HL Deb 19 April 1982 vol 429 cc412-30

4.44 p.m.

Lord Jenkins of Putney

My Lords, I beg to move that this Bill be now read a second time. This happens to be by chance the anniversary of the day on which I learned a year ago that I was to become a Member of your Lordships' House, but it is the first time on which I have ventured to introduce a Bill into this Chamber and I hope that I may crave for a little indulgence which might be appropriate for a "new boy" if in so doing perhaps I have failed to carry out all the preliminary work which might have been appropriate to introducing a Bill which brings a rather complex idea before your Lordships. As a member of the Government, one goes into highly complex operations in sounding out all sorts of opinions all over the place and, before introducing a measure one has White Papers or Green Papers and goodness knows what else. None of that has been done and therefore I come before your Lordships with an unargued proposal: this is the first time that your Lordships will have heard anyone say anything in favour of the idea.

It would be unreasonable for me to expect your Lordships immediately to leap up and shout, "Eureka! This is something we have been waiting for all these years! This is just the thing we want!" Therefore, I will spend the first part of my introductory remarks on explaining the nature of the problem which the Bill seeks to solve, and the second part on explaining the Bill itself.

I should like to begin by saying that British broadcasting is among the best in the world and that the licence fee is small in relation to the quality and quantity of information and entertainment which is enjoyed by the viewer and the listener. Nevertheless, now that a full colour licence costs £46, and the figure must rise further if the standard of BBC radio and television is to be maintained and improved, increasing strains are being encountered which must be tackled before they get out of hand. The licence is a permit to install: apparatus for the purpose of receiving visual images sent by television from authorised broadcasting stations"— that is, from the BBC and IBA. That is to say, one must have a licence even if one looks exclusively at programmes financed by advertising.

However, the licence fee is widely regarded as something one pays to look at BBC television. There is substance to this view for, after deductions, all the money goes to finance the corporation. Here lies the crux of the problem. The licence fee bears most hardly on the lower income families and it is precisely these families who look at BBC television least and who therefore resent the licence fee with a bitterness which can be testified to by every Member of Parliament. Members of another House, irrespective of whichever part of the country they come from or whichever party they represent, will tell you that this is something which people whose incomes are not among the largest regard as an imposition. As these Channel Three viewers see it, they are being forced to pay increasing sums for something they do not consume.

The stock answer to the problem is to say, "Cancel the licence fee and transfer the cost to taxation". This is strongly resisted by the BBC, who fear the spectre of Government control. Whether this fear is justified or not is beside the point. The fear is as real in Broadcasting House as is the conviction of commercial television watchers that they are being "conned". These are the two incompatibles, one might say, which this Bill seeks to resolve.

In an endeavour to do something to meet what is seen as being a reasonable complaint without changing fundamentally the licensing system on which we depend, further anomalies have been created by providing for collective licensing for those old folks who live in homes so that they pay a purely nominal fee and one licence is held on behalf of all the people who live in that place. That has only created more bitterness among the majority who live with families or by themselves, because they obviously do not benefit by the collective licence which is available to some others. Therefore the time has come for a radical solution to this problem before evasion of the licence fee—and what is seen as an unjust tax—becomes even more widespread than it is now.

That brings me to the manner in which the Bill seeks to solve the problem which I have just described. The Bill reduces the licence fee to £10 from its present figure of £46—and £5 for black and white television only. May I, before I go on to describe the Bill, insert in parenthesis a word of appreciation to the House of Lords Public Bill Office, whose help in drafting the Bill which I am about to describe has been quite invaluable?

The Bill creates a broadcasting finance board whose chairman and vice-chairman are appointed by the Government. The other members of the board are appointed by the BBC and by the IBA. The board receives the licence fee and all broadcasting advertising revenue. It also receives a Government grant and may receive other monies granted to it by other bodies. Here the Bill is defective. It is my fault and that of no one else. An amendment to the Bill as printed will be required in order to make it clear that the board is entitled to receive a Government grant if the Government so decide.

The Bill takes something from the recommendations of the Pilkington Committee of 1962, for it is the board's main duty to redistribute the money that it receives to the BBC and the IBA. The programme contractors continue to put on programmes as at present but their income arrives from the board via the IBA, which acquires the duty of redistributing its share of the total revenue, as was recommended all those years ago by the Pilkington Committee. The small licence fee will be augmented not only by the total advertising revenue. This is important because the advertising revenue at the moment is subjected to a massive deduction by the Treasury. The TV levy, as it is called, now amounts to £52 million. This is taken out of broadcasting every year by the Treasury and is never seen again. Under this plan, of course, that £52 million will remain in broadcasting, will be part of the revenue of the broadcasting finance board, and will be available to put increasing programmes and meet increasing costs.

I have heard very substantial complaints from BBC sound radio people since their national income was abolished. The licensing fee, is now a television licensing fee. They say that, since they were deprived of a revenue which is specifically their own in relation to sound radio, they have been deprived of reasonable sums needed adequately to run a sound broadcasting system which is of not only a national but a local charater. In the proposal that I place before your Lordships, since the broadcasting finance board will have the right to ask for and receive, a Government grant, all forms of radio and television will have more money to use on programmes. The grant, however, need not necessarily be so large, because of course there is this extra £52 million which is now being taken out of television and which, under this proposal, will remain in.

The BBC will not have to take advertising. This the corporation is thoroughly against. It will no longer have to argue for increases in the licence fee, though it will undoubtedly and quite properly seek to maximise the Government grant, both directly and through its representatives on the board. The commercial radio and television programme companies will be relieved of the direct pressure of advertising interests, which will deal with the IBA on terms which the authority will agree with them.

In sum, this is an attempt—perhaps an imperfect one —which I submit for your Lordships' consideration to solve a problem which has been with us for a long time. By this Bill, the British broadcasting, communications and entertainment media will be given a rational basis on which they will be able to grow and cope with the technical developments which are crowding upon them: satellite, video, cable. Other future developments are coming, and the fundamental basis of broadcasting finance is entirely unsound. This is an attempt to put it on a basis upon which it can survive in future. It is an attempt to ensure that these new developments can be faced and can be benefited from without the broadcasting system in this country losing its popularity, losing its independence or losing its variety and its excellence. It is essential to preserve these things, and it is my hope that your Lordships will will feel that this Bill is an endeavour to do that and at the same time to solve this difficult problem.

I am conscious of the fact that the Bill may need attention in detail. I should be very happy to listen to what your Lordships have to say, but it is my hope that you will feel that the changes which clearly need to be made in the Bill can be made in Committee, and that you will decide that the Bill is worth a Second Reading. I beg to move.

Moved, That the Bill be now read a second time. —(Lord Jenkins of Putney.)

4.57 p.m.

Lord Aylestone

My Lords, the proposal in the Bill is not unlike a proposal that was before the Annan Committee which sat a year or two ago. Its title was dissimilar. It was called the Public Broadcasting Commission and was completely rejected by the Annan Committee. The noble Lord's proposal in this Bill is laudable in the sense that he seeks to reduce the licence fee from its present £46 per year to £10 per year. No one who pays a licence fee will object to that.

However, I am afraid that my conclusion, in looking at this Bill—not in a great deal of detail, because we have not had a great deal of detail—is that not only would it reduce the licence fee from £46 a year to £10 a year, it would considerably reduce the number of programmes that are made, either by the BBC or the IBA. This is at a time when, within a very few months, we are going to have a fourth channel. I am grateful to the noble Lord for explaining the way in which broadcasting—both television and radio—is at present financed. Of course, he is quite right. The BBC's income comes entirely from the licence fee after the collection charge has been made for getting the money through the Post Office or in any other way. He is again right in saying that many people never quite understand that the licence fee covers all the programmes that they see: both BBC and IBA programmes.

What the noble Lord did not explain (and I am sure that this was purely an omission) is that in financing the other side of the coin—that is to say, in financing the independent side—the first charge on the advertising revenue is the making of programmes. Then there is a rental which is payable to the IBA for the transmission of the programmes. At this stage it is absolutely similar to the BBC although the method of raising the money is different. The noble Lord is quite right in saying that there is a charge—he said £52 million but it is much nearer £60 million, I think, and the noble Lord the Minister will probably remind us about that when he replies—which is taken from the industry as an additional rental, an additional charge. After that, from whatever is left the 15 contracting companies can make a profit. Of course, many of them do make quite a good profit; others do not. Some in fact would be better off investing their money in a building society at the current rate of 8.75 per cent. than they would be leaving it in television broadcasting, and certainly in radio. Let us hope all that improves.

Among the proposals in this Bill the noble Lord introduces what he calls the "Broadcasting Finance Board", which would receive the whole of the licence fee of £10—not £46—plus the whole of the advertising revenue, and the Government would immediately lose their first figure of, whatever is it—£52 million or £60 million. The noble Lord then suggests that to make up for any loss in the cost of broadcasting incurred by the BBC or the IBA the Government should pay a sum of money out of the public purse.

Let us try to look in detail at how this would work out. Assuming that the BBC today need a licence fee of £46 per licence-holder, as I personally do—indeed I think it is probably not enough, and I agree with the noble Lord, Lord Jenkins—they are going to get only £10, so the remaining £36, now obtained from the licence-holder, has to come out of a central fund set up by this Bill. In that sense it can only come partly from the £50 to £60 million that the Government pay or out of advertising revenue. The BBC therefore are being subsidised by money raised from advertising. A lot of people do not object to this at all, but the BBC do. They think that as a result they would lose their independence; and if they wish to retain the same sort of standards as now exist, some of the money to enable them to do that has to come from the independent side of broadcasting. That means they will be losers, because £50 million or £52 million is not going to make up for what the BBC lose. Therefore there will be fewer programmes made.

The House will be aware that both the BBC and the IBA have to cut their cloth according to the amount of material they have, and whether they are making a drama programme, a current affairs programme or whatever it may be, they have to look at the cost before they even start making it. That is why I said at the beginning that, if this system were approved and adopted, it would result in fewer programmes for people to look at and the programmes would not be of the standard we get now. Personally, I would prefer to see more money being spent on broadcasting now, from whatever source it comes, than that there should be a reduction in the number and quality of programmes.

I hope that my noble friend will consider the points I have made and those which other noble Lords will make during the course of this debate. I should like to thank him for introducing this matter. While I always enjoy debates about broadcasting—I do not think we get enough of them—I hope that at the end of the debate the noble Lord, Lord Jenkins, will think it worthwhile to withdraw his Bill rather than take it further in this House or in another place.

5.6 p.m.

Lord Hill of Luton

My Lords, the noble Lord, Lord Jenkins, began his studiously moderate speech by raising a point of general difficulty which we must all accept exists. The broadcasting licence fee, standing now at £46 and inevitably bound to rise with inflation, I suppose presents very great difficulty to a proportion of the population who are, to put it simply, too poor to contribute such a sum even by the instalment system which has been introduced in recent years. I agree there is a problem which needs a solution, but I submit to your Lordships that this Bill is not the solution.

Let us look at what this means. It means that the BBC's annual income, as I calculate it, would fall by £580 million per year. The independent companies' advertising income is of the order of £645 million a year. What is left when the BBC's income has fallen by £580 million is about £170 million that goes into this new finance committee kitty, and the whole of the £645 million of advertising income of the independent companies also goes into that kitty. So the total income of the finance board would amount to some £815 million, formed by those two elements.

If existing costs remain at the present level, the £815 million will be there to finance an expenditure of £1,410 million, which is the sum total of the existing expenditure of the two broadcasting companies. The net deficit, after allowing for the end of the levy—whether it is £40 million, £50 million, £60 million, but I take it as £50 million—to be met from the Exchequer is £645 million a year. The noble Lord, Lord Jenkins, forgot to add anything to his Bill to authorise the payment out of taxation of £645 million. This, of course, stems from the fact that the licence fee is to be reduced to £10 not only for those who find it difficult to pay but for the whole community of licence holders.

So let us begin with that position: we are considering a Bill which, when the noble Lord, Lord Jenkins, has had time to make this adjustment in order to make it clear that the state makes up the deficit, involves expenditure by the state of £645 million a year. No doubt that will be increasing year by year hereafter; and of course both services will be commercial services, for the BBC will be financed—like independent television—from a kitty which consists both of licence income and advertising income. It is difficult to see ahead what may happen, but both will be financed by advertising even though only one collects the money, as it were, by exhibiting advertisements on its programmes.

Let us assume that the state pays up that vast sum of £645 million. How is it to be distributed? There is to be a finance board, with two members from each of the services and a chairman and deputy chairman appointed by the state. It is a fair bet that the two services will disagree as to the distribution of the kitty—I may be unduly pessimistic, but life has taught me that such will be the result—particularly independent television, which sees money collected by its own advertising organisation being skimmed off, perhaps more than skimmed off, by their competitor, the BBC. But they will disagree about many pounds.

What happens then? In a tie, the chairman will have a second casting vote, but of course there will be an appeal and it will go up to the Secretary of State. The Secretary of State decides the disposal—if the present level of expenditure is maintained—of those many millions of pounds; and, of course, every year, on the assumption of an annual allocation, there will be such an appeal. The Government will inevitably be brought into broadcasting in a way that has hitherto been prevented and has not happened; and they must be, for they will be making up this deficit of £645 million. How can you keep them out? It is inevitable, whatever gentle words are used, that the Government will want a big say in its use and in its sharing between the services.

In other words, this Bill, with its innocent and admirable purpose, will lead inevitably to a very much greater influence over broadcasting by the Government of the day. There are some people who want that. There are one or two today—I am thinking of one, in particular—who attribute all the evils to the media in general, and to broadcasting in particular. I would not go so far as to say that that is the real purpose of the noble Lord. He might have an inkling that way, but I have no direct evidence. I have just a wholesome suspicion. But whether or not he intends that, this means the end of what has proved a satisfactory service—a public service and a commercial service competing with each other—

Lord Jenkins of Putney

My Lords, would the noble Lord not agree that the Government are already today heavily involved in broadcasting finance? Would he not agree that every year an argument goes on with the BBC as to how much the licence fee should be? Would he not agree that the Government are taking large sums of money out of commercial television? Are not the Government already in it up to the neck?

Lord Hill of Luton

My Lords, let us look at it. The licence fee used to be considered every five years. It is likely now to be every three years. Yes, my Lords, there is an argument about the size of the licence fee every three years. This Bill ensures a bigger argument every year and a bigger opportunity for control of the licence system as we have known it. Of course it does. This is the beginning of the end of what has proved to be a reasonably satisfactory system. By all means, let us solve the problem of many people who, by reason of poverty, cannot afford the licence. But there are other ways of solving such problems, particularly for a section of the community which probably relies on broadcasting more than any other. There is the problem and let us solve that.

But, for heaven's sake!, do not let us ask the state, even though the amendment is not yet in the Bill, to pay up this vast sum of money of £645 million, and set up a body which, by its very nature, will represent a Government influence over, and a Government pressure on, broadcasting such as we have avoided with great skill in this country. And do not let us think that this is just an innocent aid to the poor. It is a recipe for Government intervention in broadcasting of a kind that we have not seen in this country to date.

5.16 p.m.

Lord Willis

My Lords, like other noble Lords who have spoken, I applaud the motives of my noble friend Lord Jenkins in putting forward this Bill, particularly his concentration on the needs of the poorer sections of the community in relation to the licence fee. But I must say that I concur with other noble Lords in hoping that the House will reject this Bill. In my view, it is the wrong Bill at the wrong time, though not necessarily in the wrong place.

I do not want to go over all the arguments again, because they have been admirably covered by the noble Lords, Lord Aylestone and Lord Hill. But the thought of a finance board doling out money in this way fills me with absolute horror, because there is a point that the noble Lord, Lord Hill, did not touch on, but which is very important; that is, that this finance board, composed of a chairman, a deputy chairman and two representatives of each authority—by the way, it will also be another Quango—will inevitably have to make value judgments about our broadcasting.

In other words, each year the BBC will go and say "We are proposing to do so many series. We are proposing to extend here and to do this" and so on, while ITV will go along and say "We are proposing to do even better that that". There will inevitably be fierce arguments and the chairman and the deputy chairman will, in the end, have to take value judgments and say "We think that we should give more money to ITA this year, because they are going to do Brideshead Revisited and less money to the BBC, because they are not" and vice versa. They will have to make value judgments, which such a board is not equipped to do.

Another point that has to be made, apart from the huge Government subsidy which would be necessary, is the fact that there would be less enthusiasm on the part of the independent commercial companies to gather up the advertising, if they knew that a great section of it would be spent on the BBC. So there are so many arguments against this. I hope that my noble friend will withdraw the Bill and that he may come back at another time and give the House an opportunity to debate, in a different way, some possibilities of removing the burden of the licence fee from old age pensioners and from the poorer sections of the community. But what we need for that is something more simple and more direct.

May I beg him, at the same time, not to live under this delusion that I have found other noble Lords and Members of the other place live under, that, somehow, this country is divided into intelligent people who watch the BBC and the great masses who watch the ITV. They are the poorer sections of the community. They have the lumpen diet. They have "Crossroads", "Coronation Street" and so on, and the other people listen to the BBC, or watch the BBC, because it is infinitely superior. Noble Lords ought to know that the ratings do not bear this out at all. It is right across the board. People are very evenly divided in their tastes.

I venture to suggest that I move around just as much as my noble friend who has introduced this Bill, and I have met from time to time, as we all have met, objections from people about the size of the licence fee. But I have never had the licence fee thrust down my throat, because people say, "We only watch commercial television I venture to suggest that not many people have had that. Indeed, the record of commercial television in terms of quality matches the BBC in all respects, especially in recent years. There is no reason to think that people feel this kind of bitterness because they are paying for a BBC service. This is a kind of illusion which has been fostered through Tribune and which has taken on the virtue of a myth. Believe me, my Lords, it does not really exist.

My final point is that to pass this Bill, if it had any chance in the other place, would be once again to throw television and broadcasting into turmoil. We have just been through it all. We have just reallocated the franchises, the licences and so on. We have just agreed on a three-year fee for the BBC licence. Are we now going to throw it all back into the pot, with all the tremendous problems which would arise, simply because the noble Lord quite rightly wants to do something about the high level of the licence fee for poorer people? May I beg him, please, to withdraw the Bill and to come back to us again with a simpler and more straightforward proposal about the licence fee which we can debate?

5.21 p.m.

Lord Ardwick

My Lords, I hope that the noble Lord, Lord Hill of Luton, and the noble Lord, Lord Aylestone, will forgive me if I use the term "commercial television" instead of the correct term "independent television", because I want to talk about independence and I think it might be rather confusing if I talk all the time about independent television.

I have tried to put my prejudice, which is in favour of the prevailing system, aside and to look positively at the Bill, first because it is the inspiration of my noble friend and, secondly, because I know that he is as deeply concerned as I am, and as we all are, about value and standards, and in particular about the level of our culture. The Prime Minister chose a dedicated man indeed when he made Hugh Jenkins Minister for the Arts. But I am afraid that I can find little to commend in the Bill. Of course we should all like to find a way of financing the BBC which would be painless, but it could only be done by making the corporation dependent either on advertising or on general taxation, thus concealing the smart inflicted by the licence fee under the deeper pain which we all feel as we pay VAT and our income tax.

But painlessness cannot be the only aim of the exercise. We shrink, and we rightly shrink, from making public service broadcasting dependent on advertising, with all the compromises that that requires, and we recoil before the idea that the BBC should be directly financed by Government. Of course the BBC can never be wholly independent of Government, but it can be—and is— almost entirely independent of Government. That is one of the blessings which we enjoy, and it is envied by people like us in many countries of the world.

Some of us on this side of the House have a special reason for valuing the independence of the BBC. The BBC is not just a theatre, a cinema, a play centre of party games. It is also a great electronic newspaper—not an opinionated one, but a newspaper that provides facts and both analyses and broadcasts opinions. My party has enjoyed for many years the support, though not the uncritical support, of one powerful group of newspapers with a genius for political impact. Nevertheless, the preponderance of the spoken word in Britain is not on the side of Labour, and the BBC, and commercial television, with their fair and balanced presentation, makes the imbalance of the printed word less unacceptable. Of course, all political parties get upset if they think for one moment that the balance has been lost, but that only shows how strong in this country is the idea of balance and how usual is the achievement of balance by independent television and by the BBC. Nobody can complain at this moment, for example, that the electorate has not had full access to the views of Mr. Foot and Mr. Healey on the Falklands crisis.

This tradition of fairness, of balanced public service broadcasting, has been developed under the leadership of Director-Generals like Reith, Haley and Greene, fortified by a number of strong-minded chairmen of governors, and this outlook on how broadcasting should be carried out has, almost unconsciously, been adopted by commercial television. Yet all this developed almost fortuitously out of the original decision to finance the BBC by the product of a licensing system. For although in one sense licence fees are Government money collected by the Post Office and disbursed by the Home Office, with the consent of Parliament, they are money to which the BBC has a clear and uncontested right and can spend in any way the governors decide, within the terms of the charter. If ever that right were diminished, as the noble Lord, Lord Hill of Luton, has pointed out, and the BBC had to depend on the generosity of the Government of the day, then its independence would be in danger. The licence fee is in fact the very palladium of its liberties.

My noble friend seems to be motivated by two generous aspirations: to relieve pensioners of a heavy annual financial burden and to appease some impoverished viewers who are angry at having to pay a licence fee because, they say, they watch only commercial television. This argument does scant justice to the popular appeal of the BBC or the serious programmes of commercial television, as my noble friend Lord Willis pointed out. I do not believe there was an audience which watched "Brideshead" on commercial television simply because it was on commercial television and which would not have looked at Morecambe and Wise in the days when they were on the BBC.

The BBC has shown a remarkable ability to maintain its integrity and to fulfil its prescribed social purpose, which lies in keeping its mass audience. It has roughly 50 per cent. of the total audience, but of course it is not the same 50 per cent. every day. Most viewers commute between the channels. But the BBC has always realised that if it failed to keep its mass audience, then its right to a substantial licence fee would come under challenge—perhaps under valid challenge. Yet my noble friend is proposing a ludicrously small licence fee, the balance of the cost to be made up by a slice of the advertising revenue of commercial television, plus a Government grant. And the money would be dished out by a tripartite board.

On what principles would the share-out be? What profit should be allowed to the programme companies? What should their costs be? And with what assiduity should they continue to canvass advertising? The licence fee will of course have to go up. But is it really a heavy burden for most households in this country today? There is a problem which most of us in this Chamber have when we talk about sums of money. Our ideas of the value of pounds and pence were formed before 1939. For a few of us they were formed before 1914. It is very hard for us all to grasp that £1 in 1938 would buy as much as £17 would buy today. It is very difficult for us to realise that when today we hand a cloakroom attendant a 10p piece we are giving him not two shillings, not even the 6d which was the minimum tip before the war. We are giving him about a penny-three-farthings. If we want to give the pre-war minimum, then we must give 40p, and we might as well make it a 50p coin—which would be only very slightly generous.

The licence fee today is £46. I shudder as I write out the cheque because I find it very hard to realise that this is the equivalent of less than £3 pre-war—less than £3 a year. Of course it is hard on poor families, but they are selective poor families. They manage to find the rental for colour television, or the hire-purchase money. This is a general problem of poverty and not a special one. It is hard on pensioners too, but if we feel that they as a class ought to have colour television because it is a life-enhancing necessity for aging people who cannot get about as they used to do, then we should find a way of subsidising them directly instead of changing the whole system of broadcast finance, as this Bill proposes.

To me, it seems that the proposed new system breaks down at every point. It removes from the programme companies the incentive to earn their own revenues, to decide what their audience targets should be, what expenditures they should undertake and what profits they should try to make. These are essential disciplines well appreciated not only by broadcasters but also by those of us who have run newspapers, too. If the system proposed in the Bill were accepted, it would not be long before the BBC came under pressure to contribute to its keep by also taking advertising. Yet this would not reduce the dependence of both broadcasting systems on Government support because the amount of advertising money, even for television, is limited.

The danger is that if one increases the number of companies taking advertising, one does not increase the amount of advertising revenue which is available. There is a danger too, in the near future, that the increase in the number of channels available will spread broadcasting talent too thinly and the present excellence of our programmes could be diluted. It is essential, in this transitional period in particular, to maintain the existing broadcasting authorities as the custodians of a splendid tradition. I am not suggesting that our television is perfect, that its taste is impeccable and that its politics are always in perfect balance; but there is nothing better anywhere, and we must take care to protect it and preserve it: otherwise, we shall finish up as a small island of public service broadcasting surrounded by a sea of mush.

5.32 p.m.

Lord Elton

My Lords, this House takes a very considerable interest in questions of broadcasting policy and I am very much aware of the enormous concentration of experience and authority represented on the short list of speakers for this afternoon. For the enjoyment and illumination of listening to that alone, the noble Lord, Lord Jenkins of Putney, should be congratulated. I welcome the opportunity which he has afforded to the House today for this debate on the important matter of broadcasting finance. I am sorry, however, (particularly, since this is the first occasion on which I have spoken for the Government on broadcasting) that I cannot extend a similar welcome to the proposals in the noble Lord's Bill. I am indeed grateful to him for his explanation of the motivation behind his polite but fundamental assault on the present system of paying for broadcasting in this country—which was not, perhaps, evident from the text of the Bill itself.

The main responsibility of Government, and indeed of Parliament, in relation to broadcasting is to establish the framework and the structure within which television and sound broadcasting services are provided to the general public. At the heart of that structure lie the arrangements which have been devised for the financing of them. It may be for the assistance of the House if I were to summarise briefly what the existing financial arrangements for broadcasting in this country are. The BBC's domestic television and radio services are financed by sums paid to the BBC which are equivalent to the net revenue from the television licence fees. The continuation of these financial arrangements is provided for in the BBC's new Licence and Agreement, which was made last May and which was approved (as it had to be before it could take effect) by a resolution in another place. Last December my right honourable friend the Home Secretary made an order, to which noble Lords have referred, increasing the television licence fees from £34 for colour and £12 for monochrome to £46 and £15 respectively. He made it clear that, in deciding on this increase, his intention was that the fees should not be increased for at least three years and that he is expecting the corporation to live within the revenue which the new fees will produce until the end of the 1984–85 financial year. That at least will provide a respite for those poorer licence-payers to whom the noble Lord, Lord Hill of Luton, so eloquently drew our attention. It is also a step towards avoiding an adjustment of fees on an annual basis, against which, with others, the noble Lord, Lord Jenkins of Putney, complained.

The noble Lord, Lord Jenkins of Putney, referred to pressure on licences as a source of revenue, and certainly it is a less buoyant source of revenue than it was, as the noble Lord, Lord Ardwick, has made clear to your Lordships. We are aware of this and are seeking to reverse that trend. Only last month, my right honourable friend announced the Government's decision in principle to authorise the BBC to provide two television channels of direct broadcasting by satellite. One of these would be financed from the licence fee revenue, augmented perhaps by a supplemental licence fee for the reception of DBS transmissions; the other from revenue obtained from subscriptions from those members of the public wishing to receive the service.

On the independent side, television and local radio services are financed directly or indirectly by revenue obtained from the sale of advertising time in television and local radio programmes by the IBA's ITV, and independent local radio programme contractors. All this is very elementary to your Lordships but it is important to have it on the record in this discussion. The regionally based ITV service is financed directly, while the fourth channel, and in part the Welsh fourth channel, will be financed indirectly from this source of revenue—that is, from money provided by the IBA out of the sums collected from the ITV companies. An important feature of the financial arrangements I have just outlined is that they seek to avoid direct competition between the broadcasting organisations for the same sources of finance. This feature, which was endorsed by the Committee on the Future of Broadcasting chaired by the noble Lord, Lord Annan, has been regarded as important for the preservation of the quality and range of our broadcasting services—services which, I would endorse, are widely regarded both at home and abroad as second to none in the world.

It is against this background, my Lords, that I should now like to comment on the proposals in the noble Lord's Broadcasting Finance Bill. This appears to contemplate that our broadcasting services would continue to be financed by the television licence fee and by advertising. However, it proposes, I would suggest, nothing short of a wholesale dismantling not only of the existing arrangements for broadcasting finance, but also of the framework of independent broadcasting as we know it. In place of the very separate and distinct arrangements which have been made for financing the BBC's services on the one hand and those of the independent sector on the other, the Bill would establsh a Broadcasting Finance Board which would be the recipient of all revenue for broadcasting, both from the licence fee and from radio and television advertising. The board would distribute the money so received to the BBC and the IBA "in such proportions" (and I am now quoting from Clause 3(1) of the noble Lord's Bill) "as the board may determine". The Bill goes on, in Clause 7, to provide that if the BBC or the IBA are aggrieved by any decision of the board (presumably any decision on the allocation of money between them and they could well be frequent), then they may appeal to the Secretary of State for the Home Department, whose decision is presumably intended to be final.

My Lords, this is not the occasion to comment on detailed aspects of the Bill and I propose this afternoon to outline only what seem to Government to be the major difficulties with the noble Lord's proposals. But before I do so I think it only right to remind your Lordships that broadcasting finance is hardly a matter which Parliament has ignored, or which it has had no opportunity to consider, over recent years. One of the significant features of the existing arrangements for broadcasting finance which I have described is that they have all been the subject of extensive debate, inside Parliament and outside Parliament, since the publication of the report of the committee under the chairmanship of the noble Lord, Lord Annan. Moreover, the financial arrangements for ITV and independent local radio were endorsed, and those for the fourth and Welsh fourth channels determined, by Parliament in the Broadcasting Act 1980, now consolidated in the Broadcasting Act 1981.

The arrangements for financing the BBC have, as I have already mentioned, been continued in the Corporation's new Licence and Agreement. These decisions have followed a period of great uncertainty in the broadcasting world, particularly about finance; indeed with the fourth and Welsh fourth channels due to come on the air later this year, it is fair to say that there remains a degree of uncertainty in the independent sector. I mention this because, even if the noble Lord's proposals commended themselves to your Lordships, we should have to think very hard before embarking on a wholesale dismembering of financial arrangements so recently determined, particularly in view of the further uncertainty which this would be bound to create. The present time, as the noble Lord, Lord Willis, has so lightly said, would not be appropriate for such radical changes even if they were to commend themselves to your Lordships, which I hope they will not.

Turning now to our specific criticisms of the noble Lord's Bill, the first concerns the effect which it would have on the amount and sources of finance available for broadcasting in this country. It will not have escaped your Lordships' attention that the Bill would place a maximum of £10 on the colour television licence and £5 on the monochrome fee. The present levels of £46 and £15 respectively are expected to yield during the current financial year a net revenue of £690 million. Fees of £10 and £5, however, would yield net revenue of little more than £110 million. How, I wondered earlier today, was the difference to be made up. The Bill was silent, but the noble Lord has kindly made good the omission, and it is to be made up by grants, presumably from the Government. That is understandable, because I do not see how advertising revenue could make up the shortfall even if the present limits on the amount of advertising permitted on ITV and independent local radio were increased. If the noble Lord has it in mind, and we do now know that he does, that the shortfall should be made up from direct government grant, I have to say that this idea is acceptable to the Government neither in principle nor in terms of the effect it would have in terms of public expenditure. The noble Lord, Lord Aylestone, made a considerable point of this, and it was eloquently elaborated by the noble Lord, Lord Hill of Luton.

The objection in principle is that direct government subvention would threaten the editorial independence of the broadcasters. It is for this reason that successive Governments and successive committees of inquiry have set their faces against this means of finance. The noble Lords, Lord Hill, and Lord Ardwick, in particular emphasised this, and I endorse the alarm which they express at this proposal. This House is the traditional defender of the liberties both of the realm and of its citizens, and I would be sorry indeed if the noble Lord, Lord Jenkins of Putney, were to celebrate what he tells us is the anniversary of his invitation to join it by weakening that important bastion against excessive concentration of power in the hands of politicians. The third possibility, to avoid that, would be that broadcasting finance should actually be reduced by getting on for £600 million a year, and I do not believe that the reduction which this would be bound to entail, either in the quality or the quantity, or in both quality and quantity, in broadcasting would be acceptable either to Parliament or to the general public or indeed to the noble Lord, Lord Jenkins of Putney, and he said he did not intend that.

The second criticism I would make of the Bill is that it would not only have the effect of dismantling the arrangements for financing our broadcasting services, it would also have the effect of dismantling the structure of independent broadcasting as Parliament has recently approved it. The existing independent broadcasting system is founded on a contractual relationship between the IBA and the programme contractors. In return for providing programmes for broadcasting by the IBA and for paying rentals to the authority the programmes contractors have the right to sell advertising time in the programmes they provide. It is very hard to see how this or any other contractual arrangement could exist if the ITV and independent local radio companies had to provide programmes on the basis the noble Lord proposes.

The basis would appear to be as follows. First, the Broadcasting Finance Board would determine a global figure for all the services provided by the IBA. That, I presume, is intended to include all the services provided by both ITV and independent local radio; that much is clear. I also presume, though there is no mention of them in the Bill, that it would also apply to the services provided by the Fourth Channel Company and in part by the Welsh Fourth Channel Authority. All that is to be thrown into the noble Lords' melting pot. I presume, also, that the next stage would be for the IBA to decide what should be the proportions in which this revenue should be distributed between ITV, independent local radio, the fourth channel and the Welsh fourth channel. But that judgement of Solomon would not be the last it has to perform. The third stage would presumably be for the IBA to decide the proper deserts of every independent television and local radio company as well.

What I am saying is that the financial arrangements envisaged in the noble Lord's Bill would simply not be compatible with the existing structure of ITV. It would also, and this is no less an objection, destroy the special relationship which the licence fee system creates between the BBC and the general public. The third, and in the Government's view perhaps the most compelling, argument against the proposals is that which the Annan Committee used against similar proposals which it received. These proposals, for reasons which I believe are still valid today, are not acceptable. They considered that a single body with power to allocate finance to broadcasting organisations would concentrate power over broadcasting in too few hands. I say it although the proposal is that the membership of the board should be appointed by the BBC and the IBA. In addition, it would represent a return to monopoly control of broadcasting when experience has shown that regulated competition is fundamentally healthy. Furthermore, such a body would be bound to increase the risk of political interference with broadcasting. Indeed, the Bill seems positively to invite it by making the decisions of the Broadcasting Finance Board appealable to the Secretary of State. I find it hard to imagine that any decision by the board would not be appealed against by one or other of the broadcasting organisations, if not by both. The noble Lord's Bill gives absolutely no indication as to the criteria which the proposed board should apply in determining the allocation of funds between the BBC and the IBA. Nor does it give any indication of the criteria which the Secretary of State should apply in determining appeals against the board's decisions. I am convinced that the Bill is a recipe for that political interference in broadcasting against which successive Governments have rightly set their faces.

I hope that I shall have persuaded the noble Lord of the dangers and problems which his Bill, if enacted, would create. I am not sure that it was necessary for me so to do, having heard the trenchant series of attacks upon it that preceded my delivery. I hope I can perhaps also persuade him that to cope in so short a measure as this with the huge ramifications of the wholesale changes he proposes is a legislative impossibility. I have listened with great interest and respect to a former chairman of the BBC, a former chairman of the IBA, indeed a former chairman of both, the writer of a famous, and for my part much lamented television serial as well as many other items for broadcasting, and a most distinguished journalist, and from not one of them did I detect one grain of support for the noble Lord's Bill. He has nevertheless provided us with an occasion of edification, but in view of what has been said already I hope your Lordships will not pass this Bill on Second Reading. And, in view of what has been said, I think any pretention of mine to cry,"My bird", as it falls to the ground would be drowned by the cries of other noble Lords who have shown so clearly that it is not acceptable to this House.

5.49 p.m.

Lord Jenkins of Putney

My Lords, I am grateful to your Lordships for the attention you have given to this Bill. As has been said, the quality of the contributions stems from their great experience in the media, and I will in a moment refer to some of those contributions. Before I do that I would say that I am perhaps one of the very few people on this side of the House who welcomed the arrival of commercial television in the beginning. I think that most of us on this side of the House are rather late conversions on this. However, the reason why I personally supported the arrival of commercial television was not that I am over-fond of capitalism but that I was at that time working closely, for and with, the British Actors' Equity Association and I saw here the arrival of a separate employer. Actors at that time were working wholly for the BBC as far as television was concerned, and the BBC, as a single employer will do, held them down. The remuneration that they received at the hands of the BBC was very small. Actors began to be paid decent money in television only when an alternative employer arrived on the scene. From that time, television, instead of being a spare-time occupation for an actor, gradually became something central to his economic life. That is the background against which I see the problem.

Also, I have been devoted utterly and absolutely to the notion of the mixed economy so far as the media of communication and entertainment are concerned. I am a very great supporter of state theatre, of the National Theatre and the Royal Shakespeare. But I do not wish to get rid of the commercial theatre, because I believe that the duality which exists in the theatre, the duality which exists in our television, is its strength. So the Bill begins from the proposition that basically we have our system right, in the sense that the dual control—commercial television competing with the state supported system—is, in my view, fundamentally correct. I think that it is correct in all areas of the media and correct so far as the theatre and television are concerned. I even go so far as to say that I think that it would be correct so far as the press is concerned. One of these days I hope that we shall begin to take that message as far as regards the press, and thereby deal with some of the problems which the noble Lord, Lord Ardwick, discerned—if he will forgive me for saying so—in his over press-orientated contribution.

The contribution of the noble Lord, Lord Hill of Luton, was exceptionally valuable although he profoundly disagreed with me. He gave a factual contribution in which he told me how much the Government grant would have to be, and I accept his figures absolutely. The Government would have to find something of the order of £600 million in order to maintain television at its present level of excellence. I think that that correctly summarises what he said. I entirely accept that. Indeed, that is why I said at the beginning that an amendment to make that clear would be necessary in the Bill. That slipped out in the course of drafting and, as I said, that was my fault and nobody else's.

Nevertheless, if I may say so, I think that the noble Lord, Lord Hill, led us a little astray. The £600 million to which he refers is already being taken out of the taxpayers' pocket in the licence fee. It is not a new £600 million. The licence fee would be reduced from £46 to £10. It is £600 million gross. It is coming out of the public's pocket, but it is coming out in terms of a licence. The £600 million required by this Bill is not a new £600 million but the same £600 million, but it would be found in terms of a Government grant rather than by means of a licence fee. Therefore, it is not an additional and fresh sum but simply a different way of finding the money. In other words, it is not found by the Government; ultimately, the whole cost of television in one way or another is found by the listener, the viewer or the taxpayer. He pays for it in the licence fee; he pays for it in taxation; he pays for it over the top on what he pays for goods which in turn pay for the advertising. Ultimately, we cannot escape from the fact that the money has to be found. However, although the noble Lord disagrees with my Bill, I personally do not see the sinister overtones which he sees in it. It seems to me to be a method of preserving the independence of television and not one of limiting it in any way. One way or another, these problems must be solved. The continual growth of the licence fee must be dealt with in some way.

I noticed in the contributions of noble Lords that, although they found things to disagree with in the Bill, they were not very free with their alternative proposals. I did not hear anyone say that we should put it all on taxation. If anybody had said that, I should have opposed it very strongly. However, nobody came up with that proposal. In other words, nobody has come up with an alternative. The problem itself would he recognised more freely by my noble friend Lord Willis, for example, if he had ever had any constituents. But he never has had any constituents, and anybody who has had constituents—

Lord Willis

My Lords, will the noble Lord allow me to interrupt? I have never had any constituents, but I move around the country doing extensive research with ordinary people for the programmes that I write. I think that they are as much constituents as the constituents of any MP.

Lord Jenkins of Putney

My Lords, my noble friend and I must disagree on that point. I think that it is the case—and I do not think that anybody would disagree—that one of the constant nags that Members of Parliament receive is complaints about the continual rise in the licence fee. As I made clear at the beginning, I personally do not believe that, in terms of its cost and value, this nagging is justified. But that it is there and that it is a real hardship bending upon many people in the poorer sections of the community, there can be no reasonable doubt.

The contribution of the noble Lord, Lord Aylestone, was equally well informed. I disagree with him on the following point. It does not seem to me that the relationship between the Independent Broadcasting Authority and the programme companies was, in fact, intended in the original Act in the way that it has turned out. That is a relationship which has developed over the years and the Motion that it is some sort of God-given thing which is inherent in the legislation itself is, in my view, wrong. The proposals which were before Annan—although I agree that they were not accepted by Annan—seemed to me to have more substance in them and to be more worthy of further consideration than perhaps the noble Lord led us to believe. This suggestion provides a future basis of broadcasting finance which could cope better with the increasing technicalities of broadcasting, with the new ideas of a fourth channel, cable television and so on, and provide a basis which could cope with it more easily than our present system, which somehow or other must be changed.

Other noble Lords have made useful and interesting contributions, and I agreed with a good deal that they had to say, although I am bound to admit that they fundamentally disagreed with the proposal that I am putting before the House this afternoon. That has often been my experience in life. I often find myself starting things off which somebody else has to finish. This may be one of those occasions—I do not know.

One of the advantages of the system that I am suggesting to your Lordships is that it lifts the direct pressure of advertisers off the backs of the programme companies. As Pilkington pointed out, if that pressure is taken off, the programme companies could continue with the business of making programmes which is their fundamental job and they would not have to spend most of their time raising their own revenue—the revenue would arrive but it would arrive not so directly. So, because the broadcasting finance board is a body which stands between the Government and the broadcasters, it seems to me that, so far from bringing Government directly to bear upon the broadcasters, it lifts it off the broadcasters and it places a barrier between the broadcasters and the Government in the same way as the Arts Council stands as a barrier between the performer, the theatre producer—the entertainment producer—and the Government. The broadcasting finance board brings in that element of an independent body standing between the people who are actually doing the job on the ground and the influence of Government.

So, in many respects I should have thought that the effects of this Bill would be opposite to those which many noble Lords have feared. In the interests of time I hope noble Lords will forgive me if I do not refer directly to all their interesting and valuable contributions. In that I hope I may include the forgiveness of both the Front Benches for not examining in detail the contributions of both Front Bench speakers.

I think that it is time that I reached, on my feet, a conclusion as to what I shall ask your Lordships to do about this Bill. It seems to me that I have a choice. I can, against the advice of the noble Lord, Lord Elton, ask your Lordships to give the Bill a Second Reading and ask noble Lords to make any objections to the Bill, if they have them, or any improvements to the Bill, in the Committee stage by the process of amendment, and at the end produce a Bill which, on Third Reading, your Lordships' House might find acceptable. Alternatively, I could seek the leave of the House to withdraw the Bill.

In making up my mind about this, there is a consideration which should weigh in the balance. As has been said on all sides, we have had—I hope that this is the case; I, myself, think it to be the case—a useful discussion, a discussion which will not leave the matter where it is, but which will take up the problem, because it is a problem that must be solved. In leaning towards not pursuing the matter to a Division, I do so not only because I think that I should be hopelessly defeated if I were to try to do so—I am not entirely sure that I should get sufficient support to mount a Division —but because fundamentally I believe that this is a matter which ought ultimately to be decided by process of Government legislation, perhaps introduced in another place, because it is intimately concerned with money and by tradition your Lordships' House does not concern itself quite so closely with money as does the other place.

For all those reasons—with a little reluctance, but nonetheless with sincere gratitude to your Lordships for the attention that you have given the matter, and in the hope that it will proceed in some form or another in the future—I therefore beg leave to withdraw the Motion for Second Reading.

Motion for Second Reading, by leave, withdrawn.

Bill, by leave, withdrawn.