Committee (1st Day)

Digital Economy Bill [HL] – in the House of Lords at 3:39 pm on 6th January 2010.

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Votes in this debate

Clause 1 : General duties of OFCOM

Amendment 1

Moved by Lord Lucas

1: Clause 1, page 1, line 5, leave out subsection (2)

Photo of Lord Lucas Lord Lucas Conservative 3:40 pm, 6th January 2010

My Lords, Clause 3 of the Communications Act 2003 sets out the general duties of Ofcom. The first subsection describes Ofcom's general duties towards citizens and consumers, and the second subsection sets out its detailed functions. It is significant that on the plaque in the lobby of Ofcom's office only the second set of duties is commemorated. The duties to the citizen and to the consumer are missing. I think that that has been Ofcom's attitude throughout its life-that it feels that its principal duties are to itself and to the industry and that the inconvenient subsection (1) is to be ignored. So that is the attitude with which I approach subsection (2), which I wish to remove with Amendment 1.

It is of specific concern that we are loading on to Ofcom new duties to promote investment in electronic communications and infrastructure, and for the investment resulting from that to be efficient. Given Ofcom's open disregard of its duties to the citizen and to the consumer, that is putting too much emphasis on the wrong side of things. If we consider Ofcom's attitude combined with those words, we are creating something which over time will reduce competition and the breadth of services available to the consumer. It is also of concern to me whether it really is right that a body which is supposed to be an independent regulator should be responsible for promoting investment, a duty which is more commonly separated from that of regulation. This confusion of powers and principles is likely to cause problems over the long term.

Deletion, of course, is not the only solution to this problem. We could try to bring into these clauses something which reminded Ofcom that the citizen and the consumer are actually its principal concerns. We could bring in a requirement that, to keep these matters in its mind, Ofcom should report at intervals to Parliament or the Secretary of State on competition and on the breadth of services available to consumers. However, it seems to me that, as things are at the moment, loading these rather unusual duties on to a body which ought to be a regulator-which, as I say, has left some duties out of the plaque in its lobby and always been less than mindful of its duties to the consumer and the citizen-and to give it this additional bias in terms of industry and efficiency, at a time when the breadth of opportunities to the citizen seems to be exploding and when the industries that Ofcom regulates have in many instances dragged their feet and been slow to take advantage of these and tried to oppose the tide of change, is the wrong way to be looking. We ought to be looking to redirect Ofcom towards the consumer and the citizen and not to be focusing on the support of the industry. I beg to move.

Photo of The Earl of Erroll The Earl of Erroll Crossbench

I want to reinforce what the noble Lord, Lord Lucas, has said. I have noticed that in various areas where we have amalgamated the roles of enforcer and helper, it has rarely worked, if ever, because the agency or body concerned finds it difficult to know which one it will do. The danger is that the Government will then say, "Don't worry, this is covered", when the body concerned is failing in the bit that it is not good at. In other words, Ofcom may be a good regulator but not a good promoter, but we will be told that the issue is covered because it is part of its duties, even if it is not doing it well.

It is difficult to set priorities because one role costs money and the other sometimes involves levying charges, so there can be great conflict. From this point of view, the first part of the proposal is that Ofcom should promote investment in electronic communications networks and infrastructure. Part of Digital Britain, which has been left out of this completely, was the concept that we should have a minimum level of broadband in every household in the country, so that the Government could reduce the cost of delivering services to the public-they have assigned a lot of money to this-by using the internet much more widely. A minimum level of 2 megabits per second would be required for that. I see nothing about that in the Bill. Do the Government intend to place a duty on Ofcom to bring that forward, and also perhaps to bash heads together so that BT and other local community initiatives for broadband come together properly? Or do the Government not see that as Ofcom's role? I think that there will be confusion, so I agree with the noble Lord, Lord Lucas, that subsection (2) should be left out of the Bill.

Photo of Lord Steel of Aikwood Lord Steel of Aikwood Liberal Democrat

I support the thrust of what the noble Lord, Lord Lucas, and the noble Earl, Lord Erroll, have been saying, particularly in reference to subsection (2)(a), which refers to promoting,

"appropriate levels of investment in electronic communications networks".

I should declare an interest-or a lack of interest, to be more accurate. I happen to live in an area that has no mobile telephone reception. Both my mobile telephone and the gadget which the House of Lords kindly provides me with to receive communications do not work. I have raised this in correspondence directly but Ofcom has tended to shrug it off by saying that it is not part of its responsibility. I should have thought that in this day and age there should be a general policy to ensure that where there is at least a reasonable population-I am not talking about the tops of mountains-and villages which do not yet have a telecommunications network, the companies that have not built the necessary masts should do so. In the case that I am thinking of only one more mast is needed. These companies are falling down in their duty. I should like to hear that the Government will take this matter seriously and that, where there is a reasonable population, the whole country will be covered by the mobile telephone network.

Photo of Lord Gordon of Strathblane Lord Gordon of Strathblane Labour

I wish to strike a slightly different note. It seems to me that the answer to what the noble Lord, Lord Steel, has just said lies precisely in subsection (2)(a). The reason for promoting investment in networks is precisely to ensure that people such as him can receive mobile reception. My contribution will be very brief. Basically, I think that Ofcom cannot put everything on its plaque. I forget how long the Communications Bill was, but it is a fairly weighty document. I do not think that it neglects the citizen or the consumer. After all, there is a difference between the citizen and the consumer, as the noble Lord, Lord Puttnam-who I am delighted to see in his place-pointed out when the communications legislation was going through. The clause is there precisely to remedy the lack of coverage, including broadband coverage.

Photo of Lord Puttnam Lord Puttnam Labour

My Lords, as will probably become evident during the passage of this Bill through Committee, I am an all but unalloyed fan of Ofcom, but I support the noble Lord, Lord Lucas, in the broad thrust of what he said. I do not know whether the mechanism that he has chosen is the right one, but he makes a very good point. Noble Lords will remember that we dragged Ofcom, kicking and screaming, into its citizen obligations. I believe a severe error has been made in Ofcom not taking on board the spirit as well as the letter of those obligations that this House imposed on it. The truth is that it could do a lot more. These improvements could well be in the Bill, and although an alternative mechanism should be found I certainly support what the noble Lord, Lord Lucas, is seeking.

Photo of Lord Whitty Lord Whitty Labour

My Lords, while I, like my noble friend Lord Gordon, do not entirely accept the characterisation of Ofcom by the noble Lord, Lord Lucas, by and large it has not made a bad fist of balancing out its obligations to citizens and consumers-and I declare, as I will probably have to do later as well, that I am chair of Consumer Focus. In one sense, Ofcom has been relatively good among regulators -and that is, let us just say, a relative term-in terms of taking care of the consumer interest. Yet, without any counterbalance, this clause changes that balance. It insists that it is the role of the regulator to promote infrastructure, for whatever purpose, so that the economic responsibility to the industry is emphasised but not the responsibility to the citizen and the consumer.

Whether we do it in the general sense to which the noble Lord, Lord Lucas, referred or, following some of my later amendments, in a more explicit and specific sense in the terms to which the noble Lord, Lord Steel, referred, of something approaching a universal service obligation on the part of Ofcom, the balance in simply taking this clause will be wrong. At this stage, I am not explicitly supporting the noble Lord, Lord Lucas, should this be taken to a vote, but the Government need to look at whether, by adopting this clause, they are unbalancing what has hitherto been a balanced responsibility for Ofcom.

Photo of The Bishop of Blackburn The Bishop of Blackburn Bishop

My Lords, it is my view that removing these proposed new duties of Ofcom would strip the Bill of one of its most considerable assets. I urge your Lordships to consider carefully what message removing it at this stage would send out. My friend the right reverend Prelate the Bishop of Manchester, who is not in his place today, has suggested on quite on a number of occasions in this House that public service media content serves to foster specialist knowledge of various specific categories within the industry, which informs other programme-making and, in turn, permeates our culture. It is highly prized by viewers and listeners. At its best, such content can quite genuinely make a significant contribution to enriching the fabric of our shared society.

I do not wish to dwell on the importance of public service content, as I expect that this amendment was not born from a desire to see less of such material available to the public. However, the consequences of doing nothing to keep a closer eye on the trend in the provision of such content and in having a regulator that continually has that on its mind cannot be side-stepped. Part of PSB's power lies in its ability to touch mass audiences. Such content must therefore be available to as many as possible on as many platforms as possible: over the internet, and on mobile telephones. That point was repeatedly made during Second Reading, and I do not expect that many of your Lordships would disagree with the importance of ensuring that we do not create a two-tier digital Britain of haves and have-nots. Yet the consequence of removing this obligation of Ofcom to keep an eye on the investment going into building networks of the future would send a deeper message about our commitment to such a programme.

There is a real symbolic as well as a practical value to these proposed duties, and I hope that the amendment is resisted. Those who have the privilege of producing and transmitting public service media need to know how much it is appreciated by the British people, and ensuring that our regulator has it on the radar at all times is one way of doing so. Similarly, that radar should check whether we are preparing properly for the next evolution of Digital Britain. The message of the original Digital Britain report was that we were in danger of being left behind economically and socially unless major private and public investment were marshalled. Let us not forget that lesson.

Photo of Baroness Howe of Idlicote Baroness Howe of Idlicote Crossbench

I more than understand what the noble Lord, Lord Lucas, is aiming at. I have considerable sympathy with the point. However, as someone who has much admired the efforts of the noble Lord, Lord Puttnam, in regard to the Communications Act, ensuring that the citizen and the consumer had some degree of balance and that they were shown to have different needs and interests, it would be good to have that carried through to this Bill. From time to time, I have been equally critical of Ofcom for just that reason-not paying sufficient attention to content matters. Of course, I have a different sympathy in that respect because subsection (2)(b), as has already been said by the right reverend Prelate, is a very important aspect. We must ensure the continued availability, which we in the United Kingdom are used to, of high quality public service media content in many of the areas which some of us here today are currently looking at-children's programmes, drama and so on.

Equally, the noble Lord, Lord Steel, made a very important point. I, too, live in one of the completely hopeless reception areas. Enough gigabytes need to be available so that the level is acceptable right across the country. I fear that we did not have enough gigabytes in the first place so that we could compete with countries such as Japan and so on. That is one of the problems with which we have to live. In the mean time, I hope that the good aspects of the clause will not be removed totally because of our shared feelings. I shall be neutral in my support, one way or the other, until we hear what the Minister has to say.

Photo of Lord Maxton Lord Maxton Labour

I would like to ask the noble Lord, Lord Lucas, whether, if the amendment were carried, he can tell the Committee who would have the responsibility under Clause 1(2). It seems to me that someone has to have responsibility for promoting appropriate levels of investment in electronic communications networks. He did not suggest an alternative. Would it be the BBC? At present it has responsibility for the television digital switchover. The biggest telephone company in the country in terms of landlines is BT, and much of the electronic communication network will initially be down the landline network. Who will be involved in promoting this if it is not Ofcom? As this comes from the Benches opposite, I assume we will not have yet another new quango established to carry out this responsibility.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

On the point made by the noble Lord, Lord Whitty, can the Minister help me about the use of the word "particular"? I am quite familiar with the phrase "have regard to" in relation to these matters, but in this case Ofcom is asked to have particular regard to these problems. I wonder how that affects the balance of the concern for the consumer. In some ways, the clause is there in the interests of the consumer, to ensure that the number of consumers is as large as it can be, within reason. I just wonder what the effect of the use of the word "particular" is in the clause.

Photo of Lord Mitchell Lord Mitchell Labour 4:00 pm, 6th January 2010

My Lords, I was unable to be here for Second Reading-I was travelling. I had things that I wanted to say but cannot at this stage. I need to make a declaration. First, I am chairman of a charity called the e-Learning Foundation, which is responsible for all children in this country, especially those from socially disadvantaged backgrounds, having laptops. I am also a shareholder in a company called Syscap, which is an IT services company, and I hold a significant shareholding in Apple.

I have been in the IT industry for 43 years-I started in the very early days, and have seen a thing or two in my life-but the most dramatic thing to me is that the IT industry, instead of going into middle age and slowing down, seems to have reverted to adolescence and is growing faster and more frenetically than ever. Look at a product such as the iPhone. A year and a half ago, Apple announced the product called apps-applications-to go on the iPhone. Today, just 18 months later, there are 130,000 applications for the iPhone. I read yesterday that 3 billion downloads-that is one for every two people on this planet-have occurred. That is a measure of the truly phenomenal growth of this industry.

Yesterday, Google announced a smart phone product, and it is rumoured that Apple itself will in the next few weeks announce a totally different product, an iTablet. That all means that these handheld mobile devices will be gulping huge amounts of broadband capability; amounts that we cannot even contemplate. That will be truly massive. There will be a convergence of television broadcasting, books, movies and anything you care to mention available on those products.

The wording of the duties for Ofcom uses the word "appropriate". I think that the word "appropriate" is totally inappropriate for the requirements of Ofcom. "Appropriate" is a word that you might use for the steel industry, but not for an industry that is growing so fast. When the clause is redrafted, I ask my noble friend for some wording that recognises the sheer growth of this industry and its potential growth in future.

Photo of Baroness Buscombe Baroness Buscombe Conservative

My Lords, first, I need to declare an ongoing and active involvement in the media as chairman of the Press Complaints Commission.

One of the difficulties surrounding the whole viability of the digital economy is that not only did the Communications Act not even refer to the existence of the internet, the principal focus of our debates regarding Ofcom's duties were the rights of citizens and consumers, together with the plurality of provision of services. We did not focus enough on how that plurality of provision of services would be funded. In some ways, the Communications Act was an anachronism before it began, before the ink was even dry on the statute book. We all knew that there would be the rapid evolution to which the noble Lord, Lord Mitchell, has just referred.

It is right that there is more of a focus in the Bill on investment. However, my concern about Clause 1, in supporting the principles behind the amendment, is that there is possible duplication here between the duties set out in the Communications Act and the duties set out in the Bill. As my noble friend said, under Section 3 of the Communications Act, there is already a duty on Ofcom to ensure efficient investment in infrastructure. I advise the Government by saying that it is really important to keep this simple and to keep it clear. There is already some confusion among various channels over what these duties really mean. Unless we keep it simple and clear, and focus on the provision of sufficient investment, there will be confusion. Confusion invariably leads to higher costs and they invariably fall on the consumer. If this clause is not otiose, can we ensure that there is real clarity?

I absolutely agree with everything said by the right reverend Prelate. However, it was all said during the passage of the Communications Act. In theory, it is already there, but there is a lack of enforcement of what we looked and asked for in 2003. Maybe it is symbolism and this is the Government gently wanting to nudge industry to do the right thing. That is good, but if in so doing they create confusion and a lack of clarity in the Act, the consumer will suffer.

Photo of Lord Howard of Rising Lord Howard of Rising - Shadow Minister (Also Shadow Minister for Treasury and Culture, Media and Sport), Shadow Minister, Shadow Minister (Also Shadow Minister for the Cabinet Office and Treasury), Culture, Media and Sport, - Shadow Minister (Also Shadow Minister for the Cabinet Office and Culture, Media and Sport), Shadow Minister

We on these Benches also agree with the concerns of my noble friend Lord Lucas about these provisions. Clause 1 adds to the general duties of Ofcom by amending the Communications Act 2003. While we support some of the aims of this clause, we are not convinced that such additions are necessary, as my noble friend Lady Buscombe has pointed out.

Taking each duty in turn, proposed new Section (1A)(a) deals with the duty to promote appropriate levels of investment in electronic communications networks. Both sides of the House would agree that we should do all we can to ensure that our communications infrastructure is equipped for the 21st century. We agree that this will require significant investment but are not convinced that this clause is the best way to go about it.

The Government's fact sheet on this section of the Bill states that this legislation will require Ofcom,

"to have particular regard in all cases to the need to promote appropriate levels of investment".

Ofcom already has a duty to encourage investment. As the Minister knows, under Article 8 of the access and interconnection directive 2002, which was subsequently transposed into Section 3 of the Communications Act 2003, Ofcom must encourage "efficient investment in infrastructure". This has been highlighted by Ofcom itself. Its chief executive stated to the Business, Innovations and Skills Committee on 24 November that,

"the notion that we do not concern ourselves with investment and infrastructure is obviously not the case; we do do that".

What would be different in Ofcom's approach if it were granted this extra duty? We are not convinced that there would be a significant shift in the levels of investment in communications infrastructure as a result of this duty.

There are a number of reasons why there may not have been the levels of investment which we would all have liked, particularly in next-generation broadband. Barriers include lack of access for other operators to BT's ducts, dark fibre and other infrastructure; a failure to make any progress on allowing the use of telegraph poles for overhead delivery of fibre; and business rate anomalies that favour incumbent operators. Her Majesty's Government should be addressing these issues. The idea that adding a duty to the regulator-if one has been added-will suddenly transform levels of investment in this sector is fanciful. As the Government's own impact assessment states,

"investment decisions by telecommunications companies depend on a variety of factors which may be specific to the company, the sector or the economy more widely".

If the Government believe that this duty is necessary, indeed, key, to any increase in the levels of investment in the communications sector, we do not share that belief. Indeed, it is worth noting that neither the Government nor Ofcom seem to know what the result of this duty would be. That is hardly surprising, given the doubt about whether there is an additional duty. The Government's impact assessment states:

"It is difficult to predict with complete certainty what the precise effect of this will be".

The chief executive of Ofcom optimistically looked to these Committee sessions for clarity when he told the recent joint hearing of the Culture, Media and Sport and the Business and Innovation and Skills Select Committees that that will be one of the things that emerges in the parliamentary debate. What does it actually mean? The only thing that the Government seem to know is that such a duty may lead to higher prices for consumers.

I turn again to the impact assessment, which states that this duty will,

"allow network providers such as BT to raise the prices".

We on this side of the House do not support a clause that is not necessary, unlikely to lead to the results the Government claim and is likely to mean consumers paying more for communications services.

New subsection 1A(b) requires Ofcom to have regard to the need,

"to promote appropriate levels of investment in public service media content".

Again, Ofcom already seems to have the appropriate legislative framework. Section 3(2)(c) of the Communications Act 2003 states that Ofcom must ensure,

"the availability throughout the United Kingdom of a wide range of television and radio services which (taken as a whole) are both of high quality and calculated to appeal to a variety of tastes and interests".

Section 3(4)(a) further states that it must take into account,

"the desirability of promoting the fulfilment of the purposes of public service television broadcasting in the United Kingdom".

Ofcom is already empowered to ensure a wide variety of television and radio services that fulfil public service duties. Does it really need a specific new duty to promote the public service content in general? We are particularly concerned that the definition of public service media provided in subsection (5) is far too broad. The fact sheet accompanying this subsection states that this new duty will extend Ofcom's duty to promote investment to specific web services meeting specific public service definitions only. However, Section 264(6) in the Communications Act defines public service as content that covers: education and entertainment; cultural activity; civic understanding; sporting and other leisure interests; science, religion and other beliefs; high quality and original programming for children and young people; and programmes made outside the M25 area. These are broad categories and are difficult to reconcile with the Government's statement that they will apply to specific web services only. Will Ofcom have a duty to promote investment in political blogs such as ConservativeHome or Guido Fawkes or, indeed, your Lordships' Lords of the Blog? Will Ofcom have a duty to promote investment in newspapers or university websites? Can the Government also confirm that this investment in online services will not be to the detriment of programming on core channels? It would also be helpful to know whether this would give Ofcom power over how the BBC spends the licence fee. Either way, with such a broad definition, the duty could be extended to such a vast number of websites as to become meaningless. The Government must clarify the specific web services they mean.

Finally, this clause raises a number of broader issues about the role of government versus that of the regulator. Surely the promotion of investment in one market or another, or in one service or another, is a matter for Government not a regulator. A regulator's role is to protect the consumer and promote competition. I look forward to hearing the Minister answer these questions and those of my noble friends.

Photo of Lord Young of Norwood Green Lord Young of Norwood Green Government Whip, Parliamentary Under-Secretary, Department for Business, Innovation and Skills, Government Whip, Parliamentary Under-Secretary of State (Department for Business, Innovation and Skills) (Postal Affairs and Employment Relations) (also Lord in Waiting) 4:15 pm, 6th January 2010

My Lords, Clause 1(2) builds on Ofcom's existing duties in the Communications Act 2003 regarding the desirability of promoting the fulfilment of public service purposes and encouraging investment in relevant markets. It requires Ofcom to consider in all cases the need to promote investment in communications networks and in public service media content. Subsection (2) places these considerations as the most important qualifier of Ofcom's main duties. I am aware of the misconceptions and concerns about the status of the qualifier and would like to reassure the noble Lords, Lord Howard, Lord De Mauley, Lord Lucas, and other noble Lords who expressed concern during this debate that this qualifier will not override Ofcom's principal duty to further the interests of citizens and consumers. Ofcom will be able to use its discretion to ensure that investment is promoted only where it would be appropriate and where it helps to deliver on the principal duty.

The communications market and infrastructure in the UK has changed substantially since the Communications Act was passed in 2003-the digital world has changed the landscape dramatically. There have been a number of examples during this debate. Therefore, it is very important that in performing its existing duties, Ofcom should give greater weight to the need to promote investment in electronic communications networks and in public service media content-as far as is appropriate to the benefit of consumers and citizens. Surely the overall objective is to ensure that in this country we do not have what has come to be known as the digital divide. The noble Lord, Lord Steel, and others expressed concern about access to services. There is a much more fundamental need to ensure that we get the infrastructure investment that the whole country needs and do not create a digital divide.

The UK increasingly relies on having a world-class communications network for every part of our lives. Our businesses rely on electronic communications to improve processes, to innovate, to control costs and to reach customers. Citizens rely on electronic communications to work, to shop, to train, to stay in touch with friends and family and to enjoy our world-class digital entertainment. Children rely on electronic communications to study and learn. Indeed, it is not only children. Increasingly every part of government relies on electronic communications to reach citizens. The health of infrastructure, over which all these electronic communications pass, is critical to the well-being of the UK. Many of our communications networks are being substantively upgraded-digital television, digital radio, high-speed broadband and next-generation mobile. It is important that Ofcom should be able to take into account, as far as is appropriate, the benefit to consumers and citizens that will result from these and other major investments.

It is important that this is properly recognised in the regulatory framework that impacts so much on what happens to communications infrastructure. There is a risk that if we do not invest more in our communications infrastructure, we will find that the networks and services that currently exist will deteriorate and that we will fossilise and fall behind our competitors as they invest for the future.

Before I continue, I want to deal with some of the questions raised during the debate. The noble Lord, Lord Lucas, said that the new duties imply an open disregard for consumers by Ofcom. We reject that and believe that we have the balance right between promoting infrastructure investment and the need to deal with the concerns of consumers. The noble Earl, Lord Erroll, was worried about the question of the commitment to megabit speed. We have not abandoned it by any means, but we do not need to enshrine the objective in legislation to achieve it. I can reassure him that the objective is still in place.

I have already addressed the concerns of the noble Lord, Lord Steel, about infrastructure; indeed further on in the Bill we talk about the importance of mobile coverage. To me, removing this subsection would actually act against the concerns he has expressed.

Photo of Lord Steel of Aikwood Lord Steel of Aikwood Liberal Democrat

Perhaps I could clarify that while I support the sentiments reflected in the submission of the noble Lord, Lord Lucas, I do not support the amendment for the reasons the Minister has just given. However, there was a fatal accident not far from where I live, and the sheriff who conducted the inquiry said that the employer ought to provide a shepherd operating a quad bike with a mobile phone. That would be completely pointless if there is no reception.

Photo of Lord Young of Norwood Green Lord Young of Norwood Green Government Whip, Parliamentary Under-Secretary, Department for Business, Innovation and Skills, Government Whip, Parliamentary Under-Secretary of State (Department for Business, Innovation and Skills) (Postal Affairs and Employment Relations) (also Lord in Waiting)

I thank the noble Lord for his clarification about the amendment and I endorse what he said about the importance of universal coverage, a point reinforced by my noble friend Lord Gordon.

My noble friend Lord Whitty said that we do not have the balance right. We believe that we have. Let me reassure him that it is not a question of promoting infrastructure investment at the expense of consumers. Ofcom's duties have to cover both. I would ask my noble friend to reflect on this: if we do not have the right infrastructure in place, we will deny the very consumers about whom my noble friend cares so passionately access to the services they need to function in today's digital society. He is right to stress the importance of balance and we believe that we have it right.

I must admit that I was impressed with the contribution made by the right reverend Prelate the Bishop of Blackburn. His spiritual analysis was better than the temporal one, quite frankly. He understands the importance of getting investment into the infrastructure right and said that we do not want a two-tier Britain, which is another way of expressing what I call the digital divide. I absolutely endorse that. He also made points in relation to public service broadcast content and the ability for it to be available on a wide variety of platforms.

The noble Lord, Lord Howard, said that it is not necessary, but my noble friend Lord Maxton pointed out that if we do not ask Ofcom to do this, who is going to be responsible. That is a pertinent point. It is right that the regulator should be responsible for this. The duty is already there and we are enhancing its status. I want also to reassure the noble Baroness, Lady Buscombe, because I share her concern. We do not want to muddy the waters or obfuscate the issue-although it is a delight to hear it again, I shall not use the word "otiose". We do not believe that this provision is otiose because within this legislation we need to emphasise the increasing importance of getting the infrastructure right. It is necessary and there will be no duplication because we are doing this only once.

I was asked about the use of the word "particular", a point raised I believe by the noble and learned Lord, Lord Mackay. As I have said, Ofcom already has a duty to encourage investment. This may have been appropriate in 2003 when we were on the threshold of the digital era, but that emphasis is no longer sufficient. The new clause will affect its principal duties as in all cases Ofcom will have to have particular regard to the need to promote investment. Another noble Lord felt that even that word was not sufficient and that it should have an even higher priority. Again, it is a question of balance. We believe that we have got the balance right by raising the status of the requirement for infrastructure investment.

On the question of public service media content, the substantive upgrading of our communications network has also provided great opportunities for UK producers to offer innovative, original content that can meet new audiences' demands. Public service media content is therefore now increasingly being provided on electronic platforms such as on demand, on-line services and mobile devices. At the same time, these changes threaten the production of UK public service media content such as current affairs and high-end drama by shifting advertising revenues and challenging the economics of the production of such content. Commercial public service broadcasters have already reduced programme budgets in 2007 and 2008 in response to market conditions, and Ofcom's second public service broadcast review indicated that the total amount invested in programming is likely to fall, in real terms, by between £170 million and £350 million in the six years between 2006 and 2012.

The plurality of public service media content provides significant benefits for the UK. It provides healthy competition to the BBC and purely commercial content providers, which benefits citizens and consumers. Increased investment will ensure a variety of outlets for the different content produced by the UK's independent sector. This competition drives up the entire market and contributes to making our country a world leader in content and format exports.

As regards the concerns expressed by the noble Lord, Lord Howard, in relation to the duty to encourage investment, the new clause will affect the principal duties. Ofcom will have to have particular regard in all cases to the need to promote investment. This is not a statement of principle but a clear requirement on Ofcom to consider systematically the specific impact on investment of all its decisions. At the moment, Ofcom is simply required to have regard to the desirability of encouraging investment when it appears to be relevant in the circumstances.

The noble Lord asked whether the coverage of public service broadcast content would be too wide and I shall try to clarify that now. The amendments made by the clause recognise the importance of investment in public service media content. The digital age provides great opportunities for British producers to offer innovative, original content that can meet new audience expectations. However, as I have said, at the same time these changes threaten the production of UK public service media content such as current affairs and high-end drama by shifting advertising revenues and challenging the economics of the production of such content. As I have said already, commercial public sector broadcasters have reduced their investment.

The plurality of public service media content provides significant benefits for the UK, provides healthy competition to the BBC and purely commercial content providers, which benefits citizens and consumers. Increased investment will ensure a variety of outlets for the different content produced by the UK independent sector. This competition will drive up the entire market and contribute to making our country a world leader in content and format export.

I have not addressed the point about whether Ofcom will investigate every single blog. I doubt it because we have a defined view of the areas that Ofcom would investigate in relation to public service broadcasting. However, I will clarify that in writing because the noble Lord has made an important point.

We believe that it is a question of doing two things in these clauses: to recognise the importance of ensuring that we do not have a two-tier Britain, a digital divide, and that we have a truly universal UK infrastructure, while at the same time ensuring that Ofcom does not overlook the importance of services to consumers and addresses the concern expressed by a number of noble Lords. We believe that we have got that balance right.

The ability to introduce innovative new media services frequently depends on investment in communications infrastructure. The Government recognise that there is a potential, though by no means automatic, tension between a short-term regulatory goal of reducing prices and a long-term regulatory goal of promoting investment in the resulting innovation. We need to ensure that, even in the face of difficult market conditions, investment in infrastructure and the plurality of media continue. Subsection (2) takes steps to achieve that.

I hope that, in the light of that explanation, the noble Lord will feel able to withdraw the amendment and that the Committee as a whole will recognise the importance of ensuring that we truly have an infrastructure for the whole of the UK and healthy public sector content. For that, we need both these clauses.

Photo of Lord Puttnam Lord Puttnam Labour 4:30 pm, 6th January 2010

Before the Minister sits down, I do not believe that he has fully addressed the underlying concern that the noble Lord, Lord Lucas, set out in his opening speech. Can I invite him to go back to the issue of balance? There are many people in this House, the noble Baroness, Lady Howe, probably being the most diligent, who over the past seven years have observed and been consistently disappointed by-I stress that I say this as a real supporter of Ofcom-the way in which it has addressed its obligations to citizens' interests, to digital literacy, to training and to other issues. The Bill offers a golden opportunity to rebalance what is at present an imbalanced situation and it would be quite foolish not to take advantage of it. That is what I think the noble Lord, Lord Lucas, is driving at, and it is what we should be attempting to achieve.

Photo of Lord Young of Norwood Green Lord Young of Norwood Green Government Whip, Parliamentary Under-Secretary, Department for Business, Innovation and Skills, Government Whip, Parliamentary Under-Secretary of State (Department for Business, Innovation and Skills) (Postal Affairs and Employment Relations) (also Lord in Waiting)

I am sorry that my noble friend thought that that was not addressed; I thought that I had addressed it. I pointed out in my opening paragraphs that the qualifier in relation to promoting investment in the electronic communications network and infrastructure,

"will not override Ofcom's principal duty to further the interests of citizens and consumers".

That, surely, is a pretty emphatic statement; if the noble Lord is looking for balance, it is there.

Photo of Lord Puttnam Lord Puttnam Labour

That would be the case if the Committee was convinced that that was already happening. I am suggesting that it is in these areas that Ofcom has badly let itself down over the past seven years.

Photo of Lord Young of Norwood Green Lord Young of Norwood Green Government Whip, Parliamentary Under-Secretary, Department for Business, Innovation and Skills, Government Whip, Parliamentary Under-Secretary of State (Department for Business, Innovation and Skills) (Postal Affairs and Employment Relations) (also Lord in Waiting)

If my noble friend is saying that Ofcom has not yet risen to the challenge of being the protector of the consumer up to now-I would not necessarily support that view but I understand the concern-that still does not take away the need for us to ensure that we have a modern digital infrastructure that covers the whole of the UK. If we are not saying that we are going to place less importance on ensuring that-the noble Lord says that that is not what we are saying-and if we really care about consumers' interests, then Ofcom has a duty to deal with both those concerns.

I am giving an assurance today that this qualifier will not override Ofcom's principal duty to further the interests of citizens and consumers. We will take it away and see if we can further reinforce it, but there is no intention that the clauses as they stand will somehow devalue the importance of the interests of citizens and consumers.

Photo of Baroness O'Neill of Bengarve Baroness O'Neill of Bengarve Crossbench

Before the Minister completes his response, the worry on many sides of the Committee is not that Ofcom has failed to consider consumers' interests but that it has hyphenated the interests of citizens and consumers, and that what were laid down in the Act as two distinct duties were conflated. This, as the noble Lord, Lord Puttnam, said, is a golden opportunity to remedy that deficiency and to emphasise that these are distinct duties that have to be balanced against one another at certain times. No amount of going back to the importance of the investment in support of infrastructure really speaks to that issue. There is a gap here, and it is what goes into the gap that I take the amendment of the noble Lord, Lord Lucas, to be addressing.

Photo of Lord Young of Norwood Green Lord Young of Norwood Green Government Whip, Parliamentary Under-Secretary, Department for Business, Innovation and Skills, Government Whip, Parliamentary Under-Secretary of State (Department for Business, Innovation and Skills) (Postal Affairs and Employment Relations) (also Lord in Waiting)

My Lords, with respect, I do not think that the amendment does address that. Taking away subsection (2) is still not going to deal with the problem that has been identified. I have indicated that we will look at the point in relation to concerns about citizens and consumers, but removing this subsection will not address the problem. What it will do is take away a really important duty of Ofcom in the current digital climate, which is to ensure that we have the right investment in not just the infrastructure but also public service broadcast content.

Photo of Lord Mayhew of Twysden Lord Mayhew of Twysden Conservative

My Lords, perhaps I may ask for some help with the intended meaning of the formula,

"must have particular regard, in all cases, to the need", which is then followed by paragraphs (a), (b) and (c). Does it mean that, among other things, it must have regard to the specified matters, or does it mean that it must have a special regard, which suggests a higher value, and that it must have perhaps even overriding regard where there is any conflict? We need rather clearer advice about that.

Photo of Lord Young of Norwood Green Lord Young of Norwood Green Government Whip, Parliamentary Under-Secretary, Department for Business, Innovation and Skills, Government Whip, Parliamentary Under-Secretary of State (Department for Business, Innovation and Skills) (Postal Affairs and Employment Relations) (also Lord in Waiting)

My Lords, I have tried to clarify that position. Clearly, the reference to having "particular regard" is intended to indicate that the matters mentioned in new subsection 1A should be given more weight than those currently in subsections (3) and (4) of the Act. This will qualify, in particular, the requirement in the principal duty to further the interests of consumers by promoting competition wherever appropriate.

Photo of Lord Howard of Rising Lord Howard of Rising - Shadow Minister (Also Shadow Minister for Treasury and Culture, Media and Sport), Shadow Minister, Shadow Minister (Also Shadow Minister for the Cabinet Office and Treasury), Culture, Media and Sport, - Shadow Minister (Also Shadow Minister for the Cabinet Office and Culture, Media and Sport), Shadow Minister

My Lords, I thank the Minister for saying that he will write to me, and I look forward to hearing from him when he can clarify the Ofcom position on promoting web services. No one could possibly disagree with the Minister's comments on improving infrastructure, but he has not actually said what will be gained by what is in the Bill. The duty already exists, as I have pointed out, and I would like the Minister to tell us what will actually be done differently because of this.

Photo of Lord Young of Norwood Green Lord Young of Norwood Green Government Whip, Parliamentary Under-Secretary, Department for Business, Innovation and Skills, Government Whip, Parliamentary Under-Secretary of State (Department for Business, Innovation and Skills) (Postal Affairs and Employment Relations) (also Lord in Waiting)

My Lords, the duty does exist but, as I indicated earlier, it is at a much lower level in that it talks just about sufficient investment. This duty was defined in the Communications Act 2003. Surely with the passage of time and the importance of infrastructure-and practically every contribution this evening has stressed its importance-are we really saying that that is a sufficient duty? We do not believe that it is. We need to heighten the importance of infrastructure investment and move from a position where Ofcom merely ensures that there is sufficient investment to one where it promotes investment. There is a real benefit to be obtained from that. Obviously, the proof of that particular pudding will be in the eating, but that does not gainsay the importance of ensuring that Ofcom gives more weight to infrastructure investment.

Photo of Lord Lucas Lord Lucas Conservative

My Lords, I am very grateful to the many noble Lords who have spoken. I do not hold to the particular wording of this amendment. I very much hope that the Minister, in his replies, will not do the tiresome government trick of trying to treat every amendment as literal. Certainly, that is fine on Report, but in Committee they are very much designed to elicit debate and draw out points of concern. I think that this amendment has succeeded from that point of view. I certainly shall not press it at Committee stage; I do not intend to press any of my amendments in Committee, unless I get a completely bananas answer from the Government, which I am sure I will not from the noble Lord. I am certain that we will return to this matter in a more directed and considered way on Report, particularly if the Government, as seems to be the case, show no sign of movement.

My principal concern with the clause is that it qualifies subsection (1) and not subsection (2). This amplification of the current duties would naturally fit in subsection (2), but it is put into the Communications Act as a direct, single and special qualifier of subsection (1); that is, it reduces the duties to the citizen and the consumer by taking on board the need to cuddle up to the industry in order to encourage greater investment. That is a dangerous thing for a regulator to do.

To answer the question asked by the noble Lord, Lord Maxton, I think that this sort of thing belongs with the department. That is where this sort of relationship ought to exist and where this sort of support ought to come from. The regulator ought to take a dispassionate view, judging between the consumer and the industry. In particular, as is set out in the Bill, it ought to put the citizen and the consumer first. The way in which the legislation has been structured directly threatens that. As several noble Lords mentioned, it strikes hard at the duties to the citizen and the consumer.

The use, twice, of the word "appropriate" puts Ofcom, which is supposedly a regulator, in the position of picking winners. That is a dangerous thing for a Government to do, let alone a regulator. The Minister looks puzzled, but how can Ofcom judge what is appropriate without getting into the business of deciding between one set of investment and another? Paragraph (c) contains the word "efficient", which, in the context of qualifying this, gives me considerable concern about how the investment is to be directed.

In his reply, the Minister referred to high-quality drama. I got the feeling when he was talking about that that the people who are briefing him are living in the world of six months ago and not the world of today; they are living in a world where somehow we can defend the old ways of doing things. I hope to live in the world that the noble Lord, Lord Mitchell, outlined-a world of extraordinary new opportunities. When I started looking at the Bill, I thought that it was ridiculous in many ways; the Government seemed to be trying to hold back a slowly rising tide of change and that just would not work. However, as the noble Lord, Lord Mitchell, pointed out, we are facing not a tide but a tsunami-the dam has broken. He outlined a world where there is the growth of apps, to be followed by a decent e-book, at last-I am dead certain that Apple will not produce anything other than that. This will create an enormous change, not only for this part of the Bill but certainly for Clauses 4 onwards. I declare an interest as someone who earns most of his money from selling copyright on the net.

It is wrong to see these things as a threat. They are an enormous opportunity. The way in which to harness an opportunity is not to live with the old monopolists and try to shore them up, doing cosy deals with the big beasts of the industry, but to encourage the underdogs and the people who are motivated to change. If the Minister had looked at the computer industry five years ago, how much money would he have put on Apple? I am afraid that I was not nearly as wise as the noble Lord, Lord Mitchell. I thought that Apple had a nice little niche to itself but that it had been defeated; it was hanging on somehow in a little cosy corner. Now it has come back and, goodness, it is making a change to the world. Will noble Lords continue to be refused iPhones? It is becoming impossible to see how, if I had the choice, I would wish to buy a Windows computer again. The world has changed. There is a sudden explosion of capability out of the back field, out of a neglected area. This clause, to judge from the noble Lord's speech, is aimed at imposing higher prices, which means shoring up the old monopolies and giving them extra money in return for investing rather than looking at new people and new ways of doing things. This has to be the wrong way of doing things and the wrong time to disempower the consumer and the citizen.

Photo of Lord Young of Norwood Green Lord Young of Norwood Green Government Whip, Parliamentary Under-Secretary, Department for Business, Innovation and Skills, Government Whip, Parliamentary Under-Secretary of State (Department for Business, Innovation and Skills) (Postal Affairs and Employment Relations) (also Lord in Waiting) 4:45 pm, 6th January 2010

I have tried not to respond, but I shall just on that point. If you look at the range of competition on broadband or on mobile networks, you cannot say that we are just shoring up existing or previous old monopolies. There has been a huge growth in competition, as the number of offerings on broadband connections and mobile phones shows. We are not intending to shore up. There is a huge expanding market. We put a duty to promote competition in the 2003 Act. We may not have got everything right, but to say that in the UK we do not have a highly vibrant competitive market is not an appropriate description.

Photo of Lord Lucas Lord Lucas Conservative

The noble Lord is taking my arguments too far. I was taking up his comment that prices would be higher. The only way you can impose higher prices on the consumer is to create a monopoly of some variety to inhibit competition. Otherwise, competition destroys any possibility of doing that.

If Dickens had been alive today, he would look at the iPhone not as a threat but as a wonderful opportunity to get out there with drama in ways that no one had ever thought of before. He was a great user of new media in his day. To regard drama as threatened merely because the old ways of consuming it are having a difficulty when we are suddenly being presented with all sorts of new ways of doing it is a great mistake. Governments are entitled to make mistakes, but what I regret in this clause is polluting a perfectly good regulator with something which gives it duties in an entirely inappropriate direction, rather than doing what ought to underlie the sentiments of the noble Lord, which is reinforcing Ofcom's interest in making sure that proper infrastructure is provided and that British Telecom gets off its butt and really gets at the quality of some of its old network. We were talking earlier about communications in the Channel Tunnel. Some of the mobile phone communication masts being put up now have 12 hours' reserve power. We are building extremely delicate, unrobust networks. This is the sort of thing Ofcom ought to be caring about. It ought to be challenging the industry in the interests of the consumer. It ought to be clearing away obstacles which are being put in the way of progress by those who represent the old rather than the new.

That is the way we ought to be looking at the Bill. I very much hope that we can take the good parts of what the noble Lord is hoping to do in terms of making sure that we have a decent infrastructure in this country and put it in the proper context of the duties that we fought so hard to get into Section 3(1) of the 2003 Act. I beg leave to withdraw my amendment.

Amendment 1 withdrawn.

Amendment 2

Moved by Lord Howard of Rising

2: Clause 1, page 1, leave out lines 8 and 9

Photo of Lord Howard of Rising Lord Howard of Rising - Shadow Minister (Also Shadow Minister for Treasury and Culture, Media and Sport), Shadow Minister, Shadow Minister (Also Shadow Minister for the Cabinet Office and Treasury), Culture, Media and Sport, - Shadow Minister (Also Shadow Minister for the Cabinet Office and Culture, Media and Sport), Shadow Minister

Amendment 2 focuses on an unnecessary additional duty to promote infrastructure in electronic communications networks. I have mentioned a number of concerns already about this particular subsection, but they are worth reiterating. We on these Benches believe that Ofcom already has the legislative framework within the Communications Act 2003 to encourage investment in communications networks and the Government have not been clear as to what change this new duty would have when there already exists a requirement for efficient investment in infrastructure. If this paragraph will fundamentally change the way in which Ofcom works, the Government need to be a bit clearer about it. The only change that I can see with such a duty is to allow the incumbent operator to charge higher prices, both directly to consumers and indirectly through its wholesale pricing. If the Government think that this is necessary, or indeed a good thing, they should say so.

It is worth pointing out again that the Government's impact assessment states:

"It is difficult to predict with complete certainty what the precise effect of this will be".

If this is the case, I suggest it is best that the duty is not included in the Bill until we are certain of its impact. I beg to move.

Photo of The Bishop of Blackburn The Bishop of Blackburn Bishop

My Lords, diluting this part of the Bill seems to me somewhat unhelpful. Maintaining the duty for Ofcom to promote and monitor investment in the infrastructure that we need to help secure our economic and social prosperity in the future seems entirely sensible, even highly desirable. Identifying where the private sector is simply not going to deliver a next generation service to our hardest to reach communities, and plugging it with targeted public money to ensure that all households have equitable access to the internet, which will include a whole range of public service media content too, is surely, at least to my way of thinking, a reasonable duty for our communications regulator in a digital age.

I am also reluctant to concede that providing audiences with high quality public service media content is solely the responsibility of one or two broadcasters. The Digital Britain White Paper set out some unsettling truths about the shape of the broadcasting landscape at present and in the future. In this new world, the role of public service broadcasting cannot be left to chance, and cannot be left to the BBC and Channel 4 alone.

Ofcom's role in helping shape the future of a second strong public service broadcasting institution around Channel 4 is a vital one. The whole point is that the market, if left to its own devices, would not provide much of the content that helps sustain, reflect and inform our culture. Some ability for the regulator to recognise this in its activities is simply common sense. I do not get the feeling that Ofcom is likely to be profligate with the element of flexibility; the clause simply makes sure that its hands are not tied unnecessarily in seeking to deliver the goals of the Bill, or that it has to complete extensive audit trails simply to demonstrate that all its activities are wholly efficient. The new duties appear to me to be good seeds. From them mighty oaks might grow. I therefore resist this amendment in favour of the Bill as it stands.

Photo of Lord Young of Norwood Green Lord Young of Norwood Green Government Whip, Parliamentary Under-Secretary, Department for Business, Innovation and Skills, Government Whip, Parliamentary Under-Secretary of State (Department for Business, Innovation and Skills) (Postal Affairs and Employment Relations) (also Lord in Waiting)

My Lords, I think that we covered a good deal of this in the previous debate but nevertheless I shall try to address a couple of the points that were made.

Paragraph (a) of proposed new subsection (1A) requires Ofcom to consider the need for investment and,

"to promote appropriate levels of investment in electronic communications networks".

This makes it a clear requirement on Ofcom to consider systematically the specific impact of its decisions and assessments relating to investment. Currently, Ofcom is simply required to have regard to the desirability of encouraging investment when it appears to be relevant in the circumstance. That clearly is not sufficient in today's digital environment. This will qualify in particular the general duty to promote competition. This amendment clarifies and substantiates the existing caveat,

"where appropriate by promoting competition", by requiring Ofcom to consider the promotion of investment even in those circumstances, for example, where increased investment and competition might be at odds.

Let me try to reassure the noble Lord, Lord Howard, that it will not be a carte blanche for one of the network operators to make excessive profits. Ofcom will continue to be bound by its existing general duties in Section 3, which are very clear about the importance of promoting competition. In addition, it is important to remember that the functions that Ofcom derives from EU legislation will have to be carried out strictly in accordance with that legislation. Where that legislation does not recognise the importance of promoting investment, Ofcom will have to follow the EU provisions if there is a conflict between them and the new qualification to its general duties.

I concur with the conclusions of the right reverend Prelate the Bishop of Blackburn, who again has got the analysis right in terms of the importance of ensuring sufficient infrastructure investment in the current climate. We have covered most of this argument in the previous debate, so I would hope that in the light of that debate, and given the importance of maintaining this clause, that the noble Lord will consider withdrawing the amendment.

Photo of Lord Howard of Rising Lord Howard of Rising - Shadow Minister (Also Shadow Minister for Treasury and Culture, Media and Sport), Shadow Minister, Shadow Minister (Also Shadow Minister for the Cabinet Office and Treasury), Culture, Media and Sport, - Shadow Minister (Also Shadow Minister for the Cabinet Office and Culture, Media and Sport), Shadow Minister

I agree with the right reverend Prelate about the need for an infrastructure that works and delivers, and I am not seeking to criticise that. My only point is that the power already exists; so what is the gain from the proposed legislation? I return to the government impact assessment. It is difficult to predict with complete certainty what the precise effect will be. If no one knows what gains there are going to be, why are we trying to introduce the legislation? I am sure that the Minister must have a better reason than the generalities he has expressed, but-

Photo of Lord Young of Norwood Green Lord Young of Norwood Green Government Whip, Parliamentary Under-Secretary, Department for Business, Innovation and Skills, Government Whip, Parliamentary Under-Secretary of State (Department for Business, Innovation and Skills) (Postal Affairs and Employment Relations) (also Lord in Waiting)

If I can, I want to reassure the noble Lord that this new clause recognises the specific importance of investment in electronic networks at a time when many of our communication networks are being substantively upgraded-digital television, digital radio, high-speed broadband and next-generation mobile. It is vital that Ofcom should be able to take into account, as far as is appropriate, the benefits to consumers and citizens that will result from these and other major investments.

The amendment places the need to promote such investment as the most important qualifier of Ofcom's duties. Our policy objective as set out in the Digital Britain White Paper was clear, in that the general duties of Ofcom should be qualified by the need to promote investment. We concluded that the best way of achieving this is by the creation of proposed new subsection (1A), which would include a specific requirement on Ofcom, in performing its duties, to promote appropriate levels of investment in electronic communications networks. We believe that that is appropriate and necessary in the current climate if we are serious about having an infrastructure that will carry us into the 21st century.

Photo of Lord Howard of Rising Lord Howard of Rising - Shadow Minister (Also Shadow Minister for Treasury and Culture, Media and Sport), Shadow Minister, Shadow Minister (Also Shadow Minister for the Cabinet Office and Treasury), Culture, Media and Sport, - Shadow Minister (Also Shadow Minister for the Cabinet Office and Culture, Media and Sport), Shadow Minister

My Lords, I shall speak also to Amendments 4, 6, 7 and 31. These five amendments fall into a few different groups. Amendments 3 and 6 serve two purposes-first, to create a level playing field with respect to investment in media content, and, secondly, to highlight a further concern that this subsection may have on Ofcom's ability to function properly. By removing the phrase "public service" from this duty, we are attempting to create a level playing field in the media sector.

We on this side of the Committee want to attract investment into UK content in general, rather than just public service content. Without this amendment, such a duty may put off potential investment into the UK media sector, because it would create a fear that Ofcom may intervene to the detriment of those not producing public service content. We do not believe that the state should choose what type of content non-public service broadcasters invest in. Consumers value choice above all else, and these amendments would ensure that this is protected.

More broadly, it would be helpful if the Minister could clarify whether the Government have considered the potential impact of this subsection on the way that Ofcom functions. If Ofcom has a duty to promote investment in media content-public service or otherwise-is there not a danger that this could be used by companies to appeal against any regulatory decision that Ofcom makes? If, for instance, Ofcom decided to change the levels of advertising that ITV is allowed to show and ITV believed that this would result in a decrease in its income, it could argue that this would stop it investing in certain types of content. As such, Ofcom would have failed in its duty to promote investment in media content. How do the Government see this clause working in practice?

Amendments 4 and 31 move the focus in the other direction and define the content more narrowly. Ofcom's new duty is extended solely to content made by public service broadcasters. In tabling these amendments, I hope to draw out from the Minister a more precise explanation of the types of content that the Government hope this duty will cover. We believe that public service broadcasters should be encouraged to make their content available across all platforms. In today's digital age, the idea of public service content being just about broadcasting is becoming anachronistic. Video on-demand services are incredibly popular. The BBC iPlayer has more than 1.5 million download or stream requests a day, and 30 per cent of adults already watch content online. We accept that simply looking at broadcasting would not reflect the way that audiences consume content.

These amendments would mean that Ofcom's existing duties were updated whereby this shift in consumption was better reflected, but would limit this to broadcasters that were licensed to meet public service objectives. Rather than promoting investment in public service content by anyone meeting the general criteria contained in the Communications Act, Ofcom's duty would simply apply to online content made by the public service broadcasters.

Public service broadcasters exist to provide public service content, and it is right that Ofcom has a role in ensuring that this happens. However, without Amendment 4, Ofcom would have a duty to promote public service content from non-public service broadcasters. This would represent an unnecessary extension of Ofcom's powers into non-public sector broadcasting companies. Do the Government want Ofcom to regulate Sky whereby it must favour one type of programming over another? If not, can the Minister explain how this would not be the case? These amendments seek to ensure that we do not inadvertently enhance Ofcom's powers beyond that which is appropriate.

I admit that this is an attempt to make an unnecessary clause slightly more workable and we remain unconvinced about the need for the clause at all. However, if the Government insist on retaining it and do not accept the amendments, they need to be much clearer on the types of online content that they are talking about. I look forward to clarity from the Minister in due course.

Amendment 7 is simply a probing amendment to highlight the criteria contained in Section 264A of the Communications Act. As has been mentioned, these are so wide-ranging that I would imagine that almost any web service could be included within this definition. Assurances within the accompanying fact sheet that this applies only to specific web services is not sufficient to allay our concerns, although the Minister has said that he will communicate on this. I beg to move.

Photo of Lord Razzall Lord Razzall Spokesperson for Business, Enterprise and Regulatory Reform

I resisted the temptation to intervene in your Lordships' personal grief over these amendments. In my experience, there is always a rhythm with regard to important Bills in which for the first hour and 20 minutes on Amendment 1, whatever the amendment may say, a number of noble Lords will wish to get off their chests the thing that most concerns them about the Bill. Had I been trying to do that, I would not have picked this clause as the one to which to devote this amount of time. Of course, at the end of the day, we have to realise that it comes down to electoral politics.

The noble Lord, Lord Howard of Rising, aided and abetted by the noble Lord, Lord Lucas, have tabled a series of amendments that would simply delete all the powers given to Ofcom under Clause 1, culminating with their intention to oppose the Question that Clause 1 stand part of the Bill. We have been going through the amendments one by one but that is really what they feel. I wondered why that was when I saw the amendments, but then I read what the Leader of the Tory Party said the other day about what he feels should happen to quangos should he get into power. Ofcom is on the list of quangos to be reviewed in the event of a Tory Government coming to power.

Underlying the debate is an attack on the role of Ofcom in the regulation of broadcasting and other services. The noble Lord, Lord Maxton, asked the $64 million question, that if Ofcom is not going to do this, who will, and he got a noble admission from the noble Lord, Lord Lucas, that in his view the ministry should do it. That is fine if that is what he thinks, but I am also reminded of an interview with Mr Cameron the other day in which he said that all Whitehall departments must accept a very serious haircut if the Tories get into power. There is a bit of a mismatch with what is being proposed in the amendments. Ofcom should lose these powers, which should be handed over to Whitehall, which in turn will be subject to a serious haircut. Whether that would extend to the powers that the noble Lords, Lord Lucas and Lord Howard of Rising, would wish the Government to have, who knows?

Noble Lords who follow the Bill's progress will bear in mind, I am sure, that this amendment, moved by the noble Lord, Lord Howard of Rising, is beloved of BSkyB, which has a serious concern about it and has lobbied everybody extremely hard. There are some fundamental misconceptions in both the approach of BSkyB and the noble Lord's argument. The concern is obviously that Clause 1 would have the effect of skewing Ofcom's decision-making so that it will favour the promotion of investment in public service broadcasters' content at the expense of investment in other content. The amendment is intended to stop that perceived fear.

However, there are two misplaced assumptions here. First-and the Minister may say this-the definition of public service media content makes it clear that such content means material included in media services generally, not just the services of the public service broadcasters. Secondly, for the content to qualify as public service media content it needs to meet one or more of the criteria set out in Section 264(6)(b) to 264(6)(j) of the Act, as amended by the Bill. When we look at that list, we see that it is very inclusive. It is not just cultural and educational content, but programming such as sports, feature films and news. There is not even a condition that it has to be on a free rather than a paid basis. In fact, a number of concerns that have been expressed, which reflect the BSkyB concerns, are to no avail and are not needed.

On the final point made by the noble Lord, Lord Howard of Rising, regarding a concern over Ofcom's decision being challenged, I suspect that there would be an even greater risk of challenge if his amendment were carried. If, as he suggests, this should apply to media content generally, Ofcom could be challenged, for example, on why it was not ensuring investment in pornographic, teleshopping or gambling content. That would provide a much wider opportunity for challenge, so I fear that we on these Benches cannot support the amendment .

Photo of Lord Maxton Lord Maxton Labour

Following on from what the noble Lord, Lord Razzall, has said, it seems to me that what is being proposed in this amendment actually limits public service media content to that provided by public service broadcasters. That is totally wrong; there is a large amount of content on the internet that is public service, in the strict sense, but is not provided by any public service broadcaster. An obvious example that might not be covered by Ofcom is those services directly provided by all government departments, which give the public-the citizen-information about all the government services available to them. That is equally true of local government and of many quangos. Public health quangos are a particular example-if you want public information, you go on the internet. Surely that is a public service which is not provided by public service broadcasters.

These amendments would limit Ofcom and not allow it, for instance, to say to local authorities, "Rather than each of you providing independent services on the internet, perhaps paying quite large sums of money, why don't you get together to invest in a common service that will give services across a much wider range of local authorities than just one?". That may be a simple example, but it seems to me that the proposers of this amendment have to be very clear. Are they saying that all they are interested in is public service broadcasters, and that they are not interested in any public services provided across the media in other ways to the public? Again, those are provided very much to the citizen rather than necessarily to the consumer. I take the point of the noble Lord, Lord Razzall, about increasing concern regarding support from BSkyB in the political area.

Photo of Baroness Buscombe Baroness Buscombe Conservative

I again declare my interest-as I think I am supposed to do every time now-as chairman of the Press Complaints Commission. I want to refer to Amendment 31 regarding unintended consequences that may arise, from what I think is a well-meaning clause, on public service broadcasting and other media services. My concern relates entirely to the question of impartiality. Again, this is something that I touched on at Second Reading.

We must not lose sight of the fact that the word "broadcast" is almost an anachronism and that within a few years there will be convergence. No one yet has talked about that but we have to keep it in mind throughout the passage of the Bill. As chairman of the Press Complaints Commission, my concern is that at the moment the commission regulates the press which is, at its very foundation, allowed to be partial. It exists for freedom of expression, something for which it has fought valiantly over the years. It must be absolutely clear that Ofcom will not extend its powers, either inadvertently or otherwise or through other regulations which may come as a result of another Clause-I think Clause 17-so that it is able to regulate newspapers. There is a real problem here.

Public service broadcasting at the moment must be impartial and the news provided must be impartial. I am particularly thinking about IFNCs, the new regional news providers which we understand are being piloted in the near future by the Government. There is a proposal for news companies and news corporations to be involved in the provision of regional news. What would happen if, inadvertently, that news had to be impartial? We have to think about that big problem. The noble Lord, Lord Mandelson, wrote to all of us who spoke at Second Reading to reassure us that that would not be the case but I urge the Government to think carefully about how, through the passage of the Bill, we ensure that whatever the Bill says in terms of provision, the importance of impartiality in relation to public service broadcast news does not, by regulatory creep, leak out into the newspaper industry as well.

Photo of Lord Puttnam Lord Puttnam Labour 5:15 pm, 6th January 2010

May I pick up what the noble Baroness, Lady Buscombe, has said about impartiality? I do not want to pre-empt Amendments 234 and 235 in my name and that of my noble friend Lord Bragg. This is a crucial issue and I am seeking clarification from the noble Lord, Lord Howard. When he talks about the possibility of Ofcom's obligations being restricted to public service broadcasters, is he suggesting-I am sure he is not and certainly hope he is not-that Ofcom's obligations in respect of the impartiality of news broadcasts in this country should cease to range right across the whole of the broadcast media? One of the pivotal components of civil society in this country is that we have impartial broadcast news. I have spent a huge amount of my working life in the United States and no one in this Chamber would wish this country to go down the road which the Americans have opted for, irrespective of changes in technology. The point made by the noble Baroness, Lady Buscombe, is very important. In the bids for the Cumbria and North East television area there are two prime bidders: one is led by ITN, which has impartiality in its DNA-one does not have to remind ITN about the importance of impartiality; and the other is the Cumberland Newspaper Group which is a classic crusading newspaper group that does not have impartiality in its DNA. It is absolutely imperative that Ofcom has the right to insist, should the Cumberland Newspaper Group be successful, that it obligates itself to exactly the same forms of broadcast impartiality which traditionally have been one of the hallmarks and great successes of our British media ecology. Perhaps the noble Lord could clarify that he is not for one moment suggesting that we move away from impartiality of news provision in all broadcast media.

Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords) , Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (and Deputy Chief Whip)

The noble Lord, Lord Howard, has introduced amendments which have raised some very interesting and challenging issues. However, I am unsure whether they raise contradictory issues. I presume it is an attempt to balance the whole matter, although it seems to me that, to a degree, they lurch from one position to another. However, I am grateful that the amendments raise some important issues. I have noted that the noble Lord, Lord Razzall, suggested that we are following our usual course of spending a great deal of time on Clause 1. However, he must confess that these amendments raise some substantial issues and, therefore, it might be helpful to clarify them as far as we can at this stage, as we know there are one or two other clauses which cause an element of concern and which might detain us for a short while later in Committee. I am aware that the House takes a keen interest in the issues of public service media content, so I am glad that we have this opportunity to discuss the issues now.

My noble friend Lord Young has already explained the objectives of Clause 1. It is a small but necessary change. It is not an epoch-making change, as was suggested in the debate which went on for almost an hour a little while ago and threatens to re-emerge; it is a small but necessary change in the way that Ofcom performs its existing duties which gives greater importance to the need to promote investment in robust and modern communications infrastructure and public service media content. My noble friend Lord Maxton waxes lyrical on these media issues whenever he gets the opportunity, and I am grateful to him for his contribution again today. We are all aware that technological change creates the exciting opportunities about which the noble Lord, Lord Lucas, waxed strongly. There are great opportunities, but there are also incumbent obligations, so we have an element of regulation effective and appropriate to the changes. That was the burden of our previous debate, so I do not have to reiterate the issues at great length.

The amendments would widen the qualifier on Ofcom's principal duty to require it to consider the need to promote investment in other kinds of media content besides public service media content. They define media content for the purposes of Clause 1 as meaning material other than advertisements included in media services. They would represent a significant increase in the scope of Ofcom's responsibilities, and we do not believe that that is appropriate.

We are arguing the case for necessary marginal increases related to technological developments and opportunities; we are not arguing for radical change. The qualifier in Clause 1 builds on Ofcom's existing duty to have regard to the desirability of promoting the fulfilment of the purposes of public service television broadcasting. The rationale for that specific requirement is simple, and it remains valid in the digital age. It is because public service media content has clear social and economic benefits for the UK. Plurality of public service media content provides healthy competition for the BBC and a bedrock of quality for purely commercial content. It drives the market up and ensures that the British public has a choice, including in genres where the market alone cannot sustain plurality-for example, for news in the nations, locally and in regions. It will be noted that the Government are greatly exercised about that in the Bill and in action to be taken elsewhere. I am grateful to my noble friend Lord Puttnam for emphasising our expectation of the impartiality that news must provide.

Losing that focus on public service media content would introduce new responsibilities for Ofcom that would be impractical and could have significant unintended consequences. As the noble Lord, Lord Razzall, emphasised, the amendments could conceivably require Ofcom to consider the need to promote investment in adult online content, American programming, Hollywood films or teleshopping. Is that what we expect Ofcom to get involved in by promoting investment? I take it that we agree that that is an issue for the private market, and therefore not investment that Ofcom will be expected to encourage or develop.

A vast amount of material in these categories alone is included in media services available in the UK already, which would surrender the responsibility to promote investment in media content. That is quite impractical for Ofcom. This amendment opens the door through which Ofcom could not possibly go; if it did there would be deleterious consequences for its role.

The Government also question whether it should be the role of the UK regulator to promote investment in this commercial content. We maintain that the qualifier should be limited to material that contributes or may contribute to clear public service objectives, set out in statute and formulated for the benefit of the UK public. That is the role we want Ofcom to pursue. Beyond that we consider that market mechanisms are the appropriate way to ensure that there is an optimal provision of purely commercial content. None of us underestimates the extent to which the market is making those provisions at the present time and with the most considerable growth possible.

I understand the concerns that limiting this qualifier to public service media content could be detrimental to other types of media content, but we believe that the definition set by Clause 1 is flexible and wide enough to embrace all content that has public value. It strikes the right balance between respecting market mechanisms where they are enough to provide for what is required and supporting all content that delivers public value, which is the proper responsibility of regulation. This definition includes content provided by non-public service broadcasters and from new media, which is why we need this extension. That is why the clause is drafted as it is.

It is worth reminding the Committee that Clause 1 maintains and modernises the existing requirement on Ofcom under Section 3(2) of the Communications Act to secure the widest availability of media services which taken as a whole are both of high quality and calculated to appeal to a variety of tastes and interests. Currently, this requirement applies only to television and radio services. Clause 1 is designed to widen that to media services, taking account of the digital age-on which the noble Lord, Lord Lucas, waxed so eloquently in the earlier debate. We all agree with him. The clause as drafted catches the intent of the amendment that all media content is important, but it also quite properly distinguishes between content that has a specific social and economic public value, and is particularly at risk, and purely commercial content which we can essentially leave as a matter for the market.

The noble Baroness, Lady Buscombe, introduced another dimension with her advocacy of Amendment 31. I am aware that there have been some misconceptions about the proposed changes to Ofcom's general duties introduced in this Bill. I am grateful to her and her Front-Bench colleagues for raising these issues and helping us to clarify the matter, though there is a certain contradictory element to them when compared with the previous opposition amendments.

It has always been our position that these changes to Ofcom's general duties enhance the regulator's current responsibilities rather than introduce new duties. I give the noble Baroness a clear assurance on that point. Clause 1 does not give Ofcom any new hard powers to regulate the provision of public service media content by public service broadcasters or other content providers. The qualifier on Ofcom's principal duty will not, for example, allow Ofcom to extend the scope of impartiality requirements to content providers not subject to them currently.

Photo of Lord Maxton Lord Maxton Labour

The problem that the noble Baroness, Lady Buscombe, rightly raises is that newspapers, particularly local newspapers, increasingly provide video content on their websites, therefore they become broadcasters. As such, are they not obliged to have applied to them the same rules on impartiality in terms of news provision as other broadcasters?

Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords) , Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (and Deputy Chief Whip) 5:30 pm, 6th January 2010

The noble Baroness was talking about the role and independence of newspapers. None of us could conceive of any impartiality requirement upon newspapers. Their editorial line and content must be free. However, the Government are concerned that news content programmes provided through the new media will be subject to clear provisions with regard to the impartiality of news. My noble friend must recognise that there is a great distance between the issues that the noble Baroness, Lady Buscombe, raised with regard to newspapers, on which I want to give the assurance, and the more limited point that my noble friend put forward.

Clause 1 qualifies the existing provision that Ofcom should exercise its principal duty where appropriate by promoting competition, by requiring Ofcom to have particular regard-I come back to the point that I know still exercises the noble and learned Lord, Lord Mackay-in all cases to the promotion of investment in electronic communication networks and in public service media content. The amendment restricts the scope of the qualifier in relation to promoting investment in public service media content to such content provided by the public service broadcasters.

It is widely accepted that plurality of public service media content delivers significant social and economic benefits to our country. The substantive upgrading of communication networks in the UK means that there are now more opportunities for content providers, other than PSBs, to provide public service media content. While the opportunities to provide content have increased, so has the accessibility of content from abroad provided, for example, on multichannel television and broadband. This, together with shifting advertising revenues and economies of production, is threatening the production of UK public service content. My noble friend quantified that in the earlier debate; it is a matter about which we should all be concerned.

To accept this amendment would ignore the new opportunities provided by increasingly popular electronic platforms and would restrict Ofcom's ability to promote investment to a narrow range of broadcasters. There would therefore be a higher risk of a loss of plurality and competition for the BBC in the provision of public service media content. Although I may have difficulty in taking the Opposition with me on some of the proposition, I feel reasonably secure when I emphasise effective and proper competition to the BBC in public service broadcasting.

In no way does Clause 3 give Ofcom additional regulatory powers. The clause extends the scope of Ofcom's existing reviewing and reporting duties to include content provided by providers other than public service broadcasters, but does not mean that Ofcom can regulate those providers in any way, nor do we intend that Ofcom should. I guarantee from the Dispatch Box that at any stage when this issue is raised, we will be as assertive as we can be in this refutation. I hope that reassure the noble Baroness.

However, Clause 3 requires Ofcom to review and prepare a report on the contribution of material included in media services to the fulfilment of the public service objectives. The clause does not limit media services to a particular provider, although they must be available to the public in the UK. The amendment would restrict Ofcom's wider reviewing and reporting obligation in relation to media services provided by public sector broadcasters only. Ofcom's previous public sector broadcasting reports have provided a very useful analysis of the state of public service television broadcasting in the UK. The reports support Ofcom's recommendations to the Government on public service broadcasting. The provision of public service content is now no longer restricted to PSBs. The substantive upgrading of the communications networks has increased the opportunities for more content providers. Accepting this amendment would therefore result in Ofcom making recommendations to the Government based on a partial assessment, which would be to the detriment of public service content provided beyond the PSBs. That is why I resist the amendment.

The wider reviewing and reporting duty of Ofcom will help to maintain and strengthen the fulfilment of the public services objective. It is crucial that Ofcom's future reports are able to take into account this wider delivery of public service content, to allow Ofcom to make accurate recommendations to the Government, on which the Government might then be able to act.

I hope the noble Lord, Lord Howard, will first of all recognise the heartfelt appreciation I have for him in having raised these issues. I hope he will also have noticed my significant self-denying ordnance, in a testing year, from indulging in political knockabout. The noble Lord, Lord Razzall, a great friend of mine on the Liberal Benches, may indulge himself, but from the Dispatch Box the noble Lord, Lord Howard, will have noticed that I have not engaged in such issues. Therefore, I hope he can feel that he can withdraw the amendment in the confidence that the Government have got it just about right.

Photo of Lord Lucas Lord Lucas Conservative

I hope when my noble friend replies he will join me in refuting the calumny uttered by the noble Lord, Lord Razzall, that I am in some way in league with my own Front Bench. The problem may arise from the Stalinist discipline that the Liberals apply to their Back-Benchers. Our Front Bench is much more confident in the underlying rightness and consistency of our philosophy and is happy to allow Back-Benchers their own voice.

Photo of Lord Howard of Rising Lord Howard of Rising - Shadow Minister (Also Shadow Minister for Treasury and Culture, Media and Sport), Shadow Minister, Shadow Minister (Also Shadow Minister for the Cabinet Office and Treasury), Culture, Media and Sport, - Shadow Minister (Also Shadow Minister for the Cabinet Office and Culture, Media and Sport), Shadow Minister

I start by saying how much I appreciate all that the noble Lord, Lord Davies, has said this afternoon. It is always a pleasure to listen to him, especially when he is not being horrid to me. I say to the noble Lord, Lord Puttnam, that I have not proposed any changes in Ofcom's duties, and I say to the noble Lord, Lord Razzall, that the Conservative Party's view of Ofcom is only that it should restrict itself to its regulatory function and not get involved in policy-making.

One of the main thrusts of the amendments is to prevent an inadvertent increase in Ofcom's powers beyond what is appropriate, as indeed I said. Can the Minister confirm that I heard him correctly and that there will not be any such inadvertent increase? I disagree that my amendments would limit plurality. I am grateful for the assurance that the Minister gave to my noble friend Lady Buscombe about the extension of Ofcom's powers, and perhaps he could table an amendment to that effect. I leave that suggestion with him. I beg leave to withdraw the amendment.

Amendment 3 withdrawn.

Amendment 4 not moved.

Amendment 5

Moved by Lord Howard of Rising

5: Clause 1, page 1, line 12, leave out "wherever possible"

Photo of Lord Howard of Rising Lord Howard of Rising - Shadow Minister (Also Shadow Minister for Treasury and Culture, Media and Sport), Shadow Minister, Shadow Minister (Also Shadow Minister for the Cabinet Office and Treasury), Culture, Media and Sport, - Shadow Minister (Also Shadow Minister for the Cabinet Office and Culture, Media and Sport), Shadow Minister

My Lords, this amendment would ensure that investment is efficient at all times and not just "wherever possible". The Government's factsheet on this clause explains that at times it may be desirable for social reasons that investment is not efficient. It cites that many types of public service content are not efficient and would not happen if this was the only criteria by which investment was judged. We accept that this makes sense in terms of subsection (2)(b).

Some public service content is by its nature not provided for by the market and as such may represent inefficient investment. The clause therefore allows Ofcom leeway when considering issues of this nature. However, we are not certain that there are any areas in which investment in electronic communications networks should be inefficient. Are the Government thinking of investment in what the Digital Britain report called the "final third"? If so, I suggest that they should remove the barriers to investment that make this commercially unattractive before rushing to encourage inefficient investment. It would be helpful if the Minister could explain the circumstances in which inefficient investment into these networks would be encouraged by Ofcom. I beg to move.

Photo of Baroness Buscombe Baroness Buscombe Conservative

My Lords, I rise to support my noble friend entirely on the basis that this makes the way ahead unclear for Ofcom. There is a real lack of clarity in the provision: what on earth does "wherever possible" mean? It could be read in a host of different ways and I am not sure that would be helpful to the citizen and the consumer in the long run, or even in the short run.

Photo of Lord Maxton Lord Maxton Labour

I may feel some confusion over the actual phrase used, but the implication that there should be occasions where investment would not be efficient is understandable. I refer to the first contribution made by the noble Lord, Lord Steel, in which he said that he does not have mobile phone coverage in his area. That is exactly the sort of investment that might have to be made by somebody to ensure that there is telephone coverage across the whole country, but some of that will not provide a return in terms of efficiency for a private company. For instance, if we look at what BT charges to put in a telephone line in a remote area, it is understandable that it would not be efficient for an individual to invest in it, and therefore someone else will have to do so if there is to be full coverage.

Photo of Baroness Buscombe Baroness Buscombe Conservative

My Lords, perhaps that could be solved quite simply by adding the words, "in cases where there is an overwhelming public interest". That would satisfy the implication made by the noble Lord in the direction of ensuring the universal delivery of broadband as an example.

Photo of The Earl of Erroll The Earl of Erroll Crossbench

My Lords, I, too, am interested in the word "efficient" because I suspect it is being confused with the concept of commercial viability. Whenever I talk about investment in rural broadband, which would help hugely in terms of reducing traffic on the roads, the green agenda, working from home, teleworking and flexible working hours-over the past few days and particularly today, it would have been useful if certain key people could have been working straight from home-I am always told that it is not commercially viable. I note that the latest list, published yesterday, of over 100 exchanges that BT is upgrading, shows that they are all fairly major and not in rural and more distant areas. There is no intention at the moment, I think, of putting any investment into those.

That is not because of efficiency, and that is why the word is so odd, but because of the commercial viability of doing so. That is where I hope we will look at trying to co-ordinate activities between BT, the large incumbents and Virgin, and perhaps alter the rating system so that some of the dark fibre that is running alongside railway tracks could be lit commercially-again, because of the rating system, it cannot be-and integrate it all so that it is not about efficiency or commercial viability, but about putting in place a proper working infrastructure. That is why I think the word "efficient" is an odd one to use in this provision, although I suspect that, as ever with this clause, the intentions are right.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

My Lords, I wonder how the point made by the noble Lord, Lord Maxton, fits in with this clause at all because his doubts in relation, for example, to the area in which the noble Lord, Lord Steel, lives, imply that Ofcom should in some cases have the responsibility of promoting inefficient investment, if efficient investment means that some profit is produced for those who make the investment. "Efficient" may mean something different, and I am not sure exactly what meaning the word has in this subsection. "Efficient" could mean that it carries out the purpose in which Ofcom is interested.

In some cases, it would not necessarily need to be a productive investment from the point of view of the person making it, but productive from the point of view of the person receiving the benefit of it. If Ofcom was to take up the problem of the neglected areas of coverage for media phones, the clause would need to require it to promote investment which might not be productive for the investor in certain cases.

Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords) , Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (and Deputy Chief Whip) 5:45 pm, 6th January 2010

My Lords, I hope that we are not going to make a mountain out of this molehill because there is not much at stake with regard to the amendment. Although I am grateful to the noble Lord, Lord Howard, for having tabled it, I am even more grateful to my noble friend Lord Maxton for having stolen seven-eighths of my speech because he has indicated exactly the position and has, therefore, cut down my remarks.

The amendment would mean that Ofcom's principal duty would be restricted to only efficient investment. I listened carefully to what the noble and learned Lord, Lord Mackay, and the noble Earl, Lord Erroll, had to say about efficiency, but my noble friend Lord Maxton identified what we all understand by "inefficient" in this area. It will sometimes be in the interests of citizens and consumers for Ofcom to promote inefficient investment. Universal service conditions may promote inefficient investment to ensure that a service is universally available. The noble and learned Lord, Lord Mackay, may say that that is then being efficient because a service is reaching recipients who would not otherwise be able to meet the costs or which it would not be in the interests of those supplying it to meet the additional marginal costs which the consumer cannot meet.

We are talking about the definition of efficiency in economic terms. All that has been indicated-the noble Earl, Lord Erroll, identified this just as clearly-is that there can be additional marginal costs which no one could take on as an investor sensibly and intelligently because they do not bring a reward commensurate with the outlay, but which achieve the essential public good of providing the universal service. That is the only issue at stake with regard to "wherever possible". It is not that Ofcom could conceivably be prodigal in its recommendations on how additional investment should be developed, but there are specific circumstances where inefficient investment-in the sense of not bringing a return to the investor-might need to be encouraged. I am merely emphasising the obvious fact that we need, wherever possible, a safeguard for that position. There is no more to the issue than that.

Photo of Lord Fowler Lord Fowler Conservative

The concept of efficient investment is rather curious. The Minister almost put his finger on the point when he referred to economic investment. Would it not make more sense to say that the investment should be "economic" wherever possible rather than "efficient"?

Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords) , Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (and Deputy Chief Whip)

My Lords, as ever, the noble Lord, Lord Fowler, is helpful. However, we are straining at a narrow point. All we are indicating-I hope there is agreement-is that we want investment on the whole, of course, to be efficient. However, a universal provision will carry at times a potential for marginal costs which do not meet the criteria of efficient, economic or any the other concepts we may use to demonstrate levels of efficiency. All that the "wherever possible" element introduces is some recognition that the public good might be served rather than the narrower concept of economic efficiency. The noble Lord, Lord Fowler, is better placed than anyone in the House to know the extent to which Ofcom has general duties with regard to the interests of the citizen and the consumer, an issue that was raised earlier today. This is merely recognition that at times this may condition investment that does not have an immediate and even potential direct payoff to investment.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

My Lords, before the Minister finally sits down, is he satisfied that the structure of the Ofcom powers will allow it to give emphasis to cases where investment would not be efficient in the economic sense but would be important from the point of view of the consumers? That is my principal concern about the relationship between this clause and the main clauses of the 2003 Act. The noble Lord has already mentioned the use of the word "particular". We have to encourage efficient investment where it is possible but not encourage inefficient investment where that is necessary in the interests of the consumer unless the previous provisions of the 2003 Act take priority over this in relation to the interests of consumers and citizens.

Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords) , Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (and Deputy Chief Whip)

Perhaps I did not interpret the noble and learned Lord's position as accurately as I ought to have done, but I reassure him that I am absolutely at one with him, and that is what the Bill actually represents. Of course we want investment to be efficient but there are circumstances, which he has identified, where the public good requires investment that is not narrowly efficient but is essential if we are going to meet our wider obligations in terms of universal service provision.

Photo of Lord Howard of Rising Lord Howard of Rising - Shadow Minister (Also Shadow Minister for Treasury and Culture, Media and Sport), Shadow Minister, Shadow Minister (Also Shadow Minister for the Cabinet Office and Treasury), Culture, Media and Sport, - Shadow Minister (Also Shadow Minister for the Cabinet Office and Culture, Media and Sport), Shadow Minister

It has become apparent that the whole debate is really about the definition of the word "efficient". The problem, with the greatest respect to the Minister, is that the use of the word in this context is perhaps not the right one. It must be more efficient for me to go home by car, but it would be a lot cheaper to go on foot. The substitution of the word "efficient" for "profitable" or "economically viable" was, perhaps, wrong. Having listened to everything that has been said, I suspect that we are all singing from the same song sheet. I therefore beg leave to withdraw the amendment.

Amendment 5 withdrawn.

Amendments 6 and 7 not moved.

Amendment 8

Moved by Lord Gordon of Strathblane

8: Clause 1, page 2, line 24, at end insert-

"(7) Before section 120 of the Enterprise Act 2002 insert-

"119C OFCOM to perform functions of the Office of Fair Trading in relation to media mergers

(1) In the case of a media merger, the provisions of this Part shall have effect as if the references to the Office of Fair Trading were references to OFCOM.

(2) The Office of Fair Trading will notify OFCOM as soon as it becomes aware that a merger situation is a media merger and from that time onwards the Office of Fair Trading will cease to exercise any functions in relation to the merger situation.

(3) Where the Office of Fair Trading has exercised functions in respect of a merger situation before becoming aware that it is a media merger, such functions shall be deemed to have been exercised by OFCOM.

(4) For the purposes of this section, a media merger is a merger situation in which at least one of the enterprises ceasing to be distinct consists in or involves broadcasting.""

Photo of Lord Gordon of Strathblane Lord Gordon of Strathblane Labour

My Lords, with the passage of the years, regrettably, any interests that I would have had to have declared are now in the past tense. None the less, in the interests of completeness, I make them now, but I hope it will be acceptable if I do not repeat them every time I intervene during the passage of the Bill. For 33 years I ran the company that was known as Scottish Radio Holdings by the time it was taken over in 2005. I was also director of Johnston Press for 11 years and retain a shareholding in that company. I have also held various representative posts in the broadcasting industry.

I assure your Lordships that it is not mere opportunism that leads me to move this amendment today, although I freely concede that the fact that the noble Lord, Lord Mandelson, straddles quite so many government departments makes it rather less likely that departmental territorial imperatives will block any dispassionate evaluation of my proposal. That proposal rests on some simple, almost self-evident truths. First, convergence is happening at an almost alarming rate. Noble Lords have already alluded to that. Secondly, in those circumstances, mergers in the media sector are going to be rather more likely than less. Thirdly, since media is a very sensitive area in a democracy, it is right that any such merger must be referred to some regulatory body for clearance. Fourthly, in the interests in those in the industry, it is vital that the regulatory body concerned is both well informed as to the public interest as it affects the media sector and able to deliver its verdict in reasonable time. I contend that Ofcom meets those criteria better than the Competition Commission and that is why I propose the transfer of powers.

As noble Lords have recognised, Ofcom is the specific sector regulator brought about by the 2003 Communications Act. It already has considerable powers to deal with ownership matters, which it exercises through licence agreements with the various radio and television companies. It already has quite considerable concurrent powers, as I believe they are called, with the OFT in terms of making market investigation references, investigating infringements of Chapters 1 and 2 of the Competition Act, and carrying out market studies. However, those concurrent powers do not extend to merger regulation.

I concede that my amendment goes further than simply concurrent powers. It transfers the entire responsibility to Ofcom and away from the Competition Commission. It does so for two reasons. First, as I mentioned earlier, speed is of the essence. Delay in giving approval is almost as bad as a refusal of permission for a merger. For example, how long has it has taken for ITV to secure any kind of verdict on its contract rights renewal proposals, reached about three years ago? It has pretty well bled to death in the process. We cannot wait that long in future.

Secondly, I do not think that a purely competition-focused regulator is best equipped to make judgments on public interest. That judgment is best made by the specific sector regulator, part of whose job it is to keep the state of the industry under constant review. It is a regrettable fact-I do not want to pass any comment on the merits of the particular judgment-that the only time there has been a public interest test, Ofcom reached one conclusion and the Competition Commission reached the opposite conclusion. Irrespective of the merits of the subject under discussion, which happened to be the Sky shareholding in ITV, I would much rather put my money on Ofcom than on the Competition Commission.

I want to keep my remarks very brief, so in conclusion, if there is another way of achieving the result I seek, I will be very happy to back down and back another proposal, although it is worth noting that it was an amendment to the Enterprise Act 2002 that introduced the public interest test. So there is a good precedent for choosing the avenue I have chosen, but I am quite happy to change it. In the mean time, I beg to move.

Photo of Lord de Mauley Lord de Mauley - Shadow Minister (Also Shadow Minister for Universities and Skills), Shadow Minister, - Shadow Minister (Also Shadow Minister for Children, Schools and Families), Shadow Minister

My Lords, in Amendment 8, the noble Lord, Lord Gordon, raises an issue which is critical to the future success of the United Kingdom's commercial media market but one that is sadly not yet addressed in the Bill. If our commercial media sector is to keep pace with technological developments and the resulting commercial pressures, then the media merger regime in the United Kingdom is surely in need of quite substantial reform. Recent examples of competition decisions have not always been helpful and, in some cases, have led to overseas rivals setting up similar services. I am thinking in particular of the decision concerning Kangaroo, which, to all intents and purposes, denied UK public service broadcasters an opportunity to move into the video on demand market. Instead, we are likely to see American versions such as Hulu offering similar services. This is one example, but there are others.

The result is that those contemplating entering into mergers, acquisitions or joint ventures in this country in the media sector face considerable regulatory uncertainty. This has the potential to harm the United Kingdom's reputation as an attractive place for investment, so we have a great deal of sympathy with the noble Lord, Lord Gordon, in raising the issue. However, I am not yet quite sure that his proposed solution is necessarily the right way forward; indeed, he gracefully admitted that there may be others. Simply moving the regulation regime from the Office of Fair Trading to Ofcom might not, I fear, ensure a more flexible and dynamic competitive environment, particularly if Ofcom is simply working under the same rules. Instead, we believe that it would make sense to look at updating the competition rules for media mergers, perhaps by examining the threshold levels and the criteria by which mergers are examined.

Photo of Lord Fowler Lord Fowler Conservative 6:00 pm, 6th January 2010

My Lords, I wish to intervene briefly. If, like the noble Lord, Lord Gordon, one is to declare past interests, I should declare a past-regrettably-interest as chairman of two regional newspaper companies, one of which I think we sold to Johnson Press, of which the noble Lord was a board member.

I have great sympathy with the point that my noble friend has just made. The Kangaroo case raises important questions about what the national interest is. Whether or not the amendment moved by the noble Lord, Lord Gordon, is the correct way of putting it-it probably is not, as he has been modest enough to say-the issues that have been raised should certainly be considered by the Government. In the Kangaroo case, a proposal to bring a number of companies together in providing a service was not approved. The only result of that will be that companies from outside the United Kingdom will fill the gap that has been left. That cannot be in the national interest or the public interest, however it is that one wants to put it. Although the Minister will have all kinds of reasons why the amendment is not drafted correctly, I hope that he will at least recognise that there is a serious point here, which the Government-and only the Government can do this-will need to handle and concentrate on.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

There is a lot to be said for Ofcom having responsibility in this area. As the noble Lord, Lord Gordon, said, it has the day-to-day acquaintance with the media that is essential to understand what the public interest is likely to be in this area. For my part, I would be keen to agree with the substance of what the noble Lord, Lord Gordon, has proposed. I am not certain what the position would be about appeals under the Ofcom arrangement but, subject to that, I think that the proposal merits consideration by the Government and I hope that they will give it that.

Photo of Lord Young of Norwood Green Lord Young of Norwood Green Government Whip, Parliamentary Under-Secretary, Department for Business, Innovation and Skills, Government Whip, Parliamentary Under-Secretary of State (Department for Business, Innovation and Skills) (Postal Affairs and Employment Relations) (also Lord in Waiting)

My Lords, the amendment moved by my noble friend Lord Gordon proposes that Ofcom should be given a whole new set of powers, responsibilities and duties, equivalent to all those that the Office of Fair Trading has in relation to merger control but applicable only in relation to mergers involving enterprises engaged in broadcasting. There has been some acknowledgement that this is not necessarily the perfect solution.

This proposal appears to stem from a belief that Ofcom, as a sector regulator, would be better placed than the OFT to identify such mergers and, where appropriate, undertake the initial phase 1 consideration of these. The role currently performed by the OFT for all UK mergers involves deciding whether or not to refer a merger to the Competition Commission to undertake a full phase 2 investigation into the competition effects of the merger. It must do this if it considers that a merger may be expected to result in a substantial lessening of competition. We are satisfied that the OFT is entirely capable of carrying out this function for all mergers, including those involving broadcasting enterprises. It has built up substantial expertise and experience in assessing whether or not a particular merger might result in a substantial lessening of competition and can draw on expert teams of economists and lawyers to help it reach such decisions. Ofcom does not currently have any such capability. It is not clear what purpose would be served by requiring it to attain such capability simply to duplicate a role already performed effectively by the OFT. This would appear unnecessary and would introduce wasteful duplication and undue complexity into the merger regime. It may be noted that the number of mergers involving enterprises engaged in broadcasting that may actually occur is likely to be very small and will represent only a tiny fraction of the mergers taking place in the economy.

The Government recently gave careful consideration to the merits of amending the role played by Ofcom in the merger control regime as it relates to mergers involving media enterprises. We decided no change to the statutory regime was appropriate. However, as was announced in the Digital Britain report, it was decided that the OFT would include in its updated guidance on merger control a specific commitment to consult Ofcom whenever it considers any merger involving enterprises engaged in newspaper publishing and/or commercial radio or television broadcasting. We are satisfied that this effectively ensures that the particular knowledge and expertise Ofcom possesses will be drawn on and properly taken into account whenever the OFT considers and takes decisions on media mergers, while avoiding burdening Ofcom with a whole new set of powers and all the duties, burdens and costs that would go with them.

I listened carefully to the points made by my noble friend Lord Gordon and the noble Lord, Lord De Mauley, when he himself recognised that this is not the right vehicle. Moving everything to Ofcom would not necessarily solve the problem and there may be a need to update competition rules. The noble Lord, Lord Howard, came to a similar conclusion as a result of the analysis of the Kangaroo case. I thank my noble friend Lord Gordon for expressing what is a genuine concern. I hope he recognises, as I think a number of noble Lords do, that this is not necessarily the right vehicle. I do not know what I can promise to do at this juncture to resolve what I am sure noble Lords will recognise is a very complex area of legislation, but I will reflect on the points made. In the mean time, I hope that the noble Lord will withdraw the amendment.

Photo of Lord Gordon of Strathblane Lord Gordon of Strathblane Labour

I feel that, in the light of the support from the other three speakers, the matter must be taken further. It clearly is not appropriate to press it this evening. I have no intention of so doing because I concede, despite the kind remarks of the noble and learned Lord, Lord Mackay, that there might be better ways of doing this. I would simply invite the Minister, before he reaches a conclusion on this, to ask the Department for Culture, Media and Sport if it is happy with the project Kangaroo decision. The department's feeling was that no public interest concerns whatever were raised by the decision, and yet the Competition Commission turned it down. We are not talking about the near future or what might happen. Channel 4 has already moved to YouTube so the flight of business to America is already taking place. I hope that once the Minister has done that, there might be a warmer response to a proposal that, after discussion with others, I will put forward at the next stage. In the mean time, I beg leave to withdraw the amendment.

Amendment 8 withdrawn.

Debate on whether Clause 1 should stand part of the Bill.

Photo of Lord Howard of Rising Lord Howard of Rising - Shadow Minister (Also Shadow Minister for Treasury and Culture, Media and Sport), Shadow Minister, Shadow Minister (Also Shadow Minister for the Cabinet Office and Treasury), Culture, Media and Sport, - Shadow Minister (Also Shadow Minister for the Cabinet Office and Culture, Media and Sport), Shadow Minister

My Lords, we have been through Clause 1 in some detail. In summary, we on these Benches are concerned that this clause will inhibit Ofcom's ability to perform its current duties effectively while at the same time failing to achieve what the Government proclaim they are seeking to do. I am afraid that after listening to the responses to the previous groups of amendments, I remain unconvinced. If these new secondary duties have any effect on Ofcom at all, and are not just ignored, they would seem to be negative. I therefore oppose the Question that this clause should stand part of the Bill.

Photo of Lord Clement-Jones Lord Clement-Jones Spokesperson for Culture, Media and Sport

My Lords, like my noble friend Lord Razzall, I am somewhat baffled by the excitement generated by Clause 1. However, I am breaking the Trappist vow that I made at the beginning of the debate. Sadly, we have only about an hour and a half of proceedings left today in which to underline the opposition on these Benches to the proposal made by the noble Lord, Lord Howard.

I certainly do not yield to the noble Lord, Lord Lucas, in his excitement at the prospect of the iTablet coming down the track. It is a perfect illustration of the convergence mentioned by the noble Baroness, Lady Buscombe. I think that another noble Lord also used the word "convergence". This clause is designed for the post-convergence age. Of course, the 2003 Act was pre-convergence. We on these Benches think that Ofcom has not done a bad job in the pre-convergence age. Of course, there will be quarrels with some aspects of it. It will probably be too slow in making sure that local loop unbundling happens quickly enough, and I am sure that we would all disagree with many other aspects. By and large, however, we believe that Ofcom has done a pretty good job in a very complicated pre-convergence age.

This clause is not the big bang to end all clauses; it is a very modest qualifier to the current duties of Ofcom. We believe that it is appropriate for the post-convergence age. We do not believe that it detracts from the duties of Ofcom towards the consumer. Indeed, we believe that the investment duties are designed to make it more responsive to the consumer. If this clause were not included, do we honestly believe that Ofcom would suddenly become more responsive to the consumer? Of course not. I think that the noble Lord, Lord Davies, talked about making sure that broadband was more universally available. Of course, that is one of the underlying objectives of the duties imposed on Ofcom. As the noble Lord, Lord Maxton, said-my noble friend Lord Razzall also mentioned it-if Ofcom does not have these duties, who does have them? It is not easy to distinguish between regulation and policy, as the noble Lord, Lord Howard, has done. As regards the expansion and coverage of mobile networks that my noble friend Lord Steel mentioned, where do policy and regulation respectively begin? It is not easy to make that distinction.

I am sure we all agree that there is a need to deliver the Digital Britain strategy. We on these Benches believe that Ofcom is an absolutely essential instrument to do that. Unlike the noble Lord, Lord Lucas, I do not believe that this clause is designed to allow Ofcom to cuddle up to the major players; that is not the essence of it at all.

I shall not continue at great length. Points have been teased out on the public service broadcast front. The right reverend Prelate made extremely cogent remarks on that on two occasions. It is not just about public service broadcasters; it is also about public service content and plurality. Plurality is the essence of the post-convergence age. I believe that Ofcom needs to have that duty as set out in Clause 1. If anybody wanted to illustrate the way in which public service content brought people together, they should give the example of the Christmas and New Year broadcasts. If anybody thought that the delivery of content was being so totally Balkanised that it did not bring us together culturally, the Christmas broadcasts such as "Strictly Come Dancing", "The X Factor", and "Dr Who", which were viewed by many people, would prove that they were mistaken. Millions watched those broadcasts. I forget which show had the largest audience; it was probably "The X Factor", which I believe was watched by some 20 million people. All that demonstrates the need for regulation, for somebody to hold the ring in this post-convergence era. I have continued for far too long, but I hope that the passion with which I have talked illustrates that we do need to preserve this clause in this Bill.

Photo of Lord Whitty Lord Whitty Labour 6:15 pm, 6th January 2010

My Lords, I am not going to support this clause either. Nor on this occasion am I declaring an interest, because this is a bit of friendly, personal advice to my noble friend the Minister. Will he talk to his officials and to parliamentary draftsmen about the wording particularly of subsection (2) of this clause? I felt that it was not a clear answer to the issue of balance. The further we went on in the debate on the amendment moved by the noble Lord, Lord Lucas, the more concerned I was about balance. The Government's intention may well be benign, but that is not clear from the wording. We know that for particular words-including the word "particular", which the noble and learned Lord, Lord Mackay, spoke about-we need to have clarity on what they mean, as we do with the word "appropriate" and the word "efficient". I am not opposing this clause at all, but the wording needs another look. I would be grateful if my noble friend the Minister at least undertook to consult his officials on whether he could express it better.

Photo of The Earl of Erroll The Earl of Erroll Crossbench

My Lords, very briefly, I would like to support what the noble Lord, Lord Whitty, has just said. The ideas behind this clause are good, but the exact wording is wrong. It is not ideal. The noble Lord, Lord Clement-Jones, has given me the opportunity of pointing out that he thinks that Ofcom has done extremely well in some ways, and he mentioned the local loop unbundling. The trouble with the local loop unbundling is that although it has done fine in the cities, where there is a lot of competition, but-and this is where the later amendments of the noble Lord, Lord Whitty, are going to be so important, and I support them very heavily-it has allowed the entire local loop to degrade in rural and distant areas to an almost disastrous extent. Investment in those areas is not commercially interesting, and this is where the word "efficiency" and the points made by the noble and learned Lord, Lord Mackay, come in.

Another example where Ofcom may have made a mistake is over the sharing of mobile telephone masts. That sounds very efficient, but it has allowed companies to reduce the number of masts in some areas. We now have such contention on some masts that you will find that your signal is not as good as it used to be in some areas, because they have taken out some masts in order to save money. It has not done what it was expected to do, which was to increase the amount of masts available and give us better coverage. We are getting worse coverage instead. I am not sure that Ofcom realises some of the unintended consequences of some of their policy decisions.

Photo of Lord Puttnam Lord Puttnam Labour

I suggest to the Minister that the advice he has had from the noble Lord, Lord Whitty, is very, very good advice and I urge him to listen to it.

Photo of Lord Lucas Lord Lucas Conservative

The noble Lord, Lord Whitty, seems to have encapsulated my arguments at much shorter length than I employed.

Photo of Lord Young of Norwood Green Lord Young of Norwood Green Government Whip, Parliamentary Under-Secretary, Department for Business, Innovation and Skills, Government Whip, Parliamentary Under-Secretary of State (Department for Business, Innovation and Skills) (Postal Affairs and Employment Relations) (also Lord in Waiting)

My Lords, for which relief, many thanks. I thank the noble Lord, Lord Clement-Jones, for giving up his vow of silence and providing such an excellent summary of the reasons why we need this clause. We had a very extensive debate and I do not intend to repeat all that again, because that would not be using the time and resources here in an efficient way. It would certainly not be economic.

Addressing the points of concern raised by my noble friend Lord Whitty and others, including my noble friend Lord Puttnam, I undertake to look at it again. However, Ofcom has a statutory duty to consider both the interests of citizens and consumers, with no hierarchy between the two. Ofcom is obliged to treat both equally. No doubt there are different views about how well it has done on particular issues, but the statutory position is clear. That is just one point. However, I understand the point that my noble friend Lord Whitty made when he said that he feared that the balance of interest would be detrimentally affected by the legislation. That is certainly not our intention and, if necessary, we will certainly make sure that that is clarified..

I could not help but be amused when the noble Earl, Lord Errol, said that he did not like the idea of mast-sharing. Nothing stirs my local residents association more than the erection of another mobile telephone mast, and I do not think that there is a popular vote out there for the idea that we should have more of them. We have to do two things, do we not? One reason why these clauses are important is that everyone is trying to ensure that-whether we are talking about broadband, mobile telephone networks and so on-we get genuinely universal coverage. It is not easy to achieve that, and there will be a number of different platforms. However, I think that mast-sharing has to be part of that solution.

The analysis of Ofcom offered by the noble Lord, Lord Clement-Jones, was about right. In a very complex area-convergence was emerging in 2003 but was nowhere near where it is now-Ofcom has done a reasonable job in ensuring that there is competition and a number of different offerings whether in broadband or mobile. There is a wide range of prices and services to serve people as a whole. As the noble Lord, Lord Clement-Jones, said, removing the clause would undermine Ofcom's role in an era when convergence has fully emerged. I therefore hope that the clause will remain and that the noble Lord, Lord Howard-it is probably a vain hope-will reconsider.

Photo of Baroness Buscombe Baroness Buscombe Conservative

Notwithstanding what the Minister said, does he agree that it might be wise for him, prior to Report, to take away some of the points that have just been made on terminology by the noble Lords, Lord Whitty and Lord Puttnam, and by others? Does he agree that this is of fundamental importance? Terminology in itself means rather a lot and the clause as a whole might be acceptable with the right terminology.

Division on Clause 1 Stand Part.

Contents 106; Not-Contents 55.

Clause 1 Stand Part agreed.

Division number 1 Digital Economy Bill [HL] — Committee (1st Day)

Aye: 104 Members of the House of Lords

No: 53 Members of the House of Lords

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Clause 2 : OFCOM reports on infrastructure, internet domain names etc

Amendment 9

Moved by Lord De Mauley

9: Clause 2, page 2, line 30, after "must" insert ", if requested to do so by the Secretary of State,"

Photo of Lord de Mauley Lord de Mauley - Shadow Minister (Also Shadow Minister for Universities and Skills), Shadow Minister, - Shadow Minister (Also Shadow Minister for Children, Schools and Families), Shadow Minister 6:33 pm, 6th January 2010

My Lords, Amendment 9 would provide that the new requirement for reports is rendered much more flexible and that the timetable is not set in stone. We support the principle of ensuring that Ofcom has the ability to provide expert, independent reports into the nature of the communications sector in the United Kingdom; indeed, one could argue that this is one of the principal reasons for having an independent regulator. However, there is a danger of Ofcom becoming something of a report-making monster.

The Bill contains numerous new reporting duties, many of which we feel are unlikely to be needed as regularly as the current drafting suggests. Clause 2 adds reports on communications infrastructure and services, and a report on the allocation, registration and misuse of domain names; Clause 3 adds reporting duties on public service media content; Clause 9 on the efficacy of obligations to tackle online piracy; Clause 10 on the efficacy of technical measures; Clause 22 on Channel 4's new duties; and Clause 26 on the viability of the teletext service. It seems that on almost every issue that the Bill addresses the Government's favoured solution is for Ofcom to provide a report on it.

Ofcom is mentioned 159 times in the Bill and 27 of the Bill's 49 clauses mention Ofcom on one or more occasion. In many cases, including that in Clause 2 on infrastructure, we acknowledge the benefit in having such reports, but if Ministers want a report, they should be able to ask for one. There is a precedent for such a format within the Bill, indeed within this clause. On page 4, line 25, new Section 134C states:

"OFCOM must, if requested to do so by the Secretary of State-

(a) prepare a report", and so on. That seems to be a much more sensible and flexible approach to using Ofcom's technical expertise. It is entirely possible that in a fast-paced and ever-changing environment, the Secretary of State would want a report sooner than every two years. It is worth pointing out that the Communications Act 2003 set a fixed timetable for Ofcom's reports on public service broadcasting and that these had to be brought forward. It is more likely that after the first report, one may not then be needed for a period longer than two years, but no one knows. That is entirely the point of this amendment. Rather than tie the hands of a Minister, why not provide the flexibility to ask for such a report as and when one is required?

The Government's impact assessment states that although Ofcom is likely to incur increased administrative costs for carrying out this new reporting duty, the considerable uncertainties surrounding the precise scope and objectives of the report make it extremely difficult to quantify the costs accurately. However, it would seem obvious that there will be an increase in costs and that they will be passed on to the industry and eventually, indirectly, to consumers. As such, it makes sense, we suggest, to ensure that money is not spent on reports when they are not deemed necessary. I beg to move.

Photo of Baroness Buscombe Baroness Buscombe Conservative

I support my noble friend's amendment. It seems to be a good one. It reminds me of the words-I shall not attempt to quote him directly-of the noble Lord, Lord Currie, speaking during the passage of the Communications Bill as the then chairman of Ofcom, pleading with noble Lords not to shackle Ofcom with unnecessary bureaucracy. There is nothing worse than having to deliver reports for the sake of it. It does not achieve very much. My noble friend's amendment makes a lot of sense.

In this age when technological advance-we are talking about convergence-is so fast-moving, the idea that we shackle Ofcom with these additional burdens for the sake of it to my mind seems nonsense. It would be far better to look on the whole regulatory function as something that needs to be very pragmatic and flexible to respond sensibly when necessary. There should be an assumption that the Secretary of State will have an eye on the issues at hand, in which case it will make sense for the Secretary of State to decide if and when a report is necessary. I believe that the Minister will accept that the current budget of Ofcom is already fairly enormous and that to add to that budget just for the sake of the administrative burdens proposed here to my mind is nonsense.

Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords) , Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (and Deputy Chief Whip)

My Lords, I am grateful to the two noble Lords who have spoken, especially the noble Lord, Lord De Mauley, for moving the amendment, but we are of the view that we need reports to the Secretary of State at regular and known intervals on the UK's communications infrastructure and services. That regular summary will provide the Government with a clear indication of the state of health of the country's communications infrastructure and allow regular comparative assessments to be made. The report will, for example, highlight any longer term infrastructure planning issues and potential network and service delivery problems, help to co-ordinate national and regional strategic development, and support in policy development.

The reports are intended to ensure that the Government have a comprehensive and up-to-date picture of the communications infrastructure of this country. By setting out in the legislation when both the first and subsequent reports should be produced, Ofcom and-of great importance-service providers will have the notice necessary to allow them to plan to meet the requirement. In this rapidly changing environment, and one of such critical importance, we think it important to include in the Bill the regularity of the reports to the Secretary of State. I therefore hope that the noble Lord will feel that he has probed the issue, but the Government think that there are great merits in the current drafting.

Photo of Lord de Mauley Lord de Mauley - Shadow Minister (Also Shadow Minister for Universities and Skills), Shadow Minister, - Shadow Minister (Also Shadow Minister for Children, Schools and Families), Shadow Minister

My Lords, I am grateful to my noble friend Lady Buscombe for her support and to the Minister for his response. He did not address any of my arguments-specifically, those of flexibility and cost-but, in view of the weather and the hour, that is about as far as I am prepared to take the matter this evening. For this evening, I beg leave to withdraw the amendment.

Amendment 9 withdrawn.

Amendment 10

Moved by Lord Davies of Oldham

10: Clause 2, page 2, line 31, leave out "on" and insert "and each report must deal with"

Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords) , Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (and Deputy Chief Whip)

I speak also to Amendment 11, in the name of the noble Lord, Lord Lucas, and Amendment 13. All the amendments relate to new Section 134A, which sets out the content, timing and definitional issues that relate to the preparation of the initial biennial and ad hoc reports. The matters to be covered in the reports are already outlined in subsections (1)(a) and (1)(b), but I want to make clear beyond doubt that those specific network and service matters are to be covered in the initial and subsequent biennial reports, to which we have just referred. I am grateful to the noble Lord, Lord Lucas, for his suggested amendment. It helpfully drew to our attention the fact that, as drafted, there was indeed ambiguity as to whether each report would cover all the matters in subsections (1)(a) and 1(b). However, we have difficulties with the amendment. I would like to have stood at the Box and accepted it. I am sure that that would have pleased him as much is me. However, his amendment clarified the situation only in respect of the initial report, and we feel that it is necessary to make the clarification in respect of all subsequent reports as well.

I might add that while we were looking at the drafting of the clause, we became aware that, as originally drafted, new Section 134A requires subsequent reports to relate to a "relevant period", but does not expressly require there to be a subsequent period for each relevant period. In theory, that could allow gaps to occur in the provision of reports. Because of that possible anomaly, we have tabled the two amendments and trust that they will provide clarity on the extent of each report and that there must be a report every two years. I am extremely grateful to the noble Lord, Lord Lucas, for having already improved the Bill-or at least having obliged the Government to make the necessary improvements. I beg to move.

Photo of Lord Lucas Lord Lucas Conservative

I am always happy to bow to the superior style of the parliamentary draftsmen. I am grateful for what the noble Lord said.

Amendment 10 agreed.

Amendment 11 not moved.

Amendment 12

Moved by Lord Whitty

12: Clause 2, page 2, line 40, after "State" insert ", Scottish Ministers, Welsh Ministers and Northern Ireland Ministers"

Photo of Lord Whitty Lord Whitty Labour 6:45 pm, 6th January 2010

I shall speak to the other amendments in this group as well. On reporting at least, these go to the heart of what we were discussing earlier-that the whole point of Digital Britain is to end the digital divide and digital exclusion, for both citizens and consumers in so far as there is a difference.

There is a differential exclusion and extension of networks in many of the areas regulated by Ofcom. The Minister's officials will have statistics on this. I would like to see a universal service obligation in this area, but understand some of the arguments against doing that given the range of technologies involved. I am not quite pressing that at this point, but we need to ensure that we get as close to a universal service provision as we possibly can. That has both geographical and social dimensions.

On the geographical dimension, it is true, as the noble Lord, Lord Steel, implied, that the different nations of Britain have somewhat different patterns, in particular in the rurality and distance involved in many areas of Scotland, Wales and Northern Ireland. There are similar areas in England as well, and it is important that part of the responsibility of Ofcom is to relate to the broader dimension of closing the digital divide in those parts of the United Kingdom. It is important that Ofcom has a relationship with the devolved Administrations and those administrations need to know what is going on. This in no way changes the UK dimension of the legislation but means that the resources, assets and networks that exist within the devolved nations could, jointly with Ofcom and the various digital media, be directed at closing the digital divide. It is important that those mechanisms are recognised in this Bill.

The first four amendments in this group relate to a reporting relationship between Ofcom and the devolved Administrations. It is not a responsibility relationship but a reporting one, which could lead to joint work in many areas. There are those who say that if we have a non-devolved area of responsibility the regulator cannot report to the devolved Administrations; I do not believe that to be the truth. I looked quickly behind me to see if the noble Baroness, Lady Young, was here; she is a former chief executive of the Environment Agency, on whose board I sit. We operate in England and Wales; most environment legislation is UK-wide but we have to report separately to the Welsh Assembly. I am sure there are plenty of precedents among other regulators where they report to the devolved Administrations. I have had dealings with the Minister's department on many different facets over the years-there are things they do well and things they do less well. They hardly do devolution at all. The role of the devolved Administrations needs to be reflected here.

The last three amendments in this group are probably the more important in that the digital divide, digital exclusion and lack of digital literacy impact differentially among different social groups. In particular, we have the issue of rural communities. The noble Earl, Lord Erroll, has already referred to the disadvantages found by both individuals and businesses in rural areas in access to the various digital arrangements. Although it may be true that in Norwood Green people do not want too many masts, I can assure the noble Earl that in rural Wiltshire and Dorset there is a considerable demand for them so that people living there can use the services we are hoping to make available to everyone more efficiently. Even in relatively populated parts of Dorset-where I was hoping to get tonight, but will not-although we have broadband it is pretty slow compared with the urban arrangements. There needs to be due consideration for people living in rural areas and in the more deprived parts of urban areas and for small business.

The other main dimension is that people who suffer from various disabilities and, to some extent, the elderly have not always been treated with full respect in relation to the new digital technologies. There is a batch of silver surfers, but there is also a batch of elderly people who are completely out of touch with various parts of the new technologies. Therefore, at least in the reporting sections, we need to do something to offset the imbalance I was fearing in Clause 1 by recognising that, in its reporting system at least, Ofcom has an obligation to identify and have regard to the interests of these various groups of disadvantaged consumers. I beg to move.

Photo of Lord Maxton Lord Maxton Labour

I shall comment briefly and give general support to the amendments tabled by my noble friend. However, on Amendments 21 and 25, as one of the elderly, I am not sure that I want to be linked in as one who needs special consideration in terms of the new media. My father-in-law, who is 86, also still uses a computer, although not particularly well.

When I initially looked at these amendments, particularly on the Scottish Ministers, Welsh Ministers and Northern Ireland Ministers, I had some reservations. The devolution Bill specifically excluded broadcasting from the remit of the devolved Parliaments, and I think that was right. However, as my noble friend explained, it is entirely a matter of reporting, and he may be right that we should report to each of the Parliaments. The Scottish Executive, under the previous Administration led by Mr Jack McConnell, undertook to ensure that remoter rural areas of Scotland were provided with broadband. That is being rolled out much faster in Scotland than elsewhere in the United Kingdom. My noble friend is quite right that it is probably easier for me to get broadband provision on the Isle of Arran than it is for the noble Baroness, Lady Howe, to get it in the remote rural area of England in which she lives. That is because there has been deliberate encouragement and funding by the Scottish Executive and Parliament to ensure that this happens in Scotland. I support my noble friend's amendments, although I ask him not to put all the elderly into one group.

Photo of Baroness Howe of Idlicote Baroness Howe of Idlicote Crossbench

I support the intentions behind Amendments 21, 22 and 25. These are important areas, and I certainly would be more than happy to be included in the elderly group because we do not all, alas, have the technical ability of the noble Lord, Lord Maxton, and his father-in-law.

The BBC was given the responsibility of helping some of these groups on switchover, although some of us were not happy about that. It has been assumed that not only will all these groups be happy by the time switchover occurs, but that there will be extra money available for other things. In view of all the areas that we already know will need some of this extra money, we shall wait and see. Therefore, it will be important that as part of the reporting we hear whether these groups have been dealt with satisfactorily, are happy at the changeover and have the support they need, so I support the amendment.

Photo of The Earl of Erroll The Earl of Erroll Crossbench

My Lords, I have already said that these are very important amendments. The noble Lord, Lord Whitty, put it extremely effectively and correctly. All I can add is that there are various things on this agenda. First, there is efficiency-we are trying to deliver government services electronically. We read that £1.3 billion is about to be allocated to it and that certain government services will be only available online. You cannot do that if you suddenly find a significant percentage of the population cannot access them. People say that there is 95 per cent coverage, for example. The remaining 5 per cent still makes up a significant actual number of people. You cannot deal with this in percentage terms. This will save money in the administration, which is hugely important.

Secondly, there is resilience. In some unexpected circumstances such as when the snow falls, as has just happened, you can still get access to key people who may be needed. You do not always need their physical presence, you need their brain power.

Thirdly, there is the green agenda and the environment. You reduce pollution by less travel because you can communicate properly and efficiently. Again you have to do it universally. The people who have to travel most are those who live furthest away from a city centre. You can use public transport in a city-you cannot if you live more than a couple of miles away from the station.

Fourthly, there is education and the people we rely on for the future. Some children live in non-urban areas and a lot of homework now involves trying to get access over the internet. You also have the ongoing lifelong learning, a lot of which is delivered over the internet.

This all comes down to money. Where savings are made, the people who see the benefits from it are not the people who put the money into developing the infrastructure. The people who are developing the infrastructure get no commercial benefit from doing it. The people who are going to benefit from it do not want to put money into it because their budgets are not big enough and they are busily cutting costs-everyone is going to have a very strong haircut, we hear. It is complicated. That is why these amendments are so important. There has to be someone in the middle to take money from A and give it to B. Someone has to be brave at central government level.

Photo of Lord Howard of Rising Lord Howard of Rising - Shadow Minister (Also Shadow Minister for Treasury and Culture, Media and Sport), Shadow Minister, Shadow Minister (Also Shadow Minister for the Cabinet Office and Treasury), Culture, Media and Sport, - Shadow Minister (Also Shadow Minister for the Cabinet Office and Culture, Media and Sport), Shadow Minister

My Lords, the first point to make in relation to these amendments is that we are dealing with matters that are reserved issues. Electronic communication networks and services are public policy matters that are looked after by Westminster. We on this side of the House have no appetite to change this arrangement as we believe these are matters correctly dealt with at a UK level.

Broadband networks, for instance, do not differentiate across borders. I state this more as a matter of record than anything else as I am sure the noble Lord is not suggesting such a change. It is worth mentioning simply because it could be interpreted in that way. More importantly, we are not certain that these amendments are strictly necessary. The Minister will correct me if I am wrong, but we were under the impression that the Secretary of State would be able to share these reports with devolved Ministers in the usual manner. If they raised issues of particular note for Scotland, Wales or Northern Ireland, then I am sure they would be passed on. More importantly-and this relates to an amendment we will be dealing with shortly-we assume that like most other Ofcom reports these will be made public. I hope that the Minister can shed some light on these assumptions.

Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords) , Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (and Deputy Chief Whip)

My Lords, I am grateful to all noble Lords who have spoken in this debate and note the unanimity of approval for the amendment which my noble friend Lord Whitty moved, with the exception of the noble Lord, Lord Howard. The Government agree with noble Lord, Lord Howard, in this respect. As far as devolved Administrations are concerned, Ofcom currently sends its annual report to First Ministers. There is nothing which we would assume would change. The noble Lord, Lord Howard, indicated that broadcasting is a reserved matter. First Ministers in the devolved Administrations have a great interest in these issues. They are fully entitled to receive reports and Ofcom will carry on the practice of ensuring that those reports go to the First Ministers of the devolved nations. The Ofcom annual plan also does that. I can see no reason why established practice would change. Therefore I do not think that the amendments which relate to this and the devolved Administrations are necessary.

Amendments 21, 22 and 25 deal with the specific groups identified by my noble friend as cause for concern. I am not surprised that there were several speeches in support of such amendments because I am sure they reflect the universal position of the House, and of course the Government have sympathy with the aim of the amendments. The ability of everyone in society to engage with and benefit from digital services is of the greatest importance and is part of the reason for the enormous amount of work put into these issues by the Government over recent years. Moreover, the Digital Britain report published in the middle of last year gave Ofcom a specific role leading the Digital Participation Consortium which brings together the Government, the private and the third sectors to work together on reducing the barriers that people face in getting online. So of course the Government are fully charged of the necessity to meet these objectives-in fact it is part and parcel of the strategy being pursued over recent years.

My noble friend has quite appropriately raised a very important matter in the context of the Bill, but I do not think that Amendment 21 is required, or indeed Amendment 22, which suggests that there are separate networks in rural and urban areas, because that is not the case. In any event, the extent to which rural and urban areas are covered and the nature of that coverage is already required within the report since Ofcom will need to consider availability and quality issues when it makes its report. It is also worth noting that Section 3(4) of the Communications Act 2003 requires Ofcom to "have regard" in performing its duties both to,

"the different interests ... of persons living in rural and in urban areas", and to the needs of the disabled,

"of the elderly and of those on low incomes".

All this is already part of our existing legislation in terms of Ofcom's overarching duties and obligations which will apply, of course, to the preparation of these reports.

I do not have in any way, shape or form anything but admiration for my noble friend for raising these issues and for those noble Lords who have supported him in objectives that we all share. I merely indicate that the Government are fully cognisant of them and, indeed, legislation already takes account of them. Again, I beg to agree with the noble Lord, Lord Howard, that it may not be necessary for these amendments to be pressed. I hope that my noble friend will think likewise.

Photo of Lord Whitty Lord Whitty Labour 7:00 pm, 6th January 2010

Not quite. This is a new system of reporting on infrastructure and therefore we need to be quite clear that Ofcom actually does extend its reporting on this particular form of report to the groups outlined in the last three amendments in this group. I am quite happy for this to be expressed in a different way or to make sure that the existing Communications Act and other regulations ensure that Ofcom do this in relation to the new reports we are talking about here. But if the issue is not raised in this context, there is an opportunity for it not to do so.

Moreover, when we come to Scotland, Wales and Northern Ireland, I should make it absolutely clear that I am not seeking any change in the constitutional arrangements. However, the exercise in Scotland to which my noble friend Lord Maxton referred to try to close the digital divide involved not only the providers and Ofcom, but also the education service, the library service and other elements of public services that are either delivered in terms of education and information by the Scottish Government or local authorities in Scotland subject to that Government, or they are access for the community to those services which are the responsibility of the Scottish Government.

What I am implying is that there should be separate reports for Scotland, Wales and Northern Ireland. That may not be clear from the amendments, but the point is not covered simply by sending separate copies to the respective Secretaries of State. In order to tackle the digital divide, it is not only the regulated industry and the regulator which are important, but also the other services that are provided to the communities in those areas. The majority of those other services are controlled by the devolved Governments and therefore a specific strategy for closing the digital divide in Scotland is appropriate and ought to be reflected somewhere in the Bill. I do not say that this is the best way to do it, but a recognition of that reality is needed somewhere. For the moment, however, I beg leave to withdraw the amendment.

Amendment 12 withdrawn.

Amendment 13

Moved by Lord Davies of Oldham

13: Clause 2, page 2, leave out lines 42 and 43 and insert-

"(3) A further report must-

(a) be prepared for each relevant period, and"

Amendment 13 agreed.

Amendment 14 not moved.

Amendment 15

Moved by Lord Razzall

15: Clause 2, page 3, line 2, leave out "2" and insert "4"

Photo of Lord Razzall Lord Razzall Spokesperson for Business, Enterprise and Regulatory Reform

My Lords, I should make it clear that we have no problem with and, indeed, support the principle of regular infrastructure reports. I am interested in the word "etc". Given the debates we have had on the Bill, I am surprised noble Lords have not wondered what "etc" means, but I am sure that we can assume knowledge of what it means for the purposes of the clause.

This is a probing amendment. As I said, we are totally supportive of the principle that there should be in the Bill a requirement for Ofcom to produce infrastructure reports, but we wonder whether a two-year cycle is too short and carries with it the danger found in an Australian general election where, as soon as the election has taken place, the campaigning for the next one starts because of the short period between elections.

Clearly these obligations will require not only a significant amount of work by Ofcom but, if the report is to be dealt with in a proper manner, significant input from the networks with regard to the provision and implications of data. The networks are more used-as is Ofcom-to having market reviews which are three to four years apart. In the light of the potentially onerous nature of the requirement on the networks and the workload on Ofcom, if these reports are to be meaningful, we wonder whether a four-year cycle rather than a two-year cycle would be more appropriate. I beg to move.

Photo of Lord Puttnam Lord Puttnam Labour

My Lords, we rehearsed this discussion in the passage of the Climate Change Bill, in which many situations were similar; in a fast-changing situation the obligation on Ofgem was two years or four years. If my memory serves me correctly, we compromised on three years as being a reasonable amount of time in which change could take place. The terminology was "not more than three years". I suggest that not more than three years is both appropriate and reasonable. I cannot imagine that the Government would have a particular problem with that.

Photo of Lord de Mauley Lord de Mauley - Shadow Minister (Also Shadow Minister for Universities and Skills), Shadow Minister, - Shadow Minister (Also Shadow Minister for Children, Schools and Families), Shadow Minister

My Lords, as I said earlier, we are of the view that the requirement for reports would be of most use if the Secretary of State had the flexibility to ask for them as and when he believed them necessary or useful. We would be concerned if this lack of flexibility was reinforced, as we fear it would be, if the period between reports was increased to a greater number of years than already provided for. Once again, I remind your Lordships of Ofcom's decision to bring forward its second review of public service broadcasting simply because things had changed more quickly than had been anticipated by the Communications Act. I do not believe that the Bill in its current form would allow such a decision to be made if four years looked like being too long an interval between reports.

I agree with the noble Lord, Lord Razzall, that in future, after the first period, a longer period would probably be appropriate. However, the simplest way of ensuring the most efficient use of the power would be for the Secretary of State to be able to request a report when he wants one.

Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords) , Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (and Deputy Chief Whip)

My Lords, I am grateful to all noble Lords who contributed to the debate, although I am slightly perplexed by my noble friend Lord Puttnam; he has provided a compromise position, but the amendment before the House does not allow quite that degree of flexibility. I appreciate the sentiment, but I am glad that it is not going to be translated into action because it cannot, given the nature of the amendment. In fact I do not even appreciate the sentiment, because I am going to stick to the text of the Bill.

Our concern is that technology in this sector moves very quickly. The rationale behind reporting every two years is simply to guarantee that the Government are kept properly and fully informed about the state of the country's communications infrastructure, including all the issues that we have discussed on Clauses 1 and 2 in these intensive debates today-and I know that there are a great deal more to come. I emphasise that if the biennial report shows issues of concern that cannot be resolved through the normal operation of commercial arrangements or regulatory intervention, the Government will be well placed to consider whether further intervention of any sort is required.

With regard to the point that the noble Lord, Lord Razzall, made about the networks, they are going to be involved in the compilation of these reports; it will be their assessments, evidence and contributions that will help to inform Ofcom. The industry will know the timetable that it is working to. It is not as if, within that framework, things are going to be sprung upon the industry at short notice. We think that, within a rapidly changing environment, there is great value in having reports of what is recognised as conspicuous regularity.

The burden of the noble Lord's amendment is that the reports could be reduced to every four years, but in this industry four years could see a significant change in technology, which is why we wish to defend the biennial reports. My noble friend Lord Puttnam has already indicated a compromise position, but I am not convinced of that, although I hear what noble Lords have said about the virtues of a longer period of time. I also listened to what the noble Lord, Lord De Mauley, said, that the Secretary of State might be able to demand the reports. The problem is that that looks a good deal more arbitrary than does the regular reporting to which the industry will be accustomed.

We think that we have got it right. We would not want to risk an extension of the period, certainly not to four years, and I hope that the noble Lord, Lord Razzall, having aired the issue, will feel able to withdraw his amendment. The Government have considered this carefully.

Photo of Lord Razzall Lord Razzall Spokesperson for Business, Enterprise and Regulatory Reform

I thank the Minister for his comments. I hope that, before we get to Report, he will take this away and think a little further about it. Two things have come out of his remarks that are relevant. First, there seems to be an assumption that, until the report comes, there will be no action taken by either Ofcom or the Government in relation to technological developments that have occurred, but, as he has admitted, that will clearly not be the case. In the light of significant technological developments, Ofcom will be in consultation with the networks and indeed with the Government if it feels that action needs to be taken, so the "technological development" argument does not really hold water here.

I am more concerned with his second point. As he indicated, the networks will be well involved with both Ofcom and the Government to react to technological developments, but it is the networks that have lobbied strongly for this amendment. Indeed, one of the major networks is extremely concerned about the timeframe and the amount of work involved in carrying out a market review on a two-year timescale.

I have a lot of sympathy with the amendment of the noble Lord, Lord Puttnam, and I am sure that, were he to bring it forward at a later stage, he might find support from these Benches, or indeed he and I might join together to bring it forward on Report. In the mean time, while asking the Minister to reflect on this, and particularly on the lobbying we have had from one of the major networks here, I beg leave to withdraw the amendment.

Amendment 15 withdrawn.

Amendments 16 to 18 not moved.

Amendment 19

Moved by Lord Lucas

19: Clause 2, page 3, line 17, at end insert-

"( ) The Secretary of State must make reports prepared by OFCOM under this section available to the public in a timely manner, subject to such redaction as he may consider necessary."

Photo of The Earl of Erroll The Earl of Erroll Crossbench

I do not trust people to put reports into the public domain. There is a long history of these things being suppressed. We end up with Freedom of Information requests to get the information out of the Government after a lot of difficulty. It is a very good idea to have it in the Bill to clear things up. These sorts of things should go in the public domain.

Photo of Lord Howard of Rising Lord Howard of Rising - Shadow Minister (Also Shadow Minister for Treasury and Culture, Media and Sport), Shadow Minister, Shadow Minister (Also Shadow Minister for the Cabinet Office and Treasury), Culture, Media and Sport, - Shadow Minister (Also Shadow Minister for the Cabinet Office and Culture, Media and Sport), Shadow Minister

My Lords, we on these Benches entirely agree with my noble friend's Amendment 19. It is worth noting that the reports that Ofcom currently produces are published for all to see. For instance, Section 264(10), in relation to Ofcom's reports on the fulfilment of the public service remit, explicitly states:

"Every report prepared by OFCOM under this section must be published by them".

That is significantly different from the reports under Clause 2 of the Bill, which states that they must be sent to the Secretary of State. There is crucially no mention of publication. If these reports are to be useful contributions to the public policy debate on such an important issue, they should be made public as soon as possible. The amendment provides the Secretary of State with the ability to make redactions if these are necessary, so fears of commercial confidentiality should be addressed. It is important, if these reports are to retain the confidence of both the industry and consumers, for everyone to be able to see them.

We certainly want to hear some assurances from the Minister that this will indeed be the case even if he does not accept this particular drafting. It would also be helpful if the Committee could be told whether these reports will be subject to release under the Freedom of Information Act. If so, it would seem to make more sense simply to publish them with as much detail as possible. Ofcom and the Government are used to producing reports that are based on commercially sensitive information and we see no reason why these reports should not be dealt with in the same manner.

We also support Amendment 28. As I have previously stated, we on these Benches believe that for these reports to be of most value, they need to be published for all to see. Parliamentary scrutiny of these reports would greatly enhance their worth.

Photo of Lord Young of Norwood Green Lord Young of Norwood Green Government Whip, Parliamentary Under-Secretary, Department for Business, Innovation and Skills, Government Whip, Parliamentary Under-Secretary of State (Department for Business, Innovation and Skills) (Postal Affairs and Employment Relations) (also Lord in Waiting)

My Lords, Clause 2 amends the Communications Act by inserting new sections requiring Ofcom to report to the Secretary of State at regular intervals on the UK's communications infrastructure and services. One such report is where there is a significant change in connection with the matters listed in new Section 134B(1) or (2). It requires that, should Ofcom become aware of a marked change which has a significant impact on business or the public in any of the reporting areas and which it considers should be brought to the attention of the Secretary of State, it should write a further report as soon as practicable. We have not been prescriptive as to when these reports will be prepared. This will ensure that, if there are developing problems or constraints on the UK's infrastructure, the Government will get advance warning of this from the regulator and, as appropriate, will be able to consider whether any action is needed.

Your Lordships will no doubt appreciate that the persons or organisations from which information will be gathered are likely to be very sensitive to disclosure, since much of the information will be commercially confidential, as the noble Lord, Lord Howard, recognised. Disclosure could prejudice network security issues, for example. Because of commercial confidentiality, we believe that the information that Ofcom would obtain will be exempt under Section 44 of the Freedom of Information Act. This is because it is information relating to a particular business, which is subject to the prohibitions in Section 393 of the Communications Act 2003.

For the reasons stated, we do not believe that these reports should be made available to the public. However, I assure the noble Lord that we propose to publish an account of the broad information on the overall state of health of the UK's communications infrastructure, detailed in both the initial and biennial reports. I mentioned earlier that it is our intention to set out in a note for your Lordships how we expect this reporting process to work in practice in a number of areas. I will ensure that that note includes our expectation that the conclusions of these reports will be made public wherever possible.

The purpose of the second amendment in this group is to require that all reports to the Secretary of State on domain names are made public by laying a copy in both Houses. I understand what this amendment might be trying to achieve. However, it is likely that Ofcom will itself publish any report on domain names. This might satisfy the noble Lord. The Government are open to transparency and would expect to see any reports published save in exceptional circumstances, where, for example, matters of security or commercial confidentiality would make it inappropriate to publish. Therefore, there just might be cases where the Secretary of State could choose not to publish the report. I would expect this to be the exception rather than the rule, but nevertheless it should be left to the Secretary of State's discretion. Once again, I will ensure that this is covered in the note that I spoke of earlier. In the light of that assurance, I hope that the noble Lord will feel able to withdraw the amendment.

Photo of Lord Lucas Lord Lucas Conservative

My Lords, as I have said, I will certainly withdraw amendments at this stage, but I think that there are matters to come back on. On Amendment 19, I accept that there will be elements of confidentiality, which is why I built in the ability to redact. I concede that that might be cumbersome, but the noble Lord will be faced with it in the end; when he gets a Freedom of Information Act request, he has to publish the report with the bits that he thinks should be left out redacted. That is what will happen under the Freedom of Information Act, so he might as well do it anyway. It is merely tiresome of officials to insist on acting otherwise and then to be compelled to do it in the FoI fashion later.

On Amendment 28, I should like a presumption of publication. If we are not to have automatic publication, I should certainly like the fact of the commissioning and receipt of a report to be made public, so that people know that something has been commissioned and received and that therefore there is something to expect and discuss.

In both instances, I should like to think further and perhaps for the Government to go a bit further. I will write to the noble Lord to suggest what I should like to see. On Amendment 28, we are not talking about things that come within the Government's purview; we are talking about the Government seeking to extend their purview into something that is currently a private matter. Therefore, the Government's activities should be known; this should not take place in secret, with the Secretary of State commissioning and receiving a report without anyone else ever knowing what is happening. However, for now I beg leave to withdraw the amendment.

Amendment 19 withdrawn.

Photo of Lord Razzall Lord Razzall Spokesperson for Business, Enterprise and Regulatory Reform

Before that Motion is put, can I make the point that there are three parties in this House and it would be a matter of courtesy if that discussion had taken place not only with the noble Lord, Lord De Mauley, but also with me or the noble Lord, Lord Clement-Jones?

Photo of Lord Faulkner of Worcester Lord Faulkner of Worcester Government Whip, Government Whip, Deputy Chairman of Committees, Deputy Speaker (Lords)

I apologise to the noble Lord, Lord Razzall. I did pass a signal across to the noble Lord, Lord Clement-Jones.

Photo of Lord Clement-Jones Lord Clement-Jones Spokesperson for Culture, Media and Sport

Before the Motion is put, I point out that mine is the next amendment. Therefore, I had a particular interest, and if the Minister had bothered to ask me, I would have said that probably we would have dispatched this amendment in five minutes, which would have brought us up to exactly half past. So I am not happy with the moving of the Motion at this particular moment, and I assure the Minister that we will make the same point over and over again if he does not consult these Benches.

House resumed.

House adjourned at 7.26 pm.