroness Anelay of St Johns moved Amendment No. 32:
Page 4, line 24, at end insert "or
(c) the switching-off of all forms of terrestrial analogue communication,
The noble Baroness said: Clause 4(1) lays down the conditions under which Ofcom may be wound up by
the Secretary of State. The two conditions mentioned in the Bill are,
the abandonment of any relevant proposals about the regulation of communications
the modification of any such proposals".
§ Presumably they have been included in the Bill because there will be such important changes in the communications environment that the Government expect Parliament to agree that it would be right to dismantle Ofcom.
§ Another dramatic change is on the cards for the communications industry and it might have the effect of requiring the Secretary of State to consider the position of Ofcom as it is constituted in the Bill. I have tabled the amendment because I want to probe the Government on how the implications of analogue switch-off might impact on Ofcom.
§ Everything we are discussing in the paving Bill is set on the presumption that we are moving inexorably to the full implementation of the digital age. We all assume that it is not a question of if but of when. Can the Government give the Committee guidance on when they will take the step which is eagerly awaited by the communications industry? The industry is concerned that if the Government do not set a date, there will be no impetus for consumers to switch to digital.
§ In the meantime, consumers carry on buying new analogue television sets and a huge proportion of the television sets sold last Christmas were analogue, not digital. Consumers are buying analogue sets which may soon become useless. But, rightly, consumers want to be assured that before they take the gamble of switching en masse to digital it will be both affordable and available, regardless of where they live. They also want to be assured that they will be able to receive a digital signal on all their television sets. I am sure that Members of the Committee are among general members of the public who, when buying a new television set, relegate the existing one to a study or bedroom. I understand that in this country there is now an average of four television sets per household. What will happen at switch-off when people have not changed to digital perhaps because they cannot afford it or because they own more than one set?
§ The take-up of digital television is steady and slow but it is by no means overwhelming. There are therefore serious problems about the if and the when of analogue switch-off. So far the Government have indicated that it might take place between 2006 and 2010, although some members of the industry have predicted that it could be as late as 2018. I notice that yesterday in another place the relevant Minister, Dr. Howells, repeated the dates 2006 to 2010 as being possible.
§ We are all aware that the recent problems surrounding the sale of the 3G licenses have given the industry and the Government worries about what may happen when analogue is sold off by the Treasury. Analogue switch-off will be a dramatic change in the 138 communications environment and I therefore believe that it should be a reason for the Secretary of State, under Clause 4, to consider winding up Ofcom. As I said earlier, this is a probing amendment. I beg to move.
§ Viscount Astor
I must congratulate my noble friend Lady Anelay on managing in such an ingenious way to secure a debate on analogue switch-off. She has tabled an amendment which would abolish Ofcom on the assumption of analogue switch-off. My noble friend said that it is a probing amendment. I am delighted to hear that because the last thing we would want is to have Ofcom abolished when analogue switch-off finally happens.
However, as my noble friend has been so ingenious in tabling her amendment, I am sure that as always the Minister is prepared to answer a couple of questions. No doubt, she will say that analogue switch-off will be addressed in the main communications Bill, but perhaps I may enter a short plea.
The Government have rightly set out a number of steps that they would require digital television to take before they consider analogue switch-off. It would be based on issues such as coverage, the number of analogue sets in the country and so forth. However, in order for those steps to be taken there must be an end date. One that is as wide as has been suggested will not help the industry to focus on when the changeover needs to take place. I believe that the gap between 2006 and 2010 is too wide and needs to be narrowed.
The industry needs clarity as regards the steps which are required to be taken and a date. I hope that the Minister will consider that. I realise that it will be no part of this Bill, but I take the opportunity to make that plea.
§ Lord Lipsey
The noble Baroness, Lady Anelay, has laid such a tempting bait that I cannot help darting after it. I am reasonably confident that the amendment will never take effect because, as the Minister said, we shall have a full-scale communications Bill—touch wood, if there is any in this Chamber—and because I believe that all the tough talk of analogue switch-off is for the birds.
I know why the industry wants Ministers to continue with such talk; so that consumers are frightened into going out and buying digital television sets. The truth is that were any government to render redundant the television set in my daughter's bedroom and in the bedrooms of millions of daughters up and down the country, that would be their poll tax mark II. It simply is not practical.
I should like us to stop talking about analogue switch-off, therefore, and to start to talk about digital switch-on. We should make sure that the industry is organised to provide a range of digital services which are utterly compelling to every consumer who wants to buy a new set. I believe that that involves a deepening and broadening of the BBC's efforts in the field, made possible by the increased efficiency of the corporation in recent years and by the additional money granted to 139 it by the Davies panel, of which the noble Lord, Lord Gordon, and I were members. There must be a compelling offering to those who have not taken up the increasingly attractive, although somewhat less than high-grade offering, from the commercial sector. Let us have less talk of analogue switch-off and more talk of digital switch-on.
§ Lord Crickhowell
In making a couple of brief points I declare an interest, as I have on previous occasions, as the chairman of HTV. Perhaps I may take this opportunity to congratulate the noble Baroness, Lady Whitaker, who I see in her place, on her appointment as deputy chairman of the ITC and therefore my regulator. I look with proper respect in her direction.
I have a good deal of sympathy for what has been said about positive measures as well as negative ones. However, a number of other countries, including, for example, Finland, have come forward with earlier dates than those we are contemplating and are making more satisfactory progress. If satisfactory solutions for the transfer are not reached, we shall get ourselves into a terrible mess. Whatever industry there is to be regulated by Ofcom, it may be very different from the one we have at present.
I believe that as many as 4 million analogue television sets were sold in this country last year. It is a large number. We are therefore going down a road of considerable chaos and confusion and it is likely to get worse. I realise that we are dealing with a probing amendment of some ingenuity, but there is a serious point to be made and it is urgent that the Government consider a total and comprehensive examination of the issue. Otherwise Ofcom will have to deal with an industry in crisis.
§ Baroness Blackstone
Like the noble Viscount, Lord Astor, I was slightly surprised to see the amendment in the Marshalled List but I congratulate the noble Baroness on her ingenuity. However, I shall not rise to the bait and get into a long debate about digital switch on, off or over.
Clause 4 provides that if the Secretary of State considers that it is no longer necessary for Ofcom to continue to exist because of the abandonment or modification of relevant proposals about the regulation of communications, she may, by order, provide for its winding up. The proposed amendment would broaden greatly the circumstances in which that power could be exercised to include a specific sphere of its transferred regulatory responsibility; the incidence of terrestrial analogue communications being switched off. However, as the noble Baroness has openly admitted, that was a device for initiating a speech about moving from analogue to digital services.
I can only reiterate that, as my honourable friend Dr Howells said yesterday in another place, our aim is to achieve these criteria within the time-frame of 2006–2010. That is quite challenging. However, we anticipate that with a successful alliance between the Government, the industry and consumers, within the 140 framework set out in the digital action plan—I shall not go into that today—we shall be able to meet the criteria.
The noble Viscount, Lord Astor, thought that we needed to narrow down the time-frame. At this point it would be dangerous to do so, for a whole variety of reasons, one of which was alluded to by my noble friend Lord Lipsey. I am not sure that I would go as far as the noble Lord did in suggesting that analogue switch-off is just for the birds. He may one day have to eat those words. However, I entirely accept that before we go down that road it is important that we go through the whole series of tasks set out in that plan. I hope that that will be helpful to the noble Lord, Lord Crickhowell.
We have certainly made clear that full switch-over—I think that that is the right term to use—will take place when and only when the tests of availability and affordability are met. We believe that that could start to happen as early as 2006 and could be completed by 2010. More than that at this point in time I will not say.
§ 3.30 p.m.
§ Baroness Anelay of St Johns
I am grateful to Members of the Committee for their comments. I hope to stretch my ingenuity on even more serious subjects in our later debates on the Bill.
My intent was not wholly or in major part mischievous. I am not trying to ferment a rebellion by teenagers around the land who may be alarmed at losing their bedroom programmes. Certainly, the amendment sought to focus our attention on the fact that, as my noble friend, Lord Crickhowell, commented, the Ofcom that we are creating today may end up in the future regulating a very different communications and telecoms environment. I said that this was a probing amendment. Such it was. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Baroness Miller of Hendon moved Amendment No. 33:
Page 4, line 26, leave out "may" and insert "shall
§ The noble Baroness said: Amendment No. 33 is a simple amendment. We suggest that on page 4 at line 24 the word "may" should be replaced by the word "shall". We assume that the use of the word "may" in the clause is a drafting error. The Bill is based on the premise that there will be a communications Bill. That will amalgamate the functions of the existing regulators into the person of one super regulator—Ofcom.
§ If the project for some reason is abandoned. Ofcom will have no reason to exist. It must be wound up. It cannot be left. Therefore, it is not "may" be wound up at the Secretary of State's discretion as stated in Clause 4(1)(b). We certainly do not want to have an unused and redundant regulator hanging around, eating up public money—perhaps like another Millennium Dome.141
The amendment removes any ambiguity and ensures that if there is no need for an Ofcom then it must be wound up. If our amendment is successful, Clause 4(1)(b) would read:
he shall by order provide for the winding up and dissolution of OFCOM".
§ I said that the amendment was simple. It has a simple purpose. I beg to move.
§ Lord McIntosh of Haringey
In order to understand the amendment, we must look at both subsections (1) and (2) of Clause 4. Subsection (1) states that if, in consequence of various things,it appears to the Secretary of State that it is no longer necessary for OFCOM to continue to exist, he may by order provide".The noble Baroness rightly described that. However, subsection (2) goes on to state:If, in consequence of anything mentioned in paragraph (a) or (b)…it appears to the Secretary of State at any time after the end of 2003 that it is no longer necessary for OFCOM to continue to exist"—Members of the Committee will notice that the wording is parallel—it shall be the Secretary of State's duty to make an order under that subsection providing for OFCOM to be wound up".In other words, the Bill sets the end of 2003 as a kind of deadline for the Secretary of State. If things were going wrong before then, she could seek to wind up Ofcom. But she could instead choose to give it another chance, even if the prospects were not very promising. After the deadline, however, she would need to be more confident that the project could be rescued in order to give it more time.
A deadline is a useful discipline. Amendment No. 33 would remove it. During the earlier period it will be more difficult to judge whether the project is making adequate progress or whether early difficulties will be surmountable. Therefore, at that stage, as the Bill states, she should have more discretion, but after 2003 she should not.
§ Baroness Miller of Hendon
I thank the Minister for that clear and satisfactory answer. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Baroness Miller of Hendon moved Amendment No. 34:
Page 4, line 27, at end insert "and he shall not require the repayment of any monies borrowed from him by OFCOM
§ The noble Baroness said: In moving Amendment No. 34, I shall speak also to Amendments Nos. 39 and 40. They are linked. The purpose of the proposed addition by Amendment No. 34 to Clause 4(1) makes it quite clear that if the Government abandon the concept of Ofcom they shall bear the costs and expenses incurred during the transitional period. Otherwise, where would the money come from? If Ofcom is strangled at birth, what assets will it have from which to pay anything back to the Government? 142 If Ofcom follows what the Government says is its initial function in accordance with the Bill, it will possess only a few desks and a handful of paperclips.
§ Clause 4(5)(c)(iii) contains an ominous provision which enables the Secretary of State to extinguish interests, rights and liabilities. We may want to explore that at a later stage of the Bill.
Amendment No. 39 is a probing amendment because the provision in the Bill is vague and ambiguous. It provides for the compensation to be paid either by the Government or by Ofcom. But if it were to be Ofcom, where would it get the money from? It will be provided with the barest minimum of money to set itself up. In response to that question by my noble friend Lady Anelay at Second Reading, the Minister said that,
if Clause 4 were invoked and the whole process aborted. The literal answer is that the Government and the taxpayer would have to pay. There is provision for Ofcom to levy charges, but I do not think it could quite be used for that purpose".—[Official Report , 15/10/01; cols. 466–467.]
Do the proposed powers to pay compensation include payment to the existing regulators for the expense and disruption that they will suffer while preparing to wind up their own affairs and hand over to the now abortive Ofcom? I ask that because Members of the Committee will have noted that Clause 4(5) grants power to transfer assets and liabilities of Ofcom to the existing regulators. Why should they pay for a U-turn by the Government over the establishment of Ofcom?
The Bill states that the Secretary of State will have power to pay compensation to,
persons suffering loss or damage".
Does that mean every person or just those who, at the discretion of the Secretary of State, are worthy of consideration? Will suppliers of goods and services be fobbed off, like the unhappy shareholders in Railtrack were with the observation, "Well, you took a commercial risk"? Do the Government undertake to ensure that if Ofcom is wound up, taxpayers will not be faced with huge claims for compensation, loss of office and golden handshakes? As regulators of segments of the industry, surely Ofcom's board will not be personally liable. I say that because Ofcom is not a limited company.
§ Amendment No. 40 will make sure that the Secretary of State takes into account the value of resources transferred to the stillborn Ofcom by the existing regulators. Presumably those resources will be restored to the original provider, not just thrown into a liquidation pot. We want far clearer indications from the Government of who pays what, with what and to whom in the event of Ofcom being prematurely wound up—however remote the Government believe such an eventuality to be. I beg to move.
§ Lord McIntosh of Haringey
The noble Baroness's closing remarks sounded like a limerick that it would be improper for me to repeat in this Chamber. I will talk to the noble Baroness about it afterwards.
The noble Baroness quoted me correctly from Second Reading when, in summary, I said that if Ofcom were wound up the taxpayer would have to 143 pay. I meant that if Ofcom were unable to meet all its debts, the taxpayer would have to meet the deficit. It is possible that they might not entirely match. At the time of winding up, Ofcom might have assets that could be realised. In that event, there is every reason for the Secretary of State to recover what she can, provided that other creditors have been paid. Amendment No. 34 would prevent that happening.
The converse situation would be insufficient assets to pay all Ofcom's creditors in full. The Secretary of State has power to compensate people who suffer as a result of Ofcom being wound up. The Secretary of State would have to consider carefully whether to exercise that power if Ofcom's other creditors could not be paid in full. Amendment No. 39 would remove that power.
The noble Baroness questioned whether all the fine detail of the way in which the Secretary of State could use that power would be exercised. I am sure that the Secretary of State would use that power to compensate responsibly and even-handedly. If she did not, her actions could be challenged, as can those of all Secretaries of State. There is a balance between Ofcom and the Secretary of State because by this time Ofcom will have no power to levy charges. It will not do so until the main Bill is implemented. All the money going into Ofcom comes from the Secretary of State, mainly by way of a loan. Therefore, it is right that any money left over at the time of winding up should go back to the Secretary of State.
Amendment No. 40 seeks to influence the way in which the Secretary of State would conduct a winding up, giving particular weight to the relative value of assets and liabilities transferred from the four existing regulators to Ofcom. I do not believe that value should be a particular factor. Abandoning the Ofcom project would leave us with the four existing regulators, together with the Radio Communications Agency, to continue their existing functions. They are all part of the statutory apparatus. It is not like a commercial merger of companies with shareholders.
The Secretary of State should decide, subject to the reasonableness test, the best way of redeploying assets to maximise the efficient and effective conduct of the existing and surviving regulator regime. Valuing transferred property should have nothing much to do with it. I hope that that is enough to persuade the noble Baroness not to press the amendment.
§ Baroness Miller of Hendon
I am satisfied with the Minister's explanation, particularly with regard to Amendment No. 34. I was concerned to know where the money for Ofcom was to come from and therefore who would get it back. The noble Lord made it clear that Ofcom would only have the money that came from the Secretary of State in the first instance and it would be appropriate for the money to be returned there. In those circumstances, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.144
§ [Amendment No. 35 not moved. ]
Lord McIntosh of Haringey moved Amendment No. 36:
Page 4, line 31, leave out "make" and insert "lay before Parliament a draft or'
§ The noble Lord said: When the Delegated Powers and Regulatory Reform Committee examined the Bill in July, it made one recommendation. The committee noted that Clause 4(3) applied the negative procedure to the Secretary of State's power to make an order for Ofcom to be wound up. The committee's view was that Parliament should have sufficient opportunities to discuss Ofcom's fate before any such order was made and recommended that the affirmative procedure would be more appropriate.
§ Baroness Anelay of St Johns
We welcome that the Government have taken due note, as they always do in these circumstances, of the Delegated Powers and Regulatory Reform Committee. If such an eventuality were to occur, it is only proper that Parliament should have the opportunity, through the affirmative procedure, to consider such an application by the Secretary of State.
§ On Question, amendment agreed to.
Lord McIntosh of Haringey moved Amendments Nos. 37 and 38:
Page 4, line 34, leave out from "instrument" to end of line 35 and insert ", and no such order shall be made unless a draft of the order has been laid before Parliament and has been approved by a resolution of each House
Page 4, line 35, at end insert—
§ On Question, amendments agreed to.
§ [Amendments Nos. 39 and 40 not moved. ]
§ Clause 4, as amended, agreed to.
§ 3.45 p.m.
§ Clause 5 [Interpretation ]:
§ [Amendment No. 41 not moved. ]
Lord Gordon of Strathblane moved Amendment No. 42:
Page 5, line 18, at end insert—
(e) the Board of Governors of the BBC;
§ The noble Lord said: It is not my intention to open up the issue of how much the BBC should come under the regulation of Ofcom, although I look forward to taking part in that important debate. The proper time will be when we have the full Bill, in draft form. one hopes, later in the current Session.145
§ This amendment does not take the Government further with regard to the BBC. Those of us who attended the first day in Committee last week will recall that my noble friend Lady Blackstone, replying to Amendment No. 18 in the name of the noble Baroness, Lady Anelay, went into detail on how much the BBC was already covered, or would be, by Ofcom. In those circumstances, it is strange that there is not a single mention of the BBC in the paving Bill.
§ I examined all the clauses that refer to existing regulators and none of them takes the Government further than they have already said they want to go. There is a strong case for listing the BBC board of governors along with the other regulators at the beginning of Clause 5. After all, the BBC board of governors is a regulatory body. It does many other things but if it does not regulate the BBC, who does? There is no excuse for the board being left out on those grounds.
In Committee last week, the Minister said that Ofcom already had blanket powers under Clause 2(3)(a), which uses the phrase
whether by transfers from the existing regulators or otherwise".
§ As a great admirer of the BBC, I am unhappy to see our biggest and best broadcaster consigned to the dustbin of a catch-all phrase such as "or otherwise".
§ There is an overwhelming case for including the BBC board of governors in the list of regulators specified at the beginning of Clause 5. That would not take the Government any further than they have said they want to go. I want them to go further but will argue that case later. To get the BBC's co-operation, arguably the board should be listed. There is no case for dealing separately with the BBC when the Bill's objective is to bring the BBC more in line with other broadcasters. I beg to move.
§ Baroness Anelay of St Johns
I am sure that Members of the Committee will be relieved to hear that I shall not repeat all that I said last week on this point. I wish merely to emphasise my support for the intention behind the amendment moved by the noble Lord, Lord Gordon. I too seek a way of putting a duty on the BBC as regards preparing itself for the eventuality that it might be wholly regulated within Ofcom. Like the noble Lord, I agree that this is not the occasion on which to hold a debate on whether the regulatory powers are transferred to Ofcom. I wish only to investigate other ways in which both his objective and my own might be turned into a reality within the context of this paving Bill.
§ Baroness Blackstone
The amendment would make the BBC an "existing regulator" alongside the other regulators. The position for the BBC under the Bill would be the same as for the other "existing regulators". Ofcom would therefore have duties to prepare to assume functions in respect of the BBC and the BBC would have new functions as regards facilitating the implementation of legislative proposals. It would also have to prepare an asset transfer scheme if so directed by the Secretary of State.
146 I am grateful to my noble friend Lord Gordon and, indeed, to the noble Baroness, Lady Anelay, for accepting that there would not be much point in rerunning our debate on the BBC last week. However, perhaps I may reiterate what I said at the time. I sought to outline to noble Lords the fairer system of regulation that the Government propose to introduce for all public service broadcasters. I explained how our proposals in respect of the BBC and its relationship to Ofcom fit within the overall system. I also explained that those arrangements will generally best be implemented by amendments to the agreement between the Secretary of State and the BBC. We expect to make available a draft of the proposed amendments for discussion when the main Bill is discussed.
At the same time I emphasised that I do not seek to pre-empt any different conclusion that Parliament might reach in due course. I explained how the Bill as drafted already allows for any legislative proposals affecting the regulation of the BBC that may come forward. Clause 2 of the Bill gives Ofcom the power it needs to facilitate or secure the modification of any proposals concerning the BBC. Under Clause 2(1), Ofcom has the power to do whatever is appropriate in preparing for its task. The BBC's Charter will allow the BBC to prepare for implementing our legislative proposals. Therefore, I cannot agree with the comments of my noble friend on the amendment.
The phrase,whether by transfer from the existing regulators or otherwise",neatly includes the BBC and means that Ofcom can prepare for transfers from the BBC or the Secretary of State or, indeed, for new functions arising in relation to the BBC. But I should like to insist once more that the BBC is not a regulator of other broadcasting bodies in the same way as are the ITC, the Radio Authority and the Broadcasting Standards Commission; rather it is a Royal Charter body in respect of which the governors regulate the BBC in accordance with the terms of the BBC agreement with the Secretary of State. It is not envisaged that the BBC will need to transfer assets to Ofcom to enable the latter to exercise its future regulatory functions so far as concerns the BBC.
I am satisfied that these powers are sufficient. They will allow Ofcom and the BBC to make preparations that will be needed. In concluding my remarks, perhaps I may make reference to that well-known production from the BBC, the "Hitch-Hiker's Guide to the Galaxy". I am convinced that in this case we need not panic and, although we are debating Amendment No. 42, this is not the answer to life, the universe and everything; specifically, it is not the right answer for integrating the BBC into the work of Ofcom.
§ Lord Gordon of Strathblane
In thanking my noble friend for her detailed reply to the amendment, I should say that I am still a little unhappy. At this stage I do not seek for the BBC to be brought fully under Ofcom. I simply wanted to remind my noble friend of what she said last week: 147Broadly speaking, the BBC will be subject to the same degree of standard setting and monitoring as all other public service broadcasters for each of the three tiers regulated by Ofcom.The overall result will be that the BBC will be subject to greater external regulation than at present".—[Official Report , 29/10/01; col. 1271.]In those circumstances, it seems only sensible to list the BBC board of governors which, I repeat, is a regulatory body. If that is not the case, may I be enlightened as to who is the regulatory body for the BBC within the list of regulatory bodies?
I know that the Minister is far too intelligent to remain opaque to reason for very long. I am therefore happy to withdraw the amendment at this stage, although I shall return to it on Report.
§ Amendment, by leave, withdrawn.
Baroness Anelay of St Johns moved Amendment No. 43:
Page 5, line 23, after "2(3);" insert—
"Secretary of State" means the Secretary of State for Culture, Media and Sport;
§ The noble Baroness said: This is a probing amendment which asks the Government how they anticipate the two government departments concerned with the Bill are going to be able to work with Ofcom. How will appointments and all the related decisions be made?
§ Although I speak on these Benches on the Department for Culture, Media and Sport, I certainly do not regard that department as superior to that of the DTI. I had to choose one department for my amendment, and so chose my own. I am delighted that my noble friend Lord Crickhowell has picked up the challenge and tabled an amendment to define the words, "Secretary of State" as "Secretary of State for Trade and Industry". I look forward to hearing his remarks.
§ It is important that the Government unravel the muddle that appears to have developed from the body being subject concurrently to two departments. The Bill has a potential to disclose that there is confusion rather than co-operation between the DTI and the DCMS. For example, the DTI appears first on the White Paper, but the Statement in another place was taken by the DCMS. DCMS Ministers are leading on the legislation in this House, but I understand that the DTI made the groupings for the Committee stage. How will the Government decide on the issues raised here?
§ Which department will take the lead on important decisions as soon as the embryo Ofcom is up and running? Appointments will be made during the transitional stage. Who will take responsibility for them, in particular as regards the appointment of the chairman? To whom will the chairman be accountable? What will happen if no agreement can be reached on that and on other operational matters? Once Ofcom is fully up and running, how would an intractable issue on competition policy be resolved? How will the DTI be brought into the loop?
§ In the meantime, the simple question I put to the Minister is this: which Secretary of State is referred to throughout the Bill? The Explanatory Notes refer to 148 "she". Does that mean that the Secretary of State for Culture, Media and Sport is to take the lead? The noble Lord is quite right to remind me that both Secretaries of State are women—perhaps this is an ingenious plot on the part of the Government to ensure that we do not find out the answer until later. But I am sure that the Minister responding to the amendment will not use that as an excuse.
§ Paragraph 12 of the schedule requires Ofcom to prepare an annual report and submit it to the Secretary of State. To which Secretary of State will it be sent? I beg to move.
§ Lord Crickhowell
As my noble friend has pointed out, my amendment seeks to probe the mirror image of the question behind her amendment. Of course I am aware that, when used in legislation, the term "Secretary of State" is generic and thus covers all Secretaries of State. When I was a Secretary of State I shared responsibilities for organisations with other Secretaries of State. A case which comes to mind was that of the Forestry Commission. Furthermore, as a regulator I was answerable to more than one Secretary of State. I have been in the position envisaged in the Bill, but it would be useful nonetheless if an explanation were offered as regards how in practice it is envisaged the relationship will work.
Conflicts can arise. I recall that conflicts flared up in the context of the National Rivers Authority between MAFF and the Department of the Environment. They did not always agree on quite important policy matters, including eventually the entire reorganisation of that body and its participation in the Environment Agency. I think that it is at least reasonable for us to probe a little into the general powers being conferred by the Bill which I am sure will cover, quite correctly, all Secretaries of State, as is the practice.
§ Baroness Miller of Hendon
I approach this from the perspective of trade and industry matters and thus would like to support the amendment tabled by my noble friend Lord Crickhowell, as well as having put my name to the amendment tabled in the name of my noble friend sitting with me here on the Front Bench.
These are probing amendments. It would he most interesting for the Government to tell us what they really mean. For example, do they mean that a report has to be sent to both Secretaries of State? That is the issue and it would be interesting to know about it. In particular, as I have said on several occasions—indeed, the noble Lord, the Minister, commented on this point when I spoke to an amendment on our first day in Committee—if one reads the White Paper carefully, one sees that telecommunications are mentioned only 78 times, whereas broadcasting is mentioned 592 times. If one were to read the Bill rather quickly, without taking too much notice, one might think that it related only to broadcasting. Of course. I do not suggest for a moment that any noble Lord would have done that; I am sure that they read every word very carefully. However, it is important that we make it clear that the Bill was, after all, prepared by 149 two departments. It would be interesting to know whether the Government are referring to one Secretary of State—and, if so, which one—or to both.
§ 4 p.m.
§ Baroness Blackstone
It is very useful to have this contradictory advice from the Benches opposite. I must tease the Opposition. Two amendments have been tabled from their Benches that directly contradict each other. However, I accept, of course, that they are probing amendments.
The noble Baroness, Lady Anelay, asked for a little explanation. I think that I can be very brief. This Bill and the Communications Bill that will follow are concerned equally with economic and cultural issues. The communications sector embraces not only broadcasting, but telecommunications, as the noble Baroness, Lady Miller, said. There is absolutely no intention of ignoring that or of giving that extremely important sector insufficient consideration. In the light of that fact, it is right that both the Secretary of State for Culture, Media and Sport and the Secretary of State for Trade and Industry should be involved. They are, incidentally, both women—this is a Labour Government and we like to see plenty of women doing a wonderful job in the Cabinet, as they do.
All the ministerial functions under the paving Bill relate to appointments and other general issues concerning Ofcom. The intention is that, when the Secretary of State has to discharge those functions, the two Ministers will consult one another and decide jointly. The noble Lord, Lord Crickhowell, has admitted that it is very common in government for two Secretaries of State to be involved in making joint decisions. I am sure that we will be able to avoid the conflicts that he experienced under MAFF and the DoE, as they then were, when we implement the legislation. Ministers in the two departments have worked very closely together since before the White Paper was published. I see absolutely no reason why the provision should cause any difficulties. In any event, as the noble Lord, Lord Crickhowell, has said, Acts of Parliament invariably refer to "the Secretary of State", leaving it to decisions about the machinery of government to determine which Secretary, or Secretaries, of State should exercise which function.
§ Baroness Anelay of St Johns
I am grateful to the noble Baroness, the Minister, for her response. This probing amendment was merely an attempt to elucidate some of the difficulties that may well arise. There is a perception in the telecommunications industry that it is perhaps being left a little on the sidelines on occasions. I am sure that all noble Lords would be keen in future debates to assure the industry that that is not the case. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.150
§ [Amendments Nos. 43A and 44 not moved. ]
§ Clause 5 agreed to.
§ Clause 6 [Short title, commencement and extent ]:
Lord Gordon of Strathblane moved Amendment No. 45:
Page 5, line 42, at end insert—
(2A) No order shall be made under subsection (2)—
(2B) If the conditions specified in subsection (2A) above are not fulfilled, no order shall be made under subsection (2) until a bill to give effect to the proposals referred to in section 2(3) has received a Second Reading in either House.
§ The noble Lord said: I am aware that many noble Lords expressed concern in last week's debate on the Bill that we seemed to be creating an organisation before we had had an opportunity even to see the full legislation and let alone to debate it. There are various ways of trying to solve the problem. My noble friend Lord Lipsey proposed the highly desirable idea of pre-legislative scrutiny by a Joint Committee of both Houses of Parliament. I found my noble friend Lord McIntosh fully convincing and very persuasive in his response to the debate. I think that he went as far as anyone could possibly go in reassuring us that the Government would try to achieve as much consultation as possible. However, he was quite right that no government can tie themselves down in advance to a particular form of pre-legislative scrutiny or a particular timetable. The route taken by amendments that contained such proposals may, regrettably, be closed off.
§ The amendment seeks to recognise the Government's difficulty in meeting those points. It allows us to recognise that they cannot tell us that we will have a Joint Committee or cannot guarantee a draft Bill. However, if they do not take those steps, the amendment would mean that this Bill could not take effect unless one of two things happened. First, we could have a draft Bill. I have made that suggestion for some 12 weeks and I did so on some advice, although I fully recognise that it is not written in stone. I am quite happy to listen to any proposal that the Government have in that regard. However, if they fail, through no fault of their own, to deliver a draft Bill, we can say that they cannot have Ofcom up and running before we have had at least a Second Reading in one of the Houses of Parliament on the major Bill that confers its powers. That is not very much to ask and I hope that the Government will be responsive.
§ Baroness Miller of Hendon
With the permission of the House, I should like to speak to Amendment No. 45, which stands in my name and that of the noble Lord, Lord Gordon of Strathblane, and also to Amendment No. 46, which stands in my name and that of my noble friend Lady Anelay of St Johns.
151 If the amendment of the noble Lord, Lord Gordon, is accepted, as I believe it deserves to be, I shall not move Amendment No. 46. I shall not take up your Lordships' time by repeating the points that the noble Lord has just made. He spoke in general terms about why he thought that the amendment was necessary. Indeed, its details are written very clearly on the Marshalled List. His amendment clearly goes further than mine. All I can say is that he has more courage than I do, as I would not have attempted to take the proposal quite as far as he has. None the less, I hope that his influence with his noble friends will mean that his amendment will be accepted, as I believe it deserves to be. On the other hand, if your Lordships were to regard the amendment as involving a date that is too far away, perhaps I may commend Amendment No. 46, which was tabled by myself and my noble friend Baroness Anelay. It would provide the safeguard that we seek without delaying the setting up of the operation of Ofcom by an appreciable time, bearing in mind the time that the substantive Bill will take—I speak with all possible good will—to pass through both Houses.
§ Lord Lipsey
I was rather tempted by the amendment when I saw it. My noble friend Lord Gordon and I share a common objective to ensure that the final proposal, when we get it, comes in a timely fashion and is properly examined. I cannot agree with his comment that Ministers have gone as far as they can go with regard to the Joint Committee. Indeed, since my noble friend Lord McIntosh made his remarks, the Government have already gone a bit further, as was shown by the comments made by the Leader of the House of Commons in another place in last Thursday's business questions. I have great confidence that, in the period before Report, they will go that little bit further still to render us all content that we will, all being well, get the Joint Committee.
My other concern with this specific amendment is that it would render the Bill otiose. As I understand Treasury rules, they permit bodies to start off once the Bill that establishes them has had its Second Reading in the House of Commons. That was certainly the case in respect of the Financial Services Authority. It is not clear to me that it would be worth having the Bill if we were not going to set anything up until the proposals were introduced to one or other of the Houses of Parliament. I think that the body needs to set about its work rather earlier. The important thing is not the sunrise clause proposed by my noble friend Lord Gordon, but the sunset clause: namely, the assurances that we have had from the Front Bench that, if we do not get a Bill in the end, they will get rid of this thing because it will no longer have any purpose.
Therefore I hope that my noble friend Lord Gordon will come back to the task that we both have in mind—that is, getting the Bill properly examined by the other route—by pressing harder again for a Joint Committee, rather than by this route, tempting though I found his argument.
§ Baroness Blackstone
We need to move forward without unnecessary delay to create a modern 152 regulatory regime. These amendments would, I am afraid, cause an extremely unhelpful delay. Indeed, Amendment No. 46, which stands in the name of the noble Baroness, Lady Anelay, would delay implementation of any provision in the Bill. It is a wrecking amendment.
While I understand the concerns about undertaking a careful examination of the Government's proposals in the main Bill, I do not believe that the creation of Ofcom would close off any sensible options. The paving Bill is designed to be flexible and the planning process can be safely allowed to move forward in parallel with our debates on the substance of policy.
Either amendment would prevent us from making any appointments to the Ofcom board before the introduction of the main Bill at the earliest That means November 2002 on the most optimistic scenario. Yet, as I have made clear on several occasions, the Government's intention is to appoint the chair of Ofcom next spring. So we are talking about a delay of at least six months, and possibly longer, because we cannot predict exactly at what point in the next parliamentary Session the main Bill will be introduced.
Such a delay would be a serious matter. Appointing the chair is only the first step in the appointments process, as the chair and other non-staff members need to be appointed in order to choose a chief executive. Our plan is to have the chief executive in place by the end of the summer/early autumn so that Ofcom can start to discharge its duty of preparing. That is what this Bill is about. Either of these amendments would postpone that for quite a long time. By that time there will be perhaps less than a year before Ofcom is to start regulating, and the work that we want to get on with will have been delayed.
A lot of practical work can be done by the existing regulators and the two departments to prepare plans for the Ofcom board—the Towers Perrin report sets out a useful model—but only when the Ofcom hoard is in being can they decide whether to adopt those plans. If they want to make changes, there will need to be time at the practical level to implement them before Ofcom starts to regulate.
I have to ask myself what benefit would be gained from this delay. The paving Bill has been deliberately designed to be flexible. We want Ofcom to be able to react to changes in markets and technologies as they occur. We want Ofcom to have the freedom to organise itself internally in the best possible way to undertake its functions. So if Parliament were to make changes to the policy set out in the White Paper, or if details emerge in elaborating that policy, the practical preparations by Ofcom will be able to accommodate that.
Equally, however, as I said in Committee last week, I must emphasise that the broad principles of the new regulatory regime are fully set out in the White Paper.
The Government's proposals may of course emerge from Parliament with modifications, but I believe that most Members of the Committee would agree that the range of issues which the existing regime and the White 153 Paper address will need to be carried forward into the new regime. The objectives of competition, consumer protection, universal access to high quality diverse broadcasting and the efficient allocation of spectrum are not controversial objectives—there is agreement on them right across the board and the planning work should be allowed to go forward without jeopardising our timetable for bringing the new regime into force.
I hope that I have said enough to convince my noble friend. In Committee last week I gave an undertaking about frequent reports to Parliament on the progress of Ofcom. Given that undertaking on reporting, the explanation about the need to avoid delay, and taking into account what my noble friend Lord Lipsey said, I hope that my noble friend will feel able to withdraw his amendment.
§ Lord Gordon of Strathblane
I do not wish to appear ungracious, but the noble Baroness has not gone far enough. I can assure my noble friend Lord Lipsey that I in no way have departed from my enthusiasm for a Joint Committee of both Houses. But I believe that the noble Lord, Lord McIntosh, was right when he said that it is unlikely that the Government will commit themselves to a definite timetable on that. If I am wrong, my amendment will be unnecessary and everything in the garden will be lovely.
But I must take issue with the Minister. Only two weeks ago, the Secretary of State in another place announced that there was to be a further consultation on cross-media ownership. That implies that the Government are not satisfied with what is put forward in the White Paper at the moment on cross-media ownership. We do not know—arguably the Government do not know yet—what the full Ofcom Bill will contain. In those circumstances, it is not unreasonable to ask that we are at least given sight of, and a chance to debate, either a draft Bill—which I hope we will get; I hope the optimism of my noble friend, Lord Lipsey is justified—or, if not, a Second Reading of the substantive Bill.
In the hope that the Government, with further pause, may reconsider this matter, I am happy to withdraw my amendment. I obviously cannot speak for the noble Baronesses, Lady Miller and Lady Anelay, on their amendment. I shall return to this matter on Report because the Committee is entitled to some assurance that it is not voting blindly to create an Ofcom, the powers of which we do not know enough about. I beg leave to withdraw the amendment.
§ 4.15 p.m.
§ Baroness Miller of Hendon
Before the noble Lord withdraws his amendment, I should say to the Minister that I was surprised when she called my amendment a wrecking amendment. It was certainly not intended to be. As I said when I spoke to my amendment, I thought it was rather more gentle than the noble Lord's amendment. My amendment relates to before a Bill is 154 introduced in either House and the noble Lord's amendment relates to before Second Reading, which I thought came after the introduction of the Bill.
However, as the noble Baroness is aware, I do not intend to move my amendment. I certainly wish to speak to her about it before we reach Report stage.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 46 not moved. ]
§ Clause 6 agreed to.
§ Schedule [Further provision about Ofcom ]:
The Earl of Northesk moved Amendment No. 47:
Page 7. line 4, leave out "non-staff member" and insert "non-executive director
§ The noble Earl said: In moving Amendment No. 47, I shall speak also to Amendment No. 79, which is grouped with it. By way of reassurance, this is a probing amendment.
§ The phrase "non-staff member" strikes us as a curious term, which could possibly lead to confusion with the phrase "staff member" used elsewhere in the Bill. The amendment therefore suggests that it should be changed to "non-executive director", which, after all, is more commonly known and understood.
§ It may be a vain hope, but we believe that, for ease of purpose and understanding, the Government may just be inclined to accept the thrust of the amendment. Indeed, it is worth noting that the Government have referred to "non-executive directors" on many occasions. The term was used in the White Paper—the Minister even had occasion to use it during the Second Reading debate—and yet it does not appear anywhere on the face of the Bill.
By the same token, the only apparent reference to "non-staff members" outside the schedule to the Bill is an oblique one in Clause 1(3), which states:
such number of other members appointed by the Secretary of State".
§ It would seem that, while it is not clearly stated on the face of the Bill, the non-staff members referred to in the schedule are intended to be members of the board—that is to say, they are, to all intents and purposes, intended to perform the functions of non-executive directors. That being so, it is somewhat confusing, if not untidy, to use such a woolly phrase on the face of the Bill to define them. I beg to move.
§ Lord Borrie
Perhaps I may indicate sympathy for the noble Earl's view from at least one person on this side of the Committee. "Non-staff member" is a very unhappy phrase. I do not know where it comes from. "Non-executive director" is a phrase that is widely known and would be eminently suitable in this instance.
§ Baroness Blackstone
The White Paper referred to the board of Ofcom as comprising a mix of executive and non-executive directors. The Bill differentiates between these two groups by using the simple distinction of "staff members", in the case of employees of Ofcom who become members of the board, and "non-staff members" in the case of the 155 chairman and other members appointed by the Secretary of State. The differentiation was felt to be perfectly acceptable in the case of Ofcom where the appointees are not merely the directors of Ofcom but are also its very members.
However, I have a great deal of sympathy with the view of the noble Earl, Lord Northesk, and with that of my noble friend. I am willing to consider whether it might be possible to change the terminology used in the Bill.
§ The Earl of Northesk
I am grateful for the sympathy demonstrated by the Minister and by the noble Lord, Lord Borrie. I hope that the Government may come forward with an amendment between now and Report stage. In the meantime, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Baroness Anelay of St Johns moved Amendment No. 48:
Page 7. line 8, after second "time" insert "(but at least every three months)
§ The noble Baroness said: In moving this amendment, with the leave of the Committee I shall speak also to Amendment No 64, which is grouped with it.
§ The amendments raise the question of what happens when the Secretary of State makes appointments to Ofcom—as we understand will happen in a year or so—and those appointees have a financial interest relevant to the communications industry.
§ Paragraph 1 of the schedule relates to the qualification for membership of non-staff members. When the Secretary of State appoints such members, she is required by sub-paragraph (1) to ensure that they have no financial or other interest which is likely to affect in a prejudicial manner the way in which they carry out their functions.
§ It therefore appears that the members are allowed to have financial interests in the communications sector, but that those interests must not be prejudicial ones. How do the Government define what is to be considered "prejudicial"? Could an interest be prejudicial at one point in Ofcom's life but not at another?
§ I hope that the Government can today clear up some confusion about their position on this point. The confusion was compounded by statements during our debate on the first day in Committee on Amendment No. 4. The noble Viscount, Lord Falkland, argued (at col. 1214) that the members of the Ofcom board should have no financial interest in the communications sector.
§ In his reply, the noble Lord, Lord McIntosh, appeared to reassure the noble Viscount (at col. 1216) that his point was fully met by paragraph 1 of the schedule. But surely that is not quite the case. Is it not true that the Bill as drafted allows a member of Ofcom to have a financial interest in the communications 156 sector, just so long as it does not affect his or her judgment prejudicially—otherwise, what would be the point of the provisions in paragraphs 16 and 18?
§ Paragraph 1(2) of the schedule places a further duty on the Secretary of state; namely, that once she has made the appointment she will review the matter "from time to time" to ensure that the appointed members have not obtained such a financial or other interest subsequent to their appointment.
§ Amendment No. 48 asks the Government to place on record what they mean by the phrase "from time to time". As it stands, the definition seems far too woolly. We need to be reassured not only that there is regular scrutiny of such matters, but that it is clear to everyone at what intervals that scrutiny will take place. I believe that "every three months" would be a reasonable period for checking that all is well, and I use it as a probing measure to elicit the Government's intent.
§ In order for the Minister to respond to the amendment, it is important for the Government to place on record how they will define a financial interest. Are we talking about shares in a company? If so, would they be shares held by that member, by someone in his or her family, or by one of his or her friends? Is it a matter of the operation of a blind trust being acceptable, or not? Does the definition include employment by a company involved in the communications sector, whether directly or because it is a supplier?
§ Amendment No. 64 would introduce a requirement for Ofcom to include in its annual report a register of the financial interests of all non-staff members of Ofcom—I look forward to seeing whether we may get away from the term "non-staff member". Such an amendment to the Bill would be appropriate where a significant economic decision had to be made by Ofcom.
The standard code of practice for board members of public bodies requires that their internal regulations should make provision for the keeping of a register of interests appropriate to the body's activities. The code goes on to state:
Public bodies should make registers of interests open to the public. They should ensure that details of how access can be obtained or available widely and include such details in annual reports. It will often be appropriate to publish registers of interests annually. Board members should in any case be required to update them as changes occur".
§ In the case of a regulator with such a potentially far-reaching remit, it is reasonable for the communications industry and the public to have a facility to find out with ease the relative interests of the parties making decisions pertinent to the supervision of their affairs—hence the suggestion that the keeping of a register of interests should be a statutory requirement, rather than it being imposed by the rather more nebulous means of a departmental decree. That, again, would be consistent with the promises made in the White Paper that Ofcom would be open in the conduct of its affairs.157
§ The Government tell us that the model soon to be adopted in this House for the declaration of interests is "light touch". If that is the case, will the Government undertake to ensure that the same "light touch" is applied to Ofcom? If not, why not? I beg to move.
§ Baroness Blackstone
Under paragraph 1 of the schedule, the Secretary of State is required from time to time to satisfy herself that the chairman and non-staff members—perhaps to be termed "non-executive" members—of Ofcom have acquired no financial or other interests likely to conflict with their functions. This provision is, of course, important to enable the Secretary of State to ensure the continuing probity of members of the board whom she has appointed. From everything that the noble Baroness, Lady Anelay, has said, it is clear that that is understood by the Opposition.
However, I suggest that it would be onerous on all concerned to require that this should be done every three months, as suggested in the amendment. We all want to avoid unnecessary bureaucracy. The amendment would involve a great deal of irritation and unnecessary bureaucracy and a waste of time and effort.
The important thing is to ensure that the chairman and non-executive members understand fully that they should not have any such conflicting interests and to allow the Secretary of State the discretion to satisfy herself periodically that no such interests exist. It would be wrong to set down in stone exactly how often the Secretary of State needs to be asking questions of this kind. Again, it would involve unnecessary bureaucracy. It is a matter of sensible good practice that we should leave this open to the Secretary of State's discretion.
We have some sympathy for the general principle underlying Amendment No. 64. However a requirement that all financial interests of non-executive members of Ofcom should be registered and made publicly available as part of the annual report would be too burdensome. It would not be necessary in order to establish the principles of probity that I have mentioned.
The noble Baroness asked for a definition of a "financial interest". Clearly, it involves anything with a financial element, including shares. The expression in the Bill is "financial or other interest". It is wide enough to include a variety of indirect interests, such as the financial interest of a close family member, and non-financial interests such as membership of a public interest organisation. I believe that the schedule is already full, by the standards of these matters, in setting out what is intended here.
At present the Independent Television Commission and the Radio Authority, which have similar status as statutory corporations as will Ofcom, have drawn up codes of practice for members of their boards along the lines of that provided in guidance produced by the Cabinet Office for board members of public bodies. In the case of the ITC, the relevant interests of board 158 members are made available on its websites and any person unable to access the information in that form is able to ask to view it by another means.
This is simply a matter of good governance. We would expect Ofcom to adopt a similar practice to ensure that it introduces the most appropriate measures for registering the relevant interests of its board members. We agreed during Committee last week to consider Amendment No. 24 of the noble Baroness regarding inserting a reference to the generally accepted principles of good governance. I certainly would be prepared to consider this amendment also in that context.
§ 4.30 p.m.
§ Lord Dubs
I follow what my noble friend said but I go even further. Is it not proper—I do not suggest this should be included on the face of the Bill—that anyone appointed to Ofcom or a similar body should have the duty to inform the chief executive and, through him or her, the Secretary of State of any change in their interests which might be prejudicial to their continuing membership? In other words, should not that happen automatically as part of the process rather than by adding an amendment to that effect to the Bill?
§ Baroness Blackstone
That is part of the good governance to which I referred. The schedule also makes clear that that is what would be expected.
§ Baroness Anelay of St Johns
I am grateful to the Minister for her reply and particularly for her comments on Amendment No. 64. The noble Lord, Lord Dubs, rightly says that it should be a matter of good practice for members of Ofcom to be open, honest and transparent in their dealings and to notify their chief executive or chairman of the changes that we discussed. I seek to establish the duty of the Secretary of State in monitoring the financial interests of members.
I am simply trying to tease out from the Minister the meaning of the woolly phrase, "from time to time". I was interested to note that she considers a three monthly check might be irritating and that it is reasonable to have a periodical check. I do not seem to have teased out any more precise term than "periodically" or "from time to time". I was intrigued to hear that the Government may reconsider Amendment No. 64 but that a register of financial interests which is considered a "light touch" in this Chamber is considered burdensome for Ofcom. However, I shall read carefully what the noble Baroness said. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Baroness Anelay of St Johns moved Amendment No. 49:
Page 7, line 27, at end insert—
( ) The Secretary of State shall publish the guidelines which shall govern the appointment of members to OFCOM.
§ The noble Baroness said: In moving Amendment No. 49, I wish to speak also to Amendment No. 50 with which it is grouped.159
§ Since the middle of September I have met many members of the industry and consumer groups, as, no doubt, have other Members of the Committee. There is one matter on which they all agree without reservation; namely, that there should be an open and consistent approach to appointments to Ofcom and that it should be based on the principles that emerged from the work of the Nolan committee with regard to public appointments.
At Second Reading the Minister said:
We will, of course, follow the full public appointments procedures in making the appointments".—[Official Report, 15/ 10/01; col. 353.]
However, at the moment that is not clear from the way in which the Bill is drafted. This is a probing amendment which asks why the Secretary of State should not publish guidelines which will govern the way in which she makes appointments to Ofcom. I consider that that is simply good practice on the part of the Secretary of State. After all, the members of Ofcom will be powerful and influential people. Without the transparency of guidelines there may not be appropriate confidence in the operation of Ofcom.
§ Amendment No. 50 addresses the issue of tenure of office. How long can someone serve? The amendment concerns the appointment of non-staff members (the non-executive directors) and the chairman. The Government propose in the Bill that there should be no time limit on tenure of office and prefer to appoint the chairman and other non-staff members for a period determined by the Secretary of State at the time of appointing the member. In theory at least—although I am confident that the Government do not intend this—a chairman or a member could be appointed for life. The amendment proposes that members, including the chairman, should be appointed for a term of five years in line with the current practice of appointing existing regulators.
§ My amendment stipulates that the maximum term a person can be a member is 10 years overall or two terms of five years with a break in between. That would allow a person the option of being a member for five years and then pursuing other interests elsewhere before coming back a few years later, if that was appropriate, to be reappointed for a second term of five years. This simple amendment reflects good practice.
§ With the leave of the Committee I speak to two other amendments which are now grouped with Amendment No. 49 although they were not so grouped on the first day of the Committee stage. In so doing I hope to save the Committee's time.
§ Amendments Nos. 51 and 52 raise questions about what happens if things go wrong with the appointments made by the Secretary of State for reasons that the Secretary of State could not have foreseen. She will have taken all proper care that the persons appointed are absolutely appropriate but something may still go wrong. Amendment No. 51 requires the Secretary of State to remove a person from office in specified circumstances rather than allowing her—as the Bill does—the discretion of taking action if she sees fit to do so.160
§ The circumstances in which someone can he removed from office are listed in paragraph 2(4) of the schedule. For example, someone may be removed if he or she is an undischarged bankrupt, has had his or her estate sequestrated without being discharged. has a financial or other interest that is likely to affect prejudicially the carrying out by them of their functions as a member of Ofcom, has been guilty of a misdemeanour, is otherwise incapable of carrying out the functions of a member or is unfit to do so. Will the Minister explain why a person who falls into any or all of those categories and is judged by the Secretary of State as unfit to serve may continue as a member of Ofcom? It is rather odd that someone whom the Secretary of State believes is unfit to serve may be allowed to continue in office. Why should the Secretary of State have discretion in that regard? Surely such a situation will destroy people's confidence in the organisation.
§ I turn to Amendment No. 52. The Government propose to give powers to the Secretary of State to force the Ofcom board to pay compensation in the event of the chairman or members of Ofcom resigning or being sacked by the Secretary of State. There is no indication in the Bill of what "special circumstances" would warrant the Secretary of State to direct that Ofcom pay compensation. What are those "special circumstances" likely to be?
§ Questions of compensation can normally be pursued through legal remedies available in the courts. Why have the Government decided to provide this alternative route to compensation in the circumstances listed in paragraph 3(3) of the schedule? Subparagraph (3) states that the Secretary of State would determine the amount of compensation, but how would it be determined? What are the limits? Is there a cap? How would it be paid? What would happen if Ofcom refused to pay? I beg to move.
§ Lord Borrie
I want to address the tenure of office of the chairman and, I think—I am not quite sure of the intention behind Amendment No. 50—the non-executive directors rather than the staff directors of Ofcom. The Bill currently leaves the issue to the terms of appointment that are agreed. One of the concerns that I flagged up on Second Reading was the substantial need for Ofcom, like other regulatory bodies, to be independent of the Secretary of State— or the Secretaries of State in this case—so that the public can see that it is not likely to be readily leaned on by Ministers. As with High Court judges and many other people, security of tenure is often one way of achieving that.
I have not looked into this thoroughly, but there are precedents for the Government's proposals and for what the noble Baroness, Lady Anelay, has put forward. The Financial Services and Markets Act 2000 and the Utilities Act 2000, which set up the Gas and Electricity Markets Authority, both contained similar wording to that in the Bill, leaving it to the terms of appointment. On the other hand, under the Competition Act 1998, the Competition Commission 161 has a provision for the chairman—and, I think, the other members, although I am not sure—to be appointed for a five-year term.
I am not sure whether I am right, but sometimes a phrase such as "not more than five years" is interpreted as a norm of appointment, resulting in appointments of five years and not less. I have already expressed my concern to ensure the independence of the chairman and other non-executive members of Ofcom. It is therefore important to me that the specified term of office should be a minimum as much as a maximum. In the case of the amendment, five years would be the outside limit of the first appointment, but there would be possibilities of further appointments beyond that to a maximum of 10 years. I am interested in establishing a minimum. I am happy if "for not more than 10 years" is interpreted as a normal term of five years, because that would give the chairman time to learn the job and settle in before starting to worry about whether he was going to be reappointed, should he so wish, which might lead him to be more cautious in his attitude to Ministers, who would determine the reappointment.
For the reasons that I have mentioned, I am a little anxious about the lack of a minimum or a norm of five years in the Bill. I think that five years is a suitable norm and I would be glad to hear the Government's response to the debate.
§ Lord Thomson of Monifieth
I support what the noble Lord, Lord Borrie, has said. The independence of the chairman and non-executive directors of Ofcom from ministerial pressure, certainly on broadcasting matters, which are central to the running of a free and civil society, is of great importance. In my time as chairman of one of the broadcasting regulatory authorities I had my disputes with Ministers and found it a great protection to have a fixed term established in advance.
§ Baroness Howe of Idlicote
I shall speak on the opposite lines to the noble Lords, Lord Borrie and Lord Thomson, and support the noble Baroness, Lady Anelay. In my experience, if we are looking for independence and a turnover of people who do not get agency captured, it is important to have a limited period so that fresh and equally relevant blood can come in and be equally independent when dealing with Ministers.
I also draw on the experience of company boards over time. There has been a clear move towards shorter periods of appointment. The Cadbury report was in favour of quite short periods. Some boards may have argued for up to 10 years, but not many of them have more than three or four years in the first instance. On those grounds alone, I support Amendment No. 50.
§ 4.45 p.m.
§ Lord Gordon of Strathblane
I shall intervene very briefly. It looks as though we shall spend longer on these amendments than on many of the others that might have caused controversy.
162 I agree that it is politically correct to have rapid turnover of non-executive directors. It is all the fashion at the moment, but I think that it is entirely wrong. I hope that the Government will stick to their guns, because the danger is that too rapid a turnover of chairman and non-executive directors will strengthen the hand of the executive beyond what might be proper.
§ Baroness Blackstone
As was said in Committee last week, the Secretary of State will appoint the chairman and other non-executive members of Ofcom. The appointments will be made in line with the code of practice of the Office of the Commissioner for Public Appointments. The code of practice is already widely publicly available, so there is no reason to issue separate guidance for appointments made to Ofcom. I think that I said that on Second Reading.
Amendment No. 50 relates to the tenure of office for members of Ofcom. It is important at the outset to remember that the membership of Ofcom will be comprised on the one hand of the chairman and other non-executive members and on the other of employees of Ofcom, including the chief executive.
The chairman and other non-executive members will be public appointments. As I have said, their tenure in office will be governed by the code of practice issued by the OCPA, which stipulates that terms of appointment should be made for between three and five years and that normally terms of appointment and any reappointments should not total more than 10 years.
I have sympathy with the views put forward by the noble Baroness, Lady Howe, and by the noble Lords, Lord Borrie and Lord Thomson, on the importance of having fresh blood and of reasonable turnover, but equally I am sympathetic with what the noble Baroness, Lady Anelay, said when moving the amendment and with my noble friend Lord Gordon. Too rapid a turnover means insufficient continuity and accumulation of experience among the non-executives. This is a good example of needing a sensible happy medium. People should not be appointed for years and years, but neither should we have a constant merry-go-round, with non-execs being replaced all the time.
Paragraph 2 of the schedule provides the Secretary of State with flexibility in appointing the chairman and non-exec members of Ofcom to allow for operational requirements, while keeping within the provisions of the code that I have mentioned. For example, I am sure that noble Lords are aware that initial appointments to bodies are sometimes made to cover different lengths of time to avoid the appointments all ceasing on the same date. Some non-execs might be appointed for three years, others for four and others for five. It is important to maintain that flexibility.
Employees of Ofcom who become members of the board—apart from the chief executive, who will automatically be a member—will be appointed under the terms and conditions determined by the chairman and other non-executives under the provisions in 163 paragraph 6 of the schedule, though it will be for the chairman and non-executives to decide how long the services of an employee who will become a member of Ofcom will be required.
I turn to Amendment No. 51. It is important that the Secretary of State retains discretion in deciding whether to remove the chairman or another non-executive member from Ofcom. Fairness would oblige the Secretary of State to consider the individual circumstances of any particular case. Again, I believe that we must allow for that flexibility. For example, there may he instances in which a non-executive member becomes incapacitated or unfit to carry out the functions of the office for a temporary period. That may be due to illness or due to the fact that the non-executive director had for a temporary period taken on another job which was in conflict with his remaining a member of Ofcom. However, the flexibility provided in the Bill would allow the Secretary of State the discretion not to remove the person automatically from office.
The main point must be that the Secretary of State should be able to consider whether the factor—whatever it might be—which leads to a person being removed from office disables the person from performing his duties. If it does not, the Secretary of State would have the discretion to retain that person's skills and expertise after, perhaps, a temporary break.
I turn to Amendment No. 52. The power for Ofcom to pay compensation should a person cease to be a chairman or non-executive member for any reason other than the expiry of his term of office is important. Some circumstances may be beyond the control of the individual concerned; for example, where, on reflection, there is a need to reduce the size of the board. In such a case, payment of compensation may be justified. However, payments would be made only where the Secretary of State considered there to be special circumstances which justified them.
Perhaps I should add that the Secretary of State herself has no power to force or direct Ofcom to pay compensation. Paragraph 3(3) states merely that the Secretary of State may decide what is an appropriate amount of compensation. Ofcom then decides whether or not to pay it.
I believe that I have covered the main points of the debate. However, a question was raised as to whether a person who was bankrupt or badly misbehaved should be removed from the board. The power as it stands would allow the Secretary of State to act in such circumstances where removal from the board would be the most appropriate form of action to take.
§ Baroness Anelay of St Johns
I am grateful to the noble Baroness for giving further explanation on these matters. I am also grateful to noble Lords who in particular addressed the issue of tenure of office. I certainly agree with the way in which the Minister summed up on that matter. In any organisation, however large or small, there is an inevitable tension between having people of experience and expertise who are able to exercise independence of judgment as 164 against having a sufficiently large turnover to bring in fresh blood and fresh minds. I shall certainly want to look at that matter between now and Report stage. I believe that it is a difficult area to cover.
I am grateful to the noble Baroness for what she said with regard to the discretion that should be exercised by the Secretary of State in removing persons from office. Perhaps I am encouraged that, throughout debate on this series of amendments, the noble Baroness referred entirely to non-executive members. I had hoped that the amendment in the name of my noble friend Lord Northesk would find proper favour with the Government.
I was a little concerned about one aspect of this issue. Perhaps I may discuss it with the noble Baroness not on this occasion but outwith the Committee. It relates to what might happen if a member of Ofcom took on a job, as I understood the Minister to say, for a temporary period which would disable him from being a member of Ofcom. At the moment, we understand that the Ofcom board is meant to be lean and mean in its operations. Therefore, I am a little concerned that the board should be considered to be able to afford to let one of its members go for any period. I should like to take up that matter with the noble Baroness between now and Report stage I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 50 to 52 not moved. ]
The Earl of Northesk moved Amendment No. 53:
Page 8, line 34, leave out sub-paragraph (1) and insert—
( ) The chairman and non-staff members of OFCOM shall, in consultation with the Secretary of State, appoint a person from their number to be the deputy chairman of OFCOM.".
§ The noble Earl said: In moving Amendment No. 53, by the Committee's leave I shall speak also to the other amendments in the group—Amendments Nos. 54, 55 and 56.
§ As the Bill stands, the Government propose that the Secretary of State is to appoint not only the chairman but also the deputy chairman. We believe that that proposition is intrusive to the independence of Ofcom and is antipathetic to the Government's insistence that their wish is to deliver "light-touch" regulation. Surely the appointment of a deputy chairman is a managerial decision best taken by the Ofcom board rather than by the intervention of the Secretary of State. Would not the Government be better advised to have some faith in their own construct and to permit Ofcom's board to make that appointment? That is the purpose of Amendment No. 53.
§ Amendment No. 54 follows the same line of reasoning. Once again, the Bill proposes that the role and functions of the deputy chairman should be at the behest of the Secretary of State or the Government's appointed chairman. But we believe that it should be up to fellow board members of Ofcom to provide the direction required. Our solution, embodied in the amendment, is that the terms and conditions of the deputy chairman be determined by Ofcom itself.165
§ In the same vein, Amendment No. 55 removes the power of the Secretary of State over the appointment of Ofcom's chief executive. If Ofcom is to be the truly independent regulator for the 21st century that the Government want, the implication that the Secretary of State should have to approve who is to be appointed as chief executive can only, in our view, undermine its independence. However, as an alternative in this context, consultation between the Ofcom board and the Secretary of State offers a shift of emphasis away from outright approval. That is the purpose of Amendment No. 56.
§ In conclusion, our aim in tabling these four amendments is simple. They are concerned with buttressing Ofcom's independence. I beg to move.
§ Baroness Blackstone
Amendments Nos. 53 and 54 relate to the appointment and functions of the deputy chairman. We believe that it is important that the Secretary of State has flexibility in determining whether or not to appoint a deputy chairman. At the early stages of Ofcom's development when the board will be small—perhaps with only three members—there is unlikely to be a real need to appoint a deputy chairman.
As the Secretary of State will be responsible for appointing the chairman of Ofcom and the deputy chairman will be responsible for carrying out the functions of the chairman in the absence of the latter, I believe that it is reasonable that the Secretary of State, should she decide to do so, should also be able to make the appointment of the deputy chairman. Similarly, as the deputy chairman will carry out the functions of the chairman, it is reasonable that the chairman and Secretary of State should be able to direct how those functions might be performed.
I turn to Amendments Nos. 55 and 56. It will, of course, be for the chairman and non-executive members of Ofcom to consider candidates for the post of chief executive and to reach a decision on the most suitable person. That is absolutely clear. However, when it is fully operational, Ofcom will be responsible for the collection of truly enormous sums of money. The amounts of revenue will be very large. As we have seen with the recent auction of spectrum for 3G licences, they can amount to billions of pounds. With that in mind, it is essential that the Secretary of State is assured that the chosen candidate is appropriate to carry out such an important stewardship role. Therefore, it would be proper for the Secretary of State to have a role beyond merely being consulted about the choice of candidate. She should be in a position to approve the choice made by the board. I expect that in almost all instances she will be able to approve such a choice.
§ Lord Dubs
I am most grateful to the noble Earl. I am sorry that I did not manage to stand up before the noble Earl rose. I wonder whether I may make a brief point concerning appointments. I am not happy about 166 Amendment No. 53. However, perhaps I may be permitted to put to my noble friend one aspect of practice concerning appointments, even though it stems only indirectly from these amendments.
The chair of a body such as Ofcom or many of the existing quangos is not normally involved in the Nolan process of selecting members of the board, whether deputy chairmen or others. Would not it be better practice for the Nolan-type panel—it consists of people entirely independent of the body—to have present the chairman of the quango to which an appointment is being considered in order that information can be given to the panel about the detailed requirements of the post other than what is on paper?
This argument may be totally out of order in terms of the amendments. I could argue that it is not. I leave the thought with my noble friend. I do not expect the Minister to comment on it now. It would reflect the good practice which occurs on occasions. I suggest that it should become the norm rather than the exception.
§ 5 p.m.
§ The Earl of Northesk
I am grateful for that intervention and the Minister's reply. We shall reflect on her reply. In the meantime, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 54 to 56 not moved. ]
Viscount Falkland moved Amendment No. 57:
Page 9, line 4, at end insert "and after gaining a vote of approval from a designated Select Committee of Parliament
§ The noble Viscount said: In moving the amendment, I speak also to Amendment No. 65.
§ The purpose of Amendment No. 57 is to assist Ofcom and to enhance the standing of Ofcom by making the appointment of the chief executive subject to the scrutiny of an appropriate Select Committee. "Appropriate" means the Select Committee with the most direct concerns in the work of Ofcom.
§ As drafted, the Bill allows for a check on the appointments procedures of the board of Ofcom by making the appointment subject to the approval of the Secretary of State. The amendment seeks to bring the elected representatives of the British public into the process so as to enhance the transparency and accountability of the process.
§ Any candidates intending to put themselves forward for the post would know in advance that their candidature would be subject to approval by a Select Committee. It is difficult to envisage any candidate who might be suitable for such an important post objecting to such a process.
§ The Committee will agree that a Select Committee represents, to a greater degree than the Secretary of State, cross-party views. Such a committee is in a position to stand back from the immediate political considerations underlying an appointment and seek to 167 engage the long-term public interest and the wishes of Parliament as expressed in the relevant legislation directly in the process of approval.
§ In the event of a vote of approval not being forthcoming, Ofcom would be free to reopen the process of advertisement and appointment. Knowing the concerns of the Select Committee, Ofcom would be in a better position to consider more carefully the criteria by which the final judgment of selection would be made.
§ For too long there has been a perception that appointments to the highest positions in such bodies, quangos, and so on, particularly in the area of broadcasting, have been made behind closed doors. The proposed amendment is not radical. It enhances the transparency and accountability of the process. It is on public faith in the transparency of the processes associated with Ofcom that its credibility will finally rest.
§ Amendment No. 65 deals with an extension of this philosophy. The purpose of the amendment is to strengthen scrutiny of important bodies such as Ofcom by the use of the Select Committee procedure. Again, it will be most appropriate for the Select Committee to perform that scrutiny. The Bill allows for the Secretary of State to receive and lay before Parliament the Ofcom report. It is surely a small step beyond that to allow the British public, through their representatives, a voice on the performance of Ofcom.
§ The public are those with the greatest interest in the success of the regulation. As such, they should have a viable route independent of Ofcom through which they can make known their concerns. A Select Committee would have the task of judging the report in the light of the express wishes of Parliament and of any current public concern about Ofcom. The committee would be able to invite suitable organisations and individuals outside Ofcom to comment on the report. The committee might also wish to offer points of guidance to Ofcom for consideration in its future activities. All of that would increase the degree of accountability and, ultimately, add to the credit of Ofcom in the eyes of the British public.
§ In the event of a Select Committee voting down a report—I hope an unlikely event—the sheer fact of such censure would be enough. It would be Ofcom's task to convince by action, persuasion and negotiation that it is operating in the correct manner. In time, constant disagreement between the Select Committee and the regulator would surely sound alarm bells, certainly in the press and to policy makers, and raise the question whether important changes were needed.
§ However one considers this new body, Ofcom will be an important super-regulator. We need to deal with this new situation, not with any radical departure from 168 current procedures, but with a thoughtful increase in the degree of public scrutiny of its activities; hence these two amendments. I beg to move.
§ Baroness Anelay of St Johns
It may be for the convenience of the Committee if I speak to Amendments Nos. 63 and 66 which are grouped with those of the noble Viscount.
Paragraph 12 requires Ofcom to prepare an annual report and send it to the Secretary of State. Subparagraph (1) gives Ofcom a lot of leeway in setting a deadline. Indeed, there is no deadline in sending the report to the Secretary of State. It is merely told to do so "as soon as possible" after the end of each financial year. That sounds very lax. How would the Secretary of State judge what time constitutes "as soon as possible". What factors would she take into account? How would anyone know what was expected to be "as soon as possible"?
If there are no clear guidelines about this, how can there be any sanction against Ofcom for the late production of its annual report? What sanction do the Government expect that there should be for late production?
Amendment No. 63 would ensure that Ofcom had to send the annual report to the Secretary of State within three months of the end of the financial year. I use that as a probing device to establish what good practice is intended to be in this instance.
The purpose of Amendment No. 66 is to require Ofcom to report annually to two committees in another place—the Public Accounts Committee and the Trade and Industry Select Committee. I tabled the amendment after listening to companies' experience of Oftel.
I understand that the director-general usually snakes an annual appearance before the Public Accounts Committee in another place. Although the brief of that committee is strictly financial—to ensure that Oftel is spending public money wisely—in practice, there are usually discussions about whether or not Oftel provides value for money by doing its job properly. That, however, seldom involves policy issues—it concentrates on detailed and frequently very local matters. It does not involve a thorough examination of what Oftel is doing, why it does what it does or how that relates to statutory responsibilities and current public policy objectives.
Oftel also appears before other parliamentary committees, the most significant of which is the Trade and Industry Select Committee in another place. That undertook a detailed review in 1994 of the policy on higher bandwidth services and it concluded that the local monopolies that are enjoyed by cable television companies should be ended.
It is important to consider whether scrutiny by Select Committees in another place has proved to be important and whether similar scrutiny should be applied to Ofcom's annual report.I therefore support Amendment No. 57, which was spoken to by the noble Viscount, Lord Falkland.
169 In relation to Amendments Nos. 57, 65 and 66, we should consider carefully the scrutiny role of Members of your Lordships' House; so many noble Lords have expertise in these areas. When Ofcom is up and running, what scrutiny do the Government believe this House should embark on?
§ Lord Dubs
I should have earlier declared an interest—I am chairman of the Broadcasting Standards Commission. I am sorry that I did not mention that during my first intervention.
On Amendment No. 57, I am in sympathy with what the noble Viscount, Lord Falkland, is seeking to do but I wonder whether he has the right target. If one is going down the path of allowing Select Committees to approve key public appointments, the chairman of Ofcom, not the chief executive, should be subject to that procedure because, as the Bill is currently drafted, the chief executive is accountable to the chairman and non-staff members. The chairman, not the chief executive, should therefore be subject to that form of approval.
I turn to the period during which annual reports have to be produced. I have on occasion been involved with that. The difficulty is often in getting the accounts audited. It is hard to get the end-of-year accounts done and to have them audited within three months, simply because money and accounts come in late. We might have a rather unsatisfactory annual report because the accounts would not have been properly audited and approved. It is for that reason rather than any other that bodies such as Ofcom will need more time.
§ Viscount Astor
The purpose of Amendment No. 66, which also appears under my name in the Marshalled List, is to draw the Committee's attention to the importance of parliamentary scrutiny. When the Minister replies, I am sure that she will say that it is up to whichever committee in another place to decide what it wishes and what it does not wish to scrutinise. However, that, in a way, is part of the problem.
We want to ensure that the Bill will place a duty on Ofcom to account for what it has done and intends to do. In effect, the Bill should say to Parliament that it must take notice of that and provide time for it. Otherwise, things tend to get lost. If that provision is not in the Bill, Parliament could decide whether or not to take such action. Ofcom will be an important part of industry and the amendments are therefore important.
I am sure that different approaches are possible but the Government should consider the principle that Ofcom will have to be accountable and that Parliament must in effect look into, and give its seal of approval to, what Ofcom has done during the year.
§ 5.15 p.m.
I want to speak against Amendment No. 57. There was logic in the suggestion of my noble friend Lord Dubs, who argued that the amendment was wrongly targeted and that the chairman rather than the chief executive should be the key figure. 170 However, I do not like the idea of a Select Committee having to approve either appointment. The noble Viscount quite fairly wants to extend the job of the Select Committee to other areas involving the scrutiny of Ofcom. The job of a Select Committee is to call before it the Minister, the chairman and chief executive of Ofcom and others and to examine them from time to time to establish what they are—and what they should be—doing. It should also cross-examine them.
However, it is wrong to mix that with the executive job of appointing the chief executive or the chairman, which implies at least partial responsibility for the appointment. In that situation, the Select Committee's job of scrutinising the work of Ofcom would be more difficult. At least some people—those who voted for the chairman or chief executive—would feel somewhat committed to what the chairman or chief executive was doing, and they would not, as it were, prove themselves wrong by agreeing to the appointment of Mr X or Mrs Y. The proposal mixes up the executive appointment role and the valuable scrutiny role, and the former would make the latter more difficult to achieve.
§ Lord McIntosh of Haringey
The noble Viscount, Lord Falkland, began by saying that his amendments were not radical; but they are very radical because they affect the whole relationship between government and Parliament. I—and, I am sure, other Members of the Committee—have been through that in relation to at least one other Bill during the past few years. During the passage of the Bank of England Bill a few years ago, there was strong pressure for members of the Monetary Policy Committee to be vetted and approved by the Treasury Select Committee. Some noble Lords will remember that debate. I responded then—and I respond to the proposal that is before us—by saying. with my noble friend Lord Borrie, that it is not for government to dictate what Select Committees of either House should do; it is for Parliament to make such decisions.
If we are going to go down the route of allowing advice and consent—of having, in effect, senatorial approval—to operate in relation to executive appointments, we should do so with our eyes open. That is a serious and constitutionally serious step. I do not suggest that it is necessarily wrong; I have a certain amount of sympathy with the proposal, although many of my colleagues in government do not share that view. However, we should not introduce the proposal in relation to a minor paving Bill such as this one without fully recognising the implications of what we are doing.
Apart from anything else, the system has not been working very well in the United States during the past year. After the events of 11th September, it turned out that a significant number of deputy under-secretaries in the Defense Department and the State Department had not been appointed because great delays were caused by the requirement of having congressional approval of the appointments. When a new Administration take over it can take months to obtain the relevant approvals. The example involving 171 congressional or parliamentary approval of executive appointments is not particularly attractive. If we are going to have that debate, we should do so in the open and in relation to a whole range of appointments; we should certainly not introduce it in a Bill of this kind.
That is all that I have to say on Amendment No. 57 and the appointment of the chief executive, other than to note that, if we were going to adopt the proposal, it would be rather odd to do so in relation to the chief executive but not in relation to the chairman. We take the appointment of a chief executive very seriously. The schedule states that it is for the chairman and non-executives to consider the matter and that the Secretary of State should have the opportunity to satisfy herself that the chief executive is the right person for the job; in other words, we require the approval of the Secretary of State. My noble friend Lady Blackstone made that point clearly in responding to the previous group of amendments.
On Amendment No. 63, my noble friend Lord Dubs has answered the point. Of course, the Bill is right in saying, "As soon as possible", but all sorts of things can happen, notably any delay in the audit of the accounts which would mean that three months is something of a straitjacket. If one accepts the assurance that it is in no one's interest, and it is certainly not good for the reputation of Ofcom, that there should be any delay, the amendment should not be pressed.
The arguments against Amendment No. 57 apply also to Amendment No. 65. Despite what the noble Viscount, Lord Falkland, said, if we were to add the words "for scrutiny and approval", we would need to have procedures for what would happen if there were no approval and if the report were to be rejected. If we do not believe that a rejection of the report is important, the provision is not necessary.
The same arguments apply with perhaps a little less force to Amendment No. 66. Of course, it is highly likely, and it seems virtually inevitable, that the Public Accounts Committee, the Trade and Industry Select Committee and possibly the Culture, Media and Sport Select Committee will want to quiz the chairman and the chief executive on their annual report, but it is not for the Government to tell them to do that. Parliamentary committees must determine their own programmes. I am not sure what is meant by "to give an account". Does that mean actually appearing before the Select Committee? It is highly likely that that will happen, but surely it is not for us to say what parliamentary committees should do.
§ Viscount Falkland
I thank the Minister for that full answer and I thank all noble Lords who have taken part in this interesting debate. I shall study in Hansard what has been said. I take on board the points made by the noble Lord, Lord Borrie. I can see the logic and the conflict that he points out. That had not occurred to me. I shall read carefully his remarks and those of the noble Lord, Lord Dubs. In the meantime, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.172
§ [Amendments Nos. 58 to 66 not moved. ]
Baroness Anelay of St Johns moved Amendment No. 67:
Page 11, line 27, at end insert—
§ "Annual meeting
§ 12A ( 1 ) No later than three months after making a report under paragraph 12, OFCOM must hold a public meeting ("the annual meeting") for the purpose of enabling that report to he considered.
§ (2) OFCOM must organise the annual meeting so as to allow—
- (a) a general discussion of the contents of the report which is being considered; and
- (b) a reasonable opportunity for those attending the meeting to put questions to OFCOM about the way in which it discharged, or failed to discharge, its functions under this Act during the period to which the report relates.
§ (3) But otherwise the annual meeting is to be organised and conducted in such a way as OFCOM considers appropriate.
§ (4) OFCOM must give reasonable notice of its annual meeting.
§ (5) That notice must—
- (a) give details of the time and place at which the meeting is to be held;
- (b) set out the proposed agenda for the meeting;
- (c) indicate the proposed duration of the meeting;
- (d) give details of OFCOM's arrangements for enabling persons to attend; and
- (e) be published by OFCOM in the way appearing to it to be most suitable for bringing the notice to the attention of the public.
§ (6) If OFCOM proposes to alter any of the arrangements which have been included in the notice given under sub-paragraph (4) it must—
- (a) give reasonable notice of the alteration; and
- (b) publish that notice in the way appearing to OFCOM to be best calculated to bring it to the attention of the public.
§ (7) Not later than one month after its annual meeting, OFCOM must publish a report of the proceedings of the meeting, detailing the action they intend to take as a result of any matters addressed at the meeting."
§ The noble Baroness said: Amendment No. 67 requires that Ofcom should hold an annual public meeting at which there could be a general discussion of the contents of the report that is being considered and a reasonable opportunity for those who attend the meeting to put questions to Ofcom about the way in which it has discharged, or failed to discharge, its functions during the period covered by the report.
The purpose of the amendment is to give both industry and the public a forum in which to provide feedback to Ofcom, during its formative, embryonic stage and subsequently as a fully-fledged regulator. This amendment is based on a similar provision— I say this quietly as the Minister is in his seat—to which the Financial Services Authority is subject. The Communications White Paper states as one of the main proposals at paragraph 6.1:
Taking full account of the differences between services and people's expectations of them, OFCOM will be responsible for maintaining content standards in the electronic media. It will develop Codes underpinned by statute for the most pervasive broadcast services, and work with industry to ensure effective co-and self-regulatory approaches to protection for other services, such as the Internet, where they are more appropriate".
§ So how will that interface occur? That is the point of this amendment. Part of the answer is provided in the White Paper which promises that Ofcom will establish a consumer panel to advise the regulator, the members of which will be independently appointed. As that is not dealt within the present Bill, presumably it will be addressed in the communications Bill. There is no reason why the general meeting proposed in my amendment should not fit comfortably within that system of feedback.
The White Paper also states at paragraph 8.5.3 that,
the regulatory practice of the new body should also be appropriately informed by the Better Regulation Task Force principles of transparency, accountability, proportionality, consistency and targeting".
The White Paper goes on to state that,
We will also particularly wish to ensure that OFCOM's work on content issues is organised so that it takes into account a wider variety of interests, including the interests of different parts of the UK, and reaches consensual judgement".
§ In the light of those points it must be difficult to say that it is not in Ofcom's interest to have from the outset some sort of public forum in which all-corners may be able to make their views known in relation to the manner in which Ofcom has already, or may in the future fulfil its functions. That must be consistent with principles of openness, transparency and good governance. That was clearly seen to be appropriate for the FSA, so perhaps there is no reason to suggest that the impact of Ofcom's work will be any less relevant, important or interesting to the public. Indeed, a general meeting of the type proposed will be vitally important to Ofcom to enable it to assess whether the feedback that it receives from its consumer panel is realistic and accurate.
§ I appreciate that the Government may claim that that sort of structure can be left for implementation by the communications Bill. However, I do not see why the proposed annual meeting is not more important—perhaps vitally important—while Ofcom goes through the process of advising itself upon its own creation. The public has a right to learn and to be involved in that stage too under a system of feedback to Ofcom. I beg to move.
§ Lord McIntosh of Haringey
The noble Baroness, Lady Anelay, certainly has me in her sights. She knows that I recognise her amendment from the Financial Services and Markets Act. Last year the Utilities Bill went through the House and no comparable provision for an annual meeting was put forward. I believe we have to be more flexible than the noble Baroness suggests.
If I were chairman of Ofcom—this is not an application for the job—I would want not just one annual meeting for the public, but quite a number. It appears to me that public interest in telecommunications and in broadcasting—not necessarily the same people and not necessarily at the same time—is such that public meetings of the kind suggested here for the financial services community would be entirely appropriate. I would be nervous that 174 public meetings of that sort may be hijacked by special interest pressure groups, whether they were concerned with taste and decency in broadcasting or whatever, but I still believe that one of the objectives of Ofcom should be to consult directly with the public and to secure public support.
I do not believe that that is comparable to the provision in the Bill as proposed here and as we have in the Financial Services and Markets Act. The financial services industry is coherent, with many different branches, and people recognise the relationships between one part of the industry and another. One can imagine a public meeting of the Financial Services Authority that would have some kind of coherence and some kind of consistency. I find it difficult to understand how that would happen in relation to a public meeting of the kind described here.
However, the Financial Services Authority does not come into operation until the end of this month, so we are a long way off any annual meeting of the kind proposed in the Financial Services and Markets Act. On the main communications Bill—possibly not the draft communications Bill because we will have had no experience of the FSA annual meeting, but a main communications Bill—I am prepared to consider whether that is an appropriate provision to put in the legislation rather than the more informal approach that I have described. However, I believe that it is inappropriate to include such a provision at this stage.
§ 5.30 p.m.
§ Lord Thomson of Monifieth
As the Minister implied, the amendment addresses a major problem, especially in the field of broadcasting and communications, of how to make people accountable to those who ultimately matter—viewers of and listeners to broadcasts, as well as consumers of telecommunications. After many years of wrestling—I hope positively and constructively—with that problem, I remain sceptical about what is the best answer. I certainly do not believe that the large and imaginative idea proposed in the amendment will be an answer. For one thing, speaking as an impenitent provincial, it represents an extraordinarily metropolitan view. I doubt that my fellow citizens in Dundee would feel that an annual meeting down in London in any way met their needs.
Accountability is an extremely difficult problem. It is important that Ofcom, like the present regulatory authorities, has a duty continually and seriously to sample and react to public opinion. Done scientifically and as well as possible, that is one of the better ways to ensure that the needs of listeners, viewers and consumers are reflected. There is also a need for physical meetings of one kind or another, but, with respect, the kind of annual meeting proposed in the amendment is not the answer.
§ Lord McIntosh of Haringey
I cannot resist that temptation. As a researcher all my life, I cannot let the noble Lord's praise of scientific assessment of public opinion pass without giving it my personal assent. I do not think that the noble Baroness, Lady Anelay, ever 175 thought that such a public meeting was to be the only way in which Ofcom should consult the people. It is clearly vital that it should consult the people continually as well as once a year; I am sure that she would agree with that.
§ Baroness Anelay of St Johns
I wholly agree with the Minister on that point. Like other Members of the Committee, my purpose in our debates is to find out how Ofcom may be properly accountable to both industry and public. I recognise that there is no one solution. As the noble Lord, Lord Thomson of Monifieth, pointed out, the problem is almost intractable but one that we are charged to resolve during discussion of the Bill and the ensuing communications Bill.
I am encouraged that the Minister sees it as proper that we return to the matter when discussing that communications Bill—or perhaps even a draft Bill. We will have to see what is the timetabling. The Minister referred to the fact that the FSA annual meeting system is about to begin; we may learn from that experience. If the draft Bill is published well after the FSA's first annual public meeting, we may be able to consider that experience in a joint scrutiny committee of both Houses of Parliament on the draft Bill.
I cannot sit down before referring to a point raised by the noble Lord, Lord Thomson of Monifieth. He commented on the danger of any organisation having a metropolitan view. One concern that has been raised throughout industry and by the public is that Ofcom may become a metropolitan body. It may not consider the needs of the industry outside Watford—to cite the place already mentioned. Perhaps, as I live south-west of London, in Woking, I should say, beyond Watford and Woking. I am sure that the Committee would want to ensure that the needs of the whole country were considered.
§ I listened carefully to what the Minister said, and I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 68 not moved. ]
Viscount Falkland moved Amendment No. 69:
Page 11 line 40, leave out "may make arrangements as they think fit" and insert "must make arrangements
§ The noble Viscount said: I rise to move Amendment No. 69, but I shall speak also to Amendment No. 70. Deep concern has been expressed in all parts of the Committee about how the Bill pre-empts debate on the communications Bill proper. The schedule as drafted does just that. The amendment would minimise the detail included in this paving Bill. As drafted, the words "as they think fit" on page 11, line 40, raise a question. If the functions of Ofcom are to be clearly laid out in the forthcoming communications Bill, why should the shadow Ofcom be allowed such discretion to decide the nature and function of its functional and advisory committees? Surely, it is incumbent on the Government to specify Ofcom's functions first and allow for a relevant committee structure rather than to allow Ofcom to develop functions by establishing committees as it sees fit.176
§ Any specific committees needed to advise Ofcom should be specified in the Bill—or, more importantly, in forthcoming legislation. The wording of the schedule goes well beyond that. The amendment simply urges Ofcom to act with caution. It would ensure that Ofcom appointed committees in line with what we and those in another place consider appropriate to its overall ends. As those ends have not yet been decided by Parliament we must ensure that Ofcom acts with maximum caution so as not to preempt parliamentary debate. The amendment therefore allows for the development of relevant committees, but ones that conform to the spirit and letter of current and forthcoming legislation.
§ I turn to Amendment No. 70. Ofcom is being set up to regulate vast areas of the media environment. It is a justifiable response to the reality of technological convergence. However, while technological convergence is real and there for all to see, the output and use of media product does not display signs of convergence to the same extent. There is hence a need, at least for the foreseeable future, for distinct areas within Ofcom with clear remits to supervise different sectors and to review and authorise work in those areas, subject to ratification by the Ofcom board.
§ Radio immediately springs to mind as an example. Producers will conceive different ways to market television product across various platforms, but they also take account of the different audiences for whom they are producing. They take into account viewing and demographic patterns, requirements of decency of content and appropriate viewing times. Those factors differ across different media. To cite radio again as an example, radio has a completely different set of relationships between producers and listeners from those applying to either television or Internet services. As users of media, I am sure that all Members kit' the Committee read newspapers, watch television and listen to radio, which provide us with different types of service. Unlike the technology, they have not yet converged—and, I suggest, are unlikely to do so in the foreseeable future.
§ The press are left out of the regulation of Ofcom. However, some may argue that in various areas there is little difference between the product of the press and other areas of the media. They would put forward a view with which none of us would disagree that they have a particular set of social relationships between themselves and the users of their output which would make such a form of regulation impossible.
§ Our amendment therefore recognises that fact of life. It allows for the distinctive needs of the different sectors to play a central role in the regulatory process. It also leaves separate sectors in Ofcom and allows for co-ordination in various areas. It allows for sectoral regulators to gain experience of working together, which will be the case for some time as Ofcom sets off on its regulatory duties. Where appropriate, it will put forward plans for more integrated forms of regulation in the future when the time is right. I beg to move.
§ Baroness Miller of Hendon
I intervene briefly on Amendment No. 70. While we agree that Ofcom will 177 of practical necessity be obliged to operate via a series of committees, we believe that that is not the proper, best and most effective procedure. We believe that the detailed recommendations relating to committees, as contained in the Towers Perrin report which, after all, was produced by the regulators which Ofcom replaces, would be more helpful when the final communications Bill comes into being.
§ 5.45 p.m.
§ Baroness Howe of Idlicote
I rise to speak to Amendment No. 70, proposed by the noble Viscount, Lord Falkland. I want to inquire how far it is likely to fulfil the objectives of the White Paper to which I referred in my maiden speech; namely, that people should have,the right to complain directly to an independent body which is able to make and ensure the publication of adjudications",and that,the right to seek such redress will be retained as an important remedyfor those affected by a programme. I apologise for returning to the point, but it is one to which the draftsmen of the White Paper rightly attached importance.
The study of the debate so far makes me anxious that the need for independence in consideration of complaints risks being overlooked. Perhaps I may explain why. During debates on Amendments Nos. 14 and 15 on the first day in Committee, the noble Baroness, Lady Miller, and the noble Lord, Lord McIntosh, spoke of the need to secure harmonisation of amalgamated functions and of a need to safeguard the interests of citizens and consumers.
The interests of citizens and consumers are not always identical. As was pointed out, consumers certainly need assurance in respect of choice, price, quality of service and value for money. All those are properly matters for Ofcom. But citizens as individuals need separate consideration in relation to complaints. There above all, complaints require—if a hearing is to be fair—independent consideration.
That point was most clearly focused by the Minister, the noble Lord, Lord McIntosh, when he spoke of the existing group of regulators' resolve,to establish mechanisms to ensure that complaints are handled in order to avoid double jeopardy wherever possible".—[Official Report , 29/10/01; col. 1264.]I do not dissent from that principle. It has been confusing for citizen complainants to be able to receive conflicting verdicts not just from programme makers but also from the BBC/ITC on the one hand and the BSC on the other. Obviously, it is quite likely—if not always likely—that the programme makers will reject a citizen's complaint. But it is equally obviously desirable to have an independent adjudication of that complaint, and to have one adjudication rather than two.
Therefore, I do not object to avoidance of double jeopardy at the hands of two adjudicators, but it is vital to ensure—perhaps I may put it like this—the 178 continuance of at least single jeopardy! We must ensure the survival of one place where a citizen's complaint of unfairness or infringement of privacy is assured of independent consideration. I do not see how that can be assured without being guaranteed by a statutory structure.
A slightly different approach may be possible for taste and decency matters. The noble Baroness, Lady Blackstone, at col. 1271 of Hansard , foresaw tier one of the White Paper with exclusive responsibility for "overarching guidelines" on the portrayal of violence, sex and bad language. Those codes are now the responsibility of the Broadcasting Standards Commission.
Even so, there could be a case—not least when the broadcaster has not responded in "a timely manner"— for independent consideration of complaints under that head. But surely there is no doubt whatever of the need for independence in the consideration of complaints relating to fairness and privacy. That requires something other than a separate tier; it needs a distinct independent agency.
So what kind of body or bodies is/are going to be established to perform the functions in respect of complaints now performed by the BSC as regards taste and decency and fairness and privacy? And how, when and by whom is that body going to be established? Will it be by Ofcom—this Ofcom—or by some other body along the lines to be recommended, presumably, by this Ofcom?
Most important of all, how is the independence of the intended body to be secured? I would argue that independence is important for more than one reason; first, because it is, understandably enough, expressly promised in the White Paper, and, secondly, because it may well be important if the new structure when it emerges is to be compatible with the provisions of the Human Rights Act. I say that because the Human Rights Act certainly appears to be relevant in other fields where quasi-judicial figures are now required to be sufficiently detached from the interests in respect of which they have to give decisions.
Finally—I do not wish to weary the Committee by trying to cover the whole field—how is the legislation intended to result in the emergence of a body with the same necessary powers that are at present exercised by the BSC? The White Paper expressly recognises that such powers will continue to be necessary; for example, the power to require broadcasters to transmit a ruling given by the BSC. So, in whom will those powers be vested? By whom will they be vested and when? Will Ofcom have any power to confer, or continue, such powers?
I believe that in order for those questions to be fully and sensibly answered, it would be desirable for Ofcom to be given some kind of steer at this stage. It seems to me that that might best be done by accepting an amendment along the lines of Amendment No. 70. For that reason, I am disposed to support the amendment of the noble Viscount, Lord Falkland, that the existence of a committee specifically 179 concerned with the future of the functions currently exercised by the BSC would be the best way of getting the right answer to the questions I have posed.
§ Lord Roberts of Conwy
It is clear that under this part of the schedule Ofcom can establish executive and advisory committees. Perhaps this is the appropriate point to reiterate the concern I expressed on the first day of Committee about national and regional interests within the United Kingdom. Those national and regional interests will not be directly represented on the board. But Ofcom will need to have regard to them, hearing in mind what is said in the White Paper and what was said at Second Reading by the noble Lord, Lord McIntosh of Haringey.
The importance of national and regional aspects of television and broadcasting were today re-affirmed to me by an article in the Western Mail by the chairman of the Independent Television Commission, Sir Robin Biggam. I am delighted to see the noble Baroness, Lady Whitaker, in her place. I understand that the noble Baroness has just been appointed as his deputy.
In that article Sir Robin referred to a series of public consultations that the ITC undertook last year. Towards the end of the article he referred to the Government's new communications legislation, including the creation of a new regulator—Ofcom. He said that,this will necessitate looking at the ways in which the most valued aspects of public service broadcasting can be viably delivered.For our part, the ITC is thinking hard about how to ensure that viewers get the best quality and range of television and how to secure for the future the things they most value about ITV.We know from our public consultations that these include high levels of original UK material, strong and popular drama, accessible and authoritative news, and regional news and other programmes reflecting the relevant nation or region.The ITC wants to ensure that investment in UK production remains strong and that a good proportion of that is spent and based outside London".I share totally Sir Robin's views. I am delighted that he has expressed them so clearly. It means that my own television experience, which goes back to the 1950s and 1960s, is not totally out of date.
Of course I am particularly interested in Wales. There we have the unique phenomenon of S4C. As I understand it, S4C's Welsh language output is supervised by the S4C authority. I can understand the Government's reluctance to change that. The programmes are drawn from BBC, HTV and independent producers.
The S4C English language programmes are drawn from Channel 4 and are subject to the same regulation as that channel. I imagine that its advertising, which is predominantly in English—although I am delighted to say that they do advertise in Welsh for Aspro and Aspirin from time to time—is similarly regulated. S4C also has two digital channels which broadcast Welsh language programmes and National Assembly proceedings. So clearly there will need to be liaison and co-operation between the S4C authority and Ofcom. I cannot imagine that that will be difficult as they are both statutory bodies.
180 With regard to the amendments, my sympathy is with the freedom that the Government are trying to give to Ofcom, in that they simply say that theymay make arrangements as they think fit".With Ofcom not yet in existence and with the detail of its work not yet worked out, Ofcom deserves all the freedom that it can get in establishing these executive and advisory committees. I very much hope that such committees will take into account the needs of national and regional broadcasting in the United Kingdom. It would be an indication of the Government's support for the regions and the nation of the United Kingdom if they gave some further indication of that in the Bill, particularly as we are to have a White Paper tomorrow which will indicate how there will be regional representation in your Lordships' House.
§ Lord Crickhowell
Despite the fact that Sir Robin Biggam, in the admirable article to which my noble friend referred, praised the company of which I am chairman and about which I have already declared an interest, I must say that I thought that both my noble friend and the noble Baroness, Lady Howe of Idlicote, took us down a road which the Government might be justified in saying was for a later Bill. But that perhaps bears out the difficulty that we have about the Bill, which is that we are dealing with legislation that covers functions which the Government have not yet defined and policies which the Government have not yet decided. Therefore, to that extent at least, I sympathise with the noble Viscount, Lord Falkland, because he is really making that point.
I hope that the noble Viscount will not press the amendments as they seem to be almost bizarre. Surely the board of any organisation should have freedom to establish such committees as it needs. Even on the most practical measure, anyone who has sat on a board of any organisation or company will know that there are moments when it is necessary to set up a small committee to see that documents are signed by a given date when it is impossible to get the whole board together. There are a great many practical situations like that with which a board has to deal. Surely to goodness, when we are dealing with radical structural changes that are taking place, both in the regulatory regime and in the industries that they regulate, the new organisation would be wise to take advice and to set up advisory committees. To inhibit that freedom would be a great mistake. Therefore, like my noble friend Lord Roberts of Conwy, I shall support the Government on this occasion if they resist these amendments.
§ Lord Dubs
I agree very much with what the noble Lord has just said. Of course this is essentially a matter for the communications Bill. But even if we were discussing that Bill, I doubt very much whether it would be proper for the Bill to go into such detail about the committee structure to be followed.
There is also a fundamental misunderstanding in Amendment No. 70. It refers to,the separate subject areas of the existing regulators".181 The whole point is that the regulators' subject matter overlaps, one to the other. In some respects there is much double or treble jeopardy from the broadcasters' point of view because the regulators overlap in their functions. Therefore, to suggest that one can separate the subject areas reflects a misunderstanding of how the regulators operate. That is even more the case as the presumption in the communications Bill is that there will be a convergence, and the more convergence there is in telecommunications and broadcasting, the less can one talk about separate subject areas.
§ Lord McIntosh of Haringey
Far be it for me to be so foolhardy as to swim against the tide of committees. After all, we are in a committee now, although not a committee that many other committees would recognise. If there is one thing that the 20th century has left us as an inheritance, it is the spawning at frogspawn speed of committees. Of course Ofcom will have to work through committees. There cannot be any doubt about that.
Ofcom, as set out in the Bill, has only one purpose—to prepare for regulation when it is given regulatory powers by the substantive Bill. In that context, we can only debate the kind of committees that Ofcom might need to establish. To begin with, Ofcom might want committees to deal with pay, information technology and accommodation. It might want to start thinking about spectrum issues in advance of the decisions that it or the Government will have to take. Those committees may be temporary or permanent but they should not be required on the face of the Bill. That is the trivial answer to Amendment No. 69 but it is true.
This debate has produced some valuable contributions but mine has to be the "dusty answer" to those "hot for certainties"—for those who remember their Meredith—that we must wait to see what the draft Bill states, then debate it in Parliament when we consider the main Bill. I say that with particular regret because the noble Baroness, Lady Howe of Idlicote, made a particularly penetrating contribution—perhaps freed from the constraints of her maiden speech. I agreed with so much that she said about citizens and consumers not being identical and about the need for independence and authority in the panels or committees that will be examining the issues—which are not the same as each other—of standards, privacy, taste and decency. I commend the noble Baroness's remarks as a notable contribution to the debate that we will be having next year.
All that we say now—as we did in the White Paper—is that there should be a consumer panel. I acknowledge that there will be more, as did Towers Perrin—which, in addition to proposing a committee structure for Ofcom, suggested a content board. That interesting idea will, again, be debated next year. All those issues are properly for consideration when we consider the main Bill. Meanwhile, even at the level of the amendment we should not dictate to Ofcom—certainly not that it should establish committees on the lines of the existing demarcations or boundaries between regulators.
§ 6 p.m.
§ Viscount Falkland
I thank all noble Lords who have taken part. I must reassure the noble Lord, Crickhowell, that I have no intention of pressing the amendment. I view the Committee stage of a paving Bill as an excellent opportunity to probe and open up subjects to debate. It has been a valuable discussion and, to echo the words of the noble Lord, Lord McIntosh, the speech of the noble Baroness, Lady Howe, will become required reading as we progress with the legislation proper. I dare say that we shall hear the noble Baroness speak in detail on these subjects, which are central to the operation of the new regulatory body. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 70 not moved. ]
Baroness Miller of Hendon moved Amendment No. 71:
Page 12, line 2, at end insert
( ) The committees to be established under sub-paragraph (1)(a) may include—
§ The noble Baroness said: With Ofcom undertaking such wide-ranging and technically complex activities, it will wish to do so via a series of committees, with specialised committees to advise the main board. This is also a probing amendment, to identify what kind of committees could be appropriate. All those listed in the amendment, with the exception of the community media committee, were recommended in the Towers Perrin report to which the noble Lord, Lord McIntosh, referred a few moments ago.
§ The need for a community media committee is separately urged upon us in the briefing note from the Community Media Association that many members of the Committee have received. Although there might be a need for such a committee to represent the interests of the public, we do not go as far as the CMA proposal that the chairman of what it calls the citizenship panel must be appointed as a member of Ofcom. Neither do we seek, as does the CMA, to prescribe the membership of the community media committee. I suspect that that comes as a relief to the Minister. To do so would cause endless argument and possibly give rise to litigation by special interest groups—who might claim that they were wrongly excluded.
This little paving Bill tells us little about the nature of Ofcom's activities but one is clearly stated. Clause 2(1) states:
It shall be the function of OFCOM … to do such things as they consider appropriate for facilitating the implementation of … any relevant proposals about the regulation of communications.
§ The Government clearly envisage an organisation that will function via a series of committees. We agree. Nevertheless, the Government have not specifically prescribed those committees' formation. It is merely stated that Ofcom may make such arrangements as it thinks fit for performing any of its functions by committees established by Ofcom. While that is giving Ofcom power to delegate its duties to committees, they may also be advisory. Our amendment carries that process one logical step forward.
§ The amendment presents a list of suggested committees in accordance with Towers Perrin and the Community Media Association. Ofcom does not have to create all or any of the committees in the amendment. Neither is that list final. There is nothing to prevent Ofcom creating further or different committees. On previous occasions, the Government have often complained about entirely logical amendments to other Bills as being too prescriptive. Amendment No. 71 is far from prescriptive. Following the precedent set by the Government with this Bill, the amendment is merely permissive.
§ The Bill is short on substantive content and mainly offers the prospect of jam tomorrow. It devotes almost as many lines to the subject of winding up Ofcom as it does to specifying Ofcom's initial functions. It is entirely right that Parliament should put down a simple marker to indicate its will. I beg to move.
§ The Lord Bishop of Wakefield
This is a probing amendment. On Second Reading, the Minister helpfully emphasised that the traditional aspects of public service broadcasting would be maintained. The problem of defining particular committees is an indication that other committees could be added. I shall be grateful if the Minister will clarify how he sees the public service broadcasting role being supervised in detail. I appreciate that Ofcom as a whole has responsibility but I suspect that specific areas of public service broadcasting—to which I refer as the traditional areas—could benefit from committees to oversee them not just in an advisory capacity but in a rather more prescriptive group.
§ Lord McIntosh of Haringey
The noble Baroness, Lady Miller, presses me too hard. She may think that I will promise jam tomorrow; I am certainly not going to do that, let alone promise jam today. She will have to wait and see what kind of jam, if any, will be offered.
Of course the simple response to the amendment is that it is not appropriate for us to specify what committees should be established by Ofcom. The noble Baroness knows that. Indeed, she emphasised that she has put forward a probing amendment. However, I shall expand my remarks.
Her suggestions for committees are helpful; her proposal for a community media committee is also helpful. However, the amendment does not reflect what was reported by Towers Perrin. That report concerned the staff of Ofcom rather than the setting up of committees. Secondly, once one starts to consider committees such as those set out in the amendment, including in particular the community media 184 committee, it is necessary to consider all the associated issues as regards who should comprise the membership of the committees. Should members be drawn from the Ofcom staff? Should they be non-executive directors of Ofcom? Should they be co-opted outsiders? Should they be representative of outside bodies? All those variables would have to be considered by Ofcom. hut not in a paving Bill.
It is hardly necessary for me to appeal to the noble Baroness, Lady Miller, to withdraw the amendment because she has already made it clear that she will do so. However, I should like to add that discussion held in public of issues such as those raised by tabling the amendment is helpful and will aid our further consideration.
Perhaps I may respond to the points put to me by the right reverend Prelate. He asked who will be responsible for protecting public service broadcasting. I hope that he has not read the speech given last week by Mr Michael Jackson, chief executive of Channel 4. It was printed as a media lecture in the New Statesman . In it he explicitly rejected the whole concept of public service broadcasting. Perhaps the right reverend Prelate should read the article; he would find it challenging, shall I say. Ofcom will be responsible for delivering the policy set out in the framework of the Bill, but that will be for the main Bill rather than the paving legislation before us today.
§ Baroness Miller of Hendon
Earlier I told the Minister that this was a probing amendment and I confirm that I shall withdraw it. However, I am somewhat disappointed. Not only did the noble Lord say that he cannot promise jam tomorrow, he cannot even promise it for today. The fact that he could not promise jam today caused me to start and do a double-take.
I am grateful to the Minister for his response. Of course he is right; I sought to highlight the way in which things could develop. I am glad that the noble Lord was grateful to me for mentioning the committees as set out in the amendment. I beg leave to withdraw it.
§ Amendment, by leave, withdrawn.
§ 6.15 p.m.
Lord Corbett of Castle Vale moved Amendment No. 72:
Page 12, line 18, at end insert—
§ "Citizenship Panel
§ (1) OFCOM shall be required to establish and maintain a panel of persons to be known as "the Citizenship Panel".
§ (2) The purpose of the Citizenship Panel shall be to represent and promote, in respect of the function of OFCOM set out in section 2(1), the interests of United Kingdom citizens with regard to those services deemed essential for citizenship.
§ (3) The person elected by its members to chair the Citizenship Panel shall also be appointed as a member of OFCOM.
§ (4) OFCOM shall appoint to the Citizenship Pane such persons representing the interests of citizens as it considers appropriate in order to give a fair degree of representation to civil society."185
§ The noble Lord said: This amendment is about enabling citizens to speak for themselves. Too often that is done by others claiming to do so on their behalf.
§ Of course, those appointed as members of Ofcom are also citizens, but that is not why they will be there. They will apply and be appointed because they will bring to the organisation a particular range of experience and qualifications beyond and above that of the citizen.
I believe that we urgently need to listen, understand and respond to what citizens are trying to tell those of us in Parliament. The glib, easy and misleading verdict on the exceptionally low turnout at the general election held in June this year—noble Lords will recall that the turnover fell from 71 per cent to 59 per cent compared with 1997—is that it was due to apathy. But I do not think that it was only apathy. I agree with Professor Bob Worcester, the wise and respected chairman of the polling company MORI, who has argued that it more likely reflected disengagement rather than apathy. He said that interest in politics,
has remained remarkably stable over the past three decades".
The low turnout, he said, was the result of,
the lacklustre way the election was fought and in which the campaign was reported failed to give many of the public the stimulus they needed to turn out and vote".
§ I believe that we had better take note of those words as we debate how Ofcom is to be set up. Citizens must not be an afterthought, some optional bolt-on. We need to encourage, invite and make real citizen involvement. That can best be achieved by way of a citizenship panel, as suggested in the amendment. It has been proposed at the suggestion of Public Voice, a coalition of voluntary organisations that wants to make real the public service broadcasting commitments embraced by the Government.
§ What would such a panel do? It would supplement the work of the proposed consumer panel, which will be concerned primarily with service delivery. It would speak on behalf of citizens of the global information society on matters to do with content rather than with delivery. That content, primarily so far as broadcasting is concerned, is about information, education, knowledge and understanding. The distinction between service delivery and what is being delivered is what this amendment is all about.
§ But the citizenship panel would also be about something else: access to what is on offer and how any gaps in that access for some citizens could best be met. Earlier in the proceedings on the Bill we held a discussion on this point in the context of the changeover to digital broadcasting.
§ Few would argue with the need for a single regulator for telecoms and broadcasting, but I believe that it is vital for broadcasting properly to be recognised as being concerned with more than knobs and wires. Our broadcasting system has crucial social, cultural and democratic values that are totally distinct from the passive services delivered by telecoms. The citizenship 186 panel would ensure that the vital provision of such communications was monitored and, where necessary, improved.
§ Perhaps I may add that the citizenship panel would monitor the performance of public service broadcasters against their promises and would have a duty to research how the public and community groups react to their performance, and then report those findings to Ofcom, the Secretary of State and the broadcasters.
§ If my noble friend wants to tell me that all this will be addressed in the main Bill, I shall accept that, so long as he acknowledges and respects the need to empower the citizen in this communications revolution to ensure that all citizens are included. I beg to move.
§ The Earl of Sandwich
I support the amendment moved by the noble Lord, Lord Corbett, which follows on from his splendid maiden speech. At Second Reading I declared an interest through my connections with certain NGOs concerned with issues being raised by the paving Bill. The Minister may recall that at Second Reading I pointed out that there has been a significant fall in the television coverage of international affairs. Over the past decade, there has been a drop of the order of 42 per cent in the amount of non-news factual broadcasting on all channels.
Monitoring of the positive content of broadcasting is therefore a matter of public concern and serves as a powerful argument behind the proposal for a citizens' panel. The noble Baroness on the Front Bench knows—perhaps better than almost anyone else in the Government, given her previous responsibilities—that the idea of citizenship, including global citizenship, has gained enormously in educational terms. The proposal before the Committee, in the context of broadcasting, reflects a growing awareness of international affairs among the general public. That, of course, will be heightened by the recent events in America and the Middle East.
I turn now to the detail of the proposal. It is important to distinguish the citizens' panel from the proposal for a consumer panel as set out in the White Paper. Similar concerns have already been expressed by the noble Baroness, Lady Howe, and welcomed by the noble Lord, Lord McIntosh. A consumer panel would advise on service delivery and important consumer issues such as pricing and accessibility. It would not be able to embrace the broader issues of positive content requirements.
I know that the Government like to bring citizenship into many aspects of contemporary life, and that is to be welcomed. However, this sets out a specific proposal to address the content of broadcasting. The citizenship panel would spend most of its time analysing the performance of public service broadcasters with regard to tier 2 and tier 3 public service requirements. It would also provide a useful focus for government and regulators to define and provide information services which could be seen as essential for citizenship.
187 Unfortunately, although the Minister earlier mentioned the content board, the Towers Perrin report places positive content requirements alongside much more practical categories such as licence fees. I hope that, in his reply, the Minister will confirm that an emphasis on and interest in citizenship will eventually stand apart from consumer concerns, as sought by the noble Lord, Lord Corbett. It should be recognised as an interest in its own right, a point which Ofcom would be required to take on board.
§ Baroness Miller of Hendon
I regret to say that we oppose the amendment, which was tabled by the noble Lord, Lord Corbett. I remember very well his excellent Second Reading speech, as does the noble Earl, Lord Sandwich. I believe that it was his maiden speech. I dropped him a note to say what an excellent speech it was. I am, therefore, doubly upset to have to oppose the amendment.
I oppose the amendment on similar grounds to those on which I opposed the proposals made by the noble Viscount, Lord Falkland, and the noble Lord, Lord McNally, during our first day in Committee. Their suggestion was simply that, if Ofcom were to appoint members of a citizenship panel, and if such a panel were, in the words of the amendment,to give a fair degree of representation to civil society",its size would or could be absolutely enormous. What would happen with regard to those parts of civil society that, for whatever reason, Ofcom declined to include in the panel? I suspect that they will form a long queue at the law courts to litigate against their exclusion. What are the interests of United Kingdom citizens with regard to services that are deemed essential for citizenship? Indeed, what services are deemed essential for citizenship? The noble Earl, Lord Sandwich, mentioned serious global and international matters, but other people closer to home might ask whether the phrase means more or less football on television, or more or less soap operas or street telephone boxes. I could go further. The point is that one just does not know. Is it right that Ofcom should appoint its own pressure group, to the possible diminution of the credibility of genuine independent groups that already exist or that may form in future?
I accept that the amendment was tabled with every good intention by the noble Lord, Lord Corbett. I began these remarks by saying that we very much regretted that we could not support it. However, it is our view that it is too vague and too impractical to be considered as a useful addition to the Bill.
§ Lord McIntosh of Haringey
Like so much of the discussion that we have had in the past hour or so, this is another useful contribution to the debate that we must have next year. I do not know whether this will satisfy the noble Lord, Lord Corbett, but let me say that we made it clear in the White Paper that we wanted to safeguard the interests of citizen consumers. We recognise that those interests are not identical. People have interests as both citizens and consumers, and their interests must be expressed in both regards. We set out in the White Paper our proposals for 188 safeguarding the interests of citizens. Our proposals for strong public-sector broadcasting will ensure that high-quality services are available to all citizens. We recognise the need for a forum in which issues that are of crucial importance to society can be debated. Of course, that includes the international issues to which the noble Earl, Lord Sandwich, referred.
This point makes my dusty answer argument a little bit weaker, but it comes from the White Paper. We have already said that Ofcom will be able to commission independent research and establish bodies to reflect public interest in the content of communications services, as well as the independent consumer panel to advise the regulator.
I have perhaps gone further in expressing support for the thinking behind the amendment than I have in respect of some other amendments about which I have spoken, but I have done so because the communications White Paper is very positive about the issues that the noble Lord, Lord Corbett, has raised. They will be debated when we consider the draft and main Bills, but I hope that my answer will satisfy my noble friend that we have very much at heart the interests about which he is concerned.
§ Lord Corbett of Castle Vale
As I hope that your Lordships will understand, I was more taken with the speech of the noble Earl, Lord Sandwich, than with that of the noble Baroness, Lady Miller. None the less, I am grateful to her for the charming note that she sent to me after my maiden speech. If I may, I should like to make a comment to the noble Baroness on something that I read in the paper about what is happening down at the other end of the Corridor. Perhaps I paid to much attention to it. It said that the new leader of her party is all cuddly and open-minded. Apparently, he wants to stop saying "No" and to start saying "Yes", and to be terribly inclusive. So, I was a little taken aback with her dismissal of the amendment's importance.
I say to my noble friend the Minister that we have to get out of the habit—if this is what he implied when he said that Ofcom could commission research—of simply saying that people can speak when we speak to them and that when they are asked, we will listen. The gut of the amendment was the intention to go beyond that. We wanted people to be able to speak in their own right and to do so directly on things that affect their daily lives. That is what public broadcasting is all about.
I thank my noble friend the Minister because he has demonstrated that he has taken the sense of what the amendment is about. I shall accept that and take his word that these thoughts, like ones expressed earlier today, will be taken into account when we come to consider the main Bill and when that legislation is drafted. It is very important that that is done. I want to underline again that we must go out of our way to encourage citizens to speak and those of us here and elsewhere to demonstrate that we understand, listen 189 and respond. The more that we do that, the better it will be for our democracy. That said, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Baroness Anelay of St Johns moved Amendment No. 73:
Page 12, line 27, leave out "may" and insert "shall
§ The noble Baroness said: With the leave of the Committee, I should like also to speak to Amendment No. 74, which is grouped with this amendment. Both are simply probing amendments on issues of good practice with regard to the mechanics of Ofcom's decision making.
The schedule gives guidance, vague though it is, on the proceedings of Ofcom and its committees. We have had much discussion about why we cannot debate committees and what they do until the main communications Bill comes before us, but procedural issues that relate to committees are dealt with in the paving Bill that we are considering. Sub-paragraph 15(3) of the schedule states that Ofcom,
may include arrangements as to quorums and as to the making of decisions by a majority",
when it draws up its rules about its proceedings. My amendment would merely remove its discretion in this matter and require that, when it makes arrangements for regulating its own procedure and that of its committees, it must include arrangements about quorums and about the making of decisions by a majority.
§ I wonder what objection could be made to the amendment. Surely Ofcom could not operate under a procedure that gained the respect and confidence of the public if it did not have clear rules about the quorums and the making of decisions by a majority. As ever, it is also important to ensure that the quorum is set at a proper level. If it is too low, one risks allowing the board and committees to be controlled by a small clique. If it is too high, it becomes impossible to reach decisions because members may be absent or disqualified by reason of their declared interest.
Amendment No. 74 deals with the making of decisions by a majority. Its purpose is to prevent Ofcom instituting internal arrangements that enable its decisions to be made only by staff members. Subparagraph 15(3) of the schedule refers briefly to,
the making of decisions by a majority".
My amendment would simply add the proviso that no arrangements shall be made that,
enable the members of OFCOM to make a decision in the absence of at least one non-staff member".
The need for the amendment arises out of the balance between staff and non-staff members that is proposed in Clause 1. Clause 1(6)(b) requires the Secretary of State,
to secure that the number of staff members of OFCOM is, so far as practicable, at all times less than".
the number of non-staff members. The intention of the provision seems perfectly reasonable, as it seeks to
prevent staff members dominating decision-making by the regulator. However, that will provide no reassurance to the industry or the public if Ofcom can, in practice, institute arrangements that enable decisions of its full board to be made in the absence of non-staff members. All that the amendment would do is carry through into the schedule what appear to be the intentions of the main part of the Bill.
§ 6.30 p.m.
§ Lord McIntosh of Haringey
The noble Baroness, Lady Anelay, knows that the simple answer to Amendment No. 73 is that it goes into too much detail. I do not know of any legislation which specifies that there should be provision for quorums and reaching majority decisions. However, if it helps her, I shall undertake to send to the chair, when he or she is appointed, a copy of either Citrine's ABC of Chairmanship, as published from time to time by the Fabian Society, or Model Standing Orders for Constituency Labour Parties. I shall not commit myself as to which I shall send.
I was glad to have the noble Baroness's explanation of Amendment No. 74 because I read it as if all the non-staff members or non-executive directors had to be present. Certainly Ofcom may well wish to take seriously the suggestion that there should be at least one non-executive director present—which is not what the amendment states—but, of course, it should not appear on the face of the Bill.
§ Baroness Anelay of St Johns
I did say that these were straightforward amendments because such they are. The Minister replied—as he has done on previous amendments in Committee—that we are going into too much detail. The difficulty is that there is so little detail in the Bill that we are groping in the dark to find what on earth is this beast that we are being asked to set up and let loose upon the citizens of this country. I share, as does my noble friend Lady Miller, some of the concerns of the noble Lord, Lord Corbett, about how the beast will become accountable when it takes off and makes its own character even before it comes into fruition with the communications Bill.
I am tempted to make comments about whether Model Standing Orders for Constituency Labour Parties should be sent to Ofcom or any other body. Whether it will have the same record of obeying them as the Labour Party constituency committee is for someone else to comment on. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 74 to 76 not moved. ]
Baroness Anelay of St Johns moved Amendment No. 77:
Page 12, line 41, leave out from "interest" to end of line 3 on page 13.
§ The noble Baroness said: In moving Amendment No. 77, I shall speak also to Amendment No. 78. Both amendments address the question of what should happen when a member declares that he or she has a financial interest.
§ Amendment No. 77 is a probing amendment, the effect of which would be to prevent members of Ofcom or those exercising functions delegated to them by Ofcom from taking part in decisions in which they have an interest. At the moment, the drafting of the schedule to the Bill quite correctly recognises that members of Ofcom and members of its committees will, from time to time, find that they have an interest—whether personal, financial or fiduciary— that conflicts with their involvement with the functions of the regulator. This must be expected to occur on a fairly regular basis, given the wide brief that Ofcom will have.
§ Paragraph 16 currently proposes that if a person has such an interest, they can not only remain present but also take part in the decision in which they have a collateral interest, provided that everyone else there says that they can. Indeed, one can say "everyone else" so far as concerns members of Ofcom because paragraph 16(3)(a) refers to unanimity. The problem is that the same cannot be said of the committees of Ofcom, the members of which will simply be making the decision in accordance with their standing orders, which may or may not require unanimity. We simply do not know at this stage.
§ It is surprising that this proposal is regarded as good governance. The norm would be, surely, for the person subject to the conflict of interest to leave the room, unless the others required him or her to stay to assist with their discussions. The presumption would be that they should not be there. It takes self-regulation to new extremes to suggest that the members of Ofcom can decide among themselves whether or not a conflict of interest is sufficiently important to exclude someone from the decision-making process. It is vital that the public perception of the decision-making processes of Ofcom is that they are honest and transparent.
§ I was intrigued to note the report of a problem which has apparently arisen at BBC Worldwide. The Committee may have noted that it was reported in the Sunday Times on 28th October this year. Rupert Gavin, the chief executive of BBC Worldwide, chaired the meeting that approved the appointment of his associate, Dan Colman, to a contract to stage pop concerts starring the children's characters the Tweenies. I believe that the Tweenies is the BBC's most commercially successful show. The turnover for last year's concerts, also staged by Colman, was£5 million. The Sunday Times reports that his appointment for the second season of concerts was approved at a meeting of the BBC Worldwide's investment committee which Rupert Gavin chaired on 5th July 2000.192
The BBC has said that the process of awarding the Tweenies contracts was,
entirely above board, properly implemented and fully declared".
I am sure that was exactly the case. But the problem that this matter highlights is that even where a person who may influence the awarding of a contract does declare a relevant interest, it may be perceived by the public as wholly wrong that they should then continue to be present at and take part in a meeting which comes to a decision which could benefit a colleague, friend or relative of theirs. It is a matter of perception.
§ So, looking at this probing amendment, it would perform a useful function to determine in what circumstances someone should be allowed to remain present when matters are discussed from which they or their friends could benefit.
§ Turning to Amendment No. 78, paragraph 18(1)(d) of the schedule makes it possible for the proceedings of Ofcom to be valid even when the board or any of its committees breaches the rules set out in paragraphs 15 and 16 of the schedule. The rules in those two paragraphs are as follows: paragraph 15 sets out the rules covering procedure, including the rules about quorums and the making of decisions by a majority; paragraph 16 covers the rules about the declaration of interests and the requirement that members shall thereafter not take part in decision-making on matters where that interest has been declared.
§ These are serious matters. It seems extraordinary that there is provision in the Bill for members of Ofcom to break their own rules and yet still be permitted to go ahead with the decisions made in breach of those rules. That means in theory—I hope it would never happen in such a prestigious body—that a person who has a financial interest could take part in the making of a decision, and perhaps influence it to their own financial advantage, knowing that if they were found out the decision would still stand and the financial advantage which they had gained by breaking the rules would still be secure. That surely cannot be right. I hope that the Minister can reassure me that there is some way of preventing that happening. I cannot see it in the Bill at the moment.
§ As the Minister said earlier, huge sums could be involved in the decisions made by Ofcom—billions, perhaps, if analogue is sold off. So this is a very serious matter. People who take decisions at Ofcom should not only be seen as not benefiting from them. But if, by any remote chance, Ofcom broke its own rules and someone benefited because they had not declared an interest, then surely that Ofcom decision should not stand and thereby benefit that person for breaking the rules. I beg to move.
§ Baroness Blackstone
Amendment No. 77 relates to declarations of interest. Ofcom and its committees will, of course, need people who have experience gained in a whole variety of different fields. It is essential that people with particular skills, interests or experience are not automatically ruled out from participating in actions and decisions where that experience would be of great benefit. I am sure the 193 noble Baroness, Lady Anelay, would agree with that. Ofcom must, therefore, have the means of enabling people to declare their interests in matters which may be under discussion, but, in doing so, it should not necessarily rule them out from continuing to take part if other members of Ofcom or its committees decide that they should. For example, it might be the case that a member of a consumer body was appointed to one of Ofcom's committees. It would be unfortunate, to say the least, if that person were to be excluded from participating in matters relating to consumer interests by the fact of his or her connections with an organisation involved in those matters.
I entirely accept the important point made by the noble Baroness about public perception: that people should be clear, and should be reassured, that there are not serious conflicts of interest. But it must be left for the members of Ofcom and its committees to take a commonsense approach in these areas.
It would perhaps be open to Ofcom to require unanimity in making decisions about this for some or all of its committees. It may not always be necessary; however, the noble Baroness has raised an interesting point. Unanimity is required for Ofcom as a whole but we should perhaps look at it in the context of committees. Therefore, I am happy to consider the point.
Turning to Amendment No. 78, many of the arrangements that Ofcom might make for regulating its own procedures and those of its committees under paragraph 15 of the schedule could relate to matters of a fairly minor nature. For argument's sake, these arrangements might refer to the publication of 194 documents in Braille or in an ethnic minority language. While it might be administratively careless should that not happen, it would be invidious to suggest that Ofcom's proceedings should be invalidated because, perhaps due to an oversight, this did not take place.
Similarly, the requirements in paragraph 16 are entirely appropriate and sensible for ensuring that declarations of interest are made where they might exist. However, the fact that, for example—in relation to paragraph 16(6)(b)—a declaration that was made is not read out at a meeting, again, should not make the proceedings of Ofcom or one of its committees invalid.
§ Baroness Anelay of St Johns
I am grateful to the Minister for her response. Perhaps I may refer first to Amendment No. 78. I shall look carefully to see whether my amendments should possibly have been drawn in a different position and whether, given the way in which I have tabled them, they refer to matters of administrative oversight rather than decision-making.
Turning to Amendment No. 77, I am grateful to the Minister for saying that she might look again at the matters regarding unanimity as regards committees and how decision-making ought to be dealt with. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 78 and 79 not moved. ]
§ Schedule agreed to.
§ House resumed: Bill reported with amendments.
§ House adjourned at sixteen minutes before seven o'clock.