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Lord Quirk: My Lords, on a point at a more modest level of sophistication, will the Government note the importance of simple clarity on public address systems? While within trains the PA has dramatically improved over the past five years, on mainline and underground stations the PA remains very bad and potentially dangerously bad. Should not those making announcements be given specific training in empathising with the unfortunate listeners—their passengers, customers and the public at large—who are unable to understand what is always important and may in the current context of terrorism be potentially lifesaving?

Lord Falconer of Thoroton: My Lords, I could not agree more with the proposition that if one has a public address system, whether on a train, in a railway station or anywhere else, the announcement being made should be audible to the listener. I agree with the noble Lord that there is nothing more irritating than having an announcement going on which you cannot quite hear because the system is not quite up to it. That is particularly important in relation to public transport.

Lord Dholakia: My Lords, one of the recommendations made by the national steering

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committee was that there should be a computerised system by which messages are sent to all telephone lines and mobile phones. The Government rejected that. Has any progress been made on that front rather than simply to relying on messages on television or radio?

Lord Falconer of Thoroton: My Lords, as regards the current level of threat, messages would be disseminated by, as I have indicated, television, radio and website. Messages can also be disseminated through mobile telephones. That is something that the emergency services are developing.

Baroness Blatch: My Lords, in Answer to a Written Question the noble Lord, Lord Macdonald of Tradeston, said:

    "Further work on procedural documents is scheduled for completion by the end of the current financial year".—[Official Report, 12/3/03; col. WA188.]

That was in connection with the attack warning system. Will the noble and learned Lord tell us—as it is only four weeks away—whether that work is complete? Will he also comment on the fact that the Minister for homeland security has resigned from the Government and has not yet been replaced? Is this not a very bad time to have a vacancy in that particular post?

Lord Falconer of Thoroton: My Lords, as far as concerns the noble Baroness's first question, perhaps I may write to her. As regards her second question, the Home Secretary is the Secretary of State responsible for internal security. He remains in post.

Public Services (Disruption) Bill [HL]

3.8 p.m.

Read a third time, and passed, and sent to the Commons.

Health (Wales) Bill

Read a third time, and passed.


Lord Grocott: My Lords, before we start the Second Reading debate on the Communications Bill, perhaps I may mention to the House the usual arithmetic on the subject. It is a Second Reading so there are no time limits. There are, however, 49 speakers on the list of speakers. For the debate on Iraq a week ago there was a suggested time of eight minutes per speech. If we were to apply that today, the House would rise around 10.30 p.m. Obviously, every extra minute that each speaker takes adds around 45 minutes to that time. I shall leave the rest of the arithmetic to your Lordships.

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Communications Bill

3.9 p.m.

The Minister of State, Department for Culture, Media and Sport (Baroness Blackstone): My Lords, I beg to move that this Bill be now read a second time.

Media and communications have a powerful reach. They touch our lives everyday with both subtlety and strength. They are vital to the way we live, the way we do business and the way our democracy functions.

The Communications Bill will transform the regulation of those important industries by creating a new framework: a framework that is rooted in competition; balanced by tough safeguards to protect the interests of citizens and consumers; and flexible enough to respond to a rapidly changing business environment.

The Bill is a delicate balancing act to preserve the best of what we have, while ensuring that we do not close off future opportunities. It will sweep away regulation in many areas, but it must also protect the quality, diversity and plurality of the British media. At the heart of what we want Ofcom to do will be its role to uphold the long tradition of public service broadcasting in this country.

The Bill is the result of close co-operation between my department and the Department of Trade and Industry. I am grateful to my noble friend Lord McIntosh of Haringey, who will wind up the debate. I will therefore concentrate on how the Bill will affect broadcasting; my noble friend will cover in his closing speech the provisions about electronic communications networks and services and the radio spectrum.

Before I turn to the substance of the Bill, I should like to acknowledge those who have helped to shape it. The Bill has been carefully consulted on and has benefited greatly from pre-legislative scrutiny. Under the chairmanship of my noble friend Lord Puttnam, the Joint Committee worked tremendously hard. I am sure that I speak for all noble Lords in thanking him and my noble friend Lady Cohen of Pimlico, the noble Lords, Lord Crickhowell, Lord Hussey of North Bradley, Lord McNally and Lord Pilkington, for the part that they played in making a good Bill better. The Government took their report seriously and accepted more than 120 of their recommendations. We continue to listen and to welcome improvements.

Part 1 contains details of the functions that will be transferred or assigned to Ofcom, bringing together functions currently exercised by: the Broadcasting Standards Commission, the Independent Television Commission, the Director-General of Telecommunications, the Radiocommunications Agency and the Radio Authority. This part of the Bill sets out the general duties of Ofcom and the establishment of the consumer panel and the content board.

Ofcom's general duties will be its touchstone. They will be crucial in determining how Ofcom operates. As a result of continuing consultation and review, the Government made changes in another place to leave

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no doubt whatsoever that Ofcom will have a duty to further both the interests of consumers and the interests of the wider community.

The consumer panel will be the independent voice of consumers—close enough to influence but with the right degree of separation and independence to represent their interests and to carry out research. The content board will ensure that there is proper provision for public interest representation on content issues of citizens, viewers and listeners, and especially of the different nations and regions of the UK.

As I said, my noble friend Lord McIntosh will set out the provisions in Part 2. Part 3, covering public service broadcasting, is where I want to focus. Public service broadcasting is an essential feature of our heritage. High quality television and radio programmes free at the point of use and available to all are the cornerstones. Programmes that inform, educate and entertain while reflecting the views and needs of all listeners and viewers help to shape our society. They are essential to our democracy as well as being a key part of the broadcasting ecology.

Public service broadcasting is not only part of our heritage; it is part of our future. Our commitment to public service broadcasting is unequivocal. But we must make changes in the way that it is regulated if it is to survive in this digital, multi-channel, multi-media age. We want public service broadcasting to do more than just survive—we want it to thrive and flourish.

The Bill introduces a three-tiered structure for the regulation of broadcasting. Tier 1 will ensure guaranteed standards across all broadcast services—public service or not. Tier 2 will ensure a healthy, diverse production industry capable of delivering high-quality, original programmes from around the UK. Ofcom can take firm action against any public service broadcaster who is in breach of the requirements.

Under tier 2, there are quotas for all public service broadcasters covering: the amount of independent productions, original and regional productions and regional programming; the provision of high quality national and international news and current affairs programmes in peak times; the provision of party political broadcasts; and the provision of schools programming.

Tier 3 sets out for the first time in legislation a clear account of the kind of programmes that make up public service broadcasting. While the broadcasters are given vital flexibility in how to deliver the remit, Ofcom has a duty to ensure that audiences are guaranteed high-quality public service programmes.

Our aim is to establish a common framework of regulation across broadcasting. We are therefore providing for the BBC to be covered by obligations that are broadly similar to those applying to other broadcasters. The BBC's obligations are set out in the agreement between the BBC and the Government. In that way, we can ensure that the BBC's constitutional relationship and accountability to Parliament are maintained.

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We have published the text of our proposed amendments to the BBC agreement to assist Parliament's consideration of the relevant provisions of the Bill. The effect of the amendments is to impose new obligations on the BBC that mirror the corresponding provisions in the Bill, to the appropriate extent. Under the revised agreement, the BBC will undertake to be bound by most of the same rules as other broadcasters.

It is in the context of those provisions, which ensure quality of content and the protection of public service broadcasting, that I shall set out our proposals for changing the rules on media ownership. Foreign ownership of UK broadcasting licences exists now. There are no foreign ownership restrictions of any sort on certain UK broadcasting licences, such as cable and satellite television licences. Where foreign ownership restrictions apply, they apply only to non-European Economic Area countries.

The anomaly of the current rules would allow a huge EEA-based company with significant operations around the world to buy anything that it wanted, whereas similarly global firms such as AOL/Time Warner or Viacom are barred. That does not make sense in the global market. It cuts us off from a potential source of increased investment at a time when our media industries could benefit most.

The amendments brought forward by the Government in another place as a result of the Independent Television Commission's review of the UK programme market strengthen Ofcom's powers to regulate content with quotas to retain the vitality of our independent and regional production industry. There is no threat of programme dumping or lowering of standards on change of ownership.

On ownership of Channel 5, we must recognise the clear difference between its position and that of Channel 3. Channel 5 has only 6 per cent of audience share, compared with 24 per cent for ITV. Channel 5 reaches only around 80 per cent of the UK population.

In the spirit of the Bill, we want to remove unnecessary restrictions wherever possible to promote competition and investment, so that consumers can benefit from better programmes. That is not about giving favours to anyone; it is entirely proprietor-neutral. It is about giving Channel 5 access to a wider pool of potential investors so that it can compete on a more even footing with the other public service channels.

Ofcom has the power to review the public service obligations of Channel 5 whenever it feels it appropriate to do so. If Channel 5's audience expands to a level comparable with ITV's the Secretary of State could introduce a nominated news provider system, with or without the advice of Ofcom. Ofcom will also be required to undertake a review of Channel 5's original and regional production, news and current affairs programmes if there is a change of control of the channel. Those are substantial safeguards.

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We are removing the ownership restrictions that prevent a single ITV. There have been calls for us to abolish at the same time the nominated news provider scheme for ITV. I shall set out why we have resisted that, as it is particularly relevant in the current circumstances. When 59 per cent of the population consider television to be their most trustworthy source of information, we must ensure that high quality and editorially independent news is available on free-to-air television from more than one source. ITV news, as the BBC's main competitor, must provide it. The nominated news provider system, together with the associated ownership limits guarantee both quality and independence.

So far, I have talked only about television, but a vital part of our broadcasting industry is radio, which will be a key part of Ofcom's remit. We are radically changing the radio ownership rules in a way that will bring significant benefits to listeners and the industry. There are new freedoms, but, to balance any future consolidation in the radio industry, the Bill introduces a new duty on Ofcom to protect the localness of local radio. Those are the key issues that the Bill addresses in respect of broadcasting.

The Bill also reforms the newspaper merger regime contained in the Fair Trading Act 1973. We are modernising the existing newspaper merger regime and integrating it with the new merger regime in the Enterprise Act 2002. We are deregulating where we can while continuing to protect the public interest. Where the Secretary of State intervenes in a newspaper merger, Ofcom will have a purely advisory role specifically related to the impact of a merger on accurate presentation of news, free expression of opinion and the plurality of views in the press. We believe that the involvement of Ofcom will bring greater transparency, independence and depth to the process of advising Ministers, and can only enhance the quality of decision-making under the new regime.

I have not been able to make a statement of compatibility under the Human Rights Act 1998 in respect of one provision of the Bill. I am grateful for the view expressed by the Joint Committee on Human Rights in its fourth report of this Session that our position in this matter is considered to be both legitimate and respectful of human rights.

For many years, successive governments have maintained a complete ban on advertising of a political nature on television or radio. The Government intend to continue with the current ban—a ban that was supported by the Neill committee when it reported on the funding of political parties in 1998—and to define more precisely what is meant by "political" so that Ofcom may continue to use the broad reading of the word used by the existing regulators.

Some noble Lords are no doubt aware of the judgment by the European Court of Human Rights against Switzerland, which maintained an apparently similar ban. Having examined all the facts, and following extensive legal advice, I have concluded that very strong arguments could be advanced in favour of the ban contained in the Bill being compliant with the

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ECHR. However, the Government apply testing standards to their consideration of the compatibility of their legislation with the convention. Given the existence of the Swiss precedent, I must ask the House to consider the Bill with a Section 19(1)(b) statement attached to it.

That does not mean that we believe the Bill to be incompatible with the ECHR. We would mount a robust defence if it were legally challenged. Of course, if that defence subsequently failed before the domestic courts, we would need to reconsider our position. Beyond that, we take our international obligations seriously. There is no question but that we would amend the ban in accordance with any judgment of the European Court of Human Rights in Strasbourg that ruled against the UK legislation. As things stand, however, the Government believe it right to ask the House to continue that ban.

In response to the European Court's judgment and to the JCHR's initial concerns, we looked closely at the current ban to see whether some minor changes would make it more certain that it was human rights compatible. Unfortunately, any such changes would have allowed substantial political advertising. I hope that all noble Lords will agree with me that that would not be a desirable outcome. The present ban denies powerful interests the chance to skew public debate, thereby safeguarding the public and democratic debate and protecting the impartiality of broadcasters.

Broadcasting and electronic communications have advanced rapidly over recent years. The Bill seeks to prepare the way for some of the changes that lie ahead. Some of those changes may be evolutionary; some, no doubt, will be revolutionary. The only certainty we have is that change will happen. This Bill will preserve the best of what we have and open the way for more investment, better and new services and a digital future that we can all look forward to. I commend the Bill to the House.

Moved, That the Bill be now read a second time.—(Baroness Blackstone.)

3.27 p.m.

Baroness Buscombe: My Lords, we welcome and support the Bill. We welcome the creation of a new framework for the communications industries, including the liberalisation of ownership of the media.

There has been an almost unprecedented amount of debate in advance of the Bill. That was partly to be expected, given the nature and character of the industries involved and the detailed scrutiny of the draft Bill undertaken by the Joint Committee, which was so ably chaired by the noble Lord, Lord Puttnam. I wish that the same could be said of scrutiny in another place. I know that I speak for all my honourable colleagues, who feel a deep sense of frustration that a good 25 per cent of the Bill was not considered at all by elected representatives.

Notwithstanding the overall attention given to the Bill, I wish to make it absolutely clear now that scrutiny to date does not, in our view, obviate the need for noble Lords properly to consider the Bill in its

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entirety. Although we support the Bill in principle, there are a number of important issues on which we do not agree with the Government. We hope to persuade the Government to change their minds on those issues as we proceed. Given the list of eminent speakers today, I have no doubt that we can look forward to some eloquent, lively and, it is to be hoped, constructive debate that will assist the Government in their thinking.

Although we support the general thrust of the Bill in its approach to economic regulation, we are also aware that the EC directives dictate significant aspects of it. It is to be noted that the Government have said:

    "As competition becomes more pervasive in the supply of communications services, it is expected that OFCOM will be able to rely increasingly on [competition] powers, rather than powers specific to the sector, in addressing concerns about competition. However, many aspects of the sector-specific framework, e.g. universal service provision, will remain necessary and will not disappear or become redundant in the foreseeable future".

The noble Lord, Lord Currie, chairman of Ofcom, said:

    "Where competition is reasonably robust or where it can be developed to be so, it is usually better for sector regulation to withdraw and reliance placed on competition policy".

We urge those responsible for executing the provisions of the Bill to keep firmly in view the aim of using competition law powers wherever possible rather than ex ante regulatory powers. In particular, even if the Government are right and certain sector-specific aspects will need to remain, they should, wherever possible, be universal obligations and not company-specific conditions. Significant market power conditions, which, by definition, are imposed on some undertakings and not on others, and, in particular, price controls should play an ever-smaller part in the sector because of their inevitably distorting effect on competition. In addition, it should be noted that the EC directives are more prescriptive than most economists think appropriate. We believe that Ofcom should make the greatest possible effort to reach a deregulatory outcome when working within those provisions.

It is vital that the regulatory framework to be established by the Bill is capable of dealing with a fast-changing and market-led environment. No one can predict the mix of communications products, services and technologies that will capture consumers' interest in the future. Nor should government or communications regulators attempt to pick winners, be they technologies, services or particular players in the marketplace.

I turn to the specific duties of Ofcom. We are pleased that the Government have seen fit to respond to pressure from Her Majesty's Opposition by including the interests of the community in Clause 3. That said, we ask the Government how that duty to facilitate the interests of the community will be met. In addition, we shall seek clarification that advertisers, who are by far the biggest source of funding for the UK's commercial media, are consumers of the "relevant markets" referred to in Clause 3(3).

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Regulatory uncertainty remains in Clause 3. Although the Government endorsed the principles set out by the Better Regulation Task Force that regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed, Ofcom is not under a duty to apply those principles in all its functions . It need have regard to them only as appears to be relevant in the circumstances. The principles of better regulation should properly underpin Ofcom's general duties. An example of an industry that would benefit if we got that right is mobile telephony. It is a significant success story, but that continued success depends on the right regulatory environment. The industry developed quickly through intense competitive rivalry that has benefited consumers beyond anyone's expectations.

I turn to media ownership. The Bill is intended to be deregulatory, but, although we welcome the move to liberalise existing restrictions prohibiting media convergence, we believe that the Government's approach to ownership is prescriptive and timorous. That is well illustrated by the prohibition on shareholders owning more than 40 per cent of the nominated news provider or NNP. The statutory imposition of a fragmented ownership structure on any core business is bound to undermine its ability to grow and innovate. Limited ownership will act as a disincentive to shareholders in the NNP to invest in its long-term future. Concern has been expressed that, without those rules, the NNP might fall into US hands. That is not a sustainable argument, as the rules do not eradicate that possibility, as practical experience has already shown.

The removal of restrictions on the ownership of national terrestrial broadcasting licenses will open up the broadcasting media to new sources of investment and ideas. Foreign investment has already enabled cable and satellite television to grow in this country. What is there to fear? The concern that liberalisation will lead to a flood of foreign content is misplaced. Commercial companies in a competitive marketplace simply cannot afford to ignore consumer demand. All the evidence suggests that domestic programming is popular in the UK. Any media company that wants to be successful here must provide the local content that people want, or it will not survive. In essence, content is driven by consumer demand, not by ownership. The two issues should not be confused. We should have more confidence in our culture and allow the consumer to choose.

On a separate note, although the restrictions governing ownership of different media could previously be justified with reference to the scarcity of available spectrum, the media have changed exponentially in the past decade, with the advance of new technology and communications. The provisions in the Bill should reflect that change and the different climate in which we now live and work.

Although the Government have decided to lift the restriction prohibiting a newspaper proprietor controlling more than a fifth of the national newspaper

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market from owning Channel 5, their decision not to disapply that restriction in the case of Channel 3 appears arbitrary and discriminatory. The argument advanced for the limitation by Kim Howells MP in another place was that it was necessary to retain the balance of different media viewpoints. What evidence do the Government have to justify the distinction between the role of Channel 5 and Channel 3? It has been suggested that Channel 3 is universally accessible and has the largest audience share of a commercial broadcaster. That may be the position this week or this month, but what will happen if Channel 5 too becomes universally accessible, as indeed it is likely to? What if Channel 5's audience share increases significantly? What action do the Government envisage taking in such circumstances?

That said, we are supportive of the Government's approach to "must carry", "must offer" and "must distribute" provisions that enable Ofcom to impose conditions requiring particular services to be carried on broadcasting networks that are used by a significant number of end-users as their principal means of receiving television. However, we are concerned by the introduction of a general duty to maintain plurality of providers. That is of particular concern to the newspaper industry, which is wholly united in its objection to the involvement of Ofcom in the newspaper merger regime.

Despite the Government's protestations to the contrary, Ofcom will inevitably have a role in determining newspaper content. That is because, as the Bill is drafted, Ofcom will be inextricably involved in the merger regime at several stages of the merger process on the issue of public interest considerations. How is it possible to judge public interest and thereby test plurality, without taking into account the key players, whose editorial and political stance will be known?

The duties of political impartiality, so integral to the broadcasting field, do not exist in the newspaper realm. Indeed, strong opinion is a mainstay of newspaper publishing. Given the highly subjective nature of the assessments that Ofcom will be required to make before determining its advice to the Secretary of State, is it not probable that its experience and, more importantly, its instincts in broadcasting will influence its advice on newspaper mergers?

I turn to the BBC. I shall set the scene by emphasising our support for the BBC. Any suggestion during the passage of the Bill through your Lordships' House that Her Majesty's Opposition are anti-BBC will be instantly refuted by me. The BBC belongs to us all; its future is the responsibility of all of us, and its relationship with all other broadcasters and viewers alike is intrinsic to the effectiveness and success of Ofcom. That effectiveness will be measured from day one, not 2006 or thereafter.

The UK broadcast media ecology must be kept in a delicate balance that satisfies the needs of public service and commercial elements. The pace of change in a paradoxical era of simultaneous media fragmentation and convergence is rapid and its future

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direction hard to forecast. Steering the right course and maintaining the balance is a subtle task and one that can be carried out only by a single, independent helmsman—Ofcom. The ecology is out of kilter, given the over-commercial, ratings-chasing approach of the BBC, a combined result of an extraordinarily generous licence fee and a weak advertising market. That is the source of much of the debate about and criticism of the BBC, which, unlike its rivals, operates in a virtually risk-free environment, allowing it, for example, to trial programmes on niche channels, build audiences for them and then promote them on mainstream channels. That is the stuff of dreams for the commercial players, who cannot compete on those terms.

If Ofcom is to act efficiently and fairly, it must be allowed to take an entirely holistic approach, unfettered and uncompromised by having a different set of rules and a different timetable for the public service broadcaster with, by far, the biggest market share. I cannot resist a quote from the Financial Times:

    "Not having the BBC fully under OFCOM is like having the Simpsons without Homer".

It has been suggested that Ofcom will have enough to cope with at the outset without the BBC fully on board. The Liberal Democrat MP, Nick Harvey, said that it would be a "huge gamble" to give it—an as yet unproven body—full responsibility for the BBC. That is saying that Ofcom may not be up to the job, but that it is fine to use the commercial sector as guinea pigs while Ofcom gets its act together. That is simply outrageous. The Government have said in response—and I quote Kim Howells MP—

    "the BBC does a pretty magnificent job in most respects, but there is no question but that there is room for debate".—[Official Report, Commons, 25/2/03; col. 217.]

The Government have entirely missed the point and in so doing invite and encourage animosity from all quarters, causing great damage to the industry and, most particularly, to the BBC.

We shall also be addressing the need to enable the Comptroller and Auditor General to have full value for money access rights to the BBC and thus to open it up to the same scrutiny on Parliament's behalf as all other bodies that are funded by tax. There is total consensus among members of the Commons Public Accounts Committee on this issue. This scrutiny would not impinge in any way upon the editorial independence of the BBC. What it would do is give some measure of accountability and transparency and that must be in the best interests of the BBC.

Extracts from the recommendations of the Independent Review Panel reporting in July 1999 on the future funding of the BBC, a panel chaired by Gavyn Davies, encapsulate our position. I quote:

    "The Government should amend the Royal Charter to give the National Audit Office inspection rights to carry out periodic financial audits of the BBC's accounts and its fair trading arrangements; and it should focus only on administrative efficiency and on proper financial management and accounting and not question policy objectives and programming issues and matters of editorial or artistic judgement".

I turn now to radio. This is an industry that has achieved fantastic growth in the past 10 years and is a world leader in digital radio. We need to show our

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pride in this industry and to give it room to consolidate and grow, particularly bearing in mind that it has a tough competitor in the BBC. We are concerned that certain provisions in the Bill that micro manage the industry are unnecessary and restrictive. Ofcom should allow the industry to concentrate on what listeners actually want—not what politicians and Ofcom might think they want. We believe that the focus should be on outputs, not inputs—namely, what the listeners hear—and not where, how and by whom it is produced, let alone where those producers live.

While commercial radio understands the importance of localness—indeed, the entire industry has been built on that—it does not need regulation to ensure that localness is retained or what this should mean. The Bill also introduces new restrictions on the development of radio where previously there were none, including a limit on ownership of digital multiplexes in overlapping areas. Similarly, the ownership regime for digital radio licences is more restrictive than for analogue. Surely there must be some mistake.

While we welcome the Government's moves so far to relax the restrictions on the involvement of religious bodies or individuals in broadcasting, the Bill retains a complete ban on religious organisations holding national analogue radio and television licences and multiplex licences. We believe that this is a clear case of discrimination against people holding a religious office in local churches or religious charities and we shall seek to reverse it.

There are many more issues in the Bill which I fear time does not allow me to address today, including for example, spectrum use and conditions and appeals procedures for the provision of networks and services. In addition to the Internet, there are two issues of real significance which, while not captured by the Bill, are central to the development of communications. The first is broadband; an extensive debate in another place highlighted the crucial importance of balancing the need for investment in a competitive market. Investment is vital to ensure that universal access is achieved as expeditiously as possible. This technology will facilitate greater accessibility and social inclusion and must be encouraged.

The second issue is analogue switch off. We believe that it is incumbent upon the Government to act now, as a matter of priority, to raise public awareness of the timetable and implications of digital switch. It is not reasonable to expect industry, which is striving to remain at the forefront of digital technology worldwide, to continue to invest in the future, without proactive support, as opposed to words, from Government.

The communications industry is flagship to our nation and deserves our serious attention. In order to assist Ofcom in carrying out its duties, we need to ensure that the Bill is sufficiently robust to endure change while flexible and deregulatory to allow all our communications industries to thrive for the benefit of us all.

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3.45 p.m.

Lord McNally: My Lords, although approaching this Bill in the same constructive manner as I heard from the noble Baroness, Lady Buscombe, having heard the explanations given by the Minister on how the public interest will be protected by this Bill, I think that I shall advise my three children to become communications lawyers. Ofcom will certainly need them in abundance to match the serried ranks ranged against them when it tries to enforce the provisions of the Bill. But the first thing to say about the Bill is that anyone who has been involved in it during the past 18 months will have gone neither hungry nor thirsty.

The extent of the lobbying and consultation is both a tribute to the Government in the way that they have approached this legislation and an indication of public interest and concern about its final shape and outcome. The very size and complexity of the Bill is the give away about the importance of communications. The communications industries cannot be regulated like other parts of our economy because they occupy a different place in the scheme within our society. They determine how we speak to each other and to the world. They underpin our culture, our democracy and our regional diversity. That is why in addition to enterprise and competition in these industries, we insist on quality, diversity and choice.

The concept of a super-regulator for the converging communications technologies was conceived at the height of the boom. To some extent, this legislation creates a structure for a convergence which has not yet happened. During our examination of this legislation we shall look again at what has been described as the "techie" end of the Bill, and look in particular at such matters as the roll out of broadband, competition in the telecom sector and the effective use of spectrum. In this scrutiny, I shall be aided by my noble friend Lord Razzall on competition matters and, like the noble Baroness, Lady Blackstone, I have the commonsense to leave the technical issues to someone else—namely, my noble friend Lord Avebury who, as noble Lords know, is an engineer and therefore well acquainted with wires, valves, crystals and the like.

On matters of cultural and regional content, domestic music and drama production, the distinctive roles of Welsh language and Scots Gaelic, as well as the need to recognise and protect the rights of the citizen, I shall be supported, as the speakers list demonstrates, by a positive galaxy of experience and talent from these Benches.

Today, I want to make one clear declaration of intent on behalf of my party and to flag up a number of areas in which we shall seek fundamental changes in the Bill during its passage through the House. That declaration is clear and simple: it is the intention of my party that there should emerge from this legislation a strong, independent and well-funded BBC, which will be the iron pole around which we shall construct our commitment to public service broadcasting. That does not mean that we shall not sometimes criticise the BBC or urge on it reforms which provide for more transparency and greater accountability. We shall do both.

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But we shall defend the BBC for what it is—a great broadcasting organisation with a name recognised throughout the world as synonymous with accuracy, quality and trust—and we shall resist and oppose any proposals which weaken or undermine that position. I noted what the noble Baroness, Lady Buscombe, said about the position of the Official Opposition on these matters. We shall see where our respective parties stand when push comes to shove in defending the integrity of the BBC.

As to our overall approach, my honourable friend in another place, Nick Harvey, gave a broad welcome to the overall intentions of the Bill. As in other parts of the economy, we welcome attempts to lift the burden of bureaucracy from entrepreneurs and to regulate with a lighter touch.

The House must ask itself whether the Bill as it stands gets the balance right between giving entrepreneurs freedom to exploit the market for personal and shareholder benefit and the responsibility of Parliament and government to protect the wider interests of the citizen.

I am sure that the name Mr Rupert Murdoch will come up from time to time in our discussions. I am not sure as yet that the Bill, unamended, reflects the same burning ministerial desire to protect the public interest as Mr Murdoch shows when promoting his shareholder interest. Indeed, there is an almost blind faith on the part of Ministers that deregulation to promote competitiveness and investment will produce the most dynamic and competitive communications industry in the world. Maybe so—or it may result in concentrations of power in the hands of multi-media global conglomerates which will pose a threat to programme quality, cultural diversity, regional identity and the effective workings of our democracy.

I have had the pleasure on a number of occasions of listening to Dr Kim Howells, the Minister who took—some would say steamrollered—the Bill through the Committee stage in another place. On the scale of Pauline conversions, his must come fairly near the top. His faith in the market now seems total and, like many late converts, he can be disturbingly belligerent in his commitment to the new faith.

But in fact he reflects only in its more brutalist form a more general weakening of commitment to wider public interest in favour of market-driven solutions, which is now found inside No. 10, in the DTI and in the DCMS and is reflected in the Bill.

Take, for interest, the attitude towards the fate of ITV Channel 3. There is an almost naive belief, quite unsubstantiated by fact, that by allowing American companies to buy Channel 3 we will, according to Tessa Jowell,

    "end up with the best of both worlds: their money and our standards".

I am tempted to remind the House of when George Bernard Shaw met Jean Harlow and it was suggested that their union would produce the perfect child, with her beauty and his intellect. "But", said the great man, "what if he ends up with my looks and her brains". It is

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a legitimate question. AOL-Time Warner, Disney and others would be interested in making money from us and working to their standards.

The British-born but American-based expert on communications, Professor Richard Tracey, gave a warning in an essay written for the Joseph Rowntree Foundation and the Campaign for Quality Television. He said:

    "The whole story of the US media since 1981 has not just been the elimination of costly high-quality programming—an essential part of public service broadcasting—but the progressive elimination of any programmes which do not maximise profits".

"Why", as Nye Bevan memorably said, "look in the crystal ball when you can read the book?" I challenge Ministers to read Professor Tracey's essay and then to tell the House why there is such a determined rush headlong into American ownership of ITV, without any reciprocity on the part of the United States and without, as the Puttnam committee recommended, giving Ofcom the opportunity to examine the merits of the case. It is a pig in a poke solution and should be resisted.

The Liberal Democrat study group into broadcasting advocated that ITV should be consolidated under single ownership. We believe that ITN should be wholly owned by the channel so that the ITV news provider can be sustained and nourished by its owner in the same way as the BBC and Sky nourish their news channels. When that process is over and Ofcom has had an opportunity to study the merits of any further opening up of the market, then and only then should other changes be contemplated.

As for Channel 5 and its possible purchase by Mr Murdoch under the weakening of cross-media rules, I simply ask Ministers committed to a dynamic and competitive communications industry the same question as the one posed by Mr Chris Mullin, the chairman of the Home Affairs Select Committee in another place, who said:

    "[Would not] removing the cross-media ownership rules from Channel Five enable a newspaper proprietor who already owns, say, four national newspapers and one television channel to purchase Channel Five and use it to subvert ITV and Channel 4, in the same way that he has subverted much of the rest of Fleet Street?".

It would be a concentration of power unacceptable in any industry at any time, and certainly unacceptable in the communications industries in a democracy. The House should insist on an amendment which prevents such a gross distortion of the market.

The so-called ratchet solution is no solution at all. Ministers seem unwilling to comprehend that it is the concentration of media power which should be resisted in a free society. Simply attempting to tie down such power with post facto service requirements ignores the real threat that the concentration of ownership presents to our society.

As regards both the print media and radio, the Bill again promotes relaxation of ownership rules in order to promote competition and investment. We should examine these proposals very carefully in Committee.

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I was recently invited to a meeting of the All-Party Media Group to meet Mr Ralph Bernard, the chief executive of the GWR Group. The invitation told me that the company operates Classic FM, Core and Planet Rock, 32 local radio stations, the commercial national digital radio multiplex company and 16 digital radio licences. That, I remind the House, is before the further consolidation allowed by the Bill.

I have no particular axe to grind about GWR, which runs some excellent stations, but it all seems to be a long way from local radio, with the local news, local music and local content we were once promised by the commercial sector. Now we have news hubs, central programming and what has been described as the "blanding" of content to dilute the local distinctiveness of local radio. I hope that we will have time in Committee for a thorough examination of these issues, including proper protection and promotion of access radio, an issue on which my noble friend Lady Walmsley will speak further.

As regards the print media, as well as looking at the cross-media ownership implications of the Bill I hope that we will be able to give Ofcom the power to run its self-regulation accreditation slide rule over the Press Complaints Commission. The evidence of the newspaper owners to the Puttnam committee was churlish and defensive. The reaction of our newspapers—the editors of the Guardian and the Independent being notable exceptions—to the modest examination of their record by the DCMS Select Committee under Mr Gerald Kaufman was what I can only describe as the Violet Elizabeth Bott reaction—they scweemed and they scweemed and they scweemed.

Yet the print media, local and national, is part of convergence. I recently heard the editor of the Guardian say that the paper now has more readers on the Internet than buy the printed version. Among younger people that trend is likely to continue. So there is no doubt that the print media falls within the context of the Bill.

Indeed, the newspaper organisations seem very willing to take the benefits of conversion where it suits them. If they are to have the benefits of self-regulation, then Parliament and the public have the right to insist that such self-regulation is conducted in the public interest, to the highest standards and with genuine transparency. I shall bring forward an amendment to bring this about and enable the House to have a thorough debate in Committee on the workings of the Press Complaints Commission.

This is a vast Bill and we shall need a long time in Committee to do it justice. We shall have to examine in detail issues such as "must offer/must carry", religious broadcasting, children's programming, media literacy, protecting the rights of disability groups, protecting content quality, protecting regional distinctiveness and genuine independent production and creativity in radio and television for both music and the spoken word. All these causes have champions on these Benches and across the House. These and the technical and competition issues to which I referred earlier must be thoroughly scrutinised in Committee.

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When doing so, I hope that the House will keep in mind the warning of the distinguished American broadcaster, Ted Koppel, when speaking of the American experience. He said:

    "We are ripping down those institutions, large and small, within which democratic culture was intended to be undertaken. Institutions that once destroyed, amidst the whimsical destructiveness of the market, will be extraordinarily difficult to reconstitute".

The charge against Ministers and against this Bill from these Benches is that, unamended, the Bill puts too much faith in the whimsical destructiveness of the market and pays too little attention to the protection of the interests of the citizen and the wider cultural and democratic responsibilities of the industries involved.

Recently I visited Swansea, the birthplace of Dylan Thomas, whose most famous work, "Under Milk Wood", was a play for voices commissioned by the BBC. Running through my head in relation to the Bill are the lines Thomas wrote:

    "Do not go gentle into that good night, . . .

Rage, rage against the dying of the light".

I believe very strongly that, without amendment, the Bill does mark the dying of the light for a communications ecology which, for all its faults, is still the envy of the world. We still have quality, diversity and choice. We still have public service broadcasters who seek to educate and inform as well as to entertain.

That is what the legislators of the 20th century bequeathed us. The Conservative Party in particular can take pride in what Conservative governments have done. It was a Conservative government which founded the BBC as a public body protected by a licence fee and independent governors from day to day government interference. It was a Conservative government which established commercial television and radio with strong local, regional, news and public service commitments, and the name of Lord Whitelaw will always be associated with Channel 4. Indeed, the noble Baroness, Lady Thatcher, in all her pomp, never contemplated the abeyance to the market contemplated in this Bill.

It is because Ted Koppel is right that institutions once destroyed will be extraordinarily difficult to reconstitute that we shall fight hard to change the Bill. We will not rage against the passing of the light, but we shall argue with passion and conviction so as to preserve the bright beacons of public service broadcasting and the diverse and pluralistic media which is our legacy from the past, and which it is now the responsibility of this House to safeguard for the future. In that task, we shall be looking for support from all parts of the House.

4.2 p.m.

The Lord Bishop of Manchester: My Lords, in some respects this is a courageous Bill and the Government deserve praise for trying to make our unique public service broadcasting ethos compatible with commercial interests and deregulation. But as it stands, with the Bill's central thrust of economic policy

25 Mar 2003 : Column 670

as the prime motivator, public service broadcasting is a secondary concern. One can understand why, but for all the Government's good intentions, the Bill's effect, by strengthening rather than containing market forces, could be to put public service broadcasting on the margins.

The noble Lord, Lord McNally, has already quoted the phrase of the Secretary of State at the Department for Culture, Media and Sport: "their money, our standards". As he indicated, the Government's hope that they can promote high-quality television through market forces and "light touch" regulation is not helped by the American experience: the progressive elimination of good programmes because they do not boost ratings or maximise profits; an increase in programmes that hurt, humiliate and appeal to greed, as well as stifle diversity of view and impartiality of reporting. That is why a strong and effective codification of the public service remit, both for the BBC and the independent broadcasting sectors, is so important.

But are the Bill's provisions strong enough? A review of public service broadcasting is proposed only once every five years. The ITC recommended that it should be annual to be effective. I am concerned, too, about the "taken together" basis which allows a channel to be excused its obligation to an area of its public service remit if another channel has produced an above-average output. The effect could be to let certain channels off the hook in terms of, say, the religious remit. Another clause permits a public service licensee to be excused public service broadcasting commitments in unfavourable economic circumstances.

On these Benches, we should like to see specific obligations written into the legislation in such a way that minimum requirements have to be kept, for example, for art, science, religion and children's programmes, not only on the BBC but also on each individual commercial channel. It would be a tragedy if such key aspects of our cultural heritage and future were to be lost from the main free-to-air channels or pushed to the edges.

Earlier government proposals would have diluted specific legislation on religion. The White Paper placed it in the third tier as a part of education, thus endangering broadcast worship and overtly spiritual presentations of faith, so I am glad that religion has now been, as it were, upgraded to sit alongside science as a subject in its own right.

However, there remains a vagueness of definition. Broadcasters are to provide a, "suitable quantity of religion". A similar phraseology is used for regional content, which has to be of, "appropriate range and proportion". How does one measure those things? How is Ofcom to hold broadcasters to account if almost anything can be explained away as suitable or appropriate, unless there is to be endless wrangling and possibly litigation? The public service provisions will need to be more specific and more robust if the Government are to succeed in their finely balanced task of maintaining and strengthening these elements of our culture alongside increased commercial competition through deregulation.

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Here I come to a vexed matter. On these Benches we have welcomed the relaxation of regulations for licence ownership by religious organisations to include digital local and national sound programme licences and digital local TV licences, but we continue to believe that that does not go far enough. I share the concerns forcefully expressed by the noble Baroness, Lady Buscombe, that religious groups and their officers cannot own licences for national AM/FM radio frequencies, a nation-wide analogue TV channel, or more than 5 per cent of a multiplex from which the new radio and TV digital programmes are broadcast.

There is a blanket disqualification on religious organisations of all faiths from even being able to apply. I suggest that that is an arbitrary prohibition, one which has inhibited the development of an independent Christian broadcasting industry. The Government's arguments for the prohibition have now settled solely on spectrum scarcity, but they have used other arguments which, for a government that have often encouraged faith communities in other spheres, suggest a strangely ambivalent attitude towards religion.

In the White Paper the Government claimed that religious ownership requires special treatment because,

    "religious content has a capacity to offend".

As a letter from the DCMS put it last month,

    "if we were drafting the White Paper today, we would not use the same language".

Quite so, for if anything has the capacity to offend on British television, it is the level of gratuitous sex and violence. I hope the commitment to toughen powers for content regulation properly addresses that, although I have to say that there has been a backing-off from what used to be termed "taste and decency" with phrases such as "generally accepted standards". How are those standards to be set, and ought there to be an appeals procedure over Ofcom decisions rather than only judicial review? Certainly the content board must have strong powers to protect not only the adult citizen, but also children from hearing and seeing harmful and offensive material.

No sooner had the DCMS distanced itself from the offensiveness of religion as the reason for its uniquely stringent regulations and exclusions over religious ownership than it was quoted in the Daily Telegraph as saying that the prohibition was,

    "to avoid giving one religion an unfair advantage".

That sounds like the kind of hot-cross-bun political correctness that is based on little or no understanding of any faiths. My experience of working with other faith leaders indicates that they would like the Christian faith to be more strongly owned by this country.

But perhaps the Government are using the pluralist argument as a cloak for an underlying secular agenda. For how does all this square with the fact that, in the privacy of their homes, 72 per cent of the population noted their religion as "Christian" in the census. Of course they are not all in church; but almost all of those 42 million have a radio and a television. Incidentally,

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the British Social Attitudes Survey had predicted that 40 per cent would put down "no religion". In fact, only 15 per cent—8 million—did so. An editorial in the Guardian on this matter said:

    "The census figures are reminders that religion in general, and the church in particular, are not marginal anachronisms doomed to terminal decline in modern society. On the contrary they seem to be remarkably resilient and enduring parts of the social order".

From these Benches, we seek to ensure that that remarkably resilient and enduring part of the social order has its rightful place in this Bill. We will press for the strengthening of protections for public service broadcasting—and especially that part of its remit that reflects the strength and diversity of the nation's cultural and religious richness. We will press for moves to strengthen standards of taste and decency; and we will press for the remaining disqualifications on religious ownership to be lifted.

4.11 p.m.

Lord Puttnam: My Lords, the Government quite rightly have very high ambitions for this Bill. We have just heard these ably set out by my noble friend the Minister in her introduction.

When introducing the Second Reading debate in another place, my right honourable friend the Secretary of State for Culture, Media and Sport said:

    "The Bill deals with the means by which our society speaks to itself and, as it were, hears the echo. It is the means by which we talk to the world. It is a shaper of our culture, our identity and our values. For the Government, therefore, the Bill is not simply a device to regulate or deregulate an industry; it plays a vital role in every one of our wider aspirations for Britain. It will give consumers choice—the variety that they demand and deserve—and will give citizens the information that they need".

The Bill, the Secretary of State went on to say, would prepare the UK for "a digital era" and,

    "preserve what has always been our proudest boast: that we have the best free broadcast media in the world".—[Official Report, Commons, 3/12/02; cols. 782-783.]

Those ambitions were shared in every respect by those Members of your Lordships' House who sat on the Joint Scrutiny Committee—which makes it all the more regrettable that they are so badly let down by two significant, possibly even fatal, flaws at the centre of the Bill.

To paint a balanced picture, overall the Government have listened. They have amended and improved the Bill, in some respects almost beyond recognition. But there remain a number of minor, and in some cases not so minor, improvements for which we grizzled veterans of the Joint Scrutiny Committee will continue to press. These range from complex issues, such as the appropriate use of secondary legislation, to the plain daft, as in the case of the proposal to allow advertising agencies to become major media owners.

At Committee stage, I, and others, will wish to go into some detail regarding the future relationship between the BBC and Ofcom. I shall certainly be nagging away regarding the provision of training for an industry that is so reliant on highly skilled people. I also look forward, like the noble Lord, Lord McNally,

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to what I anticipate will be a lively debate on the future of the Press Complaints Commission. It is certain that your Lordships will be hearing more on this and many other issues as the debate progresses.

In the short time available to me, perhaps I may focus on the two "fatal flaws" that I mentioned. Surely, if this legislation has any one overriding objective, it is to put in place a new and highly effective regulatory body, Ofcom, with the statutory reach and the resources to guide a volatile, complicated and incredibly "noisy" communications industry through the next decade of its technology fuelled development.

When taking evidence, it became overwhelmingly apparent to the Joint Scrutiny Committee that the recent history of regulation in this country was, at best, patchy. As to what had gone wrong, the arguments were many and varied, but one consistent theme emerged: regulation in Britain had always suffered, like so much else in public life, from an insufficiency of resource, in terms of both Treasury and troops.

Speaking of troops, it is my sincerest hope that the Ofcom board will not be deflected from seeking out and hiring the very best people that money can buy. If recent history has taught us one thing, it is that entanglement with the big battalions of any "dominant incumbent" has, for regulators in most sectors, proved an unequal struggle—in some cases laughably unequal. I can only hope that the quality of the Ofcom team, led by my noble friend Lord Currie, will, over time, find itself more than a match for the scale and complexity of the challenge.

Unless Ofcom is more than adequately resourced, with a clear underpinning from the public purse, it frankly begs the question: why bother with the Bill in the first place? I find it utterly baffling that the funding of Ofcom's competition powers failed to receive any attention whatever when the Bill was in Standing Committee in another place.

The second fundamental flaw in the Bill results from a confusion of aims and means. The achievement of "plurality and diversity" is not just the stated aim of this particular government; it must be a core ambition of any plural democracy. It tends not to happen by accident and, when it does occur, it can, and to my mind should, be supported by intelligent and sensitive regulation.

What is absolutely certain is that plurality and diversity are not a natural by-product of unregulated market forces. That is particularly true of a market in which the "cost of entry" has become all but entirely prohibitive. For that reason, I shall be opposing in every respect the provision that would allow Channel 5, or any terrestrial channel, to be wholly or partially owned by any large newspaper group. This is the issue of so-called "cross-media ownership".

The existing regulations, thoughtfully inserted into the 1990 Act by the then Conservative government, and avidly supported by my own party, have up until now sensibly prohibited this form of market dominance.

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Where did this unwelcome provision come from? Who on earth sought it? Try as we might, the Joint Scrutiny Committee could never get any sensible answer beyond an unattractive repetition of free market dogma and the mumbled plea that "poor little under-capitalised Five"! was too small to worry about. Under-capitalised? Its principal shareholder is five times the size of Granada and Carlton put together.

Most frustrating of all to the committee was an almost wilful refusal on the part of the Government to study or discuss the myriad competitive implications of well-orchestrated "cross-platform" promotion.

Perhaps I may set out one possible example of what that could come to mean. Should News Corp. or any of its associates, under the proposed provision, acquire, say, 35 per cent of Channel 5, its capacity to cross-promote that channel using its dominant satellite position and its newspaper holding would be entirely without precedent. The bleat that "Five" has only 6.4 per cent of the market would very quickly become history, as "Super Soar-away Five" dug deep into the market share of Channels 3 and 4.

Both of those channels, constrained, as they might see it, by significant public service obligations, would complain bitterly at their inability to compete on equal terms—at which, government, on the advice of Ofcom, would almost certainly release Channel 3 from at least some of its obligations.

Goodbye to 40 years of commitment to regional programming, and almost certainly a good deal more besides. Another uproar would quickly be inevitable; and to placate the market a by now damaged Channel 4 would be required to take on a slew of additional public service obligations—underwritten, in all probability, by top-slicing the BBC's licence fee. So, here we have the entire ecology of the Secretary of State's,

    "best free broadcast media in the world",

turned on its head; and for what? To allow Britain's most powerful media groups the opportunity to become that much more powerful?

The very notion that you stimulate plurality and diversity through the encouragement of market dominance is, frankly, risible. Recent history points only one way—towards the inevitable consolidation of conformity and power.

Your Lordships should not simply take my word for it, but should listen to the words of the noble Lord, Lord Birt. In his excellent and prescient New Statesman lecture, delivered in July 1999, shortly before he left the BBC, he said of regulation in the digital age:

    "Let me say, with all the force I can muster, that now is the time to act and to apply, with rigour, clear regulatory principals for the digital age. It will be even more difficult later than it is now to dislodge those who will benefit massively from their grip on the gateway . . . Let me suggest what Governments should do; let no group, in any distribution system, both control the gateway and be at the same time a substantial provider of services".

Those were wise words then and they are wise words now, and I look forward to hearing more from the noble Lord in a moment.

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Like the noble Lord, Lord Birt, my noble friend Lord Bragg and many others in this House, I have fought all my life for a media environment in film, television and the press that we can all be truly proud of. Like most of us in this Chamber, I am a fortunate inheritor of a remarkably successful public broadcasting system. As the noble Lord, Lord McNally, said, the Conservative Party, to its great credit, can lay far and away the best claim to having nurtured that system. I hope that the Conservative Party remembers that as the debate progresses through the House.

I have long felt that the most valuable service that we can fulfil for future generations is to ensure that the finest qualities of our analogue age are shepherded intact into their digital future. That can be achieved only by offering the best possible example in our programming output, supported by the best and most sensitive regulation possible. That is why the Bill is so overwhelmingly important.

The Bill has so much to commend it. I beg the Government to think again on the two crucial issues that I have attempted to highlight. Should they decide not to listen, only one of two things will happen. Either the House will, in its wisdom, require the Government to think again, or the law of unintended consequences will bear down and never again will any Secretary of State be able to celebrate Britain as the home of the best free broadcast media in the world.

4.22 p.m.

Lord Birt: My Lords, I declare an interest as an adviser to McKinsey's global media practice, and as chairman of Lynx Capital Ventures, which invests in the communications sector.

We are moving through an age of explosive possibility, driven by the extraordinary, still developing and unstoppable power of digital technology, which does not use valves, transistors or even crystals. This new technology will have a profound impact on both our capacity to create wealth and our national culture.

Many media consumers, once largely passive, are now intensively active, involved and mobile. They face expanding choice from a multiplicity of services from home and abroad, increasing opportunity to watch what they want when they want; to interact, to chat or to play games with one another online; to communicate energetically by a variety of means; or to use the magical power of the Internet to uncover information, to find their own personal needle in a worldwide haystack. Increasingly, consumers will be able to do all those things, on whatever multipurpose device they favour, whether at home, at work, or out and about around the globe. The world is at their fingertips, just a click away.

The challenges for the legislator and regulator in this converging universe of technology, media and telecommunications are to foster the greatest possible diversity of choice—real choice for the consumer; to encourage a plurality of providers of content and services of all kinds; to facilitate ease of use and

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simplicity of access for users; and, lastly, to ensure that there is effective competition to drive innovation, quality and efficiency at every link of the value chain, from consumer to producer. For the regulator, it is the consumer—the user, the viewer, the listener, the citizen—that needs to be centre stage, and not, important though they are, the leviathans and Goliaths who most press for our attention.

There are legion issues for your Lordships to address, but I shall focus on three that may receive insufficient attention. First, a number of powerful players have already won a dominant position in the digital universe, some through admirable foresightedness and boldness, at a whole series of new gateways—on the desktop, or providing new network services via satellite or wire-based systems. The task of the regulator will be to ensure that competing service providers can always reach the consumer through these gateways on equitable and non-discriminatory terms, whether as suppliers of software, of new television networks, or of online services.

Secondly, we need to ensure that the customer interface is designed in the user's interest. In digital television, that means the electronic programme guide. Just as we have more than one television magazine guide, and not only the Radio Times, so we should encourage competing electronic guides. That would enable consumers readily to uncover what is available in a genre of their choice—their selection of movie, sports event or science programme, for instance, on any channel. We cannot do that now, but we should be able to.

Improving the functionality of the electronic programme guide in this way is likely to be resisted as long as some systems are highly vertically integrated, bundling access, guide, and service provision from a single owner. In the short term, the regulator needs to use its powers to open up the system to competition at every point. In the long term, the drive of regulation must surely be, subject to investors first receiving a proper reward for the real risks that they have taken, to unbundle ownership and to have different owners as well as meaningful competition at each point in the value chain.

Thirdly, the UK has been a proud pioneer in broadcasting, and in digital television and radio in particular, but we have made a sluggish start as a nation in achieving broadband connectivity. We seem now, at last, to have turned the corner, but our inauspicious broadband beginnings seem to have been a material failure of regulation, from which Ofcom needs to learn. A key challenge for the new regulator must be to ensure, if we are to maintain a national competitive advantage, that there is sufficient competition to drive infrastructure, penetration and innovation, and to enhance functionality in the home and at the desktop.

If Ofcom can get a grip on those issues and create a level playing field for competition, we will have a thriving economically vibrant, commercial communications sector in the UK. That will not be enough, however. If we want our unique national culture to flourish; if we want to maintain the vitality of original British

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expression in every cultural domain; if we want an informed debate on crucial matters of national significance; if we want widespread exposure to illuminating and thought-provoking programmes which extend understanding of nature, science, history or the arts, we will need to maintain, in a very different era, the tradition of public service broadcasting fostered by successive governments in this country more successfully than in any other.

As we move towards a period of spectrum abundance, with none of the privileged access to the consumer that characterised the analogue age, the blunt if uncomfortable likelihood is that we are not many years away from a world of such intense competition that the public service light will soon be extinguished in commercial broadcasting in the UK. That will be a sad day—for the ITA's, then the IBA's, then the ITC's nurturing of public service in commercial broadcasting has been a triumph of regulation admired the world over. We should delay the moment for as long as we can, fostering original British production in the commercial sector for as long as possible, but we should not kid ourselves that the moment will not one day come.

Maintaining the British public service tradition in the longer term will fall in part to Channel 4, but overwhelmingly to the BBC. The key issues for the next BBC Charter are what the role and scope of the corporation should be in this very different environment; and, equally important, how the BBC should be regulated to ensure that it fulfils its charter remit. Those fundamental and critical questions are best settled in the charter review process that is about to begin, and not as part of the consideration of this Bill—the prime focus of which is, and should be, the commercial sector.

In conclusion, the UK has an unequalled if not unblemished record in regulating the communications sector. This well-considered Bill in the generality chimes with new needs and is to be welcomed. It should enable the UK to optimise the opportunity of the new technologies, to reap the digital dividend. It gives Ofcom clear and tough powers to address the issues that I have identified. But the new regulator will need to be bold and courageous to use those powers in the consumer interest—for if and when it does, Ofcom will certainly rattle some cages. The noble Lord, Lord Currie, should convey to his colleagues not only our hopes, but our good wishes and support for the awesome tasks that lie ahead.

4.32 p.m.

Lord Wakeham: My Lords, I support the Bill, but I do so with considerable reservations—and even before the noble Lord, Lord McNally, has had a go at it. I suspect that we shall have some very lively exchanges in the latter stages of the Bill.

This is the first time that I have risen to take part in a debate on the media without having to declare an interest. As noble Lords will know, I was for seven years the chairman of the Press Complaints

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Commission. During my time, I sought to encourage press self-regulation and press freedom—which in my view is fundamental to a free society. I did my best to see that it worked in the interests of ordinary people. Self-regulation is like any aspect of freedom: it has rough edges and it is not perfect. But it does work and it has no doubt raised standards of reporting over the years. My concern with this massively important Bill is that contained within it are all the ingredients necessary to undermine a free press, self-regulation and the quick, common-sense resolution of complaints. The damage will be, in my view, to ordinary people who at present complain to the PCC—and that is 95 per cent of the complaints that I had over those seven years. The rich, the famous and the crooks will be able to look after themselves.

There is a great deal in the Bill that I fully support. I think that it is sensible from the point of view of the public as well as of the industry for there to be one regulator for radio, television and communications. I instinctively support the deregulatory aspects of the Bill. In an age in which communications industries are developing and evolving day by day, it is quite right that we should be cutting away at the red tape that stifles innovation rather than adding to it.

I wish that I was more reassured by Ministers' statements that there is no way that Ofcom will have a significant role in press freedom or in the editorial content of newspapers. Although I am quite sure that they mean it, the problem, it seems to me, is that Ofcom will be responsible for advising on newspaper mergers. Its remit, in that case, is too wide. It is bound eventually to lead Ofcom into the territory of press regulation, which is precisely where it should not be.

First, I am concerned about the extent of Ofcom's responsibility on the issue of mergers themselves, which will hit regional and local newspapers—the lifeblood of all local communities—particularly hard. The vast majority of existing newspaper companies, large and small, seeking to make even the most modest of newspaper purchases are likely to be caught by the criteria in the Bill for the exceptional public interest test. That will give the Secretary of State substantial powers to refer the vast majority of newspaper acquisitions to the Competition Commission for scrutiny, and will also mean public consultation, with the uncertainty and problems that that brings. My fear is that that will have a profound impact among local newspaper companies, which need a substantial market share to survive and compete. That in turn will affect their economic vibrancy. The loser, over time, will of course be the local communities and ordinary readers throughout the country. The Government should look at that again. Again, I do not believe that the Government intend that that should happen, but that is what I fear in practice will happen.

Secondly, in discharging its functions relating to newspaper mergers, Ofcom will inevitably be dragged into the whole area of editorial content and the work of the PCC. For, in advising about a range of issues such as fairness, accuracy and opportunity to reply, it will of necessity need to form a view about a newspaper or magazine publisher's record in implementing the

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Editor's Code. That would inevitably place Ofcom as a statutory overseer of the PCC and self-regulation. That is statutory press control by the back door, something against which the Government—like the previous government of whom I was a member—have quite rightly set themselves.

Worse still, there is I think a danger that someone will try to use the courts, via the Human Rights Act—which has profound implications for public authorities such as Ofcom—to drag the print media within the scope of that Act. The courts—which have rightly fought shy of using the Act as a backdoor privacy law, and all credit to them for that—will be back in an arena in which they do not wish to be. The whole business of dispute resolution by the PCC, and the common-sense manner in which it administers the code, both to the advantage of ordinary people, will be under threat yet again. It may take some time for that threat to develop; it may happen more quickly; but unless something is done to ensure Ofcom has no role whatever in newspaper merger matters, develop it surely will, for the Bill puts the entire apparatus in place.

I have never argued that self-regulation is perfect, but I am greatly concerned that this good Bill will have consequences that I do not believe the Government want. My profound interest in this matter is—as it has been all along—to ensure that where newspapers and magazines are concerned, ordinary people who have a grievance will have some effective, non-legal and free redress. They have it at the moment. Although it is not perfect, it is far preferable to any of the alternatives. The Bill could end up by damaging self-regulation, and that must not happen. I therefore urge the Government to look again at that part of what I think is a very good Bill.

4.39 p.m.

Lord Avebury: My Lords, this enormous Moab of a Bill is, in fact, several Bills rolled into one. I intend to concentrate, as my noble friend Lord McNally said, solely on Part 2 which is concerned with network services and the radio spectrum. In doing so, I disclaim any technical expertise my noble friend attributed to me. He rather gave the game away when he referred to valves, wires and crystals, because those were the most advanced technologies when I was learning my engineering, some 60 years ago.

That part of the Bill covers every electronic means of disseminating information, including the Internet, local area networks, wide area networks, cable, radio and television. One might imagine, considering the extensive consultations which have taken place on the Bill, referred to by every noble Lord who has spoken so far, and the wide discussions throughout Europe on the four directives which are the basis of the legislation, that there would have been very little to say by the time it reached us. That, evidently, is not the case, from the speeches we have heard so far and given that 51 noble Lords are taking part in the debate. There seem to be a few matters requiring your Lordships' attention in this part of the Bill in particular.

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First, there is the Government's change of policy on the "must carry" provisions, which have been referred to briefly. In the draft Bill, these applied to both cable and satellite, but now they extend only to cable. What is termed a general condition under Clause 42, including the "must carry" condition, is no such thing. Under Clause 43(2)(b), it can be applied only to a provider of a network or a service of a particular description. Although no indication is given either on the face of the Bill or in the explanatory notes of how this discrimination is to be exercised, we understand that the "must carry" condition is not to apply to Sky, thus imposing a competitive disadvantage on cable.

NTL does not object to the list of services it is obliged to carry under Clause 61, but it fears the power that Ofcom is given to add to the list, pointing out that every additional channel it is required to carry means half a million fewer broadband connections. Therefore, the provision could conflict with the Government's declared policy of wanting to roll out broadband to every consumer in the country.

NTL also says that the adoption of proprietary technical standards by Sky for its subtitling and audio description services imposes additional costs on it, and it would like Ofcom to have a duty to promote the use of common standards in this area. Apparently, the promotion of common standards in general was not an objective of the EC directives, but that does not prevent us from considering it here. I ask the Government to think about incorporating into the Bill some power for Ofcom to promote standards in general, and in this area in particular, to benefit the cable industry and equalise competition between cable and satellite.

Sky was proposing to charge the BBC 85 million for encryption and other services over the next five years, for the privilege of transmitting its programmes through Sky decoders. The BBC therefore decided not to renew the contract when it expires in May 2003. Instead, it will spend 40 million of the savings on buying additional satellite transponder capacity, so that all the regional variations of BBC1 are available on satellite, as they are on cable. It is moving to a different satellite operated by Astra, which has the additional advantage of a footprint aimed closely at the UK, so that overspill of rights to neighbouring countries of their free-to-view services will be relatively small. It also plans to make all regional and national services available to terrestrial digital viewers in all parts of the country.

The BBC is the first to move to unencrypted broadcasting in the UK, although many public service broadcasters have done so in other European countries. The way is now open for other PSBs to follow their lead when their contracts with Sky expire. Theoretically, viewers could buy a satellite box and a dish and receive dozens of programmes, including all the BBC's free-to-view channels, without paying a further subscription. That would be of particular benefit to viewers in areas not covered by Freeview, in which 25 per cent of the population live. To be able to do that, the BBC still has one requirement to make its programmes easily accessible to viewers. Sky's

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electronic programme guide, which is like a combined Radio Times and channel selector, needs to be modified so that viewers can select which national or regional version of BBC1 and BBC2 they want to appear when they press 101 or 102 on the guide.

The current EPG regulation, which is over five years old, requires "due prominence" to be given to public service broadcasting, but it says nothing about facilitating the choice of regional variations or about the price that can be charged for amending the software. Under Clause 71(2), Ofcom has a power to impose an obligation on the providers of EPGs to secure that the guides are provided on terms that are fair and reasonable, but this may be too general. I suggest that in Committee we might consider how the requirement could be tightened to deal with the particular circumstances in which Sky might be looking to recover some of the revenue it is losing through the non-renewal of its BBC contract.

Our next concern is with recognised spectrum access, or RSA. We understand the arguments in the consultation document and we note that Ireland and Portugal already have systems of spectrum charging. We are also aware that some 26 representations have been made to the DTI opposing the principle of the scheme, and that the Minister, Stephen Timms, has agreed to meet representatives of the UK and European satellite industry on 8th April. The additional costs of some 20,000 per channel will have to be passed on to users, and Professor Martin Cave, who originated the idea of RSA in Britain, acknowledges that the effect could be harmful to channels like Discovery Channel 27. The IEEE says that RSA should be introduced at the same time throughout Europe, to avoid putting our own satellite service operators at a competitive disadvantage.

The Select Committee in another place was scathing about RSA. It found little support for the Radio Authority's proposals, and said that charging for RSA was an attempt to extract payment from operators using spectrum for which licence payments could not be levied. Select Committee members agreed with a witness who said that this was like a protection racket. The Government's response rejected this categorically, but went on to make what sounded rather like a threat—Ofcom would allow users to encroach on the frequencies of any operator which declined to make the so-called voluntary payment.

If there is no RSA, which is concerned entirely with satellites and was intended to put the use of satellite and terrestrial on an even footing, where does that leave spectrum pricing and trading? Here the Select Committee recommended the allocation of frequencies by means of auctions, as in the past, but with conditions attached to prevent the hoarding of spectrum or to specify roll-out and usage obligations. It was not clear how pricing of the broadcast spectrum would allow for the intangible value of public service broadcasting, nor how the pricing of the radio astronomy spectrum could serve any useful purpose.

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I have run out of time, but I wanted to say one thing about broadband. There is nothing specific about it in the Bill but it is important that your Lordships consider not only how to promote its roll-out but whether the regulatory framework is such as to encourage it. We must look to the future when the reception of programmes via television or via computer will be a matter of consumers' choice, and when video on demand is a normal, everyday matter. The regulatory framework must ensure that those matters are taken into consideration. The convergence that has been predicted for so many years is only a few years away. I hope that this can be taken into consideration.

4.50 p.m.

Lord Currie of Marylebone: My Lords, I add my voice to those of other noble Lords who have expressed their welcome for this Bill. I must at the outset declare an interest as the chairman of Ofcom. It is both a considerable privilege and responsibility to have that position. My interest in the Bill could not therefore be keener. The Bill sets out the duties that Parliament is to lay upon Ofcom, and the powers that Ofcom has to fulfil those duties. And it sets out a great deal more beside for which Ofcom must have regard. The final shape of the Bill when it becomes law will provide the framework for all that Ofcom does over the coming years.

It is therefore a source of considerable comfort to me that the Bill is in such good health as it comes before your Lordships' House. This contrasts with the Bills that established the FSA and Ofgem, the two previous examples in other sectors of the converged regulator that Ofcom will be in the communications space. Its health is a testimony to the effectiveness with which the two sponsoring departments—the DTI and the DCMS—have worked together. The Bill team has done an excellent job in stewarding the Bill and in working closely with existing regulators and with the nascent Ofcom organisation. I can personally attest to the effectiveness of that team led by Chris Woolard.

The two Secretaries of State have provided the leadership and vision for this excellent example of converged government. The Joint Scrutiny Committee played a key role in improving the Bill and was so ably chaired by the noble Lord, Lord Puttnam. And I look forward to observing the skill with which the ministerial team—the noble Baroness, Lady Blackstone, and the noble Lords, Lord McIntosh of Haringey and Lord Davies of Oldham—steer the Bill through your Lordships' House. I wish them safe passage.

This Bill comes in excellent health and I hope that it leaves in similar good health. I am conscious that many noble Lords have plans for the Bill: to remove a digit or a minor organ here and transplant an additional limb or organ there. At this stage of your Lordships' consideration of the Bill, I would merely enter a plea that it leaves your Lordships' House in at least as good health as it enters. In broad terms, the Bill incorporates the right balance of powers and regulation for Ofcom to do its job.

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I hope that your Lordships will avoid the temptation to add many more specifics on one aspect of the Bill or another. Ofcom needs some freedom of manoeuvre to carry out its duties in the interests of all consumers and citizens, in a proportionate way that ensures that we have a thriving and dynamic communications sector.

It is tempting, to shift metaphor, to see Ofcom as a Christmas tree on which to hang one's favourite decoration. But let us ensure that those decorations enhance Ofcom and do not weigh its branches down. And let us not destroy the balance of Ofcom by lopping off some branches.

There will also be a temptation to wish to tie Ofcom down on a number of dimensions. I urge against this course for it will pre-empt the outcome of discussions that Ofcom needs to have on key and complex issues with all its stakeholders. There may be the fear that without legislative compulsion Ofcom will not behave sensibly. But I can assure your Lordships that Ofcom will consult, will reflect carefully and will be answerable for its considered, measured and evidence-based decisions.

Ofcom recognises that it is essential to find effective ways of interacting with the very real interests of the nations and regions, of consumers and citizens, of disability groups and of many other of its crucial stakeholders. Stakeholders can be assured that Ofcom will be listening to them.

Ofcom will also be developing effective ways of answering to Parliament for the exercise of the powers that Parliament has laid upon it. Recognising the very substantial powers and responsibilities that Parliament has given Ofcom, Ofcom will be to the fore in looking for effective and powerful mechanisms of consultation and accountability.

One of the principal arguments for Ofcom is that within a converged regulator, and only within a converged regulator, it is possible to ensure that both citizen and consumer interests are properly heard and balanced; that economic imperatives are balanced against broader cultural and social issues; and all within the context of a big picture overview of the modern communications sector. The Bill is carefully crafted in this regard. The content board will manage the high-profile content issues within a strategic context set by the main Ofcom board, so that the main board will not be diverted from its crucial role as a strategic competition authority for the communications sector.

Indeed, in an area of huge importance for the UK economy and business—namely, management and oversight of spectrum—the Bill specifically and correctly requires Ofcom to have regard to the interests of all users, ranging from the 3G mobile operators who paid more than 22 billion for their licences, through the broadcasters and the emergency services, down to the small taxi firms, the yacht radio owners and the amateur enthusiasts. The challenge, to which Ofcom will rise, will be to look after this breadth of interest while promoting market mechanisms to improve the efficiency of spectrum use and keep Britain among the world leaders in the effective use of this scarce and crucial medium.

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There are many examples that I could adduce for the need for this convergent approach to regulation. But one good example is the programme supply market for television. This involves the business of broadcasting and programme formats, but it is equally concerned with creativity and innovation in content. The ITC's review of this market in the autumn has rightly drawn praise and has led to broadcasters and producers working together to produce codes of practice for commissioning. Ofcom is ready to ensure that this process, including what is laid down in the Bill, is carried forward seamlessly.

I look forward to the rest of this debate and your Lordships' consideration of this Bill in Committee and on Report. I will listen to as much of the debate as I can and will read those contributions that I cannot hear in person. I trust that noble Lords will understand if I do not intervene in some of the substantive debates that will occupy your Lordships' House. Ofcom's role is to discharge the responsibilities laid on it by Parliament, not to determine those responsibilities. It will generally, though not always, be unhelpful for me or other members of Ofcom to comment on the desirability or otherwise of the arrangements to be determined by Parliament.

This Bill and the creation of Ofcom provides a unique opportunity. We are creating a new regulator, with a new culture and a new approach to effecting regulation. We have a real opportunity to look afresh at the way we do regulation and to be world class in all that we do. We will look at regulatory process anew. We will put in place consultation processes which ensure that the voice of all key stakeholders is heard. We will establish a rigorous research base for all that Ofcom does. We will ensure that its people and processes are of the highest calibre to ensure that what Ofcom delivers matches the excellence of the sector that it oversees. We will foster a regulatory discourse that allows Ofcom to engage with consumers, citizens and the communications sector in a professional, constructive and, where necessary, robust manner.

A high-quality, converged regulator of this kind will not be the cheapest, though it will deliver value for money and be subject to scrutiny by the Public Accounts Committee and the National Audit Office. But most stakeholders to whom I speak tell me that it is worth footing the bill for high-quality regulation, because ineffective, poorly resourced regulation imposes a high commercial cost on regulated companies. This Bill allows us to create a world-class regulator for a world-class communications sector and we must seize that opportunity.

The process of creating the new, converged Ofcom is well under way and we are on track for Ofcom to be fully operational before the end of the year. And this leads me to the timing of the Bill. It is right and proper that your Lordships should subject this Bill to full and robust scrutiny. But Ofcom has been long in the making and this has meant a lot of uncertainty for many in the communications sector as well as for the staff of the five regulatory bodies that are merging into

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Ofcom. I hope that your Lordships' scrutiny of this Bill can be timely and does not extend this uncertainty yet further.

In parallel with your Lordships' consideration of this Bill there will be other lines of inquiry germane to Ofcom and its functions. The Constitution Committee is examining the question of the accountability of independent regulators to Parliament—an issue on which Ofcom places great importance. Ofcom looks forward to giving evidence on this matter to the Constitution Committee. This issue becomes all the more significant with the development of co- and self-regulation. The Bill enjoins Ofcom to promote effective co-regulation, and Ofcom will take this responsibility very seriously indeed. As part of this, we need to think through and address the additional issues of accountability that this raises.

Similarly, a Select Committee in another place is considering the issue of privacy in the broadcast and print media. I look forward to giving evidence to that committee. But I say to noble Lords now what I shall say to that committee about Ofcom and the press. First, if Ofcom is entrusted by Parliament—as the Bill proposes—with the advisory function to the Secretary of State on newspaper mergers, after due consultation Ofcom will put in place a transparent and clearly defined regime that is not unduly burdensome and which gives the industry maximum predictability. Secondly, I shall express my personal view that the Government are right to limit Ofcom's involvement with the press to that role. Some noble Lords may argue that the press needs a more effective self-regulatory or co-regulatory arrangement than that currently in place. But it would be unwise to extend Ofcom's content powers further to include the press.

The Bill provides us with the basis for modernising communications regulation and making it fit-for-purpose for the rapidly changing communications sector of the 21st century. With it, Ofcom will be able to regulate the sector in a proportionate way, intervening robustly where necessary and letting go of regulation wherever appropriate. It will allow this vital sector to develop in a dynamic and creative way to the benefit of consumers and citizens.

5.1 p.m.

Lord Alton of Liverpool: My Lords, the convergence of the media and telecommunications industries clearly demanded an end to the split of responsibilities between five regulators. I therefore support one of the principal objectives of the Bill—the creation of Ofcom—the question to which my noble friend Lord Currie of Marylebone returned us. Everyone in the House will wish him well in the onerous duties that lie ahead of him as he chairs Ofcom.

If this one-stop regulator is to be able to withstand huge vested interests and not be swamped by them, it could indeed become the guardian of consumers' interests and a watchdog with real teeth. However, before setting the seal to the Bill, we would do well to consider carefully the two fatal flaws identified by the

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noble Lord, Lord Puttnam. He rightly homed in on how best to deepen further the quality of programming.

Within the public service and private sector Ofcom will need to be the guardian of the public's access to a wide spectrum of good quality programmes. In Committee we shall no doubt debate the efficacy of the BBC's Board of Governors and the desirability or otherwise of additional accountability to the National Audit Office. There is a good argument for revisiting those two questions in the context of the renewal of the BBC Charter in 2006 once we have evaluated the impact of Ofcom. I also wonder whether the noble Lord, Lord McIntosh, will tell us when he replies to the debate what more the Government might do to provide the right of appeal against contested decisions of Ofcom.

Ofcom will not only need to weigh the conflicting and competing demands of broadcasters, it will also have to be far more engaged in issues of quality and accountability. Last year I hosted a lecture by Greg Dyke at Liverpool John Moores University where I hold a chair. I declare that interest. Echoing something of what Sir John Reith said in 1931 when he dedicated the BBC to the service of the nation, Greg Dyke said:

    "The role of the BBC is to inform, educate and entertain. The first two are quintessential values of citizenship. I would also argue that the third is also citizenship. It is about the quality of our lives. Robust democracy depends upon a healthy sense of citizenship. Broadcasting plays an essential role and provides an analytical tool for making informed decisions".

In 1931, when Sir John Reith and the other governors of the BBC dedicated Broadcasting House to the service of the country, he said—these words are on the wall of Broadcasting House as one enters its foyer—

    "It is their prayer that good seed sown may bring forth a good harvest and that the people, inclining their ear to whatsoever things are beautiful and honest and of good report, may tread the path of wisdom and righteousness".

Those are timeless values which we need to continue in both public and private broadcasting.

Like it or not, the media have become one of the most potent forces in our personal lives and one of the most powerful influences on our communities and their values. That can, of course, have a corrosive as well as a benign effect. Bruce Gyngell, as managing director of Tyne Tees Television, understood that well when he said:

    "What we are doing to our sensibilities and moral values and, more important, those of our children, when, day after day, we broadcast an unremitting diet of violence . . . television is in danger of becoming a mire of salaciousness and violence".

In saying that he sounded the same kind of warning that we heard from the right reverend Prelate the Bishop of Manchester earlier.

Undoubtedly, Ofcom and its consumer panel will need to do far more to curb the exponential increase in gratuitously violent material which is broadcast on television. One of the central recommendations of the Joint Scrutiny Committee of the noble Lord, Lord Puttnam, was that Ofcom's primary duty should be,

    "to serve the interests of all citizens".

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It is a pity that those who drafted the Bill chose the language of consumerism rather than duties towards citizens and the community. Here I endorse much that was said by the noble Lord, Lord McNally, who rightly said that we should not rely so much on market forces. Clearly, an individual consumer may desire, for instance, to see an unremitting diet of violence, but is that in the community's interests?

Only last week the Broadcasting Standards Commission and the ITC published a report indicating that more than half of the public believe that there is too much violence on TV, and that the level is increasing. That report coincided with a study published on 9th March by Professor Jeffrey Johnson of Colombia University, and the New York State Psychiatric Institute. It concluded that children exposed to violent programmes are at greater risk of becoming aggressive young adults. He said:

    "Media violence contributes to a more violent society".

One year ago the US Surgeon-General concluded that,

    "televised violence, indeed, does have an adverse effect on certain members of our society".

As television, the flickering box in the corner, has replaced the flickering fire around which families once sat and conversed, the line between fantasy and fact, reality and unreality, truth and lies is often blurred. An average adult in Britain spends at least 27 hours a week in front of the television. The television hierarchy insist that there is no correlation between what people watch—unreality—and how they subsequently behave—reality. Yet the advertising industry spends a colossal 4 billion a year trying to sell us its wares via television. Clearly, it believes that what one watches affects how one behaves; otherwise, that phenomenal outlay would be a monstrous waste of money. Professor Elizabeth Newsome, and nearly 30 of the UK's leading child psychologists, psychiatrists and paediatricians said that they had been "naive" in underestimating the link between what children see and how they behave.

Ten years ago I was successful in another place in securing amendments to the Criminal Justice Act that curbed video violence. At the time in a letter to me, the noble Lord, Lord Puttnam, got to the heart of the matter when he asked:

    "What proof are we looking for? Does the railway company wait for someone to be killed by a train before fencing off the railway line?"

I was sorry that a further amendment that I promoted, which sought to allow viewers to purchase TV sets with a "V" chip (V for violence)—a chip that automatically screened out violent images—was narrowly defeated. I hope that Ofcom will return to that issue and carefully assess programme output and issues such as the watershed.

However, violence should not be Ofcom's only concern. It will also need to be proactive on issues such as taste and tolerance. I give the House one example. Channel 4's recent programme, "Beijing Swings", which included an adult eating part of a dead unborn child, should have led to significant penalties against

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the programme makers. I invited the chairman of Channel 4, Vanni Treves, to come to your Lordships' House to screen the programme and to take part in a discussion with your Lordships about the motives in screening that barbarism and the extraordinary justification of the programme as art. In a letter declining that invitation, Mr Treves stated:

    "More generally, however, these works are not only of interest in themselves but represent significant works in the Chinese avant-garde art movement. 'Eating People' by Zhu Yu was staged and photographed in Beijing at his 'Open Studio' and was exhibited in the Shanghai Biennale later the same year. It was also featured in a show curated by the artist Ai Wei Wei and widely seen as the most important show of contemporary art ever staged in mainland China . . . The finished programme was referred to the Director of Television who viewed it before transmission. It was his view that though deeply shocking and disturbing it exemplified the dark message of the Season as a whole".

It seems to me that that plumbed new depths.

In addition to the high hopes that many of us have for Ofcom in dealing with these questions of taste, tolerance and violence, the Bill also encourages a more competitive broadcasting environment. I have no intrinsic objection to that. A more coherent and efficient ITV should not be feared and with appropriate safeguards would continue to provide strong regional programmes. ITV's ability to own ITN outright would also enhance its news coverage and should not be feared either.

Paradoxically, as the right reverend Prelate pointed out, Clause 337's impediment on religious broadcasters runs counter to that spirit. It also runs counter to European convention rights and international experience. It will mean that Ofcom will be undermined if there is one law for the Medes who declare themselves openly to be religious, and another for the Persians who omit to declare themselves as religious. In that regard, I very much support what the noble Baroness, Lady Buscombe, said earlier. If it comes to a Division, I will most certainly support her on that question.

Ofcom will have the power to grant, refuse or revoke licences, to impose fines, and to implement broadcasting codes including criteria on fit and proper persons to engage in ownership or broadcasting. That is exactly how things should be. Ofcom will be in a position to evaluate which people should hold licences. Parliament's job should surely be to insist on common standards of diversity, tolerance, quality and decency. In so far as the Bill sets out to achieve those objectives, I will support it. Where it does not, I hope that it will be challenged and amended in Committee.

5.11 p.m.

Lord Crickhowell: My Lords, those of us who served on the Joint Committee feel that we have been sentenced to a second spell of hard labour as we grapple with this enormous Bill. I am grateful at least for the fact that it is a much better Bill than that considered by the Joint Committee, and that the Government responded positively to many of the suggestions that we made. However, once again the time for scrutiny in another place has been inadequate, so there will be a major job for us to do in this House.

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Among the most important amendments to which I intend to put my name are those dealing with the duties of Ofcom, the charging by it and the funding of its regulatory powers—the noble Lord, Lord Puttnam, pointed out that that was amazingly not discussed at all in another place—media plurality and public interest considerations, foreign ownership, regional broadcasting and the BBC. Noble Lords may have noticed that my list is largely concerned with media and broadcasting issues. That is not to suggest that the part of the Bill concerned with electronic communication is less important. On the contrary, it deals with crucial nerve centres of our national economy. To give credit where credit is due, my apparent neglect of that part of the Bill may well be due to the fact that the Government engaged in a thorough process of consultation and succeeded in producing a much broader consensus than might have been thought possible at the outset.

I very much welcome the fact that the Government have responded to the criticism of the original Clause 3 that set out Ofcom's duties. In particular, I welcome the fact that there is now the duty to further the interests of the community as a whole and not only of consumers, that Ofcom must have regard to the desirability of encouraging investment and innovation and of the principle that its activities should be,

    "transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed".

Much better that than the original catch-phrase of "light touch" regulation.

Despite those and other improvements, the House will want to consider whether the Government were right to reject the Joint Committee's proposal that there should be a principal duty, achieved whenever possible by promoting effective competition. The annual report that Ofcom will be obliged to produce about how it reconciles tensions between its duties in important cases will certainly make interesting reading.

I turn to the part of the Bill that covers the media and broadcasting. I agree that we will need to discuss the restrictive rules that apply to the nominated news provider. In its report, the Joint Committee stated that,

    "given the current uncertainty surrounding the ownership structure of ITV and its commitment to investment in news, we have concluded that the Government is right to include a nominated news provider clause in the Bill".

However, we also said that we were not convinced that that was a safeguard for the quality and impartiality of news,

    "that could not be provided by licensing and networking arrangements".

We urged early review.

I suspect that, apart from ownership issues, the Government's attitude was influenced by irritation over the change made to the timing of the main evening news and doubts about the TV companies' commitment. Time has moved on. I do not think that that commitment can now be in doubt. The fragmented ownership of ITN, with some of the

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smaller investors reluctant investors, undermines ITN's ability to be a strong alternative force to the BBC and Sky. The ITC's recent commentary on that is unconvincing. It is also misleading when it implies that existing contracts with other channels would be at risk if the restriction were lifted.

The Bill seeks to guarantee access for public sector broadcasters to cable and digital terrestrial homes. ITV argues that the Bill does not include sufficient safeguards to ensure access to satellite platforms in terms that protect the public interest. The Bill relies on the community rules designed to require access on,

    "fair, reasonable and non-discriminatory terms".

The accusation is that those rules give platform operators too much scope to include unrelated costs and almost unlimited flexibility to raise conditional access charges. Of course, Sky argues exactly the opposite case. It is an issue that we must explore because access to the satellites on reasonable terms is absolutely vital if a digital service is to be provided over a very large part of Britain.

One amendment to which I will put my name concerns the relaxation of the cross-media ownership rules as they apply to Channel 5, and which have been mentioned by a number of speakers so far. The Joint Committee concluded,

    "that the case for lifting the prohibition on joint ownership of Channel 5 and a major national newspaper group has yet to be made".

The Government have rejected that advice, basically on the grounds that Channel 5 is very small compared with Channel 3. My belief is that the counter-arguments about concentration of power in particular advanced by ITV, and in the debate today extremely powerfully by the noble Lords, Lord Puttnam and Lord McNally, are very strong indeed. If we proceed on the present basis, there could be serious consequences for Channel 4, ITV and even the BBC.

Clearly that is something that we shall have to consider very carefully. We shall also have to look at another ITV concern about the current definition of an "independent production", which excludes programmes made by local ITV licence holders for other channels. That is an important issue for my old company, HTV, and others that want to see strong production units right round the United Kingdom.

On the BBC, the House will want to ask how we can have an effective regime supervising public sector broadcasting if the largest broadcaster, funded by 2.5 billion of public money, is left outside crucial areas of that supervision. Essentially, the Government's position is that everything must await charter renewal at the end of 2006. The case was strongly pressed in another place that even if it were right to wait until charter renewal to make changes, scope should be taken in the Bill to obtain by regulation any consequential statutory authority rather than wait for the opportunity provided by some future broadcasting Bill. We shall need to press the case that a great deal of future-proofing is required for the BBC.

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Of course I acknowledge that UK and European competition law applies to the BBC. It is true that the BBC will come under Ofcom on tier 1 regulation for taste and decency and on tier 2 regulation for regional and independent production, and that Ofcom will be able to fine the BBC for breaches. It is also true that the BBC has its own fair trading commitment, the aim of which is to see that it complies with competition law. The difficulty is that, confronted by complaints, the governors are the rulers of the BBC and they cannot, at the same time, be independent adjudicators.

Even greater difficulties are likely to arise because Ofcom has the job of reviewing, on a regular basis, the overall public sector broadcasting obligations of the BBC and other broadcasters. Ofcom will be able to enforce the conclusions that it reaches in relation to every other public sector broadcaster but not the BBC, whose governors may take a wholly different view of their obligations. Mr Gavyn Davies, in a speech on 18th March, said that there may be occasions when Ofcom may helpfully jog the elbows of the governors. The truth is that those whose elbows are jogged very often do not think it at all helpful.

Mr Davies also quite substantially misrepresented the Joint Committee about what he called,

    "the delicate relationship between Ofcom and the BBC which has emerged",

and which he said was a compromise,

    "supported by Lord Puttnam's scrutiny committee".

Anyone who reads our report—I re-read the section myself this morning—will see that on this issue we took a very non-committal stance indeed.

I now turn to a final topic where I fear I part company with my own Front Bench. We are confronted with the remarkable fact that the subject of ownership by non-EU companies was not discussed at all in another place. It was set to be debated in Committee, but the Liberal Democrat Members did not arrive in time to move their amendments. During the Report stage, the amendments were not reached. The Secretary of State for Trade and Industry commented at Third Reading:

    "I have no doubt . . . that it will be debated . . . in another place".—[Official Report, Commons, 4/3/03; col. 776.]

Indeed, it will be.

We are told that we need investment and overseas management skills. I do not need lessons about the importance of inward investment for many industries and for the economy. I spent a very large part of my eight years in Cabinet rather successfully working to encourage it. Within the scope of this Bill, it has made a vital contribution to the development of cable networks. But it is far less obvious that there is an urgent need for it in the case of the ITV companies. The Government have strengthened the licence regime and content obligations designed to protect regional production and the fulfilment of licence obligations. I am absolutely satisfied that, with those safeguards, further consolidation of UK ownership is not only acceptable but desirable.

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However, when we reach the Committee stage, I shall set out my reasons for thinking that those safeguards may be much less effective if our regional licence-holders are controlled by the major US players, who have an overriding priority to produce homogeneous output that can be sold in a wide variety of forms in every market in the world. Perhaps current conditions and the financial state of those companies will provide the protection that I seek during the period when Ofcom's eye may not be on the ball because of the immensity of the job that it will have to do during the first years of its existence. None the less, like the noble Lord, Lord McNally, I see no reason why we should rush recklessly down this road, and without reciprocity, when the alternative is to allow Ofcom time to review the position and to establish itself as an effective regulator.

Having said that, perhaps I may make it clear that, on the whole, this is a good Bill with the right objectives. I believe that the Government have chosen well in selecting the noble Lord, Lord Currie, to lead Ofcom. I wish him well.

5.24 p.m.

Lord Addington: My Lords, my contribution to the Bill will be rather narrower than many of those that have gone before me. I want to concentrate primarily on the legislative scope provided by the Bill to cash in on the opportunities that are expanding for those with disabilities to access the global network of the communications revolution, which we hear so much about and which is growing around us.

I hope that my noble friend Lord McNally will not mind my quoting, or misquoting, a conversation that he had with some of us earlier. He described us as breaking down into two groups: the "fluffies" and the "techies". The techies were those with an interest in wavelengths and so on; and the fluffies were those who would worry about contact. This is an occasion where the techies have allowed the fluffies in.

All the opportunities that I have seen for expanding access for the disabled have come about because the technical revolution has reached a point where such access can be made in various formats. Effectively, the technicians have given the broadcasters a problem, but something can now be done. We have established in law over many, many years that the disabled should not be excluded merely on the ground that they are disabled. I do not suggest that we take an overwhelming step forwards, but appropriate action should be taken to allow people in. For a shopkeeper, that involves installing a ramp and being prepared to carry out a box to someone in a wheelchair or being prepared to talk slowly and clearly to someone who has a hearing problem.

For broadcasters, who are dealing with a very technical subject, the answers themselves are more technical. The Bill does take steps forward and, indeed, measures have been taken in areas such as sub-titling and audio description. Indeed, in Clause 3, although I cannot remember the exact words, the Bill states that there will be regard to the disabled.

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I shall now go into Oliver Twist mode: we wanted more. We wanted stronger commitments in the Bill that the disabled would be consulted more thoroughly. I could list the areas where I believe that that should happen, but I suspect that we shall spend many hours in Committee going over that issue. I simply give notice that we are considering the matter. We need to become involved in the Bill to ensure that Ofcom knows what is going on and expands its services for the simple reason that it has the capacity so to do. It must persuade people to listen to it on this occasion. If we work only on existing technology, we shall be able to expand on what we are already doing.

There are also certain areas where circles need to be squared. Audio description is one of the oddest things that I have ever come across. The technical ability is there to deliver a service which means that those who have no, bad or even slightly impaired eyesight can gain a good experience from television and need not be excluded. But the problem is that we do not produce the necessary box for terrestrial broadcasting, although Sky can provide the service. I hope that my noble friend will forgive me for saying something nice about Sky.

The fact is that one broadcaster—the one you pay for—can provide the service, but the one to which you contribute through a licence fee does not allow you in. It is not the fault of the broadcasters—they are producing audio description titles. The problem is that only about 45 people in the country can access the service because the boxes are not being produced. I do not know whether it is technically possible to do so within the Bill, but I say to the Government that they should do something to get those boxes produced. I am referring to an item that costs less than 200, although I forget the exact figure.

It would be a major step forward if we could get those boxes on to television sets. It will not be easy because unfortunately, by definition, the disabled are more likely to have lower incomes or, indeed, to be unemployed than those who are able-bodied. That is simply the way that things stand at present. But surely we can call upon the Government to act through the agencies and then perhaps the BBC, for example, can become involved in some way. It has considerable commercial experience. Surely it, or another broadcaster, can become involved in ensuring that such items are produced. It would mean that the hours of broadcasting that are prepared would be available to those with sight difficulties.

Following on from that is the run-in time for subtitling. When one sets a long run-in time of say 10 years it becomes a long-term project. Then it becomes an intermediate-term project and then it becomes a short-term panic. Often the longer-term projects tend to get put off because they are someone else's problem, or not enough is done. That has happened in many other services relating to disability legislation.

Surely, we could bring these issues together. We now have the technical ability. It would concentrate the mind. The halving of a 10-year run-in period would

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surely not overly extend any of the huge bodies involved. As regards the granting of exemptions for subtitling or audio description, I would hope that smaller broadcasters are treated fairly roughly, especially if they happen to be a small broadcaster in a bigger chain or if they happen to produce, for instance, a cheap programme that is repeated about 20 times on certain channels, which I have seen by scanning through the broadcasting schedules of many TV guides. Can we make sure that there is no great flood to grant exemptions because it might be inconvenient and only do so when it would stop the programme?

In order to obtain the full benefit of this service, surely we should provide—at least as vigorously as we do in other commercial services—for the fact that you must have an incredibly good reason not to do so, and not merely because it is slightly more inconvenient. That is the standard that we apply in other parts of life.

5.31 p.m.

Baroness Howe of Idlicote: My Lords, as no. 13 out of 49 speakers, I am clearly one of a great many who are glad that the time has at last arrived for your Lordships to bring your considerable expertise and experience of the communications industry to bear upon this important Bill. You have heard some brilliant examples of that expertise already.

As some of your Lordships know, I would have preferred two separate commissions—one that was responsible for the economic and telecommunications side of the industry and the other responsible for public service broadcasting standards and content issues. But, there comes a point when it becomes fruitless to pursue an issue that falls upon continually deaf ears.

As a step in the right direction, however, I congratulate the Government on their decision specifically to include a content board in the legislation, and, indeed, the pre-legislative scrutiny committee on its role, both in persuading the Government to accept that point and in securing the adoption of so many other improvements to the Bill.

However, I remain sure that the establishment of a content board will not stop internal arguments as to which aspect of the commission's work should take precedence or secure the lion's share of resources. That kind of concern is certainly not imaginary; it has already surfaced in another place. Of course the old Radio Authority knows that only too well from its own experience as part of the Independent Television Authority, before it was liberated—with its own budget and priorities—in the 1990s. Now, of course, it is due to be swallowed up all over again.

Neither does the establishment of a content board really meet my other major concern. Will complainants alleging unfair portrayal or unwarranted infringement of privacy, accept as unbiased the judgments of a regulator who also licenses the broadcasters and sets the terms under which those licensees operate? Will those decisions be seen as "transparently independent" from the point of view of human rights legislation, as were those of the BSC, for example? Sadly, but honestly, I very much doubt it.

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No doubt the content board will try to be as open as possible in its dealings with the public. So I hope it might think of referring complaints on taste and decency and fairness and privacy which reach its level for decision by an outside, and more visibly independent, panel. If, as I suspect—and wrongly I think—it decides against that and keeps this responsibility "in house", then surely it should be content board members themselves and not staff who decide the majority of complaints. It should, in other words, continue with the current practice of the BSC, rather than follow the unconvincing ITC's example, where decisions on many complaints were made by staff members. Charges of "agency capture" are far less likely to be made, and less likely to be justified if it follows the BSC's precedent. Having said all that, I am not sure whether it is a good or a bad thing that I have the noble Lord, Lord Currie, sitting directly in front of me.

I now want to turn to one or two specific issues. First I deal with diversity. Equal opportunities for women has been a constant theme with me over the years. The racial aspect of diversity—of equal opportunities—is at least as important as that for women and for the geographical and ability/disability diversity, which are specifically written into the Bill as Ofcom's duties, particularly when one remembers the ever increasing range of nationalities and religions that today make up the UK population. I hope the Minister will address that point.

Next, continuing the religious theme, there are the restrictions on licence ownership for those with religious backgrounds. The Government are to be congratulated on removing certain of those restrictions in the draft Bill. But, inexplicably, some remain. I join with the noble Baroness, Lady Buscombe, and with the right reverend Prelate the Bishop of Manchester—who put the case so compellingly—in calling unreservedly for all such restrictions to be removed. The conditions on which such licences are granted and the regulations which have to be complied with are quite sufficient to deal with any possible breaches that might occur.

I turn to the BBC, which is clearly still controversial. It is right that it should be subject to, and fined for, any breaches of tiers 1 and 2 of Ofcom's regulatory system, should that become appropriate. It should also be required to publish an annual statement of programme policy, and be judged against that by Ofcom and be subject to competition law. And, of course, we should all continue to expect, and press for, the very highest standards of public service broadcasting from all its programmes.

However, I remain unconvinced that the BBC should be regulated in exactly the same way as commercial TV and radio, from which we expect considerably less public service broadcasting. I am also unconvinced that there is a need for it to come within the remit of the National Audit Office. None of us should forget, however critical we may be of some aspects of current BBC policy or programming, that the BBC, with its proud history, is still—much more often than not—the bench-mark. It is the bench-mark

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against which others, and especially terrestrial channels, can match themselves, and, on occasions, surpass the BBC with the quality and originality of their own public service broadcast programmes.

Next I deal with taste and decency. I am glad, of course, that the structures of Ofcom are being designed with far more emphasis on light touch/self regulation. But equally, I have no doubt that what we see does influence our behaviour to some extent, often of course for the better, but not always. That is why issues of bad language, sexual behaviour and, above all, the portrayal of violence on the screen will continue to cause considerable citizen anxiety. One has only to look at the recent ITC/BSC research, The Public's View, which was published in 2002, to realise that concern about taste and decency issues—55 per cent felt that they had got worse—will not disappear with the establishment of Ofcom, or even with the establishment of the content board. Concern remains high about children's programmes and the viewing to which they are subject. So, though we must of course beware of over-nannying, it remains vital for society to retain some effective balancing influence on unbridled consumer demand.

However, if judgments are to be balanced, they need to be well-informed. So it is quite right that Ofcom should be given the duty to commission and publish research. That duty must surely be delegated to the content board.

Will the Minister assure the House that Ofcom, alongside its commitment to more detailed and in-depth research, will continue to research and monitor changes in citizens' attitudes about what is broadcast—not just from time to time, as the Bill provides, but year on year? It will surely be more important in future to have that information regularly available if Ofcom is to know whether the degree of self-regulation permitted is working satisfactorily for the community interest.

Lastly, I share the concern about Channel 5 and cross-media ownership. That has clearly fuelled ongoing unease about whether the press media should be subject to some form of statutory—as opposed to voluntary, Press Complaints Commission—regulation. I am sure that views will remain divided on the issue, not least because of the historic importance of freedom of speech, which of course remains. However, perhaps there is a need for some kind of half-way house—some more public accountability. That is why I am especially glad that both your Lordships' House and the pre-legislative scrutiny committee have accepted the proposition that a House of Lords communications Select Committee, which will include the print media, should be established once the Bill is enacted.

As the noble Lord, Lord McNally, said, this is a vast Bill. I am sure that as a result of that, and of what we have heard today, we can all look forward to many hours of stimulating debate.

5.41 p.m.

Lord Alli: My Lords, I probably fall into the category of a "fluffy". However, I must first declare

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the following interests. I am a director of a number of independent television production companies, including Shine Limited and Castaway Television; I was a senior executive of Carlton Television; and I have some, although not significant, holdings in a number of media and radio companies. I refer your Lordships to my entry in the register of interests.

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