BBC Financing: Peacock Report

HL Deb 15 December 1986 vol 483 cc18-90

3.34 p.m.

Lord Annan rose to call attention to the Report of the Committee on Financing the BBC (the Peacock Report) Cmnd. 9824; and to move for Papers.

The noble Lord said: My Lords, I must begin by thanking the Leader of the House for his kindness and generosity in allowing me to move in government time the Motion standing in my name on the Order Paper. The next thing that I must say is this. I am sure that we all of us want to thank Professor Peacock and his colleagues for the excellent way in which they have presented their report and for their courage and imagination. It is a bold report. No former report on broadcasting has ever attempted to peer so far into the future; and it is typical of Professor Peacock's vigour of mind that he has made us sit up and recognise that change is bound to come.

Many people criticise the Government for asking Professor Peacock to consider whether the BBC should take advertising. I do not think that that proposal was any more partisan than the Labour Government's injunction to the Public Schools Commission, on which I sat. We were told then to produce a plan to integrate independent and maintained schools on the grounds that the public schools were socially divisive, as indeed they are. It was understandable that the Government should consider a painless alternative to the licence fee, because all governments are embarrassed when the BBC begs them to raise the licence fee. But there was a better reason than embarrassment for asking the Peacock Committee to think the unthinkable.

There is a grave financial imbalance in broadcasting and it grows worse every year. The gross revenue of the independent companies is some £1,200 million a year; the revenue of the BBC is £750 million. No wonder that the committee were asked whether some of the ITV revenue could not be siphoned off and piped into the BBC. The committee rejected this solution, very rightly in my judgment. But the problem remains and I am very worried indeed at the committee's proposal that in the short term the licence fee should be indexed. That will make the imbalance far worse.

I myself am sorry that the committee did not recommend a return to the system of imposing the ITV levy on the companies' advertising revenue instead of on net profits. That would reduce the imbalance a bit. It would also check the featherbedding restrictive practices and bloated wage bills—as bad as anything in Fleet Street—that the ACTT has been able to extort from the companies. The 1977 committee on broadcasting did not recommend this only because the change in the method of applying the levy had been made as recently as 1974 and they believed that we should see how it worked before passing judgment. Well, I do now pass judgment. It was a bad change and ought to be reviewed. I hope that the Government will consider this course of action.

I will not summarise the proposal to move all broadcasting into the free-market economy as the Peacock Committee recommends. Let me instead try to simplify the issues in this remarkable report. There are, I think, two great questions that the Peacock Committee put to us. The first is: should we deregulate broadcasting and abolish the BBC governors and the IBA? The second question is: do we really need a BBC any longer?

Let me take the first question. The committee tell us that in the future broadcasting, will be no more special than publishing became once the world learnt to live with the printing press". They therefore propose to abolish the authorities and make broadcasting subject to the Obscene Publications Act.

I think liberty of expression the most desirable of all political goals. I do not support those in this House who want more censorship and more controls. I even think that people exaggerate the evil effects of television. But is the Peacock proposal really practicable when there is such public concern about violence, sex, and aggressive language on television? Your Lordships may remember that in 1979 Professor Bernard Williams presented an excellent report on obscenity and film censorship. That report made a sharp distinction between the degree of offence given by the printed word and the degree given by visual images which are beamed into the family sitting room by television.

If television were subject to the 1959 Act there would be endless prosecutions, many of them frivolous and unjustified. And, rich as they already are, the legal profession would grow even more opulent at the public's expense. The next step would be to amend the Act so as to make it more draconian; and very soon Lady Chatterley would be in gaol again.

What has made our commercial television so good? Why are even the ads themselves so full of wit and fun? Partly because ITV is run by fine men like Sir Denis Foreman and Mr. Paul Fox, who really have a genius for spotting talent. But partly also because the IBA exists. It was the IBA, the authority, which ordered the companies to aim higher after the Pilkington Report. Of course the companies do not love the IBA any more than Mr. Ian Botham loves the committee of the MCC. But independent authorities are the way in this country that we try to maintain professional standards and decent behaviour while simultaneously moving with the times.

The committee argues that there will still be channels for serious discussion if news and current affairs become a free-for-all. I wonder. That is not the experience of the American network companies. Were not the committee just a bit optimistic in thinking people will subscribe to a truncated BBC service? Why pay when one can get a so-called free service financed by advertisements? American public service broadcasting, excellent though it is, is kept going partly by programmes from the BBC. If regulation goes, I believe the quality of the nation's broadcasting will decline. The BBC will end like an American public service station where the station manager's underwear was auctioned on the screen to raise subscriptions.

Perhaps this is the point at which I might ask the question: is there really, throughout the country, such detestation of the licence fee? There are grumbles, yes. Good heavens, we all grumble about it. But is there rebellion against it? I wonder whether that is so. Therefore, I rather question the whole premise on which the committee worked.

The Peacock Report teems with important recommendations. I shall leave many of them for others to examine in detail. I have in mind the proposal to put ITV contracts out to tender; the requirement that all television sets should have a peretelevision socket and a decoder; and the proposal which I very much endorse that the BBC and not the Post Office should collect the licence fee. Then there is the proposal to allow Channel 4 to sell its own advertising. Mr. David Elstein, programme director of Thames Television, said: If Channel 4 goes independent, our first priority will be to drive it out of existence". There speaks commercial television. But some members of the Channel 4 board believe that this is worth trying because they might get a better price for their advertisements. I hope very much that the noble Lord, Lord Blake, will say something about this proposal. The only thing that I hope will not happen is the disappearance of the Welsh fourth channel. That channel sustains the oldest of all native languages spoken in Britain

This brings me to my second question: do we need the BBC? The Peacock Committee does not actually say that it wants to abolish the BBC. But it thinks that jolly, vulgar entertainment is no part of public service broadcasting. Weaned as I was on Tommy Handley, Carroll Gibbons and the Savoy Orpheans. I find this rather hard to take. But the committee thinks that the BBC should eventually be funded by subscription and receive a subsidy from a body such as the Arts Council to reimburse it for putting on opera and ballet. But then the committee says that the BBC could finance some of its operations by advertising and that ITV could sell some of its programmes by subscription. I blinked in astonishment at that point because, surely, this is where the argument began. Having thrown advertising out of the front door, the committee allows the filthy fellow to sneak in at the back door. But if one believes a free market economy brings benefit to all and that regulation is obsolete, why blench at recommending a free-for-all in advertising?

Nevertheless, who will deny that over the past ten years the reputation of the BBC has declined? I look forward very much to hearing what the noble Lords, Lord Swann and Lord Bonham-Carter, have to say. They were a famous pair of chairman and vice-chairman at the BBC. I put it to them however that things nowadays are not what they were in their time.

The BBC is remarkably efficient in its use of studios and in the control of all sorts of difficult running costs such as its wardrobe or the sale of its products. But its managerial strategy, I believe, has been misguided. That is not surprising because the so-called board of management manages nothing; nor should it. The managers, that is to say the director-general, the managing director of television and the managing director of radio, should manage. They can consult whom they think fit. They do not need a board. They are answerable to a board, to the governors. But they do not need a board of management.

I believe that the managers have come to the wrong conclusions. Let me give one example. At a time when the BBC was asking for a rise in the licence fee to £68 and only got £58, management decided to give more funds to radio. Why not? That is perfectly reasonable—reasonable until one learns that the extra funds were given to build many more local radio stations. So, at a time of stringency, this national corporation extended its commitments in local broadcasting.

I am afraid that I have often accused the BBC of being afflicted with the me-too disease. It believes that it must do anything that any other broadcaster is doing—breakfast TV, all-day TV, satellite TV, local radio, community television. You name it; the BBC insists on doing it. All these are staffed at BBC levels. If the BBC comes to interview you in your home, it will bring a crew of seven to eight members. If the Westdeutscherundfunk comes to interview you in your home, three people arrive. But there is more to it than that. The director-general seems to have lost editorial control. The BBC is not alone in losing editorial control these days. I sometimes wonder whether the Guardian has an editor. Journalists today consider that they should not only report the news, but also comment on it and slant it. In the past, the editor would have cut their copy or spiked it.

Take the "Real Lives" controversy. I think that the then Home Secretary was mistaken in the line he took. I think the governors were mistaken in following that line, but there need never have been a row if the top BBC brass had said. "If they're so worried, let's put someone on screen to say, 'This programme shows how difficult it is for any government to govern Northern Ireland when there are family men on either side ready to kill or murder'". But no. To say that, we are told, would have destroyed the integrity of the programme. What rubbish! Editors are needed to check the nuances of reporters. I wonder whether they realise that to say, Although criticism of the Government mounts, the Government still maintain that their policy is right", is quite different from saying, Although the Government maintain their policy is right, criticism of the Government still mounts". The media are there and are always right to put those in authority under scrutiny. They may even be right to refuse to give them the benefit of the doubt. This Government have been seven years in power, and after "Real Lives", Mr. Ponting, Westland and now the legal case in Sydney they can hardly expect not be to criticised. The BBC has no duty to uphold the government of the day but it has a duty to uphold the state. The BBC is a national corporation and it derives its income by virtue of its royal charter. To belong to the BBC should mean the acceptance of certain traditions that other broadcasters do not have to accept.

Let me given an example of this. During the Falklands War the BBC sent reporters to interview the families of the Welsh Guardsmen who were killed at San Carlos while the fighting was still going on. I consider that a scandalous breach of duty to the nation. That this kind of thing could happen is, I think, a reflection on management. Top management should call its news and current affairs staff together and spell out to them the BBC's national role. Top management should discipline them if they neglect it. Top management could very well take the World Service radio news programmes as their marker. Those programmes are trusted by foreigners and admired by British expatriates. The BBC could do worse than transfer its chief editor of the World Service to BBC news and current affairs.

It is because I believe that the BBC is a great institution and has a national role like no other national organisation that I do not agree with the Peacock Committee in seeing its future as a subscriber service, shorn of popular entertainment. Against the faults of the BBC you must put its triumphs in sports coverage, serious drama, music and features from archaeology to gardening. The BBC has done more to civilise people and make us understand our culture and the wonders of nature than any other institution. We need a BBC, but we need one aware of the realities and the perils that face us as a nation. My Lords, I beg to move for Papers.

3.52 p.m.

Lord Butterworth

My Lords, I am sure that we would all like to thank the noble Lord, Lord Annan, for giving us this opportunity to debate the Peacock Report, and to thank him especially for the way in which he highlighted the main questions that are before us this afternoon. At the same time, I must confess to being a little surprised that I am speaking so early in the debate, for I wish to confine myself today to sound broadcasting in relation to Peacock. As chairman of Mercia Sound, the local radio station serving Coventry and Warwickshire, I must first of all declare an interest. However, I hope to make a contribution to the debate about local radio in particular and its relationship with the BBC.

To understand the development of steam radio it is necessary to understand a technical concept called split frequency broadcasting. When a station has both an FM frequency, or VHF, and an AM frequency, or medium wave, split frequency broadcasting or frequency splitting is the practice of allowing the station to mount different programmes on each frequency instead of duplicating programmes by simultaneous transmission; and that has been the tradition of British broadcasting. Today the BBC is allowed to split regularly, but independent radio stations are not normally allowed to do so, although as an experiment the Home Office, through the IBA, is allowing seven local stations to split frequencies for particular programmes for an experimental 12-month period.

The reason for mentioning this point is that there needs to be in Britain a move towards FM frequencies. In Australia or the United States, it is the FM transmitters that are more popular. In Britain, only about 20 per cent. of listeners tune in to FM, though over 90 per cent. already have the facility to receive FM signals. If we could move over to this acceptance of FM signals—and we would have to stimulate a quantum leap in FM usage—many of our problems could be solved. FM, with its clarity of signal and its stereo capability, is excellent for music, with AM being generally used for speech-based material. Radio 1 and Radio 3 are of course music programmes and maybe they could be restricted to FM frequencies; but we would have the solution to many of our problems and it would enable radio stations to widen the listeners' choice within current resources at minimal cost. There could be music on one frequency and an Asian programme on another; sport on one frequency and your Lordships' House on the other.

There are three layers of radio that need to be considered: the national, the local and the neighbourhood. It would be my submission that the unique contribution of the BBC is at the national level, for the BBC is the acknowledged master of its great networks. In my opinion it should be left to operate alone in the national field.

Of course that would involve immediately rejecting the Peacock recommendations that Radio 1 and Radio 2 should be privatised. Again, independent local radio and the IBA should abandon their proposal for an independent national radio station, leaving the national field clear for the BBC. But at the same time the BBC should be required to withdraw from local radio, which should be the responsibility of the independent local radio companies. Community radio, if it is to be sanctioned, should cater for particular neighbourhoods.

Independent local radio should be encouraged to fill in the geographical gaps that still exist in the country not so far covered by local radio transmission, and local radio should continue to depend on commercial advertising, which in my view should not be extended to the BBC. The Peacock Committee's interim recommendation of an index of the fee and a flat car fee for radio would seem reasonable as an interim measure.

The BBC's apparent wish to be dominant in every kind of broadcasting is somewhat unattractive, and especially its plans to open more local stations to duplicate the independent local radio stations and what they have already provided. The BBC already has the ability to compete comprehensively with local radio through its national networks which reach into every home in the land, offering alternatives to every local radio programme.

My third point is: how should local radio be regulated—by the IBA or by some new authority? Whatever the authority, it should also regulate community or neighbourhood radio stations if they are established, for whatever regulations are promulgated should apply both to local and community radio. The IBA have the advantage of 15 years' experience of radio administration, but it is generally accepted would need to reorganise.

Worldwide—in Australia and in the United States—it has been shown that the authority that radio needs is an authority with a lighter touch, more like the UK Cable Authority, laying down general guidelines with some simple monitoring process to see that the guidelines are being properly observed. Indeed, it has been suggested that one authority should be responsible for local radio, community radio and cable television—that is to say, for all the providers of the local services—and therefore likely to be in touch with their particular problems such as rates of pay, copyright fees and the like.

Another more radical solution, of course, is that there should be one authority in the country for the whole of radio. If, however, the regulatory body for local and community radio is to be the IBA it will need to abandon much of its cumbersome and expensive present practices, its detailed control over programmes, control over advertising and control over engineering standards, often exerted through large regional offices. If community radio stations are allowed to own their own transmitters, then presumably the same freedom should be accorded to independent local radio. This would reduce the IBA's heavy engineering costs, at any rate so far as radio is concerned, and this would lead to a moderation of radio rentals.

The other heavy financial burden on local radio is the cost of copyright. United Kingdom broadcasting copyright charges are the highest in the world, with those imposed on independent local radio the highest in the United Kingdom. In spite of this, the use of commercially recorded music for radio broadcasting services is severely restricted. Many of these changes would, of course, require changes in the Broadcasting Act and amendments to the Copyright Act, and I suppose the next stage will be a consideration of the Government's Green Paper on radio, once it has been published. But the settlement of the structure within which radio is to operate is now made more urgent than ever by the rapidly changing conditions of the media and the explosive development of information technology.

4.4 p.m.

Lord Willis

My Lords, I join in thanking the noble Lord, Lord Annan, for introducing this debate. I also have to declare an interest in the sense that I am a director of Capital Radio and I write regularly for television. In fact, I was working out the other day that I have done 30 series and I am now on my 31st, so both I and my bank manager have to declare an interest in this matter. I must apologise to the noble Lord, Lord Annan, and to those who are to reply for the fact that I shall not be able to stay for the end of the debate. Had I known 42 years ago that we would be debating this question on this day, I would have taken care to have my wedding anniversary on another date!

There are two developments relating to television in the past months which have given me and many others great cause for concern—and I just want to stress the last point that the noble Lord, Lord Annan, made, which was: do we need a BBC? On the face of it, each development is separate from the other, but in my view they are inextricably linked and it would be naïve of us to think otherwise.

The first development is the report from the Peacock Committee which we are debating today. The second is the systematic campaign of denigration of the BBC launched and sustained with much vigour, if not venom, by the Chancellor of the Duchy of Lancaster and his lookalike, the chairman of the Conservative Party, as well as others. Let us consider the link between these two events.

Peacock looks forward to what it calls, "a full broadcasting market" in which there is naked competition for viewers, in which there is no licence fee, and where every householder pays directly or indirectly for what he sees on his TV set by feeding money into a meter or by some form of subscription. This is our old friend—and I have no objection to our old friend—free competition, Christmas-wrapped for public consumption. Such a development would signal the virtual end of public service broadcasting as we know it. It would be a disaster.

Peacock itself recognises this, for it comes up with the feeble and woolly suggestion that there should be a broadcasting council with the authority to provide grants to ensure the production of programmes that would not otherwise be financed if purely commercial considerations prevailed; in other words, Peacock itself recognised the danger to the BBC. But if we are to enter the free-for-all privatised world of Peacock the public service element in our present system, which has lasted well for 50 years—and I take issue here with the noble Lord, Lord Annan; I do not think that the BBC is worse today that it was 10 years ago—will have to go. The public must be convinced that it should go.

So now we come to the second prong of the attack—the campaign to discredit the BBC: Get rid of or emasculate the BBC, deregulate ITV and sell its stations off to the highest bidder and the way is clear for the complete commercialisation of the airways and open cut-throat competition for the attention of viewers. It does not take a genius to understand where this would lead. If you want to see unregulated competition in television, go to Italy and suffer, or to America where marvellous news programmes stand out like a beacon on a mountain of rubbish, because there is no regulation or very little.

In our muddled British way, we managed to set up a system for television which really is the envy of the world. Even Peacock had to admit this because it says: In every country we encountered expressions of amazement—even from NBC and ABC in the United States—that the British should be thinking of changing their system which is almost universally admired". Yet in spite of that, Peacock goes on to make its suggestions.

To destroy what we have achieved in terms of the BBC in the name of progress and change, or greater freedom of choice or whatever, would be an act of madness akin to pulling down St. Paul's Cathedral because it has one or two structural faults and putting an office block in its place. Yet I believe this is the long-term aim behind Peacock and behind the campaign to discredit the BBC.

In some ways this campaign is not new. Governments of all complexions have all railed against the BBC and issued coded warnings about "bringing it under control". Under whose control—the politicians, the advertisers, commercial interests like, for example, the great newspaper magnates, who we all know are hardly notable for their lack of bias? Does anyone seriously want that to happen to the BBC? What else does "bringing the BBC under control" mean?

The present campaign is probably the most sustained and bitter of my experience. It has gone to such lengths that people are actually being asked to sit in front of their television sets, not to enjoy the programmes, but to seek out evidence of bias—and bias, I might add, against their particular views. Bias the other way does not matter. When I was at school many years ago there was an institution known as "nit nurses" who would visit. These people remind me of nit nurses in that they spend their lives looking for other people's fleas.

Of course, the BBC and ITV are sometimes biased. Of course, they make mistakes. It would be remarkable and astonishing if they did not. They produce thousands of programmes every year on almost every conceivable subject. They employ thousands of people—Catholics, Methodists, Tories, Labour supporters, Communists, Mormons, and whatever—across the board. Can we imagine such an organisation being absolutely perfect? We are all fallible; perfection is an unattainable goal.

The real miracle is not that there is so much bias one way or the other, but that there is so little. The odd mistake is a small price to pay for the independence of the media. The BBC should of course be criticised when it goes wrong. But it should not have its independent existence threatened every time it makes a mistake or an error.

Another weapon used against the BBC is the licence fee. It is the one heavy stick which politicians can wield against the corporation and successive governments have used it. They argue that to raise the licence fee is either politically or socially unacceptable. On this point I agree absolutely with the noble Lord, Lord Annan. Do we hear an outcry? Are people marching in the streets demanding that the licence fee be reduced? This is nonsense. There is no such public outcry. On the contrary, I believe that the arguments about the licence fee are political and have been manufactured; there is no great objection to it. In fact, most people believe that it is value for money. And it is indeed excellent value for money.

The important point is that it is the licence fee that largely underpins the independence of the BBC, as the noble Lord, Lord Annan, has said. If we bring in voluntary payment for programmes—some form of pay or subscription television—we shall go a long way to destroy that independence. In the process we shall also destroy or weaken the quality of the output. The pressure to get more people to subscribe, to get more coins into the slot or more money into the monthly subscription, will inevitably lead to programmes calculated to please the lowest common denominator.

The licence fee is not perfect. But it works. The only reasonable alternative would be to replace it by an annual subvention from public funds. This is clearly fraught with great dangers, and I should not want to go far down that road. Instead of wasting time having a Peacock Committee, I think we might well have a committee to consider how to collect the licence fee. That might he a better solution.

We are on the verge of great developments in television: direct broadcasting by satellite, cable television, and the continuing video revolution. These will immensely expand people's choice. I am not certain whether that will be good or bad. I have a hunch that we shall not have too many exciting new programmes coming our way when all these marvellous things are beamed to us from up in the sky or along cables. I think we shall have much more of the same—and perhaps much worse of the same.

Again, we have heard much about the freedom of choice and the need for people to have greater choice. Do you hear that demand anywhere? I have never heard it. I believe that people are perfectly satisfied with the choice they have. They are satisfied in this country, and I shall tell your Lordships why. It is because the quality of our programmes is so great that people do not need, as they do in the United States or in Italy, to turn to cable or satellite. It is quality that counts. This great demand for wider choice has been manufactured, and we all know by whom.

If I am right about all these changes coming in and the cheapening of programmes, then it is more than ever important to maintain our present system and to build on it. Let us dispense once and for all with the notion that the BBC—or, for that matter. ITV—is a hotbed of communist or fascist activists and that its writers and producers are hell-bent on subversion and the destruction of moral standards. Such accusations can only come from unbalanced people who are themselves biased and incapable of being objective.

I have not commented on radio because we shall have an opportunity to do that later when the Green Paper comes along. Nor have I included all my criticisms of the Peacock Report. To do that would be to extend my speech beyond reasonable limits. But in general it is a poor and ill-thought-out document and for those reasons, it is potentially dangerous. Particularly dangerous—I shall say this very briefly—is the proposal that Channel 4 should settle for its own advertising. That would be the equivalent of destroying a marvellous channel and making it just another commercial outlet.

It seems to me—I say this with the greatest respect to the noble Lord, Lord Annan—that the Peacock Committee is yet another example of our academic mafia at work. They know nothing about entertainment; they know nothing about management; they know even less about television. But every ten years or so they jump for joy at the opportunity of moving in and criticising, I hesitate to say, their betters. I think that we should have a commission of television people set up to inquire into the universities.

Let us change and develop by all means; I do not think that we have any choice. But let us hold fast to the clear virtues of our present system. If we ditch those in the name of progress, we, and our children, will live to regret it. As I said, I have nothing against private enterprise. But we must remember that we are not talking about British Gas, British Telecom or British Airways. We are not talking about the manufacture of sausages. We are talking, as we all know, about the most powerful and influential medium ever known. Nobody denies this. Do we really want to hand this over lock, stock and studio to those who would feed us a constant meal of pop, pap and quiz? Do we really want to hand it over to naked commercial interests when we have done so well in the last 50 years?

We must move into this new era with care, caution and concern. We must preserve all that is good in our present system. As an honourable Member in another place said on the same theme, "Friends, if it ain't broke, don't mend it".

4.47 p.m.

Lord Aylestone

My Lords, I should like to add my thanks to the noble Lord, Lord Annan, for introducing this important debate. At the same time, may I apologise to the noble Lord and to the noble Earl the Minister who will reply, that I shall not be able to stay until the end of the debate. My reason is not the same as that of the noble Lord, Lord Willis; my reason is British Rail.

Perhaps I may also declare an interest. I have a very small financial interest in independent radio. When I tell the House that, after six years, preference shares have not yet paid me anything, the House will understand that I do not associate myself with the figures used by the noble Lord, Lord Annan, when he introduced this debate.

The Government set up this report entitled Report of the Committee on Financing the BBC. I think that the committee so interpreted the terms of reference that it went not only wide but extremely wide with the result—and I am not complaining—that we have in front of us an interesting and, to use the word of the noble Lord, Lord Annan, a bold report. I have no objection to that. However, the committee did rather more than the Government had in mind.

I propose to deal with just two points; the financing of the BBC, which is what the report is supposed to be about; and the future of radio, about which we await the Government's views in the promised Green Paper. We thought that the Green Paper would be forthcoming by Christmas but we shall not be unkind about that. Let us hope that it will be forthcoming very soon afterwards.

The licence fee for the BBC has been fixed by the Government at £58 until April 1988. In my view this figure is not adequate, and certainly will not be adequate then. I want it to be understood that, although I was perhaps at one time on the other side of the fence, I have never held any views contrary to the one that the BBC should be financed as it is, by a licence fee. I might add at this point that at the time when I had some responsibility in this matter there was no difficulty, no problem and no antagonism at all at our level between the then chairman of the BBC, our good friend the noble Lord, Lord Hill of Luton, and myself. In fact, we had monthly meetings, usually over a meal, when we discussed each other's problems, and we worked well together. I do not know whether this has been continued but it was certainly something that we started. I want it to be made absolutely clear that, in dealing with the question of the financing of the BBC or anything else in connection with the BBC, they are not hearing from anyone who really opposes them.

I have said that the licence fee was fixed at £58. I understand that that is divided up between television and radio, with something like 70 per cent. for television and 30 per cent. for radio, Criticism has been made that this is over-expanding. Frankly, we do not know whether or not it is, because if any industry has had its financial roots dug up and looked at to see if those roots are growing, it is the BBC. So I think that we should perhaps leave that. But I am of the opinion that the figure of £58 will have to be looked at in some way. It will be remembered that the £58 includes the cost of collection by the Post Office. While I do not have the figure with me, I remember that that cost is quite excessive. Nevertheless, I agree completely with Peacock that advertising as a means of financing the BBC is out and ought not to be considered. I am equally sure that the country feels the same.

Politically—and sometimes there are politics in these matters—it would be the biggest mistake any government could make to alter the method of financing on which the BBC was based half a century ago. Financing both the BBC and ITV on advertising revenue could lead only to the wrong kind of competition. It could lead to the kind of competition we do not want and we would have a lowering of standards both on television and on radio. When one considers the amount of money coming these days from advertising revenue, one should bear in mind that independent television, independent radio, Channel 4, "TV-AM" (breakfast television), direct broadcasting by satellite, and even part of the cost of cable when it comes, all need to sell advertising to be financed. I am not suggesting that it is impossible; I am simply stating a fact.

The report before us proposes linking the BBC licence to the cost of living. In a sense I do not think that this is unreasonable because when the Government are assessing the amount of any increase—and assess it they will have to—they are bound to take into consideration living costs; and I shall not forecast what they are likely to be by 1988. So it is not unreasonable to look at living costs as well as other things. I agree that the Peacock Committee's view about the collecting of the licence fee should be fully considered. I am not sure that the Post Office is the best agency for doing it, or the cheapest.

It would be possible, according to Peacock—the report simply mentions this—to add the cost of the licence fee to local authority rates, to water rates, to the gas bill or to the electricity bill. This is the craziest suggestion in the Peacock report. Surely there is no one in the country who would agree with that. But I do agree with the committee's proposal that pensioners in receipt of supplementary benefit should be exempted from paying the full licence fee or helped in some way. I accept that this could be costly, but if many pensioners living in high-rise establishments pay a nominal 5p a year, surely it is possible to do something for other pensioners on supplementary benefit.

There may be occasions when the Government themselves could make a direct contribution to the BBC. They do at present with the External Services, the excellent overseas services which we all accept are well worth providing and of great value to the country, but unfortunately these, too, have been cut on the grounds of cost. Why should not the Government pay a contribution towards, or the whole cost of, broadcasting the State Opening of Parliament, which is quite expensive; or Trooping the Colour? The BBC covers both those events. A contribution in that direction would be helpful. There are a number of ways in which the Government could help if they so wished.

The debate in another place on Peacock offered no firm views from the Government on the report itself. As I have already said, we await the Green Paper to see what they are going to say. We cannot have any idea of the Government's proposals until such time as we see their Green Paper. I hope that in considering the report they will not give a second thought to the idea of privatising Radio 1 or Radio 2, which was a proposal the report contained. Privatisation of those two radio stations would be equally difficult and would be extremely unpopular politically.

The role of the BBC in radio is part of our history and is remembered by many of us, especially those who are able because of age to recall its work during the war years. One should remember that. I should like now to add some of my own thinking about what the Green Paper could consider. It is just about 15 years ago, during my chairmanship of what was then the Independent Television Authority, that the then Conservative Government, through its Postmaster General, Mr. Christopher Chataway, whose name will be known to everyone, instructed me and the ITA to go ahead and establish independent local radio stations which were to be financed from advertising revenue in precisely the same way as independent television was at that stage and is today. We were instructed to go ahead and we did so. The BBC already had a few local radio stations on the air. I think its first one was in Leicester.

We started not with the aerials one sees today but with an aerial strung between two high chimneys and a power station in Lots Road. That was the beginning of radio broacasting in London by the ITA. When I left in 1975, 19 independent local radio stations were either on the air or had been approved and were about to go on the air. Today there are 50 such independent local radio stations, all financed from advertising, providing an excellent mixture of programming and covering about 80 per cent. to 85 per cent. of the population of the United Kingdom. The Government at that time are to be congratulated on going ahead, and it is to their credit that they did so.

I am sure that within the resources available the importance of the creation of diversity in radio should continue as the Government started it 15 or 16 years ago. I sincerely hope that in the Green Paper the Government will continue along those lines and will consider an independent national network exactly in line with the BBC's four channels; but again of course financed from advertising. The House will be aware of the excellence of Independent Radio News and of its sister, Independent Television News. Both are accepted by everyone. One never hears criticism of them. I am sure that an independent national radio channel would be equally acceptable to the public generally.

I should like to mention that the Broadcasting Act, which introduced local radio, required the IBA to keep television and radio accounts quite separately. That was a difficult job at that time, but it had to be done. Happily, a fairly recent relaxation on the part of the Government—without being absolutely certain, I think it happened earlier this year—has now permitted some co-funding between television and radio for the IBA which has enabled it to reduce rentals for the smaller and sometimes struggling independent local radio stations. They have considerably reduced the rentals, but if there is any spare money available I hope that the independent local radio stations, having obtained that reduction, will now be able to employ more musicians and give us more live music in addition to canned music. I refer to music of all kinds.

Some months ago in a Question in this House I urged the Government to deal with the problem of the law covering pirates. This is a matter for the Home Office. As is known, radio pirates have been breaking every conceivable law. At that time the Home Office did a great deal but unfortunately some of the pirates are still broadcasting. They are stealing frequencies needed for other purposes—fire brigades, ambulances, and so on. They are not paying any copyright for the music used. They are breaking local authority planning laws and behaving just as one should imagine pirates would behave. I hope the Government will do more in that direction.

In a later Question dealing with the pirates I asked the Government whether they would be prepared not to consider the pirates when applications were made to the Government for community radio licences. The reply I received was surprising. It was a stark, "No; community radio applicants will be considered on their merits". I ask, therefore, whether when the police forces are looking for recruits they consider former burglars on their merits. When appointing gamekeepers, does one consider former poachers on their merits? The reply I received was amazing. The Government were prepared to consider on their merits people who had broken the law; but fortunately community radio did not go ahead at that stage. I hope that if the Government are reconsidering the appointment of such radio stations they will be required to function within the law and under some kind of control. Perhaps the 15 years' experience of the IBA will be helpful to them in that respect.

One hears a great deal these days about television programme content and criticisms that programmes are becoming more violent, with more sex and with too much bad language. I do not dissent entirely from that view, but it is not a new problem. It has always been with us. I have always been aware that what is acceptable to one individual, or to a majority, is not always acceptable to a minority of other people. We have in charge of programmes in the BBC and in the IBA two highly responsible public spirited groups of people who I am sure can be relied upon, when programmes are generally objectionable, to handle the situation. However, as I said, I do not dissent from the fact that something needs to be done.

From the analyses taken from time to time—and the contractors spend a lot of money on this kind of research—it has been proved that bad language is number one in that field; the second is violence, and sex comes third. It does not give us any encouragement to realise that the three factors exist anyway if in fact they are wrong and beyond what the majority of people accept; but it is an extremely difficult problem.

One hears discussion of problems about the lack of political balance. We have even had that in the coverage by television of your Lordships' House. There have been accusations about lack of political balance. One does not hear much of it, but it has been said. I recall that when I had the responsibility for the job of ensuring impartiality, in one week I received complaints from the Government and from the Opposition about the same programme. I knew then that the programme complained about must have been absolutely right and balanced.

In closing, I ask the Government to let us have the Green Paper on radio with as little delay as possible and to give us an early opportunity of debating it.

4.38 p.m.

The Lord Bishop of Blackburn

My Lords, all British broadcasting, both by Act and by charter, rests traditionally upon a tripod: it exists to inform, to educate and to entertain. The report before us is vastly informative, and to read it is an education in itself. Those in search of entertainment may be disappointed, but I, like previous speakers, warmly thank the noble Lord, Lord Annan, for introducing this debate and agree with him that Professor Peacock's committee deserves to be congratulated on this in-depth presentation of wide-ranging issues thrown up with explosive urgency by the new technology of this decade. Peacock is prophetic!

The title of the report, Report of the Committee on Financing the BBC, the terms of reference given to the committee, and the constitution of the membership of the committee itself, have made predictable the major emphasis; that is, the economics of making and the marketing and distribution of BBC programmes. It seems very likely that we are on the brink of revolutionary new possibilities in international communications, so it is reasonable now to take a radically new look at ways of paying for broadcasting.

In so doing, is it not also reasonable to ask that the fundamental principles of public service broadcasting be kept in balance and in the very forefront and centre of the debate? It is that aspect of this debate that an ex-BBC producer such as myself feels best qualified to speak to. But, I heed the Peacock warning at one point in the report the evidence tended at best to be anecdotal". I hope to avoid the trap.

We are moving into a new era in which change is inevitable. I must ask: is the broadcasting we have become accustomed to indeed excellent? If so, wherein does its excellence lie? In a foreseeable period of rapid and explosive growth how can that excellence be safeguarded? Can we afford in the future the range and quality of broadcasting that we have enjoyed in the past?

British broadcasting's claim to excellence earns it accusations of complacency and imperviousness to constructive criticism, and therefore a certain degree of odium. The claim to excellence seems to rest largely on applause from abroad, from the winning of Emmy and other prizes. Here at home, approval and criticism go hand in hand. Yet I contend that appreciation in general throughout the country is high. For why else, as the Peacock Committee reports, should the United Kingdom's level of ownership of video cassette recorders be one of the highest in the world? Surely it is for what we have come to call time-shift viewing. Broadcast programmes here are highly valued.

Ten years ago the future of video disc systems looked rosy, but as Peacock reminds us, they were limited to the playback of pre-recorded material. Without the recording facility essential for time-shift viewing they have faded right out of the picture. For all their imperfections—and imperfections there are as we have already been reminded in this debate—I contend that British programmes are good and stand comparison with the best.

Why are they good? Because, although in these days it may be fashionable to deride paternalism, our programmes have developed in the seedbed of Reithian public service broadcasting. That tradition is fundamental to good broadcasting and it must be kept at the centre of every debate on programme making.

But what is public service broadcasting? This report admits that definition is elusive. Peacock contends that the fundamental aim should be to enlarge both the freedom of choice of the consumer and the opportunities available to programme makers to offer alternative wares to the public. But the single minded pursuit of consumer choice needs very careful consideration. Multiplicity of channels appears to extend consumer choice, but if each channel, for example, is offering a quiz game or a chat show as an alternative to dozens of other quiz games or chat shows, then the extension of choice is illusory. There are serious Australian and Japanese commentators who are claiming clearly today that more channels means worse television.

Real choice demands of the channel controller the resources and the willingness to explore a whole range of human interest and experience—broadcasting not narrow casting—experience that is cultural and physical, mental and spiritual. We must be concerned about programme quality and also about programme range and the public service broadcasting principle is a discipline that protects both.

I hope noble Lords may agree that British broadcasting has nourished high standards both in television and in radio. I am glad that radio has not been overlooked in the course of this debate. For it was in radio that foundations were laid down which make radio remain a significant medium in its own right. These cherished principles are protected today through local radio, ILR and BBC, and BBC radios 3 and 4.

How can these principles be safeguarded in television? The Peacock Committee propose a public service broadcasting council to ensure the protection of this principle in certain areas of broadcasting. But what of the rest? Unless this principle is endemic to all broadcasting, the existence of such a council might be a piece of tokenism. In the long run it could well lead to the public service principle becoming marginalised.

In arguing for "consumer sovereignty" the Peacock Report draws comparisons with the sale of junk foods which each individual has the freedom to choose to buy. But can broadcast programmes be perceived simply as commodities? Is this a valid model? The closest comparison to be drawn would, of course, be with books, magazines or newspapers, hence the coining of the term "electronic publishing". But, the comparison also draws attention to a subtle distinction most apparent in, though not exclusive to, news and current affairs programmes. The distinction is to do with the immediacy of shared experience that has a social significance in helping create community. Programmes are not products in an industrial sense; they are more than organs of information and opinion.

Radio and television are the mouth and ears and the eyes which have helped shrink this world to become the global village of our late 20th century experience. It was the plight of seeing starving Ethiopians on British Television, so Bob Geldof tells us, that moved him to initiate Band Aid. With our encouragement, broadcasting can be the means through which people of every community, large and small, may grow in mutual understanding.

Today more than 99 per cent. of our people can receive broadcast programmes on our four channels. Those who live in remote or sparsely populated districts pay no more than those whose city centre homes are close to major transmitters. Rich and poor alike in possession of a valid television licence stand equal before the broadcaster. Faced with all the innovations to be ushered in by DBS (direct broadcasting by satellite), by cable, by fibre-optic technology, by all means let subscription television be considered, but I beg that that be done without sacrificing the principle of this enviable heritage.

4.48 p.m.

Lord Orr-Ewing

My Lords, I hope that the noble Lord, Lord Willis, will not leave because I am going to deal with some the points that he made in his speech. I hope that the noble Lord will not leave before I have a chance of commenting on his speech.

My first duty, and it is a really pleasurable one, is to congratulate the right reverend Prelate the Bishop of Blackburn on an admirable maiden speech. We have come to appreciate the very excellent manner in which our bishops make their speeches, in particular their maiden speeches. This right reverend Prelate first served the Church in Newcastle, served later in Manchester University as assistant chaplain, and has kept in touch with the young people. He then became a religious broadcasting producer with the BBC where he was for nine years. It is particularly appropriate that he should have selected this debate for his maiden speech. We all owe a debt to Lord Annan for initiating this debate and giving us the chance to hear such a wonderful maiden speech. I hope that the right reverend Prelate will address us on many other occasions.

I wish to say straight away that I happen to be one of those who believe in public service broadcasting, the BBC and a licence fee, but that does not mean that I accept that the BBC is perfect, The noble Lord, Lord Willis, seemed to think that it did not need any changes. He ridiculed the fact that we had urged some people to monitor and look at all the programmes. He obviously had not read the Guardian of 3rd October which claimed that the Labour Party is to double its 60-strong team monitoring political bias on television. If it is so perfect, why is it necessary for the Labour Party to put another 60 people, making 120, to monitor the output of that "perfect" broadcasting service?

Lord Willis

My Lords, I condemn the Labour Party for doing it as much as any other party, and as for the Guardian, I am trying hard to give it up.

Lord Orr-Ewing

My Lords, I am glad that the noble Lord has broadened the criticism. I see nothing wrong in being a critic. I do not understand why it should immediately be said that there was an immense attack upon the whole editorial freedom of the BBC. There was not. That was not Mr. Tebbit's intention. He asked the BBC how it was that the BBC and IBA programmes on the Libyan raid were so markedly different, and whether perhaps it should look to see if there was some flaw within the corporation. That is all he said. He did not say that the BBC was totally wrong. he thought that the phrase: world condemnation of American action was rather pejorative. The IBA was much more restrained, sensible and balanced. That is what he said; nothing more.

I hope that it will not be thought that that was an attack. The noble Lord, Lord Willis, always speaks in a colourful way. We enjoy his speeches. However, I thought it essential to contradict that point. Both sides are monitoring. I must now release him for his wedding celebration.

It was 50 years ago that the BBC opened its public service broadcasting. For the previous two years I had been one of a team of three designing the first television receivers at EMI, Hayes. I have been closely concerned with television for many years. Later I joined the BBC where I was in charge of TV outside broadcasting. I have always been a supporter of the BBC. One always has a love and respect for one's alma mater. That does not mean that when we think some people fall below professional standards we should not criticise them. That is what freedom and democracy are about.

Whether or not we love the BBC, it must be recognised that we are coming to the end of an era. For a fairly long period we have had a cosy relationship with television. We have four channels—two from IBA sources and two from the BBC.

I thought that the noble Lord, Lord Annan, did well. I shall not repeat what he said. There have been excesses. Pay has risen disproportionately when compared with other entertainment media. The BBC and the IBA may be working towards the state in which Fleet Street found itself. It is deeply embedded in overtime and expensive technology. It uses big camera teams when they are not necessary. That puts extra pressure on the licence fee.

We cannot disinvent satellites and cable. In the United States, where I was recently, their use is expanding. In Belgium, Holland, France and Germany these alternatives are coming along. We must face the fact, and Peacock did a wonderful job in facing it. The new high-powered satellite will need only a two or three foot dish for private houses to be able to receive satellite programmes. Satellite programmes bypass all national boundaries, and however much nations may wish to control broadcasters' responsibilities and programmes they are losing control over them because they will be on an international basis. I think that we shall be the richer for that.

I want to concentrate on one side of the matter. Although many new programmes may be coming along from new sources—all power to their elbow, and we wish them well whether they are cable or satellite—we hope that the Government will not inhibit and cripple them too much with regulations. For the next five or even 10 years the BBC and IBA will each have nearly 50 per cent. of the market. They are in a quasi-monopoly position. As public service broadcasters they must be scrupulously careful. I am not sure that we can indefinitely restrict regulation to the Cable Authority and the IBA. The only branch of the TV media which is judge and jury in its own case is the BBC.

I was looking back through the Selwyn Lloyd minority report. Your Lordships will remember that Beveridge set up a committee in 1949 and he published his report in 1951. Lord Selwyn-Lloyd published a minority report which advocated a measure of competition. The idea of competition started within the Conservative Party. One of the things that he also said was that he believed that the BBC was becoming too big and perhaps too powerful. He wanted to devolve broadcasting by other people. I looked the figures up. Then the BBC employed 12,000 people. Today it employs 25,000 people. I wonder whether it is becoming too big for one board sensibly and efficiently to manage.

The noble Lord, Lord Annan, was right when he said that it was odd that the BBC seems to feel that it has a tremendous obligation to cover the whole spectrum of broadcasting from A to Z. I believe it had 20 local broadcasting stations before the independents were allowed to come in. That was an awful waste. Surely a national public service should not be concerned with local broadcasting. It should leave it to others. It may say that it costs only £2 million or £3 million, but why take it on? Every extra activity needs a slice of management time and a slice of the overheads all the way down. I wonder whether as time goes on separate autonomous subsidiary companies should be set up with the BBC as the holding company. I should like to see that done and I believe that it would be beneficial to the corporation.

I come to my second point which relates to editorial control. I hope that the noble Lord, Lord Ardwick, who has much more experience than I do, will touch upon it in his speech. It was mentioned by the noble Lord, Lord Annan. It seems that editorial control is loose. The BBC appears to be losing control. Producers who are responsible for such programmes as "Panorama" or current affairs or news programmes seem to be kings in their own kingdoms and any criticism is resented. That is dangerous. Few newspapers would allow that measure of independence and freedom. When a person slips, it is sad that the BBC always rushes to his or her support instead of saying that with 25,000 employees some people will make mistakes. We all make mistakes. It would be more becoming a public service if we had an apology occasionally.

There is another tendency. Many young Tory Members of Parliament have told me about it. Producers tend to ask new, fresh faces to contribute to a programme. They suggest to young aspirants that it would be a good idea if they mentioned a certain point. If the young aspirant goes along with it, all well and good. Some young people, wherever they may sit in the other place, will not go along with it. They say, "No, I do not agree with that. I know that that is your particular viewpoint and that is the way you feel about it but I am not going to kowtow. In my interview I am going to say this".

I know one case in which the person was video-ed about eight times. Even then he stuck to his principles and said, "I am not going to say that. This is what I believe in sincerely". In the end, of course, his contribution was cut out of the programme. That is one incident only. It happens a great deal. I suspect that the BBC runs a black list and that if a chap speaks out, is unco-operative and does not take the view that the producer wants him to take he does not get a further invitation. That should be put a stop to.

The BBC is inclined to say that if a viewer is critical he can go to the Broadcasting Complaints Commission. This commission was set up as a result of the report of the noble Lord, Lord Annan. I reread the salient parts. He recommended that something of this kind should be done. There was a previous body which was appointed by the BBC, and paid for out of BBC funds. It was therefore too tied to the BBC to be a neutral body.

I still think that perhaps the new Broadcasting Complaints Commission which was set up in 1981 does not have wide enough terms of reference to tackle these problems. It is not allowed to deal with a complaint unless it personally affects the person complaining. As an example, if someone objected to a programme on AIDS—he thought it was imbalanced or misinformed, or whatever it might be—that would not be open to investigation by this commission unless the person complaining had AIDS. That is taking an extreme view. But it is very restrictive.

One has only to look at last year's report. They were always asking for more people to complain. Generally people complain to the BBC and then, if necessary, to the commission. I have to say that one of the complaints very widely believed is that when people go to the BBC and complain about something their complaint is very often not even acknowledged, let alone dealt with. I am sure that this is an area which ought to be put right. Having made a complaint to the BBC people then go to the Broadcasting Complaints Commission.

I notice two faults in this area. The first is that it takes an unconscionable time to unravel the complaint. I looked through a summary and 10 months is about the minimum. Many complaints take a year and a half. In one instance reported it took four years and three months to deal with a complaint. That will not put things right. How can people in these circumstances feel that they are satisfied by the investigation?

Sometimes it is said, "Why do you not go to law?" The outcome of a complaint about "Maggie's militant tendency" was that it must have taught everyone to be very careful before going to law. One remembers that the costs were £20,000 to the two Members of Parliament who complained because it was found that there had been some gerrymandering of the accusations. The legal costs on each side were £240,000, making a total of £480,000 to look into that investigation. That is surely not an easy route for any individual to take?

It may be all right for a very rich firm to go along that route, but think of the strain on an individual to have that hanging over him. One has to consider abandoning one's house, the effect on one's family, and the strain month after month of these huge legal fees if one loses one's case, which might force one into bankruptcy. This is surely not a route that can sensibly be taken. It is far too laborious and expensive. One has therefore to make the complaints commission procedure easier, quicker and obviously cheaper to go to.

One of the faults at present is that one is persuaded—and the BBC has been trying to strengthen this—that if one goes to the complaints commission one should not follow it up by legal action. That again should be looked at. It may be that they say, "Yes, there is a case". They do not want to use it as a chopping block, or as a kind of trial horse. On the other hand, I do not see why one should give up all one's legal rights as a person because one goes to the Broadcasting Complaints Commission. That is an area which needs reinvestigation.

On the regulating body of the BBC, I notice on rereading the report of Selwyn Lloyd that he recommended such a body should be set up. I believe that he was influenced by the US Federal Communication Commission which still exists. But the body was not set up. On page 58 the noble Lord, Lord Annan, says firmly that one should be set up. I underline this passage: Much of the evidence we received was particularly critical of the BBC, whose attitude was described as not only cavalier, but aggressive and arrogant. Several people sent us copies of letters from the BBC: and we thought these epithets justified". It is sad that the BBC should react in that way to genuine complaints from people who feel that they had been wronged. That report was in 1977. I cannot say that the situation has improved since. There is a long history of people wanting to see such a body set up. I hope that this House will feel it is appropriate.

Lord Selwyn Lloyd (as he was later) repeated what was stated in the main Beveridge Report, that broadcasting was, one of the most powerful agents for influencing men's thoughts and actions, for giving them a picture, true or false … for filling their minds with beauty or ugliness, ideas or idleness, laughter or terror, love or hate". How true are those words today! All round the world broadcasting is expanding. The source and potential of programmes are expanding. In this House, where political lines are not pathological—we have a lot of cross-Bench voting and opinions—we must consider the future most carefully. I was encouraged, I hope correctly, when the Minister who wound up the debate on 20th November, said this: We have to find a system of regulation that best enables us to retain all that is best in British broadcasting".—[Official Report, Commons, 20/11/86; col. 79.] I hope that that will be done. I have suggested one route that we might take to preserve the credibility, professionalism and the balance of the BBC.

5.7 p.m.

Lord Barnett

My Lords, I thank the noble Lord, Lord Annan, for initiating this debate. I also congratulate the right reverend Prelate the Bishop of Blackburn upon a most excellent maiden speech. We shall all look forward to hearing him on many other occasions. I have to declare an interest as vice-chairman of the BBC. It is so important a debate that I felt I should make a modest contribution and I understand that it is in order, especially as I have no intention of criticising either the Government or any Member thereof.

The Peacock Report has come at a critical time in the development of broadcasting in this country. It is a time when the existing structures are rightly under close scrutiny and when alternatives to the present sources of broadcasting funding are being sought on both political and economic grounds. It is a time when there is a sense of the imminence of the new technology of cable and satellite but no precise indication of how that technology will develop, and when there is a temptation to sweep away the existing structures to make way for the new. I certainly recognise the need for change in a changing world but I hope that we shall ensure that the changes are genuinely for the better.

The Peacock Report has provided a basis for informed discussion at this critical time. I welcome it therefore and pay tribute to the hard work of Professor Peacock and his colleagues on the committee. They have helped to concentrate the minds of those who are concerned with the future of broadcasting in this country. I cannot agree with all the committee's conclusions but I certainly believe that the report has helped us to phrase the questions which need to be answered.

I am particularly pleased that the main conclusion of the Peacock Report was to rule out advertising as a replacement for the BBC licence fee. I hope that your Lordships will agree with the committee that a competitive scramble by all broadcasters for the same source of advertising revenue would have resulted in a downward spiral towards lower programme quality. But what of the rest of the report? Your Lordships will be pleased to know that I do not propose to go through its recommendations in detail, but to concentrate on those which have particular implications for the way in which broadcasting is likely to develop in the years ahead.

In making a judgment about such developments, I would suggest that there are three basic questions to bear in mind. First will the recommendations mean increased choice for every member of the television or radio audience? Secondly, do they help maintain the editorial independence of the broadcaster? Thirdly, do they provide a method by which programmes of the highest standard will continue to be produced and broadcast to all?

Of course the Peacock Report's central conclusions relate to the financing of the BBC, and to the possibility of setting up alternatives to the licence fee in its present form. In the long term, the committee would like to see subscriptions as a means of providing programmes of quality to some viewers at least. The Home Secretary has commissioned a feasibility study on the prospects of subscription. I am sure that he has no illusions about the technical, manufacturing and marketing difficulties attached to the subscription proposal. I am told that within the next decade subscription could be technically possible, but at a very significant cost. One estimate that I have been given of the cost of fitting a de-scrambling device to a television set is £50 per set; £50 multiplied by the number of television sets in the country—say, 20 million sets—gives a rough figure of £1,000 million as the cost of providing the basic technical facility for subscription across the country. On top of that, the cost of collecting subscription fees will be significantly greater than the cost of collecting the licence fee, as I am sure the Home Secretary's consultants will be telling him in due course.

However, the basic problem with a subscription system is a social one. It cuts across the universality of the present arrangement. Subscription could well provide programmes of quality. But these programmes would only be available to the subscribers—in other words, to those who can pay for them. Under the present arrangement, programmes of all kinds and all costs—opera relays, outside broadcasts, drama, documentaries—are available to everybody in the audience, not just to the self-selecting few who might be able to afford to subscribe to the channel which offered them the programmes they believed they wanted. At the moment the oldest and the poorest citizens in this country view the most television. Under a subscription system, they would be denied a substantial part of the programme excellence which is at present available to them across the range of BBC and ITV schedules.

The problem with subcription is that it is an untried system on any large scale. It is as yet too uncertain, and its costs and consequences are unforeseen. It should therefore not be used as the basis for sweeping away all that is so good in the existing structure. That is not to say that there may not be a place for it in the changing world to which I have referred. I suggest that subscription as a new method of financing broadcasting might be applied and tested first on the new broadcasting services which could become available to viewers through the development of cable and satellite in the 1990s. Only after assessing this would it be sensible to consider converting 20 million sets to provide subscription finance for the BBC.

For some time therefore, as Peacock recognised, there will have to be another form of financing of the BBC. I know there are those who are so unhappy with the licence fee that they have looked for alternative sources of finance. We have had proposals that the BBC should be financed either out of general taxation, or a surcharge on income tax or national insurance. Mostly they are put forward by people who care as much as I about the BBC being independent of any government. However, I am bound to tell them from my experience as Chief Secretary to the Treasury that financing the BBC from any form of general taxation is incompatible with retaining its vital independence, for the simple reason that it would mean that BBC expenditure would inevitably be up for consideration in each annual public expenditure round. I would not wish that on my best friend, and certainly not on those who I know really care about the BBC retaining its independence.

To exempt some or all pensioners from the licence fee is an entirely different matter, but it is a wholly political decision to be taken by Parliament, and financed by Parliament, not by broadcasters. It should not be confused with the wider issue of how the BBC should be financed.

It is to that central issue that I now wish to turn. Peacock, having rejected advertising, accepted that the licence fee should need to be with us at least for some considerable time. The committee went on to recommend that the licence fee should be index-linked to the RPI. It saw indexation as a way of both enabling the BBC to plan the use of resources more efficiently, and, most importantly, to bring a measure of insulation from political influence. I strongly agree with the principle of annual increases in the licence fee and accept that indexation would be a sensible way to deal with this difficult problem. I would only add that I believe the three-year negotiation should remain as a sort of periodic assessment and an opportunity for a public debate about the overall place of the BBC in national broadcasting.

The question remains of course as to whether the RPI is the best basis for indexation. It is a demonstrable fact that over 60 per cent. of BBC costs are represented by wages and salaries, and annual increases for some time now have generally been in excess of the RPI. Because of what is happening elsewhere, they are effectively outside the control of the BBC. As the noble Lord, Lord Annan, said, current high ITV profits can only serve to widen the differential. On the other hand, as vice-chairman of the BBC, I am just as concerned about value for money as I was as Chief Secretary to the Treasury and chairman of the Public Accounts Committee.

I can therefore understand the argument that a growth of BBC income below the growth of our costs could provide a useful discipline. However, an effective search for economy and value for money should not mean so large a cut in real income as to impose, as it were by the back door, a major cut in BBC programmes. If that is intended, and I trust it is not, then it should be done openly as a conscious act of policy, for the problem is not only the level of wages. For example, home and foreign affairs subsistence costs have risen by 700 per cent. in the last four years, and satellite expenditure has increased by 900 per cent.

Then, owners of rights are alive to all commercial possibilities. Extortion is the only word appropriate to, for example, some of the demands of the Mexicans for facilities for the recent World Cup coverage. Despite these, and many other examples I could give, I repeat that I want to see a vigorous search for constantly improving value for money in BBC expenditure. But we cannot allow ourselves to get into a position where, metaphorically, the only symphony works we can afford are those for one violinist. I was therefore pleased to note that this central problem was clearly recognised by Mr. Sam Brittan, one of the members of the Peacock Committee. He proposed the use of a well known Treasury measure called the "relative price effect", to take account of the peculiar inflationary factors operating within the broadcasting industry. While appreciating, of course, that Chief Secretaries to the Treasury do not concede every penny of even the most carefully calculated relative price effect, it would nevertheless be a more sensible, and workable, solution than a simple RPI indexation.

There is one small but important point on the licence fee. As essential as the level of the licence fee itself is the promotion of payment by instalments, credit card or direct debit. I hope that these alternative methods and others can be made more generally available as quickly as possible.

I now turn briefly to the Peacock recommendation on independent production companies. It is certainly incumbent, I believe, on the large broadcasting organisations to ensure that small independent production companies should be given an opportunity to develop their programme ideas, and have their productions placed in the schedules. However, every programme idea and every finished production has to be judged on its merits. The need to preserve quality is paramount. Therefore, I do not subscribe to the notion of mandatory quotas in the television schedules such as the Peacock Committee recommend.

In any case, I think the committee sets too high a figure when it speaks of independent productions making up 40 per cent. of the national television schedules within a decade. But we are, in the BBC, actively exploring the possibilities of co-production with independent producers, in addition to planning more programme purchases from the independents. It is, as the Home Secretary said in another place, indeed desirable to encourage the independent sector for reasons of diversity, freshness and efficiency. I hope it will however be recognised that there really is no solid evidence that this would prove less costly to the BBC.

Turning to radio, I would like to say a word or two about the recommendation by a majority on the committee that Radios 1 and 2 should be privatised. It does not seem to be a recommendation for any practical broadcasting or financial reasons. By how much could the licence fee be reduced if Radios 1 and 2 were no longer run by the BBC? How exactly would the committee decide what is to be hived off in connection with those two networks—which staff, which studios, which portion of shared services like reference departments, gramophone libraries and tape archives?

The fact is that on both these channels, in addition to popular music, there is a growing amount of news and documentary material presented in a popular manner but containing a good deal of serious and well-researched content. It depends upon the same resources—the same newsrooms, the same libraries, the same correspondents—as material on the ostensibly more serious networks.

Let me give a single, topical, example. Radio 1 is currently in the forefront of the campaign to warn people of the dangers of AIDS. That means, in effect, providing people—young people—with information. The millions of young listeners to Radio 1 are, unfortunately, the social group most at risk from this dreadful disease. They are the ones in urgent need of counselling and advice.

I would suggest that, because of the growth of serious documentaries on this network in recent years—documentaries which have found great favour with the audience, documentaries which are often followed up with 'phone-in discussions—the AIDS campaign is likely to have an even more significant impact on the Radio 1 audience.

Like the BBC's local radio stations, Radio 1 and Radio 2 are an intrinsic part of the BBC's whole linked structure of radio services. I cannot see how, if they were detached, they would be able to maintain their present character and their present mix of programmes. Just as there is a two-way flow of material and resources to give support between the BBC local radio stations and the national networks, so there is a similar exchange between the networks themselves. I hope on reflection the committee might accept that its recommendations on radio are impractical. They would achieve very little. And they might well ruin a great deal that is good in the present system.

With every year that passes the broadcast media play a larger part in the lives of twentieth century citizens. Television and radio are not a substitute for personal experience; they are an extension of it. With a proper sense of responsibility, with awareness of their public service duties, and within a system which provides for their editorial independence, the broadcast media should be an essential part of the democratic progress.

They are part of a system which begins with an elected government accountable to Parliament and extends outwards to provide for those essential freedoms of democracy, freedoms within the law—the freedom to speak; the freedom to think; the freedom to inquire; the freedom to report and inform. The editorial independence of the broadcasting media—an independence which must continue to be exercised with the utmost sense of responsibility and with a strong commitment to the public service—will be as important at the end of the twentieth century as it has been in the past.

Against that background, I conclude by returning to my three basic questions. Will the proposed change increase choice for everyone? Will it maintain the broadcaster's independence? Will it ensure programme quality? The licence fee system is not ideal, but it does all those things. Its presence at the heart of the broadcasting system has brought diversity, independence and quality albeit, inevitably, with some controversial programmes, and occasionally some mistakes. It is incumbent on the advocates of change to prove that any alternative system would bring the same benefits as the licence fee to the audiences of this country, and to the citizens of this democracy.

Of course, as I have said, there must and will be change but let it be change for the better: more programme choice; more employment in broadcasting; more diversity. Let it be change which produces even better quality and variety, as well as excellent and well balanced programmes that will help rather than diminish the provision of standards that most of us desperately want to see in a civilised, democratic society.

5.27 p.m.

Lord Buxton of Alsa

My Lords, may I thank the noble Lord, Lord Annan, for kindly giving us this opportunity to debate the Peacock Report. I should also like to congratulate the right reverend Prelate the Bishop of Blackburn on his marvellous contribution this afternoon. I have to declare interests which are one reason why I have never spoken on broadcasting in your Lordships' House except to fight on many occasions for the maintenance of the BBC external services. I hope that I was helpful in ensuring the survival of the World Service of the BBC, which is universally popular.

My interests are as chairman of Anglia Television, in which I have been a shareholder since 1958 and as recent chairman of ITN. Last week, my company, Anglia, was one of the five partners in the successful application for the DBS franchise. I mention that only because I do not want the noble Lord, Lord Annan, to think that I am being reactionary in my remarks or that I wish to keep everything as it is. It proves, I hope, that I am as anxious as the noble Lord, or Peacock, to look well into the future.

I want to make some remarks as a grass-roots operator in the field. There has been so much eloquence around the House about the BBC that I really have nothing to add. However, I want to make two points that I believe are important and should be placed on record today. Had Professor Peacock and his colleagues finished their report when they reached the end of their terms of reference and settled the matters that were asked of them concerning the BBC and its finances I would have been the first to leap to my feet and say, "That is brilliant. Well done". But for some reason, they then got enthusiastic and proceeded to deal with many matters not contained within the terms of reference at all.

In order to confirm what I was intending to say, I read the report three times this morning coming up in the train. There is no way that the matters that I am going to mention come within the terms of reference at all. I shall be interested to hear later from my noble friend Lord Caithness on the Front Bench as to whether I am right in thinking that a commission's report could possibly be considered invalid if it deals with matters totally outside its terms of reference. I do not know the answer, but I should be very interested to hear it. It just occurred to me to wonder whether, if I was appointed chairman of a commission to decide whether the Norfolk Broads should be drained and we decided no, could we say: "But what about ploughing up Hyde Park?" That is how I see many of the matters that affect ITV.

The first one is the recommendation that Channel 4 should take its own advertising, in other words to go independent. I do not want to be thought to be against Channel 4. In fact I am very pro Channel 4 and have had warm relations with them since the start. Their senior people have been mates, so to speak, for years and years. However, I am deeply concerned about this frivolous—that is the only way I can describe it—rather reckless recommendation in the Peacock Report, without going into any serious detailed calculations or documentation at all. It is simply tossed out as though anybody can become an independent operator any day that they feel like it.

A word of warning that I want to mention to my noble friend Lord Caithness and to the Government is that this must not be undertaken lightly at any stage, either now or in the future, or in the long term future. Advertising revenue, as everybody knows, is cyclical. It goes up and it goes down. The whole point is that you do not know when it is going to go up or go down. We have seen ample evidence of this, and the dangers of interfering and tampering in relation to advertising revenue over the past 20 years. It started with what was known as TAD, the television advertising duty, and then it was turned into the Television Levy.

Every time that the Chancellor and the Government decided it was time to increase the levy (because everybody appeared to be printing money) the revenue immediately went down and there was panic first in the industry and the IBA and then in government circles in the Home Office. Then they decided they had better lighten the load and bring down the levy, and the revenue immediately went up. This happens all the time.

At the present time it could be found—but we do not know for certain—that the costs of Channel 4 might be matched by the revenue which relates to it. But in the way that it is operated, it is not easy or even possible to calculate exactly what the revenue is. It is no more than at best breaking even. The revenue at the resent time is slackening. We all know that it has been through one of those good times, but I want to make it quite clear that I can remember the bad times. Before the noble Lord, Lord Thomson, was Chairman of IBA, I can remember panic meetings when the only thing that Sir Robert Fraser, the director general, thought about was finance and ratings. Things were so bad that everything else was swept away while that very serious situation was considered. We could now be at a peak. For the Peacock Committee to come out with a suggestion on the lines of "why not let it go independent?" is really reckless. I want to leave your Lordships with that thought.

The next matter is the famous one that the noble Lord, Lord Barnett, has raised: the lobby of independent producers. Again, I am in favour of independent producers; but, quite frankly, they are impossible to define and I implore the Government—and the Home Office particularly—to be extremely careful because I believe that they have been swayed and influenced by this famous lobby. If anybody can define for me exactly what an independent producer is, then it would be easier to make up one's mind. The answer is that it can be absolutely anything from a quite substantial programme production company, which does not have a franchise and therefore has to sell its product either to the BBC, to the ITV or to Channel 4, or it could even be somebody at home, an individual with a brilliant idea who writes a wonderful outline for a programme or series and says that he is an independent producer.

If the Government fall into the trap of saying that a quota has to be given to independent producers, then they are really in a swamp and on a whole load of banana skins. I implore them to take note of that.

Finally, I want to mention a point which is of fundamental importance and has already been referred to, particularly by the noble Lord, Lord Willis. It is the question of tendering for franchises. He described the reaction abroad to the Peacock Report as being expressions of amazement. The whole subject of tendering for franchises has completely stunned our admirers, not only in this country but throughout the world. When I say our admirers, I mean admirers of the British Broadcasting Corporation's services which, as everybody knows, because of our system and the way Parliament brought it into being, and because of the history and the background of the BBC, are without question the best in the world. People simply cannot believe that we can go to the other end of the spectrum, the absolute bottom of values, and put out franchises to competitive tender.

The Peacock Report also says that a full public and detailed statement of its reasons has to be given by the IBA. I just cannot see that as being anything except a moonshine world. The first thing is that it would be known what fantastic bids were perhaps being made to the IBA and who is going to be the first people that are interested in the figures, and watching them like hawks. It is going to be the Treasury. They are then going to ask the IBA: "Tell me what your reasons are for picking No. 3 or 5? They may say: "That is not good enough for us. Those reasons of yours, A, B, C and D, simply do not outweigh the benefits of getting an extra £20 million from Mr. Mogul" or whoever he is. So it is fraught with dangers, and in my view it would lead ultimately to much closer involvement, much closer association of the Government in broadcasting. It is not beyond the bounds of one's imagination to see an insidious creeping control gradually coming through the award of those franchises, and how they are subsequently conducted.

I just want to make one final point in reply to the noble Lord, Lord Annan. He mentioned figures. They can be extremely misleading if seen starkly. I think the noble Lord said that ITV had revenue of £1,200 million and the BBC £750 million. The very important aspect, as I am sure the noble Lord is aware, is that one must be comparing like with like. It is inconceivable to imagine two more different things if there is going to be comparison between the two figures. On the one hand, in ITV there are 15 regional stations with 15 regional services provided on a regional basis for the inhabitants of this country. It might be argued that the regional system is lavish and quite ridiculous. However, it has been extremely popular for 30 years and I do not think that any of the electorate would agree with that argument. I say that the cost figures between the BBC and ITV cannot be compared. I am not making any comment about the costs of the BBC. I am saying that if the costs of the ITV, with all its paraphernalia of regional services throughout the country, are less than twice those of the BBC, it probably is doing rather well.

5.39 p.m.

Lord Ardwick

My Lords, first of all, I must congratulate the right reverend Prelate the Bishop of Blackburn upon his maiden speech, which I thought was an excellent speech, partly perhaps because I agreed with almost everything that he said. I must also thank the noble Lord, Lord Annan, for initiating this debate. I agree with most of what he said. I agree with almost everything that has been said in the debate.

I do not remember a debate on broadcasting where there has been as much commonsense talked as there has been in this debate today. I hope I can add to it. I differ a little from the noble Lord, Lord Annan. He sees the problem; but the problem that we face today is that there really is no problem. The problem of differential revenue is not a serious one or one that cannot be dealt with. Here we have in this country two great broadcasting systems which enjoy universal esteem and give general pleasure. They can continue to do so provided there is no meddlesome intereference. Of course they have their critics. Some say they show too much sex and violence. That may be true. We live in an age which has made sagas of crime and violence a mainstay of its entertainment, but it is not the first time in history that that has occurred and it is not eternal.

As for the other ingredient, I think we are going through a phase of being absolutely barmy about sex. The phase began about a quarter of a century ago. As the poet Larkin wrote: Sexual intercourse began In nineteen sixty-three (Which was rather late for me)— Between the end of the Chatterley ban And the Beatles' first LP". Indeed, it was rather late for most of us in this Chamber. We were brought up in a less permissive and a less embarrassingly explicit age. Television reflects these distortions in our society and perhaps intensifies them.

But there is no great public outcry among viewers and there is an easy acceptance, I think, among the younger ones. I do not think that anybody could stage the kind of mass demonstration against sex, crime and/or violence on television that CND can regularly command against nuclear weapons. There are also critics of our television systems who make politics their hobby or their profession. They seem mildly paranoid, convinced that their opponents are in charge of the broadcasting institutions and wilfully distorting the truth. But nobody, I hope, is demanding radical changes in those institutions in the belief that they could be made to emit purer, gentler and fairer programmes. The experience of America and of Italy should cure one of that belief.

Of course people would like cheaper television, but nobody is saying that we get poor value for our licence money. However, it is on the licence that the trouble began. The BBC, like other labour intensive institutions, was caught by inflation and for once its political antennae were insensitive. It asked for a 41 per cent. rise. It asked for this increase from a Government who believed that parsimony was the supreme political virtue. It made its demand at a time when the Government party was at the height of a cultural revolution, an inverted Maoism inspired by the free enterprise ideology of the last century. The BBC must surely also have known that the advertising agencies were longing to buy time on the BBC because the demand on independent television time was greater than it could supply and it was therefore rather expensive.

At the heart of this neo-Tory applied philosophy was the idea that as modern technology made it possible to proliferate the number of wavelengths, there was no need any longer to regulate the quality of radio and television that came into our homes to be received by our families. Broadcasting, they argued, could now be as free as print. But print won its freedom to make information and opinions universally available. It did not win its freedom to make a profit for anybody. Yet it is profit which surely is the main thrust of those who seek entry into broadcasting via the new technologies of cable and satellite.

If one argues that nevertheless a free-for-all in broadcasting will produce the diversity of opinions found in print, look at the tabloid newspapers today which dominate the national scene. As for the range of information, look at the free sheets which are pushed mercilessly through out letterboxes. Yet it was this kind of thinking—if "thinking" is the right word—which lay behind the decision to set up the Peacock Committee.

Let me put the argument against change in this way. I see the BBC as a great club. Because almost every household in the country pays a modest subscription to that club, it is able to provide an amazing range of radio and television which could never be approached by a club in the free enterprise system. The BBC package of entertainment, information and education is possible only because it is supported by almost the entire nation. A licence fee of more than £50 seems a lot to those of us whose values were fixed before the great inflation. Compare it, however, with the average wage which has gone ahead of inflation. What is it? Divide it by 20 to find its pre-war equivalent. What answer do we get? The £50 of today has less purchasing value than £2–10s. had in 1939.

I have talked so far only about the BBC, but its excellence has been emulated by ITV, thanks to vigilance and diplomatic pressures and the encouragement of the authority. Thank heaven that the Peacock Committee saw most of the realities and, above all, that the excellence of our great broadcasting institutions would be gravely threatened if they were competing for advertising revenue and the mass audiences that advertisers demand. Yet the Government do not seem to be wholly convinced. They still want to remove the freedom and the nationwide responsibility of the BBC; or at least there seem to be signs of that kind of opinion existing in the Government today. I think they are still playing with the idea of advertising, of pay television and of selling bits off.

One of the less wise ideas of the Peacock Committee was that the programme companies should put in competitive tenders for franchises. But what is to be the criterion of choice since the quality of the programmes a company provides bears no fixed relationship to the size of its profits? This surely is a proposal which the Government would do well to forget.

Those brave spirits of free enterprise who are still hoping to make profits out of broadcasting or "narrowcasting" are still looking for ways of wrecking the present system, because only by so doing can they hope to succeed to any high degree. Certainly the fantastic value for money that we get as subscribers to the BBC, which is what we are by virtue of our licence fee, makes a monthly subscription to anything else look very poor value for money. Of course there may be an affluent audience willing to pay a good fee for a first-run film as they now do for the hire of a video, but it would be an audience of limited size and difficult technical problems of methods of payment have to be solved.

As for the BBC itself being enticed into pay television either on a large scale or as a supplement to its normal programmes, I hope it will resist the pressure. The BBC is not there to provide first-class carriages for a moneyed minority. It is there to serve the nation, the whole nation—each for all and all for each. I believe that the licence system must stay. I believe that it is acceptable to almost everybody. I believe that its increases can be confined to the rate of inflation and that a fair method of indexing can be found—fair to the viewer as well as to the BBC.

In an age of technological innovation we need stability at the centre to preserve the good we now enjoy. If the commercial interests now trying to get into the field in a few years' time are offering better packages than they now provide in other countries, we can then review the situation. But at the moment we must hold hard to what we have and we must thank heaven for it, as does every English-speaking visitor to this island.

5.50 p.m.

Lord Thomson of Monifieth

My Lords, like other noble Lords who have spoken in this debate, I join in the warm congratulations to the noble Lord, Lord Annan, for initiating this important debate and in the congratulations to the right reverend Prelate the Bishop of Blackburn for a splendid and persuasive maiden speech. Like my noble friend Lord Barnett, to whose speech I listened with great pleasure, I have to begin with a declaration of interest as chairman of the Independent Broadcasting Authority. In fact, this is the first time I have addressed your Lordships' House since I became chairman. There is a proper inhibition, I believe, on a chairman of a broadcasting authority who has the good fortune to a Member of this House from joining in its debates when he may subsequently have to adjudicate on the way the issues in these debates are covered by the broadcasters for whom he is responsible.

This debate on the Peacock Report, I believe, provides an exception to this general tradition. The Government's view has not yet been formed. They have invited Parliament and indeed all the interested parties in the country to join in a great debate on what is no less than the whole future of British broadcasting. I hope therefore that it may be considered helpful to your Lordships if you hear directly instead of indirectly the views that I have formed during my period of responsibility as chairman of the IBA. The committee under Professor Peacock has produced what I regard as an unusual, unique and important report. It considers the economics and financing of broadcasting generally in a way which has never been undertaken in this country before. As I shall explain, I am critical of a number of the conclusions of the committee but in one respect I am wholly with Professor Peacock and his colleagues. The status quo in broadcasting is not, I think, an option for any of us. This report provides a valuable and very thoughtful basis for the further hard thinking that will be needed about the way broadcasting structures in this country should develop in response to the technological changes which are taking place.

Professor Peacock bases many of his views on what he calls the comfortable duopoly of the BBC and the IBA. From my experience of the relationships between the BBC and independent broadcasting, it is a rather uncomfortable and competitive duopoly, but duopoly it certainly is; and it is salutory for all in that relatively privileged position to be compelled—to use the words of the noble Lord, Lord Annan—to think the unthinkable.

Professor Peacock and his colleagues, on the central issue that they were asked to examine relating to the effects of the BBC taking advertising, came to the conclusion, as good economists, that this was not sensible, at least for a number of years ahead. They then, as the noble Lord, Lord Buxton, has remarked, went well beyond their terms of reference and ranged over the whole face of broadcasting and well into the next century. Unlike the noble Lord, Lord Buxton, I make no complaint about that. I think it is one of the glories of the British tradition of setting up Royal Commissions and committees of inquiry that they normally go over their terms of reference and sometimes produce quite interesting results. The difficulty, I think, is that some of the committee's recommendations which particularly affect the commercially-financed half of public service broadcasting in this country came rather late in their deliberations, sometimes without much research. At least one important proposal, that relating to the floating of Channel 4, seems to have been a last-minute, bright idea after dinner in Rome or some such place.

Let me therefore comment briefly on the aspects of the Peacock Report which affect independent broadcasting particularly. First, there is the majority recommendation that broadcasting franchises should normally be offered to the highest bidder. This "auctioning" of contracts would shift the emphasis from the contractor's ability (in the judgment of the IBA) to provide that wide range of attractive and worthwhile programmes, including programmes which cannot pay for themselves. They would be replaced by the maximisation of profit at the expense of good programming. Then, again, the Peacock suggestion that Channel 4 should be floated off into financial autonomy has been the subject of two reports on the proposal commissioned by the board of Channel 4. The board is at present considering them and I have every expectation that the noble Lord, Lord Blake, when he speaks in this debate will be able to say something about them.

The IBA, for its part, has done its own analysis of these reports. Its conclusion is that to have to advertise Channel 4 as a separate contract—because that, presumably, is what is involved in making financially autonomous a national commercial television channel—would run the serious risk that in order to pay its way it would have to dilute its present remit from Parliament to commission programmes of a distinctive character. In my judgment the issue goes much deeper than the purely financial arguments about whether Channel 4 would enjoy more of less revenue if it sold its own advertising time. The two reports that I have mentioned tend to be marginal in terms of their judgment on that. One is rather optimistic and the other rather more pessimistic.

But the present formula for Channel 4 is an ingenious compromise which the present Government introduced in their 1980 Broadcasting Act, of which the noble Viscount, Lord Whitelaw, was the principal political architect. Channel 4 is only four years old. It works very well. It has become widely admired both in this country and abroad. It seems a nonsense to consider destroying that structure and putting its programme achievement at risk on such a slim basis as this almost casual suggestion from the Peacock Committee.

The noble Lord, Lord Annan, made comments about the problem of what he regarded as the excessively high costs associated with the independent television system. The noble Lord, Lord Buxton, made some mention of that. I myself think there is a historic problem of high costs in the ITV system but that in seeking to reduce those costs—and I think that is a matter which should get a great deal of attention—one has to be very careful.

The ITV system, like the BBC broadcasting system, is a high-quality system as well as being a system of considerable cost. Part of the costs of the ITV system (as the noble Lord, Lord Buxton, has said) lies in the extremely popular, high-quality regional programming. And one could reduce costs very drastically by greatly reducing the regional dimension of independent television. But I think that that would be much against the public interest. Therefore, one has to be careful in dealing with this problem not to look for radical surgical solutions to what is believed to be high cost in independent television that have the practical result of destroying the high quality that is also part of independent television.

I think that one of the ways a healthy downward pressure has been exercised over recent years through Channel 4 on programme costs within independent television has been through the growth of the independent sector. One of the major positive achievements, I think, of the special structure of Channel 4 has been to provide a new role for the first time for independent producers within British broadcasting. The independent producers have in many cases brought a freshness of creative approach to their programme-making and, above all, as I have said, they have brought a healthy downward pressure on ITV production costs.

The IBA is proud of the part it has played in this development, a development for which the board and those working for Channel 4 deserve the greater part of the credit. It was praised by Professor Peacock and it has led the Government to talk in terms of expanding the share for independent producers in both independent television and the BBC to something like 25 per cent. over a period perhaps of four years. The IBA is ready to explore practical ways in which independent producers can build up access to ITV. But I join with the noble Lord, Lord Buxton, is issuing a word of caution about the way in which this is approached and indeed probably the timescale on which it is approached.

I should like to deal with just one of the many problems which I do not think has begun to be thought through. One of the distinctive features of independent television, as I have said, is the role of our regional contractors. In a very real sense some of the smaller regional contractors are independent provincial programme producers. They are certainly fiercely independent in their search for advertising revenue in competition with the major network companies, and they also have their own independent struggle to gain access for their programmes to the network run by the ITV's big five companies.

On the other hand, one must recognise that the independent producers we are talking about, admirable as their role has been, are predominantly a London-based industry. Perhaps I might be excused for feeling that it would be wholly against the national interest to rush into plans that to contractors meant the loss of jobs in Border Television in Carlisle or in Ulster Television in Belfast for the sake of creating new jobs for independents in the relatively prosperous London area. This aspect, I think, requires further careful consideration by government before they finalise their plans in consultation with the broadcasting organisations.

I turn now to the role of new technology in broadcasting. One of the main arguments behind Professor Peacock's recommendations for radical change in broadcasting is the need to come to terms with the new telecommunications technology. Both the significance of the new technology and the speed with which it will overtake us can be exaggerated. In my experience, politicians are a little too easily hypnotised by a vision of a technological utopia. I was a member of a government that gave a great deal of importance to what was, I think, called a "white hot technological revolution". And what a lot of good it did us!

The present Government have seemed to me to fall into exactly the same trap, creating false expectations through a vision of cabling Britain quickly with a fibre optic grid of inter-active information technology. The Government still seem tempted to draw over-hasty conclusions from Professor Peacock's—or should I say Mr. Peter Jay's—own heady vision of a twenty-first century electronic bookstall with hundreds of titles struggling to reach our television screens at the touch of a button. I do not know what it will be like in the twenty-first century and I am unlikely to see it, but I rather suspect it will be different from any of the visions that anybody has at the moment.

The IBA can hardly be accused of being Luddite about new technological developments. Our engineers are the inventors of the new high-definition satellite technology of the nineties. The IBA, at the request of the Government, last week appointed Britain's first direct broadcasting by satellite contractor—a £500 million high technology venture which will mix subscription and new competitive advertising. Despite the risks, we have every reason to believe that it can be successful and that it can enhance the range of choice for viewers without destroying the balanced mix of public service programming we have built up in this country.

In general, in facing all these potential changes in the landscape of broadcasting, it is important to remember that technology is a good servant but a bad master. The tide of technology ought to be able to be harnessed without sweeping away what is best in the present public service broadcasting system. In broadcasting, neither technology nor, for that matter, the marketplace, are everything. It is creativity that counts. Technology without the creative flair of the programme-maker to fill the new channels would be sterile. In the 1990s and beyond, the viewer can look forward to a greatly increased range of channels. But whether that results in a richer range of choice will depend on the wisdom with which the structures of the new broadcasting are shaped by Parliament.

If, as a majority of the Peacock Committee propose, ITV is handed over to a marketplace auction of contracts; if Channel 4 is floated off and, presumably, similarly put up to the highest bidder; and if the BBC gradually becomes available only to those who volunteer or who are rich enough to subscribe to it, we must seriously ask ourselves whether the foundations on which one of Britain's greatest national and international assets are built could be irreparably damaged by that process.

Britain is the only country in the world to have a completely commercially funded television system that is also a public service broadcasting system of high quality. It is a unique British achievement which we too easily take for granted. The secret of its success, as other noble Lords have said, lies in the formula, established by Parliament in 1954, that ITV and the BBC should compete vigorously in the programme field but that they should not compete for the same source of revenue since that would inexorably drive down programme standards however hard the members of the IBA or the governors of the BBC tried to stop it.

So far as the IBA is concerned, we will continue to defend the principle of collective public funding of the BBC and separate commercial funding of independent broadcasting. Alongside all the new technological developments, the satellite and cable services, it remains perfectly possible, with wise policy-making by Parliament and government, for British broadcasting to remain a balanced mix of entertainment, information and education, with a conscious striving for balance and impartiality and a conscientious shaping of standards. These, my Lords, are values worth striving to conserve.

6.6 p.m.

Lord Blake

My Lords, I should like to join with many other noble Lords in expressing appreciation of the maiden speech by the right reverend Prelate the Bishop of Blackburn. I should also like to join in thanking the noble Lord, Lord Annan, for giving us the opportunity to debate this subject.

I shall speak quite briefly and confine myself to two aspects only. I ought, as so many noble Lords have already done, to declare an interest. I am, and will remain so until 31st December this year, a director of Channel 4. My term of office will then come to an end. I should also say that I am in no sense speaking on behalf of Channel 4 this evening. On the contrary, what I propose to say is certainly not the view of the majority of the board although it is, I think, a view shared by the chairman. Still less is it the view of the IBA of which we are of course the humble servant and wholly controlled subsidiary. However, we are allowed to speak our own minds as I think the noble Lord, Lord Thomson, would agree.

The first matter I wish to raise—one which has already been mentioned by noble Lords—is Recommendation 14 of the Peacock Report, that Channel 4 be given the option, although not obliged, to sell its own advertising time instead of being funded by a subscription from the ITV companies. That is on page 144 of the report. The board has yet to take a decision on its attitude to this. Of course, we cannot control what happens. It would no doubt require a new Act of Parliament or an amendment to the present Act even to make it possible for the channel to have an option, let alone actually to do it. As I say, the board has yet to take a decision but my guess is that it will be against being given such an option and will be even more strongly opposed to any change in the Broadcasting Act that might oblige Channel 4 to sell its own advertising time. I must say that I disagree with that view, if it does prove to be the channel's view.

As the noble Lord, Lord Thomsom, mentioned, there has been a report on the financial aspect by Professor Budd of the London Business School. That was published on 3rd December, together with a commentary by Coopers and Lybrand, which argued that some of the assumptions and projections of Professor Budd might be over-optimistic. These documents have been leaked to the press in a most tendentious and misleading manner. The impression has been given in more than one serious newspaper that their combined advice was definitely against the viability of Channel 4 as an independent organisation living on its own advertising revenue.

I was very glad to hear the noble Lord, Lord Thomson, put the matter in a much better perspective. It is not at all as clear cut an issue as has been reported. It depends on what assumptions are made. But it is by no means impossible for the channel to live on its own. Professor Budd considered that on certain assumptions Channel 4 could be viable and might actually do financially better than at present. Coopers and Lybrand pointed to some downside factors which could occur. In fact, if some of those downside factors occurred the whole of the ITV network would be in dead trouble, not merely an independent Channel 4. So the two reports read together can by no means be regarded as damning the possibility of Channel 4 opting to sell its own advertising. I think it could be done.

It may be asked: even if it could be done, should it be done? The present system works well, so why change? It is certainly true that Channel 4 could never have got off the ground with its particular remit and terms of reference unless there had been a subscription system of this kind from the revenue of the independent television companies, and if indeed their franchises had not been granted on that basis. It could not have started at all if it had depended on selling its own advertising. But times change. What was essential to get a new project going is not necessarily essential to keep it going.

The case for considering giving Channel 4 the option to go it alone is the case for competition and for some modest challenge to what the Peacock Report describes as the cosy programme duopoly of the BBC and the ITV and of course the monopoly of selling advertising time enjoyed by the ITV companies. If Channel 4 sold its own time separately, this would contribute something towards economy and cost consciousness—perhaps not a great deal, but something. It would be in the right direction.

It is absurd to pretend—and the noble Lord, Lord Annan, mentioned this matter, as did the noble Lord, Lord Thomson—that the television industry's duopoly has been very conscious of cost in the past. There has been a high cost tradition, and this was certainly true of the BBC as well. The BBC may be obliged to change now that it is proposed to link the licence to the retail price index—this remains to be seen—and not to some specially pleaded BBC index of its own, which I personally would be strongly against in spite of what some noble Lords have said.

The ITV companies are in a different situation. I cannot believe that after the next election any government, of whatever political complexion, will allow the widening gap between the finances of the BBC and ITV to continue. I do not wish to condemn what has happened in the past, because if people are given the opportunity to get money for old rope they will, naturally. But the overmanning and extravagance of both organisations is substantial. There is no doubt at all about that.

Like the noble Lord, Lord Annan, I have been televised for various interviews—probably half-a-dozen times—on this or that subject in my house in Oxford over the past few years. I have been televised by the BBC, by ITV, by a French broadcasting company and by a German broadcasting company, and I can fully confirm exactly what the noble Lord, Lord Annan, said. Invariably, if it was done by an English organisation two vans arrived with eight people to do a job which could perfectly well have been done by one van with three people; and that is precisely what happened in the case of the Germans and the French.

Of course it is a racket, really—there is no question about that—on the part of the television unions. In most cases, incidentally, the job could have been done perfectly well in London at a studio, and I was entirely willing to go to a studio. The dismay with which that suggestion was greeted made me deeply suspicious of what lay behind it.

As I said, the situation as regards the BBC may now change. Economy may be forced upon it. In fact, I hope that it will be. But I cannot imagine that the independent television network will not fairly soon be obliged to give a better financial return to the taxpayer for its monopoly position. If Channel 4 sold its own advertising, this might have a competitive effect—slight but not altogether negligible—on costs and cost awareness. I think that the channel should at least have the option. Whether it chooses to take it is another matter.

This brings me to my second point. There is a bigger change which could be made with advantage. I believe that the whole basis of the levy ought to be altered. I do not know how many of your Lordships have perused the chart on page 43 of Peacock, which shows the discrepancy between annual levy receipts and net advertising revenue from 1972 to 1984. It is by now a tiny proportion compared with what it was in 1972. No doubt this is because it falls on profits, not revenue.

But even with the new rules introduced earlier this year, every pound saved, and so every pound of profit gained, bears a marginal tax rate of 64 per cent., according to Peacock. What inducement does that really provide for economy and cost-effectiveness? So long as the shareholders are not so squeezed that they sell out the answer, I am afraid, is none or at any rate extremely little.

The system is open to a good deal of criticism, and, if I were to make a general criticism of the debate so far this afternoon, I think there has been undue complacency displayed by a great many of your Lordships about the television set-up in Great Britain. One solution towards cost effectiveness suggested by Peacock was competitive tendering for ITV franchises, instead of having them vetted by some kind of committee of the great and the good brooding behind closed doors and operating on unknown principles.

I certainly think it would be much better to have it done by the great and the good, like the noble Lord, Lord Thomson, rather than by the small and the bad. On the other hand, there is no doubt that this method of giving franchises is open to a great deal of ill-feeling and criticism. Open tendering would at least be straightforward and clear and there would, under Peacock's recommendation, be the option of refusing the highest offer for stated reasons if that were deemed desirable.

The other possibility is to make the incidence of the levy fall on revenues, not on profits, made after what may well be inflated expenses have been deducted from revenue. I believe on the whole that the second course would be better than bidding for franchises. But however that may be, I am sure that we cannot and will not go on as we are. I think that the television companies will be short-sighted if they imagine that the comfortable position in which most of them, though by no means all of them, are will not come increasingly under criticism. I hope that the Government will look at those matters very carefully. The sale of advertising time by Channel 4 would be a useful but minor improvement. A change in the way of making the levy on the ITV companies, or the introduction of competitive tendering, would be a major and salutary step in the direction of a highly desirable improvement in efficiency and economy.

6.17 p.m.

Baroness Warnock

My Lords, I should like to join other noble Lords in congratulating the right reverend Prelate the Bishop of Blackburn on his admirable maiden speech, and also in expressing my thanks to the noble Lord, Lord Annan, for initiating this debate and initiating it with a characteristically punchy and thought-provoking speech.

This afternoon we have heard a great deal about public service broadcasting. In fact, I think this phrase has become almost an incantatory phrase that can, I suspect, lead to a very familiar and particular kind of British smugness. I of course am a fully paid-up member of what the noble Lord, Lord Willis, referred to as the academic Mafia, and I should like on another occasion to attempt, in the spirit of this Mafia, a redefinition of the concept of public service broadcasting. However, your Lordships will be happy to know that I shall not do that now.

I think that the notion of public service broadcasting needs updating, and it certainly cannot be presumed any more that public service broadcasting is the monopoly of the BBC. That has not been true for a great many years. Ahead of us there lies a great potentiality for widening the scope of public service broadcasting, widening our idea of what will serve the public, what will stretch their imaginations and widen their horizons, as well as informing and entertaining them.

Understandably enough, most of the Peacock discussion has been about television, but the report was concerned with financing the BBC as a whole and I want to concentrate for a few moments on the question of radio. I believe that radio is a great medium for the future. We often hear it referred to as "steam radio" in a somewhat patronising tone. However, I think radio is a medium for the future and requires fresh thinking. I believe that over 90 per cent. of the people in the United Kingdom listen to radio every week. Most listening is done by oneself. Radio is used as a kind of companion, in speech or in music, and one listens generally while one does something else. One listens at home; one listens while driving around. One can drive up and down the United Kingdom and be aware of the great variety of radio available. I think that strong plans are now needed to conserve the current strength of radio and allow for new elements.

A certain amount of radical thinking has already gone into the development of radio. But that thinking now needs to be given practical effect and scope. We are imminently expecting the Green Paper, which is greatly to be welcomed. I hope that the Green Paper itself will devote some of its time to examining the concept of public service broadcasting. At any rate, I hope that in the debate following the Green Paper this notion will be taken up; it is right to allow time for public discussion.

At the present time there may be difficulties in making practical decisions. I urge that real priority be given to plans for radio, because to be effective plans have to be fairly long term. As your Lordships will know, allocation of wavelengths or frequencies is done on an international basis. The United Kingdom must ensure that it makes economic, modern and varied use of the channels available to it. This could and, I believe, will mean that the BBC, both from the general public standpoint and from the standpoint of its own true interests, concentrates and reduces its radio efforts. I believe that the BBC must, to be plausible and economical, give way here and there on the radio front.

BBC radio is familiar to everyone. I personally have the deepest admiration for the historical role it has played in public service broadcasting, in radio in general, in humour and perhaps in music in particular. However, times have changed and in the years ahead the major developments which will be made in radio should be made outside the BBC. The licence fee, of which we have heard so much, is a television licence fee. The radio licence fee was abolished as long ago as 1971. Yet about 30 per cent. of that licence fee, as we have been told this afternoon, is spent on BBC radio. This cannot make sense.

Great as the achievements of the BBC have been, it now needs to take on less and not more. For example, it is odd and in practice extravagant for BBC radio to put so much into what is called its radio regional services. Can these possibly still justify so much expenditure? In operating expenditure alone, the regional services cost over £30 million a year—at least that was the cost up to March 1986. That is 14 per cent of BBC radio's operating costs. One learns this from the Handbook for 1986. That figure discounts anything that might be spent on capital, which I personally could not elicit from the BBC published accounts.

Looking ahead, with so much radio now possible on a self-financing basis, does it make sense for the BBC still to tie up so many resources in what it somewhat eccentrically calls "the national regional radio services"—that is to say, the services peculiar to Scotland, Wales and Northern Ireland? I do not believe that these things make sense, and I think the BBC should look to something different.

The ideas of the Peacock Committee as regards radio are greatly to be welcomed. The Peacock Committee suggested that all local radio, broadly speaking, should be organised on very much the same lines as those on which Lord Annan's committee reported several years ago. Local radio has been one of the great innovations in broadcasting in recent years, and I think advertisements are a useful and central part of the local service. I believe that it is right for all local radio to be financed independently—that is, through advertisements. It could he administered, as the Peacock Report recommends, by the IBA; it could be brought under a new radio authority of the kind which is now being discussed and which probably will be discussed in the Green Paper. So local radio really should cease to be anything to do with the BBC and become privately financed.

Turning to national radio, I find myself strongly in disagreement with the noble Lord, Lord Butterworth. In essence, the Peacock Report argues—and I think rightly—that at least some national radio should be run on a self-financing basis. For the 1990s, this must be realistic. That approach has two advantages. First, it puts less burden on the licence fee and enables the BBC to concentrate and not to diffuse its energies and resources. Secondly, the introduction of independent national radio would be a benefit in itself. The main reasons for the introduction of independent national radio must be editorial or broadcasting reasons. It could bring extra and fresh choice for the public; it could bring considerable new employment opportunities in professional radio for both men and women. It could also offer alternative diversity; for example, it could offer a new form of radio in the United Kingdom with international news and it could offer exciting opportunities for different kinds of music and for treatment of all kinds of music in an up-to-date and knowledgeable style.

The IBA has put forward some carefully thought out plans for national radio. However, I think it is an important point that this means that national radio should be run in complement with the existing local stations. Aside from editorial considerations, there are strong economic arguments, and the country as a whole needs to decide what it can afford.

The Peacock Committee argued strongly for the view that the licence fee will have to change or be replaced eventually. Therefore, for radio especially it is enormously important that new methods of finance are evolved. We must be realistic. In seeking to reconcile ideas for establishing an independent national radio with the thoughts of the Peacock Committee concerning the BBC entertainment-oriented national networks, I have personally been most interested in the views expressed by advertising interests. These suggest that for radio to attain real credibility as a medium for national rather than just local advertising, the opportunity to reach an audience penetration of about 70 per cent. of the population would be crucial.

Projections based on known listening patterns indicate that at least two national channels, in addition to the existing independent local radio system, would be a realistic way to attain the target of 70 per cent. Therefore, while the initial establishment of a new national radio outlet (INR) remains the first objective, this development should have in mind additionally the conversion of one or more existing channels, that are BBC channels or are at least on frequencies occupied by the BBC, to another self-financing national channel.

A more radical alternative which must be considered (though it may indeed be the unthinkable) would be to allow the BBC to opt out of radio altogether. On a broad view, I cannot think of any really convincing reason or cause for thinking that radio needs public funding of the kind provided by the television licence fee. After all, quality newspapers live by their advertising revenue at least as much as they live by circulation and cover prices. So a well conceived system for financing radio could provide many more styles of radio than we have at present.

For example, the IBA has shown that independent radio can treat classical music in an approachable and perfectly responsible way; so it may be that we have to forget our preconceptions about Radio 3, although I must say that from day one I have been an addicted listener to Radio 3. Nevertheless, we may have to think in terms of change here. Even Radio 4 which is a generally admirable service has no divine right to a monopoly in national radio.

The noble Lord, Lord Annan, and others are well aware of groups prepared to finance radio stations of a style and with a challenge that is quite new. Within a design and framework with flexibility for cross-fertilisation with the local channels these could flourish and serve the public. But a national service must be operated in a way that is complementary to the existing local services. That is to say, national and local radio must come under the same supervising authority to direct, to finance and to see to the financial structures and the programme content in a way that will enhance the local system.

Any advertising financed national channel that operated quite separately from ILR would do great damage to what is already a well running and much loved service. So the two—national and local—have to go together. Any national service needs to come either within the IBA, which might be the simpler solution, or within the view of a new radio authority which would regulate it.

The question of regulation may be a matter of dispute. The Home Secretary recently said: Radio may be a good test bed for pursuing deregulation rather faster than may be immediately possible for television". He also said that there is a great deal of ferment and activity in radio which we wish to encourage. But here I would recommend a certain caution. In the original introduction of independent radio more than 10 years ago regulation was applied, although some would say too heavy-handedly, on the whole with sensitivity and with success. It has been used by the IBA not just as a matter of control but as a stimulus to the companies and as a spur to creating a helpful and entertaining service for the public. Essentially, then, radio for the 1990s will come from giving similar opportunities and flexibility and from the use of talent, but the results for the public depend on good management and on direction. I believe that some elements of regulation will continue to be needed and will be constructive.

In short, radio has a big role for the future. Some changes are needed—and I believe considerable changes are needed in the position of the BBC and therefore in the Broadcasting Act as it now stands. We need to plan imaginatively for the 1990s and to draw on the experience of the 1970s and the 1980s. Independent radio so far has been a major achievement, and I recommend and strongly hope that after Peacock radio will be given as great a priority in our discussions as television and that as soon as the Green Paper comes out it will be seriously and urgently discussed with a view to acting and planning for the 1990s as soon as possible.

6.34 p.m.

Lord Nugent of Guildford

My Lords, I am very glad to have the opportunity to join in this interesting debate. I begin by thanking the noble Lord, Lord Annan, for promoting and opening the debate so interestingly and I should like to thank Professor Peacock for writing this vast and fascinating report. I hope that the noble Baroness will forgive me if I do not follow her far on matters of radio although I should declare an interest as president of a local radio station in my county—County Sound—and as an honorary president. It is very honorary; even as a shareholder I have yet to receive a dividend. I would only make the observation that anything which further weakened the financial viability of local radio stations would see the collapse of a good many. I am sure that the noble Lord, Lord Thomson, will agree with me on that. I believe that the stations provide a valuable service in their localities and that would be a sad day. County Sound is a very efficient little company but it is hard to live in the competitive conditions in which we operate.

I want to talk about television because, after all, it is the greatest influence in people's lives, especially in the lives of schoolchildren. In fact, they watch the television screen more often than they listen to the teacher. It is the major influence in the life of the nation and therefore how it develops in the future is of prime importance. The Government have an obligation to provide the maximum freedom of access and choice of programme, subject only to effective safeguards for the standards of morality and patriotism. This is how the report surveys the scene. Perhaps it has gone somewhat beyond its terms of reference but it gives to me as a layman a most lucid picture of the new techniques as they are developing. I refer to transmission by satellite and cable and possibly even by optic fibre network, as Mr. Jay so lucidly describes, and to the sophisticated techniques of encryption and decryption by which the viewer can be charged for the programme of his or her choice.

This is fascinating and it is sure to happen; in fact it is happening already. What is uncertain is how quickly it will happen and how the costs will work out. Contrary to what the noble Lord said earlier, these things usually tend to happen quickly rather than slowly. The noble Lord, Lord Thomson, mentioned that last week he had given the contract to the British Satellite Broadcasting Company, financed with some £500 million, which is a substantial sum, in order to bring in three new channels from a satellite within the next three or four years. We can see that things are beginning to happen in terms of new programmes arriving. I am sure that gradually over the next 10 years many new channels and programmes will come into this country, some promoted from at home and others from overseas. The report advises the Government to prepare for this; and I think that that is very good advice.

The noble Lord, Lord Willis, who knows so much about this world made an interesting speech earlier on pleading for the status quo. That simply is not on. The world is changing. The logic of the report is that in the light of the technological developments already in hand it is unstoppable. I was interested to hear the noble Lord, Lord Thomson, who speaks with such authority in this field, entirely agree that it is unstoppable. Just how it will turn out and how fast it will be is more difficult to say.

I regretted the fact that in another place the debate centred around the embattled position of the BBC rather than a discussion of these major issues which are of such tremendous importance for the future life of the country. The fact is, and as we all know it, that the BBC tends to be embattled whoever is in government. The noble Lord, Lord Wilson, was present earlier. I remember that when he was Prime Minister there was a certain tension in the air between him and the BBC which took about 12 months to clear.

It is inevitable that these things happen, so let us not get too lost in those arguments. We are talking today about something much bigger. If ever a topic should be dealt with on an all-party consensus, it is this one. I am sure that all those who have listened to the debate today must be glad that noble Lords have spoken with such authority, interest and detachment to try to find what is the best way to move.

The one thing that is sure is that the existing structure of the BBC and the IBA will not be viable. Any attempt of a government to try to restrict access to all these programmes and keep the world as it is now would be a very unpopular move indeed. In fact, when I was thinking about this it crossed my mind how interesting it would be to see what they do in Soviet Russia in trying to stop all these programmes that are floating about in the atmosphere from getting into their country. I am sure there will be many dishes in backyards picking up programmes from all over the world. As far as we are concerned, however, we are going to try to deal with it in a sensible, responsible way, and that is what Peacock tries to help us with.

Let me say immediately that I recognise the major achievement of the BBC and, indeed, the IBA in achieving public service broadcasting, and that is what they have done. We have a splendid range of services, right across the board, and even if I am critical of some aspects I recognise the value of the whole. But when pay TV is feasible—and I think it will be—it is only logical that BBC viewers will have to pay a subscription; and, indeed, ITV viewers, the same as anyone else. I do not think anyone will be willing to take out a licence when all the other programmes they can get come in on a subscription basis. However, I certainly take note of the cogent point made by the noble Lord, Lord Barnett, in, if I may so so, a very authoritative and interesting speech, that we must be careful about the interests of the pensioners and people on small incomes who are so dependent on their television screens. We must be sure that this is going to be within their means. We shall lose universality. That is inevitable; we cannot stop it.

I come, then, to the public service broadcasting council proposed by Peacock. That seems to be a very sensible suggestion which should be generously financed. I say this to my noble friend Lord Caithness, who is sitting on the Front Bench listening carefully, I hope. It will have to be financed very generously by the Government of the day, who will have the job of financing the BBC of the future—and, indeed, the IBA of the future—in respect of public service broadcasting, which I hope will still continue on a large scale. Unless that is done we shall simply not have the quality of programmes that we have had and which we are determined to keep. In passing, perhaps I may say that the version of the news on ITV would certainly qualify, in my opinion, if only as variety on the BBC!

I certainly agree with Peacock that advertising on the BBC as a supplementary income is not suitable and that it would foul up the situation with the financing of independent television. I was interested to hear that the suggestion concerning indexation seemed to be acceptable to the noble Lord, Lord Barnett. It would appear to be a sensible position that we should adopt in the intermediate stage. I confess that I am not clear on how the multiplicity of programmes in the future, pouring in from all over the place, will obtain their money. To a certain extent it will be by pay television and the rest by advertising, but they will all be competing with the existing ITV companies here. I did not hear the noble Lord, Lord Thomson, speak about that problem but it would seem to be a serious one. I suppose that the market will shake out, but there may be some casualties in the process.

My final point concerns the control of quality in this future of multi-choice. Peacock recommends, in Recommendation 18, that all programmes including BBC and ITV should become subject to statute law. At present both are controlled—the IBA by its own law, or the law applying specifically to it, and the corporation by the corporation agreement. However, I would say in passing that it has not been completely successful for either organisation. There has been a downward trend with regard to violence and obscenity in programmes. There is no doubt about that, and it is for a number of reasons, but there is not time to go into that now. However, the Government have gone this distance. In the 1981 Act, cable TV is subject to statutory control. That would seem to me to be the only way it can go because with programmes coming from all over the world it is clearly impossible to have anything but a single statute which will cover the whole range of this medium.

I should like to add this point for the information of my noble friend on the Front Bench. The Obscene Publications Act 1959 has again and again proved to be a failed statute. It is useless to believe that it is adequate to control programmes coming from abroad. It will be essential to have a new, more effective statute to control the situation. It is bad enough to have the offensiveness of some programmes coming from our own sources, but to have them from foreign sources would be intolerable.

Therefore, what this means, in my opinion, is legislation. I see that Peacock says it can be done and I note that my noble friend the former Home Secretary has said that, in his opinion, it can be done. Well, it can, but we all know, because we have discussed it many times, that we are immediately into a conflict between licence and liberty. That is a very difficult field for parliamentary discussion and agreement. It is difficult, as a matter of judgment, to set the law in a way which will protect us from offensive programmes and at the same time not restrict the programme-makers in an unreasonable way.

Therefore, I suggest to my noble friend that the Government should take on board, as a necessity in development for the future, the fact that the law needs to be effectively strengthened in this respect. That will mean obtaining a consensus of all political parties because this is very much an area on which all should agree. It can only be done by the next government, whoever they may be, getting the leaders of all parties together and trying to work out a consensus. This is a subject which cannot be whipped by whoever forms a government. It must be done by consensus, and therefore needs agreement across the board.

Therefore, I commend to my noble friend the thought that, of all the difficult points that have to be decided in preparing for the future, this point is absolutely essential. We must strengthen the statute law. That will be the safeguard for quality in our programmes of the future as we move into this exciting world of freedom of choice over a great range of programmes.

6.47 p.m.

Lord Swann

My Lords, I too thank the noble Lord, Lord Annan, for starting this debate and speaking with his usual panache and perception; though I feel bound to remind him that when his committee was investigating the BBC I do not remember him being so complimentary to myself and the noble Lord, Lord Bonham-Carter.

As an erstwhile academic and scientist, I want to congratulate Professor Peacock. He is an old friend and a former academic colleague. He has undoubtedly produced, though I do not agree with all of it, an interesting report that is highly unusual in two ways. In the first place, it relies strikingly on objective research for the conclusions on its primary task of assessing the feasibility of advertising on BBC television. Secondly, it looks far ahead to the impact of new technologies, new methods and long-range possibilities of financing broadcasting in one form or another. I shall not speak about the long-term future but I think that the Peacock Report deserves (and I do not doubt it will get) a great deal of thought on this score from politicians, broadcasters, economists and others.

I do not want to say much about the report's recommendations because it has all been said before. I have agreed with some noble Lords and disagreed with others. However, there is one point I should like to pick up. I am much puzzled, as was the noble Lord, Lord Barnett, by the majority recommendation—and it is a majority recommendation—that BBC Radios 1 and 2 should be privatised. I cannot see anything much in the report that favours so doing, except: We feel that with advertising on Radios 1 and 2, the whole radio advertising market would be more attractive to advertisers. I wonder whether that recommendation would stem from disappointment somewhere within the committee that the hard evidence having denied it the possibility of introducing free market competition in a big way by advertising on television, it then wanted to do the best it could.

On the ground that imitation is the sincerest form of flattery, I should like to touch on an area which was picked up by the right reverend Prelate the Bishop of Blackburn, and not by anyone else, about something that the report has not talked about. Having been chairman of the BBC for more than seven-and-a-half years I think (and I suspect that the right reverend Prelate was in effect saying this) that the committee has totally failed to grasp what I believe to be the most important issue of all. I mean by that that any old method of financing broadcasting will produce programmes, and may even produce cheap programmes, whereas producing a constant stream—it has to be a constant stream—of the best programmes appropriate to every scale of audience is a very difficult thing indeed. It needs thinking about in dimensions that are way beyond where the money comes from, and how it comes.

I should like to put to your Lordships a few perspectives on that problem that derive from my time at the BBC. I do not wish to go far into things that other noble Lords have said. I do not know whether the noble Lord, Lord Orr-Ewing, is here, but as he epitomised some of the complaints about the BBC I should like to spend a moment (not too seriously) on that, because the BBC is permanently beset with problems and troubles especially where politicians are concerned. After a year or two as chairman, I came to the conclusion that there was no programme that the BBC ever put out that did not upset somebody somewhere.

I think it was the noble Lord, Lord Orr-Ewing, who said that people had told him what arrogant replies they received to their complaints. I used to spend a lot of time trying to make the replies more polite and admitting error where I could. It is a quite difficult thing, because when I arrived as the new chairman I found many people wrote in and said, "You are the new chairman. We never got anything out of your predecessor. We hope you will answer this letter". The letters came attached to the chap's file. I noticed that nearly all of them had a red stripe across them and the letters "PC" written on them, which means "persistent correspondent". Once you have tried more than three dozen times you get a red stripe and you do not get answered, which is perhaps fair enough.

Apologies also caused me trouble. Yes, I think the BBC ought to apologise. I did so publicly in my first six months over a programme called "The Question of Confidence" in which a lot of Members of the other place were being quizzed by an audience. The audience shouted them down and they could not get a word in. They complained bitterly and there was a frightful row in Westminster the next morning. It so happened that the board of governors was having a meeting and we decided to apologise; whereupon all the Members from the other place who had been in the programme said that they were not worried, they had not been complaining; and what was the silly chairman doing not standing up for his staff? To make it slightly worse, the system had failed to tell the staff who were being criticised and so I ended up apologising to my staff. As you will see, that is a suitable item for a script of "Yes Minister".

To return to the question that there is no programme that ever goes out that somebody does not complain about, and to put the Chancellor of the Duchy of Lancaster more into perspective, I invite your Lordships to recall that infinitely gentle middle-class comedy series called "Dad's Army". It was about the Home Guard during the last war. You may be surprised to hear that even that programme generated complaints on the grounds that it was subversive of authority. I was never entirely clear what that meant, but I think it meant that the platoon's ineffable commanding officer, Captain Mainwaring, was being constantly mocked. There were compensations, because "Dad's Army" dubbed in Arabic was a bestseller in the Middle East, which is more than can be said for many of the activities of our Foreign Office.

All I am saying is that programme making is a subtle and rather mysterious art. Programme makers are rum people, as indeed all creative people are. In consequence, it does not work to weigh them down with the kind of controls that one finds in industry, commerce and the Civil Service if you want to get the best out of them. As the BBC and ITV are well aware, if you want good broadcasting you can only get it with a looser rein than in other areas of endeavour. In my experience, few politicians understand that, though I have to pay tribute to every Home Secretary with whom I ever had dealings, because they did understand.

Once at the BBC I realised rather quickly that this looser style of management is exactly how previous chairmen and boards of governors had wisely tried to oversee the organisation. I also found the BBC familiar in that it is curiously like another somewhat anarchic creative organisation that I knew rather well—namely, a university—where exactly the same managerial considerations apply. Surprisingly (and this may cheer up the noble Lord, Lord Orr-Ewing, and suggest that the BBC is not wholly beyond redemption) it also has strands of the armed services in its make-up, if only because putting television programmes on the air requires a lot of people to jump to attention at the right moment; and of course the whole organisation needs a large bureaucracy to keep it working. However, from my experience in a great many walks of life I thought that it was a rather efficient bureaucracy and a surprisingly benign one.

If I may pick up a point made by the noble Lord, Lord Blake, perhaps when he did a television programme in his house eight people went there. When I did it recently only three people came. I advise him to look at the figures collected by the European Broadcasting union, which measures, on the grounds that a studio is the biggest overhead, the number of minutes of production of a finished programme per studio per day. The BBC comes at the top of that league at about 19 minutes per day, which means it puts out an hour-long drama (shall we say?) after three days in a studio. The somewhat less efficient French did 11 minutes a day and the Germans, who one usually supposes are extremely efficient, only did seven minutes per day. The film industry does less than one minute a day.

I am quite clear that it is this mix of styles that I am talking about, with a looser rein of authority than governments like, that has made British broadcasting—I do not mean just the BBC; I equally mean ITV—so much better than broadcasting elsewhere in the world. Therefore I was glad when the noble Lord, Lord Willis, quoted Peacock as being amazed at what foreign people said to him. I should like to quote another piece in addition to what the noble Lord quoted. The report says that the senior officials of overseas broadcasting authorities were, deeply envious of the British duopoly, and advised us to make no recommendations which would result in hastening the break-up of the present financial arrangements. More important, I suggest, Peacock goes on to say: They [the officials] maintained that these arrangements were a necessary condition for the continuing production of the high quality television and radio programmes of the BBC which have earned international respect". I believe those comments are profoundly true, but curiously they do not seem to have influenced the Peacock Committee, which goes on to examine at length rather theoretical objections to what it calls the comfortable British duopoly. I am sad about that because much of the Peacock Report is commendably objective. I do not think the committee ever understood, still less addressed, the crucial problem of getting creative people to give of their best.

Vital as I believe that style of management to be where creative people are involved, and that they should not be too close to the sources of money, there is a price to be paid. Quite simply, it is the occasional programme mistake—one, on average, in a good many hundreds. It upsets one group or another and most often politicians, who are of course the touchiest of the lot. They seem to forget, as a number of noble Lords have pointed out, that all organisations make mistakes. It is just that BBC or ITV mistakes are a great deal more visible than (shall we say?) M15 mistakes.

Politicians are totally obsessional about broadcasting. I do not need to remind your Lordships of all the rows. There have been several of late, just as there always were in my time, the time of the noble Lord, Lord Bonham-Carter, and even in the supposedly halcyon days of Reith, if we care to read Lord Briggs's history of the BBC. I may need to remind your Lordships of how often governments have set up inquiries into broadcasting in general and the BBC in particular, in what sometimes seems—one is always liable to become a little paranoid on these occasions—a spirit of revenge. I am sure that no organisation has ever been investigated so continuously or on such a scale.

I should like to quote a few figures. In a talk I gave in 1978, when I was still chairman, I looked back over the previous 30 years and discovered that there had been no fewer than 20 government reports, great and small, into the BBC as a whole or into some part of it. On average, that was one every one-and-a-half years; and eight of those 20 inquiries were into the external services, which in my opinion, the opinion of many people and that of the noble Lord, Lord Annan, is perhaps the most prestigious and best bit of the whole BBC. Nonetheless, there were eight inquiries into what it did over those 30 years.

Your Lordships may not realise it, but matters have gone on in just the same way. Peacock is hardly out before we have this report. It is an inquiry into the external services by the Comptroller and Auditor-General, which underlines what I say: that far too few people understand what matters in a creative organisation. I should add that the report came out only a week or two ago.

Finally, I want to repeat what I said in 1978, which sums up the matter: Since the BBC for all its faults is widely thought to be the best organisation in the world—not only by the British—all this inquiring could I suppose be laughed off as knockabout political farce. But it is in fact very disturbing to a lot of good and conscienscious people, and disruptive to the whole organisation. I am left with a firm conviction that the number of inquiries is absurd, and the amount of time spent in suspense is intolerable.

7.3 p.m.

Lord Quinton

My Lords, I should like first to pay tribute to the right reverend Prelate the Bishop of Blackburn who, uniting the arts of the pulpit and the studio, has treated us to a most enlightening and gratifying maiden speech. I want also to thank the noble Lord, Lord Annan, for giving us the opportunity to debate the Peacock Report. Although I am not exactly going to declare an interest, I shall do something of a rather analogous character by saying that I have a particular concern with there being a debate on this subject as I am the sole person who is a Member of your Lordships' House and a member of the Peacock Committee.

It was in that spirit that I arranged to speak rather late in the debate. That was not in any spirit of defensiveness but rather from a readiness to explain anything that may not fully have been understood by Members of your Lordships' House. I should have known better. Not only has the Peacock Report been treated with a level of civility astronomically higher than that accorded it on its first appearance before the public by the press; it has also been shown a great deal of understanding.

I was moved by the noble Lord, Lord Barnett. He is here today as the respresentative of the BBC, or spoke as such. One may say that the BBC was the principal target—if we think of the Peacock Report as some kind of shooting gallery—of the Peacock Report. The BBC was the primary object for investigation. It was its future that was primarily being considered. The extraordinary politeness and moderation of the remarks of the noble Lord, Lord Barnett, will gladden the hearts of the other members of the committee when, in due course, they come to hear of them.

As I say, I came here to explain rather than to defend. But, naturally, there is a little defensiveness. The noble Lord, Lord Willis, having taken a rather unfavourable view of the report as a whole, wished instead that there had been a committee on the licence fee. I know that it is true, and I shall come to it in a moment, that the committee went somewhat beyond its terms of reference. But there is a large passage at the beginning of its report about the licence fee. It contains a number of proposals and considers a number of dimensions of the licence fee problem. What makes the issue vexatious to people is not merely its absolute magnitude but the amount of evasion that they believe, on the whole probably correctly, goes on, and, where they know of it, the extraordinarily costly character of the work of securing payment of the fee.

I was a little disappointed when the noble Lord, Lord Aylestone, dismissed one of the committee's proposals to which I am closely attached. It seems to have a perfect virtue in relation to this rather modest topic of how the licence fee should be collected. The proposal is that the licence fee should be included automatically as part of people's electricity bills. Although my technical understanding of television and broadcasting matters generally falls short of that of some of the experts on whom we have drawn, it is my solid belief that an electricity supply is required for the operation of the television set, although not of course of a radio. And nearly everyone who has electricity uses television as well. It would therefore be simple to add to the electricity bill a form of disclaimer, possibly requiring the countersignature of a JP, minister of religion or some such person. It would greatly reduce the problem of detection because detection would only need to be applied to the rather modest number of electricity bill payers who made the disclaimer, "I vow I have no television set".

This leads on to the topic of whether we exceeded our terms of reference. There is no question but that we did. From one point of view, that could be seen as a type of treacle sandwich effect. Once embarked on one end of the problem of considering whether the licence fee could be achieved or gathered differently or whether it could be repalced by some other form of revenue for the BBC, it was inevitable that we should begin to think about the financing of what is slightly laughingly called the commercial sector of broadcasting. It is slightly laughingly called that because it is not particularly competitive in that, by a system of monopoly arrangements, not seen in this country since the reign of James I, the country is divided and handed over to various programme making and presenting companies. They have no direct competition for the advertising revenue on which they depend in an area.

It is hard to envisage such a system coming into being except as a by-product of, or as an epicycle fitted onto, a state monopoly system of the type the BBC was until independent television companies first came into operation. It was adjusted to the requirement of continuing the essential services of the BBC.

We, undoubtedly, did go beyond the terms of reference. Never the less, we addressed, I think with some thoroughness, the issue of the licence fee—its method of collection, including matters of payment by instalment, direct debit, credit card and so forth—and arising out of that, questions of evasion and the detection of evasion. We then rapidly advanced to consider various other possibilities of revenue for the BBC. I may be wrong about this, but the committee assumed that the expenditure of the BBC in the current year was going to be approximately £900 million. Therefore, the remark by the noble Lord, Lord Annan, that its revenue was approximately £750 million sent a thrill of horror through me. I wondered where the intervening amount was coming from. However, there may be a date difference. It could be that £750 million was a past figure, and that £900 million is projected for the immediate future. That constitutes a very large problem.

To require suddenly the provision of anything approaching that sum from the existing market for advertising air time would clearly have a disastrous effect and would bankrupt all the ITV companies. We would be in the position of a community broadcasting world that had undergone the experience of a tidal wave and an earthquake at the same time.

There are then difficulties about the graduated introduction of advertising. I would agree with my colleagues on the committee. It is impossible to investigate the financing of the BBC without investigating the financing of the independent domain in broadcasting. Independent broadcasting—in particular independent television—is a kind of quasi-monopolistic system, or a palaeogopoly dividing up the area both in time and in space between its parts, superimposed on a traditional monopoly, the BBC. All that was the by-product of a particular technical state of affairs, spectrum scarcity, and the fact that there was a very limited number of frequencies on which television could be sent out. This is the central technical thrust of the committee's report. It is now more or less at an end. We have to envisage a state of affairs in which the fundamental technical justification for monopoly is no longer there.

I now move away from being a member of the Peacock Committee and briefly speak on my own behalf. Are there any other good reasons for having a monopoly? The noble Lord, Lord Swann, suggested that it created a warm and agreeable atmosphere. There was one aspect of the monopoly that we took up and perhaps did not emphasise enough, because I notice that not very much has been said about it here today. Not only is there the monopoly in the ordinary sense, or the duopoly between the two great cooperating, collaborating and complementary systems, but there is also, on the BBC side, a total, and on the IBA side, a partial, vertical monopoly. That is to say that the BBC prepares, presents and organises the programmes for transmission. These are three quite distinct functions. In the independent television companies, one has the company that presents the material. It is very largely that company which produces the material in the first instance for presentation. Therefore at least two segments of the three fold vertical monopoly are there.

What good reasons are there for monopoly? I should be inclined to think from first principles that monopoly was not very advantageous for an activity such as broadcasting which has two important and closely linked characteristics. It is a creative and highly varied activity. One therefore wants as many independently operating forms of production as one can have. One wants separate types of operation performed by separate institutions rather than having them linked together in some huge, gigantic structure. I cannot see that very much is gained by that.

The rhythms and styles of these aspects of the broadcasting activity are different from one another. But it does not have to be a matter of argument from first principles here. There are also empirical considerations. One can develop analogies with other forms of cultural provision—to use a peculiarly repellent phrase. An analogy that is frequently used, which crops up in Peter Jay's phrase, electronic publishing, is the analogy with the production of books. We envisaged a state of affairs in the world of broadcasting closely similar to that which prevails in the world of book production. There is HM Stationery Office which brings out publications of public interest and importance which would not naturally be produced with that degree of lavishness or multiplicity if the matter were left to purely commercial criteria. Then there is the vast array of variously funded and directed publishing organisations, some seeking mass markets, and others tied, for example, to universities, producing scholarly literature and not offering profits to shareholders.

The other analogy is the theatre. This is perhaps relevant to the vertical case. We have the National Theatre and the Royal Shakespeare Company. The burden of serving high culture in the theatre is to some extent incumbent on these two organisations. Then there is the whole range of plays by Ayckbourn; productions such as "No sex please, we're British"; and, by an extreme extension, Paul Raymond's Revue Bar which in a statistical sense is a theatrical performance. No-one would wish either of these types of creative activity to be drawn within the ambit of one single institution, almost like an army, with people progressing by promotion up the hierarchy. There is no case for that. I do not see in principle that there is any such case for monopoly in the world of broadcasting.

A good deal of anxiety has been expressed by noble Lords on the topic of regulation. It is very important to bear in mind that there are two utterly different types of regulation. First, there is negative regulation, which is concerned to prevent certain bad things from happening, such as sedition, libel, and obscenity. Then there is positive—or perhaps one should say affirmative—regulation. That endeavours to bring about high quality production. I am not for a moment denying that our regulatory machinery brings about very high quality production. All I would argue is that it is done in a curiously circuitous and roundabout way. The system of the BBC charters, the control by the governors, and the subterranean influence of the fear of not getting an augmentation of the licence fee, is a rather complicated way of ensuring that the BBC discharges a fine, ample public service obligation, as it does.

In the case of the independent television companies, the intrument is of an even more complex and baroque variety. People are encouraged to make very large sums of money, and frequently do so; although, as the noble Lord, Lord Buxton said, not in all seasons if there is a cyclical element in it. However, a great deal of vast monpoly profits are garnered more times than not by independent television companies. In the distance is the prospect of the possible withdrawal of the franchise if they do not include in their product a large amount of high quality material.

That system worked quite well when monopoly was technically necessary. However, monopoly is no longer technically necessary. I cannot see that monopoly is desirable for a creative and varied form of cultural production. Nevertheless, the essential public service task—which we all want to continue to be discharged—can still be accomplished by more direct and straightforward means than the extremely cumbrous and indirect procedures that we have at the moment.

7.9 p.m.

Lord Bonham-Carter

My Lords, I must first declare an interest. Since July I have been chairman of an independent production company, the National Video Corporation, which produces television and videogrammes of opera and ballet. Secondly, I must join with others in thanking the noble Lord, Lord Annan, for giving us an opportunity to debate the Peacock Report. It is a document which deserves the serious consideration which it has received by Members of this House today, and should not be dismissed in the rather cavalier way shown in some quarters on publication. It provides a most interesting agenda for consideration and one from which we can and should benefit.

I should like also to join with others in congratulating the right reverend Prelate the Bishop of Blackburn on his contribution to our debate. It was particularly valuable in that the experience he brought was rather different from that of the rest of us who sat in elevated but remote positions on boards or authorities. He was able to speak to us from the inside and from professional experience, which was extremely useful.

The ground of the Peacock Report has by now been very well covered. I shall be in danger of boring you all to death if I merely repeat or agree with the views which have already been expressed by noble Lords. However, I shall try to skedaddle through that part at a rapid rate and turn to one or two other matters which it seems to me have not so far been handled.

It has been said by several noble Lords that Peacock concerned himself with wider issues than his terms of reference demanded. Today we are concerned not with what the Government expected but with what the Peacock Committee reported. It is quite clear from its terms of reference, and pretty clear from its membership, that it was expected, if not instructed by the Home Secretary, to devise ways and means whereby the BBC could be financed by advertising rather than by the licence fee.

The noble Lord, Lord Annan, said today, as he has said before, that there is nothing very surprising in this. Indeed, it reminds him of the terms of reference of the commission set up by the Labour Party to deal with the public schools. That may well be true, but it merely confirms the point I am making: that these terms of reference were not intended to be impartial and were what I call an instruction.

It is therefore to the eternal credit of Professor Peacock and his colleagues that they unanimously rejected those instructions. Their conclusion gravely disappointed some of the sponsors who had hoped that the BBC was going to go the way of all flesh after the Peacock Report; that public service broadcasting would be flushed down the drains; that the BBC and IBA would go the way of The Times, The Sunday Times, the Sun and the News of the World; and that electronic broadcasting would hand over television and radio to the market and perhaps, they may have thought, to an unswerving support of the Conservative Party.

The Peacock proposals did not offer them that, at any rate in the immediate future. They can be divided into two parts: those dealing with radio and those dealing with television. Perhaps I may deal first with those relating to radio because they are relatively brief. According to Alastair Hetherington, a member of the Peacock Committee, the privatising of Radio 1 and Radio 2, which was the main recommendation, was never thought out, never properly discussed and never supported by two members of the Peacock Committee. Despite what the noble Baroness, Lady Warnock, has said, it seems to me that it is a rather dotty piece of cultural élitism. It is difficult to understand quite why high culture should be advertisement-free and low or popular culture advertisements only.

The television proposals are divided into the long, medium and short term. I very much agree with the noble Lord, Lord Thomson, about the long-term prophecies. The further one looks into the future, it seems to me, the more hypothetical the hypotheses of Professor Peacock become. Indeed, he admits that it is impossible to predict with any accuracy how soon technological developments will be implemented. He is of course right. If the predictions we heard 10 years ago had come to pass, this country would be awash with dishes, the sky would be stuffed with satellites, and cables would be running all over the place. I doubt whether the cable has much future in this country. Its success in America is largely due to the fact that their programmes are so lousy.

Satellite is on our doorstep and we must come to terms with that. It is to be financed by advertising, but before we hand over our programmes entirely to the tender mercies of advertisers, let us see what they have to deliver.

Regarding pay TV, it seems to me that everything the noble Lord, Lord Barnett, said was correct, authoritative and undeniable. It would certainly mean that if the BBC was to attract any audience at all it would have to go massively down market or confine itself to a tiny cultural ghetto.

I agree with the noble Lord, Lord Annan: the idea that the licence fee is enormously unpopular is something which I very much doubt. Most people accept it as a fact of life, rather in the same way as they accept that rates are a fact of life. They do not like them but, on the other hand, they have got on with them for some time and will continue to get on with them for some time in the future. Therefore, I am sceptical about the accuracy, or the immediacy, of the long-term future which I believe Professor Peacock and his colleagues have persuaded themselves is something which is very near, very real and inevitable.

The future is generally quite different from that which is predicted, as all those futurological novels indicate. Brave New World has not yet occurred, nor did 1984 occur in 1984. I am therefore attracted by the proposition made in another place that the solutions to the future of broadcasting are dubious because no one really knows what the problems will be. Therefore—and this is my brilliant idea—the best thing we can do about the future is to resort to that famous bureaucratic platitude and "keep it under continuous review". In the short-term Peacock is much more important because I guess that that is what will happen between now and the end of this century.

The noble Lord, Lord Barnett, has dealt with indexing the licence fee and there is nothing that I can add to the remarks he made. In answer to Lord Annan's question: do we need a BBC and an IBA?, it seems to me that the whole tenor of the debate from both sides of the House has been that, until we know what the future will hold, we should preserve institutions which have offered this country a great deal in the past and in the present and which, according to the Leeds University study commissioned by Peacock, have offered this country a range of choice on any day greater than that in most other countries, including the United States of America.

That is not to say that I am totally uncritical, or ever have been, of the BBC. I should like to try to deal with some of the points raised by the noble Lord, Lord Annan, and others in that connection. He raised, quite rightly, the question of BBC news and current affairs. When I was at the BBC, under the chairmanhsip of the noble Lord, Lord Swann, BBC news and current affairs were a constant ache. After all, the BBC run the biggest news-gathering and news-disseminating operation of any broadcasting organisation in the free world.

I and some of my colleagues were never satisfied primarily with the standard of regular TV news bulletins. We thought, with others, that ITN was sharper and more direct. I must say that the ratings have never confirmed that conclusively; it goes to and fro. We thought that there were too many people who were asked, after a triumph or in the midst of a tragedy: "How do you feel?" There were too many news programmes which were totally insular. The order of the news was too much angled by the availability of pictures and by pandering to a Daily Mail public. To get proper news one had to turn to Radio 4 or the World Service.

We made various attempts to improve things. We appointed a director of news and current affairs who should have the sole supervision of all news output from the BBC. This was against the advice of our professional colleagues and indicates that, in point of fact, boards of governors can, if they wish, get their way. The fact that it failed did not make it any easier for other boards of governors subsequently to get their way, but you can always be wrong and you must take the consequences of being wrong. We decided that it had not worked and introduced a new system, and I must say that I cannot see that that has improved things very notably except that we launched "Newsnight", and "Newsnight" in my view is the best quality news programme on television in this country and one that I think the ITN cannot rival.

On current affairs we had similar reservations, but the cause is more complex. It is due in my view to two factors. First, the fashion for investigative journalism launched by Harold Evans in the Sunday Times and made famous by the Thalidomide case, led journalists to suppose that investigative journalism was the peak of their profession. It has its place of course, but it seems to me that the heart of journalism should be reporting events in so far as they can be discovered, and in analysing and describing why those events happen.

The second factor I have called "the Westminster model". This is because television and radio have imitated the Westminster model. The Westminster model of Parliament is an organisation for reaching decisions; either one thing or the other. The task of journalism is not to reach decisions but to describe how decisions are reached, what those decisions are or what the consequences of those decisions will be. Journalism is really more concerned with the truth than Parliament, which is concerned with decision-making.

Following from this, a further aspect of imitating the Westminster model is that interviewers, if they are interviewing a Minister, appear to feel bound to behave like a Front Bench member of the Opposition, and, if they are interviewing a Front Bench member of the Opposition, feel bound to behave like an imitation Minister. That is not in fact their job. It is not their job, it seems to me, to discover whether a Minister is right or wrong, but what stance he is adopting, why he is adopting it, and the likely consequences of his doing so.

The second major issue was raised not in this place but by the former Home Secretary, the right honourable Leon Brittan, in another place, and concerned the question of the relationship between board of governors and board of management. This is an extremely important and complex relationship which was also raised by the noble Lord, Lord Annan.

My view is that it is crucial to the running of the BBC that people should try to understand this relationship. I think that Leon Brittan was right to raise it, but the proposal that he made would be absolutely disastrous in its consequences if it were carried out. What he suggests is that the two should be amalgamated in some way. The result of that would be that the professionals and the governors, who are responsible for the public interest, would be inextricably muddled together. Nor would the strengthening of the Broadcasting Board of Complaints do anything to remedy affairs.

The board of governors is of course concerned with complaints, but primarily it is concerned with protecting the public interest and overseeing the BBC. It is sometimes suggested that the board of governors is an impotent body drawn from the establishment and without power or influence. That is not the case.

Given a powerful and determined chairman, the board of governors controls the budget and controls the appointment of the top 46 people in the BBC, and those executives neglect its wishes at their peril. Moreover, with the arrival of controversial television, the board of governors has been pushed forward into the centre of the stage because it alone can adjudicate as to whether a programme was or was not in the public interest.

For all these reasons I think that the board of governors' present role, if properly exercised, is quite possible. What is more difficult is the construction of the board of management, because, as a result of the McKinsey Report, each of the wings of the BBC was given its own budget, and as a consequence of this the director-general was left with no air time and no money—and air time and money are the source of power in the BBC. So the person who has lost power as a result of McKinsey is not the board of governors but the director-general, and the consequence of this is a loss of the sense of corporate interest in the operations of the BBC.

Lord Ardwick

My Lords, would the noble Lord say where the director-general stands in relation to the board of management on the one side and to the board of governors on the other? At one time I think that the board of management was responsible to the director-general, who, in turn, was responsible to the board of governors.

Lord Bonham-Carter

My Lords, if the noble Lord looks at this historically he will find that different director-generals took different attitudes to the role of the board of management. Haley saw it as a cabinet; Curran saw it as a body of advisers. This obviously had an effect on its composition, which has changed from time to time, and on its authority. It is a subject of extreme interest and complexity on which we could spend the rest of the evening, but I do not think that we should.

I do not know where I ought to go from here. I have tried to cover some of the points which have been raised and some which have not. There is only one other which I should like to mention because I think no one has mentioned it, and it is relevant if we start thinking of the future Professor Peacock envisages, with everyone producing hundreds of programmes in all directions.

One fact which seems to be neglected is that there is a limit to human talent. It is difficult to produce decent broadcasts on four channels, and, if you are going to have 30 channels, the quality of the stuff pouring out into the ether will pollute it to a degree which will be totally unacceptable. I have, however, tried to respond to the Peacock Report in a reasonably respectful and constructive way, as I hope the noble Lord, Lord Quinton, will agree.

I should like to conclude by saying that a report such as this is a political document and it cannot be interpreted outside the political climate of its time. That is particularly true of Peacock. We really must remember the sequence of events of which it was a part. The appointment of the late Stuart Young—whose death we mourn and whose absence is a severe loss—as chairman of the BBC and Sir William Rees-Mogg as vice-chairman of the BBC was seen to signify an overt politicisation of the board of governors in a fashion which was without precedent.

This was followed in 1985 by the appointment of the Peacock Committee, which was followed in its turn in October 1985 by the "Real Lives" affair, launched publicly by the then Home Secretary. This was then followed in 1986 by the Tebbit manifesto, or whatever you want to call it. Meanwhile throughout 1985 The Times had published five leaders (an unprecedented number) of drumfire advocating advertising on the BBC—in which News International, I may say, must have had some interest. In October 1985 in the wake of the "Real Lives" fiasco I wrote that to regard that event as part of a conspiracy would be paranoid, and that it could perfectly well be seen as one of a chapter of accidents.

However, the chapter of accidents did not stop with "Real Lives". It was continued with the Tebbit campaign. I must confess that it has led me to revise my opinion. I now believe that the sequence of events was part of a plan (vague and not very well planned) to destroy the BBC as we know it; to undermine the standards that the BBC and the IBA have established; to replace that with a system controlled by money with the purpose (and I now paraphrase Peacock) not of delivering programmes to the public but delivering the public to advertisers. It makes me wonder what has happened to the ideas which used to sustain and inspire the Conservative Party—the party which was committed to preserving all that is best and greatest in the traditions of this country, which believed in what worked irrespective of ideology.

The noble Lord, Lord Quinton, might notice that the case for the BBC and the IBA is not whether they are a monopoly or not a monopoly but that, in the old-fashioned Conservative term, they worked, irrespective of ideology, which was above all sceptical of the effectiveness of human action. It was Arthur Balfour who said—and the noble Lord, Lord Blake, will no doubt correct me if I am wrong—"Nothing matters very much—very few things matter at all." What has happened to that charmingly sceptical approach to our public life today? The Prime Minister and most of her colleagues believe that everything matters terribly much and that anything can be changed by human action. I am sure she thinks that, by controlling M1 and M2 or whatever it is that measures the money supply, the British people can be persuaded to adopt what she calls a Victorian morality. In respect of the BBC and IBA, I profoundly disagree with this view. As far as those institutions are concerned, I am an old-fashioned Conservative. The values of excellence for which they stand deserve to be conserved and preserved. Of course they are not perfect and I am sure that they can be better managed. But compared with those who managed the Westland affair and the continuing nonsense in Australia, they are miracles of scientific modern management.

I was going to conclude simply by quoting from the piece which the noble Lord, Lord Willis, quoted, but it is worth repeating: In every country we encountered expressions of amazement, even from NBC and ABC in the United States, that the British should be thinking of changing their system". I picked up my paper the other day and found Tadao Saito, a leading Japanese film critic, said that the BBC probably has the highest standards of any broadcasting company in the world. I wonder what other industry in this country would enjoy those words from the Japanese today.

7.42 p.m.

Baroness Birk

My Lords, I find myself somewhat in the uncomfortable position of not having any interest to declare except that of a viewer and a sometime participant in programmes. Perhaps it is only fair to say that I was connected for many years in one way by marriage some years ago. What this debate has shown, and what the Peacock Committee Report indicated right away when it was published, was that the original scenario, that the Peacock Committee would recommend advertising on the BBC, backfired. Here I am absolutely at one with the noble Lord, Lord Bonham-Carter, because they came up with the wrong answer, and from there I think everything else has flowed. It fell down on the economic side. Otherwise, I think that we would be faced today with the recommendations for advertising to be introduced in the BBC.

The motives behind the campaign were clearly mixed. The advertising agencies were very anxious about it, and wished to destroy the monopoly on TV advertising held by the ITV companies. The president of the Incorporated Society of British Advertisers said quite frankly and plainly: The advertiser's view is quite straightforward. He is sick to death of having to pay more for his television airtime. He is fed up with being taken to the cleaners and will look sympathetically at any and all solutions which would promise even a minor ruffle of competition among the airwaves". The committee then emerged, as has been pointed out by practically every other noble Lord—so I shall go over it very quickly—with a number of specific proposals. I mention them all because they all link up into what I feel is still the motivating force running through these proposals: the privatisation of Channel 4 and Radio 1 and 2; the selling off of the ITV franchises to the highest bidder; and, in particular, the long-term proposal to introduce subscription as a way of funding the BBC, which was another second best after advertising was shown not to be viable.

If we take all those together, they represent the wholesale transformation of British television and radio into a system which would be completely dominated by market forces. We are aware that British broadcasting often makes bad programmes. The BBC is not perfect; and we have heard a lot about that this evening and I do not think more needs to be said. Of course, other countries' broadcasting services make good programmes; but I do not think that is the point with which we are concerned. What we are concerned with is that what has distinguished British broadcasting has been the sheer range, quantity and consistency of good programming over many years which our system has produced when we compare it to other more commercially market-orientated models of broadcasting.

I notice the noble Baroness, Lady Warnock, queried the phrase, "public service broadcasting". I should prefer to talk about British broadcasting, because it is a working of the two together that has made our system so successful. This is no accident. It follows directly from the way in which it has been organised, and in particular the way in which we have ensured two things for British broadcasting. One is that the BBC and ITV companies do not compete for the same revenue, with all the debilitating competitiveness which flows from that and to which the noble Lord, Lord Thomson, referred. Secondly, the programme makers are insulated from the pressures which have so distorted those systems where the hot breath of the market or the state is felt on the neck of the broadcaster. Having political pressures brought is one thing, but being forced in some way to give way to them is absolutely disastrous and is quite contrary to anything in a democratic way of life.

This relative immunity of British broadcasting has enabled programme makers here to think in terms of quality and standards, to produce a wide range for people with different tastes and interests to produce programmes for minorities, cultivate writing talent, and to innovate in drama and comedy. I would say here that range is just as important as choice because there is no point in having choice if you are going to have the same thing on every channel but under a different title. I consider the innovation to be very important because it is the way one is moving along all the time. In short, it is to sustain a vital and healthy broadcasting service which is essential to the wellbeing, the cultural education and the entertainment of any society.

I think we have to ask—as, one after the other, we all have—what the real implications of these proposals will be. I find the proposal for Channel 4 very worrying, as indeed a number of these proposals are. Although the noble Lord, Lord Blake, made out what I would call the economic case for them, I was a bit surprised to hear that from him because it was not what I would call a case of traditional Conservatism which I expect to hear from him.

Lord Blake

My Lords, I am a radical Conservative.

Baroness Birk

My Lords, if this happens, which I very much hope (and if the tenor of this debate has any influence) it will not, the fourth channel will no longer be Channel 4. It will be a fourth channel limping along and trying to keep up and compete with the other ITV companies. As has been pointed out, the companies have been quite open about what they would do. As one managing director of one of the commercial companies said to me, "We would all schedule aggressively against Channel 4 if it was on its own". One does not have to be brilliant to see that this must result in a deterioration in the standards. The auctioning of companies again has been discussed by many noble Lords. What worries me tremendously is how a committee with all the talent of the Peacock Committee, although it appeared to be done rather rapidly, could come up with a suggestion such as that without realising the dangers that could result. I apologise to the House but I must stress, although it has been stressed by many, the problem for the IBA if it does not accept the highest offer, how it would then have to justify itself and how difficult it might be to do so. Again there is a change in the relationship—I am sorry to be looking at the noble Lord, Lord Quinton, all the time while I am saying this because he is a good friend, but he is the only representative of the committee here so I have to address my remarks to him as he also spoke in the debate.

I think subscription is a very insidious way of trying to break down quality and standards, but in a different way. First, the cost will be enormous because, apart from the £6 billion required to cable the country, there will be the other main additional costs. If I remember correctly, Peacock recommends that all new sets should have attached this gadget or whatever else is required so that they can be used for subscription television. Can the Minister tell me who will pay for this if that recommendation is accepted? Will it be added to the price of the television set or will there be some other arrangement? What about people who want a new television set but do not want the subscription services they would receive if this attachment was on the set?

In considering the organisation we have here, many noble Lords and the Peacock Committee referred to the reputation that British television has abroad. I shall refer to a couple of specific points that are not generalisations. The Broadcasting Research Unit, which is funded by the BBC, the IBA, the British Film Institute and the Merkle Foundation from America, undertook a series of studies on how broadcasting works in other countries. I shall cut the report down and give just one extract from the Director of Programmes of Television in New Zealand—New Zealand TV takes advertising. He told the researchers that, if the BBC had been made to take advertising: A weakened BBC would be damaging to television all round the world as the BBC has an extraordinary influence throughout the English speaking world". In the face of continued domination of Canadian television by American programmes the Canadian Federal Minister for Communications in the progressive conservative government set up a task force on broadcasting in 1984. The task force was asked to examine and make recommendations to the Minister on, appropriate public policy objectives for the Canadian broadcasting system in the environment of the 1980s and 1990s addressing specifically the government's cultural and economic priorities". Like the Peacock committee it was enjoined to examine these issues in terms of fiscal restraint and private sector initiatives; unlike Peacock the task force decided that regulation was more important than ever in an age of channel proliferation and called for the establishment of a new public channel to complement the existing broadcaster, the Canadian Broadcasting Corporation (CBC).

During its deliberations the task force asked itself the question: has technology become the ultimate deregulator? Its answer was simple; We are not prepared to agree. To understand the implications of technology is one thing; to surrender to it another. The fact that culture is at stake cannot be overlooked". This makes a very sharp contrast with the findings of the Peacock Committee.

However, there is one perspective in all of this which perhaps has not had the attention it deserves: that is the perspective of public opinion. We have heard from several noble Lords that people do not grumble about the licence as much as they are said to do and do not worry about it or do not necessarily want changes. If one judges this by the results of the opinion polls it would seem that upwards of two-thirds of the British public would agree to the BBC accepting advertisements, if by doing so the licence was reduced or done away with. This finding is hardly surprising, but the tragedy is that it has been taken as a universal truth about the audience.

This was the finding of the Peacock Committee because it has been the finding of a number of opinion polls. If you ask people whether they would like their income tax cut by a half it is unlikely that anyone would disagree; but if you ask them whether they would like their income tax cut by half but that that would mean the collapse of the health service and education, I think very few would consent.

Basically the opinion pollsters ask, as they usually do, very simple questions. This is why I think we sometimes have such extraordinary results in polls which follow one after another. They did not ask whether the public would still want advertising if some unpleasant consequences followed. People were simply asked whether or not they would like to save money.

However, the survey conducted by the Broadcasting Research Unit, the most detailed of its kind, asked the public under what circumstances they would agree to the BBC accepting advertisements. It found that hardly anyone wanted advertising if doing so led to any of the following consequences—this was a survey and not a quick flip opinion poll: an increase in the number of American programmes on BBC and ITV; less choice of programmes on BBC and ITV; less experimentation; the closure of some smaller television stations; the closure of some independent local radio stations and a reduction in the services offered by Channel 4.

The survey asked people about the broadcasting values they have and discovered that most people were strongly committed to a system based upon the ideals of public service broadcasting; although obviously all these things would not happen together. The principle of geographic universality and universality of payment are also firmly supported by the audience for broadcasting in Britain.

If we go ahead with deregulation, which is really the ultimate and what the Peacock Report, well written as it is, is leading to—taking us through the stage of subscription and gradually to deregulation—and we leave the decision to the market, that market will rapidly be dominated not by former public service programming (which will be left as a sort of rump), not by range, innovation, quality, wit and power, but by large private often multinational corporations whose whole concern—understandably because that is what they are in it for—is profit and programmes which would be shallow, narrow and utterly devoid of that spirit and life which as a society we should rightly demand and obtain from our television. We can be proud of the model that has developed which should not be destroyed. It is something that any Government should tamper with with great care and reluctance.

When television plays such a central role in people's lives—on average people watch for four hours a day; when it becomes the most important source of information for so many people; when it is a central experience in the lives of children in this country, one is not dealing with a very small fringe area of entertainment; one is dealing with something that is a very fixed part of our lives, a part that is not going to go away.

The noble Lord, Lord Nugent, said that he hoped that any changes would be brought about by consensus. Of course, if that were possible that would be a very pleasant thought, but these are political matters and, as the noble Lord, Lord Bonham-Carter, has just pointed out, it is a political question as well as a matter of philosophy. I believe that we are really faced not with just tampering around on the surface of the television system and the television organisation in this country but with a very much deeper division between whether we want market forces to operate or whether we want the public service that we have at the moment which works together with commercial television to form the service that we get in this country, but both within the structure of regulations. It is the only way I think that it will work.

When the Peacock Report first came out, it was rather pushed aside and some people said that it would be shelved very quickly. I do not believe for one moment that that is true. I think it is being taken very seriously indeed. That is why it is very important, as I think the noble Lord, Lord Annan—who I think I forgot to congratulate on opening this debate—pointed out, and extremely urgent that this is not just put on one side. The process is going on. There is a broadcasting committee chaired by the Prime Minister. This committee is considering the whole question of the licence and the other matters which have been brought up today.

We have been told that change is needed, but, incidentally, I think that change is taking place all the time but in an evolutionary rather than a revolutionary manner. Things do not remain static. We have had breakfast television. Whether one agrees that some of the changes are good or bad is not relevant. But a change is taking place. There is daytime television on all the different channels; and then there was the advent of cable and now satellite. Here I agree with the noble Lord, Lord Thomson, that we must not let ourselves become bemused by scientists or technologists, but make them work for us and know exactly what it is that is wanted.

The fact of change should not be an excuse for the wholesale abandonment of basic principles. Nor should it be an excuse for not realising what is fundamentally behind the motivation for that change. One can spring clean a room without sending a bulldozer through it. We have to consider the future of television and radio, cable and satellite in this country in their totality. Where we must, we should build new structures and, above all else, we must consider what set of arrangements will best serve the public, what set of institutional organisations will ensure the continuation of activity and range of programming. We must remember that for much of this century since we have had broadcasting, we have been doing it rather well. It is a habit which we should try to take with us, or those who follow us, into the next century.

8.4 p.m.

The Earl of Caithness

My Lords, I should like to thank the noble Lord, Lord Annan, for giving us the opportunity to debate this important report—he called it a bold report and I do not disagree with him—and for his clear expression of his own views on the issues to which it relates. The noble Lord of course speaks with particular authority. The committee which he so successfully chaired from 1974 to 1976 produced a report which is still in many respects the bible of much of current broadcasting policy. The Annan Report is still consulted frequently by Ministers and civil servants when difficult points of policy arise.

However, the fact that 10 years later we are still discussing some of the same issues which the noble Lord's report addressed is a measure of their intractability. It is also due in no small part to the very considerable technical developments which have taken place since the publication of the noble Lord's report and which are bound sooner or later to have their impact upon the existing arrangements for broadcasting in the United Kingdom.

The central argument of Professor Peacock's report is that the present structure of broadcasting, and in particular the present methods of financing broadcasting, although they have served us well in the past, will become increasingly inappropriate in the future. He points out that the present highly-regulated nature of broadcasting owes its existence to two historical facts: the great scarcity of broadcasting spectrum, which has required that this scarce asset should be regulated by public bodies in the public interest; and the fact that the consumers of broadcasting services have been unable to register directly their individual preferences for different programmes, as we take for granted in other forms of publishing whether of books, newspapers or indeed cinema films and video tapes.

Professor Peacock points out that technology is sweeping away these two constraints which have traditionally shaped our broadcasting regimes. The new media of cable and satellite are capable of delivering an almost unlimited number of television channels to people's homes. At the same time, modern systems of encryption, decryption and direct charging will in due course enable the viewer or listener to pay directly for the programme or channel of his choice. These technologies are with us already and the committee predicts that their impact will be felt increasingly in the coming years. It recommends that the opportunities presented by these technologies should be seized in order to create a genuinely competitive broadcasting market based upon the principle of full consumer sovereignty. Here I note the wise words of my noble friend Lord Nugent when he mentioned the need to strengthen the existing statute law. I take that point seriously.

Whether or not we share Professor Peacock's vision of the future, there can be no doubt that profound changes are already under way in the nature of broadcasting—not just in the United Kingdom but in the world at large—in response to the new technologies. The fact that these changes provide an opportunity for widening consumer choice must surely be welcomed. One thing is certain: we cannot stand still—the status quo is not an option—but at the same time this does not mean that we should not seek to preserve the best of our existing broadcasting arrangements.

Your Lordships have made interesting and important points this afternoon. Indeed, that is not surprising considering the very great expertise of those involved. In particular I should like to commend the speech of the right reverend Prelate the Bishop of Blackburn, which I thought was an excellent maiden speech, and the contribution of my noble friend Lord Quinton, the only Member in this House who served on the committee. In view of this great expertise it is with some trepidation that I shall try to respond to as many of the points as I can; but before I do so I should like to remind the House of the words of my right honourable friend the Home Secretary in another place on 20th November when Members of the other place also debated the Peacock Report.

My right honourable friend pointed out that when he had published the report in July he had said that the Government would come to a final review on its recommendations only after they had measured parliamentary and public reaction. Today's debate is a part of that process of measurement and we are grateful to all noble Lords who have contributed today. In the words of my right honourable friend, we see this as an interrogative and exploratory debate and I shall not therefore be attempting to give answers to all the points that have been raised, especially on the central recommendations of the Peacock Report where government policy has not yet been decided.

The noble Baroness, Lady Birk, stressed the phrase "public service". I refer her to paragraph 577, on page 130 of the report. It says: There is much more confusion about public service as an aim. It goes on: For instance, some statements of the BBC Director General Alasdair Milne risk giving the impression that the viewer's or listener's main function is to react to a set of choices determined by the broadcasting institutions.". My Lords, should we be content with that or should we, as my noble friend Lord Nugent of Guildford has said, maximise the choice? Evidence of the pace of change—

Baroness Birk

My Lords, I am not quite sure what point the noble Earl is making. The point I was making when I was saying why I thought television in this country is good was that it is because it is a combination of the public service and the commercial stations as well. I was trying to get away from using the one phrase "public service". It was in answer to something the noble Baroness, Lady Warnock, said; so I do not see how the quotation, pleasant as it sounded, really helped.

The Earl of Caithness

My Lords, I apologise if I misunderstood the noble Baroness, but I thought that as she referred to it on more than one occasion, having completed her reference to the noble Baroness, Lady Warnock, she was content—as indeed the Labour Party seems to be content—with the status quo. It does not want change. However, the public service, as illustrated in the quotation I have just enunciated, is a difficult thing to quantify in its own right, as the BBC Director General has said. Indeed, as my noble friend Lord Nugent said, there is a very good argument for the need for change.

Evidence of the pace of change occurred only last week when the IBA announced on Thursday its decision to award a contract for the provision of a direct broadcasting by satellite service which we expect to start before the end of the decade. This service will initially provide three new television channels which will be available throughout the country, and in due course a further two channels. That will more than double the existing service. It will be available to all viewers in the United Kingdom who are prepared to invest in the relatively inexpensive equipment necessary to receive these services. It is expected that at least one of the DBS channels will be funded by subscriptions from viewers.

The technology for collecting and enforcing payment of subscription already exists. However, Professor Peacock has recommended that in order to pave the way towards a full broadcasting market based upon consumer sovereignty the present licence fee should be abolished in favour of direct funding for the BBC, based upon subscriptions raised from viewers. Moving over the whole of the BBC services to subscription funding raises a number of technical and economic questions and we have therefore commissioned consultants to carry out a study of this subject. That commissioned report is often known as the Jonscher study.

On the question of subscription, the noble Lord, Lord Annan, and the noble Lord, Lord Barnett, in particular asked whether the subscription would affect BBC standards. This is obviously a most important question to which we will pay proper attention in reaching decisions upon subscription. The subscription study at present being undertaken by independent consultants will, among other things, look at the technical and economic questions and at the willingness of individuals to pay on this basis.

The Peacock Committee recognised that certain high-quality programmes of minority interest currently provided by British broadcasting would not necessarily be provided if broadcasting was subject to market forces. The committee therefore recommended that a public service broadcasting council would be required to fund such programmes, on the lines of the Arts Council. In particular, if the BBC were funded on a subscription basis the committee recommended that the council would initially be required to fund Radio 3 and Radio 4, local and regional radio and public service television programmes. These services of course would be available free to everyone. The Government will consider these recommendations in the light of decisions to be reached on subscriptions and we expect the report in the spring. We shall assess it then.

However, even if the results of the study confirm the Peacock view of subscription, it is not a solution which could be imposed quickly and the committee itself saw it as an option for the medium and longer term. In the short term the committee considered whether the licence fee should be displaced by any other means of finance, particularly advertising. Having conducted a careful study of the subject, the committee concluded that advertising on BBC television did not offer an effective alternative to the licence fee. It believed that the competition for advertising between the two broadcasters would lead to a reduction in the range of quality of programmes.

It is interesting to note that although the report of the committee of the noble Lord, Lord Annan, and the report of the Peacock Committee addressed the issue from different directions, on one centrally important point they reached the same conclusion. That point is advertising. The noble Lord, Lord Annan, reached his conclusion on what I might describe as cultural grounds, whereas Professor Peacock reached his view on economic grounds. As Professor Peacock described it: The existing broadcasting system has very effectively mimicked the inherent advantages of a full consumer market and should be allowed to continue to do so until market forces can be introduced in a way which will not be detrimental to the quality of broadcasting". I turn next to the licence fee, which many of your Lordships have mentioned. We shall certainly consider carefully all the points that have been raised during the debate. If it is ultimately decided that the licence fee should continue in the short term, a number of decisions will need to be made about the future arrangements for the licence fee in the light of the recommendations made by the Peacock Committee.

My right honourable friend has already announced that the licence fee will remain at its present level of £58 for the period April 1987 to April 1988. For the future the committee recommended that the fee should be fixed by reference to the retail price index, starting at a notional level of £60 on 1st April 1987. I believe this to be Recommendation 3.

The Government see attractions in a proposal of this kind and we feel that it would benefit the broadcasters also. It would ensure a guaranteed and predictable income and reinforce the independence of the broadcasters from government. There would be a built-in incentive for cost-consciousness and efficiency in order to avoid costs rising faster than prices. Such a system would be fair to the viewer since the income of many of the poorest viewers, and particularly those on supplementary benefit or receiving pensions, is also linked to the retail price index. We have reached no decision on this recommendation but we see much merit in it.

The noble Lords, Lord Barnett and Lord Aylestone, with my noble friend Lord Nugent of Guildford, referred to concessionary licences. Again, we have made no decisions on this matter because it is bound up with decisions on the licence fee generally. We acknowledge that the present concessionary scheme has shortcomings and creates anomolies. It would be difficult to identify ways of improving it without substantially increasing costs and creating new anomalies. That is one of the problems we have to face.

The noble Lord, Lord Aylestone, asked us not to change the role of the Post Office in connection with the collection of the fee, which is mentioned in Recommendation 4, whereas my noble friend Lord Quinton explained his reasons for supporting a different arrangement. While the present arrangements have some limitations and shortcomings, to which the Public Accounts Committee drew attention in its 27th report for the 1984–85 Session, we and the Post Office are conscious of the need to keep the system under review and improve its effectiveness and efficiency. The most careful and thorough consideration will need to be given to any proposals for radical change in the present arrangements.

Quite properly, the committee did not confine its consideration of broadcasting arrangements to the BBC alone but also addressed the ITV system. Its central proposal was that ITV contracts should be put out to competitive tender—a point raised by my noble friend Lord Blake and the noble Lord, Lord Thomson of Monifieth. Since these contracts, under normal circumstances, would begin to be renegotiated within the next few months, the Government decided that options should be kept open for delaying the next contract round for a period of three years in order to allow the question of competitive tendering and other factors affecting the arrangements for contracts to be examined in more detail.

As your Lordships will recall, the House debated the Broadcasting Bill which gave effect to this decision on 4th December, and I am pleased to say that the House granted the Bill a Second Reading on that date. The committee also considered the institutional arrangements within our broadcasting organisations.

Historically, broadcasting in this country has been what management specialists call "vertically integrated". This is to say that all aspects of programme production have been carried out within the same organisation: commissioning, studio production, editing, scheduling and transmission all take place within the same organisational group. Channel 4 and the Welsh Fourth Channel have shown that it is possible to operate broadcasting as a form of publishing, using independent production houses actually to make the programmes while the role of the broadcaster is confined to commissioning, scheduling and transmission.

The Peacock Committee propose that there should be a greater use of independent producers on ITV and BBC services generally in the interests of encouraging efficiency, diversity and novelty. The Government see great force in this suggestion and my right honourable friend the Home Secretary recently met the chairmen of the BBC and the IBA to discuss with them how this recommendation could be taken forward with the aim of seeing independent producers providing something like one-quarter of relevant programming within a period of about four years. We shall be having further discussions with the broadcasters on the detailed arrangements for reaching this objective. Of course, we shall bear in mind the warnings issued by my noble friend Lord Buxton of Alsa and by the noble Lords, Lord Barnett and Lord Thomson of Monifieth.

The report also made a number of recommendations relating to radio—most importantly, the proposal that part of the BBC's radio services should be privatised. Many of your Lordships picked up this point; in particular, my noble friend Lord Butterworth, the noble Baroness, Lady Warnock, and the noble Lords, Lord Bonham-Carter, Lord Barnett, Lord Aylestone and Lord Swann. The report has attracted both criticism and support, but the Government have deliberately decided at this stage not to respond to the proposals on radio. For some time, it has been the Government's intention to publish a Green Paper on all radio services, and we hope that this will be available early next year. This consultation paper will look at a wide range of matters affecting radio policy, and decisions on these matters, and on the Peacock recommendations on radio, will be taken in the light of the comments on the Green Paper.

I can assure my noble friend Lord Butterworth that the Green Paper will address many of the various issues raised by him, including the role of the BBC in providing local radio in competition with commercial stations, and the practice under which both the BBC and commercial stations broadcast, as a rule, the same programmes on both FM or VHF and medium wave.

The noble Lord, Lord Aylestone, asked about pirate radio stations. Any changes in established broadcasting that the Green Paper might propose will, I have to tell him, not affect the need to control unlicensed broadcasters, who as the noble Lord rightly observed, can cause damaging interference to other users and who avoid their proper obligations. I can confirm to the House that enforcement action will accordingly continue.

I turn next to Channel 4, and I thought it was an interesting confrontation between my noble friend Lord Blake, with his particular knowledge of Channel 4, and my noble friend Lord Buxton of Alsa, the noble Lord, Lord Thomson of Monifieth, and the noble Baroness, Lady Birk. The Broadcasting Act 1980 established Channel 4 as a complementary service to ITV, with a requirement to innovate. We shall clearly want to consider, in particular, the extent to which competition for revenue with ITV might prejudice the nature of the service provided by Channel 4. I would say that Channel 4 is amply fulfilling its statutory remit and is widely regarded as a success. The question is whether the remit might be discharged as effectively or even better under different arrangements. The Government have not yet formed a view, and we shall want to consider all the relevant factors.

The noble Lord, Lord Bonham-Carter, gave an interesting account of broadcasting matters and I appreciate his view that an evolutionary approach to future policy is appropriate. The Government will clearly wish to consider seriously this view of the matter, which is one of the many factors which we have to study. If I may respectfully say so to him, I thought it was sad that he rather ruined a good speech with a personal attack on the chairman of the Conservative Party, when his house is in no better order in view of the way that Dr. Owen and his lawyers have pursued in the High Court the matter of the BBC's political coverage of news.

I am afraid that on one matter he is mistaken. Peacock was not set up with "instructions"—and I put that word in inverted commas, but it is the word that he used. The then Home Secretary, my right honourable friend Mr. Brittan, made it very clear that the Government had an open mind on all questions, including advertising on the BBC.

The noble Lord, Lord Swann, said that we politicians are perhaps the touchiest of all when it comes to watching TV and we are ready to make our concerns known to any chairman of the BBC. I wonder whether that might continue if the Labour Party were elected, because Mr. Kaufman, the Shadow Home Secretary, has said that Labour would seek to remove the chairman following his appointment very recently.

My noble friend Lord Orr-Ewing reminded us of the time it often takes the Broadcasting Complaints Commission to take a decision in an individual case. I am afraid that with a complaints system of this kind, often dealing with complex issues, when every opportunity must be given to both broadcaster and complainant fully to make their case, some complaints will inevitably take time. I feel sure, however, that my noble friend's remarks will be fully noted by the new chairman of the commission, who takes up office next month.

My noble friend Lord Buxton of Alsa said that the Peacock Committee had exceeded its terms of reference and my noble friend Lord Quinton admitted that it had. The Government have no complaint about this, but there is no question of its being invalid because ultra vires does not arise. This is because the report has only the form of its own cogency. It is merely a persuasive or an unpersuasive document. Part or all of it will be implemented only if it is viewed as sensible.

The noble Baroness, Lady Birk, asked about peri-television sockets and the cost of this. As no decisions have yet been taken to introduce subscription and the matter is being studied, it would be wrong for me to do more than take note of her concern as to whether it will be required at all or, indeed, who will pay for it.

Baroness Birk

My Lords, will the Minister also take into account my other point? I asked whether people could really opt out of it, or whether once it is there they will have to pay and have a subscription gadget when they buy a new television. That is what I wanted to know.

The Earl of Caithness

My Lords, I take that point as well. It is one of the many things that we shall be looking into. I was rather saddened by some of the contributions from the Benches opposite. As this is a consultation exercise, I thought that the Labour Front Bench, as it showed in another place, has been peculiarly negative and has said no to everything—

Baroness Birk

My Lords, I do not like to keep jumping up and interrupting the Minister, but that is grossly unfair. What I was doing was pointing out the advantages of the present system, why it is as it is and making comments very similar—though it was difficult to find different words to use—to what earlier speakers said from the Cross-Benches and from the Benches opposite. It is not at all a negative attitude. If the Minister will read Hansard tomorrow, he will see that I finished up by saying that there must be some change, it should be evolutionary change and in changing we must be careful not to destroy what we have developed.

The Earl of Caithness

My Lords, I apologise if I misunderstood the noble Baroness, but I seem to be supported by a comment that I read the other day in one of the senior papers, the Independent. That stated: for the debate finds the Labour Party in disarray, still in the process of formulating its media policies. Senior broadcasters who have been lobbying discreetly in the last few days are dismayed and shocked at the lack of serious thinking". I should like to conclude by paying tribute to the work of Professor Peacock and his committee. In the course of slightly under a year, they produced a report which went to the heart of the current dilemma about the future of broadcasting policy and the way in which it should accommodate the new technological developments which—whether we like it or not—will dramatically affect the programmes which we are able to receive in the coming years.

Television is a relatively young industry—only 50 years old this year. It is not surprising, therefore, that change should be needed to reflect both developments in technology and in our general approach to the medium. I should like to assure your Lordships that the Government share their primary objective to achieve the highest possible standards in British broadcasting. But high standards will not be achieved by either turning our backs upon change, or by resisting the opportunities for widening diversity and consumer choice.

Many of the same reservations were expressed 30 years ago with the introduction of commercial television alongside the BBC. But I believe that few would now argue that this was not a wholly beneficial development for the quality of British broadcasting. As Peacock rightly points out, we should take the opportunities presented by new technological developments to create a broadcasting system which genuinely reflects the multiplicity of interests of its viewers and is capable of providing the high standards of programming which we take for granted today. The Government will make up their mind on how these objectives are to be achieved when they have studied more closely the very valuable contributions which have been made by your Lordships today. Once again, I should like to thank the noble Lord, Lord Annan, for introducing the debate.

8.31 p.m.

Lord Annan

My Lords, may I thank all noble Lords who have taken part in this debate. Your Lordships' House fielded an extremely strong team which scored a very great number of runs; the tail scored as freely as the early speakers. I should particularly like to congratulate the right reverend Prelate the Bishop of Blackburn for an excellent innings on his first appearance at the crease.

Perhaps I may also say a word of congratulation to the noble Lord, Lord Quinton. By the time he came in to bat the wicket was extremely sticky. As a former member of a committee on broadcasting, I well know what it is like to sit through not merely a debate in your Lordships' House but also the months of comment on a report of a committee of which one has been a member. It is very much like suffering that exquisite Chinese torture called "Death by a thousand cuts". Of course, he acquitted himself magnificently, like Hobbs and Sutcliffe on a certain occasion at Lord's some 60-odd years ago.

There was one stimulating proposal made by the noble Lord, Lord Willis. It was that the time had come for the academic mafia to stop being members of committees looking into broadcasting and it was high time that a commission of television stars investigated the universities. I concur with that suggestion and I should like to nominate Mr. Frankie Howerd as the chairman of that body. Since I am sure that the noble Earl will take that recommendation on board, I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.

House adjourned at twenty-seven minutes before nine o'clock.