Clause 5 (Hansard, 12 April 1972)

§ Mr. Chataway
I beg to move. Amendment No. 42, in page 5, line 28, leave out subsections (1) and (2) and insert: 1360
(1) Where, before the beginning of a financial year, it appears to the Minister, after consultation with the Authority, to be appropriate to do so, having regard—
(a) to the amount which (after making due provision towards or for capital expenditure required for the proper discharge, in relation to local sound broadcasting services, of the duties of the Authority under section 1(3) and (4) of the principal Act) is likely to be the amount of the relevant expenditure for that year, and

(b) to the need for securing that excessive profits do not accrue to programme contractors under contracts for the provision of local sound broadcasts,
the Minister, with the consent of the Treasury, may before the beginning of that year make an order under this subsection in respect of that financial year.

(2) Any such order made in respect of a financial year shall specify an amount (in this subsection referred to as 'the specified amount') by which the relevant revenues for that year ought to exceed the relevant expenditure for that year, and shall require the Authority—
(a) to determine what aggregate amount of relevant revenues for that year they regard as necessary to ensure that those revenues exceed the relevant expenditure by the specified amount;

(b) to determine, in the case of each programme contractor with whom the Authority enter into a contract for the provision of local sound broadcasts, what amount in the opinion of the Authority represents his appropriate contribution for that year towards meeting that aggregate amount;

(c) so to exercise their powers under their contract with each such programme contractor as to ensure that the payments, made for that year by that contractor are not less than the amount so determined as representing his appropriate contribution, or (if there are circumstances which in the opinion of the Authority make it impracticable for those payments to be equal to the amount so determined) are as near to that amount as in the opinion of the Authority those circumstances permit; and

(d) to pay into the Consolidated Fund for that year a sum equal to the specified amount or to the amount by which the relevant revenues for that year exceed the relevant expenditure, whichever is the lesser amount.

(3) Any order made under subsection (1) of this section in respect of a financial year may, by a further order made by the Minister after consultation with the Authority and with the consent of the Treasury,—
(a) be revoked, or

(b) be varied by substituting a lesser amount for the amount specified in that order.
and any such further order may be made either before or after the beginning of the financial year to which it relates.

§ Mr. Deputy Speaker (Miss Harvie Anderson)
With this Amendment it would be convenient to discuss Amendments Nos. 46, 47, 48, 49 and 51.

§ Mr. Chataway
This is a very large number of Amendments covering a good many lines. Some of them have some importance. As those who served on the Committee will recollect, the Clause is designed to ensure that if the commercial radio stations reach a situation in which they are making excessive profits, the community should have some share in them. It provides for the Government to set a target for the Authority. It would mean that the Authority would have to provide a contribution to the Consolidated Fund for any financial year.
My hon. Friend the Member for Hendon, North (Mr. Gorst) was extremely anxious in Committee that we should not have a situation in which the Government of the day would start to scoop off the excess revenue from the system before the system had had the chance to extend to the full. He was anxious to ensure that we should provide that it would be the Minister's duty to ensure as best he could that before any money was taken out of the system the frequencies should be fully used, that there should be as big a spread of the service as possible over the country and that where possible there should be second stations in towns. Amendment No. 42 seeks to meet my hon. Friends point in that regard.

§ Mr. Gorst
Exactly where is the provision in Amendment No 42? The two specific points of competition and completion of the coverage do not appear to be mentioned in the wording of the Amendment.

§ Mr. Chataway
Subsection 1(a) requires the Minister, in considering whether to set a financial target, to have regard to the Authority's duties under sections 1(3) and (4) of the principal Act". That has the effect my hon. Friend wishes, because under those subsections the Authority is required to ensure that its services reach as much of the United Kingdom as may from time to time be reasonably practical. The effect is, there- 1362 fore, to require the Minister to have regard to the fullest use of the frequencies that are available; and, before he sets a target and takes money away for the Consolidated Fund, he should bear in mind the desirability of extending the system and providing second stations where possible.
The effect of Amendment No. 46 is to bring the wording of the requirement on the Authority to make sure in its contracts that target payments are produced by contractors into line with the word "ensure" used in Section 14 of the Television Act, 1964, for the similar requirement to ensure that levy payments are forthcoming. It was felt by the Authority that it might be held that the different wording produced a different connotation. We have therefore brought it into line.
Amendment No. 47 merely makes a drafting change. The effect of Amendment No. 48 is to repeat the substance of the words to be left out but with consequential drafting changes.
Amendment No. 49 is, again, a drafting Amendment consequential on the proposed replacement of the old subsection (1) and paragraph (a) of it by a new subsection (1) of which paragraph (a) is about something quite different.
The effect of Amendment No. 51 is to provide that any order setting a target or revoking or reducing a target once set shall be made by Statutory Instrument under the affirmative Resolution procedure. This obviously is an Amendment to which I ought particularly to draw the attention of the House. My hon. Friends the Members for Sevenoaks (Sir J. Rodgers), and for Belfast, North (Mr. Stratton Mills), and others suggested on Second Reading that it would be right, before a measure of this kind were taken by the Government, that it should be brought before Parliament—that is following the same procedure as in the operation of the levy in relation to television. I hope that it will be acceptable to the House and seem reasonable that we should effect that change to Clause 5.
I do not think that there will be a great deal of argument about the principle of the Clause as a whole. Some of my hon. Friends had reservations, I know, but the fact is that, when commercial television started to make very 1363 large profits through the use of scarce frequencies, the Public Accounts Committee called for some sort of levy. It was felt on both sides of the House that it was only right that some contribution should be made and that society as a whole should have a larger share in the profits which were accruing.
Plainly, commercial radio will not reach a similar situation in the years immediately ahead, but it seems only right that, should it ever do so, there should be some back-stop provision of this kind.
I hope that the House will accept the Amendments.

§ Mr. Gregor Mackenzie
The right hon. Gentleman has promised that there will be a review fairly soon of the whole system of levy in television. It would be right if, at this stage, he told us how he sees the two tying together, and whether action will be taken in the near future.

§ Mr. Chataway
I do not think that there would necessarily be similar systems at this stage in radio and in television. Without going into the differences which may prevail—I should probably stray out of order if I did—I can tell the hon. Gentleman that the possibility of alternatives to the levy in television has received considerable study, and proposals have been put to me by the Authority. I know that my right hon. Friend will be considering this matter in the weeks immediately ahead.

§ Mr. Golding
We are much obliged for the work which the draftsman has done in the past few weeks, and we are grateful to the Minister for introducing the affirmative Resolution procedure in this case. Both sides of the House greatly welcome that.
I have one reservation to express on Amendment No. 42. It is possible for the targets set to be waived and for the Minister, after consultation with the Authority, and with the consent of the Treasury, to revoke an order or to vary an order by substituting a lower figure, the reference here being always to specific years.
It is apparent from the record of the television companies that advertising revenue and profits are cyclical, and it may be found that profits are cyclical in commercial radio, too. I suggest that it 1364 would be better in the future, after 1976, if any such provision as this were related to a period longer than one year.
It is possible to set a target for one period of 12 months and for that target not to be reached. The next 12 months may be a bumper year, but the experience of the previous year may well have persuaded one that a lower target figure is appropriate. In such circumstances, there is no way of recoupment.
It is clear from the experience of commercial television over the past few months that the annual provision, while it may be convenient for Treasury accounting, does not take account of the true nature of the business. However, we do not wish to press that point now.