Standing Committee E
Thursday 31 January 2002
[Mr. Roger Gale in the Chair]
The Chairman: I understand that the Committee had an interesting ramble around the frequencies and the airwaves this morning, and that you got a lot out of your system. As a result, I confidently expect that we shall make rapid progress this afternoon.
Initial function of OFCOM
Amendment proposed [this day]: No. 14, in page 2, line 24, at end insert—
'(1A) The functions conferred upon OFCOM under this section shall have effect only for a period of one year following its commencement'.—[Mr. Laurence Robertson.]
Question again proposed, That the amendment be made.
The Chairman: I remind the Committee that with this we are taking the following: New clause 2—Duration—
'The Act shall cease to have effect at the end of a period of one year after its commencement.'.
Miss Anne McIntosh (Vale of York): Concluding the discussion on amendment No. 14, the Minister was about to explain the difference between quick and brief. I am being brief and he is being quick. We expect a commitment from the Government that the transitional period—I want a precise answer—will not last more than one year. To give the Minister his due, that would be quick. Anything more than that would be deeply regrettable. New clause 2 states that the Act should cease to have effect after one year, which links to amendment No. 14. I want the whole Bill, not least clause 2(1), to qualify for sunset clauses similar to those previously specified.
I am grateful to the Minister for drawing my attention to the Towers Perrin report and the regulators' steering group. It is appropriate to consider the clauses that should be subject to sunset provisions. The Towers Perrin report sets out several transitional principles. On page 40, paragraph 10.6, it specifies:
In a merger of this kind, when the outcome is to create a new organisation, it is important to define the principles by which the transition will be managed. This will provide consistency to the thinking and will give positive early signals to employees about the future management style of OFCOM.
I would go further than that: it would give positive early signals not only to employees of Ofcom, but to the industry as a whole, which Ofcom will regulate.
The report states that
The principles have been developed in consultation with the Regulators' Steering Group and drawing from our own experience of best practice.
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They are described as statements of intent. Assuming that the new clause is accepted and that the Bill will cease to have effect one year after its commencement, we shall judge its success according to how the statements of intent measure up against best practice.
The existing organisations will be merged during the transitional period to create, we are told, ''a world-class regulator''—the Government have held that out as the pearl in the heart of the oyster—subject to the advent of the communications Bill. If we create one regulator to replace five, the one should be a world-class regulator that will carry out a truly integrated regulatory role beyond that conducted by the existing organisations. It is appropriate that we specify precisely what the Bill is to achieve during the transitional period; if the Government fail to achieve those intentions, the legislation should fall. That is the purpose of new clause 2.
There is also a need, as the Towers Perrin report states categorically, to deliver ''business as usual'' in parallel with delivering a new Ofcom. That is why it is extremely important Tthat the legislation should be in force for only one year. For reasons that we stated at some length this morning, we should not be creating a sixth regulator. The aim is to achieve one regulator—a merged regulator, not a mega-regulator or behemoth. Within one year of the Bill receiving Royal Assent and reaching the statute book, it should have been replaced by the communications Bill. The explanatory notes say that the substantive Bill should receive Royal Assent and reach the statute book by mid–2003.
That is a tall order, but I believe that that statement of intent goes to the heart of new clause 2. The legislation before us must have the objective of delivering business as usual and of delivering the new Ofcom by the end of one year after its commencement. I hope that the Minister can put our minds at rest that that is the timetable and the objective towards which the Government are working. It would be totally unacceptable for the legislation to remain in situ and on the statute book for longer than one year if that meant that Ofcom existed in parallel with the original five regulators for longer than one year. It is necessary to recognise the need to deliver business as usual.
Ofcom must also be required to communicate frequently, consistently, openly and honestly, sharing information with the present regulators when possible. I am concerned that the Bill makes no reference to how the existing regulators will communicate with the new regulator. The report says that, as a principle for the transitional period, it is desirable that all employees of the existing regulators be treated with respect and dignity, and that recognition be given to the difficulties presented by the length of the transition period. That is a key point. We all sincerely hope that the transitional period will be short.
Michael Fabricant (Lichfield): My hon. Friend knows that I know some of the regulators personally. One very senior regulator in one of the organisations to be included in Ofcom says that because of the uncertainty, he does not think that he will stay in the industry. If the Department for Culture, Media and Sport knew of that individual's intentions, it would be very concerned.
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Miss McIntosh: I am most grateful to my hon. Friend for that appropriate intervention. I, too, have met a number of the current regulators, but they are not leaving the scene; they hope to become part of the new regulator. It would be inappropriate for me to support their application at this stage, and I am sure that the Minister would not want me to make representations on their behalf in Committee.
That strengthens the argument for new clause 2. The Minister has not yet provided the Committee with the timetable for the transition. I am sure that he has had a good lunch and has not had enough time to consider the matter, but we must have a commitment from the Government that the transition period will be time limited. The 1,111 current employees will be deeply concerned about their future. It is incumbent on the Committee to recognise the uncertainty facing the industry, those employees and the regulators. I therefore seek the Minister's approval for the new clause.
The Towers Perrin report—the Minister can see that I am warming to my theme—goes on to say that the plan for the transition period, which we say should last one year, should plan for implementation from the start of the design phase. He may not accept the amendment or new clause 2 because the Government do not have the time they need in the space of one year. He has given us no indication of, for example, where the new Ofcom is to be housed—although I might have missed something in debate. We are on the third day of our sittings and our proceedings have moved rapidly; it may be that I have not been alert, as Miss Widdecombe would have said. However, the Government will not be alert enough and competent enough to reach the timetable of best practice commissioned by the regulators' steering group in the Towers Perrin report.
Moving on rapidly, the transition principle to which that report refers is that the existing regulators want to ensure that the way in which Ofcom is built and designed sends clear signals and gives people positive experiences of Ofcom's future ways of working. To enable the Minister to find a quick response to these questions, pages 40 and 41 of the report are relevant. It will be apparent to the Committee that this is a probing amendment that provides an opportunity for the Minister to state the extent to which the Government are prepared on matters such as where Ofcom is to be housed.
Michael Fabricant: My hon. Friend's question about where Ofcom should be housed is prescient given that we heard in a previous sitting that 1,111 people are likely to be employed. The size of the building presents a serious problem, and contradicts the Minister's assurances that this will be a light-touch regulator.
The Chairman: Order. That might be of interest to estate agents, but it has nothing to do with the amendment.
Miss McIntosh: Mr. Gale, may I respond to that intervention?
The Chairman: No, because I have just ruled it out of order as it has nothing to do with the amendment.
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Miss McIntosh: Then let me elaborate on the amendment. The purpose of the transition is to identify Ofcom's size, its staff and where it should be located. Both the Bill and the Minister are silent on that point. If the transition phase is to be successful and staff morale boosted, good management principles, such as those in pages 40 and 41 of the Towers Perrin report, must be observed.
With the Bill, Government seek to empower Ofcom to act as sole regulator. It is therefore important that during the course of the year after the Bill is enacted, the public, the industry and viewers and listeners can see that the new regulator is making good progress towards fitting itself for the functions that the Bill bestows upon it. Were the communications Bill not to be brought before the House before the spring of this year and to achieve Royal Assent before mid–2003, it would be totally unacceptable for Office of Communications Act, as it will be, to remain on the statute book in its present form or amended. If the Government fail to act and do not introduce the communications Bill in Parliament within one year, the paving legislation should fall. Anything less than that would be totally unacceptable.