HC Deb 27 June 1963 vol 679 cc1731-56

7.4 p.m.

Mr. David James (Brighton, Kemptown)

I beg to move, in page 10, line 25, at the end, to insert: (13) Any programme contractor who is required under the terms of his contract with the Authority to provide programmes which shall contain a suitable proportion of matter calculated to appeal specially to the tastes and outlook of persons in each of two or more areas (as defined by the Authority and approved by the Postmaster General) and, to comply with this requirement, has accordingly to maintain studios, offices or premises in more than one area, shall for the purposes of this section, make a separate return of his advertising receipts for each area, and the additional payments due from that programme contractor shall be separately computed and charged accordingly, to the intent that the Table in subsection (4) of this section shall apply by reference to each area taken separately. As there has been so much controversy about the Bill, I must be specially careful in declaring an interest. I am a paid-up member of the Society of Authors, as hon. Members opposite—I am sorry to bore them with this a second time—know, and I am undoubtedly influenced by the fact that I was hi the film business for a couple of years as technical adviser to Ealing Studios during the making of "Scott of the Antarctic". We had three rather grizzly locations—in the Antarctic, 12,000 feet up in the Alps and on an ice field in Central Norway—and I grew to appreciate what I believe to be the considerable qualities of the technicians in the industry.

I make no secret of the fact that when those people were thrown out of work, two or three years later, by virtue of the collapse of the film industry, it made a profound impression on my mind. It is possible that anything which I may have to say today may be influenced—I hope not, but it might be—by undue apprehension as to whether this Measure may not put some of my friends at risk of unemployment once again.

In the earlier stages, we were discussing the industry as a whole. This time, in so far as two certain companies may be mentioned, I ought in fairness to the House say that there is another situation which could conceivably add bias to my mind, namely, that certain scientific aberrations which I perpetrate from time to time around Loch Ness have been assisted by Associated Television. I do not think that this is so, but, in so far as the House should have the benefit of any doubt in my mind as to whether I may or may not have been influenced, I felt it safer to disclose that fact.

The arguments in favour of the Amendment are implicit in its wording. It may, however, help the House and hon. Members who were not on the Standing Committee if I briefly recapitulate the circumstances leading up to the Amendment. It was common ground to both sides of the Committee and to the House that the television companies were not paying enough rental for a very valuable concession. This was common ground between the lot of us. The argument raged over how an appropriate rental could be devised. The view of my right hon. Friend the Postmaster-General was that the gross advertising revenue was the only method that could be employed, because it was the only method which, in his view, could not be susceptible to tax evasion or minimisation, whichever one chooses to call it.

We opposed that view on the ground that while there was obviously a great deal of substance in my right hon. Friend's view, gross advertising revenue was of its nature an inflexible weapon which might involve returning to Parliament to get the rates altered and that net profit would be a far more satisfactory yardstick. I do not want to go over all the arguments again. My right hon. Friend carried the day. We retired bloody but unbowed, and I am prepared to accept that decision as being the decision of Parliament.

The Amendment arises directly out of the difficulties which we foresaw if the Postmaster-General's point of view prevailed. Since those days, incidentally, we have got over from a basis of gross advertising revenue to net advertising revenue. I thank my right hon. Friend and his hon. Friend the Assistant Postmaster-General for that considerable alteration, which has, I believe, materially improved the Bill and made it easier for all sides.

As we now understand, the position of the smaller companies is substantially improved. Once again, I am grateful to my right hon. Friend, because they are saved the T.A.D. levy, which hit the large and small companies alike, and they get the advantage of the so-called free slice of £1½ million of advertising revenue, which they can take free of charge. In so far as that helps the small companies, all of us are grateful to my right hon. Friend the Postmaster-General.

It must, however, be noted that whereas, for a small regional company, the free slice represents 100 per cent. of its revenue, for any one of the so-called big four it represents only 12½ per cent. of their revenue. Therefore, from the outset, as the upper rate of the levy is 45 per cent, there must be doubt whether the big four companies can fulfil their obligations to the Independent Television Authority under Section 2 of the Act in providing the best possible form of television for the public.

There is, too, the further complication—and this is where I get on to individual companies—that Granada and Associated Rediffusion have single workings: that is to say, they have one franchise to operate one service in a certain area for five days a week. On the other hand, A.B.C. and A.T.V. have a dual franchise. They have to operate five days a week in one place and two days at the weekend somewhere else. This is bound to lead to their having far greater production costs than the companies with single workings.

As a single case in point, A.B.C. is bound, under the terms of its contract with the I.T.A., to maintain studios in Manchester and Birmingham as it has to give a certain proportion of local material. It has also to run a third set of studios at Teddington, because there are a number of stars—everyone should realise that the economics of the industry are, most unfortunately in my view, but inescapably, geared to a star system of people who command their salaries in the international market—who will not go to Manchester or Birmingham, but demand fast cars to take them out to Teddington.

So it is obvious that A.B.C. and A.T.V., from the very nature of things, are bound to have a more expensive operation than the two companies with single workings. I will illustrate this with figures. I assure the Postmaster-General that I shall deal in millions only. One of the things which has bedevilled the Bill has been the fact that there has never been an agreed set of figures between the companies' advisers and his advisers. I do not believe for a minute that anyone was in bad faith. Obviously, one is dealing with a projection into the future. However, if I deal in round figures I think that it will stop our haggling and arguing over decimal points, which someone once referred to as "those damned dots".

Relatively speaking—I have confirmed this with my hon. Friend the Member for St. Marylebone (Sir. W. Wakefield)—excluding the fact that each company has some minor variations of cognate activities or even different activities, such as bowling alleys, which are aggregated and, therefore, prevent one from getting a clear picture, and using the published media figures and making one's own estimate for discounts, it can be said that the two companies with single workings have an advertising revenue of about £12 million a year, that their programme costs currently run at the rate of about £4 million to £5 million a year, and that, obviously, their profits prior to tax emerge at about £7 million to £8 million. I am deliberately giving the figures roughly and vaguely because I am trying to paint a broad canvas and not a narrow one.

On the other hand, the two other companies are placed in very different circumstances. A.T.V.has about the same advertising revenue, or slightly less—about £11 million. Its production expenses are about £8 million as opposed to the £4 million to £5 million, and this is because of the double overheads and dual expenses involved in its programming. Its profit this year, as we saw in the newspapers yesterday, amounted to about £3 million—on an eleven-month year. A.B.C. is very unfortunately placed in that its advertising revenue is only £7½ million or thereabouts and its production costs are about £5 million—it should be noted that even that is more than the other two—leaving it with a profit of £2½ million.

If we can now extend these figures—I do not think that anyone would seriously dispute that they are roughly accurate—the impact of the levy on the profit of £3 million to £4 million left to the two companies with single workings would be to reduce their profits to between £1½ million and £2 million prior to tax, or to between £750,000 and £1 million after taxation. The impact of the levy on the two companies with dual workings would be to reduce their profits not to £4 million, but to £2 million and £1½ million respectively, leaving between £750,000 and £1 million in both cases.

7.15 p.m.

So far as one can possibly tell at present, it is obvious that the difference in the revenue between the four companies, whch are engaged in doing pretty well the same sort of work, is considerable. It is possible—I believe that my hon. Friend the Member for St. Marylebone would say so—that some companies are more efficient than others, and that there are economies which the two companies with dual workings could make. I will not dispute that for a minute. But the companies which have to maintain two sets of studios and two sets of offices and have dual overheads throughout in order to make two sets of programmes are bound to feel the pinch more than companies not in such a situation.

In these circumstances, can one wonder that all four of the big companies which have a very major responsibility and whose gross revenue is attacked at the margin to the tune of 45 per cent. feel extremely apprehensive? They feel even more apprehensive on reading today's media report, which shows that, while independent television as a whole has had a slight increase in advertising revenue over the last quarter, that is entirely accounted for by one or two of the peripheral companies, and that the big four's advertising revenue has gone slightly down while that of the newspapers has risen owing to the impact of full double page or single page colour advertising due to web-offset printing. So they are in a very real sense in competition with the newspapers for the nation's advertising business.

At this point it is pertinent to raise the question of the Press. I have done some research and found out that the Mirror Group, on a capital of £80 million, recently clocked up £5 million in sales, £48 million in advertising and £13 million in profits. This is very big money, but because it has been going on for years no one is hot under the collar or expressing moral indignation about it. The Mail Group is slightly less open about its revenue, but on a capital of £16 million it has just declared a profit of a little over £4 million, or about 25 per cent.

The only reason why I bring the Press into this argument is that independent television and the Press are substantially doing the same sort of job. They are bringing to the notice of the general public such interesting matters as may occur in this House or on Lords cricket ground and the behaviour of Mr. Dexter and other people in the United Kingdom. They are dealing with the purveying of news and feature articles. But no one has ever suggested that the Press should have its advertising revenue attacked in this way. Moreover, the Press has alternative sources of revenue in the sale of the paper. It can put up the price of the paper.

On the other hand, the television companies depend solely and exclusively on their advertising revenue for their budgeting and programming. It is true that there is a small element of export of films, but I am told that by the time the artists have had their royalties—it is right and proper that they should have them—and agents' commissions have been paid, and so on, the net return to the companies from this factor is very small indeed. Therefore, as I say, the companies feel apprehensive.

I believe that my right hon. Friend is likely to produce an alternative solution. He will admit the difficulty and the inflexibility, but he will claim that all this can be ironed out on Part I of the rental, the first rental which is paid to the I.T.A. in this instance in order to cover the direct costs of running the I.T.A. Incidentally, it will involve a change in concept as to what Part I rental is.

If we are really to iron out the differences in this way, it will involve some fairly hefty figures. I estimate that to put the two companies with the single franchise on the same basis as the two with the double franchise would involve increasing the rental of the former from about £1 million—in one case it is £895,000, but the House will appreciate that I am speaking in round figures—to something more like £2 million, while in the case of the two companies with the dual workings it would involve reducing their rental from £1 million to about £500,000.

This could put the four companies who do substantially the same job on a level peg basis. The snag is that this leads the companies which still have a reasonable margin to pretty well the same situation as those whose margin is perilously thin now. If we were to do it on the basis of leaving Associated Rediffusion and Granada as they are, it would lead to the ludicrous proposition of paying them to remain in business with A.B.C. and A.T.V. That cannot be a sensible decision for Parliament.

All these considerations have led to great apprehension in the industry, which has been heightened by the fact that A.T.V.'s profits have slumped in twelve months from £5 million to £3 million. Thus, even a year of general trade recession in the country can hit this highly marginal and knife-edged industry to the tune of 40 per cent. of its profits. Obviously, if a company feels that its profits are so vulnerable that a profit of £1 million in one year could be a loss of £1 million the next year, it tends to take steps to protect itself against insolvency.

However, in the end, I do not believe that these companies will suffer. I do not believe that the big four will go out of business. I do not think that Mr. Norman Collins will need to take advantage of Lord Beaver brook's generous offer. [An Hon. Member: "Then wipe your tears."] I have no tears. I am not sorry for the commercial television companies, although I am sorry for Lord Beaverbrook, because he failed to recognise a good thing when he saw it. I am not weeping about the four big companies, or about the long-term future of television.

But I am worried about the general public, because I think I have shown that what the companies will do in these circumstances will be to reduce their activities in order to economise. They will economise either by cutting rehearsal time—and as we know from seeing plays it is already perilously low and inadequate in some cases—or reducing the time and money spent on research in individual programmes as they stand. Alternatively, they may reduce the number of programmes they make themselves and increase the number they buy from overseas.

Hon. Members opposite know as well as I do—probably even better—that what this will mean is redundancy. There is serious risk of redundancy in the industry. Fourteen trade unions, seven of them affiliated to the T.U.C. and seven not affiliated, have banded together and have been plugging this one for nearly six months, and in view of the stature of Mr. George Elvin and Sir Tom O'Brien, I am staggered that their trade union friends opposite have not paid attention to them.

I did not think that dog ate dog in this sort of matter, and that merely because someone springs from a miners' union he should necessarily take such a low view of representatives of technicians. But these people are being let down both by hon. Members opposite and, so I believe, by this House.

Mr. W. R. Williams (Manchester, Openshaw)

That, of course, is a lot of nonsense, and the hon. Gentleman knows it. We have given the fullest possible consideration to the case, but no statistics whatever have been presented either in Standing Committee or anywhere else to justify what the hon. Member is saying. There will be an opportunity later this evening for the hon. Member and his hon. Friends to help the unions and the workers in the industry through an Amendment which we hope to move.

Mr. James

I am grateful to the hon. Member, not only for listening to long and kindly, but also for a very constructive suggestion. I will, naturally, listen to his Amendment, and any others to come. When the hon. Member says that he and his hon. Friends have found the evidence submitted by the unions wanting in substance, I wonder what serious attention was paid to the very weighty memorandum by Sir Tom O'Brien on the impact of the Entertainments Duty on the cinema industry.

Mr. Frederick Willey (Sunderland, North)

The hon. Member should face the situation. The Committee to which he refers—the Safeguards Committee—put forward positive proposals, one of which was that a statutory obligation should be placed on the programme companies to extend the proportion of their advertising revenue spent on programmes. The hon. Gentleman has referred to A.T.V. That company was spending 55 per cent. of its advertising revenue as profit.

Mr. James

I do not think that the hon. Member and I are so far apart on this. I, too, am keen that the programme companies should spend more money on programmes. That goes for A.T.V., as well as the rest, even though it has the highest programme costs. My point is that one must make certain that the money is there to do it. My concern is that unless we are prepared to give these companies in that position a double free slice the money will not be there. Unless we approve this Amendment, which makes sense, it will be utterly impossible to do that and see that the companies have money to spend on programmes.

I have laboured this point enough. The issue is simple. There are some companies on single franchise which can afford rental on net advertising revenue and which will have a margin sufficient to take care of rising costs. The other companies are in a different position because of a dual franchise; they have to run two different sets of programmes and meet the costs accordingly.

Later tonight we shall come to the question of a second channel. With respect, I think that a certain amount of nonsense has been talked about the likelihood of outside people coming into this highly complex industry. I hope they do, but I think the chances of anyone getting off the ground in competition with existing companies is about as great as anyone successfully launching a new national paper. It involves years of expertise and hundreds of trained employees, and we must not forget that the B.B.C. will mop up a lot of skills.

If the service is to depend on the rationalisation of existing companies—there is a lot to be said for some of the Welsh companies amalgamating and for progressive companies like Anglia extending into the middle—they will not be able to rationalise unless advantage can be taken of this double franchise.

The Postmaster-General (Mr. Reginald Bevins)

I do not wish to be discourteous to the House, but I think that even at this early stage it might be helpful if I were to seek to put the Amendment into its correct perspective. I hope that what I have to say will be helpful to the House and to my hon. Friend. First, I should like to make two short comments on what he has said. He referred to the fact that this Amendment would give a double free slice to A.T.V. and A.B.C. But it would go far beyond that. It would have the effect of taking them wholly out of the application of the 45 per cent. levy. That is an important fact which hon. Members on both sides of the House should understand.

Mr. James

But the Clause states that this application would be defined by the Authority and approved by the Postmaster-General. Surely this gives considerable discretion to the Postmaster-General in this matter.

7.30 p.m.

Mr. Bevins

That may be, but the Amendment as drafted—and I have taken very careful legal advice on this—means what I have said it means rather than what my hon. Friend has said.

Secondly—and I say this in perfectly good humour—my hon. Friend referred to the fortunes of the newspaper world as distinct from the fortunes of commercial television. He said that the profits of the Daily Mirror, for example, were about £13 million a year on £80 million of capital invested. The comparable figures for commercial television, as the Government estimate them for the first year of operation of the levy, are a profit before tax of £15 million, which is higher than the profit of the Daily Mirror, on a capital which I cannot give with precision but which is approximately half the capital of the Daily Mirror. I do not think that it is very wise to draw comparisons between the fortunes of newspapers and those of commercial television.

Having got those two small points out of the way, perhaps I can come to the Amendment itself. My hon. Friend argued that the expenditure of contractors who function in two areas is particularly heavy because they require two sets of offices and two sets of studios. I also understood him to argue that one or more of these companies, because of its split franchise, was required to produce two sets of programmes—those were my hon. Friend's actual words.

I have examined this argument in great detail to ascertain whether it is valid. As the House knows, the two companies which these Amendments are mainly designed to help are A.B.C. and A.T.V. A.B.C. operates at the weekend both in the North and in the Midlands. A.T.V., alone of the big four companies, puts out programmes for seven days a week, Monday to Friday in the Midlands and in London on Saturday and Sunday.

Let us take first the case of A.B.C., a case about which I know a little, because I often watch its programmes in Liverpool at the weekends. I have noticed repeatedly—and this is in no sense a criticism of A.B.C.—that as a general rule it puts out identical programmes in the Midlands and in the North. A.B.C. produces about two-thirds of its programmes itself. In effect, whatever we may say about dual franchises, the franchise which A.B.C. enjoys is for all practical purposes a single franchise for the weekend only covering a very large area served on Monday to Friday by A.T.V. in the Midlands and by Granada in the North. Therefore, the additional programme costs which are incurred by this company owing to the split franchise cannot be substantial in the nature of things.

That leads to the question which has no doubt bothered my hon. Friend as it did me until I came to examine it. It is why A.B.C. should be doing less well than Granada or Associated Rediffusion, for example. The answer is that its franchise for two days does not produce anything like the same revenue as those of the other large companies. The costs of producing popular weekend programmes are naturally high and the profit margin of A.B.C., though still high by present standards, is reduced on that account.

The case of A.T.V. is different. It alone of all the big four has to provide programmes every night of the week, five days in the Midlands and two days at the weekend in London. It is perfectly true that A.T.V. maintains separate studios in the Midlands and in London and that its overheads are clearly higher on that account. But the main reason why A.T.V. is doing less well than Granada and A.R. is that it has to find and pay for programme material for seven days a week on a revenue which is comparable with that of the other two companies who are on the air only five days a week.

Therefore—and I assure my hon. Friends that I have been into this matter in great detail—the inequalities of which my hon. Friend complains do not arise so much because these two companies have split franchises as for other and in each case quite different reasons. In the case of A.B.C. it is because the programme area, although big, does not generate as much revenue as those of the rest of the big four. In the case of A.T.V. it is because it has to find about 40 per cent. more programme material than does Granada or Associated Rediffusion.

I do not know, nobody knows, what the pattern of these contracts is likely to be after July 1964. But, for the sake of argument, let us assume that the areas remain substantially unchanged. The Amendment refers to cases where the contractor is obliged to provide material with special appear to people in two or more areas. It is quite true that A.T.V. is obliged to do this by its contract with the Authority, but I am informed that A.B.C. is not so obliged. This, of course, could be changed if a new contract were drawn up.

Here, in fairness, I ought to tell the House that another company comes into the picture. I am informed that Southern Television has studios in both Dover and Southampton and puts out special programmes from Dover for the South-East. It is not required to do so by contract, but it does it by an understanding with the Authority. Of course, if the Authority chose to vary the contract for A.B.C, requiring A.B.C. to do certain things as it requires A.T.V., it could hardly refuse to vary the Southern contract as well to include such a requirement. By extending this practice, the concession envisaged in the Amendment could very well become much larger than my hon. Friend indicated. That is one of the defects of the Amendment.

However, I appreciate that my hon. Friends see this Amendment as a means of helping these two companies. How much would it help? If in 1964 this Clause, as modified by the Amendment, were to apply, A.B.C. would pay—and I am not dealing in round figures; I am a bit suspicious not of my hon. Friend's round figures but of round figures as a whole, although I will not dilate on that—£702,000 less in levy and A.T.V. would pay £1,491,000 less. The total yield of the levy would be abated by approximately £2,200,000.

All this is not to say that it is neither possible nor fair to help these two companies. Indeed, if it is possible I should like to find some method of doing so, because there are obviously inequalities between these contracts which have existed since the start. I do not think that that means that the levy itself is misconceived either in principle or in practice. It means that the inequality in these contracts arises from the decisions of the Authority as to how the contracts are to be allocated.

It therefore seems entirely reasonable that the Authority should use means within its own control to go at least some way to iron out these inequalities in the financial sense. What the Authority has proposed to me is to vary the allocation of the first part of the rental, that is Part I of the rentals as referred to in the Bill, in such a way that the best contracts financially would pay the highest rentals. It is entitled to do this in law. I assure the House that that is so, and it is right to do it from the point of view of equity. The Authority consulted me on this proposal some time ago, and I agreed with it, and the Authority is now in the process of working it out in detail. It will help companies with contracts which are less valuable than others.

I think that my hon. Friend and the House are entitled to know how much room exists for manoeuvre, and I should like briefly to give the significant figures. In 1962–63 the rentals paid to the Authority totalled £5½ million. The big four contributed £3½ million towards that figure. A.B.C. paid just over £630,000; A.T.V. paid just over £1 million; Associated Rediffusion paid just over £950,000; and Granada paid £850,000. The estimated position for 1964–65 when all this business starts is that the total head A rentals will be about £7½ million as opposed to £5½ million, and the big four's share is likely to be £5½ million instead of £3½ million.

If this were shared out on the basis of the present proportions, which possibly is what these companies are expecting, A.B.C.'s costs would rise by nearly £500,000 and A.T.V.'s by nearly £750,000. If, however, these companies have contracts which are inherently less favourable than those of Granada or Associated Rediffusion, I think that it would be right for the I.T.A. to ask the wealthier companies to shoulder a higher proportion of this increase.

As I indicated, the I.T.A. is now working out how it will set about doing this, and I ask my hon. Friend to bear in mind that it has a substantial amount of money to play with, if I might use that expression. It clearly can do a great deal to iron out the inequalities which exist within the big four.

I conclude by saying that the House really has to choose between what the Amendment proposes and what I have indicated. Both my hon. Friend and I recognise these inequalities in contracts. The difference between my hon. Friend's proposal and what I have said is that his proposal would eat into the levy whereas mine would not I hope that what I have said will persuade my hon. Friend that I am alive to the case he has put forward. I am not wholly unsympathetic to it, but I hope that in view of what I have said he may be prepared to consider agreeing not to press his Amendment.

Mr. Roy Mason (Barnsley)

I cannot let the Amendment go without first condemning the hypocritical attitude of the hon. Member for Brighton, Kemp Town (Mr. David James) and his hon. Friends. Throughout the Committee stage he and his hon. Friends—

Mr. Speaker

Order. That is an observation which the hon. Member must withdraw. We do not allow the word "hypocrisy".

Mr. Mason

If I am out of order, Mr. Speaker, I shall certainly withdraw it. What the hon. Gentleman said was a series of misleading inexactitudes, particularly when he chastised my hon. Friends for, as he said, ignoring the demands from the trade unions within the industry. It is for this reason that I described him as I did.

The hon. Member's attitude is wholly deplorable, because throughout the Committee stage the hon. Gentleman and his hon. Friends chastised my hon. Friends for not falling into line with the big four's policy on the contentious and controversial Clause 7, yet when the matter was debated on the Floor of the House on Monday, and we dealt in full with that contentious part of Clause 7, not one of the seven hon. Gentlemen opposite who opposed it in Committee on the pretence that they were assisting the trade unions, whereas they were in fact backing the big four policy, spoke on the matter, even though there was mass lobbying in the Central Lobby at the time.

7.45 p.m.

Mr. David James

There is a simple answer to this. We regarded the decision of the Committee upstairs as being definite and final. We had no reason to go back on it. We accepted the judgment of the Committee.

Mr. Mason

With your permission, Mr. Deputy-Speaker, I say that that is a hypocritical attitude.

Mr. Deputy-Speaker (Sir Robert Grimston)

Order. The use of the word "hypocritical" has on many occasions been ruled out of order. The hon. Member must not use it.

Mr. Mason

I am sorry to be ruled out of order, but what I have said is correct, and it can be proved.

The seven profiteering lobbyists, in support of the big four policy, pressed the Postmaster-General about this and tried to chastise my hon. Friends on the ground that they were attacking trade union policy. Yet, when the matter was discussed on the Floor of the House, and there was mass lobbying by trade unionists in the Central Lobby, there was not a peep or a squeak from the seven hon. Gentlemen.

Mr. David James

I met as many of those people as I could, including Tom O'Brien and George Elvin. The hon. Gentleman's outburst is not really directed at me. He is trying to salve his conscience in relation to his trade union comrades.

Mr. Mason

Members of the trade unions and of other organisations lobby Members so that they will voice their protests in the House. The hon. Gentleman and his hon. Friends were noticeably silent on the day in question.

Mr. Geoffrey Hirst (Shipley)

I was a member of the Committee and spoke strongly about this matter during our discussion of it. I read the views of the unions and supported them, particularly on the analogous position regarding entertainments tax, in my usual strong language. When it was impossible to maintain that point, I had sufficient respect for the House not to repeat the argument all over again.

Mr. Mason

With respect to the hon. Gentleman, he is adopting an attitude as bad as that adopted by his hon. Friend the Member for Kemptown, because this is the place where voices should be raised. These matters should be mentioned in this Chamber. Because hon. Gentlemen opposite did not get their way on the contentious part of Clause 7, they banded together and brought in the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) to assist them to make a further fight on an aspect which had nothing to do with assisting the trade unions.

If hon. Gentlemen opposite are sincere in their demands, and in the regard which they profess to have for the trade unions, why did they not assist us on the new Clause "Authority to ensure the showing of British television films", which we debated on Monday? It was purposely drafted to help people within the industry and particularly those in the film industry. There was not a squeak from hon. Gentlemen opposite, and it is this attitude which led me to use the adjective that I did.

I was pleased with the Postmaster-General's reply, because the companies he mentioned, A.B.C. and A.T.V., are two of the big four, who are responsible for 85 per cent. of the network. The hon. Gentleman based his argument on the fact that these companies put out another programme on local matters, but this amounts to only 15 per cent. of the total. We have to remember that 85 per cent. is putout by the big four, and now the hon. Gentleman makes a special plea on that ground, so it is not invalid to say that two different arguments are being adduced.

It is not my intention to delay the proceedings of the House, and having risen solely because of the remarks of the hon. Member for Kemptown about the trade unions, I shall now resume my seat.

Mr. David James

I would be grateful if the hon. Member would clear up one point. On Clause 7 there were seven Amendments, and five of them sought to leave out "gross". Which would the hon. Member suggest we should have supported?

Mr. Deputy-Speaker

I do not quite follow what this has to do with the Amendment before the House.

Mr. Donald Chapman (Birmingham, Northfield)

I intervene for only one reason. That is to take up something which was said by the hon. Member for Brighton, Kemptown (Mr. David James) this evening. I have an enormous amount of sympathy with the anger of my hon. Friend the Member for Barnsley (Mr. Mason), but I shall not be angry because I think that the collapse of the lobby opposite is not something to be angry about, but something to laugh about. How ridiculous it was to hear all their high-flown speeches in Committee upstairs and then to find them collapse down here. That is something to laugh about. I do not agree that everything is settled in Committee upstairs. One does not get results in that way. To get results one has to keep fighting on every opportunity. That cannot be the reason why certain hon. Members opposite have sat silent here in the House.

I intervene to take up a particular point made by the hon. Member for Kemptown. He said that he would not make his case tonight on the basis that these companies would go into bankruptcy, and that therefore they needed to accept the offer of the Beaverbrook papers to take them over. He said that his case did not rest on the extreme financial difficulties in which they are likely to find themselves. What the hon. Member said in Committee upstairs was the exact opposite. He said: The point about a knife edge is that one can fall off either way, either into big money or into bankruptcy. I submit that it is very likely under the provisions of this Bill as at present drafted those concerned will fall off on the wrong side."—[Official Report, Standing Committee B, 2nd May, 1963. c. 850.] Now that the whole thing has been exploded and shown to be ridiculous, the hon. Member says the absolute opposite.

I say in all friendliness to the hon. Member that I am not getting angry because I think that this is rather funny, but this sort of thing does not do the case of television companies any good at all. It means that their case has been so exaggerated upstairs that no one will believe it in future if the hon. Member is not careful. He must be more careful. The big four figures were exploded almost immediately after they were given. The hon. Member fell for them and presented them in Committee and exaggerated them. Now the wheel has turned full circle and here in the House he says exactly the opposite.

On this Amendment, he has a case in the sense met by the Postmaster-General. I hope that in continuation of his withdrawal from the position the hon. Member took upstairs he will now accept the very proper offer made by his right hon. Friend as the way in which to handle this problem.

Mr. Robert Cooke (Bristol, West)

I am not part of any pressure group or faction. I do not give a damn about pressure groups—I hope it is in order to say that—on either side of the House. I think there has been a great deal of over-statement on both sides.

The position of the so-called seven lobbyists has been mentioned. Seven hon. Friends of mine voted in a certain way at a certain time, but I do not think they can be all lumped together because they happened to share a point of view at that particular moment. It is true that some are interested parties, indeed some are directors. I have one sitting beside me at the moment.

Sir Wavell Wakefield (St. Marylebone)

I am not a director of any television programme company.

Mr. Cooke

The hon. Member is, however, a director of Rediffusion Limited. My hon. Friend the Member for Brighton, Kemptown (Mr. David James) has been vigorously attacked. He is not a director of any company I know of, but he seems to have a burning personal sincerity to try to improve television. I do not always agree with him on the way in which he goes about it. I have had long conversations with him to try to learn his views and to try to persuade him that they are not always in the interests of the industry.

We find ourselves in the present difficulty because the Bill, as originally drafted, gave the Postmaster-General the job of fixing the amount of money these companies should pay back to the Exchequer out of their profits. That was regarded as unacceptable. It was unacceptable in the minds of many hon. Friends and by the seven hon. Members who have been spoken about. They have gone on public record on that. They have accepted the principle of the levy, and that has been accepted by the House. I entirely sympathise with my right hon. Friend, who said that this Amendment would wreck the whole thing. It would destroy most of its effect, but I welcome what was said about the way in which I.T.A. can help those who find themselves in particular difficulties. All the way along we have tried to help individual companies. We have had the business of dealing with the small companies and today we have heard a suggestion of a concession. I hope that my hon. Friend the Member for Kemptown will find it possible to withdraw the Amendment because I think the Postmaster-General has gone a long way to alleviate the difficulty.

Mr. Victor Yates (Birmingham, Ladywood)

The assumption that is being put into the whole of this discussion by some hon. Members is that Clause 7 is absolutely right in all respects. In Committee I had some reservations. I say to my hon. Friend the Member for Barnsley (Mr. Mason) that it is difficult to be absolutely certain that this is the right method. While I agree that the Postmaster-General has put forward a very reasonable argument on the Amendment and has gone some way to meet objections, that does not prevent trade unions and others from feeling some concern about the future.

I say this to my hon. Friend the Member for Barnsley because we argued about it in Committee. I know the trade unions are genuinely concerned about the future. It must not simply be brushed aside as if it were of no account. I have had the opportunity since the Committee met of going over the A.T.V. studios. I was astonished to find the very large labour force of artisans, craftsmen and so on employed there. It was pointed out to me that even before the company embarked on the programme "Man of the World" it had to decide that it would cost over £½ million. I think "Robin Hood" cost £350,000, and that had to be agreed before the programme was made. One can understand that the companies are concerned that the money should be available. The trade unions are concerned about the possibility of these large programmes being reduced and about there being an uncertain future.

I do not like the principle of taxing advertising revenue. I do not like indirect taxation. I should not like it if for Income Tax we could not deduct expenses before paying tax. In view of the objections raised and the possible evasions, I could not, however, propose an alternative. I do not think my hon. Friend the Member for Barnsley would wish to give the impression that on this side of the House we were unmindful of the views of the trade unions. I have read their memorandum very carefully. I have great respect for Mr. George Elvin and the other leaders of the trade unions. We have met them separately to hear their point of view and we have put before them the difficulties as we see them. I think that it ought to be said that we have listened to them and that we appreciate the very sincere arguments that they put forward.

I believe that we are under an obligation to the workers in the television industry to see that at all stages expenditure on its programmes and on good broadcasting will not be reduced. Whatever our point of view, we want that assurance, and I am sure that the Postmaster-General ought to be able to assure us that at least these important programmes which involve the employment of labour on a vast scale will not be reduced.

8.0 p.m.

Mr. Mason

I rise only to put it on record that my hon. Friend did not participate in the debate on Monday dealing with Clause 7. If he will look in the Official Report of Monday, he will see by column 968 that my remarks made a full column expressing the view of trade unionists.

Mr. Yates

My hon. Friend must not think that he can get away by suggesting that just because I do not happen to be present on every possible occasion when the matter is under discussion I have lost interest. In Committee upstairs, my hon. Friend certainly gave me the impression—and I was a member of the Committee—that he brushed aside the opinions of the trade unions. Let him say quite frankly that he views with some concern the opinions of the trade unions and that they will be adequately considered.

Mr. Robert Cooke

I do not wish to get involved in a quarrel between hon. Members opposite on the merits or not of trade unions, but do not hon. Members opposite see that if we have the second commercial channel as soon as possible there should be enough jobs to look after all these people's profits?

The Deputy-Speaker (Sir Robert Grimston)

We cannot discuss the second channel on this Amendment.

Mr. Yates

All I want is for the Postmaster-General to appreciate that however small a company may be, if it is employing thousands of workers and there is the fear that in some way the money will not be there or that the method of doing it is not right, their views will be adequately considered and that there will be no such danger.

I do not say that the trade unions are absolutely right in this. I am not sure about the Government's position. It may be that we shall have another Government and that they may have to do something different from this. This may not be the absolute solution to it. I do not commit myself either one way or the other. I expressed some misgivings in Committee and I admit that I cannot propose a system which would not be open to objections and which would be satisfactory in every respect.

I do not blame hon. Members opposite. I have been in minority groups myself and I have raised matters in a minority of one. Because I have not done so on every conceivable occasion, it does not mean that I was not right. This is a democratic assembly and we ought to examine the views put forward on both sides with adequate care and consideration. That is the only way that we can get a really good Bill. If we do not get it now we shall chase the Postmaster-General to see that we get it eventually.

Mr. Selwyn Lloyd (Wirral)

I am all for hard hitting in these matters, but I do not think that the hon. Member for Barnsley (Mr. Mason) should have said what he did say that I have been brought in by my hon. Friends to bolster up some sort of pressure group. My views in this matter are, I think, distasteful to most of the big four companies, and not accepted by some hon. Members. There have been strong differences of opinion, but they have not cut across any party lines at all, but have been between Members on the same side of the House.

I want to ask my right hon. Friend two questions. To begin with, I base myself completely on what the hon. Member for Manchester, Openshaw (Mr. W. R. Williams) said in the debate on Monday, as reported in the Official Report, column 986, that We want to ensure that the resources of the companies are adequate to meet the new requirements and the new demands which will be made upon them as the service develops, and as the very costly installations and instruments are introduced into the service."—[Official Report, 24th June, 1963; Vol. 679, c. 986.] That covers what the hon. Member for Birmingham, Ladywood (Mr. V. Yates) has just said about the trade unions.

I think that the hon. Member for Birmingham, Northfield (Mr. Chapman) posed the problem as reported in column 974, when he referred to the observation of my right hon. Friend about the authority taking steps to seek to even out the nature of the differences between contracts especially as they affect the big four.

The hon. Gentleman went on to refer to the special problem of A.T.V. and the split franchise …between London and the Midlands, involving it in heavy excessive overheads. This can make its tax position unfortunate in special circumstances."—[Official Report, 24th June, 1963; Vol. 679, c. 975.] If that is true it seems to mean that the people to whom the hon. Gentleman has been referring will suffer. Therefore, I want to be satisfied that the Authority has the power to deal with this matter. May I ask my right hon. Friend these two questions? There is a fund of £5½ million to play with in this respect. He used the phrase "play with", or someone else did. The total in 1964–65 will be something over £7 million, of which the big four pay £5½ million. There is that fund to use for adjustment. I hope that I understood my right hon. Friend about that. I also want to know whether the discretion of the Authority will be unfettered to deal with this matter, or are certain rules and regulations to be laid down for it by my right hon. Friend, or will he give the Authority discretion to deal with this matter in the way that it thinks right?

Mr. Willey

I hope that we shall be able to expedite our proceedings, because we have a very long way to go. I know that this is an important matter, but I should like to emphasise the view we take on this side of the House.

We have taken the view consistently that what was required and what has been missing in the past was a realistic rental for the exercise of the public franchise. I have criticised the Government for not tackling this problem earlier. Now the Government have introduced this formula—and it is the best formula which has been put to us—that a levy should be raised on the advertising revenue. When we consider a rental we also con- sider the different circumstances in different cases, and I think that it is fortunate, if we regard this as a rental, that it has two elements and that there is room for adjustment in the other element.

I can think of other factors that ought to be brought to mind, such as Granada, which has the exceptional expense of producing in Manchester. It is right that it produces there and I should like the production to continue in Manchester and not be prejudiced. That is a circumstance which has to be taken into account. The hon. Member mentioned another.

I agree with the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) that we need an assurance, but I gather from the Postmaster-General that he is satisfied that there is sufficient scope to make the adjustments which should be made. I should support him in saying that in such a matter it is best to leave this to the discretion of the Authority, which is well versed in the different circumstances and can, therefore, make the adjustment.

Mr. Bevins

Perhaps by leave of the House I may be allowed to make one or two comments, particularly in reply to my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd).

I have taken note of what was said by all hon. Members who have taken part in the debate. On the best estimate which the Government can make, the collective profits after paying levy of all the companies in 1964–65, the first year of the levy, will be rather more than £15 million.

The two principal financial figures which enter into that calculation are, first, the estimate of advertising revenue, which is not a figure which has been "cooked up" in the Post Office, but has come from the best experts we can find in the advertising world, and, secondly, the estimated costs of the companies, which we have obtained from the Independent Television Authority. I think it fair to say that this is an honest estimate of the probable position in the first year of the levy.

It is worth pointing out to the hon. Member for Birmingham, Ladywood (Mr. V. Yates) that when the Bill is law the revenue derived by the companies from the sale of programmes will not be subject to the application of the levy. To that extent, companies will be under a greater incentive to produce programmes than they are at present. I entirely agree with my right hon. and learned Friend that the companies must have adequate resources if they are to be able to produce programmes of the right quality and in the right numbers.

The hon. Member asked me whether the Authority would have unfettered discretion to act on the basis to which I referred when making my first speech, and the answer is "Yes". My right hon. and learned Friend may remember the provision in the 1954 Act in which the financial injunction upon the Authority is very vague. They were to conduct their affairs so as to secure that their revenues are at least sufficient to meet ail sums properly chargeable to revenue account", and in Clause 7 we see that these Head A payments ought to be payments representing—these are the operative words— what appear to the Authority to be the appropriate contributions of the respective programme contractors". I repeat that we have taken very good legal advice on this point, and I assure my hon. and learned Friend that there will be no impediment here.

Mr. Martin Maddan (Hitchin)

My right hon. Friend said that the Authority has infinite power in this matter. May we have an assurance that it will use that discretion and authority?

Mr. Bevins

It was the Authority itself which in the first place made this proposal to me, and I accepted it.

Mr. David James

Before asking my right hon. Friend a final question, may I sincerely thank the hon. Member for Birmingham, Ladywood (Mr. V. Yates) for what I regard as his very kindly and constructive speech? It is nice to know that occasionally one's good intentions and credentials are not in doubt.

May I ask my right hon. Friend to dot the "i's" and to cross the "t's" of the assurance which he has given to my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd)? Is it his intention that the Authority should use part of the £5½ million to level up the two companies, which we all agree are on very fine margins, so that they have enough margin for new programmes, rather than to level them down?

Mr. W. R. Williams

On a point of order. We are trying to get on with the Bill. I did not hear the hon. Member for Brighton, Kemptown (Mr. David James) ask leave of the House to speak again, but he is making a long speech.

Mr. Deputy-Speaker (Sir Robert Grimston)

The hon. Member for Brighton, Kemptown (Mr. David James) does not need the leave of the House. The proposer of an Amendment on Report stage of a Bill which has been in Committee upstairs has the right to speak more than once.

Mr. David James

Thank you, Mr. Deputy-Speaker. It was by sheer inadvertence that I was right, and I was more than willing to apologise in the belief that I was wrong.

May I ask my right hon. Friend whether the spirit of his remarks means that he would propose to level up the margins rather than to level down by using the I.T.A.'s £5½ million?

Mr. Bevins

I do not think that I can add to what I have said. I have been as specific as any Minister can be on this question. At the end of the day it is a matter for the Authority and not for the Postmaster-General. But, having said that, I think that the whole House understands the spirit in which the Authority may approach it.

Mr. David James

In view of what my right hon. Friend has said, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.