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Baroness Blackstone: Taken together, these amendments would make the BBC an existing regulator for certain purposes in the Bill, alongside the other regulators. Ofcom would have certain duties to ensure co-operation between itself and the BBC, and the BBC would have new functions for facilitating the implementation of legislative proposals. However, the amendments would impose on the BBC a duty to prepare for the Secretary of State a scheme setting out how any of its objects, powers or duties might be conferred on, or regulated by, Ofcom; how those proposals might be effected, and the property rights and liabilities that it would also be appropriate to transfer to Ofcom for that purpose. They would also allow preparation for the transfer of functions from the Secretary of State.

Amendments Nos. 18 and 19 would mean that there would be no scope for the new functions to be embraced by Ofcom, but I shall explain that point in more detail later.

Let me say at once that, while we are clear about government policy, I fully acknowledge that we must not pre-empt the outcome of parliamentary debate on the main communications Bill. At the end of the Second Reading debate my noble friend Lord McIntosh responded to the important point on this which was made by the noble Baroness, Lady Anelay, and which has been reiterated by her this evening. He sought to assure her. Whether or not she was reassured I cannot say; perhaps not, in view of what she said this evening.

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Before I explain in more detail why I do not believe that the provisions introduced by these amendments are necessary, it may be helpful for me to spend a little time going over the relationship that the Government envisage between the BBC and Ofcom as outlined in the White Paper. It would be useful to set the record straight in that regard.

It is a pity that, in the public debate we have had so far on our proposals for regulating the BBC, there has been so much emphasis on how its position differs, and rather little attention paid to the features that are common to all public service broadcasters. Let me start by repeating that the aim is to treat all broadcasters in a similar manner. The White Paper describes a new three-tier structure of regulation which is to be generally deregulatory and, in the interests of fairness, will apply across the board.

The public service programme broadcasters are Channels 3, 4, 5, the BBC and S4C. They cover a broad range--from the BBC, a body established by charter and funded through the licence fee, to Channel 5, a commercial channel with fairly restricted public service obligations.

The White Paper recognises that the new system of regulation will need to take account of those differences. There will therefore remain some differences in regulation between the BBC and others. The position of the governors will be unchanged internally, but will be modified by the new relationship with Ofcom. Broadly speaking, the BBC will be subject to the same degree of standard setting and monitoring as all other public service broadcasters for each of the three tiers regulated by Ofcom.

The overall result will be that the BBC will be subject to greater external regulation than at present. I want to make that clear. Let me emphasise that its position will be brought much closer than it has been to that of other broadcasters. One might put it the other way round: by lightening the burden on other broadcasters, we are bringing their position closer to that of the BBC. There will be three tiers of regulation for television. Tier 1 will apply to all broadcasters; tiers 2 and 3 will apply to all the public service broadcasters.

Tier 1 includes such matters as guidelines on the portrayal of sex and violence. Ofcom will develop overarching codes tied to the statutory principles, which will bind all broadcasters. Those will also apply to the BBC. The governors will be responsible for developing more detailed guidelines building on the overarching codes and applying those standards to BBC services. There will be one specific exception for the BBC: regulation of the impartiality requirements will remain with the board of governors because that is so closely bound up with their overriding role of ensuring the BBC's editorial independence.

Tiers 2 and 3 will apply to public service television broadcasters only. Tier 2 provides for consistent regulation by Ofcom of quantifiable elements for which quotas or targets can be set such as quotas or targets for regional production and output and the requirement for news/current affairs to be broadcast in peak time. The same system of quotas will apply to all.

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The White Paper says specifically that Ofcom will be responsible in future for both agreeing and monitoring the BBC's compliance with the regional production targets, and that there will be no requirement on the BBC for the first time to provide news and current affairs in peak time.

Tier 3 relates to the qualitative obligations on all public service television broadcasters, including the BBC. It is about the content of broadcasting, and the aim is to give other broadcasters a freedom similar to that enjoyed by the BBC. A system of self-regulation will operate. All the public service broadcasters, including the BBC, will still be required to provide a mixed and high quality range of programmes. They will also be required to develop statements of programme policy and self-regulatory mechanisms. Those statements will be updated annually.

This is an opportunity for all public service broadcasters to demonstrate that their obligations can be better delivered and monitored through self-regulation. The White Paper states:

    "The BBC Governors must equally demonstrate that they are regulating the BBC effectively. In the run-up to the Charter Review in 2006, they must demonstrate not only that the BBC continues to reach the vast majority of the audience, but that it also fulfils its public service remit. ...

    "OFCOM will report periodically on the key cross industry issues of public service broadcasting and we would expect OFCOM's advice to be published. The BBC's Board of Governors will want to consider observations made by OFCOM in drawing up the BBC's annual statement and all other broadcasters will be expected to undertake a similar and formal process".

Should there be a major failure by any of the broadcasters, Ofcom will have a restricted power to intervene. For the BBC those backstop powers will be subject to charter review involving the Secretary of State for Culture, Media and Sport, and Parliament. The Secretary of State will also retain the power to approve new BBC licence-fee funded services and material changes to existing services. The regulator will, however, give formal advice to the Secretary of State on the often important market impact of both proposals for new BBC public services and for material changes to existing ones, before she reaches a decision. The BBC will also continue to be subject to economic regulation, in future principally by Ofcom instead of the OFT. Like other broadcasters, it will be subject to the normal competition laws.

The White Paper refers to the need for amendments to the agreement between the Secretary of State and the BBC. The agreement and any amendments are presented to Parliament and it is through amendments that the Government intend to set out the relationship between the BBC and Ofcom. The amendments will work alongside the statutory duties and powers that Ofcom will hold. Draft amendments will be available for discussion when the main Bill is published next spring.

That route fits the constitutional position, which was briefly reviewed at the time of the licence fee review in 1999. It will be fully reviewed again in the run-up to 2006 when the charter will expire. We do not see the need for another review at this time and by

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using amendments to the agreement we can establish the relationship between the BBC and Ofcom without jeopardising the lines of accountability to Parliament.

Having set out how the Government intend that the new system should work, perhaps I may now explain why we see the amendments as unnecessary. Clause 2 of the Bill, without the amendments, gives Ofcom the power it needs to facilitate or secure the modification of any proposals concerning the BBC. Under Clause 2(1) Ofcom has the power to do whatever is appropriate for that task. The BBC's charter will allow the BBC to prepare for implementing these proposals.

The phrase,

    "whether by transfers from the existing regulators or otherwise"

has been included in Clause 2(3). That means that Ofcom's power is not limited to transfers from existing regulators but can also include transfers from the BBC.

Furthermore, the phrase has a wider purpose, which Amendments Nos. 18 and 19 would remove. The amendments would delete words so that the phrase reads simply,

    "by transfers from the existing regulators".

That change would prevent Ofcom taking on new functions which are not currently being carried out by the existing regulators, including any new functions arising in relation to the BBC. So if these amendments are carried without the other amendments in this group, their effect will be to exclude the BBC entirely because it is not an existing regulator under the terms of the Bill.

I am satisfied that the powers in the Bill are sufficient to cover the points that we are debating. They will allow Ofcom and the BBC to make preparations for implementing the new regulatory regime. Therefore, there is no question of pre-empting your Lordships' right to debate more fully the exact relationship between Ofcom and the BBC, when the communications Bill is debated in this House.

In the light of what I have said, I hope that the noble Baroness, Lady Anelay, will feel able to withdraw her amendment.

9.15 p.m.

Lord Thomson of Monifieth: I begin as I did at Second Reading, with a declaration of interest. I have a daughter who is employed by the BBC. I hope that the two noble Baronesses who have spoken will not regard the following remark as politically incorrect. We have had a most impressive dialogue between the two noble Baronesses. I congratulate the noble Baroness, Lady Anelay, on the thoughtful way in which she has moved her amendments and the ingenious way in which they have been drafted. The Minister has performed a useful service to all noble Lords by setting out clearly and fully--more fully than was possible at Second Reading--exactly what the Government have in mind for the relationship between the BBC and Ofcom under this Bill and the major Bill that is to follow.

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My view is that the BBC, within the British broadcasting scene, including the contemporary broadcasting scene with all the revolutionary changes that have taken place, remains unique, with unique characteristics. It is uniquely financed and it has a unique remit. Therefore, I believe that one is entitled, when shaping a major telecommunications and broadcasting Bill, to seek some special arrangement that reflects the need for a unique degree of regulation of the BBC. The BBC, for all its faults, is a great British institution with an international reputation, with which one should tamper only with very great care. Having some experience of both sides of broadcasting--of independent, commercial broadcasting and of the BBC--perhaps I may say that the Government have achieved the right balance in their current legislative proposals on the relationship between the BBC and Ofcom.

Having said that, there remains a heavy responsibility on the BBC to adapt itself to the situation. I noted the words that the noble Baroness quoted from the White Paper, recognising the special responsibilities of the BBC. In a curious way, in the new broadcasting scene, the relationship between the BBC's governors and their broadcasters has become comparable to the relationship between the old Independent Broadcasting Authority, of which I was chairman for some years, and the television companies. We had an arm's-length relationship with the television companies, as the broadcasters, but it was a close relationship. In that relationship we used our regulatory skills, such as they were, to encourage the highest public service quality out of what were commercial organisations that had sometimes conflicting duties to shareholders. In the contemporary situation I believe that the BBC should try to invent a comparable relationship with its broadcasters. Something more of an arm's-length relationship than it has had in the past is required.

I thought that the noble Baroness, Lady Jay, in her speech at Second Reading--and I am sorry that she is not now in her place to speak for herself on these matters--produced some very interesting and constructive ideas about how the BBC governors, as that part of the institution, should reform some of its internal arrangements to give itself a better relationship, at a little distance from the broadcasters whom it has the responsibility of regulating. I think that these ideas ought to be pursued and explored.

There are two other remarks to be made about the responsibility--the new responsibility, in a sense--of the BBC governors in a new situation. One is that they ought to recognise the limits on their public service remit. They should get out of the mood that is deep in the BBC tradition, that wherever there is any new development of any kind in broadcasting the BBC must, by definition, be there and spending its resources on it. Some more discriminatory approach to that limitation would be helpful.

Equally, they have to recognise the limits that ought to be imposed on them as to how far they compete commercially for audience and ratings in the rather overlapping field of some of the BBC's commercial activities. There I say--and I have said this many times in the debates in this Chamber on these broadcasting

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matters--that the BBC would benefit if it had the courage to go for total transparency in its commercial operations, a transparency audited and invigilated independently of the BBC itself. These are some of the ways in which the BBC governors--now in a very special position in our debates--could adapt themselves to this changing situation.

As the noble Baroness has said, there is in relation to the BBC a laid-down timescale. It has its Royal Charter; it has a limit. The noble Baroness mentioned the date of 2006, which perhaps seems a long way ahead. As these things go, however, it is not. The preparation for such a review has to take place at a very much earlier date.

The debate that the noble Baroness, Lady Anelay, has initiated regarding the future relationships of the BBC within the overall broadcasting scene, and the new regulatory arrangements of Ofcom, will be an ongoing debate. It has now begun and it will not stop. The right timetable, however, in terms of looking at the way the BBC adapts itself to these changes, is the review of the charter in 2006.

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