Lords Sitting of 22 November 2001

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Oxford): The LORD CHANCELLOR on the Woolsack.

Phonics
Baroness Brigstockeasked Her Majesty's Government:
In the light of the recent Ofsted paper on the teaching of phonics, what further action they will take to secure the proper teaching of phonics in primary schools and teacher training colleges.
The Parliamentary Under-Secretary of State, Department for Education and Skills (Baroness Ashton of Upholland): My Lords, Ofsted reported last month that the amount of phonics teaching had increased substantially since the implementation of the national literacy strategy in 1998. We have made excellent progress, but there is still much more to do. We are continuing to provide a comprehensive programme of training and support to teachers and to teacher trainers on phonics, which is critical to children's early literacy.
Baroness Brigstocke: My Lords, I thank the Minister for that Answer. I agree that a start has been made, but I hope that she agrees that many of the comments in the Ofsted report are still worrying. Does she have any plans for improving the teaching of phonics, which are acknowledged to help enormously with the learning of reading and writing, particularly for year 3—the eight and nine year-olds—where the inspectors found so many lessons to be less than satisfactory?
Baroness Ashton of Upholland: My Lords, the noble Baroness makes some excellent points. It is worth pointing out that in five out of six schools the teaching of phonics in years 1 and 2 was considered by Ofsted to be satisfactory, which I interpret to mean fine. The teaching of phonics is also good in the majority of reception classes. The noble Baroness pointed out that the teaching of phonics in years 3 and 4 is not so obvious. In a sense, that does not surprise us, because if a good grounding has been made, we do not expect every lesson to put the same emphasis on phonics as was the case when the children were younger. However, we have trained all reception and year I teachers in phonics and we continue to give teacher trainers professional development in phonics. We have endeavoured to spend good resources this year to ensure that that happens. Last year, we trained 38,000 primary teachers in phonics teaching.
Baroness Andrews: My Lords, given the tribute that the excellent Ofsted report, mentioned by the noble
1236
Baroness, paid to the role of phonics in the overall success of the national literacy strategy, which has raised the achievement of many thousands of children of all ages in primary schools, will the Minister take this opportunity to congratulate the teachers and classroom assistants who are working in such effective partnership to raise standards across the country?
Baroness Ashton of Upholland: My Lords, I am sure that, as my noble friend has said, the whole House will wish to congratulate teachers on the excellent work that they do and to pay full recognition to the role of classroom assistants, who play a fantastic part in the development of children's education. We have seen significant progress in reading, writing and spelling over the past four years. The number of seven year-olds achieving the expected level in reading has gone up from 80 to 84 per cent. In spelling, the figures have gone up from 62 to 75 per cent.
Baroness Sharp of Guildford: My Lords, does the Minister agree that there are as many factions in the teaching of reading as there are among the Northern Alliance? Does she also agree that different children learn to read in different ways? While it may be good to start off with a good grounding in phonics in the first two years in primary school, it is important for teachers to be aware of and trained in other methods of teaching reading so that they may respond to individual needs.
Baroness Ashton of Upholland: My Lords, I have no information about the factions in the Northern Alliance, but I understand the noble Baroness's point, which is a good one. That is why we put the emphasis on phonics teaching in reception and year 1, but we recognise that by years 3 and 4 teachers are diversifying their strategies. We believe that phonics provide a good grounding. The proof is in the results of those schools that put an emphasis on phonics in the early years. However, we have fantastic teachers and we recognise that they develop strategies that are appropriate to their classes and to individual children as they get older.
Baroness Gardner of Parkes: My Lords, will the Minister define phonics for us and tell us how they are used? I do not know exactly what she is talking about.
Baroness Ashton of Upholland: My Lords, I do not believe that I have the time to answer that question properly, but phonics are essentially about groups of sounds that are put together. My guess is that the noble Baroness was taught phonics, because the method has been used over the years, though it was felt to have been lost along the way in the teaching of children. It is about groups of sound coming together so that children recognise the sound and attempt to turn that into writing. It is a simple and basic way of exploring a language, but it is very important for small children, who get confidence in language as a result.
Baroness Walmsley: My Lords, does the Minister agree that the important thing is that the classes are

1237
taught by a fully qualified teacher who knows the children, and preferably not a supply teacher? Will she assure us that however many classroom assistants the Government employ, classes of that age will always be supervised by a fully qualified teacher, who is in a position to make a judgment between the different reading schemes available?
Baroness Ashton of Upholland: My Lords, it is very important that teachers teach. The purpose of classroom assistants is to support them in that role and to do some of the work that teachers unnecessarily do or feel that they have to do because they do not have enough support. Classroom assistants can work with groups of children under the supervision of a qualified teacher. That is applicable to all years. It is important that we enjoy a range of adults coming into our schools to support teachers. We must free teachers to teach.
Baroness Blatch: My Lords, does the noble Baroness accept that some of us never lost our support for the teaching of phonics? There was a movement in education that lasted throughout the 1960s and 1970s which decided that creativity was more important than phonics. I hope that the noble Baroness agrees that a great deal of damage was done to young people at that time. It is all very well to be creative, but unless children understand the fundamentals of reading and writing, creativity has no home.
Baroness Ashton of Upholland: My Lords, I agree with the noble Baroness that it is important to get a balance in education. We want children to be creative and to explore and express themselves, but the noble Baroness is right about the basics—hence the national literacy strategy.
The Earl of Listowel: My Lords, have the improvements among children whose first language is not English mirrored those among English-speaking children since the introduction of the literacy strategy?
Baroness Ashton of Upholland: My Lords, I cannot give exact figures. I understand that the pattern is varied, but with good teaching and good support, children for whom English is a second language are doing very well. However, that is not universal. As noble Lords are fully aware, there is more to do.

Foot and Mouth
3.8 p.m.
The Earl of Onslow The Earl of Onslow asked Her Majesty's Government:
Whether their decision not to give evidence to the Devon foot and mouth inquiry was influenced by the number of permanent staff at their Exeter office who have been suspended since August 2001.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty): My Lords, there is no connection whatsoever.
The Earl of Onslow: My Lords, is there a connection between trying to avoid answering questions on animal welfare, trying to avoid justifying the abuse of the Official Secrets Act with which farmers were threatened if they discussed their compensation payments, and trying to make sure that there is a barrier against the possibility of any public inquiry, which would see the Prime Minister being cross-examined for his sorry role in this whole disgusting saga?
Lord Whitty: My Lords, as I said the other day, I really am getting fed up with this. There is no doubt that I and my predecessors at this Dispatch Box have frequently answered every question that has been put to us on foot and mouth. We have done so in depth, in writing and orally. The same applies to my colleagues and their predecessors in another place. We are continuing to supply information to everyone who asks for it. We were dealing with an extremely fraught situation at the beginning of the disease in particular and there were problems of communication, which we have acknowledged. We have set up an independent inquiry which will be open and will look into all the facts. The noble Earl is welcome to contribute to that, but any further imputation in the House that the Government are trying to cover something up deserves the contempt of this House.
The Countess of Mar: My Lords, I have a letter in my hand dated 18th November 2001, purporting—I cannot believe that it really comes from DEFRA—to be from a lady called Hazel Harris of the Newcastle Disease Emergency Control Centre. That letter is being sent out to farmers who are in the early stages of the cull. It asks them to produce a day-by-day diary of what happens during the cleaning and disinfection period. Farmers are being asked fraudulently to produce a log in order that the United Kingdom Government may claim back from the European Union up to 60 per cent of the costs incurred as a result of foot and mouth disease. Is it the policy of Her Majesty's Government to perpetrate a fraud on EU funds?
Lord Whitty: My Lords, I am extremely surprised by that question from the noble Countess. Obviously I have not had sight of that letter. However, an EU audit investigation is examining, and rightly so, payments made in relation to the foot and mouth outbreak because the EU is required to repay the UK Government some of the money which went towards compensation. In order for the investigation to ensure that compensation was paid properly, it requires some facts. No doubt the letter is designed to ensure that it receives those facts. The EU Commission is carrying out a proper audit, which normally this House seeks and demands. I do not believe that there is anything improper in this whatsoever.
Baroness Hayman: My Lords, does my noble friend accept that he is not the only person to become slightly irritated by the quality of some of the comments made in your Lordships' House on this issue? Does he agree

1239
that, at times, it felt as though the public inquiry was going on during the outbreak and not after it? So far as I know, no former Minister has refused to give evidence to any inquiry; and, if one is not invited, it is rather difficult so to do.
Lord Whitty: My Lords, the House recognises the contribution made by my noble friend to the understanding of the epidemic during those extremely difficult early months. I underline the point that the imputation that previous Ministers and officials who dealt with this matter are in any way likely to refuse the inquiry's request to give information is both a calumny on them and an absurdity. We are all looking for the truth. We are all looking for ways in which we can deal with such a situation better in the future and at how we can learn the lessons of the outbreak. The continual regurgitation of rumours and innuendoes, which, I regret to say, some Members of this House go in for, does not help that quest for the truth.
Baroness Miller of Chilthorne Domer: My Lords, I regret that I must return to this issue. I want the Minister to explain why the reason given at the beginning for there being no public inquiry was that such an inquiry would take a long time. Yesterday, the noble Lord said that the independent inquiries will not report until the middle of next year. Therefore, the time from the inquiries being set up to their being due to report appears to be at least nine months. If that is so, I believe that the Minister would accept that there was enough time for there to have been a strictly time-limited public inquiry. Such an inquiry would have quelled all the innuendoes because it would have dispelled the rumours and extracted all the facts. Was the length of time an inquiry would have taken the only reason why we are not having one?
Lord Whitty: My Lords, we are having open and independent inquiries—one conducted by Dr Anderson and one by the Royal Society. I believe that the noble Baroness misremembers. The reason for not starting an inquiry while the disease was continuing was so as not to divert from fighting the disease people whose evidence would be vital. That has remained the case until very recently. We always said that the inquiries would not start until the end of the disease was in sight. It is hoped that we are now close to that point. Therefore, Dr Anderson will begin his inquiry, which is likely to last for about six months.
A full public inquiry of the kind demanded by various sides of this House would almost certainly last three or four times as long. Noble Lords will recall that the Phillips inquiry into BSE, which, in a sense, involved far fewer cases, lasted for nearly four years. It is important that we learn the lessons thoroughly and that we learn them fast and at least expense. That is why we have chosen—I consider it to be a defensible position—not to go down the road of a quasi-judicial public inquiry. This inquiry is designed to get at the truth, and rapidly.
Baroness By ford: My Lords, perhaps I may press the Minister further. I believe that we could save his
1240
irritation if the Government would give way and hold a public inquiry. Then the rumours would go away. I return to my noble friend's Question. It dealt with the dismissal of staff, but I do not believe that the Minister answered it adequately. Perhaps he can tell the House how many of the 18 members of staff who were suspended in August are still at work and how many have been dismissed; how far the inquiries have gone; how many of those 18 members of staff were dealing directly with foot and mouth disease; and how many of the total number staff at the Exeter office were doing so?
Lord Whitty: My Lords, I shall decline to give that information. If the noble Baroness had any notion of personnel relations, she would not ask it; nor would the noble Earl. We are talking about members of staff who have been suspended pending inquiries. Were I to give details of those staff and of their disposition during the course of this epidemic, those inquiries would be severely prejudiced. I do not believe that it is the job of Ministers to do that to members of their staff.
To answer one of the noble Baroness's points—and only one—those inquiries are still continuing. Therefore, at this point there have been no dismissals. The staff will remain suspended until the inquiries are completed. I should prefer that we did not have to debate such issues on the Floor of this House. I certainly do not believe that it is the job of Ministers to do so and I hope that the noble Baroness will not pursue the matter.
The Earl of Onslow: My Lords, is the noble Lord—
The Lord Privy Seal (Lord Williams of Mostyn): My Lords, we have spent quite a long period of time on that Question.

Higher Education Staff: Equal Opportunities
3.16 p.m.
Baroness Sharp of Guildford Baroness Sharp of Guildford asked Her Majesty's Government:
Whether they are satisfied with the progress made by universities towards combating the discrimination against women and ethnic minorities in pay and promotions revealed by the Bett report.
Baroness Ashton of Upholland: My Lords, the higher education funding councils and representative bodies have established an Equality Challenge Unit to promote equal opportunities among higher education staff. Over the three years to 2003–04 the Government have made available a total of £330 million in England to support the human resource strategies drawn up by each higher education institution, including measures to promote equal opportunities.
Baroness Sharp of Guildford: My Lords, I thank the Minister for her reply. However, she did not answer the Question that I asked. As she will be aware, the Bett report came out two years ago in 1999 and was based on data up to 1997. The most recent data available, which take us up to the end of the academic year 1999–2000, indicate that the gap between average male and average female pay has increased by 1 per cent. In some institutions—for example, St George's Hospital Medical School and the London Business School—the gap is greater than 33 per cent. Does the Minister consider that, 40 years on from the Equal Pay Act, such differentials are reasonable? Does she believe that universities have done enough in the past two years to put their houses in order?
Baroness Ashton of Upholland: My Lords, I am from the school of encouragement to all organisations which wish to develop strategies. Over the past 40 years I should like to have seen many organisations exercise greater equal opportunity policies. Noble Lords may know of some. Therefore, I recognise what the noble Baroness says and I recognise her frustration in saying it. However, I believe that we must look at the position that universities are prepared to be in now and at the way forward. Universities appear to have decided to tackle some serious issues in relation to equal opportunities. The Government are very happy to support them in doing so.
Baroness Warwick of Undercliffe: My Lords, I express my pleasure at the noble Baroness's appreciation of the work of the Equality Challenge Unit, which is certainly addressing these issues. I declare an interest as the chief executive of Universities UK. I also remind the Minister that estimates based on the Bett report indicate that by 2005 the cost of modernising pay structures will be approximately £480 million a year. Does the Minister agree that extra public investment is necessary to enable the higher education sector fully to address these vital human resource issues?
Baroness Ashton of Upholland: My Lords, these are, indeed, vital human resource issues. It will be for the Comprehensive Spending Review to determine whether extra public investment will be made available. I am very happy—although I am sure that it will not be necessary—to bring this matter to the attention of my honourable friend Margaret Hodge, who is the Minister responsible. Of the additional moneys that have been made available, it is my understanding that 28 per cent of funds have been allocated to recruitment and retention, 23 per cent to staff development and 12 per cent to equal opportunities.
Baroness Blatch: My Lords, does the Minister agree that each time the Bett report comes up, the Government have said from the Front Bench that it is a matter for further and higher education? It is a matter for those sectors only because the money comes from the Government and their capacity to respond to the report comes from the Government. On the
1242
situation last year, we were told that the matter would be dealt with in the Comprehensive Spending Review, but it was not. What confidence do we have that it will be dealt with in this year's Comprehensive Spending Review?
Baroness Ashton of Upholland: My Lords, I do not think that the noble Baroness is right to suggest that I would eventually have said that the Bett report is for higher education institutions and not for the Government. However, she raised an important point. This matter is about the relationship between higher education and government. In the course of the review of student tuition, the Government are keen to examine that. There are many representatives from the higher education sector who can bring far more knowledge and understanding to this debate than I can. I recognise that that is a fundamental part of the matter. The Government are committed to equal opportunities and want higher education institutions to pursue those policies.
Baroness Walmsley: My Lords, does the Minister agree that one of the main reasons for the discrimination that was exposed by the Bett report— and by the noble Lord, Lord Dearing—was because too much personnel management in the university sector was unprofessional and, to put it bluntly, based on the old-boy network? Is she now confident that universities have put their houses in order and that high quality, professional personnel management is now the norm?
Baroness Ashton of Upholland: My Lords, I do not know whether I can say that with great confidence—but only because I do not have the relevant information with me. I am sure that many universities have moved forward, but the noble Baroness could doubtless find examples in which that is not the case. We point out that in terms of equal opportunities there is often a correlation with leadership. We need to examine the fact that none of the vice-chancellors or principals in HE is from an ethnic minority background, that seven heads of the 37 HE colleges are women and that seven of the 71 vice-chancellors are women. In a sense, equal opportunities start from the top.
Baroness Howe of Idlicote: My Lords, I must declare an interest—I chaired the Hansard Society commission on equal opportunities some 10 years ago, in which we paid particular attention to the inadequacies of universities on the equal opportunities front. Does the Minister agree that the governing bodies of universities have an important role to play in ensuring that full equal opportunities policies, in relation to pay and opportunities, are carried forward?
Baroness Ashton of Upholland: My Lords, it is a great pleasure to agree with the noble Baroness, who—I am sure that all noble Lords will agree—has done a huge amount with regard to equal opportunities. It has been a privilege to know her.

1243
I agree that the matter that the noble Baroness raised is to some extent a subject for the governing bodies of, in this case, universities; similar considerations apply to other organisations. As I said, the effort starts, in a sense, at the top in that the commitment needs to be there. I am sure that noble Lords are keen to see universities move ahead with regard to the progression of women. Issues involving inequality of pay arise because women are simply not getting into senior management positions.
Baroness Howells of St Davids: My Lords, does the Minister agree that another important report—the Bett report—has once again failed the black community? Does she agree that it is important to have some mechanism to ensure that race is included in discussions on equal opportunities? Anecdotal evidence is not enough; we need empirical data.
Baroness Ashton of Upholland: My Lords, the latest information that I have is that 10 per cent of HE staff did not give information to the relevant higher education statistical organisation and that, of the rest, 95.31 per cent were white, 0.31 were black Caribbean, 0.27 were black African, 0.17 were classified as black other and 1 per cent were Indian. Those are very low figures and my noble friend makes an important point.
Earl Russell: My Lords—
Lord Williams of Mostyn: My Lords, we are ready for the next Question.

Gibraltar
3.24 p.m.
Lord Burnham Lord Burnham asked Her Majesty's Government:
What conclusions they have drawn from the meeting to discuss Gibraltar between the Foreign Secretary and the Spanish Foreign Minister on 20th November.
The Minister for Trade (Baroness Symons of Vernham Dean): My Lords, following their meeting in Barcelona on 20th November, my right honourable friend the Foreign Secretary and the Spanish Foreign Minister issued a joint press communiqué. Copies have been placed in the Library. The Government will pursue dialogue with Spain under the Brussels Process, which is aimed at building a secure, stable and prosperous future and a modern sustainable status for Gibraltar.
Lord Burnham: My Lords, I thank the Minister for that Answer. Will the Government provide the welcome for Mr Caruana to play a full part in all discussions on the future of Gibraltar? Will they also give an assurance that no changes of any kind will be made without the full agreement of the people of Gibraltar?
Baroness Symons of Vernham Dean: My Lords, if the noble Lord has not yet had an opportunity to examine the communiqué, I point out what it says on his first point. It states: "We"—that is, both governments—
"agreed that the Government of Gibraltar had a very important contribution to make to our discussions. Gibraltar's voice should be heard. We reiterated the invitation which we issued to the Chief Minister of Gibraltar"—
that is, Mr Caruana—
"when we met in London on 26th July to attend future Brussels Process Ministerial meetings".
Mr Caruana has been invited, and that invitation was made clear again in the communiqué. I remind the noble Lord that, as I hope I made clear in my Answer, these discussions are taking place under the Brussels Process. The noble Lord will know that the Brussels Process makes direct reference to the 1969 constitutional position, which is that there will be no changes in sovereignty issues without the agreement of the people of Gibraltar.
Lord Hoyle: My Lords, it is right for the talks to take place and for the restrictions that Spain has imposed on Gibraltar to be lifted. If a referendum takes place, will it be binding on the British and Spanish governments? If it is not binding on the Spanish Government, will we defend the interests of the citizens of Gibraltar?
Baroness Symons of Vernham Dean: My Lords, I go back to the question of the auspices under which these discussions are taking place; that is, the Brussels Process. The UK and Spanish governments are committed to that. I remind my noble friend that the Brussels Process said that the British Government will fully maintain their commitment to honour the wishes of the people of Gibraltar as set out in the preamble to the 1969 constitution. That preamble states that we will never enter into arrangements under which the people of Gibraltar would pass under the sovereignty of another state against their freely and democratically expressed wishes. The British Government are unequivocally committed in that regard and the Spanish Government are committed to a process that recognises the United Kingdom's position.
Lord Wallace of Saltaire: My Lords, does the Minister accept that the long-term interests of the people of Gibraltar, of the substantial British population who live in Spain and of Britain and Spain as a whole are served by a settlement that is agreed by all parties?
Baroness Symons of Vernham Dean: Yes, my Lords, indeed I do. There are several important issues to be discussed in this context—not solely the sovereignty issue, although I accept that that will inevitably excite most attention. Other important issues include the economy, culture, tourism, aviation, military matters and the environment. In their own ways, all of those issues have caused much difficulty for the people in Gibraltar and they need to be resolved.
Lord Howell of Guildford: My Lords, will the Government allow the people of Gibraltar—1 have

1245
read the communiqué— an independent voice in the discussions and not simply present them with a done deal at the end for their opinion? If Spain intends to be rather more neighbourly to Gibraltar, as some reports suggest, will the Minister confirm that Spain will recognise the international dialling code of Gibraltar rather than insist on all telephone calls being rerouted through Spain?
Baroness Symons of Vernham Dean: My Lords, on the noble Lord's last point, he will know, having read the communiqué, that issues about the telephone system are still under discussion. He will know that more telephone lines—a further 70,000—are under discussion, which would be a welcome addition. That is a continuing discussion which we hope will be resolved.
On the question of Mr Caruana's participation, the issue, as I understand it, is that Mr Caruana has not so far felt able to accept the invitation because he has argued that he wants nothing to be agreed without his explicit agreement on each individual item. As I understand it, however, Mr Caruana said that he does not want a veto. I hope that that difficulty can be sorted out. We need Mr Caruana in these discussions. He has a very important contribution to make. It is in the interests of the people of Gibraltar that he does so.
Lord Howe of Aberavon: My Lords, I declare an interest as one of the architects of the Brussels Process, which was built upon the foundations laid by the noble Lords, Lord Owen, Lord Carrington and Lord Pym. Does the Minister welcome the resumption of negotiations? Does she agree that the presence of Mr Caruana, for the reasons that she has stated, would make an enormously useful contribution to successful progress? Does she also agree that it is important that the Spaniards understand, as increasingly they do, that they must play their part in persuading the people of Gibraltar that a settlement along the lines sought is to be greatly desired from every point of view?
Baroness Symons of Vernham Dean: My Lords, I agree that the Spanish Government have an enormously important part to play in this matter. It is important to raise the level of confidence of the people of Gibraltar in relation to Spain's commitment to the process. I certainly agree with the noble and learned Lord that we are building on the foundations laid by a Labour government in 1969 and by his government, a Conservative government, in 1984. When launching the discussions we have drawn on both the convention and the Brussels Process.

Business of the House: Human Reproductive Cloning Bill
3.31 p.m.
Lord Williams of Mostyn: My Lords, I beg to move the Motion standing in my name on the Order Paper.
1246
Moved, That Standing Order 46 (No two stages of a Bill to be taken on the same day.) be dispensed with on Monday next to allow the Human Reproductive Cloning Bill to be taken through all its stages that day.—(Lord Williams of Mostyn.)
On Question, Motion agreed to.

Office of Communications Bill [H.L.]
Report received.
Clause 1 [The Office of Communications]:.
The Minister of State, Department for Culture, Media and Sport (Baroness Blackstone)The Minister of State, Department for Culture, Media and Sport (Baroness Blackstone): moved Amendment No. 1:
Page 1, line 11, leave out "staff— and insert "executive".
The noble Baroness said: My Lords, in moving Amendment No. 1, I shall speak also to Amendments Nos. 2 to 6, 32, 34, 36, 37, 39, 40, 42 to 73, 76, 77, 80 to 83, 85, 87 and 88. I apologise for that mouthful. I also apologise for my voice and for the voice of my noble friend Lord McIntosh of Haringey. We have both succumbed to the same dreaded lurgy. We shall be playing for sympathy this afternoon and shall speak quite briefly to ensure that we can continue to speak until the end of this Report stage.
In Committee I indicated that we would be prepared to reconsider the terms "staff member" and "non-staff member" used in the Bill. The series of amendments tabled by the Government changes the terminology throughout the Bill from "staff member" to "executive member" and from "non-staff member" to "non-executive member".
As I said in Committee, the use of the term "director" was not considered appropriate for a body such as Ofcom, where the organisation is embodied by its membership. Therefore, we have retained the use of the term "member", but we have distinguished between those members who are employees of Ofcom and those who are not by using the more familiar terms "executive member" and "non-executive member" respectively. I beg to move.
The Earl of Northesk: My Lords, I rise to thank the noble Baroness for bringing forward this change to the Bill. It is flattering, even embarrassing, that my gentle probing of the matter in Committee has prompted such largesse. I make it a full pack of cards, excluding jokers—52 amendments. I am most grateful and I hope that the noble Baroness shakes off her lurgy as soon as possible.
On Question, amendment agreed to.
Baroness Blackstone Baroness Blackstone moved Amendments Nos. 2 to 6:
Page 1, line 12, leave out "staff" and insert "executive"
Page 1. line 18, leave out "staff" and insert "executive"

1247
Page 2, line 1 leave out -staff' and insert "executive"
Page 2, line 5, leave out "staff" and insert "executive"
Page 2, line 7. leave out -staff" and insert "executive".
On Question, amendments agreed to.
Clause 2 [Initial function of OFCOM]:
Baroness Anelay of St Johns Baroness Anelay of St Johns moved Amendment No. 7:
Page 2, line 32, leave out "both".
The noble Baroness said: In moving Amendment No. 7, I shall speak also to Amendments Nos. 8, 9, 17, 18, 26 and 28 standing in my name. This group is not quite such a formidable battery of amendments as the previous group, but the objective behind it is simple. That objective is to keep our options open in relation to the communications Bill on whether the BBC should be regulated by Ofcom wholly or merely in part.
The practical effect of the amendments is that they place a duty upon the BBC to prepare plans for the regulatory functions of the Board of Governors to be brought wholly within Ofcom. They also put a duty on Ofcom to co-operate with the BBC for the same purpose. Without these amendments there is no mention of the BBC in this paving Bill.
Clause 2(1) gives Ofcom the function to do just about anything that it considers appropriate for implementing or modifying proposals covering regulation. But the definition in Clause 5 of "existing regulator" makes no mention of the regulatory function of the BBC governors.
I want to make it clear from the start that I do not want to abolish the BBC Board of Governors—far from it. It has and, in the future, it will continue to have a valuable role to play if Parliament decides that BBC regulation should come wholly within Ofcom. The amendments do not change the status of the BBC Board of Governors. They do not threaten the independence of the BBC.
Whether it is right to bring the BBC fully within Ofcom, of course, cannot be decided today. That will be determined when we debate the provisions of the communications Bill itself. However, Parliament's opportunity to make that decision will be impaired unless we take steps, in this Bill, to ensure that the BBC is ready to join up fully to Ofcom.
If the BBC is left out of the loop now, I believe that, when we deal with the communications Bill, it will be too late to bring the BBC fully within Ofcom if that is Parliament's wish. Ofcom's working culture will be established in its transitionary phase without the benefit of full BBC input.
The Government have tried to rebut my arguments by adopting what appear to be two rather contradictory positions. At Second Reading the noble Lord, Lord McIntosh, said that the provisions of Clause 2(3)(a) allowed the Secretary of State to bring the BBC within Ofcom at some later unspecified date if she so wished. But that is not an adequate answer to this problem. It creates an uncertainty that I believe is
1248
unacceptable. When will the Government decide to bring the BBC fully within the fold? This year, next year, sometime, perhaps never?
We do not know when the draft Bill will be published, let alone the real communications Bill. The transitional Ofcom may well be into maturity by the time Parliament has the opportunity to consider the BBC's position in the communications Bill The indications given so far by the Government are that they will not even consider that until charter review, if then.
The second, slightly different position was explained by the noble Baroness, Lady Blackstone, in Committee. The Minister argued that my amendment should not be pursued because the Government have already made a clear statement in the White Paper as to why they would not allow the BBC to be fully within Ofcom. So, in essence, it appeared that I was wasting my time because by the time we get to the communications Bill the Government will already have made up their mind on behalf of Parliament on this matter.
I remain convinced that the shadow Ofcom, this paving Ofcom, should not be set up in such a way that it becomes difficult, if not impossible, for Parliament to bring the BBC wholly within Ofcom in two or three years' time or whenever the communications Bill is implemented. The culture of Ofcom will have been set without the full input of the BBC and the problem will be even worse if we are forced to wait until charter review to make that change. The debate needs to start now.
It is illogical to establish a single converged regulator and then to exclude from its remit services that represent a major part of broadcast radio and television. The Government have often said that their aim is to create a single regulator for the communications sector. But in reality, as the Bill stands, there will continue to be two broadcasting regulators—Ofcom and the BBC Board of Governors. The National Consumer Council points out that,
"retaining two disconnected streams of regulation is not in the consumer interest".
That could lead to messy turf wars between Ofcom and the BBC governors which would lead to chaos and confusion.
I was interested to note that support for bringing the BBC's regulation wholly within Ofcom recently came from an unexpected source. In a Question to the Government in another place on 5th November the former Secretary of State for Culture, Media and Sport, the right honourable Chris Smith, tried to encourage the Government to look favourably at this issue. I welcome his conversion.
At Second Reading some noble Lords argued that the BBC is different from other broadcasters and therefore should be left alone. The noble Baroness, Lady Young of Old Scone, put the matter in a nutshell when she said that,
"the BBC is different … from … [other] broadcasters because its sole role is public service [broadcasting]".—[Official Report, 15/10/01; col. 442.]

1249
I recognise that there is a difference from other broadcasters in the constitution and remit of the BBC. Therefore, I have always treated it differently in my amendments. But the BBC does not always act differently. Therein lies a problem of its own creation. Its determination to chase ratings often makes it look too much like other broadcasters to members of the public.
An illuminating example is some good broadcasting carried out by the BBC last Christmas. I thoroughly enjoyed it. BBC radio decided to broadcast non-stop a Harry Potter book. Before it could do that, it had to buy the company—Cover to Cover—which owned the rights to the audio tapes. That was a good example of successful, aggressive commercialism. But it makes one wonder how the BBC differentiates itself from other commercial broadcasters.
Some noble Lords have questioned whether or not Ofcom is competent to take over all the regulatory functions from the BBC governors. One asks: why not? Surely, Ofcom must have the necessary expertise to take the decisions required, bearing in mind the different needs and status of different service providers. If it does not have that competence, it will not be competent to regulate other public service broadcasters, such as Channel 4 and those outside public service broadcasting altogether.
Either the Secretary of State has confidence in Ofcom or she does not. If she does not, why is she going to the trouble of bringing forward this piece of legislation? If she does have confidence in Ofcom to do the job properly, surely the suspicion must be that she wants to control the political direction of the BBC to a greater level than would be achievable via an independent regulatory body.
I shall briefly run through the technical effect of each amendment. Amendments No. 7, 8 and 9 seek to amend Clause 2 so that the BBC is named as one of the organisations with which Ofcom shall cooperate. Amendments Nos. 17 and 18 seek to amend Clause 3 to impose a duty on the BBC to co-operate with Ofcom to develop proposals for the transfer of the BBC governors' regulatory functions to Ofcom. Amendments Nos. 27 and 28 should be described as consequential.
My amendments offer a simple, fair and practical way to ensure that this paving Bill does not leave the BBC behind—half in and half out of Ofcom. It will ensure that Parliament can make its decisions about the BBC in the communications Bill unfettered. It is a matter of keeping our options open. I beg to move.
3.45 p.m.
Viscount Falkland: My Lords, we have a certain amount of sympathy with some of the sentiments behind the amendment, but we cannot support it. We cannot support it because it takes us far too far down the road. The Bill is not the right place to make decisions of this kind. I do not seek to criticise the Bill. It is called a paving Bill. That is an anomaly in itself as it is not a real paving Bill. The Bill sets out a structure.
1250
The noble Baroness seeks to put the BBC and the Government in a position in which neither of them wants to be nor should be. When we are further down the road after the normal periods of consultation—they will be long periods of consultation—we may change our view.
On these Benches our view is that the BBC is in a particular position. One may express irritation at the BBC as one does at many large and unwieldy institutions. But, nevertheless, it is the template of quality broadcasting in this country. It is different from the commercial broadcasters. Its regulation is and always has been different in character. That difference is likely to continue for some length of time. To what measure will become clear after consultation.
Having said that, although we sympathise with what is, in essence, a sensible suggestion that the BBC should make preparations, that should not be on the face of the Bill. If the BBC has any sense it will be making preparations. We shall be in the middle of the discussions to find out whether or not there is merit in the BBC becoming part of this larger regulatory body.
Lord Gordon of Strathblane: My Lords, before the Minister replies, she may find it helpful to accept Amendment No. 27 standing in my name. The amendment is policy neutral. Unlike the amendment moved by the noble Baroness, it does not commit the BBC to doing things at this stage. It simply lists the BBC Board of Governors as one of the regulators. It does not take the Government any further than they have said they will go at the moment. On the other hand, if the Government change their mind, as T believe they will, and bring the BBC more fully under Ofcom, it will make the change less apparent in that a step will have already been taken.
I use the word "apparent" advisedly. In previous debates the Minister and my noble friend Lord McIntosh have pointed out that the White Paper provides for the BBC to be "fully under Ofcom" as regards tier one, "virtually fully under Ofcom" as regards tier two with the single and, in my view, wholly inappropriate exception of impartiality. The idea that the Secretary of State of a government should be the backstop in deciding whether the BBC is impartial strikes me as ludicrous. Anyway, it is broadly under Ofcom. Even under Clause 3, Ofcom will comment on the public service statements of all the public service broadcasters, including the BBC.
It would do a great deal to remove the misapprehension that the BBC somehow lies wholly outwith Ofcom if the Minister were able to accept my amendment which simply lists the BBC as one of the regulators in the Bill.
Lord Crickhowell: My Lords, I declare an interest, as I did on the previous occasion when we debated the Bill, as chairman of HTV. The immediate answer to the noble Viscount, Lord Falkland, is that the Bill deals with the setting up of an organisation that is preparing the way to be a regulator of commercial

1251
activities. There is a serious danger that if it does not expect to regulate the BBC that that structure will initially be prepared in an inadequate way.
Like my noble friend, I am not in any way attempting to abolish the BBC Board of Governors. I am conscious of the fact that to alter the existing arrangements and to change the BBC Charter before the year 2006 would be in any case an impossible task. I am one of those who has no great desire to see the new body interfere with the content of programmes. I am a believer in light regulation. We must maintain certain basic standards as the ITC has done successfully in the commercial sector. But I am horrified at the thought that there may be a "contents" board, encouraged by a number of Members of Parliament, in contact with correspondents and constituents, wanting to manage programmes. I am not dealing with those matters. My concern is primarily about the BBC's involvement in commercial activities.
We have seen elsewhere that regulators can take actions which often have devastating consequences for the organisations they regulate. We hear much talk about level playing fields. In the sense that the playing fields are not bumpy, regulators achieve that. But they seem often to tip up the playing field so that those on it have to climb steeply uphill and struggle to survive. That may be all right when dealing with only one organisation. However, if two commercial organisations are operating on parallel playing fields, one walking along a level surface and the other having to put on climbing boots, one is likely to create a massively unfair situation. I note the remarks in the useful paper prepared by the Consumers' Association—my noble friend referred to it—about the lack of transparency in the present arrangements for the governance of the BBC. The paper refers to the unaccountable and opaque way in which the BBC is governed. It expresses concern that that is particularly unfortunate when the BBC is involved in commercial activities and the development of digital services.
The issue has also been examined by ITN. Many noble Lords will have read the useful article by Stewart Purvis in the Parliamentary Monitor, who makes clear his concern about the problems associated with accountability and transparency in the BBC's commercial and publicly funded operations. We have seen a remarkable expansion of the BBC's activities across a range of new digital services. From two TV channels and five radio stations, the BBC is now present on almost every conceivable media platform and is about to launch a series of new publicly funded digital services. It is true that the process under which these new digital TV and radio services were examined was considerably more transparent than in the past but there is much that is less than clear. We need an organisation which will open up the issue so that there is clarity.
On the basis of public funding, the BBC's power to compete with the independent sector is enormous. It does so in a range of ways which may or may not be fair. It can produce resources into programming—in bidding for sporting activities, for example—which in
1252
these times it may be difficult for others to match. But in setting up commercial operations there needs to be fair and open regulation. If publicly funded services are combined with commercial services in a way that is not completely open, we face the charge that we are creating unfair competition.
We hear that the BBC is to merge the BBC World Service and BBC World. It maintains that those are kept completely separate. We need an organisation such as Ofcom to look at the structures to ensure that they are kept completely independent and open.
In this increasingly complex and competitive world, we cannot allow a situation in which a publicly funded body can compete unfairly with the commercial world and use its public sector funding to undercut or even destroy other services. In the past it has been argued that it is the job of the BBC to fill gaps which the private sector is unable to fill. That may be fine. But when the public sector destroys services by its competition and creates a gap into which it then steps, that is not fine. Ofcom should be preparing a structure and organisation so that when the promised legislation is implemented it is enabled to grasp those matters with a sense of urgency. These are not future threats; they exist at present. Those competitive operations are already under way. Ofcom must be in position to act quickly. I strongly support the amendment.
Lord Thomson of Monifieth: My Lords, I begin with my customary declaration of interest in any matter relating to the BBC. I have a daughter who is an executive of the BBC. I shall move later an amendment relating to the problems of ITV. I make my declaration of interest that I am a pensioner of the former Independent Broadcasting Authority which regulates these matters in commercial broadcasting.
We discussed these issues thoroughly in Committee. I noted a change of emphasis in the views of the Conservative Front Bench. The noble Baroness, Lady Anelay, made a seductive speech proposing an innocent looking half-way house. However, she was at great pains to say that she did not wish to abolish the governors of the BBC. By curious coincidence, this was echoed immediately by the noble Lord, Lord Crickhowell. If the Official Opposition do not seek to abolish the governors of the BBC but to do what the amendment provides, they propose to turn the governors of the BBC into what in the past they have occasionally been criticised as being; distinguished men and women who accept being a governor of the BBC as almost the equivalent of appearing in the New Year Honours List rather than undertaking a serious public working responsibility.
My view about preserving the BBC, at least for the time being, is not uncritical. I share some of the views expressed by the noble Lord, Lord Crickhowell, about the transparency of some of the BBC's commercial activities. I also read with interest the proposal that the BBC World Service should now be combined in an integrated information service with BBC Worldwide and with the BBC's general news services which we all greatly admire. That produces considerable difficulties about transparency and Chinese walls. In this case,

1253
services will be funded from three separate quarters: from the licence fee we all pay; from the Foreign and Commonwealth Office vote; and from the commercial revenue that the BBC may earn. A high degree of transparency is required. I have raised the matter before. It is important that the BBC should make progress in producing transparency beyond doubt. We are living in very troubled times internationally, but there are not that many institutions in which the rest of the world regards the United Kingdom as playing a leading role. The BBC is such an institution, even with its warts and all, as I have said on many occasions, and I am cautious about disturbing it unduly.
The Government made a strong and sensible case in arguing how Ofcom will regulate the BBC in important and significant ways. To go to the heart of the BBC and turn the Board of Governors into a decorative institution is extremely dangerous. The BBC has been through many different changes in its long life. Ofcom is an entirely new institution. Indeed, it is an extraordinary new regulatory institution in many ways and one of the most massive forms of regulatory mechanism that has been produced by government in recent years. I carefully avoided the alliteration of saying that it was a monstrous mechanism, but it is a massive regulatory body, which will have a painful and difficult settling-in period.
We shall have some interesting debates on the main Bill, and Ofcom will have a considerable and long settling-in period. There are strong arguments for integration over wide areas in telecommunications, but we should give Ofcom time to settle. We should examine the role of the BBC very carefully when the charter comes up for renewal. It is my profound hope that the Government will resist this amendment as robustly as they resisted the proposals suggested at earlier stages of our consideration.
4 p.m.
Lord Pilkington of Oxenford: My Lords, the BBC is regulated by the Broadcasting Standards Commission. It is worth reminding your Lordships that it was regulated because the Annan commission found that the BBC behaved in a cavalier fashion towards complaints about infringement of privacy and unfairness. As a result, a statutory body was set up to deal with those issues, so the position was not as good as has been described by noble Lords. The Annan commission thought that the governors had failed in their duty.
The noble Lord, Lord Thomson of Monifieth, speaks with greater knowledge, but I am a former chairman of the Broadcasting Complaints Commission, the predecessor of the Broadcasting Standards Commission. The paving Bill will remove a regulation that was imposed on the BBC a couple of decades ago. I hope that when the Minister replies she will assure us that the little regulation that was imposed on the BBC by the Broadcasting Standards Commission will not be abolished. That would negate the long study of the Annan commission.
1254
I remember from my time on the Broadcasting Complaints Commission that complainants felt that the tribunal set up by the BBC did not give adequate hearings to complaints. I shall discuss this in a later amendment, so I shall not burden your Lordships now, but attention should be given to the position of the BBC.
Lord Lipsey: My Lords, I first declare an interest as I chair a government consultancy of which the chairman of the BBC is the major shareholder. I hasten to add that what I say are in no way his views.
Like the noble Viscount, Lord Falkland, I have some sympathy with the amendment, but I do not support it. The position expressed by the former Secretary of State in another place may have been misunderstood. In the context in which the noble Baroness, Lady Anelay, mentioned him, it sounded as if he had come out as a supporter of full Ofcom regulation of the BBC. But that is not what I understand from his words which I read carefully. He wants a back-stop role for Ofcom in relation to regulation of the BBC, and I have much sympathy with that position.
Whatever view one takes of the ultimate correct responsibility of Ofcom, relative to the BBC, we are a long way short of the time when we need to make up our minds. I have sat through the debates on this Bill and note that the understanding in this House of the exact position of the BBC under the Government's proposals has moved forward greatly. When we debated the proposals with the noble Lord, Lord Gordon, back in February, there was a feeling that Ofcom should have no role relative to the BBC. I even thought that myself for a while until I was put right by reading the document produced by the noble Baroness's department.
We have moved forward in understanding, but not far enough in analysis. I take the point made by the noble Lord, Lord Thomson, that when dealing with an institution of such importance and with such a world-wide reputation one does not want to rush changes through without careful thought.
I believe that the right way forward is to continue to debate the matter. It should not be referred to in this Bill. The big Ofcom Bill—as one might call it—should enable the Government to take power to alter the role of Ofcom relative to the BBC, but it need not specify what those powers should be. In the meantime, the BBC should bring forward proposals, in particular proposals that will strengthen the independence of the governors. The way in which the governors are served by employees of the BBC who may go on to other roles within the BBC is problematic. That was the conclusion of the Davies panel on the future of the BBC licensing fee, of which I was proud to be a member.
Debates on the BBC's proposals and the final Bill with full powers should be followed by discussions on charter renewal, which is when we shall have the true debate on whether to move further towards ensuring the accountability of the BBC. That debate must take

1255
place and the matter must be resolved. If it means that there is a consensus in favour of full Ofcom regulation, that will be perfectly all right. But I stress that when dealing with an institution of such importance, we must not rush it. We must get it right, and the procedure that I have suggested would be a way of getting it right.
Lord Dubs: My Lords, first, I declare an interest as I am chairman of the Broadcasting Standards Commission. I have enormous respect for the BBC as an institution. It has done a tremendous job and has set an example to the rest of the world as to what broadcasting should be.
Having said that, I sympathise with the thrust of the amendments. I should not have spoken had we not been taken into a debate that will be more appropriate when we come to the full Ofcom Bill. We are merely testing the water rather than, I hope, pushing it all the way.
It is important that Ofcom is open and transparent so that everyone can see what the decisions are. Some will be commercially confidential but others should be open and transparent. I fear that the history of the BBC shows that the governors have not been open and transparent. I have certainly never known what goes on. I have friends who are governors who have hinted at what happens occasionally, but there is no openness or transparency. That is because of the conflict of the role of BBC governors. They seem to act partly as non-executive directors with responsibility for the good management of the BBC—if I am wrong, I am sure that I shall be interrupted—and, on the other hand, they are supposed to protect the interests of the public on the issues that we have been discussing. I do not believe that the same group of people can do both. It is unreasonable to expect that they could. That is why I am surprised that the Liberal Democrats have not said that the full Bill should provide for the BBC to be totally under Ofcom.
Perhaps I may say a word about public service broadcasting, without going through the tortuous process of trying to define it. Wherever there is intervention in a free market, as with ITV, Channel 4, Channel 5 and so on, one seeks to impose certain standards which represent public service broadcasting. It is not only the BBC that does it. The BBC has done it for longer and may believe that it does a little more of it, but we have accepted the concept of public service broadcasting and the use of the regulatory system to intervene in what would otherwise be a free market. It is, surely, that which makes clear that this is not just for the BBC but goes across the board. That is why there is an argument that similar standards should be applied. I happily give way to the noble Lord.
Lord Thomson of Monifieth: My Lords, I am obliged to the noble Lord, but he tempts me. Has he never sat in front of a television screen with his zapper and looked at the variety of channels that can be viewed on cable or satellite? Some channels are publicly regulated but not even by the greatest act of imagination can
1256
they be called public service broadcasting. The BBC is still the fount of standards in that regard, and I believe that we should be rather careful about that.
Lord Dubs: My Lords, the BBC produces world-class programmes and represents the best in the concept of public service broadcasting. But if some day the noble Lord cares to join me in front of a television set I can show him material broadcast by the BBC which is absolute rubbish and is as bad as an thing that can be seen anywhere. This is not a matter of my own prejudices. The chairman of the BBC spoke to some of us a few weeks ago and said that the BBC was not just for the likes of politicians who view life in a certain way. Many people in this country are also entitled to high standards and to view programmes which are different from those that we would choose. We are a bit skewed in that we watch "Newsnight", listen to Radio 4 and so on. That does not necessarily mean that we represent overall public taste. I am sure the noble Lord agrees that there arc times when the BBC produces rubbish. I shall be content to discuss that with him later and reach agreement on it.
That is a digression from where we should be at the moment. All I say is that public service broadcasting as a concept goes across the board at least to all the terrestrial channels, if not further; it is not simply the prerogative of the BBC. Unfortunately, if the governors have the sole regulatory responsibilities for those aspects that do not fall under Ofcom, that will also lead to the BBC becoming involved in arguments with the Government. In the end, it is likely that for the BBC the Secretary of State may be the regulator of last resort. That is not a happy position for the BBC to be in. I hope that in arguing for the independence of the BBC—a view that we all share—when the day comes I can persuade the noble Lord that it may be right to move amendments to the main Bill to bring the BBC fully under Ofcom.
Baroness Blackstone: My Lords, in responding to the debate I shall not comment on the technical effects of the individual amendments in this group which have been clearly set out by the noble Baroness, Lady Anelay. I do not believe that the amendments relating to the BBC and Ofcom tabled at Committee stage were significantly different from those tabled today. I explained then that although I understood the reasons for debating the relationship between the BBC and Ofcom this was not the right time for such debate, as the noble Viscount, Lord Falkland, rightly said. Other noble Lords have conceded that point, including the noble Baroness herself.
The communications Bill will provide a very much more appropriate opportunity to debate fully the exact relationship. The paving Bill is there to set up Ofcom and its initial functions—no more and no less— but it will allow Ofcom and the BBC to make preparations to implement the new regulatory regime, whatever Parliament may decide. I should reinforce the point made by the noble Viscount that there is nothing here to prevent the BBC from making the preparations that it needs to make for the new regime.

1257
I do not want to be drawn into an extensive debate about the BBC; for example, about the quality of its programmes in public service broadcasting. I do not rise to the bait dangled by my noble friend Lord Dubs, except to say that I accept entirely that Ofcom should be open and transparent in how it operates.
The noble Lord, Lord Crickhowell, referred to the commercial activities of the BBC in which it has been involved for many years. That was so when I was chairman of the General Advisory Council a long time ago. As I said in Committee, the BBC will continue to be subject to economic regulation in future, principally by Ofcom instead of by the OFT. Like other broadcasters, it will be subject to the normal competition rules. That is a matter on which the noble Lord, Lord Thomson of Monifieth, touched. The commercial broadcasting of the BBC is already fully regulated by the Independent Television Commission.
In Committee I set out in detail the relationship as envisaged by the Government between the BBC and Ofcom. That was outlined in the White Paper. There will be a new three-tier structure of regulation which will generally be deregulatory and will apply to all broadcasters. The BBC will be subject largely 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 third tier is about the content of broadcasting. The aim is to give other public service broadcasters a freedom similar to that already enjoyed by the BBC.
I shall not respond to the point raised by the noble Lord, Lord Pilkington. My noble friend Lord McIntosh of Haringey will deal with that in responding to the debate on the next amendment. As stated in the White Paper, equally the BBC governors must demonstrate that they are regulating the BBC effectively. Although the governors have a regulatory role in relation to the BBC, I do not agree that this means that they must be mentioned in the Bill. I must disappoint my noble friend Lord Gordon of Strathblane. I do not believe that it would be appropriate to accept his amendment for the reasons given by my noble friend Lord Lipsey. Let us suppose for a moment that the BBC was fully subject to regulation by Ofcom. What would that imply by way of preparing for transferring powers and staff? The existing regulators will need to transfer every piece of their property to Ofcom. However, that does not apply to the BBC.
The BBC is a broadcaster and the governors act only as regulators for the BBC alone. Unlike regulators such as the ITC, the BBC's functions will not all be subsumed into Ofcom. Almost all the things that it does now will continue. The BBC will still need a board and staff to service it. There would be no property to transfer because the board would still need a room in which to meet. Most importantly, the BBC would also still need staff to deal with such matters as complaints.
1258
Clearly, it would be unacceptable for the BBC to abrogate entirely responsibility for considering matters such as complaints.
It is difficult to see what can be transferred to Ofcom other than the regulatory powers themselves, which I believe all noble Lords agree—my noble friend Lord Lipsey put it very well—are not for debate at this time in relation to this Bill. We are jumping the gun in attempting to consider those questions.
Ofcom has the power to prepare for the transfer of powers. The power of the BBC to co-operate with Ofcom is sufficient for what is proposed but, as I explained previously, it is our intention to bring forward draft amendments to the agreement between the Secretary of State and the BBC when the main Bill is published. At that point, plenty of time will be made available for noble Lords to consider all those issues.
Finally, perhaps I may say to the noble Baroness, Lady Anelay, that the Government do have confidence in Ofcom. This legislation is being brought forward so that we can get on with the job of setting up the organisation and working with the existing regulators. In the light of those words, I hope very much that the noble Baroness will agree to withdraw her amendment.
Baroness Anelay of St Johns: My Lords, I am grateful to all noble Lords who have spoken and who have given us the benefit of their great experience in these matters. Perhaps I may begin by remarking that when the Minister thought that I might have confessed that I thought that my amendments were not appropriate to the Bill, the concession I made was that amendments would not have been appropriate to make a transfer of regulatory powers under the Bill. My amendments certainly do not seek to do that.
Of course I am disappointed by the view expressed by the noble Viscount, Lord Falkland, but I hope that I shall not be disappointed by him in the future. He pointed out that he felt that it was not the right time or place to table my amendments. I have to disagree with him on that point. To that end, I am grateful to my noble friend Lord Crickhowell for his response when he said that if Ofcom does not expect fully to regulate the BBC now, it simply will not organise itself in such a way that it will be able to undertake those tasks effectively.
In courtesy, at this point I should refer briefly to the amendment tabled by the noble Lord, Lord Gordon of Strathblane. I deliberately did not refer to it in the course of my opening remarks in order to give the Minister an opportunity to respond before I added any comment of my own. I certainly support the objective behind the noble Lord's amendment. I did not choose the same route because I felt that in so doing I would be sending a signal that I was seeking to try to wind up the Board of Governors of the BBC. I felt that if I put the board on the same basis as the definition in the clause, it might appear that I expected to see the board

1259
come to an end once the communications Bill makes the transfer of regulations. That is certainly not the case as regards the BBC Board of Governors.
I believe that Ofcom will be at the forefront of developing regulatory policy across the entire media sector. For that reason, given that the BBC is one of our national champions, it simply cannot afford to sit outside Ofcom; that is, affected by its decisions but without having a chance to take part fully in that process. I think that Ofcom needs to work with the BBC from now on, and that that should be made clear to the organisation. The Minister has attempted, most charmingly, to reassure me on this point, but I fear that her words will simply have reassured the BBC that in the future no change will be made to the Government's position as a result of the conclusions of the White Paper. Thus there really is no incentive for the BBC to work towards a position where it could be fully regulated by Ofcom, if that proves to be Parliament's wish in the main Bill.
I remain convinced that unless the amendments I have tabled are put on to the face of the Bill, Parliament's ability to act freely and in an unimpaired way in the communications Bill will be a problem. I do not believe that I am jumping the gun with my amendment. I simply do not want us to shoot Ofcom in the foot. I wish to test the opinion of the House.
4.24 p.m.
On Question, Whether the said amendment (No. 7) shall be agreed to?
Their Lordships divided: Contents, 73; Not-Contents, 144.

Division No. 1

CONTENTS

Alexander of Weedon, L.

Hayhoe, L.

Ampthill, L.

Henley, L.

Anelay of St Johns, B.

Hodgson of Astley Abbotts, L.

Biffen.L.

Hooper, B.

Blackwell, L.

Howe, E.

Bowness, L.

Howe of Aberavon, L.

Bridgeman, V.

Howell of Guildford, L.

Brooke of Sutton Mandeville, L.

Hunt of Wirral, L.

Brougham and Vaux, L.

Hurd of Westwell, L.

Byford, B.

Luke, L.

Caithness, E.

McColl of Dulwich, L.

Campbell of Alloway, L.

Marlesford, L.

Campbell of Croy, L.

Mayhew of Twysden, L.

Carlisle of Bucklow, L.

Miller of Hendon, B.

Carnegy of Lour, B.

Molyneaux of Killead, L.

Clark of Kempston, L.

Mowbray and Stourton, L.

Colwyn, L.

Moynihan, L.

Cope of Berkeley, L. [Teller]

Murton of Lindisfarne, L.

Cox, B.

Noakes, B.

Crickhowell, L.

Northesk, E.

Dundee, E.

Oxfuird, V.

Eden of Winton, L.

Park of Monmouth, B.

Elles, B.

Pearson of Rannoch, L.

Elliott of Morpeth, L.

Pilkington of Oxenford, L.

Elton, L.

Plummer of St. Marylebone, L.

Ferrers, E.

Rawlings, B.

Eraser of Carmyllie, L.

Renton, L.

Gardner of Parkes, B.

Renton of Mount Harry, L.

Hanham, B.

Roberts of Conwy, L.

Haslam, L.

Rotherwick, L.

1260

St John of Fawsley, L.

Strathclyde, L.

Saltoun of Abernethy, Ly.

Taylor of Warwick, L.

Seccombe, B. [Teller]

Thomas of Gwydir, L.

Vivian, L.

Selsdon, L.

Wakeham, L.

Skelmersdale, L.

Warnock, B.

Soulsby of Swaffham Prior, L.

Wilcox, B.

NOT-CONTENTS

Addington, L.

Hunt of Kings Heath, L.

Ahmed, L.

Irvine of Lairg, L. (Lord

Alderdice, L.

Chancellor)

Allenby of Megiddo, V.

Janner of Braunstone, L.

Alli, L.

Jones, L.

Andrews, B.

Lea of Crondall, L.

Ashley of Stoke, L.

Lester of Heme Hill, L.

Ashton of Upholland, B.

Levy, L.

Bach, L.

Lipsey, L.

Barker, B.

Lockwood, B.

Bassam of Brighton, L.

Macdonald of Tradeston, L.

Bernstein of Craigweil, L.

Mcintosh of Haringey, L

Bhatia, L.

[Teller]

Billingham, B.

MacKenzie of Culkein, L

Blackstone, B.

Maclennan of Rogart, L.

Borrie, L.

McNally, L.

Boston of Faversham, L.

Maddock, B.

Bradshaw, L.

Mallalieu, B.

Bragg, L.

Methuen, L.

Brett, L.

Miller of Chilthome Domer, B.

Brooke of Alverthorpe, L.

Milner of Leeds, L.

Brookman, L.

Mishcon, L.

Bruce of Donington, L.

Mitchell, L.

Burlison, L.

Morgan, L.

Campbell-Savours, L.

Morris of Manchester. L

Carter, L.[Teller]

Moser, L.

Clarke of Hampstead, L.

Murray of Epping Forest. L.

Clement-Jones, L.

Newby, L.

Cohen of Pimlico, B.

Nicol, B.

Corbett of Castle Vale, L.

Northbourne, L.

Craig of Radley, L.

Northover, B.

Crawley, B.

O'Neill of Bengarve, B.

Currie of Marylebone, L.

Oakeshott of Seagrove Bay, L.

David, B.

Paul, L.

Davies of Oldham, L.

Pendry, L.

Donoughue, L.

Phillips of Sudbury, L.

Dormand of Easington, L.

Pitkeathley, B.

Dubs, L.

Plant of Highfield, L.

Elder, L.

Prys-Davies, L.

Evans of Watford, L.

Ramsay of Cartvale, B.

Falkland, V.

Randall of St. Budeaux, L.

Farrington of Ribbleton, B.

Rea, L.

Filkin, L.

Redesdale, L.

Fitt, L.

Richard, L.

Gale, B.

Rodgers of Quarry Bank, L.

Gibson of Market Rasen, B.

Rooker, L.

Gladwin of Clee, L.

Roper, L.

Golding, B.

Russell, E.

Goldsmith, L.

Sainsbury of Turville, L.

Goodhart, L.

Sawyer, L.

Goudie, B.

Scotland of Asthal, B.

Gould of Pottemewton, B.

Sewel, L.

Graham of Edmonton, L.

Sharman, L.

Greaves, L.

Sharp of Guildford, B.

Grenfell, L.

Sheldon, L.

Grocott, L.

Shutt of Greetland, L.

Habgood, L.

Simon, V.

Hardy of Wath, L.

Smith of Clifton, L.

Harrison, L.

Smith of Gilmorehill, B.

Haskel, L.

Stallard, L.

Hayman, B.

Stone of Blackheath, L.

Hilton of Eggardon, B.

Strabolgi, L.

Hollis of Heigham, B.

Symons of Vernham Dean, B.

Howells of St. Davids, B.

Taverne, L.

Howie of Troon, L.

Temple-Morris, L.

Hughes of Woodside, L.

Thomas of Gresford. L.

1261

Thomas of Walliswood, B.

Weatherill, L.

Thomson of Monifieth, L.

Whitty, L.

Tomlinson, L.

Wigoder, L.

Turner of Camden, B.

Williams of Crosby, B.

Williams of Elvel, L.

Wallace of Saltaire, L.

Williams of Mostyn, L. (Lord

Walmsley, B.

Privy Seat)

Warwick of Undercliffe, B.

Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.36 p.m.
Lord Pilkington of Oxenford Lord Pilkington of Oxenford moved Amendment No. 10:
Page 2, line 38, at end insert—
"( ) In fulfilment of the function relating to relevant proposals about regulation set out in subsection (1), OFCOM shall have regard to the need to establish an independent communications ombudsman service for investigating complaints by members of the public about invasion of their privacy or unfair treatment by any body or individual which it is proposed will be regulated by OFCOM."
The noble Lord said: My Lords, I begin by apologising for bringing forward this amendment at a late stage. When your Lordships reached this stage of the Bill in Committee, I had a medical appointment, and nowadays one does not surrender a medical appointment even to speak in your Lordships' House.
It may seem to many noble Lords a narrow point, but complaints regarding unfairness and infringement of privacy arouse a great deal of passion and can have considerable effects on the individuals or companies concerned. Such complaints were considered by the Broadcasting Complaints Commission, of which I was the chairman for four years, and subsequently from 1996 by the Broadcasting Standards Council.
In hearing complaints, both the Broadcasting Complaints Commission and the Broadcasting Standards Council acted in a quasi-judicial capacity—a very important point to note—and were therefore subject to judicial review. Broadcasters and complainants often regarded their appearance before those bodies as an alternative or even a prelude to legal remedies in the courts, such as, for example, a libel action. During my time—
The Deputy Speaker (The Viscount of Oxfuird): My Lords, I apologise to the House. I have not properly called Amendments Nos. 8 and 9.
[Amendments Nos. 8 and 9 not moved.]
The Deputy Speaker: I apologise to the noble Lord, Lord Pilkington.
Lord Pilkington of Oxenford: My Lords, during my time as chairman of the commission, we were the subject of three or four judicial reviews and in one case were taken to the Court of Appeal. Complainants, and more particularly broadcasters, often appeared before us represented by very distinguished and rather frightening lawyers of some distinction and skill. Mere former schoolmasters at times found that quite worrying.
1262
The point that I make is that the members of the body considering those cases needed skills that would stand up to a judicial review or to a challenge in the Court of Appeal. They had to take care in asking questions and even more care in the writing of a judgment following consideration of a case. In addition, it was enormously time consuming. For example, when we considered a case involving Shell in Nigeria, the piles of papers would almost have filled the bench in front of me. Therefore, the members who considered that case had to be prepared to devote a great deal of time to the task in hand. Because its decisions were subject to judicial review, the body had essentially to be regarded as independent. If its independence was in any way doubted, its judgment could be overturned by the courts.
As your Lordships will realise, Ofcom will have a wide variety of functions, such as, for example, the award and withdrawal of licences. If it awarded a licence to a broadcaster and then had to decide whether or not to uphold a complaint regarding unfairness or infringement of privacy, there could theoretically be a conflict in relation to its independence, which lawyers representing a complainant would question in the courts if the judgment went against that complainant.
My amendment proposes for the Ofcom organisation what I would describe as an ombudsman type of role. I do not specify the details—I shall leave it to the Government to define them—but, however they are defined, the body or individuals must be independent of the functions of the whole of Ofcom. The body's independence must be clear and the walls surrounding it must be very obvious. The ombudsmen must have dedication to the task in hand, and have the time and experience to so conduct cases that their judgments will be upheld without any measure of doubt.
That is the essence of my amendment. I hope that the Minister will show sympathy towards the ideas behind the amendment as important issues are involved. I realise that this is a paving Bill, but this is a crucial issue—particularly for the individuals and companies involved. I hope that the Minister will be able to give me some reassurance that, within Ofcom, the functions performed by the old Broadcasting Complaints Commission and the Broadcasting Standards Commission will be, to some extent, guaranteed and even, as I said previously, be applied to the BBC. It is not the most glamorous issue, but to the individuals or groups concerned it is important. The matter of natural justice is also concerned in this. I beg to move.
Lord Borrie: My Lords, there is merit in the amendment moved by the noble Lord, Lord Pilkington. I say that because it is not necessarily a good idea for a regulatory body, with the punitive powers of removal of licences and matters of that kind, itself to handle complaints against the particular behaviour of particular licence holders and to decide whether redress should be provided.

1263
As my noble friend the Minister and many of your Lordships will know, there has been a recent precedent in the Financial Services and Markets Act 2000. In that Act, Part 16—which all noble Lords will remember is hugely long—and Schedule 17 provide for the establishment by the Financial Services and Markets Authority of a body corporate, which has to be independent, to administer the resolution of disputes with the minimum of formality by an independent panel of ombudsmen. There is a statutory reference in the Act to the need for securing the independence of the body corporate, and it in turn is meant to uphold the independence of the individual ombudsmen who will hear a particular complaint.
Noble Lords will be familiar with the creation of ombudsmen to settle disputes of various kinds in the public sector and, more recently, in the private sector. It started in the public sector with the Parliamentary Commissioner Act 1967, and in the private sector during the 1980s, when it seemed that almost every year, if not every month, an industry—pensions, insurance, banking and so on—determined to set up, albeit on a voluntary basis in some cases, an ombudsman to determine disputes.
The scheme's merit of avoiding lawyers, its informality and cheapness has been well acknowledged across many fields, and it would be odd if one did not at least contemplate such a scheme in the field of communications. With the statutory precedents so well known to my noble friend the Minister, this is something on which he may ponder and find merit. I rather doubt that it is appropriate for the amendment to be incorporated into this paving Bill, but I have no doubt that it deserves consideration in the future.
4.45 p.m.
Baroness Howe of Idlicote: My Lords, I am glad to support the amendment moved by the noble Lord, Lord Pilkington. To my mind, it seeks to give substance to the point on which I have troubled your Lordships previously.
The amendment focuses very clearly on the need to make express provision for a visible independent and objective agency to consider citizens' complaints about unfairness or infringement of privacy. However, I wish to make two points about the way in which the noble Lord has formulated his proposals.
The amendment calls for the investigation of complaints, which the noble Lord has described very well. So far so good. But we need to be clear what that should involve. Three matters strike me as important. First, the need for a hearing where there is a substantial complaint. I declare an interest as a previous chairman of the Broadcasting Standards Commission, where we dealt with both fairness and privacy and taste and decency complaints. Over time, we managed to refine the way in which such complaints were dealt with so that they did not take days and days to resolve. The need for a hearing where there is a substantial complaint certainly remains.
1264
Secondly, following the hearing, the complainant should receive a ruling on each complaint, and the adjudication should be published, whether it goes one way or the other. Thirdly, there is a need for the body to have sufficient power to do the job properly—for example, to make programme makers answerable and, in appropriate cases, to require the broadcast of its decision on the appropriate channel.
The second point on which I should like to focus—I do not think there is any difference between myself and the noble Lord, Lord Pilkington—concerns the phrase "ombudsman service". The phrase recognises the need that the service should be more than a one man or one woman agency. If the service is to command confidence, ideally it should be comprised of a small group of people of varying expertise and experience; it should not be drawn solely from those with experience in the broadcasting industry.
Turning away from the wording, perhaps I may suggest two ways in which the amendment could be enlarged. First, it does not address the issue of taste and decency complaints when a "satisfactory answer", to use the words of the White Paper, has not been forthcoming from the broadcaster concerned. The noble Lord, Lord Pilkington, may have a somewhat less positive view on these kinds of citizens' complaints than I, but many people share my view that there will continue to be a need for those kinds of complaints—as well as fairness and privacy complaints—to be resolved by just such a visibly independent body. Could not this role also be taken on by the ombudsmen service proposed in the amendment?
Secondly, there is a need for research. In order to do the job properly, an ombudsmen service would certainly need a budget for the kind of independent research which is now undertaken—and very effectively used and made publicly available—by the Broadcasting Standards Commission. It is no exaggeration to say that the BSC, with its need to keep constantly in touch with citizens' and viewers' concerns and attitudes, simply could not have been an authoritative voice when dealing with complaints or drawing up statutory codes of guidance for broadcasters without this absolutely vital resource.
No doubt the Minister will, once again, be inclined to give a "dusty" answer to some of the ideas suggested. However, I make no apology for reminding the Minister of the importance of these issues. We are bound to return to them when the main Bill comes before your Lordships' House.
Viscount Falkland: My Lords, we on these Benches find a great deal that is attractive in the amendment, and in the way in which it was presented. I recall going with a number of my noble friends—in response to an invitation by the noble Baroness, Lady Howe, who just spoke so authoritatively on the subject—to spend the morning (and to have an excellent lunch, I might add) viewing various clips of film and to judge various complaints made by viewers and listeners.
We all came away with the impression that many of the complaints relating to bad language, to explicit sex or anything approaching it, and even to violence,

1265
required subjective judgment. However, we were taken away from our natural disposition to be against any kind of censorship when we saw examples of intrusions into people's privacy. We were struck by the fact that television producers can overstep the bounds of what is acceptable, either by mischievous design—which unfortunately happens from time to time—or, through pure pressure of work, by cutting corners. Whichever it is, it can result in extreme distress for individuals or for a number of people, and can involve a whole family when modern technologies are used to take pictures of people entering houses when they are not aware of the presence of a camera; and there are more grave examples.
On questions of content, any regulatory body will be concerned about changes in standards, about shifting fashions and so on. In terms of what is considered decent or indecent on television, standards have changed markedly, particularly in the past few years. A regulatory body will have to take account, still further, as we move towards what is clearly pornography, of what is acceptable and what is not.
Again, subjective judgments are involved. However, the noble Baroness, Lady Howe, used the key word "objective". In terms of what is suggested in the amendment, we must have objective standards. I do not know whether an ombudsman and his staff are the right people to do such work. Perhaps the Minister who is to reply will give us the Government's view. I imagine that this is merely a probing amendment and I look forward to some enlightenment from the Minister. By and large, we are sympathetic to the philosophy behind the amendment.
Lord Dubs: My Lords, there is a good case for setting up an independent procedure for dealing with complaints, whether about fairness and privacy or about standards. That is indisputable.
However, if I understand the amendment correctly, it is clearly not for the Bill that is before the House, but for the forthcoming communications Bill. So it must be a probing amendment. The amendment refers to an "independent communications ombudsman service". Presumably that can only mean a service that is independent of Ofcom. The suggestion is that the functions which three of the existing regulators presently have—namely, the Radio Authority, the ITC and the BSC—should stay in the main independent of Ofcom. So in a sense this drives a coach and horses through the whole concept of Ofcom.
I understand that it is on the way to being accepted that Ofcom should have within its structure a content committee consisting in the main of lay persons who would carry on these functions in the way described by the noble Lord, Lord Pilkington, and the noble Baroness, Lady Howe. The committee would examine these matters and apply the mind of lay people, either in its quasi-judicial sense of dealing with fairness and privacy or in the slightly less quasi-judicial sense of dealing with standards. If that principle is embedded in
1266
the new Ofcom, it would achieve all the aims that the noble Lord has put forward in his amendment, without setting up a separate body.
The problem with separate bodies is that citizens and consumers will be confused as to where to take a complaint. We need absolute clarity as to what are the tasks of the new Ofcom, so that those with complaints know where to go. I fear that the amendment introduces a confusion factor that will not be helpful. I hope the noble Lord will accept that point. I hope that he will accept also that, provided that the new Ofcom has a content committee with lay members, we shall be achieving what he wants to achieve through a different, less clear structure.
Lord Brooke of Sutton Mandeville: My Lords, I declare an interest, as I did yesterday in the debate on the financial services, as chairman of the building societies' ombudsman council. I concur with the remarks of the noble Lord, Lord Borrie, about the role of ombudsmen in that industry.
I support my noble friend Lord Pilkington in bringing this matter forward at this particular juncture in the legislative proceedings. I appreciate that the Government may say, as the noble Lord, Lord Dubs, has, that this is a matter for the subsequent Bill. I am aware that Sam Rayburn—Speaker of the House of Representatives when Lyndon Johnson, his great Texan ally, was president—said that the three wisest words in the English language were, "Wait a minute". However, it is a British characteristic always to think of reasons for delaying doing something. Therefore, it is worth occasionally examining whether delay is sensible.
The issue raised by my noble friend seems to me to be entirely free-standing. It seems capable of being considered on its own merits. Yesterday, I said that, as and when the financial ombudsman service comes into force on 1st December, it will be extremely important for ombudsmen to remain ombudsmen and not become regulators. In the context of remarks by the noble Lord, Lord Dubs, and the fact that the ombudsman service was set up under the Financial Services and Markets Act—it was not a free-standing issue—it is sensible to examine the matter independently and make it less likely that regulation will creep in to the ombudsman role. If conventional wisdom regards this as a probing amendment—my noble friend is the best judge, since none of us can know what is in the minds of others—then so be it. But I would remark gently that a paving Bill is sometimes no bad place to have a paving argument.
Baroness Anelay of St Johns: My Lords, I thank my noble friend for giving us the opportunity to consider this matter. I very much hope that he will table amendments to the main communications Bill next year to give effect to the objective behind his amendment. However, I echo the sentiments expressed by my noble friend Lord Brooke. A paving Bill is no mean place for a paving argument.
My noble friend's amendment allows us to return to the heart of so many of the debates that we had in Committee. The paving Bill is not quite the

1267
"inoffensive skeleton" that the Government present to us. It sets up a body which as yet has no regulatory powers; and we all accept that. So there is currently no work that an ombudsman may do. But we simply do not know how long the stage one embryonic Ofcom will operate before it develops into stage two, when the chairman and chief executive will be appointed, and into stage three, when powers are transferred to it under the main communications Bill. This is an organic structure beginning from day one when the Bill leaves another place.
I appreciate, like my noble friend and the noble Baroness, Lady Howe, that the Minister may give a rather dusty answer and say that the amendment is more suited to the communications Bill than to this one. However, I wonder whether that is the case. There is a sound argument for my noble friend bringing forward the amendment at this stage and I support it.
5 p.m.
Lord McIntosh of Haringey: My Lords, I shall indeed give a dusty answer. Having given dusty answers so often during our proceedings, I reread Meredith's Modern Love, whence the phrase "dusty answer" came. I found that the phrase was preceded by the line:
"That fatal knife, deep questioning, which probes to endless dole".
I suspect that we are suffering from that fatal knife, deep questioning.
The amendment would effectively require Ofcom to establish an independent communications ombudsman service. I have emphasised that the Government want to safeguard the interests of citizens and consumers. That includes those who are portrayed in the communications media, where their individual rights may be in question.
The White Paper made it clear that:
"OFCOM will also consider complaints of unfair treatment or unwarranted infringement of privacy in licensed broadcast services, where no other legal remedy is being pursued."
I can assure the noble Baroness, Lady Howe of Idlicote, that the White Paper also covers the need for independent research, to which she referred, and for regulation on grounds of taste and decency.
The amendment is intended to ensure the continuation of an important aspect of the work carried out by the Broadcasting Standards Commission: its role in ensuring that those appearing on electronic media have a proper opportunity to have any complaint of unfair treatment or the unwarranted infringement of their privacy considered by an independent body that can come to an adjudication. That is a valuable function in our society; it has a beneficial effect in encouraging broadcasters generally to behave responsibly when portraying individual members of the public. That has been the role of the Broadcasting Complaints Commission and the Broadcasting Standards Commission, both of which have been represented in the debate.
1268
I can give the noble Lord, Lord Pilkington of Oxenford, the main assurance that he seeks. We propose to bring that function within Ofcom, which will reduce the risk of overlap and confusion about the responsibilities of different regulators, to which the noble Lord, Lord Dubs, referred. It will also ensure—this will be important to the noble Lord in the light of what he said about his experiences—that the greater resources combined under Ofcom can be used to defend its decisions. That will give greater confidence to members of the public unfairly attacked by broadcasters that its decisions can, if necessary, be properly defended in the courts.
The noble Lord, Lord Dubs, raised the issue of conflict of interest, suggesting that it could arise between the regulatory and licensing functions of Ofcom and those that we are now discussing. I agree, that is possible, so in the main communications Bill we shall have to structure Ofcom to guard against such a conflict of interest.
We now come to the dusty answer. The Bill creates a small, focused body without regulatory functions. It will be for the main communications Bill to elaborate the eventual regulatory and other functions of Ofcom, including its role in considering independently of broadcasters any complaints of individual unfairness or unwarranted infringement of privacy, as proposed in the White Paper. That could be done by a content board, as proposed by the Towers Perrin report. It could be done in various ways, but we should not prejudge them now.
I must tell the noble Lord, Lord Brooke of Sutton Mandeville, that we are discussing not delay but doing things in their proper place. This is a skeleton Bill which will set up a body without regulatory functions. It is appropriate for the main Bill, which will cover all the regulatory aspects, to provide for that as well. However, we have the greatest sympathy for the arguments put forward, in particular by the noble Lord, Lord Pilkington of Oxenford.
Lord Pilkington of Oxenford: My Lords, I thank the Minister for that reply. This is a probing amendment, I shall not be taking noble Lords through the Lobby tonight. I thank everyone who has contributed to the debate.
I should like to underline the point made by the noble Lord, Lord Borrie: it is possible to have an independent ombudsman within an overall organisation. We do not have to go the way that the noble Lord, Lord Dubs, suggests and keep the existing regulators.
The Minister said, "where no other legal remedy is being pursued". There may be trouble about that. When the Broadcasting Complaints Commission was set up, it was decided that it could not say that: one cannot deprive a citizen of the right to go to court. If we try to protect Ofcom against people subsequently seeking legal remedies, we may have trouble with the courts and human rights. We must be careful about the wording.

1269
It is crucial that there is independence and no conflict of interest. Therefore, officials must not be involved. There must be either an independent ombudsman—a lawyer-type role—or, as the noble Lord, Lord Dubs, suggests, lay people, although they must be prepared. I do not know what was the streamlining to which the noble Baroness, Lady Howe of Idlicote, referred, but a good deal of work may be involved. Such work certainly governed a large amount of my time.
I agree with the Minister that there will be more resources, which such organisations certainly need. I am grateful for the Minister's reply and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 11:
Page 2, line 38, at end insert
"( ) In fulfilment of the function set out in subsection (1), OFCOM shall have regard to the need (subject to subsection (2))—

(a) to ensure fair and effective competition in the provision of services provided within the communications industry and those connected with them; and

(b) to ensure needs of consumers are protected with regard to both economic consideration and access to communications services."

The noble Baroness said: My Lords, I proposed an identical amendment in Committee, which I withdrew so that I could give proper consideration to the Minister's response. On reading it, I must say that I agree with his description of it as a dusty answer. It is an answer that he has given to previous amendments today. With the greatest respect, a dusty answer is not what is needed to a serious, constructive proposal.
The Bill will set up an all-powerful regulator, if I interpret the White Paper correctly. But this so-called paving Bill requires Ofcom to create its own organisation and to prepare to start functioning only once the definitive Act comes into force. No one suggests that all that it will do is rent an office and buy a few desks and paper clips. It will organise taking over the functions of the existing five regulators. It will have to consider how far those functions are consistent with each other, and how far and in what way any inconsistencies are to be ironed out. It will have to consider how the existing regulators' powers are inadequate for the bewildering rate of change in the technology and hardware, and how the communications industry functions.
The existing regulators and the new Ofcom will not simply sit around waiting for the new definitive Bill. Ofcom will want to hit the ground running once it is commanded to start operating by the Minister. Even if the Government do not intend it or want it to do such preparatory spade work, if Ofcom is to be worth its salt, that is exactly what will happen.
With the best will in the world, and with the cooperation of all parties, the definitive Bill will not be passed until well into next year. Even that assumes that
1270
the definitive Bill is ready, which it probably is not. Ofcom's new staff, and the staff who will be moved to it from existing regulators, will not simply sit around for months planning their holiday rotas.
As I mentioned in Committee, the amendment touches on one major aspect of the new regulator's duties: telecommunications, which received only 78 mentions in the White Paper, compared to 592 references to broadcasting. It is in the area of telecommunications—which is now rapidly becoming another form of pure broadcasting reception—that the public will need the most protection by the regulator. There are constant complaints about the confusing array of charging tariffs; complaints about the lack of transparency about rates of charges, even by the same carrier; complaints about allegedly excessive charges for connection from and to overseas and to other mobile telephones; and, as we have come to expect in other industries, complaints that British users get charged more than our European neighbours for precisely the same purposes.
The amendment, especially paragraph (a), makes it clear right from day one—indeed, even from before day one, from the date of Ofcom's conception—where Ofcom's duty lies. The amendment sets out one of the criteria by which Ofcom will be required to act and gives it something to think about while it waits to become operational, although we do not know when that will be. There is no harm in telling it, even prematurely—I am sure the Minister will use those words when he responds to the amendment—one of the key definitions of its duties. The Government can tell it the same again in the definitive Bill, if they wish. In the mail order industry, with which I used to be involved, there was, and still is, a definition of the ideal leaflet, which comprises three parts: tell them what you are going to tell them; tell them; and then tell them what you have told them. I want to see that Ofcom knows from the first day that this Bill becomes an Act exactly where it stands on this vital subject which in my opinion is item number one on its agenda in its most important function; that is, protecting the public.
If, despite the Minister's sympathy for the objective of this moderate, constructive and definitely not over-prescriptive amendment, the Government's response will be to continue to reject it, I believe that that is an entirely wrong message to send out, not only to the new regulator but also, and perhaps even more especially, to those who will be regulated. They will feel that a free-for-all—a continued free-for-all, if only for the time being—is still in order. I beg to move.
Lord Crickhowell: My Lords, I wish to make one brief point. During the debate on the BBC the Minister, and, indeed, several other noble Lords, kept talking about there being plenty of time. Here we are dealing with another aspect of the activities of Ofcom. I do not believe that there is plenty of time even in the broadcasting area because the rate of change is so fast and already competition is having a destructive effect. By the time decisions are taken some commercial activities will have been destroyed unfairly.

1271
The bewildering rate of change to which my noble friend referred is even greater in this area. Recently I have attended a number of meetings with the Bill team and consultative bodies, organisations such as EURIM, PITCOM and others which are considering these issues. They are all desperately concerned about the rate of change and about the need for action and for decisions. I hope that the response on this occasion will indicate that there will be plenty of time available.
I understand that this is a paving Bill and I understand the inhibitions under which we are working. Indeed, I devoted a large part of my first speech in Committee to criticising the fact that we were proceeding down this road in this way. I suggested that there was a better way of doing it and that the real preparation work could have been proceeded with if my suggestion were followed. At least a message must go out that there is not plenty of time available and that those who are preparing to take over whatever may be given them when finally a Bill is passed through this House should be ready to proceed very fast indeed.
5.15 p.m.
Lord McIntosh of Haringey: My Lords, when we discussed this amendment in Committee, the noble Baroness, Lady Miller, expressed wholehearted support for what she called the great "mission statement" we had set for Ofcom to make the UK home to the most dynamic and competitive communications and media market in the world and to ensure universal access to a choice of diverse, high quality services with proper safeguards to protect the interests of citizens and consumers. Let me return the compliment. We, of course, are in sympathy with the terms of the amendment. However, this is a paving Bill.
There is no question about having plenty of time; this Bill aims to save time and to ensure that when Parliament properly considers all the issues involved in the regulation of communications—I do not think that the noble Lord, Lord Crickhowell, would say that we have done so now; certainly I would not say that—its decisions will be able to be put into effect immediately as the skeleton structure of Ofcom will be in place ready to spring into action.
The objectives were set out in the White Paper. They have achieved fairly universal support, with some obvious exceptions. Ofcom will do its preparatory work while Parliament and others comment on the objectives and transform them into legislation. Meanwhile, surely the right thing to do is not to add elements to a definition, however much we may be in sympathy with them. That applies to Amendment No. 11 of the noble Baroness, Lady Miller, and to Amendment No. 12 of the noble Lord, Lord Corbett. Let us stick to the regulation of communications, which is clear enough, relates to the White Paper and will relate to the communications Bill, but let us not start to put pre-judgments of this kind into this paving Bill.
Baroness Miller of Hendon: My Lords, I thank my noble friend for his support. I also thank the Minister
1272
for trying to return a compliment I paid earlier in Committee. Apart from that, I am not sure whether his response today was either more or less dusty than on the previous occasion we discussed the matter. However, I am aware that he has worked hard and he is clearly having trouble with his throat. I do not wish to prolong his agony. In view of his kind comments, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Corbett of Castle Vale Lord Corbett of Castle Vale moved Amendment No. 12:
Page 2, line 38, at end insert—
"( ) In fulfilment of the functions set out in subsection (1), OFCOM shall have regard to the need to promote the interests of citizens and consumers with regard to communications."
The noble Lord said: My Lords, my noble friend Lord McIntosh was kind enough to acknowledge in Committee that the Government wanted to safeguard the interests of both citizens and consumers in this Bill and the "grown-up" one which will follow. He said:
"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".—[Official Report, 6/11/01; col. 187.]
I return to the issue in the hope of persuading the Minister to make flesh of those shared ambitions by laying a specific duty on Ofcom to promote the interests of citizens and consumers in all that it does and to make that duty as explicit on the face of the Bill as it was in the White Paper. The White Paper said that the interests of citizens and consumers are at the heart of the regulatory framework. That is right, but I invite your Lordships to join in helping to make that crystal clear in the duties we lay upon Ofcom in this paving Bill. We can debate the details in the Bill which will follow.
I wish to mention three reasons why I believe the amendment is necessary and why it is much easier for the Minister to accept it than to dismiss it with a dusty answer. First, it recognises that broadcasting is not mainly about knobs and buttons, as I said in Committee. It is not principally or only about delivery. It is an industry like many others. It makes clear that broadcasting has a vital role in communications in our democracy to inform, educate and involve the citizen. Broadcasting is a two-way street of communication in our democratic process because in unique ways it offers citizens the opportunity to debate and discuss and get involved in their own and wider communities.
Viewers and listeners are not just consumers of broadcast media but also all-round citizens with a need for information, knowledge, education, skills and understanding. In the aftermath of the appalling events of September, that need is probably greater. As responsible and active citizens our ability to access and use information is a matter of the strongest and most overriding self-interest and national interest.
Secondly, the amendment puts a proper duty upon Ofcom to protect and promote the interests of people with disabilities to ensure that they are neither left behind in the digital revolution nor neglected those providing telecommunications services or by

1273
broadcasters. The new regulatory framework must ensure equal access and equally affordable access to digital communication services and equipment for people with disabilities.
The Government must constantly remember, now and when we come to the main Bill, that increased competition must also increase choice and access for people with different abilities, those on low incomes and older people. The White Paper refers to Ofcom giving "due weight" to those needs, which is a long way short of guaranteeing that access barriers will be tackled and overcome, as the Royal National Institute for the Blind argues in its helpful brief.
Finally, the White Paper rightly stresses that,
"the democratic importance of public service broadcasting is as great as the economic justification".
If that welcome aim is to be met, the regulatory framework needs from the start to put the separate interests of citizens and consumers at its heart. Otherwise, as Public Voice—a voluntary sector network set up to protect and promote public service broadcasting—argues, the regulatory system will be driven by the market alone, which will mean that the proper interests of citizens and consumers will take second place at best. I am sure that no one in your Lordships' House wants that to happen.
I am grateful for the support of the Voice of the Listener and Viewer and the National Consumer Council on the amendment. The best way in which I can help the Minister to a speedy recovery from his throat trouble is to recommend that he may find it right and helpful to his medical condition simply to say, "Yes, I accept". I beg to move.
Lord Crickhowell: My Lords, I commiserate with the noble Lord, Lord Corbett, that, during the debate on Amendment No. 11, in his lecture on not prejudging anything, the Minister pre-judged the noble Lord's amendment before it had been moved. That seems a bit hard. I hope that we shall now get a slightly fuller response and not simply be told that the Minister has already answered the points during the debate on Amendment No. 11.
Baroness Miller of Hendon: My Lords, we on these Benches are pleased that the noble Lord, Lord Corbett, has brought this amendment forward so that we can have a little more discussion on it. The noble Lord has spoken very well about what he believes to be in the interests of the consumer and the citizen, so I shall restrict my remarks to a few points.
We are delighted that the White Paper referred to a light touch. I agree with my noble friend Lord Crickhowell that Ofcom should not end up involved in content. I say that simply because one of the real problems for many listeners and viewers—and in many cases both—is that if they have any complaints about the BBC, ITV or any commercial broadcasters, they often do not know where to take them. We in this House know, because we are interested in the paving Bill and in the communications Bill, when it comes.
1274
It would be helpful if one of the duties of Ofcom could be to highlight the route for the ordinary listener or viewer—or both—to know where any complaint can be dealt with and, if it is not dealt with suitably, what they can then do. Although existing consumer panels—or whatever they are called—normally reply very quickly, the consumers often get no more than a brush-off. It would be nice to know whether there was anything further that those consumers could do.
The Earl of Sandwich: My Lords, I too support the amendment. I have already spoken on the subject and the Minister and the noble Baroness know my views. I hope that the Minister can go one step further and be even more obliging than he has been.
Lord McIntosh of Haringey: My Lords, my basic reaction to the amendment can be said very briefly: I agree with everything that the noble Lord, Lord Corbett, said. He made a long speech and it was clearly complicated, so I suppose that I ought to protect myself by saying that I shall read it carefully, but in principle I agree with everything that he said. The only thing that I do not agree on is whether the amendment should go into the Bill. He knew that I was going to say that.
There is a particular reason for my disagreement. I spoke about the importance of distinguishing between the interests of citizens and consumers. The amendment does not do that, so it could give rise to the false assumption that the noble Lord, Lord Corbett, and others think that the interests of citizens and those of consumers are unitary, not potentially divided. However, I shall not make much of that point.
My main point was made by the noble Baroness, Lady Miller, who said that it is important that those in need should know where to go. That is the commitment that is made in this paving Bill. The one decision that is taken in advance of the communications Bill is that there shall be a single regulator. Let us leave it to the communications Bill to go into the necessary detail and leave it to Parliament to cover the huge range of issues that are very properly raised by the amendment.
Lord Corbett of Castle Vale: My Lords, I thank those who have taken part in this short debate and express the fond hope that the Minister has not imperilled his recovery by the length and detail of his response.
It is nice to know that there is such agreement around the Chamber for the second day running—there was wide support yesterday for siting the English national football stadium in Birmingham. My noble friend has accepted the spirit of the amendment. I do not want to put any improper duty on him, but all that remains is for him to see that, if not the words, then at least the spirit of what we are after in the amendment is properly and fully reflected in the main Bill. In that fond hope, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 13:
Page 2, line 38, at end insert—
"( ) It shall be the duty of OFCOM to work with the Office of Fair Trading to develop proposals for the exercise of concurrent powers under the Competition Act 1998 (c. 41) "
The noble Baroness said: My Lords, during the passage of the Competition Act 1998 there was considerable discussion about the merits of concurrent powers being granted to sector regulators. In the end, concurrent powers were granted, in spite of widespread concern that that should not lead to "forum shopping" or the fragmentation of the overall regime for the enforcement of competition law.
We believe that for competition policy to be enforced by multiple bodies, one of them must be primus inter pares. That logic is followed in the Competition Act, which reserves certain key policy-making functions to the OFT alone. The aim of this probing amendment is to secure a commitment to establishing Ofcom as a viable competition in its own right in its own field.
However, we propose that the professional expertise and experience of the Director-General of Fair Trading should be recognised and utilised wherever practical. For example, in the early days of Ofcom, the expertise of the DGFT could assist in the selection of candidates for posts in the parts of Ofcom dealing with competition.
Apart from availing themselves of the DGFT's knowledge of the strengths and weaknesses of particular candidates in an intimate circle of specialised professionals, Ofcom will be able to be aware of any incompatibility between the DGFT and the senior managers discharging competition powers within Ofcom.
I stress that that would not give the DGFT power of veto over appointments. The amendment simply calls for consultation. I imagine that Ofcom, with a choice of candidates from five regulators, will welcome the opportunity of having its cards marked by a knowledgeable outsider.
However, the consultation process called for goes further. There will be input available from the DGFT of his own recent experience in reorganising the Office of Fair Trading following the Competition Act.
The White Paper proposed that Ofcom should have concurrent Competition Act powers with the OFT. At present, although Oftel has such powers, the other four regulators being merged into Ofcom do not. A major task of the new Ofcom, as it complies with the Bill to prepare itself to assume the duties that Parliament will lay on it, will be to make effective plans to exercise its powers in areas where the other four regulators have no experience. The advice and support of the OFT will he invaluable in this area.
However, there is one very important reason why Ofcom should be obliged to work with, or at least to consult with, the OFT. One of the recognised dangers of granting concurrent Competition Act powers to sectoral regulators is that they may apply the Act within their sector in a different way from the OFT and
1276
other regulated sectors of the economy. More than that, in the present case, Ofcom may drift into applying the Act in different ways between the converging, but not necessarily homogeneous, industries over which it presides.
The involvement of the OFT in a consultative capacity is essential if Ofcom is to be set up properly to exercise its Competition Act powers from the very inception of its operations. Consultation with the OFT will also prevent multiple and inconsistent ways in which the Competition Act is enforced. I beg to move.
5.30 p.m.
Lord Borrie: My Lord, I intervene briefly to say that the objective of the noble Baroness, Lady Miller, is highly desirable. However, I doubt whether it is necessary to have an amendment of this sort. Although she is quite right to say that only one of the regulators that are to be absorbed in Ofcom has experience of exercising powers under the Competition Act—namely, Oftel—they have had a concordat voluntarily agreed with the OFT, as indeed have other non-communications regulators, such as Ofgem. I imagine that that would almost certainly take place and would be wholly desirable; otherwise, the two types of regulator—the general and the specialised ones—would get out of kilter. There would be different approaches to the enforcement of the Competition Act, which would be wholly undesirable. Therefore, I support the objectives that are mentioned but I doubt the need for the amendment.
Lord McIntosh of Haringey: My Lords, my noble friend is absolutely right. We set out in the White Paper on communications, and I reiterated in Committee, that Ofcom will have concurrent powers with the Office of Fair Trading under the Competition Act 1998. I can reassure the noble Baroness. Lady Miller, that that is not a new or unusual arrangement. Oftel already has those concurrent powers, as do regulators in other sectors. She referred to the relationship between sectoral regulators and the Office of Fair Trading. However, under this Bill Ofcom will have no regulatory powers until they are conferred on it by the main communications Bill.
I am sure that in due course Ofcom, as a regulator, will work closely with the OFT to ensure a mutual understanding of how such concurrent powers will be exercised, and, indeed, will do so before that. The arrangements will undoubtedly be brought within the scope of the relevant regulations made under the Competition Act.
The informal Concurrency Working Party, which brings together regulators that have concurrent powers, has been instrumental in producing joint guidelines from the OFT and the regulators. We have no reason to expect those arrangements to work less well in respect of Ofcom. In any event, Clause 2 requires Ofcom to do such things as it considers appropriate for facilitating the implementation of any relevant proposals about the regulation of communications. I believe that that requirement quite adequately covers the development of the relationship

1277
with the OFT which the noble Baroness, Lady Miller, wants and which Ofcom in due course considers necessary.
Baroness Miller of Hendon: My Lords, I thank the noble Lord for his reply. I am also grateful to the noble Lord, Lord Borrie, for explaining to me that he was sure that my amendment was not necessary. I certainly hope that he is right; as his experience is greater than mine, I am sure that he is. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Thomson of Monifieth Lord Thomson of Monifieth moved Amendment No. 14:
Page 3, line 5, at end insert "; and
(c) any proposals by the Secretary of State for the conferring on OFCOM of functions relating to restrictions on the holding of licences in Schedule 2 to the Broadcasting Act 1990 (c. 42)".
The noble Lord said: My Lords, this amendment raises matters that were not discussed at earlier stages of the Bill. Therefore, perhaps even at this stage, I might be allowed to say a word or two about the background to it.
While we are paving the way for the "big bang" of the real communications Bill later next year, the world of commercially-funded television broadcasting has been facing the worst recession in advertising revenue since records began. The events of 11th September have made a bad situation worse. ITV, in particular, is suffering from the fact that at present we have a paving Bill rather than the main Bill, which originally, I believe, it had been hoped to bring in at the time of the gracious Speech.
Therefore, there is an urgent need to look at ways and means of introducing more flexibility into varying the financial terms of ITV licences to deal with the unpredictable external changes of the type that, for example, the regulator of Ofwat is able to propose. I have the impression—I hope that it is not inaccurate—that the Government are ready to consider that proposal for the main Bill in due course. I hope I can be assured that at least that is so.
My amendment, which had to be drawn rather narrowly within the limits of the purposes of the Bill, deals specifically with the second area for urgent change necessary to give ITV the financial vitality to fulfil its public service responsibilities. I refer to the need for a change in ownership rules which at present prevent consolidation within ITV. Last year's White Paper gave a rather more than cautious green light to this issue. I gather that there may be another White Paper shortly which will carry the matter further and deal with the wider issues of cross-media and competition aspects.
The amendment seeks to allow government to send a clear signal to the City and to financial circles generally that there will be no bar on plurality grounds to ITV consolidation once the main communications Bill goes through. It could also have the practical
1278
benefit of giving paving Ofcom the task, together with the OFT—rather along the lines proposed by the noble Baroness in her recent amendment—of preparing the groundwork for the inevitable competition issues which ITV consolidation would raise for the United Kingdom advertising markets and, perhaps in particular, for the London advertising market within the United Kingdom. The OFT and Competition Commission would then have much of the necessary basic material to consider any merger proposal quickly after the communications Bill comes on to the statute book.
In my view, and from my considerable experience of the world of commercial television broadcasting, the present position is disturbing and distorting the ecology of the broadcasting landscape. The ITV and BBC, in their separate and competitive ways, provide the very heartlands of public service television in this country. Given the costs of the digital revolution that is now being undertaken, the capacity of that heartland to preserve the values of public service broadcasting is now under considerable threat from the dominating pressures of satellite and cable.
A financially viable ITV system is as essential to the survival of public service broadcasting as is an efficient and dynamic BBC. Therefore, I hope that, when the Bill goes to another place, further consideration can be given as to whether there are ways and means of expediting the process by which ITV can remain a pillar of public service broadcasting. I beg to move.
Lord Lipsey: My Lords, I support the spirit in which the noble Lord, Lord Thomson of Monifieth, moved his amendment. We rightly spend a tremendous amount of time in this House debating the BBC and rather less—given the kinds of people who we are—debating ITV, although it has important public service obligations. I fear for ITV at the moment because it is squeezed between intense competition from channels that are not subject to those public service obligations and a serious crisis in advertising revenue. That crisis developed not just because of present economic circumstances but because of the developing difficulties associated with a channel that has to deliver the kinds of audiences at the kinds of prices that advertisers want to buy. It is therefore vital to preserve the public service capacity of ITV. There is a shift in the balance of advantage between consolidating and not consolidating the ITV companies. Of course one wants maximum diversity and competition but, in the new circumstances, the arguments are tilting towards consolidation. It is good that we in this House should recognise that by debating the amendment.
Lord Crickhowell: My Lords, I reiterate the interest that I declared earlier today. I am chairman of HTV, although those responsibilities are due to come to an end in about three months. I can therefore speak from personal experience of the pressures that are currently felt in the industry. I am the chairman of a company that, to meet its public service obligation—I was delighted that the noble Lords, Lord Thomson and Lord Lipsey, referred explicitly to that

1279
obligation—has to produce more broadcasting hours than any other licence holder. That is because of our dual responsibility for Wales and the west of England. Those are heavy burdens at a time when advertising revenue is collapsing.
I return to an observation that I made in relation to an earlier amendment. I believe that the noble Lord, Lord Thomson, was one of those who said, when considering the BBC, that there is plenty of time and that we must not hurry things. I fully agree with him that on this occasion there is not plenty of time and that the situation is serious. I agree with every word that he said in moving the amendment.
Lord Gordon of Strathblane: My Lords, I, too, endorse the remarks of the noble Lord, Lord Thomson of Monifieth. This is a matter of urgency. We are not debating the matter; we are simply hoping that the Government will take the power unto themselves to do something once the paving Bill has been passed. The proposal is highly desirable.
Lord McNally: My Lords, I have previously argued the case for the BBC. I remember when the noble Lord, Lord Bragg, censured me for not acknowledging the public service role of ITV. I share the concern that has been expressed on all sides of the House. It is not just sweet words that we require from the Minister, although I know that she is very capable of giving them. It is no use having sweet words while the patient bleeds to death. There is a real danger in this context. ITV was working on the assumption that the main Bill would already have been before us and that it would contain powers of consolidation.
Although the noble Lord, Lord Bragg, is not in his place, he will undoubtedly read Hansard. He has promised me a pot of tea while he explains to me the full dimensions of ITV's public service commitment. I shall certainly take him up on the offer. I have always appreciated the fact that, by accident or design, we have in ITV a marvellous addition to our public service broadcasting.
I still think of myself as a child of "Granada-land" and I fully appreciate the regional commitment of our ITV companies. I hope that in consolidation we will retain that amazing richness that ITV brought to broadcasting through the regional network. The noble Lord, Lord Crickhowell, referred to Wales and the West Country. We have all seen the benefit of the ITV network in the regions. However, it now needs consolidation, so that we have strength in our broadcasting ecology. I do not want a level playing field. This is where I differ from the noble Lord, Lord Crickhowell. I want a playing field that allows a strong BBC to retain its public service contribution. I do not want ITV to go. It is as important a part of the commercial competitive side of broadcasting and of public service. I hope that the Minister will give more than sweet words; I hope that she will convey a sense of urgency.
Lord Crickhowell: My Lords, I do not think that anything that I said earlier differs from the argument
1280
of the noble Lord. I, too, want a strong BBC with a public service obligation. I want ITV to be able to survive with its public service obligation as well, and I want it to do so on a level playing field.
Lord McNally: My Lords, my noble friend Lord Thomson has united the noble Lord, Lord Crickhowell, and myself. We now only have to persuade the Minister!
5.45 p.m.
Baroness Miller of Hendon: My Lords, noble Lords will be pleased to hear that we, too, support the amendment. I shall do my best not to repeat arguments already used.
Since the passage of the Broadcasting Act 1990 the whole world of broadcasting has been overtaken by major events: first, by the rapid and continuing expansion of satellite broadcasting, as the noble Lord, Lord Thomson, mentioned; and, secondly, by the advent of digital broadcasting, which is intended to displace analogue broadcasting within a relatively short period. That change to digital is actively encouraged by the Government not because they want everybody to enjoy better sound and sharper television pictures but—probably—because they want to sell the analogue bands to commercial users, such as mobile phone operators and taxi firms.
The situation has changed since 1990 because, despite Schedule 2 to the 1990 Act—that provision, along with the Fair Trading Act, was intended to restrict the amount of media ownership getting into one set of hands and to restrict cross-media ownership—neither of those objectives any longer obtains. One merely has to look at the newspaper empire of Mr Rupert Murdoch, combined with his interest in Sky broadcasting, and at other television broadcasters around the world to appreciate what I mean. I make it absolutely clear that I am not in any way criticising Mr Murdoch or his organisation. He has done only what he is allowed to do as a vigorous and forceful businessman. He has done nothing that he is not entitled to do. However, it is not good for the market or for the public interest that commercial television broadcasting should be dominated by one powerful organisation. I make that point because other noble Lords have not raised it.
The independent television companies have contributed to the fact that they have fallen behind with regard to digital broadcasting. The reception of digital signals via an existing aerial as distinct from one of Mr Murdoch's dishes does not represent effective competition. That is another problem.
On the grounds that "Unity is strength"—noble Lords opposite will fully understand that aphorism—the time has now come to allow television companies to merge if it suits their commercial interests. The way in which Mr Murdoch has created his empire positively demands that he should face viable competition that has the funds and resources to match his own with regard to bidding for the right to broadcast sporting events, to acquire the rights to films and so on. That would be good for him.

1281
I anticipate that the Minister will tell us that it is not appropriate to amend Schedule 2 to the 1990 Act in relation to this Bill. I notice that the Minister nods her head. I agree with her, really. The amendment, as the noble Lord, Lord Thomson, pointed out, does not overturn Schedule 2 to the 1990 Act; it merely requires Ofcom to consider, as part of its preparation for its duties under the substantive Act when that becomes law, the implications of relaxing the rules. That way, it would not have to start from scratch perhaps several years from now.
Such advance preparation is anticipated and it is provided for by the wording of the subsection that we are considering which says:
"references to relevant proposals about the regulation of communications are references to the following proposals (whether or not Parliament has given any approval on which the implementation of the proposals depends)".
I ask your Lordships to note the phrase,
"whether or not Parliament has given any approval".
In other words, Ofcom is being given authority to make preparation for activities that, at the early stages of Ofcom's existence, will not yet have been authorised by Parliament. They are presumably activities that it is anticipated will be included in the substantive Act. The Bill, as it stands, gives authority for two types of activity. The amendment of the noble Lord, Lord Thomson, would merely add a third. We are glad to support that proposition.
Baroness Blackstone: My Lords, I am not sure that my words will be sweet enough for the noble Lord, Lord McNally, although they will be quite sweet. The amendment raises an important issue, but I am afraid that it is not one for discussion at the Report stage of this Bill. The noble Baroness, Lady Miller, rightly predicted that that was what I would say.
Media ownership is a matter that will be addressed by the main communications Bill, so I can give the noble Lord, Lord Thomson of Monifieth, an assurance that that will be addressed.
Noble Lords may be aware that my right honourable friend, the Secretary of State for Culture, Media and Sport recently announced that we would consult on the issue of cross-media ownership. She made reference to a White Paper. In fact, it will not be a White Paper, but a consultation paper which will be published shortly. It will set out our principles and will outline some possible options for reform. Noble Lords will understand that I cannot make any commitments today, nor can I reveal any of the details of the paper before it is published, but they will not have to wait long.
Some noble Lords have suggested that certain ownership rules should be formed immediately. I believe that lay behind some contributions. We understand the importance to business of getting ahead with the changes. I have much sympathy with the predicament in which ITV finds itself. I certainly support what has been said about its importance, including the importance of its public service role.
1282
However, we must get this matter right so that the legislation stands the test of time in what is likely to be a rapidly changing marketplace and one that will continue to change.
We need to bring forward all our proposals on media ownership in a single, coherent package in the communications Bill. It is not practical, nor is it desirable, to deal with the issue in an ad hoc or piecemeal fashion. We are anxious to get this area of policy right so that the legislation will stand the test of time. The changes that we make have to aid the long-term development of a competitive market, while maintaining pluralism and diversity, as mentioned by the noble Baroness, Lady Miller. We aim to publish proposals in the draft Bill next year. There will be a further period of consultation before any of the rules are finalised.
I conclude by explaining that under Clause 2 Ofcom will be able to facilitate the implementation of any proposals that provide it with functions relating to,
"broadcasting, radio and television services or other activities connected with the communications industry".
Those functions will clearly include functions relating to the regulation of media ownership rules as set out in Schedule 2 to the Broadcasting Act, which do not need to be specified separately.
This amendment will have no practical effect. In the light of what I have said I hope that the noble Lord will agree to withdraw it.
Lord Gordon of Strathblane: My Lords, before the Minister sits down, perhaps I can remind her that the amendment of the noble Lord, Lord Thomson, prejudges nothing. It would simply confer the power on the Secretary of State, presumably after the consultation that is about to be initiated, to confer on Ofcom the power to do something about the matter. Otherwise, we are talking of a delay of something like two years. My concern is not the financial health of ITV, but the development of digital terrestrial broadcasting, which may well be non-existent and may well be totally dependent on satellite for the delivery of the new system to which we all aspire.
Baroness Blackstone: My Lords, I understand the point made by my noble friend, but I believe that everything that I have said, in relation to the need for proper consultation and the time to get this matter right, stands.
Lord Thomson of Monifieth: My Lords, I am grateful to the noble Lord, Lord Gordon of Strathblane, for the point that he has made more pungently than I did. Terrestrial, commercial television broadcasting is seriously at risk because of the digital challenge that it faces. The matter is one of great urgency. I am grateful to all noble Lords who have spoken in response to my amendment.
At one stage I had a slight hope that the House may arrive at that rare position of total unanimity, but I understand what the Minister has said on behalf of the Government. I did not expect that this matter could be

1283
incorporated into the Bill at this stage, but I was anxious to underline the urgent matter of the survival of public service terrestrial broadcasting in this country as we understand it. I hope that the debate has brought that point home to the Minister.
I understand that the Minister was seeking to be as helpful as she could be in the circumstances and I welcome the positive assurance that she has given me about the consultation paper that will soon be published and about the main Bill containing a provision for dealing with the ownership issue. I impress upon the Government the need for the greatest possible urgency and the need for the maximum amount of preparation in advance of being able to achieve that under the new Bill when it comes before us. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 15:
Page 3, line 21, at end insert—
"( ) Borrowings under subsection (6) shall not exceed £6 million until legislative effect has been given to the proposals about the regulation of communications referred to in subsection (3)."
The noble Baroness said: My Lords, this amendment is substantially the same as one that I proposed at the previous stage, but which I withdrew so that I could consider the Minister's reply. The difference between this amendment and the previous one is that we now propose that the figure should be £6 million instead of £5 million. The difference is a mere £1 million, which is less than the cost of chartering Concorde for two return trips to the United States of America.
At the previous stage of the Bill, I reminded your Lordships that paragraph 24 of the Explanatory Notes to the Bill said:
"The Government envisages that the extra costs of establishing OFCOM will be of the order of £5 million spread over the period of transition".
As I acknowledged in the debate in Committee, the words, "of the order of" are fairly elastic. As co-operative and as constructive as I always try to be, I told the Minister that I was open to an offer of a slightly higher figure to allow for unforeseen contingencies. In his reply the Minister said that,
"those who have read the report"—
the Towers Perrin report—
"will agree that it does not give us a basis for saying that £5 million is a magic figure and that the sum will not be £5.1 million or £5.5 million".—[Official Report, 29/10/01; col. 1281.]
The £5 million was not my magic figure; it was not Tower Perrin's magic figure; but it was the Government's magic figure that was in the White Paper. It was not I who plucked the figure of £5 million out of the air, but seemingly, it was the Government. If the figure of £5 million was not a reasonably based
1284
estimate, why did the Government insert that figure in the Explanatory Notes? For what purpose did they do that? The Minister went on to say:
"we need that degree of flexibility in the legislation, rather than the rigid figure that would be provided by Amendment No. 23".—[Official Report, 29/10/01; col. 1281.]
It is not Amendment No. 23 today but was on the previous occasion. But it was not my rigid figure; it was the Government's. It was I who offered an opportunity to the Government to be flexible about the figure, but they have not responded by suggesting some additional contingency margin. So it has been up to me in this amendment to propose that margin and that flexibility to increase the Government's own figure by 20 per cent; in other words, by £1 million.
I accept that there is an extension to Parkinson's Law, which says that,
"expenditure increases to absorb the allocated budget".
There is a risk that if we increase the figure from £5 million to £6 million, that is exactly what will be spent. However, the important point is that there must be some cap on expenditure on setting up Ofcom. That body, for the moment, only has the task of preparing for the functions that Parliament may or may not assign to it in a Bill which will be presented to it at some indeterminate time—hopefully, a short time—in the future; a Bill whose contents even the Government are not yet exactly sure of. Otherwise, we would be considering it already rather than having two bites at the cherry.
I repeat that we must have a cap on the amount of seed money that can be spent in advance of the substantive legislation. In the Explanatory Notes to the Bill the Government put a figure on that cap. At the previous stage the Government tried to retreat from that figure, leaving us not with a revised figure but without one at all. The amendment, by seeking to add a generous margin to the Government's estimate, insists that they put the taxpayers' money where the Government's mouth is, or was when the White Paper was written.
Lastly, all the kind and suggestive amendments put forward to give extra jobs for Ofcom to plan for have been turned down on the basis that we cannot burden Ofcom at this stage. Ofcom will just have to get ready to do that. Since it is doing so few things, why can it not stick to at least a figure that is no more than 20 per cent more than the figure arrived at by the Government? I beg to move.
6 p.m.
Lord Crickhowell: My Lords, I rise simply to observe that from my experience of having been chairman of a non-departmental public body, one thing is absolutely certain; that is, whether or not it is in the Bill, the Government will impose a limit of expenditure on the organisation. Therefore, what we are really talking about now is openness and transparency.
The Government tell us that they believe in openness and transparency. So all they have to do is tell us what the limit will be, rather than hide it now and tell the chairman of Ofcom when he is appointed.
Lord McIntosh of Haringey: My Lords, in Committee I offered to write to the noble Baroness. I am afraid that I did not. That may be one reason why the amendment is in the form that it is today.
It may be convenient if I explain the background to our plans for financing Ofcom before it is able to raise revenue from the communications sector. There is an element of misunderstanding here. The amendment places a limit on borrowing from the Secretary of State. It is better not to set out a limit in primary legislation. There is too much uncertainty about how long the preparatory stage will last and what practical steps Ofcom will need to take to prepare to receive the regulatory functions.
I am certain, having heard the noble Baroness, Lady Miller, that there is a confusion between the additional cost over and above the cost to the existing regulators of establishing Ofcom, which is the £5 million referred to in the Explanatory Notes, and the money it will need to borrow to implement its plans, which is the figure in the amendment. During this preparatory stage, almost all the money will come from the Secretary of State. It is possible that existing regulators may give money to Ofcom. If that happens it will be on a relatively small scale.
We want the transition to the new regulatory regime to be as smooth as possible. Ofcom will only be able to take decisions on the practical steps when it is in place next summer. It will be necessary for Ofcom to commission new IT systems, to take on buildings and possibly to give up existing buildings and a host of similar measures. We have not estimated what the costs of such activity may be or how much of it will need to be financed before the transfer of functions takes place.
There will also be the pay, accommodation and other costs for the Ofcom board and its small skeleton staff. We cannot be certain when—this is the most important point—the new main Bill will receive Royal Assent or how soon after that that the regulatory functions will be transferred.
I have described the costs falling on Ofcom. Most—perhaps all—of which will require a loan. But this is a different coverage from the £6 million figure. That covers, as I said, the extra costs of establishing Ofcom. Some of those costs have already been incurred by the two departments and the existing regulators; for example, on the Towers Perrin report. There will be further costs for head-hunters and consultancy before Ofcom is able to undertake any expenditure. So the £5 million figure in the amendment in Committee, and the more generous £6 million figure before us today, are not really relevant to Ofcom's borrowing requirement.
I turn to the point to which the noble Lord, Lord Crickhowell, added extra force—the question of financial controls. The Secretary of State will be best placed to decide how much to lend Ofcom. She certainly will not want to lend any more than she has to. But the National Audit Office will also be responsible. It will be able to look at the loan. The Bill provides for the National Audit Office also to look at Ofcom's finances.
1286
In addition, in Committee we undertook to make regular reports to Parliament on progress with Ofcom. I am sure that these reports should and will cover expenditure. In the light of that explanation, I hope that the noble Baroness will not press the amendment.
Baroness Miller of Hendon: Well, my Lords, that was a very interesting and full reply. I am disappointed that the Minister was not able to give me a guesstimate of what the figure might be. I need to read carefully what he said so the noble Lord can be somewhat relaxed. I confess I was tempted to divide the House and test its feeling. The noble Lord made some very interesting points. He said that Ofcom may need more money because it may be a long time before the substantive Bill comes before Parliament. We shall be able to talk about that interesting matter later. In view of the response from the Minister, I shall do what he says and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Blackstone Baroness Blackstone moved Amendment No. 16:
After Clause 2, insert the following new clause—
"MANAGEM ENT OF OFCOM
OFCOM shall. in managing their affairs, have regard—

(a) to such general guidance concerning the management of the affairs of public bodies as OFCOM consider appropriate; and

(b) subject to any such guidance and only to the extent that they may reasonably be regarded as applicable in relation to a statutory corporation. to generally accepted principles of good corporate governance."

The noble Baroness said: My Lords, in moving Amendment No. 16, I shall speak also to Amendments Nos. 25, 29, 74 to 75 and 86. We had some discussion in Committee about the desirability of Ofcom complying with generally accepted principles of good governance. I indicated that the Government were sympathetic to this suggestion. Amendment No. 16 places such a requirement on Ofcom.
I should emphasise that when we refer to good governance we are thinking of the commercial principles of good corporate governance, in so far as they are relevant to a statutory corporation such as Ofcom but also, and perhaps more importantly, of guidance on the conduct of public bodies, again in so far as it is relevant to Ofcom. In fact, the guidance on the management of public bodies is more likely to be relevant to Ofcom. Hence it takes precedence in the proposed amendment.
In Committee, we had a number of discussions about the appropriate method of recording and monitoring the interests of members of Ofcom. I shall not be bringing forward a specific amendment in relation to that as it is sufficiently covered by the new clause. The guidance on the running of public bodies, to which Ofcom will have to have regard, requires such bodies both to keep a register of the relevant interests of Members and to make them publicly available. I would certainly expect Ofcom to ensure that it complies with this requirement. I hope that that will

1287
ensure that the concerns which have been expressed on the issue are fully met. Amendments Nos. 25 and 29 are purely consequential amendments.
We indicated in Committee that we would be willing to consider a requirement that Ofcom should publish its regulations and procedures. Amendment No. 74 requires Ofcom to do that under paragraph 15 of the schedule. We believe that this provides a more precise requirement and will meet the concerns expressed.
Finally, Amendments Nos. 75 and 86 relate to record keeping and transparency and again follow on from our discussions in Committee. Amendment No. 75 requires Ofcom to record decisions whether made by Ofcom, its committees or its employees acting with delegated authority. By applying the provisions of the Public Records Act to Ofcom, Amendment No. 86 places obligations on Ofcom in respect of maintenance and safekeeping of records. We believe that the Public Records Act is the right vehicle to use to place an obligation of this kind on Ofcom.
On a related matter, noble Lords will recall that in Committee there was discussion of whether it was appropriate to apply the negative resolution procedure to decisions made by the Secretary of State to vary the size of Ofcom. I promised then to write to the Delegated Powers and Regulatory Reform Committee and ask it to reconsider its previous advice that the negative procedure was acceptable. I am pleased to be able to confirm today that the Delegated Powers and Regulatory Reform Committee has considered the issues raised and has stated that it does not wish to change its recommendation. I hope that that will reassure noble Lords that appropriate procedures are being followed and that, as the noble Baroness, Lady Anelay, said in Committee the views of the Delegated Powers and Regulatory Reform Committee can be taken as definitive. I beg to move.
Baroness Anelay of St Johns: My Lords, I welcome the amendments moved today in response to concerns
I expressed in Committee. I acknowledge that they meet fully the precise concerns identified by the Minister.
I thank the noble Baroness for writing to me in advance of Report stage with an explanation of why the Government have chosen this route for the amendments. I am grateful to her today for putting on the record her commitment with regard to the Register of Financial Interests. That indeed troubled me.
The Minister referred to the order-making power about which I tabled an amendment in Committee and which she referred back to the Delegated Powers and Regulatory Reform Committee. That committee was so swift—it discussed the matter yesterday—that I was able to receive a letter on the Front Bench today. I was, therefore, aware of the decision. I have already been able to indicate to the chairman of the committee that I fully accept its decision and have no intention of returning to the matter at Third Reading.
On Question, amendment agreed to.
Clause 3 [Functions of existing regulators]:
[Amendments Nos. 17 and 18 not moved.]
6.15 p.m.
Lord Lipsey Lord Lipsey moved Amendment No. 19:
After Clause 3, insert the following new clause—
"IMPLEMENTATION OF PROPOSALS

(1) The Secretary of State shall ensure that any bill containing provisions relating to the implementation of any relevant proposals within the meaning of section 2(3) is—

(a) published in draft; and

(b) subject to consultation.

(2) The period for consultation shall be such as to allow scrutiny of any draft bill by a joint committee of both flouses of Parliament."

The noble Lord said: My Lords, I have banged on about the case for a Joint Committee of both Houses until the House has been driven to distraction. Were the Minister a less patient person she, too, would have been driven to distraction. Instead she has listened with close attention and has promised to consider the matter. I think that it will be for the convenience of the House if we now hear what the noble Baroness is able to tell us.
Baroness Blackstone: My Lords, my noble friend has made clear his view that we should allow for pre-legislative scrutiny by a Joint Committee of both Houses and I have expressed a good deal of sympathy for that approach. I am extremely grateful to my noble friend for pressing us so hard on this issue.
I am delighted to be able to tell him that the Government are confident that time can be found, if Parliament wishes, for a Joint Committee to undertake this task. Nearer the time we shall invite Parliament to establish such a committee. I hope that on the basis of that assurance my noble friend will feel able to withdraw his amendment.
Baroness Anelay of St Johns: My Lords, as it is Report stage, perhaps I may speak next so that the noble Lord, Lord Lipsey, is able to respond fully to the Minister.
I thank the noble Baroness for listening to the requests made in Committee from all sides of the House that the procedure of a Joint Committee on pre-legislative scrutiny should take place. I appreciate that the Government had to go through certain administrative procedures behind the scenes before they are able to give as near an assurance as any government are able to give on these matters. I welcome the noble Baroness's words today.
Lord McNally: My Lords, before the noble Lord, Lord Lipsey, makes his final comment, perhaps I may say that the House should not underestimate the importance of the Minister's remarks. This is a real, positive step towards good governance. It is an immensely complicated Bill involving a wide range of outside interests. If we had tried to carry it through without the pre-legislative consultation, we should have been seeking in all manner of ways to get points of view across to the House.
We have a real opportunity to invite those outside interests to make their contribution transparently under the scrutiny of Members. It is a really good day

1289
for Parliament when the Government concede such an approach on a major and complicated Bill. Let us hope that this example is followed in many more Bills to come.
Lord Lipsey: My Lords, I thank the Minister for her remarks which were more fulsome than many Members of this House might have expected. I thank, too, the many noble Lords who supported the cause, in particular the noble Baroness, Lady Anelay, and the noble Lord, Lord McNally, who have put their names to the amendment.
It is right to say that this does not involve only Members of this House. We are talking about a Joint Committee. Both opposition parties in the Commons wrote to the Minister asking for such a committee; and the All-Party Media Group backed it. Nevertheless, governments have been known to resist such forces in the past. I hope that it will not be felt to be sycophantic if I welcome greatly the announcement that the Government have made.
As is evident, it is goods news for the communications industry and all the interests involved. It is the way to hammer things out. As the noble Lord, Lord McNally, said this is a very good day for Parliament. This is precisely the kind of Bill which deserves such examination in this forum—pre-scrutiny which can be truly effective because it seeks the best possible results rather than scoring any political points. The Government deserve great credit for agreeing to it. I had thought that we were knocking at a semi-open door. The Minister has opened it wide and we all cheerfully crowd through. I thank the Minister and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 [Winding up of OFCOM on abandonment etc. of proposals]:
Lord Brightman Lord Brightman moved Amendment No. 20:
Page 4, line 24, after "abandonment" insert "or modification"
The noble and learned Lord said: My Lords, in moving the amendment, I speak also to Amendments Nos. 21 and 23.
Amendment No. 20 is a small drafting amendment. I believe that it is worth bringing it before the House because by adding two words to line 24 on page 4 of the Bill we can eliminate no fewer than three lines of the Bill.
Clause 4(1) states:
"If, in consequence of—

(a) the abandonment of any relevant proposals about the regulation of communications, or

(b) the modification of any such proposals,
it appears to the Secretary of State that it is no longer necessary … he may by order provide for the winding up and dissolution of OFCOM".

Precisely the same result can be achieved both in legal effect and in clarity of expression by simply adding the words "or modification" after "abandonment" and removing subsection (1)(b). Subsection (1) would thus become four lines rather
1290
than seven. We should not make a clause any longer than is necessary. Amendment No. 21 is consequential. My Amendment No. 23 is unnecessary if Amendment No. 22, which has been tabled by the Government, takes effect. I beg to move.
Baroness Blackstone: My Lords, I am extremely grateful to the noble and learned Lord, Lord Brightman, for Amendments Nos. 20, 21 and 23. His expertise in these matters and his eye for detail are remarkable. We are happy to accept Amendments Nos. 20 and 21 as we agree that there is little need to separate the reference to "abandonment" or "modification" of relevant proposals, as the Bill currently does.
However, there is some difficulty in accepting consequential Amendment No. 23 to Clause 4, as this could leave some doubt as to what the Secretary of State would be under a duty to act in consequence of. In order to be entirely clear about what is being referred to, we propose Amendment No. 22 to replace the wording,
"If, in consequence of anything mentioned in paragraph (a) or (b) of subsection (I)"
at the start of Clause 4(2), with,
"If in consequence of the abandonment or modification of any relevant proposals about the regulation of communications".
As a result of that change, Amendment No. 24 is also needed to make a minor alteration in Clause 4(2) to the reference to subsection (1).
I hope that the noble and learned Lord, Lord Brightman, is prepared to agree that we should accept Amendment No. 20 and Amendment No. 21, which I hope he will move, and that he should not move Amendment No. 23 but instead agree with our Amendments Nos. 22 and 24.
Amendment No. 84 is a technical, tidying-up amendment to remove superfluous wording that has no effect and should therefore be removed.
On Question, amendment agreed to.
Lord Brightman Lord Brightman moved Amendment No. 21:
Page 4, line 26, leave out paragraph (b).
On Question, amendment agreed to.
The Deputy Speaker (Lord Brougham and Vaux)The Deputy Speaker (Lord Brougham and Vaux): My Lords, if Amendment No. 22 is agreed to I cannot call Amendment No. 23.
Baroness Blackstone Baroness Blackstone moved Amendment No. 22:
Page 4, line 30, leave out from first "of' to first "it" in line 31 and insert "the abandonment or modification of any relevant proposals about the regulation of communications"
On Question, amendment agreed to.
Baroness Blackstone Baroness Blackstone moved Amendments Nos. 24 and 25:
Page 4, line 33, leave out "that subsection" and insert "subsection (1)"
Page 5, line 21, leave out "or 2" and insert ", 2 or (Management 4 OFCOM)"
On Question, amendments agreed to.
Clause 5 [Interpretation]:
[Amendment No. 26 not moved.]
Lord Gordon of Strathblane Lord Gordon of Strathblane had given notice of his intention to move Amendment No. 27:
Page 5, line 28, at end insert—
"(e) the Board of Governors of the BBC;"
The noble Lord said: My Lords, Amendment No. 27 is not moved. It was referred to by myself and the Minister in the debate on Amendment No. 7. In the light of the Minister's reply, it would clearly waste the time of the House to move the amendment tonight. I invite the Minister to look at the clauses in the paving Bill that refer to the phrase "existing regulator". She will find that only one of them refers to a transfer of property. The idea that no property is involved is not a sufficient answer to my amendment. I do not intend to move the amendment.
[Amendment No. 27 not moved.]
[Amendment No. 28 not moved.]
Clause 6 [Short title, commencement and extent]:
Baroness Blackstone Baroness Blackstone moved Amendment No. 29:
Page 6, line 3, leave out "and 2" and insert ", 2 and ( Management of OFCOM)"
On Question, amendment agreed to.
Lord Gordon of Strathblanehad given notice of his intention to move Amendment No. 30:
Page 6, line 5. at end insert
"(2A) No order shall be made under subsection (2)—

(a) until a bill to give effect to the proposals referred to in section 2(3) has been introduced into either House of Parliament, and

(b) unless, before introduction, a draft of such a bill has been published and is available for scrutiny for at least eight sitting weeks of either House.

(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: My Lords, in light of the Minister's helpful remarks in the debate on the amendment moved by the noble Lord, Lord Lipsey, I should like to study them in detail. I think, although I am not certain, that they meet my objections. I do not move the amendment.
[Amendment No. 30 not moved.]
Baroness Miller of Hendon Baroness Miller of Hendon had given notice of her intention to move Amendment No. 31:
Page 6, line 9, at end insert—
"( ) Nothing in this Act shall come into force until a bill, draft or otherwise, to give effect to the proposals referred to in section 2(3) is introduced into either House of Parliament."
The noble Baroness said: My Lords, I take the same action as that of the noble Lord, Lord Gordon of Strathblane.
[Amendment No. 31 not moved.]
Schedule [Further provision about OFCOM]:
Baroness Blackstone Baroness Blackstone moved Amendment No. 32:
Page 7, line 4, leave out "non-staff" and insert "non-executive"
On Question, amendment agreed to.
Baroness Anelay of St Johns Baroness Anelay of St Johns moved Amendment No. 33:
Page 7. line 7, at end insert
"( ) Before appointing a person as a non-staff member of OFCOM, the Secretary of State shall satisfy himself that the appointments panel has taken into account the views of the chairman before making their recommendations as to the appointments to be made."
The noble Baroness said: My Lords, this is a probing amendment. I tabled it to give the Government the opportunity to respond to what I thought was a constructive suggestion put forward by the noble Lord, Lord Dubs, in Committee, at col. 166 on 6th November, on the procedure for appointing non-staff members to Ofcom.
The noble Lord, Lord Dubs, said that the chair of a body such as Ofcom was not usually involved in the Nolan process of selecting members of the board. He suggested that the independent Nolan-type panel should be given the opportunity to have the chair of Ofcom present when making decisions on appointments so that they could ask questions about the detailed requirements of the post rather than having to rely on a written summary and a prepared briefing.
Now that the Minister has had the opportunity to consider that idea, I wonder whether she can put on the record the Government's view. Do they agree that that could be a useful procedure? I beg to move.
Lord Dubs: My Lords, I stick by what I said previously. It represents what would be good practice and I hope that the Government seek to extend it across a range of appointments as a way of making the process more efficient. However, I do not think that it is appropriate for the Bill.
Lord McIntosh of Haringey: My Lords, as the noble Baroness, Lady Anelay said, the amendment concerns the involvement of the chairman of Ofcom in the appointment of non-executive directors. As I said in Committee, the appointment of non-executive members of Ofcom—I am now using the words "non-executive" instead of "non-staff"—will be in line with the guidance issued by the Office of the Commissioner for Public Appointments. The guidance says that departments may seek the views of the chairman of the body concerned on issues such as selection criteria and the balance of the board. Although the guidance says "may", it is an example of when it would be foolish to ignore it.
The chairman will be involved in drawing up the role specifications for a particular board vacancy in putting forward names of potential candidates and

1293
considering names suggested by other sources. The aim of the guidance is to keep chairs fully in touch throughout the appointments process and that will be the case for appointments of non-executive members to Ofcom. There is no need to set that out in the Bill.
On the issue of whether the chair should be present, which my noble friend Lord Dubs raised in Committee, that is a BBC procedure that predates the Nolan proposals. We do not propose to introduce it in this case.
6.30 p.m.
Baroness Anelay of St Johns: My Lords, I am grateful to the Minister for putting on record a further explanation. I made it clear that this was a probing amendment. There are some questions of good practice to which we may return. I am grateful to the Minister for saying that this is one kind of good practice that the organisation would be rather foolish to ignore. I am very interested in the comment of the noble Lord, Lord Dubs, that perhaps this is the kind of good practice that should be practised—for want of a better expression—more widely. I shall look at it in further detail, but at this stage I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Blackstone Baroness Blackstone moved Amendment No. 34:
Page 7, line 9, leave out -non-staff" and insert "non-executive"
On Question, amendment agreed to.
Baroness Anelay of St Johns Baroness Anelay of St Johns moved Amendment No. 35:
Page 7, line 10, at end insert
"( ) Before appointing a person to be the chairman, the Secretary of State shall also satisfy himself that the person will have no employment or other commitments or responsibilities as are likely to affect prejudicially his ability to devote sufficient time to the undertaking of his functions as the chairman and as a member of OFCOM."
The noble Baroness said: My Lords, in moving Amendment No. 35 I shall speak also to Amendment No. 41 which is grouped with it. Both are probing amendments which in a sense are tidying-up questions on matters of good practice which I hope will not need to be taken further if we are given an explanation by the Government. Both amendments deal with the Government's expectations with regard to the role of the members and chairman of Ofcom.
I tabled Amendment No. 35 in response to remarks made by the noble Baroness, Lady Blackstone, in Committee in relation to an amendment which examined the reasons why the Secretary of State should, or could, allow a member of Ofcom to remain in post, even though he or she was incapacitated or unfit to carry out functions as a member of the board. On 6th November the Minister argued at col. 163 of the Official Report that the Secretary of State should retain discretion as to whether or not to remove unfit persons on the basis that they may be only temporarily unfit. The Minister gave as an example the scenario
1294
where an Ofcom member may have taken a temporary job which was in conflict with his or her remaining a member of Ofcom.
The Minister argued that the Secretary of State should be able to leave that person in office while he or she took a temporary break from the work of Ofcom. Has the Minister had an opportunity to consider further the implications of this for the effective operation of Ofcom? After all, at the moment the Bill provides for a maximum of six members of Ofcom: one of them will be chairman and another chief executive. Even if the size of the board is increased by secondary legislation the Government have made it clear that they intend the board should be as small as possible.
There is no doubt that absences from meetings of the board will compromise the operation of Ofcom. Some absences are unavoidable and will not be the choice of the board member, for example, because of his or her illness. But it is altogether another matter if the board member has accepted an appointment to Ofcom knowing full well what the work and its responsibilities entail and subsequently decides to take on another job which he or she knows will prevent that member from doing his or her duty as an Ofcom board member. If that occurred it would not appear to be responsible action by that individual. Certainly, it would be odd if the Government gave anyone the green light to do that.
The Nolan procedures are both welcome and proper, but we should recognise that it takes a considerable time to make appointments. Once made, the successful appointees must be under no illusion that they should take their role seriously and are not able to opt in and out of the work as it may be convenient to their business careers. Can the Minister explain to the House the Government's further thoughts on these matters? For example, will the Secretary of State take a different view if the temporary job is taken by the chairman rather than one of the members; if it is for six months rather than six days—in other words, whether the length of time matters—or if this is the second or subsequent occasion that a member has decided to opt out of his or her Ofcom work?
I turn briefly to Amendment No. 41 which I tabled as a consequence of the comment by the Minister in Committee that,
"the chairman is likely to be part-time".—[Official Report, 29/10/01; col. 1228.]
We have already been told that the appointment of chairman will be made next year. One hopes and assumes, therefore, that the Government have already made great strides in preparing a job description for that post. Can the Government confirm that? If so, will the Government be able to publish it before the Bill leaves this House?
The proposal to have a part-time chairman raises three questions which I should be grateful if the Minister could address tonight. What will be his or her responsibilities? How part-time is "part-time"? How can the work of four existing heads of regulators and the Secretary of State's duties in relation to radio

1295
communications be carried out adequately by one part-time chairman at Ofcom? The Minister may say that one cannot be aware of all this until later, but since she is already on record as saying that the chairman is likely to be part-time one assumes that these matters have been taken into consideration.
The Minister also said, again at col. 1228, that,
"The chief executive will be a full-time appointee and an expert in matters of regulation".
Does that mean that the Government anticipate that the chairman could be inexperienced in such matters? I beg to move.
Lord Borrie: My Lords, towards the end of her remarks on Amendment No. 41 the noble Baroness wondered how the roles of full-time chairmen of five bodies merged into one could possibly be carried out by someone who was only part-time. But, surely, this paving Bill is concerned with the Ofcom that is to be created by the Bill which has a temporary role and the other regulators continue in existence. By Amendment No. 41 the noble Baroness forces the Government from the very beginning to appoint someone who is full time when that may or may not be necessary. I do not know.
Lord Brooke of Sutton Mandeville: My Lords, following the observation of the noble Lord, Lord Borrie, I am very supportive of my noble friend particularly in relation to Amendment No. 41. In no sense am I the spiritual heir of Professor Parkinson, but it is my experience that when Ministers ask individuals to take on jobs which are not necessarily full-time almost always they underestimate the amount of time that those people need to put in to discharge the tasks. Although the Government may be reluctant to see a particular number of hours placed on the face of the Bill, my noble friend introduces an extraordinarily valuable precaution and in that respect I am very supportive of it.
Lord Dubs: My Lords, Amendment No. 35 represents good practice which I am sure takes place anyway. Therefore, there is no point in putting it on the face of the Bill. Amendment No. 41 raises a point of principle. Here I differ from the comments of the noble Lord, Lord Brooke of Sutton Mandeville. To have a chairman of a body work full-time and, therefore, as long as the chief executive, is not totally satisfactory. There may be a conflict of roles and I am not sure that that is a desirable direction in which to proceed. In the end, it may be necessary to have a chairman who is virtually full time, but at this stage to suggest that that is the only way to proceed because five bodies are to be merged weakens the very delicate balance that one seeks to achieve between the chairman and chief executive of an organisation. The more the chairman works full-time the more difficult it is to place the two roles in the right relationship one to the other. I hope that the Government not only reject the amendment but do their best not to have a chairman for as long as five days a week.
Lord McIntosh of Haringey: My Lords, it is true that in Committee we said we expected the chairman of
1296
Ofcom to carry out his functions on a part-time basis. We want the chairman and other non-executive members to bring a range of experience relevant to the responsibilities of Ofcom and to keep that body in touch with the outside world. It is not inconceivable that the chairman could have other calls on his or her time, but that does not mean that he could have commitments or interests which affect prejudicially his ability to devote sufficient time to the undertaking, or that they should be of such a nature as would bring them into conflict with his role as chairman. There is nothing wrong with a part-time appointment. The chairmen of the BBC and ITC are part-time appointments. But clearly it is important that there should not be any conflict of interest, and the Secretary of State will ensure that that is the case.
Similarly, if the noble Baroness is worried about the prospect that the chairman might take a leave of absence which could damage the position. the Secretary of State would consider the matter and certainly would not allow a leave of absence that would render the post unoccupied when it needed to be occupied—if I may put it that way. The Bill provides flexibility in this area. If a short period of absence would not be damaging and other members could provide cover for the post, of course that would be acceptable. Otherwise, we would expect the chairman to resign.
All this will be covered by the job description. Although it is not yet ready, we aim to make it available before the Bill leaves Parliament. I hope that that will be helpful. As regards the onerous tasks of the job, I should point out that the chairman will have to assist him the experience of the board, as well as the support of a full-time chief executive and adequate staff. Provision has been made to increase the size of the board if that is considered necessary.
I hope that, on the basis of those reassurances. the amendment will not be pressed.
Baroness Anelay of St Johns: My Lords, I am grateful to those noble Lords who contributed to our brief debate on these matters. I was intrigued by the contribution of the noble Lord, Lord Borrie. He went to the heart of the issue by saying that we appear to be recruiting a person to become the chair of a body which has a limited range of operation, but which later may well evolve into a far more demanding role. However, the person recruited will need the skills of a chameleon to change the way in which he or she operates. That I believe will be a challenge for the Government in terms of advertising the post as well as a challenge for the candidate who seeks to meet the requirements.
I thank my noble friend Lord Brooke of Sutton Mandeville for his support. He was quite right to point out that whoever is appointed may well find, as so often happens, that no matter what is set out in the job description as regards the amount of time needed to carry out the tasks, the postholder finds that he or she has to do a great deal more work than has been provided for in the job description.

1297
The noble Lord, Lord Dubs, made a proper point as regards taking care not to muddle the roles of the chairman and the chief executive. I certainly would not wish to do so and that was not my intention in tabling the amendments.
I am grateful to the Minister for making two points. First, he believes that the Bill already provides sufficient flexibility in these matters. I hope that is the case and I wait to see whether his assurances are borne out in reality. Secondly, I welcome in particular the fact that he has been able to put on the record the Government's intention to make available the job description for the chairman before the Bill leaves Parliament. I wonder if, by that comment, the noble Lord means that it will be published before the Bill leaves another place. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Blackstone Baroness Blackstone moved Amendments Nos. 36 and 37:
Page 7, line 13, leave out "non-staff" and insert "non-executive"
Page 7, line 14. leave out "non-staff" and insert "non-executive"
On Question, amendments agreed to.
6.45 p.m.
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 38:
Page 7. line 27. at end insert—
"( ) Before appointing members of OFCOM the Secretary of State shall ensure that at all times, where possible, at least two members of OFCOM are qualified lawyers or economists and who have appropriate experience and knowledge of competition law and practice.
( ) A lawyer will he qualified for these purposes only if

(a) he has a seven year general qualification within the meaning of section 71 of the Courts and Legal Services Act 1990 (c. 41),

(b) he is an advocate or solicitor in Scotland of at least seven years' standing, or

(c) he is—

(i) a member of the Bar of Northern Ireland of at least seven years' standing. Or

(ii) a Solicitor of the Supreme Court of Northern Ireland of at least seven years' standing."

The noble Baroness said: My Lords, this probing amendment seeks to drive home the critically important point that Ofcom should be, above all else, an effective competition authority. In particular, it is clear that the Government intend that Ofcom should inherit the concurrent powers under the Competition Act 1998 which at present are held by Oftel. But it also seems likely that concurrent powers will be extended to cover the full, "converged" area of Ofcom's operations, including broadcasting, where at present competition cases are handled by the OFT, not the ITC. Ofcom may therefore end up handling some of the most strategically important competition cases within the United Kingdom, not only in telecoms but also in broadcasting.
In our view it is entirely appropriate to ask the Government to make explicit that they will appoint to the core of Ofcom a number of persons with experience and expertise in that particular area. That does not simply mean appointing those who have general experience either in telecoms or broadcasting circles, but rather people who are expert in the specific field of competition law, in particular as it is applied to telecoms and broadcasting.
As was recognised in the Competition Act, the provisions of the Bill indicate a role for qualified competition lawyers and economists. Indeed, much of the wording of the amendment is lifted directly from the Competition Act—specifically paragraph 26 of Schedule 7—which deals with the qualification of persons for the panel of tribunal chairmen. I beg to move.
Lord Dubs: My Lords, I should like to make a brief intervention. The amendment is interesting in terms of what it reveals about the views of the Conservative Front Bench. The amendment seeks qualified lawyers, but any old economist will do. Noble Lords on the Opposition Front Bench decided not to define, or perhaps could not define, what was meant by suitable economists. A certain weakness lies in the amendment, quite apart from the basic principle being addressed. On second thoughts, I know why the qualifications of the economists were not specified. It could not be done because it was far too difficult. Members on the Conservative Front Bench have left it well alone, thereby exposing a weakness.
More seriously, to define in terms of specialist qualifications what will be required of the members of the Ofcom board is, I believe, to misunderstand the nature of what the Ofcom board ought to be. The legal skills prescribed here strike me as the kind of skills that the board of Ofcom ought to have at its disposal; namely, it describes the kind of advice that should be provided by members of the Ofcom staff. Such expertise should not necessarily be prescribed as skills to be held by individual members of the board. The normal and healthy tradition of government Ministers taking advice from expert civil servants, which acknowledges that the individuals themselves do not have the same level of technical expertise as staff in their departments, serves very well. The same would hold good for Ofcom and similar bodies.
We need individuals for the Ofcom board who prove themselves able to master the technical and skilled advice that they are given, rather than those who are so qualified. After all, many other qualifications could also be listed. I cite, for example, knowledge of broadcasting and of the Internet. Those skills are not listed in the amendment. In fact, the amendment exposes some weaknesses of approach, even though it is only a probing amendment, as the noble Baroness pointed out. Perhaps it has exposed more weaknesses in her thinking than she may have wanted to reveal.
Lord Borrie: My Lords, like my noble friend Lord Dubs I, too, oppose the amendment. I do so for three reasons. The first is rather similar to the points made

1299
by my noble friend. Here we are appointing a regulatory body. We are not, apropos the last remarks of the noble Baroness, Lady Miller, appointing a tribunal. Ofcom will be a regulatory body whose members—as distinct from the staff of that body, who no doubt will need to hold this or that qualification—will need to reach decisions. It would be wholly wrong in principle to insist on particular professional qualifications for some, even if not for all, the members of the board.
My second reason for opposing the amendment is that Ofcom will be a body which the noble Baroness, Lady Anelay, stated will start with a minimum membership of three people and a maximum of six. Out of those three to six members, it is being suggested that two should hold very specific qualifications.
The third reason for opposing the amendment is, as I have said, that the qualifications required are extremely specific. I believe that my noble friend on the Front Bench would have some difficulty in locating such experts when fishing for suitable candidates in what will be a small pool of those who are not only lawyers of a certain standing, but who also have experience and knowledge of a discrete area of law—competition law—which most lawyers would not even admit is a separate topic. It forms part of the larger subject of commercial law. It would be extremely difficult to track down suitable candidates to take on those roles. Thus I believe that there are several reasons for opposing the amendment.
Lord Brooke of Sutton Mandeville: My Lords, I have been absorbed by and have understood the points made by the noble Lords, Lord Dubs and Lord Borrie. In particular I admire the first point made by the noble Lord, Lord Dubs. In that context, I think that he has forgotten the episode of the television production, "Yes, Minister", in which my noble friend Lady Thatcher appeared in person on a proposition that economics should be abolished. In those circumstances, my noble friend has been extraordinarily prudent, in terms of the theology of our party, not to ascribe specific qualifications to economists.
Lord McIntosh of Haringey: My Lords, the last thing I want to do is to offend lawyers or economists, since we are surrounded by them in this House. I was once a university Fellow in Economics at an American university, and I must be the only person to get a second-class degree with three gamma minuses, one of which was in the theory of economics. I also remind the House that one can become a Fellow of the Royal Economic Society and place it after your name simply by subscribing to its journal; not many people know that.
We have always said that, so long as it can operate effectively, we want the board of Ofcom to be as small and flexible as possible. It will need the right mix of experience and skills to cover the range of Ofcom's responsibilities. In the initial preparatory stage, the board will consist of between three and six members. Particular skills and experience, perhaps involving
1300
change of management or human resources issues, may be of greater relevance to the board in the early stages. We may need to enlarge the board when Ofcom starts to take on its regulatory functions. It may be necessary to have members with direct experience of competition law and practice, but Ofcom may also find that it needs board experience covering other areas of its responsibilities. The needs of the board may change; other types of experience and skills could be required. We cannot make that sort of provision in advance. I am glad that the noble Baroness. Lady Miller, has recognised that this is and should be a probing amendment.
Baroness Miller of Hendon: My Lords, first, I thank my noble friend Lord Brooke for riding to the rescue and giving such a happy and friendly example to your Lordships to demonstrate that the comments made by the noble Lord, Lord Dubs, are quite irrelevant With regard to the way in which the noble Lord, Lord Dubs, suggested that I had no idea how to describe the an economist, I have now learned a good deal from the Minister.
This is a probing amendment. One advantage of a probing amendment is that one can ask questions and find out that one is right or completely wrong in what one says. Having previously received few compliments from the noble Lord, Lord Thomson, and agreement having been expressed with some of the things that I have done, I believe that I can stand up quite bravely and say that I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Blackstone Baroness Blackstone moved Amendments Nos. 39 and 40:
Page 7, line 30, leave out "non-staff" and insert "non-executive"
Page 7, line 32, leave out -non-staff- and insert "non-executive"
On Question, amendments agreed to.
[Amendment No. 41 not moved.]
Baroness Blackstone Baroness Blackstone moved Amendments Nos. 42 to 77:
Page 7, line 35, leave out "non-staff' and insert "non-executive"
Page 7, line 37, leave out "non-staff" and insert "non-executive"
Page 8, line 11, leave out "non-staff' and insert "non-executive"
Page 8, line 14, leave out "non-staff" and insert "non-executive"
Page 8, line 18, leave out "non-staff- and insert "non-executive"
Page 8, line 24, leave out "non-staff' and insert "non-executive"
Page 8, line 27, leave out "non-staff" and insert "non-executive"
Page 8, line 28, leave out "a staff" and insert "an executive"
Page 8, line 30, leave out "non-staff" and insert "non-executive"
Page 8, line 31, leave out "staff' and insert "executive"
Page 8, line 32, leave out "non-staff' and insert "non-executive"
Page 8, line 34, leave out "non-staff" and insert "non-executive"
Page 9, line 3, leave out "non-staff" and insert "non-executive"
Page 9, line 10, leave out "staff' and insert "executive"
Page 9, line 12, leave out "staff' and insert "executive"
Page 9, line 13, leave out "staff" and insert "executive"

1301
Page 9, line 15, leave out "non-staff" and insert "non-executive
Page 9, line 17, leave out "non-staff' and insert "non-executive"
Page 9, line 18, leave out "staff- and insert "executive"
Page 9. linssse 24, leave out "non-staff" and insert "non-executive"
Page 9, line 25, leave out "a staff" and insert "an executive"
Page 9, line 28, leave out "non-staff" and insert "non-executive"
Page 9, line 30, leave out "non-staff" and insert "non-executive"
Page 9, line 32, leave out "a staff" and insert "an executive"
Page 9. line 35, leave out "a staff' and insert "an executive"
Page 9, line 38, leave out "a staff" and insert "an executive"
Page 9, line 39, leave out "a staff" and insert "an executive"
Page 9. line 41, leave out "staff" and insert "executive"
Page 9. line 45, leave out "staff' and insert "executive"
Page 10, line 9, leave out "a staff member or a non-staff" and insert "an executive member or a non-executive"
Page 12, line 24, leave out -non-staff' and insert "non-executive"
Page 12, line 26, leave out "non-staff" and insert "non-executive"
Page 12, line 28. at end insert—
"(3A) Ofcom shall publish, in such manner as they consider appropriate, any arrangements which they make under this paragraph."
Page 12. line 29, at end insert—
"15A Ofcom shall make arrangements for the keeping of proper records

(a) of their proceedings;

(b) of the proceedings of any committee established by them;

(c) of the proceedings at any meeting of the chairman and other non-executive members of Ofcom; and

(d) of anything done by an employee or member of Ofcom under paragraph 17(a)."

Page 12, line 33, leave out "non-staff" and insert "non-executive"
Page 12. line 42, leave out "non-staff' and insert "non-executive"
On Question, amendments agreed to.
The Deputy Speaker (Viscount Simon): My Lords, as Amendments Nos. 78 and 79 have been marshalled incorrectly, I have to call Amendment No. 79 before calling Amendment No. 78.
Baroness Anelay of St Johns Baroness Anelay of St Johns moved Amendment No. 79:
Page 13, line 3, at end insert

"( ) In the case of a resolution made under sub-paragraph (3)(a), Ofcom shall publish within 30 days a statement of the interest and the reasons why it was appropriate to disregard it."

The noble Baroness said: My Lords, for the convenience of the House and to save time, I shall refer to the government amendment that we had thought was Amendment No. 78 at the same time as I speak to Amendment No. 79.
I welcome government Amendment No. 78. It fully meets a concern that I expressed in Committee. The reason that I have tabled Amendment No. 79 is to probe one remaining matter about which I am concerned regarding the way in which financial interests shall be declared by members of the Ofcom board and of Ofcom's committees. We are at the tail end of this Report stage, and I am very aware that my
1302
Amendment No. 79 is a tail-end amendment, too. It is a minor matter about which I hope the Government can give an assurance.
Part of my Amendment No. 79 is met by the government's Amendment No. 78. I tabled mine before they tabled theirs. Since it is a probing amendment, I felt that it was not worth taking up your Lordships' time by withdrawing my amendment and retabling something else.
The Government have made some significant improvements to the Bill today with regard to the declaration of financial interests. But, even with the benefit of those amendments and I hope the benefit of the government's Amendment No. 78 when we come to it, the public will not know why the board or committee felt it appropriate to disregard the declaration of interest and then allow the person involved to remain for the decision-making process from which they could possibly obtain financial benefit.
Amendment No. 79 seeks to correct that omission by providing transparency. My amendment would ensure that if someone declared a financial interest and was then allowed to take part in the decision-making process, Ofcom would simply have to publish a statement of the financial interest and the reasons why all the other members agreed to disregard it. It would be given 30 days within which to publish such a statement.
The government's Amendment No. 78 has also given rise to another question which I shall address now in the interests of saving time later. The new clause tabled by the Minister, to which we spoke earlier, gives us the reassurance that the public will be able to gain access to a record of the financial interests of the members of the board. But does that also give them the right to have access to a record of the financial interests of the members of Ofcom's committees, who, of course, need not be members of the board?
If the new clause does not provide that right with regard to committee members' interests, we could find ourselves faced with a position in which a member of a committee who was not a board member was able to benefit financially from a decision taken by the committee that he or she had attended, but the public would have no way of discovering that he or she had participated in that decision in which he or she had a financial interest. It would therefore seem appropriate to extend the provisions of my Amendment No. 79 to the proceedings of committees.
This is a probing amendment at this stage. It may be that the Government can give me some assurance that this problem is covered in another part of the Bill.I should be grateful if the Minister would address that matter. I beg to move.
Baroness Blackstone: My Lords, we agreed in Committee to consider the concerns of the noble Baroness, Lady Anelay, to ensure that serious conflicts of interest do not arise in relation to the committees that Ofcom will be able to establish and, in particular,

1303
whether unanimity should be required in the proceedings of its committees before a declaration of interest by a member of one of those committees could be disregarded.
I believe that the noble Baroness accepts that the highest standards should apply to decisions taken by the members of Ofcom itself. As the members of Ofcom will be acting collectively, we consider that unanimity in meetings of Ofcom and between its members would be appropriate before a declaration of a direct or indirect interest should be disregarded.
As I mentioned in Committee, the Secretary of State must satisfy herself before appointing the chairman and other non-executive members that they do not have financial or other interests which would affect them prejudicially in carrying out their functions as members of Ofcom. However, a member of Ofcom having any form of direct or indirect interest in a matter falling to be considered at a meeting will have to declare that interest. It will be for the other members of Ofcom to decide unanimously whether or not the nature of the interest declared was such that it should disqualify the person concerned.
We will expect the committees established by Ofcom to operate to the highest standards. However, in the case of those committees that are purely advisory in nature, many of their members will be chosen because of their experience or because they represent particular interests. We believe that it would be inappropriate to require unanimity to disregard a declaration of interest on those advisory committees, especially as a single dissenting voice could prevent anyone declaring an entirely legitimate interest from participating in discussions in which their experience would be of value. Therefore, in connection with committees of a purely advisory nature, I hope the noble Baroness will agree that a degree of flexibility should be provided to allow Ofcom to authorise the procedure under which declarations should be dealt with.
With regard to those executive committees established by Ofcom to carry out functions on its behalf, we accept that a higher level of propriety should be expected than might be applied just to advisory committees. Again, as it is likely that many members of executive committees will be chosen for their skills, their experience or to represent particular interests, we do not believe it appropriate that a single voice should be able to prevent participation by those declaring legitimate interests.
Amendment No. 78 therefore proposes that a two-thirds majority of those present and eligible to vote should be in favour of allowing a person declaring an interest to continue to participate in a meeting, subject to the number in favour being above that required for a quorum of the committee. It would again be for the members of the committee in question to decide whether any interest declared was of such a nature that the person should be debarred from participating further in the matter under consideration.
Turning to Amendment No. 79, I can appreciate the purpose which lies behind it. As I have said, we expect Ofcom and its committees to operate to the highest
1304
standards and they should be as open and transparent in their proceedings as possible. We have accepted changes to the Bill to ensure that Ofcom should follow the principles of good governance applicable to it. While I do not believe that it should be necessary to place the matters covered by the amendment on the face of the Bill, Ofcom should certainly follow its spirit. We would therefore expect Ofcom to be as open as possible about the reasons why declarations of interests made at its meetings were disregarded.
Turning to the noble Baroness's more specific question, as publication of interests is a matter of good governance, there is nothing in the Bill in regard to either the board or committee members. I would expect the same practice of good governance to be applied to both.
In the light of what I have said, I hope that the noble Baroness will accept Amendment No. 78 as an improvement and will agree to withdraw Amendment No. 79.
Baroness Anelay of St Johns: My Lords. I am grateful to the Minister for her explanation. I certainly welcome government Amendment No. 78. It is a curious situation where the Marshalled List is wrong and my later amendment is dealt with first.
The Minister raised an interesting point with regard to the difference in the treatment of executive as opposed to advisory committees. That is something I shall wish to consider further in case there are any other implications. I welcome the response of the Minister to my amendment and I beg leave to withdraw Amendment No. 79.
Amendment, by leave, withdrawn.
Baroness Blackstone Baroness Blackstone moved Amendment No. 78:
Page 13, line 3, at end insert—
"(3A) It shall be the duty of OFCOM, in granting authorisations for the purposes of sub-paragraph (3)(b), to secure that a resolution for those purposes does not allow a person to take part in a discussion or decision at a meeting of a committee established by virtue of paragraph 14(1)(a) unless at least the following requirements are met—

(a) the number of other members of the committee in favour of the resolution is not less than two thirds of those who are both present and entitled to vote on the resolution; and

(b) the number of other members of the committee in favour of the resolution is not less than its quorum."

On Question, amendment agreed to.
Baroness Blackstone Baroness Blackstone moved Amendments Nos. 80 to 86:
Page 13, line 5, leave out "non-staff' and insert "non-executive"
Page 13, line 12, leave out "non-staff" and insert "non-executive"
Page 13, line 17, leave out "non-staff' and insert "non-executive"
Page 13, line 19, leave out "the other non-staff" and insert "other non-executive"
Page 13, line 42, leave out "Subject to the following provisions of this paragraph,"
Page 14, line 2, leave out "non-staff" and insert "non-executive"

1305
Page 14, line 39, at end insert—
"Public records
21A In paragraph 3 of Schedule 1 to the Public Records Act 1958 (c. 51) (administrative and departmental records of certain bodies to be public records), in the Table, in Part 2, at the appropriate place there shall be inserted—
'Office of Communications.'"
On Question, amendments agreed to.
Baroness Blackstone Baroness Blackstone moved Amendments Nos. 87 and 88:
Page 15, line 7, leave out ""non-staff" and insert ""non-executive"
Page 15, line 8, leave out "a staff- and insert "an executive"
On Question, amendments agreed to.

Dentists Act 1984 (Amendment) Order 2001
7.4 p.m.
The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath)The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath) rose to move, That the draft order laid before the House on 30th October be approved [8th Report from the Joint Committee].
The noble Lord said: My Lords, as part of the Government's modernisation programme for the NHS, we seek to modernise and make more robust the system of professional self-regulation of the healthcare professions. The order before your Lordships' House today is an important first step towards that aim.
Many of the processes and rules of professional regulatory bodies are bound by primary legislation which pre-dates the modern era of openness and responsiveness. The Government have addressed this by taking powers in the Health Act 1999 to modernise this legislation more rapidly and easily than was previously possible.
Section 60 of the Health Act 1999 enables amendments to be made to primary legislation dealing with the regulation of healthcare and associated professions by Order in Council. The order before your Lordships House today concerns dentistry, and I should like to pay tribute to the role of the General Dental Council. Under the presidency of Professor Nairn Wilson and his predecessor, Dame Margaret Seward, the council has pursued a policy of modernisation since at least 1995. This order will place dentistry among the first professions to make life-long learning a mandatory requirement. But it is just the first part of a programme of reform, and work has already begun on a second order which will cover the fitness to practice of dentists.
The first issue addressed by the order is the composition of the council. The current situation is unsatisfactory because the council is too large to be a fully effective decision-making body and the lay representation too small to ensure a fair balance of patient and consumer interest.
Articles 3 and 4 of the order empower the GDC to reconstitute its council. The exact composition will be the subject of an Order in Council which requires the approval of the Privy Council. The GDC's current thinking is to have a council of between 25 and 30 members, of whom one-third would be lay people and the remainder dentists and professionals complementary to dentistry.
Article 5 of the order provides for the rationalisation of the GDC's committee structure. This provides for the creation of an additional continuing professional development committee and the abolition of the education committee. There has been a misunderstanding in the profession about the education committee proposal. This is a technical amendment. The GDC will continue to have such a committee, with strong representation from the educational institutions to advise on its duty to set educational standards and accredit training institutions, but it will no longer be a statutory committee.
The abolition is proposed because, in contrast to the council's other statutory committees, the education committee has no statutory powers; it cannot suspend or erase a dentist. Removing the committee from primary legislation would therefore give the GDC more flexibility should the composition of the GDC committee responsible for education need to be altered.
Finally, I wish to turn to the other main objective feature of the order, which is about life-long learning for dentists. Continuing professional development programmes are the means by which dentists ensure that their practice is up to date with developments in medical and dental science.
Article 8 of the order empowers the registrar of the GDC to erase from the dental register the name of a dentist who has not met the council's re-certification requirements. However, the GDC recognises that these requirements have to be easily understood by dentists and any sanctions applied fairly. Article 8 also provides for the GDC to make rules on the operation of the re-certification scheme, including the conditions which dentists who have been erased would have to meet to secure restoration to the register.
To provide further assurance that the scheme is fair to dentists, the order provides a right of appeal to a newly-constituted continuing professional development committee for dentists who have been notified that they are to be erased for non-compliance with the council's re-certification scheme. A further right of appeal will then be available to the Privy Council.
Article 9 empowers the GDC to make rules on the procedures to be followed by the CPD committee and the rules of evidence that the committee would have to observe.
I believe that the proposals before the House today are sensible and very much underpin the modernisation of regulation within the profession of dentistry. I commend the order to the House.
Moved, That the draft order laid before the House on 30th October be approved [8th Report from the Joint Committee].—(Lord Hunt of Kings Heath.)
Earl Howe: My Lords, the House will be grateful to the Minister for his clear and helpful explanation of the order, which we welcome.
The contents of the order have been the subject of extensive consultation and I understand that the British Dental Association supports it fully. It seems to me that the order is deserving of a wider welcome, given that its general thrust is to make the General Dental Council more responsive to the concerns of patients and to ensure that the quality agenda in healthcare applies as much to dentists as it does to doctors and other health professionals. That is surely the right direction in which the profession should be moving.
When the Health Act 1999 was debated in this House, we realised the good sense of being able to amend the regulatory arrangements for the health professions by statutory instrument. The advantage of doing so is that of speed. Previously, the only way of making changes of this kind was by primary legislation. It was for that reason that the previous Conservative government found themselves unable to respond to the requests put forward by the General Dental Council in 1996.
This order, which provides for a professional majority on the General Dental Council, preserves the important principle of professional self-regulation. However, that fact and the unamendable nature of statutory instruments create an obligation to ensure that the profession itself is content with the arrangements proposed. We know that that is the case so far as concerns dentists; but it is a point that applies more generally to all the relevant professions, and one to which we shall return as we debate subsequent orders under the 1999 Act.
However, given that the main advantages of the order-making power in the 1999 Act are speed and flexibility, I must ask the Minister why it has taken nearly two and a half years from the passing of the Act to the laying of this order. The dentistry profession has understandably been keen to move forward with these changes as rapidly as possible. Discussions about them began in the summer of 1999. Even allowing for the need to consult, I do not understand why we could not have been debating this order a year ago.
I say that not to be awkward, but to flag up my anxiety that the other measures, which I know the General Dental Council is keen to see approved by Parliament, may not see the light of day for some time to come. I hope I am wrong about that, but it would be helpful to hear from the Minister that progress on the questions of the performance review scheme for poorly performing dentists, misconduct procedures, regulation of the professions allied to dentistry and of dental bodies corporate, and other issues, will be expedited as rapidly as possible.
It is a pity that it has not proved feasible to incorporate all these measures into a single order. But since it has not, I hope that the Government will accept
1308
the case for maximum speed in introducing the remainder of the reform programme, consistent with the need to secure a wide professional consensus.
Lord Clement-Jones: My Lords, I, too, thank the Minister for his clear exposition. I welcome the order. It is worth noting that this is the first use of the powers in the Health Act over which we laboured two years ago. I am sure that this is a useful precedent. I hope that the orders that come before this House in the future are as uncontentious. I suspect that that will not be the case, but we certainly welcome the order before us today.
I have listened with care to the Minister's remarks and I have read the fairly extended discussion on this matter in the First Standing Committee on Delegated Legislation in the other place. There has been a fair working over of the issues set out in the order. Generally in the profession the order is supported on all sides. As the noble Earl, Lord Howe, said, the aims of the order must be supported by us all in terms of not only a smaller and more effective governing body but also in terms of an increase in lay representation, which is clearly going in the right direction. The compulsory professional development of dentists as a precondition for registration is important. On these Benches, we always like the phrase "life long learning". That must surely be a step in the right direction.
We look forward to the forthcoming orders which will reform procedures further. I refer, for example, to the introduction of new complaints systems and the regulation of the professions complementary to dentistry. But will the Minister say what is the time-scale for the orders? It seems that the fitness to practise order is being drafted at present. But the precise nature of the orders is important.
I understand from the debate that took place in another place that only this order is subject to the affirmative resolution. The next set of orders will be subject to the negative procedure. The Minister in another place said that they were orders of the Privy Council. I am not aware of exactly why there should be a difference. If there is a difference, and the negative procedure is used, the point made by the noble Earl, Lord Howe, is important: in circumstances where we do not have the opportunity to question the Minister directly on the orders, consultation is of great importance. That is a minatory note. These orders need airing. We need to have a discussion and make sure that all parties are able to contribute.
Lord Colwyn: My Lords, I am grateful to Minister for the way in which he has explained the order, identified the issues and confirmed the fact that it is the first in a series to modernise the regulation of dentistry. I declare an interest as a practising dentist. I, and the profession, welcome the proposed legislation which will formalise the GDC's current initiative for continuing professional development—life long learning.
This will be phased in from 1st January 2002. The dental profession is solidly behind the GDC initiative. Some 13,000 have already registered voluntarily under

1309
the scheme. That bodes well for the future of dentistry. Compulsory continuing professional development, as a condition of registration, will help to maintain and improve standards in the dental profession, and to enhance public confidence.
The GDC is to be congratulated on having assembled a steering group in 1999, gathering together representatives of all the major stakeholders in the profession in order to take forward the council's proposals with a solid consensus. The proposed changes in the composition of the GDC will make it more manageable and more able to operate responsively and in a strategic way. The proportion of lay members will be tripled. The increase in the membership and participation of the professionals complementary to dentistry is appropriate to pave the way for proposed future registration of nurses and technicians who will join the hygienists and therapists.
The greater separation of the GDC's investigative and prosecuting function from the actual hearing and determination of cases is a crucially important one. The current lack of separation between the prosecution and hearings roles of the council undermines the appearance of fairness. The council's proposals are to create three distinct functions which will fall within the ambit of "fitness for registration". They are: health, conduct and performance.
While declaring my interest as a former chairman of Dental Protection Ltd, I think that the third category is a very positive step. It gives the council a valuable third option, which would allow an under-performing dentist to be assisted with a clear and structured personal development plan in order to allow that dentist to be a safe and useful member of the profession again; as opposed to the present situation, where the dentist is either subjected to severe disciplinary penalties, including suspension and erasure from the register, or where on occasions a decision is postponed, allowing the dentist further opportunity—perhaps a year later—to demonstrate that he or she is fit to practise safely. During this time the dentist tends to be left to his or her own devices.
Under the new arrangements, a performance committee would have a much wider range of constructive options available to it; but only the conduct committee itself would have the power to suspend or erase, or to impose conditional registration. This would appear to be a considerable improvement on the present situation.
Finally, I recognise that this is only the first in a series of orders to which the Government are committed. Subsequent orders covering poor performance, patients at risk, registration of the entire dental team, the introduction of a new complaints system—separated from the GDC to enable patients to seek independent resolution of disputes—and measures to improve the regulation of dental corporate bodies will be introduced early next year.
1310
The modernisation has started. I hope that it can be completed very soon. I welcome the order.
Lord Prys-Davies: My Lords, I, too, welcome the order. I note that the noble Lord, Lord Colwyn, a practising dentist, has given it his complete support. To justify my brief contribution, perhaps I should say that a long time ago I was involved in the NHS for a number of years. I was much concerned about the adequacy of lay representation within the NHS machinery.
The order is a short order of seven pages, but to describe it as such does not reflect its importance to the dental profession and patients in the United Kingdom. I am especially pleased that it paves the way for a strong lay element in the composition of the General Dental Council, and that it will ensure that England, Wales, Scotland and Northern Ireland will have representation and a voice on the council.
The order is therefore a significant improvement on the present position. It is a major milestone in the dental profession's history. It contains some model provisions that could be adopted by other professions within the NHS. I greatly appreciate all the work by the General Dental Council and the departmental team. A great deal of effort has gone into the preparation of the order.
I end with two questions for the Minister. First, when will the retraining scheme come into effect? Secondly—here I end where I began—the order does not contain a job description for a lay member. I did not expect it to do so, but can the Minister confirm that it is not intended that a member of the medical or nursing profession will be deemed to be a lay member for the purpose of the order?
Lord Hunt of Kings Heath: My Lords, I am most grateful for the comments that have been made. I welcome the support of the noble Earl, Lord Howe, for the order. He was right to say that it is broadly supported among the dental profession—and especially by the BDA, which has played an important role in enabling the profession to discuss the proposals. I agree that the GDC will emerge from the order as a more responsive organisation that will be even more committed to ensuring a quality agenda among the dental profession.
I have always been an admirer of the dental profession in this country. Its standards are high compared to those of many other countries. It is much to the profession's credit that it supports the proposals. I have no doubt that the public will be the winner in receiving an even further increased quality of care.
Noble Lords have assumed that this is the first order to be laid under the Health Act 1999. In fact, it is the second. About a year ago, we laid an order providing for immediate changes to the General Medical Council. I can promise many more orders as we go through the health professions one by one. What I cannot do—I express my regret to the noble Earl, Lord Howe, and the noble Lord. Lord Clement-Jones—is to

1311
give a precise timetable at the moment. I will endeavour to keep noble Lords informed of the progress of the various orders that must be laid.
I have noted the comments of the noble Earl, Lord Howe, about professional support for the changes. There has been extensive debate with all of the professions during the past 12 to 24 months, which has been lively. That has helped to inform the process. Each of the orders that will come before your Lordships will ensure professional confidence in the arrangements, but, at the end of the day, the public interest must be paramount.
The noble Earl, Lord Howe, chided me for delay in bringing the order before your Lordships' House. I must tell him that I am aware of the General Dental Council's anxiety that the orders be brought to fruition as soon as possible. When I met the GDC several times, it was clear about that message.
On timing, in May 2000, the GDC sent the department proposals for a Section 60 order along the lines of the order before us. We could not respond immediately, because we had to revise the agreement by which NHS dentists are compensated for loss of earnings through undertaking continuing professional development. We had to take account of the extra CPD required under the GDC's re-certification scheme. Agreement with the profession was not reached until November last year. We published the draft order for consultation on 27th April. That was then delayed by the election, and there was no time to arrange a debate before the summer recess. We laid the order as soon as practicable after Parliament returned in October. I accept that the noble Earl, Lord Howe, is right to press us on speed. I am as committed as he is to ensuring that we deal with the orders as soon as possible.
I was asked about future orders. The orders relating to the GMC, the nursing and midwives council and the Health Professions Council will all be affirmative orders to be debated in your Lordships' House as we are doing today. The orders that will not be affirmative are those that concern the actual membership. Today we are conferring the ability for changes in membership to be made. That will be subject to another order, which will not be an affirmative order.
Lord Clement-Jones: My Lords, in the other place, an honourable friend of the Minister responded to a question from the honourable Member for Oxford, West and Abingdon about how future orders will come before the House. I assume that that Minister was also talking about the orders on complaints and professions complementary to dentistry. She said:
"They will be subject to negative resolution because they will be orders of the Privy Council."—[Official Report, Commons, 14/11/01; col. 11.]
Is the Minister saying that that refers only to the composition of the council?
Lord Hunt of Kings Heath: My Lords, when my honourable friend said that, she was referring to what we may call the subsidiary orders contained in the dental order before your Lordships' House. The
1312
substantive issues relating to dentistry that will be addressed in the second order will be debated in your Lordships' House under the Section 60 provision. As I said, the orders dealing with the other professions will be dealt with in a similar way.
I turn to the comments made by the noble Lord, Lord Colwyn. He is a distinguished dentist in his own right, and I welcome and agree with his comments about the fairness of the regulatory procedures. He asked what matters were to be contained in a further order. Taken together, the orders place dentistry in a good position. It will be leading the way in regulation. I am convinced that, together with the change to the GDC and the discussions taking place between the department and the dentistry profession, the orders lay an excellent foundation for the future.
My noble friend Lord Prys-Davies spoke about his experience of NHS dentistry. I agree with him about the need to increase the number of lay members on the GDC and other regulatory bodies. I can confirm that the order's principle of increasing lay membership will be followed through with the other regulatory bodies.
On the question of when re-certification will commence, provided that the order is passed by your Lordships' House, and provided that the GDC can make its rules by 31st December, re-certification will be mandatory from 1st January 2002. My noble friend then asked how one defines a lay person, and whether it could include a doctor or a nurse. Yes, it could be a doctor or a nurse or, indeed, a Member of your Lordships' House. The definition of "lay" essentially is someone other than a person who could be appointed as a professional member of the GDC. It is right that the lay category should be as broad as possible. However, I also believe it is important that the people appointed to the GDC as lay members can reflect the lay person's view. Of course, great care will be taken to ensure that a high calibre of member is appointed.
I believe that I have responded to all the points that were made. I commend the order to the House.
On Question, Motion agreed to.

Maternity and Parental Leave (Amendment) Regulations 2001
7.30 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville) rose to move, That the draft regulations laid before the House on 18th October be approved [7th Report from the Joint Committee].
The noble Lord said: My Lords, I have great pleasure in presenting to your Lordships significant changes to the Maternity and Parental Leave Regulations.
I should first like to provide some background to the Government's consideration of family friendly policies such as parental leave more generally. At the end of last year a Green Paper on work and parents

1313
was published which set out the Government's commitment to helping working parents achieve a better balance between the needs of their work and their home lives. It put forward a range of options to help improve choice for parents and enhance competitiveness and productivity for business.
The consultation, which asked for the views of both employers and employees on which options they wanted the Government to pursue, finished on 7th March this year. Over 600 formal responses were received by the end of the consultation process. In addition, members of the ministerial group and officials from the review team met almost 300 individuals face to face. They spoke to employers or their representatives, working parents and those representing unions or family groups. Further focus group work was also commissioned with expectant mothers and with small employers across Britain.
What we learnt from this comprehensive consultation was that working parents and employers clearly want more support—support for parents to fulfil their potential as both parents and employees and support for business, particularly small business, to take on board changes in legislation. At the core of the Government's decision-making are two principal elements, therefore—ensuring more choice for parents, together with appropriately light touch regulation for business.
In March this year the Government announced a series of new measures to offer more support to working parents around the time of a child's birth. These measures concerning maternity, paternity and adoption leave had all received strong support during the Green Paper consultation and will largely be taken forward through the Employment Bill which the Government introduced on 7th November.
I turn now to the specific subject of today's debate and the announcement we made in April this year to make changes to the regulations that govern parental leave. At the moment, only parents of children born on or after 15th December 1999, the date on which the right was first introduced, qualify for the right. Similarly, parents of disabled children are at present only entitled to the same amount of leave as other parents of 13 weeks.
When the Government introduced parental leave for the first time at the end of 1999, it was a totally new concept in the UK. We had no experience of how it would work in practice and, although we had, of course, consulted business on its possible effects, we could not be sure what, if any, difficulties it might create for businesses. The Government therefore felt at that time that it was important to introduce the right with a "light-touch" approach to give employers time to understand it and its implications.
The Government believe the parental leave right has worked well since its introduction and, accordingly, that the time is now right to increase the amount of leave to parents of disabled children and to extend the right to parental leave to all parents with children under five. During the Green Paper consultation
1314
exercise, parents and employers were almost universally positive in their support of extending the amount of parental leave for parents of disabled children. This will help to give parents of children with disabilities greater flexibility to strike the balance between working and caring for their child's additional needs. The question of extending entitlement to parental leave to parents of children who were under five at the time the right was first introduced was the subject of a specific consultation following the publication of the Green Paper.
The consultation period closed on 8th August, by the end of which 46 formal responses were received, almost equally split between parents, employers, and their various representative bodies. None of these responses opposed the changes, with the majority supporting the proposals, and the Government are therefore proceeding with them. The Government published their responses to the consultation on 18th October.
The changes to the regulations will mean that parents of disabled children can take 18 weeks' leave up to their child's 18th birthday—an increase of five weeks. Different provisions already exist for parents of disabled children whereby they are able to use their leave over a longer period than other parents—up to their child's 18th birthday. By increasing the amount of time these parents can take off to 18 weeks they can, if they so wish, take one working week off per year in parental leave up to their child's 18th birthday. This will give parents of children with disabilities greater flexibility to strike the balance between working and caring for their child's additional needs, and this move has been strongly supported by business and parents and disability groups.
In addition, the Government believe that the time is now right to increase the number of parents who are able to exercise the right to parental leave. The changes to the regulations will ensure that parents of all children who were under five when the right to parental leave was first introduced will now benefit from it.
One effect of the extension of the right is that transitional arrangements will be needed to cover parents of children who have since reached, or will soon reach, the age of five. The Government's aim is to ensure that these parents are not disadvantaged in comparison with the position if the original right had extended to them in 1999 but as far as possible to preserve the existing requirements of the regulations apart from that.
Under the statutory fallback scheme, which forms part of the original regulations, parents are limited to take a maximum of four weeks' parental leave in any one year. On this basis, it will take just over three years for these parents to take their full entitlement of 13 weeks' leave. The same applies to parents of children who were placed with them for adoption in the five years before the right was first introduced. The amended regulations will therefore give all such parents and adopted parents until 31st March 2005 to exercise their right, and parents of disabled children

1315
will have until their child's 18th birthday to take their 18 weeks' entitlement as provided in current legislation.
We intend, subject to approval here, that the amended regulations will come into force on 10th January 2002. These amendments make sound, sensible and necessary improvements to the law. I therefore very much commend the regulations to the House. I beg to move.
Moved, That the draft regulations laid before the House on 18th October be approved [7th Report from the Joint Committee].—(Lord Sainsbury of Turville.)
Baroness Miller of Hendon: My Lords, I thank the Minister for his explanation of the regulations. I also thank him for the positive history he gave of the consultation process. While we on this side of the House certainly accept the amended regulations, as did the other place, the history of how that arose is not as positive as that of the consultation. I shall try to relate the relevant events as that puts the matter in a proper perspective.
These regulations make three changes to the Maternity and Parental Leave Regulations 1999. Three is a significant number, as the explanatory note provided to your Lordships merely refers to two of them; namely, the retrospective inclusion of certain older children in paragraph 5(2) and increase of the length of leave in the case of disabled children under paragraph 4(b).
However, there is a further important and substantial amendment to the regulations; that is, the provision that employment by a previous employer qualifies an employee for leave from his new employer. I shall turn to the merits of that shortly, but for the moment I should like to be told the reason for the omission of that important provision from the explanatory notes. It seems rather extraordinary that the notes mention two of the provisions but not the third. This is not the first occasion that the DTI has been economical with the facts in the course of these new draft regulations passing through Parliament.
In April, the department issued a press release announcing the extensions to employees' rights covered by the regulations. That press release omitted to mention that the change to the qualifying age was brought about not by the Government suddenly discovering an anomaly in the original regulations or by a spontaneous desire to improve the benefits, but by an action by the TUC for a judicial review of the Government's interpretation of one aspect of the EC directive, which is the source of the original regulations.
The Government resisted the action and resisted it being decided by our own High Court. Instead, it was referred to the European Court of Justice and listed for hearing on 3rd May 2001—a date that your Lordships will recall had some significance, at least for the Government, because it was just a month before the general election.
1316
One week before the hearing date, the Government gave in. Not only that, in the new regulations they have, as is typical of them, gold-plated the directive in a way that I shall describe shortly.
I am sure that the Minister will assure us that that sudden change of heart by the Government had nothing to do with the TUC's possible contribution to the funding of the Labour Party's election campaign. I am sure that the real explanation is that the DTI suddenly realised that the legal advice that it had received previously was hopelessly wrong.
On 1st December 1999, the Minister for Employment and the Regions told the Fifth Standing Committee on Delegated Legislation in the other place:
"All our legal advice tells us that our provision is in accordance with the directive".—[Official Report, Commons Fifth Standing Committee on Delegated Legislation, 1/12/99; col. 15.]
What a pity that, instead of listening to their own advisers, the Government did not listen to the advice of the highly skilled expert on employment law who had been retained by the TUC—Ms Cherie Booth QC—who proved to be right where the Government's lawyers proved to be wrong. What a pity that the Government did not follow the example of the Irish Government, who caved in as soon as the error was pointed out to them.
Last month, my honourable friend the Member for Runnymede and Weybridge asked the Minister in the other place how much this legal fiasco had cost the taxpayer, including, no doubt, the substantial fees justifiably charged by Ms Booth. Answer came there none. At first the Minister claimed:
"The subject is still under negotiation. No settlement has yet been made".
Could the costs still have been under negotiation six months after the settlement of the action? I compliment the lawyers involved for their remarkable forbearance about getting paid for their work.
When pressed by my honourable friend to undertake to write to him when the matter was settled and to say how much money was paid to the TUC, the Minister replied:
"No, I will not".—[Official Report, Commons Fifth Standing Committee on Delegated Legislation, 7/11/01; col. 20.]
I ask the noble Lord, Lord Sainsbury, the same question. I shall not be satisfied with the answer that the Minister in the other place gave, vaguely hinting at "an element of confidentiality". The payment of public money to a litigant with close political links to the Government is a matter of legitimate public concern and interest.
Only last week, I heard the parliamentary ombudsman complaining on the radio about the Government's refusal to comply with one of his rulings. He said that where public money is involved, the public have a right to know how it is being spent. The Government have had adequate time to consider the implications of my honourable friend's legitimate inquiry in the other place and to agree to answer it. If the Minister cannot now give me the information and will not undertake to provide it to me when it becomes

1317
available, I shall return to the matter at a later date. I hope that he will display the characteristic openness that he has always shown me over the Dispatch Box and will co-operate, making it unnecessary for me to consider the issue again later.
I have given the history of the situation because the Minister gave a long history of the consultation and I thought it proper to say something to put the whole matter into perspective. I shall now deal with the substance of the three prongs of the proposed new regulation. First, they will enable a person's employment with a previous employer to qualify him for benefits from his new employer. Secondly, there is a provision retrospectively providing for the start-up date for a child's parents to qualify for maternity and parental leave for children born on or after 19th December 1994. That produces the anomaly that the parents of children who are currently six, seven, eight, nine or 10 are entitled to leave, whereas the parents of those who are born on or after 15th December 1999 will be restricted to the original five years. If I am wrong about that, I am sure that the Minister will tell me.
That bizarre situation arises because the Government botched up the original regulations, fought a pointless action with the TUC when the matter was drawn to their attention and in the end had to find some way to placate the TUC—by gold-plating the directive.
Finally, the least controversial—or the most uncontroversial—aspect is to extend the length of leave to 18 weeks in the case of disabled children. The problems faced by parents of a newborn disabled child do not bear thinking about. In the compassionate society that I believe that we all live in, there has to be room for employers to assist such employees. The vast majority of employers, even small employers, would show great consideration to their employees without the need for the regulation, but I agree that, to cope with the recalcitrant minority, this extension of the regulations is reasonable and necessary.
I have referred to the plight of small businesses, on whom the burden of the regulations and similar legislation impinges. They are the least able to cope when an employee takes time off for parental leave. A small firm with just three or four employees cannot simply spread the work among the other few employees. On the other hand, the Government's new legislation that any employee is entitled to full rights, including on holiday pay, redundancy and unreasonable dismissal, militates against such firms taking on temporary staff. The cost to industry of the burdens imposed by the Government in the previous Parliament is £15.9 billion.
In response to a question from my honourable friend, the Minister in the other place tried to persuade the Committee that the cost was a mere 50p per employee per annum. Only this week, he wrote to my honourable friend admitting that he had inadvertently misled the Committee. He said that the figure of 50p per employee per annum,
1318
"is the cost of the bureaucracy associated with this legislation",
but he did not offer any new estimate of the cost. I do not know whether the Minister is in a position to do so. There is no such thing as a free regulation. In the end, someone has to pay.
As I said at the start, we shall of course accept the regulations—we would not dream of opposing them. They have already been democratically accepted in the other place. We only hope that they will not have an adverse effect on small businesses. I note the Minister's comments that the consultation showed that they probably would not.
Lord Razzall: My Lords, I join the noble Baroness, Lady Miller, in supporting the regulations. I have two brief points to make. First, I hope that the Minister accepts our contention that the method of consultation used for these and many other employment regulations seems to produce answers that are well accepted by employers and employee groups. The Government should be commended on their conduct of such consultation exercises. When all the legislation was brought in there was a lot of criticism that far too much was being left to statutory instruments. The Minister and his predecessor said that one of the objectives was to have extensive consultation. It is important that such regulations are brought in after serious consultation. The Government should be commended on how they are conducting that.
Having said that—having given the olive branch with one hand, perhaps I may take it away with the other—I believe that the noble Baroness had a point. Having listened to it, and as we are nearing the end of our proceedings this week, perhaps I may say that, had the noble Lord, Lord Healey, or the noble and learned Lord, Lord Howe, been in their places, they might have considered that perhaps an opportunity had been missed to savage the Minister with a live sheep.
Nevertheless, the point is well made. Why was the TUC forced into the position of taking a case for judicial review against the Government on something that should have been dear to their hearts? I know that in the nine minutes that the noble Baroness spoke, the point became rather lost. However, I should like to hear from the Minister a simple explanation as to how the Government, with their well intentions, got into the position of being sued by the TUC.
The Earl of Erroll: My Lords, although I empathise fully with the cares and worries of the new parent—I have four children, one of whom is disabled—I believe that it is vital for the future to remember that the purpose of employing someone is to get a job done.
If one is a very small employer—I am talking about employing not two or three people but one secretary—it is absolutely disastrous when that employee moves away. No one else is available to train a temporary or semi-temporary replacement. The employer has to do

1319
it; there is no one else. A very heavy cost is involved. I believe that every time I change secretary, I probably lose about a fortnight's worth of work—perhaps a little more—over a one to three-month period. After a while, such an employer cannot cope with a number of changes.
I believe that people are losing track of what this issue involves. We are losing a sense of reality. We should protect employees, in particular, against unreasonableness and we should protect those in large companies, where people feel that they do not have a voice. However, if this type of legislation continues, I do not know what the very small employer, employing one person who perhaps carries out two different jobs, will do in the future.
Lord Sainsbury of Turville: My Lords, perhaps I may deal with some of the important points that have been raised. I believe that the noble Baroness has been listening to rather too many of the lurid stories that were put forward in the other place about the sequence of events. She cannot accuse us of gold-plating and then say that we did not fully comply with the directive.
The situation is that the TUC's challenge to the regulations came before the then Lord Chief Justice, the noble and learned Lord, Lord Bingham, in a Divisional Court. He considered that the intention of the directive was not clear. Accordingly, he referred the matter to the European Court. Therefore, clearly there is room for disagreement at a very high level as to whether or not we had complied fully. The Government still believe that we complied perfectly properly.
So far as concerns the costs of the TUC's legal challenge, as a Minister said in the other place, they are under discussion. Therefore, I cannot give them now. I believe that it is quite usual for negotiations about legal fees to drag on. However, in the spirit of openness on which the noble Baroness commended me, I should be very happy to write to her when the matter is settled.
So far as concerns the Explanatory Notes, the point is covered. Perhaps I may read out the relevant part:
"A new regulation 13(1A) enables these parents to rely on a period of service with a previous employer in order to satisfy the one-year qualifying service requirement to which the right to take parental leave is subject".
I believe that that covers the particular point that the noble Baroness raised.
My final point concerns the costs. I believe that the noble Baroness explained the figures herself. Two quite different sets of costs are involved, which it pleases some people continuously to confuse. There is the cost of paying more to people in terms of increased wages or salary bills. According to the Government's own regulatory impact assessment, that figure is £5 million a year; that is, approximately 1 per cent of the annual wages and salary bill for the economy as a whole, or just under £4 per employee per week.
I believe that Members of this House, including Members on the other side, have a clear decision to make on that issue. They can say, "We do not want
1320
these particular regulations. We believe that they should be withdrawn and that people should not have these benefits". A straightforward decision can be taken as to whether or not one wants the regulations to be put in place. They may say, "We do not think that the minimum wage is a good thing, although there seems to be some disagreement as to whether that is the case. We think that it should be reduced". Then they can claim legitimately that they would remove that burden from industry.
My honourable friend in the other place referred to the cost of bureaucracy; that is, the procedures that must take place. That cost is 50p a year for each employee and it covers the introduction of the national minimum wage, paid holidays, parental leave, time off for family emergencies, fair treatment of part-time workers and improved maternity provisions.
Finally, the noble Earl, Lord Erroll, mentioned the problems that may arise if people avail themselves of these rights. Of course, there is a provision which allows people to put off the effects of the legislation for six months if difficult cases arise. It appears that the noble Earl has a great deal of experience of secretaries coming and going. Perhaps he should ask himself whether, because they have experience of his work, it is better to keep his secretaries by occasionally giving them parental leave than continually to have them leave their employment. Perhaps they consider that, because they do not receive reasonable leave when they need it as parents, it is very difficult for them to do the job.
The Earl of Erroll: My Lords, none of my secretaries has left because of parental leave problems. I simply point out that in the future I shall be very careful about employing anyone who might possibly qualify for such leave. Having experienced changes of staff, I know that it is very expensive in terms of training and other overheads. I am not an arm of the DHSS, and I believe that it would be nice if the Government started to remember that. I know that I should have responded to consultation. However, I did not even know that it was taking place because this is not the type of debate in which I normally take part.
Lord Sainsbury of Turville: My Lords, I absolutely accept that the noble Earl has this relationship with his secretaries. I believe that he would cut himself off from a very good source of people if he said that anyone who might become a parent would not be suitable for employment by him.
I believe that I have dealt with all the points raised. The changes proposed will help parents to balance the conflict between their work and family commitments. I hope that noble Lords will support the Government today in increasing support for working parents in a way which accommodates the needs of business.
Lord Razzall: My Lords, before the noble Lord sits down, he said that he had dealt with all the points, but he has not dealt with my fundamental question How did this Labour Government get into litigation with the TUC?
Lord Sainsbury of Turville: My Lords, I believe that it is clear that if we believe we are correctly fulfilling the directive and we believe that that is right, then we shall do so regardless of whether the TUC or any other body thinks differently. We are concerned with doing what is right for both working families and business in a way that is flexible and sensible and in a way that both parties can agree. If other parties—for example, the TUC or the CBI—think differently, that does not necessarily deflect us from what we consider to be right. I commend the regulations to the House.
On Question, Motion agreed to.

Organisation for the Prohibition of Chemical Weapons (Immunities and Privileges) Order 2001
7.58 p.m.
Lord Grocott Lord Grocott rose to move, That the draft order laid before the House on 17th October be approved [7th Report from the Joint Committee].
The noble Lord said: My Lords, this draft order will enable the United Kingdom to accept and implement the agreement on privileges and immunities of the Organisation for the Prohibition of Chemical Weapons which was signed by our Ambassador in The Hague and presented to Parliament in April this year (Cmnd. 5099).
The draft order confers privileges and immunities on the organisation, representatives of its members, its officials and experts, as provided for in the OPCW agreement. Those privileges and immunities are comparable to those accorded to similar international organisations and are no more than the Government are internationally obliged to confer under the OPCW agreement.
The United Kingdom is a party to the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction; that title is normally shortened to the Chemical Weapons Convention, or CWC. It entered into force on 29th April 1997 under the Conservative government. It established the Organisation for the Prohibition of Chemical Weapons—OPCW—which is located in The Hague. The CWC is the first multilateral arms control agreement that aims to ban an entire category of weapons of mass destruction in a verifiable manner, and 143 states have now ratified it. Since coming into force, the OPCW has established a rigorous worldwide regime of verification and monitoring. More than 900 inspections have so far taken place in some 49 countries.
The OPCW agreement provides, among other things, for immunity from civil and criminal process for representatives of states, officials and experts. Such matters impinge on the devolved responsibilities of Scotland and Northern Ireland, but not on those of Wales. The devolved Administrations are responsible for observing and implementing those international obligations of the UK that relate to their devolved
1322
responsibilities. Scotland and Northern Ireland have been consulted and are content that the proposed Order in Council under the International Organisations Act 1968 should extend to them.
I am satisfied that the order is compatible with the rights that are contained in the European Convention of Human Rights. I commend the order to the House. I beg to move.
Moved, That the draft order laid before the House on 17th October be approved [7th Report from the Joint Committee].—(Lord Grocott.)
Lord Redesdale: My Lords, we on these Benches have no difficulty in welcoming the order. It is perhaps unfortunate that an order on biological weapons that was ratified by all the major parties is not also on the books in the foreseeable future. We very much welcome the order.
The Earl of Northesk: My Lords, I thank the Minister for his explanation of the order. It will come as no surprise that we on these Benches support it. As the Minister said, the previous Conservative government helped to negotiate the convention and signed and ratified it. Currently, when the potential threat of the terrorist use of chemical weapons is so real, it is all the more important to support the work of the organisation. The order assists with that purpose and is therefore very welcome.
Lord Grocott: My Lords, it is nice to have a note of such universal agreement. I am grateful to the noble Earl, Lord Northesk, and the noble Lord, Lord Redesdale, whom I welcome to his new responsibilities—he has moved from DfID to defence, and I am sure that he will bring the same expertise to this subject as he did to the previous subject.
On Question, Motion agreed to.

Uncertificated Securities Regulations 2001
8.3 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey rose to move, That the draft regulations laid before the House on 22nd October be approved [8th Report from the Joint Committee].
The noble Lord said: My Lords, I beg to move that the draft regulations that were laid before the House on 22nd October be approved. This may be a farewell symphony.
The regulations set out the legislative structure for CREST, which transfers securities electronically without using certificates. The legal framework for CREST is currently provided by the Uncertificated Securities Regulations 1995. This new instrument would re-enact those regulations but with modifications. We had hoped that the changes could have been introduced by amending the Companies Act 1985, but it soon became obvious just how many changes were needed in both primary and secondary legislation. We did not think that that was helpful so

1323
we decided to revoke the 1995 regulations and to reenact them in the modified form that is before the House.
The regulations will improve CREST by bringing in two new reforms: first, the electronic transfer of title, which is known as ETT; and, secondly, delivery versus payment in central bank money, which is called DvP in central bank money. The main advantage of those changes will be that legal transfer of ownership of securities and fully secure payment occur together at the same time. That will bring the UK financial infrastructure to the forefront of international best practice.
There is strong support from the City to implement ETT and DvP because settlement is an important source of revenue and a determinant of the location of financial activity. Because issuers and investors nowadays have greater choice over where they do business, it is essential that the UK remains attractive to them. ETT and DvP will not only bring direct benefits but also be an important factor in maintaining the UK's competitive position.
In view of that widespread support and the highly technical nature of much of the legislation, I do not propose to detain the House with a lengthy explanation of the regulations. However, there are a couple of points that deserve a slightly fuller explanation, the first of which is the electronic transfer of title. When someone transfers an uncertificated security the operator—currently CREST—debits or credits accounts in the system. Notification of the change is sent down a secure network to the company registrar, who updates the register where legal title to the securities and membership of the company is recorded.
The draft regulations define a new concept—the "operator register" of uncertificated shares. In IT and data terms, the registers would be largely the same as the current CREST set of share accounts but would have the legal status of a register, so a change in the register would represent a change in legal ownership. That is the electronic transfer of title. The draft regulations would impose on CRESTCo certain responsibilities concerning keeping the operator register and set out in statute the relationship between CREST and companies and other issuers. They would also make changes for gilts and corporate bonds that are similar to those for shares.
The other main change involves payment for the security. Payment in CREST is made via a number of settlement banks. When the securities are delivered through CREST, the buyer's bank agrees to pay the seller's bank; final payments between the banks are made across accounts at the Bank of England at the end of the day. The buyer's bank guarantees the payment to the seller's bank. However, the seller's bank is exposed to the risk that the buyer's bank becomes insolvent during the day between delivery of the securities and the end-of-day transfers.
That system has served CREST well but it involves settlement in so-called commercial bank money. There is a better international standard—"delivery versus
1324
payment in central bank money". That removes the risk of the settlement banks being exposed to each other during the day; instead, they settle their payments to each other immediately on a gross basis. That process requires a higher level of liquidity: each bank must have more cash in its account at the Bank of England if it has to settle each of its customers' payments immediately than is currently the case. At present, payments are settled (on a net basis) only at the end of the day. The Bank of England has made arrangements to provide a higher level of liquidity for the buyer's bank to pay the seller's bank.
The Bank of England needs some collateral to support that liquidity. To provide that, the buyer's bank will "repo" the shares being purchased to the Bank of England, temporarily obtaining sufficient central bank money to enable the seller's bank to be paid. For DvP in central bank money, that repo needs to be automatic and the regulations have been modified to allow CREST and the Bank to set up such a facility.
During a debate in Committee in the other place, Howard Flight made a constructive and helpful contribution on some detailed legal points. A definitive answer was given in Ruth Kelly's letter to the Committee of 15th November, which was placed in the House of Commons Library. It may interest the House if I refer briefly to two aspects of that letter—they address significant points.
Howard Flight asked about what would happen if the operator's approval were withdrawn. First, there would have to be a consultation period of at least two months. The operator—and others—could make representations. The possible implications of a withdrawal would be assessed and decisions would be taken about what needed to be done as a result. If approval were then withdrawn, there would have to be at least three months' more notice. To make sure that the change took place in an orderly way, the regulations allow transitional provisions to be put in place.
Mr Flight also asked about the issuer's liability if the operator makes a mistake. Broadly, the draft regulations state that the issuer cannot be held liable unless he caused the problem. The regulations provide for no-fault liability on the operator in some circumstances but put a cap on that of £50,000 per instance. That £50,000 maximum broadly reflects the size of retail transfers.
I apologise for detaining the House with a somewhat complicated explanation. That is, however, inevitable given the nature of the subject and the importance of getting the details right. The regulations will enhance the competitiveness of the UK financial markets and will be greatly welcomed in the City. I commend the regulations to the House.
Moved, That the draft regulations laid before the House on 22nd October be approved [8th Report from the Joint Committed.—(Lord McIntosh of Haringey.)
Lord Hodgson of Astley Abbotts: My Lords, I am grateful to the Minister for the characteristically clear

1325
explanation that he has given and, in particular, for the additional information about the follow up to the questions posed by Howard Flight in another place.
This is a technical matter, but none the less, an important one as it affects the transfer of billions of pounds worth of shares every day which affect all of us, whether we are direct investors, pension fund members, or whatever. The public focus tends to be on the Stock Exchange, with lads in red braces, in front of flashing TV screens. However, the settlement procedures may be behind the scenes and appear unglamorous, but nevertheless they are vital to the economy and represent a substantial element of dealing in securities. I shall return to that subject later.
I welcome the regulations because they move the London settlement platform forward. They will bring it up to date, as the Minister has told the House, allowing electronic transfer of title and reducing the risks in the financial settlement of share bargains. I hope that the Minister will not feel that I am ungenerous if I say that I believe that he deserves two cheers and a third cheer will depend upon the replies that he may give to questions that I want to raise tonight.
I have two specific points. The first contains the structure. As I understand the matter, under Regulation 4, applications are made to the Treasury to become an operator and under Regulation 11 the Treasury has the power to delegate the oversight of a scheme to the FSA. I presume that that power will be exercised and I also presume that only one operator, CRESTco, is currently envisaged.
Does the Minister believe that there is likely to be more than one operator, one of whom may be based outside the United Kingdom? If one presumes that there is only one, the regulator will have one "regulatee"—one person to regulate. In those circumstances, it seems to me that the relationships between the two may change. The line between the regulator and an operator may become blurred. There could be a wash-over from the other sections of the financial service industry for which the FSA has responsibility. There are also concerns that there could, under certain circumstances, be conflicts of interest in regulatory duty.
I do not seek to criticise the FSA, but I ask the Minister whether the Government believe that any organisation, however well funded, managed and directed, can take on the increasingly diverse regulatory burden that currently is being laid upon the FSA. No doubt the Minister will recall the debate last night on the resolution put forward by the noble Lord, Lord Levene, during which there was reference to the resources of the FSA and its capacity to discharge them. Can the Minister tell the House whether he is satisfied that this particular approach—the delegation under Regulation 11, assuming it will happen—is in fact the right way to proceed?
My second concern is about shareholder democracy. The ability to hold to account is as vital in a company as it is in a legislature. In recent years there has been
1326
concern that shareholders have become more distanced from the companies in which they invest. That is partially because of dematerialisation and partially because of the effects of PEPs and ISAs, as individuals who hold shares in those do not receive interim and annual reports. Therefore, I seek reassurance from the Minister that, in the Government's view, these regulations do not pose further practical problems for shareholder participation. In a debate in another place, to which the Minister has already referred, Howard Flight raised this issue. Reading the transcript of those proceedings, I did not find the reply of the Economic Secretary to the Treasury wholly convincing.
I also want to raise a strategic issue. These regulations are not the end of the issue, but merely the beginning of the new world. If we are to bring about in Europe the efficiencies of the capital markets that have so benefited the United States of America, there is much more to do. The purchase and sale of shares has three stages: the exchange, which is the price agreement; the settlement, which is the payment; and the registration of title, which is the transfer of ownership. Very properly, the Minister drew attention to those in his opening remarks.
In the United States of America the approach has been to deal with those matters horizontally; that is to say, to create stand-alone organisations, competing with one another in each of those separate functions. In this country, in the City, we are attempting to follow that horizontal approach. Our fellow EU members are not all convinced of the rightness of that approach. They prefer to use the vertical model, combining exchange, settlement and registration in one organisation. Moreover, they combine those in one organisation with each country having its own separate organisation. That leads to duplication and inefficiency; it lacks transparency; and can lead to cross-subsidy.
It is no coincidence that the Deutsche BÖrse, the leading German exchange, is believed to make more out of its settlement activities than out of its trading. It also requires that its bargains are settled within the German settlement system, whereas under the horizontal model, these bargains could be settled wherever they are cheapest, easiest and most convenient to those involved.
The cost inefficiencies of that are huge. They are believed to approach 10 billion euros per annum—£7 billion per annum. That is a cost to the users of markets; it is a cost to the companies who have to operate with higher costs of capital than their competitors in the United States. The elimination of those barriers would be a major step forward for the creation of a pan-European capital market.
As I have said, I welcome these regulations because they strengthen the position of London and they move forward the horizontal model for securities, trading and settlement. But in doing so I ask for the Minister's reassurance on three points. First, are the Government aware of the strategic challenges? Secondly, do they support the horizontal model? Thirdly, will they take all possible measures to remove non-tariff barriers

1327
inherent in the vertical approach. If the Minister can give me assurance on those three points, I shall be pleased to give him my third cheer.
Lord Newby: My Lords, on these Benches we take account of the fact that the City institutions and stakeholders who have operated the system strongly support these regulations. Therefore, we are happy to support them. The Minister deserves at least one cheer for struggling through his speech with such a bad cold.
The Earl of Northesk: My Lords, I too thank the Minister for explaining these regulations to the House and for fleshing out some of the detail of the letter of the Economic Secretary.
CRESTco is a key component of the London financial market. Following the excellent debate initiated by the noble Lord, Lord Levene, yesterday, none of us can be unaware of the importance and significance of the City to the UK economy. Therefore, getting CRESTco and these regulations right is essential.
I am content to let the much greater expertise and knowledge of my noble friend Lord Hodgson serve as scrutiny of some of the wider issues of the measure before us. Indeed, I look forward to the answers from the Minister to the points raised by my noble friend. For my part, I recognise the accuracy of the observation that broadly the regulations are uncontroversial and have the confidence of the City of London. In those terms, we too support them.
Lord McIntosh of Haringey: My Lords, I am grateful to noble Lords for their welcome 2.6 per cent cheers. I shall deal with the points of the noble Lord, Lord Hodgson, in turn. First, it is paragraph 11 and not paragraph 12 which deals with Treasury functions. It is the intention that the Treasury functions should be delegated to the Financial Services Authority.
There is only one operator, CREST, at the moment. But we must and would consider applications from other organisations to add to or replace the CREST system—although in view of the history of that system
1328
and the enormous amounts of money that were expended on setting it up, I am not sure how attractive that would be. If the noble Lord is worried about the burden on the SFA, I can assure him that the burden of controlling one operator, or even two or three, compared with the many thousands of organisations which will be regulated by the SFA as from the end of this month—next week—is minimal. We do not foresee any particular problem.
Nor do we see any problem about the situation becoming too "cosy", as the noble Lord suggests. Again, the SFA regulates a large number of bodies and there have not been any accusations of the kind of relationship that worries him.
I do not see any problem with shareholder democracy. There is no difference between the proposed system and what happens now. The regulations do not alter the relationship between the shareholders and the company. They simply make it easier and safer to transfer shares.
There is no restriction—Howard Flight asked this question—on information to shareholders. Regulation 24(c) does not prevent someone from finding out if he or she is a shareholder. It is possible for other parties to inspect the regularly reconciled records of the operator register. In those circumstances, there is no threat to what the noble Lord calls "shareholder democracy".
The noble Lord, Lord Hodgson, told the House about the difference between the proposed UK system and the German or the European systems. He asked me whether we were aware of the challenge. Indeed, we are aware of it. We believe that these regulations strengthen us in our support—this is the answer to his second question of the horizontal approach. We favour whatever approach the market finds best. The market favours the horizontal model. So the UK follows that rule. I can assure the noble Lord that we take this situation very seriously. We recognise its importance for the future of business in Europe.
On Question, Motion agreed to.
House adjourned at twenty-four minutes past eight o'clock.