Office of Communications Bill [Lords]

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Miss McIntosh: I am sure that the hon. Lady was in the Room when I said that it was not for me to advocate these arguments, but simply to put them forward. I have put my interest in BT on the record. I am a shareholder and, as a spin-off, I now own mmO2 shares, so I have suffered a double money loss. The important point is that we are in Committee for a very short time to scrutinise primary legislation. This is the only opportunity that we shall ever have to discuss the framework of Ofcom before it departs on a frolic of its own to set up its internal structure. I understand that Parliament, whether by way of a Committee providing pre-legislative scrutiny or any of the Select Committees in this House or another place, will have no opportunity to consider that matter.

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Michael Fabricant: BT gave evidence that its debt is falling, so my hon. Friend's investment in it may prove wise. Does she agree that it is better to take advice from those who work in the industry—particularly when similar advice is being given by NTSL, NTL and similar organisations that are in competition with BT—than to take advice from failed actresses?

The Chairman: Order. Before the hon. Member for Vale of York is tempted even remotely to answer that intervention, I remind the Committee of what we are discussing. We are not discussing the investments of the hon. Member for Vale of York, or the performance of BT. We are discussing strictly how Ofcom should manage its affairs. Will the hon. Lady confine her remarks to that? The Chair is beginning to lose patience.

Miss McIntosh: I am grateful for that explanation. The Government said:

    ''This general approach has been widely adopted in the development of regulatory arrangements for other sectors.''

I do not understand why the Government have failed, in response to this fulsome debate, to answer our questions on what arrangements were being made to recruit staff and whether those staff would be recruited on the open market. Those are legitimate questions. They were raised by several of those who made representations to us, who, because this Committee does not operate like a Select Committee, are unable to put their arguments themselves. Pages 15 and 16 of the Towers Perrin report show the exact staffing levels. As I mentioned, the Radio Authority was found to be one of the smallest employers. The largest employer is the Radiocommunications Agency, which has 631 staff.

Angela Watkinson (Upminster): Does my hon. Friend agree that it is essential to establish clear lines of communication between the Ofcom board, the Minister, Ofcom management and its substructure of committees and the existing regulators, so that everybody knows exactly to whom they are responsible, to whom they are to report and whom they must keep informed?

Miss McIntosh: That is the key to the clause. It is short and very silent on the issues raised by my hon. Friend. This is the only opportunity we have to consider the interim structure. I do not believe that it is appropriate to leave the entire interim organisation of Ofcom to the new regulator itself. We will consider the costings elsewhere, but will the Radiocommunications Agency, which currently employs 631 staff, second some of them? Will Oftel, which employs 241 staff, keep a large number of its current employees because it will be working in conjunction with Ofcom? The clause is silent on that. The ITC currently employs 172 people, the Radio Authority employs 47 and the British Broadcasting Standards Commission employs 20. It is legitimate to ask how many staff Ofcom will manage overall, and to question the extent of Ofcom's scope to achieve economies in the exercise of its duties.

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The Towers Perrin report assumes that all existing activities will be continued. Is that the case, or will Ofcom look for synergies and common approaches? There is a need to establish working relationships with the Office of Fair Trading. We still do not know what those relationships will be. It is also important that the existing regulators should be able to cease to perform regulatory activities that are no longer necessary. Economy should be exercised in the engagement of external consultants—

The Chairman: Order. It seems to me that the issues that the hon. Lady is raising relate to amendment No. 66, which has not been selected for debate. I have now had to ask the Committee on several occasions to confine itself to the scope of the clause under discussion. I have given considerable latitude, but I will not do so any more. Will the hon. Lady please bring her remarks within the scope of the clause?

Miss McIntosh: I am grateful for those strictures, Miss Widdecombe. In conclusion, the debate, which covered some relevant ground, has established that the Cabinet Office rules take precedence over accepted principles of good corporate governance. I regret that Ofcom will be permitted to issue such general guidance with regard to its own affairs, without regard to Parliament or those who are regulated, and seemingly without regard to the other regulators. I conclude our debate on the clause with immense disappointment.

Question put and agreed to.

Clause 3 ordered to stand part of the Bill.

The Chairman: Before we come to clause 4, I want to make some general comments. We have only limited time to bring our deliberations to a conclusion. I give latitude in the course of debates, because I know that it can allow for a more coherent debate if a Chairman lets one touch on matters that strictly belong to other parts of the Bill. However, the previous debate abused that latitude considerably.

We should not redebate issues. We should not debate issues that have not been selected for debate by the Chairman. If the debate on the group of amendments that I shall now call goes wider than it should, it will prejudice a stand part debate on clause 4. I ask hon. Members to be aware of that.

Clause 4

Functions of existing regulators

Miss McIntosh: I beg to move amendment No. 43, in page 3, line 33, leave out paragraph (b).

The Chairman: With this we may discuss the following amendments: No. 63, in page 3, line 40, leave out paragraph (c).

No. 64, in page 3, line 44, leave out paragraph (d).

No. 65, in page 4, line 27, leave out sub-section (5).

Miss McIntosh: I shall endeavour to follow your strictures absolutely to the letter, Miss Widdecombe, as even a short clause stand part debate would be valuable.

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Amendment No. 43 would delete subsection (1)(b), which places on the existing regulators a duty to carry out all their functions in a manner that appears to them best to secure that Ofcom can carry out its functions, and that Ofcom will be able to carry out any functions that will become its functions as a consequence of implementation of the Secretary of State's proposals.

The Minister can help me. If that understanding is correct, we would strike the paragraph from the Bill because it would order the existing regulators forthwith—immediately—to subordinate their agendas and duties to those of Ofcom. One of Ofcom's functions is to lobby for changes in proposals; would that mean that none of the other regulators would be allowed to put up a counter-case or make any arguments against Ofcom or its proposals? If so, that would be an extraordinary arrangement; subordinating the existing duties of five tried and tested regulators to the convenience and possibly the whim of Ofcom. It would muzzle the existing regulators, preventing them from having any say in the evolution of the regulatory regime.

That is different from what the explanatory notes suggest, and from what the Minister said on Second Reading. He may like to gather his thoughts and say whether the Government's position has changed, or that our interpretation of what the Government said on Second Reading was incorrect. The explanatory notes state:

    ''Clause 4 provides additional functions for the existing regulators. These are in addition to those functions that they perform under the Telecommunications Act and the Broadcasting Acts.''

My understanding of what the Minister said on Second Reading was that the function of the shadow Ofcom is merely to prepare for the implementation of the new regime. We have discussed that at some length on other clauses. The implication of the Minister and the explanatory notes is that the relevant matters are rather run-of-the-mill and boring, such as setting up offices and recruiting staff; things that need to be done about which Parliament should be consulted.

Under subsection (1)(b), Ofcom will immediately have a much larger role and influence because of its duty to lobby and because the existing regulators will be subordinated to it. Is that what the Minister means? Paragraph (b) states that Ofcom will have the duty of carrying out all the regulators' functions ''in such manner'' as appears best to secure those functions. I believe that that could be better achieved if paragraph (b) were removed.

11.45 am

On page 78 of the White Paper, the Government set out the transitional implications with regard to double jeopardy. Under the current system, an issue could be examined in parallel by different regulators. The White Paper raised a legitimate question, which should have been answered by subsection (4) but was not.

We also learn from page 78 of the White Paper that, as with the existing regulators, the quality of Ofcom's staff will be vital to the delivery of its functions. I could

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not agree more. We need to know not only that the staff will be of high quality, but whether they will be drawn from the five regulators. Will the number of staff rise above 1,111 for a short transitional period? If anything, we should see a streamlining and slimming down as the five are merged into one.

The White Paper also says that, in a competitive labour market, the office of communications will require managerial and financial flexibility to retain and recruit the necessary skilled and managerial personnel. However, it does not say what the relationship should be between the existing regulators and the new regulator. Paragraph (b) is unfortunate. We all accept that it will be difficult while the five regulators and the shadow Ofcom are working together, but does it mean that the present functions of the five regulators will be completely overtaken by Ofcom?Paragraph (b) alludes to that overlap when dealing with the functions of existing regulators. It states that they

    ''will be able effectively to carry out any functions which will become functions of OFCOM in consequence of the implementation of any such proposals''.

My concern is that morale will be low among the staff of the existing regulators. It is perhaps unfortunate that the Bill does not set out the relationship in more detail. Nor does it say what will be the recruitment procedures for new staff. We could have lessened some of that unease, disquiet and loss of morale by declaring a specific transitional period, and I regret that the Minister did not agree to do so.

Another reason why paragraph (b) needs to be redrafted is that it should say more about the regulators and Ofcom carrying out adjoining duties and acting together. Will they be looking to achieve economies, or will there be a complete duplication of effort? Will the Minister clarify the exact nature of the relationship?

Is it implicit in subsection (b) that the existing regulators will be asked to cease to perform certain regulatory activities that are now considered to be unnecessary, or will they cease to perform all their duties and responsibilities only at such time as the communications Bill receives Royal Assent? What will be the time scale in relation to the overlap of duties? Concern has been expressed—it strikes a chord with me—about the fact that, for a temporary period, there will be six regulators before the five are ultimately replaced with one.

Amendment No. 63 would remove paragraph (c), which gives the regulator a wide power to do various other things that it

    ''considers appropriate for facilitating the implementation of, or for securing the modification of, any relevant proposals about the regulation of communications''.

Before we decide whether to press the amendment to a vote, it would be helpful to know how the Minister envisaged the duties and relationships that will apply during the transitional phase. That would clarify the extent and purposes of the paragraph.

Amendment No. 64 would remove paragraph (d), which refers to

    ''a power to carry out the functions of that regulator in a manner that promotes the interests of OFCOM.''

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It would have been far preferable had it said that the functions of the regulator should be carried out in the interests of promoting the regulation of the industry. At this stage, Ofcom's one function is to set itself up. It should not only promote the interests of Ofco; it should reflect the interests of the industry in terms of what it is trying to achieve. Those who are to be regulated have expressed great concern that the provision is not better formulated. The representations that I have read or received verbally uniformly take the view that replacing five regulators with one is a positive move. However, it is incumbent on us to ensure that Ofcom puts the interests of the communications and broadcasting industry at its heart.

Amendment No. 65 would remove subsection (5), which states:

    ''The functions of the existing regulators by virtue of this section are in addition to, and without prejudice to the extent of, any of their powers apart from this Act.''

That brings me neatly to the point that I have made once or twice before in relation to clause 4. The whole thrust of the Ofcom Bill is to set up a shadow Ofcom to replace five regulators with one. However, it clearly states that for a transitional phase of indeterminate length—we do not yet know if the main Bill will be published in March or April; we know only that it will be in the spring, and not even if it will be before or after the Budget on 14 April—the existing regulators will have additional functions. Will the Minister clarify the nature of Ofcom's relationship with the regulators and how it will manage that relationship? Will Ofcom have the final say, or, given that these are additional responsibilities, will the existing five regulators continue to have the last word in their field? The most deeply worrying and regrettable omission is the failure to refer to the relationship between Ofcom and Oftel.

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