§ Order for Second Reading read.
§ 4.35 p.m.
§ The Minister of State, Treasury (Mr. John Nott)
I beg to move, That the Bill be now read a Second time.
In introducing the Bill to the House this afternoon I must first pay tribute to my right hon. Friend the Minister of Posts and Telecommunications, who will be winding up the debate. He has been the principal participant in the long and complex discussions which have taken place with the Independent Broadcasting Authority and the Association of Independent Television Companies. It is he, with his knowledge of independent television, who will be dealing with the specific issues which may arise in the course of the debate.
Before dealing with the Bill, I should like also to express the Government's appreciation of the advice and assistance which has been given to us by the authority and the views which have been expressed by the industry.
In this connection I should mention that, before introducing the Bill, my right hon. Friends the Chancellor of the Exchequer and the Minister of Posts and Telecommunications together received a deputation from the independent companies, and the latter were invited to give a full exposition of their own views. All parties have been working for a considerable period with the same ends in view: a change in the system for assessing the levy and the fixing of a rate of levy which should be appropriate to the special circumstances of the industry and which should be regarded as a flexible instrument of control for the future. I am glad to say that we have succeeded in accomplishing this dual purpose, and I am able to commend to the House today a measure which is broadly acceptable to all concerned.
Frequently the mover of the Second Reading of a Bill develops his arguments at some length, and I suppose it is only natural that the author of a Bill should wish to do that. But on this occasion, since I have often, as a back bencher, 640 been precluded from participating in debates by the undue length of Front Bench speeches, I propose to be relatively brief.
My principal themes this afternoon in moving this Bill will be, first, to explain the reasons which have led the Government to decide that the present method of assessing the levy imposed upon the companies should be changed, and, second, to explain how the rate of that levy has been chosen.
I should first like to ask the House to consider for a moment the virtually unique relationship between the Government, the authority, and the independent companies. Under the terms of contracts, which are renewable at regular intervals, the companies enjoy the use of the broadcasting frequencies. Their operations are financed by the sale of advertising time. For the period of their contracts, they have sole use of the franchise. From this, two consequences ensue—first, that the Government have a proper concern to ensure that the public interest is fully recognised by way of payment for the exercise of a public asset; and, secondly, that the companies should be enabled and encouraged to provide to the public a service of high quality in information, education, and entertainment. A balance has to be struck.
All hon. Members recognise the undoubted importance and very great influence of the television media. All those working in television have, at all times, a rôle of great responsibility in our affairs. For this reason alone it is vital that the arrangements for the financing of this medium should be such as to promote a healthy degree of competition between those seeking to enter this sphere and a full opportunity for those in the business to devote funds to the progressive development and improvement of programmes. Moreover, at this of all times, when accurate and unbiased reporting, careful and responsible presentation, and original and creative programmes are of special importance to the strengthening of our democratic processes and institutions, it is right that the arrangements for the financing of the industry should be, and should be seen to be, fair, reasonable and effective.
The programme contractors not only have the duty laid upon them of providing a public service in this country; 641 in the course of their activities they produce material which finds a market overseas, which makes a useful contribution to the balance of payments. In all this range of business, the programme companies also face the stimulus of competition from the BBC—a friendly rivalry which helps to promote discussion and debate as well as innovation.
I come now to the reasons which led us to propose the present measure and the change in the system for computing the levy on the programme companies. Hitherto, the levy has been imposed on the advertising receipts of the companies. The purpose of the Bill is to impose it upon their profits.
The Bill, in effect, is an amending instrument, and alters and supplements certain of the key provisions of the Independent Broadcasting Act 1973. The case for a change in the form of the levy was made manifest in a number of ways. First, the existing levy on revenue is, for obvious reasons, a very blunt instrument. In seeking to obtain a reasonable charge for the use of the franchise it took account of only one side of the programme companies' accounts. Advertising revenues have fluctuated considerably over the years and it has been necessary to make a number of adjustments in the rate of levy to take account of changing trends and prospects.
As any Treasury Minister and certainly the House would recognise, forecasting is a science which is far from perfect. It has, in practice, turned out in the past that an upward adjustment in the rate of levy was made at a time when the television business was on the point of a down-turn, and a downward adjustment when it was well on the road to a substantial recovery. In this way, adjustments of the present revenue levy can be seen with hindsight to have been somewhat ill-timed.
A second factor is, of course, that the old levy takes no account of the pressure on costs of the companies engaged in this business. Their financial viability would obviously be affected if this pressure was not allowed for in any way by the method used for assessing their liability to the levy—and, as I have said, periodic adjustments to the revenue-based levy raised very awkward problems of timing.
642 The obvious alternative to the present system is a levy upon profits, but I must make it clear that a levy on profits is not the same thing as a profits tax. The levy is designed, in the same way as a rental, to derive a return for the use of a national asset. After payment of levy, the profits of the companies are, of course, subject to corporation tax, as are the profits of any other companies.
The idea of a profits-based levy was seriously advanced well over three years ago. Why, hon. Members may ask, has it taken so long to make the change? I think that the main reasons are twofold. First, it was thought that such a levy might be difficult to administer and might give scope for avoidance. Second, there was the possibility that it might positively encourage excessive expenditure, in order to limit the profits assessable to tax.
It was with these problems in mind that the Government proposed that a study be made of the issues involved—a move which was welcomed by both the authority and the programme contractors, who had been advocating a change for some time. Last July my right hon. Friend was able to tell the House that the Government had concluded in principle that it was right to change to a profits basis.
The two main doubts about the change had by that time been resolved. First, we are concerned here, as I have said before, with an industry which has a unique relationship with Government, through the aegis of the authority. It consists of a very small number of companies, all of which are intimately known to the authority, which is responsible for monitoring and supervising their activities. The problem of potential levy avoidance in such a situation is, in the view of the authority and of the Government, wholly manageable.
The same goes for the risk of excessive expenditure, or "extravagance". There are powers in the Bill which would enable the Government to require special additional payments of levy in the event of a company's having incurred excessive expenditure. Moreover, the authority will be in a position to keep a close watch on this particular matter.
What are the main advantages of this new system? Quite simply, I believe that. 643 it will remove an important and damaging element of unpredictability from the operation of the levy system. As I have said, hitherto changes in rates have been made on the basis of revenue forecasts which frequently proved inaccurate. The new system now proposed incorporates an automatic regulator which increases the amount a company has to pay if its revenue rises disproportionately to its costs, and reduces the amount if the converse be true.
This should have one most important effect upon the programme companies' activities. Not only will it be possible for a company to plan more rationally and confidently its expenditure on programmes but, equally, in the event of a down-turn in profits its programme expenditure will not have to bear the first brunt of the cuts, as would be the case under the present far more inflexible procedure.
I should now like to turn to the rate of the levy which it has been decided to impose under this Bill. The proposal is that there should be a free slice, or tranche, of profits, which would not be subject to any levy. This slice would consist of a fixed sum of £250,000 in terms of profits, or of 2 per cent. of advertising receipts, whichever sum were the larger. The purpose of this arrangement is to give protection and security to the smaller and more potentially vulnerable of the companies. All profits above that level will be subject to a levy of 66.7 per cent. In fixing this figure, we have had regard to the level of the levy yield over past years in relation to the companies' aggregate profits and to the prospects for the future. There is no ideal way of calculating what levy should be paid for the frequencies, while leaving the companies with the funds, and the incentive, to improve programme quality. Last July my right hon. Friend said that a new-style levy would be designed substantially to increase the current yield of the existing system, because the companies had been earning considerable profits over quite a period of time.
We had regard to three criteria. The first was the need to secure an adequate return for the public from the franchise given to the companies. The second, was that, at a time of price and income restraint, the companies' profits should not, in relation to past levels, be excessive.
644 The third, was that the profits-based rate should not be at such a high figure as to make the contracts unattractive and incur a risk of decline in programme quality for existing contractors and must not deter potential new contractors from entering the field, by making it difficult for them to raise the necessary capital.
In the year July to July 1972–73, advertising receipts were about £150 million, and profits before levy, interest and tax were over £50 million. The present levy yielded about £22 million. Over the same period, a profit-based levy at the rates in this Bill would have yielded about £33 million—an increase of about 50 per cent. On the basis of the criteria to which I have referred, our judgment has been that it would be reasonable for post-levy profits to amount to about £20 million in an "average" year. While this is some distance from the companies' view that a 50–50 share would be appropriate, the settlement at two-thirds/one-third, after the added advantage of the free slice, was accepted by the IBA as a sensible outcome.
The future yield of the levy is now uncertain. A short time ago one would have predicted that profits this year and next would have been similar to those in 1972–73, but the companies are encountering a bad patch at present and nobody can tell how long it will last. The virtue of the change to the new system is that it will automatically reflect changes in profitability, and provides greater stability than under the present system.
I must now follow tradition—not something that I always wish to do—and give a brief description of the Bill. Clause I substitutes a new section for Section 26 of the Act of 1973. After continuing, in subsection (1)(a), the existing provisions requiring payments to be made to the authority to enable them to meet their own expenses, the clause provides for additional payments to be made to the authority and for those additional payments to be calculated by reference to profits and not, as at present, by reference to advertising receipts alone. Some provisions supplementary to this clause are included in Schedule I which, among other things, defines profits and accounting periods and provides that the amounts are to be determined by the authority, whose determination is not to be called in 645 question in any court of law or to be the subject of arbitration, but with an express retention of certain legal remedies and access to the Court of Session in Scotland.
Section 27 of the Act of 1973 is, except for minor amendments, retained by the Bill. This section includes provision to ensure that advertising receipts are not artificially diverted outside the pocket of the programme contractor and among other things also includes a requirement on the authority to account for the additional payments received to the Comptroller and Auditor General.
Clause 2 introduces after Section 27 a new section requiring the authority to secure that additional payments due are paid to the authority by instalments on account. Clause 3 contains the fall-back power under which the Minister can require further additional payments from a contractor whose expenditure he considers likely to prove excessive. Schedule 2 contains transitional provisions so as to amend contracts in force immediately before the commencement of the measure enacted by the Bill.
I hope that my short explanation of the Bill will have been useful to the House. Both my right hon. Friend and I will be willing to go into much greater detail about the technical and financial provisions of the new levy while the Bill is in Committee. With those few remarks I trust that, after what will prove to be a constructive and interesting debate, the House will give the Bill a Second Reading.
§ 4.50 p.m.
§ Mr. John Grant (Islington, East)
It is probably a pity that on a quite important piece of legislation such as this there is not a better attendance in the Chamber. But that is very largely the Government's responsibility. Having planned their business for this week originally with a General Election in mind, they then changed their mind and tried to give the week some semblance of legislative respectability.
This is a somewhat technical piece of legislation. It is legislation with which the Opposition are not inclined to quarrel in principle. But there are a considerable number of matters arising from the proposals which require much fuller and franker explanation, with respect, than we have had so far today—although I 646 appreciate that the right hon. Gentleman the Minister will be replying to the debate. Indeed, I accept the somewhat limited horizons of the Treasury from which the hon. Gentleman the Minister of State has had to suffer in dealing with this matter. But some matters cause disquiet, and I wish to draw the attention of the House to some of them.
The present levy system, so far as I am aware, has had no ardent admirers and many critics. It will die unmourned and unsung. It is reasonable and proper that that should be so. It has been disliked by the companies and by the IBA. It was criticised by the National Board for Prices and Incomes quite severely in its report on costs and revenues of the independent companies, although the board did not favour a levy on profits in this way. The Select Committee which looked at the IBA described the levy as a clumsy instrument. It noted that one company complained that in a year in which it had trading losses it nevertheless had to pay more than £750,000 in levy. Scant regard was paid to that valuable report by the House, and we rightly attacked the Government and the right hon. Gentleman at the time for that. But at least the Government have now responded to this aspect. There has been an overwhelming weight of evidence in support of a change in the levy system.
It is a great pity that the way in which this change has been brought about conflicts so sharply—as does so much that the Government do—with the Government's election pledges. In this case it is the pledge of "open government". It has all been done very secretively, with intense behind-the-scenes activities. As this whole exercise entails how to make the best use of a scarce public resource—namely, the frequency channels—there was no valid reason for the cloak-and-dagger serial story which has dragged on over recent months and preceded this debate. There have certainly been some daggers out, by all accounts.
We should ask what it was that the Government were after in terms of the profit-based levy and what the Treasury originally hoped to rake into its coffers. What was the figure from which the Government retreated, rightly or wrongly—one can take one's pick—in the face of fierce lobbying from the companies? The companies wanted this change but. 647 they certainly did not want it to be a levy at the 66.7 per cent. level. They undoubtedly regard that as punitive, bearing in mind that they have to pay corporation tax.
The Government shook the companies with their plans, which were originally for either a levy at 74 per cent., with a free slice somewhat on the lines of the free slice in the Bill, or alternatively, a 70 per cent. flat-rate levy. Ultimately the Government gave way. In this case it was not so much a U-turn as a wriggle. At least it demonstrated how the present Government can be flexible when dealing with employers' organisations rather than with workers' representatives, and when they do not have to make their act of contrition openly and publicly.
The Minister has said that the new system would, in 1972–73, have produced £33 million for the Exchequer, compared with the £22 million which was actually raised under the existing system. That was far less than the Government had wanted. I understand why they wanted more. Last year was a bonanza year for the companies. The current economic catastrophe was not with us then. I shall come to the consequences of that in relation to the Bill later. Suffice it to say that the companies, as Ian Aitken wrote in The Guardian last October, in one of the few leaks about what was going on then, were electrified by the Government's proposals, which, if the previous year's growth in revenue had been maintained, would probably have produced £35 million in levy according to the various unofficial estimates that were floating about then.
So electrified were the companies that they bypassed the IBA, the right hon. Gentleman and the Chancellor of the Exchequer—all of them deeply involved in this matter—and wrote direct to the Prime Minister. They were clearly seeking sympathy and understanding. It shows vividly the state of shock from which the companies must have been suffering if they went to this Prime Minister for sympathy and understanding. Not surprisingly, the Prime Minister rapidly passed back the buck whence it had come. As we learn in times of trouble, under the present Government the buck never stops at Downing Street. The Chancellor and the Minister of Posts and 648 Telecommunications were left with the job of sorting it out.
For the Minister of State to say that the Bill is broadly acceptable is stretching matters a little. That is not the impression that I gained. The outcome has been this compromise Bill, which would have yielded an extra £11 million levy on the basis of last year's revenue. But that level of revenue must now be completely out of the window as a result of the shambles into which the Government have led the economy, and so, presumably, is the figure of £11 million of levy out of the window.
The Minister looked at the main reasons for making the change. I shall do likewise. We shall probably differ. First and foremost, it was in the Chancellor's mind, no doubt, that the Treasury could do very much better out of it. It is significant that a Treasury Minister opened the debate. That underlines the overriding purpose of the Bill for the Government. I noticed yesterday that when the House was discussing a Ten-Minute Rule Bill on the broadcasting of its procedures, the new Minister responsible for the arts was prominent on the Government Front Bench. It would have been rather nice if he had been taking part in the debate today for the Government. He is probably a rather lonely cultural flower in a Government of Philistines. Even that cultural flower is beginning to wilt somewhat.
Anyway, we have had the hon. Gentleman the Minister of State. I mean no disrespect to him, but it underlines the fact that this is a Treasury Bill and that the Government were primarily looking for more cash rather than for better television. Better television is a secondary consideration, although the important aspect of this change ought to be whether it is possible to siphon more cash into programme making to improve the quality of television. The Bill provides that framework, but it is a somewhat dubious proposition. I say that quite apart from the immediate economic situation which overshadows this debate.
I do not rule out more cash for programme making by any means as part of the significance of the Bill, especially in an improved economic climate, but it will require the most careful attention.
649 There is certainly past evidence that reduced profits lead to a drop in spending on new programmes and mean more repeats and old films. The report of the National Board for Prices and Incomes underlined that. But the same report said that, although contractors said that the first charge on any improvement in current profits would be higher programme expenditure, the reduction in the levy in both 1970 and 1971 produced nothing of the sort. In other words, there has been a kind of built-in resistance to this kind of desirable spending.
It may be that the new system will, as I hope, provide the necessary incentive to spend on making better-quality programmes, but we cannot be complacent on that score. It throws an immense additional responsibility on the IBA. I cannot pretend that I am brim full of confidence that the authority will measure up to that, because back in the days of Pilkington the ITA was being criticised for being too much of a public relations officer for the companies and I think that the authority still manages to convey that impression too often. It does not seem to have learned sufficiently from the lessons of the past.
One current example is the appalling mess at London Broadcasting. The management crisis, financial hazards and the very sorry failure to fulfil the terms of the franchise all smack of the unfortunate London Weekend Television affair. I appreciate the IBA's problems in sorting out this latest mess. Above all, there is the problem of jobs, but the real answer is that the situation should never have been allowed to happen. As for the IBA's relationship with the companies, there is the whole matter of its approach to the allocation of the fourth channel, where it has remained the apparent mouthpiece of the commercial lobby rather than acting as many of us felt it should in the wider public interest.
The view of the Select Committee was to express concern that a levy based on profits might be subject to avoidance. That is a very real anxiety, particularly because of the very considerable diversification of the television companies. There must be a nagging fear that profits can be manipulated, probably quite legally, within the books of subsidiary companies. Let us consider what happened when the 650 levy was increased in 1969. The Associated Television Corporation moved money out of ATV, the Midlands company, and into its diversified interests mainly films, records and to some extent the theatre. For the financial year 1968–69 the group profit of £5.6 million came 49 per cent. from television contracting and 51 per cent. from the diversified interests. In 1969–70 the profit of £5.3 million came 89 per cent. from diversified interests and only 11 per cent. from ATV. There is not much of a suggestion that diversification by television companies has fallen away unduly since then.
I have been insisting up to now that companies need closely scrutinising, and I know that the IBA has given assurances in that respect concerning its auditing arrangements. It will apparently have six extra staff as a result of the Bill. That does not sound much, and I hope that they can do the job. There is another side to the whole business of policing which I must put. Superficially it may appear to conflict with what I have said so far, but I do not think so. There is a feeling among the companies that this legislation may give the IBA powers which are far too sweeping and will allow undue interference with programme making ostensibly as part of the auditing process.
The companies are not unduly concerned that this would be likely to happen under the IBA as at present constituted. Perhaps that is another indication of the cosy relationship between the companies and the IBA, but times change. This is perhaps a somewhat complex Bill in some respects. It is unduly full of the language of the parliamentary draftsmen, but my interpretation is that the authority could step in and deem expenditure to have been excessive, disallow it and then set the company's profit at some higher figure on which the levy may be assessed. I do not say that this is necessarily bad in itself, and it may be a necessary safeguard in policing the new system. Furthermore, the authority would have to get the support of the Minister, as I understand it, who would then have to make an order. However, it seems he would not necessarily have to spell out the reasons for doing so in detail. Perhaps the right hon. Gentleman will clarify that later.
651 The anxiety arises where this excessive-expenditure decision is applied directly to programme making. I do not think it is Orwellian to imagine the Minister or the authority in the future deciding to use the same powers as a big stick through which programme content could be conditioned, with spending disallowed if companies were making what might be regarded as the wrong kind of programme. This concept is by no means far-fetched. I spent a little time in the United States last autumn and I am in no doubt about the extent of intervention in broadcasting there by the President to curb broadcasting by use of the cash weapon. Political intervention in programmes is common abroad. France is a good current example. Anyone who doubts this should read Mr. Anthony Smith's recent book "Shadow in the Cave" which illustrates the case very well.
These fears exist among broadcasters because of the Bill. I would have regarded them, apart from the position abroad, as vastly exaggerated in Britain, and I would have said "It cannot happen here". However, I am beginning to wonder, because only last week in the House of Lords which we are supposed to call the other place a Conservative Peer was calling for it to be obligatory for broadcasters and even camera and lighting crews engaged on current affairs to submit to security checks. Given that this was merely the view of a solitary Tory backwoodsman, I would tend to dismiss it as a piece of irrelevance and even buffoonery.
However, we live in dangerous and volatile political times, and extreme views are very fashionable today largely due to the wretchedly divisive policies of the Government. They are more fashionable probably than for decades, and the suggestion becomes far more ominous against the background of a document just issued by the Conservative Political Centre, which I think is part of the Conservative Party machine. In addition to calling for scrutiny of Government public relations officers for a Left-wing bias—something to which we on the Opposition side plead guilty to some degree or another—
§ Mr. Archer
Surely the hon. Member would not like to see a television company with a major news programme which was totally staffed by known Communists. Surely no one is right to hope that we would have a news medium totally manned either by Communists or by Fascists. All of us have Left and Right views but it is the extremists on either side that we would like to keep out.
§ Mr. Grant
The answer to that is that this sort of situation is most unlikely to arise. I should not like to see any television company or programme-making unit staffed by known Conservatives, but I do not regard that as a likely starter either.
The document records its anxieties about a Left-wing bias in radio and television and implies that there should be a purge. Whatever our misgivings on this side of the House about the media—and we have plenty of them and they are well known—we reject this kind of McCarthyite approach with disgust and contempt, and I hope that the Minister in winding up will do likewise and will unequivocally disown this nasty little report.
I accept the view stressed by the IBA's Director General, Mr. Brian Young, in his 1974 television guide. He saysdemocracy needs broadcasting services which are not run by government".He went on to praise Governments for resisting the temptation to stop television from challenging as well as on occasion supporting the official line. That does not mean that politicians should not be able to criticise broadcasters and broadcasting, but we particularly reject the obnoxious kind of witch hunt suggested in that document.
§ Mr. Wyn Roberts (Conway)
On the point that the Bill and the IBA's powers might be used to influence the content of programmes, does the hon. Member not think that that situation could be avoided if the IBA published, as I think it is bound to do, some code of practice similar to the violence code, showing what is relevant income and relevant expenditure on programming?
§ Mr. Grant
I think that the hon. Gentleman raises a valid point. I shall advance what I hope will be a slightly 653 different solution. He may be inclined to agree with me that it is a possible way round the kind of anxiety which the companies have. To lay at the door of the companies the same critical view as I expressed about the Conservative Political Centre would be too much.
But there is a view that the excessive expenditure provision should exempt programme making completely. I think that is probably going too far. I suspect that it might leave the door open for companies to lump unjustified items of expenditure under the programme-making heading. I hope that the Minister will consider whether companies should have some right of appeal, and perhaps some kind of independent arbitration machinery, against decisions of the IBA when it claims that there has been unjustifiable spending and when action may be taken as a consequence. That would go a long way towards dispelling the kind of fears which I have been describing, particularly if there was arbitration machinery speedily available. It appears that the Bill as it stands removes from the companies even the existing arbitration which they can use in disputes over contracts. That is rather disturbing.
There are a number of other matters which I hope the right hon. Gentleman will clarify for us either now or in Committee. For instance, we should like to know what the effect will be of the new levy on organisations such as Independent Television Publications. The importance of overseas sales has already been mentioned. I should like to know what consideration is being given to allowing some special dispensation for overseas sales as an incentive to export, given our present appalling, worst ever and still worsening trade gap. It is important to bear in mind that any sympathy for any move of that kind would rapidly disappear if it was used to further the kind of television exports which might appeal to most transatlantic audiences but which would not enhance what we see on British television screens.
The Bill provides for the levy to be assessed on profits in each financial year without allowing for any carried forward losses. For example, if a company lost £1 million in the coming year—and that could happen easily in the present economic climate—it would pay no levy. However, if it made £500,000 in the 654 following year it would pay levy on the whole of that figure. The companies feel that that is unreasonable, and that matter deserves an open answer from the right hon. Gentleman.
I do not carry any kind of torch for the companies, but I think that the matters which I have raised are important. They should be probed both today and if necessary, along with other issues, in Committee. We should have the Government's view on record as soon as possible.
Another matter on which the Minister's view would be of great interest is the discussions which have taken place, involving his Department, on the special levy to be paid by broadcasting authorities for the use of old films. I gather that no discussions could have been more secretive. That is probably why I heard about them. I gather that the plans for the levy are at an advanced stage. As this is all highly relevant to television finances, we should be told just what is going on in this area of activity
I turn now to the general financial position of the industry arising from the tragic overall economic situation of Britain, and more particularly from the nonsensical late night television ban, which becomes more and more irritating and less and less meaningful the longer it continues. These developments must mean that the cash calculations on which the Bill was based are now out-dated. I feel momentary pangs of sympathy for the Treasury. Those pangs do not last for more than a moment. I think that the hawkishness of the Chancellor of the Exchequer matches the stubborn mulelike stupidity of the Prime Minister in ensuring that we remain in the present grim situation. As a result, television, along with the rest of British industry, is entering a sorry financial state.
I have personally engaged in correspondence with the Prime Minister about the effects of the late night television ban on television finances and other matters. I still regard the ban as part of the exercise in psychological warfare which the Government have been waging against the miners. That is a charge which I first made before Christmas and which has since received widespread public and political support. When I finally managed to drag some details of the energy savings from the Prime 655 Minister, and when my right hon. Friend the Leader of the Opposition dragged other details from the Minister for Energy, it was seen just how irrelevant and minute the savings really were. Mr. Keith Waterhouse wrote in the Daily Mirror:Only one who spends his evenings playing the bloody organ instead of watching a trashy old movie like any normal human being would have thought of it.The broadcasting authorities felt that the ban was an irrelevancy all along, but the imposition of the restrictions was a virtual fait accompli—even the right hon. Gentleman did not know about it. While the Prime Minister and his energy overlord of the moment shared a bath the Minister was left outside the bathroom gritting his teeth in the dark. Perhaps the right hon. Gentleman should be grateful that he cannot be blamed for being a direct party to the decision.
The broadcasting authorities, to their credit, were desperately worried by the ban, and not least because of the inevitable effect on news coverage at a time when, even more than ever, the nation was entitled to be told in depth and detail what was going on and when the news coverage would otherwise have been extended to cope with the crisis situation.
It is clear that none of these matters worried the Prime Minister. Indeed, the public should know that it was his intention to impose the arbitrary ban not from 10.30 p.m. but from 10 p.m. That intention showed a scandalous and contemptous disregard of the need to keep the nation adequately informed. I gather that it was oniy the anguished protests of the broadcasting authorities which made the Prime Minister reluctantly relent to the extent of half an hour, which, even so, has led to a sadly truncated news service.
I refer to a letter which appeared in The Times last week from Mr. Donald Swann, who presumably is the well-know pianist. He wrote:I have read no satisfactory statistics revealing the saving of electricity by the shutting down of TV at 10.30 p.m. Most people I talk to are sure it's a psychological move only, as they switch off the TV, turn on an extra light (plug=plug) and make tea (two plugs on, instead of one off). I've met no one who goes to bed earlier.After 10.30 p.m. appear some of the vital programmes. The cut is hitting actors, composers, 656 and many of the best idea people in the TV business. It even hits religion (no epilogue!).
§ Mr. Grant
This is all relevant to television finances. Mr. Swann continues:It is cultural censorship. Industry is asking for its five-day week, the miners for their pay, everyone is putting their case. I say, give us back our 90 minutes!In that letter the opinion is expressed that there has been cultural censorship. That is all relevant to the television financial situation.
§ Mr. Grant
Another point is the especially adverse effect the ban is having on elderly people who live alone. A pensioner wrote to me to say:I cannot go out and walk like I used to, so like many more, I'm so glad I've got my TV set.I have had many similar letters complaining about this mean and petty action.
§ Mr. Deputy Speaker (Sir Robert Grant-Ferris)
Order. Does the hon. Member for Islington, East (Mr. John D. Grant) give way?
§ Mr. Deputy Speaker
Order. It must be understood that hon. Members should not make a running commentary.
§ Mr. Archer
I apologise. Did the hon. Gentleman say that old-age pensioners wanted to go out for a walk after 10.30 p.m.?
§ Mr. Grant
For the benefit of the hon. Gentleman I shall read again what the pensioner wrote to me. He said:I cannot go out and walk like I used to, like so many more, I'm so glad I've got my TV set.I then said that I had received many similar letters in which people complained bitterly about this mean and petty action.
I shall not digress further from the direct effect on television finances. That effect, of course, is considerable. It comes not just from the ban, which is cutting heavily into revenue, but from the general economic recession into which the Government have dragged us. Television 657 companies are already holding "cutback" meetings. The ACTT, the television union, is complaining about members whose short-term contracts have not been renewed whilst they were in the middle of projects. I understand that they have asked to meet the right hon. Gentleman to discuss important repercussions on employment within the industry.
Advertising bookings are in some cases falling away dramatically. Channel TV has warned that if the current situation continues for long it faces liquidation. That would make redundancies inevitable. It is not a situation which is likely to be confined to one company. Indeed, for the industry as a whole, advertising this January is 20 per cent. down on advertising rates in January 1973. That is a very serious situation which looks certain to get a good deal worse before it gets better.
I shall don my other hat as an Opposition employment spokesman only to say that it is clear that the only way in which these problems—which are not just for television but for British industry as a whole—can be satisfactorily and speedily resolved is for the Prime Minister to agree to a compromise, which need not be "dirty or shabby", to quote the phrase once coined by Mr. George Woodcock, former General Secretary of the TUC, but would mean the Prime Minister swallowing a little pride in the national interest. He would earn praise and not blame from the vast majority of the people for that.
The Government ask everyone to switch something off. I ask the Government to begin by switching on the Prime Minister so that he understands that the nation is sick of the economic and industrial warfare, for which he is largely responsible and which he is in a position to end.
Although we shall not divide the House against the Bill, and we accept the principle of the new levy, that in no way detracts from the view which I expressed in the House last May in dealing with the Select Committee's report on the IBA and the Government's feeble response to it in their White Paper. I said then that what is required is a wide-ranging inquiry into broadcasting. That is still our position. Likewise, we remain in no way bound by the 1981 date set by the right hon. Gentleman for the extension of the 658 BBC charter and the television Acts. I said then, and I repeat, that there is no magic about these dates.
This Bill is one more example of the Government's scrappy approach to the problems of broadcasting. There is a further series of decisions to come—all to be announced, it seems, after closed-door discussions have been concluded rather than after the full public debate that should be focussed on this crucially-important medium—a medium which was never more important.
This piecemeal and private approach is not the way to deal with the future of broadcasting in Britain. It is not the way to handle broadcasting, Government or country. But it is typical of the present Government's approach to the affairs of the nation, and we shall doubtless continue to suffer from it until we get rid of the Conservative Party from the benches opposite. That cannot be much longer delayed.
§ 5.23 p.m.
§ Mr. Robert Cooke (Bristol, West)
The hon. Member for Islington, East (Mr. John Grant) complained that we have not a very large attendance in the House today. He made a rather prickly speech, which no doubt may earn him promotion on the Opposition benches, which will please him. Yet he said that this was an agreed measure and that the Opposition would not divide the House. So, perhaps with less pressure than we have very often, we have a little more time now to consider the subject of broadcasting, and if we cannot have the more "open Government" that the hon. Gentleman asked for, we can at least have "open Parliament" and look at the Bill both in detail and in its wider implications.
The Opposition say that they welcome the big change in the Bill. I will try to exclude some of the more political aspects of what the hon. Gentleman said, except to recall that he referred to some mysterious Conservative Political Centre document. I have not seen it and know nothing about it. It did not emanate from anything I have had to do with as Chairman of our Broadcasting Committee. The CPC documents represent the personal views of their authors, and the document to which the hon. Gentleman has referred may not have been by a Member of this 659 House. It was obviously designed as a vehicle for discussion, and if we knew who the author was some of us might refer to it later. I hope that the hon. Gentleman will send it across. We look forward to seeing it.
§ Mr. John Grant
The hon. Gentleman should read the Daily Mail, a newspaper widely read in the Conservative Party. The document was fully reported in it.
§ Mr. Cooke
There we are—the hon. Gentleman quotes a newspaper report about some alleged document. It would be nice to have the document.
We all seek to benefit television, although we may have different ways of going about it. There is no doubt that the Bill contains a positive incentive to spend on programmes. That surely is what television is all about. I have followed the television debates as they have ranged—not always raged—through the five Parliaments during which I have had the privilege to be a Member. I have tried at the same time to learn at first hand about how the independent side of the industry works. I do not have, and have not had for some time, any financial interest.
At the outset, one might ask why the Bill was not introduced 10 years ago, because a levy on profits was canvassed then. But the Government of the day were not entirely happy that profits would not disappear before tax in lavish expenditure. I suppose that in those days long ago there were still some people who thought that television was rather like Hollywood was before the war. But we have come a long way since then, and the IBA has had 10 more years' experience of intimate relationship with the programme companies.
Beyond question, we have learned that the levy on advertising revenue is—and here I find myself using the same words as my hon. Friend the Minister of State, Treasury, but one must put up with Ministers pinching one's thoughts—the bluntest of blunt instruments and always inevitably changed at the wrong time. When we reduced the levy in February 1971 on a falling market, we found that there was then a rising market to such an extent that by mid-1973 the revenue was so buoyant that there was a justifiable 660 call to raise the levy. We have now had the oil crisis and other problems, producing a sharp fall, and if the fall is maintained it will mean perhaps a 25 per cent. drop in revenue this year, although last year's total will still be up because the trend changed only towards the end.
Many people now support the new procedure of the levy on profits after programme costs, and the Bill also contains other marginal reliefs which I hope my right hon. Friend will spell out because they have only been hinted at so far. The Bill was introduced by a Treasury Minister and so the Treasury presumably is happy about the present arrangement—and who are we to question that? I have learned in my considerable experience that the Treasury has been uniquely successful in collecting its share of any profits which happen to be around. Anyone who has been in business knows that in this country people do pay their taxes.
Some people have questioned the relationship between the IBA and the programme companies, but let us not forget that the IBA has the power of life and death—and death it has sometimes been. Certainly it is in constant touch with the programme companies, and its area officers are skilful and powerful people not slow to give advice. I should be surprised if the IBA's equipment is not at present being strengthened by further staff with financial expertise in order to work the new system. The IBA knows the industry pretty well by now.
The Bill imposes a 66.7 per cent. levy on profits, but let us not forget that those profits are then going to be taxed and that dividends are going to be taxed. The Treasury is seldom very far away. Some people ask whether the levy is enough. Certainly, in the industry itself, some people think that it is too much. But all taxpayers say that, and when one considers these provisions I believe, despite some of the rather gloomy prognostications, that the figure is probably justified, although I am sure that my right hon. Friend will, with his usual interest in these matters, keep very closely in touch, if not with the day-to-day situation, with the trends as they develop, because I know that he has the interests of the industry and of television very much at heart.
661 The first £250,000, the free slice, or tranche as it is called—not free of taxation but free of levy—will be a considerable help to the smaller companies. It is a great safeguard for them. The House has often welcomed their unique regional contribution. This will be safeguarded, although the Channel company has its own special problems. I hope that my right hon. Friend will bear them in mind because there is no hon. Member to speak up for its viewers and listeners.
I do not want to get involved with detailed Committee points but my hon. Friend the Member for Newcastle-upon-Tyne, North (Mr. R. W. Elliott), who unfortunately cannot be with us today because he has to be in Newcastle, has asked me to mention a couple of representations which he has received. I think that the hon. Member for Islington, East must have seen the same representations because he made the point, as I do, that where a company lost, before the new levy, say, £1 million—and new companies or companies with new responsibilities could also find themselves in this position—it might, under the terms of the Bill, not be able to charge the £150,000 or so interest which it would have to find to finance the £1 million which would have to be borrowed to cover the loss. I hope that my right hon. Friend will direct his thoughts to that and comment upon it in reply.
The other point, also made by the Opposition, is the question of who shall judge what is excessive expenditure. According to the Bill, the IBA would appear to have the last word. There is no arbitration, and we can see that if there was there would be certain difficulties. I should be grateful if my right hon. Friend would explain in a little more detail what rights the companies would have in the courts. There are rights explained in the Bill but not perhaps in terms which a layman would understand.
There are some people in the industry who feel that the power of the IBA is too sweeping. That should please Labour Members who have always felt that the programme companies should be kept firmly under control. Most responsible people would recognise that a public monopoly should be subject to an element of public control. The Bill imposes some pretty tight financial controls. The IBA, according to other critics, could impose 662 its will on the programme companies to the detriment of freedom of expression in programme production.
I can certainly envisage a situation in which if a company decided to make a 36-part colour documentary on the two different types of Communism, involving outside broadcast facilities in various far-flung parts of the world, the IBA might say "Enough is enough".
I cite that rather ridiculous example to give force to the argument that if companies were to embark on absurdly extravagant expenditure they would not get away with it, and even if they did, it would not pay them. They would find that they had unsaleable material which they could not possibly justify to their shareholders and they would not be able to pay a dividend. They have to be able to do something for their shareholders to remain in business.
I do not believe that the freedom of expression largely comes through the most costly programmes, anyway. The most costly programmes will be those that would earn a certain amount of money in the export market. We have only to look at recent examples. The costly programmes which can earn money as exports will get marginal relief under the Bill. I do not feel too unhappy about that, and we do need the foreign exchange which they can earn.
I know that my right hon. Friend is anxious to improve the quality of television. In him the creative geniuses at work in the industry have a real ally. This is a financial Bill, and the new levy will pour into the Consolidated Fund the sum of about £30 million a year. This is in sharp contrast to the BBC, which, according to the latest figure, received £137.6 million a year from licence revenue. The taxpayer pays even more than that because there is the cost of collection. In exchange, he gets two channels on BBC-TV and the radio programmes.
In contrast, ITV has to pay the taxpayers about £30 million a year, and in exchange receives one channel. The House will not be surprised when I say that that leads me to stress the infinite possibilities of a further channel for ITV. The taxpayer will get an even better deal from two ITV channels, and even more revenue will be collected. My right hon.
663 Friend has given certain undertakings in the House about a decision on the fourth channel. Perhaps I might give him further food for thought.
If my hon. Friend felt able to authorise ITV-2 there would be a period during which, when it was being set up, costs would have to be met by the IBA—engineering costs and so on. The programme companies, in whatever form they participated—and the IBA has a great many options open to it—would initially set increased programme costs against profits and the Consolidated Fund would have to forgo some of this revenue from television. It would not be long, however, before advertising revenue increased, and the final result, after about three or four years from now, would be a wider choice for the viewer and a higher tax yield.
I am sorry that my hon. Friend the Minister of State at the Treasury has left the Chamber. If he were here I know that he would be delighted if that was the situation. My right hon. Friend, who is perhaps less concerned with Treasury yield and more concerned with the future of broadcasting, will I am sure be delighted if there is a wider choice, even if he is not prepared today to give more encouragement along the lines I am arguing.
What would ITV-2 be like? It would not be another ITV-1. It would be like BBC-2, which does not have to look over its shoulder for a mass audience. My hon. Friend the Minister of State at the Department of Education and Science who has responsibility for the arts was described by the Opposition spokesman as a wilted flower, sitting in isolation on the Treasury Bench yesterday afternoon. I believe that his appearance there was fortuitous in the sense that he had no particular responsibility. I do not suppose that any Minister did in a sense, because this was a private Member proposing a certain thing and another private Member opposing it. The Minister of State was there in solitary isolation on the Treasury Bench. I do not think that he looked particularly like a wilted flower. I was sitting behind him, also in isolation.
§ Mr. Cooke
I do not think so. However, wilted or not, we were both there. There are people who object to Government spending of the order of £50 million per year on the arts. Certainly the sporting interests object most strongly. I have often heard Opposition spokesmen decrying it and asking why the same should not be given to sport. They ask why the arts should enjoy this vast subsidy.
It is a very good question. It seems like too much money to the many people who cannot enjoy the fruits of that expenditure. With television, far wider audiences could be reached by the subsidised arts. There may be arguments about just how this could be done but I believe that ITV-2 is the answer, because the arts cannot exist on Government subsidy alone, on taxpayers' money. There is a very good case for bringing them more to the light of day through ITV-2. Financial assistance to the arts will come through television fees.
No one will benefit from this more than the Musicians' Union. The hon. Member for Rotherham (Mr. O'Malley), who is the spokesman for the union, is not here this afternoon. It is about the only time he has not been here. If the union could only see that it was in its interests to embrace the possibilities of more television it would help. This Bill could prove to be far more than a Treasury measure designed to safeguard the taxpayer. It could be a prelude to a new era of expansion for the arts via television. Even in these troubled days we would do well to look ahead to better times.
§ 5.40 p.m.
§ Mr. Phillip Whitehead (Derby, North)
I wish later to take up the latter part of the speech of the hon. Member for Bristol, West (Mr. Robert Cooke) about the possible uses of a second channel in subsidising the arts. I agree with him to a certain extent, but not so far as to think that ITV-2 in the form usually canvassed is necessarily the answer.
I should declare a professional interest in this matter; I have no financial interest in independent television. Before I became a Member I worked for some time for a television company—once Rediffusion and then Thames Television—and on several occasions during the recesses I have been involved with its 665 series "The World at War". Therefore, I know something about the economics of commercial television, and of the pressures which bore very hard on us during the last period of financial recession in 1969–70 when the grim times through which programme makers were living were reflected in the reduced budgets within which they had to work.
Therefore, on behalf of such people, I welcome the principle of the Bill. I shall not go as far as the hon. Member for Bristol, West did in quoting from oneself, but I recollect advocating precisely the principle of the Bill in an article in the Listener in September 1969. Now, three Ministers of Posts and Tele-comunications later, we have it brought before the House.
I accept not merely the principle but, more or less, the levels in the table in the Bill set for the rate of the new levy— 66.7 per cent. on profits over the £250,000, or 2 per cent. of advertising receipts, exclusion level. A 50 per cent. increase on existing yields, although it has not been satisfactory to the companies, judging by the deputations which have waited on the Minister and earlier on the Prime Minister, is reasonable in view of the outlay involved. Therefore, I have no quarrel with the broad principle of the Bill. I think that most programme makers—and that is what I have been professionally—will welcome it because it will cushion their activity, which is supposedly the prime motive of television companies, now that the tentacles of a fresh recession are slowly closing around those companies. If there were a recession, as there appears to be now, they would not want future shifts in fortune or in advertising revenue to make them the victims of the whim of the market or of the activities of the Government.
According to calculations which I saw recently in the magazine Adweek, the companies are losing about £500,000 a week overall because of the close-down of television at 10.30 p.m., which has been unnecessarily imposed for an absurd and insignificant saving in power units, and which hits hard programmes of information which are needed in a crisis such as the present. With the three-day week smashing into advertising activity, which is ultimately a factor of the business activity which it brings to the public's 666 attention, the situation is likely to become much more serious.
I quote in passing, so that there is no doubt about the difficulties which the companies face, an article which followed a fairly detailed survey done of the advertising agencies in the magazine Broadcast on 11th January. The lady writing about the economic climate in which the companies are operating states:'Where the television companies were dictatorial and bombastic six weeks ago, they are now in trouble: peak time order books are not now packed for weeks ahead and there is a good deal of wheeling and dealing'. This was one agency media director's assessment of the current situation—and said with more than a touch of glee. ' A 20–25 per cent. cut in TV expenditure for the first quarter of 1974' forecast another.My hon. Friend the Member for Islington, East (Mr. John Grant) reminded us of the way in which the companies diversified in the last recession. Unless the Bill becomes law quickly, there will be precisely the same cut-back in programming expenditure if times are bad for the companies throughout 1974. That is why I would wish to see the Bill pass speedily to the statute book.
I want to put three questions to the Minister. First, how does he respond to the criticism which has been canvassed in many areas that it is the medium-sized non-diversified company which might be hardest hit by the change? The example which I have in mind was quoted in a well-informed article in the Financial Times written by Mr. Arthur Sandles—one of the few journalists who write with knowledge about these matters—at the end of December. He stated:Broadly speaking, it is the companies which are most profitable in relation to revenue which will be hardest hit by the change from an advertising revenue levy to a profits levy. Anglia, for example, at the moment pays the equivalent of around 24 per cent. of its profit in levy, Trident and Scottish something above one-third, but companies such as ATV and Granada already pay out the equivalent of nearly half their pre-tax profits in levy. Thus, increasing the off-take to two-thirds of profits will have far more severe implications for some than for others.I wish the medium-sized company, which has been able to keep itself free of that process of intermeshing which has slowly turned the larger companies into conglomerates, to survive and prosper in times of recession as well as in 667 good times, so that everyone of them, from Channel Television upwards, is able to make a living. Therefore, does the Minister foresee any danger for the medium-sized company which does not escape under the exemption clause but which is not in the position of the large companies or of the big five—perhaps we should call them the "big four and a half"?
Secondly, a more serious point concerns the question of policing the Bill by both the Independent Broadcasting Authority and the Treasury. To quote again the wise words of Mr. Arthur Sandles, he said:A profit-linked alternative requires companies to separate television activities from such things as programme sales abroad, the merchandising of Black Beauty and the marketing of Magpie books. Without closely-drawn legislation, the opportunities for levy avoidance could be considerable. You could, after all, set up a company making programmes and selling them at a high price to the contractor. The profit would thus be taken in a non-levy activity.That is a serious point which we should consider particularly in view of Schedule I of the Bill.
I do not propose to take up a great deal of time by going through the small print of the schedules, but there seems to be some ambiguity in Schedule I about what is direct or indirect relevant income for television contractors. Schedule I states "relevant income" means income whichaccrues to a subsidiary of the contractor in connection (directly or indirectly) with the provision of television programmes by the contractor".With the intermeshing of the larger companies, it is the provision not of television programmes in the first instance but of a number of other services through a variety of subsidiary activities and companies which often makes up the greater part of the profits of some of the large groups.
Like my hon. Friend, I do not want anything we say today to prejudice our view that an immediate inquiry is needed and that we should not extend the present system until 1981. Given that we are talking in terms of the present situation, I do not want these companies to be financially damaged to the point where they are hit in their programming. There is a problem with the present extent of diversification.
668 The public sees only the tip of the iceberg of revenue and profit if it looks at the formal outline of the companies' income and expenditure given in the IBA handbook. The latest IBA handbook, published this week, contains only one simple table, which shows that the income of the companies was derived 97 per cent. from advertising sales less levy and 3 per cent. from other sources. If one takes the companies as television companies pure and simple, that is the correct result, but in some cases, particularly in hard times, that is not so. The larger part of the profit of some of the conglomerates has come from related activities but not from the provision of television services as such. The Associated Television Corporation's annual report for 1973 acknowledges that this has been the second successive year of record profitability, but even in that year the overall profits of that group come only half from television, and in bad times in the past the proportion coming from television has fallen because of diversification, but not much more than 10 per cent.
It is fairly obvious why that happened. The media industries, the conglomerates generally, have been caught like everyone else by the extraordinary fluctuations of the market and by the cycle, the upswing and downswing, of recession and boom over the last few years, to which they have been very vulnerable. It is as a result of that and of the fluctuating advertising revenue that there has been such an increase in concentration of ownership.
I am going slightly beyond the brief of television activities as such because I wish to indicate the nature of the conglomerates with which we are dealing. There has been a concentration of ownership. For instance, the major record company in this country, EMI, which owns ABPC, Thames Television and other organisations, has also gobbled up the Golden Egg restaurant chain, the Brighton Marina and other leisure activities well beyond Thames Television. The Thomson Organisation takes a major interest in package holidays. The Rank Organisation has an interest not merely in films and broadcasting but in Butlins and has tried to take over a major brewery—Watney-Mann. Granada Television, even before its television activities, had large interests in cinemas, motorway café s and publishing.
669 I will read to the House one or two of the activities of the Associated Television Corporation mentioned in its report for 1973. That will illustrate the difficulty of policing and differentiating profits and profitability which derive specifically from the provision of television programmes, which is what ATV is supposed to do under its obligations to and its franchise from the IBA. The chairman tells us with evident satisfaction that the company was paying a dividend of 28.6 per cent. for the year, and half of its profits were coming from what is called "the Television Operation". He goes on to describe the profits of the other heads of this Hydra.
had enjoyed a splendid year's trading.Precision Tapes, the cassette and cartridge tape company, had done conspicuously well and had one-third of the total United Kingdom sales. ATV Music had gone on from Lennon and McCartney to marketing long-playing records based on the Strauss family from the television series launched by Sir Lew Grade. Many people may be buying those records believing them to be original music. The remarkable Strausses are now churning it out for the beneficent ATV.
Stoll Theatres Corporation and Moss Empiresenjoyed one of the best years in their long history".Then there is Bermans & Nathans, the theatrical costumiers which deal with all the television companies. Then there is Ambassador Bowling, and a company with the magnificent name of Planned Music, which supplies Muzack, which is increasingly being supplied to the entertainment industry. Then there is Bentray Investments, and Ansafone Holdings, of which an 80 per cent. share has just been acquired. ATC also has a small stake in the commercial radio franchise for Birmingham, although it was unsuccessful in getting the main franchise for London. It also has several other holdings in advertising agencies, insurance companies and so on.
I apologise for having to read out even an abbreviated list of the ATC holdings. It is hard to see precisely how the organisation's profits can be differentiated as coming purely from ATV. How are we to look at the holdings of that company 670 and see that the spin-off which comes from broadcasting or television production can be taken as the television expenditure of the company concerned? What are we to say about the long-playing records, the cassettes, books and all the other activities which inevitably follow?
A previous report for the Associated Television Corporation which mentions one of those expensive series which have a wide multi-national and transatlantic market had this to say of the "The Persuaders", a television adventure series featuring Tony Curtis and Roger Moore:'The Persuaders' … has been sold to more than 62 countries. American Broadcasting has scheduled the re-run of 13 episodes … the theme, composed and recorded by John Barry, has sold more than 116,000 records in the United Kingdom, Pan Books have sold 180,000 paperbacks based on the series".In other words, the diversification of interests based on the major enterprise of launching a television series with this mass appeal is very great. There is much evidence to show that diversification is continuing apace.
The people who are concerned with creative innovation and who would most welcome the principle of the Bill have reasonable cause for concern in thinking that the major conglomerates may be encouraged to go their way with diversification, aiming at the "Musak" style which is what the conglomerate needs to retain its market. There will not be the protection we want to see for original broadcasting and original television transmissions, the innovations which need protection. That always happens when the accountants take over from the programmers, and we shall not stop it so long as we have the present pattern of ownership.
The men who run ATV, the amiable Sir Lew Grade and others, are highly intelligent and shrewd. If they see the Bill as a major incentive to put money into television and that they will be better off as a result, they will do it. What we are afraid of is that operations will continue as they are at the moment, except that the basis of levy has changed, and that there will be no significant gain for the United Kingdom from the original talent that is bursting out of ITV and elsewhere.
671 I turn to consider what might be done with the levy. Let us hark back a little on the story of the levy. When it was first put on, mistakenly in my view, the Government of the day and the then Postmaster-General, Mr. Bevins, saw fit not to accept the Pilkington Report but to take, as it were, conscience money out of ITV back in 1964. Should we be saying that the Treasury should take the whole of this £33 million, the sum which notionally we could have been talking about for 1973? Clearly the Treasury will answer "Yes", and we must remember that a Treasury Minister opened the debate today.
Perhaps the mistake made by the Bevins regime and what followed under both Labour and Conservative Governments lies in the clear distinction between revenue and its source. We might have benefited the country greatly by seeing that some of the money taken in levy from ITV was put back.
The hon. Member for Bristol, West referred to the fourth channel. It is true that on some estimates already given for the fourth channel one could run it—whether run by ITV or run under the auspicies of the IBA or some other organisation—on an annual budget approximating to the total which a profits-based levy would give, namely, a sum of £33 million or £35 million. However, in the present economic climate the introduction of the fourth channel in any form, under any management, would be political indecency. I do not believe that, in a period of mass inflation and near-national emergency in economic terms, we should devote that revenue to the launching of a fourth television channel.
§ Mr. Robert Cooke
I think that the hon. Member for Derby, North (Mr. Whitehead) and I are at one. Will he concede that if a positive decision on a fourth channel for ITV were made this year, the cost to the taxpayer would not happen all at once? It would probably occur two years from now when we look forward to better economic times, when there might not be any cost involved and when the taxpayer would do better out of the arrangement.
§ Mr. Whitehead
There would be a cost which would be spread. What I would debate with the hon. Member for Bristol, 672 West is whether the ITV companies should have this largesse and whether they are fit and proper people to run a second television channel. There are some signs, particularly in the new regime at IBA, that the existing channel is being run better than it was run before. However, I should like to see more evidence of that before we entrust them with a second channel.
Much of the special pleading which has been put forward for a second channel is somewhat specious when set against the arguments for an independent and experimentally-based channel. I hope that in any event we can at least expropriate some part of the money drawn from the profit-based levy for experimental purposes of one kind or another. I should have thought that we could look at the notion—I give the Minister notice that I shall raise this matter in Committee—of a differential rate for educational programmes or programmes designed for the particular markets in this country. I refer to non-mass markets and not the sort of programmes which independent television likes to make catering to the largest possible audiences here and abroad.
Is there not a case for saying that there could be some diversion of levy funds towards meaningful experiments in cable television? The Minister's ear has been bent on many occasions by the Cable Television Association in which the same or other conglomerates such as Rediffusion and Radio Rentals hold the majority slice of the entire market. They are well prepared and, similar to the ITV lobby, are saying seductively that it would not cost anything if they were left to go ahead under their own cable television council, licensed by the Minster with rolling contracts and providing separate services from separate companies. But I fear that separate companies which would be within the ambit of the present conglomerates with an intermeshing of soft-wear would create far greater difficulties than many of us would like. There might be a case for saying that a not particularly significant sum could be allocated to experimental stations in cable television which were securely based on this sort of revenue and no other.
I welcome the Minister's experiments although I think they are rather fragile. I 673 should like to see more of them and initially I should like to see them free from the ambitious conglomerates which want to take them over.
I should like to see some part of the new levy diverted to what, broadly speaking, can be termed the interests of broadcasting and mass communications. I should like to see more research backed by the Government into the question of the effect of television. That research would come as well from this source of revenue as from any other.
We argue a great deal in this House and usually take a partisan view on one side or the other about the effects of television—about politics on television, violence, sex and so on. We know little about the effects of television in those areas, and we spend less than other countries in finding out. In future I should like to see greater expenditure in an examination of those areas aided and abetted by the Government. The levy can be said to provide one source of revenue for it.
The Bill provides an excellent opportunity to get away from the worse effects of the intermeshing in commercial television and the application of mass market tastes in both national and international markets. This is a matter in which both the Government and the IBA can assist by the judicious use of money from the levy and by a careful policing of the way in which the new profit-based levy is put on.
I do not believe that there should be a Division on the Bill, and I should like to see the measure go quickly through both Houses of Parliament. However, we must realise that it will not achieve the results for which we are hoping without the greatest possible care and vigilance in its application.
§ 6.8 p.m.
§ Sir Paul Bryan (Howden)
May I declare my interest as a Director of Granada Television and also of the company which has been allotted the radio franchise for the Greater Manchester area.
§ Sir Paul Bryan
This debate has taken the form of an extensive tour of the broadcasting horizon and is all the more 674 interesting for that. I shall keep rather more closely to the Bill.
The Bill affects the IBA and television companies in two important ways. First, it increases the amount of levy that is to be extracted from the companies; secondly, it alters the system by which that levy is to be calculated.
I will start by dealing with the second of these changes. The present levy system has been frequently criticised, not only as clumsy but as arbitrary, in that it is based on the Minister's own judgment of the proportion of advertising revenue he thinks right to take from the companies. This has always proved a difficult, almost impossible judgment to make.
The last three months have shown once again how erratic and unpredictable advertising revenue can be. In November all was set fair. January now looks like being down by 25 per cent. The future is one large question mark. The hon. Member for Derby, North (Mr. Whitehead) said that the companies were calculating a 25 per cent. reduction in the first quarter of this year. I have found nobody is prepared to forecast as far ahead as that.
This has all happened before. Over the years the levy has tended to go up as profits go down, and vice versa. Not surprisingly a number of people, including the hon. Member for Derby, North began to suggest that a levy based on profits would be more equitable. This idea was always dismissed by the Treasury precisely on the grounds we have just heard from the hon. Member for Derby, North—that profits were hard to define in television companies which had diversified widely into activities ranging from publishing to zoos. I cannot see why the hon. Member for Derby, North went into this matter at such length; this is the admitted difficulty that the Bill is supposed to have overcome.
It has always been said that it is too easy to channel costs into the television companies and profits into the subsidiaries. The Bill reverses this assumption. What was regarded as impossible has apparently now become possible. The IBA has had something of a victory. It has convinced the Government that it can police the company accounts sufficiently to identify profits justly. The companies have at the same time acquired 675 sufficient confidence in the authority—especially in Mr. Curbisley, the Director of Finance—to accept that they will get a fair deal. This is the new situation.
I think that the companies are far less happy about the power given to the IBA in Clause 3 of the Bill. This clause will have to be improved in Committee. The IBA is given well nigh dictatorial powers over what is termed "excessive expenditure". Who in this creative field can presume to specify what is excessive expenditure? Every company will have a different and sincerely held view.
At Granada the cost per hour of "State of the Nation" was something like 20 times the cost per hour of "What the Papers Say" and several times the cost per hour, no doubt, of "Coronation Street". The cost per viewer of "State of the Nation" must have been astronomical. It was shown at half-past ten at night when there was a minority audience. Was the cost of that programme excessive? Probably we in this Chamber would think not. The IBA would think not. But the shareholders could reasonably think that it was. Who is to make these judgments?
Let us take as another example, the highly successful Thames production "World at War". I believe it cost about £900,000. Some companies would say that that was too much. Others might say that they would have spent even more on it. Who can claim to be right in judgments of this sort?
Every company has its own ideas of how money should be spent. This is an aspect of the one undeniable virtue of our ITV system—the variety which comes from the real and wide differences in the characters of the 15 component companies. This variety makes nonsense of Clause 3(2)(6), which says that the authority, in deciding what is excessive, shall have reference in particular tothe scale (if any) on which any comparable expenditure has formed or is expected to form part of the relevant expenditure by reference to which the additional payments of any other programme contractor or any current accounting period of his have fallen or are expected to fall to be calculated.This strange English indicates, I believe, that all companies should have similar views on how to spend money and that companies' practices should be compared 676 one with another. The indefinable word "excessive" clearly should be replaced by the word "unjustified". In practice "unjustified" would still be hard to define, but at least it would sound more sensible.
The Bill anticipates that difficulty in paragraph 3 of Schedule I which lays down under the heading "Disputes" that, amongst other things, the amount of any profitsshall, in the event of a disagreement between the Authority and the programme contractors, be the amount determined by the Authority.It goes on in subparagraph (2) to say:No determination of the Authority under this paragraph shall be called in question in any court of law, or be the subject of any arbitration'.This appears to be a quite unacceptably arrogant posture for the authority to adopt or to be made to adopt by the Bill. In disputes the authority is always deemed to be right. I can think of nothing more likely to sour relations between the authority and the companies. There should be some right of appeal or arbitration in disputes, which could involve significant sums and lead to quite important precedents.
In this debate, certain consequences of the new profits-based levy should be noted. The new levy makes the Government not merely a senior partner but a completely dominant partner in independent television. The 67 per cent. levy combined with corporation tax means that of every £100 earned in profits the company keeps £17 and the Government gets £83. The Government are in the undreamed-of position of an investor who gets 83 per cent. of the profits, stands no losses and has no need to worry about losing capital through share slumps. That should bring joy to the Opposition. It is the nearest that they have seen so far to that unique phenomenon, a profitable nationalised industry.
The Government's stake in television should be one of the factors considered in deciding the future of the fourth channel. At a time when the use of national resources is under scrutiny, the fullest use of existing resources is equally important. The report of the National Board for Prices and Incomes pointed to the spare capacity in the ITV companies. Since then, the IBA has spent large sums making engineering provision for an unused fourth channel. I agree with my 677 hon. Friend the Member for Bristol, West (Mr. Robert Cooke) that the requirement for a second ITV channel is becoming more and more apparent. BBC-2 is developing a bigger audience without any loss in quality. In the end, I believe that competition on the two-against-one basis will become impossible and that in the end will be bad for television.
§ Mr. Whitehead
It is adopting strong language to use the word "impossible". In what sense is the companies' position impossible when they remain, as they are and will be, monopoly sellers of advertising space?
§ Sir P. Bryan
With two channels against its one, in the end ITV will get too small a share of the market unless they debase quality standards. I believe that it will make for better television when ITV can have a second channel.
Another consequence of the profits-based levy is to make television a safer investment but probably less attractive to a newcomer. It is safer in that in future a levy will not have to be paid unless a profit has been made, which must be good news from the point of view of the hon. Member for Derby, North, who wants to help the medium-sized companies. It is less profitable in a year of high advertising revenue, because at the top end of the scale profits rise faster than advertising revenue. I merely point this out to warn the Minister that, should the time come when he wishes to invite newcomers into the industry, I should expect fewer takers than appeared in 1968.
This debate is mainly about a new method of raising the levy. I should like my right hon. Friend also to clarify once and for all Government policy on the spending of the levy, which again is a matter about which the hon. Member for Derby, North wishes to know.
Deposited as it is in the bottomless pit of the Consolidated Fund, I have always assumed that the levy joined the proceeds of all other taxation to be used for the normal requirements of the Government and that it could be used for no other purpose. Since 1964 no less than £196 million of levy proceeds has been dealt with in this way. plus some £200 million from normal tax. However, this 678 does not discourage a succession of optimists coming out with their own plans for the spending of the levy. When the BBC runs short of licence money, it will not be long before somebody—not the BBC—suggests that a dip into the levy money will solve everything. In a number of plans suggested for the fourth channel, finance is based mainly on the assumption of a contribution from the levy.
It would be useful, and would probably save future disappointment, if the Minister would clearly state whether such a use of the levy is a possibility or whether, as I would expect, it is against all Treasury intentions or principles.
§ 6.20 p.m.
§ Mr. John Golding (Newcastle-under-Lyme)
Several of my hon. Friends have welcomed the Bill but I do not find it difficult to contain my enthusiasm. The Bill will only tinker with the financial structure of independent television. There is much virtue in having a system whereby advertising revenue is paid directly to the Independent Broadcasting Authority. It would be better if we were to reach that ideal.
I am sorry that the debate is taking place in the absence of an inquiry. I regret that the Minister of Posts and Telecommunications has not seen fit this year to issue a Green Paper or a White Paper on the future of television. Such a document is badly needed. Without it we shall have a succession of debates this year on television which will not be strictly related to one another. I say this to caution my hon. Friend the Member for Derby, North (Mr. Whitehead) who asked for a speedy passage of the Bill. If the Bill is to provide the only opportunity to debate the central issues of television at present, that opportunity must be taken. It would be better if we were to have a coherent policy presented on the future of television, but in the absence of that I urge that we take this opportunity to debate the matter.
§ Mr. Whitehead
My hon. Friend should realise that the fact that I am in favour of springing the trap quickly does not mean that I do not think there are other ways of cooking the rabbit.
§ Mr. Golding
The Government have a habit of putting wrong labels on legislation. There is a wrong label on the Bill.
679 The long title of the Bill states that it is to:Make further provision as to the payments to be made to the Independent Broadcasting Authority by television programme contractors; and for purposes connected therewith.The title does not state that as soon as as the IBA receives payments they will have to be passed on to the Treasury. The title should have stated that it was a Bill to provide for payments to the Treasury. That would have been more truthful than what is stated.
Let me not say that I am disappointed by the title. It will enable us to debate in Committee another aspect of the Independent Broadcasting Authority's function, namely transmission. The Independent Broadcasting Authority receives its payments from the television programme contractors by way of rental, not levy. The rental payments are made for the use of the IBA's transmitters. I understand that in 1971, when the scale of the levy was reduced on 26th February, the authority seized the opportunity to increase the rentals. What assurance do we now have that when the levy is increased the IBA will not return some of the money to the programme companies by way of reduced or uneconomic rentals?
I do not wish to deal with the matter at length in this debate, but in Committee I shall want to know why last year the IBA needed to withdraw £40,000 from reserves because the revenue account surplus was insufficient to pay the needs of capital expenditure and the increased cost of depreciation. In Committee we must look at the receipts which the IBA has from the programme contractors to spend itself. We must concern ourselves not only with the receipts which are handed over immediately to the Treasury.
The levy on revenue has generally been condemned, partly because in bad times programmes have been squeezed. That was recognised by the Select Committee on Nationalised Industries, on which I had the privilege to serve. In better times, when the levy has been reduced, expenditure on programmes has not been increased. Many of us have been trying to ensure that more money is spent on certain programmes.
My great doubt about the levy on profit is the doubt which the Minister of Posts and Telecommunications expressed 680 when he appeared before the Select Committee on Nationalised Industries. He said:A levy related to profits might not be wholly enforceable in practice.I quote the Minister's words because I shall be interested to hear him explain tonight how he has come to change his mind.
The Select Committee was concerned about avoidance, as the Prices and Incomes Board was concerned that such a levy would not lead to the avoidance of excessive costs. I believe that the IBA is ineffective as a controlling organisation. Faced with the programme companies, the IBA could not knock the skin off a rice pudding. It appears to be totally ineffective.
I share the view of my hon. Friend the Member for Derby, North that it is possible that the standard of programmes on independent television has improved during the past year. In my view this is due not to the IBA but to the fact that programme contracts are coming to an end. I would expect programmes to improve dramatically towards the end of contract periods.
The Select Committee was concerned that any method of calculating the levy should take account of the need to spend adequate amounts on programmes with a minority interest. I take the point made by the hon. Member for Howden (Sir P. Bryan) when he said that the word "excessive" should be replaced by "unjustified". I say that because the problem is not one of ensuring that sufficient money is spent on popular programmes, on entertainment programmes. It is clear that the companies lavish a great deal of money on them and that they pay great attention to the prestige entertainment productions. The problem in television is not to see that more money is spent on those programmes but to see that adequate money is spent on the minority programmes.
How will the Bill make it more possible for the IBA to insist on the balance of programmes which the Select Committee found to be absent? Our basic concern must be with the standard of television. The Treasury hawk has spoken and left. We expect him to be concerned only with revenue. But the Ministry of Posts and Telecommunications dove has yet to 681 speak, and we expect in his cooing tonight to hear how the Bill will improve the standard of television. That must ultimately be the responsibility he shares with the IBA.
Payment of the levy raises the question of the fourth channel. What representations have the companies made to the right hon. Gentleman that an increase in levy will make it more difficult for them to have and finance the fourth channel? What difference does the increase in levy make to the arguments about the fourth channel? We on the Opposition benches absolutely oppose the allocation of the fourth channel until the Minister has conducted that elusive inquiry.
We await the right hon. Gentleman's speech with interest. I am glad that he is to wind up the debate, because we are keen to hear his answers to the questions put to him from both sides of the House.
The Bill will have a speedy passage only if the Minister's answers are satisfactory to us on the future of television. We on this side are not concerned solely with putting revenue into the Consolidated Fund. The spokesmen for the Opposition will be concerned with the future of television, not solely with the raising of taxation in this way.
§ 6.34 p.m.
§ Mr. Wyn Roberts (Conway)
I should like to comment on every speech that I have heard in the debate, but I shall refrain from doing so and limit myself to one or two points.
The 10.30 p.m. curfew and the possible effects on employment of the cut in programming have been mentioned. I understand that, although there has been a cut of 20 per cent. in total ITV television time, the cut in locally-originated, British programmes is only 13 per cent. Therefore, efforts are clearly being made to protect employment.
Mention was also made of the London Broadcasting Company's problems. Its new schedule has not yet been approved by the Independent Broadcasting Authority, but I understand that rather more money is to be spent on the new schedule than was originally to be spent on the schedule promised by the company.
682 I welcome the Bill. Like the hon. Member for Derby, North (Mr. Whitehead), I was among those who canvassed the idea of a levy on profits rather than on revenue three years ago. From my personal experience of the television industry I recall the deleterious effects on programming of the introduction of the levy in 1964. The increase in 1969 also had a deleterious effect. That increase was used as an excuse by some companies for the non-fulfilment of the promises they gave in obtaining their licences. It was a very reasonable excuse, as excuses go.
The Bill should help to make ITV production and programming more independent of the ebb and flow of advertising revenue and give them a more consistent quality. It should also give more security to those involved in programming, not so much security of personal salaries as security of programme budgets.
As a former producer, I know just how jealous creative people are of their programme budgets. The creative people in ITV should have an enhanced status as an indirect result of the Bill, because to a certain extent they have been dissociated from the profit motive, the main profit drive, in ITV. While the Bill may not contain direct encouragement to spending on programmes, it seems to me that the discouragement will be less in difficult times. Money is not everything in the provision of programmes but it can contribute a great deal towards programme excellence. Money should always be available if it is required for programme purposes.
It has taken the Government quite a long time to come to the conclusion that a levy on profits is practicable. Perhaps the cause of the delay was the persistent doubts of the Treasury as to whether a system of levy on profits could be devised that was not open to abuse.
I have already suggested in an intervention that, further to Schedule 1, the IBA should produce a code which gives in greater detail what is relevant income and expenditure. I do not think that it should be an immutable code. It cannot be that under the Bill, because the IBA has the final word. But a document should be available not only for the programme contractors but for the public, so that we may all see the position clearly 683 and see what is permissible expenditure and what is not.
The IBA is in a position to do that. I believe that it has powers under the main Act to ask the programme contractors for details of programming costs and so on. I am sure that the authority has been doing this over the last few years and that it knows perfectly well what is and what is not relevant expenditure. I think that some of the fears expressed by the hon. Member for Derby, North about abuses are unjustified.
At the same time I disagree with my hon. Friend the Member for Howden (Sir P. Bryan). I think that there has certainly been a time in the history of ITV when we all thought that the authority did not have enough power over the companies. That situation has been changed. I am not convinced that a right of appeal should be provided within the Bill. I prefer to leave the authority with the final word.
The immediate prospects for the industry are not bright and there are those who feel that the present time may not be the right time for launching ITV-2. But I am convinced that this is the time for a decision on the fourth channel, even if the circumstances for acting on that decision are not propitious. There is a general consensus that fairness demands that the IBA be given a chance to show that it can produce a service as attractive as BBC-2.
I wish to deal with the Welsh aspect of the decision on the use of the fourth channel, which has a stronger bearing on the British national decision on the use of the channel than many hon. Members might think. There is a powerful lobby in Wales which is for putting all the Welsh language programmes now on BBC-1—or BBC Wales as we call it—and on ITV-1—or HTV—on the fourth channel, thus creating a combined BBC-ITV Welsh language service, plus some filler English programmes, preferably of Welsh interest only.
The composition of that powerful lobby is curious to say the least. The originator of the idea was, I believe, the Welsh Language Society—Cymdeithas yr laith Gymraeg—whose motivation was the preservation of the language and the further promotion of Welsh national consciousness.
684 The Welsh Language Society has now been joined by representatives of the non-Welsh-speaking majority of viewers. I believe that the hon. Member for Pontypool (Mr. Abse) has played a leading part in this move. Of course, they wish to have the Welsh programmes removed from their screens because they do not understand them and regret missing the English programmes that the Welsh programmes have replaced.
The BBC, for reasons which do not require much divining, tends to favour this combined use of the fourth channel in Wales. I believe that there is an element in ITV in Wales which also favours it, although ITV as a whole presents a united front in favour of exclusive ITV use of the fourth channel.
How has this situation come about? It is important that the House should have this statement on the situation in Wales. For years the BBC and ITV in Wales presented Welsh language programmes as part of their normal main channel programming. While there were alternative services available for viewing on VHF, there were not many complaints about the Welsh programmes from the non-Welsh-speaking majority. But after the transfer of service to U.H.F. and the consequent elimination of alternative viewing, the complaints have poured in to the broadcasting organisations.
Although there is this strong lobby in favour of isolating the Welsh programmes—it includes some notable establishment figures who have leapt on to the nationalist band wagon—there are others, such as Professor Jack L. Williams, Dean of the Education Faculty of Aberystwyth University College, who are strongly opposed to isolating the language on a channel which 90 per cent. of the population will probably never view. Professor Williams believes that there is no hope for the language to survive if it is relegated to a special service for the few as opposed to having an honourable place as a national language on our main television channels in Wales.
I supported the view that Welsh programmes should be on the main channels and I practised it during my years in the television industry. But I wavered in my belief in its Tightness when I saw a younger generation of ardent Welshmen criticising the system and demanding the isolation of the language on a separate channel.
685 The decline in the number of Welsh speakers between 1961 and 1971 was also a factor leading to my change of view. Whether we are stepping from the frying pan into the fire, I frankly do not know. I eagerly await the Crawford Committee's report which will, I hope, contain a clear assessment of the arguments. Certainly we must take the greatest care in deciding about the allocation of the fourth channel in Wales.
I have mentioned this matter because the financing of ITV-2 is related to the Bill. We have had a number of suggestions, some of which I approve, about the matters that might be financed by this levy.
The hon. Member for Derby, North talked about the need for more research. I agree with him on that aspect and on the need, which I have already stressed in this House, for an extension of the cable television experiment.
I should like to see some research carried out on the effect on the viewing public not of violence, but of intensive news coverage such as we get these days through the media. My impression is that the newsmen's neuroses are rapidly being transferred to the public because we are getting, if anything, too much news coverage.
Finally, I return to the subject of the decision on the fourth channel. Whatever may be the problems of the fourth channel in Wales, I do not think that they should delay the making of a decision on the use of the channel in the United Kingdom as a whole.
§ 6.50 p.m.
§ Mr. A. J. Beith (Berwick-upon-Tweed)
As a relative newcomer to the House I have had an object lesson in debate from a number of hon. Members who have spoken, ranging from the eloquent pleading of the hon. Member for Bristol, West (Mr. Robert Cooke) on the commercial interests to the insiders' views which make me feel an inadequate contributor. I am thinking of the hon. Member for Derby, North (Mr. Whitehead), whose knowledge and experience are well known. The hon. Member for Conway (Mr. Wyn Roberts) knows that I speak his language but will forgive me if I do not tread into the minefield of the Welsh use of the fourth channel.
686 I am pleased that the Minister is in his place because our usual alternate Monday exchanges end with the predictable refrain about the Crawford Committee which could almost be set to music. I hope the right hon. Gentleman will also be pleased that I am able on behalf of my colleagues to give a welcome to the principles which lie behind the Bill. We feel that it is a move in a necessary direction.
One does not have to go back far to remember a phrase which one noble Lord will, I am sure, have regretted for many years afterwards about a "licence to print money" which, in a way, started off the whole levy business. The Bill retains that purpose but it also has more important objectives which can be better utilised in the form now proposed than in the form we have had to date, a purpose which may help to bring out the best in commercial television. If the provisions of the Bill can encourage the putting of money into programming rather than the distribution of profits, television will be the better. If the provisions act as an incentive to those companies which make that an objective of policy, we shall all benefit.
The references to Clause 3 which started with the hon. Member for Islington, East (Mr. John Grant) and were taken up by other hon. Members are worth noting. I should like the Minister to spell this out more clearly. To what extent can the provisions of Clause 3 be used by the IBA to look at the appropriate programming expenditure of the companies? Is there any risk that too detailed an examination of whether the companies are spending such money usefully might be ultra vires their responsibilities?
Indirectly the provisions should encourage regional programming, which is not a subject to which any hon. Member has referred tonight, except, obliquely, to Wales. This is where one of the major contributions to the medium-size and smaller programme companies will fall, since they will put their money into programmes for regional screens only or programmes of regional interest which will find their way into the network. Commercial television has improved the level of regional programme production, an area in which competition in broadcasting has been fruitful. The 687 BBC now takes a full part in that competition, sometimes from a weaker financial position than the regional ITV company. But it is an area in which ITV has done some valuable pace-setting.
What I have said about regional programming applies particularly to smaller companies like Grampian and Border, whose symbols are not seen on network screens by hon. Members in other areas but which provide locally a service of considerable importance in terms of news and current affairs. Companies like Border are exempt from the levy because of the low level of advertising receipts, and on the proposed scale and in the present circumstances such companies are likely to be exempt for some time to come, even in the levy's new form. Companies at the margin ought not to face a disincentive under the new system.
For small companies the present situation is having serious deleterious effects on their programming prospects. Clause 4(3) gives the Minister an opportunity by Order in Council to apply the Bill to the Channel Islands. The question is academic because the level of profitability of Channel Television will not bring it anywhere near the scope of the levies proposed but will provide the Minister with an opportunity to say what will happen in the Channel situation and whether we are to watch a useful local concern go under.
This may not be the last word—I hope it is not—on the use of financial controls in a constructive way. Many hon. Members will agree that the contract-letting procedure is a crude and blunt instrument for trying to improve or monitor the programme quality of television companies. It has an excessive dependence on promises and names on the notepaper and relates little to whether the goods can be delivered. I hope that the Department concerned, as well as hon. Members, will consider whether the provisions offer an opportunity for later refining which would enable the financial means to be a method of monitoring and having some effect on the amount of money which goes into programming rather than the distribution of profits and the way that money is spent. I am talking not about interference with the content of programme but about examining the effort that companies put into programme production.
688 To talk about refining a device like this is to illustrate that commercial television has been subject to a system of safeguards which in many instances has been inadequate, but it was a system which owed something to the very bitter debate within which commercial television was born. One recalls the late Lord Reith remarking that somebody introduced the bubonic plague into this country and that now someone had managed to introduce commercial television. We have come a long way since then, but the bitterness of that debate helped to build some safeguards.
This is not an ITV Bill—it is the Independent Broadcasting Authority Bill; the Government have transformed what was the Independent Television Authority into the Independent Broadcasting Authority in rather a hurry and with scarcely any permission from it and certainly with little consultation. Will it be long before we have another IBA Bill to sort out the financial arrangements of the radio side or the authority's responsibilities?
One wonders whether an opportunity has been lost—if not, perhaps it will appear in another form—and whether the radio side will lurch from problem to problem with nothing like the time scale and the mellowing period we have had with commercial television. When in government the Labour Party was in a panic to get BBC local radio off the ground before another party had an opportunity to do something different. That part of the process was rushed. The Government have moved with great speed to get commercial radio under way, not forgetting the commitments which the hon. Member for Howden (Sir P. Bryan) entered into successfully while the Conservative Party was in opposition. The results of this have meant that, while many areas have a wide choice of local and regional stations, others, like mine, have none at all.
It has also led to a situation which, in commercial terms, many Tory Members would regard as odd. I cannot think that many hon. Members opposite, with their considerable business experience, would regard the London Broadcasting situation, its franchise and opportunities as a commercially sensible proposition.
Will the rental income of the IBA, which has been referred to, be sufficient to deal with some of the transmission 689 problems on the television front which are exacerbated because, as a result of local radio changes, people can no longer get their local news and regional information through the medium of radio and find their only source is television? I hope the Minister realises that he may have to spend some of his levy money, dragging it back from the Consolidated Fund, to bail out the IBA when new transmitter demands are being placed on it.
I welcome the Bill but echo the thoughts of many hon. Members that in reality it may not be long before other aspects of the IBA's activities make it necessary to have another Bill to pick up some of the pieces.
§ 6.59 p.m.
§ Mr. Jeffrey Archer (Louth)
I congratulate my right hon. Friend the Minister on bringing forward the Bill. I join the hon. Member for Derby, North (Mr. Whitehead) and others in hoping that it will have a speedy journey through its stages and soon be an Act. I welcome the Bill personally.
From both sides of the House there has been immense criticism. This sort of debate has a tendency to bring out criticism rather than praise. The standard of independent television is higher in Britain than in any country. That is something of which we can be immensely proud. Opposition Members spoke of the news. The standard of ITV's "News at Ten" is an example to the entire world of how a news programme should be done. All of us see prejudices, and Reds under beds and Fascists on top of them. But that particular programme is very fair and even. It sets a standard for the whole of independent television and for the BBC.
The hon. Member for Islington, East (Mr. John Grant), in his elevated position, said that many Conservative hon. Members were worried about Left-wing views. Indeed, even some of us who are described as liberal are worried about views that are extreme in any direction. I had an example of that. Sometimes one's Right-wing constituents say "They are all Communists running the BBC and ITV." One gets tired of hearing that. One takes it and dismisses it. However, I want to repeat a story. I have not had permission to use the name of the person concerned. If I can get permission I shall 690 reveal it. A friend of mine who was a leading Socialist at Oxford made a statement on radio recently which was a little naughty. It was a bit too much to the Left. His views were being asked not in a political sense but in a legal sense. I said to him "That was an interesting statement, but you brought politics into it without revealing that you were a well-known Socialist in the sense that you were interested in and supported the Labour Party." He said "Gosh, that was only half of what they wanted me to say. They wanted me to run down the Government and talk about the Government s relations with the courts." He went through a list of things.
Had it not been that the man telling me about this was a Socialist and a man whom I greatly respected, I would have dismissed it. But, in view of that, I believe that there is a necessity to watch very carefully the power in television. We know only too well that a statement made on television is very hard to refute in any other medium, and that, therefore, it is a most powerful medium.
I agree with the hon. Member for Derby, North in his comment on overseas sales. We have certain television programmes of which we can be immensely proud. The "Forsyte Saga" is a classic example of a wonderful series which was then sold world-wide. Since then our television channels have brought forward the most amazing series and with very high standards. I agree with the hon. Member for Derby, North in hoping that we shall make every effort to give more opportunity for these series to be used properly, not only because they are of great advantage for our revenue but because they set a very high example for television, for which the rest of the world is full of admiration.
I join my hon. Friend the Member for Conway (Mr. Wyn Roberts) in hoping that the Minister will be a little more open-minded about cable television. The Minister appears—I say this with great respect—to have been slightly introvent and slightly hidden. Cable television could be a very exciting proposition. But other countries are going well ahead of us. We should examine this subject properly and stop fiddling about with it in London and pretending that we do not know anything about it. If we are to be an enterprising country, we shall have to be on top 691 in enterprises such as this, and not behind others.
My right hon. Friend the Minister will forgive me for dealing with something about which I feel strongly—the Belmont decision. Thirty-two Members of the House, representing about 500,000 people, feel very strongly about that decision. If I may say so, Mr. Deputy Speaker, you know as much about the decision as any of us in the House. There is an example here of how the two major parties have come together strongly. There have been no party divisions. I am not among those of either the extreme Right or the extreme Left who think that one should never praise the Opposition. The lead and example given by the right hon. Member for Grimsby (Mr. Crosland) brings credit to the issue over which we are fighting. I intend to repeat the arguments about the issue in order to drill them once and for all and finally into my right hon. Friend's head—though I believe that within that head he would like to say what he really believes. But, briefed carefully by gnomes from the civil servants' office, he is told just how far he can or cannot go. He grins and smiles, but never says what he really means.
Having listened to the Leader of the House on this issue—he let it slip at the Dispatch Box—and to the Secretary of State for Northern Ireland, who made a public statement about it, I believe that it is time for my right hon. Friend the Minister to say that he has looked at both sides of the issue and decided to say "To hell with my civil servants—this is what I believe." Does not my right hon. Friend consider it amazing that 32 Members of Parliament, from both sides of the House, have come together and have allowed the right hon. Member for Grimsby to present their case without any prejudice? Is not that alone an example of where a Minister should say "I must do something more than just nod my head"?
The argument is simple. Yorkshire Television has its headquarters in Leeds. By nature and birth it is for the people of Yorkshire and of Leeds. We who represent constituencies ranging from Grimsby down to the Isle of Ely and further will in future not be allowed to watch Anglia Television, which is the television company that genuinely represents 692 the area, headquartered in Norwich, and Yorkshire Television will be forced upon us.
I admire the Yorkshire people. They have a second-rate cricket team and a good football team. Though they always say that the world's capital is Leeds, or, if not Leeds, Hull, it is time that they realised that we in Lincolnshire have had enough of that attitude. The Yorkshire Television Company is run very efficiently. Its chairman, James Hansom, is a first-class man. But I do not want Welsh television or London television for my area. Wales and London are just as far away in attitude and personality as Yorkshire. We are having Yorkshire Television forced upon us because of a decision made by Lord Aylestone and his wonderful committee. The decision is that 500,000 people will watch Yorkshire Television, having no say in the matter. Why do we have to watch Yorkshire Television? Why can we not continue watching Anglia Television? We do not have a genuine reply when that question is asked of us. All that we can say is that it is the whim of one man—no less a person than Lord Aylestone.
I note the sighs coming from the Opposition benches. I should like to thank the hon. Member for Rutherglen (Mr. Gregor Mackenzie) for his generous support in trying to find out what the issue was about and for helping us with it. I was going to suggest that if the Minister were to appoint the hon. Member for Rutherglen as chairman of the IBA, that would serve many purposes for the House. First, the title "Lord Rutherglen" is one that would suit him; second, we could get rid of Lord Aylestone; and third, there would be a by-election in Rutherglen that would show that we do not need to hold a General Election. Those are three good reasons for getting rid of Lord Aylestone.
I come to the crux of the matter. Many of us have made this case. The right hon. Member for Grimsby will agree with me on this matter. In the past he was greatly supported by the late Member for Isle of Ely, Sir Harry Legge-Bourke, who put up a very strong fight. He was very determined. Three or four months ago, just before his death, I was receiving letters from his bedside saying "Tell them this is what my people want and this is what they must get. Go 693 on fighting. As soon as I am out of bed I shall come and fight with you." Those were the sort of letters I was getting right up to the end.
We have placed our argument before Lord Aylestone, and it appears to have had little or no triumph and so we make one last plea which we genuinely believe is fair. Yesterday and the day before the Crawford Committee has been in my constituency while travelling up and down Lincolnshire. The committee is listening to the views of the area. Soon it will come to the House of Commons to hear the views of the 32 Members. On behalf of those 32 and as secretary of that group I shall make a pledge which I am sure will be supported by the right hon. Member for Grimsby. If the Crawford Committee says that we are wrong, if it says we have no case and that we should drop it, we will stop arguing and we will allow that committee to be the decision makers. On the other hand, if the Committee says that our case is right, that we have been misrepresented, and that the 500,000 people we represent are not getting a fair deal, and if the decision is made before Sir Steward Crawford announces the result, many of us will return to this House and demand an explanation.
We ask of my right hon. Friend the Minister only one thing. He must instruct Lord Aylestone that he should not give out the contract until Sir Stewart Crawford has made his decision. We shall abide by that decision, and we shall be the first to go to our newspapers and to our people and say that an independent man—independent of the Government and of Lord Aylestone—says that we are wrong and, therefore, we stand back. If, however, he says that we are right we shall insist that action is taken.
In the past my right hon. Friend has adopted the attitude that he is unable to insist with Lord Aylestone that a particular course of action should be taken. We accept where the dividing line is between being a Minister and being the authority over the IBA. But instead of doing what we suspect he has been doing—telling Lord Aylestone behind closed doors that this is what he would like—my right hon. Friend should agree in this House to wait for the Crawford Committee's report. I do not believe it will take more than a month. The committee will be listening to us in the next 694 few days. When that decision is made we shall stand by it. However, we insist that Lord Aylestone stands by it, too.
I warn my right hon. Friend that if he fails to do that I shall insist upon his resignation. I insisted upon the resignation of his predecessor, my right hon. Friend the Member for Chichester (Mr. Chataway) and I got it a week later. They made him a Privy Counsellor. I then insisted in another speech on the resignation of my hon. Friend the Member for Woking (Mr. Onslow). I got it a week later, and they gave him another senior position. Therefore, not only should my right hon. Friend appoint Lord Rutherglen—[Interruption.] I give way to Lord Rutherglen.
§ Mr. Gregor Mackenzie
Perhaps I could suggest that the hon. Member might ask for my resignation as well.
§ Mr. Archer
Maybe if I finally ask for the resignation of my right hon. Friend the Minister he will then be moved into the Cabinet.
My right hon. Friend will be replying to many serious speeches. I hope that tonight he will get up at the Dispatch Box in the way that my right hon. Friend the Leader of the House did—he made a mistake but he did not lack the courage—and say that he will tell Lord Aylestone that he must wait until the Crawford Committee has decided and that he must abide by that decision. The whole House will admire him for that; the 500,000 people affected will admire him; the country will admire him for not just listening to the rules of his civil servants. That is what Parliament should be about, that is what democracy should be about and that is what serving one's people should be about. That is why I want him to stand up tonight and say that he will await the decision of the committee.
§ 7.15 p.m.
§ Mr. Hugh Jenkins (Putney)
I must apologise for not being here at the beginning of the debate. My excuse for intervening at this stage is that the main proposal in the Bill is one I have advocated for a long time. Many times in this House I pressed it upon the right hon. Gentleman's predecessor, and he resisted me continually. I have not had much opportunity of pressing it on the right hon. Gentleman but I am glad to see that at long last my proposal has been 695 adopted by the Government. I do not know whether that is because of my advocacy, but it has been done and we need not inquire too closely into the motives.
I do not propose to intervene in the quarrels of the tribes that inhabit the tundra north of Watford. That they feel passionately on these matters has been made eloquently and abundantly clear by the hon. Member for Louth (Mr. Jeffrey Archer) in his appeal to the right hon. Gentleman the Minister. I shall at least be interested enough to listen carefully to what the right hon. Gentleman says because, quite apart from the issues concerned, he has been fried fairly well and I should like to see how he emerges from it all purely from a political point of view. I look forward to listening to the Minister in due course. I do not doubt that the hon. Member for Louth, in whose presence the right hon. Gentleman needs no enemies on the Opposition side, will be intervening into his speech in due course to press him further should that prove necessary.
I have long advocated what is proposed in the Bill but I am disappointed in one respect. The hon. Member for Berwick-upon-Tweed (Mr. Beith) suggested that the Bill had missed an opportunity. I go further and say that it misses a lot of opportunities. It would have been possible for the Government to take a fresh look at the financing of the broadcasting media but they did not do so. They have confined themselves to one improvement. That is an important improvement, and it would be wrong to look a gift horse in the mouth. It is a pity, however, that the chance was not seized to take a much wider view of the situation in which the media find themselves today.
We are in a most anomalous position and have been for some time. People say of anomalies "Well, they work", and certainly they work after a fashion, but that is no reason for not removing them. I hope that when my party comes into power, as it will after the forthcoming General Election, it will take that fresh look at broadcasting as a whole.
§ Mr. Jeffrey Archer
Perhaps the hon. Member for Putney (Mr. Hugh Jenkins) is not the man to ask, but if his party gets into power will it give us back Anglia Television?
§ Mr. Jenkins
I am not in a position to say anything about Anglia Television. I doubt whether I shall have the authority to do what the hon. Member wishes. However, my hon. Friend the Member for Rutherglen (Mr. Gregor Mackenzie) will be speaking in the debate and he will be in a better position to advise the hon. Member. Anglia appears to me to be a middle-range company which has put out some extremely good programmes. It has the distinction among the smaller companies of having put on programmes with a creative element. Therefore, if that company has created affection in the bosom of the hon. Member for Louth, it is clear that it deserves appreciation within the context of commercial television.
Although it might be said that by their fruits we shall know them, and some of the fruits of commercial television have been well worth the eating, nevertheless the method of financing the medium seems to me to have been brought into question. We now pay a television licence for about half the television output and we receive the other half on the basis of what is paid for advertising. That creates a peculiar situation. It places upon the BBC the necessity to go for the largest possible audience—in other words, to go for the charts. If at any time the BBC's audience falls below 50 per cent. the credibility of the licence fee comes into question. It cannot be tolerated that less than half the population is looking at programmes for which it regards itself as having paid a licence fee to see. Therefore, the BBC must all the time, and just as much as the commercial authorities, feel bound to go for the charts and to strive for the highest audience. If it does not do so, the corporation's reliance upon a licence fee is brought into question.
I had hoped that the Government would reconsider broadcasting licensing and the financing of broadcasting. There is a strong case for the establishment of a national broadcasting commission or a broadcasting revenue authority to receive the entire revenue from broadcasting, both licensing and advertising revenue, and to redistribute it within the media.
Such a body should have no programme function. It should be a revenue receiving and distribution organisation. The establishment of such a body would solve many problems. The 697 Pilkington Committee long ago went half way towards that suggestion when it put forward the idea that the Independent Broadcasting Authority should receive the revenue. It was a pity that that recommendation was not implemented. It would have solved many of the problems of the financing of the smaller programme companies. They are problems which would not arise if a body was established with the responsibility of receiving and distributing finances.
It is sad that the opportunity has not been taken to take a fresh look at television financing. Nevertheless, it is good that it has been decided that the levy shall be taken from the profits of the programme contractors rather than from their gross income. The reason for that is obvious. It is a reason which led me to believe that it was the right way in which to proceed. If the money is taken from the top, as it were, the quality of programmes is affected and parsimony of programme planning is encouraged. If it is taken from the profits the situation is reversed and programme expenditure is not restricted.
There is one danger which has already been mentioned—namely, that money might not go on programme expenditure but be wasted or slipped into someone's pocket. For that reason I agree that the new method must be closely policed. There are, of course, methods of doing that. If the system is closely watched there is no reason to suppose that any substantial fiddling will take place. I suppose it is inevitable that occasionally the producer's girl friend will be put on the cast list and paid. However, I do not think there is any possibility of serious exploitation provided that the accountancy job is done properly.
I see no reason to suppose that the job, which is no more than an accounting job. should not be done effectively and efficiency. I congratulate the Government on having grasped the nettle. One thing which they have not done—and it is a great pity that the opportunity has been missed—is to reconsider the course which the money takes. The Government propose to continue the practice of paying the levy into the Treasury. The Treasury has already taken millions of pounds of what is essentially entertainment and communications money. I hope that the 698 Minister will put his Treasury colleagues firmly in their place when considering this matter. We are not talking about taxation. It is money which has been paid by people in various forms so that they can look at television programmes. It is communications and entertainment money which belong in the business, yet it is filched by the Treasury.
The money should remain in entertainment. Provision should have been included in the Bill to enable the levy, instead of being passed into the general funds of the Treasury, to be retained in entertainment. The Government would then have no difficulty in financing the Arts Council, which this year needs £20 million. I do not know whether it will get it, but the council could easily be financed from the TV levy. As I have said, it is money which should remain in the arts and in the entertainments business. It should not be allowed to disappear into the general pocket of the Exchequer.
My welcome to the Bill is limited. I am glad that it has been introduced as it is a good Bill as far as it goes. You have allowed me, Mr. Deputy Speaker, to stray a little beyond the strict range provided by the title of the Bill, but it is a Second Reading debate and I think that I am entitled to say what I regret is not in the Bill as well as to welcome what is in it. I welcome the fact that the Bill will enable the programme companies to put on better programmes.
We must ensure that the companies use the money for that purpose. I hope that we will stop the nonsense of closing at 10.30 p.m. It is about time that the Government dropped that restriction. Let us allow the programme companies to spend the money, and let them spend it wisely. As has been said, the quality of British television is a high one compared with the abysmal level which prevails in some countries, but that is no reason for it not becoming higher. There is room for improvement. With more money the contractors will have no excuse for not putting on first-class programmes. They will be in a position to do so, and I hope that they will take advantage of their position.
Within its limits I welcome the Bill. I hope that when the Labour Party forms the next Government we shall be much more imaginative, more adventurous and 699 more broadminded in our approach to television. I hope that we shall bring about a number of sorely needed changes which will enable the medium to fulfil more adequately the important role which it already plays in the lives of the people.
§ 7.29 p.m.
§ Mr. Gregor Mackenzie (Rutherglen)
In my part of the country we use the expression that guid gear goes into small bulk. Roughly translated, it means that although something is small that does not necessarily mean it is not good. We often mean that because something is small it is all the better for it. This has been a small debate in that few Members have chosen to take part in our deliberations. However, the speeches which have been made have been very good. Hon Members have made serious contributions.
On a personal note I have been touched by the speech of the hon. Member for Louth (Mr. Jeffrey Archer), who wanted to transport me to another place. I can reply in two ways to the hon. Gentleman. First, like Bernard Shaw, when I leave this place it will be for nothing less than a dukedom. Secondly, since Lord Aylestone does not retire until the end of this year, it may not be the present incumbent at the Ministry who will be appointing his successor. My natural Scottish modesty does not permit me to say which party will be making the appointment for which hon. Members will be responsible; but it is something to which we have to give consideration.
The hon. Gentleman asked me about my attitude to Anglia Television. The vigour with which he and my right hon. Friend the Member for Grimsby (Mr. Crosland) have pursued their case deserves to be rewarded, and I should think that they have much to gain from it.
As my hon. Friend the Member for Islington, East (Mr. John Grant) said, this is another example of the piecemeal approach of the Government to the whole question of broadcasting, and it is rather sad. It started, as we have said before, because the Prime Minister, in a fit of instant opposition, said that he did not like the Annan Committee. In that sentence the whole framework of the Government's broadcasting policy has been framed. If there is any lesson to be learned in the House, it is that one 700 must not try to frame a policy in so negative a manner.
We on this side wanted to see an inquiry. Our view was shared by many people outside. Instead, we have had a little about commercial radio, there has been a technical committee and now we have another committee on coverage. All of this has led to the extension of the BBC Charter until 1981 and to consequential increases in the time limit of the IBA—two things very much resented on this side of the House and I suspect, by many people outside.
The last instalment is this Bill, which has arrived rather later than we were led to expect by the Minister's predecessor. I do not say it in a carping sense, but I, as many others are, am getting a little tired of hearing what is going on about broadcasting only if I go outside the House of Commons. I hear what is happening from the companies and from television journalists and all sorts of people. I never hear in the House of Commons what is happening. I hope that the right hon. Gentleman will put to the Leader of the House the proposition, which was contained in the Pilkington Report, that there should be an annual debate on the reports and accounts of the IBA and the BBC. It would enable the House to be informed about the Minister's thinking on the subject. It would be useful to many of us. We could exchange points of view. One of the results of the present sort of situation is growing cynicism about politics and politicians. Broadcasting is frequently discussed outside the House, yet we do not ourselves have a real opportunity of saying what we think about this important subject.
Some of my hon. Friends have welcomed the Bill in warmer terms than others. I am not saying that I welcome it. It is not the Opposition's duty necessarily to welcome everything from the Government. But the Bill seems a marginal improvement on the position, so I shall not advise the Opposition to vote against it. However, I hope that in Committee some of the suggestions made by hon. Members will be looked at.
I hope for good things from the Minister in Committee. We have argued against each other now for some years, both in this Chamber and upstairs. I have never yet succeeded in getting him to accept 701 one of my amendments. Perhaps—who knows?—this time we might be a little luckier, because I hope that both sides will be approaching the Bill in a spirit of trying to improve it.
Several points are always at the back of my mind when I think about commercial television. The first of these involves the question whether, as a result of the Bill, the viewer, who is my principal interest in this matter, will get a very much better deal than he has had in in the past. The second point is whether the companies operating under licence from the IBA will produce better programmes, buy better equipment and experiment and innovate in programmes, which is something they have been rather afraid to do in the past.
I hope I do not offend my hon. Friend the Member for Putney (Mr. Hugh Jenkins) when I say that I see no harm in the Treasury getting something out of what is a saleable commodity. We are selling frequencies to commercial companies. Although I, too, favour more research and the rest, I want the Treasury to get its share of the profits. Lastly, I want the IBA to be allowed to do its job and get enough money to ensure that it can do so properly.
Those are some of the questions which are always at the back of my mind when I think of this subject. It is a pity, therefore, that the Minister did not publish some kind of background paper, as is sometimes done with Bills, on the arithmetic of the subject. My arithmetic is not as good as that of some of my hon. Friends, but if we are to discuss in detail what the Minister of State called a complex and complicated Bill we should have had background information to a greater extent than we have at present.
I am not suggesting that we ask the right hon. Gentleman for precise figures—I know that it would be difficult to give them; economics and finance are not an exact science—but it would have been useful to have had a paper indicating profits and dividends of the past and what advice he has received from his experts about what to expect from the future in terms of advertising revenue and so on and, finally, what sort of dividend he thinks is reasonable.
If the right hon. Gentleman is putting the levy figures so precisely, almost in 702 arithmetical form, in the Bill, it is not unreasonable to ask him to do the same sort of thing on dividends. Some of the companies have made considerable profits in the past, although it is true that others have not done quite so well. In these days when we have restraint on wages and there is meant to be, I understand, some kind of restraint on prices, and there is governmental interference in all sorts of things, the right hon. Gentleman might like to tell us also how he regards the dividend which should be paid—for example, whether he thinks it should be 5, 10, 15 or 20 per cent. or whatever.
As I have said, some of the companies have been making very considerable profits. It is not the picture of gloom for the companies that some hon. Members wish us to accept. This leads me to talk about what I expect from the companies. They are entitled to a fair return on their money—no more, no less. I do not want to see them ground into the dust. They are entitled to something for their investment but I do not want them to have, as Lord Thomson used to have, a licence to print money. The figures go a long way towards what the companies originally wanted. That being so, they have an obligation to do something in return. The companies should be using some of this money to re-equip their studios, to experiment and innovate.
My hon. Friend the Member for Derby, North (Mr. Whitehead) mentioned experimenting in television. Someone once said that in television a company needed from time to time to have the right to fail. I was not sure then what that meant, but I know now. It means that companies sometimes have to spend considerable sums of money on programmes which might not catch on, which might not be as acceptable to the general public as they would like. I hope that when the Treasury and the IBA examine the money situation in the future they will bear this in mind.
Perhaps the Minister can give us some guidance on the question of excessive profits, because the Treasury is not necessarily the best judge of such matters. I may have failed to understand the complexities of the Bill but it seems that not only will the IBA have a rôle to play in determining what is right and reasonable but that the Treasury will come into it somehow. I have doubts about the ability 703 of the Treasury to make determinations of that kind.
§ The Minister of Posts and Telecommunications (Sir John Eden)
Perhaps I can help the hon. Gentleman. It is the authority on which the duty is placed to determine the amount of levy payable by each company.
§ Mr. Mackenzie
I am obliged. It seemed from my reading of the Bill that the Treasury had an interest. My hon. Friends the Member for Derby, North and Islington, East, in speaking of programme control, expressed their concern about the sort of political control that seems to be implicit in this. In the Television Act there is provision for the Minister to wield a heavy hand. It has never been used and we hope that it never will be.
The Minister interrupted to mention the rôle of the IBA, and it is to this which I now turn. The IBA has a heavy responsibility in all this. As the Pilkington Committee said, there was an almost constant conflict between getting the advertisements and putting out good programmes as well as catering for minority and changing tastes. This point was made in the report of the Prices and Incomes Board dealing with the costs and revenues of the independent television companies. This point was also put by our colleagues who produced the report on the IBA last year. They said that future adjustments to the levy should be made in the light of a more detailed inspection of the costs incurred in making particular types of programmes, especially those not likely to attract a very large audience. It is important that the authority should look at this.
In the past, the IBA has had an unusual relationship with some of the programme companies. I was about to say that it was far too cosy, but perhaps that is not the right word. The speech of the hon. Member for Howden (Sir P. Bryan) seemed to indicate that it was a dictatorial attitude. My hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding), with his own elegant turn of phrase, said that the authority could not knock the skin off a rice pudding. Somewhere along the line——
§ Sir P. Bryan
What I said was not that there was currently a dictatorial attitude 704 on the part of the IBA but that the Bill appeared to impose a dictatorial rôle upon it.
§ Mr. Mackenzie
I am sorry if I misunderstood the hon. Gentleman. From past experience of the IBA, particularly with London Weekend and others, I do not think that the hon. Gentleman has a great deal to fear.
§ Mr. Jeffrey Archer
May I dissociate myself from the remarks of my hon. Friend the Member for Howden (Sir P. Bryan) and say that I think the IBA is damned dictatorial now?
§ Mr. Mackenzie
I appreciate the point the hon. Member makes, because of his particular interest.
The IBA has real responsibilities and, unlike the hon. Member, I have a great respect for Lord Aylestone and other members of the authority. Some of them are my best friends. I have a great respect for Lord Aylestone in particular. He used to be the Labour Chief Whip. I do not know what he does to the television companies but as a new Member of Parliament I recall that he used to put the fear of God into me. If occasionally he could frown on some of the television companies in the same way as he came down on youthful Members of Parliament now and again, it might be interesting.
§ Mr. Hugh Jenkins
Perhaps I should recall for my hon. Friend that there are some who feel that the rejoicing over the departure of Lord Hill from the BBC was somewhat premature.
§ Mr. Mackenzie
When Lord Aylestone and his colleagues come to exercise their powers they must remember that there are sticks as well as carrots. The IBA should tell the companies to try to achieve a much better balance between new programmes and old films. It is not perhaps the most important of points but it is worth making.
Now that the companies are approaching the position they want to be in, they should put on rather more new programmes and fewer of the old films to which we have been subjected in the past. I know that some companies are still pressing the IBA to have the right to show some of the dreary films which we have been getting in the past few 705 years. On television last weekend there was a choice between a film produced in 1936 and another produced in 1942. In 1936 I was nine years of age. I had seen that film on numerous occasions over the past 40 years. I should think that people with more creative interest would want rather more from their televisions than these terribly dull films.
If the 10.30 ban, which I dislike intensely, has done anything, it has saved us from watching Shirley Temple at 11 o'clock on Saturday night, or something called "The Curse of the Mummy's Hand" which we see with great regularity at about that hour.
§ Mr. Mackenzie
No, but the films are on television and if the authorities cannot show anything better they need to reconsider the matter.
§ Mr. Whitehead
As a non-viewing foetus in 1936, may I ask my hon. Friend whether he would agree that this matter goes further than the question of film programmes? The Bill should encourage companies to make a positive choice in favour of programmes which are good on merit rather than in favour of programmes which provide excuses for spinners, spin-offs and other artefacts which can be diversified through the multimedia field.
§ Mr. Mackenzie
I agree. We have within the television ranks enough people of talent and creative ability to do much better.
I understand that the television companies buy films in lots of 15 or 20 and, therefore, we are subjected on television to films made in 1936. But in a few years, if not in a few months, the companies will be in difficulty, because films with Shirley Temple and about the mummy's hand are no longer being produced. One would have great difficulty in finding in the list of programmes in tonight's Evening Standard a film with a U or an A certificate. Most of them have X certificates—films of the sort which are made, distributed and shown for private profit. I do not wish to see such films in my home.
I hope that the Minister and Lord Aylestone and his colleagues in the IBA will bear in mind our comments about 706 old films and new films of the sort which seem to be all too prevalent in the West End and, indeed, in the provinces. The BBC seems to be just as bad as the television companies in this regard. Should I ever be privileged to have the opportunity of meeting the Chairman of the Board of Governors of the BBC in Scotland—or perhaps I should say to have an audience with the good Lady, who sometimes strikes me as being rather like God: nobody sees her, we just have to believe in her—I would say to her precisely what I am saying to the IBA. The IBA should seek to encourage the companies, particularly the large companies, to allow the young television producer with undoubted talent to produce new material. That would be welcomed.
I wish to ask the Minister two questions. My hon. Friends the Members for Derby, North and Newcastle-under-Lyme have made some serious comments about cable television. I am sure that the hon. Member for Louth is also concerned about this matter. I should like to know what will be the future position about IBA rentals. That matter may not be relevant to the Bill, but we should appreciate hearing something about it. Will the recommendations of the Crawford Committee be accepted, and will there be better coverage?
The Minister of State, Treasury mentioned the question of overseas sales about which there has been a great deal of discussion in the last few months. We have wondered whether they would form part of the package. However, like the Minister of State, I appreciate their value in helping to solve our balance of payments difficulties. Perhaps the Minister of Posts and Telecommunications will comment on that subject.
I return to the question of advertising. It is popularly said that people have to pay for a licence to receive BBC programmes but that they receive commercial television for nothing. A magazine which I read recently stated:Last year commercial television advertising climbed to well over £200 million—or, to put it another way, to the cost of a colour television licence for every single household in the country".That proves conclusively that we are not getting commercial television for nothing, and we should consider the question of the revenue which it generates. When I first became responsible for these matters 707 some years ago, the advertising revenue was about £100 million, so it has almost doubled. Therefore, the argument which we have heard for a long time that we get commercial television free is nonsense.
I am concerned about how long that situation will last. The hon. Member for Conway (Mr. Wyn Roberts) expressed concern about the present difficulties, which do not seem to me to have much to do with the miners' dispute. For example, before the mining dispute there were shortages of many commodities—such as bottles and packaging—which caused the Chancellor of the Exchequer to introduce his mini-Budget at the end of last year.
I know from talking to people involved in commercial television that there has been a drop in revenue in the past couple of months of about 40 per cent. The Minister should comment on whether that is due to a movement into commercial radio or to the fact that there has not been much growth in the economy. My part of the country—this is true of many areas described as development areas—is badly hit when there is a fall in growth, and advertising continually suffers. The Minister has not given us any guidance on the effect of the 10.30 p.m. shut-down and the consequent reduction in advertising revenue. Some Tory Members have become very upset when we have raised this matter in the past few weeks, but I am worried about it. I do not like people to be treated in a childish way and told what they should save in their homes. One Minister said that we must brush our teeth in the dark. Another said that we must switch off the television set at a certain time and go to bed. This is a very unpleasant way of governing the country.
We are not sure how much the Minister has had to do with this situation. He has had a bit of a licking from some of his senior colleagues. Under the mini-Budget he had to cut Post Office expenditure by £150 million. Now he has been told that he must cut down on television. I appreciate where he, or indeed any Minister of Posts and Telecommunications, stands on the Government ladder, but it is time he said to his senior colleagues that enough is enough. It is time he started speaking up for the viewers. Perhaps he will speak to some of his senior colleagues and tell them what he thinks about this.
708 We shall not oppose the Bill but we shall be exercising vigilance on behalf of viewers and making sure that national as well as commercial interests get a proper financial return from the television companies.
§ 8.0 p.m.
§ The Minister of Posts and Telecommunications (Sir John Eden)
I am extremely grateful to all hon. Members who have spoken in the debate, first, because they have given general approval to the principles on which the Bill is based and, secondly, because all have made extremely interesting speeches. I have listened to them all, and in each one I have found points of considerable value. The debate will help me in the discussions on the Bill in Committee, to which I look forward. There are several matters of special interest to certain hon. Members which I will deal with more fully then, but now, so far as I am able, I will answer some of the questions which have been raised.
Although the leniency of the Chair has allowed a wide-ranging debate, the net has been cast wider than I anticipated when preparing my mind for it. For example, I was a little surprised to hear the hon. Member for Islington, East (Mr. John Grant) refer to the London Broadcasting Company. As he knows, that company is concerned with radio. If it came under any legislation it would be that for sound broadcasting. The Bill is about television and not about radio. I commend the hon. Gentleman on his ingenuity in putting over his arguments. All I can say is that we must have confidence—I certainly do—in the Independent Broadcasting Authority and in its determination to ensure that LBC lives up to its promise to provide a good service to the public. This is an extremely difficult area for broadcasting, and two unique requirements have been placed upon the company. I accept that the company knew what was involved and set about trying to fulfil the terms of the obligation to which it had given its name.
In the earlier days of independent television, with which the Bill is directly concerned, some of the companies had a rather uncertain financial start—that is going back to the 1950s. I have counselled before, and do so again, that we should give time to those who have been struggling to create a new service 709 and to fulfil the promises they gave when the franchise was open for application. It must remain the objective of the authority to safeguard the public interest, and I am confident in looking to it to do that.
§ Mr. John Grant
As the Minister rewarded my ingenuity by making such a long reply to a matter I raised only in passing, may I say that all I did was to illustrate that the IBA in relation to London Broadcasting had failed to learn the lesson of those earlier days. That point remains valid, despite what the right hon. Gentleman said.
§ Sir J. Eden
I will not pursue the hon. Gentleman in his pursuit of me. We may have an opportunity to discuss this matter at another time.
The hon. Member for Rutherglen (Mr. Gregor Mackenzie) spoke of the desirability of frequent debates on broadcasting matters. I share his view, and I would welcome more frequent debates, as would many hon. Members on both sides of the House. Perhaps the hon. Gentleman will suggest to his right hon. Friend the Leader of the Opposition that broadcasting might be an appropriate subject for an Opposition Supply Day debate.
§ Mr. Mackenzie
If we are asked to debate annual reports, it should not be in Opposition time. I was asking the Government to supply a couple of days for annual reports.
§ Sir J. Eden
On whatever peg the debates are hung I would welcome them.
My hon. Friend the Member for Bristol, West (Mr. Robert Cooke) and others made an eloquent case in favour of the fourth channel being made available to ITV. I listened also to the views of the hon. Member for Derby, North (Mr. Whitehead) and others who take a different attitude towards the allocation of the channel. My position and that of the Government are well known in the House. The matter has been under study and is still under consideration. No decision in principle has yet been taken. I have undertaken to come back to the House as soon as the conclusions of this general study have been reached. I hope that opportunities will be provided later to discuss those conclusions if that is the general wish of the House. I have undertaken to ensure that the Government's views on this subject are known before 710 the House is invited to consider legislation for extending the franchises of the BBC and the IBA. I expect—and this answers a question raised by the hon. Member for Newcastle-under-Lyme (Mr. Golding)—that there will be several opportunities in the coming months for debates on broadcasting.
My hon. Friend the Member for Louth (Mr. Jeffrey Archer) spoke of the Belmont transmitter. The IBA and I know that views on this subject are strongly held by hon. Members and others outside the House. The Chairman of the IBA is in no doubt of the deep passion with which the issue is considered, particularly in East Anglia. My hon. Friend and those associated with him have faithfully, frequently and vehemently repeated to me their constituents' views.
I have had to say in the past, and can only repeat it now, that the right of decision rests with the authority. It is perhaps not generally understood that as Minister in an instance of this kind I have no power in contractual matters, nor can I require the authority to broadcast any particular contractor's programmes from a specified transmitter. The 1973 Act, beginning with Section (2)(3), puts the duties in relation to contracts wholly in the authority's hands.
My view has been that the claims and counter-claims of viewers in the area concerned as a whole needed to be examined by some impartial witness who is not committed to any opinion about the merits of the case being argued. The Government appointed the committee on coverage to be chaired by Sir Stewart Crawford to study this and other matters in areas throughout the United Kingdom. The committee has been in East Anglia this week, and I know that my hon. Friend and others will also be meeting Sir Stewart. It is not possible for the committee to pick out one of the rural areas from the rest of the rural areas which it is studying in the United Kingdom. Therefore, we must wait for the report, and I know that those concerned are pressing on with their work as rapidly as possible. I expect to have the report by the summer.
In the meantime, as my hon. Friend the Minister of State at the Treasury said, and as the House will know, the existing contracts are due for renewal in July 1974. The IBA understandably is anxious 711 not to leave the companies in any doubt about where they stand. Both Yorkshire and Anglia have been informed by the authority since 1970 that it is its intention to switch Belmont. Although I understand the authority's position, I cannot support its determination to press ahead with the issue of new contracts when the Crawford Committee is so close to reporting to the Government and, through the Government, to this House. I hope that it will avail itself of whatever opportunity comes its way to await the outcome of this report.
§ Mr. Jeffery Archer
I wish to thank my right hon. Friend for that courageous statement. I withdraw everything I said in my speech. Indeed, I look forward to Lord Aylestone reading the Minister's speech and not bothering with mine. From my point of view, what he has just said is the most relevant part of his speech, and I know that this view will be shared by 500,000 people in my area. We wish to thank him very much indeed.
§ Sir J. Eden
I am grateful for what my hon. Friend says. I thought for one moment he was going to suggest that I should be transported to another place. I should like to be there to join "Lord Rutherglen" when he arrives in that place so that we may still continue our debates from opposite sides of that House.
A number of hon. Members who commented on the Bill asked me what particular changes had taken place to enable the Bill to come forward. I know that many hon. Members have been waiting for this legislation for some time. The hon. Member for Rutherglen said that he had received reports on the progress or lack of it from sources outside the House. But he must know that when discussions are taking place within the Government on a matter of this kind preparatory to a Minister bringing legislation before the House it is inappropriate to comment on any speculative reports until the legislation is ready. The hon. Gentleman will recollect that as soon as the legislation was ready a statement was made in the House which anticipated the nature of the legislation to be brought forward. We are now considering that legislation.
Over the years, especially since the widening of the ITA's responsibility in 712 the Television Act 1963, the authority has been accumulating an extensive and intimate knowledge of programme contractors' financial performances. In particular, Section 4 of the 1963 Act gave the authority power to regulate the contractors' sale and purchase of programme material. In this way it has now gained considerable experience in monitoring the contractors' financial performance. This experience, allied to its new powers under the Bill, should enable the authority to do everything required to minimise the risks of avoidance—and, if avoidance is threatened, to recognise it and prevent it. It was this accumulation of practical experience and knowledge which was the primary influence in persuading the Government to accept a change to the new system of levy.
My hon. Friend the Minister of State at the Treasury touched on the question of avoidance. My hon. Friend has asked me to apologise to the House for the fact that he was called away during the debate to an urgent meeting. He asked me particularly to apologise to the hon. Member for Rutherglen for the fact that he missed the beginning of his speech. I was grateful to my hon. Friend the Minister of State for the care with which he spelled out the principle contained in the Bill and for the way in which he illustrated the broad form in which the terms of the Bill would operate.
On the subject of avoidance, the danger that was foreseen was that contractors would study the legislation when it had been passed and rearrange their affairs so that the income caught by the Act was a good deal less than their total income and so that they were expending a good deal more. That, quite candidly, was the worry. The factor which has changed is the reality of the experience gained over 10 years by the authority, arising out of its much closer involvement in the financial affairs of the companies.
The authority will require additional auditing staff for this purpose, and this subject was touched upon by the hon. Member for Islington, East. I understand that it will employ about three new audit teams. The teams will, as my hon. Friend the Member for Howden (Sir P. Bryan) said, be under the overall direction of Mr. Curbishley. I have every confidence 713 that this direction will be properly exercised and that they know their job. The House can have confidence in that fact.
§ Mr. Whitehead
May I draw the Minister's attention to the specific point which I made on Schedule (1), where the phrase "directly or indirectly" occurs? Can the right hon. Gentleman say whether the word "indirectly" includes subsidiary expenditure and subsidiary activities derived from television programmes?
§ Sir J. Eden
I hope that the hon. Gentleman will leave me to give the full answer to that point in Standing Committee. In so far as activities of the subsidiary company are concerned with the expenditure for the making of television programmes, the income from which is leviable, that expenditure will be brought into consideration when weighing up the amount of levy due. The principle here is not whether it is a subsidiary company's activity, but whether it is part of a television contracting company's expenditure and of revenue connected with the making of television programmes. The thinking behind this is that it is right and proper that where there is a special national asset made available in unique circumstances to particular companies a special and unique payment shall be made.
§ Mr. Hugh Jenkins
I do not know whether this is the right moment, but will the right hon. Gentleman comment on the proposed film levy? He will be aware that it has been suggested that a levy should be paid by companies using films in order to support the failing British film industry. Does he intend the levy to be a separate one, or will it be part of the levy which we are discussing under this Bill? Is he prepared to accept an amendment in Committee to make sure that this film levy comes into being?
§ Sir J. Eden
I can only answer the hon. Gentleman by saying that this is not the right moment, nor is this the right Bill, nor am I altogether clear about what he is asking since I have no firm proposition before me.
We also heard reference to the expenditure aspects and whether excessive expenditure could be prevented. On this point I was interested to hear the remarks of my hon. Friend the Member for 714 Howden. I am sure that he will pursue this matter in Committee. I cannot comment at this stage on his alternative choice of words except to say that I shall listen to any extension of his argument, assuming that he has the opportunity to make it, in Committee.
The principle here is again quite clear. It is in order to try to avoid the situation where totally unnecessary expenditure occurs in making a programme apparently to avoid increasing the amount of revenue which will attract the levy. So some fall-back power is clearly required. Obviously I hope that it will not be necessary to contemplate invoking it. But if we are to have a fall-back power of any kind it has to be a credible deterrent which, if necessary, can be made to bite. That is the purpose behind the provision in the Bill. However, this point can be studied further in Committee.
There is one general observation which is well worth making and underlining. It has been recognised by a number of hon. Members that the companies have been asking for a long time for a change to this system of levy. When they have it, if that is the will of this House, they are not likely to set about abusing it. They are likely to be much more concerned to see that it operates properly. I am sure that it is in that spirit that they will be addressing iheir minds to the provisions in this legislation.
One or two hon. Members expressed anxiety about the posible increase in the authority's powers. They questioned the extent to which the programme companies might have rights in the courts. The IBA is concerned with interpreting the wishes of this House as expressed in legislation. That is the responsibility which the Bill places upon it. The courts are not excluded completely. They are not excluded from looking into claims which arise in the determination of amounts due if, in the view of the companies, the IBA has acted unreasonably or capriciously. But the courts are excluded if a dispute is simply about the amount that is due. It is important to recognise this because the Bill deliberately places responsibility for it on the authority.
A number of other matters have been raised by right hon. and hon. Members. I have been asked about the carrying forward of losses, about overseas sales, about 715 the effect on middle-sized companies, and so on. Perhaps I might go through them sketchily and answer some of the specific matters which have been raised.
There is no provision for carrying forward losses. This is not allowed as an exemption from the levy. It cannot be allowed in the following year into which a loss may be carried. Nor is interest paid by the contractors on loans. Levy is not to be treated as the same as taxation. There are distinctions on the plus side from the contractors' point of view. For example, no levy has to be paid on interest received.
The hon. Member for Derby, North said that the new levy might hit the middle-range companies harder than most. I do not think that that is likely to be the case. The free slice which is the allowable deduction before levy is less valuable the larger the company is. The larger companies will as a result of that pay a slightly higher proportion of their profits. But the key point is that the rate has been fixed, we hope, at a fair level. The weight on the middle range of companies, therefore, is not likely to be exceptional. I see no reason why they should suffer especially hard as a result of it.
The hon. Member for Rutherglen asked me to give a lot of detailed financial information. Some of this in general terms may be able to be made available in Committee. Of course I cannot answer for each individual company. Many of them are publicly quoted companies, and it would not be appropriate for me to speculate about the future course of the effect of the levy on individual companies. Nor is it possible to gauge accurately what may be the overall profit figures with which the authority may be dealing in the future. This is in the very nature of the levy, because, as profits rise, so will the amount of levy increase, and, as profits decline, so will the amount of levy due diminish.
I do not think that the new system will encourage contractors to diversify their activities away from television. This may be the decision of a particular company, but it will not arise as a result of the operation of the new levy system. In any event, if companies were inclined to do that, they would also be wise enough to recognise that they were contractors 716 for television purposes and that no doubt the authority would take into account the extent of their television activities when the time came for contracts to be renewed. I do not take quite such a pessimistic view of the future as my hon. Friend the Member for Howden. I believe that we can still look forward to healthy competition for these contracts.
The hon. Member for Islington, East asked about overseas sales. These are specifically exempt from the provision of the levy. The exemption has been made deliberately to encourage the making of British television films for sale in overseas markets.
I have to disappoint my hon. Friend the Member for Howden, who asked about the destination of the yield of the levy. He is right in saying that it goes into the Consolidated Fund. I was tempted in regard to this matter to follow some of the arguments of the hon. Member for Putney (Mr. Hugh Jenkins), the hon. Member for Derby, North and other hon. Members, who spoke about the possible applications of funds derived from television. The hon. Member for Berwick-upon-Tweed (Mr. Beith) went so far as to suggest that the funds might help in the establishment of transmission equipment in his constituency. I have to disappoint the hon. Gentlemen and state categorically that there are no plans to give the levy to the film world, the cultural world, the ITV world or the BBC world. The levy comprises moneys paid into the Consolidated Fund, and it would be for my right hon. Friend the Chancellor of the Exchequer to account to the House for its disposition.
§ Sir J. Eden
It may be so, but perhaps these matters can be debated on some other occasion.
I have been unable to cover all the interesting points which have been raised, and I look forward to the opportunity to follow up some of them in Committee.
The main problem which the Government saw, and which most people saw, was that with the present system of levy it was difficult to predict the future course of advertising revenue, which proves particularly sensitive to changes in the economic climate. We are now seeing the degree to which advertising 717 revenue is sensitive to present changes. Hon. Members have commented on that fact, which gives added impetus to our proposals. I agree with the hon. Member for Derby, North that the Bill should go on to the statute book as soon as the House finds it convenient.
The sensitivity of advertising revenue has meant that changes in the levy rates, although commended to Parliament by Ministers in successive administrations as based on the best available forecasts of financial prospects, have all too often contributed to instability in the industry by bearing too harshly on contractors in difficult times, while often leaving them with unduly high profits when advertising revenue is buoyant. The new scheme will automatically adjust to the changing fortunes of programme companies to ensure, on the one hand, that they are not squeezed in lean times and that, on the other, the Exchequer will secure a fairer share when profits are high. The new system will be fairer to all parties and will, we hope, promote greater stability in the television industry.
Most, if not all of the speeches in the debate have been concerned with trying to achieve continuing improvements in the quality and standard of the programmes which appear on British television. The legitimate expenditure on television programmes, under the new system proposed in the Bill, is to be deductible before the levy starts to bite, and this will be a direct encouragement to the making of those quality programmes which we all wish to see. This has been one of the main thoughts which encouraged the Government to bring forward the Bill. I have no hesitation in asking the House to give it a Second Reading.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).