Joint Committee on Draft Communications Bill Report


Note of discussion meeting 27 June by Phil Kirby, Specialist Adviser:

OFCOM and the Future of Regulation

The Committee was joined for breakfast by Lord Currie, Dean of City University Business School, Nick Lovegrove, Partner at McKinsey & Co, and Damian Tambini, of the IPPR and Oxford University.

In the discussion, the following points were made.

  • A risk with new regulators is that they are given responsibility over everything, but power over nothing; scope creep should be avoided.
  • OFCOM needs to be a strategic body, able to act in a timely, not rigid, fashion.
  • The process of creating OFCOM would be critical to its success - any further delays to the legislative process would complicate the transition to the new regulator, during which the existing regulatory bodies would become very hard to manage.
  • Maximum clarity amongst OFCOM's duties was essential; although there would unavoidably be multiple objectives (and indeed some doubt was expressed about the record of regulators with a single principal objective), the promotion of competition should figure prominently as a mechanism for meeting other objectives.
  • The language and approach in EU Directives was very different to British legislation, so their translation into the Bill clauses could cause confusion about where ultimate authority lay.
  • Experience suggests that regulation by means of legal instruments and fines (for example the railways) did not work: regulation through structures and incentives was preferable.
  • The existing regulators had very different cultures, and very different understandings of the "same" concepts.
  • It could not be left to the new Chief Executive to meld the regulators into one new culture and make critical early decisions about a range of policy issues; there should be different public accountability arrangements for this early period, such as a special report on progress.
  • The status of the Towers Perrin report was obscure (and its proposed management structures unworkable); a genuinely independent new "Towers Perrin" exercise could help.
  • There should be an opportunity for whoever takes the Chair of OFCOM to take rapid advice on the legislation and press for any changes necessary to make the job possible.
  • There needed to be at least three executive Members of OFCOM, suggesting that, in order to keep a majority of non-execs, the overall Board would need to be bigger than the six currently envisaged.
  • Any references in statute to an aim of "light touch" regulation was a hostage to fortune, and would lead to more judicial review cases; OFCOM needed to be able to come down hard where necessary - an analogy would be a football referee, who needed to be able to establish control of a match through early decisive action
  • "Withdrawal" from sectoral regulation was possible - for example, retail prices controls in energy markets had been abolished - but it was important to note, not least for presentational reasons, that normal competition regulation still remained, and that sectoral regulation could also be reapplied if necessary.
  • An incentive for the regulator to withdraw was the sheer complexity of regulation, though this might not be strong enough to overcome a certain natural tendency for regulatory bodies to maintain or expand their activities.
  • Proportionality was relevant across all areas of OFCOM's responsibility, but some areas, such as media ownership, were not amenable to full withdrawal of sectoral regulation.
  • The "future-proofing" of the Bill was at its weakest in the area of media ownership; although as a rule a thumb a minimum of 3 "voices" (in any media, not necessarily just radio) for a local area was seen as desirable, it was difficult to turn this into a workable general definition of plurality.
  • There was a risk that if the Bill left too much detail to secondary legislation, special pleading would mean the eventual decisions would be very different to what was envisaged at the time of Royal Assent - the Act should have "teeth" in it from day 1.
  • OFCOM should be required to explain its decisions in as much detail as possible.
  • The US system had a stronger anti-trust tradition, which ensured that any drift towards corporate interests was periodically reversed by a reassertion of the public interest; the Competition Act and Enterprise Bill might signal that the UK was developing in the same way. It was suggested that OFCOM might set up its own powerful specialist competition unit.
  • More attention needed to be paid to how OFCOM would work with self-regulatory bodies: an accreditation system could be introduced to ensure their activities were meaningful and taken seriously; they could also be required to report periodically to Parliament on their activities.

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