HL Deb 11 June 1980 vol 410 cc532-57

7.53 p.m.

Lord HILL of LUTON rose to ask Her Majesty's Government why they fixed the broadcasting licence fee at a level which, over the next two years, involves the cutting of BBC expenditure by £130 million and the loss of 1,500 jobs. The noble Lord said: My Lords, in putting this Unstarred Question to ask the Government why they fixed the broadcasting licence fee at the level that they did, I do not propose to raise the question as to the various cuts and changes which have followed but to adhere to the main question as to what led the Government to take the attitude they did in fixing the broadcasting licence fee at £34 for the colour licence—the one to which I refer as an example, without duplicating it by reference to the monochrome licence.

It was in August last that the BBC submitted to the Home Office its plans for the next 10 years for capital and operating expenditure, as well as the hours of output and the changes expected, in cost per hour. It asked for a colour licence fee of £40. In December the Home Secretary announced a colour licence of £34 a year, a figure to last for at least two years, to cover an appreciable reduction in the BBC's overdraft. And, in so deciding, the Home Office knew that this meant a cutting of staff and a cutting of services in the BBC. It knew that in real terms that figure of £34 represented a cut in the licence fee. Why?

One can understand the Government's preoccupation with public expenditure. But this is not public expenditure; it is not expenditure of public money. The domestic services of the BBC, as your Lordships will know, are financed entirely by licence fees. Why, then, it not being an issue of public expenditure, it representing a cost of some nine pence a day did the Government decide on a licence fee that meant a fall in capital expenditure of some £90 million and a reduction and change in services amounting to some £40 million? Why?

I suppose it might well be that the Government thought, perhaps rightly, that in a body the size of the BBC, there was room for economy of one kind or another. But inflation has already done that. In the 12 years since the colour licence was introduced, its level has increased by 240 per cent. During that time, the retail price index has increased by 270 per cent., average earnings have gone up by 380 per cent. and the retirement pension has gone up by 500 per cent—all during those same 12 years. In other words the real value of the licence fee has fallen in those 12 years and the public's capacity to pay that licence fee has risen. The Government's preoccupation with the retail price index may have played a part, but the difference between the £40 which was sought and the £34 which was awarded represents but one-tenth of 1 per cent. of the retail price index.

It could not have meant—and I do not suggest that it could—that the Government were seeking to weaken further the BBC's financial capacity to compete with independent television. But it has done just that thing. The figures tell their story. From a rough parity some five years ago, ITV today enjoys 20 per cent. more income than does the BBC on a regular basis. The BBC runs two television services; independent television runs one service. But it can be fairly argued—and let me say it straight away—that the income of independent television has special outgoings in levy, corporation tax, selling expenses and so on.

I think it fairer to look on what was spent on making television programmes for 1978–79, for which the figures are available. Each week over that period the BBC produced 21½ hours of programmes; ITV produced 14½ hours of programmes. The BBC spent on those programmes £208 million and ITV spent £233 million. In other words, the BBC produced 50 per cent. more viewing than the ITV at a lower total cost. I do not for one moment begrudge Independent Television its income, but I do begrudge the effect of this licence fee division in reducing further the BBC's financial capacity to compete. That is the essence of what I want to say.

Having made the point of the addition to the financial margin between them, I want to come to the points that above all seem to me to emerge from the Government's decision. It is in my experience—and I have experience of both services—fortunate that this country found its way to a system involving the competition between a commercial service and a public service. I believe that that has proved to be a satisfactory basic organisation, provided there exists in term of resources a fair competitive capacity between the two services. Upset that financial capacity, and one has disturbed the basic principle upon which Independent Television was founded—and wisely founded.

It is in the public interest that there should be this competition with the two kinds of service. The commercial service, once it has overcome its financial difficulties in competing with the public service, soon wishes to enjoy the esteem that has hitherto belonged to the public service only. The public service, for its part, is compelled to step down from any higher level from which it may have felt it was operating, and get away from a "holier than thou" attitude and compete reasonably with the commercial service. I believe that this licence fee decision substantially upsets that balance. It brings a kind of poverty to the BBC at a time when Independent Television, in spite of its heavy outgoings and even the strike that it had last year, is in a much stronger financial position.

The second general consideration is one about which I am greatly disturbed. All your Lordships accept the principle that broadcasting should remain independent of Government. That is the source of the strength of British broadcasting, the envy of so many parts of the world. The licence fee system is, I believe, an important part of the butressing of that freedom. There may be other ways but I frankly do not know them. The licence fee system provides that gap between Government and broadcasters. It does it adequately. It provides the protection when in fact it is assessed, say, every four or five years. Once one gets to the situation in which the licence fee is re-examined every year or every other year, one is not far from the situation in which the service is financed by the Treasury on an annual allocation, with all the possibilities that that presents for intervention in broadcasting. At a time of inflation we must get away from this system. The licence fee is provided for 2 years 4 months, and next time it may have to be for one year, if the present system is continued.

I suggest a modification of the licence fee system. It ought to be possible for the Government to appoint a few assessors who would hear the BBC's claim in public and in detail and would recommend to the Government the licence fee and perhaps a formula for adjusting the licence fee for the next few years before the next major assessment. It could be done—but I am sure that no one would accept it—by an indexation of the licence fee. The suggestion that I make leaves the Government's control of the licence fee as it is. It spares the civil servants at the Home Office from a great deal of work over a long time. It enables the issue to be put and judged in public and gets away from some of the worst features. But we must get away from this near-annual assessment of the licence fee if we are to sustain the freedom, the independence, of broadcasting from Government interference.

I know that it is so often said, and it may even be in people's minds now, that the way out of this difficulty is for the BBC to take a little advertising. "Gentle, of course. Only superior advertising. Only a little. Would that matter?" My Lords, it would be the thin edge of the wedge. It would be starting on the slippery slope. Can we imagine what a Government's response would be to an application for an increase in the licence fee once advertising revenue was being obtained for one small part of the service? "Add more advertising. Extend the scope of the advertising". Then there would be competition between advertising services. No one who has ever seen television on the American Continent would ever wish to inflict on this country competing advertising commercial services. I hope that we shall sustain this position of a wholly public service, and, on the other hand, a commercial service.

I know that there are possibly added financial burdens to come to Independent Television, though I doubt whether they will come in in the next two years. I want the licence fee to be seen not merely in the context of this economy or that economy; I want it to be seen in terms of two essentials. One is, if there is to be fair competition between the two great services, then let there be some reasonable relationship between their financial resources. Secondly, let us get away—with a little ingenuity maybe—from the position into which we are rapidly moving: more frequent assessments of the licence fee than are good for the independence of the BBC. The independence of the BBC means the independence of broadcasting as a whole. Do not, for Heaven's sake, let us do anything to injure that independence, in either our own interests or the interests of the many services of the world which point to the BBC as the model they would wish to follow.

8.10 p.m.

Lord WINSTANLEY

My Lords, it is a pleasure and indeed an honour to follow the noble Lord, Lord Hill of Luton, on a subject in which he has a great personal interest and involvement and of which he has almost unparalleled experience and expertise, whether inside or outside your Lordships' House. The Question he has asked the Government seems to me to be both highly pertinent and very urgent. Also, as he has said himself, it raises questions of principle which should be of the greatest possible concern to noble Lords in all parts of your Lordships' House.

First, I think I have to ask whether we and the BBC have got this particular question the right way round. I believe that repeatedly we are asking the BBC—and this is not a new exercise: as the noble Lord, Lord Hill, suggested, it occurs every two or three years when the BBC is in financial difficulties—to cut its coat according to the arbitrarily fixed length of some piece of cloth. We should really be doing the more sensible thing; in other words, deciding together what range and variety of services public broadcasting should provide, be they TV or radio services, local, regional or whatever, and then calculating the cost, deciding how much money is needed to provide the services and how that money is to be provided.

Lord TAYLOR of GRYFE

My Lords, would the noble Lord tell us who would decide this?

Lord WINSTANLEY

My Lords, if the noble Lord will be good enough to bear with me I shall come to that, although I do not think we can go in this way into the whole question of broadcasting, its organisation and financing, on an Unstarred Question. However, I will come to that question and, of course, it is an important one. As things are, I think we have to accept the situation in which we are placed and we have to ask the questions which inevitably arise from it. I should like to add two supplementary questions to those put so very eloquently by the noble Lord, Lord Hill of Luton. First, is the BBC making its cuts in the right way and in the right places? Secondly, and in my opinion very much more importantly, are we satisfied that the licence fee is the best or indeed the only acceptable method of financing public broadcasting?

To begin with, I should like to draw your Lordships' attention once again to the perpetual problem of the shortfall in licence fee collection: that is a technical question. I am not quite sure what the figures are but no doubt the noble Lord who is to reply will be able to tell us about them. It seems to me that over the years, had we been able to collect all the licence fees to which the BBC is undoubtedly entitled, many of their difficulties would not have arisen. Therefore this is not a matter solely for the BBC: it is for the Government and for other bodies as well. Are we doing enough to make absolutely sure that we eliminate the shortfall in the collection of licence fees?

Secondly, with regard to the steps which the BBC itself is forced to take, are they looking in the right direction? It seems to me—and I say this with the greatest possible respect to the BBC, for whose officials and officers I have the highest regard—that there is fruitful soil in the whole question of the elimination of waste in the BBC. For example, in the engineering field—I am not an engineer and therefore perhaps not qualified to talk in any detail—I believe there are opportunities for economies. Maybe they have not all been grasped, and some of course are not wholly under the control of the BBC—as indeed in the situation which we have, though whether we still have that situation to the same extent I am not entirely sure, when the BBC were forced to rely on renting of lines from the Post Office at very high rates instead of having control over their own microwave links. That might have been a greater economy. I am sure there would be other opportunities for economies in the engineering field.

In the administration field I am bound to say that, from my experience of the BBC, it seems to me that here, too, is an area which might perhaps attract the scrutiny of "Marks and Spencer" along the lines on which the Civil Service administration and other bodies are now being investigated. It is possible that economies should be made there. But on the question of programme making—and I think the BBC inevitably looks towards that—there are possibilities for genuine economies. Here I would refer to the BBC's apparent reluctance to enter into arrangements with Independent Television and to avoid unnecessary and wasteful duplication. I am all for competition, but it seems to me that if both channels present, as perhaps they should, a Royal Wedding or some other important occasion, it may well be necessary to have two programmes, with two commentators, two producers and two editors. But is it wholly necessary that there should always be two crews of cameramen, of lighting engineers, of scene shifters, studio hands and so on? Is there not room for economy in the kind of duplication which now occurs?

Here I am perhaps falling into the trap which I think the BBC itself is inclined to fall into occasionally, of looking immediately to the programme area for making cuts, instead of looking rather more at the infrastructure which is necessary for any programmes to be made at all. Even if we accept the need for cuts within the programme area of the BBC's activities, I do think it is regrettable that whenever these situations arise the BBC should automatically look to its orchestras.

The BBC really must accept that it is deeply dependent for its programme output on music and musicians, and it must also accept that unless it continues its traditional role in the sponsorship of orchestras it may well be that there will be no musicians upon which it can depend. It is no good the BBC saying: "We shall still have as much music and there will be more 'needle time' and more recorded music". I do not think you can have that unless you have the musicians to produce it, and without the BBC's traditional role—I shall not name particular orchestras, save that of one in my own area which was once known as the BBC Northern Dance Orchestra and is now the BBC Northern Radio Orchestra—these are the kind of bodies which are threatened; and somehow one dries up the supply of the musicians upon which the BBC is going to have to rely for its other services.

As regards flexibility in relation to programme-making—and I have mentioned the question of programme duplication with Independent Television—when the BBC is once faced with the situation of making cuts, it never dreams of cutting out any particular area and saying, "We will no longer cover this, that or the other; we will no longer cover the Cup Final, the Olympic Games or whatever". It must go on trying to cover everything. It is rather like saying: "Never mind the quality; look at the width". Perhaps there are opportunities for the BBC to drop out of certain fields, rather than feel they must go on doing absolutely everything.

Here I should like to say just a word about the BBC's role in relation to local radio. I must choose my words very carefully, because I have an immense regard for friends and colleagues who do remarkable work in the BBC's local radio stations; but they are doing that work under very grave difficulties and with wholly inadequate support and resources.

Perhaps I might remind the noble Lord, Lord Hill of the history of the emergence of local radio. It arose at a time when I was a member of the BBC's General Advisory Council, a position which I greatly enjoyed, though I began to suspect from time to time that the BBC preferred advice of a somewhat different character from that which it received from me fairly regularly. At that time the noble Lord will remember we had a document, in a situation which was just the same as that which the BBC is now facing. The document was known as Policy Document: Broadcasting in the 'Seventies. Essentially, it was a document designed to achieve cuts, but it also included a proposal to introduce local radio at a cost of something like £6 million.

At that time I know there were those working in the BBC who were wholly dedicated to the idea of local broadcasting, but I also know there were many who believed that the introduction of BBC local radio would pre-empt the introduction of commercial radio by possibly an incoming Government. I warned them at the time that it would not pre-empt it and that commercial radio would come and then they would be left with local radio which could not necessarily be fully supported.

I took the view—a very different view from that of the noble Lord, Lord Hill, at that time—that having advertising on Radio One essentially and almost solely a pop channel, pop music—which, it seems to me, in every country throughout the world is supported, in broadcasting terms, financially by advertising—was a very different thing from having advertising in ordinary, in documentary or in any other kind of programmes. Indeed, the interpolation of an occasional advert into Radio One would provide a merciful relief from the programme content. However, it is my view that, had the BBC gone for that option, they would then, first, have made themselves a little more independent of the Government for finance; and, secondly, they would probably have pre-empted local commercial radio. But that is water under the bridge. The point in recriminating about the past, as Mr. Churchill once said, is to ensure effective action in the future. I mention that merely in the hope that, as time goes on, the BBC will become a little more flexible and a little less conservative in its attitude towards change.

So far as local radio is concerned, it is there. There is great benefit in competition. Commercial radio is doing a good job, and here I should declare an interest as a director of a very successful independent commercial company. I believe in competition, but it really must be fair competition. Either the BBC must give effective support to its local radio stations, so that they can genuinely compete fairly, or it should draw out of that field.

I will conclude with my other question, which is much more important. Is the licence fee the best and only way in which to finance public broadcasting? I do not need to remind anybody in your Lordships' House that the whole object of the establishment of the BBC under its Charter, and of independent broadcasting under what was then the Independent Television Authority and is now the Independent Broadcasting Authority, with the related Act, was to put the control of broadcasting at a distance from government, be it central Government or local government. That is wholly right and it is something which we in your Lordships' House must defend to the very death.

But I am bound to say, as the noble Lord, Lord Hill, said, that making the BBC dependent on a kind of biennial basis on going to the Government about the licence fee is, in a sense, putting its independence at naught. We have to devise some kind of new system. What that would be, this is not the time to go into in detail. I do not think we have thought enough about Pay TV, which is an opportunity for minorities to pay big prices for minority programmes. I do not think we have been enough into the question of the possibility of a levy on the sale or rental of sets. There are many other possibilities, but we have to look at this question very closely.

Years ago in another place I had the honour of opening a debate on this subject. Unusually the Liberals had a Supply Day, because we had suddenly become, in numbers, a baker's dozen. That was rather unusual and entitled us to a Supply Day. We discussed this subject and, at the end of the debate, the then Paymaster-General, Mr. Short, now the noble Lord, Lord Glenamara, in your Lordships' House, said this about organising the finances of the BBC: I cannot see the present kind of organisation lasting for very much more than the decade which we have ahead of us". He went on, referring to the change in the Post Office and the new role which the Postmaster-General, if there was one, would have: From that time"— after the reorganisation— the residual Minister will be able to devote a great deal more of his time to broadcasting, and I hope that, in the spring of 1969"— this was a long time ago— a long, cool look will begin at the whole system of broadcasting in this country".—[Official Report, Commons 28/6/67; col. 456.] Since then, have we had a long, cool look? Certainly we have had the very important report of the noble Lord, Lord Annan, but we have emerged from that report so far as the licence system is concerned, totally in status quo ante bellum; in other words; no changes at all. I am bound to say to the Government, and the noble Lord, Lord Hill, that we must either underwrite and guarantee the BBC's necessary income under the licensing system, or, if we cannot do that we must take that long cool look which has been so long delayed and devise a new system.

Lord TAYLOR of GRYFE

My Lords, before the noble Lord sits down, I wonder whether I may pursue the question that I put. He said that we should decide the range and type of services which the BBC should provide and make finance available accordingly. I am interested to know what he had in mind when he said "We should decide". Is it the Government or the new institution? What had he in mind?

Lord WINSTANLEY

My Lords, the noble Lord will recollect that I said that together, the BBC and us—and by "us" I meant Government as a whole—we, ought collectively to decide. It has to be that kind of decision. It has to be looked at by everybody. But I was referring to the need to do this operation the other way around. We should decide how much money is necessary and then produce it, rather than say "There is the money, and now you decide what you can do with it."

8.26 p.m.

Lord BOOTHBY

My Lords, the House will have listened with very great interest to the authoritative speech delivered by the noble Lord, Lord Hill. I thought that his argument was quite unanswerable. The present system of licensing is, in itself, intolerable. I do not see how we can possibly maintain the standards of broadcasting in this country, if it is continued for any length of time. It should not be an annual Treasury decision. Licensing of the BBC should be the result of discussion between the Government and the BBC, and should last for a considerable period, so that the BBC can plan properly ahead what to do.

I so agreed with the noble Lord, Lord Hill, when he said that successive Governments have treated the business of licences for the BBC as if it were part of the Budget, a kind of annual haggle; as if it were public expenditure. It is not public expenditure at all. If it can be described as anything, it is public taxation; and the question is whether or not the public wish to pay the tax. In my submission—I shall develop it in a moment or two, but I shall not make a long speech—the public do; and the Government have seriously misjudged public opinion in this country in setting the licence fee for the BBC at a figure which is manifestly too low, because I do not think they realise what the public want.

I have sat in Parliament now, in one or other House, for well over 40 years and I should just like to say this. I have watched throughout that period the development and growth of broadcasting, first by radio, then by television, and finally by both. Neither House has ever really grasped the extent to which it has revolutionised the lives of everybody in this country and, indeed, life itself. It is tremendously important and we do not realise—the condition of this House tonight is further proof of it—the important part that broadcasting plays. We never have; but we are beginning to come to it now, and I believe that the Government will reconsider their views about the licence fee.

There are obviously enormous defects, but the fact remains that we still have the best broadcasting system on radio and television in the world. Between the ITV and the BBC, we provide the best in the world, on the cheap. The licence fee in this country is lower than in almost every other country, while the programmes are the best. That situation cannot possibly continue. There are many criticisms to be made of broadcasting in this country. For example, the BBC has been much criticised for its recent action over the orchestras. It is arguable that it has attempted over the last 10 years to run and finance too many orchestras up and down the country.

On the other hand, the assassination of the BBC Scottish Symphony Orchestra is not on. It is, quite simply, unforgivable. I can tell your Lordships that I know that Sir Thomas Beecham, who was not apt to praise orchestras other than his own, held that orchestra in very high regard, not only on its own merits but as a training ground for both musicians and conductors. It also has a tremendous influence and effect not only in Scotland but all over the world, and I think the proposed assassination of that orchestra is absolutely appalling.

But the BBC itself can come forward, quite legitimately, and say, "Well, we're very sorry, but with the present licence fee we simply cannot afford it". The present licence fee holds down—I have no doubt of this—the standards, which are very high today, but which will not be maintained if the Government's present policy is continued indefinitely. The licence fee is too low on any count.

I have said that Parliament has never recognised the important part that broadcasting, and especially television, plays in our lives. I am bound to say for myself that I did 30 years ago, and I have spent a great part of my life in it and at it. I would be the first to say that the BBC has never paid anybody, apart from pop singers, enough. I know that to my cost. They ought to pay more, and so should every other broadcasting company. If one goes to America and is asked to broadcast, one is staggered by the cheque one gets. When one broadcasts in this country one is appalled by the cheque. Even so, the standard remains very high indeed.

I do not want to detain your Lordships for long; but what a difference television has made to the lives of everybody, although it is not wholly without its difficulties and defects. Certainly it has had a deleterious effect upon the live theatre; I have no doubt about that. Why should one pay £10 for a rather uncomfortable seat in a theatre, and another £20 if one wants supper, and then fail to get a taxi when one wants to get home, when one can probably see something much better sitting comfortably in one's own armchair with a glass of whisky? That is what goes on all over the country today. More and more people are depending to a greater extent than they realise even themselves upon the "tele". One great thing about it is that one can always switch it off. If one goes to a theatre one cannot switch it off.

Television has already brought the world before a vast public which otherwise would know nothing about it. The news itself—the "World About Us" for example, on the BBC—tell people about things they never knew anything about. The other dangerous effect, a deleterious effect, is that apart from its effect on the live theatre it has to a considerable extent stopped people, especially the young, from reading. But one cannot help that; one cannot reverse that. There is only one answer to it and that is to keep the standards as high as they are and, if possible, make them higher.

The present licence fee policy—I am sure of this—is bound to lower the standards of broadcasting generally in this country. That would be a pity because it is, and should be, one of our greatest prides. I believe that Parliament is beginning to realise how important it is. If there were a referendum in this country today as to whether it would be desirable to pay £10 or even £20 a year to maintain and improve the standards of the BBC, I am quite sure there would be an overwhelming majority, even from the poor, even from the unemployed, in favour of it. They would feel that they were getting marvellous value for the price, as indeed they would be.

That is what public opinion really wants. It is not, as my noble friend Lord Hill said, a question of Government expenditure. We are not asking for increased Government expenditure which would go against the financial policy of the Government. We are asking the Government to increase the licence fee by taking more money from the public; and I submit with fervour that the public would be glad to pay if they were told that, if they did not pay, the standard of broadcasting would go down.

I do not think I have anything more to say except that I hope the Minister will give us a little encouragement that this policy of the annual fixing of a licence fee which is lower than that anywhere in the world for a service which is unparalleled in the world, and which means a great deal to every family in this country, will be reconsidered at the earliest possible moment.

8.37 p.m.

Lord O'NEILL of the MAINE

My Lords, I think we all owe a great debt of gratitude to the noble Lord, Lord Hill, for raising this subject. I am only sorry, if I may say so, that not more of your Lordships are present to follow something which is so important, as the noble Lord, Lord Boothby, said, to every man and woman in this country—in fact, it is not only more important but rather more understandable than the debate which we heard earlier today.

As long as I can remember there has been trouble over the licence fee. This time the trouble has been very much worse, but it has gone on and on. In view of the fact that in a few minutes I am going to say something in agreement with what the noble Lord, Lord Winstanley, said, I must say, just for the record, that I have the greatest admiration for the BBC. Anyone who has watched American television, and particularly anyone who has listened to American sound radio, must know how fortunate we are. There are no studio managers in America, Canada, Australia or anywhere else. The perfection of sound radio at its best on the BBC is unparalleled anywhere else in the world. Admittedly, in the eastern States of America there is Channel 13, which is sponsored and is an excellent pro- gramme, but that is the exception which proves the rule. NBC have the "Today" show on television, upon which our equally good sound "Today" show is based. Nevertheless, despite these facts, we have the finest service in the world.

But, as there is always trouble over the size of the licence fee, may I suggest, as the noble Lord, Lord Winstanley, did tonight and as I did in this House six years ago—the suggestion was thoroughly squashed—the possibility of advertising on Radio One and Radio Two during the long hours of the night? Can it really be sustained that the quality of those programmes is so high that they would be spoiled by some advertising? One of the BBC's daughters, CBC in Canada, uses advertisements, and I think I am right in saying that they do so in New Zealand as well. And ABC in Australia is considering it at the moment. So it is not a terrible heresy to talk about advertising; it is something which may well have to be faced at some time.

Also, as the noble Lord, Lord Winstanley, mentioned earlier, one often wonders, as a private citizen, how much money is lost by the evasion of payment of the licence fee. None of us knows, but it could be a considerable figure. Again, it may be that this is a weakness in the licence fee' system. As I see it, the BBC is undoubtedly better off with the licence fee than with the direct Government grant which ABC get in Australia. While I was in Australia just before Christmas I heard that ABC were delighted because they had just got a grant from the Government for two or three years. But that does not alter the fact that this makes them even more dependent on the Government than is the BBC with its licence fee. I am not, therefore, suggesting for a moment that there should be a direct grant; I think that would be a retrograde step. On the other hand, I do think that there are very great problems over the licence fee.

At the conclusion of my few remarks may I say that I think that new methods of financing the BBC should be investigated. If successive Governments—this goes for Labour Governments just as well as for Conservative Governments—are not going to give the BBC enough money, then I think that alternative methods of financing the BBC should be investigated.

8.42 p.m.

Lord PONSONBY of SHULBREDE

My Lords, by leave, my noble friend Lord Donaldson of Kingsbridge had hoped to reply to the debate from these Benches. Unfortunately, he is unable to do so as he has a previous engagement which makes it impossible for him to be here. He had hoped that the earlier debate would finish early enough for him both to take part in this debate and to fulfil his engagement. Unfortunately, that has not been possible and it has been agreed, through the usual channels, that I should speak instead.

Let me say at the outset that I know my noble friend Lord Donaldson of Kingsbridge would wish me to say that the House is honoured and pleased that it should have been the noble Lord, Lord Hill of Luton, who raised this evening the question of the broadcasting licence fee and gave the House an opportunity to debate it. As many other noble Lords have already pointed out, as a former chairman of both the IBA and the BBC the noble Lord is uniquely qualified to speak on this matter.

In his speech, the noble Lord rightly pointed out that after its application for the new licence fee the BBC received permission for a fee which fell some 15 per cent. short of what it had expected. He also pointed out that the rate of inflation and other costs have exceeded the rate of increase in the BBC's licence fee and that the income of the IBA has exceeded the rate of inflation. Of course, this means that the BBC's ability to maintain its standard of excellence is impaired. This standard of excellence which the BBC has set over a number of years—indeed, since the BBC first started transmitting—is admired throughout the world. It has set a standard which other commercial television stations in the United Kingdom have competed with—and, indeed, have successfully competed with. However, anything which inhibits the BBC from maintaining that standard of excellence must be condemned.

As the noble Lord, Lord O'Neill of the Maine, reminded us, this is not the first time that the Government have interfered with, or perhaps I should say have restricted, the amount of the increase in the licence fee which the BBC required. It is important that the BBC should retain its freedom and ability to maintain its standards. The view of the noble Lord, Lord Hill of Luton, and of the BBC is that the licence fee should be increased to a sufficiently high level to enable it to be maintained for a number of years and not just for a year or two—or two years and four months, as in this case.

I am not sure that I agree entirely with this view. The BBC must certainly have an assurance about its future level of income so as to enable it to plan ahead. One way is, certainly, to have a sufficiently large increase in the licence fee every five years or so to enable them to do this. Another way would be to have an annual increase. As it now stands, however, the BBC would not find this an acceptable way of proceeding, because it would never know what its licence income would be one year ahead.

One wonders whether a system could be arrived at by which the Government agreed upon a basic licence fee for a period of five years which was then index linked throughout that five-year period, so that the BBC would be able to plan ahead and would know that during that period of five years it would have a constant level of income, whatever the rate of inflation might be during that period. This would also enable the Government to review the question of the basic licence fee once every five years. Index linking is a phenomenon which the public are beginning increasingly to accept. Indeed, I feel that in some ways it is more acceptable to the public than a very substantial increase once every three, four or five years, as the case might be. Within the last decade we have seen index linking introduced in a number of areas, with annual increases taking place.

The noble Lord, Lord Hill of Luton, was authoritatively hacked up by the noble Lord, Lord Boothby, who pointed to the damaging cuts being forced upon the BBC. The noble Lord, Lord Hill of Luton, referred in his Unstarred Question to the loss of 1,500 jobs, a point which we have not discussed very much this evening. That is, of course, a very considerable loss of jobs, resulting from the failure of the BBC to get the increase in the licence fee which they wished to have. The BBC is a most valuable institution in the whole world of the arts, and it is important that it should be able to maintain its standards of excellence. The noble Lord, Lord Hill of Luton, rightly pointed out that the fee is not a part of Government expenditure and that therefore there is really no need for the Government to take this niggardly attitude towards the proposed increase in the fee. I hope that the Government will in future note the serious effects which the restriction of the increase has had, and I very much support the noble Lord in the remarks he has made.

8.50 p.m.

Lord BELSTEAD

My Lords, all of your Lordships who have spoken in this short debate this evening, for the initiation of which we are grateful to the noble Lord, Lord Hill of Luton, have made the point that the services of the BBC are of the greatest value. That point has been made finally in the very interesting speech to which we have just listened, made by the noble Lord, Lord Ponsonby. I associate myself with the speeches of your Lordships in this matter. The way in which the BBC has provided public service broadcasting over the years has been an object lesson to anyone who cares to listen and to see; and therefore any debate of this nature, particularly one raised by someone who has the experience not only of public life but also of broadcasting, as has the noble Lord, Lord Hill, raises questions which must be taken very seriously.

However, I do not agree with the terms of the noble Lord's Question, which refers to the cutting of expenditure by a sum of £130 million without any qualification being put to those words. I hope it is not out of tune with the serious way in which this matter has been discussed this evening if I ask the noble Lord to imagine for a moment that he is going to a public house for a drink. The noble Lord—although I know that he is almost a total abstainer —decides to consume one pint. Then he consumes another; then he finds that it would be desirable if he consumed a third but he has not got enough money to finance this attractive objective. The noble Lord considers the desirability of asking the landlord to allow him credit but decides against incurring any debt, so the noble Lord is forced to forgo this final item of desirable planned expenditure.

With his experience of broadcasting I think the noble Lord might well say to me that there is no analogy here; that there is a world of difference between expenditure for the purposes of pleasure and expenditure for the important purposes of the BBC, justly regarded as leading the world in public service broadcasting. But, if I may say so, I think there is an analogy between my concept of the noble Lord's third pint and the expenditure plans of the Corporation. In both cases a certain amount of money is available; in both cases, in the event, the money will not pay for everything, however desirable it may appear to be, and in both cases it is recognised to be undesirable to borrow.

Your Lordships who have taken part in this debate have each asserted that there ought simply to be more money available for the BBC, but I think that that assertion pays scant regard to the increases which my right honourable friend announced last November, from £25 to £34 for a colour TV licence and from £10 to £12 for a monochrome licence fee. If I may follow the noble Lord, Lord Hill, by sticking in my remarks to the colour licence, that represented an increase of 36 per cent. for a colour licence, over a period of two years, and provided the largest cash increase ever known in the history of the fees—not, if the noble Lord will forgive my saying so, a figure which could be called niggardly, I should have thought, as the noble Lord, Lord Ponsonby, sought to do. The new licence fees will provide over £1,000 million for the period 1980–1982, a considerable increase over the Corporation's previous expenditure levels.

When my right honourable friend announced those increases over six months ago there was no chorus of protest—at any rate, there was no chorus of protest that I heard—that these fees should be higher; and on the evidence that I have just been trying to give your Lordships I do not find that surprising. My right honourable friend has to decide what is fair, both to the BBC and also to the licence payer. Although the noble Lord, Lord Hill, asserted in his speech that we are not talking about public expenditure, of course it is compulsory expenditure for anyone who wishes to watch television; and for many people, as the noble Lord will know, with his medical experience, television makes all the difference to their lives. Indeed, I rarely heard a more eloquent exposition of that case than was put in the speech of the noble Lord, Lord Boothby. If I may just finish this part of my remarks before giving way to the noble Lord, Lord Hill, the noble Lord, Lord Boothby, explained how people can sit at home, drawing not only entertainment but also comfort from their television screens, and for that reason alone my right honourable friend the Home Secretary must take the greatest care in deciding what has to be paid by the individual television viewer. Your Lordships may wish me to remind you that the poll, published in the Sunday Times last Sunday indicated that over 60 per cent. of the public are not disposed to pay more for their television licences.

Lord HILL of LUTON

My Lords, I do not rise in any way to pursue the analogy of beer. The thirst is so growing on me that I want no further reference to it. But will the noble Lord, Lord Belstead, look at this from the angle of what £34 means to the Corporation? The angle of a reduction or a postponement of £90 million worth of capital development, a reduction of £40 million in current expenditure, a loss of 1,500 jobs and—what is very serious—a movement of trained staff at an increasing pace from the BBC to Independent Television because their rates of pay are 20 per cent. and 25 per cent. higher, something with which the Corporation cannot compete. Those are the facts of the reality of the application of the Government's decision; not the contemplation of total amounts that are being given. It is a question of the amounts that are not being given, and the results that flow from that.

Lord BELSTEAD

My Lords, the noble Lord anticipates what I was about to put to your Lordships. Your Lordships may remember that the chairman of the BBC, Sir Michael Swann, while making no secret of the serious implications for the BBC of the level of the licence fee, none the less in his lecture to the Royal Television Society, speaking of the Government's decision on the new licence fees, said: to be fair, this is more or less in line with what they are trying to achieve elsewhere in the public sector. And to be truthful, quite a lot of the £130 million—in fact, £90 million—will be found by deferring or abandoning planned new developments". If I may go on on the same tack, and answering the point that was put to me by the noble Lord, Lord Hill, in announcing the fee increases my right honourable friend made it clear that they must last for at least two years. This was a genuine attempt to do exactly what the noble Lord, Lord Hill, and the noble Lord, Lord Boothby, have been asking, namely, to give a sensible period of time for the duration of the licence. My right honourable friend said that he had taken account of the need for the BBC to pay off its deficit on current account, that the level of the fee took account of the need for an increase in capital expenditure and recognised the need for an increase in Welsh language broadcasting by the autumn of 1982.

Before the noble Lord says to me that these considerations which were taken into account were not enough, may I say quite openly that of course it is absolutely true that the increases were less than the BBC had hoped for. The plans of the BBC would have involved a colour TV licence fee some £7 higher, as I understand it, which would have meant £41 rather than £34. But the Government thought that this was more than they could reasonably ask the licence fee payer to meet, for reasons that I have tried to lay before your Lordships this evening.

Of course, we will not encourage the BBC to borrow further. Only last year the previous Government decided not to improve their 1978 licence fee increase, but rather to relax the borrowing powers of the BBC, which has led the Corporation to run a deficit on current account alone of some £40 million. This, of course, is a very serious matter in the situation in which the Corporation finds itself at the moment.

The economies—and I make no secret of the fact that the BBC have had to look at these very seriously indeed—are nonetheless a matter for the governors themselves. Without going into unnecessary detail they have—if I may repeat it—made it clear that £90 million of the figure of £130 million involves deferring improvements and increases which were planned in expenditure. But £40 million is needed partly to finance £14 million of new developments which the BBC governors regard as essential; and partly to finance increases in labour costs. The reduction in manpower—which the noble Lord, Lord Ponsonby, particularly referred to in his speech, and the noble Lord, Lord Hill, has just referred to again in his intervention—of some 1,500 jobs will be achieved largely by natural wastage.

The noble Lord, Lord Hill, spoke of various indices which could perhaps be compared with the licence fee. The noble Lord, I am sure, appreciates better than I do that the licence fees are not really the right measure when we are talking about this. It is the income you actually get from the licence. Buoyancy, the switch from monochrome to colour, has, of course, increased the BBC's income from given fees. In 1970–71, when the noble Lord was indeed chairman of the BBC, there were, as I understand it, some 600,000 colour licences and they produced some £7 million in money. But in 1978–79 there were some 12 million licences producing some £300 million in money.

The noble Lord also proposed in his speech a system of independent assessors, and also spoke of the desirability—as indeed did others of your Lordships—of indexation for the licence fee. As to the case for independent assessors, I think for the reason which I sought to give when I was talking about compulsory expenditure, which I believe the fee is, the Government must really always make the final decision, and they must consider what is fair to the licence payer and what is the proper allocation of national resources. Independent assessors would inevitably be looking, I should have thought, only at the needs of the BBC.

I suspect that this was the sort of thing which was in the mind of the noble Lord, Lord Taylor, of Gryfe, when the noble Lord intervened during the speech of the noble Lord, Lord Winstanley. I can quite understand the noble Lord, Lord Winstanley, saying that it would be desirable to find out first what are the needs and then to provide the money to pay for those needs. But that would be putting the cart the other side of the horse compared to the way that we have it at the moment. That is not always the best way of driving the cart down the road.

So far as indexation is concerned, if there is a measure of inflation, indexation builds an inevitability into it. Only if prices, wages and salaries can be kept below an existing rate of inflation can that rate be reduced. In case your Lordships think that that is a very stuffy thing to say in this speech, and that I have simply read out a brief in saying it, the answer is yes, it is rather forbidding; yes, I have read out some prepared words; and yes, I intended to read them out because I think that this is a fact of life that we have absolutely got to face.

Indeed, if I may just say so, I think we have also, in a debate of this kind, to look at whether alternative proposals have been put forward in the debate this evening. As I understand it, apart from my noble friend Lord O'Neill of the Maine, who recommended limited advertising on BBC radio, I believe that this evening there has been broad agreement that public service broadcasting will only retain its character, its quality and its independence if the BBC continues to draw its finance essentially from a licensing system. It is therefore inevitable as a follow-up to that that my right honourable friend the Home Secretary has to decide the level of the licence fee. He believes that the increases he has announced are fair, bearing in mind the interests of both the payers as well as the Corporation. But it is the responsibility of the governors of the BBC to decide how they spend their money. The governors have already indicated that the BBC cannot be isolated from the realities of the economic situation. Indeed, they have said that if inflation worsens, and there is no compensating increase in income, further economies will be needed.

The governors have set out their priorities for the future, and have set the cuts particularly in the regions in context against sizable levels of expansion in recent years. The governors have clearly reached their decisions with great care, and I would just like to repeat something which I ventured to say to the House a few weeks ago: the governors of the BBC have gone to great trouble to say that they will encourage any efforts which may develop to find additional money for orchestral music, a matter which the House debated on 29th April on an Unstarred Question by the noble Lord, Lord Ross of Marnock. At the same time, the governors of the BBC have not suggested that they are unable to carry out their public duty with this level of fees. Much of the reductions are, as I have been at great pains to try to point out, in planned rather than in existing expenditure and staff.

Although I assure your Lordships that I have listened, and will draw the attention of my right honourable friend, to what has been said in this debate, at the same time may I express the hope that this debate has set matters in a clearer perspective.

Lord TAYLOR of GRYFE

My Lords, before the noble Lord concludes this interesting debate, may I ask him one question? I apologise for not giving notice of it. He talked about the limits on BBC borrowing. Is the BBC limited in its borrowing by the same constraints as apply in other public industries, or have the BBC examined the prospect of financing some of the requirements by leasing devices or other devices which would attract money from the private sector?

Lord BELSTEAD

My Lords, the second part of the question the noble Lord asks is, of course, a matter for the BBC governors. The first part of the question is a matter of fact. There was a ceiling on the borrowing powers of the Corporation which was raised—the word I used in my speech was "relaxed"—by the previous Government, for perfectly understandable reasons, early in 1979. But the effect of that relaxation was that certainly last year the BBC was running a formidable debt on current account which amounted to some £40 million.

Lord WINSTANLEY

My Lords, may I ask one final and simple question? Irrespective of whether the money is enough, and irrespective of the difficulty of index linking or finding other means, does the noble Lord agree that a situation in which the BBC is deeply dependent on the Government of the day on a continuing basis for its housekeeping really is a situation containing very great dangers?

Lord BELSTEAD

My Lords, we have said, certainly in another place—I am not sure whether it has been said in your Lordships' House—that my right honourable friend is instituting and has instituted discussions between his department and the BBC on the future financing and financial arrangements of the BBC. This is, of course, in an attempt to ensure that when the licence fee is fixed, in the interests of the Corporation and everybody that licence fee fixing will be for sensible periods of time. I do not think I can go further this evening along that particular path, except to say to the noble Lord that, although we have this evening discussed at some length some of the great problems which undoubtedly arise as a result of the licence fee system, I think that would be as nothing compared to some of the suggestions which are occasionally made—for instance, that perhaps the BBC should be financed out of direct taxation, precisely the sort of thing which would mean that the BBC would lose the independence which we all so much desire.