Lord Stevenson of Balmacara (Lab)

My Lords, I welcome this SI, although I have some questions about it. I would be grateful if the Minister could respond to them and, if not, write to me about them. It is good to see progress being made on these issues. This was an area of considerable discussion and debate during the passage of the Bill, which some present will remember, mainly because we had no real certainty about the ambitions regarding whether those who were benefiting from Ofcom’s work would actually be prepared to pay for it. Even if they were prepared to pay for it, there was no certainty that they could be made to pay for it. Even so, despite the wording and deep thought that has gone into this particular piece of paper before us today, I still have some doubts about whether it will get the effect it wants. Can the Minister say whether there is a back-up plan should the fees not meet the requirements of Ofcom in its vital role, which increases day by day? What would happen then? If the main companies involved—99% of them are at least operating outside the UK, and most of them are established outside the UK—refuse to play ball and are able to find a way around this process, we may face a bit of a difficulty, and quite an expensive one at that. So, my first point is to congratulate the department on bringing this forward, but I worry a little about whether it will be able to achieve its aims and objectives in a way that will be satisfactory for those of us who are concerned about the generality of this issue and also for those who are directly affected by some of the work done by these companies. My second point is a bit technical, but that may just be because I am an accountant. The choice that has been made here in assessing the QWR is that it should be “just and reasonable”. These are fine words, but they are not very common. The words used in most accounting systems across most of the world—unless there are areas that I have yet to experience—are “true and fair”. Accountants have not loved those words, have often argued about them and constantly disagree about what they mean, but they are what works in assessing the effective financial position of any publicly owned company: most companies that wish to receive investment have to prove to a “true and fair” standard that their accounts reflected the true situation in that company. Why have the Government agreed with Ofcom in going for these other words, which must be deliberately chosen? If they are deliberately chosen, will the Minister explain why “just and reasonable” is in any way equivalent to “true and fair” and, if it is not, as I suspect, why that choice was made? I do not say that it is wrong; whether the calculations on which financial results are being made are just and reasonable is a perfectly good way into any discussion with any organisation or company. It would be a good way of testing whether contributions to be made by companies in scope of Ofcom are just, in the sense, I suppose, of being justified, and reasonable in the sense of being able to be made to an apportionment that is sensibly aligned to the actions that will be taken by Ofcom against that company, very often against its economic interests. But I am intrigued by it. There is a perfectly good system that operates in the accounting world; “true and fair” has been used for years and years. We do not like it, but we have learned to live with it. Why have they not taken it forward in this sense?