Commons Sitting of 18 February 1980

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  WALES

    Wales Trades Union Congress
    Mr. Allan Robertsasked the Secretary of State for Wales when he plans next to meet the Wales Trades Union Congress to discuss the steel industry.
    Mr. Barry Jonesasked the Secretary of State for Wales when next he proposes to meet leaders of the Wales Trades Union Congress.
    The Secretary of State for Wales (Mr. Nicholas Edwards): My right hon. Friend the Secretary of State for Industry and I will be meeting representatives of the Wales Trades Union Congress on 25 February.
    Mr. Roberts: When the Secretary of State meets the Wales TUC, will he explain to it why the Conservative Party in Wales is still extolling the virtues of owner-occupation when, at a stroke, by closing down the steel industry in whole areas of Wales the Government have destroyed what stake owner-occupiers had in their country?
    Mr. Edwards: I do not believe that it is of any help to owner-occupiers to continue to support an industry which cannot compete in world markets.
    Mr. Barry Jones: Does the right hon. Gentleman agree that the loss of 7,500 jobs in four months in my constituency poses a real strain on the social fabric of the area as well as on the local economy? What hope of new jobs can he offer in the imminent near future? Will he take time to examine the underrated, unsung and vulnerable textile industry in my constituency, where 4,000 jobs have been lost in a decade, and in which Deeside Mill is at risk, involving 500 jobs?
    Mr. Edwards: I agree with the hon. Gentleman about the strains and difficulties that these events create and by the announcement of measures of assistance the Government have indicated that they will do everything in their power to create the infrastructure to attract fresh industry. There have been other announcements, concerning the titanium plant and the coal research project, which

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    I hope will prove helpful. I shall consider what the hon. Gentleman has said about the textile situation to see whether more can be done.
    Sir Anthony Meyer: When my hon. Friend meets the Wales TUC, will he invite it to condemn not merely the use of force by pickets but the use of intimidation as a weapon?
    Mr. Edwards: I think that it would perhaps be best to refer the Wales TUC to the White Paper issued by the previous Government, following consultation with the TUC, in which these practices were condemned and a clear statement was made by the TUC that it would support measures to uphold the law.
    Mr. Roy Hughes: Will the right hon. gentleman appreciate that this is not a kid-glove affair? A serious situation exists throughout the steel and coal industries in South Wales. The right hon. Gentleman can be assured of a warm welcome when he meets the Wales TUC, but will he meanwhile, prevail upon the Secretary of State for Industry to intervene in the dispute?
    Mr. Edwards: I do not underestimate the seriousness of the situation. That is why, at a time when the Government are engaged in a round of difficult public expenditure cuts, we have thought it right to make a substantial sum of money available for remedial measures in the area.
    Mr. Alec Jones: Has the Secretary of State seen the article in The Times today which refers to an estimate by the Manpower Services Commission of 2 million unemployed in the United Kingdom next year? When the right hon. Gentleman meets the Wales TUC, will he disclose to it how many Welshmen and Welshwomen will be part of that 2 million? Above all, will he disclose what steps he intends to take to solve the problems associated with the rundown in the steel and coal industries? His Micawber-like attitude of waiting for something to turn up is proving disastrous for the people of Wales.
    Mr. Edwards: Of course I shall discuss these matters with the Wales TUC. That is why we have invited it to come and see us. I shall listen to any constructive proposals that it has to make.
    Several Hon. Members rose—
    Mr. Speaker: Order. This matter comes up again.

    Welsh Development Agency
    Mr. Knoxasked the Secretary of State for Wales when he intends to meet the chairman of the Welsh Development Agency.
    Mr. Nicholas Edwards: I meet the chairman frequently.
    Mr. Knox: At my right hon. Friend's next meeting with the chairman will he be discussing the investment programme of the Agency, in the light of the failure of Leiner? How much will the company's crash cost the Agency?
    Mr. Edwards: I have had discussions with the Agency about its investment programme and we have indicated that we think it right that, out of the reduced sums available to the Agency, it should concentrate primarily on the small business sector. The Agency made a £2 million investment in Leiner on 2 February 1979, and at that time it was owed about £800,000 for services. Since then the amount outstanding for services has continued to rise and, although the company has gone into receivership and one hopes that there will be some recovery, there is a possibility that the agency will face a substantial loss.
    Mr. John: Does the right hon. Gentleman agree that the Leiner problem must be judged by two criteria, namely, the maintenance of employment and manufacturing capacity and the safeguarding of public expenditure? When he meets the WDA, will he ask about what seems to be an extraordinary decision to call in £500,000 from the company at six hours' notice, thereby forcing it into receivership, when the WDA knew that a contract signed with Romania a month ago would have given £1 million profit to the company and that the sale of the encapsulation plant, which has been interrupted, was nearing fruition? What hope can the right hon. Gentleman give to those working at the plant, who are so diligent that they won the Queen's Award to Industry three years running?
    Mr. Edwards: The company made substantial losses before the investment took place, and since then there has been

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    a large over-capacity in the industry. The situation was deteriorating and the bank had first charge on the moneys from the American deal. I have made clear to the WDA that it would have complete discretion over the way in which it handled the difficult and deteriorating situation.
    Sir Raymond Gower: While there must be the most detailed and careful examination and investigation of this serious matter, may I ask whether my right hon. Friend agrees that it is not one in which a hasty judgment should be reached, because many companies have been placed under great pressure by economic and industrial events all over the world, and the Leiner company has had a splendid record for a quarter of a century?
    Mr. Edwards: The company had had a good record, though at the time that the investment took place the losses made in the previous year ensured that the money put in went simply to meet those losses and was fully absorbed by that. I repeat that I have made clear to the chairman and chief executive of the WDA that they must have complete discretion in how they handle the difficult situation facing them.
    Mr. Rowlands: When the Secretary of State meets the chairman will he apologise for the shameful attempts that he has been making to fob off on to the Agency responsibility for the suspension of all derelict land schemes in Mid-Glamorgan as a result of the petty-minded public expenditure cuts that the right hon. Gentleman has imposed on the Agency? Does not he consider that action to be a grave offence to a county with an enormous amount of derelict land, with communities such as my own, from which the idea of derelict land clearance originally stemmed?
    Mr. Edwards: The WDA initially allocated about £6 million to derelict land clearance in its budget for this year, as against expenditure last year of about £7 million. In doing so it took account of the need for priority expenditure on advance factory programmes There was a massive continuing commitment which it had to meet before launching into new schemes. It is clear that as a result of the additional sums that I have made available in connection with the
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    steel closures in South Wales there will be more money available for derelict land clearance where it is linked to the preparation of sites for industrial development.
    Mr. Wigley: Reverting to the Leiner decision, and in view of what the hon. Member for Pontypridd (Mr. John) said, will the right hon. Gentleman confirm that because of the Romanian deal, the sale of the capsule side and the willingness of the family to give up its holding in the company, the bank was not going to press its rights, and that if the WDA had not pressed the company it could have continued for a considerable time?
    Mr. Edwards: The bank had prior charges, and the substantial service debts were mounting steadily. We have not yet seen the audited accounts for the previous financial year, which may indicate that losses were even greater than was thought when the investment was made. I have made it clear that the WDA must look at the situation on a day-to-day basis and make decisions in the light of the information available to it, after discussions with the bank, on the proper way forward. I understand that that has happened.
    Mr. Hooson: Is my right hon. Friend satisfied that the WDA has instituted financial control systems that will adequately protect public money from this sort of loss in future?
    Mr. Edwards: I have instituted tighter guidelines for this sort of investment, and I have great confidence in the new chairman whom I have appointed and who takes over an extremely difficult situation.
    Mr. Alec Jones: Does not the right hon. Gentleman agree that from some of the comments made in the House today, and from certain press reports of the past week, there seems to have been an over-hasty judgment in the Leiner case? I should make clear that the Opposition want the WDA to succeed in all its activities. Its investment activity is essential to preserve and create jobs in Wales. Is the right hon. Gentleman aware that I look forward to an early statement from him or the WDA on this issue?
    Mr. Edwards: I shall certainly draw to the attention of the chairman the right hon. Gentleman's desire for a statement,

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    but I do not believe that his suggestion about over-hasty action is true. The situation has been deteriorating. The WDA has been considering it for many weeks and has been engaged in discussions with the banks and other interested parties. Other negotiations that have been taking place have been relevant and have had to be taken into account in decision making. I told the chairman a week or so ago that I must leave it to him to decide what course of action he, the chief executive and the board choose to pursue.

    Wales Gas
    Sir Anthony Meyerasked the Secretary of State for Wales when he expects to meet the chairman of Wales Gas.
    Mr. Nicholas Edwards: I have no immediate plans to meet the chairman of Wales Gas.
    Sir A. Meyer: Is my right hon. Friend aware that the proposed steep increases in gas prices, though reluctantly accepted as essential by many, are causing great apprehension to a large number of people? Will he be more specific than Ministers have been up to now in saying what measures of alleviation are proposed for those who will be hard hit by the increases, not merely the over-75s?
    Mr. Edwards: My hon. Friend is aware of the scheme anounced on 22 October last year, which was designed to provide help for those most in need. The Government have made it clear that they are reviewing the whole range of measures available to assist those in the community most in need of help with fuel bills, and an announcement will be made in due course.

    Transport and General Workers Union
    Mr. Wigleyasked the Secretary of State for Wales if he will meet the Gwynedd officers of the Transport and General Workers Union.
    Mr. Nicholas Edwards: I have no present plans to do so.
    Mr. Wigley: Is the Secretary of State aware of the tremendous support in Caernarvon for the Transport and General Workers Union and others involved in the fight to save the Bernard Wardle company, which is under threat of
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    closure? Has he taken up with Mr. Graham Ferguson Lacey, who is involved in a takeover bid for the Wardle group, the future of the Caernarvon plant, as his new set of directors may be responsible in a few weeks' time and could seriously reconsider the decision to close the Caernarvon factory?
    Mr. Edwards: The hon. Gentleman and I have had a discussion about the company, and I understand that he will be attending the meeting that is to take place on Friday. My officials are keeping in the closest possible touch with the company and we will do everything in our power to assist if there seems to be a sensible way to proceed.

    River Conwy (Submersible Tunnel)
    Mr. Bestasked the Secretary of State for Wales when he will publish the results of the feasibility study by consulting engineers R. Travers Morgan into a submersible tunnel crossing the River Conwy; and when he will indicate his decision on the matter.
    The Under-Secretary of State for Wales (Mr. Wyn Roberts): We expect to receive a report shortly. We will need to study it before saying when it could be made available to interested parties.
    Mr. Best: Is my hon. Friend aware that, on environmental grounds, a tunnel would be preferable, and that a decision will have to be taken shortly to meet the Secretary of State's deadline of 1987–88 for a route of strategic economic importance to the people of North Wales? I am sure that my hon. Friend is aware of that, bearing in mind that he represents the constituency of Conway.
    Mr. Roberts: I cannot give any commitment about the timing of publication, let alone a decision, until we have seen the report. I fully appreciate the importance of completing the improvements along the whole of the A55 as soon as possible.
    Mr. Wigley: Will the Minister confirm that the 1987 target date for completion of the dual carriageway can be met if they continue with the tunnel under the Conwy Estuary?
    Mr. Roberts: As I have already said, we have not seen the report, and it

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    is impossible for me to answer that question. Various sections of the improvements are scheduled for different years. In the coming year, 1981, three schemes started will be totalling in value more than £120 million.

    Flood Emergency Arrangements
    Mr. Hoosonasked the Secretary of State for Wales whether he is satisfied with his review of flood emergency arrangements with Welsh county councils and whether he will make a statement.
    Mr. Hudson Daviesasked the Secretary of State for Wales whether he is satisfied with his review of flood emergency arrangements with Welsh county councils.
    Mr. Wyn Roberts: The review of flood emergency arrangements is not a Welsh Office review. The county councils whose areas were affected by the floods of 27 and 28 December are conducting reviews, and they have been asked to let my right hon. Friend know the results of these reviews. We have not yet received their reports, but I know that the authorities concerned are examining any deficiencies in the emergency arrangements with a view to ensuring that they work smoothly in future.
    Mr. Hooson: When speaking to the county councils about the lessons that they have learnt from the floods experienced after Christmas, will my hon. Friend bear in mind two obvious needs: first, the need for a better early-warning system, and secondly, the need to have emergency supplies available to the voluntary organisations, which moved so swiftly on that occasion?
    Mr. Roberts: I am aware that early warnings were not received in some areas. There were difficulties in maintaining telephone communications. In some areas there were difficulties also in interpreting the information provided by the water authorities. The position is being reviewed by the authorities concerned, to avoid similar problems in future.
    I wish to add my tribute to the work of the voluntary organisations.
    Mr. Ioan Evans: Is the Minister aware that there is dissatisfaction over the lack of immediate financial aid from the Government? Although there is the agree-
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    ment to give the product of the 1p rate, the need is immediate. Local authorities had to appeal for EEC funds. If we are giving £1,000 million to Europe, why cannot we establish a fund to meet the immediate needs of those who lost their possessions in the floods?
    Mr. Roberts: I am sure that the hon. Gentleman is aware of the aid that is available. Local authorities can give aid, and the Government will meet it above the cost of a 1p rate. What is under the 1p rate might rank for rate support grant. Moneys properly given by local authorities in individual aid can qualify for rate support grant also.
    Mr. John: Does the Minister accept that the inhabitants of the areas stricken by the floods would trade all the early-warning systems in the world for an assurance that preventive action will be taken by the Welsh water authority to prevent such floods from happening again?
    Mr. Roberts: The Welsh water authority intends to review the whole of its system, including the warnings given to the police and the local authorities, and the problems of maintaining communications. It intends to hold regular exercises with the police and the local authorities to ensure that those involved are aware of the local plans and of their responsibilities within those plans.
    Mr. Geraint Howells: Has the Secretary of State received any representations from the National Farmers Union in Wales and the Farmers Union of Wales about the losses sustained in the floods?
    Mr. Roberts: I am not aware that my right hon. Friend has received any representations from the farmers unions. We are well aware that many farmers sustained substantial losses.
    Mr. Alec Jones: Is the Minister aware that while it is true that many parts of Wales affected by the recent flooding did not receive adequate warning, the Government cannot say that it is entirely a matter for county councils? Apart from the emergency measures that are necessary, many of the preventive measures are the responsibility not only of local authorities but of the water authority, the Welsh Development Agency, the nationalised industries and the Forestry Commission, all of whom have a role to play.

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    Is the Minister aware that the Welsh Office is the one body in Wales which should co-ordinate the activities of all the other bodies?
    Mr. Roberts: We are taking a considerable and active interest in the matter. I cannot agree with the right hon. Gentleman about the local authorities, which do a good job. They would rightly resent intervention on our part. They have the powers and the organisation for dealing with emergencies, and, most importantly, they have the manpower and the plant needed. I feel a sense of personal concern for those who suffered, but that does not mean that we need to take over the role of the local authorities.

    Local Authority Associations
    Mr. Colemanasked the Secretary of State for Wales what consultations he has had with the local government associations in Wales.
    Mr. Nicholas Edwards: My consultations with Welsh local authority associations naturally embrace a wide range of issues.
    Mr. Coleman: In the Minister's discussions with the local authority associations, has his attention been drawn to the widespread opposition to the proposals in the Rayner report for the payment of social security benefits through sub-post offices? Is he aware of the concern of the Mid-Glamorgan county council over the way in which old-age pensioners will be disadvantaged if the nonsense proposals are permitted to go through? Will the right hon. Gentleman bring his influence to bear upon his Cabinet colleagues and draw their attention to the widespread opposition in Wales to the proposals?
    Mr. Edwards: The matter is to be debated in the House tomorrow. I must disabuse the House of the notion that old-age pensioners are to be made to receive their pensions in that way. The object is to offer a wider choice to those who wish to receive payment by way of cheque.
    Mr. Coleman: That is absolute nonsense.
    Mr. Edwards: The Government are consulting widely on the suggestions, and no final decision has been taken.
    Sir Anthony Meyer: Is my right hon. Friend aware that on this side of the
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    House also there is great concern lest the very desirable changes proposed should result in any closures of sub-post offices? What do the Government propose to prevent that?
    Mr. Edwards: We have received a large number of representations on the matter. The issue is to be debated in the House tomorrow.
    Mr. Anderson: Is not the Secretary of State seriously concerned about his party's tarnished image in Wales? Will he consider seeking advice from Saatchi and Saatchi so that he can convince the councils, the steel workers, the coal miners, the railwaymen and the post office workers that the Conservative Government are good for them?
    Mr. Edwards: I shall continue to do my best to ensure that the interests of those in Wales are protected. I shall be content to defend the Government's policy. I have obtained from my Cabinet colleagues an additional £48 million by way of assistance to ensure that effective measures are taken in the South Wales area.
    Mr. Best: If my right hon. Friend further employs the services of Saatchi and Saatchi, does he agree that its services would be better employed in pointing out the myopia of Opposition Members, who think that the ills confronting Wales have occurred during the past nine months only and are not a result of the previous Administration's policy?
    Mr. Edwards: Most of the problems result from the attitude of the Leader of the Opposition, who believes that public expenditure does not count a tuppenny damn.
    Mr. Alan Williams: Is the right hon. Gentleman aware of the preposterous proposition by the Secretary of State for the Environment that he will take into account the speeches of members of county and district councils when deciding whether to apply financial sanctions under the rate support grant? Does the right hon. Gentleman intend to apply such a policy in Wales? If so, how does he intend to justify this curbing of the natural democratic right of councillors to express their criticisms?
    Mr. Edwards: We have made it absolutely clear that councils, which attempt

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    seriously to conform with Government policy on public expenditure will not be penalised for incurring exceptional and unavoidable expenditure, as, for example, with the recent floods.

    National Coal Board
    Mr. Ioan Evansasked the Secretary of State for Wales when he last met the chairman of the National Coal Board, Wales region.
    Mr. Nicholas Edwards: I last met the area director, NCB South Wales on 20 November 1979.
    Mr. Evans: Did the right hon. Gentleman discuss with the area director the possibility of investment in the Ancit process at the Phurnacite plant in Aberaman, bearing in mind that with the increase in gas and other energy prices there is likely to be an increased demand for this type of fuel? Did he discuss the great difficulty that now faces Wales with the possible closure of Port Talbort and Llanwern, and the effect that that will have on the coal industry in South Wales? Will he use his influence in the Cabinet to prevent these closures from taking place?
    Mr. Edwards: We discuss all these issues. The Government are making available to the NCB substantial sums for its investment programme. Its programme for the current year amounts to over £600 million, of which about £250 million is in the form of grants. The increase in oil prices makes it a good deal easier for the NCB to meet some of the problems with which it is faced.
    Mr. Best: Will my right hon. Friend pay close attention to the imports of coking coal, which are causing so much concern among the mine workers in Wales? Is he aware that in 1978, 9·2 per cent. of coal consumed at United Kingdom coke ovens was imported, and that the provisional figure for 1979 is 15·7 per cent.? Will he look carefully into that?
    Mr. Edwards: An agreement has recently been made between the NCB and the British Steel Corporation which will mean no increase in imports of coking coal in the next year. That will undoubtedly be of considerable assistance to the South Wales industry.
    Mr. Alec Jones: Is the Secretary of State aware—if he is not he can confirm this fact when he next meets the NCB—that the agreement between the National Coal Board and the BSC is financed entirely by the NCB, with the Government making no contribution? Does he realise that the agreement provides only one year's respite—just a breathing space—for the two industries and for the South Wales coalfield? If that coalfield is to be viable, providing coal from Aberaman and other places—coal which will be badly needed in the future—there will have to be public investment by the Government.
    Mr. Edwards: I have indicated the scale of public investment in the coal industry. I do not think that it is entirely wrong that, on a turnover of about £3,000 million, when oil prices have risen sharply, the National Coal Board should have to meet the cost of the additional subsidy required.

    Roads (Newport)
    Mr. Roy Hughesasked the Secretary of State for Wales if he has had any recent discussions with Gwent county council concerning the completion of Newport's road plans and including a fourth river crossing.
    Mr. Wyn Roberts: No, Sir. The programming of local road schemes is a matter for the county council to determine.
    Mr. Hughes: When production is proceeding normally about 20,000 people a day travel into Newport to pursue their employment, with all the environmental pollution and congestion that that causes. Environmental considerations apart, does not the Minister appreciate that if South-East Wales is to have any hope for the future these vital developments in Newport must be given the highest priority?
    Mr. Roberts: I am fully aware of the traffic congestion to which the hon. Member refers. Various steps are being taken. There is currently a widening scheme primarily intended to reduce delays and the dangers caused by heavy vehicles overtaking on the upgrades of the M4. Alternative ways of reducing traffic through the Crindau tunnels are being investigated.

    Common Agricultural Policy
    Mr. Geraint Howellsasked the Secretary of State for Wales if he will make a statement on his plans to reform the common agricultural policy; and if he will make a statement.
    Mr. Nicholas Edwards: The common agricultural policy is in need of urgent and permanent reform and the Government will have that fact very much in mind during the price fixing negotiations now being embarked upon.
    Mr. Howells: I am grateful to the Minister for his reply. Is he in favour of deficiency payments for the intervention system? Does he favour selling our butter to the Russians at 30p a pound while charging the elderly in this country nearly £1 a pound? If he believes that Welsh agriculture is to survive and compete on equal terms with its counterpart in Europe, does he believe that the green pound and the MCAs should be abolished so that we may compete in that market?
    Mr. Edwards: We have made it perfectly clear that we are opposed to the sale of cheap butter to Russia and will do our best to prevent it. My right hon. Friend has taken a strong, firm line there. With regard to MCAs, the Government have implemented three green pound devaluations since coming into office, and that, combined with the strength of the pound, means that the MCA gap has largely been eliminated.
    Mr. Hooson: Will my right hon. friend ensure that British payments to the Community under the CAP are conditional upon French adherence to the Treaty of Rome in respect of sheep and lamb imports?
    Mr. Edwards: My hon. Friend well knows that we have been pressing the Commission very hard to take action against the illegal acts of the French Government on lamb imports. We shall continue to press the matter and to press the Commission for action.
    Mr. Denzil Davies: Will the Secretary of State make it clear to the Minister of Agriculture, Fisheries and Food that any price increases resulting from the price fixing negotiations will merely mean an increase in our budgetary contribution? Will the Government therefore veto all
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    price increases in order to keep our contribution down to the existing £1,000 million?
    Mr. Edwards: We are totally opposed to price increases which will have the effect of increasing the present surpluses, and we shall take a strong line on that. But we must also be opposed to measures which are discriminatory against our farmers, and which seek merely to penalise our farmers but not those elsewhere in Europe.
    Sir Raymond Gower: Does my right hon. Friend recall that a few years ago butter was sold through a special concession to elderly persons? Does he realise that that was a better method of dealing with the surplus?
    Mr. Edwards: I note that. This matter is not entirely within the hands of the Government, but my right hon. Friend has taken a strong line in the Council of Ministers on this issue and will continue to do so.

    Nationalised Industries
    Mr. Alan Williamsasked the Secretary of State for Wales when last he met the representatives of the nationalised industries in Wales.
    Mr. Nicholas Edwards: I met the BSC Welsh division managing director and the NCB area director in separate meetings on 20 November.
    Mr. Williams: Has the right hon. Gentleman discussed with representatives of the Post Office in Wales the threat of the closure of hundreds of sub-post offices throughout the Principality as a result of the proposition put forward by the Government for the payment of pensions? Is he aware that this is causing deep alarm to pensioners and the disabled? Will he, as a matter of urgency, have discussions with those who represent the disabled and pensioners to establish precisely what will be the effect of these proposals if they go ahead?
    Mr. Edwards: We have already dealt with this matter today. I have made it clear that some of the fears are based on a total misunderstanding and misrepresentation of the proposals. The matter will be debated tomorrow, and the facts can then be clearly established.
    Sir Anthony Meyer: Will my right hon. Friend use any forthcoming meetings that he may have with the heads of nationalised industries in Wales to get across to them and to the public the message that though taxpayers' money may be available for public investment in nationalised industries, under no circumstances will it be available to finance wage increases which are unmatched by productivity?
    Mr. Edwards: The Government have made their position on that matter abundantly plain.
    Mr. Barry Jones: Will the Secretary of State urge a rethink by his Cabinet colleagues and the British Steel Corporation of the dangerously low steel target of 15 million tonnes a year? For an industrial nation and a strategic industry, that is very worrying. Will he urge his Cabinet colleagues to look at the ruinous number of foreign cars being imported, bearing in mind that such imports destroy the jobs of British steel workers?
    Mr. Edwards: Under the present plans there is a good deal of spare capacity for an increase if British Steel can sell the product. The problem is the corporation's inability to sell the steel. Certainly it is not in the interests of the British motor car industry, which faces its own difficulties, that BSC continues to be uneconomic and uncompetitive.

    Derelict Land
    Mr. Andersonasked the Secretary of State for Wales whether there has been a change in his policy on the reclamation of derelict land in Wales.
    Mr. Nicholas Edwards: No. As I told the Welsh Grand Committee last November, I have asked the agency to give priority to factory building, provision of infrastructure, and derelict land clearance, rather than investment.
    Mr. Anderson: Can the Secretary of State confirm that, in a letter of 24 January, all the counties in Wales were informed that it was unlikely that any new projects for land reclamation would be authorised in this calendar year? How much, if any, of the £48 million allocation will now be available for land reclamation?
    Mr. Edwards: I cannot give an answer to the last question. I expect that expenditure on land reclamation will be more in total than it was in the previous year. The Welsh Development Agency is considering plans for developing industrial sites to meet the need in South Wales. Clearly, land reclamation is needed to carry schemes into effect. The Briton Ferry site is an example of an area where reclamation is required before factories can be built.

    DEEDS OF COVENANT
    Mr. Jesselasked the Chancellor of the Duchy of Lancaster whether he considers that on balance a reduction in the minimum period for charitable deeds of covenant from seven to four years would result iv increased private support for the arts.
    The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): Although the overall effect is impossible to predict, there is a widely held view in the arts world that a reduction in the minimum period of charitable covenants for the purposes of tax relief would increase private support for the arts. However, any reduction would also have important consequences for other charitable bodies and for the Exchequer.
    Mr. Jessel: Apart from the view of the arts world and charities, is my right hon. Friend aware that the public would welcome a reduction from seven to four years? Will he encourage the Chancellor of the Exchequer to propose such a reduction?
    Mr. St. John-Stevas: I shall certainly encourage my right hon. and learned Friend the Chancellor of the Exchequer to do anything that will benefit the arts. The difficulty is that some people might execute deeds of covenant for periods shorter than they otherwise would. That would result in a loss of revenue to the charity concerned. That might be balanced by others who would be encouraged by the shorter period. There is a balance. I shall convey my hon. Friend's views to the Chancellor of the Exchequer.
    Mr. Faulds: Does the right hon. Gentleman not agree that the total removal of VAT would be the simplest way to serve

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    the best interests of all the arts throughout the kingdom?
    Mr. St. John-Stevas: What a wonderful thought that is. How much I regret that the hon. Gentleman's Government never did that.
    Mr. David Price: In view of the slightly equivocal advice given to my right hon. Friend on whether four or seven years is right, will he be daring and suggest an experiment based on four years to see whether it provides more revenue for the arts, as I and my hon. Friend the Member for Twickenham (Mr. Jessel) believe it will? Why does not my right hon. Friend try it?
    Mr. St. John-Stevas: I am always willing to be bold, but if I tried to interfere with the responsibilities of my right hon. and learned Friend the Chancellor of the Exchequer my actions, experimental or otherwise, would be received with less than rapture. I shall certainly pass on those important views.
    Mr. Cormack: Does my right hon. Friend accept that one of the great attractions of the switch to four years is that people would tend to uprate their covenants? Does my right hon. Friend agree that the seven-year covenant remains at a fixed sum and is not reviewed during that period? That is why so many people would like to see the period changed.
    Mr. St. John-Stevas: That is a valid point, but it will not be quite so important once the Government have brought inflation under control and down.

    ALGARDI BUST
    Mr. Abseasked the Chancellor of the Duchy of Lancaster what consultations he has had with the review committee on the export of art relating to the Algardi bust.
    Mr. St. John-Stevas: I refer the hon. Member to the answer that I gave my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack) on Thursday 7 February.
    Mr. Abse: Is there not a real mischief, which is damaging to Britain's place as the centre of the art world, if reputable
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    auctioneers such as Christies fail to be give notice of any agreements or partnerships that are formed? Does the right hon. Gentleman agree that, to protect our art treasures and the reputation of our art market, it is essential that dealers ensure that they have as officers in their associations people whose behaviour and conduct are impeccable?
    Mr. St. John-Stevas: I can express my agreement without drawing any inferences from what the hon. Gentleman said. This matter involves a number of important technicalities which are being examined by the Department of Trade.
    Mr. Fell: Will my right hon. friend please not stand in the way of the export of this bust, which is not all that brilliant?
    Mr. St. John-Stevas: I value my hon. Friend's opinion, but others in the art world, who are equally expert, think that this is an outstanding piece of sculpture. I have not yet been able to reach a decision because of the technical questions which are under consideration. I am most anxious to dispose of the matter as soon as they are out of the way.
    Mr. Faulds: The right hon. Gentleman really must do better than that. Is he aware that Agnew's did not, as required, put on the application export form the co-owners of the bust, and that even the reviewing committee was not told, as it should have been, that the three buyers, were acting in syndicate? Is it not desirable, in the right hon. Gentleman's own interests, that a decision on a prosecution be come to speedily so that there can be no appearance of his involvement in the cover-up of an illegal conspiracy?
    Mr. St. John-Stevas: The hon. Gentleman is his usual moderate and balanced self. I am not involved in any cover-up. The question of bringing prosecutions is for the Attorney-General and the police. Until the investigations have been completed I cannot reach a decision. As soon as the investigations are complete I shall reach an early decision.
    Mr. Faulds: Again, that is not good enough. Is the right hon. Gentleman aware that I received an answer today from the Attorney-General, in which he said that no complaint had been made to him? What is the right hon. Gentleman doing?
    Mr. St. John-Stevas: It is not up to me to make complaints to the Attorney-General. I am saying that it is a matter for him. If the hon. Member for Warley, East (Mr. Faulds) is so keen that a prosecution be brought, and if he is sure of his facts, why does not he approach the Attorney-General himself?
    Mr. Goodlad: Is my right hon. Friend aware that the Waverley committee took the view that where a fully substantiated international market price has been agreed at arm's length, that price should determine an offer to be made by a British public body? Does he further agree that in this case the review committee was not equipped to pronounce on value, did not seek independent advice on value, as required by the Waverley committee, and was advised by three museum officials—a category of person who was said specifically by the Waverley committee not to be impartial?
    Mr. St. John-Stevas: The Waverley report, on whose recommendations our export control system is based, recommended that for every export stopped a clear market price should be specified. As a general proposition, I believe that where there is a genuine offer to purchase that must constitute the fair market price.

    PROVINCIAL SYMPHONY ORCHESTRAS
    Mr. Stephen Rossasked the Chancellor of the Duchy of Lancaster whether, when assessing the Arts Council grant for the coming financial year, he will take into account the critical financial situation facing a number of provincial symphony orchestras such as the Bournemouth symphony orchestra.
    The Under-Secretary of State for Education and Science (Mr. Neil Macfarlane): My right hon. Friend hopes to ensure that the Arts Council will be able adequately to discharge its obligations, including support for provincial symphony orchestras.
    Mr. Ross: Does the Minister accept that the Bournemouth orchestras—two in particular—give enormous pleasure to a wide range of people living in the South and West of England? Is he aware that, in general, our provincial orchestras are in difficulty? The Bournemouth orchestra is reported to be in debt to the tune of
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    £80,000, and that debt is likely to increase rapidly. I understand that the position of the Birmingham orchestra is even worse. Is the hon. Gentleman able to assure us—the money is unlikely to come from private sources and certainly will not come from local government—that an undertaking will be given in the House that our fine provincial orchestras will not be put in jeopardy?
    Mr. Macfarlane: I am aware of the great contribution which the Bournemouth symphony orchestra makes in its part and region of the United Kingdom. I am certain that the Arts Council will do its best to maintain that level of support for the provincial symphony orchestras, taking inflation into account. I understand from correspondence that I have had with many hon. Members on both sides of the House, and from correspondence with Keith Whitmore, the general administrator of the Bournemouth orchestra, that discussions have gone into some depth with the Western Orchestral Society Limited. My door is always open to discuss the problem with members of the Arts Council and with general administrators of the symphony orchestras.
    Mr. Mellor: Does my hon. Friend agree that it is a matter for regret that orchestras such as the Bournemouth symphony orchestra have to undertake far more sessions every working year to keep their deficits down to the levels that have been quoted? Does my hon. Friend accept that even within the exigencies of the present financial situation a disproportionate amount of the Arts Council's support for classical music goes to opera houses rather than to symphony orchestras throughout the United Kingdom?
    Mr. Macfarlane: That is not a matter in which I can personally intervene. It is very much a matter for the directors of the Arts Council. The hon. Member for Isle of Wight (Mr. Ross) referred to private sponsorship. That is an avenue that we can explore. It must remain very much an issue for the Arts Council.
    Mr. David Price: When my hon. Friend talks about sponsorship, will he bear in mind that increasingly, local firms are part of national firms, and national firms tend to sponsor national orchestras rather than local ones? Will he bear in

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    mind that provincial orchestras, such as the Bournemouth symphony orchestra, break themselves down into small chamber groups in order to get round to serve the public in their areas in a way that no national orchestra finds possible?
    Mr. Macfarlane: My hon. Friend makes a valid point. My right hon. Friend and I believe that there are many more people—for example, many more members of the business community locally—who can be drawn into the net. That is an aspect to which we shall be giving close attention over the next few months.
    Mr. Cormack: We do not doubt my hon. Friend's intentions, but does he accept that unless the Chancellor of the Exchequer makes some radical moves in his forthcoming Budget private patronage, which is so necessary, will not materialise?
    Mr. Macfarlane: I hope that my hon. Friend will not purvey that gloomy view all the time. There are many avenues that we can explore. As for the outcome of the Budget, my hon. Friend will have to be as patient as I shall have to be.
    Mr. Ioan Evans: Is the hon. Gentleman aware that provincial theatres and opera groups, as well as orchestras, are facing difficulties? If the Government are not prepared to go all the way with my hon. Friend the Member for Warley, East (Mr. Faulds) and accept that VAT should be removed from the arts world, will they at least agree to revert to 8 per cent. VAT, the rate which existed until the Government took office? That would be of some assistance.
    Mr. Macfarlane: I cannot give that assurance, as the hon. Gentleman well knows. It is my intention to have discussions with the various orchestras, as I intimated. I cannot guarantee that such a reduction will take place.
    Mr. Neubertasked the Chancellor of the Duchy of Lancaster when he expects next to meet the chairman of the Arts Council.
    Mr. St. John-Stevas: On Monday 3 March.
    Mr. Neubert: Is my right hon. Friend able to do anything to dispel the anxieties
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    that are being expressed in such quarters as the Royal Shakespeare Company and the Royal Opera House, Covent Garden that the levels of Arts Council grant will bring widespread reductions in the arts next year?
    Mr. St. John-Stevas: I have endeavoured to do precisely that. The Royal Shakespeare Company received an increase in grant of over 15 per cent. last year. Before that it received an increase in grant of 36 per cent., and before that an increase of 35 per cent. It is now receiving about one-seventh of the Arts Council's budget. I do not think that it is doing too badly. The final announcement of the grant must be made to the House. The Government made it clear in a White Paper published in November 1979 that they hope to continue support for the arts at the same level in the coming year as they did during last year. In view of the public expenditure situation generally, that is no mean achievement.
    Mr. Faulds: But has the right hon. Gentleman really no comprehension of the damage done to the practice of all the arts throughout the Kingdom by the late announcement of the Arts Council's grant? When he comes to make the announcement—or whoever does—will he see that he tries to live up to the Labour Party's record of a 250 per cent. increase between 1974 and 1979?
    Mr. St. John-Stevas: A 250 per cent. increase over five years is not, as far as I know, a totally accurate figure. I shall have to check the hon. Gentleman's figures. If by some mischance he is right, I shall correspond with him privately. The hon. Gentleman must know that it has long been the custom, before the final figure is announced, for informal indications and guidelines to be given to the Arts Council so that it may make plans for its clients. The anxieties that have been expressed by some in the arts world have been greatly exaggerated.
    Mr. Gummer: When my right hon. Friend meets the chairman of the Arts Council will he be careful to stress the importance of community art, especially in rural areas, where there are not the advantages of being able to draw on the urban aid scheme, for example? This is especially important in Suffolk, where

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    we are worried that the budget might be reduced to enable some of the more popular metropolitan budgets to be increased.
    Mr. St. John-Stevas: I agree that there must be a fair distribution of the money that is available. It is not for me to decide between the various projects. I am glad to say that whereas some years ago the majority of the Arts Council's money was spent in the metropolitan area, the position has been reversed and the majority of its budget is spent in the regions.

    TURNER MUSEUM
    Mrs. Renée Shortasked the Chancellor of the Duchy of Lancaster when he expects to make an announcement about the Government's contribution towards the proposed new Turner museum.
    Mr. Macfarlane: An announcement will depend upon the decisions referred to in my answer of 24 January to the hon. Lady.
    Mrs. Short: Is the hon. Gentleman not aware that while it is marvellous to have generous gifts from private donors, there is a continuing need for more support from the Government to keep the theatres and art galleries running? Is he not aware that there is an urgent need for an increased amount for the Arts Council as a whole, and for support for the arts?
    Mr. Macfarlane: The question deals with the contribution towards a proposed new Turner museum. I must remind the hon. Lady that this is a private donation by the Clore Foundation. There are many outline proposals that have still to be developed. If the hon. Lady wants to debate or discuss any other aspects of the Arts Council's grant, I shall be happy to engage in that at some future date.
    Mr. Cormack: Does my hon. Friend accept that everyone who is conscious of the failure to implement the terms of the Turner bequest will wish both him and my right hon. Friend success in the forthcoming negotiations? Does he agree that there is bound to be a period before any new gallery can be opened, and that during that period Somerset House would provide a magnificent setting for the Turners?
    Mr. Macfarlane: I take my hon. Friend's point. As everyone has indicated, if the Clore Foundation donation comes to fruition—everybody hopes that it will—it will make an enormous contribution to the wealth of art in this nation.

    ARTS COUNCIL
    The following Question stood upon the Order Paper:
    Mr. FAULDS: To ask the Chancellor of the Duchy of Lancaster when he expects to make the announcement of the financial allocation to the Arts Council for the financial year 1980–81.
    Mr. Speaker: Question No. 27.
    Mr. St. John-Stevas: I hope to inform this House shortly of the Arts Council's grant-in-aid for 1980–81.
    Mr. Faulds: I am sorry to have disturbed the right hon. Gentleman from his slumbers. Does he really think that it is fair to pretend, as he did in a previous answer, that the fact that occasionally the administrators of various of the arts bodies are given a hint as to what they will get really meets the requirement of the people practising the arts throughout the kingdom of actually knowing what the allocation is going to be?
    Mr. St. John-Stevas: I respectfully point out to the hon. Gentleman that if he has a question on the Order Paper he does have to ask it before I can answer it. That is the normal convention of the House. I am most grateful to you, Mr. Speaker, for your helpful intervention.
    I do not pretend that it is an ideal system. I should welcome an earlier official announcement. As the hon. Gentleman knows, we have been having reviews of public expenditiure. They were taking place until last week or so. In these circumstances, it has not been possible to give a definitive announcement. I trust that I have been as helpful to the Arts Council as my predecessors were.
    Mr. Freud: When the amount of the grant is finally announced—I accept that regional arts councils have a good idea of the sorts of sums that will be allocated—will the right hon. Gentleman ensure that

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    the sums that are given to the National Theatre are published? Provincial theatres are apprehensive that an extraordinarily large amount of their grants goes to the metropolitan area, and specifically to the National Theatre.
    Mr. St. John-Stevas: I believe that that is the course that is followed. I shall certainly convey the request of the hon. Gentleman to the Arts Council.

ABORTION (AMENDMENT) BILL (DIVISION)
Mr. Speaker: On Friday last I undertook, in response to a request from the hon. Member for Swindon (Mr. Stoddart), to look into the matter of the delay that occurred in the locking of the doors during the course of the first Division on that day. The basic reason for the delay was the absence of Division sheets in the L to Z desks in the Aye Lobby. The missing lists were eventually discovered in the drawer in the other Division desk. I am satisfied that that was a simple human error and that there is no question of there having been any malicious attempt to disrupt the business of the House.
With regard to the timing of the order to lock the doors, the House will be aware that Standing Order No. 34, by which the procedure on Divisions is governed, lays down that the Speaker directs the locking of the doors
"After the lapse of at least six minutes"
from the direction to clear the Lobby. On 12 March 1975, my predecessor ruled that the period of six minutes should be extended to eight minutes, in order to allow hon. Members time to come in from Norman Shaw North. In doing so, he did not, however, change the period from a minimum period to a fixed period. Since that ruling was given, the occupants of the Chair have always regarded themselves as working on a period of at least eight minutes.
It therefore happened last Friday that when the Deputy Speaker was informed by a number of hon. Members that the Division sheets were missing and that they had therefore been reluctant to pass the Tellers without their names being recorded, he decided to defer ordering the doors to be locked until he was satisfied that the sheets were available and that the
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hon. Members in question had had the opportunity to return to the Lobby. In my view, that was an eminently sensible decision and an absolutely justified use of the discretion of the Chair. Had it not been taken, the Division might well have had to be held again, to the general confusion of Members, and it would have been a waste of time.
Mr. Stoddart: I am most obliged to you, Mr. Speaker, for making that statement. It has clarified the matter, and hon. Members will know the position in the future.
I should like to take this opportunity, however, of refuting the suggestion that was made by the hon. Member for Buckingham (Mr. Benyon) that it was a time-wasting exercise. It was not. I believe that it was a relevant point of order, and your ruling clarifies the issue to my satisfaction and to that of other hon. Members.
Mr. Freud: On a different point of order, Mr. Speaker.
Mr. Speaker: May I interrupt the hon. Gentleman? I hope that he is not seeking to raise the matter about which he wrote to me, concerning privilege. That matter is not allowed to be raised.
Mr. Freud: On a point of order, Mr. Speaker. On 21 January I wrote a personal and urgent letter to the Minister of State, Department of Health and Social Security in respect of a dying constituent who had, in the eyes of my local social services department—
Mr. Speaker: Order. The hon. Gentleman and I know the correspondence that has passed. Even if he is not raising the matter to which he referred, I have said before that it is a waste of the time of the House to seek to raise, under the guise of a point of order, a dispute with a Minister. I apply the Standing Orders of the House, and I can rule only on the Standing Orders and on our customs and courtesies. I must indicate to the hon. Gentleman that if there is a dispute about his not having received a proper reply, or if there has been a delay or anything of that sort, I am not a court of appeal against Ministers.
Mr. Freud: I am grateful for your guidance, Mr Speaker. My point is not what you have suggested it might be. I

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asked the Minister to investigate the case as a matter of urgency. Today, four weeks later, I still have not received a reply from the Minister. I have received a letter from solicitors retained by the medical profession—
Mr. Speaker: Order. I have already indicated to the hon. Gentleman that the letter from the solicitors, to which he referred—with which we have dealt privately—cannot be raised here on the ground of a point of order.

SYNTHETIC TEXTILES (IMPORTS)
The Secretary of State for Trade (Mr. John Nott): The House may be aware that the European Commission announced this morning its decision on the United Kingdom's application for import quotas on certain synthetic textiles.
My hon. Friend the Minister for Trade and I, together with officials of my Department, have held extensive talks with the Commission to stress the urgent need for action to stabilise imports of those products, in order to check further factory closures and redundancies in the threatened sectors.
For its part, the Commission has been anxious to avoid the application of the United Kingdom leading to a breach in the open trading relations with our main partners. The United Kingdom, with one-third of its GNP sold in export markets, shares that interest in avoiding an outbreak of retaliatory action and damage to our wider trading interests. Moreover, the United Kingdom is itself a major textile exporter. The Commission has therefore been concerned to ensure that any action taken is strictly within the terms of article XIX of the GATT.
Against that background the Commission has agreed quotas on both polyester and nylon carpet yarn at the following levels for the calendar year 1980: for polyester filament yarn, 9,053 tonnes, compared with imports in the final quarter of 1979, running at an annual rate of 15,600 tonnes; for nylon carpet yam, 7,500 tonnes, compared with a 1979 final quarter rate of 9,150 tonnes.
Those quota levels will cut imports back from the very high level reached at the end of last year, but it is our view that they should not be so severe as to provoke retaliatory action or to create damage to the downstream textile and clothing industries, which depend on the availability of low-cost fibres for the competitiveness of their own end-products.
With regard to man-made fibre tufted carpets, our concern has been to avoid the quota on nylon carpet yarn damaging the interests of the United Kingdom carpet industry. For that reason we felt that quotas on both products should be introduced. However, the Commission has had to examine our application against the definition of "serious injury",

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since otherwise a number of other European countries might also seek quotas for their products, leading to an escalation of protectionism. While the increase in imports of man-made fibre carpets has been substantial during 1979, growing from 1,085.000 square metres in the first quarter to 2,162,000 square metres in the fourth quarter, from non-EEC or preferential sources, the penetration of the United Kingdom market from these sources amounted to only 8.5 per cent. in the final quarter of 1979. In the Commission's view that level of import penetration was insufficient to warrant a quota based on serious injury at this stage. Despite that, we have obtained a statement to the effect that the Commission will monitor imports vigilantly, and that it recognises the necessity for immediate recourse to safeguard action if present trends continue and lead to serious injury.
I am not wholly satisfied with the Commission's response to our application, but we have to acknowledge the overriding duty of the Commission not to provoke a sudden surge of protectionism. On balance, therefore, I think that the outcome is reasonable. Within these constraints the Government will do all in their power to safeguard the interests of the United Kingdom textile and clothing industries. I hope that those quotas, and the very firm statement on carpets, will go a considerable way to stabilising the exceptionally difficult trading conditions that the industry has faced during the past year.
Mr. John Smith: No doubt the Secretary of State will be aware that the almost total failure of the Government to obtain adequate protection against the unfair trading in man-made fibres created by the United States' duel pricing system for energy will cause dismay and alarm throughout the entire man-made fibre industry. Indeed, such alarm is already being expressed by it.
With regard to the detail of the right hon. Gentleman's statement, will he confirm that he has gained absolutely nothing for tufted carpets, apart from an allegedly firm statement? We know what that means in practice. With serious and growing United States import penetration, it is apparent that nothing will be done about the problem.
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Is the right hon. Gentleman aware, and will be confirm, that the quota of 7,500 tonnes for nylon carpet yarn for 1980 will mean that imports will, at that figure, be higher in 1980 than they were in the whole of 1979? It is misleading for him to refer to the final quarter of 1979 when the so-called quota is higher than for the year which preceded it, which gave cause for alarm in the first place.
Will the right hon. Gentleman also confirm that the quota for polyester filament yarn will be 50 per cent. higher than for 1978?
In the light of these figures and that analysis of the problem, which I believe to be correct, is the Secretary of State aware of the mounting concern in the industry, over the past six months in particular, and the increasing worry in this House over that period, that the Government have been wasting their time in pursuing a so-called general Community solution to the problem, and that this has been a great mistake on his part? Negotiations have dragged on interminably, and at the end of the day his statement proves that he wasted his time and was hoodwinked by the other party to the negotiations, and that we are ending up with no proper defence against an unfair trading practice. I think that the right hon. Gentleman will agree that in this case we are talking not so much about free trade as about fair trade. Does not his statement today prove that he has neglected a British national interest that it was his duty to maintain?
Mr. Nott: I agree with the right hon. Gentleman that we are talking about fair trade. If we had not sought a Community solution to the problem we would have had to act unilaterally, which, of course, we are entitled to do. But in my judgment, had we acted unilaterally, within six weeks' time we would not have had a qualified majority at the Council for our action, and the quotas would have come off altogether. Moreover, had we acted unilaterally we would have found ourselves quite unable to prevent free circulation within the Community, and the products would merely have been invoiced through third countries and would have come in here in that way.
We were faced with the choice of getting the best agreement that we could through

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the EEC Commission or taking unilateral action in a way which, in my view, would not have given our industry protection for, probably, more than six weeks. That was the dilemma that we faced.
Throughout the whole affair, which has been an extremely extended and difficult one, we have been absolutely compelled—so would the right hon. Gentleman have been—to act strictly within the terms of the Treaty of Accession and within the terms of the GATT.
If the feedstock question had been the whole of the problem there would not have been too much difficulty, but I think that we all recognise that the problem is partly the high value of sterling in relation to the dollar and also that the American industry has very large economies of scale and is running its plant on three shifts. In many respects, there is a whole body of problems here, of which the feedstock price is only an element.
We applied for a quota for tufted carpets, but the Commission did not grant us one. In the fourth quarter of 1979 the penetration of tufted carpets from restricted sources amounted to only 8½ per cent. of the United Kingdom market.
I have to acknowledge that we must act within the terms of article XIX of the GATT, but 8½ per cent. is not a very large penetration, and we are ourselves substantial exporters of textile products to the United States.
The quota for nylon carpet yarn is highe0r than the 1979 figure but it is lower than the figure for the fourth quarter, as the right hon. Gentleman says. I hope that this will help to stabilise the position. Nylon yarn is a crucial input in the production of many products. Had we gone for too harsh a quota we would have done great damage to the downstream producers who depend upon cheap raw materials for the competitiveness of their end-products.
Finally, on polyester filament, I agree that the figure is roughly 50 per cent. higher than for 1978, but it represents about 13 per cent. of the penetration of our market from restricted sources, against 27 per cent. penetration in the fourth quarter, and it is about 58 per cent. of the level of imports into this country for 1979 as a whole. In 1979, the imports
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were 12,690 tonnes, and the quota has been fixed at 9,053 tonnes.
Mr. David Steel: Will the Secretary of State accept that we recognise that he has done as much as possible within the constraints that he has mentioned? In particular, will he accept that the warnings that he has given against the surge of protectionism are extremely important?
Will the right hon. Gentleman concentrate, in the Commission, on trying to tighten the rules about the switching of products outside the Community and their being reimported and passed off as Community products? Will he amend his own Department's policy on encouraging public corporations to buy British wherever possible, and in that way try to reduce imports?
Will he recognise that the new machinery for the spinning of yarn, which is extremely expensive, is difficult for our industry to invest in when the Government have cut back on industrial investment grants?
Mr. Nott: I am grateful to the right hon. Gentleman for his comments on the dilemma that the country faces. We are a trading nation, with one-third of our gross national product in exports, and we are the very last country that can afford to set off a round of protectionism in the world. That is the dilemma that we face in trying to help a very important industry that is in considerable difficulties at the present time.
I accept the right hon. Gentleman's point that there is great concern about switching. Where the products are under quota, under the MFA, any switching comes ultimately within the quota set out by the MFA, but I accept that this is a matter of concern to the textile industry, and rightly so.
I take the right hon. Gentleman's point concerning public procurement. I am delighted when British purchasers decide to purchase British goods. But again I point out that we are a main signatory of the GATT, and that one of the recent and most important sections of the multilateral trade negotiations was the agreement on public purchasing policies. As a world trading nation we must be very careful not to be in breach of the MTNs, and public purchasing was one of the central matters in discussion in that respect.

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With regard to machinery production, we are, of course, a major exporter of textile machinery—particularly to some of the countries that cause us problems with their exports. I believe that this country has some of the most attractive investment allowances of any developed nation in the world. It is not just to subsidies that we should look. We have highly attractive investment allowances, and the industry must take full advantage of them.
Mr. J. Enoch Powell: What, in the Government's view, is the basis of this policy? Is the importation of these items to be controlled because they are priced too low or because they are priced unfairly?
Mr. Nott: Some of the greatest pressure for control has come from Northern Ireland, as the right hon. Gentleman will be aware. The nylon yarn industry in Northern Ireland has been one of our principal concerns, as I am sure it has been to the right hon. Gentleman. By the introduction of the quota we believe that price levels will be raised within the domestic market and that this will give the industry an opportunity to adjust itself to the surge of competition that has arisen during the calendar year 1979. My answer is that it will have the effect of raising price levels within the United Kingdom market over a period, but not immediately. That will be one of its principal effects.
Several Hon. Members rose—
Mr. Speaker: Order. If hon. Members will co-operate and ask brief questions, I hope at least to call those who have constituency interests.
Mrs. Kellett-Bowman: Has my right hon. Friend received any assurance from the Commission regarding free circulation? Will he assure the House that in view of the drop in textile jobs from 117,000 to 70,000 during the past 10 years he will press Commissioner Giolitti, in charge of the regional fund, to include textiles specifically in the next tranche of the non-quota section of the European regional development fund, as that would be of tremendous help to textile areas?
Mr. Nott: It would be of help to the textile industry to be included in the
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way suggested by my hon. Friend. I shall certainly look at that matter and communicate with my hon. Friend.
Free circulation lies at the heart of the difficulty that we face, as I am sure my hon. Friend appreciates. The Commission has undertaken that under article cxv, to the extent that diversion of trade occurs it will take appropriate action. That is the assurance that we have had from the Commission on free circulation. I believe that it will abide by that undertaking.
Dr. Summerskill: Will the right hon. Gentleman bear in mind that his statement will be received with extreme disappointment and great dismay by people in Halifax and West Yorkshire? We have waited months for this statement. Apparently, it is the best that the Government can do, yet they have obtained absolutely nothing for tufted carpets. There will be a further steady decline in this part of the industry throughout the whole country.
Mr. Nott: I hope that the hon. Lady is proved to be a little too pessimistic. Certainly the industry is going through very difficult times. I recognise that my statement will come as a disappointment to sections of the textile industry.
The gravest concern has been expressed on polyester yarn. We have in fact got a quota of 9,053 tonnes against fourth quarter imports on an annualised basis of 15,600 tonnes. For 1979 generally it was 12,690 tonnes, so the quota is considerably below average imports of these products for 1979.
I agree that there will be disappointment in the industry regarding tufted carpets. However, we must recognise that the Commission has a duty—indeed, we also have a duty—to ensure that any action that we take comes strictly within the terms of the GATT. Otherwise, this country will become extremely vulnerable to retaliatory action against our exports all over the world.
Mr. Maxwell-Hyslop: Why is it logical to confine the action taken to polyester yarn and not to undyed fabric made up in America from that yarn, which has been produced from artificially cheap oil?
Mr. Nott: Because the action that we are taking is based not upon feedstock

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input prices but upon article xix of the GATT, which sets out in specific terms when a country can take action where material damage is being done to its industry. Under article xix of the GATT there is no case for taking action on downstream products that use polyester yarn as an input. We have to abide by the internationally established rules in dealing with this matter. I have no choice but to give my hon. Friend the perhaps unsatisfactory answer that there is no case under article xix for taking action on these products.
Mr. Woolmer: Does the Minister recognise that, certainly in Yorkshire, workers will fail to understand the statement that such little harm is being done to the carpet industry that protection in these terms cannot be justified?
Is the right hon. Gentleman aware that we shall be pleased to hear a Minister at last recognise the overvaluation of the pound and the effect that it is having on manufacturing industry? Will he ensure that the Chancellor of the Exchequer is made fully aware of that and, while renegotiating with the Common Market, will he get something done about the foreign exchange rate?
Finally, will the right hon. Gentleman think again about the carpet industry and agree to meet the leaders of that industry, together with the relevant Members of Parliament, and consider whether a more pressing case can be made, because workers are facing not a dilemma but the dole queue?
Mr. Nott: I recognise the concern that has been expressed about carpet imports from these restricted sources. As I said, in 1979 generally—I am taking the average figures—they amounted to only 5·8 per cent. of the British market. One thing that I have had to take into account, as has the Commission, has been that domestic production of these carpets in the United Kingdom rose in 1979, that the domestic market was higher in 1979 and that domestic sales were rising in 1979. Therefore, although there has been difficulty with substantially increased imports from certain restricted sources, production, the United Kingdom market, and sales rose in 1979. That factor has to be taken into account in deciding what action we can reasonably take under international agreements.
Mr. Robert Atkins: Does my right hon. Friend recognise that his comments about polyester filament yarn are not satisfactory? What further action needs to be taken in view of the closures that have taken place, particularly in my constituency, where a Courtaulds mill has closed down putting 2,600 people out of work? What more can we expect my right hon. Friend and his Department to do?
Mr. Nott: I believe that for the time being I have obtained through the EEC the best possible deal that was obtainable in the circumstances. I am afraid that I cannot offer my hon. Friend anything more. If we had taken unilateral action, my judgment is that we would not have had a qualified majority in the Council and all quotas would have come off six weeks later. I have been concerned to get the best possible deal that I could for those firms manufacturing polyester filament yarn. However, I accept that they would have liked a harsher quota.
Mr. Barry Jones: Does the right hon. Gentleman appreciate that Courtaulds' workers, in my constituency, will believe that he has been sold a pup on this one? Will he undertake to fight to improve the current miserable 14 million units of account that are available for restructuring and that the Italians are at the moment almost monopolising?
Mr. Nott: We have a common interest in obtaining what finance we can out of the Community for the purpose of restructuring. Certainly I share the hon. Gentleman's concern in that respect.
As for being sold a pup, if the hon. Gentleman can carry that message on to the Continent for me and perhaps seek out the Germans, the Dutch, the Danes and people in other countries who feel that there is a great danger of reversion to protectionism, I shall be grateful for his assistance. We are now within the Community and we do not have the capacity effectively to take unilateral action.
Mr. Bulmer: Will my right hon. Friend confirm that the United Kingdom market for tufted carpets is more attractive to the Americans because we use the same measurements, speak the same language, and, I might almost add, play by the rules? Will he define the term "serious

39
injury" and indicate, when that point arrives, what further action he might take?
Mr. Nott: Action would be through the Commission. The Commission has specifically and clearly spelt out the circumstances in which it might contemplate safeguard action on carpets. Rather than read it out now, I shall let my hon. Friend have a copy. United Kingdom production of man-made fibre tufted carpets—I am sorry to have to give the detailed facts, but they are important—rose from 94 million square metres to 100 million square metres last year. The United Kingdom market increased and home sales increased. It is not as though the man-made fibre tufted carpet industry was doing anything other than selling more in 1979. The industry is in difficulty, but it actually sold more in 1979 than in the previous year.
Mr. Arthur Davidson: Would it not have been better to take a chance and act unilaterally? In that way the right hon. Gentleman would at least have demonstrated his determination to keep the British textile industry alive. After all, what could be worse than what is already happening?
Mr. Nott: That was certainly a tempting option, and one that I considered. Indeed, if the hon. and learned Gentleman talked to the Commission in Brussels he would discover that the Commission knew that that was an option that we had available to us. However, in the end it was my judgment that we would better help the industry by obtaining Commission action that would last a year or so, rather than taking unilateral action that would have the risk of lasting only six weeks. Even if we had succeeded, after that six weeks we would have had no means of stopping the free circulation of products from third countries. Therefore, though it was an option that I considered, it would have been ineffective in the circumstances.
Mr. Trippier: Does my right hon. Friend accept that it is extremely difficult for those of us, on both sides of the House, who represent textile constituencies to explain to our constituents the problem that the British Government have in dealing with the European Commission on matters of this kind when countries such as France can seemingly
40
get away with unilateral action while we do not take that same effective action? My right hon. Friend has explained to the House why he did not want to take unilateral action before he went to the Commission. He seems to have got little out of the Commission, so could he not consider taking unilateral action now?
Mr. Nott: I got much more out of the Commission than could have been obtained by taking unilateral action ourselves. That is my view. My right hon. and hon. Friends can agree or disagree with it. Naturally I understand that it is extremely difficult to explain this to the general public and to our constituents. It is an extremely complicated matter; that is the difficulty.
What I hope my hon. Friend will explain to his constituents as best he can is that we have to achieve a balance between, on the one hand, protecting our industry from unfair, disruptive imports and, on the other, promoting our exports, on which one-third of our manufacturing industry depends. My guess would be that in Rossendale there are as many jobs dependent upon export markets as there are jobs that are now going through difficult times because of imports. That is something that we must all try to explain to the country generally.
Mr. Straw: Is the Secretary of State aware that in the whole of North-East Lancashire his action will be regarded as too little, too late? Is not the truth of what the right hon. Gentleman has said about the EEC that our membership of the Common Market is now a serious impediment to the defence of our national interests? Could he say exactly what he means by these quotas lasting for a year or so? What is "or so"? When do these quotas come up for review by the EEC? Could the right hon. Gentleman tell us what arrangements there will be for the surveillance of imports? Could he also tell us why he is not taking unilateral action in respect of carpet yarn, when only a week ago, when he made the application, one assumes that the right hon. Gentleman thought that quotas in respect of manmade fibres would he justified under article xix of the GATT?
Mr. Nott: There is a quota on the nylon carpet yarn. We applied for a

41
quota on carpets because it seemed to us that to apply for a quota on the yarn and not the carpets might create difficulties. As I have said, that is the problem, and that is why we applied for a quota on carpets as well as the input. The Commission decided—I must recognise its point of view—that there was not sufficient justification at present for article xix action on carpets. Naturally surveillance will continue on all these products and we shall study very closely the volume coming into this country. That is fundamental. As to the EEC being an impediment, I accept that it has been an impediment in persuading us not to take unilateral action at present. I acknowledge that. But had we not been in the Community I think that we would have been extremely careful and as cautious as we are now being about taking action that could trigger off retaliation against our exports and a new surge of protectionism, particularly at a time when the MTNs have just been concluded. I do not believe that, ultimately, it would have made that much difference whether we were in the Community or not. In the last resort it is our own economy that we seek to defend.
Mr Goodlad: Has my right hon. Friend made any estimate of the effect that stricter quotas would have on the downstream users of these yarns?
Mr. Nott: A stricter quota on nylon and polyester yarns would have helped to a greater extent the producers of those yarns, but it would also have raised the United Kingdom domestic price level more than will happen now and, in that respect, would have increased the costs of those producing downstream products and made them less competitive as a result.
Mr. Park: Is the Minister aware that already 1,500 jobs are at grave risk in the British Celanese factory, in my constituency? The Minister mentioned the observance of rules. Is he aware of the evasive practices of American companies that use their Belgian subsidiaries to evade direct import duty and even get an import duty clawback? Fair competition is one thing; unfair competition is another. Will not the Minister reconsider his position?
Mr. Nott: If the hon. Gentleman can bring to my attention an evasion of the rules, as he puts it, and can show that rules have been evaded, we shall take action to put that right. I should like to have from the hon. Gentleman precise examples. Of course, there is nothing to stop products manufactured in Belgium coming into this country without tariffs, but if rules are being broken or tariffs are being evaded and the hon. Gentleman can give examples we shall look into them immediately.
Mr. Waller: Is my right hon. Friend aware that in my constituency in the last two or three days a carpet factory has closed, with the consequent loss of 300 jobs, and that there is increasing concern about unfair imports of American tufted carpets? If the present level of subsidised imports is not regarded as sufficient, can he say what level of imports would be regarded as unfair so that my constituents may know when to expect some action?
Mr. Nott: In 1979 the total imports of tufted carpets from Canada and the United States—which I think are the countries that my hon. Friend has in mind—amounted to 5·7 million square metres. The United Kingdom production of man-made tufted carpets amounted to 100 million square metres. So although American and Canadian imports may be causing some difficulty, they are a small fraction of the total United Kingdom market.
Mr. Wigley: Will the Minister tell us whether, in these discussions, any representations were made about allied products, such as laminated or coated fabrics, or fabrics covered with polyvinyl chloride, as were made by the Leathercloth and Coated Fabrics Manufacturers' Association? If not, are such representations about to be made?
Mr. Nott: As the hon. Gentleman will know, there must be about 5,000 separate products in this area. Without notice, I cannot give him a firm answer to that question, but if he would like to table a question or drop me a line I shall give him a clear answer.
Mr. Thompson: Will my right hon. Friend confirm that this is the best deal

43
that any Government have ever got since we joined the EEC—(HON. MEMBERS: "Oh".]—in this sort of industrial situation? Whilst doing that, will he realise that some of the firms in my constituency, both wool textile firms and others are very worried about the retaliation that this may attract?
Mr. Nott: I am grateful to my hon. Friend. I am not proud of the fact, but when right hon. Members of the Opposition formed the Government of this country—and they were in government for four or five years—only once did they take article xix action themselves—and that was on television sets from Korea. This is the first time for many years that article xix action has been taken on textiles. Although I do not anticipate that it will satisfy the textile industry—I should like to be able to do that, but I think that I shall have to remain in my present post for a very long time to be able to satisfy all sections of the textile industry—this is the first time that article xix action has been taken and I hope that it will go some way towards stabilising the market.
Mr. McNally: Is the Minister aware that west of the Pennines his statement today will be greeted with despair by hon. Members of both sides of the House? The fact is that we have heard before the hand-wringing and the legalism about the problem. Is the Minister aware that 750,000 jobs are haemorrhaging away? Unless there is more robust action from his Department, the Government will be facing the equivalent of a Corby or a Shotton a month in the textile industry, and all that he will be left to do is to bury a corpse, unless he is willing to defend the industry properly, efficiently and effectively—and that he has certainly not demonstrated his willingness to do.
Mr. Nott: The hon. Gentleman has it so completely wrong that I really should like to debate the matter with him. First, of the 750,000 jobs—that figure is roughly right—a very large proportion are dependent on exports of textiles and clothing all over the world. That is the first thing. Some of those people who export those textile products depend upon cheap fibres to make their goods competitive in world markets.
Furthermore, I remind the hon. Gentleman that the textile industry is a very big
44
and important industry. We are trying to do our best to help it, but we must do so within the environment of one-third of our GNP being earned in world markets.
Mr. Watson: Whilst I acknowledge that this is probably the best deal that the Minister could have got in the circumstances, I wonder whether he would acknowledge that an important share of the market does not need to be particularly large in order to have a dramatic and disruptive effect upon the price structures prevailing within that market.
Mr. Nott: I wholly agree with that. A surge of imports at the margin can have a very serious effect on the domestic price level. I accept that entirely.
Mr. Lee: Will my right hon. Friend accept that many companies in the textile industry have been waiting for today's decision before deciding on possible closures or possible expansion plans, and that today's decision will be taken very pessimistically by the industry, as evidenced by the press release from the British Textile Confederation, issued this afternoon, which describes the measures as "totally inadequate"? Does my right hon. Friend accept that if, tragically, there is a wave of closures in the next few weeks, he will be forced to take unilateral action?
Mr. Nott: I have not seen the BTC's press release, but it does not surprise me that it feels that this is inadequate. I have had many submissions from parts of the textile and clothing industries asking that on no account should we take quota action of the kind for which the BTC has been asking. The textile industry is far from being united in wanting quota action at all, because many people in the textile industry are users of cheap fibres.
As for closures, I realise that the textile industry is going through an extremely difficult time. I have already explained that I do not believe that unilateral action would help the industry one little bit at present, and I have given the reasons why I believe that to be so.
Mr. John Smith: The Secretary of State said that he would be happy to debate these matters with one of my hon. Friends. Will he take that a little further and

45
arrange for a debate on these matters, in view of the widespread concern—echoed in all parts of the House—and, indeed, the widespread dissatisfaction that has been expressed?
On the question of the best deal possible—which is apparently the Secretary of State's defence—may I remind the right hon. Gentleman that for nylon carpet yarn the quota for 1980 is 30 per cent. higher than the level of imports for 1979, when that was 21 per cent. of the United Kingdom market? Can he remember any occasion in the history of British trading when a quota has been fixed at such an absurd and ridiculous level?
Mr. Nott: The nylon carpet industry and the man-made fibre carpet industry are actually purchasers of nylon carpet yarn. If the right hon. Gentleman thinks that it would benefit the carpet industry to take action that would lead to a sudden savage jump in the price of its raw materials, I do not share that view.
As for a debate, I should have thought that since the Government, as I recall, had a debate on textiles some time ago in their own time, if the right hon. Gentleman wishes to have a debate on this subject it might be useful to choose it as one of the Opposition's Supply day subjects.

STEEL INDUSTRY (PICKETING)
Mr. Stokes: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the intention of steel pickets from South Yorkshire to switch their mass demonstrations today to the other main private steel companies still in production, such as the Sheerness Steel Company, Manchester Steels, steel companies in West Bromwich and in Birkenhead, and so on, and in the words of Mr. Edward Thorne, secretary of the Yorkshire divisional strike committee, 'to shut all engineering industry down in this country'."
I submit, Mr Speaker, that this is a specific matter because a threat has actually been made and is now in process of being carried out. Special coaches and buses are conveying the flying pickets to their destinations.
It is an important matter because, judging by the success of the mob demonstrations outside Hadfields last week, it will place intolerable strains on the police, the rule of law will be broken by violence and intimidation, and ordinary work-people will be forcibly prevented from attending their place of work.
Finally, I submit that the matter is urgent because, if this sort of lawless behaviour by flying pickets is allowed to continue without comment or judgment by this House, we shall be looked upon with contempt by our constituents and we shall be failing in our duty to keep the Queen's peace under the existing law and to support the chief constables concerned.
These pickets are not acting peacefully or in pursuance of a trade dispute. They are attempting nothing less than to subvert the social order of this country and to compel the Government to give in to their demands.
My noble Friend Lord Hailsham, the Lord Chancellor, has said that even under the law in the emasculated state in which the Labour Party has left it intimidation is illegal. He has said:
"the events at Hadfields a few days ago and at Grunwick last year had been breaches not only of the civil but of the criminal law. Intimidation is unlawful. Violence can amount to an affray. Violence causing fear in the minds of a reasonably stout heart can be an unlawful assembly."
Those are the words of the Lord Chancellor. I cannot believe that this House

47
will wish this sort of continuing anarchy to go on without debate here.
Mr. Speaker: The hon. Member for Halesowen and Stourbridge (Mr. Stokes) gave me notice before 12 noon today that he would seek leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the intention of steel pickets from South Yorkshire to switch their mass demonstrations today to the other main private steel companies still in production, such as the Sheerness Steel Company, Manchester Steels, steel companies in West Bromwich and in Birkenhead, and so on, and in the words of Mr. Edward Thorne, secretary of the Yorkshire divisional strike committee, 'to shut all engineering industry down in this country'."
I listened with great and real concern to the hon. Gentleman, as I am quite sure the House did. There is no doubt that he has raised a very important matter. I have to take into account the many factors set out in the Order but to give no reasons for my decision. Although I rule that the hon. Gentleman's submission does not fall within the provisions of the Standing Order, I say that that applies to today. Therefore, I cannot submit his application to the House today.

ORDERS OF THE DAY

  BROADCASTING BILL
  Order for Second Reading read.
  Mr. Speaker: I have selected the amendment in the name of the right hon. Gentleman the Leader of the Opposition. I propose to operate the 10-minute rule, and I want to make it quite clear to the House that, if any hon. Member is called shortly before 7 o'clock, in the spirit of that rule he is not entitled to take more than 10 minutes after 7 o'clock, and whoever is in the Chair will call him to order at that point.
  4.22 pm
  The Secretary of State for the Home Department (Mr. William Whitelaw): I beg to move, That the Bill be now read a Second time.
  The Government undertook in the Gracious Speech at the opening of Parliament to bring forward proposals for the future of broadcasting and, in particular, legislation to extend the life of the Independent Broadcasting Authority and to give the authority, subject to strict safeguards, the responsibility for a new service on the fourth television channel. This Bill fulfils that undertaking. It is a substantial measure, and I do not propose this afternoon to go through it clause by clause. Instead, I should like to concentrate on the four main proposals it contains—the extension of the life of the IBA, the establishment of the Broadcasting Complaints Commission, the financial arrangements for independent local radio and the fourth channel.
  First, there is the extension of the life of the IBA. The Annan committee considered that this should be extended by 15 years and that it would be right at the end of this period that there should be a review of the whole broadcasting system. The Select Committee on nationalised industries, on the other hand, in its report on the IBA in July 1978, recommended that the life of the IBA should be extended indefinitely so as to avoid the kind of uncertainty which broadcasting has suffered over the last few years and which I am sure the House would agree should be avoided in future. However, as was made clear in my response to the

  49
  Select Committee's report, the Government consider that the advantages of having a major review of broadcasting from time to time outweigh the disadvantages. I believe that a term should be set to the life of the broadcasting authorities and that 15 years is about right. The Bill, therefore, proposes the extension of the life of the IBA until 31 December 1996.
  The Bill also enables the life of the IBA to be further extended by up to five years beyond the end of 1996 by order, subject to the approval of both Houses of Parliament. This would seem to be a sensible provision, giving some flexibility to the Parliament of the day.
  I turn now to the provisions in the Bill which would establish a single, independent Broadcasting Complaints Commission to deal with complaints of unjust or unfair treatment or infringement of privacy in programmes broadcast either by the BBC or the IBA. As the House will know, at present both the BBC and the IBA have their own complaints bodies. I believe that these do a valuable job, but it was clear to the Annan committee that, because these bodies had been set up by the broadcasters themselves, they did not command public confidence. Accordingly, the committee recommended the establishment of an independent Broadcasting Complaints Commission.
  This recommendation has—as my predecessor the right hon. Member for Leeds, South (Mr. Rees) noted in his White Paper—commanded widespread public support. It has the additional merit of replacing the two bodies with a single organisation, and it is implemented, with certain detailed modifications, in the Bill. At present, the BBC and the IBA meet the costs of their respective complaints bodies, the IBA from the rentals paid by the programme contractors. The costs of the commission, which I estimate will be in the region of £150,000 a year—though this will, of course, depend on the volume of complaints with which it has to deal—will continue to be met in broadly this way. The Bill provides that a proportion of the total cost of the commission will be met from contributions by the IBA's programme contractors. In fact, the programme contractors will meet half the cost. The other half will be met by the BBC. This will need to be
  50
  dealt with by an amendment to the corporation's licence and agreement.
  I now want to say something about independent local radio. There are at present 19 independent local radio stations on the air. My predecessor approved the locations for a further nine in 1978, and last year I approved a further 15 stations, leaving open the precise location of one of them.
  The IBA currently operates a system of secondary rentals which the more profitable independent local radio contractors pay and which provides money for the expansion of the system or to assist individual contractors with programmes of merit. The secondary rentals system is not provided for specifically in the existing legislation. It will, however, have an important part to play in the expansion of independent local radio, and I believe that the time has come to reflect this in the legislation.
  The Bill contains three main proposals about the financing of independent local radio. First, it places on a clear statutory footing the IBA's powers to make grants to individual contractors, for example, to help the expansion of the system or to improve the service provided in particular areas. Secondly, it deals with rental payments. Although there is no mention of "secondary rentals", the authority will continue to be able to raise funds for the purposes of the sort of grants to which I have referred.
  Mr. Geoffrey Johnson Smith: On the issue of the authority giving grants to local radio stations as it thinks fit, does that not introduce the element of subsidy and possibly encourage stations not to be profitable?
  Mr. Whitelaw: I trust, on the whole, that it does not, but we can consider the point.
  Thirdly, the Bill also provides for the application, with appropriate modifications, of the provisions of the 1973 Act that deal with the ITV levy to the profits of the independent local radio contractors. It is now clear that independent local radio can generate a high level of profits. Since these profits, like those of the ITV companies, derive from the exploitation of a public monopoly, it is right that the public should have some share in them.

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  The Bill proposes a 40 per cent. levy on the local radio contractors' profits over and above £250,000, or 2 per cent. of the contractors' advertising receipts, and enables the Home Secretary, with Parliamentary approval, to vary the rate. The initial rate would be 40 per cent., compared with 66.7 per cent. on the ITV companies, mainly to take account of the contributions that the local radio contractors will be making to the expansion and improvement of the system as a whole through the rental system. It would be our intention, however, to review the rate of the independent local radio levy in a couple of years' time.
  I return now to the major provisions in the Bill that deal with the fourth channel. The amendment in the names of the right hon. Member for Cardiff, South-East (Mr. Callaghan) and his right hon. and hon. Friends asks for the Bill to be rejected on the ground that it does not provide for an open broadcasting authority. On the contrary, that is, in my view, a prime reason why our proposals deserve acceptance. I should like at the outset to make three fundamental points.
  First, I do not consider that the fourth channel should constitute a direct or continuing charge on public funds.
  Mr. D. E. Thomas: Does the right hon. Gentleman accept that the negative levy is a charge on public funds?
  Mr. Whitelaw: I am much too cunning for the hon. Gentleman. I said that it should not constitute "a direct or continuing charge". Initially, there may be a reduction in the levy, but in the long run I hope that the fourth channel will be financially viable. I intend that it should be so. On that basis, there will not be a direct or continuing charge. That is what I said. I use the words "direct or continuing charge" in order to cover exactly the hon. Gentleman's point.
  Mr. Barry Sheerman: Does the Secretary of State accept that the distinction between private financing and public expenditure means merely that the profits that come to these commercial companies come from the exploitation of the public in the first place? It is a direct taxation in many senses.
  Mr. Whitelaw: I do not accept for one moment, for various reasons, that that is at all the position. I shall come to the point.
  That, in my view, was a fatal flaw in the Annan committee's proposals for an open broadcasting authority and, indeed, in the OBA proposals in my predecessor's White Paper. The fourth channel, as I said to the hon. Member for Merioneth (Mr. Thomas) must be financially viable and self-supporting. There are, of course, risks with any new venture, and it may take a while to establish financial viability for the new service, but financial viability must be achieved and, if it is not, we shall be entitled to reconsider the future of the service.
  Secondly, I should not be prepared to accept, much less to put forward, proposals for a fourth television channel that would inflict serious damage on our broadcasting system as a whole. I have always opposed the proposals for an OBA because I believe that there are risks in having an authority directly appointed and directly funded, to a substantial degree and on a continuing basis, by the Government.
  Thirdly, I should not be prepared to countenance a fourth channel that, far from extending the choice available to viewers, had the effect of restricting choice by intensifying to an unacceptable level competition for the ratings.
  I believe, however, that these problems can be overcome, and I have sought in the fourth channel provisions in the Bill to deal with them.
  Mr. Jim Craigen: I take it, therefore, that the right hon. Gentleman demanded of IBA that it created the subsidiary company. Why is the right hon. Gentleman giving the independent contractors a monopoly over the advertising, if he believes in competition?
  Mr. Whitelaw: I am learning that, in the interests of brevity, I should not give way too often. I shall deal exactly with the hon. Gentleman's points, which he raises perfectly properly, in the rest of my speech. I believe that it would be unwise for me to give way too much hereafter.
  As I said in a speech that I gave at the Royal Television Society's convention in Cambridge last September, the Annan committee's proposals for a new

  53
  and different kind of service on the fourth television channel have commanded a remarkably wide measure of support.
  There is no doubt that we must aim for a channel that will serve the viewing public by offering opportunities for programmes which, in the words of the committee,
  "say something new in new ways",
  and find ways of meeting the needs of specialist and minority audiences. We must seek to provide an outlet for the talents of independent producers and also greater opportunities for the regional ITV companies. ITN should be given the opportunity, which it seeks and is well equipped to seize, for covering news more extensively.
  I am convinced that the best way of achieving a service of that kind is to vest responsibility for the channel in the Independent Broadcasting Authority. The authority has the experience and ability, and, indeed, the enthusiasm, to provide a service of that kind. Moreover, to place the authority in charge of the channel will enable the new service to be scheduled, to the extent that that is consistent with the objectives of, and safeguards for, the service, on a complementary basis with the existing ITV channel. That must be in the best interests of the viewing public.
  The Bill, therefore, makes provision for the fourth channel service to be provided by the IBA. The existing legislation stipulates that the programmes for the authority's existing services are to be provided not by the authority itself, but by programme contractors that, in consideration of payments to the authority, have the right and duty to provide programmes and the right to sell advertising time in the programmes that they provide.
  Under the proposals in the Bill, the fourth channel will operate on an entirely different basis. The formal position will be—and much will flow from this in terms of the authority's control over the channel—that programmes for the channel will be provided by the authority itself. However, the authority is not, and will not become, a programme-making organisation, and the Bill therefore empowers it to obtain and assemble programmes for the fourth channel.
  The important point here, however, is that the Bill also requires the authority
  54
  to establish a subsidiary for the purpose of obtaining programmes and planning schedules. In addition, it will be open to the authority to assign to the subsidiary such other functions connected with the provision of the fourth channel service as seem to the authority to be appropriate, but that would not, of course, include its regulatory functions. That will distance the authority from the programme makers and will enable it to operate on a similar supervisory level as it does at present for the existing ITV service.
  Mr. Phillip Whitehead: It is possible that the authority, as the Secretary of State says, can distance itself from programming, but surely it will not be possible for it to distance itself from scheduling. The logic of what the right hon. Gentleman outlines is that the authority will have to consider two separate sets of schedules for the two services and not allow that to be done by a group of people dependent on the existing companies.
  Mr. Whitelaw: One has to see how this will work out, but it will be mainly for the subsidiary company to deal with both the programmes and the scheduling. This will, of course, come under the overall control of the IBA. I believe that this is exactly as it should be. I accept, in principle, that this is something that the IBA will have to work out under the Bill and under the arrangements provided in the Bill by Parliament.
  Mr. Clement Freud rose—
  Mr Whitelaw: I am trying to resist giving way, but I am not resisting very well.
  Mr. Freud: I am grateful to the right hon. Gentleman. I had waited for him to raise this point. He has declared that the fourth channel would be viable and self-supporting and would not have life everlasting until it became so. Will he give the House an intimation of how long he will allow the fourth channel to prove itself?
  Mr. Whitelaw: The answer to that question, very simply and straightforwardly, is "No". It would be a great mistake at this time to try to lay down

  55
  the exact timetable. I do not think that anyone would expect that to be done. My only answer is "As soon as possible". I do not believe that it will be very long.
  Since the new service will be under the overall supervision and control of the IBA, I have not thought it necessary or wise to specify in the Bill the composition of the board of directors of the subsidiary. It will be for the IBA to decide this in the light of the duties which the Bill will place on it in relation to the fourth channel service. I know that a number of hon. Members will be concerned lest the fourth channel is dominated by the ITV companies, particularly perhaps the network companies. I would not be prepared to countenance this. Such domination is prevented in the totality of the fourth channel provisions of the Bill. This is also why I attach great importance to the strict safeguards which the Bill contains for the nature and sources of programmes on the fourth channel.
  The principal safeguards, which have been written into the Bill, are these. First, the IBA will be required to ensure that the fourth channel service contains a suitable proportion of programme material calculated to appeal to tastes and interests not generally catered for by the existing ITV service.
  Second, the authority will be required to ensure that the new service contains a suitable proportion of programmes of an educational nature.
  Third, the authority will be specifically enjoined to encourage innovation and experiment in the form and content of programmes.
  Fourth, the authority will be under a duty to give the fourth channel service a distinctive character of its own.
  Fifth, the authority will be required to ensure that a suitable proportion of programmes broadcast on the fourth channel in Wales are in the Welsh language.
  Sixth, the authority will be required to ensure that a substantial proportion of fourth channel programmes are supplied by people other than the ITV contractors.
  I know that some people will argue that the Bill should include specific quotas for the various types of pro-
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  grammes which will make up the fourth channel. My reply to this is that I am convinced that it would be unwise for Parliament, or for the Government, to attempt to give too detailed guidance as to the way a particular channel is run. There is the serious practical difficulty of forecasting what proportions of programmes of various kinds will be both available for the fourth channel and suitable for the new service.
  The more important point, however, is that our task is to set the objectives for the new service and leave it to the responsible public authority to see to it that those objectives are achieved. To those who doubt it, I would say that is the principle on which all our broadcasting has been laid down by the House over a considerable time, and I believe it right.
  As the House knows, there are a number of requirements in the Independent Broadcasting Authority Act 1973 which relate to programme standards in the services, both television and sound, for which the IBA is responsible—for example, the requirement that programmes contain nothing which offends against good taste or decency and is likely to incite to crime, or lead to disorder or be offensive to public feeling.
  There was a suggestion in the Annan report that these requirements should not apply in the case of the fourth channel service. I reject this idea, just as my predecessor rejected it in his White Paper. There are certain minimum standards which Parliament and the public are entitled to require in relation to the programmes which form part of public service broadcasting, and the Bill applies these standards to fourth channel programmes.
  The fourth channel will, at least initially and except in Wales, be a national service. The Bill does not, however, rule out regional variations, and there may well be scope for these as the fourth channel develops.
  I come now to the question of Welsh language broadcasting to which the right hon. Member for Cardiff, South-East refers in his amendment and on which the hon. Members for Cardigan (Mr. Howells) and for Berwick-upon-Tweed (Mr. Beith) have tabled a reasoned amendment to decline the Bill a second reading. The right

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  hon. Member for Cardiff, South-East and his right hon. and hon. Friends assert that our proposals contradict the promise made in the Queen's Speech on this subject. I reject this. We said in the Queen's Speech that we would seek an early start to Welsh language broadcasting on the fourth channel, and that is what we intend and what the provisions in the Bill are designed to achieve.
  Mr. Tom Hooson: Is not my right hon. Friend surprised that there is not a single Labour Back Bencher from Wales present to discuss this subject?
  Mr. Whitelaw: I am never surprised at anything in this House. I am always ready to be surprised one day, but it has not happened to me yet.
  I wish to stress that the Government are committed to increasing Welsh language broadcasting as quickly as possible. We have considered the various alternative ways of achieving this and have sought to take into account the interests of both Welsh and non-Welsh speakers alike.
  I am now convinced—and this is my reply to the hon. Members for Cardigan and for Berwick-upon-Tweed—that the fastest, most efficient and most economical way of doing this is to concentrate on the fourth channel all the Welsh language programmes produced by the ITV companies and independent producers and to concentrate on one of the BBC's two channels the corporation's Welsh language broadcasts.
  As I have said, the Bill requires the authority to ensure that programmes broadcast on the fourth channel include a suitable proportion of matter in Welsh. The authority tells me that, with the introduction of the fourth channel in Wales, it will transmit 12 hours a week of programmes in the Welsh language compared with its present seven hours a week. Although it is intended that these 12 hours should be transmitted as soon as possible entirely by the fourth channel, the authority recognises that some programmes in the Welsh language may have to continue to be placed on the existing ITV service for a while, pending the completion of plans to give equal coverage in Wales to its two services.
  Mr. Geraint Howells: Does the right hon. Gentleman agree that,
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  following the promise in the Conservative manifesto and the promise by the Secretary of State for Wales in this House on 23 May, the Government are treating the people of Wales as second-class citizens? They are denying us the right to a national programme for ourselves. The Government, in my view, do not care two hoots about the future of the Welsh language.
  Mr. Whitelaw Mr. Whitelaw My hon. Friend the Under-Secretary of State for Wales will speak about this matter later. If we believe, as I will show, that our proposals will provide more Welsh language broadcasts than would otherwise have been the case, it would have been stupid and futile to provide less than we believe is possible under these proposals. If those proposals mean more Welsh language programmes, why on earth should the hon. Gentleman or anyone else in Wales protest, especially if, at the same time, we can help the interests of those in Wales who wish to watch English broadcasts? I should have thought that this was a sensible proposal. I find it hard to believe otherwise. From what I have learnt, it seems that some of the people of Wales take a different view from the hon. Gentleman and think that our proposals are right.
  The Government therefore expect that the total output, when the fourth channel goes on the air, will thus be at least 20 hours a week and might be 22 hours, the latter figure being more than my predecessor hoped for. Furthermore, by the placing of those programmes on two channels, the rescheduling of other English language programmes will become more practicable so that viewers in Wales will still be able to see the bulk of the English language programmes, both of the BBC channel and of the new fourth channel, albeit some at different times from viewers elsewhere in the United Kingdom. That is my further answer to the hon. Member for Cardigan.
  The interests of both Welsh and non-Welsh speaking viewers in Wales will be served best if Welsh language programmes are not scheduled at the same time on a BBC channel and on the fourth channel. That will require close consultation between the BBC and the IBA. I know that they accept that, but I think it right that the matter should be put beyond any doubt. Clause 20, therefore,

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  places a duty on the corporation and the authority to consult each other to ensure that the scheduling of their respective Welsh language programmes is such as will best serve the interests of Welsh and non-Welsh speakers as a whole.
  It would be a mistake to underestimate the problems that will face the authorities and optimistic to suppose that they will invariably see eye to eye. To whom, then, should the authorities turn for advice? My right hon. Friend the Secretary of State for Wales and I were clear that it would be wrong for either of us, or any member of the Government, to become involved in matters of this kind. I have, therefore, included in the Bill provision for the appointment of a person to advise the authorities on such matters arising from their consultations as either or both may refer to him or her.
  The appointment will be made, in the words of the clause, by the "Secretary of State". As Minister responsible for broadcasting matters, the Home Secretary will make the appointment, but that will be after consultation with the Secretary of State for Wales.
  I turn to the question of the financial arrangements for the fourth channel. A channel without a secure financial basis would be little short of disastrous. At an early stage, as I have explained, I ruled out the option of financing the fourth channel from Government grant. That is, of course, the essential difference between my proposals and those of my predecessor. His White Paper simply acknowledged that the cost of BBC2 in 1977–78 was some £45 million. That figure had increased to some £60 million in 1978–79, but the right hon. Gentleman took no account of the cost of the OBA itself or of Welsh language broadcasting. Neither did he explain how provision for general financing assistance to the OBA would be made or how long it would last. In short, the White Paper left Government funds to support indefinitely an ill-defined expenditure on a service which made no attempt to build on our existing broadcasting structure, and which, in the unlikely event of its ever becoming financially viable, would almost certainly have been at the expense of the other services.
  In my view, the money must be found from within commercial broadcasting, and
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  in such a way that it does not have a disastrous effect on the existing system. The Bill provides for the IBA to obtain the money for the fourth channel from the ITV contractors. The authority estimates that the amount in question will be about £70 million at present prices for the first year and that it will be subject to review in subsequent years. The authority proposes to raise this money by individual subscriptions from the ITV companies and has included provision for that in the ITV contract specifications published on 24 January.
  Under my proposals the ITV companies will be able to sell advertising time in the fourth channel programmes broadcast by the authority in their respective regions. The companies will also have the opportunity of selling suitable programmes to the IBA's subsidiary for broadcasting on the fourth channel. For the purposes of the levy provisions of the 1973 Act, the income and expenditure of the ITV companies in connection with the fourth channel will, in so far as it is relevant income and expenditure under that Act, be aggregated with their relevant income and expenditure in connection with the existing ITV service.
  I hope that, in due time, the advertising revenue derived from the fourth channel will pay for the new service. It is, of course, difficult to estimate so far in advance the likely cost of the fourth channel. It is even more difficult to estimate the revenue which is likely to accrue from the sale of advertising time on the channel. My assessment, and that of most people who have considered this matter, is that in the first year or so revenue is unlikely to match expenditure. If that is right, the profits of the ITV contractors, and hence the yield of the levy, will fall in real terms in the initial period. I believe, however, that once the new service is established it will pay for itself and that the yield of the levy will be restored, and, indeed, increased.
  I should, however, like to tell the House that my right hon. and learned Friend the Chancellor of the Exchequer and I are now reviewing the whole operation of the ITV levy. We are firmly of the view that the public should share the profitability of the exploitation of a public monopoly, but we believe also that the companies should be encouraged to be cost conscious, and we are anxious about

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  the high marginal rate which the present system of levy, together with corporation tax, produces. I cannot, therefore, rule out possible changes in the levy system that may go beyond simple alterations in the rate.
  As the House will know, I have indicated that I hope that the fourth channel service will begin in 1982. I must make clear, however that the actual date on which the fourth channel comes on the air depends on a number of factors. There is the engineering work; the establishment of the fourth channel subsidiary and the arrangements which will have to be made to acquire programmes; and the question of the financial climate and the availability of resources. While, therefore, it remains my hope that the fourth channel will begin in the autumn of 1982, and work will proceed on that basis, it is only right that the actual starting date should be kept open.
  Mrs. Gwyneth Dunwoody: Before the Home Secretary leaves the question of finance, will he accept that if there is to be an input of independent material into the service it must be provided with suitable sources of finance? It seems that the right hon. Gentleman is not considering how that problem can be met.
  Mr. Whitelaw: I am doing so—by the financial proposals that I have set out. If the hon. Lady disagrees, there will be ample opportunity for her to argue the point during the passage of the Bill. I believe that the financial basis, through advertising revenue, that I have set out is by far the most likely basis on which to achieve the objective that the hon. Lady and I share.
  I have sought to present to the House the main proposals in the Bill and to explain the thinking that lies behind them. My hon. and learned Friend the Minister of State will deal with any points that hon. Members may wish to raise on the proposals, or on any other matters that time has prevented me dealing with in detail. My hon. Friend the Under-Secretary of State for Wales will seek to intervene to deal with some of the Welsh aspects.
  I have formulated my proposals on the basis that we must place our trust in the concept of broadcasting services being provided as public services by publicly
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  accountable broadcasting authorities. Some of the discussions and debates that have taken place, particularly on the fourth channel, since the Annan report, and even before, seem to me to have concentrated far too much on the prizes to be lost or gained by various interests, by the ITV companies, the advertisers, the independent producers or by the regional companies. But surely the main criterion for judging proposals for the future of broadcasting is whether the interests of the viewing public will be served. It is, of course, right, and indeed necessary, that other needs and interests should be taken into account, but my primary concern and, I would suggest, that of Parliament must be with the interests of the viewing public.
  Having considered these matters over a considerable number of years, I have come to the firm conclusion that our methods of regulating broadcasting in this country are fundamentally sound and have proved their worth in practice. I have sought, therefore, to provide a framework, constructed on the tried and tested foundations which have been established over the years, within which our broadcasting system can develop and the quality and range of our broadcasting services can be maintained and, wherever possible, improved. I believe that these are objectives to which this House will subscribe. It is in this spirit that I commend the Bill to the House.
  5.1 pm
  Mr. Merlyn Rees: I beg to move, to leave out from "That", to the end of the Question and to add instead thereof:
  This House declines to give a Second Reading to the Bill on the grounds that it does not provide for the institution of an Open Broadcasting Authority, and flatly contradicts the promise made in the Queen's Speech to both Houses of Parliament on 15th May 1979 that an early start would be made with Welsh broadcasting on the fourth television channel in Wales.
  In July 1978—and it is relevant today—I presented a White Paper on broadcasting that was prepared in the light of the Annan report. The then Conservative Opposition were not exactly enamoured of the need for such a report. They have changed their minds now. I pay tribute to Lord Annan, because much of what we are discussing is based on his, report.

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  The White Paper that I presented set out a number of proposals for the future constitution, structure and organisation of broadcasting in the United Kingdom. There are some issues in the Bill, such as the fourth channel and the proposals for Wales, on which we shall disagree profoundly with the Government. A great deal of the proposals in the Bill are exactly the same as those that would have been included in any legislation prepared by the Labour Party, as I think the Home Secretary would concede.
  I propose to deal with the Bill now and in Committee on the basis of a constructive discussion. In July 1978 I said that the then Labour Government
  "believe that these proposals will provide a structure for the next decade which, in the public interest, will accommodate technological change and encourage all that is best in our present system.—[Official Report, 26 July 1978; Vol. 954, c. 1558–59.]
  The proposed legislation will go forward for 15 years. It will be the basis for what happens after that. Therefore, it behoves us to consider it not only in a parochial way but on the basis—as the Home Home Secretary said—of the traditions of public service broadcasting since 1926. We shall operate on that basis during the discussions on the Bill. We shall vote against the Government on the basis of our reasoned amendment. We believe in the concept of the OBA and the control and use of channel 4. That constitutes the main part of the Bill, and it is on that that we shall register our view. It is important to do so. The Government were wrong to change their minds on the organisation of a Welsh language channel.
  Whatever the Home Secretary said about the Queen's Speech, the Conservative manifesto for Wales was quite clear as to the Government's intentions. The classical words that the right hon. Gentleman used today are, no doubt, the classical words that will be used by the Conservative Party for U-turns on many other matters in the next four years. It is a change of mind, and there is no point in burking the issue. Any problems that arise in Wales will be a result of the Government's change of mind on what they said during the election.
  I have no doubt that the hon. Member for Brecon and Radnor (Mr. Hooson) used that manifesto at that time—
  Mr. Hooson Mr. Hooson indicated dissent.
  Mr. Rees: If the hon. Member for Brecon and Radnor did not do so, I do not blame him, as he is an honourable man. There are many other statements in the manifesto for Wales that I would not support either. Look at the problems in Wales now.
  Several Hon. Members rose—
  Mr. Ioan Evans: The Conservative manifesto stated:
  "There is a widespread desire in Wales, shared by English and Welsh speakers, to use the fourth television channel for separate Welsh language broadcasting. There is an understandable demand among Welsh speakers for an increase in the amount of Welsh language broadcasting."
  That was a categorical statement in the Conservative manifesto. There was all-party agreement on that issue, but the Government have reneged on their manifesto commitment.
  Mr. Nicholas Baker: The right hon. Member for Leeds, South (Mr. Rees) said that he did not blame my hon. Friend the Member for Brecon and Radnor (Mr. Hooson), for not agreeing with what was in the manifesto. Does that mean that the right hon. Gentleman does not agree with the amendment in the names of some of his colleagues?
  Mr. Rees: That is far too cunning. It is an in-Welsh issue. Perhaps the hon. Gentleman ought to leave the matter alone.
  We shall not win on the OBA. It is important that we nudge the Government, because the Home Secretary's remarks at Cambridge rather enthused the media. They have been saying "Yes, very good. There will not be an OBA, but there will be exactly what was suggested in the Annan report". In Committee we shall nudge the Government towards that aim. I hope that the Government will change their minds about the Welsh channel. They have changed their minds once, and they can change their minds again. It will not be too difficult for them. We shall listen carefully to the debate. Our amendments will be gauged to enable to the Home Secretary to live up to his statement at Cambridge, which was based on the Annan report.
  I turn to the IBA and clause 1. The authority works well, and I should like

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  to praise it, its chairman and her colleagues. There are some aspects of its work, namely, breakfast broadcasting—which I read about in the newspapers—and the regional companies and their appropriate areas about which some of my hon. Friends feel strongly and with which they will deal during this debate and in Committee.
  The Bill will extend the life of the IBA until 1996. It is important to discuss the basis on which the new franchises are to be granted. We have read a great deal about that in the newspapers. In the past, one of the companies was dropped every time a new franchise was granted. There are many who think that that will happen now. Is that the correct interpretation of the legislation? What is the precept on which the IBA is working in awarding the new contracts?
  In the previous Government's White Paper we did not accept the proposal to call the IBA a regional broadcasting authority, although we wished to have a strong regional bias. The companies should not be purveyors only of national network programmes operating from the regions.
  There was a disturbing article in The Sunday Times yesterday which discussed the problems of the companies and claimed that ITV had become
  "simply an extension of the Establishment, an extraordinary gravy train with private jets and plush apartments in New York."
  No doubt that sort of claim can be made easily. However, it appears from that article, and from what I have heard from many people, that there are real problems.
  In the article in The Sunday Times, Paul Fox of Yorkshire Television—a man whom I admire greatly—is quoted as saying:
  "I feel sorry for people who are 50 in ITV. If I hadn't decided somewhere half-way through my career to go into management…The atmosphere's changed in ITV.…We've faced a period of uncertainty.…There's been no expansion at all."
  I found that article worrying. We shall wish to discuss its implications, if not today in Committee, under the heading of clause 1. That clause maintains the IBA and the companies that it controls for the next 15 years.
  On the fourth channel, we shall nudge the Government to live up to the remarks of the Home Secretary at Cambridge. We
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  preferred the OBA and its concept, under Annan, to widen choice, with programmes which would not compete with the existing channels. That is the Government's view, and the Home Secretary repeated it today. We were talking about education programmes, additional to university programmes, and about catering for minority tastes, including the diverse cultures of this country. So the new channel will be different, and the Home Secretary agrees with that.
  I come next to the sources of material. We agreed with Annan that programmes should come from a wide variety of sources, in particular from producers outside the existing organisations. However, the independent producers and independent companies are clearly very worried, and that worry has been conveyed in conversations that we have had with them and in letters that they have written. Their concern may be misplaced, but they believe that the IBA is saying that the new channel will be put under the control of the five main companies. In Committee we shall have to make sure that that is not so.
  The last Government believed that a second best to the open broadcasting authority was an open broadcasting corporation working through to the IBA, but with the same function as the OBA. The merit of that was that it involved no separate organisation. The disadvantage that I saw in it was that it would not be generating its own philosophy. I felt that it could not do that if it was working with the IBA.
  The IBA is to be responsible for the channel, I gather. However, I am working not on what the Government have said, or on what is in the Bill, but on information given to me by the IBA. What organisation will the IBA provide to deal with that? Normally the IBA is a regulatory organisation. Will it therefore treat the new subsidiary company as it treats Granada, Yorkshire, or, say Harlech? If it can recommend schedules for independent television, why could it not do the same for the new channel?
  Next, what does "subsidiary company" mean? Will it operate in accordance with the Companies Acts? Will it issue shares? What sort of company will it be? Will it have to make a profit, as a Companies Act company must? If it does not make money will it be wound

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  up? The Home Secretary raised expectations on the Labour Benches when he gave the impression that if the arrangement did not work the company would be brought to an end. Is that in line with the philosophy of Milton Friedman, that if its marginal revenue does not equal its marginal costs it will end? The Bill does not say that or specify what sort of subsidiary company it will be.
  Will it be some newly dreamed-up constitutional device in the context of public ownership whereby a "subsidiary company" is really a part of the IBA? We have to be clear on this, because at Cambridge and again today the Home Secretary sounded clarion calls in respect of what the Bill will do. The flesh that has been on the bones of the Bill does not satisfy us all.
  Mrs. Dunwoody: If the service is to be seen solely in terms of pounds and pence, should not the Home Secretary estimate before it is brought into operation whether the fourth channel could be independent and whether it would be better served on the basis of independent input from elsewhere?
  Mr. Rees: I shall come to that point in a moment. The Home Secretary said that Annan was deficient on the question of finance, and he was right. My White Paper took that aspect a step further, but the right hon. Gentleman was right to say that I did not spell it out. However, he did not spell it out either. That is because it is impossible to predict the financial situation in a couple of years' time. I have heard in the past few weeks from people engaged in advertising in independent television that they will make no money and that therefore the whole project should be slowed down. They say that their backs are to the wall. I hear from other people—not those in the companies—that it is the usual gravy train—
  Mr. Whitelaw: They cannot both be right.
  Mr. Rees: Of course not. I was not right, and neither is the right hon. Gentleman right. We are therefore both equal in that respect.
  Clause 3 states that the programmes must contain a "suitable proportion of matter" calculated to appeal to other
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  tastes and interests. The lawyers will have a marvellous time with that. What is a "suitable proportion of matter"? The clause states that the authority has the duty
  "without prejudice to so much of main section 2(2)(a) as relates to the dissemination of education, to ensure that a suitable proportion of the programmes are of an educational nature".
  I do not know what that means. That may be good for a speech at Cambridge or anywhere else. The Bill goes on to refer to the need
  "to encourage innovation and experiment in the form and content of programmes".
  That is rather like the newspaper editorial which reads well but which we should not ask anyone to put into practice. I accept that the precept is good, but how can it be imposed on the company?
  In its proposals the IBA says that it will appoint, after consultation, the non-executive members of the board. It will approve the fourth channel programme schedules and ensure that the planning and scheduling of fourth channel programmes on ITV1 are co-ordinated. In addition, it will establish the annual budget. Although that may be what the IBA says, it is not what is in the Bill.
  Clause 4 deals with the composition of the new body, but that is not spelt out either. Again I have to look to the IBA, which says in its document that
  "A possible model…is a board of twelve to fourteen people, of whom eleven non-executive members would be chosen by the Authority after consultation"—
  but with whom I do not know. I presume that it will be with the Government. The Government no longer have quangos, but they do consult, which amounts to the same thing. There will be an independent chairman and deputy chairman under the IBA proposals, and the
  "other members would broadly represent those who are likely to provide programmes".
  It will be a representational board. The members will not be there in their own right, although it does not say that in the Bill. Under the proposals four members will come from the ITV companies, which, as well as providing some of the programmes for the fourth chanbudget. The people on that committee will be powerful. They will provide nel, will be providing virtually all its

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  the brass. I bet that all the independents on it will have a lot to say.
  Sir Paul Bryan rose—
  Mr. Rees: Here is the right man to speak on this point.
  Sir P. Bryan: The right hon. Gentleman has underlined the difficulties, but I want to know whether he will be with us in committee to help us get these details right.
  Mr. Rees: I am just coming to the point. This is not the detail. That can await the Committee stage. I suggest that on the function, the composition, and so on, there should be, before the channel starts broadcasting, a statutory instrument specifying such matters. That is not stated in the Bill. Perhaps it is too soon to hear about that, but the House should not allow anything as general as what is contained in the Bill to be passed into law and be practised by the IBA. The new channel is important. There must be a statutory basis for the subsidiary company.
  I turn to the question of advertising. The clause 5 provisions are suitable for discussion in Committee. The previous Government agreed that there should be advertising on the new channel. However, does it have to be spot advertising? Can we experiment with other forms of advertising, as other parts of the world do? Paragraph 21 of my White Paper dealt with sponsorship and spot advertising. It stated that the major part of advertising should be spot advertising but that there should be experiments in different types of advertising.
  The Home Secretary answered a question by the hon. Member for Merioneth (Mr. Thomas) about the cost of the channel. The right hon. Gentleman used his words correctly. He said that there would not be a charge through the Treasury. If, in the short term, not much revenue goes to the Treasury, there will be a cost to the public purse. The cost is added up differently, but there will be a cost to the public purse. The Treasury will prefer the method chosen by the Government. If our suggestions had been taken up public expenditure would have been increased, but public expenditure is not affected by the method proposed in the Bill. The Treasury will love
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  that. Perhaps that is why the Bill was a little delayed.
  I turn to the regional aspects of channel 4. In the short term there will be no regional programmes. Some of my right hon. and hon. Friends will want to ask about Scotland, because account must be taken of the differences in that part of the United Kingdom. I have expressed my argument about Wales, and my right hon. Friend the Member for Swansea. West (Mr. Williams) will return to that aspect. Under Siberry and Annan the fourth channel was to be established in the way that we suggested. I want to put down the marker that we believe that it is important to consider the special aspects of Northern Ireland. The Home Secretary knows better than anyone that Northern Ireland is not just part of the United Kingdom but a place with its own culture. We are considering Scotland and Wales, and we should also consider Northern Ireland. All the regions are important, but Northern Ireland is of special importance.
  What about the financing of local broadcasting? At the moment there is a system of rentals and secondary rentals. My White Paper suggested that there should be a levy. As the right hon. Gentleman explained, after the rental there is now to be a 40 per cent. levy. I am not clear when it will be levied. Will it be levied at the end of the next financial year if the Bill is passed by then?
  I understand that IRN and the London Broadcasting Company face a special problem. LBC is not in the same league as Capital Radio. It performs a different task. For years it has lost money because it performs a public service and does not earn much from advertising. I do not criticise Capital Radio. It performs a different task. LBC's financial year runs from October to September. In its first debt-free year—1981–82—it will be faced with a secondary rental and a levy. This will be at a time when it will be able to move to new buildings. LBC's news broadcasts are excellent. I hope that its position can be examined. The general impression was that there would be a graduated levy although that impression may be wrong. LBC is not alone in its problems. Other stations throughout the country also have problems. A graduated levy may be best.
  Mr. W. R. Rees-Davies: A graduated levy is a fair suggestion. However, what criteria will be laid down? Will Capital Radio not be involved when LBC is? To what extent will such criteria affect regional stations? Are special conditions to apply to stations in the agricultural counties, for instance?
  Mr. Rees: That is a fair point. A graduated scheme up the scale may not help companies such as IRN and LBC to the degree that I should like it to. Broadcasting stations in the North of Scotland which do not make much money could argue that they also should be treated specially. Perhaps there might have to be a double standard for the graduated levy. We want to be clear about this matter. In Committee perhaps we shall be able to help the Government to work out a fairer system.
  Pay television and cable services are not dealt with in the Bill, although I think that they should be. Paragraphs 177 to 182 of my White Paper suggested that pay and licensed cable operations should come under the IBA. I did not believe that the Home Office was constitutionally the right organisation to deal with them. According to The Times of last Friday, a parliamentary answer is to be issued today explaining that there is shortly to be an experiment on pay television. The merits and demerits of pay television were mentioned in the White Paper. The Home Office is to continue to be involved with pay television. I believe that it should be operated through the IBA and that it should be distanced from the Home Office.
  We want to improve the Bill. It is full of generalised provisions of which we approve. In his Cambridge speech the Home Secretary said that he would make precise proposals. There is room for more precision in some parts of the Bill. We want to translate the spirit of the Cambridge speech and Annan into clear proposals, because there is some dubiety about the proposals in the Bill. We shall welcome information from the Government and all other sources in Committee. Half of the Committee should not be left in the dark. We are trying to set up a form of broadcasting for the next 15 years. We shall receive much information from the independent companies. I hope that the Government will be able
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  to give us factual information that will make our discussions constructive.
  This is an important matter, and we must all play our part. The Opposition will vote against the Government. That is the course that I advise my right hon. and hon. Friends to take. We would prefer to have the OBA. We shall vote against the Government on that ground. We think that they are wrong to change their minds about Wales. They have changed their mind since the publication of the Conservative Party manifesto. At least one Welsh Conservative Member did not subscribe to what appeared in the manifesto, but we have witnessed a U-turn. The Government should make another U-turn and change their minds once more.
  5.30 pm
  Sir Paul Bryan: I declare my interest as a director of Granada Television Limited.
  Too often over the past 40 years broadcasting policy has been the responsibility of a junior Minister or a non-Cabinet Minister whose decisions, even when they have been good ones, have been overruled by the Prime Minister of the day. Luckily, at this turning point in our broadcasting history we have in charge of the Bill a Cabinet Minister who has taken the greatest interest in the run-up to the Bill and in its final outcome—namely, the Deputy Prime Minister. I congratulate my right hon. Friend the Secretary of State for the Home Department on the Bill. It bears all the signs of his long experience and knowledge of our broadcasting system.
  The Bill will chiefly be remembered as the parent of the fourth channel, or service 2, as we are asked to call it in the Bill. It will be judged over the years by whether that channel turns out to be merely more of the same or a channel with its own distinctive character, complementary to ITV 1 but offering new opportunities to the viewers and to broadcasters, whether they be the companies or the independent producers. That is what we all want. There is no argument about that. The argument is directed to how we may achieve that objective.
  The Annan committee had its own solution—the OBA. The Home Secretary is relying on an extension of the

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  present system, by which the IBA supervises the companies and is ultimately responsible for their programmes. In doing this my right hon. Friend is adding great responsibility to the IBA. The Annan committee recommended robbing the authority of its radio stations and relegating its television channel to a regional channel. In contrast, the Government have doubled the number of radio stations under the Independent Broadcasting Authority and given it a second service. This increase in the standing of the IBA is the key decision that my right hon. Friend has made. I think that it is a correct decision.
  Those who fear that the system will produce more of the same and drag down the quality of the other ITV channel and the two BBC channels by the competition it will cause underrate the supervising powers of the IBA, which the television companies certainly do not. May I now examine the question of whether the authority is sufficiently strong to carry out its watchdog duties in respect of the broadcasters?
  The IBA does not go out of its way to fight its battles in public. However, at intervals there is clear evidence of the authority insisting and the broadcasters having to submit. The authority is not always right, but it is not always wrong. Most people now agree, including the ITV companies, that the IBA was right when it insisted on a half-hour news broadcast at 10 o'clock at night. This decision was taken some years ago. That turned out to be one of ITV's greatest successes. The fact that it came about because the IBA stuck to its guns does not make it any less so.
  More recently there has been a reduction in the quota of programmes from overseas, including the highly popular American detective and "private eye" series. The quota is decreasing from 14 per cent. to 11 per cent. It is not necessary now to debate whether that is the right thing of the wrong thing to do. The important fact is that the IBA has insisted on it in the face of great reluctance from the companies, which consider it to be one of their most popular programmes.
  For the most recent example one need look no further than the IBA's conditions for franchises, which make heavy requirements on the applicant companies. For
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  instance, there is a stipulation in respect of the Midlands area that a fully operational self-contained second station should be brought into use so that the East and West Midlands operate on a basis of partnership as a dual region. I estimate that the move will cost the ATV, or its successor, between £15 million and £20 million. However, that is a requirement. It is not merely advice; it must be done.
  I can assure the House that in the day-to-day running of television companies the IBA is constantly in touch with the companies. It gives strong advice of various sorts about the balance of local programmes, for example. This advice is not disregarded.
  Mr. Whitehead: If the authority is so much in touch, why did it ignore public opinion in the East Midlands? The view of the public in that area was that a new and separate programme structure was needed. Surely there has been an extremely conservative move, and not the radical move that the hon. Gentleman suggests.
  Sir P. Bryan: One could debate that subject long into the night. I stress the importance of retaining five companies large enough to be able to undertake major productions. As soon as we start splitting up the big companies as the hon. Gentleman suggests, the system starts to disintegrate. That is my view.
  It cannot then be argued that the broadcasting authorities do not have the powers and the will to do their job. All the evidence is to the contrary. The welcome advent of Lord Thompson as chairman of the IBA will add even further to its influence.
  If, despite what I have said, the companies are in a position to thwart the authority's efforts to create a distinctive channel, to do so would be against their commercial interests. It must surely be clear that the existing ITV companies would be doing themselves a massive disservice if they were to produce more of the same. They would be putting themselves in competition with themselves. That is the last thing that they want to do. It is not in their interest to draw away from ITV 1 advertising revenue of the sort that is logically placed with a popular service. Their only hope of increasing the volume of advertising revenue overall is to create new markets.

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  The best way to accomplish that is to develop new programmes of an exploratory nature, which appeal to new audiences.
  Mr. Sheerman: Does the hon. Gentleman accept that one of the great dangers—it may be spelt out in Committee—is precisely the opposite of what he is suggesting might happen? Is there not a risk that the main ITV 1 will become even worse in its range of programmes and will shunt off specialist programmes into this new area? If that were to happen we should see a great deterioration of ITV 1. The parallel is to be found in commercial radio, where education and other related broadcasting is put into the dead time, when no one listens to it.
  Sir P. Bryan: That could happen. However, the IBA, on its past conduct, has not shown itself likely to move in that direction. It is strong enough and responsible enough to carry out the provisions of the Bill.
  There has been much debate as to who will produce the programmes for the fourth channel. Will the companies hog the screen? Will the independent producers get their fair share? The Home Secretary has wisely promised the independent companies as many programmes as is "practicable". That is wise at this stage. These are early days for quotas or percentages. First and foremost, the company running the new service will be responsible to the viewers and not to the programme producesrs. It will be more concerned to get an early reputation for quality than to allot so much time to one source or another. We do not know yet what volume of worthwhile output the independent sector is capable of producing. As far as I am concerned, the more programmes it produces the better, so long as they are of a quality that will enhance the value of the channel. I shall be surprised if, in the early days, the independent companies are able to produce a large volume of quality programmes. But there is no shortage of talent in Britain, and I am sure that as time goes on there will be plenty of good quality programmes. The ITV companies want to play a large part in the new channel, but more for the opportunity to expand the openings for
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  talent within the companies than for commercial reasons. In television it is not possible for large sums of money to be made simply by producing programmes. Money is made from advertising. For the reasons given by the right hon. Member for Leeds, South (Mr. Rees), clearly there is frustration within the companies because of a lack of expansion. The new channel will provide an opportunity for expansion, to which everyone has been looking forward.
  Clause 3 of the Bill, entitled:
  "Nature of Service 2, and its relation to Service 1"
  makes one realise why it is wise to give the IBA those powers. The task of making the two services complementary will involve detailed scheduling. It is impossible to imagine how the Annan plan, involving two independent organisations—the IBA and the OBA—could have managed that. One programme cannot be made complementary to another unless one has a good idea of what the other programme will contain. The notion that two series can be scheduled in isolation and emerge with a genuinely complementary programme is absurd. One immediate result would be duplication of the sort that viewers find so irritating, and another would be a failure to provide sensible time junctions between the programmes so that the viewer could turn off one and on to the beginning of another. That depends on careful scheduling.
  The IBA has immense experience in supervising scheduling over the 15 independent companies and the ITN. The programme policy committee is closely linked with the network programme committee, which is the main instrument of the ITV companies for arranging co-operation between them in the programme services. I do not suggest that the new Service 2 merely involves adding one more company to the existng system. However, the existing system provides a ready-made body of experience on which to base a difficult and complicated operation.
  The Home Secretary has given his views on competitive advertising between the two channels and the House will not be surprised that I agree with him. Very few people—except the advertisers—would not expect direct competition for advertising to lead to

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  a corresponding scramble for audiences and a deterioration of programmes, both on ITV and BBC.
  Nevertheless, I think that the advertisers have a grievance. By that, I do not mean that they are necessarily charged too much. Against the common assumption, advertising costs have dropped in real terms over the last 20 years. Their legitimate grievance is that insufficient notice is taken of their position as customers of a monopoly supplier. Any monopoly supplier can appear to be arrogant, if he is not careful.
  I do not believe that the many variations of the rate cards thought up by the 15 companies constitute dishonesty of any sort. However, some are ingenious, and some advertisers might be forgiven for wondering whether a non-monopoly supplier would be bold enough to offer them in their present form.
  I am therefore glad that the IBA proposes to set up an advertising liaison committee. I hope that it will be a high-level body, chaired by Lord Thompson and manned by leading directors of the companies and the advertising organisations. From those meetings should emerge a code of practice, written or not written, that will ensure that fairness is seen to be carried out between the companies and their customers.
  The complaints commission occupies no fewer than eight out of the 28 clauses of the Bill. It therefore deserves mention. I concede the desirability of the commission, if only because the present system does not work. The BBC and the ITV have equivalent complaints commissions, whose members comprise many distinguished personalities, including a previous Speaker of the House. Despite that, they are hardly used. During the course of a year the number of people who seek their help is under 20. That must be a negligible fraction of the total number of individuals who have just cause for complaint about their treatment on the screen. Perhaps the Minister of State will explain why people will be less reluctant to use the new commission than the present arrangements.
  One of the great faults of the BBC commission is that the only form of redress for a person whose grievance is upheld is an apology in The Listener.
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  That is not a very satisfying return for an appeal to the commission.
  I should also like the Minister of State to clarify part of clause 12. It is stated in the explanatory and financial memorandum to the Bill that:
  "Clause 12 enables the commission to direct that their findings in relation to a complaint be published by the broadcasting body concerned."
  I should like to know how much publicity those findings will receive. The publicity should be given on the screen, not in a magazine.
  I turn now to radio. I declare an interest, as a director of Piccadilly Radio, in Manchester. The Bill makes provision for a levy on the profits of radio companies. I have no complaints about that. It is a recognition—rather an unwelcome recognition—of the local radio success story.
  It is about 12 years since the Postmaster-General of the day, Lord Glenamara—then known as Mr. Ted Short—from the Dispatch Box told me, as his opposite number, that our plans for independent radio were impracticable and impossible because there were no frequencies available. Since then, on this frequency desert, 20 BBC stations and 19 ILR stations have blossomed, and now another 15 are planned.
  I pay tribute to the staff and the members of the IBA for their work in setting up this flourishing and widespread organisation. They have spent thousands of man-hours and women-hours in the exacting task of selecting companies to run the stations. They have done it with great diligence and success. Independent local radio now covers 60 per cent. of the population. As the coverage spreads, the stations get smaller, more local and more appreciated. It is a unique example of a public service run by most adventurous entrepreneurs, most of them very small companies, to the evident satisfaction of millions of individuals and their families.
  5.51 pm
  Mr. Gregor MacKenzie: I gathered from the first Back Bench speech that in this debate one is first required to declare one's interest. Unlike the hon. Member for Howden (Sir P. Bryan), I am not able to say that I am a director of a television company or a radio company. But I declare an interest,

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  in that I am a viewer, I pay my television licence fee, and I also help to pay for commercial television operations by reason of the extra price my wife has to pay in the shops.
  It is not the first time that the hon. Member for Howden and I have had cause to disagree. Indeed, we have already disagreed quite profoundly on how broadcasting should develop in the course of the next couple of decades. I offered from the Opposition Dispatch Box some years ago the proposition that we ought to have a commission of inquiry. Now that we have all had an opportunity of reading what Annan and his colleagues have had to say, I think that we were right to press for that inquiry. Not only have we had from the Annan committee some of the things now contained in the Bill; it has also given us tremendous food for thought about all sorts of matters associated with broadcasting.
  I turn now to the core of the Bill, and in particular to the fourth channel. My hon. Friends will remember that when I spoke rather more frequently on broadcasting matters, I was not wildly enthusiastic about the notion of a fourth channel. It always struck me, as a Scot, that it would be rather difficult to introduce a fourth channel into Scotland at a time when some of my compatriots could not receive a first, a second or a third channel, and could not get many of the local radio stations. Perhaps the Home Office, in considering what it is to do about broadcasting in the future, will spare a thought for those people who are unable to receive the television services for which they are paying.
  My second reason, some years ago, for not being enthusiastic about a fourth channel was that, at a time when resources and money were scarce, I thought that it would be rather out of place to spend money on a fourth channel. That is how many people view the matter today, when we are being asked to make all kinds of cuts in public expenditure. Only last week we were depriving young people at school of milk and of meals; we were also depriving them of school transport. Yet, as I understand the position from what the Home Secretary said, the revenues that will be made available in the initial stages in order to provide a fourth channel will be more than double the amount
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  needed to provide for a school transport system.
  Having held these views and expressed them over a period, I was eventually persuaded that perhaps the time had come to introduce a fourth channel. The problem is rather like that of the salaries of Members of Parliament, in that it is never the right time to do anything about it. That was perhaps the sort of attitude that I had to the fourth channel. Now we are to have one, and I can only hope that the fourth channel will do what Lord Annan and his colleagues wanted—provide a service that will be of interest to specialist groups and to minorities. The term "minorities" is rather a misnomer, because the minorities concerned are not very small. There are considerable minority groups in size and number and it is only right and proper that we should cater for them by means of the fourth channel.
  This may be regarded as a Committee point, but when the Minister of State replies to our deliberations I hope that he will tell us why it is thought necessary to remove section 34 of the Independent Broadcasting Authority Act 1973. That is the section which has always struck me as being very important, in that it provides for balance in our television programmes. I hope that the Minister for State will assure us that there will be a proper balance in the fourth channel, and that it will cater for the various interest groups to which I have referred.
  I should have preferred, as Lord Annan and his colleagues suggested—and as my right hon. Friend the Member for Leeds, South (Mr. Rees) said in his speech today, and in the course of his White Paper—to see the new service run by a quite separate and distinct organisation, namely the OBA. The Home Secretary, when he asked questions about this matter during the time when he was the Opposition spokesman, seemed to be complaining that one of his objections to an OBA was that it would create some new kind of bureaucracy. If he thinks that some new kind of bureaucracy will not grow out of the IBA and IBA 2, he is being much more optimistic than are the generality of hon. Members.
  In Committee, as my right hon. Friend said, we shall obviously wish to pursue the notion of the OBA. Therefore I shall confine my present remarks to the matters which concern me. I hope that,

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  although they will be of a national character, I shall not be thought to be too parochial, but they are matters of importance to me. We have to determine the criteria for our new television companies, as the life of the IBA is to be extended.
  I enjoy the broadcasting system that we have in Scotland. I enjoy listening to and watching BBC programmes. It may come as a surprise to some of my hon. Friends, who know the attitude that I have always had to commercial television, that I now enjoy even some of the programmes presented by the Scottish independent television companies. But we operate in Scotland in a rather vicious circle, in that neither the commercial television companies within Scotland nor the BBC within Scotland are permitted, for various reasons, to provide more services than they provide at present for the national network. This leads, naturally, to the loss of talent in Scotland, and perhaps in Wales and other parts of the country.
  As I watch ITN programmes at night, I see two presenters, both of whom are Scots. I hope that one day they may be back in Scotland. I know that BBC 2 is likewise directed by a Scot. The flow of talent south of the border represents a vicious circle, for the more that our talented people move from the regions to the centre, the more the centre demands that we should have fewer of our own programmes than we have at present on the network. I hope, therefore, that the establishment of the fourth channel will do something to ensure that the smaller groups and smaller companies will be able to feed rather more into the national network than they do at present.
  When I watch BBC or commercial television programmes from Scotland, I am sorry that sometimes the image presented is simply one of bagpipes and heather, of people wearing kilts, of country dancing and that sort of thing. That is not the sort of Scotland that I know. I am bound to tell hon. Members that if they see a man in a kilt in Scotland, they can be sure that it is most unlikely that he is a Scot. If one then listens to his accent, it will sound more like Eton or Harrow than Rutherglen high school.
  Having said that, I am sure that we could produce programmes of national
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  interest in Scotland. We have industrial, economic, social and scientific programmes which are of interests. Indeed, at the risk of sounding too nationalistic, John Logie Baird invented television, so we do have a contribution to make in that way. If Scottish companies were able to make a more substantial contribution than they do to the national network, the quality of broadcasting, both nationally and in Scotland, would be improved.
  Although we do not see very much about the BBC in the Bill, the Home Secretary, in a speech at Cambridge, said that the BBC, and his thoughts about it, were an integral part of our broadcasting system. I suggest that BBC Scotland should produce more programmes for the national network. Again at the risk of sounding nationalistic, there should be more autonomy for the board of governors of the BBC in Scotland. There has been a considerable quarrel and a deal of friction between BBC Scotland and BBC London. It springs from the fact that BBC Scotland does not have a budget of its own. Therefore, it cannot make its own distinctive contribution and it cannot even make its own appointments. I think that if we are to have a substantial improvement, we must have something done about the attitude of the BBC towards the programme makers and workers in Scotland and Wales.
  My first comment on the fourth channel—this was mentioned by my right hon. Friend the Member for Leeds, South—concerns the speech made by the Home Secretary at Cambridge in September last year. My understanding is that initially, apart from some Welsh language programmes, there will be little or no regional variations. That could be a very serious problem for people in Scotland and elsewhere.
  I am directing my remarks to the Minister of State who, for two years in Opposition, argued the whole question of devolution. He knows that that matter was taken very seriously in Wales and in Scotland. If he does not make some concession on regional variation at the very outset, we shall again face serious problems about independence because he will simply be giving fuel to the nationalists in Scotland. Of course, the Scottish nationalists have not bothered to turn up for our deliberations and say what they

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  think about Gaelic and so on. As the Minister knows, Scotland has its own educational, legal and church systems and it will be at his peril that he ignores the fact that we want to see these featured on the fourth channel from the earliest stages of broadcasting.
  I turn next to the question of the advisory committee and those who are to be appointed to it. I may have misunderstood the Home Secretary but it was significant that, when referring to his attitude to regional broadcasting, he made a kindly reference to how he proposed to make appointments in Wales. He said that he would consult his right hon. Friend the Secretary of State for Wales about such appointments. However, some of us would like to be assured that a similar situation will apply in Scotland and in Northern Ireland. Indeed, some of my hon. Friends who represent English constituencies would like to think that attention will be paid to these matters when the Home Secretary and others make these appointments. The Home Secretary is responsible for broadcasting, but perhaps the Minister of State will spell out a little more clearly than did his right hon. Friend how he proposes to make the appointments.
  As I said at the beginning of my comments, unlike the hon. Member for Howden, I have no expertise in these matters other than as a viewer. I think that on the advisory committees we have had far too many professional communicators and people with direct links with advertising, television companies and so on. I appreciate that it is always difficult to draw from ordinary members of the public to serve on such committees. However, I beg the Minister to consider this matter very seriously. We know that lists of the good and the great are maintained by Governments—both by this Government and the previous Labour Government of which I was a member. Nevertheless, I ask the Minister to go beyond the professional communicators and to get a few ordinary people—ordinary viewers—to serve on the committee and to say what they think about programmes and how they should be run. That would be of value.
  Like many of my colleagues, I feel justified in having asked for a commis-
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  sion to look at the whole sphere of broadcasting. The Home Secretary has not accepted the view of Lord Annan and his colleagues on many points, but there is a great deal of meat in the report and it could help to form the guidelines for a more effective system of broadcasting than we have had in the past.
  6.7 pm
  Mr. Clement Freud: I shall comment only little on the speech made by the right hon. Member for Rutherglen (Mr. MacKenzie). My right hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. Steel) would clearly want me to take issue with the right hon. Gentlemen on his contention that only non-Scotsmen wear the kilt. My right hon. Friend not only wears a kilt, he is a Scot.
  The right hon. Member for Rutherglen sold himself short to an extent when he told the House that the Scots had a separate system in education, religion and law. I remind him that the Scots also have a separate system in drinking and in gambling in that they pay out in respect of whoever passes the post first regardless of objections that may ensue.
  The Bill is under four headings. I broadly welcome parts I and IV. Therefore, I shall confine my Second Reading comments to the creation of a fourth channel and to the setting up of a complaints commission.
  The Liberal Party was not particularly sold on the open broadcasting authority. Lord Annan, in his report, criticised the BBC for having a difficult administration and seemed to set up in the OBA something which was administratively even more difficult than was the BBC.
  We have always felt that as television sets have for many years had four buttons, it was right and proper to have some programme rather than no programme as a result of pressing the fourth button. We felt that it was equally right that such a programme should come sooner rather than later.
  Mr. Whitehead: That is typical Liberal thinking.
  Mr. Freud: It may be typical Liberal thinking. However, as we pay for a fourth button, let us have something if we press it. If that is typical Liberal thinking, I welcome it, and so should the House.

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  It is also right that a fourth channel should put the minimum of pressure on the public purse, whether it be in direct grant or in a diminution of the income from the Government. Therefore, we give a general welcome to the fourth channel under the IBA and a warm welcome to restricting the involvement of major ITV companies therein. In Committee we shall want to argue about the setting of a date after inauguration for when what is stated in the Bill as the "substantial proportion" of programmes that are to be provided by independent television contractors should actually come about. It is right to ask for quantification, first, at the commencement and, secondly, in the longer term.
  When the Bill becomes an Act it would be proper to state what the long-term provision by major ITV companies, minor regional companies, educational contractors, foreign contractors and the independents should be. It would also be proper to know what proportion of programmes should be news programmes. It is not unimportant to remember that whereas, clearly, ITN will provide the news, it would be wrong to allow ITN to provide all current affairs programmes. I sincerely hope that the Minister will bear in mind that the independents have every right—and should have every encouragement—to provide current affairs programmes.
  We welcome the fact that programmes should be complementary to the other channels and not reactive to them. I am not sure what a "proper balance" will mean in legal terms but we certainly welcome the sentiments behind it.
  The fourth channel board should be thought about carefully. When the BBC was set up the Minister may recall that the governing body consisted of a chairman and four members. Over the years the composition of the board has risen to 11. I am sure that the Minister will agree that wisdom does not increase with the number of people on the board. As all boards tend to start small and become big, I hope that the opening number for the board of the fourth channel will not be much larger than perhaps a dozen, bearing in mind that on that board there will have to be representation from Scotland, Wales, Northern Ireland and England. In addition, educational and
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  religious bodies may want to be represented.
  I would feel badly about over-representation from the large independent television companies. There must be a balance—the Government are keen on balance—between the representation of independent television producers and the members who represent the big commercial television companies. I also hope that consideration will be given to the paying of this new body.
  I turn now to the complaints commission. The Home Secretary has suggested a figure of about £150,000 as the cost to the country. I hope that the Government will remember the miserable Press Council they created. I am sure that no one will deny that that is a toothless body. I hope that the complaints commission will not be like a second-rate psychoanalyst who will listen, but give no advice. If a new complaints commission is set up it should have real teeth and real power.
  Clause 9(1)(b) says that the complaints commission will be concerned only with complaints about matters that are broadcast. It must also be concerned about those matters that are not broadcast but are left on the cutting room floor. The complaints that come to the BBC—at the moment the only body with a complaints commission—tend to be that a proper balance has not been found. I can give the House an instance of this. Yesterday I appeared on a programme with the hon. Member for Bethnal Green and Bow (Mr. Mikardo) and we were discussing the Minister's suggestions for raising deposits in a parliamentary election. I suggested that, rather than having higher deposits, it might be sensible for a candidate to be required to obtain 1 per cent. of the electorate to endorse his candidature. The hon. Member for Bethnal Green and Bow said "Anyone with a pretty face can get anyone to sign anything."
  My contention was that if anybody would sign anything that would be wrong and, therefore, what would happen would be a prescribed form which would say "I, so-and-so, stand for such-and-such party, and would like your consent for my candidature at this election." The BBC, presumably because of shortage of time, cut this so that anyone who watched

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  the programme heard only the words "Anybody will sign anything".
  I have stopped complaining to the BBC because I am permanently grateful for being given air time. But if there were a complaints commission one would be entitled to ask "Why was this not broadcast?" However under clause 9(1)(b), because it was not broadcast, one would not, as the Bill stands at present, be able to make a complaint. The Minister shakes his head, for which I am grateful.
  Mr. Nicholas Baker: I am most interested to hear the hon. Member say that the complaints commission should have body and teeth, but what body and teeth has he got in mind?
  Mr. Freud: I believe that the complaints commission should have power similar to a referee in football, in that it could show someone a yellow card and when that has been show often enough it could show a red card. To put it more realistically, if a sufficient number of complaints were made against an ITV company, or an idependent company providing programmes, there should be a real threat of the ability of the commission to recommend to the IBA that that company's licence would not be renewed after seven years. That is the sort of power I mean. At the moment I do not think that the complaints commission has that power.
  As was said earlier, what seems to have happened is that complaints are published in The Listener, which not too many people read.
  Mr. Barry Sheerman: Would the hon. Member accept that the complaints commission should manifest teeth by a system of fines imposed on those companies shown to be in neglect of their duties? They could fund the operation.
  Mr. Freud: That is something that might be discussed in Committtee, but, from the way the hon. Member for Huddesfield, East (Mr. Sheerman) presents the idea to me, it does not at the moment, commend itself.
  The Home Secretary said that Channel 4 should be viable and self-supporting. I asked him for how long he would let it be unviable and not self-supporting before
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  he said "That is enough." He said "No". That seemed a strange sort of answer to give. I admit that it may be impossible to spell out the minutiae. But surely the Home Secretary could have spelt out the bottom line. What is the point at which he will say "Enough is enough"? What must the loss in revenue or the paucity in quality be before he will say "Let us go back to where we were before"?
  The amendment in the name of my hon. Friend the Member for Cardigan (Mr. Howells) was not selected, although the sense of it is incorporated in the Opposition amend-pent. We shall vote against giving the Bill a Second Reading because of the clear departure by the Government from their manifesto in which they promised a separate channel for Welsh broadcasting. It is high time that politicians started to be bound by the Trade Descriptions Act. Until that happens, all opposition parties should—and in this case we will—vote against Government motions that are brought in in deceit of promises made to the electorate.
  6.19 pm
  Mr. Julian Critchley: I have one interest to declare, and that is that I have no interest in Welsh broadcasting. I say that not to offend you, Mr. Speaker, or any Welsh Member, but only to stop Welsh Members interrupting my eight minutes with questions that I am unable to answer. That privilege will be left to my hon. Friend the Under-Secretary of State for Wales.
  I enjoyed the speech of the right hon. Member for Leeds, South (Mr. Rees). It reminded me of the young Lauren Bacall. It was thin and interesting. The interesting bits were a bit thin, and the thin bits were not so interesting. But I feel sorry for the right hon. Gentleman, because he is still foisted with the OBA. Even when the child was living, before the election, he showed it little or no affection. Indeed, there were those less charitable hon. Members who hinted at the time that the right hon. Gentleman was not the father of the OBA, but that the father, in fact, came from Derby.
  Not only was the previous Home Secretary lumbered with the OBA before the election; he now finds himself embracing the corpse of that unfortunate child and

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  still having to make half-hearted speeches in favour of that particular concept. I think that we should stand for a moment in respect not simply for the OBA but for the former Home Secretary as well.
  Mr. Merlyn Rees: What the hon. Gentleman is saying is not true. I thought that he was going to explain why, before the election, in this House, on behalf of the then Opposition, he came out firmly in favour of handing it over to ITV 2, no holds barred, whereas he has changed his mind now in enveloping it.
  Mr. Critchley: I think that the Government's policies on this aspect have moved very gently in the right direction. I wish that I could say the same for all their policies. None the less, on this particular aspect, all conversion is to be welcomed.
  I welcome the Bill. It is reactionary in the best sense of the word, in that it reverts to a sort of Macmillanite Conservatism. It is interventionist and it steers, as it were, a middle way, between the horrors of the OBA, on one side—which we would have had to pay for indefinitely through the revenue—and the equal horror, upon the other side, of a fourth channel, fully competitive, with a new set of programme companies.
  I suspect that the Home Secretary will run into a degree of opposition from those who hanker after the past, in terms of the OBA, but also from some of my hon. Friends who would like a fully competitive fourth channel. So far, no one has mentioned the BBC. I think that it is the health of the BBC and the fact that it can command half of the viewers of this country that makes certain that the standards of programmes throughout television remain as high as they are today. What is very clear and very plain is that, were we to have had a fully competitive fourth channel with a new set of companies in full competition with ITV 1 and BBC 1, the viewers watching BBC 1 and BBC 2 would have dropped to about 30 per cent. to 35 per cent., in which case we can imagine the arguments over the licence fee. The mind boggles at the horrors of having to face the old problem of having to fund the BBC on a 30 per cent. viewership through a universal form of licence.
  Mr. Nicholas Baker: Is not what my hon. Friend is saying—the suggestion
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  that he was keen on preserving the standards about which he is talking—an argument for putting the fourth channel into the hands of the BBC?
  Mr. Critchley: No, because the virtue of the Bill is to strike a balance, so that on one side of the argument there are two channels run by the BBC—BBC 1 and BBC 2—and now we are to have a fourth channel, under the auspices of the IBA. So we get the balance right.
  The point I am making is that a fully competitive fourth channel, which we are not going to get, would have put the BBC at risk, and I do not think that it is in the interests of broadcasting, or of the nation, for the BBC to be threatened in such a way.
  Mr. John Watson: There are a number of us in the House who are arguing for a greater degree of competition in the sale of advertising time. I do not think that any hon. Members will be arguing for full competition. Our belief is that competition in the sale of advertising time can remain compatible with complementary programmes, and that would not trespass on any prerogative of the BBC.
  Mr. Critchley: I do not think that my hon. Friend will find very many people prepared to follow that argument through or to be in very general sympathy with it. Quite clearly, ITV 1 companies should be able to sell space into ITV 2 in order that they have an interest in making this fourth channel a financial success. Clearly that must be so.
  It goes beyond that, because the demand for advertising today vastly exceeds the supply. Even were one to have a fully competitive fourth channel, with a new set of companies, one would not reduce the price of a commercial at all, because the demand exceeds the supply. Indeed, one has to reach a situation in which we have three, four, five or six fully competitive channels on television before the price mechanism would really start to bite into the whole cost of commercials. Clearly, it is a nonstarter.
  Therefore, what we have to do is to protect the quality of the BBC and of ITV and of existing television. The most important single fact about the Bill is that it strikes a middle course. The good

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  thing about the OBA, surely, would have been that certain fresh groups of people would have had a chance to show their programmes. That has been transferred and translated into this Bill. Also, the independent producers, a most successful lobby, have succeeded in most of what they set out to achieve—in which case, we can only stand in congratulation for the hon. Member for Derby, North (Mr. Whitehead). That is included in this Bill, and at the same time, we have resisted any temptation to go into a form of broadcasting which would have lowered standards.
  We have been given a compromise which deserves the full support of both sides of the House.
  6.26 pm
  Mr. D. E. Thomas: I shall not follow the remarks of any previous speaker—except to remark that if the Broadcasting Complaints Commission is to be a referee, I certainly hope that it will not be a rugby referee.
  In this debate we are talking about a part of our cultural and political system which is not debated in the House often enough. Very often we debate our constitutional practice. We debate specific policies. But we do not spend enough time either on analysing cultural policy or on looking at the ways in which the major form of communication, the mass media, interacts with the rest of our social system.
  It is fair to say that in the debate so far there has been a lot of what might be called repressed discourse. People have declared interests, but in many cases people have not declared the link between the financial interest and the ideological interest. They have not made it clear enough in their statements that there is a difference between a public interest and the interests of Granada Television.
  When we are talking about the communication system and the media we are talking about the monopolistic structures—first of all, whether they are the State structures or semi-State structures or are commercial in form. The duopoly is basically a monopolistic system.
  Mr. Martin Stevens: If, Mr. Speaker, you are offering someone four choices, how can that be a monopoly?
  Mr. Thomas: On my understanding, Mr. Speaker is not offering anyone choices at this stage. But if he were to offer a choice, in this case what we have is a choice between two systems, both of which are organised in the same kind of centralised way and, indeed, both of which, very often, produce similar kinds of biases. However, I do not want to go into detail about programme content.
  What I want to do is to stress that we have an over-centralised, monopolised system that was indicated very clearly in the recent remarks of the director-general of the BBC, who, when faced with cutbacks and with having to justify the regional cuts being imposed by the BBC, stated that of course the BBC was well known throughout Britain and presumably throughout the world for its great network programmes. In other words, it was the centralised mechanism of production that was important to the BBC.
  We also have a unilateral system. There has been a lot of talk today about the audience. In what sense, apart from this debate, is the audience involved in deciding the content of television? Of course, there is the so-called "feedback" type of programme. We also have audience research and viewing figures. But at the end of the day the media system comprises mainly middle-class, professional elites, most of whom are based in the South-East of England, who speak with the right sort of accent. It is that kind of elite which speaks to dispersed audiences throughout the United Kingdom.
  Not only is it a monopolistic and unilateral system, which in a sense dictates messages to the public, but it is a deeply bureaucratic system. One of the great myths about British broadcasting is the myth of independence. In the case of the BBC, that myth is maintained through the licence fee, about which I shall have something to say later. It is also maintained through a kind of buffer-State mechanism in respect of the BBC governors and broadcasting council. In the case of the IBA, it is maintained by having what is called an Independent Broadcasting Authority, whereas in a real sense that authority is dependent in two ways. First it is dependent on the Government for its political appointment and secondly,

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  it is dependent upon commercial interests for its funding.
  Therefore, when we talk about independent television we are really talking about State capitalism, because it is State-controlled or State-managed television whch provides an opportunty for companies to have access to the monopoly of air time. Therefore, there let us try to get away from the double-think that we have heard—in my view far too often—in the debate. Instead, we should talk about what the system really is. What we are granting tonight is the freedom of further access to a limited resource for a small fraction of the population.
  As I have implied so far, the issue of funding is crucial to the control of broadcasting. We are talking about scarce broadcasting funds, which must require some form of centralised allocation. In my view, the quantity of the funding, and where the funds come from, are the fundamental constraint on the broadcasting system. Those were the issues to which Annam did not sufficiently or clearly address itself. If, through fear of political control, or because of arguments about reductions in public expenditure, one rejects increased public funding, what one does is to hand over broacasting to increased control by private capital. That is what we are doing in the Bill. We are handing over the control of the fourth channel service to the interests of private capital, although we have recognised the need to take in the lobby of one interest by providing it with a couple of hours here and there.
  In most countries, because of the nature of the medium, there is a clear element of State planning and control. In Britain that is done through the mythology of the autonomy of the BBC and the so-called independence of the IBA. Therefore, we still control our broadcasting system in a public and State sense, but we have a buffer mechanism. The effect of that mechanism is that rather than hand over public expenditure to the broadcasting authorities we do two things. The Government determine the level of the licence fee to the BBC, and they extract revenue from the companies and grant borrowing powers to the IBA through legislation. That is how the system is operated. What has been the effect?
  The effect on the BBC has meant that apart from a period immediately after the
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  war, at a time when there was a massive expansion of commercial television, it was starved of resources. Indeed, it is still being starved of resources. After all, the BBC created BBC2 and colour without adequate funding. At the same time, increased access is provided in the Bill to commercial companies to take on service 2.
  I am opposed to the expansion of the kind of consumer society that we have. It will, therefore, come as no surprise to hon. Members that I am opposed to advertising as a source of revenue for anything. I believe that our advertising culture is generally obnoxious and creates false needs. But, having said that, I am also non-Utopian, and I accept that a valuable source of revenue comes from advertising for other more useful forms of cultural activity.
  It does not follow that because one has advertising one must therefore have a private capitalist system in commercial broadcasting. My view is that we ought to get away from the divide of inadequately funding our sector of public television—the BBC—through a low licence fee while allowing the commercial companies to take in advertising revenue. Instead, we should move towards a global funding of our television system.
  In that sense I welcome the cunning device, as the Home Secretary described it, which is adopted in the Bill, of setting against the levy that is extracted from the television companies their investment in channel 4. That is a step in the right direction. I welcome the opportunity to have the funding of Sir Lew Grade directed towards the expansion of Welsh language programmes. That kind of cross-funding from the highly profitable sector of the television industry into less clearly profitable commercial sectors is something that I welcome, given the kind of mixed economy that we now have in the media, as in all other areas.
  That brings me to some of the details in the Bill. I am surprised, and to a certain extent amused, by clause 3. I wonder whether this is the first time that we have tried to legislate on taste. The Bill states that Service 2 should
  "appeal to tastes and interests not generally catered for by Service 1".
  We know what the interests are. Presumably, yet again, they are the commercial

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  interests of the companies that wish to advertise. But who is to define whether the channel appeals to tastes? Taste is a concept of elitist high culture derived from that other high cultural activity—eating expensive and tasty food. Therefore, the transfer of the concept of taste to broadcasting can only indicate that the intention of the service is to appeal to forms of high culture. I should like a clearer definition from the Minister, if not now, at least at a later stage, of his understanding of the world "taste" as it applies to broadcasting.
  That brings me to the specific clauses in the Bill relating to Wales. I shall try to be brief. Clause 3(5)(a) states that service 2 should
  "contain a suitable proportion of matter in Welsh".
  At one stage I thought that that was a misprint, in view of the high content of "talking heads" on Welsh language television, and that the clause should have read "a suitable proportion of patter in Welsh". In fact, this is the first time that we have legislated by Act of Parliament for Welsh language broadcasting. Of course, the BBC, through its charter, is obliged to take account of the language as a cultural factor in its activities, but this is the first time that we have legislated. However, I want to be clear about the link between clause 3(5)(a) and the miscellaneous and general clause 20 relating to Welsh language broadcasting.
  The Government are legislating to place Welsh on channel 4 in service 2, but, from my reading of clause 20, the Welsh language will not be limited to that channel. Conversely, it does not prevent Welsh language broadcasting from being concentrated on that channel if that is considered to be in the best interests of the public in the future.
  I shall not go into detail of what the Under-Secretary of State for Wales and the then Home Secretary said on 23 May 1977 or 29 March 1979, or what the Secretary of State for Wales said on 23 May 1979. It is all boringly set out in Hansard.
  I hope that the Government will confirm that the Bill does not preclude the broadcasting authorities in Wales, should they so desire, from concentrating their programmes on service 2. There are
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  financial implications of reverting to the policy of concentrating Welsh on service 2. The subsidiary company running the channel would have to buy programmes from the BBC. That is how I interpret clause 20(1), which is rather convoluted. It talks about having to make scheduling arrangements for programmes in Welsh so that they are broadcast in the way that
  "will best serve the interests of persons residing in Wales."
  All tests of public opinion, published and unpublished, including the latest survey which shows a 4 to 1 majority, indicate that public opinion in Wales is in favour of concentrating Welsh language programmes on one channel. If it can be shown that the interests of persons residing in Wales can best be served by a concentration on service 2, the Government should allow that. The Home Office should not seek to intervene directly. If the buffer-State principle is relevant for the United Kingdom as a whole, the consensus principle must also be acceptable for the structure of broadcasting in Wales.
  It appears that we are not to have a broadcasting authority for Wales that will be representative of any sections of opinion. We are to have a statutory advisory committee carrying on the role of the present advisory committee for Wales and the IBA. Under clause 20(2) we are to have this person—this one-man quango—who will be a referee and to whom arguments about scheduling shall be refferred.
  It is the first time in the history of broadcasting in the United Kingdom that the Home Office has intervened directly in the scheduling of programmes. It is the first time that decisions on air time and the timing of programmes have become, albeit indirectly, through a nominated person, a Home Office responsibility. I totally oppose the concept that there should be a person who determines the schedule. It has always been determined by those who make the programmes and by the structures of the broadcasting system, whether the bureaucracy of a commercial company or of the BBC. It has always been the prerogative of those companies to determine scheduling.
  Will that person be appointed by the Home Secretary, in consultation with the

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  Secretary of State for Wales and the broadcasting authorities? The first requirement is that he should not be Irish—and I do not mean that in a racist sense, but in regard to the events of last Saturday. His appointment should be acceptable to the broadcasting authority, otherwise he cannot function. I am surprised that the Bill does not include the provision that the appointment must be agreed with the Secretary of State for Wales or the broadcasting authority.
  Why have the Government changed their minds and made a U-turn on Welsh language broadcasting? The answer is stated clearly in a letter from the noble Lord Belstead to my hon. Friend the Member for Caernarvon (Mr. Wigley). In reply to arguments in favour of concentrating Welsh language programmes on the fourth channel the letter states:
  "Secondly, and perhaps more crucially, there is the question of the financial viability of the fourth channel service. If all Welsh language programmes were to be placed on that channel in Wales, there would be a considerable reduction in the advertising revenue likely to be raised. Consequently a large amount of subsidy, quite different in order from that currently enjoyed by HTV, would be necessary from the rest of the ITV system."
  In parenthesis—and this is significant in view of what the Home Secretary said—it adds:
  "(We have already made it clear that Government finance will not be available for the fourth channel). If on the other hand, programmes are split between two channels, each has its own source of finance and the fourth channel is more able to attract advertising revenue."
  The Government have not suddenly become convinced that linguistic harmony will be created in Wales by having two channels with Welsh on both. The commercial contractor, significantly, is not mentioned in that matter, but he has been lobbying for the past two years to have the decision reversed. He has found friends in the House, at the IBA and in the Home Office, and the Government have succumbed. The commercial interest of the contractor serving Wales ensured that change of heart.
  That contractor's employees—employees of HTV—wrote to me this weekend, stating:
  "That the company in general does not care a whit about its operation in Wales is evidenced by the slum-like conditions at Pontcanna and the fact that over the last few
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  years nearly all the new electronic equipment has gone into Bristol."
  The only advantage that I can see from the Government's channel 4 proposals is that that company will be divested of much of its influence on Welsh language broadcasting and will be replaced by independent producers.
  6.48 pm
  Mr. Tim Rathbone: I shall not follow the remarks of the hon. Member for Carmarthen (Mr. Thomas), who seemed to be arguing for a broadcasting Nirvana of unlimited Government funding for anyone who wished to speak on television, particularly if they spoke in Welsh, irrespective of the desire to listen to them.
  I welcome the Bill and the safeguards contained in it. I particularly welcome the provision for a separate company to run the programming for the fourth channel.
  Like the right hon. Member for Leeds, South (Mr. Rees) I question whether the board of that separate company should have such a high proportion of ITV representatives, up to a possible total of one quarter. What criteria will the IBA use in choosing those representatives? They will be professional representatives rather than representatives of shareholders, workers or the regions represented by the existing ITV companies. On the other hand, I wonder whether representatives of independent and educational interests should sit as such on the new board. I should prefer to see a board selected from the widest interests, with the sole purpose of ensuring the production of exceedingly good television to be broadcast on the new channel.
  The finance for this channel is open to conjectural projections. My right hon. Friend the Home Secretary touched on some of them. Some figures have suggested a cost to the Government of £45 million as a result of a reduction in levy. But these figures have now been dramatically reduced to between E14·5 million and £18 million in all. Even this lowest figure represents only half of the estimated deficit for the first year of operation, of £24 million, and should be seen against the total levy payments by ITV companies, at the year ending March last year, of almost £69 million. In contrast,

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  this must be taken against the almost unlimited cost estimated for the operation of an OBA as suggested by the Opposition.
  This is in no way a heavy Government underwriting and should not therefore affect the decision on when channel 4 gets off the ground—the sooner the better, I believe, within the natural restraints of obtaining sufficient, or nearly sufficient, national coverage for the station so that the advent of increasing advertising revenue can soon give rise to the possibility of increasing levies again.
  In the same way as channel 4 is not a large burden on the Government—and, as the Home Secretary pointed out, a temporary burden at that—nor is it a large burden on ITV companies. On current conservative estimates of additional revenue of £60 million and a reasonable cost estimate of £84 million, and after allowing the levy contribution from reduced levy payments of £14·5 million, the companies would have to accept a total reduction in their profits of £9·5 million in the first year, out of total profits for the year 1978–79 of £44·5 million.
  Mr. Whitehead: Has the hon. Gentleman seen the confidential document that the companies sent in October to the IBA that talked of revenue of £129 million in 1983?
  Mr. Rathbone: The hon. Gentleman is ahead of me yet again in his knowledge of confidential statistics. If the statistics that I possess are placed against the possibility of break-even in the second year and considerable profit contribution in the third year, it can be seen that the companies are able to work on a more than reasonable three-year pay back on their original investment. Except for the possibility of the effect of continuing business and economic stagnation that could possibly affect the timing of the style of broadcasting, there seems little or no threat to the health of the independent television system as a whole. Therefore, greater separation and competition in the sale of advertising could be advocated with beneficial effect. In putting this argument, I should declare an interest as a director of an advertising agency, although I stress that what I am arguing is not in the interests of advertising agents.
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  I advocate much greater separation between the selling of time on ITV 1 and the new fourth channel. I believe that separation would achieve greater overall advertising revenue, and competition in sales leading to greater incentives to search out new television advertisers. Contrary to the views of my hon. Friends the Members for Howden (Sir P. Bryan) and for Aldershot (Mr. Critchley), I do not believe that it would lead to a ratings war such as the IBA referred to in its handbook, in stating:
  "It has always been clear that a channel of the kind suggested over the last eight years by the Authority and envisaged by Government is not compatible with the competitive selling of advertising."
  I do not believe that there is anything in this document or anything that the IBA or the Government have stated to substantiate its claim. Indeed, there is programme audience competition already in existence between any producer of any television programme, whether it is to appear on BBC 1, BBC 2 or ITV. They are jealous guardians of the audience that they have attracted. It is on that basis that the BBC is so worried, all the time, about maintaining its 51 per cent. share of the television audience.
  On the one hand, separation could not lead to influence on programming. That is another criticism of it under the envisaged structure. Rather, programme content would lead to more imaginative use of advertising to match imaginative programmes. In talking of separation I am referring to the separation between the sale of advertising time on ITV 1 and the sale of advertising time on the new channel. On the other hand, this separation would erode the monopoly practice of some present television contractors. I believe that these exist, despite the remarks of my hon. Friend the Member for Howden. They have appeared in terms of package selling, the packaging of time slots in the selling, and in special pre-emptive arrangements to force higher prices and in other straightforward monopolistic practices.
  I believe that the Government should seriously consider this threat, in view of the belief, on the Government side of the House, in the benefits of competition in aspects of commerce. Without separation of advertising, some questions arise.

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  Is there not a need for a more formal separation of responsibilities for programming and for advertising sales than I believe exists in the structure as envisaged and described in the Bill? Without such separation of responsibilities—I refer to the separation between television programming and advertising sales—would the IBA's ability and statutory duty to ensure programme balance work in practice, whatever the Bill says should happen? Even with the advertising liaison committee, which I welcome, containing representatives of advertisers and broadcasters, will advertising practices be properly policed and difficulties and corrective action be properly aired? Does not this require—I would be most grateful for the Minister's comments—a statutory duty to report on these matters to hon. Members in Parliament at least on an annual basis? I ask the Government to weigh those questions carefully.
  I have already mentioned that this plea for separation and competition in advertising sales and stricter control by the IBA, together with better reporting of that control, is in no way a self-serving plea from those in the business of advertising. Rather, it is a plea for minor changes in an overall excellent plan in order to avoid some of the pitfalls that those in the advertising business can see in the operation of the system as suggested to the detriment, in the end, of those people for whom the fourth channel is designed—those who will tune in to it.
  I should like to add a few words about radio. I welcome the financial provisions, similar to those for television, to introduce a levy on the local contractors' profits. Local radio is already an immensely important part of the broadcasting scene in those areas where it exists. It is now profitable everywhere. It is reasonable to tap those profits for the Exchequer and to help establish future radio stations, all the more so with the extension of radio contracts to 11 years from eight years. That might otherwise be a true example of a licence to print money.
  I would have liked to see a further recommitment by the Government to the speedy establishment of at least national coverage by independent radio, all the more so since there are reports in the press of the BBC feeling the need to curtail its own plans for expansion of local
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  broadcasting. And I would have liked even the establishment of competitive stations where the market allows. London is an example. Capital is easily the largest commercial radio operator in the country, and more radio broadcasting competition could well exist in its market.
  I wonder whether some of the levy might not have gone towards the establishment of non-commercial private radio, often called citizens band radio, which many hon. Members are now advocating. Any licensing revenue from citizens band radio, of course, would in the end meet the costs of running and controlling it; but there might be start-up costs, which could be financed from the surplus levy.
  It is high time that the Government acted positively and legalised this form of broadcasting, to the benefit of those who are already using it, in that they would then be operating a legal station, and on a higher frequency, to the benefit of those who are using this form of radio and of those who suffer interference from it.
  The interests of the viewing public and the maintenance of high standards of broadcasting in this country are served well by the Bill. Those interests will be better served, I believe, if some of the suggestions that I have put to my hon. and learned Friend are taken into consideration at a later stage.
  7 pm
  Mr. Alan Williams: My speech will be brief, Mr. Deputy Speaker, because I know that your problems of scheduling today are every bit as great as those of the companies which we are discussing.
  We in Wales feel that we are ill-served by the television service that we receive. Indeed, outside this current issue, there is, grave dissatisfaction that the independent channel in Wales, HTV, has already been cutting back considerably on its coverage of current affairs programmes for Wales, and we question whether it should automatically be given its renewal of franchise.
  During the election campaign, as was inevitable with many marginal constituencies in Wales, Welsh issues were a major factor, and it remains undeniable that the Conservative election manifesto for Wales gave a clear commitment that

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  the fourth television channel would be a Welsh language channel. This is what was said:
  "we are anxious to see Welsh broadcasting starting on the fourth channel as quickly as possible. We believe that this could be done more cheaply, simply and at least as quickly if both the BBC and HTV Welsh programmes are transmitted on the fourth channel".
  At the time of the election, that was the considered opinion of the right hon. Member for Pembroke (Mr. Edwards), spokesman for the Conservative Party in Wales, and of the Welsh Conservative Party itself. Cheaply and simply, one could introduce the all-Welsh fourth programme.
  We now know what was done even as early as the Queen's Speech, when most of us reading or listening to the Speech thought that we heard the echo of that resolve stated in the manifesto. We learn today from the Home Secretary that by the use of weasel words a retreat route had already been prepared to enable the Secretary of State to worm out of his clear commitment to the people of Wales.
  At the time of the election, that cornmitment—and the similar commitment in our Labour manifesto—was seen by Welsh speakers as a gesture and an indication of governmental determination to help to preserve the Welsh language and to help develop a television channel in which there could be a balanced mix of programmes. To the non-Welsh speakers, the vast majority of the people of Wales, it offered the possibility of the removal—I am sorry to have to put it this way, but all hon. Members are aware of the fact—of a major source of irritation because they find that English language programmes which they want to see are replaced by Welsh language programmes which they cannot understand. One must appreciate that more than three-quarters of the people of Wales are in that position. We may regret it, but it is a fact of the language split within our country. In my own part of South Wales and on the South Wales coast, many people, if they are fortunate enough to be able to do so, tune into Westward Television to avoid that irritation.
  The Conservative Party appealed to both those groups. Cheaply and simply, it said, they could have their ambition. Yet now the Welsh channel has been
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  scrapped. We are entitled to know what happened.
  Did the Tories make their commitment in the manifesto on a "me too" basis to ensure that they did not lose in the election stakes, so that no one could point at them and say "You are not offering it as well"? It cannot be that the Conservative Party never examined the case, because there has been no new evidence. In an interview or meeting as reported by the Western Mail, the right hon. Gentleman said that his party:
  "had adopted its policy of concentrating Welsh on the fourth channel under IBA control because, despite obvious drawbacks, it seemed to produce the widest consensus."
  There are the words—"despite obvious drawbacks", but the drawbacks were there before the election. They were there before that cynical paragraph was written into the Conservative Party manifesto. Why was that paragraph written? Was it because, we are told, it
  "seemed to produce the widest consensus"?
  I suggest that for "widest consensus" we should substitute "the largest number of voters who might be persuaded to support us". But now it has served its purpose and it has been discarded. It was discarded within days of the Tory Government coming into power, and now we are to stay with our fragmented programmes, with the Welsh language spread throughout three or four channels under the Government's proposal.
  The formula presented by the Conservative Party is in fact the formula which will produce the maximum annoyance among both Welsh and non-Welsh speakers. Many of us thought that we saw in television an opportunity to integrate the Welsh people, to bring them together, to produce and induce a greater sense of Welshness. But these proposals will turn us even more firmly into two linguistic groups who see one another as rivals and who will be challenging one another. This is a tragic waste of opportunity.
  The Government claim that the channel is not really the issue, that it does not matter whether it is one channel or two, that what matters is the number of hours and so long as there is the right number of hours our requirement is met. But that misses the point. I referred earlier to the need to establish a cohesive Welsh identity on the television channel. We

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  need a balanced mix of programmes. The more channels there are, the greater will be the overlap in timetabling and the greater will be the irritation as people have to switch out and, because Welsh programmes are coming on at a time when it is not convenient to switch into the beginning of a programme on the other side, they have to come in half-way through.
  Moreover, we now discover that on the timetabling or scheduling issue there is to be only one adviser. There is not to be a Welsh committee, as we might perhaps have expected. There is to be but one adviser and he will have no power. That is clause 20.
  On 4 February—this is col. 52 of Hansard—the Secretary of State said that he did not believe that it would be in the interests of the Welsh language to establish the fourth channel. With respect, that is rather conceited, since his Welsh language background is probably about as good as mine—indeed, mine may be marginally better than his—and it is hardly fair for us, as monoglot English-speaking Welshmen to say that we are sure what is best for the Welsh language and to disdain the views of, for example, the court of the University of Wales which, on 11 January, wrote to the Secretary of State to reassert:
  "its belief that a fourth channel should be devoted to the Welsh Language"
  because it believed that to be in the interests of the Welsh language.
  We know, and he knows, that the right hon. Gentleman has bowed to the commercial lobby since he came into office.
  There is a further aspect which is often overlooked. Far too many capable young people cannot now pursue logically along the promotion ladder a broadcasting career in Wales. To get into the upper echelons of the BBC in Wales and ITV in Wales one has to be bilingual, and it would have opened up opportunities for the monoglot English-speaking Welshmen if the fourth channel had been devoted to the Welsh language as was originally envisaged.
  I return to the basic fact. The Government are today betraying an election promise, cynically betraying a promise which they gave as cynically. Again, I quote the words of the Secretary of State on 4 February:
  "I changed my mind"—
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  at least, that is a clear indication that there was an intention—
  "I changed my mind, and I make no apology for that."—[Official Report, 4 February 1980: Vol. 978, c. 51.]
  Mr. Geriant Howells rose—
  Mr. Williams: I am sorry, but I have no time to give way.
  During the election campaign the Conservative Party misled Welsh speakers and non-Welsh speakers about its intentions. The Secretary of State has not just betrayed the people of Wales; he has displayed arrogant contempt.
  Mr. Michael English: On a point of order, Mr. Deputy Speaker. I do not wish to shorten anyone's speech under the 10-minute rule, but it is most unusual to have six Front-Bench speeches in a debate. May I say—
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. The hon. Gentleman has been here long enough to know that the number of Front-Bench speeches is nothing to do with the Chair.
  Mr. English: Further to that point of order, Mr. Deputy Speaker. I am aware of that, but it seems strange—
  Mr. Deputy Speaker: Order. If the hon. Gentleman is aware of that fact, it is not a point of order.
  7.11 pm
  The Under-Secretary of State for Wales (Mr. Wyn Roberts): As the broadcasting situation in Wales is referred to in the Opposition amendment, perhaps the House will find it helpful if I say a few words.
  I want to assert at the outset in the strongest possible terms that in formulating our plans for broadcasting on the fourth channel in Wales the Government's thinking has been dominated by consideration of the best interests of both the Welsh speaking and the non-Welsh speaking television viewers.
  I totally reject any suggestion that we have not had the interests of the Welsh language very much in mind. On the contrary, we hope to see an increase in the quantity and an improvement in the quality of the programmes available to Welsh speaking viewers, and to achieve

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  that increase and improvement as soon as possible. Our proposals are designed to that end.
  I recognise that we disagree with a number of hon. Members as to the means by which that end is to be achieved. It is true that the idea of a Welsh language service concentrated on the fourth channel received support from several of the committees which have considered the matter, but I have to point out that until this Government came into office the possibilities for the fourth channel in Wales were being considered against the background of very different plans for the fourth channel as a whole from those that we have now put forward.
  Some hon. Members have made great play with the view that the Government have changed their mind and that our current proposals differ from those in our party manifesto for Wales. We readily admit that that is so, and there are good reasons for it. A change for the better is, to my mind, always justified. When we came to look more closely at the practical problems of implementing our plans we came to the conclusion that if we wanted to increase the number of hours of Welsh language television in the foreseeable future and to preserve the best part of the new national service so that non-Welsh speakers would not be deprived, our present proposals were the best way of doing so.
  My right hon. Friend the Secretary of State put the matter in a nutshell in the Welsh affairs debate earlier this month when he said:
  "In providing a Welsh language television service there are two claims to be met: the interests of those who speak the language, and the interests of a larger number who do not. The one-channel solution was a satisfactory answer to the problem provided only that the fourth channel was not operating on a United Kingdom basis. To use the fourth channel exclusively for Welsh language programmes would mean that Wales would have to opt out of the United Kingdom network for nearly 50 per cent. of transmission time. It would be an almost impossible task to reschedule the programmes that were missed. That task becomes much simpler if the Welsh language programmes are spread over two channels."— [Official Report, 4 February 1980; Vol. 978, c. 51.]
  I cannot deny that there has been some opposition to our proposals in the Welsh-speaking community and, regrettably, a small minority has decided that it is
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  justified in taking unlawful action to give expression to its opposition. I did not hear the hon. Member for Merioneth (Mr. Thomas) defending his connection with that proposed action.
  I believe that that opposition is based on a misunderstanding of the Government's motives. We firmly and sincerely believe that our proposals will provide a more secure future for Welsh language programming and allow more scope for its development, because the creative force and talents of both the BBC and the IBA will be available to support that development. The concentration of programmes on the fourth channel envisaged by the hon. Member for Merioneth is not specifically excluded, though it is somewhat unlikely.
  The first proposals by the Crawford and Siberry committees were that the fourth television channel in Wales should be allocated to a separate service to be provided jointly by the BBC and the IBA, in which Welsh language programmes should be given priority, and that the service should be introduced before decisions were tabled about the use of the fourth channel in the United Kingdom generally. The proposals were expensive, and although the previous Government accepted them in principle they could not, in practice, find the money to implement them.
  The Annan committee also recommended that provision of the further channel in Wales should precede the use of the channel in the rest of the United Kingdom, but went on to say that when the fourth channel was actuated in the United Kingdom generally under the supervision of the open broadcasting authority, Welsh language programmes should continue to be given priority in the scheduling of the service in Wales. As we all know, the previous Government accepted the proposal and announced their intentions to increase Welsh language broadcasting by the autumn of 1982, but they still had not introduced their broadcasting Bill before the election.
  That is why the Welsh reference in the amendment is wrong. We are making progress and an early start with Welsh language broadcasting on the fourth channel, as promised in the Queen's Speech.
  Mr. Geraint Howells rose—
  Mr. Roberts: I think that we should be clear that the OBA favoured by the previous Government would not and could not have been self-supporting; its success would have depended on a sizeable Government subsidy supplementing whatever funds it could have attracted from advertising. Another Home Office committee on which all the broadcasting organisations were represented came to the conclusion in 1978 that if the Government were to allocate the fourth channel in the United Kingdom to a service supervised by the IBA, it would be in the interest of all the viewers in Wales that the BBC and the IBA should broadcast their Welsh language programmes on their own services.
  The lack of direct Government finance was stated to have been an obstacle up to 1976. What certainty is there that if the previous Administration had been returned at the election it would have been easier to provide that finance in 1982? None whatsoever.
  I have explained why we do not regard the single channel solution as an option in the present context. I should like to stress again that we do not regard the two-channel solution that we have adopted as in any way inferior to the single channel solution as a means of achieving the ends for Welsh broadcasting which I think all of us share.
  Mr. Howells rose—
  Mr. Roberts: There will be the capacity for as many hours of programmes in Welsh to be spread over two channels as there would be on one. And just as many of them can be scheduled at peak viewing times. The consultative arrangements for scheduling for which the Bill provides are specifically designed to avoid clashes between programmes in Welsh on the two channels and to secure that a fair proportion are seen at peak viewing times.
  The solution that we have adopted will not provide a single Welsh language service of the sort that advocates of the Welsh language fourth channel have urged, but two cardinal principles of broadcasting in this country will be preserved. They are just as important to broadcasting in Welsh as they are to English broadcasting. They are that the broadcasting authorities have the editorial responsibility for what they broadcast and that there should be some diversity in the
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  system. Both principles will be maintained and reinforced by the Government's arrangements for Welsh language broadcasting. Each broadcasting authority—the BBC or the IBA—will retain responsibility for the programmes in Welsh broadcast on its own channel. Diversity will also be enhanced by the contribution that I hope independent programme makers will be ready to make to the fourth channel service.
  Many aims and hopes have been expressed for the future of Welsh language broadcasting, and I have indicated how far the Government share them, but we cannot forget the financial realities. The plain fact is that viewers in Wales are already subsidised, in both the BBC and the IBA systems, by viewers in the United Kingdom.
  Under our proposals there will be an element of subsidy within the independent system, but a manageable one. We believe that the proposed arrangements will provide a secure basis for an extension of Welsh language broadcasting. We shall urge the broadcasting authorities to face the challenge with enthusiasm and vigour. The way forward now is for the House to set this Bill on its way. I urge hon. Members to join me in rejecting the motion declining the Second Reading.
  7.21 pm
  Mr. Phillip Whitehead: In view of the guillotine, I shall not follow the arguments of the Minister. The whole House knows, and the people of Wales know, that the Government are betraying Siberry, recommendation 101 of the Annan report, and everything that was said by all major political parties at the election and beyond.
  The hon. Member for Aldershot (Mr. Critchley)—in one of those amusing and light-hearted contributions that I always enjoy following, and that are rapidly turning him into the Archie Rice of the 1922 Committee—was kind enough to say that the Bill was almost the OBA within the IBA, and that it gives us all that we have ever wished for in terms of a separate service.
  My right hon. Friend the Member for Leeds, South (Mr. Rees) and others fore-bore to point out that it was the hon. Member for Aldershot, and others like him, who consistently argued for an ITV

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  2 service, pure and simple. They are telling us now, with the joy of the sinner who has repented, that they are in favour of the new system outlined in the Bill. I have my doubts about that.
  To some extent the Bill vindicates some of the principles of the Annan committee. It establishes a complaints commission—which I welcome—and a procedure whereby new styles of local commercial radio could be introduced. It is an unusual Bill, running against the grain of the Government's policies. To have a redistributive, interventionist, public service, quango-creating Bill from the Government is extraordinary. I do not know of one word to describe the Bill. In the German language there is a phrase that describes the man who assassinated the aunt of a Hottentot chief. The Bill deserves a similar phrase.
  The Bill offers good intentions, but its essential flaw is that it does not provide the powers to see through those good intentions. In clauses 2 to 5 it offers a number of useful words, namely, "suitable" and "distinctive" in clause 3, and "substantial" in clause 4. They are intended to describe and delineate the nature of the programmes within the service.
  They do not give a clear enough indication of what the so-called subsidiary of the authority—which is to be the programme company, financed by subscription income—will be doing. Who will run it? Who will govern it? Who will establish its ground rules? Why is it impossible to have the ground rules described within the Bill?
  An issue that was discussed time and time again in the Annan committee—of which I was a member, and whose recommendations were unanimously supported by its 16 members—was that we must avoid ITV 2 by the back door. There are not sufficiently strong prescriptions for that in the legislation.
  Sir Denis Forman, chairman of the Independent Television Companies Association said, with hardly concealed delight:
  "The Bill is permissive in respect of Service 2, not mandatory. The Minister takes no powers. Everything … is left to the Broadcasting Authority."
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  I do not fancy permissive legislation that is not mandatory. A mandate is needed, because we are asked to take on trust the repentance of the independent companies. Yet in the memorandum that I quoted earlier the companies made perfectly clear what they regard, in their submission to the IBA, as their share of the service. They commit themselves, in print, to 70 per cent. of the whole.
  A recent article in The Daily Telegraph quotes one of the companies as saying that it will be 80 per cent. within a year or two. Give them time, they will take over the whole of the system. That would increase the monopolistic powers referred to by the hon. Member for Lewes (Mr. Rathbone). That is the difficulty of the present position.
  In his speech the Home Secretary was rather vague on the subject of scheduling. The memorandum from the companies said:
  "The viability of the whole system could be jeopardised if the scheduling of ITV 1 were to become conditioned by the needs of ITV 2."
  The schedules for the two networks should be separately submitted to the IBA. It should make a judgment in terms of complementarity that takes at least as much account of the needs of the second service as of the first service. I am not sure that the role of independents, as described by the powerful big brother figures of the companies, is anything like sufficiently protected. They are rather patronising about the independents, saying "Awfully nice chaps. They will produce some grand stuff." We heard that in the litany from the hon. Member for Howden (Sir P. Bryan), a director of Granada Television.
  The channel ought to provide the independent companies with a guaranteed slot of time. They have not had that in the past. It has been the tyranny of time that has suppressed the growth of the independent sector. We must allow that sector to develop. We shall not do so if we leave it to the companies. They have a vested interest in selling advertising space and hope to have a predominant voice in the scheduling and governance of the new organisation. They will have no interest whatsoever in allowing the independent sector to develop.
  We have been offered a certain number of guarantees from hon. Members who

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  have spoken on the subject. However, the Independent Broadcasting Authority is the same authority as, from 1972 onwards, urged upon us ITV 2, in much the same terms as the hon. Member for Aldershot. We are asked to believe in a repentance that, although no doubt genuine, must be seen against the track record of the authority when it has confronted the companies in the past. It confronted the companies after the last franchises, when the programme element within London Weekend Television was destroyed entirely because the financial needs of the company took priority.
  When I hear the Home Secretary's bland phrases about financial viability I wonder what is the first criterion that should be applied to the new service. Is it to be programme quality? Is it to be a genuine independence of outlet? Or is it to be, first and foremost, who pays for the service, how much it will cost, and how soon it will be in profit? If that is the first criterion, and the only one that is allowed, profitability will mean mainstream programming. That will be slotted in to what we have already on ITV 1.
  The House should consider carefully the statements of those who claim that there are sufficient safeguards in the Bill. There are not. We would wish to write into the Bill safeguards about the IBA control of separate schedules and the exclusion of the companies from the governing body. The independents should be excluded from the governing body. They have no business being included in it as they have a vested interest. We should safeguard the proportion of independently derived material, where it comes from, and what constitutes an independent company in those terms.
  I welcome the complaints commission. I am glad that—as the Annan committee recommended—it is to be one that will investigate personal malpractices and not a tribunal of taste, as some of the self-styled arbiters of taste have urged. The hearings of the committee should be held in public rather than behind closed doors, as has been suggested.
  We are moving into a position in which local radio may become too much, financially, for the BBC. That is the logic that led the Annan committee to recommend the establishment of a local broadcasting authority. Privately, members of
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  the committee thought that that would be eventually a hived-off part of the IBA. If we are moving in the direction of the commercial sector having more to do with local radio, we ought to be specific about how that move should be carried out.
  A provision that allows redistribution of funding within the radio sector would allow us the experience of different sorts of local radio within the general sphere of the responsibility of the authority. If we secure those points, this could still be a good Bill. It can be amended in Committee, and, like my right hon. Friend the Member for Leeds, South I look forward to constructive opposition in the genuine spirit of pluralism that animated the Annan committee and, I believe, animates this House also.
  7.30 pm
  Mr. Tom Hooson: I declare an interest as the spokesman for the Periodical Publishers Association, even though I have nothing to say today that concerns periodicals.
  I wish to concentrate on the nature of the fourth channel as envisaged in the Bill, and then on the plan for Welsh language television.
  I am convinced that the Annan committee—and now the Government—were right to conclude that the fourth channel should offer a range of distinctive minority and educational services. This objective is widely shared by all parties, even if the Opposition include some who hanker for the creation of a distinct administrative body to control the service. That is one of the less practical ideas to have emerged from the Annan committee.
  Nowhere in the flawless English of the Annan report, or in anything I have read subsequently, have I seen an adequate statement on the source of that body's funds. I believe that a link between two IBA channels sharing many costs but supervised by different boards is an efficient way of adding a fourth channel at a fairly modest cost.
  There is an understandable desire among advertisers for all-out competition between the proposed IBA channels. Having spent most of my working life in advertising, including a decade of handling several of the largest television advertising budgets in the United States, I sympathise with this legitimate wish for

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  competition between sellers of air time. But the desirability of competition has to be weighed against the provision of a rich range of television options for viewers, and that seems to me to be the factor to which the greater weight should be given.
  American experience is clear enough. Competition mainly for large numbers of an audience produces a considerable amount of mediocre "me too" programmes. "Me too" programmes are not unknown already to ITV and BBC. We do not need more of the same. I therefore support the main outline of the Government's proposals.
  I turn now to Welsh language television, a subject on which both Wales and this House have agonised long and frequently over many years. It would be impossible ever to satisfy everyone in Wales, whatever policy were adopted. Furthermore, people who have wrestled with this difficult issue have often moved from one view to another. Members of the Dyfed county council have changed their minds on this illusive issue four times in the last five months. Now we have Plaid Cymru promoting lawlessness in urging non-payment of television licences in a campaign that is based on some important misconceptions.
  Some clear thinking is urgently needed on this issue. Let me identify several misconceptions that have led to the uninformed fury being whipped up by Plaid Cymru and by extremists. The impression exists that a Welsh language fourth channel would have been 100 per cent. a Welsh language channel. No such recommendation was ever made by anyone. The Crawford committee, and the Siberry working party that came out of it both recommended that the fourth channel in Wales should give priority—nobody said exclusivity—to the Welsh language. Therefore, some mixing of Welsh and English language programmes was always intended, and the present irrational excitement is based on the need to switch in order to find programmes in Welsh. How many lights do we switch on and off in the course of a day? I offer to Plaid Cymru the famous slogan of an American cigarette:
  "We'd rather fight than switch".
  It would be more constructive to ask what amount of Welsh language television
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  will be achieved. With both BBC and IBA financing programmes and competing for talent and audiences, the Bill envisages a minimum of three hours a day in Welsh, largely in the peak evening time, which is not a second less than the original fourth channel idea.
  We Welsh speakers have come a long way from what started in 1953 as occasional television in the Welsh language. Even in 1963 it occupied only four hours a week. Now there are 14 hours. My right hon. Friend the Home Secretary holds out the prospect of over 20 hours, and possibly 22 hours. No minority language anywhere in Western Europe gets the amount of television time that is already given to the Welsh language.
  I should alert those who have been confused by Plaid Cymru's campaign to another fact. A considerable number of thoughtful Welsh people have come to realise what a mistake it would be to confine the language to a ghetto channel at which the majority of viewers would not look. As the Annan report wisely said on page 414:
  "The Siberry Working Party envisaged that there would be no programmes in Welsh on the other television services; but we would regret it if all Welsh language programmes were banished to the fourth channel and we think it would be the worse for the Welsh language and the heritage of Wales."
  It is because Annan's comment is right that the Welsh press, from Y Faner to the Western Mail, has come to see the good sense of the present proposals. Even within Plaid Cymru, Mr. Meredydd Edwards, a notable actor who knows more about television than the rest of his party put together, has warned it against the attractions of the ghetto.
  I read in the Western Mail of 6 February the headline:
  "Backing wanes among councils on one-channel Welsh TV".
  The report in that newspaper read:
  "The campaign among local authorities for the fourth television channel to be used for Welsh language programmes is collapsing rapidly. Only 15 of the 45 authorities in Wales said yesterday they still supported the principle".
  Leaving what I know are deep feelings about Welsh language television, I want to call attention to one Welsh problem that is quite as bad as the unspeakable horror of having more Welsh television provided than ever before. I refer

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  to those, not least in my sparsely populated constituency, who cannot rely on receiving television programmes. The Crawford committee placed its highest priority on achieving wide coverage by UHF transmitters. Mountainous Switzerland has better than 99 per cent. television coverage. Flatter Britain does not. The Annan report absolved the BBC and the IBA from ever aiming at 100 per cent. coverage. This leaves a question that I address in all seriousness to the Government. If there are people whose sets can receive at best flickering signals, should they be required to pay for a television licence?
  7.38 pm
  Mr. Jim Craigen: I recognise that a Bill of some sort is necessary, if only to regularise a number of the administrative changes that are now required in broadcasting, and to extend the life of the IBA. But I find that the main import of the Bill is the introduction of a fourth channel, and that provides a curious insight into the Government's priorities. Week after week Ministers tell us from the Dispatch Box that we must make greater use of existing resources and cut down on our demands.
  The chairman of the Greater Glasgow health board is talking about closing the Royal infirmary. Vice-principals of universities are saying that their universities are near bankruptcy. Cut-backs are to be made in regional aid to industry. Yet this afternoon the Home Secretary was able to tell us that we should have more choice, that we should be able to press a fourth button on our television sets. I have no doubt that it will be very consoling to the growing number of unemployed, to those paying higher mortgage rates, and to those who are wondering how they will pay their rates bills when they arrive to know that there will be another television channel.
  The hon. Member for Aldershot (Mr. Critchley) made a significant comment when he referred to the ratings battle that is likely to ensue between the BBC and the independent sector. I suspect that this may be the first warning shot and the thin end of the wedge for the BBC, because it will have to depend upon the continuing support of the Government through the licence fee system. I dis-
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  agree with the hon. Member for Aldershot when he says that the Government are striking a middle way. They are striking a muddle way in the creation of this subsidiary of IBA.
  I dispute what the Home Secretary said about the falling yield of the advertising levy and therefore that there will be no charge on public expenditure. We are discussing a transfer of resources which would otherwise help to pay for some of the many public projects which the Government say they cannot afford. It is a question of "Heads the contractors win; tails the taxpayers lose". Advertising is tax allowable. The more advertising and the more business that the companies do, the more the taxpayer will lose.
  The creation of the subsidiary company will severely test good will for the IBA. The IBA has established its reputation as an independent and experienced body whch oversees the development of commercial television. It has been a guardian of ITV 1. Suddenly it is to become the stepfather of ITV 2. That may create some family friction within the commercial broadcasting sector.
  The Home Secretary did not answer my intervention about why it is right to give the new body a monopoly of advertising at a time when Government policy, proclaimed to all and sundry, is that there must be more competition, not less. The Home Secretary, in his genial manner, skipped over the question of the new channel's content. He said that we would have more education and more innovation. Why cannot we have that now on the existing channels? We shall see more of the old movies and the programme content will not vary much from that on existing channels.
  I shall not retread the arguments put by my right hon. Friend the Member for Rutherglen (Mr. MacKenzie) about the difficulties in Scotland because of our distinctive culture, sports life, politics and local government. I believe that the arrangements for opting out of programmes in Scotland are insufficient and will create much heart burning if the new channel is introduced.
  One of the strengths of ITV 1 is that it has been able to take account of regional distinctiveness and to cater for such differences in the various parts of the

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  United Kingdom. A monolithic fourth channel will not benefit consumers in the independent sector.
  Is the Scottish advisory committee to be an important body, or is it simply a soft option to try to assuage Scottish public opinion? The weakness in the Scottish system is that it lacks a network company. As a result there will be little Scottish input into channel four.
  If resources were aplenty there would be scope for a fourth channel. However, resources are not aplenty. The character of the subsidiary company will not present independent television in its best form. The other arguments that I should have liked to express will be made in Committee.
  7.45 pm
  Mr. Tim Brinton: I felt rather lukewarm this afternoon as I listened to and considered the two main features of the Bill—the creation of ITV 2, about which I should be terribly enthusiastic, blazing fire and looking forward to it, and the complaints commission. I suppose that we must have another quango. The Government are determined to get rid of quangos, and so I suppose that we have to grow another. It is the fashion to allow people to complain. I was encouraged when the Home Secretary said that the BBC complaints commission received hardly any complaints. If that is so, it is astonishing that we should plan to spend £150,000 of taxpayers' money to encourage complaints.
  Some of my hon. Friends who are involved in broadcasting did not consider the problem of editorial responsibility in terms of the programme makers. Is everybody who has an interview edited on television to be able to go to the complaints commission and say that he was unjustly treated? If so, £150,000 will go nowhere.
  A second service is to be created. A fourth channel is important and to be commended. I do not believe that the OBA is the right way. We have a public broadcasting system with two channels which are run excellently by the BBC. We need to find a way in which the independent, the fresh and the new can be shown on general public television.
  I shall be honest. I assume that the price of persuading the present pro-
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  gramme contractors to finance service 2 is to allow them part of the action. I wish devoutly that we could create a new service 2 for all those independent producing companies and individuals who understand and know about programme making, quite separate from the present programme contractors, so that there is a totally fresh approach.
  I have committed several heresies, so who not one more? My yardstick is to ban all feature films from service 2 and to get back to proper television. We have lost that in the last few years. We need live television; exciting television. The medium of television should be used as broadcasters can use it, not as the feature film-maker uses it on celluloid nor as the Fleet Street journalist approaches it with a pen. I am sorry that that is not happening. I shall vote for the Second Reading of the Bill because it is an important measure. Let us try to sort it out in Committee. Today, I am lukewarm.
  7.50 pm
  Mr. Barry Sheerman: One of the elements of the debate has been the lack of a genuine, independent and objective consumer's voice. So many interests in the media have been declared. It is refreshing to hear exactly what those who send us to Parliament think when we hear their thoughts expressed by their representatives.
  I was horrified to hear the Home Secretary mention, in passing—this may be described as an important link—that there is to be more favourable taxation treatment of the commercial companies in the near future. If I understood the right hon. Gentleman aright I am astounded that in the present economic circumstances the commercial companies, which have money coming out of their ears, should benefit in that way.
  I shall strike a discordant voice, because I am not satisfied with the track record of the IBA. I have been unimpressed by the track record of the BBC. I should have tentatively supported the new channel that the Labour Party proposed when it was in government. The channel would have been based on a method of operation different from that of the IBA and the BBC. Some of us as consumers consider the present arrangement, which dominates

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  the ordinary person's broadcasting, as a choice between monolithic bureaucracy and commercial tyranny. Open broadcasting seemed to offer an alternative to that choice.
  The House has tended to concentrate on two main issues. The first issue is the Bill's proposal for a fourth channel. The other issue is the treatment of the Welsh language and Welsh broadcasting, which does not conform to the Conservative manifesto. Perhaps the first important part of the Bill is the prolongation of the IBA. Many question marks hang over the IBA. As I have said, I am not content with its track record. Many people have argued that it has become the lap dog of the commercial network companies and that it has not the independence and innovative abilities that were envisaged in the Bill that established it.
  I confess that I have always had a basic distaste for commercial television. I believe that commercial television exploits and brings out the grosser materialistic instincts in those who watch it. It is an intrusion in the home of the ordinary family. There are those who go home to be bombarded with subliminal advertising as they watch one channel. Enormous pressures are put on ordinary working people to buy or to want better things. The pressures are especially great when Governments do not give them the chance, the wherewithal and the income to buy those things. That commercial bombardment is a cruel torture of working people with limited hopes for the future.
  The opportunity before us in the beginning of the 1980s is to start a bold new experiment in broadcasting that is free of monopolistic controls. Some of my hon. Friends and one or two Conservative Members, refreshingly enough, have mentioned the monopolistic nature of broadcasting. I am worried that the monopolistic tendencies will be encouraged and not curbed by the Bill.
  The Bill has no bones. It has no structure. I hope that we shall be able to put some bones in it in Committee. There are no guarantees. We hear that the purpose of the Bill is to introduce independence, freshness and innovation. Are there any guarantees that that will be its effect? Where are the guarantees and the prospects for independent producers? No guarantee is given that they will have a
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  certain percentage of production. No mention is made of the slots that they will have in the new company. Those of us who are more cynical than others can see that the commercial interests—they have friends in high places and many friends on both sides of the Chamber—have pushed and pushed for ITV 2. Many of them are rubbing their hands with glee and saying "We do not have it formally, but we shall have it by the back door. In a couple of years we shall dominate it."
  Where are the guarantees of independence? Where are the independent studios? Where is the independent finance? Does the Bill guarantee it? Where is the guarantee of freedom? Where is the guarantee that a new training school will be established to provide for those who will not have been trained in the BBC monolith or the commercial monolith? There are many questions hanging over the subsidiary company and its powers and possibilities.
  The Home Secretary suggests that there will he an education role for the channel. What will that role be? Will we have practical education for the car owner spliced with encouragement to drink more bitter? In the course of a programme educating us in the raising of children, shall we be bombarded with sweets advertising? Are we to have health education programmes spliced with demands that we smoke more cigars? What sort of channel is it to be? What is the education that we are talking about? Many hon. Members and many outside the Chamber underrate this insidious and disgraceful advertising.
  The grip of the commercial companies is far greater than suggested by the naive attitude of the Home Secretary. The right hon. Gentleman is full of good will. He exudes good will. He believes that all his friends in the commercial world are honest men of good intent. I am afraid that he underrates the interests that are behind commercial television. I am appalled that the Bill gives a charter to commercial interests to continue without rein. We need an independent company that is independent of Governments. I had my reservations about open broadcasting, because it would not have had great independence from Governments. However, it would have had possibilities if we had strengthened its independence.

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  The grip of commercial companies is too great. It has been too great, and it will be too great under the Bill. I hope that we shall not overlook the possibility of independence, freshness and a new innovative style in broadcasting. It is not too late to approach that. For example, I hope that attitudes towards women in the media will be changed by the new channel. We have seen and heard stereotyped attitudes. One does not have to belong to a strident campaign to believe that women have been treated in an appalling way and exploited by commercial television—and in part by the BBC—over the years. Freshness, innovation and change are possibilities, and I hope that we shall not lose sight of them. I hope that my right hon. and hon. Friends and a few courageous Conservative Members will join together in Committee to ensure that the Bill is a worthwhile and creditable achievement.
  7.59 pm
  Mr. John Patten: I shall not follow the rant of the hon. Member for Huddersfield, East (Mr. Sheerman) against advertisers. Many of my colleagues share many of his reservations, but to suggest that advertising on commercial channels has led to the degradation of women and to exploitation is overselling his case.
  I was much more interested in the argument advanced by the hon. Member for Merioneth (Mr. Thomas), who, unfortunately, is now not in the Chamber. The hon. Gentleman said that we spent a great deal of time debating matters of economic content and not a proportionate amount of time debating matters of social and cultural import. We should consider cultural matters in their broadest sense. One such matter—I suspect that it will not be fashionable—is religion. Another matter, possibly slightly more fashionable, relates to regions and regional input into television.
  In its proposals the IBA states that it will ensure that at least one hour a week will be allotted to recognised religious programmes. I do not think that that is sufficient. There is an enormous diversity of religions experience, particularly from ethnic minorities, and I do not think that one hour a week is sufficient to cover that. I hope that my hon. and learned Friend the Minister of
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  State will examine clause 3(1), where, clearly, one of the duties laid on the IBA is to consider the dissemination of education. I shall be glad to hear his views on the matter when he replies to the debate.
  Regional interests can also be reflected in the new channel. I hope that I am not stepping outside the boundaries of order if I refer to the disposition of regions in the present ITV channels and point out some of the drawbacks. They could be overcome by laying an additional duty on the IBA in its running of the new fourth channel under clause 3.
  Oxford, like many other cities, lies on the borders of a television region. It lies to the south of the ATV region, to the west of the London region and to the north of the Southern Television region. It lies in a sort of cultural no-man's-land. In Oxford, we receive television programmes from Midlands ATV. Many of the programmes are very enjoyable. My noble Friend Lord Windlesham, managing director of that company, has provided us with good programmes. Other directors of that company, such as Councillor Ann Spokes from Oxford, have tried to ensure a more equitable balance.
  But many of my constituents are unhappy. The news is read from Birmingham with an accent which my constituents find curious and alien, whether they are from the university sector with its Oxford English, or from the car-making sector with its Oxfordshire burr. They also find that the screens of their television sets are often over-filled with Birmingham politicians. The right hon. Member for Birmingham, Spark-brook (Mr. Hattersley) has been overfilling the screens lately. My constituents have suggested that a local political hero might be given more time. Equally, they are forced to view a series of advertisements which pertain only to Birmingham and to the Birmingham region.
  I recognise that that is likely to continue. In giving ITV franchises there will always be cases where there is rough justice. However, there is an opportunity in the Bill to right the balance and to lay on the IBA the duty to consider two propositions. First, in the short term, there should be a statutory duty, in the dispositions of the fourth channel, to look to regionally based production

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  companies. A duty should be laid down in clause 3.
  Secondly, clause 3(2) contains a danger in paragraph (a). The areas laid down by the preceding Bills under which the IBA operates now may become fossilised. If the IBA changes its plans from running a national programme service to a more regional programme service, we may find that when that series of proposals is put forward the old regional boundaries will be fossilised by the effects of the Bill. That would be bad for the encouragement of greater regional authority and would cut across the already long and deep-seated regional boundaries.
  I look forward to hearing the views of my hon. and learned Friend the Minister of State when he replies to the debate.
  8.5 pm
  Mr. David Stoddart: I am pleased to follow the hon. Member for Oxford (Mr. Patten): He obviously experiences that same sort of trouble as we experience in Swindon with ATV. I believe that the Bill is premature. I believe, as does my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen) that there are higher priorities for expenditure than a fourth television channel. I cannot bring myself to believe that the setting up of a fourth television channel, at a cost of around £50 million, should take priority over many other matters.
  I do not believe that we should give the IBA a new lease of life for a further 15 years, with a possible extension of a further five years. That is far too long a period to allow a conservative body to continue. Its term of office should be reviewed at shorter intervals.
  We must consider whether there is a public demand for a fourth television channel. Have hon. Members received large postbags about the fourth television channel? Have they received hundreds of letters about the matter, such as they received on the Education (No. 2) Bill? Have people been queueing to see them at their regular surgeries to demand a fourth television channel? My guess is that, like me, they have not had one constituent who has written or lobbied about a fourth television channel.
  We are not talking about a public demand. We are talking about an engineered demand—a demand engineered
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  by the television companies and by the IBA acting in concert. The Government have fallen for it. Now we are faced with a Bill for which I do not believe there is any real public demand. The public are mere lookers-on.
  Mr. Austin Mitchell: They are lookers.
  Mr. Stoddart: Yes, they are lookers, but also lookers-on—at some awful stuff, if we are talking about television programmes.
  What steps have been taken to try to find out the attitude of the public? Again, my guess is that no steps have been taken to find out what the ordinary man in the street thinks about the fourth television channel. Have the public been asked which they would prefer to have—an improvement of the present range of choice or a fourth channel? I very much doubt whether that question has been put to the public.
  In my own area, not only in Swindon but in the surrounding district—indeed, as far as south Gloucestershire—people are not too worried about a fourth television channel. They are worried about the service imposed upon them at the present time by the IBA, which will do nothing to alter it, although it has been asked to do so by mass meetings all over the place. People are not worried about the fourth television channel; they are worried and concerned about the sort of service they are getting from ATV at the present time.
  The IBA says "Let us consult the people, let us go to the people and ask them what they think about the present services." The IBA came to Swindon and to other areas and asked people "Are you satisfied with the service you are getting?" In my own constituency, in the company's own poll, a huge majority of people said "We do not want ATV, thank you very much. We want a Bristol-based company, because Swindon is in the South-West."
  The local press took a poll which showed categorically that people in Swindon and the surrounding area felt that, being in the West, they wanted a Bristol-based service. We had a public meeting—the best attended public meeting in the whole country—and only one voice was raised in favour of ATV. The rest of the people wanted to be served by a Bristol-based South-West service.

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  All those expressions of opinion were ignored. As a result, the people of Swindon will remain within the octopus-like grip of the ATV which, frankly, is so ignorant of geography that it describes the Swindon Town football club as a Midlands football team. It is hardly possible to be more out of touch than that.
  The fact is that many areas are already not being well served. The director general of the IBA wrote to me stating that the reason IBA could not alter the service to a Bristol-based service was that the Government were short of labour and money. The amount of money involved is not very great. I suggest that that money would be far better used in improving existing services than giving the country a fourth television channel, which in my view is not necessary.
  I believe that my constituents are being badly served at present by ATV, and that the company is far too large and far too widespread to serve the 12 million people in a local as well as in a national sense. The money could be better used in correcting that position. For all those reasons, I shall vote against the Bill tonight.
  8.13 pm
  Mr. John Watson: I am most grateful to you, Mr. Deputy Speaker, for giving me an opportunity to participate in the debate.
  I believe that everyone in the broadcasting industry will welcome the Bill. I hope that at the same time we can welcome those parts of my right hon. Friend the Home Secretary's introduction to it in which he said that, while he was hoping that the fourth channel would be introduced in 1982, we should not take that as read because it depended upon certain technical works and upon the capacity of the country to afford service of the fourth channel.
  I hope that hon. Members will not be misled by some of the figures being put out by the IBA about the cost of the fourth channel. In saying that I do not mean that these figures are intentionally misleading. I mean that if they are taken at face value hon. Members are likely to be misled.
  The IBA in its documents is saying that in the first year of operation the income of the fourth channel will be £60
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  million and that the expenditure will be £84 million, leaving a deficit of £24 million, of which £10 million will be funded by the ITCA companies in loss of profits and £14 million will be funded by the Government in loss of IBA levy.
  I believe that it was that £14 million that was causing such concern to the hon. Member for Swindon (Mr. Stoddart), and before him to the hon. Member for Glasgow, Maryhill (Mr. Craigen). I do not believe that that figure of £14 million in lost Government revenue is particularly accurate. I believe that the true figure is considerably greater than that, for two reasons. First, the IBA has taken the first operating year, and that does not coincide with a financial year. Secondly, it has taken into account only the loss of revenue from the IBA levy, and not that from corporation tax.
  My own figures, which on Friday were confirmed by an IBA spokesman, show that in the tax year from April 1982 to March 1983 the income of service 2 would be£30 million and the expenditure would still be £84 million, leaving a gross deficit of £54 million, of which only £13 million would be met out of net profit reduction by the companies concerned, leaving £32 million to be lost by the Government in IBA levy and £9 million to be lost by the Government in corporation tax—a total cost in that year, at this year's prices, of £41 million.
  Last autumn we made a great fuss about trying to save £2·7 million on the overseas services of the BBC. Last week I was one of a number of Conservatives who had the deepest reservation about voting for a Bill that would enable local authorities to charge for school transport, thereby hoping to save £20 million. When I consider activities such as that and then I see that it is now proposed to launch a fourth channel at a net cost to the Government of £41 million—for a service for which I have not had one letter of support from my constituency—I am bound to question our priorities.
  The Bill generally has been welcomed by people in the industry, but the specific contents of the Bill have met with somewhat less than unanimous support. As has been mentioned already, the independent producers do not like clause 4. The advertising industry does not particularly like clause 5. It is easy to say

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  that that is an industry with a vested interest, but it is shallow to say that. We must look rather more carefully at what the advertising industry might be saying.
  In this debate it is fashionable to declare interests. I am an unpaid member of the council of the Incorporated Society of British Advertisers, which represents the people who spend money on advertising. I believe that the advertiser's case needs to be taken seriously for two principal reasons. First, if the advertisers are correct in their assertion that greater competition in the sale of advertising time will lead to lower costs of television advertising, there is a more than sporting chance that consumers throughout Britain could benefit as a result.
  The second reason is that some of the things that the advertising industry is saying about the ITCA companies are very serious indeed. It is saying that television companies have shown a marked reluctance to launch breakfast-time television, that there has been collusion over rate cards and that there has been packaging of television time. It says that in 1976 and 1977 the television companies withheld advertising time in order to support rates. It says that certain companies have sold their time in return for a percentage of an advertiser's profit margin, and that throughout the industrial dispute last year the ITCA companies behaved towards their customers with an attitude which can only be called cavalier and arrogant.
  I must confess that the ITCA resolutely denies all those allegations. For all I know, its denials may be correct, but the following points are unchallengeable. First, by no stretch of the imagination can ITV companies be called efficient when we consider the number of people whom they find it necessary to employ to make one programme. Secondly, the profits of ITV companies are almost—
  Mr. Stevens: The independent television contractors do not find it necessary, to use the words of my hon. Friend, to employ such large numbers of people to make programmes. They are compelled by the relevant trade unions to employ such large numbers of people on programmes.
  Mr. Watson: Then I question why the BBC is able to make equivalent programmes with fewer people.
  The second point concerns the profitability of the ITV companies. It is substantial. To my mind, it is greater as a percentage of turnover or of capital than is necessary to justify the commercial risks undertaken by a company which takes on a television franchise.
  Thirdly, I know of no industry where the suppliers of a particular commodity—we are talking about advertising time—are so mistrusted by their customers as is the television industry. Therefore, we need to ask: what is wrong with competition? There seem to be two things wrong with it. Some say that it would not produce enough money for the fourth channel. The Home Office and the IBA say that. On the other side of the argument, the whole of the advertising industry and the CBI say that almost certainly over a limited period of years there would be enough money. I find it difficult to make a judgment. But if I am asked to believe the people who collect the money as against those who pay, I find it preferable to believe those who are to pay.
  Then there are those who say that competition in the sale of advertising time would inevitably lead to a ratings war. I believe that to say that is in the same breath to say that the IBA has no power to prevent it. The IBA in one of its documents states:
  "All ITV schedules must be approved in their entirety by the Authority. When serious differences of opinion arise, it is the Authority which has the ultimate responsibility and the final word."
  It is apparent that the IBA, the Home Office and the ITCA are currently relatively intransigent in their attitude that there cannot be competition in the sale of advertising time because, if there were, it would lead to a ratings war. If that is their view, and if they are inflexible in that view, I suggest that all the parties to the disagreement should look with favour on a compromise solution which would result in the ITCA companies retaining all the revenue from the fourth channel, but selling the time on the fourth channel purely by means of a separate sales force.
  If the ITCA companies are sincere in saying that they do not intend to use the fourth channel air time to inflate

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  artifically the rate cards which they already apply, I should have thought that they would jump at this suggestion. To run a separate sales force would cost them less than £800,000 a year, and they would be virtually guaranteed to raise that amount by incremental revenue. If the IBA is sincere in wanting to protect the advertisers' interests, I believe that it can best do it by accepting a compromise on these lines. For the advertisers, I suggest that half a loaf is better than none, and at the moment they are not likely to get any more than half the loaf for which they are asking.
  I welcome the introduction of the Bill. I have the deepest reservations about the timing of the introduction of the fourth channel if the net cost to the Exchequer is to be £41 million, but, when we get it, I hope that it can be in a form that provides a degree of genuine competition in the sale of advertising time, because that is in the consumers' interest.
  8.24 pm
  Mr. John McWilliam: First, I declare an interest as a member of the Post Office Engineering Union and a Member of Parliament sponsored by that union.
  Secondly, I declare an even stronger interest. It is 21 years sinced I lined up my first broadcasting circuit. Until a year ago I was responsible for producing the technician course for engineers in the production of programmes on the studio floor and, more importantly, for their transmission. It is to that aspect that I shall direct my remarks.
  I am very disappointed in the limited extent of the Bill. What no one seems to have picked up today is that it fixes the pattern not just of IBA broadcasting, but of all broadcasting until four years before the end of this century, and it fixes it on the present pattern. It completely fails to recognise the rapid increase in technological development that has taken place in transmission systems already in being in this country and being developed elsewhere.
  The House must realise that broadcasting does not only take place over the air waves. Indeed, there was an article in The Sunday Times referring to a pay cable television experiment, to which I hope the Minister will refer in his reply.
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  Apparently there was supposed to be a reply to a parliamentary question today on that matter. Certainly the matter has been raised. If it is raised as a new experiment, surely it should appear in the Bill, especially if it is a change in broadcasting licensing, but it does not. Therefore, I ask the Minister: is it true? If so, will he tell us about it?
  As I said, broadcasting does not take place only over the air waves. There have been tremendous developments in fibre optics in the past two or three years. In Britain a contract is about to be signed that will give broad band transmission capacity through very small centres. We shall be able to send television pictures over lines that could not carry them before.
  There is another development in Britain on other broad band systems, which enables wave guides to be joined. Wave guides take the signal from the master amplifiers to the final television transmission aerial. A joint can be made on tubes, which can be unrolled from drums. Only in this country has that been made to work.
  In the neighbouring constituency of Chester-le-Street, in Washington new town, an experiment is taking place. Broad band systems have been provided to every house in certain areas. These are not the broad band systems being provided by cable television contrators. Their systems are only seven bands. These are 20-band systems, which comply with the new international standard, and at least two of those bands are reactive. In other words, programmes can be fed into them. If the Bill took account of developments in technology we could consider genuine community television and radio and not have to talk about broadcasting areas of 12 million people. My hon. Friend the Member for Swindon (Mr. Stoddart) would not need to worry about ATV. He could have his local programme on radio or television for a certain part of the day.
  Another part of the Bill deals with teletext. It makes it clear that the main broadcasting contractors need not be the teletext contractors. That is important. If modern technology were used we could have local teletext. The sick and the disabled, for example, would have the advantage of being able, on a teletext set, to look at and compare the prices in the various shops in the town shopping

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  centre and know where they wanted to do their shopping, instead of having to trail round. That is a possibility with current developments.
  The idea of a new channel with another mast sticking up on the skyline somewhere, yet another transmission line, another set of amplifiers and another lot of equipment to look after, is offensive both technically and financially. There is no need, even on a broadcast system, to have more than one mast in any locality. One mast can broadcast all the signals—BBC, IBA, ITV, anything—provided that somebody has the responsibility for feeding the signals to that mast and for looking after them. If today's debate is anything to go by, all that anyone has talked about is making programmes and making money, or not making programmes and not making money.
  If the Government had had the foresight to have a proper technical evaluation of the way in which broadcasting should be carried out to within four years of the end of this century—we are talking about 1996—they could have made this an important Bill. Instead, all that the Government have done is to renew the licence for ITV contractors to print money and make sure that the fourth channel, if it comes, will not cost them anything. The Government have done no one any favours, especially those interested in communicating as widely and accurately as possible to the community and reflecting the needs of that community.
  8.29 pm
  Mr. Michael Morris: The hon. Member for Blaydon (Mr. McWilliam) made an extremely interesting contribution. I should like to pick up and emphasise the points made by my hon. Friend the Member for Skipton (Mr. Watson). In doing so, I declare an interest as one who has been in advertising for some 20 years—on both sides of the fence. I hope that my hon. and learned Friend the Minister of State, Home Office will consider carefully the points my hon. Friend made, because he should know that the experience of those of us in the industry, in connection with the principal ITV companies, has not been happy. Considerable malpractice has been undertaken such as the restrictions of the amount of air time that has been sold so as to increase the market price, which is not in the interests of the
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  consumer. A number of my hon. Friends have mentioned pre-emption deals and rate card packages.
  It is interesting to see in the confidential memorandum—which seems to be circulating among all hon. Members—that in their submission to the IBA the ITV companies first asked for the channel to be viewed as a single service and even went so far as to have, under section 56, a requirement for safeguards for advertisers, the first of which is that companies should publish separate rate cards. No advertising company has ever believed the rate card published by an ITV company—certainly not to my knowledge over the past 10 years. I re-emphasise the importance of that subject.
  I welcome the principle of the Bill. The Government are absolutely right to reject the concept of the OBA and to place their faith, in principle, in the IBA. I say "in principle'. I think that my right hon. Friend the Home Secretary has a great problem in meeting the requirements he laid down at Cambridge with the Bill as it stands, because of the over-influence of the ITCA companies.
  In questioning this, let us say, policing role of the IBA, I bring to my hon. and learned Friend's attention the minutes of evidence of the Public Accounts Committee which were published on 12 November 1979. Those minutes of evidence indicate, first, that the IBA authorised certain ITV contractors to switch from a historic cost accounting basis to a current account costing basis without consulting either the Home Office or the Treasury. That meant a major loss of revenue to the public sector through the reduced levy. That, I believe, was an error of judgment. Secondly, in this evidence it is reported that the IBA authorised the inclusion of certain exceptional items of depreciation, and that, again, had a major impact on the levy, with a loss of revenue to the public sector.
  Thirdly, the IBA chose not to challenge the procedure whereby contractors charge the whole of production costs against their United Kingdom accounts in the knowledge that many of the programmes are now being made with substantial overseas sales in mind. That, again, inflates the home costs and reduces the profits on which the levy is paid.

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  We have not yet had a report from the Public Accounts Committee but I have no doubt that when we do receive such a report it is likely to be critical. My personal conclusion is that it has been shown that the IBA has not protected the public's interest in relation to the strength of the ITCA companies.
  If we look at the accounts of some of the leading contractors over the recent past we see that there is evidence that they have approached matters from a purely financial point of view, which is understandable. The accounts of Thames Television show profits for the year 1977–78 of £8 million and for the year 1978–79 of roughly £6 million. At the same time if we look at the amount of money that Thames Television put against programming in the year when it reduced its profits we see that it is an increase of £10 million. It will be clear, I think, to hon. Members that this was done at a time when new contracts were under review, and Thames was obviously putting extra money against future investment. But again, this has a major impact on the levy.
  On the financial dimension, therefore, I say to the House, and particularly to my hon. and learned Friend the Minister of State, that I am not convinced that the IBA has had adequate control over the existing ITCA companies.
  I look, too, at the creative content side. I find that the IBA, in considering the new contracts for the existing contractors, has resisted change all the way along the line. Hon. Members on both sides of the House have made points about that. The IBA has resisted—and this is the key point—meeting the needs of consumers. I do not have much faith in it meeting the needs, in creative terms, of the independent producers.
  It is very rare to find the commercial world, the advertisers, the advertising agencies and the independent producers being at one. But they are at one, and that point ought to be taken on board by my hon. and learned Friend. There is a need to spell out the safeguards in clauses 3, 4 and 5. We know that the IBA is thinking of the existing companies producing about 75 per cent. of content. The ITCA companies are boasting that it will soon be 80 per cent. I think that we must write in those safeguards,
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  because the majority of British television is among the very best in the world. What we want is more of that television, more of that alive, creative content, to be put on the screens, and in a way that is financially viable.
  It is against that background that I ask my hon. and learned Friend to listen with sympathy in Committee to the needs to put boundaries on, and to give some teeth to, the IBA, and for this House to have teeth to conrol the IBA, because although no Government like to interfere with the day-to-day dealings in broadcasting—and long may that remain so—we in this House must have written into the Bill certain key safeguards to ensure that we get a television service which we can all enjoy and which can be viable.
  8.37 pm
  Dr. Oonagh McDonald: I am glad to speak after the hon. Member for Northampton, South (Mr. Morris) and to take up some of his remarks about the creative possibilities of British television. Speakers in this debate, particularly from the Conservative Benches, have had much to say about the cost to the Exchequer of setting up the fourth channel. I think that what has been overlooked is not only the high standard of much of British television but its export potential, and the fact that it can earn for us considerably as it is sold in other parts of the world, and particularly in America. But that is just by the way.
  I want to concentrate on two points. The first is the Home Secretary's general attitude to the Bill and the second is what he expects from the IBA. He expressed many fine sentiments about the future of the fourth channel. He expects it to develop as a distinctive service and to provide programmes that will be available to the public, to find new ways of serving minority and specialised audiences, and to give due weight to innovation. He has also said that he expects that the IBA will not allow the development of rivalry for ratings between the two channels.
  The Home Secretary's sentiments are, indeed, fine. One thinks of him as attempting to stir up virtue among the ITV companies, just as he once accused the Labour Party of energetically stirring up apathy throughout the country. But I do not think that his sentiments and

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  aspirations will be quite sufficient to create virtue in terms of the fourth channel, for what he has not done in the Bill is to lay down proper criteria for ensuring that a particular proportion of the fourth channel programmes will go to education, to minority interests and to others.
  In other words, clauses 3 to 5 are much too vague for that purpose and will definitely need to be considerably tightened up in Committee, because as things now stand it seems that advertisers will inevitably want to maximise audiences for ITV 1 in order to make sure that they have plenty of funds available to finance the fourth channel, or service 2. The programmes for ITV 2—I use that term because it will obviously be called ITV 2—will be planned with that in mind. That will inevitably weaken the new fourth channel.
  The use of words such as "substantial" in clause 4 means that the Bill is much too permissive. In its proposals the IBA states that 75 per cent. of the output of service 2, or ITV 2, should come from the ITV companies, with a present maximum of 35 per cent. from producers outside. If the programme contractors are to provide the dominant share of programmes they must prove their intention to provide programmes that are properly distinctive and innovative. But the draft programme schedules that have so far merged lead one to doubt that. They include programmes such as "Classics of the Cinema" although we get plenty of those on television at the moment. There will be an "Intelligence Game" and a "Continuing Story". I like that, but I much confess that I have no idea what a continuing story could possibly be.
  If the purpose of channel 4 it to promote a more diverse and plural television system, the majority of programmes should come from sources other than the service 1 contractors. That possibility should be more firmly allowed for in the Bill than it is at present. There are plenty of talents and abilities among the independent producers, and they should be given the opportunity to provide programmes of this kind as well as enabled to finance such programmes.
  Contractors should be able to provide finance for independent producers, for example, as "seed" money, or facilities
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  amounting to just under 50 per cent. of production costs. That would allow for opportunities from the independent producers to provide innovative, interesting and creative programmes on the fourth channel.
  Since time is short, I am afraid that many of the points that I would like to make will have to be omitted. Instead, I should like to touch on one point that has not been raised so far. It concerns clause 24. At present, there are considerable foreign holdings in independent radio. They are entirely Canadian. Of the total ILR capital, Canadian holdings amount to 19 per cent., although if one excludes LBC, with its strong Selkirk holdings, total foreign holdings are only 12 per cent. As independent radio develops, the proportion of foreign holdings will fall because most local radio stations will have no foreign holdings at all. However, there is interest in foreign ownership of commercial radio, which has been quite strong over the last few years.
  Clause 24 allows for EEC individuals or companies to hold shares in commercial television programmes. That is simply a matter of our compliance with the rules of the Treaty of Rome. Those companies or individuals will be allowed to bid for commercial television franchises. Indeed, it is already rumoured that Radio-TV Luxembourg is preparing a bid for the national breakfast-time television franchise that IBA advertised last month. I am not suggesting that there is anything sinister about that. However, a point to be borne in mind is that the IBA is relaxing the question of political balance on channel 4. In other words, the rules relating to political balance will not be as strict or rigid as they are elsewhere.
  Although an overall balance will be maintained, channel 4 is intended to afford greater opportunities for individuals to express points of view and to do so as strongly as possible. I am in favour of that. However, if the rules concerning political balance are to be relaxed to some degree, and we are concerned with cultural and social balance, we must consider the question of foreign ownership of television companies. We must examine to what extent ownership by member countries should be permitted and what our attitude will be to the

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  political or cultural content of such programmes. Those are questions that we need to consider.
  There are two serious areas of concern in the Bill—the lack of firm controls for the contrast of channel 4 programmes and the lack of opportunity for independent producers to play a substantial part. Finally, foreign ownership of commercial television and radio has not been adequately considered, and we should like to know the Home Secretary's views.
  8.46 pm
  Mr. Martin Stevens: I have served as a consultant to half a dozen television companies, and for two years I was managing director of Granada Television (International).
  As this fascinating debate progresses, hon. Members on both sides of the House are moving further from the ground and higher into the stratosphere. My hon. and learned Friend the Minister of State, Home Office is appealed to from all sides to impose ever loftier standards of aesthetic taste and political eunuchry in approaching the fourth television channel.
  Hon. Members may not be the best possible people to talk about television viewing, as by the nature of our job, none of us sees much television. I should have my eyes scratched out if I were to suggest that I was on better terms with the frequenters of tap rooms and four-ale bars than are my colleagues. We all consider that we have the ear of the man in the street and know exactly what he wants. Let us not quarrel about that.
  The hon. Member for Merioneth (Mr. Thomas), in his charming and disarming way, spoke with venom of the commercial interest in advertising and of taste, which he appeared to think was the prerogative of an upper-class elite. Many of us are being elitist today. Television is not a medium for the elite. It is not an alternative pastime to reading The Times Literary Supplement or the New Statesman. It is a popular medium, but we are talking of it as if it is the leader page of The Times.
  An unpleasant fact which many of my colleagues on both sides of the House appear unable to contemplate is that people like advertising. When commercial radio was introduced, a friend of mine was hired by the BBC solely to
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  create features which sounded like advertising to interrupt programmes. If listeners could not hear advertising, they would switch to another programme. Those are the facts. It is bunkum for hon. Members to talk in terms of how dreadful these commercial people are and how programmes should be sterilised by more controls operated either by the IBA or by my right hon. Friend.
  I welcome the Bill. It meets a need. It is a realistic measure. I hope that what happens with ITV2 will be the same as what happened with BBC2. With control of both programmes in one set of hands we were able to see the most skilful and exciting complementary programming between BBC1 and BBC2. I have no doubt that this will be echoed by the new ITV programme that we are discussing. It is bunk to say that a programme will not be controlled or influenced by those who sell the advertising space or by those who control the network over which it goes. The whole of the construction of a television programme is highly complex and sophisticated.
  If one says, as the Bill enjoins, that a programme will be a minority programme—this is one of the benefits of BBC2 that we shall see echoed in ITV2—one has to know what the minorities are and understand the demographic audience to which one is appealing. The programme controllers of the independent networks have this skill and this talent. If they are denied access to, or control of, these programmes there will be less professional organisation of what goes out. There will be more confusion and clashes between programmes which minority audiences want to see.
  We are told on all sides that more than the allotted amount of time should be afforded to what are called independent producers. I was in the cinema business for 15 years. We were always being told that the big networks excluded the independent producers, who were of a loftier character than those of the network.
  Mr. Whitehead: They do.
  Mr. Stevens: Here again we are being a little hypocritical. Most of the independent producers, so called, clamouring for space on independent television, for

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  which, needless to say, someone else will have to pay, are not independent at all. They work perfectly happily for the BBC or the independent contractors already, with complete programme freedom, and think that it would be nice to have even more money and more freedom. They will get it. [Interruption.] There is a little barracking from the Opposition Benches. I am not, however, denying those producers their right. That is what the Bill gives them. I hope, however, that my hon. and learned Friend will not be too bemused by the prospect of these pitiful people who are said to be excluded by the monopoly interests so far, and who are seeking to come into more than their own in the Bill before us. I think that my right hon. Friend the Home Secretary has got the balance about right.
  All that I ask my hon. and learned Friend to do, in replying to the debate is to have regard to the taste of the public at large. He should have regard to the unvarnished common sense of the situation and not listen too much to the humbugs. He should recognise that we are talking about a developed programme, like BBC2, which will appeal to minorities but which must be prepared and paid for in a sophisticated manner, and that he should not be ashamed of the wording of the Bill, which I am glad to say does exactly what I have described.
  8.55 pm
  Mr. Austin Mitchell: There comes a time in the life cycle of every Government when we seem to be discussing that Government's proposals for the fourth channel. If this stage comes a little earlier than usual in the life-cycle of the present Government, perhaps the reason is that the pace of rise and fall is becoming more frenetic in modern politics.
  We ought to be discussing the fifth and sixth channels which would be available from the re-engineered VHF system rather than the fourth channel which we are still discussing 18 years after the Pilkington committee suggested that it should go to a reconstituted independent television, 15 years after the fourth channel button appeared on television sets, and six years after the Labour Government agreed to shelve the whole problem by handing it over to the Annan committee, which treated it as a branch of embalming rather than television.
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  Even now, we hear that the appearance of the Bill has been delayed by the intervention of the right hon. Lady the Prime Minister, who was concerned to extract from independent television what she could not get from the Common Market. I congratulate the Home Secretary on defeating that intervention and, indeed, on steering, as he has, a middle course between the Scylla of the advertising lobby, which has been well represented tonight—allied, as it is, with the intellectual advocates of the fretwork network—and the Charybdis of the ITV contractors. In fact, the debate has prompted the thought that if my hon. Friend the Member for Derby, North (Mr. Whitehead) the ITV contractors, the Stigwood organisation, the advertising lobby, the independent producers and the Prime Minister all have various reservations about these proposals, the Home Secretary may have something to be said on his side.
  I think that the reason for the disagreement is the old problem of drawing a balance between complementary programming and competitive programming. This is the reason why the fourth channel has been so long delayed. We remember that the OBA, the open broadcasting authority, was recommended by the Annan committee and taken up by the Labour Government, and I must say in passing that I am sorry that we still have this wretched albatross of the OBA round our neck tonight.
  The real need is for complementary programming to provide a genuine choice of programmes, and the OBA would have been a competing organisation. As such, it would have been driven remorselessly in one of two directions—either to maximise the audience, an imperative which would come from its dependence on advertising, or conscientiously to take up a minority role in which it would not have the advertising revenue but would inevitably have to be dependent on Government financing, turning itself into a kind of cultural ghetto.
  In my view, only a complementary channel can avoid that dilemma, and that requires what the Bill does, which is to put the other channel, the fourth channel, under the aegis of the IBA so that it can provide a genuine alternation of programmes, so that, by careful

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  scheduling, it can provide proper junction programmes and proper cost promotion of programmes, so that the audience can be encouraged to trade up to the new channel and enjoy some genuine choice, and also so that more popular programmes can go on the fourth channel without ITV 1 feeling it necessary to swamp them by some blitz of popular programming.
  That is the essence of the argument why the advertising has to be handled by the same organisation. Competitive advertising would almost certainly lead to competitive programming. I believe that genuine choice can come only from complementary advertising and complementary programming.
  I see this measure as topping off the structure of the duopoly which the Annan committee disliked so much but which has provided in this country such good television for so long a time. That is why I welcome it rather than the proposal to give the kiss of life to the OBA, which in fact was still-born—or, rather, it sprang fully adled from the head of my hon. Friend the Member for Derby, North.
  We ought to concentrate our energies on taking forward this Bill, which is right in broad outline, and hardening it up to provide what we want, which is exciting and adventurous television and a new opening for an industry which is in such a log-jam that it is in danger of stultification.
  Although I approve of the complementary approach, I recognise that it carries with it the danger of insitutionalising caution, complacency and conservativism instead of providing the new dynamic which the industry sadly needs. I believe that in this question of caution the attitude of the IBA is central, and the auguries of that attitude from the new programme areas, which show an unwelcome caution and reluctance to change, are not good. Indeed, the caution of the IBA spills over into its preparations for the Bill. It seems intent on a representational board, with representatives of everything from the programme contractors to education—and possibly with God and Mammon added in a representative capacity as well. That, in itself, is a framework for institutionalising vested interest and caution.
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  What is needed—and it is the only guarantee of the sort of dynamic approach to programming that the new organisation needs—is a small committed group which can set about shaping the channel on its own, rather than the institutionalised, representative group that is envisaged.
  The caution comes in also in the proposed complaints commission, which I welcome in general except for the provision that it should work behind closed doors. If it worked publicly it would become an educational process about the problems of the medium. The primary need is for urgency in the setting up of the new channel. There was an ominous note in the Home Secretary's speech when he envisaged the possibility of delay. It has been too long delayed already.
  We need the fourth channel for two basic reasons. First, there is still a wealth of underemployed talent in the programming companies which is able to provide programmes and wants to do so. I am talking about individuals, not companies. The groups who provide the programmes find that there are not the openings for which they have the ideas, the enterprise and the drive. That is particularly true of the smaller companies.
  The second reason for the fourth channel is that we need to provide—and this is where programming from the independent sector is necessary—a thriving independent sector which will be the basis for the much more varied and dynamic television which we shall get, and which is technically feasible, in the 1980s, which will take the risks and develop the new ideas and provide a genuine new excitement.
  Obviously the intention is that the new organisation will take a substantial proportion—I hope a major proportion—of programming from the independent sector. However, there is a need for positive discrimination in favour of that sector in order to overcome the difficulties under which it works at present.
  In my view, the Bill is basically right in the outline that it proposes. When we come to amend it, our objective should be to strengthen the measure in the direction that I have indicated.
  9.3 pm
  Mr. Nicholas Baker: I am grateful to have the opportunity to make three points. The first is to consider whether we want a fourth channel at all.

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  There has been some discussion of that question, but the suggestion that it is needed for the sake of the broadcasters, as was implied by the hon. Member for Grimsby (Mr. Mitchell), is not good enough. In some respects, broadcasting is too important to be left to the broadcasters.
  I do not share the view of the spokesman of one of our great political parties that the reason for the fourth channel is to fill in what is behind the fourth button on the television set. I detect no such need on the part of my constituentes. The only one who wrote to me had attended a Welsh university and wrote in Welsh threatening me and the House with various sorts of insurrection if the fourth channel was not a Welsh-speaking one. That is the only demand that has been suggested from my constituency.
  My second point is to ask whether we can afford a fourth channel at this stage. I am glad that several hon. Members have referred to this. It is a curious fallacy that the BBC is a cost on the public and commercial television is not. As the right hon. Member for Rutherglen (Mr. MacKenzie) pointed out, in the end the consumer pays for commercial television. The cost of the service is relevant and important. Various figures have been mentioned, and I hope that my hon. and learned Friend the Minister of State will say something a little more specific when he replies to the debate.
  My third point relates to the quality of programmes. If we must have a fourth channel, we should have it because, and only because, it will be a special, independent, totally new and complementary channel, totally unlike ITV 1. For that reason I favour the complementary channel approach and appreciate the strong words on the subject from my right hon. Friend the Secretary of State.
  The only possible way to secure such such a channel is along the lines set out in clause 3. I add my voice to those of other hon. Members who have said that they wish safeguards to be built in to impose these standards on the new channel. I hope that the channel will avoid some of the mistakes of ITV 1, such as the gross overloading of American culture, the continued high proportion of violence, and practically no attention being paid to the EEC. I often wonder whether Britain is a member of the EEC.
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  when watching a large number of programmes.
  Many hon. Members have preferred to forget, or ignore, that television is an educative medium. It is not only a medium for teaching children, but one from which all may learn more about our society and the world. That is why the educational function in clause 3 is especially important.
  It is important to achieve the independent channel which many of us wish for, tying it to independent producers and independent companies and thereby securing their participation to a specified minimum extent. I hope that the Government will have more to say on that matter.
  The only justification for a fourth channel is as an independent complementary broadcasting system. We should not undertake that until financial circumstances permit. It is obvious that it is a most inappropriate moment to choose, although I appreciate that the channel will take at least two years to establish.
  I ask for an assurance from my right hon. and hon. Friends that they will not implement the fourth channel until such time as the economic circumstances of the country permit, and that they will provide safeguards for the quality and content of programmes and the participation of those who provide the programmes.
  9.9 pm
  Dr. Shirley Summerskill: This Bill has ended the consensus on broadcasting matters that has been maintained in the House during the past few years. The Bill will be opposed in the Lobby tonight.
  Part I, dealing with the extension of the duration of the Independent Broadcasting Authority's function, is one of the less controversial proposals.
  The IBA's reputation has not survived the debate unscathed. The 1973 Act has, on the whole, worked well. The IBA has catered for regional tastes and interests in many areas, as my hon. Friend the Member for Glasgow, Mary-hill (Mr. Craigen) appreciated.
  The original introduction of commercial television 26 years ago aroused great passion. ITV and local radio are now accepted features of our national life, both wielding immeasurable influence on

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  the thinking and standards of our culture. The IBA has the merit of being independent of Government and of Parliament in the day-to-day conduct of its business, a concept that we all support. It has the important duty, to which many hon. Members referred, of exercising an influence on the ITV companies so as to maintain standards. As the Home Secretary said, it is right that the continued existence of the IBA should be reviewed by Parliament form time to time. It is to the IBA's credit that the proposal in the Bill is to extend its life for as much as another 15 years.
  The establishment of the Broadcasting Complaints Commission is another part of the Bill which, without exception, the House has welcomed. There has certainly been more public demand for it than for a fourth channel. The Annan committee received evidence which it claimed revealed widespread public dissatisfaction with the present arrangements for dealing with complaints of infringement of privacy or of unjust or unfair treatment in broadcast programmes.
  The present arrangements which have lost the public's confidence are defective because, as with the old police complaints system, the same people appear to be judge and jury in their own cause. Television and radio have an enormous power to intrude and wound, and an independent commission is long overdue. There is a fear among some programme makers that the existence of the commission could represent overt censorship or even produce self-censorship. I hope that this fear proves to be unfounded, because the commission is denied the power to intervene before programmes are shown.
  The commission will have no power to punish offenders, only to rebuke them. Some hon. Members have criticised that aspect. Its sphere of operation is more limited than some of them would have liked. There is the possibility of having open hearings. All these matters will be examined in Committee, perhaps with an attempt to give the commission more teeth.
  I now come to the totally unacceptable parts of the Bill. The debate has been notable for the large number of Conservative Members who have declared interests. My only interest is that my
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  father is a Welsh-speaking Welshman. It is quite clear from the speeches of my right hon. Friend the Member for Swansea, West (Mr. Williams) and the hon. Member for Merioneth (Mr. Thomas) that the Welsh people are angry and feel betrayed by the Conservative Party's reneging on its manifesto pledge to them. There is a feeling that the Government no longer represent Wales, and that was evident from the speeches from the Opposition Benches. Not only has an election pledge been broken, but it is a sorry waste of a unique opportunity to cater for the wishes of 250,000 Welsh-speaking people.
  In successive broadcasting debates my right hon. Friend the Member for Leeds, South (Mr. Rees) assured the House that a Labour Government would introduce the fourth television channel in Wales in the Welsh language. We would have kept that pledge. There has been a long campaign to secure a Welsh-language televison channel, and judging from the speeches in this debate, that campaign will continue until it achieves its aim.
  Part II of the Bill, dealing with the provision of a second television service by the authority, has dominated the debate, although the matter has provoked little interest among television aaudiences. Like my hon. Friend the Member for Swindon (Mr. Stoddart) I have received not one constituency letter about whether there should be a fourth channel and who should run it. Nevertheless, the Bill is crucial to the future shape of British television, and the House has a great responsibility to ensure that this country continues to have the most independent broadcasting system in the world.
  We on the Labour Benches are totally opposed to the Government's proposals for the new channel. It is time, and this is the time, to break the duopoly of the BBC and the IBA in British television. We should grasp this opportunity to establish a new channel which is totally different from, and independent of, the three existing channels, different in the way it is controlled and in the service it provides. Only the establishment of a third television broadcasting organisation would do that. It could give independent producers maximum opportunities to us their varied talents and capacities. It could also provide a market for their programmes at the same time as catering

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  for the tastes and interests of minorities who are neglected by existing services. Those minorities can number millions of viewers.
  An open broadcasting authority would be committed to quality, diversity, experiment and innovation. That would be a refreshing change from some of the programmes on offer today. However, the best of our programmes are still the best anywhere. The Bill does not give us that new authority which we believe will meet tomorrow's needs. Nor does it give us another fully competitive commercial system, which is championed by many Government Members. Instead, we are faced with a compromising hybrid Bill. The new service will be provided by the IBA and its subsidiary, which involves the same ITV companies with which the IBA has a longstanding relationship and with which it is already deeply involved on an existing channel.
  The IBA is on record as advocating that the new channel should be an ITV 2. The service will, therefore, be schizophrenically torn between the desire to produce high-quality, original programmes and the need to attract advertising revenue with mass audiences. Those are twin aims which are incompatible.
  The specific proposals for the new channel are incredibly vague, permissive and ill-defined. The omissions from the Bill are as significant as its content. The Home Secretary has certainly lived up to his Cambridge speech last September when, referring to legislating for the control of broadcasting, he said:
  "great detail in legislation may prove misconceived."
  There is no doubt that the Home Secretary believes in, and is expecting to see, good television in the public interest. But he will not be Home Secretary for ever. The effects of his Broadcasting Bill will outlast his term of office. His reassuring noises and optimism about how everything will turn out are no substitute for a clear and explicit measure. He talks of strict safeguards on one hand and gives us a vague Bill on the other. That argument was expressed repeatedly in the debate, especially by my hon. Friends the Members for Derby, North (Mr. Whitehead), Thurrock (Dr. McDonald), and Hudders-field, East (Mr. Sheerman), and even by the hon. Member for Northampton, South (Mr. Morris).
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  When describing the vitally important aspects of the programme nature of service 2 and its relation to service 1, the Bill uses the totally meaningless phrase "a suitable proportion", no fewer than four times. It uses the uninformative phrase "a proper balance" twice. We are told that service 2 will have a distinct character. That can be interpreted in various ways. After all, American television has a distinctive character.
  On the crucial question of the extent of the role to be played by independent producers on service 2, the Bill provides that they shall supply "a substantial proportion" of the programmes. What does that mean? For an interpretation of those and many other words in the Bill we must study the IBA's proposals. That leads to our major criticism of the Bill—the domination of the new channel by the programme companies at the expense of independent producers. The IBA estimates that, to start with, independent producers will provide only 35 per cent. of the programmes. So much for the phrase "a substantial proportion".
  A maximum of 75 per cent. of the programmes will be supplied by the five major ITV companies, the regional companies, ITN and foreign services. From the start the IBA is immediately totally dependent for the success of the channel upon these companies. It claims that that 75 per cent. could become smaller as time goes by, but that is hard to envisage. Once ITV companies have invested in expanding their facilities to provide new programmes, will they be able or willing to contract and give way to an increase in the strength and number of programmes from independent contractors? I very much doubt it.
  The essential prerequisite to supporting the Bill is total faith and almost blind confidence in the IBA. That the Home Secretary has in abundance. This faith and confidence is certainly lacking among many independent film producers. They are sceptical about the IBA's determination and capacity to encourage innovation and experiment in the form and content of programmes.
  The House cannot legislate for quality in programme making, but we have a duty to ensure that this measure is as specific and precise as possible on the key issue

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  of how the new channel will work. If we do not observe that duty, we may find ourselves with a fourth channel that not even the Government will want to watch.
  The Bill is totally silent on a second crucial issue—namely, the composition of the all important subsidiary company to be established by the IBA to control the new channel. The IBA states that four places on the board will go to the existing ITV companies. One reason given by the IBA for this is that the companies will provide the channel's finances. Will not this result in "He who pays the piper calls the tune", and could not the new channel become a system designed to support audience domination and the profitability of the ITV 1 contractors?
  The composition of the subsidiary—again, not mentioned in the Bill—will be all-important. The people on it should be selected on merit for the contribution that they can make to managerial problems. They should not be representatives of areas or special interest groups. Naturally, there are no details in the Bill—or outside the Bill for that matter—about the specific division of duties and powers between the IBA and its board. It is important that the Government should publish a document—preferably a statutory instrument—before the board goes any further. The articles of association of the new company will be vital to the success of the channel and in ensuring its independence of action from the mass audience philosophy of ITV.
  In practice, three major factors will give the ITV network companies de facto control of the new channel. The ITV companies will have the sole right to sell advertising time on the new channel. Together with ITN they will supply, at the start, three-quarters of the channel's programmes. They will have a cohesive block of four seats on the board. Once the companies have become dominant, the situation is unlikely to change at a later date.
  The ratings war now exists between the BBC and the ITV, but it will be aggravated by a fourth channel that will be determined—which it will be, in conjunction with ITV—to take 60 per cent. of the audience. That is IBA's stated aim. This limits innovation and risk among programme makers so as to appeal
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  to the popular demand of the moment, leading to a decline in the standards of British television. There is a case for an independent, separate channel that is uninvolved with the ratings war. Real television competition should be related to the qualities of the programmes rather than the advertising and ratings war. It should be achieved by broadening the base of television, rather than contracting it.
  In view of the genuine concern that the new channel will become merely the creature of the big ITV companies, we welcome the provision in the Bill for an annual report. It must be as full and comprehensive as possible. The influence of the companies can then be closely monitored. The report is an essential safeguard.
  It is also essential that the Government should tell the House the public expenditure implications of the Bill. Many hon. Members have raised the matter in their speeches. The Home Secretary gave no estimated figures about those public expenditure implications in his opening speech, although he is asking the House to accept the Bill. Everyone seems agreed that in the first year, and possibly the next few years, the cost of the new service will exceed the income. I ask the Minister to clarify that in his reply.
  The estimate of how much the channel will lose in its first year varies as to whether the estimate is made by the IBA or by advertising interests. The House needs to know the Government's estimate of the amount that the Treasury will lose during the first year and the early years of the channel's operation, due to the loss of the annual levy on the commercial television profits.
  The hon. Member for Skipton (Mr. Watson) has done his sums, and he arrives at the figure of £41 million as the net cost to the exchequer during the first year. The IBA has done its sums. The television companies have done their sums. It is time the Government told us the result of their sums. In a negative, indirect way the service will be a charge on the Exchequer. In view of the widespread concern about cuts in public expenditure across the social services field, we need to know whether £41 million is an accurate estimate. I ask the hon. and learned Gentleman to state in his reply whether he agrees with the recent state-

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  ment of Sir Dennis Forman, chairman of the service 2 policy working party of the Independent Television Companies Association when he said:
  "No starting date should be adhered to, regardless of the state of the industry's economy."
  We are told that the independent contractors need to find £70 million to finance the launching of the new channel in the autumn of 1982. If there is a choice between the alternatives, either to adjust the scale and nature of the channel, or to postpone its introduction, I trust that the Minister will reassure us that the channel will be postponed, rather than altering its scale and nature. The IBA has stated that it is important that the channel is not confined to a minority of the population, and that it must be a truly national service.
  My right hon. Friend the Member for Leeds, South and other hon. Members referred to independent local radio. The representatives of independent local radio are concerned because the new levy is being introduced at a stage when the independent local radio system is far from complete. The stations will have to face competition from the new channel, and possibly from national morning television. They are also concerned that the new levy will not be used for broadcasting purposes.
  Great changes are taking place, not only in the technology of broadcasting, but in the tastes of audiences and in the work of writers, directors and producers, particularly the younger new generation of people who work in television. Many of them have been strong in lobbying against the proposal in the Bill for a fourth television channel.
  This House should respond to the changes that are taking place and provide scope for them throughout the next decade and beyond. British broadcasting must not be allowed to remain static and fossilised, yet the Government have thrown away a tremendous opportunity, provided by a new channel, to reinvigorate our television and enrich our viewing.
  The Bill, together with the IBA's proposals, is a recipe for the effective control of the new channel by the ITV companies. The OBA offered fresh possibilities for experiment and new initiatives, and at the same time a channel genuinely independent from financial and aesthetic domination by either ITV or BBC.
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  I ask hon. Members to vote for the amendment and against the Bill.
  9.31 pm
  The Minister of State, Home Office (Mr. Leon Brittan): We have had an extremely interesting and wide-ranging debate. I should like now to draw some of the threads together as well as to amplify some of the points made by my right hon. Friend the Home Secretary and to deal with a number of other matters that he did not discuss in detail. What I shall not do is to deal with the Welsh matters, which have been dealt with by my hon. Friend the Under-Secretary of State for Wales, buttressed subsequently by my hon. Friend the Member for Brecon and Radnor (Mr. Hooson).
  Whatever disagreement there might be about the organising and financing of the channel, one of the remarkable features of the debate has been a very high degree of agreement about the sort of product that the House would wish to see put out on the fourth channel, whenever it comes. As my right hon. Friend pointed out, that was foreshadowed to a considerable extent by the Annan committee, and we share the conception of what the fourth channel should be that seems to be held by a large majority of those in the House.
  Where we differ from both Annan and our predecessors is in our assessment of the needs of such a channel in terms of organisation and finance. Quite bluntly, we simply do not believe that the open broadcasting authority envisaged by Annan and the previous Administration could ever have achieved financial viability. My hon. Friend the Member for Aldershot (Mr. Critchley) rightly pointed out that there was no enthusiasm whatever on the Opposition Benches for the concept of the open broadcasting authority. He did so with a wit that was not divorced from wisdom.
  It was only when the hon. Member for Halifax (Dr. Summerskill) spoke at the end of the debate that there was any degree of enthusiasm for the OBA. I contrast the hon. Lady's views and attitude with that of the hon. Member for Grimsby (Mr. Mitchell), who has considerable experience of these matters. He pointed out that, apart from the financial aspects of the matter, the disadvantages of the OBA would be that it would not

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  be complementary, in the sense that would be desirable if the standards and qualities that are widely sought in the House are to be achieved on the channel.
  It is our express and firm intention that the fourth channel, supervised by the IBA, should be financially self-supporting as soon as possible, in a way that the OBA could never be, and in due course financially profitable. I do not deny that in the first year or two it is unlikely that the advertising revenue attributable to the channel will be sufficient, of itself, to meet the channel's costs. That means, as my right hon. Friend said, that initially there will be a fall in the receipts from the ITV levy, but there will be no call for continuing Government subventions, such as the OBA would have required. The essential difference is that whereas with these proposals there is a reasonable prospect that within a comparatively short time they will be financially self-supporting and will not lose the Government any levy, we can be quite sure that, with the OBA proposals, there would be a continuing call for direct Government assistance indefinitely.
  Dr. Summerskill: What will be the estimated fall in the levy? Everyone but the Government has estimated it.
  Mr. Brittan: I was about to come to that point. The hon. Lady naturally referred to estimates of that kind, and I am about to give them, but before doing so I think it right to preface my remarks on that score by saying that the different estimates that have been given derive not from bad motives or vested interests but from the fact that there are so many uncertainties—
  Mr. Sheerman: Will the hon. and learned Gentleman give way?
  Mr. Brittan: No. I am answering the hon. Member for Halifax. There are so many uncertainties with regard to the economy generally, advertising, and so on, that any estimate must be approximate, and I propose to give the figures on that basis.
  It is perhaps convenient to do that in terms of the financial years. This is on the assumption that the fourth channel starts in 1982. In the financial year 1979–80, the costs incurred would be approximately £2 million for engineering workers,
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  and those would be met by the IBA from its reserves. There would be no revenue and no effect on the levy at all.
  In 1980–81 the costs incurred would, on the same approximate basis, be £3 million for engineering workers, and £1 million for the subsidiary. Again, there would be no revenue; again, those costs would be met by the IBA; and again there would be no effect on the levy.
  In 1981–82, the costs incurred would be approximately £15 million for engineering works, £20 million for programme preparation, and £1 million for the subsidiary. Again, there would be no revenue, because the programmes would not have started. The costs would be met by the IBA from reserves and borrowing and also to the tune of £18 million in subscriptions from the independent companies. The effect on the levy would again be difficult to speculate, but possibly about £18 million in that year.
  In 1982–83, the costs would be £15 million for engineering works, approximately £70 million for the programmes, and £1 million for the subsidiary. On the other hand, the revenue would be £40 million, representing five months of advertising if the channel were to open in November 1982. The costs would be met by the IBA from its reserves, borrowing and additional rentals from the ITV companies as well as £70 million in subscriptions from the ITV companies. That would be the year in which there would be the major effect on the levy, which again is difficult to speculate, but up to approximately £40 million.
  In 1983–84, on the other hand, the revenue would have gone up to £80 million. To compress the matter, the effect on the levy would probably be down to £15 million. From 1984 onwards, the revenue would be £80 million. It is estimated that there would be no net effect on the levy, and possibly an increase. Those are the best estimates that can be given at this stage. What they show—
  Mr. Sheerman rose—
  Mr. Brittan: No, I shall not give way for the moment. What they show is that of course there would be a net loss of levy during the peak years, as has been indicated by my right hon. Friend. But that would tail away and eventually cease being a cost to the Exchequer in

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  terms of loss of levy, whereas if the OBA were persisted with the cost to the Exchequer could continue indefinitely and be very substantial. [HON. MEMBERS: "Why?] I have given an estimate and no one else has given an estimate of any credibility to suggest that the OBA would be able to generate the revenue that would result and enable it to be run on a viable basis.
  That leads directly to the question of the starting date for the fourth channel.
  Mr. Sheerman: With due respect to the hon. and learned Member's hon. Friend, the Member for Skipton (Mr. Watson), we are not talking about monopoly money. We are talking about real money, the kind that people outside understand. I put it to the Home Secretary earlier this afternoon that the difference between the proposals for the OBA and his own proposals for putting this matter in the hands of the IBA is surely a question where public and private expenditure is nonsense. What the Government intend to do with their proposals is to introduce a tax on the consumer through the price that he has to pay on the goods that are covered by rubbishy advertising on the screen.
  Mr. Brittan: I do not accept for one moment that there is any foundation for that. If the hon. Gentleman seriously believes that there is no difference between a service that is paid for by direct public expenditure raised through the taxpayer and a service that is financed by advertising revenue, I am afraid that he and I simply do not see things in the same light.
  Mr. Sheerman: Yes. The Government screw the consumer honestly, instead of dishonestly.
  Mr. Brittan: As for the date of the opening of the fourth channel, we are convinced that it is right to take the opportunity in the Bill to make the necessary legislative provision for the fourth channel, but the House will notice that the Bill's provisions are enabling and do not impose a duty on the IBA to start the channel on a particular date. We are proceeding on a certain basis, but my right hon. Friend indicated that that does not necessarily mean that in all circumstances the channel will open on the date referred to.
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  I have taken note of the reservations about the date expressed by my hon. Friends the Members for Skipton (Mr. Watson), and Dorset, North (Mr. Baker), against which there is the enthusiasm of my hon. Friend the Member for Lewes (Mr. Rathbone) that the fourth channel should start as soon as possible.
  Mr. Watson rose—
  Mr. Brittan: As my right hon. Friend said, we hope that the IBA's plans to start the channel in November 1982 will come to fruition. We consider it essential that when the channel starts it does so with proper national coverage. The IBA's plans envisage a coverage, at the outset, of over 80 per cent. of the population of the United Kingdom; that population coverage in each of the ITV regions should exceed 70 per cent. and in Wales it should be in excess of 90 per cent.
  Figures such as these are acceptable to the Government.
  Mr. McWilliam rose—
  Mr. Brittan: I would like to finish this passage. Figures such as these are acceptable to the Government. If for any reason they are not attainable by November 1982—and we must not ignore the complexity of the engineering involved—we would wish to examine the starting date very carefully with the IBA and all the programme makers concerned. The Government do not want the fourth channel to start with the limited coverage and aims that characterised the start of BBC2. Again—
  Mr. Watson rose—
  Mr. Brittan: I will just finish this passage and then I will give way. While I have made clear that our particular concern now is with the coverage to be available when the channel starts, we will wish to be satisfied that sensible financial provision can be made from the outset. Again, we shall be in close touch with the IBA and the programme makers. Clearly, expenditure must be incurred before any advertising revenue is earned. The channel must be engineered, programmes made and prepared and so on. We should not want to wait too long before a return can be obtained on such an investment. So the question of the

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  actual date on which the channel will finally open must be left until these considerations are clarified.
  Mr. Watson: I am very grateful to my hon. and learned Friend for this further information about the timing and probable cost of the fourth channel, but will he confirm that for the two financial years 1981–82 and 1982–83 the cost to the Exchequer in lost IBA levy will be £58 million but that that figure needs to be augmented by lost corporation tax to the value of £11 million, making a total cost to the British taxpayer of almost £70 million?
  Mr. Brittan: No, I do not confirm those figures. The figures that I am able to confirm are those that I have already given.
  Mr. McWilliam: I want to refer back to the paragraph that the hon. and learned Gentleman insisted on finishing. Given the figures that he gave to my hon. Friend the Member for Halifax (Dr. Summerskill) and the suggestion that the hon. and learned Gentleman was looking for between 75 per cent. and 80 per cent. coverage, and given the investment costs to get that coverage, and the other qualifications that he put in that most important statement, what is the degree of confidence that the hon. and learned Gentleman has in introducing this channel?
  Mr. Brittan: I do not think that it is possible to talk in terms of percentages of degrees of confidence. I hope that I have been candid with the House in explaining the factors that will be borne in mind when considering the position.
  Mr. Sheerman rose—
  Mr. Brittan: I am not giving way to the hon. Gentleman again. He has made a speech already, and he has intervened, and the time has come to deal with some of the points raised by other hon. Members.
  Mr. Sheerman: Will the hon. and learned Gentleman give way?
  Mr. Brittan: I shall not give way. I think that the hon. Gentleman might consider the points made by other hon. Members, on both sides of the House, who would like to have them answered in my winding-up speech.
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  The question of advertising has been raised by many hon. Members, in particular by my hon. Friends the Members for Lewes, for Skipton and for Northampton, South (Mr. Morris). I fully accept and understand that there has been a considerable degree of unhappiness on the part of those in the advertising business about the way in which the ITV contractors have dealt with the question of advertising up to now. There have been a number of specific complaints. Both from the sources from which they come and from the details of those complaints, I know that the points that have been raised are serious.
  It is not for me to go into the rights and wrongs, because obviously there is another side to the complaints. All that I will say is that we very much welcome the approach that has recently been made by the IBA to the Incorporated Society of British Advertisers and the Institute of Practitioners in Advertising with a view to the setting up of a liason committee on which they and the Independent Television Companies Association would be represented. This committee will be able to consider matters of principle relating to commercial relationships with a view to improving liason and communications between advertisers' agencies and ITV programme contractors, examining ways in which outstanding differences might be resolved and giving any guidance and advice that it may consider helpful. I hope that a committee of this kind can be set up and that it will succeed in its aim of improving relations between the buyers and sellers of advertising.
  I am not standing at this Dispatch Box and saying that there is no problem. I accept that there is a problem. But I hope, equally, that it will be accepted that these steps amount to a constructive attempt to deal with the real problem that has arisen.
  Having said that, however, I agree with the point made by my hon. Friend the Member for Aldershot in accepting the fundamental view of the Government that the claims of competition, concerning advertising, cannot be paramount with regard to the running of the channel, and I think that we are justified in fearing that the result of competitive selling of advertising as between ITV 1 and the

  161
  fourth channel would be harmful to the type of channel that we all envisage.
  Mr. Rathbone: No, no; not true.
  Mr. Brittan: I accept that my hon. Friend does not believe that. However, I hope that his concern can be met by the committee to which I have referred.
  I now turn to the most substantial criticism that has been made of the Bill by those who are fundamentally sympathetic to our aims in putting it forward. The most substantial criticism put forward is that the Bill is not sufficiently detailed, that it does not spell out in full what is meant by "suitable proportions", "distinctive character", "substantial proportions" and so on. Some of these matters are by their very nature incapable of definition in a statute.
  Mr. Sheerman: Why introduce the Bill?
  Mr. Brittan: Because I do not believe that if one is talking about a distinctive type of servce any draftsman or Minister is capable of putting into binding, proscriptive legislative words a description of the type of programmes that would be regarded as acceptable and those that would not.
  Mr. Whitehead rose—
  Mr. Brittan: Perhaps I can finish this point, and then I shall certainly give way to the hon. Gentleman, who, as one would expect, put forward that viewpoint. As I said, some of the requirements are not inherently capable of being put in legislative form. But there are others that are. Plainly, it would be possible to lay down a specific figure with regard to a proportion of programmes from a particular source. It would be possible to lay down a specific percentage as to the type of programmes of one character or another.
  Here the objection is not that it is impossible to do so; the objection is that it would be undesirable to do so. For example, we all want the independent producers to have a fair crack of the whip, but I do not believe that anyone, even the hon. Member for Derby, North (Mr. Whitehead), can stand up and say that those independent producers—
  Mr. Whitehead: Try me.
  Mr. Brittan: The hon. Gentleman will have a chance to stand up in a second. But I do not believe that he will be able to say that the independent producers are capable of producing X per cent. of the output of the channel, still less to say that whatever percentage is fixed here and now it will be appropriate and desirable, not only in 1982, but also in 1983, 1984 and 1985. To import into the Bill a provision of that degree of specificity would be to ascribe to this House a wisdom and a rigidity that would be wholly undesirable.
  Mr. Whitehead: I can now make my own intervention in my own way. Does not the hon. and learned Gentleman realise that the essence of regulation within broadcasting in this country has in the past needed the provision of quotas and percentages, for example, in the amount of advertising shown, the amount of American material that can be transmitted, and so on? Therefore, the point about safeguarding the independents is that this new channel is, at least predominantly, supposed to be for them. If the quota cannot be set out at the earliest stage, surely some kind of quota should be built into the legislation over a given period of years—say five years.
  Mr. Brittan: With great respect to the hon. Gentleman, whose interest in the matter is well known throughout the House, I cannot help feeling that he has asserted the case rather than proved it. I do not accept that the way to achieve the sort of safeguards that he wants is to write in a quota.
  It may be that if one simply set up an Act of Parliament, and nothing else happened after that, the only way to achieve what the hon. Gentleman wants would be to put in a quota, with all the rigidities that that would involve. But it is not as simple as that, because the IBA polices the whole system. Therefore, one is presented with a completely different picture, because if the IBA polices the system, its powers are substantial, and, as my hon. Friend the Member for Howden (Sir P. Bryan) pointed out, the IBA has not hesitated to use them.
  What is more, those powers are substantially buttressed in the Bill by the provision of reports. The report that is required under clause 7 is that the IBA should include in its annual reports

  163
  various items of information, including the following: first, a general description of the programmes broadcast both on the fourth channel and on ITV, with particular reference to news and educational programmes; secondly an account of how the fourth channel programmes differed from those on ITV; thirdly an account of the way in which the IBA has encouraged innovation and experiment; and, finally, a description of the sources from which programmes have been obtained. That last requirement will enable everybody to see quite clearly how far the authority or its subsidiary has succeeded in obtaining programmes from independent producers.
  The record of the IBA in securing the objectives set out in the Bill will be subject to the public scrutiny that is rightly demanded. That is a considerable safeguard, and one that is greater than the insertion of artificial quotas and provisions—[An HON. MEMBER: "After the event."] I heard a voice from the Opposition Benches saying that it was after the event. It is not. It may be after the event in terms of the year in respect of which the report is published, but the service is a continuing one. If the public feeling, which will no doubt be expressed in this House as elsewhere, is that the record displayed in the IBA's account of its activities is unsatisfactory, the clamour and demand for change will be overwhelming.
  It is a fallacious idea that we are simply washing our hands of the matter and handing over a vague and impotent instrument to an IBA that will be hesitant to use its powers to achieve the television that this House requires. Hon. Gentlemen are being over-anxious and demanding insertion into an Act of detailed, binding provisions that would be wholly out of character with television legislation. The specific provisions of the Bill—for example, the requirements and obligations with regard to education, are substantial.
  Mr. Sheerman: On a point of order, Mr. Deputy Speaker. The hon. and learned Gentleman should be replying to the debate, but he is reading from a typed Civil Service brief.
  Mr. Deputy Speaker (Mr. Bernard Weatherill): The hon. Member for Huddersfield, East (Mr. Sheerman) knows perfectly that that is not a point of order.
  Mr. Brittan: Quite apart from the general provisions enabling the IBA to police the system, there are a number of specific and important provisions. I referred to education. My hon. Friend the Member for Oxford (Mr. Patten) suggested that a specific provision should be put in with regard to religion. That will be considered in Committee. There are a number of matters that we should like to see dealt with in the details of the programmes as they are developed but that are not necessarily appropriate for inclusion in the Bill.
  The Opposition Front Bench complained that the structure of the subsidiary company was not set out in the Bill. It is not, but there is nothing in the least secretive or uncertain about it. The IBA has published its proposals, which have been frequently quoted in the debate. The House is legislating not blindly but with a firm knowledge of the type of subsidiary that will be set up and of the board that will control it. We should also bear in mind that in policing the operations of its subsidiary the IBA will be approving programme schedules and ensuring co-ordination, so that the two channels it is involved with are complementary.
  I regard those safeguards as real. I regard the powers of the IBA as real. I regard these proposals as providing a realistic proposition for the House to support them.
  Question put, That the amendment be made:—
  The House divided: Ayes 139, Noes 177.

  Division No. 188]

  AYES

  [10 pm

  Abse, Leo

  Bidwell, Sydney

  Clark, Dr David (South Shields)

  Allaun, Frank

  Booth, Rt Hon Albert

  Cocks, Rt Hon Michael (Bristol S)

  Alton, David

  Bray, Dr Jeremy

  Coleman, Donald

  Anderson, Donald

  Brown, Hugh D. (Provan)

  Conlan, Bernard

  Archer, Rt Hon Peter

  Callaghan, Rt Hon J. (Cardiff SE)

  Craigen, J. M. (Glasgow, Maryhill)

  Atkinson, Norman (H'gey, Tott'ham)

  Callaghan, Jim (Middleton & P)

  Cryer, Bob

  Bagier, Gordon A. T.

  Campbell-Savours, Dale

  Cunliffe, Lawrence

  Benn, Rt Hon Anthony Wedgwood

  Carter-Jones, Lewis

  Cunningham, George (Islington S)

  Bennett, Andrew (Stockport N)

  Cartwright, John

  Cunningham, Dr John (Whitehaven)

  Davidson, Arthur

  Hughes, Robert (Aberdeen North)

  Prescott, John

  Davies, Rt Hon Denzil (Llanelli)

  Hughes, Roy (Newport)

  Race, Reg

  Davies, Ifor (Gower)

  Jay, Rt Hon Douglas

  Radice, Glles

  Davis, Terry (B'rm'ham, Stechford)

  John, Brynmor

  Rees, Rt Hon Merlyn (Leeds South)

  Dean, Joseph (Leeds West)

  Jones, Rt Hon Alec (Rhondda)

  Roberts, Albert (Normanton)

  Dixon, Donald

  Jones, Barry (East Flint)

  Roberts, Ernest (Hackney North)

  Dobson, Frank

  Kerr, Russell

  Rooker, J. W.

  Dormand, Jack

  Kilroy-Silk, Robert

  Ross, Ernest (Dundee West)

  Dubs, Alfred

  Leighton, Ronald

  Ross, Stephen (Isle of Wight)

  Dunwoody, Mrs Gwyneth

  Lewis, Arthur (Newham North West)

  Sever, John

  Eadie, Alex

  Lewis, Ron (Carlisle)

  Sheerman, Barry

  Eastham, Ken

  Litherland, Robert

  Silverman, Julius

  Edwards, Robert (Wolv SE)

  Lofthouse, Geoffrey

  Snape, peter

  Ellis, Raymond (NE Derbyshire)

  Lyon, Alexander (York)

  Spearing, Nigel

  Ellis, Tom (Wrexham)

  Lyons, Edward (Bradford West)

  Spriggs, Leslie

  English, Michael

  McCartney, Hugh

  Steel, Rt Hon David

  Evans, loan (Aberdare)

  McDonald, Dr Oonagh

  Stoddart, David

  Evans, John (Newton)

  McElhone, Frank

  Stott, Roger

  Field, Frank

  McKay, Allen (Penistone)

  Summerskill, Hon Dr Shirley

  Flannery, Martin

  McKelvey, William

  Thomas, Dafydd (Merioneth)

  Foot, Rt Hon Michael

  MacKenzie, Rt Hon Gregor

  Thomas, Dr Roger (Carmarthen)

  Foster, Derek

  Maclennan, Robert

  Urwin, Rt Hon Tom

  Freud, Clement

  McMahon, Andrew

  Wainwright, Edwin (Dearne Valley)

  George, Bruce

  Marks, Kenneth

  Wainwright, Richard (Colne Valley)

  Golding, John

  Marshall, Dr Edmund (Goole)

  Watkins, David

  Graham, Ted

  Mason, Rt Hon Roy

  Welsh, Michael

  Grant, George (Morpeth)

  Maynard, Miss Joan

  White, Frank R. (Bury & Radcliffe)

  Grant, John (Islington C)

  Millan, Rt Hon Bruce

  Whitehead, Phillip

  Grimond, Rt Hon J.

  Miller, Dr M. S. (East Kilbride)

  Wigley, Dafydd

  Hamilton, James (Bothwell)

  Morris, Rt Hon Charles (Openshaw)

  Williams, Rt Hon Alan (Swansea W)

  Hamilton, W. W. (Central Fife)

  Morris, Rt Hon John (Aberavon)

  Wilson, William (Coventry SE)

  Hardy, Peter

  Newens, Stanley

  Winnick, David

  Harrison, Rt Hon Walter

  Ogden, Eric

  Woodall, Alec

  Haynes, Frank

  O'Neill, Martin

  Young, David (Bolton East)

  Helter, Eric S.

  Palmer, Arthur

  Hogg, Norman (E Dunbartonshire)

  Parker, John

  TELLERS FOR THE AYES:

  Hooley, Frank

  Parry, Robert

  Mr. George Morton and

  Horam, John

  Pavitt, Laurie

  Mr. James Tina.

  Howells, Geraint

  Powell, Raymond (Ogmore)

  NOES

  Alexander, Richard

  Edwards, Rt Hon N. (Pembroke)

  Lawson, Nigel

  Aspinwall, Jack

  Eggar, Timothy

  Le Marchant, Spencer

  Atkins, Robert (Preston North)

  Eyre, Reginald

  Lennox-Boyd, Hon Mark

  Baker, Nicholas (North Dorset)

  Fairgrieve, Russell

  Lester, Jim (Beeston)

  Banks, Robert

  Faith, Mrs Sheila

  Lloyd, Peter (Fareham)

  Beaumont-Dark, Anthony

  Fenner, Mrs Peggy

  Luce, Richard

  Bendall, Vivian

  Fisher, Sir Nigel

  Macfarlane, Neil

  Bennett, Sir Frederic (Torbay)

  Fletcher-Cooke, Charles

  MacGregor, John

  Benyon, W. (Buckingham)

  Fowler, Rt Hon Norman

  McNair-Wilson, Michael (Newbury)

  Berry, Hon Anthony

  Gardiner, George (Reigate)

  Madel, David

  Best, Keith

  Garel-Jones, Tristan

  Marland, Paul

  Bevan, David Gilroy

  Glyn, Dr Alan

  Marlow, Tony

  Biffen, Rt Hon John

  Goodhew, Victor

  Marten, Neil (Banbury)

  Blackburn, John

  Gorst, John

  Mates, Michael

  Blaker, Peter

  Gow, Ian

  Mather, Carol

  Braine, Sir Bernard

  Gray, Hamish

  Maude, Rt Hon Angus

  Bright, Graham

  Griffiths, Peter (Portsmouth N)

  Mawby, Ray

  Brinton, Tim

  Grist, Ian

  Maxwell-Hyslop, Robin

  Brittan, Leon

  Grylls, Michael

  Mellor, David

  Brocklebank-Fowler, Christopher

  Gummer, John Selwyn

  Meyer, Sir Anthony

  Brooke, Hon Peter

  Hamilton, Michael (Salisbury)

  Miller, Hal (Bromsgrove & Redditch)

  Brotherton, Michael

  Haselhurst, Alan

  Mills, Iain (Meriden)

  Brown, Michael (Brigg & Sc'thorpe)

  Havers, Rt Hon Sir Michael

  Moate, Roger

  Bruce-Gardlyne, John

  Hawkins, Paul

  Morris, Michael (Northampton, Sth)

  Bryan, Sir Paul

  Hawksley, Warren

  Morrison, Hon Charles (Devizes)

  Buck, Antony

  Hayhoe, Barney

  Morrison, Hon Peter (City of Chester)

  Bulmer, Esmond

  Heddle, John

  Murphy, Christopher

  Cadbury, Jocelyn

  Hicks, Robert

  Myles, David

  Carlisle, John (Luton West)

  Higgins, Rt Hon Terence L.

  Neale, Gerrard

  Carlisle, Kenneth (Lincoln)

  Hogg, Hon Douglas (Grantham)

  Needham, Richard

  Chalker, Mrs Lynda

  Hooson, Tom

  Nelson, Anthony

  Chapman, Sydney

  Howell, Ralph (North Norfolk)

  Newton, Tony

  Colvin, Michael

  Hunt, David (Wirral)

  Normanton, Tom

  Cope, John

  Hurd, Hon Douglas

  Nott, Rt Hon John

  Cormack, Patrick

  Jessel, Toby

  Onslow, Cranley

  Cranborne, Viscount

  Johnson Smith, Geoffrey

  Page, Rt Hon Sir R. Graham

  Critchley, Julian

  Jopling, Rt Hon Michael

  Parris, Matthew

  Dorrell, Stephen

  Kellett-Bowman, Mrs Elaine

  Patten, Christopher (Bath)

  Douglas-Hamilton, Lord James

  Kershaw, Anthony

  Patten, John (Oxford)

  Dover, Denshore

  Knight, Mrs Jill

  Pattie, Geoffrey

  Dunn, Robert (Dartlord)

  Lang, Ian

  Percival, Sir Ian

  Dykes, Hugh

  Langford-Holt, Sir John

  Porter, George

  Eden, Rt Hon Sir John

  Lawrence, Ivan

  Price, David (Eastleigh)

  166

  167

  Proctor, K. Harvey

  Sims, Roger

  Walker, Bill (Perth & E Perthshire

  Raison, Timothy

  Speller, Tony

  Walker-Smith, Rt Hon Sir Derek

  Rathbone, Tim

  Spence, John

  Waller, Gary

  Rees, Peter (Dover and Deal)

  Spicer, Jim (West Dorset)

  Watson, John

  Rees-Davies, W. R.

  Spicer, Michael (S Worcestershire)

  Wells, John (Maidstone)

  Renton, Tim

  Sproat, Iain

  Wells, Bowen (Hert'rd & Stev'nage

  Rhodes James, Robert

  Squire, Robin

  Wheeler, John

  Rhys Williams, Sir Brandon

  Stainton, Keith

  Whltelaw, Rt Hon William

  Ridley, Hon Nicholas

  Stewart, John (East Renfrewshire)

  Wickenden, Keith

  Roberts, Wyn (Conway)

  Stradling Thomas, J.

  Wiggin, Jerry

  Rossi, Hugh

  Thatcher, Rt Hon Mrs Margaret

  Williams, Delwyn (Montgomery)

  Rost, Peter

  Thompson, Donald

  Winterton, Nicholas

  Royle, Sir Anthony

  Thome, Neil (Ilford South)

  Wolfson, Mark

  Sainsbury, Hon Timothy

  Townsend, Cyril D. (Bexleyheath)

  Shaw, Michael (Scarborough)

  Trippier, David

  TELLERS FOR THE NOES:

  Shelton, William (Streatham)

  Viggers, peter

  Mr. Robert Boscawen and

  Shepherd, Richard (Aldridge-Br'hills)

  Waddington, David

  Mr. John Wakeham.

  Silvester, Fred

  Question accordingly negatived.
  Main Question put forthwith pursuant to Standing Order No. 39 (Amendment on Second or Third reading), and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Standing Commitee pursuant to Standing Order No. 40 (Committal of Bills).

  BROADCASTING BILL

    BUSINESS OF THE HOUSE
    Ordered,
    That the Motion relating to Ways and Means may be proceeded with at this day's Sitting, though opposed, until any hour.—[Lord James Douglas-Hamilton.]

BROADCASTING [MONEY]
Queen's Recommendation having been signified—
Motion made, and Question put,
That, for the purposes of any Act of the present Session to amend and supplement the Independent Broadcasting Act 1973, to establish a Broadcasting Complaints Commission and to require consultation between the British Broadcasting Corporation and the Independent Broadcasting Authority about the scheduling of
television programmes in Welsh, it is expedient to authorise—

(a) the payment out of money provided by Parliament of any expenses incurred by the Secretary of State for the purposes of the said Act of the present Session; and

(b) any increase attributable to the provisions of that Act in the sums payable under the said Act of 1973 out of money so provided or out of the Consolidated Fund.—[Lord James Douglas-Hamilton.]

The House divided: Ayes 168, Noes 16.

Division No. 189]

AYES

[10.10 pm

Alexander, Richard

Gummer, John Selwyn

Page, Rt Hon Sir R. Graham

Aspinwall, Jack

Hamilton, Michael (Salisbury)

Parris, Matthew

Baker, Nicholas (North Dorset)

Haselhurst, Alan

Patten, Christopher (Bath)

Banks, Robert

Havers, Rt Hon Sir Michael

Patten, John (Oxford)

Beaumont-Dark, Anthony

Hawkins, Paul

Pattie, Geoffrey

Bendall, Vivian

Hawksley, Warren

Percival, Sir Ian

Bennett, Sir Frederic (Torbay)

Hayhoe, Barney

Porter, George

Benyon, W. (Buckingham)

Heddle, John

Price, David (Eastleigh)

Berry, Hon Anthony

Hicks, Robert

Proctor, K. Harvey

Best, Keith

Hogg, Hon Douglas (Grantham)

Raison, Timothy

Biffen, Rt Hon John

Hooson, Tom

Rathbone, Tim

Blackburn, John

Howell, Ralph (North Norfolk)

Rees, Peter (Dover and Deal)

Blaker, Peter

Hunt, David (Wirral)

Rees-Davies, W. R.

Boscawen, Hon Robert

Hurd, Hon Douglas

Renton, Tim

Braine, Sir Bernard

Jessel, Toby

Rhodes James, Robert

Bright, Graham

Johnson Smith, Geoffrey

Rhys Williams, Sir Brandon

Brinton, Tim

Jopling, Rt Hon Michael

Ridley, Hon Nicholas

Brittan, Leon

Kellett-Bowman, Mrs Elaine

Roberts, Wyn (Conway)

Brocklebank-Fowler, Christopher

Kershaw, Anthony

Rossi, Hugh

Brooke, Hon Peter

Knight, Mrs Jill

Royle, Sir Anthony

Brotherton, Michael

Lang, Ian

Sainsbury, Hon Timothy

Brown, Michael (Brigg & Sc'thorpe)

Langford-Holt, Sir John

Shaw, Michael (Scarborough)

Bruce-Gardyne, John

Lawrence, Ivan

Shelton, William (Streatham)

Bryan, Sir Paul

Lawson, Nigel

Shepherd, Richard (Aldridge-Br'hills)

Buck, Antony

Le Marchant, Spencer

Silvester, Fred

Bulmer, Esmond

Lennox-Boyd, Hon Mark

Sims, Roger

Cadbury, Jocelyn

Lester, Jim (Beeston)

Speller, Tony

Carlisle, John (Luton West)

Lloyd, Peter (Fareham)

Spicer, Jim (West Dorset)

Carlisle, Kenneth (Lincoln)

Luce, Richard

Spicer, Michael (S Worcestershire)

Chalker, Mrs Lynda

Macfarlane, Neil

Sproat, Iain

Chapman, Sydney

McNair-Wilson, Michael (Newbury)

Squire, Robin

Colvin, Michael

Madel, David

Stainton, Keith

Cope, John

Marland, Paul

Stewart, John (East Renfrewshire)

Cormack, Patrick

Marlow, Tony

Stradling Thomas, J.

Cranborne, Viscount

Marten, Neil (Banbury)

Thatcher, Rt Hon Mrs Margaret

Dorrell, Stephen

Mates, Michael

Thompson, Donald

Dover, Denshore

Mather, Carol

Thorne, Neil (Ilford South)

Dunn, Robert (Dartford)

Maude, Rt Hon Angus

Townsend, Cyril D. (Bexleyheath)

Dykes, Hugh

Mawby, Ray

Trippier, David

Edwards, Rt Hon N. (Pembroke)

Maxwell-Hyslop, Robin

Viggers, peter

Eggar, Timothy

Mellor, David

Waddington, David

Eyre, Reginald

Meyer, Sir Anthony

Wakeham, John

Fairgrieve, Russell

Miller, Hal (Bromsgrove & Fedditch)

Walker, Bill (Perth & E Perthshire)

Faith, Mrs Sheila

Mills, Iain (Meriden)

Walker-Smith, Rt Hon Sir Derek

Fenner, Mrs Peggy

Moate, Roger

Waller, Gary

Fisher, Sir Nigel

Morris, Michael (Northampton, Sth)

Watson, John

Fletcher-Cooke, Charles

Morrison, Hon Charles (Devizes)

Wells, John (Maidstone)

Fowler, Rt Hon Norman

Morrison, Hon Peter (City of Chester)

Wells, Bowen (Hert'rd & Stev'nage)

Gardiner, George (Reigate)

Murphy, Christopher

Wheeler, John

Garel-Jones, Tristan

Myles, David

Whitelaw, Rt Hon William

Glyn, Dr Alan

Neale, Gerrard

Wickenden, Keith

Goodhew, Victor

Needham, Richard

Wiggin, Jerry

Gorst, John

Nelson, Anthony

Winterton, Nicholas

Gow, Ian

Newton, Tony

Gray, Hamish

Normanton, Tom

TELLERS FOR THE AYES:

Griffiths, Peter (Portsmouth N)

Nott, Rt Hon John

Mr. John MacGregor and

Grist, Ian

Onslow, Cranley

Lord James Douglas-Hamilton.

Grylls, Michael

NOES

Alton, David

Grimond, Rt Hon J.

Steel, Rt Hon David

Anderson, Donald

Howells, Geraint

White, Frank R. (Bury & Radcliffe)

Bennett, Andrew (Stockport N)

Parry, Robert

Cryer, Bob

Pavitt, Laurie

TELLERS FOR THE NOES:

English, Michael

Roberts, Ernest (Hackney North)

Mr. Clement Freud and

Flannery, Martin

Ross, Stephen (Isle of Wight)

Mr. D. E. Thomas.

George, Bruce

Sheerman, Barry

Question accordingly agreed to.

BROADCASTING [MONEY]
  WAYS AND MEANS

    BROADCASTING
    Resolved,
    That it is expedient to authorise the inclusion, in any Act of the present Session to amend and supplement the Independent Broadcasting Authority Act 1973 and to establish a Broadcasting Complaints Commission, of—

    (a) provisions authorising or requiring the Independent Broadcasting Authority to con-
    172
    tract with local sound programme contractors for payments to the Authority the amount and nature of which is determined by or under the said Act of 1973 as amended and supplemented by the said Act of the present Session, and provision for any part of those payments to be paid, directly or indirectly, into the Consolidated Fund;

    (b) provisions for raising from programme contractors contributions towards the expenses of that Commission, and provision for those payments to be paid, directly or indirectly, into the Consolidated Fund; and

    (c) provisions requiring the payment of any other sums into the Consolidated Fund.—[Mr. Whitelaw.]

DOUBLE TAXATION RELIEF (UNITED STATES OF AMERICA)
10.23 pm
The Minister of State, Treasury (Mr. Peter Rees): I beg to move,
That an humble Address be presented to Her Majesty, praying that on the ratification by the Government of the United States of America of the Convention and Protocols set out in the Schedule to the draft Order entitled the Double Taxation Relief (Taxes on Income) (The United States of America) Order 1980, which draft was laid before this House on 31 January, an Order be made in the form of that draft.
Tonight the House returns for the third time to the double taxation convention with the United States and the three protocols. For technical reasons they are embodied in a new draft order, but in substance they are precisely the same. They are designed to supersede the convention with the United States which was entered into in 1945. With the lapse of the years there is a clear case for adjustment of the fiscal take between the two countries and of the rights and reliefs available to taxpayers of both countries.
The convention and the three protocols were negotiated with the federal authorities by the previous Administration. I make no point on that. I am not pretending that this Administration could have done any better or would have done any worse than their predecessors.
The convention was approved by the House after a debate on 12 January 1977. The principal issue debated involved the fiscal reliefs available to the American wives of United Kingdom taxpayers. A notable contribution was made by my hon. Friend the Member for Horsham and Crawley (Mr. Hordern), who mentioned that and article 9(4), which is the basis of tonight's debate.
In deference to the views expressed on that occasion a second protocol was negotiated. The right hon. Member for Llanelli (Mr. Davies) can take credit for that. That adjusted, so far as was possible, the position of American wives who might have been domiciled outside Britain had it not been for a marriage at an earlier stage in Britain's legislative history. On that occasion the unitary system of taxation, which was covered by article 9(4), was mentioned, but not in great depth. I hope that the House will forgive me if I refer to that tonight.
174
The general principle adopted by Britain and by other countries that have adopted the OECD model of double taxation is that profits should be allocated between the various companies of a group on what is known as an arm's-length basis. An alternative approach is adopted by some countries called the unitary or combined reporting system. Under that, broadly speaking, one amalgamates the profits of a whole group and allocates them on an arbitrary basis between the various subsidiaries so that the country in which the subsidiary operates receives what it regards as a fair tax but the group may not be so satisfied with it.
That principle has not been generally approved by those countries that adhere to the OECD model and certainly not by Britain. It has not been approved by the federal authorities in the United States. In order to cover that precise point, article 9(4) was inserted in the original double tax convention that was approved in January 1977.
Article 9(4) then prevented either the federal authorities of the United States, any state in the United States, or the United Kingdom Government, from applying the unitary or combined reporting system to any group or company resident or emanating from the other country. That was satisfactory, although I emphasise that it was not by any means the only or most important provision of the double tax convention. A whole range of other provisions were examined and debated in January 1977.
Matters progressed thereafter. In 1978, when the convention was considered by the Senate Foreign Affairs Committee—since it was considered to be an aspect of United States foreign affairs—after a keen debate a reservation was entered on the basis that article 9(4), in so far as it applied to individual states, constituted a potential infringement by the Federal authorities of states' rights. On that basis, rapidly it became apparent that the necessary two-thirds majority would not be available in the full Senate to approve the convention.
Like the last Administration, we have a certain distaste for the unitary system; on technical grounds because it does not comply with the OECD model and, more specifically, because it is an arbitrary method of arriving at the tax liability of

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subsidiaries operating in the countries which choose to apply that system. The compliance cost can also be considerable.
I take an example. Let us suppose that there is a group of companies, the parent company of which is based in the United Kingdom and one of the subsidiaries operates in California. I cite California because that is one of the principal states in the United States that operate the unitary system. To have to compute the whole of the group's profits on a Californian basis and then to make an allocation on a rather arbitrary basis to the Californian subsidiaries yields is, we feel, with all respect to the Californian franchise tax board, a rather arbitrary and capricious measure of profits.
Mr. Geoffrey Johnson Smith: With all respect to my hon. and learned Friend, why offer any respect? It is international robbery.
Mr. Rees: I know that there are strong feelings. They exist, possibly, on both sides of the House, but they are certainly present on the Government side. However, we must treat with a certain circumspection and delicacy the affairs of an individual state of a friendly nation. I shall demonstrate clearly that I have indicated what I conceive to be the feelings of the House, and certainly those of British industry, to the Californian franchise tax board. I was privileged to go to California in September 1979.
The unitary system is applied with any rigour only in three states of the United States, namely, Alaska, Oregon and California. There are not too many complaints by British companies operating in Alaska and Oregon. Of course, there are not many British companies operating in Oregon. In California there has been considerable concern. Many representations have been made by United Kingdom subsidiaries operating there. The matter has been taken up both in Washington and in Sacramento. I pay tribute to my right hon. Friend the Member for Crosby (Sir G. Page), who has paid a visit to Sacramento, and to the efforts of the CBI and individual companies which recently have been making representations to Sacramento and have been taking a certain part in legislation which is currently before the Californian legislature.
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In consequence of the reservations entered into by the United States Senate, a third protocol was negotiated amending article 9(4). It made it clear that neither the United States federal authorities nor the United Kingdom Government would be in a position to impose the unitary system on any company based in one country but operating in the other country. However, it removed the provision that made article 9(4) applicable to individual states of the United States.
It was not possible for the House to consider the third protocol prior to the general election. The first moment that it proved practicable for the House to consider it was when clause 16 of the second Finance Bill of the summer of 1979 appeared for debate in July. I see behind me many of my hon. Friends who contributed to the debate in July.
As I indicated to the House in July, we were in no hurry to force through the convention. However, we felt it necessary to prepare the ground in case the House should feel it appropriate to approve the convention. I gave an undertaking that I would go to the United States in the autumn to sound out the position with the federal authorities in Washington and with the Californian state authorities in Sacramento, which I duly did.
After exhaustive consultations in Washington with all those who take an interest in the matter—with the chairman of the Senate Finance Committee, with Congress's Ways and Means Committee, with Senator Mathias, who has a Bill on the stocks to prevent the spread of the unitary system, and with Representative Conable, in the lower House, who has a similar bill—I reached certain conclusions that may not accord entirely with those of my right hon. and hon. Friends, especially my right hon. Friend the Member for Crosby and my hon. Friend the Member for Surrey, North-West (Mr. Grylls), who have visited the United States along with other of my right hon. and hon. Friends. I dare say that certain Opposition Members have made the trip to take their own soundings. I present my conclusions as my personal conclusions. I do not wish to be dogmatic.
My conclusion is that there is little chance of legislation in the Senate or in Congress on Capitol Hill—at any rate at this side of the presidential election—to

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rule out the spread or to preclude the imposition of the unitary system in the United States by legislative action. It is a delicate constitutional issue—not simply a fiscal matter—touching on states' rights. One has to approach those internal domestic constitutional matters with a certain circumspection.
It was also pressed upon me that it might be possible to circumvent the Senate's reservation by Executive action. I have talked with members of the Executive in the United States, with the federal authorities, and in particular with Under-Secretary Lubick. I reached the conclusion that Executive action was out of the question, because in a politically sensitive year in America it is unlikely that the Executive would want to circumvent the legislature. I am sure that my right hon. and hon. Friends can see an analogy here. We would be equally sensitive if the Executive were to attempt to bypass this House on a constitutional matter. I therefore report to the House, with regret, that we cannot expect action, at least in the short run, at the centre in Washington.
It was necessary to consider how far litigation might limit the rights of individual states to impose the unitary system. I am sure that my right hon. and hon. Friends who follow these matters closely will have in mind the case of Japan Lines, in the county of Los Angeles. The best advice that we received was that it would be extremely unlikely that there would be a case so exactly in point that it would be held by the Supreme Court that the unitary system was unconstitutional.
We then had to consider whether a further delay by the Government in the ratification of the convention would materially affect the prospects in California or Washington. I did not form that impression, nor do I believe that in the long run it will be possible to conduct relations between Britain and the United States, or between individual taxpayers on cither side of the Atlantic, without a more up-to-date double taxation convention.
Although California is the seat of the troubles—it is the state where there is the greatest measure of British investment and where the unitary system bites hardest—it does not only bite on subsidiaries of British groups. There is a
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considerable Japanese and other foreign investment in California. California is sensitive to the effects of the imposition of the unitary system on foreign investment. A Bill is currently being promoted in the Californian legislature by Representative Floyd Mori, which is making progress. It seems possible, paradoxically, that the unitary system may be outlawed for foreign companies that are not in the energy field. It is not for me to speculate how far that measure will go, or in what form it is tied up with certain measures of Mr. Howard Jarvis—who is perhaps known to the House in a different context.
My conclusion is that although it is important to convey across the Atlantic our misgivings, reservations and doubts about the unitary system, we would be unwise to chart our legislative course on the progress of legislation in America.
I emphasise that strong representations have been made not only by myself but by my right hon. Friend, by the CBI and various other individual companies, and by companies in other countries.
Mr. Tim Rathbone: Will my hon. and learned Friend confirm that part of that pressure could emanate, and has emanated, from companies that are seriously considering withdrawing from the Californian market because of the threat of taxation—to the detriment of the economy of California?
Mr. Rees: I absolutely take my hon. Friend's point. It would not, of course, be appropriate for me to make their case to the Californian authorities. But there was an open hearing on the Hughes/Mori Bill in Los Angeles in November, and strong representations were made to that effect by various British companies and by the CBI, which played a prominent role. I have no doubt that when my right hon. Friend paid his visits subsequently he made the same point. Indeed, I am sure that exactly the same point has been made by Japanese companies, but again it would not be appropriate for me to make their case here tonight.
The only point that I am trying to convey to the House is that we have not been supine on this side of the Atlantic. I hope the House will accept that the Administration have not been supine on the point. We have made the strongest

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possible representations in Washington and in Sacramento.
Returning to the double taxation convention, I emphasise to the House that although latterly and rightly the question of article 9(4) has assumed prominence, a wide range of other matters has been covered by the convention. These were very thoroughly canvassed and debated. On the basis of that debate, the House gave its approval three years ago, in January 1977.
The considered view of the Administration, which I give to the House tonight, is that even without this amendment to article 9(4) there is a very fair balance between the interests of the United States and the interests of this country—and between the taxpayers of the United States and the taxpayers of this country—embodied in the convention.
One regrets, of course, that the original article (9)(4) cannot be restored, at least at this stage, in its whole pristine glory, but the practical message that I would convey to the House—my right hon. and hon. Friends may not reach the same conclusion, although I hope they do—is that to hold up the convention would be a mistake. It is already getting a little old; indeed, the point has already been made that it will be operative back to 1973, 1974 and 1975.
To those who remain concerned about the unitary question, I say that there is no disposition on the part of the Government to let the issue die. If the House approves the convention and if it is ratified thereafter, we shall be prepared to place on record, for all to see, our reservations on the unitary system. The Administration in the United States were left in no doubt by what I told them.
Between two sophisticated and old friends such as the United States and the United Kingdom fiscal matters are subject to continuing review, and I assure the House that there will be an annual review of the working of this double tax convention. It is absurd for it to be raised automatically every year, but when the moment is propitious we shall be prepared to raise it again.
The British ambassador in Washington at this moment is mustering the EEC ambassadors to see what kind of common demarche can be made on the subject.
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Depending on the outcome of the Hughes/Mori Bill in California, we would be prepared to send a technical delegation to see whether any sensible guidelines can be worked out for the application of the unitary system. I say that it depends on the outcome of the Hughes/Mori Bill because, in the event of that Bill becoming law, the problem for this country will almost totally evaporate. I emphasise that the Hughes/Mori Bill specifically excludes companies operating in the energy field, but, leaving those aside, the Hughes/Mori Bill, certainly in regard to California, would largely solve our problems. If, by any mischance, it were not to become law, we would be prepared to send a technical delegation to Sacramento to see whether guidelines could be worked out to ease the compliance costs in relation to British companies within the net.
I hope that on that basis the House will accept that the convention strikes a fair balance, that the Government have not been supine in making the British case against the unitary tax system, and that the House would be well advised to approve the double tax convention and the three protocols.
10.45 pm
Mr. Denzil Davies: I am sure that the House is grateful to the Minister of State for the detailed way in which he has, as always, dealt with this difficult and complicated matter. We are grateful to him for going through the background again, especially the problems of article 9(4).
We are debating an order that in some ways is rather strange, because we have already approved the treaty. We approved the treaty and the first protocol in January 1977 and we approved the second protocol in June or July 1977. Presumably, whatever the House were to do tonight, those orders would stand. Therefore, in reality, all that is required is that the House should look at the third protocol which amends the original protocol.
Perhaps in winding up the debate the Minister will tell us why it was necessary to bring forward this order again. In theory, I suppose that the House could vote down the first order and the two protocols. What would then happen to the original ratification I do not know.

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It is an unusual procedure. Therefore, I ask the Minister to tell the House why it has been done in this way.
As the hon. and learned Gentleman said, there has been a delay in the ratification or in bringing forward the third protocol, which amends article 9(4), as a result of Congress not approving that article.
As I said in the previous debate, it was a matter for the Minister's judgment whether he felt it was necessary to go to Sacramento and Washington in the summer to put the British case. I do not question his judgment. But there has been some delay. Whether that delay has improved matters I know not, but clearly one must say that the Americans are now probably more aware than they were at the time of the strength of feeling in this country. From that point of view, it is only right that the Minister of State should have made the representations that he made. Whether some revenue was lost as a result of that delay I do not know, and would not wish to ask him. However, I accept his judgment entirely in deciding to go and put the British case.
Before coming back to article 9(4), perhaps I might point out that the main reason for the treaty, apart from the fact that the previous one was getting old, was the introduction of the imputation system of corporation tax by the previous Conservative Government as a result of the approval of that system by a Select Committee of the House. The Select Committee was impressed by the arguments that the imputation system would save some money for this country on the balance of payments. I seem to remember that we were swayed by the figure of £50 million—which at that time was thought to be a lot of money—on the balance of payments. Things have since changed. But that, as much as anything, was why the Select Committee approved the imputation system.
I always thought it unrealistic to believe that the imputation system could remain completely unsullied in international negotiations. In theory, it was all very well, but in practice, as was proved when trying to apply it to a United States-United Kingdom double taxation treaty, it was optimistic to believe that it could remain entirely unsullied, and it did not, because there are credits for both port-
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folio and direct investment. Because of the weight of money flowing between our two countries, that concession had to be made, and that concession has been followed by other concessions in other treaties. So the imputation system does not now remain as wholly as it did.
A balance had to be struck. We had to strike a balance between greater dividends flowing out of the country as a result of the credits given for portfolio and direct investment and the greater benefit to the country because of greater investment coming in, because investors could see that they could repatriate some of their profits. It is a difficult balance to strike, but it is about right. I think it is right—especially in view of the importance of the United States in terms of inward investment into this country—that that balance should have been struck in the way that it has been struck.
Coming back to article 9(4), I have always had sympathy with the United States argument that if the unitary system is to be outlawed—I think that it should be outlawed—it should be done by Congress. I do not understand the technicalities of the argument, but I think that it is not entirely satisfactory in a treaty to try to change domestic legislation; that should be done by the domestic legislature.
Having said that, we must make it clear to our American friends that we have little sympathy for the unitary system. It is arbitrary, extremely complicated, imposes a lot of extra work on companies, and is patently unfair. Now that we have accepted that Congress has power to put this matter right, Congress should try to achieve that. I understand the problems of bringing legislation forward, but I hope that Congress will now see the sense of outlawing the unitary system. American companies will suffer at the end of the day, other countries will copy—as they are thinking of doing—the unitary system, and I should have thought that that would affect American investment in those countries.
It is a question not just of British companies seeking to obtain an advantage but of international investment in general. The United States has as much to gain as any one else from that kind of investment. Quite apart from the California situation, I hope that Congress can find time to put this matter right and accept

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that the unitary system is not in the interests of British or American companies.
I do not want to detain the House. These matters have been discussed before. However, I have one or two questions to put to the Minister of State. If the Bill in California does not go through and British companies have to pay Californian tax on the unitary basis, so that presumably a greater amount of tax would be paid than would otherwise be the case, would they be able to credit that tax and obtain unilateral relief in respect of it against United Kingdom corporation tax? That is an important point. My understanding is that they would. I hope that the Minister can clarify that point. Clearly that would not be the best solution, but companies should know what their position would be if it came to that.
I notice that in article 12(3) royalties from films are excluded. Perhaps the Minister could tell us why. Most other royalties are covered. In article 28 there are various dates for the operation of the treaty and for the benefit of those who have to operate the treaty. Perhaps the Minister can explain why those dates are different.
Double taxation agreements do not in themselves stimulate international investment; they help it and give some certainty to taxation provisions. International investment is encouraged by a fairly stable economic climate. I do not wish to enter upon an economic debate at present, but I hope that the Government will see the error of their ways and improve confidence in our economy. I also hope that problems of international finance—the dollar, other currencies and gold—will be solved or at least alleviated, so that investment and trade can begin to flow better than at present.
We negotiated this treaty. I do not believe that the third protocol is any different from the one that we would have brought forward. I understand why the Minister of State wished to delay the matter, but I am sure that the House will want to approve all these orders.
10.53 pm
Sir Graham Page: It was about four years ago that the House gave a blessing—or almost gave a blessing—to
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the convention that is now set out in the schedule to the draft order that we are considering. If the House approves this draft tonight it will enable the Government to ratify that convention and to bring considerable tax benefits to many enterprises in the United Kingdom, from insurance to entertainments, from shipping to mixed marriages, and many others. So there are great benefits to be drawn from the approval of this order and the acceptance of the convention.
I said that four years ago we had approved the order and given it a blessing, "almost". There is a clause missing now, as has been explained by my hon. and learned Friend the Minister of State. It is that provision which was in the original convention prohibiting the States in America from using the unitary taxation on a world-wide basis, a system which, as my hon. and learned Friend has explained, is very damaging to British companies which have subsidiaries or even any kind of business within some of the States in America.
Here I must, perhaps, declare an interest. Some of the companies in this country thought the matter so important that they were kind enough to pay my expenses and an honorarium to go and talk to Congressmen in America in order to explain how we felt about it here. I went backed by 130 signatures of my colleagues on an early-day motion in the House, with my hon. Friend the Member for Surrey, North-West (Mr. Grylls). We followed, as it were, in the footsteps of the Minister, who had very ably been putting the Government's case, Government to Government. We thought that perhaps we could supplement that by putting the case from Parliament to Congress. Therefore, we discovered, by talking to a great number of Congressmen and Senators, exactly the feeling there.
Before we set out, I had certainly thought that the right thing to do was to try to get this provision put back into the convention. But we quickly found that that was not the right way to tackle the matter. Those Congressmen and Senators to whom we talked and who were anti-unitary tax and were all in favour of outlawing it did not wish to do it by means of the treaty. They thought that the right way to do it was by federal legislation.

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My hon. Friend the Member for Surrey, North-West and I were happy that before we left Washington in the autumn two Bills had started there, one in the House of Representatives and the other in the Senate, both outlawing unitary taxation on a world-wide basis. Both Bills had been backed by quite a number of Members of each House respectively.
I am sure that this House will know that the procedure in the Congress and the Senate is a little different from ours. They go through a number of committees with their legislation before it reaches the House or the Senate. So we were eager to get each Bill started on its stages through its committees—committees of revenue and taxation, of ways and means, and even a rules committee, before it ever reaches the Floor of their House. We endeavoured to get undertakings from the chairmen of those committees that they would start committee hearings. We got some fairly firm assurances that, the Bills having started, committee hearings would be fixed as soon as possible, as soon as their schedule would allow. We came away in the autumn feeling that at least we had put the case from this House to Congress, and that there was a good chance of at least the Bill in the House of Representatives starting off its committee hearings.
Time passed between the autumn and Christmas, and so far as I could ascertain the legislation process in Congress was not moving very fast. I thought it worth while to talk to those chairmen of committees again to see whether we could hasten it. I went after Christmas and I found that the attitude against unitary taxation had strengthened very much. They were really determined to proceed with legislation, and because California had apparently decided to outlaw that form of taxation there was not that feeling between the states and the Federal Government as there had been before. In the centre, they now did not mind attacking the states on this subject, because the leading state—California—had itself attacked and decided to abolish it.
We had some fairly firm undertakings in January that the hearings would proceed with that federal legislation. Even more important, I was able to go to California to find out how the legislation there was proceeding. Incidentally, I arrived with the earthquake, and I thought
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it very kind of whoever does that to announce my presence with an earthquake. I found that the Bill had just completed all its hearings in the House of Representatives. Just after I left it went to the lower House, and all those concerned with it seemed quite sure that it would go through the Senate and that there would be no trouble. In fact, they were sure that whereas the energy companies had been excluded, they would be reinserted in the Senate and that a comprehensive Bill would get on to the Californian statute book.
We are now almost dead certain that California has outlawed this tax. California was the leading state that imposed the tax. It has found that it is losing over it and that it is driving enterprise away, and it has therefore decided to abolish it. I gather that Oregon is following in step and that it is no longer pressing for unitary taxation. Alaska has never been terribly eager to do anything about it, and the fourth state—Maryland—uses it only in a limited sense.
If we approve this draft order tonight, it means that we are relying on our friends in America who, generally speaking, think the same way as we do on this unitary tax question. We are relying on them to complete their legislation and to abolish this grossly unfair tax there. I feel some confidence that they will do so eventually.
My hon. and learned Friend is right in saying that the federal legislation will not be completed before the American election, but, if it has proceeded through a number of its committee hearings, the information that I was given was that it would be revived in the next Congress with little difficulty, because when a Bill has been seen to go through quite a large amount of its legislative procedure it seems that it will be successfully revived.
Although I have been extremely hesitant throughout about approving the draft order, which seems to omit a provision prohibiting unitary taxation on a worldwide basis by the states in America, I now feel that we are justified in approving it, first, because of the assurances that I have obtained from those concerned in the United States and, secondly, because of the very great benefits that other parts of the convention give to United Kingdom enterprises.
11.4 pm
Mr. Michael Grylls: Like my right hon. Friend the Member for Crosby (Sir G. Page), I was asked to help in this matter by a number of leading British companies. I have been with him to the United States on a number of occasions during the past nine months to try to assess the possibility of legislation. I also have an interest to declare.
In 1978 the Senate considered the convention and the so-called Church reservation was put in. That was a setback for the British Government. A major part of that convention had been shot out. The Government found themselves obliged to accept the convention, with a major part that was of great importance to British companies removed. Perhaps we can learn a lesson from that.
It has not been a partisan debate, and I hope that the right hon. Member for Llanelli (Mr. Davies) will not take my comments amiss. Since 1978, certainly in the first year, the Government appear to have done little to put the matter right. It appears that they accepted the situation and took no great diplomatic initiative to put it right.
Many of our most important companies operating in the United States were at great risk as a result of article 9(4) being removed from the convention. They are subjected to the vagaries of that extraordinary and unfair taxation system throughout the United States.
At present EMI is involved in a court case in California. It was asked to produce figures for its business in England. Part of that business concerns defence and is covered by the Official Secrets Act. EMI wrote to California saying that it could not disclose that information on penalty of imprisonment, because of the Official Secrets Act. California nevertheless imposed a 25 per cent. tax penalty for non-disclosure. That is an illustration of what British companies are subjected to.
The world-wide reporting basis is not only unfair, as my right hon. Friend described, it has been perceived by the Californians to be counter-productive. British and other companies that are subjected to the tax will, at the end of the day, withdraw.
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It is important that we should understand a little of the detail of what companies are subjected to. One of the factors considered in the world-wide reporting basis is the inconsistency of the property factor. Great confusion is caused by inconsistencies between states. I shall quote one of the five property factors. Goods in transit are included in the numerator for the destination state in 14 states but excluded from the numerator and denominator in four states. Wisconsin treats such goods as if they had already arrived at their destination. That is just one of many complications that companies have to deal with in trying to assess the world-wide reporting system. The administrative cost in coping with such problems is unfair.
The right hon. Member for Llanelli was concerned with the problem for a time. We should all learn the lesson. When something appears in the convention that is not right, the Government have a duty to take prompt action to rectify it. When the Church reservation was first entered in June 1978 the Government should have stated that they did not like the convention and discussed improvements. They could have mounted a campaign. Very little was done.
The Government should protect not only their citizens but their great trading companies. They are a considerable asset to the country.
Our investments in the United States amount to $7,000 million. It is in British interests to see the matter put right.
My right hon. Friend the Member for Crosby described the good news from California, but the House should be aware that there are other states—Oregon, Alaska, Maryland and Vermont—where this is happening. If this matter is not resolved quickly British companies operating throughout the United States, even if they have only distribution depots in one of these states, will be subjected to the vagaries of a world-wide reporting system. What has happened to the Mobil oil company in Vermont could happen to a British company. That company, with a distribution depot in Vermont, was taxed on all its foreign source income going into its headquarters in New York. That was lumped on top of the profit made solely in Vermont. That crazy

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situation is liable to affect British companies operating throughout the United States.
It is good to see the progress that has been made and that, we hope, will be completed when Bill 525—the Hughes/Mori Bill—goes through the Californian Senate. That will he a step forward. As my hon. and learned Friend the Minister of State said, it is an important advance. I pay tribute to my hon. and learned Friend, who has dealt with this matter in an active way since taking office. He realised that there was a real problem. He was there just before my right hon. Friend and me. I know how hard my hon. and learned Friend worked to try to convince opinion formers in Congress and in California of the need to put this matter right.
My hon. and learned Friend said tonight that the House is taking on trust our friends in the United States Congress to get the matter put right. We have to rely on them absolutely. I have some good news. When my right hon. Friend and I were there in January we had meetings in Congress with Congressman Rostenkowski, the leader of the task force, who considered the whole question of taxation in 1977 and produced the report saying that the unitary system should be outlawed. In nearly three years since the report there has not been any action.
As my right hon. Friend said, we met chairman Ullman, the influential chairman of the Ways and Means Committee, who said that he would look at the matter and see whether some hearings could be brought forward. I am able to tell the House that last week, on 13 February, I talked to chairman Ullman on the telephone, as had been arranged when we saw him in January. He gave me an assurance, agreeing that I could so inform the House tonight, that hearings will be scheduled this spring on Bill 5076, the Bill in the House. We can therefore see that there is to be real progress in Congress. As soon as the convention is ratified, dates for the hearings will be announced. Chairman Ullman gave me the clear assurance last week that these would take place during the spring.
I am sure that the promise is copper-bottomed. It it essential that this should be so. It is crucial for business relations between two countries as close as Britain
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and the United States that this matter should be resolved. Otherwise we risk generating friction not only between our business enterprises but between our countries. We explained to people in Congress, as fellow parliamentarians, the real problem that existed and that the change they had made in the treaty had created a problem for us. We appealed for their help to try to solve it.
One cheerful factor is the comment of the United States Supreme Court that counters the argument of those who stress the delicacy of matters related to state rights. The Supreme Court said:
"The United States must speak with one voice regarding such international activities."
It is not right for individual states to speak with different voices on matters of international business. We are relying on them. Britain has the biggest investment of any foreign country in the United States. We are the closest of friends. I am sure that we want to go on investing and expanding business there. I am sure that this also benefits the United States.
It will be a tragedy if the matter is not put right in California, Oregon and the other states and dealt with in a proper federal way, so that we can go on investing there. Their system of taxation is dangerous and short-sighted. Indeed, it is increasingly being seen by the states as a short-sighted policy and a mistake. Many countries have made mistakes in taxation and they are wise if they change.
We hope that there will be legislation and we have an assurance from the chairman of the Ways and Means Committee that he will start hearings in the spring. That is a step forward, and the message from the Back Benches tonight should be that we accept the treaty and the convention and rely on our friends to sort out the thorny problem so that United States—United Kingdom relations can return to a fair and friendly basis.
11.16 pm
Mr. Nicholas Baker: I am grateful for the opportunity to raise a point that does not relate to the unitary basis of taxation. I share the views expressed on that matter and am happy to support the order on the basis outlined by my hon. and learned Friend the Minister of State.
It has come to my attention that a new form of capital gains tax is likely to be

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passed in America. Two Bills are going through the House of Representatives and the Senate. The tax would be levied on citizens, whether resident in the United States or not, in respect of real property transactions within the United States.
The tax would apply to disposals made after 31 December 1979 but would not override conflicting treaty provisions for five years thereafter. The existing convention between the United Kingdom and the United States conflicts with the proposed tax because it provides that, as a general rule, a resident of the United Kingdom is to be exempt from United States taxes on gains from the sale of capital assets such as real property.
The proposed convention that we are discussing does not conflict with the proposed tax. Article 13 of the convention says:
"Except as provided in Article 8 (Shipping and air transport) of this Convention, each Contracting State may tax capital gains in accordance with the provisions of its domestic law."
If the new capital gains tax is enacted, as I gather from American friends is likely, and the proposed convention is ratified, residents of the United Kingdom will be fully within the scope of the new tax.
Our general rule is that we do not tax, on the basis suggested in the proposed American tax, non-United Kingdom residents on sales of real estate. If we ratify the convention and the Senate's proposals are carried out in their present form they will bear unfairly on residents of the United Kingdom who realise capital gains from the disposal of United States real estate.
I draw the point to the attention of my hon. and learned Friend. He may already be aware of it, but it is certainly a matter that he should consider in his annual review.
11.20 pm
Mr. Keith Wickenden: I wish to draw the attention of my hon. and learned Friend the Minister to the issue that was raised by my hon. Friend the Member for Dorset, North (Mr. Baker). I do so with both trepidation and confidence—trepidation, because it is a bold man who raises an issue on any form of tax convention, let alone a double taxation convention, especially in the
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presence of one so skilled in these matters as my hon. and learned Friend, and confidence, because it directly affects the affairs of the company of which I am chairman. The registered office of that company is at No. 1 Camden Crescent, Dover, which will not be unknown to my hon. and learned Friend.
As I understand the position, capital taxation was specifically exempted from the convention because at the time that it was negotiated the rules of both countries were that non-residents were not subjected to capital taxation outside their own countries. That was a reasonable assumption to make at the time, but since then there has been an attempt within the American Senate to introduce legislation that would tax capital gains by foreign residents, especially on real estate and agricultural land.
The provisions were of special importance to individual Senators because of what was judged, in the United States, to be the minor scandal of Arabs buying large areas of agricultural land in highly sensitive agricultural areas, realising huge gains within a short period and avoiding taxation.
I corresponded with my hon. and learned Friend last October on the matter. At that time it was believed that the measures then before the United States were unlikely to become law. Since that time, as my hon. Friend the Member for Dorset, North said, a United States Treasury Bill has been introduced—Bill No. 2247—which effectively taxes overseas companies or individuals resident outside the United States who realise capital gains arising from transactions inside the United States.
Since the convention before us specifically excludes capital gains it follows that double taxation relief is not available to United States companies. Furthermore, there is an element of retrospection in the United States Bill. The date from which the measure will apply is not yet known. That is a matter of considerable concern. Neither is it known what transitional arrangements will take place.
We do not know that the Bill presently before the United States Senate will become law, but it is confidently believed that it will. If it does, I hope that my hon. and learned Friend will take the opportunity to review the position in the

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future to see whether the convention that we are being asked to approve can be amended. It affects not only my company but many other British companies.
11.23 pm
Mr. Roger Moate: I am rather disappointed that my hon. and learned Friend the Minister felt it necessary to bring the motion before the House, although I fully understand why, after a long period, he felt it necessary to do so.
In deciding whether to vote for the motion, I am influenced considerably by the remarks of my right hon. Friend the Member for Crosby (Sir G. Page), who, I appreciate, has done so much in connection with the matter. I endorse the remarks of my hon. Friend the Member for Surrey, North-West (Mr. Grylls) about the efforts of my hon. and learned Friend, who has contributed an immense amount of expertise and energy to solve this very real problem.
I am disappointed that the motion is before us, for a number of reasons. As has been said, if the treaty is ratified we shall depend immensely on the goodwill of our friends in Congress and in certain states of the United States to carry out what we consider to be their side of the bargain. They are our close friends, and we are entitled to feel a great sense of trust and goodwill towards them.
However, when dealing with business matters we find that it is a hard world. I feel that we should depend more on our votes than on fine words. In a sense, Parliament is expressing a degree of impotence by accepting the treaty in its present form. It was not so long ago that Parliament expressed its approval of a different version of the double taxation relief treaty. That was our expressed view.
We have no powers to amend such a proposal in the House. It is a different matter in the United States Senate; it has powers to amend. Therefore, the treaty was changed. The power of the vote was exercised there. It was sent back to us and we accepted the amended version, although it was generally accepted that that amendment was detrimental to British interests.
I would much rather that we used our votes to express our feelings on this issue, therefore. I have a feeling that such a move would concentrate enormously the
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minds of our friends across the Atlantic. It might produce much quicker results than any other form of action. I, too, hope that federal and Californian and other state legislation to deal with the matter will be passed. But I am not sure that we should depend upon hope and trust. I would rather we did what we seldom do in this House, and that is to use our votes effectively.
Nevertheless, I must be guided by my right on Friend the Member for Crosby, who has had much more contact with those involved in these negotiations. I am disappointed for a number of other reasons. It is a bad international precedent for the British Government or any other nation to have to look to perhaps 50 states in the United States for an understanding of the way in which we are to conduct our international tax affairs. That cannot be right. I am sure that the United States understands that that is a grossly unsatisfactory situation.
It is a bad international precedent, because of the damage that it could do to all world trading nations. In the earlyday motion we urged the Government to do their utmost
"to ensure that any contrary arrangement be rectified so as to avoid a harmful international precedent and serious consequences for both British and United States companies with overseas interests."
If the United States fails to thwart the unitary tax threat in the United States, and if treaties of this kind are seen as examples to be followed elsewhere, might not other countries such as Nigeria adopt similar practices and endanger the trading activities of all companies with worldwide interests?
The United States has as much to lose as the United Kingdom if treaties of this kind proceed. There is an OECD model double taxation treaty that does not allow unitary taxation. How much better it would be if our treaty with the United States were to follow that model agreement. I therefore express my disappointment for that reason.
We should be a little hesitant about seeing this matter as a great constitutional issue, in the United States, of states' rights. I understand the delicacy of the matter, but history does not show that it has given rise to great argument between the states and the federal Government.

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When the Church amendment was proposed the original proposal failed to get through by a very narrow figure. The treaty was approved by 49 votes to 32, but because it was a treaty it failed to proceed by not securing the necessary two-thirds majority. At no stage has there been any indication that there has not been a majority either in the House or in the Senate for federal legislation preventing unitary taxation. There is quite clear evidence in the United States that what we are saying in this House also commands a majority on that side of the Atlantic.
I hope, therefore, that if we agree to the motion tonight, and if the Government proceed to ratify the treaty, those in the United States Senate will understand that we are doing so on the basis of trust and are placing an immense amount of faith in the proposals about which we have heard and in the Senate's determination to rectify what is a grossly unsatisfactory situation.
11.30 pm
Mr. Tristan Garel-Jones: I came to the House this evening with some trepidation because a number of substantial firms have made representations to me about the immense damage and intolerable burden caused by the unitary taxation system in California. The House owes a debt of gratitude to the Minister of State and my right hon. Friend the Member for Crosby (Sir G. Page), both of whom, ploughing different furrows, have winkled out a substantial degree of reassurance. The bulk of my remarks have been circumscribed by the reassurances.
It is important for the Minister to make it clear that we have no intention of letting this issue die. The right hon. Member for Llanelli (Mr. Davies) summed up the unitary taxation system when he said that it was arbitrary, costly and unfair. Difficulties are placed upon British firms. I have in my possession the guidelines issued by the California franchise board for companies operating under that taxation scheme. It makes terrifying reading. Much of the information asked for is totally irrelevant to trading in California. If the debate had not progressed as it has I intended to read out some of the requests—but that is no longer necessary.
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It is a ridiculous document for British companies to comply with.
Another interesting recent development is the refusal by the United States federal tax court to hear the case of EMI against the constitutionality of the California unitary tax system. That is doubly disturbing for the United Kingdom, in view of the favourable treatment given to a similar case by Japan Line over a year ago. One is dealing with friends, but one is tempted to believe that there is discrimination against the United Kingdom.
Given the assurances, I find no difficulty in supporting the order. However, it is worth reminding ourselves that the type of British companies that operate in California and the United States tend to be leaders and innovators in their fields. They tend to be the companies upon whose success the economy of Britain depends. I urge the Government to ensure that British companies upon which we depend so much are given fair treatment in the United States.
11.34 pm
Mr. Peter Rees: With permission, I shall respond briefly to the important points raised in the debate. The right hon. Member for Llanelli (Mr. Davies) asked why we are not merely debating the third protocol. For various technical reasons the original order and the protocols had to be embodied in a new order. Because of the lapse of time, it was necessary to tie up the new order with the small legislative changes that have taken place since the original order was recommended to the House three years ago.
The right hon. Member for Llanelli also asked whether, if the Hughes/Mori Bill did not become law, British companies would get double taxation relief in respect of Californian unitary tax. The answer is "Yes". This comes about under section 498 (6) of the Income and Corporation Taxes Act 1970. Relief will be given in respect of United States federal taxes and Californian tax, but only, of course, up to the level of British taxes.
I was asked why royalties on films were singled out for different treatment. This is because they are taxed on a profit basis under article 7 rather than article 10 (3). The right hon. Member also asked about article 28, and why

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there were different dates for the coming into force of the double tax convention. This is because the effective provisions relate to a variety of taxes and they have to be geared—in the case of dividends to a year of assessment; in respect of income tax to a financial year; in respect of corporation tax to a slightly different financial year—that beginning on 1 April—and in respect of petroleum revenue tax to chargeable periods, which normally start on 1 January, although one can have a six-month period. The differences arise only because the convention is tailored to the various taxes that it is designed to cover.
I come now to the speeches of my right hon. Friend the Member for Crosby (Sir G. Page) and my hon. Friend the Member for Surrey, North-West (Mr. Grylls). They have laboured so hard and long in this field that it would be otiose for me to commend their efforts or to deal with the general principles that they have canvassed, here, in Washington, and elsewhere. I recognise that they have made a deep impact on legislative minds on the other side of the Atlantic. They and the various companies with which they are associated, and the CBI, have brought about a considerable shift in the climate of opinion on the other side of the Atlantic. I hope that the House will think it appropriate for me to congratulate them and thank them for their considerable efforts.
My hon. Friend the Member for Dorset, North (Mr. Baker) asked a specific point, as did my hon. Friend the Member for Dorking (Mr. Wickenden). Dare I say to my hon. Friend the Member for Dorking that even if the principal place of business of the great company that he represents had not been in Camden Crescent his point would still have been valid and important, as was recognised by my hon. Friend the Member for Dorset, North. It is true that there is a new, special, capital gains tax on the disposal of realty by foreigners wending its way through Capitol Hill. It is not for me to speculate about the shape in which it will emerge. It is likely that there will be considerable technical problems to be faced before it can reach the statute book. It is not for me, as a British Minister standing at the Dispatch Box at Westminster, to speculate about the course of that piece of American legislation.
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All I can say is that, as we currently understand the Bill, there would be relief against United Kingdom capital gains tax on the same transaction in respect of any tax charged in the United States. It would be misleading for me to go more deeply into the problem, because we cannot foresee the form that the Bill will ultimately take when it becomes law. We are watching it closely. If my hon. Friends have any worries, once the measure has reached the statute book and they feel that such worries have not been adequately met by this or any other form of double taxation relief that may be available to British taxpayers, I shall be happy to look at the problem again. We are aware of this problem.
I say to my hon. Friend the Member for Faversham (Mr. Moate) that we all recognise that it would be nice to strike an attitude, to make a gesture, to record our disapprobation of the unitary system in California and, indeed, in the other states. Ultimately we are faced with a practical dilemma. Would we achieve more for British companies by those means? Although we have rightly concentrated tonight on the question of unitary taxation, the double taxation convention and at least two of the protocols cover a whole range of other problems.
It is important for British taxpayers generally, whether they be companies, individuals or partnerships, that the convention is enacted into our law. I recognise the sentiments that led my hon. Friend to intervene and to advance his argument. However, I hope that at the end of the day the House will feel that even with this slight imperfection—my hon. Friend the Member for Surrey, North-West described it as a considerable blemish—the package is one that we should adopt.
My hon. Friend the Member for Faversham was disposed to question the statement—I do not know whether I should claim its paternity—that this is a great constitutional issue in the United States. I am not over-concerned to debate that. However, the issue has been simmering for quite a few years, and long before the double tax convention ever saw the light of day. Unitary taxation concerned groups of companies resident and based in the United States long before it affected any of our companies.

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The system of unitary tax was originally devised to cover the United States railway companies, which were formed in one state and whose operations inevitably carried them over to another state. When I was in the United States I discovered that it is not one narrow issue affecting only the United Kingdom and the Japanese; it goes much wider than that. If it is not a great constitutional issue, it is a wide constitutional issue in the United States. If we expect that by withholding or conceding our vote in this instance we shall necessarily fundamentally shift opinion on the other side of the Atlantic, that is attributing rather more than we are entitled to the House and its deliberations.
Those in the United States who are focusing their attention on the issue are now well aware of what we feel. They are well aware of the impact that the spread of the unitary system will have on foreign investment in the United States. I found in California that they were sensitive to the issue. The Japanese have been as effective as we have been in bringing the argument home to the Californian administration.
My hon. Friend the Member for Watford (Mr. Garel-Jones) made some valid comments on the general principle. At the end of the day my hon. Friend, like so many of my hon. Friends, has come to realise, as I did after first-hand acquaintances with the problem in the United States, that this is not a problem that we can let die. We do not propose to bury the issue if the House gives its approval to the convention and the three protocols. I have indicated the various ways in which we propose to pursue the issue in the years to come.
I hope very much that the problem will be solved for us in large measure by the Hughes/Mori Bill. If it is appropriate for me to do so, I wish it well. I am sure that my hon. Friend the Member for Surrey, North-West appreciates that we are concerned principally with California. To demonstrate the complexity of the issue, a great United Kingdom-based company in Alaska has argued for the imposition of the unitary system in Alaska. It found that in its circumstances the system advanced its interests. We must not make any snap, dogmatic judgments. It is necessary closely to
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study the facts to ascertain where the balance of advantage lies.
If we detach the convention from the issue and consider the package as a whole—I hope that nothing that I have said has led my right hon. and hon. Friends, or the Opposition, to consider that I underestimate the importance of the issue—that which is before us strikes a fair balance between interests on both sides of the Atlantic. It is not for us to claim, on a narrow, nationalistic basis, that we should have the greatest advantage and the United States should have the lesser advantage. We are concerned to ensure that it is a fair balance of advantage between United States federal authorities, the United Kingdom Inland Revenue, United States' taxpayers and United Kingdom taxpayers. I must pay tribute to whatever role the right hon. Member for Llanelli may have had—it may have been a principal part—in negotiating the original package.
I hope that after a thorough examination—I venture to say that no other double tax convention that I can recall has had such a thorough and prolonged examination in the House—the House will feel able to approve this measure.
Question put and agreed to.
Resolved,
That an humble Address be presented to Her Majesty, praying that on the ratification by the Government of the United States of America of the Convention and Protocols set out in the Schedule to the draft Order entitled the Double Taxation Relief (Taxes on Income) (The United States of America) Order 1980, which draft was laid before this House on 31 January, an Order be made in the form of that draft.

THE QUEEN'S FLIGHT
Motion made, and Question proposed That this House do now adjourn.—[Mr. Cope.]
11.46 pm
Mr. Cyril D. Townsend: It is a pleasure to have this opportunity to ask the Government what plans they have for re-equipping the Queen's Flight, and I am grateful to my hon. Friend the Under-Secretary of State for Defence for the Royal Air Force for being present to reply.
There have been two debates on the subject in the other place—in 1976 and 1978—and a number of questions have

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been asked in this House over the years, most recently on 12 February. There has also been interest in the press.
This Flight is the most prestigious in the world. It is a rare honour for a pilot or engineer to be selected to serve in it and over the years it has been commanded by highly distinguished officers. It has given value for money. It has set the highest standards. The problem is not how to get men to work hard but how to make them stop work and go home. According to an excellent article in Flight International on 30 September 1978:
"The floor of the maintenance hangar at RAF Benson gleams like a ballroom. The Andovers and Wessex that stand upon it are washed daily, polished weekly and repainted every three years."
The historical association of the Queen's Flight with the Royal Family is one of 30 years' continuous service, and it has brought favourable world-wide publicity to the Royal Air Force as a whole. The Queen is a prolific user of aeroplanes, and both her consort and heir are experienced jet and helicopter pilots. For example, in 1977 there were 37 Royal VIP flights and tours abroad, involving visits to 22 countries. From 1973 to 1978 a total of 60 different nations were visited. The three Andovers and two Wessex helicopters undertake about 700 tasks a year.
Although, of course, the Flight is mainly for the use of our Head of State and immediate family, as the Minister reminded the House on 12 February,
"35 per cent. of all flights…are for the purpose of transporting non-Royal persons, such as Service chiefs and Government Ministers—no matter which Government are in power."—[Official Report, 12 February 1980; Vol. 978, c. 1251.]
The Flight is of great help in carrying out the Government's business, and direct rule in Northern Ireland has added to its work load. It has carried visiting Heads of State, including Chancellor Schmidt, President Giscard d'Estaing and King Hussein.
Experience has shown that VIP flying poses its own special problems of aircraft safety, administrative efficiency and physical security, and that they are best handled by experienced staff. If we did not have a Queen's Flight we would have to invent one. It is the most cost-effective way of providing a service de-
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signed to meet a large number of public engagements with tight schedules. Governments of both political parties agree to that.
A case could be made for changing the name of the Flight, so that the hon. Member for Fife, Central (Mr. Hamilton) would not be given any excuses for his flights of fantasy and the public would be made more aware of the facts.
The main reason for this debate is that the three Andovers used by the Flight are now 16 years old. Many people find that difficult to believe. As Flight International said in 1978:
"Fitness for a Queen does not have to be fitness for the RAF Museum. The Queen's Flight wants and should have jets; it should have had jets long ago; and Her Majesty's loyal subjects will agitate every year until it gets jets. The Queen is flying in slower, older aircraft than any other Head of State in the Western and probably the eastern world. The Head of the State which invented the jet is without one."
I take it as axiomatic that the Flight should be brought up to date and given modern British jet aircraft. It is absurd that the world's No. 1 flight should have to display, at home and abroad, 16-yearold aircraft. One of its roles should be to show potential foreign buyers the latest and best that British aviation has to offer.
On 20 March last year I tabled a parliamentary question on the Flight. I was supported at Question Time by my hon. Friend the Member for Horncastle (Mr. Tapsell), who asked:
"Is the hon. Gentleman aware that when these aircraft arrive overseas they are universally regarded with affectionate amusement and that they do grave damage to the reputation of British technology?"—[Official Report, 20 March 1979; Vol. 964, col. 1297.]
The Andover in which the Queen flies to Germany is the aircraft that she used to fly there in 1965.
What did the princes in the Persian Gulf make of this antique aircraft during the Queen's recent visit? The Arab world is an important market for British executive jets.
Of course, those who campaign for modernisation accept that these turboprops are safe and will remain safe for a year or two. We accept that for long-range flights Concorde may be used and that VC10s are made available, but both arguments miss my main point.

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According to Lord Kimberley, who made a splendid speech in the other place two years ago, the Heads of State and Governments of 55 countries alphabetically from Algeria to Zaire have a total of 139 jet aircraft between them. We are missing the chance of giving the British aerospace industry—a vital one for jobs in this country, as my hon. Friend well knows—a sales promotion platform.
I understand that the Air Force Board approved an order for two 111s in 1972 but that this was turned down. Again, in 1977—when, of course, the Andovers were five years older—re-equipment was examined but rejected.
My hon. Friend disappointed the House last week, when I asked him if any decision had been taken, for the Government have had nine months to bring forth. He said that the Government would consider whether new equipment was needed. He knows the answer to that as well as I do, for he has been studying the matter at least since July 1979, according to a parliamentary answer.
The hon. Member for Erith and Cray-ford (Mr. Wellbeloved) told me last year that to the best of his knowledge the Royal Family were satisfied with the present arrangements. To the best of my knowledge they are not, although they would be the last people to give public complaint. As Lord Kimberley said in another place:
"the jet operating technique of quick rates of ascent and descent with the ability to cruise above the weather avoids prolonged flight in turbulence. Let us not forget that the Andover takes something like 30 minutes to reach its cruise height of 15,000 ft. Today, in the jet age, there is really no excuse for giving the Royal Family or VIPs a rough ride at turboprop cruising altitude. I believe it is known that whenever possible, Ministers—and I do not blame them—try to catch a 125 if they can, so as to avoid turbulence."—[Official Report, House of Lords, 14 November 1978; Vol. 396, cc 685–6.]
The jet operational requirement calls for short field and short sector performance, together with a long-range potential for overseas tours. The range requirement is to save money in the chartering of commercial aircraft. Greater speed and range mean greater security—highly important in this age of international terrorism. Greater speed also means less blocking of congested air space and thus less inconvenience to other users. More
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sectors flown in a day mean fewer overnight stops, with their extra cost and diplomatic inconvenience, and less vulnerability to hoaxers.
As mentioned, an alternative to civil chartering is the hiring of a VC10. Again, according to Flight International:
"This means taking an aircraft out of RAF service, special fitting out, and invariably seems to involve taking two aircraft out of operation. The man-hours involved in the special preparation of both the primary and the back-up aircraft are prodigious".
The Government's traditional case is that the Andovers will have to be replaced in due course, but, due to the need for restraining public expenditure and bearing in mind that the cost of the Queen's Flight falls upon the Defence Vote, no money can be found at the present time. No doubt we shall shortly hear another form of those words.
On examination, that case is totally unconvincing. In a few years, when the Andovers are no longer safe, new planes will have to be purchased. With inflation running at nearly 20 per cent. a year, the longer the delay the greater the costs. Against the purchase price of new aircraft would be offset the second-hand value of the present aircraft—perhaps £1 million each on the American market.
There would be savings resulting from less chartering, fewer stops, fewer flying hours.
I, for one, am by no means convinced that the RAF should be expected to continue to bear the full cost, and I invite my hon. Friend to comment on that observation.
Why should not the Departments of Industry, Trade and Northern Ireland, for example, make their contributions as they receive direct benefits? Do they at present pay for the cost of each trip their Ministers make in an aircraft of the Queen's Flight?
It also crosses my mind that greater use should be made by other Departments of the Queen's Flight. Is it still true that the Department of Trade and the Civil Aviation Authority have their own HS125s? What thought have the Government given to rationalisation in this area? Would there not be savings by way of less chartering and fewer first-class air fares?

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It is inappropriate for Back Benchers to tell Ministers with what modern jet aircraft the Flight should be re-equipped. The Ministers have the up-to-date expert advice that we lack. According to a report in The Daily Telegraph of 8 January:
"The type the Government is favourably considering is the BAC 1–11 series 475, with extra underfloor tanks to give a maximum range of about 3,000 miles."
What is of great concern to me is that the Government may be letting go the last opportunity we shall ever have of giving this Flight wholly British-built jet aircraft. If they cannot be British, they should be European rather than American.
I believe that I have made my case and do not need to weary the House by going into more technical details—details that have been admirably brought to the fore elsewhere. The House would prefer to hear the Minister's replies to three direct and basic questions.
First, does the Minister accept in principle that the Queen's Flight must be given modern jet aircraft? Secondly, if so, what financial provisions have been or will be made? Thirdly, what type of plane has he in mind?
The present position all too clearly is indefensible. The House and the country look to the Government to put this matter right without further delay. If we are to have a Queen's Flight—and I believe unhesitatingly that we should—there is a clear obligation on the Government, especially a Services-conscious Tory Government, to make sure that it is properly equipped.
The Under-Secretary of State for Defence for the Royal Air Force (Mr. Geoffrey Pattie): I should first like to thank my hon. Friend the Member for Bexleyheath (Mr. Townsend) for raising this subject and for giving me the chance to explain the current position on the re-equipment of the Queen's Flight. As my hon. Friend is aware, I am studying the question of new aircraft, but before I discuss the background to that issue it might be helpful to the House if I give a little more general information about the Queen's Flight.
At present the Flight operates three Andovers, which it has had since 1964, and two Wessex helicopters, which it has
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had since 1969. The House will appreciate that the primary factor that must be taken into account when considering aircraft to be employed in the Queen's Flight is safety. On this count the Andovers and Wessex have extremely impressive records, which result from a combination of the very highest standards of maintenance and airmanship achieved by the members of the Queen's Flight and the excellence of the aircraft themselves. We are grateful for the complimentary remarks made by my hon. Friend about the performance of and standards in the Queen's Flight.
The Queen's Flight is a dedicated and self-contained unit that is used for journeys by Her Majesty the Queen and by other members of the Royal Family. For some years, with Her Majesty's approval, the use of the Queen's Flight has been extended to certain senior Government Ministers, senior defence staff and important foreign visitors.
The existence of the Flight derives from the need to provide a service that is geared to meet a heavy round of official engagements with very tight schedules. This demands very high standards of flying, aircraft safety, administrative efficiency and physical security before VIP travel itself poses its own particular problems, and experience has shown that these are best handled by experienced staff.
The Flight is composed of volunteer personnel who are trained, equipped and organised to maintain the special engineering and supply standards for aircraft maintenance and component inspections that are required. The historical association of the Queen's Flight with the Royal Family is one of over 30 years' continuous service and one of which the Royal Air Force is very proud. The establishment and retention of the special unit has brought prestige and favourable world-wide publicity to the Royal Air Force as a whole.
On command and control, the command of the Queen's Flight is vested in the Air Officer Commanding-in-Chief Strike Command and is delegated by him to the Air Officer Commanding 38 Group, who exercises operational and disciplinary control through the Captain of the Queen's Flight. The latter is a retired air commodore and a civilian member of the Queen's Household, but he is also

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responsible, through the Air Officer Commanding-in-Chief Strike Command, to the Ministry of Defence for maintaining the operational, administrative and engineering efficiency of the unit and for its Service and civilian performance.
The present establishment of the unit is some 20 officers, 156 other ranks and three civilians. All of these are highly qualified and specially selected volunteers, and although the Flight is part of the Royal Air Force it is a separate and self-contained unit. Many of the ground crew remain with the Flight for several years, despite the pressure of the long hours, to which my hon. Friend referred, and the exacting standards needed to maintain the highest technical expertise and to provide aircraft, often at very short notice. For the aircrew, longer tours than normal elsewhere in the Royal Air Force are particularly valuable in providing the long and thorough apprenticeship needed to build up the required efficiency and familiarity with all the aspects of Royal and VIP air travel.
The unit, which is sited at RAF Benson, in Oxfordshire, is completely self-contained, with its own offices, hangars, workshops and stores. It has the facilities and expertise to carry out not only first-line and second-line servicing but also third-line major overhauls. Because of the great utilisation of aircraft, the maintenance standards are extremely high. The aircraft must be 100 per cent. serviceable before each flight and on their return they are immediately prepared for further use, regardless of the time of day.
Those components which have particular safety or functional importance are changed when only half the life predicted by the manufacturer has expired, so that they are always well within the bounds of safety. This practice was introduced many years ago to guarantee a very high standard of safety, but it has been found that the increased cost for the small number of aircraft involved is more than offset by the improved aircraft availability and the 100 per cent. reliability that has resulted. Indeed, this policy has allowed the Queen's Flight to operate its aircraft world-wide without the need to provide a reserve aircraft, thus greatly increasing the efficiency of the unit.
The essential justification for the Flight is that it is the most cost-effective way of
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providing the special facilities and personnel that are required. The latest available annual running cost of the Flight is £2.4 million, and in 1979 the Andovers flew 1,581 hours, of which 1,033 were for training, route proving or positioning. Of the others, 433 hours involved the carriage of members of the Royal Family and 115 involved Ministers and other VIPs. As a general rule, the Andovers are employed for the longer journeys, up to 800 miles, and the Wessex for the short journeys, up to 200 miles.
The Andover is still an excellent aircraft for the job, and bearing in mind the meticulous standards applied, it could remain safely in service for some time yet. One of the most important capabilities that the Andover offers is the ability to operate from the smaller airfields, and the value of this was demonstrated during Her Majesty the Queen's visit to Africa last year. However, the House will appreciate that there are occasions when the Queen will need to fly over longer distances than is possible in the Andover. On these occasions, arrangements have been made to use either an RAF VC10 or an aircraft provided by British Airways or other civil airlines.
I now turn to the specific question that my hon. Friend raised, of the replacement of the Andovers by new aircraft. As I have mentioned, the Andover has many excellent qualities and is well able to continue the sterling service it has given to the Queen's Flight. However, the Government are well aware of the arguments in favour of replacing it, and I would be the first to agree that it is getting on in years and that by modern standards its performance is, in some respects, less than ideal, both as regards its operating height and its cruising speed, which makes for longer journey times—a matter that I might say is of equal concern to busy Ministers who have to use it as well as members of the Royal Family. My hon. Friend is on a perfectly fair point. He reminded the House of the point made by Lord Kimberley, on the question of the time taken by the aircraft to achieve its cruising height and, therefore, the time often spent in turbulence.
In considering what aircraft might be suitable to replace the Andovers, there is another matter that we should consider. The only aircraft that the RAF has available for long-distance VIP passenger

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flight beyond the range of the Andover is the VC10. While this offers excellent range, speed and comfort, it is quite a large and, hence, costly aircraft to use to transport small groups—Ministers as well as Royalty—and tying up one, or perhaps even two, of these aircraft for two weeks or so on such tasks reduces the number available for military use. It is desirable, therefore, that any replacement for the Queen's Flight Andovers should have greater range so that it can be used for journeys further afield than Western Europe.
My bon. Friend will appreciate that this rules out the HS125 and the Jet-stream. Both, of course, are already in RAF service and the HS125 has been used on occasion by some members of the Royal Family. But neither type has the range, payload or short field performance for which we are looking. Nor, I regret, has the BAe146, but even if a longer-range version were one day to be built, we could not consider it for the Queen's Flight until its safety and reliability had been proven over several years of passenger service.
Since I am sure that we would all wish any new aircraft to be a British design, this brings me to the BAe111. I should like first of all to emphasise that the suggestions that have appeared in certain newspapers that two such aircraft have been secretly earmarked for the Queen's Flight have no justification whatsoever as far as I am concerned. In connection with the examination that I am carrying out into the Queen's Flight, informal discussions have taken place with British Aerospace on the cost and availability of 111 aircraft, but I can assure the House that no decision has yet been taken, nor has any order been placed. My hon. Friend will be aware that such decision would be announced to the House first.
Having said that, it is obvious that the BAe111 475 series would be a strong candidate. It is a good aeroplane and in many respects, including range and payload, it would be superior to the Andover. It could carry out the majority of the long-range tasks that the Andover is unable to undertake and it has good short airfield performance. The procurement of such an aircraft for the Queen's Flight would also, of course, be an excellent advertisement for a British
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product. However, it would undoubtedly be costly to purchase and would also be more costly to run than the Andover, although it would admittedly be more economical than the VC10.
As the House will be aware, the cost of the Queen's Flight is borne on the Defence Vote, although charges are made for journeys made by Ministers of other Departments. My hon. Friend's suggestions about the way in which other Departments might contribute to capital cost will be duly noted and borne in mind by my Ministry and other Ministries.
Any proposal to re-equip the Queen's Flight must, therefore, be considered alongside other demands on the defence budget until new budgeting arrangements are devised. As the House is aware, these are many, since we have to make up for the failure of our predecessors to provide the forces needed for our defences. Not all of the many and pressing claims on the defence budget can be accommodated immediately. We are equally committed to restraining public expenditure, and no proposal, however well justified, can be allowed to pass without the most rigorous scrutiny. It is in the light of these considerations that the merits of replacing the Andovers must be examined.
There is also one other complication. If we were to decide—and again we have not done so—that the replacement of the Andovers must wait a year or so until other urgent defence needs were met and more money was available for projects of this type, we might find that we were too late to purchase the BAC111, since the production line in this country will not continue much longer though assembly of the aircraft will be continuing in Romania. It may, therefore, be a case of now or never for this particular option. Again, I am grateful to my hon. Friend for the succinct way in which he put this point.
It is these and related matters that form part of the study to which I referred earlier. This study has not yet reached the stage when I can make a statement, nor can I anticipate its outcome. I can, however, assure my hon. Friend that the matter is being progressed with considerable urgency
It is important that the Andover should be replaced. My hon. Friend expressed the need in terms of a modern jet, and

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I agree. He asked what financial provision is being made. The present provision is still as described to him earlier, namely, that the cost would fall directly on the defence budget, although it is a little early to say whether any change is envisaged. Thirdly, my hon. Friend asked what type of aircraft would be envisaged. I have already told him that there would be only one contender.
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I have no doubt that whatever the outcome of the study the Queen's Flight will continue to provide the excellent service that it has done to date and will be proud to do so. It deserves the praise of us all. Once again, I am grateful to my hon. Friend for raising this important matter.
Question put and agreed to.
Adjourned accordingly at twelve minutes past Twelve o'clock.