Mr Andrew Lansley (South Cambridgeshire, Conservative)

I add my appreciation of the opportunity to serve on a Committee under your chairmanship, Mr. Gale. With the benefit of experience, I can say that as long as I stay in order it will be a pleasure.

I shall detain the Committee for a minute in order to ask the Minister a number of questions. As will be a refrain in at least some parts of our discussions, I will be speaking in part about the questions and recommendations made by the Joint Committee and the Government's response. In some cases, however, there are loose ends and in others there are clearly differences of opinion. In this particular instance, I am pulling at loose ends.

The Joint Committee discussed the transfer of functions, powers and liabilities between the pre-commencement regulators and Ofcom. There is clearly provision for a transfer scheme for property and liabilities. At the time, however, we could not go into the provision to be made for the staff of the pre-commencement regulators, or indeed Radiocommunications Agency staff, who were to be transferred to Ofcom. We were led to believe that additional clauses would be added to the Bill, as indicated in paragraphs 3.7.1 to 3.7.3 of the Government's policy document. I am not aware that such clauses have been included in the Bill, and I wonder whether the Minister would indicate whether such clauses are likely to be added at a later stage.

The process of relating the structure of activity inside the pre-commencement regulators directly to the views of Ofcom can begin now that Ofcom has, to some extent, been appointed. It will allow the pre-commencement regulators to structure themselves, and the prospective Ofcom, in ways in which Ofcom would prefer. In that respect—this is a personal view, which was supported to some extent by other members of the Joint Committee—the Towers Perrin report was not wholly helpful. In particular, in so far as Towers Perrin looked at whether Ofcom should have clear, functional, outcome-related structures—for example, the function of an economic regulator as distinct from a content regulator, which is now reflected perfectly sensibly in the structure of the legislation—it discounted them in an unwarranted fashion in the way in which it structured its report.

We had to escape from the curious addition of a separate radio section to Ofcom in the Towers Perrin proposal, which treated radio as though it were not part of economic and content regulation and the concept of a converged regulator did not apply to it. The Joint Committee said that that was perverse, and the Government happily agreed. It is important that the pre-commencement regulators should not be constrained by the presence of a consultant, and I wonder whether the Minister will confirm that they are escaping from some of the constraints with which they started.

That brings me to my principal question, which relates to the use of powers in the Office of Communications Act to try to secure the most advantageous introduction for Ofcom. As one can see in clause 2, Ofcom will clearly take over functions where the events that it will be regulating will predate its assumption of those functions. So far as we can achieve it, those who are regulated should both recognise that Ofcom is a distinctly new regulator with a new approach and culture and, in so far as they have been operating under the prior regulatory regime, know the basis on which they are being regulated. The pre-commencement regulators have their own pre-existing cultures and there will be big shift to the new culture, but some of Ofcom's regulatory actions will have to relate to that prior period, which is a curious combination. The key is to be found in section 2 of the Office of Communications Act on Ofcom's initial function, to which the Minister referred, which is about making statements on its intentions in relation

to its use of its powers. Section 4 places upon the pre-commencement regulators a duty to carry out their functions in a manner that appears to them to secure that Ofcom will be able effectively to carry out its functions—its initial function and the functions that will be given them under the Bill and other proposals.

It is interesting that the Government, when responding to the Joint Committee report recommendation that those powers should be strengthened, made clear their view that there was nothing to prevent Ofcom publishing such statements of intention. That is fine; that answers the question perfectly well. However, the Government's response went on to say:

''so there is no impediment under the provisions of section 4 of the Act to the existing regulators having regard to any such statement OFCOM may make in fulfilling their functions before they are transferred to OFCOM.''

My point is what is the extent of the obligation on the pre-commencement regulators? If Ofcom makes a statement about its future intentions under section 2 of the Office of Communications Act, and many of us would wish it to do that at an early stage, is it not the case that under section 4 the pre-commencement regulators have a duty to follow that through and to try to secure that Ofcom's intentions are carried into effect by using their existing powers before Ofcom takes over—to the extent that they are legally able to do so within their existing statutory obligations?

It seems to me that there being no impediment to the regulators having regard to Ofcom's statement is not good enough. We should make it clear that we would encourage Ofcom to make such statements as early as possible and that the pre-commencement regulators, within their statutory limitations, have a duty to act in accordance with those statements of intention. Otherwise, we will have a period of confusion; it may last a matter of months only, but it is perfectly clear that although the legislation may be passed in June or July next year Ofcom may not be able to take up all those principal functions until the later part of 2003.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

May I add to what my hon. Friend says? He flags up a genuine concern. It relates to a fairly limited time scale. The pre-commencement regulators will continue to operate, but with the prospect of Ofcom being already established and with a board already in place sitting and waiting to take over. We have already seen that some of the pre-commencement regulators have started to be influenced by the knowledge that their lifespan is coming to an end. In one case at least that I know of, that has caused them to say that they will not consider any more franchise applications because Ofcom will be taking over that responsibility before too long. In other cases, decisions may be taken by pre-commencement regulators when it is perfectly clear that Ofcom may reach different decisions soon afterwards. It would help if the Minister could say a little about the timing, and when he envisages Ofcom coming into effect and taking those powers.

I note that clause 2 provides that the Secretary of State may appoint different dates for the different purposes of Ofcom. I am not entirely sure why that

should be the case. What particular examples can the Minister provide of why one particular function might come into effect earlier or later than another. Will he clarify those points?

Dr Kim Howells (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Pontypridd, Labour)

Since it was established earlier this year, Ofcom has been making preparations to assume its regulatory functions once the Bill's provisions come into force. That is why we passed a paving Bill, and I think that it was right and proper to do that.

Clause 2 will cause the functions that are currently carried out by the existing regulators to be transferred to Ofcom. Those functions are set out in schedule 1 and relate to wireless telegraphy, the licensing of television and radio services, the Channel 4 corporation, Gaelic broadcasting, which we have not mentioned so far, the national television archive, and the prescription of foreign satellite services.

The schedule includes functions that relate to entering and searching premises to enforce broadcasting licence provisions, the variation of existing licenses for Channel 3 and Channel 5, reviewing digital television broadcasting, the reservation of digital capacity to the BBC, listed events and fairness and privacy in broadcasting. Taken together, clause 2(1) and Clause 395(2) enable the Secretary of State to determine a date on which the functions to which the clause relates should be transferred to Ofcom. Under clause 395 the Secretary of State can set different dates for different purposes. That matter was raised by the hon. Member for Maldon and East Chelmsford. Those provisions would allow different functions, or even different aspects of the same functions, to be transferred to Ofcom at different times.

As a consequence of clause 2(2), references that are made in current legislation to the existing regulators should be read as if they referred to Ofcom. Subsection (3) will allow Ofcom to exercise the functions that are transferred to it in respect of incidents, such as a breach of a licence condition, that occur before those functions are transferred. Subsection (4) provides that the functions that are transferred to Ofcom include any modifications made by Bill.

The hon. Member for South Cambridgeshire asked a sensible question—what will happen to the staff? That is an important issue, because if there is doubt and uncertainty, staff might drift away. Many people on the staff are very skilled and vital. Subsection (2)(b) will apply via an order under the Employment Relations Act 1999, which has been published in draft and is in the House of Commons Library. As we are using existing powers to deem subsection (2)(b) to apply, staff will transfer to Ofcom with their existing terms and conditions under a section 38 regulation of the 1999 Act, rather than through a transfer scheme under the clause. I am sure that the Committee will welcome the protection for staff and their employment rights on transfer.

Mr Michael Fabricant (Lichfield, Conservative)

The Minister has raised an interesting issue. I know that there is huge uncertainty among Radio Authority staff about

whether they should be seeking other jobs. The Minister has, to some extent, addressed that, but will he clarify whether all employees of the various agencies that will be encompassed in Ofcom—the RA, ITC, Oftel and so forth—will automatically be employed by that body?

Dr Kim Howells (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Pontypridd, Labour)

No. They may make applications for jobs and some would not, I am sure, want to transfer. We cannot tie Ofcom to saying that it will be exactly the same size as all the existing agencies combined. It is important that the new organisation should be a new creature and should address the matter of regulation in a fast-changing environment. The hon. Gentleman often made that point during the passage of the Ofcom Bill. The answer is no.

To return to the issues that were raised by the hon. Member for South Cambridgeshire, copies of the executive summary of the Towers Perrin report have been deposited in the Library of the House of Commons. That contains recommendations only, and it will be for the Ofcom board to make its own decisions on matters such as staffing.

The hon. Gentleman also asked whether existing regulators should be under a duty to act in accordance with Ofcom's statement of intention. Clause 27(1) provides for the pre-commencement regulators to take steps to enable Ofcom to carry out the functions transferred to it under the Bill.

The hon. Member for Maldon and East Chelmsford asked about different dates. As hon. Members will be aware, detailed planning currently under way between Ofcom and the existing regulators means that we must implement telecom directives by 25 July. Ofcom may take a lead in that ahead of other powers, but that is a matter for detailed planning. I hope that he will accept that point.

Question put and agreed to.

Clause 2 ordered to stand part of the Bill.

Schedule 1 agreed to.