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Mr. John Redwood (Wokingham): Given that the Minister could make more spectrum available without tax increases, can he tell the House how there can be more jobs if he takes £1,500 million of much needed money out of the industry? Will he come clean and agree that that means fewer jobs, fewer opportunities, and damage to the industry?
Mr. Battle: I am amazed at such an early intervention from the right hon. Gentleman. I remind him that his party proposed the measure to give a boost to this sector of the economy, as I shall spell out in detail. No, we do not see it as a tax measure. We see it as a means of opening space on the spectrum. That has been widely welcomed by the industry, as was clear from the consultation. As right hon. and hon. Members will be aware, the Bill started life in another place, where it was well received and constructively debated. I should like to think that that approach will be taken this afternoon.
Mr. David Chidgey (Eastleigh): Although we well understand that the intention of the Bill is better management of the radio spectrum, and that auctioning access to the spectrum is part of that process, there is a fear in the House that the Bill may become a tax-raising measure. It sets out the objectives to which the Minister must have regard, but it is not exclusive. It would be helpful if he could give the House some guarantee that it is entirely a matter of management, not a measure for raising taxes through whatever process may follow.
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. Before the Minister resumes, may I say that, when hon.
Members are seeking to interrupt the Minister at the Dispatch Box, it would be helpful if they would identify the fact that they are trying to interrupt, rather than standing like statues. It would equally be helpful if the Minister would indicate to which of several hon. Members he is giving way.
Mr. Battle: With so many interventions after one sentence, Mr. Deputy Speaker, it is hard to keep pace.
The hon. Member for Eastleigh (Mr. Chidgey) can have the assurance he seeks. The purpose of the Bill is to break open the spectrum, to manage it better and to ensure that it can be used at all in the future. That is why many companies have welcomed the Bill. It is worth pointing out that the majority of users will face no increases, and will even pay less under the Bill. That is often not made sufficiently clear.
Mr. Norman A. Godman (Greenock and Inverclyde):
With reference to clause 1 and my hon. Friend's last remarks, will he confirm that clause 1 does not refer to the use of radio equipment on United Kingdom-registered fishing vessels?
Mr. Battle:
I am grateful to my hon. Friend for that detailed point. Fishing vessels will come within the scope of the Bill, but it will not have an impact on the planned charges. The frequencies for maritime use and the standards for equipment and services used were determined internationally, so they will not be directly affected as my hon. Friend fears.
Mr. Anthony Steen (Totnes):
Is the Minister aware that the previous Government stated that they had no plans to introduce spectrum pricing to the 3.5 and 10 GHz bands used for fixed radio access by Ionica and other companies? As much of the equipment for fixed radio access is made in Nortel in my constituency, I am concerned about the policy of the previous Government, which was enlightened and well accepted by the work force of 800 at Nortel. Will the Minister confirm that the new Government will accept the principles established by the previous Administration in this field?
Mr. Battle:
After lots of consultation, we have come to that view. In fact, Ionica welcomed the legislation when it was introduced. As I have said, we have accepted amendments that were made in the other place. Several amendments to the Bill reflect the comments and concerns expressed by the noble Lords, not least on behalf of some of the companies, particularly Orange. The Bill also takes account of the views expressed by a wide range of radio users in the course of extensive consultation by the Radiocommunications Agency.
I shall explain later the changes that we have made to the Bill, which have reinforced, and in no way undermined, the thrust of the legislation. I attach great importance to consultation and dialogue with those affected by the Bill regarding all the measures that my Department may bring forward. In order to emphasise our commitment to consultation, the Bill now provides specifically for statutory consultation on draft regulations.
It is tempting to say that the legislation has emerged from a series of consultations, including "The Future Management of the Radio Spectrum", published in March
1994; the White Paper entitled "Spectrum Management: into the 21st Century", published in June 1996--both endeavours of the previous Government--and "Implementing Spectrum Pricing", which was released within weeks of Labour's coming to office in May 1997. We intend to maintain wide-ranging, informed consultation with those affected by this measure, and later I shall announce new arrangements to take the process further forward and give users an even stronger voice in this vital area.
Radio has proved to be one of the key technologies of the 20th century. It is perhaps an appropriate time to introduce a Bill that will dramatically modernise the management of the radio spectrum, as this year marks the centenary of the establishment of the first stations in this country for wireless telegraphy. The first legislation regulating radio, the Wireless Telegraphy Act 1904, was put in place more than 90 years ago. The legal framework was updated through the Wireless Telegraphy Act 1949, but it remains essentially unchanged.
The world has changed rather dramatically since then, and radio has played a key part in many of those changes. Back in 1949, radio was used essentially for one purpose: sound broadcasting. There were then just three radio stations. Of course, radio was also used for some maritime communications--as my hon. Friend the Member for Greenock and Inverclyde (Mr. Godman) emphasised--and for radio astronomy, which was then in its infancy.
Developments in the use of the radio spectrum over the past 50 years have been astonishing. In broadcasting, we have seen the enormous growth of radio and television, which rely equally on the radio spectrum. As an illustration of this, the Radio Authority recently awarded its 200th licence for a local commercial station.
It is important to add that radio is no longer just about broadcasting. An enormous range of businesses now depend crucially on the radio spectrum--from the giants of telecommunications and computing to small businesses, such as taxi firms, which are crucially dependent on radio for their day-to-day operations. In future, we can expect the boundaries between radio, telephony and computing to become increasingly blurred, allowing, for example, portable computers to communicate more quickly and to convey greater quantities of information. Multimedia convergence is the brave new world facing us as we approach the new century.
Mr. John Bercow (Buckingham):
I am following the Minister's historical reflections with the closest possible interest, but I return us to the present for a moment. Can he tell the House how much the Bill will cost the public sector? Health and emergency services, for example, are extremely reliant upon radio systems--as I hope the Minister is well aware. What action do the Government propose to take to ensure that those vital services have the access to the airwaves that they undoubtedly need?
Mr. Battle:
It is important to emphasise that the concessions for services that use the radio spectrum for emergencies will remain. That was made absolutely clear in the debate in the other place. The whole purpose of the Bill is spectrum management. The public sector will have
Mr. Ian Bruce (South Dorset):
I apologise for stopping the Minister from getting into his full flow, but many people are interested in the Bill. For several years before the last general election, my local fishermen were very upset that pleasure craft users, who effectively use the same radio licence as fishermen, were getting it very much cheaper. The fishermen felt that it would be better if pricing was more even.
I know that the Bill contains powers to make variation. The Conservative Government said that they were about to decide which way it should go, and I have a letter written in April--just before the hon. Gentleman took over. Has his Department made a determination about fairer fees between fishermen and pleasure craft owners, who in effect are using the same licence?
Mr. Battle:
I am grateful to the hon. Gentleman. We do not see the correspondence of the previous Administration, as he well knows, but I shall be happy to take his point further. His point has been taken on board. The aim is to have fair use of the spectrum as well as ensuring that more of it is used, because--as I think he hints--demand for services will increase. Radio is likely to remain the indispensable means of providing multimedia convergence and mobility. In other words, the radio spectrum, as the raw material of the information revolution, will be vital.
Nor is the question one of marginal, purely technological concern. I want to emphasise--the right hon. Member for Wokingham (Mr. Redwood) raised this point with me--the importance of radio to the economy. In 1995-96, radio contributed £13 billion to gross domestic product, and more than 400,000 jobs were created. The contribution to GDP is growing at a rate of £1 billion a year, and jobs are being created in these industries at the rate of 1,000 a week. Radio also provides some £12 billion to £15 billion a year of efficiency gains and other user benefits, as businesses now rely on radio to facilitate their communications in a whole host of new ways, so it benefits the economy.
The whole purpose of the Bill--to open up the use of the spectrum--is to create space for that sector of the economy to grow. It is certain that pressures on the radio spectrum will increase as society demands ever greater mobility and as new services continue to become available, because demand in Britain for the radio spectrum is starting to outstrip its availability. That is the key point, and it is particularly true in the major conurbations and in the corridors between them where radio use is most concentrated.
In other words, we need to act now for the benefit of all radio users, private and business. I am tempted to say that, if we do not open up the space, we will not be able to use it at all, because it will be too congested, and we will all fail. That is the whole point of introducing the Bill at this time.
If we fail to do that, the result will be increased spectrum prices and congestion. Businesses will be denied access to the radio services on which they now depend.
Introducing new technologies will be delayed, and the cost to the economy will be incalculable, because businesses will grind to a halt. They will not be able to improve, because they will not have the space to take advantage of new technologies to move further forward. The cost to the economy could be billions of pounds a year, and thousands of jobs could go, or at least be jeopardised, if we do not open up the space now.
The legislative framework for managing the radio spectrum was designed for an era when spectrum availability was not a problem. Up to now, it has served us relatively well, but it does not provide us with the tools we need to manage the spectrum effectively to provide the basis for continued growth and innovation. That is the purpose of the Bill--to update the spectrum management framework, set up in the early 20th century, to take us forward to meet the challenges of the 21st.
Under current legislation, the radio spectrum is managed by regulation, and licence fees have to be based on the administrative costs of the Radiocommunications Agency in carrying out its licensing and spectrum management functions in respect of each licence class. That has two perverse effects.
First, because licence fees are not priced according to the value of the spectrum used, demand becomes distorted. Users do not have an incentive to use the spectrum more efficiently, for example by investing in more spectrum-efficient equipment, and may also be tempted to hang on to spectrum that they are not currently in a position to use to the full--or in some instances to use at all--because the cost to them of using it is minimal. In other words, the present system generates an attitude of hoarding spectrum space.
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