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Baroness Miller of Hendon: I thank the Minister for that clear and satisfactory answer. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Hendon moved Amendment No. 34:

The noble Baroness said: In moving Amendment No. 34, I shall speak also to Amendments Nos. 39 and 40. They are linked. The purpose of the proposed addition by Amendment No. 34 to Clause 4(1) makes it quite clear that if the Government abandon the concept of Ofcom they shall bear the costs and expenses incurred during the transitional period. Otherwise, where would the money come from? If Ofcom is strangled at birth, what assets will it have from which to pay anything back to the Government?

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If Ofcom follows what the Government says is its initial function in accordance with the Bill, it will possess only a few desks and a handful of paperclips.

Clause 4(5)(c)(iii) contains an ominous provision which enables the Secretary of State to extinguish interests, rights and liabilities. We may want to explore that at a later stage of the Bill.

Amendment No. 39 is a probing amendment because the provision in the Bill is vague and ambiguous. It provides for the compensation to be paid either by the Government or by Ofcom. But if it were to be Ofcom, where would it get the money from? It will be provided with the barest minimum of money to set itself up. In response to that question by my noble friend Lady Anelay at Second Reading, the Minister said that,

    "if Clause 4 were invoked and the whole process aborted. The literal answer is that the Government and the taxpayer would have to pay. There is provision for Ofcom to levy charges, but I do not think it could quite be used for that purpose".—[Official Report, 15/10/01; cols. 466-467.]

Do the proposed powers to pay compensation include payment to the existing regulators for the expense and disruption that they will suffer while preparing to wind up their own affairs and hand over to the now abortive Ofcom? I ask that because Members of the Committee will have noted that Clause 4(5) grants power to transfer assets and liabilities of Ofcom to the existing regulators. Why should they pay for a U-turn by the Government over the establishment of Ofcom?

The Bill states that the Secretary of State will have power to pay compensation to,

    "persons suffering loss or damage".

Does that mean every person or just those who, at the discretion of the Secretary of State, are worthy of consideration? Will suppliers of goods and services be fobbed off, like the unhappy shareholders in Railtrack were with the observation, "Well, you took a commercial risk"? Do the Government undertake to ensure that if Ofcom is wound up, taxpayers will not be faced with huge claims for compensation, loss of office and golden handshakes? As regulators of segments of the industry, surely Ofcom's board will not be personally liable. I say that because Ofcom is not a limited company.

Amendment No. 40 will make sure that the Secretary of State takes into account the value of resources transferred to the stillborn Ofcom by the existing regulators. Presumably those resources will be restored to the original provider, not just thrown into a liquidation pot. We want far clearer indications from the Government of who pays what, with what and to whom in the event of Ofcom being prematurely wound up—however remote the Government believe such an eventuality to be. I beg to move.

Lord McIntosh of Haringey: The noble Baroness's closing remarks sounded like a limerick that it would be improper for me to repeat in this Chamber. I will talk to the noble Baroness about it afterwards.

The noble Baroness quoted me correctly from Second Reading when, in summary, I said that if Ofcom were wound up the taxpayer would have to

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pay. I meant that if Ofcom were unable to meet all its debts, the taxpayer would have to meet the deficit. It is possible that they might not entirely match. At the time of winding up, Ofcom might have assets that could be realised. In that event, there is every reason for the Secretary of State to recover what she can, provided that other creditors have been paid. Amendment No. 34 would prevent that happening.

The converse situation would be insufficient assets to pay all Ofcom's creditors in full. The Secretary of State has power to compensate people who suffer as a result of Ofcom being wound up. The Secretary of State would have to consider carefully whether to exercise that power if Ofcom's other creditors could not be paid in full. Amendment No. 39 would remove that power.

The noble Baroness questioned whether all the fine detail of the way in which the Secretary of State could use that power would be exercised. I am sure that the Secretary of State would use that power to compensate responsibly and even-handedly. If she did not, her actions could be challenged, as can those of all Secretaries of State. There is a balance between Ofcom and the Secretary of State because by this time Ofcom will have no power to levy charges. It will not do so until the main Bill is implemented. All the money going into Ofcom comes from the Secretary of State, mainly by way of a loan. Therefore, it is right that any money left over at the time of winding up should go back to the Secretary of State.

Amendment No. 40 seeks to influence the way in which the Secretary of State would conduct a winding up, giving particular weight to the relative value of assets and liabilities transferred from the four existing regulators to Ofcom. I do not believe that value should be a particular factor. Abandoning the Ofcom project would leave us with the four existing regulators, together with the Radio Communications Agency, to continue their existing functions. They are all part of the statutory apparatus. It is not like a commercial merger of companies with shareholders.

The Secretary of State should decide, subject to the reasonableness test, the best way of redeploying assets to maximise the efficient and effective conduct of the existing and surviving regulator regime. Valuing transferred property should have nothing much to do with it. I hope that that is enough to persuade the noble Baroness not to press the amendment.

Baroness Miller of Hendon: I am satisfied with the Minister's explanation, particularly with regard to Amendment No. 34. I was concerned to know where the money for Ofcom was to come from and therefore who would get it back. The noble Lord made it clear that Ofcom would only have the money that came from the Secretary of State in the first instance and it would be appropriate for the money to be returned there. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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[Amendment No. 35 not moved.]

Lord McIntosh of Haringey moved Amendment No. 36:

    Page 4, line 31, leave out "make" and insert "lay before Parliament a draft of"

The noble Lord said: When the Delegated Powers and Regulatory Reform Committee examined the Bill in July, it made one recommendation. The committee noted that Clause 4(3) applied the negative procedure to the Secretary of State's power to make an order for Ofcom to be wound up. The committee's view was that Parliament should have sufficient opportunities to discuss Ofcom's fate before any such order was made and recommended that the affirmative procedure would be more appropriate.

Baroness Anelay of St Johns: We welcome that the Government have taken due note, as they always do in these circumstances, of the Delegated Powers and Regulatory Reform Committee. If such an eventuality were to occur, it is only proper that Parliament should have the opportunity, through the affirmative procedure, to consider such an application by the Secretary of State.

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendments Nos. 37 and 38:

    Page 4, line 34, leave out from "instrument" to end of line 35 and insert ", and no such order shall be made unless a draft of the order has been laid before Parliament and has been approved by a resolution of each House"

    Page 4, line 35, at end insert—

"( ) If—
(a) in performance of the duty imposed by subsection (2), the Secretary of State lays a draft of an order under this section before Parliament, and
(b) a motion for the approval of the draft order is defeated in either House,
that subsection shall not be taken to oblige the Secretary of State to lay any further draft of such an order before Parliament."

On Question, amendments agreed to.

[Amendments Nos. 39 and 40 not moved.]

Clause 4, as amended, agreed to.

3.45 p.m.

Clause 5 [Interpretation]:

[Amendment No. 41 not moved.]

Lord Gordon of Strathblane moved Amendment No. 42:

    Page 5, line 18, at end insert—

"(e) the Board of Governors of the BBC;"

The noble Lord said: It is not my intention to open up the issue of how much the BBC should come under the regulation of Ofcom, although I look forward to taking part in that important debate. The proper time will be when we have the full Bill, in draft form, one hopes, later in the current Session.

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This amendment does not take the Government further with regard to the BBC. Those of us who attended the first day in Committee last week will recall that my noble friend Lady Blackstone, replying to Amendment No. 18 in the name of the noble Baroness, Lady Anelay, went into detail on how much the BBC was already covered, or would be, by Ofcom. In those circumstances, it is strange that there is not a single mention of the BBC in the paving Bill.

I examined all the clauses that refer to existing regulators and none of them takes the Government further than they have already said they want to go. There is a strong case for listing the BBC board of governors along with the other regulators at the beginning of Clause 5. After all, the BBC board of governors is a regulatory body. It does many other things but if it does not regulate the BBC, who does? There is no excuse for the board being left out on those grounds.

In Committee last week, the Minister said that Ofcom already had blanket powers under Clause 2(3)(a), which uses the phrase

    "whether by transfers from the existing regulators or otherwise".

As a great admirer of the BBC, I am unhappy to see our biggest and best broadcaster consigned to the dustbin of a catch-all phrase such as "or otherwise".

There is an overwhelming case for including the BBC board of governors in the list of regulators specified at the beginning of Clause 5. That would not take the Government any further than they have said they want to go. I want them to go further but will argue that case later. To get the BBC's co-operation, arguably the board should be listed. There is no case for dealing separately with the BBC when the Bill's objective is to bring the BBC more in line with other broadcasters. I beg to move.

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