APPLICATIONS FOR LICENCES FOR LOCAL DELIVERY SERVICES (Hansard, 8 May 1990)

HC Deb 08 May 1990 vol 172 cc126-36 126

§ .—(1) Where the Commission propose to grant a licence to provide a local delivery service, they shall publish, in such manner as they consider appropriate, a notice—

(a) stating that they propose to grant such a licence;
(b) specifying the area or locality in the United Kingdom for which the service is to be provided;
(c) inviting applications for the licence; and
(d) stating the fee payable on any application made in pursuance of the notice.

§ (2) Any application made in pursuance of a notice under subsection (1) must be in writing and accompanied by—

(a) the fee specified in the notice under paragraph (d) of that subsection;
(b) where appropriate, the applicant's proposals for providing a service that would—

(i) cater for the tastes and interests of persons living in the area or locality for which it would be provided or for any particular tastes and interests of such persons, and
(ii) broaden the range or programmes available to persons living in that area or locality;

(i) the parts of the area specified under subsection (I)(b)(i) which would be covered by that service,
(ii) the timetable in accordance with which that coverage would be achieved,
(iii) the technical means by which it would be achieved, and
(iv) the extent (if any) to which he proposes that the provision of the service should be undertaken by some other person in accordance with section 67(5); and
(c) such information as the Commission may reasonably require as to the applicant's present financial position and his projected financial position during the period for which the licence would be in force.

§ (3) At any time after receiving such an application and before determining it the Commission may require the applicant to furnish additional information under subsection (2)(b), (c) or (d)'.—[Sir P. Blaker.]

§ Brought up, and read the First time.

§ Sir Peter Blaker (Blackpool, South)
I beg to move, That the clause be read a Second time.

§ Mr. Speaker
With this it will be convenient to take the following amendments:
No. 217, in page 52, line 13, leave out clause 68.
No. 218, in clause 68, page 52, line 32, at the beginning insert 'Subject to subsection (2A),'.
No. 219, page 52, line 36, at end insert—
127 '(2A) The Commission shall specify a nil percentage under subsection (1)(d)(iii) in relation to any accounting period for which the qualifying revenue of the applicant would be insufficient to provide a return on the initial capital costs incurred by him in providing the service. (2B) For the purposes of subsection (2A), the Commission shall draw up, and from time to time review, a statement setting out the principles to be followed in ascertaining in relation to any person providing a local delivery service—

(a) the initial capital costs incurred by him in providing the service, and

(b) the depreciation, payments in respect of interest and other matters to be taken into account in respect of any accounting period of his in determining whether a return on those costs has been received by him in relation to that accounting period.'.

No. 356, in page 52, line 44, after `service', insert 'and the provision proposed by the applicant for the reception and immediate transmission of the programmes included in the television broadcasting service provided by the BBC (and Channel 4 and S4C) for reception in that area'. No. 220, in clause 69, page 54, line 2, leave out 'in accordance with section 68'.
No. 221, in page 54, line 3, leave out from 'licence' to 'unless' in line 4.
No. 357, in page 54, line 10, after 'and', insert— `(d) that any telecommunications system proposed provides for the delivery of BBC–1 and 2 (and Channel 4 or S4C) services (as appropriate)'. No. 222, in page 54, line 15, leave out lines 15 to 18.
No. 80, in page 54, line 31, leave out clause 70.
No. 224, in page 56, line 10, leave out clause 71.
No. 358, in clause 75, page 59, line 22, at end insert— '(3A) A local delivery licence shall include a condition requiring the licence holder to provide services on BBC-1 and BBC-2 (and Channel 4 or S4C, as appropriate).'. No. 359, in page 59, line 26, after 'subsection (3)', insert `or subsection (4)'.
No. 216, in schedule 10, page 177, line 46, at end insert— `(4) Without prejudice to paragraph 2 of Part II of this Schedule, where any licence continues in force by virtue of sub-paragraph (1), it shall be treated for the purposes of section 72 as if it were a licence under Part II of this Act to provide a local delivery service for the area in which the prescribed diffusion service has been provided, and that section shall apply in relation to such a licence as if—

(a) for subsection (1) there were substituted—

"(1) When a licence continued in force by virtue of paragraph 1(1) of Part II of Schedule 10 to this Act expires, its holder may apply for the grant of a local delivery licence under this section for a period of 15 years beginning with the date of the grant of that licence.";

(b) for any reference to the renewal of a local delivery licence or to an application for such a renewal there were respectively substituted a reference to the grant of such a licence or an application for such a grant;

(c) for the reference in subsection (2) to the date on which the local delivery licence would otherwise cease to be in force there were substituted a reference to the date on which the licence in question would otherwise cease to be in force;

(d) in subsection (4), after the word "grant" there were inserted the words "(other than under this section)";

(e) in subsection (5), paragraph (b) were omitted;

(f) in subsection (6)(b) the words from "specify" to "the" in line 2 were omitted; and

(g) in subsection (7), after the word "granting" there were inserted the words "(other than under this section)".

128 (5) Section 75(3) and (4) shall not apply in relation to a local delivery licence granted by virtue of sub-paragraph 4, but otherwise Part II of this Act applies to a local delivery licence so granted as it applies to any other such licence granted under that Part.'.

§ Sir Peter Blaker
The new clause and the amendments are about cable television, which was little discussed in Committee. I have to declare an interest in the subject as chairman of a company which has six cable franchises but does not aspire to obtaining any more. I wish to refer to three topics which are the subject of different amendments in the group.
New clause 21 is about the franchising proposals. After the Bill comes into force, those who seek to obtain franchises, which until the end of this year will be called cable franchises, will follow a system similar to that provided for Channel 3—they will have to make competitive bids and be prepared to pay a percentage of qualifying revenue. The franchise holders will be called local delivery operators and will have a choice of technologies other than cable. That is in contrast to the existing cable operators, who are obliged to use cable and to cover their entire franchised area.
That new system will be in contrast to the present arrangements which are based on a judgment by the Cable Television Authority of the merits of different applicants with the background of section 7 of the Cable and Broadcasting Act 1984 which sets out various criteria which the cable authority is to apply.
Is the new proposed method of obtaining franchises worthwhile, because by the end of this year most of the urban parts of the United Kingdom will already have been franchised? Only 13 areas with more than 20,000 homes will not have been franchised. That is a very small number compared with the 14.5 million homes that will have been franchised. That 14.5 million represents about 80 per cent. of homes in urban areas in the United Kingdom. By the end of this year 136 franchises will have been awarded.
I should like to take this opportunity to pay tribute to the cable authority, which has worked at a speed at which nobody could have anticipated. It franchised 50 new areas last year and will franchise nearly that number this year, although in practice it will be able to use only part of the year. The chairman, Mr. Richard Burton, and his team and the director-general, Mr. Jon Davey, and his officials have done an admirable job.
Will there be sufficient applicants for the areas that will still be available? I am not sure that with the new system, which involves payments for obtaining franchises, a sufficient number of people will come forward.
The message that is being conveyed to the cable industry by the new provisions involving several kinds of payment has not been entirely well received. There is a feeling in parts of the cable industry that they may suggest that the Government's attitude towards the industry is becoming less enthusiastic. I hope that my hon. and learned Friend the Minister will be able to give the industry some reassurance, and if he is able to meet me on amendment No. 216 that will give a positive message to the industry.
10.30 pm
The new clause assimilates the franchising process for local delivery operators to the system for local radio operators. Both will be operating locally, which is the whole concept of the cable industry. It is reasonable that 129 the franchising system of the two should be put on a par. The alternative would have been to have tabled a new clause or amendment that would have assimilated the method of franchising after the Bill comes into force to the existing system—that is, simply to continue the existing arrangements of the Cable Television Authority. I was advised that that would have been extremely difficult to draw up, so I have adopted the alternative method of assimilating it to the system for local radio, which has given rise to this debate.
There would be no serious disadvantage to revenue if one or other of the proposals were accepted, given the trifling number of areas still to be franchised, and it would be possible to retain for the purposes of the renewal process a system involving payment of the cash bid and payment of a proportion of revenue, so there would not be a significant revenue loss.
Amendment No. 219 relates to the requirement for the local delivery operator to pay a proportion of revenue. The Bill already says that the ITC may set that proportion of revenue at zero for a local delivery operator. The industry would like to see a provision on the lines of amendment No. 219, which says that the ITC would be obliged to set the proportion at zero until a company had reached the point where it was making a profit. It seems bizarre to the industry that there should be a requirement to pay a proportion of revenue when, at present, no company in the cable industry is even making a profit, so large are the expenses of constructing the cable system.
Amendment No. 216 is the most important of the three amendments. The renewal system for the local delivery operator in the Bill will mean that at the end of 15 years the incumbent operator will be able to make a direct arrangement with the ITC for renewal—for a further 10 years under the Bill or for a further 15 years as proposed in Government amendment No. 179, which we shall discuss later. The local delivery operator will be able to make a direct arrangement with the ITC for renewal if he is prepared to pay the sum that the ITC regards as appropriate for that purpose and provided, of course, that the local delivery operator has conducted himself correctly and has observed the conditions of his licence.
The provision in the Bill for renewing the franchise held by a cable operator is less favourable because the cable operator will not have the option of making a direct arrangement with the ITC. He will be obliged to go out to competitive tender, involving a competitive bid, and also to pay a percentage of revenue. The existing cable operators are worried because such requirements are unpredictable and hazardous for them. Even if they have been excellent operators and conducted themselves impeccably for the 15 years of their franchise—even if they have kept to every clause in their licence and observed it scrupulously—they will still be at risk of being outbid by a newcomer who may plan to install the microwave system or lease another telecommunications system from some other operator. They will then not be able to renew.
The House may feel that that is too bad for the incumbent operator who loses out. But the problem is that the cost of installing a cable system is so enormous that the normal projections of existing cable operators show that, if everything goes well, at the end of 15 years—the licence period that most of them will have—they will only just be repaying their debts. They do not expect to be in profit after operating expenses, depreciation and interest payments until at least year seven—again, if everything 130 goes well. The amounts involved are colossal. At a rough estimate, it costs £300 million to lay cable past 1 million homes. A little calculation will show us that the sum that the cable industry is expecting to invest over the next 10 years exceeds £4,000 million. Most of that money will come—if it comes—from the United States, Canada or France because the British investor has not yet caught on to the possibilities of the cable industry.

§ Mr. Rupert Allason (Torbay)
Would my right hon. Friend be kind enough to tell the House whether those estimates are based on conventional cabling or on using the new wireless cabling on a microwave system, which is much cheaper?

§ Sir Peter Blaker
No. My figures are based on the use of cable—whether fibre optic or coaxial—which in general has to be laid underground.

§ Mr. Ray Whitney (Wycombe)
Interactive.

§ Sir Peter Blaker
As my hon. Friend points out, such cabling has the enormous advantage that not only can it provide one-way entertainment, whether on national, international or community channels—and community channels are important; it also has interactive capabilities and can therefore provide alarm systems of all kinds, home shopping and banking facilities, press-button voting, video, jukebox systems and a whole range of other interactive services, as well as better and cheaper telephone services. A microwave system could not do most of those things.
The enormous burden of cost that the cable industry has to bear—the huge sums that it has to lay out before it gets a return—and the fact that it does not expect even to pay off its debts for 15 years at best make the proposal so important.
What we need in Britain is the maximum speed of investment by the cable companies and maximum confidence on the part of the cable companies. The industry has been dismayed by the apparent discrimination against it as compared with the licensed delivery operators in the provisions of the Bill dealing with the system of renewal. In my view, we need a system that will provide greater assurance—although there cannot be any promises—to the cable operator that, if he observes the conditions of his licence, performs satisfactorily and is prepared to pay the appropriate sum, he will be able to renew and thus make a profit which he certainly will not have made before year 15.
I have had a great deal of correspondence with my hon. and learned Friend the Minister of State and with Ministers in general. I have taken representatives of the cable industry to see him, accompanied by my hon. Friends the Members for Wycombe (Mr. Whitney) and for Swindon (Mr. Coombs). We have had co-operation from my hon. Friend the Member for Gosport (Mr. Viggers), and we have had close consultation with members of the industry. We took 10 representatives of the industry— representing about £2,000 million of investment—to see my hon. and learned Friend recently. We appreciate the time that he gave us when he had many other preoccupations with prisons, quite apart from his cable responsibilities.
We suggested that the solution to the problem is to align the two systems of renewal with one another to provide the same system of renewal for the cable operator 131 at the end of 15 years, as is available to the local delivery operator. There would be no loss to the Treasury by that adjustment because the amount to be paid would be assessed by the ITC as being the amount that would be paid as a result of a contested bid, and there would be no loss of principle.
There are other points that I could make in support of the proposition, but I shall not make them because I hope that my hon. and learned Friend the Minister of State will be able to give me an encouraging response. The industry is not asking for any privileges. It is proposing a fair and common-sense solution. The industry holds out the possibility of great benefit for this country by way of infrastructure, technology and inward investment. I hope that my hon. and learned Friend the Minister of State will be able to give me an encouraging response.

§ Mr. Mellor
I am most grateful to my right hon. Friend the Member for Blackpool, South (Sir. P. Blaker) for the way in which he has spoken. As he said towards the end of his speech, there has been intense discussion about the impact of the Bill on cable interests. I am aware, as are my colleagues, that this is an important time for the development of cable in this country, which took off— perhaps that is the wrong metaphor—or failed to dive underground quite as quickly as some had hoped in the early 1980s, in the immediate aftermath of the Green Paper and the Bill, but which has now shown a considerable figure not least because of the very substantial sums that are in the process of being invested from North America. Of course we welcome that investment. I am desperately anxious that we should not do anything to put that investment in jeopardy.
My right hon. Friend has been stalwartly supported by a group of our hon. Friends in his representations. I am glad to see many of them in their places tonight. My hon. Friend the Member for Swindon (Mr. Coombs) was on the Committee and raised these points regularly. My hon. Friends the Members for Wycombe (Mr. Whitney) and for Gosport (Mr. Viggers) have spoken to me privately and in more formal meetings of the importance of our reconsidering some aspects of the Bill so that we do not, by a side wind, blow away some of the investment that is ready, at long last, to carry the cable revolution forward.
Many of the amendments deal with the granting of local delivery licences. For a variety of reasons that I shall not rehearse given the hour, I am not persuaded that what we propose is deficient, although, obviously, my right hon. Friend may wish to continue to press his points, and there are further stages of the Bill to go through. However, he pointed out, and it is undoubtedly the case, that particular attention has been paid by industry in its representations to the renewal of cable licences. Particular concern was expressed about the impact of the arrangements that we propose for a competitive tender framework on investment in the industry.
My right hon. Friend was kind enough to say that he regarded that as the most important point that he was making tonight. I am glad that he said that because as a result of the points that he and his colleagues made, in particular at the meeting at the Department—at which representatives of most of the leading cable companies came, under his leadership, to discuss these matters and at which I was able, perhaps for the first time, to focus 132 exclusively on these points and to give them the most intense personal consideration—I am happy to tell him that I can accept in principle his amendment No. 216.
Having had the opportunity of consulting colleagues, we can agree that provided a cable operator who retains his existing status performs satisfactorily, he should be able to renew his licence under the clause 72 procedure, rather than under the arrangements that were originally proposed in the Bill. I shall explain why we have arrived at that conclusion.
10.45 pm
First, it would be unfortunate if the provisions of the Bill, albeit unintentionally, deterred the major investment that is now coming forward in the cable industry. I am persuaded by my right hon. Friend's arguments that investor confidence would be dented if the Bill were not amended as he proposes. Secondly, given the huge investment required to construct a cable system and the long payback period, it seems right that operators should enjoy a reasonable certainty of tenure, provided that they perform adequately. That is the key point that registered firmly with me during the long but eminently worthwhile meeting.
My right hon. Friend's amendment No. 216—I mean no criticism by this—is not drafted as parliamentary counsel would wish. If he will agree to withdraw it, I undertake to bring forward a professionally drafted amendment that will have the effect of accepting the thrust of his amendment in all material particulars.

§ Mr. Darling
The right hon. Member for Blackpool, South (Sir P. Blaker) spoke fairly of the difficulties being faced by the cable industry. He will concede that what he is asking for, and appears to have got, are to some extent concessions for the industry. That being so, we are entitled to ask, as consumers or hon. Members, what is the quid pro quo. What are we getting for that?
Although, as he said, most of the country has been franchised, not much else has happened. The extent of cabling in this country is very limited indeed, and nobody can contradict that. After my election, being aware that my city had been franchised, I began making inquiries to discover where the cable television was. Eventually I found out who had the franchise and had a long meeting with those concerned. They spent much time telling me why Edinburgh had not been cabled and was not likely to be cabled for some time, or at least not to any extent.
I appreciate the difficulty in digging up the streets of a city and laying cables. Cabling the country has much to commend it, provided that it is not just providing the capability of carrying a narrow range of services. It was interesting to note a reply given by the right hon. Member for Blackpool, South to an intervention by his hon. Friend the Member for Torbay (Mr. Allason) about the type of cable. He talked about the infrastructure that could be provided for the nation in telecommunications and so on.
That is useful, and any city that had that capability would be at an advantage compared with other cities. But unfortunately that has not happened. If the Government are now telling the franchise-holder, "Provided you have done nothing wrong, you can get the franchise without having to go out to competitive tender," I am entitled to ask, "What has happened in the last 10 years while you 133 have had the franchise? Where is the cable? Who has the service? Only a few high rise flats have the ducting to carry it, or are others to benefit from it?"

§ Mr. Mellor
A dose of scepticism does no one any harm —but, with great respect, the hon. Gentleman must bear in mind that clearly the only people who would qualify for renewal on the terms that I have stated would be those who had fulfilled their obligation and had cabled in accordance with their franchise. Anyone who had failed to cable would not be entitled to such a renewal. That is a fair point.

§ Mr. Darling
It all depends on the extent of the cabling and the exact terms of the franchise. Without seeing the terms, it is difficult to comment on them. I think that I am entitled to be sceptical, as I suspect that many people are, about how much cabling will take place, especially with the coming of satellite television. Other options are now open to people that might be seen as more attractive. I do not know whether such options would be more attractive. I hope that I am proved wrong. I believe that cabling has a great deal to commend it. All that I am saying is that I am entitled to be sceptical because a great deal has not happened up and down the country, with a few exceptions.
Even though the country has been "franchised", as the right hon. Member for Blackpool, South put it, few people can watch cable television. If the Government intend to offer this concession and this carrot they should also provide a stick to ensure that the companies get a move on and do not simply sit on a franchise and hope that conditions will improve somewhat to make things more attractive to them.
Some aspects of the right hon. Gentleman's new clause 21 are attractive. I am attracted to the requirement that the operator cater for the tastes and interests of people living in the area. It would be necessary to show how the proposed service would add to the services already provided. That is a wholly welcome step that has been absent from other aspects of the Bill. The right hon. Gentleman should also seek other concessions for new entrants, such as not having to pay the deposit or other payments in respect of the franchise unless there is a clear commitment over a given period to put something under the ground to ensure that services are delivered.
To that end, the Opposition have tabled one amendment and a consequential amendment which would require the cable to carry existing television services. We tabled that amendment simply to ensure that cable was not capable of carrying only a narrow range of services, rather than a wide range. We must consider more than the narrow interest of commercial companies—without criticising such companies. There is a wider interest, both of the country strategically and of individual towns, cities or localities, in ensuring that they have a cable system that can be developed and used, not something of marginal interest to the population as a whole.
I understand why the right hon. Gentleman has tabled his amendment. He has cause to be well pleased with his work. He has at least gained something from it. I am worried that we should be invited to approve the amendment without having anything to show for it. I should hate to think that the next time that we come to discuss cable television, whether in a future Broadcasting Bill or some other vehicle, we find that things have not moved on. I understand the industry's problems. Perhaps 134 the Government should have done something earlier to ensure that help was given. Leaving it to the industry does not seem to have done much good. An opportunity seems to have been passed by. I remain deeply sceptical, despite what the Minister said, that the concession made tonight will greatly improve the position.

§ Mr. Rowlands
I wish briefly to underline the points made by my hon. Friend the Member for Edinburgh, Central (Mr. Darling) from the Front Bench. No one wants to interfere with the genuine cosy concession that has been made perfectly properly between the Minister and the right hon. Member for Blackpool, South (Sir P. Blaker). However, broader issues are raised not only by new clause 21 but by our amendment, including the dose of scepticism to which the Minister referred during the speech of my hon. Friend.
The quality of Committee stages is that sometimes one is educated by them. I had not given much thought to cable television until I listened to the arguments on cabie in Committee. The first thing that came clearly to one's mind was that the British investment community has been a hopeless failure in cable television. It has required a combination of the United States and Canadian investment cavalry to come over the hillside and invest in British cabling. It has not been a British effort in any shape or form.
The second factor that has struck me more and more is the point made with great force by my hon. Friend the Member for Edinburgh, Central that in geographic terms —I make no apology for referring to the Principality—we are entitled to be sceptical about the extent and scope of the choice that is to be offered as a result of cabling. The answer to many of the problems in the communities that I represent, and many other Welsh communities, may be cabling, but there is no hope of or opportunity for investors coming in to do what needs to be done, to create the choice and opportunities in broadcasting that the Minister claims the Bill is all about. I ask the Minister again whether the nature, structure and character of the operations that we are setting up will achieve the result that we all want—maximum choice, diversity of programmes and, primarily, cabling.
There is much confusion at present about what exactly the law is on the matter. In my own valley community there is a major fibre optic line up through the valley as a result of British Telecom's investment. As I understand it, British Telecom cannot diversify that fibre optic line into other services. Equally, it has no interest in promoting anybody else's line, because the other investors would be interested only in competing with British Telecom's services and telephones.
We should all ask how valley communities such as mine, with 20,000 plus households—which could enjoy the benefits of cabling and, by a co-operative rather than competitive effort, maximise the investment available—can achieve the results we all want: opportunity, choice and diversity. In that respect, I support amendment No. 358, which proposes that any cabling should carry the main stream channels, including S4C. I cannot believe that in a multi-channel system anybody in his right mind would not want to carry S4C or any other existing operating channel.
My worry over this matter is like my concern over Channel 5, that the communities that I represent will miss out on the other alternative and opportunity to provide a 135 multi-choice broadcasting system. I have broader concerns than those in the perfectly proper cosy debate between the right hon. Member for Blackpool, South and the Minister on new clause 21. We have a right to say that investors have failed to develop cable television. That can be compared to the German experience, where the German post office, through the state, built a nationwide multi-cable system to almost every community. The German equivalents of the sort of communities that I represent are being cabled by a state post office system, in a much-prized and much-vaunted capitalist society.
I believe that we shall get it wrong and fall between two stools. The private investor will not do it and, under this Government, the state is not willing to give the matter any push or assistance. There is a strong case for challenging the fundamental principles and the basis on which cabling and its future is presently organised.

§ Sir Peter Blaker
I notice that the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) is, in effect, saying that the state should take the risk. That is not a proposition that will attract many of my hon. Friends because this is a risky business. That was the point that had been missed by the hon. Member for Edinburgh, Central (Mr. Darling). He complained that very little was happening in the cable industry. As my hon. and learned Friend the Minister said, the progress of the cable industry has been slower than was expected in 1983 and 1984, when it was launched in its broader band form. One reason why it has moved slowly is lack of programmes. That is being remedied by Sky and by BSB, which has only just come on stream with five extra channels. That will be very helpful.
Another reason was the lack of know-how about how to run a cable system effectively. Several enterprises made the mistake of not calling in advice and skills from north America. That is being remedied. It is worth pointing out that the percentage of homes signed up by the British cable industry is as satisfactory as was the position in north America generally at a comparable time in the development of its systems, which are now doing very well.
The main reason why there are not many cable companies yet in operation is simply the time scale. The north American interest has developed only since the middle of 1988. Those who understand the cable system will know that from the time the idea of advertising an area is mooted publicly by the cable authority until the time the successful applicant for the franchise is able to start laying a cable is well over a year, if not about 18 months. So there has not been time for the great mass of cable companies which have been franchised since the middle of 1988 to achieve much. One hopes that with extra competence and experience that will change quite rapidly.

§ 11 pm

§ Mr. Darling
Perhaps the right hon. Gentleman could tell us when the expansion of the cable industry will take place. I accept that there is a risk, although there does not seem to be much risk in getting a franchise and not doing anything with it for six or seven years. He said that it takes 136 about 18 months for things to start happening. He has told us something that I for one knew: that the Americans took an interest in the middle of 1988. On any view there should be some activity now. Some of us have yet to see it.

§ Sir Peter Blaker
There is activity. I do not know how closely the hon. Gentleman has followed the industry. I am beginning to suspect that he does not know much about it; no doubt that is an unworthy suspicion, but from what he is saying, it is bound to arise.

§ Mr. Simon Coombs (Swindon)
Can my right hon. Friend confirm that 10 franchises are constructing and that seven have begun operation in the last year?

§ Sir Peter Blaker
That is certainly true; indeed, my information is that the figures are higher.
I find it strange that the hon. Member for Merthyr Tydfil and Rhymney appeared to object to the fact that investment is coming from overseas. I do not know whether he has a Japanese motor manufacturing plant in his constituency. There are some in Wales. I have not heard many objections from those who are situated close to such plants.

§ Mr. Rowlands
Obviously the right hon. Gentleman was not listening to what I was saying. I did not denigrate overseas investment. I thought it a sad and salutary comment upon British short-termism that City investors do not support the cable industry. Perhaps the climate of investment, including interest rates, does not allow City investors to think two or three years ahead. Curiously, overseas investors take a long-term view. What case is the right hon. Gentleman making?

§ Sir Peter Blaker
If that is what the hon. Gentleman believes, I go a long way with him. I think the City of London is making an enormous mistake. It should regard investment in the cable industry in the same way as British investors regarded the construction of railways 150 years ago or the electricity industry around the turn of the century. We are talking about a long-term investment of a utility nature. The City of London has not yet caught on to that proposition. I think it will regret that in due course.
The hon. Member for Edinburgh, Central asked what the stick would be. The ITC will have power to withdraw a franchise if the franchise does not perform satisfactorily. The Cable Television Authority threatened a number of companies, which had not started to build after a certain delay, with the withdrawal of their licences. Their licences were not withdrawn because in each case an investor came in at the last minute to start construction. So there is power to withdraw the licence from a non-performer.
The biggest stick of all is risk. This a risky business and a great deal of money may be lost if the industry does not succeed. I am not suggesting that anybody should be able to get a franchise without a competitive tender system. I am simply suggesting that the arrangements for renewing a cable operator's franchise should be the same as those for a licensed delivery operator. That seems eminently fair.
In view of the Minister's assurances, I beg to ask leave to withdraw the motion. I hope that the Minister will look sympathetically at my other two points.

§ Motion and clause, by leave, withdrawn.