HC Deb 24 June 1980 vol 987 cc311-26
Dr. Summerskill

I beg to move amendment No. 1, in page 1, line 11, leave out '1966' and insert '1992'.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

With this we may discuss amendment No. 2, in page 2, line 5, leave out '2001' and insert '1997'.

Dr. Summerskill

Part I of the Bill involves the extension of the duration of the IBA's function. The Bill proposes to extend it for another 15 years. Our amendment proposes that it should be extended to 1992—another 11 years. Our proposal for 10 years was rejected in Committee. The Bill also proposes that the duration of function can be further extended for another five years.

I remind the Secretary of State of his observation on the report of the Select Committee on Nationalised Industries. On the recommendation that there should be no arbitrary limit to the IBA's existence he said: The Government considers that it is appropriate to review the structure of broadcasting in the United Kingdom from time to time in order to ensure that it is both flexible and responsive to the nation's needs and that it is appropriate, for this reason, to have some time limit, though an adequate one, on the live; of broadcasting authorities. We agree with that observation. We differ only about the length of the time limit.

We submit that 15 years is too long a life to give the IBA without the theoretical possibility of Parliament truncating its existence. We must ensure that it is, as the Home Secretary said, responsive to the nation's needs. When the House is considering the length of life or duration of function of the IBA or the BBC it must take into account not only the existing functions and powers but the major developments which can and will take place and which will change and expand the functions and powers. We must bear in mind that the IBA's function will continue to be the supremely influential and responsible one of providing television and local sound broadcasting services.

We are adding to that the new function of providing an innovative fourth channel. That can alter, for better or for worse, the future shape of British television and make the next 11 years far more significant in the life of the IBA than the last 11. Even hon. Members who have no adverse criticism of the way in which the IBA has functioned in the last 25 years must admit that it is about to enter uncharted seas with the fourth channel. Nobody can predict the outcome.

This is not the time for Parliament to extend the IBA's life for another 15 years. The uncertainties of the fourth channel are made more profound by the extreme vagueness and permissiveness of the Bill. Most of our attempts in 12 sittings of the Committee to introduce more specific guidelines for the IBA in its relationship with a subsidiary were frustrated by the Minister. That applies particularly to the all-important powers of the subsidiary which we are not even discussing today.

The Bill is more significant for what it leaves out than for what it includes. In the exercise of its powers over the IBA Parliament must strike the right balance between control and freedom. That balance is not struck in the Bill. It would be complacent for the House to decide to allow the IBA to run for 15 years. That suggests a lack of real concern.

In a lecture to the Royal Society of Arts last month Sir Brian Young, the director-general of the IBA predicted that by the end of the century the number of channels available will be such that viewers will be making their own choices from a multitude of sources from Britain and abroad. Sir Brian made it clear that the whole infrastructure of our broadcasting services will have to be kept closely under review well before the year 2001 mentioned in the Bill.

One of the major functions of the IBA is to ensure that the Exchequer receives, through the levy, hundreds of millions of pounds from the operations of independent television. What will be the effect of increasingly competitive television on the finances of the IBA, not to mention the BBC, which is already facing a crisis? Perhaps the method of funding the public broadcasting services will have to be reviewed and altered. However much we welcome the appointments of Lord Thomson and Mr. Edmund Dell, however much we trust the members of the IBA, we must recognise that they might not be there for 15 years and their successors might not be so welcome to the House.

The future of broadcasting and of the IBA's role is full of uncertainties and new developments. Parliament must be vigilant in ensuring that a high standard of television programmes is maintained. We cannot assume that that will be so for the next 15 years.

In Committee the Minister gave practical and administrative reasons for the Government's decision to give the IBA 15 years' life. They related to work that the IBA is doing and to the programme contracting arrangements. We are told that companies with which the IBA enters into contract for the provision of programmes need the assurance of a reasonably long-term contract. It is said that it would be possible to award two successive eight and seven-year contracts during its life. Our amendment also allows for two successive contracts, but of different lengths. We recognise the feelings that arise from uncertainty and insecurity about the future of the IBA and the contracts. After all, hon. Members have contracts which last for only five years. We regard the parliamentary accountability of the IBA as an equally, if not more important, factor than the length of contract. If the Minister gives examples of difficulties I am sure that the wit of the Home Office is sufficient to evolve a method or special arrangement to solve the problems, even if that involves minor legislation.

Parliamentary accountability by limiting the life of the IBA has no substitute as a method of reviewing the structure of broadcasting in general and the IBA in particular, as the Home Secretary recognised in the observation which I quoted. As the IBA plays such an important and influential role in our lives, it should at least come under parliamentary scrutiny every 11 years, if 10 years is impossible. That must be good for broadcasting standards. To maintain those standards, we need the sanction of a shorter life span. No previous Bill has given commercial broadcasting a span of life that is as long as 15 years.

7.30 pm
Mr. Russell Kerr (Feltham and Heston)

My hon. Friend has made frequent mention of the difficulties of effective parliamentary scrutiny of the activities of the IBA. A piece of machinery has effectively scrutinised the IBA and other nationalised industries day by day for about 25 years. That machinery was in the hands of this august assembly until it was put to a relatively painless death about 12 months ago. At that time the Select Committee on Nationalised Industries, of which I had the honour to be chairman for five years, was done away with—to use an unparliamentary expression—at the will of the House. It literally makes me slightly sick that my hon. Friend, despite her delightful personality, is being forced to repeat the lament that the House cannot scrutinise the great nationalised industries, including the IBA. I hope that the House will soon sober up in its attitude towards this important matter.

Dr. Summerskill

I am sorry that my hon. Friend is suffering from nausea as a result of my remarks. The very Select Committee to which he referred recommended that there should not be an arbitrary limit to the IBA's existence. The Home Secretary and I agree that that recommendation is correct if, as the right hon. Gentleman said, we are to ensure that the structure of broadcasting is both flexible and responsive to the nation's need. We disagree only about the length of its life.

There is no substitute for parliamentary scrutiny. Under the Bill, the life of the IBA will extend into the life of the next Parliament but one. The next Parliament will not be able to make the IBA accountable to it. In his Cambridge speech last September, the Home Secretary said: The Authorities are themselves accountable to Parliament for their decisions, and the services they provide, and Parliament itself is accountable to the electorate. This is the system we must maintain as a basis, for television in a free society."' I am sure that the House agrees with that. The Bill's proposal for the years 1996 and 2001 reminds me of the famous comedy, in which it was discovered that the leading character had been deposited by his parents in a handbag at the left luggage office at Victoria station. That is what we appear to be doing with the IBA. We seem to be putting it into a parliamentary left luggage office for 15 years. If we do so, we shall be careless, to say the least. In broadcasting policy there is for this House, an importance in being earnest.

Mr. Whitehead

My hon. Friend the Member for Halifax (Dr. Summerskill) has just given an admirable impersonation of Lady Bracknell. The amendment is a minor adaptation of an amendment that was contested in Committee. My hon. Friend the Member for Feltham and Heston (Mr. Kerr) has already referred to the argument that was used. It was argued that there was always a comparative lack of parliamentary scrutiny. He was correct to say that as a result of the abolition of the Select Committee on Nationalised Industries—a decision with which I concurred—it was less likely that there would be any scrutiny by a Select Committee. I am a member of the Home Affairs Committee, which, inevitably, covers a wide area. It is unlikely that an exhaustive study of the IBA will take place twice in a decade, as happened under the Select Committee on Nationalised Industries. There is too much pressure on the Home Affairs Committee to consider other subjects. We are considering what may occur if the life of the IBA is extended for not a decade—as has been the case since the original Act of 1954—but beyond the lifetime of two complete Parliaments.

Certain questions arise in the minds of most observers of the authority when they consider its recent performance. How has the authority handled existing contractors? What patterns of ownership has the authority allowed to build up? What forces for innovation and change is it introducing into the system? How will those forces of innovation be manifested in the new fourth channel? Those questions give rise to concern.

The questions that I have posed seem to argue in favour of parliamentary scrutiny and accountability at briefer intervals than are provided in the Bill. The authority's life is now coming to an end. Its lifetime has already been extended on several occasions by the ministerial fiat of both parties. We are therefore entitled to consider some aspects of the authority's control and accountability.

There has been a good deal of criticism about the degree to which existing television and radio contractors have been allowed to operate. It would appear that the normal provisions for the collection of levy, secondary rental and so on have often been set aside. The only recent example of parliamentary scrutiny is that of the Public Accounts Committee. It recently discovered from the IBA that the authority had allowed two companies—and then more—to reclaim payments of levy against the installation of capital equipment. They were allowed to do that from 1976, and the arrangements were backdated to 1974. As a result, the Exchequer lost millions of pounds. That issue was referred to in Committee and should be of concern to the House.

This month, an article appeared in the New Statesman, entitled "Pop Profit and the IBA". It suggested that as regards the lucrative, larger commercial radio contracts, much of the money from the secondary rental that should have gone to the authority and subsequently to the Exchequer, did not do so. Loose and tenuous arrangements were being made for refunding secondary rental to companies that made programmes of merit. I am talking, not about companies that are struggling on the breadline, but about those that are getting a good rate of return. Those companies look forward to a secure investment for some years ahead. Such companies can reclaim money whenever they make a serious programme.

The article suggests that if one looks at the accounts of the 19 radio contractors for the last complete financial year one will see that they have no uniform way of dealing with secondary rental, and do not show whether that rental has been paid. These matters may be very tedious and may not be a matter for lively debate in Parliament, but they are the essence of the scrutiny which we in Parliament should apply to the authority. I do not think that the Public Accounts Committee, although it turned up some interesting facts a few months ago, is an adequate and sufficient vehicle for the kind of examination that we should carry out.

I wish to look briefly at the extension of ownership within the system. The difficulty of producing the necessary and healthy process of change seems inevitably to be intensified the longer the Independent broadcasting system continues in existence. The larger companies, by the very nature of the fact that they have been in existence for so long, that they represent such immense assets and such powerful vested interests in terms of both trade unions and management, are unlikely to be unseated in the perennial round franchise applications. Those large companies are expanding more and more in terms of their patterns of cross-ownership in a way which this House should examine at least once a decade. I do not believe that there is a sufficient process of examination implicit in the procedure for allocation and re-allocation of contracts.

When we come to a later amendment in my name, we shall see that, contrary to some of the undertakings that I thought had been given in Standing Committee, the procedure for allocation, re-allocation and re-advertisement of contracts in radio at least—when we come to the statutory period for such an exhaustive re-examination after eight years—are unclear and likely to lead to powerful existing contractors being reappointed. If that is the case, we should be particularly concerned with the expansion of oligopolistic ownership through the system.

The other week I was looking at the magazine Broadcast in which I saw a reference to a former employee of the IBA who is now the managing director for Standard Broadcasting—Mr. Robert Kennedy. Mr. Robert Kennedy, according to this article, now has interests in 12 independent local radio stations—Capital, Metro, Pennine, Plymouth, City, Trent, Swansea, Devonair, Severn Sound, North of Scotland Radio, West Yorkshire Broadcasting and Centre Radio. The latter is the new radio station in Leicester. When an organisation which is supposed to be dealing with local radio has holdings, as Mr. Kennedy's company has, of nearly 25 per cent. in the largest of all radio stations, Capital Radio, is not that kind of extension of influence something that we should scrutinise? I do not think that the process of scrutiny can just be left to the authority. Every now and then it must come back to Parliament which must be in a position to ask whether the situation is right. We must ask whether this makes for the kind of local broadcasting that we want. I do not believe that the 15-year period, or longer, will give us anything like the degree of accountability to Parliament that we want.

7.45 pm

My last point concerns the fourth channel. We see in the press that our former colleague Edmund Dell, running in tandem with the deupty chairman of Capital Radio, Sir Richard Attenborough, will run the fourth channel. We also read that four people have already been appointed their—appointment has not been announced, but they come from the ranks of the ITCA—to the fourth channel board. The appointees include three managing directors from the companies. At a later stage I hope to refer to this at greater length. The power of innovation which will be open to the new fourth channel service means that there is already reason to keep a beady eye on the IBA to ensure that there should be a novel and original element within that service.

For all of those reasons, I believe that the period set out in my hon. Friend's amendment is the correct maximum before which the authority should come back for the full scrutiny of Parliament, and at that point Parliament must decide whether there should be a further extension of its life. When we consider the area into which we are now moving—the immense extension of Teletext, off-air recording and matters of this kind, all of which are charges directly or indirectly on the authority with all its responsibilities in television and radio—we can see that after 10 or 11 years the world will be so different that that will be the moment for Parliament to have a further accounting with the authority.

Mr. Merlyn Rees

It is not usual to have two Front Bench speakers, but I thought that we might save a lot of time if I raised my question about the levy now. I am also tempted to go into the question of accountability, which we have not yet got right. In a theoretical sense the IBA is accountable to Parliament, but in a practical sense it is not, and that is mainly because of our procedures.

I raise the question of the television levy because it did not loom at all in our discussions in Committee. We dealt with the levy and the rental for local broadcasting, but we did not get involved in it, and when I attempted to put down amendments to the Bill they were ruled out of order, for perfectly proper reasons.

The House is agreeing to giving the IBA authority over the channels for a long time, and I think that we should hear from the Home Secretary how he views the question of the levy. Certainly when I was Home Secretary I was under pressure to increase the levy. Discussions on the subject had not concluded when the last Government left office rather quickly. The question of the levy looms large because ultimately it is a matter of taxation. It may be argued that no public expenditure is involved in the way in which the Government are dealing with the fourth channel as opposed to the way in which we intended to deal with it, but in practice it means that less money is leviable, so in a sense it is public expenditure in reverse.

I wish to refer to the fifth report of the Public Accounts Committee, which reported in February of this year. Since 1974 the levy was placed on profits rather than revenue, and the IBA had the statutory responsibility of determining the leviable profits, as opposed to the levy. The fifth report of the PAC said, in paragraph 6: Given that substantial public revenue is involved, our examination convinces us that the Government should have the final right to prescribe how the statutory requirements should be administered". I wonder what the Government view of that will be.

What is the situation now? In 1976 the IBA ruled that for levy purposes depreciation should be in public accounts as a whole. Will this continue? Bearing in mind that a new licence period is just beginning, would it not be more equitable if the capital base of the new contractors at the beginning of the new licence period were taken into account? Also, should not market value be taken into account? That is the traditional way of doing Things when public ownership is involved.

What about the question of relevant expenditure? The fifth report of the PAC stated: the IBA exclude income from the sale of programmes overseas from a contractor's total income but make no corresponding reduction in the total expenditure for an appropriate part of the initial production costs. However…companies may now increasingly seek overseas sales before committing themselves to producing a major series of programmes. The report is clear that, if the decision is taken that the programme is to be made and then sold abroad, at least some of the revenue obtained from such sales should be taken into account.

The Financial Times reported as recently as 7 June that there was: A joint strategy aimed at establishing a leading position in the US market for video disc systems". It listed the companies. One learns from that report that Thorn-EMI has a 50 per cent. shareholding in Thames Television. That further shows that overseas sales should be taken into account.

There is an expanding market for overseas sales. Satellite television will come well within the period laid down for the life of the IBA. Home cassettes and many other ventures come outside the category of home channels. None of those facilities would be available if the companies did not get the franchise.

We are asking for the first time for the Government's view on the levy. We are giving the IBA a long life span. The Government determine the rate, but for some time the method has been in the hands of the IBA.

The Secretary of State for the Home Department (Mr. William Whitelaw)

I shall reply first to the points raised by the hon. Members for Halifax (Dr. Summerskill) and for Derby, North (Mr. Whitehead) about the exact time span, which is the basis of the amendment. I shall also take the opportunity afforded me by the right hon. Member for Leeds, South (Mr. Rees) to outline the Government's view on the future of the levy. It would be preferable to do that now rather than on Third Reading, which will be much later tonight.

The hon. Member for Halifax said that we all agree that there should be a time limit. The hon. Member for Felt-ham and Heston (Mr. Kerr) regretted the demise of the Select Committee on Nationalised Industries. I am not sure whether my vote for its demise was wholehearted, but we did it, and there it is. That Committee did not want a time limit. From his distinguished membership of the Annan committee, the hon. Member for Derby, North will be aware that that committee felt that 15 years was about right. I shall not argue too much about the contracts, as the hon. Lady threatened me that I should not. A lifespan of 15 years would allow two contract periods of seven or eight years in the instance of the ITV contractors, enabling the authority to make any appropriate changes at about the midpoint.

Governments have extended the life of the IBA. The hon. Member for Derby, North said that that was done by ministerial fiat. It happened under a Labour Government, and I should have objected had it been done by ministerial fiat. The legislation was carried through perfectly properly by an Act in this House and also by the BBC supplemental charter. The House set a period which it evidently considered to be too short, but I wonder whether it was wise to extend the IBA's life span for further periods by other Acts. I do not make too much of it, but it is perhaps an argument in my favour. It is important for the authority to have a reasonable life span. There is also substance in my point about the contracts.

With regard to accountability, in this House we have various powers. The Select Committee on Nationalised Industries has been replaced by the Home Affairs Committee. The hon. Member for Derby, North made the point that that Committee has a wide range of subjects to discuss. Who am I to deny that? I am responsible for the range of subjects. Nevertheless, it can, and doubtless will, inquire into the IBA's activities. In its short life it has already inquired into a good many subjects. I welcome the reports that suit my views, and I do not necessarily welcome those that do not. The Public Accounts Committee can also inquire into the IBA's activities.

The other factor with regard to accountability is the power of this House to appoint members of the IBA board, and that relates to the hon. Lady's point about getting the balance right between control and freedom. The hon. Lady said that we may have successors to Lord Thomson who would not be welcome to the House. If that is so, it would be the fault of this House, which has the power to appoint them. On the whole, under Governments of either party, those appointed to such boards and certainly the people at the top, have nearly always commanded a wide measure of support from the House, as does Lord Thomson. As long as I am Home Secretary, I shall try to ensure that there is a wide measure of agreement in the House about those who are appointed to the board.

The argument between 15 and 11 years is perfectly proper. I believe that the Annan committee is probably right, and that 15 years gives us a chance for the two contract periods. If we exercise the powers that we have in the House, I believe that we can ensure acountability from the IBA. It is up to the House to see that the broadcasting authorities are accountable to us. The hon. Lady was kind enough to refer to my Cambridge speech. I believe that the hon. Lady is right, and that our whole broadcasting policy should be founded on the balance between control and fredom.

We in the House have an enormous part to play. My anxiety about some of the things that have been said is that perhaps we underestimate the extent of the power available to us if we are prepared to use it. For those reasons, I hope that we can stay with 15 years.

8 pm

The right hon. Member for Leeds, South (Mr. Rees) spoke about the levy. If I speak in detail, it is because the levy is a taxation matter and it is important that the words that I use should be interpreted correctly. My off-the-cuff words are not always capable of such a correct and precise interpretation. Therefore, I shall stick to the words that I have before me.

The House will remember that on Second Reading I informed hon. Members that my right. hon and learned Friend the Chancellor of the Exchequer and I were reviewing the whole operation of the ITV levy. I explained that we were firmly of the view that the public should share in the profitability of the exploitation of a public monopoly, that we were anxious about the high marginal rate produced by the present system of levy, together with corporation tax, and that we believed that the companies should be encouraged to be more cost-conscious.

Although the review has not yet been completed, I should like to tell the House about our present thinking on those matters. I am conscious of my responsibility not only to maintain, but to extend and enhance, the range and quality of television already available to the public. I have also to consider the effect which developments may have—as far as can be foreseen, and those are important words in broadcasting—on the totality of broadcasting in this country.

The effects of the special position in broadcasting enjoyed by the programme contracting companies and of intervention in it by the Government in the public interest are more difficult to interpret when the immediate future is uncertain. At the present time, the combination of structural changes in independent television in the early 1980s—the new franchises, the introduction of the fourth channel and, like it or not, the possibility of breakfast-time television—make the future particularly uncertain. The high marginal rate which is a feature of the present ITV levy system has some inherently unsatisfactory elements and it could in certain circumstances appear to be a positive incentive to unnecessary expenditure. Those are some of the points that the right hon. Member for Leeds, South had in mind.

However, the costs of setting up the fourth channel will be substantial and it seems clear that there will be a significant decline in the profitability of the ITV companies during the period when the fourth channel is being introduced. That in itself may be expected to provide further incentive to the ITV companies to be economical in the use of resources.

In addition, I remind the House that there is power for me, with the consent of the Treasury, to make changes in the levy by order. That would enable me, if I thought it right to do so, to change the rate of levy. There is also power for me, with the consent of the Treasury, to prescribe a minimum amount of levy to be paid by a programme contractor if I am of the opinion that the levy to be paid by the contractor is deficient because of the excessive expenditure. The use of that power would be bound to have the effect of involving the Government more closely in the assessment of matters relevant to programme content, which would have its problems. but I intend, in consultation with the IBA, to continue to keep the use of the power under review.

My right hon. and learned Friend and I have concluded that we will not propose amendments to the Broadcasting Bill to change the present powers in respect of the levy. It must be remembered that the present profits-based levy replaced a levy based on advertising revenue which was found to be so unsatisfactory only six years ago that both political parties agreed that it could no longer stand. As a levy based purely on advertising revenue has been demonstrated to be unsatisfactory, there would be no point in going back to it. But I cannot rule out change in the future.

Although we have rejected a levy based purely on advertising revenue, it may be that a rather more sophisticated system, combining some elements of a revenue-based levy and some of a profits-based levy, would be found to be the most appropriate. If, however, we were to contemplate making such a change in the ITV levy, we should also need to consider the implications for the ILR system. For those and other reasons, the option requires more thorough study and consultations, which I am setting in train. I will report to the House any conclusions reached by my right hon. and learned friend and myself.

I hope that in answering the right hon. Member for Leeds, South in such detail I have shown that we are of a similar mind to him and that we cannot be wholly satisfied with the present arrangement. We must look in detail at a more satisfactory system for the future.

Mr. Whitehead

Does the right hon. Gentleman's statement imply that the re-examination that is being undertaken will include a look at the payments of secondary rental and levy within the ILR system? The right hon. Gentleman seemed to imply that but did not quite say it.

Mr. Whitelaw

Obviously I want to stick carefully to the words that I have used, for reasons that I am sure the hon. Gentleman will accept. However, I undertake that the various aspects of the problem will be considered with the greatest care before we make a decision. That is why we do not want to be rushed into a decision in the context of the Bill. I suspect that I take the House with me on that.

The right hon. Member for Leeds, South and the hon. Member for Derby, North asked about overseas sales and relevant expenditure. I hope that the new clause that my hon. and learned Friend the Minister of State introduced, which is now clause 27, goes some way to meet those points. It requires the IBA to draw up a statement of the principles to be followed in ascertaining the levy liability of programme contractors and, in particular, the way in which the authority assesses relevant expenditure and relevant income. It was the purpose of the clause to go some way towards meeting the points that have been raised and I think that it does so.

On expenditure overseas, there are various balances to be struck. This country gains from exports and that gain must be weighed against the other factors that the right hon. Gentleman rightly mentioned.

I apologised for having taken some time on a detailed matter, and I am grateful to the right hon. Gentleman for having given me the opportunity to deal with it at this stage. While we may have disagreements about the length of life of the IBA, we all agree that there should be a time limit. As I have been able to set out good reasons why 15 years is reasonable, as the Annan committee thought, and I have made the important point that there is accountability, which the hon. Member for Halifax and others did not mention, I hope that the House will agree that 15 years is reasonable. I cannot accept the amendment aimed at reducing that time. However, I hope that I have been able to help the House, particularly on the question of the levy which is an important matter.

Mr. Merlyn Rees

It would be tempting to take discussion on the levy further. We are interested in what the Home Secretary has said, and his reference to clause 27. There are all sorts of arguments on the question of time. This has been a follow-up debate to that which took place upstairs. On behalf of my hon. Friend, I beg to ask leave to withdraw the amendment.

Mr. Deputy Speaker

The amendment was moved by the hon. Member for Halifax (Dr. Summerskill).

Dr. Summerskill

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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