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7.50 pm
Mr. Michael Fallon (Sevenoaks): I congratulate all hon. Members who have contributed to the debate, whether voluntarily or not. In particular, I pay tribute to my hon. Friends the Members for South Dorset (Mr. Bruce) and for South Cambridgeshire (Mr. Lansley) for their contributions. I also welcome the contribution by the hon. Member for South-East Cornwall (Mr. Breed) and look forward to exploring with him some of the issues to which he has rightly drawn attention--in particular, the failure of clause 2 to recognise consumer interests adequately.
We have had a useful debate. The Bill has become clearer and clearer as the evening has worn on. Conservative Members accept the principle that the spectrum should be managed properly and in such a way as to encourage the development of new services. That is what we did successfully in government. That is what my right hon. Friend the Member for Wokingham (Mr. Redwood) did when he was a Minister in the Department. If there is a problem of crowding on the spectrum, it is a problem of success, which was created by the last Conservative Government.
We do not accept the Bill, partly because it is poorly drafted and partly because it gives the Secretary of State significant powers over one of our most successful industries. It taxes those industries arbitrarily and in an indiscriminate way, and it leaves unclear the whole question of the various taxing mechanisms--the so-called administrative pricing under clause 2 and the use of auctions under clause 3.
I have said that the industry is going to be treated unfairly and in an unworkable way. There is no better illustration of that than the Bill's complete failure to address the problem of international satellite operators, who will not pay United Kingdom spectrum charges, who do not pay UK company taxes and who are outside UK telecommunications regulations. The Minister will be hard pressed to explain why our operators should be taxed twice over--first, under normal fiscal policy and again under his regime--and also regulated, and then be told that they are to share that access with operators who are untaxed and entirely unregulated.
Hon. Members on both sides of the House accept that the essential emergency services--not just gas, electricity and water, but national health service trusts, for
example--should be given access to the spectrum. We have received various assurances about the charging regime that might apply to them. The point is that that access must be guaranteed. Emergency services cannot be trifled with. They must have access to the amount of spectrum that they require. Warm words will not suffice and did not suffice in the other place. I give Ministers notice that in Committee we shall seek to place in the Bill guarantees in regard to access for our emergency services.
There are two principal pricing mechanisms in the Bill. The first, under clause 2, is ingeniously described as "administrative pricing". Conservative Members will savour that phrase constantly over the next few months. We call it taxation and it might have been to the Minister's or the parliamentary draftsman's credit if they had recognised taxation for what it is and been honest enough to spell it out as taxation. Clause 2 gives us serious problems, as their lordships in another place revealed.
In four specific areas, we are going to have to amend clause 2. First, the tests--the matters to which the Secretary of State must refer and shall now have regard: that amendment is useful--are deficient. As the hon. Member for South-East Cornwall has said, there is no reference to consumer interests. We shall want to put that right in Committee. I advise the Minister for Small Firms, Trade and Industry to improve on the defence offered by her noble Friend when resisting the amendment in Committee in another place. It is simply not good enough to say that writing consumer interests into the Bill will somehow duplicate the remit of the Office of Telecommunications. That will not wash. This is taxation and there should be some regard to the consumer interest.
There is no reference either to the need to promote stability of investment. That is important in this new market of growing businesses. We shall want to examine that, too, in Committee.
Our second concern with clause 2 is that the tests are not in any sense verifiable because the Secretary of State will be the sole arbiter. Unless companies go expensively to law, it will be the Secretary of State who decides exactly how much regard she pays to each of the matters listed in subsection (2). Conservative Members would like a better test--a more independent test--and a vehicle for that lies in the new advisory group that the Minister for Science, Energy and Industry has proposed.
Conservative Members welcome the proposal to form a spectrum management advisory group, but it should not be merely at the service of the Minister. The industry will rightly require the Minister's management of the spectrum and his justification for the additional taxation to be capable of being put to the test by the spectrum management advisory group. I give him notice that we shall insist that the Secretary of State must at least pay attention to an annual report by that group commenting on the success of the management of the spectrum and seeking to ensure that users' interests are fully taken into account before the additional taxation is levied on them. We shall table amendments in Committee along those lines. I am sure that the advisory group will want to monitor and advise on the United Kingdom's position on negotiations in Europe and internationally on spectrum management.
As I said during an intervention on the Minister our third concern about clause 2 relates to the addition of the two qualifying words in subsection (1). They were added almost by sleight of hand in another place at the same time as the phrase "have regard" was made mandatory rather than discretionary. By adding those words, the Secretary of State is giving herself complete scope to have regard to any other matters that are not specified in the subsection. That is the point I was trying to get over to the Minister of State. Because of the peculiar linguistic construction of clause 2(1), the Secretary of State will be able to prescribe sums that are greater than she needs for purposes that she is not prepared to specify. That is wrong and her hand ought to be tied much more tightly in the legislation. We shall address that in Committee.
The most serious defect of clause 2 is the general ability to raise money for unspecified purposes. From a close look at the clause as a whole, it seems that additional money could be raised for any purpose whatever, quite outside the remit of telecommunications. Presumably money could be raised to suit the broad economic interest or the interests of the Treasury rather than those of the industry that the Department and its Ministers are supposed to look after. If that is not true, perhaps the Minister will explain how he has already been able to present to the House a carefully detailed compliance cost assessment--perhaps it is only for illustration--showing exactly how the first £75 million of revenue will be raised.
My hon. Friends may be interested to know that the Minister intends to raise £42 million more from personal communication networks--I declare an interest as a user of an Orange telephone--£26 million more from cellular telephone operators, £7 million more from fixed link users and so on. Perhaps in her winding-up speech the Under-Secretary of State will tell us whether that compliance cost assessment still stands--it was compiled some time ago--and whether she still intends these quite dramatic increases to be phased over only three years. Is that still the Government's thinking?
We shall certainly seek to ensure some kind of cap on the Secretary of State's taxation power. Even without the deficiencies in clause 2 we would have sought that. It is not right that under the Bill, which I understand is not a money Bill, the Secretary of State will be allowed to impose unlimited future increases on the industry simply by statutory instrument.
Mr. John M. Taylor (Solihull):
I am following my hon. Friend's argument closely. Does he wish me to go all the way and conclude that because the DTI, which has always had a fairly tight budget, has been raided again and again by the Treasury, the Government are inventing some compensating form of income? Should I banish that thought? My hon. Friend is not asking me to believe that, is he?
Mr. Fallon:
No, I am not. Perhaps the Department of Trade and Industry and the President of the Board of Trade are simply doing what they do best, which is to comply with any demand that is put upon them by the Treasury. Perhaps they have been told to raise a specific sum--who knows? The money raised by taxation from the new industries, which the Department ought to put back into them, will go who knows where. Perhaps it will be used to support the Mandelson dome at Greenwich. These are serious additional sums.
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