HC Deb 08 May 1990 vol 172 cc60-77

'(1) The Commission may authorise agreements made by holders of regional Channel 3 licences for the purpose of securing co-ordination in the production, supply and scheduling of programmes for regional Channel 3 services.

(2) Any authorisation under this section shall be given by an instrument, published in such manner as the Commission consider appropriate, specifying—

  1. (a) the name of every person party to the agreement, and
  2. (b) such particulars of the agreement as they consider it appropriate to publish,
and may be given for such period as the Commission may specify in that instrument.

(3) The Commission, after affording the parties to an authorised agreement reasonable opportunity of making representations to them, may by instrument published in like manner revoke the authorisation given to that agreement under this section.'.

Amendment No. 705, in clause 16, page 14, line 16, at end insert— '(dd) that a sufficient proportion of the programmes so included are related, by their source or otherwise, to arrangements authorised by the Commission under section [Networking] for securing co-ordination in the production, supply and scheduling of program-mes for regional Channel 3 services.'

5.45 pm
Mr. Maclennan

The need for a network was discussed extensively in Committee but, although hon. Members on both sides acknowledged the importance of having an agreement, the Bill makes no provision for such a requirement to be underpinned in statute; indeed, it does not provide for such an arrangement at all.

The importance of a network was perhaps best summed up by TV South which said: Each constituent part of ITV would be the weaker without a network. The absence of a network, far from strengthening regionalism in television, would seriously weaken it, by undermining the commercial performance of each individual company, as a result of weaker schedules and reduced audiences. Each company would have greater freedom, but it would be the restricted freedom of the poor. Regional programmes would be marginalised by becoming a low cost ingredient. The lack of a network would undoubtedly reduce viewer choice. It would harm companies financially and put off advertisers.

Although the need for a network has been acknowledged by us all, there is still some dispute about what type of arrangement we should have and about whether we should have a statutory fallback.

The existing ITV companies are in the throes of discussing a new arrangement that would divide the companies into programme makers and programme buyers. The large and medium-sized companies have all opted to be programme makers. That leaves about five companies that would be programme buyers. In return for giving up their theoretical automatic right to be part of the network, the five non-producers will get discounts on the programmes that they buy. The advantage of such a system is that it could be argued that the smaller companies are being subsidised by the larger ones, especially as their access to the network—although recently improved—is still negligible. But even if such an arrangement were popular with all the companies—and the fact that a final arrangement is still to be worked out shows that substantial problems may remain to be overcome—the question remains whether such an arrangement is the best for a regional television system, which is what Channel 3 is intended to be.

It is undoubtedly true that a few programme makers based on a couple of production sites would constitute a more efficient way of making programmes but arrange-ments would negate the purpose of Channel 3, which is to provide a showcase of regional talent producing locally-made programmes not just for the area in which they are made but for the whole country.

The production of programmes for the network not only improves standards because it means that local producers have to compete with the best from the major companies; it increases employment, directly and indirectly, if effective use of the region is made.

New clause 1 would require that the number of programmes networked from any region should be proportionate to the local audience of the company. That would be a fair and effective way of ensuring that the smaller companies were not excluded by a cabal of the major companies, especially as the current cabal owes a good deal to its historical importance as well as to its financial clout. Unless there is some protection for the smaller companies, the fact that the programme makers and sellers are the same could act against their interests.

Even if the Government are reluctant to impose anything so regulatory on the companies, it is important that there should be a statutory power for a network arrangement to be imposed if, following the issue of new franchises or takeovers of the companies that have received franchises, there is a breakdown in the arrangements. The commission requires powers to impose an arrangement. The IBA has said that it would welcome such arrangements—certainly during the transitional period.

At the very least, I seek a commitment from the Government to allow a statutory safeguard, without which the concept of regional television may prove difficult to maintain. I look forward to the Minister of State giving a progress report, at least on the state of the negotiations, and hearing what he considers to be the best way to overcome the undoubted problems that remain, a conclusion not having been arrived at.

Mr. John Greenway (Ryedale)

New clause 33 authorises rather than imposes a network on the Channel 3 licensees and puts on the licensees an obligation to reach agreement. I looked with care at new clauses 1 and 15, which hark back to the present arrangements whereby the IBA effectively controls the schedule. A fundamental difference of view emerged in Committee. Conservative Members wish to see a free market in the provision of programmes, which does not happen now with IBA control of the schedule, and independent television companies are anxious that that should come about. The problem is that, although the Bill does not require a network to exist, a 15-region television system will not work unless there is some kind of network.

There is no doubt that a network will exist, whether or not we provide for it in legislation; however, it must be right that the financial plans of bidders are crucial to the allocation process and that they are not just a shot in the dark, which is what they would be if bidders did not know how much they might have to invest in and/or pay for network supply. That must be a worry, bearing in mind how little programming each contractor provides now or is likely to provide on his own and how much advertising revenue is generated out of the network schedule. Also, ITC will not be able to vary the financial commitments of contractors.

I am concerned also that some smaller companies may face difficulties in an open market in which their poor bargaining position could mean that they were no longer subsidised, as is now the case, and they might be forced to pay a premium for the network schedule, with new financial constraints on contractors. Every ounce of flesh will be worth getting. Commitments to the Treasury will be entered into and there is a potential unforeseen increase in costs. That could create early difficulties and pressures which might in themselves lead to a decline in regional programming commitments, which we are all anxious to see maintained.

Therefore, the ITC needs a power to approve and oversee a networking arrangement before licences are advertised so that applicants fully understand precisely what their obligations will be for each region. That is why in amendment No. 705 I have suggested that there should be a requirement at the application stage for each bidder to agree to take part in the network arrangement. As everyone who has looked at the matter knows, the current ITV companies are working towards an agreement on a network. For that reason, it may be premature for the House to reach a decision on this matter this evening. In Committee my hon. and learned Friend the Minister of State recognised that an important issue is to be addressed but that the ITV companies should be given adequate time to reach agreement.

Mr. Corbett

I understand amendment No. 705, but what will happen if the present ITV companies are unable to reach a detailed agreement on networking before the ITC advertises new licences?

Mr. Greenway

Amendment No. 705 refers to new clause 33. The two must be taken together. There is a difference of view. Conservative Members believe that there should be the authorisation of a network by the ITC, not the imposition of it, so that the free market can continue.

I hope that my hon. and learned Friend will consider my ideas and suggestions. I certainly hope that the House will reject new clauses 1 and 15 because they simply hark back to the present arrangement, which nobody wants.

Mr. John McAllion (Dundee, East)

The hon. Member for Ryedale (Mr. Greenway) is correct to say that the Committee was divided on whether a free market or regulation would secure proper networking arrangements for the new ITV service. However, the Committee was united on the need for a networking service on the ITV channels. That would offer a range of benefits, particularly for smaller regional ITV companies. For example, smaller companies could not begin to afford the wide range of quality programmes that are available to them through the network. They could not afford to produce such programmes on their own or to offer access to them. A network gives the opportunity to commission or produce programmes for sale across the network, which companies would otherwise not consider commissioning or producing on their own.

A good example is the Scottish programme "Scotsport", which is produced by STV. Other Scottish regional companies could not possibly afford to match the coverage that is given by STV or, for that matter, BBC Scotland, so they rely on a network for their viewers to gain access to "Scotsport" through the network, and enjoy a top sports programme. The quality of "Scotsport" is enhanced by the existence of the network, because, if STV produced it only for transmission within the transmission area, there would be far smaller audiences, fewer advertisers and less justification for expenditure on the quality of the programme. Everyone would agree that networking is essential, but it is a matter of how we can best secure networking for programmes across the ITV companies.

It is important that we regard television not just as entertainment or a cultural service but as an industry that brings jobs to regions that have been unemployment black spots for far too long. In the Bill there is far too little protection for regionally based ITV companies with film production facilities within their region. For example, clause 15(3) requires applicants, if the commission requires, to show that they have facilities in their area for the provision of the programme requirements set out in clause 16(2). Clause 16(2) requires that a proportion of regional programmes should be made within the particular area of a region.

There was a later concession by the Minister of State that regional news programmes would have to be of high quality, just as national news programmes are of high quality. Obviously, that has a knock-on effect for production facilities in regions. That is welcome and helps to ensure that some facilities will remain within different regions of the ITV network, but it does not go far enough to secure the full-scale production requirements that would be capable of producing high-quality programmes across the range of programme types.

People in the regions want to produce programmes that are not just good local news magazines and not just occasional good regional programmes such as the Gaelic programme on Grampian Television, "Crann Tara", which is purely for local consumption. We want to produce within the regions top-rate programmes across the whole range of programmes for sale across the network. I refer to programmes such as the Scottish soap "Take the High Road", STV's own production of "The Steamie", Channel 4's production of "Bread and Roses" and the BBC's production of "Tutti-Frutti".

The production facilities required to make programmes such as that are not guaranteed in the Bill and could be under threat should some of the smaller regional companies be taken over by their larger sister companies in the ITV network. None of those production facilities will survive if we do not have an effective network that allows programmes to be sold across the whole network to the various ITV companies.

Under the Government's proposals, there could be a gap in effective networking arrangements for the ITV companies. That gap could be sufficient, if it lasted for only a year or two, to allow many production facilities that now exist in the regions to disappear. Should they disappear, they will not return, and we would find ourselves with the situation about which the hon. Member for Caithness and Sutherland (Mr. Maclennan) warned, with production centred in a handful of regional companies selling their productions to the other regional companies.

That is not a development that we want to see. I hope that the Minister will take on board the danger of production facilities in the regions being at risk and that included in the Bill will be provision for effective networking arrangements giving adequate protection for regional companies and production facilities.

6 pm

Mr. Clifford Forsythe (Antrim, South)

Because all the regions other than Northern Ireland were represented on the Committee, I am anxious to explain that a networking operation is essential to television in Ulster. As has been said, there is a danger that local television stations will be reduced simply to putting out news and current affairs programmes. We require, particularly in Northern Ireland, a wide range of programmes that are locally produced.

Ulster Television is at present the smallest of the ITV companies. It is essential that we have networking to ensure that international and other programmes are screened in Northern Ireland, for we must have a wide range of television programmes. In view of the special circumstances in Northern Ireland, it is essential that we have a regional television company that can advance the regional view. I support the idea of provision for networking in the ITV operation so as to protect local companies.

Mr. Austin Mitchell (Great Grimsby)

I am fascinated by the prospect of the Minister's reply, for I cannot imagine what he will say in answer to such logical arguments about networking. It seems impossible that an ITV or Channel 3—call it what we may—network could work without some provision for networking.

If the Minister intends to reject that proposition, he must explain how anybody will be able to formulate a rational bid in the auction bid situation without knowing what the costs of production will be and how they will be spread around the system in forms of networking. It will be impossible to make financial predictions unless companies know in advance what the system will be.

What would happen if there were no networking system as proposed by the three amendments, the best of which is the Labour proposal? Would we not be in the situation at the start of the ITV network of having a stand-up, knock-down game of bluff among the companies, each vetoing the others' products until, in the end, by a process of financial attrition, they were forced to come to a networking arrangement?

Sir Giles Shaw

The Minister should need no further persuasion that it is essential to have an effective networking operation to sustain a regional network of 15 television companies. That must be common ground among all who wish to see a flourishing television system operating for Channel 3 services.

Equally, I have sympathy with the view that it would not be suitable for the Independent Television Commission to become a dogmatic fat controller, as it were, determining on which branch lines the schedules should be run. We have evolved over the past 10 years or more an effective networking service that has provided a significant variety, but possibly a lack of opportunity, to some companies that have been knocking at the door of admission to the network arrangements.

So I support my hon. Friend the Member for Ryedale (Mr. Greenway) in seeking a permissive statement to the effect that a network should be, or may be, introduced by the ITC but that it should not become the bedrock of the system under control from the centre. By that means, a stifling bureaucracy would be apparent, some of the consequences of which would be a stifling of regional initiative.

The hon. Member for Antrim, South (Mr. Forsythe) has in Ulster Television one of the finest examples of a company that has been able to sustain, under difficult conditions, a first-class range of programming that would have been driven into the bankruptcy court long ago without adequate networking material being made available.

Mr. Corbett

I assure the hon. Member for Antrim, South (Mr. Forsythe) that matters connected with Northern Ireland were not altogether forgotten in Committee. Indeed, I recall a spirited debate when we were attempting to get the Home Office to fall in line with what the Northern Ireland Office was doing by way of initiatives to encourage the speaking of Irish Gaelic. Whether that pleased the hon. Gentleman I do not know.

There is probably general agreement in the House not just about the desirability of having a networking arrangement but, as my hon. Friend the Member for Great Grimsby (Mr. Mitchell) said, about the critical need for such an arrangement if there is to be sensible bidding for the new Channel 3 licences.

I assure the hon. Member for Pudsey (Sir G. Shaw) that it is not a question of anybody on the Opposition Benches or of Conservative Members wanting the ITC to turn into what he described as a fat controller of schedules. The days when it was felt that we needed the IBA or a successor body to crawl over every schedule minute by minute, day by day, week by week has long since passed, if for no other reason than that the broadcasters know more about what they are doing than when the system was introduced.

That said, and given the agreement among hon. Members about the need for a networking arrangement, it is curious that the Bill does not make provision for that, mostly for the reasons that the hon. Member for Ryedale (Mr. Greenway) gave. It is claimed that the free market will sort it out, that common sense will prevail and that all will fall into place. I expect that to be the case—because of the collective interest in the matter—but it may no 't turn out to be the case. In any event, the parties to any networking arrangements that now exist may not in all cases be the same parties after the new Channel 3 licences have been awarded.

The largest company of the present ITV companies makes fewer than 30 out of every 100 of its programmes, whereas the smallest makes only five out of every 100. I am not complaining about that, simply showing the width of interest in the network. I suppose in a sense that the smaller the station, the more important is the network to it, so that it is better able to gain an audience in its region than it could hope to attract on the back of its own programming.

The Independent Television Companies Association sees the main justification of networking as enabling 15 regional companies to function as a single, nationwide rival to the BBC. Some of us take the view that the strength of the ITV system lies, or should lie, in the regions and that there should be more, rather than less, programmes made and shown in the regions and networked so that region may speak unto region. I understand the point that the ITA makes.

We now begin to part company. The Opposition take the view that the ITC should not simply have powers to okay a networking arrangement which may, and probably will, be entered into. It should have powers, in the absence of agreement, to ensure that there is such an arrangement which could be open to later amendment. I understand that at present there is a plan but no agreement. The plan is this: the big five have proposed that they should rnake all the programmes for the network and that the smaller 10 should cough up and show them. That is not acceptable to the middle five, and rightly so. They want to make some programmes for the network. To confine the making of network programmes to the present big five would not be good for the rest of the network. In effect, it would create first and second class programme makers. Inevitably the bulk of them would be made in London and the south-east. It would also mean that fewer true regional programmes—that is programmes not just from the regions but about the regions—would be made which could be networked.

It is important that the ITC has powers in the Bill to encourage and achieve a sensible networking arrangement. The Government have said that they want that and, as the ITA has said, the Bill should reflect those wishes. The IBA makes the point that the quality and range of network programmes would suffer if each of the Channel 3 companies had to supply all its own programmes. No one proposes that each, any or all of the Channel 3 companies would have to supply all its programmes. As we have agreed, the network is vital to the whole system. Certainly the network is vital to the more expensive programmes such as costume and other drama, current affairs, documentaries and comedy, some of which, although in my view not enough, reflect the realities of life outside the capital where far too much is already centred.

Of course, the ITC will not be a broadcaster in the same way as the IBA and it will not crawl all over the programme schedules and networking arrangements. However, it needs powers to ensure that a system is in place which guarantees both quality programming and —a point with which the Minister will agree—a networking agreement which is fair and open. The networking arrangements that we had in the past would not pass the tests of fairness and openness for all the reasons that we understand and some that we shall never understand.

With regard to the Government's "exceptional circumstances" and the so-called quality test, the ITC will want to know about networking to guard against over ambitious claims by bidders. The IBA has proposed that provision be made in the Bill for a transitional network to be put in place from January 1993—the beginning of the new Channel 3 licences—for two years, or less if the licensees and the ITC have agreed an arrangement in keeping with the programme promises of the applicants. As the IBA argues, that is important as ITC adjusts to the new circumstances of Channel 3 and the other changes that are to come throughout broadcasting—the Minister and his supporters would probably prefer to call it the broadcasting market but we have not come that far yet. The Minister and, indeed, the Government will accept many of those arguments, especially the argument about not only the importance of but the critical need for a network arrangement to be clear, in place and agreed to help the ITC in the allocation of the new Channel 3 licences. I hope that the Government are persuaded that it is right to turn those ambitions into words in the Bill.

6.15 pm
Mr. Mellor

There is no great division between us on these matters. I certainly believe that Channel 3 could not possibly fulfil its remit or win the audience share that it will need to win to be financially viable unless there is a networking arrangement. There is no disagreement on that. The difficulty pertinently expressed, as so often, by my hon. Friends the Members for Pudsey (Sir G. Shaw) and for Ryedale (Mr. Greenway) is how we can best create a networking arrangement. For far too long the ITV system depended on a networking arrangement that emerged in the 1950s as a defence mechanism against arguments that the ITV system could not sustain a national programme service. The big five arose and did not retire from the scene anything like quickly enough.

The consequence of centring the arrangements on the big five was an increasing awareness both within the system and outside it that the big five were an unfair cartel. Many of the views expressed in the debates reflected the fetid atmosphere of that cartel, which has long outlived its useful purpose. Apart from any other reason, the big five are no longer the biggest five. That made the whole arrangement even less relevant. It was obvious that some companies could put programmes on the network because of their position within the magic circle that would not have been included if they had been suggested by other companies whose rather better product was kept out. That raised competition issues.

The companies themselves are aware of the deficiencies in the present networking arrangements and propose to make changes. The changes are still in the process of negotiation, but they are based on a volunteer principle of opting in or opting out. I understand that about 10 companies wish to opt in and become to some extent programme makers. Five companies are happy to be programme receivers, subject to their regional obligations. That is how matters stand at present.

Several good points have been made in the debate. The hon. Member for Dundee, East (Mr. McAllion) referred to the need for local production facilities. He will be aware that in the Bill we have strengthened the regional requirements. As a result of changes that we signalled in Committee—we shall come to the amendments later—we shall require that any applicants for a regional franchise should state what programme-making facilities they propose to provide in the region so that everyone knows where he stands.

The hon. Member for Antrim, South (Mr. Forsythe) mentioned Ulster Television. I have had meetings with Brum Henderson and his team. They know that we are committed to Ulster Television and a television franchise for Ulster. It is not a matter for me, but it would probably mean the continuation of Ulster Television. It will depend on the decision to be taken on the allocation of franchises. Clearly particular care must be taken in scrutinising applications for the Ulster franchise because of the need for programming that is sensitive to the needs of both communities. Personally, I believe that Ulster Television has done a good job, but clearly it could not exist if it did not receive many good programmes from elsewhere in the system.

So far so good. The difficulty comes when we turn to the issue of how to arrive at a networking arrangement. The Opposition new clause in effect proposes that the ITC should be a programme-scheduling supremo for all its licensees. No licensee would be able to draw up a programme schedule or enter into a contract to acquire a programme without first clearing it with the ITC. That gives the ITC a greater and more interventionist role in these matters than either the present IBA or the Cable Television Authority.

I understand that the hon. Member for Birmingham, Erdington (Mr. Corbett) is using the new clause quite properly to discuss the issues. I suspect and hope that he is not wedded to the arrangements that he proposes, which would be excessively interventionist or, as my hon. Friend the Member for Pudsey said, excessively bureaucratic.

The Government have also had to reconsider their view. Our view is that in the end the matter must turn on sensible arrangements between the programme companies. After all, they have everything to gain from sensible networking arrangements and everything to lose if there is not a proper network. It is they who would be unable to sustain a popular national channel, which Channel 3 must be. The responsibility for networking should be placed firmly on the programme companies, but that does not answer the key question of the transition. That is the point rightly emphasised by various hon. Members. Plainly the ITC has the difficult but vital role of finding which pegs to fit into which holes. Obviously the holes in the system will be of different sizes, reflecting the inevitable difference of size between franchises.

The issue for us to decide is whether there should be transitional arrangements, and what they should be—whether the ITC can rely just on the emergence from present discussions of a successful new networking arrangement or whether it should have the right to determine those matters, or have them determined by others, for a transitional period, perhaps two years into the new licence, so that everybody knows where they stand and start off from a sensible position from which they might move as a result of discussions and agreements. We should certainly shoot ourselves in the foot if we allowed to be made a new networking arrangement that became as difficult to shift as the previous one, which has long outlived its usefulness.

We acknowledge that Channel 3 licensees must be given an idea of how the network is likely to shape up. That is why we shall require the ITC to issue illustrative guidelines on programme types, and expect them to include within that guide a model network scheme. Moreover, the ITC will be able to ensure that any network arrangement subsequently agreed by Channel 3 does not discriminate against the smaller licensees through is powers, under clause 2, to ensure fair and effective competition. Those are important provisions already contained in the Bill. The key issue is whether the ITC should, in effect, have a statutory power to approve networking arrangements and should it be able to acquire a transitional networking arrangement to which it would work and expect the new licensees to work.

It has been possible for my colleagues and I to resolve most of the matters left outstanding, the loose ends left untied, in Committee. The fruits of that work will be obvious to those who have looked at the Government amendments. Unfortunately, it has been impossible to resolve all the problems. One that remains the subject of discussion with colleagues is the precise shape of the transitional arrangements. I am firmly of the view that there must be transitional arrangements. That is an important point that might influence the view of those who have to decide whether to press the new clauses to a vote. I hope that they will feel that they do not need to, first, because of what I have said about the illustrative guidelines and other arrangements that already exist, and, secondly, because it is a live issue. The illustrative guidelines and other arrangements will give the ITC the power to give would-be franchise holders a clear steer.

The issue of transitional arrangements turns on whether or not they should be for the ITC or the Office of Fair Trading—bearing in mind that it is essentially a competition matter—and what the balance should be between the fair trading and competition aspects of the matter and the ITC. Hon. Members will recognise, particularly those who study such matters with care, as most present do, that one of the difficult issues of detail with which we have had to deal is how far the ITC, as the regulator, should regulate competition issues and at what point it should hand over to the OFT and those charged with the responsibility for more broadly based jurisdiction over competition issues. I am sorry that I am not in a position to resolve those matters conclusively this afternoon, but there is a strong case for transitional arrangements in the Bill. It is their shape that is still the subject of further discussion.

Mr. Austin Mitchell


Mr. Mellor

I shall give way to the hon. Member for Great Grimsby (Mr. Mitchell), who was curious about what I would say. I hope that I have satisfied his curiosity. Knowing that he would be among those present today, I was curious to know whether we would have had a better Committee stage had he been on the Committee. My verdict is very much in the balance, and we must wait and see.

Mr. Mitchell

I was not on the Committee because my party thought that I would better serve its cause doing something else—that is, nothing.

The Minister's explanation does not satisfy me. Although he is coming towards us, as on so many other issues, he is doing so in a vague and inchoate fashion. The arrangements are vague and hypothetical and deal with models and hypothetical guidelines. Companies are being asked to put in bids of millions of pounds, and need detailed and clear financial calculations and a firm basis on which to make them. All they are being offered are models, hypotheses, suggestions and guidelines. Surely that is not good enough to put a rational, calculated bid into the Government's auction. If it is not good enough, shall we not see a contest in which it is not the market that decides but a system emerges in which muscle counts and companies try to beat each other down?

Mr. Mellor

The hon. Gentleman is being less than fair because it is absolutely clear that there has to be a networking arrangement; it is far less than clear whether or not it should be the ITC's duty to determine that and be the programme scheduler for the system, and whether that would necessarily lead to the emergence of a good, competitive Channel 3 or whether it would inhibit it. That is a question on which people equally committed to making the new system work and assisting potential franchise applicants may well agree to differ.

It is quite clear in the Bill that the ITC will be able to send out a formidable set of guidelines to would-be applicants who, if they fail to bring themselves within the guidelines, would be in grave risk of failing the quality threshold. So far so good. The question then is if, as I believe, there is a case for having a transitional arrangement that can be prescribed and the framework for which would have to be in the Bill, who will police it? Should it be policed primarily by the ITC or the OFT? Those matters are still the subject of discussions. I am unable to come forward with a concluded view, but that is exceptional. For the most part, we have been able to reach conclusions on many of the issues.

There is no division between us on the need for a networking arrangement, only how it might best come about. There is no dispute on the need to massage that difficult transitional period in the interests of giving the ITC——

Mr. Bruce Grocott (The Wrekin)


Mr. Mellor

I have spotted the hon. Gentleman, so he need not worry—in the interests of giving the ITC and prospective franchise applicants a fair chance to do the proper job that we want them to do in weighing up the various quality bids. That is where matters stand.

Mr. Grocott

The Minister has been critical of present networking arrangements. They have not been perfect, but I think he would agree that they have produced outstanding programmes. We are in great danger of putting such programming at risk. He is asking us to take it all on trust and somehow a networking arrangement will come about, but what if that does not happen? What policing does he envisage if there is a free-for-all between the new companies? The new system is so unpredictable that there is no guarantee against a free-for-all. Therefore, what guarantees can he give us that there will be a networking arrangement under the proposals that he has in mind?

Mr. Mellor

The best guarantee is that it is impossible to envisage Channel 3 without a networking arrangement. We must not assume that those who will be running Channel 3 are too foolish to recognise that. I believe that they do. The hon. Gentleman should remember that the issue is who should call the shots on the arrangement. He commends the old arrangement—fair enough—but he should remember that it emerged by agreement between the companies and was not imposed on them. I am arguing against the need for the ITC to impose a networking arrangement on them.

The old magic circle of five kept out many companies that had a proven capability to make programmes, and those companies resented that and squealed about it. Many other people saw the force of that. That is why there is a competition issue involved, and the key question is what role should we assign to the ITC, and what role to the OFT and fair trading regulations more generally. That is the difficulty we have to resolve.

I think that the hon. Member for Great Grimsby is right. In the longer run it would be best to leave it to the companies to determine these matters, as they determined the earlier ones, subject to the right of intervention on competition grounds. By the way, clause 2 gives that right to the ITC, as well as to OFT, on the basis of ensuring fair and effective competition.

What particularly exercises my mind is the need to massage the transition from one set of franchise holders to the next by virtue of setting out a clear networking arrangement for a transitional period. We are still deliberating within Government on that issue. I am sorry it has not been possible to conclude those discussions for the Report stage. Of course, it will have to be scrutinised in the other place and we will have plenty of opportunity to consider the matter when the Bill comes back, so we are not attempting to keep the House out of the discussions.

6.30 pm
Sir Giles Shaw

My hon. and learned Friend has reassured the House. He has agreed that there is a need for a transitional arrangement which will provide a networking arrangement which would be viable for the ITC and at least prospective for every bidder. May I encourage him to recognise that the context in which the cartel became such an obvious restrainer of trade was largely the monopoly of ITV? There will be a much broader competitive base for television than in the past. That in itself will make the market easier. I certainly commend the view expressed by my hon. and learned Friend that ITC should not be the arbiter of what is anti-competitive. The Office of Fair Trading should be the regulator where the market will be more widespread than before.

Mr. Mellor

I am grateful to my hon. Friend. The debate has been helpful. I am sorry that I cannot finally make a categoric statement on how the Government propose to manage the transition. I hope that I have shown sufficient recognition of the problem that those who tabled the new clauses will not feel that they need to press them to a vote.

Mr. Corbett

I have listened with interest to the Minister——

Mr. Deputy Speaker (Sir Paul Dean)

Order. I understand that the hon. Gentleman has already spoken, so he will need leave to speak again.

Mr. Corbett

I beg your pardon, Mr. Deputy Speaker. With the leave of the House, may I say that I have listened with care to what the Minister said. I must confess to being puzzled. I should have thought that an expression of view on one or other of the proposed new clauses might have concentrated the minds of the present ITV licence holders and encouraged them to come up with the voluntary arrangement which the Minister supports, certainly as a transitional arrangement. We are left with the dilemma that, without something along those lines being written into the Bill, the best that can happen is that the ITC can give a clear steer. I do not think it satisfactory to leave matters in that way.

The Minister and some of his hon. Friends have exposed a difference between us, and it is well to have it out in the open. In our view, this is not a matter of competition policy. There is a competition aspect to it in the sense that any networking arrangement ought to be open and fair. In one breath the Minister is talking about the present rotten arrangement, which at least is voluntary, yet he wants to leave the companies to get on with it so that they may come up with something better. In the trade that is known as an each way bet.

I understand the narrow point about competition aspects, but essentially it should not be about competition policy. It is all to do with the quality of what people can see on their television screens. The quality of range and diversity which we should look to a networking arrangement to deliver will come only on the back of proper funding and proper investment in training and facilities, and in proper investment as well in the new writers who, we hope, will be increasingly attracted to use the medium. The Minister will recall that I have a narrow, vested, sordid family interest in these matters, but I put it in a much wider context. Not a few of those whose works appear regularly on our television screens have been encouraged by initial amounts of development money from television companies, some quite properly in the ITV sector. It is rare that someone can deliver a script and have it accepted straight away. That is why it is much more a matter of quality investment than one narrow aspect of competition policy.

I had hoped that the Minister would look favourably upon one or other of the new clauses, the better to encourage a voluntary arrangement which would have to be overseen by the IBA in the process of awarding the licence. I am sorry that the Minister has not chosen to do so. I anticipate that the hon. Member for Caithness and Sutherland (Mr. Maclennan) will have something to say on the matter.

Mr. Maclennan

I listened with great interest to the Minister. He has taken discussion of the matter a good deal further—although not, I regret, to conclusion. It is remarkable that we should allow the Bill to depart from this House to another place with no real certainty about what is regarded by the chairman-elect of the IBA/ITC, Mr. George Russell, as a matter of crucial importance to the success of the new scheme.

We have had a direct plea for a transitional arrangement and a positive response from the Minister on the need for such an arrangement, but a new idea has been floated today that that should involve the Office of Fair Trading, perhaps. I find that disturbing. It would not be likely to ease the task of the new regulatory authority if another regulatory body could inject its thoughts into the extraordinarily difficult task of allocating franchises to set up the new Channel 3. It would be a colossally difficult complication for the ITC, and perhaps not one on which the Office of Fair Trading could bring any expertise to bear in seeking to decide the competition aspect.

The hon. Member for Birmingham, Erdington (Mr. Corbett) is right: it is not primarily a matter of competition policy; it is a matter of making sure that the most appropriate programmes are made regionally and seen nationally. Although there are competition issues, they are secondary. I hope that the Minister will have that in mind in deciding whether or not the Office of Fair Trading should be involved.

I do not altogether hold it against the Minister that he has not come forward today with a final scheme. I think that he had been looking to the companies to provide him with a scheme. The very fact that they have not done so makes it clear how difficult it is and how important that it should be got right. I think that the ITC will need a fallback power if the companies do not come up with something. It may be needed beyond the transitional period which the Minister seems willing to concede. That may be needed to ensure that the cartel, which the Minister clearly did not like and about which he spoke disparagingly, does not re-emerge.

It was interesting to hear the Minister talk about the possibility of the ITC utilising the guidelines as a means of giving a steer in the matter. I suppose it is possible that the commission could use its powers to attach conditions to the granting of a franchise licence which, in effect, set up a network arrangement. However, that would not be a desirable way to approach the matter. It is better to look at such things in the round and for the ITC to take a proposal only as a fallback in the event of the companies not being able to agree something themselves. I hope that, by putting this clear support to a transitional arrangement on the face of the Bill, the Minister is not at the same time setting his face against a fallback power to set up a network arrangement in the absence of such an arrangement being agreed to the satisfaction of the ITC.

Because of the importance of this matter, and as this may well be the last opportunity that the House has to deal with it, it is necessary for us to register our concern by dividing the House. The Minister may be right, and perhaps there will be delivered from another place an amendment that gives us the opportunity to discuss the matter again. However, we may not have such an opportunity, and we must send a signal to the other place that we attach great importance to this. We must also send a signal to the companies that, if they do not come up with a satisfactory arrangement, it is imperative that an arrangement be imposed upon them.

Mr. John Greenway


Mr. Deputy Speaker

Order. The hon. Gentleman has spoken and he would need the leave of the House if he wished to speak again.

Mr. Greenway

By leave of the House. I shall be brief. I am disappointed that the hon. Member for Caithness and Sutherland (Mr. Maclennan) seeks to divide the House, because the commitment given by my hon. and learned Friend the Minister shows that he recognises that there must be a network arrangement. It would be better to allow further progress on the discussions to which my hon. and learned Friend referred.

Question put, That the clause be read a Second time:—

The House divided: Ayes 159, Noes 282.

Division No. 193] [6.42 pm
Allen, Graham George, Bruce
Anderson, Donald Gilbert, Rt Hon Dr John
Armstrong, Hilary Golding, Mrs Llin
Ashley, Rt Hon Jack Gordon, Mildred
Ashton, Joe Gould, Bryan
Banks, Tony (Newham NW) Grant, Bernie (Tottenham)
Barnes, Harry (Derbyshire NE) Griffiths, Nigel (Edinburgh S)
Barnes, Mrs Rosie (Greenwich) Griffiths, Win (Bridgend)
Barron, Kevin Grocott, Bruce
Battle, John Heal, Mrs Sylvia
Beckett, Margaret Hinchliffe, David
Beith, A. J. Hogg, N. (C'nauld & Kilsyth)
Benn, Rt Hon Tony Home Robertson, John
Bennett, A. F. (D'nt'n & R'dish) Hood, Jimmy
Bermingham, Gerald Howells, Geraint
Bidwell, Sydney Howells, Dr. Kim (Pontypridd)
Blair, Tony Hoyle, Doug
Blunkett, David Hughes, John (Coventry NE)
Boateng, Paul Hughes, Roy (Newport E)
Boyes, Roland Hughes, Simon (Southwark)
Brown, Gordon (D'mline E) Illsley, Eric
Brown, Nicholas (Newcastle E) Ingram, Adam
Buchan, Norman Janner, Greville
Buckley, George J. Jones, Martyn (Clwyd S W)
Caborn, Richard Kaufman, Rt Hon Gerald
Callaghan, Jim Kennedy, Charles
Campbell, Menzies (Fife NE) Kilfedder, James
Campbell-Savours, D. N. Kinnock, Rt Hon Neil
Canavan, Dennis Lewis, Terry
Cartwright, John Lloyd, Tony (Stretford)
Clarke, Tom (Monklands W) Lofthouse, Geoffrey
Clelland, David McAllion, John
Clwyd, Mrs Ann McAvoy, Thomas
Cook, Robin (Livingston) Macdonald, Calum A.
Corbett, Robin McKay, Allen (Barnsley West)
Corbyn, Jeremy McKelvey, William
Crowther, Stan McLeish, Henry
Cryer, Bob Maclennan, Robert
Dalyell, Tam McWilliam, John
Darling, Alistair Madden, Max
Davies, Rt Hon Denzil (Llanelli) Mahon, Mrs Alice
Davis, Terry (B'ham Hodge H'I) Marek, Dr John
Dewar, Donald Marshall, David (Shettleston)
Dixon, Don Martlew, Eric
Duffy, A. E. P. Maxton, John
Dunnachie, Jimmy Michael, Alun
Dunwoody, Hon Mrs Gwyneth Michie, Bill (Sheffield Heeley)
Eadie, Alexander Michie, Mrs Ray (Arg'l & Bute)
Eastham, Ken Mitchell, Austin (G't Grimsby)
Ewing, Mrs Margaret (Moray) Molyneaux, Rt Hon James
Fearn, Ronald Moonie, Dr Lewis
Fisher, Mark Morgan, Rhodri
Flannery, Martin Morley, Elliot
Flynn, Paul Morris, Rt Hon A. (W'shawe)
Foot, Rt Hon Michael Mowlam, Marjorie
Forsythe, Clifford (Antrim S) Murphy, Paul
Foster, Derek Nellist, Dave
Foulkes, George Oakes, Rt Hon Gordon
Fraser, John O'Brien, William
Fyfe, Maria O'Neill, Martin
Orme, Rt Hon Stanley Steinberg, Gerry
Pendry, Tom Strang, Gavin
Pike, Peter L. Taylor, Mrs Ann (Dewsbury)
Powell, Ray (Ogmore) Turner, Dennis
Prescott, John Vaz, Keith
Primarolo, Dawn Walker, A. Cecil (Belfast N)
Radice, Giles Wallace, James
Rees, Rt Hon Merlyn Walley, Joan
Reid, Dr John Wardell, Gareth (Gower)
Richardson, Jo Watson, Mike (Glasgow, C)
Robertson, George Welsh, Michael (Doncaster N)
Rooker, Jeff Wigley, Dafydd
Ross, Ernie (Dundee W) Williams, Rt Hon Alan
Rowlands, Ted Williams, Alan W. (Carm'then)
Sedgemore, Brian Wise, Mrs Audrey
Sheldon, Rt Hon Robert Worthington, Tony
Skinner, Dennis Wray, Jimmy
Smith, C. (Isl'ton & F'bury)
Smyth, Rev Martin (Belfast S) Tellers for the Ayes:
Snape, Peter Mr. Frank Haynes and
Soley, Clive Mr. John McFall.
Spearing, Nigel
Adley, Robert Clark, Sir W. (Croydon S)
Aitken, Jonathan Colvin, Michael
Alexander, Richard Conway, Derek
Alison, Rt Hon Michael Coombs, Anthony (Wyre F'rest)
Allason, Rupert Coombs, Simon (Swindon)
Amery, Rt Hon Julian Cormack, Patrick
Amess, David Cran, James
Amos, Alan Critchley, Julian
Arbuthnot, James Currie, Mrs Edwina
Ashby, David Curry, David
Aspinwall, Jack Davies, Q. (Stamf'd & Spald'g)
Atkins, Robert Davis, David (Boothferry)
Baker, Rt Hon K. (Mole Valley) Day, Stephen
Baker, Nicholas (Dorset N) Devlin, Tim
Baldry, Tony Dickens, Geoffrey
Banks, Robert (Harrogate) Dorrell, Stephen
Batiste, Spencer Douglas-Hamilton, Lord James
Beaumont-Dark, Anthony Dover, Den
Bendall, Vivian Dunn, Bob
Bennett, Nicholas (Pembroke) Dykes, Hugh
Benyon, W. Eggar, Tim
Bevan, David Gilroy Evans, David (Welwyn Hatf'd)
Blaker, Rt Hon Sir Peter Evennett, David
Bonsor, Sir Nicholas Fairbairn, Sir Nicholas
Boswell, Tim Favell, Tony
Bottomley, Peter Field, Barry (Isle of Wight)
Bottomley, Mrs Virginia Fishburn, John Dudley
Bowden, Gerald (Dulwich) Fookes, Dame Janet
Bowis, John Forman, Nigel
Boyson, Rt Hon Dr Sir Rhodes Forth, Eric
Braine, Rt Hon Sir Bernard Fowler, Rt Hon Sir Norman
Brandon-Bravo, Martin Franks, Cecil
Brazier, Julian Freeman, Roger
Bright, Graham French, Douglas
Brown, Michael (Brigg & Cl't's) Fry, Peter
Browne, John (Winchester) Gale, Roger
Bruce, Ian (Dorset South) Gardiner, George
Buchanan-Smith, Rt Hon Alick Garel-Jones, Tristan
Buck, Sir Antony Gill, Christopher
Budgen, Nicholas Gilmour, Rt Hon Sir Ian
Burt, Alistair Glyn, Dr Sir Alan
Butcher, John Goodhart, Sir Philip
Butler, Chris Gorman, Mrs Teresa
Butterfill, John Gorst, John
Carlisle, John, (Luton N) Gow, Ian
Carlisle, Kenneth (Lincoln) Grant, Sir Anthony (CambsSW)
Carrington, Matthew Greenway, Harry (Ealing N)
Carttiss, Michael Greenway, John (Ryedale)
Cash, William Gregory, Conal
Chalker, Rt Hon Mrs Lynda Griffiths, Peter (Portsmouth N)
Channon, Rt Hon Paul Grist, Ian
Chapman, Sydney Ground, Patrick
Chope, Christopher Hague, William
Churchill, Mr Hamilton, Neil (Tatton)
Clark, Hon Alan (Plym'th S'n) Hampson, Dr Keith
Clark, Dr Michael (Rochford) Hanley, Jeremy
Hannam, John Mudd, David
Hargreaves, A. (B'ham H'Il Gr') Neale, Gerrard
Hargreaves, Ken (Hyndburn) Nelson, Anthony
Haselhurst, Alan Neubert, Michael
Hawkins, Christopher Newton, Rt Hon Tony
Hayes, Jerry Nicholls, Patrick
Hayhoe, Rt Hon Sir Barney Nicholson, David (Taunton)
Hayward, Robert Onslow, Rt Hon Cranley
Heathcoat-Amory, David Oppenheim, Phillip
Hicks, Mrs Maureen (Wolv' NE) Page, Richard
Hicks, Robert (Cornwall SE) Paice, James
Higgins, Rt Hon Terence L. Parkinson, Rt Hon Cecil
Hind, Kenneth Patnick, Irvine
Hogg, Hon Douglas (Gr'th'm) Patten, Rt Hon Chris (Bath)
Holt, Richard Patten, Rt Hon John
Hordern, Sir Peter Pawsey, James
Howard, Rt Hon Michael Porter, Barry (Wirral S)
Howarth, Alan (Strat'd-on-A) Porter, David (Waveney)
Howarth, G. (Cannock & B'wd) Portillo, Michael
Howell, Rt Hon David (G'dford) Raison, Rt Hon Timothy
Hughes, Robert G. (Harrow W) Redwood, John
Hunter, Andrew Ronton, Rt Hon Tim
Hurd, Rt Hon Douglas Riddick, Graham
Irvine, Michael Ridsdale, Sir Julian
Irving, Sir Charles Roberts, Wyn (Conwy)
Jack, Michael Rossi, Sir Hugh
Janman, Tim Rost, Peter
Johnson Smith, Sir Geoffrey Rowe, Andrew
Jones, Gwilym (Cardiff N) Ryder, Richard
Jones, Robert B (Herts W) Sackville, Hon Tom
Kellett-Bowman, Dame Elaine Sayeed, Jonathan
Key, Robert Scott, Rt Hon Nicholas
King, Roger (B'ham N'thfield) Shaw, David (Dover)
Kirkhope, Timothy Shaw, Sir Giles (Pudsey)
Knapman, Roger Shephard, Mrs G. (Norfolk SW)
Knight, Greg (Derby North) Shepherd, Richard (Aldridge)
Knight, Dame Jill (Edgbaston) Shersby, Michael
Knowles, Michael Sims, Roger
Lamont, Rt Hon Norman Skeet, Sir Trevor
Latham, Michael Smith, Tim (Beaconsfield)
Lawrence, Ivan Soames, Hon Nicholas
Lee, John (Pendle) Spicer, Sir Jim (Dorset W)
Leigh, Edward (Gainsbor'gh) Spicer, Michael (S Worcs)
Lennox-Boyd, Hon Mark Squire, Robin
Lester, Jim (Broxtowe) Stanbrook, Ivor
Lightbown, David Stanley, Rt Hon Sir John
Lilley, Peter Steen, Anthony
Lloyd, Sir Ian (Havant) Stern, Michael
Lloyd, Peter (Fareham) Stevens, Lewis
Luce, Rt Hon Richard Stewart, Allan (Eastwood)
Lyell, Rt Hon Sir Nicholas Stewart, Andy (Sherwood)
McCrindle, Robert Stewart, Rt Hon Ian (Herts N)
Macfarlane, Sir Neil Stradling Thomas, Sir John
MacKay, Andrew (E Berkshire) Sumberg, David
Maclean, David Tapsell, Sir Peter
McNair-Wilson, Sir Michael Taylor, Ian (Esher)
McNair-Wilson, Sir Patrick Taylor, John M (Solihull)
Madel, David Tebbit, Rt Hon Norman
Malins, Humfrey Temple-Morris, Peter
Mans, Keith Thompson, D. (Calder Valley)
Maples, John Thompson, Patrick (Norwich N)
Marland, Paul Thome, Neil
Marlow, Tony Thurnham, Peter
Marshall, John (Hendon S) Townend, John (Bridlington)
Marshall, Michael (Arundel) Townsend, Cyril D. (B'heath)
Martin, David (Portsmouth S) Tracey, Richard
Mates, Michael Tredinnick, David
Maude, Hon Francis Trippier, David
Maxwell-Hyslop, Robin Trotter, Neville
Mellor, David Twinn, Dr Ian
Meyer, Sir Anthony Vaughan, Sir Gerard
Miller, Sir Hal Viggers, Peter
Mills, Iain Waddington, Rt Hon David
Mitchell, Andrew (Gedling) Walden, George
Mitchell, Sir David Walker, Bill (Tside North)
Moate, Roger Waller, Gary
Monro, Sir Hector Wardle, Charles (Bexhill)
Montgomery, Sir Fergus Warren, Kenneth
Morrison, Sir Charles Watts, John
Moss, Malcolm Wells, Bowen
Wheeler, Sir John Woodcock, Dr. Mike
Whitney, Ray Yeo, Tim
Widdecombe, Ann Young, Sir George (Acton)
Wiggin, Jerry
Wilshire, David Tellers for the Noes:
Winterton, Mrs Ann Mr. Alastair Goodlad and
Winterton, Nicholas Mr. Tony Durant.

Question accordingly negatived.

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