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Lord Avebury: In its report, Champions of Better Regulation, the Better Regulation Task Force claims to have the support of the Prime Minister and that that is one of the great reasons for its success. It states that several themes underpin its work and that the most important consideration of whether it is successful is to look at the themes, to judge their success over the next few years and to see whether they have been accepted and applied by policy makers and regulators. This is a very good example of how we can apply them as policy makers by incorporating them higher in the clause than the position they currently occupy.
The Minister has already explained that Clause 3 divides conveniently into three units. Clause 3(1) refers to general principles; Clause 3(2) refers to detailed objectives; and Clause 3(3) refers to matters to which the regulator must have regard. Of the two alternatives offered by the amendments, the one I prefer is to incorporate the principles of better regulation into Clause 3(1). That subsection is concerned with principles and therefore, as the noble Baroness said, if we are to divide the general duties of Ofcom into these three hierarchies, the principles of better regulation belong in Clause 3(1) and not down at the bottom in Clause 3(3) as matters to which the regulator must only have regard.
We acknowledge that the issue of the principles of better regulation is mentioned in the Bill. But we believe, as does the noble Baroness, that it should be up in Clause 3(1), which deals with general principles. Alternatively, Amendments Nos. 15 and 17 offer the option of incorporating it at the beginning of Clause 3(2), where it would be at least in the detailed objectives.
I hope that the Minister will have regard to what the noble Lord, Lord McIntosh, said about the Government being flexible and that she will consider the various options put forward by noble Lords. We have suggested two different ways of achieving the Better Regulation Task Force principles, either one of which can be discussed with Ministers during the course of the next few weeks before Report. It is important at this stage that the Minister and her colleagues should accept that the better regulation principles should come higher up in the objectives set out in the Bill.
Lord McIntosh of Haringey: I am grateful that both noble Lords who have spoken to these amendments have acknowledged that none of us is against the principles of better regulation. The issue here is where in Clause 3 is the right place to put it? We have put it in subsection (3), and it is proposed that it is put in subsection (1). The reason that it is not in subsection (1) is very simple.
The general principles set out in subsection (1) apply across the range of Ofcom's functions. They are a furthering of the interests of consumers in relevant marketsand that is all telecommunications marketsand a furthering of the interests of the community as a whole in relation to communications matters. That again is across the whole range of Ofcom's functions. Regulation is only one part of Ofcom's functions. There are many other functions, as set out in subsections (2) and (3). In upholding the principles of regulation, when we are concerned with only one part of the functions of Ofcom, it is right that it should be set alongside the other functions such as the promotion of competition in relevant markets, the desirability of facilitating self-regulation or encouraging investment in innovation. None of those is a regulatory activity. It is right that regulatory activities should be alongside those others, as referring to only part of the range of Ofcom functions.
Let me give an assurance that the words "have regard to" do not mean that Ofcom can simply ignore it. If there were any question of Ofcom going against regulatory principles there would rapidly be legal challenge to it. If that were found to be the case I am sure that such a legal challenge would be upheld. We are not in disagreement on principle. It is simply a matter of the way in which the Bill is structured and where it is right to refer to a principle which refers to only part of Ofcom's activities.
Baroness Buscombe: I thank the Minister for his response. The words that I have just written down are "lack of confidence". The difficulty that we have relates to the previous amendments in relation to upholding the principles of public broadcasting as a primary duty, and there is a similar argument here. There is a lack of confidence. It probably rests as much as anything with the wording in Clause 3(3), to which the Minister referred:
Lord Puttnam: Perhaps I may help the noble Baroness on the issue of a lack of confidence. When taking evidence in the Select Committee, it became very apparent to us that for the most part regulators had tended to act too little and too late. That was principally because they found themselves to be under-resourced and unable to grasp market realities as they emerged particularly into a fast-moving marketplace. I think that one of the confusions and one of the problems is the different perspective from the point of view of the dominant provider and the market entrant. The market entrant tends to feel that the regulator acts far too late. The dominant provider tends to feel that the regulator is interfering. Squaring that circle is not easy, but I have total sympathy with what the noble Baroness is trying to achieve.
Baroness Buscombe: I thank the noble Lord, Lord Puttnam, for his intervention. There is no question that there is a concern beyond your Lordships' House in the marketplace, as I have already said, because there is perhaps an opportunity for regulatorsusing the words in subsection (3)to act too little and too late. That is something that could and should be corrected in the Bill. That is what we are seeking to do. I thank the noble Lord, Lord Puttnam, for that assistance. We are not intending to press the amendment today, but we believe, as was stressed briefly in committee in another place, that the importance that the Government have always attached to these principles should be reflected in the Bill.
Lord McIntosh of Haringey: Perhaps I may try to be helpful. I am hearing concern about the preamble to subsection (3). I am hearing concern about whether "have regard to" is strong enough, and whether the flexibility left to Ofcom is strong enough. I suspect that that applies not only to regulatory principles, but to many other issues. I suspect that it relates to the issue of the distinction between the items in subsection (2), which are matters that Ofcom can control, and matters in subsection (3), which on the whole it can only influence. Between Committee and Report stage perhaps we can talk about the wording in the preamble to subsection (3) and make sure that we agree that it is as strong as we intend?
Baroness Buscombe: I am grateful to the Minister for that suggestion. I think it would be extraordinarily helpful if we could have a discussion between Committee and Report stage about the wording of the introduction to subsection (3), because there is no doubt that we have been lobbied at enormous length right across the industry on this issue. We believe that if we can get this right now it would make a great deal of difference. On that basis I beg leave to withdraw the amendment.
During the Bill's Report stage in another place, the Government brought forward amendments which substantially revised Clause 3. One of those amendments introduced a completely new duty for Ofcomnow subsection 3(2)(d)to secure,
In particular, concerns were expressed that the new duty could have a considerable impact on the way in which Ofcom deals with proposed mergers and acquisitions within the sector in the futurethat Ofcom could intervene in any merger between any individual TV and radio providers simply on the basis that this reduced plurality. Very specific questions were put to the Minister at the time. Would, for example Ofcom be able to prevent the creation of a single ITV, even if the Office of Fair Trading were content for that to happen under general competition law? Would it be able to prevent mergers between other existing providers such as Disney, Viacom or BSkyB, simply on the basis that this reduced plurality? What if a merger were to reduce pluralitythat is the number of different providers of television and radio
I regret that the Government have until now shed little light on the scope and purpose of the new duty. I hope that the Minister will be in a position to clarify matters for us further today. Given that the key significance of the new duty is its role in the review of media ownership rules, I should be grateful if the Minister could explain why it has not been placed in the relevant clause which relates to this review; that is, Clause 384.
The fact that the duty has instead been placed in Clause 3 suggests that Ofcom would be required to ensure that it is fulfilled in exercising all of its functionsa much wider purposeand not just specific functions that relate to plurality, such as the media ownership review. Indeed, the Minister appeared to confirm this by indicating that the purpose of the duty includes, and is therefore not limited to, the review of media ownership rules. Yet the Government have not provided any explanation of what other purposes they intend for the new duty, beyond its role in the review of media ownership rules.
As I have already reminded the Committee, there is significant concern that the new duty could afford Ofcom considerable new powers to intervene in media acquisitions and mergers on the basis of plurality alone. For example, under Clauses 344 and 346, Ofcom would have to be notified of a change in control of Channel 3 or Channel 5 licensees respectively and would have to satisfy itself that the criteria in those clauses were satisfied.
However, with the addition of the plurality general duty in Clause 3(2)(d), Ofcom would now also have to ensure that plurality was maintained. Accordingly, if Ofcom concluded that plurality would not be maintained consequent upon a change in ownership of Channel 3 or Channel 5, it might seek to prohibit the acquisition under its general duties even though all other criteriaregarding, for example, the amount, range and quality of original productions, news, current affairs and regional programmes, and competition considerationshad been met.
It is not clear to me how one could claim that plurality had been "maintained" in any merger of the ITV licensees or in the acquisition of Channel 5 by any existing television provider, since it would, de facto, represent a reduction in the number of existing providers, irrespective of the benefits a merger might bring.
It would therefore be helpful if the Minister could explain how real these concerns are and how we can be assured that there is no problem. Perhaps that could be done by reference to the examples already provided. If the real purpose of the duty is to assist the review of media ownership rules, it would in our view seem sensible for the duty to appear in the relevant clause; that is, Clause 384. That approach is suggested by my amendment.
If there is a wider purpose to the duty which prevents this, the Government should be clear about what this is and how it will impact on the sector. I beg to move.
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