DUTIES OF AUTHORITY WITH RESPECT TO PROGRAMME CONTRACTS (Hansard, 10 November 1980)

§ Mr. Brittan
I beg to move, That this House doth agree with the Lords in the said amendment.

§ Mr. Speaker
With this we may discuss Lords amendments Nos. 19 and 20, the manuscript amendment to Lords amendment No. 20, and Lords amendments Nos. 31 and 32.

§ Mr. Brittan
It may be for the convenience of the House if I use this opportunity to speak to a series of amendments made in another place—in this case those to clause 23—as the amendments are fairly closely related. I shall be happy to discuss any specific points that hon. Mem- 84 bers may care to raise as I move that the House agrees with the Lords in each of the individual amendments.
I would like to begin with Lords amendment No. 24, in page 20, line 8. Although it is not the first amendment to this clause on the Amendment Paper, the amendments to the earlier part of the clause concerning independent local radio contracts are in a sense consequential to this one. As hon. Members will be aware, clause 23 is concerned with the duties of the IBA with respect to programme contracts and sets out, among other things, the procedures that the authority must adopt when it is awarding contracts for the supply of programmes. These include taking such steps as seem appropriate to ascertain the opinion of the public in the area or locality concerned and to encourage the making of comments and suggestions by members of the public. The clause recognises that this will often involve public meetings.
However, we did not originally include in the Bill the requirement, which now appears as Lords amendment No. 24, that contracts should always be advertised in order that the merits of rival applicants for a contract to provide services of local radio or television in an area or locality can properly be assessed. This omission was in the knowledge that the authority intended, in the normal course of events, to put up broadcasting contracts for competitive tender. Nevertheless, it became clear during our discussions in Committee and on Report that there was widespread concern among right hon. and hon. Members about the lack of a provision in the Bill specifically requiring the advertisement of contracts. It was generally felt that the public interest, the demands of fair play, and the need for ITV and ILR services of the highest quality available all pointed to such a requirement.
Any persons or organisations aspiring to hold a programme contract should have the chance to make their case in competition with each other and with any incumbent contractor, and the public should have an opportunity of evaluating the competing bids and indicating the kind of service that they would favour. A statutory requirement to advertise the contract would also eliminate any suggestion that the authority had looked no 85 further than the sitting tenant when awarding a new contract.
We found these arguments persuasive, and I undertook on Report that a Government amendment would be introduced in another place to require the authority to give notice of its intention to award a contract to provide broadcasting services in any area or locality and to invite applications for the contract. Lords amendment No. 24 is in fulfilment of that undertaking, and Lords amendment No. 25 is consequential.
I turn to the question of teletext contracts. The one exception to the universality of this requirement concerns teletext contracts. Teletext is still in its early stages and it is hard to predict what future developments will be and what precise structure may prove the most appropriate for it. For that reason, we wish to proceed with caution and support the IBA's decision that in the first period of teletext contracts—the four years starting from 1 January 1982—the successful applicant for the ITV contract in any area will be awarded the contract to provide the teletext service in that area. It is not, there, fore, appropriate to apply the new advertising of francises provision to the first round of teletext contract awards, but thereafter all teletext contracts, like all ITV and ILR contracts, will have to be put up for competitive tender.
Following the decision to place an obligation on the IBA to readvertise radio and television contracts towards the end of the contract periods, it was put to us that this would weigh unfavourably against new ILR contractors. It was those representations that led to the further amendments passed in another place relating to the maximum length of ILR contracts. It is an expensive business to establish an independent local radio station, particularly now that the network is expanding into some of the less populous—and, therefore, intrinsically less profitable—areas of the country. Accordingly, a new contractor, setting up a station now, needs more time to build up an audience, and hence advertising revenue, in order to cover his capital costs and initial losses, than most of the existing contractors required. We therefore felt that is was only right to allow those ILR contracts entered into after 1 January 1980 to run for a maximum of 86 10 years in the first instance. The substantive change is made by the new subsection to be inserted in line 38 of page 19—Lords amendment No. 20—and the associated amendments—Lords amendments Nos. 18, 19 and 31—to lines 32 and 35 of page 19 and line 9 of page 30, are consequential.
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It is conceivable that in the future new ILR localities may border on places already served by independent local radio. In such instances, there may be fringe areas served by both stations, but it would be wrong, in our opinion, to discriminate against a new contractor simply because small parts of his locality were already being served by another contractor. It is clearly a matter of judgment deciding which localities fall within the contingency that I have described, and is for that reason that the IBA is empowered by sub-paragraph (ii) of the new subsection to decide on this question.
I refer finally to the amendments to insert "or locality" after "area" in clause 23. They are purely technical. Section 12 of the IBA Act 1973 refers to the programmes of an ITV contractor being provided for an "area", but to those of an ILR contractor being provided for a "locality". The amendment is therefore designed to make the wording in clause 23 consistent with the wording of section 12.

§ Dr. Summerskill
I beg to move, as an amendment to the Lords amendment, at end to add: (c) Contracts for these maximum periods shall be suspended or terminated at any time by the Authority if in the opinion of the Authority the board of directors of a contractor is conducting its affairs in such a manner as to prejudice its ability to provide the public service for which it has contracted". I should like to speak on the duties of the authority with respect to programme contractors. In view of the maximum periods for contracts of 10 years and eight years, which have been introduced through a Lords amendment, my amendment seeks to include in the Bill, and seeks to repeat in addition to what is in the main Act, a specific power for the authority to suspend or terminate a contract at any time.
Ten years is a very long time for a contract period in radio, and eight years is a long time for a contract in Independent Television. Over the years an entirely new situation will be faced by radio and television. Great changes can take place during these years. In the first place, commercial interests, such as video discs, cassettes, pay cable and satellite transmissions, will expand rapidly. Another possible change of circumstances is that when a board of directors of a consortium is set up at the end of this year, when the new ITV contracts are awarded, although the board may seem united and purposeful, in four or five years time there may be deep divisions within the same board on the question where its best financial interests lie or where the primary trading interests of large shareholders lie. What was once a common interest may become a disparity of interests. The viewers could be served less well than they deserve.
We witnessed only recently the unseemly and prolonged spectable of the directors of an Independent Television company arguing in public and bringing their company into disrepute. Attached to the public television franchises are strict responsibilities and standards of public accountability. The Bill should make provision to ensure that the standards of public accountability are maintained.
When the IBA becomes aware of insoluble dissensions and divisions within a board of directors of any one of its con- 88 tractors in radio or television, it should have the power, in this measure as well as in the original Act, to cancel a contract if it thinks fit. It should be able to do that in the public interest where the contractor is conducting his affairs in such a way as to prejudice his ability to provide the public with the service for which he has contracted. If that power is not written into this measure the IBA may have to rely on lengthy and perhaps ineffective and equivocal processes. Recent events suggest that the sanction could be necessary in future. I remind the Minister of the biblical quotation The Lord gave, and the Lord hath taken away. Parliament is able through the IBA to award contracts. We should ensure that what is given in our name can, when necessary, be taken away.

Mr. Britian
I am glad that we have the opportunity to consider this matter in spite of the excitement elsewhere in the building. I understand the concern of the hon. Member for Halifax (Dr. Summerskill) that the authority should have the power at any time to determine a contract should it appear that a programme company is acting in a way that is prejudicial to the provision of the broadcasting services for which it has contracted.
I assure the hon. Lady, without reliance on biblical maxims, that I share her desire that what she suggests should be possible, and that if it were not possible I should wish the necessary provisions to be inserted in legislation. However, I am satisfied that the existing legislation provides the authority with sufficient powers in this regard.
Section 13(2)(a) of the Independent Broadcasting Act 1973 requires that every contract between the Authority and a programme contractor … shall … contain a provision reserving to the Authority an absolute right"— subject to giving the contractor a reasonable opportunity of explanation— to determine or suspend a contract should the contractor breach any of his obligations under the contract. That is modified by section 13(2)(b). which provides that there should be at least three breaches before a contract is determined or suspended. That is not 89 an unreasonable requirement, given the gravity of the sanctions.
Section 13(1) ensures that conduct prejudicial to the contractor's ability to provide the services for which he has contracted would be a breach of contract. It requires the IBA to include in the contract all the provisions that it thinks necessary to ensure compliance with the provisions of the Act. That is the key. It means that if the contractor were to behave in a way that the hon. Lady has foreshadowed, he would be in breach of his contract and the IBA would have the right to take away his contractual rights. As the Act requires the provision of a programme service that is of high quality and fulfils, for example, the conditions in sections 2(2) and 4, the contract with the IBA contractor must include provision to ensure that the contractor is able, and continues to be able, to provide a service of that high quality.
There are other powers that the authority has that I could go into if necessary. I think that I have said sufficient to demonstrate that it has adequate powers to deal with the situation that the hon. Lady envisages. The hon. Lady would like to have those powers in this measure. Whether they lie in this measure or in previous legislation is not of the greatest moment so long as the powers exist. We have not attempted in this measure to enact a consolidating measure. Television legislation, complex though it is, is mercifully not so complex that we have to resort to consolidating legislation.
90 I hope that the hon. Lady will accept that I have provided a satisfactory explanation for the absence of the provision that she seeks by her amendment to insert.

§ Mr. Nicholas Baker (Dorset, North)
Does my hon. and learned Friend accept that there is another way to protect against companies breaching the terms of a contract—namely, that the rights of complainants could be widened slightly so that individuals or bodies would have the right to complain to the Broadcasting Complaints Commission when a contracting company was apparently in breach of its contract?

Mr. Britton
That is something that could be provided. I cannot pretend that it is provided in this measure. Such a provision would give the complaints commission a different role from the one that we have envisaged for it. If it is felt that there has been a breach of the essential obligations on a company, that should be drawn specifically to the attention of the IBA and not to the complaints commission. The IBA would be bound to give the most serious consideration to any such complaints.