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Standing Committee E
Tuesday 29 January 2002
[Mr. George Stevenson in the Chair]
Miss Anne McIntosh (Vale of York): I beg to move amendment No. 19, in page 10, line 42, at end add—
'and such grants shall be sufficient to enable OFCOM adequately to fulfil its statutory functions; and to employ sufficient staff for that purpose.'.
It gives me particular pleasure to welcome you to the Chair of the Committee, Mr. Stevenson, in view of our long and continuing partnership in other places. I look forward to working under your chairmanship.
It gives me almost as much pleasure to move amendment No. 19, which is self-explanatory. It requests that such grants as are made available should be sufficient to enable Ofcom to fulfil its statutory functions adequately and to employ sufficient staff. It may help the Committee if I explain the background to the amendment, which comes from several representations received during the consultation on the White Paper and the run-up to the Bill's Committee stage.
Centrica said that Ofcom would need to be properly resourced, and its response to the consultation on the White Paper highlighted the difficulties presented by the high staff turnover at the Office of Telecommunications. We should learn from that experience that Ofcom's structure must generate sufficient interest, enthusiasm and dynamism to attract the right type of person, and that it will have sufficient resources. I am sure that we shall discuss that when we consider the money resolution attached to the Bill. It is important that we attract the right calibre of staff, that we have sufficient staff and that sufficient grants are extended to Ofcom to enable it to fulfil its statutory functions.
I am mindful of the fact that the better regulation taskforce has reported that there should be less regulation. Hopefully, Ofcom will apply a light touch. The Bill replaces five regulators with only one. In earlier amendments we reflected on Ofcom's remit, discussed the structure of the board, and considered how executive and non-executive members will be appointed to the board, so it is appropriate to consider whether there will be sufficient staff and an adequate support structure.
The amendment is designed to probe the Minister on a matter to which his Department has given considerable consideration. I know that he will consider this part of the Bill at some length in his response. Will he take the opportunity to share with the Committee the nature of the grants, how long they will apply and the sums involved? Finally, will he say how large Ofcom's staff is intended to be?
Michael Fabricant (Lichfield): May I say what a pleasure it is to be chaired by you, Mr. Stevenson? I
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feel that we are a little Staffordshire coterie here in the Committee.
I rise to support the amendment moved by my hon. Friend the Member for Vale of York (Miss McIntosh). I suspect that the Minister will say that it is unnecessary because the schedule already states that there will be sufficient sums as the Secretary of State, or perhaps the Chancellor of the Exchequer,
may think fit for the purpose of enabling OFCOM to incur or meet liabilities in respect of capital and revenue expenditure.
I think it right, however, that my hon. Friend has tabled the amendment. As she has pointed out, some of the organisations that will be incorporated into Ofcom are not necessarily happy ships, if ships' happiness is measured by staff turnover.
I am not sure what the situation is in Oftel. It certainly contrasts with the Radio Authority, which is a very tight ship on which staff serve for many years. David Vick, its deputy chief executive, came from the radio division of the old Independent Broadcasting Authority; he has been there for the Radio Authority's whole life, as has Tony Stoller, its chief executive.
As the schedule stands, the Secretary of State and the Treasury will be tempted to make provision only for the bare minimum of services that Ofcom will provide, especially as the paving Bill deals only with the shell organisation of Ofcom. Shell or not, Ofcom will have important functions to perform, especially in liaison with the organisations that it will eventually absorb if the main communications Bill is enacted. Continuity is therefore needed. That can be maintained only if there is longevity of staff. If only the bare minimum is maintained in the operation of the shell organisation, there may be a lack of continuity through staff leaving. That would be a shame.
The amendment points out that money must be available for Ofcom not only
to fulfil its statutory functions,
which is to some extent included in the Bill, but
to employ sufficient staff for that purpose.
One might ask whether high staff turnover in Oftel has been caused by its having insufficient staff and people feeling that they are overworked, abused and not appreciated as much as they should be. We Members of Parliament should all understand that: we too are overworked and not appreciated as much as we should be.
I hope that the Committee will support the amendment and that the Minister will not fall back on his little piece of paper from his officials and say simply that the amendment is redundant because its purpose is already covered in the schedule.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Dr. Kim Howells): I, too, welcome you to the Chair, Mr. Stevenson.
Perhaps it would be convenient if I explain to the Committee how the Government envisage the funding of Ofcom during its initial stages. The general approach for sectoral regulators is that the cost should be borne by the sector concerned. That is
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how things have worked until now and how we envisage they will work in the future. In other words, regulation is part of the cost of doing business, and anyone with experience of working in those sectors knows that that is how existing regimes are financed.
We will set out powers to charge fees in the main communications Bill. For the anoraks among us, only half the cost of the Broadcasting Standards Commission, which is financed in a slightly different way, is involved. Ofcom will need to consider the best way to levy the regulated part of the communications sector, and how to avoid as far as possible cross-subsidy between one part and another, so that the burden on individual businesses is fair. I expect the Ofcom board, once appointed, to address that issue and to present its proposals publicly. In general, there will be little or no need for grants once Ofcom is regulating.
During the preparatory stage, however, Ofcom will have no statutory income. The Government believe that the extra costs of creating Ofcom should be borne by the sector. It makes more sense for Ofcom to be financed by businesses that are in the sector when the new regime comes into force than by those that are in it today. We envisage that all, or almost all, of the costs of transition will be financed by a loan to Ofcom from the Secretary of State. That loan will be paid back by Ofcom out of the fee income that it will start to receive once it moves into the regulatory stage.
Michael Fabricant: I appreciate the time that the Minister is taking to explain this. Although he is right to say that once Ofcom is up and running it should be funded by the sector that it regulates—that is normal—the method of funding that he proposes is abnormal. Is it not double-counting? Is he not asking a sector that is already suffering from lack of advertising receipts to support not only the Independent Television Commission and the Radio Authority, but the shell Ofcom organisation?
Dr. Howells: No, it is not double-counting. I am talking about the additional costs of setting up a body of which the entire industry is in favour. It wants Ofcom to happen, but it does not assume that it will get a free ride; it knows that it will have to pay. The hon. Gentleman may think that the taxpayer should pay for it—
Michael Fabricant indicated dissent.
Dr. Howells: Well, that is what is he is saying. I am not saying that the taxpayer should pay for it. I am saying that the sector should pay for it.
I am pleased that Opposition Members want to ensure that Ofcom has adequate funds to fulfil its functions. The hon. Gentleman is right to argue that Ofcom and its constituent parts should have the self-confidence to retain its staff and the resources to ensure continuity. As I have told the Committee several times, I am absolutely determined that the creature we are creating will not immediately assume any of the regulatory powers that are currently undertaken by the existing regulators. The staff who work in their offices should not feel that their jobs are
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threatened by the advent of Ofcom. It will assume a regulatory role only after Royal Assent to the main and substantive communications Bill.
Grants are not the way to achieve our objective. It will be for Ofcom to consider during the preparatory stage what it needs to cover the cost of preparation and to negotiate a loan from the Secretary of State to cover that. Once it enters the regulatory stage, it will need to set statutory fees at a level that covers the cost of the resources that it needs to regulate. Ofcom will be obliged to consider carefully both the costs needed and the level of fees required. The paving Bill provides for that in paragraph 8 of the schedule.
Ofcom will not be able to adopt a cavalier attitude to costs—its accounts will be subject to the National Audit Office, and the Public Accounts Committee will be able to examine them. The way in which it sets fees will be subject to judicial review. In due course the House will be able to consider the provisions on funding in the draft of the main Bill.
Michael Fabricant: I am following the Minister's argument with great interest. He is talking about the amount of payment that will be made by those who are regulated. Can he give some idea of the basis on which the interest rates that will be charged to Ofcom will be set, as that will be significant when it eventually recovers the moneys from the bodies that it is regulating?