§ Order for Second Reading read.4.21 pm
§ The Secretary of State for the Home Department (Mr. Leon Brittan)
I beg to move, That the Bill be now read a Second time.
The Bill marks a major step along the road of increasing opportunities for consumer choice in the provision of broadcasting services. The pace of technological change is such that we are no longer, as with earlier broadcasting legislation, talking about the addition of one new service but of the potential for a whole range of new services—some local, some national, some financed by advertising, others by various kinds of pay television.
The Bill deals with two forms of programme distribution that have already been the focus of much debate: cable and direct broadcasting by satellite—DBS. Both create new industrial, technological and cultural opportunities. DBS is more obviously an extension of conventional broadcasting, with its ability to achieve universal coverage and its use of frequencies which are available in only limited supply. Cable, on the other hand, occupies more than a halfway house between broadcasting and telecommunications. There is no theoretical limit on the number of channels that can be provided and, unlike DBS, cable has the potential for providing interactive services. Cable services, however, can be provided only where cable systems are installed, and that means that it is bound to be a number of years before even half the homes in the country will have the opportunity to subscribe.
The Government's approach to both those new developments is to create the framework within which investors can reach their own decisions on the risks and opportunities involved. The opportunities are real, but so are the risks. At the international level we have in recent times seen, for example, how some firms have made large sums of money out of the video cassette recorder while others have lost large sums of money with the video disc player. In the case of both cable and DBS the Government believe that the right decisions are more likely to be taken if assessments of market potential are taken.by those who stand to gain or lose by the outcome. For the Government to invest large sums of taxpayers' money would be quite wrong. That means that the Bill is not a blueprint for what will happen but rather an enabling measure designed to unlock the door to the future for whose who are willing to go through it.
I should first like to concentrate on cable, which currently accounts for the lion's share of the Bill. The publication of the report of the Prime Minister's information technology advisory panel in April 1982 brought the whole question of cable development into the public arena; and since then we have had three opportunities in the House to debate the way forward. The foundations for part I of the Bill were laid by the inquiry chaired by Lord Hunt of Tamworth. Although a few of the details have changed, the broad approach is the one advocated by that inquiry. The Hunt inquiry recommended the setting up of a new Cable Authority, for which the Bill provides and which is to be responsible for issuing licences to cable operators, for exercising a modest degree of continuing oversight over their activities and for reviewing 748 their performance from time to time in the light of such other applications as might be made from aspiring operators.
The Bill does not, of course, cover the telecommunications and technology aspects of the development of cable. The licensing of cable systems, as opposed to services, will be a matter for my right hon. Friend the Secretary of State for Trade and Industry and the Director General of Telecommunications under the Telecommunications Act 1984, which recently completed its passage through this House and another place. Together, those two pieces of legislation will provide a clear and settled regulatory framework against which cable can develop.
We made it clear in our White Paper that we were most anxious not to lose the momentum that had already been created while this framework was drawn up. That was why we decided to launch the pilot project exercise. We were glad to be able to agree in principle to allowing 11 operators to go ahead with their proposals. In addition, I have now authorised a number of existing cable operators to offer new services under their present systems.
Part I of the Bill establishes the new regime for the regulation of cable services. Clause 1, together with schedule 1, provides for the setting up of the Cable Authority. The authority is to consist of a part-time chairman and between three and 10 other members and will be financed out of licence fees paid by the operators. Our intention is to appoint a chairman and six members in the first instance, but the number can be adjusted if that proves necessary in the light of experience. I hope to be able before very long to announce the appointment of a chairman-designate.
Clause 2 defines the cable programme services to which the various clauses of the Bill apply and, most importantly, those services that will be licensable. In general, licensable services will be those that are offered to the public, whether to two or more private homes, as in the case of diffusion services, or, as in the case of restricted services, to a place, such as a cinema or public house, where members of the public will come together to watch them. A private service sent from one point to one other where the general public do not have access will not be licensable, nor will a service which, broadly speaking, is not analogous to television or radio. The kind of services that will be subject to the competitive franchising procedures under later clauses will be prescribed by statutory instrument under clause 2. This is because, with ever-changing technology, it is necessary to retain some flexibility, but we have made it clear in the White Paper and elsewhere that we are talking about services provided over the new wideband systems. It is those services that, under clause 4(8), it will be the duty of the Cable Authority to promote.
Clauses 3 to 9 set out the procedures to be followed by the Cable Authority in the licensing of cable programme services, including the detailed franchising process for diffusion services provided over new wideband systems. In the case of these prescribed diffusion services, licences will run for up to 12 years in the first instance and eight years thereafter. The Cable Authority is required to give an opportunity for competitive applications in each case and to allow for local views to be expressed before reaching its decision. It must also work in close consultation with the telecommunications licensing authorities. Of particular importance is clause 7, which 749 sets out the matters that the authority must take into account in considering the issue of a licence for a prescribed diffusion service.
Clause 8 sets out restrictions on the holding of licences by particular individuals and bodies. The main objectives are, firstly, to prevent the control of licensed companies resting with foreign, political or religious interests; secondly, to guard against excessive concentrations of editorial control; and, thirdly, to forestall the possible development of anti-competitive and other practices that might be contrary to the public interest. In fulfilment of undertakings given in another place, we shall be bringing forward amendments to give the Cable Authority a duty to guard against excessive accumulations of interests in separate cable companies.
Clauses 10 to 15 contain a number of key provisions that place certain duties on the authority in relation to the content of programmes and advertisements. Under clause 10, the authority must see that programmes maintain, among other things, proper standards of taste and decency, and accuracy and impartiality in the presentation of news. Of particular importance is the requirement on the authority to ensure that "proper proportions" of material to be included in programmes are of British or other EEC origin. There was considerable discussion on this provision in another place. I know that there are many who believe that there should be a fixed statutory quota from the outset, but the Government believe that the approach embodied in the Bill is the right one. There needs to be flexibility so that the Cable Authority can take account of all the relevant circumstances, including changes over time in the availability of suitable domestic material at a price that operators and the consumer can afford. It is our wish to see cable increasingly draw on, and generate, domestic programme material, but it is not in anyone's interest to try to impose unrealistic burdens at the outset.
Clauses 11 and 12 deal with other programme matters and with the framework of rules which are to apply to advertising. These are less detailed than in the case of independent broadcasting and we believe that there will be greater scope for new forms of advertising and for sponsorship, subject to a code of standards laid down by the Cable Authority. Amounts of advertising on cable will be unrestricted, except where the nature of the service makes it appropriate for the ITV limits to apply.
§ Mr. Gerald Kaufman (Manchester, Gorton)
I do not know whether I heard the right hon. and learned Gentleman correctly. How does that chime with clause 12(3)? He seems to have turned that on its head by what he has just said.
§ Mr. Brittan
That is not correct. On detailed consideration of the Bill, I believe that the right hon. Gentleman will find that what I have said is consistent with what has been said publicly, in the Bill and in another place, about what is proposed.
Two further important duties are imposed upon the authority by clauses 13 and 14, which are designed to protect the position of existing broadcasting services. Clause 13 contains the "must carry" rule under which the existing BBC and IBA services will have to be transmitted as part of the licensed cable service. Clause 14 safeguards the position of viewers of existing services from the "creaming off' of popular events by cable. We shall be bringing forward in Committee amendments designed to 750 improve the drafting of both clauses; and in relation to the events covered by clause 14 we shall also introduce a new provision designed to reduce the risk of their being creamed off by foreign broadcasting services aimed at this country. We shall also, separately, be introducing new provisions to guard against the dishonest reception of cable and satellite services.
Clause 15 imposes upon the Cable Authority a duty to consider and adjudicate upon complaints of unjust or unfair treatment or unwarranted infringement of privacy in cable programmes, the type of complaint which in relation to the existing broadcasting services is currently handled by the Broadcasting Complaints Commission. The Government have, however, been persuaded by the arguments in another place that this duty would be mare appropriate to the Broadcasting Complaints Commission, with its existing expertise, than to the Cable Authority. We shall accordingly be tabling new provisions to take the place of clause 15.
That is a brief summary of the provisions which constitute the core of part I. They are supplemented by clauses which deal with the powers and finances of the authority and with various amendments to the civil and criminal law. Clauses 16 to 18 set out the range of enforcement powers which are available to the authority. Clauses 19 to 22 deal with the finances of the authority and the submission of its annual report to the Home Secretary. The authority will be expected to become self-financing at the earliest possible date; but for the initial period the Government are willing to make up to £2 million available to it on a loan basis as working capital. Clauses 23 and 24 make changes to the Copyright Act 1956 to take account of the development of cable. Cable operators are given a copyright in the material which they put out and the position of other rights holders with regard to the use of their works over cable is strengthened. This is a particularly intricate area of the Bill and some further drafting amendments will need to be made in Committee. We made it clear in the White Paper that cable operators would be subject to the general law on obscene publications, and clauses 25 to 29 clarify and extend the existing law relating to obscenity, as well as dealing with incitement to racial hatred, defamation and the use of wireless telegraphy apparatus. Clauses 30 to 35 make supplementary provision in relation to part I.
Part II deals with broadcasting matters as opposed to cable. Before I come on to the major question of satellite broadcasting, I should like first to say a few words about a further new provision we propose to introduce. The spectrum available for VHF radio broadcasting will extend during the next decade or so and, as we announced last year, is likely to offer the facility for two new national networks in 1990. One of those will go to the BBC, so that Radios 1, 2, 3 and 4 will each have a VHF network of their own. The other will go to the IBA, to provide for the first time a service of independent national radio.
Decisions on the precise arrangements for the service and its regulation are a matter for the future, but the creation of a national network of transmitters is a substantial task which, if it is to be carried out economically and still be ready for 1990, should begin in just over a year's time. I shall therefore bring forward in Committee brief enabling powers to allow the IBA to begin the programme of transmitter construction before a 751 contractor is appointed, just as it was empowered to install the transmitters for Channel 4 before final decisions on that service had been taken.
I come now to the subject of DBS. Hon. Members who follow this subject in detail will be aware of a good deal of speculation in recent weeks about a possible new approach which would assure the initial stage of DBS for this country. Part of my task today is to tell the House of that approach and the implications for the Bill. First, I shall say a few words about the DBS provisions in part II of the Bill and the general policy background.
As hon. Members will recall, DBS is a means of transmitting television and sound signals from a single transmitter in space direct into the home, where the signals are received with the aid of a small dish aerial and converter equipment. DBS signals can, and will, also be received at the head ends of cable systems and distributed like other cable programmes. However, cable is not necessary as a means of distribution—in contrast to the programme services which are now beginning to be transmitted by low-powered telecommunications satellite for distribution as part of the package of programme services provided by cable operators.
The United Kingdom, like every other European country, has been allotted by international agreement five DBS channels. The Government's decision, announced in March 1982 by my predecessor, now Lord Whitelaw, was to allow and facilitate this opportunity to be taken, for technological and industrial as well as broadcasting reasons. Hence Lord Whitelaw said two years ago that the BBC would be authorised to go ahead with plans for a two-channel service, using a satellite system provided by the Unisat consortium. At the same time he looked forward to the participation of the independent sector in DBS once a legislative and regulatory framework had been created. That is what part II seeks to provide.
Part II empowers the IBA to provide DBS services. The IBA will be the broadcasting authority and, wherever relevant, its powers and responsibilities under the Broadcasting Act 1981 will apply to DBS also. The IBA would provide DBS services, as it does terrestrial services, through contracts with programme companies, chosen through a franchising process. Each DBS franchise would last for 12 years, in recognition of the fact that the successful applicant would bear the full responsibility and liability for satellite provision. Services could be financed by subscription or advertising or both, and, as and when there was a sufficient level of profit, would be subject to levy. In terms of the IBA's finances, independent DBS will have to stand on its own feet. The rentals received from terrestrial television will not be allowed to subsidise the IBA's DBS operation unless exceptionally the authority applied for my consent and I made a direction to that effect. Any such direction would have to be laid before Parliament.
The Government remain committed to the framework I have described, of permitting competing BBC and independent sector DBS services, for the longer term. We have, however, accepted the case that has been put forward that something different is needed for the initial stage of facilitating DBS. First, DBS is a high-risk, high-cost venture which would initially be a heavy burden for any single operator. Secondly, its viability will depend on the rate of build-up of its audience, who will have to incur 752 appreciable expense to equip themselves to receive a service. Financial projections suggest that a service will not break even until it can attract some 2 millon subscribers, and that will take some years. There are real doubts whether there is room, from the outset, for two services competing for an audience. These uncertainties led the BBC to explore the opportunities for partnership with others, latterly and in particular with the IBA and ITCA, the association of ITV companies. While the Government were not the prime mover in these talks, we have stayed in close touch with them, as we want to see an opportunity provided for a British DBS service to be established on a firm footing. We have seen our task as not to coerce anyone into a particular framework for DBS but to listen to the arguments and be ready to play our part in creating the conditions in which a venture worthy of support can go forward.
Having reviewed the case put forward, the Government have concluded that the best hope of securing a good-quality British DBS service in the late 1980s lies in a joint project to bring together the talents and experience of those of the existing broadcasters who wish to participate, together with a significant proportion of outsiders. That will mean some additional legislative provision to create the necessary framework, and I shall be bringing forward in Committee detailed proposals for the purpose. Meanwhile, the House and those outside with an interest in the project will wish me to set out its main features today.
§ Mr. Michael Marshall (Arundel)
Before my right hon. and learned Friend proceeds, may I welcome the step that he has just proposed to bring together the BBC and the IBA — the Minister knows of my commercial interests. Will my right hon. and learned Friend say whether he hopes to find opportunities for British Telecom to continue its business traffic? Will he also say whether he hopes that there may be opportunities for others besides British Telecom to become involved, if there is spare capacity in the new joint DBS project, to provide additional business services?
§ Mr. Brittan
I am not sure whether I can answer my hon. Friend's question at this stage, but he may be more enlightened about the prospects when I have outlined the general nature of the project that we have in mind.
It is proposed that the joint DBS project will be provided by a joint company or consortium whose participation will be divided between the BBC and the independent sector. The BBC will have a half share of the project. The independent sector will be in two parts. One part, which I would expect to be at least a quarter of the total project, would consist of those ITV companies wishing to take part. I stress that there will be no pressure or coercion. The companies must decide for themselves, because their shareholders' money will be at risk.
The other part of the independent sector would consist of other companies or organisations that express a wish to take part on the terms stated and are judged suitable to do so. They might make up 20 to 25 per cent. of the total, but the proportions must remain flexible until we see the strength of those who wish to participate. It is in my view essential that an opportunity for participation in this important new broadcasting development should be given to those who do not currently hold ITV franchises. I shall need to be satisfied at the end of the process of selection 753 and negotiation that a suitable consortium has been put together. I shall, therefore, be inviting the House to confer on me as Home Secretary a power under the Bill to set the seal on the consortium by formally designating it. That does not mean that I see myself, or my Department, playing a substantial role in the selection of the new element in the consortium, which is neither BBC nor franchise holder. Some mechanism—
§ Mr. Brittan
Some mechanism will be needed to invite would-be participants to come forward, to sift them and to judge the strength of their claim to participate. I propose to seek the help and advice of the IBA, whose experience and background make it an obviously appropriate body for the purpose. The authority will be inviting interested organisations to get in touch with it shortly for this purpose. I do, however, stress that this is in no sense a normal franchising operation. I shall be asking the IBA to offer me its views on the suitability and financial soundness of private sector participants and the share of the project that they might appropriately bear.
§ Mr. Brittan
I shall finish this passage. In framing its advice, the IBA will consult with the BBC, whose attitude to potential members of the consortium is a factor to be taken into consideration.
§ Mr. Corbett
I am grateful to the Home Secretary for giving way. Is this the same IBA that turned a blind eye when TV-am virtually tore up the basis on which it launched its programme, although that IBA had statutory authority to ensure that TV-am abided by its original agreement?
I do not propose to make changes to the IBA in the Bill. The existing authority will be undertaking the task.
Could I proceed a little further in explaining this aspect? Then I shall give way to the right hon. Gentleman. Perhaps the point that I am making will deal with what the right hon. Gentleman would like to know.
I was going on to say that potential participants will not look to the IBA for firm financial information about the project on which to base their judgment whether to participate. That information can come only from other members of the consortium with whom, at a second stage, third-element participants must negotiate.
At this stage, before any approaches are made, it would be a mistake to be too precise about the kind of contribution that independent participants might make. I should not want to rule out anything in advance. But I hope that some at least would not merely be seeking an investment opportunity but would have the ability to make a positive contribution in an area such as programme provision, financial management, manufacture or rental of equipment.
§ Mr. Kaufman
The Home Secretary's announcement about the proposed consortium is, of course, not what was expected, in the sense that we awaited the announcement of two DBS channels for the BBC and possibly two DBS 754 channels for ITV. The Minister is saying that there will be a full consortium between the two organisations, possibly with other outside participation. Can he tell us, because it is a matter of some importance, whether the DBS provision, in so far as it includes BBC participation, will include provision for channels without commercial advertisements? Will all DBS channels under the consortium arrangements have provision for commercial advertisements?
§ Mr. Brittan
Advertisements will not be excluded, but in the first instance it is proposed that the project should be financed by subscription.
Before I move on from independent participation in the project, I should say that I am well aware of the keen interest in the proposals that is being shown by some of the independent production companies, whose growth has been much stimulated by the outlet for their product provided in the statutory framework for Channel 4. They now seek further outlets. For some of them, possibly in consortium, there may be the option of participation as part of the independent element in the joint project, but I recognise that the scale of investment required may make that difficult. They have suggested, as another possibility, a clear place in programme provision for the joint project. That is a suggestion with which I have much sympathy. I do not at this stage have a specific proposal, but I shall be considering how effect might best be given to it and I invite others who are, or will be, concerned with the joint project to do likewise.
§ Mr. Richard Shepherd
Earlier, it was said that the Home Office was considering the relaxation of section 19 of the Broadcasting Act, or rather that representations had been made to the Home Office that that might be the quid pro quo for commercial involvement in the Unisat project. Is my right hon. and learned Friend considering extensions of existing licences to the independent television companies as a quid pro quo for their involvement in the scheme?
§ Mr. Brittan
I shall elaborate on those matters later, if my hon. Friend bears with me.
I turn now to some other aspects of the joint project. Like the BBC project from which, in a sense, it springs, it would use the Unisat satellite system. Some fresh negotiation between the consortium when formed and Unisat will be necessary, for various reasons. For example, it is envisaged that the joint project will provide three channels: one films channel and two of mixed programming. That would mean a change from the proposition being negotiated between the BBC and Unisat.
I envisage that the joint project should have a maximum life of 10 years from the date of launch; provisions to be added to the Bill will so provide. Ten years is chosen so as to provide an adequate period over which the project can build up an audience, recoup its initial outlay and move towards profit. I have particularly in mind the needs of the independent sector. Whether the project will last 10 years must depend upon the arrangements regarding satellite provision that the consortium will make with Unisat.
On other financial matters, I wish to make it clear that no public money whatsoever is being invested in or pledged for the project; nor will it be in the future. The Government are in no sense underwriting any part of the costs. The BBC's share of the cost will come not from the licence fee but from borrowing on the money market, 755 under the extended borrowing powers granted to the corporation by an amendment of its royal charter last year. If the worst came to the worst and the project collapsed, it might be necessary for the corporation to draw upon licence fee revenue, with my consent, to settle its debts; but the BBC understands that such a use of licence fee funds would not be recouped through a subsequently enhanced fee. Expenditure of the ITV companies participating in the consortium, just as under part II of the Bill, would not be an offset against the levy payable upon the profits of their terrestrial broadcasting operation.
Turning to the actual programme provision, the House will appreciate that, since neither the BBC nor the IBA as such will be responsible for providing the service, if it is to fit into our pattern of broadcasting arrangements, some responsible joint body will have to be brought into being. That will require another addition to the Bill. But I do not intend that the creation of this joint body, to bear responsibility for the transmission of the programmes and for their standards and content, should involve a large new bureaucracy. I envisage that its members will be drawn equally from the BBC's board of governors and the members of the IBA. It must have a separate statutory existence, since its responsibilities are not precisely the same as those of either of the existing broadcasting authorities; but, nevertheless, I believe that the board's activities can be viewed as a logical extension of those of both the BBC and the IBA. The standards which the service will be required to meet will be those which would apply to a service under part II of the Bill.
As I have said, the project involves high risk and a substantial investment. The financial projections which the existing participants have carried out show that the venture will have to work hard in its early years to gain audiences and revenue. Substantial losses will have to be borne. Even on favourable assumptions, the project will be making losses, year on year, in the fourth and fifth year of its operation and will do little more than break even after seven years. Two particular consequences flow from this.
First, while I am anxious that a competitive regime should not be postponed for any longer than is strictly necessary, our objective of establishing a British DBS service on a firm footing could be jeopardised if competition for audiences and revenue fragmented them before they were surely established. Some protection of the project in its early years is therefore justified. In the Government's view, it would be right to postpone bringing part II of the Bill into force until three years have elapsed after the launch of the joint project's services. At that point, the IBA would invite applications under part II and, provided suitable applicants were forthcoming, would issue contracts; so that during the second part of the life of the joint project there could be competition from other DBS channels—in addition, of course, to competition from other cable-borne services, which can of course use telecommunication satellites as a method of distribution to cable headends, and alternative systems of delivery such as video-cassette recorders.
Secondly, the ITV companies, which have throughout made clear their wish to be associated with DBS, have stressed that they suffer the particular disability of facing the risk of losing overnight their reason for existence, and hence their ability to raise and service capital, not through any commercial failure but through the operation of the 756 franchising system; the present franchises terminate in 1989. Without some relief from this uncertainty, they have argued, they would not have sufficient financial confidence to engage in a DBS venture beginning in 1987. I have considered this point carefully and have concluded that I would be justified in making some — but the minimum—departure from the normal arrangements for franchise renewal. I therefore propose to add to the Bill a provision that for 1989, but on that occasion only, the IBA will not be under an obligation to readvertise ITV contracts, but it will retain a complete discretion as to whether to do so or not. This will preserve the general franchising structure, to which we remain committed, and leave the IBA with full powers to do what is necessary to ensure a satisfactory standard of performance. I stress that it does not give any ITV company any guarantee whatsoever that its franchise will be renewed in 1989; it leaves the IBA free to renew without readvertisement if it considers that the company's level of performance is satisfactory. Alternatively, the IBA may readvertise if it chooses.
§ Mr.Gerald Bermingham (St. Helens, South)
Does the Home Secretary agree that, effectively, he has just said that, if the ITV companies participate, he will consider extending their period of time? Might not some interpret that as almost an inducement to participate and as against the public's best interests, as they may well want to challenge the various franchise holders of the current ITV systems in 1989?
The hon. Gentleman is mistaken and must have misheard me. I did not in any sense say that the existing companies would be given an extension of their franchise. I said that the obligation on the IBA to re-advertise would not apply but that it would continue to have a discretion to do so. Therefore, if there was any reason to believe that an alternative service was available, it would be entirely open to the IBA to go through whatever procedures it wished in order to consider renewal of the franchise.
§ Mr.Tim Brinton (Gravesham)
Perhaps my right hon. and learned Friend will clarify that point. Does he mean that the obligation not to readvertise would be withdrawn for all ITV companies presently franchised, or only for those that invest in DBS?
I must stress that it is not an obligation not to readvertise. [Interruption.] I am trying to answer my hon. Friend, as I know that he wants to understand the position. The proposition is that for 1989, and 1989 alone, the IBA will not be under an obligation to readvertise. It will have a discretion to readvertise if it so wishes—I am talking about all the ITV companies—but it will not be under an obligation to do so.
I am sure that my right hon. and learned Friend appreciates that I am greatly disappointed that he should have taken that view. Has he considered the American experience, where DBS has not necessitated the extension of monopolies, contrary, perhaps, to the results that will flow from the statement that he has just made in connection with, I believe, section 18 of the 1971 Act? Will he reconsider his decision to give those companies the 757 chance of continuing their monopolies without full-scale readvertising of their licences when they come up for renewal?
I understand my hon. Friend's concern, and there will be ample opportunity to debate that point in Committee.
To sum up this account of my proposals regarding the DBS joint project, I believe that the consortium approach offers the most realistic chance of getting the British DBS service into action within the next three or four years. If those who are negotiating have come to this same conclusion and wish to take this chance, I believe that we should not deny them the framework to make it possible. There will be the opportunity of a stake in the first DBS service both for the BBC and for those who might have sought to participate in an independent DBS franchise. It has a limited life; and the competitive regime, which remains our ideal, will not be long delayed. The choice of independent participants will begin very shortly. Work is already in hand on drafting the additions to the Bill which I have listed as necessary—to provide for the formal designation of the consortium; for the joint broadcasting body and its length of life; and for the changed arrangement regarding the readvertisement of ITV franchises. By making these provisions we do not, of course, guarantee that a joint project will come into being. That will be for the potential participants to determine. What we do is simply to play our part, as Government and Parliament, by creating the framework and opportunity. But, of course, having done this, we hope that the participants will consider that it is an opportunity which should now be taken.
The Bill creates an important opportunity to harness the new and exciting developments in technology in the fields of both cable and satellite. In so doing it provides a stimulus to our manufacturing and service industries and facilitates an extension of the range of choice in entertainment and other services to the individual consumer at home. The development of a new communications infrastructure has profound implications for the workings of our society in the years to come. The Bill has an important part to play in making that development possible. As such, it is a measure of far-reaching consequence, which I commend to the House. 5 pm
§ Mr.Gerald Kaufman (Manchester, Gorton)
Nobody would deny that the Bill has far-reaching consequences. It is clear from the Secretary of State's extraordinary speech that the consequences will be more far-reaching than those of us who studied the proceedings in the House of Lords anticipated.
The Bill that the Secretary of State presented is not the Bill which the Government seek to enact. They will amend it root and branch and make fundamental changes in broadcasting policy, which have not in any way been foreshadowed. There are already reasons for disquiet about the way in which the structure of broadcasting will be changed by the introduction of cable television.
The Secretary of State announced the Government's proposals for direct broadcasting by satellite and, almost in a throw-away sentence, for a national system of commercial radio. He has, therefore, announced a completely new structure for broadcasting, on which there has been no consultation and no discussion, which will 758 replace the properly structured broadcasting system from which the country has benefited for the past 60 years. At most, we shall have a semi-regulated and possibly an unregulated tower of Babel, in which people will plunge their hand to make profits at the expense of taxpayers and consumers. The disquiet on the Conservative Benches demonstrates that. That policy stands apart from the policy in the Bill which we have been discussing for several months and for which we have been preparing since the Bill was introduced in the House of Lords at the end of last year.
When we debated the White Paper, we made our position perfectly clear—that we were opposed to ihe Government's policy. The Bill is a direct consequence of the policy in the White Paper. We demonstrated our opposition to the policy when we voted against the White Paper embodying it. Before the Secretary of State's statement today, we thought that the Bill sought to mitigate the damaging effects of the policy, and for that reason we decided not to divide against it.
However, some of the safeguards in the Bill are far from adequate, and we shall seek to strengthen them in Committee. If we had known of the Secretary of State's approach to the Bill, we would have come to the Chamber prepared not for a debate of a fairly anodyne nature but to debate a contentious measure. If the Bill returns to the Floor of the House after Committee without the safeguards having been strengthened and with some of the extraordinary material foreshadowed today by the Secretary of State, we shall oppose it with all the rigour at our command.
If the Secretary of State participated in legislation instead of merely reading from his brief and disappearing to deport defenceless Asian women, we might get information from him. We had 59 sittings on the Police and Criminal Evidence Bill, yet the Secretary of State attended for only three of the 147 hours. Therefore, we must deal with him on the rare occasions when he is present.
As evidence of the good will that we felt before the debate and as a token of our good faith, we shall donate to the Home Secretary one amendment free of charge--that is, the need to correct the misprint in clause 39(2), on page 33, line 34. Furthermore, we hope that the definition of "local authority" in clause 35(2) will not be amended because the present definition includes the Greater London council as a local authority. Long may that continue.
We hope that the Government are sure that they have the Bill right. It is grotesque that under schedule 3 the Bill will repeal part IV of the Telecommunications Act 1984, which received the Royal Assent only three weeks ago. That is the quickest repeal of a parliamentary statute that I have ever come across.
The cabling of Britain is a development as inevitable as the construction of the canals, the building of the railways, the spread of the electricity grid and the expansion of the telephone network. From it, great benefit will accrue to the nation in terms of more work opportunities, less drudgery, and an easier and more productive life, with greater scope for leisure.
A short time ago, the Government seemed to be fully committed to cabling. There was a grand ceremonial launching under the auspices of the Prime Minister. I am sorry that the Minister for Information Technology—if such a department exists—is not present, because his heart was set on cabling. The trouble is that it has been 759 postponed. In the words of Lord Beaverbrook, it will not take place this year or next year either. Unfortunately, the Government's ideology is frustrating their aspirations.
Paragraph 177 of the White Paper sets out how cabling could be accomplished. It states:BT (or BT and Mercury)"—the Opposition reject "Mercury"—
should be permitted to install wideband cable systems and that they should be required to operate them on a common carrier basis, that is by providing channel space to anyone who sought and could pay for it. If BT were given an exclusive role as common carrier it could ensure that cable systems were developed as an integral part of the national telecommunications infrastructure and that profits earned in densely populated areas would help finance the provision of services in less populated regions".That is a sensible approach. However, six paragraphs later, in paragraph 183, that course of action is rejected. The White Paper, without providing a convincing reason for it, continues:the Government has decided that BT and Mercury should not be given the exclusive right to run cable systems".Accordingly, motivated only by dogma, the Government have decided that, instead of a national cable network provided by a publicly owned British Telecom, the system—if what arises from the Bill can be described as such — should be constructed piecemeal by private enterprise.
That arbitrary decision leads Ministers to state a tremulous hope as a confident conclusion. The White Paper states:The private sector should be able to finance it— the cable network—without any special difficulty from its normal sources.But the problem is that demand-led investment depends upon the existence of demand. At present there is no ascertained demand for home banking, home shopping or the other wonders consequent on a national cabling system, although it is hoped that the provision of a system will foster that demand. Since there is clearly a massive appetite for electronic visual entertainment in Britain, the Government pin their hopes on the assumption that entrepreneurs, anticipating large profits from cable television, will provide for the Government the cable network that the Government are unwilling to commission from the public sector—a public sector which, in any case, the Government are about to hand over to the scavengers of the City of London.
The Government hope that utility will ride pickaback on entertainment, and the White Paper is refreshingly frank about what they hope will happen. It states:Wideband cable systems offer the opportunity for non-entertainment services to be made available to subscribers at marginal price levels, since the basic system and infrastructure costs will have been absorbed by the entertainment services.To put it even more crudely, again in the words of the White Paper, it isthe Government's wish to see new types of service develop on the back of programme services.That means that what was once trumpeted as the cabling revolution will be, at best, a series of sporadic local risings. There is something almost wistful about the White Paper's meek expectation when it states:The cabling of Britain will almost certainly take place gradually in the years ahead.I like the phrase, "almost certainly". A leading article in the Financial Times stated the position somewhat more brutally and certainly much more honestly: 760There is a view in the telecommunications industry that the dream of an efficiently integrated communications system is looking increasingly unreal. This is because such a goal may be incompatible with the Government's strategy that cable investment should be privately financed and market led.The Home Secretary said today that DBS was a high-risk, high-cost venture. If DBS is such a high-risk, high-cost venture, I cannot even think of adjectives to describe the cabling policy which the Bill will make possible. The fact is that the poor old Minister's dream of the harvesting of information technology looks more and more like the exploitation of entertainment technology, with the availability of next year's electronic marvels dependent on the appetite for last year's Hollywood movies.
The leading article in the Financial Times summed up the position well:The idea, at least for the short-term, is that viewers of popular television programmes will fund the investment that will lead to a new world of two-way interactive communication.Our hopes of a growing national cable system depend on the estimates of profitability made by potential holders of cable television franchises. It is certain that cable can be profitable only in densely populated areas, which means that under the Government's arrangements not much more than half the country—perhaps 50 to 60 per cent.—can expect to be cabled, however many other areas might wish to be cabled. More likely is the prospect that only about half at most of those 50 to 60 per cent. of households will pay hard cash to be linked to cable television. That makes the economics of the endeavour highly problematical, although the confusion about investment allowances for constructors has, I hope, now been cleared up.
A research organisation has considered 10 areas chosen by the Government for new cable television systems and has found that, with a subscription of £9 a month for a basic service, a cable company can expect to sell its services to one home in three. The inclusion of other services would increase the average subscription to £16.50, giving an annual revenue of about £7.25 million. At best, that would put viability on the borderline, with profits having to be earned from advertising and other services. Naturally, the same market forces which dictate the Government's policies mean that the bigger the subscription, the fewer who will subscribe.
Ironically, the one big assured profit-maker is the single area of activity from which the Government have firmly excluded the cable operators —voice telephony. The White Paper said flatly that voice communication would remain the exclusive privilege of BT and Mercury. I hope that when the Minister of State replies he will reiterate that commitment with the utmost clarity, since other commitments seem to become blurred as they are transferred from White Papers to Bills.
How will cable operators be lured into doing the Government's cabling for them? That restrictions must be imposed on those operators is recognised by all, but safeguards that are too strict will rule out for good the prospects of profit for the operators. They will face the dangers of bankruptcy that have already afflicted some of their powerful counterparts in the United States—counterparts with access to far greater resources than many of the people who will try to become cable operators in Britain. The need to maximise the prospect of profits means that the safeguards must be watered down. Brittan's law becomes Gresham's law. The danger is, literally, that the bad will drive out the good, because the fear is that, without much firmer safeguards than those contained in 761 the Bill, cable operators avid for profit will buy dumped American programmes—material that has paid for itself in its home market and can accordingly be provided cheaply for our viewers.
The White Paper spelt out the economics clearly:For ITV the average cost per hour of transmission (excluding advertising) in 1981 was just under £40,000 averaging out original productions, repeat and bought-in material. In 1981–82 the BBC's operating expenditure for its two television channels was about £30,000 an hour. Channel Four is operating on a tighter budget and is spending around £25,000 an hour. An hour of original material can range from around £20,000 for a current affairs programme to £200,000 for drama (or even more in the case of prestige projects). Bought in material from the USA"—remember that this is the Government's White Paper—where the productions costs have already been largely if not wholly recovered on the domestic market, can be obtained by the broadcasters for as little as £2,000 an hour.The White Paper promised a remedy:The Cable Authority in considering competing applications will be under a specific duty to give weight to plans for using British/EC material and for stimulating new domestic production. It will moreover be required to satisfy itself that a proper proportion of such material is shown on each channel.At present the existing suppliers of television programmes—the BBC and the commercial ITV organisations—are restricted to transmitting 14 per cent. material of foreign origin.
When the White Paper was published in April last year, Lord Whitelaw told the House of Commons:On foreign programme material … the cable authority will be required to see that a 'proper proportion'— of British programme material—is shown on each channel as appropriate, to work towards a progressive increase in that proportion as United Kingdom production capacity grows, and to report progress regularly to the Government. We are anxious to maintain and develop the strong national production capacity that the BBC and ITV have helped to create.He said even more specifically:The cable authority … will have to show that there will be a progressive reduction in the amount of foreign material that is used. That duty is not placed on the IBA but it would be placed on the cable authority.— [Official Report, 27 April 1983; Vol. 41, c. 867–70.]
The present Home Secretary, on this as on so many other matters, is much less satisfactory than Lord Whitelaw. He said casually last July:the Government accepts that in the earlier years cable operators may need to use a significant amount of overseas material, if cable is to get going".However, the Bill does not say that. It simply asks the new Cable Authority to do all that it can to securethat there are included in the programmes proper proportions of recorded and other matter which originates within the European Economic Community and is performed by nationals of member States.Clause 7(2)(b) requires the authority to take into accountthe extent to which the applicant or each applicant proposes to include in the programmes matter which originates within the European Economic Community and is performed by nationals of member States".There is nothing there about working towards a progressive increase in the United Kingdom proportion, or about a duty to show such a progressive increase, or about a duty to report on progress in achieving the increase to the Government. That is not in the Bill. The Bill seeks to enact the unsatisfactory vagueness of the present Home Secretary rather than the reassuring commitment of his predecessor.
§ Mr.Roger Gale (Thanet, North)
A few moments ago the right hon. Gentleman gave the House the impression 762 that a restriction of 14 per cent. was imposed on the IBA and BBC. Will he concede that that is incorrect and that that is a self-imposed restriction, couched in the same terms as those in the Bill?
No, I do not accept that. Even if the hon. Gentleman were accurate, it would not matter. However the limit is imposed, we want the same limit for the cable operators—that is the principle. Therefore, we are saying that, however the limit is assumed, whether it is a voluntary or compulsory one, it is intolerable that the same limit accepted by the BBC and the IBA should not be imposed on cable operators.
§ The Minister of State, Home Office (Mr. Douglas Hurd)
I assure the right hon. Gentleman that the passage in the Bill that he is criticising is taken directly from section 4(1)(c) of the Broadcasting Act, which imposes a similar duty on the IBA.
However, the commitment made by Lord Whitelaw was not the commitment made for the IBA. His commitment—
I am not wrong. The statement made by Lord Whitelaw was a promise that the proportion employed by the cable operators would be reduced—
From the original proportion. I am happy to read Lord Whitelaw' s words again. I am sure that he would be glad to hear his pledges reiterated in the House, even if the Government have rescinded. He said in April a year ago:The cable authority will be required to see that a 'proper proportion— of British programme material—is shown on each channel as appropriate, to work towards a progresssive increase in that proportion as United Kingdom production capacity grows, and to report progress regularly to the Government.He said later that the Cable Authoritywill have to show that there will be a progressive reduction in the amount of foreign material that is used. That duty is not placed on the IBA but it would be placed on the cable authority."—[Official Report, 27 April 1983; Volume 41, c. 867–870.]He spoke of a duty, but there is no duty in this Bill.
There is a duty to report, but not a duty to report on reduction. There was a commitment by the Home Secretary of the day that there should be a progressive reduction and that the Cable Authority should have a duty to report progress on that reduction to the Government. The Bill does. not include that. As the Minister says, it has a provision for a report on the requirements of clause 10(1). That clause does not impose the duty to reduce that the previous Home Secretary promised. I am glad that we now have it clear that Lord Whitelaw as Home Secretary gave a promise to the House of Commons and the present Home Secretary has not included it in the Bill.
As the Minister has given me the opportunity, I shall quote clause 10(1)(d), which providesthat there are included in the programmes proper proportions of recorded and other matter which originate within the European Economic Community and are performed by nationals of member States.Clause 7(2)(b) requires the authority to take into account 763the extent to which the applicant or each applicant proposes to include in the programmes matter which originates within the European Economic Community and is performed by nationals of member States".We have none of the control promised by Lord Whitelaw but simply a pious hope. It is a hope that is likely to be extinguished in the rush to ensure profitability by cable operators who may become increasingly desperate to recoup their investment.
We shall seek to amend the Bill to secure a much more precise quota requirement, and we shall seek to amend schedule 1 to ensure that at least one representative of British entertainment or artistic interests must be appointed to the authority. We shall also seek to foster employment prospects in cable for United Kingdom workers and to protect their working conditions. This is especially important in the light of the disreputable clause 42, which repeals the provisions of the fair wages clauses for workers in the cable industry.
We believe as well, particularly in the light of what the Home Secretary has said about relieving the IBA of its responsibility for advertising, that it is about time that this authority—and the IBA—should be required to publish the reasons for its award of franchises to the chosen operators. The cable network should not become yet another old boy network.
We also want a stricter definition of the standards required of news broadcasts. Clause 10(1)(c) requiresthat all news given (in whatever form) in programmes which originate in the United Kingdom is presented with due accuracy and impartiality".The wordsoriginate in the United Kingdomare not precise enough. They leave a loophole which could be exploited.
If operators are unable to get rich quickly, they will seek at any rate to get poor slowly. Not only will they want material for which they pay as little as possible—I hope that this will impel them to draw on local groups which can provide programme material as cheaply as Hollywood and with much more relevance to our circumstances—but they will also want to scoop as much advertising revenue as possible. At present, commercial television stations can transmit an average of six minutes of advertising per hour, with a maximum of seven minutes in any one hour. The White Paper, satisfactorily enough, gave this commitment:It would be inequitable if these channels— the cable channels—were free to take an unlimited amount of advertising while IBA channels continued to be subject to restrictions. Accordingly the Government proposes that the Cable Authority should have a duty to ensure that on those cable television or sound channels which it considers to be broadly comparable with IBA television and sound services the amount of advertising should not exceed the maxima (both overall and in any one hour) for the time being set by the IBA for independent broadcasting.That is a pretty precise commitment. How is it to be honoured in the Bill? It is dealt with in clause 12(3), which says:The Authority shall do all that they can to secure that, subject to such exceptions as may be agreed between the Authority and the IBA or, in default of agreement, determined by the Secretary of State, the amount of time which, in the case of any licensed service, is given to advertisements in any hour or other period in any particular circumstances does not exceed the maximum amount of time which could be so given if that service were ITV.764 That contains two massive loopholes. First, the authority is enjoined only to do all it can. Secondly, the Secretary of State can interfere to dilute the commitment. What the Secretary of State told the House today when I questioned him about this matter must add to the disquiet that already exists about the proportion of advertisements that will be permitted in cable transmissions. It is all the more important to amend the clause in order to assist the Government to ensure that their original promise is kept.
Audiences for television programmes are, by definition, finite, particularly in a country such as ours, where television set ownership penetrates almost to the whole of the population. When cable is operating, audiences will have four other possibilities of television entertainment. There will be the terrestrially transmitted BBC and ITV programmes. There will be the DBS satellite programmes, provided by the new consortium about which we have just been told. The country will come to regret the way in which the Government are opening wide the doors to increasing commercialisation of television in Britain. There will be the entertainment provided by video tape recorders, which will soon be present in half the nation's homes — a higher penetration than anywhere else in the world. The market into which the cable operators will seek to insert themselves is highly competitive, not to say cut-throat.
The quantity of advertising, while not finite, is certainly not infinitely flexible. The Secretary of State's extraordinary announcement today about a national system of commercial radio will put that source of revenue under even greater pressure in future. It is likely that more advertising on cable, even if the current ITV quota is enforced on cable operators, will reduce the amount of advertising for ITV itself. It is certain that if cable is allowed to include a higher proportion of advertising than ITV—as the Secretary of State seemed to imply today—the commercial television companies will press for their quota to be increased. It will have highly undesirable consequences for the quality of ITV programmes.
Of course, the quantity of ITV advertising depends on audience ratings. Even though British viewers watch television for more hours in the day than any viewers except those in the United States, if cable takes a sizeable proportion of the total audience ITV will be tempted to go down market in order to protect its ratings. We saw in the early and not very edifying days of ITV that the response of the BBC was to follow its commercial competitors down market as well.
If cable, in its attempt to gain an appreciable share of television audiences, goes for the most accessible and undemanding dumped American entertainment—the Bill gives it the scope to do that—ITV, and then the BBC, will feel impelled to follow down that road. The domino theory will dominate the home screen. It is a proud fact— a fact that everyone in the Chamber cherishes—that British television programmes are of higher quality than those anywhere in the world. One reason for that is the concept of structured programming. The concept of structured programming broadcast terrestrially is already in jeopardy and may not long survive. Indeed, breakfast television on both channels has already brought in sequence rather than structured broadcasting to British television, as commercial radio did when it started.
Labour Members — I trust, all hon. Members— believe that the concept of public service broadcasting in 765 Britain must survive and flourish. If cable, in a single-minded drive for profit, drives its public service competitors down market, we shall all be the losers. I for one shudder at the prospect that the enviable standards of British television should be driven by the pressures of unbridled commercialism down to the abysmal level of most American television.
Labour Members certainly welcome the prospect of greater choice for viewers. We welcome the prospect of more entertainment opportunities. We want to see more local news, more services for the ethnic minorities, and more community television. We wish cable well and, despite the limitations imposed by the Government's dogmatic approach, we hope that the cabling of Britain will succeed. But as that process proceeds, we do not want to sacrifice what we already possess and what we rightly value. It is in that spirit that we approach the Bill.
§ Sir Paul Bryan (Boothferry)
I declare my interest in the Granada group of companies, whose activities are affected by the Bill.
Today's debate is taking a different form from the Second Reading debate only five months ago in another place. That debate was dominated by cable and its problems. Today DBS has taken the stage. Twelve months ago we were all cable optimists. Now, few of us would go as far as that.
The speed of change which has clearly been suggested by my right hon. and learned Friend the Secretary of State today is not what we are used to in broadcasting. The BBC came on the air in 1936. ITV did not arrive until 18 years later, in 1954. Nine years after that we had BBC2 and 14 years later the fourth channel. Each of those was regarded as revolutionary at the time, especially the advent of ITV, and we had plenty of time to digest them. Despite the prophets of doom, especially on the advent of ITV, our television is, if not fully appreciated in Britain, certainly coveted by most of the English-speaking world.
That leisurely development is at an end. The award of the first 11 cable television franchises, followed by the Bill with its cable and DBS implications, sets in train nothing less than a total, if long-term, recasting of the traditional pattern of British broadcasting. We now foresee with complete certainty the breaking down of the BBC-IBA duopoly that has governed our broadcasting for the past 30 years; a further dilution of the public service element; the concept of public service broadcasting; the end of the advertising monopoly of the ITV companies which has supported their heavy overheads and financed such costly productions as "Brideshead Revisited" and "The Jewel in the Crown"; and the diversification and internationalisation of ownership and of the means of distribution and sources of programme. All these developments are inevitable, but the time scale is anybody's guess. It would seem that, in the end, cable will become the natural medium of local distribution in areas which financially justify multiple services, and DBS will offer basic television channels from home and from abroad to all other areas.
Against that background, I am sure that the Government were right to go boldly for cabling of this country at the earliest possible moment and for the establishment of DBS. To try to achieve this on the back of entertainment programmes was a challenge to private enterprise, in which the Government believe. But this is 766 a free country, and nobody has a duty to enter this tricky and competitive field, or is likely to do so, unless the prospects are good.
To start with, the prospects looked good. My right hon. Friend the Minister for Information Technology has been a magnificent champion for the cause and had no difficulty in selling the idea to many prospective operators; but the truth is that cable looks unlikely now to fulfil the promise that it offered two years ago. The argument then was that Britain's technological future depended on moving into the new world of interactive communications, with all the advanced equipment that could be sold abroad and the creation of employment at home.
A combination of factors has caused a general rethink. The cost of the equipment, far more sophisticated than is required for entertainment, has shocked some people. This has been compounded by the Budget provisions for the abolition of the 100 per cent, depreciation allowance. The suspicion is also dawning that the programme services now on offer to cable television operators may be insufficient to attract sufficient consumer interest in our circumstances. The movie channel has done very well on American cable, but in this country there are already 32 films a week available free on BBC and ITV, and we know that the video cassette recorders now installed in nearly one third of all our homes account for rental of 4 million cassettes a week, a large proportion of them movies. The cable sports service may prosper, but BBC and ITV do a pretty good job in their coverage of most established sports.
In my view, cable needs a stimulant. My general advice to the Government is as follows. First, do not be afraid that people will make too much money. In the unlikely event that they do, all that the Government have to do is to slap on a levy, as happened in independent television. Second, keep restrictions to a minimum. I asked the chairman of the American FCC what regulations he would introduce if he, like us, was starting a new cable set-up. He said, "I would impose no regulations to start with, and then introduce them as they were required."
In the early days, when little money is coming in, there will be insufficient money for programme making, and the programme contractors will have to buy foreign programmes to stay in business. This is not because they want to buy American "rubbish", as it is said, or the other emotive words that have been used, but because, if one puts on half a dozen more channels, many more programmes must be available quickly. Therefore, the programme contractors will have to buy programmes, and they will buy a great many. As time goes on and they get established, I would expect Lord Whitelaw's recommendation to come about, the number of such programmes will be reduced, and there will be an ever-increasing proportion of programmes produced on the home front.
Would the hon. Gentleman explain—and one appreciates the aspect of the problem to which he addresses himself — just what market the independent producers, who service a large export market at present, are meant to service in the period when these local cable programmes are destroying their very base by the importation of cheap American trash?
§ Sir Paul Bryan
Since the advent of Channel 4, the independent home producers have already done particularly well. Few people forecast how well they 767 would do. From now on, with cable, there will be many more opportunities and a considerable growth on that front.
§ Mr.Gerrard Neale (Cornwall, North)
Will my hon. Friend confirm that when home-based programmes by existing channels—BBC or ITV—are sold abroad they, too, are sold very cheaply by comparison?
§ Sir Paul Bryan
That is quite true. As soon as programme makers, whether they are American or British, have recouped the original costs, they are able naturally, and rightly, to sell them more cheaply.
The critical times in these early days of cable will be next autumn, when the Cable Authority has been established and when potential aspirants decide whether they will apply for franchises. If there is a long queue of applicants, all is well. If there is no queue, that is the end of the programme companies. They cannot go on producing programmes at a loss with no prospect of an expanding market. By then, the 11 companies which have been granted franchises will be in business, apart from those that do not reach the starting post. Their experience will not yet have provided any indication of cable prospects. It is important for the Government to do everything they can between now and then to promote a more buoyant mood in the cable industry.
As to DBS, I consider that the Government have been sensible and brave. Once the BBC had established that DBS was beyond its means, the only other possible source of money and expertise was the ITV companies and the other support that the Home Secretary described. The companies clearly could not enter this field if, during the period of the first satellite, they all had to go through the traumas that accompany the reallocation of franchises. Hence the concession that they are receiving in the possible extension of their franchise periods. I think that that was inevitable and right.
I said that the Government were brave because they laid themselves open to the sort of charge that we have heard from the Opposition, with the obvious criticism that broadcasting will remain with the same old gang, and so on. However, the hand was so overplayed by the right hon. Member for Manchester, Gorton (Mr. Kaufman) that I do not think that much bravery was required to counter the argument.
In fact, it will not be quite like that. One of the certainties that I predicted in the first sentence of my speech was the internationalisation of broadcasting, with satellites broadcasting into our homes from the continent, in particular from Ireland. The idea that our broadcasters will continue to have the country to themselves is quite false. It also puts into another perspective the restricting foreign films, but they will come in over our borders in any case. The huge cost of DBS would have kept the television companies out of this medium; the new arrangement means that probably all of them will be involved, to their own benefit and to that of the viewers.
As I have shown, making projections of forecasts in the broadcasting world is not a rewarding exercise. Nowhere can this be more unpromising than with DBS, in which there is no experience to go on. All I ask is that the Government learn from their early cable experience, economise as much as possible on the sophisticated technology, and allot a maximum sum for programmes.
768 There is no bottomless pit of interesting material from America to be imported. New programmes will have to be made by the BBC, ITV or other companies. They will have to be complementary to those available free on the BBC and ITV, and in cassette form from the local garage.
The proposal suggests in quality and sophistication a Concorde-like standard. What is really needed is a first step to our celestial broadcasting, something on which we can all afford to ride. Once DBS is on the air, given good programmes, the task of attracting viewers will be less forbidding than it is for cable. We are told that to break even a cable operator must attract 40 per cent. of the homes passed by his cable. On the other hand, DBS needs to be used by 1.5 million to 2 million houses to break even. That represents only 8 to 9 per cent. of homes in the country—the area covered by the satellite.
I did not realise that a statement was to be made about the future of independent radio. We are to have a national independent radio frequency. Will that frequency be given to one operator covering the whole country, or will the franchise be regionalised? Will there be straight competition in the advertising world between local radio stations and a single national body? That is of interest to the whole radio world.
Earlier I contrasted the differences surrounding today's debate with what happened a few months ago when the Bill was introduced in another place. I wish the Government every good fortune in this exciting and changing scene.
§ Mr.Clement Freud (Cambridgeshire, North-East)
The Bill is another monument to the Government's policy of free enterprise and the efficiency of competition; but in this instance the myth that competition will decide and allocate, let alone do that efficiently and well, should be speedily debunked. In short, the Government appear to be actively intent on allowing monopolies to develop whilst publicly hoping that, miraculously, they will not.
There is already a high level of concentration in the industry. Even the initial measures taken by the Government to introduce cable operations—in the 11 private franchises granted — have illustrated the concentration potential, since three of the 11 franchises have been given to one group—Thom-EMI. If steps are not taken to prevent the acquisition or buying up of neighbouring franchises, area and regional monopolies are likely to develop without any positive good to the consumer. I am aware that there may not be any positive good to the programmer either financially or otherwise.
One must question the wisdom of seeking to exclude cable companies from the scrutiny of the Director General of Fair Trading and ask whether there is any justification for that. I have no doubt that we shall discuss that at length in Committee.
What will emerge in the wake of the Bill is the creation of another quango in the shape of the Cable Authority, the membership of which is to be in the gift of the Home Secretary. It will be another unelected body which may even be unrepresentative of those most intimately involved in the industry, let alone of the public at large. None the less, it will enjoy considerable discretionary powers, with few obligatory duties.
The Bill fails to guarantee representation of local interests, of the voluntary organisations which are being urged to look favourably on cable television, or of any part 769 of the broadcasting and entertainments industry. A membership of 10 for such an ell-embracing authority seemed to be sensible. The Home Secretary mentioned the chairman and six members. I shall not argue about numbers; I would rather there be seven good men and women than 10 chosen because they happen to be closely related to, or friendly with, a particular Member on the Government Front Bench. We believe that calibre is more important than numbers, although, unlike the Government Front Bench, we do not believeas does the president of the Fiat corporation of Italy—that the number of directors of a company should be uneven and that three is too many.
We know that the Government are not in favour of open government, let alone the encouragement of public scrutiny of quasi-official goings on, but consultation procedure for franchise applications, and later appraisals of how each franchise is operating, must be there for all to see. I suggest, as does the National Consumer Council, that there should be an obligation on the cable companies to be open to public scrutiny so that the public can be reassured that the operator is among the best of the applicants.
We have talked much about quotas. The Home Secretary said that a proper proportion of foreign films was 14 per cent. Surely it would be better to lay down what is an improper proportion and to set a ceiling on the percentage of material that can come from foreign countries. Those of us who have been in the House for a long time and have taken part in similar debates know that if we are to have rubbish it is better for it to be our rubbish. If it cannot he British rubbish, let it be EEC rubbish. We all know that the older the material, the cheaper it is. Our old rubbish is better than their old rubbish.
An important issue is programme standards. I am bemused that the Home Secretary should believe that programme contents beamed from on high or channelled from beneath the ground should be subject to different criteria from material transmitted by existing methods. Most hon. Members will agree that, under the monopoly of 60 years ago and the duopoly which has existed for 30 years, the monitoring of standards has gone quite well. Suddenly, because people are not keen to come forward and provide a service, the Government are to offer inducements, either financially or by extending a franchise. That must not be allowed to change standards.
Cable television programme standards should be protected on the same basis as those already laid down for the broadcasting authorities. There is no reason why violence, obscenity, filth, or even rubbish, delivered by cable should be more or less acceptable than material brought to us in the traditional way.
Control also needs to be tightened in advertising. I urge that the rules currently operated by the IBA in one section of the broadcasting media be similarly applied to cable broadcasts. The control of sponsored programmes on cablevision should be no less stringent than on broadcast television.
If the greatest public good is to be extracted from the opportunities that cablevision offers, we must look more carefully at the question of responsible monitoring and access by local groups. Most voluntary organisations have emphasised the need for resources and relevant expertise to be apportioned to them if they are truly to benefit from cable broadcasting.
770 I remind the Home Secretary that the nation awaits with eagerness the advance determination of what shall and what shall not be "protected events" of national significance. I am not suggesting that a new quango be set up to gauge the ongoing events that shall be protected or unprotected. But I feel that with the Bill there must be a schedule that includes a broad range of events that the public, whether or not they pay for cable television, whether or not they are able to view cable television, will be guaranteed on the existing channels. That must include not only the existing classic races and international football matches but a fair proportion of minority sports that have their adherents who deserve to look forward to rugby football, rugby league, ice dancing and the many other events that are now shown on television and which are dear to their hearts.
§ 6.1 pm
§ Mr.Tim Brinton (Gravesham)
As a cautionary measure, I declare my interests, although as far as I know none of them has any direct connection with cable or satellite. I am a director of Airtime Publicity Limited, a consultant with the British 'Videogram Association and a firm called Communications Strategy.
I wish to introduce a slightly novel note into the debate. With one exception, all the speeches have appeared to suggest that we are considering an extension of public service broadcasting in the development of cable. That is the wrong way to approach the subject, because we arrive so often at the wrong arguments. Some have defined cable as narrowcasting—it is the deal between the man who provides the cable and the individual customer, multiplied many times, just as a library deals in books. It is not transmitted out into the ether and spread over everyone who has the capacity to receive it; it is done individually. It is a novel form of service and a whole new ball game in inventing a new technology device to provide communication and picture in the home, office or wherever. Therefore, immediately to relate the problems of providing cable—only one part of which concerns public service broadcasting or entertainment—with what goes on now tends to produce a difficult argument.
Another difficulty has become especially apparent today, although many hon. Members have noticed it during the past two years. If there was one Department in Government responsible for the whole of the arts and the media and the problems connected with them, we would have a simpler time. Half of the Bill to regulate cable and DBS depends on the activities of the Department of Trade and Industry, yet it is introduced by the Home Secretary. So much depends on what the other Department is doing as the operation proceeds. For instance, as I understand the Bill, the new Cable Authority will not stand a chance of getting its fancied runner appointed to a contract if that fancied runner has not already been given the go-ahead, through licences, by the Department of Trade and Industry, which therefore has the whip hand. Of course, negotiations will take place, but it is vital for the licence to be granted before or during approval by the new Cable Authority in terms of standards and so on.
The White Paper suggested that we follow the light touch suggested by Lord Hunt's committee. The Bill strives genuinely to preserve that light touch but, here and there, that light touch has been tightened quite significantly. That worries me. Innovations in the entertainment business have had to start in freedom and, 771 as the hon. Member for Cambridgeshire, North-East (Mr. Freud) said, with a certain amount of rubbish. It is from a great deal of rubbish that they developed into what we know today.
There was a great deal of rubbish in the theatre, in film and in cinema when they began. Certainly on the question of standards, about which much has already been said, and much more will be said today, there was a great deal of low standard television before the advent of commercial competition through ITV. I accept that some first-class plays were broadcast by the BBC when it was a monopoly. However, I worked there and I know that there was also plenty of bad-quality television, as there always will be. I freely admit that I appeared on some of it, but that is of the very nature of the game. The assumption by hon. Members that the potential audience, if it materialises—and it is a big "if' for cable—will be grabbed and hooked for years and years if it is offered nothing but cheap American rubbish is wrong.
I began by saying that I envisage cable as a new technological facility. If a householder is to pay —9 basic a month and a little extra for this, that or the other channel, and he is offered only American rubbish, after a few months he will become supremely bored with paying extra for something that he could get a great deal of on both the major channels.
The quota for ITV and BBC, which is self-divined at 14 per cent., looks different if we study the prime broadcasting times of 6 pm and 10 pm. If from the Radio Times and TV Times we worked out the proportion of foreign and non-EEC material during those times, we would see a different picture. That is what people are really talking about when they refer to that magic figure quota. A great deal is already broadcast and received in that popular way.
Last night I was riveted by BBC 1, as, I suspect, was any hon. Member who was at home. [HON. MEMBERS: "No."] Well, some watched snooker, but I watched BBC 1. A four-hour schedule featured five winning programmes. I am sure that the broadcast was intentionally timed, by the new managing director, who is an excellent operator, to go out before our debate. It was interesting to note that three of the four hours featured essentially down market, popular material, linked by a professional presenter, and the whole demeanour—
I am glad that, for once, I can respond to an Opposition intervention made from a sedentary position. I consider them down market because they are essentially popular programmes. I am not criticising them, but praising them—
I am not a snob. I am trying very hard—and I am glad to receive support from the Opposition Benches—
Is the hon. Gentleman saying that simply because millions of people are riveted to their television sets watching the Olympic Games there is something down market about that? Why does he make such snobbish judgments?
By "down market" I meant popular, and by "popular" I mean good popular programming of excellent quality. I was not running them down. The popular programme need not be of bad quality.
Perhaps I might give the hon. Gentleman a pocket definition. The Daily Mirror is popular, The Sun is down market.
As one who takes equal glances at both, I would not dream of giving a judgment on the right hon. Gentleman's view.
Having, I hope, established that by good quality we do not mean something that is of only minority interest, but which can also be popular, I am making headway with my argument, for there is a great deal of useful, high-quality, popular programming which has not yet been explored in Britain.
It has been suggested that there should, as of right, be on the new board of the authority a representative from one of the entertainment unions. I see cable development fundamentally as being business-led. I hope that when the Home Secretary considers the people who will represent our views on the authority, he will put business expertise first and foremost. A mistake that we have made in broadcasting for too long has been to talk about it as though it were some sort of religious proceeding. It is not. It is real, and it is becoming more real and sophisticated. Cable will not succeed if too many members of the authority are concerned with the more philanthropic side of life. The authority must be tough and know exactly what it is saying to the various consortia that will be spending huge sums.
The statement in clause 10 thatall news … is presented with due accuracy and impartiality" is right in terms of hard news. However, I have noticed in previous debates, notably in connection with video recordings, that sometimes we used the word "news" too loosely. For example, if that provision were to include current affairs, I should be worried about the toughness of the impartiality rule because cable, with its multi channels, presents an opportunity for all shades of opinion to be heard and seen.For example, there is the possibility of trade union organisations getting together to put over their point of view. The possibilities for business and other interests are huge. We have come away, as we go through this window, from the four channels, the duopoly. We are going in for the sort of multi newspaper set-up that we have in Fleet street, and newspapers can allow opinions in editorialising.
I believe that there are plans by cable operators to provide, in effect, closed information channels. Again, the trade unions or other interest groups might wish to speak to only their members. If they are putting one point of view, must we ask somebody along the following week to balance that point of view, as we do now with the BBC and IBA? To do so would be wrong.
I have dealt with the quota question. As I say, the British people will themselves ensure that British material in enough quantity is put on, otherwise cable will fail.
The position of advertisements is, some would say, too tied to the IBA. I have no objection to the broad idea that, where programme material is similar to that being put out by IBA contractors, the amount of advertising should broadly be the same. However, I notice in the Bill that the letters "IBA" occur with increasing frequency. Indeed, 773 there is an instruction to the authority to consult the IBA —no other body is mentioned in relation to consultation —before determining advertising policy.
The authority should certainly consult the IBA, but it should consult the advertising and other associations and bodies involved. I should like to see the specific instruction to consult the IBA made more general. While no authority concerned with television advertising could fail to consult the IBA, I fear that at present it looks as though the IBA's word will go forward.
Direct broadcast by satellite is as risky, if not more so, as the cable venture. We are talking about a very high-risk investment. I suppose that when my right hon. and learned Friend was considering the present position on satellite broadcasting—being a believer in the free market and free competition—he had various options open to him when the BBC decided that it had to go in with one or more other bodies to succeed.
For example, he could have said, "No BBC or IBA contractors. Let us open a new free market and compete absolutely fairly." He did not say that. He chose, instead, to give 50 per cent. of the operation to the BBC and the new consortium, about 25 per cent. to the IBA contractors —if they will take it, and that is still a big "if'—and about 25 per cent. to others.
The competition should be fair, and to give the lion's share to the BBC and split the other two in the way proposed is not completely to my liking. If we must split it, I would prefer it to be 33 1/3 per cent. to each, and then we should have fairer competition.
As for the concession—I suppose that "concession" is the word we must use—which my right hon. and learned Friend announced today, it had been rumoured that the present franchises might be extended. I gather that he decided not to take that view but to say that the IBA shall have the freedom to choose not to readvertise the present contracts in 1988–89, when they become due.
I hope, if inducement it be, that it is enough inducement for this huge investment, for I could hear some of the contractors whispering behind me, as it were, "If in 1988–89 the IBA chooses to make me readvertise, I shall have put a great deal of money into satellite and I am in exactly in the same situation as I might have been before. In other words, I might lose my licence almost on the day that my money starts to work for me on satellite." That is a big difficulty that I trust we shall consider in more detail during a constructive Committee stage.
I am a believer in cable and in satellite. They can both work. Our job is to give them the freedom to work, to stand back and not get too involved with excessive regulation.
§ Mr.Gerald Bermingham (St. Helens, South)
The hon. Member for Gravesham (Mr. Brinton) advanced an interesting theory on how the cable system could be financed and got off the ground. The concept is to give the public trash at first to make it easier for the cable stations to get off the ground. Subsequently the great British public will say, "We have had enough trash now, please include some quality programmes." The hon. Gentleman suggests that at that stage the standard will start to improve. That is the argument of the naive. It does not take into account the possibility of independent producers who have built up expertise going bankrupt because no one will buy their product as a consequence of all the cheap trash that is 774 available on the world market. The cheap stuff costs about £2,000 an hour in product time as opposed to the very much higher price of the decent quality programmes.
§ Sir Geoffrey Johnson Smith (Wealden)
Why does the hon. Gentleman assume that something that can be purchased at a very moderate price should automatically be classified as trash? There are many ancient productions when judged by modern yardsticks which are classics of their kind and are available on very easy terms commercially. Would it not be to the advantage of many people to be able to see those productions?.
I accept that unreservedly. "Gone with the Wind", for example, has circulated through the cinemas and has appeared on the television screen. A video recording of the film is available and the film is available in various forms from all sources. It may well be possible for a cable station io buy a copy of that film at a low price. No one would dream of suggesting that "Gone with the Wind" was trash.
I have much more in mind the secondary product that one sees on American cassettes that have been used to record some of the products that are shown by American cable stations. The quality of production in that sector does not depend on age. It is often quite modern stuff— it might well have been made in the past six to eight months—and, because of the large market in the States and in other countries, it is possible to reduce the product price. That is the result of being able to sell a large number of units. Units will be sold to the American cable stations arid to many others and the unit product price in Britain will be very much less than the unit product price of a similar product in this country. This constitutes a form of unfair competition because the marketing possibilities of the American product will have been exploited to the full and production costs will have been recovered. The quality of many programmes of that type is trash and I make no apologies for saying so.
I suggest with the greatest sincerity that the hon. Gentleman considers further his argument in respect of British productions which, I am sure, both he and I would not consider to be trash. Indeed, I am confident that he will agree that the majority of them are of an especially high standard. If the hon. Gentleman wishes to serve on the Committee that considers the Bill, and if he is selected to do so, will he direct his attention to productions such as "Brideshead Revisited" and series such as "Upstairs Downstairs" to ascertain the price that they have been able to command when sold to overseas companies? I can assure him that they sell for a piffling proportion of what they cost per hour to produce. The same argument applies to productions from overseas that are sold to the British market. The hon. Gentleman must accept that there are films that can be acquired cheaply from overseas that are of a high standard and that there are others that are trash.
I accept the hon. Gentleman's argument. I accept also that English products, once they have been sold within our own system, may well sell abroad for smaller sums. I am advancing the simple argument that, unless we allow a home market to continue and in some form to be safeguarded, the product of our producers, which subsequently becomes an export product, will not get off the ground. If we do not have a home market we shall be unable to build an export market.
775 The product price externally will be very much higher because of the absence of the home market. It is vital to ensure that quality of production is of a high standard and that basic production is safeguarded, and there lies my quibble with the Bill.
I accept the Bill in principle and I accept, too, the concept of development in the entertainment industry, whether it be by way of satellite 1 or the BBC satellite. We have heard this afternoon that there is to be commercial radio nationally and goodness knows what else. I do not object to diversity, but who will pay for all these developments? What equipment will the average householder need in his house if he is to benefit from all the new systems that will become available? A secondary argument can be developed when we consider how the programmes will be funded.
If the average householder is to benefit from all the developments that we are discussing— I concede immediately that it will be necessary to produce domes to be placed on roofs to receive the signals and that additional fees will have to be paid—the cost at current prices of the initial equipment will be about £450. I suppose that every good household will have to have its video machine, which will cost about another £400. In addition, the average householder will have to pay his television licence and pay to join a video club. I accept that the membership fee for a video club can be as little as £1 a year. All this means that the man in the street will spend more than £1,000 if he is to benefit from the proposed developments. The number who will be in a position to spend all that money must perforce be somewhat limited. Not everyone will be able to spend £1,000 in this way. Many of them will go either for the cable system or for the "dish" system, the satellite alternative.
The audiences for each of these types of programme will fall, and when that happens the advertising rates will also fall.
Does the hon. Gentleman agree that the magnitude of the challenge will be faced by the advertising industry as well as the programme maker and Parliament, which will regulate what should appear? Many enlightened representatives of the advertising industry accept that they will have to change their attitude to media advertising and target it to individual groups in a very different way.
I am grateful to the hon. Gentleman for intervening, because he has taken exactly the road on which I set out to travel. He has referred to an area that causes me to have the greatest reservations when I consider the contents of the Bill. If I am lucky enough to be selected to serve on the Committee that considers the Bill, I shall travel along this road at much greater length. The Minister knows from experience what that might mean for him.
I return to the road on which I have taken only a few gentle steps. As I have explained, advertising rates will fall, the advertising base will contract and the funding from the companies that purchase the various "products" will decrease. If royalties are to be maintained, quality must also be maintained. If quality is to be maintained, a standard of product that is similar to the present standard must be maintained. We could not say that we had a particularly high standard if the world did not choose to 776 prove us right. Whenever there is a television award competition — I am no expert on these matters — we seem to win. In this sector we enjoy the almost un-British pastime of winning. By that means we say to the world that we have a product that is worth having and the world actually agrees with us.
Why do we have a product that is worth having? The answer is that the quality of our producers and directors and of others involved in the industry is very high. How do we manage to achieve that level of excellence? We have not attained it by producing cheap, second-rate trash. We have done it by maintaining a home market for our people. As I have said, the way to ensure the continuing quality of our products is to ensure that our home market and our producers are to that extent protected.
I am not suggesting that we protect the incompetent and imbecilic. I am talking about protecting the quality of present standards. I concede that there may be a difficulty with cable services. I agree that we are in a different media game today compared with 30 years ago when independent television was first introduced and almost became a licence to print money. Cable must not be seen in that way.
People must go into the cable industry with their eyes open. Similarly, those who go in for DBS must have their eyes open. The House must not permit those systems to be considered as a means of printing money. Cable services must be a means of offering quality in programmes that we can subsequently export. The only way in which we can do that is by protecting our home base from the word go. The IBA and the BBC have a self-imposed quota system on the amount of imported material they use, and that process must flow into the cable system. I accept that we have a hard road to follow, but the end products will be worth it.
Clause 10 deals with the quality and impartiality of our news systems. Subsection (1) states:The Authority shall do all that they can to securevarious requirements. Subsection (1)(c) uses the wordsthat all news given (in whatever form) in programmes which originate in the United Kingdom is presented with due accuracy and impartiality".The cynic in me says that it would be a good job if we started with the present news service. I note that the hon. Member for Gravesham looks horror-struck at the idea. I remember his performance some years ago. I concede that a newsreader is only as good as the piece of paper in front of him, but I am worried about those pieces of paper. We cannot always say that news services are as impartial as we would like. It is all very well when setting out on the road to say that we will have impartiality, but we need a means of enforcing standards of quality and taste and the other requirements in clause 10.
I have read the Bill as carefully as one can at this stage, and I accept that the debate perforce has taken on a different flavour because the Home Secretary mentioned many matters not dealt with in the Bill. I shall deal with the Bill as those who prepared it first read it. Clause 10 does not have the necessary teeth. There should be a controlling body, with the teeth necessary to enforce what Parliament wishes. I do not believe that any hon. Member wants bias in the news media.
The hon. Member for Gravesham may believe that I have an argument with him about these matters. He may think that he picked an incorrect example in referring to 777 editorial control of newspapers. There is much to be desired in the editorial quality and control of English newspapers.
I can best illustrate my statements by saying that Channel 4 has introduced a daily commentary spot. An invited guest is free to editorialise and opinionise as much as he or she wishes. That has been a refreshing approach in broadcasting. I was distressed to hear the hon. Gentleman's suggestion that the writers of the hard formal news take their pens in one direction and not another. The hon. Gentleman would be more profitably employed in looking at the inevitable selection caused by one camera lens photographing a scene. That is the most dangerous part of television news, although it is something that this country does better than any other country.
I accept that the hon. Gentleman's experience gives him a particular knowledge which I would never have. I ask the House to accept that I am trying to paint roughly with a broad brush a particular problem. We learn of proprietorial interference occasionally in editors' duties so that views are directed to one stream rather than another. I do not wish to make a party political point; I am pointing out a general set of principles.
I do not mind presenters giving their view—that is fair and right in a democracy—but there should also be the right periodically to put the opposite view. There must be checks and balances. The Bill fails because it does not allow those aggrieved or disadvantaged by a presenter or channel to put their views. I cite the example of Channel X17, whose news presenter night after night thunders home his view on the availability of public wash-houses. There may well be people in the locality who take the opposite view. There is no avenue for their view to be equally presented unless the Bill provides, once aggravation is shown, that the authority can enforce its adjudication. That is an important point, which I raised in June when the White Paper was first debated. That view has been raised by other hon. Members. The Bill does not fully overcome that difficulty.
Although I shall not oppose the Second Reading, I hope that in Committee the Bill will be tightened up with regard to programme protection, balance of programmes and complaints. At the end of the day, we shall doubtless have a system of programme presentation that not only maintains current quality but enhances the spectrum of programmes available so that programmes are fair and balanced and have a proper content.
§ Mr.Roger Gale (Thanet, North)
I am sure that Conservative Members congratulate my right hon. and learned Friend the Home Secretary on the Bill, although I am bound to say that the legislation was not heralded as ushering in a new era. It was presented in a more enthusiastic fashion than was shown by the right hon. Member for Manchester, Gorton (Mr. Kaufman), who managed to make the sentence, "We wish cable well", sound like an epitaph.
Eleven franchise holders understand that they have been awarded franchises and are now waiting in the wings before going into action shortly. I hope that Ministers will reassure those franchise holders that the Government are 778 as fully committed now to the future of cable television as they were when the franchises were announced at the end of 1983.
My hon. Friend the Member for Gravesham (Mr. Brinton) said that cable was a different animal from broadcast television. The House should consider that point and understand that we are dealing not with anything broadcast, in the terms of part I, but with a completely new medium—narrow casting. It has the potential to take a series of signals into someone's home and to offer him an interactive service. The word "interactive" is not used in the Bill, despite the fact that the thrust of the original concept was high technology.
A person is being offered the possibility, for example, to watch in his own home a programme about foreign holidays, to see an advertisement for a holiday that takes his fancy, to choose not to do anything about it at that moment, and to watch the rest of the programme. By pushing a response button on a machine held in his hand, that person will be able to store that information and wait until the end of the programme, or the following day, if he so chooses, to recall and rerun it. Having seen an advertisement that extols the joys of holidays in Margate or Herne Bay, in my constituency, and no doubt enjoyed the prospect, the person will be able to call the advertisement through the same system as written information which he can read and re-read it as a newspaper. If that person is still interested, he will be able to call another number and place an order. With the same system, he will be able to pay in advance for that holiday. That, and a great deal more, is the potential of cable.
Cable will have a potential for home education—the facility, once the correct chip is inserted in a television receiver, for a receiver to be fed with a series of educational programmes overnight while the house is asleep. At the push of a button the following day it will be possible to recall all or any of those programmes and to run them as often as one wishes. Cable has a potential for home shopping. It is a facility that could be an enormous asset to the housebound, the disabled and the elderly. There could be the opportunity to call up a catalogue from a local store, to decide what one wanted, to order it and, if one chose, to pay for the article and have it delivered. Those are all practical possibilities that could be achieved at present.
It is being suggested that the installation of such a system will take a long time. The installation of interactive fibre-optic cable in every home will clearly take a long time. That is what we are dealing with. That is why I am dismayed that so few hon. Members are present. I believe that we are talking about the most exciting advance in the communications industry for many years, and possibly ever.
Given that we are dealing with a completely new concept, completely new standards should be applied. Therefore, many of the arguments that we have heard this afternoon are outdated and archaic.
I come now to the composition of the Cable Authority. The authority, as the Bill now stands, will be required to lean heavily on the advice of existing authorities—the Independent Broadcasting Authority and, in the fine print, the ITCA for advertising standards. I hope that that will not be the case. I hope that the Cable Authority will be composed of qualified people who can exercise the right professional judgment to give this new service the opportunity and the freedoms that it needs.
779 The right hon. Member for Gorton suggested that there should be a special person appointed to the body to represent the entertainment interests. That sounds as if he has been attending too many debates held by British Actors Equity, where the Left wing has sought to introduce a box for almost every category of expert. I hope that that will not happen. I hope that the Cable Authority will be composed of those people who are judged the best qualified to do the job and that they will be allowed to do it unfettered by advice from the ITCA, the IBA, the BBC, the Home Secretary or anyone else.
I should like to deal with the controls over advertising standards and remind the House that we are dealing not with cable broadcast television but with a cable service capable of infinitely more than the television in the corner of the room. The programmes that will be carried will include not just the four currently broadcast terrestrial networks and the DBS channels but a great many other specialist items as well. I have mentioned facilities for home education, home banking and home shopping, but there is a great potential for specialist programmes, and also, for example, for a shopping magazine. When independent television was first introduced many years ago, there was a programme called "Jim's Inn". In due course it was decided that the advertising standards of that programme were out of order under the IBA regulations.
As the hon. Gentleman says, Jim was out.In the context of sequential broadcast television, that was probably a correct decision. We now have the opportunity to have an entire channel devoted to a comparative magazine—a cable "Which?" . There is no reason why such a programme should not be sponsored and carry an infinitely greater volume of straightforward advertising than the current six minutes to an hour carried by independent television.
Will the hon. Member accept from me that it would be inaccurate to describe such a channel as a cable "Which?"? As he is aware, "Which?" has nothing to do with any sponsorship or co-operation with any manufacturer or provider of services that it investigates.
I accept the hon. Gentleman's point. "Which?" is a comparative magazine. I believe that that was the phrase I used.
It would not be improper for such a comparative magazine to be sponsored. I accept that it might be invidious to include advertisements for individual products. I am sure that the hon. Member understands the drift of my remarks.
We are dealing with a different service. I believe that it requires, and must be allowed to have, different parameters within which to work. I hope that in Committee it will be possible to reconsider the clauses restricting permitted advertising.
Under the franchise arrangements, the Bill provides for community access programmes, but it is not clear who will have editorial control. Will the cable operator be able to say yea or nay to the programmes produced by the local community, or will the franchise holder be compelled to take, within a given slot on a given cable, whatever the community produces? As we all know, especially those of 780 us who have produced and directed programmes, some community programming is very good. Some, however, is lacking in technical quality and often, frankly, in artistic merit.
It is right that community access should be provided to cable television, but if we require cable operators to carry that material, they must have some right to reject material that they consider is unsatisfactory. I suggest, therefore, that the final arbiter of what is satisfactory, acceptable and transmittable on cable should not be the cable operator or the community programme provider but the Cable Authority. That is the only way to give just access and to ensure that cable operators are given the correct amount of editorial control, to which they have a right.
Much has been said about the quota of British programming within a schedule. I have made many British programmes, and I should like to comment upon that aspect. Opposition Front Bench spokesmen have said that television costs about £20,000 an hour in news terms. A rough yardstick for producers in British television is a total production cost of about £1,000 a minute. Much of British television is sold overseas as cheaply as the £2,000 an hour for which it is bought in. Many independent producers already make programmes for, say, Channel 4 at costs that it cannot afford to pay. Those independent producers make the programmes in the certain knowledge that, by doing a deal with the television company to retain the sales rights, they can give first outlet to the home-based television networks and subsequently recoup the production costs and make a profit by selling the programme worldwide.
The advent of cable will create a tremendous market for the independent producers, who will make programmes on that basis. Programmes will be shown in this country on many cable stations. The rights for overseas sales will be reserved by the programme maker and subsequently sold overseas. I believe that programme financing will work in that way, at least initially.
There is no question but that most, if not all, cable operators will be unable to commission the sort of programming that was referred to earlier this afternoon. Equally, it is true that much good material is generated overseas. Much of that will be needed. It will be highly desirable, and cable will give an opportunity for highly specialised and specialist programmes to be watched by minority audiences.
The hon. Member for St. Helens, South (Mr. Bermingham) asked who will pay. He would probably accept that there is great potential for target advertising to hundreds of people, if they happen to be right for the advertiser. It is more worth while in advertising terms to sell a product to those to whom the companies wish to sell than to sell it grapeshot and hope that some will buy.
It is true—I believe that the hon. Member for St. Helens, South was trying to make this point—that the system may attract too few people to appeal to advertisers, who will be an important source of revenue to cable stations. I stress that, because of the fine targeting possible on cable networks, the necessary number of 781 advertisers will be attracted. As a consequence of being able to buy specialist programmes, the subscription rates for specialised channels will be fairly high.
Does not the hon. Gentleman agree that, in an area that receives cable television, there will be a maximum audience of, say, half a million, the nature of which will depend upon how many of those living in the area take up the option to use the cable service from the local distributor, if I can so describe it? If advertising firms wish to target, the sample audience to which they direct their advertising will be fairly small. Companies will not know the exact nature of the sample unless the cable company makes that information available to them. That in itself has inherent dangers. Advertisers will also face the problem of not knowing who within the sample will have their sets switched on at the right time.
It is technically possible, and may soon happen, that a microchip can be installed in a television set so that a cable or broadcast operator can send out signals to be stored by the set for later retrieval. It would be possible for a cable or broadcast operator to transmit a programme on subscription to each farmer in my constituency, where there are between 50 and 100 farmers. That is an important market for firms selling a specialised product.
There is scope, perhaps on a section-by-section basis, with coverage every 15 or 20 minutes, rather than a long-term programming basis, for that sort of highly specialised work. That is what cable is about. The service is not concerned just with entertainment. It is an interactive service that is capable of doing many things. Incidentally, a chip that can time-expire will become available shortly for installation in television sets. Those who are worried about the collection of TV licence fees will be pleased to know that, should the Home Office choose to take up that opportunity, it will be possible to de-activate a television set at the end of a year unless the licence fee has been paid. All of those things are technically possible now.
I am totally opposed to the imposition of any sort of fixed quota. The right hon. Member for Gorton said that the IBA and the BBC were restricted to 14 per cent. of bought-in programmes coming from overseas. That is incorrect. He sought to deny it when I raised the matter at the time, so I shall repeat that those quotas are self-imposed. In fact, the legislation that applies to the IBA and the BBC in that respect is broadly the same as that to be applied to cable operators.
It is desirable that cable operators should be given access to as much material as possible, not only in the early days but for ever. British home production will be generated and stimulated in that way. I also believe that a significant amount of overseas material is well worth watching. I should like to see it made available in this country. Given the 35 channels that it could be relayed on, I do not think that there is likely to be too much material available.
Like a bolt from the blue, my right hon. and learned Friend the Home Secretary said, in the middle of his speech, that he intended to see established a national commercial radio network. On behalf of many of those who have fervently supported local radio, and who believe, paradoxically, that many of the products of local radio should be given a network outlet, I should point out that that is very heart-warming news. However, I am 782 surprised and disappointed that an independent local radio network has not been established before, and many of us believe that it cannot come too soon.
I welcome the Bill and hope to have the opportunity of working on it in Committee. It is a significant piece of legislation, whose effects will be felt in every home in this country.
§ 7 pm
§ Mr.Robin Corbett (Birmingham, Erdington)
I remind the House of my interest as a member of the National Union of Journalists.
I should like to underline the remarks of my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) in making the strongest possible protest about the Home Secretary's abuse of the House by making, in his Second Reading speech, wide-ranging announcements about changes to the shape of broadcasting in this country. If he had had any courtesy, he would have recognised that they merited a separate statement from the Dispatch Box and that they should not simply have been piggy backed on to this Second Reading debate. However, I shall not pursue that point, Mr. Speaker, and I suspect that you would not allow me to do so anyway.
The hon. Gentleman is being ungenerous. Part II deals with DBS. It would have been very wrong if my right hon. and learned Friend had spoken on Second Reading without telling the House that because of the developments that he explained we would find it necessary to add to part II. My right hon. and learned Friend handled the matter in a perfectly orderly way.
I understand what the Minister says, and it is typical of him that he should spring to the Home Secretary's defence. However, I stick to what I said: the announcements made by the Home Secretary were serious enough, because of their effect on the whole pattern of broadcasting in this country, to warrant a separate statement being made to a House which, as he knows, would probably be much fuller than it is today. He could then be questioned on it by both sides of the House.
We are talking not about whether there will be cabling but about how it should be done. We say that it should be done with sensible regard for standards and the range of services and that there should not be some commercial free-for-all in which yet another promised pot of gold is held up for people with the longest arms and the biggest bank balances so that they can grab what they can. I remind the House that when speaking about the introduction of commercial television Lord Thomson said that it was a licence to print money.
Sadly, the Government seem to want some sort of almost wholly unregulated free-for-all. In a democratic society, that is wrong. We are not talking simply about another arm of the entertainment industry. Some of the programmes will, of course, involve entertainment, but I hope that much of the content will be of a more serious educative and informative nature. However, that should not imply any dullness. As an electorate, our need is still for more relevant information to nurture and extend democracy. That may sound a little dull but it is not. If democracy is to survive and grow, it must be on the basis of more people having a fuller and thus better understanding of what is going on.
As has been said, cable is a. two-way street. It can take programmes into homes that sign up and, through the tree 783 and branch system, can offer communcation between the home and, for example, banks, supermarkets and businesses. I have even seen it suggested that it could be used for voting, although I very much hope that that does not come to pass. Cable, as with other forms of broadcasting, suffers from one major fault, which is that one cannot ask it questions and receive answers. To the best of my knowledge, that facility is confined to those who attend meetings and who listen to human beings rather than to machines.
The development of cable is crucial, both directly and indirectly, for jobs. There is potential for jobs in the laying of the cable and in the manufacturing and supply of the equipment used. As recently as last Friday, a report from Paris in the Financial Times said:The French Government intends to keep foreign communications equipment manufacturers out of the country's new cable television industry for the time being.I know that that will be of particular interest to the Minister. The French Government have made it clear that foreign equipment makers would be allowed to take part only on the basis of reciprocity. The report states:in the absence of major agreements ߪ France 'will construct its cable networks on its own'".I think that there is a message there, even for this Government, given that they crow on about the need to create new and real jobs. The Government now have a chance to put what they preach into practice. There are other areas of potential job creation or job loss. I refer, for example, to the jobs of all those concerned on the technical side of making programmes, and to the scriptwriters,actors, actresses, artistes, musicians, songwriters,authors, writers and journalists. There is a long list of such people.
In his laid-back and detached style, the Home Secretary did not deal anywhere near seriously enough with the argument for the imposition of a quota. I am arguing not about the size of that quota but, in principle, for a quota. My right hon. Friend the Member for Gorton reminded the House of the absolute assurances given by the former Secretary of State about what he expected to be achieved by the Cable Authority. He laid upon it a duty to report.
He said that the Cable Authoritywill have to show that there will be a progressive reduction in the amount of foreign material that is used."—[Official Report, 27 April 1983; Vol. 41, c. 873.] That duty is not enshrined in the Bill and there was no sign today from the Home Secretary that he had even taken that point on board.
Of course, we are used to Governments claiming the parenthood of White Papers and then proceeding to ignore what they say or to claim that they have had not just later but better thoughts. Paragraph 119 of the White Paper of April 1983 states:There is little doubt that the existence of the quota for television has contributed to the establishment of a strong domestic production capability, within both the BBC and independent television.It went on to say:the quota has ensured that foreign material has not flooded the screens and that what has been shown has generally been the best of what is available.I suspect that what is at issue is where we should start. The Government argue that we should start from the bottom and hope that cabling will be such a rip-roaring commercial success that when more money is available in 784 future years standards will rise. But what happens if, after the best efforts of those involved, the project goes wrong and it is proved that it does not work on the scale that some people expect? Opposition Members and, more important, people whose jobs, livelihoods, futures and careers depend on it fear that, should that happen, standards in the existing broadcasting organisations will have been so lowered that it will be impossible to raise them again.
My hon. Friend the Member for St. Helens, South (Mr. Bermingham) said that there would be only a limited audience available. There are not millions of people who do not currently watch television programmes but who wait for the advent of cable to switch on. The existing audience will make choices which will inevitably take viewers from the public broadcasting and commercial sectors.
I hope that the Government will not remain deaf to the arguments of those in the industry who fear the consequences if an understanding about quota is not reached, whether enshrined in the Bill or worked out by the Cable Authority in the form of a gentleman's agreement, as the hon. Member for Thanet, North (Mr. Gale) described it. The Government will say to the Cable Authority that they expect it to do its best to reach an agreement and to draw a bottom line. There is no need to go into detail about quotas because we are considering them in the context of the European Community.
We have debated the cost of buying foreign material, mainly American, and the cost of originating it in Britain. I accept that comparisons are not as easily made for the second or third showing as for the originating cost of the programme or of buying it after it has been exhausted on the American market. Nevertheless, given the initial investment, there must be an obligation under the Companies Act on those responsible to run the companies in the way that best serves the interests of the shareholders. That is their first obligation. They will receive no thanks or medals for losing money. They must ensure that those who make an investment in cable television receive a return on that investment in a foreseeable period.
Many of those involved in the early days of cable television will be tempted to see how they can fill the hours — we are envisaging a continuous service — when audience ratings are extremely low or the viewers are not attracted to advertisements.
The Entertainment Network sent us an interesting document called TEN. It states:United Cable Programmes Limited is owned 55 per cent. by four British companies — Plessey, Rank, Rediffusion and Visionhire, and 45 per cent. by UIP, a consortium of Paramount Pictures, MGM/United Artists and Universal Pictures".I am told that there is no such thing now as films being made exclusively for showing at the cinema—big screen pictures. The organisation has an extremely interesting line-up which includes four of the former giants of the old-fashioned cinematographic industry. Its advice on quota is that it isentirely proper that the Cable Authority should have the obligation of ensuring that proper proportions of programming orginate from the EEC.It adds:We would, however, regard as disastrous anything being written into the Bill by a Commons amendment requiring a specified proportion of programmes to be of EEC origin.785 That view is not surprising as the organisation has a vested interest. Precisely because vested interest has spoken with such clarity, we should pause for decent thought about where that road will lead.
The general fear, about which the Government are sensitive or with which they disagree, is that once quality has been lowered in the existing outfits they will be unlikely to recover. A further aspect is that the NUJ rightly fears that in the important news and current affairs programmes from the EEC, America or elsewhere there will be no requirements to achieve the accuracy and balance at present achieved by the BBC and commercial stations. Clause 10(1)(c) states:that all news given (in whatever form) in programmes which originate in the United Kingdom is presented with due accuracy and impartiality.That is precisely the point. We cannot legislate for programmes from other countries, only for programmes originating in the United Kingdom. A fairly large number of programmes, especially in current affairs, will originate in other EEC countries or the United States of America and will touch on issues of interest in Britain, but we shall have no control over their standards, accuracy and impartiality.
Despite criticisms from time to time, accuracy and impartiality distinguish what are recognised to be generally first-class programmes, especially by the BBC, but also by the commercial companies, from some of the tripe which is churned out on about 100 channels in most major cities in the United States. Any hon. Member who has entertained first-time visitors from the United States will know that when they watch our television they can hardly believe their eyes. They can hardly believe that they can watch television for an hour and three quarters without regular 10-minute interruptions during which people try to flog them goods. They cannot believe the controls that exist even on the commercial channels.
The NUJ makes another point of which we should be aware. I do not wish to sound Luddite, but it is possible that cable will pose a real threat to local radio stations — both the BBC and commercial ones — to local newspapers, and hence to jobs. I suspect that hard up against the union's concern is the threat to the existence of those outlets for views, news and opinions. Local newspapers generally serve their communities well, and they have adapted and adjusted to the competition from local radio so that now, by and large, they manage to live side by side.
Unless there is a sustained and rapid development of British—originated material, cable might pose a threat to the nursery end of the business. We must continue to provide and to expand opportunities for new entrants to learn and refine their skills and obtain experience. If there is a cut—some of us fear that there may be—in British programmes, or a lowering of standards because of the over-use of foreign material, the authors, scriptwriters, musicians, songwriters and the rest will find it extremely difficult not just to earn a living but to obtain the experience that they need in order to flourish.
The Society of Authors argues that the provisions for copyright in the Bill still contravene the Berne copyright convention. The society states:Most serious is the lack of copyright protection given to creators of works transmitted via point to point satellites.I should be grateful if the Minister of State would say something about that when he replies.
786 I shall need much persuading that the new Cable Authority stands any chance of being even half effective, in view of our experience with the IBA. On two recent occasions the IBA either connived at or turned a blind eye to those granted franchises for television stations tearing up the contracts on which they were granted the franchises and doing many things which were not proposed in their submissions. I understand the reasons for it, but it demonstrates the ineffectiveness of the IBA. Both cases arose because of cash crises.
The first case was with London Weekend Television and more recently a similar thing happened at TV-am. Such were the changes made by those contractors that it would have been far wiser and in the best interests of the industry had the IBA either called in the franchises or at least imposed a moratorium while matters were sorted out. It is possible that the applications of some companies were turned down because they wished to do precisely those things, but some months later those who were granted the franchises said to the IBA, "'We have run out of cash and unless we do this we shall go to the wall." To that extent, they got away with it.
I remain extremely sceptical about the likely success of cable, but I know that my opinion will not influence anyone's commercial decision to invest money in it. It has already been said that there has been an astonishing growth in the private ownership of home videos and that several millions of people hire videos each week. I am not an enthusiast for the Bill, but nor am I a Luddite. My point is that the introduction of this new technology with all its potential should be handled in the public rather than the private interest.
§ Sir Geoffrey Johnson Smith (Wealden)
I listened with great interest to the hon . Member for Birmingham, Erdington (Mr. Corbett), who, typically, in his candid way, revealed his doubts and fears about the possible success of cable, but who equally was kind enough o suggest that it is not a matter on which we should put up a token resistance or resist on Luddite grounds. He is right to take at least some encouragement from the fact that some people are willing to risk their money, not the State' s money. Had taxpayers' money been involved, I believe that I know how he would have voted. I cannot predict with confidence how this venture will develop. All that I know is that most of the predictions that were made about commercial television were completely wrong.
I declare an interest in that I am a non-executive director of the holding company of London Weekend Television. I heard what the hon. Member for Erdington said about London Weekend, and I assure him that it happened long before I became involved. He will be aware that the IBA insisted on a considerable management shakeup in that company, and we can all agree that the company as constituted has provided British television audiences with a high standard of programmes.
Last year I congratulated the Government on their White Paper. The Bill, which has had the benefit of being improved in the other House, largely meets the objectives of the White Paper. However, it will need further amendment if it is to meet the practical needs of prospective cable operators. The amendments which I wish to propose deserve consideration because we must examine cable in an up-to-date context. Much has happened since the White Paper was published and the Bill 787 was drafted. We have all developed a clearer understanding of the scope and limitations of cable and its likely impact on the traditional methods and existing patterns of broadcasting.
I do not wish to go into too much detail now, but later I shall develop the thought that since March the prospective cable operators have expressed considerable shock at the Chancellor's proposal to phase out capital allowances.
Following last year's debate on the White Paper, much has been heard about the expense of providing cable television, and many hon. Members have referred to it. It has led some to say that it will force cable companies to appeal to the lowest common denominator in an attempt to attract mass audiences. We have been warned that the knock-on effect on existing commercal companies and the BBC will be severe and will change the entire ecology of broadcasting. These fears have run through the debate today. It is argued that the IBA companies will be shorn of their advertising revenue by cable, that audiences will be seriously fragmented, and that this will cause a further decline in revenue. The BBC will feel a renewed urge to justify its licence fee and, together with the IBA companies, will plunge into a mad struggle for ratings, leading to an inexorable decline in standards.
I have never subscribed to this gloomy scenario, which was often, although not exclusively, adumbrated by those who seriously entertained the idea that this Government would introduce a monster of unregulated television. I can recall many occasions when I have been involved in debates outside the House, when people have said that the whole thing would destroy the ecology of British broadcasting because the Government would introduce unregulated broadcasting. No Government, even those who embrace the philosophy of a free market, would dare to do such a thing, at least for many years to come. They are too keen to ensure that there is a framework of control and regulation, sometimes for laudable reasons, sometimes for less laudable ones.
It is true that we have benefited from the framework that has been successively introduced by Governments. However, I believe that if we are not to have an unregulated form of broadcasting through cable we should be equally careful not to smother it with misguided kindness through new forms of regulations that might make it impossible for the infant to survive. The Bill has slain the spectre of unregulated broadcasting. Although it will not satisfy those who are irreconcilably opposed to cable, it goes a long way to reassuring those who seek to ensure that the present standard of broadcasting is not undermined. I congratulate my right hon. and learned Friend the Home Secretary, his colleagues at the Home Office and their advisers on what they have done in trying to get the balance right.
The rejection of the so-called adult movies, the opportunities for independent television companies and the investment in private programmes for cable are all measures that I welcome. So, too, is the provision which, by permitting cable operators to provide sponsored programmes and pay-per-view, will reduce the pressure for more advertising material, on which IBA companies are completely reliant for their revenue.
More important than anything else in the Bill is the realisation—this has not been sufficiently appreciated by 788 some hon. Members who have spoken today—that half of Britain is unlikely to get cable. Even if the proportion is as high as 50 per cent., such is the cost of investment that it is unlikely that we shall achieve 50 per cent. for many years. This has important implications for the existing broadcasting organisations. Surely it means that they will retain their universality and, with it, their dominance of the market. If they fail to retain it, there will be something wrong with their competitive powers as well as with their creative abilities.
In addition, the experience in the United States has demonstrated that cable is not a licence to print money, so it will not have the resources to steal the existing talents and wipe the floor of competition. Some people use the argument the other way. They say that it will be so difficult to make money that cable will rely on cheap imports. That argument was advanced by the hon. Member for St. Helens, South (Mr. Bermingham).
As my hon. Friend the Member for Gravesham (Mr. Brinton) said, cable is not just ITV in another guise, nor is it another form of public service broadcasting. In fact, those of us who have studied it closely have come to realise that it is not even broadcasting as we know it because it is not openly available to off-air transmission. Increasingly we have come to recognise it as offering a challenge to us in terms of legislation. It is something new and unique that deserves safeguards, particularly in its infancy, just as public service broadcasting deserves its own safeguards. It is our hope that the two will live side by side, and the Bill goes a long way to recognising it.
Cable has a potential that offers an interesting financial and intellectual challenge. It has inter-activity and a multiplicity of channels, should be able to harness the financial resources of international consortia and should, with all these changes, provide a worthwhile service that is different. Most importantly, we should encourage the development of cable in the hope that entertainment-led investment will open up the possibility that people will be able to buy, sell, bank, shop and work from their own homes using their link with cable, just as we hope that cable will provide new jobs for British industry.
However, in the world of communication—it is not unique in this—entrenched interests and habits take a hold of even the most imaginative people. It is understandable that some fear the technical effects that this can have on their well-established practices. As I have shown, the risk is worth taking. There are those in broadcasting and outside in the theatre and movies who recognise that cable offers a challenge that is worth taking.
I congratulate the Government on taking a positive approach. However, problems face the industry. It must have a benign financial climate. I make no apology to the Minister for touching on some of the recommendations voiced in the other place, because some of the suggestions demand further investigation by the Government with the object of trying to improve the investment climate and make the prospect more interesting for those who wish to take a licence.
For example, there is the varying of licences. We all know that if it is to work cable television and cable services must be operated on a light rein. I do not know of anyone who fundamentally objects to that. However, if it is worked on a light rein, it seems to those who want to participate that the power to vary licences is very wide and that the power on the authority to vary the licence should be strictly prescribed.
789 The Government have given the impression elsewhere that they intend to amend clause 4(7) so that the period of a licence cannot be varied without the consent of the licensee. It will be in the Government's knowledge that the Cable Television Association does not believe that the amendments that it thinks the Government have in mind will go far enough, and that the Cable Authority's power to vary the licence goes too far. I express no personal opinion on this, but I hope that the Government will give consideration to that point, if not when my right hon. Friend replies, when the Bill goes to Committee.
All along, before the White Paper and running through the debate in the other place, there has been a fear that the Government might be tempted to give increasing powers to the Cable Authority because we are used to strong authorities such as the IBA and the BBC's board of governors. We all know that there is an administrative cost. It is troubling that those who are thinking of seeking a licence are concerned that when the Cable Authority is set up it may not be sufficiently limited by the Bill to ensure that they take only a fair proportion of the administrative costs of the authority. They want to be sure that in no way can the authority indulge in excessive expenditure and that it should not be permitted to cross-subsidise between franchise areas — the authority charging excessive fees in profitable areas and uneconomic fees in unprofitable areas.
That was thought to have begun to creep into the development of independent radio. We all know how eventually we had to be rather more careful in the way in which franchises were given in independent radio as some of the more prosperous companies began to think that they were in danger of acting as subsidisers of the less prosperous areas. That is a worthy social purpose, but we are not engaged in this business in social engineering. Either we look upon this as a straightforward form of private enterprise investment or we do not. If we saddle the authority with the feeling that it has some great social purpose, I fear that we shall fall between two stools.
The other complaint will not be new to my right hon. Friend—the protection of sporting events on pay—perview terms. Everyone to whom I have spoken who contemplates seeking a licence recognises that there must be protected sporting events. At the same time, one is disturbed to hear that they believe that the terms remain unduly restrictive. They argue that there can be no objection in principle to an operator showing events on pay-per-view terms, providing that he does not obtain exclusive rights to those events and that broadcasters are able to continue to broadcast the same events. That is how they put it and I agree with them. I see no reason why we should not be allowed on a pay-per-view basis every ball that is bowled in any test match. I do not see that the preemption on an exclusive basis of the centre court at Wimbledon and the finals there by the BBC or ITV should preclude the possibility of a pay-per-view of Wimbledon through cable. If people think that it should not include the kial of Wimbledon, there is plenty of Wimbledon that Oople would be willing to pay for which is not covered by the existing channels. That matter needs looking at.
I congratulate the Government on not yielding to the deceptive voice that we would have better cable if we had a fixed quota. The simple truth that many often do not like to admit is that Britain does not produce enough to satisfy the different demands of existing channels and we have to rely on imports, many of which are of an extraordinarily 790 high standard. To expect cable operators to rely on the exclusive or heavy supply of British material will soon lead to it running out. In any case, a large proportion of it would be just as bad as some of the programmes that we already import. We are right to insist that there should be no quota. I should not mind if there were a fair proportion of what some hon. Members might regard as rubbish. If it has appeal, if it is a way of helping to make money, as someone once reminded me, in the words of Horace, "First acquire wealth then practice virtue."
A point that is often missed is that even supposing the cable operators, for some misguided reason, decided that
the best way to attract their audiences was to rely on the lowest common denominator, would that have such a sensational or dramatic effect? Would it have any effect on the taste of British audiences for existing ITV and BBC productions? After all, we are not talking about a network. We are not even talking about something the size of Channel 4. We are talking about small organisations which are serving a limited audience in certain areas of Britain. Over a period, given a favourable investment climate, entrepreneurial sense and good marketing, providing people with what they want, they might at some time. achieve—goodness knows when—a target figure of 50 per cent. of people who live in Britain. Therefore, even if I were to put forward the argument of the lowest common denominator, it would not say much for the existing standards or tastes of the British people to assume that the audiences which have been built up by existing companies would wither away as people made a mad scramble to try to get hooked up to cable, always supposing that they could. To persist with a demand for a quota of British programme material, though it may have the worthiest objectives, is not rooted in the practical facts of the development of cable.
I turn to the question of capital allowances. Every industry — shipbuilding, films and many more — has written to the Chancellor arguing for relief from this measure that he has introduced in his Budget. In today's mail came a letter from a well-known firm, Ladbroke, which is worth bringing to the attention of the House. It says that a distinguished firm of chartered accountants,Messrs. Deloitte, Haskins and Sells, hascarried out an evaluation of the implications of the Budget proposals on a typical cable television system. Their findings, which appeared in the Financial Times on 12th April 1984, show that for a company making maximum use of tax relief the yield over a 12 year period falls from 13.5 per cent. to 7.5 per cent. and the breakeven point does not come until year 9.Later, the letter draws my attention to a speech made by Mr. Peter Laister, chairman of Thorn-EMI, giving the Fleming memorial lecture to the Royal Television Society. In that speech Mr. Laister refered to the decision by the Chancellor of the Exchequer to cut corporation tax and to remove 100 per cent. capital allowances. Mr. Laister said that that is fine for established industries which are already well into profit but the effects of that on cable and satellite might tip the balance of decision in all marginal cases. He says:if ever there was a case for enlightened Government support for emerging industries, then this must be it . . . it is clear that unless the substantial cabling costs which form such a large proportion of the fixed investment— that is true—can be either sheltered or shared then the investment programme will be somewhat uncertain.We are all accustomed to receiving such letters. Some hon. Members might develop a scepticism as a 791 consequence. But we know that there is a heavy initial capital investment. Mr. Laister said that if areas of half a million homes were considered in the second round of cable franchises the capital expenditure for a single franchise might be as much as £150 million. At this stage, I cannot give an informed judgment in which I would have any great confidence, but I do not think we should ignore the warning when it comes from such a source. I do not think that Mr. Laister is chairman of Thorn-EMI without knowing something of the cost of such investment.
I hope, therefore, that the Government, if not tonight, at some future date, will bear in mind this kind of representation. It brings us back to the simple point that, if the Government are to encourage new entrepreneurial energies, they must create the framework in which new investment is to take place, otherwise we shall not have entertainment-led cable with private money put into it instead of State money.
I deal finally with a different matter. I apologise to my right hon. and learned Friend that my duties in another place made it impossible for me to hear his speech, or, indeed, that of the right hon. Member for Manchester, Gorton (Mr. Kaufman). I understand that there is to be a consortium of which the BBC would have half, while the other half would be divided between some ITV companies and some new independents which may want to participate. The project will be responsible for three-channels, one film and two channels of mixed programmes. We want to know how that will be done, which ones will carry advertising and which will not, and whether all three will have responsibility for providing films. I believe that this three-channel mixed consortium will present a complication to those who have been accustomed to working in separate compartments. I hope that my right hon. Friend, in winding up, can give some guidance on how he foresees the development.
I am concerned, too, about the proposals to enable existing ITV companies to take part in the new project. We all know that their present franchises run out in 1989. It is proposed that the new satellite project should get under way at the end of this decade. If the IBA will not be under an obligation to readvertise contracts but will retain a complete discretion as to whether to do so, this will give no guarantee to an ITV company that its contract will be renewed. At what stage before 1989 will an ITV company know that it will not be able to take part in the new consortium, but will know that, come 1989, its franchise will be renewed? From what the right hon. Gentleman has said today, that has not been made sufficiently clear. I cannot see any independent company seriously negotiating with the BBC and talking about satellite television until it is sure that its franchise will be renewed. If such a company goes down the track of talking to the BBC and, after six months of talks, goes to the IBA and is told, "Sorry, chum, you've had it, you will not be allowed to have your franchise renewed", I cannot see this getting off the ground. It is possible that, my having been absent, I have been insufficiently informed of the Government's intention.
I am delighted that my right hon. and learned Friend was able to instil new confidence by announcing the radio network. Whatever reservations one might have about the climate that is being created by the Government for this new venture in cable or direct broadcasting by satellite, I 792 think that most hon. Members would agree that the Government, in a remarkably short time, have taken encouraging and important initiatives that bode well for British broadcasting and for those who make their contributions technically or artistically.
§ Mr.Gerrard Neale (Cornwall, North)
If I may join my hon. Friend the Member for Wealden (Sir G. Johnson Smith) in his remarks about the Bill, and about the attitude of my right hon. and learned Friend the Home Secretary to the subject, I think that the Government, by their reaction to the initial Hunt inquiry and by the way in which they have accommodated amendments in another place, have shown a willingness to accept the possibilities in cable. The two aspects that deserve most congratulations are, first, that they have resisted becoming involved in any way on behalf of the taxpayer and, secondly, that they have resisted the regulatory overkill, which is always tempting in such subjects and which would have been disastrous for the future execution of cable projects.
Having listened to comments by Opposition Members, one is mindful of the doubts expressed about video. Various projections were given of the number of video recorders there would be in this country and of the amounts per month that people would have to pay, and gloomy estimates were made of how few people would take up the opportunity. One third of homes in this country now have video, and many have home computers. One aspect of which I am sure my right hon. and learned Friend is aware—an aspect of which I know my right hon. Friend the Minister for Information Technology is aware—is that the interactive services that will become available on the cable system will draw together the potential of video and home computing in a way that could not have been imagined five years ago.
As some of my hon. Friends have said, it would be possible not only to have a two-way process of information but to call up information on one's video overnight through the cable system, at a time when no programme was being transmitted. The following morning, one would be able to digest it and call up the concern from whom the film matter had come and order holidays from a travel agent, and so on.
I wish to support what my hon. Friend the Member for Wealden said. I shall refer to several of the points that he made and seek to reinforce them. The first is the change in tax provisions announced in the Budget. My hon. Friend read out certain information that he had received. I hope that representations will be made so that the Chancellor of the Exchequer will understand that, whatever may be said about potential for cable, about the potential for programme makers in the country, and about the chance for people to enjoy these interactive services, and for educational purposes to be improved, none of those things will happen unless those who have an interest in installing cable systems can see a return from their investment.
The Home Secretary made it plain that he wanted the minimum regulation and the maximum incentive for the systems. The Treasury must think more seriously about the effect of the changes. I do not suggest that the allowances should be continued, because that would be inconsistent with other fiscal policies, but, as an alternative, the 12-year term for licences under clause 4 should be 793 extended to 15 years. Licences for longer terms have been offered in the telecom business, bearing in mind the considerable investment sums involved.
When it comes to amending a licence, the risk involved must be considered. If anyone wishing to enter the cable business believes that the authority has too great a power to amend the licence at will, confidence will be affected. An amendment was made in another place to enable representations to be made, but the major anxieties still exist.
I congratulate the Government on their attitude to the programming quota. We do not feel any less strongly than Opposition Members about the need to promote a home-based film industry, but in the early stages of the development of the cable industry in Britain we cannot impose a quota of British-made programmes—in so far as one is able to judge what is British-made—without endangering the future of the industry. Those interested in promoting a home-based programme-making industry must want to ensure that the cable systems are established on a viable basis to ensure a long-term future. Those interested in investing believe that they must be free from any set proportion of British-made programmes. We should consider that view seriously.
Another aspect touches upon the standards of homemade and foreign-made programmes put out on the cable systems. It is clear that, if cable systems are to succeed in Britain, the cable operators will need much more information about viewers than is currently available to the existing channels. Consequently, sophisticated analysis is already being adopted to establish what makes an individual viewer watch a particular channel and—more important—what makes a person switch away from a channel or stop paying the cable operator for a service. The cancellation rate is as high as one third in any one period. It is as important for cable operators to discover why they lose custom as it is to know why they gain it. In that way, cable operators should be able at all times to analyse the quality of a programme as assessed by the people who pay to watch it.
The Bill is excellent in that it brings before the House a series of measures which will allow the industry to develop in a way suited to the demand in the country. The right hon. Member for Manchester, Gorton (Mr. Kaufman) was depressing about the Opposition's view of the Bill. The right hon. Gentleman delivered an extraordinary speech. He seemed to argue the case from all sides against the middle. First, he made out that there was no evidence of any demand, and then he suggested that British Telecom should be given the exclusive rights to cable Britain. His speech was extraordinarily difficult to follow.
I am convinced that if the Government consider limited amendments in Committee they will have a Bill that will offer the cable industry the opportunity to cable Britain and so provide many people with a wide range of services.
Perhaps it is strange to mention the rural areas, since it is suggested that the cable system will be of little use to them. A number of places in my constituency will benefit from the Bill. I have in mind areas which previously found television reception almost impossible unless localised aerials and transmitters were provided to communicate with villages deep down the steep hills. Such villages will be offered the opportunity under the DBS system to use dishes which will not necessarily be available to other 794 areas. Even in an area such as north Cornwall there will be a gain, and I am grateful to my right hon. and learned Friend for providing it.
§ 8.8 pm
§ Mr.Austin Mitchell (Great Grimsby)
I am surprised that the hon. Member for Cornwall, North (Mr. Nealle) concentrated on the benefits for his constituents, because the possibility that north Cornwall will be wired is remote indeed. I am surprised that he did not mention his own interests as a director of Telecom Rentals, the clients of which are Air Call Ltd. He should have declared that interest. I declare my interest as a member of the National Union of Journalists, but I have no intention of agreeing with what Government Members have said in that connection. We have heard a procession of hon. Members praising the Bill with faint damns or clutching at it with open hands because of the money involved.
I agree with what my hon. Friend the Member for Birmingham, Erdington (Mr. Corbett) said about the impropriety of introducing the measure with a sweeping and wide-ranging announcement about a national commercial radio channel which will have an enormous impact on the media scene. That seems to me to be one of the most unnecessary innovations that one could announce. The contracts for ITV are being set in aspic. The Home Secretary has made a momentous announcement for the future of independent television which has little to do with the Bill. It is not desirable to sneak in such announcements in the introductory remarks on a Bill.
Inevitably, the Opposition in general welcome the advent of cable television because we welcome anything that widens choice, offers more diversity and encourages the move towards a more pluralistic society with more sources of entertainment and information at its disposal.
One section of the people would welcome the advent of cable television. A survey carried out by the Consumers Association, and published in the February edition of Which?, shows not only that there is a high level of satisfaction with current television — which represents good value for money—but that a substantial majority of viewers want greater choice of television programmes and that a small, but significant, minority are prepared to pay for that either through subscriptions, pay-per-view or an increase in the BBC licence fee.
The bugbear of video has been mentioned. It is interesting to note from the survey that although one in four households owns a video, and there is a demand for a wider range of programmes, video owners are most attracted to cable television. They have been caught by the bug and are now avid for more variety. I accept that demand exists, although it is a minority demand and the service will be provided for only a minority of that minority. Only the urban areas will be catered for, but as the demand is there it should be met.
Pluralism in media is a solution to many of the problems of the media, which are so often debated in the House. Less obsessive attention would be paid to the accusations of bias by the BBC and ITV if there was a diversity of media. Attention would shift to a wider area and different points of view would be put, which is all to the good.
The problem is whether the Bill is the proper way to proceed or whether it will simply move us towards the lowest common denominator. Will it do for the existing institutions what The Sun did for tabloid newspapers? Will 795 it drive the service down to the lowest common denominator and weaken the existing institutions, of which we are rightly proud and which have made such an important contribution to entertainment, information and our way of life?
Given the clear confusion in the Government, we wish that they would hold the measure and reconsider it at greater length, if only to clarify their own thoughts. It is not the Opposition who need to get their thinking clear; it is the Government. The whole progress of the measure has been one of steadily changing assumptions. The Government attempted to rush cable on to the country and the House, which was a disgraceful piece of social engineering and impetuosity.
The rush has now slowed to a Gadarene amble, but the speed with which the Government embarked upon the measure led to undesirable developments. For instance, the information technology advisory panel provided the original initiative. It comprised a collection of vested interests invited to be judge and jury of their own case. Its report was inevitably slanted in the direction that was to be expected from the composition of the panel — it recommended the rapid, deregulated development of commercial cable systems. Following a note of dissent from the Opposition, that was followed by the Hunt committee. It was one of the less successful committees of inquiry. It was as though the good Lord Hunt set out deliberately to put his mistress's voice into the report. It effectively took the industry at face value and moved, although more ploddingly, along the same road as the 1981 ITAP report.
We then had the Government's declarations of enthusiasm, which were the impetuous stage. We have now moved to the cooler stage when it is clear that the assumptions on which the initial rush was based have not been justified. One section of the Government does not know what the other section is doing. The atmosphere has chilled. The commercial prospects for cable television have become harder. The Government originally wanted to carry through the cabling of the country—the second railway era—on the back of the private finance capital lured by the prospect of returns on entertainment. That prospect has faded.
There have been a series of mergers in the industry. Goldcrest, which, with high enthusiasm, proposed to establish a 24-hour-a-day news service, now says that only ITV and BBC can do that and that it is not a viable proposition for an independent company. The music channels have merged—one of the big hopes—and their prospects have shrunk and become bleaker. Indeed, it is rumoured that three of the 11 contractors with initial franchises are in financial difficulties. I hope that notes are being kept faithfully for the Minister and that, when he returns to the Chamber, he will tell us whether those reports are correct.
The CIT report has downgraded the forecasts for the growth, financial return and prospects of cable, not only in Britain but throughout Europe. That has been capped by the Government's contradictory position in the Budget, which swept away the 100 per cent. capital investment allowances. That was a curious spectacle. In the same week the Chief Secretary to the Treasury told the cable companies to rejoice because they would have 100 per cent. first year capital allowances on plant, but the 796 Chancellor announced that he was phasing out and abolishing those very same allowances. One of the basic assumptions on which the companies had worked out their financial calculations was swept away, in one fell swoop, by the Chancellor.
That is typical of what is happening in the Government. The Treasury, which is committed to the rigours of the free market, is working against the interests and developments cherished by the Department of Trade and Industry, which believes in a more interventionist approach and which is prepared to back new technology and provide financial incentives. Indeed, the Home Office is prepared to provide non-financial incentives to invest in optical cable or star cabling, as opposed to tree and branch cabling. Yet the Treasury, with its belief in free markets, sweeps all that aside and announces the abolition of the very basis of the companies' financial calculations. As a result, the expected yield of cable contracts has been halved in one fell swoop. The break-even point, which was always hypothetical, has been substantially put back.
Does one half of the Government know what the other half is doing? Did the Home Office and its officials who were negotiating with companies know what the Chancellor intended? Did the Treasury make any assessment of the effect of the slashing and abolition of the allowances on the financial projections of the companies? Was the Home Office consulted? The Government's insistence that this should be done on the basis of a free market did not seem likely to be sustained in the face of the facts of the market, the low return and the difficulties that cable would inevitably face.
That approach has not been adopted by the continental countries. For example, the French have gone in for direct Government finance, and in my view such an approach is inevitable because the market is not strong enough to bear the burden that it is being asked to carry in the cabling of the country and providing all the other services. If it is not strong enough to carry that burden, disastrous consequences must follow, a subject to which I shall return.
It is interesting to note the way in which the French have decided to go down the other road, beneficially for them in many respects. They have gone in for fibre optics, whereas we have gone in for the old-fashioned coaxial cable. A stimulus to the British fibre optics cable industry will not exist, whereas there will be that stimulus in France, provided by Government money.
By going in for the star formation, rather than the tree and branch — we have provided only a slight, non-monetary incentive for that course — and by direct Government finance to provide the incentive which private capital will not, in my view, provide on the scale required, the French, by the intervention of 1 billion French francs, or about £87 million, to get the system under way, can project 1.4 million homes being cabled by 1985.
In other words, the French plans—and I emphasise that they are plans—are much bigger than ours because they are aiming by 1986 for an annual rate of cabling of 1 million homes, which is beyond the dreams of the companies which are involved in this country. The French are right in their approach, and the British Government are wrong, because entertainment does not have a broad enough financial back to carry the burdens that the Government are placing on it.
If the Government's hopes for a free market effect, by luring investment into this sphere and providing a viable 797 industry, are not justified, there will be two results. The first is that the companies will abandon standards and cut back, and we have seen what happens in the face of financial difficulties. In the case of London Weekend Television and TV-am, the initial prospectuses were chucked overboard without any scruple of conscience and the IBA—it had no power to do otherwise—let them get away with it.
They will not be driven in the direction which they might logically go—of the increasing provision of pornography or sport, for which there would be a popular demand, not that they are two versions of the same activity — so they will be forced to cut standards and programme costs, with disastrous effects on the production industry in Britain.
The second consequence is that the Government will be forced to allow them further latitude by way of telephonic communications through cable networks — in other words, to turn them, in effect, into competitors of the newly privatised British Telecom. That means allowing them financial inducements by taking on other financial activities because entertainment will not have yielded the benefits that were prophesied.
There will be those two changes consequent on financial failure. It looks from the calculations that financial failure is the more likely possibility—I would call it a probability—and if that happens because the Government do not have their facts and figures straight, and if their expectations are not justified, we shall be lowering standards and carving out more areas to hand over to the cable companies. We have here proposals for an entirely new structure and regulatory authority. One must, therefore, ask why this function cannot be handed over to the IBA to perform. Why must we go to the expense of setting up yet another quango in this fashion?
As the point was raised in the Minister's speech, may we be told why the Government are now trying to lure the commercial television companies into investing in direct broadcasting by satellite with the prospect of automatic renewal of their contracts? I accept that the provision for periodic renewal had many faults and that it was not carried out in the most effective way on the last occasion. Mistakes have been made; there will always be mistakes and complaints.
Nevertheless, the idea of bringing all the contracts to a close at the same time and considering them anew had the great advantage of reshuffling the whole pack of cards. It provided for the infusion of new talent and it was an incentive to people to challenge existing incumbents. That revivified the system and made the incumbents improve the quality of their programmes, especially local offerings such as current affairs.
If that is now to be abandoned so as to lure companies into investing in direct broadcasting by satellite—with the promise that if they put their money into that venture the IBA will abdicate its responsibility for the periodic reshuffling of the cards—there will be a weakening of the IBA and an unjustified weakening of the check that exists for the benefit of the public.
The Minister concedes the essential point. That obligation kept companies up to the mark, allowed the infusion of new talent and meant a shake-up periodically, which was all to the good. The IBA is always in danger of entering into a cosy conspiracy with the companies that it is nominally designed to supervise and superintend. It wants a quiet life. It does not want all the difficulty and embarrassment. Faced with that permission from the Government—who want the money from the television companies in terms of direct broadcasting by satellite — it will opt for a quiet life. That is a real danger because the periodic opening up of the floodgates of competition, of new talent and of new bids for areas kept the companies on their toes.
If there is to be the same sort of contract as we have had in commercial radio, with all the contracts continuing on without being unrolled, it might be sensible, given the Government's attitude to privatisation, to scrap the IBA, which will have no real role if it is not to reshuffle the pack of cards periodically, and flog the transmitters to the companies as an extension of the Government's programme of privatisation. They could be sold to the companies at a 20-year rental purchase price, the Government would have the money and the whole pretence that there will be renewal and that a check will continue to exist could be abandoned.
That slight detour was caused by part of the Home Secretary's opening speech. The rhetorical question is "Why do we need another quango?", and I do not think that it has been answered effectively by the Government.
I am concerned about the effect of the Bill on domestic production. The Government are obsessed with free market economics, but those economics do not apply in television and film production. Our small market competes with a much larger and highly developed industry in the United States. If there is a financial desperation to move down market and to buy programmes at the lowest possible cost, the programmes bought will be the surplus production of the American industry. That is the Coca-colonialism which is complained of in so many parts of the world and which we have managed to avoid in Britain by maintaining a quota of British programmes. The quota applies to both the BBC and ITV.
The financial predictions for the companies and production costs are dire. In a publication entitled "Cable and Satellite—Choice or Overkill" from the Association of Independent Producers there is an article by a director of Cable and Finance Ltd., a firm of ex-bankers that is undertaking research into export possibilities. It is estimated that the cable companies will be able to pay an average of about £2,500 an hour for production and that there will be an industry budget of £4,800 per hour for production costs. The average of £2,500 is a measly sum when set against the scale of production costs for the BBC and ITV. However, the sum will probably be less than that because there will be a wish to buy films to recruit orders, Those films will be expensive and the financial allocation for domestic production will be extremely small.
It is not possible to support: a viable British television production industry by means of a few quick pop promotions, a few studio quizzes and sets with people talking to camera. It is necessary to have the entire panoply of production, and the cable system will be unable financially to carry that burden. It will not be able to afford British production and it will not, therefore, be able to make a contribution to the British industry. It will be 799 compelled to buy surplus American production, and the American industry will be in a good position to supply Britain because it will have amortised its costs on the American market, which is extremely profitable, and anything else will be pure cream. The extra market will be a pure bonus. That will be the consequence unless we have a British quota, which I think is desired by both sides of the House.
We must have a viable television production industry. If there is to be an audience for cable television, the audiences of the existing institutions will decrease and they will have less money available for production. There will be an adverse effect on television production and the cable system will be unable to compensate for that because it will not have the money to finance production, or even to buy surplus production, on the scale that is necessary to compensate for the decline of the institutions.
We are justly proud of our television industry, which has won a series of international awards at Montreux and in the Prix Italia competition. ITV alone has won eight out of 10 awards in the Prix Italia over the past seven years. The industry's net earnings from overseas transactions were £81 million in 1980 and £78 million in 1982. The industry is an essential part of our national culture and it will be threatened by the cheap-jack operation that is almost certain to develop.
What guarantees can be given to the industry? If the companies are driven remorselessly by financial considerations down market into imported products that are surplus to the production of the American market, what support will the Government provide to the British production industry to maintain its viability? If it is not a competitor to the American industry it will be taken over, for that is the logic of the Government's free market economics. There is the danger that our market will be driven out because the American market is so much larger as a result of having a much larger home market to which it can appeal.
What calculations have been made of the likely advertising revenues for cable television? A huge burden is being placed on the back of advertising. If we are to have a national commercial radio network in addition to the local commercial radio network that provides essentially the same fare, where is the advertising to come from? The essence of commercial radio must be pop music. I know that that is so as I am a failed disc jockey; I played brass-band records on my programme and the audience plummeted. Commercial radio means commercial music, and it will duplicate much of that which is provided by the local commercial radio network. If, in addition, we have direct broadcasting by satellite, which will be advertising-based, will the advertising budget be able to support the burdens that are placed upon it? What projections have been made for advertising revenue and expenditure over the next few years?
The future of the advertising base is linked to the future of the British economy, and my predictions for the economy are not particularly gloomy. If we are to maintain a British domestic manufacturing base, advertising will be cut slightly, for the biggest advertisers are the importers who are competing for the domestic market. It is important for the Government to state the financial basis of their calculations of advertising revenue.
800 It is a matter of regret that the same attitude is being taken to impartiality and politics. Apparently that attitude will permeate cable television as it has permeated the existing institutions. My personal view is that the existing institutions have been castrated by the requirement of impartiality. To explain is to take a point of view, and it is far easier for the existing channels to present two Members arguing with each other—and, incidentally, completely confusing the public—than to provide an explanation or a committed viewpoint.
One effect of pluralism should be to allow a diversity of viewpoints. I am not suggesting that people should be allowed, as they are in the United States, to buy time during which they can put over their points of view. To allow that is to hand power to the large financial battalions. However, it is important that we have a greater diversity of view points and not merely the access television which has been offered in mere deference to politicians. There should be a genuine openness to different viewpoints on cable television, especially access to Members to their constituents. This would be a prime use of interactive television, which has already been used effectively in the United States. Some of the clippings from the New York Times reveal how American politicians have used that form of television to talk to their constituents. It provides a constituency surgery of the air. Why should we not be able to have that form of television in this country as a means of communication with our constituents who return us?
The way in which the arrangements for direct broadcasting by satellite have been promulgated has produced a whiff of scandal. It was clear that the BBC did not want to take on the financial obligation. To save their project, the Government lowered ITV in. The carrot was the prospect that ITV's contracts would be renewed automatically by a compliant IBA. We have already gone over that argument. It is clear that private interests are to be allowed in for 25 per cent. and the BBC will not have the two channels it was promised at the beginning. The system will be operated by a consortium, of which the BBC is a part.
The BBC is being asked to provide the financial base for a commercial consortium and is not being given the two channels that would allow it to compete effectively. A consortium will operate all the available channels. That is an undesirable arrangement and a financial imposition on the BBC, which will not be permitted to raise money from its licence fee. The BBC will be forced to raise money on the market to provide financial backing for commercial interests. That is the final outcome of the long process of closed—door negotiations.
The measure is welcome in proposing the advent of cable television and a greater diversity, but it is unsatisfactory and should be reconsidered until the Government clarify their thinking on the financial basis of cable television. We need big thinking. Small men are thinking puny, short-sighted market-oriented thoughts in a system that demands intervention and leadership by the Government so that the matter is not handed over to vested interests. We want what is right, and this legislation is not that.
§ Mr.Hugh Dykes (Harrow, East)
The hon. Member for Great Grimsby (Mr. Mitchell) gave us the benefit of his wisdom and advice for almost 35 minutes. It is a 801 reflection of our quaint habits in this mother of Parliaments that, because of an over-enthusiastic floor manager rampaging around the Benches at the beginning of the debate, exhorting all hon. Members to speak for 25 or 30 minutes, each hon. Member has spoken for far too long, and now there is insufficient time left for speeches before the Minister's reply. Perhaps that is the normal habit and tradition of this place.
I partly forgive the hon. Member for Great Grimsby, because he knows something about this subject. Other hon. Members from both sides of the House also know something about it. The hallmark of their contributions of varying qualities and content has been their knowledge about television. But by definition no one knows yet about cable television in Britain; we know a little about the experiences in other countries. That should have been revealed more in the tenor of the Opposition's remarks.
I congratulate the Government on the way that they have prepared the ground for a difficult exercise. I, like many other hon. Members, am seriously disappointed that the Opposition, who were caught between a confusion of attitudes and a lack of knowledge on how to respond, acted in the traditional way. They repeated their old and now very tired and exhausted arguments about the early days of commercial television. The remarks of Opposition Members, perhaps not so much those of the hon. Member for Great Grimsby, were typical of the general debates on broadcasting in the old days when ITV began. The scene is totally different this time. This industry is completely new, except that it comes through a television set. Because it is so difficult to get the new system off the ground, the Government must consider the framework of the Bill. The legislation must strike the right balance between serious social, moral and organisational controls and the need to get this exclusively private industry off the ground properly. That is the priority for the House on Second Reading and in Committee.
I, like other hon. Members, am worried about a number of clauses, but time does not allow me to go into them in detail. I am anxious about the provisions of clause 4 stipulating 12 years for a licence period. A longer period might be a good idea. I hope that that point will be considered.
The new authority should be modest in its requirements on licence fees. or another too onerous condition will be applied in terms of those fees. The other terms and conditions of licences should be reasonably flexible. Clause 14 is also too restrictive. I, like other hon. Members, fear the excessive role of the IBA, rather than the other way round. I am concerned that pay-per-view on sporting programmes should mean what it says and not carry an unduly onerous restriction, as now provided in clause 14.
I am disappointed that this exercise is getting off the ground more slowly than we expected at the end of 1983. One Opposition Member said that the Government were going too fast, but I do not believe that. From the time of the Hunt report and the White Paper, there was a notable celerity in the Government's response. The Home Office moved quickly to get the industry off the ground. We have noted with nervousness that it is harder to get the industry launched than was anticipated.
I agree with the statements of the hon. Member for Great Grimsby about the confusion caused by the Treasury action a week after the Inland Revenue service finally decided that ducting and so on could be a capital allowable 802 item, although the IRS had previously given an ominous hint that such items would not be allowable. The capital allowance is now to be abolished. Not only did the Treasury, the Home Office and the Department of Trade and Industry swirl around one another, to some extent, causing additional confusion but the 11 interim franchises, many of which are now nervous because the talks have lasted longer than expected, are worried about the unnecessary delay. Every assistance, short of actual help, literally must be given by the Government to get the interim exercise off the ground in round one and later in the autumn in round two.
I am disappointed that it has taken so long for the Cable Authority to be established and for the chairman and the rest of his team to be appointed. It is a pity that my right hon. and learned Friend the Home Secretary did not put more flesh on the scheme in his opening remarks, but perhaps my hon. Friend the Minister will do so when replying.
This is a difficult exercise. Interim franchises and others thinking of applying for licences in later rounds fear that the rate of return will be so far removed as to make the exercise not worthwhile. Various feasibility studies are being conducted in private industry. I point out that I have no direct interest in this matter. I am a shareholder in a number of large companies that are also probably involved in cable television, but that is a rather remote connection Many doubts have arisen about those who were originally thought to be enthusiastic activists in the industry—small, medium and large companies—about the feasibility of the exercise. Many problems will arise also from DBS. I am glad that a Government framework in DBS is at least beginning to be established. We must encourage the exercise to a greater extent, and the Opposition should recognise that fact.
This is not a state exercise with state money, but a private exercise. Of course, standards must be maintained. It is easier to frame legislation and pass it in Committee than to get the industry started. I was especially disappointed with the curmudgeonly speech of the right hon. Member for Manchester, Gorton (Mr. Kaufman). At the weekend, in an article in a Sunday newspaper, the person who wrote the biographical notes said that the right hon. Gentleman was mercilessly teased at school. It is understandable that that was so, when one notes his remarks in a serious debate about starting an extremely difficult industry.
I hope that the Minister will encourage us with the belief that the cable television industry will get going and will incorporate the best traditions of the high standards of British television. This country is fortunate in its television services in that a type of historical accident has come together in a positive way to produce not only high standards but a good, semi-state framework. The Government need to take the Bill to Committee to start the industry as soon as possible. I hope that that will be the spirit of the end of the Second Reading debate.
§ Mr.Clifford Forsythe] (Antrim, South)
I am not an expert on this subject, but I am someone of equal importance because I am a potential customer of cable television. I welcome the Bill generally. It will provide greater choice. We will have many more programmes on more channels. I imagine that we will be able to watch the 803 Irish cup final and other events with a local character as well as those national events that are shown on national television.
Cable television will show different entertainments and offer other related services such as banking and business computing. There will be benefits for the handicapped, those who are housebound, and the elderly if shopping or home security is included in the related services. Medical services could be summoned into the home, and the system could be of use to doctors and other members of the medical profession when dealing with people who are tied to their homes.
While I generally support the idea of cable television, like many other hon. Members I have reservations about the Bill. One takes such a view about any new system. It takes time to have it as one would like it.
What powers and functions will the chairman, the vice-chairman and members of the Cable Authority have?
Northern Ireland is an outlying part of the United Kingdom, and I have reservations about how the system will operate there. If there is no tight control of special events, people who do not have cable television may lose out if such programmes are shown only on cable television. Will cable be given equal rights in respect of special events? Will it be allowed to show all the special events in the same way as the BBC or ITV?
One must consider the programme standards on cable television. There could be different standards on different channels. It is essential that the safeguards in the Bill should be strong enough to prevent programmes similar to video nasties from being shown on the channels. The Cable Authority should have proper powers to ensure that.
It has been said that if we do not have an 85 per cent. quota for United Kingdom and EEC programmes we will have rubbish from other parts of the world. We already have rubbish shown on television. It does not necessarily follow, however, that all foreign programmes are rubbish. Some good programmes come from outside the United Kingdom.
Other hon. Members have asked whether the 12-year starting period is long enough to give new companies the opportunity to get into the system and get back a little profit. Companies are putting their own money into the operation; public money is not going into it. The point may have been mentioned at the beginning of the debate, and I may have missed it, but is the initial starting period before the company goes into the service included in the 12 years or is it in addition? I know that the new service will not be a public service, but we expect standards as high.
I am not sure about the make-up of the Cable Authority. Will Northern Ireland have some input? Will there be representatives from Northern Ireland on the authority? How will our interests be safeguarded?
I support the "have to carry" clause. I agree that scheduled programmes should be included in the broadcasts.
The star system will probably be used in the Belfast area. We hope that that will create jobs. It should be an incentive to job creation.
I hope that the outlying areas will not lose out, and that cable will encourage local talent in drama, sport and other entertainment. I look forward to the introduction of cable television. 804 Will the licence fees to be charged by the Cable Authority be different in different areas or will there be an overall charge for all parts of the United Kingdom?
I welcome the idea of cable television and the fact that, as I understand, all the components to be used in Belfast and other parts of Northern Ireland will be British made.
§ Mr.Robert Key (Salisbury)
I made my maiden speech last June on the subject of cable television. I am delighted to report that there are far more hon. Members in the House tonight than there were then. There are still perhaps not as many as there should be when such an important subject is being discussed. I said then that cable operatorsshould do more than cream profits from limited services in densely populated areas. They should assume wider responsibilities in developing all the opportunities offered by interactive systems".—[Official Report, 30 June 1983; Vol. 44, c. 743.3That is even truer today than it was then.
Events have moved fast since last June. They have moved so fast that I must now declare an interest to the House as a modest shareholder in Salisbury Cable Vision Limited, a company born out of hope more than a large bank balance.
It is symptomatic of the way that matters have moved that many people are interested in this development. It is a new industry, as my hon. Friend the Member for Harrow, East (Mr. Dykes) said. Although my attention during the past year has been given primarily to how cable might affect my constituency, a number of hon. Members have tried to assess the impact of cable television on rural communities. I am not convinced that it will touch only densely populated areas. It may take us longer, but it has not so far been popular to consider other factors in the debate. It has been said that a population of less than about 100,000 is not enough to support a cable system. I am not sure that that is true, although it is undoubtedly true that existing IBA companies have gone to great lengths to persuade people that it is not true. It has not persuaded all of us.
A large market will be needed to attract advertising. It is also true that some of the existing IBA companies have much inflexibility in, say, their editorial areas, which is a great menace to their future. They have much to be worried about from interactive services on cable.
The interactive services will be the most important feature of cable television development. Entertainment will be available but, although it will be an important aspect, let us not under-estimate the commercial and industrial uses of interactive systems. Many specialist groups will be catered for. They have been merely touched on by some hon. Members. After sitting on the Benches for about five hours and listening to other speeches, hon. Members might have thought that there was nothing left to say and that it would be amazing if something new were discovered. Therefore, I hope to amaze, although I may not succeed after such a long time.
Because the traditional terrestrial television and radio services, satellite and subscription television, can provide other specialised subject channels for news, education, religion and health and the specialist audience channels for ethnic groups that were mentioned by the right hon. Member for Manchester, Gorton (Mr. Kaufman)—in one of the more realistic passages of his otherwise dreamy 805 speech—specialised audiences have been predicted for different age groups, for those with impaired hearing and other groups, including many channels for local information. A whole range of other services ranging from fire and burglar alarms to meter reading and opinion polling can be foreseen.
Business-led interactive services will be the key to the success of the project. Household consumers will be a priority audience and the traditionally high standards will be expected of BBC and IBA programmes. Much worry has been expressed about imported United States trash programmes, with arguments about the dangers of down-market television. But we may be able to lead the world as manufacturers of specialist programmes for cable television, which we are uniquely able to do with our wealth of talent in television production and direction, as well as acting.
Some of the specialist services that have been underestimated so far are, for example, farming channels, which were mentioned briefly in the debate. These days, farming is a hard-headed business operation. It is not the romantic, straw-sucking and gatepost-leaning hobby that it is often portrayed as.
Security channels could be used in county towns and other areas to safeguard factories, farms and city centres, and to give protection against vandalism and mugging. There is great potential for estate agents, who are already conducting experiments in this area. Shopping has been mentioned. Radio and television programme guides may presage the end of the Radio Times and the TV Times.
The systems might be developed for special, remote areas such as military camps. Those areas could well be served better by cable television than by any other system. My hon. Friend the Member for Cornwall, North (Mr. Neale) said that some of the remote rural areas might be fairly high on the list of priorities for service by cable systems, because they would be the best, and possibly the only, way in which those areas would receive television.
I should like to mention something that has not been discussed so far: a possible new life for our provincial theatre and arts. They have a great future in cable television. Perhaps the channels will be able to produce theatrical performances. There may be greater potential for the full-time use of their studio facilities and production facilities, using the technology that is increasingly found in the provincial theatres.
We have the technology to provide cable systems. Business and industry will undoubtedly use them and will be prepared to pay for the services. As an example, many cable television companies have proliferated, often with local and national backing. I have not discovered how many there are, but they are many.
The consuming public also wants cable television. The hon. Member for Great Grimsby (Mr. Mitchell) referred to that aspect and quoted the researches of the Consumers Association. It has shown that video owners are most attracted to cable television. They are also most prepared to pay for it. The hon. Gentleman might have pointed out that the Consumers Association has shown beyond doubt that by allowing cable television to compete with and attract audiences from existing channels the quality of public service television should remain protected. That is because the new channels will be available only to a minority and because the present service is held in high regard by most viewers.
806 The question of standards is paramount. I have seen little evidence that there will be a drop in standards, but it will undoubtedly be a high-risk industry. It will flourish only if the Government adopt a regulatory approach quite different from that for traditional public service broadcasting. No one is suggesting a free-for-all, least of all some pot of gold. There is no pot of gold in cable television, and if hon. Members do not know that they have not paid attention to the developments of the past year. There is certainly no licence to print money in cable television.
It wil take all the inventiveness of the market place to breathe life into this privately financed, market-led industry. As my hon. Friend the Member for Harrow, East has said, it is an entirely private industry. The Government must therefore be very careful not to stifle entrepreneurial courage at birth. I was a little upset to hear that the BBC is to have 50 per cent. of EBBS services. I would have preferred one third each in this particular form of consortium.
The Government Can Be Helpful. The Changes In Capital Allowances Have Undoubtedly Delayed The Profitability Of The Companies Involved. I Support The idea that the initial licence period should be extended to 15 years. Financial incentives are important and necessary. After all, the Government moved the goal posts after the first whistle—as we have seen in the Budget—by their action on capital allowances, after many of us had been trying very hard to get some movement on that front.
Consideration should perhaps be given to interim or installation licences to cover the transmission of test programmes. As it is a completely new industry, there will be technical problems and it will take many weeks or even months for cable companies to get around to providing a service that is fully operative for the whole of their franchise areas. There will inevitably be a long introductory period, and that should not be counted at the same rate as the full provision of services.
It is most important that licence fees should be announced as early as possible. That is crucial for all budgeting, and must be done if cable companies are to put in realistic applications in future. It is also important that licence fees should not be a burden, or another form of hidden tax on the profitable companies. I am concerned that, for example, the authority might use the licences as a means of subsidising the less profitable areas. If the market will not bear a high licence fee in the first place for a given area, a high licence fee should not be sought in the first place. There should not be any attempt to subsidise services around the nation.
In seeking to control cable licence holders, I beg the Government not to kill the goose that lays the golden egg. Twenty years ago it was said that local radio would kill the local and provincial press, but it did not do so. The newspaper industry is resilient and inventive, and has contributed much to local radio. I am concerned about clause 8 in that respect, because there is an even more natural affinity between the local press and cable television. I think that some of those Opposition Members who belong to the NUJ have pointed out that journalists are concerned that a screened information service and, perhaps more importantly, a news service that uses local reporters based on local newspapers may lead to the end of local newspapers. However, it need not do so.
It is natural, and common sense, that local newspapers should provide a news service for potential cable television
807 areas. Therefore, I accept that, although cable television has a unique potential for monopoly —I agree that it would be undesirable for a local newspaper to hold a monopoly licence in its own area—it is common sense, and professionally sound commercial practice, for newspapers and publishers to play their proper role in the development of a cable network — for instance, as minority shareholders in local companies. I urge the Government to clarify their thinking as soon as possible, so that newspapers and publishing houses are not squeezed out of their rightful place in the natural development of the industry.
I welcome the Government's announcement of a national independent radio network, and urge them first to complete the gaps in the existing local radio systems. There are large gaps, and my constituency is one of them. The Government should consider all possible means of increasing the funding of local radio—for instance, by allowing private finance for the establishment of transmitters.
Many technical and financial considerations have been and will be made, but it is more appropriate to do that in Committee. Bearing in mind the technological changes in DBS services and cable technology, and the shifting sands of public opinion and of opinion in the industry since the Government introduced the White Paper, I congratulate the Government on their resolve to bring in the Bill, and I beg the House to support it.
§ 9.11 pm.
§ Mr.John Golding (Newcastle-under-Lyme)
I say without regret or malice that since I last spoke about cable television I have not been offered chairmanships or directorships, nor do I have a new interest to declare—only my old interest of the Post Office Engineering Union.
For many years I have stressed the need for an integrated telecommunications system. The last time that my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) and I sat together on a Bill—it was about commercial radio—it took five months to pass through Committee. My hon. Friend the Member for Great Grimsby (Mr. Mitchell) is to be the Opposition Whip in Committee and, having heard him speak tonight, I think that he will need five months for himself alone. The Government are late in introducing the Bill and, as my hon. Friend will serve in Committee, I hope that the Committee of Selection will not also make me serve on it.
I regret that the Government have chosen not to split the running of the physical system from the programmes. They are wrong. The physical system should be run separately and integrated into telecommunications. It should then be controlled by one body, and whether privatised or non-privatised—preferably non-privatised —it would be better for the cable system to be given to British Telecom, or, at least, British Telecom should be involved in each consortium. The Government's separation of the transmission of information does not make sense.
Under the system Oftel will grant licences. It appears that it will be forced to grant licences to operators who have received a Cable Authority operating licence, unless there are good reasons for not doing so.
I agree with the hon. Member for Salisbury (Mr. Key) that entertainment may prove of negligible value to cable 808 in Britain. We shall come to see that the sort of technological system provided is more important than the entrepreneurs providing the entertainment programmes.
I do not pretend to have the high cultural standards of my right hon. and hon. Friends on the Front Bench. I am a philistine and enjoy watching television rubbish, but I shall not make a big issue of that. The public will not care which group of entrepreneurs provides which rubbish. However, it will be important to know about the technical systems, since interaction and, to a large extent, the development of data transmission and telecommunications will depend upon them. Jobs and prosperity will depend more on technology than on quality control. It is regrettable that the technical systems have been relegated to such a minor place in the Government's thinking.
It is clear from having listened for years to Ministers from the Department of Trade and Industry about the privatisation of BT and having read the Bill that the Government have not formulated a cohesive telecommunications policy. At present it is fragmented. The Government are wrong to try to hurry cabling under the pretence that it will provide jobs. They should have waited for two or three years and then they could have relied on the most modern technology. They have been wrong not to insist on the most modern technology, but they have at least acknowledged our argument by modifying their original position and by ensuring that the majority of franchises have gone to those who will provide the most up-to-date systems.
I agree with the hon. Member for Salisbury—I shall ruin the hon. Gentleman's career if I say that he made my speech for me—about the importance of rural areas. The Government are in danger in this matter, as in telecommunications generally, of creating two nations. They are not yet conscious of the importance of national provision.
The Bill also offers the possibility of alternative local telephone systems, although the Government have ruled out further competition to BT. It is obvious that the Department's policy on cable is designed to prop up Mercury by pressing cable operators to carry its business. It will enable Mercury to cream off business in Birmingham, London, Manchester, Leeds and Liverpool. That is entirely undesirable. Neither the Home Office nor the Department of Trade and Industry should be concerned with short-term commercial advantages in cable or short-term advantages to Mercury. They should work out what is best in the long-term interests of Britain and British manufacturing industry. There is no doubt, because of the rush to cable, that British companies will suffer at the hands of the Dutch.
It is now 9.18 pm and I know that my right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell) is anxious to address the House on the high standards of programme content required for his constituency, so I merely ask the House to note that the technological basis of the Government's decision is faulty.
§ Mr.Denis Howell (Birmingham, Small Heath)
I am grateful to my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) for not continuing beyond 9.19, which would have deprived me of the opportunity to talk about small businesses.
I start with a general welcome for the debate and for cable television itself. As I shall be critical of some aspects 809 of Government policy, such as implementation and mechanics, and about the statement that the Home Secretary has made, it is important to say that there are good reasons for the Opposition supporting cable television. The technical advance envisaged in cable television—about which my hon. Friend has just been talking—the jobs, the services, the new opportunities that we hope will come about as a result of the interaction and the welcome new cable television services that can do much to the advantage of musical programmes and programmes for schools, sport, arts and local affairs—all these things are positive, to be welcomed and are an advance.
I am sorry that the Home Secretary decided to make a rather sensational and deplorable statement at the beginning of the debate.
I see that the Home Secretary is now falling back on the excuse that his speech was written about in advance in the Financial Times. That is a remarkable statement. Leaks from Cabinet Ministers are now officially stated by the Home Secretary to be all right. The right hon. and learned Gentleman is right—I do not often read the Financial Times, but I shall be quoting from it.
The Home Secretary's announcement today has transformed the nature of the debate. While I accept that he was legitimately giving us information, as the Minister said in an intervention, about part II, perhaps the Home Secretary should have thought on reflection that it would have been better to give us advance notice of that part of his statement—probably last week. However, as the other place is still part of our parliamentary procedures, and as the Bill has gone through its stages there, I do not know what he thinks their Lordships will think about having debated the Bill without the benefit of any of the information that the Home Secretary has now given us about the changes in the rules of the game in the middle of the match. He has transformed the debate, and I should have thought that was more discourteous to the other place than to this place.
§ Mr. Howell
I am always anxious to help the Government in their protection of the second Chamber. As we have one, it is as well that we take account of the courtesies of Parliament for it.
The important thing is that the Home Secretary, by introducing a new power for the IBA, to enable it not to readvertise in 1989 for regional television contracts, is giving it a licence to reprint money, to change the old phrase. He is now saying that any television company, if it takes a stake in the new arrangements for satellite television, will automatically get itself an extension of contract.
I am afraid that that is what the Home Secretary is saying. It is inconceivable that the IBA, faced in 1989 with a programme company that has invested substantially in the new satellite arrangements, would not take advantage of the powers that the Home Secretary has told us that he is prepared to give to it. If it does not take 810 advantage of that power, what is the point of the Home Secretary announcing that power today? Perhaps the Minister can tell us, if the IBA does not have to readvertise for programme contractors in 1989, what will be the period before the contract is readvertised. Is it to be the full period, for three years or four years? We are entitled to know.
Similarly, I have grave concerns about the financial arrangements that the Home Secretary announced about the Cable Authority. If I got it right, he said that he is allowing it to borrow £2 million working capital. Presumably, if the BBC is not to finance the operation out of licences it will have to borrow money. If there is a flop which cannot be charged against licence holders, that can only mean one thing — dramatic cutbacks and the reduction of standards of BBC programmes.
I welcome the Home Secretary's acceptance of points that have been put to him else where that he should use the existing television complaints machinery. We are glad that the Home Secretary has reconsidered the matter and proposes to put it right.
There are three areas of profound concern about the arrangements that are evolving. First, the Government are botching a great technical opportunity for Britain. I need not go into that in great detail because my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) has just dealt with it. It is interesting to learn from the Financial Times of 4 May that the French Government have taken a completely different and much more realistic approach. They are going to insist on a system of optical fibres which is what we should be doing because it is there that the technological advance is to be found. They are proposing to connect up 200,000 homes a year with optical fibre systems going up to 300,000 or 400,000. In the Government's haste to get the capital ahead of the programmes and the subscribers, they have gone for a second-class system. They have done it in a way which is much to the disadvantage of British Telecom which ought to be the agency responsible for the establishment of the cables.
Our second objection is to the financial arrangements which now apply. The financial arrangements now on offer for cable television are a shambles. People in cable television, some of whom I have spoken to this weekend, particularly in the midlands, say that it is a shambles. They say that they do not know where they stand and that they cannot possibly recoup their money in the time scale available to them. On top of that, along comes the Chancellor of the Exchequer and produces a disastrous proposal for capital allowances which means that they cannot make any profit on the deal for 10 or 12 years or even longer. Those are the people who have already been chosen by the Home Office to act as licence holders. I ask the Home Office, as a matter of urgency, to look into all the financial arrangements. Those of us who want cable to succeed do not want it to be bogged down by the financial restraints which are now much in evidence.
Cable will not be the bonanza which many think. There are stories of disaster now being told in the United States and Canada. Even CBS with a 5 million viewing audience has lost £35 million and many companies have closed down. In Canada two out of the six cable television companies have closed down. That is important to note. There are various stages—the building up stage and the running in stage—before the programme companies get under way. Satellite TV News, the trade paper for the 811 industry, said in its May edition the very things that hon. Members on both sides of the House have been saying about the great financial difficulties which everybody now faces.
The next question concerns the dilemma of quality and standards. We have not been told by the Government how they intend to protect the quality and standards of the existing programmes made by the BBC and the IBA. The hon. Member for Cambridgeshire, North-East (Mr. Freud) said that, if we are going down market, as we inevitably will with cable television, if we are to have rubbish, at least let us watch British rubbish. I have a great deal of sympathy with that sentiment from the point of view of the creative arts, the musical world and sport, as well as from the point of view of viewers.
The Bill states that the Cable Authority must ensure that there is a proper proportion of British material. What on earth is a proper proportion? This must be defined, as it will be necessary to refer back to the clause. This criticism applies to a great deal of the Bill. Clause 10 says that standards of decency must be maintained. What is a standard of decency? There are about 40 hon. Members in the House, and every hon. Member will have a different idea of what this is. Indeed, one knows of the concern that there is on this question from what happened on Channel 4 when the company was proposing to show sexual intercourse under the disguise of education. Every hon. Member who has served on the Video Recordings Bill, on which the Home Secretary, I and other hon. Members have joined to protect standards in the country, will have some concern on this matter. Clause 11 contains an attempt to rectify the omission. I hope that the clause will be realistically considered.
It is most important to say, as the IBA and the BBC have said, that 86 per cent. of the total content should be British manufactured. I cannot understand why the Government are not insisting upon this, since the figure of 86 per cent. was arrived at as a result of the long working experience of the IBA, and was worked out in association with the unions and other interested people. I notice that people like John Gielgud, Michael Dennison and many other actors have been saying the same thing. It should be a matter of concern to us all.
I am pleased to note that in parts of the Bill powers are being taken to ensure that exclusivity is not bought by cable television, particularly with respect to sport. That is welcomed by me, and by the sporting organisations. In view of the fact that cable television will go to the lush urban areas, and that large parts of the country will not have it for a long time, it will be indefensible to allow events like the Olympic Games, the Cup Final, the Grand National, the Derby and similar major sporting events to be bought exclusively, and then projected to only one or two areas of the country.
I deal last with the question of impartiality which is covered in clause 10, together with the question of good taste and decency. Clause 10(1)(a) deals with good taste and decency, and will require a constant monitoring operation by somebody. That will be an expensive operation for the new authority to undertake. I hope that we can be assured that the resources will be available to the authority.
On the question of the impartiality of news, I was interested that the hon. Member for Gravesham (Mr. 812 Brinton) welcomed that but went on to say that he did not approve of it with regard to current affairs programmes. Current affairs programmes are a cause for some concern. Our experience is that the news is generally fair but that current affairs programmes depend very much on the editor of the programme, and on the sort of interviewers. We have all observed the Prime Minister being interviewed for 40 minutes, and being asked not one single reasonably hostile question in the course of the interview. I do not think that the Prime Minister should be interviewed by somebody whom she has knighted, but that is a personal prejudice. I do not think that journalists should accept honours from Government until they retire. Following such a principle might improve the health of all our newspapers and television companies.
I hope that the Minister can confirm that the impartiality of cable television will apply not only to the news, but to current affairs. That should be written into the Bill.
The Bill provides a great opportunity. Most important, it will extend choice for the people. Apart from the technological innovations, the news services, the new jobs and the new technology, the most important aspect of the Bill is that the British people will have greater choice in their television programmes.
Subject to proper safeguards, the Bill deserves a welcome. I assure the Minister that in Committee we shall approach the Bill in a constructive spirit and hope to make improvements in it.
§ 9.35 pm.
§ The Minister of State, Home Office (Mr. Douglas Hurd)
I am glad to hear that the right hon. Member for Birmingham, Small Heath (Mr. Howell) supports the Bill in principle. We have had an interesting debate, but we have only just begun to scratch the surface of the subject, in the House and outside. I agree with the thrust of the excellent speech of my hon. Friend the Member for Thanet, North (Mr. Gale) who tried to jerk the debate out of the rut of ordinary broadcasting debates. He reminded us of some of the unknown possibilities with which we are only just beginning to deal.
The right hon. Member for Manchester, Gorton (Mr. Kaufman) was in a different mood. He was obviously itching to take his place on the Standing Committee. He advertised his celebrated service of correcting misprints and we look forward to his contribution in Committee. The speech of the right hon. Member for Small Heath was similar. He was longing to set up a nationwide, nationalised cable enterprise. Both right hon. Gentlemen described in mouth-watering terms the inevitable losses which such an enterprise would meet. It is characteristic of the Opposition, even to two relatively robust Members of it, that when they see a loss they want to make absolutely sure that the taxpayer will suffer it.
We believe that cable can be profitable. Others obviously believe that, because otherwise we should not have received 37 applications for the pilot projects. The decision about whether it is profitable should not rest with the House, with politicians or with Governments. It must be taken by the cable operators and the customers. The risk should fall upon private enterprise.
The right hon. Member for Small Heath talked about chaos in our approach. There was a certain amiable chaos in his speech, short though it was. He started by saying that we were giving a licence to our friends to reprint money 813 and then he described conditions so hard and hostile that they would never be able to make it. I am not clear whether the right hon. Gentleman thinks that we are creating a honeypot or a mousetrap for applicants. I think we should be told.
§ Mr.Denis Howell
I was saying that by the Home Secretary's announcement the existing ITA programme contractors are given the right, if they buy into the new satellites, of automatic extension. That is a totally different consideration from whether satellite and cable television itself will pay. In some circumstances it will pay the companies to buy their way in, even if the systems fail, to get over the problem of having to reapply for their contracts.
We shall be able to queue up for Hansard in the morning and interpret the right hon. Gentleman's argument.
I shall not be able to cover all the points made by hon. Members, but I am sure that we shall have an opportunity to go into them in detail in Committee. I shall deal with the main points that were made in the debate.
One main argument was about British and other European material. The right hon. Member for Gorton began by saying that the provision should be the same for cable as for broadcasting. My hon. Friend the Member for Thanet, North had to say twice, and I had to say once, that that is exactly what is in the Bill. The formulation in clause 10(1)(d), which provides that the Cable Authority is under a duty to do all that it can to secure that cable programmes include proper proportions of British and EEC material, is taken direct from section 4(1)(c) of the Broadcasting Act, which imposes a similar duty on the IBA. If the House approves the Bill, the statutory basis will be the same for cable as it is for broadcasting. We want to see a substantial and growing proportion of British and European material on cable.
The question for the House—which the Opposition have not yet addressed—is whether it is sensible to lay down in the Bill a precise proportion, even though we are at the beginning of a new enterprise, whose pace and exact course we all agree it is impossible to predict. If we put into the Bill a precise proportion, we should impose on cable a precision that the House has never imposed on broadcasting. On the whole, that would be wrong.
Therefore, we have included three specific obligations on the Cable Authority. First, at the application stage, under clause 7(2)(d) it must consider the extent to which each applicant intends to use programme material from this country and elsewhere in the Community. Secondly, under clause 10(1)(d), it must include conditions in each licence in pursuance of its duty to secure that a proper proportion of domestic material is included. Thirdly, under clause 22(3), it must report to the Home Secretary each year on how it has carried out its duty in that respect. That last obligation does not exist for ITV.
There was much discussion in another place whether the proper proportion requirement was sufficient. We are not persuaded by anything that has been said so far that it would be better to introduce into the Bill, into statute and into law a precise proportion at this stage of the cable experiment. It should be for the authority to decide whether to carry out the statutory duty that we propose by setting particular figures, whether for particular channels or across the totality of the service.
The right hon. Gentleman has quoted from clause 10(1)(d) about proper proportions. Does he accept that that conflicts with the pledge given by the former Home Secretary about a rising proportion? The Bill makes no reference to a rising proportion and a duty to report about British originated material.
If the hon. Gentleman wants to put a towel around his head and put that into statutory language, he would find it very difficult. My noble Friend Lord Whitelaw was not drafting a Bill—he would be the last person to pretend when he used those words that he was drafting a Bill. The policy is as he stated, and 1 have repeated it. I have explained the reasons why we believe that statutory provision is best left as it is in the Bill.
My hon. Friend the Member for Thanet, North was entirely right to stress the importance of the quality of the membership of Cable Authority. That touches on a point made by the hon. Member for Antrim, South (Mr. Forsythe) in his interesting speech. We do not want on the authority people who are there simply because they represent other people. It should not be that sort of body. We need to find persons of substance and experience in their own right.
The hon. Member for Cambridgeshire, North-East (Mr. Freud) made a foray against porn and violence. If he serves on the Committee we shall have the opportunity to study the provisions in some detail.
Clause 10(1)(a) gives the authority the same duty as the IBA as regards taste and decency. Clause 11(1) goes further than the White Paper in requiring the authority, like the IBA, to draw up a code on the portrayal of violence and programme standards generally. Clauses 25 and 26 amend the English, Scottish and Northern Irish law to make cable programmes subject to the criminal law of obscenity. Incitement to racial hatred by cable will also be an offence under clause 27.
These provisions taken together are a sufficient armoury. If hon. Members do not agree, we can argue that through. I would not like the House to have the impression from what the hon. Gentleman said that we are leaving a gate open for pornography or violence on cable, because that is not the case.
We shall be able to examine our provisions against that test.
The hon. Member for Birmingham, Erdington (Mr. Corbett) was on to a good point on behalf of the Society of Authors about copyright protection. In Britain, the rights holder's position is safeguarded up to a point, because the services are intended for inclusion in cable services. But he was right to draw attention to other difficulties which can arise if the services are received and distributed abroad. We have discussed this with some of the copyright organisations and we are considering whether it may be sensible to amend the Bill further during its passage through the House. It is not easy and the problems of definition may be so difficult that the matter 815 may have to wait for the current general review of copyright. If we can sort out the matter in the course of the progress of this measure, it would be sensible to do so.
My hon. Friends the Members for Wealden (Sir G. Johnson Smith), for Cornwall, North (Mr. Neale) and for Harrow, East (Mr. Dykes) made cogent speeches on a theme which my hon. Friend the Member for Wealden defined as the need for a benign financial climate, and I agree with that. He raised a number of specific points that he will not expect me to pursue in detail now. He was worried, as were others of my hon. Friends, about the authority's freedom under the Bill to vary licences. We believe that there must be some provision for licences to be varied after they have been issued. We are at the beginning of something new, to some extent unpredictable, and the authority would be lucky if it could foresee all eventualities from the beginning, particularly in the early years. However, variation need not only be in the direction of greater restriction. It could be the other way round. The authority's duty is to promote the development of cable, not to impose unnecessary obstacles in its path.
We accepted in another place that the authority's power to vary licences should not be entirely unfettered and we agreed in principle to two changes, one of which has already been made and the other of which I hope we can make in Committee. First, the Bill now provides that the authority cannot vary a licence without giving the licensee the opportunity to make representations about what is proposed.
Secondly—I do not know whether my hon. Friend the Member for Wealden had taken this on board; it may not have been public before now—we intend to bring forward an amendment which will prevent the authority from varying the length of a licence without the licensee's consent. It seems right that, if the authority is dissatisfied with an operator's performance, it should use the other sanctions available to it, including, in the last resort, revocation, rather than attempt to vary the length of the licence.
On a point of order, Mr. Speaker. I shall not comment on a sedentary remark by the Home Secretary about spurious points of order, a comment to which I take exception. My point of order is extremely simple. This is a Second Reading debate. Surely the House should know at this stage of a Bill whether there are new matters which were not debated in another place but which have arisen from the discussions in another place and in respect of which the Government intend to alter the Bill, either now or in Committee. If it does not know, it cannot be properly asked to give a Second Reading to the Bill. We are entitled to know at this stage exactly what the Government have in mind in bringing the Bill before the House for its Second Reading.
The hon. Gentleman's comment would be apt if the debate had proceeded to this stage without the Government having said what their views were about DBS and the joint project. He would then have had the right to make the remarks which he included in his point of order. However, as my right hon. Friend the Home Secretary gave a careful account of the Government's proposals on DBS in his opening speech, the hon. Gentleman's comment is otiose.
No, I shall not give way to the hon. Gentleman again.
I cannot hold out much hope to my hon. Friends of my right hon. Friend the Chancellor of the Exchequer changing his mind about capital allowances and treating cable television as a special case. The cable industry now has the assurance that, while the special allowances are being phased out over the next two years, all cable installation, including ducting, will qualify. That removes a previous uncertainty. Changes in the consortium relief rules will similarly benefit cable companies. For tax purposes consortia will now be able to number up to 20 members and include foreign participants.
My hon. Friend the Member for Thanet, North and other of my hon. Friends, including my hon. Friend the Member for Harrow, East, who is unable to be in his place at this moment, are concerned about the delay which they saw in licensing the pilot projects. When my right hon. Friend announced the results of the scheme in November he said that some specific points would be discussed with the 11 applicants before licences would be issued. The discussions are in general well advanced. They have been concluded satisfactorily with certain applicants but others are not yet in a position to put definite proposals to the Government because of changes, for example, in the supply of equipment. Nevertheless, all the applicants have been able to make progress with their plans in the meantime.
It was always clear that those applicants who thought it important that they should benefit from the powers of the telecommunications code would have to wait until the Telecommunications Act 1984 came into force and for the procedures that it provided to be operated. It is not within the Government's power to issue licences bestowing such powers until later in the year.
I discussed recently the present position with my right hon. Friend the Minister for Information Technology and representatives of the pilot projects and I expect the first interim licences to be issued shortly. A draft of the licence which the Home Office proposed to issue has already been sent to all the applicants. I am keen to proceed with this procedure as soon as possible.
Some surprise was expressed following my right hon. Friend's statement about independent national radio. It is over a year since the previous Home Secretary, Lord Whitelaw, announced that the Government had found the IBA's proposal for an independent national radio service an attractive one provided that satisfactory financial arrangements could be developed. So it is not surprising that today we are making proposals to enable the IBA to begin construction of a network of transmitters for such a service.
We cannot predict now what the service will be like. The IBA's has not yet put proposals to us and the precise 817 arrangements for the service and its regulations are for the future, but it will be a national service. It is the only area of broadcasting in which there is at present no competition. If we follow the traditional pattern, the competition will be provided by one contractor. These are all matters for separate and subsequent legislation. At present we are concerned only with enabling the IBA to begin construction of the network of transmitters.
It is clear from the Opposition's comments that there is still a certain amount of misunderstanding about the DBS proposals. There have been two strands in the Government's thinking on them. There was the announcement in 1982 that the BBC would be able to go ahead with two DBS channels. That was followed by the undertaking that was given last year by my right hon. Friend that there would be provision for independent DBS. That undertaking is implemented in part II. Negotiations between those immediately concerned produced a possibility of agreement on a joint project on a basis slightly different from either of those I have sketched. As we are not providing public funds for the joint project, we have never been in a position to dictate the outcome of the negotiation.
The Government had to consider whether it was in the national interest for the negotiations for the joint project on DBS to collapse, with the possible disintegration of Unisat and the probability that there would be no British DBS this decade, or whether it was better to shows a willingness to listen and to adapt our ideas. The Government took the second view, and my right hon. and learned Friend explained the consequent details of our policy.
There are four points I should like to make in repetition and illustration of that point. First, we have insisted all the time that no ITV company could be constrained in any way to enter the joint project. Secondly, we have emphasised throughout—this point is accepted—that there must be ample scope for others to join in. I refer not to the BBC or existing ITV companies, but to other companies which have something worth while to contribute.
Thirdly, we have retained the structure of terrestrial franchise in the 1980 Act. We agreed that in 1989 alone the obligation to re-advertise the terrestrial franchise should be suspended. During the debate we have been criticised for going too far in removing competition and, by my hon. Friend the Member for Wealden, for not going far enough in giving assurance to the ITV companies concerned. In the middle of that conflicting criticism, we may have got the balance about right. We have not gone 818 for a rolling franchise. We have not gone, despite the frequent assertions of the hon. Member for Erdington, for an automatic extension of the franchise. We have not ruled out the possibility of newcomers coming in in 1989. Those matters will be left to the discretion of the IBA.
Fourthly, we propose to retain—this point has not been mentioned in the debate since my right hon. and learned Friend's speech—the provision in part H for an entirely independent DBS to follow. That was the correct decision, and we would have been much criticised, rightly, later if Britain had been held back because we had failed to take that decision and if other countries, especially Ireland, had proceeded on a different basis and we had received their programmes. On balance, after much thought, we decided that it would be sensible to provide the framework outlined by my right hon. and learned Friend.
The Bill covers one of the most lively and talented sectors of our economy and society. We have seen the talent in developing technology, whether of cable, satellite or transmission. We have seen the talent in creating programmes, as my hon. Friend the Member for Boothferry (Sir P. Bryan) illustrated, not just by the BBC or ITV, but in the independent sector growing up and clustering, to some extent, in London and Cardiff around the two fourth channels. The success of our talent has put us into a process of rapid and unprecedented change.
It is not the Government's role to dictate how the talent should be used. The public, not the politicians, should choose. The public will decide which of the new opportunities they propose to take. The Government's jot) —I do not believe that the Opposition have yet grasped this point—is to provide a sensible framework within which those public choices can be made. We do not mean to regulate with a heavy hand.
The Bill illustrates our view that as choice multiplies the need for regulation grows less. Detailed controls are necessary when one is dealing with a monopoly, as my hon. Friend the Member for Boothferry said, but such detailed controls are too burdensome when one is dealing with a choice of 20 or 30 channels. The purpose of the Bill is to encourage the rich talent which Britain possesses to enable the public to make their own choices, and to sustain the high and deserved reputation this country's broadcasting has achieved in the world.
Question put and agreed to.
Bill accordingly read a Second time and committed to a Standing Committee pursuant to Standing Order No. 42 (Committal of Bills).