TELEVISION LICENCE FEE

HC Deb 29 January 1979 vol 961 cc1175-200

10.16 p.m.

Mr. Alexander W. Lyon (York)

I beg to move, That an humble Address be presented to Her Majesty, praying that the Wireless Telegraphy (Broadcast Licence Charges and Exemption) (Amendment) Regulations 1978 (S.I., 1978, No. 1680), dated 23 November 1978, a copy of which was laid before this House on 24 November 1978, be annulled. Almost every household in the land now has a television set and has to buy a television licence. In fact, 97 per cent. of households require a television licence, and the probability is that a great many of the remaining 3 per cent. ought to have television licences but have not paid for them. In the circumstances, we have passed beyond the argument about whether the television licence is a charge as distinct from taxation and one which allows people to express freedom of choice about whether to pay. The answer is that the choice has been made and, because everyone has to pay it, it has become taxation. In essence, that is the principle of the opposition which my hon. Friends and I are expressing to the increase in the licence fee of £4 in respect of a colour television set.

If we succeed in voting down this increase, it will mean that everyone who has paid the increase since November will have to be reimbursed. It will also mean the BBC going out of business tomorrow. But it is not that that we desire. We desire that there should be a different method of financing the BBC. That is what we want to discuss, and we want some assurance from the Government that they will reconsider the method of financing the BBC before we allow these regulations to proceed.

For that reason, I want to go back to Lord Annan's report. After discussing the alternatives, he came to the conclusion that nothing but a licence fee would meet the need of the BBC. He came to that conclusion on the basis of two arguments in principle. The first was that the licence fee at that stage was bringing in over £200 million—it is now bringing in over £300 million—and that no Chancellor of the Exchequer would want to take that burden on to taxation. I shall come back to that argument because, in my submission, it does not hold water. The second argument was that the BBC would lose its independence if it were financed out of a system of taxation which meant that its estimates could be vetted by the Comptroller and Auditor General and would therefore be subject to control by a Select Committee of this House.

The system of financing the BBC by a licence fee began in 1922. For over 22 years there was no increase in the fee. It remained at 10 shillings. But, progressively since then, increases have come thick and fast. They are now coming almost annually. Although the BBC has been given £4 on the colour licence fee and a little extra on black and white for the coming year, it is already clear that, since the settlement of the claim by BBC technicians just before Christmas, it cannot hold within its estimates for 12 months. The likelihood is that the BBC will be back in much less than 12 months for another increase in the fee. Every time it puts in a submission for an increase, the Home Office examines its estimates in great depth. Lord Hams described the process to a group who went to see him as "crawling over the BBC books".

How it can be said that an examination by the Comptroller and Auditor General, or, indeed, by the Public Accounts Committee, is any greater imposition on the BBC, I do not know. Yet it is clear that with inflation at its present or foreseeable rate, with costs going up even more than the rise in the retail price index and the fact that the buoyancy of BBC revenue has evened out because almost everyone who wants a colour television has got one, the call of the BBC for more resources will go on year by year. As a result, the review by the Home Office at least of its estimates will go on year by year.

The BBC's independence would not be made worse by any alternative system. In my view, it could be made better. I have no desire, nor, I think, has anyone in the House, that the House should control what goes into programmes. It is best left to the broadcasters to meet the public denunciation, if they so want, than that we should have to channel it through the House. I am prepared to accept that a system like the University Grants Committee or the Arts Council, which would be a buffer to the BBC, would meet any legitimate request for investigation of expenditure. That method has been used by the House many times and has been found acceptable.

I do not accept Annan's strictures on the University Grants Committee. It is clear that the universities have their freedom. Of course, they have to account in general terms for their expenditure of money, but that is no real infringement of their freedom to teach in the way they want. Equally, I see no reason why the BBC would not be able to put on the programmes it wanted whichever system of collecting money was adopted.

Mr. George Rodgers (Chorley)

Does my hon. Friend agree that the World Service of the BBC is financed through direct taxation? Is this not a demonstration that it does not interfere with its freedom?

Mr. Lyon

That is a rather bad example. In relation to the World Service, the BBC is acting as an agent for the Foreign Office in the kind of broadcasts it sends out and places to which it broadcasts. The whole arrangement is made with the idea of having some political oversight. Even so, the virtue of putting the World Service in with the general expenditure of the BBC and asking for a buffer organisation to collect the money for it is that the World Service would be even more independent than it is.

The interesting thing is that the BBC goes on at length about how the World Service is recognised throughout the world as having an independent voice, yet it is controlled by the Foreign Office, both as to where it sends its messages and as to the general format, though not the detail of programmes.

Therefore, the whole argument about independence is much overdone and we can get away from that by some institutional method which would create a buffer. I am not interested in trying to control the BBC or the IBA, and no one else is.

The real argument is about whether the Treasury would accent a system of financing the BBC which came under the heading of public expenditure instead of a separate charge. This is the biggest myth of all. If the country as a whole is to pay out £300 million for broadcasting, it has to pay it out whatever it is called—whether it comes out of the private packet, charges or public expenditure. The mere fact that one spends about £300 million on broadcasting means that the resource implication is the same which ever way it is collected. There is no resource argument available to the Government in this respect.

Of course, if it is taken out of a charge and made into taxation, it appears under the heading of public expenditure and goes into the public expenditure Estimates. But since everybody knows what has happened—that the £300 million has come out of one pocket instead of another—it does not make any difference to the impact on public expenditure Estimates if public expenditure goes up by £300 million in the coming year.

The virtue of taking this out of public expenditure instead of out of a charge is that the charge is regressive. It falls on the poor as on the rich. It falls on the elderly as on the young. It falls on the lower-paid worker as on the well-paid worker. If it comes out of taxation, whatever system is used—there are three possibilities—it is more likely to come out of the pockets of those who can afford it than out of the pockets of those who cannot.

That is the great argument for going over to taxation. I would prefer to do it through direct taxation and put a penny on income tax. I am sure that that would be more acceptable to people than paying out an increasing amount each year through a regressive poll tax, through the system of the licence fee.

Hon. Members should recognise that this year, in these regulations, we are actually raising the amount by about 25 per cent.—an increase wall above even the kind of settlements that are regarded as inflationary in the present pay round. People simply will not stand for the cost going up at that kind of rate for the years ahead. Resistance will increase.

The exemptions which have been made are so absurd and create such resentment among people just over the borderline that they cause even greater difficulties. When I was a Minister and had to reply to a question about exemptions, I realised the stupidity of the system when I found that the first exemption that I had to name to the House was that for the blind.

Mr. J. W. Rooker (Birmingham, Perry Barr)

My hon. Friend referred to a penny on income tax. It should be made clear that less than a penny is involved. Those who hear our debates should not be given the figure of a penny, since that brings in about £ 500 million of revenue and we are talking about just over £ 300 million. That would require less than three-quarters of a penny on income tax.

Mr. Lyon

The Chief Secretary to the Treasury has told me that since my hon. Friend and others were responsible for raising the allowances in the spring, a penny now brings in £ 360 million, which is only a little more than the BBC requires. However, I accept that slightly less than a penny on income tax might be needed. But my contention is that if direct taxation was not found acceptable, it could be done either through value added tax or through a charge on the national insurance stamp.

I was at a party meeting last week to say that the BBC had accepted in principle that it could be financed out of the insurance stamp, but Mr. Peter Hardiman Scott has written me a letter, which says: The BBC remains convinced, as was the Annan Committee, that the best method of financing its domestic services is still the licence-fee system. Nevertheless, the BBC is certainly looking at getting the money through national insurance stamps as a possibility, but only as a method of collection for a licence fee already assessed separately and not as a means of finance from general taxation.

Hon. Members will therefore understand that the BBC is both against financing itself out of the stamp and in favour of financing itself out of the stamp. I cannot see the difference between the two propositions. Everyone accepts that each time the BBC wants an increase it will have to put in a demand which it will have to justify. The question is how it will then be paid for. If it is to be paid out of the insurance stamp, that would get rid of some of the difficulties of the present system, but it would still fall on the lowest-paid workers because the insurance stamp is paid by lowest-paid workers. Therefore, to that extent it would still be regressive.

It would be better to go over to direct taxation rather than the stamp. Nevertheless, I would be prepared to accept the stamp as an alternative. What I am sure of is that one or other of the three methods I have indicated ought to replace the present licence scheme. I hope that when my hon. Friend the Under-Secretary replies to the debate she will give us some assurance that the Government will now go over to one of those systems to replace the licence system, which is now well out of date.

Several Hon. Members

rose—

Mr. Speaker

Order. Before I call anyone to speak, I remind the House that this debate will finish at 11.30 p.m.

10.32 p.m.

Sir Paul Bryan (Howden)

This debate is to do with the BBC and not with independent television, but, as the debate is likely to flow into wider fields, perhaps as a precaution I should declare my interest as a director of a television company.

The licence is a pitifully inefficient way of collecting money for broadcasting. For years its inefficiency has been hidden because it has been functioning in a totally artificial environment. Between 1960 and 1968 there was no increase in the licence fee. The reason was not that the BBC was not spending any more. It was that the number of television sets had risen from 10 million to 15 million. so quite naturally the revenue continuously increased.

At 15 million sets we reached a plateau in black and white sets. Then, with great fortune, the BBC once again got another bonus with the advent of colour television. Indeed, the licence itself was one of the reasons why in this country colour television spread so much more quickly than it did in America. It was in the interests of the BBC to produce good colour programmes to encourage people to buy colour sets. At the same time, it was in the interests of the manufacturers and renters to provide the sets. So what took about 10 years in America got off the ground very much faster here. All these developments were hiding the fact that the system was highly unsatisfactory.

In the late sixties, I filled the role of Shadow Postmaster-General. I remember once spending a couple of days going round post offices in the provinces investigating exactly how they got in the licence fees. I can only say that if a television rental company collected its rental in the same way as the Post Office collected its licence fees, it would have rapidly gone out of business. Today it is still very inefficient. It is better than it was. This is partly due to the fact that rental companies and shops now have to supply a list to the Post Office of any new sets they sell. I do not know what that costs the trade. It is probably very expensive.

But today we still lose about £15 million in the evasion of licence fees, and the licence fee costs about £15 million to collect and to monitor. So it remains inefficient. It looks even more inefficient than it is, because we have to live with inflation and instead of the Government increasing the licence fee every few years, as the hon. Member for York (Mr. Lyon) says, it must happen every year.

The licence survived in those early years because it was no trouble, but also for a second and important reason. The BBC has always remained convinced that its political independence depends upon its retaining the licence fee. If one asked Carleton Greene in the old days or Ian Trethowan today, one would still get the same answer.

I share the doubt of the hon. Member for York. I am not convinced about it. In future, as in the past few years, it will always be difficult for a Government to increase the licence fee. There are two decisions on which Governments have always been cowardly. One is increasing the pay of Members, the other is increasing the licence fee. Both are unpopular things to do. Both those institutions are being undermined because of the cowardliness of Governments in this respect.

Therefore, I would be willing to switch to raising money by direct taxation—I would do so tomorrow—because a Government would be more likely to add £50 million to expenditure from general taxation than they would be to put £3 on the licence fee when such an increase was necessary. That I would have recommended tonight, but for the Government's white paper. I deals a genuine blow to the BBC's dependence. I shall explain that remark later. I should not like to propose anything that could be seen to be a further blow to the independence of the BBC.

The Labour Party has been quite open about its policy on broadcasting. It has said that it would do away with the BBC and the IBA. In its 1976 programme that was all laid down. It would form a commission which would distribute all broadcasting finance and take control of all matters. The Government would then be in complete charge, if indirectly. Similar arrangements would be made for the press. So there was to be central control of the mass media. The Labour Party was open about this. I do not accuse it of subterfuge. That was the proposal it put to the Annan committee, and it was rejected.

The White Paper laid down a new arrangement by which the Government would get its fingers into the BBC pie. The proposal was to infiltrate the BBC by what might be called a quango. Men would be chosen, appointed and paid by the Government, and be installed in managerial committees for the BBC. No Government have ever laid down such far-reaching changes in a Royal charter in the past.

The reasons given for these proposed changes are pure fantasy. Page 19 of the White Paper says: The Government considers that changes in the internal he BBC are required to distance the Governors from detailed involvement in management so as to enable them to concentrate more on their supervisory and regulatory functions.

Mr. Joseph Ashton (Bassetlaw)

On a point of order, Mr. Speaker. Surely this debate is about the television licence and not about the Government White Paper and the Annan report.

Mr. Speaker

The hon. Member for Bassetlaw (Mr. Ashton) is quite correct. Sir Paul Bryan.

Sir P. Bryan

I am describing why I think that the independence of the BBC is threatened. Those three management boards would do exactly the opposite. They would not distance the governors from involvement at all.

Mr. Speaker

Order. My attention was distracted a little earlier, but now that I have paid full attention I should be grateful if the hon. Member for Howden (Sir P. Bryan) would deal with the funding of the BBC, which, I gather, is what the regulations are generally about.

Sir P. Bryan

I shall not stray any further, Mr. Speaker. I conclude by saying that I give the benefit of the doubt to the Home Secretary. I do not believe that he has surrendered to his Left wing. I think that he knows what he is doing. I think that he has produced a White Paper which he knows has no hope of being approved in this Parliament and even less in the next.

10.42 p.m.

Mr. Joseph Ashton (Bassetlaw)

Many of us, especially at Christmas time, have visited many pensioners's associations, and invariably over the past few years I have found the one question that they raise is that of anomalies with regard to the television licence. Pensioners cannot understand why pensioners under the jurisdiction of a warden can pay as little as 5p a year while pensioners living on the other side of the street on the same housing estate in three-bedroom houses have to pay the full fee.

They cannot understand why some people dodge the licence fee quite successfully year in and year out, and invariably the pressure is put on all MPs to try to bring in a better system. That is what Parliament is supposed to do. They point to the example of the Savoy hotel, which has 425 sets but pays for only one television licence—exactly the same as poor old Mrs. Brown who has one set and lives in a council maisonette.

The problem for the pensioners is that, now that the fee has gone up to £25, it is for many of them more than a week's income. A widow's pension is £17.50, and she is compelled to find a lump sum of £25, which is a very great burden to her. One may argue "Why does she not have a black and white set?" It may be that when the husband was alive the couple had a colour set and she inherited it, or when he retired they had a colour set. There are also the problems of the one-parent family, where the husband has gone off and left the wife and a couple of kids with a colour set, and now she has to find the cost of the licence.

It is too much to expect people to pay out more than a week's income just for a television licence. I believe that this is why many people dodge the licence and do not pay at all—they never at any one time have £25 in their hand which is surplus to the money they need for their rent and food.

How, then, should we finance the BBC? We could do it by taxation. We could do it by increasing value added tax. There is an argument that, as independent television is financed by a halfpenny on the price of butter or by a penny on a gallon of petrol, we should finance the BBC by increasing VAT. There is a counter-argument that if the Treasury gets its hands on giving out money to the BBC, invariably the Treasury will restrict, cut or influence, or try to influence, the autonomy of the BBC.

Let us not criticise too much the autonomy of the BBC. I think that the BBC has had over many years a magnificent record of being impartial. I complain about the BBC—I think that it is anti-trade union biased. But no doubt Opposition hon. Members will complain that it gives too much air time to Left-wing extremists. That is part of the nature of democracy. Generally speaking, there are very few complaints, given the hours and hours of broadcasting put out by the BBC. The BBC has nothing to fear from thinking that a different licensing system would mean perpetual complaints from the House and the Government about the programmes on which it spends its cash.

My hon. Friend the Member for York (Mr. Lyon) mentioned the Arts Council. That is a good analogy. We do not tell the Arts Council what operas to put on. The Arts Council has a pressure group in Parliament to push its demands for more cash.

Again, we pay money to the Queen through the Civil List. We do not tell her where she should fly abroad or what she should spend the money on. Some people complain about the amount of money that the Queen receives, but that is a different matter. But there is no way that this House can complain about the way she spends the money.

I think that the universities spend too much on floodlit all-weather football pitches, but that is their prerogative. They get the cash and they decide how they will spend it.

Generally speaking, there is not a great deal of pressure from politicians on how the BBC should spend its money. Who among us would want to answer questions from a general election audience complaining that, because we had not given the BBC enough money, it had lost "Match of the Day" and there were too many repeats of "The Good Life"? It would be totally counter-productive. If the BBC wanted to attack Parliament, it would only need to announce that it could not afford this or that type of programme and it would have a powerful weapon in its hands. The initiative would be on its side. Parliament, not the BBC, would then have reason to fear from interference. There would be no question of politicians interfering if the BBC got its cash in some other way.

A couple of months ago my hon. Friends the Members for York, Bolsover (Mr. Skinner), Stockport, North (Mr. Bennett), Rother Valley (Mr. Hardy), Coventry, South-West (Mrs. Wise) and I went to see Mr. Ian Trethowan and the BBC unions to try to impress on them the need for a different form of financing. We were pleasantly and well received. The unions—at that time in the middle of a pay battle with the BBC—were anxious to change the system and the BBC was conscious of the political backlash which came from the public every time it ran short of cash. The suggestion was that if the money did not come out of taxation or VAT, it could be collected on the national insurance stamp.

I can understand why the BBC should put forward alternative methods of raising revenue. Everywhere I go, whenever I talk to pensioners and people who cannot afford the licence fee, the immediate suggestion is "Why does not the BBC take advertising? If ITV and commercial radio can take advertising and make a profit, why does not the BBC do the same?"

I should not like the BBC to take advertising. First, there is not enough to go round with all the newspapers, commercial radio and ITV companies. Secondly, there would be a rat race in chasing what advertising there was. The BBC would therefore have to put on popular programmes and not so much the minority programmes in which many people are interested. We should have a continuous diet of American imports of pop-crime series, and that would be to the detriment of television.

Therefore, the suggestion that the fee should be included in the national insurance stamp was very good. I had it worked out by the Library. If the BBC's revenue were to be collected on the national insurance stamp, it would vary between 36p and 52p a week. That would mean that pensioners, non-working one-parent families, widows, the sick and the unemployed would not pay. On the other hand, a household which had two or three wage packets coming in each week would pay more. However, those wage earners would get the benefit if they became sick or unemployed or when they retired.

I think that that idea is generally acceptable to the BBC and to the unions. It may not be inflation-proof, but at least it would be wage increase-proof. As the general level of wages increased, so also would the BBC's income increase. It would not be influenced too much by the Treasury. There would be no dodgers. I do not know what the collection fee would be, but perhaps it would not be as much as that presently paid to the Post Office. It would be a good alternative system. It would be acceptable to the public, to the BBC and to the BBC unions. All that needs to be done is to produce something that is acceptable to the House.

I apologise for speaking quickly. I have done so as I know that many hon. Members wish to speak. I hope that my suggestion will meet with some approval from my right hon. Friend the Home Secretary.

10.50 p.m.

Mr. Clement Freud (Isle of Ely)

I begin by saying that somebody seems to be grilling toast and it is burning. I do not know whether one can announce "I spy toast".

Mr. Speaker

I have made inquiries. The hon. Member for Isle of Ely (Mr. Freud) is correct. However, I cannot stop toast being made and I cannot stop the smell coming through the air conditioner.

Mr. Freud

I am grateful, Mr. Speaker. I declare an interest. If the prayer is upheld, I in common with all other right hon. and hon. Members who work sporadically for the BBC will lose some income.

I agree that the present method of financing the BBC is far from ideal, but the prayer is plain daft. If any hon. Member feels that the public interest would be served by stopping BBC programmes tomorrow morning, that must be a great indication of how distant some hon. Members are from the wishes of those whom they represent.they represent.

It is right that there are less painful ways of collecting that must be found. As the hon. Member for Bassetlaw (Mr. Ashton) rightly said, a substantial sum could be raised by stopping the stupid anomalies. For example, there are hotels with 400 to 500 bedrooms paying one licence fee. It would not be difficult to charge a hotel per number of rooms. There is another anomaly that has not been mentioned. Anyone who has two homes, unless he lives simultaneously in both homes, which would be difficult to do, is asked to pay only one licence fee. It seems incredibly stupid that if someone is able to afford two homes he should be exonerated from paying two fees.

A difficulty that all hon. Members have encountered is the constant complaints that we receive from old-age pensioners about pensioners who live in warden-controlled property. It would be difficult to extend, as my hon. Friend the Member for Rochdale (Mr. Smith) is constantly trying to do, a system of free licences for old-age pensioners. Both parties during their time in Government have tried it. There is not much doubt that if anyone tried to bring it about there would be an enormous trade in old-age pensioners being programmed to apply for licences for homes that would otherwise pay the full fee.

I do not think that I have very much more to say. I know that many more hon. Members would like to speak.

10.54 p.m.

Mr. Julian Critchley (Aldershot)

I feel anxious about intervening in yet another domestic argument within the Labour Party, and by so doing I may run the risk of uniting husband and wife against me.

The Annan committee said that the licence fee system is the least unsatisfactory system of financing broadcasting that has so far been devised. It went on to claim that whatever its disadvantages—and they exist—the alternatives have even more disadvantages. The Government should not be attacked for trying to keep the licence fee. They are right to do so. They ought to be be rebuked for their funk and for their meanness in having limited any increase in the fee to one-year periods—a strategem to avoid unpopularity which adds up to financing the BBC on a grant-in-aid which is paid once a year, and with all the implications of a one-year grant-in-aid for the independence of the BBC.

Standards of programmes are bound to fall if the public are not required to pay more for what is, with whatever limitations, a fine service. But why are the Government so hostile to the BBC? It is no secret that there are those in the Cabinet who fear and dislike the BBC and wish to emasculate it. How else can we explain the adoption in the White Paper of that strange proposal for service management boards to help run the BBC—a proposal which, whatever, the motive of the right hon. Member for Stockton (Mr. Rodgers), is as silly as it is sinister?

There are two overriding objections to the arguments of those who would abolish the licence fee and substitute an income derived from the revenue. The first is that no Chancellor of the Exchequer, of whatever party, would welcome having to find an extra £300 million in revenue. The Conservatives, who are in business to reduce taxes, will not abolish the licence fee. The Labour Party, which wants to raise taxes—and the Chancellor of the Exchequer's threat to do so, made last week, is still ringing in our ears—has no wish to do so in this particular way.

The second vital reason is that the abolition of the licence fee and the substitution of Government moneys in its stead must erode the independence of the BBC. Perhaps this is really what some Labour Members below the Gangway really want. It would become an authority in name only. Broadcasting in England has grown up one step removed from the hot breath of Government. The BBC and the IBA are authorities armoured with their own sources of revenue, whether it be from the licence or from advertising. We do not like the Open Broadcasting Authority precisely because it would be dependent to a large part upon moneys from the Government.

At present, when the BBC asks for an increase in the licence, there is no examination in any detail, on the part of the Government, of the BBC's plans or its programmes. This would no longer be the case were the money to come from the Exchequer. Were that to happen, the working of the BBC would be scrutinised, one hopes in detail, by this House, and Ministers would become responsible for Questions in the House on the programmes themselves.

To all those who say "So what?" I would only remind them of what happened recently in Australia, when Mr. Gough Whitlam, a Labour Prime Minister, needless to say, ordered the Australian Broadcasting Commission to reduce its current affairs broadcasting—was there an Australian "Yesterday's Men"?—and, when the ABC refused to do so, smartly cut the funds of the ABC by the appropriate amount. Those hon. Members who believe that it could not happen here will believe anything.

Mr. Ashton

Is not the hon. Gentleman aware of the examples we quoted, namely, the Arts Council, the Civil List and the universities, about which it is impossible to table a Question in this House on how the money is spent?

Mr. Critchley

That does not alter the point of my argument, that the BBC's independence is a fact and is worth keeping and that, were its source of revenue to be changed over to taxation, that independence would be in doubt. Hon. Members need not accept my word for it. All I can accept in part is the word of the BBC, and hon. Members need not accept that. But I suggest also that it is lie considered verdict of the Annan committee, for what it is worth, that the licence fee is the least worst form of raising money for broadcasting. Indeed, the Annan committee examined all the alternatives to the licence fee. It resoundingly rejected the substitution of the revenue for the licence. It examined whether a proportion of VAT on the sale, rental and servicing of television receivers might be allocated to the BBC, but such a scheme would be highly complicated to administer and would not give the BBC a stable income.

Another suggestion was for tax on the sale and rental of television and radio sets. This, too, was rejected by the Annan committee.

There is another possibility—

Mrs. Audrey Wise (Coventry, South-West)

The Annan committee also recommended phasing out concessions to the elderly. Is that Conservative policy, too?

Mr. Critchley

I am a modest man, and I am sure that the hon. Lady would not expect me to repeat what Conservative policy may or may not be on any particular subject at the moment. [HON MEMBERS: "Oh."] However, if the hon. Lady waits patiently for a moment or two she will find that I have one or two surprises up my sleeve.

There is another possibility, namely, obliging the BBC to take advertising. This would provide an escape route for the Government, but at the expense of the BBC as we know it. I have not heard it suggested from the Labour Benches, and I do not think that it is a good idea. The BBC does not want it. We Conservatives favour ITV2, a second commercial channel to start in 1982, and an increase in the number of commercial radio stations to 60—and, one hopes, if the market will bear it, beyond. We have also to protect the interests of the newspapers. Even those of us on the Tory Benches who believe that the millennium will dawn on the arrival of the Conservative Party in power do not think that there will be enough advertising to go round.

Those who have tabled the prayer tonight have done so because they are at root egalitarians. I submit that we have already suffered far too much from equality as it is. Equality and an efficient economy do not go hand in hand, equality and a high culture are mutually exclusive, and equality is the recipe for the secondary modern State. The Government are right, in this instance at least, to resist them. We must face the fact that inflation will make the BBC's situation worse. It is already short of money and obliged to use its licence fee income to pay the interest on its overdraft. The licence fee must rise again in the autumn to cover the CAC award of 16 per cent., and the BBC by the end of April will reach the limit of its overdraft powers.

As inflation accelerates, as indeed it must do as a consequence of what is now happening, so the viability of the BBC will be threatened even more. We need a Government with the courage to provide the BBC with the money it requires. After all, even after the most recent increase, the fee is by far the cheapest in Europe.

We might also examine whether there are any ways on the margin whereby the Exchequer might help the BBC. For example, educational broadcasting might in future receive a Government subsidy, or the cost of transmission might be paid for out of the Exchequer. But these are subventions on the margin and would not subsititute the Exchequer payment for the licence fee itself.

We should make the licence fee more acceptable in its collection. At present 4 million people use the savings stamps scheme within the Post Office. Perhaps the licence fee should be paid every three months, or monthly, or even on one's Access, Barclay or Diners Club card.

Mr. Freud

Does the hon. Gentleman accept that those who have Access, Barclay and Diners Club cards are the very people who have no problems in paying their television licence fee?

Mr. Critchley

If the hon. Gentleman will believe that, he will believe anything. The great risk of having credit cards is that one overspends on each one. Nevertheless, this would be a facility and would make it easier for people to pay.

Mr. David Stoddart (Swindon)

We have heard a great deal about the licence fee, and the Government have been accused of funking the issue. Do I take it from the hon. Gentleman that the Conservative Party would agree with the BBC's proposal to increase the licence fee to £30 immediately?

Mr. Critchley

No, I would not go as far as to commit my party or myself to that. If the Government of the day, of whatever party they may be, slide into the habit of always paying the BBC for one year and one year in advance, the result will be to put the BBC's finances in the red and reduce the standard of its programmes, which, by and large, are extremely good. That has been happening because the present Government have been unable to meet the reasonable and legitimate demands of the broadcasting authorities.

There are some 60 local authorities which are prepared to pay the monochrome licence fee for old-age pensioners—this might usefully be extended—but for the great majority the licence fee is the least worse way. If it comes to a vote tonight, I hope that the Under-Secretary of State has her way with her party.

11.6 p.m.

Mr. Max Madden (Sowerby)

Most people with common sense will appreciate that this debate provides a useful opportunity to consider how best to finance the BBC. A growing number of people recognise that the present licence system is unfair, anamalous, outdated and a discriminatory poll tax which is no longer in the best interests of viewers or board-casters. The speech of the hon. Member for Aldershot (Mr. Critchley) was most revealing. Knowingly or unknowingly, he made some wildly contradictory statement on behalf of his party. He seems quite prepared to see a substantial increase in the price of the television licence but is reluctant to see the necessary funding coming from direct taxation.

Many retired people complain bitterly to me, and I am sure to many other hon. Members, about the anomalies and unfairness of the present concessionary schemes. I am sure that they will be interested to note that the official spokesman for the Opposition did not seem to know whether his party was in favour of or opposed to the phasing out of concessionary television schemes, which was recommended by the Annan committee.

We have all come to recognise that the way of raising revenue under the licence scheme, apart from being unfair and anomalous, is also expensive. The latest figures for 1977–78 show that the gross income under the licence scheme was some £287 million. The management administration costs were some £25 million. The amount spent on enforcement was £12.6 million.

It should also be noted that evasion is extremely costly. It is estimated that some 1 million licences are not paid. The lost revenue is estimated by the Home Office at between £15 million and £20 million a year. That is a growing cost. I understand that there are plans to renew the detector van fleet in 1981 at a cost of £600,000. There are other suggestions of a new computerised scheme coming into force in 1981, the cost of which I have not been able to ascertain.

One unfairness is that many hotels and other institutions with many television sets have to pay for only one licence. I understand that there are some eager beavers in the Home Office who are suggesting that existing legislation should be amended to ensure that hotels with 25 rooms or more should be required to pay for a licence for each room with a television set.

I have mentioned the concessionary schemes that are operated for some retirement pensioners. At present 68 local authorities operate some scheme or other. They are all riddled with great unfairness. Some retirement pensioners are paying only 5p if they live in certain types of accommodation, whereas the great majority, even if they are in distressing circumstances, are called upon to pay the full licence fee. They are all anomalous, costly and unfair.

We have heard mention made of the BBC external service. It is true that this is financed by a grant-in-aid from the Foreign Office. I understand that the latest amount for 1978–79 was about £34 million. I was told in reply to a question in December that the Government were not aware of any representations having been made from individuals or organisations about funding leading to any Government interference in the affairs or programme content of the BBC's external service. I was also told that the BBC enjoys "complete editorial independence". That is a view that is shared by the broadcasting authorities.

There is growing support from many of the broadcasting trade unions for an alternative way of funding the BBC. We have had discussions with many of these unions and there is now growing agreement that another way of financing the BBC, rather than by the existing licence system, must be found. The unions are not afraid of this leading to any incursions into their freedom or independence, and indeed many of us would argue that security of financing and confidence in having ample revenue with which to plan and budget for some years ahead would strengthen the BBC's independence and relationship with Government rather than lead in the other direction.

Finally, it is interesting to note the change of view of the director-general of the BBC in these matters. He began as an ardent supporter of the licence system, but he seems to have shifted his ground perceptibly over the last few months. In November he gave an interview to The Guardian in which it was reported that an even bigger shift seemed to have occurred in his attitude as a result of the BBC's long-term thinking on the licence fee. The article said: Trethowan hopes that after the election, given political stability, Parliament might look seriously at mechanisms which might save the annual cap-in-hand trip. He recognises the need to give something in exchange. The director-general went on to say: I would be perfectly happy to go to a Select Committee of the House to be accountable for our management. It is a curious thing that at present the IBA comes under the Committee on Nationalised Industries, but we do not. Yet in the 50s and 60s the BBC went five times to the Public Accounts Committee, and twice to the one on Estimates. Technically, you see, we are paid out of the Consolidated Fund. I would not object to our being called in that way again.

Mr. Critchley

What the director-general was suggesting in that article was the appointment of an arbiter to whom the Government of the day might be able to turn for a second and deciding opinion. But there are strong arguments against that, because we all know the fate of other arbiters in other circumstances.

Mr. Madden

It also recognises the fact that the director-general is quite prepared to accept a greater degree of accountability, and is also prepared to consider alternative ways of financing the BBC. I think his view has shifted even from those expressed in November.

I strongly suggest that in reply to this debate the Minister makes clear that the Government have reached a stage where they are prepared seriously and urgently to consider financing the BBC from the Exchequer—from taxation. The results of any review of those arrangements should be announced in six months. I think that all of us realise that the present system is a most unhappy one for the people who have to pay the licence fee, and also for the broadcasters. I believe that a better way could be found which would give the BBC proper revenue over a fixed period and, at the same time, introduce a greater element of fairness into the way in which the BBC is financed. That review should be initiated immediately, and I hope that this debate will play no small part in persuading the Government of the urgency of that task.

11.15 p.m.

Mr. Tim Rathbone (Lewes)

It seems that the principle underlying this instrument is the amount of money we are prepared to pay for a quality service of broadcasting throughout the nation. The money which we vote for the BBC is, broadly speaking, spent in two ways. First, it is spent in programme production, and, secondly, in salaries. It is the general consensus in the House that the BBC does not have enough money either to produce the programmes which it should produce or pay the salaries which it should be paying. That is seen in the number of repeats it has had to buy from abroad and in the number of people it has been losing to independent companies.

There is no doubt that the BBC has established for itself and for this country a yardstick of broadcasing which is renowned throughout the world. Anything which this House did to undercut that yardstick and undercut—let us face it—one of the few examples of British dominance throughout the world would be an absolute crime. That being said, I believe that the BBC should take upon itself a most careful examination to see whether it should be doing everything that it is doing. Should it be broadcasting Radio 1 and Radio 2? Should it not be concentrating on one or the other? Should it be trying to maintain a position of equality with independent broadcasting in local radio? Can it afford it? While these questions remain, questions must be raised whether the BBC is spending economically the money which this House votes.

Ultimately it is not just a question of quality: it is also a question of independence. In this country we have established BBC independence from Government paymasters in a way which is perhaps unique and which is certainly peculiar. If the licence continues to be the only source of revenue for the BBC, it is inevitable that the BBC will not have available the money that is required. It is inconceivable that the BBC could be voted the amount of money which it should have over a period of years to ensure programme quality, not only today but tomorrow.

Independence in programming must depend upon financial independence. It is no good thinking that a year-by-year review of the BBC licence will provide the BBC with the independence which we have hitherto had, with a licence which has run for as many as seven years without review. It is akin to an annual Treasury subvention. Reasonable parallels have been drawn between the amount and method of funding for the overseas service, pointing out that this could be considered as a method of funding the BBC in future.

As the hon. Member for Bassetlaw (Mr. Ashton) suggested, although not with any enthusiasm, other methods of funding should be looked into, particularly advertising. I do not believe that there is anything sacrosanct about the independence from commercial revenue in the BBC, as some have argued. Every producer who produces a programme for BBC 1 is seeking a major audience, irrespective of whether the funding comes from the licence or the Treasury. Broadcasting tomorrow is at stake in what we vote today Whatever the future may hold in terms of funding for the BBC, it is imperative that this House votes, through this instrument, the necessary funds for broadcasting tomorrow.

11.20 p.m.

The Under-Secretary of State for the Home Department (Dr. Shirley Summer-skill)

The regulations that we are debating were laid before this House by my right hon. Friend the Secretary of State on 24th November 1978 to come into operation on the following day. They increased the television licence fees from £9 to £10 for monochrome and from £21 to £25 for colour. My right hon. Friend informed the House last February that fee increases would come into effect at midnight of the day on which they were announced, as had been the arrangement in 1977.

When he announced these increases on 24 November, my right hon. Friend explained that the BBC was badly in need of increased revenue. The BBC had asked for increases to £12 for a monochrome licence and £30 for a colour licence, to last for three years. The increases my right hon. Friend announced were, however, designed to last for about a year, and he recognised that they would not provide for all the improvements to services which the BBC had wished to introduce. He said that at a time when the overriding need was to win the battle against inflation, viewers, many of whom had small incomes, would regard it as important that the increases should be kept to moderate levels.

I should like to emphasise what was said in the Annan report and in the Government's own White Paper on broadcasting. Many BBC programmes are good, and some are excellent; it has an, impressive reputation abroad; and the public are getting good value for the licence fee. The fee is, incidentally, one of the lowest in Europe. I think that the viewers themselves recognise that they get good value for their money.

There is always room for increasing the efficiency and cost-effectiveness of any organisation. But I suggest that the public recognise that good broadcasting costs money; that broadcasting costs, like other costs, are increasing all the time; that people get a great deal of pleasure from broadcasting; and that by and large they recognise that they are not being asked to pay an unreasonable amount for that pleasure. After all, the cost is only 50p a week for colour viewing—less than the amount the average household spends weekly on tobacco.

Since the increases in the television licence fees were announced, there has been an important development. As the House will know, the Central Arbitration Committee awarded an increase in pay to all BBC staff amounting to 12½ per cent. In addition, the committee is to allocate a further sum amounting to 4 per cent. of the BBC's pay bill to correct some anomalies within the corporation's pay structure. It has always been accepted that the Government's pay guidelines do not prevent CAC awards being paid in full. Such awards are legally binding. But these awards will involve substantial additional expenditure by the corporation and will bring it nearly to the limit of its borrowing powers in the spring rather than at the end of 1979. The cost of large pay increases, even ones compatible with the Government's pay guidelines, has to be found from somewhere. I am sure, however, that neither the House nor the public would regard a further increase in the licence fees in the near future as acceptable. Neither would such an increase be consistent with the Government's general aim of avoiding frequent price rises.

The BBC's borrowing powers of £30 million were established in 1964 when the BBC's expenditure was just over £50 million a year. It is now some £350 million, and there is a case for increasing the borrowing powers at this stage to take account of the increased scale of BBC expenditure. An increase in line with the retail price index would take the powers to over £100 million. My right hon. Friend, therefore, intends to apply for a supplemental Royal charter to increase the corporation's borrowing powers to £100 million. We shall need to discuss with the BBC what conditions should be applied to this. This increase in the corporation's borrowing ceiling will avert a further rise in the licence fees in the near future.

Mr. Critchley

Does not the hon. Lady agree that deciding that the only way in which she can help the BBC is to push it into debt must have some relation to the imminence of a general election?

Dr. Summerskill

I cannot agree with either of the hon. Gentleman's suppositions.

Two major arguments about the present licensing system have been expressed in this debate. The first is that some of my hon. Friends would like to see the system of financing the BBC through the licence fee replaced by finance from Government grant. My hon. Friends feel that such arrangements would be fairer than the present system in which every householder pays the same fee so that it is effectively a poll tax. The only choice is whether a person has a colour set or a monochrome set. I recognise the arguments my hon. Friends have put forward for this point of view.

On the other hand, the broadcasters themselves attach considerable importance to financing through the licensing system. In spite of the points made my hon. Friend the Member for York (Mr. Lyon), they consider that it guarantees their editorial freedom better than annual grant-in-aid. The director-general has made it clear to my right hon. Friend that the BBC remain firmly of the view that the licence fee is the best way of financing the corporation, though the BBC wants to see some changes in the arrangements for fixing and collecting the fees. The Annan committee considered a number of alternatives to the licensing system but concluded that the BBC should continue to be financed principally from the revenue of the licence fee.

In our White Paper, the Government accepted the Annan committee's conclusion. We said that we were conscious of the difficulty of adding to the planned levels of public expenditure and that we considered it impractical to increase them by sums of the order of £300 million a year. The figure is now some £350 million. We also recognised, however, in the White Paper that there was a question whether the licence fee should continue to provide the corporation with an adequate source of income in the longer term. Just over 60 per cent. of the licences are now for colour television. At some stage there will cease to be the increase in revenue due to people switching from monochrome to colour television and so paying the more expensive licence fees. There are many difficult and important matters to be considered in this respect.

My right hon. Friend also acknowledged in November the problem created by a one-year increase in the licence fees for the BBC's future planning and said that the Home Office was prepared to have discussions with the BBC about its future financial requirements and the basis on which it could be enabled to carry forward its longer-term planning. These discussions have started. They will give us a better basis for judging the likely needs of the BBC over a period of years and how best they can be met. I would hope that we should be able to publish some material about our discussions in the middle of the year.

The second main argument has been that pensioners and other handicapped people should have free or concessionary licences. Everyone is aware of the strength of feeling about retirement pensioners and of the criticism of the discrepancy between the cost of a licence for those in old people's homes and that for others. An extension of concessions would be extremely expensive simply because there are now so many pensioners. Households with one or more pensioners account for about one-third of the licence revenue—over £100 million. Therefore, the whole issue of free licences or concessionary licences is far more complicated than would appear from the debate. It would be helpful if a full, factual explanation were prepared of what would be involved in concessions for pensioners and other groups. My right hon. Friend has arranged that this will be done and that the result will be published.

Another grievance that is expressed concerns the method of payment. For many people, £25 is a significant amount to pay in one lump sum. The television licence savings stamp scheme is of great help. Many people use it and I wish that more would do so. But there may be other ways of making payments easier under the system by instalment payments. The standing working party on the administration of the licensing system, on which the Home Office, BBC and Post Office are represented, has already begun a study into this subject and its report, too, will be published.

I have mentioned three studies which are, or will soon be, going on into various aspects of the licensing system, and the results should be available for publication together around the middle of the year. Our object, without commitment, is to set out in an orderly way for the information of Parliament and the public the costs, advantages and disadvantages—

Mr. Speaker

Order. The Question is—

Mr. Alexander W. Lyon

Mr. Speaker, I have considered the somewhat inadequate words at the end of the motion, which seem to cover our anxieties—

Mr. Speaker

Order. It is too late for points of order.

Mr. Lyon

I was not—

Mr. Speaker

Order. The hon. Gentleman does not have to vote if he does not wish to.

It being half-past Eleven o'clock, Mr. SPEAKER put the Question, pursuant to Standing Order No. 4 (Statutory Instruments, &c. (Procedure)).

Question negatived.