HC Deb 13 June 1989 vol 154 cc710-24 3.55 pm
The Secretary of State for the Home Department (Mr. Douglas Hurd)

With permission, Mr. Speaker, I should like to make a statement on the future of commercial television. I apologise for its length; a good many complicated matters need to be taken together.

The White Paper proposed a two-stage procedure for awarding licences for Channels 3 and 5 under which applicants would first have to pass a quality threshold—consisting of positive programme and consumer protection requirements—and would then go on to offer financial tenders. The Independent Television Commission would be required to select the highest bidder.

Many of those who commented on the White Paper expressed concern that those proposals might lead to a loss of quality in programming. We recognise that concern, and propose to strengthen the quality threshold. We do not consider that it would be right to do so by adding more detailed requirements in the legislation to supply specific types of programme. We therefore propose to strengthen the quality threshold by broadening the third positive requirement in paragraph 6.11 of the White Paper to read: to provide a reasonable proportion of programmes (in addition to news and current affairs) of high quality, and to provide a diverse programme service calculated to appeal to a wide variety of tastes and interests. It will be for applicants to interpret that combined quality and diversity test in drawing up their programme proposals. Those who fail to satisfy the ITC that they can meet the requirement will not have their financial bids considered.

A number of suggestions have been made about the form that the financial bid should take. The chairman of the IBA proposed that it should comprise a sum fixed by the ITC and a bid by the applicant of a percentage of advertising revenue. I support that combination of elements but, to make the bidding process clearer, propose that they should be reversed. Accordingly, the ITC will fix a percentage of net advertising or subscription revenue for each licence to form the minimum sale price. Applicants will then be required to bid a lump sum, which they will pay in addition if successful. For successful applicants, both sums will be paid annually over the period of the licence to avoid the imposition of debt burdens on licensees.

Applicants will also be required to post a bond with their tender applications. Successful bidders will be required to add to that an amount which, together with the first, will add up to a substantial performance bond. This requirement will strengthen the enforcement powers of the ITC, making them stronger and more flexible than those of the IBA now. Those who fail to meet their programme promises given at the quality threshold stage will stand to lose a proportion of the bond.

We have considered carefully the arguments about the criteria for deciding tenders. I do not believe that at the tender stage, before it is clear to whom the licences will be awarded and before the nature of any network arrangement is known, it will be possible for the ITC to make fine distinctions between the quality of programme service offered by different applicants, all of whom will have passed the strengthened quality hurdle that I have announced today. We must avoid a return to the opaque and sometimes arbitrary selection procedures of the past, but some flexibility needs to be written into the procedure.

We propose, therefore, that the ITC should be required in the normal course to accept the highest bid, but that it should have a power, in exceptional circumstances, to select a lower bid. This power would operate only in exceptional circumstances, the ITC would be required to give its full reasons, and exercise of the power would be subject to judicial review. In addition, there would be an exceptional power for the Home Secretary, acting on the recommendation of the ITC, to veto the selection of the highest bid if its funding came from a source that was undesirable in the public interest.

The White paper proposed that in addition to the sum bid at tender applicants would have to make a levy payment to the Exchequer. The proposals I have just announced for the fixing of a proportion of advertising or subscription revenue as a part of the tender price overtake our original proposals for a levy. Successful candidates will have only to pay the two-part tender price I have outlined. There will be no levy in addition.

Some people have wondered whether the Government would impose a moratorium on takeovers at the beginning of 1993 and whether they would insist on compulsory networking for Channel 3. The Government's view on both issues has not changed since the publication of the White Paper. I understand that the chairman of the IBA is considering permitting takeovers in the period from 1990 to 1993, subject to the normal anti-monopoly rules and bearing in mind our proposals for the régime after 1992. It would not in these circumstances be either sensible or necessary to impose a moratorium on takeovers thereafter. Networking will be a matter for the Channel 3 companies themselves to decide without Government compulsion. Basic fair trading laws should ensure that no companies are excluded unfairly from any networking arrangements. We shall consider whether any further provisions are needed in the legislation to regulate the operation of any new network system in the interests of free access and fair competition.

We have received a number of representations on behalf of the 4 million viewers who are deaf or hard of hearing. We agree that particular provision should be made for them. We have therefore decided that Channel 3 and Channel 5 licensees should be required to provide teletext sub-titling for some of the programmes in their schedules. They should provide more than is provided at present.

The White Paper proposed that Channel 5 should be shared between at least two licensees. In the light of the start-up costs of the new channel and the competition it will face from the established terrestrial channels, we have now decided that Channel 5 should form a single licence. It will thus be better equipped to compete with the existing terrestrial channels.

Similarly, the White Paper proposed that there should be a separate night hours licence for Channel 3. Many of those who responded to the White Paper doubted whether a separate night hours licence would be viable, so we have looked at this again. We want to ensure, so far as possible, that the night hours are fully used. I accept the argument that they may be better exploited commercially if they are linked with services provided at a more commercially attractive part of the broadcasting day. We have therefore decided not to disturb the present situation under which the night hours may remain connected with the peak viewing period. However, we will review the position if we find that the night hours are not being fully used. Under our proposals, the ITC will be free to allocate licences for other times of the day, such as a breakfast time service.

The White Paper proposed that the ITC would be responsible for the map—for the geographical division of Channel 3 into regions. This has been generally welcomed. The Government have noted with understanding the statement of the chairman-designate of the ITC, Mr. George Russell, that he would see advantage, if possible, in retaining the existing regions.

I turn finally to Channel 4 and S4C, the Welsh channel. The White Paper made clear the Government's intention to maintain the remit of Channel 4 while at the same time providing for the selling of its advertising separately from that on Channel 3. We have considered the comments we have received on the three options in the White Paper, and in particular the helpful report by the Home Affairs Select Committee. I have written today to the Chairman of the Committee expressing the Government's gratitude for its work on Channel 4 and setting out the Government's decisions. A copy of that letter has been placed in the Library.

The Government have decided that it would not be feasible at the present time for Channel 4 to become an independent commercial company competing with the other broadcasters if, as we think essential, it is to retain its remit. The financial outlook for Channel 4 remains uncertain with the prospect of new competition. We believe that the requirement in addition to provide a return for shareholders in a private company could put too much pressure upon Channel 4 finances and place its remit in jeopardy. But we see some difficulty in Channel 4 continuing to be owned by the authority which would be responsible for regulating its output—the ITC—and we believe that any financial underpinning given to the channel should be carefully circumscribed to provide clear incentives for cost-efficiency.

We have therefore decided that after 1993, if Parliament agrees, Channel 4 should become a public trust which will be licensed by the ITC and will continue to provide the service set out in the special remit. Channel 4 would sell its own advertising, and would be subject to a baseline budget of 14 per cent. per annum of terrestrial net advertising revenue. The baseline could be amended in secondary legislation. If the channel's revenue fell below the baseline, the difference would be funded by the ITC to a maximum of 2 per cent. of terrestrial net advertising revenue levied on the Channel 3 companies, but any surplus revenues above the baseline would be shared equally between Channel 3 and Channel 4. The trust would be required to hold its share of any surplus revenues to be used as a first call if there were deficits in later years. To reduce the need for a call on the guarantee, the ITC would be empowered to require cross announcement of programmes between Channel 3 and Channel 4. Complementary scheduling would be possible, but would not be a requirement. The Channel 4 licence would run for 10 years, but the arrangements would be reviewed after seven. I believe that is a satisfactory way of securing the future of Channel 4 with its present remit.

The White Paper concluded that the arrangements for the Welsh fourth channel should remain unchanged. Some have argued that it would not be consistent with the new and more free approach to regulation for the channel to be funded by a direct subscription on the commercial companies. The position is particularly anomalous in Scotland where the ITV companies are required to finance Welsh programmes as a first call on their resources even before they make provision for their own Gaelic speakers. The Government are sympathetic to these concerns, and have decided to make a small technical change to the funding arrangements for S4C. In future, S4C revenues will not be charged as a first call on the commercial companies but will be funded out of the proceeds of the tender through the ITC.

My statement covers most of the major decisions on the future commercial television system following the publication of the White Paper. We shall need to make announcements on the remaining issues, including the key question of transmission and the future of broadcasting in Gaelic, before long. Then we shall draft the Bill.

Mr. Robin Corbett (Birmingham, Erdington)

The Home Secretary and the House will understand if I do not respond in detail to the mini White Paper today. Clearly we shall return to the issue in the autumn when we consider the Bill.

The revised proposal for awarding the licences for Channel 3 and Channel 5 are no more than a figleaf behind which the Home Secretary seeks to cover his humiliation at the hands of the Prime Minister, aided by the Secretary of State for Trade and Industry. In most important respects, the bidding for the licences has barely changed from that set out in paragraph 6.9 of the White Paper which stated: there is no longer the same need for quality of service to be prescribed by legislation or regulatory fiat. All that the Home Secretary has said today is that the ITC can have reserve powers to reject the highest bid, while explaining why. In my view that amounts to no more than a tiny teaspoon to bale out a well-holed ship. Is it not the very least that could he done to meet the statement made by Mr. George Russell that unless the ITC had these powers, he would find his position untenable? I commend Mr. Russell on his stand on behalf of the viewers' best interests.

The rewording of the so-called positive requirement in paragraph 6.11 does no more than express in 35 words what took just 16 words in the White Paper. Simply adding the phrase "high quality" does nothing to guarantee that it will be delivered, nor does anything else that the Home Secretary said today. In any event, what is a reasonable proportion and who will decide it?

The statement is light on what exact amounts of money are to be provided by bidders who deliver the range and types of programme which the bid promises. The Home Secretary went out of his way to make it clear that he did not regard that to be necessary. The changes in the financial arrangements at least acknowledge that Channel 3 will face increasing competition from satellite services and are simpler and clearer than the original proposals.

I am still uncertain about what the term "financially sound" means. It seems that it will mean no more than checking on whether the cash behind the bid comes from drugs or vice. That is the problem. The Home Secretary's statement, like the White Paper, is too much about cash and not sufficiently concerned with ensuring that the cash on the table will deliver real choice and quality in terms of range and standards. Will the Home Secretary confirm that bidders will not have to guarantee to programme current affairs in main viewing programmes? Is it not the case that the same remains true of children's and religious programmes?

It is unacceptable to Opposition Members—and to some Conservative Members—that an individual should be able to own two Channel 3 licences. The Opposition believe that one person should be able to own only one franchise if there is to be real diversity in the new system.

I welcome the requirement for Channel 3 and Channel 5 licences to provide teletext subtitling for some programmes for the 4 million people who are deaf or hard of hearing. I hope that that will become mandatory for all news and current affairs programmes, and for most, rather than some, programmes eventually.

I also welcome the decision not to separate off the night hours. It was patently not sensible for the Home Secretary to propose in the White Paper to take the night hours away from the BBC while requiring it to maximise its subscription services.

Becoming a trust is the least worst option for Channel 4, although we would have preferred the status quo. What is disappointing is that despite the Government's tribute to Channel 4's "striking success" their proposals are unlikely to provide enough stability for it to meet its needs in the face of stiffening competition in terrestrial and satellite services.

Even after the statement, the Government's proposals will do no more than achieve lower quality, lower standards, less public responsibility and fewer regions within Channel 3. The proposals will not use technological change to bring about more real choice. The proposals are simply a route to undermining what the White Paper called—I hope not sarcastically—the "rich heritage" of British broadcasing. The statement reveals that the vandals have won—at least under this Government.

Mr. Hurd

The hon. Gentleman has fallen into the trap into which his right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) always falls. He has chosen to comment on inaccurate press reports about our proposals even though, by the conventions of the House, he has had a bit of time—not long, I admit—to study the proposals themselves. The hon. Gentleman has talked as though all the press reports were true. The next step, if precedent is to be followed, is that Mr. Des Wilson will write a learned article suggesting that I stimulated all the inaccurate press reports to lure the hon. Gentleman into the trap into which he has fallen.

The hon. Gentleman has ignored the three changes made on the quality threshold in response to comments on the White Paper. First, the quality threshold has been stiffened so that it is similar to the proposal in the Broadcasting Act 1981. Secondly, there will be the exceptional power of the ITC. It is exceptional—I have explained the circumstances—to award a franchise to other than the highest bidder. Thirdly, and most importantly, there will be the performance bond, which the hon. Gentleman did not mention. It will give the ITC a power that the present Independent Broadcasting Authority does not have, which is a flexible and powerful way to enforce the promises that have been made. The ITC will no longer face the criticism that all it can do is to remove the franchise, which is a power, like nuclear weapons, that is difficult to use. It will have conventional weapons with which to enforce promises.

The hon. Gentleman made two points about the news. It is clear in the White Paper that news will be a requirement and will have to be included in main time. Current affairs will also be a requirement, but there is no specific requirement about when current affairs programmes should be shown. It would not be reasonable to stipulate that in legislation.

I am glad that the hon. Gentleman welcomed our announcement about subtitling for the deaf. It is proposed that Channel 3 and Channel 5 licensees should, in the first year of the licence, provide 10 per cent. more hours of subtitling than was achieved on average by the ITV companies in the previous year. The ITC will thereafter set a reasonable target each year for an increase in subtitling.

Several Hon. Members

rose—

Mr. Speaker

Order. I remind the House that we have a busy day ahead of us with no fewer than 120 groupings of amendments and a ten-minute Bill. I shall allow questions on this important matter to continue until quarter to five, but then we must move on.

Mr. John Gorst (Hendon, North)

Will my right hon. Friend accept my welcome for his proposals, especially for the flexibility that he has shown? As many of the things that he has announced today are new, will he be open to further consultation on them with interested parties or are they now final until they are encapsulated in a Bill in the autumn?

Mr. Hurd

We have tried to listen, as was our duty, to the reactions to the White Paper and to reach a balanced reaction to them. Of course, people will continue to express views in the months ahead and it will ultimately be for both Houses of Parliament to reach conclusions. To that extent, our ears can never be shut. We have reached the conclusions that we think are sensible.

Mr. Merlyn Rees (Morley and Leeds, South)

The Home Secretary has made a most important statement to which he said that there were three main aspects, but I have a long list. Is there some way in which we can have a debate on this matter, Mr. Speaker, because we cannot go through it in the next half hour and believe that we shall then have dealt with it?

Professor Peacock, who produced the Peacock report was concerned about the issue of competitive tendering in the original proposals. Has he been consulted? Does the Home Secretary think that Professor Peacock would be content with the changes that the Home Secretary has made?

Mr. Hurd

On the first point, we have had a debate on the White Paper, and there will of course, be long debates on the Bill when it comes before the House. I considered whether to do this in a written statement but the Opposition would have protested if I had. I apologise again for the length of what I had to say.

Professor Peacock commented last week on the basis of press reports. We were in touch with him later in the week to explain that those reports were so incomplete as to be misleading. It is now for him to say what he thinks about the proposals.

Mr. Alick Buchanan-Smith (Kincardine and Deeside)

May I welcome what my hon. Friend the Member for Hendon, North (Mr. Gorst) said about Conservative Members welcoming the flexibility that our right hon. Friend has shown and the modifications that he has made? While obviously we want to follow through and work out the implications, especially of competitive tendering, does my right hon. Friend appreciate that those of us who come from areas with small, independent companies are still concerned because the present system has not worked badly in reflecting the quality and the character of those areas and we are left feeling nervous that price may still be the ultimate determinant of who gets the tender? Will my right hon. Friend bear in mind the financial position of those companies when compared with some of the large companies that serve the much more populated areas of this country? The possibility of a dual franchise, which would make competition more difficult, given the resources of those companies, means that we remain concerned. I hope that my right hon. Friend will consider that point a little further in relation to competitive tendering and price being the ultimate determinant.

Finally, we in Scotland very much welcome the fact that my right hon. Friend is removing the burden on companies in Scotland that have to pay for subsidising Welsh programmes when they already finance Gaelic programmes in Scotland. I thank my right hon. Friend very much for that.

Mr. Hurd

I am grateful to my right hon. Friend. I know of his anxieties because he has expressed them to me. We have had very much in our minds the anxieties of some of the smaller companies. That is very important. The decision has not yet been taken about transmission costs, which weigh heavily on a company such as Grampian. When we move forward to that consideration, we shall bear in mind what my right hon. Friend has said.

Mr. Robert Hughes (Aberdeen, North)

Will the Home Secretary accept that he has no need to apologise for the length of his statement, but much more need to apologise for the fact that it was nothing more than a vacuous homily? There was no substance in it. Why did he speak about "substantial, reasonable proportions"? Why did he not tell us what the performance bond will be? Why did he not say specifically that there will be no dual ownership? Why does he not say specifically that quality will be the real test when awarding the franchises, not cash?

Mr. Hurd

I thought that my statement was so precise and detailed as to verge on the tedious, but not on the empty. There is of course a limit to the extent to which Parliament or a Bill should decide all these matters in detail. Parliament is not the regulatory authority. We must leave a certain amount to the ITC, and I have explained exactly what that is.

The statement that I made some weeks ago about ownership was of a tight regime corresponding to the views expressed by many people, including the Opposition. We do not believe that it is right for the same franchisee, the same holder, to own two large companies or to own two companies that are next door to each other. But we do not exclude—I do not think it would be reasonable to do so, if we want the small companies to survive—the possibility of someone holding one large and one small franchise.

Mr. John Wheeler (Westminster, North)

My right hon. Friend has received much advice about the future of broadcasting, not least from the Select Committee on Home Affairs and its report on the future of broadcasting and the funding of Channel 4. I thank him for his generous remarks about my Committee's report and for the pleasure it gives members of the Committee to know that the financial guarantee is to be there to enable Channel 4 to continue with its diverse programming and important remit. May I ask my right hon. Friend to comment on why he has chosen a trust as opposed to option two?

In respect of Channel 3 licences, I appreciate his comments about preserving diversity and the tests that he now proposes. Will he agree that the reserve power given to the ITC must be firmly defined it it is to be effective?

Mr. Hurd

To answer my hon. Friend's final point, the House will wish to look at the wording carefully. We have not yet put it in statutory language. I have made it clear that it should be exceptional and that it should be public. One of the problems with the present system is that the decisions are like those of the oubliette—at one moment everybody is there, with the franchise holders all together, and at the next moment somebody has disappeared with no reason or explanation given and no redress. That is not, in our view, a satisfactory system.

To answer my hon. Friend's question about Channel 4, it was felt that there was a difficulty, familiar in other contexts, between having the same agency—in this case the ITC—owning and regulating Channel 4. So there should be a separation between ownership and regulation. But, equally, we decided, partly in the light of the report of my hon. Friend's Committee, that it would not be sensible to go for total privatisation—that is, option one—so we happened on the concept of a trust, which I think fits the need.

Mr. Charles Kennedy (Ross, Cromarty and Skye)

Is it not a fact that in the spheres of programme quality, diversity of choice and regional sensitivity the fatal flaw in what the Home Secretary has announced today, and to which others have referred, is the lack of definition in his statement? Phrases such as "public interest," "exceptional circumstances" and "quality thresholds" are not clearly defined. Indeed, in one case he tells us that they are to be the subject of judicial review. There is not much safeguard in that in terms of the awarding of franchises and the upholding of commitments given.

I particularly underscore the anxiety expressed by the right hon. Member for Kincardine and Deeside (Mr. Buchanan-Smith) about the future of the Scottish regional companies, for which there will be little reassurance because the Home Secretary merely expresses some sympathy for the sentiment that we should retain existing regions, if possible.

The bottom line of the right hon. Gentleman's statement is that the only cast-iron guarantees he has given are in terms of cash for the Treasury and business for the lawyers, with the interests of the broadcasters and viewers being out of sight, if not out of mind.

Mr. Hurd

The hon. Gentleman knows better than that. He knows that the phrases which he criticises are used constantly in the House and in Acts of Parliament. They are familiar to regulatory authorities and to the courts. The House will of course want to look at the phrases, and that is natural, but there is nothing particularly obscure or opaque about them.

As for the map, we propose—I hope that, on reflection, the hon. Gentleman will agree with this—that it is not sensible for the House or for the law of the land to set in concrete for ever the map of broadcasting companies. It is not there now in the law and it would be absurd to suppose that it would be sensible to put it in primary legislation. It should be left, as we propose, to the ITC, and therefore I chose my words carefully. We noticed with understanding that the chairman-elect of the ITC said—I think the hon. Gentleman would agree—that, as far as possible, he sees advantage in retaining the present map.

Sir Giles Shaw (Pudsey)

I warmly welcome the majority of the statement. I congratulate my right hon. Friend on listening so fully to all the representations. That is most welcome, especially in the context of matters such as broadcasting.

I wish to ask my right hon. Friend three brief questions. The first relates to the quality of assessment, which is now so crucial in the awarding of contracts. As he did not mention regional commitment, regional programming or regional viewers, will he comment on them? Secondly, with regard to the ITC's reserve power under a performance bond, will the bond be of a significant size relative to the areas in which it is located—for example, a smaller bond for the smaller companies in the smaller areas? Thirdly, has my right hon. Friend given any further thought to the ownership of transmitters and transmission? He will recall that that is a matter of considerable concern. While I accept the present point of view, there are considerable overlaps in the existing map to which, quite frankly, the transmission issue is linked.

Mr. Hurd

I am grateful to my hon. Friend, whose three questions are much to the point. The White Paper already gives a clear commitment to the regional content of Channel 3 programmes. What I announced today was in addition to that commitment and, for the first time, it includes a proportion of regional production. My hon. Friend is right to suggest that the size of the bond will be fixed by the ITC, but it will vary according to the franchise under discussion. We are considering transmission costs and the system of transmission. When we have decided what should be included in the Bill, I shall inform the House.

Mr. Bruce Grocott (The Wrekin)

Is the Home Secretary aware that he has said nothing to allay the genuine fear of virtually all those involved in broadcasting that he is presiding over a virtual collapse of programme standards? How will what he has proposed improve programme standards in any way? Will the competing companies have to publish their programme proposals in detail? How will the controlling mechanism work? How can it be that he rejects outright commercialism for Channel 4 as being in conflict with programme standards, but appears to think that outright and unbridled commercialism for Channel 3 will guarantee programme standards?

Mr. Hurd

I shall not repeat my answers to previous questions because the hon. Gentleman is simply repeating what his hon. Friend the Member for Birmingham, Erdington (Mr. Corbett) said and to which I have responded.

On the question of quality threshold, an applicant will come forward and after the ITC has given an illustration of what variety and diversity should mean for that particular franchise the applicant can put forward his proposals. The ITC will then judge whether the quality threshold has been passed, and, if so, the undertakings that have been given will be incorporated in the licence.

The question of commercialism and programme standards is a matter of balance. We are not suggesting that every channel should be like the BBC or Channel 4. We aim to strike a balance, with the BBC—which has not been dealt with today—remaining as the cornerstone, and with Channel 4 preserving its remit—under the arrangements that I announced today it can clearly preserve its remit, and that has been the issue—although with a lighter touch and an increased choice with respect to Channels 3 and 5. That is the balance that we seek to strike.

Mr. John Maples (Lewisham, West)

Is my right hon. Friend aware that he has gone a long way towards meeting objections both about the auction process for Channel 3 and the future of Channel 4? I hope that he will not pay too much attention to the Opposition's churlish and grudging response; they seem to be incapable of taking "yes" for an answer.

Will my right hon. Friend deal with one point that was not dealt with in his statement? Has he given any further thought to cross-media ownership and the restrictions on that with respect to Channels 3 and 5?

Mr. Hurd

I am grateful to my hon. Friend and to my right hon. and hon. Friends in general for their reception to matters to which many of them have devoted a great deal of thought. In a written answer last month I set out a rather complicated set of proposals on cross-media ownership, to which I refer my hon. Friend. If I were to attempt to repeat them out of my head, I might get some of them wrong. We accept the need for tight controls and restrictions on cross-ownership not only between holders of terrestrial franchises, but between holders of terrestrial franchises and the press.

Mr. Joseph Ashton (Bassetlaw)

Is the Home Secretary aware that the international hucksters will laugh at the idea of forfeiting a substantial bond? Is he aware that what he has announced is exactly what happened with TV-am —the ITV breakfast-time programme—which was launched with a fanfare of big names and all sorts of promises but rapidly deteriorated into trivia and trash once the Australians took it over? That is what will happen again. Faced with the prospect of putting on quality programmes that will not sell much advertising or trash that will, the hucksters will immediately forfeit the substantial bond to keep the franchises.

Mr. Hurd

Then they will not keep the franchises.

Mr. Roger Gale (Thanet, North)

Will my right hon. Friend accept that the discarding of the proposals to impose a levy will be most welcome and that the proposed alternative financial arrangements will be much more acceptable to the ITV companies? Will he accept, too, that the exceptional circumstances provision, under which, and only under which, any bid would be rejected by the ITC, will go a long way to meet many of the fears that have been expressed?

I shall ask my right hon. Friend three quick questions. Further to the question posed by my hon. Friend the Member for Pudsey (Sir G. Shaw), when my right hon. Friend defines the legislation for the quality threshold will he include specific reference to certain kinds of programming, particularly children's programmes?

Secondly, I am pleased that my right hon. Friend has announced the establishment of a public trust rather than any of the previous suggested options for Channel 4. However, does he really think that it is right for the independent companies, which will no longer have any vested interest in Channel 4, to have to underwrite Channel 4?

Thirdly, the announcement concerning ITV night hours is most welcome. May we hope that that line of thought will be extended to BBC night hours?

Mr. Hurd

I have a lot of sympathy with what my hon. Friend says about children's programmes. I believe that it will be difficult to specify in legislation all the different kinds of programmes which could make up variety, quality and diversity and, therefore, a good deal will have to be left to the ITC. However, that is a matter to which we shall certainly return.

I understand my hon. Friend's point about Channels 3 and 4. It is right that there should be some underwriting —limited, as we propose—of Channel 4 to ensure that the remit can be maintained. It is reasonable that the ITC should, as I suggested, draw to that limited extent on Channel 3. My hon. Friend will have noticed, however, that the safeguards are there.

I know my hon. Friend's view on the night hours, which is a matter that needs now to be considered. We have had many reactions to the original proposal, to which we must now turn our attention, and give the House our views when we can.

Mr. John D. Taylor (Strangford)

I welcome generally the Home Secretary's statement. It emphasises that, first, there will be greater transparency in the way in which licences are allocated to firms, and, secondly, that there will be greater competition. Will the Secretary of State consider the system that applies in the Republic of Ireland whereby those who—[Interruption]—yes, I am recommending something from the Republic of Ireland—whereby those who apply for licences must present their case and answer questions in public before the licensing authority so that the public at large have a greater idea as to the basis on which a licence is allocated?

On the question of competition, will the Secretary of State bear in mind that what has been said by colleagues from Scotland on both sides of the House about regional problems apply in Northern Ireland? We would not like to see dual ownership. We would like to see emerge a company that is truly representative of the traditions of Northern Ireland—Protestant and Catholic, Unionist and Nationalist.

Mr. Hurd

I have much sympathy with what the right hon. Gentleman said about Ulster television, which is important to the life of the Province. I note what he says about public hearings, but I am not sure whether it would be sensible to embody that as a requirement in legislation.

Mr. John Greenway (Ryedale)

Is it not clear from my right hon. Friend's statement that this is a Government who bring forward radical proposals for the benefit of consumers, take stock of comment from interested parties, listen and bring forward a reformed package in light of the representations made? I am sure that what my right hon. Friend has said will end a great deal of uncertainty within ITV currently.

Is my right hom. Friend aware that last week, at a symposium hosted by the Independent Television Association and chaired by Sir Alan Peacock, the concept of having a franchise awarded by competitive auction was considered feasible, provided there were adequate safeguards to prevent over-bidding? Is my right hon. Friend satisfied that the arrangements that he has introduced will achieve that objective? Does he further agree that, with the Channel 3 franchises, it will be much better to leave maximum flexibility in the hands of the ITC when drafting the legislation rather than specifying far too much and thus creating a straitjacket?

With regard to Channel 4, has my right hon. Friend given further consideration to the question of cross-promotion of Channels 3, 4 and 5?

Mr. Hurd

I am grateful to my hon. Friend for his initial remarks, with which I agree.

We need to consider the cross-promotion point, but it is difficult to lay it down in legislation. I have said something about the cross announcements that will be necessary between Channels 3 and 4.

Several Hon. Members

rose—

Mr. Speaker

Order. I shall allow 10 minutes more on this statement. I shall do my best to call those hon. Members who are rising, providing they ask brief questions.

Mr. Mark Fisher (Stoke-on-Trent, Central)

I recognise that the Home Secretary has listened to and even accepted much of the critical evidence he received on the White Paper. He has failed to act, however, on some of the crucial points precisely because he still seems reluctant to define his terms. Will he tell the House what the exceptional circumstances are under which the chairman of the ITC can refuse the highest bid?

On specific programme requirements, does my right hon. Friend accept that the only way to ensure quality and diversity of programmes, covering children's programmes, documentaries, religious and educational programmes, is the current written detailed requirements? The general terms that he is continuing to propose are wholly inadequate and will not ensure such quality and diversity.

Mr. Hurd

I do not think that I can define exceptional circumstances, and it would be absurd to do so in advance. The House will note that there is a double instrument of control; an instrument in the hands of the ITC, and an instrument in the hands of the Secretary of State acting on the recommendations of the ITC. The Secretary of State could act if, for example, money went into a bid which did not amount to foreign control—we could deal with that otherwise—but which might generate interests that were clearly hostile to this country or might mean that, in a particular part of our country, arrangements would be set up that would be clearly contrary to the public interest. It is reasonable to have both instruments.

There will be nothing vague in the franchise terms. They will be worked out in some detail and written down. The ITC will have substantially greater powers than the existing IBA to ensure that those terms are effectively enforced.

Mr. John Redwood (Wokingham)

Does the Home Secretary agree that during the winter ITV1 took a lot of the market share away from BBC1 through investment in good quality drama and that that was a good commercial decision as it enabled ITV to sell its programmes abroad? Does he agree that the conclusion to be drawn is that there is no necessary conflict between quality of programming and the pursuit of commercial opportunity? With the growing sophistication of the audience, the two often go together.

Mr. Hurd

I am glad that my hon. Friend made that point. I am familiar with the argument that some of the ITV companies, if driven too hard, will spend much less money and produce cheap programmes only. I noticed from press reports that when those companies began to feel the wind a bit their reaction was to spend more on higher quality programmes.

Mr. Rhodri Morgan (Cardiff, West)

Does the Home Secretary accept that our criticisms are not churlish but are based on the fact that some of us have television organisations within our constituencies? We are well aware that when the right hon. Gentleman lined up with George Russell and the ITV companies in their criticisms of the auction system, he was attacked by Right-wing ideologues, clustered around 10 Downing street. Despite his agonised squeal, "Get your tanks off my lawn", he has lost the battle, even though he has won some small victories which he has announced with great pride this afternoon.

In the main, the questions that he has said will be asked are these: "Have you got the capital?", Not "Have you got the talent?, and "What are you going to make?" which is 28.5 per cent. not good programmes.

Mr. Hurd

I do not recognise the hon. Gentleman's description of the very workmanlike discussions which we have had inside Government on this matter, nor, I think, will the House when hon. Members have studied what I have said. The hon. Gentleman misses the essential point. It is a double process. An application will come forward with programme plans and ideas to pass the quality and variety threshold. It is only after an applicant has done that—and it will be more difficult, it will be a higher test, as a result of today's announcement—that the length of his purse will become relevant.

Mr. Tony Baldry (Banbury)

Does my right hon. Friend agree that, with the franchise going to the highest bidder subject to a much strengthened overriding quality test and the ability of the Independent Television Commission not to award the contract to the highest bidder if it feels that that bidder is incapable of delivering the quality, we shall have a much simpler, clearer, fairer and more straightforward system of awarding franchises than the present somewhat opaque and oblique system? Do not the changes that my right hon. Friend has announced this afternoon demonstrate that he has clearly listened to what people have been saying over the past few weeks?

Mr. Hurd

I have tried to listen; I have not had very much option but to listen. We certainly have listened hard and tried to respond generally. I agree with what my hon. Friend said and would simply add something about the performance bond, which has not appeared in any of the press leaks. It will be a very important technique in helping the ITC to enforce quality.

Mr. Tony Worthington (Clydebank and Milngavie)

The announcements which the Home Secretary has made today are all very welcome and in the right direction, but the right hon. Gentleman will never get to the correct destination unless he abandons the original assumptions of the broadcasting White Paper. Praise has been lavished upon the Home Affairs Select Committee's report, which says that both ITV and BBC should have public service broadcasting traditions at their heart and that that would safeguard the system. Will the Home Secretary now accept that that was the correct recommendation and should be accepted?

Furthermore, will the Home Secretary think again about the situation in Scotland? It would be simply intolerable if the House did not have a say on the number of stations within Scotland and a Government-appointed quango was able to recommend that there be only one station within Scotland. Will the Home Secretary guarantee that the present three stations, or something very similar, will be maintained?

Mr. Hurd

The hon. Member talked about the original assumptions. The original assumption in the White Paper is that there is now an opportunity for a very big choice for the viewer. Instead of sitting on that and saying that they cannot have it because we are not sure that they would make the best use of it, we are trying to provide a framework within which the viewer can have increasing choice. We believe that, particularly as a result of the conclusions we have just come to, we can reconcile that with high quality. The hon. Gentleman is asking for something which has never existed before and which probably, on reflection, the House would not want—that the map should be settled by the House. It never has been before. There have been major changes in the past conducted and put through by the IBA. I do not think that it is a matter for primary legislation, and I have set out the present position.

Mr. Robert G. Hughes (Harrow, West)

Does my right hon. Friend accept that his announcement today that subtitling for the deaf and hard of hearing on Channels 3 and 5 will be mandatory and will be increased in the first year by 10 per cent. will be greeted as an enormous milestone and that there will be great thanks to him from that community for what he has done? Is he able to tell the House today what he regards as the next milestone in this and what pressure there will be on the ITC to ensure that the 10 per cent. increase does not become the entire increase?

Secondly, will my right hon. Friend accept that it would be thought wrong if the logic that has led him to announce today that the night time hours of Channel 3 will stay with the franchise holder for the day time did not lead him to leave the night time hours of the BBC with the BBC?

Mr. Hurd

My hon. Friend is right on his first point; we foresee a steady build-up of subtitling year by year. I note what my hon. Friend said on his second point. We have set out in the White Paper our notions about the BBC night hours and have noted the reaction. We have not yet turned to that matter, but we will have to do so.

Mr. John McAllion (Dundee, East)

The Home Secretary has said that he is in favour of increasing choice. Does he not accept that real choice for viewers will be diminished if small, locally based high quality companies such as Grampian Television do not survive? Why can he not assure the House that the exceptional power of the ITC to award a franchise to other than the highest bidder will be used to ensure the survival of companies such as Grampian?

Mr. Hurd

I do not think that it would be sensible or right to give any such assurance. I know the loyalty which the small companies attract from their viewers, and indeed from their Members of Parliament who live within their areas. That has been clear throughout these debates. However, I question whether the hon. Gentleman would be wise to suggest that the decisions about the map of television franchises should be enshrined in statute.

Mr. Speaker

I am sorry that I have not been able to call the remaining two hon. Members, but we have a very busy day ahead of us.