Examination of Witnesses (Questions 828-839)|
THURSDAY 27 JUNE 2002
828. I delight in declaring an interest as being
an honorary member of your organisation.
(Mr Darlington) I am tempted to do a
card check to see if anybody else is!
829. One of the thing I have struggled with
throughout the bill is the relationship between OFCOM and the
Secretary of State and the different powers they have. How comfortable
are you with this balance between what the Secretary of State
is going to do and what OFCOM is going to do?
(Mr Darlington) May I say I am delighted to be back
before the Committee, having previously given evidence on behalf
of the Internet Watch Foundation. On the last occasion I was tempted
to quote Arnold Schwarznegger and say, "I'll be back"
but I know that the cultural interests of the members of this
Committee are much higher than that. The comment we would like
to make in respect of that question I think strikes at the very
heart of the notion of independent regulation. Certainly as a
union we have had a lot of experience of so-called independent
regulation. We have been dealing with Oftel since 1984 and that
is one of the public bodies which is going to go into OFCOM, and
more latterly we have dealt with POSTCOM. Our view, which is shared
by a growing number of people, not least the politicians, is that
so-called independent regulation has become just too independent
and it is not good enough for the Government and Parliament to
create a piece of legislation, appoint usually one personbut
now we are moving towards a commission of very distinguished peopleand
then sit back and say that something as fundamental to the future
of broadcasting and the future of telecommunications is essentially
a matter for them. There obviously is a balance to be struck.
We do not believe that it is appropriate for the Secretary of
State to choose who should be given licenses and to monitor compliance
with licensed conditions, but we do think that the Secretary of
Stateor Secretaries of State, plural, in the case of OFCOMought
to, on behalf of government, periodically make a statement of
what the strategic objectives of the regulator should be and then
the regulator exercises the powers under the statute consistent
with those broad policy objectives and the extent to which they
do that of course is monitored by Parliament in the appropriate
way. We think that is a different kind of balance, a better balance,
one which captures a response to the growing concern that regulators
have become essentially a power unto themselves.
830. You are actually talking about the relationship
there between the regulator and government. What do you think
the relationship between the regulator and Parliament should be?
(Mr Darlington) Government is itself, of course, accountable
to Parliament. If government sets out every year or every three
years of every parliament these broad strategic objectives, they
would be published and government could debate them, and when
the appropriate regulator, in this case OFCOM, is reporting to
the appropriate body, either the Select Committee on Trade and
Industry or the Select Committee on Culture, Media and Sport,
or it might be a new select committee, that select committee will
obviously look at the strategic objectives, look at the decision
of the regulator and see to what extent the regulator had been
able to meet those objectives. Ultimately, government and regulator
would both be accountable to Parliament.
831. Do you think that the different clauses
of the bill actually give effect to that or are there specific
changes that you would like to see in the bill?
(Mr Darlington) As we see it, the Secretary of State
essentially makes the appointments to OFCOM, sits back and forgets
about OFCOM for whatever it is, five years, the duration of the
terms of the commissioners. As regards the public accounting,
Secretaries of State do not express a view. Parliament decides
how often and in what form they are going to meet the regulator.
Our experience has been that that is a very inadequate control
mechanism. Oftel goes to the Select Committee on Trade and Industry
about once a year and it depends on the mood of the select committee
and how much time there is as to how stringent the questioning
is. We would like to see more accountability to parliament of
regulators as a whole, which would require more time and more
expertise, and perhaps even the creation of a specific select
committee governing regulators.
832. As a point of interest, I was at the bankers
dinner for the Chancellor of the Exchequer last night and in ringing
tones he assured his audience that it was the policy of the Government
to get politicians out of regulation and this seems to be absolutely
contrary to what you are advising us and the direction the Government
(Mr Darlington) It is difficult for me to challenge
Gordon Brown, but one of Gordon Brown's other objectives is to
make this country the most competitive in the world in terms of
e-commerce and another of his objectives is to make broadband
availability in this country amongst the best in the G7 by 2005.
Now, are we saying that OFCOM has no role in the development of
those government objectives? In a sense, I think the Government
is. If I am allowed to quote from the policy document, the Government's
policy on broadband is relegated to an annex and in that annex
it states, "This comprehensive strategy does not require
any legislation in order to achieve its objectives. As a result
we are not looking to the bill to help deliver our strategy."
In our view, issues as big as the competitive position of this
country internationally, the availability of broadband, the development
of e-commerce are issues where a body with the authority and the
power of OFCOM has a role to play. But that should be consistent
with government policy and government policy should be stated
in a transparent way, so that government is not dictating to the
regulator but setting the broad strategic objectives in the hope
and expectation that the individual decisions will be consistent
with those objectives.
Paul Farrelly: I suppose at this stage I should
declare an interest. The Communication Workers Union has long
been a strong financial supporter of my constituency Labour Party.
In fact the association goes back to my predecessor John Golding,
who is the former political officer of the Post Office Engineering
Union in the days when BT made its own telephones. Acting Chairman,
you might allow me a shameless plug for a great parliamentary
tale of the past. John Golding holds the record for the longest
ever speech in parliament: 11 and a quarter hours, off-the-cuff,
to a single amendment
Anne Picking: A record might be achieved for
the length of your question!
833.in committee, which stopped privatisation
of British Telecom until after the 1983 electionmuch good
did it do us, but some of us, in the darkest days of the Lady
in the picture, still lived in hope. I have a question which has
absolutely nothing to do with that. There has been a lot of controversy
and discussion of parliament proposals to relax the rules on media
ownership. I think this is primarily a question for Equity and
BECTU: In general, what effect do you expect the proposals to
relaxing media ownership to have on your members?
(Mr Lennon) If I could deal with that one to start
with. We are particularly concerned about change in ownership
structures which might be allowed for Channels 3 and 5. Many people
in the industry ae predicting that the relaxations proposed will
almost inevitably bring large global media players into the UK
market, and, in the context of OFCOM, we suspect that this is
going to put the regulator up against tough commercial operators,
who, unlike many British broadcasters, do not even see the legitimacy
of content regulation in media markets and, given their economic
scale, this is going to cause very different contexts between
the broadcasters and the regulators from those that we have seen
in the past. On Channel 3 specifically, obviously the regional
nature of Channel 3 is of crucial importance to people, particularly
those living outside London, and there are dangers if a single
owner, even if it is a European single owner, is allowed to take
over Channel 3 as one entity. Our position on that is that we
would expect the regulator to be interventionist in the extreme
if that kind of ownership change occurred in Channel 3 and place
the most stringent requirements for the continuation of regional
broadcasting and regional production. In the world of radio, which
is also covered in the bill, the prospect of the national radio
ownership model being changed to allow cross-ownership and concentration
of ownership, we fear could lead to the kind of degradation of
regional service that we have seen in independent local radio,
where, for example, large chains have been built up in that sector.
We have seen news rooms closed down and stations being fed with
centralised news services (which come from hundreds of miles away
in some cases) and, if you scale that up to the sort of problems
that could occur if you had national radio stations owned by newspapers,
it could take a lot of the equality out of what exists there at
the moment in the independent national radio network. So, overall,
we are very concerned about the easing of ownership regulations
that is proposed in the new bill.
(Mr McGarry) If I could follow up on that, as far
as I know there are no members of Equity on the Committeealthough
possibly some potential members. We certainly do not sponsor anybody
and I will try to keep my answer to less than 11 hours! We are
concerned with a lot of what Tony just said. If I could concentrate
specifically on the suggestion of the easing of regulations on
non-European ownership. I think that needs a great deal of thought.
I have not yet heard a convincing argument why that should happen,
particularly in the situation where it is not likely to be reciprocated
in any event. I think that would impose particular difficulties
if an American owner, for example, were to buy a channel in this
country. They would come here with a library of American material,
which would be available to them almost without cost, which I
think they would be tempted to show almost exclusively on such
a channel. That, coupled with lighter touch regulation, the combination
of non-European ownership and lighter touch regulation, seems
to me to lead to a conclusion that it would more likely damage
what we currently look for in our broadcasters, which is a range
and quality of programming, and I do not see how it would improve
that situation. So I am entirely unconvinced at this stage of
834. The bill gives the Secretary of State quite
wide-ranging powers through secondary legislation to change the
ownership provisions which are in there.
(Mr McGarry) Yes.
835. In the case of particularly radio there
are no provisions in there at the moment on primary legislation
that will give effect to the three voices of all the safeguards
that the Secretary of State talked about which has led to some
people being concerned that as the process goes on the best of
interests will get to work and what emerges at the end of the
day only faintly resembles what was originally indicated. To what
extent do you think that (a) changes to these very sensitive areas
should b e made by primary legislation only and (b) that the safeguards
we have talked about for, particularly, radio should be on the
face of the bill and not left afterwards to order?
(Mr Lennon) If you are inviting us to say that as
much as possible ought to be in primary legislation, I think we
are agreeing with you. Even in the current regulatory framework,
the most confident regulator, given the option to dilute their
ownership controls in the face of what appear to be strong economic
arguments, will tend to give in, and the creeping consolidations
of independent local radio in this country and Channel 3 has happened
more or less with the full blessing of the ITC, on the grounds
that if they do not give way on the moral restrictions that ought
to be there then there will be an economic threat to that part
of the industry. So, yes, we would like to see as much as possible
on both the TV side and radio side in the primary legislation.
Paul Farrelly: To quote Lord Crickhowell's catch
phrase, "to return to the bill," assuming the Government
do not change their mind, were we to propose some changes, or
the great David Puttenham could not drive his chariots of fire
836. I think he is auditioning, by the way!
(Mr McGarry) He will have to try harder!
837. Assuming that is the mind set and it is
set in stone, are there any realistic safeguards which could be
built into the bill on which you can agree?
(Mr McGarry) We have tried in our submission to deal
with that situation whereas if the ownership regulations are relaxed,
especially in relation to television, leaving radio separately,
and we do think that in those circumstances, if a foreign owner
of a television public service broadcasts television station in
this country comes into being then I think the OFCOM should have
the power to impose specific obligations upon such a new owner
of such a channel. I think that would be more akin to the kind
of regulations which exists now that the lighter touch which appears
to be generally the proposal of the bill itself.
838. Can I follow that up. Clearly, OFCOM has
the power to regulate on the basis of the existing licences, does
(Mr McGarry) Yes.
839. You are going further than that, are you,
and saying that beyond the existing obligations, which will remain
even if the ownership is foreign, and therefore can be enforced,
you want an even wider power of some kind?
(Mr McGarry) I am not a parliamentary draftsman, so
I am not sure about the answer to that.