Standing Committee A
Thursday 13 November 1997
(Afternoon)
[Part II]
[Mr. John Maxton in the Chair]
Wireless Telegraphy Bill [Lords]
[Continuation from column 116]
8.30 pm
On resuming--
Mr. Fallon: I hope that the unrecorded reference to ``them'' was a catholic one, Mr. Maxton, and referred right across the Committee. I also hope that you had an enjoyable break and enjoyed the good dinner that you undoubtedly deserved, having so patiently sat through our many debates without the ability to contribute to them.
The amendment, as is obvious from the amendment paper, is a cross-party amendment in the broadest possible sense. It has been signed by me and the hon. Member for South-East Cornwall (Mr. Breed), who has had an extremely long day criss-crossing the globe and has now embarked on a further journey to deepest Cornwall. Understandably, he is unable to participate further on the amendment, but he has spoken to it. Most importantly, as my hon. Friend the Member for South Dorset (Mr. Bruce) said, the amendment has the support of a significant number of Labour members of the Committee, who spoke in its favour on Second Reading. My hon. Friend for South Dorset gave us some of the selected highlights of that debate, so there is no need for me to repeat them. For example, there was the speech by the hon. Member for Tamworth. I am not surprised that he is not a member of the Committee because during the Second Reading debate, he resorted to reading out the telephone directory. In more than nine years in the House, I have always had nightmares that an hon. Member would do that, but I never throught that I would witness it from the Dispatch Box.
We support the amendment, the Liberal Democrats support the amendment, and Labour members in the Committee support the amendment. They made that very clear on Second Reading. The Minister could satisfy us immediately by saying that the amendment is completely unnecessary because it cuts directly across the duty of the Secretary of State, under the Telecommunications Act 1984, which was passed by the Conservative Government. I doubt that that is true, but if it is, we shall at least be reassured.
My hon. Friends the Members for South Dorset and for South Cambridgeshire have amply justified the reasoning behind the amendment. It is probably the most important of all the additional matters that we want included as listed matters--perhaps I could call them grade one matters--in subsection (2). We believe that it is an important addition because we have always championed the cause of the consumer as new industries have evolved. My hon. Friend the Member for South Cambridgeshire reminded us that we put precisely those considerations into the original Telecommunciations Act 1984. I think he was too modest to say whether, as a mere civil servant, he had had a hand in adding that provision. We did it because as a Government, we always thought that it was important to take consumers' interests into account.
Let me do something that most of my colleagues on the Front Bench do not do; I shall take the Government at face value. They said that they applaud what we have done for consumers and that they would like to improve on our record. During the review of the utilities and the preparation of the new competition legislation, they said that they would like to strengthen the position of consumers' interests through all appropriate legislation. This is a perfect opportunity to do so. If the Minister thinks that the consumer's voice should be given further regard under utilities regulations generally, what better place to do that immediately--before the utilities review is concluded--than in the Bill?
I should be surprised if the Minister resisted the amendment. She might fall back on the argument that consumers' interests are covered by that global phrase ``any economic benefits''. However, neither she nor other Ministers have adopted that view elsewhere. In the legislation dealing with the utilities that are subject to the review, which I mentioned earlier, there are equivalent phrases, which she and her colleagues are seeking to strengthen. For example, they want to ensure that the regulator's scope is widened and that more regard is paid to consumer's interests.
What was Oftel's advice about the clause's drafting? Does the Director General of Telecommunications think that the subsection will ensure that the Secretary of State pays sufficient regard to consumer interests? That is within his remit; we should expect him to advise Ministers about such matters, and such advice is not private. One of his great strengths is that he has frequently been prepared to make public his advice to Ministers and to involve the relevant industries.
I am hard pressed to think of a reason why the Government should resist the amendment. Consumers' interests, we have been told, are all the rage--the Minister has already said that there are other matters that could be added to the grade one list in subsection (2). We do not need to wait for new technological developments. The industry has evolved and moved on from the early days, when companies invested substantial sums without knowing whether there would be sufficient consumer interest. There is consumer interest--and concern about the prices that will be charged. This is, if I may say so, one of the strongest amendments that the Committee will consider. There is a very strong case for writing consumers' interests into the Bill.
Mrs Roche: I regard this as an important debate. In the spirit of openness, I recognise the moves that the hon. Gentleman and his colleagues made towards consumers' interests. Although the move is long overdue, we very much welcome it. We have had a good debate and the Opposition have expressed their concerns clearly.
The hon. Member for South-East Cornwall was courteous enough to tell me--and, I think the hon. Member for Sevenoaks--that he would not be able to attend this evening's sitting. He has just had a long trip, and I thank him for his courtesy.
Consumers' interests are an important consideration, and they lie close to the Government's heart. Consumers' interests are best protected through effective spectrum management and the promotion of competition and innovation. Those matters are already included in the factors to which the Secretary of State must have regard in setting administrative fees under clause 2. Under the Telecommunications Act 1984, which the hon. Gentleman has referred to, the Secretary of State and Director General of Telecommunications already have a duty
``to promote the interests of consumers, purchasers and other users in the United Kingdom (including, in particular, those who are disabled or of pensionable age) in respect of the prices charged for, and quality and variety, of telecommunication services provided and telecommunication apparatus supplied''.
Clause 2 also requires the Secretary of State to have regard to economic benefits. The hon. Member for South Cambridgeshire has already conceded that regard for the consumer interest can be dealt with under consideration of economic benefits. I agree wth that. That point covers benefits to consumers--known in economists' jargon as consumer surplus--and efficiency gain. As prices come down as a result of innovation and competition, consumer surplus increases.
Prices paid by end users are a key part of the economic benefit calculation. We have published estimates of the effect of administrative pricing proposals on end users and will continue to do so as we revise the proposals.
The introduction of new digital mobile phone systems--known as personal communications networks or PCNs--provides a good illustration of those principles in action. Through effective spectrum management, spectrum was made available to accommodate PCNs and that enabled them to be used sooner rather than later. That enhanced competition, resulting in lower prices to subscribers, which increased economic benefits. Independent consultants have estimated that advancing the introduction of PCNs by two years could have benefited consumers by £2.5 billion a year by the turn of the century.
That illustrates how promoting efficient spectrum management, economic benefits, competition and innovation brings real and substantial consumer benefits. The factors listed in clause 2(2) are demonstrably effective in safeguarding and promoting consumer interests.
A further consideration is that consumer groups will be able to participate in consultation under clause 6, in which case the Secretary of State would have a duty to take those representations into account. That provides an additional and powerful safeguard, should any be needed.
The National Consumer Council and the Consumers Association have been consulted and have reaffirmed that they take a neutral position, neither supporting nor opposing amendments to the Bill. There is nothing in the Bill to which they object.
The hon. Member for Sevenoaks asked about the position taken by the Director General of Telecommunications. We have consulted the director general and I shall make open the advice he gave me. Oftel's position at the time of the Committee stage in the other place was that the Bill covered consumers' interests sufficiently. In the light of responses to the utilities review, the director general's personal view now is that he would prefer the Bill to contain more emphasis on consumer interests. He would like some amendment to be made to the Bill.
The director general made it plain, however, that he recognised that that was a matter of political judgment. I agree with him that consumer interests are an important factor and am happy to give an assurance that those interests will be given full weight in decisions on spectrum pricing. I have the greatest possible respect for the director general's views, as does the hon. Member for Sevenoaks. The director general has had a considerable impact on industry and he is respected by Government and the industry. His views understandably and rightly reflect his statutory responsibilities and focus on the interests of the consumer. I pay tribute to his success in promoting those interests, but, in the context of spectrum pricing, I must take a broader view.
Consumers are important, but why should they be singled out above all other interests, such as operators and manufacturers? [Hon. Members: ``Oh.''] If hon. Members will contain their excitement, I shall continue. Singling out consumers could distort the application of spectrum pricing and cost jobs in this important and growing sector of the economy.
I turn to the detailed drafting of the amendments. My opposition to them is not based solely on this, but amendment No. 28 refers to consumers', purchasers' and other users' interests. That raises the question of how to define consumers of radio services and their interests. Almost everyone is a consumer of radio services in one form or another. It may be necessary to balance the interests of one set of consumers against another. The point is also relevant to amendment No. 24. The amendment is too narrow as it refers only to end users of the service being provided and ignores the end users of other services. For example, it may be necessary to increase fees for one service to promote the availability of spectrum for another. The amendment would not enable that to be done.
8.45 pm
My next point was also raised by the hon. Member for South Cambridgeshire. There is a clear distinction between the functions of a regulator of services provided direct to end users--that is what the Telecommunications Act 1984 provides--and the management of a raw material such as radio spectrum, which is used to provide services to third parties. It is important not to confuse those two distinct functions and to recognise that different statutory provisions are called for.
Promotion of consumer interests is an appropriate duty for a regulator. It already applies under the Telecommunications Act 1984 in relation to telecommuncations services, which is a wide term extending far beyond telephony. It is neither necessary nor apt in the case of the spectrum manager, whose aim is to manage the spectrum in the interests of the economy as a whole.
If the Bill were amended to mention consumers, purchasers and other users, the interests of fairness and balance would require other interest groups, such as manufacturers, service suppliers and their shareholders, to be mentioned. Otherwise, the clause might operate unfairly against those who are not mentioned. Such an amendment would change the clause in a way that no longer reflected the licensing directive.
Reference has been made to the review of utility regulation. It is not my place to pre-empt the outcome of that review, but there is a fundamental difference between the regulation of a utility and the management of a raw resource such as the radio spectrum. The Committee must take that on board.
I have explained at length--because I thought it important to do so--how consumers' interests are safeguarded and promoted by the Bill. I am happy to repeat my assurance that consumers are extremely important and that their interests will continue to be given due weight, as is required under the Bill. The amendments are unnecessary and could unbalance the operation of administrative pricing. They would not benefit consumers or users, nor would they lead to lower prices. I urge the Committee to reject them.
| 
