APPLICATIONS FOR CHANNEL 3 LICENCES

HC Deb 09 May 1990 vol 172 cc266-85

Amendments made: No. 118, in page 11, line 38, at end insert— '(ii) if the service is to include the provision of such programmes as are mentioned in section 14(2A), the different parts of that area, or (as the case may be) the different communities living within it, for which such programmes are to be provided,'.

No. 240, in page 11, line 45, after 'licence', insert 'and specifying the closing date for such applications'.

Amendment No. 49, in page 12, leave out lines 4 and 5.—[Mr. Mellor.]

8.30 pm

Mr. Mellor

I beg to move amendment No. 653, in page 12, line 12, leave out subsection (2) and insert— '(2) The Commission shall, when publishing a notice under subsection (1), publish with the notice general guidance to applicants for the licence in question which contains examples of the kinds of programme whose inclusion in the service proposed by any such applicant under subsection (3)(b) would be likely to result in a finding by the Commission that the service would comply with the requirements specified in section 16(2) or (3) (as the case may be).'. The amendment replaces subsection (2), and makes points of clarification. We want to make it clear that the illustrative guidelines are a key part of the information that the ITC will give to prospective applicants, and that they should contain examples of the type of programme they would expect to see. However, that falls short of a specification of what should be in the applications, as obviously we are not giving the ITC the scheduling powers of the IBA. I expect the IBA to make clear a point that I regularly endorse: that when weighing up an application it would expect to see the range of programming now on Channel 3, and that any applicant that fell short of producing that range could not be guaranteed to surmount the quality threshold. However, there is a line to be drawn between giving clear illustrations of the type of application that is likely to succeed, and requiring certain programme types. It is important to maintain that distinction—hence the redraft in the amendment.

Mr. Darling

I welcome the amendment, not because it meets what the Opposition were asking for in Committee but because it is beginning to move towards meeting it. The Government recognise that it will be necessary to specify the range of programmes that an applicant for a licence will be expected to provide. The Minister knows our position. We have felt all along that quality is the most important consideration and that price—although an important consideration—comes second.

The Opposition would have preferred applicants to be required to provide a range of programmes to cater for all tastes and interests. It is welcome that there has been some movement, especially on religious broadcasting and children's programmes. However, we wanted to see that further specification inserted into the Bill. I understand that the Government cannot do that as it would undermine the basic philosophy outlined in the White Paper and on Second Reading, but the amendment goes some way to meeting the objections that were raised by Opposition Members in Committee. At least now the ITC can set out from the start the type of programmes, and the range of programmes, that it wants. Applicants will therefore be in no doubt about what they are expected to do.

However, if the ITC sets out that range and an applicant still submits an application that does not meet the suggested guidelines—and none of the applicants do —does that mean that the suggestions made by the ITC fall by the wayside, or would it be entitled to say to all the applicants that none of them has met those indicative guidelines, and therefore it will re-advertise and invite people to re-tender for the franchise? If the latter is the case I would be happy, but I would be concerned if the former was the case and applicants were entitled to take notice of the guidelines but were not required to do anything about it.

Mr. Mellor

That is a pertinent point. The ITC is entitled to a view about the quality that it is looking for as a minimum before it would be prepared for any applicant to receive a franchise. If it took the view that all the applicants were found wanting, it would be entitled to reject them all. The grounds on which it could do so are a matter for the ITC, but one of the grounds might be that a sufficient width of programming had not been produced. That would relate not so much to the illustrative guidelines, but to the statutory basis for them, which is not just the amendment, but the requirement for programmes that cater for a wide range of tastes and interests, which has been in the Bill from the outset. If it felt that, tested against the sensible model in its mind, nobody had reached a level where it could confidently say that the matter had been fully and properly addressed, it would be entitled to reject everyone. I hope that that will not arise, but that is the implication of a quality fence: one does not lower the fence so that someone can hop over it.

Mr. Darling

I am sure that what the Minister has said will be welcomed. It means that the Government have moved in a way that is welcome to the Opposition and many outside the House who are following these proceedings. I regard the amendment as significant. That is one reason why I felt that it should not go by on the nod. I am grateful to the Minister for tabling it.

The Opposition have made it clear how we would have proceeded, but that does not detract from the fact that the amendment will be welcomed. I hope that having raised the fence, the ITC will also write in provisions that correspond to the general guidance when framing the licence terms. At the end of the day, the test will be what the ITC does should a franchise holder fail to live up to expectations. I hope that the ITC, when it draws up the licences, will bear that in mind.

Mr. Maclennan

I welcome the amendment as it reflects accurately what I said in Committee. It is of considerable significance, which is why it is appropriate to be debated on its own. It bears considerable weight, for although it will not enable the ITC to issue specifications it can give a considerable steer. The Minister has said that it will go considerably beyond dealing with matters of programme content.

The Minister said in last night's debate that guidelines might be a way of eliciting from applicant companies their attitude to such matters as training and networking, and whether or not they intended to invest heavily in programme production within a region. This broadly drafted amendment is one of the most significant Government amendments, and should be welcomed.

The Minister was right to make specifications in respect of religious broadcasting, children's broadcasting, and educational broadcasting. However, there are clear limits to the specifying of particular types of programme that are required of Channel 3 companies, including some specifications that necessarily appear to exclude others. Through the medium of those guidelines, we can hope that the ITC will ensure that quality considerations are very much in the minds of those applying for franchises. That will allow the diversity that we hope the new Channel 3 will. offer.

Amendment agreed to.

Amendments made: No. 51, in page 12, line 18, leave out 'and the deposit'.

No. 52, in line 19, leave out 'and (ii)'.

No. 244, in line 22, at end insert— '(ba) the applicant's proposals for training or retraining persons employed or to be employed by him in order to help fit them for employment in, or in connection with, the making of programmes to be included in his proposed service; (bb) if the application is for a licence to provide a regional Channel 3 service, a statement by the applicant as to whether, and (if so) to what extent, he proposes that any offices, studios or staff to be used or employed by him in connection with his proposed service should be located within the area for which that service would be provided;'.

No. 245, leave out lines 29 to 34.

No. 246, in line 35, after 'such', insert 'other'.

No. 247, in line 36, leave out 'in accordance with the provisions of this Part'.

No. 248, in page 12, line 40, leave out 'subsection (3)(b), (d) or (e)' and insert 'any of paragraphs (b) to (bb), (d) and (e) of subsection (3)'.—[Mr. Mellor).

Mr. Anthony Steen (South Hams)

I beg to move amendment No. 485, in page 12, line 43, at end insert— '(5A) Where a person tenders an application for a licence to provide a regional Channel 3 service at a time when

1. (i) the same person is an applicant for another such licence and has accordingly paid a deposit which is held by the Commission under this section, or
2. (ii) the same person tenders an application for another such licence,

the Commission shall reject each such application and shall return to him anything he tendered to accompany it under subsection (3)(a)-(e); and the notice published under subsection (9) shall, in relation to each such tender, state that the Commission received a tender of application by that person and under this subsection declined to accept it. (5B) For the purposes of subsection (5B), the following persons shall be treated as the same person as another person, namely:

1. (a) a person who controls that other person,
2. (b) a person who is an associate of that other person or of a person falling within paragraph (a); and
3. (c) a body which is controlled by that person or by such an associate of that person.

(5C) In subsection (5B) "associate" and "control" have the same meaning as in Schedule 2.'.

Mr. Deputy Speaker (Mr. Harold Walker)

With this it will be convenient to take amendment No. 486, in page 13, line 23, at end insert 'save in the case of an application which the Commission has rejected under subsection (5A)'.

Mr. Steen

The amendments concern multiple bidding and the ownership of more than one franchise. This is an issue of principle, as I am sure that hon. Members on both sides of the House will appreciate. It is that one television company should not be able to own or control more than one franchise.

I immediately declare an interest in Television South West, my local station—the only television company to have stated publicly not only that it believes that one television company should be enough, but that it will not bid for more than one franchise. It believes, as the Government believe, that there is a need to preserve regionalism and genuine regional channels which reflect the life of the area. TSW believes that those who work in a television channel and those who are involved in this powerful medium should be living and working in, and committed to, the area. I am glad to say that that has been the policy of TSW. All its producers and directors live and work in the region. It would like to see the Government committed to that principle. It believes that the Government, far from under-valuing it, should emphasise that commitment. The principal reason why TSW is so passionately against multiple ownership is its belief that that would dilute the regional commitment.

One regional station should be enough for anyone. This is a powerful medium, but it is more important than that. One could imagine what would happen if a rural regional station were taken over by a metropolitan station. There would be economies of scale. The metropolitan station might want to centralise such things as bookkeeping and the administration, but it could have a much more devastating effect. The first thing that would probably go would be the local flavour and local emphasis.

I have never been a particularly keen gardener, but I enjoy the nice little gardening programme broadcast in my region, in which Terry Underhill takes viewers round some of the finest gardens in the south-west. I am sure that all my hon. Friends would be delighted to see this programme. It is full of the kind of local flavour that one would want and it is about local soils and regional winds —factors about which the people in metropolitan regions will not have a clue. People living in the west country would immediately identify with such programmes. If a large metropolitan station took over my regional company, programmes such as that gardening programme would go immediately and we should end up with an urban gardening programme or one that took viewers around the country but did not concentrate on the delightful gardens with which everyone in the south-west immediately identifies.

My hon. Friend the Member for Torridge and Devon, West (Miss Nicholson) and I are both worried about how far the Government are compromising their position by allowing more than one television company. The walrus and the carpenter were upset about the oysters and cried desperately for them while eating them. One wonders whether the commitment to regional television is not rather similar. The query over the Government's commitment to regionalism can be emphasised by an analogy with the Government's policy on schools. They want more parents to be involved with and running schools and they want to give schools greater local autonomy—decentralisation rather than centralisation—but if two franchises can go to one company, one could end up with more centralisation than decentralisation. When the IBA originally granted licences, it compelled all television companies to float a single class of shares. After 10 years, TSW can boast that 30 per cent. of its shares are held by people who live or work locally.

The amendment is aimed at making television companies more like Members of Parliament. All of us have constituency interests in which we passionately believe, for which we passionately fight, and which we want to protect. If each television company has only one franchise, it will fight passionately for its region. As soon as the company extends to two large regions, that passionate commitment to each region will disappear.

8.45 pm

The Government have gone to some lengths to curtail media power and ownership—that is interventionism of a kind—but I should like the Government to say something today about curbing too much power going to one company. One company could control two franchises that covered 20 million or 25 million people—about a third of the population—if it had both the London franchise and a rural franchise. Furthermore, any company or individual in the Common Market can buy into our companies, although we cannot buy into Greek, Spanish or German companies. Foreign companies could thus buy huge stakes in our television companies and control the programmes seen by a third of the population.

The amendment is also aimed at teasing out of the Government some reduction of the power of media companies to control more than one franchise. I hope that my hon. and learned Friend the Minister, when he has heard speeches in support of the amendment, will realise that this is an important matter which has perhaps slipped through the discussions in Committee. I am glad of an opportunity to air it on the Floor of the House.

Mr. Maclennan

The hon. Member for South Hams (Mr. Steen) is wrong on only one point. The matter did not slip through in Committee. It was debated at great length and I moved amendments similar to the amendments before us now, which I support for broadly the same reasons as the hon. Gentleman.

Among television companies, there is some division of opinion about the virtues of this approach. There is no doubt that some of them are potential predators and would like to acquire small companies. They have used what they call the "penny farthing" argument about this —that in the more competitive world of television in which we are moving some small regions may find it more difficult to sustain themselves. I would rather amend the law subsequently if that proved to be the case than make the kind of provision that the Bill does, which will allow the takeover of regional broadcasting companies by other, perhaps metropolitan, companies which by definition cannot establish their headquarters in a smaller and more vulnerable region. They will find it easier to centralise and make economies of scale in production by concentrating their activities in one region.

The possibility of one region being taken over by another undermines the genuine regional commitment in the Bill. This is clearly not an oversight by the Government, because the arguments were strongly canvassed before. It is agreeable to have the support of the hon. Gentleman. I hope that he has drummed up the troops tonight so that we can give his proposals massive support. We were rather more lonely in Committee.

Miss Emma Nicholson (Torridge and Devon, West)

My hon. Friend the Member for South Hams (Mr. Steen) mentioned the walrus and the carpenter. I think that it is a slightly fishier story than that. It is rather like Jonah and the whale. I do not want the whale to swallow Jonah and then find that we have to amend the law when the whale refuses to spit him out.

We have Television South West—I can demonstrate equal partisanship to that of other western area Members —but an even smaller station is Border Television, and we all know what valuable programmes Border Television presents. I am fearful that, if Thames Television, a station in the midlands or one in Italy makes successful bids for our small stations, the local flavour that we all love will evaporate. It is difficult to foresee how a fishing programme could be presented if the company that had a major stake in the station, or owned it, was based in Saudi Arabia.

The same applies to gardening, sailing and even the inter-pub competitive games, which I suspect hinge mostly on beer consumption. Local political programmes are close to the heart of every right hon. and hon. Member. The distinctive local flavour that they offer gives us considerably more air time that we would otherwise have. Now that cross-subsidies are to continue—that surely must have been at the back of the proposed new arrangements—is there any real reason to offer the ownership of more than one television station? I ask my hon. and learned Friend the Minister to ponder again.

Mr. Darling

The arguments that have been advanced this evening were rehearsed in Committee. I do not intend to add to them, save to say that the Opposition support the amendments of the hon. Member for South Hams (Mr. Steen). The Minister has not answered satisfactorily the question about when the Independent Television Commission finds that one person is bidding for two franchises. At some stage, it will surely have to decide which bid will be favoured. I can understand that an applicant might end up winning both franchises, and that would seem to undermine the regional and almost federal structure that we are trying to establish. I say that as someone who lives in an area served by one of the smaller companies, although quite a large one. I know that people who live in the area would be disappointed and upset if they discovered that it was owned by a powerful conglomerate, for example.

As the hon. Member for South Hams said, when he referred to a gardening programme, the dilution of the regional element would be apparent if there were a communal metropolitan garden somewhere in London SW1 and different backdrops were used to make it appear that the garden was in Cornwall at one moment and in the highlands and islands of Scotland in another.

The arguments have been well made, and they do not need to be laboured. I do not expect that the Government will accept the amendment, and if it is not pressed to a Division, the issue will not be resolved tonight. I hope, however, that those in another place will give it some attention. If not, I fear that we shall find the concentration of ownership that we discussed earlier this evening creeping insidiously throughout the ITV system. If that happens, we shall end up with another national station, or perhaps one owned by two main players, rather than a regional or federal structure. That would be undesirable for broadcasting.

Mr. Mellor

The final remarks of the hon. Member for Edinburgh, Central (Mr. Darling) do not coincide with our vision. Indeed, the Bill specifically precludes what he fears. We are committed to the regional basis of the ITV system. I hope, believe and expect that the Independent Television Commission will, as George Russell has suggested, advertise for applicants to take up franchises as based on the present map. I hope and believe that that will be the shape of the system.

It has been my pleasure throughout the consideration of the Bill to make it clear that my convictions in favour of the regional base are more than rhetorical. Indeed, we have substantially strengthened the regional requirements during the Bill's progress through the House. Those who considered the Bill in Committee know that only too well. Hon. Members on both sides of the Chamber have contributed to that progress.

We play by the rules. I assure my hon. Friend the Member for Torridge and Devon, West (Miss Nicholson) that no non-European company can own an ITV franchise. I am sure that it was a slip of the tongue when she suggested otherwise. My hon. Friend was a member of the Committee that considered the Bill.

Miss Emma Nicholson

That was a joke.

Mr. Mellor

I am sorry: perhaps my ability to see jokes is letting me down at this time of night.

Whatever the rights and wrongs, only European countries can own a franchise. We cannot exclude other European countries, because of the EC rules. They would, however, have to satisfy rigorous regional requirements. I am happy to repeat that if, for example, we are talking about the franchise for Wales and the west country, it might be easier to satisfy the regional requirement if one comes from south Wales rather than the south of Italy. If that were the position, I would not be unhappy about it.

Mr. Steen

Am I right in saying that it is a one-way system? The Europeans can invest in this country, but we cannot invest in their television channels.

Mr. Mellor

I do not accept that. As is usually the position in Europe, the rules are different in each country. I accept that there are some bad examples. As a Minister in a responsible Government, I cannot recommend any arrangements that go contrary to the rules of Europe. I appreciate that other Governments operate on different bases. That is why my right hon. Friend the Prime Minister and others become somewhat angry at the cant and hypocrisy at some European gatherings, when people rhetorically commit themselves to certain policies without having the slightest intention of ever putting them into effect.

We can only be honourable. We have to create a level playing field. It is idle to pretend that it will be easy for anyone without strong regional links and a regional base to be a credible and successful candidate. If that is the position, I think that we have done a good job. We are entitled to insist on a regional and national flavour to our broadcasting that is genuine.

We have always felt that the ITV system has not benefited from the absence of active competition for many of the franchises. There was hardly any competition during the last franchise round. We want to encourage as many credible companies as possible to apply for Channel 3 licences. That is why we believe as strongly as ever in the concept of multiple bidding. Ownership concentration rules are firm. The maximum that someone will be allowed to own is one large and one small franchise that are not contiguous. If they were contiguous, the regional character would be undermined.

The only exception would be if a franchise, for whatever reason, became unviable. We cannot guarantee that that will not happen, because the financial viability of some parts of the system is extremely fragile. A commercial television system stands or falls by its ability to be commercial. Even if we have a number of penny farthings, the small franchise has to be run as an entity that by itself complies with all the rules on regionality. That is why I see no threat to the system.

My hon. Friends the Members for South Hams and for Torridge and Devon, West have spoken with great sincerity. I warmly approve of what they have said. Nothing that the Government are doing is inconsistent with the maintenance of the programmes that my hon. Friends value, as do I. There are good people in the ITV system who sincerely believe that there are currently too many franchises. Leslie Hill of Central Television says that there should be six or seven.

I take the view that we should start from where we find ourselves. I should be happy if, in 10 or 20 years, there were still 15 franchises. The Bill must take account of the fact that that might not be the case—but it must do so in a way that ensures that the regional base is maintained. Never has the regional base of the ITV system been more firmly enshrined in the statute than it is now as a result of the work that we have done on this Bill.

Mr. Steen

We are always convinced by my hon. and learned Friend's arguments. In view of his strong commitment to regionalism, it would not be appropriate to push the amendment to a vote—even though, on this occasion, he did not entirely convince me of his case. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 249, in page 12, line 44, leave out subsections (6) to (8).

No. 250, in page 13, line 18, leave out from 'shall' to `publish' in line 19 and insert— `, as soon as reasonably practicable after the date specified in a notice under this section as the closing date for applications,'.

No. 251, in page 13, line 22, leave out 'and'.

No. 252, in page 13, line 23, at end insert— `; and

1. (c) such other information connected with his application as the Commission consider appropriate.'.—[Mr. Mellor.]

Mr. Mellor

I beg to move amendment No. 253, in page 13, line 26, after 'amount', insert 'of money'.

Mr. Deputy Speaker

With this it will be convenient to discuss the following mendments:

Government amendments Nos. 18 to 21.

Amendment No. 354, in clause 17, page 15, line 9, leave out 'exceptional'.

Government amendment No. 22.

Government amendment No. 654, in clause 17, page 15, line 9, at end insert— `(3A) Without prejudice to the generality of subsection (3), the Commission may regard the following circumstances as. exceptional circumstances which make it appropriate to award the licence to an applicant who has not submitted the highest bid, namely where it appears to the Commission—

1. (a) that the quality of the service proposed by such an applicant is exceptionally high; and
2. (b) that the quality of that proposed service is substantially higher than the quality of the service proposed—
1. (i) by the applicant who has submitted the highest bid, or
2. (ii) in a case falling within subsection (2), by each of the applicants who have submitted equal highest bids;

and where it appears to the Commission, in the context of the licence, that any circumstances are to be regarded as exceptional circumstances for the purposes of subsection (3), those circumstances may be so regarded by them despite the fact that similar circumstances have been so regarded by them in the context of any other licence or licences.'.

Amendment (a) to Government amendment No. 654, in line 4, leave out from 'Commission' to end and add 'that the quality of the service proposed by such an applicant—

1. (a) (i) is exceptionally high having regard to the quality of the services proposed-
   1. (A) by all of the other applicants, or
   2. (B) in all the other applications which have been made for Channel 3 licences,
   and in either case is substantially higher than the quality of the service proposed by the applicant who has submitted the highest bid, or in a case falling within subsection (2), by each of the applicants who have submitted equal highest bids; or
   1. (ii) is to an exceptional degree higher than the quality of the service proposed by the applicant who has submitted the highest bid, or in a case falling within subsection (2), by each of the applicants who have submitted equal highest bids; and in either case
2. (b) is higher than the quality of the services proposed by all of the other applicants who have submitted bids not lower than his;'.

Amendment No. 355, in clause 17, page 15, line 9, at end insert— '(3A) Without prejudice to the generality of subsection (3) the Commission may regard the following circumstances as appropriate to award the licence to an applicant who has not submitted the highest bid, namely, where it appears to the Commission that the quality of the service proposed by such an applicant—

1. (a) is higher than the quality of the service proposed —
1. (i) by the applicant who submitted the highest bid, or
2. (ii) in a case falling within subsection (2) by each of the applicants who submitted equal highest cash bids;

and where it appears to the Commission, in the context of the licence, that any circumstances for the purpose of (3) above may be so regarded by them despite the fact that similar circumstances have been so regarded by them in the context of any other licence or licences.'.

Amendment No. 704, in clause 17, page 15, line 9, at end insert— '(3A) Where it appears to the Commission, in the context of the licence, that any circumstances are to be regarded as exceptional for the purposes of subsection (3), those circumstances may be so regarded by them despite the fact that similar circumstances have been so regarded by them in the context of any other licence or licences, and, without prejudice to the generality of subsection (3), the Commission may regard the following circumstances as for the purpose of that subsection exceptional, namely where it appears to them that-

1. (a) the service proposed by an applicant who has not submitted the highest bid is exceptionally qualified, and
2. (b) the bid submitted by that applicant is higher than the bid submitted by any other applicant whose proposed service is exceptionally qualified.

(3B) For the purposes of subsection (3A), the service proposed by an applicant is exceptionally qualified if it appears to the Commission that the quality of that service—

1. (a) is exceptionally high having regard to the quality of the services proposed by all of the other applicants;
2. (b) is exceptionally high having regard to the quality of the services proposed in all the other applications which have been made for Channel 3 licences; or
3. (c) is to an exceptional degree higher than the quality of the service proposed by the applicant who has submitted the highest bid, or in a case falling within 276 subsection (2), by each of the applicants who have submitted equal highest bids.'.

Government amendments Nos. 24 to 34, 371, 135 and 159 to 163.

Amendment No. 206, in clause 70, page 54, line 41, leave out 'other than one who' and insert 'who has not'.

Government amendment No. 164.

Government amendment No. 208, in clause 70, page 54, line 43, at end insert— '(3A) Without prejudice to the generality of subsection (3), the Commission may regard the following circumstances as exceptional circumstances which make it appropriate to award the licence to an applicant who has not submitted the highest bid, namely where it appears to the Commission that the quality of the service proposed by such an applicant—

1. (a) is exceptionally high having regard to—
1. (i) the extent of coverage of the area for which the service is to be provided, and
2. (ii) the timetable in accordance with which that coverage is to be achieved,
2. proposed by all of the other applicants; and
3. (b) is substantially higher than the quality of the service proposed—
1. (i) by the applicant who has submitted the highest bid, or
2. (ii) in a case falling within subsection (2), by each of the applicants who have submitted equal highest bids;

and, where it appears to the Commission, in the context of the licence, that any circumstances are to be regarded as exceptional circumstances for the purposes of subsection (3) above, those circumstances may be so regarded by them despite the fact that similar circumstances have been so regarded by them in the context of any other licence or licences.'

Government amendments Nos. 165, 166 and 168 to 176.

Amendment No. 215, in clause 70, page 56, line 1, leave out 'granted' and insert 'awarded'.

Government amendment No. 439.

Amendment No. 592, in clause 94, page 71, line 40, leave out subsections (2) and (3) and insert 'The Authority shall disregard the size of the cash bid in allocating the license if they consider that an applicant offering a lower bid, nevertheless offers a higher quality service more likely to meet the specific remit of the particular service and increase the diversity of available services.'.

Government amendments Nos. 442 to 445.

Amendment No. 5, in clause 94, page 71, line 47, leave out from 'that' to end of line 48 and insert 'that applicant would provide a service of substantially higher quality than that proposed by the applicant who submitted the highest bid'.

Government amendments Nos. 446 and 447.

Amendment No. 593, in clause 94, page 72, line 2, leave out 'submitted the highest bid' and insert 'they would otherwise award the license to.'.

Government amendments Nos. 448 to 451, 734 and 470.

9 pm

Mr. Mellor

In the midst of this massive list of amendments lurks amendment No. 654, which to many hon. Members is the most significant amendment. It is a second attempt—[Interruption.] Perhaps it is the second most significant. We must have a raffle to decide the most significant. I hope that the amendment will be regarded by hon. Members as a genuine and successful attempt to honour our pledge to make it absolutely clear that the ITC can invoke the exceptional circumstances provision in clause 17(3) if the quality of service offered by an applicant is exceptionally higher than that offered by the highest bidder.

For many of us—and that includes me—one of the key points of the Bill has been to ensure the proper relationship between quality and price. I hope and believe that after a great deal of work, which has involved many hon. Members who are present tonight and a number of interest groups with which we have had regular meetings, we have established a substantial quality threshold over which only a good horse can jump. If those that clear the obstacle are much of a muchness—as George Russell thinks that for the most part they will be—a necessary openness is brought to the system by the competitive tender arrangement under which the highest cash bidder wins. However, we must accept that there will be other circumstances in which one of those who surmounts the quality hurdle does so with such elan and is so manifestly better that it would be perverse to permit that application to be defeated because he put in a lower cash bid.

I have always believed that the Bill made provision for the under-bidder in those circumstances to be preferred, but it is a great joy to say that, if there was a crooked way, we have straightened it out. However, the parliamentary draftsman—it is not a policy decision by the Government —believes that we clarify the point better by establishing a double test. It is not an attempt to be clever. First, the applicant must be exceptionally good. The ITC can judge that against the others in the race, if there are a number of other applicants. However, to avoid any unfortunate consequences if there was only one other applicant, the first limb of the test might not be applicable. We discovered that flaw in our first attenpt to get things right. We have therefore removed the bid. I defend that as part of the constant quest for perfection in which we are engaged, although regularly we fall short of that. Therefore, the ITC will first have to determine whether the applicant is exceptionally good. Secondly, if that is determined and if the applicant is an under-bidder, the ITC will have to determine whether he is substantially better than the applicant who put in the highest cash bid.

That is a logical way to do it. It will ensure that the best will always win through if it is clearly and obviously the best on quality. I believe that that is what all hon. Members want—

Mr. John Greenway (Ryedale)

Hear, hear.

Mr. Mellor

Even though only one hon. Member has loyally said, "Hear, hear", I shall persist in my belief that that is what the House wants. At least, that is what it is going to get.

I have discussed the issue exhaustively with colleagues here and with other groups. I have made no secret of the fact that I have had particular assistance from the Campaign for Quality Television, and I am glad that it is happy with the amendment because it has had an important impact on the debate. As it represents successful programme makers, I have listened without hesitation to a lot of what it has said, and I have made it clear that those who apply for franchises will have to have regard for the ITC's injuctions in the illustrative guide about what the diversity requirement should mean in practice. I endorse what George Russell has been saying about that.

I hope that, as a consequence of what we have done, the Opposition will feel able to accept that this is a successful outcome for which they are entitled to claim their share of credit because we all contributed to it. It is not pious words when I say that my ability to understand a number of points with clarity was greatly assisted by contributions made in Committee.

I appreciate that there is always a temptation to say that the Bill does not go far enough—that most tedious of political pronouncements which hon. Members regularly use to get off the hook. I say, with genuine respect for the hon. Member for Birmingham, Erdington (Mr. Corbett), that I hope that he will not do that. While I can see the attractions, in theory, in not requiring someone to be exceptional and just saying that he has to be substantially better, there is a danger that if one does not start from the assumption that someone is exceptional one reverts to the dubious science of making distinctions between one set of proposals and another, where the situation is not clear cut and where one applies subjective rather than objective criteria.

I would always prefer the applicant who wants to put on classical music. I would probably not be so keen on an applicant who wanted to broadcast a lot of snooker. That is just me. I accept that most people would rather watch snooker and not have classical music. I gave an example in Committee about radio and preferring Lord Hanson's easy listening station to some classical station. Perhaps that was the right decision. It is difficult to see how the quality of one can be judged against another. It is an art and not a science.

I hope that it will be viewed as a joint achievement by hon. Members on both sides of the Chamber that we have got to this amendment. It is clear from its drafting that each individual franchise race can be considered separately. There is no question of having to rule out certain exceptional applicants because there cannot be that many exceptional applicants—each race can be considered separately. On that basis, I commend the amendments to the House.

Mr. John Greenway

We are well into the second day on Report. Unlike some of my colleagues, I have not until now paid tribute to the excellent work of my hon. and learned Friend the Minister and the way that he handled the Bill in Committee. I deliberately waited until this brief debate because the House and the country owe him a debt of gratitude for the way in which he has listened and responded to concerns about this issue. He knows as well as I that many hon. Members have spent a lot of time in different forums talking to the television industry over the past couple of years about its concerns for the future. He also knows that many people doubted his ability to deliver on this amendment.

I am sure that Opposition Members would agree that during the debate in Committee on the subject there was doubt in their minds as to whether he would be able to come back on Report with an amendment which attempted to define exceptional quality and to deal with the circumstance that he has just outlined. Against that background, the House has to pay a warm tribute to him For having fulfilled his promise.

He admitted that amendment No. 654 is the Government's second attempt to get the wording right. I am sure that he will accept amendment (a) to amendment No. 654 and amendment No. 754 which stand in my name as further suggestions as to what might be the best wording to achieve the principles that we all want to achieve—that if a bidder offered exceptional quality but not the highest cash bid the ITC would be able to award the franchise to the highest bidder without fear of judicial review.

When the Home Affairs Select Committee considered the future of independent television, as we are now to call Channel 3, we recommended that there should be a tendering process for Channel 3 licences. But when we made that recommendation—and I am sure that my hon. Friend the Member for Thanet, North (Mr. Gale) will support me in this—we felt that cash should be a determinant in the franchise allocation, but that it should not be the only one and that quality should also be given a fair chance. The principle that quality and cash should each play an important role is clearly established in the amendments. However, by the same token the Home Affairs Committee wanted to achieve a greater degree of openness and transparency in the way in which the franchises were allocated. The trick of the entire process is to strike the right balance between giving quality a fair chance and making sure that the franchises are awarded on a more transparent basis.

My only remaining concern about amendment No. 654, and the reason why I have tabled two alternatives, is that, while the principle is agreed, there may be two exceptionally high bidders. If two proposals are similarly excellent, who will win? I am sure that my hon. and learned Friend recognises that this is not the last time that Parliament will consider the matter and that he will examine the wordings in the same spirit that he has adopted throughout the Committee and subsequently and will continue to consult legal experts and various television interests to ensure that we get the wording right.

A transparent tendering process that clearly establishes what a bidder must do to win a licence is extremely desirable, whether by virtue of a high cash bid or exceptional quality. The Government's amendment is admirable and welcome so far as the principle is concerned but there must be no ambiguity in this vital matter. I certainly want the issue to be settled without deviating from the principles that my hon. and learned Friend has already laid down in his brief speech in this short debate. I suggest that he looks at the wording of the amendment to ensure that, in the event of a tie between two or more exceptionally high quality bidders, the highest cash bidder of that group should win. That would enforce the principle behind the Bill. It is a sensible suggestion, and I believe that it would improve and clarify the Bill. I am sure that my hon. and learned Friend will consider the matter again before the Bill is debated in detail in another place.

Mr. Corbett

As the Minister, and the House will know, when we began debating the Bill, our major concern was the way in which the Government proposed to sell off Channel 3 licences to the highest bidder, once the so-called quality threshold had been met. Let me acknowledge immediately that that concern has now been softened to some extent by amendment No. 654. The Minister is quite right, because when we first debated the matter there was concern throughout the Committee that the Government's intentions were not stated clearly enough on the face of the Bill to protect the Independent Television Commission from judicial review from 40 bidders.

I cannot agree entirely with the hon. Member for Ryedale (Mr. Greenway). The message I received from him was that the wording now proposed by the Government gives the ITC almost absolute protection from judicial review. I am no lawyer, and nor is he, although at one stage he was close to one end of the law, but I can foresee courts having expensive arguments—I am not nit-picking, but the point is worth making—about the difference between "exceptionally high" and "substantially higher". Many an expensive hour will be spent in court considering that.

We welcome the fact that the Minister has made clear that the new definition of exceptional circumstances will apply to all the applications made for licences for the new commercial Channel 3 network. We feared at one stage that it might apply to one or two licences. That is an improvement and I do not want to disguise that fact. The Minister was kind enough to say that the Opposition played their part in persuading him to think again and to consult his colleagues. I should like to join the tribute that he paid to the Campaign for Quality Television and to the others who have much interest in and knowledge about these matters.

I began by giving our objections to the method of disposing of Channel 3 licences, but how much of a change does amendment No. 654 make? It certainly makes no change in principle. Hon. Members who served on the Committee will remember that the exceptional circumstances clause was to empower the Independent Television Commission to take into account such factors as higher quality and to enable it to award the bid on quality grounds and not to the applicant who had not submitted the most cash.

I acknowledge that the amendment has clarified and strengthened the Bill, but the principle remains. Any money collected from the licensees other than that collected from the levy on national advertising revenue, which in effect is a continuing premium on the right to broadcast on scarce wavelengths, is money taken off the screen. It is money not going into programme diversity, range and quality; it is money that cannot be spent twice; and it is, at best, some of the money that would otherwise have been for programming.

The Government have accepted that in a roundabout way. I believe that is why another of the strong pillars of the Bill is the dropping of many of the public service broadcasting obligations from the present ITV franchise holders. The Minister has said many times that he sees the new Channel 3 system as being a notch below public service broadcasting. Recently that nice Mr. George Russell expressed it another way when he said that he saw the new system as being about 80 per cent. of the present public service broadcasting commitment.

Our gravest doubts centre on what will happen to the quality of programming in terms of diversity and choice. By that, I mean choice that is new and challenging and that innovates and encourages the opening of eyes and ears to what is different. I know that that concern is shared by Conservative Members, because two early-day motions —one was signed by about 60 and the other by about 80 right hon. and hon. Members—were tabled drawing attention to those concerns. It may be said that the amendment meets those concerns, but that was not just a narrow party political interest.

As I have said, this group of amendments goes some way towards meeting those concerns. However, the highest bid—or something near to it—remains at the heart of the Bill. We believe that the viewer will pay the real price through fewer factual programmes. I do not want to weary the House too much on this joint. However, it is worth recalling the results of the IBA survey of attitudes to television that was carried out in 1989. From that, we all know what people want more of, but it is interesting to consider for a moment what people would like less of. For example, 30 per cent. of viewers would like to see fewer older and classic films and that surprised me; 29 per cent. of viewers would like to see fewer variety shows.

Dame Elaine Kellett-Bowman (Lancaster)

Oh.

Mr. Corbett

I am just quoting the research.

The IBA survey showed that 39 per cent. of viewers would like less pop and rock music, and I am probably among that number; 42 per cent. would like fewer quiz shows; and, panel games; 43 per cent. would like fewer chat shows and bottom of the pops in this sense, a clear half of the viewers asked would like to see fewer soap operas.

Dame Elaine Kellett-Bowman

What would they like more of?

Mr. Corbett

If the hon. Lady wants to know, I will lend her a copy of the survey.

My point is that there is a strong and growing demand according to the research for more factually based programmes. They are not dull and because they are factual it does not mean that they do not entertain. Such programmes are essentially factually based.

From the experience of similar shake-ups in the broadcasting systems in France, West Germany and Italy, we know that the first casualties were factually based programes. I have shown that there is a strong demand. No doubt the Minister will tell me that we do not have to enshrine that in a continuation of the public service broadcasting requirements because, if it is that clear, even the thick heads running the present ITV system will respond to it.

In our judgment, in an increasingly competitive environment in broadcasting, particularly with the advent of the two satellite channels and the promise of many more to follow, there will be growing competition for viewers. Of course, one of the ways to attract viewers is to tailor programmes for them and in turn those programmes will appeal most to the advertisers. I am not talking about viewers en masse; the advertisers will be interested in particular groups of viewers who have certain amounts of money in their pockets or purses at particular times of the day or night. That is where the pressure will be. No doubt if the hon. Member for Colne Valley (Mr. Riddick), who preached the unbridled merits of the free market earlier, was here now, he would be jumping up and down and cheering at my definition.

The Government's proposal, even with the amendments, puts the range and diversity of quality at risk. It is even more curious because in Committee the Minister told us that the amount of money that would be paid for the licence—let us describe that as the brown envelope—did not have to be tipped in up front. He said that it could be paid in instalments over the licence period. I do not object to that, but the Minister could arguably end up with less money than the income from the levy on national advertising revenue.

There is agreement that advertising revenue is hardly likely to grow at the moment. Indeed, there is some doubt whether it might dip off after a period of swift growth. It could be argued that over the whole of that licence period there will be a substantial growth in advertising revenue. The Government have the ability to adjust the levy. It is not necessarily fixed. They can change it year on year or take a gamble and say, "We shall have X per cent. throughout the period." That would fit in with the Government's free market philosophy. It is what they preach to everyone else. They tell people to try their luck and hope that the system will turn up more cash than was expected at the beginning of the franchise period on the back of the growth in advertising revenue.

I do not criticise the Minister. I wish to be open and to acknowledge the way in which he listened, consulted and responded and came back to the House with the amendment. However, the system of which the amendment is a part will not secure real, widened choice among a diverse range of quality programmes in the year ahead. I acknowledge that there is no perfect system and that both our way and the Government's way involve some highly subjective judgments.

The Minister denies that he is the author of the phrase "Becher's brook", and I accept that. I think that it was that nice Mr. George Russell again who used the term. The House is probably aware, but I owe it to the Radio Times for telling me, that the reason why that fence enjoys the name Becher's brook is that the first person to jump it was a rider by the name of Captain Becher and he came off his horse. The Minister said that he hoped that I would not say that the amendment did not go far enough. Well, I have not said that. However, the amendment does not meet our basic objections to the way in which the Government propose to award the licences. That is why we shall press the amendment to a Division.

Mr. Maclennan

The House can have no sense of the drama in Committee when these matters were discussed. Many members of the Committee—I venture to say almost all of them—felt that if the Government did not table an amendment such as the one before us, the future of television broadcasting would be led downhill and we should preside over a serious lowering of standards.

We view amendment No. 654 as a lifeline for television. The drama in Committee was created because people genuinely did not know, not what the Minister had in mind but how the Government would decide the issue. The Minister was probably always sympathetic to the view, although he accepted the legalistic point that it was not necessary, that the Bill would be strengthened by spelling these matters out for the avoidance of doubt. It is therefore right to pay tribute to him. I have no doubt that he had to persuade his colleagues of the virtue of the position that he has taken and has encapsulated in the amendment.

The amendment is well worded and I congratulate those who have played a part in drafting it. It should not lead to litigation and it will withstand judicial review. It makes it clear not only that the quality must be exceptionally high but that the bid which is lower in cash terms must be substantially higher in quality. That strengthens the quality requirement.

Having said that the amendment is an essential lifeline, do not take the view that it is the ideal way of allocating Channel 3 licences. I acknowledge that the old system was not appropriate to a more competitive world. It lacked transparency and meant that the market was slow moving. There was a need to free up the system to make it more competitive. The Government were right to legislate, but they should have considered legislating on the basis of competition and quality. Greater transparency in bidding would have allowed for that, as it would have enabled the regulatory authority to make its judgments in an open marketplace. Published bids would have indicated a good deal more about their quality than anything available in the past. None the less, the Minister has saved us from a catastrophe and we are grateful for that.

The two amendments tabled in my name which appear in this group relate specifically to radio, but the Minister has taken some care about radio quality and I thank him. I do not expect that the Minister will be surprised if, enthusiastic as we are about the work that he has done, we feel it inappropriate to join him in the Lobby. We do not commend the entire scheme—we make the best of a bad job. Therefore, my right hon. and hon. Friends and I will join the Labour party in the Lobby tonight.

9.30 pm

Mr. Simon Coombs

The amendments in my name in the group relate to clause 70, which refers to the cable industry. I thank the Government for tabling a number of amendments to clause 70 which go a long way towards meeting the points made by myself and colleagues in Committee.

As with Channel 3, it is important that the term "exceptional circumstances" should be explained and that is why amendment No. 208 needs to be discussed. It addresses the important problem known as "cherry picking" and deserves careful thought.

The cable industry is relatively new, but investors have already demonstrated confidence in its future by beginning to build systems and by establishing channels. The current telecommunications licence requires cable operators to cover 100 per cent. of an area. Investors may well be encouraged by the abolition—

Mr. Mellor

My hon. Friend looks dubious and perhaps I should repent on what I am about to say. I accept his amendment in principle and we shall bring forward amendments to that effect in another place, although he would perhaps rather that I did not.

Mr. Coombs

If it were always that easy, we would not be here for nine hours at a time. I am grateful to my hon. and learned Friend. He has not had the opportunity to listen to my argument on this occasion, but I know that he is familiar with it. I am prepared to accept his undertaking that an opportunity to deal with the problem will arise in another place.

Under the present proposals an operator can choose to develop only the most attractive part of the area for which he has been granted a franchise. He can leave the other parts of the area uncabled, but my colleagues and I believe that that would be inimical to the best interests of the cable industry, its growth and future. If my hon. and learned Friend is prepared to take steps to prevent that from happening, or at least to ensure that different types of application for the development of a franchise are dealt with carefully in the bidding process, I shall be happy not to press my amendment.

Mr. Austin Mitchell

I have not had the privilege of watching the Minister's evolution in Committee. I wish that I had because it has clearly been fascinating. It is rather like the Virginia Slims advert—"You have come a long way, babe." Unfortunately, there is still a good deal to do. The real problem is not the progress that has been made since—welcome though that is, and I am not seeking to knock or denigrate the Minister whose achivement is considerable—but the starting point from which he was forced to make that pilgrimage. That starting point should never have been ordained and put into the Bill.

The interesting question is, who decided to do so? Why did we develop the idea of auctioning television franchises? That is the crime and sin. As soon as that concept came in, it distorted the Bill's purpose. Who was responsible? I still do not know and it would be fascinating to know. Was it ordained by the Prime Minister?

Mr. Gale

rose—

Mr. Mitchell

I do not think that the hon. Gentleman will be able to tell me, fascinating as it might be. I do not think it was him, mad as the idea is. I imagine it must have been the Prime Minister—perhaps the Prime Minister's revenge on ITV or the greed of the Treasury. However, it is certainly wrong because it distorts the nature of television companies to make cash paramount. Accumulating a war chest of money and the ability to make the bid becomes the dominant consideration. As soon as that becomes paramount, the quality of production and the need to be expert producers of quality programmes goes by the board. That is why the decision to introduce the auction is already distorting the companies' nature.

Many of the companies are taking on staff, shedding labour—as Central Television is—or worsening the conditions under which people work—as Granada Television and Yorkshire Television are. There is confrontation as the companies try to squeeze more cash out of existing businesses at the expense of good industrial relations and quality of production. That distortion is already occurring.

The Minister has resiled, and has still further to resile from that position. We welcome that progress, but we must recognise it for what it is—progress away from a position that was wrong, insane and detrimental to good television and quality production. I say well done to the Minister for what he has personally achieved, but he should never have been put in that position in the first place.

Sir Peter Blaker (Blackpool, South)

I support my hon. Friend the Member for Swindon (Mr. Coombs). I welcome what the Minister said in response to my hon. Friend about introducing an amendment in another place to pursue the theme of amendment No. 208.

I believe that factors are relevant to quality in connection with cable other than simply the coverage of the area and the time scale of construction. For example, community programmes are, in the cable context, equivalent to regional programming in connection with Channel 3.

My hon. and learned Friend will have observed that the pre-qualification conditions relating to cable in clause 69 are much slimmer than those in clause 16 relating to Channel 3. When he drafts the new amendment he promised, I should like him to take account of some of the factors in clause 16 that are relevant to cable, such as community programming.

Mr. George Walden (Buckingham)

Earlier in this debate some of my hon. Friends, each in his or her own gentle way, pointed out certain shortcomings in the Bill in relation to quality. As someone who supports a Government who purport to be radical, I thought that here was a chance to take a radical view of a broadcasting matter, look at the whole sphere of what was happening and likely to happen in broadcasting and decide to go for quality as a way to secure and perhaps to reinforce broadcasting against a possible decline of quality. I also saw it as a chance to reinforce radical policies, particularly in education. As we know, the Bill started off with another sort of radicalism that seemed entirely inappropriate in this context.

However, as the Minister of State frequently reminds us, we must not let the best become the enemy of the good. I have looked extremely carefully at what the Minister has achieved. I see his achievements on this part of the Bill together with the provisions for the ITC to produce illustrative models of programmes. I cannot pretend that the amendments satisfy my inclinations, which would have been simply to have a quality auction and for the Treasury to sacrifice a certain amount of money in the process. Clearly that was never going to happen, and it will not happen now. It would be tedious repetition for me to go on with the arguments.

I acknowledge gratefully what my hon. and learned Friend the Minister of State did in Committee. I shall finish with one more Cassandra-like thought—that once again all the debate and all the efforts will be set at naught if the Government persist in over-excited tinkering with the BBC. Having got the position more or less acceptably right, they could send the whole thing spiralling slowly downhill if they started doing anything that would interfere with the public service standards of the BBC. Those standards are by no means what they should be, but they could be made a damn sight worse.

In not joining the Opposition for once, if it is their intention to vote against the Government, I emphasise strongly that I shall continue to scrutinise future Government policy on the BBC.

Amendment agreed to.

Mr. Speaker

We now come to amendment No. 41, with which it will be convenient—

Mr. Corbett

On a point of order, Mr. Speaker. We had intimated that we would seek a Division on amendment No. 354, which was in the group with amendment No. 253.

Mr. Speaker

We have not reached that on the amendment paper yet.