Select Committee on Delegated Powers and Regulatory Reform Eighteenth Report

Annex 6


Letter from Baroness Blackstone, Minister of State for the Arts at the Department for Culture, Media and Sport, to the Chairman

I very much welcome the Delegated Powers and Regulatory Reform Committee's 14th Report, which was published on 19 March 2003. I thought you would find it helpful to receive an early indication of our response to the specific points that the Committee raised.

In paragraph 7 of its Report the Committee recommended that similar provision contained in clause 61(9) should be made in respect of the power delegated under clause 271(2), and that either the criteria for its use should be specified in the Bill or the level of scrutiny should be changed to affirmative procedure:

We agree with this recommendation, and we will amend the Bill. However, we do not think that it would be appropriate to carry all the criteria used in clause 61 across to clause 271. Firstly, whilst the "must-carry" and "must-offer" obligations are designed to achieve the same policy aim (the universal availability of public service broadcasting) they are distinct in that the former requires a person to carry a service provided by a third party, whereas the latter simply targets the provider himself. More particularly, the criteria listed in clause 61 (1) (b) to (d) are drafted in terms, and designed to address issues, which are only really of relevance to network providers. However, clause 61(10)(a) addresses what is essentially the fundamental policy consideration in this respect, namely what the Government considers it will profit the public to be able to access universally and free of charge. We will therefore propose amendments to clause 271 that specify criteria that broadly require the Secretary of State, in determining whether to amend the list of must-provide services, to balance the public benefit to be secured by the proposed amendment against the costs to broadcasters.

In paragraph 9 the Committee noted that neither the memorandum to the Committee nor the Explanatory Notes to the Bill explained the need for the power to enable the Secretary of State to make any alterations to the media ownership rules for Channel 3 services and radio multiplex services contained in paragraphs 6 and 10 of Schedule 14:

Part 1 of Schedule 14 establishes the new media ownership rules relating to cross-ownership of Channel 3 services and newspapers. Paragraph 6 gives the Secretary of State the power to repeal or modify any of those rules by order. Paragraph 10 of Schedule 14 gives the Secretary of State the same powers to repeal or modify rules under Part 2 of the Schedule (rules relating to the ownership of radio multiplex licences).

Our proposals take account of concerns that either the Secretary of State or OFCOM could have too much power to amend rules by legislation. Paragraph 15 of Schedule 14 requires that before making an order under any provision in Schedule 14 the Secretary of State must consult OFCOM (unless the order is confined to giving effect to recommendations made by OFCOM in a report of a review under clause 384). Paragraph 15(2) requires that any draft order must also be laid before Parliament and approved by a resolution of each House. Parliament will therefore have the opportunity to scrutinise any proposed changes before they become law.

In the future new technologies, convergence, the growth of multi-channel households and other changes could make the Bill's current media ownership arrangements inappropriate. We want to be able to act swiftly to make the necessary legislative changes, not to be constantly struggling to catch up with the evolution of the industry. We believe that these paragraphs allow us the important flexibility needed to ensure we can adapt the media ownership rules in a quick changing market.

In paragraph 10, which deals with clause 118, the Committee, whilst recognising that the Bill delegates a number of powers to OFCOM which are not subject to any Parliamentary procedure, drew the attention of the House to the fact that Parliamentary scrutiny applies only when OFCOM itself makes the relevant provision:

The provisions of clauses 117 to 121 are based on the existence of either a code approved under clause 118 or an order made under clause 119. In both cases there is effectively a two-stage process - the clause 118 code being made by the code-making body and subject to approval by OFCOM, whereas the clause 119 order would be made by OFCOM and subject to approval by Parliament (by the negative procedure). We believe that a two-stage approval process is perfectly adequate without the need to add a third stage of Parliamentary approval where OFCOM feel able to approve a code adopted by an independent body.

Moreover, as the Committee has noted, the Bill delegates a number of functions to OFCOM without making them subject to any Parliamentary procedure. Several aspects of the regulatory regime for electronic communications networks and services fall into this category - including the setting of general and specific conditions as set out in clauses 42 to 90. Clause 45 requires OFCOM to consult on any proposal to set, modify or revoke any such condition; to allow at least one month for interested parties to make representations in response to such proposals; and to consider every representation made within the representations period. Clause 117(5) subjects the setting of conditions in respect of premium rate services to the requirements of public consultation set out in clause 45. While the Bill does not subject the approval by OFCOM of the code referred to in clause 118 to the same requirements of public consultation, the code cannot have effect without the consultation on the conditions that OFCOM proposes to set that require compliance with the code. Thus, the process is as follows: the code-making body draws up a code, OFCOM approves it under clause 118 (provided the criteria in clause 118(2) are satisfied), and there is then a public consultation pursuant to clause 45 on the setting of a condition requiring compliance with the code. This consultation provides a further check on the operation of the provisions of clauses 117 and 118. In any event, it is quite probable that, in practice, the code-making body will consult publicly on a draft code before it is submitted to OFCOM and OFCOM is likely to consult before approving it.

Accordingly we believe that the power given to OFCOM by clause 118 is appropriate.

In paragraph 11, which deals with clause 131(6), the Committee suggested that, in the absence of reasons as to why OFCOM's power should not similarly be subject to negative procedure, the House may wish to invite the Government to provide an explanation:

We agree that an order made under clause 131(6) should be subject to the negative Parliamentary procedure. We also propose that the negative procedure apply to orders made under clause 131(9), which enables OFCOM to apply the clause by order to agreements granted or entered into before the commencement of the clause, to give consistency with the negative procedure for orders under section 96 of the Telecommunications Act 1984. As a result we shall be amending the Bill accordingly.

In paragraph 12, the Committee suggested that the House may wish to invite the Government to provide reasons why clause 1(7) modifies the Deregulation and Contracting Out Act 1994 so that an order could be made permitting the contracting out of OFCOM's powers to make subordinate legislation, unless those powers are exercisable by statutory instrument:

Clause 1(7) provides for the Secretary of State to make an order for OFCOM to contract out particular functions to third parties. Under clause 1(7)(b), this will include OFCOM's powers to make subordinate legislation, except where exercisable by statutory instrument. Subordinate legislation includes the setting of codes and standards. Without clause (1)(7)(b), OFCOM would be unable to contract out any function of setting codes or standards.

Exercising the power in this provision would therefore enable third parties to develop rules and codes of practice in association with OFCOM. For example, the Advertising Standards Authority currently operates a self-regulatory system in respect of non-broadcast advertisements. The provision would enable OFCOM, should they wish, to contract out to the ASA their functions relating to broadcast advertisements, which involve the setting of codes and standards.

OFCOM will not, however, be able to divest themselves under this provision of their responsibility for their functions to be carried out effectively. Nor will OFCOM be able to contract out any function of making statutory instruments.

I am placing a copy of this letter in the Libraries of both Houses and in the Printed Paper Office.

11 April 2003

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