HL Deb 26 June 2003 vol 650 cc454-511

4.34 p.m.

Consideration of amendments on Report resumed.

Clause 101 [Civil liability for breach of conditions or enforcement notification]:

Baroness Buscombe moved Amendment No. 65:

Page 97, line 1, leave out paragraph (a).

The noble Baroness said: My Lords, when the Bill was first published, the UK mobile phone operators had two objections to Clause 101(1)(a), which gives third parties the right to sue for breaches of general conditions regardless of any ruling by Ofcom: first, that this right undermines the authority of Ofcom and UK regulatory policy could be developed through case law rather than through Ofcom's own channels for policy development, including consultation with consumers and industry; and secondly, that the right opens up an unnecessary source of regulatory risk (and therefore cost) for the communications providers, a cost that tends to get passed on to consumers.

At Report stage in the House of Commons, the Government brought forward an amendment to the Bill (now part of the Bill in Clause 101(4) and (5)) that provides that a third party will need the consent of Ofcom prior to the bringing of proceedings. That may address the first objection and we therefore welcome the development. It may be that the amendment will, in practice, deal with the second objection too but it still does not entirely eliminate the possibility of being sued for breaching Ofcom's rules without the regulator intervening in the process.

At Committee stage in your Lordships' House, the Government argued against the amendment using, in our view, an incorrect argument. In col. 710 of Hansard on 20th May, the Government stated that a third party had no right of redress against a first breach, even when Oftael had confirmed that a breach had taken place and that that effectively gave an operator a free strike. That is not the case. The third party can sue for damages on the first occasion after Oftel's determination.

It is not expected that this power will be widely used, particularly as complainants have the option of having a complaint resolved by Ofcom (or for small claims some other independent resolution procedure such as the Ombudsman) for free. The main concern is that a very large multinational company may use this right to ride a coach and horses through the carefully drafted policies of Ofcom by going straight to a court, albeit with Ofcom's consent.

While acknowledging that the need to obtain Ofcom's consent reduces the risk that regulatory policy could develop independently of Ofcom, the new wording in the Bill raises some other issues. First, there is no indication of the basis on which Ofcom would decide whether to consent to such proceedings or the procedures the regulator would follow in taking such a decision, for example, allowing the litigants to make representations. Secondly, if Ofcom had not previously investigated the matter, it might feel compelled to conduct a full investigation before deciding whether to consent. However, if the breach complained about is in the past, then that would be just a waste of Ofcom's resources. Thirdly, if Ofcom gives its consent to the action being brought, could that actually prejudice a defendant's position? The implication of Ofcom's consent would be, rightly or wrongly, that Ofcom considers a licence breach to have occurred, or at least that it is happy for the court to conclude that such a breach occurred. It would therefore be preferable to delete Clause 101(1)(a) as the amendment seeks to do. I beg to move.

Lord Avebury

My Lords, we agree entirely with the argument that has been advanced by the noble Baroness, Lady Buscombe. I shall not repeat what she has said about the remarks of the noble Lord, Lord McIntosh, in Committee, except to say that we entirely agree with her analysis. The Minister got it wrong when he said that a third party could not sue for damages on the basis of the harm caused by the breach that led to Oftel's determination. As the noble Baroness said, that was said on 20th May at col. 710 of Hansard.

I have one point to add to what the noble Baroness has said. We see this provision as being a new departure in the regulation of communications networks and that there is no requirement in the new directive for it. There is no evidence of harm being caused by the lack of the provisions in the existing regime. So we support entirely what the noble Baroness has said.

Lord McIntosh of Haringey

My Lords, although this is exactly the same amendment as in Committee the arguments now being advanced for it are rather different. Virtually the only point of contact which the noble Lord, Lord Avebury, in particular brought forward last time is the right of third parties to sue on the first occasion.

In the light of the fact that I have only just heard the arguments from the noble Baroness, Lady Buscombe, and some of the arguments from the noble Lord, Lord Avebury, I will take the matter away and discuss it further with both of them before Third Reading. I would wish the amendment to be withdrawn, but I do not wish to resist it on the same basis as last time.

Baroness Buscombe

My Lords, I am very grateful to the Minister for his response. Perhaps I have taken him a little by surprise with my arguments today. I am extremely grateful to him for the opportunity and I am sure the noble Lord, Lord Avebury, would concur that we would be grateful for that meeting and discussion. On that basis I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 103 [Application of the electronic communications code]:

Lord Avebury moved Amendment No. 66:

Page 98, line 41, at end insert— ( ) In this section persons to whom the electronic communications code may be applied shall not be restricted to telecommunications operators.

The noble Lord said: My Lords, since we discussed the matter in Committee, the noble Lord, Lord Evans, has written to me, drawing attention to the consultation paper, The Granting of the Electronic Communications Code by Oftel, issued by the Director General of Telecommunications on 2nd April. In particular, he drew attention to paragraph 1.12, which states: the Telecommunications Code applies only to telecommunications system providers. The Electronic Communications Code will apply to all electronic communication network providers, including broadcast transmission providers".

The noble Lord says that he does not think anything could be clearer than that. It is true that the intention is plain, but I suggest to your Lordships that words in a consultation document do not have the force of law, which I pointed out on the previous occasion. I quoted paragraphs 2.12 and 2.13 of the consultation paper and I said that the words gave encouragement to the owners of towers and masts, whose efforts have already led to extensive sharing of facilities, reducing the number of sites needed.

Annex A, which deals with the criteria for granting code powers, implies at paragraph 7 that broadcast transmission providers will not receive them automatically. Our amendment is modest and only embodies the sense of Annex A in the Bill, so we hope that it will commend itself to the Government. I beg to move.

Lord Evans of Temple Guiting

My Lords, as the noble Lord, Lord Avebury, said, Amendment No. 66 is designed to allow Ofcom to apply the electronic communications code to persons other than telecommunications operators. Under the new regime there will no longer be "telecommunications operators", as I said in Committee; instead there will be providers of electronic communications networks and providers of electronic communications services.

A person who has the electronic communications code applied receives substantial rights and has substantial obligations imposed. The Bill is currently drafted under Clause 103(4) to allow Ofcom to apply the code to both those who will provide electronic communications networks directly and those who will make available conduit systems to providers of electronic communications networks.

I assure you that the code can apply to providers of electronic communications networks other than the existing telecommunications providers and the providers of broadcasting networks such as Crown Castle will, like any other provider, be able to provide for code powers under the new arrangements. Indeed, the consultation paper already mentioned issued on 2nd April by the Director General of Telecommunications on The Granting of the Electronic Communications Code by Oftel makes it clear at paragraph 1.12 that, the Telecommunications Code applies only to telecommunications system providers. The Electronic Communications Code will apply to all electronic communication network providers, including broadcast transmission providers". I do not think that that could be clearer, or that anything else could be achieved by an amendment to the Bill.

We believe that the code should be available only to those who either have infrastructure or are providing conduits. Furthermore, extending it beyond those limits would upset the code's delicate balance. The proposed amendment would widen excessively the range of potential applicants for the benefits it provides and so undermine the balance.

In Committee we understood that the amendment was intended to relate to a concern expressed by Crown Castle about the current procedures for the control of rent for space on shared transmitter masts. The code is not the applicable instrument for that concern. The market review of broadcasting transmissions services will determine what regime is applied in the future.

All secondary legislation, including the general development orders, will, wherever we consider it necessary, be amended by an order made under Clause 399, so I ask the noble Lord to withdraw the amendment.

Lord Avebury

My Lords, It is helpful to have that assurance on the record, even though I would have preferred to have a provision in the Bill, because something written down in a code does not have the force of law. But having the Minister's assurances on the record goes some way to what we were asking for. Therefore I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.45 p.m.

Clauses 104 to 116 agreed to.

Clause 117 [Conditions regulating premium rate services]:

Lord McIntosh of Haringey moved Amendment No. 67:

Page 111, line 13, leave out "or (11)" and insert", (11) or (11A)"

The noble Lord said: My Lords, in moving the amendment I shall speak also to Amendments Nos. 68, 69, 71 and 72. It may be convenient to the House if I speak also to Amendments Nos. 69A and 70.

We had a rough ride with comparable amendments in Committee, which we introduced in response to concerns from ICSTIS on premium rate services. Government Amendments Nos. 67, 68, 69, 71 and 72 deal with the issues we discussed in Committee in connection with what were then Amendments Nos. 122A to 122D. They sought to respond to the concerns expressed by my noble friend Lady Gould of Potternewton during Second Reading about regulating certain premium rate services emanating from abroad.

As I agreed in Committee, officials have discussed the matters further with the operators and with ICSTIS, and I understand that these amendments meet the operators' concerns articulated during the debate, as well as those of ICSTIS.

Amendment No. 68 is aimed at ensuring that even when a premium rate service provider is located abroad and the arrangements for the use of the electronic communications network for the provision of the premium rate service in this country is via an intermediary, there is still a person who is subject to regulation.

Amendment No. 69, like the previous Amendment No. 122D, defines what is meant by an intermediary service provider for the purpose of these provisions. It is expanded slightly from the previous version to deal with situations in which there might be chains of intermediaries through which premium rate services might be delivered. Amendment No. 67 is consequential on those two amendments.

Amendment No. 71 is new. It restricts the obligations that a code approved by Ofcom could place on a communications provider falling within subsection 117(11A). In accordance with this amendment, such obligations are permitted only if three tests are met: first, the provider concerned is the only person against whom it is practicable to take regulatory action; secondly, the obligation arises only after notice has been given by the code enforcer of the premium rate service and the manner in which it is alleged to have breached the code; and thirdly, the obligation is solely to secure that the network does not deliver the premium rate service to persons in the United Kingdom.

I understand that that restriction removes the concerns of the operators expressed during Committee without jeopardising the effectiveness of the regulatory regime. Amendment No. 72 places the corresponding restriction on an order that might be made by Ofcom in the absence of a code.

We have no desire to place undue burdens on providers of electronic communications services. In Clauses 117 to 121 we are providing a regulatory regime which enables the code-making body in conjunction with Ofcom to ensure that consumers are not disadvantaged by the less scrupulous PRS providers—which will be the primary target of the regulatory regime.

But experience shows that there are times when the normal operation of the code is insufficient, and ICSTIS or Oftel has needed to ask—and, if necessary, to compel—the operator of an electronic communications service or network carrying the PRS service to act. It would be a matter of last resort that a network provider falling within Clause 117(11A) would be required to take action. But without that power of last resort, we would be leaving a great loophole in the arrangements, which I gather all interests agree should be plugged in the way that we now propose.

The amendments would ensure that the PRS regime operates effectively but without placing undue burdens on the operators.

Amendment No. 69A is at first sight very seductive. Nobody would argue that the interests of premium rate service providers—some of which have sadly shown themselves to be not terribly scrupulous—should be placed above the interests of the man, woman and child in the street. But it is too simplistic to say that we should include in the statute book a requirement that the new premium rate service regime places the interests of consumers above those of premium rate service providers. Taken literally, that could mean that consumers should pay next to nothing for the services, and providers should be deprived of a reasonable profit.

The risk of following the approach in the amendment would be that ordinary, decent premium rate service providers would be unable to offer commercially viable services and the customer would be deprived of many services to which they have shown they want to subscribe. We know that there are lots of complaints about some premium rate services, especially those pandering to people's baser instincts. But that overshadows the fact that premium rate services are much in demand by consumers across a wider spectrum: information about news, weather, financial services and sport; product helplines and entertainment such as quizzes, competitions and voting on television shows. It is now a billion pound industry with above-average growth because consumers want to use it and there are providers to supply the public with what they want.

In the premium rate service regulatory regime we need a continuation of the existing arrangements that seek to ensure that, among other things, consumers know that they are being charged a premium and the rate of the premium. There are arrangements for reducing the risk of inappropriate services reaching children and to enable the rogue elements in the industry to be dealt with effectively. The regime that we are providing for gives that assurance, so there is no need for the amendment.

Clause 118(2)(b) provides that Ofcom must not approve a code unless the code-making and enforcing body is independent of the providers of premium rate services. There is therefore no need to fear that the code will lean unduly in favour of suppliers. The amendment is not only unnecessary, it could be positively harmful to the provision of services that consumers have shown that they want.

We covered some of the ground on Amendment No. 70 in Committee, but I am happy to re-emphasise our agreement that we should not place unnecessary barriers in the way of innovation and investment in new services. That is particularly important in the sphere of premium rate services, in which there has been considerable growth in recent years with every prospect of it continuing.

However, with the growth of new services, there are always dangers of abuse. While most premium rate service providers are perfectly honourable and provide good, useful services, some would use them to fleece the unsuspecting public, including, I am afraid, children. We must therefore be wary of what we do.

I know that there are concerns about the current limit in the ICSTIS code of £20 before online services must be terminated by forced release. That limit related to only certain kinds of calls, notably online services, pay-for-product services and sexual entertainment services. In each of those categories, the code provides that the limit does not apply if ICSTIS gives prior consent. If business-to-business video conferencing were arranged in such a way that it fell within the provisions of the code applying for online services, it is likely that ICSTIS would give prior permission for the limits not to apply.

Apart from that, the amendment is unnecessary. Ofcom is already constrained as regards approving a code for regulating premium rate services. In accordance with Clause 118(2)(d) to (g) it cannot approve a code unless it is satisfied that: it is objectively justifiable, it does not discriminate unduly, it is proportionate to the intended effect and it is transparent. Those are significant constraints on the actions of Ofcom. In my view, they are adequate to provide the right balance to ensure that any code does not unnecessarily constrain innovation and investment.

Given the scope for abuse in this area, I do not think that we should feel comfortable with sacrificing customers on the altar of innovation and investment to new ways of ripping them off. I beg to move.

Lord Lucas

My Lords, I shall speak to Amendment No. 69A, which stands in my name. I am extremely grateful to the Minister for giving me the Government's attitude to the amendment before I speak to it. It will shorten my comments. I am also very grateful to my noble friend Lady Buscombe for moving my amendment in Committee and for the Minister's extremely helpful reply.

We agree that the current system is well catered for in the Bill as drafted, and that the current situation can continue under the Bill as it is. My difficulty is that I am not at all happy with things as they are now. I would like the Bill to strengthen ICSTIS's mettle when dealing with certain current abuses. I find two such abuses particularly offensive.

The first is scratch cards that drop out of magazines regularly with the promise of a large prize. Of course, everybody has won. You then phone a premium rate number to find out what you have won. The card states that the call will cost seven quid or whatever. Although it lists many prizes, what almost everybody has won is the right to pay more money—about ninety quid this time—to the company promoting the competition to learn more about the holiday that you might win if you pay yet more money.

That is as close to fraud as anything. Not only is the whole business rotten, but there are glaring inadequacies in the wording that ICSTIS has permitted on the cards. First, no identifiable company or person is involved in promoting the competitions. Usually there is an accommodation but no proper name or means of contact. Secondly, no proper information is given on the chances of winning any of the other prizes or the real value of those prizes. So far as I can work out, the chance of winning the monetary prize—that is what hooks you—of £15,000, for example, is around 140 million to one, which is 10 times lower than the national lottery. But that is nowhere stated on the card. You must read the very small print of associated papers to discover that the prizes are on offer over a very long period and apply to only one card that may not have been received, let alone posted. There is no easy way of finding out who has won in the past or what their bona fides are.

From many points of view, the business is clearly run on the basis that those funding it pay less than the person providing the service—a great deal less, because there is much wastage in the system. It is clearly a bad deal for people, but that is not disclosed. ICSTIS is allowing that to happen and intends to allow it to continue. I would like to see something stronger in the Bill to deal with it.

My other problem is competitions promoted on radio and television in which you must ring a premium rate number for a chance to win a prize. Again, you are given no information on your chances of winning. You may have an estimation of the prize value—a Centre Court ticket for the finals at Wimbledon, or something nice—but you are not told the chances of winning, so you have no idea whether it is worthwhile shelling out a quid. Indeed, the reason that the competitions are so frequent is that it is not worthwhile. People ring in enormous numbers, and businesses can garner a great deal of money from offering such competitions on premium rate services. I do not object to the practice, but the consumer should be offered a proper level of information. Again, ICSTIS appears to have no plans to change that. I should like to see something in the Bill that focused the attention of ICSTIS on the interests of the consumer, and not for it to say that there is only a limited space on the ticket and one cannot include everything—or to say that there are some uncertainties over how many people will ring in response to a radio appeal, so that one cannot give any information. It is not acceptable that one cannot do anything because the matter is difficult. There are barriers that we have overcome in many other areas of consumer businesses—not least the education service—and I would be delighted if the Bill added an extra tooth or two to bite on the shameful laxity of ICSTIS in not dealing with these abuses of the system.

5 p.m.

Baroness Howe of Idlicote

My Lords, I rise briefly to support the noble Lord, Lord Lucas, in the points that he has just made. The Minister might be right in the phrasing of the amendment, but could we have more detail of exactly what the circumstances are in these types of competitions? People do them once, maybe they do them more than once. If they do them once, then caveat emptor, theoretically. But, as we all know, there are some people who are rather more gambling-orientated than others.

The matter that needs addressing, although it might not be possible in this Bill, is the extent to which one should be told the benefits up front, and who has won—if anyone. All the details should be there. At the moment, either they are not, or they are in such small print that it becomes a complete fraud. The matter is not just about things that fall out of magazines, although that does happen. Magazines such as Reader's Digest also go in for this sort of thing, which surprises and horrifies me. It would be interesting to know from the Minister whether this Bill is an appropriate place to take action, or whether there is some other way in which we can grapple with this question.

Lord Avebury

My Lords, I intend to make a long and boring speech on this matter—particularly as everybody else has said they shall make short and snappy speeches. However, it might turn out to be the other way round—that those who say that they shall make short speeches go on at great length. My speech, which starts with the opposite undertaking, will not detain your Lordships for long.

I agree with the thought that lies behind the amendment of the noble Lord, Lord Lucas. Might the matter not be better dealt with by the use of the code? ICSTIS has just published, in draft, what it calls the Communications Bill version of the code of practice and sought comments by 16th June. That date has only just passed, so if the noble Lord sends ICSTIS a copy of his speech, it might be able to think about the matter and see whether it would be possible to cope with the kind of annoyance and sharp practice that he has outlined. He gave a specific example that is nowhere near the general grounds that he attempts to deal with in Amendment No. 69A.

The current ICSTIS code does not mention 3G—the third generation mobile phone networks—which are likely to offer services of the kind that were described by the Minister, such as video conferencing over the Internet. That would cost much more than the£20 limit, which leads to automatic cut-off under the present code. It would be useful for the suppliers of 3G and other advanced networks to have read the comments of the Minister about the likelihood that business-to-business video conferencing would be given prior approval. They will be reassured by his reaffirmation that the code would not discourage innovation and investment in new forms of content-based communications.

I was not certain how to interpret the Minister's comment that such a provision in the Bill would inhibit the regulator from dealing with many of the matters that are counter-productive in the present habits of some of the fringe operators in the PRS system. Incidentally, the draft code has to be approved by Ofcom, under Clause 118. Will the Minister give the earliest date that this would happen? What rules would apply to services offered by 3G networks at the moment?

Baroness Wilcox

My Lords, we welcome the Government bringing forward these amendments on premium rate services in response to oar debate in Committee. I was rising to speak to my Amendment No. 70, but the noble Lord, Lord Avebury, made my case for me. I take some comfort from the Minister's comments. He has picked up on the area to which the noble Lord, Lord Avebury, referred, and to which I intended to speak. I shall not repeat that again. I shall take the opportunity to say that we support Amendment No. 69A, tabled by my noble friend Lord Lucas. We sympathise with it, and hope that the Government take it seriously.

Lord McIntosh of Haringey

My Lords, I take very seriously the points that have been raised, and I understand the comments of the noble Lord, Lord Lucas, about scratch cards and competitions promoted on radio and television—and the lack of information and identification that leads to the risk of serious exploitation. He will not be surprised if I say that his amendment would penalise many more reputable people, rather than providing a remedy for the matter that he describes. Nevertheless, he makes important points on enforcement—because that is the issue—and they deserve attention.

The noble Lord, Lord Avebury, said that the noble Lord, Lord Lucas, should send his comments to ICSTIS. He does not need to—I shall. I shall also draw the attention of ICSTIS to the debate. In fairness to ICSTIS, some of the points that he has made are for the criminal law. They go beyond the scope of the powers of ICSTIS. Even for an independent regulator such as ICSTIS—perhaps especially for an independent regulator—it would be difficult to deal with some of the abuses without going to law.

I agree with the noble Lord, Lord Avebury, about the fact that there are other services than video conferencing which would benefit from the prior approval regime that I have described. I agree with him that 3G is likely to be among those. I assure him that ISCTIS would deal with them by prior approval, in the same way as they would for video conferencing. He asked me about the date of approval of the code. Oftel is consulting on the conditions that might be set under Clause 117. That consultation is likely to be very brief before the code is approved, because we have been over this ground. There will be no unnecessary delay in approving the code. I agree with him and the noble Baroness, Lady Wilcox, in supporting the principles behind the amendment of the noble Lord, Lord Lucas. However, there is general agreement that these amendments and Amendment No. 70 ought not to be added to the Government amendments, the welcome for which I am grateful for.

Lord Peston

My Lords, perhaps I may interrupt the Minister before he sits down, because I am not sure that I followed his logic. He seemed to be immensely encouraging to the noble Lord, Lord Lucas, but only up to the point of saying that nothing could be done. Did I understand the Minister correctly that ISCTS could do things, but it is not doing them, and that the moment that he writes to ICSTIS it will take action? Is he saying that ICSTIS could institute the criminal law among its possible actions? I regard myself as streetwise and am used to going down Petticoat Lane and seeing the hucksters there. Unlike the example given by the noble Lord, Lord Lucas, there one ends up paying more or less the right price for the product. The whole point is to make one buy it. The point of the remarks made by the noble Lord, Lord Lucas, is that you really are being ripped off to an enormous degree. Those of us who are sitting and watching that happen are asking the usual question: "How can it be going on?" I also follow the noble Baroness, Lady Howe, in saying that people who would otherwise regard themselves as reputable are doing this. Is my noble friend the Minister confident that, without anything else happening, the relevant bodies can do something about that—or will it just go on?

Lord McIntosh of Haringey

My Lords, these things are going on, they are undesirable and ways must be found of stopping them. However, ICSTIS is developing a code that Oftel and, in future, Ofcom, will have to approve. We look to that code for protection for consumers. Although the code will not be long delayed, it is not available yet. However, there is the backstop of the criminal law, which is available to everybody.

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendments Nos. 68 and 69:

Page 111, line 28, at end insert— (11 A) A person falls within this subsection if—

  1. (a) he is the provider of an electronic communications network used for the provision of the relevant service; and
  2. (b) the use of that network for the provision of premium rate services, or of services that include or may include premium rate services, is authorised by an agreement subsisting between that person and either an intermediary service provider or a person who is a provider of the relevant service by virtue of subsection (10) or (11)."

Page 111, line 41, at end insert "and— intermediary service provider" means a person who—

  1. (a) provides an electronic communications service used for the provision of the relevant service or an electronic communications network so used; and
  2. (b) is a party to an agreement with—
  1. (i) a provider of the relevant service falling within subsection (9)(a) to (d), or
  2. (ii) another intermediary service provider,
which relates to the use of that electronic communications service or network for the provision of premium rate services, or of services that include or may include premium rate services.

On Question, amendments agreed to.

[Amendments Nos. 69A and 70 not moved.]

Lord McIntosh of Haringey moved Amendments No. 71:

Page 112, line 22. at end insert— ( ) OFCOM are not for those purposes to approve so much of a code as imposes an obligation as respects a premium rate service on a person who is a provider of the service by virtue only of section 117(11A) ("the relevant provider") unless they are satisfied that the obligation—

  1. (a) arises only if there is no one who is a provider of the service otherwise than by virtue of section 117(11A) against whom it is practicable to take action;
  2. (b) arises only after a notice identifying the service and setting out respects in which requirements of the code have been contravened in relation to it has been given to the relevant provider by the person responsible for enforcing the code; and
  3. (c) is confined to an obligation to secure that electronic communications networks provided by the relevant provider are not used for making the service available to persons who are in the United Kingdom."

On Question, amendment agreed to.

Clause 119 [Orders by OFCOM in the absence of a code under s.118]:

Lord McIntosh of Haringey moved Amendment No. 72:

Page 113, line 41, at end insert— ( ) An order under this section is not to impose an obligation as respects a premium rate service on a person who is a provider of the service by virtue only of section 117(11A) ("the relevant provider") unless the obligation—

  1. (a) arises only if there is no one who is a provider of the service otherwise than by virtue of section 117(11A) against whom it is practicable to take action;
  2. (b) arises only after a notice identifying the service and setting out respects in which requirements of the order have been contravened in relation to it has been given to the relevant provider by OFCOM; and
  3. (c) is confined to an obligation to secure that electronic communications networks provided by the relevant provider are not used for making the service available to persons who are in the United Kingdom."

On Question, amendment agreed to.

Baroness Buscombe moved Amendment No. 73: After Clause 131, insert the following new clause—


(1) This section applies where by virtue of a restrictive covenant, the owner of any premises is restricted, either absolutely or to any extent—

  1. (a) in choosing electronic communications services,
  2. (b) in choosing a supplier of such services, or
  3. (c) with respect to any other electronic communications matter.

(2) Where this section applies, the covenant, to the extent that it restricts the owner of premises as mentioned in subsection (1)—

  1. (a) if it requires (expressly or otherwise) the consent of any person to be obtained before anything to which the restriction relates is done, shall have effect as if it required that consent not to be unreasonably withheld; and
  2. (b) in any other case, shall have effect as if it required the consent of the person entitled to the benefit of the restrictive covenant to the doing of anything to which the restriction relates not to be unreasonably withheld.

(3) Subsections (5) to (7) of section 131 shall apply in relation to a restriction falling within subsection (2) above as those subsections apply in relation to a prohibition or restriction falling within subsection (1) or (2) of section 131.

(4) Section 396 applies to the powers of OFCOM to make orders under this section."

The noble Baroness said: My Lords, in speaking to the amendment, I shall also speak to Amendment No. 243.

The new clause was debated in Committee and rejected by the Government. The Minister made a number of points at that time that merit further discussion at this stage. As I explained in Committee, the issue in general concerns many occupiers of leased and rented properties as well as many freehold property owners who are prevented from obtaining television and telephony services from the provider of their choice because of restrictions in their leases or tenancy agreements or, in the case of freehold property owners, a restricted covenant.

The Government have to an extent recognised the problem. Clause 131 provides that a lessee's request for the lifting of any relevant restriction can be refused by the lessor only on reasonable grounds. That would seem to be an appropriate balance between the rights of lessors and lessees. As I said in Committee, however, Clause 131 does not go far enough. In particular, it does not address the issue of restricted covenants in freehold property. That is the purpose of my amendment.

In Committee, the Minister indicated that the Government are not opposed in principle to taking an approach on freehold covenants comparable to that for leasehold agreements in Clause 131. That is a welcome statement. However, he went on to explain that the new clause and amendment could not be accepted because the Government were riot convinced that any problems were being experienced, as they had not heard any evidence to that effect. In any case, he suggested, it would be improper to issue new legislative requirements on such a matter, affecting the law on property, without full consultation. I wish to press him further on those two arguments.

First, it is my understanding from discussions with industry that a problem exists and that it can affect the installations of terrestrial aerials as well as satellite dishes. That is why the industry has asked me to press the issue. If there were no problem, I doubt that they would expend resources in trying to get it addressed. Therefore, will the Minister explain the basis on which he has become unconvinced? It does not mean that a problem does not exist simply because he is unaware of any evidence. Is that lack of awareness the only basis for the Government's position? Surely, it would be better to say simply that the Government do not know.

That brings me on to the second issue—that of a wider consultation. Amendment No. 243 would require the Secretary of State to consult Ofcom and such other persons as appear appropriate before bringing the clause into force. The Government have argued in Committee that the need for full consultation on the substance of the issue might not fit easily with the provision. I agree that consultation on the substance is required—and the intention of the amendment is to make that possible.

If the Government persist with their view, perhaps the Minister could provide clarification of the Government's plans to consult further on the issue, in order that they understand the extent of the problem and necessary actions as well as the views of those affected prior to any action being taken. I presume that the Minister is not going to wait until analogue switch-off to discover that freehold covenants represent a barrier to access to digital television, when it is too late to do anything about it. I beg to move.

5.15 p.m.

Lord McIntosh of Haringey

My Lords, we had this amendment in Committee, and the noble Baroness, Lady Buscombe has adequately represented my response to it. I am a little surprised, because the noble Baroness has not really raised any new issues about the two difficulties that I had with the amendment.

I said that I would need evidence that there is actually a problem. After all, a very small minority of freehold properties have covenants on them. I have explained to the House before now that I have a freehold property with a covenant on it from the early 1920s, which prohibits not only the selling but also the consumption of alcohol on the premises. Needless to say, we assured ourselves that the covenant was not enforceable before we bought the house.

It is not up to the Government to go out searching for evidence. If Sky, or anyone else interested in dishes or aerials, has examples of difficulties that have arisen, it is up to them to come to us and we will consider what should be done.

My second problem, which I had thought that the noble Baroness recognised, is that property law is always complicated. She, as a lawyer, should recognise that. The precise form of any change should be considered in consultation with the relevant interest groups and professional interest in property law. As I understand it, and as I remember from the Commonhold and Leasehold Reform Bill, it is a principle that normally covenants are not enforceable over freehold property. There are wider issues here, and we should not be dabbling in property law ill a communications Bill any more than we should dabble in communications law in a property Bill.

Our principle objection to the amendment is that no evidence has been produced that there is a problem, and without such evidence we find it very difficult to understand how we should embark on a piecemeal reform of property law. Those are the same points as I made in Committee, and 1 am unable to indicate any change in the Government's position on them.

Baroness Buscombe

My Lords, I thank the Minister for his response. I accept what he says, to some extent, about the difficulty of changing property law when addressing a communications Bill. However, a problem clearly exists. It is difficult for me to suggest to the Minister that the industry has made representations when he does not believe that has taken place.

Lord McIntosh of Haringey

My Lords, I am saying not that there were no representations, but that we have not been given adequate evidence of significant problems.

Baroness Buscombe

My Lords, I thank the Minister for his clarity on that point.

I shall go back to the industry and put it to them that the way forward might be for them to provide the Government with the necessary examples. Clearly, I can do no more than that. I accept what the Minister said in relation to property law. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 134 [Restrictions on imposing information requirements]:

Lord Avebury moved Amendment No. 73A:

Page 126, line 26, at end insert— (7) In a case where a requirement for information under section 132 or 133 includes a requirement for any person to answer a question, make a statement, provide an opinion or otherwise to provide information, whether orally or in writing, such answer, statement, opinion or other provision of information shall riot be used by OFCOM in relation to any action to be taken against that person under any of sections 34, 38, 93, 109 or 136 without the consent in writing of that person.

The noble Lord said: My Lords, when we debated this amendment in Committee on 20th May, I withdrew it on the basis of the statement made by the noble Lord, Lord Evans, to the effect that since the Human Rights Act 1998 came fully into force on 2nd October 2000, it is no longer necessary to include an express protection for the privilege against self-incrimination in order to ensure that that privilege is properly protected.

We believe that the Minister may have been wrong in that assertion because we are dealing here with protection against self-incrimination in relation to a civil matter, to which Article 6 of the European Convention on Human Rights does not apply. I think that the Minister's response was based on the incorrect assumption, which he repeated several times, that the Human Rights Act, which incorporated the convention into UK law, affords protection against self-incrimination in civil cases. I shall not weary noble Lords with other quotations from the noble Lord in which he made that assertion.

We assert that where penalties are available to Ofcom—they range up to 10 per cent of relevant turnover—while they may be civil sanctions, because of their severity they are in fact akin to criminal penalties. The Government's response, as well as their response to the joint scrutiny committee, completely misses that point. In stating that as a result of the Human Rights Act it is no longer necessary to include a specific provision to ensure that the privilege is properly protected, they are plainly wrong. The penalty is a civil sanction and so no privilege is available under UK law. That is why it is necessary in the case of these civil penalties, which are potentially extremely severe and therefore equivalent to criminal penalties whose purpose is to punish, to include a specific protection in the Bill.

In Committee I drew the attention of noble Lords to the precedent for providing such a protection in relation to civil penalties. It was contained in the draft Bill considered by a joint scrutiny committee, which then became the Financial Services and Markets Act 2000. The committee recommended the insertion of a provision, which became Section 174(2) of that Act, preventing the use of compulsory statements obtained under Section 123 as a result of which civil penalties might be imposed for market abuse.

The circumstances here are directly comparable, in that the Financial Services Authority has—as this Bill proposes that Ofcom should have—the power to impose such significant penalties. So Parliament did accept the principle that, in such circumstances, protection should be provided against self-incrimination analogous to Article 6 of the convention. In saying that it is not necessary to put anything in the Bill because the protection already exists, the Government imply that they accept that it is right for such a protection to exist, in which case they ought to be sympathetic to the amendment. I beg to move.

Lord Evans of Temple Guiting

My Lords, it is clear that there is a disagreement between the Government and the noble Lord, Lord Avebury; not a disagreement between us personally, but on the legal advice that we have received. I ought to make it clear that the relevant protections relating to self-incrimination relate to criminal proceedings. The extent to which, for example, enforcement action against an operator for breach of a condition of entitlement under Part 2 may be regarded as a criminal matter from the human rights perspective remains to be clarified by case law. So in applying these provisions, Ofcom, like any other enforcement agency, will have to act in accordance with the law as it evolves.

However, having made those comments, because of the matter of our disagreement, I shall take away the points made by the noble Lord, Lord Avebury, read the detail in Hansard and come back to him. It is clear that this matter must be resolved. We are determined to do that when we return to the Bill next week. I thank the noble Lord.

Lord Avebury

My Lords, the Minister has been extremely helpful because, as he says, there must be a disagreement between the legal advice that is available to the Government and that which has been offered to us. We hope that this issue can be resolved by discussion before we reach the next stage of the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 153 [Directions with respect to the radio spectrum]:

Lord Avebury moved Amendment No. 73B: Page 141, line 33, leave out "3A" and insert "3

The noble Lord said: My Lords, this amendment and those grouped with it relate to recognised spectrum access, a subject which we covered in some detail in Committee. Noble Lords will recall that the Government did not accept our argument that the cost of RSA would be passed on to consumers.

The satellite operators say that they are already using the spectrum as efficiently as it is possible to do and that there is no scope for efficiency savings to be made upon the introduction of RSA. Therefore the additional cost burden that RSA is bound to generate will necessarily have to be passed on to the users of the satellite platform and, ultimately, to the consumers of the services.

As was pointed out in Committee, the operators also say that RSA may compromise the take-up of digital television and, as a result, the Government's switchover target. I am bound to accept that the advice from the operators of the satellite services is of some significance in this regard. If the technical advice they are giving asserts that the adoption of these technologies will be delayed, they are in the best position to know and, with respect, I think that their opinion ought to prevail over that of the Government's advisers. At any rate, if the matter remains unresolved in the discussions between the industry and the Government, we can say that there has been a gap in communications between the two which needs to be closed during the Report stage of the Bill, rather than to allow the subject to be left unsolved and to take its place on the statute book.

In pursuing the arguments put by the satellite industry, we also assert that recognised spectrum access is likely to stifle emerging broadband services, which require a greater use of spectrum than does broadcasting. The application of RSA will constitute a significant and damaging disincentive to innovation and the development of new broadband satellite services. Again, this is likely to affect disproportionately rural consumers, about whom we heard on the last occasion during the discussion on the amendment moved by the noble Earl, Lord Northesk. It may also reduce competitiveness in the broadband market by making the further development of broadband interactive satellite services prohibitively expensive. So it will certainly compromise the Government's objective of having in place the most competitive and extensive broadband market in the G7 by 2005.

I ask the Government to think again about the whole question of recognised spectrum access. If they cannot accept these amendments, I hope that they will say that they are at the least open to further discussions before this extensive provision is included in the Bill without any additional consideration. I beg to move.

5.30 p.m.

Baroness Buscombe

My Lords, I shall not even attempt to say that I will be brief on this matter. Recognised spectrum access is a very important area. We had a considerable debate in Committee and I return to that discussion with our Amendments Nos. 74 to 99.

I am grateful to the Minister for the time that he has put into addressing the concerns I have raised. Moreover, I received a detailed letter, for which I am grateful. However, I am still unhappy that the Government have failed to provide sufficiently clear answers to these concerns. I now return to the issues to seek further clarification.

I shall start with the question of consultation, and my Amendment No. 74. RSAs are of huge concern to the satellite industry. If nothing else, the level of representations received, and the amount of time given over to this subject in debates in this Chamber and another place, stand testament to that. As the Minister also indicated in his letter to me, the majority of responses to last year's consultation were from organisations against RSA. I believe that it is vitally important for them at least to be clear that their concerns are to be taken into account, and are seen to be taken into account, in the implementation of this new system.

I do not think that the Government's reassurances on this matter have been convincing. As we have discussed previously, Clause 156 does, indeed, refer to Clause 396, which includes a requirement to consult and take account of the representations received. But Clause 396 relates only to Ofcom's powers to make regulations, orders and schemes, requiring consultation on these prior to their being put to Parliament—a "statutory longstop", as the Minister puts it in his letter. This is rather late in the day, however, and the real concern remains that there is an absence of any provision for extensive and detailed consultation on fundamental RSA principles, which should take place well before any statutory instruments come to be drawn up.

I should like to take a moment to contrast the Government's position on my proposal for consultation here and that which they took on the proposal for consultation on the implementation of my proposed new clause on restrictive covenants affecting freehold. There I proposed an amendment which would have required consultation before the bringing into force of the provisions of the new clause. In rejecting the new clause and amendment, the Minister replied that there is a difference between consulting on the substance of a provision and consulting on bringing into force a provision that has already been made. That is precisely the point that I am putting to the Minister today, yet, unfortunately, he appears not to accept its validity. Perhaps the Minister could explain this difference in approach, or preferably accept my amendment for the purposes of consistency.

Furthermore, the duty to carry out and consult on impact assessments under Clause 7 is entirely down to Ofcom's own discretion on what is important and, as we previously discussed, the better regulation principles may—unless the Minister changes his mind, and I am hopeful that he will—unfortunately be disregarded by Ofcom, also whenever it chooses to do so.

These are concerns that rest heavy with the industry. What the industry wants is a clear and guaranteed opportunity to make its concerns heard at an appropriate and timely stage of the decision-making process, not a vague commitment to consult at the convenience of the regulator which could in theory decide not to consult at all until the eleventh hour.

Moving on to a more positive outcome from our discussions I should like to thank the Minister for his expression of personal sympathy with the arguments that I put forward in favour of "grandfathering" the RSA proposals to pre-existing satellite transponder agreements which have not factored in the possibility of RSA. It is—as I think he acknowledges—important not to discriminate in providing such protection to terrestrial broadcasters' licensing agreements and satellite transponder agreements. I should like to press him a little further on that, however, and in particular on the difference between his personal views and his views as the Minister responsible for broadcasting.

In his letter he indicates that the timing of the introduction of charges for RSA will be a matter for Ofcom to judge. Yet, as I indicated in Committee, in the Government's own response to the review of radio spectrum management they indicated that spectrum trading and pricing as regards terrestrial broadcasters is not to take effect while they have existing licences which did not anticipate such pricing. If the Government are able to make such a clear policy statement as regards terrestrial frequencies, I should like to ask the Minister what is stopping him now from making an equivalent policy statement today on satellite transponder agreements rather than simply expressing a personal view.

I should like now to turn to Clause 158(3), which provides for the auctioning of RSAs, and my Amendment No. 85, which seeks to delete this provision. As I argued in Committee, while it makes sense to auction an actual scarce frequency, it does not make sense to auction an RSA, which is merely protection against a particular terrestrial frequency being deployed to create interference. Surely if there is a risk of interference to a number of satellite broadcasters from the deployment of a terrestrial fixed link, all of them should be able to obtain protection against interference and not just one.

I put a number of questions on that issue to the Minister in Committee. How, for example, will the winner of the auction ensure that those who did not bid do not benefit from the protection which RSA granted to him provides? What happens to the loser who was prepared to pay but valued the protection less highly? Does he have to do without the protection? Unfortunately, the Minister appeared unwilling to engage in debate on these difficult questions in Committee and has not attempted to answer them in the letter either. Instead the arguments in favour of auctioning remain simplistic and generalised; that there is widespread support in principle both for auctions and for spectrum pricing, and charging makes the use of spectrum more efficient. Support in principle is all very well but auctioning is quite inappropriate in the case of RSAs.

I am afraid that I must ask the Minister again, therefore, if he will take this opportunity to outline the circumstances where an auction of RSA would be appropriate, and how it would be unaffected by the considerable flaws I have already outlined. As the Minister observed in Committee, Amendments Nos. 75 to 84 and 86 to 98 all relate to the way in which Ofcom will grant and regulate RSA. This is, I believe, an important and legitimate source of concern for those who stand to be regulated in this way. The Government should not simply dismiss it as predictable special pleading on the part of commercial operators. First, I believe there are outstanding questions to be answered in relation to Ofcom's ability to impose wide-ranging conditions on an RSA under Clause 156(5), for example, on the signal or what is broadcast on it.

The Minister indicated in his response in Committee that there may be a need to impose technical terms and conditions, for example, standards that equipment should meet, to obtain a desired quality of service, or to deal with extraneous symptoms that may be received, or to deal with restrictions on the frequency limits or on geographical boundaries".—[Official Report, 20/5/03; col. 750.] He has also added in his subsequent letter that, It may be considered desirable to limit the uses to which spectrum benefiting from RSA may be put in a particular frequency band, for example in the interests of promoting a particular service such as broadband". I remain concerned at this clear broadening of the policy intention behind RSA, which my Amendment No. 75 seeks to address. The purpose of RSA is to protect the holder against interference to his satellite signal—nothing more. Surely, therefore, it runs wholly counter to this rationale that positive conditions are imposed on the RSA holder relating to his signal or what he broadcasts on it. The Minister has said that the provisions are needed to manage the spectrum but this should only mean providing protection against terrestrial interference. Other policy objectives such as the promotion of one particular type of service over another should not form part of the RSA rationale.

On a related matter, Clause 161 allows Ofcom to limit spectrum use by specifying frequencies for which it will grant or make available only a limited number of RSAs or specifying uses for which on specified frequencies Ofcom will grant or make available only a limited number of RSAs.

Amendments Nos. 86 to 91 seek to address the concern that in effect these provisions enable Ofcom to ration the protection which is to be afforded by RSA and to impose restrictions on the use of satellite frequencies which are already subject to international co-ordination and agreement. If RSAs are to be made available, they must be available to all satellite operators and broadcasters. After all, RSAs are simply intended to enable satellite broadcasters to guard against terrestrial interference. Therefore, the number of RSAs granted should be determined wholly by the demand for them and nothing else. This is clearly not the Government's intention, however. Instead they regard RSA as a tool with which to shape the use of satellite spectrum rather than a simple protection from interference. As the Minister explained in Committee: Radio spectrum is a scarce resource. In some frequency bands, the need to protect one service from interference can constrain the deployment of other services in bands shared by satellite downlinks and terrestrial point-to-point fixed links. It is necessary to limit the grant of RSA, to prevent other services from being unduly restricted".—[Official Report, 20/5/03; col. 750.]

I move on to Ofcom's powers to revoke the grant of an RSA or modify the restrictions or conditions to which a grant is subject. In particular, I remain concerned that there is no constraint on the grounds on which Ofcom may modify or revoke a grant, other than when it includes in an RSA the self-denying ordinances in paragraph 7 of Schedule 5.

In his letter, the Minister argued that it may be necessary through modification or revocation to re-farm spectrum to make room for a new service. He said that RSA holders, will have a considerable degree of security in relation to revocation or modification", in that they will have a right of appeal and that Ofcom will be required to act reasonably and give an appropriate period of notice, depending on certain circumstances. It is difficult to see how any holder of an RSA would feel secure in the light of such weak assurances. The Minister has already indicated that he believes it reasonable for a licence to be revoked in certain circumstances, so I cannot imagine that Ofcom will find it too difficult to negotiate that particular hurdle. A longer period of notice is unlikely to sweeten the pill.

I believe that it is contrary to the legitimate rights of an RSA holder for Ofcom to have such unfettered power to amend or remove, albeit after the RSA holder has been able to make representations, an RSA during the period for which it has been granted. What is the value of an RSA that in theory protects against the possibility of signal interference, while at the same time provides a mechanism for greater regulatory intervention that would allow the protection to be withdrawn at the behest of Ofcom? Once granted, RSAs should not be revocable and should last their full term. Amendments Nos. 76 to 84 seek to ensure that that is the case.

Finally, I should like to address the issue of spectrum trading. My concern remains that Clause 165 would allow Ofcom to alter the conditions of an RSA, and require further payments to be made or financial security to be given, before giving its consent to any transfer. Such provisions could alter fundamentally the rights and values of the RSA originally granted, and are inconsistent with the underlying principles of property and human rights. The effect is that, on a sub-licensing of transponder capacity, it may not be possible to transfer any associated RSA protection. That will create problems for secondary trading in transponder capacity. As noted in Committee, the European Commission has been keen to see that flourish.

We believe that the Government have failed to justify the provisions. In Committee, they said that the amendments would he "unhelpful", without giving any reasons other than that they would dilute Ofcom's powers. The Minister's letter goes a little further, indicating that transfers of RSA could lead to "undesirable outcomes" and raise issues of, competition or compliance with international obligations". However, it again fails to expand on those policy reasons.

With such significant powers of intervention handed to Ofcom on the matter, I urge the Government to be more forthcoming in their explanations. If they are unable to do so, I urge them to accept Amendments Nos. 92 to 99. They would not remove RSAs from the trading provisions, but would reduce significantly the ability of Ofcom to alter conditions requiring further payment or require its consent to be given.

Lord McIntosh of Haringey

My Lords. I also have a very long speech. I shall have to give the parts of it that refer to the amendments that have been spoken to. Fortunately, a number of amendments in the group have not been spoken to at all. I hope that the House will be glad to hear that I do not think it necessary for me to respond to them. I am glad that I was able to write to the noble Baroness, Lady Buscombe, and the noble Lord, Lord Avebury, and to place my letter in the Printed Paper Office and the Libraries of both Houses.

I realise that the noble Lord, Lord Avebury, has more general concerns such as the belief of some people in the industry, although by no means everyone, that RSA could compromise switchover or stifle emerging broadband. Those are general complaints about recognised spectrum access, and I do not think that I am in a position to do anything other than respond to the amendments in the Marshalled List. If he wants to discuss the wider issues, of course I am always happy to do so.

The principle of RSA has already been extensively discussed. The powers in the Bill are broad enabling powers. It is up to Ofcom to decide in which frequency band RSA should apply, the timing of its introduction and the level of charges. Decisions on that have not been made yet.

Before I go into the individual amendments, I should tell the noble Baroness, Lady Buscombe, that I listened closely to what she said and have some sympathy with her arguments on Amendments Nos. 75 and 76. I am happy to look again at the scope of Ofcom's powers on the restrictions and conditions to which the grant of RSA can be made subject. I want to see whether we can table an amendment at Third Reading to narrow those restrictions and conditions without compromising the effective management of the radio spectrum.

Auctions are referred to in Amendments Nos. 73B, 73C and 85 and in the linked Amendment No. 226A, which would prevent Ofcom from charging fees for RSA in excess of its costs. The underlying thought seems to be that it is wrong to charge for RSA on the same basis as licences. That is what the Trade and Industry Committee of the House of Commons said, and we have already published our response to that which goes into the issue in some detail.

Businesses such as Sky that currently benefit from satellite's free access to spectrum in frequency bands shared with terrestrial services are concerned about the prospect of paying for their use of that valuable resource. Understandably, they would rather pay nothing at all or limit their payment to cover Ofcom's costs. We have repeatedly said that we have included strong and effective safeguards in the Bill to meet those concerns about the level of fees. The amendments, which would limit the fees to costs recovery, go too far. They would deprive Ofcom of an effective spectrum management tool and perpetuate the present inequity in some frequency bands. But terrestrial users pay a fair price for spectrum, whereas satellite operators do not. That does not seem to me to be a defensible stance.

I am trying not to make points that are unnecessary in the light of the debate, but in dealing with the issue of auctions and pricing I have to say that I valued the principled position taken by the Conservative Party in debates on the Wireless Telegraphy Act 1998. It said that the spectrum pricing principles should be extended to satellite. That is what we are doing in the Bill. The amendments would depart from that principle, and I really do not understand why the Opposition wish to depart from it now. There is no basis for distinguishing between RSA and licences in respect of administrative incentive pricing or auctions.

By "administrative incentive pricing" I mean setting fees in accordance with spectrum management considerations, having regard to factors such as congestion which are specified in Clause 151(2) rather than by reference to the cost of managing the spectrum. These fees are levied to promote a more efficient use of the radio spectrum, not to maximise revenue. It is important to be clear on that point. Both the RSA and licences give the holder access to a specified quantum of spectrum of a defined quality, and the charging principles are exactly the same.

The noble Baroness, Lady Buscombe, said in Committee that RSA should not be auctioned because it is "merely protection". Indeed, the Trade and Industry Select Committee went further and called it a protection racket. This is of the essence. Permission to transmit is of little value unless there is the facility to receive free from interference. That facility underpins the value of spectrum of a communications medium. What the noble Baroness describes as "merely protection" is as valuable as a licence, and should, in fairness, be charged for on the same basis. Indeed, the Trade and Industry Committee endorsed those principles for spectrum licences.

In the end, decisions on auctions for RSA will be a matter for Ofcom. I cannot anticipate how Ofcom will use the auctions, but it will be required to act in accordance with the spectrum duty in Clause 151, taking account in particular of spectrum management considerations, and it will consult, as required by Clause 396. I appreciate the concern expressed by satellite operators about the level of fees. I am happy to repeat the assurance that RSA charges will be no higher than necessary for spectrum management purposes. Clause 151 gives that assurance statutory force.

Amendment No. 74 would require Ofcom to consult all interested parties before making regulations to apply RSA and to consider whether they are appropriate and proportionate. I have no problem with the principle behind the amendment and we have given repeated assurances that there will be full and detailed consultation before decisions are reached. But the amendment is not necessary, because Ofcom's general duty is to regulate in a way that is proportionate and appropriate. That will apply to RSA as to other aspects of Ofcom's functions. We do not need to repeat that requirement specifically for RSA.

There are provisions in the Bill requiring Ofcom to consult before introducing RSA. Clause 76(6) requires Ofcom to consult about major regulatory changes or changes with a significant impact. Clause 396 requires Ofcom to consult and take representations into account before making RSA regulations. There is nothing to prevent Ofcom from consulting more extensively if it wants to do so. The framework for consultation applies to, and is sufficient for, other Ofcom regulations. There is no need to have a special regime for RSA.

I have referred to our sympathy for Amendments Nos. 75 and 76. It is not possible to anticipate exactly what restrictions or conditions Ofcom may need to impose. It is prudent to give Ofcom similar flexibility as for licences. RSA could be for a wide range of services, not just satellite. Restrictions and conditions will have to be tailored to the circumstances, so we need to give Ofcom a margin of flexibility, for example—and this comes back to the point made by the noble Lord, Lord Avebury—to promote broadband by restricting the services that benefit from RSA, or to impose conditions on sharing spectrum in the interests of spectrum efficiency.

In exercising this power, Ofcom will be bound by Clause 3 to have regard to the principle of good regulation, and by Clause 6 not to impose unnecessary burdens. However, we will look again at the scope of the powers to see if we can narrow them. I hope that that will give some reassurance to the noble Baroness, Lady Buscombe.

The noble Baroness referred to the issue of revocation and modification, which is in Amendments Nos. 74 to 77. The amendments would limit the circumstances in which Ofcom may revoke or modify RSA to cases in which the holder has consented or there has been a contravention or restriction of the condition of the grant. This is too inflexible: Ofcom may need to revoke or modify RSA for a number of reasons. It may be in the best interests of consumers to free up spectrum that is subject to RSA for a new service to be established.

The amendment would not allow Ofcom to use the accelerated procedure in subsection (6) in urgent cases including those involving a serious threat to public safety, public health or national security. We must make provision for such a threat, should it arise, and for Ofcom to act swiftly. For example, in the terms of RSA, reserving frequencies for holders' exclusive use could prevent spectrum being made available for some application needed urgently to counter a serious threat. We need to have the power to act quickly.

Amendments Nos. 86 to 91 would remove references to RSA from Clause 161. That requires Ofcom, in imposing limitations on the use of particular frequencies, to make an order. It is difficult to predict exactly how the order could be used, but one can see in general terms why it is needed.

The noble Baroness, Lady Buscombe, acknowledged that radio spectrum is a scarce resource. In some frequency bands there is a need to protect one service from interference that can constrain the deployment of other services, for example, in bands shared by satellite links and terrestrial point-to-point fixed links. If we grant RSA and a shared band, that effectively reduces the spectrum available for other applications. In these circumstances, it is necessary to limit the grant of RSA to prevent other services from being unduly constrained to the detriment of the economy and of consumers.

Amendments Nos. 94 to 99 are about trading. They would prevent Ofcom from restricting the circumstances or manner of trading and imposing conditions. Amendment No. 99 would remove the sanction in subsection (4) that underpins Ofcom's regulation of trading of RSA. Transfers of RSA will give rise to similar considerations and similar regulations as transfers of licences. Ofcom will therefore need similar powers.

We cannot anticipate what use they will make of the powers in Clause 165, but they will be required by Clauses 3, 6 and 151 to be proportionate, appropriate and in accordance with the general principles of administrative law to act reasonably. They will be required to consult before making orders, and there will be rights of appeal against their orders.

I am sorry to have gone on so long, but this is a complicated group of amendments. I hope that I have given answers that address the problems raised by these amendments.

Baroness Buscombe

My Lords, I thank the Minister for his comprehensive and thorough response. These are complicated issues, but they are tremendously important. I am grateful that the noble Lord has taken the time that is necessary to respond to the concerns that I have raised today. I do not want to detain your Lordships' House. There is much to consider, and I want to re-read what the Minister said in Hansard. I extend my grateful thanks for his agreement to reconsider the scope of Ofcom's powers, which addressed our concerns expressed in Amendments No. 75 and 76. I beg leave to withdraw the amendment.

Lord Avebury

My Lords, the noble Baroness was in fact intervening before the Minister concluded. I moved the amendment and the noble Baroness was speaking to it. It is unfortunate that although the vast majority of amendments in this grouping were in the name of the noble Baroness, I must withdraw the amendment, which I will be happy to do in a moment.

The Minister made only one concession in his lengthy exposition, although that was quite useful. He acknowledged that the unfettered power to impose restrictions on the grants of RSA might need to be modified and that he might come back to noble Lords with suggestions that would replace those that the noble Baroness made in Amendments Nos. 75 and 76. That concession was useful.

The whole complicated question of RSA has not been thoroughly explored. Part of the reason for that involves the nature of the process that we undergo between successive stages of the Bill. I went into the Library to ask for copies of all of the letters that the Minister had sent to various speakers on different amendments. They threw up their hands in horror and said that no fewer than 60 such letters had been lodged in the Library and, presumably, in the Printed Paper Office. The problem is that the advisers helping us with the amendments do not necessarily see those letters because, unless we remember to send them out—

Lord McIntosh of Haringey

My Lords, that is the noble Lord's job.

Lord Avebury

My Lords, the noble Lord says that but he has vast resources in his department. Unfortunately, I have only me. People sometimes ring me up and say, "Could I speak to Lord Avebury's private secretary or his research assistant?", and I always have to tell them that that there is me and no one else.

With great respect, there is another solution to this matter, which is of more general interest than simply the amendment. Is there any reason why important letters such as the one that the noble Lord sent us about RSA—which was put in the Printed Paper Office and the Libraries of the two Houses—should not be put on the department's website? I am glad to see the noble Lord nodding at that suggestion. That would enable people in the industry to see what was happening in discussions between the Government and noble Lords, and it would help them to advise us more cogently between Committee and Report stages.

Lord McIntosh of Haringey

My Lords, there is no reason at all why that should not go on the website. However, I can make a suggestion that is perhaps rather unorthodox: the noble Lord could tell us who his advisers are and we will send them copies of the letters.

Lord Avebury

My Lords, that might be almost as much trouble as making copies and sending them out. We do not always know who in the industry would benefit from knowing what the noble Lord said in a lengthy five-page letter about the various aspects of RSA that we discussed in Committee. I leave that thought with the Minister.

After discussions between the noble Baroness, Lady Buscombe, and ourselves, there may he some issues to which we may wish to return at a later stage. On that understanding, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 73C not moved.]

Clause 156 [Grant of recognised spectrum access]:

[Amendments Nos. 74 and 75 not moved.]

Schedule 5 [Procedure for grants of recognised spectrum access]:

[Amendments Nos. 76 to 84 not moved.]

Clause 158 [Charges in respect of grants of recognised spectrum access]:

[Amendment No. 85 not moved]

Clause 159 [Conversion into and from wireless telegraphy licences]:

[Amendment No. 85 A not moved.]

Clause 161 [Limitations on authorised spectrum use]:

[Amendments Nos. 86 to 91 not moved.]

Clause 165 [Spectrum trading]:

[Amendments Nos. 92 to 99 not moved.]

Clause 195 [Functions of OFCOM in relation to the BBC]:

6 p.m.

Lord Gordon of Strathblanemoved Amendment No. 100:

Page 175, line 11, leave out from "OFCOM" to end of line 15 and insert—

  1. "(a) to approve or amend all BBC Statements of Programme Policy and to satisfy themselves that the Governors of the BBC have ensured adherence to them;
  2. (b) to advise the Secretary of State as to whether the BBC should be permitted to introduce new television or radio services, alter the character of existing services or cease to provide them;
  3. (c) to satisfy themselves that the BBC has followed best practice in its expenditure of funds raised by the licence fee and from other sources;
  4. (d) to ensure that any cross promotion by the BBC does not unduly distort any market; and
  5. (e) "

The noble Lord said: My Lords, this subject was raised in Committee, albeit at a very late hour, on 20th May. I am sure that noble Lords will be grateful to me at least for being brief on this matter tonight and for giving my argument in bullet-point form rather than rehearsing the whole issue.

If we are to have a Bill which brings together broadcasting and telecommunications, it would appear to the man on the street somewhat strange to leave out the principal player in both television and radio. For that reason, I believe that the onus is firmly on the Government to prove that it is a good idea rather than for people such as me to prove our side of the case.

My argument is, first, that having the BBC fully under Ofcom would improve the public service broadcasting regulatory role of Ofcom. It would strengthen that aspect of Ofcom against the simple competition regulation. I suspect that many noble Lords will at least agree with that point, although I suspect that they will disagree with some other points that I make.

Another point is that if the BBC does not come under Ofcom, there is the danger of a rival regulator in the key area of subjective assessment where the public service broadcasting objectives are being discharged. There is a danger of conflict and chaos, and that will strengthen the argument of people who say, "This regulation is just chaotic. Leave it to the market because they can't make up their own minds whether it is a good idea or a bad one". An independent producer could take a programme to the BBC, which the BBC screens and regards as acceptable. It might then transpire that Ofcom had ruled it unacceptable in the independent sector, or vice versa. That does not make sense.

My other argument for putting the BBC under Ofcom is not that that would take power away from the BBC governors; it would impose a buffer authority between the BBC governors and the Secretary of State. I shall not quote it in full but noble Lords may recall that on Second Reading I quoted the somewhat disingenuous brief from the DCMS saying that this is being fair to all in that it puts everyone on the same footing, where everyone is self-regulatory, at tier 3.

As the Secretary of State pointed out, the fact is that if the independent sector does not live up to its obligations, Ofcom can intervene. But the Secretary of State went on to insist that if the BBC does not live up to its obligations, we want politicians to intervene. I do not like politicians interfering in broadcasting: I like the British tradition of buffer authorities. I believe that the BBC is better off with a buffer authority between it and a Secretary of State rather than a Secretary of State being the judge on matters of impartiality and everything else and where, frankly, he is frequently parti pris.

The third argument is: in future, how can a Secretary of State decide whether the BBC should introduce new services if he cannot be given advice from a single source on what the broadcasting ecology is looking like at that moment? If the BBC remains outside Ofcom, presumably it will have to turn to the DCMS for advice on the BBC and to Ofcom for advice on everything else. Advice is required from a single source looking at the whole broadcasting landscape.

I address my third point, in particular, to my noble friend Lord Sheldon, who spoke eloquently and passionately about the role of the BBC governors. I concede that there have been great governors of the BBC. I simply remind them that they are human beings appointed by politicians, as is the board of Ofcom. If politicians can get the appointment of governors of the BBC right, the assumption must be that they will get right the appointment of the board of Ofcom.

Lord Sheldon

My Lords, which would my noble friend sooner be—a governor of the BBC or on the board of Ofcom? I do not believe there is any doubt that any Member of this House would say that being a governor is a great position to hold. with its long tradition and its great certainties during the long period that the post is occupied. Does it compare with being on the board of Ofcom?

Lord Gordon of Strathblane

My Lords, once Ofcom is up and running, I would argue that the answer is yes. But, in the light of his remarks in Committee, I should have expected my noble friend to make that point, and I understand where he is coming from on it.

However, I think so highly of the BBC governors that I would give them the whole thing. Why bother with Ofcom? Let us simply put the whole lot under the BBC governors. I suspect that noble Lords will say, "Hold on, but they run the BBC. They would be partial". That is not the theory. The theory is that they are not partial to the BBC but are wholly independent public regulators. It is precisely that duality of role that, in my view, creates an unresolvable conflict for a governor of the BBC—one which has been addressed in White Paper after White Paper. How can the top board of a company somehow be independent of that company and stand back in the public interest? I shall not stand back too far in case I topple over.

It is very easy to convince oneself, as politicians do regularly, to do the popular thing before an election on the basis that only if one is in power will one do good. Similarly, the governors of the BBC will decide to make more popular programmes, because as long as they have the licence fee they can continue to provide public service broadcasting. Meanwhile, they go further down the slippery slope, competing against what is—regrettably—increasingly tawdry competition from more and more television channels; and standards continue to fall.

In passing, if the BBC governors are not the top board of the corporation, who are its non-executive directors? What would Mr Higgs have to say about a body with a turnover of £2.5 billion a year, with no non-executive directors at the top? Of course the BBC governors are the top board of the BBC. However, it is very difficult to exercise both roles at once.

The arguments in favour of putting the BBC wholly under Ofcom are conclusive. If we do not do that, we will subject ourselves to two lots of debates each time: parallel debates about Ofcom and the BBC. If noble Lords want to subject themselves to two lots of debates rather than one, by all means keep the BBC outside and presumably we will have these arguments about the BBC as little as one year ahead of the same arguments about Ofcom. It is much more sensible, and much better for both organisations to have the BBC inside from the beginning.

6.7 p.m.

Lord Lipsey

My Lords, although I see the force of the arguments made by my noble friend Lord Gordon, which we discussed for many hours during the Davis inquiry, I think that this is really best considered at Charter renewal, when we can look at the whole spectrum of considerations on the BBC, rather than taken in isolation on this occasion.

My noble friend wants one giant leap, but I want one nudge before then. It is set out in Amendment No. 112; namely that Ofcom should have powers to follow up the BBC's fair trading rules—not the rules themselves, but their implementation in practice.

I moved that amendment in Committee. Indeed, when the first Marshalled List came out, my heart gave a mighty leap, because I found that conjoined with my name was that of the noble Lord, Lord McNally, who when I first moved this had been rather critical of it. However, his name has since disappeared and been replaced by a name of equal quality—that of the noble Baroness, Lady Buscombe. I have not got the ally—indeed, the convert—I originally had, but the argument is as powerful as it ever was.

The basic divide—and why this should be done now— is as to when the BBC is under Ofcom and when it is not; namely, whether it is engaging in commercial or public service activities. Public service is outwith Ofcom, in the province of the governors; commercial activity falls under Ofcom's competition responsibilities. Therefore, it seems perfectly sensible that when the fair trading obligations are to be monitored, Ofcom should play a powerful role. I said that at Committee stage.

The amendment is down again today because the noble Lord, Lord McNally, made a much better job of finding problems with it than did the Minister, who gave what I can only describe as a perfunctory and ill-informed reply. We have a different Minister this evening, so I hope for better.

The Minister then referred to the Whish report, not knowing that Professor Whish was actually debarred by his terms of reference from considering what this amendment covers, and what Ministers were exciting him in support of. The Government seemed blissfully happy to allow the BBC to act as referee in the matter, when it is also a player on the field—a principle which rarely applies with great effect in public life.

I hope that the Minister will expand on this. There is an area of doubt in my mind—and for all I know many other noble Lords' minds—and in the minds of those who have to run Ofcom. How strong and far-reaching are the powers of Ofcom with regard to competition law? If they are strong and far-reaching, the amendment may be otiose. It follows from those powers that if in practice the BBC breaks its trading obligations Ofcom can intervene. However, if, as others think, the powers are somewhat weak, then it is not so placed and we are left with the Government refereeing and playing simultaneously—and these days the BBC plays pretty hard and one needs, therefore, a strong referee to keep it under control.

It is a clear and simple case. I hope that we receive a strong and more considered ministerial response than previously; otherwise the temptation to divide the House will be powerful if not irresistible.

Lord Sheldon

My Lords, I speak to Amendments Nos. 104A, 105A and 105B in the names of the noble Lord, Lord Barnett, and myself.

Amendment No. 105A relates to subsection (3), which gives powers to Ofcom to regulate BBC services and impose penalties in respect of contraventions of those regulations. Subsection (5) proposes penalties of £250,000. I find that astonishing. We are threatening to fine the BBC as though it were a bunch of crooks. To my mind, it is the greatest public service that we have seen in the past 100 years. To start dealing with it in this way is an insult.

The purpose of the amendment is to make people realise what the Bill proposes. The governors have to submit to Ofcom's views. As I said in an intervention, would any of us prefer to be on Ofcom rather than a BBC governor? I should not have thought that that was so for the majority of the Members of this House. They would be subordinate to Ofcom's views. These are people of principle and standing; they are people of great merit. I refer to the noble Lord, Lord Hussey, my noble friend Lord Barnett and the noble Baroness, Lady Hogg. In the past, there have been many other great people. It is proposed that Ofcom will decide what they should be doing rather than those who have at heart the public interest. We do not know who the members of the Ofcom board will be. But we do know the standing of the governors of the BBC. That is a most important aspect.

The suggested penalties are ludicrous. It is a matter we shall need to deal with. We should be chastising not the BBC, but the way in which some of these matters are dealt with. Ofcom has a very distinguished chairman but I do not think that it will have the same level of distinction among the ordinary members of the board.

Over the past many years, the standards of public service broadcasting have undoubtedly been set by the BBC. It has had an enormous effect on the whole of public service broadcasting. If any of the other channels or stations deviate too strongly, the comparison is made. Others cannot stray too far. That has had an effect on the broadcasting system in this country.

Regulations can provide a number of loopholes. The United States is a good example. In the United States people are exploiting all kinds of loopholes in a way that I hope we shall not see in this country.

Amendment No. 111 deals with the National Audit Office. I am considering its effectiveness. What does the National Audit Office do?

6.15 p.m.

Lord McIntosh of Haringey

My Lords, if my noble friend Lord Sheldon, will forgive me, Amendment No. 111 is not in this group of amendments.

Lord Sheldon

My Lords, I thank my noble friend for pointing that out. I shall speak to those other matters later.

There are those who feel that the principled actions of the BBC and the way in which it operates curtail its opportunities in this area. Of course, the BBC has been the great defender of our standards. It has earned the envy of many countries and many broadcasting systems in the world and the appreciation and gratitude of many others. I look forward to seeing some qualitative contribution from my noble friend who is to respond on such matters and I look forward to a considered reply in answer to my points.

Lord McNally

My Lords, as ever, it is a great pleasure to follow the noble Lord, Lord Sheldon, on these matters. He has a vast experience of public service and public sector management. In an earlier debate I mentioned that this morning I had the great pleasure of listening to Pat Mitchell, the president and chief executive officer of Public Broadcast Service (PBS) in the United States. I came away renewed in my determination that in our deliberations on this Bill we should ensure that the great tradition of public service broadcasting, of which the BBC is the iron pole, should be retained when our deliberations are over.

I cannot support the amendment tabled by the noble Lord, Lord Gordon. I am not as worried as he appears to be about rival regulators. There may have been a time when there was genuine concern about piling such a wide range of responsibilities on a single regulator, particularly when the regulator on whom one is to pile the responsibilities is as yet totally untried. As many people say, we have a great national asset, a world asset, in the BBC. It is one of the strongest brand names in the world. It seems to me to be extraordinary that with such an asset we should contemplate moving it lock, stock and barrel to a regulator whose prime responsibility is not the defence of public service broadcasting but regulation of a commercial sector. The main merits of those chosen for Ofcom are their understanding and skills in managing and regulating a private sector.

Lord Gordon of Strathblane

My Lords, I thank the noble Lord for giving way. In the light of that, does he agree that if the BBC is ever to come under Ofcom, it is much better for it to come under Ofcom at the beginning rather than later on?

Lord McNally

My Lords, quite the contrary. I want to see some performance from Ofcom. I shall need much persuading when we come to charter review. I tend to agree with the noble Lord, Lord Sheldon, that from time to time the governors come in for a fair amount of criticism, but for over 80 years the system has not served this country too badly. I have said at various times during the course of the Bill that if hospitals and transport performed half as well as the BBC, the Government would have no problems in defending public services or the public sector.

So I am not persuaded. We must await the charter review. I am worried that even then we will get from the commercial sector a kind of "whine of the week" about the activities of a too-successful BBC. I am worried about placing limits on what the BBC should do. Imagine if this measure had been in place with the BBC and colour television or the BBC and digital. The BBC has been over the years an admirable innovator. As we heard earlier, it has an outstanding record in research, development and training.

I want to see those assets well protected. I want to see a little track record from Ofcom before I even contemplate handing over to an untried regulator a public body that is working extremely efficiently and with considerable public approval. I also think—perhaps we saw it again yesterday in the little spat in the Foreign Affairs Select Committee in another place—that we must be careful to retain what has been one of the pieces of genius in the structure of the BBC: the buffer between the BBC as a public service broadcaster and the politicians of the day in power. We must defend that buffer carefully.

With his usual skill, the noble Lord, Lord Lipsey, has enticed me a little along the way, because I want to see the BBC constrain itself in its commercial operations. There was a tendency for a while in the BBC to be beguiled by the idea of its entrepreneurial zeal and its commercial activities. It is better that it stands its credibility on its public service commitment.

But as I said before, there is a catch-22 for the BBC. Let us not forget that the settlement negotiated with the Government asked the BBC to maximise its commercial operations. Therefore it is a little harsh, when the BBC does maximise its commercial operations, to say, "Oh well, now we're going to restrict you because you're doing that too well".

We find the government amendments acceptable, but we have reservations about trying to jump the gun and make decisions too early on matters that are best left to charter review.

Lord Bragg

My Lords, I have a few brief observations. I think that finally, whether it is in three, five or six years, the BBC will be under Ofcom and the people who run Ofcom will be every bit as distinguished as those who run the BBC. I suspect that they will be the same sort of people, from the same sort of background and with the same sort of experience. The logic goes in that direction if Ofcom is to achieve what everyone in the House wants it to.

But not yet, as was said on a more dramatic occasion. The time to do that is at the BBC Charter review, when a great deal of scrutiny should rightly be brought to bear on the BBC, and the idea of it being in Ofcom would be appropriately considered there—I agree with my noble friend Lord Lipsey. I also agree with the noble Lord, Lord McNally, that by that time we will be able to see the colour of Ofcom's coat and how it has matched up, because the BBC governors on the whole have done a very good job and everyone in the House who supports the BBC—as I do—wants to ensure that it is going into good hands.

I agree with my noble friend Lord Lipsey on commercial interest. The noble Lord, Lord McNally, is absolutely right: the BBC was enjoined to carry on more commercial activities. It has done so very well—people think it has done so too well—but it is in areas that overlap with other areas of legitimate commercial activity. There are legitimate complaints of infringement and of the BBC being unduly favoured in market after market. We cannot walk away from that.

Although I am friends with many of the people who run the BBC—Greg Dyke the director general is one of my best friends, I am pleased to say—they cannot walk away from the fact that it is hitting other organisations hard, from publishers to other broadcasters, some of which have just as much public service responsibility. I am sorry to keep hammering the point, but they have just as much public service responsibility and public service grit as the BBC does. Channel 4 and ITV often outmatch the BBC in their public service devotion. We agree that they took their lead from the BBC. But, although the BBC sets, and is, the standard, it is not the only one. The others have continued in many areas when the BBC has stepped out of its public responsibility for a while.

Commercial overspill into other areas, which my noble friend Lord Lipsey discussed, should be examined and Ofcom is the place to do that. I fail to see how the governors can possibly be in a position to regulate it. They will follow what the Government have enjoined them to do—to commercialise their activities as much as possible—and they will let the hounds loose to do so. The BBC has developed some lean whippets over the past few years for that purpose.

But they must be reined in differently. Things change, and the kaleidoscope comes up with colours that we do not always want. I agree with my noble friend Lord Lipsey on that point.

The governors have done a very line job. They are principled, intelligent and dedicated. Nevertheless, as my noble friend Lord Gordon of Strathblane said, it is extremely difficult to be responsible for the organisation as overseer and executive. Without casting any blame—it is a matter of human conduct and not blame—the governors get on very well with the executives and back them to the hilt time and again. How many times have the BBC governors backed the executive? Five thousand? How many times have they publicly said, "No, the executives were wrong. We object"? Two, three or four? That is how it is bound to be when people work together so closely. In the increasingly expansive, difficult, complicated and internationalising world of television and radio such togetherness—almost collusion—will no be more acceptable—

Lord Sheldon

My Lords, the noble Lord will be aware that there are many occasions where one does not publicise ones disagreement because it might cause more difficulty than if one did so behind the scenes.

Lord Bragg

My Lords, I am very aware of that. I am sure it has happened, but not that often. I am not here to blame the governors. For instance, it was the Governor-General of the BBC, Gavyn Davies, who suggested—perhaps in stronger terms—that the BBC return to arts programme. I am very glad that he did, and I am very glad that they are there. BBC governors can be very effective. But, in the new dispensation of television, I do not think that they will be able to play the role that noble Lords describe so finely and that traditionally governors have played. We are in a different universe.

The great thing about the Communications Bill is that it is trying to chart the future sensibly. In many ways it is getting it right—cross fingers and touch wood. The idea of Ofcom looking across the board and being independent of all the existing transmission possibilities, which will increase, is very tine. Eventually, the BBC will subscribe to Ofcom willingly and make it far better than it would be without the BBC. In return, the BBC will be strengthened by the association.

Lord Alli

My Lords, I am afraid that I disagree with my noble friend Lord Gordon and commend the Government for their line on the issue—a novelty in this day and age. I do so precisely for the reason that the noble Lord mentioned. As an independent producer, I actually like the concept that if Ofcom does not like my programme editorially I can go somewhere else. It is fundamental to free speech and a good democratic society. No one person makes the final decision about what is published in the arena of television. It is a novel aspect of the debate, but it is one to which I wish to return when the debate opens again in a few years time or when there is charter renewal. We risk great error by allowing a single regulator to have single-voice control of our most powerful media. For that reason alone I do not want the BBC to come to Ofcom.

Lord Crickhowell

My Lords, I agree with the noble Lord, Lord McNally, on two points. First, I share his determination to do everything possible to protect public service broadcasting. That has been a consistent theme of everything that I have said in these debates. I, too, was tempted by the contribution of the noble Lord, Lord Lipsey, when he talked about some kind of regulation of these commercial activities. I suspect that my noble friend Lord Astor may tempt me in a similar way, but I failed to prevail on him to make his speech first. I admit to temptation, and perhaps I might be persuaded on that narrow field.

More generally, there were two possible ways for the Government to have approached the issue. From the outset they could have said that they would include the BBC under Ofcom, and we could have approached this complicated Bill on that basis. The Government decided otherwise—to wait until charter renewal, and consider the matter then. Once that decision had been taken, we were, certainly on the Joint Committee, forced into the position that there was little point in our going into great detail about the future. When I look at the amendments this evening, I am reinforced in that view. Whatever the merits of the argument, to think that at the Report stage of this large and complicated Bill we can decide in a short debate what regulation of the BBC shall be included and what shall be left out is an impossible proposition.

I indicated in Committee to the noble Lord, Lord Gordon of Strathblane, why I could not support his amendment. He has now put down exactly the same amendment, so I do not propose to repeat the points that I made then. The central point that I made on that occasion was that we need to future-proof the Bill, so that when charter renewal approaches, when we have the revised agreement, it is consistent with the Bill. That was the case that I put. I was grateful to the Minister who replied on that occasion. She said that the Government would consider the point carefully and that they might come forward with amendments that adopted the principle that was included in my amendment at the time. I now thank the Minister who is now in charge that he has fulfilled that obligation. He has come forward with amendments to make sure that there is future-proofing, that the charter and the agreement are covered in the way that I proposed. Having done that, it would be churlish of me to turn on the Minister to say that I support these amendments.

Once the decision has been taken, as long as we can future-proof the Bill, this is a sensible way to proceed. However, my noble friend on the Front Bench might say that we must have an adequate opportunity, when the time comes to consider charter renewal and the agreement, for proper consideration and debate by Parliament—I would share that view. My noble friend Lord Astor pointed out in Committee that in the past we would often be landed with a done deal. The negotiations had all been put together in advance, we had a short debate and no proper opportunity for Parliament to comment. The Government should give firm commitments about their willingness to give Parliament a proper opportunity when the time comes for full consideration of these matters.

Now that I have achieved from the Government that which I asked for in Committee, again it would be churlish if I did not at least answer a point made by the noble Lord, Lord Sheldon. Once again, the Government, in introducing the clauses that he criticised, were responding to the Joint Committee, of which I was a member.

The Joint Committee received a great deal of evidence on the question of fines. Arguments were put on both sides, including the kind of arguments that noble Lords have advanced this evening. Incidentally, as we pointed out, the ITC, BSC and the Radio Authority all considered that financial sanctions ought to apply to the BBC, not least in fairness to other broadcasters. We recommended that the Government should act as they have. Paragraph 375 of our report stated: Extensive and repeated payment of fines by the BBC would be a waste of licence payers' money, for which the BBC and its Governors would be held publicly accountable. This seems to us a reason for the BBC to so arrange its activities as to ensure that it does not incur such penalties, and not an argument for immunity from such penalties. We recommend that the proposed Agreement empower OFCOM to fine the BBC in respect of breaches of tier one and tier two obligations (other than those relating to impartiality) in the same way and to the same extent as other broadcasters". Having made that recommendation. I am bound to support the Government if they seek to keep in the Bill the clauses as they stand, despite the amendments that have been moved.

I am grateful to the Government for having accepted the suggestions that we made on that occasion about future-proofing. As they have done that, I for one am content to wait until the licence renewal debate to continue the argument, subject to some kind of undertaking—a pretty firm undertaking—that they really will allow Parliament when the time comes adequate opportunities to review the terms and conditions that are proposed.

Lord Dubs

My Lords, while I am persuaded by the arguments of my noble friend Lord Gordon, I hope that he deploys them with equal effectiveness when we come to charter renewal. The noble Lord, Lord Crickhowell, is absolutely right. The issue of bringing the BBC under Ofcom and the consequent changes that will be required in the role of the governors and other aspects of the BBC make this matter too big to deal with as one amendment on this occasion. I am persuaded hut, as my noble friend Lord Lipsey said, charter renewal is the appropriate time at which to engage in the whole range of issues relating to the BBC—for which all of us have the most enormous respect and affection, without saying that nothing should ever change.

The only regulator that has any say over the BBC at the moment is the Broadcasting Standards Commission, of which I am the chair, and of which the noble Baroness, Lady Howe, was an illustrious predecessor in the chair some years ago. Certainly there has been no difficulty in our day-to-day work in dealing with the BBC, as with all the other bodies. It works perfectly well, and I see no problems. We have no sanctions such as fining the BBC; our only sanctions are to uphold complaints and to publish when we uphold complaints, when they apply to the BBC or any other broadcaster. On certain occasions, in relation to fairness and privacy, we have the power to have on-air or newspaper publication of complaints.

In my experience, the BBC and the other broadcasters are very unwilling to have complaints held against them, and that serves as an adequate sanction. Therefore, although I see that the prospect of fining the BBC is in the Bill. I hope that the sanction will never be used. I am confident that it is unlikely to be used.

My noble friend Lord Sheldon, in defending the BBC, made a point on which I must take issue, in so far as I understood it. He said that when the governors as regulators of the BBC have an issue, it is sometimes inappropriate that the issue should come out in the open, as it is better dealt with within the walls of the BBC. I hope that I have got him right; that is my wording but, I believe, his sentiments.

Lord Sheldon

My Lords, my noble friend is fairly close, but not exactly right. The point I sought to make is that that is how it has happened; how it should happen is closer to what my noble friend suggests.

Lord Dubs

My Lords, I am grateful for the correction because I think that where the Governors of the BBC fall down is that there is not the transparency which I would want to see associated with a regulator when it is acting on behalf of the public vis-à-vis the management of the BBC, in so far as the governors can put themselves in that position. I understand that that is one of their functions and that they have to represent the public as regulators.

I believe that any regulator should be open and transparent. Everyone should be able to see what are the issues on which the regulator has had to take action, whether that regulator be the existing ITC, the BSC or the Radio Authority at the moment, or Ofcom in the future. I should like the BBC to demonstrate an equivalent transparency when the governors are acting in a regulatory capacity. That has to be the bottom line in parliamentary regulation.

I am very much in favour of the amendment tabled by my noble friend Lord Lipsey. The arguments put forward about the BBC not becoming involved in some of these issues do not apply to new ventures in the commercial sector, where they go head to head with the commercial broadcasters. There I think it appropriate that Ofcom should be able to exercise the power.

Finally, when we consider charter renewal, which is some way ahead, I certainly am concerned to keep the BBC out of politics; that is to say, the fewer arguments the BBC has with any Secretary of State, the better for its independence. I shall look at the way in which the BBC should relate to Ofcom influenced by my wish to avoid the BBC becoming too entangled with any Secretary of State of the day.

Viscount Astor

My Lords, since my noble friend Lord Crickhowell was kind enough to refer to what I said in Committee, I rise to echo and agree with much of what he has said. One day the BBC will come under Ofcom. We have yet to persuade the BBC that it would be beneficial for it so to do.

I think that it would be extremely beneficial because I agree with what has just been said by the noble Lord, Lord Dubs. We do not want too much interference from a Secretary of State. I hope that, when we come to charter renewal, the BBC can he persuaded that it will be strengthened and that it will be given more power, as it were, to resist interference from politicians of any colour.

I recognise that the Government have moved on this in producing their amendments, which go a long way to satisfy the concerns that were expressed in Committee.

Baroness Howe of Idlicote

My Lords, I wish to intervene only briefly in the debate. Almost exactly the same arguments in support of one side or the other were advanced when we considered this matter in Committee. All those arguments were important and were put with the aim of achieving the best possible outcome both for our nation and, indeed, for the BBC'. I belong to the group which says, "Not yet, and perhaps never". However, in my view, now is the time to wait until the charter review and until Ofcom is up and running and able to appreciate just how huge its task is.

The BBC is a huge asset: "A piece of genius", was how the noble Lord, Lord McNally, put it. It has set standards not only in this country, but throughout the world.

I shall not take up much of the time of noble Lords, but I want to say not only, "Not yet" or "When the time is right", but also, "Let us reach the right decision when we come to consider the whole issue again". As the noble Lord, Lord Crickhowell, pointed out, now that we have in place the requirements for future-proofing that he sought, once those have settled in, let us see whether the arguments are as convincing then as some would think.

Baroness O'Neill of Bengarve

My Lords, although the amendment before us may have much to commend it at the stage of charter renewal, there is one element in it which I hope that no friend of the BBC or public service broadcasting, or even of freedom of speech, would wish to see continued; that is, giving a regulator the power to approve or amend all BBC statements of' programme policy. Noble Lords have hardly referred to this aspect, but I think that it is, as it were, an intrusion too far. For that reason alone we should probably not support this amendment.

6.45 p.m.

Baroness Buscombe

My Lords, perhaps noble Lords will allow me now to speak to my amendments in this grouping.

I begin by saying to my noble friend Lord Crickhowell that certainly for my part, once the Bill has been fully scrutinised, I shall certainly harry both the Government and the BBC to ensure that we in Parliament have full opportunity to debate and discuss charter renewal. The noble Lord, Lord Dubs, said that that was some way away yet but we are half-way through 2003 and charter renewal will take place in 2006. As we know, these Sessions go by so quickly. We must get on to that debate early in the next Session. The more that we can build relationships with the BBC on that issue, the better. I certainly intend, as Shadow Minister, to do that.

In speaking to Amendment No. 188, I also wish to speak in support of Amendment No. 112, tabled in the name of the noble Lord, Lord Lipsey. I would also like to reiterate the wholehearted support that I gave to the noble Lord, Lord Gordon of Strathblane, in Committee on Amendment No. 100. In addition, I commend the Government for responding to my amendment—I stress that it was my amendment—to future proof the Bill by facilitating the future incorporation of Ofcom's functions into the Royal Charter. With the imminent onset of the BBC Charter renewal process, it is imperative that the dominant broadcaster is not partially exempted from external regulation before the issue has been extensively debated by Parliament. We therefore welcome the Government's reference to the BBC Charter rather than the agreement alone in the relevant provisions of the Bill.

Amendment No. 188 seeks to ensure parity between the BBC and commercial operators in the matter of cross-promotion. It seeks to confer a duty on the BBC to make arrangements to secure that any rules made by Ofcom regarding the regulation of promotion of programmes, channels and related services are observed. This would ensure that any rules set by Ofcom which apply to commercial broadcasters apply equally to the BBC. Let me be absolutely clear that the intention of the amendment is not to attack the BBC or to prevent legitimate promotional activity, but simply to bring the BBC into line with the accepted standards to which all other broadcasters are required to adhere.

Having carefully considered the comments made by the former Minister, the noble Baroness, Lady Blackstone, on this issue during Committee, I remain of the view that this is an important issue where existing rules and regulations covering the BBC do not give sufficient comfort and the Government's response was therefore inadequate.

First, the Minister said that Ofcom will have concurrent powers under the Competition Act which will apply to the BBC as they do to other organisations. It strikes me as highly damaging to the Government's own stated aims and objectives, at a time when we are trying to get the industry to work together to promote the benefits of digital TV, to suggest that the only recourse available for those who object to unfair cross-promotions is to pursue the matter through the courts under the Competition Act. This is hardly likely to engender a spirit of co-operation.

In any case, the issue of cross-promotion involves wider public policy objectives than simply ensuring fair competition. The ITC's code is underpinned both by its competition and content functions, and the code is intended not just to prevent unfair competition but also to engender clear and accurate consumer information. There is surely an even stronger case for the BBC's cross-promotional activities to be assessed against such a consumer information test, given that it is public money which is being used to fund these promotions.

Secondly, the Minister highlighted that the BBC fair trading commitment goes beyond competition law, and is subject to annual audit. But the fair trading commitment is virtually silent on the issue of cross-promotion and contains nothing like the detailed requirements imposed on the private sector through the ITC code, which I set out in some detail at the Committee stage.

Thirdly, the Minister referred to the BBC published commercial policy guidelines. Again, we can see nothing in those guidelines which provides anything like the detailed commitments contained in the ITC code. Indeed, the proof that no such internal constraints currently exist can be found in the heavy promotional activity that the BBC is currently conducting. I referred during Committee to the ITC rules including prohibitions on excessive promotion of a particular channel, service or suite of channels or services; and restrictions on the promotion of a specific digital platform. It is self-evident to anyone who has seen the BBC's promotions for Freeview and its own digital channels that these promotions would breach the ITC guidelines or any equivalent guidelines in place within the BBC if they existed.

The Minister said that my amendment would place the BBC under the scrutiny of Ofcom, contrary to agreed policy. Even if I accepted that policy outcome, two important points need to be made. First, as I have already noted, the ITC's code is underpinned by both the ITC's competition functions and its functions in relation to content. As far as the latter is concerned, it is agreed that the BBC will fall within Ofcom's remit, so to that extent compliance with the cross-promotional code is already agreed government policy. Secondly, many in the industry might accept the BBC's remaining outside Ofcom's remit in the area if there was any sign of the BBC taking the issue seriously and moving to provide detailed internal rules on cross-promotion. But, as we have seen, existing rules are silent on the issue and the BBC's promotions would clearly breach the ITC code.

We accept that the BBC has a major role to play in promoting the benefits of digital television and dispelling customer confusion about the new technology. That its existing approach is manifestly not working was highlighted by a recent press article. Media Week reported the finding of a poll in which 60 per cent said that Freeview was the name for new BBC channels and services rather than a new free-to-air broadcast platform. Half thought Freeview was available via a BBC set-top box. I strongly believe that, to allay such confusion, the BBC should be required to adhere to accepted standards for cross-promotions.

I briefly wish to speak in support of Amendment No. 112, tabled by the noble Lord, Lord Lipsey, to which my name was added. It ensures that Ofcom could monitor compliance by BBC companies with any guidelines published by the BBC to which subsidiaries were required to adhere when performing commercial activities. I do not wish to repeat what was said in Committee. However, I believe that it is imperative that all commercial broadcasters, including the commercial arm of the BBC, compete on a level playing field.

I have one final point. In Committee, I addressed a question to the noble Baroness, Lady Blackstone, concerning the draft amendments to the BBC agreement. I do not recall receiving a reply. Simply put, will Parliament have the opportunity to debate those draft amendments to the BBC agreement and, if so, when?

Lord Thomson of Monifieth

My Lords, so far as the broadcasting aspects of the Bill are concerned, we have to make a judgment about how best to preserve the essential character and quality of public service broadcasting in this country. I am bound to say that I continue with the belief that it is a safeguard of that unique feature of British achievement that one should have two regulatory centres. There is something to be said for having Ofcom regulating more directly the commercially funded sector, while continuing regulatory arrangements with the BBC.

I disagree with the noble Lord, Lord Gordon of Strathblane, in believing that there is such a great difference between the two methods of regulating the quality and character of public service broadcasting. It is true that the BBC has a problem with its board of governors being close and proud about their programme-makers. Therefore, there is a closeness between governors and management. I am glad to see that the BBC is taking steps to produce more of an arm's-length relationship there, which is important.

I am bound to say that equally, in the days when I was chairman of the Independent Broadcasting Authority, I was sometimes accused of being rather proud of the unique British achievements—as unique as the BBC—of having a commercially funded public service broadcasting system. I was sometimes accused of what I think was called, in the jargon, regulatory capture. There are problems for regulators in such situations, and the distinction between the BBC regulatory arrangements and those of Ofcom is not so vast. There is public advantage in having, in a sense, a bit of constructive tension between them.

From a purely pragmatic point of view, I shall repeat what I said in Committee and what others have said today: there is much to be said for letting Ofcom settle in, and for us to look at the future of the BBC when the charter comes up for renewal. I think that it was Mark Twain who once mentioned that the most difficult thing about prophecy was to prophesy the future. I do not feel so sure that, when that happens, we shall all end up with a great single regulator of all such matters in this country. I rather suspect that, in one way or another, the duality of broadcasting regulation trying to preserve quality and character in public service broadcasting will be maintained at that stage.

Lord McIntosh of Haringey

My Lords, this debate, which began with a clash between my noble friends Lord Gordon and Lord Sheldon, seems to have settled into a degree of consensus. I find that rather encouraging.

First, perhaps I may introduce—I nearly said "very briefly" again; when I hear those words I reach for my stop-watch. That is a warning to anyone who wants to use the phrase in future.

Amendment No. 101, coupled with a new definition of the BBC Charter and agreement in Amendment No. 219, enables the BBC charter to be capable of conferring functions on Ofcom to the same extent as the BBC agreement. The remaining amendments are consequential and ensure that the policy is applied consistently throughout the Bill. These amendments respond to an Opposition amendment moved in Committee by the noble Baronesses, Lady Buscombe and Lady Wilcox, which was accepted in principle by my noble friend Lady Blackstone.

I have listened carefully to the arguments put forward by the Opposition on this issue, and we felt able to accept the principle that it would be right to keep open the possibility of Ofcom's regulatory functions in respect of the BBC, other than those contained in the Bill, being placed in the BBC Charter and not solely in the BBC agreement as the Bill currently provides.

Before leaving this point, let me reassure the noble Lord, Lord Crickhowell, and the noble Baroness, Lady Buscombe, that, as we come up to consideration of the BBC charter, there will be full consultation and a full opportunity for parliamentary debate. I cannot be so encouraging about the BBC agreement. For some reason that I have never understood but which goes back a very long way, approval of the BBC agreement is after debate in the House of Commons and not in this House. Anyone who wants to explore that is welcome to do so.

Viscount Astor

My Lords, I may be able to help the Minister. It is because there is an element in the agreement relating to wireless which necessarily requires a Motion to be passed in another place.

Lord McIntosh of Haringey

My Lords, it sounds like a Ways and Means Motion or something of that kind. I am glad to have that explanation.

I turn now to the other amendments in the group. Amendment No. 100 in the name of my noble friend Lord Gordon replaces the general facilitative function for Ofcom to be given functions by the BBC agreement with a list of specific powers relating to statements of programme policy and others. I seem to have a page missing from my briefing; I may have to return to Amendment No. 100 when I have a fuller speaking note—no, I am being handed the notes; now I have three of them. This is overkill.

Trying to set out Ofcom's relationship with the BBC in the Bill rather than in the agreement conflicts with our basic approach to the BBC. I think that our basic approach has received a good deal of assent during the course of this debate. The Government's aim is for the BBC to be regulated by Ofcom on a basis that takes account of the corporation's distinctive role and constitution, particularly its special relationship with Parliament. The BBC's obligations are to be set out primarily in its agreement with the Secretary of State rather than in the Bill in order to maintain the BBC's accountability to Parliament. Here, it is clear that I part company from my noble friend Lord Gordon, who seems to think that the opposite is the case.

Amendment No. 112 would give Ofcom responsibility for monitoring compliance with any guidelines published by the BBC for BBC companies undertaking any commercial activities in the United Kingdom. This would only be in relation to the making, acquisition or selling of programmes. This would effectively give Ofcom the function of enforcing aspects of the BBC's fair trading commitment. UK and European competition law applies to the BBC as it does to any other broadcasting organisation. Ofcom will have powers to apply UK competition law to broadcasting and related activities if the BBC acts anti-competitively.

I turn now to the amendment of the noble Lord, Lord Sheldon. I will start with Amendment No. 104A, which removes the express power for the BBC agreement to provide for penalties to be imposed on the BBC for breaches of the agreement or the Bill. It was the Joint Scrutiny Committee, as we have been reminded, which came down in favour of giving Ofcom the power to fine the BBC, and the Government accepted the committee's view.

It is true that a fine can reduce funding for programmes and penalise the licence fee payer. Equally, it can be argued, as the Joint Scrutiny Committee did, that a fine imposed on a commercial broadcaster will ultimately work to the disadvantage of viewers or listeners. The important part is for the BBC to ensure that it does not incur fines. There is no reason to exclude the BBC from the fining procedure.

The ability to fine the BBC ensures that it is treated in the same way as other broadcasters, and this completes the level playing field between the BBC and other public service broadcasters. Ofcom must be able to impose sanctions as the ultimate deterrent to the BBC's breaching its obligations. The Government recognised that the issue of fines was not straightforward, and they specifically invited comments on this issue during the draft Bill consultation. On balance, given the principle of parity of treatment between the BBC and other broadcasters, whenever appropriate we think that it is right that Ofcom should be able to fine the BBC.

Amendment No. 112 would give Ofcom responsibility for monitoring compliance with any guidelines published by the BBC for BBC companies undertaking any commercial activities in the UK. This would only be in relation to the making, acquisition or selling of programmes. This would effectively give Ofcom the function of enforcing the BBC's fair trading commitment. UK and EU competition law applies to the BBC as it does to other broadcasting organisations. As I said, Ofcom will have powers to apply UK competition law to broadcasting and related activities if the BBC acts anti-competitively.

I was asked about Ofcom's competition powers; they are strong competition powers. The powers of investigation in terms of their concurrent powers are the same for the BBC as they are for other broadcasters. The BBC Fair Trading Commitment and Commercial Policy Guidelines are published internal documents—such as those used by many large companies—which go over and above the requirements of competition law. They have been drawn up by the BBC governors and are enforced by them.

The guidelines are designed to ensure that the BBC complies with competition law in carrying out its activities, and that all those activities are consistent with, and supportive of, the BBC's core purpose as a public service broadcaster. The guidelines underpin compliance with the law, but are not a substitute for it. The BBC's fair trading framework is also subject to annual audit by independent auditors, and their opinion is published in the BBC's annual report and accounts. It seems right and proper that the enforcement of these guidelines should continue to be a matter primarily for the BBC's board of governors rather than for an external regulator.

7 p.m.

Lord Lipsey

My Lords, I am grateful for what the Minister said and has confirmed about Ofcom's powers. In view of the great concern out there in the real world about whether the BBC is following its internal guidelines and in view of the fact that the Whish Report looked at the actual rules and said that they were right, would the Minister consider asking Professor Whish to follow up his report by looking at how the guidelines are applied in practice, or some other method of achieving the same objective? That might help to get us out of the difficulty in which we find ourselves.

Lord McIntosh of Haringey

My Lords, I am not convinced that there is a difficulty but I am always receptive to suggestions to look for up-to-date evidence. I shall take that suggestion away, think about it and respond to the noble Lord, Lord Lipsey, accordingly.

Amendment No. 188 would make the BBC subject—in the fullest and most analogous way practicable—to any rules drawn up by Ofcom to regulate the promotion of programmes, channels and related services that are provided by licensed television service broadcasters. The amendment is probably designed to address the fact that, since Ofcom will not licence the BBC's public service channels, those channels will not he subject to Ofcom's cross-promotion rules. The BBC's promotional activities are covered by competition law, which will be enforced concurrently by Ofcom and the OFT.

The BBC's own commercial policy guidelines contain commitments that the BBC's core public services will not be used unfairly to promote BBC commercial activities and that there will be no promotion of BBC commercial products and services within BBC' programmes on the public services. If there are any suggestions that that is not being adhered to, the matter should be addressed to the BBC.

The promotion of licence fee funded services is in the interest of licence payers, because it informs them about the range of services for which they are paying. For example, licence fee payers have been informed about Freeview, the new digital terrestrial channel—I appreciate the lack of understanding on the part of many people about what it actually contains and where it comes from—along with the cable and satellite platforms, as a means of viewing the new BBC digital channels.

On balance, we believe that the current approach is the right one; that is, that the BBC's position is best handled on the basis of clear commitments by the BBC itself, set firmly within the overall framework of UK and EU competition law, and enforced by the governors.

Lord Gordon of Strathblane

My Lords, this has been a very diverse debate, which is not surprising because noble Lords have spoken to very diverse amendments. On my amendment, which is all that I can really speak to, I am conscious that I will never convince some noble Lords. That distresses me because I should like them to be assured that I fully share their respect and admiration for the BBC. However, we at least begin from the same point.

The noble Lord, Lord Alli, advanced a rather individual argument, and I was surprised that it was backed up by the noble Lord, Lord Thomson. The noble Lord, Lord Alli, said that the more regulators that there were, the better, so that independent producers like himself can play one against the other. That is a perfectly legitimate argument but, frankly, it is a good argument against Ofcom altogether. We should be much better off with Channel 4 and Channel 5 and, if one was beaten by three of them, one could go to the fourth. The overwhelming undertone that I take from the debate is that this is not felt to be the right time for such an approach. To that extent, I shall withdraw the amendment and I shall not return to it at Third Reading.

Some people feel that charter renewal is the relevant time. I point out that we will probably debate charter renewal at some time in the next Session; that debate is not that long away. Moreover, the BBC is such an important organisation that it could well affect the very structure, let alone the staffing, of Ofcom and it would be much better to do that up front. I have not been able to convince the House of that and. to that extent, I thank the Minister for his reply and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey moved Amendments Nos. 101 to 104:

Page 175, line 13, leave out paragraph (a) and insert— (a) the BBC Charter and Agreement, and

Page 175, line 19, leave out "an agreement falling within subsection (1)(a)" and insert "or under the BBC Charter and Agreement"

Page 175, line 22, leave out "the agreement" and insert "that Charter and Agreement"

Page 175, line 23, leave out "such an agreement" and insert "that Charter and Agreement"

On Question, amendments agreed to.

[Amendment No. 104A not moved.]

Lord McIntosh of Haringey Amendment No. 105:

Page 175, line 24, leave out subsection (3) and insert— (3) The BBC must pay OFCOM such penalties in respect of contraventions by the BBC of provision made by or under—

  1. (a) this Part, or
  2. (b) the BBC Charter and Agreement,
as are imposed by OFCOM in exercise of powers conferred on them by that Charter and Agreement.

On Question, amendment agreed to.

[Amendments Nos. 105A and 105B not moved.]

Lord McIntosh of Haringey moved Amendment No. 106: Page 175, line 32, leave out "by virtue of subsection (3)" and insert "by OFCOM in exercise of a power conferred by virtue of the BBC Charter and Agreement

On Question, amendment agreed to.

Viscount Astor moved Amendment No. 107:

Page 176, line 4, at end insert—

  1. "(10) It shall be the function of OFCOM to oversee the terms of trade between the producers of independent radio and the BBC.
  2. (11) In subsection (10), a reference to the producers of independent radio is a reference to such producers as the Secretary of State may by order specify."

The noble Viscount said: My Lords, the BBC is required to commission at least 25 per cent of its television programming from the independent sector, yet there is no quota for radio. In Committee, I argued that quotas should be extended to BBC radio because the licence fee is, in part, designed to nurture Britain's creative base, and that includes radio as well as television. The Government opposed such a move, and I accept much of the argument that the Minister put forward in Committee about quotas. Therefore, I have returned on Report with this amendment, which I believe is a compromise and which I very much hope the Government will be able to accept.

My amendment would not only help the independent radio production sector grow without the imposition of a statutory quota; it would also clear up an anomaly in the Bill. As currently drafted, the Bill gives Ofcom the power to oversee the terms of trade between the BBC and independent television producers but not between the BBC and independent radio producers. That is particularly odd as the BBC is far more powerful in radio, where it controls more than 50 per cent of the market.

Effectively, independent radio producers are faced with a single buyer of their services—the BBC. What is more, the buyer—the BBC—is able to source product internally. That gives the BBC an enormous power, which means that effectively it can determine the terms on which it trades. Independent scrutiny by Ofcom would ensure that the BBC did not abuse its dominant position.

It has been said that the live nature of most radio programming means that the independent radio production sector can never grow in the same way as its television counterpart has done. However, independent radio producers dispute that, pointing to the huge amount of live programming that they already do. Greater transparency over the way that the BBC deals with independent radio producers would be of real benefit to the industry, enabling it to grow and prosper. I hope that this compromise amendment will find favour with the Government. I beg to move.

Lord Alli

My Lords, I support the amendment moved by the noble Viscount, Lord Astor. In Committee, I myself moved an amendment which dealt with the quota system for BBC radio. I decided not to move it on Report as I had a conversation with the head of BBC radio during which she assured me that the BBC operated a 10 per cent voluntary quota and was very keen to see that quota being built on. She also reassured me on the terms of trade issue between independent producers and the BBC.

Therefore, if the amendment were accepted by the Government, that would be a further reassurance. But if my noble friend on the Front Bench is inclined not to accept it, I wonder whether he might follow up the offer of the head of BBC radio to write to my right honourable friend the Secretary of State giving her commitment and assurance that the informal quota will continue to be adhered to and, indeed, that she will safeguard the terms and conditions of independent radio producers. If he is willing to do that, I suspect that we may achieve the same result but via a different means.

Baroness Buscombe

My Lords, I support the amendment tabled by my noble friend Lord Astor. As noble Lords have already said, the amendment would allow Ofcom to oversee the terms of trade between the BBC and independent radio producers. I spoke on this matter at some length in Committee and I do not propose to repeat what was said. However, I should like to reiterate my support for the independent radio sector. That said, I am more comfortable with this amendment than the one proposed by my noble friend in Committee because it is less prescriptive and it does not allow for a statutory quota. I believe it is important that the dominant broadcaster does not benefit unjustly from its position and that the terms of trade under which the parties operate are subject to a level of external scrutiny.

Lord McIntosh of Haringey

My Lords, I certainly agree that this amendment amends very reasonably the one moved in Committee and that it avoids some of the difficulties which arose from that amendment. The paradox is that this is about the commissioning of independent radio productions, and despite the fears of noble Lords, which lead them to wish to impose terms of trade or for Ofcom to oversee terms of trade between independent radio producers and the BBC, the BBC is virtually the only commissioner of independent radio productions. That does not mean that it is a monopsonist; rather it is an oligopsonist in the sense that there are many bodies within the BBC that commission radio productions.

However, they are hound together by a commissioning code of practice for independent producers which is produced by BBC network radio, and of which I have a copy. I would like to send a copy of this very extensive code to the noble Baroness. It goes far beyond the issue of quotas and into the detail of the commercial relationship between independent radio producers and the BBC. I have scanned it rapidly, and it seems a very fair portrayal of a good commercial, intellectual and creative relationship between the BBC and its suppliers.

I do not know whether I can persuade BBC network radio to guarantee that this will continue, as the noble Lord, Lord Alli, suggested. However, the code has been agreed with the Office of Fair Trading; it has been in operation for the past six years; it has recently been updated to extend to all BBC radio services; and I have no reason to believe that the BBC intends to depart from it. With the combination of the BBC's code of conduct and the arguments that UK and EU competition law apply to the BBC as to other broadcasting organisations, and that Ofcom will have the power to apply UK competition law to broadcasting and related activities if the BBC acts anti-competitively, I hope that the amendment will not be pressed.

7.15 p.m.

Viscount Astor

My Lords, I am grateful for the Minister's response and for the support of the noble Lord, Lord Alli.

The Minister has gone some way to satisfy my concern. There is a code which governs the terms of trade between independent television producers, and its advantage is that if an independent television producer feels for some reason that they have been done down or have not had an opportunity to do what they like, they can read the code and appeal through it. The BBC has kept that, and it works well.

In Committee, the noble Baroness, Lady Blackstone, said as a response to the code governing the terms of trade with independent television producers: The code was developed in response to concerns raised by the Joint Scrutiny Committee and the ITC in its programme supply review report. We are not persuaded that there is a case for applying a similar requirement, and one which applies only to the BBC in the radio context—[Official Report, 22/5/03; co1.957.] It would be helpful if the Minister could explain the difference. Is he saying that there is a code? Previously, he said that the code did not apply.

I hope the Minister will consider this issue. If he cannot answer me now about the difference between the two replies, I would be happy to discuss this between now and Third Reading to come to a satisfactory conclusion.

Lord McIntosh of Haringey

My Lords, my door is always open.

Viscount Astor

My Lords, I am grateful to the Minister, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Buscombe moved Amendment No. 108: After Clause 195, insert the following new clause—


In Part 2 of Schedule 4 to the National Audit Act 1983 (c. 44) (nationalised industries and other public authorities) "the British Broadcasting Corporation" is omitted.

The noble Baroness said: My Lords, with this I shall speak to Amendment No. 111. We reach now the important issue of the National Audit Office.

I believe that we have come a long way since Second Reading when I set out a case, supported by other noble Lords, for the need to enable the Comptroller and Auditor-General to have full value-for-money access rights to the BBC, thus opening it up to the same scrutiny on Parliament's behalf as all other bodies that are funded by tax. On Second Reading and in Committee I made the point that there is total consensus on the issue among members of the Commons Public Accounts Committee. In our view, this scrutiny would not impinge in any way on the editorial independence of the BBC but would give some measure of accountability and transparency. We believe that what we seek is in the best interests of the BBC.

I am pleased to report that I believe that we have now reached a happy agreement. We have moved on from the debate in Committee which addressed what we referred to as the Sharman compromise. Sadly, the noble Lord, Lord Sharman, has had to leave. I had wished to pay tribute to the noble Lord for his assistance in bringing together the Government, the BBC and the National Audit Office through his suggested arrangement. In Committee I stated that I was uncomfortable with some aspects of the noble Lord's proposal. It did not go quite far enough and lacked some clarity and certainty, in particular with regard to the important imperative if agreement were to be reached that any review carried out by the National Audit Office should be laid before Parliament and then reviewed by the Public Accounts Committee.

Since that debate, I have been in discussion with the Comptroller and Auditor-General and the Minister. I am grateful to the Minister for those discussions. I have also been in discussion with my honourable friend in another place, Mr Edward Leigh, chairman of the Public Accounts Committee, and the BBC through my noble friend Lady Hogg, who is a very able governor of the BBC. I am extremely pleased to be able to say that I believe that an agreement has been reached. The Minister wrote a letter to me on 19th June—it was placed in the Library—entitled, Ensuring the efficiency, effectiveness and economy of the BBC's operations. I do not intend to repeat it verbatim. However, one or two aspects worried me and the Shadow Secretary of State, my honourable friend in another place, John Whittingdale, MP. We have talked to the Comptroller and Auditor-General and others involved in the agreement and we are now comfortable with withdrawing the amendment tabled. We would have liked the Government to have accepted the amendments. However, we appreciate that we have come a long way and that the BBC has been extremely helpful, as has the Comptroller and Auditor-General, in reaching this consensus.

I have given prior notice to the Minister that I wish to seek his assurance on a matter. I know that it is difficult because the Minister is not the governors of the BBC so, in a sense, I am making these points for the benefit of Hansard and for the benefit of all beyond your Lordships' House so that they can understand where we are. I wish to seek his assurance that the governors of the BBC understand the unspoken framework within which the agreement is intended to work. We seek to achieve greater accountability and greater transparency. The expectation of your Lordships' House is, we believe, set upon the agreement facilitating a number of reviews and the National Audit Office would be conducting some of those.

We want assurance, which I believe is reasonable, that the audit committee of the BBC is committed to holding dialogue with the Comptroller and Auditor General. We also want to ensure that the audit committee will be both committed and supportive of providing the Comptroller and Auditor General with sufficient access to the BBC to enable the Comptroller and Auditor General to do a good job and to have the requisite understanding of the BBC's business. That is extremely important. The audit committee of the BBC will decide which programme of review it wishes to undertake, in consultation with the Comptroller and Auditor General, but that would be in the expectation that some of those reviews would be carried out by the Comptroller and Auditor General. So I am saying that the audit committee will decide which reviews it undertakes, but it is expected that some of those reviews will be carried out by the Comptroller and Auditor General.

Once reports are produced by the Comptroller and Auditor General, they will be laid, in their entirety, in a timely manner, before Parliament. The publication of the BBC's annual report will act as a backstop date, we suggest, when the Comptroller and Auditor General will lay the reports before Parliament, before the House of Commons. Then it will be open to Parliament to decide how to review those reports and how they will be taken, discussed and considered within the House of Commons.

It is reasonable to suggest and to encourage the Comptroller and Auditor General to report on behalf of the National Audit Office within, I suggest, a period of two years from now, to Parliament to inform Parliament as to how the arrangement is proceeding. I believe that it is accepted by all those party to this three-way agreement between the BBC, the National Audit Office and the Government, that this will be a trial process. It is important that we accept that the parties, in particular the National Audit Office and the Comptroller and Auditor General, should be left to pursue that arrangement. Of course, on Her Majesty's Opposition Benches we see it as a process that will continue pending charter renewal. We are extremely grateful to all the parties concerned.

Lord Crickhowell

My Lords, I am grateful to my noble friend for giving way. I have been listening with great interest and I congratulate my noble friend. Perhaps she can enlighten me on one point because she knows about the agreement and I do not. Am I right—I hope that I am—in assuming that the Comptroller and Auditor General will deal directly only with the BBC and that there will be no involvement of the finance officer of the department because that, to me, is absolutely fundamental. If this is an arrangement in which the National Audit Office deals with the BBC, that is fine, but I was concerned that we would have the kind of arrangement that normally happens with public bodies where the poor old public body is left stranded and the principal finance officer or the permanent secretary becomes involved in the exchanges with the National Audit Office.

7.30 p.m.

Baroness Buscombe

My Lords, I am extremely grateful to my noble friend for that intervention. I am pleased to confirm that what he asks is the case: this is an arrangement. Notwithstanding that we have obviously looked to the Government for their support for the agreement, it is our understanding—which I believe is contained precisely and accurately in the letter addressed to myself from the Minister—that this is an arrangement between the NAO and the BBC governors, in terms of carrying it out.

My noble friend is right to raise the issue because it was proving a sticking point on the part of the BBC and rightly so. One of the points I made on Second Reading and again in Committee is that it is terribly important that the BBC governors and the NAO can act independently of government. I urge noble Lords to read this letter of 19th June to reassure themselves that that is the case. Indeed it states that the Government do not envisage a role for the Department for Culture, Media and Sport or its accounting officers in the process and that such a role would infringe the independence of the BBC in its day-to-day operations. I hope that that reassures my noble friend. I beg to move.

Lord Sheldon

My Lords, the noble Baroness urges noble Lords to read the letter. I went to the Library today and they could not find the letter. It is a great pity that we are discussing a letter that is supposed to be in the Library but which was not there—they could not find it anyhow. The noble Lord, Lord Crickhowell, made the useful, but rather limited, point that the finance officers should not be involved.

As well as my long period of service as chairman of the Public Accounts Committee I spent eight to 10 years as a member of the Public Accounts Committee. Over that period I looked at the BBC. In my later years as chairman we considered whether the BBC's role should be investigated by the Public Accounts Committee. When I look at the new clause in Amendment No. 111, 1 see that subsection (3)(a) makes it, an obligation to carry out an examination into efficiency, economy and effectiveness of the BBC's services". That is value for money.

Economy is not difficult to understand: one obtains at the cheapest price available.

Baroness Buscombe

My Lords, will the noble Lord accept that I said at some length that I do not propose to pursue these amendments because I believe we have reached a good and helpful consensus?

Lord Sheldon

My Lords. I understand that, but I have not seen anything of it. Surely the noble Baroness cannot just say that she has come to an agreement and an understanding when most of us have not seen the letter. I went deliberately to the Library and asked to see it. I might have agreed with what it said, but I have not seen it. If it is not here, I must speak to what is here, which is the matter before us in the amendment.

When we look at economy, we can see that that is easy to handle. When we look at efficiency it is not too difficult to understand that we try to obtain the best possible deal for the lowest possible price. When we look at effectiveness, on the other hand, it becomes much more difficult. How do we deal with effectiveness in the televisual medium? What is effectiveness? Is it a popular programme; one that instructs people; or one that receives a great deal of admiration from the literary people concerned, or from whatever bodies might be involved?

I am very uneasy about the matter. I was incremental in securing John Bourn as the Comptroller and Auditor-General. He is an admirable man, and I have no doubt whatever that I would place my complete confidence in him. But I have to take into account the position as it may apply to some future Comptroller and Auditor-General who may not have the same degree of understanding.

As a result, we need to be careful about letting accountants look at the working of effectiveness when they cannot even define it properly. I wanted the National Audit Office to be in all sorts of areas, which it was over a long period of time. I never sought to limit inquiries. But there are a few areas where value for money is hardest to apply. I believe that that is one of them.

Lord Lipsey

My Lords, I am sorry that, inadvertently, the letter that my noble friend intended to place in the Library went astray. If the noble Lord, Lord Sheldon. wants a copy I have one.

The noble Lord, Lord Sheldon, spoke with great passion about the BBC. I agree with all that he said about the wonders of the institution. The BBC has signed up to the agreement. We can take it that the very real concerns that he expressed will have been taken into account by the BBC before signing the agreement. I hope that he will set his mind at further rest by reading the agreement.

The agreement was sent to me. It is a very good deal. I wish to deal with one point that is not concrete in the agreement. It states that the audit committee of the BBC will lay its report before Parliament "probably" once a year at the time of the annual report. That is not terribly satisfactory. It means that in some cases they will sit around for a long time. The PAC will have difficulty organising its programme, which is organised a year in advance around that. I hope that the Minister and the BBC might look again at the inclusion of "probably". It is not a point of principle but a question of efficient and effective management. I do not think that the proposed approach is the most efficient and effective one.

I shall pause for a minute for rosettes, as this is a remarkable item of business. With the possible exception of the noble Lord, Lord Sheldon, we have moved from a situation where some people at one extreme said that the NAO must have full power over everything and others said that the proposals were a disgraceful attack on the BBC's editorial independence. It has been a very good process where everyone has come together and signed up. I pay tribute to the flexibility of the chairman and governors of the BBC, who took some persuading but are now persuaded. They have given the absolute assurance that they will do it properly. I pay great tribute to the noble Lord, Lord Sharman, who endorsed the agreement.

Finally, I give a rosette to someone who might otherwise lack it, not being on the Government Front Bench: the noble Baroness, Lady Buscombe. I know that this has been a difficult issue in her party also. It is terribly important and significant that in Parliament all sides—subject to anything the noble Lord, Lord McNally, might say—have said that they will give the agreement a go and have another look at it during the charter review, hoping that it will not he controversial. They have said that they are prepared not to hang on to principled speeches and will work towards getting a practical agreement to work. A very large rosette goes to the noble Baroness, Lady Buscombe. I am very glad that the issue has been resolved so satisfactorily.

Lord McNally

My Lords, I know that the noble Lord, Lord Lipsey, received the letter. It also went to Shirley Williams, Colin Sharman, Edward Leigh, Gavyn Davies, Sir John Bourn and, for all I know, uncle Tom Cobbleigh. I did not receive it. I got it from the noble Baroness, Lady Buscombe. I shall be extremely succinct.

Lord McIntosh of Haringey

My Lords, I shall set my stopwatch.

Lord McNally

My Lords, when the great divergence to which the noble Lord, Lord Lipsey, refers, became apparent, I thought it was a good idea and one of the great boons of this House to ask someone who knew about such matters to look at it. I asked the noble Lord, Lord Sharman. What became known as the Sharman compromise is embodied in the letter to the noble Baroness, Lady Buscombe. The noble Lord, Lord Lipsey, is right; the noble Baroness has used considerable skill in persuading her colleagues along the corridor that the proposal is sensible.

My message is very simple. In 2001, at the request of the Government, the noble Lord, Lord Sharman, conducted a review of public accountability of public sector bodies. Unfortunately, the noble Lord has had to attend another engagement, but he asked me to say that he believes that the agreement—which I saw second-hand and that the noble Lord, Lord Sheldon, has yet to see—falls four-square within the recommendations of the report. I share some of the concern expressed by the noble Lord, Lord Sheldon, about leaping straight into full NAO coverage. However, this is a great step forward in transparency and accountability in the BBC. From all that I have heard it will be approached with the constructive spirit for which the noble Baroness, Lady Buscombe, asked, and therefore it is rosettes all round.

Lord McIntosh of Haringey

My Lords, first. I apologise to anybody who failed to receive a letter. I assure the House that the letter was laid in the Library by my department on 20th June. Of course, laying letters in the Library does not mean that people know that they are there. That is not the ideal way of communicating with people, but we do not always know who to communicate with. On reflection, we should have sent copies of the letter to all those who took part in comparable debates in Committee.

Lord Sheldon

My Lords, it is surprising that I gave the Library two hours to find the letter, and they could not find it. However, it is obvious that my interest was observed. I still do not know, and I am going to hear for the first time from my noble friend what this is all about. It is rather late in the day.

Lord McIntosh of Haringey

My Lords, I entirely agree. We shall have to think about how to put together a proper mailing list for announcements of this kind—and whether letters from one person to another are the right way to deal with these matters. This needs some thought.

There has been much heated debate throughout the passage of the Bill on this issue, both in the Commons and here. But that should not obscure the common ground that exists and has always existed. We all want to ensure BBC accountability to Parliament and to television licence fee payers. We also want to safeguard the BBC's independence, which is central to its role as our principal public service broadcaster.

However, there are very different views on how this should be achieved. Those who want statutory National Audit Office access argue that it would pose no threat to the BBC's independence, since the Comptroller and Auditor-General is prevented by statute from commenting on the merits of policy objectives; and Amendment No. 111 includes specific provision to that effect. Others, including the BBC, feel that statutory access would inevitably compromise the corporation's position, because the nature of the BBC's operations means that it is difficult, if not impossible, to separate editorial from expenditure decisions. There seemed little prospect of finding any common ground between those opposing views. So I am grateful to the noble Lord, Lord Sharman, for the proposal that he brought forward in Committee to resolve this issue.

My noble friend Lady Blackstone undertook to consider the Sharman proposal and report back to the House before Report. Following discussions between DCMS officials and—primarily—the BBC and the NAO, the Government are satisfied that the proposal offers a workable basis for strengthening BBC accountability to Parliament and licence fee payers while preserving the corporation's independence. I wrote to the noble Baroness, Lady Buscombe, on 19th June to set out how we envisage the new arrangements operating. Detailed discussions are required before the necessary amendments to the BBC agreement can be drafted, but I shall set out the basic structure.

A dialogue between the BBC audit committee and the Comptroller and Auditor-General will be the basis for establishing a programme of reviews. On the basis of the dialogue, the audit committee will settle a programme of reviews and allocate individual reviews to organisations including the NAO. The Comptroller and Auditor-General would not seek payment for any reviews undertaken by the NAO. The dialogue will need to identify those studies which would be particularly suitable for the NAO to carry out, taking this into account. Reports by the NAO, or contractors, will be submitted to the BBC audit committee. The factual content of the reports will be agreed with BBC officials before submission, but the NAO or contractor will retain full discretion over the report's conclusions and recommendations. Reports, whether by the NAO or contractors, will be presented in full to Parliament by the BBC governors, together with the corporation's response, in a timely manner but probably at the same time as the publication of the BBC's annual report and accounts. For those who are worried about the phrase, probably at the same time as the publication of the BBC's annual report and accounts", the phrase, "in a timely manner", is some consolation.

Once reports have been presented to Parliament, it is of course a matter for Parliament to decide how they should be considered. The Government do not envisage a role for the DCMS or its accounting officer in the process. Such a role would infringe the independence of the BBC in its day-to-day operations. As I indicated, our discussions with the BBC and the NAO have satisfied us that the Sharman proposal can work effectively on the basis that I have set out. There will be an opportunity to judge the effectiveness of the new arrangements in the forthcoming review of the BBC charter. Indeed, I can confirm for the noble Baroness, Lady Buscombe, although it is not for me to tell the NAO what to do, that if it wishes to review the operation of any agreement and make representations during the charter review, we would listen to it as we would to any representation made by the BBC governors.

The BBC has a clear incentive to ensure that it is a success. BBC governors are aware that Parliament and the Government will want to have sufficient evidence to judge the effectiveness of the new arrangements by the time the current Royal Charter expires. The Government expect that the first reports prepared under the new arrangements by the NAO or others will be presented to Parliament within the next two years.

I read that statement out word for word because it has been a hard-fought agreement and I do not want to depart from it in any way. I have been asked questions that are really not for me but for the BBC governors and the NAO. My understanding is that the governors want to make the agreement work and are committed to it, and that the NAO feels the same—although that is not a matter for the Government. On that basis, I am grateful to the noble Baroness, Lady Buscombe, for indicating that she is prepared to withdraw the amendments—

Lord Sheldon

My Lords, can the Minister say something about the nature of the reviews? I am still mystified as to what the reviews will entail. Are they purely financial? What else are they?

Lord McIntosh of Haringey

My Lords, I have set out the basis on which they will be agreed between the BBC and the NAO. It is not for the Government to speculate in advance as to what the NAO would believe it appropriate to seek to review or what the BBC governors would seek to offer as subjects for review, either for the NAO or anyone else. If I were to do that, I would be intervening in art agreement between two public bodies not controlled by the Government in an inappropriate way.

Lord Sheldon

My Lords, what if they disagree and do not come to an agreement? What happens then?

Lord McIntosh of Haringey

My Lords, I have set the matter out as far as I am able. These matters have of course been considered—the possibility of disagreement has been considered. If my noble friend reads what I have said in Hansard, he will see that that is as far as I am able to go.

Baroness Buscombe

My Lords, I thank the Minister for all that lie has said. I have great pleasure in saying that I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Davies of Oldham

My Lords, I beg to move that further consideration on Report be now adjourned.

Moved accordingly, and, on Question, Motion agreed to.

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