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9.31 pm

Mr. Philip Hammond (Runnymede and Weybridge): This has been a wide-ranging debate that has certainly not been limited to the specific scope of the Bill. It was right and probably necessary for it to range so widely. Although many of the issues that have been addressed relate to the more substantive matters that will be considered in relation to the communications Bill, they are relevant in determining how Ofcom should look and be structured—the precise purpose of the Bill.

I suppose it was inevitable that the debate would focus on the BBC, partly because it is such a politically sensitive topic but also because its role and its relationship with Ofcom raise very important and much wider competition issues. I agree with my hon. Friend the Member for South Suffolk (Mr. Yeo) that, in view of the importance of these subjects, it is a pity that the Government did not put forward either of the two Secretaries of State who are involved with the Bill to open the debate. I am delighted to see that the Secretary of State for Culture, Media and Sport is present for the winding-up speeches, but it is a pity that she did not take part in the debate, as she may have had the opportunity to clarify some of the issues that are clearly troubling many hon. Members in all parts of the House with regard to the future relationship of the BBC and Ofcom. She could also have clarified some of the comments that she is reported to have made about the possible extension of Ofcom's scope to embrace more control over the BBC.

Even if the BBC was the overarching theme of the debate, as it will be reported to have been, a couple of other significant issues were raised by many hon. Members.

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The regional agenda was mentioned and we heard questions about how Ofcom's structure would reflect it. Comments were also made about consumer protection and the proper role of economic regulation in ensuring that proper consumer protection is delivered. I was especially grateful to the hon. Member for Sittingbourne and Sheppey (Mr. Wyatt), who livened up the debate with a novel and Machiavellian explanation of the BBC's apparent desire to remain outside the full control of Ofcom. Time will tell whether he is on the right track.

I thank my hon. Friends the Members for Henley (Mr. Johnson), for Upminster (Angela Watkinson) and for Witney (Mr. Cameron) for their contributions. In particular, I thank my hon. Friend the Member for Lichfield (Michael Fabricant), who, as always, spoke knowledgeably about these subjects. We heard valuable contributions—they were often informed by expert knowledge—from hon. Members in all parts of the House.

Twenty years ago, UK television viewers had access to three channels and 300 hours of television a week. I could recite statistics that several other hon. Members have given during the debate, but I shall not take up the time of the House by doing so. The point is that we are approaching what the right hon. Member for Manchester, Gorton (Mr. Kaufman) described as convergence becoming a discernible fact. In those circumstances, the objective of converging the regulatory environments of the broadcasting and telecommunications industries must be sensible. The Government's White Paper promises to

Those are fine words, but half a dozen years ago, that is all we had. The Government's lack of urgency in tackling the modernisation of the regulatory regime must be at least partly to blame for our relative decline. Our challenge now is to put in place the structures that will stimulate development of access infrastructure and content provision to ensure the re-establishment of our pre-eminence.

The Government promised a communications Bill in their 1997 election manifesto. They subsequently decided to remove telecommunications from the Utilities Bill in 2000. That decision may have been embarrassing at the time, but it was right, given that few characteristics of the industry as it is developing could be described as "utility". The decision to deal with telecommunications and the broadcast media through a single regulatory body is probably also right. We shall not know for sure until we see the substantive communications Bill.

The Government claim that they need a paving Bill to avoid unnecessary delay in implementing the communications Bill. The logical way to proceed would have been to publish the communications Bill earlier, get it on the statute book and subsequently establish the necessary structures, properly reflecting the functions that Parliament had determined to give Ofcom. To use the analogy of the hon. Member for Twickenham (Dr. Cable), we are putting the cart before the horse.

We are being asked to approve a structure for and give the Secretary of State powers to appoint members to Ofcom, an organisation whose remit we do not precisely know. Of course, the White Paper provides an outline of the Government's thinking, and we have the benefit of the debate that took place in another place. A clear advantage of that is that we can all agree that many aspects remain

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wide open for debate—for example, the relationship of Ofcom to the BBC and to the economic regulation function of the Office of Fair Trading, and the relative weight that should be given to the different objectives that Ofcom will be required to pursue.

Hon. Members will wish to consider many other issues in greater depth when the substantive Bill is published. Today's debate has provided a flavour of some of them. I appreciate that it is not the right time to discuss them in detail, but they are relevant to this Bill. It is clear from our debate that hon. Members from all parties wish to scrutinise carefully the Government's contention that the BBC needs to be excluded from the full scope of Ofcom's powers to create a level playing field for broadcasting.

We want to ensure that the body that the Ofcom Bill and the substantive Bill create is efficient and that the whole costs less than the sum of its parts. We should have liked Ofcom to have a specific duty to identify cost savings from the merger of the regulatory functions. We want to ensure that the regime has a light touch and is sufficiently flexible to respond to the rapidly changing needs of the converging marketplace. It should also be properly independent from the Secretary of State.

We want to know how Ofcom will approach its two distinctive roles of content and economic regulation. We especially want to ensure that Ofcom is structurally designed to focus on the active promotion and development of access infrastructure—the broad-band roll-out—and that that is at least as important as content regulation. Politicians are perhaps more familiar with dealing with the latter.

We are conscious of the dangers of different parts of a body being effectively owned by different Departments. The right hon. Member for Manchester, Gorton mentioned that when he reminded us of the recommendation of the Select Committee on Culture, Media and Sport that a single Department should deal with such matters.

Ofcom should have a clearly ordered set of priorities so that when different priorities and targets conflict— I can envisage that happening in respect of regional content and analogue switch-off—it is clear where they should lie. Only when we know how these and other issues should be resolved will it be clear what the appropriate structure, membership and staffing of Ofcom should be. It is not clear how Ofcom will prepare for a function as yet undetermined, or how the Secretary of State can properly appoint people with the right skills to a body whose remit is not fully defined.

The approach that the Government are taking in setting up Ofcom, appointing its members and getting the whole enterprise up and running with staff seconded from the existing five regulators, which will all remain in existence, is fraught with risk. If Ofcom is to be a success, creating and nurturing an environment in which Britain can resume its leading role, it needs to be a genuinely radical and innovative body. It needs to be a product of the converged world, not merely the bolting together of pieces of the old-world regulatory apparatus.

I fear that quangos can take on a life of their own. By creating Ofcom before Parliament has finally defined the regime that it is to regulate, by staffing it with secondees, by giving the existing regulators the power to make payments to Ofcom and by giving Ofcom an explicit role in developing the scope, extent and accountability of its own future activities, we risk creating an organisation that

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will be riven from the outset by internal turf wars. Convergence of technologies is probably rather easier to achieve than convergence of people's thinking after years of adhering to tribal loyalties and territorial instincts in different regulatory bodies. I would suggest to the Minister that it is unrealistic to expect such thinking to be set aside on the day that Ofcom is created. The practical danger is, therefore, that as Ofcom becomes established, as its institutional structure becomes entrenched and as personnel are appointed, it will effectively begin to limit the discretion of Parliament in relation to the substantive communications Bill that is to follow.

The Minister with responsibility for e-commerce said earlier that the Bill had a single function: to establish Ofcom. That is certainly not my reading of the Bill. It suggests quite clearly that Ofcom is not just a body charged with setting up structures and administrative organisations. Clause 2(1) gives Ofcom the function not only of facilitating the implementation of

but of "securing the modification" of any such proposals.

In other words, Parliament is being asked to establish, staff and pay for a body that will explicitly be given a lobbying role in relation to the substantive legislation that will define the regime that it is to enforce. It does not seem excessively cynical to suggest that those appointed to membership of Ofcom, and those seconded from the other organisations, will use the resources available to them to lobby for a regulatory regime in their own image. That strikes me as a fairly unusual, and perhaps unwise, way for us to proceed.

The Bill also tells us that Ofcom's functions will be complementary to the current regulatory regime, and specifically that Ofcom shall not interfere with

Contradictorily, the Bill requires each of the existing regulators to carry out their functions in

to carry out its functions and future functions. In my interpretation, that subordinates the work of the existing regulators to the requirements of Ofcom from the date that the body is created. Indeed, it will go further, in requiring the existing regulators to second-guess Ofcom's functions and subordinate their current functions to the facilitation of those of Ofcom.

This debate has identified important issues in relation to the Bill and issues that will come before the House when the substantive legislation is available to us. We are being asked to approve a paving Bill because of the delay in bringing the substantive communications Bill before the House. The Government must take a large share of the responsibility for that situation. We, on this side, having endured a Government delay of five years in that respect, do not wish to do anything that would hinder the recovery of the pre-eminent position in communications and broadcasting that Britain enjoyed just a few years ago.

We therefore reluctantly accept the need for the paving Bill in an unsatisfactory situation wholly of the Government's making. However, the Government must be in no doubt that the substantive issues must be dealt

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with when the communications Bill is debated. The challenge for Parliament is to ensure that that Bill genuinely promotes the future of the converged industry in Britain.

We believe that the job will be made more, not less, difficult by Ofcom being created before the underlying legislation is in place, but we must minimise any negative impact that that causes. The way to achieve that is to get the Bill in Committee as quickly as possible so that we can scrutinise its detailed provisions. Therefore, we shall not oppose Second Reading. I have outlined some of our concerns and I assure the Minister that we shall make constructive proposals in Committee to address them.

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