Office of Communications Bill [Lords]

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Paul Farrelly (Newcastle-under-Lyme): In referring to cost savings, the hon. Lady appears to mean purely organisational costs. Are those the only type of cost savings covered by amendment? Does she agree that the clause as drafted applies cost savings to any regulatory proposal, come what may? Does she also agree that when deciding on the future regulation of an industry, if one opts for the cheapest of all the proposals, one will not always get the best?

Miss McIntosh: That is a gross misreading of the amendment. Perhaps the hon. Gentleman can help, but my understanding is that we can talk only about the organisation and structure of Ofcom. We cannot talk about cost savings through the delivery of policy, because that will be considered under the main Bill. I think that you would rule me out of order, Mr. Stevenson, were I to go down that path. I would tread it with trepidation.

Paragraph 27 of the explanatory notes supports the contention in our amendment, stating:

    The current cost of regulating the communications sector is in the region of £118 million.

I have not had time to analyse that against the figure that the Minister last gave us, but I find it quite shocking. That cost is currently borne by the industry because the regulators charge and those being regulated reimburse that charge. We have learned that, if I understand the Minister correctly, although the Government are prepared to pay half the setting-up costs in the transitional period, half will be recovered as an extra charge on the industry. The industry will face a double whammy, which is unacceptable at a time when independent broadcasters have lost huge amounts of advertising revenue.

Mr. Simon Thomas (Ceredigion): I am not sure that the hon. Lady's amendments would achieve cost savings. If she wants to set standards of good taste and decency, that would be an extra burden of regulation for Ofcom. Is she convinced that the provisions she proposes sit side by side and would work together?

Miss McIntosh: I think that the hon. Gentleman means to help me and I am most grateful for that. I am expressing our hope that Ofcom will replace the five regulators. We shall discuss a sunset clause—at some length, I hope—later. In my view, if the Government fail to introduce a communications Bill by April, June or even September this year, they will have failed in their duty and misled the industry. The present Bill will fail in its task if the communications Bill has not come before the House by then. That would be totally unacceptable because it would lead to the addition of a sixth regulator; the industry would be asked to pay the costs of that additional regulator, including costs of staff and use of office space and facilities. That is what these amendments tackle.

The Government envisage that

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    the initial planning costs of establishing OFCOM so that it can prepare to receive its functions will be of the order of £5 million spread over the period of transition.

I would like to pause there for a moment—[Interruption.] Perhaps the hon. Member for Rhondda (Mr. Bryant) is free to engage more enthusiastically in the debate now that he has turned off his mobile phone. The figure for the initial running cost of Ofcom that the Government envisage is in the explanatory notes. Paragraph 27 also states:

    Once fully operational, the Government would expect the costs of OFCOM to be met almost entirely from those it regulates.

I understand that the costs of the current regulators are recovered. Is that correct?

Dr. Howells: Yes.

Miss McIntosh: The notes continue:

    However, as is common with setting up new statutory bodies—

Ofcom falls into that category—

    the Government will share with industry the cost of initial establishment, in the form of an advance or an initial grant in aid.

That was the subject of previous amendments. The notes continue:

    It is intended that subsequent repayment of any advance would be met out of the powers that OFCOM would have to charge fees to the sector under the subsequent Communications Bill.

That is the key to the amendment. I repeat, the Government envisage

    that the initial planning costs—

not running costs, operational costs, functional costs or managerial costs—

    of establishing Ofcom so that it can prepare to receive its functions will be of the order of £5 million spread over the period of transition.

I commend those who drafted that because they have a literary gift for language of which Robert Louis Stevenson and Sir Walter Scott, who, like me, were members of the Faculty of Advocates in Scotland, would be proud.

How long a period of transition do Government imagine being required before the communications Bill comes into effect? Will the Minister confirm that the Government intend the transitional period to last no longer than one year? The explanatory notes state that the communications Bill will not reach the statute book before mid-2003, when it should receive Royal Assent, which would entail that Bill passing through the House in one year. The Bill before us is only the baby Bill, and it has almost taken six months for it to go through the House of Commons because we take our powers and the opportunity to scrutinise legislation seriously. It would help the Committee if the Minister were to confirm that he envisages the transition period lasting only one year.

Against that background I must say that if the operational costs of the five regulators are in the region of £118 million, £5 million spread over the period of transition, assumed to be one year, is unacceptably high. Rather than making savings, the Bill is increasing the cost of regulation, and all of us would like to see less regulation and less cost. If the initial planning costs of establishing Ofcom to receive its functions are to be of the order of £5 million spread over the one-year period of transition, will the

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Minister confirm that that is in addition to the £118 million? Alternatively, will there be a saving on the £118 million?

We must know this morning what opportunities there will be for achieving cost savings, even during the transitional phase. We must know what Ofcom's operational and running costs will be, and what proposals for costs savings there are when Ofcom is up and running and has replaced the five existing regulators. I hope that the Minister will share with us his views on what these cost savings might be and on ways in which they might be achieved.

Amendment No. 11 states that Ofcom must have regard to

    standards of good taste and decency.

That might seem a curious provision in this amendment, but it is important that in seeking to save money and reduce the cost of regulation we do not compromise the high standards of good taste and decency that viewers, listeners and users of the communications industry legitimately expect. It would be totally unacceptable if those standards were compromised.

10 am

Mr. Thomas: I am not entirely convinced by the amendment. Does the hon. Lady seek to impose standards higher than those that currently apply—to increase good taste and decency beyond the standards currently maintained by the five regulators—or does she merely want Ofcom to carry on their work?

Miss McIntosh: I thank the hon. Gentleman for making that point, which gives me an opportunity to elaborate more fully than I might otherwise have done. I simply wanted to commend the high standards of taste and decency that are currently set by the five regulators. The ultimate focus of amendment No. 11 is the implications for cost savings, but it is important to put down a marker that we do not want current high standards to be compromised. We want to set a benchmark. The new regulator should equally and always have regard to good taste and decency. The amendment reflects my desire to incorporate the Mary Whitehouse effect at the inception of Ofcom.

Mr. Bryant: I am sorry to rise to that, but in most of her lengthy contributions the hon. Lady has said that we need light-touch regulation, whereas now she seems to be arguing for heavier regulation. She must make up her mind or stop this nonsense.

Miss McIntosh: I am pleased that I have provoked a reaction from a Government Member—obviously the ringing of his mobile phone caused the hon. Gentleman to spring into action. I welcome the opportunity to reassure him and other members of the Committee that I do not seek to impose a higher level of regulation. I merely want to put down a marker to the effect that in saving costs, especially in the transitional phase, we must not compromise standards of good taste and decency.

Nick Harvey (North Devon): With each group of amendments she speaks to, the hon. Lady expresses

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disappointment that the Bill does not set out what Ofcom is to do and that that is to be set out in the communications Bill. Given that the Bill only empowers Ofcom to set up an office and hire some staff, does she accept that it is an unnecessary burden to ask it to do so with due taste and decency?

Miss McIntosh: I am sure that the hon. Gentleman accepts that £5 million is a large sum of money with which to observe standards of good taste and decency.

Mr. Taylor: Would my hon. Friend extend her concept of taste and decency in spending millions of pounds to that exercised by the Lord Chancellor?

The Chairman: Order. That is an interesting observation, but I am sure that the hon. Gentleman does not intend to tempt the Committee to debate the Lord Chancellor's office.

Miss McIntosh: Unless, Mr. Stevenson, it was to be televised, in which case it would be in the poorest of taste and lacking in decency.

Amendment No. 58 would charge Ofcom with a duty to

    identify opportunities for achieving cost savings arising from any relevant proposals and do such things as may be necessary to secure that any costs savings are implemented.

Amendment No. 11 mentions the identification of potential cost savings; amendment No. 58 deals with their implementation. I have already mentioned those points quite fulsomely.

Amendment No. 44 would remove the power given to the shadow Ofcom to lobby for changes to the regulatory regime proposed by the Secretary of State. It seems quite unprecedented and unsatisfactory to allow the Secretary of State to establish a public body—the shadow Ofcom—funded by public money, which has an explicit function of challenging proposals to be made by the Secretary of State. Can the Minister assure me that the phrase that the amendment would remove is not intended to have that effect? That is how it appears on first reading, and I humbly submit that it would be inappropriate.

Giving the shadow Ofcom the power to lobby for changes to the regulatory regime that the Secretary of State proposes is, to me, mildly controversial. Ofcom will be made up of people who are, I suppose, seconded from the existing regulators. It will not be a product of convergence, but comprise bits of the old regulatory system bolted together. If Ofcom is allowed a large role in shaping the regulatory regime for the communications industry, there is a real danger that its approach will reflect existing structures and practices rather than be genuinely radical. I believe that it is the wish of the Committee, the industry and the current regulators that a radical approach be adopted to enable the industry to thrive.

I hope that the Government will take the opportunity to confirm that Ofcom will have not only the function of regulation of communications, but an explicit function to promote investment in communications infrastructure. That confirmation would be extremely helpful to the Committee and the industry. The Government must surely want to meet their own stated objectives of broadband roll-out

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and making Britain a leader in the telecommunications field once again. I have explained the amendments to the best of my ability and as clearly and concisely as possible. I hope that the Committee and the Government will support them.

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