HC Deb 14 January 1987 vol 108 cc263-75 3.33 pm
The Secretary of State for the Home Department (Mr. Douglas Hurd)

With permission, Mr. Speaker, I should like to make a statement about decisions on certain parts of the Peacock report on broadcasting which the House debated on 20 November 1986.

We accept the judgment of the Peacock committee that the BBC should not be financed through advertising and that, for the time being, the licence fee should remain the principal source of income. As the House knows, we have commissioned an expert study of the technical and economic feasibility of subscription which, in principle, we find attractive. We should receive that in the spring, but it is, in any case, clear, as Professor Peacock noted, that that form of funding could not be introduced for some years.

I have already announced that the colour licence fee will remain at £58 until March 1988. We have decided that thereafter it should be indexed to move annually in line with the retail price index. That will provide secure and predictable funding for the BBC consistent with the principle of its constitutional independence. Increases in the licence fee will in future be determined on precisely the same basis as increases in pensions and benefits. As Peacock proposed, the new colour licence fee will be calculated on a notional licence fee for 1987–88 of £60. In April 1988 the fee will be increased by an amount which reflects the percentage annual change in the retail prices index as measured at October 1987. Given the past tendency of BBC costs to rise faster than inflation, this form of indexation will provide a strong incentive to practise efficiency and care in undertaking fresh commitments. The Government see the new arrangements I have announced today as lasting for at least three years from April 1988; any departure from them should be wholly exceptional and for clearly stated reasons.

We believe that people should have the option of receiving black and white television and taking out a significantly cheaper licence. Accordingly, despite Peacock's suggestion that the monochrome licence fee might be brought closer to that of the colour licence, we have decided that the monochrome fee should remain at broadly its present level. It will therefore be indexed on the basis I have described, starting from a notional base line of £20 and continuing to provide a cheaper alternative licence.

We have looked again at the arguments for concessionary licences. We are satisfied that there are overwhelming objections both on principle and on grounds of practicability to the Peacock committee's proposal that pensioners drawing supplementary pensions should be exempt from the licence fee if they live in households wholly dependent on a pension. We reject Peacock's suggestion which envisaged financing this proposal through a separate car radio licence. In the light of those decisions, we have decided to keep the existing arrangements for concessionary licences for those in residential care.

We accept in principle the Peacock committee's view that the BBC should be given a bigger role in collecting the licence fee. We have doubts about its specific proposal that the BBC should act as a managing agent, on a consultative basis, to the Home Office because we think that that might lead to a confusion of responsibilities. While the Government will clearly need to determine the level of the licence fee and any concessionary arrangements, we believe, subject to study of the detailed implications, that the BBC should become directly responsible for collecting this revenue and for enforcing the licence fee system. The BBC's board of governors accepts in principle the merits of this approach. We shall be exploring together the detailed implications so that we can propose later any necessary changes in the law.

We are anxious that those wanting a television licence should have available, and be fully aware of, convenient means of paying for it. Since the last settlement, the Home Office, in consultation with the BBC and the Post Office, has carried out a thorough review of existing methods and examined possible new methods of payment. As a result, both we and the BBC see attractions in arrangements under which licences could be issued on a pay-as-you-go basis—at present, as the House knows, the licence fee has to be paid in full in advance. We shall be considering further with the BBC how that could be put into practice. meanwhile, we intend to make the public better aware of the various schemes that already exist for payment. We aim to increase convenience of payment for the consumer; to help those in financial difficulty to spread the cost of the fee; to minimise enforcement and administration costs; to reduce the levels of evasion and late payment; and to enable the BBC to maximise its revenue while keeping the cost of the licence fee down.

Mr. Gerald Kaufman (Manchester, Gorton)

We note with satisfaction that the Government have abandoned any idea of imposing advertising on the BBC. However, on another aspect of his statement, the Home Secretary has been less precise and less forthright. He tells us that after March 1988 the licence increase will be on a notional base of £60. However, he does not spell out exactly what that means for licence holders. Does it mean that on 1 April 1988 the Government intend to put up the licence fee by £2 to £60 and, at the same time, add to that a cost of living increase of up to £3? Will the Home Secretary deny that if I am mistaken? If I am not mistaken, will the right hon. Gentleman admit that the Government are planning what they hope will be a post-election increase in the licence of £5 a year on 1 April next year? It is important that the country should know whether that is what the Government are planning.

What about pensioners? The Home Secretary has accepted the Peacock proposal for an indexed television licence based on a figure of £60. But one integral ingredient of that proposal was free television licences for pensioner households drawing supplementary benefit, yet the Home Secretary has meanly rejected that recommendation. He picks and chooses among the Peacock recommendations, accepting those that suit him and rejecting another that would help the poor.

The Labour party believes that the financing of the BBC should be re-examined in a way that seeks to address itself to the problem of the licence as a regressive poll tax. Meanwhile, the Labour party makes it absolutely clear and reaffirms its commitment to phase out the television licence for all pensioners. [HON. MEMBERS: "How much?"] I am coming to that. We consider that public expenditure to be a far more socially compassionate use of public money than squandering £164 million of taxpayers' money on the selling off of British Gas.

Mr. Hurd

As regards the right hon. Gentleman's first question, in October 1987 the sums will be done to calculate the rise in the retail prices index between September 1986 and September 1987, in exactly the same way as happens for pensions and other benefits. From April 1988 that calculation will be applied in addition to the notional fee of £60. The amount of the increase will depend on the Government's continuing success in resisting the efforts of the Labour party to push up inflation.

I am glad that the right hon. Gentleman asked his question because it enables me to make it clear that by April 1988 the BBC will be spending at substantially above the level of the £60 licence fee. We shall be applying a double squeeze—a once-and-for-all squeeze, inasmuch as we have chosen a notional figure of £60 and not a higher figure, although the BBC will be spending at a higher figure, and a continuous squeeze inasmuch as we have chosen for the index the retail prices index and not the higher index that the BBC tended to favour, because its costs have been historically high. There will be a double squeeze—a once-and-for-all squeeze, and a continuous squeeze on the spending of the BBC in order to relieve the licence payer from excessive increases.

On the right hon. Gentleman's second point, I notice that, in an incoherent way, the Labour party is set on the path that he describes. The policy that he announces from the Front Bench is different from the policy that the hon. Member for Walsall, North (Mr. Winnick) may have an opportunity to develop on Friday. Both are a deeply incompetent attempt at a bribe, as the debate on Friday will reveal. Once people have got over the immediate dazzle of the proposition, they will reach the same conclusion as the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan), a former Prime Minister and Home Secretary—that it is not a sensible use of social security money that elderly well-to-do people should suddenly receive free television. That is not an adequate or sensible way of spending the limited resources available for social security. The right hon. Gentleman has totally failed to explain how the £230 million, or £330 million, would be found, and we look forward to further exploration of that rather important point.

Mr. Leon Brittan (Richmond, Yorks)

Will my right hon. Friend accept that the vast majority of people who have considered this matter will welcome the Government's decision that there should be indexation on what I hope will be an interim basis until the problems relating to the introduction of subscription as a means of financing the BBC have been resolved? Will he also accept that the principle of indexation will provide the BBC with a certain income, will encourage efficiency and will, I hope, also encourage the BBC to work towards the resolution of the problems relating to subscription which will provide a long-term answer to the BBC's problems?

Mr. Hurd

I am grateful to my right hon. and learned Friend, and I agree with him. The form of indexation that we have chosen is intended to be a reasonable squeeze on the BBC's revenues and, therefore, a reasonable protection for the licence holder. When we see the report of the expert study in the spring we shall be able to judge more clearly the merits of an approach towards subscription as a substitute for the licence and, perhaps equally important, the pace at which it is reasonable to move in that direction.

Mr. Clement Freud (Cambridgeshire, North-East)

It would have been absurdly optimistic for the BBC to have expected more support or understanding from the Government, but the Home Secretary must realise that indexing the new licence fee to the retail prices index is unsatisfactory bearing in mind the cost of wages, which far outstrip the retail prices index. We welcome the fact that he has ignored the Peacock recommendations in respect of monochrome licences. We welcome the fact that that fee will be pegged and we hope that it will be pegged even below £20.

It is sensible to let the BBC bring in its own procedure for collecting the licence fee, but we hope that that will not inhibit the Home Secretary from finding, before that becomes a fact, new ways of establishing instalments and other simple devices for paying licence fees for people who cannot afford them.

Mr. Hurd

It will be interesting as the debate continues over the coming months to learn how much higher the licence fee which the Liberal and Labour parties would propose to the BBC would be than the one which we suggest on the basis of indexation. The hon. Gentleman, from his knowledge of these matters, which is substantial, understands the nature of the squeeze that we are proposing, but I ask him not to get entirely hooked on the idea that, simply because the costs of an institution, even a famous institution, have historically risen higher than the RPI, we should accept as God-given that such increases must continue.

Mr. Mark Carlisle (Warrington, South)

I welcome my right hon. Friend's decision that the licence fee should remain the principal source of the BBC's income and what appears to be his sensible proposal for the indexation of that fee. However, will my right hon. Friend spell out in clear terms the cost of the Labour party's commitment that everybody of pensionable age should, apparently, be allowed a free television licence? It seems that that would be an enormous expense on those who pay the licence fee. Will my right hon. Friend take this opportunity to spell out that cost?

Mr. Hurd

The cost of the official Labour programme, as repeated by the right hon. Member for Manchester, Gorton (Mr. Kaufman), would be £330 million. The hon. Member for Walsall, North (Mr. Winnick), with uncharacteristic modesty, has a more limited programme which would knock £100 million off that figure. His proposal would be impractical to administer, but it would cost £230 million instead of £330 million. The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) has made it clear that additional taxation would not he available to finance this. He has also warned against proposing that it could be done by extra borrowing. Therefore, we are forced to conclude that these substantial sums would be found either by loading them on the other licence holders or by cutting the social security budget in other respects.

Mr. Chris Smith (Islington, South and Finsbury)

Early in his remarks the Home Secretary said that the Government viewed the proposal for subscription payment for BBC television as an attractive option in principle. However, would it not be nonsense to have two channels available on subsription while other channels were available free at the point of delivery and funded by advertising? Will he consider again the difficulties which would be attendant upon the introduction of subscription television?

Mr. Hurd

We shall have an opportunity to consider the advantages and disadvantages when we have the consultants' report, but the hon. Member for Islington, South and Finsbury (Mr. Smith) should not over-egg this argument. We think that there is a powerful attraction in supposing that, instead of the existing licence fee, which will look odder and odder as time goes on and more and more channels are available, there might be a different system whereby people can, as they do in other respects in their daily lives, pay for what they choose to receive and not everything else.

Sir Paul Bryan (Boothferry)

Am I right in assuming that the Labour Party proposals would mean that non-pensioners would be paying about £90 a year for their licence? Will the BBC be responsible for collecting the licence and will it be able to put the agency out to tender on competitive terms?

Mr. Hurd

My hon. Friend's question is among the details that we are discussing with the BBC. At present, the collection is done by the Post Office and in the past, there have been all sorts of suggestions and criticisms of that arrangement. If we reach an agreement with the BBC on lines that I have discussed, I am sure that the BBC would wish to consider various possibilities including continuing the arrangement with the Post Office.

My hon. Friend is absolutely right on his first point. If it is suggested that the cost of the scheme—the bribe—should be loaded on the existing licence holders, it is likely that the increase would be that suggested by my hon. Friend. I suspect that what the Opposition have in mind is that this figure should get lost in the general mish-mash of their financial policies and that they will seek to avoid a definite answer as to how and at whose expense the money is to be found.

Mr. Joseph Ashton (Bassetlaw)

Is the Home Secretary telling Sid that the licence fee will go up by £5 next year? Why is he perpetuating a poll tax system whereby the Savoy hotel, charging £100 a night for a single bedroom, pays for only one licence fee for 15 television sets and Harrods pays only a small fee for exhibiting several hundered sets? Is the right hon. Gentleman aware that 1 million people do not and cannot pay their television licences because they never see £58 in a lump sum? Why will not the right hon. Gentleman implement the considered proposals of the Peacock committee and bring relief to hard-up pensioners?

Mr. Hurd

I do not think that the Peacock committee proposals, which are much more limited than those of the Labour party, would be administratively possible. The hon. Gentleman is suggesting that we should abandon the licence fee principle, but his party is saying that we should continue with the licence fee principle—to which it seems much more devoted than myself—but that we should differentiate and give a special subsidy and free television to elderly people regardless of their means and regardless of the fact that a large number of people are substantially worse off than a high proportion of pensioners.

Mr. John Wheeler (Westminster, North)

Although I welcome what my right hon. Friend has said and I entirely endorse his statement, will he give the House a little more information about pensioner incomes? Approximately one-third of pensioners live above the national income level. Would it be entirely fair if the licence fee was loaded on to all other existing licence fee payers, many of whom are one-parent families?

Mr. Hurd

I am sure that that would be unfair. The precise fact for which my hon. Friend is searching is that 35 per cent. of pensioners—rather more than one-third—are represented in the three upper-fifths of national income distribution. That makes absolute nonsense of the Opposition's approach.

Mr. Andrew Faulds (Warley, East)

Is this not yet another step in the Government's vendetta against the BBC and their intention of cutting down the BBC? Does not the right hon. Gentleman understand that the costs of advanced broadcasting technology are inevitably bound to rise faster than the RPI and that the effects of his policy will be damaging—which is his intention—and deleterious to the work of the BBC?

Mr. Hurd

The hon. Gentleman's first step should be to do something to educate his own and the Liberal Front Bench because they have been sniping in a populist way at the proposal for indexation on the ground that it will be too high. The hon. Gentleman knows that it will be a substantial squeeze and therefore a substantial protection for the licence holder.

I shall repeat what I have said. We should be very wary of assuming that past cost increases were justified or of seeing them as eternal. The hon. Gentleman knows the problem that the BBC has had with its costs. The other system also has a severe problem. As the hon. Gentleman knows, the BBC is now making strenuous efforts, under its present leadership, to reduce its costs, and its stand in relation to the electricians' strike is part of that.

I believe that the Government should encourage the BBC in that effort by making it clear that the money which is available is compatible only with a considerable squeeze on costs. Moreover, I do not believe that the BBC should hold the idea that it must automatically leap first into any new venture without regard to the cost because it is afraid that someone else may come up with that idea.

Mr. Roger Gale (Thanet, North)

When does my right hon. Friend intend to ensure that every television receiver sold in the United Kingdom carries a built-in encryption unit so that when the move comes, as it inevitably will do, to subscription television, that will be technically possible?

Mr. Hurd

I know of my hon. Friend's enthusiasm for subscription television. However, we shall wait for the consultants' report as we shall then be able to judge whether that Peacock recommendation should be carried into effect, and, if so, how and at what speed.

Mr. Austin Mitchell (Great Grimsby)

Does the Secretary of State realise that rather ignobly, because we might have hoped for better from him, he has shown himself to be suffering from the Tebbit syndrome, which means, when in difficulties bash the BBC? He has just enunciated a formula for slow strangulation, because the costs of technology rise more rapidly than the retail prices index. If we are to avoid the slow contraction of services, an erosion of quality, and a slow electronic rigor mortis, the right hon. Gentleman will have to find revenues to supplement the licence fee—such as a point of sale tax on video tape recorders—and will have to end the present regressive policy by freeing the licence fee for pensioners, as my hon. Friend the Member for Walsall, North (Mr. Winnick) has proposed.

Mr. Hurd

Once again, the hon. Gentleman is contradicting his own Front Bench, because it says that the licence fee increase is too much whereas he says that it is too little. He is right, as his hon. Friend the Member for Warley, East (Mr. Faulds) was right, to say that what we propose amounts to a squeeze. However, it is a squeeze in support of what the BBC is now trying to do. Consequently, I am not criticising or bashing the BBC. It is now making a manful effort to get its costs under control and to bring itself into the modern world in that regard. We want to help the BBC in its efforts.

Sir Dudley Smith (Warwick and Leamington)

Is there not something terribly anachronistic about a system which in the foreseeable future will mean that many hard-pressed old-age pensioners will be forced to pay a compulsory BBC levy when, in other circumstances, they could watch the two ITV channels for nothing and elect in due course to pay a subscription fee, if they so wished, to the BBC?

Mr. Hurd

My hon. Friend has succinctly put the case for subscription and for the philosophy lying behind the main recommendation in the Peacock report. We believe that if that recommendation is to be persuasive and effective it needs more back-up than it receives in the report, and so we have asked the consultants for a further report. When we receive it in the spring, we shall be able to reopen the discussion.

Mr. David Winnick (Walsall, North)

Is the Secretary of State aware that in refusing to make any concessions he has today demonstrated a cruel indifference to many of our elderly people? A large majority of them are on low incomes and they rely on the television as their sole form of entertainment and many use it, as Peacock stated in his report, as a link to the outside world. I have received many letters from constituents of Conservative Members on this subject and I should like to know whether it is true that all Ministers have been told to be in the House on Friday to vote down my Bill.

Mr. Hurd

What rubbish this is! In a way I am pleased that the hon. Gentleman will have an opportunity to develop his case and that we shall have an opportunity to refute it later this week. The Labour party has wholly failed to explain where the money to finance that concession or the more extravagant concessions sought by the Opposition Front Bench is to come from, and so we must assume that there will be competition with other social security payments.

The hon. Member for Walsall, North (Mr. Winnick) and his hon. Friends must develop the case that this proposition should be top of the queue, as it is wholly unrelated to need and there are so many other demands on the social security budget at present. A large proportion of the concession will go untaxed to well-off members of the community. The hon. Gentleman and his hon. Friends will have to make the unmakeable case that the concession is a satisfactory priority for the social security budget.

Mr. Roy Galley (Halifax)

My right hon. Friend is to be congratulated on his measured and sensible approach to the Peacock report. Will he assure the House that he will put considerable umph behind the proposals for a feasible subscription system and that he will then bring positive proposals to the House? We must find an alternative to the ludicrous licence fee system, because the majority of people are fed up with paying such an enormous fee for a regular diet of old films, repeats, American soap and biased current affairs programmes.

Mr. Hurd

The licence fee system was perfectly natural when the BBC had a monopoly. It has been tolerable during the era of the duopoly in which we still live. Like my hon. Friend, I think that it is beginning to creak quite noisily as we move into a time of possible wider choice. But before we abandon the system we must be clear that there is an alternative that makes sense. We may have found one, but it is still too soon to be absolutely clear. I take note of the point made by several of my hon. Friends that the House will wish to discuss that point again when the consultants report is published.

Mr. D. N. Campbell-Savours (Workington)

Is it not fair to say that a Government who refuse even properly to heat the homes of millions of pensioners is hardly the sort of Government that would be receptive to the principle of free television licences for pensioners? When the Minister tells us that the Government do not have the money to do that, will he give us an assurance that there will be no tax cuts in the Budget which is due in two months time? Will he assure us that there will be no cuts in the standard rate of income tax, in the capital transfer tax or in capital gains tax? That is where the money is. The Minister knows that he has it, but he refuses to use it to help Britain's pensioners. He should be ashamed of himself.

Mr. Hurd

I refuse to accept that it makes sense in terms of social security benefits for the old and those in need to put at the top of the queue and establish as a priority the giving of free television to elderly people, regardless of their circumstances and need. That is nonsense and it will be rapidly seen as such as the debate proceeds.

Mr. Neil Hamilton (Tatton)

Will my right hon. Friend confirm that the income from the licence fee is about £1,000 million a year? Does he recognise that there is considerable disquiet, and not only on this side of the House, that such a large sum of money that is acquired by compulsion can be disbursed by an organisation that is virtually unaccountable except when it is brought to account through the courts? Why should the BBC uniquely have a secure and predictable income that is not enjoyed by the independent broadcasting companies?

Will my right hon. Friend also confirm that the sale of programmes contributes little more than 1 per cent. of the BBC's total income? If the BBC wishes to increase its resources and it is as good as it says it is, why does it not sell more programmes?

Mr. Hurd

I am entirely in favour of the BBC trying to improve and diversify its sources of income in the way my hon. Friend has suggested. He is unpicking the BBC's charter, as several of my hon. Friends would wish to do, and the form of responsibility that exists between the BBC and the House. The time will come—although it is not immediate—when the charter must be renewed and those matters will come up for discussion. We are concerned more immediately with the basis of financing the BBC and whether it is possible to move from the licence fee system, with all the criticisms made of it, towards a system of subscription based on individual choice.

Mr. Tony Benn (Chesterfield)

Is the Home Secretary aware that by rejecting all concessions he has, in effect, said that after the general election pensioners, among others, will pay £5 a year more for the licence? Does he really believe that people think that commercial television costs them nothing when the consumers, many of whom are pensioners, pay for it and when all advertising budgets are tax deductible and therefore the taxpayers, many of whom are pensioners, pay for it? The Home Secretary's statement is an attack upon the group that my hon. Friend the Member for Walsall, North (Mr. Winnick) intends to protect.

Mr. Hurd

The only thing to be said for the hon. Member for Walsall, North is that he has never held office in a Government.

Having looked at the concessionary system and the proposals for improving it, I have come to exactly the same conclusion as the right hon. Gentleman and his colleagues did when they were in office.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

Does my right hon. Friend accept that my mother and my mother-in-law, of whom I am inordinately fond, would very much enjoy a free television licence, but is it not nonsense to subsidise people by age group alone? Is not the proper use of public money to use it where it will do most good? To subsidise those who do not need it deprives people who need state and taxpayers' help.

Mr. Hurd

My hon. Friend is entirely right. I agree with his premise and his conclusion.

Mr. Dennis Skinner (Bolsover)

Is the Home Secretary aware that he has not paid any attention to the argument put forward on this issue, that there are countless hundreds of thousands of pensioners who live in warden-controlled accommodation and who get a relatively free television licence?

The Labour party and my hon. Friend the Member for Walsall, North (Mr. Winnick) will try on Friday to bring about some equality under the law so that every pensioner is treated properly. One thing is certain from the Home Secretary's remarks today. Hugo Young just about got it right in respect of the chairman of the Tory party. What he got wrong was that he did not apply it to the entire Government Front Bench, including himself.

Mr. Hurd

I do not think that anyone is entirely happy with the existing concessionary scheme that was introduced by the last Labour Government and which we have expanded by bringing in, in 1984, handicapped and disabled people.

As with winter heating, although on a lesser scale, we have taken what we inherited and made it somewhat more substantial. However one expands this housing-based concession, there will be borderline cases and difficulties. We have considered the matter carefully, but we have concluded that the best way is to continue with the present limited concession.

Mr. Tony Marlow (Northampton, North)

I am sure that my right hon. Friend will have looked at various proposals for the financing and control of the BBC. I think that it has been suggested that there should be established a Ministry of arts and media, hence to be known as the Ministry of Culture and Propaganda. Originally that would be without the BBC, but knowing the nature of the proposals of such a Ministry inevitably the BBC would come within its ambit. Could my right hon. Friend tell the House, and particularly the Labour party, why that would not be an appropriate solution?

Mr. Hurd

I have noticed that there has been commotion in the shadow kingdom on this subject and I had mixed feelings when I read today that the right hon. Member for Manchester, Garton (Mr. Kaufman) had unhorsed the challenger who was attempting to take away part of his shadow fief. It is a shadowy business, as my hon. Friend would acknowledge.

For what it is worth, it is on the whole better, regardless naturally of all personalities, that the Shadow Home Office fief should resemble the accurate one as represented by the Home Secretary.

Mr. Dave Nellist (Coventry, South-East)

Is the Home Secretary aware that Britain's 10 million pensioners will view this week in Westminster with a slight degree of incredulity? Yesterday, paid for through a cut in the real value of their pension, the Government said: "Here is a fiver." That is wholly inadequate to pay towards the heating of their homes. Today they are saying, "An extra fiver will go on your television licence?" Yesterday the pensioners were told that it was a choice between food and fuel. Today it will be a choice between food and entertainment. Is that really the future that the Tory Government offer Britain's 10 million pensioners?

Mr. Hurd

Pensioners are not so simple or silly as the hon. Member appears to make out. They know that in the lifetime of this Government there has been a 25 per cent. increase in real terms in spending on pensions. They will know from their experience how to weigh in the balance the sort of shallow half promises being tossed about by the Labour party.

Mr. Richard Ottaway (Nottingham, North)

As the BBC easily won the ratings war over the Christmas period, with eight programmes in the top 10, will my right hon. Friend accept that he is quite right to resist claims that funding of the BBC be at parity with ITV, as such extra funding is totally superfluous?

Mr. Hurd

I think that, on the whole, my hon. Friend commends the balance that we have tried to strike. If that is what he is doing, I agree with him.

Mr. Peter Hardy (Wentworth)

The Home Secretary appeared to reject the idea that concessions should be given to pensioners. Will he confirm that the present concessionary system will be maintained? If he does, will he accept that, in those areas in which local authorities have a splendid record in building and providing accommodation for the elderly, the grievous anomalies are particularly intense? Will the right hon. Gentleman make sure that the point that he made to my hon. Friend the Member for Walsall, North (Mr. Winnick) is properly sustained? He said that my hon. Friends wil have to deploy arguments to convince the Government about the merits of the Bill on Friday. Have not the Government already made up their mind regardless of the case that my hon. Friends will make?

Mr. Hurd

I will welcome the debate because it will show the hollowness of the pretensions of Opposition Members. The hon. Gentleman's first point is entirely right. The present concessionary scheme that we inherited and, as I have said, expanded to include the handicapped and disabled is patchy. It produces anomalies that are particularly severe in some parts of the country. We have tried hard to find a neater, tidier way of spending roughly the same amount—£22 million. We have not found a neater way to avoid creating new anomalies. Therefore, I confirm that we have decided to maintain the present scheme.

Mr. Richard Holt (Langbaurgh)

I welcome what my right hon. Friend has said. I am sorry that the Government have rejected advertising as such out of hand. There is advertising every day on the BBC. Every sporting organisation that is sponsored by a commercial organisation receives money not because of philanthropy but because the commercial organisation wishes to advertise as widely as possible to the widest audience. There is no mechanical reason why this could not be done in the same way as money is collected for the Performing Right Society.

Mr. Hurd

Evidently, the BBC draws a distinction between advertising and sponsorship. As my hon. Friend may know, it is exploring and putting forward ideas for a limited range of sponsorship. The BBC has been in touch with us about that matter. It is its initiative. We shall be interested to see how its thinking develops on this matter.

Several hon. Members


Mr. Speaker

Order. I shall call the hon. Gentlemen who have been standing. I ask for questions on this statement and not the speeches that might be made tomorrow.

Dr. Jeremy Bray (Motherwell, South)

Does the Home Secretary think that the public wish to see a reducing proportion of national income available to the BBC?

Mr. Hurd

So long as the licence fee system continues, the public will welcome a system that provides the BBC with an income that will rise in the same way, to the same extent and on the same dates as pensions and social security benefits. They will find that a much more reasonable proposition than others to which they may have to listen.

Mr. Michael Forsyth (Stirling)

Will my right hon. Friend acknowledge that his statement puts the BBC in a uniquely privileged position? Not only does it have a guaranteed income but it is protected against inflation, regardless of its ability to satisfy consumers. Is my right hon. Friend satisfied that the necessary changes in the structure of the BBC will be made to ensure that it is able to meet its obligations under the charter and thereby do something in return for this privilege?

Mr. Hurd

I assure my hon. Friend that the BBC will not regard today's announcement in anything like the same way as he does. The BBC clearly will see, as various questions have illustrated, the substantial double squeeze on its income—first, the once-for-all choice of the base line, and, secondly, the RPI indexation as opposed to indexation of relative costs, as Mr. Samuel Brittan and others rather surprisingly suggested. The squeeze is intended to support and underpin the efforts that my hon. Friend and I strongly welcome being made by the BBC to bring its costs under effective control.

Mr. Tam Dalyell (Linlithgow)

Was the Home Secretary being any more than polite to the hon. Member for Halifax (Mr. Galley) when he agreed with what he said and, in particular, rather threateningly said that the BBC was creaking? I remind the right hon. Gentleman of a cautionary little tale. When the late Reggie Bevins was Postmaster-General, in answer to questions he said he would do something about the BBC and "That Was The Week That Was". Reggie Bevins, when he went to his desk the following morning, found a little note on it. The little note said, "Oh no, you won't." It was signed "Harold."

Mr. Hurd

The hon. Gentleman is uncharacteristically inaccurate. It was not the BBC but the licence fee system for financing it, which I said in response to my hon. Friend the Member for Halifax (Mr. Galley), seemed to be beginning to creak.

Mr. Peter Bruinvels (Leicester, East)

Will my right hon. Friend accept that today's announcement will be seen outside as a victory for the BBC and, therefore, is most disappointing? Does he agree that the House seriously hoped that the licence fee would have been reduced rather than linked to an inflation increase and that the remainder would have been made up by advertising? Does he agree that the pay-as-you-view system is unlikely to succeed at the moment anyway because, as hon. Members have said before, there have been so many repeats? Please, may we reconsider this and again examine advertising?

Mr. Hurd

If my hon. Friend believes that that is how this announcement will be regarded by the BBC or others, he will believe anything. On the whole, the debate on 20 November supported the Peacock conclusion on advertising. There was hardly a whisper in the whole of the debate criticising that particular Peacock recommendation which, as I said, on examination the Government found to be cogent.

Mr. Robert N. Wareing (Liverpool, West Derby)

How can a Government, who have cut the real value of the pension by £8 a week since they came to office, while handing out £3.6 billion to the richest 5 per cent. in the country, refuse 14,000 pensioners in my constituency, most of whom are poor, some concession on their television licence fee? The Government must bear in mind that those pensioners are fully aware that many of the right hon. Gentleman's rich friends who permanently reside in luxury hotels and west end clubs get their television viewing free all the year round.

Mr. Hurd

The hon. Gentleman may know that I tightened up the rules about hotels and television licences when I was Minister of State because I thought it was needed. The hon. Gentleman will not succeed in persuading his elderly constituents that the right way to spend £230 million, or £330 million, of social security money is to give free television licences to elderly dowagers and elderly people across the country regardless of need.

Mr. Bill Michie (Sheffield, Heeley)

As questions on the statement draw to a close, will the Home Secretary make it clear to the House whether he intends to organise opposition to the Bill to be presented by my hon. Friend the Member for Walsall, North (Mr. Winnick) on Friday?

Mr. Hurd

That is not a matter for me.

Mr. Kaufman

Have not two clear facts emerged from the Home Secretary's attempt to create a smoke screen this afternoon? First, the Government are planning a £5 licence increase for all television viewers on 1 April next year. Secondly, the Government oppose the Labour policy of phasing out television licences for all pensioners. The Labour party will be happy for the country to choose between those two policies.

Mr. Hurd

It has emerged clearly in this agreeable prelude to Friday's debate that some Opposition Members think that we are squeezing the BBC intolerably. Other hon. Members believe that we are giving far too much to the BBC and that an increase based on indexation is too generous. What we have set forward will appear to be sensible to sensible people—that while the licence system continues, the BBC, rather than having the occasional arbitrary increase that occurred in the past, should have a system of indexation that will provide a once-for-all squeeze when it is introduced in 1988, and then a continuing squeeze on costs that will show the direction in which it should go.

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