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Lords Chamber

Volume 627: debated on Monday 15 October 2001

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House Of Lords

Monday, 15th October 2001.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers—Read by the Lord Bishop of Birmingham.

Lord Fearn

Ronald Cyril Fearn, Esquire, OBE, having been created Baron Fearn, of Southport in the County of Merseyside, for life—Was, in his robes, introduced between the Lord Rennard and the Baroness Walmsley.

Lord May Of Oxford

Sir Robert McCredie May, Knight, having been created Baron May of Oxford, of Oxford in the County of Oxfordshire, for life—Was, in his robes, introduced between the Lord Flowers and the Lord Butler of Brockwell.

Tributes To The Late Lord Longford

2.48 p.m.

My Lords, I rise today to pay tribute to Lord Longford and Lord Hailsham of Saint Marylebone: two great men, both distinguished Members of this House, and both full of many happy and fulfilling years. The two men knew each other well: they were both born at the beginning of the last century; they were both men of first-rate intellect, both educated at Oxford and offered positions by that university. Curiously, the two men even contested between them the seat of Oxford City in 1945—a contest which Lord Hailsham won. Although there were many parallels in their lives, the two men were, in fact, remarkably dissimilar. I shall speak about Lord Hailsham shortly, but perhaps I may begin by saying just a few words about Lord Longford.

Frank was a very familiar figure here; known to all of us, and admired by many. He was, of course, a distinguished Leader of this House. It is with a sense of gratitude for a long life, lived to the full, that I pay tribute to him today. He was born as Frank Pakenham in County Westmeath in the centre of Ireland. He was educated at Eton and at New College, Oxford, where he took a first in 1927. He began his political career by working at the Conservative Research Department. He changed allegiance to the Labour Party, and for the next 65 years never wavered. Plainly, he believed in the power of redemption through good works—

One of the most important events in his life was his conversion to Roman Catholicism. Throughout his life, his faith plainly sustained and supported him, and gave him a sense of moral and religious certainty.

From 1941 to 1944 he worked with Sir William Beveridge and, with him, drew up the blueprint for the foundation of the post-war welfare state. He began in this House as a Whip, and soon became Under-Secretary of State at the War Office with special responsibility for Germany. His approach was typical and controversial: he was ready to forgive the German people more quickly than many others. He worked tirelessly to stop starvation in Germany, focusing on the re-opening of schools and hospitals, and on currency reform. That approach did not necessarily make him universally popular at home. However, looking back, it may be that that period of his life was his finest hour.

Frank moved later to the Ministry of Aviation, and in 1951 became First Lord of the Admiralty. In 1955 he founded New Bridge, the first organisation dedicated to the welfare of former prisoners. In 1963, Harold Wilson appointed him chairman of a special committee to investigate penal reform. That committee's report, Crime—A Challenge, advocated the abolition of capital punishment, aftercare for prisoners, and the introduction of the parole system. I believe that we shall remember him most clearly for his contributions on those subjects.

His ministerial career reached its climax as he was appointed to the Cabinet as Lord Privy Seal and Leader of this House in 1964. He stayed in the Cabinet for four years but resigned on principle when the Cabinet abandoned a commitment to raising the school leaving age. still remember that with admiration and recall that the days are not long past when a senior politician could resign over a question of deep principle.

Thereafter he campaigned and published. His most published campaign was for the release of the Moors murderer, Myra Hindley. It is fair to observe that his point of view on that matter was not popular. It was an article of faith for Frank to condemn the offence but care for the offender. He became a tireless prison visitor visiting anyone he came to hear of who seemed to need help or support.

He was a prolific author whose books commanded admiration and respect. As chance would have it, I read his obituaries far away from this House. The Daily Telegraph listed his books in order of publication. One that caught my eye was A History of the House of Lords. The next in order was Suffering and Hope. I think that somewhere Frank may be smiling at that felicitous conjunction.

He was a man of principle. I did not always agree with him; I do not think that he ever agreed with me. However, we all respected the way that he followed his conscience, whatever the issue and whatever the cost. He did sometimes look absent-minded and dishevelled but one should beware—as we on the Government Front Bench all discovered—as that masked a clear, accurate and witty mind. He was for 56 years a Member of this House. Therefore, it is no wonder that it is strange not to see him here today. I know that the whole House will wish me to express to his family not only our sincere condolences but also our affection, respect and admiration for this grand old man of politics.

My Lords, I join the noble and learned Lord the Leader of the House in paying tribute to Lord Longford and Lord Hailsham. Like the noble and learned Lord, I shall begin by paying tribute to Lord Longford who was one of the most interesting characters to sit in this House and was one of the few people of whom one can genuinely say that he became one of the fixtures and fittings of the House. He was with us until an age far beyond that allotted to most. As the noble and learned Lord has said, Lord Longford was a Member of this House for over 55 years and to the end he spoke out for what he believed.

Interestingly, Lord Longford acquired a medley of peerages which I suspect will render him for ever unique in Labour Party circles. He acquired an hereditary peerage of first creation in 1945, an earldom in the peerage of Ireland in 1961, an inherited UK barony in the same year and a life peerage in 1999—not bad at all! It was a collection he was openly proud of. I do not suppose he would ever have been described as a "People's Peer" but perhaps he should have been, for wherever there was suffering, whether in the form of poverty or, as he saw it, unjust imprisonment, there he was on the side of people who could not speak for themselves or for whom others did not care to speak. That flowed from that powerful Catholic faith which informed his entire career and which I suspect made him not always the most comfortable of colleagues in either Cabinet or Parliament. He was not one to compromise the diktat of conscience even in the face of scorn and hostility from parts of the media.

He was a Cabinet Minister over 50 years ago, before some of us were born. He led this House in the 1960s but he was someone who throughout that long career of public service always loved this place and loved it with deep emotion and passion. I join wholeheartedly the noble and learned Lord the Leader of the House in expressing our sympathy to his family and friends. As the noble and learned Lord has just said, Lord Longford began life as a Conservative. Someone "boobed" in 1932 when we lost him to the Labour Party. His sense of social justice was respected in every part of this House. It is by standing for that sense of natural justice in the future that this House will best honour his memory.

My Lords, I add the voices of these Benches to the tributes paid to Lord Longford and also to those paid to Lord Hailsham, about whom we shall speak shortly. The good fairy obviously gave to both those distinguished men an astonishing array of gifts, in particular a remarkable intelligence, a deep sense of humanity, a very strong sense of integrity and a profound religious faith.

Lord Longford was a member of the Attlee government and subsequently of the Wilson government and served them both in senior capacities. As a young man he had been a politics lecturer at Christ Church. In that he shared a link with Lord Hailsham as both had been educated at Eton and Oxford. I agree with the noble and learned Lord the Leader of the House that perhaps the single most distinguished period of Lord Longford's life was when he had responsibility for occupied Germany. He brought to occupied Germany an astonishing sense of compassion and empathy. I for one believe that one of the reasons why Germany is one of the great successes of the post-war world and is a truly powerful and strong democracy is that it was taught by Lord Longford a different way from that of violence and war.

As has been said, Lord Longford became Lord Privy Seal and in that capacity resigned over the issue of the raising of the school leaving age. At that time I was a junior education Minister and that action profoundly met my own sense of sadness at the decision of the then government to abandon their commitment to raising the school leaving age.

As we all know, having left the House of Lords and politics, Lord Longford became chairman of The National Bank which was effectively the National Bank of Ireland. Subsequently in this House he played a large part in two areas open to derision and criticism. One of them was prison reform with which he was closely identified, often with its least popular aspects. The second was pornography on which he wrote a distinguished report which immediately turned him into a cartoon figure for virtually every one of the tabloids.

The remarkable thing about Lord Longford, whose family have been friends of my family all my life, was that, as the noble Lord, Lord Strathclyde, pointed out, criticism and derision slid off his back like water off a duck. He paid not the slightest attention to it. If he believed that what he was doing was right, the press could go and create whatever cacophony they liked; Frank was undisturbed and in no way impeded.

Finally, some people called him a fool. If so, like Dostoevsky, he was a holy fool. He brought to this House an astonishing sense of spiritual mission and an astonishing belief in the infinite potential of every human being. He was one of the luminaries of this House. Now that the light has gone out, many of us recognise what the House owes him and will not forget his passing.

My Lords, on behalf of all noble Lords on these Benches and myself, I add our support to the tributes that have been so eloquently made from the party Benches. All noble Lords here today will have their own special memories of Lord Longford. My own admiration was for his eloquence and for his determination to support those causes dear to his heart.

He was very much his own man. He combined in equal measure his championing of the less well respected members of society with an unquenchable patrician air, as a member of a very distinguished and noble family. We shall all miss his contribution and his unfailing memory of the business of this House, which, for him, stretched back for more than half a century.

My Lords, from these Benches we salute a life that was devoted to the service of Christian truth and of humanity. The obituaries have recorded Lord Longford's double conversion—to the Labour Party and to Roman Catholicism. Of far deeper significance was his profound conversion to God and to the Lord Jesus Christ.

Our concern today is not with his private life, though one may point to the witness of a marriage of nearly 70 years and his evident capacity to win devoted friends. Of his public life, one must say that in everything that Frank Longford said and did, he sought to bear witness to the truths and claims of the Gospel. He was passionate, he was fearless, he was of the stuff of which martyrs are made.

I shall mention two instances of the way in which, in the face of prevailing opinion, he sought to follow the moral claims of his faith. The first was soon after the Second World War when, as the Minister responsible for Germany, he set his face against the punitive attitude towards the Germans that still prevailed and instituted policies for social, economic and political reconstruction. It is said that Konrad Adenauer counted him as one of the founders of the Federal Republic. In retrospect, we can see that that policy was not only moral, but also politically right.

Secondly, there was his care for prisoners and for the victims of injustice. His concern was not merely theoretical, but practical. Few of us can have agreed with him in every cause that he espoused, but we all admired him. That is because he was no mere moral campaigner. He once said:
"I am much happier taking up the cudgels on behalf of the stricken. In the end, I feel that my vocation lies there rather than in the denunciation of evil".
Such is the memory of the man to whom today we pay tribute and for whom today we thank God.

Tributes To The Late Lord Hailsham Of Saint Marylebone

3.4 p.m.

My Lords, perhaps I may now say a few words about Lord Hailsham of Saint Marylebone. He was born in 1907 and educated at Eton, where an exceptional intellect was quickly recognised. He took a double first at Oxford and was immediately successful in obtaining the much-prized Fellowship of All Souls.

In 1932, he was called to the Bar at Lincoln's Inn. By that time, his father had been awarded an hereditary peerage and had served for three years as Lord Chancellor. By all accounts, Quintin Hogg received the news of his father's hereditary peerage with some dismay. Even at that early stage, he harboured ambitions of going into politics. In those days there was no way of disclaiming a peerage, so his father's acceptance of the honour condemned him to sitting on a red Bench rather than a green one—something that he deeply regretted at that stage.

However, as long as the unwelcome peerage was held by his father, he was eligible to stand for the House of Commons. In 1938, as is well known, he won the Oxford City by-election. So he began his political career.

Only a year later, war broke out. He joined the Army, was commissioned into the Rifle Brigade, served in the Middle East, was wounded and, in 1942, was invalided out. He went back to the Commons, where he formed, with others, the Tory Reform Committee. He was instrumental in urging the coalition government to accept the Beveridge report on social security—that very report which Lord Longford had worked so hard to produce. In 1945, he became joint Under-Secretary of State for Air.

He was obliged to leave the Commons in 1950, when his father died. He took silk in 1953, but even then I think it is fair to say that his heart was really with politics rather than with the law and he continued actively in Parliament. He became a Privy Counsellor in 1956 and in the same year was made First Lord of the Admiralty—five years after Frank Longford had held the same post. He had a succession of ministerial posts in the Macmillan administration and he was a distinguished Leader of this House from 1957 to 1963.

All that came to an end when Mr Macmillan fell ill in 1963. Viscount Hailsham became the first Conservative Peer to take advantage of the provision in the Life Peerages Act that allowed art hereditary Peer to disclaim his peerage. He did so and threw his hat into the ring with vim and vigour. He was a serious contender. He had captured the imagination and, more importantly, the affection of the public when he was Conservative Party chairman, campaigning in the 1959 election by tolling a handbell for the death of the Labour Party—an interesting if somewhat over-hopeful suggestion.

Such dramatic stunts were very much a part of the person in exactly the same way, perhaps coincidentally and bizarrely, as his extraordinarily powerful intellect. He was a humorous and mercurial man and in the end his party preferred another. That was a disappointment, but he was soon back in the House of Commons representing St Marylebone. He served loyally in a variety of ministerial roles until 1970, when he came back to this House, this time with a life peerage—so his collection was not as extensive as that recited by the noble Lord, Lord Strathclyde, i n the case of Lord Longford, but it was still interesting. He came back here as Lord Chancellor.

It is in that role that he will be mainly remembered. He was fiercely proud and defensive of the independence of the judiciary. He saw through the implementation of the Beeching proposals for the reform of the criminal courts. However, even as Lord Chancellor, his main focus was politics rather than the law. As a member of Mr Heath's Cabinet and Mrs Thatcher's Cabinet he was forthright, respected and entertaining.

His skills as an orator were second to none. He could argue a case with eloquence and charm so that sometimes people actually changed their minds—a distinct shock to the nervous and political systems, as your Lordships well know. He was one of the outstanding characters of 20th century politics. He had a truly impish sense of humour. He could be impatient when those around him could not keep up with his intellectual pace. His sense of morality and public service seemed to belong to an older school, which, curiously, made his contribution in this House all the more necessary and all the more valuable. He was frailer in those later years and less often about this House. But we remember him as a man of energy, vigour and drive who served his country throughout his whole life with integrity and enjoyment. We shall miss him for many years to come.

I have of course written on behalf of us all to the noble Baroness, Lady Hogg, who I am most pleased to see in her place. On all our behalf I send, through her, our condolences, our affection and our remembrance to his family.

3.10 p.m.

My Lords, Lord Hailsham was one of the giants of British politics and the English legal system in the latter part of the 20th century. His succession of high offices in the service of both country and party, including leadership of this House, culminated in 12 years as a distinguished Lord Chancellor—a term of office unequalled in modern times.

As Lord Chancellor, he was a powerful defender of the independence of the legal system. He also sat relatively frequently in judgment, taking as active a part as the modern role of Lord Chancellor allows. But it was his wise political judgment that was respected by Prime Ministers as diverse as Harold Macmillan, Edward Heath and Margaret Thatcher. He was striking proof of the way that the office of Lord Chancellor can benefit politics, Parliament and the law alike.

His long career would mark him out as a remarkable figure in any age. So, too, as the noble and learned Lord the Leader of the House reminded us, would his acute mind, marked by a Fellowship of All Souls and a range of notable publications over nearly 60 years in the fields of law, politics and the constitution. He also wrote about spiritual matters, for he was a man whose firm Christian faith and abiding integrity were lodestars of his career.

For those of us who were privileged to have known him and to have watched him at work, there was something far more than the records of a great life of public service that will be written for ever in the history books. It was the presence of a character as unique as any in modern politics—the twinkle in the eye, the flash of humour, followed invariably by that throaty chuckle that showed him unable to contain his delight in his own wit, and a commanding resonant oratory that now seems something of another era. A personal kindness and a moral and physical courage were two striking sides of his nature.

Who can forget his whispered asides from the Woolsack, his taking out his walking stick to batter a poster of Harold Wilson, or his arrival at No. 10 on a bicycle to accept office under Margaret Thatcher? He was a figure both lovable and loved.

The dramatic renunciation of his peerage and his failure to secure the leadership of the Conservative Party, which almost everyone believed was his for the taking, could have been the defining moment of his career. It could have led to bitterness and to the renunciation of public life, but in his case it did not. Unlike others, he readily took office under the leader who had defeated him. He was too big a man to do other than his public duty. He was a great parliamentarian as well as a great public servant. And he left us with a lasting phrase of warning—the "elective dictatorship" that we must bear in mind whenever the independence of Parliament is threatened by change.

Our heartfelt sympathy and good wishes go to his family at this time. They can be reassured by the memory of a great life, nobly lived, and by a member of a family steeped in public service over many generations which is still living out those ideals. They must know that so long as the Hailsham title lives, it will be associated indelibly with the memory of this extraordinary and gifted man.

3.14 p.m.

My Lords, among the many talents showered upon Lord Hailsham—high intelligence, wit, ebullience and a tremendously energetic personality—there was a secret ingredient: like Winston Churchill, he had an American mother. There were also two talents which he did not possess—talents indispensable to political advancement. The first was caution and the second dullness. Lacking those two, it is perhaps not altogether surprising that a man of such abounding talents did not become Prime Minister, as he had long wished to do.

Lord Hailsham was, as we know, someone who embarked with enthusiasm on politics. He began by getting it wrong because he was, of course, the pro-Chamberlain candidate in the famous 1938 Oxford by-election. However, being a man of ebullience and also a man with a capacity for learning and learning quickly, he came back from that rather unfortunate experience. Indeed, he served with great distinction in Her Majesty's forces and, after the war, played a very large part in politics.

Perhaps I may underline two or three other characteristics of his political career. One was that, rather like Lord Longford, of whom we spoke previously, he had, to his credit, an astonishing achievement in the area of education. He was twice Secretary of State for Education. Many people forget that he was the great champion of the Robbins report, which enabled a much larger proportion of the British population to move on to higher education than had ever been the case previously. I believe that it is to Lord Hailsham that we all owe one of the planks of our democracy—the widening of opportunities to a larger and larger range of our fellow citizens.

The second point about Lord Hailsham that I want to mention is his long and distinguished career as Lord Chancellor. As the previous tributes have indicated, in that role he was a powerful champion of the independence of the judiciary and, indeed, also a strong champion of the rights of individuals, marked time and again by his complete opposition to any attempt to water those down.

People may forget that in 1973, when the IRA made its attack on the Old Bailey, Lord Hailsham decided, as Lord Chancellor, that it was his duty to visit the ruined courts of law. However, he decided that it would be inappropriate to take his official car because it would disturb the work of the police. So he got on that famous and capricious vehicle known as a bicycle and cycled down to the Old Bailey wearing, as ever, his bowler and his pinstriped trousers in order to give comfort and assistance to his fellow members of the Bar and to other members of his profession.

I strongly agree with what the noble Lord, Lord Strathclyde, said. In his long and remarkable history of writing thoughtful books, including a very distinguished one on the laws of England, Lord Hailsham warned time and again of the dangers inherent in modern democracies and, in particular, the dangers of unrestrained executive power. In that. I believe that he showed considerable foresight because we are all conscious that the executive has more power under all governments today than it did in the past.

I conclude what I have to say about Lord Hailsham by quoting his own remarks when he was asked why he chose to bicycle to the Old Bailey. He said—I am sure that some Members of this House will see the pertinence of my quotation:
"it does no damage for a Lord Chancellor to appear a little ridiculous from time to time as long as it is not all the time".
Nothing could quench the ebullient wit of Lord Hailsham. Time and again it broke through what might be considered to be the wiser course because he simply could not bear not to give vent to his spirit. We all remember the occasion when he invited the tabloid press to watch him walk into the sea at the Conservative Party conference—incidentally, a very cold sea—wearing unbelievably old-fashioned swimming trunks. At one and the same time they told us what a brave man he was but also how, in some ways, he was rather out of touch with fashion.

Finally, as with Lord Longford, perhaps I may mention the two great pillars in the life of Lord Hailsham. One, as the Leader of the House said, was his profound religious faith. I believe that sometimes he held a kind of dialogue with the Almighty in which it was not clear whether or not they were speaking as equals. In the case of Lord Longford, the approach was perhaps rather more humble.

But both men were also borne up by extraordinary and astonishing marriages. As the right reverend Prelate said, they were long marriages with women of great character, strength and courage. As we all know, after a long marriage Lord Hailsham was devastated by the death of his second wife in a tragic riding accident. But, fortunately, he found happiness in his last years with his third wife, the late Lady Hailsham.

Therefore, we may say that the two institutions—religion and marriage—were crucial parts of the greatness of these two men and that they brought to them an astonishing degree of persistence and determination. Let us again thank God that we have had the experience of having such distinguished people in our current House.

My Lords, it is a privilege on this occasion to express our condolences to the noble Baroness, Lady Hogg, and members of Lord Hailsham's family. I shall not repeat the long catalogue of his formidable achievements, which were fully and eloquently expressed by others. My memories of him are more personal.

Lord Hailsham was Lord Chancellor when I was first chosen as Speaker in 1983. Thereafter. we travelled together to numerous Commonwealth and European Speakers' conferences. At the time he was a widower, and my wife became his unofficial minder and sought to ensure that he was on time and dressed in the correct garb. It was a formidable task but also great fun.

I shall never forget the after-dinner speech that Lord Hailsham made in Athens at a European Speakers' Conference. No one who was present will ever forget it. He delivered his speech in Greek. Unfortunately, he did so in Ancient Greek and nobody understood a word, but his speech deservedly achieved a standing ovation.

Lord Hailsham was indeed a legend in his lifetime, and his service was very distinguished both in war and peace. He served under seven Prime Ministers in a number of distinguished ministerial offices and, as has already been mentioned, he was the longest-serving Lord Chancellor.

Just before the Recess, I ran into his son, Douglas, who is a Member of the other place, and said, "How is your father?", to which he replied, "Gone, I am afraid". I fear that Quintin's last days were not happy ones for him or for his family. As I said, our hearts go out to them today. He is gone, certainly, but he will always be remembered by those who were privileged to know him with great affection and esteem.

My Lords, I add the tribute of these Benches to what has already been very eloquently said about the life and career of Lord Hailsham and I offer our own condolences to the noble Baroness.

Lord Hailsham was a person who gave enormous service to London, as had many members of his family. I remember also his enormous contributions to many institutions within London. He once said that every politician worth his salt, no matter how devoted—we have heard of his extraordinary parliamentary service and loyalty to the traditions of Parliament—must have interests outside politics. He continued, "For the more intelligent of my friends, it is religion; for the less intelligent, it tends to be hunting".

As we recall the memory of Lord Longford, we also remember Lord Hailsham's conversion, as a very strenuous intellectual, to Christianity and his life as a reader in the Church of England. We acknowledge and are grateful for his insistence as a great parliamentarian that wherever the Church of England might be, it is a Church of apostolic foundation and certainly not merely a creature of Parliament. It was good to have the great parliamentarian underlining that fact.

That is not to suggest that Lord Hailsham was never critical of bishops. I remember him saying, "The trouble with bishops is that they tend to blow in, blow off and blow out". Nevertheless, despite that occasional asperity, we, like other noble Lords, remember a parliamentarian of dignity, magnanimity and greatness of soul. I have no doubt that the trumpets—in his case, probably the bells as well—are ringing for him on the other side.

My Lords, I hesitate to delay the House. But even as a mere adjunct of the Hogg family, may I express appreciation of what has been said this afternoon and convey the regret that my husband Douglas could not take his place at the Bar of the House to hear what noble Lords said? He was detained not by business in another place but by something that I know his father would consider equally important: representing his clients' interests in court. I am very happy that so many of Lord Hailsham's family who looked after him so devotedly in his declining years were in the Gallery to hear what noble Lords had to say.

With the indulgence of the House, I should like to end with a brief quotation from his last great book, A Sparrow's Flight, which I feel may be tremendously appropriate in view of the dangerous and difficult times in which we currently live. He wrote:
"Despite all the destruction and malevolence of the world, I do not believe in a malevolent deity or an irrational universe. I believe in goodness, truthfulness, loving kindness, beauty, generosity and loyalty. They all exist and are qualities which demand just as much explanation as malevolence, mendaciousness, cruelty, ugliness, meanness and treachery".
As the considered judgment of a brilliant but not over-optimistic man, we can perhaps take some comfort from that.

My Lords, I strongly associate myself with all that has been said. As noble Lords know, I had the great honour of succeeding Lord Hailsham as Lord Chancellor after the sadly short period in which Lord Havers served in that position.

I pay public testimony, since I have the opportunity to do so, to the warm and affectionate support he gave to my wife and myself during my term of office. He did not always agree with what I was doing. As some noble Lords may remember, he had views about where some ideas were coming from—from which part of one's anatomy. Notwithstanding that, he was a firm and affectionate friend; that warm communication of affection continued until very near the end of his life. We had the privilege of having him with us in Edinburgh in our home on one occasion. Our children have never experienced such an erudite conversation at breakfast!

My Lords, as we speak of these two great men I hope that I may pay tribute to the continuing work of Lord Longford. Many years ago he established the New Horizons youth centre in King's Cross. That continues today to provide help for homeless people in that area, including young prostitutes working in King's Cross and young men coming out of prison. All of the sorts of people whom he used to help continue to be helped thanks to his foundation of the centre.

Hepatitis C

3.28 p.m.

What further consideration they are giving to the Haemophilia Society's call for a public inquiry into the infection of haemophilia patients with hepatitis C by contaminated National Health Service blood products.

The Parliamentary Under-Secretary of State, Department of Health
(Lord Hunt of Kings Heath)

My Lords, the Government have great sympathy with haemophilia patients who were infected with hepatitis C before the means existed to remove the virus from blood products. We have given careful consideration to the call for a public inquiry but do not believe that that is the way forward. The facts have been set out clearly on many occasions in debates in both Houses, in meetings with Ministers from the Department of Health and in correspondence.

My Lords, is it not grossly damaging to the reputation of the National Health Service that we still await a public inquiry into its worst-ever treatment disaster—one that has already taken more than 100 lives among the now more than 1,000 haemophilia patients who have died from contaminated NHS blood products? And will my noble friend respond to the deeply disquieting recent disclosure made by my former ministerial colleague, the noble Lord, Lord Owen, to the BBC's "Face the Facts" programme, when he said that money laid aside, when he was health Minister, to protect haemophilia patients from infection from blood-borne infection was diverted to other purposes? Is this not still further evidence that an in-house departmental inquiry is no substitute for the public inquiry the Haemophilia Society is seeking?

My Lords, I believe that all the facts have been produced in various debates in your Lordships' House and in the other place. There can be no doubt that any Minister who had a decision to make on the issue cannot but deeply regret that so many people with haemophilia were infected with hepatitis C through blood products. As soon as the technology became available to make blood products free from hepatitis C, it was introduced by the National Health Service.

I have asked officials to look into statements made by the noble Lord, Lord Owen. We shall respond to those statements in due course. My understanding is that the resources promised by the noble Lord when he was Minister of Health were allocated to the then regional transfusion centres to increase production of plasma for the bioproducts laboratory. That resource was used and, as a result, production was increased considerably. However, because of the rapid growth in demand for those products we did not achieve self-sufficiency in this country. Even if that was achieved in the late 1970s, the fact that heat treatment did not take place until the mid-1980s meant that self-sufficiency would not have prevented haemophiliacs being infected with hepatitis C.

My Lords, can the Minister tell the House what moral distinction the Government make between their decision to set up a £60 million compensation fund for those who contracted new variant CJD and their adamant refusal to do the same for those who contracted hepatitis C through contaminated blood products? Is that not a case of double standards?

No, my Lords. Such decisions are always difficult and no Minister would ever make them lightly. The plight of individuals and families affected by new variant CJD was the result of a unique set of circumstances. The Government considered that society as a whole should bear a moral responsibility. New variant CJD is a particularly distressing condition. Even though we were advised that we were unlikely to be legally liable, we considered it right to make payment to the victims and their families.

My Lords, can the Minister tell the House whether the situation in this country is different from that in France where I understand that the Government knowingly allowed HIV-transmissible injections to be used for haemophiliac patients? I believe that one of their Ministers admitted to that. Are we sure that that was never knowingly done in this country? Can the Minister tell the House the number of relative cases of hepatitis C as opposed to the number of HIV/AIDS cases that have been transmitted to haemophiliacs through blood products?

My Lords, clearly, circumstances have differed in every country which has had to face up to this problem. In the early 1970s, clinicians knew that there was a risk of hepatitis. However, there was great demand and, indeed, enthusiasm, for the new treatment from haemophiliacs and doctors. The impact of hepatitis C was not fully understood at that time and its effects were unclear. It was not until the mid-1980s and the attempt to prevent HIV that heat treatment was first used. It was not until then that there was a process which could have prevented the hepatitis C infection.

Zimbabwe: Restoration Of Rule Of Law

3.33 p.m.

My Lords, at the request of my noble friend Lord Blaker who is indisposed, and on his behalf, I beg leave to ask the Question standing in his name on the Order Paper.

The Question was as follows: What steps are being taken by the Commonwealth and other international bodies to aid in restoring the rule of law in Zimbabwe.

The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office
(Baroness Amos)

My Lords, perhaps I may first wish the noble Lord, Lord Blaker, a speedy recovery.

We are working with Commonwealth colleagues to encourage Zimbabwe to abide by the commitments it made to the Commonwealth in Abuja. With the Commonwealth, the Southern African Development Community (SADC), EU partners and other concerned members of the international community, we are continuing to urge the Government of Zimbabwe to uphold the rule of law.

My Lords, I thank the Minister for that reply. First, is it the position that the Abuja agreement is working or has it not broken down and been abrogated by the Zimbabwe Government? Secondly, what action will be taken to ensure that the forthcoming presidential elections are free and fair? All the signs indicate that they may not be. Finally, is it correct that Libyan troops are now placed in Zimbabwe?

My Lords, it would not be true to say that the Abuja agreement has broken clown. Zimbabwe gave a number of assurances at the Abuja meeting, including a commitment to the democratic and human principles contained in the Harare Declaration, a commitment to no further occupation of farmland and a commitment to the restoration of the rule of law. With the partners to the Abuja process we have been monitoring the Government of Zimbabwe against such assurances. We are concerned that they are not meeting the commitments they made. Commonwealth partners, led by Nigeria, are planning an early visit to Zimbabwe to look at the processes and talk to the different stakeholders who are concerned with those issues.

As regards the presidential elections, together with our EU partners, SADC colleagues and others, we are working extremely hard to ensure that election observers are in Zimbabwe for the elections. President Obasanjo, who played a key role in the Commonwealth process, has undertaken personally to intervene with President Mugabe as regards election observers.

I have no information to give the noble Lord as regards Libyan troops. I shall certainly seek further information, but I am not aware that Libyan troops are in Zimbabwe.

My Lords, the Minister will be aware of a report that the leader of Libya visited President Mugabe in order to encourage him in energetic election campaigning. Given that the campaigning has already begun, with allegations of substantial intimidation, can the Minister tell the House whether or when election observers might be in place? Can she also tell the House whether any resettlements have taken place under the Commonwealth scheme?

My Lords, I cannot give a date when election observers might be in place. Together with our EU partners, the United States and our African partners we are concerned to ensure that election observers go into Zimbabwe as soon as possible. As everyone in this House will be aware, the process in the run-up to the elections is critical. That is why we consider the process now to be so important. We shall continue to push hard on that issue.

As regards resettlement under the Abuja agreement, the Zimbabwe Government committed themselves to no further occupation of farmland and to take firm action against violence and intimidation. As the Government of the United Kingdom, we undertook that if the Zimbabwe Government adhered to their commitments, we would again consider putting resources into a transparent land reform programme. We made clear that it would be important for the UNDP mission to go into Zimbabwe to conduct an initial assessment.

My Lords, first, can the Minister tell us what truth there is, if any, in the statement that the International Red Cross has been prevented setting up camps and places of refuge for the many Africans who are suffering grievously from expulsion from the farms? Secondly, can she comment on the press report at the weekend that large numbers of Zimbabwe passports are to be issued to Libyans, a matter which, in the present circumstances, must be of interest?

My Lords, we are concerned to ensure that NGOs operating in Zimbabwe are able to do so in a way which will assist them in their work. Perhaps I may seek further information from the noble Baroness with respect to the International Red Cross. That is an internationally recognised organisation and I am not aware of it having been prevented setting up camps to assist Zimbabweans. We would be extremely concerned if that were the case.

As regards passports being issued to a large number of Libyans, that has not been verified. I have heard those reports but I do not know whether or not they are true.

My Lords first, does the Minister agree that the grievousness of what is happening in Zimbabwe is as great today as it was before 11th September, and that this House maintains its interest at the same level as was the case before 11th September? Secondly, will she tell us to whom the international observers of the elections will report and what action will be taken, and by whom, if they report that the elections have not been free and fair but the result of intimidation?

My Lords, this House will continue to take a great interest in what is happening in Zimbabwe, as will the Government. We have worked long and hard—and it has not been an easy process—to build an international consensus around what is taking place in Zimbabwe. The noble Lord will know that we, our Commonwealth colleagues, the European Union, the United States, as well as African partners through SADC and through their bilateral contact with Zimbabwe, have expressed concern about this matter.

With regard to international observers, a number of different organisations have expressed interest in sending international observers to Zimbabwe—the Commonwealth, the European Union and the United States, to name but three. The election observers would report through the processes that operate in each of those areas. The Commonwealth observers, for example, would report to the Commonwealth Secretariat, and each organisation would then take the action that it thought fit, depending on what election monitors said about the outcome of those elections. If there were concerns about the outcome, I believe that the kind of international consensus that we have seen would be maintained and there would continue to be a push on the government of Zimbabwe to change their ways.

Farming And Food

3.42 p.m.

Why they have not stated that ensuring the ability of the British farming industry to feed the British public will be their prime objective in considering the future of farming in Britain.

The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs
(Lord Whitty)

My Lords, the establishment of the Policy Commission on Food and Farming was announced in August. It is due to report to the Prime Minister and the Secretary of State by the end of this year. It has a wide remit. That will allow it to consider issues of food security and self-sufficiency in the context of the wider objectives of economic, environmental and social sustainability within the international and EU framework, together with issues of rural development, food safety and consumer requirements.

My Lords, I thank the Minister for his reply. I think the Government still need to emphasise the point that sustainability is about reducing food miles and about food production in harmony with the environment. In particular, Britain's ability to produce food for itself is now severely undermined by the rising age of farmers, a lack of government support for an entrance scheme for young people, such as is being introduced by Southern Ireland, and a lack of investment in processing and research and development, so that in 10 to 15 years there will not be very many bright young people with the energy and experience to produce our food. Does the Minister therefore agree that this is a serious issue?

My Lords, it is a serious issue that entrants to farming are discouraged by the present situation. I expect the policy commission and the Government to address the raising of the quality of inputs to farming in general, in terms of personnel, marketing skills and research and development, a large part of which the Government do fund on a very substantial basis. Therefore, the modernisation of the industry will be a key factor in the process of the recovery of agriculture.

My Lords, will the Minister tell the House how much additional support has been given to the agricultural sector by the Government since they came to power?

My Lords, in addition to the support from the common agricultural policy, which is currently running at approximately £3 billion per year, the Government have committed additional expenditure of £1.7 billion to support key aspects of the modernisation of the industry. Of course, as noble Lords will be well aware, the total cost of the foot and mouth disease epidemic will now amount to over £2 billion.

My Lords, I declare my interest as an organic farmer. Are the Government considering whether diseases such as salmonella in hens, swine fever in pigs, BSE and foot and mouth disease in cattle indicate that British agriculture has followed a path that is too intensive and too cost conscious, and will they by all possible means encourage more natural and holistic methods for the benefit of both farmers and consumers?

My Lords, the Government have substantially increased support and encouragement for organic farming of all types. However, the incidence of the kind of diseases to which the noble Lord has referred is not in any objective sense directly related to the production methods that are involved. Indeed, such problems are found in all forms of farming production. Nevertheless, the elimination of such diseases will play an important part in ensuring that our farm produce is safe and acceptable to the consumers of this country.

My Lords, I accept the Minister's response to the previous question about money given to farmers. However, I should like to ask two questions. First, if the Government really believe that we should produce our own food and supply our own basic food needs, why is the word "farming" not used in the title of the new department? Secondly, having regard to the figure of £2,500 average income, released last week, does the Minister accept that it is hardly surprising that farmers are struggling? Thirdly, will he say how he regards Margaret Beckett's desire to get cheaper food on to the shelves, if in fact the farmers cannot make a living at the present time?

My Lords, as regards farm incomes, while the precise figures relate to a particular sample, it is absolutely clear that there has been a very severe reduction of farm incomes in recent years. Part of the need to address the future of farming and to change much of what happens in farming and the marketing of farm produce relates to ensuring not only an environmental sustainability but also an economic sustainability for those engaged in farming. That requires us to look at the food chain as a whole, which is central to the mission of my new department, to ensure that farming is not isolated from the rest of the world, as it sometimes has been, but is placed within the whole of the food chain and within the overall context of rural and environmental development. That would result in an enhancement of the status of farming in relation to the way in which we can achieve a sustainable countryside and a sustainable food chain.

With regard to price, one of the needs of British farming is to meet international competition. Developments in both the WTO and the CAP are likely to increase that competition, and it is important that in the sectors in which British farming continues to compete we produce value for money and competitive prices. It is also important, of course, that consumers recognise the need to pay, directly or indirectly, for some of the other benefits that farming brings to this country.

My Lords, in his answer two supplementaries ago, the noble Lord referred to amounts paid by the European Union to this country in respect of agriculture. Does he agree that the money is placed, first, at the disposal of the Commission for this service direct from the British taxpayer, so that we are merely getting a return of part of the money that we ourselves have put in?

My Lords, that is largely true. However, it does not alter the fact that the tax system at both European and British level recycles very substantial amounts of the taxpayers' money into support for farming, though I think the noble Lord and I would agree that the way in which it does it leaves something to be desired. A radical reform of the common agricultural policy must obviously be part of the medium to long-term future for agriculture in this country and world-wide. CAP reform is, therefore, one of our top priorities.

My Lords, I declare an interest as a farmer. Does the Minister agree that, everything else being equal, it is desirable that food which is consumed in Britain is produced in Britain?

My Lords, we live in a world economy and some trade is necessary. In fact, of total food consumption a remarkable amount is produced in Britain; some two-thirds. As regards indigenously grown products, the amount is some 80 per cent, a figure which is not achieved in many other industries or sectors.

Nevertheless, I take the broader points behind the noble Lord's view that the degree of travel and the number of changes to which products are subject between the primary producers and the final market add to the cost and to environmental and economic damage. To that extent, we want to continue to support home produce.

My Lords, will the Minister answer the question asked by the noble Baroness, Lady Miller, about bringing young people into farming? I do not believe that he covered it sufficiently. Does he appreciate that today young people do not want to be out seven days a week in all weathers looking after stock at all hours? The Minister spoke about modernising farming but one cannot modernise that system. Does he agree that young people need appreciation for the work they do and in this case financial appreciation?

My Lords, I agree with the noble Countess in part. It is clear that societal and financial rewards are needed if we are to attract a new generation into or to stay in farming. However, it is also necessary to recognise that the range of tasks which small and medium-sized farmers in particular currently undertake may not be appropriate for the future development of agriculture, world trade and the demands of consumers. That may require sections of agriculture to develop a different degree of professionalism, perhaps specialism, than has been the case for the farmers who tilled their soil and looked after their livestock in previous generations. A cultural change is probably needed in addition to the environmental and economic changes.

Feltham B Prison For Young Adults

3.52 p.m.

What action they have taken following the last report by the outgoing Chief Inspector of Prisons, Sir David Ramsbotham, on the situation at Feltham B prison for young adults.

My Lords, the Prison Service was able to direct substantial new investment into Feltham B from April this year. Consequently, more than one-third of the recommendations in Sir David's report have already been implemented. In particular, purposeful activity hours have been increased and now average more than 20 a week.

My Lords, I thank my noble friend for that reply. Does he agree that this is precisely the kind of Question in respect of which the whole House will miss the voice of Lord Longford?

Does my noble friend agree that in an institution charged with the safety and well-being of highly disturbed young people it is totally unacceptable that in that institution there was in September a tragic suicide; that there had been a suicide a year previously; and that there was a most ugly murder? Does he further agree that there is no room for complacency?

Does that not raise the issue of the prevailing culture within the Prison Service—a battle that must be won in order to ensure that those who join the service do so in the cause of rehabilitation and the real fight of turning young people into decent citizens?

My Lords, yes, in respect of my noble friend's first point, it was a privilege to be in this House in July during one of its many debates—as I was warned—on prisons. I was able to listen to Frank Longford speak in that debate and afterwards told people what a privilege that was.

As regards my noble friend's substantive point on self-inflicted wounds and self-inflicted deaths, I cannot comment on the tragedy which occurred in late September or on the previous one, save to say that full inquiries are taking place. Furthermore, there is an action plan to ensure that young people are inducted into such establishments and that there is a proper programme tailored to their individual needs. We hope to reach the point when they have telephone cards and people to speak to who will listen to what they say, and not the isolation which can build up to such tragedies.

There is still a lot to do and I make no bones about that. Nevertheless, we are working hard on Feltham and on Feltham B in particular. There is much to do between now and January when Her Majesty's Inspectorate of Prisons will return to the prison.

My Lords, is the Minister aware that the mention of Sir David Ramsbotham's name in the Question will be taken by some as an opportunity to pay a real tribute to the courage, intelligence and honesty with which he performed a difficult job? If it is true that by chance some of Sir David's comments may have caused a little discomfiture in the higher realms of the Home Office, then as far as many of us are concerned he was the better for that.

My Lords, I hate to quote myself but I remember that in answering a Question in the summer I made it clear that it is no good appointing an independent investigator or regulator to conduct an inquiry and to compile a report and then complain about the report. That response was made in respect of Sir David Ramsbotham and I made it clear that that was my view. Indeed, I pay tribute to his work.

I am prepared to admit that Sir David's 1996 report on Feltham B was dealt with inadequately and that his 1998 report made us move up a few gears because clearly there was much to do. Both Houses have paid tribute to his work; he has illustrated many shortcomings and we are trying to put them right.

My Lords, does the Minister accept that the success of Feltham A has been the result of more resources, a more liberal regime and the fact that standards were set by the Youth Justice Board? Has he in mind proposals whereby the Youth Justice Board or a single body can set up standards so that we can monitor progress in Feltham B where the regime is still most restrictive and poor and where to a great extent the situation has not improved as we thought it would?

My Lords, the noble Lord is right. Since being in post I have visited only one young offender institution. which is Prescoed. The difference in the treatment of under 18s and over I 8s is clear. The Youth Justice Board ensured that massive resources have been directed at the younger people.

The situation is tragic in places such as Feltham where offenders move from one section to the other and where resources have not been adequate. Nevertheless, the new governor and the team are working their socks off in order to ensure success and that we complete the rest of the action plan. It is to be hoped that there will be better news to report early next year after the inspectorate has returned on 14th January. New resources have been put into Feltham B and there is the opportunity for association and education one no longer has to choose between—one and the other—but we still have a long way to go.

Business

3.58 p.m.

My Lords, at a convenient moment in the debate on the Office of Communications Bill, my noble friend Lord Rooker will, with the leave of the House, repeat a Statement which is being made in another place on anti-terrorism measures. After that, my noble friend Lord McIntosh of Haringey will repeat a Statement which is being made in another place on action against the funding of terrorism. After the second Statement, my noble and learned friend Lord Falconer of Thoroton will repeat a Statement which is being made in another place on Railtrack.

It may also be for the convenience of the House to know that the usual channels have agreed that there will be a further debate on the coalition against international terrorism on Thursday 18th October. The debate will follow the Report stages of the International Development Bill and the Travel Concessions (Eligibility) Bill.

Examiner Of Petitions For Private Bills

3.59 p.m.

My Lords, I beg to move the Motion standing in my name on the Order Paper. It is a formal Motion but it has a human side to it. We are to lose Dr Philippa Tudor to the Scotland Office. She is to be replaced as Clerk to the Private Bill Office by Mr Tom Mohan. Those who have worked with her—I see the noble Lord, Lord Wigoder, nodding his head, and I am sure that the noble Lord, Lord Alexander of Weedon, would agree—would like to thank her for her clerkship of the Delegated Powers and Regulatory Reform Committee and wish her well in her new job. I beg to move.

Moved, That, pursuant to Private Business Standing Order 69, Mr T. V. Mohan be appointed an Examiner of Petitions for Private Bills in place of Dr F. P. Tudor. ( The Chairman of Committees.)

On Question, Motion agreed to.

Land Registration Bill Hl

My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That the amendments for the Report stage be marshalled and considered in the following order:

  • Clauses 1 to 12,
  • Schedule 1,
  • Clauses 13 to 27,
  • Schedule 2,
  • Clauses 28 to 30,
  • Schedule 3,
  • Clauses 31 to 65,
  • Schedule 4,
  • Clauses 66 to 92,
  • Schedule 5,
  • Clauses 93 to 96,
  • Schedule 6,
  • Clauses 97 and 98,
  • Schedule 7,
  • Clauses 99 to 102,
  • Schedule 8,
  • Clauses 103 to 105,
  • Schedule 9,
  • Clauses 106 to 123,
  • Schedule 10,
  • Clauses 124 to 130,
  • Schedule 11,
  • Clause 131,
  • Schedule 12,
  • Clause 132,
  • Schedule 13,
  • Clause 133.—(The Lord Chancellor.)

On Question, Motion agreed to.

Office Of Communications Bill Hl

4 p.m.

The Minister of State, Department for Culture, Media and Sport
(Baroness Blackstone)

My Lords, I beg to move that this Bill be now read a second time.

In December of last year the Government published the White Paper A New Future for Communications which set out their vision for the future of telecommunications and broadcasting in the UK. In doing so, the White Paper recognised the enormous changes which have been taking place in telecommunications and broadcasting, both domestically and on a global scale. Rapid technological advances and a growing convergence between the two sectors are creating new opportunities which are changing the way we all communicate and interact with each other. As these changes take place, not only do they create exciting new openings; they also raise huge challenges if the UK is to take full advantage of them.

The White Paper affirmed the Government's aim to make the UK home to the most dynamic and competitive communications and media market in the world which ensures universal access to a choice of diverse, high quality services and proper safeguards to protect the interests of citizens and consumers.

Central to achieving this vision was the creation of a unified regulator which would take over the responsibilities of the five existing regulators operating in the telecommunications and broadcasting sectors: the Broadcasting Standards Commission; the Independent Television Commission; the Office of Telecommunications (Oftel); the Radio Authority; and the Radio Communications Agency. I pay tribute to the work of the current regulators and the skills, knowledge and dedication of their staff. Indeed, these same qualities will be needed in seeking to build the new regulator.

However, it was clear that the current system of regulation, with a number of separate regulators each responsible for different aspects of different sectors, was more a reflection of the way communications had developed in the 20th century than the kind of organisation that would be essential to meet the challenges of the 21st. In taking the bold step to create a completely new regulator, which will be known as the Office of Communications, or Ofcom for short, the Government intend to set up a body that will be in a position to take a broad view across the converging industries and make strategic decisions which take account of complex technical, economic and cultural issues.

After the White Paper was published there was a further round of consultation with key stakeholders and other interested parties. Overall, the White Paper was received warmly by almost all respondents. The vast majority welcomed the Government's overall aims and there was almost universal support for the establishment of Ofcom which many felt would serve to simplify the current complicated web of regulation. This general consensus has also been reflected in cross-party support for a unified regulator. Each of the main political parties has expressed general support for the concept of establishing Ofcom to oversee the converging sectors and have called for early action to be taken to bring about this necessary change.

As many of your Lordships will remember, in February my noble friend Lord Gordon of Strathblane introduced a timely debate in this House on the proposals in the White Paper. There were many eloquent and well informed contributions and most noble Lords gave a general welcome for the proposal to create Ofcom. I look forward to hearing what your Lordships have to say in this debate about the proposals to establish the new body which are before the House today.

Despite setbacks in recent months with the deflation of the dot.com bubble, over-capacity in telecommunications and the recent downturn in advertising, technological innovations in the communication sector continue to change lives and businesses. It is vital that we are able to compete in global markets and ensure the UK's place in providing high quality infrastructure and content. To help ensure this, we must create the right regulatory structure so that UK business can continue to develop and grow. Indeed, the more difficult the economic circumstances, the more important it becomes that the regulatory framework is right to avoid stymying business further.

The Queen's Speech announced the Government's intention to publish a draft communications Bill later this Session. That Bill will set out in detail the proposals for the new regulatory regime which Ofcom will eventually oversee. Your Lordships will appreciate that regulation in this area is very complex and we want to make sure that we have the detail in the Bill right. We shall, therefore, undertake full consultation with industry and other stakeholders on the contents of the draft communications Bill in the spring to enable them to consider the proposals properly.

If noble Lords want to speculate on the policies to be set out in the main Bill I shall of course listen carefully to what they have to say. But the time to debate those matters is when the main Bill is available. Therefore, my noble friend Lord McIntosh will not be adding to the broad principles of policy set out in the White Paper when he winds up our debate this evening. Instead, publication of the draft communications Bill in the spring should provide ample opportunity for Parliament to debate the new regulatory regime. Pre-legislative scrutiny would normally be undertaken by the appropriate Select Committees in another place. The possibility of a Joint Committee of both Houses has also been raised, and nearer the time we shall consider whether to invite Parliament to adopt that approach. Either method would allow us to take account of Parliament's views before finalising the communications Bill prior to its introduction when parliamentary time is available.

The Ofcom Bill which is before you today is a paving measure which will enable us to make progress on the essential practical work which is necessary to set up Ofcom. Folding three statutory organisations, one non-ministerial government department and an agency into a new statutory body is extremely complex. We have to bring together five separate groups of professional expertise based across 20 or more offices around the country, with differing pay systems, pension schemes and organisational cultures, without disrupting this important industry and while maintaining effective protection for consumers.

The Ofcom Bill will allow the preparatory work to begin so that the new regulator will be in a position to take on its regulatory functions quickly once the regime which will be set out in the main communications Bill has been fully discussed and comes into force.

The measures set out in the Ofcom Bill are straightforward. They will establish Ofcom as a statutory corporation. The new regulator will be governed by a corporate board made up of executive and non-executive members (referred to in the Bill as staff and non-staff members) who will be able to bring a range of knowledge and expertise to the organisation. Appointment of the chairman and other non-staff members will be made jointly by the Secretary of State for Culture, Media and Sport and the Secretary of State for Trade and Industry. The Bill proposes that, initially, as Ofcom will have no regulatory functions, there should be a small board of between three and six members, including the chairman and the chief executive. However, the Bill also provides the Secretary of State with the power to change the size of the board. It is envisaged that that power might be used at a later stage to widen the range of expertise available to the board once Ofcom takes on its regulatory functions.

The Bill provides Ofcom with just one function: that of preparing to assume its other regulatory functions at a later stage. As I said earlier, bringing Ofcom into being is complex and includes preparation of schemes for the transfer of staff, property and other assets or liabilities from the existing regulators to Ofcom. The schemes themselves, however, will not be made until the communications Bill has been passed. Moreover, they will not involve the transfer of any regulatory functions. Those regulatory functions will be conferred upon Ofcom only when the main communications Bill is brought into force after Royal Assent.

Ofcom will only be able to undertake the necessary preparatory work successfully with the full co-operation of the existing regulators. The Bill, therefore, contains provisions to ensure that Ofcom has a duty to co-operate effectively with the existing regulators during the transitional period. Similarly, the Bill places an additional duty on the existing regulators to do everything necessary for Ofcom to make its preparations.

In order to avoid regulatory uncertainty occurring during the transitional period, provision is made in the Bill preventing Ofcom interfering with the carrying out by any of the existing regulators of their current functions. It therefore remains clear that during the transition period the current regulators will continue to carry on with their day to day duties until Ofcom assumes its regulatory role.

Clause 4 of the Bill allows the Secretary of State to wind up Ofcom. In practice the Government do not anticipate that measure being required. It is included purely as a safeguard to provide assurance that should any unforeseen circumstances prevent progress in bringing forward the policies contained in the communications Bill, the Government will be able to take the necessary steps to dissolve Ofcom should the need arise. After 2003, the Secretary of State will have a duty to act if no progress is in prospect.

The Bill contains provisions to give Ofcom the power to establish committees. Ofcom will have the flexibility to determine its own internal working arrangements and establish committees which are advisory in nature or ones which will have decision-making functions delegated to them. Ofcom will be able to appoint non-board members to be included in the committees to enable them to benefit from particular expertise or the representation of particular interests. The White Paper made specific reference to the new consumer panel which would represent the concerns of consumers to Ofcom. Further details of how that panel would be constituted will be set out in the main communications Bill.

In summarising the main purpose of the Ofcom. Bill, perhaps I may stress again that it is the intention to provide Ofcom with just the single function of preparation. Ofcom will have no regulatory functions until Parliament has had the opportunity to consider precisely what those functions should be. Nothing in the Ofcom Bill prejudges those substantive issues.

Your Lordships may be aware that the Delegated Powers and Deregulation Committee issued its report on the Bill in July with a single recommendation. It noted that in Clause 4 of the Bill—the sunset clause—that subsection (3) applied the negative procedure to the Secretary of State's power to make an order for Ofcom to be wound up and dissolved. The committee's view was that Parliament should have sufficient opportunities to discuss the fate of Ofcom before any such order was made and therefore recommended that the affirmative procedure would be more appropriate in connection with that power. I am pleased to confirm that the Government are happy to adopt that recommendation and therefore propose to put down amendments to the Bill in Committee to that effect.

As envisaged in the White Paper, the Department for Culture, Media and Sport and the Department of Trade and Industry have worked closely with the five existing regulators to start the planning stages of the transition process needed for the eventual creation of Ofcom. I thank the boards and chief executives of the regulators and their staff for their extremely constructive and valuable contribution throughout the process. A steering group comprising the regulators and representatives from both departments has been established to oversee this planning process. The results of an initial scoping study, undertaken by independent consultants, have recently been published which assess the kind of organisation Ofcom might be and how the complex task of transition might be managed. The main management decisions relating to structure, staff appointments, human resource policies, vision, organisational culture and many others, will ultimately be for Ofcom itself to take when a chairman and board are in place. But a great deal of work needs to be done—for example, in gathering information, benchmarking against other organisations and identifying options—if we are to meet the 2003 target date. In the meantime, the work process now embarked on by the steering group provides a satisfactory basis for carrying on with the planning for the new body.

Obviously, the chairman and board of Ofcom will have a crucial role to play as the transition process develops; and the timing of the appointees to these posts will be important to ensure that they are able to contribute fully. We still need to find the right mix of experience and skills to cover the range of Ofcom's responsibilities. That process will need to start soon, but it is one that cannot take place overnight. We will, of course, follow the full public appointments procedures in making the appointments. In view of that, the appointment of the chairman of Ofcom will not take place before spring 2002. Subsequently, we hope to have the full board of Ofcom in place by autumn 2002.

Following the consultation process, and pre-legislative scrutiny, of the draft communications Bill which I have already outlined and which will take place in spring next year, we aim to introduce the main communications Bill as soon as parliamentary time is available. The Government remain committed to the target of having Ofcom operational by the end of 2003.

Both broadcasting and telecommunications are vital for the cultural and economic interests of the whole country. A modern, forward-looking regulator operating a flexible, effective and proportionate regime will be crucial for creating the conditions within which these converging sectors can flourish. Through the promotion of competition, high standards and a vigorous communications sector, Ofcom will be well placed to help ensure that the expectations of consumers, citizens, viewers and listeners can be met. I commend the Bill to the House.

Moved, That the Bill be now read a second time.—( The Baroness Blackstone.)

4.20 p.m.

My Lords, I look forward to hearing later in the debate the maiden speeches of the noble Baroness, Lady Howe of Idlicote, and of the noble Lord, Lord Corbett of Castle Vale.

I begin by agreeing with the Government on one basic point: the speed of development of digital technology and the convergence of communications have highlighted the inability of the regulatory framework to keep up with the pace of rapid change. After all, the current framework was designed at a time when the full implications of the digital age could not have been predicted by either politicians or the industry. It is true that we need to get right—and to get right for a generation—the proposals contained in the paving Bill before us as well as those in the communications Bill.

As a child, I can recall huddling with my parents around a seven-inch television set, watching black and white pictures and thinking that I was extremely lucky because so few people owned television sets. I listened avidly to the Home and Light stations on the radio and later, as a teenager, I struggled to find Radio Caroline on the wavelengths. Today, of course, I enjoy access to digital TV through my satellite dish, as well as to digital radio by the same means. I use my telephone line to gain access to the Internet, slow though it is, and, although I have not yet caught up with WAP technology, I hope to do so soon. I am proud of the lead taken by the industry in this country both in telecoms and broadcasting and I await impatiently the next stage of convergence of the telecoms and broadcasting sectors. But I also impatiently await the next stage of the Government's plans for the communications Bill. The Minister rightly forecasted the fact that Members participating in this debate and those involved in later stages of the Bill would refer to that matter with some angst, because so much of this Bill predicts what may or may not happen in the future.

The Minister told the House that the Government intend to publish the draft communications Bill in the spring of next year. In this country, spring can last for a long time before the cold winds finally disappear. Let us hope that on this occasion spring comes early.

The Minister was brief in her exposition of the paving Bill now before the House. Perhaps the Government are keen to avoid consideration of the issues that will necessarily form part of our deliberations on it; namely, issues raised by the Government's own inaction on the communications Bill itself. Because that Bill did not come forward in proper time, the Government have now had to take the extraordinary step of asking the House to approve a paving Bill. That in itself is a matter to which we shall have to pay close attention.

With regard to the issues raised by the paving Bill, we give our general support to the idea of a single over-arching body to serve as the regulator. The Minister was absolutely correct to point out that there is general cross-party support for the proposal. However, practical probing amendments will have to be tabled in Committee to ask the Government questions about the model they have chosen for Ofcom to ensure that it acts as a board and not as a dictatorial body. How can we be sure that the embryo Ofcom created by the paving Bill will be able to operate in a manner that is appropriate, fair and effective both before and after the passage of the communications Bill? Will the new super-regulator have the super flexibility required to meet the changing needs of industry and consumers? Will it owe its loyalty to politicians, to viewers and listeners, to broadcasters and to Internet service providers?

When Ofcom acquires its powers, will it provide light-touch regulation? The Government have said "Yes" to this question, but we all know that their idea of a light touch can turn out to be someone's else's idea of sticky fingers. Witness the debacle earlier this summer over Tessa Jowell's initial reaction to the "Brass Eye" programme when she wanted to step in ahead of the regulator, but then had to beat a retreat. The problem is that we do not have the answers to those questions, because today the House is being asked firmly to put the cart before the horse. Worse than that, we are being asked to approve the Government's decidedly sketchy design for a cart and we do not even know what kind of horse is to pull it. Indeed, the Government are so lacking in confidence in their design skills that, as the Minister pointed out, they have inserted into Clause 4 an option to pull the whole cart to pieces and throw it in the skip.

What will be our guiding principle when considering the Bill? The test that we shall apply throughout is that we believe it is vital that the initial functions of the paving Ofcom body, the embryonic Ofcom, should not pre-empt or prejudice any matters on which Parliament may wish to legislate in the main communications Bill—whenever it is brought forward. Clauses 2(5) and 3(4) try to give a reassurance that nothing will be done by Ofcom which would supersede or circumvent decisions that properly should be taken by Parliament. But the fact remains that the provisions contained in the Bill raise significant questions as regards structure and function which may undermine Parliament's ability to approach the communications Bill unfettered.

I propose to cite only four examples in my remarks. My noble friend Lady Miller will address further examples. I shall refer to issues regarding structure, appointments, finance and the regulators themselves.

With regard to structure, it is important that the existing regulators are not simply Sellotaped together. The Bill provides an ideal opportunity to rethink the way in which regulation should take place. We need to bring to this a fresh mind, unencumbered by the policies of the existing regulators. The Bill needs to make that clear. However, the underlying question here is: what are the Government really asking us to debate? Is it what the Minister proposed; namely, the constitution of Ofcom for the purposes of its present function, as set out in clause 2(1), "to facilitate implementation", or are we being asked to debate the anticipated future functions of Ofcom as an industry regulator? The noble Baroness stated firmly that we should not do so. Unfortunately, although logic states that it cannot be the latter (because we cannot yet determine whether Ofcom's structure will be suitable for functions which Parliament has not yet decided that it should have), if It is the former, I fear that the Explanatory Notes to the Bill are misleading. The notes suggest that certain provisions are being included in the Bill due to their relevance to Ofcom's operations after the future communications Bill has come into force. I refer to paragraph 12 of the Explanatory Notes, which outlines the establishment of committees by Ofcom.

In her remarks, the Minister referred to the Towers Perrin report, published only three days ago. Although I have had the opportunity only to look at the executive summary, it makes it clear that the report was prepared,
"on the understanding that final decisions on structure will rest with the paving Ofcom board",
that is, not the full board. That means that, as the Minister said, we are being presented with something of a fait accompli with regard to the structure of Ofcom. However, even without that report, the reality of the Bill before us is this: once an organisational structure has been created, however skeletal—even before a chairman has been appointed—those people who staff it will have to make decisions and plan for the future. The organisation will begin to take on a life of its own.

I turn briefly to the matter of appointments. The Minister was most helpful in outlining when the Government hope to make some of the key appointments to the board. It is true that the board will need a membership that has the support of both consumers and the industry. It is also important that there is transparency in the appointments process. However, I have to say that that process is not made clear in the Bill. The noble Baroness will not be surprised if we probe a little further on it when we debate the Bill in Committee.

A time will come when the preparatory work is so advanced that the key decisions on how Ofcom is to work will have to be taken by those who will be ultimately responsible. After the Government have made the appointments of the chairman and members, there will be a key period when those members will be making decisions which may undermine what Parliament wishes to achieve in the communications Bill.

As regards the size of the board, I understand much of what was said by the noble Baroness with regard to the need to start small and then perhaps to grow. However, I believe that there may be inherent problems in that approach, although I recognise the tension between, on the one hand, establishing a board that is small enough in number to respond rapidly with regard to economic regulation where swift decisions must be reached, and, on the other hand, balancing the need to appoint enough people to the board fairly to represent the broad swathe of abilities that will be needed in order that the super-regulator will be able to do its job well. Furthermore, there is the moot question of how the Government will cope with their relationship with the devolved administrations. Will each administration nominate a member to the board? If not, will another way be found for them to feed in their views on appointments?

As regards finance, I believe that we need further clarification on the budget and funding of Ofcom during the transitional period. Ofcom is being asked by the Government to conduct an expensive guessing game, which the Bill itself acknowledges may have become pointless by 2003. The Explanatory Notes put the risk at about £5 million—my noble friend Lady Miller will have something further to say about this later—but the question is who should carry that risk. The Explanatory Notes state that,
"the Government will share with industry the cost of initial establishment",
but what will happen if Clause 4 is invoked and Ofcom is abandoned? Who will pick up the bill then? I would hope the Government.

I turn now to the question of the regulators covered by the Bill. The clearest way in which the Bill may be seen as defective—by "defective", I mean pre-empting what may be Parliament's will in the communications Bill—is the omission of the BBC governors' regulatory remit from the remit of Ofcom during this preparatory phase. It is surely illogical to establish what the Government call a single converged regulator and then to exclude from its remit services which represent a major part of broadcast television and radio. As the National Consumer Council points out:
"Excluding the BBC from the full remit of OFCOM limits the potential benefits to consumers of a much improved regulatory system".
It is important to have a significant debate on the nature and structure of the BBC's regulation. It is important to have that debate now simply because the way in which the Government have introduced this paving Bill makes it vital that we should have such a debate. If Parliament decides that the BBC governors' regulatory role should be transferred to Ofcom, we need to prepare for that in the Bill.

Clause 2(1) gives Ofcom the function to do just about anything it considers appropriate for implementing or modifying proposals covering regulation, but it is limited by subsection (2) to working only with the Secretary of State and existing regulators—and, of course, the definition of "existing regulator" at Clause 5 excludes the BBC. If the BBC is left out of the loop, it will surely be too late when we come to the communications Bill to bring BBC regulation fully within Ofcom, if that is Parliament's wish. Ofcom will have worked throughout the transitional period without building up its relationship with the BBC governors in the proper manner.

It is important to bring the regulatory functions of the BBC governors into the loop now in order that we are able to ask the industry to move forward as a whole. In Committee, we shall ask the House to do the right thing by the BBC, the industry and consumers—that is, to ensure that the BBC works with the paving Ofcom in such a way that it is ready for the regulatory powers of the BBC governors to be transferred to Ofcom, if that is what Parliament decides in the communications Bill.

Finally, the Government will have a duty in Committee to prove that the provisions of the Bill will enable Ofcom to do a job which has not yet even been defined in a draft Bill, let alone in statute, and to exercise powers which have not yet been debated, let alone agreed by Parliament. The Government must satisfy the House that nothing in the Bill will pre-empt or prejudice our debates on proposals in the communications Bill. This is a paving Bill which may, if we are not careful, trip up both the Government and the industry. I am sure that the Minister and the Government are perfectly capable of looking after themselves, but we have a duty of care to both the industry and consumers. I look forward to trying to fulfil that duty of care in later stages of the Bill.

4.33 p.m.

My Lords, I, too, am looking forward to the maiden speeches of the noble Baroness, Lady Howe of Idlicote, and the noble Lord, Lord Corbett of Castle Vale. They have chosen a difficult debate but I know that their expertise will add great value to our deliberations.

I say that it is a difficult debate because we have had so much time to consider how to address this paving Bill, as it is rather loosely called, and now none of us will be making the same speech today as we would have made a month or six weeks ago. Inevitably, whether consciously or subconsciously, we have in the back of our minds the terrible events which took place at the twin towers in New York and ensuing events.

Britain has a great reputation in communications and broadcasting and the Government are now looking to take that forward into a new age of technology. From my experience—I express my own view; I am sure that at Second Reading noble Lords will forgive me this indulgence—of listening to many broadcasts of the BBC's World Service, I am struck by the very high quality of its broadcasting. I get extremely angry when I am riding around on my bicycle or my motor-cycle—which is extremely dangerous—when I think of the number of times we in this House have pressed, and others have pressed the Front Bench in another place, for some reassurance about the continuance of funding for the World Service of the BBC. There is always the possibility of the cutting down of vital services.

In Afghanistan there has always been a very high percentage of people who listen to the World Service of the BBC. I believe it is some 60 to 70 per cent in both the major language groups, Pashto and Persian. Noble Lords will be aware that during the unfortunate disagreement we had with the Taliban over the Buddhist statues, the World Service spokesman in Afghanistan had to be removed. It is interesting that now, at the wish of the Afghan authorities, the spokesman has been recalled and the level of listening to the World Service is as high as ever.

There is even an Afghan version of "The Archers" programme, which deals with two villages. I do not know what the programme is called in the Afghan language, but it shows the ingenuity and creativity of the British There is a lot of high-flown talk about the new Bill releasing or unlocking creativity. There is no shortage of creativity—it does not need to be unlocked in this country because there is plenty of it—but there needs to be an opportunity for people to recognise it. Management is required, and it is management that we shall be looking to in the new arrangements.

Having said that, the noble Baroness described exactly how the next few months will proceed. Some of us will be more sceptical than others about the timetable she has given for the arrangements because convergence will take place at differing rates. The solutions to the problems of staffing, staff welfare and property disposal that the Minister told us about will take a good deal of time and complex negotiation.

As the noble Baroness said, the purpose is to provide an efficient structure for our communications industry. That is quite normal because of the way in which we are all aware of broadcasting in this country. However, the majority of provisions in the Bill, when we come to it, will not concern broadcasting matters but the Internet, fixed and mobile telephones, increasing the choice available to consumers, the quality and cost of equipment and so on.

The public service environment in this country requires not only parliamentary debate—I was interested that the Baroness indicated that there may be a joint committee of both Houses to examine many of the issues leading up to the Bill proper—but the future of public service broadcasting in the new digital age has not been properly debated in the nation as a whole. People are not yet aware of the complexities entailed. There are so many difficulties in the new environment that special interests will be extremely fearful unless they are assured in short order. The poor, those who live in rural areas, the disabled, the blind and the deaf all have a vested interest in seeing that their needs arc catered for in the new environment.

As the noble Baroness acknowledged, we have no objection in principle to the combining of the functions of the existing regulators into a new regulatory body, at the same time acknowledging the difficulties that that entails. The existing bodies have served us well. There have been hiccups, and there is an overlap between them. Taken together, the regulators employ a much larger number of people than is widely realised. The possible uncertainty for staff if delays occur and the danger of losing good people must be borne in mind.

The fact that the noble Lord, Lord McIntosh, will not address issues other than those set out in the Bill makes this a difficult and unusual debate. Our concern will be with the content of broadcasting, which has undergone great changes. There are many distinguished broadcasters in this Chamber and I meet many others. My assessment as a radio listener—an assessment that is probably shared by a large proportion of the population—is that radio broadcasting in this country has maintained its quality to an extent that many of us would not have thought possible as we entered an age when the race for television audiences became evident. As one who has listened to the radio every day over a long period of time, I take the view that 70 per cent of the programmes are of an extremely high quality; indeed, they are probably unmatched in the world. My comments relate to education, entertainment, information and many other areas.

However, public service television broadcasts—I see noble Lords opposite making a "thumbs down" sign. I would not go quite so far as that, but a higher and higher proportion of broadcasts on public service television are meretricious rubbish. That is sad, given the great traditions of broadcasting in this country. We looked on the old BBC rather like a schoolmaster for whom we had affection: we thanked him for teaching us well but did not want to spend too much time with him in private; we did not want too many of the moral strictures that the old nanny gave us. The BBC set a standard in broadcasting which has been maintained on radio but which has not been maintained on television. Competition from the new satellite channels and from other areas has made matters difficult. There has also been pressure from government in regard to ratings, although that is denied by the BBC.

These matters will need to be discussed in some detail. Standards of decency will also need to be discussed. They are part of the content of programmes and they have changed enormously. That change presents great difficulty for the older generation, in which I happily include myself. I sometimes ask my children and grandchildren whether the programme they are watching is suitable, and receive looks of kindly derision. Those of us who are over 50 are hopelessly out of date as regards what young people want, like and accept in terms of pornographic material, language and so on. All these points will have to be dealt with as we move towards the forthcoming Bill.

Returning to the importance of radio, I realised only when we were briefed by the Radio Authority that there are 100 million radios in this country. The average household has five radios. Some may not be in use; for all we know they may be submerged in bath water, but the number is enormous. Twenty per cent of radio listening takes place during people's car journeys to and from work—long periods of time for many people. Large numbers of young people listen to music programmes, which are a wonderful medium. All this relates to the comments of the noble Baroness; she wishes to create a dynamic, effective and well-structured communications industry continuing into the digital age.

Carrying out the proposals will be an extremely difficult job. The Bill before the House is simple. I admit that I have paid scant attention to it, but we do not disagree with its terms. We see the difficulties and we shall co-operate as much as possible in the run-up to the Bill proper, whenever that is, in trying to arrive at a decent result.

The legislation will create one of the biggest ever quangos. The word "quango" has certain pejorative tones and people do not like it, but this body will be a quango. We shall examine the terms of the proposals very carefully in order to ensure that it has the flexibility, the capability and the standards that are required, consistent with British traditions and at the forefront of their thinking. I wish the noble Baroness great good fortune in the run-up to the final legislation.

My Lords, before we move to the three Statements on anti-terrorism measures, the funding of terrorism and Railtrack, perhaps I may take this opportunity to remind the House that the Companion indicates that discussion on a Statement should be confined to brief comments and questions for clarification. Peers who speak at length do so at the expense of other noble Lords.

Anti-Terrorism Measures

4.36 p.m.

My Lords, with the leave of the House, I shall repeat a Statement made by the Home Secretary, David Blunkett, in another place. The Statement is as follows:

"With permission, I wish to make a Statement on the legislative steps necessary to counter the threat from international terrorism.

"Can I immediately pay tribute to all those in the emergency services and elsewhere who have already risen to the challenge over the last five weeks, and all those who have assisted in the immediate aftermath of the terrorist attack in New York itself.

"It is the first job of government and the essence of our democracy that we safeguard rights and freedoms, the most basic of which is to live safely and in peace. It is necessary now that we should look afresh, in a measured and proportionate manner, at whether our legal framework is adequate and our security sufficient.

"Whilst the nature and the level of the threat is different than previously envisaged, wholesale revision of our anti-terrorism laws is unnecessary. This is also the view of law enforcement agencies. However, we do need specific and targeted measures, which is why I intend to introduce an emergency anti-terrorism Bill. I am determined to strike a balance between respecting our fundamental civil liberties and ensuring that they are not exploited.

"Through these measures we will reinforce action against the perpetrators of organised crime, drug and people trafficking. In the next few days we will therefore introduce separate measures in the proceeds of crime Bill, which will now be complemented by anti-terrorist legislation.

"Terrorists use organised crime and trade in human misery to finance their activities. The tough new financial controls in the emergency Bill will help us to staunch the flow of terrorist funding. The emergency legislation will build on the provisions of the proceeds of crime Bill to deal specifically with terrorist finance, through monitoring and freezing the accounts of suspected terrorists.

"My right honourable friend the Chancellor of the Exchequer will spell out in more detail measures on the seizure of cash within this country, and strict reporting requirements on the financial sector. Separately, a new anti-terrorist finance unit is to be established in conjunction with my right honourable friend under the auspices of the National Criminal Intelligence Service.

"The events of 11th September have led to a new determination to co-operate at European and international level. Terrorists do not respect national boundaries. In line with the European-wide endeavour, I intend to include in the emergency Bill an enabling power to allow implementation of measures from the Justice and Home Affairs Council on police and judicial co-operation, by affirmative order.

"But, regrettably, there are also those who are prepared to exploit the tensions created by this global threat. Racists, bigots and hotheads, as well as those associating with terrorists, are prepared to use this opportunity to stir up hate. It is my intention therefore, to introduce new laws to ensure that incitement to religious, as well as racial hatred, will become a criminal offence. I also intend to increase the present two-year maximum penalty to seven years.

"I am examining wider powers in relation to incitement by people in the United Kingdom, against groups or individuals overseas. I am also examining additional powers in relation to conspiracy. None of this is intended to stifle free speech, dialogue, or debate. Fair comment is not at risk, only the incitement to hate.

"Obtaining good intelligence and being able to target and track potential terrorists is essential. We need comprehensive powers to require best practice to become the norm. This legislation will therefore facilitate the exchange of information in two key areas. It will ensure that law enforcement agencies can access vital information on passengers and freight. It will also enable Customs and Revenue officers to pass information to the police. These provisions will remove barriers that currently prevent the exchange of information in the fight against terrorism. These will be carefully targeted measures designed to protect the public, not affecting the privacy of law-abiding citizens.

"We shall introduce measures to enable communication service providers to retain data generated in the course of their business: by which I mean the records of calls made and other data, not the content. We shall work with the industry on a code of practice.

"I wish to thank those who have co-operated so well over the past five weeks.

"I believe we all accept that there is a compelling need for more effective powers to exclude and remove suspected terrorists from our country. We rightly pride ourselves on the safe haven that we offer to those genuinely fleeing terror, but our moral obligation and love of freedom does not extend to offering hospitality to terrorists. That is why both in the emergency terrorism Bill and in a separate extradition measure, I shall ensure that we have robust and streamlined procedures.

"I believe that it will be possible to achieve these changes without substantial alteration to the Human Rights Act. Nevertheless, it may well be necessary, using Article 15, to derogate from Article 5 of the European convention. This would allow the detention of foreign nationals who we intend to remove from the country, and who are considered a threat to national security. This would occur in circumstances falling outside those permitted by Article 5 of the European convention, but within the scope of Article If of the 1951 refugee convention.

"I am also looking to take power to deny substantive asylum claims to those who are suspected of terrorist associations, and to streamline the existing judicial review procedures while retaining the right of appeal. Appropriate safeguards would apply to any such derogation.

"A review of extradition procedure had been undertaken by this Government prior to 11th September. I intend to bring forward a separate substantive measure to modernise and place our laws within the context of the new international situation. Streamlining, while retaining rights of appeal, will form part of the measure.

"I also intend, following an announcement to this House in the weeks ahead, to modernise our nationality and asylum system.

"There are four other measures that I wish to refer to today. The first, which relates to the responsibilities of my right honourable friend the Secretary of State for Transport and Local Government, will strengthen security at airports and for passengers. Powers both within restricted areas at airports, and aboard aircraft, will all be strengthened.

"In addition, I can announce that we shall be expanding the role and jurisdiction of the British Transport Police, together with those working on enforcement from the Ministry of Defence and the Atomic Energy Authority. We shall be asking the House to agree to widen their powers beyond the boundaries of particular sites.

"I shall also seek powers to provide to the police, and Customs services, the authority to demand the removal of facial covering or gloves. This is a basic requirement to enable identification, where fingerprinting or other biometric tests are important.

"I am also including in the Bill clauses on nuclear, chemical, biological and radiological materials—generally described as, "weapons of mass destruction". These clauses will cover the intention to use, produce, possess or participate in unauthorised transfers of these materials.

"At the time of the millennium a great deal of work was undertaken to ensure the security of key utilities. I want to assure the House that both in the Civil Contingencies Committee, and more widely, we have examined and put in place further work to update our preparedness, preventive action, and remedial steps, should they be necessary.

"The United Kingdom has some of the world's best counter-terrorist expertise. Working together with international partners, we are taking every step to protect ourselves. These plans are continually reviewed and tested. There is no immediate intelligence pointing to a specific threat to the United Kingdom, but we remain alert, domestically as well as internationally.

"I know that many in this House will agree that strengthening our democracy and reinforcing our values is as important as the passage of new laws. If, therefore, we do not rise to the challenge, provide through our democratic institutions the commitment and will to face-down terrorists, then our economy, our social well-being, and our quality of life will suffer.

"The legislative measures that I have outlined today will protect and enhance our rights, not diminish them. Justice for individuals and minorities is reaffirmed, and justice for the majority and the security of our nation will be secured.

"On 11th September families lost their loved ones, and the threat of terrorism touched us all. If we fail now to take the necessary action to protect our people, future generations will never forgive us.

"That is why I am asking for the wholehearted support of all sides of the House in demonstrating that this Parliament, our democracy, and our judicial system, are capable of rising to the challenge and of doing so swiftly and effectively".

My Lords, that concludes the Statement.

4.56 p.m.

My Lords, I am sure that the whole House will be grateful to the Minister for repeating the Statement made by his right honourable friend in another place. Like the noble Lord's party, we also wish to see those changes in domestic law that are necessary to improve the effectiveness of the counter measures against terrorism in this country. However, I am sure that the noble Lord will agree that over a number of recent years we have witnessed too many instances where we have legislated in haste and subsequently repented at leisure. We must be most careful in what we do to ensure that we properly maintain the balance between public safety and individual freedom.

The Statement refers to building on the powers under the proceeds of crime Bill to deal with the question of cutting off funding for terrorist activities. I believe that the City is the biggest money market in the world; indeed, it is certainly by far and away the biggest within Europe. Can the Minister assure me that proper and adequate consultations are now taking place, especially with banks and other city interests, to ensure that, while every proper step is taken to ensure that we do what we can wherever possible to restrict the movement of funds that might be used for terrorist purposes, we do not take steps that might at the same time so restrict the City that we indirectly achieve the terrorists' purposes for them?

We welcome the acknowledgement that we need to change the law now in the interests of public safety so that the Minister can refuse entry to this country of persons known to pose a risk to public safety and national security. That law will require precise definition.

We also need to deal with the people who are already here. There will unquestionably be some, as we know from some recent court cases. What shall we do to remove them? Again, I welcome the Minister's assurance that action will be taken, but it is clear from recent cases that the removal of dangerous foreign nationals will present us with a tricky legislative problem.

The Statement appears to say that one way of overcoming that difficulty would be the indefinite detention of such individuals, but that may not necessarily be the best way forward. As we see the programme of proposed legislation, we shall need to explore whether other methods might be more appropriate.

We welcome the assurance that there has been in the past that Parliament will have the right to consider the Human Rights Act. Indeed, we may now have to examine the effect of that legislation in so many ways because of the counter-terrorist problem. The issue of counter-terrorism has affected not only this country. Europe has rightly woken up to the problem, which is a welcome response. We welcome the directive requiring other EU countries to pass legislation on terrorism that is parallel to our Act.

That is one thing, but to accept too slavishly what comes from Europe may not be as reasonable as the Statement implies. I admit to considerable concern about the part of the Statement that appears to imply that action to implement European arrest warrants might be passed into British law using only secondary legislation. That is so serious that we need to think more carefully about it. It could threaten the old British principles of habeas corpus and one is innocent until proven guilty. These are serious matters, and I should welcome the Minister's assurance that they will be treated with all necessary and due care when the legislation is brought before us.

It is clear that sunset clauses, to which I referred when we debated the Statement on emergency action a week or two ago, are very significant. Will the Minister assure us that there will be a sunset clause in the proposed new legislation on terrorism, as it relates to the present emergency, so that Parliament can review regularly both its effect and the need for it to remain on the statute book?

We support the principles that the Government have outlined and which they are trying to implement. The whole House will want to examine in detail the proposals, to minimise the possibility of any perverse effect. The legislation that is passed by Parliament must be in the best interests of all our people, whatever their background or their community within our nation state. That is our purpose and one with which we are happy to join the Government in pursuing.

5.4 p.m.

My Lords, like the noble Lord, Lord Dixon-Smith, I am grateful to the Minister for repeating the Statement. I am not particularly good at mathematics, so I wonder whether he can tell me how many pieces of primary legislation he has announced today. I am sure that the House will be interested to know.

The most abiding memory of the events of the 11th September was the sight of firemen, police and other emergency services going against the flow and going into danger as others fled from it. There is no doubt that if we ever faced a similar attack, we could rely on a similar sense of duty and heroism from our own emergency services.

This is the first time that the House has had the opportunity to discuss or question home front matters and time will be needed for a debate on the issues raised. I wonder whether the Minister agrees that if truth is the first casualty of war, there is often a danger that civil liberties is the second, and freedom of the press is the third. There is a need for Parliament to be careful of the powers that government and the state ask for when facing an emergency.

As I said when I intervened in the debate on emergency action, it is not as if we have lacked legislation in these matters. The Terrorism Act, Regulation of Investigatory Powers Act, Immigration and Asylum Act and various Acts relating to criminal justice are all less than two years old, and presumably were drafted with an eye to emergency and attack. As regards some of the most recent Acts, in particular, Parliament should be willing to see how the new powers that were so recently granted apply to this situation.

On the question of money laundering measures, to which the noble Lord, Lord Dixon-Smith, referred, I disagree slightly with his emphasis. I spent part of the summer talking to various authorities about money laundering, mainly in relation to drug trafficking. In listening to the professionals of the various bodies involved, I was struck by how much slack there is in London. Although I understand the desire of the noble I Lord not to damage the City of London and its financial institutions, they cannot have it both ways. It is extremely important that bankers, lawyers and accountants show a sense of proper responsibility—I see one of our most distinguished accountants nodding vigorously.

The matter is important. It is no use saying, "I am not a private detective". I believe that those professional organisations have a public duty to help in taking effective action against money laundering.

Will the proposed emergency legislation on terrorism be published in draft form? Will there be a consultative process, especially considering the large number of parliamentary groups that are interested in these matters? Will our new Human Rights Committee be consulted? The noble Lord, Lord Dixon-Smith, referred to a sunset clause and annual provisions for renewal, which are matters that concern us all, so it would be useful to have clarification.

No mention of identity cards was made in the Minister's Statement, so can we assume that the authoritative put-down by the noble Lord to a Labour party fringe meeting is the last word on these matters?

Will the proposals for derogation from the Human Rights Act be put to the Human Rights Committee and will there be scope for judicial review of derogations? Will derogations be time limited by the Government? We welcome the proposals referring to incitement to religious hatred, although it has been pointed out that the existing legislation on racial hatred has been rarely used.

I wish to touch on another point, which relates to the second half of the Minister's Statement that comes under the broad term of civil contingencies, or perhaps the more old-fashioned term of civil defence. Who is in overall charge of the security of London? Can he give us a categorical assurance that there are no "turf wars" between central government and the Greater London Authority as have benighted transport policy? It is important that we do not fall foul of such "turf wars".

I am aware that a review of civil defence is under way, but there is the worry that our civil defence is geared to fight a cold war and nuclear war and a possible attack from Russia. This is an emergency and we are fighting a different kind of threat. One wonders how well geared we are to meet the new threat. The Minister mentioned that the MoD, atomic energy and transport police will have extended powers. How will those powers match those of existing police bodies and those of the police authorities who have oversight of those bodies? Does the Minister fear that "turf wars" or contradictions may arise? That is always a danger with these matters.

The Minister ended his comments with a ringing declaration of wholehearted support and our duty to future generations. We are all aware of that duty. However, Parliament also has a duty to be certain that emergency legislation is just that; namely, that it responds to an emergency, is clearly justified and will apply only for as long as is necessary. The wholehearted support of these Benches will be gained if the Minister can reassure us on those points.

5.12 p.m.

My Lords, in the limited time available I shall do my best to respond to some of the points which have been made. However, it is inevitable that I shall not be able to respond to all the points raised by the noble Lords, Lord Dixon-Smith and Lord McNally.

The Government have taken on board the point with regard to legislating in haste. We are trying not to do that. Much preparation and thought are being put into the legislation. Many of the loopholes we have identified have existed for some time. Sometimes it has not been appropriate to seek to close them, as has been the case in legislation that has been passed in the past few years. This House has not been satisfied that some of them should be closed. Therefore, we do not have to invent the wheel in respect of some of these issues.

I understand that the proceeds of crime Bill will be published later this week. I warn the House that it is a massive tome with over 400 clauses. It is a substantial piece of legislation. It has involved much consultation and has already been published in draft. Some consultations on the draft Bill are ongoing. As I indicated, we shall have to revisit the human rights legislation. I make no bones about that. That will have to be done in conjunction with the other place. As I made clear, we intend to use affirmative procedures with regard to the proposals of the Justice and Home Affairs Council of the European Union. I make it absolutely clear that the United Kingdom cannot solve these problems on its own. We must co-operate closely with our European Union partners. We do not seek to undermine or fast track the matter. As I say, we shall use affirmative procedures in bringing forward matters relating to the Justice and Home Affairs Council. There will be full debate in this House.

I say to the noble Lord, Lord McNally, that I listed three Bills: the emergency anti-terrorism legislation; an asylum and immigration Bill and an extradition Bill. The proceeds of crime Bill will be modified to deal with some of the other matters. I take second place to no one in defending our civil rights, but inevitably there are those who will seek to abuse our liberal, tolerant democracy to undermine and exploit existing loopholes. We must make sure that we maintain our liberal and tolerant quality of life and not have it smashed by terrorist minorities. We must be careful. People have rights but they also have duties. One cannot have dutiless rights and have a decent civic society.

The other day I came across The Principle of Duty by David Selbourne. The book fell open at a page where a point was made that clearly fits the current circumstances. We must defend our rights but those rights involve duties. We shall consult fully. I hope that we have made that clear from the beginning of the parliamentary Session as regards the legislation that we are bringing forward. I cannot promise that it will be published in draft form. An emergency anti-terrorism Bill will be brought to the House quickly. I suspect that there will not be time to publish it in draft form. It will be introduced first in the other place and, to that extent, its contents will not come as a surprise. In so far as we can consult with all relevant parties we shall certainly seek to do so.

I was asked about ID cards. I was asked a straightforward question; namely, whether ID cards were part of the Government's emergency legislation. I replied, "No". I did not add, "How could they be? If we were to do that it would take years and this is emergency legislation". The next day the headline in the media was, "Government abandon ID cards from emergency legislation". When I replied "No" to the question that I was asked, it was an honest answer. That is not to say that the Government are still not considering the issue. I have not issued a "put down". I simply made the point that we were not rushing the matter, that there were no secret policies or plans and that the Government would discuss that matter and, if it was considered appropriate, we would bring forward proposals but that it would not be part of the emergency legislative package. It could not possibly be so in a country with nearly 60 million people. There are no "turf wars" in Whitehall.

My Lords, I shall not say any more as anything I say will qualify that statement. I say to the noble Lord, Lord McNally, that I referred to the British Transport Police, the MoD police and the atomic energy constabulary. Those police forces already operate. The atomic energy constabulary was armed many years ago when Tony Benn was the Secretary of State for Energy. I remember the legislation going through the House of Commons. It was "touchy" at one point. Nevertheless, their powers are highly restricted and curtailed. I made the point that there are probably grounds for extending some measures beyond particular sites. Obviously we shall hold full discussions on that matter. It would not make sense for proposed changes not to involve the co-operation of the police. Therefore, as I say, the matter will be fully discussed.

As I say, I cannot respond to all the points made but I shall do my best. We shall, of course, revisit the issue soon.

5.18 p.m.

My Lords, will the noble Lord please help me? First, will he define "terrorist"? Secondly, will he remember that I have a vision of a man who was an Omagh bomber, leading a Rottweiler, carrying a target pistol and going to a football club to be a hooligan? All of the legislation covering those matters was passed in a rush and no one has taken a blind bit of notice of it. We have had terrorists in this country for 30 or 40 years now. We have introduced emergency legislation after emergency legislation after emergency legislation and it has not worked. I do not say that it is completely unnecessary, I just ask the Government to consider the matter carefully and to accept the situation if measures turn out to be illiberal and unnecessary. Instead of being stubborn and saying, "We cannot resist", I hope that they will say, "Yes, we shall listen". That is the mark of a good government.

I produce one further small point for the noble Lord to consider. As regards stirring up religious hatred, we are in difficulty with monotheistic religions. The Christians quote Jesus saying, "Only through me can you have salvation". The Muslims say, "There is one god, no god but God, and Mohammed is his Prophet". The Jews say, "God loves us and no one else". Those are all pretty mutually exclusive bits of, some could say, unpleasant attitudes. We have to be very careful before we embark on such legislation, because it will be illiberal in concept and difficult to enforce and the charges will create martyrs.

My Lords, I cannot give the noble Earl a legal definition, but it is a bit like the elephant on the doorstep: I will recognise a terrorist when I see one and so will the people of this country. We have had this problem with legislation in the past. It has been said that one man's terrorist is another man's freedom fighter. Generally, the people of this country and the people who were affected by what happened on 11th September recognise terrorism when they see it.

On the noble Earl's other point about religion, there is one God and there are many prophets.

My Lords, will the Government take this opportunity to review the rules that prevent the extradition of someone accused of serious and appalling crimes to other countries—even to an ally such as the United States—unless they change their domestic law on capital punishment?

My Lords, that is not true. We have extradited many people accused of heinous crimes to the United States. We have an agreement with the United States and the rules are clearly laid down. We will extradite if there are reasonable grounds, provided there is a commitment that those extradited will not be subject to the death penalty. That has worked. It has not proved a barrier to extraditing people to the United States and there is no reason why it should prove a barrier in the future.

My Lords, the Statement seems to envisage creating an arbitrary power of arrest and detention without trial and giving to the Home Secretary an arbitrary right to expel suspects, apparently without any form of judicial process or judicial examination of the merits of the case. Will the Minister assure us that, although the judicial review procedures may be streamlined, the Government do not intend to take away the right to apply for a writ of habeas corpus?

My Lords, I am not qualified to give answers before full legal authority, but I think that I have made it clear, as the Home Secretary did throughout his Statement, that we are not seeking to remove appeal rights. We are seeking to streamline the position, for example by removing judicial review from the Special Immigration Appeals Commission. I do not want to fall out with the legal nobles here. I assure the noble Lord that the legal industry, or legal trade, in this country will still be able to earn a living. We are not going to put them out of business, but neither are we going to let them misuse the legal process on key decisions to frustrate what we are seeking to do with our partners, as has happened in the past. That is all that we are seeking to do.

My Lords, is the Minister referring to Her Majesty's judges? It is they, not the lawyers, who take such decisions.

My Lords, I shall refrain from the temptation to indulge in a lecture on theology or comparative religion, but I should like to comment on the Government's intention to act against incitement to religious hatred. No healthy religion has anything to fear from scrutiny and honest debate. That is not the problem. The problem arises when attacks on a particular religion are used as a cover for racism and xenophobia. There is no difficulty with religions such as Judaism, which belong to a particular ethnic group. Anti-racism legislation is sufficient there. The difficulty arises with religions such as Christianity and Islam, which, in principle, transcend all ethnic divisions, but which, in particular historical circumstances, have become associated with an ethnic group. Islam is not an inherently Asian religion, but in this country it is generally perceived as such, so attacks on Islam are used as a cover for incitement to hatred against people of Asian origin. That is the problem.

I know some people who do not think that there is a problem, but there is. They should see some of the material recently distributed by the British National Party urging parents to withdraw their children from religious education on the grounds that it is an instrument for the Islamification of Christian Britain. For those reasons, the Government's intention to legislate against incitement to religious hatred is welcome. However, will the Government be very careful in drafting their legislation to ensure that they hit the intended targets and do not give unintended protection to bogus groups, whose names we can probably all think of and who deserve no protection from the most searching scrutiny?

My Lords, the right reverend Prelate made the case for me at the beginning of his remarks. We do not intend to define religion in the legislation as far as I am aware, because that is not the issue. The issue is criminal behaviour, which the courts can identify. There is no doubt that people have exploited religion as a cover for racial hatred. We are not seeking to ban or outlaw fair comment or debates within different religions. We are after the misuse of religion as a proxy for other purposes in the context of criminal behaviour. That is where the courts can be used to make the final decision.

My Lords, I strongly support what the Government have recommended this afternoon. It is entirely appropriate when faced with dangers such as those that we have faced since 11th September that the Government should bring in measures such as those that have been outlined. Indeed, they would be negligent in their duty if they did not do so.

We have been dealing with terrorism in our country for the past 150 years, but the nature of terrorism has changed significantly since 11th September. When the perpetrators of acts are prepared to destroy themselves in the process, new and uniquely difficult dangers are created for innocent people and prominent people. That is why the measures outlined have my strong support.

The Minister said that the Home Secretary was still considering two measures. One relates to those who, from the safe haven of Britain, still promote and support subversion and terrorism in their own country. I hope that those measures can be brought in relatively soon. As we shall be seeking to identify fanatical individuals and groups, we shall need much more intelligence about their activities, not only in this country but in the country from which they came. I very much hope that the resources available to the security forces will be increased significantly.

My Lords, the noble Lord is right. The nature of the threat has changed. If we do not recognise that, we and our fellow citizens in this country are in real trouble. However, that does not mean that we should over-react and destroy our way of life in meeting the threat. We have to be mindful of that. We need to use our brains to maintain the liberal tolerance of our society, but also to fight the new threat. That means change and accepting some duties that would not have been placed on citizens in the past. It means accepting a degree of intrusion. Communications is one example. We are not after the content of communications, but information such as the dates on which calls are made and which number rang which number. That will protect the privacy of law-abiding citizens. The noble Lord is right about the intelligence services, because we cannot operate without good intelligence. We are looking at that issue.

My Lords, I should like my noble friend to address a single point on money laundering. I think that there is agreement among the general public that money laundering is one of the means by which terrorists help to organise their activities and get the materials and transportation that they require. I ask my noble friend whether he will try to ensure that the money laundering instructions or regulations that the noble Lord may have in mind will be much more precise in nature than the mere generalisations that have been offered over the past year or so. Those are so general in their effect that one can escape them very easily.

Money laundering is an activity that benefits not only the person who wants to launder the money but also the person or body who supplies it. Therefore, it is a very sensitive matter. Can my noble friend assure me that some detailed precision will now be applied to the regulations that will be rigorously enforced? The Government should have studied the matter over the past year but the issue has now become vital. If we are successful in cutting off the money, we shall deal a very heavy blow against terrorism.

My Lords, I say to my noble friend that the Statement which is to follow this one will probably be more specific to the financing of terrorism. However, the point that he makes is correct. If we do not apply precision to the legislation, the matter will end up in the courts. As a result, the legal profession and not Parliament will make the decisions. Therefore, the more precise that we are, the greater the chance that Parliament and not the courts will make the rules. That is a matter about which we are actively concerned.

I return to the subject of the proceeds of crime Bill. As I indicated, it is a substantial piece of legislation and there will be plenty of opportunity to discuss it. I hope that the length of the Bill is an indication of its precision. Obviously, a broad-brush approach would leave gaping loopholes all over the place. Therefore, we must hone in on and target exact offences; otherwise, the matter will be taken out of Parliament's hands and into those of the courts.

My Lords, I wonder whether the noble Lord can answer the last part of the previous question concerning resources. We shall need a great many more people in the security services. Will he obtain the necessary money from the Treasury?

My Lords, as I said, there are no turf wars and we have joined-up government. At present, resources are being made available as required.

My Lords, why should a person within the United Kingdom be allowed to board an aircraft without being required, if necessary, to prove his identity? Is there resistance within the department to the introduction of national identity cards?

My Lords, we have not kept embarkation details in this country for several years. Rather, the situation has gone the other way: we check those who enter the country, not those who go out. However, measures are in hand which I believe will meet the point to which my noble friend referred. As touched upon in my Statement, other legislation will deal with aircraft security, the swapping of information about people on flights before they land, and so on, so that the authorities receive good advance notice. I consider that to be important.

So far as concerns my noble friend's second point, the answer is no. There is no barrier in the department.

My Lords, convicted terrorists in my part of the world have for many years continued their dastardly trade from behind bars. Are there no conditions under which Her Majesty's Government will consider the reintroduction of the death penalty?

No, my Lords. In any event, as I understand it, that has always been a matter for a free vote in both Houses. I believe that the issue has been put to bed. The subject has been debated in Parliament time and again, and the result has been the same. Therefore, I say that there is no prospect of reintroducing such a penalty.

My Lords, in his remarks earlier, the noble Lord, Lord McNally, reminded us of the abiding scenes of the emergency workers in New York. We also recollect the rock solid qualities of the Mayor of New York, Rudolph Giuliani, standing in the midst of the mayhem and creating some order out of the chaos. I want to ask the Minister whether he is happy that, if, God forbid, similar circumstances were ever to occur in this country—here in the city of London especially but also in our other great metropolitan centres—there will be clear lines of authority. Will someone be seen to be in charge and able to gather together all the resources of the state to deal with such problems?

Coupled with that, and endorsing a point made by the noble Lord, Lord Baker, about the importance of intelligence gathering, does the noble Lord recall the occasion in the 1990s when intelligence was able to detect that the state of Iran sought to purchase chemicals from Poland? That attempt was thwarted by good intelligence. Indeed, two-and-a-half years ago his own department quite properly warned of the dangers of anthrax and smallpox being brought into this country. Does he agree that good intelligence is the best way for us to combat the evil of terrorism? The noble Lord, and, through him, the Home Secretary, has asked for the support of all sides of the House today. In principle, he is entitled to that.

My Lords, with regard to the noble Lord's first question, contingency plans are, by definition, contingency plans. They are always being updated and tested. However, we do not advertise the fact and we do not make announcements. Exercises take place on an ordinary basis. During my time as a Minister since 1997 I have participated in contingency plans and exercises. However, that is not the type of matter about which one issues a press release. That would defeat the object of the exercise.

Obviously, post-11th September contingency plans have been considered, updated, extended and modified. I say with all sincerity that I have no reason to believe that a situation, as described or hinted at on more than one occasion, will arise in which we shall not know who is in charge in our great cities.

My Lords, is my noble friend able explicitly to reassure the House that, amid all the important measures that are anticipated, the Government remain determined that one of the values which has been central to our life in Britain will be upheld? Will Britain continue to be a safe haven for the genuine refugee and genuine asylum seeker? Can he reassure the House that we shall not in any way be driven from that commitment by the terrorists?

My Lords, I can give my noble friend that absolute commitment. There is no question of undermining this country as a refuge and safe haven for those who flee persecution and torture. The fact is that those who genuinely flee persecution and torture are a minority of those who seek asylum. Because criminal gangs organise the trafficking of people in whose cases there is no shred of evidence under the 1951 convention, the concern remains that the genuine person who flees persecution may be prevented from reaching a safe haven. However, we do not seek to undermine our commitment to the 1951 convention or to undermine this country's proud tradition of being a safe haven for those who flee persecution and terror.

Action Against Financing Terrorism

5.38 p.m.

My Lords, with the leave of the House, I shall now repeat a Statement being made by the Chancellor of the Exchequer in the House of Commons. The Statement is as follows:

"With permission, Mr Speaker, I wish to announce measures to cut off the supply of funds to terrorism.

"Those who finance terror are as guilty as those who commit it. So our response to the funding of terrorist acts must be every bit as clear, as unequivocal and as united as our response to the terrorist acts themselves.

"The action plan that I am placing in the House of Commons Library and making available in the Vote Office"—

I acid in parenthesis that they are also available in the Printed Paper Office and our Library—

"today arises from concerted work across governments, in particular from decisions of the G7 group of finance ministers and central bank governors on 6th October and will tighten the law, further empower the police, and strengthen co-ordination across the world.

"I can report to the House that, having already fully implemented UN Security Council Resolution 1267, on the Taliban, and UN Security Council Resolution 1333, on Osama bin Laden, the UK has now frozen 35 suspect bank accounts, immobilising more than £63 million of suspect terrorist funds.

"I can also report that by Order in Council following the latest UN resolution, Resolution 1373, we have frozen all UK bank accounts associated with the individuals and organisations named in the US Treasury suspect lists; the effort includes action this weekend by which bank accounts have been frozen and £180,000 belonging to those identified in Friday's updated lists have already been seized.

"Our UK domestic controls are already among the best in the world but, as part of the emergency anti-terrorism Bill that was announced this afternoon by the Home Secretary, the Government propose a new power to freeze funds when suspicious transactions are under investigation. They will be backed up by new reporting arrangements on financial institutions so that they must disclose not only known transactions that are destined for terrorism but also transactions about which there are grounds for suspicion.

"Clearly, a balance has to be struck between individuals' right to privacy and their security at a time of increased risk. However, we believe that there is a case for new powers for the police to monitor accounts that may be used to facilitate terrorism, for Customs to be allowed, where there are suspicions, to seize cash not only at our borders but also within the UK and for the Inland Revenue and Customs to share information and co-operate more effectively with the police. We do that because of the weight of evidence concerning the finances of Osama bin Laden and the Al'Qaeda organisation, which are complex but which are becoming clearer daily. It is not primarily his personal wealth that supports the Taliban and active terrorist operations, but the profits from the drugs trade and other businesses and from individual and company donors. That money is channelled through a range of financial centres across the globe and the evidence already points to centres in the Gulf, Pakistan, and central Asia and to money laundering through an established underground banking system.

"The cells that form part of the wider Al'Qaeda network are often self-financing, and possibly use business fronts and crime to sustain themselves. Unravelling that relies on first-rate co-ordination.

"Since 11th September, security services, the police, the special branch and Customs and Excise, co-ordinated by the National Criminal Intelligence Service, and our Armed Forces, have worked together to track down terrorist finance. I believe that the whole House will wish to express its gratitude to them. To enhance those efforts we now propose to establish and fund within NCIS a new multi-agency terrorist finance unit that is fully supported by additional special branch investigative resources.

"To further improve financial intelligence a new task force will also bring into the anti-terrorism effort the best academic, financial and commercial expertise and use the best skills of forensic accountancy to track assets. It will also investigate underground banking, which is often used for legitimate purposes, such as remitting earnings to far-away families and communities but which is also known to provide a very easy means by which criminals and terrorists can conceal the laundering of money and its movement around the world.

"Bureaux de change are another network by which money can be laundered and transferred. During the past 18 months, Customs and Excise has charged 89 people in connection with the laundering of £590 million. I believe that that is just a start. In the consultation document that we are publishing today we therefore propose the implementation from 12th November of a new regime of supervision to ensure compliance with money laundering regulations; we will also consult on a registration charge. To make easier the tracing and tracking of criminal and terrorist assets we are also consulting on a new requirement for the proper disclosure of the beneficial ownership of companies.

"Large financial centres all over the world have an important part to play in cutting off the supply of terrorist funding. I am able to tell the House that many of the measures that we are bringing forward are to be replicated throughout UK Crown dependencies and overseas territories. They are announcing their own plans to introduce appropriate equivalent measures.

"The G7 finance ministers and central bank governors met in Washington on 6th October and concluded that a special plenary of the international financial action task force would meet later this month to agree the imposition, enforcement and monitoring of a new international standard to combat terrorist finance. The UK is also pressing for the United Nations to establish a permanent monitoring unit, for the IMF to provide expert help to countries setting up economic crime units and for the early ratification of the EU second money laundering directive and of the UN convention on the suppression of the financing of terrorism.

"At those international meetings G7 ministers also had a chance to review the current state of the world economy. We expressed solidarity with the US Government and the whole of the USA after the tragic events of 11th September and agreed that the global economic challenge demanded a global response. Not only have interest rates been brought down worldwide but the central banks of America, the euro area, Japan and Britain have made clear their determination to take any necessary further action.

"Oil prices, which have previously risen in times of trouble, have fallen during the past month. We will continue to work with the oil-producing countries to ensure steadiness of supply and prices. Where markets have failed, as in airline insurance, governments across Europe and America have acted together, with a new short-term insurance guarantee.

"These remain uncertain and testing times. As governments and finance ministers work together, every one of us is conscious of the human consequences of economic uncertainty—there are particular concerns about employment. However, since 11th September, the world has acted together and decisively to maintain the conditions for stability and growth.

"The Government's assessment of the current state of the economy and our forecasts for next year will be published next month in the pre-Budget report for full discussion in this House.

"If fanaticism is the heart of modern terrorism, finance is its lifeblood. I believe that the whole House will agree on the need to move expeditiously to cut off the supply of terrorist finance. This House is once again demonstrating its unity and determination—it is standing firm, as one, to cut off all means of support to terrorism."

My Lords, that concludes the Statement.

5.46 p.m.

My Lords, we are grateful to the Minister for giving us an opportunity to hear the Chancellor's Statement and for giving these Benches this opportunity to respond.

We remember the thousands of people who died in the attacks in September, but a month later people are still confused. In how many countries do the terrorists still have cells? How did they plan such a crime in total secrecy? Why even now do we lack intelligence about the whereabouts of a veritable army of men? However, there is one thing about the terrorists of which we can be sure—they must eat. And to eat, they must have money. As today's money is electronic, it should leave a money trail. However, as the Minister has just said, life seems to be more complicated than that.

We recall that in the second of our emergency debates the noble and learned Lord the Leader of the House rightly said that the present supervisory oversight system for transactions in the UK has many weaknesses. He referred to the £63 million, which was mentioned in the Statement, that had been frozen in UK bank accounts as a drop in the ocean. That description must also apply to the £180,000 that was mentioned in today's Statement. He wisely advised that our best course of action in defeating terrorism might well be to follow the money.

We also recall the words of the US Defense Secretary, who said that we were now engaged in a cold war. We remember that the previous cold war, against communism, ended when the economic system of communism collapsed. I hope that today's Statement will bring forward the day when, in Mr Rumsfeld's phrase, terrorism also collapses from within. That is why these Benches wholeheartedly welcome the Chancellor's Statement and support bipartisan legislation that will demonstrate to our friends and enemies, here and abroad, that Britain stands with the US in the campaign to dismantle the financial infrastructure of terrorism.

I dare to hope that the Chancellor's new procedures will become a model for the gaining and sharing of financial intelligence. It is certain that a new approach is required. Many experts in the financial services sector are asking questions such as: what is terrorist financing? For example, are terrorist organisations moving funds into the UK banking system through third-party correspondent accounts at major UK banks or are they relying more on cash transfers through underground money services businesses? How did those people get credit cards and bank accounts without raising suspicion? If the attacks could be executed without leaving an obvious financial trail, what might we be missing now? Finally, there is the chilling question of whether it is possible that terrorist financing is continuing undetected in the UK.

These are urgent questions. Our purpose on these Benches must be to help the Government to devise effective legislation and procedures to stop it, however it occurs. From what investigators have so far pieced together of the money trail, I find that there are still more questions than answers as to how the operation that culminated in the horror of 11th September was paid for. What we know suggests that we should place a much higher priority on non-traditional or "underground" banking systems that fall largely outside the scope of normal reporting and record-keeping requirements.

For example, the ancient money exchange system of "hawala" is virtually impossible to detect. Hawala is an Arabic word that means word of mouth. It is an international underground economic system by which people in different locations honour each other's financial obligations by making payments wherever needed. Such activities have no apparent victim and involve people who are legitimate businessmen in every other way. There is no movement of money between countries. It is hard to see how we can possibly detect such transactions or stop them.

I have two questions for the Minister. First, is he convinced that the proposals described in the Statement are adequate to address the particular features of terrorist financing which I describe? I am not sure. The new regime seems to be designed to detect the kind of money transfers associated with crimes that generate significant proceeds. It does not appear to be particularly well suited to catch an unconventional terrorist operation often financed by legitimate business activity.

Does the Minister agree that the fight against terrorism should not be regarded as a sub-issue of money laundering but as a battlefield of its own? My right honourable friend the Shadow Chancellor said in another place earlier this afternoon that money laundering involves making dirty money clean, but here we are dealing with a system which makes clean money dirty. Does the Minister agree that a recognition of the distinction between money laundering and terrorist financing should be at the heart of our approach, and that simply building on the same laws as may arise against money laundering may not prove to be the right course? For example, does the Minister agree that the proceeds of crime Bill seems to be particularly ill-named as a vehicle for the right kind of legislation against terrorist financing?

Secondly, this morning The Times newspaper reported that:
"The Home Office and the Treasury were unclear yesterday as to precisely how their responsibilities for the anti-terrorism measures were divided".
Is the Minister sure that there will be what the Statement called "first-rate co-ordination", or does he take the point made in one of our emergency debates by the noble Baroness, Lady Williams—who I am pleased to see is in her place—that there are perhaps too many bodies involved in this process? I believe that the noble Baroness cited the Treasury, the Home Office, the Financial Services Authority and the DTI. Can the Minister tell the House how the new unit described in the Statement will interact with those four bodies? Who will be in charge?

In summary, we see three major goals for government policy. The first is to bolster the ability of the police to find and destroy the financing f terrorist organisations, whether in banks or in underground hawala systems. The second is to establish a government-industry partnership to stop terrorist funding. The third is to track any terrorist money kept in foreign bank accounts and to increase foreign co-operation with the new UK and US policies. We shall support the Government in their efforts in those areas.

The best way for our Parliament to commemorate the lives of the victims is to ensure that the gates to the financial services system are locked to terrorists. Now is the time to draw the line.

5.53 p.m.

My Lords, we shall have to look at the details of the proposals but, in general, we warmly welcome these measures. It seems to me of the greatest importance that there should be international co-operation and better co-ordination of services on the part of the Government in this country. These are practical measures and are likely to be an effective weapon against terrorism.

However, I have some questions for the Minister. First, what is the status of sanctions on non-co-operating countries? A number of countries have not co-operated on international measures in the past. In the Government's view, can the legislation deal with money laundering in the state funds of some developing countries and other countries; for example, in Nigeria, Indonesia and Russia?

Secondly, in the past there has been some coincidence between tax havens and money laundering. Do the Government see such a connection? If so, how will that affect their actions? Thirdly, I shall make a general observation. Towards the end of the Statement, the Chancellor refers to measures dealing with recession. I am sure that the Government agree that irrational and panic reactions are worsening recessions and thereby serving the aims of the terrorist. Do not the Government accept that some of the language used and statements made have increased public fears irrationally on both sides of the Atlantic? Should not there be, generally, more emphasis on operations against terrorism and rather less use of the language of war? Would not that be more effective in defeating the aims of the terrorists?

5.55 p.m.

My Lords, I am grateful to the noble Lords, Lord Saatchi and Lord Taverne, for the general welcome they gave to the Statement. More than that I am grateful to them for their constructive approach in suggesting further measures we might take, and, indeed, for a proper degree of criticism and realism about what is proposed.

I agree with the noble Lord, Lord Saatchi, that the key to all of this is the money trail. As he said, we must follow the money. He is right to say that support for bi-partisan legislation must depend on agreement on the way in which we propose to proceed. Perhaps I may say straightaway that the proposals put forward by the Chancellor do not rely principally or even largely upon legislation. Many of the measures announced by the Chancellor can be introduced either through Order in Council, as happened last weekend in response to United Nations Security Council Resolution 1373, or by administrative action, as the new units in the National Criminal Intelligence Service imply.

There is legislation, which is part of the spectrum of legislation referred to in the Statement given by the Home Secretary. The noble Lord, Lord Saatchi, is right to say that the "proceeds of crime" is not a natural way to describe terrorist financing. On the whole, those are legitimate movements of funds which may be used for illegitimate purposes rather than the other way round.

Other powers will be needed. Some will require only secondary legislation; for example, the introduction for the first time of proper controls over bureaux de change. Some will require primary legislation, for example, wider grounds for freezing funds: greater police powers to seize cash and monitor accounts; greater monitoring obligations on banks and money-holders generally, and reporting obligations to Government. We shall certainly consult on those matters with the financial institutions concerned.

Reference has not been made to what may be a controversial element of the proposals; namely, a greater co-operation between departments. I am aware that that is a matter which concerns noble Lords, and rightly so as civil liberty issues are involved. I can only say that Parliament will be adequately consulted and will have an opportunity to express its views on those matters.

It is true that the kind of underground financial organisation which was referred to by the noble Lord, Lord Saatchi as hawala, is the most difficult type to identify. That is particularly so as there is no flow of money involved, simply the flow of oral promissory notes. I believe that the answer to that will be not legislation but intelligence, which the Chancellor has put forward in the Statement. Subject to the comments of the noble Lord, Lord Saatchi, I believe that such proposals deserve the support that he is prepared to give.

The noble Lord, Lord Taverne, has quite rightly said that international co-ordination is the key. A large part of the Statement is about the G7 meeting on 6th October and the agreement to hold a wider group meeting before the end of this month. At that meeting consideration will be given to one of the issues properly raised by the noble Lord, namely; sanctions on non-co-operating countries. Such sanctions are possible. The noble Lord also raised the issue of tax havens. The Statement made it clear that, as far as we are concerned, our Crown Dependencies and Overseas Territories are working on similar steps to those described in the Statement. Finally, he urged that we should not give way to panic reactions, which increase public fears. I entirely agree.

My Lords, will my noble friend confirm that the measures applying to the Crown Dependencies and Overseas Territories will also apply to the Channel Islands and the Isle of Man?

My Lords, I had understood them to be included in the phrase, "Crown Dependencies and Overseas Territories".

My Lords, will the Minister confirm that when the detailed legislative measures are tabled, consideration will be given to some of the devices used by criminals operating on the international scene? They do not conveniently have bank accounts in the names of terrorists. Corporations are widely used. There are two well known methods of concealment: first, nominee shareholdings, which make it impossible, under many legislative systems now in force, to know who owns a company; and, secondly, the peril of bearer shares. I know of a particular case involving criminality in one part of the Commonwealth, in which money was held in a company in the form of bearer shares, for which there is no register, making it totally impossible to establish the ownership of the company. It is therefore important to introduce some transparency into the very dark areas of finance of which these master crooks are already well aware. I hope that consideration will be given to that matter.

My Lords, the noble Lord, Lord Neill, makes a very valid point. Reference is made in the Statement to the need, difficult to achieve, to identify and force financial institutions to identify the beneficial owners of shareholdings and funds. Unless we can do that, criminals and terrorists will continue to exercise ingenuity to conceal the true ownership of those funds. The funds that have been seized, particularly by the American Government, who have issued lists, are not held in accounts named, "Al'Qaeda Terrorist Account Number 1". Rather, they are held in the names of corporations and individuals. Therefore, effective intelligence and effective co-operation between the intelligence agencies is needed to ensure that those covers do not succeed. The controversial point is the obligation to reveal the beneficial ownership, and that affects bearer shares and a large number of devices that have for many years been supported by financial institutions in all countries of the world.

My Lords, we all recognise that the sums involved in crime, particularly crime related to drugs, are enormous. However, it is apparent that the sums involved in terrorism are rather remarkably small. I have seen an estimate—I do not know how reliable it is—of the total operation and administration cash cost of the atrocities of 11th September of little more than 500,000 US dollars. Does the Minister recognise that from 1st January next year, when the euro is introduced—and the biggest euro note will be 500 euros—the total amount required for such an operation, assuming that that figure is anywhere near correct, can be transported in something little larger than a fairly big paperback book? It therefore seems to me that the more sensible approach, as was mentioned earlier, is to investigate very fully the finances of suspected terrorists, rather than merely spending enormous resources on examining finances in the hope of finding the terrorists who might be using them.

My Lords, I have seen an estimate that the total direct cost of the 11th September atrocities was more like 11,000 dollars because it represented 19 one-way airline tickets. It can be defined in a number of ways. It must cost a substantial amount of money to operate a network of terrorists in a large number of countries, with terrorists acting as sleepers in those countries, to train them in the first instance, to maintain communications with them and to supply them. But, of course, by definition it is an unknowable statistic. If we knew how much it cost, we would know where to find it and how to wipe it out. The noble Lord, Lord Marlesford, is quite right that the profit to be made from drug smuggling and drug production and distribution is much greater than that which results from certain kinds of terrorist attacks. However, that does not mean that we need not do as much to eliminate finance for terrorism as we try to do in respect of drugs.

My Lords, I should like to ask some questions about the role of the Financial Action Task Force, the organisation established some years ago by the G7 to undertake measures against money laundering. First, what role will the Financial Action Task Force play in the development of anti-terrorism measures in this country? Secondly, are the Government seeking to encourage other members of the G7 to extend the powers, scope and resources of the Financial Action Task Force? Thirdly, what will be the relationship between the Financial Action Task Force and the new organisation to be established, to which the noble Lord referred?

My Lords, the Statement refers to new organisations to be established in this country, and that clearly is not the proper homologue of the Financial Action Task Force. I think the noble Lord, Lord Eatwell, is seeking some indication of the way in which the international conference, which will meet before the end of this month and to which the Statement refers, will operate and how it will relate to the task force. There is no answer to that question. It still has to be determined.

I should make it clear that we act at all times in accordance with, and sometimes even in advance of, the actions of the United Nations. For example, we were one of the first countries to ratify the United Nations Convention on Suppression of the Financing of Terrorism, passed in December 1999, ratified by us in February 2000, along with only Botswana and Uzbekistan. It is clear that much more needs to be done in the international sphere to ensure that international co-operation is pursued. That is why, as the Statement makes clear, we are pressing the United Nations to establish a monitoring and enforcement unit to make sure that we have the kind of co-operation that the noble Lord, Lord Eatwell, rightly desires.

Railtrack

6.9 p.m.

The Minister of State, Department for Transport, Local Government and the Regions
(Lord Falconer of Thoroton)

With the leave of the House, I shall repeat a Statement made in another place by my honourable friend the Secretary of State for Transport, Local Government and the Regions:

"With permission, Mr Speaker, I wish to make a Statement concerning Railtrack: to describe to the House the worsening financial crisis facing Railtrack which led the Government to petition for railway administration on 7th October; and to outline the further measures that we intend to take to put the interests of the travelling public first.

"The House will be aware of the history of Railtrack. When the railway industry was restructured following the 1993 Railways Act, Railtrack was created.

"It was in 1996 that Railtrack was privatised. Railtrack was the only publicly floated utility subsidised by the Government, this subsidy making up the majority, in fact some two-thirds, of its revenue.

"After the Hatfield train crash, the whole network was urgently reviewed and fundamental safety issues addressed. This added significantly to costs, with Railtrack claiming it needed an additional £700 million a year to put the track into a proper condition.

"On 2nd April 2001, Railtrack asked for help because of pressing financial difficulties. We brought forward £1.5 billion of investment from the period beyond 2006 to the five-year period beginning on 1st April 2001. The first instalment of £337 million was paid on 1st October 2001. However in May, June and July, the company's position apparently deteriorated.

"Finally, on 25th July at a meeting in my office the chairman said that the position was far worse than it was thought in April. It was clear that unless extra financial assistance was provided, on 8th November when Railtrack was due to give its interim results, it would be unable to make the critical statement that "it was a going concern". The effect of this would have been disastrous. Immediately I ordered intensive discussions with Railtrack.

"In August, Railtrack's advisers came back to the department and said that there were only three options: restructuring; renationalisation; or, as they described it, receivership. So it was Railtrack's advisers who first raised the possibility of insolvency if no additional government funding was available.

"I asked my officials to investigate the restructuring option, which involved the provision of yet more funding to Railtrack. Railtrack asked for government funding to cover all its costs, plus a profit, plus a four-year suspension of the regulatory system. That was Railtrack's proposal.

"Given the company's demands, we also began to prepare for the possibility that we might feel unable to provide additional funding and that, as a consequence, Railtrack would prove to be insolvent.

"To protect the interests of passengers it was clearly right to explore the need for railway administration on a contingency basis. As a result, preliminary contact was made with Ernst & Young on 23rd August.

"There were further negotiations and various modified proposals. But it was becoming obvious that the company could not continue unless we offered to fund whatever losses it might have for a period of several years. I took the view that I simply could not responsibly enter into such a guarantee on behalf of the British taxpayer.

"We carried on discussions until 3rd October, but no way out of the dilemma could be found. Either we gave the guarantee on money or the company became insolvent.

"On Friday 5th October, I reviewed all the relevant papers and considered all the options, including Railtrack's proposed rescue package and the additional funding that would be required. Railtrack's proposals were cast in such a way that it was hard to be sure the precise sum it was seeking, but it was effectively an open-ended funding request on the Government.

"I decided that I could not give Railtrack a blank cheque. I informed John Robinson, the chairman of Railtrack, on Friday afternoon of this decision and of my intention to petition the High Court for a railway administration order if the company was insolvent. This order was granted on 7th October.

"Railtrack was taken into administration because it was, or was likely to become, unable to pay its debts. Our petition to the High Court showed that there would be a deficit of £700 million by 8th December, rising to £1.7 billion by the end of March next year.

"In granting the order, Mr Justice Lightman said:
"This is clearly a case where the making of a railway administration order is not only appropriate, but absolutely essential, and I shall therefore make that order immediately".
"Much has been made in the press of the position of shareholders. At the time of the April agreement the Government felt that we should make clear that the role of government should be to support the railway network, but that we should not be seen as acting as guarantor of individual companies or their shareholders. We therefore agreed with Railtrack a statement of principles. The first point in the statement reads as follows:
"The Government stands behind the rail system but not individual rail companies and their shareholders who need to be fully aware of the projected liabilities of the companies in which they invest and the performance risks they face".
"To ensure that this had a wide circulation in the City it was sent out through the Stock Exchange News Service.

"The directors of Railtrack have said that they want £3.60 a share. On our calculations that would require the transfer of up to £1.5 billion of new money from the taxpayer to Railtrack shareholders. We believe that it would be wrong to make new money available. We will not do it.

"In the light of the administration of Railtrack, we believe that we should now consider reshaping the structure of the industry in a way which recognises that the needs of the travelling public must come first. We shall be proposing to the administrator that a private company limited by guarantee be established to take over Railtrack's responsibilities. Any operating surplus it makes would be reinvested in the railway network. Such a company would have the needs of the travelling public and other users as its priority. With no shareholders we would remove the conflict between the need to increase shareholder value and the interests of rail passengers.

"The company we propose would have responsibility for operations, maintenance and renewals. It would have a small professional board of executive and non-executive directors. Performance targets would be set linked to levels of service, safety and value for money. It would have a board working on commercial lines but focused solely on delivering a safe, well-maintained rail network that is fit for the 21st century.

"The company would be able to promote collaboration and co-operation around the wheel and track interface, the absence of which has been one of Railtrack's weaknesses.

"A private company limited by guarantee would need far less intensive regulation. We therefore intend to streamline the existing structure while still recognising that there will be a continued need for some form of independent economic regulation.

"We shall discuss our proposals with the industry's key players, but we are clear that it is important for the new structure to provide the following: strong strategic leadership; a cut in the burden of day-to-day interference; an end to the self-defeating system of penalties and compensation; clearer accountability; and an end to perverse incentives.

"The new company we will be proposing would be able to raise funds in the market. Private sector funding would operate in partnership with government to deliver the 10-year plan objectives for rail. Under our proposals, we intend to offer all existing lenders to Railtrack plc the opportunity to transfer over to the new company with no loss of principal or interest. Any debt transferred to the new company will be financially sound and have, at the time of transfer, good long-term and short-term credit ratings.

"Mr Speaker, there are many talented and motivated people working in Railtrack. They have worked with dedication, in particular over the past seven days, and I want to thank them for that. I know that they and the rest of the industry want to see an improved railway system. I believe that with the demise of Railtrack that is what they will get. The Government are committing some £30 billion to the network over the next 10 years.

"The administration of Railtrack provides us with a golden opportunity to create a railway system which is united and not fragmented; a railway industry with a shared strategic vision; a railway industry which can respond to the needs of our time; and a railway network provider that answers to the millions of passengers and not private shareholders. Our decisive action makes all this possible and I commend it to the House".

My Lords, that concludes the Statement.

6.20 p.m.

My Lords, I thank the noble and learned Lord for repeating the Statement. Before I start to attack the Government, perhaps I may express my sorrow for the noble and learned Lord who has just managed to leave the mess of the Dome only to move to the mess of Railtrack. Bad news appears to follow the noble and learned Lord.

This mess has been brought about by government bungling and mismanagement. The future of the whole rail industry is in tatters, and there is now little hope of the £34 billion of private sector investment, alongside the Government's £30 billion, required over the next 10 years going ahead. The Secretary of State has been caught out by the disgraceful behaviour of his own spin doctor. Ms Moore told a Sunday Times journalist who asked about Railtrack and possible administration:
"If you run that you will look like an idiot".
In fact, she used words worse than that. Next day, the Secretary of State made that announcement. When will Stephen Byers follow the advice of his own senior Back-Benchers in another place and get rid of Ms Moore? I remind noble Lords of her words within an hour of an aircraft flying into the World Trade Center:
"It's a very good day to bury bad news stories".
This is another bad news story. The Financial Services Authority is to investigate claims that the Secretary of State rigged the market for shares before forcing the company into administration. The Railtrack group is considering suing the rail regulator under the Railways Act 1993 and bondholders are considering legal action. Class action suits brought by pension funds and other shareholders loom. Finally and importantly, the employees of Railtrack, 90 per cent of whom are shareholders, face losses and possible redundancies.

The Secretary of State forced Railtrack into administration without giving it the opportunity to appeal to the regulator. Can the Minister tell the House what meetings took place with Railtrack before the Secretary of State's announcement? At what date did the Secretary of State take the decision to formulate the plan to put Railtrack into administration? Is it riot true that Railtrack would have been solvent if the funding promised by government had been committed by them? This will have an effect on all the Government's other PFI initiatives. It is interesting that the rating agencies have reduced Railtrack bonds to junk status despite government promises. They do not believe the Government either.

Perhaps I may ask the Minister what the Government propose to do about the Channel Tunnel Rail Link, ownership of which is essential if the Railtrack group, as opposed to Railtrack itself, is to survive. The Secretary of State had accused Railtrack of not controlling its costs, but is it not true that those increased costs have been imposed by the regulator and the Government themselves so that Railtrack has been squeezed at both ends?

What guarantees can the Minister give that there will be sufficient public funding for the rail network in the future? The Minister said that a private company limited by guarantee would lead to less intensive regulation. Can the noble and learned Lord explain why? It will still raise funds in the market. Extraordinarily, the Secretary of State believed that this would be a good news story—a political coup—which would be welcomed as nationalising Railtrack and bringing it back into public ownership. Clearly, it is not. The Secretary of State ignored the advice of the Treasury and the Chancellor and rushed out an announcement.

But the most important group of people—the poor long-suffering passengers—have been left entirely out of the equation. The train operators do their best but in future. when passengers suffer delay, fares go up and track upgrades are put off, the Government will not need to blame; the blame will lie opposite with the Government.

My Lords, I thank the Minister for repeating the Statement. As far as concerns the response of the Conservatives, they were the ones who privatised the railways and are responsible for the mess. Over 80 per cent of the delays in Great Western, for example, are caused by Railtrack. Railtrack is the root cause of the problem and is a very badly managed company.

We welcome the Statement and that users, both passengers and freight, will be put first in future. It is time that passengers were put first. The taxpayer needs to come second and the shareholders some way behind. We have heard too much in the media about the plight of the shareholders but nothing like enough about the passengers and users. I hope that the Minister will be able to assure the House that there will not be a north versus south railway so there is growth under the 10-year plan in this part of the country but nothing is done in the Midlands and the North. I hope that the Government remain committed to delivery of the growth targets under the 10-year plan. We are beginning to get behind in some aspects. We want to see the railway developed but we have seen precious little of it in the past two or three years.

I hope that in future the SRA will be a purchaser of freight paths and will sell them on retail to freight users and that the gap will be met by state subsidy. We shall need to know something about land in the future. We are ready to help if the Government stick to their principles. We want a new railway and certainly do not have it now.

I and, I believe, everyone who is connected with the railway welcome simplicity, which means abolishing the regulator and loss of performance regimes which now take up as much money as we see going into the system. Lawyers may provide some benefits but the complexity that they bring to the railway is of no benefit to anyone. Access should be based on the CAA model. We should license many fewer franchises and roll them forward. We should also have franchises which are responsible for track and signalling so that blame is not passed from one to the other as in the past.

With the exception of one or two tiny areas, we do not believe that competition has worked on the railway. Competition over the same lines is not something that passengers welcome. We want to see regulation of a number of fares on some franchises and some franchises which have profiteered brought within regulation.

As to safety, within self-contained franchises we should like to see an independent safety inspectorate, not the Health and Safety Inspectorate, which, quite honestly, has cost a fortune and achieved little for railway safety. However, we support Lord Cullen in the need for independent investigation of railway accidents.

I shall not say more tonight because there is not much to say until the Government bring forward their proposals. However, we on these Benches are willing to co-operate in everything that the Government do along these lines because we believe that the user will welcome the bonfire that is to be made of Railtrack.

My Lords, I am grateful for the support for the steps that we have taken from the noble Lord on the Liberal Democrat Benches. I am also grateful for his recognition of the past difficulties in relation to the structure and the fact that he takes the sensible approach of seeing what happens next.

I am surprised that the noble Viscount did not mention that the Conservatives were responsible for privatising the railways and caused Railtrack plc to be set up. I am absolutely amazed that he did not see fit to refer to that as part of the cause of this problem. I am also interested that, although he had a political rant at the start of his contribution, he did not dispute one of the propositions in the Statement that I repeated, in particular that on 25th July the chairman of Railtrack said that in order for Railtrack to survive—that is, not to become insolvent—he needed a blank cheque from the Government for the next few years and the suspension of all regulatory control and after that he would consider the position. I do not believe that any sensible government, having investigated the position as thoroughly as we did, would accept that.

The noble Viscount asked whether, if we had given the £1.5 billion that had been agreed between the Government and Railtrack on 2nd April, Railtrack could have survived. If he had listened to the Statement he would have heard that Railtrack, in particular its chairman, said that it would be insolvent at the time of its interim accounts on 8th November if additional sums of money over and above the £1.5 billion were not given. Attempts were made to discover from Railtrack how much that was. It proved impossible to find out how much extra, over and above the £1.5 billion, would be required to keep the company solvent. Therefore, the answer to the noble Lord's specific question is, "No, it would not have been possible to keep the company solvent with the £1.5 billion". That is on the word of the chairman of Railtrack.

The noble Viscount asked various other questions. He asked when the plan was formulated to put the company into administration. After the distressing news on 25th July, the Secretary of State rightly instituted contingency plans in order to see what needed to be done if it was necessary to put the company into administration. That was in parallel with the detailed discussions that were going on with Railtrack to investigate the position fully. Those contingency arrangements were started on 23rd August when Ernst & Young, the company from which the administrators were appointed, was approached. The final decision to put Railtrack into administration occurred on 5th October.

The noble Viscount asked about contacts with Railtrack. There were contacts between the department and Railtrack in May, June, July, August, September and October during which all of these issues were thoroughly discussed. So far as concerns the Channel Tunnel Rail Link, Railtrack Group Plc has a contract with London & Continental Railways Limited, which requires it to buy section one of the Channel Tunnel Rail Link. That remains the position.

With regard to less intensive regulation, the reason for that is because there will be no shareholders whose interests need to be balanced when one has a company limited by guarantee.

We wholeheartedly agree with the point that there should be no North versus South railway. In relation to growth targets and the 10-year plan, as the Secretary of State made clear in another place, we stand four square behind the 10-year plan and behind proposals that will bring about a much better railway for the travelling public.

6.32 p.m.

My Lords, perhaps we can start with the noble Lord, Lord Clinton-Davis, and then continue with the noble Earl, Lord Onslow.

My Lords, first, in view of what has been said by the Opposition today, is it not surprising that it was Railtrack itself through its senior managers which in July suggested that the company should be placed in administration? Is it not surprising that not one word of that has been mentioned by the noble Viscount today? Secondly, does the Minister remember any occasion when a senior rail manager showed any concern for the rail network or for its passengers? Thirdly, is it not clear that Railtrack could not continue, either in law or for any other reason at all, as at present, and that the Government have taken the right step in applying to the court for administration?

My Lords, first, I agree with the proposition of my noble friend that it was surprising in the light of the venom with which the noble Viscount made his remarks that he failed to refer to the fact that it was indeed Railtrack which first mentioned "receivership" rather than "administration".

Secondly, I do not agree with the proposition that there is not one senior manager in Railtrack concerned about the network and the travelling public. There are a great many people working for Railtrack who are concerned about the travelling public and the network and who are keen to deliver as good a service as possible.

In relation to my noble friend's third point, I am sure that the focus should be on getting a structure that delivers just that.

My Lords, I thought we had agreed that it should be the noble Earl, Lord Onslow, next.

My Lords, is it not true that Railtrack during its existence carried more passengers, increased passenger use of the railways and had a better safety record than did British Rail in the equivalent time before it? Is it also not true that this is nationalisation by the back door? Furthermore, is it not also true that someone said that this old Labour, but at least old Labour paid 3.5 per cent bonds when it nationalised the London, Midland, Scottish and Southern Railways, LNER and LMS?

Furthermore, is it not true that what the Government have done is what Talleyrand said of Napoleon when he said that a gentleman may cheat on his wife or may run into debt, but that if he cheats at cards he is not trusted by his acquaintances and friends? It looks as if the Government have cheated at cards. When the Prime Minister is doing his level best to put on the high moral authority against terrorism, for the Government to look as if they are cheating at cards does not stand very well in their favour.

My Lords, that was a very intemperate account of what happened. Yes, of course Railtrack, by comparison with a number of things that British Rail did, has shown improvements. But on 25th July 2001 Railtrack ended up in a position where it said that it required an unspecified amount of money and a guarantee from the Government in order to remain solvent. Of course people who invest in shares recognise that they are taking some risk. It was for the Government to decide whether in the circumstances which presented themselves on 25th July it was right to commit the British taxpayer to an unlimited guarantee over a number of years, or to face up to what had happened; namely, that Railtrack was then insolvent. In those circumstances, the consequences for the shareholders were bad. However, I have no doubt that it was correct for the Government to face up to those consequences. That was not remotely cheating; it was facing up to what had happened.

My Lords, does my noble and learned friend agree that the problem at the heart of the Railtrack privatisation was the incompatibility between serving the public interest and enhancing shareholder value, despite the fact that the Railtrack licence says quite clearly that the public interest must come ahead of the shareholder value? Is it not that which led to the huge escalation in the cost of investment projects now calculated at anything between 2.4 and three times what similar projects used to cost pre-privatisation? Furthermore, as a result is there not a much overdue need for a new company along the lines which my noble and learned friend described in the Statement, and will not that be widely welcomed not only on these Benches and on the Liberal Democrat Benches but by the millions of people who use the railway system as well as by the thousands who work on it?

My Lords, it is possible to debate for some considerable time the precise causes of the problems. The structure, to which my noble friend referred, plainly has a part to play. But, whatever the precise causes, on 25th July and in the few weeks that followed we ended up with a company that could not identify the amount of money it required to remain solvent. That is not a basis upon which it would be possible to provide the travelling public with the service that they are entitled to expect.

My Lords, shall we try the noble Earl, Lord Mar and Kellie, first and then definitely the noble Lord, Lord Peyton?

My Lords, can the Minister confirm newspaper reports that the Government want to experiment with the vertical integration of the industry in Scotland? Can he also confirm that there will now be more chance of an expansion in the network, particularly, for example, the reopening of the Stirling Alloa Dunfermline Railway?

My Lords, the intention is to have a company limited by guarantee. That company will deal with the operations, maintenance and repair functions of Railtrack. That company will be able better to deal with the interface between wheel and track. Larger projects will be dealt with by special purpose vehicles. I do not think that it is right to go further than that at this stage because one needs detailed discussions with the industry on how to take the matter forward.

My Lords, I hope that I take the Minister with me to the extent of saying that perhaps the last way of dealing sensibly with a matter of this complexity is the one that we are using now. It will not work. Perhaps I may remind the Minister that I never thought that Railtrack was anything but a pretty dud idea. When the government who introduced that company departed from office, I was fairly confident that the then opposition party would rush to put things right. But it did not do that, and I suspect that the reason why it did not do so was that it knew well that an industry that was pretty much bankrupt would simply resort to relying on the Treasury to act as a banker. That is a death warrant for any venture.

I hope that the Minister will accept that I think the Secretary of State is to be envied in one matter alone; he has had at his disposal the noble and learned Lord's skill in defending the indefensible this afternoon. I hope very much that we shall have a proper debate on this matter, opened with a much fuller explanation from the Minister. It is easy to pretend that all was well, but I simply cannot credit it that the Minister concerned is not putting his own skin above every other consideration. I do not refer to the noble and learned Lord; I refer to the Secretary of State, whom the noble and learned Lord at the Dispatch Box has had the heavy burden of representing today.

My Lords, I should correct what I said from a sedentary position. I am sure that it is right that the noble Lord, Lord Peyton, opposed rail privatisation throughout the time that the proposals went through Parliament. He has been completely consistent in saying that it was a bad idea since it was first adumbrated. I think that few people would now disagree with the views that the noble Lord expressed at the time.

We thought that the right thing to do would be to try to make the system work in order to deliver good services to the travelling public. The noble Lord has stated that we are now going about it in the wrong way. Our hands were considerably tied by the simple proposition that, once it became apparent that Railtrack was insolvent, there was no option but to make that fact public and then make arrangements to protect the creditors. As the Statement made absolutely clear, if the choice was between a blank cheque from the Government to be issued for years to come or to face up to the insolvency of Railtrack, we think that the right course was to face up to that insolvency. I have not yet heard one dissenting voice in the Chamber in regard to that decision.

My Lords, I am concerned and mystified as regards how the new company will be able to raise any capital. Perhaps the noble and learned Lord would be kind enough to give the House some clarification as to how he envisages such a vast amount of capital will be raised.

My Lords, the new company will be able to raise capital on the basis that it will be a company limited by guarantee, with certain assets guaranteed by certain people. In that way, the company will be able to raise money.

My Lords, I congratulate the Government on their move to put Railtrack into administration. I believe that it is an event which has been coming for a long time. To that end, I cannot understand the complaints being made by shareholders who say that they did not know anything about the problems. Can my noble and learned friend confirm that if any shareholders had read the technical press or had listened to comments about Railtrack's performance over the past year they would have been able to form their own judgment? Personally, I do not believe that they deserve much compensation.

I am pleased that my noble and learned friend has confirmed that extensive consultation will be carried out with the industry. This is a complex situation and I am glad that my noble and learned friend is keen to see that the trains continue to run.

I declare an interest as chairman of the Rail Freight Group. Perhaps I may put a question to my noble and learned friend. Rail Freight is in the final stages of a regulatory review of freight access charges which, it is said, will reduce those charges by around 50 per cent. I believe that the regulator is due to announce that any day now. Can my noble and learned friend confirm that this arrangement will stand and that the Government will guarantee that finance? It is extremely important for the rail freight industry.

My Lords, as regards the position of Railtrack shareholders, I think that it would be wrong to make any specific comment save to say that my noble friend is right. The difficulties in which Railtrack found itself had been widely reported in the press. While it is true to say that the precise extent of those difficulties might not have been known, it was clear that a question mark and a risk overshadowed Railtrack.

Perhaps I may write to my noble friend on the issue of freight charges.

My Lords, the Statement contains a wonderful phrase that I should like to repeat:

"The company will be able to promote collaboration and cooperation around the wheel and track interface, the absence of which has been one of Railtrack's weaknesses".
From that it would appear that the Government agree with those of us who believe that the separation of rail infrastructure from rail operation was a major flaw in the way that the rail industry was privatised. In the light of that, does the Minister believe that the ability merely to promote collaboration and co-operation will be enough to deliver the kind of changes which everyone knows are needed in the rail industry? It would be a grave mistake to think that simply removing shareholders from the equation and creating a "Son of Railtrack" will make a significant difference.

My Lords, the promotion of collaboration will not be sufficient; collaboration itself is required here. We have indicated and outlined the kinds of proposals that we think should take the matter forward. But, as I have said, proper consultation now has to be carried out with the stakeholders, including those experienced in the running of railways.

My Lords, in the Statement the Government made it clear that they felt that they had acted properly and with perfect propriety. However, it is clear that in the City of London there is a substantial body of opinion that takes exactly the contrary view. At a time when the Government are looking to the private sector to raise equity funds to support our public services, notably the National Health Service, do they recognise that tremendous damage has been done to their credibility as a partner with industry and with financial institutions? Only a relatively small group of companies and banks have the potential to become involved in PPP or PFI projects. What will the Government do to remedy the undoubted damage that has been caused, whether or not it was intentional, to their ability to persuade the private sector to participate in public projects?

My Lords, it is most important to set the facts on the record as regards what has happened. The vital fact here is that a decision had to be made by the Government in the face of Railtrack's need for an uncapped guarantee in order to avoid insolvency. That has been made clear in the Statement delivered by my right honourable friend in another place and which I have repeated in this House. I think that the noble Lord is saying that a guarantee of that kind has to be given in such circumstances because it was a privatised company. We do not think that that follows. We think that the right course was to take steps to protect the company from insolvency by appointing an administrator. That involves a very significant reduction in the value of the shares in Railtrack Group plc, but there is nothing remotely improper about that course; far from it. It was the course which the law required.

My Lords, can my noble and learned friend confirm that the new company will have at its heart questions of health and safety? Bearing in mind the atrocious record of Railtrack over those issues, that is now much needed. Perhaps I may declare an interest as a former commissioner for health and safety.

My Lords, I can confirm that health and safety will be put right at the heart of any new arrangements made in relation to the railways.

My Lords, I shall declare a non-interest by saying that I do not hold shares in anything. For that reason, I recognise that the noble Lord who spoke a little earlier in our debate knows more about the need for shareholders to read the relevant press reports and to keep themselves informed on what is taking place. However, I understand from newspaper reports that many of the shareholders are people who have worked all their lives for Railtrack. They believed in what they were doing and invested their not overly large savings in it. While I recognise that the Government cannot take on everyone's mistakes, I hope that something can be done in consideration of those people who thought it loyal and sensible to invest in the industry for which they have worked all their lives. I hope that that group will be helped in some way.

My Lords, I hope that nothing I have said reflects anything other than regret about what has happened to those shareholders. But we must return to the basic dilemma faced by the Government: should an uncapped guarantee be offered, lasting for years? That would mean that taxpayers' money would have to be spent. Alternatively, should steps be taken to protect the company from insolvency? We have taken the view that the company should be protected against insolvency.

There is some value in Railtrack Group, which is the company quoted on the Stock Exchange. It is dramatically less than it would otherwise be as a result of the insolvency of the plc. Only time will tell what is the residual value in relation to that company, which is where the shares are. So it may be that there is some value there.

My Lords, the noble and learned Lord referred to issues of health and safety in answer to a previous question. Can he say who is in charge of safety now? The Minister has made it quite clear that the person who calls the shots in this business is his right honourable friend the Secretary of State. He also referred to the administrator, who is, as I understand it from the Statement, running the business. Is the administrator now the person where the buck stops in relation to safety, or is it the Secretary of State?

My Lords, the company which is in administration continues to have the legal obligations in relation to safety. It is supervised in relation to that by the Health and Safety Executive. So the arrangements in relation to safety remain, legally, exactly as they were before the administration.

My Lords, as one who declares an interest only in a return to a situation where I can use the West Coast Main Line between London and Glasgow, which has been run down under Railtrack to a state where that is no longer a pleasant proposition, I echo the views expressed by the noble Lord, Lord Bradshaw, when he stated that it is important that whatever emerges from the restructuring—which I believe will be widely welcomed—does not serve only London and the South East but has wider benefits.

This may be an unfair question to ask the Minister, but I shall ask it nevertheless. Given the dissembling, I use the term advisedly, of the chief executive of Railtrack in terms of "ambushes" and apparently forgetting that it was Railtrack's own advisers, Credit Suisse First Boston, who first raised the question of insolvency as long ago as August, can my noble and learned friend assure the House that if the chief executive demits the post—I am not sure whether that has been confirmed—he will not be given any kind of golden handshake? Failure must not be rewarded.

My Lords, I repeat what I said in answer to the noble Lord, Lord Bradshaw. We fully appreciate the importance of a rail network which serves the whole country. Anyone who lives outside London knows very well how important is the rail network outside London, just as it is to the people who live in London and work in London.

It would be invidious of me to comment on any arrangements that are matters for Railtrack and the administrator.

Office Of Communications Bill Hl

6.53 p.m.

Second Reading debate resumed.

My Lords, I first declare an interest. I am currently chair of the Broadcasting Standards Commission and I was previously deputy chair of the Independent Television Commission. I therefore speak for myself. It is quite clear that any comments on behalf of the regulators are made by the Minister and, in accordance with the rules and conventions of the House, the views I express are simply my own.

I welcome the Bill and I warmly welcome the intention to set up Ofcom. It is right that there should be a light regulatory touch, although I accept that this is easier in theory than in practice. I also welcome the fact that the intention is that Ofcom will not merely be the sum of the five bodies going into it but will have an independent structure and life of its own. It is however to be noted that the five bodies—I believe that there are four regulators plus the Secretary of State in the terminology—are working closely together and establishing close co-operation. That augurs well for a smooth transition to Ofcom when it happens.

It has always been clear that having several regulators with overlapping functions led to confusion and, in some instances, resulted in double jeopardy for broadcasters.

I also welcome the fact that within the concept of Ofcom there is to be technological advance. That means that it is right that the new regulator should cover not only broadcasting but related issues such as the Internet and broadband.

We should ask the question of why it is necessary to regulate broadcasting at all? The answer is that as a society we have long accepted certain values attached to broadcasting. We have usually used shorthand and called it "public service broadcasting". We have accepted that market forces and competition, which have an importance and strength in the scheme of things, may not in all instances protect those values or ensure that the values we believe in are featured sufficiently prominently in broadcasting. So we need to intervene in that process and, hence, we need to have regulation.

There is a cost in this. It may be the BBC licence fee, it may be the way in which independent television companies operate and the way in which Channel 4, with its unique position, operates. We should recognise that there is a cost and that it is part and parcel of the way in which we have broadcasting arrangements in this country.

I do not want to spend a long time defining public service broadcasting. Very briefly, there are certain elements which are important: there should be adequate coverage of news and current affairs; coverage of the arts, culture and religion; proper diversity in our broadcasting media; proper emphasis on regional broadcasting and on regional production. Those are elements in what we would call public service broadcasting.

My noble friend the Minister mentioned in her speech that the Bill gave the Government the ability to time the key appointments to Ofcom in a sensible way, neither too soon, when there would be a bunch of able people not having much to do, nor too late, which would impede a smooth transition to the new body. That is important.

It is quite clearly understood that the five bodies—the four regulators and the Radiocommunications Agency—represent different cultures, different degrees of independence and, in some cases, dependence on government. The most important single issue before us today is that Ofcom will be a large and powerful body. It is crucial that it should have a cutting edge; that it should not be a bureaucratic elephant but able to move speedily, flexibly and dynamically in an industry which is both dynamic and changing rapidly. The worst outcome would be if Ofcom were to be an insensitive body which could not get on with the job because it was large and unwieldy.

It is therefore crucially important that the people to be appointed—the chair and the small number of non-executive directors—are people who accept the need for a body with a cutting edge. Those non-executive directors will set the tone and appoint the chief executive. That is the crucial task before them long before the Communications Bill comes into force.

I have considered whether there is any way of reducing the size of Ofcom—it will have a large staff—but that will be difficult given the size of the five bodies that will go into it. We are, as it were, stuck with the size of it. It is therefore important that the culture and mode of operation is dynamic and not bureaucratic.

There is a related issue. Given the power that the new regulatory body will have, will there be a mechanism whereby people can appeal against its decisions? Clearly a complicated appeals process will slow things up. I am not certain whether there will be any redress at all. I simply pose the question.

I trust that the people appointed to Ofcom will be fully aware that they are charged with protecting the interests of citizens and will also have a responsibility for the economic wellbeing of the industry, broadcasting, the Internet and so on. From this it follows that the people appointed must be able to exercise their judgment in achieving the right balance between the two pressures of protecting the citizen and looking after the well-being of the industry.

I recognise that there will be an enormous difficulty for the Government in achieving regional representation. They are under great pressure from Scotland, Wales and elsewhere. It will be difficult. If the main board of Ofcom is to be large enough to encompass all of the different regional and other interests, it will not be the kind of board which will manage Ofcom as effectively as it ought. It would not be advisable to have regional representation through the Scottish Parliament, the Welsh Assembly or the Northern Ireland Assembly because the appointments should surely be subject to the Nolan procedures and a nomination from elsewhere would go against that.

The difficulty lies in the fact that if the main board of Ofcom were large enough to encompass all the different regional and other interests, it would not be the kind of board that would manage Ofcom as effectively as it ought to do. It would not be advisable to have regional representation through the Scottish Parliament, the Welsh Assembly or the Northern Ireland Assembly. Appointments should surely be subject to the Nolan procedures, and a nomination from elsewhere would go against that principle. The difficulty arises of making the board too big if regional questions are too strong—although I understand the force of the argument for some regional representation.

One way round the difficulty may be for the proposed content committee—a committee under the main board with lay representation looking after the important area of content—to have some regional representation in order to provide a sense of balance.

The Minister suggested that that we should focus mainly on the Bill that is before the House. However, she invited us to speculate mildly about the communications Bill that is to follow. Perhaps I may take her advice and speculate a little, given that I shall not be the only one who does so. I believe that my noble friend will understand the motive. It is not that we expect an answer from the Minister who will reply to the debate; we merely wish to put down markers which I hope will influence the Government as they finalise the drafting of the communications Bill.

First, I welcome enthusiastically the Minister's willingness that there should be pre-legislative scrutiny. That will greatly facilitate our task when the full Bill comes before the House. I hope it will be possible for the parliamentary draftsmen—are they draftsmen, or draftsmen and women?—to consolidate in the communications Bill the previous two broadcasting Bills. Otherwise, we face the nightmare of having three Bills on our knees while we are trying to sort matters out. The Minister's task will be significantly facilitated if there is a consolidation measure.

I turn briefly to the BBC. Of course, there will be plenty of chances to debate it later. I am an enthusiastic supporter of the BBC and what it stands for. However, I believe that it is in the interests of the BBC that it should come under Ofcom. Otherwise, the arguments about how the BBC operates in regulatory terms will be between the Secretary of State and the BBC, which would be the unhealthiest possible position for the BBC. It is much healthier, in the case of any regulatory argument, for the BBC to receive a slight wrap on the knuckles from Ofcom rather than there being a major row between the Government and the BBC. It is because I have such respect and affection for the BBC that I argue in favour of it coming fully under Ofcom.

I have referred to the desirability of a content committee in terms of regional representation. I believe it to be important also in terms of having a proper focus on content matters, which may not otherwise receive enough attention from the main board.

I am concerned about digital switchover. I understand that the majority of television sets presently being purchased are analogue sets. We must find some way of moving towards the Government's target dates for digital switchover. I know the difficulty: it is not just a matter of one black box per household; it is the fact that there are so many television sets in most households and achieving digital switchover for all of them is difficult. The Government would surely not wish to upset all the young people and teenagers who have second, third and fourth sets.

I shall not comment on media ownership beyond saying that I accept that it is a difficult question for the Government. I shall look with interest to see how they wrestle with it. Radio is of great importance as one of the broadcasting media. I am delighted that a task paring report acknowledges that in terms of ensuring proper consideration for radio within the structural arrangements.

During the Labour Party conference I had an interesting meeting with independent producers who felt that their competitive position was seriously eroded by the kind of contracts they had, particularly in regard to the BBC and but also with other broadcasters. It may be that Ofcom itself is not the right body for protecting competition, but I should like to feel that we can achieve a better arrangement than presently exists if we are to give independent producers a better chance than they have at the moment.

Finally, I welcome the idea of a consumer panel, provided that it is made clear that the panel is not an alternative to the content committee of Ofcom dealing with complaints. If we confuse people, we simply repeat the present muddled situation. The consumer panel has a part to play, but it is not the body to which complaints should primarily be addressed. That is an issue for debate when the full Bill comes before the House. I apologise to my noble friends on the Front Bench for spending rather more time on the measures that I should like to see in the communications Bill than on the Bill that is before the House. I welcome the present Bill. It offers a sensible way forward for a very important industry.

7.4 p.m.

My Lords, perhaps I may begin by thanking your Lordships and the Officers of the House most sincerely for the warmth and helpfulness of the welcome extended to me since my arrival in this place.

Even so, I address your Lordships on this particular topic with great diffidence that—is not merely because it is getting late—for this House is packed with communications and broadcasting experience and expertise, including most of my predecessors and successors as chairmen of the Broadcasting Standards Commission. Your Lordships have just heard the quality of my successor as chairman. Following that, I am rather surprised that I dare to speak at all!

Let me first emphasise that I see broadcasting as an important influence on us all. It helps to shape our attitudes, our culture, indeed the very way our democracy develops—critical your Lordships may think, at this unhappy time. I am a lifelong and, for the most part, enthusiastic consumer of British broadcasting, sound and vision alike. I know from my travels that its literally global reputation for quality, diversity and impartiality is well deserved.

I understand as well the need to re-examine our regulatory framework. Change is inevitable. But we need to be sure, as we make those changes, that we do not risk losing strengths which have helped to shape and to secure the quality of British broadcasting. That is the basis on which we need, in my view, to consider the plans that are now in their early stages before this House, as outlined by the noble Baroness, Lady Blackstone.

I start with one firm conviction. I believe that our experience has established the importance of having a visibly objective, independent statutory body to draw up codes of guidance and to receive complaints of the kind considered over 20 years by the Broadcasting Standards Commission and its predecessors. It must be a body empowered to consider—again, I emphasise, independently—both sets of issues that fall within the present remit of the BSC: taste and decency, and fairness and privacy.

How far do the present models, as they begin to be outlined in the White Paper, measure up to those standards? Perhaps I may say a word first about "taste" and "decency". Those two rather prim words tend to obscure what we are actually talking about. We are discussing the possible impact of unsuitable material at unsuitable times. I refer to the portrayal of sex, bad language and violence beamed directly into our homes. Competitive pressures in the broadcasting industry have pushed the boundaries of taste and decency ever further. The evidence, unsurprisingly, shows continuing concern, particularly about violence, and particularly about the impact of such material on children and vulnerable individuals.

In these circumstances, and with at least 60 per cent of even multi-media equipped viewers still preferring the public service "free-to-air" channels, I find it disconcerting, to say the least, that it is apparently proposed in the White Paper to leave decisions on this kind of complaint largely to the broadcasters themselves. They will be less transparently and independently accountable than now. That would contrast sharply with the move towards greater accountability almost everywhere else, from the health service to the railways—indeed, even in your Lordships' House.

As it appears, under the system proposed for taste and decency, broadcasters are to be both judge and jury in their own case—except where the complaint has not been dealt with "in a timely manner"—a somewhat quaint phrase drawn from paragraph 6.4 of the White Paper. I should be grateful if the Minister—if not in his reply then at some other time—would explain the thinking behind that. How exactly is "timeliness" to be determined, and by whom? What is to be done, and by whom, in respect of a decision affecting taste and decency which may indeed have been "timely" but where the broadcaster's reaction was perhaps unsatisfactory in every other respect?

I turn now to "fairness or privacy", or rather to the handling of complaints of unfairness or unwarranted infringement of privacy. On this topic, I am glad to say, the 'White Paper's analysis is clear, save in one important respect, of which I shall say more in a moment. For it recognises—here I quote from paragraph 6.5.2 of the paper—that,
"because of the invasive and powerful nature of broadcasting",
people should have,
"the right to complain directly to an independent body which is able to make, and ensure the publication of, adjudications".
Every word of that description of the present position is crucially important. The White Paper goes on to describe this approach, quite rightly, as,
"often the most effective means of redress for individuals or groups whose reputation may have been damaged",
and promises that the,
"right to seek such redress … will be retained as an important remedy for those … affected by a programme".
So far, so very good. I am glad to read and quote:
"This function is currently performed by the Broadcasting Standards Commission"—
as indeed it is, in respect of the BBC, as well as the commercial channels. As has already been pointed out, in the case of the BBC the Broadcasting Standards Commission is the only independent supervisory agency. For this purpose the commission uses "hearings", where both sides present their case in a simple, compact and mutually informative procedure. The question—and my most important point—is whether the proposed new structure will ensure the continued transparency, effectiveness and, above all, independence of existing arrangements, including, for cases about unfairness and infringement of privacy, hearings of the existing kind. For the White Paper concludes that this will in future be available from Ofcom itself; or, indeed, as was mentioned by the noble Lord, Lord Dubs, possibly from a content board.

It is here that some of the most important uncertainties arise. Will Ofcom have, as it will surely need, the same explicit, statutory powers as the Broadcasting Standards Commission now has? Will they extend, as they do today for taste and decency as well as fairness and privacy, to the BBC? If not, why not? Who will make the decisions on complaints: staff, commissioners, or some other grouping?

In the case of the Broadcasting Standards Commission—in order to avoid the risk of so-called "agency capture"—care has been taken to secure a regular turnover of the membership of this independent commission. I stress that it is the members themselves who make the decisions on complaints.

Will it be possible to ensure the same detached relationship if the adjudicator—the content board, or whatever it may be called—standing between the aggrieved citizen and the broadcaster (and acting, I may say, in a quasi-judicial capacity) is so closely identified with Ofcom, the body whose primary purpose is managing the industry?

I see, of course, the case for reducing and rationalising the number of regulatory bodies. But I have to ask your Lordships: can we be sure that it is right to go for a single, huge integrated regulatory body? Should we not consider at least a "two body" approach—by continuing the existence of something more like the commission, a body with at least the same degree of independence?

I am all for having a "tidy mind". But the trouble with tidy minds—if I may outrageously mix my metaphor—is that they sometimes try to go "a bridge too far".

7.14 p.m.

My Lords, it is my pleasant privilege on behalf of your Lordships' House to congratulate the noble Baroness, Lady Howe, on her maiden speech. I do so wholeheartedly. It will have surprised no one remotely acquainted with the noble Baroness that her speech was succinct, resonant and full of rich goods no doubt waiting to be unwrapped at a later stage.

The achievements of the noble Baroness are dauntingly wide ranging—from the Equal Opportunities Commission and chairmanship of an inner London juvenile court for 20 years to, relevantly for us here today and as we have heard, chairmanship of the Broadcasting Standards Commission, which, ironically, we may now be set to subsume into Ofcom. However, most tellingly for me, was her decision to take a degree as a mature student at the formidable London School of Economics. We await the noble Baroness's further interventions with some apprehension, as well as with keen anticipation.

Like other speakers, I must begin to talk on this Bill by declaring an interest. I work for Granada Television. I also work for BBC Radio—perhaps they cancel each other out. But the interest that I most want to declare is in public service broadcasting, in which I have worked for 40 years in the BBC, in ITV and in Channel 4. The British system of broadcasting is uniquely characterised by that public service tradition throughout. This is key to the issue of Ofcom.

It is easy to see public service in the BBC. Channel 4 was set up—with ITV money—to be a public service channel, commercially underpinned and it succeeds very well. Most remarkably of all, I think, ITV contributes massively to the public service coffers, at no charge to the viewer. It provides over 10,000 hours of news and other regional programming per year. Your Lordships might not know that that is twice as much as BBC1 and BBC2 combined. It also has a programme spend on creative talent in this country that is the biggest spend on any single channel in Europe. This is now at risk.

I believe that the public service notion cannot be kept out of this evening's debate. Like others among your Lordships, I wish rather to digress to tackle this point, or rather speculate, licensed by my noble friend the Minister. I welcome legislation that will enable Ofcom to be set up and running as soon as the full communications Act is brought into force, providing that it is fashioned to suit conflicting needs, which are now—and quite cannily—individually tailored. But the arrival of Ofcom throws into relief the harmfully, even fatally, slow progress of the communications Act itself, which has been promised for so long—since 1997—and is now pushed back yet again to 2003 at the earliest, by which time it could be the lifebelt offered after the subject has drowned.

The danger signals in commercial television are surely unmistakable. To ignore them is to imperil a valuable commercial and public service enterprise. Ofcom is to be welcomed. But surely it must include the BBC in its remit. To leave out the BBC—approximately 50 per cent of broadcasting business—makes as much sense as having a regulating power for food standards yet leaving Tesco and Sainsbury to regulate themselves. No doubt they would do it responsibly, but the greater points are fairness, transparency and consistency and, for that, everyone needs to be under the same authority, which would be diminished without the BBC as the BBC would, I believe, be diminished without—that is to say, outside—Ofcom.

No one doubts the integrity of the BBC's governors. I am sure that your Lordships wish the new chairman well. No one doubts the high aspirations of the BBC to which the present director-general is devoting his great skills and energies. But the BBC must not be allowed to be a state within the state. Ofcom could become a powerful instance and metaphor for that.

Recently, when the BBC failed to get BBC3, a senior BBC executive said:
"The BBC will get what it wants. The BBC always does".
Even someone like myself, who is a 100 per cent supporter of the BBC, felt a chill come to the blood. No organisation should believe that it can behave like that in our country, and certainly not one wholly subsidised by the people to the tune of £2.5 billion a year.

If Ofcom is not allowed to engage with the BBC, then, like it or not, this will be further proof that the traditional personal and philosophical intertwining of a powerful government and by far the most powerful broadcaster is again prepared to lock forces against the rest of the broadcasting community. There was never a good time to do that. This is, and critically I believe, a very bad time to do it.

Do BBC governors fear to lose their independence if they accept Ofcom? They need not. Granada, under the ITC, which many think could set out proofs to show, is much tougher than the BBC governors. Granada still acts independently. Surely transparency ought to be welcomed by the governors, and consistency—that old level playing field; not a bad image; not an ignoble ambition in a democracy.

The fate of Ofcom will be a crucial signal to commercial, independent television in this country. Bluntly: is it truly part of the agenda, or not? Is this a country that wants commercial television or does it merely tolerate it? Is it prepared to see it wither, in effect, or will it make it part of its central broadcasting concern?

It is interesting in this context to look for a few signs. Granada and Carlton, for example, have invested £800 million in the UK's digital terrestrial platform, with £300 million more to go—yet the Government have failed to follow up their promised commitment to drive digital TV, and the result could be catastrophic. The Chancellor of the Exchequer in another place could help by deciding that a digital component be built into every new television set. That would help manufacturing too. A date for switch-over could be announced, allaying many of the uncertainties. Much else could be done, but there are no signs.

Yet more super-tax is being demanded from ITV while its losses mount. Are there any signs that cross-media ownership rules for TV and radio could be relaxed with instant and direct benefits from the regional to the international scene? Are there any signs that advertising, an essential driver in our society, should have its voice heard? There are still no signs.

There is more, but I shall add only one observation. Recently, the BBC secured not only a new and munificent licence fee settlement, but the Government reopened the previous government's settlement two years early—plenty of signs there. Remember, "The BBC will get what it wants. It always does", as the man said. It is odd, even bizarre. It is no wonder that the rest can feel left out in the cold.

The issue is not only about Ofcom, but about taking the whole of broadcasting equally seriously. It not so much level ground as common ground. The BBC should make alliances and lead. It has nothing to fear. We are a trading country that could enjoy much fuller rewards from one of the world's four great global industries—communications. It is right to support the BBC, but to favour it and conspicuously disadvantage so much else could mean that we miss great opportunities for skills to develop, in manufacturing, in job creation, and in making the best of the rich mix that we still, just, have.

7.22 p.m.

My Lords, it is a strange experience to find myself here after 23 years in another place, but it is made much easier by the helpful welcome of so many of your Lordships, including my friends on the Front Bench and my staff. I do not doubt that as well as renewing old friendships, I shall probably find myself renewing old arguments.

I come to the debate as the spokesman who led for the Opposition during the passage in another place of the Broadcasting Bill 1990. That took a year out of my life, but we prevented the Bill from being as bad for broadcasting as it promised to be, although it did considerable damage to the "must carry" obligations of public service broadcasting, to which many of your Lordships have already referred.

That was 11 years ago, which was another world in broadcasting and communications. The technological changes have been fast and wide-ranging, but I take the view that broadcasting is about more than knobs and buttons. Technology should not blind us to what underpins our broadcasting services. It is Ofcom's role to hold the ring.

The pride that we generally have in the quality of our broadcasting is properly placed because both the public and commercial sectors are built on the base of broadcasting as a public service with sensible regulation. Your Lordships will not expect me to be contentious in my first speech in your Lordships' House, but perhaps I may say as an aside that the commercial sector and BBC are regulated in different ways to common standards that take into account the differences between the two broadcasting sectors. I am not persuaded of the need to change that.

Public service obligations were placed upon the infant ITV regional network and remain in place today, although they are not as strong as they once were. The fact that the BBC is there and that ITV matches at least its main public service broadcasting obligations, gives the whole system its underlying strength.

Many years ago there used to be a television programme called, "Never Mind the Quality, Feel the Width". In many ways, this is what has happened to broadcasting in the past decade. I am not against change, but against change that loses some of the essential ingredients of what we value most in the broadcasting sector. There is now less factual programming, especially on developing countries. The number of hours of serious documentaries on ITV has almost halved to about 18 hours a year. Budgets for these programmes have consequently been reduced. Despite criticism from the Independent Television Commission, ITV has failed to increase its documentary output. To be even-handed, I shall mention the BBC, which has pared its documentary schedule and there is a risk that its proposals for new digital services could move programmes from BBC1 and 2 to digital channels ahead of the time when most of the population can access them.

There is much for Ofcom to do on behalf of both audiences and those broadcasters who understand the importance of quality programming. Of course broadcasting must entertain, but in a vibrant democracy it has a duty to inform, educate and activate the public.

I am aware that the Bill is about the regulator rather than the detail of the regulation, but as the Minister issued the invitation, I thought that I might as well take the opportunity to offer a few words. In setting up Ofcom, we need to consider the place where it may be. As digital and other technology expands the number of channels, it is important that there is real choice and variety. I believe that that will be put at risk unless public service broadcasting regulations remain.

The point is well made by Public Voice, which is a voluntary sector network that supports public service broadcasting. It wants Ofcom to ensure that in the bid for audience share, important public service broadcasting obligations are fully and properly met.

Indeed, as the number of channels expands, it is my view that if there is to be real choice and variety, public service broadcasting becomes more important. More choice is less choice if it is a choice of more of the same. I should like the Minister to consider the call of Public Voice to expand the membership of Ofcom—the noble Baroness, Lady Howe, referred to this too—from the proposed number of three to six people to between six and 12, so that a wider range of public interests can be reflected in the membership.

I endorse the suggestion from Public Voice that there should be a consumer committee, or citizens' jury to help Ofcom to assess performance against promise on public service broadcasting obligations by each broadcaster. That would enable and encourage real hands-on involvement by the public and give a spur to broadcasters.

I welcome the Government's stated intention that Ofcom will have powers to strengthen regional production in both TV and radio to give continuing voice to our important regions and the countries which make up the United Kingdom. I hope that the Minister will urgently look into disturbing reports that some ITV franchise holders want to halve the minimum level of regional programming to eight hours a week from next year. That comes only six months after the completion of the renewal of the last round of ITV franchises. If that is allowed to happen, it will severely damage one of ITV's most distinctive features. I hope that the Minister will also repeat an earlier pledge to retain Channel 4 as a non-profit-making corporation.

I support the idea of the UK as a world leader in communications because it helps our democracy, economy and jobs. I hope that this Bill and the communications Bill which follows will maintain real choice and diversity, increase those for radio and have cross-media ownership rules which protect the public from monopoly abuse.

7.29 p.m.

My Lords, perhaps I may say what a pleasure it is to speak after the noble Lord, Lord Corbett, and congratulate him on his maiden speech. The last time I heard him speak was in the House of Commons when he was Robin and I was Kenneth. He served for some 23 years as a very distinguished senior Back-Bencher and a spokesman on the matters that he has just discussed. He was very respected for his views and he was also chairman of the Home Affairs Select Committee in the House of Commons. I am sure that he will speak a great deal in this House on these matters. However, I tell the Whips that he is not good whipping fodder. He is independent minded. He will always appear on "Today" or "Newsnight" when an independent voice is heard. I hope that that spirit will continue. I note from Who's Who that his recreation is pottering, so he has come to the right place.

It was a pleasure to hear the maiden speech of the noble Baroness, Lady Howe. I have known the noble Baroness for over 40 years. Her contribution to public life in that time has been quite outstanding and unique. The work that she has done to promote the work, the cause and the role of women in our society has been impressive and effective. I am delighted that she is in this House—on some Benches anyway. In a moment I shall strongly support the view she expressed.

I express an interest in that I am the chairman of two companies, one of which provides Internet services to small companies and one of which also provides services to mobile phone users. However, nothing I shall say will have any effect upon the activities of those businesses. What is perhaps more important is that in the 1980s as I was the Minister responsible for privatising BT and Cable and Wireless, I had to set up Oftel. I had to invent Oftel and appoint the first director general. Later in my ministerial career I was responsible for all the other bodies that will be put into Ofcom. The spectrum agency did not exist in those times but I was directly responsible for spectrum allocations. Therefore, I have some experience of the complexity of what is proposed by the Government.

The way the Government are handling the matter is rather strange with a White Paper and then a paving Bill. The Minister said that tonight she would not give us any details of her thoughts and the Government's ideas as the Government wanted to listen and to collect the voices. I suppose that this matter could be dignified as a great public debate. However, on the other hand it could be described as indicative of a government who do not really know what they want in various key areas and decide to follow the good old process of grope, fumble and stumble. The French, as usual, have a word for this: Système D. When chaos is about to overwhelm you and you do not know what will happen or what to do, you employ Système D. "D" stands for débrouillard. It means, basically, to grope yourself out of the fog. That is the process in which the Government are engaged in the consultation process. What is missing from the White Paper is any intellectual discussion about the need, scope and the consequences of regulation both as regards telecommunications and the broadcasting industries and an assessment of whether the regulatory process which presently exists achieves, or will continue to achieve, the objects that it was supposed to achieve.

The body we are setting up, Ofcom, is rather a strange body because three of its constituent parts are basically concerned with economic matters. Oftel is almost solely concerned with economic matters as a price regulator. The Radiocommunications Agency is largely concerned with economic matters. The Radio Authority has an interest in content but is again very much concerned with economic matters. Those are the economic considerations. On the other side there are the content bodies: the ITC, which is primarily concerned with content, and the Broadcasting Standards Commission, which is concerned with taste, decency, privacy and other matters of that kind. It is rather a two-headed beast, a kind of push me, pull me. Like any two-headed beast, it answers to two voices. It answers to the culture Secretary and to the industry Secretary. Therefore, there will be a huge number of turf wars as that is the very nature of these areas. Just because the industries are converging we should not believe that the interests of those departments will converge.

Behind it all an even more important body in many respects is the OFT, which has to decide crucial matters of competition as regards amalgamations in the broadcasting industry and the television industry and cross-media matters. The regulator is, of course, an independent body. Ofcom will be independent. It will not be accountable to a Minister. Regulators are not accountable to Ministers. Ministers speak on their behalf but regulators make their own decisions and have to defend them. That is an important consideration.

I touch upon the economic regulation, which I consider one of the most important matters. I shall discuss broadcasting later. Is there a case for economic regulation of telecommunications and of broadcasts on the Internet? The answer is yes. There was, and is still, a case but one hopes that one will move to a situation where regulation will largely fall away. When I set up Oftel in the 1980s it was important to have a body that could cope with the overriding monopoly of BT. As we were privatising BT, the policy was to set up a competitor, Mercury. The role of the first director general, Professor Carsberg, was to ensure that that survived against the pressure of a monopolist. The pressure of a monopolist is almost overwhelming. It is difficult to prize the sticky fingers of the monopolist off the monopoly. That was the contribution that Professor Carsberg made. In 1990 we set up Mercury and it established a market share of nearly 20 per cent in seven years under a policy of duopoly.

In 1990 we gave the cable companies power to carry telephony as well as entertainment. That was a real convergence and we led the world. Virtually every other country has now followed our lead. That required a different type of regulation. The second Oftel regulator, Don Cruickshank, ensured that the cable companies could survive the pressures exerted by BT. It all comes down to the interconnect arrangements. That may seem technical but that process has created one of the greatest growth industries in our country. The cable industry and the other telecommunications operators were probably the biggest investors of cash in our country in the 1990s. That matter requires a form of regulation but the nature of regulation changes. The first regulator had to be concerned very much with international telephone calls as they were considered to constitute a racket. The present regulator does not have to control international telephone calls at all. He barely has to control the prices charged by BT. He is now much more concerned—the present regulator, David Edmonds, is a distinguished regulator—to ensure that BT does not stop unbundling in ADSL and also that the mobile operators do not "rip off- the public. If you look at your telephone bill, you will probably find that when you use your telephone to phone a mobile phone, that is the one item that sticks out enormously in the bill. That item may cost £1 or £2. It is cheaper to phone Australia. That is why two or three weeks ago David Edmonds decided to regulate that area and to reduce the prices of calls between mobiles and fixed link phones.

That is the kind of work that Ofcom will spend most of its time doing. That is what the staff will be involved with and where the concentration of numbers will be found. That is economic regulation. The same applies to the Radiocommunications Agency that is to determine matters concerning the spectrum. That is a big business; over a quarter of a million licences of one kind or another must be policed. I assure your Lordships that the regulation of telecommunications is not only complicated but is also a lawyer rich area and an area where lawyers become rich. How can we ensure competition? What is the role of Ofcom and the OFT? For example, at the weekend I read that BT, Carlton and Granada may combine to form a TV digital platform. That is an interesting idea which I had not heard of before. That has substantial competitive considerations as it would bring together telecommunications and broadcasting. However, the cable companies bring together telecommunications and broadcasting. Therefore, who will decide whether that is given approval? Is that a matter for Ofcom or for a Minister? Will it be reported to the OFT? Those are the kind of questions which the Government will have to answer before they produce their Bill.

I turn to content. Most of the speeches tonight have concerned content on the broadcasting side of Ofcom. Here, one is concerned with the protection of children and vulnerable persons, the prevention of crime and disorder, the balanced presentation of news and current affairs and the wide range of programming and plurality of expression that make up public service broadcasting, which the noble Lords, Lord Corbett and Lord Bragg, touched on.

If that is to be done, surely the BBC must be included. I have a word of advice for Ministers. All three Labour Peers who have spoken so far in the debate have said that the BBC should be included. I am sure that the Government will be able to carry anything through the Commons with their large majority, but I would take a bet that it would be difficult to exclude the BBC from Ofcom when the debates come up in this House. I may be proved wrong, but I would be prepared to take a bet. I see two Labour Peers already nodding. The Whips had better note that. The Government should recognise that they have probably lost that one already and move on.

The noble Baroness, Lady Howe, asked who would deal with content considerations. Who will decide the cross-media ownership rules? In my time in government, those rules were protected fiercely by Ministers. In his day, Harold Wilson decided the rules himself as Prime Minister. What will happen? Will that responsibility be moved to Ofcom or will Ministers still have a say on cross-media ownership rules? Will Ministers determine the broad parameters? The rules will have to change all the time because the structure of media ownership is changing. Will a Minister be asked to approve plans by the BBC to establish new channels? I read in the press that the BBC wishes to establish BBC3 and BBC4. That may be an admirable thing to do, but it must have competitive implications for other companies. The BBC intends to produce a national curriculum resource that will be available to all schoolchildren. That is an attractive idea, but there are any number of companies—in which I have no interest—that already provide such resources on a commercial basis to schools. Who will decide on that? Will it be Ofcom? Will it be a Minister? Will the OFT be involved? I hope that the Government will address such considerations while they are gathering voices.

If Ofcom polices the quality and content of the ITV companies, what sanctions will exist to ensure compliance? The original ITC had sanctions to ensure compliance, but they have rather faded. Will there be any sanctions and how will they operate? Will that be done with the approval of Ministers?

As the noble Lord, Lord Corbett, asked, what sanctions exist if the ITV companies decide to reduce their regional content? Will that be Ofcom's responsibility or the responsibility of a Minister? The Government obviously do not know. I understand that. At the moment it is the job of the ITC, but will that continue? How important will the regional content be? What percentage will it constitute and who will decide on it? Those are interesting questions for the OFT.

The noble Baroness, Lady Howe, talked about taste and decency. The problem for Ofcom is that taste, decency, content and privacy are the issues that the public will mainly be interested in. They will not be interested in Oftel and the spectrum, although they might be slightly interested in the work of the Radio Authority. Those issues of taste and decency are what will turn the public on. If the head of Ofcom has to appear on television every other night, it will not be to defend telecommunications regulation, but to justify, defend or condemn something that has appeared that offends public taste and decency. That will be the main role of the chairperson of Ofcom.

The management consultants who were appointed to try to pull together the mechanics of making the process happen produced a report last week. It said:
"We took as our starting point the White Paper, and our understanding that Ofcom's regulatory objectives are now seen as falling under five headings".
One of those five headings is:
"Protecting the interests of citizens, by maintaining generally accepted standards to protect the public from offensive and harmful broadcast content and ensuring protection of fairness and privacy".
The word "privacy" is vital in this context. As I understand it, Ofcom will be able to examine complaints by ordinary citizens who believe that their-privacy has been unfairly intruded upon by a television programme. That is interesting, because Ofcom will operate under a code. Will it be the same code as that used by the Press Complaints Commission, administered by the noble Lord, Lord Wakeham? The issues are very similar, but the media are rather different. Will there be different sanctions? If a citizen has been traduced by a television programme, that person could be punished for life. What remedy does he have? What redress for that grievance is envisaged by Ofcom or the Government? Will there be compensation for that person? Will Ofcom be given the power to say that a particular programme must not go out or be repeated?

The Government are moving into an area of tremendous complexity and great public concern. I hope that in the next few weeks we will get some answers to the questions that I have raised tonight. The issues that I have touched on are so different from economic regulation that there is a case for having two bodies, but I suspect that we have lost that argument, because the flood was convergence. We are dealing with two separate areas of human decision making and human activity. The Government should have the humility to recognise that.

I had hoped to listen to the whole of the debate, but I am going to a dinner tonight where I am expected to say a few words, so I may not be able to stay right to the end because of the time taken by the Statements earlier. However, I shall read everything that has been said, particularly the Minister's reply.

7.47 p.m.

My Lords, I echo the tributes paid by the noble Lord, Lord Baker, to the noble Baroness, Lady Howe, and the noble Lord, Lord Corbett, on their maiden speeches. Both spoke with immense experience as, respectively, a former chair of the Broadcasting Standards Commission and an opposition spokesman on broadcasting. That shone through their speeches. We all look forward to their contributions at the further stages of this Bill and when the communications Bill proper comes before your Lordships' House, which we anticipate will be in the next Session.

At first sight it may seem rather strange to bring forward legislation to establish the "office of communications" before we have even seen the Bill specifying what the functions of a future Ofcom will be. Further scrutiny does not totally dispel that impression. I fully understand the need for an orderly transition from the five current bodies or offices regulating the communications sector to a single, unified regulator for the entire sector, but unless that body is going to do nothing over the next year and a half or so until the communications Bill proper is passed—we are promised a draft of it in the spring—there must be a real danger that any actions that it takes or appointments that it makes may not accurately anticipate the final shape of legislation, which we have not seen in draft form yet, let alone discussed or amended.

To give but one example, it is by no means impossible that the Government may find themselves persuaded to bring the BBC more fully under Ofcom. If that were to happen, surely it would affect the weight given to the various functions within Ofcom, and possibly the personnel appointed to oversee their discharge.

The final draft of the new communications Bill is clearly not ready, otherwise it could have been introduced in the current Session. There is no disgrace in having second thoughts, particularly in a sector such as communications, which is changing so rapidly. The technical possibilities of the communications landscape and, perhaps even more importantly, the economic resources to exploit them effectively, are changing all the time. Just think back to the spectrum options for the third generation of mobile telephony. The Chancellor certainly sold at the top of the market. How many of the bidding companies today would bid even half of what they committed themselves to less than two years ago, and, in any event, would the banks let them? Dates for digital switchover in television are being extended almost every month. The slump in advertising revenues is giving the commercial sector in broadcasting quite severe problems, perhaps thereby enhancing the case for further consolidation.

I hope that the Government are not hung up on delivering an up-and-running Ofcom by 2003 simply because the election manifesto stated that they would. I am happy to give them the benefit of the doubt, and perhaps I may put forward what I hope is a helpful compromise solution. It would enable progress to be made before a communications Bill is passed but would delay the setting up of "pre-Ofcom" until we have had the Second Reading of the substantive communications Bill.

In opening, the Minister indicated that the Government do not intend to appoint the chair of Ofcom before the spring of 2002 at the earliest. I understand from Statements in another place that the rest of the board of Ofcom will not be appointed until later in the summer. As British Summer Time ends in October, I interpret that to be some time, but not long, before the next Session of Parliament. The insertion of a sunrise clause along the lines that I have suggested would delay matters only for a couple of months or so.

I very much welcome the course of action that the Government are taking in this matter. So far as I am concerned, the more pre-legislative scrutiny that we have, the better. I believe that the publication of the draft Bill in the spring will be the most effective public consultation that we can have. Consultation is always better when one talks about specifics rather than generalities. It will only be when people see the legislation as it impinges on them that they will become active and start to lobby properly. If we have consultation, together with the Second Reading of the communications Bill—although the legislation will not have been passed and will still be capable of amendment—the Government will have a very good idea of what we all want the new Ofcom to be like. If we were to delay the setting up of Ofcom until then, I believe that that would provide several advantages.

Establishing "pre-Ofcom" before then could be unwise. Until the preparations for the Queen's Speech are finalised next summer, there can be no guarantee that there will be a communications Bill in the next Session of Parliament. We could be establishing a body with planning and administrative powers before there is anything to plan or administer. If there is too long a gap between the setting up of a "pre-Ofcom" and the substantive debate on the future communications Bill, there is also a grave danger that "pre-Ofcom" may create a predisposition to pursue a course of action other than that which Parliament may finally decide to be desirable.

It is important that Ofcom works to a clear brief from the outset. One cannot make appointments or, indeed, determine structures in isolation from that brief. There is also a very real danger that in the next 18 months or so before the passage of the communications Bill a prematurely created Ofcom could start to drain authority and attention from the existing regulators, who will still remain in control of the various sectors.

One issue which I gather will be a major talking point in the Bill is media ownership. I believe that we have always been a little too uptight in this country about media ownership to the extent that, if diversity of output is an objective of public policy, our current rules on media ownership perhaps militate against it. If one individual owns three television or radio stations or three newspapers, self-interest and public interest coincide. He will want to make them different because it will be in his own interests to do so. If, on the other hand, one compels them to be held separately, they will end up competing for the same market place. That is against the public interest.

I regard content regulation to be a far surer guarantee of public interest than ownership regulations. In that connection, one heard reports that the Government were prepared to countenance a single ITV. If that is the case in television, they should take a much more liberal outlook towards radio as well. In that, I declare an interest as chairman of Scottish Radio Holdings.

It is perhaps inevitable that our debate today strays into areas which will probably be debated more fully when we come to deal with the communications Bill. However, it is precisely because these matters impinge directly on the nature, structure and composition of Ofcom itself that they must be referred to today, even if only in broad outline.

In respect of the BBC, I hope that I shall be regarded as its friend.' I am certainly one of its staunchest admirers. However, I must say that I cannot see any logical reason—the noble Lord, Lord Baker, can now add another Labour Peer to his list—why the BBC should be left outwith the scope of Ofcom. It seems silly to leave the UK's largest broadcaster at least partially outwith the new system. I also believe that in the long run that will be to the disadvantage of the BBC in that it will leave it in an increasingly anomalous regulatory position.

By contrast, I should like to see the BBC as a benchmark for quality throughout the system but very much part of the system. In that, I advise the Government to reread the White Paper on broadcasting published by a Labour government in 1978. The White Paper drew attention to precisely that anomalous situation with regard to the BBC, which is judge and jury in its own case. I do not consider that to be in the BBC's interests. Such a situation is in contrast with that of the commercial sector, which is subject to regulation by an external body. Allocation of frequencies and spectrum for new services can be made only on the basis of full knowledge of the plans, performance and promises of those involved. Having a major player partially outwith the system does not make much sense.

I also hope that we shall not allow technology to be the sole determinant of what we do. Of course, technology widens the range of choices open to us, but it should never determine the options that we choose. Those must be determined by listener tastes and the availability of resources, whether financial or human, to deliver them. One should reread the arguments in favour of the introduction of cable back in the 1980s and consider what has happened.

In particular, I hope that Ofcom will have regard to the overall health of the system. The fact that new technology permits 200, 400 or 2,000 television channels does not mean that we should have them or want them. Therefore, I hope that Ofcom will have regard to the health of the industry as a whole and will consider the impact of licensing new services before it acts on them.

Too often we regard regulation in a negative sense as preventing people from doing things. However, quite clearly in the case of the roll-out of broadband, Ofcom must have a proactive and encouraging role if we are not to continue with the present unhappy situation whereby only 100,000 UK households have a broadband connection.

Like other noble Lords, I have been deluged with lobbying material by those involved in the provision of broadband. I honestly do not know who is to blame for the current situation. However, what appears to be the case is that, while billions of pounds have been spent laying cable networks between cities and between countries, very little has been spent on the last local mile, which is absolutely necessary if the individual consumer is to participate. Indeed, doubts have been raised as to whether broadband would be viable outwith urban areas. Clearly Ofcom has a crucial role not only in regulating but in stimulating universal access if that is perceived to be a government policy objective.

Although I shall seek the introduction of a sun rise clause along the lines that I have suggested, and although I am pretty well agnostic as to the desirability of creating Ofcom in the form proposed, I am happy to support the Government's broad intentions. However, I warn the House that the creation of Ofcom in the form proposed will almost certainly involve terms and conditions for staff representing the highest common factor of those presently enjoyed by staff in each of the five regulatory bodies. It would not surprise me at all if this single, streamlined regulator did not end up costing us more than five separate ones.

However, it is good to know that the five separate regulators are working closely together. Reference has already been made to the document that they produced, scoping the work required to create the, full Ofcom. As a result of such meetings and work, they are quite confident that they know what needs to be done in management terms. They are also confident that they can achieve it within the time-scale that the Government have outlined.

7.59 p.m.

My Lords, I begin by expressing my gratitude to the Government for the initiative taken earlier this year by the Department for Culture, Media and Sport. It convened a meeting of senior representatives of Christian denominations and other faiths to discuss public service broadcasting issues relating to the White Paper and not least to this proposal. The former Minister responsible for broadcasting indicated at the time that she would convene a further meeting. I very much hope that her successor will be encouraged to do that as the communications legislation progresses.

Religious leaders of all faiths have a particular interest in any new settlement or rearrangement relating to public service broadcasting and especially to the way in which it is regulated. It was our unanimous view across the faiths at the meeting to which I have referred that it is important for the traditions that we have already established in public service broadcasting in this country to continue to be supported under the new regulatory regime and for the British public to continue to have access to quality programmes on a wide range of subjects. Ofcom's proposed responsibility in those areas appears to be reassuring, but I am still not clear—forgive me if I am being obtuse about this—exactly how it will determine whether broadcasters are meeting their public service obligations. Is the process through which Ofcom's decisions will be received sufficiently straightforward? Will there be a straightforward process by which those decisions can, if necessary, be challenged? The noble Lord, Lord Dubs, has already raised that problem.

There is much change taking place across the whole range of communications. As the noble Viscount, Lord Falkland, mentioned, there are complicated matters to be teased out about the nature and regulation of public service broadcasting in a digital age. With so much in the pipeline it would be easy for a heritage part of broadcasting in one area or another to be destroyed; its subsequent re-creation would be much more difficult.

That consideration applies especially in relation to religious broadcasting, which has been a pillar of the public broadcasting scene since the inception of broadcasting. In the UK it has led to many memorable broadcasting achievements. Many programmes have been creative, informative and entertaining and others have reflected the mood of the nation at key times of sorrow or of joy.

Can the Minister give an assurance that the importance of religion, its place in our multicultural society and the way in which that is properly reflected in our traditions of public service broadcasting will be well understood by the new regulatory body? How does she envisage Ofcom fulfilling its role in that area?

The noble Lord, Lord Corbett, discussed, in his excellent maiden speech—I offer him my congratulations—the danger that some serious programmes could be hived off to the digital channels. If that happened to religious broadcasting, it would be a betrayal of our public service broadcasting traditions. Would it not be appropriate for one of Ofcom's proposed advisory committees to be designated for that important role in public service broadcasting or for there to be some other properly agreed means of regular consultation between Ofcom and faith representatives?

I turn, as many other noble Lords have done, to the credibility of Ofcom in relation to the concern that has been frequently expressed by many people in this country, and it was eloquently articulated tonight by the noble Baroness, Lady Howe, to whom I add my congratulations on an excellent maiden speech. It involves the issue of content and of taste and decency. I am no puritan; indeed, Wakefield was known in medieval times as the merry city and on Friday and Saturday nights it still is. I detect among the cross-section of the public whom I meet in my ministry—it is way beyond Church boundaries—a perception that broadcasters and regulators too often and too casually dismiss genuine complaints that are made to them about offensive material that is broadcast, especially on television.

Will the public have reason to be confident that Ofcom will have sufficient clout to deal with such complaints quickly, effectively and fairly? On what basis will it define the boundaries of taste and decency? As several noble Lords have rightly said tonight, generation gaps and different cultural backgrounds make such boundaries very difficult to define. What advice will Ofcom seek in those sensitive areas and from where will it seek it?

I look forward to our future debates on the communications Bill. We shall doubtless go into this matter in much more detail in future but, if the BBC is not included in the arrangements, can the Minister explain why not? I was present and had the privilege of taking part in an earlier debate on the communications legislation in this House. I recall clearly that noble Lord after noble Lord spoke about the need for the BBC to be within the framework of Ofcom. I seem to remember on that night that the Government responded with the advice that in future debates we would find that many people would say, "The BBC should be excluded". I wait to hear such speeches tonight.

Tonight we are putting in place the mechanics before we have addressed the substance and the principle. I understand why the Government wish to adopt that approach and I hope to be reassured by the Minister that those matters will come before the House and that they will not be hurried. Speaking from these Benches, I hope that she can address my concerns and reassure me about one aspect of public service broadcasting; namely, religious broadcasting.

8.7 p.m.

My Lords, like several other noble Lords, I find it rather difficult to assess whether the form and structure of Ofcom, which is provided for in this paving Bill, are appropriate without knowing in any detail what its purposes and functions will be. The Bill requires Parliament to agree to the creation of a statutory body and to indicate its approval of a certain membership and of a relationship with existing regulators, but it has to do so without being fully aware of the ultimate role that Ofcom will have, perhaps for many years, in the world of communications.

I must declare an interest as the chairman of the Advertising Standards Authority, which supervises the self-regulatory system that obtains in non-broadcast advertising. It is because of that interest that I would like to know, for example, whether Ofcom will continue the Independent Television Commission's highly prescriptive regulation of the content of television advertising, or whether we will move towards a so-called co-regulatory regime, which is contemplated in the White Paper and in relation to which some form of self-regulation would be extended across all media platforms, including broadcasting.

I am reminded of the 19th-century story in which the Archbishop of Canterbury was asked, in the course of a debate on some ecclesiastical Bill, to explain what an archdeacon was. He replied, "An archdeacon is one who discharges archidiaconal functions". "So, what are archdiaconal functions?" The reply came, "They are the functions performed by an archdeacon".

My first point is that we must press for the earliest possible publication of the draft communications Bill. Like the noble Baroness, Lady Anelay, who was the first to speak from the Conservative Benches, I hope that next year, spring will come early and that we shall see it as early as possible. We need to have a better idea of precisely what Ofcom will do and how it will be expected to work. We do not expect full answers from Ministers tonight—we have been told that we cannot have them tonight—but can we have them as soon as possible? Without full answers from Ministers, we shall have to wait for the draft communications Bill for a number of answers. I suppose that we shall need to await the debates on the BBC's Royal Charter to learn the fate of the board of governors. To whatever extent, Ofcom has a BBC involvement.

I happened to be in Italy when the World Trade Centre was attacked by terrorists. Naturally, I watched a good deal of television in my hotel. I have to say that BBC World Service coverage was superb and strikingly superior to that of CNN. I hold no brief for the corporation. I shall reserve judgment about the role of Ofcom until I see what is proposed. However, the strength of the BBC World Service, the intelligence of BBC news correspondents, the welcome development of BBC Online all stem from an excellent public service purpose of the BBC, and not from the strictures of any regulator.

Indeed, a regulator such as Ofcom may be able to prevent bad programmes, but I doubt that it will ever be able to call forth good programmes. Nor will Ofcom be the answer to the menace of competitive television scheduling between BBC1 and ITV. I share the concern recently expressed by the former Secretary of State for Culture, Media and Sport, Chris Smith, about BBC1 no longer providing a broad mix of programmes of wide variety but always of high quality. Chris Smith reminds us that the raison d'être of the BBC is to act as a bench-mark of quality against which the rest of broadcasting must measure itself; in the famous phrase of Huw Wheldon, to make the good popular and the popular good.

One of the less attractive features of the modern BBC is the urge to compete with other television channels for the biggest audience figures. I am all in favour of competition; it is practically my middle name. Competition between rivals is normally the way in which consumer interest is best served in terms of value for money and efficient service. However, the ratings war is reducing consumer choice.

Both the BBC and ITV now give us their late night news bulletins at the same time, 10 p.m. I understand that total audience for news in peak time has, rather surprisingly, increased following those changes, but the fact remains that those who do not want any news at 10 p.m. have fewer alternative programmes from which to choose, and those who would like to have a news bulletin at 9 p.m. no longer have that choice on the main terrestrial channels.

Why was it that the BBC began to schedule an extra episode of "EastEnders"—which, as noble Lords may know, has 11 million viewers—at 8 p.m. on Fridays? It was because that is the time when ITV broadcasts "Coronation Street", which also has about 11 million viewers. The public interest is likely to be better served by the complementarity of programmes available at any one time rather than by several channels showing the same kind of programme at the same time: the news head to head with the news and one popular soap head to head with another. I hope that Ofcom will continue to insist on clear public service obligations from all their licensees and that the governors of the BBC will remember their obligations under the charter to ensure distinctive programming.

We are told that Ofcom will be a "light touch regulator". If I were in government I suppose I would use that phrase a lot. It does not mean anything in particular but sounds rather good. If Ofcom is to be a light touch regulator, the structure proposed in this paving Bill of an authority with a single board of executive and non-executive directors may well be appropriate. However, can we be sure that regulation of something so powerful in our democratic society as communications will really be light touch unless we ensure legislatively that it has to be so?

The most recent experience of the reaction of Ministers to the Channel 4 "Brass Eye" satire programme was not so much light touch as heavy handed or, as was put to me on one occasion, "riot so much light touch as light the touchpaper and retire to a safe distance". One thinks back to earlier interventions by other governments. Today's "Brass Eye" affair was little different from yesterday's "Real Lives" controversy.

Will an Ofcom constituted as in the Bill be sufficiently independent of government? Will the chairman, appointed by Ministers, be executive or non-executive? Will he or she have security of tenure for, say, five years? The need for the right constitutional structure is all the more important when one considers that as presently planned, Ofcom will be a single regulator of both the economics of the communications business and of content.

I mention briefly the regulation of advertising. In the new world of digital communications it is advertising which finances much of what we are discussing. Soap operas were originally a vehicle for advertising household soap. The White Paper was clear that the system of regulation of non-broadcast advertising run by the Advertising Standards Authority, and now in its 40th year, is a success and should be retained. The White Paper confirmed the ASA's role with regard to advertising in the cinema, on video and on the Internet. That role should continue. The White Paper proposed that Ofcom is to have the principal responsibility for regulating advertising in the broadcast media. However, it also raised the possibility of Ofcom discharging that responsibility through co-regulatory mechanisms.

I hope that the communications Bill will enshrine that possibility in legislation enabling Ofcom at some time in the future to recognise a self-regulatory system of some kind for broadcast advertising. I hope that the industry players will act on that prompt and begin to work out how such a regime could operate. That seems to accord with the Better Regulation Task Force, chaired by my noble friend Lord Haskins, which recently concluded that self-regulation may be a more flexible, cheaper and more effective alternative to statutory regulation. It may also be the only realistic way of maintaining standards across multiplying channels and converging media. It would also accord with the references frequently made by the Government to light touch regulation.

8.19 p.m.

My Lords, in such a long debate with so many expert speakers, we all have a duty to be brief. However, after the excellent archdiaconal joke made by the noble Lord, Lord Borrie, I am reminded of the most penetrating remark of Screaming Lord Sutch; that is, "Why is there only one Monopolies Commission?"

I should declare an interest, like other noble Lords, as past deputy chairman of the ITC and chairman of the Broadcasting Standards Commission. In that latter context perhaps I may say, with all deference to the noble Lord, Lord Corbett, and two excellent maiden speeches this evening, how particularly I enjoyed the characteristic trenchancy and clarity of the maiden speech given by the noble Baroness, Lady Howe. I look forward to hearing from her often in this House. I also declare an interest as an advisory director of NTL, which accounts for 60 per cent of the UK cable connection.

I believe that something like Ofcom is desirable and inevitable—so desirable and inevitable that if we were not planning it we should have to invent it. That is because convergence is coming, and in some respects has already arrived, and because the broadband revolution is of the utmost importance to our economic future and to our education and our society as a whole.

I say "something like Ofcom" because at the moment it seems to me—and other noble Lords have made this point in different ways—that Ofcom is rather like a gigantic Rorschach ink blot test on to which we project our hopes and expectations for the future: hopes such as a positive climate for infrastructure investment or a leading role for UK plc at the cutting edge of ITC; expectations like the elimination of duplication and double jeopardy; expectations of cost efficiencies, which I fear may be belied; expectations of greater transparency, accountability, proportionality and consistency; all the good things which, as the noble Lord, Lord Borrie, reminded us, the Better Regulation Task Force set out as desirable for regulation. The hopes may or may not prove to be justified, and the expectations on the whole should end up in operational guidelines, but my plea at this point is to keep the main objective of Ofcom simple and clear.

There should have been a greater clarity of purpose in the White Paper, in which several parallel good points were set out for our inspection. Like other noble Lords, I feel that we have put the cart before the horse. I fear that multiple objectives laid on the new super regulator may result in it falling between two stools. I favour a clear, primary objective for Ofcom, qualified or limited by other objectives: for instance, the promotion of the interests of consumers; that is, viewers, listeners and users, through competition, while sustaining public service broadcasting and acceptable community standards. No doubt the Government will be able to do better than that, but a sense of the priority of the new body is sorely lacking. In other words, in my contention, competition should be explicitly identified as the main driver for consumer satisfaction, subject—and importantly so in this country—to much valued public goods continuing to be secured.

The definition that I have just tried out on your Lordship raises two questions, one about competition, the other about the BBC. I deal first with competition. If we are to have a regulator driven primarily by competition, it is essential to have good market definitions so that competition and market access regulation can work properly. Convergence has made a lot of our traditional thinking about cross-media ownership something of a non-issue, and in that respect I agree with other noble Lords. If teenagers can watch music videos on the tiny screens of their mobile phones between sending text messages to their friends and calling up news headlines, all 1950s ideas of separate boxes and the danger of crossing over between them become obsolete. It is quite apparent that the real economic issue is not cross-media ownership but the total share of voice in the UK marketplace and how to maintain a decent plurality of provision for content and advertising in the UK and the EU, particularly given the formidable weight of the US media industry.

It is a very great shame that the Government have felt unable to address the issue of media ownership in this context at this time. Without wanting to be in any way cynical in your Lordships' House, if it is not addressed in the first two years following an election, it will not be addressed in the last two years, for obvious electoral reasons. I therefore wish the Government would nerve themselves up and, in the context of the Bill, also address the question of ownership.

I turn to the issue of the BBC. Most of your Lordships who have spoken about the BBC have said that you wish it were in Ofcom. I remember that when the BBC was in peril in the 1980s it was quite simple. You were either on the side of the BBC or you were against it, and I was fairly uncritically on the side of the BBC. But I think we now have to acknowledge that the BBC is a fixed point in the ecology of broadcasting and is that important benchmark to us. I wonder whether we could ask for a much crisper definition of what public service broadcasting represents. We do not live in a society in which reference to the past is an adequate justification for the future. The BBC's glorious past does not adequately define the future that the taxpayers expect of it.

I believe that the BBC has made very great and commendable strides in its own accountability, to which we should pay tribute. It is impressive and is an example to other broadcasters. I would say that Channel 4 follows and other broadcasters are still some way behind the BBC. But the moment one accepts, as the BBC has, that you should be accountable, the question is: accountable for exactly what responsibilities? That is the black hole.

I am reminded irresistibly of that great work of literature with which I am sure your Lordships are familiar, The Young Visitors, by Daisy Ashford, in which the heroine, a rather precocious, small girl asks, I think of Mr Salteena, "What is that man for?". I feel that we should ask the same question of Mr Dyke—what is this man for, what is the BBC for?—because we pay his salary.

What I am obviously asking is, what is public service broadcasting? I do not think it is enough for public service broadcasting to be whatever the BBC's management want to do, in the same way as it used to be said—and I hope that this reference does not embarrass noble Lords opposite, because it is slightly old-fashioned—that socialism is what a Labour government do. I think it is an inadequate definition of public service broadcasting.

There has been some very lively debate, in which my party has been much involved, which probably comes down in favour of keeping the BBC out of Ofcom. Being a loyal party man, I do not want to comment on that but simply to say that, whether the BBC is in or out of Ofcom, or half in and half out, as the Government seem to propose, it is absolutely crucial that we have clarity about what is meant by public service broadcasting.

I should therefore like to ask the Minister how the Government propose to arrive at a clear definition of public service broadcasting, against which not only the BBC's current and future activities can be regularly tested but which, in an attenuated form, can be spelled out as part of the continuing responsibilities of Channels 3 and 4. Without that, we do not know whether we are getting what we pay for.

I know that some in the BBC are nervous of that sort of clarity, as they are nervous of being brought within Ofcom. I simply point out to them how much better it would be for the BBC to have public service goals, clearly agreed by Parliament, and to report annually how the BBC is achieving them, rather than to be subject to random political interference driven by various pressures and the recurrent fits of moral panic to which even the best governments seem prone.

With regard to Ofcom itself, rather late in my remarks, I was very much reassured by the Minister's assurances in the original debate on the White Paper that this would be a new organisation, fit for its purpose, set up ab initio, with structure and function analysis, not simply the sum of the existing regulators bolted together. It is a very important reassurance that we shall not have a cartel or market-sharing agreement between the existing regulators to carve up a new world of regulation between them.

I pay tribute to the five regulatory agencies, the Broadcasting Standards Commission, the ITC, Oriel, the Radio Authority and the Radio Communications Authority, for the way in which they have approached this, in not only quite rightly trying to keep skills and capacities in place at a very difficult and uncertain time for their employees, but also trying to imagine a different organisation for the future; and the Towers Perrin report is a step in the right direction.

However, there is great danger of confusion as regards pre-Ofcom looking forward, in particular with the leadership to Ofcom being announced in the relatively near future. I fear also the prospect of a chilling effect on the existing regulators from the existence of this potentially powerful shadow agency. In summing up, will the Minister say whether in six months or so—we are not sure what stage we shall have reached with the Bill by then—we can have a progress report on the introduction of Ofcom and its work and a reassurance that it does not interfere with or chill the work of the existing agencies?

8.31 p.m.

My Lords, welcome the Bill—at least, I think I welcome the Bill. I welcome the fact that it means that when the big Bill comes it will not be a rushed piece of legislation. By putting a framework in place now—we did not do this with the Financial Services Authority, and it caused certain problems—we are giving ourselves time to get the detail right. But I only think that I welcome it because it matters terribly what we do with that time.

On the one hand, the Government could keep the process of refining their proposals tight to themselves. What will then happen is that the outcome will be determined by the clash between the great lobbying powers of the BBC on the one hand and of the commercial broadcasters on the other. Experience suggests that that will not lead to a satisfactory outcome.

On the other hand, we could have an open, efficient, effective and productive debate. The way to do that is to refer the draft Bill to a Joint Committee of both Houses, such as was successfully employed under the excellent chairmanship of the noble Lord, Lord Burns, in the case of the analogous Financial Services Bill. That proposal was put to the Government by the All-Party Media Group and it was supported by many noble Lords in the debate on communications initiated by my noble friend Lord Gordon of Strathblane on 28th February.

Therefore, I was sorry that despite earlier indications in the press the Government did not pledge such a committee. Indeed, we were told that the decision did not have to be made until the spring. The proposal has been about for a year already and the arguments will be no different in the spring. Are the Government going to get themselves into a position in which they will be forced by the will of this House—I believe that they will be—to concede reluctantly, apparently being dragged along, or will they take the initiative and for once put Parliament and its input first?

In, I think, welcoming the Bill, my future attitude towards it—and that of many noble Lords—will depend on the answer to that question. I choose my words carefully when I say that a decision to announce a Joint Committee now would greatly speed the passage of this Bill.

I want to address the rest of my remarks to the central issue which continues to arise in this debate as it did on 28th February; that is, the role of Ofcom relative to the BBC. I regret that the debate has created more heat than light. For ITV in particular and the commercial broadcasters in general, bringing the BBC under Ofcom has been a stick with which to beat the Beeb. It is part of their general campaign of denigration against the corporation and their attempts to insinuate that, because the BBC is not subject to the same regime of standards regulation as they are, its standards are lower. I do not believe that to be the case.

The BBC top brass has reacted—at least, before the change in chairman it did—very poorly. Instead of the calmness and rationality we should expect of the BBC, it has gone into defensive mode; and the BBC in defensive mode demonstrates an inimitable blend of arrogance and insecurity which makes many of us yearn to give it a bloody nose. Tempted though I am, I shall resist. Let us try to be dispassionate.

Two arguments are advanced for bringing the BBC into the purview of Ofcom. The first is that this would create a level playing field with the commercial broadcasters. When I hear the hackneyed, hideous phrase "level playing field"—and I was sorry to hear the great expert on the English language, the noble Lord, Lord Bragg, give it houseroom today—I reach for my journalist's blue pen. But at least I could make sense of it when it was first applied to competition between commercial companies. It makes no sense here, for we are talking about completely different kinds of outfits engaging in different kinds of activities. There cannot be a level playing field between a commercial broadcaster in the market-place and a public service licence-fee supported broadcaster. It makes as much sense as putting enormous effort into levelling a playing field so that there can be a match between one team playing football and another playing rugby. Therefore, I reject the level playing field argument and I hope never to let those words again pass my lips.

But there is another argument which has as much force and which we have heard today. It is the argument of accountability. Once upon a time when the good and the great ruled our land unchallenged, the accountability of the BBC might adequately have been protected by the board of governors, and the board of governors alone. I do not believe that that is acceptable today. Nor actually does it preserve the independence of the BBC because in practice a paradox arises. The only outfit outside the BBC which has any powers over it is the Secretary of State, an elected politician. He or she determines its charter, the level of its licence fee, what new channels it may launch and who chairs it. There is no accountability other than to a politician. I do not see why the BBC is so adamant that Ofcom should be kept at bay as a way of preserving its independence while apparently accepting that a party politician should have so much power over what it does.

Therefore, it seems to me that the case for a role for Ofcom vis-à-vis the BBC is a powerful and indeed irresistible one. But what in the cacophony of competing lobbies few people seem to have noticed is that the Government propose that it will have such a role. It will—just read the White Paper. It will have a role as commercial regulator of the BBC's commercial activities. It will monitor the BBC's adherence to what are called "tier two standards"; that is to say, clearly measurable performance indicators, such as adherence to independent production quotas, and on targets for regional output. It will advise the Secretary of State on new services. Now it is done on the say-so of a politician. Furthermore, Ofcom will be taking over the regulatory responsibilities of the Broadcastings Standards Commission, so admirably chaired by my noble friend Lord Dubs, which already has a duty to consider complaints against the BBC. Those are not negligible powers relative to the BBC which the Government propose to give to Ofcom.

At the same time, no one, not even Ofcom's strongest supporters, is proposing an end to the governors. They will continue to exist. The White Paper lists them as one of the bodies which would exist after its proposals are implemented, adding in a footnote—and it is a powerful and important footnote to which we shall give much attention—that they will have "modified responsibilities".

The governors' role needs reconsideration. We have that on the highest authority. Gavyn Davies—perhaps I may declare an interest through friendship even before the House's rules require it is—the new chairman of the BBC. He was also the chair of the panel on the future financing of the BBC on which I was lucky enough to sit. On page 146 of its report the panel concluded:
"In regulation more generally a certain tension between regulators and those they regulate is regarded is desirable, since their interests can diverge. It is not clear whether in the case of the BBC such a divergence of interests can become transparent and effective".
Shorn of the verbiage, that means that something must be done about the governors. Here we see the glimmering of a constructive solution to the impasse between the BBC and everyone else. I believe that in the Ofcom legislation, if not in this paving Bill—I have an open mind on this matter—we should provide for Ministers to give Ofcom such powers in relation to the BBC as they may, after due consideration, judge to be appropriate. The time to do that is in the context of charter review which looms. In view of the way that the legislation has dropped back, we shall be in the middle of charter review before we get the main Bill.

Therefore, the correct time to determine the future role of the governors and the relationship with Ofcom is when the charter is reviewed, and when the role of the governors is sorted out in the course of that review. If we get the Bill when we are told we shall get it, that may mean that the status quo will abide for a couple more years than would otherwise be the case. To me, that is a price that is well worth paying to get right the governance of a major national institution in the new world of broadcasting which is dawning on us so fast.

8.41 p.m.

My Lords, I begin by congratulating the noble Baroness, Lady Howe, on her excellent maiden speech. She succeeded me as chairman of the amalgamated commission and carried through that difficult process with elegance and success. Although I did not always agree with her, I agreed with her speech.

I must also congratulate the noble Lord, Lord Corbett, who is not here. He once said that he wanted to sack me when my noble friend Lord Baker appointed me. He said that the first act of a Labour government elected in 1992 would be to get rid of Canon Pilkington. Fortunately, that event did not occur and his speech shows a generosity of spirit which he did not show at that time.

As a former chairman of the Broadcasting Complaints Commission I can talk only about content. I confess that I know little about economic regulation. I share the anxiety of my noble friend Lord Baker about combining economic regulation with the business of judging content. That said, as to content I welcome the Bill. During my four years with the Broadcasting Complaints Commission I found that there were too many regulatory bodies which could, and did, lead to confusion. During my time there were occasions when they arrived at different conclusions on the same complaint. That is both confusing to the public and makes a mockery of the whole system.

I believe that anyone who has dealt with regulatory bodies will agree that it is difficult for the general public, given the number of regulatory bodies, to know which one they should approach when they have problems in the broadcasting area. Canada has long had a unified system which has proved very successful. Therefore, Ofcom has a model abroad to which I believe we should give some attention.

That said, I should like to make two specific points which underline what many other noble Lords have said in this debate. I believe that these points should be considered when the communications Bill is brought before Parliament. First, my commission, which was amalgamated with the Broadcasting Standards Commission, considered the narrow area of unfairness and infringement of privacy. They were not cases that gained great publicity, but those complaints were by people or companies who felt that their personal lives or business reputation had been injured by a particular broadcast. In many cases they suffered great agony as a result of that situation.

I believe it is important to underline that the role we played was essentially that of an ombudsman. Whatever happens with Ofcom, I believe it is terribly important that within the structure such a role should exist. In some ways, that is what worries me and other noble Lords about the vagueness of a paving Bill. We shall plunge into it before we know the details. In some way the role as an ombudsman should be ring fenced so that its task of providing a just redress is not subordinated to the other issues that Ofcom will have to consider.

In that context, the point raised by my noble friend Lord Baker needs to be underlined. The Government are to create a body that is both economic and also judges individual cases. In part, the old Broadcasting Complaints Commission had quasi-legal status, as the noble Baroness, Lady Howe, said, and some of the independence that belongs to a court of law. The noble Baroness is to be congratulated that when she had to combine the divergent roles of taste, decency and quasi-legal status in dealing with individuals who had suffered personal hardship she managed to ring fence the situation so that the integrity of that body was never questioned. I believe that the Government should consider that matter.

Like all other noble Lords, I must turn to the BBC. Like anyone else in the debate, I cannot understand why the BBC is not to be placed under the new body. Perhaps I may reminisce a little over the history. Up until the mid-1950s when the BBC had a monopoly the governors were able to perform their role as guardians of public service broadcasting, impartiality, fairness and much more. But once that monopoly went and ITV began the governors were merely part of a competing broadcasting system and were very concerned for the success of only part of that system which they represented. Therefore, they were not just guardians of the public interest as they were prior to the mid-1950s; they were also directors of a company.

That becomes even more marked when one considers the pressure of digital and global broadcasting and so much more. Certainly, in this situation it would be difficult for them to be the best judge of complaints of unfairness, infringement of privacy and so on. That may conflict with their general role as directors of the company. Some group—my ombudsman—external to the corporation is essential in this area. I underline the words of the noble Baroness, Lady Howe, that at present the only body that can judge the BBC because of its statutory position created in the early 1980s is the Broadcasting Standards Commission.

The Canadian system places public service broadcasting under the overall body. I remind noble Lords that in the late 1970s the Annan commission, which has been quoted by previous speakers, reported that the BBC had failed to judge complaints fairly. The result was the Broadcasting Complaints Commission. Therefore, I cannot envisage that the Government could go back to the situation previous to the proposals of the Annan commission which produced the legislation that established the Broadcasting Complaints Commission in the early 1980s.

Therefore, with qualifications I welcome Ofcom. We see barely bones. It is rather like an archaeological dig; one sees the faint sign of bones and the odd piece of pottery and skull, but little else. But my job and that of other noble Lords is to put flesh on the bones and table amendments in Committee. Gradually, the Government will come to realise that they must put forward more precise proposals. I hope to contribute a few morsels myself.

8.50 p.m.

My Lords, like other noble Lords I welcome the Bill. It moves us towards a single regulator in the field of communications. That is a sensible, and perhaps overdue, response to growing convergence in the industry. In many respects, it mirrors the earlier convergence in financial services that led the Government to create the FSA. Like the FSA, Ofcom will regulate a sector that is crucial to economic growth, efficiency and innovation. But, unlike the FSA, it also regulates a sector that is crucial to profound issues of citizenship, democracy and social inclusion. It is crucial, therefore, that we get it right.

Convergence, of course, is slow to come, despite being much talked about, and the bursting of the dot.com bubble will not bring it forward much faster. But it will come and it is essential that we have in place a regulatory structure that can cope with it. We must ensure that key commercial decisions, notably non-investment and products and service innovation in that sector, are not distorted by regulatory gaps, regulatory overlaps and regulatory inconsistencies. That will be more readily accomplished under Ofcom than under the present five-headed structure, however good the co-ordination between the different heads of those five bodies.

Moreover, a single body can more easily deploy regulatory resource where it is most needed and withdraw from regulation where it is no longer needed—a key factor in key parts of the telecoms sector. That is more easily done than will be the case with many smaller organisations with more limited individual resource and narrower agendas. Furthermore, I believe that the issues of economic and content regulation are more interrelated, perhaps subtly so, but certainly more interrelated than suggested by the noble Lord, Lord Baker of Dorking. That again points to the need for a single regulatory body in this area.

I also welcome the Bill because through it the Government are preparing the ground to create the new regulatory body. Creating one single organisation from five is no simple management and organisational task. It will involve vexed questions; for example, where to locate the body, and the creation of a unified salary structure. I do not believe that a single salary structure implies a levelling up and therefore a necessary increase in cost, providing that it is well managed. It requires a unified organisational structure; and it needs to deal with some vexed questions, such as pensions. All those matters can be managed, particularly given the excellent co-operation among the existing regulatory bodies. But it needs to be worked on and it needs time.

The example of Ofgem—I declare an interest as a non-executive director of the new Gas and Electricity Markets Authority—merging the old Offer and Ofgas, and the example of the FSA, which brought together certainly many more than five organisations or parts of organisations, illustrate both the issues and their resolution and merit a study. But what they clearly bring out is that time and careful planning are of the essence. It is key that we do not lose momentum. As outlined by the Minister, any delay in the timetable could easily lead to loss of morale in the existing regulatory bodies and a loss of key talented personnel. As good regulation depends crucially on good people, delay is to be avoided.

I also welcome the board structure proposed for Ofcom. I do not think that that has been challenged in the debate tonight. But it is, one should observe, relatively new for economic regulation. Oftel, Offer, Ofgas and Ofwat were all set up with individual director-generals, individually responsible for fulfilling the statutory duties placed on them by Parliament. The experience of the new Gas and Electricity Markets Authority—I leave it to noble Lords to judge the record of that authority—has been a good one. A board structure depersonalises issues; it allows different experiences and expertise to be brought to bear on difficult decisions; and it provides greater continuity over time. Ofcom will certainly need that experience and expertise as it has to balance the different requirements of regulatory policy for achieving economic efficiency, policies towards content regulation, and policies towards the roll out of, and access to, new technologies; and it has to grapple with the difficult issues of the analogue switch off and convergence and the roll out of broadband.

Like the noble Lord, Lord Holme of Cheltenham, I should like to see clarity in the objectives that we place on Ofcom, but I fear, although I may be proved wrong, that it will prove impossible to find a single primary duty that we can place on Ofcom in the legislation to follow. Simply rolling together different objectives into a single sentence does not avoid the very difficult questions of choice and trade off that arise in this area.

Much has been said about the position of the BBC. I shall be brief on the point. I agree fully with my noble friend Lord Borrie—perhaps now Lord Competition Borrie—that regulation has its strengths. But a major and inevitable weakness of regulation is that it operates largely by constraints and negative powers. There is great merit in an organisation such as the BBC which has a positive mission to pursue its role in public sector broadcasting, updated, to be sure, for the 21st century. I believe that British broadcasting generally has been the better for that positive influence over the decades that the BBC has exerted in carrying out its mission. We would be unwise to tamper with that too fundamentally. The BBC's mission needs to be defended. The Government's position of partially bringing it within the regulatory oversight of Ofcom, leaving the positive mission for the BBC, is a good one.

Finally, perhaps I may touch on a concern that I have heard expressed by a number of informed commentators but which has not been touched on in your Lordships' debate tonight. The issue of broadcasting attracts many, each with their divergent interests and views. The danger, not so much with this Bill but with its successor, is that as it proceeds through Parliament we will each try to hang our own favoured bauble on this particular Christmas tree. I hope very much that we resist that temptation.

Future regulation will be the better the more that the Bill lays down high-level principles and refrains from detailed prescription. Regulation needs to be flexible and fleet of foot to keep up with rapid technological advance and market changes. We need to avoid building too much prescriptive detail into primary legislation. We need to allow the board of Ofcom to exercise its discretion in pursuit of the high-level objectives laid down by Parliament. That point applies as much to Government as to the rest of us. The Minister will be better served by leaving the detail of regulatory practice to Ofcom and ensuring consistency and clarity in overall objectives. Light touch regulation—I hope that phrase has real meaning—of this kind will serve us best over the coming years, and avoid the need to return to primary legislation within the decade.

8.59 p.m.

My Lords, I want to speak briefly on one aspect of broadcasting; namely, the coverage of international affairs. I declare an interest as a trustee of Christian Aid and as an associate of Save the Children Fund and a number of other aid agencies. Through these organisations I have also had links with the International Broadcasting Trusts, the One World Broadcasting Trust and 3WE, which is the third world and environment broadcasting project.

The Minister knows that I have expressed concerns to her in her previous capacity as regards public awareness of international issues. She was personally sympathetic to those concerns. We are now at a time when these matters seem more urgent and the case for more understanding of other cultures is considerably strengthened.

The Government have made genuine advances in the promotion of development education, support for a wider curriculum and the building up of alliances in the voluntary sector for global citizenship and racism awareness. Now that broadcasting has come back into focus, the Minister will recognise that the same policies will be needed in programme regulation. Since the events of 11th September, that has become even more important.

In the debate on Second Reading I wish only to register concern that the new Bill, while obviously welcome to most of us because it reflects a new environment, may not do enough to promote global awareness and to ensure that the public will receive a proper standard of programming in this field. Much of the positive content of the "Tier 3" category of broadcasting applies directly to global citizenship, but as the Bill is currently drafted, the regulator will have little impact on its performance. I hope that the Minister will be able to give some guidance as regards the extent of monitoring and the likely consequences in the event of any failures in this area of broadcasting.

It may surprise some noble Lords to learn that since the last Act of 1990 there has been a significant fall in the television coverage of international affairs. Monitoring of the four main TV channels by 3WE showed that non-news factual broadcasting on international issues fell by 42 per cent in the period from 1992–2000, while coverage of developing countries fell by 50 per cent over the same period. The addition in 1997 of Channel 5 made almost no impact. Those figures have caused great concern among the aid agencies since they show, first, an erosion of the commitment of public service as well as independent broadcasters and, secondly, that the regulatory arrangements put in place a decade ago were not sufficient in themselves to arrest the decline. It is essential that this trend does not continue at home, even as we applaud the success of the BBC overseas.

Finally, as regards Ofcom itself, I suggest that the strength of the interest of the voluntary sector concerned with international affairs surely indicates that its advice, perhaps through the suggested advisory panel to run parallel with the consumer panel, would be helpful to the regulator. In his reply, can the Minister confirm that that proposal will be given serious consideration during the passage of the Bill?

9.2 p.m.

My Lords, for a short Bill, I shall try to keep my comments comparably brief—a virtue already displayed by my noble friend Lady Blackstone in her excellent introduction. Nonetheless, want to take a little time to pay tribute to the notable maiden speeches of my noble friend Lord Corbett and the noble Baroness, Lady Howe. It seems to me that both are good advertisements for, on the one hand, the traditional method of entering this House and, on the other, the new way.

I should also declare an interest as a venture capital investor in or board member of a number of companies already entered in the register whose activities may be affected by the future operations of Ofcom. In the spirit of the future rules of the House, I should add the name of one company, Video Networks, in which I am—to me—a significant shareholder, as indeed are my former colleagues there and other friends.

I welcome the Bill unreservedly, both for the principle of establishing a unitary regulator and for the pragmatic approach of constituting Ofcom through the Bill, so that in its initial incarnation it can both participate in and inform the debate about the subsequent Bill and prepare to implement its provisions once they are enacted. The noble Baroness, Lady Anelay, complained that the Government were putting the cart before the horse, an analogy which itself seems almost completely topsy-turvy. To adopt that analogy, even if we do not know the precise weight of the future regulatory burden, the sooner we start breeding a thoroughbred to lead it, the better.

I want to touch on four points: competition, concurrency, cost and composition; four C's. In the process, I may flag one or two issues relating to the future regulatory Bill either because of the importance that I attach to them or because they illustrate the huge task that will face Ofcom once it assumes its full responsibilities.

As the noble Lord, Lord Baker, made clear, competition lies at the heart of economic regulation. In an area with external constraints—spectrum, for instance, in particular in the analogue era—the regulator may need to be actively interventionist to balance competitive forces with non-economic objectives such as programme diversity. As constraints such as these are eased by, for example, digital technology, the regulator must judge carefully what measures will allow the most vibrant and responsive markets to emerge through a transitional period into a time when, as the noble Lord pointed out, the lightest of light touches may be all that is needed.

A good illustration of how not to do it has been provided, I am afraid, by Oftel in its handling of local loop unbundling. Five separate approaches to local loop unbundling were identified by Oftel—I am sure that there are countless other variations—which then managed to choose the one, a complete free-for-all, which may have created the illusion of competition but in reality offered the consumer the smallest possible chance of benefit. As the White Paper noted, in countries where local loop unbundling had already commenced, itself an indictment given the UK's early lead in telecommunications deregulation, the process had proved problematic. Oftel appeared to pay little or no attention to the lessons that could be learned from abroad. British business and individuals are the poorer for that. The interests of the consumer would have been hugely better served by the introduction of targeted competition through licensing a limited number of alternative service providers in any one region, combined with a significantly more vigorous and proactive attitude towards BT. It is essential that Ofcom enforces effective competition rather than simply introduces illusory competition.

The realpolitik of competition in the analogue era has to be scrutinised with a fresh eye as digital technology changes the terrain. My noble friend Lord Bragg raised the fragile position of ITV Digital. The partners in the company formerly known as ONdigital have urged the Government to advance the date for analogue switch-off in order to accelerate the take-up of digital, as well as taking other measures to stimulate that process. In principle, now that we have started down the road towards digital switch-over, it is right to continue; and, if to continue, to do so as rapidly as possible, however formidable the challenge, for fear of being stuck with the worst of both worlds.

But if this proves to be the route we take, it may present the partners in ITV Digital with a conundrum, for those same companies own the majority of the ITV network and have loudly declared the desirability of merging fully as soon as possible. Yet the sooner that full digital coverage is achieved and the necessary steps taken to allow analogue switch-off, the weaker the argument is to allow that merger. Why? Because the availability of digital channels would allow Carlton and Granada each to have a national network and, instead of cosily sharing prime-time programming, have to compete to win both audiences and advertisers.

If this scenario, heavily dependent on a determined approach to analogue switch-off, were to become a possibility, we would face most vividly a case of concurrency, my second C. The White Paper sets out very clearly the Government's thinking on the interplay between Ofcom and the OFT—which I suspect the noble Lord, Lord Baker, may have forgotten when he criticised the Government's thinking on the whole area of economic regulation—and it suggests that the OFT would have primacy on any merger, in consultation with Ofcom, whereas Ofcom would have primacy in competition issues within broadcasting, presumably excluding mergers. This represents a considerable improvement on the existing position—described by my noble friend Lord Dubs as "double jeopardy"—but I suspect that there may be some further clarification which would be desirable.

Very briefly, on my other two Cs, the creation of the merged office may not give the opportunity to make net savings in cost but it should not be the cause of an increase. Regulators of industries where practitioners enjoy significant financial rewards always have the challenge to induce at least some poachers to turn gamekeeper, so I suspect that an effective Ofcom may need to have a smaller number of people, better rewarded.

Finally, on composition, like my noble friend Lord Currie, I welcome the proposed composition of Ofcom, with a small board as well as a chief executive. Unlike other noble Lords, however, I would favour a board which remained as small as possible indefinitely, with its members, while remaining non-executive, active in the strategic direction of the office and with the resources to do that.

9.10 p.m.

My Lords, I, too, welcome the Bill. I start by declaring an interest as a non-executive director of ITV Digital.

The Bill not only brings together the five regulators involved in broadcasting and radio but also sets the agenda for the future. It will end the occasional turf wars between departments and their regulatory bodies over broadcasting and media responsibilities.

It will be useful to start by looking at the principles underlying a single regulatory regime. In the Government's White Paper, A New Future for Communications, published last December, the Government set themselves the task of introducing clearer and simpler regulation; they gave a commitment that broadcasting will retain a strong public service remit; that they would encourage competition and future market development, and would place the BBC partly alongside the other broadcasters. So the question we must pose to the Government is whether the Bill sets the scene to achieve those ambitions.

The BBC would come under the first two tiers of regulation by Ofcom but not the third. The BBC will account to the standards required under the statements of programming required by the third tier, but will account to the chairman and board of governors. As we have heard, the management board of the BBC and the regulator of the BBC have two roles.

The BBC's charter and agreement has five years to run. I do not believe that a case has yet been made for altering that agreement, but I do believe that these issues will have to be carefully considered before a new agreement can be put in place in five years' time.

There are difficult issues here that put the chairman and the governors in the position of judge and jury. An important issue is the separation between the public service remit, the commercial broadcasting services and, for example, the Internet services of the BBC. The responsibility lies with the board and the auditors but it is not a transparent process.

The BBC has a unique public service remit and constantly reminds us of it. But so do other commercial broadcasters have their own public service remit. ITV's public service remit is enshrined in its licence conditions and covers scheduling and a range of programmes that must be broadcast.

There may be a role for Ofcom and I do not accept the argument that Ofcom's other responsibilities could conflict when it comes to the BBC. Under its charter and agreement the BBC is accountable to Parliament, but it is a cumbersome process. If the present arrangements were to stay, the BBC would need to be accountable also to the Public Accounts Committee and to the National Audit Office. That is the alternative to Ofcom. I believe that Ofcom may prove to be a more welcome alternative for the BBC.

Turning to the commercial sector, I believe that ITV, Channel 4 and Channel 5 will also benefit from a single regulator. I do not understand the reasons for S4C, the Welsh language channel, being left out and remaining self-regulating. It has a public service remit, but it also carries advertising. Broadcasting is not a devolved matter. If S4C is regulated by a chairman appointed by the Department for Culture, Media and Sport and the National Assembly for Wales, should not Scottish television and BBC Scotland be regulated in Scotland? I shall be interested to hear the Minister's response.

Ofcom will not merely pull together all the functions of the previous five bodies. It will do more, particularly dealing with the increasing number of European directives. Who will scrutinise Ofcom? To whom will it be responsible? It will certainly not be directly responsible to the Secretary of State. Will it come under the scrutiny of the Public Accounts Committee?

I was interested to see in the report by Towers Perrin published at the weekend, commissioned by the five existing regulators, a warning that the opportunities for cost reductions are small and that Ofcom may require greater funding. It will be a large organisation with over 1,100 people on the payroll and a budget of £119 million. I hope that the Minister will give an assurance that Ofcom will receive the funding that it requires to do the job, and that he will explain how its cost controls are to be monitored.

The Minister assured the House that Ofcom will consult with the industry before it sets up its internal structures and working arrangements. Will the Government explain how they see the split of roles and responsibilities between Ofcom and the OFT?

There are now over 250 television channels available to viewers in this country. New services—Internet via the television and interactivity—are developing rapidly. Television is an easy way to bring the Internet into every home. Over 30 per cent of all viewers in this country have gone digital. Sky has 5.5 million subscribers, NTL and Telewest have 1.2 million customers between them, and ITV Digital has about 1.3 million viewers.

More television has not meant less quality television; it has actually produced both better programming and occasionally, of course, worse programming. What it has produced is better choice. More choice enables broadcasters to offer new services and encourages innovation. Digital television has been the main driver of new channels, promoted by the private sector in its terrestrial and satellite forms. The BBC has done little so far to promote digital take-up, except to pay Sky an undisclosed sum for BSkyB to carry BBC on its satellite platform. So much for the new transparency—the BBC will not say what it pays.

Going digital has had a large cost. Pay-to-view is the most important way to drive take-up. Digital television has grown because Sky, Carlton and Granada supported the installation of set-top boxes. Without pay-to-view driving and subsidising the take-up, there is no chance of meeting the Government's goal of analogue switch-off between 2006 and 2010.

The pay-to-view broadcasters, including cable operators, cannot do it all on their own. The Government must put policies in place which encourage take-up and which encourage manufacturers to produce more and cheaper digital televisions. The BBC and Channels 4 and 5 must play their part.

The BBC has been allocated three new television channels and five new radio stations by the Government. These services, which can be seen on digital television, will cost £300 million out of the licence fee over the next two years. So the BBC must promote digital viewing if it is to justify this expenditure out of its licence fee income. After all, the BBC has been given the best multiplex for broadcasting.

The BBC has been required by the DCMS to show that these new services do not replicate existing services. I support the introduction of the new television channels; however, I am concerned that the proposed new radio channels have not had the proper scrutiny that they deserve. They are going to compete directly in areas already covered by independent radio stations.

I welcome the draft digital action plan published jointly by the Department of Trade and Industry and the Department for Culture, Media and Sport. The accompanying statement by the two Secretaries of State makes it clear that the Government,
"wants every home to be able to enjoy the present and future benefits of digital television"
That is an admirable ambition with which we all agree.

What do the Government intend to do about the ownership of radio licences and local terrestrial television licences by religious bodies? They do not seem to have made up their mind yet.

Perhaps I may say a word about what the Bill does not contain. As many speakers have said, it is disappointing that there is no review of media ownership restrictions. There is clearly room for consolidation within ITV while maintaining the important aspects of regional programming.

Following the emergence of cable and satellite, old rules have been made redundant. It should be the aim of government—I hope that it is—to bring broadcasting and radio and the rest of the media within a normal competitions policy over a period of time. The old barriers do not make sense any more in a global market.

I do not have time this evening to go into the matter, but I am also concerned about bundling, market abuse and about the criteria for "must carry" channels. While some services should be available for all, different platforms should be able to carry their own unique services. The industry needs a main communications Bill. I hope that the Government will stick to their plan and publish a draft of the Bill early next year. Perhaps they will be able to do so before we have finished improving the Bill in this House. It is crucial for the industry that a Bill should be ready for Parliament during the following Session. There will be much to debate during the passage of this albeit rather short Bill, but I am sure that noble Lords on this side of the House will be constructive and, I hope, improve the Bill as it passes through your Lordships' House.

9.21 p.m.

My Lords, declarations of interest in this debate have been fluttering around like leaves in the autumn, so I had better begin by stating my own. I declare that I have a daughter who is a BBC executive. As a former chairman of the IBA, I should also declare that I am an IBA pensioner and president of the IBA pensioners' association. In the immortal words of the Broadcasting Act, I hope that "due impartiality" will have been satisfied by that declaration.

This Bill starts the process of determining the character and quality of our broadcasting and telecommunications, certainly for the early decades of the new century. I join with others in welcoming the fact—an accidental fact, I believe, but a happy one—that it is a skeleton Bill and that the flesh of what will go on the bare bones will come later. Much of that flesh is indicated in the Government's White Paper, so we are not as ignorant about what is likely to come in the main Bill as some noble Lords seem to fear. However, I believe that this skeleton, paving Bill provides us with a priceless opportunity for pre-legislative consultation, involving both Houses of Parliament. I join the noble Lord, Lord Lipsey, in expressing the hope that the Minister may be able to be more precise in his response than the noble Baroness, Lady Blackstone, as regards the Government's commitment to having that kind of pre-legislative consultation.

The Bill will establish a huge new regulatory body. It will merge other bodies that have a staff collectively of 1,000 in 20 offices who will be dealing with the issue of 250,000 licences. Inevitably, it recognises the reality of 21st-century technology. When I became chairman of the IBA, which was only 20 years ago, telecommunications and broadcasting were entirely separate and in entirely insulated little national boxes. Today, all the frontiers are down. Satellites, fibre optic cable, computers and the Internet have seen to that. If this requires some kind of super-regulator—an Ofcom—so be it.

However, like the noble Lord, Lord Gordon of Strathblane, I am bound to confess that I remain rather agnostic about this being the only possible pattern. Some noble Lords have suggested that we could have two bodies. Indeed, I believe that the noble Lord, Lord Corbett, made that suggestion in his excellent maiden speech. One can be sure of one thing: there may be total convergence in the world of the new telecommunications and broadcasting technology, but there will certainly be two bodies in Whitehall with not much convergence between them: the DCMS and the DTI. That will be a situation upon which Parliament will need to keep a pretty watchful eye.

What kind of Ofcom should it be? Patricia Hodgson, the director general of the ITC, used a vivid phrase in answer to that question. She said that Ofcom should be mean and lean and both things at the same time. It should be lean because a regulator on this scale, covering many diverse, conflicting but clearly interrelated activities, must guard against becoming a bureaucratic monster. Many noble Lords would agree with that proposition. It should be mean, too, because however much Ofcom relies on self-regulation, it must be able to intervene quickly and decisively when it does act.

How to reconcile meanness and leanness will require the wisdom of Solomon. The new body will have to avoid setting itself up simply as a patchwork of the various bodies it absorbs. There has been a good deal of agreement about that in the debate.

Ofcom must establish an integrated identity of its own, but how will it ensure that commercial radio is not overshadowed by the giants of television, as tended to happen in the old MA before there was a separate Radio Authority? I rather welcome the proposal in the document provided for us, which refers to a horizontal radio organisation within Ofcom, which would be extremely important.

Judging from the flood of representations that we have received, Ofcom will have to organise itself to satisfy a wide variety of national, regional, ethnic minority and other functional interests. I do not presume to give any advice about how to deal with that tonight, but it would be wise for Ofcom to start small and compact. It may be that some of these matters can be best dealt with by building up a corpus of effective advisory committees, reflecting the interests and concerns of various outside activities.

The Government's White Paper provided a welcome assertion of the importance of public service broadcasting. But we are uneasily aware that their drive for digital television and radio was driven not by a belief in better public service broadcasting, but by the Treasury's obsession to raise £22.5 billion by auctioning off the analogue frequencies for the third generation of telecommunication purposes. From many of the speeches that we have heard in this debate, it looks as if all this is going a little sour. The bidders are burdened by debt. ITV Digital is in trouble. There are signs that even the natives, among whom I include myself, are becoming restless as we sit before our analogue television screens. The Government's target for switching off terrestrial analogue is 2006–10. The last published forecast by the ITC, which it has never repeated, was that the digital switch-off could not take place until 2018.

In the mean time, the Cassandras among us who took part in the debates on the previous Broadcasting Bill have seen depressing evidence that even the present proliferation of TV channels has put downward pressure on the terrestrial public service channels. ITV still does excellent things in its regional programming. Under the leadership of the noble Lord, Lord Bragg, it preserves the "South Bank Show" as a monument to cultural programming. ITV has undoubtedly, as we forecast and under the pressure of new developments, dumbed down in its general pattern of programming. It is not alone. Soaps are now stripped across the week and even Channel 4, with its unique innovation remit, is showing worrying symptoms. Its first chief executive, Jeremy Isaacs, wrote an interesting article recently in the Independent, expressing his concern about that. The newspaper itself reached the verdict that in Channel 4,
"we have a publicly owned broadcaster that behaves more and more like a privately owned one".
The remit of Channel 4 which enjoys the great privilege of not having to pay for the spectrum it uses—I gather that is worth about £100 million a year—will come directly under the responsibility of Ofcom and will be a good challenge to it in terms of its responsibility for the programme remit of one of our most important television channels.

In that situation, those of us concerned to maintain the range and quality of British broadcasting should be concerned to preserve and strengthen the special remits of the BBC and of Channel 4 and, indeed, of S4C, as has just been mentioned. We must ensure not only that their privileged position is protected, but we must make equally sure that they themselves vigorously fulfil the special responsibilities and duties that go with those privileges. It is against that background that I make my comments about the relations between Ofcom and the BBC. There has been an artificial dichotomy as regards that issue in some of the speeches. The White Paper proposes that Ofcom should establish the general framework far all broadcasters including the BBC—the so-called tiers one and two of the White Paper—and ensure fair competition. It would be good for the BBC to have its separation of licence revenue and commercial revenue scrutinised for transparency by Ofcom as an independent watchdog.

However, there is a difference between Ofcom and the BBC that is central to this question. Ofcom is a regulatory body with the traditional role of the old Victorian headmaster; namely, to find out what the boys are doing and forbid it, whereas the BBC governors have a different role. If they are doing the heart of their job properly—that is a question that we must all continue to be vigilant about—they are public trustees with the positive duty to promote high quality public service patterns of programming. They are riot there to protect their professional broadcasters from public criticism when things go wrong. They are there to make the difficult definition of where the public interest truly lies in the role of broadcasting in society today. I very much agree with the point made by my noble friend Lord Holme that the time is right far the BBC to consider redefining rather precisely what we mean by public service broadcasting in the modern world. The governors are free from having a duty to shareholders or advertisers. They therefore have to justify their use of that rare freedom.

The BBC, warts and all, is, in the true sense of that overworked cliché, a world-class British institution. Like a great university or a great school, such creative institutions grow up only gradually and can be damaged easily. The BBC is instinctively recognised as a special case by the British people. On that dreadful day of 11th September, 33 million citizens turned to the BBC for the news from New York. That was more than all the other news providers in this country added together. The BBC World Service, which presently transmits to Afghanistan 17 hours a day, is the global standard of impartial, international news.

For three-quarters of a century the BBC has been an essential cement that has given the diverse nations and regions of the United Kingdom their sense of unity. Its mainstream programmes have stretched the interests of viewers and listeners in ways they never knew they could enjoy. It has had an educational and cultural force that the new niche channels can never achieve although they can usefully supplement it.

In conclusion, the relationship between Ofcom and the BBC will be a major matter for debate in the pre-legislative discussion. Perhaps the longer-term future of the BBC and its governors will be a subject for separate debate when the charter comes up for review in the years that lie immediately ahead. However, there will be many more matters than those to be considered in the pre-legislative discussion that I hope we shall have, including the questions of ownership. I hope that we can deal with this paving Bill quickly and move on to discuss the main Bill before its problems are too firmly set in stone.

9.35 p.m.

My Lords, I declare an interest, as other noble Lords have done tonight, as a recent vice-chairman of the BBC and as the sister of an employee of the BBC. However, I speak tonight not only as someone with an interest in public sector broadcasting, but also as a regulator, wearing my hat as chief executive of the Environment Agency. I have an interest above all in effective and proportionate regulation.

I support the principle of the single regulator represented by Ofcom. In the new digital age it will be even more vital to avoid the current complexity and duplication, as convergence of technologies blurs the lines that currently differentiate regulatory areas.

We also need to overcome the rather ridiculous situation that we find ourselves in from time to time when different regulators dealing with the same case can come to very different decisions on taste, decency or impartiality. That must be abundantly confusing for the poor complainant and for the public.

Like the noble Lord, Lord Currie of Marylebone, I think that it is an excellent idea for a regulatory board to head up Ofcom rather than the heroic one-man band regulatory regimes that we have seen in some other areas of regulatory life, when regulatory decisions have been rather over-sensitive to the personal quirks of the incumbent. I do not think that I am mis-stating the case to say that that was true with the previous water, gas and electricity regulators before we had Ofgem.

Speaking as a regulator, I think that modern regulation must be effective and proportionate. In the case of communications regulation, "proportionate" definitely does not mean that one size fits all. Regulating a music service delivered through a third generation mobile telephone service, a subscription-based digital TV channel for which people have chosen to pay, an advertising-funded free-to-air channel with an element—but only an element—of public service broadcasting, and the BBC, whose sole role is public service broadcasting, will be very different jobs. It would be madness to assume that the regulation of all those very different services should be carried out in the same way.

I support the principle of tiered content regulation, setting down basic content standards for services with small groups of niche viewers, listeners or service takers who are free to choose and to come and go, rising through higher programming obligations and quotas up to the highest requirement to account against statements of programming for broadcasters where there is little choice.

The roles and objectives of diverse ranges of providers with diverse sizes of audiences are very different, so the markets in which they operate need to be clearly differentiated, otherwise we risk having all providers regulated on the basis of issues of competitiveness. Public service broadcasting should not be about competitiveness, but about content, and above all distinctive content.

The development of BBC1 as a mass market channel over the past few years is a present example of the risk of over-emphasis on competition. I am sure that not many of your Lordships sit glued to BBC1 on a Saturday night. I believe that the very competitive environment that existed in the run-up to the last licence fee settlement, in which the determining factor was seen very much as audience share, meant that the focus was on what was popular and, eventually, on what was populist. That is what results from insisting that the BBC competes for audience share.

The comments of the noble Lord, Lord Borrie, on head-to-head scheduling provided just such an example. However—it is unfortunate that the noble Lord is not here to receive this excellent piece of advice from me—if he wants to hear the news at nine o'clock, he can tune in rapidly to News 24, available on the ring main here in your Lordships' House for occasions such as this when we are bound to miss the ten o'clock news. Not only can he have the news at 9 p.m., he can have it at 9.15, at 9.30 and at 9.45 p.m. That is what digital news provision is all about.

I believe that the BBC is different, even from the advertising-funded "free to air" broadcasters who have an element of public service remit, because its sole role is public service. Therefore, I believe that it would not be appropriate for it to be wholly regulated by an Ofcom under which competition would drive its regulatory ethic.

An example of that is the Government's recent decision to support the BBC's launch of new digital channels for children. The commercial broadcasters got themselves into a stew about that. They were very against the idea that the BBC should be able to launch those children's channels. They saw it and predicated it as direct competition. They said that a range of children's channels are viewed actively by children in this country.

However, the issue rested on the fact that, although there was a range of children's channels, there was no channel of the type proposed by the BBC. The type proposed was one with distinctive and creative programming, originated primarily through those channels and primarily of UK provenance, not a cartoon-based or American-based children's channel, and not one interrupted by exploitative advertising where My Little Pony is pushed harder than heroin up the All Saints Road on a Saturday night. That is what parents said that they wanted. They wanted a channel with original content, one that was UK-based and one that was very much free from advertising. The Government recognised that and approved the BBC's children's channels because they were different. It was not a matter of competition but of distinctiveness. I believe that that would be a virtually impossible decision for an Ofcom to take, charged with regulating across all the providers, including the BBC.

The BBC is different from other broadcasters. Its sole role is public service broadcasting. The governors of the BBC have a duty to direct the BBC in the public interest, free from political or commercial bias, and to ensure impartiality and independence. The noble Lord, Lord Holme, talked about great steps to ensure enhanced accountability of the BBC through its governors. That is very true. The BBC's governors have changed considerably over the years, and successive charters have introduced new requirements. Indeed, the BBC has improved its own accountability systems internally. It now has clear duties to consult the public and to seek government approval for new services. There are clearer duties on the governors to safeguard the remit and accountability, and there are new responsibilities for new institutions such as the national broadcasting councils.

The governors do hold the BBC accountable. In addition, it is proposed that Ofcom will have two key roles in respect of the BBC. It will have an absolutely appropriate one, as is the case with all public sector broadcasters, in the areas of basic content standards and programme obligations and quotas. Of course, the BBC will be subject, as, indeed, would be any commercial operator, in the areas of its purely commercial activities to competition law and competition regulation. However, Ofcom will not—appropriately, I believe, under the current proposals—have a role in deciding the range of BBC public service broadcasting activities on the basis of its place in a competitive market.

I believe that communications regulation should be proportionate and should not be about what the noble Lord, Lord Lipsey, called the level playing field, which he abhorred. To use a phrase of which I am sure he would approve—I know that he is a horseracing man—we should have horses for courses. Tonight a few of us have argued for distinctive and unique regulation for our distinctive and unique public service broadcaster, the BBC. We, the few, hope that the Minister will find us persuasive.

9.45 p.m.

My Lords, I begin by declaring an interest as the chairman of the Commercial Radio Companies Association. The success or otherwise of Ofcom will have a powerful impact on the future of members of the association and on the whole radio industry. My remarks tonight represent my own views but they have inevitably been influenced by the prospective fate of the radio industry as a whole.

As many noble Lords have noted, there is a certain incongruity in discussing a paving Bill for the creation of an organisation the scope and content of whose activities are as yet not precisely defined, although we had a broad view of them in the White Paper. That has not stopped several noble Lords opining this evening about what those activities might most appropriately be, and I am afraid that it will not entirely stop me.

First, however, I want to focus on the basic issue before us; namely, whether there should be an Ofcom at all. Is its existence really a good idea? So far as broadcasting is concerned, will it contribute to access, choice, diversity and the efficient use of scarce spectra? All of those issues are fundamental to the success of broadcasting in this country.

It is well known in relation to the economics of regulation that if there is more than one regulator for an industry the result is wasteful duplication and inefficient utilisation of scarce resources and the consumer is badly served. Those were some of the reasons why the Government rightly decided to opt for a single regulator for the whole of the financial services industry. The creation of the Financial Services Authority was the rational response to convergence in financial services, just as Ofcom is a rational response to convergence in the communications industry. That involves in part convergence in the delivery of services, although that has been somewhat over-hyped, and, most importantly, convergence in the common demands that are placed on scarce spectra. The selfsame logic that supported the creation of the FSA supports the creation of Ofcom. That makes sense—the fact that it makes such good sense is the reason why I welcome the Bill.

It is worth noting that support for the creation of Ofcom is not unanimous throughout the broadcasting industry. We have heard much this evening about the relationship between Ofcom and the BBC but not much about the BBC's view of Ofcom. The creation of Ofcom was discussed fully by the director-general in a speech that he delivered at the radio festival in July. Mr Greg Dyke argued that there should be not one regulator but a plurality of content regulators that could match the plurality of content providers. He went further and declared:
"It has been recognised from the beginning of mass media in this country that plurality is fundamental to the basic values of democracy".
There we have it—the charge is the serious one that Ofcom is a threat to democracy. I presume that we can be confident that the Minister does not agree with Mr Dyke.

Mr Dyke argued that there should be many regulators, but just how many he did not make clear. Nor did he make it clear how the multiplicity of regulators could relate to one another or to different parts of the industry. If the multiplicity of regulators is to be the defence of democracy, surely broadcasters should be able to choose their regulator. Individual radio companies should be able to escape from beneath the heel of an oppressive regulator and search out the sunny uplands of the more liberal regulators. BBC radio, for example, oppressed by the governors, should be able to opt to be regulated by the Radio Authority. Mr Dyke's argument is nonsense, which is why everybody is laughing. It is designed for one purpose only, to disguise the fact that there is no real argument for the BBC not to be regulated by Ofcom. That is what he is afraid of.

I would argue that to establish a single regulator and to leave one broadcaster outside its scope is a recipe for serious inefficiency. It would be as if the Government had gone to all the trouble of creating the Financial Services Authority and then decided that one major firm—shall we say Goldman Sachs—should be exempt from the regulatory regime and allowed to regulate itself. I should like to ask the Minister why, if self-regulation is not good enough for Goldman Sachs, is it good enough for the BBC?

On that topic I make a further point. If Ofcom does not regulate the BBC, the integrity and independence of the corporation are placed in serious jeopardy. History has shown that it is not possible for the BBC board of governors to avoid being sucked into the management as well as the regulation of the BBC. That point has been made by many noble Lords. That is why the governors do not have the power to determine which services should be provided by the BBC and why the Secretary of State determines the content of such new services.

However, in the long run surely it is not right that the Secretary of State should be the arbiter of the content of radio services. We do not want state radio in this country, yet that is exactly the slippery slope down which the absence of independent regulation is pushing the BBC. The creation of Ofcom by the Bill provides the Government and the BBC with a means of escaping from that dilemma.

My noble friend Lord Lipsey pointed out that certain aspects of BBC activity will be regulated by Ofcom. However, the crucial issue of format and content will not be. That is particularly vital as an economic issue and in the case of a corporation which in its recent annual report demonstrated that it is driven by the desire to maximise market share. I realise that this is not the Bill in which to discuss the issue of scope and content. Hence the question of regulation of the BBC is a topic to which we shall turn on another date.

I return to the structure of Ofcom as envisaged by the Bill. Clearly, Ofcom involves the amalgamation of four regulators together with the Radiocommunications Agency. I would ask the Minister in winding up to answer two questions about the nature of the single regulator. The first question has been raised by other noble Lords: what is the relationship between Ofcom, the Competition Commission and the various competition authorities? That is a question of enormous importance to the commercial radio industry, which needs to know now where it will stand after Ofcom takes over as its regulator. As my noble friend the Minister will be aware, at present the Radio Authority exercises economic regulation over the radio industry. She will also know that in anticipation of this Bill and the succeeding Bill, the commercial radio industry has joined with the Radio Authority to draw up a blueprint for a simplified economic regulation in future.

The new simple rules define the minimum number of companies which can provide radio programmes within each area of the country. However, the question still remains, what will be the relationship between any economic regulation by Ofcom and the role of the competition authorities? The Competition Commission has an overarching brief in all industries. Perhaps in winding up the Minister could answer that question, first as regards local radio and secondly as regards the national franchises.

My second question is whether the Minister is confident that when five organisations have been incorporated into Ofcom there will be less regulation, not more. If she is, what is the basis of such confidence? We have heard much about light-touch regulation. However, as other noble Lords have asked, what exactly is "light"? Is it lighter than what we have today? The Minister will be aware that despite all the talk of convergence—much of it is just that: talk—communications infrastructure and broadcasting continue to be two quite different things. By bringing the communications and broadcasting regulations together, it appears that Ofcom will face a more massive and complex task than is currently faced by any of the individual existing regulators.

The Minister will also be aware that the Towers Perrin report states that in the short run more work is likely to start than stop and that,
"it is difficult at this stage to make an assessment of the level of resources Ofcom will need".
Given this statement by the independent consultants, is the Minister still confident of the assessments of cost set out in the explanatory notes?

Throughout the progress towards Ofcom, commercial radio has made it clear that having its own regulator has worked well. The progress of the commercial radio industry since 1990 has been more rapid and more beneficial to listening choice than anything achieved under the aegis of the IBA between 1973 and 1990. The attention of the IBA was concentrated for most of its time on television. Will this recur? What will be the position of radio within this new amalgam? Does the Minister accept the Towers Perrin recommendation that there should be,
"a horizontal Radio Group, to ensure the integration of broadcast radio regulation",
throughout Ofcom?

If Ofcom is not to become an unwieldy, sclerotic barrier to progress, its regulatory activities must be transparent, flexible and reduced to the essential minimum. If the organisation established by this Bill is to play a role in the creation of a highly competitive, prosperous, creative and diverse radio industry, it must bring to the twin tasks of content and economic regulation a new spirit of openness and enterprise, a new approach to regulation. If it achieves that, its creation will have been thoroughly worth while. I hope and believe that it will.

9.56 p.m.

My Lords, like previous speakers, I begin by declaring my interests. I am a non-executive director of the CN Group, which has a number of commercial radio interests, and I have in the past, but do not now, advised the BBC and the ITV Association.

I recall in early 1996 standing where the noble Baroness was standing earlier this afternoon and introducing the previous Broadcasting Bill. Before delivering my speech on that occasion, I well remember the discussion in the department about its content, especially the more general opening section. Not only did the description of how the digital world might develop stagger me, a non-scientist, I was very concerned not to paint a picture that your Lordships would dismiss as fanciful.

Whether I succeeded then, I do not know. However, in the intervening years it has become clear that the political and social implications of what is happening are far more wide-ranging than many people thought at that time. I have recently tried to clarify in my own mind what the digital revolution is doing and what it has created. I have to admit that I am finding it very far from straightforward.

One analogy is with the Age of Faith. In a way that appears different from the view of contemporary theologians, the Kingdom of Heaven was believed in those days to be immediately at hand and invisible. After all, in quattrocento paintings angels are to be seen almost everywhere, obviously invisible to the human, but there none the less; and the painter, who clearly never saw an angel as he depicted them, knew that they were there and so painted them in, rather like the person who carved the bosses on the roof. In parallel with the physical world, there was a heavenly world that was very real and very close. In a somewhat similar way, the digital world has developed very close to the physical world in which we now live.

A different, more contemporary analogy is with the world of Harry Potter. In J K Rowlings' books there exists the wizarding world and the muggle world; the muggle world is our world. They exist in parallel and those who are wizards can move between them.

It seems to me that the revolution of the digital world is that there is existing in parallel with the traditional physical world of our daily lives a world of digital codes and electrical impulses which we have harnessed for a whole variety of separate purposes and which in a real sense changes our traditional relationship with space and time.

The digital world's physical form is a network of cable, wire and radio waves permanently pulsating with binary code transmitted by electrical impulses. What had previously been distinct networks—that is to say, television, telephone, Internet or radio—are now becoming fused. Technology gives entry and exit to the primal soup of digital bit stream out there in cyberspace contained in the networks.

Of course, in the old analogue era it made sense to have different regulators for television, radio and telecoms because they were distinct networks each with their own separate problems. But now they are not; they are fused, or at least fusing, together in a single whole and as such the logic for a single system of regulation is, in my view, overwhelming. That is what this Bill is intended to do and why I support it.

It seems to me that the important political question is how that regulatory system will operate. I do not believe that you can simply separate form and function, as the noble Baroness suggested in her opening remarks. The way the system operates determines what the system as opposed to the structure on which it is based does; whether it will run with or against the grain of public interest; and how it might be answerable or accountable both to the public and to Parliament. Only by looking at those together can we judge whether it is doing the right thing.

I believe that what is needed was put succinctly and emphatically by Patricia Hodgson, mentioned by the noble Lord, Lord Thomson of Monifieth. She is chief executive of the ITC and she gave a speech to the European Media Forum on 26th September this year in which she said that the three vital priorities for regulation were investment-friendly policies, competition and a new settlement for public service broadcasting. I believe that she is right. The way in which Ofcom works must align with these priorities, for if it does so the industries affected by it will flourish and if it fails they will not. The form of Ofcom must enable it to deliver the priorities.

As has been said by a number of speakers, the Bill is not the answer to all the problems facing the sector. It is merely a precursor of the forthcoming communications Bill, which must provide a settlement for the next few years, just as the Broadcasting Act 1996 has done for the past few. Paradoxically, in the case of this kind of legislation, it can only be deemed successful if it creates conditions which make it out of date a few years later.

As we know, the world of telecoms and the media is changing very fast and changes are needed to the regulatory regime in response to that. As has already been mentioned, some of them such as those relating to cross-media ownership do not necessarily require statutory change. What are the Government proposing to do about that? Will they do something now or do they want to wait?

I want to concentrate on two of the many aspects of this area because I believe that one cannot separate form and function in the debate. I want to talk, first, about access and, secondly, public service broadcasting. The interface between our physical world and the public networks of binary code is via a series of gateways which are the bottlenecks in the system. Those who control these gateways, whether it be through software, ownership of hardware or by other legal means, are in positions of great power. In my view, perhaps the most important role of Ofcom will be to police those gateways which are under our national jurisdiction in order to ensure that there will be fair, reasonable and non-discriminatory access to enable those of us in this country to draw down through them what it is that is outside.

The proper regulation and policing of that aspect has been one of the major priorities of Ofcom's predecessors and I very much hope that the noble Baroness or the noble Lord, Lord McIntosh, in responding will be able to confirm that it will be at the centre of Ofcom's workload and that what will be done will be compatible with the provisions of the electronic communications package currently going through the European legislative process.

If one moves through the gateway the corner of the digital world one first enters is that part which is under the UK's jurisdiction. Beyond it there is the equivalent, in digital terms, of international waters where our jurisdiction does not extend. In the area within our jurisdiction are to be found our national public service broadcasters.

As a number of noble Lords have said this evening, public service broadcasting is a vexed and topical question. In this country it comes in a unique and, some would say, rather idiosyncratic form, but, in the best traditions of British institutions, it all works. I believe that that concept has served this country and its citizens well and enabled them to enjoy probably a better choice and range of good quality broadcast services in a whole range of different milieus than is the case elsewhere. In a world of increasing choice and pluralism it provides a benchmark that its commercial competitors must match to capture audiences.

The rationale for public service broadcasting and the form that it takes is bound to be changed by the technological changes of the past few years. It does not matter that the old arguments may have died or are less relevant. I believe that there are cogent new ones to replace them. It is important that nobody becomes a prisoner of nostalgia for form. Anything that is worth its salt must adapt as the world changes and that applies to public broadcasters as much to everything else. Between th