Mr John Greenway (Ryedale, Conservative)

I beg to move amendment No. 52, in

clause 7, page 8, line 11, after 'markets', insert

'or on major communications users'.

Mr Roger Gale (North Thanet, Conservative)

With this it will be convenient to take the following: Amendment No. 5, in

clause 7, page 8, line 23, at end insert—

'(4A) An assessment carried out under this section shall include an assessment, as appropriate, of the impact of the proposal upon the general duties of OFCOM and, in particular, the furthering of the interests of consumers through competition as set out in section 3(1).'.

Amendment No. 53, in

clause 7, page 8, line 26, at end insert

'or are lead to believe is important for significant users'.

Amendment No. 54, in

clause 7, page 8, line 30, leave out 'OFCOM's opinion' and insert

'a reasoned opinion by OFCOM'.

Amendment No. 56, in

clause 7, page 9, line 6, leave out 'OFCOM's opinion' and insert

'a reasoned opinion by OFCOM'.

Mr John Greenway (Ryedale, Conservative)

The clause sets out Ofcom's duty to carry out impact assessments before implementing proposals, and its duty to publish any findings from those assessments. The addition of required regular impact assessments in the Bill is positive and welcome. However, decisions about when to carry out such assessments, who to consult and to whom the information is shown are very much left to Ofcom's discretion. We think that measures should be put in place to ensure that Ofcom's decision process is transparent and not carried out in an arbitrary manner.

It is important that not only businesses that supply electronic communications services but business users are consulted on the impact of regulation. Electronic communication tools have become an integral part of all United Kingdom businesses—although, thanks to your ruling, Mr. Gale, they are not integral to the proceedings of the Committee. Such tools represent a significant percentage of the cost base of firms. Consequently, the effect of regulation on them must be explicitly recognised.

I should like to explain the effect of amendment No. 52, which stands in my name and those of my hon. Friends. Under clause 7(2)(b), Ofcom, when deciding whether something that it plans to do in carrying out its functions is sufficiently important to warrant an impact assessment, must have regard to the likely impact of its proposal on persons carrying on business in the markets concerned. Subsection (2)(c) makes a similar requirement with regards to the general public. It is not clear that either definition includes major communications users. We suggest that it might be sensible to include those users in the definition for reasons I have outlined.

Similarly, amendment No. 53 includes the views and opinions of significant users as an important element of Ofcom's decision-making process on how impact assessments are to be carried out. The key issue is whether, and to what extent, Ofcom should consult the customers, particularly business and commercial customers, whose commercial interests may be affected significantly by any regulatory change that Ofcom may have in mind.

Subsection (6) requires Ofcom to provide an opportunity for representations to be made to it. It might be argued that amendments Nos. 52 and 53 are covered in that general provision. However, the requirement is restricted to the persons who, in Ofcom's opinion, are likely to be

''affected to a significant extent''.

Another way of trying to ensure that the views of significant business users are always sought is to place an obligation on Ofcom to give reasons why—that is to say, to give ''a reasoned opinion'', as in amendments Nos. 54 and 56, as opposed to just an ''opinion'', as it says in the Bill. I hope that the Committee will see the difference of accent.

In some respects, these are probing amendments, designed to place on the record the extent to which there will be proper consultation with business on the important issue of impact assessments. Businesses and business organisations are sufficiently concerned to have encouraged the amendments to be tabled. We look forward to the Minister's response.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

I wish to speak to amendment No. 5, which stands in my name and that of the hon. Member for North Devon (Nick Harvey). I shall not detain the Committee with a lengthy discussion about regulatory impact assessments, but shall point out that in subsections (4) and (5), the form that a regulatory impact assessment will take is established in rather flexible terms. In the first instance, Ofcom would be allowed to do what was deemed appropriate. Under subsection (5), however, that would be done by general guidance. The Committee might be aware, from some other context, of the way in which that guidance has developed in recent years to encompass a risk assessment, the presentation of options, including the option to do nothing, the inclusion of a competition assessment and small business impacts. However, general Government guidance on the subject of regulatory impact assessments that is promulgated by the Cabinet Office, or some other responsible body, does not, so far as I am aware, relate to the responsibilities of individual regulators, particularly utility regulators, or to Ofcom, which is a kind of converged market regulator.

Ofcom is required to consider a pattern of general duties that includes the principle duties under clause 3(3), which it could take into account and set out, under its permissive power in subsection (4). It would not, however, necessarily do that. We have discussed the necessity of considering the general duties, particularly in the early stages, and the necessity of understanding the basis on which Ofcom would reconcile conflicts between those general duties and the benefits of transparency in the market place if it does act in that way.

The regulatory impact assessment was published alongside the draft Bill in order to show the benefits to industry of the introduction of a single regulator. That documents refers, for example, to the benefits of the reduction in capital costs through a reduction in regulatory risk, which would be derived directly from greater transparency about how the regulator does its job. If we can require Ofcom to be more transparent about its general duties, and if we find out how those duties would impact on decisions, or vice versa, and how that can be reconciled through the RIA, that will make for decision making which is better and is much more transparent. Amendment No. 5 would achieve that objective. It might otherwise be achieved by

Ofcom, but it would be a matter for regret if Ofcom did not use powers under subsection (4) to achieve it. It is better for it to be specified.

Mr Roger Gale (North Thanet, Conservative)

Before I proceed, I would say, and I intended to inform the Committee earlier about this, that the amendments largely brace the entire content of the clause. I shall not, therefore, be minded to permit a clause stand part debate. Hon. Members might wish to contribute at this point.

Mr Simon Thomas (Ceredigion, Plaid Cymru)

I am interested in what the official Opposition and what the hon. Member for North Devon have explored through the amendments. Those matters are worthy of exploration. I have two points to put to the Minister. First, in moving his amendment the hon. Member for South Cambridgeshire couched his remarks in terms of a RIA. My understanding of clause 7 is that Ofcom is empowered to make wider impact assessments than simply RIAs across the whole range of their functions that would relate to the wider discussions that we have had, not just to its regulatory function.

Will the Minister say more about how the impact assessment system might work? When we discussed amendment No. 176 earlier, which related to clause 7, the Minister said that he did not want to see Ofcom delay any impact assessments by consulting with, for example, the National Assembly for Wales. These amendments seek to establish another kind of consultation through the impact assessment process with significant telecommunications users and industry interests. That is important and perhaps the Minister could take this opportunity to explain that further. If there is to be a proper impact assessment, surely there must be consultation and discussion with the parties that are involved, whether it is an industry body or another body such as the National Assembly for Wales or the Scottish Parliament and involves territorial issues. Whichever way we look at the clause, it gives considerable power to Ofcom to review the impact of its work on particular areas, both geographical and sectoral. The amendments would give us an opportunity to see how such a measure pans out in reality and how the Minister sees it working. We must ensure that Ofcom's work on an impact assessment is not done in the dark and launched on an unsuspecting public or industry. I hope that the hon. Gentleman will explain the process.

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

I will come to the points made by the hon. Member for Ceredigion (Mr. Thomas) in a moment, if I may. I wish first, however, to deal with amendment No. 5, tabled by the hon. Member for South Cambridgeshire and the hon. Member for North Devon. It would require Ofcom to include in any impact assessment that it carries out an assessment of the impact of the proposals on Ofcom's general duties, in particular the furthering of the interests of consumers through competition. I fear that that would invert the relationship between clauses 3 and 7.

Clause 3 imposes duties to be complied with by Ofcom in carrying out all of its functions. That includes those functions that may lead to the need for an impact assessment under clause 7. Thus, anything that Ofcom proposes to do that leads it to carry out an impact assessment is subject to its duties

under clause 3 and could not have an impact upon them. In any event, subsection (2)(c) requires Ofcom to carry out an assessment if it would have a significant impact on the general public, which includes members of the public as consumers.

The hon. Member for Ryedale (Mr. Greenway) spoke to amendment No. 52. Clause 7(2)(b) is aimed at the providers of services, facilities and apparatus within the industry. The amendment would include the users of those services within the subsection. Although we agree that it is appropriate to highlight directly those most affected by regulation, such as the users of the services and facilities likely to be affected by the implementation of any proposals, they are already covered under subsection (2)(c) and any significant impact on them will be dealt with by Ofcom accordingly.

I turn now to the interesting points raised by the hon. Member for Ceredigion. We did not refer specifically to a regulatory impact assessment. Such a term has no statutory meaning. We have tried to keep the spirit of the IRA—RIA, not IRA! That reminds me of a friend who set up a company and asked me what I thought of its title, Ian Reekie Associates. We have tried to keep the spirit of the regulatory impact assessment, while recognising that, because of the breadth of Ofcom's functions—the point that the hon. Gentleman was making—it would be unlikely that a one-size-fits-all approach would work. To delve into a different area, I certainly expect Ofcom to take a more holistic approach to the way in which it regards the impact of its decisions. Obviously, we are worried about regulatory impact assessments, in particular, and their effect on core businesses.

Guidance and standards change, and good practice evolves. For example, competition assessments are now considered an integral part of an impact assessment, which is a different view from that held 10 years ago. For those reasons, we resist the amendments.

Mr John Greenway (Ryedale, Conservative)

I am not sure that the Minister has entirely answered all our questions, but he said that it is the Government's view that business users are caught by the general public definition under subsection (2)(c). There is plenty of time for us to consult those concerned to determine whether that is satisfactory. However, in the light of what the Minister has said, I seek leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 7 ordered to stand part of the Bill.