HL Deb 16 January 1996 vol 568 cc468-566

3.23 p.m.

The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood)

My Lords, I beg to move that this Bill be now read a second time.

I am delighted to bring forward the Broadcasting Bill. It amends the regulatory structure introduced in the 1990 Broadcasting Act and is designed to ensure that the new digital technology benefits viewers and listeners and that British industry maintains and develops its leading position in this area.

I am confident that your Lordships will scrutinise it rigorously, but I also hope you will be able wholeheartedly to support its aspirations. I do not, however, suggest that the Bill as drafted cannot be improved. Indeed, the Government intend to introduce some amendments at the Committee stage, to which I shall refer later.

The Bill is very complicated, but reflects four key policy principles: first, to safeguard and encourage plurality and diversity; secondly, to maintain our unique tradition of public service broadcasting, including not only the public broadcasting corporations but also the independent sector; thirdly, to foster the competitiveness of the UK broadcasting industry, which leads the world in digital technology; and, finally, to maintain standards of impartiality, taste and decency.

I should like now to turn to Parts I and II of the Bill, which concern digital terrestrial broadcasting. I shall begin with digital terrestrial television. Digital television promises to have a greater impact than the introduction of colour. Sound and pictures are converted into binary code. Using a process called digital compression, the transmitter sends not the whole image, but only the information needed to effect changes between frames. This uses much less spectrum than the existing "analogue" process.

Through another process, known as "multiplexing", the signals of several broadcasters are combined into a single stream on a single frequency channel. Thus there is no longer a direct one-to-one relationship between a television service and a frequency. The signals are finally received and decoded by digital receivers or set-top boxes attached to existing sets.

Initially these advances will offer at least 18 national television channels on six multiplexes, which, in the medium term, will serve from 60 to over 90 per cent. of the population. There will also be improvements in picture quality, increased potential for widescreen, and some potential for interactivity, enabling viewers to choose different soundtracks or camera angles for the same programme.

In the longer term, the coverage of digital terrestrial television can be increased to levels similar to that of current analogue transmissions. Once that happens, frequencies currently used for analogue transmission might be released for other uses. Five years after the introduction of digital terrestrial television or once 50 per cent. of the population has digital receivers, whichever is the sooner, the Government will review setting a date for the so-called "analogue switch-off".

Cable and satellite broadcasters can provide hundreds of channels. They can begin digital transmission now. But terrestrial delivery has certain advantages. It is capable of being received by virtually the whole country; it uses existing aerials; it will not require a satellite dish or expensive cabling; it will be better suited to portable reception and it provides flexibility for regional programming.

Digital technology offers much for radio as well, particularly for the quality of in-car reception. And it is on radio that the first digital terrestrial services have already begun. The BBC began its existing national services on its own digital multiplex on 27th September 1995, and those services will soon be supplemented. In addition there will be a multiplex for at least six digital independent national radio services and, in most areas, a multiplex offering six local digital services. We have decided that a further digital radio multiplex should be used for extra local services in areas of greatest demand, including London and other major cities. Unfortunately, technical constraints and international agreements mean that some areas may in the medium term be unable to receive local digital radio services. We shall clarify the position as soon as possible.

Digital technology will also enable improved additional services; for example, advanced teletext, data services, or in-car direction finders. However, since the spectrum employed is primarily intended for broadcasting, the Bill ensures that at least 90 per cent. of digital capacity on each multiplex must be made available for the provision of television and radio programmes.

At present there are no digital television sets or set-top boxes. The digital audience is almost zero. Major investment is needed to produce the transmission infrastructure and the programming to be carried on it. We therefore concluded that frequency channels should be allocated to multiplex providers rather than individual broadcasters. That makes it easier for large numbers of broadcasters to participate, not just those large enough to manage a whole channel. It also allows non-broadcasters with relevant technical and commercial expertise to participate.

The Independent Television Commission will license television multiplexes, which will be awarded to those who are best able to meet three key criteria: investment in infrastructure; investment in promotion and marketing (perhaps involving measures to reduce the cost of receivers) and programme variety. The Radio Authority will license independent radio multiplexes.

Digital broadcasting is a major, long-term investment. Its investors must have a fair chance of a return. So multiplex licences will run for 12 years, with the opportunity to renew for 12 more. No payments will be made to the Exchequer in the first period. But, except for local radio, a percentage of revenue reflecting the state of the market will be payable for the second.

Public service broadcasters have particular requirements and duties placed upon them. We would like them to help launch digital broadcasting. So we shall reserve half a multiplex for each public service television channel. The BBC will be offered control of the multiplex with the greatest potential coverage. Channel 3, Channel 4, Teletext, and, in Wales, S4C will share the multiplex with the second greatest coverage.

Channel 5 will be offered half the space on the multiplex with the third highest coverage. This is expected to reach around 80 per cent.—more than the projected reach of Channel 5's analogue service.

In return for their guaranteed places, public service broadcasters will be required to simulcast their existing analogue services on digital—that is to say, to broadcast them at the same time—in their entirety and free-to-air.

Public service broadcasters will also be able to do completely new things. Half a multiplex is sufficient to simulcast in widescreen and to provide at least one, and possibly two, further full programme services, which may be funded by advertising, by subscription; by pay-per-view or by a mixture of all three. The BBC is also free to provide new programme services on its multiplex, and has said it plans to do so.

On radio, the BBC is already operating its own national multiplex. The three existing independent national stations—Classic FM, Virgin and Talk Radio—will be offered guaranteed places on the second national multiplex. This will leave space for three new stations. Digital capacity is tighter for radio than for television, so there is less scope for existing broadcasters to provide new services.

Currently, independent radio licences are awarded for eight years, at the end of which there is full re-tendering. It would be unattractive for the independent national radio companies to invest in digital when they could lose their analogue licence, and thus their digital guaranteed place, within a very few years. We therefore propose that existing independent national radio broadcasters who accept guaranteed places will be able, for one period only, to renew their analogue licence, subject to revised cash payments negotiated by the Radio Authority. We shall be introducing a government amendment to that effect.

BBC local radio bears public service responsibilities, and capacity will be reserved for them on local multiplexes. But limited capacity precludes guaranteed places for independent local radio stations. However, independent local stations which are part of successful applications from multiplex providers will, like their national counterparts, be allowed to renew their analogue licences once.

I should like to conclude my remarks on the digital elements in the Bill by mentioning three specific points. The first is programming at local, regional and UK national level. Our revised proposals for Wales mean that Channel 4 will be able to offer digital viewers its existing analogue service, in full and with the same scheduling as the rest of the UK. And, on digital, S4C will be free to expand or complement its peak-hour Welsh language service, which itself must be simulcast.

More generally, there is likely to be demand for increased regional and local television programming throughout the UK. The Bill caters for this. As I have said, one of the principal criteria on which the ITC will judge applications is the variety of programme services prospective multiplex providers intend to transmit. We expect the ITC to take full account of proposals for local, regional, community and special interest channels and programming as an important element in assessing variety. Moreover, digital broadcasting will make it easier to split services between different regional and local areas.

The second point relates to ownership. The Bill seeks to encourage investment in digital technology while preventing the abuse of dominant positions and the excessive accumulation of control over the new digital channels. To encourage investment, there will be no constraints on cross-ownership between multiplex providers, broadcasters and the providers of the conditional access systems. A transmission provider may also be a multiplex provider.

Multiplex providers' licences will require them to treat broadcasters, fairly, reasonably and on a non-discriminatory basis". Moreover, the Bill provides that no more than three of the six television multiplexes may be controlled by the same organisation. Nor may a single broadcaster dominate the digital medium. For television, there will be a points system limiting any broadcaster to around 25 per cent. of new digital services. For radio, broadcasters will be limited to one national station, and to one (or in some cases two) local stations per multiplex.

The third point concerns the control of conditional access systems. Digital broadcasting will allow subscription and pay-per-view services on terrestrial television. Providers of the encryption technology and subscription management services should not be able to abuse their position as "gatekeepers". We intend, through licensing, to ensure that they do not discriminate unduly between broadcasters or multiplex providers and that they do not unreasonably refuse access to their services.

This issue is not covered by the Bill because the controls will be introduced through amendments to licences issued under the Telecommunications Act 1984. The Government yesterday published a paper setting out detailed proposals on exactly how this should be implemented.

I turn now to the proposals in Clause 62 and Schedule 2 to the Bill concerning media ownership. These aim to allow British companies greater scope to respond to technological change, while maintaining diversity and plurality. Since 1990, the media industry has seen major changes. Cable and satellite broadcasting has expanded dramatically. Commercial radio has grown very considerably. New technology has forced down costs for the press. Digital broadcasting provides further potential for major expansion. It was against this background that the Government decided to review the cross-media ownership regulations in the Broadcasting Act 1990.

We remain convinced that, because of its ability to inform the public, influence opinion and engender political debate, the media make up an industry unlike any other. It is central to our culture, our democratic system, our access to information and our way of life. Its regulation must reflect that. Nevertheless, technological and business developments make liberalisation of the extensive existing ownership controls highly desirable.

Most British media companies specialise in one single area: the press, television or radio. That fragmentation is underpinned by prohibitions on cross-media ownership. But technological change provides the opportunity for newspapers, broadcasters and production companies to apply their traditional expertise in new and complementary areas.

Meanwhile, competition is increasing. Only major media companies can make the investments and take the risks associated with the modern media market. We want to see UK companies succeeding in the domestic and international marketplace. The new rules therefore relax existing constraints on cross-media holdings, allowing groups to control a mix of newspapers, television and radio licences. They will also abolish the limits on the number of Channel 3 television and independent radio licences which one company may control, replacing them with a simpler single measure based on shares of the overall television and radio markets.

These new limits directly reflect readers', viewers' and listeners' actual use of the media, at both national and local level. We intend to use audience share to limit holdings in television, and newspaper circulation to limit the ability of powerful newspaper groups to buy into broadcasters. The radio points system (which measures potential audience) will remain as the method for limiting holdings in radio. Audience share relates directly to the principle of plurality. That makes it appropriate in this context. Revenue shares reflect the market power of a media enterprise, rather than its ability to influence opinion and engender debate—and market power is primarily controlled through competition legislation.

Currently, nobody may control more than two licences to provide Channel 3 and Channel 5 television, or more than 35 local radio licences. The Bill abolishes these rules and proposes instead limits of 15 per cent. share of the total television audience, and 15 per cent. of the total points in the radio points scheme. We propose, however, to retain a few additional controls, specifically aimed at preserving plurality and diversity. No one will be permitted to own more than one national radio licence. No one will be allowed to hold a licence to provide a national Channel 3 service (such as breakfast television) and the licence to provide Channel 5. And where, as in London, there is more than one regional Channel 3 service, they must be separately controlled. All of these represent unavoidably scarce and powerful sources of influence—nationally or regionally—which must not be aggregated even within the overall 15 per cent. limit.

Newspapers are not subject to overall market share limits. However, it is important that dominant newspaper groups do not also become dominant broadcasters. The Bill will therefore prevent those groups having 20 per cent. or more of national newspaper circulation from acquiring Channel 3 and Channel 5 licences or radio licences or vice versa. But this restriction does not apply to the emerging markets of cable, satellite and digital terrestrial broadcasting.

For the same reasons the Bill also seeks to prevent the emergence of local media monopolies. The existing rule that the same person may not control regional Channel 3 and local radio licences whose areas significantly overlap therefore remains. We shall also retain the restrictions preventing one company holding multiple radio licences in a particular area. Radio operators will still only be allowed to own one FM station and one AM station in areas which are substantially the same.

Local newspapers will be able to own the holders of regional Channel 3 licences only where they have less than 20 per cent. of local newspaper circulation in that region. They may not own a local radio licensee if they have 50 per cent. or more of local newspaper circulation in the area concerned, and, where they have 20 per cent. or more of the circulation, they may not own local radio licensees who account for more than 50 per cent. of the radio points for the area. Reciprocal restrictions will apply to the stakes that broadcasters may hold in local newspapers within their broadcasting area.

In determining the local newspaper market for the purpose of these controls, we shall include local freesheets but exclude national newspapers. Freesheets increasingly carry significant amounts of news and editorial. So they should be subject to the same restrictions as paid-for newspapers. They are part of the market in reporting news of local and regional significance, whereas national newspapers do not focus on reporting local issues. But if a national newspaper substantially differentiates its local or regional editions, the regulator will treat these as local papers, and they will be within the scope of these controls.

The Bill also proposes to allow joint ownership of cable, terrestrial and satellite television licences. However, since national newspaper groups have been able to establish significant holdings in cable and satellite, we propose to prevent those cable and satellite groups in which national newspapers with 20 per cent. or more of national circulation have an interest of more than 20 per cent. from controlling licences to provide Channels 3 and 5, or national and local radio. Again, the aim is to prevent joint control of dominant newspapers and dominant broadcasters.

Currently, local newspapers, local radio stations and regional Channel 3 services are prevented from owning cable franchises in their areas of operation. But since cable operators control a means of delivering programmes, not the programmes themselves, the Bill proposes to abolish these cross-ownership restrictions.

The Bill also revises the definition of "control" in the Broadcasting Act 1990. Our aim is to ensure that the legislation cannot be circumvented by arrangements which, while producing control in practice, do not technically breach the statutory definition. The revised definition allows the relevant regulator to conclude that control is exercised if it is reasonable, having regard to all the circumstances, to expect that a person will be able, by whatever means and whether directly or indirectly, to secure that the affairs of the body in question are conducted in accordance with his wishes.

These measures represent a substantial liberalisation. But we have also built a number of important safeguards into the Bill. First, alliances between newspapers and broadcasters will be subject to a public interest test. The Independent Television Commission and the Radio Authority will have the power to prevent newspapers acquiring broadcasting licences if they judge this to he against the public interest. There will be three criteria to assess this: promoting media plurality and diversity; maintaining a strong industry for the benefit of the country; and ensuring the proper operation of markets. The ITC and the Radio Authority will seek advice as necessary from the competition authorities.

A second important safeguard will ensure the regional nature of the Channel 3 network. The unique regional nature of ITV is a major strength. Channel 3 licences include commitments to both regional programming and regional programme production, which are closely monitored by the ITC. Most of the ITV companies regularly exceed their regional programming commitments and see that as in their commercial interests.

Nevertheless, some fear that consolidation within the ITV network and newspaper control of Channel 3 licences could mean more metropolitan domination. Clause 63 of the Bill therefore enables the commission to vary a Channel 3 licence following a change of control, to include new conditions to preserve the quality, range and regional character of the existing programming.

Clause 64 of the Bill changes the current funding arrangements for the Welsh Fourth Channel Authority. Under the current system S4C receives a grant from my department equivalent to 3.2 per cent. of all territorial television revenues from advertising sponsorship and subscription in the previous year.

The television advertising market fluctuates considerably. This is unsatisfactory both for S4C, which needs to make business plans for serval years ahead, and for Government in planning public expenditure. The new arrangements will be based on the payment to be made to S4C in January 1997 under the existing formula. That amount will then be increased from 1998 onwards in line with the RPI. The Bill also empowers the Secretary of State to alter S4C's funding to reflect transmission costs.

Clause 66 amends the formula for securing the income of Channel 4. It gives the Government powers to alter by order the distribution of any Channel 4 revenue above its guaranteed income, by adjusting the percentages allocated to the ITV companies, to Channel 4's reserve fund and to Channel 4's current expenditure.

The present arrangements are not a subsidy to the ITV companies, but a form of insurance premium as a guarantee of Channel 4's long term future. Channel 4 has been tremendously successful in the past two years. But with Channel 5 and new digital services in prospect we still see the need for a safety mechanism for Channel 4 to secure its continuing success within its existing remit. Nevertheless, we want to be able to allow Channel 4 to retain more of its own revenues to invest in programmes. We propose to specify the relevant percentages nearer the time, taking account of the prevailing circumstances of the broadcasting market.

The BBC's new draft Charter and draft Agreement, discussed by your Lordships last week, provide for the development of the BBC's commercial activities. But they also ensure that the commercial operations are funded separately from the public services supported by the licence fee. Accordingly, the Bill empowers the ITC and the Radio Authority to license and regulate commercial services which are owned or partly owned by a company in which the BBC has a stake.

We announced on 27th November that the BBC's transmission services would be privatised and that the BBC would handle the sale. The Bill includes provisions designed to assist the BBC to transfer in the sale those rights within the BBC's transmission services which currently either cannot be transferred at all, or cannot be transferred without the consent of a third party. These provisions are similar to those at Schedule 9 of the Broadcasting Act 1990 concerning the former IBA's transmission network.

Part IV of the Bill merges the existing Broadcasting Complaints Commission and Broadcasting Standards Council—another change foreshadowed in the 1994 White Paper.

We need effective mechanisms to benchmark standards, for canvassing viewers', listeners' and the public views, and to investigate complaints. The proposed new Broadcasting Standards Commission will build on the work of the two existing bodies in fulfilling these functions. It will be a single, recognisable, independent body dedicated to maintaining standards in broadcasting.

The new body's powers and functions differ slightly from those of its predecessor. In addition to the Code of Practice previously produced in the areas of taste and decency, the commission will now he invited to produce privacy and fairness guidelines. It will also be required to publish, in its regular reports, summaries of every fairness or standards complaint, whether they have been upheld in whole or in part, and details of all steps taken by broadcasters as a result of findings made against them. Such action would include both the direct response to the commission's conclusions and any internal measures taken. Broadcasters will thus need to demonstrate to the public that they have given the complaint due and proper attention within any timescale set by the commission.

One further proposal, which the Government intend to introduce as an amendment to the Bill, is to simplify the procedure for re-advertising independent local radio licences. The 1990 Act generally requires all local radio licences to be re-advertised at the end of their term. The Government propose to enable the Radio Authority to invite expressions of interest in an expiring independent local radio licence. If only the existing licensee is interested, then provided the authority is satisfied that the other criteria in the Act would continue to be met, the licence could simply be renewed. But if others are interested, and deposit a bond as a back-up, then it will he re-advertised in the usual way. This should reduce uncertainty, concern and expense, and allow radio companies to concentrate on making programmes, without damaging the chances for prospective newcomers.

Finally, your Lordships will wish to know that we shall be bringing forward government amendments on a number of technical points relating to the 1990 Act, following representations we have received from the regulators.

I began my remarks by noting that this Bill deals with an enormously complex subject, to which this speech is just an introduction. I have had to compress verbally what I wanted to say and I hope I have "multiplexed" my message clearly. I look forward to listening to 'your Lordships speaking with the plurality of voices we in government are keen to encourage. But, as I also said, I hope our debate will proceed on a largely non-partisan basis and we shall always be willing to help explain points informally if asked. The issues involved are very important for the future of our society, of our economy and our democracy. We have already shown we shall respond to well reasoned suggestions for improving our proposals, and I assure your Lordships that I shall pursue our debates in this House in a receptive but critical frame of mind.

The Bill is complicated, but it merits careful and constructive examination, not least because it deals with revolutionary technological developments at the cutting edge of the broadcasting and multi-media changes of the late 1990s, which are so important to both our citizens and our industry. I commend this Bill to your Lordships.

Moved, That the Bill be now read a second time.—(Lord Inglewood.)

3.49 p.m.

Lord Donoughue

My Lords, I thank the Minister for presenting us with such a comprehensive Bill which seeks to shape the structure and to regulate the behaviour of a wide range of diverse media activities. That required some courage and ingenuity on the part of the Government since the future of broadcasting is not easy to forecast. We on this side will try to be as positive and constructive as possible, not least because that is the spirit which the Minister usually brings to the House. I must add that I am grateful that I do not have to repeat all the technological explanations which the Minister so courageously went through.

Before getting down to the nitty-gritty of the Bill, I must first say how much I am looking forward to the maiden speech of the noble Baroness, Lady Smith of Gilmorehill. Her introduction to this House gave me personally as much pleasure as any in my decade here. She revives many memories, happy and sad, and her interest in the arts and media field is well established. She comes from a marvellous Scottish stable and we shall all enjoy her contributions today and in the future.

Noble Lords will be relieved to hear that I do not propose today to trudge through this highly complex Bill in great technical detail. That lies ahead in Committee. However, several issues of great principle are wrapped up in its technical jargon. We wish to highlight them now and shall later propose amendments relating to them. I suspect that some of our main concerns will be shared across the parties.

There is much in the Bill that we welcome, as it amends or fills the gaps in the tattered 1990 Act. It also grasps the digital nettle which promises several technical benefits to broadcasters and to viewers. We especially welcome the guaranteed access for existing terrestrial broadcasters. However, it is not all that simple or rosy. Technology is not the sole or the prime priority of broadcasting. Broadcasting is above all about programmes for the public to watch, and we shall judge the Bill by how it affects that.

Perhaps I may now summarise what seem to me to he the broad general consequences of the Bill for broadcasting. I would say that they will be to expand the commercialisation of British broadcasting; to multiply the broadcasting channels available while at the same time increasing the concentration of power controlling them; that many new channels will be targeted pay-per-view, thus fragmenting the national audience; and that, as well as a reduction in universal access, there will inevitably be reduced access for the less prosperous groups and localities in our society. Therefore, beneath an appearance of increased choice there will be a reality of reduced access to broadcasting for some.

Not all of that will give us great pleasure. Certainly the fragmentation of the audience, with some groups excluded, has implications for the cohesion and common knowledge of our democratic society. The share of public service broadcasting in that future landscape is apparently bound to be reduced. We regret that and will look to resist it while of course accepting that much of the technological tide is irresistible. However, what we do not always accept is the underlying philosophy of the Bill that the commercial tide is not only irresistible but also to be encouraged in every form described in the Bill.

We certainly welcome the fact that the BBC has been guaranteed a whole digital multiplex. I am not wholly clear how it will finance that risky investment. Last week we discussed the BBC's new Charter. The BBC's basic dilemma is that it must dramatically increase its commercial activities and revenues, including by pay-per-view which will be at the heart of digital broadcasting, yet that is bound to call into question its right to the licence fee which is essential to its public service broadcasting functions. I am not sure how it gets out of that vicious circle. Certainly, its share of British broadcasting will seriously decline, especially if it is excluded from televising major sporting events.

The principle of universality of access originally—long ago—provided free-to-air to all by the BBC is very important to us. That cannot now mean in practice that every single person can watch every programme on every channel regardless of ability to pay, but it does mean that there should be as far as possible access without technical hindrance by broadcasters to frequencies and by viewers to programmes—and viewers should include those with impaired hearing or impaired sight. That means that all broadcasters deemed fit and proper should have fair and equal access to a digital multiplex and to the decoders. It also means that all viewers should have fair access to the decoding technology which releases broadcasts to their sets. To us, that means satellite and cable as well as terrestrial.

The set-top boxes are potentially, but not inevitably, a natural monopoly. Most consumers will want or be able to afford only one. If that one is controlled by a programme service provider, and technologically can exclude other competing services, it is a vehicle of monopolistic practice. That critical issue is not properly addressed in the Bill. We do not accept that the existing telecommunications legislation is sufficient. There should be a strongly enforceable statutory requirement for common, fair and non-discriminatory access to. any encryption or subscription management system. If the Government do not provide that here—I am bound to say that last night's press statement on licensing from the Department of Trade and Industry, which, unhelpfully, was not distributed to us, is probably not good enough—we shall seek to protect the public interest by tabling amendments in Committee against potential monopoly abuse.

We are also concerned that there is no criterion of quality in the process of selecting multiplex operators. The miserable 1990 Act at least flirted with a quality threshold, but here there is no mention of programme quality among the several criteria for issuing multiplex licences. Do the Government not care about quality in our broadcasting? I am sure that that is not true. Are commercial expansion and profit their prime concerns? I hope that that is not true. We shall seek to reintroduce the quality criterion and I suspect that the ITC, as licence issuer, will welcome that.

The provisions on cross-media ownership covered by Clause 62 and Schedule 2 are somewhat changed since the White Paper and will attract much attention. They often take us, as they took the Minister, nearly into the realms of higher mathematics when assessing permitted ceilings of control and dominance. We support much of that. We accept that some loosening is required as the different forms of media—print, picture and sound—converge, but I must warn the Minister that I do not accept all the free market arguments currently floating around. Broadcasting is not like any other commodity, subject only to market forces. I agree with all that the Minister said on that. Because of its immense political and cultural significance, any excessive concentration of media power is of political as well as economic concern. That is why we welcome the safeguard of public interest to be applied to ownership and control issues.

We are, however, still concerned to preserve the precious regional identity and independence in British broadcasting. It seems likely that the proposed changes that will follow from the Bill could result in us having just two dominant ITV companies—I guess that one will be based on Carlton and another on Granada—plus perhaps a confederation on the Celtic fringe. We should try to establish minimum levels of regional programmes, staff and facilities. We must be very careful to ensure that local near-monopolies do not develop among our regional TV, radio, newspapers and cable. We will carefully scrutinise Clause 63 onwards and the relevant schedules accordingly.

It is worth pointing out that radio, which is often forgotten, is an important part of the Bill. British radio is of high quality and is often helpfully locally focused. We welcome the decision to roll forward the licences of existing radio companies, such as the very good Classic FM, provided that they take up the digital audio slots.

It puzzles me a little that independent local radio does not appear to have the same rights of access to the multiplexes as those provided for national radio and for local BBC and we will want to look closely at that. It also seems that radio is more constrained than TV in its scope for expansion. It is also more vulnerable to predators from other sectors.

I am concerned too that low population areas may not be able to support a fully subscribed local multiplex. We must consider how we ensure that they get off the ground viably. That is part of the continuing thread of my concern about the Bill. I am concerned about those who will lose out in the future media world—the outer areas of the United Kingdom which may not be adequately covered by digital and the less prosperous groups in society (the poor, the old and the unemployed) who will not be able to afford access to this expensive technology, either to the receiving equipment or to the pay-per-view services.

That raises the central question that is not answered in the Bill. What will be the date for switching from analogue to digital? When that happens will the marginal groups and the localities be deprived of most of the best of broadcasting if digital pay-per-view is beyond their reach or beyond their pockets? That issue must be faced and, it is to be hoped, resolved.

While talking of groups which lose out from the Bill, I must point out that its cross-media ownership clauses specifically discriminate against one newspaper group through the 20 per cent. ceiling on the national newspaper market. That excludes the Mirror Group from joining in terrestrial TV. I assume that that is not because it is the largest newspaper supporter of the Labour Party. I have heard argued that that is not discrimination because the 20 per cent. ceiling also excludes News International. But that is disingenuous and meaningless in commercial reality since the latter group has its own large share of the television market and, I presume, would not wish to enter the crowded and less profitable terrestrial market. It would seem to me fair to correct that particular discrimination if possible. It strikes me, without any commitment, that an amended ceiling at, say, 25 per cent. would do that and then the continuing public interest test could still be applied.

A number of other particular issues warrant the attention of the House. The Channel 4 funding question, which is covered in Clause 66, has aroused much heat and a great volume of briefing paper. The compromise formula proposed by the ITC—that is, moving to zero payments but retaining the mechanism after 1997—has practical attractions, especially with the uncertainties of Channel 5 ahead. No one handling the 1990 Act ever imagined that it would work out so unfairly to Channel 4, with so many millions of pounds moving out of Channel 4 programmes and into the pockets of ITV shareholders. Had that been foreseen the Bill would never have passed. We shall look at it carefully to see how to get a fairer balance. What is certain is that we must have clarity after 1997 and must not have an annual battle over the amount of cross-funding. It is not clear that we can achieve that with the present mechanism.

While considering television funding, we shall want to look at the whole issue of taxation and levies on television. It is not currently a level playing field. We shall consider ways of ensuring fair taxation of our broadcasters. We also want to ensure fair access to programming by British and European programme makers, whether by minimum programme origins or in terms of investment or percentage of turnover, and we shall be influenced by the developing European position on that.

A large section of the Bill treats the accountability for standards in programme content and the merging of the bodies that monitor that into the new Broadcasting Standards Commission. We broadly welcome that rationalisation, although I personally would like to see more provision for greater involvement by the consumers of broadcasting. They should be involved not just in after-the-event complaints about taste and so forth but in influencing what the consumers want from broadcasting; for example, on the televising of sports or on the date for switching off analogue.

The privatisation of the BBC transmitters will also attract our close attention. I can say now that our reaction will depend on whether the Government can clarify exactly how the proceeds are to be distributed to the BBC and also on the precise arrangements to regulate the transmitters to avoid predatory pricing and discrimination when they are privatised.

I began by stating our prime concern with the fundamental principle of common and fair access to broadcasting which is not satisfactorily guaranteed or indeed even covered in the Bill. My final specific and probably most important point also relates to a further aspect of common access; that is, the televising of sports. That is also ignored by the Bill.

We have recently seen dramatic developments in this area, with satellite subscription channels buying up virtual monopoly rights to televise whole areas of British sport. As examples I can mention the following: in rugby the super league and the championships; in Rugby Union the club, county and perhaps soon the five nations; premier league soccer; in tennis the Davis Cup; in cricket the overseas tests, home one-clay internationals, the county championship and Sunday league; in golf the Ryder Cup, the US Open and the US and European PGA; in boxing many managers of leading boxers; basket ball; ice hockey; the snooker opens; and the Olympics around the corner.

I am not concerned to oppose the particular broadcaster involved. In the future it may well be another. We are concerned here with the principle. The implications of this are profoundly worrying and I especially look forward to the speech of my noble friend Lord Howell, who has unequalled experience and authority in this area. This development means that the majority of the British people will not have access to most great British sporting events where in the past they have had national and free access. The poor, the old and the unemployed will certainly not be able to afford much subscription or pay-per-view. The BBC and ITV will not be able to afford to buy the rights to broadcast them; and without sport their chance of survival in the highly competitive media world described in the Bill are worryingly thin.

Anyone who cares that the nation should have access to great sporting events and that the BBC and ITV should be enabled to survive must care about this issue of principle. The Prime Minister certainly cares and has said so publicly. I hope that the Minister noted that. The all-party Select Committee concluded recently that major sporting events must be preserved for universal access. Mr. David Mellor, who when he was a Minister steered through the 1990 Act, said last week that he had made a mistake and that protection must now be strengthened. So far, the Government have said that this is a matter just for the market and that the sporting bodies must be allowed to sell sport at the highest price to any bidder, however minority a broadcaster that bidder may be. We do not wholly accept that.

Our understanding is that sport should receive as much money as is reasonable, given the other claims. The 1990 Act tried to provide some guarantees hut it ignored the one real threat; namely, subscription satellite. We shall look for ways, through amendment, in which to reinforce the intentions of the 1990 Act and to review the protected list.

I ask all sides of the House to join us in finding a solution which is fair to the broadcasters, to the public and to the sporting bodies. It will he sad if that balanced and moderate approach is opposed.

Finally, I should like to put to the House what I see as the central dilemma at the heart of this Bill; namely, how do we make the digital revolution happen? When one listens to the cheerleaders of the free market, one can get carried away into believing that we shall automatically have this world of a limitless choice of wonderful programmes. I have said that in fact the choice will not be for all.

I doubt also the automaticity. The digital revolution, costing £8 billion to launch, may prove very cautious and patchy. At present there are no viewers, no broadcasters and no equipment. Viewers will not pay £500 to £600 for new receiving equipment until there is a range of high quality digital programmes. Programme makers, including the BBC, will not commit themselves expensively until there are more guaranteed viewers and revenues. Multiplex operators can do little without broadcasters, and equipment makers will not invest heavily without a big market. It would be like one of those bicycle races where everybody goes as slowly as possible compatible with staying upright and waits for somebody to take the lead in order to ride in the slipstream. Only one broadcaster, Sky Satellite, would stand outside that paralysed circle. Through a mixture of entrepreneurial foresight, which I admire, and privileged treatment by this Government, it will sit with its digital technology in place, with more channels to offer, with its experience of pay TV and free from the taxes and levies which burden its terrestrial competitors.

Terrestrial digital television will be launched successfully and will survive on a national scale only if the initial investment can he encouraged and the programmes have the necessary quality and variety, including the sports coverage which its viewers require.

The question for broadcasters and the Government is how that can be achieved. I suggest that it can be achieved only by encouraging the rapid national take-up of digital receivers so that broadcasters, have an audience and the equipment manufacturers have a mass market. The switch-over day can then be guaranteed. The Government may need to inspire that since market forces may not. I look forward to hearing any of the Minister's views on how to ensure that the digital revolution takes place. It will certainly need vision to bring about the best kind of British broadcasting future.

4.14 p.m.

Lord Thomson of Monifieth

My Lords, I join immediately with the noble Lord, Lord Donoughue, in saying how much I look forward to the maiden speech of the noble Baroness, Lady Smith of Gilmorehill. I also join the noble Lord in thanking the Minister for explaining so clearly this complex and technical Bill. He even managed to increase my understanding of the complexities of multiplex digital broadcasting.

As has been said, because of the character of the Bill and because it has so many different parts, even though they are interlocking parts, it is essentially a Committee Bill. It is likely to have a rather long Committee stage. Therefore, on Second Reading, I shall concentrate on what seem to us on these Benches to be some of the main issues in the Bill and on some issues which are not in the Bill but should be. I welcome the Minister's readiness to consider improvements to the Bill and I hope that he will listen to ideas with a sympathetic ear.

This is a very important Bill. Together with the new BBC Charter and Agreement, which we debated last week, it is probably the last major broadcasting legislation of this century; it will shape British broadcasting in the early years of the 21st century. In the face of vast technological change, the development of digital transmission, and the fact that multi-channel television is now with us and that the old frontiers between print and electronic media are disappearing, the challenge for Parliament and the Government is to try to define what is the public interest in a very difficult situation and how it can best be preserved.

Alongside traditional players—the BBC and commercial broadcasters—there are now, with digital broadcasting still to come, new players in satellite and cable television. Among them is the dominating presence of BSkyB. And behind BSkyB is Rupert Murdoch and his News Corporation. The Bill surely presents the opportunity for the Government and the Labour Party in Opposition to summon up their courage regarding the future role of Murdoch's interests in the British media scene.

By any standards, Rupert Murdoch is in my judgment a brilliant and aggressive media innovator and a risk taker on a breathtaking scale. He has made the most of the government-created loophole, the so-called non-domestic satellite. Now that BSkyB has reaped the rewards of the risks he has taken, surely the time has come for it to be treated fairly but on the same terms as its competitors.

Sky's successful establishment of, for example, the 24-hour news service is a major advance in the public interest. The creation of its sports channel—we shall come in a few moments to some of the implications—providing single-sport coverage over long periods of time, again, is in the public interest because it is something beyond the capacity of other terrestrial broadcasters. It enhances choice.

Now that newspaper groups are to be allowed to hid for ITV franchises and vice versa, I believe that Sky has a case in that area. I put the matter more generally than the noble Lord, Lord Donoughue, who expressed it in terms of the particular interest of the Mirror Group. But there is an objection to the 20 per cent. rule in that sphere. In effect, it is a practical ban on two newspaper groups—the News International group and the Daily Mirror group. For reasons of general equity, I cannot see why, for example, the Daily Mirror should be banned from going into the TV ownership business because it is a few ownership percentage points above the Daily Mail or the Daily Express.

I agree entirely with the Minister that dominant newspaper groups should not he allowed to become dominant broadcasters. But would it not be better to treat all the press tycoons equally and then apply a rigorous public interest test via the Office of Fair Trading and the Monopolies and Mergers Commission?

If my plea for fairness between newspaper groups is heeded, should there not be fairness between commercial broadcasting groups? ITV pays nearly £400 million per year to the Treasury and under the ITC licences is obliged to spend large sums of money on original programmes. Sky is licensed by the ITC, as are all the other organisations, but pays only £750,000 for its licence. It pays nothing to the Treasury and so far has a very poor record of expenditure on original programming despite revenues which now approach £800 million. The Government's excuse is that ITV consists of domestic broadcasters using domestic frequencies while Sky is that rare breed—the non-domestic broadcaster using satellite frequencies. That is absolute humbug. Sky is a domestic broadcaster which produces television programmes for domestic audiences in competition with ITV. I fully concede and welcome that it provides useful British jobs in both London and Scotland. Its satellite frequencies are international but they are allocated under an agreement to which Her Majesty's Government are a party. In our judgment Sky should be treated as the domestic broadcaster it is. We should look at the Bill to see what opportunities exist to press that proposition.

The noble Lord, Lord Donoughue, raised the question of conditional access and the technology of the smart card for subscribers to satellite and cable operations. At present this is dominated by a Murdoch company called Videocrypt. On any principle of competition law it seems wrong that there is no public control where a programme provider is also the gatekeeper and can control access to other programme providers who compete with him. I echo the words of the noble Lord, Lord Donoughue. Sky argues that others could have taken the risks it did and could still set up rival systems. However, what matters is the interests of ordinary viewers to be able to buy a single black box.

I am genuinely puzzled by the government position. The Minister mentioned some announcement by the DTI yesterday. Like the noble Lord, Lord Donoughue, I had no notice of that but I read carefully the questions and answers provided by the Secretary of State when the Bill was launched. I find the information curiously evasive. It talks about doing something sometime in the future in relation to digital television under a European Union directive but promises nothing on present analogue broadcasting on satellite and cable. Yet the Secretary of State is on record as saying: I recognise we must take steps to prevent unfair competition in this field … The Government is committed to a vigorous response to proven anti-competitive behaviour in this field as in others". What is the Government's response to those stirring words? The Secretary of State's response to the question of whether Murdoch's dominance could be challenged was that the market would decide. The public interest now requires that in the proposed legislation there should be a provision to force the Murdoch interests to license Videocrypt to other service providers for a regulated fee. This is a serious broadcasting issue rather than a DTI issue, and for my part I believe that the right body to establish that fee is the ITC.

My final point on Sky relates to sporting rights. Mr. Murdoch's money has transferred sporting events to exclusive broadcasting on pay television, depriving millions of viewers of what they had been accustomed to see free on public service channels. Sky's latest bid is to buy next century's Olympic Games. As was made clear by the noble Lord, Lord Donoughue, this is not an easy issue. The legislation offers an opportunity to strike a new balance between, on the one hand, the very proper interests of Sky, which I concede freely has added to public choice of programmes in the sporting field, together with the interests of sports providers, who did not have a fair deal under the old duopoly of the BBC and ITV, and, on the other hand, the principle of universal reception of major sporting events in this country. There is need to draw up a fresh list of these events and to legislate to ensure that such events cannot he exclusively transferred to subscription channels. In this regard, I refer not only to pay-per-view channels, as is the present law, but also to monthly subscription channels. I do not believe that the considerations here are mutually exclusive. If one has regard to sporting occasions that continue over many days, as some do, there is a lot to be said for a subscription channel that covers the whole activity from beginning to end, provided that the major events within those few days are available to everyone on the basis of universal reception.

I turn to the Bill's changes relating to the ownership of television companies. The vitally important issue here is the preservation of the regional character of ITV in the face of greater concentration of ownership. The ITV system provides twice as much regional programming as the BBC, and all the figures show that it is among the most widely appreciated programming in terms of the audience. Clause 63 is crucial in this respect. I welcome its inclusion in the Bill. However, we shall seek to strengthen it with amendments to ensure that regional programmes continue to be made in the region by programme makers who live in the region and know all about it, not simply by people who fly in from outside. The Minister will appreciate that many of the smaller regional companies, who are potential targets of takeover bids, are proud of their local programming and often do a good deal more than the minimum required by the licence. We shall also want to look at amendments to ensure that on takeover the new owner is required to maintain the enhanced level of programming which viewers have been enjoying from the incumbent rather than simply the original minimum under the terms of the licence.

Clause 66 is concerned with the new formula for Channel 4. I do not want to go over arguments that the noble Lord, Lord Donoughue, has already mentioned. It was never the intention of Parliament in erecting an insurance policy—as the Minister termed it—for the special remit of Channel 4 that there should be massive subsidies from the minority channel to the ITV companies who provide the mass appeal channels. It is right that once the present timescale is completed at the end of 1997 there should be a new arrangement. I say to the Minister that our present disposition is that at that stage the best solution will be to abolish the funding formula altogether. I believe that Channel 4 was unreasonable some time ago in seeking an immediate change in this matter. The point at which the Bill provides a moment for review is the right time to do it. For my part, I believe that it is better to go for a simple abolition at that stage rather than the Bill's compromise, which is a recipe for continuing bad blood in the Independent Television system.

I leave the complications of the digital multiplexes to the Committee stage, except for two points. One relates to the need to insert a quality criterion and the other relates specifically to the Welsh fourth channel. Unlike other existing broadcasters, the Welsh fourth channel feels that the arrangements, which will prevent it having half a multiplex, mean that in Wales it will not be allowed to develop the possibilities of digital broadcasting, high-definition television and wide screen that will be available to fellow citizens in other parts of the United Kingdom. We wish to have an assurance from the Minister that when sufficient band width eventually becomes available ways may be found to redress that inequality.

The Minister also mentioned the new funding arrangements. There is great concern in S4C about the implications of those arrangements. It believes that, given the extra costs of digital broadcasting, it may face an extra £27 million in the three years from 1998. I am sure that my noble friend Lord Geraint will develop those matters more fully, and with greater authority, than I can. I hope that the Minister will be able to give a reassuring response to those concerns.

There are many other aspects of the Bill. There is, for example, the question of standards which I do not wish to go into beyond referring to the Broadcasting Standards Council. I was an original critic, in days gone by, of the establishment of the council, but under the experienced direction of Colin Shaw, and now under the chairmanship of Lady Howe, it has been performing a constructive, serious and sensible role in terms of sustaining the standards of broadcasting in this country. I also echo what has been said about radio. Radio is continually overshadowed by television issues—it has been overshadowed in my speech today—but I am very much aware that radio is an important medium. For millions of people it is sometimes more important than television. There are various matters in relation to radio that we shall want to apply our minds to in Committee.

I come back to where I started. The Bill underlines that we are no longer in a cosy world of national broadcasters cosily regulating. There is now a global world—indeed a global marketplace—of information technology, of which broadcasting is just a part. The British broadcasting industry is only a small part of this global scene, although from Britain's point of view it is an important part. The broadcasting industry in Britain employs 42,000 people and it contributes more than £3.5 billion to the British economy. Britain is the biggest exporter of broadcast programmes after the United States although I think it is a good long way behind the United States. That is all of great significance. Of even greater significance, however, is the fact that, as the Minister said, broadcasting—indeed, the media industry—is an industry which, in his words, is unlike any other. It is much more than an industry. It accounts for the way people spend 40 per cent. of their leisure time. According to an astonishing and terrifying statistic, in a third of our homes there are more than three televisions. Broadcasting is the biggest single factor as regards making an impact on the climate of opinion in this country and on our national culture. That is the justification for this Bill finding forms of regulation that make the new telecommunications technology our servant and not our master.

4.32 p.m.

The Lord Bishop of Southwark

My Lords, the Bill that is before us seems at first sight a very technical Bill, dealing as it does in a large part with regulating the development of digital broadcasting. The detail of such a system is something that is certainly beyond my knowledge, capabilities or expertise, but the implications are clear—there will be more channels available and media ownership will be concentrated in broader based companies.

Friends who travel more extensively than myself tell me of the size of the New York TV listings guide. They say that it is more like a telephone directory. There is a vast array of channels and enormous variations in the standards of programming that can be seen. In our own country with the advent of satellite and cable we are beginning to experience something of this. There is more choice and there is more specialisation available for those able and willing to pay. The developments that this Bill prepares us for will not only extend this trend but will also provide much greater potential for the expansion of services that are available.

Since the Church fell out with Galileo, Christians have often been seen as people who want to stand in the way of progress. I am not of that mind and neither is the Church. I welcome this Bill and the developments that will follow, but that does not mean that I do not have concerns. I was particularly interested to read Part IV of the Bill which effects the merger of the Broadcasting Complaints Commission and the Broadcasting Standards Council. One statutory new body will be established in their place—the Broadcasting Standards Commission. On the basis alone that this reduces the number of quangos that exist I warmly welcome that recommendation. It seems to me that this new body, the BSC, by combining their roles will be better able to perform the functions of its predecessors and will have more teeth to enable it to do so. It has to be said, however, that the detail of the working of the new body will require careful consideration. I believe that there is a good deal of work to he done in this respect.

With the growth in the number of broadcasters and the number of programmes broadcast there will he a need for greater vigilance if standards of taste and decency are to be maintained and if programmes are to deal fairly with individuals and not misrepresent the truth. There is an ongoing debate, to which some of your Lordships may well have contributed, that centres on whether broadcasters should set standards of taste and decency or whether they must reflect the standards current in society; whether television and radio are merely mirrors on society, or whether they are agents and catalysts for change.

Integral to this debate is the whole question of whose standards are the ones that count. The values that I hold dear and that shape my life would certainly not be held by some. The values that many espouse nowadays I find difficult to accept. Yet I believe that even in such a pluralist society as our own there is still a set of core values to which the majority would subscribe. It is this set of values, among them respect for human life; respect for personal freedom; and respect for the individual, that I believe it is the duty of broadcasters to uphold. These values are worked out in the response we make to violence, sexual exploitation, blasphemy and a general inhumanity and lack of decency that we sometimes see on the television screen in particular. Even if we pay to see a channel of our choice in the privacy of our sitting room, should we be allowed to watch something that degrades another person or offends the values of the majority in our society? I believe that we should not, because those who are most easily influenced by what they see or hear might be inclined to turn their fantasy into our reality and so continue what is seen by many as the downward spiral in moral values.

This may be an unpopular thing to say and something that would be condemned by those who argue for civil liberties. While personal freedom is fundamental to the Christian understanding of the individual, yet higher on the agenda is responsibility for one another. When the liberty of one person to commission, broadcast or view something threatens the liberty or the integrity of another, I believe that we have a duty to protect the freedom of the latter before the liberty of the former.

I believe that in the age of digital broadcasting and of broader and more concentrated media ownership, the BSC will have a tremendously difficult job to do and will carry great responsibility for monitoring on our behalf what is happening on our television screens and on our radios. I believe that the provisions made for the Broadcasting Standards Commission in this Bill will provide the right sort of body to shoulder this important task on behalf of the nation. I would simply ask that those who lead it do so with courage and with a strong sense of promoting the very best of values, and not of being pulled down to the level of the lowest common denominator. Only in this way can we hope to maintain those core values that continue to give us identity, witness to our humanity, and provide something of the social cohesion that is so vital to the health and wholeness of our nation.

4.39 p.m.

Lord Blake

My Lords, I welcome the Bill and the admirable speech of my noble friend who introduced it. It is a complicated Bill and there will no doubt be a great deal of discussion of it in Committee.

It would be unwise for any one speaker at this stage to try to cover even half of the provisions of the Bill. Therefore, I shall concentrate on the particular provision which happens to interest me. In doing so I should declare an interest. I was a non-executive director of Channel 4 many years ago. At that time, as I believe is still the case, there was a system of rotating directorships under which one served for three years and was then chucked out. Since then I have had no financial connection with Channel 4. Even then the finances were not very lavish.

I agree entirely with what the noble Lords, Lord Donoughue and Lord Thomson of Monifieth, said about Channel 4. The formula that was produced to finance Channel 4, however well meant it was at the time—and I am sure there was a genuine effort to produce a safety net for Channel 4, whose fortunes at one time perhaps looked doubtful—is out of date and irrelevant. There is no danger of Channel 4 failing to reach the benchmark of 14 per cent. of total terrestrial advertising revenue. Most media analysts are equally convinced that that is not likely to happen. Therefore, the case for continuing the arrangement is nil.

The Government have recognised that in Clause 66 of the Bill. It is gobbledegook, but if one can unravel its meaning it provides that the Secretary of State will have the power to diminish the take of the independent television companies from 50 per cent. downwards. (There is an argument about whether it should be 50 per cent. or half. I always thought that they were the same, but apparently it is an important matter to substitute "50 per cent." for "hall") That is something, and presumably it will give the Secretary of State the power to reduce the 50 per cent. figure to nil.

On the other hand, as the noble Lord, Lord Thomson, said, that is a formula for trouble. It is a formula for endless bickering and dispute between the ITV companies and Channel 4, year after year, about exactly what the amount should be. Therefore, I strongly agree—and I know that Channel 4 would certainly wish—that the arrangement should be abolished. That formula should not continue and Channel 4 should stand on its own. There is something ludicrous about a public service broadcasting organisation subsidising, quite lavishly, private broadcasting organisations, and, for example, helping a particular private broadcasting organisation to take over a chain of hotels. Surely that cannot be what Parliament or the Government intended. The whole situation is ludicrous.

I hope that my noble friend on the Front Bench will at least consider the possibility of modifying the Bill by removing those clauses altogether and leaving it to Channel 4 to stand on its own and do as best it can without subsidising the independent television companies.

4.44 p.m.

Baroness Smith of Gilmorehill

My Lords, in addressing your Lordships' House for the first time, perhaps I may begin by saying how much I appreciate the warm welcome I have been given by noble Lords on all sides of the House. Members of the House have been particularly kind and helpful to me as a newcomer, and that has made my presence here much easier.

I recognise that my presence in this House is to a large extent due to my role in supporting my late husband throughout his political life. 1 hope, therefore, that I may be forgiven for making one of his cardinal principles my starting point in addressing the issues contained in the Broadcasting Bill.

John set great store by the principle of public service. It is one of the best traditions in British public life and one which is much admired in other countries. It is so ingrained in the public's expectations of the way their leaders should behave that lapses from it cause justifiable outrage and disappointment at any fall in public standards.

The public service tradition is not the monopoly of any one political party but has inspired those of all political beliefs to put something back into our country, from which they feel they have benefited so much.

Public service broadcasting is one of those traditions. It should not be regarded as the exclusive preserve of the BBC. Indeed, I believe that the real success of the public service tradition in the UK has been that it has permeated both the BBC and the independent systems. The distinction between them is therefore primarily one of sources of funding. Partly for that reason, I was very happy to accept an invitation from Scottish Television to become a non-executive director, which is an interest that I now declare.

One of the key ingredients in public service broadcasting tends to be taken for granted. Universality of provision has ensured that television and radio services are available to all parts of the United Kingdom, irrespective of the costs involved to the transmitting authorities. That surely has been a force for cohesion in our society, providing the entire nation with a common corpus of knowledge, and perhaps even attitudes, which must be a prerequisite for any form of national debate let alone consensus. But it is important that that universality of provision also applies to some elements of programme content. Coverage of key national sporting events must not be restricted on grounds of geography or ability to subscribe to an additional service. Otherwise the alienation felt by some sections of the population unable to enjoy such events, or to participate in the discussion of them afterwards, would be a dangerously divisive influence on society.

That universality of provision runs the risk of being eroded. While it is right to consider that the current core services should be supplemented by others whose availability is restricted on the basis of geography or income, anything which diminishes the central role of the current public service broadcasting authorities should be resisted.

There is a danger, which must be guarded against, that the new services, while not in themselves as popular or as universally receivable, might, however, by fragmenting the audience or outbidding for coverage of key national events, reduce the capacity of public service broadcasting organisations to continue to serve the public and to ensure that coverage of national sporting events is not restricted to a minority.

The reputation of Britain's broadcasters and programme makers has been built on the quality of their programming—and that depends ultimately on the quality of the workforce. The BBC has long been the wellspring that has supplied the whole of the industry with much of its creative and technical talent. It has therefore been the BBC's standards of training and production which have become the benchmark standards for the whole industry and have helped to guarantee the vitality of a system that has served us well and is still admired throughout the world. We neglect this at our peril.

The Bill has two main themes, the first of which concerns the introduction of digital technology which could facilitate the introduction of many more television and radio services, while the other proposals on media ownership might be thought to make greater concentration of ownership more likely. Both, I believe, should be judged by the criterion of what is best for the listener and viewer.

For we must resist the technological imperative whereby invention has become the mother of necessity. Technology has dramatically increased the options open to broadcasters. Better communications have made the news agenda of both radio and television truly that of the global village. Technology increases the range of options open to us but it does not, and must not, determine how they should be used. Decisions on the number of services must be based not on technical considerations but on listener demand and the availability of resources, both human and financial, to provide the programming they wish.

Few people would want to admit publicly that as human beings we are powerless to control the technology we have created. Yet it has a power to freeze our critical faculties and produce a sense of inevitability about the nature and direction of change which comes pretty close to inducing an abdication of responsibility.

On ownership, I believe that there may be a stronger case for permitting a relaxation of ownership restrictions within television and radio rather than making them more vulnerable to bids from newspaper groups, which, whatever their other qualities, come from a different tradition.

In conclusion, I should like to suggest that there is perhaps a danger in looking at one or other aspect of broadcasting in isolation. Since the Annan Committee was set up more than 20 years ago, no one has looked at broadcasting in the round, yet surely the financing of the BBC, the scope of the services it will provide, the use to which additional spectrum is put by the independent sector, the regulation of satellite or cable TV, the possibilities of digital broadcasting, and cross-media ownership rules, cannot be looked at in isolation. If those issues are examined separately, there is a danger that conclusions will be reached without adequate attention being paid to the knock-on effect on other aspects of broadcasting. I am aware that technology seems to move the goalposts all the time and it is never possible to find the ideal time to deal with the various complex issues facing broadcasting at the moment. But, if the time is never right, the task nonetheless needs to be attempted, and now seems to be the most appropriate moment for us to ask what sort of broadcasting we want in the future, and what steps we can take to ensure that we have it.

Broadcasting is truly at the crossroads, and decisions taken now will irretrievably determine its future pattern. Broadcasting is too important to leave its future to chance—or even to the market place.

4.53 p.m.

Lord Chalfont

My Lords, it is a great pleasure that it falls to me to be the first to congratulate the noble Baroness, Lady Smith of Gilmorehill, on her maiden speech. When, last year, after the sad loss which she suffered in 1994 (a loss, if I may say so, which was shared and felt by the entire country) she took her seat in your Lordships' House, it gave all of us great pleasure; and it has given us great pleasure today to hear her make her maiden speech on such an important issue. We have all listened with admiration and interest to her speech based upon personal knowledge of the media, a speech delivered in the calm and thoughtful way which is in the best tradition of your Lordships' House. It has been an impressive maiden speech and I hope that the noble Baroness will not think it merely a conventional form of words if I say that I hope that it is the first of many contributions that she will make to your Lordships' deliberations.

I fear that my speech may be slightly longer than that of the noble Baroness, and may even be slightly more controversial. A Bill containing 97 clauses and eight schedules is not a document to be rapidly absorbed or lightly treated, especially when it proposes legislation which is designed to make provision for television and sound broadcasting not only into the next century and next millennium but also in a new and completely uncharted technological environment. My concern in the debate is not technological. It can be summed up in one word—quality.

As the noble Baroness suggested, we should not be hypnotised by new technology to the extent that we fail to give attention to what I believe to be the real significance of the Bill. Behind the unavoidable jargon of multiplexes, wideband and bit compression, lies, as the noble Lord, Lord Donoughue, said, the important question of the product which is being delivered to the viewer and listener. Among computer programmers there is an expression which sums up all this—GIGO; an acronym for garbage in, garbage out. It is a truth which is as valid for radio and television programmes as it is for computer programmes. If a programme maker produces third-rate drama, rubbishy soap opera, sloppy documentaries, ill-mannered interviews or slanted news, that is what the licence payer will get however ingenious the technology to transmit it may be. The question then is: does this legislation provide the framework within which broadcasters not only can produce but are required to produce programmes of high quality?

It is, of course, a highly controversial piece of legislation. Indeed, it may be only a slight exaggeration to suggest that the only clause of the 97 which will command universal agreement is the last clause—the Short Title. But for the rest there are bound to be heated arguments—indeed, they have already started—about such crucial matters as impartiality, taste and decency, the functions of regulatory authorities and cross-media ownership. These concerns affect both television and radio. As we have already heard today, many television companies are rightly worried about Channel 4 funding and ITV licence fees, about the regional character of independent television (so eloquently referred to by the noble Lord, Lord Thomson of Monifieth) and about the rules governing ownership.

But in the interests of reasonable brevity I want at this stage in the consideration of the Bill to confine myself to two parts of it: first, Part II dealing with digital terrestrial sound broadcasting—or, to put it more briefly, radio—and Part IV which effects the merger of the Broadcasting Complaints Commission and the Broadcasting Standards Council. In the first case, radio, I must declare an interest as a recent chairman of the Radio Authority. Although that is a past rather than a current interest, it would be surprising if my approach to the legislation did not carry with it some of the perceptions of the radio industry which I formed during my time at the authority. Let me say at once that as regards sound broadcasting, I believe that the Bill will he generally welcomed in the industry.

There are, however, certain aspects of it which need to he closely scrutinised, and which will almost certainly he the subject of amendments during the Committee stage. The most sensitive area with which I am concerned is, perhaps, that dealing with the relaxation of the rules governing what is generically known as "cross-media ownership". That is not simply a matter of monopolies and financial engineering. It is an issue which is absolutely crucial to the standards of quality and diversity—those two concepts are closely interlinked—in broadcasting.

It is vital to balance the dangers posed by the monopolistic concentration of broadcasting outlets against the benefits of diversity and choice which may result from plurality of ownership. For example, Schedule 2 of the Bill we are now considering seeks to relax some of the rules governing the ownership of radio stations by newspapers. The question is: will this result in reduced choice and lower standards—often the result of the establishment of monopolies—or will it result in fresh ideas and wider sources of news and information? That is not an easy question to answer and it is one of those which will have to be answered by the Radio Authority which is now, under this legislation, to have the responsibility of deciding whether, and when, this kind of cross-media ownership is in the public interest. That is a welcome safeguard and one which I am convinced the Radio Authority will discharge with efficiency and will indeed be in the public interest.

It might he relevant to remark in passing that the legislation seems at first sight to have a certain inconsistency between its approach to cross-media ownership on the one hand and, on the other hand, the principle (in itself sound) that radio companies are not allowed to own two licences on the same waveband in a single locality. That is a wise principle but if no single radio company is allowed to dominate the scene it would he difficult to justify any legislation which allowed the local press to do so instead. In considering the Bill, it will he important for Parliament to ensure that anti-monopoly safeguards remain firm and effective. We must look at that carefully at Committee stage.

Another important aspect of the Bill concerns the renewal of licences, especially for national radio stations. As will he familiar to most noble Lords, under the 1990 Act the renewal of a national radio licence is subject, save in exceptional circumstances, to the highest financial bid. In other words, as the noble Lord, Lord Donoughue, has already hinted, when the licence period of a station such as Classic FM—one of the great success stories of commercial radio—comes to an end, it could lose its licence to someone bidding —10 more than Classic, whatever the track record or background of the bidder. The Government have now evidently accepted the general principle that, possibly subject to some safeguards regarding quality and track record, such as a performance threshold, there should be automatic renewal of national licences. That is a welcome development and I look forward to pursuing it at Committee stage.

I now wish to turn to Part IV of the Bill dealing with the establishment of the Broadcasting Standards Commission, the regulatory body which, together with the Independent Television Commission, the governors of the BBC and the Radio Authority, will now be the principal guardians of quality and excellence in broadcasting. At this stage I shall not dwell on my belief which I have stated before in your Lordships' House and which I still hold that there ought to be one overarching regulatory authority comprehending all television and sound broadcasting. I shall simply say that the merger of the BSC and the BCC is a small step in the right direction. There are, however, one or two aspects of Part IV which cause me some concern.

The first is that there is no specific requirement under the Bill as at present drafted for the new BSC, when publishing its findings or complaints, to state clearly not just whether a complaint has been upheld in whole or in part but specifically whether or not each separate part of a complaint has been upheld. It would close a significant loophole in the legislation if that could be provided for.

Something to which I shall almost certainly wish to return at Committee stage is that more generally, and perhaps more important, it is difficult to understand why there is a distinction in one significant respect between complaints made to the new BSC on matters of fairness and those made on matters of standards.

In summary, as I understand the Bill in its present form—and perhaps the Minister will correct me if I have misunderstood—fairness complaints concerning partiality, impartiality and objectivity may not be entertained by the BSC unless they are made by someone directly affected by the programme concerned; while standards complaints may be made by anyone, provided that they are made within a specified time after the transmission of the programme. It may be that that is no more than a hangover from the remit of the two separate bodies, the BCC and the BSC which are now to be amalgamated. I would be grateful if, when he comes to reply, the Minister would explain whether there is any deeper significance in the desire to treat the two categories of complaint differently.

One consequence, for example, could be that a complaint of unfairness against the notorious programme on the Hiroshima atomic bomb could only be entertained if it were made by someone directly affected by the events in the programme. That would be unlikely. Is that what is intended by treating the two categories of complaint differently? I hope that the Minister can clarify the position. I believe that the new Broadcasting Standards Commission needs sharper teeth than the Bill seems to adumbrate. That is something to which we shall return at Committee stage.

Finally, without attaching too much weight to it, perhaps I may comment on the references which the Minister made in his introductory speech to what I believe to be a misleading concept of "public service broadcasting"—a sound bite which has become current in the media debate. It seems in some cases to assume that public service broadcasting is the monopoly of the BBC. The Minister made clear in introducing the Bill that there is a substantial amount of public service broadcasting on independent television and radio. The only valid distinction, in my view, is between publicly funded and commercially funded broadcasting. The whole concept of public service broadcasting is becoming less relevant as the BBC develops into a mass entertainment organisation, competing for listeners and viewers with the independent sector. I make the point just as an aside designed, with very little hope of success, to remove a virtually meaningless cliché from the debate.

The important thing about the Bill is that, in the words of the Secretary of State for National Heritage, it seeks to establish a framework for broadcasting in the 21st century. In the words of a former shadow heritage Secretary, that framework has to allow British broadcasting companies to meet the challenges of explosive technological change. However, as I said at the beginning of my remarks, what matters in my view is not what astonishing technology is used to provide a framework for our information and our entertainment; it is the quality of that information and entertainment when it reaches us that counts.

5.8 p.m.

The Earl of Arran

My Lords, it is a great delight to me from this side of the House to be the first to congratulate the noble Baroness, Lady Smith of Gilmorehill, on what I think noble Lords will agree was a fine, perceptive and knowledgeable maiden speech. I join the noble Lord, Lord Chalfont, and many others of your Lordships in expressing the strong hope that she will speak many times in the future.

In the spirit of the times I will declare an interest: I like British television. I think it is the best in the world. But I am not yet convinced that the industry needs all of this new Broadcasting Bill to keep it that way. My noble friend has argued that the coming of digital television and radio is a revolution for which the country must be prepared. I have no dispute about that. The Bill contains 97 clauses and the first 61 concentrate exclusively upon digital matters. Then, after the break, so to speak, comes the rest of it. It is some of the rest of it with which I am worried.

Part III of the Bill in particular is concerned with amendments to the Broadcasting Act 1990. The individual clauses, once passed into law, will radically change the ownership rules for ITV companies. My interpretation is that an excellent system of regional ownership and diversity in commercial television will be in danger as soon as the legislation is on the statute book this year. A rash of takeovers will probably follow. The big will follow the small and "local" may not mean "local" for very much longer. I hope that noble Lords, and particularly my noble friend the Minister, will take heed of a straightforward plea for much more thought on this issue. Indeed, this particular point was strongly alluded to both by the noble Lord, Lord Donoughue, and the noble Lord, Lord Thomson.

The history of commercial television in Britain is relatively short. In the mid-1950s the Government decided to create a network of independently financed television companies. Eventually there were 15 different stations licensed to broadcast. The ITV structure probably had its faults, but regional television spawned genuine originality. Anglia gave a superlative series on wildlife conservation; Granada pioneered documentary journalism. Would there have been any hope for either programme species if the ownership of ITV had been confined to a few rich conglomerates? I doubt it. Yet that is precisely the course upon which Part III of this Bill now sets us.

I regard regional diversity as the United Kingdom's most precious asset. We are not a nation of look-alike, sound-alike, think-alike Anglo-Saxons. But the crude realities of chain store economics are ever conspiring against us. These days you cannot tell the difference between a McDonald's hamburger in Exeter or Edinburgh. Sainsbury's shelves are stacked with much the same goods from Truro to Telford. And, if we are honest, everyone probably owns an identical item of Marks & Spencer underwear.

Identical clothing, groceries and fast food are one thing. Identical culture is quite another. No National Heritage horror plot would ever seriously suggest identical arts in every corner of an identikit kingdom. So let us reconsider the risk to regional television. It was never meant to be the same, or owned by the same people. That was realised by previous legislators when they drew up the ITV regional map 40 years ago.

Even those responsible for the much criticised 1990 Broadcasting Act did not forget the importance of regionality. Within their original framework was a simple interpretation of the two classes of ITV companies. "Big ones" were expected to make programmes for the network; "small ones" were to concentrate on those vital regional ingredients; and no financial group could own a big company and a small one at the same time. That was the original rule. It was perhaps too strict for common sense, so it was relaxed and re-set as a two-licence limit.

Two licences was still the sensible boundary by the time the Government published their White Paper on media ownership last May. My right honourable friend the then Secretary of State had invited consultations from big ITV companies and from small ones too. But Secretaries of State come and go, and continuity is always the loser. The present Secretary of State decided to abandon the two-licence rule, and did so without any formal consultation with the group of small ITV companies.

It is worth reminding the House of her hurried decision-making. The White Paper on media ownership was published in May, under Stephen Dorrell's careful stewardship. Mrs. Bottomley's Broadcasting Bill appeared just after Christmas—and here we are again, just after it. I have always had my doubts about legislating in haste; for with a general election 16 months or less away, there is no time at all to repent at leisure.

My personal concern is for quality regional television. As a West Country man I genuinely value my local station, Westcountry Television. It has done much more than the regulators ever expected or demanded. It is locally owned, and most of the staff are shareholders too—a far cry from the "bastions of restrictive practice" so reviled by my noble friend Lady Thatcher when she examined the ITV patient and prescribed the 1990 Broadcasting Bill.

I have listened carefully to the Government's explanation of this policy: it takes big players to succeed in global markets, so they say. But I have yet to hear a satisfactory explanation for this question: if Carlton TV or Meridian bid for my local station, how will it help them compete worldwide?

Where is the economic logic for the Government's assertion that big is beautiful? I read the White Paper on media ownership very carefully. I was impressed with the calibre of research on other matters. But not a shred of evidence is cited to substantiate this obsession with size. Indeed, these days large entrepreneurial projects are usually undertaken by consortia, joint ventures or alliances rather than by single industrial giants. That way, risks are spread and particular talents are introduced as required. That is as true of engineering work, such as the Channel Tunnel high-speed rail link, as it is for television.

Let us look at the track records of our big ITV companies. If Carlton, Granada and Meridian were really so keen to break into world markets, why has there been no sign of it? What is their international strategy? If the Government believe that past legislation has stifled expansion, how does anyone explain the rise of Mr. Murdoch's satellite empire in Britain'? Did he not reach for the sky entirely within the law?

Such anomalies make me suspicious of the whole argument. Building larger media companies in order to fight the world brings no guarantee of success, and may hamper the entry and growth of small innovative companies into the domestic market. It is an old-fashioned policy that is very unlikely to work. Indeed, if you let the big get too big at home, why should they bother competing abroad at all? It is no disrespect to my profitable local TV station, but if Carlton or Meridian have their eye on Westcountry it is unlikely to have anything to do with a great global plan.

My point is simplicity itself. The ITV companies at greatest risk of takeover are the very ITV companies regarded as important enough to protect in previous legislation. What is more, these companies can contribute very little to the world expansion of British television envisaged in the mind of the Secretary of State. No global ambition requires a new studio in Barnstaple, surely! Westcountry has installed one—and a very good one it is, too. It is handy for me, of course, but it is also a real feather in the cap of the region as a whole. For it is from Barnstaple that Westcountry's weekly bulletin of news about the region is compiled for the benefit of Breton viewers, in fluent French too. It is a healthy innovation, a worthwhile contribution to the regional balance of payments. But it is hardly the stuff of multi-national TV development.

So let us suppose that this Bill goes through unchanged, and the noble Lord, Lord Hollick, for instance, or one of his expansionist rivals, snaffles up my friendly neighbourhood ITV station. In that event, Ministers insist, I am not to worry. They have thought of everything! New powers will he given to the Independent Television Commission to ensure that any new owner maintains the same high, regionally diverse standards. Hurrah! But these fine men and women at the ITC are just regulators, are they not? They are those same people who were sucked into the muddle of licence-bidding after the 1990 Broadcasting Act—a muddle that still means that Central TV pays only £2,000 a year for its privilege to broadcast, while Yorkshire TV has to find around £38 million for an identical licence.

Regulators have difficulty enough these days dealing with simple commodities such as water, electricity and gas—the sort of commodities that are pretty well identical in composition, if not always in price. But how do we expect regulators to make meaningful value judgments, on regional grounds, for ITV? It is no good simply counting the hours of local programmes and checking them against some arbitrary performance yardstick. To take my own area again, when Westcountry Television began, three years ago, not even the ITC believed in the value of seven separate studios around the region, all linked by the very digital technology that now causes my right honourable friend the Secretary of State such excitement. Westcountry was there first, offering viewers in remote areas entirely local coverage. And how would the ITC measure the quality of political programmes? Westcountry's hypothetical new owners could surely knock together a regular political series, and meet the quantity rules. But Westcountry happens to spend more on politics than any other ITV station, bar one. The smallest company on the mainland is outspent only by one of the largest, Granada.

I sense incredulity in the House. Why should a little regional company spend so much money on a subject that even politicians are glad to avoid? I will tell the House why. Once you arrive as far as Taunton and beyond, you are almost 200 miles from Westminster. And the further you go, the more remote the government machine seems to be. Ministers and shadow Ministers come to visit us sparingly. Their idea of a trip to the West Country is Bristol. So it may be that the very distance from the political centre gives West Country people a taste for political reporting. But it takes a local ITV station, with truly local management, to know its own audience and risk big budgets satisfying demand.

Westcountry Television was the only ITV station to respect the British Legion's call for broadcasting silence at the 11th minute of the 11th hour on the 11th day of the 11th month last year. Not even the BBC made the effort. I believe that that is another example of a TV station which is responsive to the real needs of its viewers. Anyone who knows my part of the world knows how deep the military traditions run there. But would a small branch of the Carlton/Central empire ever have been allowed to turn off the programming? Could local managers have reached the moguls in London in time? Frankly, I do not want my local TV station owned by some invisible bankers. I am far from convinced of the economic arguments for changing the ownership rules to the extent proposed in this Bill at the moment.

I believe that the small companies need and deserve the kind of protection from predatory takeover that previous legislation has always granted. At the very least, the Government should consider an amendment to the Bill ensuring adequate safeguards against predatory takeovers of the small companies.

5.20 p.m.

Baroness Jay of Paddington

My Lords, it is a great privilege to be the first speaker on this side of the House to congratulate most warmly my noble friend Lady Smith of Gilmorehill on her very interesting and important contribution to the debate. I was particularly glad that she emphasised the longstanding tradition of public service and its resonance in the broadcasting policies of this country. I am sure that that theme will continue through the contributions that are made at every stage of the Bill from this side of the House.

As I have a longstanding commitment to another speaking engagement this evening, which was arranged before the date of this Second Reading was set, I must apologise to the House and to the Minister for having to leave before the conclusion of the debate. I must also declare a series of interests as a contributor for many years on a professional basis to several television and radio companies which have been mentioned today, and to others which have not been mentioned, and also as having been a long-term employee of the BBC. It is, however, as a consumer—as a viewer and a listener—that I want to address a few remarks to the House. After all, as my noble friends Lord Donoughue and Lady Smith emphasised, it is as consumers of good quality programmes that we should judge the contents of the Bill and not its contribution to the commercial marketing forces which may underlie it.

I wish specifically to speak about the new Broadcasting Standards Commission in Part IV of the Bill. The provisions are fair enough so far as they go, although I echo the concerns felt by the noble Lord, Lord Chalfont, about the very narrow basis of legitimate concerns and complaints about specific programmes. It seems to me that a chance has been missed in the Bill to develop and expand the role of the viewer and the listener as consumers in broadcasting policy in this country.

I should like to propose—perhaps rather radically, but I believe that it can help our understanding of the role of the consumer in broadcasting—that the new body should not be called the Broadcasting Standards Commission but rather the Broadcasting Consumers Commission or, indeed, the Broadcasting Consumers Council. To use that title would not simply change a formal framework of words but would enable a much more positive, less reactive and more proactive position to be adopted by a consumer body in the formation of strategy and policy about broadcasting. I should like to see a Broadcasting Consumers Council have within its remit formal consultation and advice on a much broader agenda than the rather reactive agenda contained in the legislation. For example, there could be a statutory role for setting the strategy for overall quality of programmes. My noble friend Lord Donoughue alluded to that.

There are proposals which enable the new Broadcasting Standards Commission to have a research capacity and to develop positive policies in areas concerned specifically with its areas of remit on violence, taste and decency. But, in my view, it should be possible to elaborate and expand that research role in such a way that contributions are made on a much broader agenda about specific areas of quality.

I am interested that in Clause 82 of the Bill the new body is allowed to represent the UK on international bodies concerned with setting standards for TV programmes. That seems to suggest a general quality remit which is perhaps more broad than the narrower national one suggested earlier in the legislation. At home, it seems to me that if the Broadcasting Consumers Council or the Broadcasting Consumers Commission were to have a wider range of responsibility, it should also be reflected in a wider range of membership of such a consumer body.

My noble friend Lord Donoughue referred to the very important regional identity of broadcasting and the noble Earl, Lord Arran, gave a vivid picture of the special regional interests in individual programmes. It seems to me that if we are to continue to conduct a broad policy approach to such regional identity, the broadcasting consumers need to be represented at that kind of regional level. Perhaps at least their concern should he reflected in regional outposts of any new body intended to reflect consumers' interests. That is particularly important in the light of the renewal of the BBC Charter, a subject mentioned in the debate last week, which, unfortunately, I was unable to attend. The powers of national governors and national broadcasting councils of the BBC will be reduced under the new Charter.

Another significant message from the Bill related to consumer involvement is the whole issue of broadening and opening the appointments procedure to any new body. Given that the legislation was drawn up after the report of the noble and learned Lord, Lord Nolan, on standards in public life, I am surprised that there is no mention of the relevant recommendations that he made about future appointments to public bodies. Perhaps I can take a few moments to mention those specific recommendations and those which should be relevant to an appointments system to a new body. First, selection on merit should take account of the need to appoint hoards which include a balance of skills and backgrounds. All appointments to executive non-departmental public bodies should be made following advice from a panel or committee which includes an independent element. A new independent commissioner for public appointments, who may be one of the Civil Service commissioners, should be appointed. The public appointments commissioner should monitor, regulate and approve appointments procedures. I hope to be able to introduce or support amendments to achieve that kind of openness in appointments to the new body.

In conclusion, I re-emphasise that the new body of consumer interests, which, as I said, I should prefer to see renamed the Broadcasting Consumers Council, must be an essential part of achieving and maintaining general quality of programmes in a proactive rather than simply a reactive way. To achieve good quality must be the basic aim of the legislation. Personally, I look forward to supporting all attempts that are made to place on the face of the Bill the most stringent requirements for good quality in the future of broadcasting in every way.

5.28 p.m.

Viscount Caldecote

My Lords, as my noble friend Lord Inglewood said, this is a complex, important and valuable Bill. I very much hope that we shall treat it largely as a non-party Bill. Two main subjects are covered: the issues relating to the availability of digital multiplex techniques; and, in Part IV, the regulation duties of the new BSC.

I should like to make a few comments on Part IV. I welcome warmly the combining of the old BSC and BCC. But there are many obligations of the new BSC which are excessively permissive rather than mandatory. If this is not corrected, it will give rise to misunderstandings and the kind of weakness on the part of the new BSC that we have seen occurring in the old organisation.

I shall give a few examples. Clause 68(1) states: The BSC may draw up guidance relating to principles to he observed". Surely it would he better to say that the BSC "shall" draw up "rules": that would be much better wording and give more teeth to the BSC. Again, in Clause 69(1) the Bill states: It shall he the duty of the BSC to draw up, and from time to time review, a code giving guidance". What is the point of the words "giving guidance"? It should draw up a code or rules to regulate practices within its field. Again, in Clause 70(2) it states: the BSC may make reports on the matters specified … on such occasions as they think fit". Surely the word "may" should be replaced by "shall". Those are indications of the comparative weakness of the new BSC which I deplore and hope that we can correct at Committee stage.

Clause 80 determines the action to be taken by the BSC when it considers complaints on fairness or standards. Inter alia, the BSC must report on "any action taken"—laid down in Clause 80(7)(c)—by the offending broadcaster. Again that is too weak. The BSC should also state what action it instructed the broadcaster to take.

Clause 84 requires the BSC to publish an annual report. The existing BSC publishes monthly summaries of complaints, indicating those which are upheld and those which are not. That should be made mandatory too, for an annual report leaves matters open for far too long.

The most important omission from the new powers of the BSC is any reference to complaints on impartiality. The noble Lord, Lord Chalfont, made the point that it was possible to complain about individuals being unfairly treated on the grounds of not observing the impartiality rule; but that does not cover organisations, whether political or commercial. It is extremely important that we bring within the powers of the BSC the ability to deal with complaints on impartiality. The ITC has full powers under Clause 6 of the Broadcasting Act 1990 to deal with complaints relating to impartiality. But the public, the licence holders, can complain to the BBC itself only about the lack of impartiality which is required in the new Charter and Agreement.

As I made clear in the debate on the Charter and Agreement, the BBC is thus judge and jury in its own case. That is completely illogical. Company directors do not themselves decide whether regulations on, for instance, the provision of financial information or on health and safety at work are being complied with when complaints are made. Neither do trustees of great charities themselves judge as to whether they are acting within the powers given to them by the Charities Act. Why therefore should the BBC be allowed to be judge and jury in its own case on this important matter of impartiality, which was referred to by the Select Committee in another place as being of the utmost importance?

There are two possible solutions. The first is to have an independent, over-arching—as the noble Lord, Lord Chalfont, called it—supervisory commission with similar duties and powers relating to impartiality in BBC programmes as the ITC has for ITV companies, acting right over the whole field of complaints. That is an unnecessarily bureaucratic solution. The best way is to give the new BSC powers over complaints relating to impartiality and to make that clear, just as, under Clause 68(1) of the Bill, it has powers to deal with standards of fairness and decency. That would provide a judgment independent of the BBC governors on matters of impartiality and would give confidence that such complaints will be dealt with fairly and squarely.

I hope that, in dealing with that point when he winds up, my noble friend will not argue that it is part of the regulatory functions of the governors, for they cannot regulate themselves when, at the same time, they are responsible for monitoring the approved objectives of the BBC which they themselves laid down. This is a crucial issue in the Bill and we must consider amendments to correct the ridiculous anomaly, however much the BBC governors and management may want to retain the Bill as drafted.

I want to turn briefly to digital broadcasting. It will make available many new TV channels, both satellite and terrestrial. Existing satellites carry up to 14 transponders, each transmitting one channel at present. Digital transmission will enable each transponder to transmit up to 16 channels, thus increasing the number of channels from up to 14 to some 200; that is an enormous change. Digital terrestrial transmission will also allow a more efficient use of the existing frequency spectrum, so increasing the number of programme channels available; but that will be to a smaller extent than in satellite digital transmission.

It is therefore important to prevent satellite broadcasting, with its huge revenue from subscription channels, from having excessive dominance over terrestrial broadcasting. That may lead, as many other noble Lords have said, to the big sporting events being monopolised by satellite. It will also discourage the production of programmes within the UK.

Another problem, also referred to, relates to the set-top boxes which will be required to receive digital transmissions before it becomes economic to build the facility into the TV sets themselves. The set-top boxes are already required for satellite and cable programmes. But other boxes will be needed in the future for receiving available satellite and terrestrial programmes. It is highly desirable, both on account of cost and opportunities for UK manufacturers, to plan from the start to have a standard specification enabling all the different types of transmission to be received. That is a point on which the noble Lord, Lord Thomson of Monifieth, spoke so eloquently and clearly and I hope that it will be taken seriously by my noble friend.

Those points raise complex issues which we shall need to discuss at later stages of the Bill, not least to determine the optimum balance between legal restrictions and flexibility to take full advantage of the new opportunities provided by digital broadcasting.

Finally, I draw your Lordships' attention to the huge and important contribution made by engineers in devising and successfully developing the new digital techniques which will have such far-reaching effects on our national life.

5.39 p.m.

Lord Kirkhill

My Lords, I shall be brief because I wish to concentrate on one aspect of this complex Bill—ITV's regional broadcasting service and the possible threat it may face in the event of any change in ownership. My own regional television service is provided by Grampian Television, which covers a vast area of great diversity, cultural, linguistic and even scenic in nature, and includes those parts of the United Kingdom which are the most remote from Westminster.

As a weary foot soldier, returning home from frequent Council of Europe meetings, usually held outwith the United Kingdom, I, too, know what it means to return home and to catch up with more local interests. Although my remarks may concentrate on my own regional service of Grampian, they probably apply—indeed, I am certain that they do—to all of the regional services.

It is well documented that viewers appreciate regional programmes. Yet, as national and international channels proliferate, only ITV offers a regional service. Therefore, the proposal to relax the rules governing cross-media ownership has given rise to concern, a concern which I share, and this unique aspect of ITV broadcasting could be threatened—indeed, on one reading of the Bill is threatened—in the event of a change in the ownership control of any regional company.

Regional programming is enshrined in existing licences. For instance, under its licence—I cite this merely as an easy example for me to give—Grampian Television must transmit seven-and-a-half hours of regional programmes each week, of which 80 per cent. must be produced in the area covered by the licence. In practice, Grampian transmits nearly nine hours of regional programmes, of which almost 100 per cent. are produced in the area. In November last year National Opinion Poll Research asked viewers in mainland ITV areas to assess the quality of their local regional service. Viewers in north Scotland placed Grampian first across 12 categories of regional programming. So there is fair evidence that the service is valued by its viewers. Most programmes broadcast on other channels are made outwith the north of Scotland, which has its own cultural diversity. It has, if you like, a multilingual heritage—English, Gaelic and Doric, which is the language of my own area. It is geographically distant from all the main production centres.

I am glad that Clause 63 of the Broadcasting Bill recognises that new licence conditions may need to be imposed in order to maintain the standards of a regional Channel 3 service where control of either the licence holder or the body providing programmes for the service is changed. However, I am concerned that, as currently drafted, the clause does not protect the level of service being provided at present. I am of the view that this part of the Bill could he justifiably strengthened. Without such a strengthening both the quality and the quantity of regional output could be jeopardised. I believe, therefore, that the best way to protect the quality and quantity of regional output is by means of the benchmark of existing services at the time of any change of control and not by means of the licence minimum. As a result, viewers would suffer no diminution in service.

I am firmly of the opinion that the quality of a regional programme service to an ITV area is directly linked to the decision-making and editorial control being resident in that area. Clause 63 recognises the importance of regional programmes being made within the region and makes provision to vary licences if necessary. But it does not go far enough to guarantee protection. Because it is an enabling rather than a compulsory measure it gives too great an element of discretion to the Independent Television Commission. It seems to me self-evident that the interests of the viewer and of the regions would be best served by reducing just such an area of discretion which is, as the Bill stands, to he given to the Independent Television Commission.

I am also somewhat concerned that the definition of "regional programming" may not be as clearly and comprehensively defined as it could be. I hope that this will be taken into account by some of us in the form of suitable amendment when the Bill reaches its complicated Committee stage. It is surely only by providing such a clear definition that Clause 63 will have its intended effect.

The preservation of proper regional programming has wider implications than the justly important consideration of viewer satisfaction. The structure of the regional economy and the retention of skills, often in quite remote areas, must also be taken into consideration. A good example of this is the construction and operation of the Grampian television studio in the far distant Stornoway. An indigenous regional television company has one great asset. It knows its area. It understands what binds its viewers together and what does not. It understands that it must cater for the real and varied interests found within its area; and in its programming it will balance these interests with, one would hope, a good judgment.

I am an Aberdonian. Indeed, I am a former Lord Provost of that city. Naturally, I am interested in programmes about that community, one I know so very well. But I do not, and I should not, expect the viewer in, say, Ardnamurclan, or Achiltibuie, or Achmore, or Alness to share my enthusiasms. It is not enough for the makers of regional programmes to be able to locate such places on a map. They have to know and understand them from the inside. I would therefore welcome an additional definition of the concept "made within the area" to mean programmes whose creation covers all stages of the production process, from inception through to transmission, and which are subject to decision-making and editorial control within the area. As far as I can tell, there appears to be no such definition within licences or other ITC documentation. Without a definition, I could envisage that an unscrupulous owner would have a licence to undertake all stages of production at its base outside the area and then merely send a camera crew to shoot film on location.

As I conclude, perhaps I may observe that one of the underlying principles of the Bill—namely, the objective of improving international competitiveness—is laudable. It is laudable in itself and laudable as an underlying principle. But it must not be at the expense of the great strength of the current ITV system—that of the regional programming element.

5.50 p.m.

Lord Geraint

My Lords, on behalf of the Liberal Democrats, I congratulate the noble Baroness, Lady Smith, on her excellent maiden speech. It was constructive and the presentation and content were good. I can assure the noble Baroness that, once having made her maiden speech in this House, there will he no stopping her from now on.

Perhaps I should declare an interest, in that a member of my family works for the BBC World Service. The Minister touched in his opening remarks on, and referred quite often to, S4C, the television channel that we have in Wales. Today, I am going to confine my remarks to the setting up of S4C, which came into being in 1982. It is fitting that I should begin my contribution, although he is not in his usual place today, with a generous acknowledgement of the role of the noble Lord, Lord Cledwyn, in the long and arduous campaign to establish a dedicated and properly funded channel to serve Welsh speakers within the Principality. It took patience, diplomacy and determination— a determination based on the resolve that never again should Welsh be downgraded to inferior status as it was by those young English commissioners on their visitation to Wales in the last century. They were perhaps well intentioned, but their findings have gone down in the history of Wales as the "Treachery of the Blue Books". There is an old Welsh proverb which I am sure all noble Lords have heard: he who is without his language is without nation. By trying to deprive them of their language the treachery was to undermine the identity of the Welsh.

But times have moved on. The cycle of history has turned and times have changed. I am delighted to see the noble Viscount, Lord Whitelaw, sitting opposite on the Government Benches. We owe so much to him, because when he was a Minister in the other place he gave us S4C, the Welsh channel. He was responsible, with the noble Lord, Lord Crickhowell, who was Secretary of State at the time. Who knows?—perhaps if they had given the programmes to two channels, things in Wales today would not be as good as they are. But in their wisdom they gave Wales its own Welsh channel and it has proved to be of good use to the people of Wales. I say to the noble Viscount that if ever he comes to Cardiff or to Wales, perhaps we shall jump and sing the old favourite, "We'll keep a welcome when you come back to Wales again".

We recently had a new Welsh Language Act upgrading the official status of the Welsh language. Perhaps I may also pay generous tribute to the untiring efforts of the noble Lords, Lord Prys-Davies and Lord Williams of Mostyn, for putting that legislation in place. I would also like to pay tribute to the Government and to the noble Earl, Lord Ferrers, who was responsible for guiding the legislation through this House. It has proved to be worth while. We now have the language on the rise because parents desire their children to be bilingual. There is no second-class image, thanks to the Government. Welsh speakers enjoy confidence in the quality and nobility of their culture. I have no doubt that this is due in no small measure to the tremendous international successes that S4C has delivered. "Hedd Wyn" achieved the accolade of a nomination for an Oscar in the best foreign language film category. S4C obtained 26 international awards and nominations last year alone—a first-class achievement from a first-class channel!

Perhaps I may now turn to the Government, run as they are by a party which has only minority support in the Principality of Wales. Perhaps that has something to do with the minority being conscious of the needs of another minority. But the Government did establish the Welsh Language Board to foster growth in the language and they have found resources to give the language financial support on a significant scale. They have given a proper, first-class position to Welsh in the school curriculum. That much at least must be acknowledged by those of us in Opposition.

I genuinely believe that the Department of National Heritage wants to do right by the second public service broadcaster in the United Kingdom. I am more concerned that it may not realise some of the implications in this Bill as drafted. I am sure that the majority of noble Lords would fight for the independence of broadcasters from government. It is an important buttress of our democracy. Your Lordships should have regard to Clause 64(2), which allows the Secretary of State to intervene annually in the settlement for S4C and effectively to ignore the principles underlying the new formula. That does not make for the certainty of sure-footed planning for S4C. There should not be this Sword of Damocles hanging over the authority, because the danger is that it will be used to exert political influence over broadcasters. I hope that the Minister will be able to reassure me on that point when he comes to sum up this debate.

Perhaps I may finish by returning to the danger of giving, or seeming to give, second-class status to Welsh. The Department of National Heritage plans to give only half the capacity to S4C that other terrestrial broadcasters will enjoy. It means that Welsh speakers will not be able to benefit from the exciting advances that digital will bring to viewers on other channels. So other channels will increasingly have the edge over S4C as viewers switch to digital. It will have unfortunate historical echoes if Welsh speakers find that they are being given such second-class status in the Principality. I pray that that does not lead people to a path of struggle and unrest once again. By law, Welsh has equal validity in the official life of Wales. Let us also have equal validity on the airwaves in Wales. I hope that the Minister can give an assurance to the people of Wales that S4C will have its rightful place within broadcasting in the years to come.

5.57 p.m.

Baroness Rawlings

My Lords, I am delighted that this important piece of legislation, announced in the gracious Speech in November, has come to your Lordships' House so soon. It has been long awaited. This has been for a very good reason. The Government published several proposals and working papers last year, especially so they could he discussed and debated before this highly complicated legislation came to us. And how right they were! The interest was and is enormous.

In the European Parliament we had naturally, as in any other Parliament, many people lobbying and briefing us, but the prize went, year after year, to the same group; the animal welfare lobby. They managed just to beat the farming lobby. We received thousands of letters; reams of paper and more trees than one would ever wish must have been chopped down to supply the paper. But the flood of information that has landed on my desk, and no doubt on the desks of many of your Lordships, for this Broadcasting Bill, seems to have outstripped both the animals and the farmers!

Despite this, I shall be brief today and touch on only two aspects of this very important but highly complex Bill, as I spoke in some detail on the subject in the debate on 22nd November last year. There are also many speakers today and there will be further opportunities for detail during the progress of the Bill.

The Bill is essential because of all the rapid changes in broadcasting. Even as we speak, new inventions are being made related to either the Internet or other forms of transmission. We are certainly living in exciting times. As Leibniz said: The present is great with the future". Broadcasting has such an enormous influence on our lives that it has to be taken seriously. Apart from the great potential for influence, there are vast possibilities to make gigantic sums of money, of lottery proportions. Here, the Government have tremendous responsibility, and for this reason they need to be congratulated. They have published the discussion documents, listened and substantially altered and built on the original ideas. They listened to all sides, to both the producers and the consumers. For example, on digital terrestrial broadcasting, they have increased quite significantly the amount allowed to each existing broadcaster. That should allow the broadcasters to develop in a major way, if they wish, additional news services, advertising and subscription possibilities. That will further encourage them to invest. They are as a result on the whole, dare I say, mostly satisfied customers looking forward to an exciting future.

This legislation will affect not just our national market; nor are we looking at the European market alone. Surely our target is the global market. Here I would beg to differ with my noble friend Lord Arran in his very fine speech. He may be right concerning analogue, but where digital is concerned we must compete globally. After all, cross-media ownership and broadcasting know no boundaries, and we need to liberalise to be able to compete worldwide.

We in this country have some of the best broadcasting in the world, with a reputation higher than most, especially in the case of our World Service. In this new climate, legislation is needed to protect that position. There are changes taking place in our public sector broadcasting which needed to be addressed. We saw that happen last week with the new Charter and Agreement. The BBC's role is to provide high quality programmes with wide-ranging appeal that educate, inform and entertain. There are only two forces that carry light to all corners of the globe, the sun in the heaven and the Associated Press". Mark Twain said that many years ago. For "Associated Press", today I would substitute "television and the wireless".

There is overwhelming support for Part IV of the Bill, the merging of the Broadcasting Complaints Commission with the Broadcasting Standards Council. I hope that that body will be more efficient and easier to operate. The new commission's role will be to act as an independent body to which the public will be able to complain about matters of taste, decency and violence in respect of the content of broadcasts. I mention that even though we have heard a great deal about that part of the Bill. It is a very sensitive subject on which everyone holds strong views.

With the advent of digital broadcasting, we are likely to see many more channels available. It will be of paramount importance that standards are maintained, so perhaps I may ask my noble friend the Minister to make certain that the new commission will have adequate power to keep decent high standards. I am aware nonetheless of what a media mogul said many years ago: It is the duty of a newspaperman to comfort the afflicted and afflict the comfortable". But the media as well as the Government do have a responsibility to the millions who listen and watch daily. The responsibility is built into the freedom of the media. As Clemenceau said: Freedom is nothing in the world but the opportunity for self-discipline"— that is to say, voluntarily to assume responsibility.

Let us hope that with this new Bill will come a new exciting era where Britain will serve the public trust and continue to be a world leader.

6.4 p.m.

Lord Prys-Davies

My Lords, I too congratulate my noble friend Lady Smith of Gilmorehill on her thoughtful maiden speech. I particularly welcomed its central theme.

I propose to concentrate on the concerns of S4C about some aspects of the Bill as it stands and the proposed arrangements for digital television in Wales. I very much regret that my noble friend Lord Cledwyn, who played a significant role in the events which led to the setting up of S4C, is unable to speak in the debate for reasons which are unavoidable. However, as is my normal practice, I have discussed with my noble friend the concerns in Wales and in particular those of S4C. He feels deeply about them and I believe that he agrees with the thrust of my comments.

I should like to emphasise that the concerns expressed by the board of S4C arc very important. They are important because S4C is a powerful promoter—possibly the most influential promoter of all—of the popular use of the Welsh language. II' the capacity of S4C to hold the continued support of its viewing audience was to be imperilled as a result of the advent of digitalisation, it would have serious implications for the prospects for the Welsh language in the coming century and possibly for social harmony within Wales.

The case for a separate Welsh language television service was made by a succession of authoritative reports, in particular that of the Crawford Committee published in 1974 and that of the committee that was chaired by the noble Lord, Lord Annan, published in 1977. That led to the setting up of S4C in 1982. Today it is almost unbelievable that the plans for the service were drawn up, according to a respected opinion—and here I pick up a phrase from the 1978 official report of the Home Office Working Party on the Welsh Television Fourth Channel Project—as "an act of faith".

We now know that the separate Welsh television channel has been strikingly successful. The noble Lord, Lord Geraint, reminded the House of some of the achievements of S4C. I should add that it broadcasts 33 hours a week of Welsh language programmes. At other times it broadcasts Channel 4 programmes. It has been a powerful stimulus to the creation of an impressive pool of independent television programme-makers in Wales. Certainly, S4C's capacity to attract sales revenue is inevitably constrained by the small size of its potential Welsh-speaking audience—an audience of just over half a million or so. Yet by now it succeeds in generating yearly about £6 million of advertising revenue. For all those reasons, as well as its record of achievement as set out by the noble Lord, Lord Geraint, we are fully justified in saying that S4C has been a success.

We have rightly heard this afternoon that digital technology heralds great changes and opens up exciting opportunities. But the Welsh-speaking community asks: where does S4C go from now on? Is it to be allowed to take full advantage of all the benefits of digital technology?

S4C has two principal concerns. They have already been outlined by the noble Lord, Lord Thompson of Monifieth, and the noble Lord, Lord Geraint. I see that the noble Lord, Lord Elis-Thomas, is in his place and I am sure that this point will be developed by him also. His words are of special significance because he happens to be the Chair of the Welsh Language Board, which is a statutory board charged with the duty of promoting the use of the Welsh language.

The first concern is that it will have to share the frequency with Channel 4 in Wales. That means that the viewers in Wales will be able to receive both Channel 4 and S4C, which is welcome. However, the sharing arrangement also means that S4C and Channel 4 in Wales will not have access to the full digital capacity that will be available to their competitors in Wales—BBC1, BBC2, HTV and Channel 5. Each will enjoy only half of the capacity of their English language competitors in Wales. Therefore, the resulting quality of the digital service transmitted by S4C will be inferior to that of its competitors. It will not be able to broadcast wide screen programmes of satisfactory quality. In the result, its programmes will be increasingly associated with old-fashioned technology. That would be unfair to S4C, to the Welsh-speaking population and to the Welsh nation.

It is our submission that there should be a clear recognition that S4C must be able to compete for Welsh-speaking viewers with its principal competitors on equal terms. If that principle is right, and I believe it to be right, its implementation is not insoluble. The practical solution is to allocate full separate digital capacity to S4C and to Channel 4 in Wales on the same basis as other broadcasters. I hope that the Minister will he able to say that that option is available.

The introduction of a digital service by S4C cannot take place in isolation from a consideration of the funding of S4C. That is the second principal concern of the board of S4C. It is concerned about the adequacy of the statutory funding. The formula is set out in Clause 64, which introduces a significant departure from the present arrangement. It means that from 1998 onwards S4C will receive the amount of the January 1997 funding as increased by the yearly percentage increase in the RPI, adjusted "to have regard" to the cost of transmitting S4C. I should like to know whether those words include the full costs of the new digital service.

I was not all surprised to hear the Minister say that the proposed index-linked arrangement will give S4C a source of security of future funding. Indeed, that was stated in the question and answer document issued by the Department of National Heritage. That formula seems to have attraction in the sense that the amount of the future subsidy will be more predictable than if it were to be a share of total television revenue, which forms the basis of the present formula.

However, there is another view. The board of S4C has calculated that, in practice, the new formula will mean that S4C will be less generously funded than it would be under the current formula—and substantially so. We have already heard from the noble Lord, Lord Thomson of Monifieth, that the board has concluded that the loss could be more than £9 million per annum over the three years 1998 to 2000. Such a sum would be in the order of 12 to 15 per cent. of its total yearly income. That would be damaging, and that at a time when the provision of digital service will involve S4C in increased expenditure, and also at a time when the introduction of digital Channel 4 service into Wales could lead to a marked loss of advertising revenue. That has not been mentioned. All that would weaken significantly the capacity of S4C programmes to hold their own against the English language programmes on the other channels.

There is another difficulty with the funding clause as it stands. The funding formula which I have described is not necessarily the end of the story. Under subsection (2) the guaranteed index-linked payment may be replaced by, such other amount as the Secretary of State may from time to time by order prescribe", so the funding is not guaranteed, as claimed by the department. As Clause 64 stands, the index-linked formula can be replaced at the sole discretion of the Secretary of State. The noble Lord, Lord Geraint, expressed his concern at the existence of that power given to the Secretary of State. Many of us would be opposed to giving that power to the Secretary of State to he exercised solely at his discretion unless it were to be used only when the Secretary of State was satisfied that the product of the index-linked formula would be inadequate to match the necessary requirements of S4C. If that is the intention, the use of the power should be confined to that situation and the limitation should be incorporated in Clause 64. I hope that in reply the Minister will clarify the position.

Before I sit down I wish to endorse the concern so eloquently expressed by the noble Lord, Lord Thomson of Monifieth, the noble Earl, Lord Arran, and my noble friend Lord Kirkhill about the need to safeguard the quality and the quantity of regionally produced programmes in the event of a change of ownership of the licence holder. Does Clause 62 need to be strengthened in Committee? I hope that the Minister and his advisers will give sympathetic consideration to those points and to other matters relating to S4C and the regional committees which are raised in the course of the debate.

6.17 p.m.

Lord Ackner

My Lords, it is a wise advocate who takes his best point first. Mine is that I shall not detain your Lordships long. I rise essentially to support the observations made by my noble friend Lord Chalfont and by the noble Viscount, Lord Caldecote. Part IV of the Bill makes elaborate provision for the Broadcasting Standards Commission, its establishment and its field of operation. However, I am bound to say that in many respects it has the characteristic of a toothless watchdog. Clause 68 provides that the BSC may—the noble Viscount, Lord Caldecote, pointed out that that is merely permissive— draw up guidance relating to principles to be observed". Those are the words that I wish to stress. Why should it not draw up a code stating the principles to be observed so that everybody will know where they are?

Clause 69(2) states: It shall be the duty of each broadcasting or regulatory body, when drawing up or revising any code relating to standards and practice for programmes, to reflect the general effect". That provides a very good basis for saying, "Well, it does reflect the general effect. It may not be in the way that you, the standards authority, intended but it certainly is a bona fide exercise by us of our opinion".

When one comes to complaints, which are dealt with in Clause 71, I do not quite understand why, in regard to the complaints relating to unjust or unfair treatment or unwanted infringement of privacy, the BSC has to adjudicate on such a complaint, whereas it merely makes a finding as regards complaints relating to standards. But that is probably a subtlety which I have failed to penetrate.

Clause 80 deals with the effect and the power of the BSC. One merely sees there that there must be published by the offending authority a summary of the complaint, which is not difficult, the BSC's findings on the complaint, or a summary of them, and in the case of a standards complaint any observations by the BSC on the complaint or a summary of such observations. All that has to he done under Clause 80(7), where a direction is given, is a summary of any action taken by a broadcasting body to provide a licensed service in pursuance of the direction. I cannot see anything in that which does not prevent the authority saying, "We have taken no action because we do not agree with your finding". There is no obligation to provide an apology or compensation and there is no provision, as far as I can see, for the BSC to say exactly what action should be taken.

I thought that I heard the noble Lord, Lord Inglewood, say, when he opened, that Part IV is designed to maintain impartiality and standards of taste and decency. I cannot find anything which relates to impartiality in the breadth of the activity which the BSC is entitled to undertake.

When one wishes to use robust language, one can often do no better than to turn to what has been said by the noble Lord, Donoughue, on the relevant subject. That is no doubt a by-product of his affection for boxing. In the debate on 9th January on the BBC draft Charter and Agreement he said: It may be seen as a weakness that the Charter suggests only guidelines"— and that, of course, is all that is suggested in this Bill— which are ultimately unenforceable. In the modern media world, where the trashy gutter standards of tabloid journalism are increasingly infecting television, that may indeed be risky. Bad television drives out good. Perhaps that should be nailed down with an enforceable code, as with the Radio Authority".—[Official Report, 9/1/96; co1.26.] I do not think that I can end on a more satisfactory note than that in support of my submission.

6.24 p.m.

Lord Astor of Hever

My Lords, it gives me particular satisfaction to welcome this Broadcasting Bill. The Government have put forward a timely measure which improves the ownership regime and provides an opportunity for really prompt progress to be made with digital broadcasting.

It is no exaggeration to say that the Bill gives broadcasters and their associated industries the opportunity to show that this country can lead the world in digital broadcasting and that it will help United Kingdom media companies to compete more effectively by allowing them to exploit opportunities in the ever-expanding global media market.

I congratulate my noble friend Lord Inglewood on having made such a good start with this Bill. We all know that a great deal of work remains to he done on the detail. In particular, the idea of the multiplex provider as an extra tier in the broadcasting system will need some careful attention as regards the wording of the Bill. This is a good solution to the complexities of digital broadcasting but we must not allow a new power base to be established which stands outside the regulatory process and which runs the risk of becoming a monopoly element within broadcasting. We need to he clear also as to who is going to review the developing technologies to ensure that they are inter-operable and can work together as seamlessly as possible.

I also congratulate my noble friend on having resisted the lobby which describes itself as the "community radio lobby". Local independent radio, which is community radio in its true sense, has made excellent progress under the Radio Authority. I had the pleasure of visiting Star FM in Slough last summer when my 16 year-old daughter was doing her work experience there. Star FM is chaired by my noble friend Lady Flather and serves a small area with programmes which are popular and widely appreciated. It provides good coverage of local affairs and manages to thrive, despite being overlapped by no fewer than 24 other commercial and BBC radio services.

Incidentally, Star FM manages to achieve viability in a small catchment area because its studio equipment is state-of-the-art digital. It is one of the many small companies in the commercial radio system which is already taking advantage of digital technology to very good effect and is working within the system which Parliament has established. It makes no demand on public funding, nor is it seeking any special privileges which might allow enthusiasts to broadcast even if the listeners are not interested in hearing them.

Creditable community radio enthusilasts have shown themselves prepared to apply for independent radio licences and to compete with commercial interests. In many instances, they have won those licences and run effective stations. Of the 53 new licences issued by the Radio Authority since it was established, 20 serve areas with an adult population of 100,000 or less. There arc several successful models within the existing ILR system for linking community aspirations with commercial operations. The new frequencies spectrum, which lies between 107 and 108 MHz, has been allocated specifically to serve those smaller-scale aspirations.

Finally, many of us listen to and greatly esteem the English language services of the World Service of the BBC. Its current affairs programmes and especially its new broadcasts are really first class. The World Service is much less parochial—some would say objective—than Radio 4. The problem is that the World Service is often inaudible in this country. The wave band on which it is available in Britain during the day and evening is 648 medium wave. That is intended for southern Europe and is audible—often not very clearly—only as fall-out in the south of Britain. I admit that during the small hours the World Service is now broadcast on Radio 4 frequencies. I ask the Government to ensure that in future the World Service is allocated frequencies that are audible throughout the United Kingdom. The additional cost of my proposal will be minimal. I hope that my noble friend will react sympathetically to my suggestion.

6.30 p.m.

Lord Blease

My Lords, my intervention in this Second Reading debate will be brief, but brevity is not an indication of the level of my concern about and interest in the important issues and vital implications of the legislative provisions proposed in the Broadcasting Bill. The Bill is timely and is to be welcomed. In the United Kingdom there is an urgent need to establish new and effective structures for the provision and regulation of the dynamic technological changes that confront broadcasting throughout the country. The Bill is particularly welcome because of the acute need to exercise suitable, effective accountability over the huge and growing amounts of private and corporate finance now directly involved in this powerful and important public service.

What is perhaps of more importance is the need to examine and provide suitable parliamentary accountability and democratic control over the social implications and the regressive cultural impact of some forms of broadcasting output on the staple and proven forms of community life throughout the United Kingdom. Broadcasting and broadcasters now almost dominate the national and local political scene. They set the agenda and determine the issues.

Clause 97 of the Bill provides that the legislation will extend to Northern Ireland. Northern Ireland people value highly television and radio services. I understand from an official report that the Province has the highest percentage of viewing and listening public in the United Kingdom. There is considerable interest in and discussion of the Bill among broadcasting and media personnel in Northern Ireland. In particular, concern is expressed that all aspects of broadcasting in the Province should be fully considered before any properly informed changes are made. The capacity to maintain and develop regional production at current levels is vital for a number of reasons. Issues relating to ownership and Channel 4's current financial provisions are among those matters that require close examination as they affect Northern Ireland. In this connection, during the Committee Stage, Clause 63 will be of importance.

Many essential issues will emerge during the debate on the Bill. I look forward to hearing the views of noble Lords, especially those with the necessary expertise and practical knowledge of today's broadcasting ramifications. We hope to improve the text of the Bill and promote improvements that are in the best interests of public service accountability at all levels of broadcasting in the United Kingdom.

6.34 p.m.

Baroness O'Cathain

My Lords, it is difficult to forecast the long-term effects of the huge advances in technology in the broadcasting industry. Most of us arc just capable of coping with the new technology. However, I have yet to meet an adult aged 30 and over who can confidently assert that he or she is competent to operate a video recording machine. But how many of us have the ability to consider how the latest developments can and will impact on broadcasting in the future? We must avoid supporting every aspect of the Bill, which looks fine now but which may, in a short time, prove to have results that are unacceptable. I fear that this Bill contains an area of concern which, if not remedied, may be invidious for the future health of broadcasting in this country. Before I deal with it, I should like to echo the words of the noble Lord, Lord Thomson of Monifieth, who thanked the Minister for his stated readiness to listen to all the considerations brought forward today.

The development of satellite and cable services has reached a point where a great number of people have grown used to having these services as the primary means of receiving the four terrestrial television services: BBC 1, BBC 2, ITV and Channel 4. Currently, cable operators carry the four terrestrial channels as a free service to their clients. They offer the BBC's two services prominently in their programme guides. That has been an excellent marketing ploy on their part. It encourages would-be viewers to take up the cable options that can, by the very nature of the advanced technology, give better reception. The nub of my concern is that there is no obligation on the satellite and cable companies to continue to carry and offer these services. As the number of subscribers to cable and satellite channels increases, a situation may develop where BBC 1 and 2, ITV and Channel 4 are dropped, as the attraction of carrying those broadcasts—i.e., the sprat to catch the mackerel—is significantly reduced.

Inevitably, new distribution systems will fragment the audiences and the BBC's future as a universally available public service will be seriously undermined, unless an obligation is placed upon cable and satellite operators to carry those services. I believe that this is a serious omission from the Bill which needs to be rectified.

The BBC, which is funded by the licence fee that all viewers are obliged to pay, is exceptionally good value for money. That was acknowledged in the debate in your Lordships' House last week. It is a national asset of which we are all duly proud, particularly when we are holed up in a hotel room overseas, zapping through the channels of the local television stations and constantly bemoaning the fact that there is no BBC. It is also the primary mechanism through which emergency information is carried to the public—for example, in times of war or national disasters. Access to BBC services is fundamental to guarantee that the public receive information in times of emergency.

Regulations that require distribution systems to carry and offer BBC services prominently will ensure that in a multi-channel environment publicly-funded channels are available as a matter of course via all delivery systems—cable, satellite and, who knows, any other system that is still only a gleam in the boffin's eye—without the need for viewers to buy new equipment. If audiences are to be guaranteed access to core licence-fee funded public service broadcasting—i.e., BBC transmissions—in the digital world there should be a guarantee of "must carry" status to those channels on wire-based services, and "must offer" status through satellite conditional access boxes.

In addition, as electronic programme guides become increasingly the norm and allow viewers to choose what they want from the menu on the screen, it must be right that the services of the BBC, as the primary publicly-funded broadcaster—I send a nod of thanks in the direction of the noble Lord, Lord Chalfont, for putting me right on the definition—are given prominence in such guides. In that way the public will maintain their familiarity with those services, for which they pay, and must pay, through the licence fee. I urge the Minister to consider these requirements, and I look forward to his comments.

6.38 p.m.

Lord Ashley of Stoke

My Lords, I apologise to the House for my absence during some earlier speeches. I was attending a meeting with the Minister for Disabled People which was arranged some time ago.

I am glad that the noble Baroness referred to the "must carry" provisions of the BBC, which I endorse strongly. I shall develop that point in a moment. By way of recompense for my earlier absence, I propose to cut my speech from 25 to five minutes. The Bill is an official declaration that the starting gun of the new broadcasting gold rush has been fired. The Klondike of the digital age offers massive fortunes to a few and more viewing opportunities to the many, but in the stampede some viewers and listeners will be trampled upon, standards can fall, and wealth can dominate. That is why this debate is of such importance. I was delighted to hear the speech of my noble friend Lord Donoughue and those of other noble friends before I had to leave the Chamber.

The challenge for the Bill is not only to provide a legislative framework for digital television and radio but also to ensure fairness for all, high quality programmes and comprehensive access to good television and radio. A sensible and indeed necessary provision of the Bill should he one requiring quality as an important aspect of licensing. That matter was referred to by my noble friend. The Minister made a good speech but it was not particularly impressive as regards the question of quality. It was not definite or specific enough. Perhaps, when he replies, he will be far more insistent and far more specific on the provisions. Without the provision for quality the licensing authorities are prohibited from taking account of programme quality. It is bizarre to prevent the licensing authorities even considering quality. It brings the licensing authorities into disrepute and it certainly providles a loophole for unscrupulous people. I hope that the Minister will he able to respond constructively to that point. I know that he will try to do so.

Another major issue is access. Many noble Lords have referred to that matter. I simply wish to add my support to the BBC's call for "must carry" and "must offer" provisions. Competition can only be beneficial if there is access to the market and that means no harriers whatever through gateways for any broadcaster—the BBC or any other. I feel rather redundant in referring to sport because that matter was dealt with so admirably by my noble friend and by many other noble Lords, and I know that the noble Lord, Lord Howell, will give a tour de force. I am a great fan of sport. Sky is trying not only to please existing viewers but also to attract new ones. That is fair enough but in essence it is using sport as supermarkets use loss leaders—to attract new customers. Therefore it is not genuine competition. That is one reason why I find the present situation unacceptable.

The basic problem is satisfying the viewers, rewarding the players and being fair to the broadcasters. That basic and profound problem is the nub of the whole debate. Obviously there is no simple satisfactory solution. There have to be compromises to reduce the gap between what the BBC and ITV can afford and what Sky will pay. There needs to be movement on both sides. Of course sponsorship is a possibility. We already have pseudo-sponsorship. As a fan and indeed proud patron of the Widnes Rugby League club, I am sorry to say that every major Rugby League match involves Wigan. It breaks my heart to say so. Every Wigan jersey is plastered with the name of Norweb and yet the BBC receives no money for promoting Norweb. That is absolutely ridiculous. Something more is required. The Government should take a hand and consider making direct payments.

Finally, I believe that this Bill should cater for deaf and blind people. I have some considerable experience of the problems of deaf people. We should aim at 100 per cent. subtitling and a special channel for those people who need signing. We should use audio description for blind people. I hope that at the Committee stage the Chamber will listen sympathetically to detailed amendments.

6.45 p.m.

The Earl of Stockton

My Lords, why is it that I have a sense of déjà vu? I look around your Lordships' Chamber and see so many familiar faces among whom I have spent so many long and, by and large, happy hours debating the intricacies of broadcasting and the media over the eight years since I became a Member of your Lordships' House.

I am sure that my noble friend Lord Inglewood will forgive some of us if we say to Her Majesty's Government, "We told you so!" My noble friend was at that time a Member of the European Parliament in Strasbourg, or, as we might say, dans un autre endroit, and so he will not recall that we warned the Government that the new bidding system for ITV licences would prove to be anomalous and unworkable. The Government have had to vary the system and conditions by order on a number of occasions since.

We cast doubt on the wisdom that allowed the Murdoch empire's satellite arm to be outside the cross-media provisions of the Act. Little did we imagine that before the ink was dry on the Royal Assent, BSB would be swallowed up by Sky. Little wonder, therefore, that Sky mobilised such powerful support in your Lordships' House to resist the concept that Sky should fall within the scope of UK legislation at a certain level of market penetration, because even as we were debating the Bill in Committee it knew that with the assimilation of BSB it would have passed the threshold in a matter of days, not months. I endorse, therefore, the wish of the noble Lord, Lord Thomson of Monifieth, to regularise the position of Sky.

I hope that my noble friend will appreciate the irony when I tell him of my suggestion that the regulation of broadcasting was a task singularly unfitted to the Home Office, and that what this country needed was a ministry of culture. That suggestion was rejected, not to say ridiculed by my noble friend Lord Ferrers as foreign, alien and essentially un-British. Ah well, one Minister's ministry of culture is another's Department of National Heritage!

Nevertheless, there is much in this Bill that is to be welcomed. Britain is good at broadcasting. It is something in which this country excels and something of which we have every reason to be proud. All over the world British programmes and British broadcasters command respect and admiration for their quality and authority. The creative talents and skills of our programme makers are second to none. This is not by chance. The quality of our broadcasting is the product of choice; choice that has been secured and widened by successive Conservative governments. They have put in place a strong framework that combines the public interest with effective competition; a healthy environment in which high standards have been maintained and in which the viewer and listener enjoys real choice. I have to say as one who is relentlessly middle-brow that the success of Classic FM has added much to the quality of my life, especially when I am behind the wheel.

Let us not forget that it was a Conservative Government who created an alternative to BBC television by setting up the independent network in 1955. It was a Conservative Government who established Channel 4 in 1982, operating under a statutory remit to innovate and to extend choice but without any subsidy from the public purse. The present Government have continued to support the BBC, as we discussed last week in your Lordships' House. They have reinvigorated ITV and have promoted competition in the commercial marketplace by allowing Channel 4 to sell its own air time. That is a welcome extension of advertiser choice at a time when the number of ITV sales outlets has been reducing.

The Bill before your Lordships reflects the ever-increasing tempo of change and technical innovation. I remember a pundit telling me in 1990 that he saw no way that digital terrestrial television would he feasible before the end of the first decade of the next century. So much for pundits! First, there is a new framework for the introduction of these digital services. Secondly, the ownership rules arc to be liberalised to encourage new players and new ideas as broadcasting expands and as the viewing and listening public demand a wider range of programmes and services.

As a publisher, I welcome this further liberalisation. Broadcasting, like publishing, can only benefit from wider choice and a more plural marketplace.

Before turning to the future, there is one hangover from the 1990 Act which is not corrected in the Bill. That is the funding arrangements for Channel 4, as has been pointed out by the noble Lord, Lord Donoughue, and my noble friend Lord Blake.

Your Lordships will recall that in the last legislation the Government's three objectives for broadcasting were competition, choice and quality. In the case of Channel 4, choice and quality were to be guaranteed by the continuation of the statutory programme remit, established in 1981, which requires innovation and the extension of viewer choice beyond the output of ITV. Whatever your Lordships may think of Channel 4's programmes, no one can argue that the channel has not carried out that part of the brief imposed on it.

Competition was to be encouraged by requiring Channel 4 to sell its own airtime as a freestanding organisation, thus ending the monopoly by ITV of the sale of terrestrial television advertising. Channel 4's new task was to earn its revenue competitively and to fulfil its remit by returning the proceeds to programmes, for the benefit of audiences. The ITV companies, on the other hand, being in the business of making profits for shareholders, among whom I know are a number of your Lordships, were quite properly required to make voluntary bids for the right to broadcast.

In 1990 the Government were still concerned that, despite Channel 4's initial success in winning audience share, it might not be commercially viable nor earn sufficient revenue to support its service. They put in place a safety net against failure by which the channel would be subsidised by ITV if its advertising revenue fell below a certain threshold. It is important to emphasise that this was not a deal with ITV. It was not intended to provide either long-term income for ITV, or to sustain ITV's own programme remit. Indeed, the safety net was registered, quite properly, with the European Union for clearance as state aid, as designed to support the public service remit of Channel 4.

Three years into the funding formula its effects are clear—and completely perverse. Far from being a failure, Channel 4 has been a great success, making profits before payments to ITV of £39 million in 1993 and £84 million in 1994. It has reserves of nearly £200 million. No serious independent analyst expects Channel 4 to be in a position of receiving money from ITV; nor does the Independent Television Commission, and nor, I suspect, does my right honourable friend the Member for Surrey South-West in another place.

All I ask my noble friend the Minister is, if he continues to believe that Channel 4 still needs to buy an expensive safety net from ITV, on what figures does he base such a forecast? Without such supporting figures, if he continues with that assertion I can only assume that it is merely a departmental shibboleth.

If Channel 4 did need help after 1997, ITV could not really provide it. Under the terms of the funding formula Channel 4 would have to lose one-third of its annual advertising revenue (namely, £150 million) and a further £150 million from its reserves before triggering a subsidy, which would at any rate be limited to £40 million a year—certainly not enough to rescue it in that event! I find it difficult to envisage any scenario in which the safety net would be invoked and in which it could save Channel 4. The very Ministers who devised the formula in the 1990 Act have stated that it has not worked as they, or Parliament, intended. It has therefore proved to be unnecessary and ineffective.

That alone would he good enough reason to change, but in fact the position is worse in that the formula has become counter-productive. Instead of supporting Channel 4 it has become a drain on the company's programme-making capability. Under the terms of the formula Channel 4 is obliged to pay to the ITV companies half of its so-called excess advertising revenues. By the end of 1997, when the formula is due for revision, the ITV companies will have received around £300 million—three times what they forecast when they hid for their licences in 1991. That is no more and no less than a direct subsidy to them from Channel 4 at the expense of programmes and films.

I have to ask myself, and my noble friend, why the ITV companies require such a subsidy. They are not using it to support their programme making. They all have profits considerably in excess of the Channel 4 transfers and can hardly claim that they need the money to ensure their survival. No, my Lords, the money is going to the shareholders, numbered in thousands, and not to the viewers, numbered in millions. Does a company like Granada need £15 million from Channel 4 when it can afford to bid billions of pounds for the empire of my noble friend Lord Forte?

Parliament, in the 1990 Act, always intended that this matter should be reviewed. The Government recognise that, because they propose in this Bill to take powers to reduce the 50 per cent. figure after 1997. My noble friend must accept that the formula is working perversely. Clearly the ITC accepts that, as does the National Heritage Select Committee in another place.

The Government's proposals set out in Clauses 65 and 66 of the Bill fail to solve the problem; they merely prolong the agony. Tinkering with the percentages may marginally staunch the flow of funds, but it will lock the ITV companies, Channel 4 and the Secretary of State into a regular, perhaps endless, battle over the prescribed percentages. It will be a continual battle over who gets what proportion of Channel 4's earned income, and is no way to organise a fair and competitive commercial situation.

My noble friend has suggested that £300 million is a reasonable insurance premium for a maximum claim of £40 million, with the insured bearing the first £300 million in damages himself. I cannot agree with him, for it is axiomatic that insurance policies arc agreed and not imposed, and I trust that when we come to the Committee stage he will he minded to agree with amendments that I shall table to remove this anomaly once and for all.

Turning briefly to the future, I trust that in creating the regulatory framework for terrestrial digital television we are minded to allow the development of not only regional but sub-regional and local broadcasting. The limited range of digital transmitters allows, for the first time, the real possibility of parish pump television broadcasting. Not only would such programming, inevitably limited to a few minutes a week, he of inestimable service to the local community, it would I believe be a very real extension of local democracy, and one that I suspect might find favour with the Members of another place.

There is one small but significant technical point to be addressed. In common with many noble Lords, I am concerned that the provision of digital services will entail considerable cost to the consumer, especially to those least likely to change their sets—the less well-off, the unemployed and the elderly, who can least afford it. I shall be examining the possibility of some kind of short-term levy on the providers of programmes on the digital network to alleviate this, and also the obligation on the manufacturers of the necessary black boxes to decode the digital signals to make them compatible with other digital, cable and satellite transmissions. One black box that accepts all cards must be achievable.

Lest my noble friend considers that I have been overcritical, let me assure him that I welcome the Bill most sincerely. I congratulate him on the way he introduced it, and I look forward to working with him and your Lordships' Committee and his department in turning what is a good Bill into a potentially great one.

7 p.m.

Lord Elis-Thomas

I am very pleased to follow the noble Earl, Lord Stockton. There is always a danger on Second Reading of a technical and detailed piece of legislation that we end up simply flagging the amendments we intend to introduce. However, the noble Earl made a good point, not only in relation to the Channel 4 formula—I am sure that there will be support from some noble Lords on these Benches on that issue—but also the important technical issue regarding the nature of the change in technology. As he described, we can now have not only international, national and regional, but also local communication and broadcasting.

I sat on the Standing Committee in another place on the 1990 legislation. I was concerned that we always fail as legislators to regulate in good time and to anticipate technological changes. That is why we visit or re-visit broadcasting and the media at least once every five years, and no doubt it will be a shorter timescale in future. As we move from broadcast technology to a multi-media context, we are dealing with rapid changes which at member state level we often fail to regulate. That is why matters such as the achievement of European standards in this area are crucial.

All aspects of relevant technology may not be covered by the Bill. Perhaps I may flag up one issue which I intend to raise. I refer to microwave video dissemination. The Government are addressing microwave video distribution in a number of departments. The DTI has undertaken substantial research into the whole area. It is important that when the Department of National Heritage deals with broadcasting legislation it should work in close harmony with other departments that are taking the lead in areas of technological development. We shall wish to return to that issue.

On a local level—it is very attractive to some of us who live in valley communities, surrounded by mountains—the system could create a greater range of programming and dissemination opportunities than the digital terrestrial proposals set out in the White Paper and the Bill.

I agree entirely with, and indicate my support for, any proposed amendment from my noble friend, as perhaps I may call him, Lord Ashley. I agree that we need to address far more strongly the issue of the deaf and visually impaired. We are beyond the code of guidance suggested in Clause 19 of the Bill. I shall support any amendment of the noble Lord which strengthens not just the Teletext services but the audio-described television he indicated. The technology is already available to provide far greater access to the media for those who are deaf or visually impaired. We need to address that issue more strongly in the Bill. I give notice of support for any amendment that he will produce.

I, too, congratulate warmly the noble Baroness, Lady Smith of Gilmorehill, on her maiden speech. She addressed what I believe is the central issue of the debate: the relationship between the attempt to hold together a public service broadcasting culture with the technological determinants that face us and the influence of the market. It was a thoughtful, philosophical speech in the best tradition of Scottish moral philosophy. I cannot pay a higher compliment than that.

The Bill has four large parts to it. The first deals with terrestrial television. We shall need to consider a number of aspects, in particular that of cost. For example, as regards Wales and the hills and valleys model, the cost of adaptation of the six main transmitters serving Wales would not be massive. That, I believe, would be NTL's estimate. But what would happen with the 180 sub-transmitters? What will be the cost of the adaptation of all those repeaters in order to make reception possible throughout hilly and mountainous areas? It concerns me that the government estimate of the early stages of population coverage—that is before we come to the switch-over and removal of the analogue service—may be over-optimistic. We shall wish to pursue that issue in Committee. It is a matter on which we shall require technical advice. Those of us who proposed that there should be early legislation for digital broadcasting in the 1990 Act will return to some of the advisers we then had. We look forward to an ongoing technical debate with the Government's advisers on the issue. Members of this House and of another place need all the advice to be obtained as we pursue the issues.

The second part of the Bill deals with digital audio broadcasting. Since I forgot to declare an interest, as chairman of Screen Wales, when I spoke about television, I must remember now to declare an interest as a director of Marcher Sound, an independent local radio station which serves the Marches of Wales and the North Wales coast.

I am a little concerned that the regime proposed in the Bill and set out in the White Paper for ILR may not be as rigorous as for INR. Again, we shall wish to pursue that in Committee. I am aware that in the Radio Authority we have a regulating body which has proved its worth over the years, certainly since it was renewed under the 1990 Act. We shall wish to consider again as to how the licensing and multiplexing for radio will operate at the local level to ensure that there is a diversity of service.

The third part of the Bill deals with the funding formulae which were devised in our 1990 legislation. I have already referred to that concerning Channel 4. The other has been referred to eloquently by my colleagues. We do not form a Welsh mafia; we agree on important issues. However, it is nice to have the agreement on these issues of the official Liberal Party and the official Labour Party with the official Cross-Bench spokesman on Wales.

S4C has deep concern about its ability to continue to meet the technical challenges of a public service broadcaster in a "smaller" language. The authority and its chief executive are determined that they will respond effectively and with imagination to the challenge. But they need a level playing field. For those reasons they are concerned about the allocation of frequency, the way in which the multiplex will operate and their proportion of the frequency. That issue has been covered. They are concerned too with the funding mechanism to meet those challenges.

We have heard that the current funding on the present formula is based on 3.2 per cent. of the revenue from terrestrial broadcasting advertising. The transfer from DNH to the authority in 1995 amounted to some £63 million. The authority also raised nearly £7 million in other commercial activities. That global figure relates to its own commercial activity. It indicates that it is an enterprising channel. However, it is a matter of concern that while moving from the previous formula to the formula of RPI may appear to bring about a level playing field, because of the additional costs of digitalisation, the channel may well be unfairly penalised in relation to the topographical issues that I discussed earlier—potential transmission costs and so on. Therefore I ask the Minister to give an assurance at Committee stage that the formula will be one upon which, as he said in opening the debate, the channel can plan its business for the future.

Concern has been expressed that the wording of the Bill might indicate potential political interference by a Secretary of State. I am certain that no Secretary of State for National Heritage would wish to interfere with the internal activities of any broadcaster. I am sure that the Government are looking for a formula that will allow the Minister to pay such sums as may be necessary for the additional cost of digitalisation, to remove the funds when they are no longer available and to do it in a way that also guarantees a regular and consistent income for the channel.

The present form of words in Part III is not as helpful as it might be. I would like the Minister to look at that, as I am sure he will do, before we reach Committee stage. Others will wish to consider the wording. There are some formidable Welsh lawyers in this House, as noble Lords will know.

I wish to turn to one more important issue in relation to S4C which has already been mentioned. I make my final declaration of interest as chair of the statutory Welsh Language Board. As it happens, in our usual timely way we have managed, S4C and ourselves, to publish figures which are a good measure of the effectiveness of the channel. They are based upon an NOP survey of viewers in Wales. It appears that over 61 per cent. of the sample—that is the total population of Wales in a structured sample—watched some programmes in Welsh. If we take into account that only 18 per cent. are fully fluent in the population, that sample included a substantial figure who do not follow Welsh as well as the noble Lords, Lord Geraint and Lord Prys-Davies. Fourteen per cent. of those who can receive S4C said that they spent more than half their time watching television on S4C, receiving, we hope, a varied cultural output. Six out of 10 fluent Welsh speakers claim to watch at least half their television on S4C. A more important figure for me, as someone who is charged with extending the domain of the language, is that even among those who can speak no Welsh at all, 20 per cent. watch at least a bit of their programmes in Welsh. That includes the population in the Wirral who are tuned in to "Sgorio" and other sports programmes on S4C.

Twenty per cent. of all those who have ever spoken any Welsh—even a few sentences—who were sampled by the survey said that the use of Welsh on S4C encouraged them to try to use it more often. Clearly the channel is already fulfilling the duty laid upon it by the Government in the early 1980s to provide for a smaller language to have access to the mass media and for it to be part not only of providing cultural output for the population of Wales but of providing valuable employment. That includes my number two son who is employed by a facilities company, Barcud, in Caernarvon. That is my final declaration of interest, and I should remember it. There are over 100 independent companies, as well as the big Facilities House, which work for the channel, creating a cultural industry in Wales. The channel has provided employment throughout Wales, particularly in the north. That is an important investment in the country and the industry.

The Government are well aware of all I have said. They have done their fair share in developing the resource. I only hope that in the Bill we will do nothing to damage a success story in terms of the media in the UK.

7.13 p.m.

Lord Dixon-Smith

My Lords, I welcome the Broadcasting Bill, which is market-oriented and deregulatory in intent. The main aim appears to he to allow the market to achieve a greater measure of consolidation so as to produce stronger media companies better able to compete on the international front.

My purpose in speaking is to draw attention to a problem at the bottom end of the market where independent local radio stations provide services that have proved to he very popular. The Association of Independent Radio Companies has pointed to an area of unnecessary regulation which was acknowledged in the broadcasting White Paper but appears to have slipped through the net in the preparation of the Bill. Companies are unable at present to apply for two FM licences in the same area. The department has so far demurred at change because it appears to believe that this might lead to over-dominance by particular companies.

One needs a sense of proportion about local radio concentrations. The concentrations are very small compared with television, which we have spent most of the afternoon discussing. The largest radio concentration would have a total current market capitalisation of some £400 million. Granada-LWT's market capitalisation is £4 billion—10 times as much. The Bill expects that TV concentrations will grow further. In that context, radio companies are minnows by comparison and restraining local radio seems unreasonable.

I can see an argument in favour of restricting companies to one FM licence in areas where healthy competition does not exist. But, in urban areas where strong competition already exists, the argument for artificial restraint disappears. In London, for example, there are already some 20 local radio stations and more in the pipeline. We heard from my noble friend Lord Astor of Hever about Star FM, which operates in a limited market but one where there are 24 overlapping local stations.

If stations achieve popularity within this context, that is a good thing and more power to their elbow. But, if spectrum is a scarce resource, then popularity should be an attribute worthy of rewards rather than penalty. In any event, it seems anomalous to restrict development of local radio stations when there is no restriction on co-ownership between local radio and local newspapers.

If considerations of over-dominance nevertheless remain, let that be for the Radio Authority to take into account in its consideration of competitive bids for a new licence. There are also powers for the Office of Fair Trading to ensure a competitive market. Do we need to have a rule which prevents even an application for a second FM licence? That seems to be unnecessary.

I make a final point in favour of this measure of deregulation which I request. It might be argued that the restriction protects diversity. In fact, the reverse seems often to be the case. If there is a successful commercial format on one FM licence in an area, competitors all too often try to imitate that format when they are in competition. However, if one company owned two FM frequencies in its area, then it would he much more likely that the second FM channel would be different from the first. Diversity of ownership does not necessarily imply diversity of output.

The Committee stage will allow us to research these matters more closely, but I should appreciate an initial reaction from my noble friend on the Front Bench to the arguments that I have deployed on behalf of the local radio industry.

7.18 p.m.

Lord Howell

My Lords, first I must declare an interest as I am a non-executive director of Birmingham Cable, although I shall not touch on any of its affairs today. Secondly, I wish to say what a privilege it is to take part in a debate in which my noble friend Lady Smith made such an excellent maiden speech. It was particularly gratifying to those of us who were friends of John Smith and have admired Elizabeth Smith, if I may call her that, over the years.

We had some excellent openings from the Minister, my noble friend Lord Donoughue and the noble Lord, Lord Thomson of Monifieth. They set the tone for the debate and I am glad that we shall approach the Bill in a spirit of co-operation. I hope that tonight the Minister will depart a little from the technicalities of the Bill, which he covers so well, and deal with some of the big issues which arise, particularly sport. He was unable to deal with it when we debated the Charter last week.

I give advance notice of the topic to which I shall return in a minute and I especially hope that the Minister will deal with a question I wish to raise. I have to disclose to the House that in the forthcoming World Cup cricket tournament the entire nation will be deprived of seeing any highlights on the BBC as a result of the withdrawal by Sky Television from the agreement into which it had entered. That is a very serious matter, and I shall return to it shortly. I give notice to the Minister that I should like him to express the same concern as some of us already have done on this subject.

The Bill is an essential piece of legislation, given the technical revolution now available to broadcasters. Vital questions are raised, and they have to be dealt with in this Bill. Previously, every legislative approach has been an attempt to catch up with the existing broadcasting situation, which has seemed to be ahead of the legislators. I hope that this Bill will reverse that process. The Television Act 1954 established ITV; the Broadcasting Act 1981 granted powers of regulation in relation to sports coverage of (and the House should note these words) "events of national interest". That was a declaration by Parliament of immense importance—now challenged, I am afraid, by Sky and some sporting bodies—that the coverage of sports events on television affects the national interest. Parliament visited this subject again in the Broadcasting Act 1990, when these events of national interest had then come to be called "listed events"—about which we shall hear much during the passage of this Bill.

The crucial question in 1990 led the Minister in charge of the Bill, the noble Earl, Lord Ferrers, to put the issue, as then seen, very clearly to the House. I will quote his remarks: The rights to sporting events are … a form of property. The sale of those rights is one of the principal means by which sporting bodies … could raise revenue. The Committee would … have to consider whether the apparent mischief which the amendments seek to prevent warrants such a measure"— as was then being put before the Committee. The "apparent mischief' was that listed events would soon he available only on satellite channels—a mischief indeed!

The noble Earl concluded: a satellite channel would not he able to show a listed event on a pay-per-view basis. It would therefore almost certainly only he able to show a listed event at a substantial loss".—[Official Report, 26/7/90; col. 1691.] That statement, which has proved to be totally inaccurate, though I do not blame the noble Earl, has dominated government thinking, and still does. It is that fundamental thought that has to be corrected. The reality of today is a million miles away from that situation, and it is the reality that we now have to address.

The face of British sport, as it is broadcast to the nation and the world, is determined nowadays not by sport but by Mr. Murdoch, his News International and Sky Television. I join with the two Front Bench speakers in saying that I admire very much some of the things that he has done and the programmes that he has brought about. I have two subscriptions to Sky, one in London and one in Birmingham. I take advantage of it. So I am not prejudiced in that direction. But the time has come for this monopoly to be opened up. That is the essence of the matter.

The major spectator sports division of the Central Council for Physical Recreation wrote to many of us, certainly to me, demanding no interference with its right to maximise its earnings through selling sport to satellite television. We should take note of that. That committee is chaired by the chief executive of the Rugby League, who has just negotiated one of the most extraordinary deals in relation to the future of his sport ever seen in the history of British sport.

Conflicts of interest litter the membership of that committee. Some are legitimate; others are not. Members of the committee are entitled to safeguard their financial interests, as noble Lords on the Front Benches said. But we have a duty to protect the national interest, and that consideration must be supreme. We must not deny this facility to millions of householders who have no access to satellite, mainly through high costs—I believe Sky has increased the cost of its sports coverage three times, an increase of about £100 in recent years. To deny the millions of elderly who supported their sport in better days the opportunity to do so now, in old age or difficult circumstances, is not acceptable. It is anti-social.

I am very sorry to say, as senior vice-president of the CCPR, that to remove from the screens of BBC. ITV and Channel 5 the exposure to sport which millions of young people will undergo if these trends continue would remove from future generations the inspirational effect of British sport which television brings to youngsters, who see the events on television and then want to take up those sports. Therefore, this policy is self-defeating in terms of the future interests of British sport. I regret that none of these considerations finds time or space within the CCPR letter. It should think again and make sure that they do.

To return to the activities of Sky, we must note again what some of us mentioned in last week's debate on the BBC Charter: the control of Rugby League by News International; the saturation coverage of some sports now, particularly football, with all the dangers that that brings for the future, which again might well rebound on the football authorities that allow it; the exclusivity now beginning to creep into cricket coverage, of which I just gave an illustration and to which I shall return; and the removal of much golf, especially the great Ryder Cup victory, in which we all took pride but which was denied a showing to the majority of people in this country. That cannot possibly be right if we regard important sporting occasions as being of national interest. If ever there was a national interest, the Ryder Cup certainly provided one.

These examples are just for starters. Who can doubt that next will come attempts to corner Wimbledon tennis. Let us hope that Wimbledon and the LTA will maintain the resolve that they have shown so far to ensure that maximum audiences for their sport are in their interest, and that they will resist the financial temptations that will no doubt he put in their way. So, too, with Formula One racing.

The most spectacular example of all is the future of the Olympic Games, for which I understand (if reports are accurate) Mr. Murdoch is now offering £1.2 billion for exclusivity. There is no more important sporting festival in the world, bringing the world together, uniting the world with 60 nations competing, than the Olympic Games. We must hope that president Samaranch, who has always maintained a realistic sense of duty in these areas and has always insisted on working through such bodies as the European Broadcasting Union so that the games can be available to the widest possible audiences, will maintain that principle, even though Mr. Murdoch is trying to seduce him. As I know from my own experience, president Samaranch is a difficult man to seduce.

Noble Lords


Lord Howell

I am talking in sporting and realistic terms.

Turning to the detailed amendments some of us would like to see discussed or inserted in this Bill, it is right that we give notice at this point. Each one of them will provide an opportunity for debate and for the Government to deal with them separately.

We must start by repeating in this Bill Clause 182 of the Broadcasting Act 1990, which deals only with pay television and sporting events. The clause has to be extended to cover subscription television, which was not considered as it was not in evidence at the time when the 1990 Act was discussed by Parliament. We have to consider whether the present list of eight national events should be extended. I believe that it should, but there will he another opportunity to go into detail.

Then there is the question of highlights on television which must be separated from live coverage, so that the public at large can be guaranteed, as in the cases I have already instanced, that at least sight of some major sport is available to them through highlights, even though coverage has been sold to satellite television. I believe that we have to deal with conflicts of interest. Therefore. I shall myself seek to provide that television companies or their executives, having the rights to televise sport, shall not be involved in the government of that sport. That is a very important principle which hitherto has not raised its head—not until recently when the situation in Rugby League and possibly Rugby Union has come to our attention.

Then there is the need for sensible control by regulation or, as I shall propose, by a commission on sport and television, in order to look fairly at the interests of satellite and terrestrial television channels, as well as of sport and the public at large. My noble friend Lord Donoughue mentioned that point. At the moment, it is nobody's job to hold the ring fairly on behalf of all the interests. Whether or not my solution is adopted, the problem has to be addressed by this House and by the Government.

I come to the cricket World Cup, which I mentioned earlier, which is to take place soon in Pakistan and India. The BBC was approached by Sky to televise the highlights and asked if it would agree to do so. Sky started to negotiate with the cricket authorities. The BBC agreed at a fee of over £1 million for the highlights of that world cup which will take place in a few weeks' time. The deal was done by Sky with the cricket authorities, whereupon Sky promptly ditched the BBC. Therefore—I do not think the nation understands it at all and they ought to do so, although there has been no comment about it—we now face a situation in which, at the world cricket cup in two or three weeks' time there will be no highlights available. There will be no such coverage for the whole of the nation unless they own Sky or have access to cable. That is a disgraceful situation. It highlights some of our problems and fears about the direction in which we are moving.

I do not expect the Minister to say too much tonight but I hope that he will take the issue on board and say that he and his ministerial colleagues will look at it in the interests of English viewers. We do not want another Ryder Cup situation. I hope that we do have a successful cricket team, which would be unusual—a modest phrase, but we all hope that it will be successful and wish it well. The nation as a whole is entitled to enter into such competitions and to participate through television.

Finally, my noble friend Lord Donoughue raised the issue of what I call "decoders". I have heard them given other names. At the moment News International owns them all. I do not read anything in any way subversive into that. I believe that it has come about as a result of its normal entrepreneurial activities and that should be acknowledged. But pay television, which the BBC or ITV may well wish to take up with the new opportunities that are available to them, can only be taken up if their smart card giving access to their programmes is acceptable by the black box which is totally owned by News International at the present time. The dangers are obvious. If any of those organisations wish to offer realistic money to the sports bodies— I hope that they do—then, as I said last week, they will probably have to move into some areas of pay television in order to generate the income to compete with Sky Television. It would be totally unacceptable if they were not allowed to do. that because their competitor owned all the black boxes. The problem needs to be stated and taken on board by the Government and by the House.

These matters concern the national interest. There is great national interest in sport. Therefore, it follows that there is great national interest in the delivery of sport to the homes of most of our citizens by terrestrial or pay television. That has to be provided for and it would be quite wrong for the Government and Parliament not to provide for it when the opportunity is given in this Bill. If we miss the opportunity now, it may be well into the next century before it comes again and we should be creating great hardship for sport and genuine followers of sport who do not have deep pockets from which they can ensure that they can follow the sport which they traditionally champion.

7.35 p.m.

Lord Pearson of Rannoch

My Lords, much of what I intended to say has already been said by noble Lords, and in particular the noble Lord, Lord Chalfont and my noble friend Lord Caldecote. I shall not weary your Lordships by repeating any of it now except to say that I align myself in particular with the remarks of my noble friend Lord Caldecote.

I listened to nearly all last week's debate in your Lordships' House on the BBC's Charter and Agreement. I was tempted to speak in the gap because it seemed to me that three quite important points had not been made. I have not heard them this evening and as they seem pertinent to this debate, perhaps I may make them now. They come under the broad heading of quality and concern political bias and the ability, especially of television, to undermine our culture.

I know that bias is often in the eye of the beholder. I agree that it is the duty of free media to keep a highly critical eye on the government of the day, especially perhaps on one which has been so long in power as our Government. But I am one of those who believe that the BBC, among others, has done much to diminish our culture, which is not nearly so racist or atheistic and immoral as the BBC would like us to believe and, indeed, would encourage us to become. I cannot see that it has attempted to put anything enduring and worth while in the place of what it has often done its best to knock down.

My first point about what I see as a disturbing state of affairs may strike some noble Lords as extreme lateral thinking and perhaps even irrelevant. But, during my 10 years validating so-called academic courses in the polytechnic sector, I discovered an almost universal bias, of the kind that I described, in the media studies courses, which often are much the same thing as cultural studies. Similar bias, as I think many noble Lords will agree, toward what are termed in the jargon "issues of gender, race and class" was and I am sure still is to be found in our teacher training, social studies and much of the humanities. This is not the moment to debate higher education. I shall simply comment that there does not seem to me to he any system of quality control in higher education—I say "quality control" as opposed to "quality assurance". I should expect our media studies courses today to be just as bad as, if not worse than, they were three years ago when I spent much of my time looking at them.

My point—the lateral thinking will perhaps come home to roost at this point—is that I understand that many people with a media studies degree enter the media. I feel that an examination of the area that I indicated might repay anyone interested in the quality of our television and particularly that of the BBC.

Let me give an example. I happened to be looking at the 9 o'clock news on BBC last night, in which there was a largely balanced programme on the proposal of the Government's chief schools curriculum adviser for a new moral code for the curriculum. I thought that the social affairs editor of the BBC News dealt with the programme perfectly fairly until he came to the end, when he delivered the punch-line of his presentation. He ended by saying, all the signs are that parents want schools to provide a strong moral lead. Yet beyond sets of worthy principles it'll be hard to identify a national consensus". That reflected the programme fairly and I am sure that it is fair enough so far. But then he went on, And attitudes do change, slavery was once condoned, illegitimacy condemned. The difference then was that those in authority were better at ordering people what to do and at concealing faults in themselves". That was the end of the programme. Whatever one may think about those in authority being better at ordering people to do what they want them to do and concealing their faults, it is a matter for us all to consider rather carefully. But the phrase I particularly object to in that summing-up punch-line is that illegitimacy used to be condemned, the inference being that it now is not.

I hold no brief for illegitimacy one way or the other. But I am sure that there must have been a lot of people watching that programme, perhaps with teenage children, who will have found that very offensive. They may not even have spotted quite why they found it offensive, but it probably did the damage that it was intended to do.

I go back to my second point and would like to remind the Government that drama has a far greater effect on our social attitudes than news or current affairs. The slanted programme which exaggerates the cuts in our health service, for instance, has far more effect on what people believe than does a boring slanging match between politicians.

My third point is that some 54 per cent. of all children under 16 now apparently have an unsupervised television in their own rooms. If that is so, the efficacy of any nine o'clock watershed must surely be in some doubt.

It is for those reasons and others on which I do not have time to dwell now that I agree with the noble Lord, Lord Chalfont, and my noble friend Lord Caldecote, that the proposed BSC must he given real teeth in this Bill, and it must be obliged to use them. It is no use leaving it to our old friend self-regulation and pious hopes that the governors of the BBC and others will do their stuff. They will not, as the Bill is drafted, and we shall all he the worse for it.

I had thought to end my few remarks there until I heard the intervention of the noble Lord, Lord Howell, who I regret to see is no longer in his place. I have been struck by the considerable amount of criticism that Mr. Rupert Murdoch has received this afternoon, together with his various companies. A number of noble Lords also paid tribute to the remarkable business acumen of Mr. Murdoch, but now, after the game has been won, they seem to want to move the goalposts against him in relation to the rules by which he played it.

I refer particularly to the amount of sports coverage Mr. Murdoch now offers. In that, I must declare a complete lack of interest. I do not have Sky Sports and, unfortunately for me, professional sports give me no pleasure. But, like many noble Lords, I have been sent numerous briefs on the Bill. Given the treatment which News International received this evening, I dug out one it sent to me. I have no reason to think that any of the claims in it are inaccurate. It claims that Mr. Murdoch's position in our television provides better funding for sport; greater coverage and wider choice for the viewer; improvements in quality and better access for youth and minority sports. The deals which Sky has made with football put some 10 to 15 times more money into the game than the deals of a decade ago. Sky provides over 10,000 hours of sports every year, compared with 1,500 on the BBC.

Then we come to one of the most remarkable statements in defence of the wicked Mr. Murdoch, and it is this: that we all seem to labour under a common misconception that BSkyB has increased its coverage of sporting events by taking them from terrestrial channels. In fact only 1 per cent. of current Sky sports coverage used to be shown on terrestrial channels: the rest is all new; it is additional programming. Whatever that 1 per cent. means to the channels which lost it, the rest must represent an enormous increase in overall sports coverage.

Then we come to the, question of access for youth and minority sports. It seems that over 30 per cent. of men under 25 and children under 15 live in a home with a satellite. That strength with the country's youth has been attractive to many sports bodies which wish to reach that elusive audience and to promote their sports at the grassroots. That seems to go against what the noble Lord, Lord Howell, was saying when he said that he felt that our children in schools were being disadvantaged by the presence of Sky television.

That brings me back to education and to what has been going on in our schools, where—certainly in our state schools—regrettably, competitive sports have been continuously and consistently dropped over recent years. I am afraid that in many schools they have been regarded as elitist. In case your Lordships do not know what elitism is, it is in the "classist" platoon of the gender, race and class brigade.

I therefore disagree with the noble Lord, Lord Howell, that the young are, on the whole, disadvantaged by Sky in relation to sport. I must ask also whether the costs are so tremendous. Even our poorest people make investments of a kind which could give them Sky television. I have just been offered Sky for £240 in a remote house in Scotland and understand that it will cost me £1 to watch a football match. I do not know what unit one is supposed to describe it in nowadays, but that is not a large quantity of beer.

I understand those who want to see the principle of universal reception given to everyone in this country. I do not know how we achieve it, but I must submit that it is much less important than some of the other issues that I have raised this evening.

7.47 p.m.

Viscount Chandos

My Lords, I too thank the noble Lord, Lord Inglewood, for his lucid introduction to the Bill and pay tribute to the contributions, and stamina, of all noble Lords who have spoken today, but most of all to that of my noble friend Lady Smith of Gilmorehill, whose speech I enjoyed, admired, and envied for its incisiveness. At this hour I shall do my best to emulate the spatial aspect of that incisiveness, if not aspiring to the same quality.

I shall begin by declaring a number of interests. As an investment banker I act as financial adviser to a number of UK and overseas media groups, including those holding ITV, Channel 3 and other broadcasting licences. I also have an interest as a director of, or shareholder in, independent local radio stations, an advertising agency, film and television production companies and a film exhibition business. As I have suggested to your Lordships in the past, I hope that the variety of those interests aids rather than hinders the objectivity of my views.

If your Lordships have approached this Bill in a non-partisan spirit, that in no way diminishes the complexity or difficulty of some of the issues raised. The whole area of digital broadcasting is one where, across the parties, there is a common aim of successfully introducing the next generation of broadcasting, but a shared anxiety of how best to achieve it. I join other noble Lords in suggesting that new technology should be the servant and not the master of that process; TW3 and TSR2 may both have gained notoriety in the 1960s, but we should remember that one was a successful satirical television programme and the other a commercially and economically disastrous implementation of the cutting edge of aerospace technology. We shall return to that conundrum in Committee.

Similarly, I shall not prolong your Lordships' agony in addressing other subjects such as the merger of the BCC and the BSC or the maintenance of ITV's regional quality, which have attracted broad cross-party support. Even the funding of Channel 4 attracted a high degree of consensus, acknowledging that, as in many areas, the 1990 Act missed the target with monotonous regularity.

The position on the Channel 4 safety net must be rectified fairly for all parties, which points inexorably to timing this to coincide with the earliest date for the renegotiation and extension of the Channel 3 licences. In the meantime, since Channel 4's reserves have grown so much, presumably so much faster than Channel 4 and the Government had forecast, and since there is such widespread confidence that its share of terrestrial television advertising revenue will not fall below 14 per cent., it would surely not be imprudent to allow it to devote all or part of the 25 per cent. surplus designated annually for addition to its statutory reserve for investment in programming instead. We can perhaps explore this also at the Committee stage.

On sport as well, I am optimistic that the noble Lord the Minister will find the widespread concern on all sides of the House an irresistible force to propose, or accept, a judicious strengthening of the protection afforded to terrestrial coverage of major sporting events without unduly cramping the beneficial consequences of the digital revolution through massively widening choice for sports enthusiasts and enhancing the financial position of the sports being covered.

We know that all members of the Government look nervously over their shoulder for the approbation, or otherwise, of the previous Prime Minister. I would not therefore wish to put the reputation or happiness of the noble Lord the Minister in jeopardy by suggesting, at least publicly, that he was a one-nation Tory. But what your Lordships' House and the country want him to be is a five-nations Tory.

My noble friend Lord Donoughue, in addition to his excellent speech today, argued powerfully last week in the debate on the BBC Charter that the BBC's support for the performing arts must be maintained. So, too, should the independent sector's. While declaring an additional interest as a director of English National Opera, I believe that all your Lordships would share my concern at the diminishing number of broadcasts from many of the country's leading opera and other performing arts companies, while heavily sponsored recordings of the Metropolitan Opera of New York, for instance, dominate the classical music airwaves. At a time when the Arts Council grant has been cut in favour of subsidising the ownership of classic cars, I suggest to the noble Lord the Minister that the profound and productive relationship between the subsidised performing arts and the commercial broadcasting industry would justify the allocation of a small percentage of that industry's payments to the Government to make up for the acute shortfall of current funding for the arts, perhaps on a matched basis with the broadcasters. To win that modest but logical concession from the Treasury would demonstrate that there was real merit in having broadcasting and the arts fall under the same department.

Finally, I should like to address the relaxation of ownership rules, both on a cross-media basis and to allow, in some cases, further consolidation within the individual sectors. I vigorously support the noble Lord the Minister in his argument that larger and financially stronger media groups are needed in this country to exploit the opportunities opening up, to serve their customers and to expand their employment and profitability. That is one reason for allowing the principle of cross-ownership of electronic and printed media, and we can return at Committee stage to debating whether every detailed clause of the Bill is yet perfectly honed to provide equal treatment to all the different industries.

But another reason for this proposed relaxation is that in many of the different sectors, printed and electronic alike, the major companies have established a level of market share—in that market—at, or close to, or even above, the limit of fair competition. Cross-media expansion provides the alternative opportunity for new growth and the productive interaction between previously separated sectors.

There remain, however, overwhelming arguments for preventing the concentration of power within specific, discrete, markets, whether for rights, subscribers or advertisers. I therefore join wholeheartedly with my noble friends Lord Donoughue and Lord Howell in advocating the rigorous application of competition policy to encryption and subscription systems for satellite and digital and terrestrial broadcasting and hope that the noble Lord the Minister will give your Lordships' House the unequivocal reassurance that it is seeking.

Furthermore, I hope that the noble Lord the Minister can provide both clarification and reassurance that nothing in the Bill overrides the normal workings of the Fair Trading Act and the OFT's regulation of competition issues. Currently the three major ITV groups control, whether through licence ownership or the management of airtime sales contracts, close to 25 per cent. each of total television advertising revenue. Indeed, at the time of the last consolidation within ITV, two years ago, each of those groups gave undertakings to the OFT—lasting at least until 1999—that they would not increase their interests significantly beyond their present level without the OFT's agreement.

I hope, therefore, that the noble Lord the Minister can confirm, particularly in the light of the DTI's participation in the preparation of the Bill, that the Government will hold these companies to their undertakings and apply normal competition policies in respect of concentration in television advertising. If that is the case, while it may be a few years before the major ITV groups can take full advantage of the audience share limits proposed in the Bill—since the BBC's position, inter alia, substantially changes the relationship between audience and advertising share—we can be assured of a competitive and healthy market for major advertisers. If, on the other hand, the Government see the Bill's limits as overriding or pre-empting the OFT's judgments, your Lordships' House may feel that an appropriate amendment would be justified to prevent undue concentration of market power.

I hope, however, that this will not be the case and your Lordships' attention at Committee stage can focus on establishing the vital long-term framework for thriving, competitive broadcasting and media industries in these fast-changing times.

7.58 p.m.

Baroness Flather

My Lords, before I begin, I cannot resist a comment on something my noble friend Lord Pearson of Rannoch said. He sees the issues of race, gender and class as being subversive and, if I understand him correctly, a threat to his culture.

Lord Pearson of Rannoch

My Lords, I wonder whether my noble friend will give way since she has been good enough to mention something that I said. I certainly do not see the issues of race, gender and class as being necessarily subversive of our culture and I have the greatest respect for everyone of another race, including my noble friend. It is just the way these issues have been used in our education system that has been so damaging to our culture.

Baroness Flather

My Lords, I am sure that we are all the clearer for that. These issues are of great importance to some of us. As regards class, I am sure that there are many other noble Lords in this Chamber who are better qualified to comment on it. I only know that class is not something that one is born with: either one has it or one does not.

Perhaps I may declare an interest before I start. I am a non-executive director of Meridian Broadcasting, which is a regional television station, and I am also non-executive chairman of an independent local radio station. A great deal has been said today about regional television and most of it, I am pleased to say, has been complimentary. Therefore it is not my intention to speak fulsomely about regional television because I believe that we all understand the value of it.

Everyone knows that commercial television has a bottom line called responsibility to shareholders. I would like to give noble Lords some brief examples of what Meridian does in terms of supporting the local community and some of the issues which are of concern in the local community. I was very pleased last year to launch a booklet on racial harassment. It is extremely well produced, it is simple and easy to use. If any noble Lords are thinking of producing a booklet on a major issue and it needs to be translated into several languages, I commend to noble Lords this booklet as an example of how to do it. The languages are all together in one booklet, including English, and that helps a great deal because we know these days that people speak English and other languages arid sometimes they need both to make sense of what they need to know.

The first print run ran out long since and we are now into a second print run. There was a rather wonderful letter from the Commission for Racial Equality and I cannot resist reading it to noble Lords. It says: This initiative represents the best in public service broadcasting and is entirely in keeping with the Commission's own mission statement which stresses creation of a just society free from racial harassment and violence". I make no apology for taking time to read that because, as noble Lords know, this issue is one of the closest to my heart.

There is a community liaison unit as well at Meridian which has three officers whose job it is to keep in touch with the local community and to act as a bridge on issues which are of concern. There is the Meridian Broadcasting Trust. There was also a trust when it was TVS. That trust was dependent on the telethon and with the demise of the telethon it was unable to survive in the same form. The trust now takes different kinds of themes to highlight each year. They are called the "Spotlight" programmes. If noble Lords arc in the Meridian area I commend these programmes to them.

The first was a deaf awareness programme. The noble Lord, Lord Ashley, was one of those who took part in it. It was called "The Sound Barrier". It was extremely successful. It was followed by fact sheets, booklets etc. which were very well received. The second programme was for the blind and sight impaired and it was called "Seeing Things Differently". Again, that programme was supported by fact sheets and various booklets. The third programme related to carers and took place last year. The fourth one planned for this year is called "Independent Living", which follows naturally from the programme called "Carers".

It is important to see these things in the context of the service that the regional television stations provide. There are other companies apart from Meridian which have initiatives that are worthy of a quick mention. I am not familiar with the details, but I know that Granada's "Challenge" programme netted about £6.5 million in investment in the north-west. That is very creditable because it is an area greatly in need of investment. Carlton has supported educational initiatives all around London. Yorkshire, Tyne Tees and Grampian take great pride in contributing to the regional culture and in trying to produce programmes reflecting the life of their own areas. Grampian has also helped in the resurgence of Gaelic as a spoken language.

That brings me to something which one cannot avoid at this moment; namely, the thorny issue of Channel 4 and the levy it has to pay to Channel 3. We have heard a great deal about Channel 4 being a public service broadcaster and BBC1 and 2 also being public service broadcasters. All the terrestrial channels are public service broadcasters. Channel 3 is a public service broadcaster. If one reads all the regulations that apply one finds that they are extremely stringent and the companies have to comply with whatever they have promised to do in their licence.

All of these channels are public service broadcasters. Channel 4, on the contrary—and I speak now as a viewer and not as a director of Meridian—provides us with a great number of American programmes and a great number of repeats, probably more than any other television channel. Noble Lords often complain about the dubious content of many of its programmes. Suddenly today Channel 4 has been elevated to something quite amazing; namely, that it is the best channel and it provides public service programmes. It is not Channel 4 which has received the most awards but Channel 3. Channel 3 is viewed more than any other terrestrial channel in this country.

On top of that, Channel 3 pays corporation tax, as noble Lords would expect, and a very heavy levy to the Treasury. Channel 4 does not pay a levy to the Treasury and does not have shareholders to placate. It is very important to remember that when we are talking about the relevant importance of these two channels. Channel 3 has calculated that it has lost £258 million in revenue since Channel 4 came on stream.

If the £50 million is not going to be paid to Channel 3, it will have to come from somewhere. Channel 3 will have to cut down and what will be cut will be what is expendable, which will include new programmes and community initiatives, and we do not want to see that. A level playing field will not be achieved by changing any single component in this complex formula. I am grateful to my noble friend the Minister for saying that the entire issue is going to be looked at in due course because, as other noble Lords have said, that is the only way forward. If we are to compete in the world market we need to have everything set out very carefully in this Act. It is worth remembering that there is indeed one service which is not a public service broadcaster and that is Sky. That should not be forgotten.

I have a little to say about radio because I am closely involved in local independent radio. I am grateful to my noble friend Lord Astor of Hever for mentioning Star FM. I know that his daughter enjoyed being with us and we enjoyed having her. I heard my noble friend Lord Dixon-Smith give as a reason for not having single local radio stations the fact that we had to compete with 24 local radio stations. That is not exactly correct. In different core areas one can receive up to 24 local radio stations. It is a very crowded area. I am talking about Slough, Windsor and Maidenhead. That one can receive these stations does not mean that it is not a core area for Star FM, which is protected. The Radio Authority sees to it that every radio station has a core area, but one cannot control the broadcast bands in such a way as to ensure that they do not move a few yards this way or a few yards that way.

Many points have been raised in this debate, including the question of ownership. I know that the Radio Authority would like to have the power to issue a code on that very difficult issue, mainly because the situation is likely to lead to litigation and long disputes. I hope that my noble friend the Minister will consider this as a matter of priority. The Radio Authority already has code-making powers in relation to the regulation of programming and advertising, so it would not be out of place for it to be able to issue a code on this matter. Perhaps in due course my noble friend will give us such an assurance. If not, I hope that other noble Lords will feel that it is worth supporting an amendment to that effect.

I have received a briefing note from a local newspaper organisation saying that local newspapers are frightened that national newspapers might buy up local radio stations. Independent local radio stations would not like to be owned by either local or national newspapers. We exist because there is diversity, and there would be no guarantee of diversity if we were owned by newspapers.

Finally, I refer to community radio. The idea that we should all have community radio sounds tremendously good, but I should like to draw to your Lordships' attention an amendment which the Community Radio Association would like to be brought forward. It defines community radio as: a service operated in a defined locality for the social and cultural benefit of the community, or a particular section of the community. by a non-profit distributing company or society whose membership is drawn from that locality or interest group". Apart from the words "non-profit distributing company", that definition applies exactly to independent local radio. The CRA has described us. We see ourselves as community radio and as part of our local community. Indeed, that is part of our performance promise. We cannot depart from that.

Perhaps I may make another point for clarification. My noble friend Lord Dixon-Smith said that if two radio stations were owned by the same company they would probably be more likely to promise diversity than would two local radio stations operating separately in one area. I do not think that my noble friend can be familiar with the performance promise. He must not know how strictly the Radio Authority controls what each radio station may or may not provide in its locality.

I see that I have taken up a great deal of your Lordships' time. I hope that the House will consider local independent radio to be worthy of protection and allow it to have as good a future as in other countries.

8.13 p.m.

Lord Birkett

My Lords, I am sorry to take issue so swiftly with the noble Baroness, Lady Flather, but I do not think that the debate about Channel 4 has anything to do with whether it is the best channel, whether it is better than Channel 3 or the question of its relationship to the BBC. The reason that Channel 4 has been mentioned so often this evening, and in particular the fact that its present funding formula is out of date, is quite different. Many noble Lords referred to that funding formula. The noble Lord, Lord Blake, and the noble Earl, Lord Stockton, thought that it was unfair, unnecessary and totally out of date. I entirely agree. I shall not worry your Lordships by repeating their extremely cogent arguments on the subject, but perhaps I may add a third reason why I think that the formula should be terminated as soon as possible.

I refer to what Channel 4 might have done with the money if it had not had to contribute to ITV. Its own prediction is quite formidable—and it really does not matter whether this is exactly what Channel 4 would do in any given year. With the £57 million that Channel 4 paid to ITV last time round—that is, about a year ago—it would have been able to make 12 new films, four new drama series, three new comedy series, three new documentary series and about four major broadcasts from, say, Glyndebourne or the Royal Ballet or of any of this country's other subsidised art forms. I accept, of course, that Glyndebourne has never looked for a subsidy.

That list is pretty formidable, especially in the context of the film industry in this country which has not had much support over the past two or three decades. The noble Viscount, Lord Falkland, took me to task in our debate last week on the BBC Charter in which I praised the orchestras of the BBC but did not mention what it did for film. What Channel 4 has done for film is formidably useful to a film industry which receives very little support from elsewhere. When we think of all the things that Channel 4 might have done with that money, that is a powerful additional reason for altering or preferably cancelling the present system.

I refer again to broadcasts from, say, Glyndebourne, the Royal Ballet or English National Opera. I took a lot of notice of what the noble Viscount, Lord Chandos, said about subsidies. Every time a major broadcaster picks up the work of something that has been subsidised by the Arts Council, the audience expands to such a point that the subsidy, from having been very heavy, suddenly becomes worth while. It becomes a few pounds per member of the audience instead of many thousands. Increasing an audience by a quarter of a million people, half a million people or even a million people simply by broadcasting a performance must he of value to the Arts Council, particularly given its pathetic and unnecessary recent cuts. If that could happen as a result of Channel 4 not having to give ITV that £57 million, the sooner that system stops, the better.

After all, we are talking about public broadcasting. Although it is a little unfair to take issue with a noble Lord who is not in his place, I must take issue with my noble friend Lord Chalfont because I do not agree that the phrase "public service broadcasting" is a soundbite which has become an unnecessary cliché I think that there is a better definition of the phrase than that given by my noble friend. I believe that it is not a matter of where the funding comes from initially; it is a question of what the objectives of that broadcasting organisation are. To me, a public service broadcasting organisation has as its primary aim and first priority the quality of the service that it provides for the public. It was the terror that the BBC might be diverted from such priorities that frightened everybody so much over the past few years which was, I believe, one of the reasons why your Lordships so welcomed the BBC's new Charter which we discussed last week.

If that definition of public service broadcasting is right, I believe that what Channel 4 might do if released from its burden is a serious argument for the Minister looking again at the formula and recommending to his right honourable and honourable friends in another place that the formula should not merely be altered but abolished.

8.18 p.m.

The Earl of Northesk

My Lords, as many of your Lordships will be aware, I lean towards being a technophile rather than a technophobe. As such, I can do no other than welcome the Bill most warmly. I have no wish to get bogged down in any exposition of the technology involved. My noble friend the Minister carried out that responsibility most admirably.

However, I should like to make one general point about the technology. The consultation paper Digital Terrestrial Broadcasting—I cannot let this moment pass without commending my noble friend's department for the clarity and succinctness of the document—commented: The technology is being developed now. To exploit it to the full will require vision, imagination and significant investment". In that sense the Bill affords us the opportunity to lead the world in digital technology. As we wrestle with the terminology of multiplex and the like in the coming weeks we will need generous helpings of that vision and imagination to ensure that this opportunity can he grasped.

I have common cause with the words that the noble Lord, Lord Donoughue, used last week when he remarked: Our aim should be to set out a framework which encourages growth in what is one of our most dynamic arid rapidly changing technological activities".—[Official Report, 9/1/96: col. 23.] In effect, we are not only licensing for the broadcast of digital terrestrial services; we are also licensing for the development of a specific technology that could and should have substantial benefits across a very broad spectrum of our social and economic fabric—in our manufacturing and communications industries, in education, in trade, and so on.

I have no doubt that the Bill's provisions with respect to cross-media ownership and the like are something to which we will be devoting a great deal of time in the coming weeks. For myself, I am somewhat ambivalent. I am suspicious of formulae in this area that create artificial or distorted markets. Against this, I hope that I am not too much of a technophile that I cannot recognise some of the dangers inherent in the immense power that the broadcast media have to influence their audience, dangers that carry much greater risk if the power is invested in a single entity. I look forward to hearing in Committee the perspectives of those of your Lordships better versed in the matter than I.

There is a consensus that the merging of the Broadcasting Standards Council and the Broadcasting Complaints Commission into the Broadcasting Standards Commission is welcome. I concur with that. So far as the BSC's functions are concerned, it is of course inevitable that some of the content of our debate on the BBC has spilled over into today's proceedings. It is also the case that a number of important issues were raised last week which, while they have a particular relevance to the BBC, are no less important to the rest of the broadcast media.

The one thing that the BSC will most assuredly be once the Bill has completed its passage through Parliament is a central regulatory authority. While acceding to the views of the noble Lord, Lord Annan, particularly in so far as they relate to the broadcast media's creative output, I find myself as attracted to the views of the noble Lord, Lord Chalfont, particularly as regards the factual element. Like him, I believe that, there are serious defects in the section which deals with the new Broadcasting Standards Commission, especially as regards complaints about fairness and impartiality".—[Official Report, 9/1/96; col. 54.] I cannot say that I am at all surprised that there is no mention of impartiality in Part IV of the Bill. It is at best an ephemeral beast. Nor would I seek to dispute the characterisation of the noble Lord, Lord Barnett, that impartiality is, in the eyes of different beholders".—[Official Report, 9/1/96; col. 46.] When one adds the simple truth that, by its very nature, the factual material with which the broadcast media are required to work is partial one begins to see the paradox with which we are faced.

My own belief is that any attempt to, as it were, "front-end load" the concept of impartiality onto the face of legislation would be to veer dangerously close to irresponsibility. That, if I may say so, is barking up the wrong tree. I would therefore be extremely chary of amendments that sought to impose rules, guidelines or codification in this regard. In my view, the noble Lord, Lord Annan, is right in saying that in this sense what is required is responsible behaviour from the broadcasters themselves. How, therefore, are we to achieve that belief and trust in the impartiality of our media that is so desperately needed and required?

Many of your Lordships in our debate on the BBC made reference to the principle of accountability—accountability of the broadcaster to its consumer and paymaster. Of course, that is extremely important. Among others, the noble Baroness, Lady Jay, pursued that thread with vigour today. However, I would like to develop the logic of it a little further.

As a nation we have to be honest and mature enough to recognise and admit that the media—all the media—operate both within and without our parliamentary process. As such—and here I echo the words of the noble Lord, Lord Chalfont—they are as much servants of the public as Parliament or the Civil Service, with all the ramifications that that has for democratic accountability. In our information age, it is simply not enough that broadcasters protest their innocence as regards any transmission of bias or distortion, however accurate or well-meaning such protestations may be. We have to think more laterally than that. In common with those in public service, the actuality of fairness and propriety must be buttressed by tangible substance that the nation—both the people and Parliament—can see.

I therefore favour the principle of the BSC being invested with a mechanism against which the public can adequately and properly measure the fair or impartial performance of broadcasters both corporately and individually and against which their performance can be seen to be transparent and open to scrutiny. My hope is that in Committee I shall be able to introduce amendments to achieve that effect.

I have already suggested that the Bill represents an opportunity to give a fillip to the nation's industry, education, economy and so on. The immense benefits that this technology can bring to so many areas of our lives, while not without problems of execution, are tantalisingly close. I conclude by saying that, above all else, the Bill represents a unique opportunity to give a fillip to our democracy, an opportunity to which I feel that we—the corporate "we", including ourselves in Parliament, the people and especially the media—should attach the greatest priority.

8.26 p.m.

Lord Dubs

My Lords, perhaps I may first declare an interest in that I am deputy chairman of the Broadcasting Standards Council. I wish to congratulate my noble friend Lady Smith of Gilmorehill on her excellent maiden speech and on the thoughtful contribution that she has made. She is proving to he an asset not only to the Labour Benches but to the House as a whole.

In thinking about the speeches that have been made today I am bound to conclude that politicians—we in this House must call ourselves politicians like Members of another place—have a viewing pattern that is different from the rest of the population. I suspect that we are more avid consumers of news, current affairs, documentaries and so on. To that extent, our perceptions are a little askew.

The issue with which we have been wrestling throughout the debate has been the problem of arriving at the right balance between public service broadcasting, in particular not-for-profit public service broadcasting, and the operation of market forces. That runs through virtually all parts of the Bill. Whereas none of us would argue that market forces alone should determine the future of television and radio into the next century, all of us are aware that the days when the BBC had a monopoly and there was no profit in it are long gone. We are seeking to arrive at the right balance.

It is difficult for us to come to terms with the fact that Rupert Murdoch has shown enormous entrepreneurial skill in getting into such a strong position. In a sense, he is still on the march as regards the BBC, ITV and Channel 4 managements and we are trying to deal with the consequences as regards sport. Whatever one may say about Rupert Murdoch, he has been most skilful in his entrepreneurial approach and in taking a risk with his satellite transmissions, which many people in the business did not think would be successful. We have the difficulty of establishing an effective future for public service broadcasting while allowing for diversity in our media and the forces of competition.

I believe that the advent of digital transmission represents an exciting but difficult opportunity. I understand that the BBC is on the way to developing digital processing for the editing of transmissions which will then go out on analogue.

Of course, for consumers of television, a more interesting prospect is that of having more channels, better quality pictures and radio reception and the opportunity to use digital in such a way that it becomes a more localised service with local options and variations.

A drawback which I am not sure has been mentioned very much today is that for consumers it is extremely expensive to buy a radio set which will take digital. It is likely that in the initial stages it will also be expensive to buy television sets which are wider in their screen shape in order to receive digital effectively. There is also the cost of the black boxes. I very much hope that the development of technology will be such that the cost of equipping ourselves with digital will fall to a level that is not much more than the present cost of equipment. But at the moment the cost must be seen as something of a deterrent.

I support totally the view of the terrestrial channels, especially the BBC, that it is important that there should he open access for all public service broadcasting through whatever digital system is developed. Otherwise, we shall have quasi-monopoly positions which will undermine the concept of public service broadcasting and, in relation to the BBC, it will undermine the concept of a compulsory licence fee. Unless there is universal access, the willingness of people to pay the licence fee—and I totally support the fact that there should be one—will be weakened.

In that context, perhaps I may ask the Minister a question. I have been told that Rupert Murdoch has bought all the remaining channels on the Astra satellite, including a number that are not being used, in order to prevent the BBC and perhaps the ITV companies from gaining access to it. I am not sure that I am right about that, but that has been put to me with a certain amount of conviction.

I turn to the question of sport which has been covered so ably by my noble friend Lord Howell who has outlined very clearly the difficulties for most of the population who wish to watch sport. I enjoy watching sport. It would be a very sad day indeed if, for example, test matches, the cup final and other leading football matches, rugby union internationals and the Olympic Games were no longer to be shown on terrestrial television.

I understand that Rupert Murdoch has been very skilful in persuading people to subscribe to BSkyB, but it will be a sad day if something which has become almost within our national television coverage were to be no longer available to ordinary people. I am sure that many people in the country will look to Parliament to safeguard their right to watch sport. I understand the difficulties and I realise that there is a difference between designated sporting events for the most significant national coverage and giving universal access to TV highlights and full radio commentaries; but I hope that we can make some progress in that regard, otherwise it will be a sad day for many people in this country.

I turn now to the suggested merger of the Broadcasting Standards Council and the Broadcasting Complaints Commission. Because of my position on the Broadcasting Standards Council, I do not wish to say more than a few words about that. I speak personally but I certainly welcome the merger. I believe that the Broadcasting Standards Council has done much better than many of its critics suggested but we were ably led by Colin Shaw, our director—who, alas, will be retiring in the near future—and by our present chairman, Lady Howe.

I should like to say a few words about the suggestion that the new body should deal with questions of impartiality; and by that I believe we mean political impartiality. There is a world of difference between dealing with complaints about unfairness and breaches of privacy when an individual is featured in a television programme, which I believe is the proper responsibility of the new body which is to succeed the Broadcasting Complaints Commission, and dealing with the hot issue of political impartiality. I speak entirely personally but I should not wish the new body to he asked to become embroiled in that question. It would weaken the ability of the new body to deal with the other issues which are important. Moreover, it would require more resources. I am not sure that that is the best way to deal with such a hot issue. How on earth can we say whether there is too much Labour Party, Tory Party or Liberal Democrat Party bias on the "Today" programme or on "Newsnight"? That is a minefield and I should like the new body to be clear of it. Of course, if Parliament asks us to do that, we shall do so. But I advise noble Lords that that is not the best way forward.

Before I conclude, I should like to make two other points. I believe that my noble friend Lord Ashley covered one of them. The advent of modern technology and digital technology will enable television programmes to be made so that they are more friendly to people who are hard of hearing or who have impaired sight. I was extremely impressed when I had that explained to me by the BBC. It will be possible for people who are hard of hearing to use digital technology so that they can specify sub-titles which other people do not have to watch. It is all a matter of which buttons one presses. That represents an enormous technical opportunity: to make the sub-titling universal across all television programmes. Similarly, other developments can take place for people who have impaired sight. I welcome the opportunity that that will give to people.

Finally, I do not like to use too often the jargon expression "level playing field". I believe that that should be confined to descriptions of sports fields. However, it is important that we should move towards a level playing field as regards the financing of commercial television in the sense that Channel 4 has to make a contribution to the ITV companies; the ITV companies have had to bid for their licences; and satellite television does not have to do any of that. There is there a difficulty and an inconsistency. I suspect that there is nothing much that can be done in the immediate future about Channel 4's complaint in that the other ITV companies took account of Channel 4 income when they made their bids. But that looks increasingly like an anomaly which will have to be rectified in the fullness of time.

8.37 p.m.

Lord Lyell

My Lords, it is a great pleasure to be able to take part in a debate on the Second Reading of a major Bill like the Broadcasting Bill. It has been extremely instructive to me and no doubt to many other noble Lords as regards the enormous scale of the communication systems which we are discussing.

The noble Lord, Lord Dubs, and many others who have spoken have referred to one particular, as I think he calls himself, service provider; namely, Mr. Murdoch. He seems to have revolutionised major aspects of television in this country in connection with satellite television and so on. Many of the comments made about Mr. Murdoch have been in relation to the transmission of sporting programmes. I believe that my noble friend Lord Pearson quoted some figures which were reasonably accurate. They demonstrated the fact that only 1 per cent. of the sporting material transmitted by Mr. Murdoch would be shown on normal terrestrial television. Having seen some of the sports programmes on satellite television, I must tell your Lordships that I reach for the "off" button fairly quickly. There is truck racing. Sumo wrestling can be quite interesting, but many of the programmes send me straight to sleep.

However, in the course of today's debate, although I have great sympathy for the terrestrial broadcasters, I have been reminded of a time about 20 years ago when England were playing cricket in Australia. After the close of play one day, the England captain happened to be walking through the stands and he spoke to one of the maintenance men. This was either at the Sydney or the Melbourne cricket ground. They began to talk. The England captain discovered that the man who was clearing up the beer cans and generally sweeping up was paid more than the captain of England was receiving as his match fee and overall earnings. After that a complete revolution in the game was brought about not by Mr. Murdoch but by one of his bitter rivals—Mr. Packer. The noble Lord, Lord Howell, may be disappointed about the results last week when I understand that matters did not go entirely England's way. But, as a result of that, we had an interesting insight into the game.

Thanks to Mr. Packer's rebel cricket tour, the financial stakes were raised and a good bit went to the players, for good or ill. I confess a particular interest as one of your Lordships' leading couch potatoes. For 51 weeks in the year I can be seen sitting before a television set muttering "They're not fit" while reaching for some liquid beverage. I am therefore a consumer as far as much of what has been discussed this afternoon is concerned.

I should like to raise one arcane point. It relates to the Broadcasting Act 1990 and what are referred to in Section 175 as "statutory licences". I understand that, when that Act was proceeding through your Lordships' House and another place, the intention was to provide in that section—which made further reference to the Copyright, Design and Patents Act 1988—measures to assist new broadcasters and radio stations such as the noble Viscount, Lord Chandos, mentioned earlier to thrive and to get under way reasonably quickly. There was also a relaxation of the quantity restrictions on what was termed needle time. Needle time related to records that some of us remember from our youth. It referred to the length of time during which recorded music and material, for which a payment would be made by the broadcaster to the owners of the copyright, could be played on radio stations.

It was difficult in 1990, as it is today, to define "broadcaster". Since the passage of the 1990 Act, a new type of broadcaster, or service provider, has emerged. Two particular effects have resulted from that. One is the multi-channel cable network, which can provide through one coaxial cable anything up to 120 different channels carrying very high quality music or speech. The quality of this material in transmission is good enough for recording on to blank tapes. However, that particular problem would not necessarily be applicable to the Bill, let alone as we have it tonight.

The second effect relates to what is called "muzak", which we hear in the background in hotels and very often in retail stores and enormous do-it-yourself warehouses. One hears background music, occasionally interspersed with announcements. I understand that this particular type of transmission is a marketing aid. For my part, I am not totally lured by the music as I go between the shelves, but I am advised that certain types of background music are considered to he a valuable marketing aid in large retail and wholesale areas.

It is the service provider of this particular form of sound, be it music or announcements, who in many cases is the beneficiary of the licensing provisions of Section 175 of the 1990 Act. The provisions of that Act do not give reasonable protection, as might have been seen then, to the copyright material, which in many cases is music. It is clear that that section was intended to assist the new, sometimes small, fledgling broadcasting stations. That did not seem to be a major problem to the owners of the copyright material. But the new breed of service provider which has mushroomed intensely in the past five or six years is able to use the provisions of Section 175 to negate the normal pattern of copyright protection mentioned in the section. It is pretty large, but I think that the point will he clear to the Minister with his enormous knowledge.

I hope that this problem will he solved by examining statutory licensing and this section of the 1990 Act, as it applies, I believe, to Part III of the Bill before us tonight. Perhaps I may cast that delicate fly over my noble friend to let him know that this matter may be raised at a later stage.

I conclude by congratulating him on his enormous stamina. He has sat in the Chamber throughout this evening. I read in a very reasonable article, which perhaps was not too flattering, that my noble friend had engaged in a sporting activity over the Christmas holidays. He had been skating and did not fall through the ice of Derwent Water but survived. That is a lot more than can be said of my noble friend Lord Astor and myself, who were in the Alps.

8.45 p.m.

Baroness Wharton

My Lords, I intend to refer only to the problems that face Teletext, not only now but well into the next century. I wrote to the noble Lord's predecessor and the former Secretary of State on the subject of Teletext on ITV and Channel 4. The ability to modernise and update this popular service, which has over 17 million viewers a week, is severely constrained by its lack of broadcasting capacity. I am often surprised by how many people believe that Teletext is part of ITV rather than an independent licensee. It has won its franchise along with the rest and contributes £8.2 million to the Exchequer every year.

Teletext's existing technology was invented in the 1970s and has barely changed since. It broadcasts its pages to more than half the homes in the country by the use of vertical blanking intervals, or VBI lines. Teletext Limited currently has 7½ lines on ITV and the same number of Channel 4. It is a public service that is regulated by the ITC. The BBC's service, known as Ceefax, has 12 lines for each channel. Teletext routinely exceeds the number of pages that it is obliged to broadcast under the terms of its licence but wishes to present its viewers with additional information services and to improve the look of its overall service by the use of digital technology. It believes that such a service may encourage people to take up the new digital technology. This was recognised in the Government's White Paper on digital broadcasting. The White Paper said that a super-Teletext service could increase the appeal of digital receivers to the consumer. Teletext has high aspirations for digital broadcasting.

However, under the Government's proposals for digital terrestrial television it is proposed that Teletext Limited should be allocated a guaranteed place capacity, equivalent to that employed in its existing analogue service, in order to simulcast its service via the new digital transmission medium. Teletext wants to publish photographs and offer a far speedier service as well as improve its general presentation. That will be necessary if it is to remain competitive into the next century. It is the original information on demand service but now faces potential competition from emerging media, such as on-line services and the Internet. These new media have a far more up-to-date look than Teletext.

Teletext already has more viewers than its rivals. It brings us the latest information, with up to 50,000 updates a day. Not only does it provide news, sport and financial information, as well as entertainment magazines; is also a major player in the holiday industry. It is estimated that approximately 20 per cent. of holidays are booked on the basis of information on Teletext. It is also interactive in that it encourages viewers to take part in the service. It has many other features too numerous to mention here.

Teletext has asked the Secretary of state for its guaranteed capacity to be increased to 10 per cent. of the multiplex frequency in order to develop an enhanced digital service. We know that BBC, ITV, Channel 4—and in the future Channel 5—have all had their guaranteed allocations increased. They will be able to offer new services along with their existing simulcasted services. I hope that the Minister will look favourably on the request as I believe it should be able to compete on a level footing with the other public service broadcasters whose capacity is increased by the Bill.

8.50 p.m.

Viscount Astor

My Lords, I should like to give a warm welcome to this Bill. It establishes effective cross-media ownership rules while also ensuring national and regional competition, as well as protecting regional programming. It does not make sense to try totally to separate sections of the media. Old boundaries, because of new technology, arc rapidly disappearing. One can now read a newspaper on a screen or have a video sent down a telephone line.

I believe the Government are quite right to have strict safeguards to prevent unacceptable concentrations of control or ownership, whether it he national or regional. This Bill will make a significant difference to the broadcasting industry. For too long governments have regarded it as a sort of cottage industry to he kept small and exclusive. It is much more important than that. It is a major industry in this country and it deserves to be treated as such. It is an industry that will have to compete with the vast European companies, and that means being able to achieve a certain size and also a certain profitability.

It must be right that ITV companies should he able to take a part of cable and satellite services. In fact, Granada Television has already announced the launch of eight channels later this year. I do not believe that this means that television is necessarily going down market, or indeed losing regional programming. The ITC, through the licence system, is well placed and will have additional powers under the Bill to ensure that that does not happen. One of the advantages of the proposals of the Bill is that broadcasters will be able to offer the consumer, whether a viewer or a listener, a wider choice.

In this country we have excellent television companies and a strong domestic production base but our television sector is vastly over-regulated. How can we expect British television companies to invest in production, build up, their libraries, and to compete internationally if they are constrained by out of date legislation? I strongly support deregulation not of television's content but of the rules governing ownership. Deregulation has strengthened other sectors of the economy and it can do the same for television. We must seek to ensure that this Bill does deregulate. A government pledged to deregulation is rather like an alcoholic pledged to give up the bottle—it always pays to keep an eye on the drinks cupboard.

I am slightly concerned, therefore, to see in the Bill a raft of regulations for the ownership of digital terrestrial services, far in excess of anything that governs cable and satellite services. I am sure that my noble friend the Minister will provide a convincing explanation of these rules at Committee stage. But if we are trying to enhance competition and improve deregulation, we should think very carefully before adding to the rules and regulations currently governing the television industry. The increase in the number of channels that digital, cable and satellite will make possible will considerably enhance choice and lessen the need for regulation. We should try to ensure that it is not necessary for us, in another three or four years time, to debate yet another broadcasting Bill scrapping restrictions put in place by the current one.

There are two areas of difficulty that must be addressed. The first is that for the first time we are proposing the linking under ownership rules of the unregulated sector, newspapers, with the regulated sector, television and radio. I do not see this necessarily as a problem. There is a clear difference between the two sectors, but I believe we must be on our guard not to over-extend regulation. However, although the Bill includes the ownership of newspapers, it does not include the ownership of magazines, or some of the newer products like inter-active multi-media. I do not see how in the future these can be excluded if we are to include newspapers.

The area of perhaps greater concern is the boundary between Oftel and the ITC. There is no doubt that in the past there has been confusion between the roles of the two, not only in industry but also in government.

I am not sure that the Government have got the split of responsibilities right between the two departments, the Department of National Heritage and the DTI. No department ever likes giving up responsibility to another, and turf wars are fought with a passion never normally seen in Whitehall.

The DTI yesterday finally published its proposals on conditional access and encryption for digital television. Although the proposals for digital look sensible, they are only applicable for digital satellite, cable and terrestrial services, none of which we currently have. They are not applicable for analogue, which is here, and is where the proposals need to be applied. This means that conditional access for current satellite broadcasters is ignored. It is not in the Bill, nor in the DTI proposals. I believe this is wrong. I agree very much with what the noble Lords, Lord Donoughue and Lord Thomson of Monifieth, said on the subject.

The ITC wanted to be given the responsibility. It already has the power in relation to its own licensees. The Government have chosen instead Oftel. I accept and understand their reasoning. However, it is not acceptable, if as a result Oftel then weakens the regulations which were proposed to ensure a fair market. That is what has happened.

I have to say to my noble friend the Minister that unless the Government seriously consider proposals to include analogue, satellite and cable services in the Bill, this House will have to consider amendments to the Bill at Committee stage, which will give the power needed either to the ITC, or Oftel to ensure reasonable access for analogue services. I would have to support those amendments.

I turn to a happier part of the Bill and give a welcome to some important changes. The first are the changes proposed for independent national radio. Currently a national licensee, such as Classic FM, would have at the end of its licence to go through a competitive tendering exercise, with no concession as to the quality of service that has been provided over the licence period. The Government have quite rightly listened and proposed to put the national licences on a similar basis as local radio. The three licensees will be able to roll forward their licences for a further period of eight years on condition that they take up their allocated digital slot. That is to he welcomed.

The second bit of good news is the merger between the Broadcasting Standards Council and the Broadcasting Complaints Commission. The new body will need to be effective and have sufficient power to represent and protect the public. It will need to ensure that broadcasters, and that includes the BBC, behave in a way that does not unjustly or unfairly infringe on people's privacy. Most importantly, it will have to maintain and implement the code which is to he drawn up by the new body—the Broadcasting Standards Commission—on taste and decency, and on the portrayal of violence.

The Bill will encourage investment in digital and investment in multiplex services, and guarantee access to them. The BBC is going to be, as it were, gifted a multiplex for its services; and the Government have announced that the sale of the transmission business of the BBC will help pay for the introduction of its digital service. I have one question to ask my noble friend the Minister. Will it be possible to also use the moneys raised to subsidise the installation of set top boxes, or could these be funded by the BBC's own licence fee? This is an important question because the independent companies are going to have to pay for this themselves. Obviously we must make sure that there is fair competition.

I have spoken recently on the complex subject of Channel 4 funding and on sport so I do not intend to say much this evening on those two subjects. I shall await the Committee stage. However, I must say to the noble Lord, Lord Howell, that as much as I respect him I profoundly disagree with what he had to say on sport. I believe that he has correctly identified some of the problems but in doing so has proposed totally the wrong conclusions to put them right. We have to be careful as regards interfering with the rights of sport. It is a business and an industry and the public have certain rights. I believe that the proposals of the noble Lord, Lord Howell, go far too far and are extremely dangerous for sport and the public, but no doubt we will debate that matter at the Committee stage and throughout the Bill.

Lord Howell

My Lords, I am very grateful to my noble friend—if I may describe him as such—for allowing me to intervene. Does he realise that millions of householders—about 40 million people—will be deprived of access to live sport by monopolies unless we protect their interests? I am sure that the noble Viscount would not want to deprive those millions of people of access to sport on television.

Viscount Astor

My Lords, nor would I wish to deprive sport of the very large revenues which the sale of broadcasting rights have brought to the game. I gave the noble Lord one example in the debate last week when he mentioned the Ryder Cup. We would never have seen the whole of the Ryder Cup if it had been on BBC. It was broadcast on satellite television. I accept that lots of people could not see it, but that is the kind of decision that sporting authorities must make. It is a subject that we shall no doubt discuss in greater detail, and I look forward to debating it with the noble Lord, Lord Howell.

As I said earlier, I welcome the Bill. However, I hope that the Government will not lose sight of the longer-term goal of a simpler system for regulating the media market. That was proposed in the White Paper published last year, in which I played a small part. Although the media industry could not agree on the basis of media measurement, there was agreement that it was the right direction in which to move.

I believe that it is vital that we move to a simple, flexible and coherent system of regulation. We should not try, as was done in the past, to regulate each piece of the jigsaw separately. What happens in this fast-changing world is that those with new technology come along and steal a march on the rest as existing operators cannot, by law, compete. What we must have in this country is open competition subject to fair trading and monopoly provisions.

I believe that the Bill goes a very long way to achieving that goal, and I hope that during its passage your Lordships will consider amendments to improve it.

9.1 p.m.

Lord Desai

My Lords, as the last speaker from the Back Benches I have the very pleasant task of being brief. Your Lordships will be pleased to hear that I shall not speak on Channel 4 nor on S4C although when I heard the noble Lord, Lord Elis-Thomas, recount the results of the survey on S4C and how watching television encouraged people to learn the language I thought what a happy Principality it is. In England we say that people should switch off the television so that children can learn the language whereas in Wales they switch the television on so that children can learn the language.

I want to say something about independent local radio. Happily, much of what I wanted to say has been said much better by the noble Lord, Lord Dixon-Smith, so I shall only make a few additional remarks. It is true that in the Bill the Government are treating radio very differently from television. I do not understand the logic. As some noble Lords pointed out, we have very good independent local radio stations. My noble friend Lady Smith of Gilmorehill said in her excellent maiden speech that most broadcasters, in both television and radio, have a tradition of public service. As a Londoner—someone has to stand up for the region—I am pleased that Capital Radio provides many public services. It runs the Help a London Child charity and provides flatshare and jobfinding services. Local radio companies such as Capital Radio should not be prevented from having two FM stations. If television companies or newspapers can own independent local radio stations why do we have to have a rule that independent local radio companies cannot have two FM stations? That point must be emphasised.

Secondly, in terms of digital audio broadcasting I do not understand why we are repeating the same structure as applies to television. The problems are very different. There is no need to set up an extra layer of multiplex authorities to supervise the system whereby a local radio station has to get together with partners and present a bouquet of services before it can have a multiplex licence. Why not leave it to the Radio Authority or run an auction for licences subject to conditions as to what bidders may offer?

There is a lack of consistency of logic between the radio and television aspects of the Bill. If the logic in relation to television is correct, as I believe it is—we want strong companies which can take on competition from other strong, well-funded companies—we also want radio to have an equal chance of fielding strong players. I do not believe that we should revert to a cottage industry logic for radio having just abandoned it for television.

I was very impressed by the point that my noble friend Lord Donoughue raised concerning sports broadcasting, which has just been mentioned in the debate between the noble Viscount, Lord Astor, and my noble friend Lord Howell. I shall propose a solution to the problem. It is merely a first attempt at a solution. No doubt the Government will hire distinguished management consultants and pay them £100 million to make it slightly better. I do not think that one could do better than what I am about to propose.

There are three players. We do not want the sporting authorities, be they the Lawn Tennis Association, the FA or whatever it might be, to lose any money that they receive from the bidding process. I do not believe that that competitive bidding process should he stopped. At the same time we want almost universal live broadcasting of certain sporting events throughout the year. However, the company which wins the auction should retain some residual advantage for having won the auction.

My proposal is as follows. The bidding should proceed and once the price has been decided the broadcasters who have lost the auction but still want to transmit the sport should pay half the price of the hid to the winner. Let us suppose that Sky pays £50 million to televise the FA Cup Final. I do not know what the amount is. Having won the bid, for £25 million it will allow ITV and the BBC simultaneously to broadcast the event live, but will retain all the residual rights—repeats, video recordings and all those matters. There is some value in the repeat rights. Therefore the winner of the auction has won a bundle of rights. We are "unbundling" them.

From the public welfare point of view we are anxious about the live broadcasting of certain sporting events. But there is a price. The BBC and ITV were bidding, so they have some reservation price. So payment may perhaps be equally split. The figure could be 50 per cent. or 60 per cent.; that is a matter of detail. Your £100 million consultant will sort that out. But the principle is simple. With such an auction one will have public broadcasting of important sporting events. The winner of the auction will gain the residual rights, and the sporting authority will not lose money. My proposal preserves competition. It preserves freedom, and it preserves the public service aspect of sports broadcasting.

9.9 p.m.

Baroness Dean of Thornton-le-Fylde

My Lords, we are concluding a Second Reading debate about a very innovative industry. My noble friend Lord Desai has proposed an innovative idea. Whether it is acceptable is probably another matter.

The Minister set the tone for the debate in his opening address when he said that this was by no means a perfect Bill—I think that we all know that—and that amendments were needed. I hope that in saying that the Minister also accepted that amendments will not necessarily all come from the Minister's side, and that there will he quite a number, as has been made clear in the debate.

I was particularly pleased today that my noble friend Lady Smith of Gilmorehill made her maiden address. It is, if you like, my maiden address at this stage of the debate at the Dispatch Box. I was particularly pleased to join her company. Her maiden address, in my view, reflected strongly how much in touch with public opinion she is and how much her views reflect two feet on the ground. Our debate today was all the better for her contribution on this important subject.

The House should know that I have no direct interest to declare, although I was previously a member of the BBC General Advisory Council and later a member of the Broadcasting Complaints Commission. However, I wish to indicate that my husband is associated with a company which advises in the field of broadcasting.

During the debate there has been tremendous agreement on all sides of the House. That is encouraging at this stage of a Bill. The noble Viscount, Lord Astor, stated that it was a major industry. He is so right. In television we are talking about 40,000 people, plus a further 20,000, and those figures do not include radio or the wider media that we are considering.

We are also agreed that broadcasting is a major centre of our lives. Television and radio, more than many developments in this century, have had a profound effect on the nature of our society. We all have our nostalgic memories. One of mine is as a nine year-old, crammed into the living room of our two-up, two-down house in Lancashire with what seemed like half the street watching the Coronation on a little nine-inch Rediffusion black and white television screen. Only two or three houses in a street of about 50 had a television set. How times have changed. This morning I worked on my participation in this important debate on a lap-top computer with a colour screen the same size as that television set. We no longer ask each other whether we have a television or radio but, "What did you watch last night? What are your favourite programmes?". We assume that we all have access to radio and television. That, I suggest, is because of the public policy decisions taken by legislators when broadcasting first got off the ground. It made clear the crucial importance to our community of universal access.

I accept readily that nostalgia might be good for memories. But for broadcasting to maintain its pioneering role, and to continue to be that important information, education and entertainment provider that we have all come to expect, it is essential that we provide the right framework to serve the public interest well and at the same time encourage the necessary investment and competition. Those two—investment and competition—are not incompatible with the public interest.

As we have heard in this debate, digital broadcasting provides tremendous opportunities for diversity, increased choice and quality of reception. I for one will be delighted if it provides better reception on FM radio than at present. Much of the Bill is to be welcomed. It will gather general support across the Chamber. For example, the decision to leave open the date on which we switch fully from analogue to digital was taken by the Government, and we welcome it. They are right to have taken the decision to review the situation within five years or when there is more than a 50 per cent. take-up of digital services. The public response to digital is not known, nor is the take-up of the multiplexers. The ability and willingness of manufacturers to respond and what levels of investment they are prepared to put in are not known. There the Government may have an important role to fulfill. In any review of the switch from analogue to digital we would expect the public interest to come first. That would include the universal availability in the UK of reception of the services.

However, despite general acceptance of much of the Bill, there are many key concerns which we will pursue in Committee. Conditional access is one; a number of Members of the House have spoken on it. The noble Lord, Lord Thomson of Monifieth, was absolutely right in what he said, as were the noble Earl, Lord Stockton, my noble friend Lord Howell and the noble Viscount, Lord Chandos. The White Paper last August covered that and referred to the EC directive on television standards. I am aware of the press release from the DTI yesterday announcing that there would be two class licence amendments. I fully accept the apology which the Minister put forward for our not receiving the document on this side of the House. We totally accept that it was not intended. The Minister has been extremely co-operative and helpful in giving information and briefing us on the Bill. It derives from the EC directive of July last year.

However, the point was made a few minutes ago by the noble Viscount, Lord Astor, that we are talking about the future covered by the DTI statement. He was absolutely correct: it will not rectify the problems that we have in regard to present television availability. The EC directive requires and facilitates consumers being able to receive all digital TV through one box. It also provides that manufacturers will he obliged to incorporate an open interface socket on all TVs larger than 42 centimetres. The Government's White Paper said that it would be expensive, unpopular with consumers and inefficient for each broadcaster to have his own encryption system. We agree. Yet there is nothing in the Bill to deal with that. It is a subject to which we shall return because it is central to universal access.

There are a number of issues affecting regional broadcasting which we will want to take up at Committee stage. As the Minister said, the coverage of the multiplexers will be from 60 per cent. to 90 per cent. With universal access we would want to see that improved. It cannot be done through the Bill but it can be done with encouragement when we see how the licences are taken up by the multiplexers.

Regional broadcasting and the ownership provisions in the Bill are of concern to a handful of small but significant companies in regional TV. The noble Earl. Lord Arran, is a West Country-man and I also come from the West Country—not originally but I do now. I too share some of his anxieties.

S4C in Wales has been mentioned and the change in its funding from the present 3.2 per cent. of advertising revenue to the set figure in 1997 plus an RPI increase. It is worrying and I know we shall discuss it at the Committee stage of the Bill.

After much debate in this House the Broadcasting Act 1990 provided a quality threshold in the granting of licences. That quality threshold requirement has not been extended in the granting of multiplexer licences. We do not understand why. We believe that it makes sense and it should be a requirement on the ITC to take it as a central condition. It should be in the Bill.

We tend sometimes to forget radio, but it has not been forgotten in this debate I am pleased to say. There too we should he looking at a quality threshold. It is not covered by the Bill and we would like to see it covered. The issue of sport on free-to-view TV has been an interesting dimension in the debate; interesting, but not unexpected. We merely need to read the newspapers and talk to people on the street to learn of the worries that people have That has been put very vocally by my noble friends Lord Howell and Lord Donoughue in opening the debate. Their contributions were added to by other Members. Unbundling is a matter that needs to be addressed, as well as revisiting and reviewing the ring-fencing of events in regulations under the 1990 Act.

There is general agreement that developments in broadcasting present tremendous opportunities, not only analogue but also digital. The achievements of analogue broadcasting for people with disabilities are to be applauded. Digital broadcasting, particularly in this area, presents tremendous opportunities—to see a signer on television without too much interference with the screen; to help people with sight difficulties and those who are deaf and hard-of-hearing. That subject was covered by my noble friend Lord Ashley and the noble Lord, Lord Elis-Thomas. It is a subject to which we shall return.

My last point concerns the merger of the Broadcasting Complaints Commission, of which I was a member until last year, and the Broadcasting Standards Council. We welcome the merging of those two bodies. However, we have a number of anxieties. My noble friends Lady Jay of Paddington and Lord Dubs mentioned a number of them, as did the noble Viscount, Lord Caldecote, who also raised this issue last week in the debate on the BBC Charter. Our concerns are certainly very strong, and right. I have a couple more.

Previously, there was an indication that the newly merged body could conduct research over the whole area of its remit. That provision is not now in the Bill. It is not clear whether the new Broadcasting Standards Commission will have authority to conduct research on fairness, an area of individual complaints previously covered by the Broadcasting Complaints Commission. The complaints process has been ring-fenced. It seems to me that in the Bill it has been ring-fenced in a way that seems to place the chairman of the new commission in a no-go area. What is the role of the chairman? Is the Minister considering amendments in this area? If not, it certainly needs looking at.

The noble Lord, Lord Chalfont, rightly mentioned anxieties about the very narrow area of direct interest that is necessary before a complaint can be lodged. That needs to be addressed. What is a direct interest and what is not? Is a group a direct interest? The noble Lord was right to cover this point in his presentation. We need to debate the matter, and probably to amend the Bill.

It was rightly said time and again in this debate that digital broadcasting will present many tremendously exciting and as yet unknown opportunities. But it will bring those advantages to us as a community across a wide and diverse range only if this Bill is changed to provide the framework to ensure that.

So far, terrestrial television has been universally available. That does not mean that I am speaking against pay-for television, be it pay-to-view, subscription or single-drop charge for videos. It does not mean that we oppose those. It means that this Bill needs to end in an Act that will ensure that the high standards of quality and access, and the central role that broadcasting has come to play in our lives in Britain, remain in the developments that take place in the future.

9.23 p.m.

Lord Inglewood

My Lords, noble Lords who attended last week's debate on the BBC Charter and Agreement will know the breadth and range of expertise that this House is able to bring to bear on important issues. The debate this evening has confirmed that. I am sure that all who took part and listened will have seen the important role of this House underscored by our discussion. Inevitably there have been differences of opinion and emphasis. That is a reflection of the healthy plurality that this Bill seeks to achieve.

The Government will continue to listen to the arguments, as we have done throughout the Bill's preparation. The much greater scope offered to existing broadcasters on digital TV, the revised arrangements for digital Channel 4 in Wales, the removal of the two-licence limit from Channels 3 and 5, the greater freedom for local newspapers to acquire local radio licences and the provision giving the ITC new powers to protect regional programming are all examples of that. We are prepared to consider carefully the well-reasoned case for further change.

I began my speech this afternoon by setting out the four principles underlying the Bill: safeguarding and encouraging plurality and diversity; the maintenance of public service broadcasting in a time of rapid change; fostering competitiveness; and maintaining standards. Those will be the touchstone for our considerations. Striking the right balance is a difficult turn, but I believe that we have managed to do so.

Many noble Lords commented on specific aspects of our proposals. I shall now respond to some of the points raised and in so doing expand on some of the remarks I made in opening. I cannot respond to every point and to every noble Lord by name. There is quite simply not enough time. I shall respond in writing to those points that I fail to answer. If any noble Lords feel that I have failed to do that, I hope that they will be in touch with me. I also know that a number of points raised by noble Lords were raised in order to flag them up for later in the course of the Bill.

I propose to divide my comments into groups: those relating to the digital section of the Bill and those relating to ownership matters. In response to the noble Viscount, Lord Chandos, I can confirm that the provisions that we are discussing in the cross-media ownership parts of the Bill are subordinate to competition policy matters. I also confirm that we do not seek to exclude anyone from these rules. We merely intend to ensure that diversity of voice is guaranteed.

One of the concerns most frequently expressed was anxiety about quality. That was a point made by the noble Baroness, Lady Smith of Gilmorehill, in a distinguished maiden speech. For my part, I have not previously heard her speak, unlike, I imagine, many of those on the Benches opposite; but, of course, I know well and recognise the very distinguished contribution to public life made by her husband. Having heard the noble Baroness, I know that she will, in her own right, make a major contribution to your Lordships' House. From these Benches I congratulate her on a splendid speech and welcome her to this House. We look forward to further contributions from her. Finally, speaking as I do from the Dispatch Box at the Government Front Bench, I apologise for the noises-over during her speech, but I have always preferred a song with an accompaniment because it sounds so much better.

When thinking about quality, it is important to be clear that it is an essential element of our proposals that the existing public service broadcasters—I apologise to the noble Lord, Lord Chalfont, for using those words, but I use them, as I did in my opening remarks, in a strict and wide sense—should transfer to digital. That has two consequences. First, the quality criteria that define those channels' standards will come with them. Secondly, access to them will, we trust, be widely available because they will continue to be free to air. Our proposals for granting multiplex licences include measures to encourage take-up of necessary new equipment.

As I explained, the offer of guarantees to existing broadcasters, all of whom have particular quality requirements placed upon them, will ensure that public service programming of high quality will continue. But in any case the viewing public will not choose to watch rubbish. In order to ensure commercial viability, broadcasters will need to produce programmes of the appropriate quality. I do not therefore see the need to extend quality thresholds to the new programme services which will come on stream. They will be regulated in much the same way as existing cable and satellite channels—subject, that is, to the scrutiny and oversight of the ITC exercising its statutory functions.

With digital transmission there is not the extreme scarcity of channels which justified the specific arrangements under the existing analogue system. However, since the number of digital terrestrial channels will still be limited, we want to ensure that the increased number of channels increases diversity of choice for viewers. That is why the variety of programme services proposed is one of the criteria against which the ITC will be required to consider applications for multiplex licences.

Once licences are granted, multiplex providers and broadcasters will need to adhere to the proposals included in the multiplex providers' application, especially with regard to the nature of the programme services offered. There will be financial penalties and possible revocation of licence for failure to comply with those requirements. In addition, the ITC's general duty set down in the 1990 Act to ensure the provision of high quality services across television as a whole will apply to digital as it does to analogue.

A number of your Lordships, including the noble Lords, Lord Donoughue and Lord Thomson, raised the question of conditional access, to which point the noble Baroness, Lady Dean, returned in her concluding remarks. That, of course, is crucial to the availability and accessibility of the new broadcasting systems. As I mentioned in opening, we published a consultation document on the regulation of conditional access services for digital television. I am grateful to the noble Baroness for her remarks. I had hoped and intended that she and her colleagues on the Liberal Benches would have received the document. My plans went awry; I do not know whether I am to blame, but I am certainly responsible.

As I said in my opening speech, we are determined that providers of conditional access services should not be able to abuse their position as gatekeepers. That is why the Government supported the European Community Television Standards Directive and that is why, as I mentioned, we published a paper outlining our proposals under the Telecommunications Act 1984. That will ensure across all types of digital television that broadcasters, multiplex providers and, most important of all, viewers are treated fairly by conditional access providers and by those offering subscription management services.

The noble Lord, Lord Dubs, raised the question of the cost of the various pieces of equipment that may be involved in the digital revolution.

Lord Thomson of Monifieth

My Lords, before the noble Lord passes to that, will he respond to what was said by his noble friend Lord Astor as to whether the Government have any intention of dealing now with the existing problem of conditional access with analogue, satellite and cable broadcasters?

Lord Inglewood

My Lords, that matter is currently being looked at by the competition authorities. It would be premature to take any steps until we have the outcome of that investigation.

To turn to the question of set-top boxes, initially it would seem that all digital television sets are likely at first to be limited to wide-screen models at four-figure prices and set-top boxes may be between £300 and £500. A European standard has been drawn up with a guideline price of £375 and prices will come down as production increases, as they did for colour television, CD players and microwaves. But the Government's proposals encourage measures to reduce that cost even further. In relation to digital radio, current cost is in the region of £1,500. We believe that that will be reduced to something like the price of a top-of-the-range analogue receiver once mass production gets under way.

The noble Viscount, Lord Astor, on a similar topic asked about the BBC and set-top boxes. The BBC will be required by the Government to contribute to both the roll-out of digital transmission and to the promotion of the take-up of digital receivers. We shall expect a contribution broadly equivalent to that required by the ITC from Channels 3 and 4. The contribution the BBC makes to encouraging take-up may be, in part at least, through promotion rather than through subsidy as such. In any event, it will be free to use resources derived from any source for that purpose.

The noble Lord also raised the matter of the relationship between Oftel and the ITC. As your Lordships will know, Oftel was set up under the Telecommunications Act 1984 and has responsibility for the monitoring and enforcing of telecommunications licences and the enforcement of competition policy legislation that affects telecommunications, while the Broadcasting Act 1990 established the ITC to licence and regulate all commercial television services. Those arrangements have worked well for both the broadcasting industry and viewers and have co-existed quite happily in practice with Oftel's related but distinct powers and concerns. The Government consider that there is a continuing need for special regulation in the broadcasting sector over and above the Telecommunications Act and general competition law.

The noble Lord, Lord Ashley, and the noble Baroness, Lady Dean, referred to the problems of viewers with impaired vision and hearing. I acknowledge the concern which many noble Lords expressed that the potential of digital technology be used to improve facilities for viewers with sight or hearing difficulties. We shall reflect further on that and wish to ensure that the new technology extends choice and serves worthwhile purposes. We also wish to restrict digital terrestrial broadcasters as little as possible in the difficult initial phase of launching the new service in a competitive environment.

We have spent in the order of half an hour debating sports rights this evening, which is not a matter contained in the Bill at all. I took careful note of the worries expressed about broadcasting sports rights and the need for a new framework of controls to prevent certain events being shown exclusively on subscription television services. The Government's position is that sporting bodies should, in general, be free to dispose of their broadcasting rights in the interests of sport. But we are aware of public debate on the issue and are keeping it under close review.

Perhaps I may say at this stage that we should not forget, as my noble friend Lord Pearson of Rannoch pointed out, that in addition to free market principles there are a number of sound arguments in favour of retaining the status quo. For example, there has been increased coverage of sport on television. There are rights holders who are acting responsibly in ensuring the long-term well-being of sport and there have been significant benefits to sport itself. There still is a considerable amount of sport available on terrestrial television.

There have been various suggestions to extend the 1990 Act controls to subscription services, to unbundle primary and secondary rights and to extend the number of listed events. The one thing that all these ideas have in common is that they raise difficult issues of principle and practicality and they would all affect the interests of sports rights holders. The Government are keeping all options under review. While one is reviewing all the options, it hardly suggests an open-minded process to come rushing forward with all kinds of ideas before listening to the arguments, not least of all in your Lordships' House, which is what I have been doing this evening.

I was interested in the suggestion by the noble Lord, Lord Desai, of a particular type of auction. But since, as I understand it, the really valuable asset is the right simultaneously to broadcast the event in question, I have a feeling that his idea may be to promote an auction where it is in one's best interests to lose.

I should now like to move on to consider a number of other topics which are related and which concern regional diversity in the United Kingdom, which obviously, in turn, is by definition an integral characteristic of our country. I shall begin with Wales, which was brought to the forefront by a number of distinguished Welsh Members of your Lordships' House.

As I have said, our proposals mean that S4C will no longer be required to show Channel 4 programmes on its digital channel but will be able to expand its Welsh language service for Welsh viewers. S4C will be required to simulcast its peak-hour Welsh language service and Channel 4 will be able to broadcast on digital its existing analogue service in full and with the same scheduling as the rest of the United Kingdom. Taken together, these advances represent a significant benefit for all Welsh viewers and I believe they represent the best solution currently available. But I should like to assure Welsh viewers that the Government will not fail to take any future opportunity to increase the capacity available to S4C and Channel 4 in Wales should a practical possibility present itself.

The change in the funding formula makes S4C's income more predictable and reliable and so will facilitate planning on a much firmer basis than is possible at present. The formula, like the existing one, allows the Secretary of State to take account of the costs of transmission. Moreover, it takes as its starting point the 1997 figure, arrived at by applying the existing formula.

I have explained the purpose of the proposals for S4C and I should just like to reassure your Lordships that, as far as concerns the funding formula, it will first take effect only in 1998. There is no intention that S4C should find itself in some way beholden to the Government. We are currently in the process of dialogue with the Welsh authority about other funding streams. Indeed, I discussed the Bill's proposals with the chairman and chief executive of S4C yesterday.

It is not only the Welsh who have regional concerns, and they were vigorously articulated by a number of your Lordships, not least the noble Lords, Lord Kirkhill and Lord Blease, and my noble friend Lord Arran, whom, if I did not know was excluded, I would have supposed was standing for Parliament. I am pleased that your Lordships recognise the significance of Clause 63 and appreciate that it represents evidence of our commitment. I cannot fully agree with my noble friend Lord Arran that it is ownership which is the key to ensuring regional character in broadcasting. Nor, indeed, is there anything to prevent anyone from anywhere in the European Union owning a regional Channel 3 licence now. We thought it best, through Clause 63 of the Bill, to provide safeguards for the level of regional programming as currently achieved directly.

My noble friend questioned what benefits accrue from the increased concentration of ownership. We contend that allowing more concentration allows a stronger and more concentrated Channel 3 response to the substantial investment needs of new digital media competition. We want Channel 3 to have a fair chance to sustain its current good health and leading place in viewers' affections into the digital future, with the increased domestic and international competition that will imply.

Nor does concentrated ownership and access to increased funding in any way preclude the continued development of regional programming diversity within that framework, particularly when that regional element is underpinned by specific licence requirements, which I know the ITC is keen to ensure.

I assure the noble Lord, Lord Kirkhill, that subsection (5) of Clause 63 allows the ITC to introduce new licence conditions which consolidate not merely existing licensing requirements but also existing actual levels of performance by the current Channel 3 licence holder. He further suggested that the ITC's powers to specify conditions on the level of regional employment and facilities should be mandatory rather than compulsory. Our feeling was that this might undesirably tie the hands of the ITC because it is no part of the continuing health of regional programming, a goal which the Government share, to lock existing detailed means of programme delivery indefinitely in place.

I would like to mention the point raised by my noble friend Lady O'Cathain and the noble Lord, Lord Dubs, that there should be a "must carry, must offer" requirement. It is of course the case that it is only after an eventual switch-off of analogue that it is possible, even in theory, that households with television sets would be unable to receive the services of existing terrestrial broadcasters. That would happen only if they had access to digital cable or satellite receivers but not to digital terrestrial ones and if the cable and satellite companies chose not to carry their services. There is no indication at this stage that such a situation arises, particularly because the Government have made it clear that analogue will not be switched off until the vast majority of the population has changed to digital. In addition, there is a strong possibility that by the time analogue switch-off becomes possible the industry will have developed television sets or set-top boxes able to receive all three modes of transmission. The Government will of course monitor the situation as it develops.

The noble Baroness also mentioned electronic programme guides. At present there is no conclusive evidence that extra regulation is necessary, but we are conscious of the potential importance of these guides and will research and monitor the position closely. We shall certainly take full account of any issues which arise as the nature of the systems becomes clearer.

The noble Baroness, Lady Wharton, referred to Teletext. The public service teletext licence was awarded on a competitive basis and the holder must adhere to positive programme requirements just like independent television. The Government therefore decided that Teletext should be offered an opportunity to duplicate its service on digital television. Channels 3 and 4 and S4C will be required to make capacity available on their multiplex to Teletext to provide their existing service on digital with picture quality at least equal to that currently available, and the broadcasters and Teletext will be free to come to arrangements to increase capacity and to provide an enhanced service if they wish.

I now turn to the new BSC, which I am glad is generally welcomed. Much of our thinking was indicated in the debate on the draft BBC Charter and Agreement last week, but I would like to repeat the outline of our position. I begin by saying that it is not our intention that the new BSC should be able not to have to make an adjudication/finding in respect of each matter of complaint. We believe that the Bill's wording does achieve that, but we shall look at it and check.

The responsibility for what is broadcast on television and radio rests with the broadcasters and the broadcasting regulatory bodies, the governors of the BBC, the Independent Television Commission and the Radio Authority. They are independent of government and are responsible to Parliament for safeguarding the public interest. They each have a statutory duty to draw up a code of practice on impartiality and other programme matters. Similarly, the BBC's producer guidelines include guidance on achieving accuracy and the importance of avoiding prejudicial or pejorative reporting.

A major characteristic of the new Charter and Agreement is clarification of the BBC's responsibilities for impartiality, taste and decency, placing the BBC under obligations equivalent to those applying to the commercial sector. Some have argued that the Broadcasting Complaints Commission and the Broadcasting Standards Council should take on this role once they have been merged, but we are not convinced that it would be appropriate for this wider role to be assumed by bodies that were set up to deal with standards in relation to violence, sex, taste and decency and issues of personal privacy or injustice, which frequently in fact involve wider matters of more general impartiality.

The Government do not accept that there are gaps in the present arrangements which need to be filled. Some of the perceived gaps are intentional. For example, the Government do not consider it necessary for BSC's remit to extend to all issues relating to programme content and scheduling. Most of these, including questions of maintaining due impartiality, can he properly left to broadcasters and regulators. I am glad that the noble Lord, Lord Dubs, agrees with us in that regard.

The ITC licenses all commercial television services in the United Kingdom, whether delivered terrestrially or by cable or satellite. Before the ITC can award any licence it has to be satisfied that the applicant is a fit and proper person to hold a licence and is not disqualified from doing so. Disqualification applies to any body whose objects are wholly or mainly of a political nature. Once any licence is awarded the licensee has to comply with the ITC's published codes and guidelines which flow from the Broadcasting Act and European legislation.

There are two codes which affect this issue: the programme code, which gives guidance as to the rules to be observed, and the advertising code, which ensures that licensed services do not include certain forbidden classes of advertising. Compliance with these codes is a condition of all licences to broadcast. In order to ensure compliance, the ITC regularly monitors programmes, considers viewers' complaints, carries out audience research and seeks opinions from the ITC's 10-viewer consultative councils. The commission has a range of sanctions to enforce licence and code requirements, including issuing formal warnings, requiring on-screen apologies, imposing financial penalties or shortening or revoking licences. Broadcasting legislation therefore provides the regulator with significant powers both to refuse and to revoke licences.

In conclusion on this topic, we feel that considerable powers are available both through the Broadcasting Act and the BBC's Charter and Agreement, and we therefore see no reason to extend the remit of the Broadcasting Standards Commission which should run in parallel with the regulator, not substitute for it. It is for the regulator to punish where punishment is appropriate.

Finally, I turn to the question of Channel 4's funding formula to spell out our attitude towards it and to explain our reasons for that view. This matter was vigorously raised by my noble friends Lord Blake and Lord Stockton and by the noble Lord, Lord Birkett. We commend the recent successes at Channel 4 and hope that it will go from strength to strength in the new digital era. The Government expected, when framing the 1990 Act, that Channel 4's advertising revenue would remain buoyant for a number of years after enactment. It was never envisaged that Channel 4 would need to make use of the safety net provisions in the immediate wake of the 1990 Act. We want to recognise Channel 4's recent success by using powers in the Bill to alter the distribution of payments of the channel's income above the 14 per cent. threshold in Channel 4's favour.

I understand that Channel 4 wants the formula abolished, hut, as my noble friend Lady Flather pointed out, there is another side to the coin. It would he imprudent of the Government to leave a quality public service broadcaster such as Channel 4 to face an uncertain future with no safety net provision. Those advocating change base that view on a very confident analysis of a very uncertain future. Indeed, there seems to be a direct correlation between a recognition that this was got badly wrong in the past with the fact that people are very certain about what will happen in the future. The Government remain committed to public service broadcasting and we believe that it is only right to retain Channel 4's safety net as a guarantee of its future. I emphasise that we do not expect there to be annual negotiations such as those described by one or two contributors to the debate.

My noble friend Lord Dixon-Smith and the noble Lord, Lord Desai, mentioned proposals for changing the rules on radio ownership in relation to analogue. They asked whether it would be possible to have more than one FM licence. We do not want the most commercially attractive frequencies to be seized by the most profitable and aggressive broadcasters. That would be a case where market dominance—even where, as in London, there is a choice of other stations—can serve to inhibit plurality and competition, so I remain unpersuaded of the case for change.

As I said at the outset, this is a complicated and important Bill which will have far-reaching consequences for the future of broadcasting in this country. As I also said, digital radio broadcasting has just begun and the era of digital television is fast approaching. The proposals that we have debated today will give the United Kingdom a world lead in the development of digital broadcasting technology and services. They will free the industry of unnecessary controls to enable it to compete most effectively with the best in an expanding global media market. They will ensure that the new freedoms do not damage the essential qualities which have contributed to the success of our broadcasters—diversity and plurality reflecting national and regional characteristics. The Bill will ensure that the power of broadcasting is always exercised with responsibility. Broadcasting standards will be maintained.

I have no doubt that the debate that we have started this evening will continue both within the Palace of Westminster and among all those who care about broadcasting in Britain. I look forward to playing my part constructively in that debate while taking the Bill forward in your Lordships' House. I commend the Bill to the House.

On Question, Bill read a second time, and committed to a Committee of the Whole House.

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