HL Deb 13 June 1989 vol 508 cc1281-93

4.1 p.m.

The Minister of State, Home Office (Earl Ferrers)

My Lords, with the leave of the House I should like to repeat a Statement about the future of commercial television which is now being made in another place by my right honourable friend the Home Secretary. The Statement is as follows:

"The White Paper proposed a two-stage procedure for awarding licences for Channels 3 and 5 under which applicants would have first to pass a quality threshold, consisting of positive programme and consumer protection requirements, and would then go on to offer financial tenders. The Independent Television Commission would be required to select the highest bidder.

"Many of those who commented on the White Paper expressed concern that these proposals might lead to a loss of quality in programming. We recognise that concern and believe that a case has been made out for strengthening the quality threshold. We do not consider it would be right to do so by adding more detailed requirements in the legislation to supply specific types of programme. We therefore propose to strengthen the quality threshold by broadening the third positive requirement in the paragraph 6.11 of the White Paper to read: to provide a reasonable proportion of programmes (in addition to news and current affairs) of high quality, and to provide a diverse programme service calculated to appeal to a wide variety of tastes and interests". It will be for applicants to interpret this combined quality and diversity test in drawing up their programme proposals. Those who fail to satisfy the ITC that they can meet this requirement will not have their financial bids considered.

"A number of suggestions have been made to us about the form that the financial bid should take. The Chairman of the IBA proposed that it should comprise a sum fixed by the ITC and a bid by the applicant of a percentage of advertising revenue. I support this combination of elements but, in order to improve the transparency of the bidding process, propose that they should be reversed. Accordingly, the ITC will fix a percentage of net advertising or subscription revenue for each licence to form the minimum sale price. Applicants will then be required to bid a lump sum which they would pay if successful in addition. For successful applicants, both sums will be paid annually over the period of the licence to avoid the imposition of debt burdens on licensees.

"Applicants will also be required to post a bond with their tender application. Successful bidders will be required to add to this an amount which, together with the first, will add up to a substantial performance bond. This requirement will strengthen the enforcement powers of the ITC. Those who fail to meet their programme promises given at the quality threshold stage will stand to lose a proportion of the bond.

"We have considered carefully the arguments about the criteria on which the tenders should be decided. I do not believe that at the tender stage, before it is clear to whom the licences will be awarded and before the nature of any network arrangement is known, it will be possible for the ITC to make fine distinctions between the quality of programme service offered by different applicants, all of whom will have passed the strengthened quality hurdle I have announced today. We must avoid a return to the opaque and sometimes arbitrary selection procedures of the past. But some flexibility needs to be written into the procedure. We propose therefore that the ITC should be required in the normal course to accept the highest bid, but that it should have a power in exceptional circumstances to select a lower bid. This power would operate only in exceptional circumstances and the ITC would be required to give its full reasons. Exercise of the power would be subject to judicial review. In addition, there would be an exceptional power for the Home Secretary, acting on the recommendation of the ITC, to veto the selection of the highest bid if its funding came from a source which was undesirable in the public interest.

"The White Paper proposed that in addition to the sum bid at tender applicants would have to make a levy payment to the Exchequer. The proposals I have announced for the fixing of a proportion of advertising or subscription revenue as part of the tender price overtake our original proposals for a levy. Successful candidates will have to pay only the two-part tender price I have outlined. There will be no levy in addition.

"There has been some speculation as to whether the Government would impose a moratorium on takeovers at the beginning of 1993 and whether they would insist on compulsory networking for Channel 3. The Government's view on both issues has not changed since the publication of the White Paper. I understand that the Chairman of the IBA is considering permitting takeovers in the period from 1990 to 1993, subject to the normal anti-monopoly rules and bearing in mind our proposals for the regime after 1992. It would not in these circumstances be either sensible or necessary to impose a moratorium thereafter. Networking will be a matter for the Channel 3 companies themselves to decide without government compulsion. Basic fair trading laws should ensure that no companies are excluded unfairly from any networking arrangements. We shall consider whether any further provisions are needed in the legislation to regulate the operation of any new network system in the interests of free access and fair competition.

"We have received a number of representations on behalf of the 4 million viewers who are deaf or hard of hearing. We agree that particular provision should be made for them. We have therefore decided that Channel 3 and Channel 5 licensees should be required to provide teletext subtitling for some of the programmes in their schedules.

"The White Paper proposed that Channel 5 should be shared between at least two licensees. In the light of the start-up costs of the new channel and the competition it will face from the established terrestrial channels, we have now decided that Channel 5 should form a single licence. It will thus be better equipped to compete with the existing terrestrial channels.

"Similarly, the White Paper proposed that there should be a separate night hours licence for Channel 3. Many of those who responded to the White Paper expressed doubts about the financial viability of a separate night hours licence. We have accordingly looked at this again. We want to ensure so far as possible that the night hours are fully used. I accept the argument that they may be better exploited commercially if they are linked with services provided at a more commercially attractive part of the broadcasting day. We have therefore decided not to disturb the present situation under which the night hours may remain connected with the peak viewing period. This position will be reviewed if the night hours are not being fully exploited. Under our proposals, the ITC will be free to allocate licences for other times of the day, such as a breakfast time service.

"The White Paper proposed that the ITC would be responsible for the geographical division of Channel 3 into regions. This has been generally welcomed. The Government have noted with understanding the statement of the chairman designate of the ITC, Mr. George Russell, that he would see advantage in retaining the existing regions, if possible.

"I turn to Channel 4. The White Paper made clear the Government's intention to maintain the remit of Channel 4 while at the same time providing for the selling of its advertising separately from that on Channel 3. The White Paper proposed three options ranging from a fully independent commercial service licensed by the ITC, through an option linking Channel 4 with the new Channel 5, to an arrangement whereby Channel 4 would continue as a subsidiary of the ITC with a possible minimum guaranteed income.

"We have considered the comments we have received on these options and in particular the helpful report by the Home Affairs Select Committee. I have written today to the chairman of the Committee expressing the Government's gratitude for its work on Channel 4 and setting out the Government's decisions. A copy of that letter has been placed in the Library of the House.

"In considering the various options, the Government have decided that it would not be feasible at the present time for Channel 4 to become an independent commercial company competing with the other broadcasters if, as we think essential, it is to retain its remit. The financial outlook for Channel 4 remains uncertain with the prospect of new competition. We believe that the requirement in addition to provide a return for shareholders in a private company could put too much pressure upon Channel 4 finances and place its remit in serious jeopardy. But we see some difficulty in Channel 4 continuing to be owned by the authority which would be responsible for regulating its output; and we believe that any financial underpinning given to the channel should be carefully circumscribed to provide clear incentives for cost-efficiency.

"We have therefore decided that after 1993 Channel 4 should become a public trust, which would be licensed by the ITC, and would continue to provide the service set out in the special remit. Channel 4 would sell its own advertising, and would be subject to a baseline budget of 14 per cent. per annum of terrestrial net advertising revenue. The baseline could be amended in secondary legislation. If the channel's revenue fell below the baseline, the difference would be funded by the ITC to a maximum of 2 per cent. of terrestrial net advertising revenue levied on the Channel 3 companies. Any surplus revenues above the baseline would be shared equally between Channel 3 and Channel 4.

"The trust would be required to hold its share of any surplus revenues to be used as a first call in the event of deficits in later years. To reduce the need for a call on the guarantee, the ITC would be empowered to require cross-announcement of programmes between Channel 3 and Channel 4. Complementary scheduling would be possible, but would not be a requirement. The Channel 4 licence would run for 10 years, but these arrangements would be reviewed after seven. I believe that this is a satisfactory way of securing the future of Channel 4 with its present remit.

"The White Paper concluded that the arrangements for the Welsh fourth channel should remain unchanged. Some have argued that it would not be consistent with the new and more free approach to regulation for the channel to be funded by a direct subscription on the commercial companies. The situation is particularly anomalous in Scotland where the ITV companies are required to finance Welsh programmes as a first call on their resources before even they make provision for their own Gaelic speakers. The Government are sympathetic to these concerns, and have decided to make a small change to the funding arrangements for S4C. Henceforth, S4C revenues will not be charged as a first call on the commercial companies but will be funded out of the proceeds of the tender through the ITC.

"My Statement today covers most of the major decisions on the future commercial television system following the publication of the White Paper. We shall make announcements on the remaining issues, including the key issue of transmission and the future of broadcasting in Gaelic, before long. These decisions will be incorporated in new broadcasting legislation which the Government hope to bring forward in due course".

My Lords, that concludes the text of the Statement.

4.15 p.m.

Baroness Birk

My Lords, I start by thanking the noble Earl, Lord Ferrers, for repeating the Statement made by his right honourable friend in another place. I am sure he will appreciate that it is a very long Statement to take in in such a short time. I shall do my best to comment on some of the points which have been made which differ from those in the White Paper.

One of the issues which concerns us all is the retention of the auction system for obtaining licences. I am pleased to note that the views of Mr. George Russell, the chairman designate of the IBA, and those of the other ITV companies have been taken into account, so that there is some improvement on the White Paper. Nevertheless, it seems to me that finance rather than quality permeates the whole scheme.

I am slightly perplexed by the paragraph concerning the strengthening of the quality threshold. It does not go much further than the original White Paper proposals. We do not know who will make the judgment of quality and the kind of judgment that there will be. We are told that it will be for applicants to interpret the quality and diversity tests in drawing up their programme proposals. What is important is the level at which the judgment and acceptance or rejection should be made.

The financial arrangements where the ITC will fix a percentage of net advertising for a minimum sale price seem to me to be something, without going into it very much further, on which one can for the moment withhold judgment. Applicants will be required to post a bond with their tender application, and I believe that is a positive point. One hopes that it will deter the Johnny-come-latelys and do something to strengthen and improve quality standards.

Concering the criteria on which tenders will be decided, one has to start commenting on that matter from the point at which the Government start. However, I should not have started from that point. We are still left with the licence by auction system. It is ironic to read in the White Paper, in paragraph 2.3: Two reports have been particularly influential in the recent debate about the future of broadcasting: the Peacock Report … and the main report of the Home Affairs Committee's inquiry into broadcasting". As the noble Earl said, the Home Affairs Committee has been thanked. Sir Alan Peacock was appointed by the Government to carry out a survey into BBC radio and television but eventually his remit spread wider. It is interesting that he came out quite definitely against auctions as a means of awarding licences.

On page 3 of the Statement we see the sentence: We must avoid a return to the opaque and sometimes arbitrary selection procedures of the past". Most people will agree with that sentence because no one has pretended that the previous procedure was perfect. However, I should like to know a little more about the "exceptional circumstances" in which the ITC will be able to select a lower bid. Twice in the Statement appears the sentence: This power would operate only in exceptional circumstances and the ITC would be required to give its full reasons". I have no objection to it giving its full reasons but I should like to know at which level the "exceptional circumstances" rests.

I am slightly worried and perplexed about the proposal that the power shall be subject to judicial review. That could have a deterrent effect and make the position of the ITC even more difficult when it decides that in exceptional circumstances it does not wish to accept the highest bid. The Statement also provides that: there would be an exceptional power for the Home Secretary, acting on the recommendation of the ITC, to veto the selection of the highest bid if its funding came from a source which was undesirable in the public interest". I should like to know whether the Home Secretary could veto the selection of a bid not only on the basis that it came from a source which was undesirable in the public interest but also on the quality standards which are mentioned so often throughout the paper.

The proposal that there should be no levy in addition to the two-part tender price will be welcome. Of course, we already have the situation that networking is a matter for Channel 3 companies to decide without Government compulsion. We note that a number of representations were made on behalf of the 4 million viewers who are deaf and hard of hearing and that particular provision should be made for them. That is welcome news to us all. My only criticism is that I should like to see the provision go further.

Channel 5 will have a single licence. At first sight that appears to be a good idea but it is matter which we must consider. We can accept and live with the proposal that there should be a separate night hours licence for Channel 3.

The Statement continues: The White Paper proposed that the ITC would be responsible for the geographical division of Channel 3 into regions. This has been generally welcomed. The Government have noted with understanding the statement of the Chairman designate of the ITC, Mr. George Russell, that he would see advantage in retaining the existing regions, if possible". I should like elucidation of the words "if possible" because I understood that the number of regions would be reduced.

I now turn to Channel 4. The Statement may be an improvement on the proposals contained in the White Paper but I still do not believe that it is good enough. In the White Paper the Government paid tribute to Channel 4, its success, its quality and good work. However, it will now come under closer supervision and I believe that it will be more difficult for the channel to fulfil its remit. I do not understand how the Conservative Government which introduced Channel 4—and the noble Viscount, Lord Whitelaw, was then Home Secretary—can now, with their concentration on market forces and the monetary system, require it to sell its own advertising while, as a safety net, other competing companies will be able to come to its rescue. That does not appear to be in line with general Conservative Party policy, nor do I believe that it is good for Channel 4. It is a bad day for Channel 4. I still do not understand why the Government, which have applauded the work of Channel 4, do not leave it as it is. I am sure that everyone will agree that if something is working well it should be left alone.

I am also concerned about the trust which is being set up. Who will appoint the trustees? Will they be appointed by the Government or by representatives of Channel 4? I am pleased that the Welsh channel will remain unchanged, as will be my noble friend Lord Cledwyn.

The Statement is long and I do not wish to make an even longer speech. However, the main objection to it remains that, in spite of some of the alterations which are an improvement on the White Paper, it is more permeated by financial concerns than by quality. There is no mention of money which should be spent on good programming. I believe that our commercial television service will depreciate in quality, no longer being as good as it is now even with all its imperfections.

Lord Winstanley

My Lords, we on these Benches also wish to thank the noble Earl, Lord Ferrers, for repeating the extremely long and complex Statement. It consists of the Government's response to the observations they received from approximately 3,000 people and various bodies on the proposals outlined in the White Paper. It is also a response to many of the observations made by noble Lords during the debate in this House some time ago. At that time the principal anxiety expressed by noble Lords in all parts of the House concerned the proposal to auction the franchises to the highest bidder. As the noble Baroness, Lady Birk, has said, that remains a worry.

We on these Benches were heartened when we saw the proposals put forward by Mr. George Russell. They appeared to attempt to safeguard programme standards and ensure that the main criterion of success in television would not be "the bottom line"—there would also be programme standards. However, we regret that Mr. Russell's proposals have not been completely accepted; they have been greatly modified. The Government's comments have been hedged in by many qualifications. At the end of the Statement concerning the auctioning of franchises the Government state: We propose therefore that the ITC should be required in the normal course to accept the highest bid, but that it should have a power in exceptional circumstances to select a lower bid". Even that is hedged in with qualifications.

We on these Benches do not believe that the proposal goes far enough to meet the anxieties expressed by the various companies and by the Chairman designate, Mr. George Russell. We believe very profoundly that programme standards depend upon the hands in which control of broadcasting is laid. In due course we shall want to read those hands with very great care when they become available for inspection.

Another source of anxiety about the White Paper proposals dealt with at length in your Lordships' House and only in part referred to in the Statement was the possible plight of regional companies, an anxiety expressed very forcefully by the noble Lord, Lord Buxton of Alsa, who said that under the proposals as they then were, with the possibility of the extinction of networking, the regional companies would just go out of business. I am very glad to see from the Statement that networking is to be continued, because without it the regional stations could not remain viable.

I regret that the Statement does not show any proper understanding by the Government of what regional television actually is. Regional television is not parochial television merely with regional or local news. Regional television is really a matter of looking at national and international events through regional eyes and giving a regional flavour to universal themes, be they cultural, economic, political, industrial or otherwise.

As the person who presented the first series of television programmes which signed for the deaf I welcome the comment in the Statement about special proposals for the 4 million people in Britain who have hearing difficulties. It indeed is welcome.

However, it is clear from the Statement that we shall have many further opportunities to debate this matter. We are told that there will be further statements on individual matters not yet clarified and there will also in due course be legislation. At the moment I merely say that we have some anxieties because we are still not satisfied that the principal criterion will be programme standards and not just money.

4.30 p.m.

Earl Ferrers

My Lords, I accept the problem which the noble Baroness, Lady Birk, the noble Lord, Lord Winstanley, and indeed other Members of the House have in digesting what is a very complicated and technical subject in the form of a Statement. I apologise for the length of it, but we thought it was right that your Lordships should know the details because of the anxiety which has been expressed. I realise that it is difficult to absorb this straight away.

Quite clearly, the noble Baroness, Lady Birk, and the noble Lord, Lord Winstanley, are concerned about the highest bidder and programme quality. The Government are also deeply concerned about the quality of programmes, and that is why we have made three additions to encourage programme quality and to make it more difficult for—I think that they were called this by some noble Lords—fly-by-night operators to function. The first addition is to add in the words to the White Paper—and the noble Baroness said that she did not see much in this— to provide a reasonable proportion of programmes (in addition to news and current affairs) of high quality". That will be part of the test which any applicant has to pass; that is, he must show that his programmes are to be of high quality.

He then has to put in a bond, and he may forfeit part of that bond if he does not come up to the expectations of his tender if he is accepted. Indeed, he may lose the whole of the bond, so that is a positive incentive to the successful applicant to ensure that his programmes are of high quality.

The third addition is that there are occasions when the ITC could choose somebody other than the highest bidder. The noble Baroness, and indeed the noble Lord, Lord Winstanley, were concerned that that is auctioning for the highest price. There is now a change between what has happened before and what is proposed at present. Before it was subjective and now it is objective. Of course finance comes into the matter but it is considered proper, provided people have shown that they are perfectly good at their quality standards and that their range of programmes is right, to accept the highest bidder with the caveat that in certain circumstances the highest bidder may not be chosen. The noble Baroness asked whether that would be open to judicial review. It would be open to judicial review, as this Statement makes perfectly clear.

The noble Baroness also asked whether the Home Secretary could veto applicants on the matter of programme content and quality as well as on the money coming from undesirable sources. He cannot and will not. His veto will refer only to applicants whose money comes from sources against the public interest.

The noble Baroness also asked who will appoint the trustees. They will be appointed by the government of the day. If she thinks that the government will fill it up with their own lackeys, I can assure her that that is not so, as she will see if she looks at the vice-chairman of the BBC and the previous chairman of the IBA. I realise that there are many questions to be answered and many points about which your Lordships will be concerned, but I believe that it would be inappropriate to go on for too long on this matter and I hope that I have answered the main substance of the questions asked.

Baroness Birk

My Lords, before the noble Earl sits down I should like to ask him one question. How many licences will the companies be allowed to apply for? At present they can apply for only two franchises. The rumour is that it will be multiple, and I should like to have the answer.

Earl Ferrers

My Lords, perhaps I could reply to the noble Baroness after I have heard the other questions.

Viscount Whitelaw

My Lords, in the interests of the House, perhaps I may briefly say this. First, as one of those who has believed consistently since the Government's proposals were first put forward that any question of sale to the highest bidder without clear safeguards would endanger quality, perhaps I may say that I welcome the safeguards which have been produced. Of course we shall need to study them very carefully, but they are a step in the right direction. Those of us with experience of television in the past, as I have, were very worried indeed about sale to the highest bidder alone without safeguards. I hope that the safeguards will prove sufficient, although they should obviously be considered more carefully. However, initially one must welcome them. Perhaps I may say to the noble Baroness, Lady Birk, that I do not take her pessimistic view, but perhaps she would not expect me wholly to do so. I believe that the safeguards are important, and I welcome them.

Secondly, I was the person who originally set up Channel 4's remit and that of the Welsh fourth channel. There were many other people, including the noble Lord, Lord Cledwyn, who took a part in ensuring that I took the right course over Welsh television and not the wrong course, which I was likely to take previously. Both those cases required that some very careful consideration was given to the White Paper as originally put forward. At this stage perhaps I may welcome what I believe to be, as I heard it, a move in the direction of retaining Channel 4's particular financing in order that it can fulfil its remit, and I hope also in making it quite clear that the Welsh channel can continue as it does at present. In my judgment any other decision would be totally disastrous and quite wrong.

Earl Ferrers

My Lords, I am very grateful to my noble friend whose experience of these matters is remarkably wide. I am grateful to him for his welcome for the increased safeguards. Like all Members of your Lordships' House, he is concerned that standards should be high, and I hope that it will be shown that these additional safeguards that have been introduced will achieve that.

I am also grateful to my noble friend for his welcome as regards Channel 4. Of course we realise the specific problems of Channel 4 and we are equally concerned to see that its remit stays as it is in the manner in which it presently operates.

The noble Baroness asked me how many licences can be applied for. The answer is that the company can apply for as many as it wants.

Lord Boyd-Carpenter

My Lords, perhaps I may ask the noble Earl to clear up one point on the interesting and important matter to which he referred of the right and duty of the Home Secretary to veto the grant of a licence in certain circumstances. I understood him to say that the ground for exercising the veto would be that the source of finance for the applicant was inappropriate. Does that mean a source of finance perhaps from an unfriendly foreign power, or does it go wider and involve a judgment about sources of finance in this country; for example, those concerned with very low grade entertainment?

I also understood the noble Earl to say—I hope that I misunderstood him—that the Home Secretary's power of veto could only be exercised with the consent of the ITC. Surely the Home Secretary, who is responsible to Parliament, should have the full responsibility in these important circumstances for exercising the veto if necessary, without the consent of any other outside body.

Earl Ferrers

My Lords, I think that my noble friend Lord Boyd-Carpenter understandably misunderstood the long and convoluted Statement. I said that there would be an exceptional power for the Home Secretary, acting on the recommendation of the ITC, to veto the selection of the highest bidder if its funding came from a source which was undesirable in the public interest.

If the Home Secretary wished to make a veto, there is no question that it could only be done with the agreement of the ITC. If the ITC informed the Home Secretary that the funding from such an applicant would come from sources which were undesirable, he could then pass a veto. I am thinking primarily of disguised funding coming from an undesirable source which is politically opposed to the continuance of good government in the United Kingdom; for example, groups connected with terrorism. It would be for the ITC to alert the Home Secretary to such a problem whenever it arose.

Lord Carter

My Lords, I should like to declare an interest as the director of an independent television company which makes a weekly programme for people with disabilities, which goes out on the commercial network.

I welcome the proposals for the deaf and hard of hearing. Could the noble Lord tell the House how it is proposed under the new arrangements to protect the interests of what are sometimes described as the minority programmes for the disabled, the ethnic minorities and the like?

Earl Ferrers

My Lords, I think that that would be a matter for the ITC to consider. There will be a requirement that Teletext subtitles should be provided on certain programmes. It is for the ITC to consider other requirements.

Lord Bonham-Carter

My Lords, I should like to ask the noble Earl, Lord Ferrers, to clarify his answer to the noble Baroness, Lady Birk. I understood the noble Earl to say that a consortium of companies could apply for as many franchises as it liked. It is reasonable that one should be able to apply for a number of franchises, but how many would be allocated? The concern is that one consortium may have control over more than one franchise.

A second point which occurs to me is the right of veto in the public interest. The noble Earl spoke of sources which were against the good government of this country, which may have terrorist finance. Does he include sources which already have substantial media interests? It is extremely important that control of the media should not be further consolidated and made more concentrated than it is now. Many noble Lords are anxious about the degree of concentration of control of the media. Does the power of veto cover an ability on the part of the Government to prevent a further concentration in the control of the media?

Earl Ferrers

My Lords, people may apply for as many franchises as they like, but no more than two Channel 3 licences can be approved. They would not be two large ones or contiguous to Channel 3. With regard to the right of veto, the separate proposals announced on 19th May will restrain cross-media ownership. I think that covers the concern of the noble Lord, Lord Bonham-Carter. I think I am right in saying that large newspaper groups may only hold 20 per cent. of the stake in the advertising industry.

4.45 p.m.

Lord Orr-Ewing

My Lords, would my noble friend go a little further on the point raised by the noble Viscount, Lord Whitelaw, and the noble Lord, Lord Boyd-Carpenter? It is a two-way movement. It cannot be left to the ITC. It does not have the sources of intelligence and other information which are available only to the Home Secretary and perhaps the Prime Minister. It must be possible for people to feed information to the ITC about the people making applications and where the money comes from, without being probed as to how they know about it. Surely the initiative can come from the Home Secretary to the ITC, which can inform people that something may be undesirable, and in the reverse direction also.

One should look with some scepticism and wish well the judges who are going to make this very difficult choice. The IBA was not altogether successful when TVAM dressed up its application in very glowing terms. Suddenly it found that it was grossly overmanned; that it had over-egged the pudding in more ways than one, and it had to cut everything to a bare skeleton. The IBA then said that it would risk its franchise if it continued to curtail the standards of its programme in conformity with its monetary sources. That was built up again and became a perfectly respectable and successful programme.

The ability to tell the story seems to me to be a very difficult matter to judge, however wise the judges and whatever their perspicacity. One wishes them well. I welcome the safeguards put forward because when this was debated every part of the House was concerned that it should not only be a financial consideration with the person with the longest purse winning the race. This Statement seems to be a sensible compromise, although we need to study such a long Statement very carefully before we fully understand it.

Earl Ferrers

My Lords, I agree with my noble friend Lord Orr-Ewing that the people who have to make the judgments on these tenders are not in a very enviable position. I do not think that they were under the old regime. All one can do is invite people to tender, to say what they are going to do and to make the hurdles as strong as possible. Sometimes that has been shown to be unsuccessful. We hope that under these new arrangements the opportunity for having good quality programmes has been made as strong as possible.

Of course there is a financial incentive and finance is bound to play a part. I would not seek to disguise that fact. I hope your Lordships will agree that these measures will go a long way to meet concerns, but inevitably any choice like that can never be a certainty.

My noble friend asked whether my right honourable friend the Home Secretary could take action on the veto if he thought it appropriate to do so. The whole purpose behind the Statement is that the information about financing of the new companies is bound in the first instance to come to the ITC. If the ITC is alerted to the fact that the finance is not all that satisfactory, it will contact the Home Secretary. If my right honourable friend were to hear something in advance, he would speak to the chairman of the ITC. It is not only one-way traffic. The whole purpose is to ensure that contestants do not operate with money that has come from unsavoury sources which are against the interests of the United Kingdom.

Lord Cledwyn of Penrhos

My Lords, can the noble Earl say how the new formula for funding will affect the revenue payable at present to S4C? Will it be more or less on the same level as it is at present?

Earl Ferrers

My Lords, the funding will be very similar to what is being done at present. But if there should be a shortfall the S4C will be able to make a call to the ITC. The funding will be similar to what it is at the moment.

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