Column Number: 143
Standing Committee E
Thursday 31 January 2002
[Mr. George Stevenson in the Chair]
Initial function of OFCOM
Miss Anne McIntosh (Vale of York): I beg to move amendment No. 11, in page 2, line 22, leave out from first 'for' to end of line 24 and insert—
'the purpose of making institutional arrangements required to facilitate the future implementation of, or for securing the modification of, any relevant proposals about the regulation of communications, and to identify opportunities for achieving cost savings arising from any relevant proposal; and in particular to reflect standards of good taste and decency.'.
The Chairman: With this it will be convenient to take the following amendments: No. 44, in page 2, line 22, leave out from 'of' to 'any' in line 23.
No. 58, in page 2, line 30, at end insert—
'11(aa) Will identify opportunities for achieving cost savings arising from any relevant proposals and do such things as may be necessary to secure that any costs savings are implemented;'.
Miss McIntosh: It might be helpful to tell the Committee that I have shares in BT. You are now aware, Mr. Stevenson, that most of my portfolio of shares is in the transport sector, which we have occasionally discussed elsewhere. I do not have enough BT shares to declare them in the Register of Members' Interests or for them to influence my approach to the Bill, but I thought that the Committee should have that information.
Clause 2 is pivotal to the Bill. I shall speak at length on this group of amendments. I preface my comments on amendment No. 11 with a reference to the explanatory notes, which set out the purpose of the Bill. They state:
The Office of Communications Bill would make it possible for the Secretary of State to create OFCOM before the main Communications Bill achieved Royal Assent, which should enable regulatory functions to be transferred to OFCOM more quickly thereafter.
The Government aim to clarify what Ofcom will do between enactment of the Office of Communications Bill and Royal Assent to the communications Bill, which will give the new regulator powers. The paving Bill enables the Government to establish Ofcom so that practical steps can be taken to prepare the regulator to receive the functions that the communications Bill will confer on it.
The explanatory notes make it clear that the single function of Ofcom under the Bill before us is to prepare to assume functions at a later date. They state:
Establishing OFCOM, planning and managing the practical transition from the existing five regulators will be a complex task, which will take much time and effort to complete. The Office of Communications Bill would make it possible for the Secretary of State to create OFCOM before the main Communications Bill
Column Number: 144
achieved Royal Assent, which should enable regulatory functions to be transferred to OFCOM more quickly thereafter.
During our proceedings we have lamented the separation of the paving Bill from the meat in the main Bill. I emphasise that that separation is unfortunate for the full consideration of the structure and function of Ofcom.
Paragraph 7 of the explanatory notes states:
The Office of Communications Bill . . . enables Government to establish OFCOM, so that practical steps can be taken to get the regulator ready to receive the functions a Communications Bill would confer upon it. The Bill should enable a more orderly transition.
In fact the Office of Communications Bill will, perversely, lead to a more disorderly transition and, I fear, to absolute confusion. The explanatory notes state that the purpose of the Bill is threefold: to
establish the Office of Communications; give OFCOM a preparatory function; and place the existing regulators under a duty to assist OFCOM to prepare.
That is similar to the role of the Opposition in preparing for Government—
Mr. Chris Bryant (Rhondda): You wish.
Miss McIntosh: Yes, we do, most fervently. It is a task that we take seriously. Clause 2 sets out Ofcom's single function of preparing to assume functions at a later stage. Again, that can be likened to the role of the Opposition: the first stage is preparing the structure, and the second is preparing the policies. The Bill was made for us.
The explanatory notes state that clause 2 sets out that
OFCOM will be involved in making transitional arrangements. These might include setting up the structures of OFCOM and making ready for the transfers of staff, property and other rights and liabilities when the Communications Bill comes into force.
We are hampered by the Minister's failure to tell us on Tuesday precisely how many members of staff Ofcom is intended to have. Perhaps that failure is due to the fact that the Government want to leave the power of decision entirely to the chairman and members of the Ofcom board, but in selling the Bill to Parliament and a wider public and in preparing for the communications Bill, it is incumbent on the Minister to take the opportunity he missed on Tuesday and tell the Committee how many staff Ofcom will need, not only for the transition stage, but in the long term.
Angela Watkinson (Upminster): Has my hon. Friend reflected on the possibility of redundancies? Will she seek an assurance that the Transfer of Undertakings (Protection of Employment) Regulations 1981 will apply to the terms and conditions of employment of those working for the existing regulators during the transfer to the new umbrella body?
Miss McIntosh: My hon. Friend raises an important point—that we may consider later at some length. The Minister has been given notice that we want to raise it, so he and his Department will have time to reflect and respond.
The Government assure us that Ofcom will not be given powers to exercise any regulatory functions that relate to the communications sector. Those functions
Column Number: 145
will be set out in the communications Bill. However, I am not entirely sure what Ofcom will be doing if it is to share, to a certain extent, regulatory functions by taking in some board members on secondment from the existing regulators.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Dr. Kim Howells): I have informed the Committee on many occasions, and it is included in the Bill, that we are creating a creature that will take on no regulatory functions nor remove functions from any existing regulator until Royal Assent has been given to the substantive communications Bill. I hope that the hon. Lady understands that.
Miss McIntosh: That makes matters worse. Rather than lose five regulators, we are to gain a sixth body.
Dr. Howells: I repeat: the creature that we are setting up will not regulate. I hope that the hon. Lady heard me say that.
Miss McIntosh: That brings me neatly to amendment No. 11, which would replace clause 2(1).
Mr. Ian Taylor (Esher and Walton): I am slightly puzzled by the Minister's intervention. I understand the thrust of what he is saying, but clause 1 states:
or for securing the modification of, any relevant proposals.
That is an intriguing active role, which might imply that regulations are to be promoted or changed during the setting up stage.
The Chairman: May I clarify this point, because there appears to be a little confusion? The hon. Gentleman just referred to clause 1. He means clause 2(1).
Mr. Taylor: Thank you, Mr. Stevenson.
Miss McIntosh: I am grateful for that clarification, Mr. Stevenson.
Clause 2(2) states:
It shall be the duty of OFCOM to carry out their function under subsection (1),
whereas clause 1—sorry, I mean subsection (1)—states that that is
securing the modification of, any relevant proposals about the regulation of communications.
It will be clearer if I stick to what I prepared yesterday.
The Chairman: Order. I do not want to jump up and down, but the debate would be much clearer for me if we referred to parts of the Bill correctly.
Miss McIntosh: Amendment No. 11 would replace the text from line 22 with a clearer wording. The amendment recognises the need to make
institutional arrangements required to facilitate the future implementation of, or for securing the modification of, any relevant proposals about the regulation of communications.
Those arrangements should ensure
cost savings arising from any relevant proposal
reflect standards of good taste and decency.
Column Number: 146
The original wording of subsection (1) implies that Ofcom may have a wider role than establishing a shell organisation prior to the enactment of the main communications Bill. I alluded to that wider role earlier. That role is deemed by many to be inappropriate, and I have sympathy with that view. The explanatory notes show that the Government did not intend such a purpose under the clause. Our amendments are proposed in the interests of clarity, and I am sure that the Government will find amendment No. 11 helpful.
Chapter 8 of the Government's communications White Paper sets out the Government's outline for the structure of Ofcom. Page 78 describes how, by amalgamating the five existing communications regulators, the Government seek to
greatly simplify the regulatory framework.
However, the Bill would do precisely the opposite, because the paving Bill is separate from the contents of the main communications Bill.
Several outside bodies, particularly Orange, support that view and believe that the merging of the regulators should create significant operational cost-saving synergies for the communications industries. In their view, an increase in the long-term cost of regulation may result in increased licence fees, which would not be in the interests of consumers. Orange recommends that an initial function of Ofcom should be to examine potential operational cost-saving opportunities resulting from the amalgamation. That is not too much to ask of the Government at this stage. The amendments area designed to improve and strengthen this part of the Bill, which should not affect the need to recruit highly qualified experts and to pay them well, but should lead to a greatly simplified regulatory framework with the object of reducing the overall cost of regulation as well as the overall regulatory burden.
We learned on Tuesday that the total number of staff of the existing five regulators is 1,111—a good figure because it is easy to remember—and that the Radio Authority employs the fewest. The Minister most helpfully, albeit unwittingly so, referred to a document that I had not come across before—the Towers Perrin report, which was commissioned by the regulators steering group. It was also mentioned by the hon. Member for Ceredigion (Mr. Thomas). The report sets out a helpful structure in relation to staff and cost savings. In addition to a board and a number of board committees and advisory committees, it envisages a radio group to consider broadcast radio licensing, broadcast radio ownership, tier 2 format regulations, tier 1 BBC radio regulations, and access radio. Even though my pleas have not gained much credibility with or support from the Government, I seem to have struck a chord with the Towers Perrin report.
In seeking the official Opposition's support for the Bill, the Government have to convince us not only that one regulator is better than five, but that cost savings will be made through streamlining the organisations, reducing the number of staff in the short and the long
Column Number: 147
term, and significantly reducing expenditure. The Minister did not give us satisfaction—he seemed to be wriggling away from making that commitment.