Lords Sitting of 13 February 1996

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Oxford.

Baroness Wilcox
Judith Ann, Lady Wilcox, having been created Baroness Wilcox, of Plymouth in the County of Devon, for life—Was, in her robes, introduced between the Lord Templeman and the Lord Griffiths of Fforestfach.
Lord Brocket
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, I have to acquaint the House that the Clerk of the Parliaments has received notification from the Chief Clerk of the Luton Crown Court informing him that Lord Brocket was, on 19th December 1995, convicted at that court of conspiracy to defraud, and was sentenced on 9th February 1996 to five years' imprisonment.

Developing Countries: Multilateral Debt Burden
2.49 p.m.
Lord Judd Lord Judd asked Her Majesty's Government:
What progress has been made in measures to reduce the multilateral debt burden on developing countries.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, we have put the issue firmly on the international agenda. We have wide agreement that there is a problem that needs to be addressed. It is agreed that the IMF and World Bank will put forward proposals at the April meeting of the Development Committee. My right honourable friend the Chancellor of the Exchequer is looking forward to discussing these proposals with his colleagues at that meeting.
Lord Judd: My Lords, I thank the noble Lord for that reply. However, is it not totally unacceptable that in a country like Uganda, where it is still the case that one in five children dies before the age of five from preventable diseases, only three dollars per head is available for health, while 17 dollars per head goes on debt servicing—mainly multilateral debt? Does not the debt burden, and particularly the multilateral debt burden, crush development efforts across the world? What are the Government doing to mobilise World Bank reserves, special drawing rights and IMF gold stocks to promote a more constructive approach to international debt management?
Lord Mackay of Ardbrecknish: My Lords, the noble Lord rightly draws our attention to this problem,
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and in particular uses Uganda as an example. We have made some progress in Uganda since the beginning of the 1990s. The Ugandan Government have undertaken a strong reform programme. They have dealt with the problem of loans from commercial banks and to some considerable extent with the problem of bilateral debt. However, as the noble Lord rightly identifies, the problem of multilateral debt remains.
We have proposed, in general, that the IMF should convert a small part of its gold reserves into income-earning assets. The interest earned could then be used to provide more concessional and, where appropriate, larger loans to the IMF's poorest and most indebted members which have shown a sustained commitment to economic reform.
The Lord Bishop of Oxford: My Lords, Her Majesty's Government have urged the IMF to sell some of its gold stocks and to use the proceeds to alleviate the debt burden of the lowest income countries. They are also encouraging world bankers to produce a proposal, albeit unpublished, to create a multilateral debt facility; one that will also he used to reduce the debt burden. Unfortunately, the IMF has taken no action to sell any of its gold stocks and nothing has been done to create the multilateral debt facility. What further action is the Minister proposing in order to make these promising ideas a reality?
Lord Mackay of Ardbrecknish: My Lords, as I explained in my original Answer, my right honourable friend the Chancellor is looking forward to the April meeting, when these issues will be addressed. We certainly will be urging on the IMF the policy that we have proposed of selling some of its gold in order to buy assets that would earn interest. That interest could go towards helping the poorest countries. We have been pressing other countries, and the various institutions in the international monetary and financial field, to support our efforts to help those countries look for an exit strategy for their multilateral debt problems.
Lord Redesdale: My Lords, is the Minister aware that we on these Benches support the Government's lead role in tackling the problem of debt relief? However, considering the massive burden of debt on countries in sub-Saharan Africa, will the Minister give the House an assurance that when the noble Baroness, Lady Chalker, meets with the World Bank next month in Washington this subject will be at the top of the agenda?
Lord Mackay of Ardbrecknish: My Lords, I shall certainly draw the noble Lord's remarks to the attention of my noble friend Lady Chalker. As all your Lordships know from my noble friend's Answers at this Dispatch Box on many occasions, she is much seized of the problems of the poorest countries in the world. I reiterate the assurance that I gave and the assurance welcomed by the noble Lord—I am grateful to him for that—that we shall continue to pursue these matters about multilateral aid on the international stage.
Lord Gisborough: My Lords, does the debt burden indicate that many of the loans were economically

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unviable in the first place or, in many cases, misappropriated? Does he agree, as is thought on the ground, that there should be more loans made available to very small industries, which can then support the larger infrastructure with their profits, rather than big loans of which much is often misappropriated?
Lord Mackay of Ardbrecknish: My Lords, as my noble friend points out, it is important that both multilateral and bilateral loans are given with a good deal of care and mindful of the fact that the country will have to repay the loan, even though the interest rate charged is extremely low. In this country we have "forgiven"—that is the jargon—over £1.2 billion of old aid loans. All new aid by us to the poorest countries has been on grant terms for many years now to get round exactly the problem raised by my noble friend.
Baroness Gardner of Parkes: My Lords, as one who does much through NGOs to help the underdeveloped countries, could the Minister tell me whether there is any way in which we can ensure that the money given to those countries by international or bilateral loan filters down to the people in need? Very often that money does not go to those in need. As was said, it is simply appropriated by someone at the top who lives in absolute luxury while the people at the bottom remain in a very bad way.
Lord Mackay of Ardbrecknish: My Lords, my noble friend certainly makes a point that has been made by a number of people. Certainly, she could give examples of that in the past. But I very much hope that the situation has improved since then. Certainly, one of the preconditions of multilateral and bilateral aid is that the country concerned has an agreed policy with the IMF of restructuring its economy, and so on, and of sticking to it for three years. That way, we combine the aid, either the grant or the loan, with an insistence that the country attempts to use the grant or loan in such a way that it improves its economy.
Lord Judd: My Lords, will the Minister accept that we found much of what he said this afternoon extremely encouraging? With regard to the misappropriation and misuse of aid, is it not doubly important to ensure that the burden of settling the evils of previous malpractice does not land on the impoverished people of the third world? Will he further accept that the Chancellor of the Exchequer will have the full-hearted supported of these Benches in taking a lead at the April meeting of the World Bank in ensuring a comprehensive multilateral and bilateral approach which encourages development rather than crushes it?
Lord Mackay of Ardbrecknish: My Lords, I am certainly very grateful to the noble Lord for his support and that of the official Opposition for my right honourable friend the Chancellor in his efforts in that regard. I shall pass on those words of encouragement and support to him. The noble Lord makes a valid point about the situation in the past. In some cases corruption has meant that the aid given has not achieved the objectives hoped for it. I can assure him that both the
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World Bank and the IMF, backed by ourselves, are setting standards for accountability and independent audit as conditions for funding. I very much hope that the problem he mentioned will not arise in the future.

Pollution at Sea: Level of Fines
2.56 p.m.
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
What is the maximum fine payable under Regulation 34 of the Merchant Shipping (Prevention of Oil Pollution) Regulations 1983; and what was the average fine imposed on conviction under that regulation for pollution offences during 1995.
The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen): My Lords, there is no maximum fine for conviction secured in the Crown Court. The maximum fine that a magistrate may currently impose for an oil pollution offence is £50,000. On 24th January we announced, as part of a package of 18 measures to prevent illegal discharges of ships' wastes, that we should be seeking fivefold increases in the maximum fines that magistrates may impose for pollution offences at sea. No precise information on individual fines is held centrally.
Lord Campbell of Croy: My Lords, I am very grateful to my noble friend for that reply. I welcome the intention to increase the maximum fine to £250,000. The new power to prosecute when offences occur beyond our territorial waters of 12 miles is also welcome. Will guidance be given to magistrates' courts—the relationship between government and courts is a delicate one—on the need for appropriate penalties for gross transgressions? The average fine imposed is derisory for companies which deal in millions of pounds.
Viscount Goschen: My Lords, I welcome my noble friend's support for the measures we have taken to address the complex and important issue of illegal discharges of oil at sea. My noble friend is right to highlight the fines. The levels imposed have not been high so far. We felt that the best course of action was to seek powers to raise them. On the issue of guidance, it is not appropriate for the Government to tell magistrates the level of fines they should impose beyond setting maxima. It is for the courts themselves to decide the appropriate penalty. I can assure my noble friend that we shall provide information on the aims of our policies on marine pollution. We hope that that will be of use.
Lord Monkswell: My Lords, the House will be curious to know how the Minister, in one supplementary answer, can say that the Government have no central record of the fines levied and then, in another, say that the fines are abysmally low. Can he give the House some indication of the basis on which the Government

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are considering increasing the level of fines if they have no record centrally of the fines being levied at the moment?
Viscount Goschen: My Lords, my precise words were that we have "no precise information". We have some information from the Advisory Committee on Protection of the Sea—ACOPS—on the levels of fines in 1994. The average fine was just over £2,000. That is where our information comes from. However, it is not entirely complete and is used for purposes of guidance.
Lord Renton: My Lords, is my noble friend aware that for over 30 years we have passed laws with a view to preventing oil pollution at sea but that those laws have been largely ignored or at any rate not adequately enforced? Can he say to what extent continued pollution is due to non-enforcement of our laws?
Viscount Goschen: My Lords, that is a difficult question to answer precisely. What is clear is that deliberate oil pollution discharges still continue. We have chosen to take an approach of both deterrent and increased detection. We use aerial surveillance and other methods to try to identify the culprits. The thrust of our policies has been to negotiate with ports, users, waste management companies and operators to make sure that ports have a waste management plan for the proper discharge of waste. That is the encouragement approach. We vigorously pursue the detection and prosecution approach as well.
Lord Clinton-Davis: My Lords, I thank the Minister for the reference to the Advisory Committee on Protection of the Sea, a body which I chair. We co-operate in issues concerning the safety of the marine environment. Is the Minister aware that, in the debate we had the other day, I warmly supported the action of the Government over increased fines which is thoroughly welcome? Can he give some indication as to whether the Government feel that charterers should bear some responsibility for the safety and standards of the ships they charter?
Viscount Goschen: My Lords, that is another vexed issue. We must ensure that those who operate the vessels do not discharge oil. When we have proper evidence we take measures to prosecute the owners of the vessel and may also prosecute the master. That seems the most efficacious way of tackling the problem. The question of whether those associated with the vessel should also be prosecuted is part of a wider issue. It has been raised in relation to the carriage of oil, but our best course of action is to pursue those who own and operate ships.
Lord Campbell of Alloway: My Lords, is this not an international question that may only be resolved by international agreement?
Viscount Goschen: My Lords, it is certainly an issue where international co-operation is required and fellow members of the Bonn Agreement agreed to co-operate
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with each other. Indeed, those channels work well. Where we have information regarding a vessel that we believe is polluting the environment, we pass it on to other states, particularly those where we believe the vessel will call. On the wider front, it is an issue where the International Maritime Organisation has a strong role to play.
Lord Clinton-Davis: My Lords, can the Minister give an assurance that in the discussions that take place on these important issues before the International Maritime Organisation the Government will not rule out the idea that charterers should bear some responsibility? Is it not worthy of investigation at that level?
Viscount Goschen: My Lords, as I said, this is an issue which has been the subject of international discussion. We shall make sure that all areas surrounding the unacceptable issue of maritime pollution with oil are properly discussed.
Lord Campbell of Croy: My Lords, is my noble friend aware that I am a former chairman of ACOPS, the organisation mentioned, but that this is not an arranged ambush prepared for him? In regard to international discussions, does my noble friend agree that a huge amount has been agreed internationally in the MARPOL Agreement and others? However, what matters now is the execution and implementation of those agreements.
Viscount Goschen: My Lords, I welcome contributions from all noble Lords who have had a serious interest in that committee in your Lordships' House. The noble Lord, Lord Callaghan of Cardiff, had a prominent position on the committee as well as my noble friend and the noble Lord, Lord Clinton-Davis. It is extremely important that we take forward these measures as part of the package approach and that we also pursue detection and deterrent. We have put considerable resources into that effort.

Belfast Airports
3.4 p.m.
Lord McConnell Lord McConnell asked Her Majesty's Government:
What action they will take as a result of the report of the Monopolies and Mergers Commission on the proposed merger of Belfast International Airport and Belfast City Airport.
Lord Chesham: My Lords, the Monopolies and Mergers Commission report was published on 9th January. In a press notice issued on that day my honourable friend the Minister for Competition and Consumer Affairs announced that the proposed merger

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would not be allowed to proceed, in line with the recommendations of the MMC. A copy of the press notice has been placed in the House of Lords Library.
Lord McConnell: My Lords, I thank the noble Lord for that satisfactory Answer. Is he aware that all those who value competition will laud the decision of the Government in this matter?
Lord Chesham: My Lords, I am very grateful for those kind words.

NHS Residential Care and Mobility Allowances
3.5 p.m.
Lord Rix Lord Rix asked Her Majesty's Government:
Whether they will withdraw their proposals for depriving people in National Health Service residential care of entitlement to support for personal mobility.
Lord Mackay of Ardbrecknish: My Lords, the proposals are currently being considered by the Social Security Advisory Committee. We will, of course, consider carefully any recommendations the committee may make. There are no plans at present to withdraw the proposal.
Lord Rix: My Lords, I understand the reluctance of the Minister to go further, although I do not sympathise with it. Can he confirm at this stage that the advice of the Social Security Advisory Committee will be accepted rather than just examined by the Government? Can he also confirm that all the voluntary bodies and major charities concerned with disability, together with the NHS trusts, unanimously supported the continuation of the mobility allowances saying that the mobility of disabled people would be severely curtailed if they are withdrawn and that social security benefits would be put hack nearly a quarter of a century?
Lord Mackay of Ardbrecknish: My Lords, I am aware that there have been reactions to the request for consultation from the SSAC—the Social Security Advisory Committee. However, the end date for observations was only yesterday. The committee will now have to meet and consider before it makes its recommendations to the Government. I am sorry that I cannot give the noble Lord an assurance that we will necessarily do what the committee wishes. We shall certainly consider carefully what it says. However, we will have to wait to see what the committee says and then deliberate upon it.
Lord Renton: My Lords, perhaps I can declare a family interest in that I have a severely handicapped daughter who is in receipt of the mobility allowance. Is my noble friend aware that the allowance is not easily
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obtained? Its issue is strictly administered and if it were to be withdrawn it would cause hardship and a great deal of inconvenience in many families.
Lord Mackay of Ardbrecknish: My Lords, the point made by my noble friend is one of the issues we shall need to take into consideration when the Social Security Advisory Committee reports. But it is fair to point out that the mobility component of the disability living allowance is the only benefit of this nature which somebody keeps when they are in hospital for any length of time. For example, the care component ceases after four weeks; the attendance allowance ceases after four weeks; and other benefits are downrated or withdrawn after six weeks. It is only this benefit which continues after people are in hospital in the care of the NHS, which provides from the public purse for all their needs.
Lord Ashley of Stoke: My Lords, is the Minister aware that this plausible proposal for cost cutting founders in the light of clear evidence that disabled people in hospital have mobility needs? Those needs will not be met if the allowances are withdrawn. That is why the leaders of 11 major disability organisations have written to the Secretary of State to say that withdrawal of the allowances will cause considerable hardship to extremely vulnerable people. If that is so, they should not be withdrawn.
Lord Mackay of Ardbrecknish: My Lords, as the noble Lord, Lord Ashley, knows, the mobility component is primarily intended to help disabled people be independently mobile. We are dealing with patients in National Health Service hospitals whose needs are met by the health service and where every other benefit bar this one is actually withdrawn after four or six weeks. In addition, in the past we have seen examples of hospitals accumulating large balances of patients' funds coming from those allowances. For example, one hospital said that it was not uncommon for patients to have balances of unspent benefits of over £8,000. In that hospital the total size of patients' balances actually exceeded £3 million.
Baroness Hollis of Heigham: My Lords, does the Minister agree that over many years the mobility allowance has permitted severely disabled people in residential hospitals nonetheless to remain members of the community, to build new relationships, to experience new things and to develop as people? Does he agree that cutting off mobility allowance will confine disabled people to isolation? Will he not think again?
Lord Mackay of Ardbrecknish: My Lords, there is also some evidence, as the noble Baroness may know, that this money is not just used for mobility but is in fact used for other things—to buy goods and services which are otherwise supplied free by the National Health Service to its patients. As I said a little while ago, if the noble Baroness was being totally logical, she would be urging me not to withdraw those benefits which are already withdrawn—the care component,

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attendance allowance and other benefits, like income support, which are downrated or withdrawn when people go into hospital.
Lord Mackie of Benshie: My Lords, can the Minister tell us what happened to the £3 million which the hospital accumulated?
Lord Mackay of Ardbrecknish: My Lords, it was a little time ago and the hospital has taken steps to reduce those balances. But this has been a problem for a long time in many hospitals. They have been more careful recently. However, the point I made a little while ago was that the money is not always spent directly on mobility; and that is what it is intended for.
Lord Rix: My Lords, like the noble Lord, Lord Renton, I, too, must declare an interest in that I have a daughter who is in possession of the full mobility component. Does the Minister not consider it ludicrous that she, who receives her mobility component direct through social security because she lives in a MENCAP Homes Foundation house, could indeed be living next door to a house funded by the NHS where a person with exactly the same disabilities as my daughter would be denied the maximum amount of the mobility component? Does the Minister agree that that is a ridiculous anomaly and one which certainly is not solved by reducing the mobility component or removing it altogether in the case of hospital care?
Lord Mackay of Ardbrecknish: My Lords, I understand the noble Lord's point, but it is equally anomalous that people in long-term hospital care should receive a benefit which they may not be using for the purpose for which it is intended—and it can be accumulating or it can be used for other things. In addition, some of the observations made to the Social Security Advisory Committee have been from special hospitals, where patients' mobility outside the hospital is something we would wish to discourage because they are put into those hospitals to keep them secure.

Business of the House: Debates this Day
3.13 p.m.
Lord Richard: My Lords, I beg to move the first Motion standing in my name on the Order Paper. This is an unusual Motion but it is designed to deal with an unusual, not to say unprecedented, case. I have taken the opportunity of looking at the relevant page of the Companion, which, for your Lordships' benefit, is page 43. That makes it clear that a Motion to suspend standing orders is customarily in the name of the Leader of the House—customarily, my Lords, not exclusively.
The House will, however, wish to know the background to the appearance of these two Motions in my name on the Order Paper. Perhaps I may say right at the outset that this is not the time to go into the merits or demerits of the Scott Report itself. Indeed, one could hardly do that without first seeing it, despite the extraordinary amount of leakage and comment that seems to have taken place.
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The Scott Report is, I understand, some 1,800 pages long and of considerable complexity; 278 witnesses gave written evidence and 81 were heard orally. I gather that the 1,800 pages do not include the evidence. The inquiry has now been sitting for some three years and its report, as we know, is to be made public on Thursday.
Understandably, therefore, Opposition spokesmen took the perhaps somewhat naive view that in order to deal with it properly we needed to have reasonable facilities and time to read it. Ministers will have had it for eight days and I have little doubt that the noble and leaned Lord who will be making the Statement in this House on Thursday will have had ample opportunity to brief himself.
Requests were therefore made to the Government for access to the report. When they were made, the President of the Board of Trade, Mr. Lang, wrote a letter to my honourable friend Mr. Robin Cook which included the following paragraphs:
"As you will be aware, the Prime Minister said yesterday that Opposition spokesmen would have the opportunity to have access to the report several hours before its publication. The Government will allow access to the report from 12.00, thus giving Opposition spokesmen some 3½ hours' advance access in advance of my statement. This is comparable to or longer than what has been the practice in previous cases (including the recent reports of Lord Nolan, Sir John Learmont, Lord Justice Bingham and the Barings Inquiry). The Government has of course already announced that it is prepared to set aside time for a full debate on 26 February, thus giving the Opposition ample prior opportunity to consider the report".
The letter continued:
"The Inquiry has agreed with the Government exceptional advance access arrangements designed to safeguard the security of the report prior to its publication. I expect they will wish similar undertakings to be given in relation to access by Opposition spokesmen, although Sir Richard Scott has agreed in principle that I should give you access. The Government will therefore be making arrangements for access to the report in a controlled environment. I shall write shortly with details of the location and the practicalities.
Can I invite you to nominate a Lords' spokesman to whom similar arrangements might apply?".
That was the substance of the letter and that remains the position. Indeed, the Prime Minister confirmed it by letter to my right honourable friend the Leader of the Opposition about an hour ago.
Let me deal with some of the points made in that letter. First, the Scott Report is not comparable to any other that I have been able to trace. Lord Nolan's was 109 pages long, Sir John Learmont's was 182 and the Barings Inquiry 337. But each of those dealt with a fairly narrow point. There is, as far as my researches go, no precedent for a report of this gravity and complexity being handled in this way.
Secondly, the proposal that access to the report should only be in a controlled environment apparently means that the noble Lord, Lord Jenkins of Hillhead, and I, both of whom are Privy Counsellors, should arrive at the gates of the Department of Trade and Industry at noon, be admitted and be permitted to look at the report, there, in an environment which is apparently to he controlled—whatever that means.
Is there to be a guard present in the room? Are we to be locked in? Are we to be permitted to take notes on the report? Are we to be allowed out before three

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o'clock with the notes that we have taken? Do we have to surrender the copy we have been working on if we do? It is more like visiting day at Strangeways than a serious attempt to give us proper access to the report.
Moreover, on a more serious matter, I find this proposal gratuitously and deliberately offensive. Both the noble Lord, Lord Jenkins, and I are Privy Counsellors. His lineage as such is considerably more ancient than mine. But is it seriously suggested that in circumstances in which there is a need for confidentiality prior to publication, Privy Counsellors who appreciate that need are going to rush out and leak the contents of the report to the press? And if it is said that Mr. Cook and Mr. Campbell are not Privy Counsellors and that we must all be treated in the same way, I can only say that that is then highly offensive to them. I have to say to the Government that I racked my brains to try to discover any conceivable reason why they are behaving in this way. That is the only one I can come up with.
Can government properly function if there is a presumption that the Opposition are not to be trusted in this way? I think not. It is a bad precedent and, if I may say this to the House, it is a precedent which will be remembered. There has to be some basic trust and understanding between the parties; otherwise the system breaks down.
How on earth are we supposed to be able to comprehend, let alone fully digest, 1,800 pages in some two-and-a-half to three hours? At the Bar one had some experience of reading briefs at the last moment. But this is ridiculous.
Finally, there is the "fairness" argument. It is quite simply unfair that Ministers should have a full opportunity for picking over the minutiae of the report, having their civil servants analyse and dissect it in search of some dicta that might justify their positions, whereas the Opposition are being offered not even sufficient time to turn the pages over. In our view the facilities and time being offered are thoroughly unreasonable and even perverse. Ideally, I would like 24 hours in advance on Privy Council terms; but, even if access is to be limited to the day in question, there are no reasonable grounds for insisting on these absurd and offensive restrictions.
If the Government insist on these terms they will have to do so by imposition and without the agreement or acquiescence of the Opposition. That is why I commend to the House the first Motion standing in my name.
Moved, That Standing Order 38 (Arrangement of the Order Paper) be dispensed with to enable the Motion standing in the name of the Lord Richard to be taken before the Broadcasting Bill this day.—(Lord Richard.)
Lord Jenkins of Hillhead: My Lords, I am in broad agreement with the noble Lord, Lord Richard. The Government seem perversely determined to make everything concerned with the long-delayed publication of the Scott Report as awkward as possible. As the noble Lord indicated, it is in many ways a report without precedent. The length of the
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inquiry and the number and eminence of the witnesses are matched, so we are informed, only by the length of the report—1,800 words.
Noble Lords: Pages!
Lord Jenkins of Hillhead: My Lords, 1,800 pages! The noble Lord gave one or two comparable examples. The only equally eagerly awaited report I can recall was that of the noble and learned Lord, Lord Denning, in 1963. That was 128 pages, barely one-fifteenth of the length of the Scott Report. What is also without precedent is the barrage of semi-official denigration to which the learned judge, who undertook this heavy task at the request of the Government and was specially chosen by them, has been subjected. All this, together with the other signs of an attempt at a massive news management campaign, point to extreme nervousness on the part of the Government.
In the circumstances I would have thought that the Government might have been wise not to provoke the Opposition parties. But nervousness often does not produce wisdom. It seems to me that the Government have done the reverse. Whereas the Ministers concerned have been given eight days to study the report at their leisure and in their libraries—they have libraries—Opposition spokesmen are offered three hours—600 pages an hour—to which the noble Lord, Lord Richard, has rightly drawn considerable attention, and in what the President of the Board of Trade was pleased to describe as "a controlled environment". I take it that it is the President of the Board of Trade and not the present Home Secretary who is in charge of these arrangements.
I acquit the noble Viscount the Lord Privy Seal of any personal discourtesy. I gather that he has not seen the report himself. He is one of the lucky ones. He is not involved and therefore not informed. I believe that he has been eager to ensure that Opposition spokesman in your Lordships' House are not treated worse than Opposition spokesmen in the Commons, but that is an equality of suspicion and contempt.
What is this "controlled environment" of the Department of Trade and Industry in which we are to be incarcerated for three hours? Is it a padded cell or a sealed capsule? It is an intolerable offer. To be honest, it would have been better to have done nothing. The only tolerable, courteous and civilised procedure, in my view, would have been to let Opposition spokesmen have the report on Privy Counsellor terms and not in a padded cell from the previous afternoon or early evening. Instead the Government have chosen to produce the maximum irritation.
There is a crowning irony. The Scott Report is unprecedented in yet another way. It is the most leaked report in history, often from official sources. It is from the security of a sieve that they are producing all this trouble.
The Lord Privy Seal (Viscount Cranborne): My Lords, if both noble Lords will forgive me, I believe that perhaps the muddle in which noble Lords may be finding themselves over which Motion we are at present

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debating may all too easily reflect the muddle in both noble Lords' minds over the substance of what they have said.
It is only fair to point out for the elucidation of your Lordships' House that we are considering the Business of the House Motion. If carried, that Motion will enable us to consider the Motion of the noble Lord, Lord Richard, which moves to resolve,
"That this House calls on Her Majesty's Government to allow reasonable time and facilities to Opposition spokesmen prior to the statement in Parliament on the Scott Report".
I am always edified and delighted by the opportunity to listen to both noble Lords, a privilege accorded to your Lordships, I am glad to say, very frequently. I hope that we may at least agree that both noble Lords have spoken to the second Motion on the Order Paper. Although I would be only too delighted to hear a re-run of both speeches, it may be for the benefit of the expedition of business if we confine ourselves to the Business of the House Motion but, with your Lordships' permission, allow our remarks to cover both Motions before us. Therefore, if your Lordships will allow me, I shall follow the example of both noble Lords.
As regards the Business of the House Motion, which I believe was not addressed by either the noble Lord, Lord Richard, or the noble Lord, Lord Jenkins, I should perhaps draw to your Lordships' attention how very unusual it is for such a Motion to be tabled in a name other than that of the Leader of your Lordships' House. I should perhaps also point out that although both noble Lords, with their usual courtesy, advised me yesterday that it was perfectly possible that the noble Lord, Lord Richard, would put down a Business of the House Motion today, neither he nor the noble Lord, Lord Jenkins of Hillhead, suggested that I might like to do it according to the custom of your Lordships' House. Because of that I was unable to do what I would always try to do, that is, follow the convention of your Lordships' House and accede to the request of the Leader of the Opposition that I should do so.
The Business of the House Motion is the means by which the House determines the way in which its proceedings should be ordered. As I said, such a Motion is customarily moved by the Leader of the House. Therefore, I merely note the events of the past 24 hours. While I would not seek to oppose the Motion on the Order Paper today, in the interests of the expeditious and effective dispatch of business in your Lordships' House—if it is the wish of your Lordships that that Motion shall be agreed to—I suggest to your Lordships with the greatest respect that, given the events of the past five to 10 minutes, it would be unwise not to try to dispatch this particular piece of business as efficiently and effectively as possible. Nevertheless, I trust that that will not be regarded as a desirable precedent.
If your Lordships will allow me, I shall now proceed, perhaps in anticipation of the second Motion which my noble and learned friend will no doubt put before us shortly. I hope that I need not detain the House long on this matter. But in all fairness I think there are a number of points which I should draw to the attention of your Lordships. First, the status of the report. The report has been made by Sir Richard Scott to my right honourable
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friend the President of the Board of Trade. It is for my right honourable friend to decide on the arrangements for publication and advance access. I should also point out that those arrangements have been the subject of detailed correspondence with Sir Richard Scott.
Perhaps I should also say in view of the—dare I say it?—somewhat tendentious remarks of the noble Lord, Lord Jenkins of Hillhead, that I too would greatly deplore any attempt by my colleagues in the Government or indeed myself to denigrate the efforts of Sir Richard Scott. The judge was asked by my right honourable friend the Prime Minister to conduct the inquiry. As the noble Lord pointed out, the inquiry has been the subject of considerable interest, but it has also taken up some three years of the time of Sir Richard and his team. It would be extremely perverse of the Government to suggest that they did not take either Sir Richard or his efforts seriously or, indeed, in anticipation of an official reaction from the Government to the report to try "to rubbish"—I think that I quote accurately the words used by the noble Lord—what Sir Richard said. I should like to take this opportunity to say—
Lord Jenkins of Hillhead: To rubbish? Which noble Lord said that?
Viscount Cranborne: I give way to the noble Lord, Lord Jenkins.
Lord Jenkins of Hillhead: My Lords, this is not tremendously important, but I thought the noble Viscount was referring to me and suggesting that I used the phrase "to rubbish". I used no such phrase. I hope that he will be more accurate.
Viscount Cranborne: My Lords, forgive me. I am well aware that I am more capable of vulgarity of language than the noble Lord. Let it be enough for me to say that my colleagues and I will treat whatever Sir Richard Scott says with due seriousness. Indeed, I have no doubt at all that my right honourable friend the Prime Minister feels strongly that the report should be treated seriously and that my right honourable friend is under no misapprehension, since he asked Sir Richard Scott to chair the inquiry and to make the report, that he should not take it seriously and will in no way try to anticipate his official reaction or that of my right honourable friend the President of the Board of Trade.
Perhaps I may add a couple of other points. The Statement which will be made on Thursday will simply give the Government's initial reaction on the publication of what is, as I understand it and as I think both noble Lords made clear, a very lengthy and complex report. Noble Lords opposite are clearly already aware that on Monday 26th February there will be an opportunity for a full debate of Sir Richard Scott's findings on a Motion to be moved by my noble and learned friend Lord Fraser of Carmyllie. There will therefore be a full 10 days, including two weekends, which I know are sacred to many Members of your Lordships' House and which will therefore provide an opportunity for ratiocination of an appropriate kind, when your Lordships will he able to peruse the report thoroughly and prepare comments.

509
Many of your Lordships may feel, as I do, that it is only reasonable to expect that another place will always take a lead in resolving matters to do with the release and handling of a report of this kind. Therefore, I hope that the noble Lord, Lord Richard, will forgive me when I say that it might perhaps be regarded as opportunistic of the noble Lord to seek to pursue this matter here when it has been the subject of discussion between the Government and Opposition in another place, as he himself acknowledged.
As Leader of your Lordships' House—the noble Lord, Lord Jenkins, freely acknowledged that and I am grateful to him—I have tried to ensure that Opposition spokesmen in this House are accorded exactly equivalent treatment to those in another place. I hope that your Lordships will feel that in doing so I have done everything which your Lordships would expect of me on the matter. I am grateful to the noble Lord, Lord Jenkins, for his acknowledgement of that, which was made with his usual grace and courtesy.
Perhaps I may also point out that, as the noble Lord, Lord Jenkins, acknowledged, in having the opportunity to read the report in advance on Thursday the noble Lords, Lord Richard and Lord Jenkins, will have the advantage of me. Since I am not one of those Ministers, and I quote,
"necessarily concerned in the preparation of the Government's response to the report",
I shall have no advance access to it and at 3.30 p.m. on Thursday, like the rest of your Lordships, I shall have to obtain my copy from the Printed Paper Office, which, I advise the noble Lord, Lord Jenkins of Hillhead, will not enable me to have the time to take it to my library in order to study it with all the grace which he and his great subject, Mr. Gladstone, would have wanted.
Lord Shepherd: My Lords, perhaps I may say to the Leader of the House that I agree entirely that my noble friend has taken an unusual step. Perhaps I may also agree with the noble Viscount that in practice it is undesirable. On the other hand, there are times and circumstances in which unusual and perhaps undesirable steps have to be taken. This is a matter for this House because a Statement will be repeated here. It is not for us to say what should be done or what should be agreed in another place. The noble Viscount has a duty to the House. As I have said on a number of occasions, so, too, the Leader of the Opposition has a duty and an obligation to the House as a whole, but the Leader of the Opposition has no more rights than any of us sitting in the Chamber this afternoon. However, our parliamentary assembly has a formalised procedure whereby, when the Government, through their Minister, make a Statement, it is expected in every quarter of this House that the Leader of the Opposition and the Leader of the Liberal Party will be in a position to give a measured and considered response.
My argument is not about time; although it is an extraordinarily short period in which to consider a paper which, like the noble Viscount, I have not read other than through leaks in the press. It is clearly a report of
510
very considerable significance—perhaps not in terms of the past, but in view of its recommendations about what should be done in the future.
My anxiety is about what is called the "controlled environment". I never thought that I would hear those words used of the British Parliament and I hope that this House will take the view, perhaps this afternoon, that we are not part of the controlled environment. Parliament should be the complete opposite of that. As I understand my noble friend, what is being said is that he and the noble Lord, Lord Jenkins—I forget those who are down in another place because they are not material to us—will go into a controlled environment, such as the Cabinet Office, the Department of Trade and Industry, the Home Office or wherever, and will sit there under surveillance to read what could well be a report of infinite significance with the object of coming to this House to give a considered view.
Having been a Leader of this House, I have to say to the noble Viscount that I cannot imagine—I am putting this point directly to noble Lords opposite—what would have happened if I had gone to the noble Lord, Lord Carrington, then the Leader of the Opposition, and said, "I can't trust you. You cannot be trusted to have these papers in your room in the House of Lords". I have been here so many years that I can even remember the great Leader of the Opposition, Lord Salisbury. If I had gone, from my side of the Chamber to Lord Salisbury and said, "I cannot trust you to read this report in your room in the House of Lords", we would have been murdered, and quite rightly so.
If we have reached a point when we say that the noble Lord the Leader of Her Majesty's Loyal Opposition and member of the Privy Council, and the noble Lord, Lord Jenkins, former Chancellor of the Exchequer and member of the Privy Council, cannot be trusted to guard a paper in their own offices, then we are in a parlous situation. A price will be paid—a price which I do not believe the noble Viscount would wish to recognise let alone to pay.
Lord Campbell of Alloway: My Lords, from these Back Benches, I understand fully the reservations about the controlled environment. I cannot help but feel that that phrase was not just unfortunate, but may well have been misunderstood.
A noble Lord: No!
Lord Campbell of Alloway: My Lords, if noble Lords will bear with me, I cannot conceive that it can have meant anything that has been attributed to it today in your Lordships' House. At least I have lived some of my life in what was a controlled environment. This is a Business of the House Motion. This is a wholly unprecedented occasion. Is this the occasion to depart from precedent? It is said that it is because of the second Motion. On that Motion, surely Her Majesty's Government ought to be in a position to confirm, as they always have done. Who is to advise them whether they are to make a Statement and when they are to make a Statement? Whether it be the Opposition or the

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Conservative Government, the Government is Her Majesty's Government. Who is to advise them? Who is to challenge them in this way?
If they give their initial reaction to the report, it would surely he—this a matter of fact—to affirm that that application was a serious deception which inevitably warranted the institution of proceedings, because that machine tool was computer programmed for the manufacture of shell cases. It would be confirmed that there had been no relaxation of those guidelines.
Lord McIntosh of Haringey: Order!
Lord Campbell of Alloway: My Lords, the noble Lord says, "Order". There is another Motion on the Order Paper to which noble Lords opposite have spoken, to which my noble friend the Leader of the House has spoken, and to which, with the leave of the House—to which I always defer—I intend to speak. I have one more thing to say.
Lord McIntosh of Haringey: My Lords, if the noble Lord will allow me, he is speaking to neither Motion. He is speaking to a debate which will take place on 26th February.
Lord Campbell of Alloway: My Lords, I am not. Perhaps my noble friend will allow me—we are not friends in a political sense, but we are friends in another sense—to say that I am not. He misunderstands me. What I am saying is that any government have the right to make a Statement if they wish, and to make a Statement when they choose. That is the constitutional position.
I have given two examples in relation to the next Motion to which noble Lords opposite have spoken—the noble Lord, Lord Jenkins of Hillhead, has spoken—and to which surely I am entitled to speak. That is all I am seeking to do. I have just one more thing to say. These PII certificates, as will be explained, were issued in total conformity with the decisions of the Appellate Committee of your Lordships' House.
Lord McIntosh of Haringey: Order!
Lord Campbell of Alloway: My Lords, the decision was that there was no irregularity. The Government are entitled to say that in their initial reaction to the report. I thank noble Lords for their patience.
On Question, Motion agreed to.

Business of the House: Scott Report
3 45 p.m.
Lord Richard Lord Richard rose to move to resolve, That this House calls on Her Majesty's Government to allow reasonable time and facilities to Opposition spokesmen prior to the Statement in Parliament on the Scott Report.
The noble Lord said: My Lords, I do not propose to weary the House with a second speech. I was a little surprised at the procedural petulance of the noble Viscount the Leader of the House. Surely he would have realized—
Noble Lords: Oh!
Noble Lords: Hear, hear!
Lord Richard: My Lords, surely the noble Viscount the Leader of the House would have realised, and indeed should have realised, that the usual channels have not been clogged for the past 24 hours. If there had been any suggestion that he would have accepted this Motion, naturally we would have considered it; but none came.
I want to make just two points, and then I shall leave it. The issue now before the House is not the merits of the report; it is the facilities being offered to Opposition parties before the Statement is made on Thursday. I do not propose to repeat what I said before. What is on offer is basically unreasonable. I beg to move.
Moved, That this House calls on Her Majesty's Government to allow reasonable time and facilities to Opposition spokesmen prior to the Statement in Parliament on the Scott Report.—(Lord Richard.)
On Question, Whether the said Motion shall be agreed to?
Their Lordships divided: Contents, 133; Not-Contents, 152.

Division No. 1

CONTENTS

Ackner, L.

Ezra, L.

Acton, L.

Falkland, V.

Addington, L.

Farrington of Ribbleton, B.

Alport, L.

Fisher of Rednal, B.

Archer of Sandwell, L.

Flowers, L.

Ashley of Stoke, L.

Gallacher, L.

Attlee, E.

Geraint, L.

Bancroft, L.

Gladwin of Clee, L.

Barnett, L.

Glenamara, L.

Beaumont of Whitley, L.

Gould of Potternewton, B.

Birk, B.

Graham of Edmonton, L. [Teller.]

Birkett, L.

Gregson, L.

Blackstone, B.

Grey, E.

Blease, L.

Hamwee, B.

Borrie, L.

Hams of Greenwich, L. [Teller.]

Brooks of Tremorfa, L.

Haskel, L.

Bruce of Donington, L.

Hayman, B.

Callaghan of Cardiff, L.

Hayter, L.

Carmichael of Kelvingrove, L.

Healey, L.

Chandos, V.

Hertford, M.

Charteris of Amisfield, L.

Hilton of Eggardon, B.

Chichester, Bp.

Hollick, L.

Cledwyn of Penrhos, L.

Hollis of Heigham, B.

Clinton-Davis, L.

Holme of Cheltenham, L.

Croham, L.

Hooson, L.

Dacre of Glanton, L.

Howie of Troon, L.

Dahrendorf, L.

Hughes, L.

David, B.

Hutchinson of Lullington, L.

Dean of Thornton-le-Fylde, B.

Jay of Paddington, B.

Desai, L.

Jeger, B.

Donaldson of Kingsbridge, L.

Jenkins of Hillhead, L.

Donoughue, L.

Jenkins of Putney. L.

Dormand of Easington, L.

Judd, L.

Dubs, L.

Kennet, L.

Elis-Thomas, L.

Kilbracken, L.

513

Kirkhill, L.

Rea, L.

Kirkwood, L.

Redesdale, L.

Lester of Herne Hill, L.

Richard, L.

Lockwood, B.

Ritchie of Dundee, L.

Longford, E.

Robson of Kiddington, B.

Lovell-Davis, L.

Rodgers of Quarry Bank, L.

McConnell, L.

Roskill, L.

McIntosh of Haringey, L.

Russell, E.

Mackie of Benshie, L.

Sainsbury, L.

McNally, L.

Sandwich, E.

Mallalieu, B.

Sefton of Garston, L.

Mar and Kellie, E.

Serota, B.

Marsh, L.

Shaughnessy, L.

Mason of Barnsley, L.

Shepherd, L.

Merlyn-Rees, L.

Simon, V.

Milner of Leeds, L.

Smith of Gilmorehill, B.

Mishcon, L.

Spens, L.

Monkswell, L.

Stallard, L.

Moran, L.

Stedman, B.

Morris of Castle Morris, L.

Stoddart of Swindon, L.

Strabolgi, L.

Murray of Epping Forest, L.

Taylor of Blackburn, L.

Nathan, L.

Thomson of Monifieth, L.

Nelson, E.

Tope, L.

Nicol, B.

Tordoff, L.

Ogmore, L.

Turner of Camden, B.

Oliver of Aylmerton, L.

Wedderbum of Charlton, L.

Oxford, Bp.

White, B.

Palmer, L.

Wigoder, L.

Perry of Walton, L.

Williams of Crosby, B.

Peston, L.

Williams of Elvel, L.

Phillips of Ellesmere, L.

Williams of Mostyn, L.

NOT-CONTENTS

Aberdare, L.

Coleraine, L.

Addison, V.

Colwyn, L.

Ailsa, M.

Constantine of Stanmore, L.

Aldington, L.

Cooke of Islandreagh, L.

Alexander of Tunis, E.

Courtown, E.

Allenby of Megiddo, V.

Craig of Radley, L.

Archer of Weston-Super-Mare, L.

Cranborne, V. [Lord Privy Seal.]

Arran, E.

Crathorne, L.

Astor, V.

Crickhowell, L.

Astor of Hever, L.

Cuckney, L.

Belhaven and Stenton, L.

Cullen of Ashbourne, L.

Beloff, L.

Cumberlege, B.

Blake, L.

Dean of Harptree, L

Blaker, L.

Denham, L.

Blatch, B.

Denton of Wakefield, B.

Blyth, L.

Downshire, M.

Boardman, L.

Ellenborough, L.

Boyd-Carpenter, L.

Elles, B.

Brabazon of Tara, L.

Elliott of Morpeth, L.

Braine of Wheatley, L.

Elton, L.

Brentford, V.

Erroll of Hale, L.

Brigstocke, B.

Faithfull, B.

Brougham and Vaux, L.

Flather, B.

Bruntisfield, L.

Forbes, L.

Buchan, E.

Fraser of Carmyllie, L.

Buckinghamshire, E.

Fraser of Kilmorack, L.

Burnham, L.

Gainford, L.

Cadman, L.

Gardner of Parkes, B.

Caldecote, V.

Geddes, L.

Campbell of Alloway, L.

Gisborough, L.

Campbell of Croy, L.

Goold, L.

Carnarvon, E.

Goschen, V.

Carnegy of Lour, B.

Gray of Contin, L.

Carnock, L.

Greenhill of Harrow, L.

Cayzer, L.

Griffiths of Fforestfach, L.

Chalfont, L.

Grimston of Westbury, L.

Chelmsford, V.

Hacking, L.

Chesham, L. [Teller.]

Hailsham of Saint Marylebone, L.

Clanwilliam, E.

Halsbury, E.

Clark of Kempston. L.

Harding of Petherton, L.

Cockfield, L.

Hayhoe. L.

514

Hemphill, L.

Mowbray and Stourton, L.

Henley, L.

Munster, E.

Holderness, L.

Northesk, E.

HolmPatrick, L.

O'Cathain, B.

Howe, E.

Onslow, E.

Ilchester, E.

Park of Monmouth, B.

Inglewood, L.

Pender, L.

Jellicoe, E.

Peyton of Yeovil, L.

Johnston of Rockport, L.

Pilkington of Oxenford, L.

Killearn, L.

Reay, L.

Kimball, L.

Renton, L.

Kinnoull, E.

St. Davids, V.

Laing of Dunphail, L.

Saltoun of Abernethy. Ly.

Lane of Horsell, L.

Sandford, L.

Lauderdale, E.

Seccombe, B.

Lawson of Blaby, L.

Shannon, E.

Leigh, L.

Shaw of Northstead, L.

Liverpool, E.

Skelmersdale, L.

Long, V.

Soulsby of Swaffham Prior, L.

Lucas, L.

Stevens of Ludgate, L.

Lucas of Chilworth, L.

Stockton, E.

Lyell, L.

Stodart of Leaston, L.

McColl of Dulwich, L.

Strange, B.

Mackay of Ardbrecknish, L.

Strathcarron, L.

Strathclyde, L. [Teller.]

Mackay of Clashfern, L [Lord Chancellor.]

Terrington, L.

Teviot, L.

Mackay of Drumadoon, L.

Thomas of Gwydir, L.

Macleod of Borve, B.

Trefgarne, L.

Manchester, D.

Trumpington, B.

Merrivale, L.

Tugendhat, L.

Mersey, V.

Ullswater, V.

Middleton, L.

Wade of Charlton, L.

Miller of Hendon, B.

Whitelaw, V.

Milverton, L.

Wolfson, L.

Mountevans, L.

Young, B.

Resolved in the negative, and Motion disagreed to accordingly.

Broadcasting Bill [H.L.]
3.57 p.m.
The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood): 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.—(Lord Inglewood.)
On Question, Motion agreed to.
House in Committee accordingly.
[The DEPUTY CHAIRMAN OF COMMITTEES (Lord Ampthill) in the Chair.]
Lord Desai Lord Desai moved Amendment No. 143:
Before Clause 62, insert the following new clause—
AMENDMENT OF THE BROADCASTLNG (RESTRICTIONS ON 'THE HOLDING OF LICENCES) ORDER 1991
(".—(1) The Broadcasting (Restrictions on the Holding of Licences) Order 1991 is amended as follows—
(2) In section 12 subsection (3) for "two" there is substituted "three".
(3) In section 13 subsection (1) for "hold a licence" there is substituted "hold more than one other licence".
(4) In section 13 subsection (1) for "holder of a licence" there is substituted "holder of more than one other licence".
(5) In section 13 subsection (2)(a) for "for which the service" there is substituted "for which a service".").
The noble Lord said: Amendment No. 143 stands in my name and is grouped with Amendment No. 156 which stands in the name of the noble Baroness, Lady O'Cathain. I trust that the noble Baroness will speak to her amendment and I shall speak only to mine.
At the heart of the Bill is a correct philosophy that in the world of today's technology and competition we need powerful British companies which can compete internationally. Therefore, certain restrictions imposed on television companies as regards licensing and on other media companies as regards cross ownership have rightly been lifted. My amendment addresses the issue of local radio stations being treated unfairly, or asymmetrically at the very least, in this respect.
The restrictions on local radio stations having more than one FM station have not been lifted.
Members of the Committee will remember that there is a restriction on local radio stations not owning more than one FM station. That was not in the Broadcasting Act 1990 and nor is it in this Act. But that was put in place by an order and because it was an order, my amendment refers to that order.
The situation is very simple. An independent local radio station may have an FM station and an AM station. Since those independent stations were able to have two wavelengths, the Gold station has been transmitted on AM and current news and so on transmitted on FM. In the spirit of the Broadcasting Bill, it would be quite right to allow radio stations to be able to bid for two FM wavelengths. That will enhance the quality of transmission of the programme and it is quite clear that AM is a technology which is less preferred than FM by many transmitters. That seems to me to be a straightforward argument. We wish to be able to allow our radio stations to have two FM wavelengths.
It may be said that having one radio station with two FM transmitters could restrict competition and that we would not have diversity. It is almost a well known result in many of these industries that if different owners have the same kind of channel, there is a great deal more uniformity of service rather than rivalry. If you do not believe me, go to Heathrow Airport and you will find that flights to the United States leave more or less at the same time whether it is British Airways, United Airlines or American Airlines. That is how people tend to behave. You would think that they would provide diversity because there is competition, but instead they provide identical services. Therefore, if we want to have diversity, it is better to have a producer of the size and range that can produce diversity.
This is a straightforward amendment. I hope that the Minister will not find much objection to it. Perhaps I may add briefly that across the country many independent radio broadcasters are in favour of this amendment. I beg to move.
4 p.m.
Baroness O'Cathain: My Amendment No. 156 is grouped with this amendment and I wish to speak now to that amendment.
516
Amendment No. 156 addresses one of the particular issues where I believe this Bill could be improved. My amendment is placed with the specific intention of ensuring that three of the objectives of government policy are supported: first, by encouraging greater diversity of broadcast output—in other words, consumer choice; secondly, by deregulating the restrictions on the media industry; and, thirdly, by ensuring the commercial strength and success of our much valued media industry.
Currently, an independent radio station is restricted from applying for a licence for more than one station on the same waveband in the same geographical area. This amendment aims to allow independent radio stations to apply to the Radio Authority for more than one licence on one waveband in any licensed area. That will offer local radio stations the opportunity to move their popular AM Gold music stations onto the better quality FM frequency.
For the benefit of Members of the Committee who are not quite sure what "Gold" means, it refers to what I would call easy listening muzak which one hears in hotels and shops but which in fact is extremely popular. Gold stations are currently listened to for something like 17 million hours per week. That sounds a great deal. That may mean that 17 million people listen to it for one hour per week but it is more likely that, for example, 4 million people listen to it for 4.5 hours per week.
Gold music output is currently listened to for that amount of time and the majority of that output is on the AM frequency which, as we have said before, is notorious for its poor quality. With the advent of digital audio broadcasting—DAB—the AM frequency will disappear—at least, it will not disappear but it will be even more sub-standard. Therefore, it is important for millions of listeners that the quality of output of those popular stations should be improved.
The restrictions which prevent that at present are contained in the Broadcasting (Restrictions on the Holding of Licences) Order 1991. Some may say that giving existing companies greater access to FM frequencies may reduce diversity of output. In fact, the exact opposite is the case. For example, two different companies running two FM stations may have very similar output in a particular geographical area with both aiming for the same most lucrative advertising market. However, if the same company owns two FM licences, by commercial definition it will aim for different audiences and a different advertising market through significantly different programming, thereby creating diversity.
As regards deregulating the media industry, the Government have achieved much in allowing greater cross-media ownership. However, they may have overlooked the need to ensure that each specific media sector is allowed an equal amount of freedom. If this Bill passes into law unchanged, a local radio station could own a greater "share of voice", as it is called, by purchasing a local newspaper, but would be prohibited from obtaining a similar percentage of "share of voice" by expanding in its own sector. Surely it should not be more difficult for a company to expand within its current media sector than to diversify outside its core

517
expertise. From my understanding of the radio industry, very few radio companies have any interest in developing into local press barons.
The popular Gold music stations are in direct competition with the BBC's Radio 2. Radio 2 is on an FM frequency and therefore has, I believe, an unfair competitive advantage over local radio stations which must broadcast on an AM frequency.
As regards the commercial strength and success of our valued media industry, I believe that the majority of the radio industry is not interested in diversifying into the print media. It is interested in excelling in the industry in which it has the greatest expertise; namely, radio broadcasting. That in turn should be encouraged by the Government. Giving independent local radio companies the same commercial freedom as other media operations will create greater choice and better quality of radio broadcasting to consumers. I hope that the Government will consider that issue as it would add to the improvements which the Bill brings to the media industry.
The Earl of Onslow: I was approached by my noble friend Lord Dixon-Smith, who cannot be present today, to add my name to the amendment tabled by the noble Lord, Lord Desai. I was extremely willing to do so until I saw all the Members of the Opposition Front Bench putting their names to it. I thought that they wanted to ban me from speaking on the matter and therefore I did not add my name to it. However, I support them in principle, especially the noble Lord, Lord Desai.
It seems to me that the Government are worried about a monopoly situation, and they are right because we should worry about a monopoly situation. But surely such a situation should be dealt with either by the radio regulator or by the monopolies commission. Capital Radio gave me a sandwich lunch and a drink of water, because I was dying of thirst, when explaining this matter to me. If Capital Radio wished to buy half of the FM frequencies available in London, that would obviously be monopolistic. But all the independent radio stations have said that they do not wish these restrictions to be placed upon them. I did not understand until it was all explained to me but FM radio produces a far higher quality of music transmission. Whether it is that disgusting noise which sometimes one's children will listen to or whether it is Brahms, is relatively immaterial. However, it seems to me to be right that, provided that it is non-monopolistic and non-area dominating, people should he allowed to have two or three stations. After all, if the Evening Standard were to take over Capital Radio, it would actually have a far more monopolistic access to news and media ownership over London than would be the case if Capital Radio were to have a second FM channel.
I am suggesting that the monopolistic tendencies are obviously real. I recognise the fact that everyone, from the Venetians through to Adam Smith, wants a monopoly because it is a licence to print money and that it is the duty of regulators to stop that happening. But it seems to me that a blanket ban is not the correct way to do it. It would be much better to approach the
518
monopolistic angle which, I believe, is the only angle which has any truth or value. As I said, it could be done by the regulator rather than by a blanket ban. That is why I support not only my noble friend and the noble Lord, Lord Desai, but also the Opposition Front Bench on the issue.
Lord Thomson of Monifieth: The noble Earl is absolutely right to say that at the heart of the matter is the question of monopoly and how one handles monopolistic tendencies. For my part, I do not know what the other Opposition Front Bench will say on the amendment. Indeed, the noble Earl should not give a blanket assertion about the Opposition because, from these Benches, we have given most careful consideration to the matter. I did not get a glass of water from Capital Radio; indeed, I gave them a cup of tea.
We considered the pros and cons of the matter most carefully and came to the conclusion that the danger of a monopoly was such that the amendment should not be accepted. I believe that it is fair to say that it is supported by some of the most successful and powerful groups of independent local radio stations in the country. If the amendment were accepted, my fear is that such groups would become even more powerful. Of course I wish them every success, but I do not wish to see them become so powerful that they reduce the plurality of ownership of independent local radio stations.
The Earl of Onslow: I should like briefly to take up that exact point. I, too, was worried about that aspect. That is why, over my lovely glass of water which I enjoyed in the headquarters of Capital Radio, I pressed those concerned very strongly. They told me that the smaller London radio stations agreed with the relaxation of the ban on dual ownership. Therefore, it is not fair to say that it is a matter only for big radio stations. It was only when I had been persuaded on that point that I was prepared to speak in favour of the amendment.
4.15 p.m.
Lord Chalfont: As a former chairman of the Radio Authority, perhaps I may offer a few words of comment on the amendment. I have a natural sympathy for the amendment moved by the noble Lord, Lord Desai, but, unfortunately, the amendment would not achieve the desired effect. I believe it is true to say that the radio companies would like, as the noble Lord says, to put their "gold" output (their easy-listening output) on to FM because it has a better transmission quality. It does not, I fear, improve the music at all; but it does improve the quality of the transmission and, therefore, of the reception.
However, if that is what radio companies wish to do, the amendment would not achieve that aim. I say that because there are no spare FM channels at present. Moreover, even if there were, it would certainly not make sense that existing holders of licences should have a prescriptive right to receive them. Therefore, in most cases, the amendment would not necessarily mean that people who wished to transfer their gold service to FM would be able to do so. Indeed, as the noble Lord,

519
Lord Thomson of Monifieth suggested, it would enable stations to take over other stations and thereby reduce the plurality and diversity which the Radio Authority as the regulator is meant to ensure.
The noble Earl said that it should he a matter either for the Monopolies and Mergers Commission or for the regulator. It is indeed a matter for the regulator. When I was chairman of the Radio Authority, one of the tasks that we sought constantly to undertake was to ensure that, in the issue of licences, diversity of ownership and plurality in local conditions was maintained. That is what is at issue. The amendment would not allow people to move their gold format on to FM; it would enable powerful, big radio stations to take over small ones in the same area.
I have one further point to make. The noble Baroness mentioned the implications of DAB—digital audio broadcasting. I believe that there is a contrary argument here. If people were allowed to achieve two analogue FM frequencies in the same area, it is possible that they would cease to have much interest in pursuing digital audio broadcasting which is what, I believe, we are all inclined and intending to do. Therefore, with the greatest respect to the noble Lord, Lord Desai, and with every sympathy for what he is trying to achieve, I must suggest that the amendment would not achieve the desired effect. Instead, it would remove a good deal of the diversity and plurality from local broadcasting.
Lord Colwyn: We are having a most interesting debate. I am sympathetic to the thoughts behind the amendments. Newspapers and new radio players can find much to encourage their aspirations in the Bill, but perhaps it does less than it should to help those who wish to concentrate their skills and investment in radio only. There is no good reason to have rules which entirely close the door on a radio company owning more than one service on a single waveband in a single geographical area. I believe that the Radio Authority should at least have to consider proposals on their merits rather than ruling them out completely.
Schedule 2 to the Bill allows for the inclusion of two of a station's services on a multiplex, where available capacity allows, and for influential local newspapers to own local radio services. It seems inconsistent for the Bill to condone the merger of a leading local newspaper with a leading local radio station in the same geographical area, albeit subject to public interest criteria, when the expansion of radio interests beyond a single FM and a single AM service in the same area is prohibited.
It seems especially unfair when that restriction does not apply where there are only a few, if any, competing commercial radio services. Under current Radio Authority proposals I believe that the restriction is confined to highly competitive markets where many stations vie for revenue and listenership. It is worth thinking about again. I hope that my noble friend the Minister will give the matter serious consideration.
Lord Inglewood: As we have heard, radio companies are currently restricted to controlling one FM and one AM station in each local licence area under the so-called
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"overlapping areas" rule. The noble Lord, Lord Desai, comprehensively explained his argument as to why broadcasters should be allowed to run up to four radio stations, two on each waveband, in areas which overlap to a significant extent. My noble friend Lady O'Cathain would simply dispense altogether with the overlapping areas rule.
Perhaps I should first explain that the Government intend to revise the restrictions on secondary holdings, many of which are also contained in the 1991 order. The scope of those changes is substantial. I anticipate that we shall revoke the 1991 order in its entirety and replace it with a new one. I shall have more to say on this at Report stage. But, as I made clear at Second Reading, we do not plan to change the existing restrictions on the use of the AM and FM wavebands. The Radio Authority, which advises the Government on how best to promote a thriving plural and diverse independent radio sector, supports that view. I believe that we ought to think hard before rejecting its advice.
The companies lobbying for change are largely those which originally held franchises to simulcast their radio services on both FM and AM but were later allowed to split their services to provide different formats on each waveband. Typically, as was explained by my noble friend Lady O'Cathain, such companies offer complementary services—one on FM, based on current hits and a so-called "gold" service on AM, based on hits from the 1960s, the 1970s and the 1980s. Given the scarcity of FM channels, that splitting has represented both an efficient use of the scarce public resource of the spectrum and a broadening of choice.
The main arguments for reform are, as we have heard, that popular "gold" formats, broadcast on AM, would be able to provide better reception for listeners if they were switched to the FM waveband, and that the growth of successful companies should not be restricted. But let us just look a little more closely at the current position. In the metropolitan areas of Britain there are typically two or three companies in operation; in London there are more than a dozen. But across shire England and the non-metropolitan areas of Wales and Scotland there is often only one local independent radio licence-holding company which operates on both the AM and FM frequencies.
Across the country, then, the position in local radio is that there is often a single monopoly or heavily dominant player. This derives to a considerable extent from the Radio Authority's remit to promote diversity in the radio services available in a particular area. When it does advertise a further FM licence in a franchise area, it for that reason tends not to relate to a popular hits format, and the successful applicant for the further FM licence accordingly is unlikely to acquire a major share of the market, or in effect to compete directly for most purposes with the dominant station. Moving a popular current AM station onto an FM channel is not the only thing a strong player might do if the rule were relaxed. I refer to the points made by the noble Lords, Lord Thomson and Lord Chalfont. Indeed, the opportunity of bidding for new FM licences, or challenging renewals of existing ones,

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is much less frequent than that of simply taking over an existing competitor, with the result that, for example, separate news reporting facilities would be closed down, thereby diminishing local diversity of voice.
I should say to the noble Lord, Lord Desai, that we must focus here on voice. Diversity of service is guaranteed by the Radio Authority agreeing the differing formats applying to different FM licences. What we are aiming to ensure is a diversity of voice. Moreover, what may be reasonable in the crowded, diverse context of London radio is less obviously right elsewhere, where a relaxation of the one FM rule might simply consolidate the position of a monopolist or near-monopolist and prevent the development of a healthy diversity. My noble friend Lord Onslow referred to the Evening Standard acquiring a radio station. Of course the Evening Standard would have to pass the public interest test before it could acquire Capital Radio, if it wished to acquire it.
The Earl of Onslow: However, it is not banned by law from so doing. That is the point I am making. I should hope that everything could be considered on a public interest basis rather than being banned by law. That is the difference and it is exactly what my noble friend has highlighted.
Lord Inglewood: I am grateful to my noble friend for elaborating that point. Because of the Radio Authority's important remit to secure variety in local radio formats, the market remains artificially structured, albeit far less regulated than the corresponding television one. Arguably, that means that there is still a need for checks on the further growth of dominant players in a particular area. If the existing rule is overturned, such groups would be able to buy their only significant competitors in their locality. In addition, new entrants to the radio market who seek to provide different services would be forced onto the inferior AM waveband, diminishing their effectiveness as competitors with existing companies and reducing the prospect of greater diversity.
We should also not forget that the Government are already providing the larger radio companies with substantial opportunities to grow. Last July an order increased from 20 to 35 the number of licences that any one company may own. That limit is removed entirely by the Bill. During the Second Reading debate I made clear that the Government are as yet unpersuaded by proposals to abandon the overlapping areas rule. That remains the case. If these amendments were to be accepted we believe, like the noble Lords, Lord Thomson of Monifieth and Lord Chalfont, that they could threaten plurality at local level, undermine competition in the provision of services, and inhibit the promotion of diversity. It is for those reasons that we are opposed to these amendments.
Lord Desai: I am grateful to those Members of the Committee who have spoken to this amendment. I am especially grateful to the noble Lord, Lord Chalfont, for informing me of the technological details of this matter. I remain convinced that there is confusion here as
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regards the notion of monopoly and competition. If we consider, for example, the larger metropolitan areas where—as the Minister said—there are a number of competing radio stations, those areas are referred to as the A and B types of area. In that case, if an existing large producer acquired another station that would not necessarily reduce competition because much competition already exists. If, however, there are areas in which there is only one dominant producer and that dominant producer acquires another FM channel, that again in my view does not reduce competition. The technology of radio is such that one can always move the dial and obtain a broadcast from the next area. It is not as if one is confined to listening to the station in one's local area.
I could understand anxieties about a monopoly situation if there were no substitute easily available, or if the substitute were costly. If I may say so to the Government, we are discussing an old fashioned view of monopoly and competition. If they had read their Professor Hayek carefully, they would be reassured that it is not difficult to have competition provided there are substitutes available. There will not be dominance because people can always turn the dial and turn to a station in another area. That has been the case in the computer industry where IBM was a large player but it faced competition from small minnows. Diversity is not the issue either because, as I pointed out, if there are several players they tend to offer the same kind of broadcasts. They all offer "gold" broadcasts. Therefore, the situation is contrary to what the Minister thinks it is and it is contrary, somehow, to common sense. Common sense is wrong in this respect. I urge the Minister to think about this matter and I am grateful to him for saying that he will return to it on Report. In the light of that good discussion—
The Earl of Onslow: Before the noble Lord sits down, I shall now confess to a frightful piece of peeking. In looking over the shoulder of my noble friend on the Front Bench, I see that he has an alternative reply. Everyone will say that it is unfair to do that and I admit that is cheating, but I cannot resist it all the same. His alternative reply states that in view of the feeling expressed in the House he will go away and—
Baroness Trumpington: This is quite intolerable, even from one of my noble friends. I ask my noble friend to sit down.
The Earl of Onslow: I do not see that it is intolerable. Where in the Standing Orders does it state that one should not quote from a brief? Let me just finish the point I am making. The only noble Lords who have spoken on the Government side are two who have done so on behalf of the Radio Authority. I am not asking the Government to agree to the amendment. I am simply asking the Minister perhaps to choose the second of the alternative replies in front of him.
Lord Boyd-Carpenter: I really must protest at my noble friend's attitude in looking over and reading from

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the Minister's brief. This is contrary to the normal good manners and standards of this Chamber. I hope that he will now apologise.
Baroness Trumpington: I do not know whether the noble Lord, Lord Desai, had finished his remarks but he was interrupted in the middle of his speech.
Lord Desai: An interesting discussion is taking place. Therefore I shall try to find out what the discussion comprises before I do anything further with my amendment.
Lord Inglewood: There are all kinds of things that I have notes on—that applies to what we are discussing today and on previous occasions when we sat in Committee on this Bill—which I deemed not appropriate to mention. Whatever the noble Earl may have thought that I had written in my notes, what I said was what I meant to say.
Baroness O'Cathain: Like the noble Lord, Lord Desai, I am grateful to all Members of the Committee who have taken part in this debate. The comments of the noble Lord, Lord Chalfont, worried me because he said that if the aim of the amendment was to put "gold" on FM, that would not be achieved. Obviously I shall have to reconsider that matter. I understood the noble Lord to say—I do not know whether I understood him correctly—that that is because of the limitation on the number of FM hands, or at least space on the FM band. Obviously I shall have to look at that matter again.
I am also grateful to my noble friend Lord Colwyn, who suggested that the authority should consider proposals on their merits and not condemn them outright. When my noble friend the Minister spoke he raised my hopes because he said that he intended to revise the restrictions and to revoke the 1991 order in its entirety. However, he then stated that, on the advice of the Radio Authority, there would be no change to the AM and FM wavebands. That does not encourage me at all.
People are talking about competition and monopoly. The reality is that there is already competition. If there were not an increase in competition, with a greater number of FM bands being given to independent radio stations, there would be a greater monopoly by the BBC which, I remind my noble friend the Minister, has four FM wavebands in each geographical area. We are looking for competition in the independent radio sector, which competes with the BBC, although not for advertising. Perhaps I did not make that point clear.
I reiterate that if the radio company were allowed two hands, that would provide greater diversity. The second FM band would not compete with another news station or current hits stations but with an easy listening station.
Therefore, the market is not the monopoly that many Members of the Committee seem to think it is. The dominant player in any area is always the BBC. I shall withdraw the amendment and look forward to hearing what will he said at Report stage, when I shall probably return to the matter. In the meantime, I beg leave to withdraw the amendment.
4.30 p.m.
Lord Desai: The Minister should remember that small radio stations, no matter how cuddly and lovely, will not survive. If there is to be new technology, one has to build up a few major players. Radio does not have highly capitalised companies. Even in companies such as Capital Radio the capitalisation is about £400 million.
We ask that the spirit of the other part of the Bill he extended to radio. Have confidence and courage and one will be all right. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 62 agreed to.
Lord Thomson of Monifieth Lord Thomson of Monifieth had given notice of his intention to move Amendment No. 144:
After Clause 62, insert the following new clause—
COMMUNITY SERVICE LICENCES
(".—(1) Section 84(2)(a) of the 1990 Act is amended as follows.
(2) After "restricted service")" insert "or—
(iv) for a defined locality and operated for the benefit of the community, or a particular section of the community, by a non-profit distributing body (a "community service").".").
The noble Lord said: Amendment No. 144 and the following amendment deal with the future of community radio, a matter on which we had some discussion in relation to amendments moved last Tuesday. We may wish to return to the issue at Report stage, but in view of the pressure on time I shall not move the amendments.
[Amendment No. 144 not moved.]
[Amendment No. 145 not moved.]
Lord Thomson of Monifieth Lord Thomson of Monifieth moved Amendment No. 146:
After Clause 146, insert the following new clause—
DURATION AND RENEWAL OF CHANNEL 3 LICENCES
(".—(1) Section 20 of the 1990 Act (Duration and renewal of channel 3 licences) is amended as follows.
(2) In subsection (2) for "four" there is substituted "five".
(3) Subsection (3) is omitted.").
The noble Lord said: Amendment No. 146 is an important one. It is a significant piece in what might be described as a jigsaw of amendments that we shall discuss today. Taken together they seek to reshape the financial arrangements between Channel 4 and ITV, between the ITV companies and the ITC in terms of the renewal of their licences, and between the large ITV companies and the small ITV companies. The issues hang closely together, and it is a pity that the groupings do not allow us to discuss the whole area at the same time.
Suffice it to say at this stage, however, that one of the anomalies of the disastrous 1990 Act was that the timetables within that Act did not synchronise with each other. Under the Act the Channel 4 funding formula, which we shall consider later, can he reviewed and ended from January 1998. However, under that same Act the licences of the ITV companies cannot be reviewed and adjusted until January 1999 at the earliest. There is a glaring gap of a year in which the ITV companies could lose their subsidies from Channel 4

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without any chance of relief from the terms of their licences from the ITC. For some of the ITV companies that is critical.
The solution appears to be simple. It is to move forward by one year from 1st January 1999 to 1st January 1998 the earliest time when the new ITV licences could start. That involves bringing the specified date forward by five years from the end of the licence period—2003—instead of the four years that are specified in the 1990 Act.
This is perhaps a deceptively straightforward amendment. By accepting it, the Committee will simply correct one of several anomalies of time which exist between the Broadcasting Act 1990 and the new Broadcasting Bill.
Whatever the outcome of the Channel 4 argument later in the proceedings on the Bill, this should be a commonsense and uncontroversial amendment to establish consistent review dates within the new legislation. I beg to move.
Lord Crickhowell: I must first declare an interest as a director of the Channel 3 company HTV.
There is little that one need add after that admirable introduction by the noble Lord, Lord Thomson of Monifieth. He rightly described the situation as a jigsaw. The companies which have the unenviable task under the bidding arrangements of looking 10 years ahead and forecasting a range of changing circumstances have to consider all kinds of things and bring the totality together to form a judgment about their bids. One of those elements is clearly the Channel 4 rebate. We shall debate that later and I do not want to anticipate that debate. However, some of the money coming to the companies has proved even more important than was realised when the Bill was originally drafted. Certainly, for those companies with relatively high bids it makes a significant contribution to income.
If part of the prospectus on which the bidding process was based is changed, it is right that the whole should he taken together. If a private sector organisation put forward a prospectus and suddenly changed the rules it would be subject to great criticism. Here we have a situation where it may be that, as a result of the review, the financial position of the companies will be substantially altered, perhaps in 1998, but because of the absurd anomaly in the original timing of the events there is no opportunity for them to have the contract reviewed in parallel with the change, whatever it may be.
All that is suggested in the amendment is that those two elements should be brought together. There is no attempt to suggest what the outcome of the review should be or to impose a solution. The purpose is merely to ensure that if a change arises in one part of the package a balancing change can be made at that time in another part of the package to provide a fair situation for all the companies involved. The case is overwhelming and I hope that the Government will be able to accept the amendment.
The Earl of Arran: I too would like to support the amendment in the name of the noble Lord, Lord Thomson
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of Monifieth. Inasmuch as the Bill as a whole seeks to provide a sensible framework for the future of British television, the amendment can only be regarded as extremely welcome. These are uncertain times for independent television. If the Government adhere to the timetable for re-evaluating Channel 4's finances, as I profoundly hope they will, then 1998 threatens even greater uncertainty.
My interventions on these issues of broadcasting policy are fired by a desire to maintain quality television. However, 12 months of limbo will do nothing for confidence in the industry at any level—from the boardroom to the studio floor. Moreover, tomorrow's critics have an uncanny knack of blaming today's legislators. I am told that good lawyers loathe anomalies. The Minister has a reputation for being a very good lawyer. I commend the amendment to him and rest my case.
Lord Donoughue: From this side we totally support the amendment in the name of the noble Lord, Lord Thomson. It seems sensible and practical and I cannot see what the Government would have against adopting it.
Lord Inglewood: The noble Lord, Lord Thomson, explained the purpose of his amendment as being a means of providing Channel 3 companies with greater certainty of income levels in the light of expected changes to the Channel 4 funding formula. As already noted, we shall discuss the formula later this evening. I do not wish to pre-empt that debate by going into detail now. However, there are certain objections in principle to what the noble Lord, Lord Thomson, proposes.
The Broadcasting Act 1990 was absolutely clear as to the duration of the Channel 4 funding formula which it set in place. It made clear that no order providing for different payment thresholds should be made before the end of 1997, as has been explained. The Act was also clear on the duration of the Channel 3 licences. They should continue in force for 10 years, with application for renewal no earlier than four years before the date of expiry.
In bringing forward our proposals to amend the 1990 Act formula, we have made clear that we do not think it right to change the rules applying to the flow of payments between Channel 3 and Channel 4 before 1997. To do that would be unfair. It seems to us that by the same token Channel 3 companies cannot have any specific expectation of arrangements applying after that date. It follows that there is no case for re-opening the timescale for licence renewal as set out in the 1990 Act.
However, there are more general arguments against the proposal to bring forward renewal of Channel 3 licences to five rather than four years ahead of their expiry date. At only halfway through the licence period, the ITC would be less able to make a fully informed assessment of the licensee's performance to date. Indeed, it was the noble Lord, Lord Thomson, himself who made that point during the Committee stage of what became the 1990 Act.
If licence renewal four years in advance of renewal leaves the ITC a short time in terms of assessing the quality of the licensee, leaving only five years of performance and removing the ITC's power to defer

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consideration of the application seems to me significantly to erode the ITC's ability to assess the renewal of the licence properly.
As I mentioned, the amendment also proposes removing the ITC's discretion to defer considering an application for a licence renewal to a more suitable date. With the renewal of 16 Channel 3 licences to consider and with a variety of market interests affecting different regions, it is only prudent to permit the regulator the flexibility to assess the application at the most sensible time. For those reasons, we oppose the amendment.
Lord Thomson of Monifieth: I find that a deeply disappointing and in some ways rather baffling reply. In this major Broadcasting Bill we have probably the last piece of broadcasting legislation this century on such a scale. With it we have the chance to make a fresh start and put right the anomalies of the 1990 Act. Although that Act occurred under this Government, it was in a different mood. There is a fairly general feeling around, not entirely on this side of the Committee, that the 1990 Act has turned out in practice to be pretty disastrous. The bidding system for television contracts left grotesque anomalies between one regional area of commercial television and another.
We greatly welcome the noble Lord's presence at the Dispatch Box but he might have sought to ensure that we try to put right in the Bill some of the more glaring anomalies of the 1990 Act rather than stand on the arguments put forward during proceedings on that Act. They were poor arguments at the time and this is a chance to put matters right. I find astonishing the Minister's resistance to this simple example of at least getting two timescales to coincide with each other and enabling two parts of an integral commercial television system to be dealt with on an even footing. However, this is not the time to pursue such matters. There are many others related to them with which we have to deal tonight. Therefore, I beg leave to withdraw the amendment.
Lord Peyton of Yeovil: Before the noble Lord sits down, I wish to say that I entirely agree with every word he said. So far as I am concerned, the 1990 Act is nothing to be proud of. My noble friend has been broadminded, and I hope that he will undertake at least to look carefully again at the amendment. The noble Lord, Lord Thomson, does not say what he has just said without the backing of a great deal of experience and much thought.
Lord Thomson of Monifieth: I am grateful for the noble Lord's support. We shall certainly wish to return to the matter on Report when we shall be able to take all the interrelated issues as a whole depending on the outcome of matters later this evening. In withdrawing the amendment, I give notice that we shall return to it on Report.
Lord Inglewood: In the light of those remarks, I wish to assure the Committee that we shall pay considerable attention to what Members of the Committee said. They bring with them a considerable corpus of experience and expertise. We shall think carefully and reflect on what has been said.
Amendment, by leave, withdrawn.
4.45 p.m.
Baroness Dean of Thornton-le-Fylde Baroness Dean of Thornton-le-Fylde moved Amendment No. 146A:
After Clause 62, insert the following new clause—
NON-DOMESTIC SATELLITE SERVICES: LICENSING PROCEDURE
(". After section 45 of the 1990 Act there is inserted—
"Non-domestic satellite services: licensing procedure.
5A. Section 44(4)(b) shall apply to a licence to provide a non-domestic satellite service as it applies to a licence to provide a domestic satellite service.").
The noble Baroness said: This amendment deals with the shortcomings of the Broadcasting Act 1990 and seeks to rectify them. The amendment would add a new paragraph under Section 45 of the 1990 Act bringing non-domestic satellite services into line with the provisions of the 1990 Act covering the BBC and Channel 3 licensees. It creates a fairer competitive playing field by setting similar standards for the commissioning of programmes from independent producers. Under Section 16 of the 1990 Act Channel 3 licensees are required to broadcast a range and diversity of independent productions for not less than 25 per cent. of the total allocated time. Section 186 extended that requirement to the BBC. Section 44(4)(b), to which the amendment specifically refers, extends that provision also to domestic satellite services. In a nutshell, what is missing from the 1990 Act is non-domestic satellite service providers. As such, BSkyB is exempt from the requirements of the 1990 Act.
BSkyB is covered by the 1989 European directive Television without Frontiers, which is currently being renegotiated, I gather. That directive requires 50 per cent. of the material to be of European origin and just 10 per cent. from independent producers. However, the directive does not cover sport. Amendment No. 146A is not specifically related to sports.
The definition of what is an independent production is covered by another order, the Broadcasting (Independent Productions) Order 1991. I apologise for referring to specific pieces of legislation which are complex, but the issue is simple. It takes into account and changes the 1990 Act to cover non-domestic satellite services.
Under the 1991 order, independent producers must use their own facilities, not those of the broadcaster to whom they are selling their programmes. The broadcaster is not allowed to own more than 15 per cent. of shares of the independent producer. I suggest that this amendment would bring about a fairness that does not exist under the 1990 Act, nor under this Bill. There was an oversight in the 1990 Act. Domestic licensees—the BBC, Channel 3 and domestic satellite services—were covered quite specifically by the Act. The requirement was that 25 per cent. of their productions must come from independent producers.
The amendment must be acceptable, on grounds not only of competition but of equity. It must be in line with the declared policy of the Government on independent productions and the interests of diversity and high standards as introduced under the Bill.
Viscount Astor: This amendment concerns me slightly. As the noble Baroness quite rightly said, it amends the 1990 Act as regards non-domestic satellite services.
It should be remembered that the 1990 Act passed through this place before we had those satellite services. The noble Lord, Lord Thomson, regards the 1990 Act as at the very least disappointing. However, the Act tried to look forward. In many ways it did so rather well, but it did not foresee what would happen in some areas.
There is a difference between non-domestic and domestic satellite services. The amendment would mean a non-domestic satellite service having to contain various European programmes and being subject to the independent productions order. That might be absolutely fine for BBC, ITV or Channel 4. But satellite broadcasters relay specialist programmes. They relay films, for example, and programmes in minority languages. They are highly specialist in the material they broadcast and are different from domestic services. We ought to think carefully before imposing restrictions on the material that could be broadcast. I believe that we all want the maximum opportunity to receive the programmes we want, or to turn them off, and not to have them restricted in this way. I understand the noble Baroness's concerns about the independent productions order and other matters. However, I am not sure that they should apply in these cases.
Lord McNally: It is interesting to hear a debate such as this. It reminds us just how quickly circumstances in broadcasting change. During the passing of the 1990 Act and thereafter, I was an adviser to the ITV Association. I therefore remember some of the current thinking about satellite broadcasting. It was a leap into the unknown on the part of those investing; namely, Mr. Murdoch and BSB. At that stage Members on all sides of this Chamber thought that in order to invite the courage needed to invest in satellite broadcasting, it was necessary to give the broadcasters a pretty free hand. For Mr. Murdoch to take on BSB to give us Sky broadcasting was in the circumstances, as has been acknowledged in this debate, a piece of commercial courage.
There comes a time, however, when commercial courage has been rewarded enough. There is no doubt that the strength and power of satellite broadcasting today and as we see it in the future demands of that service some of the responsibility and contribution to the overall benefit of broadcasting that terrestrial suppliers undertake. Ministers could well indicate that the period of grace for satellite broadcasting remaining outside some of the broader responsibilities is coming to an end. They could give fair warning to satellite
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broadcasters that we intend, either by this amendment or by other means, to bring them into the family of responsible broadcasters.
Viscount Chelmsford: Perhaps I did not do sufficient homework, but I had assumed that BSkyB, as a UK company, was a domestic satellite service. Perhaps someone will correct me.
I do not see how a UK Act can possibly control services that may come to us from France, Germany, Holland, or other countries not within our jurisdiction. I therefore do not see how the amendment could be made to work.
Lord Donoughue: In particular reference to the remarks of the noble Viscount, Lord Astor, we need to focus on the basic principles. We are dealing with the need to encourage independent production and the need to support European production. The decision to exclude these particular satellites was not made on the principle that they are exempt from those imperatives; it was simply a matter of historical chance that they were not taken into account.
I support the point made by the noble Lord, Lord McNally. Now is the time to correct an anomaly. We do not mind that it was an anomaly; we do not mind that a particular non-domestic satellite producer has benefited greatly. That was an award for enterprise. However, that is over now, and we need consistency.
This amendment produces that consistency and the Act ought to contain it. It ought not to prolong a quite illogical exemption that runs contrary to the main imperatives that have to be taken into account. I hope that the Minister will take the amendment seriously. This is in no way a party issue; there is concern and support on many sides. It is not personally against any particular broadcaster. I should certainly be prepared to divide the House on this matter at another time.
The Earl of Stockton: I agree with Members on the other side of the Committee. As the noble Lord, Lord Thomson of Monifieth, among others, will remember, during the Committee stage of the 1990 Act we were very close to introducing a threshold of penetration, at which time non-domestic satellite companies would come under the aegis of that legislation. It was agreed by those involved that a limit should be set by statute to reward enterprise, courage and ingenuity in setting up the system. For reasons beyond the control of this place, and certainly beyond my control, that was not to be.
As a consequence, instead of having a non-domestic satellite company outside the control of the Act and a domestic satellite company within the control of the Act, within a matter of days the two had merged. Indeed, discussions on that merger were continuing even as the Committee stage was held in this place.
Therefore the amendment is entirely reasonable. The penetration threshold of 14 per cent.—the number of households—discussed at that time and agreed by

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executives of some of the principal companies has now been well surpassed. Now is the moment to bring the companies within the terms of the legislation.
Lord Desai: To respond to a point made by the noble Viscount, Lord Chelmsford, as the Minister may remember, I moved a similar amendment earlier, to bring about a level playing field, as we call it.
Once Sky had taken over BSB, the domestic spectrum had been sold to foreign broadcasters. Sky was transmitted to domestic receivers via Luxembourg. The domestic/non-domestic distinction in the 1990 Act has been overtaken by technology and by mergers. The amendment moved by my noble friend is therefore entirely appropriate to the present day.
5 p.m.
Lord Inglewood: I am grateful for your Lordships' concern about this matter, particularly the noble Baroness, Lady Dean, who clearly spelt out the reasoning and effect of her amendment. Her desire to promote the European independent production sector, and the UK industry in particular, in the context of European programming content is admirable. However, I am not convinced that the requirements she seeks to impose are either practical or desirable.
We listened carefully to what has been said this afternoon and I should like to reflect on that. However, I shall explain what we see as the general position in relation to satellite broadcasting.
Both terrestrial and satellite channels are already hound by the terms of the 1989 broadcasting directive to secure, wherever practicable, 10 per cent. of their output from producers independent of broadcasters. Given the number of hours broadcast by the satellite channels, that is already a significant requirement. To seek to more than double that requirement by means of this amendment would not be in the interests of the broadcasting industry, especially when significant amounts of independent production for sports, news and game shows are excluded as qualifying towards the European quota.
I note what was said by the noble Lord, Lord Desai, about establishing a level playing field for the competition between BSkyB and the terrestrial channels. I fully understand what I imagine to be the thoughts behind his intervention. But the products of traditional terrestrial broadcasters and satellite broadcasters are not the same. The first and most important requirement for a new entrant satellite broadcaster is to establish the financial viability of his operation. Without access to terrestrial frequencies, that broadcaster needs to start from scratch to win access to the millions of homes which the terrestrial commercial broadcasters automatically reach with both their programme material and their advertising in support of it.
BSkyB is a good example of a much more developed and diverse broadcaster than many others. It is now able to expand and the company has introduced a number of new channels, such as the History Channel. Others, such as the documentary based Discovery Channel, also use significant amounts of European and independent
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production content. Looking across the complete range of BSkyB channels, I am pleased to note that they seem comfortably to exceed the European broadcasting directive quota of 10 per cent. for independent European production.
We must not forget, however, that although BSkyB is the biggest satellite broadcaster it is not the only one. Satellite broadcasting is a growth area. At the end of 1992 there were some 42 channels. Today there are over 60. Some of the 42 are no longer in business. It is a high cost, high risk business which as yet attracts a total viewing audience of only 8.7 per cent. It is also a highly consumer-led industry, catering for specialised tastes. It needs to research its potential audiences very carefully. For some thematic channels, especially nostalgia movies, soaps or sport, the question of independent production quite simply does not arise. For others, such as those eight catering for non-European language populations, 25 per cent. would be an onerous and, indeed, impossible requirement.
We are comfortable with the existing obligations in the 1989 broadcasting directive precisely because they allow for a diversity of channels, and recognise the problems of new entrants, particularly where commercial and cost considerations are concerned. The flexibility allowed for in the current broadcasting directive has encouraged companies such as Turner Broadcasting to establish a European base in the United Kingdom. I would also like to think it plays a part in encouraging potential developments such as the one announced today of a £225 million international film and television studios and theme park to be opened by Warner Brothers and MAI at Hillingdon. Ten per cent. of independent programme content, where practicable on individual channels, in this rapidly expanding sector can only be good news for United Kingdom and European production companies.
I have taken a little time trying to explain the context of the satellite broadcasting industry as we see it. We believe that there is a real risk that if one imposes too high a threshold of the kind proposed in the amendment it may fail to draw broadcasters. That will be to the detriment of potential independent producers in this country and production of television material in Britain.
We must try to ensure that there is sufficient diversity of transmitters—if I can call them that—of television material that will create a market for the material produced in the United Kingdom. We are anxious not to put hurdles and barriers in the way of that happening in the form of driving away potential broadcasters who may use that material.
I listened carefully to the arguments put forward lucidly this afternoon by Members of the Committee and hope that, in turn, the Committee will consider carefully the points I have put forward in order to explain my standpoint at this Dispatch Box.
Baroness Dean of Thornton-le-Fylde: First, I thank all those who have taken part in the debate and the Minister for the detailed and considered way in which he responded to the amendment. However, I should like to comment upon one or two points that were made.

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I feel that we sometimes tend to apply a higher threshold on our producers of television programmes than we apply to non-domestic providers. When we talk about small companies, it is worth looking at the annual turnover of some of our regional television companies, because this Act applies to them. I do not believe that equity comes into the equation. The noble Lord, Lord Astor, said that the amendment would restrict choice; that satellite is more specialised. That is not the intention of the amendment and I do not believe that would be the result if the Minister accepted it.
I heard the Minister's response and am not absolutely convinced by it. Before I conclude, I should like to refer specifically to the point made by the noble Viscount, Lord Chelmsford, who focused sharply on what the amendment means. At the moment we are discussing BSkyB, but the amendment is not aimed at BSkyB; it is aimed at non-domestic satellite services in the belief that when the Bill becomes an Act it may put us ahead of the game for once, which certainly was not the case in 1989. But the noble Viscount, Lord Chelmsford, is absolutely right that Section 45 of the 1990 Act deals with the licensing of non-domestic satellite services. Section 44 deals with domestic satellite services. The difference between the two is that, whereas Section 44 requires the 25 per cent. from independent producers and the European origin content, Section 45 specifically does not. The amendment would bring Section 45 into line with Section 44 of the Act.
I shall reflect on what the Minister said and read Hansard carefully. I felt that there were some positive messages coming through. I may come back to the matter on Report but, in the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 146ZA not moved.]
Schedule 2 [Amendments of Broadcasting Act 1990 relating to restrictions on holding of licences]:
[Amendments Nos. 146B to 150A not moved.]
[Amendment No. 151 had been withdrawn from the Marshalled List.]
[Amendments Nos. 151B and 151C not moved.]
[Amendment No. 152 had been withdrawn from the Marshalled List.]
[Amendments Nos. 152A to 152E not moved.]
Viscount Chelmsford Viscount Chelmsford moved Amendment No. 153:
Page 80, line 1, at end insert ("relevant").
The noble Viscount said: In moving Amendment No. 153, I wish to speak also to Amendments Nos. 154 and 157 to 161. Part III of Schedule 2 lists those services which are licensed by the commission and which are thus subject to various restrictions. The list is basically one of programme providers. However, paragraph 1(2)(f) extends the list to include local delivery services. In general the Bill recognises the difference between a programme provider and a delivery operator. Its restrictions as to the number of licences held and to audience share are aimed at programme providers, not at delivery operators. That recognises the interests of the
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delivery operator which are to transmit material for as many different programme providers as possible. His competitors are rival delivery operators. He has no interest in preventing programme providers from broadcasting. It therefore came as a surprise to cable companies, whose trade is that of delivery operators, to find that, under paragraph 1(2)(f), they are included in the restrictive provisions. I understand that in discussions with the ITC they were reminded that they had editorial control of local advertising and also foreign non-European programmes delivered by them. I am told that they have in fact a statutory responsibility to vet such local advertising and that the only foreign programmes are from a Russian channel called Moskvar. It is arguable that those editorial responsibilities are so de minimis that the Government could delete paragraph 1(2)(f) entirely. Indeed, that would make everything very much simpler. However, the cable companies decided to ask for a more modest solution. Their association approached me to seek an amendment which would limit the effect of paragraph 1(2)(f) only to those situations where the cable companies act as programme providers. The amendments are drafted to achieve that.
At this point it is best for me to advise the Committee that I am a director of EURIM and that the CCA is a member, as are others from different parts of the broadcasting and communications world. However, I do not work for any cable interest; nor do I personally take any money from any party. I am moving the amendment because I was asked to and because it seems to me a reasonable thing to do, and not for any other reason.
The wording of Amendment No. 154, the principal amendment, may look complex; it is actually quite simple. It restricts the effect of paragraph 1(2)(f) to circumstances where the companies act as programme providers, using the definition for the licensed service set out on page 66, line 14, of the Bill. It uses the Government's own definition. I should add that without the amendment the industry will find itself double-counting audience time, once in respect of the programme concerned and again for the local delivery operator. Should the amendment be accepted, the other amendments in my name fall logically into place, including the deletion of references to the local delivery services on page 90, lines 38 and 51, in order to remove cable . companies from cross-media ownership restrictions.
In local delivery services the true competitors of the cable companies are MTL, the BBC's transmission arm, SES Astra and, perhaps sometime in the future, British Telecom. None is subject to restrictions about licences, audience share or ownership. My amendments seek to return the cable companies to the same position, a position which they have historically enjoyed. I beg to move.
5.15 p.m.
Lord Inglewood: My noble friend's amendments, Amendments Nos. 153 and 154, seek to meet the concerns of the cable industry about how audience shares are attributed to their services. I recognise that holders of local delivery licences usually transmit

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programmes which are provided for them by other broadcasters as part of the programme service. As my noble friend pointed out, they are normally only held accountable for the content of any advertisements and any foreign satellite programmes they may relay which are not otherwise licensed for broadcasting in the United Kingdom. My noble friend's amendments seek to ensure that it is only these programmes which are included in the audience share attributed to the local delivery licence.
It has not been our intention that programme services provided to a local delivery service by another channel which holds a UK licence should count towards the cable service's audience share. In our view the drafting of paragraph 3(1)(a) of Part III of the schedule ensures that audience time attributable to a service would be produced,
"by ascertaining, in relation to every person who in that period watched any programme included in that service, the total amount of time he spent in that period watching programmes so included".
The wording means that if a programme is delivered as part of a licensable programme service, regardless of whether it is delivered by cable, satellite or terrestrial television, the watching of it will be included against that programme service and not against the local delivery service or, as the case may be, satellite service. In our view there is no question that a programme provided via, say, Channel 3 which is received through a local delivery service would count towards both the Channel 3 service and the cable service. If it is a Channel 3 service it will only count against that service regardless of the means of delivery. I hope that that reassures my noble friend and meets his point.
Perhaps I may talk briefly about the practice. The ITC is likely to use statistics provided for it by the Broadcasting Audience Research Board—BARB—which already provides viewing figures for the industry. These are gathered by means of a panel consisting of some 4,700 households spread geographically across the UK. The viewing of programmes by all members of the household over the age of four is recorded electronically by means of a so-called people meter, regardless of the means of delivery used. The figures provided for the viewing of BBC1, for example, reflect viewing by those who receive the signal through terrestrial as well as through local delivery service. Although in practice BARB is able to say what percentage of viewing of BBC1 was in cable and satellite homes, it would not be able to identify what viewing of that channel was attributable to each local delivery service.
We conclude that the amendments are not necessary as viewing of licensable programme services and other television channels which are delivered through cable will not be counted against that local delivery service. In fact, the effect of my noble friend's amendments would not be quite the one that I think he intends. In strict terms it would mean that the only programmes delivered through a local delivery service which could he counted towards audience share would be those for which cable companies were deemed to have editorial responsibility; namely, satellite services which were not licensed in the UK but were relayed by means of cable and the cable service's own advertisements. The result
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would be that those people who chose to watch services like BBC, ITV or Sky but received them through cable would have to he discounted from the total television audience. That, in turn, would distort the overall picture and lead to the disappearance of audience share statistics for those programme services, such as, for example, Live TV, which are delivered exclusively through cable.
I appreciate my noble friend's wish to ensure that local delivery services are not subject to unnecessary regulation as they are essentially a means of delivery rather than a broadcasting service in their own right. However, to exclude them from the 15 per cent. audience share threshold altogether would open up a damaging loophole in our policy. As we believe the amendments are not necessary to protect the interests of local delivery licence holders—I hope I have reassured my noble friend about that—and as we believe that they do not achieve the objective that is intended, I ask my noble friend if he will consider not pursuing them.
Viscount Chelmsford: I thank the Minister for his reply, which was a long and detailed response on double counting. That was a side issue to my amendment, which was effectively asking the Government to look at delivery operators rather than service providers. I still hope that we may find some way to exclude cable companies from the restrictions that are put on service providers. I shall study what the Minister said. It may well be that I shall want to come hack to this matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 154 not moved.]
Baroness Dean of Thornton-le-Fylde Baroness Dean of Thornton-le-Fylde moved Amendment No. 155:
Page 80, line 39, leave out ("three") and insert ("two").
The noble Baroness said: This part of the Bill deals with multiplexes. At present we suggest that it provides for an in-built potential monopoly situation if one person bids and receives licences for all three. At the moment, in the first stage of development of digital television and radio, six multiplexes will be available. One of those will go to the BBC, one to the independent companies such as ITV, including Channel 4 and S4C, and half to Channel 5, leaving three-and-a-half multiplexes.
We suggest that enables one person to develop immediately a monopoly situation. Against the background that we want pluralism and diversity, we suggest that the Bill as it stands is flawed. The amendment will reduce the number of multiplexes not from three to one but from three to two because we do not want to discourage digital television getting off the ground.
There is another factor. We are not yet clear about the strategic importance of multiplexes within broadcasting in this new digital age. We believe that we know the direction in which it is going but we arc not absolutely sure. The Government's proposals in the White Paper did not refer to three multiplexes being able to go to one purchaser. In fact, the Government probably

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had it right originally in the White Paper when they spoke about establishing a maximum below three. I beg to move.
Lord Inglewood: I am most grateful to the noble Baroness who has clearly set out her concerns and explained why she is proposing that the maximum number of television multiplex licences that one person might hold at one time be reduced from three to two. The launch of digital terrestrial television will carry with it significant long-term investment. There will be six multiplexes initially and more may become available, perhaps with more restrictive coverage. Our original proposals were, as the noble Baroness said, to restrict companies to the ownership of two television multiplexes, ensuring thereby competition between at least three companies. However, consultation produced significant feedback from the industry that it would be necessary to allow companies to reap the maximum possible economies of scale from rolling out infrastructure from more than one multiplex. Many in the industry also argued that companies would only consider entering the market if they could see a prospect of controlling three licences. Indeed, many actually argued for a monopoly.
A higher ownership threshold would also allow multiplexes to develop a sufficient base of subscription television to enable them to make a reasonable return on their investment. We have taken these arguments on board. The revised limit of three multiplexes helps to make digital terrestrial television a better business proposition while continuing to ensure that there is some competition in provision to the benefit of broadcasters.
There is one point I should like to emphasise. There is no requirement under our proposals that there be only two providers altogether. However, our proposals allow the ITC the flexibility to bundle multiplexes in a way that might best result in the successful launch of digital terrestrial television. We have also taken powers in paragraph 5(3), which will allow the Government to respond to future developments in the market and to amend the position should that prove sensible, particularly as more multiplexes come on stream.
I am sure that we are in agreement on both sides of the Committee that it is important to ensure that digital terrestrial television is given every opportunity to succeed. I very much hope that the noble Baroness will now understand the thinking behind the change that we effected between the White Paper and the introduction of the Bill.
Baroness Dean of Thornton-le-Fylde: I appreciate what the Minister says. We want to see digital television get off the ground. One must bear in mind that one multiplex can provide between two and 10 programmes. The Bill as it stands will put multiplexes out for licence and there will be criteria which the ITC will apply such as the area covered, the timetable, programme variety and fair competition. We have difficulty reconciling fair competition, on the one hand, with a company having a potential monopoly on the other, bearing in mind that licences for programmes are automatically awarded and do not have to meet a criteria as such in the Bill as it
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stands. We believe that there is a danger here of a monopoly developing and that this amendment would avoid that. I heard what the Minister said and at this stage I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 156 not moved.]
The Deputy Chairman of Committees (Baroness Serota): If Amendment No. 156A is agreed to, I shall not be able to call Amendments Nos. 156C to 161ZG.
Lord Thomson of Monifieth Lord Thomson of Monifieth moved Amendment No. 156A:
Page 88, line 15, leave out from beginning to end of line 39 on page 93 and insert—
("Restrictions on links between newspaper proprietors and licence holders
2.—(1) A person who is the holder of a licence to provide a national or local service specified in sub-paragraph (2) below may not run, or become a participant in a body corporate which runs, a local or national newspaper—

(a) without the consent of the relevant authority, or

(b) if the Monopolies and Mergers Commission report that the running of the newspaper by the person who holds the licence or the participation (as the case may be) in question may be expected to operate against the public interest.

(1A) A person who runs a local or national newspaper may not become the holder of a licence to provide a national or local service specified in sub-paragraph (2) below or a participant in a body corporate which holds such a licence—

(a) without the consent of the relevant authority, or

(b) if the Monopolies and Mergers Commission report that the holding of the licence by the person who runs the newspaper or the participation (as the case may be) in question may be expected to operate against the public interest.

(1B) In any case—

(a) where—

(i) a person to whom sub-paragraph (1) above applies runs or is a participant in a body corporate which runs a local or national newspaper, or

(ii) a person to whom sub-paragraph (1A) above applies holds a licence to provide a national or local service specified in sub-paragraph (2) below or is a participant in a body corporate which holds such a licence; and

(b) there is an increase in any of the following—

(i) the level of that person's participation in that body corporate;

(ii) the aggregate market share of the newspapers in question;

(iii) the aggregate audience time attributable to the services in question (determined in accordance with paragraph 3 of Part III of this Schedule),

the relevant authority may refer that increase to the Monopolies and Mergers commission for investigation.
(1C) A reference may not be made under sub-paragraph (1B) above more than 3 months after the relevant authority first knew of the increase in question (or ought to have know from information available to it), but such a reference shall be made in anticipation of an increase within paragraph (b)(i) of that sub-paragraph if the participator makes a written request to the relevant authority for such a reference.
(1D) For the purposes of this paragraph the market share of a newspaper shall be determined in accordance with regulations made by the Secretary of State which shall be laid in draft and approved by resolution of each house of Parliament before being made.").
The noble Lord said: In moving this amendment, with the leave of the Committee I shall speak to the two amendments grouped with it, Amendments Nos. 161A and 161B, because they go together.
These amendments deal with the arrangements for newspaper owners to seek ownership of television companies. They deal with what is now popularly called the "20 per cent. rule". In these amendments I am seeking to remove that rule and I shall explain why in a moment or two.
Currently, under Schedule 2 of the 1990 Act there is the general rule that newspaper companies of whatever size should not have more than a 20 per cent. interest in a terrestrial television broadcaster or radio station. The new Bill changes that to reflect changing circumstances. We all recognise and accept that. Perhaps I may say in parenthesis that I am perhaps less starry-eyed than some who believe that by encouraging greater cross-media ownership and larger units in the media field we are going to create world-class companies and compete with the Warner Brothers and the Disneys of the global economy. I believe that there is a good deal of exaggeration about that. Nevertheless, circumstances have changed and we accept that.
National or local newspaper owners who want to own a terrestrial television or radio licence are now simply to be subject to a case-by-case public interest inquiry by the ITC, but only where the newspaper group in question has a newspaper market share of under 20 per cent. That does not seem to be logical and forms the objection of principle which I and other Members of the Committee have as regards Schedule 2, paragraphs 4 and 5 on pages 89 to 92 of the Bill. They use arbitrary limits to prohibit participation in markets which ought to he open to all unless—and I emphasise this—the public interest is adversely affected by any particular participation.
The Bill as it stands provides that any national newspaper group with more than 20 per cent. of the market cannot have more than a 20 per cent. interest in a Channel 3 licence, a Channel 5 licence or a radio licence, but any other newspaper can. According to my sense of fairness, it does not make sense that a national newspaper group with, say, 19 per cent. of the market may fully own such a licence, subject to the public interest test, whereas a group with a 21 per cent. market share must he banned absolutely from owning it, regardless of its good or bad effect on the public interest. Equally, it is nonsense to suggest that a participation level of 19 per cent. by one larger newspaper group may be allowed but that a group with a level of 21 per cent. should be prohibited absolutely. I do not see how one could regard such a system as anything other than arbitrary. It is difficult to see how the public interest can be adequately served by such a system.
We all know what we are talking about in practical terms. Only Mirror Group Newspapers and News International are affected by the prohibition in the 20 per cent. rule as they are the only newspaper groups with more than 20 per cent. of the national newspaper market. All other newspaper companies are free to
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invest heavily in mainstream television, subject to the Bill's public interest test. Just two companies are being treated unequally. I hope the fact that I have tabled this and similar amendments will enable us to create a fairer situation all round. This is not a vendetta against Mr. Murdoch and all his works.
Returning to the specifics of the amendments, the first seeks to leave out the provisions which introduce the arbitrary 20 per cent. barrier, together with attendant definitions, and instead to make all licence holders and newspaper owners subject to a public interest inquiry. The requirement is that the ITC should first look at the situation and decide whether there should he a full MMC inquiry or whether it is plain that the public interest will not be adversely affected by the level of cross-media ownership in question. So where newspapers and television are involved, ownership changes would be reviewed on a case-by-case basis under the public interest and would be decided on their merits. It may be expected that where the level of participation is very low, the ITC will consent so that an MMC inquiry will not be required. Bringing all the players in the market within the public interest test will undoubtedly increase the level of the protection for the public interest, but it will also allow the industry to operate more fairly.
I can deal briefly with the second of my amendments. It is a technical amendment which seeks to replace the definition of "newspaper proprietor" although it is not intended to change the meaning from what is in the Bill at present.
The third amendment would allow participants or would-be participants to ask for clearance in advance so that they may know where they stand before investing large amounts of money in the business. Unlike the Government, I believe that the ITC should he required to come to a decision within a specified time. I have proposed a period of one month. I am not dogmatic about that, but I propose that there should be a time limit which provides just enough time to determine whether there is something which needs investigation. If investigation is needed, the matter is to he referred to the MMC within the one month allowed. The MMC will have three months to make its inquiry unless the Secretary of State allows an extension of time. I do not believe that the Government's attitude of allowing the ITC unlimited time to make its inquiry can be justified on any grounds.
The amendment also replaces some of the provisions in the Bill which provide for public interest inquiries. The replacement is necessary not because I disagree with the broad thrust of this part of the schedule, but because in my view the provisions are too narrow. I want to widen the scope of the inquiry to all players in the market and to have those inquiries carried out by the MMC.
On that point, perhaps I may deal with a slightly wider matter than the 20 per cent. rule and advise the Minister that I am concerned that the Government should make arrangements to have the public interest tests applied in the most rigorous and effective way. We were happy to hear the Minister confirm on Second

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Reading that the Bill would be subordinate to the Fair Trading Act and the normal workings of the Office of Fair Trading. However, the fact of the matter is that there is some confusion about the provisions in this sphere in both the television and advertising industries as well as among the general public. There is a feeling that the audience share limits proposed in the Bill imply a potentially higher level of ownership than is likely under the competitive rules of the OFT. In moving Amendment No. 156A, I have dealt with a slightly wider point, but I should like to press the Government for further reassurance that anti-competitive positions will not be permitted.
In conclusion, the amendments would broaden the use of the public interest test for cross-ownership and, in doing so, would treat all companies equally and on a case-by-case basis. I commend the amendments to the Committee. I beg to move.
5.30 p.m.
The Earl of Stockton: I should like to support the noble Lord, Lord Thomson of Monifieth, in this amendment. It seems to me that it makes perfect sense in a very fluid series of interlocking media industries to say that the public interest should be the primary criterion—in fact, the only criterion—by which such matters are judged.
We are now moving from broadcasting to narrowcasting. We are moving from being providers of newspapers to being providers of data bases which may or may not be supplied down cables or wires or on surplus frequencies in the multiplex. The situation is such that the previous definitions with which we have been working will no longer be applicable in a far more immediate future than I suspect many of us are prepared to grasp. It seems to me that the noble Lord's amendment meets exactly the repeated concerns of your Lordships in these discussions by a very simple, and I think elegant, formula.
Viscount Astor: My noble friend has just made a rather convincing argument for an amendment; but I am not sure that his argument is relevant to the amendment moved by the noble Lord, Lord Thomson of Monifieth. This amendment is not about new technology or anything like that. It is simply about ownership. It seeks to amend the ownership schedule which deals with the 20 per cent. rule. I am sure that all of us consider that we do not want large concentrations of ownership in either the broadcasting industry or the newspaper industry; nor do we want an overlap of such a high concentration as to cause us concern.
The noble Lord, Lord Thomson, in effect asked, "Why 20 per cent?" The answer is, "Why not?" because 20 per cent. is the percentage that we have lived with, as the noble Lord explained during the 1990 Act. Therefore, I do not accept the noble Lord's argument about unfairness arising to those with a market share of 21.1 per cent. as opposed to 19.9 per cent. It may be said that that is unfair but everybody, whatever side of the divide they are on, knows what the rules are. I do not think that it is sustainable to argue that there should not be a percentage rule because of that.
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The Bill rightly says that broadcasting is special in this country. Broadcasting is not like any other industry. It has an influence on our society and nation which is out of due proportion to perhaps any other industry. I am sure that the noble Lord would agree with that. Therefore, in drawing up the Bill I think that the Government were right to say that there must be some restrictions on what is a fair percentage. I think that the Government got it exactly right with 20 per cent. because that will stop undue concentrations of newspaper ownership affecting television. It will allow plenty of people to operate in the market. Therefore, with great respect to the noble Lord, Lord Thomson, I do not think that his amendment is right and I hope that my noble friend will resist it. I am sure that he will have a convincing argument for doing so.
Lord Wyatt of Weeford: At a previous stage in this Committee, I referred to my interest in News International and News Corporation. If any noble Lord would like me to recite those interests again, I am happy to do so. They did not arise because of my membership of this House; I had them long before I became a Member of your Lordships' House.
I should like to support the amendment which I think provides a fair and sensible arrangement. Some things about News International have been forgotten. First, it has no regional newspapers, and so when one says that it has an undue proportion of readership of newspapers in this country, that is untrue. It is in fact in a small minority. Again, it has no consumer magazines which are widely read by all manner of people. News International has only 40 per cent. of Sky. It is a minority shareholder. It may be that Mr. Murdoch is an active 40 per cent. shareholder, or representative of that shareholding, and that is no doubt to the benefit of BSkyB, but it has only 4 per cent. of this country's TV audience. So it can hardly be said to be a monopoly, or that it should be restrained from competing, for example, with the BBC which has 44 per cent. of the country's viewing audience.
I do not want to labour those points, but it is clear that the Bill as framed is unfair to anyone who happens to be concerned with News International or News Corp. On reflection, perhaps the Government will consider accepting the amendment.
Lord Desai: Perhaps I may ask a general question in relation to the amendment. It relates to the relationship of the Bill to the Fair Trading Act. Why do we need conditions to be laid down in the Bill? Why cannot we just trust the Fair Trading Act to take care of the matter? There are concentrations of ownership. We have a mechanism under which the Office of Fair Trading can proceed. I ask the question out of curiosity, because I am somewhat confused. Why do we need to lay down these limits?
Lord Colwyn: I regret that I find the whole issue of the 20 per cent. rule bizarre and difficult to understand. For a start, I believe it to be unnecessary. A public interest test has already been expressly, although perhaps not perfectly, drafted into the Bill with the issue of cross-ownership between newspapers and broadcasters. It

543
is clear that that would suffice whatever the size of the newspapers involved. Why is the 20 per cent. rule there if a public interest test operates already? Its existence is artificial. I hope that this afternoon we shall not become part of a commercial battle.
Noble Lords opposite will try to change the 20 per cent. to a 25 per cent. rule in their Amendment No. 156E. Conveniently, the Mirror Group would then be excluded from its application. The reasons for any proposed change are not clear. Could it be that News International already has satellite TV so it deserves to be treated roughly? But the Mirror Group already has cable TV with its subtle and intellectually challenging news bunny. As far as I am aware, the Mirror Group is, and always has been, free to enter the satellite world as well.
The 20 per cent. rule business is a nonsense. I ask the Committee to look at its implications. Just two companies are affected by it as it stands at present—the Mirror Group and News International. It is the ownership of popular newspapers that they have in common that causes them to deserve this stigma.
If the 20 per cent. rule becomes the 25 per cent. rule, News International only is affected because of its ownership of the Sun. In fact, any owner of the Sun would be caught because of its circulation. Effectively, we should be punishing the Sun for being too good. It may not be my cup of tea; it may not be that of Members of the Committee. So its circulation figures are not our fault, but nor are they the fault of the owners. They are, I am afraid, the fault of the readers.
Successful circulation figures would thus keep News International out of mainstream TV which all other newspapers can get into. Perhaps the Mirror Group has thought of that too. It cannot make sense for a newspaper group to have to get its circulation figures down below a threshold to avoid this absurd success penalty. Unless steps are taken to get a newspaper's market share down to below 20 per cent., one can still buy only 20 per cent. of one ITV company. It is all very different if one has 19 per cent. That is about the total market share of every British national broadsheet paper—dailies and Sundays—put together.
If one has 19 per cent. one can buy TV companies up to an overall audience share of 15 per cent. I am not sure whether that is in line with the Government's views on plurality. But let us remember that it is no longer a share of one company; it is a share of the total television audience. That makes a huge difference.
One percentage point more and one has the automatic imposition of these strict limits slapped upon one. One percentage point less and one can have a substantial newspaper and television business.
There are many companies with huge media interests which will not come within the 20 per cent. rule, because the combination of media which they own happens not to offend that rule. Pearson or the Daily Mail, to name but two, are excellent and successful companies, but just because their interests are spread around all the different sectors of the great media market far more widely than News International—magazines, regional newspapers, terrestrial channels, and cable
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radio—they are not subject to these whimsical and arbitrary rules. They will be subject only to the public interest test just like everyone else.
Even the live TV news bunny would find it hard to smile if the 20 per cent. rule disappears. It is unnecessary, unfair and inefficient. I hope that my noble friend will consider the amendments carefully. They would treat everyone equally and allow the MMC to apply a public interest test. At the same time, I hope that when the amendments tabled by the noble Lord, Lord Donoughue, come up, we shall reject them.
5.45 p.m.
Lord Harris of High Cross: As I have not had an opportunity previously to take part in debates on the Bill, I have to declare a direct interest in the matter as one of the six independent national directors of Times Newspapers which is a subsidiary of News International. In that role, my responsibilities relate to five titles only—The Times and the Sunday Times and the three educational and literary supplements. I suspect that were they to be produced by the BBC they would be described as an example of public service publishing. Yet the circulation of those five papers, for example, contributes towards the market share that rules out, as the noble Lord, Lord Thomson, said, News International from certain capabilities in the broadcasting field.
I find myself in total agreement with the noble Lord, Lord Desai, who said that these matters can be left to the ordinary processes of fair trading, the MMC, and all of that. I strongly oppose the noble Viscount, Lord Astor. He seemed to say that we should perpetuate controls and restrictions. He did not quite come to the rationing of newspaper readership into the indefinite future.
At later stages, if there is an opportunity, I might refer to an extensive piece of research conducted in 1994, I think, by Arthur Andersen, which had a sample of 30,000 for some parts of the survey. It looked at the average time devoted by people to watching television, listening to the radio, and reading newspapers. That is a single market for information, news, entertainment and so forth.
The conclusion was that watching television occupied 60 per cent. of the average weekly time devoted to those activities; listening to radio accounted for 28.5 per cent; newspapers, in total, took 9 per cent.; and magazines a mere 2 per cent. We are becoming too excited about the modest role played by newspapers—dominance, press barons and all that stuff—which reflects the old party political knock-about which I was so glad to hear the noble Lord, Lord Thomson of Monifieth, scrupulously avoid.
As I said in my original remarks, my contribution to this debate relates to my experience during the past six or seven years as an independent director of Times Newspapers. The Times is run wholly separately and independently under its editor and the hoard has no regulation. The job of an independent director is to ensure that the editorial process is wholly removed from proprietorial pressure. The same applies to the Sunday Times and the three supplements under their editors.

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I have not mentioned the Sun. Ownership of the Sun alone would put any newspaper publishing company beyond the pale, according to the noble Viscount, Lord Astor, because the Sun, over which I have no influence or control, has more than a 20 per cent. share of the national readership. Indeed, the Daily Mirror titles have more than a 20 per cent. share. I strongly support the amendment tabled by the noble Lord, Lord Thomson.
Lord Inglewood: The amendments of the noble Lord, Lord Thomson, as he fairly said in his opening remarks, taken together would alter fundamentally the way in which we intend to regulate cross-holdings between newspapers and broadcasters. They would remove the market share limits which we intend to set for both national and local newspapers, and for broadcasters investing in newspapers. Instead, regulation would be reliant upon the application of the public interest test alone. Under these proposals, it would he for the Monopolies and Mergers Commission to determine whether a proposal was in the public interest. The revised public interest test would apply not just to the control of broadcasters by newspaper groups and vice versa, but also to participation by way of minority shareholdings.
With the agreement of the Committee, I wish to explain the Government's position and to comment on some of the points arising from the noble Lord's amendment. I wish to deal first with the removal of the newspaper market share thresholds. The current rules prevent any national newspaper group from owning more than a 20 per cent. stake in holders of licences to provide a Channel 3 service, a Channel 5 service, a domestic satellite service and national radio services. These restrictions will be relaxed in the Bill but the core concept at the heart of our policy allowing greater cross-holdings between media is that those who enjoy a position of dominance in the national newspaper market—we believe that this is a distinct phenomenon from local newspaper markets—should not also be allowed to become dominant broadcasters and vice versa. Uniting the leading sources of the national news agenda with the most potent sources for influencing opinion through broadcasting, carries the risk of concentrating too much power in the hands of one organisation. The proposed 20 per cent. market share threshold for national newspapers will continue to prevent those exceeding the threshold from controlling licences to provide a Channel 3 service, a Channel 5 service, a domestic satellite service and national or local radio services. The 20 per cent. and 50 per cent. thresholds for regional and local newspapers will prevent the most dominant newspaper groups from controlling broadcasters operating in the same region. They do not, however, prevent them from entering the television or radio market altogether.
I do not believe that it would be right to allow newspaper acquisitions of broadcasters to be entirely dependent on the judgment of the broadcasting regulators and the MMC. There must as a matter of public policy, which it is right for Parliament to decide,
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be a cut-off point above which a newspaper group is simply too big to be allowed to become one of the more powerful broadcasters as well. Similarly, it must be right that large regional newspaper groups should not be able to secure a more dominant position in a particular region through ownership of the regional Channel 3 service, or local radio licences, without Parliament setting an appropriate threshold.
I am not persuaded, therefore, that it is right for us to abandon the market thresholds for newspapers and simply to rely on the public interest test. Clear thresholds provide a measure of certainty for the industry, which the simple reliance on a public interest test would remove. They will also insulate the regulators from special pleading and other pressures that may be brought to bear on them if there is no threshold.
On the public interest itself, the Government concluded, after consultation, that it was right for the broadcasting regulators to retain their role in determining whether a company should become a licence holder. Both the Independent Television Commission and the Radio Authority have a considerable understanding of the media industry. We concluded that they would best be able to judge where the public interest lies in protecting plurality and diversity, which is at the heart of the test we propose. We would expect that, in applying the other elements of the test, which involve economic considerations, the broadcasting regulators will consult the Office of Fair Trading. We have not made this a requirement in drafting the test because we understand that in practice, the ITC, the Radio Authority and the OFT keep in touch with one another on matters of policy involving broadcasting and economic considerations. We did not therefore need to compel them to do what is already their standard practice.
I am also concerned that these amendments would extend the public interest test to participation by way of minority shareholdings. In the Government's view, this would only add bureaucracy and reduce transparency. If there is a case for applying the public interest test to participation, and I am not persuaded that there is, there is little point in applying it to stakes below the level at which shareholders might be regarded as being able to exert a material influence. We intend to bring forward revised proposals for regulating secondary holdings, but these will be based on absolute limits and will not involve a public interest test.
I should also add that the noble Lord's amendment envisages a number of circumstances in which a group's holdings in newspapers and broadcasters could be referred to the MMC for consideration; namely, if it increases its levels of participation, its aggregate share of the newspaper market, or its aggregate share of audience time. This would mean that even where a company had acquired a licence or a newspaper it would still face the continuing uncertainty of having to satisfy the public interest test as its circulation or audience levels rise. That would undermine the ability of media companies to plan their business. The test proposed in the Bill is intended to be a one-off test, applied on the

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acquisition of a newspaper or broadcaster, not one which can be applied continually as and when market shares increase.
We do not see that the sole authority which the noble Lord proposes for the MMC in applying the public interest test is desirable. We consider that the ITC and the Radio Authority are better able to judge matters of plurality and diversity in broadcasting, which are central to the objectives of this Bill and to the separate broadcasting industry ownership regime. The formal involvement of the MMC in this process would, in the Government's view, serve only to complicate the regulatory structure through the addition of another regulatory body in the process of determining whether a newspaper group should be allowed to become a licence holder.
I wish to turn to a point raised specifically by the noble Lord, Lord Thomson; that is, that media ownership regulation in no way inhibits the normal operation of competition legislation. That is absolutely clear. In responding to a point raised by the noble Lord, Lord Desai, we believe that, first, we have competition legislation which is intended to regulate competition and is based on economic considerations of what is involved in a commercial sense. In addition—and I have made this point on a number of occasions in this Chamber—we believe that the media are so important, because of their effects on the way in which people in this country obtain information and the relationship between the media and democracy and so forth, that it is appropriate to have a different set of rules which overlie the generally applied competition policy rules for the reasons I have just described.
Should a merger between a newspaper group and a broadcaster fall to be considered under competition legislation then, of course, the Secretary of State for Trade and Industry and the Office of Fair Trading and, where appropriate, the MMC will have a role in determining whether that merger should proceed. But in such a case, the OFT and MMC would primarily be concerned with the economic consequences of the proposal and not with questions of plurality and diversity.
The amendment also provides the Secretary of State with powers to determine the method by which newspaper market share is to be calculated. In bringing forward this Bill we have made it clear how we think newspaper market share should be calculated by including the method on the face of the Bill. I see no advantage in leaving this to be determined by order. On the contrary, I can envisage that winners and losers would be constantly lobbying the Secretary of State to change the method of calculation for the benefit of their newspaper business. I think it is better that such rules for calculation remain on the face of the Bill.
In this rather long contribution to the debate I have endeavoured to set out the Government's stall. It is important to have an upper threshold beyond which the most dominant newspaper groups should be prevented from also becoming dominant broadcasters, while at the same time remaining free to develop broadcasting
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interests in emerging markets. It is right that Parliament should set that threshold rather than leaving it for the regulators to determine.
The ITC and the Radio Authority are best placed to consider matters of pluralism and diversity which are at the heart of the public interest test and, where appropriate, they will consult the OFT on economic considerations. We see no need to have the formal involvement of the MMC in applying the public interest test. But where a merger falls to be considered under normal competition legislation, the MMC will continue to consider medium mergers where appropriate.
The noble Lord's amendments would effectively remove the distinctive role which the ITC and the Radio Authority play in policing ownership in the broadcasting industry and the distinctive system of controls which recognises the uniqueness of that industry.
6 p.m.
Lord Wyatt of Weeford: Perhaps the noble Lord will allow me to intervene. I listened with great interest to what he said. His government is the champion of deregulation, the market knows best and free competition. Why, then, does he propose to shackle one of the most successful competitors in the country instead of leaving it to carry on in the way described by the noble Lord, Lord Thomson, and leaving it to the public interest? Why should he also shackle the Daily Mirror? That is an unreasonable point of view too.
Lord Inglewood: I was endeavouring to explain to the Committee that we believe it right, when dealing with the media, to take into account the fact that the media are unlike any other industry. As I said, they play such an important part in our lives in respect of providing information and as an important element in the background to our democracy. As I explained, against that background, so far as the business and economic aspects of those industries are concerned, we believe that the general rules, as practised right across the board in respect of competition policy, should apply.
However, as I also said—it is entirely consistent with the Government's position and, I believe, equally consistent with the generality of the policies advocated by the parties on the Benches opposite—we believe that the media cannot simply be left to find their own level in a marketplace which is regulated by competition policy alone because of the implications for everybody in society that I described. That is the answer to the point raised by the noble Lord, Lord Wyatt.
I have tried to explain the position from which the Government have come, in order to reach the proposals that are contained in the Bill. In giving that exposition, I very much hope that I have clarified the position and, needless to say, equally hope to have convinced all those who expressed dissent or doubt about some aspects of the policy.
Lord Thomson of Monifieth: I am, like other Members of the Committee, very grateful for the way in which the Minister so fully and carefully explained government policy. It sets out the whole background to the issues that I raised. He gave a detailed account and

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raised a number of matters to which I had not previously given thought. In deciding whether or not to carry the arguments further at a later stage in the Bill, I shall certainly want to study carefully what he said.
The noble Lord mentioned the local situation. I deliberately did not apply myself to that. I think, from what he said, that I totally agree with him about the considerations that affect a regional newspaper owner acquiring a dominant position in a region or television company. Effective action has to be taken to prevent that.
On the national newspaper scene there are wider considerations. I fully take the points made about the problem which arises whenever a percentage is established; namely, that some people are on the right side and some people on the wrong side of it. But the national newspaper scene is, in a sense, one with a small number of very substantial newspaper groupings. It still seems to me rather unfair that, because of the percentage rule, two of them should be absolutely debarred. For that reason I felt that a rigorous public interest test, through the ITC and the Radio Authority in the first place and then through the OFT and MMC, might be the better way to proceed.
I shall think carefully about the Minister's comments. I profoundly agreed with one remark when he almost seemed to say that whatever happened, there would be any amount of special pleading from other interests. My goodness, after some weeks of this Bill, we are all aware of that. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 156B had been withdrawn from the Marshalled List.]
Lord Donoughue Lord Donoughue moved Amendment No. 156C:
Page 88, line 38, leave out ("national").
The noble Lord said: We have now entered the Schedule 2 world of ceilings of 15 per cent., 20 per cent., 25 per cent. and 50 per cent.; of shares of audience time; of advertising and circulation; of the national, regional and local; and of point systems beyond my capacity to calculate. I was tempted first to move an amendment to the effect that any errors of ceilings, shares or points by either side in this debate should tactfully not be referred to by the other side. On that basis I hope that we can proceed.
I do not believe that I have any interest to declare, since I have no outside earnings from the Mirror or anywhere else. But a typical modern journalist—the Committee will know what I mean by that—took the trouble to telephone me and assert that I had tabled these amendments because five years ago I worked for the then proprietor of the Mirror (though he had nothing to do with the present Mirror and I never worked for the Mirror under that or this management). So I mention that because the minds of many journalists are occupied with such conspiracy fantasies.
The amendments in my name follow from the general points made by my noble friend Lord Thomson in Amendment No. 156A. He argued against the percentage ceilings and sought to rely on the public
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interest test. I do not go so far. As I said before, we understand the Minister's concern and the fact that broadcasting is different. I refer him again to my earlier amendments strengthening the public interest obligation. We shall come back to that because the stronger the public interest obligation, the less agitated we need to be about various ceilings. In my amendments I seek to loosen the ceilings. Above all, I am concerned with the discrimination, mentioned by others, against one group; namely, the Mirror group.
By picking on the arbitrary threshold of 20 per cent. and using the single market determinant of national share, the Bills ends up discriminating against the Mirror. In principle, though it is in fact theoretical, it also discriminates against News International. But that is not discrimination that has any practical effect because News International is not banned from entering television. It already has a giant television business. I understand that it probably does not wish to expand into terrestrial because it would soon hit the 15 per cent. ceiling limiting its growth in satellite.
Lord Wyatt of Weeford: Is the Mirror in any way banned from entering satellite television?
Lord Donoughue: I said from entering terrestrial television.
Lord Wyatt of Weeford: But the noble Lord also said that a combination of the two was unsatisfactory.
Lord Donoughue: We know that the Mirror Group is not banned from entering satellite. It has other constraints on entering satellite, but that is not what I mentioned. We are discussing terrestrial and loosening the cross-media ownership rules in relation to terrestrial and especially ITV Channel 3. I am talking about that. The amendment bans the Mirror Group from entering that.
It is also arbitrary to treat national newspapers as one sector separate from local newspapers. I can see the practical effect because the moment the two are treated differently the Mirror Group, looking at the national share, is above 20 per cent. I do not believe that it is necessary or logical to separate the two. In fact, they compete with one another in the same sector. If they were treated as one newspaper sector as national and regional television, for audience share, is treated as one sector, the Mirror Group would have less than 15 per cent. of the total.
The Bill liberates other newspaper groups—United News and Associated. If the purpose is liberation, why not liberate the Mirror Group? Why should that one group, among newspapers the largest supporter of the Labour Party, be shackled? That is the main thrust of my approach. I do not think it correct that we should support a Bill which discriminates against one group.
I ask the Minister whether the Government are confident that their proposals in relation to the Mirror Group would survive legal challenge? The removal of restrictions on cross-media ownership among newspapers does not apply to the Mirror; in fact both the Mirror and News International continue to be affected. I have said why I think News International and Sky are

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in a different category. I ask the Minister whether he is aware—I suspect he is—that it is senior Queen's Counsel opinion that the restrictions on the Mirror in the Bill constitute interference with the Mirror Group's rights to freedom of expression under Article 10(1) of the European convention of rights. Legally, to justify the Government's discrimination under the convention it would have to be shown that the proposed restriction advances "a pressing social need" in what is called "a proportionate manner"; otherwise, such discrimination is not allowed or justified in a democratic society.
When Article 10 is read together with Article 14 of the convention, such discrimination seems again to be unlawful in that it constitutes what is there described as arbitrary discrimination. Given the arbitrary mechanical mechanism imposed, given the lack of pressing social need, which is the justification required by the convention, and given the severe practical impact on the business health of the Mirror Group, I suspect that the Government will have difficulty in justifying that discrimination under the convention. That is particularly so because under the convention special care is specifically required when assessing the justification of those particular restrictions on Opposition media. I believe that the Government are in even greater difficulties in that regard. I see no justification for such constraints and suggest that there are serious grounds for legal challenge under the convention.
In that context, I suggest that the Government should look seriously at what I propose. I suggest either that they should not proceed with the 20 per cent. provision until they are absolutely confident that they will not be challenged legally or that they adopt my amendment to raise the ceiling to 25 per cent. which would let in the Mirror Group and therefore not activate the legal challenge.
Lord Wyatt of Weeford: Why would it enable the Mirror Group to make a legal challenge under the European convention but not Sky and News International?
Lord Donoughue: I sympathise with what the noble Lord says. I suspect that News International might have grounds for challenge but at present it would not benefit from the extra thrust in the convention dealing with Opposition media since News International has for some time not come into that category. It had an excellent newspaper in that category—Today—but chose to close it. In what I am saying I am certainly not opposing News International. I am sure that it will wish to look at the matter and if it succeeds I wish it all luck.
Specifically, Amendment No. 156C, which seeks to leave out the word "national", would remove the artificial distinction between the prices of national and local newspapers. It would require the national market share to be judged against the total circulation of all national and local newspapers sold or distributed free of charge. That is the practical market definition which would be best and which would leave the Mirror Group within the ceilings to expand into Channel 3.
Amendments Nos. 156E and 156G, which I wish to take with this amendment, lift the ceiling from 20 per cent. to 25 per cent., thus removing the
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discrimination. Taken with the national change, that would leave the Mirror Group comfortably within the ceiling and might conceivably bring in News International too. That is quite acceptable to me, as it is to the noble Lord, Lord Wyatt. I beg to move.
6.15 p.m.
Baroness Jay of Paddington: I support my noble friend on the Front Bench. These measures would be arbitrary and unfair, as he described. As my noble friend mentioned in referring to learned counsel's briefing, they are susceptible to legal challenge under the proportionality and non-discriminatory effect of the human rights provisions of the European convention.
My noble friend mentioned the problems of Opposition newspapers. It is interesting that learned counsel says that it is likely that the Department of National Heritage has not given consideration to those anxieties. If there is a very powerful case to be made in support of the Bill and against my noble friend's amendment, the Government need to answer the points made by my noble friend concerning the opinion of learned counsel on these matters. What the Bill proposes is susceptible to legal challenge under the European convention rules. If the amendment is not agreed, it seems important that the Government should justify in precise terms their rejection of my noble friend's amendment.
Lord Desai: I return to a point I made earlier to which the noble Lord did not give a reply. I wish to continue to question him. It is obvious now that a 20 per cent. limit is arbitrary, as was mentioned by the noble Lord, Lord Colwyn. If the ceiling is raised to 25 per cent., it helps one organisation but not another. Clearly, the Government believe that the media are so special that their competition policy needs extra help and an extra belt and braces arrangement which is not needed elsewhere. The Government may be happy for one to eat dangerous food which harms one's health but the media require special attention.
I would like to know why the figure of 20 per cent. has been chosen. Why do the Government feel that above 20 per cent. there is scope for arbitrary power and great domination while that is not the case below 20 per cent.? Without any particular bias to anybody, I suggest that the Government should think of a combined measure of all-media ownership—newspaper and television—either in terms of readership or the amount of time spent by people watching television or whatever.
We need some sort of overall measure which would cover not just newspapers, television and radio but also whatever other media one can think of. We should look at market power in that way. We could then say that competition policy requires us not to have too much concentration from that point of view. If we take 20 per cent. from one medium and use it to restrict ownership in another, I believe that we will run into rather arbitrary thresholds which have no economic logic whatever.
The Earl of Stockton: Following on from what the noble Lord said, can my noble friend the Minister say

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why 25 per cent. should apply? It is another arbitrary figure which may have been chosen for reasons of mathematical ingenuity or, indeed, for personal taste in popular literature, and so on. I am pleased to see that my noble friend Lord Stevens is in his place, but unhappy to see that the noble Lord, Lord Hollick, is not present in the Chamber. However, there is a possibility that their great new media empire will grow to that larger size. Indeed, there are other newspaper proprietors who have proved in the past that they can be successful and there are other television proprietors who, equally, might wish to buy newspapers. What is the magic of any of these numbers, other than pulling something out of the air? Are we in the business of legislating by pulling numbers out of the air? I trust not.
Lord Thomson of Monifieth: Perhaps I may point out that the Minister admitted that we are discussing an absolutely one-off percentage. The noble Lords, Lord Stevens and Lord Hollick, may be immensely successful in their merger and the percentage of the Express Group rise to 22 per cent. or 23 per cent. If it has managed to get into the television business in the meantime, it will be there; it will not be debarred. This is an extraordinarily arbitrarily method of dealing with such problems.
Lord Inglewood: We are now dealing with a technical matter, and I should like to respond to the noble Lord's point. I should make it clear that the one-off application of the test relates to the public interest test as we have defined it, not to the thresholds. If groups are below the threshold and are potentially capable of coming together in terms of mergers which involve newspapers, it is necessary to satisfy the additional public interest test. It is a one-off test. If, subsequently, the proportion of the national newspaper market obtained by the particular newspaper in question were to rise above the threshold, that would trigger off the consequences.
Lord Thomson of Monifieth: Perhaps the Minister can further clarify the matter. Would it mean that, after the noble Lords, Lord Stevens and Lord Hollick, have been outstandingly successful and the Express Group has gone beyond the 20 per cent. barrier, they would then need to divest themselves of either a newspaper or of their television holdings?
Lord Inglewood: That is correct. If they breach the mathematical test in such a way, that would be the case. In order to merge at all after the Bill has become enacted, it will be necessary to satisfy the public interest test to which I referred because of the involvement of a national newspaper. As I said, that is a one-off test. Thereafter, there is still the question of remaining below the threshold, whatever that might be. That will depend upon what Members of this and another place decide.
Perhaps I may now respond to the amendment moved by the noble Lord, Lord Donoughue. I am most grateful to the noble Lord for approaching the matter from an essentially enumerative perspective, although I wish that he had told us to which amendments he was speaking
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as he did so. The amendment seeks fundamentally to change the entire basis of our system of cross-media ownership controls, by comparing like with patently unlike. In our view, it is quite ludicrous to suggest that the Sun is equivalent to the Keswick Reminder. For those Members of the Committee opposite, I should point out that the noble Lord, Lord Judd, and probably the noble Lord, Lord Dubs, will be able to tell them about the latter, which is a local newspaper.
Of course, it is true that in market terms there is an overlap between national newspapers and those which are primarily local or regional. But, as I have consistently said throughout our debates on this schedule, we are not concerned in broadcasting legislation to regulate the operation of markets as such, particularly markets in newspapers. That is a matter for competition policy. Broadcasting legislation has, rightly, only sought to regulate newspapers seeking to buy into broadcasting. Newspaper markets and advertising markets are regulated under the normal operation of competition law, as I have already said. What concerns us in this context is the interaction between publications and broadcasters which play a key role in determining and debating the national news agenda. The local and regional newspapers pay little or no part in that process. Quite simply, I cannot accept that we should include them in the threshold calculations because to do so is self-evidently absurd, as I have already intimated.
Whatever the configuration of the media markets, there are substantially distinct national and sub-national news agendas, and plurality and diversity are separately desirable in each. Carlton and Central between them carry the ITV network to approximately 28 per cent. of TV homes. That ITV network is a major commentator on the national news for those viewers—viewers who form part of a national population where the Mirror Group has around 22 per cent. of national newspaper circulation. Similarly, the Mail Group has just under 68 per cent. of local circulation in the South West. It is equally undesirable for that group to have control of the West Country regional Channel 3 franchise. Similarly, again, the Guardian Media Group holds 27.8 per cent. of the newspaper market in the Manchester area. At that more local level it is wrong for them to own the dominant local radio station in Manchester. That is because democracy and public affairs operate at different levels—national, regional and local—and it is important that the citizen has some choice of independent sources of information. It is for those reasons that I am not persuaded of the merits of Amendment No. 156C.
I move on to deal with Amendments Nos. 156E and 156G. The noble Lord, Lord Donoughue, and the noble Baroness, Lady Jay, referred to certain specific provisions of the European Convention on Human Rights. We have not taken specific legal advice on those points, but it is not intended that the provisions we introduce will discriminate. We have explained the social policy and thrust behind them and arc confident that they are defensible.
I am aware of counsel's opinion to which the noble Baroness and the noble Lord referred. If Members of the Committee would like us to form a considered

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opinion on that advice, the first condition that would have to be met would be the provision of a copy of such an opinion. I leave that thought with those concerned.
Whatever else can be said about our proposals, I should point out that we are not proposing a regime which is arbitrary—and I use that word in the sense that it is capricious. Our regime is inherently not arbitrary because the rules will be set in place and it will be possible for all those who wish to do so to ascertain the current position.
The noble Lord, Lord Donoughue, made it quite clear that his amendment which seeks to increase the newspaper market share threshold from 20 per cent. to 25 per cent. is intended to address a wrong that he perceives in the exclusion of the Mirror Group from controlling licences to provide Channels 3 and 5 and radio services. As Members of the Committee will know, the Bill currently prevents any national newspaper group from owning more than a 20 per cent. stake in the holders of such licences.
With the leave of the Committee, perhaps I may to a slight extent go over some of the remarks that I made previously. The position that we have adopted in allowing greater cross holdings between media is that those who enjoy a position of dominance in the national newspaper market should not also be allowed to become dominant broadcasters, and vice versa. As I explained, uniting these two sources for influencing opinion carries the risk of concentrating too much power in the hands of one organisation.
The 20 per cent. market share threshold was set after careful consideration of conditions in the market. It was not devised—and I must emphasise this point—because of its impact on any particular group or groups. Therefore, our proposals do not single out the Mirror Group. The latter are caught by provisions not because of who they are, but because of their ability to influence opinion. The group, in terms of its ability to reach the public, is the second largest national newspaper group in the United Kingdom after News International. The position we start from is that we are talking about national newspapers in this context. I want to be sure that the Committee is clear about that. That is our starting point in the consideration of these matters.
As I have already explained, media ownership regulation is about protecting the public interest in pluralism and diversity. The regime we propose seeks to ensure that we shall continue to enjoy the provision of news, information and entertainment from a wide variety of sources. It does not seek to regulate competition in the overall media marketplace because the ordinary mechanisms for securing fair competition—for which the Department of Trade and Industry and the Office of Fair Trading are responsible—apply to the media just as they do to other industries.
I believe it was the noble Lord, Lord Desai, who said that the figure of 25 per cent. is used for the purposes of regulating competition in markets. However, the point here is that we are not talking about regulating competition. The basis of the separate broadcast licence regulation system is precisely that, in broadcasting,
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levels lower than 25 per cent. of market share can affect plurality and diversity if they are allowed to control other sources of influence, whether within a particular medium or across the media as a whole. This is the approach which we have adopted throughout the Bill with a 15 per cent. audience share for the powerful broadcasting media and 20 per cent. circulation for the influential local and national newspapers; these being the levels that we believe represent the current tolerable levels of concentration.
Despite the 20 per cent. threshold, the Mirror Group will still be free to expand into cable, as it has already done, and to enter the satellite market, as indeed it is free to do now. It can do this either by setting up new businesses or by taking stakes in existing businesses. It is also free to establish itself as a programme provider through the independent production sector and to acquire stakes of less than 20 per cent. in those broadcasters it is forbidden to control. The Bill also—as we discussed at some length on a previous occasion—will create a new opportunity for the group in digital terrestrial television broadcasting.
The Government believe that the 20 per cent. threshold is right and have not been persuaded by any of the arguments which have been advanced so plausibly for raising it to 25 per cent.—or for that matter setting it at any other level. It would in our view be wrong to raise the threshold merely to benefit one particular media group. If any one group thinks that it is essential for it to be allowed into Channel 3, it is open to it to devise a strategy that will bring it below the 20 per cent. threshold. After all, is Paris worth the Mass? I hope that I have explained clearly and comprehensively the basis of our position in this regard and why we disagree with those on the Benches opposite in this matter.
6.30 p.m.
Viscount Astor: Before the noble Lord, Lord Donoughue, replies, I wonder whether he would be kind enough to answer one question. He said that the Government have imposed an arbitrary threshold. Does he not accept that any threshold by its nature h8 to be arbitrary? That is the nature of thresholds. What matters is that that threshold is based on good sense and sound logic, which I believe the 20 per cent. threshold is. The noble Lord's Amendment No. 156G which seeks to raise the threshold from 20 per cent. to 25 per cent. is exactly the opposite of sound logic because it would include one dominant newspaper chain and exclude another dominant newspaper chain. Is that not even more arbitrary and even more unfair—in his words—than the Government's position? The noble Lord must reply to those points to enable his amendment to make any sense.
Lord Donoughue: All the figures are arbitrary, but the 20 per cent. was chosen arbitrarily by the Government. I have heard nothing to explain that other than that it is a mechanism which happens to exclude two newspaper groups. However, one of those already has a strong presence in television but the other one does not. Therefore the impact is differential in that sense. I listened to the Minister's reply but I still did not detect

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any basis for this discrimination. I understood that if an organisation does not pass the 20 per cent. threshold it is excluded from the measure. However, I did not hear an argument for maintaining this discrimination.
I heard that the Minister had not taken legal advice. I do not propose to let him see the legal judgment because, as he will be aware, something like one-third of Members of another place comprise lawyers. We in this place are led by lawyers in all directions. Therefore I feel it is prudent on my part to generate as much business for the trade as possible. I suggest to the Minister that by the time we reach Report stage he and the department should have taken their own legal advice. I hope he will then tell us whether what I believe to be true is the case; namely, that what he has mentioned is legally unsustainable. That is of great significance. If it is legally unsustainable, we should not be spending parliamentary time enacting a measure which will be shown, after a long and expensive process, to have no legal basis. It is important for us to make sure that what we are doing is proper. My amendments should be grouped logically together. In the meantime I beg leave to withdraw the amendment.
Lord Inglewood: I am grateful that the noble Lord, Lord Donoughue, is as solicitous for the interests of lawyers as he is for the Mirror Group.
Amendment, by leave, withdrawn.
[Amendment No. 156D had been withdrawn from the Marshalled List.]
Lord Harris of High Cross Lord Harris of High Cross moved Amendment No. 156DA:
Page 89, line 19, at beginning insert ("Subject to sub-paragraph (4) below").
The noble Lord said: I propose, with the Committee's indulgence, to speak also to Amendment No. 156GD which is grouped with Amendment No. 156DA. Amendment No. 156GD seeks to insert the following new subsection:
"Sub-paragraphs (1) to (3) shall not apply to prevent any newspaper proprietor controlling a body corporate which holds any licence unless a reference of that newspaper proprietor's control of that licence holder has been made under paragraph 9 below and the Monopolies and Mergers Commission has found that that control operates or may be expected to operate against the public interest".
Some of this argument repeats what we have discussed on previous issues. I was rather disappointed by the Minister's bearing this afternoon. I hope that he will not be off colour for too long. I remind him that in last Thursday's debate—at cols. 349 to 350 of Hansard—he described his standpoint as deregulatory. There was a splendid purple passage where he urged the importance of stability and consistency in regulation, not least to encourage continued investment. We are expecting billions of pounds to be shovelled into this fast moving industry. We are confronted with a cable, satellite and digital revolution. The Minister talks of stability; but this is a second effort in barely five years of Parliament to regulate such a rapidly changing industry. I look at this complex and, for me, largely incomprehensible Bill and I cannot help wondering what would have happened to the first Industrial Revolution if well-meaning
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politicians had spun and respun a comparable web of restriction around developments in textiles, coal mining, iron and steel, shipbuilding, canals, railways, roadways and the rest of it.
This group of amendments seeks to remove another 20 per cent. arbitrary restriction—this time not as regards the circulation of newspapers but the ownership by a newspaper of a satellite; namely, BSkyB. It is part of the deregulatory feature of this Bill that it would now allow satellite and cable companies to control Channel 3 and Channel 5 licences, which in turn are free to move into satellite broadcasting, as the Minister has explained. That gives a welcome green light to cross-media or cross-sectoral growth so that companies can take advantage of internal and external economies in developing a structure which we cannot at the moment even begin to predict. Yet once again BSkyB is cast as the Cinderella at the feast. It is to be excluded from the general rejoicing. In Schedule 2, in the provisions relating to restrictions on proprietors of newspapers, a new formula is conjured up which deliberately excludes BSkyB from that otherwise welcome liberalising process.
Under that formula a satellite company can control a commercial terrestrial television company, but it may not do so if it is more than 20 per cent. owned by a newspaper company with more than 20 per cent. of the total national newspaper circulation. It could do so if it was owned by a duff company which does not have a large circulation. News International, alas, since taking over the ailing Sun and the threatened Times, has built up their circulations. News International is guilty of building up a total diversified newspaper circulation in excess of 20 per cent. of the national circulation. That is naughty. The mathematical application of the rule concerning 20 per cent. control and more than 20 per cent. of newspaper circulation succeeds in singling out Sky for punishment.
I argue that both of the 20 per cent. rules collapse on close examination. News International owns more than 20 per cent. of Sky. Indeed, it owns 40 per cent. However, that 40 per cent. does not give News International a controlling interest. There are two reasons for that, which the Minister can verify. First, Stock Exchange rules require that a company is capable of operating independently of any shareholder owning 30 per cent. or more of the voting rights. Secondly, the board of BSkyB numbers 18 directors, of whom only five are News International appointees. Therefore, the 20 per cent. control by News International is a phantom. It is frightening Ministers needlessly when there are many other things for them to be frightened of.
In the same way the 20 per cent. control of national newspaper circulation has already been exposed to a good deal of criticism by the Committee, in particular by the noble Lords, Lord Thomson of Monifieth, Lord Desai and Lord Donoughue. We are not faced with News International as a unique mixed-media giant. Together with Carlton, Granada, Pearson, the Daily Mail, or the proposed United News/MAI merger, it is one of a number of strong, powerful, mixed-media companies. The Mirror Group has other titles. It is naughty that its circulation is now 22 per cent. or 23 per cent. of total

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circulation, but it is allowed to have part of Scottish Television, a bit of cable channel and to become involved in satellite television if that takes its fancy.
I return to the study which I mentioned earlier, towards which I believe the noble Lord, Lord Desai, as a fellow professional economist, will be more sympathetic. The survey, by Arthur Andersen, sought to measure the influence of companies on public opinion. Instead of trying to compare the BBC's 40 per cent. share of television viewing and the Sun's 40 per cent. of newspaper readership, it drew on a whole range of sources relating to viewing and readership. It assessed the degree of concentration of attention by calculating for each of the media companies—Carlton, Granada and so on—the total amount of time that viewers, listeners and readers devoted respectively to its television programmes, radio broadcasts and newspapers.
Towering above all other influential forces in our society was the BBC. Of audience attention and the time people devoted to these activities, 44 per cent. was controlled by the fearsome BBC. Second was Carlton, that monstrous mixed-media corporation, with 6.9 per cent. of audience attention. Channel 4, another public interest company, had 6.2 per cent. Poor News International, with its newspapers and television stations, was sixth with a paltry 3.4 per cent. of audience attention. That is a degree of influence which has Ministers and former Ministers cowering in their tents for fear of the takeover of opinion by those powerful companies.
The success of News International in building up newspapers that attract growing readership, and launching, with enormous courage, risk and enterprise, the satellite television stations, has been turned against their creator by excluding it from more than a 20 per cent. share of Channel 3 or Channel 5 licences. Why should Sky's success be curbed simply because a minority shareholder also owns and runs a successful newspaper? I hesitate to say in front of the noble Baroness, Lady Dean, that it is a company which has contributed much to the multiplication of channels, including newspaper facilities. It is treated less favourably, even in my opinion grossly unfairly, in regard to terrestrial television. Channel 3 and Channel 5 companies can exploit BSkyB's pioneering enterprise by entering satellite broadcasting but BSkyB is not free to become involved in terrestrial television.
If we recall that the pretext for all that discrimination is to guard against undue influence, we need to remind ourselves that consumer protection and positive programme requirements are already in operation and are designed to protect the public against undue influence. The argument behind the amendments is that there is no need for that discrimination in the form of the 20 per cent. restrictions. The amendments seek to bring broadcasting more fully within the general framework of monopoly law and practice on which we rely elsewhere to maintain the vigour of competition. I beg to move.
6.45 p.m.
Viscount Astor: I should like to take issue with the noble Lord, Lord Harris. As was said earlier, the broadcasting and newspaper industries are unique. They have a significant influence on life in this country.
The noble Lord approached his argument as though BSkyB and News International were somehow being excluded from this vast new growing industry. However, the share price of BSkyB shows that the company is worth over £ 6 billion. That is rather more than the individual ITV companies put together. News International has a circulation of 36 per cent. of national readership. The companies are huge and they are dominant in their industries in this country.
To go back one stage, the White Paper which was published earlier this year stated that the eventual goal should be overall market shares. That was welcomed. The noble Lord, Lord Desai, supports the logic and thrust of that. News International protested because it saw even that as a restriction on its growth. It should still be our goal in the long term, but in order for the industry to reach that point, we must allow everyone to grow and compete on a level playing field. That means allowing some of the smaller players in the industry the ability not immediately to be swallowed up. We must allow them the ability to control, to grow and to merge within their sector and with others so that they can then compete successfully with the vast organisations that exist.
I am not against those vast organisations, I admire them enormously. BSkyB is a wonderful British company, a leader in its field and it is hugely successful. I admire everything it has done. However, because it is so dominant we must not forget one of the reasons for its dominance. Under the 1990 Act the ITV companies were precluded from competing with it. That is an important reason. We are simply trying to give the companies an opportunity to catch up before they compete; otherwise, they will be swallowed up.
Lord Wyatt of Weeford: I am surprised to hear the noble Viscount running down the Observer with which he was associated for so long. He suggested that because its circulation was small it had no influence. I thought it was supposed to have a great influence, particularly under Mr. J. L. Garvin.
Have not the Government so far made a total muddle and mess of all the regulations, counter regulations, slip holes and arbitrary numbers? You can get underneath them or you cannot, and if you cannot, then this, that or the other happens. Would it be wise to examine all the implications again thoroughly before Report stage? Perhaps the Government can take on board the demonstration by the noble Lord, Lord Donoughue, that what may be done could be in contravention of European law by which we are bound. Would not the Government be wise to go away, try to understand some of the comments made in the Committee stage so far, think again and consider their position more carefully?
Lord Desai: I support the amendment in the name of the noble Lord, Lord Harris, and wish to respond to what the noble Viscount, Lord Astor, said. He is on the

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right lines; we need a measurement of the market, of market power, and of market share. But given that the different media interact and that there are cross-influences, we need a common measure of market power across the different sectors.
I have raised this issue before. We should consider how the 1990 Act got the domestic and non-domestic distinction totally wrong within three weeks of the passing of the Act. We are about to see tremendous technological change in the industry; we know that. We are about to enshrine in print proposals from 1995 which are likely to be out of date before 1996 has gone. I put this to the Minister. Suppose we want to restrict the influence of certain big barons on political opinion, for whatever reason. I imagine that the Minister would say that if people own news channels, in terms of news channel percentages and newspaper percentages, that is political influence and therefore we should do something about it. There may perhaps be logic in that. However, one would not want to put all television and newspapers together and say that 15 per cent., 20 per cent. or 25 per cent. of that is a meaningful figure when there is already a competition policy. I must emphasise that there is a competition policy. People will not be able to gobble up smaller producers just like that. The noble Viscount need not fear that, given that we have the MMC and the OFT. Therefore, I do not see the logic of having another competition policy. I am still not convinced by the sincere arguments of the noble Viscount showing that somehow the media are peculiar and that we must be more careful with them than with any other commodity. I am not persuaded of that.
Lord Inglewood: I begin my remarks with the obvious point that the noble Lords, Lord Harris, and Lord Wyatt, do not agree with our policy. That is the fundamental division between us.
I wish to pick up the point made by the noble Lord, Lord Desai, about finding a way of measuring the impact of the media. The suggestion of the noble Lord, Lord Harris, about measuring influence solely through time shows how wise the Government have been in the Bill in not attempting to suggest a common currency. It does not underscore the credibility of his proposal that his approach to the problem suggests that BSkyB has less influence than Capital Radio. We have at least found one currency of which the noble Lord seems to approve.
I wish to go to the heart of the debate because I do not wish to go over our general policy. I have explained what it is, some Members of the Committee accept it and others clearly do not. As it stands, the Bill will also prevent newspaper groups having 20 per cent. or more of national market share from exerting an influence over Channel 3, Channel 5 and radio licence holders through cable and satellite companies in which they have an interest above 20 per cent. Even if one disagrees with the approach which the Government adopt, it must follow that if there is a market share threshold, one must ensure that the Government's intentions cannot be circumvented by newspaper companies using companies
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in which they have major shareholdings from controlling such licences. The amendments of the noble Lord, Lord Harris, would remove that restriction from the Bill.
We must be clear about one point which was touched on earlier in the debate. We are not saying that News International controls Sky. We say that News International has such a large share in it that it should not be allowed, through Sky, to acquire control in leading broadcasters on top of its national newspaper dominance. It seems to me that that is a relatively simple and straightforward proposition to grasp.
However, at the same time, the debate has illustrated another important point. It is that if any organisation which has above the 20 per cent. newspaper threshold wishes to become involved in television, a great deal can be done if it is not a company acquiring Channel 3 licences or a Channel 5 company. In the case of BSkyB, it is a large company and a large proportion of its shares are exchanged on the Stock Exchange. There are plenty of ways in for those excluded from the Channel 3 and Channel 5 sectors of the market, and if a company wishes to go in that direction it can play a big part.
I conclude not by rehearsing the arguments again but by making two points. In bringing forward our proposals we have endeavoured to work out a scheme which we believe will deliver the policy aspirations which we have in the world as it is. I suspect that it is always tempting for professional economists to reduce their arguments towards abstraction because that is the nature of their trade. I sense that I have been hearing from one or two Members of the Committee this evening an analysis which provides enormous intellectual coherence in a purely abstract sense. However, it does not measure up to the realities of the world, as it is out there at the moment.
We have endeavoured to bring forward a series of suggestions which provide a proper balance between a number of conflicting goods which come into conflict with each other when considering such matters. I wish to emphasise one point before I sit down. It was suggested that in this area, in one way or another, the Government were cowering in their tent. I am not cowering in any tent. The Government are coming forward with these proposals which they are endeavouring to present to the Committee and to the country in as clear a manner as possible, in order to try to take a positive step in response to the technological changes affecting the media. Thus, on the one hand, the changes can be driven forward and at the same time the public interest is properly protected.
7 p.m.
Lord Harris of High Cross: I do not wish to prolong this absorbing debate very much longer. I urge the Minister and his friends to bear in mind the remarks of the noble Lords, Lord Thomson, Lord Donoughue and others: the 1990 Broadcasting Act has not survived the dramatic changes that are still going forward. This very detailed kind of regulation is brittle. It is liable either to prevent fruitful and important developments or to give way under stress and strain.

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I was much encouraged by the debate on these amendments. The noble Lord, Lord Thomson of Monifieth, on the Liberal Democrat Benches, the noble Lords, Lord Donoughue and Lord Desai, on the Labour Benches, and some Members on the Cross-Benches, all spoke about whether this provision is arbitrary and whether 20 per cent. is the right kind of arbitrariness to go for. As the noble Lord, Lord Thomson, said, before Report there must be some way of putting to the test, in a perfectly open spirit of inquiry, not the abstract view of the economists, but the view of Members of this Committee on the great issue of which way we should lean. Should we lean towards restriction and detailed control; or should we be a little more laid back and trust leading established institutions such as the Monopolies and Mergers Commission and the Director General of Fair Trading to play their proven role?
We are being very noble. We are not dividing the Committee and marching through the Lobby. However, it would be valuable if, on Report, we could find between us some way of presenting that choice in some part of the Bill. In that way we could test the blinkered, tunnel vision of the Government's spokesman against the more confident, optimistic, forward-looking and dynamic view represented in all parts of the other side of the Chamber. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 156E to 156EB not moved.]
[Amendment No. 156F had been withdrawn from the Marshalled List.]
[Amendments Nos. 156G to 156GH not moved.]
[AmendmentNo.156H had been withdrawn from the Marshalled List.]
[Amendments Nos. 157 to 161B not moved.]
Schedule 2 agreed to.
Clause 63 [Variation of regional Channel 3 licence following change of control]:
[Amendment No. 161C had been withdrawn from the Marshalled List.]
Lord Crickhowell Lord Crickhowell moved Amendment No. 161D:
Page 55, line 43, leave out ("referred to in section 14(1)") and insert ("or
(d) the quality of range of programme originating from each regional service area and offered for inclusion in the nationwide system of services,").
The noble Lord said: In moving this amendment, I propose to speak also to Amendments Nos. 169B and 171A grouped with it. Again, I declare an interest as a director of HTV.
During an earlier debate, the noble Lord, Lord Thomson of Monifieth, pointed out that sometimes the grouping of amendments and the order in which we take debates is not exactly helpful. We now come to a very important series of four debates on regional broadcasting. Had I had the choice, I think I would have taken them in reverse order. It is not entirely rational to start with the contribution to the nationwide system, follow it with a debate about the relevant period and then touch on what constitutes a significant reduction,
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before debating the crucial and important issues of editorial control, where programmes are produced and who produces them.
However, faced with this difficulty, I say one general word about the importance of regional broadcasting. Last night, speaking at the Royal Television Society dinner in honour of David Glencross, John Birt said that regional programming is surely the singular achievement of ITV. That is a judgment with which I agree. My company, HTV, is responsible for two quite separate regional areas and provides very different services to each.
For Wales, regional broadcasting is of absolutely crucial importance. In Wales, HTV provides a national service to its viewers which records, reflects, questions, reveals and celebrates all aspects of Welsh life. Of all the television channels available in Wales, it is the most watched. Its news programmes, for example, regularly attract a greater number of viewers than any other channel. The programmes that the company produces include drama, documentaries, sport, music, arts, entertainment, current affairs, education, community programming and religion. At least 95 per cent. of HTV's regional programming is produced in Wales. The same could be said about other regional companies. I use this example only to illustrate the importance of regional broadcasting.
I am therefore pleased that Clause 63 of the Bill recognises that new licence conditions may need to be imposed to maintain the standards of the regional Channel 3 service when control of either the licence holder or the body providing programmes for the service is changed.
However, I am concerned that, as presently drafted, the clause does not protect the level of service currently provided. It is important to emphasise that the two are not necessarily the same. In most cases the regional broadcasters provide a service that is significantly better and greater than that demanded of them by the licence conditions. We need to consider whether we can strengthen the provisions in the Bill in any way. A number of attempts are being made in this grouping and in those that follow to do just that.
This amendment deals with a matter that is clearly considered relevant. The Government refer to it in Clause 63(3)(c), which relates to the quality or range of programmes included in the nationwide system of services known as Channel 3. The balance is provided by programmes that are acquired or commissioned for transmission across the whole of the United Kingdom.
At the present time all regional broadcasters are able to offer programmes to the Channel 3 network for commission and subsequent transmission throughout the United Kingdom. The existing provision ensures that the Channel 3 network carries programmes which are properly representative of the geographical diversity of the United Kingdom. I welcome the attempt by Clause 63(3) to strengthen the Independent Television Commission's ability to ensure that programmes from all parts of the country continue to be offered to the Channel 3 network and to monitor the supply of programmes to that network. But we must consider one or two problems in that connection.
One could make an interesting speech and write an interesting book about the factors that help to decide exactly what is included in network broadcasting and how decisions are taken by the powers that be to put specific programmes onto the network. Clearly large companies have a considerable influence in deciding what share of the network is taken by their companies. But it is also true that if we do not have good quality programmes produced by the right kind of staff in the regions, with the necessary skills and experience to make programmes that are attractive not just in the regions but throughout the country, we shall not have the opportunity to share in the national network.
There is a danger that the situation could arise where we are down to two or three large companies producing the bulk of their production in London, the Midlands or elsewhere. The chance of obtaining good regional programmes is then reduced because the scale of the production facility, the numbers of people involved, and so forth, have been whittled down in the regions and concentrated in the centre. The object of the clause is to strengthen the ability of the Independent Television Commission to protect that aspect of regionality as part of a package of measures to protect the great achievement of ITV in its contribution of regional programmes to television. I beg to move.
Lord McNally: I strongly support the noble Lord, Lord Crickhowell. Listening to the noble Lord, Lord Desai, earlier I was reminded of a definition of economists; that they are men trained to predict the past. Broadcasting legislators, too, are men and women skilled at predicting the past. We always seem to be behind the game. I suspect that in this Broadcasting Bill we shall find ourselves behind the game, such is the rapid change in technology and the structure of companies.
I do not know whether it is a sign of the times that the noble Lord, Lord Stevens, left by one door and the noble Lord, Lord Hollick, came in another. I do not know whether they are pairing to cover the Bill and that that is a sign of what we will see in the future in the new arrangements. Knowing both of them, though only vaguely, I am sure that their marriage was not arranged by one of the computers that puts together compatibles.
I want to remind the Committee that, despite all the changes and the number of times that the legislators have got behind the game in relation to broadcasting, one stroke of genius has stood out over the years, right back to 1950; that is, the setting up of commercial television on a regional basis. That has been a massive triumph and one which, as the noble Lord, Lord Crickhowell, pointed out (and attention was drawn to it last night at the Royal Television Society) is an enduring achievement. Those of us who want to see that achievement retained see Clause 63 as an iron pole in terms of the ITV network. The dangers referred to by the noble Lord, Lord Crickhowell, of the ITV system with 15 companies gradually concentrating into three big groupings, all of them based in London, is a danger to that regional strength in which we take pride.
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My background is from the North West and I was proud to grow up in Granada-land. It is very much in my mind, as I see the developments in television, what a privilege it was to live in Granada-land in the 1950s and 1960s and have a regional television company that had social interests, quality and regional pride. In talking about Granada this evening, I realise that I must sound a little like the character in the Victoria Wood sketch who talks about the gritty realism of the North and the softness of the South. After a long diatribe he finally confesses that he lives in Woking. I am afraid that at present I live in the gritty north of Hertfordshire, but have many business, political, social and family ties with the North West that make me feel concerned to retain those regional strengths.
I happened to be in Liverpool on the day it was announced that Granada was moving the broadcasting of its successful morning programme from Albert Dock in Liverpool to London. The feeling was akin to that aroused by the closure of a large factory. Liverpudlians felt that they had lost to London a major national programme which gave identity to the region and to the City of Liverpool.
I understand the problems. Twin forces are at work. On the one hand the ITV companies say that they must increase in size to be able to play nationally and globally and must acquire critical mass. At the same time, there is no doubt that the bean counters are within the walls and testing each little bit of regional initiative against its cost-effectiveness. All I would say to those people in the ITV companies who are fighting against the bean counters is: "Clause 63, however strong it eventually ends up, is intended to help you. If we do not accept it I fear that, just as we have discovered in other parts of broadcasting where our good intentions are pre-empted by the realities, so the regional strengths of ITV—not only the small companies, but also the big companies—will be gnawed at by the realists, the cost-accounting bean counters, who do not see the strength and value that the commitment to regionalism has given over the years".
Perhaps I may relate an anecdote which applies to Granada, but could apply to any of the other big regional companies. A colleague in this Chamber who had a long tradition in and experience of broadcasting said, "In the past I have defended Granada right down the line when it was under assault from Rank and when it was under-bid at the time of the licence renewals. I am not sure that I would go to the wall for it today".
I remind the big companies within ITV that if they lose the commitment and the support which regionalism has given them, they may be losing more than they yet know. I warned Granada that I would be mentioning it and so, quite rightly, it sent me a great bundle of facts and figures about its regional commitment. I respect that. But the worry of many colleagues is what I would call the body language of the ITV companies. That body language sees the regional commitment not as an

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opportunity for them to exploit talent but as a burden that has to be carried and got round. That is what makes me want to see a strong Clause 63 survive in the Bill.
Lord Elis-Thomas: The debate on regionalism in this series of amendments echoes a similar debate we had on the BBC Charter in which we spoke of the importance of regional production in terms of the region itself and also in terms of inter-regional broadcasting within the UK and within the wider European context.
It gives me pleasure to support the amendment for the reasons already set out and for a few others. Regional television looks at least two ways. It reflects regional culture. I have always lived on the borders of HTV-land, Granada-land and almost into RTE-land. I have been able to get different regional and national messages from different areas. There is the creation of employment within regions. There is the creation also of centres of regional journalism, drama and cultural activity. The region is able to express its identity and contribute to a broader cultural picture. If that sounds like last night's guest list revisited, perhaps I may refer back to the RTS dinner and to the excellent and distinguished speech of the noble Lord, Lord Thomson of Monifieth. At the dinner we were celebrating not only the work of David Glencross but the particular regional strengths of the ITV system.
What concerns me is that, as a result of the Bill and the changes in ownership which are now taking place, we may well see a reversal. ITV was clearly more regional in its accents and its culture than the BBC which relied on its heavily centralised network channels with opt-outs. However, after the assurances given by the BBC centrally as a result of pressure and our debates on the Charter, we may well see a BBC which is more decentralised while the ITV Channel 3 system becomes more centralised. It is for us to voice those concerns.
When we raise issues we are not being critical of the ITV network centre or the work of the ITC as a regulator. Our concern is that we have a cultural remit in this area. We need to ensure that when changes of ownership take place they do not result in disenfranchising regional populations from having their own internal cultural life reflected and from having the communication between regions which is an important part of national, international and inter-regional life.
The Wales-based company HTV has made its own distinctive contribution to the network but has also been rooted within its region through a network of offices which enable it to report on its region and to contribute that reporting not only to the whole of Wales but beyond. For all those reasons I press on the Government the importance of maintaining the distinctive regional identity of ITV at a time when there is a great danger that ownership concentration may undermine the very distinctiveness which the Channel 3 system has so far maintained.
Lord Prys-Davies: Those of us who see the existence, the strength and the vitality of regional broadcasting as being good are grateful to the Government for Clause 63. But we believe there is need for more safeguards. I trust that the Minister will listen
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sympathetically to our arguments. I shall say no more in support of the amendment because it is the first of a group dealing with regional broadcasting. I hope very much that the Minister will listen sympathetically to the arguments in support of the amendment and succeeding amendments. If they are acceptable to the Government that will be a clear message that the Government place value on regional broadcasting.
Baroness Dean of Thornton-le-Fylde: I support the amendments. The difficulty every Member of the Committee has had in speaking to them is that it is like dealing with a jigsaw puzzle. One amendment overlaps another so it is difficult to compartmentalise the debates.
There is no doubt that the requirement on Channel 3 companies to regionalise under the previous legislation helped considerably with the quality of broadcasting and with the regional input. The Bill allows for larger concentrations of ownership. We are told that that is necessary to ensure that our companies can compete. We are also seeing a concentration of ownership anyway. I suggest that it is essential to have within the Bill protection for regional programming for our television companies.
The noble Lord, Lord McNally, referred to Granada-land. I remember Granada-land very well. I am very proud of it, as I come from that part of the world. I also remember Granada's nervousness when it was coming up to its licence review. There had been complaints that Granada was not dealing with regional programming in the way that it should. That is one of the reasons why the Liverpool studio, to which the noble Lord, Lord McNally, referred, was opened.
Under the 1990 Act the ITC was given quite wide-ranging powers to ensure protection for regional programming. It carried out those duties well. I suggest that more powers should be available to the ITC to protect regionalisation of programming. We are pleased to support the amendments.
Lord Inglewood: There is near universal agreement around the Chamber about the aims we are attempting to implement. We in government are at one with the remarks made about regional broadcasting. We endeavour to recognise that while there will be change—it is inevitable and desirable—there is need at the same time to ensure that we entrench all the best qualities of regional broadcasting and, where we can, enhance them. In doing that we must avoid becoming so focused on protection that we end up entrenching the status quo and therefore do not enable the best of regional broadcasting to go forward with the changes we are talking about in the generality of the Bill.
I wish to emphasise that the proposals in Clause 63 include a power to protect existing levels of achievement at the time a licence changes hands. It is not a question of carrying forward the existing licence conditions. It is a matter of being able to protect existing levels of achievement.
I am pleased that the clause has been so widely welcomed. We shall consider carefully the suggestions that have been made for improvement, as we shall

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throughout this group of clauses. I hope that that gives reassurance to noble Lords, and in particular to the noble Lord, Lord Crickhowell, who moved the amendment.
7.30 p.m.
Lord Crickhowell: I do not intend to press this amendment at this stage in the light of what has been, said. I am grateful to the Minister for his reply. As I pointed out, in a sense we have taken this matter in reverse order. I believe that we are coming to some even more significant amendments. We wish to consider the collectivity of the debate at the end and, perhaps at Report stage, decide whether anything further needs to be done. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Kirkhill Lord Kirkhill moved Amendment No. 162:
age 55, line 45, at beginning insert ("during the relevant period").
The noble Lord said: As has been said by quite a number of speakers, this is a series of linked amendments. An area of overlap does exist. I welcome Clause 63 and support its objectives. My aim in submitting these amendments to the Committee is to help the clause achieve its purpose of ensuring that ITV's unique regional television service is maintained in terms of quality and quantity for viewers throughout the United Kingdom no matter—and this is a very important qualification—what change in control of the licence holder takes place.
These amendments are therefore intended to help Clause 63 fulfil its objectives. I believe that Members of the Committee may find these amendments of appeal to them. They do not stand in the way of progress or of allowing the media industry to be internationally competitive or of introducing digital television and the rest of it. Therefore, I can see no reason why the small regional companies cannot continue to provide a bespoke service in Britain in tandem with the creation of the larger media groups.
As a native of the north of Scotland, I am acquainted with beautiful scenery. I am well acquainted with travellers who frequently ask directions of me and others. There is the well known tale of the Highlander who, when asked how to reach a particular destination replied, "If I were you, I would not start from this point". I am rather like that as regards this series of amendments. It is difficult to guide the Committee through the labyrinthine progress of them all.
In considering Amendments Nos. 162, 169 and 169A before we consider Amendments Nos. 163 and 165, we are being asked to consider the efficacy of the mechanism of achieving an objective before we consider the central principle which the mechanism seeks to establish. Therefore, at the heart of the amendments which I have tabled is the principle that there should be no loss of regional programme service to viewers in the event of a change of licence ownership or control; that the benchmark should be the actual service enjoyed by viewers rather than a licence minimum. Furthermore, regional programming should be comprehensively defined.
Amendments Nos. 162, 169, 169A and 172 deal with the mechanism to achieve that. Amendments Nos. 162, 169 and 172 were designed, at least by me, to be read together. The grouping has come out somewhat differently, but I am attempting to give such guidance to the Committee through a rather difficult minefield of amendments, as it is open to me.
As well as offering precision and measurability, Amendment No. 172, which is at the tail end, crucially seeks to be fair to all parties who may be involved in a change of ownership control. If the benchmark is to be the level of existing services rather than a licence minimum it is therefore crucial that there is a fair definition of existing services. The underlying principle behind Amendments Nos. 162 and 172 is thus to ensure fairness to all parties who may be involved in a potential change of ownership. Therefore, the amendments set a time frame for the benchmark service to be evaluated. A definition based on a snapshot period—for instance, just before a change of control—could enable the incumbent licence holder to raise the level of regional programming to an unrealistic level in the short term in order to deter a potential takeover. Such an action would be unfair and, I believe, anti-competitive. Both the ITV companies and the ITC keep detailed records of the service throughout the year. Statistics are kept each quarter and then aggregated to analyse a year's performance along with the monitoring of programme quality.
By defining the relevant period as covering 12 months, the ITC is better able to judge the level of service that should continue following a change of licence control. While I agree with the sentiment behind Amendment No. 169A, I believe that Amendments Nos. 169 and 172, as I have been explaining, offer greater clarity and that the element of fairness, which is introduced in Amendment No. 172, is essential. The amendments are somewhat complicated. I have done what I can to explain the basis of why they are before the Committee. I plead with the Committee to give them wholehearted support. I beg to move.
The Earl of Kinnoull: As my name is associated with other distinguished Members of the Committee, I support the noble Lord, Lord Kirkhill, in his amendments. I can well understand his problem when one looks at 21 amendments surrounding this one clause and the groupings. He has explained the matter with great clarity, as one would expect of him.
I believe that everyone agrees that the standard, quality and quantity of the regional television services is currently very high. I share the real fear that new owners may be drawn in and could damage the ethos and the culture of these regional services which have a very strong community connection. I very much welcome this clause. As we study it tonight with care, our efforts will pale into insignificance compared to the toothcomb study of the clause when it eventually becomes part of an Act. I am sure that those outside will be looking carefully to see what loopholes have been left open. If we are to try to ensure that this clause achieves perfection, or near perfection, it must be both

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clear and draw a proper balance between mandatory duties and the discretionary powers of the commission to control the new owners.
As regards Amendment No. 162 and the others grouped with it, the noble Lord, Lord Kirkhill, described the purpose of introducing them into the Bill with the term "a relevant period of time" as a benchmark when considering the performance of existing licensees and how best that must be maintained or improved by a new owner. The noble Lord suggested a period of 12 months for judgment on how the existing licensee had performed. I believe that that is a reasonable period when one considers that the commission has up-to-date figures month by month of the performance of all the companies. These figures are readily available. I am sure that a balanced benchmark is a fair reflection and would not lead to false hopes.
The Bill as currently drafted considers the relevant period of time to be immediate and, as the noble Lord has explained, that could lead to unhappy consequences. I support the noble Lord and his group of amendments and I hope that my noble friend will look on them with his normal kindness and courtesy.
Lord Thomson of Monifieth: The first thing to say about the clause is how much we welcome it. I congratulate the Government, and particularly some members of the Government, on having included it in the Bill because it is an important bulwark for the essential character of the ITV system. In this world of take-over frenzy, it is important that we have such provisions, so we welcome the clause but we are always ready to be helpful to the Government and we offer some suggestions of how to make a good clause even better. That is the main thrust of the amendments.
I never quite understand the groupings in your Lordships' House. I believe that there is normally some wording at the top of the groupings list to the effect that if noble Lords do not like the groupings, they can please themselves to some extent. I think that I shall please myself. It might be for the convenience of the Committee and the Minister if all the amendments to Clause 63 were discussed en bloc because they all provide methods of strengthening the clause.
Regionalism in commercial television is the essential distinctive element of ITV as compared with the BBC. I hope that the noble Lord who spoke earlier with pessimism is wrong in believing that ITV will become so centralist that the BBC will seem the more regional. I think that the distinctive regional character of ITV is one of its greatest qualities and needs to be protected and preserved.
Before turning to the individual amendments, perhaps I may say that there is a rather glib view in certain quarters of ITV these days that the great thing to do is to have companies of world-class size within which one can still maintain the regional character of ITV. That has to be watched vigilantly. Perhaps I may refer to the part of Scotland that I know best. Like the noble Lord, Lord Kirkhill, I should like to refer to Grampian Television in Aberdeen. It is sometimes said that it does not matter who owns Grampian because it will still be a perfectly good Scottish regional company. After all,
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the Aberdeen Press and Journal, which is a very good regional newspaper, was owned by my namesake, the noble Lord, Lord Thomson of Fleet, for many years. Indeed, he ran it more recently from Toronto and it still remained a good north-east of Scotland newspaper.
However, the analogy between newspaper ownership and television company ownership is a false one. The position certainly needs to be watched carefully. You can produce a good regional newspaper only by having the editor, his top management team, the reporters and all the panoply of a good newspaper actually in the region. You cannot do it by having those chaps in Toronto. When it comes to television, one can fiddle around and send a team with their cameras from London or Manchester in an aeroplane and make programmes about the region in the region. However, those programmes will not have an essentially regional character because they will not have been made by people whose roots are in the region. That is the important difference between maintaining the essentially regional character of a television company and maintaining the essentially regional character of a newspaper which may be owned by someone far away.
Taken together, the amendments seek to provide additional safeguards. As has been pointed out, by and large the regional companies are so proud of their regional programming that they do a good deal more than is required of them under the licence. If there is a takeover bid, the level of regional programming that is provided should be a benchmark, as the noble Earl, Lord Kinnoull, said. I think that that benchmark should be judged over 12 months. That is a reasonable period. Other amendments provide that the senior management responsible for the programmes should be present in the region. Those are the main elements in the amendments. Having done so well with the clause, we hope that the Government will be sympathetic to improving it, but I await the Minister's speech with interest.
7.45 p.m.
Baroness Carnegy of Lour: I shall not take up the time of the Committee, but should like to endorse what the noble Lord, Lord Thomson, said about the characteristics of Grampian Television and the advantages of its smallness and concentration on the area where I, too, live. The important point about a company such as Grampian is that it is able to be about not only Aberdeen, where it is mainly based, but also about Inverness and Dundee. Grampian Television is highly valued by the people who live in our area. I do not have the figures with me, but people in the area watch it in preference to anything else. They are extremely interested in it.
Grampian Television has written to me to say how strongly it welcomes Clause 63. I have studied the clause and the proposed amendments. I shall be interested to hear whether my noble friend feels that the amendments improve Clause 63 from the point of view of a small company. I am not sure that they do, particularly in view of what has been said about the need not to freeze things so that we cannot move on in the future. The position does not have to remain as it was at a given moment or over a given period of time. I shall

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be interested to hear what my noble friend says on that. It is important that Clause 63 stays intact. I shall be interested to hear further discussion and what my noble friend says about whether the amendments would improve the clause.
Lord Donoughue: The subject of regionalism is central to the Bill. So as far as we are concerned, it is one of its most important aspects. It has been a decisive characteristic of our ITV from the beginning and one of its proudest characteristics. What the Government have drafted in Clause 63 is pretty good and they should be congratulated on that. We are talking only about refinements.
With the permission of the Committee, I propose to speak to Amendments Nos. 169A, 163A and 164A because our approach was totally to support the more general amendments on regionalism and those amendments are three detailed tightenings of the provisions. We saw them as all falling within the same grouping. I am intrigued to find the amendments distributed among three different groupings between which there are very few differences.
First, Amendment No. 169A would improve the existing provisions because it is slightly worrying that under subsection (6) the ITC is prevented from imposing new requirements after a merger which would follow logically and helpfully from it unless they operated immediately before the change of control. That is an unhelpful restraint on the ITC. It prevents regional improvements, such as occurred after Yorkshire Television and Tyne Tees Television merged in 1993.
Amendment No. 163A refers to "significant" reductions on the regional side. That is repeated in an amendment tabled by the noble Lord, Lord Kirkhill, which we are prepared to accept. We do not like the flexibility to make "significant" reductions.
Amendment No. 164A refers to maintaining regional production programmes. Those amendments provide specific tweaks to reinforce the regional aspect. I propose to move them all across the various groupings in which they have been curiously distributed.
Lord Hooson: I rise briefly to mention that under its licensing obligation HTV Wales has to provide ten and three-quarter hours of regional programmes, 95 per cent. of which are produced in Wales. Clause 63 is clearly an important safeguard, but I do not think that it is strong enough.
When the regional companies were set up originally they took cognisance of the wide views expressed in another place and in this place before the hours, and so on, were agreed. What is needed is guaranteed protection. My criticism of Clause 63 as drafted is that the areas of discretion are too wide. All lawyers know, for example, the phrase, "significant reduction". How many times have I argued in court the meaning of "significant"? I have heard different interpretations depending upon the context. The word "significant" should disappear. I am in favour of this group of amendments. It would have the effect of strengthening
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Clause 63 which is such an important safeguard for regional television, which has been ITV's crowning achievement.
Lord Inglewood: The noble Lord, Lord Thomson, said that these were good clauses and asked whether we were prepared to accept improvements to them. The answer is that we are. I have listened with great care and interest to the points that have been raised. I am not clear as to which clauses we are talking and to which we are not talking, and which we shall deal with after dinner. We are most sympathetic to the thrust of what has been said. We are concerned that in a number of instances the drafting might not meet the case, but I do not want to labour that point.
We must put ourselves in the ITC's shoes. It must be given some discretion to respond to circumstances, otherwise, as the noble Lord, Lord Hooson, said, clever lawyers will get round the matter. We want to give the ITC sufficient flexibility so that it can catch the wheeling and dodging that we suspect will inevitably go on. It is for that reason that we have reservations about such things as the definition of "relevant period", "making a programme", and so on, because there is a risk that we may introduce into this regime elements which are over-rigid. At the end of the day we want regional health and growth and not atrophy. We accept the point made by the noble Lord, Lord Kirkhill, that predators too, may be studying these clauses carefully, and we do not want to give them any comfort.
On the point raised by the noble Lord, Lord Donoughue, on his amendment, we are concerned that it may give the ITC excessive powers to impose more onerous conditions even when they are not agreed by the parties concerned and not currently being achieved.
We are concerned about the implications of the definition of "relevant period" as it has been inserted into the Bill, because it could have certain unfortunate consequences.
We agree that the matter should be approached from the perspective of not describing in legal terms what might be called the "relevant period", although it would normally be a year, with some leeway where the immediately previous level is significantly different from the norm of the whole year. We should like to talk to the ITC about that, because we want to ensure that we achieve what I think we agree we all want to achieve in looking at the drafting of this clause. I hope that in that hurried way I have given the Committee a clear indication of our response to the proposed amendments. We intend to take them away, think about them carefully, and discuss them with the ITC, with a view, as suggested by the noble Lord, Lord Thomson, to taking on board those which we believe to be an improvement to our version of the story.
Lord Kirkhill: I thank the Minister for his courteous and comprehensive reply to what has been a wide-ranging discussion over a number of amendments. The amendments which, so far as I understand have been spoken to, are Amendments Nos. 162, 169, 169A and 172, but we have spilled over into numerous other amendments because they are in part or in whole linked.

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The noble Baroness, Lady Carnegy of Lour, should mark carefully and note what the Minister has just said about the relevant period, so I do not need to add to that. I say to the Minister that when we come to Amendment No. 165, which we might do fairly soon, because we have already spoken to it, what the noble Lord, Lord Thomson of Monifieth, has just said is surely the relevant core of any argument that any of the rest of us might make. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Trumpington: I beg to move that the House do now resume, and in moving the Motion perhaps I may suggest that the Committee stage begin again not before 8.55 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Environmental Technology and Service Companies
7.55 p.m.
Lord Beaumont of Whitley Lord Beaumont of Whitley rose to ask Her Majesty's Government whether they will develop a coherent strategy to help promote British environmental technology and service companies.
The noble Lord said: My Lords, in introducing the debate I declare that I am an unpaid member of the political advisory committee of the Environmental Industries Commission which contains members of all parties and both Houses. The commission is the new trade association of the UK's environmental technology and services industry. It was launched in April 1995 and has already gained a membership of over 100 member companies.
The party to which I belong has policies set out strongly in Agenda for Sustainability and other documents for achieving the objects mentioned in the Question. I am aware that the Labour Party proclaims the same commitment in its new document Leading the Future: Environmental Technology, Green Growth, and the Stakeholder Economy. We shall no doubt hear from the noble Lord, Lord Haskel, on the subject.
Although we are all full of good intentions, there is a problem with what is actually being done by the Government. This country is missing out on a great opportunity. The Government are failing to compete. The world market for environmental technologies is dominated by Germany, Japan and the US whose governments have recognised the importance of the new industry to jobs, profits and trade balances, and have developed supportive policies. They employ a range of schemes, notably on R&D funding, export promotion, investment incentives and regulation to promote their domestic environmental technology companies. In contrast, the UK Government have relatively few schemes, as we shall see, to help ensure that British environmental companies compete in a growing market.
It is now recognised that the worldwide environmental technology and services industry (ETS) will provide one of the biggest ever opportunities for enterprise and technical innovation the industrial world has yet seen. The OECD's October 1994 meeting of experts reached a consensus that the best estimate is that the world market is currently worth 250 billion dollars. Furthermore, the ETS markets are likely to increase significantly in the future. There are only a few other business sectors, notably information technology, which are expanding at the same rate. It is predicted that the environmental industry worldwide will be worth 600 billion dollars by 2000. Clearly, the potential size of the environmental business opportunity is very substantial. In comparison, the aerospace industry is some 180 billion dollars in size worldwide, and the chemical industry, 500 billion dollars.
Mainstream industry is very concerned about the cost implications of environmental protection. But costs are not the whole picture. Indeed, savings are just as prominent and important a part of what environmental protection brings. Mainstream business can make substantial financial savings from pollution prevention. A host of recent waste minimisation projects, such as the Aire and Calder project, have proved that costs can be cut and competitiveness improved through waste reduction and recycling, reduced material use and energy efficiency. The projects' initiatives incurred short payback periods and produced considerable financial savings.
Pollution costs money. One authoritative study, cited by a recent CBI report, estimated that the full cost for Britain of water, air and noise pollution is more than £22 billion, which is equivalent to 6 per cent. of gross national product.
The crucial question is: which countries' environmental industries are succeeding in winning the lion's share of new ETS markets and why? There are three possible criteria; patents, trade surpluses and job creation. Germany, the US and Japan are dominating the ETS industry with shares of 29 per cent., 22 per cent. and 12 per cent. respectively of the world's patents. They also dominate world trade with trade surpluses, according to OECD figures, of 10 billion dollars, 4 billion dollars and 3 billion dollars respectively. In contrast, the UK had a trade surplus of 500 million dollars. The US, German and Japanese industries have created very large numbers of jobs. Some 1,800,000 were employed in the US in 1995, 700,000 in Germany, and 600,000 in Japan. In contrast, the UK has 100,000 jobs in the ETS sector. That is not good enough.
British companies have identified three crucial areas where the UK Government have failed to act and which constitute the main barriers to growth. The first is inadequate R&D support for ETS entrepreneurs; the second is environmental laws inadequately enforced; and the third a lack of tax investment incentives for mainstream industry. Certainly many far-sighted policy makers—notably the Germans, the Americans and the Japanese—are responding to such concerns from the environmental industry. The OECD in particular

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supports serious government involvement in the promotion of ETS companies. It argues, for example, that government funding for R&D in this area is,
"the type of Government subsidy which is relatively more beneficial in economic terms and less actionable in terms of trade counter measures".
As regards Japan's physical incentives for ETS investment, the OECD concluded that,
"such assistance constituted a useful incentive and did not create significant trade distortions".
The role of government is crucial to success. The world ETS market leaders—Germany, Japan and the US—certainly understand that and have developed very extensive support programmes.
A major international report from the Environmental Industries Commission, entitled Government Policies as the Catalyst for the British Environmental Industry, reveals that the US Government provided 4 billion dollars in 1994 for environmental technology R&D whereas the UK Government provided less than £50 million. The same applies to the Germans and the Japanese. The US Government have even developed a comprehensive national strategy across all relevant agencies because,
"America's principal trade competitors, Germany and Japan, have already positioned themselves to support environmental technology innovation and capture a leading share of this global market. The United States now has a limited window of opportunity either to strengthen its own presence in this market, or be left behind".
Why are we not following suit? Indeed, given our natural adaptiveness to such an industry, why are we not in the lead?
The Environmental Industries Commission, a new organisation representing over 100 environmental technology and service companies, makes a number of recommendations. It urges a national strategy for promoting the British environmental industry. It also calls for regulation to encourage innovation. I know that that goes slightly against the Government's philosophy but it is true. It has been proved time and time again that in this field regulation encourages innovation. Regulation has helped our competitors to gain an outstanding lead.
Technology diffusion to mainstream industry must be encouraged. The UK Government could provide a 100 per cent. first-year tax allowance for the acquisition of innovative environmental technologies. Exports must be vigorously encouraged. The UK Government should urgently develop a strategy to co-ordinate and extend DTI export initiatives. Leading member companies in the Environmental Industries Commission have begun consulting on a draft National Export Strategy. A supportive R&D policy is now vital. Investors generally regard the ETS market as risky and uncertain and so tend not to back environmental technologies until late in the development phase.
The UK Government must increase funding. The level of support to British ETS companies must be comparable to that provided by the UK's major competitors. ETS-related R&D must be made a central mission of the research councils. We have great opportunities. We have the kind of industry which takes
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easily to environmental protection and improvement. We also have a hard core of companies which are working extremely hard in that field and which need encouragement. I look forward to hearing not only what the Government think they are doing about all this but how they intend to improve and increase their efforts.
8.7 p.m.
The Earl of Clanwilliam: My Lords, I thank the noble Lord, Lord Beaumont of Whitley, for introducing this important debate. I congratulate the Environmental Industries Commission, of which he is a member. He has shared his detailed knowledge of the problem and its many implications. The world is becoming more polluted; indeed, it is probably being polluted faster than the fishing stocks are being reduced.
The Environment Act 1995 established clear rules on the liability that we must assume to clean up the mess created by sometimes negligent and at times innocent industries. That applies in particular to degraded land and disused industrial property. The noble Lord, Lord Beaumont, agreed that the UK was strong in engineering solutions to the problem and I should like to give an example.
Perhaps one of the most exciting and profitable areas involves human and animal waste and its disposal and conversion to useful use. It is a worldwide problem. I have spoken previously of the biotechna method of alginate bacteria, biological degradation, using blue-green, and now a new strain of red, algae to convert such waste by photosynthesis into animal feed with methane biproducts which in turn can provide some energy to drive the system.
The research needed to develop the particular strains of bacteria is typical of the work that can be aided by the ETI and the DTI together. The power of those bacteria is truly remarkable. Their application to third world countries which have a large night soil problem in the poorer country areas is vitally important. Different strains of the bacteria can be bred to ingest and remove from solution otherwise unpleasant and toxic materials including herbicides, pesticides and hydrocarbon residues. I am particularly anxious to promote such a method, with my keen ambition to support organic farming. To combine organic farming in third world countries with the proper removal of human and animal waste would be an enormous advantage. That might possibly be of interest to the ODA.
From that, it may also be thought reasonable that if those bacteria can consume herbicides and pesticides, they can also be bred to consume petrochemicals. Indeed, in their progress through the ring, they have destroyed the plastic pipes through which they are pumped.
The other activity in which we have particular strength is in cleaning up soiled properties and mining remains where there are large metal detections. Here, biotechnology offers exciting prospects. A UK company is also working on that potential activity with a machine called the Graessna, which is particularly effective.
I have used that remarkable tale to illustrate not only examples of the need but also the opportunity that is presented to the DTI. The programme "Biotechnology

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means Business" is apt, indeed. We have the opportunity to be world leaders in the science. The ETI and the DTI need to co-operate fully to exploit the chance.
8.12 p.m.
Lord Butterfield: My Lords, I am grateful to the noble Lord, Lord Beaumont, for introducing this important topic for debate. My interest in the overall topic was aroused when serving under the noble Lord, Lord Lewis, on Sub-Committee III of the European Communities Committee, concerned with the environment. I certainly had my eyes opened to the kinds of solutions to which companies can contribute when I went with the noble Lord, Lord Lewis, and others on a visit to eastern Europe. It was a fascinating trip.
I must also express my gratitude to the noble Lord. Lord Gregson, who is not present this evening. He stimulated my interest by inviting me, like the noble Lord, Lord Beaumont, to participate in the efforts of the commission that he established—the Environmental Industries Commission. I too am a member of its political committee. That seems a strange hat for me to wear, but I am pleased to do so because it is a very important subject.
My interest in the question of fuel and the environment was strongly aroused about 20 years ago when working with the university in Nottingham. I discovered that the authorities of the city had achieved a good deal of district heating by burning civic rubbish. It seemed to me that that was a very forward looking approach by the Nottingham Council. I became intrigued with the whole issue of the environment when I agreed to support, through the Croucher Foundation in Hong Kong, of which I am chairman, a project to use solar panels in the construction of a hotel on mainland China. I was very impressed by the success of that venture and by the way in which it spared environmental demands for that hotel in that area of China.
More recently I have become interested in the way in which environmental industries are becoming involved with the production of power. Noble Lords do not need me to remind them of the remarkable efforts being made in this country and elsewhere on renewable energy resources. I noticed recently some work which first started a year or two ago in the University of Northumbria where they have been pushing ahead with photovoltaics, which is a way of converting solar energy into electricity. I gather that the potential resource for that form of technology in this country would be 360 TWhs. Our annual consumption of electricity as a country is 270 TWhs. That is a system which could certainly make a very big contribution to our electricity production.
There is only one problem. The sun does not shine all the time in Britain. But in some countries it does shine and if we can develop that technology, it might be an enormous gift to countries such as Oman, which I used to visit a good deal in a medical setting. Oman has wonderful sunshine and desperately needs a successor to oil in the production of electricity. I shall try to ensure that His Majesty the Sultan of Oman hears about that wonderful work in the University of Northumbria.
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Our anxiety about carbon dioxide production led us to become involved in the Rio de Janeiro Conference on the environment. We are anxious to get our carbon dioxide emissions back to 1990 levels by the end of the century. We could do that. I gather that the Government's aim involves trying to obtain 1,500 megawatts of electricity from renewable fuels by the end of the century. We have come quite a way and have reached 626 megawatts so far.
How have we done that? Industrial developments have been taking place in this country and the rest of the world. The DTI has been busy encouraging wind power, hydro-electrics, the use of waste—I mentioned the use of waste in Nottingham, but they also have ways of getting sewage gas and landfill gas into energy production—and the use of energy crops from forestry waste, and such like.
I am also very conscious of the enormous number of environmental industries that have developed as a result of the problems of waste disposal. I first became interested in waste disposal when on holiday in the United States where my family has a small house. It is situated in a wood, which meant having to get rid of rubbish. One had to attend meetings of the Minute Men—shades of Boston in the 18th century—to discuss what to do about throwing rubbish onto the land. The first time that I went to throw rubbish away I saw an enormous hole in the ground into which we and our American colleagues were to throw our rubbish. An enormous number of gulls then dived into the hole and enjoyed the pickings. In the evenings they used to sit on the little lakes around that wooded area. It was clear why sometimes one had tummy troubles after swimming in the lakes. One could see the gulls going straight from the pit and resting on the lake. The consequences medically were obvious.
A few years ago I bumped into a man whom I should like to mention for the record. His name is Philip Moore. My full title is Lord Butterfield of Stechford, which tells noble Lords that I am a Birmingham boy. Just outside Birmingham Philip Moore had built a remarkable municipal waste disposal unit. It was a very large tower. Waste was put into it which settled. Moore was able to separate out the metals. He was able to separate out a good deal of plastic and other waste which he turned into little plastic pellets for use on the roads and as fuel. The only problem was that the fuel tended to release quite toxic smoke into the atmosphere which rather damped down the whole project.
I was sad to hear that Philip Moore was probably going to America, but I am happy to hear that he is now back in this country and is working with Mr. Bellingham, a Member of Parliament in another place. He is making great progress in developing his system, which he hopes to be able to export. Of course, that is something that we must do. However, exporting to America is becoming progressively more difficult because, as has been pointed out, the Americans have gone ahead so quickly, recognising the possibility of developments here.
The noble Lord, Lord Beaumont, gave the House the figures, which are really dramatic. Germany has 29 per cent. of the world trade in these fields;

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America has 22 per cent.; and Japan has 12 per cent. We are down to a small percentage. It has been pointed out by the commission on which I am now serving that there is an interesting correlation between trade balances and the amount of work taking place in those fields. Germany has a very high balance of trade, while we are far behind.
As a physician, what has intrigued me about the whole of this development is that it really could draw on the inventive abilities and lateral thinking abilities of scientists and applied scientists in this country. I cannot help feeling that, in a way, environmental industries could be very similar to the pharmaceutical industry. The noble Earl, Lord Clanwilliam, referred to biotechnology, which is very important because we are strong in that sphere.
I can see great possibilities for encouraging that entire development by appointing a director of research and development in environmental industries, just as the NHS has recently done. Of course, our NHS has a big lead over other countries, including America, Japan and Germany; we have had that lead a long time and a great deal of experience. The Unstarred Question tabled by the noble Lord, Lord Beaumont, refers to whether the Government:
"will develop a coherent strategy to help promote British environmental technology and service companies".
I believe that the establishment of a national director of research and development in this field would be a terrific stimulus and help to the young men and women who could make very significant contributions.
I have read the work of the Environmental Industries Commission and I have seen its proposals. I hope that the Government will read those proposals, which range from dealing with a national strategy to developing interest in research councils. I hope that they may help to produce a scheme which will promote the development of this potentially important growth industry in this country.
8.23 p.m.
Lord Haskel: My Lords, first, I congratulate the noble Lord, Lord Beaumont, on getting this Question on the Order Paper. I know that he is a doughty fighter for the environment and I ask him not to be discouraged by the small number of noble Lords present. I am afraid that noble Lords are more easily tempted by the bright lights and delights of broadcasting. The environment is lower in profile but is no less important to our quality of life and to the economy.
I suspect strongly that the motive of the noble Lord, Lord Beaumont, in tabling this Question is to find out whether the Government believe in strategies. We know that they believe in markets and that power lies where the money is, but strategies are a different matter. Strategies involve working together with others in partnerships and partnerships seem to be something of a problem for the Government. I hope that we shall find out from the Minister this evening whether the Government believe in a strategy for the development of the British environmental industry or whether their
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strategy is that they have no strategy. If there is to be a strategy, it is rather late. We have heard how, for some years, it has been recognised that the world wide environmental technology and services industry will provide a major business opportunity.
When launching the Environmental Industries Commission, to which the noble Lords, Lord Beaumont, and Lord Butterfield, referred, my noble friend Lord Gregson said that,
"there are significant world-wide opportunities to British suppliers of environmental technologies and services which bodes well for the future balance of payments as well as much needed job creation".
His thoughts were echoed by the right honourable Michael Heseltine who was President of the Board of Trade at the time. Only last week those thoughts were echoed by the right honourable John Gummer, Secretary of State for the Environment. Those thoughts have been further confirmed by noble Lords this evening.
My noble friend Lord Gregson went on to say that without a strong home market it is unlikely that those companies will develop and be able to compete on the world stage. That is the heart of the matter. The environmental industry is dependent on government policies. That is because in environmental matters individuals cannot act alone. Individuals cannot buy clean air, clean rivers or clean seas for themselves. They cannot monitor and regulate pollution. Those things can be achieved only by people working together. In the same way that none of us can take action by ourselves, a coherent strategy for the environment industry requires a partnership between government, business and local authorities.
The role of government in setting and encouraging high standards and seeing that they are maintained is no longer in doubt. The best of British industry is convinced of that and the Government are pushing against an open door. Recently the CBI produced a report called Efficiency Gains in which it said that,
"by examining the environmental impact of products, processes and services, most businesses can find new, practical ways of achieving business gains. The environment is not something to be treated separately, but forms part of a culture of quality, efficiency and innovation".
Our better firms know that in the long term, higher standards for energy efficiency, engine emissions, discharges to rivers and the sea can make British industry more competitive. They know also that their customers want environmentally friendly products and systems. Some firms have already acted. In 1991, B&Q launched a supplier environment audit programme to assess its suppliers' environmental awareness. Its suppliers are graded on a database and as standards for environmental regulations change, they will be able to identify any supplier which might represent a liability or an opportunity to its business.
Buckland Paper Mill carried out a waste reduction strategy which concentrated on water consumption. That was reduced by 77 per cent. with savings of over £0.5 million per year. Forte Hotels saved £180,000 in 1983 by installing a combined heat and power system in 60 hotels.

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It is therefore clear that there is already a market for pollution abatement equipment and technologies to reduce the damaging effect of what is happening now. But companies are looking further. When considering new investments and processes they are looking for clean technology so that they do not create environmental problems in the first place. Moving on from that, the industry is looking for sustainable technologies. A committee of your Lordships' House emphasised that sustainable technology for future generations depends on action being taken now, led by the Government. The noble Earl, Lord Clanwilliam, suggested a sustainable biodegradation system to clean up waste and the noble Lord, Lord Butterfield, told us about solar energy technology, energy from waste, from windpower and from crops.
So how are we measuring up to that business challenge? Noble Lords have told us how we are lagging behind Germany, the United States and Japan. The noble Lord, Lord Beaumont, told us that a recent survey carried out by the European Commission of all the patents issued in environmental technology showed that 63 per cent. were awarded to companies in Germany, Japan and the United States; but the United Kingdom only received 6 per cent.
A further indication of the present state of affairs can be illustrated by looking at the number of applications for awards for environmental achievement in the Queen's Awards to Industry. In April 1995, 140 awards were given for export, 17 for technology, but only six were for environmental achievement. Sadly, applications for environmental achievement awards have almost halved since 1993.
When asked for an explanation of the situation, nine out of 10 businesses in Britain said that central government action to promote higher standards was the main factor driving them to buy environmental technologies. Obviously, the best companies do not need government action, but the rest of them do. By putting together a coherent strategy not only will the Government be making the environment pleasanter for us and for our children, but they will also be encouraging a new source of business and employment. That is the kind of double whammy which is so beloved of the Tory advertisers.
The other partner which the Government must involve in their strategy is the local authority. The local perspective is important for many reasons. In 1992, the Earth Summit in Rio agreed an action plan called Agenda 21. Over two-thirds of that agenda cannot be delivered without the co-operation of local government, working in partnership with local businesses and communities. According to the OECD, a few large firms account for half the output of the environmental industry. The other half is composed of small firms.
Companies of that size and type can gain great benefit from a partnership with their local councils. Local government can act as both a demanding customer to encourage such small firms to improve their products and performance, and also provide them with access to information and advice. That is why Agenda 21 wants to encourage people and institutions to think globally and to act locally.
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We are now entering an area where some of Labour's ideas on public and private sector partnership can be effective. Many Labour-controlled local authorities are trying to use the private finance initiative to overcome restrictions which are hindering councils trying to promote economic regeneration partnerships. We have also heard of further elements of the Government's strategy which will help to promote the industry. They could have a structured dialogue with the industry through the DTI. The research councils could be encouraged to ensure that they fully participate in innovative, environmental technologies, as suggested by the noble Lord, Lord Butterfield.
The Government could talk to the environmental industry about setting standards, both for industry generally and to verify the claims of the environmental industry itself. The noble Lord, Lord Beaumont, reminded us that the Government could encourage the development and use of clean and sustainable technologies by a tax policy, which encourages long-term investment by companies and which discourages pollution and resource depletion.
However, as I said at the start, the Government strategy may be not to have a strategy. The noble Lord, Lord Beaumont, suggested that they may be concerned about making life too difficult for sloppy companies with low environmental standards and that they justify this by calling it deregulation. They may hope that the existing sector dialogues will produce some consensus which will offend the least number of people. But, inevitably, it will mean that standards will be low.
I remind the Minister that there will always be countries with lower standards to which such firms can move. In the long term the Government must encourage best practice and support firms to lift their standards. As the MSF Union recently put it:
"The old view that taking the environment into account would cost jobs is out of date. On the contrary, it is the organisations that close their eyes to this challenge which have most to lose".
I wait with interest to hear the Government's strategy.
8.35 p.m.
The Minister of State, Department of Trade and Industry, (Lord Fraser of Carmyllie): My Lords, I should like, first, to thank the noble Lord, Lord Beaumont, for taking the time and effort to introduce such an important debate. We certainly recognise that the scale of the opportunities for environmental goods and services, both domestically and overseas, is vast. I had hoped that the noble Lord, Lord Haskel—being in possession, as I know he is today, of a Labour Party document on such matters which has been conveniently leaked to me before it is available for the rest of the world to see—would have taken the opportunity to tell us just exactly what the document contains. However, we shall doubtless have to wait for another opportunity before the noble Lord reveals the details of the document to us.
As the noble Lord, Lord Beaumont, said, the world market for environmental goods and services is already bigger than a wide range of well-accepted international trading applications; for example, international aerospace or pharmaceutical sectors. The OECD has

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estimated that by the year 2000 it will be bigger than either of those. While I cannot agree with the noble Lord's figure of 600 billion US dollars—the figure that I have is 300 billion US dollars—I must say that by anyone's reckoning it is a vast sum.
Our view is that the UK environmental industry is well placed to take advantage of those opportunities as it is competitive internationally and is also, potentially, a very successful exporter, building on past successes. Our exports accounted for just under 4 per cent. of the world market in 1992—that is something like 8 billion US dollars—and will grow to an estimated 4.5 per cent. to 5 per cent. by the year 2000. At that rate of growth, the UK could take some 28 billion US dollars of business in 15 years' time.
Those are colossal figures, but we cannot afford to be complacent. As in all other sectors, competition is fierce and, further, the markets themselves are in a state of flux with customers increasingly demanding—and I stress this point—co-ordinated solutions to their problems, requiring companies to bring together diverse expertise from engineering applications and design, manufacture and installation to consulting and finance.
I believe that the noble Lords, Lord Beaumont, Lord Butterfield and Lord Haskel, were concerned that we are failing to develop overseas markets. That is something of a misconception. UK firms are as active and as successful as their major overseas competitors. My department recently published, without difficulty, two successive booklets each giving 100 success stories of UK environmental companies overseas. They range from massive contracts by Anglia Water for a waste-water treatment plant in Wellington New Zealand to noise insulation in Japan, meters for the Swiss police and rotary kilns in the United States.
I recognise the fact that there is an extraordinarily wide range of technology and scientific expertise to be exploited. My noble friend Lord Clanwilliam dealt correctly on what is probably the most interesting of them all. I have no doubt that there are quite remarkable applications that the expertise available in this country could be deployed in pursuing not only in the developed world but also—and this is probably just as important—in the underdeveloped world. I acknowledge the emphasis that my noble friend placed upon it, and similarly the emphasis that the noble Lord, Lord Butterfield, placed on the contributions which might be made as regards the expertise being developed in such places as the University of Northumbria, and elsewhere. That is clearly most important. I hope that the noble Lord will do all he can as the "sponsor Minister" for the north of England to bring to the attention of the wider world just what is going on in that part of the country.
I must tell your Lordships that it is not that we have a strategy to have no strategy; it is our clear belief that it is first and foremost for the industry itself to develop a strategy. I hope that my next comment will be taken in a positive sense. My department would be happy to facilitate this process, recognising as we do that the relatively young United Kingdom environmental industry is highly fragmented, having its roots in more traditional industries. It is for that reason that we set up
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the Joint Environmental Markets Unit (JEMU)—I hope that I may be permitted to use that acronym—to increase awareness of the opportunities and to help United Kingdom companies exploit them.
Based in the DTI the unit works closely with other parts of government, individual firms, trade associations, chambers of commerce and other organisations. One of its first priorities was to commission a major report on the state and competitiveness of the United Kingdom environmental industry. It is this report—which I believe will be well known to your Lordships—which has probably provided many of the facts and figures which have been quoted. Unhappily, the report revealed a lack of co-ordination in the sector. Fragmentation made it difficult for the industry to respond to customer demands and in particular the trend towards integrated solutions to environmental problems.
Although some of our companies are world beaters—I am happy to acknowledge that—the report found that the United Kingdom industry's image overseas was not as high as it deserved while its profile at home was also, regrettably, understated. It also pointed to a lack of reference standards for performance and, for newer technologies in this rapidly developing industry, the absence of good demonstrators. The report stimulated a debate which confirmed the industry itself shared these concerns. JEMU is therefore helping industry address these issues. Working with industry and our embassies abroad, it has been publicising UK technologies and services and UK successes overseas. I wish to underline that our export services now treat environmental technology as a priority sector in nearly two-thirds of what we would consider to be our top 80 markets.
I would say to my noble friend Lord Clanwilliam that we recognise the importance of biotechnology—I hope he has understood that from my earlier remarks—but our programme, Biotechnology Means Business, will, we hope, help by ensuring that companies are fully aware of the new market opportunities around the world. We hope it will also stimulate the supply and demand sides by raising awareness.
JEMU has done much to raise awareness of the global opportunities in the United Kingdom. It has published overseas market opportunity briefs on some 57 countries. It has worked with the regulators to issue sector-by-sector reports on best available technology to help UK suppliers benchmark their performance and identify new opportunities. It has produced guides to successful exporting and to sources of public support among its many other activities. It is interesting that a report which has been published recently, sponsored by the United States Environmental Protection Agency in Washington DC states,
"Even France and the United Kingdom have a headstart in the global environmental market principally by virtue of their privatised water infrastructure which has given them an advantage in international privatisation projects".

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I doubt whether the noble Lord sitting on the Opposition Front Bench ever thought it would be possible to pray in aid that economic change to secure such environmental improvement around the world. I am happy to provide him with a copy of the full report if he wishes to see it.
Lord Haskel: My Lords, if I want to see that report would I have to read it in a secure environment, as we were discussing this afternoon?
Lord Fraser of Carmyllie: No, my Lords, I can promise the noble Lord it will be environmentally friendly. Overarching all the work that JEMU undertakes is the efforts we are making to help and encourage the industry to overcome the major problem of fragmentation. I cannot stress that too much. The industry comprises a high proportion of small companies. It is served by a multitude of trade associations and other bodies, many of which are unrepresentative, under-resourced and unable or unwilling to provide their members with the range of services which competitive industry demands. Prime responsibility for overcoming this lack of cohesion must inevitably rest with the industry itself; with the companies within it and its trade representatives.
I believe there are now some encouraging signs of industry tackling the problem. As I have stressed, we are anxious to facilitate the process. We recently published model trade association guidelines. We are also exploring with industry the development of a commercially based co-ordination group to strengthen the United Kingdom's ability to respond to demands for integrated packages by customers in the world markets.
The noble Lord, Lord Butterfield, asked about a national R&D centre. This is one of the issues that we are discussing in the context of our work with the industry on an industry-led co-ordinating mechanism. These have been JEMU's priorities thus far; but we remain, as I have indicated with the example I have just used, in dialogue with the industry to explore what can be done to address the broad range of factors that influence competitiveness.
I appreciate that I have al limited time in which to respond to the debate and I regret if I omit some of the points that have been raised. However, the noble Lord, Lord Beaumont of Whitley, asked me specifically about tax allowances to aid technology diffusion. We already give 100 per cent. tax allowances to the environmental industry for the costs of research and development of new technology. However, capital allowances to the industrial purchasers of certain environmental equipment—which I think he might urge—would be contrary to our policy of maintaining a neutral tax regime with low rates of tax and special reliefs.
This has been an important debate. I hope that I have been able to respond to it in the time available to me as fully as your Lordships would wish. I stress in conclusion that as regards the DTI, it is not that we have a strategy to have no strategy; we believe it is for the industry to develop it itself. I wish to see carried forward a positive and constructive dialogue between the industry and the unit. I believe that there is considerable credit to be given to the industry thus far, not only in a
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domestic but also in an international context. We are more than willing to work with the industry. It offers to us all a real opportunity not only in terms of commerce and exports around the world but also as a positive contribution to the cleaning up of the world when for too long too much has been despoiled.
Lord Chesham: My Lords, I beg to move that the House do now adjourn during pleasure until no earlier than five minutes before nine o'clock.
Moved accordingly, and, on Question, Motion agreed to.
[The sitting was suspended from 8.48 to 8.55 p.m.]

Broadcasting Bill [H.L.]
House again in Committee on Clause 63.
Lord Kirkhill Lord Kirkhill moved Amendment No. 163:
Page 56, line 7, leave out ("a significant reduction in").
The noble Lord said: I spoke earlier to Amendment No. 163, which I linked with Amendments Nos. 164 and 165. I have nothing further to add to what I said earlier. I beg to move.
Lord Prys-Davies: In view of the procedure before the dinner break, I shall concentrate on one question.
I hope very much that the word "significant", or words "significant reduction", will be removed from the clause. If the word "significant" is to remain in the Bill I invite the Minister to identify the meaning which it is intended the word should have in the context of the Bill. It has many shades of meaning, and I should have thought that, if not tonight at least at Report stage, a definition would be useful both to the commission and to the broadcasters.
Lord Crickhowell: I do not wish to get involved in a debate about the exact meaning of the word "significant". I listened to what the noble Lord, Lord Hooson, with all his legal expertise, had to say on the subject earlier. It would be interesting at some point to have some clarification.
I wish merely to observe that, unless I entirely misread the clause as it stands, the drafting of my amendment seems to be preferable to that of Amendment No. 163, which seems to make nonsense of the clause. If one takes out the words "a significant reduction in", and does nothing further, I am not sure that the provision makes sense. However, one can remove the word "significant" and the provision then has a real meaning.
Lord Inglewood: In the context of the amendment, we feel that the key point in the group of introductory words in subsection (4) is whether or not the regional character of the service is likely to be prejudiced. It seems to us that that should be the focus of the aspirations that we have as legislators. What we are not convinced of is the extra hurdle that the degree of reduction in any particular measured aspect of the service should itself be significant. It may fail to address

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the core point. We are concerned about a reduction in regionality. We feel that it is important that we focus on it.
As I said in respect of the earlier amendments, we wish to consider all of them as a group in order to refine them. We are all trying to achieve the same end in the group.
Lord Kirkhill: In the light of the Minister's remarks and the points which he made earlier, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 163A not moved.]
Lord Kirkhill Lord Kirkhill moved Amendment No. 164:
Page 56, line 15, leave out ("or").
The noble Lord said: Again I wish merely to move the amendment formally.
Lord Crickhowell: We should not pass quite so quickly over this amendment. When we started the debate I indicated that in my view it is the most crucial and it would have been much better to have had a debate on it. I have some sympathy with what the Minister said about not trying to impose a set of definitions that are too restrictive or to tie the hands of the commission too far. However, we are not doing that. Clause 63(3) draws attention to three aspects of the provision which should concern the commission: the quality or range of regional programming; the quality or range of other programmes which contribute to the regional character of the service; and the quality or range of the programmes included in the nationwide system of services. In a sense, the amendment is an attempt to give definition to what we are talking about in regional programming.
Amendment No. 164B, in my name, refers to the degree of editorial control and the extent to which the service is managed by persons with sufficient knowledge of the area. That is fundamental. As has been observed during the debates we have had, knowledge of the area and production of programmes within the area are a fundamental factor in successful regional programming.
I understand that my noble friend will wish to go away and consider the amendments and that I shall not receive an answer from him tonight. However, I ask him to consider the amendment with special care. I believe that nothing is more important for the defence of the regional principle than that we protect the position of the people who produce programmes who have real regional knowledge and involvement. The noble Lord, Lord Thomson, suggested that one can produce a programme by getting into a helicopter and flying a crew up from London to produce a programme which purports to be regional. However, it will not be regional in the real sense of the word unless it is produced by people who have knowledge of, sympathy with and understanding of the part of the country that they are portraying. That is what we must defend.
Lord Prys-Davies: I support Amendment No. 164B which also happens to be in my name and is grouped
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with Amendment No. 164. We believe that it is important that editorial control of the regional programmes is located in the region. There are at least two reasons why we consider it to be important. First, there is the duty in subsection (4) to have:
"offices or studios situated within the area for which the service is provided".
That phrase is not as reassuring as it purports to be, unless the editorial control is also within the region. Secondly, if the regional broadcasting is not to be put at risk it seems to me that the editors and heads of programmes should be located at the point of contact with the people of the region. They should therefore be regarded as part of the local scene.
Amendment No. 164B can be distinguished from Amendment No. 164A because the former refers specifically to editorial control. If the Government are minded not to accept the amendment, then I should have thought that today or at Report stage we should be enlightened as to where editorial control will be located in the absence of a reference to any duty in the clause. Are we to assume that it is therefore to be left to the discretion of the new owner who may, by choice or otherwise, become intolerant of genuine diversity?
Lord Elis-Thomas: I have a problem with the amendment. I suspect that I am sometimes a bit of an old-fashioned liberal, therefore I flinch from putting a phrase such as "editorial control" on the face of legislation. Here we have the difficulty of deciding what is appropriate for legislation on the face of the Bill and what is appropriate for discussion with the ITC and the regulator. I can see where we are trying to go. The Minister has already indicated that he will talk to the ITC about the regional tranche of amendments. However, it is important to remember the principles that we brought out: that regional programming in music, current affairs and all the cultural output should continue to reflect the region from wherever the ownership or inward investment into a company may come. That is the issue to which we shall need to return; namely, how is it possible to maintain a framework in which regionalism is celebrated and where there is additional outside investment into the region through the new ownership of a regional company without undermining that regionality. I suspect that the balance lies somewhere between what the ITC does as a regulator and what is on the face of the Bill.
Lord Inglewood: I am most grateful to the Committee. This is obviously an important point and we have heard some helpful comments. Many of the difficulties relate to the core point made by the noble Lord, Lord Elis-Thomas. It seems to me that the "production" and "editing" that the noble Lord, Lord Kirkhill, wishes to add to the criteria that the ITC must examine are both encompassed within the wider concept of "making" a programme, reductions in the local proportion of which are included in the criterion at subsection (4)(b) of Clause 63. It may be that there are loopholes in the definition or that there are ways through via the mechanisms of programme-making which need to be addressed. I believe that the noble Lord, Lord Donoughue, seeks in his amendment to close a loophole whereby some parts of the production process could be performed outside the licence region. I shall certainly ask

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the ITC whether it would welcome some clarification or expansion of the concept of making a programme spelling out the position of particular component activities like production and editing. However, I rather doubt whether the idea of seeking to nail down where decisions are taken as opposed to where people are employed or processes carried out is practically enforceable, necessary or even directly relevant to regional character.
I see a similar problem in enforcing the amendment proposed by the noble Lord, Lord Crickhowell, who seeks to have the ITC judge by whom editorial control is exercised and the extent to which managers of a company are knowledgeable of the region served. It is perhaps unreasonable to burden the ITC with criteria that are not readily measurable and may be subject to challenge. The point about managers of companies having knowledge seems to imply that a manager could never be brought in from outside. There are a series of difficult problems with which we must try to get to grips. However, I see that there may well be a point to address. I hope that the undertakings I have given to consult will reassure the noble Lord.
Lord Kirkhill: When I moved the amendment I did not speak to it for reasons I have indicated. I thought that we covered the ground rather well earlier. In particular, the noble Lord, Lord Thomson of Monifieth, made the key point, and with success. I am now content to leave the Minister and his officials to consider all the comments made. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 164A not moved.]
Lord Crickhowell Lord Crickhowell had given notice of his intention to move Amendment No. 164B:
Page 56, line 22, at end insert (", or
(d) the degree of editorial control exercised from within the area for which the service is provided and the extent to which the service is managed by persons with sufficient knowledge of that area,").
The noble Lord said: I am grateful for what my noble friend had to say on this amendment. He identified possible difficulties. The company of which I am a director, which covers two regions, believes it a good idea not to have the people from our Bristol office and south west region trying to produce programmes in Wales, and vice versa. We find that editorial control has to be exercised by those who are involved. Although we have executives who cover both, and the general management of the company covers both, the production of programmes is in the hands of people who come from one or other region. That is the point I seek to identify. I should be grateful if my noble friend would discuss it with the ITC and consider it further before Report stage.
[Amendment No. 164B not moved.]
[Amendment No. 165 not moved.]
Lord Kirkhill Lord Kirkhill moved Amendment No. 166:
Page 56, line 23, leave out ("may") and insert ("shall").
The noble Lord said: I beg to move.
Lord Prys-Davies: Again, I should be grateful for some explanation from the Minister. I find it very
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difficult to reconcile the power in Clause 63(3) dealing with regional programmes and that in Clause 63(4) referring to the regional character of the service. The power in subsection (3) relates to the quality and range of programmes and is mandatory. The power in subsection (4) relates to proportionality and is not mandatory. Is that lack of consistency a mistake? If not, will the Minister explain why there should be two inconsistent approaches?
I am puzzled also by this possible situation. If the change of control leads to a marked reduction in the time given to the regional programme, is it intended that the commission shall not be under a duty to vary the licence, even though it can be demonstrated that it is prejudicial to the regional character of the service? That would be an extremely odd result.
9.15 p.m.
Lord Inglewood: Perhaps I can respond to the specific point made by the noble Lord, Lord Prys-Davies. The way the provision has been drafted is deliberate. The matters referred to in subsection (3) are those which it is felt are inherently such that it would be appropriate for the commission to vary the licence as a result of them occurring; while those referred to in subsection (4), if in reality they are prejudicial in the manner referred to by the noble Lord, would lead to a variation in the relevant circumstances.
We do not feel that if, for example, there was a five-minute shift in time, that would be something which should automatically trigger the variation. We intended to ensure that the ITC, as the authority which deals with the matter, had sufficient flexibility to be able to respond in a common sense way to what happened. As I said in my remarks when we began to debate these amendments before the dinner break, we are not endeavouring to entrench the status quo; we are endeavouring to make sure that the regionality, as it is manifest in the Channel 3 services covered by this provision, remains. That is why we felt it appropriate to have a degree of discretion in this regard in order to enable the system as a whole to be sufficiently flexible to evolve as the world moves forward.
Having said that, I am proposing to take all these clauses away to look at them. While we are not necessarily convinced by Amendment No. 166, I shall take it away to discuss it with the ITC.
The Earl of Kinnoull: In relation to subsection (3), if the change appears to be prejudicial, then under the three circumstances listed the commission shall vary the licence. I understand that. In subsection (4) the word "If' appears again, which indicates that on both occasions the commission has the right to consider whether or not to proceed, but on both occasions the term is prejudicial. I do not understand why there is a difference because on both occasions the word "If" appears at the start of the subsections.
Lord Inglewood: I hope that I can answer my noble friend satisfactorily by saying that, by definition, what the noble Lord, Lord Prys-Davies, was postulating was a change in regionality which does not jeopardise the

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quality and range of regional programmes, otherwise subsection (3) would apply. The provision seeks to deal with a lesser range of potential mischief. It is important that we do not completely corset the existing arrangements and pickle them so that there is no scope for any kind of evolutionary change in the event of the ownership of the licence which is underpinning the service changing.
Lord Kirkhill: I indicated that I did not intend to say anything at this stage. However, in view of the contributions that have been made in Committee, I am tempted to make a few remarks.
The purpose of Amendment No. 166 is to replace the option to vary a licence with a duty to vary a licence. The Minister indicated earlier that he would consider all the points which have been made, but perhaps he might give consideration, as a matter of consistency within Clause 63, to the suggestion that subsection (4) should follow the example of subsection (3) where "shall" is used rather than "may". It is a point to which I am sure he will give consideration. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 167 to 169B not moved.]
Lord Kirkhill Lord Kirkhill moved Amendment No. 170:
Page 57, line 6, leave out from ("is") to end of line 8 and insert ("designed to be of particular interest to and to be first broadcast for—

(a) persons living within the area for which the service is provided (or any part of it), or

(b) in the case of a programme which is produced by or for a body holding the licence in respect of that service and one or two other bodies holding regional Channel 3 licences, persons living within that area and the area or areas for which services under those licences are provided' ").

The noble Lord said: I wish to make a number of remarks relative to Amendment No. 170. The term "regional programme" appeared widely in the Broadcasting Act 1990 and it has been used many times in debate. Everyone has a fair idea of what it means. Yet I suspect that we would probably all offer a slightly different definition. In fact, the whole of Clause 63 is about definitions. What we need to do, if we can, is attempt to define more carefully the question of what is or what is not a regional programme. The clause attempts a definition—I welcome that—but the definition is incomplete.
To find a definition of a regional programme, I turned to the ITC, which issued a very detailed description to TV companies in November 1992. Amendment No. 170 embraces the ITC's definition. As the clause stands, it defines a regional programme as being,
"of particular interest to persons living within the area for which the service is provided".
That could apply both to regional programmes, as in subsection (3)(a) of the clause, and to those described in subsection (3)(b)—those other programmes which contribute to the regional character of the service.
I come from an area where angling and hill climbing are very popular. Grampian Television has been mentioned once or twice today, not by me but by other
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Members of the Committee. If I give the example of Grampian it is because I live there. If it were to acquire an angling programme from RTE in Ireland and one about hill climbing from NRK in Norway, those programmes might be of great interest to those of us who live in the North of Scotland but they would nevertheless not be regional programmes. My amendment, by emphasising that the programme is designed for local viewers and is normally to be first broadcast for those viewers, ensures that simple acquisitions from elsewhere are insufficient to qualify as regional programmes.
Paragraph (b) of the amendment allows for the ITC's willingness to accept a very limited number of co-productions among ITV companies as regional programmes in more than one area. For example, in Scotland there is a significantly different pattern of religious worship from that which exists in the rest of the United Kingdom. In recognition of that, both Grampian and Scottish Television work together to produce weekly church services from the Church of Scotland, the Scottish Episcopalian Church, the Free Church of Scotland and so on. The few but legitimate regional co-productions such as these create the need for the second part of this more complete definition; or at least that is my view. In the light of the Minister's co-operative stance in our earlier discussions, I hope that between now and the Report stage he will give some thought to my concept.
The Deputy Chairman of Committees (Lord Brougham and Vaux): I should point out that if Amendment No. 170 is agreed to, I cannot call Amendment No. 171.
Baroness Dean of Thornton-le-Fylde: I wish to speak briefly to Amendments Nos. 170 and 171. I listened to the earlier debate about Grampian. As someone who does not live in Scotland or come from it, I imagined that Grampian covers the whole of Scotland, Scotland being an entity. My noble friend Lord Dubs, who intended to speak on this issue but cannot be with us, said that his mind was finally made up on the thinking behind Amendment No. 171 when, while waiting to take the Skye ferry recently, he bought some petrol. He thought that it was very expensive and said to the petrol attendant, "This is very expensive petrol". The attendant replied, "But it is the same price as everywhere around here. What do you mean that it is expensive?" My noble friend said, "Yesterday I bought some in Glasgow". The attendant said, "Have you not heard of the North-South divide?"
I have a home in the West Country. Devon and Cornwall is covered by West Country TV. People in Devon call a "foreigner"—and that is me, from Cornwall—an "Emit". If one is in Cornwall people from Devon are called "Grockles". Therefore, one may feel that one is talking about a regional area, but one is not. There are individual identities within the region. That is why this Amendment No. 171 at first glance may seem a little nit-picking, but it is not. It is not just within the region but throughout it, as we see it.
Lord Inglewood: Having heard this debate I have concluded that if each of your Lordships were to

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separately draft the clause we are debating each draft would be quite different. As I said in my earlier remarks, we shall consider all these matters with the ITC. We are certainly not convinced that the solution offered here by the amendment of the noble Lord, Lord Kirkhill, will necessarily get to the heart of the issue as we want to. We believe that it is rigid. The amendments proposed by the noble Baroness may in fact be treating a largely imaginary problem.
The reason for that is that the powers to impose new licence conditions in Clause 63—new Section 21A(3)(a) and (4)(a) to the 1990 Act—are designed to cover not just regional programmes as specified by the definition we are now considering, but also other programmes which contribute to the regional character of the service. If either or both of these are felt to be threatened in quality, range or quantity, then the ITC can impose new licence conditions. So to that extent it should not greatly matter whether a programme comes within the expressed definition of "regional".
As I said, we propose to discuss this matter with the ITC and to take into account the debate we have had this evening. It has considerable experience of enforcing licence conditions designed to preserve regional identity. I hope that that will reassure the Committee.
The Earl of Kinnoull: Before the noble Lord withdraws the amendment, perhaps I may ask my noble friend one matter. The statement that the commission put out in November 1992 was a fairly long one and, I imagine, it was issued to all licensees and companies involved. It very much covers the amendment which the noble Lord has moved. I hope that when my noble friend talks with the commission he will take into account the fact that it is already common knowledge what the definition was as they saw it. I hope that it will be expanded into the Bill and make it clearer.
Lord Inglewood: I am grateful to my noble friend for those comments. Unfortunately, I am not in a position to comment specifically on the document to which he referred. As I said, when we debate these matters with the ITC that will be done in the round and in a co-operative spirit, bearing in mind the debate that we have had here this evening.
Lord Kirkhill: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 171, 171A and 172 not moved.]
Clause 63 agreed to.
[Amendments Nos. 173 and 174 not moved.]
Clause 64 [Funding of Sianel Pedwar Cymru]:
9.30 p.m.
Lord Elis-Thomas Lord Elis-Thomas moved Amendment No. 175:
Page 57, line 25, at end insert ("("the adjusted amount")").
The noble Lord said: We now come to two funding debates, which may take a little time. I do not want to extend the time taken by the Committee, but the funding issue is of importance both to S4C and Channel 4. We shall come to that a little later, but not too late. The
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funding issue is important because television is not only a producer and distributor of programmes, but also an economic activity in its own right. It is a major service industry. Indeed, it is one of the major service industries in the United Kingdom. The role of S4C as a service industry in Wales was described both on Second Reading and earlier in today's debate. I need emphasise only the importance of the authority's ability to be able to invest in programme-making in different centres of production throughout Wales and to be able to sell its product both nationally and internationally. It has production centres in Cardiff, Swansea and Caernafon—I declare an interest as a resident of the Royal Borough of Caernafon—which have created a system of media presentation within Wales which reflects those different communities with their linguistic and community diversity.
It is essential for the future development of the channel and for the maintenance of employment in that service industry of television in all its production centres in Wales that the funding of the channel should be adequate. There is a long history to the funding formula we are discussing. The Bill proposes to change the funding formula from one based on 3.2 per cent. of total advertising revenue to one based on the 1997 level of funding plus RPI with an unspecified amount—that is part of our difficulty—to cover the cost of digital transmission. It is argued that that gives the department and S4C stability for planning purposes. We accept that. I also accept that the existing formula on its current basis presents a public expenditure problem for the department and a certain insecurity in terms of planning for the channel. The problem is that total television revenues have consistently risen at a higher rate than RPI, and that pattern is projected to continue.
The problem that S4C has as an authority is that the formula on the face of the Bill leaves it with less funding than is produced by the existing formula at a time when it has additional expenditure, when the digital service becomes an added expense, and when other channels, such as Channel 4, will be benefiting from increased advertising revenue. The existence of Channel 4 in Wales, which we all welcome, is a matter for debate later. We welcome the proposals in the Bill to extend Channel 4 throughout the United Kingdom, but that may result in an advertising revenue problem for S4C.
The authority is seeking—I know that the matter has been discussed in detail with the department—to retain a link between the funding of the authority and commercial revenues so that the authority can benefit from the rise in terrestrial television advertising revenue. The proposal in this and the two linked amendments is that there should be an adjusted amount, which is the base funding plus RPI, but that the supplemental amount, the increase, should not be greater than 3.2 per cent. of total advertising revenue, thus keeping the current formula. The amendments propose a compromise between the existing formula and the position set out in the Bill.
The funding formula is to change in 1998. That will be the first year of digital transmission. .Although the formula gives the authority a more secure footing, as was indicated, it does not enable the authority to have a sufficient base to continue its level of production or to

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be able to fund the additional cost of the digital service. I do not want to go back over the history of the formula. Briefly, it is this. In the early 1980s the formula under the Broadcasting Act 1981 required the IBA to fund what were described as the "reasonable outgoings" of S4C. It was also required to fund Channel 4. Funds for both were obtained from the fourth channel subscription, which was then a levy on the ITV companies. The position at that stage was negotiated by the IBA. The fourth channel subscription was set at 17 per cent. of total commercial revenue (NAR) for the previous year and was shared between Channel 4 and S4C on an 80 per cent./20 per cent. basis so that S4C then received 3.4 per cent.—that is, 20 per cent. of 17 per cent.—of the previous year's NAR, by agreement. I go back to that to indicate the complexity of the original formula that was set out in legislation.
The transmission costs were then paid by the IBA. That system worked well for S4C. Following the 1990 Act, the ITV contractors emphasised that the funding for S4C should come from a different source. At the same time, advertisers were calling for Channel 4 to sell its own airtime. That was introduced with the so-called safety net, to which we shall come later, for Channel 4.
In 1989, the Home Office, the department then responsible for broadcasting, discussed with S4C a different funding scheme, comprising a direct grant from government of 3.2 per cent. of the previous year's NAR which would have allowed S4C to keep the revenue from the sale of its own airtime, but it would have had to pay the transmitter cost out of that total sum. That became, in effect, the position in the 1990 Act.
The period 1989 to 1991 was not a buoyant one for NAR, but ever since there has been real growth. That is what has created the problem and why the Government have felt the need to cap the present funding formula. Our concern is that in the present legislation the proposal that from 1998 S4C funding should continue at the 1997 level in real terms with an RPI link, will mean that for the first time, which is why I have gone over the history, S4C's revenue will not be linked to the ITV Channel 4 commercial advertising revenue, but will be frozen in real terms.
It is important that the department reconsider that decision not to link the S4C funding to operational market forces in this area. It cannot have it both ways. Either S4C is granted further commercial flexibility if it is to be capped in that way, or it has to have its revenue linked to the market movement in the whole media sector that we are discussing.
S4C's own advertising revenue has been buoyant, but as I said earlier there may be competition in future years as Channel 4 becomes available in Wales. So the levelling off of income is coinciding with a period of additional costs because of the need to develop the digital channels. Those are not merely transmission costs. That is why I have proposed in the amendment one formula that maintains a link with the commercial market movement of revenue in terms of income, but also provides flexibility for the department in terms of the way it wishes to control public expenditure in this area.
I am not pressing this solution as the only one, but I should like assurances from the Minister when he responds that he will look again at the break that has been made between S4C's income and the relative movement of the market in this whole area. There should be particular financial provision for S4C at a period when analogue and digital are being broadcast together to ensure that the channel is not placed in an unfair situation in relation to what is happening in the development of the other broadcasters that we have been discussing during the Bill's progress. I beg to move.
Baroness Dean of Thornton-le-Fylde: I shall not detain the Committee too long because equally important amendments are down on the Marshalled List. We support the amendment because we feel that what the Government expect S4C to face in 1998 is a cutback in funding which, over the next three years, is projected to be £27 million potentially. Digital is coming on stream, and at the same time the Bill introduces and envisages a new relationship between S4C and Channel 4 which will mean that S4C will have to produce a great deal more of its own programmes to take up the availability of the channel space that it will have. We believe that during that time S4C needs some stability but clearly the Government do not wish to maintain the present formula. While the Minister's amendments are helpful and recognise the problem, they do not go far enough. Amendment No. 175 is in many ways a compromise. It will leave the ceiling at 3.2 per cent. but it could be less depending on the fortunes of the industry in regard to advertising revenue. If there is a downturn in advertising revenue, S4C will experience it, as will other commercial channels.
We believe that Amendment No. 175 is worthy of consideration as are the linked Amendments Nos. 178 and 179. I had intended to speak of the importance of the Welsh language service but in view of the hour I shall say only that I support the amendments.
Viscount Astor: Having looked at the amounts of money that S4C has managed to collect in recent years, I am concerned about the amendment. I understand that under the formula in 1993 it was £56 million; in 1994 it was £58 million; and in 1995 it was £64 million. That represents a percentage increase of 4.4 per cent. in 1993; 10.2 per cent. in 1994; and 14 per cent. in 1995. S4C has done pretty well. In fact, it has done a great deal better than most others; for example, the BBC under the percentage increase in the licence fee. It has had extremely generous treatment.
What worries me about the amendment is that it seeks to link the amount of guaranteed total revenue to a share of all the new channels which are coming on stream. It includes all advertising. I accept that the noble Lord's amendment provides a ceiling of 3.2 per cent., but bearing in mind that the whole pot is becoming much larger than I suspect the Government thought in 1990—and probably more than S4C then thought—I believe that the limit put on by the noble Lord's amendment is perhaps slightly over-egging the pudding. I am all for Channel 4 receiving funding but I wonder whether the Government's proposal is more sensible because it gives the Government an ability to choose the figure.

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As the noble Lord said, this is a difficult area for the Department of National Heritage because if it gets its budget wrong—indeed, if it gets wrong the budget for total television advertising—it will suddenly find that all the money it had intended to spend on other parts of the department has gone on Channel 4. I am sure that the noble Lord will recognise that and the Government appreciate it. I wonder whether we should be hung up on the figure of 3.2 per cent. and I should be interested to hear my noble friend's comments. I believe that we must arrive at an equitable formula but I am not sure that this amendment achieves that.
Lord Geraint: I listened with interest to the remarks of the noble Viscount, Lord Astor. As a Welshman—and I am sure that many others will share my view—I believe that the S4C channel has been a success for the Welsh people, their nation and its language and culture. I am delighted that the Government and others have spent so much money on the channel. It is a worthy cause and I hope that more help will be given to our channel in Wales.
I wish to comment on Clause 64 and the proposed new subsection (3A) in Amendment No. 179. I am bemused by the preamble to the Bill. It refers to the financial effects of the Bill and states simply that Clause 64,
"revises the funding formula for the Welsh Fourth Channel".
There is no mention of whether this is a revision with the effect of making public expenditure savings. The fact is that while the current formula—I repeat, the current formula—does not produce certainty because it depends on the variability in advertising revenue it has produced growth in S4C's income in real terms. That is because advertising revenue has been climbing on a trend higher than the RPI.
It seems to me that there is some deliberate element of public expenditure reduction. The calculations supplied to me show that on current projections S4C will lose some £27 million cumulatively by the end of the century. That is not a very good prospect. It is not a small amount for an organisation facing the extra expenditure of digital broadcasting which goes beyond the additional costs for transmission.
I realise that the new firmula will not operate until 1998. But the effect of the cut is immediate in that year and cumulative thereafter. All public bodies have to keep their housekeeping in order. But the fact is that S4C's administrative overheads are low. The 1994 annual report states that over 90 per cent. of the channel's public funding is spent on programme services. That is a wonderful achievement in itself. I can understand how the Government would want certainty in a formula and to be certain that the new formula produces lower expenditure—and rightly so. But that treatment comes over as somewhat harsh for an organisation which has so many achievements to its name.
I hope that I express the mood of the Committee when I ask the Government to think again. I am sure that they will do so. There should be room for some transitional arrangements for the S4C channel to cushion the change over, say, the next five or 10 years, corresponding broadly to the period over which we expect analogue broadcasting to be phased out.
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I make a final plea. I am sure that the noble Lord will support S4C's argument. To date, he has taken a realistic attitude of S4C, and rightly so. I am sure that he will continue to give that support to our Channel S4C.
9.45 p.m.
Lord Crickhowell: I do not doubt that anyone who knows me can doubt my support for S4C and Welsh broadcasting. The name is almost engraved on my heart. I was Secretary of State at the time of the controversy that gave it birth and was intimately involved in the decisions that led to that happy event. Therefore, I want to see the company thrive and prosper. I am perfectly happy to hear arguments which say that the Government must be asked to pay a reasonable amount to meet the additional costs that may arise from the introduction of digital broadcasting and such things.
I do not believe that it does S4C any service to produce a formula which is indefensible. I have been around for rather a long time dealing with public expenditure issues. I know perfectly well what happens when a department's budget is wrecked by something which does not stand up to examination. I know what will be the attitude of the Treasury.
We have heard about demands for certainty. In the last year or two the Channel 3 television companies have not lived through a period of certainty but through a period when their share of advertising revenue has been falling because of the arrival of a successful new channel. We are in a period of unprecedented change and the arrival of new channels. It worries me that we are being asked to guarantee a formula which is related to total television revenue. A situation may arise in which, for example, Channel 3 or Channel 4 companies see falls in their share of total revenue but, apparently, a formula which guarantees a percentage for S4C. My worry about that is that far from safeguarding S4C, it will be so open to attack that certainty will be very quickly removed.
Therefore, I am not at all happy that the formula in the amendment moved by the noble Lord, Lord Elis-Thomas, actually gives S4C what it wants. I do not think that it will stand up to examination in five, six or seven years' time against the totality of the situation and the comparative position of other companies. Therefore, I ask the Minister to consider very carefully the arguments that have been put forward for a sound formula to support S4C. But I express quite serious reservations as to whether the formula suggested by the noble Lord, Lord Elis-Thomas, will do what he wants it to do. Indeed, I thought from his reaction to some of the comments made by my noble friend Lord Astor that he may understand that there are some weaknesses in the proposed formula which will need further consideration.
Lord Prys-Davies: I shall not repeat what has been said by the noble Lords, Lord Elis-Thomas and Lord Geraint, except to say that broadly, I am in full agreement with their sentiments.
I propose to take a narrow approach to the new funding formula. The Government propose a new funding formula and there are siren voices from the department advising

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S4C to abandon the existing formula and seek the shelter of a guaranteed sum. Basically, that is the message that has been given to S4C.
But the board and officers of S4C said, "Well, we would have to pay a very high price for that guarantee". That price will be substantially less income for S4C to develop its services at a time when they have to be developed. Therefore, its ability to compete with its competitors will be put in jeopardy.
Was it the Government's intention, by changing the formula, that S4C should receive significantly less funds in future? If that was not their intention but they are persuaded by the board of S4C that that will be the result, will they please reconsider the formula?
Lord Inglewood: Clause 64 aims to put S4C's funding on a reliable and predictable basis which will benefit both my department and S4C in their financial planning. The funding formula in the 1990 Act fixes the statutory payments made by my department to 3.2 per cent. of terrestrial national advertising revenue. The process of operating this formula is prone to significant fluctuations given the vagaries of the advertising market. Forecasts can vary from the actual amounts paid by several million pounds. This makes sensible planning of my department's PES provision very much more difficult. That was a point echoed by my noble friend and predecessor Lord Astor and my noble friend Lord Crickhowell. If we get the forecasts wrong—and forecasting is not an exact science—we can unduly and unfairly affect the interests of those other organisations which depend upon the department for money.
The funding mechanism proposed in the Bill takes as its starting point the payment to be made to S4C at the beginning of 1997 under the current formula, and it will be uprated annually thereafter by the RPI. That will put S4C's funding on a similar basis to that of the BBC.
This funding will be guaranteed. It will be free from political interference. And we have moreover built in an additional protection. The clause includes a power to fund S4C over and above the statutory formula to reflect the additional costs arising from digital transmission. I hope that that provides some comfort to the noble Lord, Lord Prys-Davies. Contrary to suggestions made in debate, the Bill's proposals have not been introduced simply as a means of cutting S4C's funding but as a means of making the whole financing process more predictable and reliable.
If we simply wanted to cut S4C's funding, the 1990 Act gives the Secretary of State the power to amend the percentage of total television revenues by order after 1997. That is not what this amendment is about.
The fulfilment of S4C's remit is not tied to any particular level of funding and the channel has other sources of money than the statutory payments. The Bill will enable S4C to widen its commercial activities. In that respect, as I indicated, we are looking to bring forward amendments to enable S4C to undertake additional commercial activities beyond its statutory function. I hope that that will reassure both the noble Lord, Lord Elis-Thomas and the noble Lord, Lord Geraint.
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However, having said that, I must have regard to the element of S4C's funding which comes from the taxpayer. In the period 1992–93 to 1995–96 the BBC's licence fee income increased by 14.6 per cent., while over exactly the same period S4C's statutory payments increased by 23 per cent. S4C has done extremely well out of the funding system since 1993. We must recognise the fact that there is a limit to the extent that S4C should continue to receive funding increases above inflation.
It is always very alluring when making such an argument to do what the noble Lord, Lord Geraint, did; namely, to imply that there is some money which one might have had a hope or an expectation of receiving and that if, somehow, one does not receive it, then that money is lost. Indeed, it is the kind of situation where a spinster aunt leaves her fortune to someone else. That is hardly a fair way of looking at the problem.
The order-making power in the Bill simply repeats the position in the current funding arrangements in the 1990 Act which enable the Secretary of State to take into account the costs of transmitting S4C. The order-making power is extended to digital. It is not intended to allow the Government to change S4C funding for any other reasons, nor does it in any way compromise S4C's independence. Government Amendments Nos. 176, 177, 180 and 181 narrow the wording of Clause 64 specifically to take account of fears expressed to me by S4C on the issue.
I join Members of the Committee who paid a tribute to the work of both the Welsh Authority and S4C in ensuring that the material broadcast on the Welsh fourth channel is of a high standard and appreciated by the majority of the Welsh population. S4C's success on analogue will, I am sure, be enhanced by the opportunities of digital broadcasting. The Government are committed to ensuring that proper arrangements are in place for S4C to continue to thrive. That includes the adequate provision of resources. We believe that what we propose, which is analogous to what the BBC enjoys, is appropriate for the purpose.
Lord Elis-Thomas: I am most grateful to the Minister for the assurances he has given. I am also grateful to Members of the Committee who have spoken. I can assure the noble Viscount, Lord Astor, and the noble Lord, Lord Crickhowell, that it is not my intention to cause PES difficulties for any government department because, in another life, I have to make PES bids to another department on behalf of the public body with which I am associated. Therefore, I do not want to create any upsets in terms of expenditure. I understand such disciplines precisely.
My concern has been that in the process of transition to the new world of digital the channel would have problems coping with the change. The Minister made clear that he is pointing S4C in the direction of level funding related to the RPI for its statutory payments but that he is also looking to other sources for greater commercial flexibility. We welcome that fact. Therefore, when the Minister returns on Report with further amendments in the area of commercial flexibility, we shall look to him to give further assurances that the legislation will allow the authority

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fully to exploit all the possibilities that may be open to it. I beg leave to withdraw the amendment with the indication that we shall certainly return to the funding issue on Report. We look forward to hearing more about the Minister's further flexibility on the commercial side of the development of the channel's activity.
Amendment, by leave, withdrawn.
Lord Inglewood Lord Inglewood moved Amendment No. 176:
Page 57, line 26, after ("means") insert ("the 1997 amount or such amount as may from time to time be prescribed under subsection (2B).
(2A) In this section "the 1997 amount" means").
The noble Lord said: In moving the amendment I shall with the leave of the Committee speak also to Amendments Nos. 177, 180 and 181. Since the publication of the Bill, S4C has expressed concern to me that Clause 64 gives the Secretary of State a broad power to alter S4C's funding annually. As I made clear on Second Reading, that is not the intention behind the clause. We have therefore brought forward this group of amendments to implement more narrowly our policy intention. This is what I referred to in my previous remarks. Our intention is to provide a steady and predictable income stream for S4C to enable both the broadcaster and the Government to plan properly for the future.
These amendments make clear that the Secretary of State can only increase S4C's funding from the 1997 levels in relation to the channel's transmission costs and for no other reason. They extend this provision to include digital transmission costs as well as analogue. I am confident that Clause 64, as amended, will provide a reliable basis for funding to enable S4C to continue its successful Welsh public service broadcasting. I beg to move.
On Question, amendment agreed to.
10 p.m.
Lord Inglewood Lord Inglewood moved Amendment No. 177:
Page 57, line 29, leave out from ("enacted)") to end of line 31 and insert—
("(2B) The Secretary of State may, if he is satisfied that it is appropriate to do so having regard to the cost to the Welsh Authority of transmitting S4C and the service referred to in section 57(1A), by order provide that the prescribed amount is to be an amount which is greater than the 1997 amount and is specified in the order.
(2C) Before making an order under subsection (2B) the Secretary of State shall consult the Welsh Authority.").
On Question, amendment agreed to.
[Amendments Nos. 178 and 179 not moved.]
Lord Inglewood Lord Inglewood moved Amendment No. 180:
Page 57, leave out lines 40 to 44.
On Question, amendment agreed to.
Lord Inglewood Lord Inglewood moved Amendment No. 181:
Page 58, line 1, leave out ("(2)") and insert ("(2B)").
On Question, amendment agreed to.
The Earl of Stockton The Earl of Stockton moved Amendment No. 182:
Page 58, line 4, leave out subsection (2).
The noble Earl said: In moving Amendment No. 182, which stands in my name and that of others, with the leave of the Committee I wish to speak also to Amendments Nos. 183, 229, 231 and 232. I suggest that, in view of the lateness of the hour, we also consider whether Clauses 65 and 66 should stand part of the Bill. The object of this group of amendments is to abolish in its entirety the funding formula for Channel 4.
At Second Reading I indicated that the formula set up in the 1990 legislation has gone badly wrong. Parliament intended it to be a backstop, a guarantee for the channel as it began to sell its own air time and a safety net whereby the ITV companies received a small insurance premium in the early years in return for a modest liability in the later years. I urge those Members of the Committee who may believe—or who have been led to believe—different, to read the words of my noble friend Lord Ferrers in his reply in the debate on the relevant clauses of the 1990 Act. The formula has now run out of control.
Tomorrow morning Channel 4 will hand over a cheque to ITV of £74,008,186 as the payment for 1995. That is more than £74 million. By the end of 1997 the ITV companies will have had £300 million against their expectation of £100 million over 10 years—an expectation on which they based their business plans when they bid for their licences. They have done very well indeed! More significantly, their liability has vanished. No one—I repeat no one—in the industry, or those whose business is to analyse the industry, forecasts that Channel 4 will need any payments in return. The ITC sees no case for any further insurance payments after the end of 1997. Only the Government appear to think that Channel 4 faces a hypothetical disaster, but they have failed to produce the figures, or the basis on which such a disaster is forecast.
After Second Reading of this Bill I took up the invitation of my noble friend the Minister and I wrote to him asking for figures to justify the Government's hypothesis. I am grateful to my noble friend for his reply which I received this morning. Sadly, his letter provided me with no financial forecast, no facts and no figures. It simply reiterated concerns about the rapidly changing sector. I will not usurp my noble friend in quoting in extenso his letter, but point out that no one is proposing to end the funding formula before 31st December 1997. Channel 4 is happy to pay until then, and will pay out the legitimate expectations of any ITV licensee which have not been met by then.
I shall have to take into account the views expressed by the Committee tonight. Unless my noble friend can satisfy me this evening, I fear that I may have to seek the opinion of the Committee.
Taking the charitable view of the Government's position, the only argument that is left to them is to say that the future of broadcasting may be clearer when we get closer to 1998. That is why, they say, they have taken powers in Clause 66 to adjust Channel 4's payments from that date.
How will matters be clearer in two years' time? For the Government to fix a new percentage payment in sufficiently good time before the beginning of 1998 the

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decision will have to be announced by the autumn of next year, just 18 months from now. At that point Channel 5 will only just have started broadcasting, and we shall be no clearer about the impact of digital broadcasting. Therefore, postponing the issue only prolongs the uncertainty for all concerned—the ITV companies as well as Channel 4—at exactly the time when, as a result of the rest of the Bill, Channel 4 and ITV are being encouraged to work together. That point was made forcefully by my noble kinsman the Earl of Arran and my noble friend Lord Astor in the debate on Amendment No. 146 earlier today. Just like the question of sport on television, this decision should be taken now to end uncertainty. I can assure my noble friend the Minister that this issue will come up again and again, not only in the remaining stages of the Bill in your Lordships' House and in another place, but time after time in the months ahead.
Parliament was wise enough to provide for the formula to be reviewed in 1997, halfway through the 10-year licences of both Channel 4 and the ITV companies. By that halfway point the ITV companies will have received £300 million—£200 million more than they themselves forecast. Given that under that formula the maximum payout from ITV in any one year is £40 million, even if Channel 4 lost money in each of the final five years ITV would have no cause for complaint. In fact, however, by 1997 the channel will have £150 million of reserves which would have to be lost first. It is inconceivable that a £40 million payment could be needed. Furthermore, £40 million in such circumstances would hardly protect the channel in the way that Parliament intended.
There is no more threat to the viability of Channel 4 in 1998 than there is now. Even if there were, a down payment of £300 million in premium for a maximum claim of £40 million is excessive by any standards. Given that there is no threat, there is no need for the formula.
Secondly, we need to be clear that the formula was never designed as a subsidy for ITV. Indeed, when the formula was registered in Brussels for clearance as state aid its objective was defined by the Government as:
"continuation of quality programming on Channel Four".
Those cross-payments were not intended to assist ITV companies in complying with their licences. Nor are they anything to do with their regional programmes. In fact, each of the regional ITV companies makes far more in profits than it receives from Channel 4. None of them depends upon those payments. For example, Border Television, one of the smallest companies and one known very well to my noble friend the Minister, made profits last year of £1.9 million, and received £45,000 from Channel 4. Last year Carlton's two licences made £122.8 million profit. This week Carlton will receive £22 million from Channel 4. We have just seen Granada successfully buy up Forte for nearly £4 billion. It will receive £16 million from Channel 4.
No one could seriously argue that ITV's programmes could be threatened by the removal of the subsidy. Nor should its regional programmes be at risk. The
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companies are duty bound to comply with their licence conditions anyway before profits. In any event, the ITV companies' bids will be reviewed by the ITC in 1998. Nor do I think that the ITV companies can seriously argue that the formula was an integral part of their original bid. In total, they have received three times their expectation. They knew that the formula was up for review in 1997 and they made their commercial bids on that basis.
These payments have become nothing less than a subsidy to ITV. I thought that we were against subsidy. For almost every other industry we have stripped out subsidy. Why should these profitable ITV companies depend on the earnings of their competitor? The whole point of the 1990 Act was to promote competition, not to distort the markets, nor to create new subsidies. Channel 4 does not want a subsidy; why should ITV which is four times wealthier?
I am pleased that the noble Lord, Lord Hollick, has been able to use that wealth in such a spectacular fashion with his non-domestic colleagues in the new production centre which he announced today. Channel 4 is ready to face the future without subsidy, without special protection. Originally it wanted the formula scrapped when its perversity became clear. However, the board of Channel 4, led by Sir Michael Bishop, has made two important concessions. First, Channel 4 now accepts that nothing should be done until the end of 1997—the first point at which Parliament provided for a review. Secondly, it has offered to pay out at that point any unmet legitimate expectations of any ITV company in full: that is, the full payment that each company expected to receive up to 1997, as recorded in its 1991 bid document. The ITV companies knew then, of course, that the position could not change before 1997 but certainly could change after 1997.
My amendments accept that the payments, even at their inflated rate, should continue until the end of 1997. But then they should stop. In view of my noble friend's letter, I feel that I should point out that the ITC—the objective regulator of the whole industry—also believes that payments should stop then. Indeed, the ITC believes that the ITV companies should receive no further payments but retain a long-term liability—a much tougher proposition than anything I am asking for. If ITV companies really believe that they might have a liability, they ought to favour my amendments rather than oppose them.
The Government's proposals prolong the agony. They do not deal with the central issue that the formula is both unnecessary and damaging and they offer the prospect of a further two years' lobbying in final percentages. That is no way to run an industry. Good programmes take time. Good films can be two or three years in the making. That is no way to encourage ITV and Channel 4 to work together on the digital future mapped out so well in the rest of the Bill. Some Members of the Committee may feel that the campaign has gone on quite long enough. By scrapping the formula after 1997, we can end it now. Abolition is in the end the clearest answer. There will be no losers. The ITV shareholders already have their money. All the money retained by Channel 4 will be spent on

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programmes and films; 1,500 new jobs will be created. The viewers will gain, the lobbying will cease. Channel 4 and ITV can work together on a great digital future and on an equal basis. I beg to move.
10 p.m.
Lord Thomson of Monifieth: The noble Earl has put an eloquent and devastating case. I await with interest hearing how the Minister hopes to answer him. I remind the Minister that Channel 4 is a unique British achievement in the whole world of broadcasting. It is a small company by world standards. It has a high-minded and extremely limited remit to cater for tastes and minorities that are not otherwise catered for. It is wholly commercially funded through selling its advertising. It has proved that it can do that very successfully. If I may say so to the Minister, who is the first Minister from this House to have responsibility for broadcasting, it is a very great Conservative achievement. The Conservative Party and the Government should be proud of it. In political terms it was very much the achievement of his noble friend Lord Whitelaw, his neighbour in Cumbria. The Government should approach the question of the future of Channel 4 with a certain pride of proprietorship rather than in the somewhat hang-dog manner in which they seem to be approaching the situation.
That situation, as the noble Earl said, is not the result of the purposes of the financial formula. The financial formula was clearly designed as a safety net for the new circumstances that the Government, in their wisdom, created in the 1990 Broadcasting Act. The fact that it clearly was a safety net was recorded not only in the debates but, as the noble Earl said, was recorded by the Government in Brussels since it was registered as a state subsidy to Channel 4. In fact, as a result of Channel 4's enterprise and excellence, the situation has been an Alice in Wonderland one, in which the great, popular Channel 3 is heavily subsidised on the scale described by the noble Earl. The proper and wise thing to do now is to call it a day, wipe the slate clean and make a fresh start in relations between Channel 4 and the ITV system.
In any case, the 1990 Act contained a provision for a review. I do not want to go over the ground that the noble Earl recited in relation to the figures. They are of a scale to make the mind boggle. By the end of 1997 the ITV companies will have received three times what any of them stated collectively in various business plans when they bid for the contracts. It is sometimes said that we ought to preserve the ongoing subsidy for the time being because it represents compensation for the ITV companies in respect of investment they made in the establishment of Channel 4.
I can speak to that argument from a certain amount of personal experience. I was chairman of the Independent Broadcasting Authority at the time. The facts are that the ITV companies received in Channel 4 a partner with a limited remit whereas they might easily have had an entirely new competitor. They were also given the right to sell the advertising for Channel 4 in exchange for resources they made available in setting it up. They did not in fact do it very well. That is one reason why extraordinary figures emerged of Channel 4's success in
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selling its own advertising. However, I believe that over the 10 years they did receive a surplus of some £68 million in advertising revenue over the investment they made. Today the benefits to the ITV companies are on a massive scale. In 1995 Carlton received £21.9 million; MAI 13.1 million; and Granada £16 million. Granada, once a very great television company with other commercial interests in the catering and rental fields, now a very great hotel owning company with some television interests, received a subsidy of £16 million. It is a very extraordinary situation.
The ITV companies—I have much sympathy with a number of them—are making the most of what they believe to be the position of the small regional companies which we have just discussed at some length. Five small regional companies who, in many ways, give some of the distinctive character to the ITC system, as we have been arguing, together receive, not the £16 million that Granada receives nor the £21 million that Carlton receives, but £1.6 million. The implications in terms of Clause 63 are clear. On the basis that the noble Earl made the case in an unanswerable way, there are implications, if the correct decision is taken, for the Government, for ITV, the ITC and indeed for Channel 4.
As I said at the beginning of these proceedings, it is necessary to do a number of things. It is important to bring together the dates for the Channel 4 review and the dates for the review of the ITV licences so that some of the grotesqueries of the bidding system can be put right at that time. Incidentally, I tabled an amendment with which we shall no doubt deal on Thursday proposing that BSkyB is now sufficiently successful to make its contribution to qualifying revenue as a well established broadcaster dealing with a British broadcasting public. The amendment, in the name of the noble Earl, Lord Arran, is extremely important. We should have a government guarantee on the face of the Bill that the discounts which are part of the network system of ITV and which sustain the smaller regional companies will be guaranteed for the future.
Finally, I turn to the responsibilities of Channel 4 if the Government are wise enough to wipe the slate clean. It has a responsibility that is not being fulfilled as well as it ought to be in relation to the commissioning of programmes from the regions. I am told that a good deal less commissioning of programmes from the smaller ITV regional companies now takes place. I asked for figures from Channel 4.
It appears that Channel 4 spent £188 million last year in commissioning programmes. The statement is that £35.5 million of that was spent "outside the M.25". It is a curious and revealing description of Channel 4's idea of dispersing creative programme-making to the regions. It reminds me of an occasion when, as a Foreign Office Minister, I was asked to take action to disperse the Passport Office out of London. The Passport Office was extremely reluctant to go. Finally, it bit the bullet, came back to me and said that it had been extremely difficult but it had found a site in Ealing.
The amount that Scotland receives out of Channel 4's £188 million is £4 million. I do not feel that in Horseferry Road they have heard of the Goschen

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Formula and that Scotland normally expects to have 11 eighty-eighths of the United Kingdom's revenue. There is a long way for Channel 4 to go. So, while I am proud of its place in the broadcasting scene, the Government should act in support of the amendment moved so well by the noble Earl. Channel 4 has its responsibilities and, if the slate is wiped clean and we make a fresh start for both Channel 4 and ITV, I hope that Channel 4 will rise to those responsibilities. I am happy to support the amendment.
Lord Birkett: I too support the amendment to which my name is attached. Between them, the noble Earl and the noble Lord, Lord Thomson, have made such a comprehensive survey of the history and finance of the matter that I do not need to add to it. It adds up to an unanswerable case. However, I should like to emphasise one small element which they did not. It relates to the programmes which would be made.
At Second Reading I told your Lordships exactly what Channel 4 thought—and I agreed—would be possible had it not had to pay the sum to ITV. But today the position is very much more dramatic. At Second Reading I talked about what Channel 4 would have done with £56 million or £57 million, which is what it paid last year. This week it is paying £74 million. I have added up all the programmes which it has carefully budgeted at £74 million. No fewer than 88 new programmes would result; some of them single programmes, some of them complete series, and some of them major films. That would be very good news for the viewers of this country, because Channel 4 makes programmes and films very well.
The film and television industries are much more closely interlinked than ever they were before. Anyone can tell the difference between a cinema and a television screen. But it is often quite difficult to know on which of those screens a new film will appear, so interlocked are the media. Not only would the 88 new programmes be wonderfully good news for the viewers of this country, but they would be wonderfully good news for the talented programme and film makers of this country. A shot in the arm is what they have needed for years and there are very few places to look for that shot. This would be something so valuable to the industry and so valuable to the viewers that it simply cannot be neglected.
Baroness Birk: It certainly does not seem as though six years have passed since I was embroiled in the details of the last Broadcasting Act. However, technology has moved on since then. The Bill now before us recognises that technological change has created a range of new opportunities in the media. Channel 4 remains committed to its full public service programme remit but admits much tougher competition than there was at that time. However, the funding formula imposed on it in the Broadcasting Act 1990 is draining the corporation of funds badly needed to invest in British programmes.
It was never the intention of Parliament that the funding formula should be anything but a safety net provision for an innovative channel specifically targeted
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at minority audiences which were not catered for under the system at that time. How anxious most of us were at that time to ensure its success during its transition to financial independence. Instead, the funding mechanism has become an expensive millstone round Channel 4's neck, depriving viewers of new British programmes and films and in the process creating a regular, risk-free windfall for many ITV companies.
It is the viewers who suffer from a lack of new programmes. It is employment which is penalised, since the money paid out can provide around 1,500 new jobs. As has already been said three times, but I think it is worth pressing it yet again, this week Channel 4 will pay £74 million to ITV. Last year it handed over £57 million. In 1997 it will have paid £300 million. It really is a victim of its own success. That is all wrong. The funding formula's sole purpose was to sustain Channel 4, not to subsidise ITV. Given ITV's profitability and its mergers and takeovers, its shareholders should not suffer from the abolition of the funding formula.
In 1990 we agreed to the formula for the best of intentions, but the formula has not worked out because Channel 4 has been much more successful than we estimated in 1990. In this Bill we now have an opportunity, as was pointed out by my noble friend Lord Thomson of Monifieth, to review the situation. The Government have argued that the future for Channel 4 is uncertain, which is why I think there should still be a fall-back position, but have failed to provide evidence to back that up. The ITC also wants it to have a fall-back position just in case it needs help. But again it failed to provide evidence to sustain that. Channel 5 is coming two years later than expected and its programmes will be competing primarily against ITV and not against Channel 4, as was once thought. For the safety net to operate after 1997, Channel 4 would first have to lose, as has been pointed out, £150 million, which is 30 per cent. of its annual advertising revenue, and a further £150 million to consume its reserve fund.
The National Heritage Select Committee has unanimously recommended the abolition of the funding formula since it hinders investment in the British film industry. As a past governor of the British Film Institute, I would much prefer to see the revenue earned by Channel 4 being ploughed back into British film and programme production. If the channel did not have to subsidise ITV, it would be able to invest in 12 new "Film on Four" projects for this year alone.
We have a duty to promote the British film industry and to ensure that the viewing public has the chance to see more films like "Four Weddings and a Funeral" and "The Madness of King George III". The Government's proposals, as set out in the Bill, provide only further delay in solving the failure of the formula. It will ensure continuing dispute between ITV and Channel 4 at a time when they will be expected to work more closely together with digital television. That is not good for either organisation or, I suspect, the Ministers concerned who will be the recipients of further informative lobbying material.

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We can play our part in rewarding that success and enable viewers to have more of what they so clearly appreciate. I hope that the Government will think again and secure the future of independent film and programme production companies up and down the country by allowing Channel 4 to use all its earned revenue for much needed investment in this important British industry. I urge the Government to accept these very sensible amendments, if only to save the rain forests which have been ravaged in the lobbying efforts of those concerned.
10.30 p.m.
Viscount Astor: The noble Lord, Lord Thomson, said that my noble friend moved the amendment and made an elegant and devastating case. I agree that my noble friend certainly made an elegant case, but I put to the Committee that it was neither devastating nor convincing. I shall take a moment to explain why.
Much has been said about the funding formula, but two things are clear. In 1990, Channel 4 welcomed the protection that the formula provided. Also the ITV companies based their bids for the 10-year licence on the formula and the terms of the Act. Channel 4 has done much better than many expected—indeed, better than it expected itself—and it has gained an estimated 21 per cent. of the advertising revenue share. As a result, it has had to pay sums over because it is over the 14 per cent. One could say that it agreed a very expensive insurance policy. It was an insurance policy because if it had gone wrong the ITV companies would have had to pay money to Channel 4.
My noble friend the Minister has taken the view that the formula under the 1990 Act should be reviewed at the end of 1997, but that it should stay in place. The ITC has also said that the formula should stay in place, but that the payments should be set at zero. Michael Grade has now said that he believes that the formula should remain until the end of 1997, which is a change from his previous position, but that it should then be abolished.
There are many arguments which have been made to promote that cause. The first is that it would enable Channel 4 to plough back more money into domestic production. That sounds reasonable and the noble Lord, Lord Birkett, made a case. We have to look at what the consequences will be for other small, regional ITV franchisees. Let us look carefully at the claim that abolition would increase domestic production.
Channel 4 does not owe its success to homemade programming. One of the reasons that it is successful is that it has cleverly imported ready-made programmes From America. The audiences love them. That is the reason for their success. I know from my own experience at home, wrestling and battling to get hold of the remote control, that programmes such as "Cheers", "Frazier", "NYPD Blue", "Roseanne" and many others are popular.
It is interesting that in fact, although Channel 4's income rose from £251 million in 1992 to £394 million last year, over the same period the number of US programmes broadcast on Channel 4 actually increased
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from 992 to 1,443. Channel 4's income has grown in recent years, but so has the level of imports. So I am rather sceptical of the simplistic argument that giving more money to Channel 4 will automatically increase domestic production. A simple analysis of the ITC annual report demonstrates that once the special payments from Channel 4 to ITV, and from ITV to the Treasury are taken out of the equation, there is no difference. Comparing the ITV and Channel 4 franchisees, both spend the same percentage, some 50 per cent. of net revenues, on original UK production.
The Earl of Stockton: Does my noble friend have a comparable figure for investment in British film industry production, particularly in terms of bringing on a script to the point of production?
Viscount Astor: The funding formula has nothing to do with the film industry. This is about Channel 4. It is a separate matter.
Channel 4 has been able under the existing rules to increase its programming budget by 44 per cent. over the past three years: not a bad record when you consider that it has also been able to spend £62 million on a new building. What we must also remember is that although Channel 4 pays some £60 million to the ITV companies, it does not pay any levy to the Treasury. The ITV franchisees actually pay over £370 million to the Treasury, plus corporation tax and dividends to shareholders.
Channel 5 arrives next year, paying about £22 million in licence fee to the Treasury, and is forecast to gain a 4 per cent. share of total television advertising in its first year, rising to 9 per cent. in 2002. It is very important to retain the flexibility and not haphazardly change the rules. With Channel 5 taking a large chunk of revenue, and many more satellite and cable channels about to be launched, who knows what will happen?
The Government must have the flexibility. Much has been said about the smaller ITV companies. We all agree about the importance of regional programming, which we discussed earlier, but without the possibility of support post-1997 those companies could be in great danger. The amendment removes the possibility of support post-1997. We all agree that the larger ITV companies will not need the money after 1997—they might not get any of it—but this amendment removes the formula and the flexibility. If we tinker with the arrangements in this way, we put some of those companies in grave danger. Therefore, I hope that my noble friend the Minister will firmly resist the amendment.
Lord Palmer: This is becoming a fascinating debate and, although I do not agree with the noble Earl, I almost tore up my speech because what he said was so convincing.
I feel that I must declare an interest as a small shareholder in the smallest television company, Border TV, which as many of your Lordships may know has just 1 per cent. of the viewing population. The sheep outnumber the viewers by 5:1. Border TV produced 0.6 per cent. of total ITV revenue.

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Many of us have been lobbied vigorously on the question of Channel 4 funding. There is a danger that we will all become hopelessly confused by claim and counterclaim, by endless references to "reserve funds", "percentages of qualifying revenue", "cash bids", and so on.
The Broadcasting Act 1990 guaranteed that the funding formula would stay in place unchanged until the end of 1997. Going back on that guarantee would mean the Government acting in bad faith. That would be a great pity at this particular moment. I think that even Channel 4 is beginning to accept that a deal was made and a deal has to be adhered to. The shareholders of the ITV companies invested money on that basis. It would be quite wrong to change it.
I accept that after 1997 the argument is more complex, but I believe that it would be entirely misguided to alter one element of the financial balance within the Broadcasting Act while leaving the others unchanged. As a result, we should not abolish the funding formula at the end of 1997. The two channels (ITV and Channel 4) have battled out this issue in the press and elsewhere. The Government's reaction set out in the Bill represents a fair compromise: keeping the funding formula in place but enabling the Secretary of State to regulate a flow of funds from one channel to the other after "the end of 1997".
We have also to remember, as the noble Viscount, Lord Astor, said, that Channel 4 does not pay any tax to the Revenue. When one thinks of the enormous tax bill that the ITV companies pay (£370 million) and that is before corporation tax, we must be extremely wary of this. Nor must we forget that, as it is a publicly owned company, it has no requirement to make profits.
I suspect that in the longer term the right solution will be to spread the payments that the ITV companies make to the Treasury more widely across the whole broadcasting industry, including Channel 4 and the cable and satellite broadcasters. That would create a genuinely more level—although I hate the expression—playing field for the whole of the broadcasting industry. Even so, I do not believe that that should be the intention of the Bill.
The right thing to do is to keep the Channel 4 funding in place along with the other financial aspects of the broadcasting legislation, and review them all at the same time at the end of 1997 or even during 1998. I believe that it would be good for British broadcasting, fair to all the companies, and, above all, the right decision in the interests of good government.
Lord Burnham: Before the noble Lord sits down, may I ask him whether, as a shareholder in Border Television, one of the smallest companies, he can confirm that in 1995 it made a profit of £1.9 million, whereas its subsidy from Channel 4 was £44,405. If that is so, it is scarcely an absolutely vital element in the survival of Border Television.
Lord Palmer: I am not sure how I should answer that other than to say that Border Television has for many years been struggling, but under new and dynamic
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management it is proving to be a much more successful company. Indeed, the share price went up to over £3 this morning. I am not sure how I can reply more logically to the noble Lord.
Baroness Hayman: I shall not detain the Committee long at this time of night, but I shall say a few words in support of the amendment which has been so well argued by the noble Earl, Lord Stockton, the noble Lord, Lord Thomson, and others. I support the propositions that have been put forward, but I shall not follow in all the details the contributions that have just been made.
It seemed to me that the noble Viscount, Lord Astor, was arguing that because, in effect, Channel 4 had taken out an expensive insurance policy for itself in 1990, from 1997 onwards it should take out an expensive insurance policy for the small ITV companies. That cannot be right.
Mention was made earlier of the tendency of broadcasting legislation to predict the past. The provisions in the 1990 Act that we are discussing had the effect of achieving the opposite of what they intended. What was intended in the funding formula as a safety net for Channel 4 ended up, in effect, as a subsidy for the ITV companies. That is what happened. Those were the provisions that were put in place, and those are the provisions that will stay in place until 1997. We have to consider whether it is right that we should continue that situation.
Channel 4 is different from the ITV companies. That takes us into the taxation issues. It is different because of its clear public service responsibility. As has been said, the original proposals were registered as state aid with the European Union in order to sustain quality on Channel 4. I am not sure that anyone could argue that the effect of what has been done has been directly to sustain that quality. However, I believe that in reviewing the funding formula there is an opportunity to fulfill those obligations about sustaining quality in the public service remit if those retained services are not syphoned off into the ITV companies but will accrue to investment within the film industry—I think that the film industry is most relevant here because of the closeness between film and television industries—and to employment in production in the television sector. We should welcome and encourage the willingness that Channel 4 has shown to guarantee that surpluses would be put straight back into programming and to welcome the ITC having a role in overseeing this, and perhaps looking into the issues of regional programming and commissioning as mentioned earlier.
We would be making a great contribution to the future success of Channel 4. It has been a great success and an asset to public service broadcasting in this country. A great deal has been said about the turbulent times ahead and the vast changes that we envisage in broadcasting. In view of that, it is even more important that we should be supporting and sustaining Channel 4's public service remit and not devaluing it by sustaining present funding arrangements beyond 1997. For that reason, I support the noble Earl tonight.
The Earl of Arran: I believe that the amendment has been rottenly argued by my noble kinsman Lord

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Stockton and I am sorry that on this occasion blood is most certainly not thicker than water. I totally agree with the remarks made by my noble friend Lord Astor.
There is no excuse for failing to understand the intricacies of Channel 4's finances because Channel 4 has spent a huge amount of money making sure that we all know about it. Its version of the story tells us of award-winning programmes never made and of opportunities unfulfilled. Channel 4 claims that it has been bled of finance. However, Channel 4 can afford to make a lot of noise because it is now a huge success. When the station began no one believed that to be possible so a funding formula was invented. It is a little like a seesaw. If Channel 4 is struggling ITV will back it up, but if Channel 4 prospers ITV becomes the beneficiary.
I am delighted that Channel 4 is doing so well and I am happy to pay tribute to the considerable commercial acumen of the Channel 4 managers. But their accompanying chorus of bleeding hearts really is a little hard to swallow. We hear a great deal, and we have heard a great deal tonight, about how much the TV giants receive from Channel 4's coffers. We hear nothing at all about the sums that go from Channel 4 to the small ITV companies; money that is never squandered but pays for valuable regional programmes. That money was part of the deal and effectively part of the legislation.
The points, very simply, are these. The Channel 4 funding formula was designed to last until 1998. The Channel 4 funding formula is still essential to small companies. Without it their corporate plans would be thrown into total disarray. Without it their pledges to the ITC would be seriously hampered and without it their viewers would suffer. There may be faults in the funding formula but they can be properly addressed on schedule towards the end of next year. Until then, the whole of independent television should stick to the letter of the binding agreement. A promise is a promise and I suggest that we break it at our peril. I strongly urge my noble friend the Minister not to accept this amendment.
Lord Elis-Thomas: I wish to support the amendment and briefly to point out what appears to me to be a great inconsistency on the part of Members of the Committee who have spoken against it. We have dealt successively tonight with two funding formulas. The outcome of both cases has been different from the predicted intention of Parliament. In one case, the case of S4C, the noble Viscount argues that the formula should be amended because it has been too generous to the authority. In the case of Channel 4, he argues that the formula should not be amended because it has been providing revenue for ITV companies.
Clearly, we cannot have it both ways. If the formula were going through the public expenditure procedure, no doubt he would be in favour of amending the formula. In this case the formula is taking out of public service broadcasting and is providing added value for what is becoming an increasingly commercial sector. It is taking money out of programme production into the interests of shareholders.
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It is for that reason, because potential revenue for production is not being utilised for production, that I support the amendment and make it quite clear that so far as concerns the future of the independent production centre throughout the United Kingdom, there is more future in terms of programming invested in Channel 4 than there is invested in the profits of the current ITV companies.
Lord Crickhowell: I am moved to intervene in the debate by the two speeches from the Cross-Benches. The noble Lord, Lord Birkett, suggested that there would be a great increase and huge flood of new productions from British companies, if the formula were done away with. We have just heard the suggestion that it will somehow be much more valuable and better managed in the hands of Channel 4 than in the hands of the ITV companies.
The noble Lord, Lord Elis-Thomas, pleaded very strongly and correctly earlier in the day for regionality. So far as Wales is concerned, if the money were taken away from HTV, it would to a certain extent come out of programmes made in Wales and the programme-making capacity that we have. It simply is not true that there would be a great upsurge in programme making. The truth of the matter is that there would be more programme making by one channel and less programme making by another. People can take sides as to which could produce the best programmes and whether there is virtue in the one or the other. But the idea that there will be an enormous increase in UK production as a result of such change is, I believe, simply nonsense.
I understood that my noble friend Lord Stockton made a most eloquent speech. It was a most persuasive argument for standing where we are. He told us very clearly that he did not propose a change until the end of 1997 and that everyone should stick to that point. We have a formula which provides for a review in 1997 but at that point it allows the Government to take account of whatever the situation may be at that stage. We all know about the difficulty of making forecasts.
I am not one who argues that necessarily the existing proportions should continue to be paid right through for 10 years. My noble friend Lord Stockton made quite a case for change after 1997 and no doubt my noble friend the Minister will consider that very carefully at the appropriate time. But we had a timetable for review and people made their plans accordingly. As we argued in an earlier debate, there was a parallel provision made in the 1990 Act but with a gap of a year which would enable a review of the licences for the new companies. As the noble Lord, Lord Thomson of Monifieth, observed, that again is a very strong case for bringing together those two things. We need to look again, at the appropriate time as provided by the legislation, at whether change is needed. But at the same time, the companies which made their bids under the previous arrangements need the ability to have a chance to have those licences reviewed, and the two things should happen together.

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I shall make only one other observation. It has been made in much more detail and very eloquently by my noble friend Lord Astor. We have heard a tear-jerking plea on behalf of the fourth channel, but we heard very little of whether there was any merit, in the light of everything that has happened and the unexpected success of the company, in considering whether some modest contribution might be made to the Revenue by that channel. I must say that I am at a loss to understand why, if we are to have a level playing field, one channel should provide a huge subsidy to the Treasury and the other should not. It seems to me that if we are to review matters, perhaps we should not review just one item of the package but have a more fundamental review. I suspect that my noble friend Lord Stockton and those who press him to argue the case in this Chamber would not be quite so happy to have a wider review of the total financing arrangements.
The Earl of Stockton: Before my noble friend sits down, I should tell him that I would be entirely happy to have a wider review. I should point out that Channel 4 pays corporation tax. There are two questions that I should like to ask my noble friend. He has declared an interest in Harlech Television, a company which bears the name of my revered and respected noble uncle. Is that position remunerated? If so, does he accept that, therefore, part of his remuneration comes indirectly from Channel 4?
Lord Crickhowell: The other day I inquired of the Clerks about the way in which one should treat declarations of interest. Of course, I have declared my interest. It must be a direct and meaningful financial interest to prevent me from arguing the case. But I doubt whether my accountants would be able to calculate even a minuscule consequence for me brought about by a change in the formula.
Baroness O'Cathain: I declare an interest. I was a director of Channel 4 but before the 1990 funding was put in place under the 1990 Act.
In 1993, the National Heritage Select Committee took evidence from Channel 4 on the subject of the funding formula and Channel 4 said that during the passage of the 1990 Act it had not objected to the funding formula and did not want to lobby against it now for the reasons that stood then. That was only 1993. Of course, it has been a great success and we must hand it to Channel 4 for that.
But from 1993 to 1996, Channel 4 has spent some £81 million over the amount that it had budgeted for its programmes. Therefore, in those circumstances it cannot plead poverty. But of that £81 million, it reduced its expenditure on programmes from the UK and other sources by 2.5 per cent. and increased its expenditure on US programmes by 66 per cent. in 1994 alone. Therefore, all the arguments that we have heard this evening have been most persuasively put but they really do not hold a lot of water.
I think that it is sad that we have two organisations here—ITV and Channel 4—which are both very successful in producing programmes, commissioning
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programmes and buying in programmes which the customer obviously likes. They should not be fighting with one another and bandying statistics and figures all over the place. I believe intrinsically that an agreement is an agreement. An agreement was made. It has fewer than two years to run. Why do we not leave it at that? I shall certainly not support the amendment.
Lord Desai: I merely rise to note that in this country, success causes more problems than failure. Had Channel 4 lost a great deal of money, we would all have sympathetically given it even more and we should not be having this debate.
The ITV companies took a gamble which was highly successful. They made three times more money than they thought they would do, even on their best expectations. It seems to me that it is very strange to claim that the small ITV companies would be devastated if they did not receive that money for ever and ever. If their planning is that bad, they do not deserve to be in business.
For my money, it does not matter whether the companies commission British productions or import American or Chinese productions. They are in a free market and can do what they like. If we do not believe that, we should not have an independent television sector. We should oblige them only to make British programmes and nothing else. That is not a valid argument.
The valid argument is that something unanticipated confronted us in 1990. We took a gamble. We now know that that fear was unjustified. Is there any reason to continue the arrangement which was extremely successful for those on one side of the bargain but not for those on the other side? One can reward people for one gamble, but one should not continue to do so forever. I believe that the noble Earl's point is perfectly valid.
At the end of 1997 I believe that we should abolish the formula. No other reconsideration would make any sense. Even if the Government were to reconsider the matter, I would be surprised if they came to any other conclusion except that put forward by the noble Earl. Therefore, why do we not make the decision now?
11 p.m.
Lord Donoughue: Members of the Committee can be very proud of themselves; we have indeed had a most lively debate. I believe that it is now seven hours since "kick off", and things are still going very well. It has been said that the funding formula was established as an insurance police to protect Channel 4 and we can recall why. It was in case the channel did not attract the advertisements or in case the audience was small. The latter has proved not to be so and that is wholly to its credit. It was also to protect the channel should the competition, the satellite or cable competition hit their adverts. That has not happened either, mainly because the introduction of Channel 5 has been delayed and satellite and cable are expanding primarily in subscription, not in advertisements.

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That is the history of the matter and we have had figures put forward from all sides of the Committee. Clearly, it is a very complex issue and the funding formula is obviously not working as intended. I believe that that is one of the few areas of total agreement by all Members of the Committee. Payments of £175 million between 1993 and 1995, and rising, were never envisaged and are clearly, and understandably, intolerable to Channel 4. Indeed, had those of us who were in this place at the time known about those figures by looking into the crystal ball, the 1995 formula would never have been introduced or been accepted. What was seen as a small insurance policy has become a massive levy on Channel 4's profits and success. The resentment in that respect has been clear from the majority of contributions made by Members of the Committee from all sides.
As the formula is not working, how and when do we change? I believe that the "when" is easier to answer, because the end of 1997 would be a natural break. In response to some speakers who have pointed out that Channel 4 has changed its position—which is often seen as a bad thing—I should say that I know that that was actually a concession on the part of the channel to try to make life easier for us. The "how" of the matter is more difficult. Anyone seeking a compromise, as some of us have, has not found it easy to bridge the interests of both sides. As the massive flow of briefing paper has demonstrated to us, bottom lines were speaking very loud. I feel that the hyping of the issue by both sides has not helped us in the bridging process; it has certainly not helped us politically.
To end the formula totally and soon, as proposed by the noble Earl, Lord Stockton, would lead to many disadvantages and threaten the budget cash flows of ITV, thus causing pain throughout the regions. I believe that the noble Viscount, Lord Astor, was very sensible in that respect. I do not believe for a moment that most of them budgeted for this bonanza. However, having said that, to continue the subsidy for a long period at the present rate would be an intolerable and unacceptable levy on the marvellous success of Channel 4. The fact that the better Channel 4 performs the more it suffers is something which upsets many of us.
There is an additional factor involved about which there has been some disagreement. If the money were kept in Channel 4, there is no doubt that it would mainly go into domestic programme production and films in the future. It is important to mention films because Channel 4 has a very good record in that respect. Channel 4 has generously promised, in advance, to do more of that in future. Therefore I would say to the noble Viscount, Lord Astor, and to the noble Baroness, Lady O'Cathain, that Channel 4's performance in the past is not relevant to what it will do in the future as it has made clear promises as regards better performance on domestic programme production and continuing expenditure on films whereas, as we know, some 50 per cent. of that money when passed to ITV goes straight to the shareholders and the directors, as the noble Lord, Lord Elis-Thomas, stated so powerfully. That is not pleasing to anyone who cares about the health of British TV where we want the maximum invested back in the production industry.
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The Government's compromise formula has not had much show in all the exchange of heavy artillery from the two sides. I thought it not a bad opening shot. But its flexibility—flexibility is a virtue which we do not often see—is in a way its disadvantage, leaving the Secretary of State apparently deciding the matter each year. That is the last thing I want. It is like the racing industry and the bookmakers arguing each year about the levy, as they used to do. It creates the danger of annual battles over the formula distribution. That would institutionalise the present battle, and that is not desirable.
I have some sympathy with the ITC approach of keeping a kind of sleeping formula in case one needs the insurance but making zero cash payments after 1997. Our position on this side is clear but not brutal. We believe the matter should be settled for the end of 1997 and not left in further doubt for future battles. It should be seen within the context of the overall taxation net for broadcasting where there are many inequalities from which, on the whole, the ITV Channel 3 companies suffer. They make overall an unfair over-payment to the Revenue while others make a lesser payment. I am pleased that the matter will be raised again on Thursday because it is an important context in which to consider what is a much smaller financial issue—the funding formula. We on this side expect the date—1997—to be important as we expect a Labour government to have been comfortably in office for some time when we take the decision. We expect to do so in relation to the several considerations I have outlined.
Lord Inglewood: I am sure we all agree that we have had an interesting and worthwhile debate about the Channel 4 funding formula which has generated a wide diversity of views. My noble friend Lord Stockton suggested, in moving the amendment, that Channel 4's long-term future was assured; that the statutory funding formula had already acted against its interests; that it no longer served a useful purpose; and that its retention would lead to annual conflicts about levels of payments—all of which, and much besides, led him to the conclusion that the formula should be abolished.
No one applauds Channel 4's success in recent years more than the Government. We want to safeguard its future as part of the core quality public service channels in the digital age. We have already debated this in general terms. In our view the right way to secure Channel 4's part is to retain the funding formula but to enable the Government to adjust the variables in that formula to take into account the economic realities of an uncertain future as they become apparent. Abolishing the formula outright could prejudice Channel 4's long-term future and we oppose doing that.
Perhaps it may help the Committee if I first explain the basis for the present formula and the Government's proposals to amend it before dealing with my noble friend's specific points. As already mentioned, Channel 4 was established in 1982 as a wholly owned subsidiary of the Independent Broadcasting Authority. The ITV companies sold Channel 4's advertising space and funded the channel by a subscription. The 1990 Broadcasting Act changed the arrangement. It provided for Channel 4 to

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become a statutory corporation, selling its own advertising space. It set out Channel 4's remit to broadcast a suitable proportion of matter calculated to appeal to tastes and interests not generally catered for by Channel 3, with special emphasis on innovation and experiment in the form and content of programmes.
The funding formula was introduced by the 1990 Act as a response to anxieties that the new arrangements introduced for Channel 4 to sell its own advertising, rather than to rely on financing from Channel 3 as before, might have a damaging effect on its finances and that that, in turn, might damage Channel 4's ability to execute its remit properly.
The funding formula was accordingly devised as a means by which Channel 4 is, in certain circumstances, guaranteed funding from the Channel 3 companies should its income from advertising revenue fall below 14 per cent. of total national advertising revenue. As a quid pro quo for that arrangement, in essence a kind of insurance policy, any income which Channel 4 obtains from advertising revenue taking it above the 14 per cent. threshold is distributed according to a formula. Fifty per cent. of the excess goes to the ITV companies; 25 per cent. to a statutory reserve fund held by Channel 4; and the remaining 25 per cent. to Channel 4's current expenditure on programmes. However, should Channel 4's income fall below the 14 per cent. threshold, the funds which have accrued in the statutory reserve are used in the first instance to top up Channel 4's income so that it reaches an amount which is the same as 14 per cent. of total national advertising revenue. If and when reserve funds are exhausted, it is for the Channel 3 companies to fund the shortfall between Channel 4's income and the 14 per cent. threshold, up to a limit of 2 per cent. of total national television advertising revenue in any one year.
We have heard a lot about the level of Channel 4's payments to Channel 3 since 1993. It is fair to say that it was anticipated at the time the 1990 Act went through Parliament that Channel 4 would be profitable in its early years and that it would accordingly make payments to the Channel 3 companies. The Government are nonetheless aware that many people believe that the amount of those payments has been higher than was expected at that time, and we have taken that into account in proposing an amendment to the funding formula.
The Government's approach retains the basic framework of the funding formula. However, it includes the power, by order, to adjust the treatment of Channel 4's earnings above the 14 per cent. threshold which I have described. It also updates the definition of total national advertising revenue to include multiplex revenue as well as the other elements (including Channel 5 revenue) specified in the 1990 Act. It would not be right to change the rules applying to funding flows between Channel 3 and Channel 4 before 1997. To do that would be unfair.
The Government's approach has two benefits. First, retaining the formula will keep the safety net for Channel 4 in place as a prudential measure. I hear the arguments that that safety net is unnecessary, since Channel 4 has every expectation of being able to stand
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up for itself in future. We do not feel that it is responsible to be so sanguine. The broadcasting industry is going through a period of intense change. Indeed, I doubt whether there has ever been a period of such change. There is a plethora of uncertainty, arising from the launch of Channel 5, the advent of digital terrestrial television and the projected expansion of the cable and satellite sector, with scope for several hundred channels to be available in future. As the ITC has acknowledged, the outlook for Channel 4 into the next century is uncertain. Some forecasters anticipate a downturn in Channel 4's share of net advertising revenue, in particular as Channel 5 develops in the early years of the next century.
No amount of media analysis one way or the other can make an inherently uncertain future any the less so. Channel 4's efforts to increase its advertising revenue have been extraordinarily successful, with its share rising from 14 per cent. to 21 per cent. of total national advertising revenue over the past four years, growth in revenue which has raced ahead of the increase in its share of the audience. That shows considerable success. However, we have to acknowledge that, as the financial advertisements put it, past performance is not necessarily a guarantee of future success. Indeed, as those of us involved in politics are aware—and I draw this point to the attention of the noble Lord, Lord Donoughue—there is scope for rapid and considerable fluctuations in opinion polls. The essential point is that we cannot predict the future with certainty. For that reason, I am sure that the retention of a long-term prudential framework is right and that we should not abandon the principle of having a safety net on the basis of two or three good years.
The second major characteristic of the Government's proposals is their flexibility. Clause 66 will provide powers for the Secretary of State, by order, to adjust payments from Channel 4 to Channel 3 companies downwards from their current level of 50 per cent. of Channel 4's income above the 14 per cent. threshold. It is too early to say what the new funding level will be, but there is scope to adjust the current distribution significantly and our intention will be to enable Channel 4 to retain significantly more of its revenues for programmes. Under the affirmative resolution procedure, Parliament will have an opportunity to debate the issue fully in due course.
Furthermore, included in these powers is one by which we can reduce Channel 4's payments into the statutory reserve. It may help the Committee to know of the Government's present intention so far as the reserve is concerned. The reserve currently stands at more than £70 million. Assuming no unexpected difficulties, it is the Government's present intention that the reserve would be capped at an appropriate level, with no further payment made into it unless circumstances changed. Even assuming no change in the level of payments to Channel 3, that would at a stroke double Channel 4's income above the threshold to spend on programmes. Thus, it would be able to provide the kind of extra programmes to which the noble Lord, Lord Birkett, referred.

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In that context, undoubtedly one cannot accurately trace or follow any transfers of money which may pass from Channel 4 to Channel 3. After all, both of them are organisations which make programmes. As I also indicated, it is our intention to review the level of payments to Channel 3. It seems that there is little doubt that what the Government propose is not incompatible with what the ITC proposes because it hinges on the way in which the formula might be drawn up. According to the ITC, the way the problem should be resolved is by means of the proposed order-making power under which the flow of funds between Channel 4 and Channel 3 is reduced to nil. The funding formula should not be abolished altogether because it may still have a useful role to play in the longer term.
At this stage I cannot possibly predict what might be an appropriate amount of money to pass between the parties concerned. We are talking about the distant future. We wish to have in place a formula which can be activated as and when necessary and appropriate.
Before sitting down I wish to respond to one or two specific points raised in the debate. Questions have been raised about whether Channel 4's commercial success has been bought at the expense of its specific remit, to which I have referred. It is for the ITC to determine and monitor Channel 4's remit. Clearly, this is in principle a further potential element of uncertainty. The ITC's last annual performance review contained a good deal of praise for Channel 4's output. I know, however, that the ITC has registered various concerns, in particular in relation to the proportion of repeats. No doubt the ITC will take the comments of Members of the Committee into account in considering what, if any, tightening might be appropriate to Channel 4's licence.
A number of speakers have drawn attention to the scale of Channel 4's payments to Channel 3. I have already outlined the background to that and do not wish to go into it in great detail. I have acknowledged that the Government are aware of concerns on that score. However, it is important to be clear that Channel 4's payments do not represent one-way traffic. Although some of the companies in 1982 are not necessarily those which hold licences today, overall Channel 3 companies as a whole have paid more to Channel 4 since 1982: over £400 million in 1995 prices against £170 million the other way. I have also taken careful note of anxieties—particularly those of the noble Lord, Lord Donoughue— that retention of the funding formula will lead to continuing bickering and lobbying in annual negotiations about the details of the formula. I do not see it as a serious problem. The Government will make matters quite clear in putting the proposed orders to Parliament in due course. They will be intended to last for a number of years, as I mentioned at Second Reading.
Those advocating abolition of the funding formula base their case on a very confident analysis of a very uncertain future. They are putting all their money on one horse. The Government's proposals have the virtues of prudence and flexibility to allow Channel 4 to develop as a quality public service broadcaster. Yet they maintain realistic, sensible and fair safeguards to ensure
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its continuing economic security and underpin its enduring wider success. It is for these reasons that the Government disagree with those who advocate the abolition rather than the reform of the funding formula.
The Earl of Stockton: It would clearly be churlish of me not to recognise that the Government have moved their position. Until recently, the Department of National Heritage maintained that the formula was part of a complex set of arrangements. I am glad that they now recognise that it is no such thing, but simply and solely an insurance policy for the benefit of securing Channel 4's public service programme remit.
I thank my noble friend for his suggestion of a cap on reserves and his assurances that a flexible approach will be taken by his department. I remind him, however, that where I go horse-racing you tend to do better if you bet on one winner than if you put your bets on several horses. But perhaps his experience in the north-west is different.
My noble friend Lord Astor spoke eloquently about the threat in the post-1997 era to the small ITV companies. I remind my noble friend that threats are not restricted to small companies. In many cases the bigger they are, the harder and easier they fall.
I still believe that keeping the formula would be a mistake, as do a number of noble Lords. I was interested that my suggestion for a compromise received the support of my noble friend Lord Crickhowell. It was about the only one of my suggestions that did receive his support. I cannot believe that I heard him aright in his suggestion that I put forward this amendment for other than purely altruistic motives. I am sure I misheard him.
My noble friend wants to persuade the Committee that his solution is better than a simple abolition. If that is the case, he has to produce a slightly clearer exposition before the Bill leaves this House of the Government's real intentions. Do they really intend to fix the percentage for the five-year period—or will the period be longer or shorter? Will these arrangements come for another two years and then start over again for a another fcur or five years? They say now that significantly more of the channel's money should be retained for programming—but how much more?
As we agreed last week on the sports issue, it is surely better to have certainty now, before the Bill leaves this House, so that all concerned can get on and plan their businesses. Furthermore, ITV and Channel 4 must work together for the digital future. The necessary co-operation will be hard to achieve while they are still in conflict.
Unless my noble friend can persuade us that he has the answers t these questions, we shall have to return to the principle of abolition as a much more straightforward solution at a later stage of the Bill. However, in the meantime I beg leave to withdraw the amendment.
Amendment by leave, withdrawn.
[Amendment No. 183 not moved.]
Clause 64, as amended, agreed to.
Clause 65 agreed to.
[Amendment No. 184 not moved.]
Clause 66 [Application of excess revenues of Channel Four Television Corporation]:
[Amendment No. 185 had been withdrawn from the Marshalled List.]
Clause 66 agreed to.
Lord Inglewood Lord Inglewood moved Amendment No. 186:
After Clause o6, insert the following new clause—
POWERS OF CHANNEL FOUR TELEVISION CORPORATION AND SIANEL PEDWAR CYMRU TO PROVIDE DIGITAL SERVICES.
(".—(1) In section 24 of the 1990 Act (Channel 4 to be provided as licensed service) after subsection (4) there is inserted—
"(5) The Corporation shall also have power (subject to and in accordance with Part I of the Broadcasting Act 1996) to arrange for the broadcasting of Channel 4 in digital form as a qualifying service (within the meaning of that Part)."
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(2) In section 57 of the 1990 Act (functions and duties of Welsh Authority) after subsection (1) there is inserted—
"(1A) The Welsh Authority shall also have power (subject to and in accordance with Part I of the Broadcasting Act 1996) to provide a further service as a qualifying service (within the meaning of that Part), and to arrange for the broadcasting of that service in digital form." ").
The noble Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Baroness Trumpington: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at twenty-four minutes past eleven o'clock.