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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Communications Bill, have consented to place their prerogative and interests, so far as they are affected by the Bill, at the disposal of Parliament, for the purposes of the Bill.

Read a third time.

Clause 3 [General duties of OFCOM]:

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Lord McNally (Liberal Democrat)

moved Amendment No. 1:

Page 3, line 8, at end insert "with due regard to the qualifications and limitations contained in paragraph 6A of Schedule 14"

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Lord McNally (Liberal Democrat)

My Lords, Amendment No. 1 paves the way for Amendment No. 131 that is grouped with it, which I hope will provide the core of the debate that we are about to have. That amendment stands in the name of the noble Lord, Lord Crickhowell, and is identical to an amendment which has being tabled at different stages of the Bill in the names of the noble Lords, Lord Hussey and Lord Puttnam. The name of the noble Lord, Lord Hussey, does not appear on this amendment. As he is unwell, I did not think it right to disturb him to ask whether he would put his name to it. The name of the noble Lord, Lord Puttnam, is not on the amendment for reasons which I fully understand and accept.

The Puttnam committee report had a tripod of recommendations, which it believed would immensely strengthen the Bill in providing essential protection for our communications industry against the predatory instincts of the global multi-media conglomerates. The first recommendation was that Ofcom should be able to test the totally unproven assertion that ITV would benefit from American ownership and American money before opening up our markets without any reciprocation on the part of the Americans.

Last week the Government were able to resist the amendment by 11 votes, with only half of Labour Peers supporting the Government and helped over the line by a three-line Whip from the Conservative Front Bench.

The second leg of the Puttnam tripod was the inclusion of a tough plurality public interest test. Thanks to the persuasive powers of the noble Lord, Lord Puttnam, the Government will be bringing forward amendments to insert such a test later today.

That brings us to the third leg of the tripod which is contained in this grouping before the House. The amendment seeks to put specific restrictions on the ownership of Channel 5 in terms of cross-media ownership between print media, satellite and terrestrial television, which would—as did happen—as I said at Second Reading, create a grotesque concentration of power in any industry and in the communications industry would constitute a threat to our democracy.

I can already hear the Minister arguing that this amendment is no longer needed thanks to the tough new plurality clause which we are about to receive. But is that so? Not according to the Financial Times. On 3rd July, the day after the Puttnam plurality amendment was accepted, it quoted an unnamed senior DCMS official as saying that the amendment would not hamper the principle of allowing US media groups to bid for ITV or enabling newspaper publishers to seek control of Channel 5.

The media expert, Owen Gibson, in the Guardian said:

"Competition lawyers believe that the new test will be a significant hurdle to media owners wanting to branch out into other sectors. A lot will depend on how Ofcom, which under Lord Currie has promised to retain a 'light touch', chooses to interpret the public interest test".

So, there we have it: after today we are in the hands of the media lawyers and an untried regulator and an untested piece of legislation. That is why the House should take this final opportunity to have its say on the matter.

The plurality test provides Ofcom with a big and powerful gun. These amendments give a clear direction as to which way it should be pointed. Some people say that this is aimed at the ambitions of Mr Rupert Murdoch, but Tessa Jowell has told us at great length that this is not a Bill tailored to Mr Murdoch's ambitions. Furthermore, Mr Murdoch has said that he has no interest in Channel 5. So let us have no more about this being an anti-Murdoch amendment. It is aimed at thwarting any Australian/American multi-media conglomerate with significant press and satellite holdings taking such a stranglehold on the British media.

I know that asking Labour Members to vote with us today puts great strains on their loyalty. The Whips are very persuasive. I am a great fan of "24" on BBC2, which is an example of good American television. As devotees may know, in Sunday's episode the hero, Jack Bauer, was left in the hands of the world's most cruel and sadistic torturer, who, I understand, was on loan from the Government Whips' Office.

I ask Members on all Benches to ask themselves what they will answer in the future when asked about what they did to make sure that the right safeguards were in place. What if the plurality test does not prove as strong as we think it is? What if the noble Lord, Lord Currie, proves less robust in his interpretation than we would like? What if Mr Murdoch changes his mind and comes calling for Channel 5?

We all remember the impressive mea culpa of the noble Lord, Lord Renton, about the 1990 Act. What will noble Lords who today vote "Not-Content" say? "David Puttnam asked me not to vote"; "I thought the plurality tests would be enough"; "I was bullied by the Whips"; or will they say, "I used the one personal power I had—my vote in the Lobby—to send a message to government, Ofcom and to the media moguls that we expect diversity and choice to be defended with vigour and this legislation to be interpreted robustly"?

As the noble Lord, Lord Crickhowell, reminded us on Report, the media moguls have a record of challenging rather than complying with regulation.

Shortly before I entered the Chamber, I received an e-mail from a senior person in the television industry who asked me to put the following questions to the Minister. He said:

"If, as the Government is implying, the plurality test is the solution, that begs the question why the 20/20 rules are being retained for ITV. If the test is not enough for ITV—where the competition and plurality hurdles to Murdoch takeover would anyway be immense—it is disingenuous for Government to imply that the plurality test alone is enough for C5—where actually the competition and (as defined) plurality concerns may be surmountable.

Furthermore, the Government extending the 20/20 rule to ITN at the same time as introducing the plurality test. Again this suggests that the plurality test is not enough and gives a lie to the argument that it is too late in the day for extending the scope of 20/20".

Those points were made by an expert within the industry and it will be interesting to know what the Minister says about them.

Essentially, this amendment had its origin in the recommendation of the Puttnam committee, which said that if the Government believed that it is unacceptable for a major terrestrial channel, a major newspaper group and the dominant satellite network to be open to shared ownership, then the clearest and most straightforward way to achieve that was to maintain the prohibition on ownership of Channel 5 which presently exists.

The questions to be answered today are clear-cut and simple. Do the Government consider such a concentration of media power to be unacceptable? If so, why do they resist the most unambiguous and clear-cut way of preventing such an accumulation of cross-media power?

Listen carefully, my Lords, and if the answers are not convincing, I hope noble Lords from all Benches will join me in the "Content" Lobby today. I beg to move.

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Lord Crickhowell (Conservative)

My Lords, my name is attached to Amendment No. 131 and I therefore support the noble Lord, Lord McNally, on both the amendments in this group.

The noble Lord concluded his remarks with a quote from the Puttnam committee, which I was going to take as the simple proposition on which to base my speech. He referred to this being the clearest and most straightforward way to make sure that we did not have a major terrestrial channel, a major newspaper group and a dominant satellite network open to shared ownership.

The noble Lord, Lord McNally, also observed earlier in his speech that the Government will argue that now we have a plurality test, these amendments are superfluous. He said that the plurality test would depend upon the approach of the chairman of Ofcom and his board and on the effectiveness of the legislation. However, it is a little worse than that. It is actually going to depend on the attitude of Ministers and the action of Ministers. I want to say a little more about that.

Noble Lords must be clear that the purpose of the plurality test as it is about to be added to this Bill by the government amendments, which we will debate later, is not to impose a plurality test. The purpose is to enable a media plurality test to be carried out in the event of a qualifying merger.

According to the Minister on Report,

"a plurality test would, in principle, allow the Secretary of State to make a judgment on media mergers".

He went on to say:

"It will be for Ministers to determine whether the merger causes sufficient plurality concerns for it to be blocked, or for conditions to be attached".—[Official Report, 2/7/03; col. 914.]

Therefore the test is very conditional and it is all in the hands of Ministers. The test may be effective if Ministers decide to act, but that is a very big if. We know, because Ministers have told us, that the Government took the view that there were very good reasons for removing the restrictions on a major newspaper owning or controlling Channel 5, although in response to repeated questions since, it has emerged that the only difference they can spell out is the difference in size between Channel 3 and Channel 5 at the present time.

We know that the Government intend to be restrictive in their use of this new plurality power. There is no guarantee that the Government would use it to prevent a major national newspaper owning Channel 5—the Minister made that perfectly clear on Report. I refer to his remarks in col. 915 of the Official Report of 2nd July 2003.

We are told the Government will publish guidelines setting out in more detail the areas where the test will generally be applied. I am not sure whether these guidelines have yet been issued. In any case, guidelines are only guidelines. Therefore, we have before us what might be termed the "if, maybe, possibly, and then again, possibly not" clause.

However, the arguments against allowing a newspaper which has a national market share of 20 per cent owning Channel 5 are immediate and compelling. They do not depend on some future increase in Channel 5's market share. Those arguments were put with great conviction, with admirable brevity and clarity and with unanswerable logic by my noble friend Lord Glentoran, speaking from the Opposition Front Bench in Committee. I agreed with everything he said then. He provided grounds enough to support the certainty of the amendment before we again fog it all with the uncertainty provided by the Government's plurality test.

There is a another compelling reason for Parliament removing the uncertainty. We know that there has never been a moment in the history of the modern media when its barons have not been prepared to exert every pressure in support of their own interests. We also know that there has never been a time when the powers of media barons to exert pressures have been greater—greater perhaps than when Stanley Baldwin made his famous remark about "power without responsibility . . . the prerogative of the harlot down the ages".

As the Bill has gone through Parliament, pressure has been applied to both the Government and the Opposition to allow the giant oligarchies the maximum freedom to exploit their already great power. I am alarmed at the prospect that we leave all this uncertainty in the hands of Ministers, who will inevitably and unavoidably come under greater pressure, no matter which party is in power. That pressure will be political and financial to allow the great media moguls to have their way.

We should build certainty into the Bill. I therefore urge my noble friends to support this amendment and with it Amendment No. 131.

3:30 pm
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Lord Lipsey (Labour)

My Lords, I accept the test that the noble Lord, Lord McNally, has put before us; namely, when we go into the Lobbies today, we should be thinking hard about how in 10 or 20 years we shall answer for our vote in the light of developments. I accept the test and have thought hard about the subject as a result. I want to make only three brief observations.

First, the noble Lord, Lord McNally, described the committee's recommendations as a trifle. I do not see it like that. I believe that in the plurality test we have a solid pillar which requires little by way of gothic buttresses to be added to it. It is sufficient to stand.

Secondly, although there are dangers such as those described by the noble Lord, Lord McNally, there is another. That is that Channel 5 does not do very well. In five or 10 years' time, the only people who might be prepared to invest in it are those who would not on plurality grounds be ideal. The Minister at the time will be able to account for that, but we are legislating for five, 10, 15 or 20 years.

If Channel 5 goes belly-up due to the fact that no one is prepared to invest in it because the law we have passed allows no flexibility for changing circumstances, that might be regrettable, particularly for those who get pleasure from Channel 5. It is, after all, a channel contributing to plurality, but it has no guaranteed existence. That is a matter that this House should weigh.

I want, thirdly, to comment on a matter that weighs heavily with me. In my time in this House—it is short compared with most noble Lords—I have known no other Bill that has changed so much during the course of its passage here. The Government have been prepared to make many fundamental changes. Indeed, one only has to look at today's Marshalled List to see the number of government amendments. They have not been tabled because the Government have cocked things up, but tabled in response to the views put forward by this House.

Like many noble Lords, I know the kind of arguments that occur among Ministers when considering amendments which come from this House. Many people in another place and elsewhere say, "Oh, don't pay any attention to them"; or they say, "If you give them concessions, what's the good? They just want more. They are insatiable, that lot. Take them on. Ignore them". Perhaps the Licensing Bill is an example of that.

Thanks to my noble friend Lord Puttnam, we have achieved a remarkable result with this Bill. It is beyond what most of us would have believed. We are now right, particularly Members on this side of the House, to say, "The deal is done. It is a success. We have achieved the objectives we wanted to achieve and now we will support the Government through the rest of the Bill".

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Lord Pilkington of Oxenford (Conservative)

My Lords, I was a member of the Joint Committee and I must remind your Lordships that we put forward a modest proposal that Ofcom should consider this matter. The Government's concession is that Ministers should consider the position. I totally share the view of my noble friend Lord Crickhowell that Ministers are subject to enormous pressure. The committee was united in the view that Ofcom should consider the position. It did not, as the noble Lord, Lord Lipsey, said, recommend setting the situation in tablets of stone. It said, "Allow this body, which is neutral and not subject to political pressures, to consider the position".

I urge your Lordships to support Amendment No. 1 tabled by the noble Lord, Lord McNally. Ministers are politicians and are subject to pressure. My noble friend Lord Crickhowell is right about that—he was one of them. I urge the House not to follow the honeyed words that we have just heard.

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Baroness Cohen of Pimlico (Labour)

My Lords, I support the amendment tabled by the noble Lord, Lord McNally. The plurality test, though useful, will not quite do the job, particularly if it is in the hands of Ministers to apply it. I was prepared to consider the plurality test when Ofcom, which one hoped would be independent of Ministers, had the application in its hands.

Media are political. We would do well not to be too confident about how culture stands up to anyone else's agenda. It does not stand up very well—it never has. I therefore consider it important to put in place as many bodies charged with considering the preservation of our culture which do not include Ministers. I therefore support the amendment.

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Lord Peyton of Yeovil (Conservative)

My Lords, I want briefly to support every word the noble Baroness, Lady Cohen, has just spoken. In particular, I want to echo what was said by my noble friends Lord Crickhowell and Lord Pilkington. I do not believe that the plurality test stands on its own and I greatly hope that your Lordships will support the amendment moved by the noble Lord, Lord McNally.

I sadly add this. While I have every admiration for the way in which my noble friend Lady Buscombe has led the opposition to the Bill, I deeply regret this lacuna. I speak for myself and not for her. I suspect that she is under heavy pressure from some gentleman down the corridor, whose name I can never remember, who has given contrary instructions in this particular context. I can say only that I deeply regret that and I shall certainly disregard them with some happiness and support the amendment in the name of the noble Lord, Lord McNally.

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Lord Phillips of Sudbury (Liberal Democrat)

My Lords, I want briefly to make a point referred to rather vividly by the noble Lord, Lord McIntosh, when we last debated the Bill; namely, that the extent to which tests of the complex and rubbery kind which are implicit in his Amendment No. 85, which introduces the plurality test, can be the subject of intense legal bombardment by well-financed and resourced would-be litigators, should not be under-estimated by this House.

While undoubtedly the concession made previously and the tabling of the plurality amendment is most important, I believe that the rigour which would be added to it by the amendment in the name of my noble friend Lord McNally would carry the position much further. Amendment No. 85, introducing the plurality test, talks about,

"a sufficient plurality of persons with control of the media enterprises".

Media lawyers will lick their lips at the extent to which that will give them endless prospect for muzzling and befuddling the poor old lawyers who will be working for Ofcom.

I invite your Lordships to look at some of the other great regulators we have set up in the past 20 years. Let us take, for example, the Serious Fraud Office, which in the past five years has brought only a single prosecution for insider trading while everyone in the City knows that it is an hourly and daily event. Why? Because the criteria for the bringing of a prosecution and the range of legal guns levelled against the authorities if they try to prosecute are such as to make an insider trading prosecution a farce. I put that point to the House as a practical consideration.

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Baroness Howe of Idlicote (Crossbench)

My Lords, I also wish to support the amendment of the noble Lord, Lord McNally. There are two points that I wish to make, both of which have been made already but they need emphasising. The noble Lord, Lord Crickhowell, pointed to the two tests that already exist and have been reaffirmed by the government amendment—the test of 20 per cent for both ITN and Channel 3. There really is no argument why the same restrictions should not apply to any would-be owner of Channel 5.

The second point is one that other noble Lords have expressed. It is about the involvement of Ministers. As noble Lords will know, I have always had a great concern about the telecommunications and contents side coming together—the techies and the fluffies—because there could well and truly be conflicts of interest. Naturally, the Minister for Trade and Industry will be the one to be consulted. However, there are two Ministers who are to be responsible for this Bill. It is important to know that both would be consulted before any decision was taken.

Having said all that, I agree entirely with the noble Lord, Lord Lipsey. We have had a tremendous response from the Government and we all applaud that. It is this continued worry that we wish to reinforce by testing the amendment of the noble Lord, Lord McNally.

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Lord Borrie (Labour)

My Lords, I would like to speak against the amendment of the noble Lord, Lord McNally, despite the fact that I admire his work in this field. As he made a comment on the strength of Government Whips, I add to my admiration the way in which the Liberal Democrat Whips have gathered such a splendid force behind him. Not for the first time, the Liberal Democrats are extremely good at filling their Benches in support of this important amendment.

This Bill, which will be passed in the very near future, is one which will stand for a considerable period of time. If I concentrate on Amendment No. 131 which specifically deals with Channel 5 licences, it says anyone having a national newspaper market share of 20 per cent or more shall not be allowed to acquire Channel 5. That is concentrating on the now and near future. What my noble friend Lord Puttnam, the noble Lord, Lord McNally and others of the pre-legislative scrutiny committee were really concerned with was to make the Bill future proof. They were not just concerning themselves with the temporary moment. They were to consider life as we go ahead in which there will be huge numbers of channels of various kinds—terrestrial, satellite and others whose names we do not yet know. Things will not be the same in five or 10 years.

If we look at the amendment more closely, it is such an inflexible position to say 20 per cent. While that may be a significant figure at the present time, who knows what will be the right figure in years to come? Who knows whether it is desirable that an owner of 19 per cent should be allowed freely to acquire Channel 5? The noble Lord may say if anybody does not fit the exact criteria of Amendment No. 131, then he may come within the plurality test which is to be introduced by the government amendment. It seems to me that the plurality test which has been moved before by my noble friend Lord Puttnam, but criticised by others today because of ministerial involvement, is much more future proof, much more sensible to put into a Bill which we hope will last for many years.

I cannot see a government of any complexion being particularly keen to have a communications Bill of any kind for years to come because of the difficulties of this one. Of course the plurality test involves Ministers because as noble Lords know, it fits into the structure of the Enterprise Act 2002. But that is not to diminish the role of the principal adviser on these matters—Ofcom. Its views would be known and made public. No government Minister with any sense, whether in an existing or future government, will override the carefully reasoned advice of Ofcom—assuming it is carefully reasoned. I do not believe that Ministers will go off on a wild tangent of their own in a matter of this sort.

My noble friend Lord Puttnam, the noble Lords, Lord McNally and Lord Crickhowell, and other noble Lords have promoted the plurality test for months. It is now shortly to be proposed by the Minister. This is something which can cater for all situations, for the future as well as the present. Having this extraordinarily inflexible amendment, which the noble Lord, Lord McNally put forward, is not necessary.

3:45 pm
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Lord Maclennan of Rogart (Liberal Democrat)

My Lords, perhaps I may begin by saying to the noble Lord, Lord Borrie, that I am not here because anyone suggested that I ought to be here. I am here because his suggestion that this very large Bill could be made future proof in the way he suggests, is certainly not borne out by experience of earlier attempts in 1990 and 1996 to regulate cross-media ownership for all time. I do not imagine the present Bill will have any greater success in longevity. What is quite clear from my recollection of those Bills is that if one seeks to set up a framework to protect diversity, it is necessary to have figures which the noble Lord characterises as arbitrary. Percentage wise, it has been done before and no doubt will be done again. The nub of the opposition has not come so much on the merits of the particular amendments before us as the suggestion by the noble Lord, Lord Lipsey, that somehow if we were to carry these amendments we would be chancing our arm too far, pressing our luck too far. The suggestion is that the response of the Government might be less rational as a consequence.

What has characterised the debate on this Bill has been the degree of dialogue between the Government and many other interested parties. With a Bill of such major importance and of such gargantuan extent, it seems entirely appropriate that that should be the approach. I recognise that the time available to consider these matters has been very great, but I do not believe it has been too much or that the Government are likely to abandon the approach that they have taken which is to consider these matters on their merits. As my noble friend Lord McNally said, this amendment was not put forward by the Puttnam committee as an alternative to the plurality clause. As I read the report, this was seen as a belt and braces measure necessary because of the importance of this issue. I cannot think that at this stage the judgment of what we would be doing if we carried my noble friend's amendments and that of the noble Lord, Lord Crickhowell, would be any different in another place, where there is, properly, considerable unease about media concentration, not just now, but in the long term. Many of those engaged in this debate, and who will be engaged in further consideration of the Bill, took part in debate on the 1990 and 1996 Bills. The noble Lord, Lord Corbett, who participated in those debates, expressed concern about these matters at that time. I see no reason to believe that the judgments of principle made then would be any less focused today. I hope that we will not shy away from our duty to provide the best framework possible and that we will take the advice of the noble Lord, Lord Puttnam, and his colleagues in supporting my noble friend's amendments.

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Lord Gordon of Strathblane (Labour)

My Lords, I, too, support the amendment of the noble Lord, Lord McNally. I concede that, at worst, it is a belt and braces measure and that the clause might not be necessary if the plurality test is strong enough. However, in a matter as important as media ownership, which is pivotal to the future of democracy in this country, I would rather—save in the presence of the noble Lord, Lord Peyton—add a clause than take a chance on the issue not being caught. Given that there are already 400-odd clauses, I do not think that the rainforests will be endangered by the use of extra paper.

I agree with the noble Lord, Lord Maclennan, that the amendment addresses a subject different from the plurality test. It addresses a specific. At Second Reading, I said in passing that I cannot see why people are treating Channel 5 differently from Channel 3; after all, both are terrestrial television services licensed by the Independent Broadcasting Authority. Why are we treating one differently from the other? Two reasons can be alleged. The first is audience size. Surely we all recognise that that could change. Channel 5 could end up with a bigger audience, particularly allied to media promotion from a national newspaper. Channel 3's audience could well decrease, so that argument does not hold water.

The only argument that bears examination is that, at present, Channel 5 does not cover the whole of the UK. At present, the channel covers over 75 per cent, but that could change. Why are we treating Channel 5 so much differently from Channel 3? If it is logical to impose restrictions for Channel 3, it is also logical to impose them for Channel 5. This clause is a specific. It is not an alternative to the plurality test; it is an addition to it to ensure that there is no possible doubt about what noble Lords mean. At the moment, I support the amendment.

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Lord Thomson of Monifieth (Liberal Democrat)

My Lords, I support my noble friend Lord McNally. Normally, I agree with the noble Lord, Lord Borrie, on these matters, but I was tempted by his remark that he puts his faith in the fact that he could not foresee a situation in which Ofcom's serious views were rejected by Ministers. The noble Lord, Lord Borrie, was a very distinguished director of the Office of Fair Trading for a very long time. I do not know the full details of his history, but I would be very surprised if he was totally content with all the ministerial decisions put before him.

I support the views that the noble Lord, Lord Gordon of Strathblane, has expressed. Channel 5 must be regarded as a distinctive, separate case to be dealt with on its own merits. It is the fifth terrestrial public service channel in this country. It is true that, because of its lack of total coverage and for other reasons, the public service regulator has given it a lighter remit than the other ITV channels. However, that will change.

I find Channel 5 rather good these days. Very often, I find programmes on the channel that interest me. I hope earnestly that its standards and coverage will improve. I see no reason why it should be treated separately from the ownership considerations that apply to the rest of the public service commercially-funded system in this country—the ITV system. For those reasons, it is wholly right that Channel 5, as the fifth channel of our public service broadcasting system, should be safeguarded as proposed by my noble friend Lord McNally.

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Lord Sheldon (Labour)

My Lords, for some years now, I have been concerned about the increasingly close relationship between the Government and the media. We have seen it as an extreme form—nowhere near the one that we are discussing today—in Berlusconi, where there is almost a fusion between certain parts of the media and important parts of the government. That is what concerns me most. That relationship seems to be growing over time. We have never had that kind of relationship in this modern media age, but we are seeing it now. This is an opportunity for us to say, "Enough is enough". There comes a time when one must bring it to a halt.

Politicians now depend more than ever before, not so much on getting support from the media, but on avoiding unfavourable mentions from them. That has now become an important aspect of government and political life. We need greater safeguards to protect us from the increasing powers of these kinds of relationships. For that reason, I support the amendment moved by the noble Lord, Lord McNally.

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Baroness Buscombe (Conservative)

My Lords, I wish to be very brief. I join the noble Baroness, Lady Howe, and the noble Lord, Lord Lipsey, in congratulating the Government for making many moves in relation to the Bill. I do not think that it is the case, as the noble Lord, Lord Lipsey, stated, that we are worried about pushing our luck too far. I genuinely mean that. Several noble Lords, including myself, were deeply concerned, when we set out to scrutinise the Bill in your Lordships' House, that the Government would not show signs of shifting, and of listening to noble Lords and our debates.

However, the Government have listened on several occasions. On behalf of Her Majesty's Opposition, I am extremely grateful for that. We support the Government on this issue. It is right to liberalise ownership rules for Channel 5, particularly given that the Government have tabled amendments to the Enterprise Act to introduce a plurality test in certain media mergers. Given that the plurality public interest test will act as a belt-and-braces safeguard—some have talked about a pillar—in addition to powerful competition law, we simply do not believe that it makes sense now to retain limits on cross-media ownership.

With the exception of the noble Lord, Lord Borrie, who made a very powerful speech with which I agreed entirely, and the noble Lord, Lord Phillips of Sudbury, who referred to the OFT, noble Lords have spoken as if the OFT and the Competition Commission do not exist. They play powerfully important roles in such issues and the question of mergers. We believe strongly that Ofcom will have very powerful content rules. Ofcom will be in the driving seat rather than Ministers, as the noble Lord, Lord Borrie, said.

On several issues on which the Government have moved in your Lordships' House, we have concentrated on the need to future proof the Bill. As the noble Lord, Lord Borrie, said, there is a concern that if the amendments were carried today, we would place in the Bill an unnecessary inflexibility on Ofcom's ability to act in the future. I ask the noble Lord, Lord McNally, to respond to the brief statement that the noble Lord made on Report with regard to similar amendments.

The noble Lord, Lord McNally, said :

"in the light of the very important statement made by the Minister today about plurality and its effect on the Bill, I shall not move this amendment".—[Official Report, 2/7/03; col. 955.]

Was the noble Lord, Lord McNally, deciding on principle last week that it was not necessary to move his amendment in relation to Channel 5, or was it that the troops were not there to support him? That is terribly important, because it is unfortunate that we are not debating the government amendments on plurality before debating Channel 5. It would be helpful to have that point answered.

4:00 pm
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Lord McNally (Liberal Democrat)

My Lords, I thought that I had cleared that matter up in my opening remarks. Within 24 hours, according to the Financial Times on 3rd July, an unnamed senior official at the DCMS was putting the concessions well into the margins of the Bill and making them extremely discretionary. That was why I was determined to bring this matter back to the House.

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, I must start by congratulating the noble Lord, Lord McNally, on the way in which he has succeeded in paving this debate.

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Lord McNally (Liberal Democrat)

My Lords, when I was faced with this dilemma, I was told that the expert on paving Bills in Opposition was the noble Lord, Lord McIntosh of Haringey, so I was following the master.

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, that is precisely why I was congratulating the noble Lord, Lord McNally. I was about to say that I did that for 14 years and enjoyed it. I challenge the noble Lord to achieve what I once did, which was to move an amendment in Part 6 of a Bill that would retrospectively have changed provisions in Parts 2, 3, 4 and 5. He can have a go at that if he wants to.

The noble Lord's amendment has had a very bizarre effect, paving up the debate on Channel 5 now. The amendment will be considered before the debate on the plurality clause. That means that I now have to bore your Lordships by saying what the plurality test, which will be introduced in the next group of amendments, will do. If my noble friend Lord Sheldon had heard what I am going to say, he would not have been able to say what he said about Berlusconi and Beaverbrook. The answers to all of the points that have been made are to be found in the plurality amendment.

The media plurality test is a new public interest consideration added to Section 58 of the Enterprise Act 2002, in addition to a consideration relating to national security that was included in the 2002 Act and the newspaper merger public interest considerations that are already in the Bill. The wording seeks to ensure that the Secretary of State can intervene in a proposed or completed merger between broadcasters or between broadcasters and newspaper proprietors.

The clause deals at great length and in detail, in many amendments, with the whole issue of cross-media ownership, which was not recognised by the noble Lord, Lord McNally, in his speech. It proposes to ensure sufficient plurality of persons controlling media enterprises in relation to: every different audience in the United Kingdom or a particular area or locality in the United Kingdom; the need for diversity of broadcasting throughout the United Kingdom; and the need for persons controlling or carrying on media enterprises to have a genuine commitment to attainment in relation to the broadcasting standards objective in the Bill—impartiality generally and impartial and accurate news, for example.

The amendment exactly addresses the problems of the potential motivation of individual media proprietors or would-be media proprietors seeking to enter broadcasting markets—be it Channel 3 or Channel 5—in this country. However, the difference between this amendment and the amendment tabled by the noble Lord, Lord McNally, is that ours has two bases. It is based on principle and is not directed at individuals—and I really do deplore the noble Lord's levity when he said that his amendment was not about Mr Murdoch, but was about American or Australian moguls, because he could not name a second one, could he?

Our amendment is not only based on principle—in other words, on the competition legislation that has existed for many years. It is not untested, but is based on the high standards that are required of media owners throughout this Bill and the way in which the plurality amendments, which I hope that we will agree, protect the high standards of broadcasting in this country. Against that, the speech made by the noble Lord, Lord McNally—although not his supporters, who made serious speeches—was disgraceful. He talked about industry experts, the Financial Times, unnamed senior officials in the DCMS and Government Whips, but almost not at all about the substance of his amendment, which is an ad hominem amendment, directed at an American Australian media mogul.

The way in which the noble Lord, Lord McNally, has approached this amendment has debased the argument in this House. The rest of the debate has been perfectly proper, but the noble Lord, Lord McNally, has sought to have this debate before the one on the plurality test. He has sought to do so in a personal and light-hearted manner. This is a serious matter that deserves serious consideration. I believe that the noble Lord, Lord McNally, has not given it that serious consideration.

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Lord Crickhowell (Conservative)

My Lords, I am glad that the Minister said that some of the supporters of the noble Lord, Lord McNally, were serious. I believe that the noble Lord, Lord McNally, was also serious. Would the Minister not agree that he made almost every single point that he made tonight when speaking on the subject on 2nd July on Report? The Minister might also give us the credit for reading ahead to the amendments that we will discuss later. It was only after reading this amendment and re-reading what the noble Lord, Lord McNally, said, that I came to the firm decision to support this amendment. I hope that my noble friends will also support it.

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, I absolve the noble Lord, Lord Crickhowell, of any blame, because he put his name to the amendment at a late stage. The noble Lord, Lord McNally, however, tabled his amendment before I had tabled my plurality amendment, despite the fact that he withdrew it on the argument that he had to see the plurality amendment before he tabled his own amendment. That argument will not wash.

I am also a little surprised that the noble Lord, Lord McNally, continued to say that this was the view of the Joint Scrutiny Committee. That committee said:

"We consider that matters relating to the consolidation of ITV and Channel 5 could properly be decided through competition law strengthened by the plurality test".

That is exactly what the Government are doing, as the noble Baroness, Lady Buscombe, and others recognise. I commend that view to the House.

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Lord Pilkington of Oxenford (Conservative)

My Lords, I am sorry to interrupt, but the committee wanted Ofcom. The great worry that the Minister has not dealt with is that the Minister will decide the criteria. There is considerable worry on this side of House about the pressure imposed on Ministers. I hope that the Minister will answer that point.

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, I was going to answer that point. The noble Lord, Lord Pilkington, cannot take me very seriously if he thinks that I would ignore that point. The noble Lord, Lord McNally, seems to base his argument on three questions—what happens if Channel 5 grows, how we ensure that Channel 5 does not fall into the wrong hands, and the contention that any protections offered by the plurality test could be swept the way on a Minister's say so. That is the point made by the noble Lord, Lord Pilkington.

I will take each point in turn. First, what happens if Channel 5 grows? The noble Lord, Lord Gordon, referred to that point. We would very much like to see Channel 5 grow. Channel 5 has just over 6 per cent of the audience and a reach of only 80 per cent of the country. We do not think that Channel 5 is large enough to need protecting in the same way as ITV. That is the difference between Channel 3 and Channel 5. There is a range of protections and controls that the Bill will put in place in the event that Channel 5 grows to the size of ITV. For example, Ofcom could alter the channel's original programme requirements, or the quota for independent productions could be changed by order by the Secretary of State. If Channel 5's audience share becomes broadly equivalent to that of ITV, the Secretary of State may introduce an appointed news provider scheme similar to that for the Channel 3 system, or Ofcom could change the obligations for Channel 3.

How do we ensure that Channel 5 does not fall into the wrong hands? There are the plurality tests. As I said, the tests will allow the Secretary of State—I shall come to the point made by the noble Lord, Lord Pilkington of Oxenford—to intervene in cases in which she believes that a merger causes sufficient plurality concerns for it to be blocked or for conditions to be attached. The test will enable us to examine a newspaper acquisition of Channel 5 with a view to ensuring that a minimum level of plurality is maintained. The test will also address the need for a plurality of owners, a wide range of high quality broadcasting calculated to appeal to a wide range of tastes and interests, and a genuine commitment to Ofcom's standards code.

There is also a power for Ofcom to review the Channel 5 licence when it changes hands and, if necessary, impose new licence conditions on the new licence holder, if the change is thought to be prejudicial to aspects of the service. There are rules in place that will prevent an unreasonable amount of cross-promotion, which will be regulated by Ofcom and the OFT. For example, the cross-promotion of other television channels and programmes is not allowed to cause annoyance to viewers, and licensees for Channels 3, 4 and 5 are not permitted to promote multi-channel platform service operators such as the Sky platform.

If, at some point in the future, the regulator believed that the cross-promotion rules in place were no longer relevant, Ofcom would be able, with consultation, to change the rules on cross-promotion. The noble Lord, Lord Phillips of Sudbury, implied that the big beasts would work their way around content regulations with armies of lawyers. Big companies always look for the greatest commercial advantage in any rules-based system, but there is also the possibility, which the noble Lord apparently rules out, that a large company, having been examined by the Competition Commission, might be suitable. It might be a good thing. As I said, the Joint Scrutiny Committee did not rule that out. It suggested that it should and could be properly decided through competition law, strengthened by the plurality test.

The noble Lords, Lord Crickhowell and Lord Pilkington of Oxenford, in particular, addressed the issue of the role of Ministers. The test involves three independent regulators: Ofcom, the Office of Fair Trading and the Competition Commission. They are not, as the noble Lord, Lord McNally, alleges, untested regulators. The OFT has been running for more than 30 years, and the Competition Commission has run for about 30 years too. They are all independent bodies commanding respect, and I do not care to hear them called "untested".

The whole point about the public interest merger test is that it is for those independent regulators to make recommendations. It is for Ministers to make decisions. Does anybody seriously think that, if the independent regulators said, having regard to the provisions of the plurality test contained in Amendment No. 85, which we have yet to debate, that a Minister had flouted their advice and had done so for the base reasons suggested by several noble Lords—it is legitimate to criticise Ministers and ascribe base reasons to them—that Minister would get away with it? Of course not.

I propose to the House that we should address the issue of cross-media ownership and plurality on the basis of principle, not of levity and ad hominem arguments about Australian-American moguls. We would do ourselves credit if we gave proper prominence to the rule of law in this country and avoided the kind of temporary political advantage proposed in the amendment.

4:15 pm
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Lord McNally (Liberal Democrat)

My Lords, I suppose that we all respond to difficult situations in different ways. I often say that, perhaps, I do so with a little too much levity. Others respond by speaking louder and using a little bombast. It is a matter of choice. The more I listened to the Minister, the more I thought of the phrase:

"The louder he talked of his honour, the faster we counted our spoons".

I spent a long time on the Bill, and I was proud to have the noble Lords, Lord Crickhowell, Lord Sheldon, Lord Gordon of Strathblane, Lord Peyton of Yeovil and Lord Pilkington of Oxenford, the noble Baroness, Lady Cohen of Pimlico, and my noble friends Lord Maclennan of Rogart and Lord Phillips of Sudbury with me today. I may be frivolous, but they are not. I say to the noble Lord, Lord Lipsey, that it is not some wonderful thing that, at Third Reading, a Labour government should propose concessions on plurality. I would have expected a Labour government to have had such a test as the flagship of the Bill.

As for my attack on Mr Murdoch, the noble Lord, Lord Sheldon, put his finger on it. He mentioned the matter a week or so ago at a seminar. The Rubicon was crossed when Tony Blair travelled halfway round the world to address a News International conference. There are concerns about the close links between the media and politics not only in Britain or Europe, but around the world. In the 1930s, we were afraid that the fascists would take over the government and then control the press: in the 21st century, there may be a danger that the fascists will take control of the press and then control the government. The dangers are there.

We talked about Mr Murdoch: OK, let us take Mr Murdoch. The Columbia Journalism Review said:

"Rupert Murdoch's Fox is leading the charge on the station ownership issue . . . Murdoch is threatening to fold the Post"—

the New York Post

"if the FCC doesn't bend the rules to allow him (over media activists' objections) to own those two TV stations and a newspaper in the same city".

The Guardian, reporting from Australia, said:

"Rupert Murdoch's business ambitions in his home country have been thwarted after the Australian senate passed a bill limiting cross-media ownership yesterday . . . 'That final amendment . . . is a dagger through the heart of cross-media reform,' said communications minister Richard Alston. 'We'll send it back to the [house of representatives]. I'm sure they'll make some changes, including the removal of Senator Harradine's amendment, and we'll see where we go from there.' . . . The government controls the lower house and the bill is expected to go through another senate vote this year as the government maintains pressure on an upper house it feels is blocking too much legislation",

The indignation shown by the noble Lord, Lord McIntosh of Haringey, in his desire to defend Mr Murdoch runs in the face of 20 years' experience.

The noble Lord, Lord Lipsey, said that, at some time, Channel 5 might be in such dire straits that we might have to bend the rules a little to save it. That is how Mr Murdoch got The Times; that is how he got his satellite television monopoly. We must not consider the amendment as an alternative to the plurality test. I am delighted at the plurality test. I welcome not only the plurality test but the many other amendments that the noble Lord, Lord Puttnam, with principle and great skill, has managed to insert. However, that better Bill needs the amendment. For all the talk from the noble Lord, Lord Borrie, about future proofing, the 20:20 arrangements are in for Channel 3 and ITN. They must be in for Channel 5 because there is a clear and present danger that there will be a call to bring Channel 5 into cross-media ownership. That would be dangerous for our democracy and damaging to other parts of our media.

I shall say one more thing. My noble friend Lord Maclennan of Rogart mentioned another place. Some 126 Members of another place signed an Early Day Motion in support of the amendment at an earlier stage of the Bill's passage. The proposer of that Early Day Motion, Mr John Grogan MP, who was himself a member of our committee, was quoted in the Independent as follows:

"I was frustrated that we did not get a chance to debate and vote on this in the Commons. If the Lords knock it back, then we will have a chance and there will be quite a rebellion".

That has not been discussed, but this belt and braces amendment is needed. I hope that the Minister will bring forward those plurality clauses, which will be a great tribute to the Bill. The clear and present danger that exists with regard to Channel 5 justifies this amendment, and I urge noble Lords on all Benches to join me in the Contents Lobby today.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 137; Not-Contents, 167.

Division number 1

See full list of votes (From The Public Whip)

Resolved in the negative, and amendment disagreed to accordingly.

4:31 pm
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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

moved Amendment No. 2:

Page 3, line 23, after "a" insert "sufficient"

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, in moving Amendment No. 2, I shall speak also to Amendments Nos. 83 to 116, 118, 120, 121, 132 to 136 and 148. I made clear on Report that I intended to bring forward amendments at Third Reading to introduce a media plurality test. I have now done so and the amendments are before us. These amendments will introduce an additional level of protection to plurality by extending the public interest test in the Enterprise Act to enable a media plurality test to be carried out in the event of a qualifying media merger. A qualifying merger is one where enterprises cease to be distinct and either the UK turnover of the acquired enterprise exceeds £70 million or the new entity has at least a 25 per cent share of supply of goods or services of any description in the United Kingdom or in a substantial part of the United Kingdom. We shall also be able to look at a qualifying merger where an existing share of 25 per cent or more changes hands.

By extending the scope of the Enterprise Act so that qualifying mergers could be subject to a media plurality test, the Secretary of State will be able to intervene where she believes a merger would have a damaging effect on plurality. In principle, all media mergers, including cross-media mergers, can be subject to a media plurality test. However, we intend as a matter of policy normally to apply the test in practice to those areas only where the current rules are being removed completely. That would mean that usually the Secretary of State would consider intervening on plurality grounds only in the following areas: national newspapers with more than 20 per cent of the market/Channel 5; national newspapers with more than 20 per cent of the market/national radio service; Channel 3; Channel 3/national radio; Channel 5/national radio; and national radio/national radio.

As I explained on Report, we do not believe that it would normally be desirable or sensible to intervene and apply the test to areas where there have never been media ownership restrictions or to areas where there continue to be ownership rules, as the continuing rules will protect plurality. In order to give the media industry some degree of certainty, the Government will publish guidance setting out in more detail the areas where the Secretary of State is likely to consider intervening on media plurality grounds. Guidance obviously cannot fetter the Secretary of State's discretion and we would not rule out its wider use in an extreme and rare case.

The test will ensure that the Secretary of State can ask Ofcom and, if necessary, the Competition Commission to investigate any merger which threatened plurality. It will prevent unacceptable levels of cross-media dominance and ensure a minimum level of plurality. The media plurality test would sit alongside the special— page 26 of the brief is missing. I had to be caught out some time. Thank you; it is missing in this version too. I shall correct any self-evident errors—or perhaps not. With real apologies, I shall start that sentence again.

The media plurality test would sit alongside the special newspaper public interest test, which would continue to consider newspaper-only mergers. So it is a rather important page. The plurality provisions will be brought into force before or at the same time as the lifting of restrictions on media ownership contained in the Bill. The Secretary of State's powers of intervention under Sections 59 to 66 of the Enterprise Act will extend to the media plurality provisions.

I hope that the House will allow me a few minutes to explain the effect of the main provisions set out in these amendments, although to some extent I have done so twice already. Amendment No. 85 inserts a new public interest consideration into Section 58 of the Enterprise Act 2002. It specifies that public interest considerations may be looked at in mergers that satisfy the relevant jurisdictional criteria.

Under the Enterprise Act, the vast majority of mergers will be considered only under the test of whether they would result in a substantial lessening of competition. However, the legislation also makes provision for intervention by the Secretary of State on specified public interest grounds. Currently, the only specified consideration is national security. Clause 372 specifies new newspaper public interest considerations. This clause adds a new subsection (2)(c) to Section 58 and sets out a public interest consideration that may apply to media and cross-media mergers.

As a result, the Secretary of State will have the ability to intervene in relation to mergers involving media enterprises and to investigate the impact of the merger on the need, in relation to every different audience in the United Kingdom or in a particular area or locality of the UK, for there to be a sufficient plurality of persons with control of the media enterprises serving that audience; the need for the availability throughout the United Kingdom of a wide range of broadcasting which, taken as a whole, is both of high quality and calculated to appeal to a wide variety of tastes and interests; and the need for persons carrying on media enterprises, and for those with control of such enterprises, to have a genuine commitment to the attainment in relation to broadcasting of the standards objectives set out in Section 315 of the Bill. I commend these amendments to the House. I beg to move Amendment No. 2.

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Baroness Buscombe (Conservative)

My Lords, I should like to press the Minister on several points concerning the scope and purpose of his amendments. On Report, the Minister set out clear boundaries to the Government's intended plurality test. In particular, he stated that it would be,

"a matter of policy normally to apply the test in practice to those areas where the current rules are being removed completely".

In addition, he added—which he added again today—that,

"usually, the Secretary of State would consider intervening",

only in the following areas:

"national newspapers with more than 20 per cent of the market/Channel 5; national newspapers with more than 20 per cent of the market/national radio service, Channel 3; Channel 3/national radio; Channel 5/national radio; and national radio/national radio".—[Official Report, 2/7/03; col. 915.]

This clearly stated approach to the plurality test reflects the key concerns expressed by the noble Lord, Lord Puttnam, and others throughout the passage of the Bill and in the pre-legislative scrutiny process. That is a concern over a liberalisation of the cross-ownership provisions for Channel 5—as we have heard today—as well as the prospect of investment by non-EEA companies in UK media companies in Channels 3 and 5 (and UK radio).

I am concerned therefore that it is not just these carefully targeted policy aims that are reflected in these amendments. Instead, having considered the amendments, it appears that the Government are presenting us with a plurality test which could be applied to all "merger situations" involving broadcasters or broadcasters and newspapers which qualify for investigation under the Enterprise Act 2002. It could also apply to transactions that initially may not qualify for investigation, but concerning which the Government's amendment to Clause 375 would permit an intervention notice to be served. Such transactions would include mergers and acquisitions among cable and satellite channels that have launched in the UK without any of the special privileges or protections given to those broadcasters using scarce, analogue terrestrial frequencies, and which have not had any special media ownership rules applied to them previously. Examples, of which there are almost limitless permutations, might include the acquisition of the National Geographic Channel or History Channel by Discovery Networks, the acquisition of additional music video channels by MTV or the purchase of one channel provider by another—for example Flextech Television and Turner.

The provision represents a major shift in government communications policy and as the Government are aware it is of significant concern to all broadcasters, who now face another regulatory barrier and greater uncertainty. I should like to remind your Lordships of the comments of the broadcasting Minister during the Committee stage of the Bill in another place. The Minister said that the problem with the plurality plus competition test was that,

"it inevitably leads to uncertainty . . . Although businesses may be used to dealing with uncertainty daily, they do not actively seek out uncertainty. We should make clear rules where appropriate. If we accepted the amendment"—

that is not the amendment proposed today, but one proposed in another place—

"we would effectively be putting those who wanted to acquire media assets in a worse position. In addition to complying with the clear and transparent ownership rules and satisfying the competition authorities, an owner would face the further obstacle of satisfying a plurality test. The Bill is intended to remove regulations, not to impose new and unnecessary ones".—[Official Report, Commons Standing Committee E, 6/2/03; cols. 1002-04.]

I recognise that the Government have subsequently introduced amendments into your Lordships' House as a compromise. I also recognise that the Minister said on Report—and has confirmed today—that guidance would be produced to clarify the provisions and narrowly to define the scope of the plurality test. However, we are concerned that nothing has been produced yet. It is creating disquiet in the industry and on the part of the Opposition that such wide provisions are being introduced with the promise of guidance to come once the Bill has received Royal Assent.

In the absence of such guidance I should be grateful if the Minister would provide further clarification. Why have the Government gone to the trouble of including all broadcasters in the plurality test, only to produce guidance to exclude most of them from it? Surely a better solution would have been to amend Clause 373 to narrow the target of the plurality test in the first instance to Channel 3, Channel 5 and radio; that is, the scarce analogue terrestrial frequency services, which have been the source of the concerns of the noble Lord, Lord Puttnam, and others about non-EEA and cross-media ownership all along.

I should also be grateful if the Minister would explain the status of the guidance to be produced, and why this has not been made available at the same time as the amendments to the Bill. After all, if a key feature of the plurality test is that it is to be narrowly applied by the guidance, so as give broadcasters confidence and clarity, it naturally follows that the two must be considered hand in hand. How are we to decide on the merits of the amendments when they represent only half the story? Such guidance is unlikely to have the same legal force as the provisions in the Bill, so the certainty that could be derived from it is likely to be limited.

I should be grateful if the Minister could clarify the Government's intentions towards the existing 20:20 ownership rule governing Channel 3 licences in the light of the new plurality test. As the Minister said on Report, the 20:20 rule has something of a cliff-edge element to it, with the plurality test allowing "finer judgments" to be made in particular cases according to circumstances. Given that it is his stated intention to apply the plurality test in this particular case and, in addition, only where the current rules are being removed completely, it would follow that the 20:20 rule should be abolished.

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Lord Fowler (Conservative)

My Lords, I also have one or two concerns and shall speak briefly. I agree with the Minister that it would have been much more useful had we been able to debate this set of amendments prior to our debate on Channel 5. There is no question that it might have illuminated that debate.

Having read not only the clauses and the amendments, but the Minister's letter, I think this is a useful addition and I congratulate the noble Lord, Lord Puttnam, on achieving it. However, I do not think that it answers some of the concerns relating to the Bill, in particular, those relating to the rules on foreign ownership that we were debating under the first set of amendments. It seems to me that it is not intended to do so.

I am not clear why the Minister was so upset with the noble Lord, Lord McNally, for mentioning the report in the Financial Times. It seemed to me that that report was relevant to this debate. It said that senior officials of his department insisted that the amendment would not hamper the principle of allowing United States' media groups to bid for ITV or enabling newspaper publishers to seek control of Channel 5. I know that the Government are rather concerned about sources at the moment, but there is no dispute about the source in that case. Senior officials have told the Financial Times that that is the issue, and as far as I know the department have done nothing to correct that.

I think that we are allowed to be a little sceptical about some aspects of the Bill. At the end of the day, the decision will rest with the Secretary of State—there is no question about that. The Minister's letter to the Front Bench leaders said that the provision enables the Secretary of State to intervene in a case. It does enable, but of course it does not require. At present, we do not all have overwhelming confidence that the Government would intervene in particular circumstances.

There is no rule set down to deal with a number of the cases that we will be discussing. There is, for example, no rule, such as the one that I have included in an amendment to be debated later, for making reciprocal arrangements a condition if a United States company takes over a British television company. We will debate later whether that rule is right or wrong—I can perhaps predict what the Minister's reply will be—but at least if that rule is in the legislation, we know exactly where we are.

The Secretary of State is not bound by the advice given. The Minister made much of his contention that no Minister would ever overrule the advice given to him in this area. I am not entirely sure that that is correct. There are examples where the unanimous recommendations of the Office of Fair Trading have been overruled. I remember one instance involving regional newspapers—the Nottingham Evening Post—where the OFT said quite clearly that deal should not go ahead, but it was overruled. It was overruled, as it happens, by the Government of which I was a member. I did not agree, but that was the decision. The Minister will say that that example concerns a Conservative Government and that nothing of that kind would ever happen under a Labour Government, but that slightly beggars belief.

The amendment is a useful addition, but I do not think that we should place too much emphasis on it. Personally, I welcome what has been done and what the noble Lord, Lord Puttnam, has achieved, but I give only two cheers for the final version of the amendment.

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Lord Puttnam (Labour)

My Lords, I offer the Government two and a half cheers. They are to be congratulated. An enormous amount of work has gone into making the amendment possible. I would personally like to thank Paula Carter, who has helped me enormously, and the Bill team, who have done Trojan work. I am not sure that they will thank me for thanking them, but they have done an extraordinary job in hammering through what is in some senses new law. We have come a long way.

These amendments must be seen as all of a piece with the amendments to the general duties that we have already agreed. Together, those provisions are the double bolts. I have now talked to enough lawyers and judges, who have assured me that those two aspects of the Bill, taken together, represent a very serious impediment to the type of dominance that the clause is intended to prevent.

That is one thing. I come to the other issue. Several noble Lords mentioned the Financial Times article. The last Division went as it did—but I have to tell the Government that I believe that the Division was quite avoidable. It was caused by a misbriefing given to the Financial Times last week, which gave the impression for whatever reason that the amendment might not bite as the Government intended, or as the proposers of the amendment intended. That could have been avoided.

I beg the Government to do two things. First, I ask them not to be tempted by the wish expressed by the noble Baroness, Lady Buscombe, to restrict the breadth of what has been created. That breadth is very important. Secondly, they should make it very clear, and not only in this Chamber but outside, that they have taken a big step in a very important direction and are intent on giving the noble Lord, Lord Currie, all the powers and all the encouragement to take the route that the House has clearly indicated.

There is real fear about media dominance. The Government have come a long way in accepting those fears, which have been made apparent today by the comparative narrowness of the previous Division. However, I look for some form of assurance that we will not be battered next week by the type of Commons amendments that would undermine much of the good work achieved in this House over the past weeks and months. I welcome the amendment gratefully.

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Baroness Howe of Idlicote (Crossbench)

My Lords, I hope that the noble Lord will forgive me. We have had pretty little time to get used to these wonderful new amendments, but I welcome them. I have actually read them but, if I have not understood them thoroughly, I apologise in advance.

I want to return to the point that I made earlier, which the Minister, perhaps rightly, did not answer in the earlier debate. With all the tests that will be applied, we come back to the point that it will be a Minister who makes the decision, although admittedly advised by Ofcom. With regard to both the content and the technology aspects—and particularly the content aspect—I am concerned that there will be more than an assumption that the Secretary of State at the DCMS will also be consulted. I am certain that Ofcom will consider both sides of the question; we have been told often enough that that is its intention. However, I am concerned that there are often problems when two Ministers are responsible for something. While congratulating the Minister on all the amendments, I should be grateful for an answer to that question.

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Lord McNally (Liberal Democrat)

My Lords, I welcome the amendments and the moderate and temperate tone in which the Minister introduced them. However, I make one point as a genuine seeker after truth. An executive from one of the specialist music stations asked me whether it would be seen as a dangerous accretion of media power if a music station with one per cent of the total audience acquired another music station with one per cent of the total audience, or whether it would be said that the stations had only 2 per cent of the total audience, even if they had a larger share of the music-only stations. I told him that I would put that question to the Minister, and I was sure that he would get an answer.

The broader question of how far and how real this is a step forward goes to the heart of the comments made by the noble Lord, Lord Puttnam. The Financial Times article was not an accident. There have been parallel messages coming from the Government: the kind of messages that the Minister has given from the Front Bench here, and the kind of speeches that Mr Kim Howells and officials have made at specialist conferences, which have continued to emphasise that this is the freewheeling, free enterprise, deregulatory Bill that was so carefully crafted in Downing Street all those months ago.

It has also been irritating to hear the continual message that Parliament has somehow interfered in this perfect process. I went to a seminar organised by the ever-industrious the noble Lord, Lord Lipsey, where the noble Lord and an official combined to lecture the assembled attendees, some of whom had more political experience than both of them put together, about the realities of legislating. One reality of legislating for me is that Parliament does matter and governments should listen.

I was very worried when Mr Stephen Carter was reported as showing a certain tetchiness about the way in which Parliament was messing about with the Bill. I asked for the text of his speech, and was pleased to read that,

"as a creature of statute Ofcom will deliver to whatever rulebook it inherits from Parliament".

Quite so.

Sometimes when we are discussing civics education, I think that it might be worth applying it to some civil and public servants, to show them where the relative balance lies between their powers and Parliament's powers. We do not want to see some carefully crafted briefing, 48 hours after the Bill has left this place, saying, "Don't worry, all those silly old people are now out of the way and we can march on to the new land".

The Minister has made a great to-do about how powerful the test is, and we want to make sure that it works. I am not making any predictions. However, Mr Murdoch will come calling, believe me, because it fits into his strategy and his pattern. The noble Lord, Lord Lipsey, should know that when he comes calling he never plays just by the rules. As he did in New York, he will threaten to close down The Times if he does not get his way, or he will have some other blockbuster to intimidate Ministers.

The issue is a lot tougher than the Minister implied, but the amendments are welcome, as long as the Minister lives up to his promises and the public servants who are get the rulebooks from Parliament live up to them too.

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Lord Phillips of Sudbury (Liberal Democrat)

My Lords, I want briefly to ask the Minister whether I heard him correctly when he referred to the possibility of the director of Ofcom imposing conditions in relation to matters dealt with by Amendment No. 85. Is that the case? If so, is the Minister concerned by some of the precedents for the imposition of conditions attached to newspaper takeovers in the past, which it would be fair to say have been ineffectual in practice?

5:00 pm
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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, I am grateful for the welcoming and moderate tone of the debate. I must say a word to the noble Lord, Lord McNally. He accused me of shouting, and maybe I did. He made a debating speech and I made one in reply, but I did not at any stage question the sincerity behind his speech. Of course, I know that he feels strongly about these matters, and always has. I simply did not like the way in which he introduced his amendments, and I said so.

The noble Baroness, Lady Buscombe, started by asking why we did not specify a narrow test in the Bill—why we went for a wide test and then imposed restrictions on it. We considered a narrow test but decided on balance that we could get to substantially the same place through taking a wide power and limiting its general application as set out in guidance.

In exceptional circumstances—I think that I used the phrase "extreme and rare circumstances"—we might want to apply the test more widely if there were genuine plurality concerns. This approach allows us to do so. However, we recognise that the share of supply of goods or services in the United Kingdom—or a substantial part of the United Kingdom in the case of a relevant merger situation—or when one of the parties has an existing share of a supply of broadcasting of at least 25 per cent, could cause the Secretary of State to decide to intervene. We intend generally to intervene only in those areas where we have removed all ownership rules. However, we cannot rule out the possibility that in exceptional circumstances we will look at other orders. Nevertheless, I think that we have diminished uncertainty as far as possible by setting out in my speech all of those relationships which we expect to be covered. I think that that deals with the point that the noble Baroness, Lady Buscombe, raised about uncertainty.

The noble Baroness, Lady Buscombe, then went on to quote points made in the House of Commons. I do not know how to respond to that. We have responded to debate in this House. We have responded to debate over a period of something like three months now. The fact that we have responded late in the day means that we have been concerned and worrying about it. We have certainly been doing that, as the noble Lord, Lord Puttnam, recognised. I hope that if I am offered the choice of being charged with introducing amendments late and charged with being inflexible, I will accept the charge of tabling amendments late rather than of being inflexible. That means—the noble Baroness asked about guidance—that guidance cannot be produced in time. We cannot produce guidance simultaneously with approximately 44 complex amendments, which is what we have done.

The noble Baroness asked particularly about satellite and cable channels. Although we do not think that there is normally an issue of plurality test there, we could see plurality tests applying in some rare cases if a large number of news or educational channels would be coming under single control. I do not know what that means as regards the question that the noble Lord, Lord McNally, asked about music channels. I take it that he is talking about what I call "serious music channels" with a small share of the market.

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Lord McNally (Liberal Democrat)

No, my Lords. On cable television there may be four or five specialist music channels playing various kinds of pop. If one channel took over another, its share would increase from 20 per cent to 40 per cent of the channels. Would that worry or trigger any of this legislation?

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, I would be very surprised if it would. As I have just been saying, cable and satellite channels are not currently regulated and we would not expect them to raise questions of plurality. However, if someone were to take over all the music channels, I think that the "extreme and rare" case to which I referred might well come into force.

The noble Baroness, Lady Buscombe, referred to the issue of the 20 per cent rule. I think that the point about these amendments in departing from the 20 per cent rule is that it is possible that someone with 19 per cent of the national newspaper market might raise plurality concerns, which is why we did not want cliff-edge regulation. The provision would enable Ministers to distinguish those with larger holdings in the event that the 20 per cent rule was removed. We do not have any plans to remove it, but a well-established plurality test may make removing it a possibility in the future.

The noble Lords, Lord Fowler, Lord Puttnam and Lord McNally, all referred to the Financial Times article, which of course I read. However, I have to say that I and the members of the Bill team do not know who the unnamed source was. Whether anyone is briefing against us, I do not know; it is not a matter on which I can comment. However, on the substance of the article, if the Bill is passed as it stands, yes, investment from non-EEA sources will be possible. However, although the plurality test will allow foreign investments to be made, if necessary they will be considered by the Competition Commission on a case-by-case basis. If they raise concerns, those cases can be targeted. If those concerns are found to be justified, those cases could be blocked. That is the point that we were making last week in the foreign ownership debate.

I should like to say to the noble Lord, Lord Puttnam, how grateful I am to him for his continued involvement in debate on this issue, at any rate over the time that I have been involved in the Bill's passage. I think that he carries a great deal of the credit for what is widely accepted as being improvements to the Bill. I pay tribute to him for what he has done. I agree with him that we need to get the general duties right so that they work with the spirit of the Bill. However, I can confirm that, pending that which has to be done in another place, this amendment, if we agree to it today, is in black and white. It clearly bites right across the range. The Government have taken a big step. I am grateful to the noble Lord, Lord Puttnam, for giving encouragement to the noble Lord, Lord Currie, in the way that he carries out the Bill's provisions.

The noble Baroness, Lady Howe, asked which Secretary of State would be involved. In legislation there is only one Secretary of State. The legislation applies regardless of whether the Department of Trade and Industry or the Department for Culture, Media and Sport is abolished. There will still be a Secretary of State who is responsible for carrying out the law. I do not think that she should place any significance on the fact that the Secretary of State currently responsible for competition policy is the Secretary of State for Trade and Industry, and certainly not on the personalities concerned. However, in so far as there are two Secretaries of State involved in these issues, they will, as they have been doing, work closely on the Bill.

The noble Lord, Lord Phillips, asked about precedents for conditions under the newspaper merger regime. There certainly have been headline cases where conditions have been thought to be ineffectual. However, there are many other cases where they appear to have worked well. Generally, we think that undertakings will be given effect to in broadcasting licences, which are readily enforceable, as I think is well recognised. Of course newspapers are not licensed, and for newspapers a merger can always be prohibited.

I hope that that deals with the points raised in debate.

On Question, amendment agreed to.

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Lord Davies of Oldham (Deputy Chief Whip (House of Lords), HM Household; Labour)

moved Amendment No. 3:

Page 3, line 38, leave out "particular" and insert "all cases to—

(a) the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed; and

(b) any other principles appearing to OFCOM to represent the best regulatory practice.

(4A) OFCOM must also have regard, in performing those duties"

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Lord Davies of Oldham (Deputy Chief Whip (House of Lords), HM Household; Labour)

My Lords, in moving this amendment I shall also speak to government Amendments Nos. 6, 7, 81 and 82.

We have been clear that Ofcom will be a good regulator. As we are giving it strong powers, that is only right. It is important that as Ofcom carries out its functions the principles of good regulatory practice should apply. We have listened to the concerns vigorously expressed by the noble Baroness, Lady Buscombe, that the provisions in Clause 3(4)(b) and (d) were not sufficiently robust to ensure that the principles applied when they should. We have therefore brought forward amendments to address the concerns that she expressed on that occasion.

We agree with the noble Baroness that the principles of good regulatory practice must always be relevant to Ofcom's decision-making and that Ofcom should apply those principles uniformly. There is to that extent a shade of difference between the application of good regulatory practice and the other matters to which Ofcom should have regard under Clause 3(4). Good regulatory practice is always relevant. The other matters may or may not be relevant in particular circumstances or in particular cases. We are happy to reflect that shade of difference through the structure of the clause.

The amendments retain the current drafting that Ofcom will have regard to the principles. It may be helpful if I explain why that is the right approach. For a person or a body to have regard to a matter when taking specified action is a substantial legal obligation. If they fail to have regard to the matter in deciding what action to take, or whether to take action, or have regard to it in the wrong way, the action which is taken is liable to be held by a court to be unlawful or legally ineffective. It will not be sufficient for Ofcom to consider the principles of regulatory practice for the sake of form only or to consider and reject them for no good reason.

I hope that I have assured the noble Baroness that the phrase "have regard to" is a significant legal phrase and obligation and tightens up the inevitable obligations upon Ofcom. Good regulatory practice should be a consistent and central tenet in Ofcom's operations. I believe these amendments ensure that it will be. I beg to move.

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Baroness Buscombe (Conservative)

My Lords, I thank the Minister for responding to our concerns which we raised throughout our debates, beginning with Second Reading, in relation to good regulatory practice. The Minister knows that we have always been concerned about the expression "must have regard". Therefore we are extremely pleased that the Minister listened to our concerns and brought forward these amendments. They are not quite the amendments that we would have liked but I am grateful that the Minister read almost verbatim from a letter addressed to myself dated 30th June which reassured me that we are talking about a substantial legal obligation. I am grateful to the Minister for that. We welcome the amendments.

On Question, amendment agreed to.

5:15 pm
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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

moved Amendment No. 4:

Page 3, line 39, at end insert—

"( ) the desirability of promoting the fulfilment of the purposes of public service television broadcasting in the United Kingdom;"

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, in moving Amendment No. 4, I wish to speak also to Amendments Nos. 27, 32 and 123, and, if the noble Lord, Lord Phillips, will allow me, speak also favourably to Amendment No. 5.

We debated in Committee, and on Report, earlier amendments tabled by the noble Lord which the Government found they could not accept, but I made it clear that we supported the spirit behind the amendments because the Bill aims to secure the future of public service broadcasting in this country.

We now have revised duties for Ofcom and I must say that the noble Lord, Lord Phillips, skilfully responded both to the Government's reservations and those expressed by noble Lords in earlier debates, as well as to the other changes to Clause 3, in bringing forward his revised amendment.

I have argued previously that it was undesirable to refer to public service broadcasting in Clause 3, given the detailed regime established in Part 3 of the Bill, but the proposal of the noble Lord, Lord Phillips, fits very neatly in the new structure of Clause 3 and much improves it. The Government are grateful to the noble Lord for the tenacity with which he pursued his aim.

I should have been happy to accept his amendment, except that there are slight drafting weaknesses which I believe our amendments address. They are simply to tie the Clause 3 duty more transparently and clearly to the fulfilment of the purposes of public service television broadcasting as set out in Clause 262, and to make consequential amendments to Clauses 227, 268 and 402. I hope that the noble Lord will agree that the government amendments give effect to what he sought to achieve. I beg to move.

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Lord Phillips of Sudbury (Liberal Democrat)

My Lords, I am extremely grateful to the Government and to the Minister for in effect accepting the amendment which, as the Minister rightly says, was pressed strongly not only by myself but also in particular by those whose names were attached to the amendment: the noble Baronesses, Lady O'Neill and Lady Howe, my noble friend Lord McNally and the noble Lord, Lord Fowler. In Committee there was an hour long debate on the matter. I am sure that everyone will be extremely content that what must be by any reckoning the most single important non-economic factor linking into Clauses 262 and 263, as they now are, is written into the keynote clause of the Bill. I am grateful for that.

At Second Reading I mentioned that I felt that commercial strains fell heavily on producers and programme makers in commercial television. Indeed, the noble Lord, Lord Birt, added his own gloomy prognostication to that theme. I gave as an example my local television company, Anglia, which I know and with which I have worked closely for many years, and was perhaps a little unfair to it in that it has done better than some other commercial television companies in relation to what one might call the public broadcasting remit or standards.

I know that good programme makers and producers, of whom there are very many in the commercial sector, will welcome this entrenchment of the public service broadcasting remit in Clause 3 as it will strengthen their hand when the going gets a bit rough. That is all I need to say. Later we shall deal with an amendment to the enforcement clause, which is now Clause 268, and there will be more to say then. In the mean time I am most grateful to those who supported this long campaign and to the Government and the Minister for concurring. I beg leave to—no, I do not do anything, do I?

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Lord Fowler (Conservative)

My Lords, not yet. I wish to add to what the noble Lord, Lord Phillips, said. This is an important amendment. I congratulate the noble Lord, Lord Phillips, on his persistence with it. I congratulate the Government on accepting it. Personally, I prefer the wording of the amendment as it stands now without the Government's amendment, but we shall not argue about that because the Minister has given way.

As has been said, public service broadcasting is not just about the BBC, but the dispute between the BBC and the Government is being used to attack the very concept of public service broadcasting in this country. It is argued that there are other options: government controlled radio and television making no pretence to be other than the Government's mouthpiece or the kind of marginal public service broadcasting that exists in the United States.

My own view is that the standards of public service broadcasting are so demonstrably superior to any of those other brands that it is something that we should fight very hard to preserve in this country. In that respect the Government have been entirely right in putting that at the head of the Bill. Perhaps one might add in parenthesis that one hopes that the tabling of this amendment by the Government might mark an end to the rather futile warfare between the Government and the BBC at the moment. It would be in everyone's interest if that were to take place. I shall not go further down that particular road, but I congratulate the Government on underlining their belief in public service broadcasting.

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Baroness Howe of Idlicote (Crossbench)

My Lords, as one who has put my name to the amendment of the noble Lord, Lord Phillips, on many occasions, as he acknowledged, I, too, congratulate the Government. I also particularly congratulate the noble Lord, Lord Phillips, on his persistence. The measure will give considerable reassurance to many organisations. I mention especially the Voice of the Viewer and Listener and Public Voice, representatives of which have written many times to your Lordships throughout the Bill's passage. Indeed, many individual citizens have let us know how deeply concerned they are to preserve that unique quality of British broadcasting which they consider is crucially embedded in public service requirements.

As has already been said, British public service broadcasting is the bench-mark not just for British terrestrial channels but for all broadcasters who wish to compete for our viewing time. Again, I congratulate all concerned and particularly the wider public who made us aware of their views.

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Baroness O'Neill of Bengarve (Crossbench)

My Lords, I shall not spin this debate out, but I should like to ask the Minister what are the reasons for the restriction of Amendment No. 4 for the purposes of public service television broadcasting. That is the substantive difference between the government amendment and that of the noble Lord, Lord Phillips. So far, I have failed to understand the reason for that restriction.

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Lord Davies of Oldham (Deputy Chief Whip (House of Lords), HM Household; Labour)

My Lords, I shall not talk about public service radio—that is effectively the BBC, and its purposes are set out and secured through the BBC Charter and Agreement rather than in the Bill. When we talk about public service television, we are talking about a wide range of channels, but public service radio is the remit of the BBC. That is why Amendment No. 4 is expressed in these terms. I accordingly commend it to the House.

On question, amendment agreed to.

[Amendment No. 5 not moved.]

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

moved Amendments Nos. 6 and 7:

Page 3, line 41, leave out paragraph (b).

Page 3, line 46, leave out paragraph (d).

On Question, amendments agreed to.

Clause 14 [Consumer consultation]:

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Baroness Buscombe (Conservative)

My Lords, the House will recall that the words in brackets in Clause 16(5) which my amendment seeks to remove are the words inserted by the Government on 15th May in Committee into what was then Clause 15(5), dealing with areas which should be subject to consultation by the consumer panel.

The purpose of the government amendment was, according to the Minister,

"to give the consumer panel the power to consider matters of content which are referred to it by Ofcom".—[Official Report, 15/5/03; col. 357.]

The Minister said that these would be matters that had a "high consumer dimension", and misleading advertising was cited as an example.

Your Lordships will recall that we debated the issue again on the second day of Report, on 26th June, in relation to Amendment No. 33. The aim of my amendment then was to remove the words in brackets, and thus return to the clarity of remit previously given to the consumer panel. It was identical to the amendment that I am moving now.

My amendment reflects concerns expressed to me by content providers and the advertising industry throughout the progress of the Bill in this House about the potential for overlap between the consumer panel and the content board, and the need for clearly defined boundaries between the two.

The Government gave some reassurance at Report stage on 26th June that the consumer panel would not have free rein to advise on content, and that it could do so only when asked by Ofcom. That was helpful, but I do not believe that it goes far enough. It is essential, going forwards, to have clarity between the functions of the regulatory and advisory bodies. Otherwise, the whole purpose of creating a single regulator—to develop a common regulatory approach across the communications sector and to avoid regulatory overlap—will have been pointless.

The Minister also referred to the fact that that has been government policy since the White Paper. Yes, that is true—but have not the Government developed the remit of the content board since then; and is it not true that Ofcom is required to carry out research on public opinion and the experience of consumers in accordance with Clause 14 of the Bill? Surely that should be sufficient to ensure that Ofcom's policy on content issues takes full account of wide consumer concern.

The Government said that the wording that they added in Committee was merely to correct a disparity between what is now Clause 16(5) and Clause 16(6)(c). I believe that it goes further than that. My reading of the Bill is that there is no disparity in the meaning of the respective clauses if the words in brackets in Clause 16(5)—

"other than one referred to them for advice by OFCOM"—

are taken out. It then means that the consumer panel can give advice to Ofcom in relation to any matter except content, which is specifically excluded under Clause 16(5). However, if the words in brackets are left in Clause 16(5), this would nullify the specific exclusion created for content by that clause. In other words, the opposite effect is achieved.

In conclusion, my amendment seeks to address the concern that I know still exists among content providers in the advertising industry that there should be complete clarity and avoidance of overlaps between the consumer panel and the content board. I beg to move.

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Lord Thomson of Monifieth (Liberal Democrat)

My Lords, I support the noble Baroness, Lady Buscombe, in her amendment. The noble Baroness described succinctly the previous discussions that have taken place on this matter. I share her desire as regards the value of achieving certainty over the frontier between the responsibilities of the consumer panel and those of the content board before the Bill finally leaves this House.

The consumer panel has clear and important responsibilities—there is no question about that. So does the content board. But they are distinctively different. One of the advantages of this mammoth Bill is that it tidies up the landscape of communications and clears the regulatory undergrowth of competing responsibilities.

Ofcom has a massive task ahead of it dealing with the pressures of conflicting interests, some of them very powerful. Ofcom deserves the maximum of clarity in the Bill that finally completes its passage. It does not deserve having thrust on it the duty of deciding which content matters have such "high consumer dimension" that the content board should be second-guessed by the consumer panel.

It is a quite unnecessary fudging of the regulatory frontiers. It will confuse the work of the content board and will add a dimension of uncertainty to a regulatory system for television advertising which has a record of working well and which is in the process of development within the new responsibilities of Ofcom.

It is true, as the Government have previously pointed out, that there was a specific reference in the original policy document relating to the draft Bill to the consumer panel having a say in,

"content issues that have a high consumer dimension, such as rules on misleading advertising".

But the Bill itself permits Ofcom to contract out its functions and to promote "effective" self-regulation. If key areas may be contracted out, leaving Ofcom as a backstop regulator, albeit with teeth, surely we should be careful about giving Ofcom's consumer panel a statutory role, however limited, in content.

It is no secret in this House after our prolonged discussions that a key area which may be contracted out by Ofcom in the near future, subject to the results of a public consultation, is the regulation of broadcast advertising, using aspects of the ASA system.

The Bill provides that self-regulation of areas co-ordinated by the Bill must be, first, adequately funded and, secondly, independent of the industry that it regulates. An effective self-regulatory system operating in a co-regulatory framework would surely base policy decisions on input from consumers as well as from the industry. It would surely also ensure that the complaints adjudication process is properly and effectively managed, with published performance indicators.

If broadcast advertising is contracted out, Ofcom would become the backstop regulator. Would it not be odd in such circumstances for Ofcom to refer advertising content matters to its consumer panel if the self-regulatory system is already using established procedures for taking views from consumers?

Advertising is but one case, but I believe it demonstrates that we have to be extremely careful, as we move into the new regulatory environment, not to perpetuate the problems created by previous legislation—where, for example, there were overlaps between the ITC and BSC advertising remits which sometimes resulted in conflicting decisions. We are creating a single regulator with the purpose of developing a unified approach to communications policy and we must therefore ensure that we avoid creating overlaps and additional bureaucracy within the regulator and its boards and advisory groups, one of which is the consumer panel.

The consumer panel is important, but we must avoid two groupings giving conflicting advice. It would be a recipe for confusion and delay to have an advertising self-regulatory system consulting with consumers and relevant interest groups and advertising also being discussed by Ofcom's own consumer panel.

5:30 pm
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Lord Davies of Oldham (Deputy Chief Whip (House of Lords), HM Household; Labour)

My Lords, the noble Lord, Lord Thomson, is certainly right when he says that we have been round this course before. We have had substantial discussions on these issues as the noble Baroness, Lady Buscombe, attested when moving the amendment. We have discussed a similar matter at Committee and Report stages. I understood that the amendment had been brought back at Report stage so that the Government would have an opportunity to put on record the details of a letter that my noble friend Lord McIntosh sent to the Advertising Association. The letter assured the industry—I take this opportunity of renewing that assurance—that this provision does not risk double jeopardy and that there is no perception that misleading advertising is a problem. It was not our intention to suggest that it is. I had hoped that our answer on Report gave further reassurance to the industry, although the noble Baroness has renewed her fears on their part again today.

The consumer panel is an advisory body and has no regulatory powers. The contents board of course is part of the regulatory structure, but the consumer panel is not. The consumer panel will provide another means of advice for Ofcom if Ofcom wants to use it.

I understand that there is a more fundamental objection to the policy of Ofcom being able to refer matters of content with a high consumer dimension to the consumer panel for advice—please note, for advice, not regulation; not for decision taking, just for advice.

The principle behind the amendment seems to be at some odds with the will of the Chamber when it gave Ofcom a principal duty to further the interests of consumers and citizens. The joint scrutiny committee was quite clear that it, while recognising that,

"the interests of the citizen in the nature of broadcast content should first and foremost be represented by the Content Board . . . nevertheless support the current proposals in the draft Bill whereby certain issues could be examined by the Consumer Panel at the instigation of Ofcom's main Board".

That is exactly what the Bill says.

The noble Baroness, Lady Buscombe, said on Report that she wanted to be sure that nothing in the Bill undermines the advertising industry's ability to regulate itself successfully. She has emphasised that point again and as we said on Report we agree with her wholeheartedly, but we do not see how this provision could undermine the Advertising Association's plans for co-regulation. It does not.

Furthermore, I believe that if we were to deny Ofcom that flexibility we would be doing consumers a great disservice. As my noble friend Lord Evans fully explained on Report, this is not about advertising. There are some—not many—content-related matters, such as the bundling of different channels on pay TV services that could have a high consumer dimension on which Ofcom may need to seek expert consumer advice.

The consumer panel is best placed to give Ofcom that advice. This is not about blurring the boundaries or muddying the waters, as the noble Lord, Lord Thomson, was suggesting. The content board, within the regulatory structure, is the proper place for matters of content. I believe that we are totally agreed on that point. But on the few issues where there is a high consumer dimension we must not deny Ofcom the flexibility of hearing the consumer voice.

Responses to the consultation on the draft Bill fell into two fairly distinct camps on this issue. Powerful interests like BSkyB were quite clear that they did not want the consumer panel to be able to advise on content matters referred to them by Ofcom. They were concerned that the consumer panel should have,

"no jurisdiction over content-related issues or the terms on which content services are provided".

The consumer lobby, in the other camp, wanted the panel to have a much broader remit that allowed it free reign over all of Ofcom's remit, including content. Some, like Channel 5, were supportive of the Government's position that the consumer panel,

"should only be required to consider broadcasting/content issues when instructed to do so by Ofcom".

This is the balance that we have struck between two competing perspectives on this issue. We believe that the balance that we have struck provides certainty for the industry and gives consumers a voice on content matters where Ofcom decides that its advice is relevant. BskyB have nothing to fear. The panel has no jurisdiction over content. Ofcom merely has the ability to seek its advice and we have made it clear that we expect it to do so only when matters of content have a high consumer dimension.

At Report stage the noble Baroness, Lady Buscombe, said that she felt the wording that this amendment removes was unnecessary. We introduced the wording to give certainty in respect to our policy which has always been clear throughout the Bill. Clause 16(6)(c) which provides for the panel to,

"give advice to Ofcom in relation to any matter referred to the panel by Ofcom for advice",

is where it is given effect.

But we were concerned that there was a tension between Clause 16(6)(c) and Clause 16(5). I think that the debates in Committee, on Report, and again today—the noble Baroness has put her case with admirable clarity—have helped us to examine the matter further. It is the Government's intention in drafting the Clause 16(6)(c) that "any matter" would include matters of content where there is a high consumer dimension and where Ofcom chooses to seek advice. I firmly believe that it is in the interests of consumers that this is so. I hope that the noble Baroness at this late stage—we have tried to persuade her on two previous occasions without conspicuous success—will say that we have sought to strike a balance between competing interests in these terms and that we have a provision that will secure the interests of consumers so she will withdraw her amendment.

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Baroness Buscombe (Conservative)

My Lords, I thank the Minister for his response. He has worked hard today and on previous occasions to allay industry fears. The Minister said that the wording we seek to remove was introduced to give certainty on government policy. Unfortunately, it has done the opposite.

We have talked ad infinitum to the industry during each stage of the Bill. The advertising industry, in particular, but also content providers remain deeply concerned. As I said on Report, which the Minister was kind enough to repeat, this industry has proved entirely capable of successful self-regulation. We believe that it deserves our whole-hearted support, a matter referred to by the noble Lord, Lord Thomson. I am very grateful to him for his support.

This is an important issue and one that is causing great concern. It is true that we have been around the course before, but there is still uncertainty and we remain dissatisfied on the matter. Therefore, I wish to test the opinion of the House.

On Question, Whether the said amendment (No. 8) shall be agreed to?

Their Lordships divided: Contents, 158; Not-Contents, 141.

Division number 2

See full list of votes (From The Public Whip)

Resolved in the affirmative, and amendment agreed to accordingly.

5:50 pm
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Lord Randall of St Budeaux (Labour)

My Lords, I want to make a short speech because I am dealing with the finance being presented for small to medium enterprises and the telecommunications implications.

I start by bringing in a few introduction notes. First, the current Act provides satisfactory protection and regulation for SMEs. Secondly, the SME performance is vital for economic reform in the United Kingdom.

There is deep concern that the Bill will weaken the protection of SMEs in a very serious way. Also, the proposed case is to retain for SMEs the level of standards for SMEs in the current Act.

I will speak briefly on the perception of SMEs. During the Portuguese presidency of the European Union it was decided that all 15 member states should have a key role in economic reform. The Prime Minister contributed significantly to this, which showed the vital role that SMEs have. Additionally, the DTI has a "think small first" policy and the Better Regulation Task Force. They are very important policies and show the significance of SMEs in the United Kingdom.

In addition, the Minister for SMEs, Nigel Griffiths MP, paid tribute to Britain's 3.7 million SME businesses, which he said are responsible for generating £1 trillion in our economy and employ 12 million people.

The good reputation of SMEs in the United Kingdom is now being recognised by other member states in the European Union. It is worrying that the current Act has worked well for SMEs, but the proposed legislation would undoubtedly weaken SME interests as a whole.

People are asking, why on Earth are we attempting to change the current legislation regarding SMEs when it has worked satisfactorily?

Those in the SME representative bodies are confused as to why the Government are weakening SMEs by means of their legislation when at the same time the Government have expressed support for SMEs and their important contribution to the UK economy.

I will briefly explain the main concerns that SMEs and their representative organisations have about the Bill.

First, they welcome the Bill's consumer panel, which will promote the interests of consumers. A strong consumer panel should act as an effective counterbalance in the interests of industry, particularly large players, and it should provide useful input into regulatory decision making.

As I have already implied, the proposed consumer panel, which will protect the interests of SMEs, is weaker than the current arrangements in the Act. The Bill describes the consumer panel's role in relation to domestic and small business consumers. In practice, this means that the elements in the relationship between the new consumer panel and SMEs are used in deciding whether SMEs are chosen or rejected when it comes to protection and regulation provided by the consumer panel.

This is a complicated issue but, briefly, the valuation of SMEs' acceptability by the consumer panel will take into account the following definition points. SMEs, as consumers in the market for services or facilities such as computer systems, would be acceptable provided that neither is a communications provider or a person who makes associated facilities available; or a person who is a consumer in the market in respect of an undertaking carried out by him or for which more than 10 individuals work.

The consumer panel is therefore being changed so as to protect the interests of SMEs in this country.

So what are we worried about? This part of the Bill ignores the reality that many SMEs are both consumers—in that they subscribe to a communications provider—and service providers, for example, hardware/software maintenance and retail shops.

What are the consequences? They are that small businesses with 10 or more employees are highly likely to be consumers of communications services. However, if small businesses are also part of the communications industry, they will not be represented by the very important consumer panel, which is a matter of great concern. This is so even if SMEs have legitimate concerns and interests as consumers of communications services that are totally unrelated to their own products or services.

I wonder what estimates the DTI has made about the number of exclusions of SMEs arising from the consumer panel. This is an important question for the various representative bodies not just in the UK but in the European Union. I beg to move.

Photo of Baroness Buscombe

Baroness Buscombe (Conservative)

My Lords, I support these amendments, but of course I would because we put them down in Committee. I am rather tempted to welcome the noble Lord, Lord Randall of St Budeaux, to the Bill, albeit at a rather late stage. As chairman of a project linked to the Small Business Bureau, he is obviously very keen to support the interests of small businesses.

This is an issue we have spoken to at earlier stages of the Bill. It is an important issue and we very much hope that the Government will be able to respond positively to these amendments today.

6:00 pm
Photo of Lord Davies of Oldham

Lord Davies of Oldham (Deputy Chief Whip (House of Lords), HM Household; Labour)

My Lords, it is certainly the case that we have discussed these amendments previously and it is a little late in the Bill for such fundamental concepts to re-emerge. We did not have the opportunity of considering them at the Report stage. I will do my best to reply to my noble friend's long list of amendments.

I shall take Amendments Nos. 10 to 16 together, as their combined effect would be to make the Secretary of State responsible for appointing and removing the members of the consumer panel. As the noble Baroness, Lady Buscombe, recalled, we discussed this in Committee in response to her amendments. We explained at that time why it was not our intention that appointments to the consumer panel should be made by the Secretary of State and nothing has changed since to alter our view.

There are two possible models which might be followed in establishing the consumer panel. The first is the approach adopted in the case of Energy Watch and Post Watch—and the other is that followed by the Financial Services Authority.

Both Energy Watch and Post Watch were established as separate non-departmental public bodies with a separate legal identity and their own secretariats and staff. They each have significant complaint handling responsibilities which the Ofcom consumer panel will not have. As separate bodies, it is appropriate that the appointments to those bodies should be made by the Secretary of State.

The model we have followed for establishing the consumer panel is that adopted for the Financial Services Authority where, although the members are appointed by the FSA, albeit with the chairman's appointment subject to the approval of the Treasury, the panel is still able to operate perfectly independently of the FSA itself. We believe this provides a more appropriate model for Ofcom and have presented our arguments to the House on previous occasions.

We have also put in place a number of measures designed to ensure that the panel is able to work independently. These include the consumer panel being a legally separate unincorporated body and operationally independent from Ofcom; the panel being able to formulate its annual work plan and be responsible for allocating its own resources; providing the panel with the power to establish its own advisory committees and to determine its procedures; ensuring that no member or employee of Ofcom is able to be a member of the consumer panel; and that Ofcom must explain the reasons why it might not accept the advice given to it by the panel. On the second day of Report, we moved a government amendment to require the consumer panel to publish an annual report, adding an extra element of transparency and accountability to the panel's work. When taken together, we believe that the whole package will ensure that the consumer panel will be able to act as an effective, independent voice for consumers.

Amendment No. 9 suggests that as well as domestic consumers, the remit of the consumer panel covers small businesses of no more than 10 employees because the experiences of these businesses are similar to the experiences of domestic consumers in the markets for communications networks and services. Businesses of this size may lack the resources and expertise to tackle any communications problems they may experience and they will have particular issues as consumers on which the consumer panel will be able to advise Ofcom.

We have excluded communications providers and persons supplying associated facilities—even if they have no more than 10 employees—because they may have different needs as consumers that would not fit with the tight focus of the panel. I know that some members of the small business community have expressed concern that this exclusion will cover many small IT businesses, but let me assure the House that this is just not the case. The definitions of "communications provider" and associated facilities are set out in Clauses 402 and 30 respectively.

Amendment No. 17 would in its first part effectively create the consumer panel as some kind of "watchdog" for Ofcom, monitoring it and reporting on what it has been doing. This is not the role we want to create for the panel. We have made clear during the passage of the Bill that we want to ensure that the consumer panel acts as the independent voice of consumers. I indicated today the way in which that has been established in the Bill. The phrase "a critical friend" has often been used, but sums up nicely the way we envisage the consumer panel operating by working closely with Ofcom in order to provide it with expert advice.

The remaining parts of Amendment No. 17 relate to the power of the consumer panel to establish committees and would, in effect, require the panel to establish advisory bodies for England, Scotland, Wales and Northern Ireland and one for small businesses. We have had debates on these issues, too, during the passage of the Bill. One of the measures we have included to ensure the independence of the consumer panel is the power for it to determine what committees it feels are necessary in order to provide advice about its functions. We did so in response to the recommendation from the pre-legislative scrutiny committee.

Finally, I turn to Amendments Nos. 18 and 19, which would require the consumer panel to make arrangements for regulating its own procedures and those of any committees it establishes. The Bill as it stands allows the panel to make such arrangements as it sees fit. Given what I have already said about not wishing to constrain the independence of the panel unnecessarily, I cannot imagine that the consumer panel would not want to make proper arrangements. It would certainly make its operation needlessly difficult if it did not.

In the light of those assurances—and I have no doubt that my noble friend has had a chance to study our previous debates on these issues—I hope he will feel we have aired the issues sufficiently and will be prepared to withdraw his amendment.

Photo of Lord Randall of St Budeaux

Lord Randall of St Budeaux (Labour)

My Lords, I am absolutely dumb struck by the comments I have just heard from my noble friend. I beg leave not to test the opinion of the House.

Amendment, by leave, withdrawn.

Clause 17 [Membership etc. of the Consumer Panel]:

[Amendments Nos. 10 to 16 not moved.]

Clause 18 [Committees and other procedure of the Consumer Panel]:

[Amendments Nos. 17 to 19 not moved.]

Photo of Lord Evans of Temple Guiting

Lord Evans of Temple Guiting (Government Whip (technically a Lord in Waiting, HM Household); Labour)

moved Amendment No. 20:

After Clause 19, insert the following new clause—

"ADVISORY COMMITTEES FOR DIFFERENT PARTS OF THE UNITED KINGDOM

(1) It shall be the duty of OFCOM, in accordance with the following provisions of this section, to exercise their powers under paragraph 14 of the Schedule to the Office of Communications Act 2002 (c. 11) (committees of OFCOM) to establish and maintain a committee for each of the following parts of the United Kingdom—

(a) England;

(b) Wales;

(c) Scotland; and

(d) Northern Ireland.

(2) Each committee shall consist of—

(a) a chairman appointed by OFCOM; and

(b) such number of other members appointed by OFCOM as OFCOM think fit.

(3) In appointing a person in accordance with this section to be a member of a committee, OFCOM must have regard to the desirability of ensuring that the person appointed is able to represent the interests and opinions, in relation to communications matters, of persons living in the part of the United Kingdom for which the committee has been established.

(4) The function of each committee shall be to provide advice to OFCOM (including other committees established by OFCOM) about the interests and opinions, in relation to communications matters, of persons living in the part of the United Kingdom for which the committee has been established.

(5) A committee established under this section may also, at the request of the Consumer Panel, provide advice about those interests and opinions to the Consumer Panel.

(6) The consent of OFCOM is required for the giving of advice under subsection (5).

(7) In this section "communications matters" has the same meaning as in section 3."

Photo of Lord Evans of Temple Guiting

Lord Evans of Temple Guiting (Government Whip (technically a Lord in Waiting, HM Household); Labour)

My Lords, your Lordships will recall that in responding to an amendment tabled at the Report stage by the noble Baroness, Lady Finlay, and the noble Lord, Lord Roberts, we recognised the anxieties the nations have expressed that their voices should be heard within Ofcom. We therefore agreed to consider tabling a government amendment to ensure that Ofcom should establish advisory committees for each of the nations.

Amendment No. 20 would place Ofcom under a duty to establish and maintain committees for each of England, Wales, Scotland and Northern Ireland in order to provide Ofcom with advice about the interests and opinions of people living in the respective nations in relation to communications matters.

It will be for Ofcom to appoint the chairman of each committee and such numbers of other members as Ofcom thinks appropriate. In doing so, Ofcom would need to have regard to the need to ensure that the people appointed to each national advisory committee are able to represent the interests and opinions of those living in the relevant part of the United Kingdom in relation to communication matters.

The national advisory committees would be able to provide advice to other committees established by Ofcom, including the content board. In view of the independent status of the consumer panel, it would of course be possible for the panel to establish its own national committees should it so wish. However, we have also made provision that it would be possible for the national advisory committees to provide advice to the consumer panel should the panel request such advice and Ofcom consents.

Also at the Report stage we considered two amendments tabled by the noble Lord, Lord Addington, that would put a requirement for a disabled and elderly person's advisory committee on the face of the Bill. One amendment required Ofcom to establish and maintain an advisory committee on the interests of disabled and elderly people and the other required the consumer panel to do so.

Consistent with our approach on the advisory committees for the nations and regions that I have just set out, Amendment No. 21 will require Ofcom to establish and maintain a committee to advise it on the interests of disabled people and of elderly people across its remit.

As I have said, we do not want to get embroiled in the detail of Ofcom's organisational structure—it must have the flexibility to make operational decisions without being tied into complex statutory requirements. For this reason, we have kept the clause simple and avoided over-prescription. We have also allowed the same flexibility that the national committees have to advise the consumer panel, if they request it and with Ofcom's consent.

I set out in some detail in Committee and again at Report the powers which underpin the panel's independence and self-determination. This is why we have not taken forward the second amendment that was tabled at Report which would require the consumer panel to establish a committee for disabled and elderly people. Our amendment does not preclude the panel from establishing such a committee and it paves the way for an element of joined-up working if that is what the panel and Ofcom desire. I beg to move.

Photo of Baroness Finlay of Llandaff

Baroness Finlay of Llandaff (Crossbench)

My Lords, I would like to speak briefly in support of this amendment this afternoon and to welcome it. The amendment recognises the unique nature of each part of the United Kingdom. It is in the spirit of devolution and it allows Ofcom to ensure it meets the special needs of individual areas instead of trying to cater for the whole of the UK in a blanket way.

While I am on my feet, I would also like to welcome Amendment No. 21, which recognises that elderly and disabled people have special needs. We have an increasingly elderly population. I am glad that the Government have recognised that the needs of elderly and disabled people may be quite different and that Ofcom must take this into account.

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Lord Roberts of Conwy (Conservative)

My Lords, I compliment the noble Lord and the Government on introducing the new clause represented by Amendment No. 20. I also compliment the chairman of Ofcom on the wisdom he displayed when he addressed your Lordships' House during Report stage. I also compliment the noble Baroness, Lady Finlay of Llandaff, on her persistence, which gave the noble Lord, Lord Currie of Marylebone, his opportunity. The Government have given us all we asked for and more. The function and scope of the advisory committees is not confined to devolved areas of government in Wales, Scotland and Northern Ireland but ranges over all communication matters as defined in Clause 3(11), and I am sure that that is right.

I am slightly mystified as to why the consumer panel is specifically mentioned in subsection (5) but not the content board. It did beg the question of whether the committees could advise the content board with or without the consent of Ofcom. But the noble Lord, in speaking to the clause, made it quite clear that the content board could also be advised. He might just wish to clarify why the consent of Ofcom is required by the committees before they advise the consumer panel. Of course Ofcom should be kept informed, but consent to advise is something different. It smacks of potential prohibition. I shall not belabour the point, but this also applies to Amendment No. 21, of which I approve, which gives powers of advice to the committee for the elderly and disabled. But again I ask why the consent of Ofcom has to be obtained by that committee before it advises the consumer panel?

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Lord Thomas of Gresford (Liberal Democrat)

My Lords, I also welcome this amendment. We are very grateful to the Government for listening to the arguments that were put forward. I should like to pay tribute to the leadership of the noble Baroness, Lady Finlay of Llandaff, on this topic. She has done a brilliant job. The only criticism I have of this amendment is that I would have wished to see a closer link with the National Assembly for Wales when it comes to the Welsh committee. I hope that the committee membership will be formed with proper consultation with the National Assembly. I see that the Minister is nodding. I hope that he will be able to give me that assurance when he comes to reply.

6:15 pm
Photo of The Bishop of Manchester

The Bishop of Manchester (Bishop)

My Lords, much congratulation for persistence is being spread around your Lordships' House. I look at Amendment No. 21 and take the opportunity to congratulate the noble Lord, Lord Ashley—not in his place today—and also the noble Lord, Lord Addington, on their persistence on behalf of the elderly and the disabled. I welcome particularly this amendment. I hope that the noble Lord, Lord Addington does. I congratulate the Government on listening.

Photo of Lord Peyton of Yeovil

Lord Peyton of Yeovil (Conservative)

My Lords, there must be some disturbing dissident note here and I propose to sound it. The Minister gave me some pleasure when he said that the Government did not want to get embroiled in the intestinal arrangements of Ofcom. That is very satisfactory. It is much better than just having a committee appointed by the Government. I am tempted to ask whether Ofcom really welcomes all these duties. I suspect, from an earlier stage in the Bill when we were talking about appointing a committee to represent the needs of the elderly and disabled, that Ofcom will be reasonably happy with this arrangement.

I always rail against the pathetic faith we have that the appointment of a committee will actually achieve something. Very often committees have too many people on them. Half the people there ought to be doing something more important and the other half ought never to be let loose at all. The National Health Service is festooned with them. They are a nuisance, they take up the time of busy people. Committees very often need themselves to be scrutinised. It would be very healthy if every committee were compelled to examine what they did last year and then decide whether they have any excuse for remaining in existence.

Let us look briefly at subsection (3) of Amendment No. 20:

"In appointing a person in accordance with this section to be a member of a committee, OFCOM must have regard to the desirability of ensuring that the person appointed is able to represent the interests and opinions, in relation to communications matters".

I would have thought that that idea would have occurred to Ofcom. It does not need to be told on a page of the statute that it must find people who are interested and knowledgeable on the subject.

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Lord Carter (Labour)

My Lords, I welcome particularly Amendment No. 21. There are two amendments in later groups with which the Government have come a long way towards the views of those of us who have spoken on issues concerning disability. I would like to thank all my noble friends on the Front Bench and my noble friend Lady Blackstone for the way in which they have responded to our concerns.

I have one point on the two amendments, which was raised by the noble Lord, Lord Roberts of Conwy. Under subsections (5) and (6) the consent of the consumer panel is required before these committees can give advice. They have to ask for it. Then Ofcom has to consent to it. This means that the advisory committee will tend to be reactive rather than proactive on behalf of the nations and the elderly and disabled. I await an answer on this.

Photo of Baroness Darcy de Knayth

Baroness Darcy de Knayth (Crossbench)

My Lords, perhaps I may very briefly intervene on the side of the accolades. This is an amendment we have wanted very much. It is an important amendment. I would say to the noble Lord, Lord Peyton of Yeovil, that one disabled person or someone with knowledge of disability is no substitute for an advisory committee whose members know exactly what they are talking about and can explore all the issues. We have discussed this at length and Ofcom is perfectly happy. I very much appreciate the Minister having done this.

Photo of Baroness Wilcox

Baroness Wilcox (Conservative)

My Lords, we are pleased that the Government have listened and responded to the arguments that, along with the noble Lords, Lord Addington, Lord Carter, and others, we made on Report. They have added to the Bill a commitment to establish and maintain an advisory committee on elderly and disabled people. We thank the Government.

Photo of Lord Addington

Lord Addington (Liberal Democrat)

My Lords, I thank everyone who helped to have the amendment tabled. No matter whose name appeared on the amendment, it was definitely a team effort to bring it here. Taking on the noble Lord, Lord Peyton, slightly, I think that we should have a committee to consider the functioning of committees. We should always bear in mind that the entire House often sits as a Committee. Another committee to give advice might be a suitable present from us to the whole process.

Photo of Lord Evans of Temple Guiting

Lord Evans of Temple Guiting (Government Whip (technically a Lord in Waiting, HM Household); Labour)

My Lords, I am most grateful for the general welcome that the two government amendments have received. In response to the noble Lord, Lord Roberts, and my noble friend Lord Carter, I said earlier that we did not want to get embroiled in the detail of Ofcom's organisational structure. We tried to make the committee system in relation to these amendments as flexible as possible. There is neither a hidden agenda nor anything sinister related to the points that the noble Lords raised. Given Ofcom's interpretation of the amendments, and having listened to the debate—we will also read Hansard—I am absolutely sure that any concerns noble Lords may have will be allayed.

The noble Lord, Lord Thomas of Gresford, asked for an assurance that the countries in question will be consulted fully about the committees. I can give that assurance.

The noble Lord, Lord Peyton, a man after my own heart, hates bureaucracy and talked about "intestinal arrangements". I am sure that we have all taken on board his points. He ridiculed the wording concerned with appointing persons able to represent communications. We must acknowledge that communications is a very broad church. The intention is that those appointed do not, for example, have an interest in film as part of communications and nothing else; rather they must have a broad interest and an ability to contribute.

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Lord Roberts of Conwy (Conservative)

My Lords, before the noble Lord sits down, he should promise to consider further the point that the noble Lord, Lord Carter, and I have made. In proposed subsections (5) and (6) in Amendment No. 20, and similarly in Amendment No. 21, it is curious that the consumer panel should request advice from the appropriate committees and then have to gain the consent of Ofcom before that advice is given. It seems a somewhat strangulated approach. I should be grateful if the Minister would agree to consider the point.

Photo of Lord Evans of Temple Guiting

Lord Evans of Temple Guiting (Government Whip (technically a Lord in Waiting, HM Household); Labour)

My Lords, I have just received a note on the matter. If the following explanation does not satisfy the noble Lord, Lord Roberts, I shall write to him. The content board is part of Ofcom; the consumer panel is not. That is why special arrangements must be made. Consent is needed because this is part of Ofcom.

On Question, amendment agreed to.

Photo of Lord Evans of Temple Guiting

Lord Evans of Temple Guiting (Government Whip (technically a Lord in Waiting, HM Household); Labour)

moved Amendment No. 21:

After Clause 19, insert the following new clause—

"ADVISORY COMMITTEE ON ELDERLY AND DISABLED PERSONS

(1) It shall be the duty of OFCOM, in accordance with the following provisions of this section, to exercise their powers under paragraph 14 of the Schedule to the Office of Communications Act 2002 (c.11) (committees of OFCOM) to establish and maintain a committee to provide the advice specified in this section.

(2) The committee shall consist of—

(a) a chairman appointed by OFCOM; and

(b) such number of other members appointed by OFCOM as OFCOM think fit.

(3) In appointing persons to be members of the committee, OFCOM must have regard to the desirability of ensuring that the members of the committee include—

(a) persons who are familiar with the needs of the elderly; and

(b) persons who are familiar with the needs of persons with disabilities.

(4) The function of the committee shall be to provide advice to OFCOM (including other committees established by OFCOM) about the interests, in relation to communications matters, of—

(a) the elderly; and

(b) persons with disabilities.

(5) The committee may also, at the request of the Consumer Panel, provide advice about those interests to the Consumer Panel.

(6) The consent of OFCOM is required for the giving of advice under subsection (5).

(7) In this section "communications matters" has the same meaning as in section 3."

On Question, amendment agreed to.

Clause 25 [Training and equality of opportunity]:

Photo of Lord Evans of Temple Guiting

Lord Evans of Temple Guiting (Government Whip (technically a Lord in Waiting, HM Household); Labour)

moved Amendment No. 22:

Page 24, line 21, leave out "fair treatment of" and insert "equalisation of opportunities for"

Photo of Lord Evans of Temple Guiting

Lord Evans of Temple Guiting (Government Whip (technically a Lord in Waiting, HM Household); Labour)

My Lords, I shall speak also to Amendments Nos. 70 and 128. The amendments are tabled in response to concerns expressed on Report by the noble Lord, Lord Addington, that the term,

"fair treatment of disabled persons",

used in Clauses 25 and 333 was not in line with the terminology used in other disability legislation.

We explained on Report that the use of the term "fair treatment" mirrored the current obligations in the Broadcasting Act 1996 and was well understood in the context of that legislation. However, we accept that more recent disability legislation, such as the Disability Rights Commission Act 1999, preferred the term "equalisation of opportunities" and that it would be helpful for our legislation to be as consistent as possible with other legislation in the area. We therefore undertook to table amendments at Third Reading to substitute the current references to "fair treatment" with the more up-to-date term "equalisation of opportunities". The amendments fulfil that commitment. We have also extended the change to the equivalent provision for the Welsh authority in Schedule 12 to the Bill. I beg to move.

Photo of Lord Carter

Lord Carter (Labour)

My Lords, I thank the Government. I moved the amendments on the issue in Committee and on Report, so I am extremely grateful. I had wondered why the word "equalisation", rather than "equality", of opportunity was used. However, apart from the fact that the word is consistent with the wording of the 1999 Act, the dictionary states that "equality" is the state of being equal. "Equalisation" is not defined, but I understand it as a process of achieving equality, which is what equality of opportunity is all about.

Photo of Lord Addington

Lord Addington (Liberal Democrat)

My Lords, this is just a case of saying "thank you" again. There has been a relay: the noble Lord, Lord Carter, to start, Addington second, with Evans and McIntosh to finish. We got there. It is nice to know that the Government listen sometimes.

Photo of Baroness Darcy de Knayth

Baroness Darcy de Knayth (Crossbench)

My Lords, I express my support as one who did not get in on the list earlier.

On Question, amendment agreed to.

Clause 92 [Notification of contravention of conditions]:

Photo of Lord Avebury

Lord Avebury (Liberal Democrat)

moved Amendment No. 23:

Page 89, line 2, at end insert—

"( ) Where OFCOM receive a complaint, or otherwise become aware, that a person may be in contravention or have contravened a condition set under section 43, they shall inform that person in writing of the nature of the suspected contravention and that they are conducting an assessment of available evidence, which may lead to that person being given a notification under subsection(2)."

Photo of Lord Avebury

Lord Avebury (Liberal Democrat)

My Lords, as the Minister knows, we are still of the opinion that, in relation to a contravention of conditions set under Clause 43, this clause as drafted incorrectly translates the word "find" in the directive into,

"determine that there are reasonable grounds for believing"

in the Bill. However, clearly, we were not going to make any headway in convincing the Government on that point.

In this amendment, we have relied on the Minister's observation on Report that:

"In many instances—probably the majority—prior investigation of the matter in issue will be necessary before Ofcom will be able to decide whether or not it has such 'reasonable grounds'".—[Official Report, 26/6/03; col. 423.]

The amendment provides that, when Ofcom receives a complaint or otherwise becomes aware that a person may have contravened a condition, it should notify that person that it is conducting an assessment of the evidence which may lead to a notification under Clause 92. That means that, at least in the majority of cases, the person has a prior opportunity to correct the alleged breach, thus reducing the number of occasions when Ofcom must take the serious step of issuing a notification, or to submit evidence to Ofcom showing that he is complying with the conditions notified. That may convince Ofcom that the complaint did not provide reasonable grounds for believing that a Clause 43 condition had been contravened. In either case, unnecessary notifications under Clause 92(1), which could have damaging effects on the provider concerned, would be avoided.

The noble Lord, Lord Currie, the chairman of Ofcom, has written to me about the matter. He has been good enough to make clear that it will be only in rare and extreme cases that Ofcom might have to act without warning. He said that, in the normal course of events, Ofcom would undertake a preliminary investigation, letting the operator concerned know as soon as possible so that in some cases it is possible,

"to resolve the matter speedily and informally, without the whole panoply of the Notification Procedures having to be involved".

That is indeed most helpful. I suggest that the noble Lord, Lord Currie of Marylebone, does what I have advised the Government to do, which is to place his letter on Ofcom's website so that it can receive wider circulation, instead of simply lodging it in the Library of your Lordship's House as he has been asked to do. I beg to move.

6:30 pm
Photo of Baroness Buscombe

Baroness Buscombe (Conservative)

My Lords, I rise to support the amendment to which my name is added. We are returning to a very important issue that I spoke about as early as Second Reading. We are in a strange situation that I have discussed with the noble Lord, Lord Avebury. He and I were minded to test the opinion of the House today on this issue because we are both deeply concerned that the Government have not, until now, responded sufficiently to allay concerns or rebut the problem. As the noble Lord, Lord Currie, quite rightly said in his letter addressed to Lord Avebury, operators are concerned that Ofcom will have gone a long way down the road of investigating an alleged breach leading to a possible enforcement order before operators are even made aware that they are under investigation, and thus have the opportunity to make representation.

We are extremely grateful that, at the 11th hour, this letter was written by the noble Lord, Lord Currie. To our minds and in discussion with the industry, the letter has made a difference. The issue is an important one and we were determined to be robust on behalf of the industry. We are very glad that the letter has been forthcoming.

We would have preferred, however, to have the matter included in the Bill. We are concerned, and we know that the industry is also concerned, to ensure that we do not in any way remove important flexibility in the way that Ofcom proceeds in the future. Therefore, we have decided to agree to accept the contents of the letter, although, as the noble Lord, Lord Avebury, rightly said, please let us make this letter as public as possible as quickly as possible to allay concerns beyond your Lordships' House.

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, it is obvious that we have considered this matter very carefully and discussed it with the noble Lord, Lord Avebury. We are willing to discuss it with the noble Baroness, Lady Buscombe. We understand that the assurances that the noble Lord, Lord Currie, has offered have given sufficient comfort for the amendment to be withdrawn.

The amendment relates to the matter of Ofcom's detailed administrative and operational practice, rather than to any substantive matter of policy, so we do not think that it is right to include the provision in the Bill. However, we acknowledge that, as a matter of good regulatory practice and in accordance with the principle of transparent regulation, Ofcom should ensure that, except when clearly justified, the subjects of any investigation it undertakes, even an informal preliminary one, are made aware of Ofcom's interest at an early stage.

As always, there will need to be provision for some exceptions to the rule. The exceptional circumstances that we have in mind would be those in which advance notice would be likely to prejudice Ofcom's ability to intervene effectively. In certain cases the element of surprise is crucial to ensuring, for example, that vital evidence is not destroyed. I hope that such cases will be very rare.

Since this is principally a matter for Ofcom, I am glad to confirm that the noble Lord, Lord Currie, has written to the noble Lord, Lord Avebury, advising him that Ofcom also accepts the principle underlying this amendment, and will include a suitable provision in public guidance on the administrative procedures that it is preparing. Moreover, operators and others with an interest in these matters will have ample opportunity to discuss with Ofcom the precise detail of how this process will operate. Before it formally takes over its enforcement role, Ofcom will consult on public guidance and other procedural matters too.

A copy of the letter from the noble Lord, Lord Currie, will be placed in the House Library and I am sure that he will agree to place it on the website. I am grateful for the way in which the amendment has been moved.

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Lord Avebury (Liberal Democrat)

My Lords, I also thank the Minister for his courtesy in discussing this matter with me yesterday. He could has resolved this problem, which has caused enormous concern in the industry, as the noble Baroness, Lady Buscombe, said, if we had arrived at the solution much earlier. I am sorry that we had to take it up to the wire, but we felt that the issue was important.

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, better late than inflexible.

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Lord Avebury (Liberal Democrat)

I quite agree, my Lords. I am thankful that the department is as flexible as it has proved to be. I hope that the Minister will not take it amiss if I say that, as the period that the Bill has to be on the statute book approaches, we have noticed something of an increase in the flexibility of the department. Of course, that may be purely coincidental. I am happy to beg leave to withdraw the amendment with the assurances that have been given and with the extremely helpful letter that we received from the chairman of Ofcom.

Amendment, by leave, withdrawn.

Clause 157 [Grant of recognised spectrum access]:

Photo of Lord Avebury

Lord Avebury (Liberal Democrat)

moved Amendment No. 24:

Page 145, line 27, at end insert—

"( ) OFCOM shall carry out an impact assessment in line with section 7, prior to any introduction of recognised spectrum access, having due regard to the international implications of such a measure."

Photo of Lord Avebury

Lord Avebury (Liberal Democrat)

My Lords, we have had a great many discussions about the merits of recognised spectrum access throughout the proceedings of the Bill. There have been parallel debates going on as a result of the Radiocommunications Agency's consultation on the subject. I do not propose to rehearse those arguments today, but I merely point out that the matter is still highly controversial. Even those who were most in favour of RSAs, such as the spectrum management advisory group, acknowledge that there are unresolved problems such as the distortion of competition that would arise in the European Union if RSA is introduced in some countries and not in others. The taxation aspects also have to be more fully assessed.

In order to resolve this and other outstanding issues before RSA is introduced, we propose in this amendment that Ofcom should undertake an impact assessment under Clause 7. That clause gives Ofcom power to carry out impact assessments when it proposes to do anything important for the purposes of, or in connection with, its functions. The definition of importance in Clause 7(2) certainly applies to the introduction of RSA. An impact assessment would allow persons likely to be affected by RSA to make representations, and for the outcome of the assessment to be published. We think that that process will be useful, because it would enable the international implications to be evaluated with the aid of those concerned, especially those in the European satellite industry. I beg to move.

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Baroness Buscombe (Conservative)

My Lords, the Minister and I have had extensive exchanges on RSAs in Committee and on Report. I have raised a whole host of issues in relation to the way in which the Government intend to implement RSAs and the powers of control and intervention that the Government intend to give Ofcom in this area.

My concerns remain unallayed in several important areas. The Bill still fails to provide sufficiently robust requirements for consultation with the industry and other interested parties. I remain to be convinced that auctioning is an appropriate tool for RSAs. Ofcom's powers to limit spectrum use, modify and revoke licences and place conditions on spectrum trading, all reflect a hugely interventionist approach in this area.

I am pleased, however, that the Government have recognised the concerns that I expressed on behalf of many in the industry on one particular issue—that there is no reason to allow Ofcom to impose conditions or restrictions on the transmission or broadcasting of particular matters on RSAs. It is right for that particular provision to be removed from the Bill.

I shall not take up much more time on the matter, but there is one question that I put to the Minister on Report which he has failed to answer. In Committee, the Minister expressed his personal sympathy with the arguments that I put forward in favour of grandfathering the RSA proposals to pre-existing satellite transponder agreements, which have not factored in the possibility of RSA. It is, I think he agreed, important not to discriminate in providing such protection to terrestrial broadcasters' licensing agreements and satellite transponder agreements.

The Minister has indicated, however, that the timing of the introduction of charges for RSA will be a matter for Ofcom. Yet, in their response to the review of radio spectrum management, the Government said that spectrum trading and pricing, as regards terrestrial broadcasters, would not take effect while they had existing licences that did not anticipate such pricing. If the Government can make such a clear policy statement on terrestrial frequencies, what is stopping the Minister from making an equivalent policy statement today on satellite transponder agreements, rather than simply expressing a personal view?

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, with such issues, we return to the issue of recognised spectrum access. I am told that it is also called "radio signals from afar". I shall speak to Amendment No. 25, about which the noble Baroness, Lady Buscombe, spoke, but I shall speak first to Amendment No. 24, which was moved by the noble Lord, Lord Avebury.

We listened carefully to the noble Lord, and we understand the concerns. We agree about the importance of impact assessments. They are an essential component of evidence-based policy making. However, we do not think it necessary to amend the Bill with regard to assessments for RSA.

Given the significance of the RSA provisions, I would expect Ofcom to follow the Clause 7 procedure and carry out an impact assessment before deciding whether to proceed. I would further expect the assessment to have due regard to the international nature of the satellite services, if it relates to satellites, that is. We should bear it in mind that RSA may be introduced for other services, which is a good reason to allow Ofcom a measure of flexibility over the detailed contents of the assessment and not to prescribe them in the Bill.

Clause 7 places Ofcom under an obligation to publish impact assessments in important cases. It is difficult to imagine that RSA is not important. It will be open to operators or anyone else to make representations to Ofcom, if an assessment omits a material consideration, and Ofcom will be required not to implement the proposal until it has taken account of representations received. That is in addition to the duty under Clause 400, which will also apply. Clause 7 already makes sufficient provision for impact assessments without any need for special provision in respect of RSA.

I turn to Amendment No. 25. On Report, I undertook to review the scope of Ofcom's power to make a grant of RSA subject to restrictions and conditions. The noble Baroness, Lady Buscombe, had asked why Ofcom needed such a power, especially in relation to the content of transmissions and broadcasts, and she moved amendments to remove the power from the Bill.

I have looked carefully at subsection (5) of Clause 157 to see whether we could narrow Ofcom's powers without compromising the effective management of the radio spectrum. Amendment No. 25 is the result of that consideration. It will remove from the clause Ofcom's express powers in relation to restrictions and conditions on content. On reflection, we agree with the noble Baroness's argument that they are unnecessary for RSA. She made a fair point, and I am grateful to her. The issue has been extensively debated, and I congratulate the noble Baroness, Lady Buscombe, and the noble Lord, Lord Avebury, on the persistence with which they have pursued the matter.

The noble Baroness asked why I could not give a categoric assurance on grandfathering. It is not really for the Government to do that. Decisions on RSA will be a matter for Ofcom. Unlike for licensed users of spectrum, such as terrestrial broadcasters, the Secretary of State has no existing powers relating to RSA, which is a new system introduced by the Bill. The situation with RSA is more complex, and the effects are not limited to broadcasting. For example, decisions on RSA could affect the availability of spectrum for terrestrial fixed links in the 11 gigahertz band, which is used by Astra for Sky transmissions and shared with terrestrial services. It is for Ofcom to balance such considerations, but I repeat my view that I expect it to take account of any implications for switchover.

6:45 pm
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Lord Avebury (Liberal Democrat)

My Lords, I hope that what the Minister said about grandfathering has satisfied the noble Baroness, Lady Buscombe, to some extent, at least. Perhaps she could get a letter from the chairman of Ofcom—similar to the one that we secured with regard to the previous amendment—that would say what he thought was possible?

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, I shall ask him to do that.

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Lord Avebury (Liberal Democrat)

My Lords, I am grateful to the Minister. That would be useful, even if he cannot give a complete undertaking that the same procedures will be applied to satellite as are applied to terrestrial to give whatever undertakings are possible about the extension of licences that might be covered in future by the introduction of RSA.

The Minister has also said, effectively, that we have what we want. An impact assessment will be conducted under Clause 7. Moreover, he has drawn attention to Clause 400, which reinforces the necessity for Ofcom to take account of representations from the industry before introducing RSA. I hope that that will also go a long way towards reassuring the industry that there will not be a sudden introduction of RSA without the fullest possible consultation.

We have achieved quite a lot in our discussions on the matter, and I sincerely hope that Ofcom will be as receptive to representations from the satellite industry as it ought to be. We look forward to continued consultations with Ofcom, so that we can guide it, if it feels that it is necessary for your Lordships to continue to take an interest in the matter a long time after the Bill has left the House. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

moved Amendment No. 25:

Page 146, line 12, leave out paragraphs (b) and (c).

On Question, amendment agreed to.

Clause 217 [Licensing of the public teletext service]:

Photo of Lord Addington

Lord Addington (Liberal Democrat)

moved Amendment No. 26:

Page 195, line 8, at end insert—

"(4A) The licence must contain the conditions that OFCOM consider appropriate for securing that persons with disabilities affecting their sight or hearing or both are able, so far as practicable, to make use of the service for all the same purposes as persons without such disabilities."

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Lord Addington (Liberal Democrat)

My Lords, when I first saw the group of amendments, I was a little worried by the fact that there were 83 clauses between Amendments Nos. 26 and 49. However, they probably hang together with regard to subject matter.

Amendment No. 26 deals with the teletext service. There has been an interesting debate on the matter. Analogue teletext meant that people who had access to Braille typewriters were able to use teletext and thus get information. It was of great benefit to them. It meant that the blind and the deafblind who could use Braille had a way of getting information.

We have tried many things to get the Government to move on the matter. We started off ambitiously in Committee, but I hope that the Government will be able to accept this amendment. The aim is to mirror what was done on the electronic programme guide, on which the Government were able to move towards us. If it is possible to do something because of an advance in technology, we should take the argument on board. That is a reasonable approach. As the technology comes on line, we should be allowed to use it. I hope that the Government will respond favourably.

Clause 300, to which Amendment No. 49 relates, covers the issue of people with a dual sensory impairment. The Government have undergone something of a learning process in respect of those with a dual sensory impairment—the deafblind. The department has undergone something of a learning process. One wonders why other Ministers did not bring forward that matter for us. It does not matter, as long as we get there in the end.

The deafblind—those with dual sensory impairment—are a specific group with specific problems. However, they are not even one consistent group. There are those who are born deafblind and those who are initially blind or deaf and then lose the other sense. Those secondary groups can, as their senses deteriorate, get access to services made available by current technology. It is possible to give assistance to a subset within a subset of a specific condition. All that this amendment does is suggest that the Government, or those in power, must bear in mind those considerations. I hope that the Government are able to accept the amendment.

Amendment No. 50 is probably the most controversial of all the amendments. I believe that I previously described audio description as the cock-up school of history, in which broadcasters could be told to audio describe X number of programmes only to discover that no one can receive the audio description. The most recent information that I have is that 49—or has it gone up to 50?—people can receive several thousand hours of audio-described programmes. That is an absurdity, but there is a solution, because for those on Sky—I hope my noble friend will forgive me for saying something fairly nice about—

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Lord Addington (Liberal Democrat)

My Lords, Australian-American broadcasting conglomerates allow one to receive a firm kind of audio description, although it is not as good. I believe that there are two different kinds—broadcaster mixed and receiver mixed. I understand that the receiver mixed system, which the free-to-air people have been working on, is renowned for its superiority. It is better; it has many bonuses; it can be used individually; one does not need to have broadcasts to the entire room. Everything about it is better. But if you cannot receive it, it does not matter very much whether it is better. Therefore, if we push forward here, we can simply say that those free-to-air broadcasters must allow their audio description programmes to be broadcast by Sky to those who have Sky; namely, 24 per cent of the target population, or about 480,000, according to the figures that I have been given. That surely makes sense.

A number of arguments have been advanced and a number of letters written about this matter. I believe that at the back of those is the fact that trying to get a producer for the chip to go into the new box may well be discouraged. I have come to the conclusion that that is at the back of the resistance. Therefore, if one manages to scare off someone from the potential market by saying that this should go through Sky, one may well continue the process. I believe that that is one of the greatest points of resistance by the free-to-air broadcasters. I suggest that the Government should consider forcing those free-to-air broadcasters to make this service available to what is under a quarter of their potential market, when they are already pumping vast amounts of money into the audio description itself. I beg to move.

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, I do not want to prolong the debate and I shall not make a speech now. However, I want to indicate that I shall advise the House to accept Amendments Nos. 26 and 49.

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Lord Puttnam (Labour)

My Lords, perhaps I may briefly gatecrash the amendment tabled in the name of the noble Lord, Lord Addington, to deal with a small problem that I have. Due to a miscommunication between me and the Public Bill Office, Amendment No. 50, which relates to backstop powers on training, failed to make it from Report stage to Third Reading. As it was not a contentious issue when I left it at Report stage, and as it has some bearing on the utilisation of new technology, I hope that the Minister will kindly help me further with regard to that particular issue.

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Baroness Darcy de Knayth (Crossbench)

My Lords, I support what the noble Lord, Lord Addington, has said and welcome what the Minister is about to say. I am very pleased that the deafblind—a most excluded group of people—will at last get something. However, I am saddened that the Minister does not propose to accept Amendment No. 50. I support all that the noble Lord, Lord Addington, has said. We are in an absurd situation. It would be ridiculous to be unable to get what is available and hope for better prospects later.

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Baroness Howe of Idlicote (Crossbench)

My Lords, I, too, express my pleasure at hearing that Amendments Nos. 26 and 49 have been accepted and also to add my concern that Amendment No. 50 has not. Over a number of sittings in Committee and at Report stage, the noble Lord, Lord Addington, has made the problems clear to us all, and we have also been very well briefed by the RNIB and others. With about half a million people being disadvantaged in this way and 22 per cent of people over 60 having both a hearing and visual problem, it is quite absurd—I believe that that is the right word— that we are not moving faster, especially as the facilities are in place and as this amendment would ensure that suitable provision was made for such people. I therefore support all these amendments.

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Baroness Buscombe (Conservative)

My Lords, I rise to say briefly that we welcome the Minister's forthcoming response to these amendments. Our only concern, which I hope the Minister will allay, has been to ensure that the legislation is not technology specific. I believe that that would be a great mistake. It is important for Ofcom to be given the flexibility to drive forward these proposals and to respond to technology.

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, I hope that the House will agree that we have listened not only today but throughout to the views expressed and have shown ourselves willing to make changes. At Report stage we introduced a new duty for Ofcom to encourage the availability of easily-useable apparatus; we acted on the need for broadcasters to make available adequate information about subtitling, signing and audio-description services to those likely to want to use them; we introduced the 60 per cent, five-year interim target for subtitling; we addressed the concern that electronic programme guides should be as accessible as possible to people with disabilities. I am grateful to all those who have pressed us to make those changes.

Amendment No. 26 would require Ofcom to include in the public teletext licence conditions to ensure that people with sight or hearing disabilities are able to use the service for all the same purposes as people without such disabilities. Teletext provides a valuable service, but it is licensed as a text service. We do not want to change the name of the service. We agree that we would like it to be available to people with disabilities, in so far as that is reasonably practicable. We will therefore accept the amendment. There are some technical difficulties to be addressed with regard to the drafting and the placement of the amendment in the Bill. However, I can assure the noble Lord, Lord Addington, that what comes back from the Commons will preserve the effect of his amendment.

Amendment No. 49 would require Ofcom's code relating to provisions for the deaf and visually impaired to give guidance on the extent to which applicable services should promote the understanding and enjoyment of programmes by people with a dual sensory impairment, as well as people who are deaf or hard of hearing and blind or partially sighted. We understand the very particular needs that are involved. As we have said, realistically, a person will need to have some degree of sight or hearing to be able to benefit from television; and, as such, they would be covered by the provisions. I regret that the substantive effect of the amendment is not entirely clear. However, we understand the strength of feeling. The amendment has a great deal of support, and we shall accept it on that basis. Again we may need to make some minor changes to the amendment, but they will not affect the spirit of it.

Amendment No. 50 is more difficult. We have already discussed the provision of audio-description services. I am well aware of their importance for visually impaired people. We all agree that there should be more audio-described programmes. The amendment would require broadcasters to provide their audio-description services in a form intelligible by their users. That is so obvious that there should be no need to write it into the statute, and the amendment does not appear to add much to the Bill. But it could be counterproductive. It is not clear why we would need such an amendment for audio-description services but not for sub-titling or signing. We certainly would not want to imply that there is no corresponding need for subtitling or signing to reach users in an intelligible form. That is the danger of this amendment. However, we understand that particular problems surround the provision of audio description that do not arise for subtitling and signing.

There are currently two ways of transmitting audio description—either mixed with the programme sound as an alternative to the normal soundtrack or in a separate stream that is mixed with the soundtrack in the viewer's set-top box. Both systems have their advantages and disadvantages.

The purpose of the amendment is to get broadcasters to provide their services using a specific system compatible with Sky set-top boxes instead of another one developed by the BBC and other partners which can only be received on 45 prototypes. That would allow Sky viewers to receive the programmes audio-described by the broadcasters which have to provide audio description. We fully understand the desire to make the best use of currently available technology to accelerate the provision of audio-description.

That would not solve the problem of the non-Sky viewers. I agree with noble Lords who said that we must not be equipment specific. There is not enough bandwidth available on the digital terrestrial platform to operate a system similar to the one used on satellite television. The drafting of the amendment presumes that the solution lies in the hands of the broadcasters. In fact, one only has to look at the example of current developments in EPGs to see that future models may depend as much on manufacturers of equipment as on the broadcasters themselves. So we think that this is a matter better left to the codes, since that will mean the regulator can take into account the latest developments and direct the broadcasters accordingly. In future, there might be other options or equipment that might have more benefits and less disadvantages. But my point is that we should not be picking winners now—a point which I think was taken up in debate.

Perhaps I may now address the gatecrasher. Yes, we understand the point that he makes about training. I can just about relate it to this group of amendments. The Government would like to make it clear that the obligations placed in the Bill represent a serious and ongoing obligation to invest in training. We see these requirements as vital to the future success of the sector. Unless we invest in people and their skills our vibrant audio-visual media will eventually go the way of shipbuilding and any other traditional manufacturing industries. On the recommendation of the ITC's programme supply review, the Secretary of State asked Skillset to set up a task force to report back to Ofcom on training. We keenly await the recommendations of the task force and expect a robust and vigorous strategy for the industry to emerge as a result.

Broadcasting is just one part of the audio-visual industry. Skillset and the UK Film Council are currently working with the film industry to develop a comprehensive film skills strategy to be launched in September. We look forward to the DTI and Skillset working together with the new media to address skills strategies to drive productivity and competitiveness of the sector. It is particularly fitting to be addressing these issues on the eve of the launch of the Government's national skills strategy, which places particular emphasis on the need for industries to work collaboratively to advance the implementation of skills strategies within their sectors. The Government will continue to monitor this broad range of training and development activities closely, particularly compliance with measures.

7:00 pm
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Lord Addington (Liberal Democrat)

My Lords, I thank the noble Lord for accepting my first two amendments—a brace is a good haul for one day. Amendment No. 50 is designed to deal with an ongoing problem as it currently exists. I heard what the noble Lord said and I have decided not to seek the opinion of the House, although it crossed my mind more than once. I offer the Minister one thought on this matter: I promise never to come back to this subject provided boxes are produced with the relevant technology within, say, eight months from now. If not, I shall come back and badger the Government to merry hell to do something about it. There is no point in ensuring that something beneficial is produced which cannot be received.

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, I do not think that I can take up the direct challenge made by the noble Lord, Lord Addington. However, I am told that the technology is readily available and that some manufacturers are looking at producing the appropriate equipment. It is not a matter that the Government can command manufacturers to do.

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Lord Addington (Liberal Democrat)

My Lords, yes, and apparently there have been manufacturers interested in audio-description ever since the first broadcasts were made. That is what is behind it. I suggest that there is some way in which the Government can improve matters.

On Question, amendment agreed to.

Clause 227 [Report in anticipation of new licensing round]:

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

moved Amendment No. 27:

Page 204, line 31, leave out subsection (6).

On Question, amendment agreed to.

Clause 239 [Television multiplex services]:

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Lord Avebury (Liberal Democrat)

moved Amendment No. 28:

Page 216, line 9, at end insert—

"( ) When making an order under this section the Secretary of State shall require OFCOM to—

(a) do what it can to sustain the availability of a digital frequency for an existing analogue Restricted Services Licences channel;

(b) consult with existing local television channel Restricted Services Licences licensees about transitional arrangements for broadcasting on Digital Terrestrial Television in their local area; and

(c) begin the digital local television licensing process prior to digital switch-over."

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Lord Avebury (Liberal Democrat)

My Lords, this amendment concerns the availability of frequencies for existing local television services which are broadcasting under restricted services licences. In Committee I gave the example of Channel M in Manchester. The problem is that when the switchover to digital occurs, there is no guarantee that spectrum will be made available for these services. The then Minister, the noble Baroness, Lady Blackstone, said that it was,

"for Ofcom to determine, within the framework of its statutory duties, what spectrum should be available for those different types of services".—[Official Report, 20/5/03; col. 753.]

The RSL broadcasters were not reassured by that statement and we fear that when digital local frequencies come to be allocated, which may not be until after 2010, their current situation of operating on low-power, poor-quality frequencies will be perpetuated. In the past, the frequency planners have leaned towards the interests of the bigger organisations at the expense of independent local channels. That could easily be repeated in the digital spectrum.

The RSLs are not represented on the spectrum planning committee and have not been asked for an opinion by the planners. We therefore hope that the Government will require Ofcom to do three things: first, to provide digital frequency for existing analogue RSL broadcasters; secondly, to consult with them on transitional arrangements for DTT broadcasts in their local areas; and, thirdly, to begin the process of allocating digital frequencies for local TV now, so that existing broadcasters do not have to face years of uncertainty which would make it impossible for them to attract investment. We understand that there have been helpful discussions on these matters between most of the RSL TV channels and officials of the DCMS in which assurances have been given, but it would be useful to have those on the record. I beg to move.

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, in practical terms, this amendment seeks to give existing television restricted service licensees a guarantee that they will be able to continue after switchover. That would not be appropriate or fair. In fact, it might not even be realistic. I say that it would not be appropriate because paragraph (a) of Amendment No. 28 would mean that Ofcom was required to do what it could to ensure that spectrum is available for existing RSLs. We have never given such a guarantee to any other commercial service, nor to any other spectrum user. However, we did decide that Ofcom should have a general duty to manage the spectrum as efficiently as possible. Having done so, we tried not to tie its hands by introducing more specific requirements.

I also feel that it would not be fair. As we said on Report, holders of the current RSLs were perfectly aware that the licences they applied for were restricted in duration and came without any spectrum guarantee. They knew the rules of the game. It is likely that the other operators who decided not to compete for those licences would have responded to an application for long-term licences or for short-term ones that had such a guarantee for the future. It would not be fair to change the rules after the game has begun.

It might turn out that it is not possible to give such a guarantee. Until our spectrum plans are finalised and have international clearance where we need it, we will not know what frequencies will be available on top of those necessary for the six multiplexes. Although it is perhaps unlikely, we might find that in a particular area securing a frequency for an RSL will be possible only if that frequency was not given to one of the six national multiplexes. Would that provision mean that Ofcom would have to give a small RSL priority over a multiplex?

Paragraph (b) of Amendment No. 28 would impose a requirement on Ofcom to consult RSLs about transitional arrangements for broadcasting on DTT in their area. Not only is the drafting of this provision rather unclear but it is also superfluous. As part of the good regulatory practices that it is required to follow, Ofcom will consult all the relevant parties. Therefore, we must oppose this amendment.

However, we understand that there is an issue to be addressed here. Operators have taken the risk of investing in these licences. Yes, they knew the risk beforehand, but they took it, and some of them not only built successful businesses but have created genuinely attractive local services which are now greatly appreciated by their audiences.

Ideally, we would like it if these services were able to continue, while seeing new ones develop. We recognise that if they are willing to invest in developing high quality programmes and play their role in social inclusion, licensees will want to be given as much security as possible for their future. Much as we would like to be able to provide this now, we are simply not in a position to do so, nor will we be until we have a clearer idea of how best to use the available spectrum.

For the time being, therefore, I can do little more than repeat what we said before. After switchover there will, of course, be more spectrum available, principally coming from the 14 frequency channels that will be cleared. However, it may well be inappropriate to use high-value national frequencies for local broadcasting. A preferable solution may be to use the interleaved spectrum that will become available within the frequencies used for the six national multiplexes. This interleaved spectrum could create new opportunities for local television services after switchover.

Once the spectrum plans for these multiplexes have been finalised, Ofcom will be able to switch its attention to this interleaved spectrum and prepare for its allocation. Once it has done so, I would expect it to consult fully all the stakeholders and present them with a list of options. In addition, the Department for Culture, Media and Sport and the Department of Trade and Industry will undertake a major public consultation exercise on switchover in spring next year and I can assure all concerned that the issues of the availability of local television services and the continuation of existing restricted service licences will be given careful consideration in the course of that exercise.

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Lord Avebury (Liberal Democrat)

My Lords, I am grateful to the Minister for that assurance and for repeating what I believe was the substance of what was said to the RSLs at a meeting at the DCMS on 30 June. There was only one point on which the Minister's remarks did not appear quite to tally with the assurances that the industry thought it had received at that meeting—the early advertisement of suitable digital frequencies, identified in areas where local television licences were already operating. The industry thought that that early advertisement of digital licences might be accompanied by a presumption that the existing incumbent would be preferred. However, the Minister seemed to tell your Lordships that the competition would be completely open and that newcomers would have the same chance of having that spectrum as the incumbents.

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, we will consult before we make any order affecting the licensing regime for local television services, and one of the questions that we will need to address will be the extent to which previous experience as a local broadcaster has to be taken into account when assessing competing applicants.

Once our spectrum plans are finalised, and the orders on the licensing regime for local television have been made, Ofcom will be able to advertise licences for local television services. It may decide to do this before the relevant digital spectrum actually becomes available, in order to ensure, where appropriate, continuity of existing services, or a smooth start for new ones. However, we do not want to tie Ofcom's hands and the matter must be left to its discretion.

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Lord Avebury (Liberal Democrat)

My Lords, perhaps we had better pursue the matter through Ofcom, because the RSLs were under the impression that the existing licence holders would be given preference in the allocation of the new digital frequencies, and that did not quite emerge from the Minister's remarks. However, I thank the Minister for the rest of his remarks, which will be useful. I hope that the industry finds that they enable it to plan with greater assurance for the future. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Baroness McIntosh of Hudnall (Labour)

moved Amendment No. 29:

Page 234, line 29, at end insert—

"( ) that sufficient high quality original drama is broadcast covering a range of issues in a variety of formats;"

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Baroness McIntosh of Hudnall (Labour)

My Lords, my noble friend Lord Lea is unable to be in the Chamber at this time and so at his request I have undertaken to be his understudy in moving Amendment No. 29. I hope that noble Lords will not ask for their money back.

Your Lordships will recall that when this issue was raised on Report by my noble friend Lord Lea, his amendment drew support from all sides of the House. That prompted the Minister to offer a discussion on the subject. That discussion took place, and as a consequence, the Minister has now tabled a most helpful amendment, Amendment No. 30.

Both the amendments seek to protect and enhance the value of drama as part of the range of services available through public service broadcasting. We can be very proud of the range, quality and immediacy of UK television drama at its best, and of the people who produce it—our actors, directors, producers, technicians and above all our writers. I am grateful to the Minister for seeking through his amendment to protect their interests and thereby the interests of us all, and I look forward to hearing his response. I beg to move.

7:15 pm
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Viscount Falkland (Liberal Democrat)

My Lords, I spoke to the amendment of the noble Lord, Lord Lea, on Report. I was unfortunately unable to be at the meeting, to which I was invited, but I am delighted that the Government are taking the matter seriously. As a country, we are very proud of our long-established culture of drama and literature, particularly of the way in which that has been taken up in broadcasting. The points were well made—I echo what the noble Baroness, Lady McIntosh, said.

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Baroness Buscombe (Conservative)

My Lords, we are glad that the Government have responded to the good debate that we had on Report in relation to the amendments of the noble Lord, Lord Lea.

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Lord Evans of Temple Guiting (Government Whip (technically a Lord in Waiting, HM Household); Labour)

My Lords, in Committee and on Report, the noble Lord, Lord Lea, moved amendments concerned with the place of drama in the public service television remit in what is now Clause 262. The Government were unable to accept the amendments as they stood. However, we have always made clear our view that drama programming must constitute a key element of the public service remit.

The list of programme types specified in Clause 262 already refers to drama as one aspect of the UK's cultural activity and its diversity. However, reflecting on the concerns raised in the earlier debates we have had a helpful meeting with the noble Lord, Lord Lea and the noble Baroness, Lady McIntosh. In the light of that we have concluded that it is right for the Bill to offer a little more detail as to how the term "drama" should be interpreted. Hence this proposed amendment to Clause 262, which makes clear that the term "drama" as used in the clause includes contemporary and other drama in a variety of different formats.

We see this new provision as encompassing both new ideas and new writing in the field of drama. It emphasises, too, the wide range of formats that television drama can take, whether it be one-off dramas, serials or themed series, to mention just a few examples. I should also emphasise once again that drama, along with all the other listed programme types, is covered by the overarching provisions in subsection (4) of Clause 262, which specify the purposes of public service broadcasting. These make explicit reference both to programmes dealing with a wide range of subject-matter and to programmes which embody high general standards with respect to content and quality. So quality of programming and diversity of subject-matter encompass the entire list of programming requirements, drama no less than the others.

The quota regime for original and independent programming by public service broadcasters will encompass drama, together with all the programme types included in the public service remit. I hope the House will agree that Amendment No. 30 provides a satisfactory way of meeting the points raised in the earlier debates. I would ask the noble Baroness, Lady McIntosh, speaking on behalf of the noble Lord, Lord Lea, to withdraw Amendment No. 29, with a view to my moving Amendment No. 30.

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Baroness McIntosh of Hudnall (Labour)

My Lords, I am grateful to my noble friend the Minister for that series of helpful observations. We are concerned to ensure that the reach, diversity, originality and innovation of UK television drama is protected. We can agree that the amendment introduced by the Government will do that. Consequently, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

moved Amendment No. 30:

Page 236, line 18, at end insert "; and

"drama" includes contemporary and other drama in a variety of different formats."

On Question, amendment agreed to.

Clause 268 [Enforcement of public service remits]:

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Lord Phillips of Sudbury (Liberal Democrat)

My Lords, the amendment relates to the strength or otherwise of the enforcement powers of Ofcom under the Bill. A great deal of energy has been expended in the House over the balance of the Bill between economic and market forces on the one hand and "cultural goods" on the other—the values and standards that are to be required under the Bill. Unless Clause 268 is equal to the task, all the hopes that the House—including the Government—has reposed in the public service broadcasting requirements in what are now Clauses 262 and 263 will be useless.

We on these Benches have one particular and specific anxiety about Clause 268. In order for Ofcom to form an opinion as to whether it can use the enforcement powers under the clause, it has first of all to decide whether the broadcaster has,

"failed to fulfil the public service remit",

under Clauses 262 and 263.

In addition, if Ofcom decides that there is such a failure, it must come to the opinion that it is a "serious" failure. Then Ofcom has a discretion as to whether in those circumstances it will proceed to enforce its powers. That discretion depends on whether,

"the situation requires the exercise of their powers".

Further, in reaching that decision, various factors are laid down in the clause to which Ofcom must, "have regard, in particular". One of those is the,

"general economic and market conditions",

prevailing, which may impact on the failure concerned.

Noble Lords may think, "So far, so weak", but that is not the end of it, because even if all those tests are complied with, no enforcement is possible if Ofcom is satisfied that the failure is,

"excused by economic or market conditions".

I have checked with the extremely helpful civil servants who are working on the Bill, and their and my belief is that the first test,

"excused by economic or market conditions",

is particular and specific to the broadcaster that has failed to meet the public service broadcasting remit.

That seems to mean that, if a media group, as is typical, puts a particular broadcaster into a subsidiary and intentionally runs it on an extremely short and limited financial lead, starving it of any resources that it does not need imminently for broadcasting purposes and driving it into a programme of broadcasting that falls foul of the public service remit, Ofcom could not then take enforcement proceedings against that subsidiary company. Ofcom must be satisfied that the failure is not excused by the particular and specific economic conditions of the broadcaster concerned, or it has no further powers under the clause.

I hope that I do not to need to labour the danger of that potential state of affairs. It would allow a single broadcaster to burst through the public service remit net on the grounds of its own incompetence or, more likely, on the grounds that it did not have the wherewithal, having been starved by its parent company. It may not be able to meet the public service remit for that reason. One can think of many examples of a media group purchasing an overpriced television company and then not having the money to put into programming.

One can think of a great many circumstances in which the company concerned will be beyond the reach of Ofcom on the grounds in the clause. Therefore, we believe that the clause is seriously weakened unless those words are removed where they first appear in subsection (2). I beg to move.

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Baroness Howe of Idlicote (Crossbench)

My Lords, I believe that it was I who raised this issue in Committee in the first place. The noble Lord, Lord Phillips, has not only explained the matter much more succinctly than I did but has added other complications that could easily occur if the circumstances that he described arose.

It is absurd that there should be a double let-out, in that the clause says,

"is not excused by economic or market conditions",

in a specific sense, before moving down to the,

"general economic and market conditions",

which are part of the general aspects to which Ofcom must have particular regard.

I am absolutely behind the amendment, and am worried that the Government have not seen fit to take note of it and remove what appears to be a bias in favour of the broadcaster under these circumstances.

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Lord Lipsey (Labour)

My Lords, I do not believe that the amendment is well advised, for two reasons. First, we are moving from the old world of broadcasting to a new world of broadcasting. Some of us like that more than others, but that is what is happening. In the days when ITV had guaranteed revenues and spectrum shortage and did not have to pay for its licences, we did not have to worry much about economic conditions getting in the way of its public service obligations. I hope that we will never have to do so in future, but we are in the world of greater competition, so it is sensible to have some sort of safety valve built into the Bill. The clause is a safety valve.

It worries me that, at every stage, this House has displayed a lack of confidence in Ofcom. The noble Lord, Lord Phillips of Sudbury, was as coherent as ever in inventing a transparent device that a company might adopt to get round the provisions and saying that Ofcom would not be able to do anything about it. The clause is quite clear that such a matter is left to the opinion of Ofcom; it would see through such a device like a shot. The provision is wise and I hope that the Minister will not accept the amendment.

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Lord Crickhowell (Conservative)

My Lords, the noble Lord, Lord Phillips, will know that no one has been a stronger advocate of public service remits and the need to protect and strengthen them than me, and I have supported other amendments that he has tabled. He will also know that I have not always agreed with the noble Lord, Lord Lipsey. However, I have a certain sympathy with the view that he has just expressed.

I could not quite understand the argument of the noble Lord, Lord Phillips, that we would allow a loophole for financial incompetence. That is certainly not how I read the clause. Having lived through some difficult times in the industry, in the days when I was a director in it, I believe that there should be an escape clause under the discretion of Ofcom for general economic conditions. It will not be in anyone's interest if Ofcom is forced into an action that might bring down a perfectly good company or organisation, which is doing its best and would normally, over a period, be able to meet the conditions but is facing a temporary situation in which it cannot. Such situations have arisen, and no doubt will arise again in future, when a company cannot do so for reasons entirely outside its control.

I hope that Ofcom will have a certain amount of discretion. I am not a lawyer, and I do not have the noble Lord's expertise in this matter but, as I read the clause, there is some discretion given. Therefore, I am slightly puzzled by his amendment.

7:30 pm
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Lord Phillips of Sudbury (Liberal Democrat)

My Lords, I am grateful to the noble Lord for giving way. However, the very point to which he refers is in the Bill, and I would leave it in the Bill. Ofcom does have to have regard in particular to the general economic and market conditions. I do not seek to strike that from the Bill. However, as the noble Baroness, Lady Howe, said, this is a second provision which is particular to the particular company. It is that which seems to me to drive a coach and horses through the strength of these enforcement powers.

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Lord Crickhowell (Conservative)

My Lords, I have made my point. I do not wish to add anything further.

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, Amendment No. 31 relates to the circumstances in which Ofcom may choose not to impose direct regulation on a broadcaster in the case of a serious failure either to fulfil the broadcaster's own public service remit or to make an adequate contribution to the overall public service remit. The Bill provides that Ofcom's enforcement powers can be used only if it considers that the broadcaster's failure is serious and is not excused by economic or market conditions. Enforcement powers include removing the broadcaster's self-regulation—in the third tier of the public service regime—and imposing direct regulation on that broadcaster.

Amendment No. 31 would prevent Ofcom considering whether a broadcaster's failure either to fulfil its individual public service remit or to make an adequate contribution are excused by economic or market conditions. So it would reduce the circumstances in which Ofcom could exempt a broadcaster under Clause 268(2)(a) to those in which the failure was not considered to be serious. Under Clause 268(2)(b) Ofcom also has to determine whether the situation requires the exercise of its enforcement powers. As the noble Baroness, Lady Blackstone, explained, it would not be realistic or reasonable for Ofcom to ignore the impact of economic and market conditions on the ability of licensed broadcasters to fulfil their remits.

All licensed broadcasters operate in a commercial market, as the noble Lord, Lord Crickhowell, said. They are affected by external economic conditions. Concern was expressed both in Committee and on Report that the double reference to "economic and market conditions" in Clause 263 might allow economic and market conditions to become Ofcom's overriding consideration when making a judgment about using enforcement powers. I shall set out again why that would not occur.

Under subsection (2)(a), Ofcom will consider whether the failure of the provider is serious and whether or not that failure is excused by economic and market conditions. I should make this clear because the noble Lord, Lord Phillips, made a great point about subsidiaries and the possibility of a broadcaster starving the service of funds. The question is whether the failure is excused by economic conditions specific to the broadcaster. We do not think that Ofcom would conclude that the failure was excused if the failure was caused by the broadcaster's incompetence. We are still looking at economic or market conditions.

Under subsection (2)(b), Ofcom will determine whether the situation requires the exercise of its powers, having regard to a number of matters including the general economic and market conditions affecting broadcasters. "General economic and market conditions" in subsection (3) therefore relates to Ofcom's decision on whether or not to exercise its enforcement powers. The reference removed by this amendment concerns the nature of a provider's failure to fulfil the public service remit.

The combined effect of those two provisions is that Ofcom can consider whether the specific failure of the provider is excused by economic or market conditions and can decide—taking into account a number of factors, one of which is the general economic and market conditions affecting broadcasters across the board—whether to take enforcement action. We do not accept that these provisions give economic and market conditions too great an influence over Ofcom's enforcement powers.

I should make it very clear that the issue of whether or not a failure can be excused by economic or market conditions will be judged by Ofcom, not the broadcaster. The enforcement process must have due regard to the realities of the marketplace in which commercial broadcasters have to operate. However, it is not intended to provide an easy get-out for broadcasters wanting to escape their public service obligations. I am confident that Ofcom will not regard it in that way.

In short, I believe that the Bill as it stands formulates Ofcom's enforcement powers in a sensible way and that it would not be right to remove the existing reference to economic or market conditions.

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Lord Phillips of Sudbury (Liberal Democrat)

My Lords, before the Minister sits down, I should like to ask a question, an affirmative answer to which would go some way towards reassuring me. Where Ofcom is looking at a broadcaster in order to form an opinion on whether its failure to comply with public service broadcasting standards is excused by economic or market conditions, what will be the position if it turns out to be a subsidiary which has not been incompetent but whose parent company—the media group or holding company—has simply not provided sufficient capitalisation for it to undertake programming that meets its public service broadcasting requirements? Would that bring the individual broadcaster within the net? Would that excuse the broadcaster or would it not? I feel sure that the Minister will see my point. I know from my own professional life that a great deal of extreme financial cunning is employed in such groups. What if it were possible to construct financially a set-up whereby the financial problems of the subsidiary could not be taken back to the parent company for the purposes of this clause?

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Lord McIntosh of Haringey (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Labour)

My Lords, the noble Lord, Lord Phillips, has repeated at length the argument that he used in his original speech. My answer is "No". The question is whether the failure is excused by economic conditions specific to the broadcaster. It does not matter whether it is a subsidiary or a parent company. Ofcom will not allow someone to get round their obligations by setting up a subsidiary and starving it of funds.

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Lord Phillips of Sudbury (Liberal Democrat)

My Lords, I take that last reply to mean "Yes" and not "No"—that Ofcom could take account of the parent company's conduct in deciding whether the wholly-owned subsidiary had an excuse. That is of considerable solace. I hope that the Minister is right in that. I suspect that it may be a passage of Hansard that is pored over. As I detect little support from other Benches, with reluctance, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Lord Davies of Oldham (Deputy Chief Whip (House of Lords), HM Household; Labour)

My Lords, I beg to move that the further proceedings after Third Reading be now adjourned until 8.37 p.m.

Moved accordingly, and, on Question, Motion agreed to.