HL Deb 17 July 1995 vol 566 cc71-80

7.1 p.m.

Lord Inglewood rose to move, That the draft order laid before the House on 23rd May be approved [22nd Report from the Joint Committee].

The noble Lord said: My Lords, on 23rd May the Government announced the conclusions of their review of the media ownership regulations. As part of the extensive package of legislative measures proposed, the Government undertook to enact immediate secondary legislation to amend the Broadcasting (Restrictions on the Holding of Licences) Orders with the aim of liberalising the ownership arrangements for radio. These measures were developed after widespread consultation and have the support of the majority of the radio industry, including the Association of Independent Radio Companies and the Radio Authority.

I would like to assure the House categorically that the Government remain committed to the continuing development of the sector and to the principles of diversity, choice and quality set out in the Broadcasting Act. However, it is also important to allow the sector to take advantage of the new opportunities that will arise as the result of recent technological change across the media as a whole. In this context the Government propose to enact two changes to the existing rules.

The first is to increase the upper limit on the number of local radio licences which may be held by any one person from 20 to £35. This adjustment to the numerical limit takes account of the significant growth that has taken place within the radio sector and effectively restores the previous balance of licences that can be held as a proportion of the whole. This measure forms the first stage of the Government's proposed changes to the radio ownership rules and represents a way of responding quickly to the immediate needs of the industry in advance of possible primary legislation. In the primary legislation proposed on media ownership we intend to remove the limit on the absolute number of local radio licences altogether and to rely instead on the points system established by the Radio Authority.

Our second proposed change is to remove the restrictions on the joint holdings of category A and category B radio licences. A category A licence is defined as one in which the number of persons over the age of 15 resident in the area for which the service is provided exceeds 4.5 million. A category B licence is defined as one in which the number of persons over the age of 15 resident in the area for which the service is provided exceeds 1 million but does not exceed 4.5 million. At present a person may hold a total of no more than six category A and B licences, of which no more than two may be category A licences. The effect of our proposal is to remove the restrictions on the holding of category B licences while retaining the two licence limit for category A licences. This change, as I shall explain in a moment, leaves the so-called points system unaffected.

At the same time we propose to remove the rule preventing national radio companies from holding more than a maximum of four category A and B licences. They will remain subject, like anyone else, to the two licence limit for category A licences but will be free to own any number of B licences subject to the overall 15 per cent. threshold established by the Radio Authority's existing points system. These changes do not affect the Radio Authority's points system. Companies will therefore continue to be required to ensure that their radio holdings do not exceed 15 per cent. of the total number of points in the Radio Authority system. Points in this system will continue to be allocated to each licence on the basis of the size of population served by the licence concerned.

The amendment to this statutory instrument represents a necessary response to the needs of the media industry during a period of great change. This proposal has received the overwhelming support of the industry itself and it will ensure that listeners will continue to benefit from the high standards they have come to expect from the broadcasting industry. I commend the order to the House.

Lord Harris of Greenwich

My Lords, before the noble Lord finishes his speech, would he like to explain to us what exactly happened in the House of Commons when these orders were rejected by the appropriate House of Commons committee?

Lord Inglewood

My Lords, my understanding is that the matter was debated in Committee and the measures were lost in Committee. However, the matter will be considered in the normal way by the House as a whole. I beg to move.

Moved, That the draft order laid before the House on 23rd May be approved [22nd Report from the Joint Committee].—(Lord Inglewood.)

Lord Donoughue

My Lords, first I would like to pursue the point which I think may be—

7.6 p.m.

Viscount Astor

My Lords, there is a speakers' list which I do not know whether the noble Lord has seen.

First, I congratulate my noble friend on his new position. It is one in which I spent an immensely enjoyable and interesting time in the Department of National Heritage and I wish him luck and great success in that position. He did not mention the independent productions order. Are we debating that at the same time or separately?

Noble Lords


Viscount Astor

My Lords, I should then turn to the broadcasting restrictions order on radios. The primary aim of the amendment order is to liberalise the ownership arrangements for radio. The radio sector has expanded rapidly during the past few years and it is vital that the regulatory regime should recognise that and, where necessary, adapt to those changes. It is expanding faster than any other media businesses, including television, and for two years running has been the fastest growing advertising medium.

There has been a huge surge in the number of licences over the past few years. The number of licensed independent local radio stations has grown by 30 per cent. in the previous three years from 135 in 1992 to 175 in 1995. The proposed change in the licence limit is therefore proportionally less than the increase in the total number of licences. As a result, many of the existing ownership rules are redundant. These changes represent a way to respond quickly to the immediate needs of the industry.

The current rules prevent UK companies which have a relatively large number of licences from expanding. One of the deficiencies of the present system as it is at the moment with the outdated 20 licence limit is that it prevents companies from expanding to reach anywhere near the 15 per cent. points limit without exceeding the 20 licence threshold. This position has of course favoured the expansion of overseas companies with little or no UK presence rather than established UK media companies.

More importantly, a licence with a small share of the market is treated in the same way as a licence with a large market coverage. For example, the Isle of Wight with a total survey area of just over 100,000 adults and Capital Radio with a total survey area of over 9 million adults are each counted as one licence. The current rules clearly favour city licence operations over those acting in the more rural parts of the country. Rural licences have smaller audiences and tend to be more financially marginal.

These changes have been welcomed by the industry, including the association of independent radio contractors. They are necessary because we must not treat this important industry as a cottage industry. For these companies to be major players they have to achieve a certain size. There was an interesting debate in the Standing Committee in another place. Perhaps the noble Lord, Lord Donoughue, after the leader of his party has been on an excursion to Australia, will give us the entire new Labour broadcasting policy and will explain to us what this now means after this "love-in" with Mr. Murdoch. I look forward to hearing that.

There were objections to this order in another place. One can deal with them quite simply. Why should we allow these mergers? They allow a more effective use of capital and consequently more production. That increases the overall level of investment in the industry. More value is created by putting two companies in the same industry sector together than by combining two in related sectors; for example, a newspaper and a radio station as opposed to two radio stations. There are good reasons not to delay. Shareholders are not being disadvantaged, but they would be if the order were delayed, as was suggested in another place.

I also welcome the brief glint of light introduced by the Minister in another place when he opened the door on the possibility of cash auction bids for independent national radio licences when he said that he would look at the issue again. That is to be welcomed.

The order is an improvement for the industry. I wholeheartedly endorse it and welcome it. So does the industry. I hope that the noble Lord, Lord Thomson of Monifieth, and the noble Lord, Lord Donoughue, will also do so.

7.10 p.m.

Lord Thomson of Monifieth

My Lords, the noble Lord, Lord Inglewood, as a new Minister, whom we have all congratulated, is having an interesting day. He did not have the happiest of times earlier when, from both sides of the House, he had to defend the Government, who, two-and-a-half years after the Calcutt Report, managed to come to us with a very tepid Statement of their intentions. Now we have the interesting situation of the new Minister for the Department of National Heritage describing the orders to us, followed immediately by his immediate predecessor defending one of the orders strongly. I am sorry to say to the noble Viscount, Lord Astor, for whom I always had the highest regard when he sat in the Minister's place, that I am going to disappoint him and will not support him. One of the orders raises some serious issues which the House ought to consider very carefully before reaching a conclusion.

Whereas the Government took two-and-a-half years to come to their decision on the Calcutt Report, it was on 23rd May that the then Secretary of State for the Department of National Heritage put forward his White Paper on cross-media ownership, among which were the proposals we have before us now. Within three days, one of the local radio companies had made a hostile bid for another local radio company. Here we are in the dying days of this particular part of the Session being asked to take this order through both Houses, and in circumstances in which the Government have announced major primary legislation in this field for the Queen's Speech and the next Session.

That situation caused such disagreement in the Standing Committee on Statutory Instruments in the other place, where nobody but the Minister spoke up for this particular order, that at the end of the day it was rejected by the committee in the other place which deals with these matters.

I am not sufficiently experienced in the procedures of your Lordships' House to know whether it is unusual for us to be asked to pass an order after it has been rejected by the appropriate committee of the other place, but it seems an odd procedure. I know that the general convention in your Lordships' House with statutory instruments is that, if they have been accepted by the elected Chamber, they should not be disputed, although they may be debated, here in your Lordships' House. This is an important constitutional issue. We are being asked to pass an order at the tail end of the summer when the other place has voted against it.

Perhaps the Minister can enlighten us on this matter, but I understand that the Government hope that, having obtained the acquiescence of your Lordships' House in the dinner interval when we are not at our most numerous, the matter can then be raised on the last day of the Session in the other place and, on the basis of the House of Lords having agreed to it, the other place will be asked to turn a somersault and go against the majority view of its own Standing Committee. It is not a procedure that I am prepared to commend to your Lordships. We require a very serious reply and a more serious indication than we have had so far from the Minister.

Behind that issue lies the other issue of policy that I have mentioned. I agree that in the White Paper it was forecast that this secondary legislation would come forward immediately. However, I remain puzzled as to why in this particular field it is necessary to rush matters in this way. I have no objection to the other order relating to independent producers and am all in favour of the Government showing proper expedition in their legislation. However, the holdings order deals with the pattern of ownership of commercial local radio and does so against the background of an important Statement by the Government that they intend to introduce major primary legislation in the Queen's Speech in November which will greatly liberalise this whole matter. That is bound to affect the pattern of ownership of independent local radio.

Certainly those who are engaged in the present takeover battle between GWR and Chiltern Radio recognise that the rushing of this particular order has major implications for both sides. It is not for this House or for me to take sides in that takeover battle, and I do not seek to do so. In these situations my emotional sympathy tends to lie with the small shareholder. I know from my past connection with the commercial radio industry as one of its regulators that it is often the small shareholders who help to found these companies in the first place. Therefore, on the whole my sympathies are with them as against the great battalions.

It is, however, on the policy that I want to press the Minister. Is it sensible that at this stage, in July, on a matter of such importance that the Government should be rushing the order through in the last 72 hours before the Summer Recess? It is a very strange business indeed that the Government, having been unable to carry their own business in Standing Committee 3 in the other place last Wednesday, have thought fit to bring the order to your Lordships this evening. I suggest to the Minister that at the least that is pretty high-handed action. We are entitled to a thorough explanation before we decide what course of action we pursue.

7.17 p.m.

Lord Donoughue

My Lords, first I should like to welcome the noble Viscount, Lord Astor, to the Back Benches, where I notice he looks much happier than he ever did on the Front Bench. He certainly must be pleased not to have had to defend this afternoon's Statement on privacy. In relation to the question of politicians dealing with newspaper proprietors, which the noble Viscount mentioned, that is not a question of policy. It is a matter of the personal taste of individual politicians; some presumably have more catholic tastes than others.

As regards the broadcasting order, I want to speak mainly on timing and to support everything that my noble friend Lord Thomson said. I should like to start with what is almost a constitutional point. It certainly concerns the conventions of our conduct of business in this House. I accept that the way we do things is our own and differs from the other place. However, I should like to ask why on earth the order had to be rushed into the House of Lords when it was defeated in another place last week. The Government asked the view of the relevant committee of another place and are now apparently ignoring it. What is worse, they may be trying to use the approval of the House of Lords to assist in pushing the other place tomorrow to reverse its decision. In that sense the Government are almost abusing our convention that the Opposition Front Bench does not vote against orders. That is partly based on the fact that we accept the will of the elected House. However, the Commons' will was to reject it. I do not believe that that is the best of behaviour.

Regarding the draft order relating to the holding of licences, I must ask another question on timing; the matter was raised by the noble Lord, Lord Thomson. Having delayed the issue so long, why not wait a few more months until it is covered by the promised primary legislation? Why are we debating secondary legislation ahead of the primary legislation on television and newspapers? By so doing, it gives the big radio companies an advantage over television and newspaper companies in potential mergers in this field. It also produces an unwelcome concentration.

For instance, should GWR obtain Chiltern Radio, then GWR and Capital will shortly own all the main-line independent local radio stations in Southern England. Those two companies already have a 20 per cent. cross-holding. Therefore the Government are in the process of creating an artificial market tilted in favour of a few big radio companies. That will mean less return for those companies in any merger situations; and if the big television and newspaper companies were able to bid, they would be able to bid more and in cash rather than offering volatile shares.

The legislation gives small radio stations no chance to seek and accept a white knight—an acceptable controller—as opposed to one of those in the radio field. Therefore I believe that the small shareholders are disadvantaged. Surely there are serious reasons not to proceed, and good reasons to delay until the primary legislation comes before us. We could then have a complete level playing field.

Perhaps I may say a little on the points of substance. We on this side of the Chamber deplore the fact that sufficient weighting is not given to quality regarding radio stations. For instance, when Classic FM's licence expires, it could be bought by a higher bidder which has no intention to supply the special quality which Classic FM provides. We believe that the radio authority should be given the extra powers to negotiate higher quality, as does the ITC for television.

We are also worried about lack of protection for community radio stations which in this bout of prospective expansion may be taken over and eliminated effectively as community radio stations. Could we not have special licences for community radio stations, accepting that they do not compete on the same scale as the large commercial companies?

However, the main issues are these. It is surely wrong to push this measure through in this Chamber tonight after rejection by the Commons. I simply cannot understand why it has to be dealt with now. Why cannot we wait until the primary legislation comes through, which gives a level playing field regarding television, newspapers and radios? The Government may have a secret agenda for rushing the measure through. We should like to know that. However, if there is no such agenda, why do not the Government withdraw one of the two orders and then bring back the measure when the Commons have decided?

7.24 p.m.

Lord Inglewood

My Lords, I was extremely grateful to my noble friend Lord Astor for his kind remarks. It seems as though I am an enormous disappointment to the remainder of your Lordships today. Every time I have opened my mouth, I have been told that I have been a huge disappointment. However, in responding to the remarks of the noble Lord, Lord Thomson of Monifieth, and the noble Lord, Lord Donoughue, it is important to be clear about this. I have made inquiries to check the position. There is nothing in any way untoward about dealing with this particular order in the manner that we propose tonight. After all, the matter was rejected in Committee in another place, not by the whole House in another place. The matter will go forward to another place for consideration by the whole House which is what I understand happens in any event, whatever decision the Committee may reach.

When all is said and done, these are matters to be determined by each House against the background of its procedures and conventions. Of one thing we can be reasonably sure; it is improbable that another place will take a view on the matter, acquiescing with the decision of your Lordships' House. It is rather contrary to the normal practice in that regard. There is nothing in any way constitutionally improper.

Lord Harris of Greenwich

My Lords, perhaps I may intervene on that point. It is a matter of some significance. The noble Lord indicates that when this matter is debated, his honourable friend in another place will not call in aid any decision of your Lordships' House on this order. Is that right?

Lord Inglewood

My Lords, I cannot speak for any Member of another place. No doubt those who are interested will be able to hear what I have said in this Chamber. Having said that, there is nothing in any way improper about dealing with the matter in the way that we propose this evening.

Perhaps I may now turn to other points of substance about which we have had a certain amount of debate. It is important to be clear about one point at the outset. As the noble Lord, Lord Donoughue, commented, in the Government's media ownership proposals it is indeed proposed to bring forward certain primary legislation in the future. However, what we debate this afternoon is secondary legislation which derives its potency from existing legislation. We are not talking about secondary legislation in some way derived from future legislation. We are talking about secondary legislation derived from primary legislation already on the statute hook. There is nothing remotely unusual about doing that.

Criticism was levelled against the Government, in particular by the noble Lord, Lord Thomson of Monifieth, that we were too fast. Only a few hours ago the Government were accused of being too slow in response to matters.

Lord Thomson of Monifieth

Moderation in all things!

Lord Inglewood

My Lords, that is a characteristic of this excellent Government, as the noble Lord knows only too well. However, in the Government's media ownership proposals, we have a number of policy statements. On page 2 in the summary of the document, the Government propose to enact immediately certain pieces of secondary legislation which includes the orders that we discuss this afternoon. Other matters in those proposals are those considered to be appropriate for further consultation consideration. We now have a position where the Government have determined that it would be appropriate to legislate now and they therefore propose to do so. If that is the Government's policy, it seems to me in no way inconsistent to bring the orders forward. Indeed, in the circumstances it would be slightly surprising if the Government did not bring those orders forward. Against that background, there has been a considerable amount of debate about the merits of a specific proposal and whether it is right or wrong. I do not propose to go over the ground that I covered in my opening remarks. Suffice it to say that if it is appropriate to go forward, we believe that we have a formula which is correct, and that we should therefore do so.

The noble Lord, Lord Donoughue, made two points in relation to a specific bid which has been made, subject to this order going forward. Clearly it is not for me to go into the merits of any proposal. Suffice it to say that in this case the bid came forward after the proposals were made public; and it is all above board. It is inevitably the case that if any statutory regulation changes, it may have economic consequences. But that is true of all regulations of this type. It is in no way unique to what we debate this evening.

I wish to comment on two remarks made by the noble Lord, Lord Donoughue, one relating to the quality of Classic FM, and the other to community radio stations. I can do no better than to refer to the remarks of my honourable friend who is now Minister of State in another place at col. 23 of Hansard for 12th July this year. He made a number of remarks which will, I am sure, allay the noble Lord's fears in that regard. Finally, there is no secret agenda here. The reason is that the agenda on the face of the proposals is self-evident and in our view it should commend itself to the House.

Lord Thomson of Monifieth

My Lords, before the noble Lord sits down, will he confirm that a period of consultation is going on in connection with the proposed primary legislation later this year? If so, and if the radio companies are among those being consulted, given the controversy over the matter and that the events have taken place at the other end of the corridor, why do not the Government at least wait until the consultation period finishes in August? Then they could come back to us in the light of the consultation.

Lord Inglewood

My Lords, I had hoped that I had made the point clear in my remarks. The document indicates that certain longer term changes will be considered. Comments are invited on the basis of what is contained in the Government's policy. As I also explained, the Government are of the view that certain matters should be taken forward immediately in secondary legislation, of which the two orders we are debating this evening are part.

Lord Thomson of Monifieth

My Lords, I do not wish to try the patience of the House, and I thank the Minister for his reply. However, I feel that an issue of principle is involved here and I wish to express that issue of principle in the Lobbies.

7.32 p.m.

On Question, Whether the said Motion shall be agreed to?

Their Lordships divided: contents, 70; Not-Contents, 21.

Division No. 1
Aldington, L. Inglewood, L.
Alexander of Weedon, L. Kimball, L.
Ampthill, L. Kitchener, E.
Astor, V. Leigh, L.
Balfour, E. Lindsay, E.
Blaker, L. Long, V.
Blatch, B. Lucas, L.
Boardman, L. Lyell, L.
Borthwick, L. Mackay of Ardbrecknish, L.
Brougham and Vaux, L. Massereene and Ferrard, V.
Burnham, L. Miller of Hendon, B.
Chalker of Wallasey, B. Milverton, L.
Chesham, L. [Teller] Mountevans, L.
Clark of Kempston, L. Moyne, L.
Courtown, E. Napier and Ettrick, L.
Cranborne, V. [L. Privy Seal] Newall, L.
Cross, V. O'Cathain, B.
Cumberlege, B. Oxfuird, V.
Dean of Harptree, L. Perry of Southwark, B.
Deedes, L. Rankeillour, L.
Denham, L. Reay, L.
Digby, L. Rennell, L.
Dixon-Smith, L. Renton, L.
Elliott of Morpeth, L. Rodger of Earlsferry, L.
Faithfull, B. St. John of Bletso, L.
Flather, B. Saltoun of Abernethy, Ly.
Fraser of Carmyllie, L. Seccombe, B.
Gardner of Parkes, B. Shaw of Northstead, L.
Glenarthur, L. Stewartby, L.
Goschen, V. Strathmore and Kinghorne, E.
Hayhoe, L. Thomas of Gwydir, L.
Henley, L. Thomas of Swynnerton, L.
Hooper, B. Trumpington, B. [Teller]
Howe, E. Vivian, L.
Howe of Aberavon, L. Wade of Chorlton, L.
Airedale, L. Monkswell, L.
Bradford, E. Palmer, L.
Craigavon, V. Reading, M.
Elis-Thomas, L. Rodgers of Quarry Bank, L
Falkland, V. St. Albans, Bp.
Harris of Greenwich, L. [Teller] Seear, B. Sharpies, B.
Stoddart of Swindon, L.
Holme of Cheltenham, L. Thomson of Monifieth, L. [Teller]
Howie of Troon, L.
Lawrence, L. Tope, L.
McNair, L. Tordoff, L.

Resolved in the affirmative, and Motion agreed to accordingly.