Broadcasting Bill

HL Deb 19 July 1990 vol 521 cc1010-60

3.22 p.m.

The Minister of State, Home Office (Earl Ferrers)

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.—(Earl Ferrers.)

On Question, Motion agreed to.

House in Committee accordingly.

[The CHAIRMAN OF COMMITTEES In the Chair.]

Earl Ferrers moved Amendment No. 163A: After Clause 20, insert the following new clause: (&Restriction on changes in control over Channel 3 licence holder .—(1) Where (a) any change in the persons having control over— (i) a body to which a Channel 3 licence has been awarded or transferred in accordance with this Part of this Act, or (ii) an associated programme provider, takes place within the relevant period, and (b) that change takes place without having been previously approved for the purposes of this section by the Commission, then (subject to subsection (4)) the Commission may, if the licence has not yet been granted, refuse to grant it to the body referred to in paragraph (a) (i) above or, if it has already been granted, serve on that body a notice revoking it. (2)In subsection (1)— associated programme provider", in relation to such a body as is mentioned in paragraph (a) (i) of that subsection, means any body which is connected with that body and appears to the Commission to be, or to be likely to be, involved to any extent in the provision of programmes for inclusion in the licensed service; and the relevant period", in relation to a Channel 3 licence, means the period beginning with the date of the award of the licence and ending on the first anniversary of the date of its coming into force; and paragraph 3 in Part I of Schedule 2 to this Act shall have effect for the purposes of this subsection as if a body to which a Channel 3 licence has been awarded but not yet granted were the holder of such a licence. (3) The Commission shall refuse to approve for the purposes of this section such a change as is mentioned in subsection (1) (a)— (a) if it appears to them that the change would be prejudicial to the provision under the licence, by the body referred to in subsection (1) (a)(i), of a service which accords with the proposals submitted under section 15(3) (b) by that body (or, as the case may be, by the body to which the licence was originally awarded), or (b) it appears to them that the change would be prejudicial to the provision of Channel 3 as such a nationwide system of services as is mentioned in section 14(1); and the Commission may refuse so to approve any such change if, in any circumstances not falling within paragraph (a) or (b) above, they consider it appropriate to do so. (4) The Commission shall not under subsection (1) refuse to grant a licence to, or serve a notice on, any body unless they have given it a reasonable opportunity of making representations to them about the matters complained of. (5) Where under subsection (1) the Commission refuse to grant a licence to any body, section 17 shall have effect as if that body had not made an application for the licence; and, where under that subsection they serve on any body a notice revokin3 its licence, subsections (5) to (7) of section 37 shall apply in relation to that notice and the revocation of that licence as they apply in relation to a notice served, and the revocation of a licence, under subsection (3) of that section.").

The noble Earl said: It may be for the convenience of the Committee if, when moving Amendment No. 163A, I speak also to the proposed new clause in Amendment No. 293A, together with Amendments Nos. 163B to 163F, 169B, 341A and 341B which are tabled in my name and that of the noble Baroness, Lady Birk.

The Government noted the many strong arguments which were put forward by this Chamber and Members of another place for a moratorium on takeovers, in order to provide for a period of stability at the commencement of the new licence period. The proposed new clauses therefore provide for a moratorium on takeovers of Channel 3 and 5 and national radio licensees from the date of the granting of a licence to the end of the first broadcasting year of the licensee.

The three other related government amendments are consequential. In the case of Channel 3, this will mean effectively a twoyear moratorium. The period of one year from the date of broadcasting is the time period which Mr. Russell, the chairman designate of the Independent Television Commission has asked for. Thereafter, we believe that it would be right to allow takeovers of licensees. The prospect of takeovers is an important market discipline. But that does not mean that there will then be a free for all. Takeovers and transfers of licences will still be subject to the oversight of the ITC. It will have to be satisfied that the original programme promises and licence conditions can still be met by the body which takes over the licensee, and that the new owners are people to whom it would have been prepared to grant a licence in the first place. I very much hope that this development will essentially meet the concerns expressed by many noble Lords on Second Reading.

With regard to the amendments tabled in the name of the noble Baroness, Lady Birk, these would deny the Independent Television Commission any discretion in agreeing to a change of ownership during the licence period, and would require them to revoke the licence in all circumstances where any such change occurred. I do not believe that that can be right. Moreover, I think that when the noble Baroness looks deeply into the matter she will also agree that that cannot be right. There may well be circumstances where it would be positively beneficial for a change of ownership to occur, and the ITC should have the scope to recognise that fact.

Amendment No. 163D would give the Independent Television Commission discretion to refuse changes of ownership after the moratorium period and through-out the whole of the licence period. I find it difficult to accept that amendment for the reasons which I have given. Takeovers are an important market discipline and after the initial moratorium period it would be inappropriate for a light touch regulatory body to he able to interfere with issues of ownership, other than to satisfy itself— and this is important—that the new owners would continue to stick to the licence conditions. Of course, as matters stand, it will still be able to do so. The other amendment would extend the moratorium period to two years after the commencement of broadcasting. That is unnecessary, as it is a longer period than Mr. Russell would consider to be appropriate.

Clause 5(3)(b) and (c) deal with changes in the control of a licensee. If the ITC is not wholly satisfied that new owners could continue to satisfy the licence conditions, it could revoke the licence. The prospect of that happening will almost certainly mean that no takeovers will occur until the company effecting the takeover has satisfied itself that the commission would approve. That situation is bound to take much of the heat out of predatory takeovers. But if the ITC is fully satisfied that the new owners could continue to fulfil all the licence conditions it should not have a power to block a takeover. The moratorium period is designed to give a period of stability at the beginning of the new licence period. But after that time, the licensees do not need to be unduly cosseted.

There was a great deal of concern expressed about the moratorium both by Members of this place and those in another place. For the reasons which I gave on Second Reading, we felt that it was right to have the disciplines of the market place. However, in view of the fact that so many Members of this and another place thought that there should be a moratorium, the Government have agreed that it should be introduced.

I hope that Members of the Committee will agree that a oneyear moratorium, which as I explained would, in essence, as regards Channel 3 programmes, mean a twoyear period of stability, is acceptable. I beg to move.

Baroness Birk moved, as an amendment to Amendment No. 163A, Amendment No. 163B: After Clause 20, Line 7, leave out from ("period") to end of line 9.

The noble Baroness said: Perhaps I may start by thanking the Minister for explaining the government amendment so clearly. I should also like to say that the fact that we have amendments regarding a moratorium before us today is a great triumph for Members of this Chamber on all sides. I say that because when the Bill left another place, although there had been a great many objections to the omission of such a provision from the legislation, nothing was done and it arrived in this place with no clauses referring to a moratorium. However, we now have these proposed new clauses and we are most grateful to the Minister. In my view, this provision makes very good sense.

We on this side of the Committee, together with the Social Democrats, had tabled an amendment on a moratorium before the Government put their proposal forward. However, in the circumstances, we thought that it would be preferable to table amendments to their amendment rather than to leave our original amendments on the Marshalled List.

The main difference and bone of contention which arises between the Government's amendment and those which we have tabled is the length of time for which the moratorium will last. The Government's proposed moratorium would last for 18 months or two years. It would extend from early 1992 to December 1993. In another place the Opposition argued for a moratorium of at least three years.

It is not just because Members of another place argued for a moratorium that we have put these amendments forward. The inclusion of such a provision in the Bill seems to us to be much more sensible. As we see the situation, there will be a year from the time when the licences are awarded. After that time, according to the professional opinion which I have sought from the industry, what we really need is a period of two years to enable the companies concerned to work out what they are doing and to plan the screening of programmes. A year is not long enough. The main difference between us is the length of time. I ask the Government to consider that point because if the Bill goes through we all want the companies to be successful and to put out good programmes within a sufficient period of time without having to look over their shoulders in case they are about to be taken over, which of course was the main reason for the proposed moratorium in the beginning. The government amendment does not give long enough. The idea of having two years' screening should be seriously considered by the Government.

The new clause is permissive, as the Minister said, because the ITC may refuse to grant or revoke a licence during the licence period. We believe that any changes of ownership during the relevant period should require the ITC automatically to revoke the licence. That would be achieved by changing "may" to "shall" in line 10. The ITC's power to refuse to approve a takeover is qualified by the fact that such a takeover must prejudice the service or the network. The moratorium is limited in its effect by the length of the relevant period, while the danger of takeovers continues beyond. We believe that the same takeover provisions should continue to apply after the relevant period, albeit with the retention of the ITC's more permissive power provided by the word "may" in line 10.

We turn now to the more permissive side of the amendment. Not to make the power mandatory in respect of takeovers in the first instance is wrong because it would put the ITC in a position, which I do not believe it wants, where it has to decide whether the takeover is correct, whether it should be allowed, whether it is too big or whether it is small enough not to be taken notice of. That is wrong when one wants as clear and decisive a situation as possible. By making the provision mandatory and not therefore putting the burden on the ITC, it will make the clause clearer and stronger.

Once on air, companies need a reasonable period in which to demonstrate what they can do. We must remember that the companies which will eventually gain the licences will not all be the same companies as now. Some of them may be, but some may be new and will not have had the opportunity or the experience to be able to get their feet quickly under the table.

The amendments deal not only with the period but also with the change. There is a letout in one of the amendments which gives the ITC a certain amount of flexibility. If it wishes to be more permissive, it is always open to it to discuss the matter with the OFT or one of the government departments. My impression is that the ITC would be happier if the matter were completely clear cut. I beg to move.

3.30 p.m.

Lord Thomson of Monifieth

I support Amendment No. 163A and the associated amendments tabled by the noble Baroness, Lady Birk. Like her, I warmly welcome the fact that the Government have moved an amendment proposing a moratorium. It has taken a long time and a great deal of argument in this place and another place to bring the Government to the view that it is a common sense modification of their free market ideology. However, better late than never. It is a sensible change.

I support the noble Baroness's proposition that one full year of broadcasting is too limited a period. With all the amendments that we are discussing, I try to do my best to apply the test of the interests of the viewers and the listeners. What has been true over the years about the commercial broadcasting system—it will be true about the new system—is that the period during which one reallocates commercial contracts and licences is immensely destabilising for the companies involved and therefore for the programmes that they produce. It is a period during which the viewers suffer from a degree of destabilisation. It is important in the interests of the viewers and the listeners that one should do one's best to produce as much stability as possible during a period of change. There is a degree of separation between the shareholders and a company's senior management and the creative people who produce the programmes. It is important to try to allow the people who are making the programmes, which are what interests the viewers and the listeners, to settle down and get on with the job so that when under the new arrangements the company is inevitably in the market place, the dust will have settled on the programme-making side and the programmes will be available. When the ITC has to make the judgment as to whether the company making the takeover bid is likely to be able to fulfil the licence conditions relating to the programmes a degree of continuity will be possible. The advantages of two years of transmission over one year are considerable.

I do not know what the IBA's view is as to whether the provision should be "may" or "shall". I should have thought it would have been a help to the IBA and the ITC in what will be a difficult situation to have a clear and unequivocal statutory position which will enable them to say, without fear of having to face a judicial review of their decision, that Parliament has laid down a closed period for takeovers and that they have no alternative but to impose that closed period. For those reasons I strongly support the amendments tabled by the noble Baroness.

Lord Boston of Faversham

I join my noble friends Lady Birk and Lord Thomson of Monifieth in their welcome of the Government's decision and commend them on providing a moratorium on takeovers. That is excellent. It shows that the Minister and his fellow Ministers Mr. David Mellor and the Home Secretary, Mr. David Waddington, have once again listened and taken account of the arguments advanced in this place, in another place and elsewhere. In their approach to major changes sought in the Bill, Ministers have not just said to themselves, "We have one concession to make. We do not much mind upon which, topic we make it; but we shall give something away". On the contrary, they have treated on their merits the arguments on the various proposals put forward. They have treated each case separately and have decided accordingly. So often governments of different complexions have decided to make one concession, irrespective of the merits of the arguments on a variety of amendments. I feel it right to pay tribute to the continuing constructive approach of Ministers to the Bill.

As has been said already by my noble friends, now that the Government have decided in favour of a moratorium in principle, we—and the Government too—wish to make that moratorium as effective as possible in order, in part, to achieve the Government's aims as effectively as possible. Hence, the only point on which we now need to concentrate, as has been made clear, is the length of the moratorium.

At Second Reading I pointed out that in the debates in another place a popular period among Members, not just from one side but from all sides, was at least three years. There seems to be general agreement that the moratorium should start so as to cover the period from the time when the franchises are awarded.

Perhaps we may concentrate on what the period should be after broadcasting has started. Also at Second Reading, I went on to argue that it should last for at least twoandahalf years from the time when broadcasting starts, with an an absolute but rather unsatisfactory minimum of oneandahalf years. My noble friend Lady Birk in her Amendment No. 163F has proposed two years. I hope that it will not embarrass her if I go a little further than that, but hers is an excellent proposal.

Two years—twoandahalf years is better—would allow time for the companies to establish themselves and for a proper assessment to be made of their programme performance. That is important. The bare 12 months which the Government propose would not be enough to enable that to be done. Here I take up one point which the noble Earl, Lord Ferrers, has just made. He referred to the period mentioned by the chairman of the IBA, Mr. George Russell. I remind the Committee that Mr. Russell said that he would like at least one year. He clearly wanted—and has said so elsewhere—more than one year. No doubt that is for some of these reasons.

I remind the Committee that companies have been bringing their year ends into line at 31st December. Annual reports do not come out until some months later so it would be reasonable for the moratorium to go at least to the middle of the year. Thus the reports could appear and a thorough annual assessment could be made.

Again I remind the Committee that if the moratorium finishes on 1st January 1994, as is proposed under the Government's amendment, there would not even have been a complete winter schedule of ITV Channel 3 programmes. We would still only be a little way into the winter schedule and would not have seen a full year's service right through.

Presumably in specifying one year after the new franchises start broadcasting, the Government felt it would enable contractors to establish themselves and allow their programmes to be assessed. Neither of those aims would be achieved by the bare 12 months. I refer to the views of the IBA once more. It has given its view in the ITN context that the new contractors will not have established themselves until the end of 1994. That is after two full years, the period proposed in my noble friend's amendment.

I very much support what my noble friend Lord Thomson of Monifieth said about the viewers' interests being paramount. It is surely in viewers' interests and would secure another government aim to achieve consistency in producing good quality programmes that there should be time to see not just how one but two years' programmes have gone. I submit that it is clearly desirable to compare the first year with the second, to see whether improvements have been made and the new contractors have established the start of a consistently good series of programmes. That is part of the case for allowing the time for a full assessment to be made after two years of broadcasting and to make that assessment for preference after about twoandahalf years of broadcasting. I very much hope that the Minister will at least say that he will have another look at the length of the moratorium. To do so would be both in the viewers' interests and in the interests of securing most effectively the Government's aims.

3.45 p.m.

Baroness Macleod of Borve

Perhaps I may intervene since I have been privileged to be a Member of the IBA for four or five years. In my view and my experience what Members opposite have said is absolutely correct. It does not seem possible to me for new franchise holders to put their potential on air or on television within such a short time. People can change their programmes according to the publicity they receive and for all kinds of reasons. Two years seems to be the minimum that should be given to the franchise holders either to improve their programmes or go further down the road they have chosen. However, they should be given the opportunity of two years in which to improve, if improvement is needed. I support the noble Baroness's amendment.

Earl Ferrers

My noble friend Lady Macleod is concerned that there should be a twoyear period during which there would be a moratorium. In practice, that is what there will be. The moratorium only begins to operate for a year once the broadcasting starts. The broadcasting will not start until about a year after the licence has been granted. So from the time when the licensee knows that he will have the licence, in effect he has a twoyear period, under the Government's amendment, during which he may not be taken over. That is quite a long time.

Mr. Russell is, after all, the chairman designate of the ITC. He indicated that a moratorium lasting until the end of 1993 would be sufficient. The main reason for the moratorium was the risk of disruption before the start of broadcasting or immediately thereafter. This is what the Government's amendment seeks to secure. A number of people have told me that the potential broadcaster, the potential licence holder, must make his bid. To do so he must go to a tremendous amount of trouble and expense in formulating his bid, with all the costs involved. Other predators will be sitting in the wings and as soon as he gets the licence along comes another predator who has had none of that trouble or expense and eats him up. "That's not fair", people say. The Government agree that that would be disturbing and disrupting.

The noble Lord, Lord Boston, said this at Second Reading. The argument went that if during the following months there was a potential takeover, the management of the new licensed company would spend its time trying to fight the takeovers as opposed to getting on with putting the licence into operation. This is the vulnerable period. So we decided that there should be a moratorium for that year. Thereafter, the licence holder would be able to display his ability by broadcasting. The moratorium would last for the whole year of broadcasting.

We believe that that is a pretty generous length of time. I know that some people would like longer. During the Second Reading debate some people suggested a moratorium of three years, others two, and some said that one year would do. We have provided a moratorium for one year which, in effect, comes out to two years. It is rather like horse trading. The noble Lord, Lord Boston, says "We have got one year, now what about two years or perhaps oneandahalf years?" One has to draw the line somewhere. If one takes the view that there is a certain market discipline in allowing takeovers, it is not unreasonable to say to these companies, "You have virtually two years of quietude when the takeover will not be allowed".

I feel that we should not seek to extend that. I now turn to the words "may" or "shall" which appear in Amendment No. 163C standing in the name of the noble Baroness. If we were to substitute the word "shall" for the word "may", it would mean that the ITC would have to revoke every licence should there be a change of ownership. There could be circumstances where a change of ownership could be beneficial—for example, where a licence holder was going bust. If another company sought to take over that licence, that could be a beneficial arrangement. However, under the amendment of the noble Baroness, that licence would have to be revoked and all the screens in that area would go blank.

It would be a pity to deny the ITC the right to allow a licence to continue in the hands of a new person. In the example to which I have referred it would be beneficial for a new licence holder to take over the licence of a company that was in financial straits. I hope that the Committee will agree that the word "may" is correct and that it will not impose strictures on the ITC. I hope that the Committee will appreciate that, while we understand the reasoning behind the speeches of the noble Baroness and the noble Lord, Lord Boston of Faversham, on the whole we believe that the oneyear moratorium from the date of broadcasting is the correct solution.

Baroness Birk

I thank the Minister for that reply and explanation. I shall deal with the words "shall" and "may" before I discuss the length of time of the moratorium. The Government's proposed new clause states in subsection (3): The Commission shall refuse to approve for the purposes of this section such a change as is mentioned in subsection (1) (a)". In other words, certain mandatory duties and responsibilities will be placed on the commission.

I am afraid that I did not agree with the Minister's general explanation. Perhaps we were talking about two different things. I should like to take that matter away, think about it and perhaps return with it at a later stage. As regards the length of time, I believe there was a little misunderstanding over this at one point. The Minister said that two years had been decided upon and implied that we had been asking for that in any case. However, I think that later on he realised that that was not the case. What we are asking for is one year while the arrangements are being made, but two years of screening. That is the important point. My noble friend Lord Boston expressed that point well when he said that such a period would enable the ITC to take stock after a year's screening and be able to discuss the screening. However, one year altogether is far too short a period.

I take the point about horse trading. However, as I have pointed out, we tabled an amendment many weeks ago, long before the Government's amendment was tabled. At that stage my noble friend Lord Boston suggested a threeyear period. I would prefer that too, but finally in our amendment we were cautious and modest. I should like to see that modesty rewarded. We are talking about three years in total, but that period includes two years' screening.

The Government have come such a long way from the stage when they were saying no all the time in another place—we are grateful for that—but they are spoiling the ship for the sake of a ha'porth of tar, or one year. I hope that the Minister will consider taking this matter away for further consideration and coming back on Report with it. We would all be grateful to receive such an undertaking.

Earl Ferrers

I quite understand that the noble Baroness would be grateful if I gave that undertaking. She is enormously persuasive when she says that it is a pity to spoil the ship for a ha'porth of tar. It is hardly a question of a ha'porth of tar. We are giving a oneyear moratorium from the time at which screening starts. However, the noble Baroness says in the most charming way that she would like a twoyear moratorium. A twoyear moratorium would mean in fact a threeyear moratorium—we are agreed on this —because there is also the period before screening commences. The noble Baroness is in fact saying that companies in the independent television business should have the privilege of a threeyear break from being subjected to market forces, and that if any company wishes to take those businesses over it should not be allowed to do so during that period. She believe s those companies should be isolated and insulated from such pressures.

With the greatest respect to the noble Baroness, that is asking for a little too much. We have given a oneyear moratorium. We think that that is right. That concession represents a considerable change of heart on the Government side. The noble Baroness, and the noble Lords, Lord Boston and Lord Thomson, have been kind enough to recognise that. We have made a considerable change, and we think that is as much of a change as we can reasonably be expected to make. I hope the Committee will agree that to ask for a threeyear moratorium for the independent television companies, during which period they cannot be taken over, is going too far.

Lord Annan

I hope that the Minister will think again on the limit of two years—the one year, plus the waiting time. I do not know how much experience the Minister has of companies being taken over. I have no such experience, but two of my friends have recently undergone that experience. They tell me that when one is faced with a hostile takeover bid, one's entire energies are spent in repelling the invaders. One has to put oneself in the hands of one's public relations advisers who then mount a campaign to persuade the institutions and one's shareholders that one's company is doing a good job. One has no time whatever for forward planning or for running one's company.

That is why some of us feel that if this period could be extended to what will amount to a total of three years in all, companies would be given the chance to get going and to devote their energies to programming within the limits of satisfying their shareholders. We should not put such a weight upon companies in the early stages that they must convince shareholders—in this case we are probably talking about the institutions— that they are maximising profits to the fullest extent, when the ITC is looking at them to see whether they are living up to the promises which they made when they won their franchises.

Earl Ferrers

I go along with what the noble Lord, Lord Annan, has said. The people I know who have been subjected to takeovers have found it a most disagreeable business. The noble Lord is right to say that in such circumstances one directs one's energies to defending one's premises and one's organisation. That is why we have said that there should be a moratorium. It is obviously a matter of opinion how long the moratorium should last.

Clearly there comes a time when people have to defend their organisations and it is quite right that other companies should be allowed to take them over. However, to say that a twoyear period is not enough and that there should be a threeyear period, or perhaps even a fouryear one is, I think, going a little too far. One cannot insulate companies from the general marketplace for too long a period. I would suggest that two years is long enough.

Baroness Birk

I am disappointed but at this stage I do not think that we shall get any further along this road. Therefore I shall withdraw the amendment while reserving the right to come back at the next stage when I hope that there will have been some change of heart. I beg leave to withdraw the amendment.

Earl Ferrers

With the greatest respect to the noble Baroness, I do not believe that we were speaking to her amendment; it was my amendment.

Baroness Birk

I was attempting to amend the government amendment. I think that I am right in saying that an amendment to an amendment is dealt with first.

Earl Ferrers

I stand in sackcloth and ashes. The noble Baroness is quite right; she was amending my amendment.

Amendment to the amendment, by leave, withdrawn.

[Amendments Nos. 163C to 163F not moved.]

On Question, Amendment No. 163A agreed to.

4 p.m.

Clause 21 [The Channel Four Television Corporation]:

Lord BonhamCarter moved Amendment No. 164: Page 22, line 23, leave out subsection (4).

The noble Lord said: The amendment addresses the power of the Government to veto appointments to the board of Channel 4 made by the ITC. It is an important matter and I hope that we shall be able to persuade the Minister to change his mind wholeheartedly on this occasion rather than halfheartedly as on the last occasion.

As I understand it the Government's argument for introducing the power to veto appointments made by its own appointed body, the ITC, to the board of Channel 4 is that the ITC has less direct oversight over the activities of Channel 4 than over those of the old IBA, and therefore the Government's role, as representing the public—if I follow Mr. David Mellor's argument in another place correctly—is necessary and more important than when the IBA carried out that function.

If that is the case the Government are saying that the powers with which they have endowed the ITC are insufficient for it to carry out one of its most important functions, which is to appoint the board of Channel 4. I would much prefer the Government to change the powers of the ITC rather than to bring the Government into the very arena of broadcasting by themselves making appointments to that body and therefore running the risk of being thought to be or actually politicising Channel 4.

The Government have undermined a basic principle which has governed broadcasting in this country for many years, namely that it should be the object of policy to introduce a buffer between government and politicians and the broadcasters and everyday broadcasting. That is an extremely important principle and one which has been followed in many other fields, such as the Arts Council, with very great success. It was a brilliant invention and one which we should hang on to at all costs.

In reality, the Government are saying that they do not trust the ITC to make those very important appointments, to appoint suitable people to those jobs. I ask myself what constitutes an unsuitable person for such jobs. They can only be either professionally unsuitable or politically unsuitable. The ITC will not appoint a lot of crooks to the board. It is very unlikely that the ITC will be so ignorant of the area in which it operates that it will appoint to those jobs people who are professionally inadequate. Therefore one is reduced to concluding that what the Government mean by an unsuitable person is a person who is politically unsuitable to the Government. It is precisely that which must be avoided because of the danger of politicising appointments these days by governments of all parties, not least this Government whose record in this matter has not been without blemish. The risk of governments using their patronage to put their own people in places of authority is something that we have to avoid and if we do not, it is at our peril.

The system under which this country has run such institutions in the past is one based on selfrestraint in which governments do not pack bodies like the BBC, the IBA or the ITC with people of their own political persuasion. There have been far too many signs over the last year that that selfrestraint has not been properly exercised. The introduction of this clause in this Bill, providing the Government with the capacity to veto appointments and the ability to remain as a threat to the board of Channel 4 in all its daily operations, is something which we should not allow to pass. I beg to move.

Baroness Birk

In supporting the amendment of the noble Lord, Lord BonhamCarter, I should like to clarify one point. Perhaps the Minister can help. I gained the impression recently from Michael Grade, head of Channel 4, that there has been a change in the arrangements—which is not yet in the Bill. I understand that the arrangement would be very much more distant: the Secretary of State would not make appointments, but Channel 4's choice would be made openly and the Secretary of State would only have the power to veto it. However, the matter would already be in the open and it would be a much less closed arrangement than at present appears in the Bill.

Is that true? If the Secretary of State is to have such a power does that mean that Channel 4 would be prevented from making public the name of its choice before the Secretary of State used his power of veto? I should like to know what change is to be made. I have the impression that there is to be a change. If there is to be a change I should like to know what it is and how it will be reflected in the Bill.

Lord Winstanley

Naturally I support the amendment moved by my noble friend. I believe that having set up the machinery the Government should trust it to do the job. I do not believe the requirement is necessary.

I speak merely in order to ask a question which the Minister may be able to answer when he replies to the amendment. Hitherto there has always been an age limit. Under the existing statutes members of the boards of independent television companies have been obliged to retire at the age of 70. So also have members of the Independent Broadcasting Authority. It appears that the age limit has now disappeared. If I am correct in saying that it has disappeared, can the Minister tell me why?

Lord Sanderson of Bowden

At present Channel 4 is wholly owned by the IBA, which broadcasts its programmes, approves its schedules and decides its income. The Government appoint the members of the IBA. There have been no objections to those arrangements, even although they involve government responsibility for the appointment of the ultimate controllers of Channel 4.

In future Channel 4 will be owned by the corporation, which will be appointed by the ITC, with the Government retaining only a long stop power of veto to be used in the remotest of circumstances. The ITC will have the power to dismiss members of the corporation without government approval. We see these arrangements as involving a considerable withdrawal of government influence over Channel 4 and as giving Channel 4 a much larger degree of independence than it has hitherto enjoyed. Channel 4 will be a statutory body operating to a statutory programming remit. We therefore believe that the Government are justified in retaining some interest in the process of appointments to the corporation.

The noble Lord, Lord Winstanley, asked about an age limit. There is currently no age limit on appointments to the IBA, nor will there be for the ITC. I should point out that Channel 4 itself, having been consulted about these matters, is quite content with the new what I might call lighter touch involved in the Government's proposals for Channel 4 so far as concerns the board.

I hope that I have explained this matter clearly enough to the noble Baroness. There is a change and we believe that it is a change for the better. I hope that this explanation will mean withdrawal of the amendment.

Lord Thomson of Monifieth

I listened carefully to the Msinister's explanation of this change but I am bound to say that I remain unconvinced by the arguments that he adduced. It is true that the Bill changes the status of Channel 4, which now becomes a separate Channel 4 corporation, where previously, nominally at least, it was a wholly owned subsidiary of the IBA.

But as the Minister will know, in practice the IBA dealt totally at arm's length with its relations with Channel 4 in regard to its regulatory responsibilities. There have been references in earlier debates in this Committe to criticisms of the degree to which the IBA carried out that regulatory responsibility for programme matters that came out of Channel 4. But in practice the IBA treated Channel 4 at arm's length, exactly as it treated all the other programme contractors.

In the past members of the board of Channel 4 were appointed by the board of the IBA without needing to seek the approval of the Government. I cannot understand why in these circumstances it is not perfectly possible and consistent to continue that arrangement. The Government appoint the members of the ITC as they appointed the members of the IBA; then the members of the ITC appoint the members of the Channel 4 corporation. That insulates the Government from what is an especially sensitive appointment. I should have thought that from the Government's point of view it was a healthy insulation which protected them from the kind of charge about which my noble friend Lord BonhamCarter was concerned.

Given the facts as I have sought to describe them, I do not believe that the change in the structure of Channel 4 is an adequate justification for a change in the method of appointment of the board of Channel 4.

Lord Sanderson of Bowden

I do not know that I can add very much to what I have said. I said that this is a long stop power. Channel 4 will be a statutory body operating to a statutory programming remit. As the noble Lord said, if there have been statutory requirements, as in the case of the ITC, the BBC, the BSC, the BCC and the fourth Welsh Channel, they all have boards appointed by the Government.

I thought that we had moved on a long way since 1978. I do not want to be churlish about this matter but the other day Sir Robin Day's memoirs brought the issue back to me. I noticed that the White Paper produced by the previous government spoke about plans to secure greater government control over the BBC's output by inserting a new layer of management appointed by the Home Office.

In this area we are trying to have a lighter touch but I do not think it unreasonable for the Government to retain a long stop power as contained in the Bill as it stands.

Lord BonhamCarter

I must confess that I found the Minister's answer completely unsatisfactory. He spoke about a long stop power which will only be used in the remotest possible circumstances. He did not tell us what the remotely possible circumstances would be.

I put to him two possibilities: one, that the person was professionally unsuitable (which did not seem to me very possible because I thought it unlikely that the ITC would appoint a professional dunce to the board); the other, that he might be politically unsuitable (which seemed to be all too possible).

The Minister said that they were trying to introduce a lighter touch. In point of fact, as he must know, he has introduced a heavier touch. The IBA did not have to obtain approval for the chairman and board of Channel 4. He cannot deny that. Now the ITC will have to obtain approval for the chairman and the board of the ITC. In my view that is a very funny definition of a lighter touch. I am sorry that the Minister has been unable to meet me in what I believe to be a very important constitutional position. I am afraid that I must test the opinion of the Committee.

4.15 p.m.

On Question, Whether the said amendment (No. 164) shall be agreed to?

Their Lordships divided: Contents, 81, NotContents, 115.

Division No.1
CONTENTS
Abinger, L.	Jenkins of Hillhead, L.
Airedale, L.	Jenkins of Putney, L.
Annan, L.	Kennet, L.
Ardwick, L.	Kilbracken, L.
Aylestone, L.	Leatherland, L.
Birk, B.	Lindsay of Birker, L.
Blease, L.	Listowel, E.
BonhamCarter, L.	Lloyd of Kilgerran, L.
Boston of Faversham, L.	LovellDavis, L.
Broadbridge, L.	Macaulay of Bragar, L.
Bruce of Donington, L.	McCarthy, L.
Campbell of Eskan, L.	Mayhew, L.
Carter, L. [Teller.]	Molloy, L.
Cledwyn of Penrhos, L.	Mulley, L.
ClintonDavis, L.	Nicol, B.
David, B.	Peston, L.
Dean of Beswick, L.	PrysDavies, L.
Diamond, L.	Rea, L.
Dormand of Easington, L.	Richard, L.
Ennals, L.	Rochester, L.
EwartBiggs, B.	Russell, E.
Falkland, V.	Sainsbury, L.
Fisher of Rednal, B.	Scanlon, L.
Foot, L.	Seear, B. [Teller.]
Gallacher, L.	Serota, B.
Galpern, L.	Stallard, L.
Gladwyn, L.	Stedman, B.
Graham of Edmonton, L.	Stoddart of Swindon, L.
Hampton, L.	Strabolgi, L.
Hanworth, V.	Thomson of Monifieth, L.
Hatch of Lusby, L.	Tordoff, L.
Hayter, L.	Underhill, L.
Hollis of Heigham, B.	Varley, L.
Holme of Cheltenham, L.	Wallace of Coslany, L.
Houghton of Sowerby, L.	Whaddon, L.
Howie of Troon, L.	White, B.
Hughes, L.	Wigoder, L.
Hunt, L.	Williams of Elvel, L.
Jacques, L.	Willis, L.
Jay, L.	Winstanley, L.
Jeger, B.

NOT CONTENTS
Abercorn, D.	Balfour, E.
Aldington, L.	Belhaven and Stenton, L.
Alport, L.	Belstead, L.
Annaly, L.	Bessborough, E.
Auckland, L.	Blatch, B.

Borthwick, L.	Long, V.
Brabazon of Tara, L.	Lonsdale, E.
Brigstocke, B.	Lurgan, L.
Brougham and Vaux, L.	Mackay of Clashfern, L.
Butterworth, L.	Macleod of Borve, B.
Caithness, E.	Monson, L.
Caldecote, V.	Montgomery of Alamein, V.
Campbell of Alloway, L.	Morris, L.
Campbell of Croy, L.	Mostyn, L.
Carnegy of Lour, B.	Mountevans, L.
Carnock, L.	Mowbray and Stourton, L.
Cavendish of Furness, L.	Moyne, L.
Clanwilliam, E.	Nelson, E.
Cockfield, L.	Norfolk, D.
Colwyn, L.	Nugent of Guildford, L.
Constantine of Stanmore, L.	Onslow, E.
Cottesloe, L.	Pender, L.
Cox, B.	Platt of Writtle, B.
Cullen of Ashbourne, L.	Pym, L.
Davidson, V. [Teller.]	Quinton, L.
Denham, L. [Teller.]	Rankeillour, L.
Derwent, L.	Richardson, L.
Eccles, V.	Rippon of Hexham, L.
Effingham, E.	Rochdale, V.
Ellenborough, L.	Rodney, L.
Elliot of Harwood, B.	St. Albans, Bp.
Elliott of Morpeth, L.	Saint Oswald, L.
Ferrers, E.	Salisbury, M.
Flather, B.	Sanderson of Bowden, L.
Fraser of Carmyllie, L.	Seebohm, L.
Fraser of Kilmorack, L.	Sempill, Ly.
Gridley, L.	Shannon, E.
Halsbury, E.	Stanley of Alderley, L.
Hankey, L.	Stockton, E.
Havers, L.	Strathclyde, L.
Hemphill, L.	Strathcona and Mount Royal, L.
Henley, L.
Hertford, M.	Strathmore and Kinghorne, E.
Hesketh, L.	Sudeley, L.
Hirshfield, L.	Swinfen, L.
Hives, L.	Taylor of Hadfield, L.
Holderness, L.	Thomas of Gwydir, L.
Home of the Hirsel, L.	Thorneycroft, L.
Hood, V.	Trefgarne, L.
Howe, E.	Trumpington, B.
HyltonFoster, B.	Tryon, L.
Joseph, L.	Ullswater, V.
Kinnaird, L.	Vaux of Harrowden, L.
Lauderdale, E.	Wedgwood, L.
Lawrence, L.	Wharton, B.
Layton, L.	Wigram, L.
Lindsey and Abingdon, E.	Wise, L.
Lloyd of Hampstead, L.	Young, B.

4.24 p.m.

Clause 21 agreed to.

Schedule 3 agreed to.

Clauses 22 and 23 agreed to.

Clause 24 [Revenue deficits of Corporation to be funded by Channel 3 licensees]:

Lord Sanderson of Bowden moved Amendment No. 165: Page 24, line 33, leave out from ("(1),") to ("by") in line 35 and insert ("then (subject to subsection (4)) the amount of the difference shall be raised by the Commission").

The noble Lord said: I shall speak also to Amendment No. 166.

Clause 24 makes provision for the ITC to impose a levy on Channel 3 licensees in circumstances where Channel 4 is unable in any given year to achieve an income of an amount which is at least equivalent to 14 per cent. of the total television revenues for that year.

As it stands, Clause 24(3) leaves it to the discretion of the ITC whether to impose the levy. Upon reflection we now feel that the ITC should be required to impose a levy and this is the purpose of Amendment No. 165.

Amendment No. 166 simply recognises that at the stage where the ITC is required to establish a Channel 3 company's qualifying revenue it may be in a position to determine rather than estimate the amount. I beg to move.

Baroness Birk

have one question. Is the ITC happy about the provision? Does it quite happily accept the argument that the Minister has put?

Lord Sanderson of Bowden

Yes, indeed. It is very happy about it. It feels in a much stronger position to deal with the situation.

Lord Thomson of Monifieth

Before the Committee approves the amendments, and Clause 24, it ought to be aware of exactly what the Government are proposing with this device. It is a very curious proposition to which I believe not enough attention has been given during the debates on the Bill.

Channel 4 is a well established success story. Perhaps I may say to the noble Lords opposite that it is entitled to be called a Conservative success story. It was the creation, in the political, parliamentary sense, of the noble Viscount, Lord Whitelaw. The arrangements with regard to the financing of it have now been changed in a fundamental way. The reasons ought to be examined before we continue.

The basic proposal is that Channel 4 should now sell its own advertising in competition with Channel 3. That has been proposed ostensibly on the grounds of promoting competition. In practice it is a concession to the advertising industry which has grumbled over a long period—and I think justifiably in many cases—about the high prices that it has to pay for television advertising. But we ought to be aware that the proposition in this clause will not help the understandable grumbles of the advertising industry. It will not bring down the cost of advertising.

Why is television advertising at such high cost? It is because it is an extremely popular and effective form of advertising for a wide range of goods and services. The supply of television advertising time is limited by the necessity under statute to ensure that there is not too much advertising at any particular hour of programmes. The demand outstrips the supply. The difficulty about the Government's proposal ostensibly to create competition is that it does not in the least increase the supply and it probably will increase the price.

Channel 4 I believe is now setting up its own national selling organisation. There will be two sets of overheads to be met; one from Channel 3 and the other from Channel 4. I am not sure of the final position but it is extremely difficult for Channel 4 to sell other than national advertising whereas the present arrangements enable Channel 4 to carry regional advertising. They make it possible for local specialist advertisers to enjoy access to television advertising that is impossible for them on a national basis because it is too costly.

The thinking behind the proposition is very dubious indeed. In the proposal to which these amendments relate, such advertising will be bolstered by an economic device that I believe would make Adam Smith turn in his grave. There is to be competition between Channel 4 and Channel 3 for selling advertising. But if the competition does not work well enough, then Channel 4 will be compulsorily subsidised by Channel 3 with which it is supposed to be in direct competition.

My noble friend Lady Birk asked whether the ITC thought that was a good idea. It might have been more pertinent to ask what the ITV companies thought about it. It is a curious competitive device and I did not feel that the clause should be allowed to pass without the Committee's attention being drawn to the fact that the Government are putting before us an elaborate to and bogus charade in respect of Channel 4 advertising.

4.30 p.m.

Lord Sanderson of Bowden

I note what the noble Lord says. I am sorry that he does not like the arrangement—which may appear to him to be curious but which to others is satisfactory—to try to move Channel 4 on from the current position. In relation to the amendments to which I have spoken, Channel 4 and the IBA, to which the noble Lord contributed such distinguished service, approve of the amendments. The advertisers themselves have welcomed the separate setting up of Channel 4 air time. It is wrong to suggest that the clause will cause disruption to the advertising market. Of course there will be difficulties and problems when new arrangements are made. But by giving some kind of comfort to the company to proceed along the lines that we would wish we are letting it flap its wings—the wings that are now emerging from the little chicken that the noble Viscount produced. I thank the noble Lord, Lord Thomson, for the remarks that he made about this being one of the Government's good decisions and for acknowledging the part played by the noble Viscount. However, he is being a little tough in pouring such a large bucket of cold water over the whole of Clause 24.

Lord Sanderson of Bowden moved Amendment No. 166: Page 25, line 21, after ("estimate") insert ("or determine").

Clause 24, as amended, agreed to.

Clause 25 agreed to.

Baroness Birk moved Amendment No. 167: After Clause 25, insert the following new clause: ("Research into feasibility of new commercial television service . The Commission shall conduct such research as may be appropriate to investigate the technical and commercial feasibility of a new national commercial television service, taking into account the requirements set out in sections 26, 27 and 28 below.").

The noble Baroness said: I shall speak also to Amendment No. 168. Amendment No. 167 is a probing amendment designed to test the willingness of the Government to establish a viable Channel 5 that enhances the existing broadcasting system. There is considerable concern that Channel 5 was designed partly to satisfy the advertisers' desire to bring down the advertising rates. A channel that aims to reach only 65 to 70 per cent. of the population, with proportionately low revenue and no distinctive programming remit as yet, appears more likely to undermine the existing broadcasting standards than to enhance them.

The prospects for a significant number of highquality original productions appear on that basis to be limited. It is more likely that without a strong programme remit Channel 5 may he forced by commercial pressure to rely on a large amount of cheap, boughtin and repeated material. Have the Government conducted any research into the commercial feasibility of Channel 5? If so what did it reveal? Secondly, why have the Government not helped or encouraged the IBA to begin work on the necessary engineering infrastructure for Channel 5?

A further anxiety relates to the startup and transmission costs, including the need to retune domestic video recorders even in areas without Channel 5 reception. I understand that that will be necessary because of the interference that will be caused. The number of VCRs affected exceeds 750,000, as confirmed in a written reply given by Mr. Mellor in another place to a parliamentary Question.

The purpose of the amendment is to ensure that such issues are examined in advance and before rushing in to establish the new Channel. Ultimately our argument is not negative; everyone would welcome an extra channel of sufficient quality. We merely wish to ensure that sufficient preconditions, including a strong programming remit, are set to ensure that Channel 5 enhances our broadcasting system rather than undermines it.

Although the amendments are grouped together many questions are attached to them. It may be convenient for the Minister to reply separately to Amendment No. 167 relating to research and viability. I do not mind, but we may become bogged down. I beg to move.

Earl Ferrers

It would be easier to deal with this amendment separately. The noble Baroness asked whether the Government have carried out any research. The Department of Trade and Industry has conducted research in relation to Channels 5 and 6. As a result the Government decided to go ahead with Channel 5 but not with Channel 6. Channel 5 will be larger than any single Channel 3 company and there is no reason to doubt its viability.

The IBA has carried out detailed financial modelling which fully confirms the commercial viability of Channel 5. That is so even bearing in mind the costs of equipment and transmission. It is a completely different kind of channel to Channel 3. It will be a national channel but it will not reach everyone; only about 70 per cent. Therefore, the conditions are different.

Lord Thomson of Monifieth

The Minister gave an inadequate reply to the proposal put forward by the noble Baroness, Lady Birk, that there should be serious study. He says that a study has been carried out by the DTI. From my experience the DTI tends to rush into such matters with great ideas but without exploring them in depth. I remember a famous occasion on which it suddenly called the chairmen of the BBC and IBA to this building in order to try to persuade us to transfer Channel 4 and BBC 2 to satellite. The idea was shot down in about 50 days as being technologically foolish. The more comment that has been made on the proposals for Channel 5 the more one is glad that the ultimate responsibility for broadcasting policy will remain with the Home Office.

The comments that have been made about the economics of Channel 5 become increasingly worrying. One of the highest regarded financial commentators on broadcasting economics is Bronwen Maddox. She writes a good deal about such matters and is on the staff of one of the merchant banks involved. Recently she suggested that the worst obstacles are the startup costs. She suggested that the transmission might cost £40 million. Then there is the case of retuning most of the country's VCRs in order to avoid interference. That has been estimated at £60 million. Those costs must be borne by whoever is willing to bid for Channel 5.

Thirdly, everybody will need a further aerial for Channel 5. At present we have aerials for the four terrestrial channels and we are all busy wondering whether to buy a Sky dish or a BSB squarial. When Channel 5 comes along, we shall have to stick another aerial on to our roofs. It is estimated that the overall cost to householders of receiving Channel 5 will be £250 million.

Those are formidable figures. They may be mistaken figures, I do not know, although they come from a reputable source. Before we launch into a major new project like this the Committee is entitled to know that really serious research has been carried out so that we have the material on which to make informed judgments as to the best way forward.

We should all welcome a further channel and on another amendment we shall come to the possibilities of using Channel 5. However, the starting point is to know a good deal more about the realistic costs of the project in order to decide whether or not it is viable.

Earl Ferrers

The noble Baroness's amendment suggests that the ITC should conduct the research into the technical and commercial feasibility of Channel 5. At the same time, it requires it to set up Channel 5. The noble Lord, Lord Thomson, said that he was glad that broadcasting remained in the hands of the Home Office. I took that as being a somewhat backhanded compliment.

Lord Thomson of Monifieth

It is a real compliment.

Earl Ferrers

That gets me into even greater difficulties. I am delighted that the noble Lord should compliment the Home Office in such a way. I shall satisfy him by saying that had he complimented the Department of Trade and Industry in the same manner, that would be equally acceptable.

The Department of Trade and Industry has already conducted research and has concluded, as is fairly well known, that Channel 5 should be commercially viable and that it could achieve a coverage of up to 70 per cent. of the United Kingdom population. That is one reason that we decided to go ahead with it. If it is not likely to be viable, then there is no point in going ahead with it. That does not guarantee viability but it is considered to be potentially viable. On that basis we decided to go ahead with Channel 5.

The Government are not obliged to take a position on the financial viability of Channel 5. A full study has been carried out. We conclude that as the availability of frequency is there, and as the study indicates that there is a possibility that it is viable, then we should make that possibility open to the market. The best estimate which we have of the retuning costs is £20 million. That is based on the Department of Trade and Industry's study.

There has been a study which has shown viability and it is now up to the market place to see whether anyone wishes to take this on. Of course, if all the sets are to be retuned, that is an expense. However, that expense should be undertaken by the person who takes on the licence and it is not as high as the noble Lord, Lord Thomson, suggested.

4.45 p.m.

Baroness Birk

I shall now deal with the arguments as regards Amendment No. 168 because the amendments go together. The Minister seemed to think that, because the amendment states that "the Commission shall conduct research", that lets the Government completely off the hook. However, when I began I pointed out that this is a probing amendment which tests the Government's willingness to establish a viable Channel 5. As I also understand it, the IBA wanted to start on the infrastructure but the Government would not put up the money. How is it to get the money for the infrastructure of something which it has not yet been able to sell and as regards which at present there is no chance of putting out bids?

The following amendment, which deals with programme requirements, is closely linked to the first amendment, because if research has not been carried out and the viability is not known and there is not much idea of what its structure will be, then it will be very difficult to have a proper schedule of programmes.

Under the Bill as it stands, Channel 5 would be the first national terrestrial channel to be established without any deep thought as to how it should enhance or bring something different to the existing broadcasting system. When Channel 4 started, it was given a very specific remit and a great deal of thought was put into it. Originality was given a very high priority. Thus we achieved the quality of programming which there now is on Channel 4. When commercial television started, plans were made as to what it was meant to do. When BBC 1 and then BBC 2 were set up, there was a complete understanding of what was required and needed.

Here we have a blank. There is a vacuum. We just have the title: Channel 5. Without a strong and distinctive programme remit, it seems destined to become a poor parasitic relation of Channel 3, competing for revenue with little scope for original production and reliant on a large amount of acquired programming. Neither viewers nor programme makers could possibly gain from that.

Given those problems, the only justification for the establishment of Channel 5 will be if it has a distinctive programming remit. This amendment provides such a remit by requiring a reasonable proportion, including at peak times, of local programmes of interest to and made largely within the relevant local area as well as educational programmes. Local programmes could be provided by as many as 40 or 50 local stations.

I wonder whether the Government have thought out that point. Is there supposed to be one franchise or do they wish to break it up into different franchises? Will Channel 5 be new and distinctive or will it be a replica of Channels 3 and 4? Do the Government accept that Channel 5 should have a specific remit for local programming in line with the IBA's research into the citybased local optout services? That is one line which could be followed. Is Channel 5 to be a truly national service or will it be made up of a number of different services with one or more licences, which I have already mentioned?

Because of the shortage of frequencies, this could be the last opportunity to offer truly local television services in the United Kingdom. Cable television, with a more limited coverage and an emphasis of syndicated satellite channels, seems much less likely to produce a significant amount of locally originated service.

In addition, Channel 5 could have a distinctive profile as a knowledge channel specialising in educational and documentary programming. It could provide a significant boost to education and training in the UK including programmes from the Open University and Open College, schools, polytechnics and universities. That could be one stream of the channel's national programming and would complement a continuing commitment to education on the main terrestrial channels. That could compensate for what we discussed yesterday when so much anxiety was expressed about the quality of programmes on the new Channel 3 when the new auction system comes into being. That would be a means of providing a quality guard.

These programme ideas are probably feasible; they are certainly desirable. To provide Channel 5 with no remit at all would be a wasted opportunity. One has the impression that it is there as a name and a number, but that the Government have washed their hands of it; that it might just disappear into the distance and that we will not hear much more about it.

Earl Ferrers

The noble Baroness has given Channel 5 a pretty good spike, and says that it will not be much use; that we will not hear much more about it and so forth. I believe that she is being a little pessimistic. She asked a number of questions —in fact she moved to the following amendment—and I shall try and answer her points because they are important and require an answer.

The timetable for the award of the Channel 5 licence will be a matter for the Independent Television Commission. The ITC may decide that the licence for Channel 5 should be awarded after those for Channel 3 so that the unsuccessful bidders for Channel 3 licences have the opportunity to bid for a Channel 5 licence.

The ITC will be aware that the Channel 5 licence will be more valuable to a bidder the earlier that the service can be transmitted. The Government are proposing that arrangements for a transmission network for Channel 5 will be a matter for the successful Channel 5 licensee. The choice of transmission system may be a crucial element in the Channel 5 business plan. We do not feel that that decision should be preempted by the private transmission company, which will take over the IBA transmission network, being allocated a transmission contract in respect of Channel 5 before the Channel 5 licence has been awarded.

I appreciate the desire of the noble Baroness to see Channel 5 providing local television programmes. There is nothing to stop an applicant from arranging his Channel 5 service in that way. We do not believe we should make it a statutory requirement. The Government have identified that two additional broadcasting frequencies—UHF channels 35 and 37—could be made available for broadcasting. We felt it right to make those frequencies available, even though they could not in themselves achieve 100 per cent. coverage, in order to give wouldbe broadcasters an opportunity to expand the choice for viewers and for viewers to have the opportunity of greater choice where possible.

We are not predicting that Channel 5 will be a success. We do not see any reason why it should not be, and hope that it will be. We are giving further opportunities for entrepreneurs to provide additional broadcasting services where they want to, "have a go". A number of economic assessments of Channel 5 have recently been performed, some of which illustrate that even if Channel 5 is provided as a single national service it will be only marginally viable.

It is the intention that there should be one licence for the Channel 5 network, although it could be split into two; for instance, breakfast time and another. The viability of Channel 5 will depend crucially on the business strategy of the licensee and his success in winning and retaining an audience for the programmes which he chooses to show. Our view is that it should be for the licensee, with as little constraint as possible from statutory instrument, to determine how best to use the channel to build an audience that will be crucial to its commercial survival.

The Bill lays down detailed programming requirements for Channel 5. It will be for the licensee to develop a distinctive remit for the channel in order to compete effectively with Channel 3. It is wrong to suppose that unless the Bill lays down the precise programming policy for Channel 5 it will not acquire a strong distinctive identity.

The noble Baroness said that there would be no remit. With the greatest respect, that is not so. We have imposed basic consumer protection requirements on the licensee and also the full quality threshold in Clause 16, which applies in the same way to Channel 3 with the exception of the regional requirements. That exception is not included for two reasons. First, it is likely to be a national channel; secondly, it is not likely to cover 100 per cent. of the country.

The Channel 5 licensee will have to satisfy the Independent Television Commission that it will give a sufficient amount of its services time to news and current affairs programmes of high quality, to other programmes of high quality, to children's and religious programmes; that its planned programmes, when taken as a whole, are calculated to appeal to a wide variety of tastes and interests; that a proper proportion of the material included in the programmes will be of European origin; and that for each year not less than 25 per cent. of the total amount of time is allocated to broadcasting independent productions.

That is a very demanding remit for any organisation and for any channel whose prosperity is not taken for granted. It demonstrates that when the noble Baroness says there is no remit for Channel 5, with the greatest respect, she is not correct.

Bearing in mind those substantial standards being imposed on Channel 5, it is right that the licensee should decide how best to organise the service. Some argued that the Channel 5 licensee may wish to subcontract for local services. That is what the noble Baroness refers to when she talks of "optouts". The licensee may contract for local services for part of the transmission time. There would be nothing to stop different programmes being transmitted from each separate transmitter. Those are matters for the licensee to decide. We cannot require in legislation that a Channel 5 service should be organised in any specific way beyond the existing requirements of the quality threshold, which are very important. I am sure that the noble Baroness will appreciate that there is no point in imposing obligations on licensees which could have the effect, if we are not careful, of making the service nonviable. We should leave those matters to the commercial decisions of the applicants.

I hope that I have managed to explain to the noble Baroness some of the ideas that we have in mind for Channel 5, and that she will realise it is not as grisly a picture as she portrayed.

Lord Thomson of Monifieth

The remit which the Minister just described is acceptable so far as it goes, but it is very basic. My noble friend Baroness Birk has performed a notable service in tabling these new clauses. They will enable the Committee to begin to apply its mind to what might be best in the public interest regarding this very valuable national resource —a possible fifth television channel.

I am bound to say that given the doubts that have emerged regarding the costs associated with a fifth television channel, and the basic remit that will be included in the Bill, the likeliest course of action for anyone willing to take on the very great risks involved is to make Channel 5 a general entertainment channel. If that is so we should face the consequences of what that would mean for the general overall quality of British broadcasting.

A general entertainment channel with very limited regional or local optouts would give the kind of competition to Channel 3 that might make it extremely difficult to maintain the standards of Channel 3 that we have been painstakingly seeking to write into the Bill. The knockon effect if Channel 3 is undermined would, as many noble Lords have said in the course of the debates, in turn undermine BBC 1. Therefore very grave implications are involved.

Behind all that is the question of what is likely to be the totality of advertising available for the various new television channels that are coming along. I said that proposals in relation to Channel 4 were totally bogus in regard to helping to bring down the cost of advertising. I welcome the fact that one of the advantages of Channel 5 would be to provide real competition in advertising instead of bogus competition. It would help to bring down the cost of advertising which would be a healthy development.

However, there is still the question of the limits of television advertising. How much is available? How many channels can the potential pool of television advertising in this country finance at a reasonably acceptable standard? Those are big issues. The Government's approach, which is almost purely entrepreneurial—to propose, within a general framework of basic standards, to offer almost a blank cheque to those who might be willing to bid to take the risks—raises big issues about the future standards of broadcasting in this country. The two new clauses that we are discussing raise big issues on which the Committee should take a view.

5 p.m.

Lord Ardwick I

have rather friendly feelings towards Channel 5 because it gives the possibility of introducing real additional choice. We shall, of course, have real additional choice with cable and satellites, but they will cost money. Channel 5 could offer choice to the nonaffluent. I am particularly interested in the possibilities of local television broadcasting. I do not know what its effect will be on local newspapers, but it would certainly have a good effect on local communities.

Advertising is the only source of revenue. I go along with the doubts of the noble Lord, Lord Thomson. When I looked at the forecast, I wondered whether the Government were serious about Channel 5. Was it just a dream in the mind of some young man in the DTI? Could it earn enough revenue? There is no law which says that, when a new channel is created, advertising is automatically created to support it. As the noble Earl told us only the other day, advertising bears a reasonably constant relationship to GDP. Although that has been less true in years of great buoyancy, we must accept that it has been true over a period of time.

It has also been suggested that Channel 5 will bring relief to the advertiser. I do not see much relief being brought to the advertiser. If a channel with 2 million viewers loses 1 million to another, the cost per viewerhour remains identical, apart from some marginal competition between two companies that are now competing; and it may be that there is a bit of a market from some advertiser who does not want a wide span of television. However, it is extremely difficult to look even with minimum confidence to the future.

I wonder about the timing of the introduction of Channel 5. After all, Channel 3 will face a considerable ordeal if the satellites are as successful as people think they may be and if they fractionate the total audience. If the audiences on Channel 3 are smaller and then there is a proposition to introduce Channel 5 and reduce the audience still further, the viability of commercial television generally will be in grave doubt.

Lord Holme of Cheltenham

Perhaps I may add one reason why the prescriptions that the Government set out for the bidding process on Channel 5 may pose particular problems.

The Minister spoke yesterday of the general relationship between the quality threshold and the highest bidder. He conceded that in certain circumstances the highest bid might indicate that the quality of the bid was not all it should be in that the very high field bidder proposed to improve his profitability by putting out programmes that were not of an adequate quality. The Government have therefore established that there is a possible relationship between a high bid and inadequate quality and that the quality of money, to which my noble friend Lord Thomson of Monifieth referred, was a potential judgment that the commission would have to make.

If that is true in general of Channel 3, how much more true is it of Channel 5? The Minister has eloquently explained that the maximum area of entrepreneurial discretion will be given to those bidders who wish to conceive and invent the way in which Channel 5 will provide television services to the public but that the widest possible latitude is to be given. If there is to be the widest possible latitude, we shall give the commission an extraordinarily difficult job of judgment to know whether the quality of money with regard to any particular bid is a good quality of money.

I urge that the amendment, which asks the commission to conduct research, be taken seriously, not least because it will give the commission the grounds and the information on which to make the, judgments that are necessary to the Government's proposed highest bidder method.

Earl Ferrers

When I listen to noble Lords opposite, I begin to wonder sometimes where their spark of excitement and enterprise is. The noble Lord, Lord Thomson of Monifieth, poured cold water on all the new arrangements for Channel 4 and said that they were perfectly awful. Along came the noble Baroness and started on Channel 5. She said that it will fail, and will not achieve an audience and will fade away. The noble Lord, Lord Thomson, turned round and said, "Well, I don't know. It might be successful and, if it is so successful, it will cause all Channel 3 licensees to be in a muddle". He then asked whether we were right to give Channel 5 people a blank cheque.

Channel 5 is different. Those frequencies are available. It is something new. There will be all the problems of retuning. We shall not be able to reach 100 per cent. of the country. We shall only be able to reach 70 per cent. There will be extra expenses, but those people who want to take a risk and are prepared to make a go of it should surely be entitled to do so, provided that they accept the standards of quality threshold that the Bill places upon them. The noble Baroness said that we should do more research. The Government have done their research, and, as a result, we believe that it is a viable proposition.

The noble Lord, Lord Holme, made a point which I think is mistaken. He said that I said the other day that there might be opportunities where someone who was not the highest bidder was given the franchise. He said that that meant that the highest bid might be of inadequate quality. I did not say that. I said that all those who were entitled to bid would show that their quality was above the threshold and above the requirements. Anything above that was of adequate quality. There might be occasions where someone who has not given the highest bid can show that he would provide a better programme than someone who has submitted the highest bid. In those exceptional circumstances, the ITC could award the contract to someone who was not the highest bidder. That is not the same as saying that it is of inadequate quality. I am sure that the noble Lord realises that.

I appreciate the concern about this matter. I hope that the noble Baroness will not press the amendment. The research that has been done shows that Channel 5 can be viable. We believe that a commercial opportunity should be given to companies that wish to take advantage of it.

Baroness Birk

I do not want to repeat everything that I said. There are points that have not been dealt with. It is not a case of the noble Lord, Lord Thomson of Monifieth, or myself having gloomy views. I am very unhappy about so many features of the Bill. However, if something exciting were to come along which created more balance in the Bill I would grasp it. If people are to have a chance or an opportunity, what are they to have a chance or an opportunity about? I return to an earlier point. We are talking about a situation which is in a vacuum.

As I pointed out, Channel 4 came along and, before that, commercial television and BBC 1 followed by BBC 2 which was intended to add another dimension to the BBC. All these channels had a purpose. As regards commercial television the arrangements were not made in such detail except for the public service broadcasting, and the "must carry" requirements. However, within those provisions there was plenty of room for initiative and creativity. That is what we want. We feel that the Government should have some idea about what should happen.

If, as the Minister said, the quality requirements are exactly the same as for Channel 3 contained in Clause 16, why, in Amendment No. 169D, are the limited time services proposed for Channel 5 free from the programming obligations placed on Channel 3? The Government may feel that it is a small point. It is an indication that Channel 5 is not receiving the attention that it should. We are not going to make any headway; I must divide the Committee.

5.13 p.m.

On Question, Whether the said amendment (No. 167) shall be agreed to?

Their Lordships divided: Contents, 68; NotContents, 100.

Resolved in the negative, and amendment disagreed to accordingly.

5.21 p.m.

[Amendment No. 168 not moved.]

Clause 26 [Channel 5]:

Lord Thomson of Monifieth moved Amendment No. 169: Page 26, line 43, at end insert: ("( ) The licence period for Channel 5 shall be 15 years").

The noble Lord said: In view of our rather thorough discussion on Channel 5 I shall not take up the time of the Committee. Perhaps the amendment will be taken by the Minister as a sign of repentance. He believes that we are so unsympathetic to enterprise; but in this case we believe that the risks associated with setting up Channel 5 are so considerable that we wish to suggest that, in order to reward enterprise, those who take the risks should have a 15year contract instead of a 10year one. I beg to move.

Lord Sanderson of Bowden

I appreciate the intention behind a 15year licence period for Channel 5. It is to provide greater security for the licensee faced with large startup costs and a more uncertain financial climate than Channel 3. However, we do not believe that the proposed amendment will help because it fails to appreciate how the licence system will operate in practice. I shall try to demonstrate what I mean by that.

The Channel 5 licensee, like his Channel 3 counterpart, will be awarded a licence for 10 years with the option of seeking a semiautomatic renewal after six years. While the licence runs, the licensee is committed to the cash bid and the net advertising revenuerelated payments fixed at the outset. These payments can be changed only at the time of renewal. The present arrangements thereby provide a break-point after six years at which the financial terms can in effect be renegotiated. Were the licence period to be extended to 15 years, that breakpoint would presumably not come until 11 years into the licence period.

A licensee who at the outset took too optimistic a view of the financial prospects and who ran into subsequent financial difficulties would therefore no longer be able to look forward to a relatively early breakpoint at which the level of payments could be reviewed. The result of lengthening the licence period would therefore be to impose an additional, possibly damaging, inflexibility as the licensee found himself locked into financial arrangements that could not be altered.

I understand what the noble Lord seeks to do. He suggests that because of the risks involved the timescale could perhaps be longer. However, with the breakpoint indicated, and as we know that interest has been expressed in this channel, I think that the present arrangements are the ones to which we would wish to stick.

Lord Thomson of Monifieth

Perhaps the Minister will be glad to know that for once I am persuaded by his arguments. I beg leave to withdraw the amendinent.

Amendment, by leave, withdrawn.

Clause 26 agreed to.

Clause 27 [Application to Channel 5 of provisions relating to Channel 3]

Earl Ferrers moved Amendment No. 169A: Page 26, line 44, leave out ("subsection (2)") and insert ("subsections (2) and (3)").

The noble Earl said: In moving this amendment I shall speak also to Amendments Nos. 169C and 169D. In passing perhaps I may say that I am mortified that the noble Lord, Lord Thomson of Monifieth, should be persuaded by my noble friend and yet not be persuaded by myself. At least I shall try on these modest amendments to take the noble Lord with me.

They are minor amendments designed to provide that in the event that the ITC were to advertise for two or more Channel 5 licensees, the remit for Channel 5 as a whole which is set out in Clause 16(2) should be shared between the licensees as the ITC may determine. There might, for example, be a Channel 5 breakfast licence. It may not be necessary for that licensee to fulfil all the obligations set out in Clause 16(2), such as providing religious programmes and programmes for children. But the service taken as a whole should certainly cover all those aspects. I beg to move.

Lord Thomson of Monifieth

I am becoming positively worried because I think that the noble Earl is right in his arguments. If in fact we divided the clock different considerations would apply to different times of day. It is important to have the necessary flexibility, which I understand is the purpose of the amendments. I am happy to go along with them.

Earl Ferrers

I am deeply appreciative of the noble Lord's ever widening sense of understanding.

On Question, amendment agreed to.

Earl Ferrers moved Amendment No. 169B: Page 26, line 44, leave out ("20") and insert ("(Restriction on changes in control over Channel 3 licence holder)").

On Question, amendment agreed to.

Earl Ferrers moved Amendments Nos. 169C and 169D: Page 27, line 5, after ("shall") insert ("(except where subsection (3) below applies)"). Page 27, line 7, at end insert: ("(3) Where the Commission make a determination under section 26(3), section 16(2) shall, in its application in relation to each Channel 5 licence, have effect to such extent as they may determine to be appropriate having regard to the nature of the service to be provided under that licence.").

On Question, amendments agreed to.

Clause 27, as amended, agreed to.

Clause 28 [Initial Channel 5 licensee required to retune equipment susceptible to interference]:

Viscount Ullswater moved Amendment No. 170: Page 27, line 38, after first ("equipment") insert: ("(aa)").

The noble Viscount said: It may be for the convenience of the Committee if I speak also to Amendments Nos. 171 to 173. The only substantive amendment is Amendment No.171 which exempts the holder of a Channel 5 licence from liability to return or modify equipment if the only reason for interference to relative equipment is the installation of an aerial to receive Channel 5. Engineers who install a Channel 5 aerial will almost certainly have to retune the VCR as part of the installation procedure, where otherwise interference would be caused, in order to obtain a clear reception of the Channel 5 signal.

The remaining amendments, Amendments Nos. 170, 172 and 173 are simply minor drafting improvements to subsections (3) and (6) of Clause 28. I beg to move.

On Question, amendment agreed to.

Viscount Ullswater moved Amendments Nos. 171 to 173: Page 28, line 3, at end insert ("or (bb) if the equipment would not be liable to suffer interference caused by the transmission of Channel 5 but for the installation at the place where the equipment is kept of any apparatus for enabling that service to be received there;"). Page 28, line 4, leave out ("such") and insert ("relevant"). Page 28, line 26, leave out ("likely") and insert ("liable").

On Question, amendments agreed to.

Clause 28, as amended, agreed to.

Clause 29 agreed to.

Clause 30 [Nomination of bodies to provide news for regional Channel 3 services]:

[Amendments Nos. 173A and 173B not moved.]

5.30 p.m.

Lord BonhamCarter moved Amendment No.174: Page 30, line 22, leave out from ("provider") to end of line 28.

The noble Lord said: This amendment is concerned with the ownership of ITN. It is an important amendment as news on television is an important item in its programmes. Indeed, 80 per cent. of the population receive their news broadcasts from television or from the radio. Therefore, the quality of news provided by television or radio, whether it be on the BBC or ITV networks, is a matter of the utmost concern.

The purpose of the amendment is to ensure that the ITV companies keep complete control of ITN. That, in point of fact, is the ordinary pattern of ownership as regards television. Major television companies, without exception —although there may be one which could be regarded as an exception—all control their news providers. The exception to whom one might refer is Ted Turner, but he is a provider to cable television and I am talking about conventional television.

The reason this consideration is important is that those companies want to be assured that the quality of the news they receive is in accordance with the standards which they lay down. As they are liable for mistakes, they like to have control over those who provide them with this vital element of their programming.

The case as regards ITN is rather special in that it is regarded by the ITV companies as a cost and not a profit centre. That is an important factor. Its purpose is not to make profits, it is to provide news. Indeed, it has achieved a formidable reputation in this role. ITN and the BBC compete with each other to provide news and that competition has proved to be extremely effective.

Over the past few years the output of ITN has substantially increased to nine hours per day. Added to this there are the three or four radio bulletins which it supplies to a number of commercial radio stations. It has tripled its air time in the past three years and, at the same time, cut its news staff by 12 per cent. Its features are shown world wide and it provides news for 1,000 broadcast and cable networks. Its broadcasts are widely admired not just in this country but also throughout the world. Its success is evidence of the fact that, if you treat your news provider as a cost centre, rather than a profit centre, it pays dividends in terms of the end product. Indeed, there is much evidence to show that those who do otherwise find that the standard of their news broadcasts suffers.

The excellence which ITN has attained is a direct result of the nurturing and the investment undertaken by the ITV companies. As I understand it, the proposal in the Bill is that they should be forced to disinvest at a moment when ITN is being expanded, when it is exploring new markets which are opening up as a result of new technology and when, in addition, it is about to move into a new building. I believe that that situation should concern everyone.

It is wholly reasonable that the Channel 3 companies should wish to have control, for the reasons I have already given, of the organisation which provides them with news broadcasts. Finally, to retain it is to follow a wellknown Conservative argument: If a thing works, don't muck about with it!

I cannot understand what has compelled the Government to try to change the organisation and the financing of a body which has provided an excellent service over the years, which is now on the point of expansion and to which we all owe a debt of gratitude. I beg to move.

The Deputy Chairman of Committees (Lord Aylestone)

I should remind Members of the Committee that if this amendment is carried I cannot call Amendment No. 175.

Baroness Birk

In speaking to this amendment I should like to include Amendment No. 175 which is tabled in my name. I shall not repeat what the noble Lord, Lord BonhamCarter, has already said because I agree with him. The problem with his amendment is that it will not work. I agree that the status quo appears to be working very well at present. I also understand that the ITN people have plans for the future as regards how they will improve their organisation and management and that they are moving into new premises. However, in my view it is unrealistic to hope that the Government will leave matters as they stand. Nevertheless, if they were to do so, I would be as pleased and delighted as the noble Lord.

Further, if the proposal put forward by the noble Lord, Lord BonhamCarter, does not work, then my amendment is designed to ensure that the existing ITN franchiseholding owners can maintain their control over the company. The breakdown in those circumstances would be 70 per cent to 30 per cent. It means that there would be a 30 per cent. chance for outside investors, which is quite a sizeable proportion. The noble Lord was absolutely right when he sang the praises of ITN. There are very few outstanding news services in the world. In this country we have the BBC and ITN and in America they have the ABC, CBS, and NBC. ITN is one of those outstanding news providers. Therefore, it would be a great pity if anything were to rock that particular boat. It could result in a diminution of the quality of our news service in this country. It does indeed appear that the maxim, "If it works; leave it alone", really applies in this case.

In my view, the Government must exercise restraint upon themselves as they seem always to be throwing everything into the market and leaving it to market forces. It is rather like the Romans throwing the Christians to the lions, one after the other. Of course, any restraint can only be selfimposed. However, I hope that that factor will be taken into consideration. I know that my noble friend Lord Ardwick who has a great deal of experience in this field will want to make a contribution to the debate. I have, therefore, kept short my remarks.

Lord Ardwick

I feel the same kind of vehemence with regard to this subject as some noble Lords expressed towards midnight last night when confessing their religious faith or lack of it. I have a religious faith. It is that an adequate and pure news supply is a basic essential for a civilised democracy.

In my view this is one of the occasions on which the Government have made a mistake. It is a mistake which shows their innocence of the real world. It may well be that the same young man at the DTI of whom I was complaining a few moments ago was the person originally responsible. However, the Government seem to regard the television news service as a commodity which can be bought or sold, extended or contracted as the demand grows, or diminished; or that it can be replaced if it is not quite up to scratch. However, that is not so.

Anyone who has been in the news business will tell you that ITN is most inadequately described as a news service. It is much more than that; it is an electronic newspaper with all the ethos and drive of a newspaper. It is old enough now to have a tradition of excellence and dedication, often to be pursued even at the risk of life. It is today two newspapers. There is the major one that serves ITV and the minor one that serves Channel 4. "Minor" may be the wrong word since many people regard Channel 4 news at 7 p.m. as the best of all news programmes.

ITN is strangely constituted. It is wholly owned by the ITV companies, and so, in the arid language of the accountant, it is an item of cost, and not one of profit. That is identical to a newspaper. The advertising people and the circulation manager bring in the money, but it is the journalists who spend it. Journalism is always a cost in a well run newspaper, and although from time to time a newspaper may try to sell a service, it never gets far. The only things that are saleable are pocket cartoons and crossword puzzles.

The idea that the service is a cost is not convincing even to those who measure profit and loss in monetary terms. Prestige is also a business asset. ITN is a source of great, prestige to independent television. The fair name that independent television has in this country depends upon the quality of its news programmes. "News is sacred", as C. P. Scott said. Until ITV came along and developed, the BBC was the sole custodian of the Holy Grail. ITN now shares that honour. It is largely because it does so, that so many people in this country are battling for the survival of ITN. We do not want the ITV companies to be defenceless opponents of richer companies that shudder at the words ''public service". To quote Scott again: newspapers are of course a business, but they are like no other business". Electronic newspapers are the same. That is where the Government have gone wrong. They see ITN as a monopoly, sheltered by the ITV companies, incurring large costs, never facing competition, and never fighting to produce and sell other services to other customers.

The Government have therefore come up with the remarkable proposition that 51 per cent. of ITN should be sold to others to encourage it to get into the market place. It is all very well to argue that with 49 per cent. of the stock, ITN will still be in command of the company—technically and practically yes; but morally, no. The company will have ceased to be a company oriented to service and become one oriented to profits. There are two ways in which an efficient company such as ITN can show a profit. It can find new markets for new products (novel kinds of news services) or it can cut its costs by spending less on the news services it provides to the companies.

A reduction in the richness of ITN's services would make BBC again the outstandingly respected news service, and Channel 3 would lose prestige and revenue. There are ways in which ITN could increase its revenue from time to time. It could provide a few needed services, but within limits. Once profit becomes its main aim, its morale as an electronic newspaper would be sapped, and it would no longer be a serious competitor for the BBC.

The Government have been good learners as they have battled on with the Bill. They have changed what were once firmly held but erroneous opinions. I should like to see them do so again. They should leave ITN as it is, as the noble Lord, Lord BonhamCarter, has suggested, and make it the sole supplier of Channel 3 and the chief rival to BBC and Sky News, or they should encourage it to be a little more commercial. If they have modest proportions of nonChannel 3 investors some of them should obviously be members of its loyal and devoted staff. I have received a great deal of paper about ITN. I have had many conversations. I have heard some sensible suggestions. I have heard some bizarre suggestions; but the wisdom of ITN's future is contained in the two amendments.

5.45 p.m.

The Earl of Stockton

I shall not move Amendment No. 176A which is in this group because its scope has been covered in another and better way by the amendment tabled by the noble Baroness, Lady Birk. The argument to keep ITN under the control of the Channel 3 franchise holders has been elegantly and forcefully put by the noble Baroness and by the noble Lord, Lord Ardwick. All that I can do is to endorse them most fully. The best regime for ITN is the status quo. If not, then majority control.

However, what concerns me is that I fear my noble friend the Minister will resist the amendments. I should like to consider the situation that will prevail in that eventuality. If the Government insist on changing ITN's structure, they must avoid creating a longterm monopoly. Therefore, the ITC should be cautious about committing itself to the full 10year term as regards ITN without a review. If institutions purchase 51 per cent. of ITN's shares, they will require a return at least equal to that obtainable from other investments on the Stock Exchange. That is the purpose of institutional investment. Most UK institutions own shares in any given company for about six months only. They will therefore have little interest in the longterm perception of ITN as an effective news provider if ITN gradually loses ground to the BBC news service because it cannot swiftly bring resources to bear on events such as the Romanian revolution.

The IBA stated earlier this month that the requirement for a nonlicence majority shareholding is intended to support the independent thrust and underpin the financial basis of a nominated news provider with a genuinely national and international structure, and to open up the possibility of competition. They are strong arguments. ITN's independent thrust and financial basis have hitherto been wholeheartedly supported by ITN shareholders. ITN has been allowed to invest in a flotilla of development businesses and ancillary exploitation businesses. At the last count, ITN had 10 different revenue sources. That may not continue if there is an outside majority investor.

There is also the possibility that Channel 3's financial position could change for the worse and that it could obtain a less expensive, but high quality, news service from elsewhere. The nominated news providers' costs might rise significantly, which would lead to a significant rise in the cost of its news service to Channel 3. If ITN loses the Channel 4 news service contract, which is a twoyear contract, at some point in the future, will its shareholders accept the considerable losses without attempting to recover a significant proportion of such losses through an increase in the price of the main news service to Channel 3? If they do not, will they not face possibly insurmountable financial difficulties?

I believe that if the Government wish to preserve a national news service of high quality, it will be counterproductive for such a service to be owned by a majority of nonChannel 3 shareholders. If the nominated news provider is majorityowned by nonChannel 3 shareholders, such shareholders could only be expected to maximise profits. Since new ITV licences would be required to take that service, the shareholders would be in a position to charge a monopoly price for the service, in the knowledge that Channel 3 had effectively no bargaining position. Channel 3 would not turn to a competitive supplier for a lower price or more efficient service. The outcome would be a news contractor which would use its position as a monopoly supplier and which would not be subject to the competitive pressure to be efficient.

At a later stage in the Bill I may well move amendments to attempt to give the flexibility of supply in national and international news. There may be other ways of achieving the same object which closer scrutiny will reveal. Certainly, referral to the OFT seems to me to be a lengthy and cumbersome process. The Government have called their White Paper on broadcasting: Broadcasting in the '90s: Competition, Choice and Quality. These words should also apply to the provision of an international and national news service on Channel 3.

Lord Boston of Faversham

I wish to join in supporting the amendment proposed by the noble Lord, Lord BonhamCarter, and the amendments to which my noble friends Lady Birk and Lord Ardwick have spoken. Perhaps I may endorse what they have said, that ITN has established a reputation as a leading news service in world terms. I believe that it has served the nation splendidly and proved itself alongside and in competition with the BBC. Even though I come in part from ITV, perhaps I may be forgiven for saying that; I happen to be one of those in ITV who has had no direct personal involvement in ITN.

As other Members of the Committee have said, it seems foolish to do anything to impair ITN's effectiveness. I share their views to the extent that it seems best to leave the structure and status of ITN alone. In view of its record, it seems in the best interests of viewers to do so; again we bring in the criterion of the best interests of viewers because that is our prime test. However, there is no harm in encouraging ITN to sell its services and to earn money —it has been doing so quite extensively already—as well as to maintain the strictest possible control on costs.

As part of the aim to operate on a more commercial basis, the Government's desire to introduce outside investment and shareholders is understandable. However, to do that it is not necessary to go so far as to require the existing shareholders, the existing programme contractors or any new ITV Channel 3 licensees to sell 51 per cent. or more of ITN. It is worth noting that if ITV did so—and the noble Lord, Lord BonhamCarter, has alluded to this—perhaps that formula would overcome the exception that he mentioned in the case of the Turner organisation. If ITV sold a majority in ITN, it would become the only first rank broadcaster in the world not to have complete control over its own news service. Moreover, it seems reasonable that as the users, the programme companies should have responsibility for the quality of the service provided and stand to account for that quality.

The Government's aim to widen the ownership of ITN could surely be achieved if 30 per cent. of the equity were sold to new outside shareholders. This is along the lines of the amendment mentioned by my noble friend Lady Birk. It would also ensure that enough of the ownership remained. It has after all stood the test of time and helped to maintain a first quality news service over the past 35 years.

I turn to one other point. One of the Government's aims is to seek to reduce costs and keep them under control—an aim which which many, if not all, of us agree. I certainly do. To leave the programme companies with only a minority holding would not do that. I very much share the view put forward by the noble Earl, Lord Stockton. Since he has spelt it out, I do not need to go into it in detail. I simply add a further voice to what he said and put it in this way. As the customers, it is in the interests of the present shareholders to ensure that the costs of ITN are kept under the firmest possible control. After all, they do have a direct incentive to keep costs down in the interests of its own shareholders, to whom it has a duty. If the majority shareholders were from outside and were not customers, the incentive would be the other way round: it would be to maximise the dividend payments. The danger then is that it would be at the expense of the quality of the service which is and has been provided. It would be in the interests of the outside shareholders to charge as much as possible to the customers, the programme contractors and the existing shareholders.

One must also bear in mind, as the noble Earl, Lord Stockton, said, that the programme companies are not just the customers but captive customers, as it has been put. They wish to remain captive customers because the status quo is the ideal situation, but not in a situation where they would be exploited. That is the point for any outside shareholders who had a majority interest.

So the Government's proposals are not the solution that they might at first sight seem to the problem of how to keep down costs. Quite the reverse. It is in the interests of viewers that the ITV Channel 3 companies should be solely responsible for the national and international news programmes on ITV Channel 3. That is best achieved by keeping the existing structure and status of ITN, although my noble friend's amendment would go a long way towards doing that and serve the purposes of some of the Government's aims as well.

I ant attracted by the idea which the noble Earl, Lord Stockton, put forward, particularly his point that the ITC should keep a close watch on any single news provider. Perhaps this is one of the points which the noble Earl had in mind; it might lead to the attraction of a review during the franchise granted to a single news provider by the ITC.

6 p.m.

Lord Willis

I wish warmly to support the amendment. I beg the Government to rethink their philosophy and go back to their original philosophy. It seems to me that this is a complete contradiction. From the beginning, the ITV companies took a big risk and have subscribed to ITN for many years to set up a news service to supply them. That news service has been eminently successful and is recognised throughout the world as being one of the best news services one can find. It is successful; therefore the Government's reaction is to say, "Let us break it up. That our reward for your initiative and your investment." That is totally wrong. It is like saying a cook should not own his own frying pan or his own gas stove, that he can only own, say, 49 per cent. of it. It is a total nonsense. We have here a marvellous service. I wonder why the Government want to tinker with it.

In m y fevered imagination I have a picture of a group of civil servants, or perhaps junior Ministers, sitting down together and deciding that now that they have finished with the Broadcasting Bill they should turn their attention to something else. At that point one of them suggests looking at ITN. Another one may say that it is all right and they should leave it alone. However, then the others say, "Come on. Let us have a go at ITN". That is a totally pointless exercise. Here we have a superb news service. It is competitive in the sense that it must now compete with Sky News, BSB News and other services. It also competes with the BBC. Why do the Government need to touch it? Why do the Government want to break up a fantastic news organisation of which everyone is proud? I beg the Government seriously to think again.

Lord Jenkins of Putney

I wish to add a postscript. The noble Earl, Lord Ferrers, paid tribute to this side of the Committee for our great reasonableness in accepting the good amendments that he has put forward. I believe that this is an opportunity for the noble Earl to reciprocate. He could say that he is so impressed with these amendments and the good sense with which they have been moved that the Government have decided to change their mind and will not proceed upon the course they have chosen. In the feeling that that is likely to happen, I shall not say more but simply sit down.

Earl Ferrers

The noble Lord, Lord Jenkins, is always ingenious. I paid tribute to the noble Lord, Lord Thomson, because he had become so broadminded and had understood the point of view of the Government. I was happily placed in the position of paying that tribute. I am content to remain in that position. I believe that the noble Lord, Lord Thomson, will realise that the Government are right.

The noble Lord, Lord BonhamCarter, seems to have become infected by the pessimistic virus that is prevalent on the Opposition Benches. His only contribution to the challenges and excitements of the future is to advise that ITN should not be touched as it is doing very well as it is. He suggests that as it is doing very well we should not try to find out whether it can do any better. He does not believe that we should try out any fresh ideas or try to get some fresh money or fresh thoughts. His is the philosophy of leaving a plant alone in case it dies if one waters it. No one is complaining about ITN. We all think that it produces an excellent service. All we are saying is that, with the future opening up before us, we wonder whether it is reasonable for the whole of ITN to be owned by Channel 3 companies.

Lord Ardwick

Yes it is!

Earl Ferrers

I believe that the noble Lord, Lord Ardwick, said "yes" in a particularly unhelpful intervention. I do not believe it is reasonable for it to be owned by Channel 3 companies. The noble Lord, Lord BonhamCarter, says that he wants ITN to be owned by Channel 3 companies. However the Government think that Channel 3 companies should not have 100 per cent. ownership. There is a difference of approach here.

We believe that the shareholding of the Channel 3 news provider should be broadened and that a majority shareholding should be held by nonChannel 3 licence holders. We have always believed that and the Bill puts that into practice. Amendment No. 174 standing in the name of the noble Lord, Lord BonhamCarter, and Amendment No. 175 standing in the name of the noble Baroness would allow the Channel 3 licensees collectively to have unfettered control of a nominated news provider. At the moment we are talking about ITN, but this measure does not apply just to ITN. Even with a 70 per cent. stake, any proposal favoured by outside shareholders could be voted down by the Channel 3 licensees. Amendment No. 176A would allow Channel 3 licensees to have a majority shareholding at the discretion of the ITC. All of these amendments are designed to make quite sure that the Channel 3 licensees hold the majority shareholding.

There are four main reasons why we have thought it right to provide that Channel 3 companies should have only a minority shareholding in the news provider. First, this should help to encourage the news organisation to act efficiently. Secondly, the wider share base gives scope for directors with outside experience and outside thoughts. Thirdly, the advantage of diversification and expansion is the introduction of greater scope for risk capital for investment. Fourthly, the proposal would ameliorate the tensions that otherwise might exist because of the conflict of interests among Channel 3 licensees themselves who at present collectively own the news provider.

There may be some misunderstanding about the need for Channel 3 companies to own their own news service. We naturally want the news service to provide high quality news—there is no difference of view here—but this does not mean that the Channel 3 licensees have themselves to own the news service.

The noble Lord, Lord Willis, produced an enchantingly domestic analogy. He said that on the whole the cook has to own the frying pan and not just 49 per cent. of it. Perhaps I could direct the noble Lord to another analogy. If he chooses to move house, he will move his furniture from one house to another. He does not have to do that by putting it all in his car and humping it over to the new house himself. He can employ a contractor to do that because contractors are professionals and specialists. They are good at that job and they know their business. The noble Lord would pay a contractor for moving his furniture. He does not have to own the contractor. The same position applies to the matter we are discussing.

Lord Willis

Such a person would not get the contractor to cook his sausages, would he?

Earl Ferrers

If the noble Lord went out to a restaurant, the sausages might be a good deal better than those he cooks for himself.

The ITC will, under our proposals, be required to nominate a news provider who is capable of providing high quality news. In order to retain nomination by the ITC, the news provider will have to continue to provide a high quality news service. If he did not, his nomination would be withdrawn.

My noble friend Lord Stockton and the noble Lord, Lord Boston, were worried about what would happen if the news provider charged too much for his services. If the supplier tries to increase the price unreasonably, on the basis that he is the monopoly supplier, he could risk being denominated by the Independent Television Commission. He may find that another news supplier is offering better value for money and that supplier could be nominated in his place.

On a similar point my noble friend Lord Stockton was worried about creating a longterm monopoly. The Bill already provides that the ITC must, at regular intervals, review the performance of the nominated news provider. The first of these reviews would almost certainly take place well before the fiveyear period, which was suggested in an amendment of my noble friend which he did not move. The review would probably take place after three years.

If, as a result of one of those regular reviews, the Independent Television Commission concluded that another news supplier could offer a better service, it would be obliged to terminate the nomination of the existing news supplier and to nominate the other supplier instead. The Bill therefore already contains a slightly more detailed and more sophisticated review mechanism than that which might be expected at first glance.

I wish to make the following point clear because it has worried every single speaker this afternoon who has spoken on this group of amendments. The Government are not seeking to exclude Channel 3 licensees from holding the controlling share of the news provider. If Channel 3 were to hold the 49 per cent. share for which the Bill would allow, that would almost certainly amount in practice to a controlling interest, particularly as the Bill provides that no other single person or company could have a shareholding that was greater than 20 per cent. In other words, although 51 per cent. of the shareholding is owned by people other than news providers, no one of those other owners could own more than a 20 per cent. shareholding. Therefore the chances are that the 49 per cent. shareholding held by the licensees themselves would create a controlling interest.

Lord Boston of Faversham

I am most grateful to the noble Earl, Lord Ferrers, for giving way. Perhaps I may take up one point that he has just made. He used the qualification "almost certainly". That is a very severe qualification indeed and does not amount to complete control.

Earl Ferrers

I am trying to recall in what circumstances I said, as the noble Lord, Lord Boston, suggested, that they would almost certainly have a controlling interest.

Lord Boston of Faversham

The noble Earl also said "for all practical purposes". No doubt he would wish to include that in the phrase. Those are the terms in which he put it. One has to look very closely indeed at that very severe reservation—"almost certainly"—because if it is almost certainly controlled it is not certainly controlled. That is a severe drawback.

Earl Ferrers

That is a perfectly fair point. If all those who were the owners of the 51 per cent. were collectively to gather together on some point they would overrule the 49 per cent. As nobody on the other side can own more than 20 per cent. the chances of that happening are remote. However, it could happen, I agree. Our reasoning is that there could be cases where that should happen.

We have tried to create a sensible balance between the legitimate interests of Channel 3 companies to have a say in the affairs of the company which will provide the news for them and the desire to avoid too narrow and introspective an ownership base.

Amendments Nos. 174, 175 and 176A, which would permit Channel 3 licence holders to hold a controlling interest, are misguided. Amendment No. 176, which relates to staff, is unnecessary. I know that the Committee feels strongly about the matter and has anxieties, but I hope that I have been able to explain that although there will be an influx of fresh thought in the 51 per cent. shareholding, that does not necessarily mean that the Channel 3 licensees collectively would lose control of the organisation.

Lord Annan

Is one of the arguments that the noble Earl is deploying that when the late Lord Thomson was required by the IBA to divest himself of a very large proportion of his shares in Scottish Television that it was because it was in the public interest to bring other shareholders into that company and to limit the power held by the late Lord Thomson in that company? Is he saying that that is one of the reasons why he believes that it is in the public interest to bring new blood into the running of the company?

Earl Ferrers

The analogy with the late Lord Thomson is not relevant to this particular case. Our view is that here is an organisation which has been immensely successful. We all accept that it has done very well. It is owned and controlled by those who purvey the news. We believe that to permit outside ideas, outside thought, outside money and fresh views will make it even more lively and enable it possibly to provide news for others as well. In providing that service it will be open to competition, because if it does not do well others will be able to do better. As a result it may he able to provide even better news than it does at present and it will not be such an enclosed organisation.

6.15 p.m.

Lord BonhamCarter

In one of his happier moments the noble Earl described me as having been infected by the virus of pessimism, which appears to have infected every single speaker on this topic this evening, with the exception of the noble Earl. Possibly the virus of pessimism has spread through my veins after watching the activities of the noble Earl's Government over 10 years. I regard their initiatives and their itch to meddle in everything even if it is going well, with a good deal of scepticism. I find that his arguments for meddling in ITN arouse my scepticism in an extremely acute form.

The Minister asked one or two rhetorical questions which perhaps I may answer. He asked whether it is reasonable for ITN companies to be owned by the ITV companies. The argument which I put forward and which most other noble Lords expressed was that it was reasonable not only on the basis of our experience of ITN as a producer of news but also on the basis of the experience of other television companies elsewhere in the world.

The noble Earl asked why activities should not be contracted out to experts in the field. ITN is an expert —an expert recognised throughout the world—in the field of gathering news. I do not know of any newspaper which contracts out its journalism. ITN regards itself as an expert in that field and therefore it wishes to retain that within its own control because it wants to control the people who provide it with news, for which it has a real responsibility.

Nor do I understand why, by bringing in outside shareholders, who presumably know nothing about news or television, one should expect to produce new ideas which would vastly increase the quality of the news provided by ITN. I suggest that those people who would have invested in ITN from outside would have invested in it to make money. The making of money is not the best way of judging what has previously been run as a cost centre. Nor is it very easy to value a cost centre. There would be considerable difficulty in obtaining a true valuation of ITN.

We have had a long and interesting debate on the subject. The overwhelming majority of opinion expressed in that debate has been that the Government have not yet convinced us that what they propose is a good idea. I believe, as the noble Earl, Lord Stockton, suggested, that the best course would be to leave things as they are. However, the second best course would be to see whether we can persuade the Government that it is unnecessary to give outside investors a majority interest but that they should have a minority interest so that ITN can use their ideas but not have those ideas forced down its throat.

Therefore, I shall seek leave to withdraw my amendment at this stage, but if the noble Baroness, Lady Birk, decides to press her amendment I shall, of course, support her. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Birk moved Amendment No. 175: Page 30, line 26, leave out from ("to") to end of line 28 and insert ("no more than 70 per cent. of the shares in that body; and (ii) possess no more than 70 per cent. of the voting power in it.").

The noble Baroness said: I have already spoken to the amendment. I have listened very carefully to everything that has been said. It is interesting that the Minister has a number of his noble friends around him but none has supported the view of the Government on this subject. Everyone who has spoken, including the noble Earl, Lord Stockton, has taken the view that has been taken on this side of the Committee. It is not a party political view but a realistic view which reflects the views of the IBA and the association of independent television companies.

ITN, quite rightly, would have preferred everything to have been left as it was. No arguments have been put forward by the Government to persuade any of us to change our view on the matter. I believe that we should follow the view of the ITA, which has agreed that the initial release of onethird of the equity and voting power in ITN will be more than enough to meet the Government's concern. That is what is proposed in my amendment. Therefore I wish to seek the opinion of the Committee. I beg to move.

6.20 p.m.

On Question, Whether the said amendment (No. 175) shall be agreed to?

Their Lordships divided: Contents, 56; NotContents, 75.

Division No.3
CONTENTS
Airedale, L.	Kilbracken, L.
Annan, L.	Kilmarnock, L.
Ardwick, L.	Listowel, E.
Aylestone, L.	McGregor of Durris, L.
Birk, B.	McNair, L.
Blackstone, B.	Monkswell, L.
BonhamCarter, L.	Morris of Castle Morris, L
Boston of Faversham, L.	Mulley, L.
Carter, L.	Nicol, B.
Cledwyn of Penrhos, L.	Peston, L.
ClintonDavis, L.	Pitt of Hampstead, L.
David, B.	PrysDavies, L.
Dean of Beswick, L.	Rea, L.
Diamond, L.	Rochester, L.
Donoughue, L.	Russell, E.
Dormand of Easington, L	Serota, B.
Ewart Biggs, B.	Stedman, B.
Gallacher, L.	Stockton, E.
Galpern, L.	Stoddart of Swindon, L.
Graham of Edmonton, L. [Teller.]	Thomson of Monifieth, L. [Teller.]
Hampton, L.	Tordoff, L.
Hirshfield, L.	Turner of Camden, B.
Hollis of Heigham, B.	Underhill, L.
Houghton of Sowerby, L.	Varley, L.
Hunt, L.	White, B.
Jay, L.	Williams of Elvel, L.
Jenkins of Hillhead, L.	Willis, L.
Jenkins of Putney, L.	Winstanley, L.

NOT CONTENTS
Abinger, L.	Fraser of Kilmorack, L.
Alexander of Tunis, E.	Gridley, L.
Allenby of Megiddo, V.	Halsbury, E.
Arran, E.	Henley, L.
Auckland, L.	Hesketh, L.
Balfour, E.	Hives, L.
Belhaven and Stenton, L.	Home of the Hirsel, L.
Beloff, L.	Howe, E.
Belstead, L.	HyltonFoster, B.
Bessborough, E.	Kinnoull, E.
Birdwood, L.	Long, V. [Teller.]
Blatch, B.	Lytton, E.
Blyth, L.	Mackay of Clashfern, L.
Borthwick, L.	Macleod of Borve, B.
BoydCarpenter, L.	Milverton, L.
Brabazon of Tara, L.	Morris, L.
Brougham and Vaux, L.	Nelson, E.
Butterworth, L.	Norfolk, D.
Campbell of Croy, L.	Northbourne, L.
Carnock, L.	Orkney, E.
Cavendish of Furness, L.	Pender, L.
Clanwilliam, E.	Peterborough, Bp.
Constantine of Stanmore, L.	Platt of Writtle, B.
Cox, B.	Pym, L.
Davidson, V. [Teller.]	Quinton, L.
Dilhorne, V.	Rankeillour, L.
Elliot of Harwood, B.	Reay, L.
Elliott of Morpeth, L.	Renton, L.
Ferrers, E.	Rochdale, V.
Fraser of Carmyllie, L.	St. Albans, Bp.

Saint Oswald, L.	Swinfen, L.
Sanderson of Bowden, L.	Thomas pf Gwydir, L.
Selkirk, E.	Ullswater, V.
Soulsby of Swaffham Prior, L.	Vaux of Harrowdean, L
Strathcarron, L.	Wedgwood, L.
Strathclyde, L.	Wise, L.
Strathmore and Kinghorne, E.	Young, B.
Sudeley, L.

Resolved in the negative, and amendment disagreed to accordingly.

6.28 p.m.

[Amendments Nos. 176 and 176A not moved.]

Clause 30 agreed to.

Earl Ferrers moved amendment No. 177: After Clause 30, insert the following new clause: (" Conditions requiring holder of Channel 3 or 5 licence to deliver promised service .—(1) Any Channel 3 or Channel 5 licence shall include such conditions as appear to the Commission to be appropriate for securing—

1. (a) that the service provided under the licence accords with the proposals submitted by the licence holder under subsection (3) (b) of section 15; and
2. (b) the implementation of the proposals submitted by him under subsection (3) (c) and (d) of that section.

(2) In subsection (1) the reference to section 15 is, in relation to a Channel 5 licence, a reference to that section as applied by section 27. (3) Any conditions imposed in pursuance of subsection (1) may be varied by the Commission with the consent of the licence holder (and section 3(4) (b) shall accordingly not apply to any such variation).").

The noble Earl said: This amendment was spoken to with Amendment No. 156. I beg to move.

On Question, amendment agreed to.

Clause 31 [Schools programmes]:

[Amendment No. 177A not moved.]

Lord BonhamCarter moved Amendment No. 178: Page 31, line 16, at end insert ("provided at times appropriate for schools").

The noble Lord said: This amendment stands in my name and that of the noble Baroness, Lady Birk. These programmes concern television used for educational purposes. I need not emphasise to the Committee that it is an extremely important and growing aid in education in our schools. The question that it raises is a relatively narrow one. We know that a large number of teachers in schools use television, appreciate it and depend upon it.

A recent survey showed that 12 per cent. of primary school teachers find television central to the education of their pupils and 74 per cent. used it from time to time and found it useful. In secondary schools the figures are the same. In the same survey they are 8.5 per cent. and just under 49 per cent.

I understand that the Government envisage that the ITC will continue the procedures of the IBA in this field. However, there is some concern that the licences only "may" have conditions with regard to schools programmes which implies, as ever, that they may not. I suggest that it be a statutory duty. Amendment No. 179 turns "may" into "shall" which serves that purpose.

There is also concern that with the growth of popular daytime TV programmes, schools programmes may be scheduled at inconvenient hours, perhaps late or very early, on the assumption that all schools have videos with which they can record those programmes. The fact is that at present that is not so, however desirable it might be that it should be so. A survey by Moses and Croll showed that 23 per cent. of teachers in primary schools and 26 per cent. of teachers in secondary schools had inadequate facilities for recording those programmes. Hence it is genuinely important either that they should be provided with equipment so that they can record the programmes, or, if not, that the programmes should be scheduled in hours when they can be used. The problem is particularly important and acute in rural schools where TV education is particularly important. Amendment No. 178, which stands in my name, would ensure that schools programmes are shown at appropriate times. I beg to move.

Baroness EwartBiggs

I should like to say a word in support of the amendment of the noble Lord, Lord BonhamCarter, and then to speak briefly about Amendment No. 179.

I believe that it is very important to make sure that schools programmes are broadcast at appropriate times for schools for all the reasons that the noble Lord, Lord BonhamCarter, has given. It is true that in some schools it may be convenient to record programmes. But there are other schools which do not own a video recorder. I think that it is fairly unlikely, as the noble Lord has suggested, that, miraculously, they will all be provided with one. If the schools do not own a video recorder and do not have the staff capacity to work the equipment outside convenient times, then the schools programmes cannot be shown.

This amendment does not determine rigidly the appropriate times for schools but leaves it to the ITC to ensure that the services are provided at those times.

Amendment No. 179 has the effect of ensuring that commercial channels must contribute towards schools educational programming. The requirement is necessary because it is possible to imagine a time when education authorities might be expected to subscribe to TV schools programmes when such programmes come in sponsored packages. I therefore do not think that it is a very contentious amendment. All those who sincerely believe in public service broadcasts will welcome it most eagerly.

Baroness David

I should like to say a word in support of these amendments. The provision is important because if the programmes are not shown at appropriate times, then unless the schools have videos, they will be in difficulty. We all know that at the moment schools are short of cash for books, equipment and so on. Some schools may well have difficulty in providing sufficient videos, tapes and so on.

With the existing shortage of teachers, television programmes may be relied upon more heavily. They are a very good aid to teaching if they are used properly. Of course teachers need to be present but such programmes are a very great help. It is therefore extremely important that these programmes should be made. That is the provision in Amendment No. 179. They should also be available at the right time.

Lord Sanderson of Bowden

I should like to draw the Committee's attention in particular to Clause 31(1). It states: The Commission shall do all they can to secure that a suitable proportion of the programmes which arc included in Channel 3 services and Channels 4 and 5 (taken as a whole) are schools programmes". The ITC shall do all that it can in that regard.

On Amendment No. 178, the relevant point is in Clause 31(2)(c)(ii) which refers to conditions requiring the licence holder to ensure that schools programmes included in the licensed service, are suitable to meet the needs of schools in the area or areas in the United Kingdom for which the service is provided". Clause 31(2) (d) refers to, conditions specifying the minimum number of hours in term time or within normal school hours that are to be allocated to the broadcasting of schools programmes in the licensed service". Those are the paragraph and subparagraph that we wish to address. They give the ITC power to ensure that schools programmes are suitable to meet the needs of schools, and to specify the minimum number of hours in term time or within normal school hours that are to be allocated to schools programmes. The Bill's provisions will give the ITC ample power to ensure that schools programmes are broadcast at times appropriate for schools. It would not necessarily be the case that all schools programmes would have to be broadcast during term time. Increasingly schools have access to video recorders and can be expected to use these facilities to reschedule programmes broadcast outside normal school hours. However, again I draw the Committee's attention to Clause 31(1). The commission would have to be sure that that balance was correct in that area.

Amendment No. 179 would oblige the ITC to require all Channel 3, 4 and 5 licensees to show schools programmes. The intention of the Bill is to give the ITC the flexibility to determine how best to provide schools programmes. It may indeed conclude that schools programmes can best be provided on three, four and five channels. On the other hand, the ITC may prefer to concentrate its schools programmes on one channel only. The important point is that the ITC is under an obligation in Clause 31(2)(c) to ensure that the schools programmes are suitable to meet the needs of schools. It will be a matter for it to decide how it can best achieve that. We believe that the Bill should not include a statutory requirement which might impede that objective. Surely the way that schools programmes are to be provided is a matter for the commission to decide given the obligations in the statute under Clause 31(1).

I hope that the explanation that flexibility would not come easily if Amendment No. 179 were accepted will determine what Members of the Committee think about the amendment.

Lord BonhamCarter

I have listened to what the Minister has been good enough to say. I agree that Clause 31 goes a long way to meet the requirements of the amendment that I moved.

However, I hope that he will have drawn the attention of the ITC to the importance which Members of this Chamber attach to this aspect of those responsibilities. I reiterate that although it is surprising, the figures indicate that 23 per cent. of teachers in primary schools and 26 per cent. of teachers in secondary schools do not have video equipment. Therefore the hours at which the programmes are broadcast is still extremely important. The evidence is that those least likely to have the equipment are small schools in rural areas.

In the light of what the Minister has said, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 179 not moved.]

Clause 31 agreed to.

Lord BonhamCarter moved Amendment No. 180: After Clause 31, insert the following new clause: ("Promoting the arts on television . The Secretary of State, in order to ensure the availability in the licensed services of a wide range of high quality programmes on the arts, shall

1. (a) set a percentage of the annual revenue obtained by the Commission,
2. (b) allocate a sum equal to the amount set under paragraph (a) above;

and shall ensure that the sums so obtained are paid to a body corporate established by the Arts Council for the purpose of promoting the arts on television.").

The noble Lord said: We return to the arts, upon which we touched briefly yesterday. I hope that on this occasion I shall be presenting an exciting entrepreneurial idea which the Minister will pick up, welcome, accept and carry out. I do not see him looking very forthcoming at the moment.

When the White Paper was published the Arts Council, to its great credit, noticed that there was an opportunity for it to take an initiative. It embraced the idea that the increased viewing choice which was to be made available should include the production and transmission of programmes showing the activities of its clients—those in the arts. It commissioned Messrs Coopers and Lybrand to assess the opportunities should the Arts Council try to increase the dissemination of the arts to a wider audience through increased coverage on television and video. The Arts Council has had experience of making such films and distributing them successfully. The films have been regarded by most people as being extremely good examples of their kind.

The Coopers and Lybrand report concluded that an opportunity existed for an agency to invest in such programmes. It should coordinate them with the broadcasting companies and the businesses interested in arts programmes for sponsorship and so forth. Therefore, it set out a plan. Its objectives were to bring the work of the Arts Council's clients to a wider audience by those means and to do so with a minimum call on private funds. To achieve that worthy objective it planned to set up an independent company and commit £1.5 million annually from a new broadcasting incentive fund beginning in 1991. The company will commission highquality arts programmes from independent production companies mainly derived from the productions of existing arts companies. In accordance with the Coopers and Lybrand report, it will be financially selfsufficient within five years given adequate investment. It will earn its revenue from domestic and international sales and it will develop a secondary market through home videos.

The Arts Council is persuaded that the plan will work in part as a result of the response that it has received from sponsors, arts organisations and broadcasters to the idea that it floated. Secondly, it is persuaded because of the Coopers and Lybrand projections and assumptions about the themes, the cost of production, marketing and administration and its conclusion that with sufficient investment profitability can be achieved within five years. Those two responses have encouraged the Arts Council to believe that it is on to something that can work.

The idea complements and reinforces the Government's objectives for increasing competition, choice and quality in broadcasting. The company's programmes will offer to millions more people the chance to enjoy the best works supported by the Arts Council. The venture is not large but it is significant. It launches a new idea and I hope that the Government will embrace it. I beg to move.

6.45 p.m.

The Earl of Bessborough

I was interested to read the amendment tabled by the noble Lord, Lord BonhamCarter, relating to the promotion of the arts. I have always believed that if we are to have 27 channels, which is more or less what we have now with perhaps more later, one or two might be devoted entirely to highquality programmes on the arts.

I was also most interested to read the letter that I received from Anthony Everett, the new secretary general of the Arts Council. He gave me details of the council's plans to set up an independent company to finance arts television programmes, such as mentioned by the noble Lord, Lord BonhamCarter. It was an extremely interesting proposal put forward by the Arts Council and Coopers and Lybrand which concluded that a commercial opportunity existed, given the right level of initial and continuing investment.

Therefore, I was glad to see that the noble Lord, Lord BonhamCarter, had tabled the amendment. I have had correspondence about the matter with my noble friend Lord Ferrers. I was glad that he told me that this was an imaginative and timely initiative. However, I accept the point that he does not believe it appropriate that there should be a statutory provision which would compel ITC licensees to fund such a body. I shall not state all the points that my noble friend made in his letter to me because it is better that he should do so himself.

I am glad that the Government welcome the Arts Council initiative and wish it every success. I was interested to read an article published in the Evening Standard on 29th June. It discussed the Arts Council's proposals for a £5 million television company and asked the question: where is the 1990s equivalent of Sir Kenneth Clarke's "Civilisation"?

I agree with my noble friend Lord Ferrers that, interesting and pertinent though the amendment is, it need not necessarily be included in the Bill. It would run counter to the deregulatory thrust of the Bill as a whole. Nonetheless, I hope that the Arts Council will succeed in its efforts to obtain voluntary contributions from broadcasters to its new incentive funding initiative. I hope that it will also receive contributions and sponsorship from others. That happens, for example, at the Chichester Festival Theatre, in which I have an interest, and at Glyndebourne opera. Neither are dependent on the taxpayer. I hope that the Arts Council will succeed in obtaining the necessary voluntary contributions to set up its new independent company, Arts Council Television, even if there is no provision in the Bill for that.

Baroness Birk

I am sorry that on this occasion I do not fir d myself in total agreement with the noble Lord, Lord BonhamCarter, and nor with my old friend the noble Earl, Lord Bessborough. We on these Benches agree that there should be more arts programmes on television. I have discussed the matter with members of the Arts Council and have received their letter and memorandum. It appears to be an attractive idea, but while the intentions are excellent the whole project misfires. I do not believe that this is the way to use Arts Council money, which is always in short supply. It is not the job of the Arts Council to set up its own broadcasting company, which is expensive in financial and personnel terms. I am also worried that there would be an adverse effect on the ability to obtain more government funding for the arts.

I believe that there should be many more arts programmes on television and radio than we have at present. However, I do not believe that this amendment is the right way to achieve that. It is a question of method. I believe that the Art Council should be able to commission programmes from independent producers for Channel 3 and Channel 5, if there is one. I prefer the route proposed by Amendment No. 128 in the name of the noble Lord, Lord BonhamCarter, and myself. I believe that that is the best way to approach the matter.

Earl Ferrers

I agree with the noble Baroness, Lady Birk, and that is a somewhat happy and unusual position to be in. This amendment is not quite suitable. I agree with the noble Baroness that this is an interesting initiative and we wish it success but that is completely different from imposing an obligation upon ITC licensees to contribute.

It is an imaginative and timely initiative. However, we do not consider that it is right to have such main statutory provision for it. I expect that the Arts Council will seek voluntary funding and will ask for contributions. Of course, it can seek funding from the broadcasters. However, as there are no specific requirements on any ITC licensee to show arts programmes, it is not right to require the licensees to fund a body which is engaged in promoting those sort of programmes which they do not have to show in the first place. No doubt such programmes will be shown and no doubt voluntary contributions will be made to the Arts Council. However, I do not believe that it is right to impose a statutory requirement upon the licensees to do so.

Lord BonhamCarter

For one marvellous moment I thought that the noble Earl, Lord Bessborough, was going to support my amendment. I was rapidly disillusioned and the support disappeared. For another moment I thought that possibly the virus of pessimism might not have entered into the veins of the noble Earl, Lord Ferrers. However, this bright new, interesting, entrepreneurial idea was turned down flat by the noble Earl. The virus of pessimism or scepticism has spread across the Floor of the Committee.

I listened to the words of the noble Earl, Lord Bessborough. He said that he recognised that the spirit of the amendment ran counter to the regulatory thrust of the Bill. I say to him that all the best amendments which have been moved run counter to the regulatory thrust of it. That is why we are grateful to the Government for modifying in so many ways the original Bill which was brought before Parliament.

However, one must accept one premise on which this proposal rests, whether it be practical or impractical; that is, that it is almost certainly the case that today most people's access to the arts is through television. Therefore, to encourage television broadcasters to broadcast arts programmes is highly desirable. As we decided the other day, television brings artistic performances and works of the very highest class and quality to millions of people who would not otherwise have access to them. Without the use of this magical medium, they would be wholly deprived of that.

Although this scheme may be flawed, I do not believe it should be thrust aside as impractical. It has the germ of an idea of great importance and I hope that it will be carried further. I hope that in some shape or form it will find its way on to our screens. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 32 [Subtitling for the deaf]:

Viscount Ullswater moved Amendment No. 181: Page 33, line 30, after ("television") insert ("broadcasting").

The noble Viscount said: This is a drafting improvement to Clause 32(8).

On Question, amendment agreed to.

Clause 32, as amended, agreed to.

Viscount Ullswater

I beg to move that the House do now resume and that we return to this business at 8 p.m.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.