Commons Sitting of 29 October 1999

Preamble
The House met at half-past Nine o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
PRAYERS

  Broadcasting
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Pope.]
  9.33 am
  The Secretary of State for Culture, Media and Sport (Mr. Chris Smith): Broadcasting is close to the hearts of many Members on both sides of the House because it is of enormous importance to our constituents. I am pleased to initiate this debate as broadcasting reaches yet another important milestone, perhaps the most significant for society in the longer term.
  The debate is particularly timely. One year on from the start of digital satellite and digital terrestrial services, with cable operators beginning to roll out their digital services, and just two weeks since new interactive services began, the digital revolution could be said fully to have arrived. We are beginning to see the strengths of the new technology not only in providing more choice and diversity of entertainment for viewers, but in adding to traditional broadcast services new interactive services, connections to the internet and, more generally, an easy introduction to other forms of electronic communication, which Government and industry are increasingly adopting to conduct business. The latest figures show that 1.8 million people have signed up to digital television in this country and it is growing daily.
  Mr. Gerald Kaufman: Will my right hon. Friend confirm that, when he says 1.8 million people have signed up to digital television, that means that they have signed contracts with commercial providers of digital television?
  Mr. Smith: That is correct. Those people have signed contracts either with ONdigital, or with digital satellite through Sky. Over the past couple of weeks, they may have signed up for digital cable services as well.
  In the excitement that has been generated by the digital visions of the broadcasting industry, we must not lose sight of the ordinary viewer's needs and of the importance of ensuring that all sections of society have access to the new services. Several issues need to be resolved, and new ways forward need to be debated to ensure that we get it right. I intend to provide as clear a policy and legislative framework as possible, which will enable broadcasters to plan with confidence and, at the same time, ensure that consumers' best interests are furthered and protected. Before we take final decisions, for example, on the Davies report on the future funding of the BBC, it is important for us all to listen to what Members on both sides of the
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  House, the Select Committee on Culture, Media and Sport, which is so ably chaired by my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman), and the world outside have to say.
  I raised several important issues when I addressed last month's Royal Television Society conference in Cambridge. I hope that hon. Members will use the opportunity to debate fully many of the key issues and their other concerns.
  At the conference, my aim was to look forward and to promote the future of digital broadcasting, but, at the same time, to reassure the public about the safeguards that should be put in place. I wanted to set out the Government's thinking on the time scale of the switch-over from analogue to digital broadcasting as soon as possible because it is a key issue for broadcasters and for the Government, and of immediate concern to viewers.
  Viewers need to be fully informed of the advantages and opportunities of the new technology. Those who want to continue simply to receive free-to-air channels need to be effectively protected. I have set two crucial tests that must be met before the analogue signal is fully switched to digital: a test of availability and a test of affordability.
  We need to ensure that, at the very least, everyone who currently receives free-to-air analogue channels—99.4 per cent. of the United Kingdom population—is able to switch over and to continue to do so digitally. The digital signal must be receivable by as many people as currently receive the analogue signal.
  Mr. Norman Baker: I am grateful for that point, but does the Secretary of State accept that the 99.4 per cent. mark that he has set means that 150,000 households will not be able to receive digital television? Should not the opportunity of digital television be taken to ensure that households that cannot receive analogue television are able to receive digital television?
  Mr. Smith: I sympathise with the hon. Gentleman's point. He will have noticed the crucial phrase "at the very least". I hope that we can aim for absolutely universal coverage, which would, of course, be better than is achieved under the analogue system. Achieving that level of coverage will not be easy. Over the next two years, one of the main tasks will be to establish the best technological means for doing so. It may not be the case that all the service is delivered to all people by digital terrestrial means. We may need to use other technical means to reach the entire population.
  I welcome the work being undertaken by the Radiocommunications Agency, and the establishment by the Independent Television Commission, the BBC, NTL and Crown Castle Transmissions of an advisory board to develop further the frequency plan for digital terrestrial television and the use of cable, satellite and new transmission technologies.
  Consumers must not face unacceptable costs when switching to digital services. "Affordable" must mean that prices are within the range of people on low and fixed incomes, including pensioners. It is also essential that those who want to watch only the free-to-air channels should be able to do so without heavy costs. The level of take-up of digital equipment will be a key measure of progress. I want to ensure that at least 95 per cent. of consumers have achieved access to digital before the switch-over.

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  We also need to ensure that it is easy for consumers to switch between different platforms and providers. The three regulators—the ITC, Oftel and the Office of Fair Trading—are taking forward my request that they advise the Government on options for ensuring that the digital television market does not develop in a way that inhibits competition or sets unnecessary barriers to access to new services. The aim has to be that the viewer can make a ready and easy choice between terrestrial, satellite and cable, and does not have to invest in a tower block of set-top boxes to do so. We want to encourage the development of affordable equipment that facilitates open access as far as possible.
  The full switch-over to digital transmission will not happen until the two key tests of affordability and availability are met. That could start to happen as early as 2006 and could be completed by 2010. With the help of the industry, that time scale can be achieved. However, I emphasise that the tests, not the target dates, are paramount. We shall need to make regular checks to measure progress against the two key tests and to check our assumptions against what is happening in the marketplace. I intend to do that through a series of two-yearly reviews, beginning with a formal consultation of the BBC, the ITC, the industry and consumer groups before the end of 2001. The reviews will enable us to take any necessary action to accelerate take-up levels.
  It is particularly important to have an independent view from consumers. I am in the process of setting up a viewers' panel, which will assess the evidence provided by industry, broadcasters and the Government at each review stage and will report on the matters that are causing most concern to the public. My intention is that representatives of consumer organisations and pensioners will feed their views directly through the panel.
  For switch-over to happen, we need the confidence and support of consumers. It is clear from speaking to consumer organisations and constituents, and from letters that we have received from hon. Members and from the public, that there is considerable confusion among viewers about what digital means and about what services and equipment are available to them. No one is explaining what digital television as a whole has to offer. There is robust commercial competition between companies offering different digital packages, but no one is explaining to the public what digital means. I have invited the major broadcasters, manufacturers and retailers to meet me on 11 November to discuss ways of giving consumers clear, general messages about what digital has to offer, reassuring us about the timetable for switch-over and giving information about the tests that will have to be met.
  Mr. Peter Ainsworth: I welcome what the right hon. Gentleman has said about getting together with the industry and other interested parties. There is a need to inform the public about what is available.
  The 95 per cent. threshold is potentially a crude measurement. Many households have more than one television set. Does the threshold mean that 95 per cent. of households should have digital television? If so, what
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  happens to all the television sets that are not accessing digital technology? Will teenagers across the country find that their bedroom television suddenly goes blank?
  Mr. Smith: We do not want to deprive teenagers around the country of access to television in their bedroom. During the next seven to 10 years, the price of set-top boxes and integrated television sets will undoubtedly tumble. That always happens with the development of such technology. A second-hand market in set-top boxes will also develop as people purchase integrated sets and their old sets begin to wear out. The NERA report last year showed that the turnover time for an average television set is about seven years. As people buy integrated sets, they will hand on their set-top boxes to children's bedroom televisions.
  The threshold is a relatively crude measurement. It cannot take account of every second or third set that people have. However, it is a useful broad measure of our progress on the tests of availability and affordability, and it has been broadly welcomed following the Royal Television Society speech.
  Mr. Baker: I thank the Secretary of State for giving way again. I should like to push him on the 95 per cent. figure, which seems to be set a little low. It will mean that 1.2 million households will have their televisions rendered obsolete overnight. Those who have not invested in digital television may well be the poorer members of society. What does the Secretary of State have to say about those who do not have the means to invest in a new television and will have their old set rendered obsolete?
  Mr. Smith: We shall have a more precise time scale well in advance of switch-over and as we approach that moment, it will be in the interests of the television broadcasting industry to ensure that the final 5 per cent. are helped directly to make the switch-over. We do not want a substantial segment of the population to be deprived of access to television.
  It is important that all sections of society should have access to the current free-to-air services. In particular, people with disabilities could benefit from the new and sophisticated services that digital television offers. There is too often an assumption that digital television is of interest only to those who want a greater choice of programmes. It brings many other advantages. For example, it can ensure better signing services for deaf people. Through the links with interactivity, it can enable the development of home delivery services for housebound people. It can help to provide community information and welfare advice for people who face disadvantage and difficulty.
  I want to encourage viewers to take up and enjoy new additional services, including basic internet access, which will also become possible with the combination of digital television and telephony. Beyond that, we want digital television services to achieve much more. We want to broaden access to our rich and varied cultural heritage, to the arts and to sporting events. We want everyone to enjoy opportunities to further their education. Television, with its almost universal access, is an excellent way to begin to achieve those aims, and digital technology opens up the prospect of dedicated community education and other learning channels, backed up with interactive services.

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  Nor should we lose sight of the role of radio services in the digital era. Radio was the first medium to enter the digital arena. The BBC has broadcast digital radio services since 1995 and now has a reach extending over 60 per cent. of the United Kingdom. The BBC offers Radio 1, Radio 2, Radio 3, Radio 4 and Radio 5 Live, and is developing a range of new services. They are soon to be joined by the first national commercial radio service, Digital 1 which is due to launch in November, followed soon by the first local and commercial digital radio services.
  Mr. Desmond Swayne: Although these are exciting developments, does the Minister accept that they do not add greatly to the difference in output of the existing radio network? There is an opportunity to provide greater variety, including religious output. Is it right that religious output should be excluded from this increase in choice?
  Mr. Smith: The hon. Gentleman will know that the Broadcasting Act 1990 disqualifies groups whose objectives are wholly or mainly of a religious nature from holding a terrestrial national radio licence issued by the Radio Authority. That disqualification does not extend to local, satellite or cable radio licences where the authority is permitted to license religious bodies, subject of course to compliance with its guidelines. There are two such satellite licences—UCB Europe and Cross Rhythms—and Premier Radio has a terrestrial radio licence in London. There has been considerable pressure from United Christian Broadcasters and others to change the system. My hon. Friend the Minister for Tourism, Film and Broadcasting has taken a very keen interest in these matters and has had detailed meetings with UCB to see whether progress can be made. It is difficult to make progress at present because we are still at a relatively early stage in the development of digital radio, but we want to continue our close dialogue with UCB and others about the possibilities that may arise. My hon. Friend may have more to say about that later.
  Digital radio can offer an increased number of programmes and, importantly, the potential to deliver a range of data services via the radio. I recognise the investment and work that the industry will have to put in to develop and promote digital radio. I suspect that it will be a much slower process than the development of digital television, but I am sure that, over time, consumers will embrace this new technology.
  I am sure, however, that a major concern to consumers, in addition to the new services that will be available to them, will be whether they will continue to enjoy high-quality services. We must remember that people are not interested in watching delivery platforms; they want to watch programmes. Programmes are important and ultimately will drive any particular change.
  All broadcasters will need to produce quality digital content to attract customers and there is a strong role for public service broadcasters—particularly the BBC, ITV, and Channels 4, 5 and S4C—in providing a diversity of viewpoints and acting as a quality benchmark.
  The BBC has a particular duty in this respect. The primary message that the House should send the BBC is one that I am sure all right hon. and hon. Members will endorse. It is that the future role of the BBC, which
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  will be even more important in the multi-channel age, will be to provide a quality benchmark against which all other broadcasting has to be measured. The BBC should be chasing quality rather than ratings.
  In that respect, I disagree passionately with the speech that Richard Eyre from ITV made in his McTaggart lecture earlier this year. He spoke about the death of public broadcasting and tried to redefine public service broadcasting as public interest broadcasting. In particular, he said that, nowadays, the BBC should not be in the business of aiming just a little above people's heads—just beyond their immediate horizons, challenging them to reach up to something which they had not hitherto known was of interest to them. I strongly disagree. I believe—not for 100 per cent. of its programming, but for some of what it does—that the BBC should seek to stretch people and challenge them to do something that is beyond their immediate horizons; I very much hope that it will continue to do that.
  Let me make one point about content, which relates to the ITV environment since the changed timing of the "News at Ten". As the House will know, when the proposal was made, I expressed a personal view—it is not a matter on which the Government could or should take a view—that I was disturbed by the potential consequences of the move. The change was approved by the Independent Television Commission, but it is worth noting that approval was given on several strong conditions. First, there should be no diminution in the funding or the range and quality of national and international news on ITV; secondly, ITV would schedule a regular headline service in the nearest break to 10 pm on weekday evenings; thirdly, the commission expected ITV's commitment to public service values to be undiminished and for the more diverse range of programmes proposed between 9 pm to 11 pm actually to be delivered; and fourthly, ITV would schedule an agreed quantity of 30-minute slots for high-quality regional programmes in or just outside peak time on weekdays throughout the year. Those were the conditions that the ITC set in agreeing to the shift of "News at Ten". It indicated that it would review the changes after 12 months.
  The chairman of the commission recently expressed concern at the decline in viewing and ratings figures for ITV regional programmes and made it clear to ITV that the trend needed to be reversed before the formal review next spring. I very much hope that, when the ITC reviews the position at ITV since the shift of "News at Ten", it will look carefully at the commitments that were given and the conditions that were laid down at the time, and will be prepared to be robust about any analysis of whether those conditions and commitments are being met.
  Protecting quality was one reason why I asked the independent review panel, chaired by Gavyn Davies, to focus specifically on ways in which the BBC's role could be enhanced. The panel put a great deal of time and effort into producing a measured and thoughtful basis for public consultation. I am grateful to Gavyn Davies and his committee for the work and the imagination that they put into the report, which was published at the start of August. The closing date for consultation is Monday, and we have received more than 1,000 responses, with more coming in as I speak.

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  I do not need to tell hon. Members how important the issues covered in the report are for the general public, as many of those responses came via constituency Members of Parliament. I have indicated that we aim to reach decisions on the Davies recommendations around the end of the year when we have had an opportunity to consider all the responses fully. Therefore, it is not appropriate for me to give a Government view today. Our minds are genuinely open, and I want to take account of what the industry, the Select Committee and hon. Members today—as well as the general public—have to say.
  One of the issues that needs the most careful consideration is the extent to which the BBC can help itself through efficiency savings, improved licence fee collection, more effective commercial exploitation of its assets and a transfer of resources out of bureaucracy and into programme-making. This is why I have adopted one of the recommendations of the Davies committee; I will shortly announce the appointment of consultants to carry out a rigorous and wide-ranging study of the BBC's financial projections, which will enable us to reach a view on the appropriate level of funding for the BBC up to 2006.
  The consultants will, therefore, review the BBC's evidence to the Davies panel, taking account of the latest information available, the panel's recommendations relating to BBC funding and those areas that the panel was unable to assess in detail. The consultants will also review the BBC's assessment of the costs of its future service plans over and above maintaining existing services. I will publish a summary of the consultants' findings when I announce the Government's decision on the Davies recommendations.
  I felt that it was extremely important for us to have some objective, non-partisan analysis of the detailed figures of the BBC before reaching final conclusions on the Davies report. The work of the Davies panel, the public consultation and the follow-up consultancy exercise are vital to the UK broadcasting ecology of which we are all so proud.
  Because the profusion of the multi-channel digital future will not render public service broadcasting unnecessary, there may be reasons for reaffirming—and, to some extent, reinventing—public service broadcasting, but it will remain highly relevant. As our principal public service broadcaster, the BBC should continue to set the benchmark for the industry as a whole. We do not want the main result of digital abundance to be a trimming of expenditure and quality. We do not want more to mean worse.
  There must still be a place for the new, the unexpected and the original, and for the unashamedly educational. Viewers expect to be able to choose difficult, but rewarding, new and stimulating programming from time to time, as well as the tried and tested. Public service broadcasters will have an important role to play in the digital future, as trusted guides and defenders of the principle of universality. The potential for social exclusion is increased by technological advances, and we will look to our public service broadcasters to counter that effect. If public service broadcasters are to continue to thrive, they must be seen to adhere to their public service remits, and to demonstrate their accountability to the public and to democratic bodies.
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  In future, public service broadcasting must be something distinctive and special, with correspondingly distinct regulatory arrangements, rather than the regulated norm from which everything else deviates. That, in turn, means that public service broadcasters need to rise to the challenge of restating their purpose and demonstrating to the public that the purpose is being met.
  As the number of channels increases and new technologies offer new features, such as time-shifted viewing and internet access, our system of regulation will need to evolve. Although there will always be different views about difficult cases, overall, this system has been very effective so far in maintaining standards and providing a reasonable level of consumer protection. The watershed, in particular, is widely recognised and accepted by viewers.
  Changes in technology and the increase in channels will make it more difficult and, arguably, inappropriate to apply effective regulation in the same detailed way. We want to strike a balance between responding to these changes and facilitating the development of the industry on the one hand, and remaining true to the principle of providing viewers with adequate protection on the other.
  We are, therefore, working with the ITC to examine how regulation in the short term can be simplified and applied more lightly. We are concerned that viewers should know clearly when they are watching broadcasts meeting familiar standards, and when they are in a new environment, as they might be when accessing the internet through interactive services.
  Viewers will need new skills to navigate the new media world safely. It will be increasingly important to develop critical viewing skills for the general viewer, for parents and teachers responsible for children, and for children and young people themselves to supplement the regulatory system as it evolves. To this end, my hon. Friend the Minister for Tourism, Film and Broadcasting—together with the Under-Secretary of State for Education and Employment, my hon. Friend the Member for North Swindon (Mr. Wills)—chaired a seminar earlier this week of senior figures in broadcasting, education theory and parenting support to examine the issues and the options for action.
  The research work of the Broadcasting Standards Commission will be important in providing an insight into viewers' developing attitudes. Most commentators expect that the main terrestrial channels will continue to provide the majority of television watching for some time to come. However, we need to be looking ahead to the new era and ensuring that our regulatory and legislative framework is sufficiently future-proof.
  Digital broadcasting has the potential to bring great benefits to viewers of televised sport. Additional services will mean that viewers will have better coverage of more sports events on more channels. However, the Government will ensure that viewers who cannot afford—or do not want—subscription services are not excluded from access to nationally important sporting occasions.
  Last year, I extended the list of events for which live and secondary coverage on free-to-air channels is protected, adding several events for the first time. I shall continue to monitor the scope of the list as digital services develop further.
  The UK leads the world in digital transmission technology. The Government's aim is to have a regulatory environment that will enable and encourage the television

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  and radio broadcasting industry to flourish. However, content will be the king in the digital future. I want to ensure that programme makers are best placed to identify and take advantage of all the opportunities this will bring.

  The export of programmes and programme formats can benefit both the industry and viewers by generating funds for investment in the domestic market. The UK is already very successful at selling programmes overseas, but our industry can do better and, to this end, I appointed an inquiry earlier this year to make recommendations on measures to support export efforts. We shall shortly publish the inquiry's sensible and realistic proposals for the industry and for Government action.
  It is equally important that we develop the talent and have the trained work force to maximise the opportunities offered by digital. The success of the industry in an increasingly converged market will rely heavily on the skills and talents of the work force. That is why my Department, together with Skillset, has established a training group of key industry players under Roger Laughton's leadership. The group, which met for the first time last month, is already setting about the task of identifying current and future skills needs and considering what needs to be done to ensure that the skills are there to allow the UK to compete effectively in the world media market.
  We have challenged the industry to make digital television a success, but the Government have a clear role here in driving forward the change. I have taken the view shared by the industry that an evolutionary approach to broadcasting regulation is right and broadly sustainable for the time being. However, it is clear to me that the time for a more fundamental assessment of broadcasting legislation is coming and I anticipate that we may be able to include major broadcasting legislation early in the next Parliament.
  The main issues for such legislation might be the role of the regulators, the role of the public service broadcasters and media ownership. I want to proceed with that work without delay. I am setting up a dedicated unit within my Department, and we will announce its programme of work and the consultation process in relation to these issues shortly.
  This is a time of great expansion in the broadcasting industry. The development of digital technology will need a clear and careful steer from both Government and Parliament to ensure the continued success of the industry and to ensure that the interests of all consumers are protected. My announcement of a switch-over date and the prospect of new legislation is only a beginning, but I believe that it is a positive one on which to build a successful UK broadcasting policy.
  10.12 am
  Mr. Peter Ainsworth: I offer the apologies of my hon. Friend the Member for West Suffolk (Mr. Spring), who has donned his tourism industry hat and is visiting a coastal resort. I welcome my hon. Friend the Member for Mid-Dorset and North Poole (Mr. Fraser) to the Front Bench; he will wind up the debate for the Opposition.
  I welcome this opportunity to discuss the future of broadcasting. It is a bit of a pity that the Government have tucked this debate away on a quiet Friday at half term, in a week of thin business. Broadcasting deserves better; it
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  is a dynamic, growing, highly skilled industry, a powerhouse of new jobs that contributes an increasing amount to our gross domestic product, and something that we do extremely well. Britain is at the forefront of exploiting many of the new technologies. Our broadcasting industry is a showcase for our creative talent: our writers, actors, producers, directors and presenters. We can be justly proud of their work.
  Like so much else that is sponsored by the Department for Culture, Media and Sport, broadcasting is of immense importance to our quality of life and a powerful influence on society. People feel passionately about it. A headline in today's Financial Times—it will probably make it into the tabloids tomorrow—informs us of BSkyB's £1 billion offer for the Premiership rights. One need look no further than that for an assessment of the centrality of broadcasting issues to many people's lives.
  The Secretary of State touched on the question of sporting rights. Conservative Members recognise that the rights in any sport are the property of the sporting body. Substantial sums have flowed into sport from the sale of television rights in recent years. It is profoundly important that a significant part of that money should be used to support the grass roots of sport, as otherwise sport will suffer in the long run.
  As well as reflecting our society, broadcasting helps to shape our attitude towards ourselves, our neighbours and the world. It is the most powerful and pervasive medium ever invented. It can educate and inform like no other medium. It can also misinform like no other medium. It can create celebrities. It can even, it has been alleged, create Prime Ministers. Clearly, it is an important industry. It is so important that Governments have historically taken a very close interest in its affairs.
  Back in 1966, I believe, the right hon. Member for Chesterfield (Mr. Benn), no less, famously remarked that broadcasting was too important to be left to the broadcasters. For once, he was in step with mainstream opinion. Hence, in the intervening years, there have been numerous Broadcasting Bills. In the 1980s, they took on a deregulatory flavour and we witnessed the establishment of Channel 4; the advent of cable; the liberalisation of communications; the arrival of satellite television; the dawn of local and national commercial radio; and later, the creation of Channel 5.
  The most recent Broadcasting Bill heralded the beginning of the digital age, opening the door to new and, for many people, baffling and slightly scary opportunities: a world of 200 television channels, interactivity, media convergence and technical jargon definitely understood by the few and not the many—and, frankly, I suspect, not understood by many of the few either. It is easy to get lost in the jargon, and many have fallen victim to the temptation to get lost in messianic predictions of precisely how technology will change our lives.
  I commend the Government on taking a relatively cautious, pragmatic and evolutionary view of the impact of the multi-media age. Technology is moving so quickly that the one thing of which we can be certain is that almost every prediction that we make today will prove wrong tomorrow. Most people would have predicted a few years ago that we would all be watching more television at the end of the 20th century, but it turns out that we are watching less.

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  I want to focus on what is possible—in the sense of being achievable—not on what is probable, and therefore probably wrong. I am pleased that the Secretary of State has recognised the need for a radical overhaul of the way that we regulate the media. It is always a matter for great anxiety for Opposition spokesmen when they find that the Secretary of State is doing something sensible. It does not happen very often but I believe that, when it does, it should be recognised.
  The Government are right to approach the future of regulation in consultative mode, but I do not understand why the Secretary of State has given the task of developing the new regulatory agenda to the Independent Television Commission. The ITC's remit runs only to the independent commercial sector and no review of broadcasting regulation can hope to be comprehensive if it fails to take the position of the BBC fully into account.
  Mr. Chris Smith: I fear that the hon. Gentleman may be under a misapprehension. The immediate-term review, considering what can be done to ease the regulatory burden within the present legislative environment, is indeed being led by the ITC; but the medium-term exercise of preparing major legislation for two or three years' time will be led by the Government ourselves, taking into account the views not only of the ITC but of a wide range of other sources.
  Mr. Ainsworth: I am grateful for that clarification, because there is some misunderstanding about that in the industry and some have been baffled by the ITC's role, so it is good to have the true position on the record. If the ITC is given too strong a role—let us not forget that it is part of the regime that the Secretary of State intends to overhaul—the right hon. Gentleman's approach to reforming regulation will be in danger of taking on a rather partial view, without a sufficiently dispassionate overview.
  A good starting point would be to aim to make the next Broadcasting Bill the last for a considerable time. As the purpose of successive Broadcasting Acts has been to deregulate, that would mean taking deregulation as far as it will go. Subject to normal competition policy, we should let the market decide the future shape of the commercial broadcasting industry. More than 30 years after the young Technology Minister, the right hon. Member for Chesterfield, made his remark about the importance of broadcasting, the time has come to say that broadcasting is too important to be left to politicians.
  There is an important caveat. If the future lies, as many believe that it should, in a single regulatory authority, that authority will need two arms—one with a light touch, encouraging competition and innovation, and the other dealing with content. The time for detailed minute-by-minute analysis of radio and television schedules is probably over, but the public rightly continue to expect protection from degrading, gratuitously obscene and violent material.
  That is especially true and important with regard to children. Recent findings by the Broadcasting Standards Commission suggest that there is growing public concern about violence on television, and about the increasingly cynical approach to portrayals of explicit sexual activity, which are seen as simply a ploy to attract ratings.
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  Whatever new regulatory regime emerges, there will be a continuing need to ensure that the young and vulnerable are protected. The Opposition believe that breaches of acceptable broadcasting standards should be the subject of tough penalties.
  Mr. Swayne: That process must be open to political lobbying; my hon. Friend will be aware that it is to their Members of Parliament that people write and complain. It would be a bit weak if we had to reply, "Actually, we have no leverage over those standards."
  Mr. Ainsworth: My hon. Friend makes a good point, which will be familiar to everyone in the Chamber—and nobody is better equipped than he to conduct political lobbying.
  We also believe in maintaining the present watershed, with rigorous enforcement. We must, however, also recognise that parents have a duty to regulate what their children watch, and that adults are the prime regulators of their own viewing habits; every television has an off button.
  I see no reason why all broadcasters should not be subject to the same degree of authority. That is by no means to say that they should be required to produce the same type of programming, but merely to say that they should be subject to the same scrutiny, accountability and sanctions. At the earliest opportunity, the BBC's programme content should be brought under independent and impartial regulation.
  The debate is about the future of broadcasting, not about the future of the BBC. However, as the BBC is so important within the United Kingdom broadcasting universe, the two are closely bound together. I doubt whether anybody in the Chamber does not admire the BBC. Since its inception, it has played a pivotal role in the life of the nation, providing a benchmark of quality to which all other broadcasters aspire. I want that to continue, and I agree with the Secretary of State that, in future, that role is likely to grow in importance.
  However, I am not persuaded that the BBC's demands for extra funding are justified. The starting point of any inquiry into its funding should be the question: what is the BBC for? The remit handed to the Davies panel by the Secretary of State did not permit it to ask that question, and the result is a report that, although well considered, is fundamentally flawed. There is a need for the BBC to redefine its mission as a public service broadcaster in the light of a radically changed media environment. Only when that has been done can funding issues be properly addressed.
  We set out our views on the Davies issues in some detail in our submission to the panel last summer, and I shall not rehearse them all today. However, I welcome the fact that, on several important issues, the panel reached the same conclusions as the Conservative party. For example, there is the introduction of private capital into BBC Worldwide, and the sale of the bulk of BBC resources. There is also the emphasis on greater accountability, financial transparency and the reduction of waste. There is a proposal to improve the discount for blind people, and the idea of advertising sponsorship or subscription on the BBC's public services is rejected.
  We are however disappointed that the panel did little to challenge the BBC's underlying assumption that it requires extra funding. It has been interesting to hear

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  today that the Secretary of State appears to share some of our scepticism. I welcome the fact that he is now appointing consultants to look into the BBC's books, but I cannot help observing that it would have been helpful if he had done that before establishing the Davies committee in the first place.
  Let us have a quick look at the BBC's finances. Under the arrangements established in 1996, the corporation has received the benefit of licence fee increases above the rate of inflation. The sale of the home service transmitters raised £244 million. Incidentally, that sale was supposed to fund the BBC's entry into digital broadcasting, so it is disappointing that, only three years later, it has come back to ask for more money for precisely the same purpose.
  Since 1996, the commercial businesses under BBC Worldwide have brought in about £210 million in extra revenue. Efficiency savings have realised £267 million for programmes over the past three years. In total, the increase in resources between 1996 and 1999 has been about £1 billion, which is equal to half the corporation's annual income from the licence fee, and considerably more than the £750 million that it costs to run BBC1.
  It should also be noted that the BBC enjoys privileged free access to the spectrum. According to figures published by the Radio Authority and the ITC, national commercial radio pays £9 million a year and terrestrial television pays £345 million a year to the Exchequer for the use of the spectrum; the BBC pays nothing. Arguably, that represents a further financial benefit.
  In future, although the licence fee is set to increase by less than the rate of inflation, current projections of household growth suggest that the BBC can still budget for a rise in licence fee income in real terms over the next 10 years. In addition, the contribution from the commercial activities is forecast to quadruple over the next six years.
  In other words, it is not obvious to me that the BBC is short of money. I am not at all convinced, either, that the scope for efficiency savings has been exhausted. The BBC's corporate centre still costs the licence fee payer £60 million a year. A much greater effort needs to be made to eliminate waste; the BBC should be looking for ways of reducing rather than increasing the licence fee.
  The Opposition do not accept the panel's arguments in favour of a digital licence supplement, although we are not surprised—presumably, the Secretary of State is not surprised either—that a panel chaired by Gavyn Davies, who had the idea of the licence supplement in the first place, should recommend it. We note the ingenuity with which the panel has finessed this proposal, but we still believe that a digital licence tax would be wrong in principle and in practice. It would represent a tax on new technology and innovation and it would impede the take-up of digital services, even against a distant background of analogue switch-off. We also believe that the new tax would bear most heavily on families on low incomes.
  We note that, for its assessment of the impact of a digital licence fee, the panel relied for its principal evidence on a report commissioned by the BBC. We regret that the panel did not seek evidence from more independent sources. The Secretary of State will no doubt be aware of a report, featured in today's newspapers, by the economic consultants, NERA. In its view, the digital tax, as proposed by Gavyn Davies, could delay the take-up of digital by between two and four years.
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  The panel's proposal to sell a 49 per cent. stake in BBC Worldwide represents an uneasy halfway house that is unlikely to satisfy industry concerns about fair trading or to raise a sufficiently attractive capital sum. We believe that a better long-term solution for the licence fee payer, for BBC Worldwide itself and for the industry as a whole, would be to sell the commercial operations outright. We regret that the panel did not investigate more thoroughly whether new services, such as News 24 and BBC Choice—which have cost the licence fee payer more than £100 million in the past two years—are properly justified under the public service banner, especially bearing in mind the charter commitment to universal access.
  The question of licence fee concessions has attracted much interest. Everybody agrees that the present arrangements for concessions are arbitrary, complex and, in many ways, unfair. The problem is that nobody can agree on how to make them better. Disappointingly, the Davies committee was evasive on the question of concessions for pensioners. The panel was not much help to the Secretary of State, who will now have to decide between three options. He could leave the present unsatisfactory arrangements in place, and put the issue in a drawer marked "too hard"; he could irritate the BBC by requiring it to deliver a more generous arrangement; or he could try to persuade his colleagues in the Treasury that the attractions of a pre-election bribe outweigh the last election pledge to reduce the welfare budget. The Government's control of the welfare budget has already been shot to pieces, so he may well choose the latter option. It is not necessary to do so.
  We believe that there is scope for a fairer and more generous concession scheme, but the question of paying for increased concessions cannot be divorced from the overall context of the need to reduce unnecessary expenditure by the BBC and to reduce waste.
  Dr. George Turner: The hon. Gentleman has made much of the issue of financing for the BBC and few people would not wish to encourage efficiency and cutting bureaucracy. The issue is what the finance is for, and I hope that he will explain the Opposition's view of the BBC's role in the future. Only if we know that can we judge its financial requirements.
  Mr. Ainsworth: The role of the BBC in the immediate future is to define what it means by public service broadcasting in the light of the radically changed media environment in which it now operates. It was set up in the 1920s as a monopoly provider of radio services and it had the great Reithian vision of being all things to all people. It managed to keep that vision intact through all the changes of the latter part of the 20th century and did so very well. However, the BBC needs to come to terms with the fact that we now live in an age of explosive choice. It can no longer continue to apply the principles that were right for a monopoly provider of radio services to an age in which consumer choice has moved into a completely new orbit and competition is rife and varied. The Secretary of State and the BBC will need to work out carefully the meaning of public service broadcasting in the multi-media age.
  Once the BBC has done that, I have no doubt that the principal justification of the BBC is programmes. It is programmes that will underpin the licence fee. However,

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  if it continues to chase ratings and to compete overtly with the commercial sector in a way that the commercial sector finds offensive, the BBC runs the risk of forfeiting the justification for the licence fee. Instead of "Walking with Dinosaurs", it will be sleeping with the plesiosaurs.
  Dr. Turner: I am grateful for the hon. Gentleman's courtesy in giving way again. My right hon. Friend the Secretary of State and the Government face the issue of funding next spring. What is the view of the Opposition on what should be funded? What role does the hon. Gentleman envisage for the BBC in the digital era? Should money come from somewhere else, or is the Secretary of State charged with ensuring—after accountants have reported—that what the BBC is trying to do now should be continued in the digital era? Does the hon. Gentleman accept the BBC's internet services and its provision of the new news services, for example?
  Mr. Ainsworth: If the hon. Gentleman cares to see me after the debate, I will give him a copy of our extensive document, "Fair Funding for the BBC", which makes detailed recommendations. I do not wish to embark on a in depth exposition of that document, because it is available and on the public record.
  I welcome the Davies committee's recommendation for a half-price licence for registered blind people. It is a good idea and I hope that the Secretary of State will accept the panel's advice. I note that the Royal National Institute for the Blind has some outstanding concerns about the way in which licence fees are collected, including the sometimes threatening tone of letters, and the need to develop audio subscription services as soon as practically possible. It also raises important issues concerning the use of text on the screen and more accessible programme information. The RNIB has offered to work with the Government and broadcasters on developing solutions to those problems, and I urge them both to take up the offer.
  The Davies panel also makes some welcome recommendations about subtitling, and urges more ambitious targets for the introduction of subtitles on digital television. I hope that the Secretary of State will take those recommendations to heart and go further. It is farcical, as the Royal National Institute for Deaf People has said, that, while digital terrestrial broadcasters are required to provide subtitling, cable and satellite broadcasters have no such obligation. I take this opportunity to pay tribute to the work of my noble Friend Baroness Anelay, who has done much to draw the attention of Parliament to the issues raised by people with disabilities on their access to broadcasting.
  Failure to enable adequate access to new television services for blind and deaf people will act as a serious impediment to the take-up of digital television. The Secretary of State has recognised the importance of encouraging digital take-up and announced a possible time frame for the switch-off of analogue transmission. Again, the Government have been judicious rather than courageous, but, in this case, that is the right approach.
  Even so, more still needs to be done if the Secretary of State's targets for digital take-up are to be met by 2006. While the take-up of digital television has so far been very encouraging, with around 2 million households now
  1222
  participating, it seems clear that the process of converting to digital services is being driven by a desire for subscription channels. A large proportion—perhaps 50 per cent.—of the population are, and are likely to remain, uninterested in subscription television and only want or can afford free-to-view television.
  What do the Government propose to do to encourage those who want only free-to-view television to go digital? The free set-top boxes being offered by BSkyB and Ondigital appear to some in the equipment manufacturing industry to be part of the problem. It is said that they are suppressing demand for integrated digital television sets. The Government should be concerned that the number of analogue televisions being sold in Britain this year will be higher than it was last year, and will outnumber sales of digital sets by a factor of more than 100.
  I entirely agree with the Secretary of State's remarks about the seriousness of the problem to do with public confusion over what is on offer, what options are available and what the benefits of digital television may be. That is not helped by spats between BSkyB and Ondigital over the screening or otherwise of various sporting events. I am sure that the Secretary of State would wish to join me in urging those companies to sort out those problems soon.
  I suspect that most people are not even aware that they have been watching analogue television signals all their lives. Why should they be? It is hardly surprising, therefore, that the news that the analogue signal will be switched off rouses alarm and indifference in almost equal measure—although I reckon that indifference just about has the edge at the moment.
  I welcome the Secretary of State's statement that the Government will get together with manufacturers, retailers and broadcasters to begin a major public information exercise so that consumers can be told, reliably, clearly and in language stripped of jargon, about what is available, what the benefits are, and how to make informed decisions. Unless that happens, there is a real risk that the switch to digital will falter, and that the 95 per cent. household penetration threshold will not be met.
  It would be wrong and absurd to have a debate on the future of broadcasting without mentioning radio. The radio industry has been one of the great commercial success stories of recent years. Following the successive liberalisations under the previous Government, commercial radio stations have sprung up all over the UK. They have become established and profitable, and now form a vital part of the national broadcasting scene.
  There has always been a tendency among radio people to consider themselves the poor relations of television, although I exclude from that observation the presenters of the "Today" programme. Under this Government, the radio industry knows that it is the poor relation. Scarcely any consideration at all was given to the BBC's radio service by the Davies panel. Even the panel's attitude survey failed to seek views on the future of the BBC's radio services.
  The Secretary of State's important speech last month, in which he set out the timetable for the digital revolution, failed to make even a passing reference to the radio industry. This week, in reply to my written question about the Government's thinking on the future of the analogue radio signal, the Minister for Tourism, Film and Broadcasting admitted that she was not even contemplating universal digital radio services.

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  I suspect that the Government, along with many people in the radio industry, have simply forgotten about radio altogether. I take this opportunity to remind the Secretary of State of radio's importance to millions of listeners. If it is not too much trouble, will he examine seriously the issues facing what is an important industry?
  What are the Government doing to help encourage the take-up of digital radio? What are they doing to modernise the commercial radio ownership rules, and to take into account the role of the BBC in local radio when considering issues of plurality and competition?
  Successful radio companies are constrained by the points system, which limits, on the basis of population areas, the number of stations that a company can own. A good case can be made for a system based on a share of voice, which would be a more realistic and relevant measurement. What do the Government think about that?
  What do the Government intend to do about the scarcity of spectrum and digital radio development? I hope that the Minister, when she winds up the debate, will answer some of those questions. Scarcity of spectrum was the main reason why the previous Government excluded religious broadcasters from bidding for national radio licences. At that time, spectrum scarcity was a real problem, but technology is moving on. Will the Secretary of State take this opportunity to announce his intentions for religious broadcasting?
  I thought that the right hon. Gentleman's answer earlier to my hon. Friend the Member for New Forest, West (Mr. Swayne) was somewhat evasive. Conservative Members believe that the time has come to say that it is not appropriate for Parliament to disqualify Christian groups or other religious groups from applying for national or local radio stations. They should be able to compete on the same basis as all the other bidders for the right to broadcast. We look forward, with bated breath, to the Minister's concluding remarks.
  Finally, just as no consideration of the future of broadcasting would be complete without mention of radio, so it is important to recognise the significance of advertising. It is often forgotten that there would be no commercial television or radio to speak of without advertising. Advertising is the driving force behind the new technologies that are changing the landscape of broadcasting.
  It follows, therefore, that any attack on advertising and the advertising industry that threatens future revenues is an attack on broadcasting. We understand that there are moves afoot among some European countries, led by Sweden, to ban or restrict advertising aimed at children. That proposal is patronising, bossy and dictated by political correctness. It would also be entirely counterproductive, resulting in less investment in children's programming and leading simply to more imports of cheap cartoons, of which there are probably too many already.
  I appreciate that the advertising sector comes under the responsibility of the Department of Trade and Industry, but will the Secretary of State or the Minister take this opportunity to place on record the Government's recognition of the link between investment in advertising and investment in programming? Will the right hon. Gentleman assure the broadcasting industry that, in the event of any attempt to curtail children's advertising, the Government will put up stiff resistance?
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  I have tried to identify several areas in which a bit more effort by the Government would help in the development of this important industry and enable it to go from strength to strength. For the most part, however, the most constructive thing that the Government can do is to get out of the way. That is what I hope that they will do.
  10.47 am
  Mr. Gerald Kaufman: I agreed with much, if not quite all, of what the hon. Member for East Surrey (Mr. Ainsworth) said about the Gavyn Davies report. I note the Conservative party's new-found fastidiousness towards pre-election bribes: I have always been in favour of a good solid pre-election bribe, provided that it is offered by a Labour Government.
  I thank my right hon. Friend the Secretary of State for giving the House the opportunity to debate the future of broadcasting today. I agreed with much in his speech, and welcome his strictures on Mr. Richard Eyre's views on public service broadcasting. I do not believe that the person who was the driving force behind downgrading peak-time television news has much right to talk about the ethos of public service broadcasti-g.
  I welcome the hon. Member for Mid-Dorset and North Poole (Mr. Fraser) to the Opposition Front Bench. Knowing the robustness of his views on a great many subjects—with many of which I often agree—I look forward to hearing what he has to say.
  The hon. Member for East Surrey spoke about the BBC series "Walking with Dinosaurs". It is appropriate that that series is the BBC's latest success, as the BBC itself is turning into a communications dinosaur.
  Mr. Peter Ainsworth: They looked frighteningly alive to me.
  Mr. Kaufman: The BBC or the dinosaurs?
  Many of the recommendations in the Gavyn Davies report seem foolish, but an even greater problem is that, with one or two exceptions, they are irrelevant to the future of broadcasting. The report examines the BBC alone, not setting it within the context of wider developments in audio-visual communications, which are bringing about the greatest communications revolution in the history of the human race and which might bring revolutions in society and employment that might outstrip even the changes brought by the industrial revolution in the 19th century.
  We should first dismiss the Davies report's recommendations on the television licence. A digital supplement on the licence would be a fine on those who subscribe to commercial digital services. The infinitesimally few people—too few to be counted—who watch BBC digital services do so by subscribing either to Sky Digital or Ondigital. My right hon. Friend the Secretary of State for Culture, Media and Sport pointed out that 1.8 million households subscribe to those services, which may mean that around 5 million people pay to watch digital programmes.
  It is unacceptable to expect that those people should, in addition to the contracts into which they enter voluntarily, be required to pay a regressive poll tax to the BBC whose digital programmes—if they watch them at all—they can watch only through paying digital subscriptions. That

  1225
  point is quite apart from the utter absurdity of the sum proposed for the additional subscription of £1.99. What on earth are these people up to? This is no Tesco bargain offer on which one can take a penny off. The Davies report is proposing a £2 fee, and if its signatories think that they can get away with making people believe that it is less by taking off a penny, that merely shows the patronising nature of their report. It would be equally wrong to increase the licence as Lord Gordon proposes in his note of disagreement.
  Let me turn to arguments that torpedo the Gavyn Davies proposal for the digital licence. I have received today a report, "The Impact Of A Digital Licence Fee On The Take-up Of Digital Television", from the National Economic Research Associates. It states, at paragraph 2.5:
  "The Davies Report's conclusion that a digital licence fee will not have a significant impact on take-up does not withstand detailed scrutiny."
  The report subjects Davies to just such detailed scrutiny, arguing:
  "We expect a digital licence fee supplement to have an adverse impact on the take-up of digital services by both pay and free-to-air homes … The results of our analysis suggest that the digital licence fee is incompatible with the Government's objectives for early switch over from analogue to digital television."
  I congratulate my right hon. Friend the Secretary of State on the announcement of his plans for analogue switch-off, which accord with the report of the Select Committee on Culture, Media and Sport. I should add that, although the Select Committee will shortly conduct an inquiry into the Gavyn Davies report, I am not speaking for the Committee today and have no right or authority to do so. I am speaking purely on my own account.
  The NERA report continues:
  "Assuming that analogue services are switched off when digital penetration reaches 95 per cent. of television homes, the digital licence fee scenarios all suggest a delay of approximately 3 years beyond the end of the Government's 2006–2010 target range for switch over."
  The report's central estimate is that adoption of a digital licence fee of the kind proposed by the Gavyn Davies report would reduce penetration of digital television in households by 10 per cent.—2,570,000 households—by 2004, and by 20 per cent. by 2008. Apart from its misguided nature and its regressive impact—to which the hon. Member for East Surrey referred—the Davies report simply has not taken into account the effect on digital television. That results from the report's utter, tunnel-visioned obsession with the BBC and nothing but the BBC.
  I am opposed to the digital supplement. I am also opposed to any increase beyond the settlement decided by the previous Government, which was over-generous, for the licence until 2006. The BBC spends money as if there were no tomorrow. It can do so because it has a guaranteed income of £2 billion because of the licence. It is the only hypothecated tax whose rules are laid down by its recipient and which is collected by the recipient. No doubt, other organisations would like to be able to do that.
  The hon. Member for East Surrey referred to "BBC News 24". At the last count, 0.1 per cent. of the television audience was watching that, but it costs £30 million a
  1226
  year. The sums being spent on consultants—to little or no avail so far as I can see—are monumentally large. There are other matters on which the BBC fritters finance. There is a forthcoming jamboree at Hampton Court. It was recently reported in the press that £2,000 was being spent on providing ambient noise so that those who work at BBC headquarters in White City should not feel lonely.
  Today, another news story tells us that the BBC will spend an unspecified amount to make people feel more lonely; a new system called sound-masking is being introduced at Broadcasting House so that some BBC employees cannot overhear what others are saying. A BBC spokesman has said that personnel and legal staff may obviously not wish others to hear what they are saying. The corporation is spending money on concealing conversations at the same time as spending money to provide bogus conversations.
  Mr. Baker: Perhaps journalists at Broadcasting House have good reason to feel lonely, because most of their colleagues have been shipped out to White City and replaced by managers.
  Mr. Kaufman: I shall not reveal what employees of the BBC say privately about their management because I favour good employment practices.
  Mr. Tony McWalter: Will my right hon. Friend give way?
  Mr. Kaufman: I will give way again, but shall not do so often because I do not want to take up too much time and I have several more broadsides to deliver.
  Mr. McWalter: I am aware that those broadsides are on their way, but does my right hon. Friend agree that the BBC retains unparalleled authority in many fields? It is held in great regard by many people who use its services. Its internet sites continue to grow at an enormous rate; they have great authority and provide a good service to schools and to adults and children who want authoritative information. Will my right hon. Friend bear those points in mind when he launches his broadsides?
  Mr. Kaufman: I have an extremely high regard for my hon. Friend, but that will not allow me to endorse the panegyric that we have just heard—a panegyric that is not shared by many millions of people in this country. Although they may be accustomed to the BBC—indeed, they have to be, because they pay large sums, against their will, to keep it going—they no longer regard it as a special case. They think of the BBC as only one broadcaster among many whose wares they sample, as they feel appropriate.
  I disagree with Lord Gordon's footnote to the Gavyn Davies report in which he opposes the digital licence, while advocating an increase in the general licence. However, I agree with him when he asks whether the BBC should continue to do things just because commercial companies do them. When the BBC was the only broadcaster, it was appropriate for it to provide a reasonably full spectrum of entertainment, education and information.
  Mr. Peter Ainsworth: Is it not the point of the BBC that it does what commercial broadcasters cannot do?
  Mr. Kaufman: Sometimes the BBC does what commercial broadcasters should not do.

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  The day has passed when the BBC could do everything—even if we believed that it should do everything. The hon. Member for East Surrey mentioned that BSkyB was willing to spend £1 billion on a deal with the Premier League. In a commercial market, BskyB has a perfect right to do that, but it is not what the BBC should be getting up to. The BBC should provide a wide range of high quality programmes in education and entertainment, without feeling that, whenever anyone else in the commercial market does anything, it should have to do the same.
  On page 42 of the Gavyn Davies report, we read of the kind of money that the BBC is asking for in order to fulfil its vision. We are told that it wants a further £700 million, and although the purpose of £300 million of that money was specified to the panel in detail, the purpose of the remaining £400 million was not. The BBC is extremely free with taxpayers' money. I have a high regard for much that the BBC does; it has contributed what is possibly the most precious single aspect of broadcasting in the world today—the ethos of public service broadcasting. Nevertheless, that does not mean that it should receive a blank cheque for whatever pops into its head—a great deal pops into heads at the BBC.
  Commercial companies risk shareholders' money in the market. If they fail, they fail; indeed, satellite companies nearly did fail at the beginning. However, failure is a risk for commercial companies. The BBC risks taxpayers' money, and then demands more. There is not merely a case against increasing the licence fee, but one in favour of freezing it in cash terms during the whole of this charter period. There is also a strong case for providing substantial concessions to those who cannot afford what, to many people, is an amount that they can take in their stride, but to many others is money that is difficult to find.
  When I was shadow Home Secretary—in days beyond most people's memory—I advocated, as official Labour party policy, free television licences for pensioners. That is an idea whose time has returned. I strongly commend to my right hon. Friend the idea that all pensioners be provided with a voucher equivalent to the television licence. I realise that there are problems in removing from pensioners the obligation to pay the licence fee, because some of them share their homes with their children. There might thus be a justified apprehension that we might be subsidising people who were below pensionable age. However, if we provided every pensioner with such a voucher, they could either obtain a free licence, or pay a subscription to one of the services that are not free to air under the licence arrangements. That is my small recommendation for a pre-election bribe.
  The BBC is doing far too little to obtain commercial income. The hon. Member for East Surrey referred to its commercial ventures. We have gone far beyond the question of whether the BBC is a hybrid organisation—part public sector and part commercial. The BBC has commercial partnerships with many organisations here and abroad, such as Flextech and UK Gold. It takes advertising on some of its overseas ventures. The BBC is no longer pristine and pure when it comes to commercial activity. In view of that fact, the BBC needs to earn far more income from its commercial activities, using that money to fund whatever additional activities it deems appropriate.
  The Gavyn Davies report records a pathetic target for BBC Resources Ltd. of £82 million revenue over the next five years. The report makes it clear that—petty though it
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  is—that sum is over-ambitious because BBC Resources Ltd. is losing money. On the other hand, although I have said on many occasions that I am in favour of the privatisation of the BBC as such—I remain unrepentant in saying it—I certainly do not commend the report's proposal for the privatisation of BBC Resources Ltd. On page 101, the report rightly states:
  "As with any privatisation, these sales would replace a flow of revenue by a single capital payment."
  If BBC Resources Ltd. were run so that it made the money that it should make, there would be a most valuable addition to BBC revenues. It is absurd to sell it off for one capital payment when, properly run, it could add a great deal to the BBC's revenues.

  There are many ways in which the BBC—if properly, efficiently, effectively and imaginatively run—could make large amounts of money. Reference has been made to BBC Online, which is probably the most enterprising and forward looking of all the corporation's activities. It costs £23 million a year. The Davies report said that, in June this year, the site was receiving 100 million hits—it probably receives even more now—50 per cent. of which originated abroad. It is absolutely typical of the lack of imagination displayed in the report that it says that BBC Online should not be commercialised. Here we have a service, funded by the licence, half of whose usage originates with people overseas, who gain access for the cost of a local telephone call. If the BBC took advertising on it, it could fund the entire enterprise—
  Mr. McWalter rose—
  Mr. Kaufman: If my hon. Friend is about to tell me that the BBC has beeb.com as well, I have to say that beeb.com is a mere fledgling, whereas BBC Online is up and working and could bring in a great deal of money for the corporation.
  Mr. McWalter: I am grateful, because I know that my right hon. Friend does not really want to give way. Beeb.com, which is the commercial arm, exists, but there are no trails from BBC.co.uk to beeb.com. If those links from the free BBC Online service to commercial products were established, it would be a way of making beeb.com work much harder.
  Mr. Kaufman: My hon. Friend's suggestion demonstrates the dilemma now facing us: he is saying that a wholly licence-funded service should be used to advertise a commercial service, which brings us to the issue of transparency of financing within the BBC—a matter with which many of us are dissatisfied. The BBC is a hybrid organisation, so BBC Online being used to gain audiences and money for beeb.com would mean that licence payers' money was being used to finance a commercial service, whereas we have been told—somewhat unconvincingly—by the BBC that it ring-fences the licence funded services. My hon. Friend's suggestion is worth considering, but he has illustrated the increasing commercialism of the BBC.
  Although it makes some rather strange recommendations, the report says something quite wise on page 65:
  "We also expect that closer convergence will take place between websites and broadcast services, so that the BBC's domestic audience will increasingly access BBC output via the website."

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  That is absolutely true and that is the way of the future. We are approaching the era of convergence and it is that which makes the Gavyn Davies report not only foolish, but irrelevant. The report describes not only the BBC but the entire audiovisual communications environment that is now coming into being, and the panel's comments apply to that revolutionary environment as well as to the BBC.
  While the BBC whinges about a supplementary digital licence for services that no one watches, its rivals march into the future and cost the taxpayer not a penny in doing so. While the BBC stagnates in a poll-tax financed backwater, the real cutting edge of enterprise and innovation is found in the private sector. Every day, one finds more information about new developments. The Times today tells of W H Smith being
  "in talks with a number of 'big names' to help it to bolster its new Internet service and construct a second side to the business to rival its traditional bookselling."
  Analysts are talking about the development of holiday services, supermarket services and special deals on home delivery. That is the future.
  Photo-Me International, best known for its passport photograph booths, has already announced that it is to transform 1,000 of those booths to enable people to access the internet and use e-mail. The company announced only a few days ago that some of its booths are to be used to pioneer the downloading of music on to CDs with which people can then walk away. Carlton Communications is moving away from the transmission of films via celluloid distributed in cans to cinemas; it plans to replace analogue spools with film that can be stored on disk and beamed down from satellites or sent down fibre-optic cables. The era of e-cinema may bring films e-mailed to people's homes so that they can watch them on their own television. Telewest Communications has announced that it is to recruit 840 staff to expand the scope its digital services.
  A great convergence revolution is taking place—people talk about the prospect of convergence, but it is already here. Today, we can get television sets on which we can not only watch television programmes, but log on to the internet and use e-mail. Although the BBC has set up its BBC Online service, it appears to be utterly impervious to the idea that such services are the future. Soon—possibly within months—we shall be able to buy an entirely converged box that combines the capacities of the computer and those of the television set. That will result, not in the realisation of the "family around the fireside" vision described by Sir John Birt in his recent lecture, but in limitless opportunities for everyone in society, regardless of income, to participate in entertainment.
  The hon. Member for East Surrey spoke of the fall in television audience: the reason that that is occurring is that people are turning to the internet. There are now 10 million people in Britain who have access to the internet, ranging from schoolchildren in their bedrooms to pensioners, who increasingly use the internet to access the world. One can get all sorts of things via the internet. When I was in Palestine taking part in a recent conference, I was able, via a computer, to read The Daily Telegraph and The Times and to refrain from reading The Guardian every day. When the picture quality has
  1230
  been sorted out, which will happen soon, we shall be able to watch entertainment of all kinds on television-quality or even cinema-quality screens. That is the future for our country.
  My right hon. Friend the Secretary of State said, rightly, that we in this country have a primacy in the basic lingua franca of broadcasting that no one else in the world possesses: the English language is the key to communications. We see abroad the creation of vast media conglomerates: last month, Viacom, which already owns Hollywood's Paramount studios, the MTV channel and the Blockbuster video rental chain, bought the CBS Corporation for $34 billion; and News Corporation is already an immense transcontinental organisation. Meanwhile, the BBC whinges about a supplementary digital television licence, when it could be a major player in world communications.
  The BBC has the most famous and respected logo in the communications world. We need the BBC to compete, expand and safeguard the public service ethos that is its priceless legacy and gift to world communications. Instead of paddling about in backwaters, it is time to swim purposefully into the tide. I hope that my right hon. Friend will consider the future of broadcasting in its real context. He must set aside the irrelevancies in these finicking reports and ensure that our country, which pioneered broadcasting, can continue to lead the world.
  11.20 am
  Mr. Peter Atkinson: After that broadside, I feel rather nervous about risking my rigging by sailing close to the right hon. Member for Manchester, Gorton (Mr. Kaufman) to defend the BBC from his attack. It is a pity when debates about the future of broadcasting and the BBC boil down to an argument about what kind of potted plants should be put in the office of the director general. We should talk today about quality. The Secretary of State was absolutely right when he said that the BBC still provides quality broadcasting, although perhaps not in sufficient quantity. Despite his great vision for the future, I, as a fully paid-up member of the forces of conservatism, like to switch on the television and sit down to watch a programme that I find interesting. I do not particularly want to sit alone in an attic playing with the internet: I am happy to be an old-fashioned, conventional television viewer.
  The poor old BBC has marched up and down the same hill in successive generations: it does not know whether it should compete for ratings or produce quality programmes. It has always faced that dilemma. The licence fee is a regressive tax and the BBC argues, quite properly, that, because many people pay for it, it should provide programmes for the many and not simply for middle-class, educated Members of Parliament who go on about quality programmes. That is a difficult decision for the BBC; ultimately, I believe that Parliament will have to take it. We will have to decide, following proper consultation, in which direction we want to send the BBC. I agree with the Secretary of State that it should concentrate on quality: it should establish a benchmark in the broadcasting spectrum.
  People often criticise the BBC for being wasteful—and I have no doubt that, like many large, sleepy corporations, it often is wasteful. BBC producers and production staff at lower levels worry that their budgets are cut endlessly

  1231
  while management remains top heavy. A report was published recently by an organisation called the Campaign for Quality Television. It is a pressure group, so one must be cautious about its findings, but it conducted some alarming interviews with BBC staff and other television companies. It found that, as a result of budget cuts in the BBC, there is
  "a growing culture of self-censorship: 'Every year, they keep cutting. We feel we've become so budget orientated that we've clipped our own wings, we don't even suggest ideas because we think it will be too expensive.'"
  That alarming attitude must be addressed. However, it does not change my basic view that the BBC forms a valuable part of our broadcasting spectrum and should be defended, not ceaselessly attacked and demoralised.
  I welcome also the Secretary of State's remarks about the roll-out of digital terrestrial television. He said that the test of availability will be a crucial benchmark in deciding when the analogue switch-off will occur. I was particularly pleased to hear him say that at least 99.4 per cent. coverage will have to be achieved and that he would like to aim for universal coverage.
  As I have said before, I represent a constituency in which live some of the 0.6 per cent. of people who cannot receive television. I am afraid that it is a little like a soap opera: every time that I talk about broadcasting, I like to speak up for the few remaining people in the United Kingdom who cannot get television. Their lives are quite different, and, I believe, not as rich, because they do not see the soap operas and the news programmes. They will miss out on the new interactive and digital services that are coming on line. Therefore, it is extremely important that we make studious efforts to achieve 100 per cent. coverage.
  Mr. Peter Ainsworth: Does my hon. Friend agree that some people choose not to have television and argue that their lives are much richer as a result?
  Mr. Atkinson: My right hon. Friend the Member for Maidstone and The Weald (Miss Widdecombe), who has just bought a television, survived for a long time without one. I never mention the exact location of that part of my constituency where television is not available because I fear that if I did, many people would flock there so that their children could not watch television. It is good news that such people will have access to television in the future.
  I must pay tribute to the BBC because it is not generally realised that its digital satellite services are available to such people free of charge. There is potential for great improvement in that area because, if people are prepared to purchase a set-top box and a decoder card from the BBC, they will be able to receive all BBC digital services, including BBC Choice and BBC News 24, and Channels 4 and 5. However, people will not receive ITV 1 and ITV 2—and I shall turn to that issue in a moment.
  My hon. Friend the Member for East Surrey (Mr. Ainsworth) and I have a long-standing disagreement about this subject. I do not think that a disagreement between two commercial companies can be dismissed lightly as a spat. It may seem like a spat to him, but it is a fundamental point of principle arising from the question of platform universality. Those people who want free-to-air services cannot receive ITV because the two
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  companies refuse, for commercial reasons, to make it available to a satellite platform. In all fairness, BSkyB is compelled to make its programmes available on all platforms. I believe that we should hold absolutely to the principle of platform universality.
  That problem will affect not only those who cannot access television but those who cannot get digital terrestrial television signals for ONdigital or one or two multiplexes lower down the spectrum—I hope that that is the correct technical term. Although digital services are aimed at more than 95 per cent. of people, the programmes will be available only on multiplex one—the BBC's multiplex. Only 90 per cent. of people will ultimately be able to receive ONdigital services.
  The effect would be that next Wednesday, for example, many of those people who wanted to watch the match between Bayern Munich—I am not a great football supporter—and Rangers would be unable to do so. Although such a match would be of enormous interest to people in Scotland, at least 10 per cent. of Scots would not be able to watch it—even when the full digital roll-out is completed and even if they wished to pay to watch it on digital. That service will not be available.
  Mrs. Jacqui Lait: Is my hon. Friend aware that, even in the sophisticated south, I, as a Scot, was unable to watch Scotland play Spain at rugby because Meridian has not signed a BSkyB contract?
  Mr. Atkinson: That is an important issue, and I am sorry that I cannot convince my hon. Friend the Member for East Surrey in that regard. People must have choice, whether one pays for a service or receives it free, and such services should be available on a universal platform. The Government must intervene when they review the regulations to ensure that it is part of the package deal.
  Mr. Desmond Browne: To complete the hon. Gentleman's education about both Scotland and football, I must point out, in all fairness, that about 10 per cent. of Scottish television viewers would choose not to watch Rangers play any team.
  Mr. Atkinson: That may be so, but people should be able to exercise self-censorship. It is rather frustrating if some of the 90 per cent. of people who want to watch the match cannot do so, even if they pay for the privilege.
  I understand the reason for that situation. The previous Government wanted to allow ONdigital to get off the ground, and they thought that it would do so if it was sheltered from too much competition. ONdigital has signed up 400,000 subscribers, and the time is rapidly coming when it should be able to face the full blast of competition and make its programmes available to all.
  Mr. Peter Ainsworth: I know that my hon. Friend has for a long time strongly believed that the matter is one of important principle. I did not wish to belittle its importance. Indeed, I drew attention to the difficulty because of its impact on the take-up of digital television. The question is how to resolve the problem. He and I may disagree about that, but I have no doubt that it needs early resolution. The Government should work with those in the industry who are responsible to achieve an early solution

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  because the public are confused and, as my hon. Friend the Member for Beckenham (Mrs. Lait) suggests, getting angry.
  Mr. Atkinson: I am grateful to my hon. Friend for his intervention. We have made progress on that matter, which needs to be resolved urgently. It causes great confusion and we cannot wait two years for the proposed broadcasting Bill. Having scored a minor victory, I shall sit down.
  11.31 am
  Dr. George Turner: It is interesting that, in a debate on new technology, it is almost as if pride is taken in ignorance of that technology. If we are to make the right political and commercial decisions, we have to take care to understand what the technology makes possible. I have an engineering background, and I find that the pace of change in jargon is off-putting.
  The convergence to which my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) referred is indeed with us. It is not for the Government to decide who will win the battle of convergence and whether the recent Henley Centre report was correct in predicting that the television set will become the means by which shoppers interact with the marketplace, or whether that will come about through a major expansion in the use of the more traditional internet. Those issues will be decided by entrepreneurs who imagine how they can apply the new technology and successfully do so.
  The Government have two responsibilities. The first is to provide a level playing field so that the best of the technology can be used by the best of the entrepreneurs. The second—I was pleased that the Secretary of State referred to this in his speech in Cambridge—is to protect the interests of consumers while the entrepreneurs make or lose their fortunes.
  I want to concentrate on a particular group of consumers. It is important that we should look to the interests of the few as well as those of the many. We have heard that 95 per cent. of Britain has good television coverage, but my constituency is one of the few that has not. In Adjournment debates and on other occasions, I have brought the attention of the House to the fact that, although my constituency is in Norfolk, many of my constituents have to watch regional broadcasts from Yorkshire. Frankly, people in King's Lynn and nearby villages are not very interested in special offers that are available in Yorkshire.
  More importantly, there have been occasions when Anglia's regional television has transmitted reconstructed crime scenes, yet the people in the place where the crime has happened cannot watch those broadcasts. They can watch crime reconstructions taking place in Burnley, although there is almost no likelihood that they would have witnessed those crimes.
  I remind the House that 95 per cent. of the population put watching regional news programmes at the top of their television agenda. More people are keen to see their regional news than they are to watch soaps, yet those programmes are denied to many people in my constituency. Adjournment debates and other discussions in the House
  1234
  have revealed that there are many other hon. Members whose constituents suffer from that very problem. When I was preparing for an Adjournment debate on the subject, I found that between 30 and 40 hon. Members have constituents who have to put up with an entirely irritating and unsatisfactory delivery of the existing television channels. They have to put up with television that is meant to be watched by people in other areas.
  My hon. Friend the Member for Wirral, South (Mr. Chapman), who greatly regrets that he cannot be here, pointed out to the House in April that his constituents see themselves as traditionally Cheshire or even Merseyside-oriented, and they do not see themselves as Welsh. People in Wirral, South do not want to watch television from Wales. I understand that my hon. Friend invited the Minister for Tourism, Film and Broadcasting to his constituency recently, and she probably got an earful. I am delighted that she has been invited to my constituency in the near future, where she will hear just a little of what I am told week in and week out about the frustration that people have had to put up with for a decade.
  It is a disgrace that the BBC, the public service broadcaster, and previous Governments have ignored their responsibility to attempt to fulfil their universal service obligation. That is why I have introduced a private Member's Bill to deal with the matter.
  I respectfully suggest that other minority groups need to benefit from the introduction of digital television. Some of them have already been mentioned. The possibilities of interactive television could be particularly important to people who are isolated, without means of transport, in rural parts of the country such as mine. It could help many poor people and people whom we do not want to encourage to travel or who cannot travel.
  There are many deaf people for whom the present regulations on the availability of subtitles are wholly inadequate. They are the very people who could benefit most from the introduction of the new technology, but they seem to be almost an afterthought. The targets set for all platforms are abysmally low, particularly for the take-up of the new technology by those who stand to gain most.
  I suspect that, in addressing the few hon. Members present, I am preaching to the converted, but there are many people who still think that the digital revolution involves simply a few extra channels and being able to watch extra films. It should, and does, involve more than that, and we should deal with it accordingly. We should not regard it as if, like colour television, it were a fancy innovation for the rich.
  Digital television and the services that it provides should be available to minority groups, because the technology makes it possible to help people with disabilities and others to have a better life. It should be helping people who are housebound. We should be enabling people to receive their own regional television broadcasts. All those minority groups should be high on the Government's agenda, although it is clear that they are routinely low on the agenda of those who are seeking large numbers of viewers so that they can maximise the income and profit from their commercial ventures. It is important that the Government ensure that the ground rules are such that those issues are dealt with, not as an afterthought, but as part of how we set about delivering the benefits of the new technology.

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  I broadly welcome what the Secretary of State said about the analogue turn-off. However, I believe that one difficulty remains in the path of delivering an early turn-off of analogue. We must first ensure that it is not the same 95 per cent. who receive digital television and that, in a few years time, my constituents do not have to watch digital Yorkshire Television.
  One of the great difficulties in rolling out digital services is that they must co-exist with analogue services. Anyone who has ever looked at an engineering map showing the overlap of the different transmitters in my part of the world will understand the genuine problems that the engineers had in trying to erect extra relay masts to deal with the technical problems of providing a full range of programmes in west Norfolk. Those problems arose from the fact that analogue television interferes with other analogue transmitters, and engineers must be careful to separate frequencies of adjacent transmitters.
  As digital television is rolled out, west Norfolk is low down the priority list for the same reason. Until analogue stations are turned off, the options for turning on digital transmitters are substantially reduced. We must be wary of the fact that, unless we encourage early turn-off of analogue television, perhaps on a regional, step-by-step basis, we will restrict the possibility of covering the whole nation with the new digital services. It is a chicken-and-egg situation.
  There will be financial opportunities for the commercial and public service exploitation of the frequency space that will be released as analogue television is turned off, which could also provide the Government with income. The roll-out of digital television will provide greater commercial opportunities for companies to sell their subscription channels. We should ensure that some of that money is used to assist those who are in danger of becoming minorities in the new age as they have been for the past decade.
  I am concerned about some of the proposals that have been made. Every argument that we have heard this morning was used in support of the roll-out of the digital broadcasting revolution. Our constituents may not understand it, but analogue transmission is a huge waste of resources because it is inefficient. While we are stuck with analogue television, we are stuck in this century and are not moving into the next.
  The Government must do what they can to encourage the entrepreneurial private sector to deliver digital transmission, and in doing so to address minority interests. Why on earth is Davies suggesting that a special tax should be imposed? I have yet to understand the logic of encouraging a good idea by increasing its cost through the Government's approach to the funding of a public service need. When we wanted people to use unleaded petrol, we made it cheaper for them to do so. The price of petrol may be increasing, but we made sure that the differential favoured unleaded.
  We have yet to find out how the financing of the BBC through the licence fee will work in practice. The idea of making the priciest that which we want to encourage is turning logic upside down. There is much to be said for offering free digital licences to pensioners from the outset and having a lower licence fee. That makes more sense. I hope that the Government will have no truck with taxing a new development that we are trying to encourage and speed up.
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  I want to say something about the BBC, as it is an important issue at the moment. My right hon. Friend the Member for Gorton takes a jaundiced view of the BBC and emphasises some aspects that have merited attention in the past but which, in the past decade, have been addressed in substantial measure. I do not think that it is fair to expect the BBC to behave in the same way as a capitalist entrepreneur on the convergence issue.
  The BBC should be more accountable for the areas into which it moves public resources. I am pleased that the Secretary of State intends to ensure that the financing of the BBC will be examined dispassionately. For pensioners in particular, the licence fee is a large portion of their meagre income. It is much less affordable for them than it is for those of us who are in employment or in younger age groups, who value the services that they receive and will pay the larger subscriptions required to enjoy the greater choice available.
  It is important that we understand the financing of the BBC, and that we look for efficiency and cut out waste and bureaucracy. I want to encourage the digital revolution, but it would be dreadful to lose the BBC: that would be too high a price to pay. It has as substantial a future as it has had a past. What it does in the future may, in some respects, be different from what it has done in the past. There are new ways of delivering services through the internet, or through digital or interactive television. The BBC may not perhaps be at the forefront of that new technology, but we must not prevent it from moving into those areas with the same ethos as it has had in the past for quality provision and for addressing the needs of minority interests that may be neglected in the commercial domain.
  I hope that the Secretary of State will carefully consider the suggestion that I made in my private Member's Bill of imposing on the industry a universal service obligation. If he were to spell out now his intentions for 2002, it could alter the lay-out, the placing of masts and the use of frequencies. If we knew where we were going, we might take a different path from that which we would have taken had we not known where the end point was. If the end point is to be a universal service obligation—which I believe it should be—the quicker the industry knows that, the more effective it will be in delivering it.
  If we give the industry the target of 95 per cent., the danger is that it will become expensive to cover the other 5 per cent., and we will have to do things differently from the way we would have done them had we known what the position was from the outset. That is what happened with analogue. Early decision and guidance from the Government are important, although I accept that the Secretary of State has been wise in taking a cautious, step-by-step approach.
  11.48 am
  Mr. Norman Baker: I welcome the Secretary of State's sensible and thoughtful speech—it seems a long time ago now—and I am glad to see that he is still in the Chamber to hear contributions from hon. Members. I am struck by the degree of common purpose across the Chamber. In particular, the hon. Member for East Surrey (Mr. Ainsworth) and the right hon. Member for Manchester, Gorton (Mr. Kaufman) made useful contributions.
  New vistas are opening up, and the potential that digital television and radio offers is substantial: whether it is high-definition television, wide-screen pictures,

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  CD-quality sound, video on demand or the era of convergence, to use the phrase of the right hon. Member for Gorton. Although I welcome the conditions that the Secretary of State has set—94.4 per cent. of households being able to receive a digital signal, the necessary equipment being affordable to all and 95 per cent. of households having access to digital television—I query that last criterion, as I did when I intervened in his speech. I am not convinced that rendering the televisions of 1.25 million households obsolete at a stroke will be acceptable.
  The Secretary of State said that he expected the last 5 per cent. to receive direct help from the broadcasters to change over. Frankly, I am not convinced that that will happen, unless the Government require it. The last 5 per cent. are likely to be the poorest in society. They are the least attractive to advertisers, so there will be no incentive for anyone to help those 5 per cent. unless the Government require it.
  Mr. Peter Atkinson: The point that the hon. Gentleman is missing is that the value of the analogue channels will be limitless. They will be worth billions of pounds. I suspect that, if the industry realises that it is being blocked from being able to use those because of 5 per cent. of people, it will find an easy way to get them new television sets.
  Mr. Baker: I accept that there is commercial pressure in the opposite direction. Nevertheless, I think that the Government will have to intervene to ensure that all persons in this country have access to digital television. It will not happen by market forces.
  I make it plain on behalf of the Liberal Democrats that we are not in favour of the digital poll tax—the £24 supplement that has been suggested in the recent Gavyn Davies report. The BBC has enough money to pay for its digital services itself. We have heard how it is awash with money in certain respects. In 1996, it told a Committee of Members of Parliament that it would fund the lion's share of its digital investment from increased efficiency and the contribution from its commercial arm. Since then, it has received above-inflation increases in the licence fee. The 1998–99 report and accounts show that it has £235 million in the bank.
  There is no question but that the £24 supplement is not required. Furthermore, as other Members have made clear, it would act as a disincentive to take up the technology. In 1996, John Birt told the Select Committee on National Heritage that it would be "a tax on innovation". It is the only time this morning when I shall agree with him. I hope that the Government will not go towards the digital poll tax. It would be entirely wrong for all sorts of reasons, and quite unnecessary.

  I pick up a point that the hon. Member for Hexham (Mr. Atkinson) made—I think it was him; I hope it was—about subtitles. [Interruption.] He is shaking his head. Perhaps it was the hon. Member for East Surrey. According to the Broadcasters Audience Research Board, 5 million people rely on subtitles for television programmes, but digital satellite and cable channels are not required to subtitle at all, and digital terrestrial is required to introduce subtitles only at a very slow rate over a number of years.
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  If we are to see benefits from digital television, that issue will need to be addressed by the Secretary of State. I do not think that commercial pressures will achieve that. The Government will have to intervene.
  The Secretary of State referred to the BBC's duty to provide a quality benchmark. It is a sensible comment and I concur with it, but there is a potential problem. As the range of services from digital television and range of providers increases, that necessarily lessens the BBC's market share; it would be extraordinary if it did not. John Birt himself suggested that the market share of BBC1 and BBC2 would drift down over the years.
  If that happens, it will put pressure on the licence fee and more and more of our constituents will say, "Why should we pay our licence fee for a market supplier that is now capturing less of the market?" That, in turn, will put pressure on quality programming because the BBC will be tempted to respond by going down market and getting more and more game shows: more and more Jeremy Beadle-type programmes. That would be an entirely wrong response. The position would be very difficult. Politicians will be required to defend the BBC if it sees a decline in market share but sticks to quality programming. There will be pressures to resist.
  The BBC is like the European Union. It is necessary, we are all much enriched by it, but that does not stop me feeling exasperated by some of its idiocies and extravagances on occasions. For example, Sir Christopher Bland has admitted that the BBC spends £22 million year on consultants. He said:
  "I don't think that we have any need to be ashamed of that number."
  I wonder whether it is a case of what the consultants are looking into, because I am not aware of their producing any recommendations that have improved the BBC greatly.
  Then we have the common excesses, which are indefensible. John Birt's farewell party was referred to in passing by the right hon. Member for Gorton. On 1 November, 150 BBC worthies will be given a jamboree, to cost £50,000—that is equivalent to 495 licence fees—to be held at Hampton Court palace. He is, I understand, to receive a pay-off of £150,000, which is equivalent to 1,485 licence fees, as a golden goodbye.
  The evening will start with a reception in the Great Watching chamber, which was used by King Henry VIII, perhaps not inappropriately, to entertain his barons. The charge for renting the room is substantial: £7,050 per evening, with an additional fee of £45 for each guest after the first 100. Catering is extra, needless to say.
  The main event will take place in the Great hall, costing £10,575 per evening. It is a lovely hall, decorated with Flemish tapestries. Of course, the BBC Symphony orchestra and the BBC Singers will be on hand to entertain the guests.
  That is all very nice, but it is all licence fee payers' money. I get letters from constituents saying that £101 is a lot for a licence fee and that we should look at how the money is spent. A huge amount is being spent on a farewell bash for John Birt.
  Governors' pay in 1999 is £264,000; that is equivalent to 2,614 licence fees. Pay checks for executive committee people total £3,051,000 for 1999; that is equivalent to 30,200 licence fees. Sir John Birt's pay topped £400,000 this year after a generous increase in his salary of 7.2 per cent., well above the rate of inflation.

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  I am staggered by some of salaries at the BBC. John Birt's is £415,000. Colin Browne, the head of public relations, receives £210,000; he seems to have failed miserably in his job, at least as far as convincing me is concerned. Patricia Hodgson, head of strategy, receives £207,000. Margaret Salmon, head of personnel, receives £216,000. None of them is a broadcaster or journalist producing programmes. They are management. They are the ones who occupy Broadcasting house and have pushed out all the journalists, who are somewhere in White City now.
  Broadcasting house is singularly inappropriately named, in that there are no virtually no broadcasters in it any more; they rattle around if one goes there. The right hon. Member for Gorton mentioned the chit-chat machine.
  Of course, we can be reassured because the BBC says in its statement of promises to viewers and listeners, 1999–2000:
  "We promise to offer the best value for money. The BBC will be run efficiently in your interests."
  So that is all right then. We need not worry about all the excesses, because the BBC is being run in our interest with no waste of money.
  I am pleased that Greg Dyke, who will shortly be taking over, seems to be sceptical about some of the expenditure. He is reported to be selling the country mansion used by staff for weekend breaks and cheap wedding receptions, and targeting limousines for BBC executives that cost up to £1 million a year—that is, 9,900 licence fees. He might also ask himself why John Birt's wife has a 4.6 litre Range Rover at the expense of the BBC. I hope that such grotesque expenditure will be cut.
  Many of us want to defend the BBC. We strain to do so because we believe in it, but it would be a lot easier without such indefensible expenditure. The BBC needs to provide good value for money. If it is going to produce quality programming with a declining market share, it needs to avoid being open to attack on the issues that I have just attacked it on.
  We might also look at BBC News 24—so called because that is the number of viewers that it normally has at any given time. It is a grotesque waste of money. I am profoundly irritated—as many hon. Members may be—when I find that BBC local radio stations are run on a shoestring. There is no money for anything in BBC local radio these days, yet money is being poured down the drain on BBC News 24.
  I am also worried about the BBC World Service, which does not come under the Department for Culture, Media and Sport because it is funded by the Foreign Office. Despite reasonably helpful funding from the Government, the World Service has suffered unacceptable cuts that do nothing to improve the image of Britain abroad.
  Mr. Peter Ainsworth: The hon. Gentleman and I share a BBC local radio service. Will he confirm that, despite the straitened times in which the station lives, it found time to give him a starring role as a teddy bear in a Christmas pantomime special?
  Mr. Baker: I can confirm that. It shows how far down market the BBC has gone.
  Accountability of BBC finances is crucial. There is a case for giving the National Audit Office a formal role in ensuring that the BBC gives value for money. When I had
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  a rather nice dinner with BBC bosses some time ago at our party conference, they did not welcome the idea, saying that it would infringe their independence. It should be possible for the National Audit Office to be seen to be independent of the Government, yet still ensure that the BBC gives good value for money. [Interruption.] You will be pleased to know, Mr. Deputy Speaker, that that mobile phone was upstairs, not in the Chamber. The Secretary of State may want to wait until later in the year, but I should like him to respond to the argument for auditing the BBC through the National Audit Office, because £2 billion a year is a lot of public money to go unaccounted for.
  The Secretary of State also mentioned "News at Ten". There was a deal—almost a Faustian pact—on how it might be replaced. It was a very good way of getting news across to people who might not want to see it. It became an institution. ITV has thrown that away and put nothing satisfactory in its place. In mid-February, "News at Ten" had 8 million viewers. The "Evening News", at the unfriendly time of 6.30, is down to 5.25 million—almost 3 million viewers down. The "Nightly News" is a joke—not in its journalistic standards, but in the commitment that ITV gives to it. It is broadcast at a variable time around 11 pm and has only once made it into the nation's top 70 programmes. I hope that the review to which the Secretary of State referred will conclude that ITV has not met its side of the bargain and that "News at Ten" must be reinstated. That is the only logical conclusion.
  The Secretary of State also briefly mentioned the important issue of media ownership. If we are to have a free, fair and responsible press, it is important that we do not have one person or group controlling too much of the media. Hon. Members on both sides have argued that supermarkets should not have too great a market share, because that distorts the retail market. The same happens in the media. People rely on the printed media in particular for news and views and to help them assess their voting intentions. It is unhealthy that News International controls 35 per cent. of this country's circulation.
  I also find the apparent close relations between Rupert Murdoch and the Government—particularly the Prime Minister—unhealthy. I wonder why Mr. Murdoch, who is on record as criticising and insulting the Dalai Lama, was present at the luncheon for President Jiang Zemin. While demonstrators outside were being hustled off the street for having free Tibet flags, the Prime Minister was with Mr. Murdoch and President Jiang in No. 10 Downing street. That is not healthy for the country or for media control. I did not mind the Prime Minister going to meet Mr. Murdoch on the other side of the world down in Australia before he was elected, but he should have offered lots of promises and then stripped him of his press control a week after coming to power, or at least reduced his market penetration.
  In any case, the Prime Minister did not do that. [Interruption.] It is perfectly proper to suggest that a maximum level of media ownership should apply to one individual or group and that if that level is exceeded we will run into danger as private interests take over from public interests. Capping Mr. Murdoch would have been a sensible and democratic policy and I am sorry that it did not happen. We have to make sure that News International does not wield too much power in this country. I feel that perhaps it does, and I would be interested to hear the Secretary of State's comments.

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  Finally, let me say a word about violence on television and censorship, a subject referred to briefly by the hon. Member for East Surrey. People are rightly worried about that, particularly because of the potential for children to be adversely affected by violence and sex on television.
  I am astonished that violence in context in a programme often arouses antagonism and opposition from individuals and groups while very little is said about the constant violence in mainstream programmes, usually emanating from America. Personally, I find nothing more offensive than gun culture and a stream of programmes showing people shooting each other, which seems to be the main fare on American television, along with car chases. I find that much more offensive than a single act of violence used in the context of a programme to make a particular point artistically. I should like to hear the Secretary of State's response on that.
  It has been useful to hear what hon. Members have had to say. There is a degree of unanimity across the Chamber and I very much hope that we will continue in that spirit, making sure that we embrace the new and get the most from it without throwing out what is best about what we already have.
  12.7 pm
  Barbara Follett: It is fitting that we should be debating the future of broadcasting at the end of the century which saw its introduction and at the end of the consultation period on the future funding of the service which still leads and defines broadcasting in this country—the BBC. Whether the BBC will continue to lead and define broadcasting in the next century and the next millennium depends to some extent on the decisions that will be taken over the next two months.
  Those decisions have to be informed by the three criteria set out by my right hon. Friend the Secretary of State at the beginning of the debate: affordability, accessibility and quality. I should like to deal with them in reverse order because I believe that the quality of the BBC's programmes sets it apart from other national and international providers. My constituents and I wish to see that quality protected and enhanced in the coming years.
  Quality used to be synonymous with the BBC. In most cases, it still is. The service is impartial, intelligent and informed and has reported and relayed the defining moments of the past seven decades to the people of this country and many others across the world.
  My mother remembers her parents tuning in on crystal and cat's whisker sets in Newcastle-under-Lyme at the beginning of the century and the wonder of the instant news that it brought them. Almost everyone over 65 in Britain today remembers hearing Chamberlain announce on the BBC:
  "this country is, therefore, at war with Germany".
  I remember my father standing in front of a radio one cold February morning in 1952 to hear that the King was dead, and a year later and 6,000 miles away I remember kneeling and pressing my ear up against the bakelite and cloth of a very old radio in Addis Ababa in Ethiopia to hear the crackling commentary on the coronation of his daughter.
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  It was the BBC that I turned to while living in South Africa during the dark days of the apartheid regime. It gave, as no other service did, an impartial and informed view of the situation in that troubled area. No wonder the then regime did its best to jam it for years.
  The BBC brought me other things: the Beatles and the Rolling Stones, both banned in South Africa in the 1960s, and faithful adaptations of the books and plays that I studied at school and university, such as "The Forsyte Saga" and "I, Claudius". All were brought to life on the screen, and all were funded by the taxpayer. The BBC was the NHS for the mind.
  When I returned to Britain in 1978, the BBC was a wonderful way back into a world in which genuine debate was encouraged, rather than squashed. In the past few years, the service has carried the culture of excellence into the development of BBC News 24, BBC Knowledge and BBC Online.
  Unfortunately, the same cannot be said of some of the BBC's other services. The original three "I"s—impartial, informed and intelligent—are in danger of being replaced with a new trio; impatient, interruptive and imitative. This is particularly true in the provision of news, and particularly at a regional level. I agree with the hon. Member for Lewes (Mr. Baker) that one often gets a threadbare service there.
  The imitative, impatient and interruptive quality is not absent from national programmes. Regional radio—with its gaggle of only-just-restrained shock jocks, misinforming and insulting listeners on endless call-ins—is the worst offender. Here the impatient and interruptive tendencies are at their most obvious and irritating.
  Anyone who has tuned into "Today" recently will have heard numerous examples of the impatient and interruptive tendency, and of impatience and interruption getting in the way of information. I do not understand why the BBC wastes money on getting two scientists to debate the pros and cons of GM foods, and then insists that Professor X answers a complex question in 15 seconds and keeps interrupting Professor Y while he or she tries to put forward their case. It is simply a waste of time, and means that the public are more baffled than informed by the exchange.
  Imitation rather than intelligence seems to govern electronic news-gathering, and those involved seem to be in awe of the print media. That is the only reason I can think of why they follow an agenda set by the print media. Why, when they have sound and pictures, are they so happy to stick slavishly to what has been in the print media, and simply amplify it?
  As a publicly funded service, the BBC has the leeway and the duty to investigate in depth matters of public concern, but it is not always doing this at present during peak viewing and listening hours. When I raised this matter with the BBC at a dinner during my party conference, I was told that there were programmes at 11 pm and 6 am. However, we want such programmes at 8 o'clock or 8.30 before we go out.
  I welcome my right hon. Friend the Secretary of State's commitment to quality, and I urge him to commend the three "I"s to the viewers panel that he is setting up, in the hope that it will monitor their delivery closely. If it wants to retain its unique reputation and authority, the BBC must remain impartial, informative and, above all, intelligent.

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  I welcome all that my right hon. Friend had to say on accessibility and I wish him well in his attempts to get all platforms to carry the free-to-air channels, digital or not. At present, my constituency—like those of other hon. Members—does not receive some of the free-to-air channels equally. Some 9,000 of my constituents cannot get BBC News 24 or the Parliamentary Channel. I am the only one who regrets the lack of the Parliamentary Channel, but many regret the lack of BBC News 24.
  Mr. Swayne: Given the number of viewers of BBC News 24, an increase in viewing numbers in the hon. Lady's constituency might have a significant impact on the number of people who watch it.
  Barbara Follett: It might indeed.
  Accessibility, whether regional, geographic or platform-based, must be taken into account by both the Government and the television companies. I wish my right hon. Friend the Secretary of State well in that endeavour. Price is the other factor in accessibility. My right hon. Friend's commitment to affordability is commendable but I, like my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman), feel that pensioners deserve special treatment.
  The case is made stronger by the fact that pensioners in sheltered housing and nursing homes already receive concessions. The unequal treatment is felt sharply by pensioners in my constituency who are also extremely concerned by the tendency of some commercial channels to screen major sporting fixtures only on digital. Given the limited reach of digital television, that is truly bad for some people.
  An elderly gentleman recently came up to me on a visit to sheltered housing and told me that, for the past 10 years, he had forgone cigarettes in order to subscribe to both of Sky's sports channels, and was outraged that some of the most important football matches were being shown only on digital, which no amount of abstinence would allow him to afford. The divide between information rich and information poor could widen if the licence fee is raised without concessionary fees being introduced for those on low incomes, especially pensioners.
  We are on the brink of another communications revolution. If it is to benefit the consumer as well as the provider of broadcast services it must be carefully monitored and managed; if it is, the future of broadcasting in Britain is bright; if not, it is bleak. No one wants a two-tier broadcasting service. We must take care to prevent that.
  12.16 pm
  Mr. Desmond Swayne: It is a great pleasure to follow the hon. Member for Stevenage (Barbara Follett), whose speech was lucid and faultlessly delivered. I confess to one disappointment, however. In the Register of Members' Interests, she lists her position as a "communications consultant", and I was rather hoping, given the references that many hon. Members have made to the amount that the BBC spends on consultancy fees, that she would enlighten us as to what that money might be spent on; but I am afraid that I am none the wiser as to what a communications consultant might do than I was when she began.
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  The hon. Member for North-West Norfolk (Dr. Turner) gave us the benefit of his technical expertise in engineering in describing the technology platforms available. He raised the question whether the television or the personal computer would win the battle for the hearts, minds and, indeed, activities of the future. I offer him a third possibility: that it will be neither, that people will go on living their lives much as they do now and that the whole digital revolution has been as over-hyped as the other revolutions of the past 10 to 15 years.
  I remember being told how cable television would change my life. It did, but only in the sense of being a minor inconvenience while the road was dug up.
  Mr. Browne: Would the hon. Gentleman include in his over-hyped revolutions the commonsense revolution?
  Mr. Swayne: No. I am talking about common sense rather than over-hyping.
  I had much sympathy with what the right hon. Member for Manchester, Gorton (Mr. Kaufman) said, but I found his vision of the future profoundly shocking. The thought of having a film e-mailed to me so that I can watch it at home instead of being able to avail myself of the services of a babysitter and go with my wife to the bright lights of Bournemouth to watch it at the cinema strikes me as an unacceptable reduction in the quality of life. I could not possibly countenance that.
  Mr. Chris Smith: The hon. Gentleman has a good point about the changes over the past 10 to 15 years. When video first appeared, everyone predicted that it would mean the death of the cinema, but precisely the opposite has been the case. Cinema attendance—at the bright lights in Bournemouth—has risen by 150 per cent. over 10 years, which proves that there can be a synergy between new technology available in the home and traditional forms of entertainment outside it.
  Mr. Swayne: I thank the Secretary of State for that lucid exposition, with which I wholeheartedly agree.
  I agree with almost everything that my hon. Friend the Member for East Surrey (Mr. Ainsworth) said, and the way in which he said it, but I differ with him on one or two minor points. He began by telling us that television represented one of the greatest educational opportunities, so I ask him to repeat an experiment that I conduct from time to time with my children. I ask them to read a story book for half an hour—to master a chapter, say—and then to tell me, coherently and in chronological order, about what they have read. I then ask them to watch a television programme for half an hour and do the same with that. The difference in the results is instructive, and serves as a powerful corrective for those who over-hype the educational possibilities of television.
  Some examination has taken place, especially by the right hon. Member for Gorton, of the BBC charter. Undoubtedly when it was granted, it required the BBC to provide a broadcasting service, and that was appropriate, because there was no service then. That is no longer so. Therefore, it is proper to ask whether we still require the BBC to provide a full broadcasting service.
  Should we not be more concerned that the BBC provides what other broadcasters cannot, in terms of the quality of programming? In that respect, I was encouraged by what

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  the Secretary of State said about stretching audiences and raising their horizons. The right hon. Gentleman said that the BBC should do that "a little", but I think that it should do it a lot. It is nonsense for the BBC to pursue ratings. Its financial structure emancipates it from having to do so. That is precisely why it can afford to be innovative, to experiment and to concentrate on raising the sights and stretching the imagination of its audiences.
  The way in which the BBC competes with commercial broadcasters is undesirable. I draw particular attention to local radio in that respect. Why, in the south-east of England—or, indeed, elsewhere—does the BBC provide a service that competes with other local radio stations? When I tune in to the local stations as I motor along, it is extraordinary how often I hear repeated the jingles telling me which station I am listening to. They are necessary; without the jingles one would have no idea which station one was listening to, because they are all the same.
  Why is the BBC spending money, which should be used elsewhere, to provide a service identical to those provided by the market?
  Mr. Peter Atkinson: I must dispute that, because, in the north-east of England, the local BBC station has a substantial audience, is well appreciated and deals with local matters. If one travels across to Cumbria or to Scotland one finds entirely different BBC local radio stations, with an entirely different agenda. Our local BBC station competes extremely well with Metro FM, which is one of the most successful commercial local radio stations in the country.
  Mr. Swayne: I thank my hon. Friend for pointing that out, but I suggest that other commercial stations would probably provide a similar service. I remind him that my constituency stretches from Lymington, on the coast, to eight miles south of Salisbury, and, within an area of that size, there are different local radio services competing with one another and covering different local issues. None the less, between each zone, the output of the competitors is remarkable similar—so much so that they have to rely on jingles to remind the listener that there are several different stations.
  The hon. Member for Lewes (Mr. Baker) raised an effective point about the declining standards of decency and morality on the broadcast media. We all receive letters complaining about the decline in standards, and surveys have shown that, over the past two years, public disquiet about standards on television has increased considerably. In particular, I have received a number of letters consequent upon some salacious, late-night programmes that have been more concerned with chasing ratings than anything else.
  The Almighty, in his wisdom, did create man with a recreational interest in sex. An inevitable consequence is that that appetite will be addressed, and it will tend to be addressed on television late at night. My hon. Friend the Member for East Surrey pointed out that there is an off switch, and many people would do well to use it more often. He also, in an intervention in the speech made by the Secretary of State, referred to the possibility of teenagers' television screens going blank as a consequence of the change from analogue to digital. It
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  might be appropriate if teenagers' television screens—and, indeed, those of younger children—went blank a little more often.
  It is entirely appropriate that we should discuss the problems caused when adults do not take an effective interest and make informed decisions about what vulnerable young people and children watch. We must consider whether it is appropriate for the state to take on a greater role in protecting them. It is no good shying away from the word censorship, because that is what I mean. Censorship exists, and the only question is whether we have got right the balance of what we censor. I suggest, in the case of some late-night television programmes, that we have got the balance wrong and should re-examine it. We cannot rely on the off switch alone.
  Mr. Peter Ainsworth: My hon. Friend is making a compelling point well. However, does he agree that public attitudes to the issue can be more complicated than they at first appear? Somebody came up to me not long ago and said, "I want to know what you are going to do about all this filth on television." I asked him what he meant, and he said, "All the disgusting filth and sex, and all those films they have on night after night." I told him that he did not have to watch it, and he thought for a minute and said, "Yeah, that's what my wife says."
  Mr. Swayne: His wife is right, and I am certain that I would get fewer letters complaining about the subject if my constituents used their off switches a little more. However, it is right for us to take account of the fact that many children have televisions in their rooms and are not protected properly by parental influence. Many parents are feckless, but to what extent should the state step into that gap? I shrink from interference, because I believe in freedom of speech and I do not like regulations that tell people what they should or should not do. However, we should exercise more care, because the current balance is wrong.
  The hon. Member for Lewes drew the House's attention to programmes that rely almost exclusively on violence and the exposition of violence for their dramatic effect. I agree with that, but a more insidious and troubling problem is caused less by drama and more by soap opera. The problem arises when scenes of physical violence—and of violence of language and of sexual behaviour—are insinuated into ordinary scenes of daily life. That practice gives the impression that such violence is normal and acceptable. The programmes involved are not protected by the watershed. They go out early in the day, and can be seen by children when they come home from school—indeed, in many respects, they are designed for that audience.
  It is in such soap operas that the pervasive corrosion and corruption is evident. They often appear innocuous, but that only makes it more difficult to exercise the discipline and authority of using the off switch.
  When our constituents write to us with their concerns, it is not acceptable to tell them that Ministers cannot take decisions on those matters because that power has been handed over to the independent organisations whose duty is to maintain standards, and that complaints and representations should be made to those bodies. Our constituents' letters tell us that people consider that those

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  watchdogs have failed, and that they want politicians to do something about the problem. They tell us that the system is not working, and that they require their representatives to act on their behalf.
  Members of Parliament have a proper concern about low turnouts at elections, and all sorts of extraordinary procedures are being put in place to reverse that trend. We like to exercise our minds on the enormously important political questions of the day, such as whether Britain is to be ruled by Parliament or by a bureaucracy in Brussels, but our constituents are more worried about what is on the television. If they get no response when they write to us with their complaints, they will get the impression that there is no point in voting, as nothing will change no matter how they vote. We must address the legitimate concerns of the growing number of people worried about standards of morality and decency on television—otherwise, we can expect only their contempt and derision.
  About two and a quarter hours of religious programmes are put out every week by ITV stations, but they have been shifted to later slots, away from peak time. In addition, the output of religious programmes on BBC1 and BBC2 has decreased by one third over the past 10 years—a period in which the BBC's total programme output has increased by more than 50 per cent. There has therefore been a huge reduction in the total output of religious programmes output and in the amount of prime time devoted to such programmes. That trend is accelerating, as religious output has fallen by 15 per cent. in the last year alone.
  The BBC strategy document entitled "2000 and Beyond" makes virtually no mention of religious broadcasting at all, and neither does the corporation's most recent annual report. It is therefore entirely inappropriate for the BBC to have any role in the regulation of religious broadcasting. We should remove BBC control over appointments to the secretariat of the Central Religious Advisory Committee, which should be entirely independent. Will the Minister address that point?
  Religious broadcasters do not need the BBC and commercial radio stations to do their job. They should be able to get on with it themselves, but the law prevents that. As the Secretary of State said, the Broadcasting Act 1990 prevents religious broadcasters from having anything but a local radio analogue licence. It is difficult for anyone to get hold of one of those, and it is therefore unsurprising that there is only one religious broadcaster using analogue radio—Premiere, in London. There are also the two national and excellent United Christian Broadcasters' channels on satellite. However, outside London, one cannot hear Christian radio unless one possesses satellite equipment or a cable licence. That is the practical consequence of the law.
  The Secretary of State said that the digital revolution would bring a huge opportunity for increased choice, and I welcome that. Religious broadcasters should be emancipated from the law and allowed to take advantage of that. However, the Broadcasting Act 1996 makes the situation even worse. Religious broadcasters are excluded from holding any territorial digital licence. Religious broadcasting is flourishing in Europe, but the practical effect of our policy is to ban all religious output, Christian and other. That is a clear breach of the liberty of freedom of speech. David Pannick QC has given the opinion that our law breaches the European convention on human rights. The Minister should address that point.
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  Religious broadcasting is being increasingly excluded from mainstream television channels, and the Education Act 1944 is being ignored. I recently received a circular from my local authority which, though full of low-grade sociological gobbledegook, effectively said that it could no longer enforce the 1944 Act's provisions. I strongly suspect that my generation was the last to be taught the faith at school. There is therefore all the more reason to fill the vacuum with religious broadcasting, but we have banned it.
  There is increasing disquiet about moral standards on television, and that could clearly be addressed by religious broadcasting, but the practical implication of our policy is that it has been banned. Elderly people find it increasingly difficult to go to church, and they could be satisfied by religious broadcasting. It need not be denominational or sectarian. Take the example of the United Christian Broadcasters; the output is not inflammatory, and it provides healing and reconciliation. A survey of listeners in the island of Ireland, which crosses the sectarian divide, has made that clear. There are no grounds for disquiet on denominational grounds.
  Mr. Baker: How would the hon. Gentleman give extra access to religions of all denominations while not allowing airspace to pseudo-religious organisations that might be unwelcome? Is it his view on freedom of speech that everyone should have access to the airwaves?
  Mr. Swayne: My view is most definitely in favour of freedom of speech. As I am a member of a mainstream Christian denomination, I should prefer a particular type of output, but that would be improper. We must accept that it is incorrect simply to make it illegal for any licence—national or digital—to be held. The secondary issues arise as a result of that legal ban. We may impose certain licensing conditions on breadth of output or whatever, but we must first consider the law that prohibits religious broadcasters from holding a licence at all.
  The Minister for Tourism, Film and Broadcasting will be assisted in this matter by the views of the House. Earlier in this Session, when my hon. Friend the Member for Gainsborough (Mr. Leigh) introduced a ten-minute Bill, my hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton) and I ensured that the House had an opportunity to divide on the matter. The vote was 138 to 9 in favour of allowing our hon. Friend to introduce his Bill. That is a powerful demonstration of the views of the House.
  The Minister is not responsible for the current state of the law, but she does have the power to alter it. I hope that she has the will to do so, because there is a strong and vocal constituency which deserves to be heard. That group realises that it is appropriate to deal with that matter at a time when we have a Prime Minister who openly professes his religious faith, a Home Secretary who professes his religious faith and a Secretary of State for Culture, Media and Sport who also professes a religious faith. It would be difficult to say that the matter will not be addressed; if it cannot be dealt with now, when can we deal with it?
  I am grateful to have this opportunity to speak in a wide-ranging debate, but the House will be aware that Second Reading debates can also be wide ranging. I suggest to the Minister that we should hold more such debates, so that we can remedy the problems that we are discussing.
  12.42 pm
  Mr. John Grogan: The Americans take about two months to do it; the papacy takes about one month to do it; the British Government do it brutally during an evening; but the BBC proposes to do it over the course of a year. The exercise to which I refer is the changing of the chief executive of the organisation. That length of time is likely to prove irritating and too long for those of us who are great friends of the BBC—I chair the all-party group on the BBC—and who agree with the polls undertaken for the Davies panel. Those polls reveal that 50 per cent. of people think that the BBC represents good value and more than 50 per cent. think that it is good for Britain's image abroad.
  Taking such a long time will not help managerial efficiency and coherence during the vital few months that lie ahead for the BBC. If Greg Dyke wants to introduce changes, the sooner he gains total control, the better. I point out to the hon. Member for Lewes (Mr. Baker) that John Birt does a good job in many ways. Without producer choice, the BBC would probably not have survived; £600 million has been saved while John Birt was in charge. However, it must be a case of, "The king is dead; long live the king." The millennium would be a good time to go, because the BBC and its programmes will, once again, be at the centre of the nation's attention—perhaps even the centre of international attention.
  My right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) accused the Davies panel of being obsessed with the BBC. That is not an accusation that anyone would make against him. He talked about ideas popping into the heads of BBC executives. He reaffirmed his view that the BBC should be privatised, and said that it was appropriate that "Walking with Dinosaurs" was being shown at present. Let us consider a typical Monday night on the BBC of a few weeks ago. Would anything on BBC television or radio have tempted him away from the internet?
  As well as "Walking with Dinosaurs", there was Jeremy Isaacs's "Millennium" and "EastEnders", which is a good example of what my right hon. Friend the Secretary of State refers to as "making the popular good". "The Major Years" might have tempted my right hon. Friend the Member for Gorton later that night—if any programme is a good candidate for continual repeats on all BBC channels, that is it. He could have tuned into BBC Radio 5 and heard classic commentary on Premier League football, or into Radio 4 and heard a classic play, the like of which is not broadcast on any other public sector radio channel in Europe. He could even have tuned into BBC local radio, which indeed has a distinctive voice. In some parts of the country, it is the only speech-based radio broadcasting available locally.
  I found annexe 8 of the Davies report fascinating: it sets out in economic terms the case for public sector broadcasting and for the BBC. Its four points are based on the concepts of public good and market failure. The report states that public broadcasting services should:
  "act as a counterweight to the private concentration of ownership … provide a centre of excellence which both makes and broadcasts programmes … be large enough to influence the market and so act as the guarantor of policy",
  and
  "widen choice both now and in the future by complementing the market through the pursuit of public service purposes."
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  It seems to me that that role will be as relevant in the digital world as it was in the analogue world.
  I welcome the fact that my right hon. Friend the Secretary of State has called in consultants to examine carefully the BBC's figures. When that exercise is complete, the case for an increase in BBC resources will remain. Whereas the commercial sector increased its resources by 10 per cent. a year during the 1990s, largely though subscription television, the BBC managed only a 1 per cent. increase. In the early 1990s, the BBC had 40 per cent. of broadcasting revenue, whereas it will have only 20 per cent. in 2008, according to the Davies panel.
  There is a case for the BBC to invest in new digital services and to be given the money and the freedom to experiment. BBC Online is an extremely successful experiment, which receives more hits than any other website in Europe. BBC Knowledge has tremendous potential and there is a clear case for a BBC children's channel to counter the cartoons shown continuously on many of the satellite children's channels.
  On BBC News 24, there is a case for the BBC to use its news-gathering resources to produce a news channel, not least because Back Benchers such as myself are more likely to get on that than on mainstream channels. Where BBC News 24 competes with Sky News, with viewers having access to both, the viewing ratio is about 50:50. In addition, it is extremely important that BBC World News continues as a counterweight to CNN in world broadcasting markets.
  I do not go along with the Davies report recommendation on the digital licence fee. There is little in the report about likely evasion rates or the additional costs of collecting such a fee. It hardly seems worth levying the new licence for only a limited number of years, as the report suggests. It would have a marginal deterrent effect on viewers taking up digital television by giving them an incentive to wait until the digital fee was merged back into the main licence fee. However, unless the BBC develops digital services of quality, the take-up of digital will never reach the 95 per cent. target, because only a limited number of people will get digital for sports, movies and other specialist services.
  There is a strong case for additional resources and, if that case is proved by the Secretary of State's consultants, the licence fee should be raised. The licence fee is not regarded in the same way as the poll tax was: rates of evasion of the television licence fee are decreasing, suggesting that it is generally accepted, albeit grudgingly. An opportunity to increase the fee may shortly become available: the previous Government's licence fee settlement ensured that the fee would decrease by 3.5 per cent. in real terms over the next two years, but the new Labour Government need not remain committed to that settlement. The Davies report spoke of a £5 increase in the licence fee for two years as an alternative to the digital fee, and that proposal should be considered.
  I want pensioners to be exempted from any licence fee increase. That would cost about £25 million to £30 million, which I would call a judicious use of public expenditure, rather than a pre-election bribe, as a similar proposal was described earlier. If the Government are to make good Labour's commitment to enabling pensioners to enjoy a share in the nation's rising earnings, we have to look for ways to do that. It would be very much in the

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  spirit of the winter bonus if pensioners were to receive a £10 or £15 voucher to compensate for any increase in the licence fee.
  I disagree fundamentally with the privatisation of BBC Resources and BBC Worldwide. BBC Resources is the craft base of the entire television industry. Many technicians who are trained through BBC Resources go on to do good work in the independent sector. BBC Resources does not make a profit at present—although it is moving more into profit—so it could be privatised effectively only if business from the BBC were guaranteed for many years to come. The costs to the BBC are likely to rise in a seller's market.
  BBC Worldwide is a good example of public enterprise efficiency within the BBC. Some £80 million now comes from BBC Worldwide, which is an increase from £50 million a few years ago. My right hon. Friend the Member for Gorton must spell it out: is he in favour of the BBC undertaking commercial activities? It is a question of selling off the family silver.
  Many hon. Members mentioned sport during the debate. I was surprised that my right hon. Friend the Member for Gorton seemed to show no interest in a decision that will affect the football teams in his city, which must be the greatest footballing city in the country at the moment. According to today's Financial Times, Premier League rights—both live and recorded—may be sold exclusively to BSkyB for the first time. Several BSkyB executives are apparently having a cosy chat with two of the rich clubs in an attempt to stitch up the deal.
  Such an arrangement would be absolutely catastrophic for many football supporters up and down the country who would be denied any access to Premier League matches. The Secretary of State said that he will review the A and B lists of protected events. Programmes on the A list must be shown live on terrestrial television and there must be access to recorded highlights of programmes on the B list. If the Premier League decides to go down the route of selling all its football rights to the highest bidder, there is a case for putting Premier League football on the B list. That would separate live and recorded rights, and "Match of the Day" or its equivalent programmes would continue to be broadcast.
  I congratulate the Secretary of State on extending protection for sporting events—the so-called "crown jewels"—to a majority of the population. The next football World cup will be shown in its entirety on terrestrial television. That protection came in the nick of time because World cup rights were sold for the first time not to the European Broadcasting Union but to a German media entrepreneur, Mr. Kirch. He will have to sell those rights to terrestrial television, which is a good thing. I urge the Secretary of State to consider the case of Premier League football.
  I think that some sports rights holders are realising for the first time that they will get a better deal overall if they allow at least some terrestrial coverage. For example, the Walker cup—which is an amateur event—was watched on BBC "Grandstand" by more people than the Ryder cup, which gained only 600,000 viewers live on Sky Sports. That has given the golfing authorities something to reflect upon.
  Sky Sports has extended the range of choice for the sports fan, and done a wonderful job with its technical presentation. ITV Sport has done well to bounce back in
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  recent years to broadcast popular sports such as football, rugby, boxing and motor racing, which command high advertising rates. The BBC should continue to put both minority and crown jewel sports together in magazine programmes such as "Grandstand". The BBC has done a good job this year promoting athletics, and I am glad that Greg Dyke has listed sport as one of his priorities.
  I agree with the hon. Member for Hexham (Mr. Atkinson) about the importance of universal access to channels across platforms. As a Yorkshireman, I was sorry to hear my hon. Friend the Member for North-West Norfolk (Dr. Turner) say that north-west Norfolk is receiving Yorkshire regional news. My hon. Friend claimed that his constituents receive crime reports from Burnley. If that is true, the problem is very bad because Burnley is in Lancashire. The signal must be getting mixed up somewhere.
  I shall conclude by quoting Michael Grade on the subject of the BBC. A few weeks ago, he said:
  "The BBC is not so much an institution as an idea."
  That idea is public service broadcasting and we would do very well to preserve that in the digital world that lies ahead.
  12.55 pm
  Mr. Desmond Browne: I, too, thank my right hon. Friend the Secretary for State for the opportunity to debate this important issue. In common with other hon. Members, I welcome his remarks about many aspects of the matter, particularly the switch-over, as we are being encouraged to call it, from analogue to digital.
  I agree with much of what my hon. Friend the Member for Selby (Mr. Grogan) said. I enjoyed, as I usually do, the contribution of the hon. Member for New Forest, West (Mr. Swayne). In his own inimitable style, he put his finger on many issues that are important to our constituents. The common touch is much hyped, but he undoubtedly has it. However, in what by his normal standards could be described as a measured speech, he was long on problems but short on solutions.
  The challenge of how the state should intervene between inactive parents lounging in front of the television in their living room and their unsupervised teenage children channel-hopping in their bedroom has defeated me thus far in the debate, but perhaps the Minister will rise to it more effectively in summing up the debate.
  It is a particular honour to speak in the same debate as my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman), the Chairman of the Culture, Media and Sport Committee. Many of us are somewhat in awe of his comprehensive knowledge of these matters, which, when coupled with his eloquence, makes him a formidable advocate. Accordingly, it was with some trepidation that I anticipated speaking in his presence on this subject for the first time in the House. I fear that my less well-honed opinions may rattle his cage, and I suspect that I may shortly be the victim of one of his broadsides.

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  Before I move on to a matter on which I may disagree with my right hon. Friend, I point out that I agree with him that the time for free television licences for pensioner households has arrived. We could debate whether that should be achieved by vouchers or by simply giving all pensioner households greater financial wherewithal—I should prefer the latter option, to preserve the BBC's independence—but in principle I support him.
  I also agree with my right hon. Friend and other hon. Friends that we should reject the digital licence fee, for the simple reason that it would not be accepted by the public. The move towards digital television cannot be compared with the transfer from monochrome to colour television. The public do not have sufficient knowledge to understand what they would get from digital television, and we may not achieve that level of knowledge in the foreseeable future. I agree with my hon. Friend the Member for Selby that, if the case for more money for the BBC stands up to independent scrutiny, we should just increase the licence fee.
  The debate about the future of broadcasting is timely. To reinforce the point that has already been made by my right hon. Friend the Secretary of State, my right hon. Friend the Member for Gorton and my hon. Friend the Member for North-West Norfolk (Dr. Turner), I shall quote from the foreword to the independent review panel's report. It says that
  "we doubt whether many people have yet had their horizons lifted to the full potential of digital technology—limitless numbers of channels, full access to massive archives of programmes, the creation of 'virtual channels' to suit individual tastes, total portability of equipment, convergence between the web and broadcasting, convergence between both of these and personal communications, interactivity between households, programme makers and the commercial suppliers of all manner of consumer products, and no doubt a myriad of new applications which are as yet barely a glint in their inventor's eye.
  This qualifies without any doubt as the Fourth Broadcasting Revolution".
  At such a time of revolution in broadcasting it is appropriate that we debate, among other issues, the future of public service broadcasting. In this country, of course, that means the future of the BBC. I shall take up an opportunity presented by my right hon. Friend the Member for Gorton, who referred to "Walking with Dinosaurs". It is fortunate, not unfortunate, for public service broadcasting, that that hugely successful BBC1 series should arrive on the scene now—for two reasons. First, it achieved the remarkable phenomenon of attracting an audience of almost 19 million people for a series of educational television programmes. In a persuasive opinion piece in the Evening Standard on Friday, David Aaronovitch concluded:
  "This one series is, in itself, an overwhelming argument for the retention of the BBC and the licence fee."
  That opinion piece was prompted by a shared experience of intellectual stimulation that the author had had with his child when watching the series with her. Perhaps I think that his piece was persuasive because I, too, underwent a similar experience with my children. I am sure that it was shared by countless millions of families throughout the UK as children and the BBC opened the eyes of parents and people of my generation to the magnificence of these giant creatures, which
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  dominated the earth during the Triassic, Jurassic and cretaceous periods. Before I saw the programme, I did not even know about those periods.
  The second timely reason is the health warning that is implicit in the subject matter of the programmes. However prolific and influential in its heyday, no organism can be absolutely immune from the threat of extinction. Once vanished, it may be impossible to retain what has been lost.
  The evolution and survival of any organism is dependent on its natural environment and the predators it faces. "Walking with Dinosaurs" reminds us that, in the BBC, there is something worth preserving, and that, if we do not actively manage its environment, its survival could be at risk.
  The series further reminds us that there is very little new under the sun. Certain predators have always been around. The Jurassic period provides many prototypes for the great creatures that inhabit the broadcasting environment of today. The coelurus is 2 m long with, as the BBC on-line fact file says,
  "grasping hands and a long snout."
  The ankylosaurus has a skull that is broad and thick, leaving little room for a brain. The fact file says that it was not built to reach upwards. I could give further examples of the coincidence between creatures of that period of prehistory and present-day inhabitants of the broadcasting environment but, as I shall return to the analogy with "Walking with Dinosaurs" later, I do not want to overstretch it now. I shall leave hon. Members to their own devices in deciding to whom those descriptions apply.
  Why should we worry about the BBC's survival? After all, it has survived major environmental changes before now, especially at its birth and at the start of commercial television. I remind the House that, at the BBC's birth, the Government created a monopoly for it to live in to protect broadcasting from the predators that still dominate the field in the United States, and in that environment, it flourished.
  Later, when commercial television provided competition, the Government acted again to create a highly regulated environment to ensure that broadcasting developed in a way that was as beneficial as possible to the public. In the past 10 years, major social, political, market and technological developments have prompted fundamental changes in the broadcasting environment. Will the BBC, which can pull off miracles such as "Walking with Dinosaurs", survive in anything like its current form? Not unless public policy decides that it should, and works to create an environment that, while allowing the benefits of digital to flourish, does not damage the element of public service broadcasting that we want to preserve.
  In my view, the answer to the question put by the hon. Member for East Surrey (Mr. Ainsworth) requires two other questions. We must ask ourselves what bits of the BBC we want to keep, and what bits we would want to recreate if we lost them. There are two answers: the services that people get from the BBC that they cannot get from anywhere else; and services for which there are alternatives but which the BBC does best, and so gives the others a lead, raising standards for all. It is with alarm that I find myself in almost total agreement with the hon. Member for New Forest, West on those two issues.

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  A prime example of such services is BBC journalism. The BBC, although not infallible, is generally a source of impartial and accurate information, which is a vital constituent of a healthy democracy. It does not always meet its target, but it aims at the highest standards of broadcast journalism. I suspect that politicians' repeated complaints of bias by the BBC are in inverse proportion to the public's perception of such bias.
  As a public service with no competing commercial considerations, the BBC has uniquely nothing else to aim for but the highest standards of broadcast journalism. That means that a quality kite-marked British journalism is available for listeners and viewers on as wide a range of outlets as technology permits, on their own terms, on whatever medium, whenever and, increasingly, with BBC World and BBC World Service, wherever they are. A further example of what we should keep is the BBC's educational role, the range and quality of which are not offered by any other broadcaster.
  As the Secretary of State said, using the media to promote social cohesion is likely to be much less effective in the digital universe than in the analogue. The digital universe will be much larger and highly fragmented. In that environment, the BBC's role will become more important, not less. The BBC needs to be embedded in that new environment and to fill it with content that is drawn from the rich diversity of cultures in the United Kingdom—programming about our communities, made by members of our communities, using the full range of languages and accents to be found in the isles, reflecting the breadth in contemporary British culture.
  If that is the sort of broadcasting that we want to preserve, we will need to ensure that, in benefiting from market forces, we also regulate to allow public service broadcasting to survive. If it were to become extinct, we would not be able to clone it back into existence. Future generations will not find an example frozen in the tundra from which to extract the DNA of public service broadcasting. It will be lost for ever.
  The ability to produce series such as "Walking with Dinosaurs" is the result of decades of evolution, production talent, credibility with the academic community, building audience expectations of what channels will offer, and the technology to provide supporting activities such as the website. It is what one would expect a highly evolved organism such as the BBC to be able to do. Do we want that to disappear?
  1.6 pm
  Mr. Gareth Thomas: I share the view of many hon. Members that the debate is timely. I am grateful that the Government have found time to raise the issue on the Floor of the House in an Adjournment debate. It is a pity that it is during what might be described as an off-peak period. I hope that we can have a repeat in the near future.
  I enjoyed greatly the gusto with which my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) launched his broadside against the BBC, but he was more than a little unfair on the Gavyn Davies review, bearing in mind that its terms of reference—to examine future BBC funding—were limited by the Government. In that context, the allegation that the review panel was obsessed with the BBC seems to be entirely unfounded and unfair on the BBC itself.
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  We should not be over-sentimental about the BBC's role, or dwell too much on the past. The BBC should not rest on its not inconsiderable laurels. Surely the basic principle that is at stake and that underlies much of the debate is: can an entirely free and unregulated market enable public service broadcasting to flourish, not as a marginal activity, such as we find in the United States and other parts of the world, but as a mainstream broadcaster with big audiences and—this is the crucial point—a major influence on the whole of the broadcasting market; what is referred to in media jargon as the broadcasting ecology? There can be no doubt that the BBC's public service broadcasting ethos has influenced the whole of the broadcasting market in the UK.
  The BBC faces a major challenge. I quote what the BBC itself has underlined as the challenge in its recent publication "2000 and Beyond." I endorse these words:
  "The most important challenge for the BBC is to continue to fulfil its long-standing purposes: setting a benchmark for quality; guaranteeing a range and type of programmes other broadcasts will not, and guaranteeing universally available, high quality television, radio and new media services, such as online, and other digital services in an increasingly fierce commercial environment."
  Experience tells us that the public service broadcasting ethos will not survive unless there is a secure base of funding for the BBC. The conclusions of the Davies report are balanced and cannot be dismissed lightly. The members of the committee obviously took great care and time to balance the arguments. I am surprised that some hon. Members have attacked the report in intemperate terms.
  There is such a thing as market failure, as my hon. Friend the Member for Selby (Mr. Grogan) said. An unregulated multi-channel market with predatory multi-media conglomerates appealing to the lowest common denominator through an endless diet of game shows and quizzes creates problems. Can it deliver the public service broadcasting that we apparently all want to preserve? There is at least a risk that it cannot. In those circumstances, the Government must be prepared to accept that the BBC has a case for extra funding to help it during this formative stage, while the multi-channel market is developing and we enter the fourth broadcasting revolution.
  The important point about the BBC, which has not come out during the debate, is that it is a free-to-air service which provides universal access. There will always be a need for a service that informs and educates impartially, takes risks and stretches horizons.
  I congratulate my hon. Friend the Member for Kilmarnock and Loudoun (Mr. Browne) on using the ingenious analogy of the dinosaurs and their need to adapt to change to survive. That is an apposite analogy for the media.
  The committee's conclusion was that the BBC would be frozen out of the digital market unless it got extra funding. I share the scepticism of other hon. Members about the appropriateness of the digital fee supplement, which has been described as a poll tax or a fine on households that take out a subscription with a digital provider. Even if one does not accept this particular recommendation, there is a case for extra funding. I welcome the fact that the Government are minded to test rigorously the BBC's figures, which appear to have a broad-brush approach. That evidence does suggest that there is a real demand for extra funding. It would be better

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  to adopt the alternative course mapped out by the report by providing a £5 increase for each of the next two years—a substantial increase above the rate of inflation.
  The vexed issue of concessionary licences has exercised many on both sides of the House for many years. The present system is complex, arbitrary and unfair. I would like to see it changed. I am sure that right hon. and hon. Members will agree that pensioners should get a better deal. Having read the report, however, I am persuaded that it would be wrong to extend the scheme. My right hon. Friend the Member for Gorton made what I presume were light-hearted remarks about electoral bribes, but putting a charge on the BBC's finances by making it pay for free licences for pensioner households would amount to just that. However, something needs to be done to address the problem as many pensioners are dependent on television. I would like a voucher system similar to the winter payments system to be introduced to help pensioners with the cost of their television licences.
  In the post-devolutionary era, the BBC has an important role in cementing the countries of the United Kingdom. It is a very British organisation and it has a strong influence in Wales and Scotland. I pay tribute to the work of the BBC in Wales, which attracts 48 per cent. of the viewing and listening public. Its share of the audience is far higher than in England and Scotland. The BBC provides services in Welsh and English in what many people regard as a very professional and efficient way.
  It is superficially attractive to engage in the sport of BBC baiting and there is a great deal of that in the printed media, but one has to ask why. Many of the media conglomerates that have been referred to already have vested interests in attacking the BBC and tarnishing its image. Perhaps some hon. Members have fallen into that trap too.
  We must ensure a secure future for the BBC and I hope that the Government will accept the main recommendations of the report even if they do not accept the proposed digital licence supplement. I share the grave reservations that have been expressed about the recommendation to sell off BBC Resources and I endorse what several hon. Members have said about that. However, I see no reason why the BBC should not be subject to more rigorous accounting control. The BBC is jealous of its independence and rather nervous about too much Government control or regulation, but I see no objection in principle to the National Audit Office having a role in ensuring that BBC resources are accounted for properly. It is essential that the organisation is seen to be fair and transparent.
  We are at a crossroads. The public service ethos that the BBC symbolises is essential. We have to preserve it, but that can only be done at a price. I earnestly ask the Government to take on board the major recommendations in the Davies report.
  1.19 pm
  Mr. Christopher Fraser: I am honoured to have the opportunity to speak in what has been an interesting and wide-ranging debate that has addressed a number of the important issues affecting the future of broadcasting. I am encouraged that the Secretary of State acknowledged the impact of digital broadcasting and that he is setting two tests for availability and affordability.
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  The shadow Secretary of State, my hon. Friend the Member for East Surrey (Mr. Ainsworth), rightly pointed out how important broadcasting is to the whole country. He also rightly highlighted the position of radio—an issue not addressed properly by the Davies panel in its report.
  I am grateful for the kind words of the right hon. Member for Manchester, Gorton (Mr. Kaufman), who is not in his place. He made a comprehensive speech. Like him, I am a member of the Select Committee on Culture, Media and Sport, but I do not speak on behalf of the Committee in this debate. The right hon. Gentleman made many observations. He is always robust, and is often judged outside this place by the column inches that he gets. I can only assume that he is arranging that at the moment.
  My hon. Friend the Member for Hexham (Mr. Atkinson), as ever, made a sensible and astute speech, and rightly spoke up for his constituents. Issues of choice and availability are extremely important.
  The hon. Member for North-West Norfolk (Dr. Turner)—who is not in his place—has often told this House of his regional difficulties. I shall not refer to the fact that most of Norfolk is Conservative. I assume that he has returned to his constituency to sort out some of those difficulties.
  The hon. Member for Lewes (Mr. Baker), the Liberal Democrat spokesman, highlighted some of the problems of minority groups, and the points that he made have echoed around the Chamber. The hon. Member for Stevenage (Barbara Follett) gave an account of the BBC and of access to BBC News 24 in her constituency, and referred to the reach of digital television.
  My hon. Friend the Member for New Forest, West (Mr. Swayne), as ever, articulated common sense about the broadcasting revolution. I am pleased that the entertainments of Bournemouth featured well in his speech, and I, for one, would encourage that. He rightly points to standards in broadcasting, which are relevant to today's debate.
  The hon. Member for Selby (Mr. Grogan) spoke about the position and role of the chief executive of the BBC, and referred to choice. I thought at one point that his speech was a script suited best for the Radio Times. I am pleased to say that the hon. Member for Kilmarnock and Loudoun (Mr. Browne) supported much of what my hon. Friend the Member for New Forest, West said, and that is encouraging. Like the hon. Gentleman, I enormously enjoyed the series "Walking with Dinosaurs" with my children and family. Finally, the hon. Member for Clwyd, West (Mr. Thomas) spoke about the BBC's position in the broadcasting revolution.
  There is no argument among us that the advent of digitisation has changed the nature of broadcasting. The digital age will end broadcasting as we have known it. Comparatively new services such as satellite and cable will no longer necessarily be free to air. Terrestrial television will not necessarily always be free of charge. If it were not difficult enough to decide between four or five channels, in future we could be faced with more than 200.
  Hon. Members face a daunting challenge if we are to keep pace with the speed of change, both technical and commercial—not only within broadcasting, but across the communications sector which, as has been pointed out, includes the internet. That change has turned broadcasting into one of the biggest growth sectors of the late 1990s, with perhaps even greater potential extending into the new

  1259
  millennium. A great many jobs and commercial opportunities have been created, not least as a result of the Broadcasting Act 1996, brought in by the previous Government.
  That legislation established the right environment in the UK for the digital revolution to take place. We are at the forefront of development of digital terrestrial television. There is no argument about the fact that the principle broadcast medium is television, and that it has an enormous and potentially beneficial influence on our lives. It is not only an entertainment medium, but a source of information, knowledge, news and current affairs, both international, and national and local. It offers visual access to sport, arts and even, I am pleased to say, politics. It is especially important to the elderly and the housebound.
  The digital revolution will have a profound effect on society in many ways. In these early days of the new technological era, we must reflect on the fact that, as diversity grows, it will bring not only a wider choice for viewers but greater competition among broadcasters. We must ask whether we can be confident that we will not lose the best of what we have now in the pursuit of innovation, sacrificing quality for quantity.
  The Minister for Tourism, Film and Broadcasting will recall that, in the debate on broadcasting of 28 April, I raised concerns about social exclusion. She agreed that television can contribute to an information-rich and socially inclusive society. I hope that she will develop her argument and tell us what progress the Government have made in their consideration of the way forward.
  Perhaps the most obvious anomaly affecting broadcasting is that of regional reception. I welcome the Secretary of State's comments on coverage. I, too, am concerned that we take on board the point—made by our constituents and by other hon. Members—that the digital television era should offer at least the level of coverage that analogue systems have attained: estimated, as we have already heard, at 99.4 per cent. of UK households.
  I remain equally concerned that social anomalies still exist. Is it not right that the new technology—digitally broadcast television and radio—should be equally available to all members of society? The Secretary of State referred to his statement in September to the Royal Television Society, in which he announced his proposals for analogue switch-off. We welcome the opportunity to hear his comments at first hand in the House and we broadly support his approach, but I urge him to consider carefully the problems and unintended consequences associated with switch-off. What will the consequences be if take-off is slow? We must ensure that no one is left out in the cold. What will happen if switch-off occurs before digital television is both universally available and readily affordable?
  I share the Secretary of State's vision of basic internet access for everyone with a television and a telephone. Certainly, the housebound and those who rely on television for information and communication could greatly benefit from such a core package of services, but how will it benefit those who already struggle to pay their telephone bill and for whom the additional cost of internet use would be prohibitive? Will the Minister clarify how the Government envisage the internet benefiting the poorest and most vulnerable in society?
  In an increasingly competitive environment, how will the Government encourage broadcasters to provide what the Secretary of State called new and sophisticated
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  services for the disabled? The Royal National Institute for the Deaf is conducting a continuing campaign on behalf of those with sensory disabilities. In the debate on 28 April, the Minister told the House that she had written to the broadcasters to ask what they are doing to encourage the development of digital services for the hard of hearing. Perhaps she can take this opportunity to tell us what responses she has received and how she will answer the RNID's call for Parliament to champion its members' desire for equal access to digital television through subtitling?
  That is surely not a matter for regulation, although many other areas may well be. Standards of broadcasting by commercial channels are regulated by the Independent Television Commission and the BBC regulates itself. Both are subject to judgments, without the power of sanction, by the Broadcasting Standards Council. I believe that we in the House are agreed that the new technology and diversity in broadcasting, including not only digital television but the internet, means that there must be a fundamental review of the regulatory environment. I look forward to hearing the Government's proposals—in the House first.
  It is essential to have a regulatory environment that provides safeguards to protect the innocent and the vulnerable. As the number of channels increases, we must accept that it would be impossible to regulate globally, or to have the invasive regulation that the present system allows. However, that need not mean that we cannot aspire to high standards, or that broadcasters should not strive voluntarily to set codes of acceptable practice. As many of my hon. Friends, including my hon. Friend the Member for New Forest, West, have said, we must not give our constituents the impression that such matters are of no importance to Members of Parliament.
  That takes us back to what has been said about Christian broadcasting. It is a pity that the current law restricts the opportunities available to such religious groups. Will the Minister expand on that subject?
  Inevitably, our debate has been drawn to the subject of how that world-renowned public institution, the BBC, can survive the upheaval taking place around it. There is no doubt that the BBC must be part of the digital revolution, but no one wants to see a decline in the quality that it provides, for which it is respected throughout the world.
  On the other hand, as has been said by at least two contributors to the debate, the BBC must not become a dinosaur. As I wrote in my notes for the debate, I can tell the House that it was an enormous relief to find that the programme "Walking with Dinosaurs" was not about the launch of the BBC's annual report.
  As hon. Members are aware, the task of recommending how the BBC should be funded was given to a review panel under the chairmanship of Gavyn Davies. Among the panel's proposals were the introduction of a digital licence fee, the injection of private capital into the BBC, and a review of aspects of the concessionary licence scheme.
  The Opposition believe that, in recommending a digital licence fee, the panel has recommended a tax on innovation. What is to be gained by discouraging digital take-up in that way? I would value the Minister's comments on that subject, because the inevitable result will be further delay in the date of switch-off, if the decision is based on the parameters set out today by the Secretary of State.

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  As the shadow Secretary of State, my hon. Friend the Member for East Surrey said, another issue raised by the Davies panel is the idea that the BBC should seek to sell some of BBC Worldwide via an injection of private capital, and also to sell the bulk of its resources. Does the Minister agree with those recommendations? Does she think that they would allow the BBC to be more competitive? If they would allow it to concentrate its efforts on producing the high quality programmes that people expect of a public service broadcaster, would that not be broadly welcomed?
  The Conservatives share the view that the present concessions on television licences for pensioners and the disabled are unfair, unduly complex, and arbitrary. The cost of a licence increased on 1 April, and a colour licence now costs more than one and a half times the single person's weekly state pension; a 73p increase in the pension will do little to make good the deficit.
  Any promises of concessions for the disadvantaged or elderly, some of whom rely on television as their only medium of contact with the outside world, should not be used as party political gimmicks. They are certainly not the preserve of one political party.
  We welcome the recommendation by the right hon. Member for Gorton about BBC-funded concessions for the elderly. Does the Minister support the view that the existing derisory concession for the blind should be increased to reflect more accurately the sort of access that visually impaired people have to television programmes, as has already been requested for the deaf? Should the BBC not look closely into such matters and offer some solutions?
  With the digital revolution, there is the future ever directly in front of us. I have spoken at some length, as have other contributors, about the BBC. Any debate over the funding of broadcasting will inevitably focus on the corporation's future as a public sector broadcaster. It is clear that the BBC provides an invaluable service to people in this country and those who listen to, and watch it, throughout the world. Its contribution to broadcasting history is undoubted, but now it must define its role in the new era without jeopardising that reputation.
  Let us not forget the continued good work of the commercial sector in providing excellent and popular programmes. The advent of digital television has provided a wealth of new opportunities that have been taken up with enthusiasm by established and new programme makers alike.
  Broadcasting faces an exciting and diverse future. It is right to do what we can to encourage the most competitive marketplace to drive standards up and prices down. Today's debate has been a constructive step in that direction and I am sure that, given some of the contributions from right hon. and hon. Members, the broadcasters cannot avoid listening to us.
  1.36 pm
  The Minister for Tourism, Film and Broadcasting (Janet Anderson): As many right hon. and hon. Members have said, this is an important issue. I remember when, in the early days after I was lucky enough to be asked to do my present job by the Prime Minister, I went on a visit to
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  Border Television where I was asked to open its new digital studio. A member of the staff took my private secretary aside and said, "I hope that the Minister will not mind if we ask her some rather technical questions." As I was very new in the job, the private secretary went pale and wondered what I would say. The first question was, "Well, Minister, there is a whole technological digital revolution going on. How do you explain that to members of the public?" I said that the most important thing to understand was that it would mean more choice and a better deal for the consumer. I put that on the record today as the priority for the Government.
  Many issues have been raised in the debate and I will try to deal with as many as I can. Many hon. Members, especially the hon. Member for New Forest, West (Mr. Swayne), have mentioned the current campaign by United Christian Broadcasters. It has been raised with me before by almost every Member of the House, but in particular by my hon. Friend the Member for Ealing, North (Mr. Pound), and my hon. Friends the Members for Stoke-on-Trent, Central (Mr. Fisher) and for Stoke-on-Trent, North (Ms Walley), in whose constituencies UCB is based. The Department has received thousands of letters on the issue.
  My right hon. Friend the Secretary of State and I have had a meeting with Gareth Littler and his colleagues, and I visited UCB on Monday with my officials. We spent a pleasant morning there and we were grateful for the prayers that they had offered for us in advance of our arrival. The problem is that UCB are prevented by the legislation from applying for a national licence. We are advised that it would require primary legislation to enable them to do so, and we have said that we will consider the issue when the time comes. I hope that that answers the points raised by many hon. Members.
  The Davies report has also been mentioned by many hon. Members, and I pay tribute to Gavyn Davies and his team for their excellent work and the time that they put into it. The consultation does not close until Monday and the Opposition would not expect my right hon. Friend the Secretary of State or me to pre-empt the outcome of that consultation. We shall of course await with interest the deliberations of the Culture, Media and Sport Committee and all the other representations we receive.
  The hon. Member for East Surrey (Mr. Ainsworth) raised several points. He said that I had replied to a question he had tabled by saying that I did not envisage a switch-over for analogue radio. What I actually said was that digital broadcasting was at an early stage of development and that it was premature to set a timetable for the switch of analogue services to digital.
  Other points were raised about children's advertising. I confirm that the Government believe that a place remains for such advertising within the properly regulated framework overseen by the ITC.
  Mr. Swayne: Although I agree entirely with the sentiments expressed by my hon. Friend the Member for East Surrey (Mr. Ainsworth), as a parent I thought that we were looking a gift horse in the mouth in respect of children's advertising. As we build up to the terrible Christmas marathon, a ban on such advertising would make life much less expensive and rather more agreeable.
  Janet Anderson: The hon. Gentleman is right and, as a parent too, I have some sympathy with what he says. However, the Government have no intention of imposing such a ban.
  The hon. Member for Hexham (Mr. Atkinson) raised the problem faced by those of his constituents who do not have access to television. My right hon. Friend the Secretary of State made it plain in his speech that the two priorities in the switch-over from analogue to digital are availability and affordability. He made it clear that the 95 per cent. availability figure is a minimum, and that the Government would like to ensure 100 per cent. coverage. That would resolve a problem that many hon. Members have told the House affects their constituencies.
  The hon. Member for Hexham also raised the question of ITV1 and ITV2 and their availability via satellite. The Office of Fair Trading is considering that matter, and we hope that it will report soon.
  My hon. Friend the Member for North-West Norfolk (Dr. Turner) never misses an opportunity of raising the problem of those of his constituents who have access only to Yorkshire Television. I pay tribute to his perseverance: he has raised this issue through a private Member's Bill as well as in an Adjournment debate. I shall visit his constituency shortly to study the problem, as I recently visited the constituency of my hon. Friend the Member for Wirral, South (Mr. Chapman), where there is a similar difficulty. Both I and my right hon. Friend hope that the development of digital will help to resolve some of those problems.
  Mr. Baker: Will the Minister also look at the problem experienced by people on the south coast of England, where my constituents, and many others, are unable to receive Channel 5?
  Janet Anderson: That is a problem in my constituency too, although I dare say that some people would claim that to be a positive advantage. I am not one of them, but it was always made plain from the start that Channel 5 would not achieve 100 per cent. coverage. However, the priorities of affordability and availability are very important to the Government, as my right hon. Friend made clear in his Cambridge speech.
  Mr. Fraser: I do not want to miss out on this opportunity to tell the Minister that my constituency cannot receive Channel 5, and parts of it get Welsh television. Clearly, the problem affects places all over the country. I do not want to represent Wales, and do not speak Welsh, although I appreciate the programmes.
  Janet Anderson: The hon. Gentleman is right: although the number of areas disadvantaged in the way that has been described is not huge, some places are so affected. My right hon. Friend has written to the broadcasters to see whether anything can be done. If not, we hope that the development of digital will iron out some of the anomalies.
  The hon. Member for Lewes (Mr. Baker) asked about subtitling. My Department has had several meetings on that subject with concerned hon. Members and with the Royal National Institute for Deaf People. Again, my right hon. Friend has written to the broadcasters to say that the Government hope that the development of digital will
  1264
  allow them to continue to improve on the amount of subtitling available. We have been encouraged by their response thus far, but I can assure the hon. Gentleman that we will continue to monitor progress.
  My hon. Friend the Member for Stevenage (Barbara Follett) referred to BBC quality and the question of concessions. I shall touch on those points shortly.
  The hon. Member for New Forest, West contributed a great deal to the debate, expressing concern about content. He said that people expected the Government to do something about it, but responsibility rests with the regulators, which is one reason why my right hon. Friend the Secretary of State has asked the Independent Television Commission to examine the regulatory framework.
  We are debating the future of broadcasting, a subject that the Government take seriously. Things are happening so fast that we believe that an evolutionary approach is the wisest one for the Government to take ahead of probable major legislation early in the next Parliament. That is not to say that we are not examining various issues that that legislation would have to cover. Regulation is one such issue.
  As my right hon. Friend the Secretary of State said, I, together with a ministerial colleague from the Department for Education and Employment, held a seminar this week with broadcasters on media education. I am the mother of three children who have spent their entire lives glued to one square screen or another. Through the school curriculum, children are given guidance that enables them to be critical of literature. When they read Shakespeare or Dickens, they learn how to appreciate it, and how to be critical. There is no such help or guidance with the moving image, however, and we and the Department for Education and Employment are discussing that point with broadcasters.
  My hon. Friend the Member for Selby (Mr. Grogan) told us of his support for the BBC; it is well known, and we share it. I pay tribute to his work on the all-party BBC group. Some of his demands are not in the gift of the Government, but we have listened carefully to what he said.
  I also listened carefully to the speech by my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman), who is Chairman of the Select Committee on Culture, Media and Sport. He said that the views he expressed today were personal, and we shall consider them carefully. The Secretary of State and I cannot speculate on decisions that we may take after public consultation on the Davies report. The report is a serious one and members of the panel which drafted it took the issue seriously. We shall do likewise. We await the outcome of consultation, as well as the forthcoming report of the Culture, Media and Sport Committee.
  My hon. Friend the Member for Kilmarnock and Loudoun (Mr. Browne) talked about "Walking with Dinosaurs". I knew that he would, because he and I had a conversation about that programme in the lounge at Heathrow last week as we waited for our delayed flights. I know the enjoyment that he and his son have derived from that programme, as have other hon. Members. The programme took six years to develop and has had huge and proper acclaim. It is the sort of thing that the BBC does very well, and long may it continue to do so.

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  The hon. Member for Mid-Dorset and North Poole (Mr. Fraser) talked about access to the internet. I can reassure him that the Government are anxious to ensure that people are not excluded from the benefits of new technology. We are in discussion with the Office of Telecommunications and others to see what can be done. I emphasise that that is precisely the type of reason why the Government have set up a social exclusion unit, for which a Minister in every Department has responsibility. We want to ensure that as many people as possible have access to the internet. My right hon. Friend the Secretary of State emphasised that one of our priorities is availability.
  My hon. Friend the Member for Clwyd, West (Mr. Thomas) asked several questions, many of which illustrated how quickly events occur. Someone has described this as the fourth broadcasting revolution, which it is. There are no easy answers to many of the questions that he posed. That is why we are adopting an evolutionary approach; we are consulting widely and taking advice on those matters that we shall need to consider when introducing legislation.
  In returning to the point made by the hon. Member for Mid-Dorset and North Poole on social exclusion, I must emphasise that we are setting up a viewers panel, so that we can obtain and monitor, at every stage, the views of the consumer on access and take-up of digital.
  Many hon. Members referred to concessionary television licences. My right hon. Friend and I have frequently pointed out that the Government appreciate the importance of television to many people—especially those who are socially isolated because of old age, illness or disability, or who are unable to afford other types of leisure activity. We also accept that the existing concessionary licence scheme—under which entitlement depends on the accommodation occupied and the way in which it is provided or managed—is poorly targeted and unsatisfactory. We also accept that the £1.25 reduction for registered blind people is of little help. However, I repeat that no conclusions on the panel's recommendation have been reached; the public consultation exercise, which will end on Monday, will help to inform our decisions—as will the report of the Select Committee and the views of many Members of the House.
  The debate has been interesting and rewarding. We have covered a wide range of broadcasting issues. Broadcasting is complex; it is important that we get it right. Our aim is to balance the needs and interests of viewers and the need to build on the continued success of the UK broadcasting industry. There may be a perception that what the broadcasters and the Government want prevails over the concerns and needs of consumers. Nothing could be further from the truth. We do not want to see the digital programme being driven by broadcasters in the pay-TV market. The Government do not want to move to an early switch-over to digital transmissions merely so that we can sell off the analogue broadcasting spectrum for other use. That is not true.
  As my right hon. Friend the Secretary of State said, our main aim is to protect the interests of consumers. Our desire to encourage the early take-up of digital services and the announcement of a date for digital switch-over are to enable consumers to enjoy early access to the
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  benefits of the new technology. We want them to be informed enough to be confident about buying into the new services if they want to do so, and to have a clear idea about the Government's agenda for broadcasting. We have challenged broadcasters to make digital happen, but we shall be keeping progress under review. There will be plenty of opportunities for Parliament and the consumer to feed concerns and views into that process.
  However, as many hon. Members have mentioned, a wider revolution is taking place. The convergence of broadcasting with telecommunications and computing has been discussed for some time; now, it is finally happening—and it is happening fast—with new interactive services and the internet through our televisions. We are taking steps to ensure that the right legislative framework is in place to deal with that revolution, and that as many people as possible have access to it and are not excluded from it.
  We have emphasised the important role of public service broadcasting; we shall give careful thought as to how the BBC might fit into the new framework. The Davies review is a first stage; we are now conducting—with the ITC—an audit of the regulatory requirements. We intend that the new legislation will cover all main broadcasting issues, and that wide consultation will continue.
  Mr. Baker: Does the Minister agree that we need an independent audit of the BBC's finances?
  Janet Anderson: The hon. Gentleman knows that we are in the middle of a consultation process and that one of the recommendations of the Davies report is that the BBC should become subject to the scrutiny of the National Audit Office. I am sure that he would not encourage me to pre-empt any of the decisions that the Government might take when that consultation is complete and we have been able to take into account the views of hon. Members and the Select Committee. However, I thank him for his intervention.
  When the time comes for legislation, all the major broadcasting issues will be covered. Now is an exciting time: the future of broadcasting is important and we envisage the BBC playing a leading role in the future. We should be proud of some of this country's cultural entrepreneurs in broadcasting—they are the envy of the world. I thank all hon. Members who have contributed to today's debate and assure them that we shall take their views into account.
  Mr. Jim Dowd (Lord Commissioner to the Treasury): I beg to ask leave to withdraw the motion.
  Motion, by leave, withdrawn.

  BUSINESS OF THE HOUSE
  Ordered,
  That, at the sitting on Monday 1st November, the Speaker shall not adjourn the House until any Message from the Lords, relating to the Greater London Authority Bill, has been received.—[Mr. Dowd.]

  Private Recruitment Agencies
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Dowd.]
  1.56 pm
  Mr. Paul Burstow: In May, the Department of Trade and Industry published its proposals on the regulation of the private recruitment industry. The deadline for responses was 30 September. To the layman, the draft regulations appear to offer better protection for people seeking work and those hiring staff. No one could oppose proposals that eliminate abuse or bad practice—we all want to raise standards; but what appears at first glance to be a thorough piece of work on the part of the employment standards agency is in fact nothing of the sort. If implemented, the draft regulations would have a perverse effect by driving up the cost of live-in care for the elderly and disabled people, undermining Government policy to promote independent living and greater choice through direct payments, and reducing flexibility in the labour market by increasing bureaucracy.
  I was first alerted to the flaws in the draft regulations by a steady trickle of letters from providers of home care and live-in care staff. I make no apology for relying heavily on evidence provided by the United Kingdom Homecare Association, which represents about 700 care agencies throughout the voluntary, not-for-profit and private sectors. It is wrong to characterise the concerns expressed by the care agencies as a minority opinion, not least because those concerns are echoed by organisations representing care users, such as Age Concern, Help the Aged, the Carers National Association, the Royal Association for Disability and Rehabilitation and Mencap. Hon. Members on both sides of the House have written to the Minister to express similar concerns and to ask questions.
  The best way to explain the draft regulations and the fact that they are misconceived is to present a case study. I shall tell the House about a lady called Elizabeth, who is 80 years old and who suffers from multiple sclerosis; she is frail and vulnerable. In 1996, she started to use her savings and attendance allowance benefits to pay for a two-weekly rotational live-in care package arranged by a care agency. The package enables her to continue to live at home with a degree of independence and dignity, instead of moving into residential care and becoming institutionalised.
  The current cost of Elizabeth's care package is about £316 a week. If the draft regulations are implemented as they stand, the cost to Elizabeth of her care will rise under the new rules by 91 per cent. to £602.78 a week—an extra £286 a week, or £14,872 extra a year. The VAT element alone in that calculation is almost double the attendance allowance that she receives. Elizabeth's case is only one of thousands of examples of how well-intentioned regulations may have unintended and undesirable results.
  The objectives of the new regulations are entirely laudable. They are designed to increase clarity for clients, agencies and work seekers; promote labour market flexibility; protect clients and the general public by codifying good practice; curb payment abuses so that workers are paid and safeguard clients' money to prevent loss or misappropriation. No one could argue with those aims and goals, but they will not be achieved if the compliance cost consequences of the regulations are not addressed.
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  I asked the Minister what assessments and estimates he had made of the impact of the proposals on those who buy care privately. In a written answer, I was directed to annexe 3 of the regulatory impact assessment. However, I was disappointed that the impact assessment was unable to quantify the cost of most of the measures,
  "because the regulations are likely to lead to changes in behaviour of hirers, agencies and workers."
  To be fair to the Minister and the Department, paragraph 33 of the impact assessment accepts that there are compliance costs in the form of additional VAT. However, the Department admits that it has no way of knowing how many hirers will be unable to offset VAT payments. I can tell the Minister that more than 40,000 care users in this country will be unable to offset the new VAT liabilities that arise from the regulations.
  From talking to people in care agencies and reading the impact assessment, I suspect that officials do not fully understand the market in which care agencies operate. Regulations that are drafted for a wider industry are not necessarily appropriate for particular segments of it.
  The employment status of carers or personal assistants, and especially the impact of regulation 7(1), are at the heart of the matter. The United Kingdom Homecare Association, and others who have made representations to me and other hon. Members, strongly contend that people who work in the care sector are genuinely self-employed. They maintain that for four reasons. First, care workers are under no obligation to accept any assignment that is offered to them. Secondly, the care worker is paid directly by the hirer. Thirdly, the care worker can register with more than one agency. Fourthly, the care worker can refuse to accept the placement for the rate that the hirer offers.
  While it is right to try to clarify the contractual position—as the regulations attempt to do—to avoid opportunities for abuse and poor practice, it is misguided to believe that any real benefit will arise from prohibiting care agencies from acting as agents for self-employed, autonomous care workers.
  The practices have developed and stood the test of time for 30 years or more. They enable care workers and care agencies to operate in the flexible way that the Minister and his colleagues extol to the private sector. Therefore, it is strange that the Department is willing to regulate that practice out of existence in the care sector while it allows other sectors in the recruitment industry to continue to use it.
  Regulation 7(1) would insist that care agencies became direct employers. That would give rise to substantial extra costs that would put home care and live-in care out of the reach of many and confine it to the few. The extra costs of payroll, national insurance contributions, employer's liability and sick pay insurance mount to push up costs to the end user. To add insult to injury, VAT will be chargeable on the whole amount of the increased sum, not just the agency's fee for initially arranging the placement.
  There are numerous examples to show that, under the Government's proposals, the VAT element of the cost of home or live-in care will exceed the amount that the Benefits Agency pays in attendance allowance, or the care component of the disability living allowance. Those benefits are designed to help people to meet their care costs and the extra costs of disability, not to pay their tax bill.

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  In the past few months, the Minister has made statements criticising care agencies and others for
  "wildly exaggerating the extra costs and causing a great deal of unnecessary alarm amongst the people who receive care."
  Despite repeated requests for the Government to publish their figures, they have not been forthcoming.
  The Department has disputed figures such as those in the case of Elizabeth, which I quoted earlier. The Minister knows that in August, his officials met Mrs. Gifford of Able Community Care to go through her calculations. The Minister told me yesterday in a written answer that he does
  "not accept that the costs which she calculates would in fact result from the proposed amendments to private recruitment industry regulation."—[Official Report, 28 October 1999; Vol. 336, c. 936.]
  I hope that the Minister can tell the House today in detail why he does not accept the calculations. I understand that, even using a formula provided by DTI officials themselves, cost increases of about 40 per cent. still result.
  The lower figures that I have been informed could be achieved are arrived at by amazing contortions which appear to defeat the stated purpose of the regulations. First, I am told, the DTI's formula results in a cut in care workers' take-home pay because officials say that the employee should absorb the extra national insurance costs. Secondly, the DTI formula makes no allowance for the cost of travel, which can be an obstacle to a flexible labour market. Again, that cost has to be picked up by the care worker. That may not be a DTI formula, but I have been led to believe that it is. Will the Minister tell me, therefore, why he does not accept Mrs. Gifford's figures? What alternative figures does he have? Why does it appear that the Department is willing to allow care workers' terms and conditions to worsen?
  I know that the Minister accepts that the VAT liability will rise, although he may dispute by how much, because in a letter, the Minister said that
  "ministerial colleagues at the Treasury and Department of Health have asked officials to examine and report on the impact of the changes on those buying care privately."
  It is a pity that, when I tabled a written question to the Chancellor of the Exchequer, he transferred it to the DTI. However, I am glad to have been told that the Department of Health is due to reply to my question. I hope that the Minister will be able to tell the House today what Treasury and Department of Health officials have found so far, because I know that the reference to his ministerial colleagues was made back in August at the latest.
  The Paymaster General confirmed in a letter in August that the DTI's proposals will attract a VAT liability. She said:
  "The current application of VAT to home care gives the widest possible relief under the terms of the European Directive on which UK law is based. There is no possibility of extending the scope of VAT exemption to cover services provided commercially by unqualified, unsupervised carers."
  The Government are unwilling to come forward with their own estimates, but figures from industry analysts suggest that the extra cost will be about £40 million per annum. That will be an extra £40 million in tax revenue for the Chancellor met from the savings and benefits of elderly and disabled people. The Paymaster General suggested, however, that the impact might be reduced if
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  those agencies managed by nurses are able to argue that the services that they provide are VAT-exempt health care. That could reduce the cost to some £20 million.
  That extra VAT burden will have knock-on effects. It will drive up demand for social services funding, place pressure on the independent living fund and frustrate the Government's stated policy of extending direct payments to older people and encouraging their greater take-up by disabled people. It begs the question: where was the joined-up government thinking on that set of proposals?
  Although I appreciate that the Minister may not be in a position to answer for his Treasury colleagues, I hope that he will be able to pass on my representations and ask the Paymaster General to re-examine the scope for zero rating on personal home care for individual users. The Government's hands are not tied on VAT exemptions in that area. All home care services provided to meet an assessed need should be VAT exempted. Paragraph 1(g) of article 13 of the sixth VAT directive permits exemptions for
  "services … closely linked to welfare or social security work."
  The Government therefore have the scope to grant an exemption to commercial, as well as charitable, organisations.
  Even if the interpretation by Customs and Excise is right, and there are clearly grounds for dispute on the point about the VAT directive, there is another way in which the Government could lift the additional VAT burden imposed by the regulations. An EU initiative would allow the Government to seek a reduced VAT rate for labour-intensive services that are sold directly to final consumers. Surely home care and living care come under that heading?
  Will the Minister consider, with his Treasury and Department of Health colleagues, the possibility of making such a bid for a reduction in VAT on those services? That offers a solution to the problems that the regulations will cause for this part of the recruitment industry. I understand that time for such applications is limited because the regulations are due to come into effect at the beginning of the next calendar year.
  In this short debate, I want to make it clear that I fully accept the need to strike a balance between the interests of workers, hirers and agencies so as to afford greater protection to all parties in future. Regulations have a positive role to play in eliminating abuses or bad practices and in driving up standards—or at least they could have.
  That leads me to my final point. Regulations are only as good as the enforcement regime that underpins them. The current regime is complaints driven, but it gives little insight into how the sector is performing or who is operating in the sector. That is reflected in page after page of the regulations, and in the compliance cost assessment. There is almost no reference in the documentation about the regulation of this industry to the impact that it will have on the care industry. That is undoubtedly because of the paucity of information available to the Department at the moment.
  Creating new rules and clarifying old ones will not necessarily raise standards. It leaves it open for low-profile cowboy operators to drive a coach and horses through the regulations while the reputable operators pick up and pass on the compliance costs to those in need of care. At worst, reputable operators will be unable to

  1271
  compete in a market in which others are undercutting them by dodging the regulations, and they go out of business as a consequence.
  Enforcement and regulation require a joined-up approach. I hope that the Minister will talk to his colleagues in the Department of Health about their plans for the establishment of regionally based commissions for care standards, and the possibility of them taking on some, if not all, of the role of enforcing standards in the important field of domiciliary and live-in care.
  I hope that the Minister will be able to answer three questions, of which I gave his private office notice on Wednesday. I do not think that they are too taxing, but I shall wait and see. First, what is his Department's estimate of the increased care costs that will arise from the regulations? That information could put to rest the concerns being raised by hon. Members and outside organisations. Secondly, what other Departments have been involved in assessing the impact of the draft regulations, and when did they become involved? Thirdly, what is the timetable? When will the regulations emerge in their final guise, and when will the House have the chance to consider them in that context?
  Above all, I hope that the Minister will tell the House that he accepts that the fears I have expressed are real, and that the Government's commitment to protecting the rights of the many will ultimately shine through in the revised regulations that emerge from the consultation process.
  2.12 pm
  The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Alan Johnson): I commend the hon. Member for Sutton and Cheam (Mr. Burstow) on securing this Adjournment debate. He has taken a keen interest in this subject, as have other hon. Members. It is an important subject, and I welcome the debate, not least because it gives the Government an opportunity to state clearly what the review is about. We have had genuine consultation, and have welcomed the positive dialogue that we have had with the recruitment industry and others. We are carefully considering the responses that we have received, and we have made it clear that nothing has been set in stone, concrete, aspic or any other substance. The debate therefore comes at an opportune time.
  The private recruitment industry plays a key role in today's flexible labour market. It is a major industry, and covers permanent placements and temporary staff hire in diverse sectors, from office work to factories, from entertainment to the care of the elderly, which was the issue on which the hon. Gentleman concentrated.
  The industry has tripled since 1992, and its turnover is now estimated at more than £16 billion. The regulations governing agency conduct are 23-years-old. It is widely accepted that the private recruitment industry has expanded and developed so much since then that we need to update the regulations.
  We have received widespread support from employment bureaux, trade organisations, hirers and workers for the aims of our new regulations. The problem with the contribution of the hon. Member for Sutton and Cheam is that it tended to give an unbalanced view of what the review is all about. He mentioned a perverse effect, but talked about one particular aspect.
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  It is important to put on record the fact that most of the organisations in the sector have welcomed not just the review, but the broad thrust of the Government's proposals. I amplify that by quoting, for example, Age Concern, which says in its submission to the review:
  "We welcome many of the changes that would be introduced and support the rationale behind them."
  It goes on to say:
  "Many of the proposed changes are entirely consistent with the broader thrust of Government policy: enhancing the protection of vulnerable people; improving the quality of services: and ensuring minimum standards in employment practice. Age Concern England wholeheartedly supports these changes."
  May I take the liberty of mentioning another quotation, which is also important? The hon. Member for Sutton and Cheam mentioned the UKHCA, a major player in the sector. It made it clear that
  "the reforms will radically alter traditional working practices, most particularly in the care sector and, despite concerns over elements of the proposed regulations, agencies do support the basic principles of transparency and improved conditions for care workers."
  Mr. Burstow: The Minister has moved on to the point that I wish to draw to his attention. The care sector of that big industry has generally welcomed the regulations, but it has particular concerns, on which I have sought to concentrate my remarks. I look forward to him dealing with the VAT issue, which is at the crux of the sector's concerns.
  Mr. Johnson: Be patient. I will come to that, although the hon. Gentleman will recognise that the debate is about our review of the agency sector. For reasons that he mentioned, it is important to put it on record that the broad thrust of the proposals are welcomed. Indeed, if we did nothing and retained the status quo, Elizabeth, the constituent whom he mentioned, would stand to lose a lot and would be in great jeopardy.
  It is important to set out, as the hon. Member for Sutton and Cheam did to a point, the review's aims. I do not think that he or his party would disagree with them. I would be surprised if any hon. Members would.
  We aim to simplify and to reduce the number of regulations. Far from increasing bureaucracy, we intend to reduce it. There are three sets of different regulations. We are looking to have one set to benefit all agencies. We have not seen any criticism of that objective.
  We aim to increase the clarity of contractual relationships in the sector, so that workers and hirers know who is contracting with whom. Again, Age Concern makes an eloquent submission to support that. It is equally concerned about the position of care workers and hirers.
  Another principle is to promote labour market flexibility. We are looking also to introduce stringent requirements to check temporary staff who work with children, or the elderly—again, a fundamental update that is overdue. We are looking to protect clients and the general public, to curb payment abuses, which occur, as the hon. Member for Sutton and Cheam will accept, in all strands of the industry, and to safeguard entertainment workers' money. We have those seven fundamental aims.

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  Contrary to some of the comments by the hon. Gentleman, I can assure him that, for the past two years—I respond to one of his fundamental questions—there has been close collaboration between the Department of Trade and Industry, Department of Health, Customs and Excise and Her Majesty's Treasury. He asked when that began. It would be stretching it to say 2 May 1997, but we began the process shortly after the general election. The concepts of joined-up government and cross-cutting are important, and nowhere more so than on this issue. In the care sector in particular, there are other Departments and Government objectives involved.
  We recognise that many people are concerned about how their long-term care needs or those of their friends or relatives will be met. The Government are looking at the system of funding long-term care to ensure that it is fair and sustainable. We set up a royal commission in 1997 to help with that. My colleagues received the commission's report in March this year. We have already acted on some of the recommendations. For example, we have improved services for carers by allocating £140 million over three years to help to fund more respite care. We are extending direct payments to people aged 65 and over. That has been widely welcomed in the industry. We have also announced our intention to establish a proper commission for care standards as soon as parliamentary time allows so that residential and nursing homes can be inspected by an independent agency.
  Mr. Burstow: The Minister referred to worthy Government initiatives, including direct payments, which were started by the previous Administration through a private Member's Bill. However, direct payments will butt against the regulations because of the increased liabilities that will result from the change of employment status of care workers, as I said earlier. The Minister has been talking about clarity—
  Mr. Deputy Speaker (Mr. Michael J. Martin): Order. The hon. Gentleman cannot go on too long.
  Mr. Johnson: Everyone wants to safeguard direct payments. Age Concern and others have made that clear. The crucial aspect of the debate is the relationship between the hirer and the carer.
  My colleagues are giving the commission's proposals on the funding of long-term care the careful consideration that they merit. We want to find a solution that is fair to the individual and to the taxpayer and will stand the test of time.
  The Government are fully aware of the need for care services to be affordable and of good quality. We are also aware that a small number of agencies in the care sector offer among the most unsatisfactory and ambiguous business terms in the private recruitment industry. If we are conducting a proper review of the entire agency sector, it would be perverse to leave out a sector that has a large number of abuses. Good quality care will not be encouraged or promoted by such poor business practices.
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  As I have already said, one of our main aims is to clarify the contractual relationships between employment bureaux, hirers and temporary workers. We shall require employment bureaux to operate as employment businesses when introducing or supplying temporary workers. The temporary worker's contractual relationship will be with the bureau rather than the hirer.
  People who take on the difficult job of providing care are entitled to proper contracts and proper employment rights. A bureau that supplies the carer should be responsible for those elements. Otherwise, the people receiving care could find themselves liable under employment or tax law, even if their carer is labelled self-employed by their bureau.
  At the moment, some employment bureaux supply workers on vague contracts that result in no one knowing who is responsible. That is the case for Elizabeth, the hon. Gentleman's constituent. Care recipients may find that, without their knowledge, they are responsible for ensuring that their carer receives the national minimum wage and other employment rights, for their health and safety and for their tax arrangements. Unfortunately, a minority of the care sector has conducted a scare campaign. The danger is that it has unnecessarily alarmed some of the most vulnerable people in our communities—those in need of care—and their families and, of course, the care workers themselves. Lurid stories about huge cost increases do not help anyone.
  The hon. Gentleman mentioned Able Community Care, a company that participated in our consultation. I note that The Economist this morning contains an article that probably represents all the worst aspects of the lurid reporting that I mentioned. I am not saying that Able Community Care is responsible for the article. It states that people in need of care will have to leave their homes and be housed in already overstretched hospitals and nursing homes and that the Government will prohibit self-employment in the sector. That is certainly not our aim or objective.
  Mr. Burstow: In a written answer on 19 October, the Minister stated that care workers who are self-employed could remain so. Can he confirm that now?
  Mr. Johnson: I shall return to that in a moment. I have one final point to make first. The article quotes someone from an employment agency as saying:
  "The agency think that this bureaucratic burden"—
  that is, paying the minimum wage, complying with employment law and providing proper paid leave—
  "is all the more unnecessary because many carers come from abroad—mainly from the Commonwealth".
  We submit that all workers in this country are entitled to basic minimum standards.
  On another piece of misinformation, let me say that labelling workers self-employed—we have no desire to remove the ability to hire self-employed carers—does not necessarily mean that they are. Claiming that those placed in bogus self-employment are not entitled to the minimum wage or to working-time rights will cut no ice in the review that we are conducting.

  1275
  Whether individual carers are self-employed for employment law or tax purposes depends on the nature of their contracts. Any disputes will continue to be assessed by the courts using established pointers to employment or self-employment.
  The hon. Gentleman mentioned bureaucracy. We are well aware of the need to keep red tape to a minimum. As I have said, we propose to repeal a number of statutory requirements which are no longer necessary, such as those which prevent temporary workers from getting information about better jobs elsewhere. We are looking at ways to streamline the proposals to the maximum extent.
  Bureaux have raised with us the need to respond quickly to customer demand. Workers are finding that they are taken advantage of as a result of that process, because the rate that they are offered on the telephone when they apply for the job is completely different from the rate that they are actually paid. We may be seeking to introduce bureaucracy—a term that may sound pejorative—but it is to the benefit of the hirer and carer.
  I have two final points. The hon. Gentleman raised the crucial issues of costs and VAT. On costs, I cannot add anything to the regulatory impact assessment in the consultation document that was published at the end of May. We do not have available the information for which the hon. Gentleman asked. I am afraid that the Treasury is responsible for VAT. We are in the middle of the consultation period so I am not in a position to tell the hon. Gentleman the results of consultation that is continuing or to say anything other than we are
  1276
  working closely with the Treasury on the problems that he has identified. We ourselves highlighted these problems in the consultation document. Having done so, we are certainly minded to ensure that we find a solution—
  It being half-past Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Dowd.]
  Mr. Johnson: I fear that my inexperience is showing, Mr. Deputy Speaker.
  We want to make sure that the problems are tackled. I would submit to the hon. Member for Sutton and Cheam that this is the only area where there is a legitimate area for concern about the proposals. Lurid stories about raising £60 million suggest that some bureaux are not paying the minimum wage or paid holidays, are not looking after carers properly, and are leaving the hirer in a state of ambiguity, with infirm and elderly people suffering accordingly.
  I thank the hon. Member for Sutton and Cheam for raising the debate, and I assure him that his comments will be looked at as part of the consultation process. I am sure that, when he sees the final proposals—which we hope will be ready late in the winter, to come out next spring—he will feel that we have done a proper job on behalf of all people in need of care in this country, including Elizabeth.
  Question put and agreed to.
  Adjourned accordingly at twenty-nine minutes to Three o'clock.