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Lord McIntosh of Haringey: I should say straightaway to the noble Lord, Lord Avebury, and the noble Baroness, Lady Buscombe, that we are very sympathetic to the amendments. Indeed, on 1st May, we tabled our own amendments to Schedule 18 to the same effect; those are Amendments Nos. 320A to 320G on the Marshalled List. I shall speak to those amendments today then move them in their place on a later day—unless we reach that place tonight, of course.

Officials have been in discussion with a group of telecommunications operators who have raised this matter. Operators were concerned that in the Bill as published there was no provision for Oftel or Ofcom to deal with disputes between operators that arose under the current regime—governed principally by interconnection regulations that are due to be repealed and replaced with the new regime provided by Bill—but which were not referred to the regulator until after repeal of those regulations.

Operators considered that such disputes could indeed arise, since, for example, Oftel has from time to time set revised levels of charges for interconnection between operators. The necessary adjustments to the operators' payments are typically made by periodic invoices between operators concerned, however. As a result, a breach of these obligations might occur without it coming to the attention of operators, who may be affected by it, until some time afterwards. However, once the old regulations were repealed, it would not be possible, under the Bill as drafted, for the regulator to continue to deal with them. Our amendments ensure that they can still be referred.

In contrast to Amendments Nos. 322 and 320AA, our amendments also provide that after the end of the transitional period, between the repeal of the old regulations and Ofcom's assumption of its role in the area, a dispute can be referred only when there are exceptional circumstances to justify it. That will ensure that the two regimes are not perpetuated side by side indefinitely, which would lead to unnecessary and undesirable duplication and uncertainty. We still expect Ofcom to accept that there were exceptional circumstances in cases where, for example, it was impossible or unreasonable for an operator to discover that grounds for a dispute existed before the end of a transitional period.

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We are also sympathetic to the aims of Amendment No. 321, which relates to the possibility of giving continued effect for a transitional period to directions given by the director general of telecommunications in resolving the same sort of interconnection dispute before the Bill comes into force, when the directions correspond to SMP conditions under the Bill. Some of those directions contain important regulatory obligations of a type provided for in the new regime.

It is appropriate to continue the effect of existing obligations until Ofcom has properly reviewed them, but Amendment No. 320D ensures that Ofcom can do this only in appropriate cases, where the obligation is of a type which it would have power to impose under the new regime. Amendment No. 320F ensures that the need for any such continued direction must be reviewed by Ofcom as soon as possible and that the direction should then be either replaced by a condition under the Bill or terminated.

I can therefore confirm, as the noble Lord, Lord Avebury, suggests, that the amendments bring the directions under the new SMP regime and the directives. We are sympathetic to the general principles involved. Our amendments will ensure that Oftel and Ofcom will be able to continue to deal with these disputes as before, but will be subject to appropriate restraints in the use of its powers to continue the use of existing interconnection determinations.

Lord Avebury: That sounds satisfactory, except for one point; namely, the nature of the exceptional circumstances which have to be satisfied before government Amendment No. 320A comes into play.

The noble Lord said that the case must be one where it was not possible or reasonable for the complaint to have been raised earlier. That seems to leave scope for a variety of interpretations. Who is to judge whether it was possible or reasonable to have done so?

We have received three-quarters of a loaf from the Minister and we should be satisfied with that as far as it goes, subject to our consultations with the interests concerned and that they consider that the exceptional circumstances will be such as to allow reasonable complaints to continue.

Lord McIntosh of Haringey: I should like to try to avoid debate when we come to Schedule 18. The answer to that point is that the matter cannot be defined now, but it will be Ofcom which has to be satisfied that the circumstances are exceptional. Indeed, that is in the part of Amendment No. 320A which the noble Lord's Amendment No. 320AA would delete.

Lord Avebury: I am grateful to the noble Lord and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 182 agreed to.

Clauses 183 to 189 agreed to.

Schedule 8 agreed to.

Clauses 190 and 191 agreed to.

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Clause 192 [Decisions of the Tribunal]:

[Amendment No. 144 not moved.]

Clause 192 agreed to.

Clauses 193 and 194 agreed to.

Clause 195 [Functions of OFCOM in relation to the BBC]:

The Deputy Chairman of Committees (Viscount Simon): I must advise the Committee that if Amendment No. 144A is agreed to, I cannot call Amendment No. 145 due to pre-emption.

Lord Gordon of Strathblane moved Amendment No. 144A:

    Page 175, line 21, leave out from "OFCOM" to end of line 25 and insert—

"(a) to approve or amend all BBC Statements of Programme Policy and to satisfy themselves that the Governors of the BBC have ensured adherence to them;
(b) to advise the Secretary of State as to whether the BBC should be permitted to introduce new television or radio services, alter the character of existing services or cease to provide them;
(c) to satisfy themselves that the BBC has followed best practice in its expenditure of funds raised by the licence fee and from other sources;
(d) to ensure that any cross promotion by the BBC does not unduly distort any market; and
(e) "

The noble Lord said: It may seem strange that in a very large Bill producing the convergence of regulation of broadcasting and telecommunications the Government should contrive to leave out, at least partially, the principal broadcaster in this country in both radio and television. My amendment is designed to remedy that.

I hope that Members of the Committee will agree that my amendment is fully consistent with the two great traditions in broadcasting in this country. The first is the promotion of public service broadcasting, which I believe to be a singularly British achievement—first, in the BBC and, perhaps even more remarkably, the achievement of the Independent Broadcasting Authority in translating exactly the same public service requirements to the commercial sector. The only difference between the two sectors is the source of funding. The obligations are identical, almost word for word.

The second great institution in British broadcasting came about with the creation of buffer authorities—whether it be the BBC governors, or the ITC as it now is, or Ofcom as it will be. While there is ultimate accountability to Parliament, there is at least a buffer between political interference and the broadcaster. That is a supreme achievement which I believe my amendments encourage.

It should not be necessary for me to say this, but I shall do so in case there is any misapprehension. I in no way regard this amendment as hostile to the BBC—quite the reverse. I think that the BBC would be distinctly stronger were the amendment to be accepted by the Government—not least because, if it is not, and

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if the current provisions in the Bill regarding the BBC are maintained, I believe that there will be a backlash when it comes to discussing BBC charter renewal. The noble Lord, Lord Thomson of Monifieth, said earlier that he was worried that there would be quite a strong debate about licence fee renewal and charter renewal. I share that worry. I believe that the BBC will be immensely stronger under the umbrella of Ofcom, particularly if it is raining.

The Bill as drafted gives Ofcom power over the BBC only in so far as permitted by an agreement, yet to be negotiated, between the BBC and Ofcom. That is a recipe for a second run of this whole debate when we come to look at that BBC agreement. In the agreement as drafted there is the potential for conflict between Ofcom and the BBC. It says:

    "The BBC, however, shall take account of guidance given by Ofcom, and any reports issued by Ofcom about public service broadcasting".

If, say, the BBC takes account of that guidance and then ignores it, that will not do much for Ofcom's reputation.

I do not imagine that Ofcom will simply take that kind of action lying down. We have the seeds for potential conflict between two great regulatory bodies. Instead, my amendment proposes that, as currently, the BBC will draw up its own statements of programme policy, but that the backstop for ensuring that the BBC governors have satisfied themselves that these are adhered to, lies with Ofcom and not with a Secretary of State. That will give the BBC greater protection than it currently has.

Some of the DCMS briefing, which some time ago was kindly sent to me, seems to portray the current situation as some great freedom being given to the non-BBC public service broadcasters. There are phrases such as,

    "For this tier greater fairness will be achieved by giving other public service broadcasters a freedom similar to that already enjoyed by the BBC. A system of self-regulation will operate".

That is slightly disingenuous. Self-regulation, yes, but if in the opinion of Ofcom it does not regulate properly in the public interest in the opinion of Ofcom, there is the backstop of Ofcom. Indeed, the Secretary of State, Tessa Jowell, in speaking to the Westminster Media Forum pointed out—and I shall quote briefly because she puts the matter quite tersely:

    "There is a difference of course: if commercial PSBs are not delivering what they have committed to, Ofcom has the backstop enforcement powers. If the BBC is failing to deliver, those powers are held by the Secretary of State. Two linked arguments are advanced against this: first, that this puts the BBC at risk of political interference, [secondly], for that reason no politician is ever likely to use the backstop powers".

I would suggest that neither of those are desirable outcomes. So she correctly says,

    "so, how much better to have these powers held by a non-political body like Ofcom".

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But she then goes on—and those who think that under the present system the BBC is protected should pay close attention—to state:

    "But the BBC, unlike the other broadcasters regulated by Ofcom, is spending public money to pursue its goals. It is right that the final decisions should rest with politicians: we are ultimately responsible to parliament and the public for the way that our public institutions deliver against their public purposes".

Obviously, in extremis, I concede that Ministers have that power. But in Britain the tradition is that Ministers do not interfere in broadcasting. They leave it to the buffer authority. I would suggest that the BBC in its day-to-day management is a lot more secure under Ofcom than in responding to a Secretary of State.

From time to time some people have said, "You can't really trust Ofcom with something as precious as the BBC". Indeed those words were used in another place. As I said at Second Reading, that does not say much for our attitude to public service broadcasters other than the BBC. But let us be realistic: the board of Ofcom will be appointed by exactly the same people who appoint the governors of the BBC. If the government of the day are capable of appointing good governors of the BBC, they are perfectly capable of appointing a good board of Ofcom. So I do not think that that argument stands up.

There is also the celebrated dilemma that BBC governors face. They are both the top board of a company and the regulator in the public interest. I genuinely believe that they absolutely do their best and in general succeed tremendously well. But being realistic, it is very easy to convince yourself that you must continue to be popular so that you can do good. That is the siren voice to which politicians listen all the time, so that they do popular things before an election, whether they are right or not, because the main objective is that, "I must be re-elected so that I can do more good".

It is very easy for the BBC to convince itself that the ratings war is important for it to win, even if, in the process, its public service obligations are watered down. That is dangerous. It needs an external regulator who from time to time gently nudges it and says, "Are you sure that that is what you really want to do?"

The second requirement, under paragraph (b) of my amendment, is that it should advise the Secretary of State on what new services the BBC should be allowed to introduce, change the character of, or, indeed, cease to provide.

If my amendment is not passed, what will happen? The Secretary of State will be listening to two bodies: first, his or her officials in the Department for Culture, Media and Sport, who will presumably advise on the BBC, with which, I imagine, they will have a continuing relationship; and, secondly, Ofcom, which will be advising on not quite the entire broadcasting landscape, but on the bit of it that is within its bailiwick—that is, the non-BBC sector. That is highly unsatisfactory. Let us say that DCMS is advising one

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thing and Ofcom another. Ministers will be directly involved in important broadcasting decisions. In my view, they should not be.

Paragraph (c) is simply a gentle way to afford some public scrutiny of the BBC's financial practices. It is gentler on the BBC than the National Audit Office route, which, when I heard the Second Reading debate, in some people's view raised the spectre of a director-general being directly accountable to the Secretary of State. I am sure that none of us want that.

Paragraph (d) is intended to ensure that the BBC's tremendous capacity for cross-promotion—unique in Britain—does not distort the market places in which it is involved. To that extent, it echoes some of the points made by the committee chaired by the noble Lord, Lord Puttnam, in its report.

I think that the amendment is in the BBC's interest. I hope that those with the interests of the BBC at heart will be able to support it and I commend it to the Committee. I beg to move.

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