Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

I beg to move amendment No. 57, in

clause 8, page 9, line 9, after 'publish', insert ', and on an annual basis review,'.

Mr Roger Gale (North Thanet, Conservative)

With this it will be convenient to take the following: Amendment No. 6, in

clause 8, page 9, line 16, at end insert—

'(2A) In relation to market power determinations under sections 75 to 79 or for a review under section 80, OFCOM shall not set a standard for completing such a determination in excess of six months, or a standard for a review in excess of four months.'.

Amendment No. 33, in

clause 8, page 9, line 23, leave out 'have regard to' and insert 'comply with'.

Amendment No. 58, in

clause 8, page 9, line 23, leave out from 'have' to end of line and insert 'due regard to the statement for the time being in force under this section with a view to compliance with the standards contained in it unless exceptional circumstances prevent this'.

Amendment No. 59, in

clause 8, page 9, line 23, at end insert—

'(4A) It shall also be the duty of OFCOM to publish each year, as soon as reasonably practicable after the end of the previous year, a report of their performance during that year in relation to the promptness standards described in the statement under subsection (1).'.

Amendment No. 60, in

clause 8, page 9, line 24, after 'Where', insert ', following a review under subsection (1),'.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

As we said at the beginning of the debate on this Bill, Ofcom will be an extraordinarily powerful body. It is therefore all the more important that its regulatory functions should be subject to the appropriate checks and balances. It should be required to meet standards and to demonstrate that it is doing so. We therefore welcome clause 8, which lays down a clear requirement on Ofcom to act properly, to set out its policy, to keep the achievement of that policy under review, and to publish its success. All those things are welcome. The purpose of our amendments is to strengthen clause 8 a little further and to clarify it a little more.

The amendments split into two sets. I will first talk about amendments Nos. 57, 59 and 60, which focus on the publication of the promptness standards and the review of that publication. It is fitting that Ofcom should expect timely responses from those that it regulates. It is therefore only fair that Ofcom itself should demonstrate its promptness. Amendment No. 57 would require Ofcom to review annually its statement of promptness standards and, later, to publish regular reports on how it has performed in achieving those standards. I acknowledge that clause 8(7) requires Ofcom to include a statement in its annual report on whether it has achieved its promptness standards. Amendments Nos. 59 and 60 seek to strengthen that subsection a little to provide the reassurance that a number of industries seek.

The second set of amendments in my name and that of my hon. Friends relates to clause 8(4). At the moment, the subsection says that, in carrying out its functions, it shall be the duty of Ofcom to ''have regard to'' the statement of promptness standards. We feel that the words ''have regard to'' are not sufficient. They provide Ofcom with a let-out to fail its promptness standards. The Bill should be strengthened. Amendment No. 33 does that by removing the words ''have regard to'' and inserting

the words ''comply with''. The statement therefore becomes much stronger.

The Minister may feel that that is expecting too much. I hope that he does not, but, in case he does, we have given an alternative formulation that makes the same point but in not quite such strong terms. Amendment No. 58 is also intended to tighten up the requirement on Ofcom to comply with its promptness standards. However, it does not impose what some may regard as an impractical obligation to comply. It requires Ofcom to comply with its promptness standards but it includes the words

''unless exceptional circumstances prevent this.''

I offer the Minister those alternatives. Both are designed to achieve the same thing but, if the Minister feels that he cannot go so far as to require Ofcom to comply with its promptness standards, he may, at the very least, consider amendment No. 58, which requires it to comply unless prevented by exceptional circumstances.

Mr Roger Gale (North Thanet, Conservative)

Before we move on, I am of a mind that the amendments will permit a sufficiently wide debate on the clause for there to be no need for a stand part debate.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

I rise to support my hon. Friend, happily. [Interruption.] Given those interruptions, I should explain that I rose to support him last time and the Minister agreed, so we may go the same way. In addition, I wish to speak to amendment No. 6 in my name and that of the hon. Member for North Devon. To avoid any confusion, on this occasion, as on others, I speak directly to recommendations from the Joint Committee on which the hon. Gentleman and the hon. Members for Milton Keynes, North-East (Brian White) and for East Lothian (Anne Picking) served.

I remind the Committee of the four recommendations made by the Joint Committee on the subject of promptness standards. First, it recommended that the specification of time limits be included in the Bill, which the Government declined to do; secondly,

''that promptness standards . . . be determined by the Secretary of State following consultation with OFCOM and . . . interested parties, rather than by OFCOM''.

The Government have changed the draft so that the Secretary of State has the power to intervene to set promptness standards. There are no amendments to change that and, in practice, it ought to be sufficient, so I will not dwell on the matter.

Thirdly, the Joint Committee recommended that

''OFCOM be . . . under a . . . duty to account for . . . failures to meet time limits and promptness standards in its annual report.''

In substance, that is the thrust of amendment No. 59, and I happily subscribe to that intention. Fourthly, it recommended that

''a party aggrieved by a failure of OFCOM to determine a matter for decision in accordance with time limits or promptness standards be enabled to seek a direction by a court to OFCOM if the court is satisfied that there has been undue delay by OFCOM.''

That recommendation is analogous to a similar provision in the Competition Act 1998 which the Government have not seen fit to enact thus far—unless the Minister tells me otherwise.

In their response to the Joint Committee's recommendations, the Government stated that if Ofcom sets promptness standards and fails to meet them, it

''will be in breach of''

its ''statutory duty.'' I do not doubt that that is true, but it does not answer the Joint Committee's question. If Ofcom were in breach of its statutory duties to publish and meet promptness standards under clause 8, would anyone who felt aggrieved in relation to Ofcom's failure to act be able to go to court to secure a direction for Ofcom to act? Is that possible? If the answer is no, the Joint Committee's objective has not been met and there is scope for a beneficial amendment.

The purpose of amendment No. 6 is to insert specific deadlines. In recognition of the Government's objective, which is to retain flexibility for Ofcom when possible, I have circumscribed where the Joint Committee recommended the setting of timetables. In the amendment, we focused on two specifics: the undertaking of

''market power determinations under sections 75 to 79'',

which we will come to later; and

''a review under section 80'',

the periodic market review. Whereas the Joint Committee recommended a four-month standard in relation to the setting of market power determinations, I have included a six-month standard, just to make sure that the flexibility is not too constrained and that the reasonableness of the amendment can hardly be contested. A market review should be less complex than an initial market power determination, so I have reverted to the four-month standard proposed by the Joint Committee.

The idea that Ofcom must have complete freedom and flexibility is somewhat contradicted by the structure of legislation in relation to market power-type decisions. In many respects, the European Commission gives itself deadlines for completion of reviews of that kind. Article 20 of the framework directive seeks from national regulatory authorities a four-month deadline for resolving disputes. We shall discuss disputes and appeals later. Disputes in relation to market power determinations of that kind, or between undertakings are relatively complex. If those reviews can be completed within four months, it does not seem unreasonable to suggest that Ofcom should be able to complete them in that time too.

There is a powerful industry reason for setting a standard in relation to market power determinations. One of Ofcom's most important tasks will be to conduct market power determinations to establish where there is significant market power, so that it can have the power to set conditions. The longer Ofcom does not complete market power determinations, the longer significant market power goes relatively unconstrained, other than by pre-existing licence

conditions. It is important that Ofcom gets on with the job.

The Minister might say that Ofcom will set challenging promptness standards for itself. That may be true, but let us remind ourselves that Mr. David Edmonds, the director general of Oftel, was asked when giving evidence to the Joint Committee whether the provisions of clause 6 of the draft Bill, which is analogous to clause 8 of the Bill, would affect his work at Oftel. He replied:

''Promptness would not. I have tough targets already. We meet those targets . . . I think the promptness clause is important underpinning but in terms of how I operate at the moment it would not make a difference.''

I shall not get into a long discussion about whether the customers of Oftel think that it makes decisions in a sufficiently timely manner, and whether the targets that are placed upon it are sufficiently challenging. My conclusion is that it is not the case in all circumstances. If Mr. Edmonds, who is to be a member of Ofcom, thinks that the standards are sufficiently challenging, it is probably time that we put something into the Bill that sorted out the targets from the outset. I recommend amendment No. 6 for that purpose.

Mr Nick Harvey (North Devon, Liberal Democrat)

This is an important group of amendments, and tabled together they offer a variety of ways of approaching the issue of promptness. During the deliberations of the Joint Committee, witnesses came forward time and again with the recurring complaint that existing regulators have been far too slow in dealing with cases that have been put before them. Those complaints were certainly in no small part directed at Oftel, but were not unique to Oftel. They also related to some of the broadcasting regulators, and indeed to the Office of Fair Trading, to which the sector had found itself referring things.

Clause 8 is a welcome acknowledgement of the need for promptness standards, but as currently drafted, it frankly lacks teeth. The exchange with Mr. Edmonds to which the hon. Member for South Cambridgeshire referred demonstrates that only too clearly. It is important that there be measurement of whether Ofcom is meeting its promptness standards from time to time. It is also important that the standards be rigorous. Ofcom will expect promptness from the various industries that it regulates when they respond to its inquiries. It is only reasonable to expect similar promptness from Ofcom, which is very important.

The amendments would tighten requirements for Ofcom to comply with its own promptness standards without imposing an impractical obligation on it. What is good for the industry should be good for Ofcom as well. That is especially important for fast-moving industries such as telecommunications and the internet. Businesses in those industries refer complaints to Oftel at present. The complaints often relate to fundamental issues to their business such as the bundling together of packages of services where anti-competitive behaviour is alleged, or single billing where other telecoms providers are using BT lines. An aggrieved telecommunications operator could go out of business if Ofcom—or Oftel, at present—took too long to deliberate and to reach conclusions.

I look forward to hearing from the Minister. A menu of different ways to approach the issue is before him. I hope that we will hear that at least some of the amendments are acceptable because the issue is fundamental to Ofcom's ability to be an effective regulator of the industries.

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

As a former Department of Trade and Industry Minister, it was often extremely embarrassing and frustrating to wait for findings and decisions to come. That is especially true of findings from one of the offices that the hon. Member for North Devon mentioned—I certainly will not repeat its name here. The cases could go on for a long time. I do not want to contradict myself but I started to understand why they took such a long time, and I shall comment on that in a moment.

Ofcom's stakeholders and, especially, the industry need a degree of certainty about the time scales under which Ofcom will carry out its functions and any business connected with them. That is already set out in parts of the Bill. The hon. Member for South Cambridgeshire gave us the example of clause 183(5), which sets a four-month timetable for making a dispute determination, as required by article 20 of the framework directive.

Amendment No. 6 would set out a timetable for market power determinations. We believe that it is inappropriate to put that requirement in the Bill. As a matter of policy, we believe that setting promptness standards is an operational matter that Ofcom will understand far better than the Government or, indeed, hon. Members. It will be able to set its standards with an understanding of its resources, the urgency of each matter and the impact of not acting in a timely manner.

Mr Brian White (North East Milton Keynes, Labour)

A danger of allowing Ofcom to set its targets is the fact that that would reflect its resources. Pressure would not be put on Ofcom to get its resources right because it would not have to adhere to an external deadline. Introducing an external deadline would concentrate Ofcom's mind, which was what the Joint Committee was getting at.

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

I could not agree more with my hon. Friend that that would focus the mind. As somebody who spent a long time with the DTI, I think that the overriding priority is for the regulator to reach correct and accurate decisions. Nothing is gained by taking a quick decision that is overturned on appeal or that proves ineffective in practice. I saw that happen on several occasions, and it incurred greater delay and more heartache, and several companies suffered badly as a consequence. Getting a right decision on highly complex cases that can often involve dozens of issues and many operators is not an inherently fast process. Detailed analysis of markets, costs and contract conditions is usually required, and many interests need to be consulted and taken into account.

It may help if I explain briefly why, for market analysis, putting the timetable in the Bill could cause operational difficulties for Ofcom. Its ability to carry

out this work will depend largely on external factors such as its ability to obtain information. Unless analogous time limits are imposed on stakeholders, Ofcom may well not be able to meet its statutory time limits. Stakeholders will respond to requests for information in very different ways, certainly if the experience of the competition regulators is anything to go by.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

That those who are to be the subject of market power determinations might be able to frustrate the conclusion of such determinations seems to be an inherently bad reason to allow promptness standards to be more lax. Those determinations need to be completed quickly in order to restrict the operation of market power.

I turn to whether those who sat on the Joint Committee were a bunch of amateurs. As the Minister knows, before we made this recommendation, we discussed the matter carefully with, among others, Sir Bryan Carsberg, who was a former director general of Oftel and the Office of Fair Trading.

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

I have great respect for Sir Bryan Carsberg. His experience came through in the evidence that he gave to the Joint Committee. However, if the hon. Member for South Cambridgeshire had asked Sir Bryan whether everyone responded promptly and in the way in which we would like them to respond when the regulators approached them for information—perhaps he did ask that question—I am sure that Sir Bryan would have told him that the response can often be very tardy. As a former Minister with responsibility for competition, I know that companies will hold out until the last moment, and then come forward with the evidence accompanied by some thinly disguised threats from very heavy lawyers about where they intend to move on those issues.

Mr Nick Harvey (North Devon, Liberal Democrat)

Are not companies likely to respond more quickly if they know that the regulator has to deliver a verdict by a tight deadline, and that the regulator might assume the worst about that company if it does not respond quickly?

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

No, I do not believe that. In a perfect world, that might well be true, but I think that sometimes they would rather cast shadows across the regulator than cough up the information that they have been asked to provide. Therefore, I do not share the view of the stakeholders on that matter.

The amendments raise valid points. We have not set out the standards in the Bill. Instead, we have given that task to Ofcom so that it can reflect on what happens in practice. Subsection (1) places a duty on Ofcom to publish a statement setting out the promptness standards that they expect to meet. Subsection (7) requires it to provide a summary of the extent to which it has complied with the statement in its annual report. I am unsure what amendment No. 59, for example, would add. We have ensured that Ofcom will be publicly accountable for its record. As for requiring Ofcom to review its standards annually, we have built into this clause the capacity for it to revise the statement of promptness standards.

I turn briefly to compliance. We come here to the concept, which has been raised before in the Committee, of ''have regard to''. This clause places a duty on Ofcom; it cannot simply ignore its promptness standards. If it fails to have regard to the standards, the way in which it carries out its functions could be the subject of a judicial review. However, a compliance obligation would imperil the proper carrying out of its functions; in particular, enforcement action that took slightly too long would be rendered invalid. It would force all decisions of a similar kind into the same time scale, unless those fell under the exceptional circumstances that are referred to in amendment No. 58, and lead to bigger and more complicated decisions being unduly rushed. I resist the amendments.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

I am disappointed by the Minister's response. He acknowledged that promptness is important and the Opposition parties feel strongly that that needs to be included in the Bill. He also made various observations on the amendments. Regarding amendment No. 6, I am always slightly fearful that if one specifies maximum time periods, those become the actual time periods. I can understand why the Minister is reluctant to accept that. However, his arguments about compliance are not wholly persuasive.

It would not be going too far to require Ofcom to comply with its promptness standards, and doing so would indicate strongly that the Committee attached considerable importance to that matter. I accept that there might be exceptional circumstances.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

On the question of compliance, I can see why the Minister wants to retain the words ''have regard''. He has not, however, answered the Joint Committee's point about whether those who believe that there has been undue delay should be able to go to a court in order to direct Ofcom to reach a decision. It was seen fit to apply that to the OFT, although it was never brought into force. The Government seem to be evading that issue, but it would be desirable if it were included.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

I do not want to make the Minister's arguments for him, but he referred to the possibility of a judicial review if there were an undue delay. That would be an option, but it seems to be somewhat like the nuclear option. There is a case for strengthening the provision at least, and making an allowance for the possibility of exceptional circumstances. I would be more inclined, for that reason, to press for amendment No. 58, rather than for amendment No. 33. Hon. Members feel strongly about that matter.

I beg to ask leave to withdraw amendment No. 57.

Amendment, by leave, withdrawn.

Amendment proposed: No. 58, in

clause 8, page 9, line 23, leave out from 'have' to end of line and insert 'due regard to the statement for the time being in force under this section with a view to compliance with the standards contained in it unless exceptional circumstances prevent this'.—[Mr. Whittingdale.]

Question put, That the amendment be made:—

The Committee divided: Ayes 8, Noes 10.