Lords Sitting of 18 July 1996

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Lincoln.

Royal Assent
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:

Prisoners' Earnings Act,

Marriage Ceremony (Prescribed Words) Act,

Security Service Act,

Licensing (Amendment) (Scotland) Act,

Noise Act,

Energy Conservation Act,

Civil Aviation (Amendment) Act,

Party Wall etc. Act,

Hong Kong (War Wives and Widows) Act,

Railway Heritage Act,

Education (Scotland) Act,

Deer (Amendment) (Scotland) Act,

City of London (Approved Premises for Marriage) Act,

Henry Johnson, Sons & Co., Limited Act,

Belfast Charitable Society Act 1996.

Universities: Funding
3.8 p.m.
Baroness Lockwood Baroness Lockwood asked Her Majesty's Government:
Whether they are satisfied that the private finance initiative is a sufficient substitute for the 1995 November Budget cuts in capital funding for universities, particularly in relation to equipment.
The Minister of State, Department for Education and Employment (Lord Henley): My Lords, many institutions already attract considerable private finance. I hope they will continue to find further sources of finance in the private sector, including through the private finance initiative. It has been shown to be applicable to some equipment deals as well as to large infrastructure projects. In addition, the Higher Education Funding Council for England has been asked to have particular regard to equipment needs in allocating grant to universities and colleges.
Baroness Lockwood: My Lords, I thank the Minister for that reply, which indicates that he appreciates to some extent that there are problems with PSI in the universities. Does he appreciate that, as a result of the November cuts, not only are universities having to reduce further the staff-student ratio, but they are also
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having to postpone many plans for equipping teaching rooms with up-to-date, state of the art computer-based learning techniques, which to some extent could have alleviated the reduction in staff-student ratios? Is the Minister further aware that British industry is now beginning to fear for its future competitiveness as a result of some of the difficulties being faced in science departments?
Lord Henley: My Lords, we understand the concerns of industry and of the universities. That is why my right honourable friend the Secretary of State set up the two joint DfEE higher education sector working groups to collate evidence from the higher education sector about the impact of levels of public funding on institutions and obviously to consider the private finance initiative in the higher education sector. We shall take evidence from the higher education sector about the impact of the levels of public funding on the universities and colleges very much into account in the Government's review of their spending plans this autumn. I have to say that that will be done along with all other relevant considerations.
Lord Beloff: My Lords, does my noble friend the Minister agree that in the light of what he said about spending priorities, money must be distributed sensibly? Is it not a mistake to cut equipment grants, which prevent British industry from co-operating fully with British universities, forcing British industry to seek foreign universities for the base of their development when this money could be saved by stopping third-rate students going to fourth-rate universities to read fifth-rate subjects?
Lord Henley: My Lords, I understand my noble friend's views. I believe that we all read them in the House Magazine only this week. I disagree with the general thrust of his point. We have a great deal to be proud of in the expansion of the higher education sector, which is now being made available to about 30 per cent. of 18 year-olds. The reduction in capital of about £100 million between 1995–96 and 1996–97 is pretty small compared with the £1.6 billion of capital investment financed by the universities in recent years. As my noble friend made clear, we have to take all other considerations into account in deciding on priorities in public spending. That we shall do this autumn.
Lord Quirk: My Lords, notwithstanding the Minister's response, is he aware that some of us are concerned not only by the severity of the cuts but the fear that they may be applied too indiscriminately? Is it not in the national interest that the Government go out of their way to favour some of the world-class institutions that we have in this country so that they can remain world class?
Lord Henley: My Lords, it is a matter for the funding councils themselves to decide the priorities between the universities. I do not believe that any representatives of the higher education sector in this House would think it right that the Government should interfere in deciding those particular priorities.
Baroness David: My Lords, is the Minister aware of the effect that this may have on the recruitment of overseas students whose fees are already very welcome in the universities? If they are not using really up-to-date equipment and so on, does the Minister agree that that may have an effect afterwards on our trade with foreign countries as regards the influence on sales to industry abroad? Does the Minister further agree that overseas students have been very good ambassadors in the past?
Lord Henley: My Lords, I totally agree with the noble Baroness. It is quite right that we should encourage overseas students to come to our universities. As the noble Baroness will be aware, there has been an increase in the number of overseas students in our universities, despite the fears expressed by the party opposite when we increased the fees that such students have to pay.
Lord Wallace of Saltaire: My Lords, does the Minister accept that the shift from capital to current funding that the PFI implies requires a higher income stream from either private or public funds in future? Does he accept, therefore, that British universities will be required to charge their students fees if that is what the Government wish to do with their future capital funding?
Lord Henley: My Lords, as I believe I have made clear to the noble Lord on another occasion, it is open to the universities to charge top-up fees, should they wish, but we see no need for them so to do.
Baroness Park of Monmouth: My Lords, does my noble friend agree that the PFI takes a good deal of time to put in place and carries with it considerable expense in terms of legal and professional costs? Therefore, since the Treasury and the CVCP are still considering the scope for PFI in the universities, is it reasonable to delay the major capital cut until there is time for PFI to be put sensibly in place, whatever its merits?
Lord Henley: My Lords, I do not agree with my noble friend. We accept that PFI will take time to develop and that there is much that needs to be learnt. The funding council for England and the other funding councils are engaged in a number of pathfinder projects. This year there are approximately 12 projects worth of the order of £120 million, and there will be more next year. I am sure that the institutions themselves will look at those very carefully.
Lord Morris of Castle Morris: My Lords, is the noble Lord aware that in the second largest university in the United Kingdom, the University of Wales, having made inquiries I have been unable to discover a single PFI project that is either under way or completed? Does that not provide powerful evidence that the PFI alone cannot solve the current financial problems of the universities?
Lord Henley: My Lords, no. I believe it is evidence that the University of Wales should take advice from the appropriate funding council and consider the various pathfinder projects that it is considering. As I made clear
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in response to an earlier question, there are 12 pathfinder projects in existence worth approximately £120 million, and there will be more next year.
Lord Peyton of Yeovil: My Lords, will my noble friend not be too hasty in sweeping aside the views expressed behind him both by my noble friend Lord Beloff and my noble friend Lady Park?
Lord Henley: My Lords, I try not to sweep aside the views of my noble friends, whose support has been very useful on a number of occasions. I hope I made clear in response to a question from the other side of the House that we would take into account all the evidence in our annual review of public expenditure. Obviously, we will take into account the views expressed by Members on both sides of the House.
Lord Winston: My Lords, while I am aware that I may be told not to believe everything that I read in the newspapers, in view of the recently stated concerns of Mr. Kenneth Clarke about the PFI in the health service, why should there be any greater optimism about the PFI in education which does not have the advantage of being able to generate a proper income stream?
Lord Henley: My Lords, we have already seen some evidence of PFI projects in universities. There is a PFI project at the University of Greenwich called BOOT, the build, own, operate and transfer project, which demonstrates the success of such schemes. I believe that it is open to the institutions and the funding councils to take forward these projects and see what they can develop.

Legal Aid Costs and Income Support
3.18 p.m.
Earl Russell Earl Russell asked Her Majesty's Government:
Whether the proposal to require people on income support to contribute to their legal costs is to be referred to the Social Security Advisory Committee.
The Lord Chancellor: My Lords, no. My proposal that all legally-aided persons should pay a small minimum contribution if they pursue a civil court case against another party does not fall within the remit of the Social Security Advisory Committee.
Earl Russell: My Lords, I thank the noble and learned Lord for his Answer. While clearly it is technically correct, does he agree that since this may affect decisions on income support, including decisions on its correct level, the advice of the Social Security Advisory Committee is well worth having? Before the noble and learned Lord assures the House that people on income support can afford to pay these contributions, can he list all the other deductions that they may suffer at the same time?
The Lord Chancellor: My Lords, there are provisions for a number of deductions to be made at source in respect of such benefit, the main idea being to

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secure, for one reason or another, particular matters for the claimant. For example, amounts may be directly deducted in respect of payments to utility companies, mortgage companies, the Child Support Agency and the like. It is not my intention that this particular matter should be the subject of a direct deduction. My present intention is not to go down that particular road. So far as concerns the level of income support, that is a matter on which the Social Security Advisory Committee would have a locus. That is a rather more general matter than the matter with which I am particularly concerned.
Lord Irvine of Lairg: My Lords, will the noble and learned Lord confirm that in 1991, when free legal aid was available not just at income support level but at 20 per cent. above that level, his own department's eligibility review flatly turned down minimum contributions because they would operate as a deterrent to the most financially vulnerable either asserting or defending their legal rights, and that anyway the administrative costs would make it not worth while? Has there been any new research to justify what was unacceptable, as his department held in 1991, for those at 20 per cent. above income support level today becoming acceptable for those who are just at income support level?
The Lord Chancellor: My Lords, time has moved on since 1991. The costs of the scheme and information about it have of course been accumulated since. I have to take account of the fact that, for example, the Bar Council said in its answer to the Green Paper:
"Many cases are supported on legal aid which no reasonably well off and prudent individual would consider starting or continuing".
It is important that such matters are considered responsibly at the beginning. So far as concerns administrative arrangements, the proposals that I have made more recently are of a different kind altogether from the system which was operating in 1991. I am proposing that the system should depend to a great extent upon contracts in relation to representation for legal aid.
Lord Ackner: My Lords, can my noble and learned friend confirm that the success rate of legally aided civil actions is 92 per cent., as stated by Professor Zander in an article in The Times on 9th July? Can my noble and learned friend state also what is the amount of costs recovered to the benefit of the Legal Aid Fund as a result of those successful actions, and whether credit is given against the figures that have been announced to the House in relation to the total costs of legal aid?
The Lord Chancellor: My Lords, where net figures are given, the deductions by way of repayment are of course included. I do not have the total figure in my head at the moment. It is, of course, as my noble and learned friend knows, in the Legal Aid Board's report. On the percentage success rate, the figure to which my noble and learned friend referred is one which of course includes many cases which are settled.
One of the problems with the present system is that even small or trivial cases which are started against an unassisted person can involve that person in costs which
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make it uneconomic for the person to defend the case, whether or not it is one which, fought out to the end, would be successful. Therefore one has to take those figures with a degree of caution. When one looks at the cases which are fought out, the figure is much lower than 92 per cent.

Panchen Lama
3.23 p.m.
Lord Willoughby de Broke Lord Willoughby de Broke asked Her Majesty's Government:
What response they have had from the Government of China regarding the whereabouts and safety of His Holiness the Dalai Lama's nominee as Panchen Lama.
Lord Chesham: My Lords, the Chinese Ambassador to the United Nations in Geneva has said that the boy is in good health and living with his parents under government protection. We and our EU partners are considering what further action to take on this difficult and sensitive issue.
Lord Willoughby de Broke: My Lords, I thank my noble friend for that Answer which takes us a little further than was the position this past January. Is my noble friend aware that the Panchen Lama is only six years old and is thus probably in the unenviable position of being the youngest political prisoner in the world? Will my noble friend therefore go a little further and urge the Government of China to re-establish dialogue with the EU China Human Rights Dialogue which I gather has been suspended?
Lord Chesham: My Lords, we, too, continue to be deeply concerned about the fate of the boy recognised by the Dalai Lama Gedhun Choekyi Nyima. We have raised our concerns with the Chinese authorities both bilaterally and in conjunction with our EU partners. We shall continue to do so.
Lord Weatherill: My Lords, I must declare an interest as patron of the all-party Tibet group. Although I fully understand the Government's concern about the future of Hong Kong, is the Minister aware—I am sure that he is—that some of the worst human rights abuses are taking place in Tibet and have been for some years? Do the Government agree with His Holiness the Dalai Lama who said in his speech on Tuesday this week in the Grand Committee Room that that amounts to cultural genocide? Will they take a most positive attitude to supporting His Holiness in seeking a negotiated settlement with the Chinese? After all, that is a practice which we have been seeking to encourage others to do as we have been doing in this place over many centuries.
Lord Chesham: My Lords, as to the last aspect of the noble Lord's question about encouraging dialogue, which is the only way that a settlement will occur, my right honourable friend the Foreign Secretary had a meeting with the Dalai Lama yesterday. Once the Dalai Lama had described the situation in Tibet and expressed his concern

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about the threat to the Tibetan cultural identity, my right honourable friend said that he had discussed that issue and human rights in China, including Tibet, with his Chinese counterpart in January. He also said that we would continue to raise our concerns with the Chinese authorities both bilaterally and with our EU partners. My right honourable friend the Foreign Secretary also stressed our hope that talks, without preconditions, between the Chinese authorities and the Tibetans, including the Dalai Lama, could begin without delay.
Lord Cledwyn of Penrhos: My Lords, the Minister referred to representations being made by us and through the EU. Has the matter been before the UN?
Lord Chesham: My Lords, yes, it has indeed been before the UN. At the United Nations Commission on Human Rights in Geneva towards the end of April, we co-sponsored with our EU partners a draft resolution on China which referred specifically to Tibet. We were most disappointed that Chinese attempts to block the resolution through a procedural device were successful. However, there was strenuous lobbying by the EU and other co-sponsors. I believe that the strength of the concern shown by Europe on this issue will have filtered through to China.
Baroness Blackstone: My Lords, what response have the Government given to Chinese warnings that this week's visit of the Dalai Lama would damage bilateral relations with China? Is not that a crude blackmailing tone that should be resisted? In the Minister's earlier reply I did not detect that a sufficiently robust response on this matter is being given to China.
Lord Chesham: My Lords, I believe that a robust reply was given, as is frequently done in such situations. The Dalai Lama is in the UK this week on a private visit as a guest of British Buddhist organisations. He is a distinguished spiritual leader who is widely respected throughout the world. We are not prepared to listen to China telling us that he cannot come here on a private visit.
Baroness Strange: My Lords, does my noble friend not agree that it is very sad that, like the Dauphin Louis XVII and the little princes in the Tower, the Panchen Lama is being kept in prison through no fault of his own, but only for being who he is?
Lord Chesham: My Lords, I would agree—if we knew that he was being kept in prison. We just do not know. We are advised that he is under protection for his own benefit at the request of his parents. I cannot judge whether one should believe that or not.
Viscount Mersey: My Lords, can my noble friend tell the House how the present sorry state of affairs has arisen by considering the late Panchen Lama? For instance, is it true that the gentleman was kept a virtual prisoner in Peking and was poisoned to death by the Chinese?
Lord Chesham: My Lords, I cannot confirm a cause of death in Peking.

Helms-Burton Act and UK Trade
3.30 p.m.
Viscount Montgomery of Alamein Viscount Montgomery of Alamein asked Her Majesty's Government:
Whether they will take any action to counteract the effect of the United States Helms-Burton Act on United Kingdom trade.
The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie): My Lords, we welcome the President's suspension for six months of the right to bring actions in United States courts. At the same time, we regret the President's decision not to suspend completely provisions which threaten companies doing legitimate business in Cuba. We will be discussing the details of the President's decision with the United States Administration. We shall need to consider in consultation with our European Union partners what action, if any, should be taken in the light of the President's statement.
Viscount Montgomery of Alamein: My Lords, while that is all very well so far as it goes, is my noble and learned friend aware that the draconian legislation has serious extra-territorial provisions which are of a drastic nature and widely resented by the countries trading with Cuba; for instance, Canada, Mexico, other members of the European Union and ourselves? Will he ensure that the actions which Her Majesty's Government may consider are sufficiently robust as to have some effect on resisting interference with the free flow of international trade, in which we and the United States believe, and which is the objective of the World Trade Organisation?
Lord Fraser of Carmyllie: My Lords, certainly we hope that we have made clear to the United States authorities where we stand on the Helms-Burton legislation. As recently as last week, prior to the President's decision, my right honourable friend the President of the Board of Trade in a speech to the American Chamber of Commerce made it clear that the United Kingdom Government deplored the action that had been taken.
We need to separate the two issues; first, the reform in Cuba, which the United Kingdom firmly supports, and, secondly, unilateral actions against United Kingdom companies and others, which we deplore. We cannot accept that in applying a principle of extra-territoriality the United States has the right to attack the interests of UK individuals and companies in order to impose its approach to foreign policy issues on its partners.
Lord Peston: My Lords, I believe that today, in the light of the air accident reported this morning, we all find it difficult to say anything which may be regarded as critical of the United States. None the less, the matter is of the utmost seriousness, as the noble Viscount said. Has not the United States stated, when dealing with regimes which are not democratic in one way or another,

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that the best way of encouraging those regimes to go in a sensible direction is, first, to trade with them and, secondly, to try to raise their standard of living? Other than the extra-territoriality issue, which is disgraceful, is not the problem that the United States is acting counter-productively as regards the future of Cuba and its relationship with the rest of the world?
Lord Fraser of Carmyllie: My Lords, whatever the United States may or may not have said on previous occasions, it would appear that there is something of a trend within that country to go along this road. I am sure the noble Lord is aware that not only is the Helms-Burton legislation causing alarm but so also is legislation proposed in respect of Iran and Libya.
I too wish to emphasise that we would rather not have a dispute with the United States about this matter. We share its ultimate objective in securing a modern democracy and a proper regard for human rights in Cuba. We believe that the right way forward is to encourage it to trade and to bring about reform in that way. We are considering a number of options in terms of a possible review of entry permission procedures and steps which might be taken with our partners.
Earl Russell: My Lords, will Her Majesty's Government remind the United States that 220 years ago it declared independence from us, that by virtue of that principle we are independent from it and that the doctrine of extra-territoriality is incompatible with that principle?
Lord Fraser of Carmyllie: My Lords, I doubt whether it is necessary for us to repeat that to the US. It has been said repeatedly. The view that it should be entitled to look to territoriality has been held vigorously by the US. There appears to be some indication that United States business is beginning to understand that there is a possibility of reciprocity which could be damaging to it. However, the United States must appreciate that if we act we have the prospect of acting not only on our own but with partners. For instance, if some of our partners were to consider introducing provisions along the lines of our own protection of trading interests, that might have a considerable effect.
Baroness Young: My Lords, is my noble and learned friend aware that, although those of us who take an interest in particular in Cuba are glad that the President of the United States has made a small move on the Helms-Burton legislation, it is having a most serious effect on a number of British companies? Is he further aware that it is of great importance that we should be able to uphold the principles of free trade with countries with which we have diplomatic relations and a normal international relationship? Will my noble and learned friend confirm that we are seeking for Cuba to move towards democracy and a free enterprise economy and that trading is the best way of achieving that particular aim?
Lord Fraser of Carmyllie: My Lords, I doubt whether any Member of your Lordships' House has done more than my noble friend in attempting to secure a normalisation of trading relations with Cuba. We support every effort that she makes in bringing that about. We are concerned not only by the fact that the President has taken limited action under Title 3 of the Helms-Burton Act but also by the fact that there is in place Title 4, which would exclude from the United States directors and their families and associates. Indication has already been given that two prominent British businessmen may be excluded from the United States. Equally, I wish to make it clear that we deplore that action but, in the first instance, any appeal against it is for the individuals concerned.
Lord Ezra: My Lords, in delicate matters of this kind, which will clearly damage relations between us and the United States and its other trading partners and allies, is there not a procedure for prior consultation and discussion which would normally occur between other countries?
Lord Fraser of Carmyllie: My Lords, I can confirm that prior to the introduction of the legislation, from the first stages of its proposal in Washington, we have pointed out that we would regard it as unacceptable because it relies on the principle of extra-territoriality. I regret that the political points that have been made and the strong action that has been taken by individual British companies which trade in both the United States and Cuba has not yet brought about what we consider to be a satisfactory outcome.
We shall maintain that pressure and hope that it will be maintained by our partners in the European Union and, in addition, Canada and Mexico, which are probably most affected. I trust that discussions will mean that when the six-month period comes to an end we will have achieved some resolution of this very thorny issue. We do not wish to fall out with the United States over this issue; we would prefer to trade normally.
Baroness Hooper: My Lords, in view of what my noble and learned friend has already said, can he give us an idea of how many British companies have been affected by United States threats under the Helms-Burton Act and how many companies have protested to the Foreign and Commonwealth Office or the DTI?
Lord Fraser of Carmyllie: My Lords, it is difficult to give an indication of those which have protested to the DTI or to the Foreign and Commonwealth Office. They may consider that they have put themselves at risk of appearing on a United States' hit list if they indicated that they had an interest in the matter. In so far as I am aware, only two British directors of a Canadian company have been identified for an exclusion order from the United States.

Business of the House: Prorogation
3.39 P.m.
Lord Strathclyde: My Lords, as I have announced previously, subject to the progress of business, the House will rise on Thursday, 25th July for the Summer Recess and will resume on Tuesday, 15th October. It may be for the further convenience of the House to know that, again subject to the progress of business, it is intended that the House should meet to prorogue on the morning of Thursday, 17th October. It is further expected that a new Session of Parliament will be opened by Her Majesty the Queen in person on Wednesday, 23rd October.

Allied Irish Banks Bill
Read a third time, and passed.

Business of the House: Standing Orders 38 and 44
The Lord Privy Seal (Viscount Cranborne): My Lords, I beg to move the Motion standing in my name on the Order Paper. The Motion is to make it easier to arrange a number of items of business which have usual channels' agreement. At this stage in the Session, I am advised that it has not been unusual for the House to agree to such a Motion which allows for greater flexibility in the arrangement of the Order Paper and the consideration of legislation.
Moved, That Standing Order 38 (Arrangement of the Order Paper) and Standing Order 44 (No two stages of a Bill to be taken on one day) be suspended until the House rises for the Summer Recess.—(Viscount Cranborne.)
Lord Richard: My Lords, I do not wish to detain the House long on this Motion; nor do I wish to move a formal amendment to it. But the Leader of the House will know that going through the House at the moment is a Bill called the Statutory Instruments (Production and Sale) Bill. He will also know that in relation to that Bill, the Opposition, or at least this part of them, are not prepared to see the proper time limits on that Bill truncated in the way set out in the Motion.
Therefore, as I say, while I do not wish to amend the Motion formally, I wish to have the expressed consent and acceptance of the Leader of the House to the fact that discussions on the Statutory Instruments (Production and Sale) Bill are continuing within the usual channels. If they are successful, no more will be heard from me. But if they are not successful, it will be necessary for the Leader of House to come back to the House in relation to that particular Bill and ask for a Motion in like terms to the one which he is moving now; in other words, I do not wish my position on that Bill to be prejudiced by the fact that I am not formally amending the Motion this afternoon. I hope that I make myself clear to the House.
Lord Harris of Greenwich: My Lords, as the noble Viscount will be aware, my colleagues have made our
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position very clear in relation to the same Bill. We would be firmly opposed to the Bill being dealt with over-expeditiously, for the reasons set out by the noble Lord, Lord Richard. I very much hope that discussions on this matter will continue because we should be most firmly opposed to any question of trying to bounce the Bill through the House without giving it adequate consideration.
Viscount Cranborne: My Lords, I am grateful to both noble Lords for giving me the opportunity to confirm that the timing of consideration of the Bill to which they have both referred is still the subject of discussion through the usual channels. I hope that it may be possible to persuade both noble Lords and their colleagues that there need be no objection to completing the passage of that Bill next week.
However, the notice of forthcoming business which was circulated today indicates that only the Committee stage of the Bill is scheduled for Tuesday of next week. That is in order not to prejudge the outcome of further discussion through the usual channels which are proceeding. Therefore, I believe that I can give both noble Lords the assurance which they require.
On Question, Motion agreed to.

Deer (Scotland) Bill [H.L.]
3.45 p.m.
The Lord Advocate (Lord Mackay of Drumadoon): My Lords, I beg to move that the House do now resolve itself into Committee (on Recommitment) on this Bill.
Moved, That the House do now resolve itself into Committee (on Recommitment).—(Lord Mackay of Drumadoon.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clauses 1 to 35 agreed to.
Clause 36 [Offences in connection with venison dealing]:
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 1:
Page 18, line 24, leave out ("receive") and insert ("receives").
The noble and learned Lord said: My Lords, this amendment and the other amendments which stand in my name have all been discussed with the chairman of the Joint Committee on Consolidation Bills who is content that these amendments represent an accurate consolidation of the existing law.
Amendment No. 1 cures a minor defect in the consolidation which would have had the effect of making the offer to receive a carcass of an unlawfully killed deer an offence rather than, as at present, actually receiving such a carcass. I beg to move.
On Question, amendment agreed to.
Clause 36, as amended, agreed to.
Clauses 37 to 39 agreed to.
Clause 40 [Power of Commission to require return of number of deer killed]:
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 2:
Page 19, line 25, at end insert ("taken or").
The noble and learned Lord said: My Lords, in speaking to this amendment, I shall speak also to Amendments Nos. 3 and 4. Since this Bill was considered by the Joint Committee, the Deer (Amendment) (Scotland) Bill has completed its stages in another place. Amendments Nos. 2 to 4 make changes in the consolidation Bill consequential on the changes made on Report in another place to the Deer (Amendment) (Scotland) Bill. I beg to move.
On Question, amendment agreed to.
Clause 40, as amended, agreed to.
Clauses 41 to 48 agreed to.
Schedules 1 to 3 agreed to.
Schedule 4 [Consequential amendment]:
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 3:
Page 31, line 2 at end insert—
("The Agriculture (Scotland) Act 1948 (c.45)
.—(1) The Agriculture (Scotland) Act 1948 shall be amended as follows.
(2) In section 39(3A) (exclusion of certain deer from provisions of that section), for the words "section 35A of the Deer (Scotland) Act 1959" there shall be substituted the words "section 45 of the Deer (Scotland) Act 1996".
(3) In section 42A (definition of "animals for the purposes of sections 40 to 42), for the words "section 35A of the Deer (Scotland) Act 1959" there shall be substituted the words "section 45 of the Deer (Scotland) Act 1996".").
On Question, amendment agreed to.
Schedule 4, as amended, agreed to.
Schedule 5 agreed to.
Schedule 6 [Transitional, transitory and saving provisions]:
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 4:
Page 32, line 2, leave out ("and 3") and insert ("to 4").
On Question, amendment agreed to.
Schedule 6, as amended, agreed to.
House resumed: Bill reported with amendments.

Broadcasting Bill [H.L.]
3.49 p.m.
The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood): My Lords, I beg to move that the Commons amendments be now considered.
Moved, That the Commons amendments be now considered.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENTS AND MOTIONS AND AMENDMENTS TO BE MOVED ON CONSIDERATION OF COMMONS AMENDMENTS
[The page and line refer to Bill (88) as first printed by the Commons]
COMMONS AMENDMENT
1 Clause 1, page 2, line 5, after 'programmes' insert '(together with any ancillary services, as defined by section 21(2))'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 1. In moving this Motion, I shall speak also to Amendments Nos. 2, 3, 22, 23, 25, 37 to 41, 52, 56 to 60, 78, 86 to 88, 97 and 98. I ask that the House agree with the Commons in their Amendment No. 1 and the group of amendments connected with it which adjust the provisions of the Bill with regard to additional and ancillary services. The amendments achieve three things. First, they ensure that the whole of the 10 per cent. of the capacity on each multiplex which can be devoted to additional services is available for services which are not connected to television or radio programmes. Ancillary services, electronic programme guides and conditional access data, in so far as they relate to television or radio programmes rather than additional services, will not count towards that 10 per cent. limit.
Secondly, the amendments make adjustments to the definitions of digital programme services and digital sound programme services and therefore to the boundary between programme and additional services.
Thirdly, though we have done the best we can in the Bill, and through these amendments, to cater for all foreseeable eventualities, technological developments are not always foreseeable. Amendments Nos. 3 and 60 allow the Government, by affirmative order, to amend the definitions of programme services and, therefore, what is counted as an additional service, in order to take account of such developments. Together with the order-making power already in the Bill allowing revision of the 10 per cent. limit on additional services, this gives a flexibility which may well prove necessary in dealing with this new technology.
In speaking to the amendments this afternoon, I propose to be as brief as I can be. In so doing, I hope that I will not be thought to be discourteous but rather that I shall enable the business to proceed appropriately and expeditiously. Needless to say, it is possible that some noble Lords may need to question what I say because I have been a trifle too speedy in my approach.
Moved, That the House do agree with the Commons in their Amendment No. 1.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
2 Clause 1, page 2, line 8, leave out from 'service' to end of line 12 and insert—
'(b) a teletext service, or
(c) any service in the case of which the visual images to be broadcast do not consist wholly or mainly of images capable of being seen as moving pictures,
except, in the case of a service falling within paragraph (b) or (c), to the extent that it is an ancillary service.'.
3 Page 2, line 12, at end insert—
'(4A) The Secretary of State may, if having regard to developments in broadcasting technology he considers it appropriate to do so, by order amend the definition of "digital programme service" in subsection (4).
(4B) No order under subsection (4A) shall be made unless a draft of the order has been laid before and approved by a resolution of each House of Parliament.'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 2 and 3 en bloc. I spoke to these amendments when moving Amendment No. 1.
Moved, That the House do agree with the Commons in their Amendments Nos. 2 and 3.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
4 Clause 1, page 2, line 14, leave out 'by satellite' and insert—

'(a) by satellite, or

(b) in the provision of a local delivery service (as defined by section 72(1) of the 1990 Act)'.

Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 4. In speaking to this amendment, I should like to speak also to Commons Amendments Nos. 5 to 10, 24, 48, 49, 54, 55 and 61.
Amendments Nos. 4 and 61 are technical. They are intended to ensure that the Bill does not inadvertently require local delivery service licencees to obtain a multiplex licence. The other amendments fulfil the commitment made to the public service teletext licence holder, Teletext Ltd, that there should be no requirement to simulcast its existing analogue service on the capacity on the Channel 3/Channel 4 multiplex reserved for it. That would deny Teletext the opportunity to use the new technology to its fullest potential.
Instead, Teletext will be able to propose to the ITC a new service to be broadcast on the reserved capacity. It must meet the same general quality threshold required of the existing analogue service and be approved by the ITC.
Moved, That the House do agree with the Commons in their Amendment No. 4.—(Lord Inglewood.)
Lord Donoghue: My Lords, I thought long and hard about whether to speak on each of the amendments on the Marshalled List. However, after long consideration, I decided that that would not necessarily be the best and most optimum use of the time of the House. Therefore, perhaps I may just say a few words in general, as I believe that there are several blocs of amendments that will be taken very quickly.
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We on this side feel that whilst the Bill came first to this House and was very thoroughly considered, it has been thoroughly thrashed in the other place; indeed, it has been much changed and improved. The Government have been most helpful in a number of areas in promising changes which they have delivered. Broadly speaking, although we are not satisfied with everything—indeed, we are unhappy that there is not enough provision on quality; and we shall raise a number of points later in that respect—we would like to see the Bill go through expeditiously. We are happy to accept the will of the other place on the matter. I shall not, therefore, be speaking critically of every amendment placed before the House.
Lord Thomson of Monifieth: My Lords, I should like to associate myself with the words of the noble Lord, Lord Donoghue, on the first group of amendments and, indeed, as regards the approach to subsequent groups. However, I should like to raise one point with the Minister. Perhaps the noble Lord can clarify what will happen once the Bill has become enacted in terms of pursuing the aim of trying to ensure that, when digital terrestrial television is being developed, we as consumers will be able to enjoy the benefits of it with a single set top box.
In the autumn, after the Bill has become law, the DTI will produce, after consultation and much work, a statutory instrument in regard to such matters. That will be a vital statutory instrument. However, if it is not effective, there is a very real danger that digital terrestrial television will simply be dead before it gets off the ground and that its future will be handed over to the satellite operators.
Lord Renton: My Lords, I must apologise to my noble friend the Minister because I have a point to raise that I have not as yet mentioned to him. It is something that has just occurred to me. Some of us were given a most interesting and illuminating demonstration recently at the Queen Elizabeth II Conference Centre of the BBC's technical achievements by which the corporation is able to forecast a tremendous increase in the use of digital television and indeed radio.
Nevertheless, it seems to me that it will be a very long time before we are able to enjoy such services in our homes, simply because the receiving instruments are not being manufactured in this country. I understand that Germany has started to manufacture them. There is, perhaps, a lack of liaison between those adventurous scientists who advise the BBC and those equally adventurous people in our own industry about the timing of this wonderful new development. Although we are now enacting the introduction of such technology, we must bear in mind the fact that such developments may not come into operation for quite a long time so far as concerns the viewers and listeners of this country.
If there is anything that the Government can do to expedite the production of receivers—I do not say subsidies, or anything like that—perhaps by simply telling those who might be able to help in our great manufacturing industry that here is a great opportunity for them, they will then be performing a public service.
Lord Inglewood: My Lords, two most important points were raised by the noble Lord, Lord Thomson, and my noble friend Lord Renton. Perhaps I may deal with them in turn. The noble Lord, Lord Thomson, is slightly ahead of the game in that I shall be dealing in the next group of amendments with conditional access systems. I should like to assure the noble Lord that I shall be slightly less brief than I have been hitherto. The crucial point is that the statutory instrument from the Department of Trade and Industry is due to be finalised in the autumn.
As regards the point raised by my noble friend Lord Renton, I should say at once that it is a good one. As of last week, I understand that BBC television has been broadcasting digitally both in London and Newcastle. Two transmitters were broadcasting and I believe that there are two receivers which are able to pick up the information being distributed—you have to start somewhere. However, frivolity aside, when looking at the criteria under the Bill by which multiplex licences will be awarded, it is important to note that the ITC takes into consideration the steps that are being taken by potential licensees to promote the take-up of digital. That is within the structure of what is being legislated for and that is where my noble friend's point comes in.
Of course it is important that the receiver manufacturers, and the other suppliers of hardware, produce the necessary equipment to enable people to take advantage of this technology. Indeed, I have been encouraging manufacturers to embark upon that course of action. Some of the issues that we will be discussing in the next group of amendments dealing with single set top boxes will obviously have an important bearing on that matter.
On Question, Motion agreed to.
COMMONS AMENDMENTS
5 Clause 2, page 2, line 21, leave out lines 21 to 23 and insert—
'(d) the public teletext provider,'.
6 Page 2, line 24, leave out 'subsection (4)' and insert 'subsections (4) and (4A)'.
7 Page 2, line 27, leave out '(c) or (d)' and insert 'or (c)'.
8 Page 2, line 36, at end insert 'and'.
9 Page 2, line 37, leave out from '5' to end of line 38.
10 Page 2, line 42, at end insert—
'(4A) If—

(a) the public teletext provider notifies the Commission, within the period of one month beginning with the commencement of this section, of his intention to provide a teletext service for broadcasting in digital form, and

(b) the Commission consent under section (The qualifying teletext service) to his provision of that service,

that service (in this Part referred to as "the qualifying teletext service") shall be a qualifying service for the purposes of this Part.
(4B) In this Part "public teletext provider" means the person who holds the additional services licence (within the meaning of Part I of the 1990 Act) which relates to the teletext service referred to in section 49(2) of that Act.'.
4 p.m.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 5 to 10 en bloc. I have already spoken to these amendments with Amendment No. 4.
Moved, That the House do agree with the Commons in their Amendments Nos. 5 to 10.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
11 Clause 7, page 8, line 3, leave out 'the service' and insert 'all the multiplex services available in that area'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 11. With the leave of the House, I should like to speak at the same time to Amendments Nos. 12 and 151.
As I have already intimated, these amendments address an important issue and with the leave of the House I would like to speak to them at a little more length.
These three amendments are all intended to help to ensure that the consumer will have the opportunity to receive the greatest possible choice of broadcast services by buying a single piece of equipment.
As your Lordships will be aware, during Committee stage in another place, the Government issued a consultation paper on co-operation between digital terrestrial multiplex providers, and the single set top box. Conditional access is a major factor here. All terrestrial boxes must, under the terms of the European Directive on Advanced Television standards, be able to receive all terrestrial services transmitted in clear. However, without interoperability between different systems, it is possible that some boxes might be unable to receive all digital terrestrial pay-TV services.
To help to prevent this problem, and in the light of responses to our consultation document, two complementary measures have been taken. First, the Government have published a draft statutory instrument and draft Telecommunications Act licences implementing the conditional access provisions in the directive. The proposals will ensure that any broadcaster may obtain conditional access services from every provider of such services, and can thus make his programmes available through every digital terrestrial set top box, if necessary by transmitting them with more than one set of conditional access control information. This process, known as simulcrypt, does not involve mandating a common interface, which as Ministers explained in the Commons, would require seeking clearance from the European Union and, even if that were granted, would lead to substantial delay. The Government continue to believe that a mandatory common interface would discourage investment by allowing latecomers to free-ride on investment by those who have developed and subsidised set-top boxes.
The second measure is contained in Commons Amendments Nos. 11 and 12, which the Government believe are an ingenious response to some of the competition law difficulties identified with proposals requiring collusion between multiplex providers. The amendments require the ITC to take into account, in

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awarding multiplex licences, not only applicants' plans to promote and assist the acquisition of digital terrestrial receiving equipment, but specifically their plans to encourage the roll out of equipment capable of receiving all digital terrestrial services. Applicants may choose to do this, for example, by coming to arrangements involving the voluntary incorporation of a common interface or through simulcrypt.
Finally, I should like briefly to explain Commons Amendment No. 151, which implements Article 2(c) of the directive, dealing with transmission standards. This goes beyond digital terrestrial and seeks to facilitate interoperability across all three delivery mechanisms—terrestrial, satellite and cable. The effect of that will be to allow manufacturers, should they so choose, to produce set top boxes, and later integrated receivers, capable of receiving all digital television services. It will also facilitate interconnectivity between boxes so that viewers with separate boxes for different means of transmission will be able quickly and easily to switch between, say, terrestrial and satellite services, using the same television set.
The directive mandates particular standards, but allows member states to select from various options within them. The amendment gives the ITC the power, if necessary and after consultation with all the relevant bodies, to select a particular set of options for use in broadcasts in the UK. I hope that that slightly longer explanation will have been helpful. I commend the amendments to the House.
Moved, That the House do agree with the Commons in their Amendment No. 11.—(Lord Inglewood.)
Lord Donoughue: My Lords, this, I feel, is the single most important policy issue in the Bill. It was quite properly mentioned by the noble Lord, Lord Thomson, at the beginning of our deliberations because the interconnectivity of set-top boxes and the whole question of universal access are crucial. It is important to ensure that from the beginning consumers do not have to buy a range of different set-top boxes to gain access. One box should be sufficient to gain access to different digital systems, otherwise there is a danger that whoever springs first and pre-empts the field may block out the others. One agent may, for example, produce a heavily subsidised box which gives access only to that system.
Much progress has been made on this since we first raised it at Second Reading in your Lordships' House. In particular, Amendment No. 151 is very helpful, but we still have to wait until we have the final DTI regulations. We on this side will scrutinise those regulations closely to make sure that the maximum interconnectivity is achieved.
Lord Renton: My Lords, I promise your Lordships that I shall not speak to every group of amendments. I am quite surprised at myself for doing so on the first two.
Amendment No. 151 is really very interesting. It states:
"The Independent Television Commission … shall do all that they can to secure that every licensed service uses a transmission system complying with",
the Council directive. I wonder whether my noble friend can tell me whether that means that there will be a standard transmission system to be used by each licensed service. I can see the advantage of that. It would mean that the best system would be chosen and that there would not be varied performance by different licensed services. Does it mean that each licensed service shall use a transmission system complying with the Council directive? There is a slight distinction. If my noble friend is able to say which of the two things it means, it might be of help as guidance for the future.
Lord Thomson of Monifieth: My Lords, I am grateful to the Minister for the full explanation that he has now given. I apologise for the fact that I had confused Amendment No. 4 with the fourth group of amendments.
Lord Inglewood: My Lords, I am most grateful to noble Lords who have expressed the view that this has been a step in the right direction. In response to the important question from my noble friend Lord Renton, I think that the strict reply is that both of the options that he described are valid.
We are moving into a world where the technology will be more or less entirely new. The precise form that that technology may take is not yet certain. Within the parameters of European legislation, various options are technically possible which may contain a degree of mutual exclusivity.
There are two problems that we want to avoid. One is clearly the problem that in some way or other, by adopting a particular technology, one broadcaster may effectively block out and exclude another broadcaster. The other—this state of affairs is very well illustrated in the video market—is that it is possible to mandate a standard which, given the benefit of hindsight, is perhaps not the best standard that could have been adopted because of the state of knowledge when the decision had to be taken.
We have endeavoured to provide an environment where the technology can lead in the marketplace. At the same time we have also endeavoured to provide what might be described as a safety net so that if it looks, for example, as if one player in the game may be using exclusive control of a particular form of technology to exclude all the others, he will not, in fact, be able to do that.
On Question, Motion agreed to.
COMMONS AMENDMENT
12 Clause 8, page 9, line 8, leave out 'the service' and insert 'all the multiplex services available in that area'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 12. I have already spoken to this amendment.
Moved, That the House do agree with the Commons in their Amendment No. 12.—(Lord Inglewood.).
On Question, Motion agreed to.
COMMONS AMENDMENT
13 Clause 9, page 9, line 29, leave out 'and 8(2)(c) and (e)'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 13. I wish to speak also to Amendments Nos. 14, 15, 16 and 28. These amendments were made in response to a request by the ITC to clarify the way in which the ITC shall consider the award of multiplex licences that have been "bundled". Amendment No. 28, again requested by the ITC, makes clear that all programme services must consist of at least 10 per cent. independent productions and a proper proportion of European programming.
Moved, That the House do agree with the Commons in their Amendment No. 13.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
14 Clause 9, page 9, line 32, leave out 'and'.
15 Page 9, line 33, leave out from beginning to 'to' and insert in section 8(2), the reference in paragraph (d)'.
16 Page 9, line 35, at end insert 'and other references to the proposed service shall have effect as references either to each of the proposed services or to all of them considered together, as the Commission consider appropriate'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 14 to 16 en bloc. I have already spoken to these amendments.
Moved, That the House do agree with the Commons in their Amendments Nos. 14 to 16.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
17 After Clause 9, insert the following new clause—
AWARD OF MULTIPLEX LICENCE SUBJECT TO CONDITIONS
'.—(1) The Commission may, when awarding a multiplex licence to any person, make the grant of the licence to him conditional on his compliance before the grant with such specified requirements relating to the financing of the service as appear to them to be appropriate, having regard to—

(a) any duties which are or may be imposed on them, or on the licence holder, by or under the 1990 Act or this Act, and

(b) any information provided to them under section 7(4)(g) by the person to whom the licence is awarded as to his projected financial position during the period for which the licence would be in force.

(2) Where the Commission determine that any condition imposed by them in relation to a multiplex licence in pursuance of subsection (1) has not been satisfied, section 8 shall (subject to subsection (3)) have effect as if the person to whom the licence was awarded had not made an application for it.
(3) Section 8 shall not so have effect if the Commission decide that it would be desirable to publish a fresh notice under section 7(1) in respect of the grant of the licence.'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 17. I wish to speak also to Amendment No. 131. These amendments will enable the ITC to set financial conditions on the granting of the licence at the time the licence is awarded. If the potential licensee fails to meet these conditions, the commission can then cancel the award of the licence and simply proceed to the next applicant. This will give the commission greater flexibility in the licensing process for both analogue and digital services and will prevent needless rerunning of licence competitions if the potential licensee fails to deliver what he promised in his application before the licence is even granted.
Moved, That the House do agree with the Commons in their Amendment No. 17.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
18 Clause 10, page 10, line 19, leave out 'financial penalty' and insert 'specified financial penalty not exceeding whichever is the greater'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 18. I wish to speak also to Amendments Nos. 36, 42, 72, 73, 74, 85, 94 and 96. These amendments fulfil a commitment made during Commons Committee. Amendment No. 18 allows the ITC discretion to levy a fine of less than £50,000 or the specified percentage of qualifying revenue, whichever is the greater, when it revokes a multiplex licence because the multiplex provider has failed to begin providing the service. Amendments Nos. 72 to 74 make the same arrangements with regard to radio multiplexes.
Amendments Nos. 36, 42, 85 and 94 allow the regulators, when determining a fine, to estimate the share of multiplex revenue which should be attributable to a particular service which has not been broadcasting for very long.
Amendment No. 96 corrects an earlier drafting error which omitted the fine for breach of local radio multiplex licence conditions from the list of fines which could be amended by order.
Moved, That the House do agree with the Commons in their Amendment No. 18.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
19 Clause 11, page 10, line 41, after 'timetable' insert 'and other proposals'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 19. I wish to speak also to Amendments Nos. 27, 75 and 80.

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Amendment No. 19 has been made at the behest of the ITC. It allows it to include whatever aspects of a multiplex provider's technical plan it sees fit in the multiplex licence. Amendment No. 75 makes the same adjustment to the provisions covering radio multiplexes.
Clause 15(11) as presently drafted refers, incorrectly, to supplementary proposals submitted under subsection (4)(b). The correct reference is to subsection (4)(a). Amendment No. 27 corrects the error, and Amendment No. 80 does the same for radio.
Moved, That the House do agree with the Commons in their Amendment No. 19.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
20 Clause 11, page 11, line 4, after 'services' insert 'or digital additional services'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No.20. I wish to speak also to Amendments Nos. 21, 43, 44 to 46, 53, 71, 76, 77, 267, 273, 276, 277, 279, 281, 283 to 287, and 296.
These amendments make a number of technical adjustments to the arrangements for digital broadcasting, together with some consequential amendments to do with the creation of the Broadcasting Standards Commission. Rather than go into detail about each, I should be pleased to clarify any points which noble Lords might wish to raise with me.
Moved, That the House do agree with the Commons in their Amendment No. 20.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
21 Clause 11, page 11, line 15, after 'broadcasts' insert 'or for the purpose of securing compliance with any other condition of the licence'.
22 Page 11, line 23, leave out 'or qualifying services' and insert 'qualifying services, programme-related services or relevant technical services'.
23 Page 11, line 34, after '(1)(j)'insert—
'(a)".
24 Page 11, line 34, leave out from 'the' to end of line 35 and insert 'qualifying teletext service'.
25 Page 11, line 35, at end insert—
'(b) "programme-related service" means any digital additional service consisting in the provision of services (apart from advertising) which—

(i) are ancillary to the programmes included in one or more television programme services (within the meaning of Part I of the 1990 Act) and are directly related to the contents of those programmes, or

(ii) relate to the promotion or listing of such programmes, and

(c) "relevant technical service" means any technical service which relates to one or more digital programme services.'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 21 to 25 en bloc. I spoke to these with Amendments Nos. 1, 4 and 20.
Moved, That the House do agree with the Commons in their Amendments Nos. 21 to 25.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
26 Clause 15, page 16, line 21, at end insert 'and in deciding whether to give his consent the Secretary of State shall have regard to any report made to him under subsection (1)(b) of section (Review of digital television broadcasting) and to any representations received by him on consultation under subsection (4) of that section.'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 26. I wish to speak also to Amendments Nos. 51, 79 and 95.
These amendments fulfil a commitment I made in this House to place, on the face of the Bill, the arrangements for reviewing the prospects for analogue switch-off.
The effect is that the Secretary of State is under a duty to keep under review the progress of digital television broadcasting and so the prospects for switching off the analogue services. This hinges crucially on whether the existing terrestrial services—BBC1, BBC2, Channel 3, Channel 4, S4C and, soon, Channel 5—are available to viewers throughout the United Kingdom. We cannot switch off analogue services if the vast majority of people have not already switched to digital reception and similar arrangements are put in place for radio.
Moved, That the House do agree with the Commons in their Amendment No. 26.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
27 Clause 15, page 17, line 13, leave out from 'plan' to end of line 14 and insert 'and supplementary proposals submitted under subsection (4)(a)'.
28 Clause 18, page 19, line 1, at end insert 'in relation to each service provided under the licence'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 27 and 28. I spoke to these with Amendments Nos. 13 and 19.
Moved, That the House do agree with the Commons in their Amendments Nos. 27 and 28.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
29 Clause 19, page 20, line 14, after 'services' insert 'and qualifying services'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 29. I wish to speak also to Amendments Nos. 30 to 35 inclusive. I intend, with your Lordships' permission, to speak at slightly greater length than I have done on the amendments immediately preceding this one because the issue gave rise to much debate during our deliberations in this House.
When the Bill left this House, it provided that the ITC, after consultation with bodies representing those with sensory impairments, would set out requirements

1015
for assistance in a code. However, following debates in another place, we have been persuaded of the case for putting targets on the face of the Bill to act, from the outset, as a strong signal to broadcasters. The aim of the Government's amendments is therefore to establish targets on the face of the Bill, set at a realistic level and applied to programme rather than multiplex providers.
Amendment No. 30 provides that by the tenth anniversary of the introduction of any digital programme service: not less than 50 per cent. of non-excluded programme hours broadcast in any programme service should be subtitled to such technical standards as are specified by the ITC; and not less than 10 per cent. of non-excluded programme hours broadcast should be presented with audio-description.
These target percentages will be amendable by order. They will be incorporated into the ITC's code, conformity with which will be a licence condition for all digital programme service licence holders. The ITC will monitor broadcasters' progress towards meeting these requirements during the lead period to ensure an ongoing commitment to their achievement.
In the light of the strength of argument, the Government reconsidered the position regarding sign language provision. The Secretary of State announced in another place during Report stage that she intends to introduce by order a 5 per cent. target for sign language at the earliest possible opportunity.
The ITC will identify, in consultation with broadcasters and bodies representing the interests of those with sensory impairments, any types of programming for which it would not be practicable to require the levels of subtitling, audio-description or sign language interpretation set out in the Bill. It will do this only after consulting bodies representing people with sensory impairments and broadcasters. It will then be able to set lower, achievable targets for such programmes. These exclusions will be the exception—I emphasise that—rather than the rule: the majority of programmes should be subject to the targets set out on the face of the Bill.
The Government also recognise that there are currently no requirements on Channels 3, 4 or 5 regarding sign language or audio-description. They therefore intend to apply the new code and targets to their digital simulcast qualifying services. This is given effect by subsection (1J) of Amendment No. 30.
I believe that these proposals represent real gains for viewers with sensory disabilities. Our proposals also recognise that many different types of programme service are likely to be broadcast on digital television, and provision of subtitling, signing or audio-description at the same level will be extremely difficult for some of these programme types. This is an important point. We must allow the necessary flexibility for a range of new services to develop on digital, otherwise the successful launch of digital terrestrial television will be jeopardised, with the loss of services to all viewers.
Moved, That the House do agree with the Commons in their Amendment No. 29.—(Lord Inglewood.)
Lord Donoughue: My Lords, the Government's amendment represents a slight slippage in the optimum
1016
achievements that were at one point in the Bill. However, I should like to take a positive rather than a negative approach. The progress made, represented by the amendment, is considerable and is much appreciated by the people concerned. I know that my noble friend Lord Ashley, who worked so hard and did so much to achieve what is in the Bill, accepts the practicality of the compromise.
Lord Thomson of Monifieth: My Lords, we are in the not totally unusual position of agreeing with the Minister and the noble Lord, Lord Donoughue.
On Question, Motion agreed to.
COMMONS AMENDMENTS
30 Clause 19, page 20, line 20, at end insert—
'(1A) In this section "assistance" means assistance of any of the following three kinds, namely—

(a) subtitling for the deaf,

(b) audio-description for the blind, and

(c) presentation in, or translation into, sign language.

(1B) The code must require that, as from the tenth anniversary of the date of the commencement of the provision of any digital programme service, in each week—

(a) at least 50 per cent of so much of the service as consists of programmes which are not excluded programmes in relation to subtitling for the deaf is to be accompanied by such subtitling, and

(b) at least 10 per cent of so much of the service as consists of programmes which are not excluded programmes in relation to audio-description for the blind is to be accompanied by such audio-description.

(1C) The code must specify—

(a) in relation to subtitling for the deaf, those classes of programmes in relation to which the Commission consider that it would be inappropriate for the requirement in paragraph (a) of subsection (1B) to apply, and

(b) in relation to audio-description for the blind, those classes of programmes in relation to which the Commission consider that it would be inappropriate for the requirement in paragraph (b) of that subsection to apply.

(1D) If an order under section (Powers of Secretary of State in relation to code about provision for deaf and visually impaired)(1)(b) is in force, the code must also specify, in relation to presentation in, or translation into, sign language, those classes of programmes in relation to which the Commission consider that it would be inappropriate for the requirements specified in the order to apply.
(1E) In determining under subsection (1C) or (1D) whether it is appropriate for a particular requirement to apply to any class of programmes, the Commission shall have regard, in particular, to the benefit which the assistance would be likely to confer on the persons for whom it is intended and to the technical difficulty of providing it.
(1F) In this section "excluded programme", in relation to assistance of a particular kind, means a programme falling within a class specified under subsection (1C) or (1D) in relation to assistance of that kind.
(1G) Without prejudice to the generality of subsection (1), the code may—

(a) require persons providing digital programme services, at any time or times before the anniversary referred to in subsection (1B), to meet specified targets in relation to subtitling for the deaf or audio-description for the blind,

1017

(b) require a specified percentage of so much of any digital programme service as consists of programmes which are not excluded programmes in relation to presentation in, or translation into, sign language, to be so presented or translated, and

(c) require, in relation to assistance of any kind, a specified percentage of so much of any digital programme service as consists of excluded programmes falling within a specified class to be accompanied by assistance of that kind.

(1H) In subsection (1G) "specified" means specified in, or determined by the Commission under, the code.
(1J) Subsections (1B) and (1G), so far as relating to audio-description for the blind or presentation in, or translation into, sign language, shall have effect as if any reference to a digital programme service included a reference to a qualifying service.
(1K) The Commission may determine that, for the purposes of any provision included in the code in pursuance of subsection (1B), a digital programme service provided by any person is to be treated as a continuation of a digital programme service previously provided by him.'.
31 Page 20, line 21, leave out 'subsection (1)' and insert 'this section'.
32 Page 20, leave out lines 25 and 26.
33 Page 20, line 31, at end insert—
'(4A) In this section—
"programme" does not include an advertisement;
"qualifying service" does not include the qualifying teletext service.'.
34 After Clause 19, insert the following new clause—
POWERS OF SECRETARY OF STATE IN RELATION TO CODE ABOUT
PROVISION FOR DEAF AND VISUALLY IMPAIRED
'.—(1) The Secretary of State may by order—

(a) amend subsection (1B) of section 19 by substituting for any percentage specified there a percentage specified in the order, and

(b) require the Commission to include in the code maintained under that section the requirement that in each week, at least a percentage specified in the order of so much of any digital programme service or qualifying service as consists of programmes which are not excluded programmes for the purposes of that section in relation to presentation in, or translation into, sign language is to be so presented or translated.

(2) In subsection (1) "qualifying service" does not include the qualifying teletext service.
(3) Before making an order under subsection (1), the Secretary of State shall consult the Commission.
(4) No order under subsection (1) shall be made unless a draft of the order has been laid before and approved by a resolution of each House of Parliament.'.
35 Insert the following new clause—
COMPLIANCE WITH CODE ABOUT PROVISION FOR DEAF AND VISUALLY IMPAIRED
'.—(1) The Commission shall do all that they can to secure that the provisions of the code maintained by them under section 19 are observed in the provision of digital programme services and qualifying services.
(2) Without prejudice to the generality of subsection (1), a digital programme licence shall include such conditions as appear to the Commission to be appropriate for requiring the holder of the licence, on entering into any such agreement as is mentioned in section 18(3)(a), to submit to the Commission proposals for ensuring that the code is complied with in relation to the provision of the digital programme service.
(3) Where the holder of a digital programme licence has submitted proposals to the Commission in accordance with a condition included in the licence by virtue of subsection (2) or has failed to comply with such a condition, the Commission shall, after consulting him, vary the licence so as to include in the licence such further conditions as they consider appropriate for the purpose of securing compliance with the code in the provision of the digital programme service in question.'.
36 Clause 20, page 21, line 14, at end insert—
'(4A) Where, in the case of any multiplex service, the first accounting period of the holder of the multiplex licence throughout which the holder of the digital programme licence provides a digital programme service for broadcasting by means of the multiplex service ("the first period") has not yet ended, then for the purposes of subsection (3) the share of multiplex revenue attributable to the holder of the digital programme licence in relation to that multiplex service for the relevant accounting period shall be taken to be the amount which the Commission estimate to be the share of multiplex revenue attributable to him for the first period.'.
37 Clause 21, page 22, line 1, leave out 'or an ancillary service' and insert 'an ancillary service or a technical service'.
38 Page 22, line 3, leave out 'subsection (1)' and insert 'this Part'.
39 Page 22, line 6, leave out 'provided by means of a teletext service'.
40 Page 22, line 9, leave out from 'which' to end of line 10 and insert—

'(i) are ancillary to such programmes and directly related to their contents, or

(ii) relate to the promotion or listing of such programmes.'.

41 Page 22, line 10, at end insert—
'(3) In this Part "technical service" means a service which—

(a) is provided for technical purposes connected with the encryption or decryption of one or more digital programme services or digital additional services, and

(b) is of a description specified in an order made by the Secretary of State.

(4) An order under subsection (3) shall be subject to annulment in pursuance of a resolution of either House of Parliament.'.
42 Clause 24, page 23, line 40, at end insert—
'(4A) Where, in the case of any multiplex service, the first accounting period of the holder of the multiplex licence throughout which the holder of the digital additional services licence provides a digital additional service for broadcasting by means of the multiplex service ("the first period") has not yet ended, then for the purposes of subsection (3) the share of multiplex revenue attributable to the holder of the digital additional services licence in relation to that multiplex service for the relevant accounting period shall be taken to be the amount which the Commission estimate to be the share of multiplex revenue attributable to him for the first period.'.
43 Clause 25, page 24, leave out lines 44 to 46 and insert—
'(a) provide, in relation to any frequency to which this section applies—

(i) that any or all of the provisions of sections 7 to 15 and sections 17 and 18 are not to apply, or are to apply with specified modifications, and

(ii) that provisions of the order are to have effect in place of any or all of those provisions,'.

44 Page 25, line 6, leave out 'qualifying service' and insert 'service specified in section 2(3) corresponding to the qualifying service ("the corresponding analogue service")'.
45 Page 25, line 7, leave out 'that service in digital form' and insert 'the qualifying service'.
46 Page 25, line 10, leave out 'qualifying' and insert 'corresponding analogue'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 30 to 46 en bloc. I spoke to these amendments with various other amendments.
Moved, That the House do agree with the Commons in their Amendments Nos. 30 to 46.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
47 Clause 26, page 25, line 46 at end insert—
'(2A) No payment shall be required by the BBC in respect of the broadcasting pursuant to subsection (1)(b) of programmes provided by them under section 58(1) of the 1990 Act.'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 47. In moving the amendment I should like to speak also to Amendments Nos. 124 to 130 inclusive, 139 and 140, 180, 266, 268 and 269, 278, 280, 282 and 293.
The group of amendments headed by Amendment No. 47 deals with matters relating to S4C and Channel 4. Amendment No. 47 is a technical amendment. S4C is required by Clause 26(1)(b) to simulcast those Welsh language programmes provided to it free of charge by the BBC under the terms of Section 58 of the 1990 Act. For the avoidance of doubt, the amendment provides that the BBC may not require payment in respect of those simulcasts.
The rest of the amendments fulfil promises I made during discussion in this House of the parts of the Bill relating to S4C and Channel 4. They are designed to empower the Welsh authority to establish or participate in companies involved in television or radio broadcasting so that they can realise the full benefits of the digital revolution.
Finally, Amendment No. 127 makes it clear that Channel 4 is able to broadcast its digital simulcast service throughout the United Kingdom, including Wales. On analogue, the Welsh Fourth Channel is of course the responsibility of S4C.
Moved, That the House do agree with the Commons in their Amendment No. 47.—(Lord Inglewood.)
Lord Prys-Davies: My Lords, I wish to express our appreciation for the amendments relating to S4C. We raised these issues in the House. Our concerns have been met on almost every point. I should like the department and the Minister to know that that is appreciated.
On Question, Motion agreed to.
COMMONS AMENDMENTS
48 After Clause 26, insert the following new clause—
THE QUALIFYING TELETEXT SERVICE
'.—(1) If the public teletext provider has notified the Commission under section 2(4A) of his intention to provide a teletext service for broadcasting in digital form as a
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qualifying service, he shall submit to the Commission his proposals for providing that service in compliance with the requirements specified in subsection (3).
(2) The Commission shall give their consent to the provision of the service unless it appears to them that the proposed service would not comply with the requirements specified in subsection (3).
(3) The requirements referred to in subsections (1) and (2) are—

(a) that the service includes a sufficient amount of news items which are of high quality and deal with both national and international matters,

(b) that the service includes a sufficient amount of information which is of particular interest to persons living within different areas for which the service is provided, and

(c) that (taken as whole) the service includes a sufficient amount of information (other than news) which is calculated to appeal to a wide variety of tastes and interests.

(4) Where the Commission have given their consent under subsection (2), they shall vary the relevant licence held by the public teletext provider so as to include such conditions as appear to them to be appropriate—

(a) for imposing on the public teletext provider, in specified circumstances, an obligation to provide the qualifying teletext service, and

(b) for securing that the qualifying teletext service, if provided, accords with the proposals submitted under subsection (1);

and they may include those conditions in an) other licence under which the analogue service is subsequently provided.
(5) Sections 6 to 12 of the 1990 Act (general provisions relating to services licensed under Part I of that Act) shall apply in relation to the qualifying teletext service as they apply in relation to the analogue service, but as if the reference in section 12(1)(b) of the 1990 Act to the Commission's functions under Chapter II of Part I of that Act included a reference to their functions under this Part.
(6) In this section—
"the analogue service" means the service referred to in section 49(2) of the 1990 Act,
"the relevant licence" means the additional services licence (within the meaning of Part I of the 1990 Act) under which the analogue service is provided.'.
49 Clause 27, page 26, line 3, after 'Authority' insert 'or the public teletext provider'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 48 and 49 en bloc. I spoke to these amendments with Amendment No. 4.
Moved, That the House do agree with the Commons in their Amendments Nos. 48 and 49.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
50 Before Clause 28, insert the following new clause—
DIGITAL BROADCASTING OF GAELIC PROGRAMMES
'.—(1) The Secretary of State may by order provide for the Commission to include in any multiplex licence granted in respect of one frequency to which section 25 applies such conditions relating to the broadcasting of programmes in Gaelic for reception wholly or mainly in Scotland as may be specified in, or determined by them under, the order.
(2) The Secretary of State may by order require the holder of a multiplex licence ("the holder"), in complying with any such conditions, to broadcast programmes in Gaelic supplied by each of the persons mentioned in subsection (4) ("the suppliers") amounting to such minimum number of hours (if any) of transmission time per year as may be specified in the order in relation to that supplier.
(3) For the purpose of enabling the holder to comply with any such conditions and any obligation imposed by virtue of subsection (2), it shall be the duty of each supplier to provide the holder, free of charge, with such programmes in Gaelic which have been broadcast by the supplier as the holder may request.
(4) The suppliers are—

(a) the BBC,

(b) the Channel Four Television Corporation,

(c) any holder of a Channel 3 licence to provide a regional Channel 3 service (within the meaning of Part I of the 1990 Act) for reception wholly in Scotland, and

(d) such other persons providing television broadcasting services as may be specified by order by the Secretary of State.

(5) Subsection (3) shall not apply in relation to any programme first broadcast by the supplier concerned—

(a) before 1 January 1993, or

(b) in the period beginning on 1 January 1993 and ending on 31 March 1997, if the supplier has no right to broadcast it again or has such a right but is not entitled to transfer it to the holder.

(6) The holder may broadcast any programme supplied by virtue of subsection (3) on one occasion only.
(7) The holder shall consult Comataidh Craolaidh Gaidhlig and the suppliers about—

(a) the quantity of programmes likely to be requested by the holder from each supplier by virtue of subsection (3), and

(b) the schedules proposed for the broadcast by the holder of programmes supplied by virtue of that subsection,

and shall have regard to any comments made as a result of such consultation.
(8) Any order under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(9) In this section "Gaelic" means the Gaelic language as spoken in Scotland.'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 50. The amendment will increase the amount of Gaelic television programmes broadcast in peak time in Scotland. It places an obligation on the ITC to ensure that the operator of the third digital multiplex service carrying S4C and Channel 5 includes in Scotland a minimum of half-an-hour in peak time of Gaelic programmes every day as part of the overall service. The amendment also places an obligation on the existing broadcasters of Gaelic programmes to make available, free of charge, Gaelic programmes which they have previously broadcast for retransmission as part of the digital multiplex service.
The new measures will significantly increase the amount of Gaelic programming available in peak time in Scotland and I am sure that they will be warmly welcomed by the Gaelic speaking community.
Moved, That the House do agree with the Commons in their Amendment No. 50.—(Lord Inglewood.)
Lord Thomson of Monifieth: My Lords, the Minister will be pleased to know that I received a letter from the Gaelic Television Committee which asks me to convey our appreciation for the progress made. Overall it is a considerable step in the right direction. It would be untrue to say that we are totally satisfied; we will have demands in the future. But it is such a rare occasion to be able to read such a letter to the Minister that I felt I should do so.
On Question, Motion agreed to.
COMMONS AMENDMENTS
51 Before Clause 28, insert the following new clause—
REVIEW OF DIGITAL TELEVISION BROADCASTING
'.—(1) For the purpose of considering for how long it would be appropriate for television broadcasting services to continue to be provided in analogue form, the Secretary of State—

(a) shall keep under review the extent of—

(i) the provision in the United Kingdom of multiplex services,

(ii) the availability in the United Kingdom in digital form of the services specified in section 2(3), S4C Digital, the qualifying teletext service, and the television broadcasting services of the BBC, and

(iii) the ownership or possession in the United Kingdom of equipment capable of receiving the services referred to in sub-paragraph (ii) when broadcast or transmitted in digital form,

and the likely future extent of such provision, such availability and such ownership or possession, and
(b) shall, on or before the fourth anniversary of the day on which the first multiplex licence is granted under section 8, and at such time or times thereafter as he thinks fit, require the Commission and the BBC to report to him on the matters referred to in paragraph (a).
(2) If the Commission or the BBC are required to submit a report under subsection (1)(b), they shall submit the report within twelve months of the date of the requirement.
(3) Before making any report under subsection (1)(b), the Commission shall consult—

(a) the holders of all multiplex licences.

(b) the holders of digital programme licences who are providing digital programme services which are being broadcast,

(c) such other persons providing services licensed by the Commission under this Part or Part I or II of the 1990 Act as the Commission think fit, and

(d) the Welsh Authority;

and the Commission shall include in their report a summary of representations made to them by the persons consulted.
(4) For the purpose mentioned in subsection (1), the Secretary of State shall, on requiring reports under subsection (1)(b), consult—

(a) such persons appearing to him to represent viewers as he thinks fit, and

(b) such other persons as he thinks fit,

in connection with the matters referred to in subsection (1)(a) and also, if the Secretary of State thinks fit, as to the likely effects on viewers of any television broadcasting service ceasing to be broadcast in analogue form.
(5) In this section "television broadcasting service" has the same meaning as in Part I of the 1990 Act.'.
52 Clause 33, page 27, line 39, at end insert—
"ancillary service' has the meaning given by section 21(2);'.
53 Page 27, leave out lines 40 and 41 and insert—
"a Channel 3 licence' has the same meaning as in Part I of the 1990 Act and 'a Channel 3 service' means a regional or national Channel 3 service (within the meaning of that Part);'.
54 Page 28, line 9, at end insert—
"public teletext provider' has the meaning given by section 2(4B);'.
55 Page 28, line 10, at end insert—
"qualifying teletext service' means the public teletext service provided by the public teletext provider for broadcasting in digital form as a qualifying service;'.
56 Page 28, line 14, at end insert—
"technical service' has the meaning given by section 21(3)'.
57 Clause 34, page 28, line 45, after 'sound' insert '(together with any ancillary services, as defined by section 57(2))'.
58 Page 29, line 1, after 'include' insert—
'(a)".
59 Page 29, line 2, at end insert 'or
(b) a service where the sounds are to be received through the use of coded reference to pre-defined phonetic elements of sounds'.
60 Page 29, line 2, at end insert—
'(5A) The Secretary of State may, if having regard to developments in broadcasting technology he considers it appropriate to do so, by order amend the definition of "digital sound programme service" in subsection (5).
(5B) No order under subsection (5A) shall be made unless a draft of the order has been laid before and approved by a resolution of each House of Parliament.'.
61 Page 29, line 4, leave out 'by satellite' and insert—

'(a) by satellite, or

(b) in the provision of a local delivery service (as defined by section 72(1) of the 1990 Act)'.

Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 51 to 61 en bloc. I have already spoken to these amendments.
Moved, That the House do agree with the Commons in their Amendments Nos. 51 to 61.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
62 Clause 35, page 29, line 29, at end insert—
'(4A) Before making an order under subsection (4) the Secretary of State shall consult such persons appearing to him to represent listeners as he thinks fit'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 62. In moving this amendment I should like to speak also to Amendments Nos. 63 to 70 inclusive, 81 to 84 inclusive and 89 to 93 inclusive and Amendments Nos. 135, 137, 275 and 291.
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This group of amendments makes various largely technical adjustments to the provisions in the Bill covering digital radio. Again, with your Lordships' permission, rather than go into detail about each, I will be happy to provide any clarification in response to questions.
Moved, That the House do agree with the Commons in their Amendment No. 62.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
63 Clause 39, page 34, line 2, at end insert—
'(4A) References in subsection (4) to digital sound programme services of a particular character include references to digital sound programme services catering for the tastes and interests of persons living within a specified area or locality'.
64 Clause 42, page 37, line 4, leave out 'digital capacity of 256 kilobits per second' and insert 'an amount of digital capacity specified in the direction'.
65 Page 37, line 6, at end insert—
'(1A) Before giving a direction under subsection (1) in relation to any simulcast radio service, the Secretary of State shall consult the Authority as to the amount of digital capacity which the Authority consider appropriate in all the circumstances for the broadcasting of that service'.
66 Page 37, line 7, leave out 'this section' and insert 'subsection (1)'.
67 Page 37, line 16, leave out '256 kilobits per second' and insert 'the amount reserved under subsection (1)'.
68 Page 37, line 34, after 'service' insert 'and in broadcasting the simulcast radio service in question'.
69 Clause 43, page 37, line 41, after 'and' insert 'every'.
70 Page 37, leave out lines 45 and 46 and insert—
'(2) The circumstances to which the Authority may have regard in performing their duty under subsection (1) include the likely demand for digital capacity by persons providing or proposing to provide local digital sound programme services'.
71 Clause 45, page 40, line 32, after 'services' insert 'or digital additional services'.
72 Clause 47, page 41, line 39, at end insert 'a specified financial penalty not exceeding'.
73 Page 41, line 40, leave out 'a financial penalty of'.
74 Page 41, line 42, leave out 'a financial penalty of'.
75 Clause 48, page 42, line 20, after 'timetable' insert 'and other proposals'.
76 Page 42, line 36, after 'services' insert or 'digital additional services'.
77 Page 42, line 47, after 'broadcasts' insert 'or for the purpose of securing compliance with any other condition of the licence'.
78 Page 43, line 8, leave out 'or simulcast radio services' and insert,' simulcast radio services, programme-related services or relevant technical services.
(1A) In paragraph (1)(h)—

(a) "programme-related service" means any digital additional service consisting in the provision of services (apart from advertising) which—

(i) are ancillary to the programmes included in one or more digital sound programme services, simulcast radio services or local or national services (within the meaning of Part I of the 1990 Act) and are directly related to the contents of those programmes, or

1025

(ii) relate to the promotion or listing of such programmes, and

(b) "relevant technical service" means any technical service which relates to one or more digital sound programme services.'.

79 Clause 52, page 48, line 18, at end insert 'and in deciding whether to give his consent the Secretary of State shall have regard to any report made to him under subsection (1)(b) of section (Review of digital radio broadcasting) and to any representations received by him on consultation under subsection (4) of that section.'.
80 Page 49, line 11, leave out from 'plan' to end of line 12 and insert 'and supplementary proposals submitted under subsection (4)(a)'.
81 Clause 53, page 50, line 13, leave out subsection (7).
82 Clause 54, page 51, line 19, after '90' insert 'of the 1990 Act'.
83 Page 51, line 20, leave out 'subsection (3)' and insert 'subsections (3) and (4)'.
84 Page 51, line 28, at end insert—
'(4) In applying subsection (3)(a) to a national digital sound programme service a series of programmes may be considered as a whole; and in applying subsection (3)(b) to a local digital sound programme service the programmes included in that service shall be taken as a whole.'.
85 Clause 56, page 53, line 9, at end insert—
'(4A) Where, in the case of any national radio multiplex service, the first accounting period of the holder of the national radio multiplex licence throughout which the holder of the digital sound programme licence provides a digital sound programme service for broadcasting by means of the radio multiplex service ("the first period") has not yet ended, then for the purposes of subsection (3) the share of multiplex revenue attributable to the holder of the digital sound programme licence in relation to that radio multiplex service for the relevant accounting period shall be taken to be the amount which the Authority estimate to be the share of multiplex revenue attributable to him for the first period.'.
86 Clause 57, page 54, leave out line 6 and insert 'an ancillary service or a technical service'.
87 Page 54, leave out lines 7 to 13 and insert—
'(2) In this Part "ancillary service" means any service which is provided by the holder of a digital sound programme licence or by an independent national broadcaster and consists in the provision of any service (other than advertising) which—

(a) is ancillary to programmes included in a digital sound programme service or simulcast radio service provided by him and is directly related to their contents, or

(b) relates to the promotion or listing of such programmes.'.

88 Page 54, line 13, at end insert—
'(3) In this Part "technical service" means a service which—

(a) is provided for technical purposes connected with the encryption or decryption of one or more digital sound programme services or digital additional services, and

(b) is of a description specified in an order made by the Secretary of State.

(4) An order under subsection (3) shall be subject to annulment in pursuance of a resolution of either House of Parliament.'.
89 Clause 59, page 54, line 39, leave out 'and'.
90 Page 54, line 40, at end insert 'and
(iii) where under the agreement the holder of the digital additional services licence will be entitled to the use of a specified amount of digital capacity, of that amount,'.
91 Page 54, line 41, leave out 'either' and insert 'any'.
92 Page 54, line 42, leave out 'or (ii)' and insert ', (ii) or (iii)'.
93 Clause 60, page 55, line 16, leave out 'on any person'.
94 Page 55, line 36, at end insert—
'(5A) Where, in the case of any national radio multiplex service, the first accounting period of the holder of the national radio multiplex licence throughout which the holder of the digital additional services licence provides a digital additional service for broadcasting by means of the radio multiplex service ("the first period") has not yet ended, then for the purposes of subsection (3) the share of multiplex revenue attributable to the holder of the digital additional services licence in relation to that radio multiplex service for the relevant accounting period shall be taken to be the amount which the Authority estimate to be the share of multiplex revenue attributable to him for the first period.'.
95 Before Clause 61, insert the following new clause—
REVIEW OF DIGITAL RADIO BROADCASTING
'.—(1) For the purpose of considering for how long it would be appropriate for sound broadcasting services to continue to be provided in analogue form, the Secretary of State—

(a) shall keep under review the extent of—

(i) the provision in the United Kingdom of radio multiplex services,

(ii) the availability in the United Kingdom of digital sound programme services and the availability there in digital form of national services (within the meaning of Part III of the 1990 Act) and the sound broadcasting services of the BBC, and

(iii) the ownership or possession in the United Kingdom of equipment capable of receiving the services referred to in sub-paragraph (ii) when broadcast or transmitted in digital form,

and the likely future extent of such provision, such availability and such ownership or possession, and
(b) shall, on or before the fourth anniversary of the day on which the first national radio multiplex licence is granted under section 41, and at such time or times thereafter as he thinks fit, require the Authority and the BBC to report to him on the matters referred to in paragraph (a).
(2) If the Authority or the BBC are required to submit a report under subsection (1)(b), they shall submit the report within twelve months of the date of the requirement.
(3) Before making any report under this subsection (1)(b), the Authority shall consult—

(a) the holders of all radio multiplex licences,

(b) the holders of digital sound programme licences who are providing digital sound programme services which are being broadcast, and

(c) such other persons providing services licensed by the Authority under this Part or Part III of the 1990 Act as the Authority think fit,

and the Authority shall include in their report a summary of representations made to them by the persons consulted.
(4) For the purpose mentioned in subsection (1), the Secretary of State shall, on requiring reports under subsection (1)(b), consult—

(a) such persons appearing to him to represent listeners as he thinks fit, and

1027

(b) such other persons as he thinks fit,

in connection with the matters referred to in subsection (1)(a) and also, if the Secretary of State thinks tit, as to the likely effects on listeners of any sound broadcasting service ceasing to he broadcast in analogue form.
(5) In this section "sound broadcasting service', has the same meaning as in Part III of the 1990 Act.'.
96 Clause 62, page 56, line 38, at end insert 'and (4)'.
97 Clause 65, page 57, line 40, at end insert—
"ancillary service' has the meaning given by section 57(2)'.
98 Page 58, line 17, at end insert—
"technical service' has the meaning given by section 57(3)'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 63 to 98 en bloc. I spoke to these amendments with various earlier amendments.
Moved, That the House do agree with the Commons in their Amendments Nos. 63 to 98.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
171 Schedule 2, page 91, line 10, at end insert—
'( ) for paragraph (a) of the definition of "associate" there is substituted—
"(a) in relation to a body corporate, shall be construed in accordance with paragraph (1A), and"'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 171. In moving this amendment I shall speak also to Amendments Nos. 172 to 178 and Amendment No. 292. In addition, there is a manuscript amendment which I have just tabled. I apologise to the House for that, but a problem arose at the last minute and we hope that that amendment will resolve it.
Amendments Nos. 171 and 173 are concerned with the definition of an "associate". Our amendment will ensure that the associates of a body corporate will now be defined by reference to the Bill's definition of "control" which casts the net wider than the Companies Act's definition of a "group" on which the current definition is based.
Amendments Nos. 172, 174, 175 and 176 amend the definition and interpretation of "control" to catch a number of devices which have been employed to evade the ownership restrictions under the 1990 Act. Amendment No. 177 modifies the definition of a "participant", and Amendment No. 292 repeals provisions in Schedule 2 to the 1990 Act which will become redundant as a result of Amendment No. 173 once this schedule in enacted.
The regulators' greatest concern, which we share, is about arrangements made by corporate bodies which involve "warehousing", joint control or "deadlocked" companies. Amendments Nos. 176A to 176K, which have been inspired by the Independent Television Commission, seek to bolster the provisions inserted in the Bill in Committee dealing with this area.
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As it currently stands, the Bill will, without doubt, catch cases where two companies each have a 50 per cent. stake in the deadlocked company. However, concern has been expressed about the case where, for example, company A and company B each hold a 49 per cent. interest while 1 per cent. is held by a company which can be relied upon to follow the wishes of company A and 1 per cent. by a company which can be relied upon to follow the wishes of company B. The ITC continues to maintain that such a scenario will not be caught. Our advice is that it will be covered by the formulation which has already been introduced by the Government.
Much would, of course, depend on the exact circumstances behind such a corporate structure, but it could be covered in two ways. Such a case could be caught by the substituted paragraph 1(3)(c) introduced by Amendment No. 176, if the I per cent. shareholders could each be regarded as nominees within the meaning of paragraph 2(1) of Part I of the 1990 Act. Such a situation could also be caught by paragraph 1(3)(b) if it was thought likely (in the sense of a reasonable expectation) that A and B would be acting in accordance with each other's wishes. This is because if A and B are acting together, it would be reasonable to expect that they would be able to secure that the company's affairs would be conducted in accordance with their joint wishes. Likewise, it may be reasonable to expect, depending on the circumstances, that B would always act in accordance with A's wishes. The 2 per cent. part-shareholding would be completely irrelevant in company law terms unless allied with A or B.
The amendments tabled by the noble Lord, Lord Donoughue, and the noble Baroness, Lady Dean, would treat each of the parties to the arrangement as controlling the company. That could produce some unwelcome, and possibly even absurd, results. That is particularly the case when one considers that, under these amendments, the word "arrangement" would be defined to include any agreement, arrangement, expectation or understanding, whether or not it is legally enforceable.
The crux of the problem with these amendments lies in the scope of the expression "any specified matter" to which an arrangement could relate. Shareholders or joint venture partners enter into all sorts of arrangements, and indeed have myriad expectations which, in our view, it would not be proper to catch.
Perhaps I may illustrate the problems by means of the following examples. If a large number of small shareholders together holding 50 per cent. of the shares have an informal understanding that they will seek to ensure that no director earns more than £500,000, the amendments would treat each of them as controlling the company.
A funding shareholder who retained a right of consent to any change in the name of the company could be deemed to control that company even though its name would make no difference at all to the way in which its affairs were conducted and would be immaterial in terms of our Schedule 2 concerns.

1029
I have just given two examples and, if noble Lords wish, I can give others but I shall wait until I am asked. I hope that what I have said will serve to demonstrate that the amendments would give the regulators unnecessarily wide powers. As I have explained, the Government have already introduced amendments which should cover the specific abuses of deadlocking and joint control which lie at the heart of the regulators' concerns. Those are the reasons why the Government do not therefore support Amendments Nos. 176A to 176K.
I now turn to Amendments Nos. 174A, 176L, 177A and 177B which have been tabled by the noble Lord, Lord Donoughue, and the noble Baroness, Lady Dean. The amendments have also been inspired by the ITC and are designed to exclude bare and custodian trustees from the provisions for participation and control. The Government accept the case for excluding such trustees from the media ownership provisions, but we have been advised that although the amendments include a reference to custodian trustees, they omit a number of other categories of trustee which should also be exempted from the media ownership rules.
I also understand that the expression "exempt custodian interest" may not work in relation to the shares in companies incorporated elsewhere in the European Economic Area or in Northern Ireland. It would apply only to shares in English, Scottish or Welsh companies. Clearly, the policy should be capable of applying to the shares in any company incorporated anywhere in the EEA. I also understand that, for the purposes of the Companies Act, an exempt custodian interest is disregarded for the purposes of the statutory notification obligations only if the person concerned is not entitled to exercise, or control the exercise of, voting rights in respect of the shares in question. The amendments would disregard these interests even if the voting power attaching to them was exerciseable, thus creating a loophole.
In view of those defects, the Government have therefore tabled an alternative amendment, Amendment No. 177C, which is couched in broader terms and which will ensure that the policy is carried through. Still further consultation with the ITC's legal advisers has, however, revealed that even this amendment is defective in being unclear in its application to non-voting shares. It is for those reasons that I have tabled a manuscript amendment this afternoon, to which I have referred, to put the situation right. I apologise that it has been necessary to table the amendments at such a late stage, but I hope that in the light of the explanation that I have endeavoured to give as clearly as I can to your Lordships, the noble Lord, Lord Donoughue, and the noble Baroness, Lady Dean, will agree to withdraw their amendments in favour of the Government's Amendment No. 177C, as amended. I can assure them that I have been advised that the ITC's legal advisers are now content with the substance.
I have spoken at some length about a complicated and convoluted state of affairs. I hope that the conclusion I have reached is clear and satisfactory to your Lordships. I beg to move.
Moved, That the House do agree with the Commons in their Amendment No. 171.—(Lord Inglewood.)
4.30 p.m.
Lord Donoughue: My Lords, we wish to thank the Minister for the attention and work that he has given to the matter. I shall now speak to our amendments, the purpose of which was to make the Act work. We saw in one case of deadlocking, devices to evade and in another case, that of the bare trustees, unnecessary bureaucracy. The problem with all those is that the law is often imperfect in being comprehensive, so we have difficulty in keeping up with the problem, just as I have difficulty with keeping up with the pace of the Government's amendments.
Both sides are working towards the same objective and we are quite happy to accept what the Government said and what they propose in order better to achieve what we imperfectly sought. We shall therefore be happy not to move our amendments.
Lord Inglewood: My Lords, I am grateful to the noble Lord, Lord Donoughue, for those remarks.
On Question, Motion agreed to.
COMMONS AMENDMENTS
172 Schedule 2, page 91, line 10, at end insert—
'( ) in paragraph (b) of the definition of "control" for "by virtue of the rules regulating that or any other body" there is substituted "by whatever means and whether directly or indirectly",'.
173 Page 91, line 25, at end insert—
'( ) After sub-paragraph (1) there is inserted—
"(1A) For the purpose of determining the persons who are the associates of a body corporate for the purposes of this Schedule—

(a) an individual shall be regarded as an associate of a body corporate if he is a director of that body corporate and

(b) a body corporate and another body corporate shall be regarded as associates of each other if one controls the other or if the same person controls both."'.

Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 172 and 173. I have already spoken to them with Amendment No. 171.
Moved, That the House do agree with the Commons in their Amendments Nos. 172 and 173.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
174 Schedule 2, page 91, leave out line 26 and insert—
'(3) For sub-paragraph (3) there is substituted—
"(3) For the purposes of this Schedule a person controls a body corporate if—
(a) he holds, or is beneficially entitled to, more than 50 per cent. of the equity share capital in the body, or possesses more than 50 per cent. of the voting power in it, or'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 174.
Moved, That the House do agree with the Commons in their Amendment No. 174.—(Lord Inglewood.)
[Amendment No. 174A, as an amendment to Commons Amendment No. 174, not moved.]
On Question, Motion agreed to.
COMMONS AMENDMENT
175 Schedule 2, page 91, line 30, leave out 'secure' and insert 'achieve the result'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 175.
Moved, That the House do agree with the Commons in their Amendment No. 175.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
176 Schedule 2, page 91, line 31, at end insert 'or
(c) he holds, or is beneficially entitled to, 50 per cent of the equity share capital in that body, or possesses 50 per cent of the voting power in it, and an arrangement exists between him and any other participant in the body as to the manner in which any voting power in the body possessed by either of them is to be exercised, or as to the omission by either of them to exercise such voting power.
(3A) For the purposes of sub-paragraph (3)(c)—

(a) "arrangement" includes any agreement or arrangement, whether or not it is, or is intended to be, legally enforceable, and

(b) a person shall be treated—

(i) as holding, or being beneficially entitled to, any equity share capital which is held by a body corporate which he controls or to which such a body corporate is beneficially entitled, and

(ii) as possessing any voting power possessed by such a body corporate."'.

Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 176. I spoke to this amendment with Amendment No. 171.
Moved, That the House do agree with the Commons in their Amendment No. 176.—(Lord Inglewood.)
[Amendments Nos. 176A to 176L, as amendments to Commons Amendment No. 176, not moved.]
On Question, Motion agreed to.
COMMONS AMENDMENT
177 Schedule 2, page 91, line 32, at end insert—
'( ) For sub-paragraph (6) there is substituted—
"(6) In this Schedule any reference to a participant with more than a 20 per cent. interest in a body corporate is a reference to a person who—
1032

(a) holds or is beneficially entitled to more than 20 per cent. of the shares in that body, or

(b) possesses more than 20 per cent. of the voting power in that body.

(7) Sub-paragraph (6) shall have effect subject to the necessary modifications in relation to other references in this Schedule—

(a) to an interest of more than a specified percentage in a body corporate, or

(b) to an interest of a specified percentage or more in a body corporate.

(8) Any reference in this Schedule to a person who is over a particular age is a reference to a person who has attained that age'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 177.
Moved, That the House do agree with the Commons in their Amendment No. 177.—(Lord Inglewood.)
[Amendments Nos. 177A and 177B, as amendments to Commons Amendment No. 177, not moved.]
As an amendment to Commons Amendment No. 177.
177C Line 18, at end insert—
(".—(1) Paragraph 2 of Part I of Schedule 2 is amended as follows.
(2) At the beginning of sub-paragraph (1) there is inserted "Subject to sub-paragraph (1A)".
(3) After sub-paragraph (1) there is inserted—
"(1A) For the purposes of this Schedule, a person's holding of shares, or possession of voting power, in a body corporate shall be disregarded if, or to the extent that—

(a) he holds the shares—

(i) as a nominee,

(ii) as a custodian (whether under a trust or by a contract), or

(iii) under an arrangement pursuant to which he has issued, or is to issue, depositary receipts, as defined by section 220(1) of the Companies Act 1985, in respect of the shares concerned, and

(b) he is bound (whether by contract or otherwise) not to exercise the voting rights in respect of the shares or not to exercise them otherwise than in accordance with the instructions of another.

(1B) For the purposes of sub-paragraph (1A)(b), voting rights which a person is entitled to exercise or of which he is entitled to control the exercise only in certain circumstances shall be taken into account only when those circumstances have arisen and for long as they continue to obtain."").
MANUSCRIPT AMENDMENTS TO AMENDMENT No. 177C
177D Line 9, at end insert ("concerned")
177E Line 17, leave out from ("is") to end of line 20 and insert ("not entitled to exercise or control the exercise of voting rights in respect of the shares concerned")
177F Line 21, after ("(1A(b)") insert—
("(a) a person is not entitled to exercise or control the exercise of voting rights in respect of shares if he is bound (whether by contract or otherwise) not to exercise the voting rights, or not to exercise them otherwise than in accordance with the instructions of another, and
(b)")
Lord Inglewood: My Lords, before moving Amendment No. 177C as an amendment to Commons Amendment No. 177, I beg to move manuscript Amendments Nos. 177D to 177F.
I think I owe the House an apology for causing a lot of this complication. I commend the manuscript amendments.
On Question, manuscript Amendments Nos. 177D to 177F, as amendments to Amendment No. 177C, agreed to.
Lord Inglewood: My Lords, I beg to move, as an amendment to Commons Amendment No. 177, Amendment No. 177C.
On Question, Amendment No. 177C, as amended, as an amendment to Commons Amendment No. 177, agreed to.
On Question, Commons Amendment No. 177, as amended, agreed to.
COMMONS AMENDMENT
178 Page 91, line 32, at end insert—
'1A. For paragraph 3 of Part I of Schedule 2 there is substituted—
"3. For the purposes of this Schedule the following persons shall he treated as connected with a particular person—

(a) a person who controls that person,

(b) an associate of that person or of a person falling within paragraph (a), and

(c) a body which is controlled by that person or by an associate of that person."'.

Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 178. I have already spoken to this amendment with Commons Amendment No. 171. I commend the amendment.
Moved, That the House do agree with the Commons in their Amendment No. 178.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
179 Page 93, line 13, at end insert—
'(i) a licence to provide digital programme services, or
(j) a licence to provide national or local digital sound programme services.'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 179. Following a debate on this matter in another place, we concluded that it would be wrong to prevent foreign ownership of digital television programme services. That is because there are already a number of programme channels offered through cable and satellite which are provided by organisations whose ultimate parent is a non-EEA company. These channels, which include the Family Channel, the History Channel, the Discovery Channel, the Disney Channel and even the Parliamentary Channel, have established their
1034
popularity. We felt that we could not ultimately justify a position whereby such channels could be provided by cable or satellite but not by way of a digital programme service. In addition, their availability through digital terrestrial television may well contribute to the success of digital terrestrial broadcasting.
Similarly, allowing foreign control of digital sound programme services may contribute to the success of digital radio. Indeed, the development of commercial radio in this country owes much to the early input of overseas companies which had experience in the commercial market.
The Government consulted both the ITC and the Radio Authority about these amendments, and both were content with this liberalisation. I commend the amendment.
Moved, That the House do agree with the Commons in their Amendment No. 179.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
180 Page 93, line 13, at end insert—
'4A. In paragraph 3 of Part II of Schedule 2 (disqualification of publicly-funded bodies for radio service licences), in sub-paragraph (1)(a) for "(other than a local authority)" there is substituted "(other than a local authority, the Welsh Authority or the BBC)".
4B. In paragraph 5 of Part II of Schedule 2 (general disqualification of broadcasting bodies), paragraphs (c) and (d) are omitted.
4C. After paragraph 5 of Part II of Schedule 2 there is inserted—
"Disqualification of certain companies for certain licences
5A.—(1) A BBC company, a Channel 4 company or an S4C company is a disqualified person in relation to—

(a) any licence granted by the Commission to provide regional or national Channel 3 services or Channel 5, and

(b) any licence granted by the Commission to provide a local delivery service.

(2) A BBC company is also a disqualified person in relation to any licence granted by the Authority to provide a national, local or restricted service within the meaning of Part III of this Act.
(3) The Secretary of State may by order provide that sub-paragraph (1)(b) shall not have effect in relation to any local delivery service of a description specified in the order." '.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 180.
Subsections (4A) and (4B) in this amendment are consequential to the provisions allowing S4C and Channel 4 to create companies, to which I spoke earlier. Subsection (4C) was brought forward by my honourable friend the Minister of State following discussion in the Standing Committee in another place about the potential impact on the commercial radio market of competition from BBC companies.
Some of the concerns expressed were somewhat exaggerated. But there are special factors in the domestic radio market relating to strong competition and spectrum scarcity which will not be changed by digital

1035
broadcasting. Nor is this a sector in which the BBC had plans to establish companies. We therefore thought it would be a good thing to provide assurances to the commercial radio market by clarifying the position. This amendment makes it clear that BBC companies are disqualified from holding a Radio Authority licence to provide a national, local or restricted radio service. I commend the amendment.
Moved, That the House do agree with the Commons in their Amendment No. 180.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
181 Page 93, line 22, leave out 'paragraphs 8 and 15' and insert 'paragraph 8'.
4.45 p.m.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 181. In moving this amendment I shall also refer to Commons Amendments Nos. 182 to 184 inclusive and Commons Amendments Nos. 216 to 221.
This group of amendments concerns the categories of broadcasting licence which fall within the system of media ownership controls. They largely relate to more substantive changes to which we shall come shortly.
Amendment No. 181 is consequential on the revised system of controlling licence-holders' shares and other licences, which is now to rely not on maximum holdings but on attributing half the audience share of the licence concerned where the shareholdings are over 20 per cent.
Amendment No. 182 takes account of Amendment No. 183, which provides for the addition of the new category of restricted television services to the audience, subject to the overall 15 per cent. television share limit.
Amendment No. 184 provides for the omission of restricted radio services from the system of controls. I shall have more to say about this later.
Amendments Nos. 216 to 219 make minor and consequential changes to the order-making power to vary the specific ownership controls.
Amendments Nos. 220 and 221 are minor drafting amendments consequential on the removal of the power to specify a maximum number of local radio service licences that may be held by one person. I commend the amendment.
Moved, That the House do agree with the Commons in their Amendment No. 181.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
182 Schedule 2, page 93, line 23, leave out 'eighteen' and insert 'seventeen'.
183 Page 93, line 26, at end insert—
'(aa) restricted services (within the meaning of Part I of this Act);'.
184 Page 93, leave out line 38.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 182 to 184. I have already spoken to these amendments. I commend them to the House.
Moved, That the House do agree with the Commons in their Amendments Nos. 182 to 184.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
185 Schedule 2, page 94, leave out lines 4 to 50 and insert—
'General limit on the holding of licences to provide television services or interests in bodies corporate holding such licences
2.—(1) If any person's audience time, in respect of a period of twelve months ending with the last day of any calendar month, exceeds 15 per cent. of total audience time, he shall not, subject to sub-paragraph (4), at any time in the following month—

(a) hold two or more licences to provide relevant services falling within one or more of the categories specified in paragraph 1(2)(a), (b), (c), (d) or (g),

(b) be a participant with a qualifying interest in two or more bodies corporate each of which holds a licence, or two or more licences, to provide services falling within one or more of those categories,

(c) hold any licence to provide a relevant service falling within any of those categories and be a participant with a qualifying interest in any body corporate which holds such a licence or two or more such licences,

(d) provide a foreign satellite service and either hold any licence to provide a relevant service falling within any of those categories or be a participant with a qualifying interest in a body corporate which holds such a licence or two or more such licences, or

(e) hold a licence to provide relevant services falling within the category specified in paragraph 1(2)(g) and provide two or more such services.

(2) For the purposes of sub-paragraph (1), and subject to sub- paragraph (3), a person's audience time in respect of any period is the aggregate of—

(a) the audience time attributable in respect of that period to each relevant service falling within any of the categories specified in paragraph 1(2)(a), (b), (c), (d) or (g) provided under a licence held by him,

(b) one half of the audience time attributable in respect of that period to any relevant service falling within any of the categories specified in paragraph 1(2)(a), (b), (c), (d) or (g) provided under a licence held by a body corporate which he does not control, but in which he is a participant with a qualifying interest, and

(c) the audience time attributable in respect of that period to any foreign satellite service provided by him.

(3) For the purposes of calculating a person's audience time in respect of any period in accordance with sub-paragraph (2)—

(a) there shall be included the audience time attributable in respect of that period to each service referred to in that sub-paragraph in respect of which, on the date upon which the calculation of his audience time for the purposes of sub-paragraph (1) is made, he holds the licence, is

1037
a participant in the body corporate which holds the licence, or which he provides (as the case may be), irrespective of whether he held the licence, or was a participant in the body corporate which holds the licence or provided the service at any time during the period; and

(b) there shall (for the avoidance of doubt) be excluded the audience time attributable in respect of that period to each service referred to in sub-paragraph (2) in respect of which, prior to the date upon which the calculation of his audience time for the purposes of sub-paragraph (1) is made, he has ceased to hold the licence, or to be a participant in the holder of the licence, or to provide the service (as the case may be).

(4) Sub-paragraph (1) shall not prevent a person from continuing to hold any licence, or to be a participant in a body corporate which holds any licence, or from continuing to provide any service (as the case may be) if and to the extent that arrangements made by him after the end of the period in respect of which his audience time exceeds 15 per cent. of total audience time would cause his audience time, calculated so as to take into account the effect of those arrangements, not to exceed 15 per cent. of total audience time.
(5) In this paragraph "foreign satellite service" means any service (other than a non-domestic satellite service) which consists in the transmission of television programmes by satellite, is provided on a frequency other than one allocated to the United Kingdom for broadcasting by satellite and either—

(a) appears to the Commission to be intended for general reception in the United Kingdom (whether or not it appears to them to be also intended for general reception elsewhere), or

(b) is (to any extent) relayed by a local delivery service.

(6) References in this paragraph—

(a) to the audience time attributable to any service in respect of any period, or

(b) to total audience time in respect of any period,

shall be construed in accordance with paragraph 3.
(7) In this paragraph "qualifying interest" means an interest of more than 20 per cent.
(8) The Secretary of State may by order amend sub-paragraph (7)—

(a) by substituting a different percentage for any percentage for the time being specified there, and

(b) so as to specify different percentages in relation to licences to provide different services.

(9) The Secretary of State may by order amend sub-paragraphs (1)(a), (2)(a) and (b) by adding a reference to relevant services falling within the category specified in paragraph 1(2)(aa)'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 185. In speaking to this amendment I shall also refer to Amendments Nos. 186 and 187, 215, 157 and 158.
Amendment No. 185 retains the general scheme whereby holdings in television are limited to no more than 15 per cent. of the total television audience time. However, it provides that those who have an interest in more than 20 per cent. but less than the control of the television service shall be attributed half the audience time attributable to that service.
1038
The amendment to Amendment No. 185 before the House will ensure that when calculating audience time audience share is attributed immediately in respect of licences that a person controls or in which he has a qualifying interest at the time the calculation is made.
Amendment No. 185 also provides order-making powers whereby the Secretary of State may amend the percentage of qualifying interests to which half the audience time is attributed and bring restricted television services within the scope of the 15 per cent. audience time limit.
Amendment No. 186 provides that the Secretary of State can amend paragraph 3 of Part III to reflect any significant change in the manner in which the television industry calculates audience time.
Amendment No. 187 is simple and straightforward. It changes an order-making power into a general rule to prevent the holder of one regional Channel 3 licence from also holding another licence to provide a regional Channel 3 service for that region.
Amendments Nos. 157 and 158 are minor amendments to Clause 115 which pave the way for a repeal of the Broadcasting (Restrictions on the Holding of Licences) Orders. The replacement provisions are now contained on the face of this Bill, so the orders will become redundant when Schedule 2 of the Bill becomes law.
Amendment No. 215 amends the earlier provisions whereby the holders of one type of licence were restricted to a 20 per cent. interest in licences of a different category, replacing them with provisions which prevent common control of those licences but which do not restrict the extent of participation below the level of control. It will, however, still prevent any one person from having more than one national analogue broadcasting licence; and anyone holding a local radio licence and a Channel 3 licence where services are provided for areas which are significantly the same. I commend the amendment.
Moved, That the House do agree with the Commons in their Amendment No. 185.—(Lord Inglewood.)
AMENDMENTS TO COMMONS AMENDMENT No. 185
185A Leave out lines 4 to 7 and insert ("No one person may, at any time when his audience time in respect of the period of twelve months ending with the last day of the preceding calendar month exceeds 15 per cent of total audience time in respect of that period—").
185B Line 27, leave out (", and subject to sub-paragraph (3)").
185C Line 28, after ("time") insert ("at any time ("the relevant time")").
185D Line 33, at end insert ("at the relevant time").
185E Line 38, after ("is") insert ("at the relevant time").
185F Line 41, at end insert ("at the relevant time").
185G Line 42, leave out sub-paragraphs (3) and (4).
Lord Inglewood: My Lords, I have already spoken to Amendments Nos. 185A to 185G. I beg to move them en bloc.
Moved, That Amendments Nos. 185A to 185G, as amendments to Commons Amendment No. 185, be agreed to.—(Lord Inglewood.)
On Question, amendments agreed to.
On Question, Commons Amendment No. 185, as amended, agreed to.
COMMONS AMENDMENTS
186 Schedule 2, page 95, line 37, at end insert—
'(7) If it appears to the Secretary of State that there has been a significant change in the audience measurement practices prevailing in the television industry, the Secretary of State may, after consulting the Commission, make such amendments of sub-paragraphs (1), (3) and (6) as he considers appropriate for the purpose of taking account of that change'.
187 Page 95, line 42, leave out from beginning to first 'a'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 186 and 187. I spoke to these amendments in speaking to Amendment No. 185.
Moved, That the House do agree with the Commons in their Amendments Nos. 186 and 187.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
188 Schedule 2, page 95, line 48, at beginning insert—
'(1A) For the purposes of sub-paragraph (1), a person who is a participant with more than a 20 per cent. interest in a body corporate which holds a licence to provide a television multiplex service but does not control that body shall be treated as holding the licence held by that body.
(1B) No one person may at any time, in relation to each of five or more licences to provide television multiplex services, be either the holder of the licence or a participant with more than a 10 per cent. interest in a body corporate which holds the licence.
(2) In relation to'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 188. In speaking to this amendment I should like also to speak to Amendments Nos. 189, 190 to 195, 210, 211, 213 and 214. This group of amendments deals with the aggregation of interests in licences to provide digital terrestrial services. Amendments Nos. 188 and 189 provide limits of participation to prevent the accumulation of interests in licences to provide digital multiplex services for television. A person who controls or has an interest in more than 20 per cent. of three such licences is restricted to a 20 per cent. interest in another such licence and to interests of 10 per cent. in any such licences thereafter. Amendment No. 190 provides for these arrangements to be amended by order. It also provides that the Secretary of State may designate a television multiplex service as a regional television multiplex service if it covers less than half the population of the United Kingdom.
Amendments Nos. 210 and 211 provide similar restrictions to prevent the accumulation of interests in digital radio multiplex licences. Amendment No. 191 provides that the Secretary of State may impose limits on those providing digital programme services by means of a designated regional multiplex and the control of Channel 3 services and local analogue and digital radio
1040
provided for areas which are to a significant extent the same. This is prevent the development of local media monopolies.
Amendment No. 192 allows a digital programme service provider to provide any number of services on a single digital television multiplex without limitation under the television points system. But as soon as the licence holder provides services on two multiplexes, the points system would apply to him.
Amendment No. 193 makes a drafting correction to Part III of the schedule. Amendment No. 194 provides that only one point is attributable to those digital programme services provided by means of a designated regional multiplex. Amendment No. 195 clarifies the restriction in sub-paragraph (8) by providing that it applies to a participant with more than 20 per cent. interest who does not control that licence. Amendments Nos. 213 and 214 change the arrangements restricting the number of services which the holder of a local digital sound programme service licence may provide on a local radio multiplex.
Moved, That the House do agree with the Commons in their Amendment No. 188.—(Lord Inglewood.)
Lord Renton: My Lords, this is something which one could have said at any stage in the consideration of these Commons amendments, but I give an undertaking to say it only once. We have here, as we have already had—and we shall have many more—a mass of somewhat technical amendments which mostly have not arisen from views expressed in your Lordships' House when the Bill was before us; nor do they arise for the most part from views expressed in another place. They are necessary amendments, but they are mostly very technical and they are amendments which I think could well have been brought into the Bill as originally published if, instead of taking about one year over the preparation of the Bill, two years or even three years had been allowed in order to do so.
The Prime Minister recently made a speech about the working of the constitution generally in which he talked of ideas on the improving of the handling of legislation in the years to come. One of those suggestions was that we should have an arrangement, when we have massive Bills and especially technical Bills, for having much longer time for their consideration. The suggestion was that draft Bills should be issued to all those who might be affected by them: public bodies and others. I mention this because here is an example which illustrates the need for the change which the Prime Minister has proposed. I hope that it may be regarded as a good example of what needs to be done in the years to come.
Lord Inglewood: My Lords, the point that my noble friend has made is a very good one. As he says, this is almost a textbook case of very technical legislation. If I may, I should like to make what one might describe as a couple of points in mitigation. The first is that many of the points we are considering arose out of commitments given by me in this House at an earlier stage. In addition, the vast majority of the others arise from commitments given and changes introduced in another place.

1041
The point made by my noble friend about the general technicality of the Bill is well taken, but there is one point which I have already mentioned on a number of occasions and perhaps in this context it is appropriate to repeat it. We accept that this was a difficult Bill and it was brought in in a hurry. There was one very good reason for that: it is a Bill asked for by the industry in order to enable digital terrestrial broadcasting to take place in this country. Digital satellite broadcasting and digital cable broadcasting can be done without any legislative change.
The industry requested the Government to bring in the necessary legal framework to give the possibility of digital terrestrial broadcasting a chance. It is the view of the industry—and one which we ought to take very seriously—that unless we got that legislative framework in place quickly, the economic consequences would be that there was every likelihood that digital terrestrial broadcasting would not take place in Britain at all. Because the points made by my noble friend are entirely well taken, I thought it important to explain why, in the particular circumstances of this Bill, the Government brought forward proposals which in ordinary circumstances they probably would not have done. There was, I believe, a very good underlying reason for so doing.
Lord Renton: My Lords, before my noble friend sits down, may I thank him for that explanation? However, I should like to say that I would still suggest that this indicates a need for plenty of time to be given in such cases.
Lord Inglewood: My Lords, my noble friend is absolutely right, but one of the extraordinary things which are happening in the world is that the technology in this area is moving forward fast. Indeed, what one might describe as the broadcasting landscape is very different now from what it was in November when the Bill was introduced. In economic terms it is almost a different world from what it was six months ago.
Lord Donoghue: My Lords, I agree entirely with what the noble Lord said and I sympathise with him. I am sure he will sympathise with us on this side if he considers that we, on this side, unpaid, and with no research back-up at all, have had to handle the technicalities of the Bill from day one. The people responsible might think about the necessity from the public interest point of view to provide a proper support structure for Her Majesty's Opposition in this House.
On Question, Motion agreed to.
COMMONS AMENDMENTS
189 Schedule 2, page 95, line 50, leave out from 'Act)' to end of line 51 and insert—

'(a) sub-paragraph (1) shall have effect as if the reference to three licences were a reference to two licences, and

(b) sub-paragraph (1B) shall have effect as if the reference to five licences were a reference to four licences.'.

190 Page 96, line 1, leave out from 'order' to end of line 3 and insert—

'(a) amend sub-paragraphs (1) to (2) by substituting a different numerical limit or percentage for any numerical limit or percentage for the time being specified there,

(b) designate any television multiplex service as a regional multiplex service for the purposes of this sub-paragraph,

(c) prescribe restrictions on the holding by any one person of two or more licences to provide regional multiplex services whose coverage areas are to a significant extent the same.

(4) The Secretary of State shall not designate any television multiplex service as a regional television multiplex service for the purposes of sub-paragraph (3) unless less than half of the population of the United Kingdom is resident within the proposed coverage area of the service.'.
191 Page 96, line 3, at end insert—
'Limits on the holding, by persons providing digital programme services, of licences to provide other categories of service
5A.—(1) The Secretary of State may by order prescribe restrictions on the holding, by a person who is providing a digital programme service by means of a television multiplex service designated by order under paragraph 5(3)(b) as a regional multiplex service, of a licence to provide any service specified in sub-paragraph (2) whose coverage area is to a significant extent the same as that of the digital programme service.
(2) The services referred to in sub-paragraph (1) are—

(a) a regional Channel 3 service,

(b) a local radio service, and

(c) a local radio multiplex service.

(3) The Secretary of State may also by order prescribe restrictions on the provision by any one person at any time of both—

(a) a digital programme service by means of a television multiplex service which is designated by order under paragraph 5(3)(b) as a regional multiplex service, and

(b) a digital sound programme service whose coverage area is to a significant extent the same as that of the digital programme service.

192 Page 96, line 8, leave out from first 'services' to second 'services' and insert 'by means of two or more television multiplex services if the number of points attributable to those digital programme'.
193 Page 96, line 16, leave out 'broadcast' and insert 'provided'.
194 Page 96, line 16, at end insert—
'(aa) a digital programme service is provided by means of a television multiplex service designated by the Secretary of State by order under paragraph 5(3)(b) as a regional multiplex service, or'.
195 Page 97, line 7, leave out from 'licence' to 'to' in line 10 and insert 'but who does not control that body, shall be taken'.
Lord Inglewood: My Lords, I have already spoken to these amendments. I beg to move them en bloc.
Moved, That this House do agree with the Commons in their Amendments Nos. 189 to 195.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
196 Schedule 2, page 97, leave out lines 11 to 13 and insert—
'(9) The Secretary of State may by order amend this paragraph—

(a) by altering the number of points for the time being attributable to digital programme services falling within sub-paragraph (2), (3) or (4),

(b) by substituting a different number of hours for the number for the time being specified in sub-paragraph (3), (4) or (5),

(c) by substituting different numbers for any numbers for the time being specified in sub-paragraph (7), and

(d) by substituting a different percentage for the percentage for the time being specified in sub-paragraph (8).'.

5 p.m.
Lord Inglewood: My Lords, in speaking to Amendment No. 196 I should like also to speak to Amendments No. 197 and 209 inclusive. Amendment No. 196 gives the Secretary of State the power to vary elements in the digital points system set out in paragraph 6 of Part III to Schedule 2, so that the ownership regime can respond to developments within digital television broadcasting.
Amendments Nos. 198 and 201 make it clear that, for the purposes of the 15 per cent. radio ownership points limit, points will be allocated to the company concerned at the time the licence is awarded. The Radio Authority will not have to wait until the company is actually broadcasting under a licence which is in force before allocating points. That brings the Bill into line with the approach currently adopted by the authority. The other amendments in this group are designed to remove the category of restricted radio licences from regulation under the radio points scheme. Restricted service licences are issued by the Radio Authority to permit broadcasting which is provided for a particular establishment or other defined location, or a particular event. Licences are issued on demand, and are normally valid for 28 days.
Following representations from the Radio Authority, the Government decided that there were good reasons for removing that category of licence from the points system. The inclusion of restricted radio licences in the points system unhelpfully distorts the market. However, we do not know what the future might hold. Amendment No. 209 empowers the Secretary of State to reinstate such licences, or any category of them, in the calculation and to specify a number of points to be assigned to them should concentrations of ownership threaten to cause a problem.
Moved, That the House do agree with the Commons in their Amendment No. 196.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
197 Schedule 2, page 97, line 21, leave out '(b) or (c)' and insert 'or (b)'.
198 Page 97, line 24, at end insert 'or have been awarded'.
199 Page 97, line 27, leave out ',(c)'.
200 Page 97, line 31, leave out ', local or restricted' and insert 'or local'.
201 Page 97, line 32, after 'force' insert 'or have been awarded'.
202 Page 97, line 35, leave out 'two or more'.
203 Page 97, line 45, leave out ', local or restricted' and insert 'or local'.
204 Page 98, leave out lines 13 and 14.
205 Page 98, line 24, at end insert—
'(2A) No points shall be attributed to a national or local digital sound programme service unless the service is being provided.'.
206 Page 98, line 25, leave out ', local or restricted' and insert 'or local'.
207 Page 98, line 34, leave out ', local or restricted' and insert 'or local'.
208 Page 98, line 37, leave out ', local or restricted' and insert 'or local'.
209 Page 98, line 46, at beginning insert—
'(1) The Secretary of State may by order make such amendments of paragraphs 7 and 8 as he thinks fit for the purposes of including restricted radio services among the services referred to in any provision of paragraph 7 and of providing for the calculation of the points to be attributed to any such service, or any category of such service.
(2) '.
210 Page 99, line 24, at end insert —
'(2A) For the purposes of sub-paragraph (2)(a) a person who is a participant with more than a 20 per cent. interest in a body corporate which holds a licence to provide a radio multiplex service but does not control that body shall be treated as holding the licence held by that body.
(2B) No one person may at any time—

(a) hold a licence to provide a radio multiplex service and be a participant with more than a 10 per cent. interest in more than one body corporate which holds any other such licence, or

(b) be a participant with more than a 10 per cent. interest in each of three or more bodies corporate which hold such licences.'.

211 Page 99, line 25, leave out from 'order' to end of line 26 and insert—

'(a) amend sub-paragraph (1), (2) or (2B) by substituting a different numerical limit for any numerical limit for the time being specified there, and

(b) amend sub-paragraph (2A) or (2B) by substituting a different percentage for any percentage for the time being specified there.'.

Lord Inglewood: My Lords, I beg to move that this House do agree with the Commons in their Amendments Nos. 197 to 211. I have already spoken to these amendments.
Moved, That the House do agree with the Commons in their Amendments Nos. 197 to 211.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
212 Schedule 2, Page 99, line 26, at end insert—
'Limits in relation to licences to provide local radio services in overlapping areas
10A.—(1) No one person may at any time hold any two licences to provide local radio services which share a potential audience unless either—

(a) one of the licences is an AM licence and the other is an FM licence, or

1045

(b) the Authority have determined that in all the circumstances, having regard to the matters specified in sub-paragraph (4), the holding by that person of the licences in question could not be expected to operate against the public interest within the area concerned.

(2) No one person may at any time hold any three licences to provide local radio services any of which shares a potential audience with each of the other two services unless—

(a) the licences include both an AM licence and an FM licence, and

(b) the Authority have determined that in all the circumstances, having regard to the matters specified in sub-paragraph (4), the holding by that person of the licences in question could not be expected to operate against the public interest within the area concerned.

(3) No one person may at any time hold any four or more licences to provide local radio services any of which shares a potential audience with each of the other services.
(4) The matters referred to in sub-paragraphs (1) and (2) are—

(a) any reduction in plurality of ownership of local radio services within the area concerned that would result from a decision to allow the licences to be held together, and

(b) the likely effect of such a decision on—

(i) the range of programmes available by way of independent radio services to persons living in the area concerned, and

(ii) diversity in the sources of information available to the public in the area concerned and in the opinions expressed on local radio services received in that area.

(5) For the purposes of this paragraph two local radio services share a potential audience if, but only if, the potential audience of one service includes more than half of the potential audience of the other service.
(6) This paragraph has effect subject to paragraph 10B.
(7) In this paragraph—
"AM licence" means a licence to provide a local radio service on an amplitude modulated frequency,
"FM licence" means a licence to provide such a service on a frequency modulated frequency, and
"potential audience", in relation to a local radio service, means the persons over the age referred to in paragraph 8(2)(a) who reside in the coverage area of that service.
Power by order to impose different restrictions in place of paragraph 10A
10B. The Secretary of State may by order provide that, where a digital sound programme service is provided in any area, the holding by any one person of two or more licences to provide in that area local radio services which for the purposes of paragraph 10A share a potential audience with each other or with each of the others shall, instead of being subject to the restrictions specified in paragraph 10A, be subject to other restrictions specified in the order.'.
Lord Inglewood: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 212. I should also like to speak to Commons Amendments Nos. 222 to 229 and Commons Amendment No. 136.
There has been considerable debate about the current restriction which limits companies to one radio licence on the AM waveband and one licence on the FM
1046
waveband in areas which overlap. The Government listened carefully to this debate and held discussions with the Radio Authority and the Commercial Radio Companies Association. We concluded that both the industry and the listener would benefit from a measured relaxation of the existing ownership regime. Amendment No. 212 therefore allows companies to own three licences in areas which share a potential audience; that is to say, either two FM licences and one AM licence, or two AM licences and one FM licence.
The acquisition of a second licence on the same waveband will be subject to a radio specific public interest test, to protect plurality and diversity in the local radio market. When considering applications from radio companies wishing to operate a second licence on the same waveband in the same area, the Radio Authority will have to consider three factors in relation to that area. These are whether any reduction in plurality of ownership might result from a decision to allow the licences to be held together; the likely effect on the range of independent radio services available to listeners; and the likely effect on diversity in sources of information available and opinions expressed on local radio services in the area.
In the larger city areas where there are already several other radio stations, it is not obvious that plurality dictates that a company should be restricted to owning two licences. Under the test that we propose, the authority will be able to allow the acquisition if it concludes that a reduction in plurality is not so material as to be against the public interest.
However, in shire areas, where typically the only AM licence and the only FM licence are owned by the same company, the test will allow the Radio Authority to conclude that the acquisition of a third licence for that area does not operate against the public interest if such an acquisition will actually lead to an increase in the number of services which would be provided. That may be the only way that a further service would be viable; that is to say, through the exploitation by the dominant company of economies of scale. It will be for the Radio Authority to judge whether the benefits of diversity outweigh the interests of plurality.
In allowing a company to acquire a second FM (or AM) licence in a particular area, we do not propose to remove the existing licence conditions applying to programme formats and promises of performance. If a company acquires an existing licence, it will remain bound by these conditions, and will not simply be able to supplant an existing service with one that is radically different from the one to which listeners have grown accustomed. And in issuing any new licences, the Radio Authority will continue to seek to extend diversity for listeners in the area.
However, in our discussions with the Radio Authority about this issue, the authority expressed concern that many of the existing promises of performance had been drafted in general terms when there were tighter limits on the ownership of more than one station in any one local area. Amendment No. 136 accordingly enables the Radio Authority to revise local licences upon a change of control in order to write tighter promises of

1047
performance which accurately reflect the character of the station's output immediately prior to the change of control.
The intention behind Amendments Nos. 222 to 227 is simple. The connected persons provisions in Part III of Schedule 2, would mean that the Radio Authority would have to apply the new public interest test if a person is a director of any three radio stations which share a potential audience. That was never the intention, and these amendments change the connected persons provisions to ensure that such a situation does not arise.
Finally, Amendments Nos. 228 and 229 remove the limits on participation by holders of certain licences to provide services of a different category. Those arrangements have been superseded by Amendment No. 215.
Moved, That the House do agree with the Commons in their Amendment No. 212.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
213 Schedule 2, page 99, line 30, leave out 'such' and insert 'non-simulcast'.
214 Page 99, leave out lines 31 to 51 and insert—
'(2) Where—

(a) the coverage area of the local radio multiplex service is to a significant extent the same as that of another local radio multiplex service, and

(b) the person concerned is not providing any non-simulcast service by means of that other local radio multiplex service,

sub-paragraph (1) shall have effect as if the reference to one non-simulcast service were a reference to two such services.
(3) In this paragraph "non-simulcast service" means any local digital sound programme service other than one which—

(a) is provided by a person who holds a licence to provide a local radio service, and

(b) corresponds to that local radio service.

(4) For the purposes of sub-paragraph (3)(b) a local digital sound programme service corresponds to a local radio service if, and only if, in every calendar month—

(a) at least 80 per cent. of so much of the local radio service as consists of programmes, consists of programmes which are also included in the local digital sound programme service in that month, and

(b) at least 50 per cent. of so much of the local radio service as consists of such programmes is broadcast at the same time on both services.

(5) The Secretary of State may by order—

(a) amend sub-paragraphs (1) and (2) by substituting a different numerical limit for any numerical limit for the time being specified there, and

(b) amend sub-paragraph (4)(a) or (b) by substituting a different percentage for any percentage for the time being specified there.

(6) In subsection (4) "programme" does not include an advertisement.'.
215 Page 99, line 51, at end insert—
'Further restrictions on holding of licences of different descriptions
11A.—(1) No one person may at any time hold—

(a) a licence to provide a national Channel 3 service or Channel 5, and

(b) a licence to provide a national radio service.

(2) No one person may at any time hold—

(a) a licence to provide a local radio service or local digital sound programme services, and

(b) a licence to provide a regional Channel 3 service whose coverage area is to a significant extent the same as that of the local radio service or of any local digital sound programme service provided by him.'.

216 Page 100, line 4, leave out '1(2)(b)' and insert '1(2)(aa),(b)'.
217 Page 100, line 12, leave out '(g)'and insert '(aa)'.
218 Page 100, line 12, leave out from '1(3)(a)' to the second 'or' in line 13 and insert ',(b) or (g)'.
219 Page 100, line 15, leave out '11' and insert '11A'.
220 Page 100, leave out lines 31 to 35.
221 Page 100, line 46, leave out 'sub-paragraphs (4) and (5)' and insert 'subparagraph (5)'.
222 Page 101, line 8, at beginning insert 'Subject to sub-paragraph (1A)'.
223 Page 101, line 9, leave out '11' and insert '11A'.
224 Page 101, line 10, after 'paragraph' insert '10B or'.
225 Page 101, line 13, leave out 'who is'.
226 Page 101, line 13, leave out from 'him' to end of line 14.
227 Page 101, line 14, at end insert—
'(1A) For the purposes of paragraph 10A and any order under paragraph 10B, a person shall not be treated as holding a licence to provide a local radio service merely because he is a director of a body corporate which holds the licence.
(1B) Any provision of paragraphs 2 to 11 which refers to a person's participation in a body corporate shall have effect as if he and every person connected with him were one person.'.
228 Page 101, line 15, leave out from beginning to end of line 37 on page 102.
229 Page 102, leave out lines 38 to 43.
Lord Inglewood: My Lords, I beg to move that this House do agree with the Commons in their Amendments Nos. 213 to 229 en bloc. I have already spoken to these amendments.
Moved, That the House do agree with the Commons in their Amendments Nos. 213 to 229.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
230 Schedule 2, page 104, leave out lines 1 to 10.
Lord Inglewood: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 230. I should also like to speak to Commons Amendments Nos. 231 to 240 and Commons Amendment No. 254. These amendments all relate to rules relating to the relationship between newspapers and broadcast licences.

1049
Amendments Nos. 230 and 231 are minor modifications of the drafting of paragraph 3 of Part IV to Schedule 2.
Amendments Nos. 232 to 237 and Amendment No. 240 effect the Government's revised policy for limiting participation in broadcasters by newspaper companies, which relies on the attribution of half the audience share of a service to minority participants having more than a 20 per cent. interest in a licence.
Amendment No. 240 allows local newspaper groups with 50 per cent. or more of local newspaper circulation to apply to control a local radio licence, provided there is at least one other commercial local radio licence serving the same area and subject to the public interest test.
Amendments Nos. 238 and 239 relax media ownership restrictions in the light of the new regulatory system introduced by the Bill as amended, by removing the prohibition on national newspaper companies with a market share of 20 per cent. or more controlling digital programme service licences for radio.
Amendment No. 254 empowers the Secretary of State to make an order restricting cross-ownership of restricted service television licences and newspaper companies.
Moved, That the House do agree with the Commons in their Amendment No. 230.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
231 Schedule 2, page 104, line 10, at end insert—
'( ) For the purposes of this Part of this Schedule a person runs a national or local newspaper if—

(a) he is the proprietor of the newspaper, or

(b) he controls a body which is the proprietor of the newspaper.'.

232 Page 104, line 12, at end insert—
'Restrictions on common control etc.
3A.—(1) No person who runs a national newspaper which for the time being has, or national newspapers which for the time being together have, a national market share of 20 per cent. or more may hold a licence to provide—

(a) a regional or national Channel 3 service or Channel 5, or

(b) a national or local radio service.

(2) A licence to provide a regional Channel 3 service may not be held by a person who runs a local newspaper which for the time being has, or local newspapers which for the time being together have, a local market share of 20 per cent. or more in the coverage area of the service.
(3) A licence to provide digital programme services may not be held by a person who runs a local newspaper which for the time being has, or local newspapers which for the time being together have, a local market-share of 20 per cent. or more in the coverage area of any digital programme service provided under the licence.
(4) For the purposes of this paragraph a person shall be treated as holding a licence if the licence is held by a person connected with him.'.
233 Page 104, line 13, leave out from beginning to 'No' in line 14 on page 105 and insert—
'Restrictions on participation
'5.—(1) No proprietor of a national newspaper which for the time being has, or of national newspapers which for the time being together have, a national market share of 20 per cent. or more shall be a participant with more than a 20 per cent. interest in a body corporate which is the holder of a licence to provide any of the services specified in sub-paragraph (4).
(1A) '.
234 Page 105, leave out lines 15 to 17 and insert 'any of the services specified in sub-paragraph (4)'.
235 Page 105, leave out lines 28 to 39.
236 Page 105, line 40, leave out '(2) and (3)(b)' and insert '(1), (1A) and (2)'.
237 Page 105, line 41, after 'a' insert 'regional or national'.
238 Page 105, line 41, at end insert 'and'.
239 Page 105, line 42, leave out from 'services' to end of line 43.
240 Page 105, line 44, leave out from beginning to end of line 5 on page 108 and insert—
'(4A) The Secretary of State may by order amend sub-paragraph (1), (1A) or (2) by substituting a different percentage interest in a body corporate for the percentage for the time being specified there.
(4B) Any restriction imposed by this paragraph on participation in a body corporate which is the holder of a particular kind of licence shall apply equally to participation in a body corporate which controls the holder of such a licence.
(4C) Any restriction on participation imposed by this paragraph—

(a) on the proprietor of any newspaper, or

(b) on the holder of any licence,

shall apply as if he and every person connected with him were one person.
Holding of local radio licence by person running local newspapers with at least 50 per cent local market share
5A.—(1) A licence to provide a local radio service may not be held by a person who runs a local newspaper which has, or local newspapers which for the time being together have, a local market share of 50 per cent. or more in the coverage area of the service unless—

(a) the service in question shares a potential audience with another local radio service, but

(b) he does not hold any other licence to provide a local radio service whose coverage area is to any extent the same as the coverage area of the service in question.

(2) The reference in sub-paragraph (1) to sharing a potential audience shall be construed in accordance with paragraph 10A(5) in Part III of this Schedule.
(3) For the purposes of this paragraph a person shall be treated as holding a licence if the licence is held by a person connected with him.'.
Lord Inglewood: My Lords, I beg to move that this House do agree with the Commons in their Amendments Nos. 231 to 240. I have already spoken to these amendments.
Moved, That the House do agree with the Commons in their Amendments Nos. 231 to 240.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
241 Schedule 2, page 108, line 5, at end insert—
'Further restrictions on holding of local radio licences by a person who runs a local newspaper
5B.—(1) No person who runs a local newspaper which for the time being has, or local newspapers which for the time being together have, a local market share of 20 per cent. or more in each of the relevant areas may hold any three licences to provide local radio services any of which shares a potential audience with each of the other services.
(2) No person who runs a local newspaper which for the time being has, or local newspapers which for the time being together have, a local market share of 20 per cent. or more in both the relevant areas may hold any two licences to provide local radio services which share a potential audience, unless one of the licences is an AM licence and the other is an FM licence.
(3) In sub-paragraphs (1) and (2)—

(a) "the relevant areas" means the coverage areas of the local radio services in question,

(b) references to sharing a potential audience shall be construed in accordance with sub-paragraph (5) of paragraph 10A in Part III of this Schedule, and

(c) "AM licence" and "FM licence" have the same meaning as in that paragraph.

(4) For the purposes of this paragraph a person shall be treated as holding a licence if the licence is held by a person connected with him.
(5) This paragraph has effect subject to paragraph 5C.
Power by order to impose different restrictions in place of paragraph 5B
5C.—(1) The Secretary of State may by order provide that, where a digital sound programme service is provided in any area, the holding, by a person who runs a local newspaper or local newspapers as mentioned in paragraph 5B(1), of two or more licences to provide in that area local radio services which for the purposes of paragraph 5B share a potential audience with each other or with each of the others shall, instead of being subject to the restrictions specified in paragraph 5B, be subject to other restrictions specified in the order.
(2) For the purposes of any order under sub-paragraph (1), a person shall be treated as holding a licence if the licence is held by a person connected with him.'.
Lord Inglewood: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 241. I should also like to speak to Amendments Nos. 242 through to 253 and to Amendments Nos. 255 and 256.
These amendments relate to the public interest test for the newspaper acquisition of broadcasting licences. Amendment No. 241 allows, subject to the public interest test, local newspapers with less than 20 per cent. of circulation in an area to own up to three local radio services on the same basis as any other company, and local newspapers with between 20 per cent. and 50 per cent. of circulation in an area to own one AM and one FM service.
Amendment No. 242 clarifies the operation of the public interest test for cross-ownership of newspapers and broadcasters, ensuring that it will not represent a continuing sanction against a newspaper once it has acquired a particular broadcasting licence; that it will not apply retrospectively and that it will not apply if a newspaper acquires further titles; and that it will not
1052
apply to the acquisition of licences by local newspapers outside their circulation area. But that will apply each time a newspaper proprietor acquires further broadcasting licences, and it will apply if a national newspaper acquires a local broadcasting licence and subsequently becomes a local newspaper proprietor in the area concerned.
Amendment No. 242 also permits the ITC and Radio Authority, having consulted licence-holders, to extend the three-month period within which they are required to make a public interest determination.
Amendment No. 242 also ensures that a newspaper proprietor wishing to become a digital programme provider is able to obtain an advance indication that, in principle, his being a digital programme provider is unlikely to be against the public interest test.
Amendments Nos. 252 to 256 make a series of consequential amendments, following Amendment No. 242, while Amendments Nos. 255 and 256 prevent the regulators revoking a licence solely on the basis of a change of circumstances, which if those circumstances had obtained prior to its grant, would have led them to conclude that the grant was against the public interest.
Taken together, these amendments ensure that the regulators can protect plurality and diversity without imposing unduly on the media industry.
Moved, That the House do agree with the Commons in their Amendment No. 241.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
242 Schedule 2, page 108, leave out lines 8 to 22 and insert—
'9.—(1) A licence to provide any of the services specified in sub-paragraph (4) may not be granted to a body corporate which is, or is connected with, the proprietor of a national or local newspaper if the relevant authority determine that in all the circumstances the holding of the licence by that body corporate could be expected to operate against the public interest.
(2) Subject to sub-paragraph (3), a body corporate which holds a licence to provide any of the services specified in sub-paragraph (4) shall not become, or become connected with, the proprietor of a national or local newspaper and continue to hold the licence if the relevant authority determine within the permitted period that in all the circumstances the continued holding of the licence by that body corporate operates, or could be expected to operate, against the public interest.
(3) Sub-paragraph (2) does not apply in any case where the body corporate holding the licence—

(a) is already the proprietor of some other national or local newspaper, or is already connected with such a proprietor, and

(b) does not become connected with any other person who holds a licence to provide any of the services specified in sub-paragraph (4).

(4) The services referred to in sub-paragraphs (1) to (3) are—

(a) a national Channel 3 service or Channel 5,

(b) a national radio service, and

(c) national digital sound programme services.

(5) Subject to sub-paragraph (6), in this paragraph "the permitted period" means a period beginning with the day on which the licence holder becomes, or becomes connected with, the proprietor of the national or local newspaper ("the relevant day") and ending—

(a) in a case where the licence holder has, before the relevant day, notified the relevant authority that he will become, or become connected with the proprietor of that national or local newspaper on that day, at the end of the period of three months beginning with the relevant day, or

(b) in any other case, at the end of the period of three months beginning with the day on which the licence holder notifies the relevant authority that he has become, or has become connected with, the proprietor of that national or local newspaper.

(6) The relevant authority may in a particular case, after consultation with the licence holder, notify him before the time when the permitted period would (apart from this sub-paragraph) have ended that the permitted period in that case is to be calculated as if the references in sub-paragraph (5) to three months were references to such longer period specified in the notification as the relevant authority reasonably consider necessary in the circumstances.
(7) Nothing in any of the preceding provisions of this Schedule shall be construed as affecting the operation of this paragraph or paragraph 9A or 9B.
9A.—(1) A licence to provide a regional Channel 3 service or a local radio service may not be granted to a body corporate which is, or is connected with, the proprietor of a national newspaper or a relevant local newspaper if the relevant authority determine that in all the circumstances the holding of the licence by that body corporate could be expected to operate against the public interest.
(2) Subject to sub-paragraph (3), a body corporate which holds a licence to provide a regional Channel 3 service or a local radio service shall not become, or become connected with, the proprietor of a national newspaper and continue to hold the licence if the relevant authority determine within the permitted period that in all the circumstances the continued holding of the licence by that body corporate operates, or could be expected to operate, against the public interest.
(3) Sub-paragraph (2) does not apply in any case where the body corporate holding the licence—

(a) is already the proprietor of some other national newspaper or is already connected with such a proprietor, and

(b) does not become connected with—

(i) any other person who holds a licence to provide a regional Channel 3 service or a local radio service, or

(ii) any person who holds a licence to provide digital programme services and is providing a service under that licence.

(4) Subject to sub-paragraph (5), a body corporate which holds a licence to provide a regional Channel 3 service or a local radio service shall not become, or become connected with, the proprietor of a relevant local newspaper and continue to hold the licence if the relevant authority determine, within the permitted period that in all the circumstances the continued holding of the licence by that body corporate operates, or could be expected to operate, against the public interest.
(5) Sub-paragraph (4) does not apply in any case where the body corporate which holds the licence—

(a) is already the proprietor of some other local newspaper which is a relevant local newspaper in relation to the service referred to in that sub-paragraph, or is already connected with such a proprietor, and

(b) does not become connected with—

(i) any other person who holds a licence to provide a regional Channel 3 service or local radio service in relation to which that other local newspaper is also a relevant local newspaper, or

1054

(ii) any person who holds a licence to provide digital programme services and is providing a service under that licence in relation to which that other local newspaper is also a relevant local newspaper.

(6) For the purposes of this paragraph a local newspaper is a "relevant local newspaper", in relation to any service, if it serves an area which is to a significant extent the same as the coverage area of the service.
(7) In this paragraph "the permitted period" has the meaning given by paragraph 9(5) and (6).
9B.—(1) A body corporate which holds a licence to provide digital programme services and is, or is connected with, the proprietor of a national newspaper or a relevant local newspaper, shall not begin to provide a digital programme service if the Commission determine before the end of the period specified in sub-paragraph (2) that in all the circumstances the provision of that service by that body corporate could be expected to operate against the public interest.
(2) The period referred to in sub-paragraph (1) is the period of three months beginning with the day on which the Commission are notified pursuant to section 18(3) of the 1996 Act of an agreement to provide the digital programme service, or such longer period beginning with that day as the Commission may in a particular case, after consultation with the licence holder, notify him during those three months as being the period which they reasonably consider necessary in the circumstances.
(3) Subject to sub-paragraph (4), a body corporate which is providing a digital programme service shall not become, or become connected with, the proprietor of a national newspaper and continue to provide the service if the Commission determine within the permitted period that in all the circumstances the continued provision of the service by that body corporate operates, or could be expected to operate, against the public interest.
(4) Sub-paragraph (3) does not apply in any case where the body corporate which is providing the digital programme service—

(a) is already the proprietor of some other national newspaper or is already connected with such a proprietor, and

(b) does not become connected with—

(i) the holder of a licence to provide a regional Channel 3 service or a local radio service, or

(ii) the holder of another licence to provide digital programme services who is providing a service under that licence.

(5) Subject to sub-paragraph (6), a body corporate which is providing a digital programme service shall not become, or become connected with, the proprietor of a relevant local newspaper and continue to provide the service if the Commission determine within the permitted period that in all the circumstances the continued provision of the service by that body corporate operates, or could be expected to operate, against the public interest.
(6) Sub-paragraph (5) does not apply in any case where the body corporate which is providing the digital programme service—

(a) is already the proprietor of some other local newspaper which is a relevant local newspaper in relation to the service referred to in that sub-paragraph, or is already connected with such a proprietor, and

(b) does not become connected with—

(i) the holder of a licence to provide a regional Channel 3 service or local radio service in relation to which that other local newspaper is also a relevant local newspaper, or

1055

(ii) the holder of another licence to provide digital programme services who is providing a service under that licence in relation to which that other local newspaper is also a relevant local newspaper.

(7) In this paragraph—

(a) references to a relevant local newspaper shall be construed in accordance with paragraph 9A(6), and

(b) "the permitted period" has the meaning given by paragraph 9(5) and (6).'.

243 Page 108, line 24, leave out from 'result' to end of line 27 and insert—

'(a) in the application of paragraph 9(2) to a body corporate which holds a licence to provide any of the services specified in paragraph 9(4),

(b) in the application of paragraph 9A(2) or (4) to a body corporate which holds a licence to provide a regional Channel 3 service or a local radio service, or

(c) in the application of paragraph 9B(1), (3) or (5) to a body corporate which holds a licence to provide digital programme services.'.

244 Page 108, line 39, leave out from first 'the' to 'could' in line 40 and insert 'continued holding of the licence by the body corporate'.
245 Page 108, line 48, leave out '9(1)' and insert '9(2), 9A(2) or (4) or 9B(1), (3) or (5)'.
246 Page 109, line 1, leave out '9(1)' and insert '9(2), 9A(2) or (4) or 9B(1),(3) or (5)'.
247 Page 109, line 4, leave out 'and' and insert 'or'.
248 Page 109, line 7, after first 'the' insert 'relevant'.
249 Page 109, line 13, after '9' insert ', 9A, 9B'.
250 Page 109, line 14, leave out from 'corporate' to 'operates' in line 15 and insert 'which is, or is connected with, the proprietor of a newspaper'.
251 Page 109, line 27, leave out from 'corporate' to 'and' in line 28 and insert 'which was not, and was not connected with, the proprietor of a newspaper'.
252 Page 109, line 32, after '9' insert 9A, 9B'.
253 Page 109, line 33, at end insert—
'12. In relation to any determination under paragraph 9B(1), (3) or (5), references in paragraphs 10 and 11 to the holding of the licence shall have effect as references to the provision of the service.'.
254 Page 109, line 33, at end insert—
'Restricted television services
.—(1) The Secretary of State may by order—

(a) prescribe restrictions on the holding of one or more licences to provide restricted television services by a person who runs a national or local newspaper, and

(b) apply any of the provisions of paragraphs 9 to 11, with such modifications as may be specified in the order, in relation to the holding of a licence to provide a restricted television service.

(2) Any order under sub-paragraph (1) may provide that, for the purposes of any provision of the order, a person is to be treated as holding a licence if the licence is held by a person connected with him.
(3) In this paragraph "restricted television service" means a restricted service within the meaning of Part I of this Act.'.
255 Page 110, line 11, at end insert—
'(6B) Where a licence has been granted in a case where the Commission could have made a determination under paragraph 9(1) or 9A(1) of Part IV of Schedule 2 (if satisfied that the fact mentioned in that provision could have been expected to operate against the public interest), subsection
1056
(5) does not enable the licence to be revoked merely because a change is such that the Commission would have made such a determination in the new circumstances of the case."'.
256 Page 110, line 43, at end insert—
'(6B) Where a licence has been granted in a case where the Authority could have made a determination under paragraph 9(1) or 9A(1) of Part IV of Schedule 2 (if satisfied that the fact mentioned in that provision could have been expected to operate against the public interest), subsection (5) does not enable the licence to be revoked merely because a change is such that the Authority would have made such a determination in the new circumstances of the case."'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 242 to 256 en bloc. I have already spoken to these amendments.
Moved, That the House do agree with the Commons in their Amendments Nos. 242 to 256.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
99 After Clause 66, insert the following new clause—
PROVISION OF NEWS PROGRAMMES BY HOLDERS OF REGIONAL CHANNEL 3 LICENCES
'.—(1) With respect to the broadcasting of news programmes on and after 1st January 1998, section 31 of the 1990 Act (provision of news on Channels 3 and 5) is amended as follows.
(2) In subsection (2)—
(a) at the beginning there is inserted—
"For the purpose of securing the nationwide broadcast, by holders of regional Channel 3 licences (taken together), of news programmes which are able to compete effectively with other news programmes broadcast nationwide in the United Kingdom,"
(b) for "a nominated news provider" there is substituted "the appointed news provider", and
(c) in paragraph (b), for "the same nominated" there is substituted "the appointed".
(3) For subsection (3) there is substituted—
"(3) In subsection (2) "appointed news provider" means, subject to subsection (4), the body corporate for the time being appointed for the purposes of that subsection, from among the bodies corporate nominated by the Commission under section 32, in accordance with conditions included by virtue of section 31A in regional Channel 3 licences.
(4) A body corporate ceases by virtue of this subsection to be the appointed news provider if its nomination is terminated by the Commission under any provision of section 32."'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 99. I shall speak also to Amendments Nos. 100 to 102, 160 and 289.
This group of amendments gives effect to the commitment I gave the noble Lord, Lord Barnett, at Report stage on 7th March. As I made clear in that debate, we believe there are significant benefits to restricting the provision of news on Channel 3 to one provider able to compete effectively with other national news services provided by the BBC and, increasingly, by cable and satellite channels.
The amendments therefore place a requirement on the regional Channel 3 companies to appoint a single news provider; selected by them, from a list of those who have

1057
been nominated by the ITC as being of the necessary standard to provide high quality national and international news.
Moved, That the House do agree with the Commons in their Amendment No.99.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
100 After Clause 66, insert the following new clause—
APPOINTMENT OF NEWS PROVIDER BY HOLDERS OF REGIONAL CHANNEL 3 LICENCES
'.—(1) After section 31 of the 1990 Act there is inserted—
"Appointment of news provider by holders of regional Channel 3 licences.
31A. A regional Channel 3 licence shall include conditions requiring the holder of the licence to do all that he can to ensure—

(a) that arrangements are made between all holders of regional Channel 3 licences ("the relevant licence holders") for the appointment by them, from among the bodies corporate nominated by the Commission under section 32, and on such terms as the relevant licence holders may agree, of a single body corporate to be the appointed news provider for the purposes of section 31(2), and

(b) that, so long as he provides his licensed service, an appointment for the purposes of section 31(2) is in force."

(2) The Independent Television Commission may not include in pursuance of section 31A of the 1990 Act any condition in a regional Channel 3 licence (within the meaning of Part I of the 1990 Act) which would require an appointment for the purposes of section 31(2) (as amended by this Act) to take effect before 1st January 1998.'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 100. I have already spoken to this amendment.
Moved, That the House do agree with the Commons in their Amendment No. 100.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
101 After Clause 66, insert the following new clause—
NOMINATION BY COMMISSION FOR PURPOSES OF SECTION 31(2) OF BROADCASTING ACT 1990
'.—(1) Section 32 of the 1990 Act (nomination of bodies to provide news for regional Channel 3 services) is amended in accordance with subsections (2) to (5).
(2) For subsections (1) to (6) there is substituted—
"(1) With a view to enabling them to nominate bodies corporate as eligible for appointment for the purposes of section 31(2), the Commission shall invite bodies appearing to them to be qualified for nomination to make applications to be so nominated.
(2) Where a body corporate—

(a) applies to the Commission (whether in pursuance of any such invitation or not) to be nominated under this section as a nominated news provider, and

(b) appears to the Commission to be qualified for nomination,

the Commission shall so nominate that body.
(3) Subject to subsection (5), any nomination made by the Commission under this section shall remain in force for a period of ten years, and at the end of that period may be renewed by the Commission for a further period of ten years.
(4) Where the Commission are notified by the holders of licences to provide regional Channel 3 services that the appointment of the appointed news provider is due to expire, or to be renewed or terminated in accordance with the terms of the appointment, the Commission shall review the qualification for nomination of all nominated news providers (including the appointed news provider).
(5) If on any such review it appears to the Commission that a body is no longer qualified for nomination they shall (subject to subsection (6)) by notice terminate that body's nomination.
(6) The Commission shall not terminate a body's nomination under subsection (5) unless they have given the body a reasonable opportunity of making representations to them about the proposed termination."
(3) In subsection (9), paragraph (b) is omitted.
(4) In subsection (12), for the words from "appearing" onwards there is substituted "which—

(a) in their opinion is or, if appointed, would be effectively equipped and adequately financed to provide high quality news programmes for broadcasting in regional Channel 3 services; and

(b) appears to them not to be disqualified for being nominated under this section by virtue of this subsection."

(5) In subsection (13)—
(a) in paragraph (b), after "section", where second occurring, there is inserted "as eligible for appointment", and
(b) after paragraph (b) there is inserted—
"and
(c) references to the appointed news provider are references to the person for the time being appointed for the purposes of section 31(2) under the arrangements referred to in section 31A(a)."
(6) Subsections (2), (4) and (5) do not affect the application of section 32 of the 1990 Act before 1st January 1998 in relation to nomination for the purposes of section 31(2) as originally enacted.'
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 101. I have already spoken to this amendment with Amendment No. 99.
Moved, That the House do agree with the Commons in their Amendment No. 101.—(Lord Inglewood.)
AMENDMENT TO COMMONS AMENDMENT No. 101
101A Line 34, after (""appearing"") insert (", where second occurring,")
Lord Inglewood: My Lords, I beg to move Amendment No. 101A as an amendment to Commons Amendment No. 101.
Moved, That Amendment No. 101A, as an amendment to Commons Amendment No. 101, be agreed to.—(Lord Inglewood.)
On Question, amendment agreed to.
On Question, Commons Amendment No. 101, as amended, agreed to.
COMMONS AMENDMENT
102 After Clause 66 insert the following new clause—
MODIFICATION OF RESTRICTIVE TRADE PRACTICES ACT 1976 IN ITS APPLICATION TO AGREEMENTS RELATING TO CHANNEL 3 NEWS PROVISION
'.—(1) After section 194 of the 1990 Act there is inserted—
"Modification of Restrictive Trade Practices Act 1976 in its application to agreements relating to Channel 3 news provision.
194A.—(1) In this section a "relevant agreement" means an agreement—

(a) which is made between all holders of regional Channel 3 licences for securing the appointment by them, in accordance with conditions included in their licences by virtue of section 31A(a), of a single body corporate to be the appointed news provider for the purposes of section 31(2), or

(b) which is made between them and the body corporate appointed to be the appointed news provider for the purposes of section 31(2) for purposes connected with the appointment.

(2) If a relevant agreement is registered under the Restrictive Trade Practices Act 1976 ("the 1976 Act"), the Director General of Fair Trading shall report to the Secretary of State as to whether it appears to the Director that the agreement falls within subsection (4).
(3) If, on receiving a report under subsection (2), it appears to the Secretary of State that the agreement falls within subsection (4), he may give a direction to the Director requiring him not to make an application to the Restrictive Practices Court under Part I of the 1976 Act in respect of the relevant agreement.
(4) A relevant agreement falls within this subsection if—

(a) those provisions of the agreement by virtue of which the 1976 Act applies to the agreement do not have, and are not intended or likely to have, to any significant extent the effect of restricting, distorting or preventing competition, or

(b) all or any of those provisions have, or are intended or likely to have, that effect to a significant extent, but that the effect is not greater than is necessary—

(i) in the case of a relevant agreement falling within subsection (1)(a), for securing the appointment by holders of regional Channel 3 licences of a single body corporate to be the appointed news provider for the purposes of section 31(2), or

(ii) in the case of a relevant agreement falling within subsection (1)(b), for compliance by them with conditions included in their licences by virtue of section 31(1) and (2).

(5) The Secretary of State may vary or revoke any direction given under subsection (3) above if he satisfied that there has been a material change of circumstances such that—

(a) the grounds for the direction have ceased to exist, or

(b) there are grounds for giving a different direction;

and where the Secretary of State so varies or revokes any direction, he shall give notice of the variation or revocation to the Director.
(6) In this section—

(a) "agreement" and "Director" have the same meaning as in the 1976 Act, and

(b) "regional Channel 3 licence" has the same meaning as in Part I."

(2) Subsection (1) shall not apply in relation to any agreement (within the meaning of the Restrictive Trade Practices Act 1976) made for the purposes of the provision of news programmes by a nominated news provider under section 31(2) of the 1990 Act as originally enacted.'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 102.—(Lord Inglewood.)
Moved, That the House do agree with the Commons in their Amendment No. 102.—(Lord Inglewood.)
On Question, Motion agreed to.
5.15 p.m.
COMMONS AMENDMENT
103 Clause 67, page 58, line 40, after 'include' insert '(a)'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 103. In moving this amendment, I shall speak also to Amendments Nos. 104, 108, 112 to 114, 116, and 119 to 123.
Amendment No. 123 introduces a related new clause, which results from commitments given in this House. They reflect our full and helpful discussion of regional programming, and I trust noble Lords will accept them as fulfilling the wishes of this House.
Amendment No. 106 deals with a problem raised in another place. It was suggested that a licence holder who was the object of a hostile takeover might pre-notify the commission, but be unable to provide information about the predator to provide the basis of new licence conditions. Amendment No. 106, therefore, allows the commission in such a case to wait until a takeover occurs. At this point the predator company becomes the licence holder and so is bound by the licence to supply information to the commission.
Amendments Nos. 107 and 109 to 111 clarify the ways in which the ITC must take into account the different aspects of regionality identified in Clause 67.
The remaining amendments are simply corrections or simplifications of drafting.
Moved, That the House do agree with the Commons in their Amendment No. 103.—(Lord Inglewood.)
The Earl of Arran: My Lords, the alterations to the Bill, since we first encountered it, show what a very long time in politics six months can prove to be. So I pay warm tribute to my noble friend for having stayed the course. It is no mean feat for a man who once admitted that watching TV was not his favourite pastime! Your Lordships may recall my cri de Coeur at Second Reading that everything that could be done to protect quality regional ITV should be done.
I proposed an amendment to stop the moguls of ITV draining the financial lifeblood from small, regional companies. I sought to prevent interference with the discount price arrangement for network programmes. My noble friend promised to take a look at the problem. It turned into—if he will forgive me—a frustratingly long look. But the results of slow gestation are now embodied

1061
in the Bill. I am delighted that the spirit is close to my original intention. I am also encouraged by the comments of his ministerial colleague in another place. His words will add strength to the arm of the regulator in enforcing what will soon be law.
However, there are some puzzling anomalies and potential lacunas. Indeed, the late arrival of some government amendments allowed no time for proper consultation and precious little time for parliamentary consideration. For example, I wonder whether it is fair for a regional newspaper group to own a local radio station, while a regional ITV company cannot make such investments. And what powers were at work when, as late as Report stage in another place, the Government introduced amendments to stop ITV companies profiting from the use of Teletext?
Your Lordships will recall the reaction. ITV united in public opposition. The amendments vanished as mysteriously as they had come. This Bill may wreak discomfiting change in the ownership of ITV, but at least the small regional companies can face the future knowing that our public lobbying has secured additional safeguards for quality. At least, the small companies can now face the future without both hands being tied behind their backs, for which I am indeed grateful.
Lord Thomson of Monifieth: My Lords, I join with the noble Earl, Lord Arran, in expressing thanks to the Minister for following up this matter in the way that he has. It was a matter of concern in your Lordships' House that the regional companies and ITV are a distinctive aspect of ITV. We are all grateful for the safeguards that have been inserted.
On Question, Motion agreed to.
COMMONS AMENDMENTS
104 Clause 67, page 58, line 42, at end insert 'and
(b) a condition requiring the licence holder to provide the Commission, in such manner and at such times as they may reasonably require, with such information as they may require for the purposes of exercising their functions under this section.'.
105 Page 58, line 44, leave out 'imposed under subsection (1) or section 5(2)(d)' and insert 'in a regional Channel 3 licence'.
106 Page 59, line 5, leave out 'without that change having' and insert 'whether or not that change has'.
107 Page 59, line 8, at end insert 'one or more of the following matters, namely'.
108 Page 59, line 14, leave out 'included' and insert 'made available by the licence holder for the purposes of inclusion'.
109 Page 59, line 17, at beginning insert 'then, with a view to ensuring that the relevant change of control is not prejudicial to any of those matters'.
110 Page 59, line 19, leave out from 'of' to 'as' in line 20 and insert 'those matters'.
111 Page 59, line 21, leave out from 'that' to end of line 24 and insert ', having regard to the effect, or likely effect, of the relevant change of control on-'.
112 Page 59, line 32, leave out 'or'.
113 Page 59, line 39, at end insert 'or
(d) the extent to which managerial or editorial decisions
1062
relating to programmes to be included in the service are taken by persons so employed within that area,
the relevant change of control is or would be prejudicial to the regional character of the service,'.
114 Page 59, line 43, leave out 'and (c)' and insert ',(c) and (d)'.
115 Page 59, line 46, leave out 'the' and insert 'any'.
116 Page 60, line 5, leave out from 'holder' to end of line 6 and insert—

'(a) during the three months immediately before the relevant date, or

(b) if the Commission consider that the performance of the licence holder during that period is not typical of its performance during the twelve months before the relevant date, during such other period of three months during those twelve months as they may notify in writing to the licence holder;

and for the purposes of this subsection "the relevant date" is the date of the relevant change of control or, if earlier, the date on which the Commission exercise their powers under subsection (3) or (4).'.
117 Page 60, leave out lines 11 to 14 and insert—
'(8) Where, in a case falling within subsection (2)(a), a notice under subsection (3) or (4) varying a licence is served before the change to which it relates takes place, the variation shall not take effect until the change takes place.'.
118 Page 60, leave out lines 15 and 16.
119 Page 60, line 21, after 'interest' insert '(a)'.
120 Page 60, line 22, at end insert—
'(b) to persons living within any part of that area, or
(c) to particular communities living within that area;'.
121 Page 60, line 33, leave out 'condition' and insert 'conditions'.
122 Page 60, line 34, leave out '21A(1)' and insert '21A(1)(a) and (b)'.
123 After Clause 67, insert the following new clause—
POWERS OF COMMISSION IN RELATION TO MODIFICATION OR REPLACEMENT OF NETWORKING ARRANGEMENTS
'.—(1) Section 39 of the 1990 Act (networking arrangements between holders of regional Channel 3 licences) is amended as follows.
(2) After subsection (9) there is inserted—
"(9A) The matters to which the Commission shall have regard in deciding whether to approve any arrangements or modification under subsection (4) or (8) include the likely effect of the arrangements in question, or (as the case may be) those arrangements as proposed to be modified, on the ability of the holders of regional Channel 3 licences to maintain the quality and range—

(a) of the regional programmes (as defined in section 21 A(9)) included in each regional Channel 3 service, and

(b) of the other programmes included in each service which contribute to the regional character of the service."

(3) For subsection (10) there is substituted—
"(10) Without prejudice to the generality of their power to refuse to approve any arrangements or modification under subsection (4) or (8), the Commission shall refuse to do so if—

(a) they are not satisfied that the arrangements in question, or (as the case may be) those arrangements as proposed to be modified, would be appropriate for the purpose mentioned in subsection (1), or

1063

(b) it appears to them that the arrangements in question, or (as the case may be) those arrangements as proposed to be modified, would be likely to prejudice the ability of the holder of any regional Channel 3 licence to comply with—

(i) any condition imposed in pursuance of section 33(1), for the purpose of securing the implementation of proposals relating to the matters specified in section 16(2)(c), or

(ii) any condition imposed in pursuance of subsection (3) of section 21A in relation to the matters specified in paragraph (a) of that subsection."'.

124 Clause 68, page 61, line 4, leave out '57(1A)' and insert '57(1A)(a)'.
125 After Clause 68, insert the following new clause—
PUBLIC SERVICE FUND OF SIANEL PEDWAR CYMRU
'.—(1) After section 61 of the 1990 Act there is inserted—
"Welsh Authority public service fund
61A.—(1) The Welsh Authority shall not exercise their powers under section 57(1A)(b) before such date (in this section referred to as "the notified date") as they may notify to the Secretary of State for the purposes of this section.
(2) All amounts received by the Welsh Authority under section 61 on or after the notified date shall be kept by the Authority in a separate fund (in this section referred to as "the public service fund") which may be applied only for the purposes of their functions under section 57(1) or (1A)(a).
(3) No S4C company shall receive any direct or indirect subsidy from the public service fund.
(4) The Welsh Authority shall secure that no television programme which has been wholly or partly financed out of the public service fund is included in a television programme service provided by an S4C company before it is first broadcast on S4C or in the service referred to in section 57(1A)(a).
(5) On the notified date—

(a) all the assets then held by the Welsh Authority other than cash, together with the appropriate proportion of any cash then held by them, shall be taken to be comprised in the public service fund, and

(b) the remainder of any cash then held by the Authority shall be taken to be comprised in a general fund.

(6) In subsection (5)(a) "the appropriate proportion" means the proportion which, in the last financial year in respect of which a statement of accounts has been prepared under paragraph 12(1) of Schedule 6 before the notified date, the total amount received by the Welsh Authority under section 61 bears to the total amount of its income from all sources."
(2) In paragraph 12 of Schedule 6 of the 1990 Act (accounts and audit) after sub-paragraph (1) there is inserted—
"(1A) The statement of accounts must deal separately with the public service fund referred to in section 61A of this Act and with the general fund referred to in subsection (5)(b) of that section.".'.
126 Clause 71, page 62, line 32, after 'power' insert—
'(a)".
127 Page 62, line 34, after 'form' insert 'in any part of the United Kingdom'.
128 Page 62, line 35, at end insert 'and
(b) to establish qualifying companies, to purchase or otherwise acquire shares, stocks or other securities of qualifying companies and to assist any qualifying company.
(6) In subsection (5)(b) "qualifying company" means any company (whether incorporated under the law of the United Kingdom or of any other country) which is or will be wholly or mainly engaged in one or more of the following activities—

(a) the provision of one or more services which are licensed by the Commission or by the Radio Authority or which, if provided in the United Kingdom, would be required to be so licensed,

(b) activities incidental to such provision, and

(c) the holding of shares in any other company which is wholly or mainly engaged in such provision or in activities incidental to such provision."

(1A) In paragraph 1 of Schedule 3 to the 1990 Act (status and capacity of Channel Four Television Corporation) after sub-paragraph (3) there is inserted—
"(4) Section 24(5)(b) of this Act shall not be taken to limit the Corporation's power by virtue of sub-paragraph (3) to do such things and enter into such transactions as are incidental or conducive to the discharge of their functions under section 24(1) or (5)(a)." '.
129 Page 62, line 38, after 'power' insert—
'(a)".
130 Page 62, line 41, at end insert 'and
(b) to establish qualifying companies, to purchase or otherwise acquire shares, stocks or other securities of qualifying companies and to assist any qualifying company.
(1B) In subsection (1A)(b) "qualifying company" means any company (whether incorporated under the law of the United Kingdom or of any other country) which is or will be wholly or mainly engaged in one or more of the following activities—

(a) the provision of one or more services which are licensed by the Commission or by the Radio Authority or which, if provided in the United Kingdom, would be required to be so licensed,

(b) activities incidental to such provision, and

(c) the holding of shares in any other company which is wholly or mainly engaged in such provision or in activities incidental to such provision.

(3) In paragraph 1 of Schedule 6 to the 1990 Act (status and capacity of Welsh Authority) after sub-paragraph (2) there is inserted—
"(3) Section 57(1A)(b) of this Act shall not be taken to limit the Authority's power by virtue of sub-paragraph (2) to do such things and enter into such transactions as are incidental or conducive to the discharge of their functions under section 57(1) or (1A)(a)."'.
131 After Clause 72, insert the following new clause—
AWARD OF CERTAIN LICENCES SUBJECT TO CONDITIONS
'.—(1) After section 17 of the 1990 Act there is inserted—
"Award of Channel 3 licence subject to conditions.
17A.—(1) The Commission may, when awarding a Channel 3 licence to any person, make the grant of the licence to him conditional on his compliance before the grant with such specified requirements relating to the financing of the service as appear to them to be appropriate, having regard to—

(a) any duties which are or may be imposed on them, or on the licence holder, by or under this Act, and

(b) any information provided to them under section 15(3)(g) by the person to whom the licence is awarded as to his projected financial position during the period for which the licence would he in force.

(2) Where the Commission determine that any condition imposed by them in relation to a Channel 3 licence in pursuance of subsection (1) has not been satisfied, section 17 shall (subject to subsection (3)) have effect as if the person to whom the licence was awarded had not made an application for it.
(3) Section 17 shall not so have effect if the Commission decide that it would be desirable to publish a fresh notice under section 15(1) in respect of the grant of the licence."
(2) In section 51 of the 1990 Act (procedure to be followed by Commission in connection with consideration of applications for, and awarding of, licences to provide additional services), in subsection (3)—

(a) for "section 17" there is substituted "sections 17 and 17A", and

(b) for "it applies" there is substituted "they apply".

(3) After section 76 of the 1990 Act there is inserted—
"Award of local delivery licence subject to conditions.
76A.—(1) The Commission may, when awarding a local delivery licence to any person, make the grant of the licence to him conditional on his compliance before the grant with such specified requirements relating to the financing of the service as appear to them to be appropriate, having regard to—

(a) any duties which are or may be imposed on them, or on the licence holder, by or under this Act, and

(b) any information provided to them under section 74(3)(d) by the person to whom the licence is awarded as to his projected financial position during the period for which the licence would be in force.

(2) Where the Commission determine that any condition imposed by them in relation to a local delivery licence in pursuance of subsection (1) has not been satisfied, section 76 shall (subject to subsection (3)) have effect as if the person to whom the licence was awarded had not made an application for it.
(3) Section 76 shall not so have effect if the Commission decide that it would be desirable to publish a fresh notice under section 74(1) in respect of the grant of the licence."'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 104 to 131. I have already spoken to these amendments.
Moved, That the House do agree with the Commons in their Amendments Nos. 104 to 131.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
132 After Clause 72, insert the following new clause—
ANCILLARY SERVICES
'. Section 48 of the 1990 Act (Additional services) is amended in paragraph (c) of subsection (3) by the addition after the words "their contents" of the words "or relate to the promotion or listing of such programmes"'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 132. This amendment was tabled by the Opposition in another place and the Government were happy to accept the amendment as drafted, which expands the definition of ancillary services in Section 48(3) of the 1990 Act. This amendment will enable fuller listings by Channels 3, 4 and 5 of their forthcoming programmes on their Teletext pages currently broadcast as ancillary
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services. Amendment No. 132 will also enable the principal terrestrial broadcasters to develop further systems of programme delivery control and give more information to the viewer about their services.
Moved, That the House do agree with the Commons in their Amendment No. 132.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
133 After Clause 73, insert the following new clause—
POWER OF INDEPENDENT TELEVISION COMMISSION TO SUSPEND LICENCE TO PROVIDE NON-DOMESTIC SATELLITE SERVICE
'.After section 45 of the 1990 Act there is inserted—
"Special power of revocation and suspension on certain grounds in case of licence to provide non-domestic satellite service.
45A.—(1) If the Commission are satisfied—

(a) that the holder of a licence to provide a non-domestic satellite service has included in the service one or more programmes containing material likely to encourage or incite to crime or to lead to disorder,

(b) that he has thereby failed to comply with a condition included in the licence in pursuance of section 6(1)(a), and

(c) that the failure is such as to justify the revocation of the licence,

they shall serve on the holder of the licence a notice under subsection (2).
(2) A notice under this subsection is a notice—

(a) stating that the Commission are satisfied as mentioned in subsection (1),

(b) specifying the respects in which, in their opinion, the licence holder has failed to comply with the condition mentioned in paragraph (b) of that subsection,

(c) stating that the Commission may revoke his licence after the end of the period of twenty-one days beginning with the date on which the notice is served on the licence holder,

(d) informing the licence holder of his right to make representations to the Commission within that period about the matters complained of, and

(e) suspending the licence as from the time when the notice is served on the licence holder until the revocation takes effect or the Commission decide not to revoke the licence.

(3) If the Commission, having considered any representations about the matters complained of made to them within the period referred to in subsection (2)(c) by the licence holder, are satisfied that it is necessary in the public interest to revoke the licence in question, they shall serve on the licence holder a notice revoking the licence.
(4) A notice under subsection (3) shall not take effect until the end of the period of twenty-eight days beginning with the day on which that notice was served on the licence holder.
(5) Section 42 (as applied by section 45(5)) shall not have effect in relation to the revocation of a licence in pursuance of a notice under subsection (1)."'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 133. In speaking to this amendment, I should like to speak also to Amendments Nos. 138, 152 and 156. Your Lordships will know that in this country we have

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a liberal and deregulated broadcasting regime. We must, however, be vigilant against the exploitation of that framework particularly by those who see the opportunity to take advantage of our liberal regime in the way in which they direct broadcasts to other countries where they profoundly disagree with the government of the receiving country. While the Government are always conscious of the right of free speech in this country and of our obligations in that regard under international conventions, equally strongly they believe that the maintenance of good and proper relations between the UK and other countries requires that this matter be dealt with in legislation. Each of these amendments is directed in different ways to that consideration.
Amendment No. 133 gives a special power to the Independent Television Commission, if it thinks fit, to suspend and revoke a non-domestic television broadcasting satellite licence where there has been a serious breach of that licence by the inclusion of material likely to encourage or incite to crime or to lead to disorder. Amendment No. 138 provides parallel powers to the Radio Authority in respect of satellite radio licences.
The Government do not consider it necessary to extend the scope of the existing rules in respect of political disqualification contained in the 1990 Act because they are already comprehensive. However, the Government wish to place beyond any shadow of a doubt the obligations of the commission and authority in respect of investigation and judgment with regard to disqualification on political grounds when they are considering an application for a licence or taking a view on a current licence. Amendment No. 152 has this effect. What concerns the Government is that those who are disqualified under the existing legislation by virtue of their political objectives, might, if they are sufficiently motivated or reckless, provide false information or withhold information. The Government therefore believe that it is necessary to create a new offence. This is the effect of Amendment No. 153. Amendment No. 154 gives the court a discretion to order an offender convicted under the provisions of Amendment No. 153 to be disqualified from holding a broadcasting licence for a period of up to five years as the court thinks fit. Amendment No. 155 provides for an appeal. Amendment No. 156 is consequential to these amendments.
Moved, That the House do agree with the Commons in their Amendment No. 133.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
134 After Clause 74, insert the following new clause—
CERTAIN DELIVERY SERVICES TO CARRY CERTAIN BROADCASTS
'.—(1) After section 78 of the 1990 Act there is inserted—
'Inclusion of certain services in local delivery service provided by digital means.
78A.—(1) Where the Commission are satisfied, in the case of a local delivery service by means of which one or more of the services specified in section 72(2) is delivered in digital form, that it would be appropriate, having regard to the extent of the use and proposed use of digital technology
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in the provision of the service, for the service to be treated as a digital local delivery service for the purposes of this section, they shall serve a notice to that effect on the holder of the licence to provide the service.
(2) The Commission shall do all that they can to secure that, subject to subsection (3) and to any exceptions for which the Secretary of State, after consultation with the Commission, the BBC and the Welsh Authority, may by order provide, every digital local delivery service provided by any person in any area includes, by the reception and immediate re-transmission of the broadcasts—

(a) the programmes included in each relevant service, and

(b) if the area for which the local delivery service is provided falls wholly or partly in Wales, the programmes included in the appropriate Welsh service.

(3) The Commission may exempt any digital local delivery service from the requirement to include any service ("the broadcast service") if it appears to the Commission that, at the place where the holder of the licence to provide the local delivery service receives or would receive the broadcast service, the broadcast service is not capable of being received at a level satisfying such technical standards as the Commission may from time to time determine.
(4) Where a relevant service provided for reception in an area for which a digital local delivery service is provided consists in the broadcasting for simultaneous reception of programmes contained in two or more programme schedules, then, so far as relating to that relevant service, the duty in subsection (2) shall be subject to the limitation in whichever of subsections (5) and (6) is appropriate.
(5) Where the programmes contained in one of the programme schedules are broadcast for reception in a greater part of the area than the programmes contained in the other schedule or any of the other schedules, the duty in subsection (2) so far as so relating shall extend only to the programmes contained in the first-mentioned schedule.
(6) Where subsection (5) does not apply, the duty in subsection (2) so far as so relating shall extend only to the programmes contained in such one of the programme schedules as the relevant broadcasting body may determine.
(7) For the purposes of this section Channel 3 shall be taken to be a single service consisting in the broadcasting for simultaneous reception of programmes contained in several programme schedules.
(8) Each broadcaster shall provide any person providing a digital local delivery service with such assistance as he may reasonably require in relation to the technical arrangements for the re-transmission in pursuance of this section of the broadcasts of that broadcaster.
(9) In this section—
"the appropriate Welsh service" means the service referred to in section 57(1A)(a) or, if no such service is being broadcast, S4C;
"broadcaster" means the Welsh Authority or any person providing a relevant service;
"digital local delivery service" means any local delivery service in respect of which the Commission have given a notice under subsection (1);
"the relevant broadcasting body" means—

(a) in relation to any service provided by the BBC, the BBC, and

(b) in relation to any service licensed by the Commission, the Commission;

"relevant service" means any of the following services—

(a) Channel 3, Channel 4 and Channel 5,

(b) the teletext service referred to in section 49(2), and

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(c) the television broadcasting services and teletext service provided by the BBC.

(10) Expressions used in subsections (7) and (9) and in Part I of this Act have the same meaning in those provisions as in that Part.
(11) An order under subsection (2) shall be subject to annulment in pursuance of a resolution of either House of Parliament."
(2) In Part III of Schedule 12 to the 1990 Act (transitional provisions relating to existing cable services), for paragraph 4 there is substituted—
"4.—(1) The Commission shall do all that they can to secure that, subject to sub-paragraph (2) and to any exceptions for which the Secretary of State, after consultation with the Commission, the BBC and the Welsh Authority, may by order provide, every diffusion service provided by any person in any area under a relevant licence includes, by the reception and immediate re-transmission of the broadcasts, the programmes included in each relevant service provided for reception in that area.
(2) The Commission may exempt any diffusion service from the requirement to include any relevant service if it appears to the Commission that, at the place where the holder of the licence to provide the diffusion service receives or would receive the relevant service, the relevant service is not capable of being received at a level satisfying such technical standards as the Commission may from time to time determine.
(3) Where a relevant service provided for reception in an area for which a diffusion service is provided consists in the broadcasting for simultaneous reception of programmes contained in two or more programme schedules, then, so far as relating to that relevant service, the duty in sub-paragraph (1) shall be subject to the limitation in whichever of sub-paragraphs (4) and (5) is appropriate.
(4) Where the programmes contained in one of the programme schedules are broadcast for reception in a greater part of the area than the programmes contained in the other schedule or any of the other schedules, the duty in sub-paragraph (1) so far as so relating shall extend only to the programmes contained in the first-mentioned schedule.
(5) Where sub-paragraph (4) does not apply, the duty in sub-paragraph (1) so far as so relating shall extend only to the programmes contained in such one of the programme schedules as the relevant broadcasting body may determine.
(6) For the purposes of this paragraph Channel 3 shall be taken to be a single service consisting in the broadcasting for simultaneous reception of programmes contained in several programme schedules.
(7) Each person providing a relevant service ("the broadcaster") shall provide any person providing a diffusion service with such assistance as he may reasonably require in relation to the technical arrangements for the re-transmission in pursuance of this paragraph of the broadcasts of that broadcaster.
(8) In this paragraph—
"the relevant broadcasting body" means—

(a) in relation to any service provided by the BBC, the BBC, and

(b) in relation to any service licensed by the Commission, the Commission;

"relevant service" means any of the following services—

(a) Channel 3, Channel 4 and S4C,

(b) the teletext service referred to in section 49(2) of this Act, and

(c) the two television broadcasting services provided by the BBC on the passing of the Broadcasting Act 1996 and the teletext service provided by the BBC at that time.

(9) Expressions used in sub-paragraphs (6) and (8) and in Part I of this Act have the same meaning in those sub-paragraphs as in that Part.
(10) An order under sub-paragraph (1) shall be subject to annulment in pursuance of a resolution of either House of Parliament.
4A.—(1) Where the Commission are satisfied, in the case of any diffusion service which is provided under a relevant licence and by means of which one or more of the services specified in section 72(2) of this Act is delivered in digital form, that it would be appropriate, having regard to the extent of the use and proposed use of digital technology in the provision of the service, for the service to be treated as a digital diffusion service for the purposes of this paragraph, they shall serve a notice to that effect on the holder of the licence to provide the service; and in this paragraph "digital diffusion service" means a diffusion service in respect of which such a notice has been served.
(2) Subsections (2) to (8) of section 78A of this Act shall have effect in relation to a digital diffusion service as they have effect in relation to a digital local delivery service (within the meaning of that section); and nothing in paragraph 4 shall have effect in relation to a digital diffusion service."'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 134. In speaking to this amendment I should like to speak also to Amendments Nos. 147 and 270. In commending this group of amendments to your Lordships I should like to pay tribute to the part played by my noble friend Lady O'Cathain in putting the case for a must-carry requirement upon digital cable operators. We listened to that case and accepted it.
Amendment No. 134 requires digital cable operators to carry the public service channels. It also tidies up the existing must-carry provisions applying to analogue cable operators holding diffusion service licences. Amendments Nos. 147 and 270 adjust the Copyright, Design and Patents Act 1988 to take account of the new must-carry provisions and other developments. I very much hope that all sides of the House will be able to welcome these amendments.
Moved, That the House do agree with the Commons in their Amendment No. 134.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
135 Clause 75, page 65, line 35, leave out '35(2)(b)' and insert '35(2)(a)'.
136 After Clause 75, insert the following new clause—
VARIATION OF LOCAL RADIO LICENCE FOLLOWING CHANGE OF CONTROL
'. After section 106 of the 1990 Act there is inserted—
"Variation of local licence following change of control.
106A.—(1) Any local licence granted to a body corporate before the commencement of this section shall be taken to include—

(a) a condition requiring the body to give the Authority advance notice of any proposals known to the body that may give rise to a relevant change of control, and

(b) a condition requiring the body to provide the Authority, in such manner and at such times as they may reasonably require, with such information as they may require for the purposes of exercising their functions under subsection (3).

(2) Subsection (3) applies in relation to any local licence which—

(a) was granted before the commencement of this section,

(b) is held by a body corporate, and

(c) has not previously been varied under that subsection.

(3) Where, in relation to any local licence to which this subsection applies—

(a) the Authority receive notice, in pursuance of a condition imposed under subsection (1) or section 88(2)(d), of any proposals that may give rise to a relevant change of control, or

(b) a relevant change of control takes place (whether or not that change has been previously notified to the Authority),

the Authority may vary the licence, by a notice served on the licence holder, so as to include in the licence such conditions as they consider appropriate for the purpose of ensuring that the character of the local service is maintained after the relevant change of control.
(4) Subject to subsection (5), any new or varied condition imposed under subsection (3) in relation to any matter may be more onerous than any existing condition imposed under section 106(1) in relation to that matter; and in this subsection "existing condition" means a condition of the licence as it has effect, or had effect, before the relevant change of control.
(5) The Authority may not under subsection (3) include any new or varied condition in a licence unless the new condition or the condition as varied is one which (with any necessary modifications) would have been satisfied by the licence holder—

(a) during the three months immediately before the relevant date, or

(b) if the Authority consider that the performance of the licence holder during that period is not typical of its performance during the twelve months before the relevant date, during such other period of three months during those twelve months as they may notify in writing to the licence holder;

and for the purposes of this subsection "the relevant date" is the date of the relevant change of control or, if earlier, the date on which the Authority exercise their powers under subsection (3).
(6) The Authority shall not serve a notice on any body under subsection (3) unless they have given it a reasonable opportunity of making representations to them about the variation.
(7) Where, in any case falling within paragraph (a) of subsection (3), a notice under that subsection is served before the change to which it relates takes place, the variation shall not take effect until the change to which it relates takes place.
(8) The power in subsection (1) of section 106 to vary conditions imposed under that subsection includes power to vary conditions imposed under subsection (3).
(9) In this section "relevant change of control" means a change in the persons having control over the body holding the licence." '.
137 Insert the following new clause—
RENEWAL OF LICENCES TO PROVIDE LOCAL RADIO SERVICES
'.— (1) After section 104 of the 1990 Act there is inserted—
"Renewal of local licences.
104A.—(1) A local licence may (subject to the following provisions of this section) be renewed on one occasion for a period of eight years beginning with the date of renewal.
(2) No application for the renewal of a local licence under subsection (1) may be made before the Authority first publish a notice pursuant to section 44(2) of the Broadcasting Act 1996 inviting applications for a licence to provide a relevant local radio multiplex service.
(3) Subject to subsection (2), an application for the renewal of a local licence under subsection (1) may be made by the licence holder not earlier than three years before the date on which it would otherwise cease to be in force and not later than the relevant date.
(4) The applicant must, in his application or at any time before the consideration of his application, nominate—

(a) a local digital sound programme service provided or to be provided by him, and

(b) a relevant local radio multiplex service.

but may not nominate together a local digital sound programme service and a local radio multiplex service if another local licence held by him includes a condition in pursuance of subsection (12) relating to the broadcasting of that local digital sound programme service by that local radio multiplex service.
(5) Where an application for the renewal of a local licence has been duly made to the Authority, they shall grant the application if—

(a) they are satisfied that the applicant would, if his licence were renewed, provide a local service which complied with the conditions included in the licence in pursuance of section 106 (whether as originally imposed or as varied under that section), and

(b) the nominated local digital sound programme service provided by the applicant is being broadcast by means of the nominated local radio multiplex service.

(6) Where the condition specified in subsection (5)(a) is satisfied, the Authority may grant the application even though the condition specified in subsection (5)(b) is not satisfied if—

(a) the applicant holds a licence to provide local digital sound programme services,

(b) a licence to provide the nominated local radio multiplex service has been awarded, and

(c) it appears to the Authority that, under a contract between the applicant and the person to whom that licence has been awarded, the applicant is obliged to provide the nominated local digital sound programme service for broadcasting by means of the nominated local radio multiplex service.

(7) The Authority may in any case postpone consideration of the application until the relevant date.
(8) If, at the relevant date, the condition specified in subsection (5)(b) is not satisfied, and any of the conditions specified in subsection (6) is not satisfied, the Authority may postpone consideration of the application for such period not exceeding twelve months as they think appropriate.
(9) Where the Authority postpone consideration of an application under this section for any period beyond the relevant date (the "postponement period"), they shall extend the period for which the licence is in force by a period equal to the postponement period; and section 86(3) shall not limit the powers of the Authority under this subsection.
(10) On the grant of any application under this section the Authority shall—

(a) where the nominated local digital sound programme service provided by the applicant is not being broadcast by means of the nominated local radio multiplex service, determine a date by which that service must have begun to be so broadcast; and

(b) specify a fee payable to the Authority in respect of the renewal.

(11) Where the Authority have granted a person's application under this section they shall formally renew his licence as soon afterwards as is reasonably practicable; and they shall not so renew his licence unless they have notified him of—

(a) any date determined by them under subsection (10)(a), and

(b) the renewal fee specified by them under subsection (10)(b),

and he has, within such period as is specified in that notification, notified them that he consents to the licence being renewed on those terms.
(12) Where the Authority renew a licence under this section they shall include in the licence as renewed a condition requiring the licence holder to do all that he can to ensure that the nominated local digital sound programme service is broadcast by means of the nominated local radio multiplex service throughout the period beginning with whichever is the later of—

(a) the date on which the licence would expire if not renewed, and

(b) any date determined by them under subsection (10)(a),

and ending with the date on which the licence (as renewed) is to expire.
(13) In this section—

(a) "local digital sound programme service" has the same meaning as in Part II of the Broadcasting Act 1996;

(b) "nominated" means nominated by the applicant under subsection (4);

(c) "relevant date", in relation to a local licence, means the date which the Authority determine to be that by which they would need to publish a notice under section 104(1) if they were to grant, as from the date on which that licence would expire if not renewed, a fresh licence to provide the local service formerly provided under that licence; and

(d) "relevant local radio multiplex service", in relation to a local licence, means a local radio multiplex service (within the meaning of Part II of the Broadcasting Act 1996) with a coverage area which to a significant extent includes the coverage area of the local service provided under the local licence; and for this purpose "coverage area", in relation to a service, has the meaning given by in paragraph 3A of Part I of Schedule 2.

Special application procedure for local licences.
104B.—(1) Where—

(a) a local licence is due to expire (otherwise than by virtue of section 110),

(b) the local service provided under the licence falls within category B, C or D of the Table in paragraph 8 of Part III of Schedule 2, and

(c) the Authority propose to grant a further licence to provide the service in question,

the Authority may if they think fit publish a notice under subsection (2) instead of a notice under section 104(1).
(2) A notice under this subsection is a notice—

(a) stating that the Authority propose to grant a further licence to provide a specified local service,

(b) specifying the area or locality in the United Kingdom for which the service is to be provided,

(c) inviting declarations of intent to apply for a licence to provide the service,

(d) specifying the closing date for such declarations, and

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(e) specifying—

(i) the application fee payable on any declaration made in pursuance of the notice, and

(ii) a deposit of such amount as the Authority may think fit.

(3) A declaration of intent made in pursuance of a notice under subsection (2) must be in writing and accompanied by the application fee and deposit specified under subsection (2)(e)(i) and (ii).
(4) Where the Authority receive a declaration of intent in accordance with the provisions of this section from a person other than the licence holder in relation to the service in question, they shall—

(a) publish a notice under section 104(1),

(b) specify—

(i) in relation to persons who have made a declaration of intent in accordance with the provisions of this section, no further application fee, and

(ii) in relation to all other applicants, an application fee of the same amount as the fee referred to in subsection (2)(e)(i), and

(c) repay the deposit referred to in subsection (2)(e)(ii) to every person—

(i) who has made a declaration of intent in accordance with the provisions of this section, and

(ii) who duly submits an application in pursuance of the notice referred to in paragraph (a).

(5) Where the Authority receive a declaration of intent in accordance with the provisions of this section from the licence holder in relation to the service in question, and no such declaration from any other person, they shall—

(a) invite the licence holder to apply for the licence in such manner as they may determine (but without requiring any further application fee), and

(b) on receiving an application duly made by him, repay to him the deposit referred to in subsection (2)(e)(ii).

(6) The Secretary of State may by order amend subsection (1) by removing any of the categories of local service for the time being specified in that subsection, or by substituting for any of such categories any one or more categories of local service set out in the Table in paragraph 8 of Part III of Schedule 2.
(7) Any order under subsection (6) shall be subject to annulment in pursuance of a resolution of either House of Parliament."
(2) In section 104 of the 1990 Act (applications for licences other than national licences), subsections (5) and (6)(a) shall cease to have effect.'.
138 After Clause 76, insert the following new clause—
POWER OF RADIO AUTHORITY TO SUSPEND LICENCE TO PROVIDE SATELLITE SERVICE
'. After section 111A of the 1990 Act there is inserted—
"Power to suspend licence to provide satellite service.
111B.—(1) If the Authority are satisfied—

(a) that the holder of a licence to provide a satellite service has included in the service one or more programmes containing material likely to encourage or incite to crime or to lead to disorder,

(b) that he has thereby failed to comply with the condition included in the licence in pursuance of section 90(1)(a), and

(c) that the failure is such as to justify the revocation of the licence,

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they shall serve on the holder of the licence a notice under subsection (2).
(2) A notice under this subsection is a notice—

(a) stating that the Authority are satisfied as mentioned in subsection (1),

(b) specifying the respects in which, in their opinion, the licence holder has failed to comply with the condition mentioned in paragraph (b) of that subsection,

(c) stating that the Authority may revoke his licence after the end of the period of twenty-one days beginning with the date on which the notice is served on the licence holder,

(d) informing the licence holder of his right to make representations to the Authority within that period about the matters complained of, and

(e) suspending the licence as from the time when the notice is served on the licence holder until the revocation takes effect or the Authority decide not to revoke the licence.

(3) If the Authority, having considered any representations about the matters complained of made to them within the period referred to in subsection (2)(c) by the licence holder, are satisfied that it is necessary in the public interest to revoke the licence in question, they shall serve on the licence holder a notice revoking the licence.
(4) A notice under subsection (3) shall not take effect until the end of the period of twenty-eight days beginning with the day on which that notice was served on the licence holder.
(5) Section 111 shall not have effect in relation to the revocation of a licence in pursuance of a notice under subsection (1)."'.
139 Clause 87, page 73, line 23, leave out '57(1A)' and insert '57(1A)(a)'.
140 Clause 88, page 74, line 2, leave out '57(1A)' and insert '57(1 A)(a)'
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 135 to 140. I have already spoken to these amendments.
Moved, That the House do agree with the Commons in their Amendments Nos. 135 to 140.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
141 Clause 99, page 81, leave out lines 21 to 23.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 141. In speaking to this amendment, I should like to speak also to Amendment No. 142. Your Lordships may recall the debate at Report stage during the previous passage of this Bill through this House, at which time my noble friend Lord Astor moved amendments designed to replace the provision of absolute privilege for the BSC with one of qualified privilege. I said at that time that the Government proposed to remove the existing reference to privilege in its entirety. On further reflection, however, we did not feel that this alone was entirely satisfactory. Thus, while Amendment No. 141 deletes the existing provision, Amendment No. 142 attaches privilege to statements, directions and reports issued by the
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commission in so far as they relate to fairness complaints, provided that it cannot be shown that the commission has acted with malice. We would not wish to imply that this provision in any way limited privilege for any other element of the commission's work where it would normally apply, and subsection (2) of the new clause makes this clear.
Moved, That the House do agree with the Commons in their Amendments Nos. 141 and 142.—(Lord Inglewood.)
Lord Renton: My Lords, I wish that subsection (1) would make the matter clear. The original subsection (11), which it is proposed to omit, was perfectly clear from the legal point of view. Your Lordships are aware that there are two kinds of privilege: absolute privilege and qualified privilege. Qualified privilege arises in various circumstances. It is not merely a question of whether there is malice; it is a question of whether a person has either a duty or right to communicate. In Amendment No. 142 subsection (1) of the new clause merely refers to privilege. It does not say whether it is absolute or qualified privilege. But it provides that, whether the privilege is absolute or qualified, if malice arises privilege does not exist.
One wonders what the courts will make of that. They will try to interpret the will of Parliament as best they can, and I hope that they do not find it too difficult. I am a little worried about it. Although this change may be desirable in view of what my noble friend Lord Astor said at an earlier stage of the Bill, I wonder whether the solution of the Government is the right way to do it. Frankly, I would have preferred to leave the Bill as it was.
Lord Inglewood: My Lords, I am most grateful to my noble friend for giving the House the benefit of his very considerable experience in these matters. As those involved in the history of this matter know only too well, this has proved to be a difficult issue. We believe that the effect of what we have done will be appropriately to circumscribe the circumstances in which the commission could be attacked. I accept that the state of affairs to which the noble Lord has referred could give rise to problems. One of the difficulties that we faced in this area, bearing in mind recent history, was that the position had become very unclear. We felt that this was probably the best way forward in all the circumstances.
Lord Simon of Glaisdale: My Lords, I should like to ask the noble Lord whether the concluding words of subsection (1) provide the usual formula; in other words, whether it may be simpler to say that there is qualified privilege.
Lord Inglewood: My Lords, I am advised that this is the usual formula in these kinds of circumstance.
On Question, Motion agreed to.
Amendment No. 142 omitted.
COMMONS AMENDMENT
143 Clause 112, page 87, line 12, at end insert 'or the issue of shares or securities'.
5.30 p.m.
Lord Inglewood: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 143. I shall speak also to Amendments Nos. 144, 144A, 145, 259, 261–265, 264A, 265 and 265A. I shall refer to a number of amendments which were introduced in another place which relate to the sale by the BBC of its transmission services. The bulk of the amendments is of a technical nature and relates to various accounting and taxation matters which arise when an entity moves from the public to the private sector.
In selling its transmission assets, the BBC is likely to proceed either by a trade sale of the assets direct, or through the creation of a wholly owned subsidiary and then sale of that subsidiary. A flotation is unlikely but not impossible. The provisions now incorporated in the Bill are designed to ensure that that process can take place without accounting and taxation distortions or unnecessary constraints. I hope that that comprehensively describes the thinking behind the amendments.
Moved, That the House do agree with the Commons in their Amendment No. 143.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
144 After Clause 112, insert the following new clause—
TRANSFER SCHEMES: SUCCESSOR COMPANIES
'. Schedule (Transfer schemes relating to the BBC transmission network: successor companies) (which makes provision about the accounts etc. of wholly-owned subsidiaries of the BBC to which any property, rights or liabilities are transferred in accordance with a transfer scheme) shall have effect.'.

MOTION MOVED ON CONSIDERATION OF COMMONS AMENDMENT No. 144
144A That the House do disagree with the Commons in their Amendment No. 144.
The Lord Thomson of Monifieth: My Lords, for the convenience of your Lordships this Motion is grouped with Motions 145A, 264A and 265A. I move the Motion because it was the best way that I could find to give your Lordships' House the chance, before the House rises for the Summer Recess, to express a concern which I know is widely shared about the future of the World Service of the BBC in the face of the radical re-organisation that is presently being undertaken by the BBC. In doing so, I declare an interest in the sense that a member of my family works for the World Service.
These new clauses and new schedules are before your Lordships for the first time. As the Minister said, they carry forward the privatisation of the BBC transmitter system. The World Service's overseas transmitters are an important part of that system. Like the World Service
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as a whole, they are funded by the Government. There are at present 11 World Service transmitter sites: four in the UK, and seven overseas, with an annual operating budget of £23 million. There is a twelfth transmitter in Thailand which will come on stream later this year. A vital new transmitter is being planned for Oman, but the finance is still to be found.
The political and regulatory arrangements for privatisation of the overseas sites are particularly complicated, and I do not wish to go into that today. In the past, transmitters have been much at risk at times of international tension. We are entitled, just on the transmitter front, to have an assurance from the Minister that if the Government persist in that aspect of the privatisation the capacity remains to look after the interests of those who are working at those transmitters, and to ensure that the capacity to continue operating will be properly protected.
Those overseas transmitters—privatised or not—will be greatly reduced in value if the quality and distinctive character of the World Service are undermined by the radical reorganisation of the BBC as a whole, which has now been launched, and in which the English language news and current affairs are to be commissioned from a new central news organisation, serving both radio and television for all domestic services as well as for the World Service.
The editorial integrity and independence of the World Service from any sort of political interference are of course vital, but the Government have a special responsibility for the World Service, which is different from their responsibilities towards the rest of the BBC. They have a responsibility, first, to ensure that it is funded adequately—that is a subject for another debate, not for tonight—and, equally, they have a responsibility to both its listeners overseas and to British taxpayers at home to ensure that the Government obtain value for money.
All the evidence is that the FCO, which is the responsible department for the grant for the World Service, was treated in the same cavalier way as were the senior management of the World Service and the BBC more generally, and in the same cavalier way, as far as I can gather, as the general body of governors was treated, and informed after the decisions had been taken and the new appointments determined.
Sir Nicholas Bonsor, the Minister in another place, claimed the other day that these are only proposals from the BBC and not a fait accompli. I hope that the Minister can give us some clarity on this matter. The Guardian newspaper today carries a report that the Foreign Secretary, Mr. Malcolm Rifkind, has asked the BBC to come and see him about the matter because he is angry that his department:
"was only informed of Mr. Birt's plans less than 24 hours before they were published".
If in replying the Minister could tell us whether or not that is true, and what steps are being taken if it is true, it would be helpful to those noble Lords who are concerned about these matters.
Along with others, I was glad to hear from Mr. Sam Younger, the managing director of the World Service, in a briefing meeting that he held here yesterday that the

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original plan is in the process of some modification, at least until April 1998. What he called a "dedicated World Service news team" would continue to operate from inside Bush House, with its own responsible people with experience of the special needs and nature of the BBC World Service news activities. We were told that that would exist until at least April 1998 when the BBC has longer term building plans to bring all its activities under one roof. In any case, I understand that the Bush House lease comes to an end at the beginning of the next century.
I regard that as a welcome move and a welcome breathing space—I regard it as only a breathing space—for working out in a calmer, more considered and more consultative way how the benefits claimed for the wider BBC in the digital age out of the reorganisation may be achieved without damaging the special quality of the World Service.
That brings me up against the way in which the director-general, Mr. John Birt, has conducted this matter. I do not for a moment argue that the World Service should be immune from change in a world whose broadcasting technology, as we recognise in the Bill, is changing fast, but I question the method of almost total non-consultation adopted. I hope that the new BBC chairman, Sir Christopher Bland, whom I know personally, and who has great experience of broadcasting and business, will feel that there is a lesson to be learned here and will not allow that arrogant exercise to be repeated.
The only defence that I have been able to extract for the way in which the reorganisation has been done is that if there had been consultation, there would have had to be negotiation and that would have been an abdication of leadership. If that is modern McKinsey management philosophy, I hope that it will be abandoned by the BBC in the future.
Of course, the BBC is a peculiarly difficult organisation to manage. When it faces change it is full of leaky prima donnas who reach for a telephone to their favourite journalist every time they have a grievance. But that is the heat of the kind of kitchen in which the BBC's Director-General has to work. If you do not consult and do not try to carry people with you—good, loyal people who are proud of the BBC World Service—you get the present result. Whatever the pros and cons of the wider reorganisation which the BBC is undertaking—and I am sure that there are both pros and cons—it now faces the separate, self-created issue of a widespread crisis of morale.
The culture and ethos of an organisation—especially one as separated from the mainstream BBC as is Bush House—is the delicate achievement of years of people working together. It can be deeply damaged at an administrative stroke. In a situation such as this, what I might call the general body of governors of the BBC have a heavy responsibility. I should like to feel sure that they were ready to carry that out in the present circumstances.
The other day I came across something said by Lord Reith. I once even met John Reith before he died. Noble Lords will know that as Director-General of the BBC he
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was not noted for treating governors gladly. He did not defer very much to governors as members of the BBC institution, according to all the biographies we read. But on one occasion a governor had the temerity to ask him for advice on the role of the BBC governors. He said:
"Whatever governors may be prepared to leave to the executive, they must decide and direct policy, and they must have a lively, comprehensive and continuing care for the product of the organisation they are appointed to govern".
I hope that the governors of the BBC will have a continuing care for the very special product that is the BBC World Service. I beg to move.
Moved, That this House do disagree with the Commons in their Amendment No. 144.—(Lord Thomson of Monifieth.)
5.45 p.m.
Baroness James of Holland Park: My Lords, I am grateful to the noble Lord for tabling the Motion and for giving your Lordships' House a chance to discuss this very important matter. The major restructuring of the World Service and the BBC is as ill-conceived in principle as it was deplorable in the way in which it was promulgated. The senior staff most concerned were not consulted, including the deputy director-general, who is accounting officer for the World Service. The Foreign and Commonwealth Office was given very little notice of what was virtually a fait accompli. The requirement under the BBC Agreement that changes to the home services should not take place without consultation was ignored—and that was a change to home radio as well as to the World Service. The governors, so reliable sources inform me, considered those fundamental and far-reaching proposals in 45 minutes, without all the governors being present.
Who is running the BBC? It would appear to be a triumvirate consisting of a chairman, the Director-General and McKinsey's! This is not what many of your Lordships had in mind when it vigorously championed the role of the governors during debates on the Charter and the new Agreement.
The nature of the fiction that I write may have given me an unduly sceptical and suspicious cast of mind, but I cannot help wondering what is behind the reorganisation which was carried out in such deep secrecy. Can it really be to save money? World Service programmes already cost 36 per cent. less than those made by the home services. Is it perhaps a ploy to bring the World Service to heel, as it were, to bring it more in line with current preoccupations and ideologies more popular with the young, more relevant, more accessible? Those fashionable words are usually shorthand for bringing it down market. Or is the reorganisation primarily intended to release resources to enable the BBC to compete world-wide in the brave new multi-channel, multi-media digital age? We are apparently to have as many as 100 TV channels. This prospect brings little joy to those of us who feel that there is insufficient creative talent to provide for the channels which we already have.
But should the BBC be using its resources to compete in this overcrowded, overheated arena? Should it not concentrate on doing superbly well what it does at

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present and on consolidating its position as the world's most distinguished and admired provider of public service broadcasting? And who is to make that decision? What voice, what influence are Parliament and the licence payers to have? We return to the question so often asked in recent days: whose BBC is it?
There are many questions to which I should like an answer. How many redundancies are expected as a result of the restructuring and what will be the cost? Managerial revolutions do not come cheaply, particularly when outside management consultants have a hand in them. The BBC accounts for 1995–96 show restructuring costs of £31.3 million in 1994–95 and £35.2 million in 1995–96. What is the expected cost of this new upheaval?
Another consideration arises from the restructuring. The World Service is paid for by Foreign and Commonwealth Office grants in aid and its accounts are subject to regular scrutiny by the National Audit Office. Now that the World Service and the domestic services are to become so closely related, would it not be proper for the BBC accounts also to be subject to National Audit Office scrutiny? I believe that there are many who would welcome this reform and some who feel that it is overdue.
I think that I know what will happen. Senior staff will be propitiated, small concessions will be made and assurances will be given. Parliament will go into Recess and the fuss will die down. Staff who are devoted to the World Service will somehow resolve to try and make the new arrangements work. The restructuring will go ahead. I hope that I am wrong but I am not sanguine. We have seen it all before. But harm will have been done—and not only to the World Service.
To speak today of the ethos of the BBC is to risk being called sentimental, naive or wilfully ignorant of the imperatives of the modern broadcasting age. But the affection, respect and admiration in which the BBC is held both at home and abroad rest on more than the number of listeners and viewers—on more, even, than the quality of its programmes. It rests on trust.
I conclude as I began. This restructuring was not well done. The fact that those responsible are apparently unable or unwilling to recognise that fact is one of the most depressing aspects of a deeply depressing episode in the history of the BBC.
Lord Donoughue: My Lords, first, I wish to praise my noble friend Lord Thomson of Monifieth for raising this important issue in such an ingenious way today. I draw attention to the fact that in another place 264 Members of Parliament have already signed the Early Day Motion.
There are two elements of concern here: one is the actual substance of the management changes; and the other is the handling of those changes. As regards the second, the BBC has clearly handled matters badly. It seems to me a curious feature of the new BBC regime that while it spends millions of pounds on employing consultants, it appears not to believe in consultation.
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The art of management in modern services is to nurture the commitment and carry the support of key staff. It is clear that the BBC has not done that here. The Government and the new chairman will need to act quickly to repair damage and to halt demoralisation.
On the substance of the changes, I must say that my personal view is that the internal management of the BBC is a matter for BBC management. But what is happening to the World Service goes, I suspect, beyond those boundaries of internal management and introduces effectively a change of service.
The changes threaten to have radical implications for the future of the World Service, as has already been pointed out by the noble Baroness, Lady James. Above all, we fear the erosion of the distinctiveness of the World Service if it is merged into domestic news because it has distinct audiences and a distinct approach to them. They may be swamped by an increase in domestic news.
I accept that that is not the BBC's intention but many of us have experience of corporate politics. Large central departments tend to absorb new acquisitions and by a remorseless process, like the tide endlessly coming in, wash away all distinctiveness. I saw that personally in the City when I was a stockbroker. The merchant banks paid huge sums to buy us stockbrokers and then slowly crushed the distinctive qualities and assets for which they had paid so much. That is my fear for the BBC World Service: that the process of what might be called Stalinist centralisation and bureaucratic homogenising will erode its distinctive virtues which are the foundation of its great historic success. In particular, I am concerned also about the separation of the World Service news from the foreign language services which have often been a valuable source of the unique view which they bring to overseas news.
Given those worries and uncertainties, we on this side of the House suggest that those changes specific to the World Service should be completely stopped until there has been proper consultation with all relevant parties. I should point out that that is more necessary in a public service company than in a private company. It should be delayed until the implications of the reforms for the World Service are much clearer.
The World Service is a great national asset of international fame. If your Lordships look at the BBC report which came through my door yesterday, it praises the World Service for its reputation, intelligence and integrity. It points out that more people than ever are listening to it and how it won three Sony awards.
Its news production is cheaper than the main domestic news into which it will be absorbed. It is a public institution and not a private fiefdom. It does not belong to the BBC top management. It belongs to the British people, to the taxpayers who fund it, including all BBC staff and listeners. Parliament has a legitimate public interest in what it does. We wish to express our concern today. The BBC must start to listen because, on my observation, it is losing friends by the day.
Lord Runcie: My Lords, I am grateful for an opportunity to use a specific example of the danger

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which attends the new plans for the World Service and the centralisation of news and current affairs. It is something on which I shall speak briefly but about which I have some long experience; that is, the subject of religious broadcasting.
Religious broadcasting in this country has never quite rid itself of the image of itself which was dear to Lord Reith; that is, that it should be a kind of chaplain to the nation. Those who approve of that image watch like hawks to see that it is not diluted. We have had some examples of that many times in this House. Those who disapprove of that image see that the only alternative is to make clear that religion is a minority interest or a series of minority interests.
The result is that when the religious correspondent of the BBC appears, it is not so often in the midst of the news of the day, the mainstream events. It is perhaps on some technical matter like the implications of a Royal divorce or a specialist interest, perhaps what the Synod has been up to, or it may be something a little sensational like the ecclesiastical events in Lincoln.
In the World Service, religious broadcasting is something quite different and the interplay of religion and other news and cultural insights is vital. It is a core activity in the political and cultural life of the Middle East, Africa, India and, increasingly, in the Far East.
We have talked earlier today in this House of the Dalai Lama. The information about the activities, speeches and support for the Dalai Lama is gained chiefly by his followers from listening to the World Service of the BBC. In exactly the same way during the Cold War, in the old Soviet Union, believers obtained their Church news from nowhere else but the relevant department of the World Service.
Hence, religious broadcasting has a quite different perspective when it issues from Bush House to the huge variety of audiences that it must address. It may seem less of a chaplaincy to the world, which would be absurd, and it may be less evangelical, but somehow it is more seriously handled as a major ingredient in achieving human understanding.
A Harvard professor, Sam Huntingdon, has written recently a much debated article in which he points out that the fault lines of humanity in the future will lie increasingly not between ideologies or economic interests or nation states, but between civilisations in which religious attitudes will play a major part.
We must recognise the ability of the religious department of the World Service at Bush House, through the interaction that goes on between different forms of broadcasting, to perform with special sensitivity and in a unique way. I believe it is true that there is no other international broadcasting-radio agency like the Voice of America which has a serious and systematic broadcasting department.
Not long ago, with much debate, but not too much opposition, the religious department of the BBC was shifted from London to Manchester. I am not at all happy that people who made managerial decisions of that sort, without very wide consultation, will provide sufficient guarantees in the future for the unique contribution in world understanding that comes from the
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religious department of the World Service. I believe that religious broadcasting is just one instance—the principle may apply in other spheres. It is also a very powerful illustration of the danger of thinking that you can make this managerial change without loss.
6 p.m.
Lord Chalfont: My Lords, I, too, should like to thank the noble Lord, Lord Thomson of Monifieth, for giving the House the opportunity to discuss this most important matter before it goes too far, and indeed, before Parliament goes into Recess. I shall not spend much time, simply because there is no time, on the substance of the proposed changes or their implications. I merely want to ask, perhaps not entirely rhetorically, what has happened to consultation in the conduct of public affairs?
In the past few days we have had three examples of major administrative acts and acts of policy being carried without consultation with those immediately involved. I speak of the restructuring of local government and, with slightly more feeling, of the sale of the married quarters estate. We now have this administrative act, for that is what it seems to be, put forward—unless reports from reliable sources are to be disbelieved—without any consultation of any effective kind with those most directly affected.
If reliable sources are to be believed, the main body of the governors of the BBC was not properly consulted, the Foreign and Commonwealth Office was treated with a singular lack of regard and respect and the staff of the BBC, including those most closely associated with the World Service, were not consulted.
Only a few days ago Mr. Sam Younger, the managing director of the World Service, said in a speech to a Chatham House audience:
"The World Service is part of the public service broadcasting network. To many millions of listeners worldwide it is the very essence of public service".
In her brief speech this afternoon, the noble Baroness, Lady James, mentioned that point. If that is public service broadcasting in action, I can only say that I tremble for the future. This is not public service broadcasting; it is public disservice broadcasting.
Other people have made this point but I make no apology for repeating it. The World Service is not a personal fiefdom of the BBC or any of its managers. The BBC World Service is a precious, national broadcasting asset in the first place. It has a worldwide reputation for truth, accuracy, impartiality and for a profound knowledge of the customs and cultures of the people to whom it broadcasts.
However, it is more than that. The BBC World Service is one of the most powerful instruments of public diplomacy in the world. It is as important to the Government of this country and to the foreign policy of this country as the Diplomatic Service, which it complements. In my view, this is not something which can be treated as though it were part of some in-house administrative experiment, conducted by fashionable worshippers at the shrine of the bottom line and of cost-effectiveness which seem to be at the root of most

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of our public policies nowadays. It is an act which will have profound political implications in this country. I repeat: profound political implications.
If as a result of this change the World Service loses any of its great assets and characteristics of conducting not only a great broadcasting operation but, as I said, a great public diplomatic operation, then, at the very least—although I fear that this will be crying for the moon—it is a matter for government intervention. As other speakers have said, this is not a matter to be left to the management of the BBC; it is a matter for government intervention or, at least, if the Government will not do that, a matter for parliamentary debate and, indeed, for both Houses of Parliament to discuss. It should not be conducted in this cavalier and, one might almost say, arrogant way.
I conclude by saying that those of us who proposed amendments to the Broadcasting Bill when it was before the House were persuaded to withdraw them in the light of assurances given to us by the noble Lord, Lord Inglewood, who has conducted all these proceedings with such great courtesy and patience. He said that we could rely upon the new regime at the BBC, operating under the new charter, to introduce a new kind of BBC with which we would all be happy. However, what is happening now is giving us very little comfort and encouragement.
Lord Habgood: My Lords, I shall be very brief because virtually all that I intended to say has been said very much better by other speakers. However, there is one point that I should like to make. I trust that the Government will not say, as has already been said in answers to both spoken and written Questions, that this is an operational matter and nothing to do with us. That would be an unforgivable "get-out".
At present, we are engaged in the most Byzantine piece of legislation that I have ever tried to wade my way through, which is all about the way in which the Government and public authorities should control broadcasting. If, when we come to a major crisis like this, which is also a matter of deep public concern, the Government then say, "It's nothing to do with us", what on earth is all this legislation about? Indeed, what can we expect from it in the future? That is the first and most important reason why we must have a proper response to the concerns which have been expressed.
The second reason is that, in my view, this is not simply an operational matter; it is about structures. The way in which a broadcasting service is structured expresses its aims and values. Therefore, inevitably, a change of structure will undo precisely what has made the World Service most distinctive. That must be a matter for our concern.
Thirdly, it must be a matter for our concern because, if I understand rightly, one of the things which precipitated the whole change was the reduction by the Foreign and Commonwealth Office of the grant to the World Service. Therefore, the Government are directly implicated. I hope that the plea for a pause—perhaps a six-month pause, a time for consultation and more
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debate—will be heeded and that we shall really see some action as regards the concerns that have been expressed.
Lord Pilkington of Oxenford: My Lords, I also welcome the opportunity to speak and I thank the noble Lord, Lord Thomson, giving us this opportunity. I have been chairman of the Broadcasting Complaints Commission for the past three years. On the whole, I have been very impressed with my contacts with the BBC and with the way in which it has seen its duty as a public service broadcaster.
I want briefly to concentrate on the body that should take responsibility for what has happened at the BBC; namely, the Governors of the BBC. That body was appointed many years ago to represent the interests of the community as well as the will that is expressed in this House and the other place.
I am surprised—in fact utterly amazed—that a body of men and women appointed to guard the public interest should be prepared to acquiesce in a new policy for which there was no consultation, and which informed the Foreign Office, a major contributor, only days before the plan was implemented. The governors of the BBC have, in this instance, failed in their duty. They may expect support for public service broadcasting in the future, but I am afraid that much of that support has disappeared over the past few weeks.
Lord Orr-Ewing: My Lords, I shall be brief because much has been said, and well said, from different quarters of the House. It was ingenious to find a way to debate this. I thought it might be very difficult.
My reflection is that this matter is too secret. I am afraid the body we are discussing has grown a little arrogant. It feels that it is sovereign. It is true that it can actually make governments and defeat governments. Sometimes it is busy trying to do so. The BBC does have a conscience—very much so—as I know from the previous chairman, but it does not like being judge and jury in its own case. When we endeavoured to find an independent body which could monitor and take up transgressions when they occurred, it was frowned on by the BBC and by the officers who advised my noble friend at the heritage department. This seemed to be going one too far. Some £170 million is involved. Finance is meant to be behind this move. This proposal is supposed to save money, as your Lordships will remember. I always doubt those who claim that their proposals will be much cheaper and will save money. When those proposals come into effect, they cost much more. New buildings have to be adapted and adopted, and much money is spent. But this proposal was intended to save money.
Unique opportunities have emerged from Bush House under the present regime. Mr. Tusa and other people have done wonderfully well. Many of us look to the BBC, and to the World Service to be balanced, impartial, and independent. This is a unique opportunity to keep it so. Let us not throw that away, and tear it up.
It is desperately important that world broadcasting should be flexible. Revolutions take place, new people come into power, amalgamations take place and it is

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important that broadcasting should be flexible. It should have its ear to the ground through its well-loved, unique and loyal people serving in different countries of the world. Do not try to centralise it. Let us not forget that this Parliament is sovereign. Action taken by the BBC unilaterally is not dedicated and is not inflexible. There is time now to make a change. Certain changes have already been made under pressure. Over 220 people in the other place have signed the Early Day Motion; so there is a massive movement to try to stop this proposal. I sincerely hope that it will have the necessary effect and bring pressure to bear so that at least we do not jump off this particular tower and wreck what is a very efficient, dedicated and loyal aspect of our country.
6.15 p.m.
Lord Cocks of Hartcliffe: My Lords, many of your Lordships know that I am the vice chairman of the BBC. I declare that at the start.
The question of consultation is always a balance. It may well be that the balance was not entirely correct in this case. But I do think that the very strong reaction to any possibility that the World Service may be under any sort of threat shows the difficulty of consultation in this case. I believe the number of signatures in another place on the Motion is already up to 280. I wonder how many of my former colleagues have studied the detail of what is proposed? To talk in terms of major crises, without a proper analysis of what is being proposed, does not take us very much further forward.
Like the noble Lord, Lord Chalfont, I heard the speech by Sam Younger at Chatham House. He said that he wanted to study the detail. The detail was spelt out by the chairman a day or two ago in a lecture to the Radio Society. He said that the BBC will still remain a separately managed directorate. It will go on managing the grant-in-aid. It will schedule its own programmes; and its editorial independence will be absolutely inviolate. It can specify what programmes it requires from the BBC News Unit and its authority will not be reduced. Its nature will remain entirely distinctive.
The governors are charged with looking after the public interest. I take this very seriously, as do my colleagues. When I spoke on the Broadcasting Bill—I think at Second Reading—I spoke about the experiences some of us had listening to the World Service during the war and have treasured all these years. Believe me, my Lords, I would be failing in my duty in the post I hold if I thought there was any threat at all to the World Service and its distinctive character and I did not create the most appalling row. But at the moment I think that if the detail is studied, it will be found that the threats are imaginary and that, in fact, it will be just as efficient as it has always been.
Lord Elton: My Lords, before the noble Lord sits down, can he tell your Lordships, because he is in a good position to do so, whether it is intended to merge the news-gathering services of the World Service with the rest of the BBC. If that is the case, I think he will have to say rather more to convince us that the character of the broadcast will not change.
Lord Cocks of Hartcliffe: My Lords, with the House in its present mood, I do not think that anything I say
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will convince your Lordships. However, although there will be a common core, it can commission what it requires and the distinctive nature will stay.
Baroness Williams of Crosby: My Lords, perhaps I may just say three sentences. First, with great respect, I do not believe that the noble Lord, Lord Cocks, can defend a situation in which not even the director of the World Service of the BBC had 24 hours' notice of what was being proposed. That was indefensible by any standards.
Secondly, I believe in the BBC World Service. This country has created, as the noble Lord, Lord Chalfont, so eloquently said, one of the great instruments of diplomacy and one that we should not lightly throw away. I have seen the United States Public Service Broadcasting adopt hours of BBC broadcasting, which it would not do for anything that was not outstandingly excellent. I have seen throughout Russia the BBC World Service producing educational services on the new democracy and on the market system sans pareil, which nobody else has been able to equal. We would be most foolish to throw away one of this country's greatest assets. I very much hope that in another place the Foreign Secretary will do his very best to persuade the BBC management to turn away from this disastrous course.
Baroness Park of Monmouth: My Lords, everything has already been said brilliantly by everyone else. I wish simply to say yet once more that it is absolutely vital that we insist on delay and that we debate this issue. Like everyone else in this House, I think, I am afraid I am not convinced that this has been properly looked at as an issue of national concern. It has been looked at as a piece of accountancy. Surely we are not going to allow something as important as an extension of our overseas representation—and something which brings the truth to the whole world—to be tidied away by a management cabal which has such contempt for everyone else in the BBC that it does not think it necessary or worthwhile to explain to them what reasons there may be for this proposal. It has not explained whether this is a good case, a good proposal, or a harmless proposal. Why could it not have been explained? It has not been explained. Referring us to public speeches and to public bodies is not enough. We are talking about the management of the BBC. Frankly, I have never seen such appalling man management in my life. I hope that we shall insist, as far as we possibly can, that this matter shall be debated in the House.
Lord Inglewood: My Lords, I am sure the whole House will thank the noble Lord, Lord Thomson, for finding this ingenious way to ensure that we have had this interesting and useful debate on the future of the BBC and of the World Service in particular.
I suppose it must be admitted that these matters may be a trifle beyond the scope of the particular amendments we have been considering. Indeed, I think some of them are probably beyond the Government's ability to provide answers to the questions posed. But one thing I am sure of is that the points raised will have

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been heard by those who can, should, and no doubt will, be able to provide answers. Indeed, the noble Lord, Lord Cocks, in some respects is better placed than I to be able to respond to a number of the points made. Indeed, it is a kind of paradox that probably your Lordships are better placed to tell the BBC what it should or should not do than myself standing at the Dispatch Box. Nonetheless, I welcome the opportunity to contribute to this discussion and to respond to some of the points made about a matter which I believe is quite properly of general concern not only to your Lordships, but to the country as a whole.
Before moving on to the main body of my remarks, I wish at the outset to respond to one of the questions of the noble Lord, Lord Thomson, who sought assurance that the post-privatisation overseas capacity of transmitters to go on operating would be properly protected. In that respect, nothing should change after privatisation. Indeed, the agreements for sale have been designed to provide that services will be securely available for the BBC both at home and abroad. Clearly, in a foreign country there may be a risk of a revolution, for example, which may result in a transmitter being overwhelmed by force. However, that is beyond the scope of what we are focusing on in this Bill.
I move to the main body of my comments. I begin by emphasising that the debates recently held here and in another place on the future of the BBC and the draft Charter and Agreement have focused on the constitution and obligations of the corporation. These are at the core of those documents which are the corporation's foundations. I hope I may remind your Lordships that how the corporation is organised to meet its obligations is a matter for the governors of the BBC. Indeed, paragraph 2.1 of the Agreement makes it clear that the corporation will be independent in the management of its affairs.
It is only right, of course, that governors who have the responsibilities established by the Agreement also have the authority to organise the corporation's affairs as they believe necessary in order best to meet those responsibilities. Nonetheless, the Government's legitimate concern is the BBC's performance. Our primary interest in the way it functions relates to the extent that its modus operandi affects its output. I believe that was the point that the noble and right reverend Lord, Lord Habgood, made. It is one that we very much accept.
We have sought assurances from the BBC about the general implications of the restructuring for meeting the BBC's objectives as established under the Charter and the Agreement. It seems from what I have heard of the concerns that your Lordships have expressed this afternoon—and other comments I have read in newspapers—that they appear to be based on the premise that organisational changes are bound to have an inevitably adverse effect on the quality of the BBC's services, and in particular that there will be a loss of distinctiveness in radio output and in the World Service. Of course it is right to be vigilant about such matters,
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but are we right to believe that there is inevitability about that? Does the evidence indicate that that must occur?
Certainly I do not believe that the governors would wish to pursue changes which they believed threatened the special qualities of each of the BBC's services. After all, that would be a direct breach of their obligations in paragraph 7 of the Charter. The BBC has explained that it is proposing change because in its judgment those changes will put the corporation in a stronger position so that its best qualities and attributes can be preserved and built upon in a future which is increasingly uncertain and challenging.
The Bill establishes the framework for the continuing expansion of broadcasting services and for the coming of the digital broadcasting age. Competition is increasing and will continue to increase further. The resources available to the BBC's successful competitors grow faster than licence fee funding reasonably could. In order to maintain its position as the United Kingdom's main public service broadcaster the BBC must find the money to invest in digital technology and to continue to provide the high quality programming which licence fee payers rightly expect. To do that, it must ensure that it operates as efficiently as possible so that it gives back the most it can to licence payers and to the Foreign and Commonwealth Office for the money it receives from that department.
In 1993 the BBC put in place Producer Choice as a route to increased efficiency. It divided the functions of channel controllers who commission and schedule programmes, programme production heads who make the programmes, and support services who manage the BBC's facilities. That reflects industry best practice worldwide. In the past three years that focus on efficiency has produced savings of around £100 million a year. It is that which has enabled the corporation to make more original programmes, to reduce the number of repeats, and to launch new services such as Radio 5 Live, which is the "Sony station of the year".
The present reorganisation is based on that logic and carries it forward. The Director-General has made it clear to the Foreign Affairs Select Committee of another place this afternoon that the principles of producer/supplier relations are settled. It is how they are to be implemented that is under discussion—
Baroness Williams of Crosby: My Lords, does the noble Lord accept that the comments he has just made to the House imply some lack of understanding of the World Service? Digital systems would not apply to a large part of the world and therefore the pressure for digitalisation does not meet the question about how we address the large numbers of people for whom that is a distant dream.
Lord Inglewood: My Lords, the noble Baroness is of course correct in that in the immediate future digital technology will not be directly relevant to their concerns. Simply to drop the guillotine like that does not take account of the interconnectivity of the

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corporation and the fact that it has to work as a collective whole. However, I accept the point that the noble Baroness makes.
I believe it was the noble Lord, Lord Thomson, who referred to redundancies and costs. I understand that the details have yet to be worked out. Therefore the level of redundancies, if any, cannot be explained at this point. That is a proper matter for further consultation which will, of course, take place.
Another fear that has been expressed both implicitly and expressly in the remarks this afternoon is that radio will inevitably be subordinated to television. Is that the case? Certainly in his speech to the Radio Society on Monday—to which reference has been made—Sir Christopher Bland, the chairman of the BBC, reminded his audience that similar fears had been expressed when the bi-media news and current affairs directorate was established nine years ago. But programmes like "Today" have retained their distinctiveness. At this year's Sony Awards the BBC achieved 26 out of the 33 awards that were given, and that is a record achievement.
I should like to turn specifically to the World Service. A number of views have been strongly expressed by noble Lords such as the noble Lord, Lord Chalfont, the noble and right reverend Lord, Lord Runcie, my noble friend Lord Pilkington, the noble Baroness, Lady Williams, and my noble friend Lady Park. Standing at this Dispatch Box I cannot answer their concerns directly. It is to the BBC, through your Lordships' Chamber, that the concerns are directed.
The output of the World Service is at record levels. This Government recognise the high value and quality of the World Service. Indeed, that is why we pay for it. Neither we nor, I believe, the governors of the BBC have the slightest wish to threaten the very qualities that have led to its success. After all, it is a service which reaches a record audience of at least 140 million people—more than twice the size of its nearest competitor—and provides a trusted source of objective news even in some of the darker corners of the world. It is a great ambassador and advertisement for this country; a great service to the whole world and the ideals we all share in this country and which underpin our democracy.
This Government always have been and are now a strong supporter of the World Service. After all, despite living in an era of stringency in public sector expenditure, in real terms the funding that the World Service receives has increased by 50 per cent. since 1979. Of course, we have a more direct responsibility for the objectives and funding of the World Service than for the Home Service. The Foreign and Commonwealth Office was understandably anxious when it was told of the organisational changes for the World Service. It is because of that that we sought assurances from the BBC, as my noble friend Lady Chalker confirmed in this House on 2nd July.
Assurances have been given that the quality and character of the service will not be diminished. The clear separation between the grant-in-aid funded World Service and the BBC's other activities will be
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maintained. We shall be fully consulted on the implementation of the reorganisation so that we can be confident, as we are fully entitled to be, that the World Service will go on meeting its obligations under the agreement and continue to maintain that quality which is its distinctive hallmark. I can confirm that my right honourable friend the Foreign Secretary will be meeting Sir Christopher Bland to discuss those matters.
I must emphasise that the Government insist that the unique character of the World Service output must be preserved and that the service will not be subsumed into an homogenous BBC. As the noble Lord, Lord Cocks, pointed out, it will continue to be a separate entity complete with its own managing director. It will have complete editorial independence, with absolute control over the commissioning and scheduling of programmes from inside or outside the BBC. It will retain responsibility for the production of services in 43 languages.
A dedicated World Service news team within the news directorate—I understand that the World Service news team is to remain at Bush House in the immediate future—will be able to draw on the resources of the whole organisation to provide news tailored to the World Service's specifications. The World Service and the main news operations of the BBC already work closely together. A considerable number of World Service reports come from BBC news and current affairs correspondents. The proposals will produce further economies, not least enabling the World Service to make a greater contribution to the work of the BBC as a whole than it does at present. That in turn will reduce unit costs.
As my noble friend Lady James emphasised, the World Service already has a good record for producing cost-effective programmes. Those economies and the more effective use of staff resources should further benefit the World Service and increase and improve the work it does. In addition, the World Service broadcasts material other than news, and there is considerable scope for avoiding duplication in, to give two examples, sports coverage and drama. At present there is duplication which, by definition, costs money and that is something that could be eliminated.
In short, while your Lordships are right to be cautious about changes in the way the World Service is arranged and to question critically what is happening, are we right in supposing inevitably that the fears expressed are well founded, either on the basis of the facts as they are or upon the inherent logic of what is being proposed? The BBC governors' duty is to ensure that the BBC meets the obligations laid upon it under the Charter and Agreement. They must ensure that programme standards and the distinctiveness of the BBC services are safeguarded and that the way in which the BBC is organised contributes to rather than detracts from those obligations.
I conclude with the World Service. The Chairman and the Governors of the BBC are committed by the Charter to uphold the distinctive quality and characteristics of

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the service. The Government pay for the World Service. This Government are adamant that it shall not be transmuted from gold into base metal.
Lord Chalfont: My Lords, before the Minister sits down, will he elaborate upon the point he just made? He said that under the new dispensation the BBC World Service will still have its own managing director. As far as I can see from the table of organisation drawn up by the BBC, there is no managing director shown in the organisation for BBC News. Indeed, the editor of the World Service news programmes reports to Mr. Peter Bell, the head of news programmes, and the controller of BBC World News reports to Jenny Abramski of Continuous News Services. Where does the autonomous managing director fit in?
Lord Inglewood: My Lords, the noble Lord, Lord Chalfont, asks a difficult question about proposals. It is difficult to answer emphatically. I am confident in what I have explained to your Lordships. I am sure that if the noble Lord makes express inquiries he will find that to be the case.
Lord Thomson of Monifieth: My Lords, we must bring this matter to a conclusion. I am immensely grateful to all noble Lords who spoke in support of my Motion. Indeed, a short debate of this kind on the eve of a Recess on a Thursday afternoon that attracts two distinguished former Governors of the BBC, two distinguished retired Prelates, a former Chairman of the Radio Authority and a present Chairman of the Broadcasting Complaints Commission is a debate to which I hope the Governors and Director-General of the BBC will pay close attention.
I am grateful for what the Minister said by way of giving us information on the questions that some of us asked. I can only say to him, and repeat, that we welcome the change being proposed in terms of maintaining a team at Bush House until April 1998, though—let us be clear—it is still going to be part of a much wider overall organisation, where the final responsibility of the Editor-in-Chief will lie outside Bush House. However, that change would not have taken place if it had not been for the outcry that there has been in both Houses of Parliament and from the public generally. That is ample justification for the belief that the failure of consultation has been monumental. If ever we needed the final evidence of that, it came in the information given to us by the Minister that next week the Secretary of State himself will summon the BBC to him for further discussion. That can only be the clearest possible evidence that the Government are dissatisfied with the degree of consultation that they have had, just as the rest of us are dissatisfied with the consultation that we experienced.
I know that it is a serious matter at this stage to move a Motion of this kind which, if your Lordships are willing to carry it, means that the matter will go back to the House of Commons. But, in view of the fact that the Secretary of State is calling the BBC to meet with him, it would be helpful for there to be an opportunity in
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another place next week before the House rises, on the basis of that well-supported Early-Day Motion, to give the Foreign Secretary every possible backing when he conducts that meeting. I commend the Motion to the House.
The Deputy Speaker (Viscount Allenby of Meggido): My Lords, the Question is that this House do disagree with the Commons in their Amendment No. 144. As many as are of that opinion will say "Content"; to the contrary, "Not-Content". The "Contents" have it.
Lord Inglewood: My Lords, perhaps we may have clarification, I am confused about exactly what we have been asked to vote on. Is it correct that the noble Lord, Lord Thomson, is asking us to disagree with the amendment to which I spoke earlier?
Lord Thomson of Monifieth: My Lords, yes.
Lord Inglewood: My Lords, the Government cannot accept that we disagree. We are not content.
The Deputy Speaker: Clear the Bar!
6.41 p.m.
On Question, Whether the said Motion (No. 144A), as an amendment to Commons Amendment No. 144, shall be agreed to?
Their Lordships divided: Contents, 71; Not-Contents, 81.

Division No. 1

CONTENTS

Ackner, L.

Judd, L.

Addington, L.

Kennet, L.

Beaumont of Whitley, L.

Kilbracken, L.

Berkeley, L.

Kilmamock, L.

Broadbridge, L.

Lauderdale, E.

Carmichael of Kelvingrove, L.

Lawrence, L.

Chalfont, L.

Lichfield, Bp.

Chapple, L.

Longford, E.

Clinton-Davis, L.

McIntosh of Haringey, L.

Craigavon, V.

McNair, L.

Dahrendorf, L.

Mayhew, L.

Dainton, L.

Monkswell, L.

Darcy (de Knayth), B.

Napier and Ettrick, L.

David, B.

Nicol, B.

Dean of Thornton-le-Fylde, B.

Peston, L.

Desai, L.

Prys-Davies, L.

Donoughue, L.

Rea, L.

Dormand of Easington, L.

Richard, L.

Dubs, L.

Rodgers of Quarry Bank, L

Falkland, V.

Roskill, L.

Farrington of Ribbleton B

Runcie, L.

Freyberg, L.

Russell, E.

Gallacher, L.

Sandwich, E.

Gladwin of Clee, L.

Seear, B.

Graham of Edmonton, L. [Teller.]

Habgood, L.

Serota, B.

Harris of Greenwich, L. [Teller.]

Sherfield, L.

Hayman, B.

Smith of Gilmorehill, B.

Hilton of Eggardon, B.

Stoddart of Swindon, L.

Holme of Cheltenham, L.

Strathcarron, L.

Jeger, B.

Thomson of Monifieth, L.

Jenkins of Hillhead, L.

Turner of Camden, B.

Jenkins of Putney, L.

Whaddon, L.

1095

White, B.

Williams of Elvel, L.

Wilberforce, L.

Winchilsea and Nottingham, E

Williams of Crosby, B.

Winston, L.

NOT-CONTENTS

Abinger, L.

Holderness, L.

Addison, V.

Howe, E.

Aldenham, L.

Howe of Aberavon, L.

Aldington, L.

Inglewood, L.

Allenby of Megiddo, V.

James of Holland Park, B.

Annaly, L.

Kenilworth, L.

Ashbourne, L.

Layton, L.

Berners, B.

Leigh, L.

Blatch, B.

Liverpool, E.

Brougham and Vaux, L.

Long, V.

Burnham, L.

Lucas, L.

Carlisle of Bucklow, L.

Lyell, L.

Carnegy of Lour, B.

McConnell, L.

Carnock,L.

Mackay of Ardbrecknish, L.

Carr of Hadley, L.

Macleod of Borve, B.

Chelmsford, V.

Mancroft, L.

Chesham, L. [Teller.]

Marlesford, L.

Clark of Kempston, L.

Cocks of Hartcliffe, L.

Massereene and Ferrard, V.

Coleraine, L.

Mersey, V.

Coleridge, L.

Mottistone, L.

Colwyn, L.

Munster, E.

Courtown, E.

Northesk, E.

Cranborne, V. [Lord Privy Seal.]

O'Cathain, B.

Crickhowell, L.

Orr-Ewing, L.

Cumberlege, B.

Oxfuird, V.

Davidson, V.

Pilkington of Oxenford, L.

Demon of Wakefield, B.

Prior, L.

Dixon-Smith, L.

Rankeillour, L.

Elton, L.

Renton, L.

Finsberg, L.

Seccombe, B.

Fraser of Carmyllie, L.

Shannon, E.

Gage, V.

Shaw of Northstead, L.

Gardner of Parkes, B.

Stewartby, L.

Gisborough, L.

Strathclyde, L. [Teller.]

Glenarthur, L.

Sudeley, L.

Goschen, V.

Swinfen, L.

Harlech, L.

Teviot, L.

Henley, L.

Trumpington, B.

Hogg,B.

Ullswater, V.

Vivian, L.

Wise, L.

Resolved in the negative, and Motion disagreed to accordingly.
On Question, Commons Amendment No. 144 agreed to.
6.50 p.m.
COMMONS AMENDMENT
145 After Clause 112, insert the following new clause—
TAXATION PROVISIONS WITH RESPECT TO TRANSFER SCHEMES
'. Schedule (Transfer schemes relating to the BBC transmission network: taxation provisions) (which makes provision about tax in connection with transfer schemes) shall have effect.'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 145.
Moved, That the House do agree with the Commons in their Amendment No.145—(Lord Inglewood.)
[Amendment No. 145A, as an amendment to Commons Amendment No. 145, not moved.]
On Question, Commons Amendment No. 144 agreed to.
COMMONS AMENDMENT
146 After Clause 113, insert the following new clause—
AVOIDANCE OF CERTAIN TERMS RELATING TO USE FOR PURPOSE OF NEWS REPORTING OF VISUAL IMAGES FROM BROADCAST OR CABLE PROGRAMME
'.—(1) Any provision in an agreement is void in so far as it purports to prohibit or restrict relevant dealing with a broadcast or cable programme in any circumstances where by virtue of section 30(2) of the Copyright, Designs and Patents Act 1988 (fair dealing for the purpose of reporting current events) copyright in the broadcast or cable programme is not infringed.
(2) In subsection (1)—

(a) "relevant dealing", in relation to a broadcast or cable programme, means dealing by including visual images taken from it in another broadcast or cable programme, and

(b) "broadcast" and "cable programme" have the same meaning as in Part I of the Copyright. Designs and Patents Act 1988.'.

Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 146.
This new clause effects the commitment which my honourable friend the Minister of State gave in standing committee in another place to bring forward an amendment to the Bill to safeguard news access to sporting and other events. The new clause provides that any provision in a contract is void in so far as it prevents the use of visual images from another programme for the purposes of news reporting in circumstances where the fair dealing provisions of the copyright Act 1988 would apply. Any decisions on what fair dealing constitutes would remain for the courts to take, based on the specific circumstances of the case in question. I commend the amendment.
Moved, That the House do agree with the Commons in their Amendment No. 146—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
147 After Clause 113, insert the following new clause—
AMENDMENTS OF COPYRIGHT, DESIGNS AND PATENTS ACT 1988 RELATING TO CABLE PROGRAMME SERVICES
'Schedule (Amendments of Copyright, Designs and Patents Act 1988 relating to cable programme services) (which contains amendments of the Copyright, Designs and Patents Act 1988 relating to broadcasts included in cable programme services) shall have effect.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 147. I spoke to this amendment with Amendment No. 134.
Moved, That the House do agree with the Commons in their Amendment No. 147.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
148 After Clause 113, insert the following new clause—
COPYRIGHT LICENSING
'. (1) After section 135G of the Copyright, Designs and Patents Act 1988 there is inserted—
"Power to amend sections 135A to 135G.
135H.—(1) The Secretary of State may by order, subject to such transitional provision as appears to him to be appropriate, amend sections 135A to 135G so as

(a) to include in any reference to sound recordings any works of a description specified in the order; or

(b) to exclude from any reference to a broadcast or cable programme service any broadcast or cable programme service of a description so specified.

(2) An order shall be made by statutory instrument; and no order shall be made unless a draft of it has been laid before and approved by resolution of each House of Parliament."
(2) After section 151 of that Act there is inserted—
"Award of interest.
151A. —(1) Any of the following, namely—

(a) a direction under section 123(3) so far as relating to a licence for broadcasting a work or including a work in a cable programme service;

(b) a direction under section 128(3) so far as so relating;

(c) an order under section 135D(1); and

(d) an order under section 135F confirming or varying an order under section 135D(1),

may award simple interest at such rate and for such period, beginning not earlier than the relevant date and ending not later than the date of the order, as the Copyright Tribunal thinks reasonable in the circumstances.
(2) In this section "the relevant date" means—

(a) in relation to a direction under section 123(3), the date on which the reference was made;

(b) in relation to a direction under section 128(3), the date on which the reference or application was made;

(c) in relation to an order under section 135D(1), the date on which the first payment under section 135C(2) became due; and

(d) in relation to an order under section 135F, the date on which the application was made."

(3) Subsection (2) does not apply in any case where the reference or application to the Copyright Tribunal was or is made before the commencement of this section.'
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 148. In speaking to this amendment, I speak also to Amendment No. 148A.
Amendment No. 148 will allow an order to be made in the future to vary the application of a statutory licence. The House examined the background to this amendment when my noble friend Lord Lyell tabled an amendment during consideration of the Bill in Committee. The Government do not feel it is appropriate to proceed with any changes to the statutory
1098
licence at the moment; but the amendment will facilitate changes in the future should they become appropriate. The Government have in mind in particular the possible removal of on-demand services from statutory licensing.
The amendment would also give the copyright tribunal the discretion to add an element of interest to awards, including a backdated payment or repayment to compensate any party who has been financially disadvantaged by the unreasonable behaviour of another. This power to award interest will apply to cases involving the statutory licence and can be used by the tribunal if it feels that a licensee has unacceptably exploited its entitlement to a statutory licence.
By reason of the scope of the Bill, the amendment does not apply to cases where copyright works are used other than in broadcasting or cable programmes. But the Government intend to apply this change to all disputes which can be heard by the tribunal when the opportunity arises. I commend the amendment.
Moved, That the House do agree with the Commons in their Amendment No. 148.—(Lord Inglewood.)
AMENDMENT TO COMMONS AMENDMENT No. 148
148A Line 12, at end insert—
("(1A) Before making an order under subsection (1), the Secretary of State shall consult those persons, including broadcasters and licensing bodies, who would be likely to be affected by the order (if it were to be made).").
The Viscount of Falkland: My Lords, I beg to move Amendment No. 148A as an amendment to Commons Amendment No. 148.
There has been a good deal of discussion on the subject of statutory licences. I need not go into the meaning of such licences. As some noble Lords will be aware, an amendment brought forward by the Government in another place gave new powers to the Secretary of State to exclude certain broadcasters from the provisions of the statutory licence. I do not think any reasonable broadcaster, or the House, will have any difficulty in agreeing that such powers should exist.
As the Government have already indicated, clearly at some time in the future we may be faced with circumstances where it is necessary to exclude from statutory licensing some broadcasters with some particular types of broadcasts in mind. There is no problem with that. However, I tabled the amendment for two reasons.
First, I seek from the Minister an assurance, if he is able to give it, that before any broadcaster is excluded, that broadcaster and any other bodies relevant to the type of broadcast involved will be properly consulted. We have already had some discussion about consultation or the lack of it in relation to preceding amendments. But an assurance from the Minister on that point would be extremely helpful.
Secondly, perhaps the Minister at this stage could enlighten the House as to exactly what kind of broadcasts he has in mind for exclusion. Some of us have our own ideas, but perhaps he can guide us in this area.

1099
We are dealing with the prospect of on-demand broadcasting, which is linked with the new technologies which we have discussed at length. It has been suggested, that on-demand broadcasting would be a possible area for exclusion in the future. However, the definition seems extraordinarily wide.
As digital broadcasting becomes more widely adopted, as one might expect more and more programming will be available in an on-demand form. Viewers will be able more and more to select, order and receive an increasing range of broadcasts on an individual basis. One would expect musical content to play a large part, of which a small fraction would be the type of on-demand service that could be expected to affect the interests of rights holders. High-quality music recordings could well affect the sales of records in the shops, and that may well be a reason for introducing a refusal to grant a statutory licence.
It seems at this stage that in a vast number of cases there would be no adverse effect on rights holders. The reason for withholding permission for statutory licences is to protect rights holders. I am sure the House will agree that it is important that proper consultative procedures are put in place to make sure that no broadcaster is unfairly excluded, or that his particular type of broadcast should have been thoroughly examined to see that exclusion was just and fair. My amendment was tabled in a spirit of inquiry. I look forward to the Minister's comments. I beg to move.
Moved, That Amendment No. 148A, as an amendment to Commons Amendment No. 148, be agreed to.—(The Viscount of Falkland.)
7 p.m.
Lord Inglewood: My Lords, I am very grateful to have had from the noble Viscount an explanation of his concerns underlying this amendment. I am very glad to be able to give him an assurance on behalf of my colleagues at the DTI that there will be further consultation and an opportunity for interested parties to express their views before any order changing the application of the statutory licence is made. I should also like to remind the House that no order can be made until it has been debated by both Houses, so your Lordships will have an opportunity in the future to express views on any proposed changes to the statutory licence.
It is also important to be clear that so far as we are concerned now, on demand is all that we have in mind for exclusion; but there may be other categories in future as technology develops, and precise definitions might well be rather tricky to make. Hence we felt it would be appropriate to have an order-making power of this kind. I very much hope that in the light of the assurance and the explanation I have given, the noble Viscount may feel able to withdraw his amendment.
The Viscount of Falkland: My Lords, I thank the noble Lord the Minister for that reply and for the explanation. Certainly that satisfies my concerns and the concerns of the broadcasters who have been behind my tabling of the amendment. In the circumstances, I beg leave to withdraw the amendment.
Amendment No. 148A, as an amendment to Commons Amendment No. 148, by leave, withdrawn.
On Question, Commons Amendment No. 148 agreed to.
COMMONS AMENDMENT
149 After Clause 113, insert the following new clause—
UNAUTHORISED DECODERS
'.—(1) In section 297A of the Copyright, Designs and Patents Act 1988 (unauthorised decoders), for subsection (1) there is substituted—
"(1) A person who makes, imports, sells or lets for hire, offers or exposes for sale or hire, or advertises for sale or hire, any unauthorised decoder shall be guilty of an offence and liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum;

(b) on conviction on indictment, to imprisonment for a term not exceeding two years, or to a fine, or to both."

(2) The amendment made by subsection (1) shall not apply to any offence committed before the commencement of this section.'
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 149. I should like at the same time to speak to Amendment No. 150. These two amendments extend the criminal and civil offences of decoder piracy to include the advertising of unauthorised decoders as well as their sale. Amendment No. 149 also increases the maximum penalties for those found guilty of the offence to an unlimited fine and/or two years' imprisonment.
Moved, That the House do agree with the Commons in their Amendment No. 149.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
150 After Clause 113, insert the following new clause—
APPARATUS &C FOR UNAUTHORISED RECEPTION OF TRANSMISSIONS
'. In section 298 of the Copyright, Designs and Patents Act 1988 (apparatus &c for unauthorised reception of transmissions), in subsection (2)(a), after "hire" there is inserted ", offers or exposes for sale or hire, or advertises for sale or hire,".'.
151 Before Clause 114, insert the following new clause—
STANDARDS FOR TRANSMISSION SYSTEMS
'.—(1) The Independent Television Commission (in this section referred to as "the Commission") shall do all that they can to secure that every licensed service uses a transmission system complying with Article 2 of Council Directive 95/47/EC on the use of standards for the transmission of television signals ("the Directive").
(2) In this section "Community digital standard" means any of the alternatives permitted within the mandatory parts of the standards to be met by a transmission system for the purpose of complying with Article 2(c) of the Directive (which relates to television services that are fully digital).
(3) The Commission may, after consultation with the persons specified in subsection (6), specify particular Community digital standards to be met in the provision of licensed services which are fully digital.
(4) In deciding whether, and if so how, to exercise their powers under subsection (3), the Commission shall, in particular—

(a) have regard to the desirability of promoting—

(i) mutual technical compatibility between digital television services, and

(ii) the development of digital television broadcasting, and

(b) consider whether it would be reasonably practicable for persons providing licensed services which are fully digital to use transmission systems meeting the Community digital standards in question.

(5) Where the Commission have exercised their powers under subsection (3), they shall—

(a) publish notice of their determination in such manner as they think fit, and

(b) do all that they can to secure that any licensed service which is fully digital uses a transmission system meeting the Community digital standards specified under that subsection.

(6) The persons referred to in subsection (3) are—

(a) every person providing a licensed service,

(b) the BBC,

(c) the Welsh Authority,

(d) the Secretary of State,

(e) the Director General of Telecommunications,

(f) the Director General of Fair Trading,

(g) such persons appearing to them to represent manufacturers of television broadcasting or receiving equipment as they think fit,

(h) such persons appearing to them to represent viewers as they think fit, and

(j) such other persons as they think fit.

(7) In this section—
"licensed service" means any service licensed by the Commission under Part I of this Act or Part I or II of the 1990 Act or provided under a relevant cable licence, but does not include any service which is only broadcast or transmitted for reception outside the European Economic Area;
"relevant cable licence" means a relevant licence within the meaning of Part III of Schedule 12 to the 1990 Act (transitional provisions relating to existing cable services).'.
152 Insert the following new clause—
DUTIES OF INDEPENDENT TELEVISION COMMISSION OR RADIO AUTHORITY IN CASES INVOLVING DISQUALIFICATION ON GROUNDS RELATED TO POLITICAL OBJECTS
'.—(1) If it appears to the Independent Television Commission that there are grounds for suspecting that any person who is an applicant for a licence under Part I or II of the 1990 Act or Part I of this Act is by virtue of any of the provisions specified in subsection (5) a disqualified person in relation to that licence, the Commission shall be regarded as failing to discharge their duty under section 5(1) of the 1990 Act, or as the case may be section 5(1) of this Act, if they grant the licence to that person without being provided with information which satisfies them that he is not on those grounds a disqualified person by virtue of that provision.
(2) If it appears to the Independent Television Commission that there are grounds for suspecting that any person who is the holder of a licence under Parts I or II of the 1990 Act or Part I of this Act is by virtue of any of the provisions specified in subsection (5) a disqualified person in relation to that licence, the Commission shall be regarded as failing to discharge their duty under section 5(1) of the 1990 Act, or as the case may be section 5(1) of this Act, unless—

(a) they require him to provide them with information for the purpose of determining whether he is on those grounds a disqualified person by virtue of that provision, and

(b) if they are satisfied that he is a disqualified person, they revoke the licence.

(3) If it appears to the Radio Authority that there are grounds for suspecting that any person who is an applicant for a licence under Part III of the 1990 Act or Part II of this Act is by virtue of any of the provisions specified in subsection (5) a disqualified person in relation to that licence, the Authority shall be regarded as failing to discharge their duty under section 88(1) of the 1990 Act, or as the case may be section 38(1) of this Act, if they grant the licence to that person without being provided with information which satisfies them that he is not on those grounds a disqualified person by virtue of that provision.
(4) If it appears to the Radio Authority that there are grounds for suspecting that any person who is the holder of a licence under Part III of the 1990 Act or Part II of this Act is by virtue of any of the provisions specified in subsection (5) a disqualified person in relation to that licence, the Authority shall be regarded as failing to discharge their duty under section 88(1) of the 1990 Act, or as the case may be section 38(1) of this Act, unless—

(a) they require him to provide them with information for the purpose of determining whether he is a disqualified person on those grounds by virtue of that provision, and

(b) if they are satisfied that he is a disqualified person, they revoke the licence.

(5) The provisions referred to in subsections (1) to (4) are the following provisions of paragraph 1(1) of Part II of Schedule 2 to the 1990 Act—

(a) paragraphs (d) to (g),

(b) paragraph (h) so far as relating to participation by bodies falling within paragraph (d), (e) or (g),

(c) paragraph (hh) so far as relating to a body corporate controlled by a body corporate in which a body falling within paragraph (d), (e) or (g) is a participant with more than a 5 per cent. interest,

(d) paragraph (i) so far as relating to control by a person falling within any of paragraphs (d) to (g) or by two or more such persons, and

(e) paragraph (j) so far as relating to participation by a body corporate which is controlled by a person falling within any of paragraphs (d) to (g) or by two or more such persons.

(6) Nothing in subsections (1) to (5) shall be taken to limit the generality of—

(a) the duty imposed on the Independent Television Commission by section 5(1) of the 1990 Act or section 5(1) of this Act, or

(b) the duty imposed on the Radio Authority by section 88(1) of the 1990 Act or section 38(1) of this Act.'.

153 Insert the following new clause—
OFFENCE OF PROVIDING FALSE INFORMATION IN CERTAIN CIRCUMSTANCES
'.—(1) A person who, in connection with an application by him for, or his continued holding of, a licence under the 1990 Act or this Act—

(a) makes to the relevant authority a statement which he knows to be false in a material particular, or

(b) recklessly makes to the relevant authority a statement which is false in a material particular,

1103
is guilty of an offence if the statement relates to a matter which would be relevant in determining whether he is by virtue of any of the provisions specified in subsection (3) a disqualified person, and he is by virtue of any of those provisions a disqualified person in relation to that licence.
(2) A person who, in connection with an application by him for, or his continued holding of, a licence under the 1990 Act or this Act, withholds any information with the intention of causing the relevant authority to be misled is guilty of an offence if—

(a) the information would be relevant in determining whether he is by virtue of any of the provisions specified in subsection (3) a disqualified person, and

(b) he is by virtue of any of those provisions a disqualified person in relation to that licence.

(3) The provisions referred to in subsections (1) and (2) are the following provisions of paragraph 1(1) of Part II of Schedule 2 to the 1990 Act—

(a) paragraphs (d) to (g),

(b) paragraph (h) so far as relating to participation by bodies falling within paragraph (d), (e) or (g),

(c) paragraph (hh) so far as relating to a body corporate controlled by a body corporate in which a body falling within paragraph (d), (e) or (g) is a participant with more than a 5 per cent. interest,

(d) paragraph (i) so far as relating to control by a person falling within any of paragraphs (d) to (g) or by two or more such persons, and

(e) paragraph (j) so far as relating to participation by a body corporate which is controlled by a person falling within any of paragraphs (d) to (g) or by two or more such persons.

(4) A person guilty of an offence under this section is liable on summary conviction to imprisonment for a term not exceeding three months or to a fine not exceeding level 5 on the standard scale or to both.
(5) In this section "the relevant authority" means—

(a) in relation to any licence under Parts I or II of the 1990 Act or Part I of this Act, the Independent Television Commission, and

(b) in relation to any licence under Part III of the 1990 Act or Part II of this Act, the Radio Authority.'.

154 Insert the following new clause—
DISQUALIFICATION FOR OFFENCE OF SUPPLYING FALSE INFORMATION ETC
'.—(1) Where a person is convicted of an offence under section (Offence of providing false information in certain circumstances) the court by which he is convicted may make an order (in this section referred to as a "disqualification order") disqualifying him from holding a licence during a period specified in the order.
(2) The period specified in a disqualification order shall not exceed five years beginning with the date on which the order takes effect.
(3) Where an individual is disqualified from holding a licence by virtue of a disqualification order, any body corporate—

(a) of which he is a director, or

(b) in the management of which he is directly or indirectly concerned,

is also disqualified from holding a licence.
(4) Where the holder of a licence is disqualified by virtue of a disqualification order, the licence shall be treated as being revoked with effect from the time when the order takes effect.
(5) For the purposes of any of the provisions specified in subsection (6) (which relate to the imposition of a financial penalty on the revocation of a licence), a licence which is revoked by virtue of subsection (4) shall be taken to have been revoked by the relevant authority as mentioned in that provision.
(6) The provisions referred to in subsection (5) are as follows—

(a) section 18(3) of the 1990 Act,

(b) section 101(3) of the 1990 Act,

(c) section 10(5), and

(d) section 47(5).

(7) In sections 5(1)(a) and 88(1)(a) of the 1990 Act and sections 5(1)(a) and 38(1)(a) of this Act, the reference to a person who is disqualified person by virtue of Part II of Schedule 2 to the 1990 Act includes a reference to a person who is disqualified by virtue of a disqualification order.
(8) In this section—
"licence" means any licence granted by the Independent Television Commission or the Radio Authority under the 1990 Act or this Act;
"the relevant authority" has the same meaning as in section (Offence of providing false information in certain circumstances).'.
155 Insert the following new clause—
SUPPLEMENTARY PROVISIONS AS TO DISQUALIFICATION ORDERS
'.—(1) A person disqualified by a disqualification order may appeal against the order in the same manner as against a conviction.
(2) A disqualification order made by a court in England and Wales or Northern Ireland—

(a) shall not take effect until the end of the period within which the person on whose conviction the order was made can appeal against the order, and

(b) if he so appeals, shall not take effect until the appeal has been determined or abandoned.

(3) A disqualification order made by a court in Scotland—

(a) shall not take effect until the end of the period within which the person on whose conviction the order was made can appeal against the order, and

(b) if an appeal against the order or the conviction is taken within that period, shall not take effect until the date when that appeal is determined or abandoned or deemed to have been abandoned.

(4) In this section "disqualification order" means an order under section (Disqualification for offence of supplying false information etc).'
156 Clause 114, page 87, line 27, leave out from first 'and' to 'were' in line 28 and insert 'the following provisions of this Act—

(a) Parts I and II and Schedule 1,

(b) Part IV,

(c) Part V and Schedules 3 and 4, and

(d) sections (Standards for transmission systems) and (Duties of Independent Television Commission or Radio Authority in cases involving disqualification on grounds related to political objects) to (Supplementary provisions as to disqualification orders)

shall be construed as if those provisions'.
157 Clause 115, page 87, line 32, after 'enactments' insert 'and instruments'.
158 Page 87, line 32, after 'repealed' insert 'or, as the case may be, revoked'.
Lord Inglewood: My Lords, I beg to move that this House do agree with the Commons in their Amendments Nos. 150 to 158 en bloc. I have already spoken to these amendments.
Moved, That the House do agree with the Commons in their Amendments Nos. 150 to 158.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
159 Clause 116, page 87, line 34, at end insert—
'( ) paragraphs 4A to 4C of Schedule 2 so far as relating to BBC companies (as defined by section 202(1) of the 1990 Act), and section 66 so far as relating to those paragraphs in their application to such companies,'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 159. I should also like to speak to Amendments Nos. 161 to 170, 287, 288, 294 and 295. Amendments Nos. 159, 161, 162, 164 and 166 add various provisions to the list of those which will be effective immediately on Royal Assent. The government amendment tabled here to the Commons Amendment No. 166 is simply for the sake of consistency in the commencement of the provisions on BBC companies. Amendment No. 167 removes provisions extending the Bill to Northern Ireland and makes consequential amendments to the Welsh Development Agency Act, which obviously do not extend to Northern Ireland.
Amendments Nos. 168 and 169 enable provisions of the Bill to amend the Broadcasting Act 1990 to be extended to the Channel Islands and the Isle of Man. Amendment No. 170 deletes subsection (4) of Clause 117 which was added for the duration of the Bill's passage through your Lordships' House to avoid infringing the privilege of the other place to impose any charge on public funds. Amendment No. 287 updates the Welsh Development Agency Act, the Representation of the People Act 1983 and the Copyright, Design and Patents Act 1988 to reflect the enactment of the Bill.
Amendments Nos. 288 and 295 divide Schedule 8 into two parts, the first of which lists enactments repealed by the Bill, and the second of which lists subordinate legislation revoked by the Bill. Amendment No. 294 formally repeals provisions of the 1990 Act which are replaced by provisions in Amendment No. 287.
Moved, That the House do agree with the Commons in their Amendment No. 159.— (Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
160 Clause 116, page 87, line 34, at end insert—
'( ) sections (Provision of news programmes by holders of regional Channel 3 licences) to (Nomination by Commission for purposes of section 31(2 of Broadcasting Act 1990)),'.
161 Page 87, line 35, leave out 'section' and insert 'sections 67 and'.
162 Page 87, line 37, leave out 'section' and insert 'sections 73, 74 and'.
163 Page 87, line 37, at end insert—
'( ) section (Modification of Restrictive Trade Practices Act 1976 in its application to agreements relating to Channel 3 news provision),'.
164 Page 87, line 38, leave out 'Schedule 5' and insert 'Schedules 5, (Transfer schemes relating to the BBC transmission network: successor companies), (Transfer schemes relating to the BBC transmission network: taxation provisions) and 6'.
165 Page 87, line 38, leave out second 'and'.
Lord Inglewood: My Lords, I beg to move that this House do agree with the Commons in their Amendments Nos. 160 to 165 en bloc. I have already spoken to these amendments.
Moved, That the House do agree with the Commons in their Amendments Nos. 160 to 165.— (Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
166 Clause 116, page 87, line 39, after '114(1)' insert—
'(f) the entries in Schedule 8 relating to sections 45(8) and (9) and 47(11) and (12) of the 1990 Act, and section 115(2) so far as relating to those entries, and
(g)".
Lord Inglewood: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 166.
Moved, That the House do agree with the Commons in their Amendment No. 166.— (Lord Inglewood.)
AMENDMENTS TO COMMONS AMENDMENT No. 166
166A Line 1, at end insert—
("( ) paragraphs 10B and 13A of Schedule 7 so far as relating to BBC companies (as defined by section 202(1) of the 1990 Act), and section 115(1) so far as relating to those paragraphs in their application to such companies,").
166B Line 2, after ("sections") insert ("32(9),")
Lord Inglewood: My Lords, I beg to move Amendments Nos. 166A and 166B as amendments to Commons Amendment No. 166.
Moved, That Amendments Nos. 166A and 166B, as amendments to Commons Amendment No. 166, be agreed to.— (Lord Inglewood.)
On Question, Amendments Nos. 166A and 166B agreed to.
On Question, Commons Amendment No. 166, as amended, agreed to.
167 Clause 117, page 88, line 8, after 'Act' insert 'except paragraph 15 of Schedule 7'.
168 Page 88, line 8, at end insert—
'( ) Section 204(6) of the 1990 Act (power to extend to Isle of Man and Channel Islands) applies to the provisions of this Act amending that Act.'.
169 Page 88, line 9, after 'the' insert 'other'.
170 Page 88, line 12, leave out subsection (4).
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 167 to 170 en bloc. I have already spoken to these amendments.
Moved, That the House do agree with the Commons in their Amendments Nos. 167 to 170.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
257 Schedule 3, page 112, leave out lines 15 and 16.
Lord Inglewood: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 257. I should like also to speak to Amendment No. 258. This minor amendment removes the need for Treasury consent in respect of remuneration, allowances, pensions and compensation to members of the BSC and similarly of the recruitment, remuneration and so on of its employees. The Government's policy is that the responsibility for such routine financial matters should rest with the Secretary of State alone.
Moved, That the House do agree with the Commons in their Amendment No. 257.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
258 Schedule 3, page 113, line 18, leave out from 'State' to end of line.
259 Schedule 5, page 117, line 16, after 'enforceable' insert 'by or'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 258 and 259. I have already spoken to these amendments.
Moved, That the House do agree with the Commons in their Amendments Nos. 258 and 259.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
260 Schedule 5, page 118, line 7, at end insert—
'(aa) rights and liabilities of the BBC under any agreement or arrangement for the payment of pensions, allowances and gratuities,'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 260. This relates to the sale by the BBC of its transmission services. The bulk of the amendments relating to this topic are of a technical nature and relate to various taxation and accounting matters which arise when an entity moves from the public to the private sector. In selling its transmission assets the BBC is likely to proceed either by trade sale of the assets direct or through the creation of a wholly owned subsidiary and then the sale of that subsidiary. A flotation is unlikely, but not impossible. The provisions now incorporated in the Bill are designed to ensure that this process can take place without accounting and taxation distortions or unnecessary constraints.
1108
Amendment No. 260 deals with the pension rights of BBC transmission staff. Your Lordships may recall that during our debate on Third Reading we discussed an amendment tabled by the noble Baroness, Lady Dean of Thornton-le-Fylde, on this subject. I described the options that would be available to staff transferring with the transmission services, but indicated that the Government would consider the matter further and, if necessary, bring forward an amendment for the avoidance of doubt, making clear that pension obligations could form part of the BBC transfer scheme submitted for the Secretary of State's approval. That is what this amendment does. It adds pension rights and liabilities to the list of property at paragraph (3) of Schedule 5 to the Bill to which a transfer scheme may relate. Pensions will thus be brought explicitly within the scope of a transfer scheme. Under Clause 111, the Secretary of State's approval is needed for any transfer scheme made by the BBC. This will provide an additional safeguard for BBC transmission staff.
Moved, That the House do agree with the Commons in their Amendment No. 260.—(Lord Inglewood.)
AMENDMENT TO COMMONS AMENDMENT NO. 260
260A Line 3, after ("pensions") insert ("(including under any agreement or arrangement for the bulk transfer of an appropriate accrued pensions surplus for the payment of pensions)")
Baroness Dean of Thornton-le-Fylde: My Lords, I shall not detain the House too long on this amendment, but I feel that I must speak to it. It will amend Amendment No. 260 from the other place, which we support.
I feel the need to speak because the first time that we debated this issue was at Third Reading and the Minister kindly said that he would take away the amendment and look at it and that an amendment would be forthcoming when the matter came before another place. In fact, an amendment was not forthcoming at Committee stage in another place, when it could have been debated in full. An amendment was not tabled by the Government until Report stage in another place, when, on 11th June, the Minister accepted that the trustees' duty to all members of the scheme was to provide equitable treatment (Hansard, col. 638.) That is where the difference between us lies.
The amendment now before us will provide that the Bill itself, on the privatisation of BBC transmission services, will carry with it a requirement not only for the pension rights of employees to transfer on privatisation, but also for an appropriate accrued pension surplus to go with them. The Minister went on to say (col. 639) that the BBC had given an undertaking that it would make the best endeavours to ensure that protection was there. I suggest that "best endeavours" in this day and age is not good enough. There needs to be protection.
It is true that the amendment seeks to provide what is called a bulk transfer or a mirror image scheme. It seeks equity between the employees of the BBC transmission services now and the agreement which was applied

1109
when the IBA services were transferred. This issue was raised when I moved the amendment at Third Reading in this House.
The Minister in this Chamber (and indeed the Minister in another place) said that there were three options and choices. The employees could leave their pension where it was with the BBC fund and it would increase in line with the RPI or other increases given. That may well be justified and good advice to give. The employees could transfer to a personal pension scheme, which undoubtedly would be a money purchase scheme and not provide benefits for their families; or they could transfer to a new company scheme, and I shall return briefly to that point later.
The Minister said that this is not like the IBA transfer in that it is not a privatisation into three specific companies. In this case we do not have the facts; we do not know who will buy the BBC services when they are privatised. Indeed, because there has been so much rumour and so many statements made on this subject, on Tuesday I contacted the office of Sir Christopher Bland and asked for the opinion of the BBC on my amendment. I regret that I am still waiting for a reply. I have managed to get hold of the BBC scheme itself and a report issued by the BBC trustees—they have employee trustees on the board—from December 1995. We are not talking about an insignificant amount. In the 1993 evaluation there was a surplus of £532 million in the scheme. This amendment seeks to ensure that an appropriate part, actuarially assessed, is transferred with the employees when they move out of the employment of the BBC to whoever buys those transmission services.
It is on the record that the view of the Government is that pensions which have accrued will be valued for the individuals. They will have a transfer value. But that transfer value will only relate to their pension in accordance with pensions law. Nothing extra is being given. That is within pensions law. Indeed, many of the provisions can be found in the pensions deed itself, in the BBC scheme.
Because of the surplus that exists, and which has existed for some time—it is equivalent to 7½ per cent. of the scheme's assets and liabilities—the BBC itself has had a reduced employers' contribution. But the employees have still been paying 4½ per cent. of their salary into their scheme. If employees are transferred out of the BBC pension scheme without moving an element of that surplus with them, which I suggest they have accrued and from which they are entitled to benefit, I believe that they are being given short change. My amendment would rectify that. This is not a new idea. If it is said that the IBA sell-off was completely different, one could say that the telecommunications staff were in exactly the same situation and the department agreed that the transfer of the surplus would go with them.
Time and again it has been said that it is the loyalty of the staff of the BBC transmission services that has made it into an organisation which should make it attractive for a sell-off. Time will tell whether or not it is attractive for a sell-off.
1110
The amendment does not seek special privilege. It does not seek to transfer moneys from the BBC to another employer. It seeks to transfer with the employees the actuarially assessed accrued part of that surplus which I suggest rightly belongs to them. I hope that the House and, more importantly at this stage, the Minister are able to accept it. I beg to move.
Moved, That Amendment No. 260A, as an amendment to Commons Amendment No. 260, be agreed to.—(Baroness Dean of Thornton-le-Fylde.)
7.15 p.m.
Lord Thomson of Monifieth: My Lords, I should like to say just a few sentences from this Bench. We strongly agree with what the noble Baroness has just said. Pensions are one of the most sensitive matters in the world today. In a world where people have to change employment, it is tremendously important that justice should be done. Those in the BBC transmission services under privatisation who go off to other employers have a right in equity to take some of the accrued benefits with them.
Lord Donoughue: My Lords, with the permission of the House I should like to speak from this Bench. I was a fund manager of the BBC pension fund for many years in the 1980s, when clearly it did quite well. Specifically, I should like to support what my noble friend said. It is simply not acceptable that employees who have worked with, and for, that surplus should, on moving, lose a part of it. If that is where they end up, they certainly should be advised to stay in the BBC scheme, keep their share and then start a new scheme elsewhere.
To make a more general point to the Minister, will he confirm that in the Bill there is no guarantee that a purchaser of the transmission system will operate an appropriate scheme for employees and pensioners? That seems to me to be the heart of the problem. That is what we are looking for. We are looking for the guarantee which my noble friend said was there for the IBA. That is what should be provided.
At present, BBC employees are members of an appropriate scheme. The Government say that one of the delights and risks of privatisation is that it may mean a deterioration in the pension position for which they have worked all their life on the assumption that it would not deteriorate. That is not acceptable. I ask the Minister, if he does not wish to change the Bill, whether he will agree that the Secretary of State, who has the power of final approval on transfer, should not give approval to any transfer of transmission unless an appropriate scheme is already in place. We would rather have that provision belt and braces in the Bill. If it is not in the Bill, I should like a guarantee from the Secretary of State that a transfer will not be made other than to a party that has an appropriate scheme in place.
Lord Inglewood: My Lords, I am most grateful to the noble Baroness for explaining the thinking behind her amendment and for the way in which it has been brought forward. She explained how she wants a proportion of the accrued surpluses in the BBC pension scheme to be transferred to the scheme operated by a new employer following the privatisation of the BBC's

1111
transmission network. I do not think this would be appropriate in these circumstances and, therefore, I cannot support this amendment.
I shall say a little about the background to begin with. There is currently a surplus in the BBC pension scheme. As is normal practice, when there is a transfer of a small proportion of staff from a scheme, this will remain in the main scheme. Let me explain: the BBC pension scheme is a "balance of cost" final salary scheme. The members pay contributions at an agreed rate, which in this case is 4.5 per cent. In return there is an agreed range of benefits. These include, most importantly, a pension related to the final salary they are receiving when they retire from the BBC. That pension is not determined by the level of any individual's contributions.
The BBC has an absolute obligation to pay whatever contributions are needed so that the benefits promised in the rules can be delivered. Whether the scheme is in surplus or deficit at any point is therefore dependent on the employer's contributions. It has no bearing on the pension which any member may be entitled to receive.
The options generally available to BBC employees when they leave the BBC are threefold and reference has already been made to them. They can either leave their accrued benefits in the BBC scheme where they will be guaranteed to increase each year in line with the retail price index up to 10 per cent. The second possibility is to take a transfer value payment to their new employer's scheme. The third is to take a transfer value payment to a personal pension arrangement.
However, when staff transfer with their function, as in this case, the BBC has agreed with the trustees of the BBC pension fund that it will pay into an appropriate scheme operated by the new employer a higher amount, known as the "past service reserve". The importance of that is that it goes beyond the legal obligation. This is the amount agreed between both sets of actuaries, which the new scheme would need in order to provide benefits equivalent in value to those accrued in the BBC scheme.
While there is no guarantee that the purchaser of transmission will operate an appropriate scheme based on final salary, the BBC has assured us that it will use its best endeavours to have a buyer who does. Indeed, some of the main potential bidders already operate such schemes.
In response to the second point made by the noble Lord, Lord Donoughue, the Secretary of State will ensure that fair arrangements are made for pensions in the transfer scheme, but cannot guarantee that a purchaser will offer a particular scheme.
We believe that it is right that the BBC, in selling its transmission assets itself, should have the responsibility for negotiating the arrangements with the purchaser and with staff, as with other services they have contracted out. In the case of transmission, there is a further safeguard introduced, as confirmed by the government amendment, that pension rights and liabilities can explicitly be included in the transfer scheme, which requires the Secretary of State's approval, as already mentioned.
1112
It is important both for the BBC and for the potential purchasers that they maintain the loyalty and commitment of transmission staff who are providing a first-class service. But I do not believe that they should be put in a straitjacket. Staff benefits will be one criterion of selection, but not the determining criterion.
To return to the subject of this amendment, where a scheme provides specified benefits, as does the BBC pension scheme, those are guaranteed whether it is in surplus or deficit. There is no logic in requiring any surplus or deficit, which happens to have arisen at a particular time, being passed to the new employer. To transfer a deficit would be a drain on the new employer. To transfer a surplus would simply subsidise the new employer's future contributions and penalise the BBC for having contributed up front. It makes no difference to the member's final pension. Having heard this explanation, I hope that the noble Baroness is able to withdraw her amendment.
Baroness Dean of Thornton-le-Fylde: My Lords, I have listened very carefully to what the Minister has had to say. I shall respond to some of the points which do not answer the concerns that I have. The Minister frequently referred to "a normal transfer". These are not people who are leaving, but who are being sold on. Their work is being sold on and privatised. On that basis, as a group of employees and not individuals, I argue most strongly that the points that the Minister made about the surplus are not appropriate in this instance.
The Minister said that the BBC has agreed with the trustees. We have to remember that the trustees within a scheme have it within their discretion to decide about the scheme itself. Their first responsibility is to the scheme whereas the BBC management will not be able to instruct the trustees on what they will and will not do. That is another reason why we want this provision in the Bill, with the Secretary of State having responsibility.
The Minister used the term "best endeavours". In this situation best endeavours are not sufficient. On paper it might look right, but in reality and in everyday experience, it just does not work out. It may be that the bidders for transmission services have their own pension schemes. I do not know, and neither do the employees, whether those schemes match the BBC scheme, which is a good scheme. It is a final salary and defined benefits scheme. I do not know whether the potential bidders have money purchase schemes, which are nowhere near as good as the majority of defined benefits schemes. So the employees may not have a real choice.
If the company that buys the BBC transmission services is already an established company with its own pension scheme, it is no easy matter to transfer people into it. Time and time again one has seen situations where two schemes are run in tandem because the differences are so enormous.
Those are all arguments for the provision, but the core of the matter comes down to the surplus. I heard what the Minister said, that the BBC has to pay if the scheme is in deficit. I have here the BBC report which deals with managing the surplus. It says that the present

1113
surplus will see the BBC through to the year 2004. Therefore, it is not as though the scheme is going to go into deficit next year or the year after.
I am not convinced by the Minister's arguments. Although the present provision is an improvement on that in the original Bill, with my amendment it will give employees the security that they deserve and the surplus element that they are entitled to. I wish to test the opinion of the House.
7.27 p.m.
On Question, Whether the said amendment, (Amendment No. 260A) to Commons Amendment No. 260, shall be agreed to?
Their Lordships divided: Contents, 36; Not-Contents, 65.

Division No. 2

CONTENTS

Addington, L.

McGregor of Durris, L.

Berkeley, L [Teller.]

McIntosh of Haringey, L.

Carmichael of Kelvingrove, L.

McNair, L.

Chapple, L.

Mayhew, L.

Clinton-Davis, L.

Monkswell, L.

Dahrendorf, L.

Prys-Davies, L.

Dean of Thornton-le-Fylde, B.

Richard, L

Desai,L.

Russell, E.

Donoughue, L.

Serota, B.

Falkland, V.

Stoddart of Swindon, L

Farrington of Ribbleton, B.

Taylor of Blackburn, L.

Graham of Edmonton, L. [Teller.]

Thomson of Monifieth, L.

Harris of Greenwich, L.

Turner of Camden, B.

Hayman, B.

Whaddon, L.

Jeger, B.

White, B.

Judd, L.

Williams of Crosby, B.

Kilbracken, L.

Winchilsea and Nottingham, E

Longford, E.

Winston, L

NOT-CONTENTS

Abinger, L.

Glenarthur, L.

Addison, V.

Goschen, V.

Annaly, L.

Harlech, L.

Belstead, L.

Henley, L.

Berners, B.

Hogg, B.

Blaker, L.

HolmPatrick, L.

Blatch, B.

Howe, E.

Brougham and Vaux, L.

Inglewood, L.

Burnham, L.

Lawson of Blaby, L.

Carnegy of Lour, B.

Liverpool, E.

Carnock, L.

Long, V.

Chelmsford, V.

Lucas, L.

Chesham, L. [Teller.]

Lucas of Chilworth, L.

Clark of Kempston, L.

Lyell, L.

Coleraine, L.

McColl of Dulwich, L.

Coleridge, L.

Mackay of Ardbrecknish, L.

Colwyn, L.

Mackay of Drumadoon, L.

Courtown, E.

Macleod of Borve, B.

Cox, B.

Mancroft, L.

Cranborne, V. [Lord Privy Seal.]

Marlesford, L.

Cumberlege, B.

Massereene and Ferrard, V.

Demon of Wakefield, B.

Mersey, V.

Dixon-Smith, L.

Miller of Hendon, B.

Eccles, V.

Napier and Ettrick, L.

Elton, L.

Northesk, E.

Ferrers, E

Orr-Ewing, L.

Finsberg, L.

Park of Monmouth, B.

Fraser of Carmyllie, L.

Pilkington of Oxenford, L.

1114

Rankeillour, L.

Swinfen, L.

Seccombe, B.

Teviot, L.

Shaw of Northstead, L.

Trumpington, B

Ullswater, V.

Strathclyde, L. [Teller.]

Wilcox, B.

Resolved in the negative, and amendment disagreed to accordingly.
7.35 p.m.
On Question, Commons Amendment No. 260 agreed to.
COMMONS AMENDMENTS
261 Schedule 5, page 119, line 36, at end insert 'or Northern Ireland'.
262 Page 119, line 42, after 'documents)' insert 'or section 9 of the Conveyancing Act 1881 (the corresponding provision for Northern Ireland)'.
263 Page 123, line 27, at end insert—
'Consideration for transfer etc.
10.—(1) A transfer in accordance with a transfer scheme may be made for consideration or for no consideration and, if it is made for consideration, the consideration may, in particular, take the form of the issue of shares or securities.
(2) In sub-paragraph (1), "transfer" has the meaning given by paragraph 1(1) of Schedule (Transfer schemes relating to the BBC transmission network: taxation provisions).'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 261 to 263.
Moved, That the House do agree with the Commons in their Amendments Nos. 261 to 263.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
264 After Schedule 5, insert the following new schedule—
'SCHEDULE
TRANSFER SCHEMES RELATING TO THE BBC TRANSMISSION NETWORK: SUCCESSOR COMPANIES
Interpretation
1.—(1) In this Schedule—
"the Charter" means the Royal Charter of 1st May 1996 for the continuance of the British Broadcasting Corporation;
"preparatory scheme" means a transfer scheme whose main purpose is to provide for a transfer of property, rights or liabilities from the BBC to a wholly-owned subsidiary of the BBC;
"successor company" means a company to which property, rights or liabilities are transferred in accordance with a preparatory scheme at a time when the company is a wholly-owned subsidiary of the BBC;
"transfer" includes—

(a) any transfer effected by or under an agreement or instrument entered into or executed in pursuance of an obligation imposed by a provision contained in a preparatory scheme by virtue of paragraph 2(1)(g) of Schedule 5;

1115

(b) the creation of interests, rights or liabilities by or under any such agreement or instrument; and

(c) the creation of interests, rights or liabilities by virtue of any provision contained in a preparatory scheme by virtue of paragraph 2 of Schedule 5;

and references to a transfer in accordance with a preparatory scheme shall be construed accordingly;
"wholly-owned subsidiary" has the meaning given by section 736 of the Companies Act 1985.
(2) Any reference in this Schedule to vesting in accordance with a preparatory scheme or vesting effected by a preparatory scheme shall be construed as a reference to vesting as a result of a transfer in accordance with a preparatory scheme.
Statutory accounts
2.—(1) The following provisions of this paragraph shall have effect for the purposes of any statutory accounts of a successor company.
(2) The vesting in the company effected by any preparatory scheme shall be taken—

(a) to have been effected immediately after the end of the last financial year of the BBC to end before the coming into force of the scheme, and

(b) to have been a vesting of such property, rights and liabilities as are determined by or under the scheme.

(3) The value of any asset and the amount of any liability which is taken by virtue of sub-paragraph (2) to have been vested in the company shall be taken to have been—

(a) in the case where the value or amount is determined by or under the preparatory scheme, that value or amount, and

(b) in any other case, the value or amount assigned to the asset or liability for the purposes of the Account or Accounts prepared by the BBC for the purposes of Article 18(2) of the Charter in respect of their last financial year to end before the day on which the preparatory scheme comes into force.

(4) If an Account or Accounts are prepared by the BBC for the purposes of Article 18(2) of the Charter in respect of the residual part of a financial year, that residual part shall be treated as a financial year of the BBC for the purposes of sub-paragraph (3).
(5) In this paragraph "statutory accounts", in relation to a company, means any accounts of that company prepared for the purposes of any provision of the Companies Act 1985 (including group accounts).
Distributable reserves
3.—(1) Where statutory accounts of a successor company prepared as at any time would show the company as having net assets in excess of the aggregate of—

(a) its called-up share capital, and

(b) the amount, apart from any property, rights and liabilities transferred to it in accordance with any preparatory scheme, of its undistributable reserves,

then, for the purposes of section 263 of the Companies Act 1985 (profits available for distribution) and of the preparation as at that time of any statutory accounts of the company, that excess shall be treated, except so far as the Secretary of State may otherwise direct, as representing an excess of the company's accumulated realised profits over its accumulated realised losses.
(2) For the purposes of section 264 of the Companies Act 1985 (restriction on distribution of assets) so much of any excess of a company's net assets as falls, in accordance with
1116
a direction under this paragraph, to be treated otherwise than as representing an excess of the company's accumulated realised profits over its accumulated realised losses shall be treated (subject to any modification of that direction by a subsequent direction under this paragraph) as comprised in the company's undistributable reserves.
(3) A direction under this paragraph may provide, in relation to any amount to which it applies, that, on the realisation (whether before or after the company in question ceases to be a wholly-owned subsidiary of the BBC) of such profits and losses as may be specified or described in the direction, so much of that amount as may be determined in accordance with the direction is to cease to be treated as mentioned in sub-paragraph (2) and is to fall to be treated as comprised in the company's accumulated realised profits.
(4) The Secretary of State shall not give a direction under this paragraph in relation to a successor company at any time after the company has ceased to be a wholly-owned subsidiary of the BBC.
(5) The consent of the Treasury shall be required for the giving of a direction under this paragraph.
(6) In this paragraph—
"called-up share capital" has the same meaning as in the Companies Act 1985;
"net assets" has the meaning given by subsection (2) of section 264 of that Act;
"undistributable reserves" has the meaning given by subsection (3) of that section;
and references in this paragraph, in relation to a company, to statutory accounts are references to accounts of that company prepared in respect of any period in accordance with the requirements of that Act, or with those requirements applied with such modifications as are necessary where that period is not an accounting reference period.
Dividends
4.—(t) Where a distribution is proposed to be declared during any accounting reference period of a successor company which includes a transfer date or before any accounts are laid or filed in respect of such a period, sections 270 to 276 of the Companies Act 1985 (accounts relevant for determining whether a distribution may be made by a company) shall have effect as if—

(a) references in section 270 to the company's accounts or to accounts relevant under that section, and

(b) references in section 273 to initial accounts,

included references to such accounts as, on the assumptions stated in sub-paragraph (2), would have been prepared under section 226 of that Act in respect of the relevant year (in this paragraph referred to as "the relevant accounts").
(2) Those assumptions are—

(a) that the relevant year had been a financial year of the successor company,

(b) that the vesting in accordance with the preparatory scheme had been a vesting of all the property, rights and liabilities transferred to the company in accordance with that scheme and had been effected immediately after the beginning of that year,

(c) that the value of any asset and the amount of any liability of the BBC vested in the successor company in accordance with the preparatory scheme had been the value or (as the case may be) amount determined by or under the scheme or (if there is no such determination) the value or amount assigned to the asset or liability for the purposes of the Account or Accounts prepared by the BBC for the purposes of Article 18(2) of the Charter in respect of their financial year immediately preceding the relevant year,

1117

(d) that any securities of the successor company issued or allotted before the declaration of the distribution had been issued or allotted before the end of the relevant year, and

(e) such other assumptions (if any) as may appear to the directors of the successor company to be necessary or expedient for the purposes of this paragraph.

(3) If an Account or Accounts are prepared by the BBC for the purposes of Article 18(2) of the Charter in respect of the residual part of a financial year, that residual part shall be treated as a financial year of the BBC for the purposes of sub-paragraph (2)(c).
(4) The relevant accounts shall not be regarded as statutory accounts for the purposes of paragraph 2.
(5) In this paragraph—
"accounting reference period" has the meaning given by section 224 of the Companies Act 1985;
"complete financial year" means a financial year ending with 31st March;
"the relevant year", in relation to any transfer date, means the last complete financial year ending before that date;
"a transfer date", in relation to a successor company, means the date of the coming into force of any preparatory scheme in accordance with which property, rights or liabilities are transferred to that company.
Application of the Trustee Investments Act 1961
5.—(1) For the purpose of applying paragraph 3(b) of Part IV of Schedule 1 to the Trustee Investments Act 1961 (which provides that shares and debentures of a company shall not count as wider-range and narrower-range investments respectively within the meaning of that Act unless the company has paid dividends in each of the five years immediately preceding that in which the investment is made) in relation to investment in shares or debentures of a successor company during the calendar year in which the transfer date falls ("the first investment year") or during any year following that year, the successor company shall be deemed to have paid a dividend as there mentioned—

(a) in every year preceding the first investment year which is included in the relevant five years, and

(b) in the first investment year, if that year is included in the relevant five years and the successor company does not in fact pay such a dividend in that year.

(2) In sub-paragraph (1)—
"the relevant five years" means the five years immediately preceding the year in which the investment in question is made or proposed to be made;
"the transfer date", in relation to a successor company, means the first date on which any preparatory scheme in accordance with which property, rights or liabilities are transferred to that company comes into force.'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 264.
Moved, That the House do agree with the Commons in their Amendment No. 264.—(Lord Inglewood.)
[Amendment No. 264A, as an amendment to Commons Amendment No. 264, not moved.]
On Question, Commons Amendment No. 264 agreed to.
COMMONS AMENDMENT
265 After Schedule 5, insert the following new schedule—
'SCHEDULE
TRANSFER SCHEMES RELATING TO THE BBC TRANSMISSION NETWORK: TAXATION PROVISIONS
Interpretation
1.—(1) In this Schedule, unless the context otherwise requires—
"the Allowances Act" means the Capital Allowances Act 1990;
"the BBC transmission network" has the meaning given by section 110(2);
"the Capital Allowances Acts" has the meaning given by section 832(1) of the Taxes Act 1988;
"direct disposal scheme" means a transfer scheme which is not a preparatory scheme;
"direct disposal transfer" means a transfer in accordance with a direct disposal scheme;
"the documents regulating the BBC" includes—

(a) the Royal Charter of 1st May 1996 for the continuance of the British Broadcasting Corporation; and

(b) the Agreement dated 25th January 1996 between Her Majesty's Secretary of State for National Heritage and the British Broadcasting Corporation;

"the Gains Act" means the Taxation of Chargeable Gains Act 1992;
"modification agreement" has the meaning given by paragraph 7(7) of Schedule 5;
"preparatory scheme" means a transfer scheme whose main purpose is to provide for a transfer of property, rights or liabilities from the BBC to a wholly-owned subsidiary of the BBC;
"preparatory transfer" means a transfer in accordance with a preparatory scheme;
"relevant transfer" means a transfer in accordance with a transfer scheme;
"successor company" means a company to which property, rights or liabilities are transferred in accordance with a preparatory scheme at a time when the company is a wholly-owned subsidiary of the BBC;
"the Taxes Act 1988" means the Income and Corporation Taxes Act 1988;
"transfer", except for the purposes of paragraphs 13 to 18, includes—

(a) any transfer effected by or under an agreement or instrument entered into or executed in pursuance of an obligation imposed by a provision contained in a transfer scheme by virtue of paragraph 2(1)(g) of Schedule 5;

(b) the creation of interests, rights or liabilities by or under any such agreement or instrument; and

(c) the creation of interests, rights or liabilities by virtue of any provision contained in a transfer scheme by virtue of paragraph 2 of Schedule 5;

and references to a transfer in accordance with a transfer scheme (or any description of transfer scheme) shall be construed accordingly;
"transferee"—

(a) in relation to a transfer scheme, means a person to whom property, rights or liabilities are transferred in accordance with the transfer scheme; and

(b) in relation to a relevant transfer, means the person to whom the property, rights or liabilities in question are transferred in accordance with the transfer scheme in question;

"wholly-owned subsidiary" has the meaning given by section 736 of the Companies Act 1985.
(2) In any provision of this Schedule "the prescribed amount", in relation to any transferee under a transfer scheme, means such amount as may be specified by the Secretary of State by order for the purposes of that provision in its application to that transferee.
(3) This Schedule—

(a) so far as it relates to corporation tax, shall be construed as one with the Corporation Tax Acts, and

(b) so far as it relates to capital allowances, shall be construed as one with the Capital Allowances Acts.

Chargeable gains: preparatory transfers etc to be without gain or loss
2.—(1) For the purposes of corporation tax on chargeable gains, the disposal of property, rights or liabilities which is constituted by a preparatory transfer shall, subject to the following provisions of this Schedule, be taken in relation to both—

(a) the person to whom the disposal is made, and

(b) the person making the disposal,

to be effected for a consideration such that no gain or loss accrues to the person making the disposal.
(2) Section 171(1) of the Gains Act (which makes provision in relation to the disposal of assets from one member of a group of companies to another member of the group) shall not apply where the disposal in question is a preparatory transfer.
Chargeable gains: amendment of section 35(3)(d) of the Gains Act
3. In section 35(3)(d) of the Gains Act (list of provisions for transfers without gain or loss for purposes of provisions applying to assets held on 31st March 1982) after sub-paragraph (xi) there shall be inserted—
"(xii) paragraph 2(1) of Schedule (Transfer schemes relating to the BBC transmission network: taxation provisions) to the Broadcasting Act 1996;".
Chargeable gains: section 41 of the Gains Act
4. Subsection (1) of section 174 of the Gains Act (which applies section 41 of that Act to cases where assets have been acquired without gain or loss) shall have effect, without prejudice to paragraph 2, where there has been a preparatory transfer as if the asset to which the preparatory transfer relates had thereby been transferred and acquired in relevant circumstances, within the meaning of that subsection.
Chargeable gains: assets held before 6th April 1965
5. Schedule 2 to the Gains Act (assets held on 6th April 1965) shall have effect in relation to any assets which are transferred to a successor company in accordance with a preparatory scheme as if—

(a) the BBC and the successor company were the same person; and

1120

(b) those assets, to the extent that they were in fact acquired or provided by the BBC, were acquired or, as the case may be, provided by the successor company.

Chargeable gains: sale of successor company: group transactions
6.—(1) For the purposes of section 179 of the Gains Act (company ceasing to be a member of a group), where any company ("the degrouped company") ceases, by virtue of a qualifying transaction, to be a member of a group of companies, the degrouped company shall not, by virtue of that qualifying transaction, be treated under that section as having sold, and immediately reacquired, any asset acquired from a company which falls to be regarded for the purposes of subsection (1) of that section as having been at the time of acquisition a member of that group.
(2) Where, disregarding any preparatory transactions, a company would be regarded for the purposes of section 179 of the Gains Act (and, accordingly, of this paragraph) as ceasing to be a member of a group of companies by virtue of a qualifying transaction, it shall be regarded for those purposes as so doing by virtue of the qualifying transaction and not by virtue of any preparatory transactions.
(3) In this paragraph—
"preparatory transaction", in the case of any qualifying transaction, means anything done for the purpose of initiating, advancing or facilitating the qualifying transaction;
"qualifying transaction" means the disposal by the BBC of any shares or securities of a successor company.
(4) Expressions used in this paragraph and in section 179 of the Gains Act have the same meaning in this paragraph as they have in that section.
Chargeable gains: sale or exchange of shares or securities of successor company
7.—(1) Where a company issues shares or debentures to the BBC in exchange for shares in or debentures of a successor company which have not, before that exchange, been disposed of by the BBC—

(a) sections 127 to 131 of the Gains Act (reorganisation or reduction of share capital) shall not apply by virtue of subsection (3) of section 135 of that Act (exchange of securities) in relation to that exchange, and

(b) section 116 of that Act (reorganisations, conversions and reconstructions) accordingly does not have effect in relation to that transaction,

and the following provisions of this paragraph shall apply accordingly.
(2) The following provisions of this paragraph apply in any case where—

(a) there is a preparatory transfer to a successor company;

(b) the BBC disposes of any shares or securities of the successor company for a consideration in money or money's worth; and

(c) those shares or securities are shares or securities which were—

(i) held by or on behalf of the BBC immediately before the preparatory transfer takes effect, or

(ii) issued to or for the BBC at a time when the successor company is a wholly-owned subsidiary of the BBC,

and which have not previously been disposed of by the BBC.
(3) For the purposes of corporation tax on chargeable gains, neither a chargeable gain nor an allowable loss shall be regarded as arising to the BBC on the disposal mentioned in sub-paragraph (2)(b).
(4) If the consideration for the disposal mentioned in sub-paragraph (2)(b) consists of or includes a right to any variable deferred consideration, then, for the purposes of corporation tax on chargeable gains, neither a chargeable gain nor an allowable loss shall be regarded as arising to the BBC on the disposal of the right to the variable deferred consideration.
(5) In this paragraph "variable deferred consideration" means any consideration—

(a) which is not to be given until after the disposal mentioned in sub-paragraph (2)(b); and

(b) whose amount or value, as at the time when it is to be given, is not ascertainable at the time of that disposal.

No chargeable gain or allowable loss to arise on any disposal constituted by a direct disposal transfer
8.—(1) For the purposes of corporation tax on chargeable gains, neither a chargeable gain nor an allowable loss shall be regarded as arising to the BBC on any disposal constituted by a direct disposal transfer.
(2) If the consideration for a direct disposal transfer consists of or includes a right to any variable deferred consideration, then, for the purposes of corporation tax on chargeable gains, neither a chargeable gain nor an allowable loss shall be regarded as arising to the BBC on the disposal of the right to the variable deferred consideration.
(3) In this paragraph "variable deferred consideration", in the case of any direct disposal transfer, means any consideration—

(a) which is not to be given until after the direct disposal transfer; and

(b) whose amount or value, as at the time when it is to be given, is not ascertainable at the time of the disposal constituted by that transfer.

Chargeable gains: value shifting
9.—(1) Nothing in Part VI of this Act, and no instrument or agreement made, or other thing done, under or by virtue of that Part or for the purpose of initiating, advancing or facilitating the disposal by the BBC of—

(a) the whole or any part of the BBC transmission network, or

(b) any shares or securities of a successor company which are shares or securities which were—

(i) held by or on behalf of the BBC immediately before a preparatory transfer to the successor company takes effect, or

(ii) issued to or for the BBC at a time when the successor company is a wholly-owned subsidiary of the BBC,

and which have not previously been disposed of by the BBC,
shall be regarded as a scheme or arrangement for the purposes of section 30 of the Gains Act (value-shifting).
(2) In any case where—

(a) an asset which is the subject of a preparatory transfer has previously been the subject of a scheme or arrangements falling within subsection (1) of section 30 of the Gains Act,

(b) in consequence, subsection (5) of that section (consideration on disposal to be treated as increased for certain purposes) would, apart from sub-paragraph (3), have had effect in relation to the consideration for the preparatory transfer, and

1122

(c) the consideration for the preparatory transfer falls to be determined, for the purposes of corporation tax on chargeable gains, under paragraph 2,

sub-paragraph (3) shall apply.
(3) Where this sub-paragraph applies—

(a) subsection (5) of section 30 of the Gains Act shall not have effect in relation to the consideration for the preparatory transfer; but

(b) on the first subsequent disposal of the asset which is neither a preparatory transfer nor a group disposal—

(i) that subsection shall have effect in relation to the consideration for that disposal (whether or not it would otherwise have done so); and

(ii) the increase that falls to be made under that subsection shall be so calculated as to include any increase which would, but for paragraph (a) above, have fallen to be made in relation to the preparatory transfer.

(4) In this paragraph "group disposal" means a disposal which falls to be treated by virtue of section 171(1) of the Gains Act as made for a consideration such that no gain or loss accrues to the person making the disposal.
Chargeable gains: receipt of compensation or insurance money
10.—(1) Subsection (4) of section 23 of the Gains Act (adjustments where compensation or insurance money used for purchase of replacement asset) shall have effect in accordance with sub-paragraph (3) in any case where—

(a) there is a relevant transfer such that—

(i) a capital sum received by the BBC by way of compensation for the loss or destruction of an asset, or under a policy of insurance of the risk of the loss or destruction of an asset, becomes available to the transferee; or

(ii) a right of the BBC to receive such a sum is transferred to the transferee, and the transferee receives that sum; and

(b) the transferee acquires an asset in circumstances where—

(i) had there been no such relevant transfer, and

(ii) had the BBC acquired the asset by the application of that sum,

the BBC would be treated for the purposes of that subsection as having so acquired the asset in replacement for the asset lost or destroyed.
(2) Subsection (5) of that section (adjustments where a part of any compensation or insurance money is used for the purchase of a replacement asset) shall have effect in accordance with sub-paragraph (3) in any case where—

(a) there is a relevant transfer such that—

(i) a capital sum received by the BBC by way of compensation for the loss or destruction of an asset, or under a policy of insurance of the risk of the loss or destruction of an asset, becomes available to the transferee; or

(ii) a right of the BBC to receive such a sum is transferred to the transferee, and the transferee receives that sum; and

(b) the transferee acquires an asset in circumstances where—

(i) had there been no such relevant transfer, and

1123

(ii) had the BBC acquired the asset by the application of all of that sum except for a part which was less than the amount of the gain (whether all chargeable gain or not) accruing on the disposal of the asset lost or destroyed,

the BBC would be treated for the purposes of that subsection as having so acquired the asset in replacement for the asset lost or destroyed.
(3) In a case falling within sub-paragraph (1) or (2) of this paragraph, subsection (4) or, as the case may be, subsection (5) of section 23 of the Gains Act shall have effect as if the transferee and the BBC were the same person, except that—

(a) in a case falling within sub-paragraph (1)(a)(i) or (2)(a)(i)—

(i) any claim under the subsection in question must be made by the BBC and the transferee; and

(ii) any adjustment to be made in consequence of paragraph (a) of that subsection shall be made for the purposes only of the taxation of the BBC; and

(b) in a case falling within sub-paragraph (l)(a)(ii) or (2)(a)(ii)—

(i) any claim under the subsection in question must be made by the transferee; and

(ii) any adjustment to be made in consequence of paragraph (a) of that subsection shall be made for the purposes only of the taxation of the transferee.

Loan relationships: disposal of securities by BBC
11.—(1) This paragraph applies in any case where—

(a) there is a preparatory transfer to a successor company;

(b) the BBC disposes of any securities of the successor company for a consideration in money or money's worth; and

(c) those securities are securities issued to or for the BBC in consideration for the preparatory transfer.

(2) Where this paragraph applies, any debits or credits which, by reason of the disposal mentioned in sub-paragraph (1)(b), would, apart from this sub-paragraph, be given by Chapter II of Part IV of the Finance Act 1996 (loan relationships) in respect of a loan relationship for an accounting period of the BBC shall not be brought into account for the purposes of that Chapter as respects the BBC.
Transfer of trade: loss relief, and capital allowances
12.—(1) This paragraph applies in any case where, as a result of a relevant transfer,—

(a) the BBC ceases to carry on a trade; and

(b) the transferee begins to carry on that trade.

(2) Where this paragraph applies, section 343 of the Taxes Act 1988 (company reconstructions without change of ownership) shall not have effect in relation to the event described in sub-paragraph (1).
(3) Where this paragraph applies, the trade mentioned in sub-paragraph (1) shall not be treated as permanently discontinued nor a new trade as set up and commenced for the purpose of the allowances and charges provided for by the Capital Allowances Acts; but—

(a) there shall be made to or on the transferee in accordance with those Acts all such allowances and charges as would, if the BBC had continued to carry on the trade, have fallen to be made to or on it; and

1124

(b) the amount of any such allowance or charge shall be computed as if—

(i) the transferee had been carrying on the trade since the BBC began to do so; and

(ii) everything done to or by the BBC had been done to or by the transferee (but so that no sale or transfer which on the transfer of the trade is made to the transferee by the BBC of any assets in use for the purpose of the trade shall be treated as giving rise to any such allowance or charge).

(4) For the purposes of this paragraph—

(a) where, on the BBC ceasing to carry on a trade, a company begins to carry on the activities of the trade as part of its trade, then that part of the trade carried on by the company shall be treated as a separate trade, if the effect of so treating it is that this paragraph applies by virtue of sub-paragraph (1) on that event in relation to that separate trade; and

(b) where, on the BBC ceasing to carry on part of a trade, a company begins to carry on the activities of that part as its trade or part of its trade, the BBC shall be treated as having carried on that part of its trade as a separate trade if the effect of so treating it is that this paragraph applies by virtue of sub-paragraph (1) on that event in relation to that separate trade.

Capital allowances: industrial buildings and structures
13.—(1) This paragraph applies in any case where there is a relevant transfer of property which is, for the purposes of Part I of the Allowances Act (industrial buildings and structures), the relevant interest in relation to any expenditure incurred on the construction of a building or structure.
(2) Where this paragraph applies, the Secretary of State may by order make provision specifying, as respects the transferee, —

(a) the amount which is to be taken for the purposes of Part I of the Allowances Act to be the amount of the capital expenditure incurred on the construction of the building or structure; and

(b) the date which is to be taken for the purposes of that Part as the date on which the building or structure was first used.

(3) This paragraph shall not have effect in relation to any property if paragraph 12(3) has effect in relation to it.
Capital allowances: machinery and plant
14.—(1) For the purposes of Part II of the Allowances Act (capital allowances in respect of machinery and plant) property which is transferred to a successor company in accordance with a preparatory scheme shall be treated as if—

(a) it had been acquired by the successor company, for the purposes for which it is used by that company on and after the date on which the transfer of the property in accordance with the scheme takes effect, on that date; and

(b) capital expenditure of the prescribed amount had been incurred on that date by the successor company on the acquisition of the property for the purposes mentioned in paragraph (a).

(2) This paragraph shall not have effect in relation to any property if paragraph 12(3) has effect in relation to it.
Capital allowances: leased fixtures
15.—(1) This paragraph applies to any lease which is granted in pursuance of an obligation imposed by a provision contained in a preparatory scheme by virtue of paragraph 2(1)(g) of Schedule 5.
(2) Where the conditions in paragraphs (a) and (b) of subsection (1) of section 55 of the Allowances Act (expenditure incurred by incoming lessee: transfer of allowances) are fulfilled in relation to a lease to which this paragraph applies—

(a) the lessee shall be deemed for the purposes of Part II of that Act to have given as consideration for the lease a capital sum which falls to be treated for the purposes of that Part as expenditure on the provision of the fixture concerned;

(b) the amount of that capital sum shall be the prescribed amount; and

(c) subsection (4)(a) of that section shall be disregarded.

(3) Where the conditions in paragraphs (a), (c) and (d) of section 56 of the Allowances Act (expenditure incurred by incoming lessee: lessor not entitled to allowances) are fulfilled in relation to a lease to which this paragraph applies—

(a) the lessee shall be deemed for the purposes of Part II of that Act to have given as consideration for the lease a capital sum which falls to be treated for the purposes of that Part as expenditure on the provision of the fixture concerned; and

(b) the amount of that capital sum shall be the prescribed amount.

Capital allowances: connected persons
16. In Part II of the Allowances Act (machinery and plant) references to a transaction (however described) between connected persons within the meaning of section 839 of the Taxes Act 1988 shall not include references to a preparatory transfer.
Capital allowances: agricultural buildings
17.—(1) This paragraph applies in any case where there is a relevant transfer of property which is the relevant interest in relation to any expenditure for which the BBC would be entitled to an allowance under Part V of the Allowances Act (agricultural buildings etc) apart from section 128 of that Act (balancing allowances and charges).
(2) Where this paragraph applies—

(a) the acquisition of the relevant interest by the transferee shall, as respects the transferee, be treated for the purposes of Part V of the Allowances Act as a balancing event falling within subsection (1)(a) of section 129 of that Act (so that, in particular, subsection (3) of that section applies by reason of its occurrence); and

(b) it shall accordingly be assumed, as respects the transferee, that an election has been made under subsection (2) of that section (acquisition of relevant interest by another not to be a balancing event without an election under that subsection) with respect to the acquisition of the relevant interest by the transferee.

(3) Where this paragraph applies, subsection (3) of section 129 of the Allowances Act (entitlement of the new owner to allowances) shall, as respects the transferee, have effect with the following modifications, that is to say—

(a) the period which, by virtue of paragraph (a) of that subsection, is to be treated as if it were itself the writing-down period in which the allowances in respect of the expenditure in question were to be made shall be such period as the Secretary of State may by order specify; and

(b) the expenditure which, by virtue of paragraph (b) of that subsection, is to be treated as the expenditure in respect of which the transferee (as being the new owner, within the meaning of that section) is entitled to the allowances mentioned in
1126
that paragraph shall be equal to the prescribed amount (without any reduction or addition under that paragraph).

(4) This paragraph shall not have effect in relation to any property if paragraph 12(3) has effect in relation to it.
Corporation tax: BBC and successor company to be treated as one for certain purposes
18.—(1) If any property, rights or liabilities are transferred to a successor company in accordance with a preparatory scheme, then, subject to sub-paragraph (2), the following provisions shall apply for the purposes of the Corporation Tax Acts in their application in respect of any accounting period ending on or after the date on which the transfer takes effect, namely—

(a) any trade or part of a trade carried on by the BBC which is transferred in accordance with the preparatory scheme to the successor company shall be treated as having been, at the time of its commencement and at all times since that time, a separate trade carried on by that company;

(b) the trade or trades carried on by the successor company on and after the date on which the transfer takes effect shall be treated as the same trade or trades as that which, by virtue of paragraph (a), is treated as carried on before that date;

(c) all property, rights and liabilities of the BBC which are transferred in accordance with the scheme to the successor company shall be treated as having been, at the time when they became vested in the BBC and at all times since that time, property, rights and liabilities of that company; and

(d) anything done by the BBC in relation to property, rights and liabilities which are transferred to the successor company in accordance with the preparatory scheme shall be treated as having been done by that company.

(2) Sub-paragraph (1) shall not apply for the purposes of—

(a) corporation tax on chargeable gains,

(b) capital allowances, or

(c) relief for losses incurred in carrying on a trade,

and no provision included in a scheme by virtue of paragraph 4(2)(a) of Schedule 5 shall have effect for those purposes.
Corporation tax: no profit or loss under Case I of Schedule D by reason of a direct disposal transfer
19. In determining for the purposes of Case I of Schedule D the profits or gains or losses arising or accruing to the BBC, it shall be assumed that no profits or gains, and no losses, arise or accrue to the BBC by reason of a direct disposal transfer of—

(a) any trading stock, within the meaning of section 100 of the Taxes Act 1988, belonging to a trade carried on by the BBC;

(b) any right of the BBC to receive an amount which is for the purposes of corporation tax—

(i) an amount brought into account as a trading receipt of the BBC for any accounting period ending before the time when the transfer takes effect; or

(ii) an amount falling to be so brought into account if it is assumed, where it is not the case, that the accounting period of the BBC current on the day before the transfer takes effect ends immediately before that time; or

1127

(c) the whole or any part of the amount of a liability which falls for the purposes of corporation tax—

(i) to be brought into account as deductible in computing the profits of any trade carried on by the BBC for any accounting period ending before the time when the transfer takes effect; or

(ii) to be so brought into account if it is assumed, where it is not the case, that the accounting period of the BBC current on the day before the transfer takes effect ends immediately before that time.

Corporation tax: group relief
20.—(1) None of the following, namely—

(a) the existence of the powers of any Minister of the Crown or the BBC under Part VI of this Act or under the documents regulating the BBC,

(b) any direction given by a Minister of the Crown under that Part or those documents, so far as that direction relates to a transfer scheme or (in a case where there is a preparatory scheme) to the sale of shares or securities issued by the successor company, or

(c) any arrangements (of any kind, whether in writing or not) so far as relating to a transfer scheme or any such sale,

shall be regarded as constituting arrangements falling within subsection (1) or (2) of section 410 of the Taxes Act 1988 (arrangements for the transfer of a company to another group or consortium).
(2) Neither—

(a) the existence of the powers of any Minister of the Crown or the BBC under Part VI of this Act or under the documents regulating the BBC, nor

(b) any direction given as mentioned in sub-paragraph (1)(b),

shall be regarded as constituting option arrangements for the purposes of paragraph 5B of Schedule 18 to the Taxes Act 1988.
(3) Any reference in sub-paragraph (1) or (2) to the documents regulating the BBC is a reference to those documents only so far as they have effect in relation to a disposal by the BBC of—

(a) the whole or any part of the BBC transmission network, or

(b) any shares or securities of a successor company,

or the initiating, advancing or facilitating of any such disposal.
(4) In this paragraph "Minister of the Crown" has the same meaning as in the Ministers of the Crown Act 1975.
Corporation tax: leases at an undervalue
21.—(1) Section 35 of the Taxes Act 1988 (charge on lease granted at an undervalue) shall not apply in the case of any lease which, in accordance with a transfer scheme, is granted—

(a) to a company which is a transferee under that or any other transfer scheme, or

(b) by such a company to the BBC.

(2) Section 87 of the Taxes Act 1988 (taxable premiums) shall not apply where there is an amount which would have become chargeable in relation to any land but for sub-paragraph (1); and, accordingly, references to any such amount shall not be included in references in that section to the amount chargeable.
(3) In this paragraph "lease" has the same meaning as in Part II of the Taxes Act 1988.
Corporation tax: sale and lease-back
22.—(1) Section 779 of the Taxes Act 1988 (sale and lease-back: limitation on tax reliefs) shall not apply where the liability of the transferor or of the person associated with that transferor is as a result of—

(a) the creation, in accordance with a transfer scheme, of any interest or right in favour of a transferee or the BBC;

(b) any other transaction for which a transfer scheme provides; or

(c) the grant by a company which is a transferee under a transfer scheme ("the relevant company") to the BBC or to another company which is a transferee (whether under that or any other transfer scheme) of any interest or right, at a time when the relevant company remains a wholly-owned subsidiary of the BBC, in a case where the ability of the relevant company to grant that interest or right derives from the transfer to the company in accordance with a transfer scheme of an estate or interest in land.

(2) In this paragraph "transferor" has the same meaning as in section 779 of the Taxes Act 1988 and "associated" shall be construed in accordance with that section.
Corporation tax: sale of lease of land
23.—(l) Section 780 of the Taxes Act 1988 (sale and lease-back: taxation of consideration) shall not apply where—

(a) the assignment of the original lease, and

(b) the grant or assignment of the new lease,

each fall within sub-paragraph (2).
(2) The assignment of the original lease, or the grant or assignment of the new lease, falls within this sub-paragraph if—

(a) it is a relevant transfer; or

(b) it takes place between the BBC and a successor company at a time when the successor company remains a wholly-owned subsidiary of the BBC; or

(c) it takes place between two successor companies at a time when both remain wholly-owned subsidiaries of the BBC.

(3) The reference in sub-paragraph (1) to the assignment of the original lease and the grant or assignment of the new lease shall be construed in accordance with section 780 of the Taxes Act 1988 and sub-paragraph (2) shall be construed accordingly.
Corporation tax: leased assets
24.—(1) For the purposes of section 781 of the Taxes Act 1988 (assets leased to traders and others) where the interest of the lessor or the lessee under a lease, or any other interest in an asset, is transferred in accordance with a transfer scheme to the BBC or a transferee, the transfer shall be treated as being effected without any capital sum having been obtained in respect of that interest by the BBC or the transferee.
(2) Section 782 of the Taxes Act 1988 (deduction of payment under leases: special cases) shall not apply to any payments made by the BBC or a company which is a transferee under a transfer scheme if the payments are made—

(a) under any lease created in favour of the BBC or such a company by virtue of, or in pursuance of an obligation imposed by, a provision contained in a transfer scheme by virtue of paragraph 2 of Schedule 5; or

1129

(b) under any lease—

(i) which is granted to or by a successor company at a time when it remains a wholly-owned subsidiary of the BBC; and

(ii) which is a lease of an asset which at any time before the creation of the lease was used by the BBC for the purposes of a trade carried on by the BBC and which was, when so used, owned by the BBC.

(3) In this paragraph "lease" and "asset" have the meaning given by section 785 of the Taxes Act 1988.
Stamp duty
25.—(1) Stamp duty shall not be chargeable on any agreement or instrument to the extent that it is certified by the Secretary of State to the Commissioners of Inland Revenue as being—

(a) a restructuring scheme,

(b) a restructuring scheme modification agreement, or

(c) an instrument giving effect to a restructuring scheme modification agreement,

or as having been made in accordance with, or in pursuance of an obligation imposed by, a restructuring scheme.
(2) No agreement or instrument which is certified as mentioned in sub-paragraph (1) shall be taken to be duly stamped unless—

(a) it is stamped with the duty to which it would be liable, apart from that sub-paragraph; or

(b) it has, in accordance with section 12 of the Stamp Act 1891, been stamped with a particular stamp denoting that it is not chargeable with that duty or that it is duly stamped.

(3) Section 12 of the Finance Act 1895 (collection of stamp duty in cases of property vested by Act or purchased under statutory power) shall not operate to require—

(a) the delivery to the Commissioners of Inland Revenue of a copy of this Act, or

(b) the payment of stamp duty under that section on any copy of this Act,

and shall not apply in relation to any instrument on which, by virtue of the preceding provisions of this paragraph, stamp duty is not chargeable.
(4) In this paragraph—
"restructuring scheme modification agreement" means a modification agreement, so far as relating to a restructuring scheme;
"restructuring scheme" means a preparatory scheme, so far as it provides for the transfer of property, rights or liabilities in accordance with the scheme—

(a) from the BBC to a wholly-owned subsidiary of the BBC;

(b) to the BBC from a wholly-owned subsidiary of the BBC; or

(c) from one wholly-owned subsidiary of the BBC to another.

Stamp duty reserve tax
26.—(1) An agreement to transfer chargeable securities, as defined in section 99 of the Finance Act 1986, from the BBC to a wholly-owned subsidiary of the BBC shall not give rise to a charge to stamp duty reserve tax if the agreement is made for the purposes of, or for purposes connected with, a restructuring scheme.
(2) An agreement shall not give rise to a charge to stamp duty reserve tax if the agreement is a restructuring scheme modification agreement.
(3) In this paragraph "restructuring scheme" and "restructuring scheme modification agreement" have the same meaning as in paragraph 25.
Modifications of transfer schemes
27.—(1) If the effect of any transfer scheme is modified in pursuance of a modification agreement, then the Corporation Tax Acts and this Schedule, other than paragraphs 25 and 26, shall have effect as if—

(a) the scheme originally made had been the scheme as modified; and

(b) anything done by or in relation to the person who without the modification became entitled or subject in accordance with the scheme to any property, rights or liabilities had, so far as relating to the property, rights or liabilities to which another person becomes entitled or subject in consequence of the modification, been done by or in relation to that other person.

(2) If, in a case falling within sub-paragraph (1), the transfer scheme, as originally made, was a preparatory scheme, the scheme as modified shall be taken to be a preparatory scheme, whether or not any company which was a wholly-owned subsidiary of the BBC at the time when the preparatory scheme took effect remains a wholly-owned subsidiary of the BBC at the time when the modification takes effect.
Orders
28.—(1) The Secretary of State shall not make an order under this Schedule in relation to any transferee under a transfer scheme except—

(a) with the consent of the Treasury;

(b) after consultation with the BBC; and

(c) if the transferee is not a wholly-owned subsidiary of the BBC, after consultation with the transferee.

(2) Any power of the Secretary of State to make an order under this Part of this Schedule—

(a) shall be exercisable by statutory instrument; and

(b) shall include power to make different provision for different cases, including different provision in relation to different assets or descriptions of assets.'.

Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 265.
Moved, That the House do agree with the Commons in their Amendment No. 265.—(Lord Inglewood.)
[Amendment No. 265A, as an amendment to Commons Amendment No. 265, not moved.]
On Question, Commons Amendment No. 265 agreed to.
COMMONS AMENDMENTS
266 Schedule 6, page 124, leave out lines 4 to 14.
267 Page 124, line 30, leave out 'to (7)'.
268 Page 124, line 46, leave out from beginning to end of line 7 on page 125.
269 Page 125, line 45, leave out from beginning to end of line 16 on page 126.
270 After Schedule 6, insert the following new Schedule—
'SCHEDULE
AMENDMENTS OF COPYRIGHT, DESIGNS AND PATENTS ACT 1988 RELATING TO CABLE PROGRAMME SERVICES.
1. For section 73 of the Copyright, Designs and Patents Act 1988 there is substituted—
"Reception and re-transmission of broadcast in cable programme service
73.—(1) This section applies where a broadcast made from a place in the United Kingdom is, by reception and immediate re-transmission, included in a cable programme service.
(2) The copyright in the broadcast is not infringed—

(a) if the inclusion is in pursuance of a relevant requirement, or

(b) if and to the extent that the broadcast is made for reception in the area in which the cable programme service is provided and forms part of a qualifying service.

(3) The copyright in any work included in the broadcast is not infringed if and to the extent that the broadcast is made for reception in the area in which the cable programme service is provided; but where the making of the broadcast was an infringement of the copyright in the work, the fact that the broadcast was re-transmitted as a programme in a cable programme service shall be taken into account in assessing the damages for that infringement.
(4) Where—

(a) the inclusion is in pursuance of a relevant requirement, but

(b) to any extent, the area in which the cable programme service is provided ("the cable area") falls outside the area for reception in which the broadcast is made ("the broadcast area"),

the inclusion in the cable programme service (to the extent that it is provided for so much of the cable area as falls outside the broadcast area) of any work included in the broadcast shall, subject to subsection (5) be treated as licensed by the owner of the copyright in the work, subject only to the payment to him by the person making the broadcast of such reasonable royalty or other payment in respect of the inclusion of the broadcast in the cable programme service as may be agreed or determined in default of agreement by the Copyright Tribunal.
(5) Subsection (4) does not apply if, or to the extent that, the inclusion of the work in the cable programme service is (apart from that subsection) licensed by the owner of the copyright in the work.
(6) In this section "qualifying service" means, subject to subsection (8), any of the following services—

(a) a regional or national Channel 3 service,

(b) Channel 4, Channel 5 and S4C,

(c) the teletext service referred to in section 49(2) of the Broadcasting Act 1990,

(d) the service referred to in section 57(1A)(a) of that Act (power of S4C to provide digital service), and

(e) the television broadcasting services and teletext service of the British Broadcasting Corporation;

and expressions used in this subsection have the same meaning as in Part I of the Broadcasting Act 1990.
(7) In this section "relevant requirement" means a requirement imposed under—

(a) section 78A of the Broadcasting Act 1990 (inclusion of certain services in local delivery services provided by digital means), or

1132

(b) paragraph 4 of Part III of Schedule 12 to that Act (inclusion of certain services in diffusion services originally licensed under the Cable and Broadcasting Act 1984).

(8) The Secretary of State may by order amend subsection (6) so as to add any service to, or remove any service from, the definition of "qualifying service".
(9) The Secretary of State may also by order—

(a) provide that in specified cases subsection (3) is to apply in relation to broadcasts of a specified description which are not made as mentioned in that subsection, or

(b) exclude the application of that subsection in relation to broadcasts of a specified description made as mentioned in that subsection.

(10) Where the Secretary of State exercises the power conferred by subsection (9)(b) in relation to broadcasts of any description, the order may also provide for subsection (4) to apply, subject to such modifications as may be specified in the order, in relation to broadcasts of that description.
(11) An order under this section may contain such transitional provision as appears to the Secretary of State to be appropriate.
(12) An order under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
Royalty or other sum payable in pursuance of section 73(4).
73A.—(1) An application to settle the royalty or other sum payable in pursuance of subsection (4) of section 73 (reception and re-transmission of broadcast in cable programme service) may be made to the Copyright Tribunal by the copyright owner or the person making the broadcast.
(2) The Tribunal shall consider the matter and make such order as it may determine to be reasonable in the circumstances.
(3) Either party may subsequently apply to the Tribunal to vary the order, and the Tribunal shall consider the matter and make such order confirming or varying the original order as it may determine to be reasonable in the circumstances.
(4) An application under subsection (3) shall not, except with the special leave of the Tribunal, be made within twelve months from the date of the original order or of the order on a previous application under that subsection.
(5) An order under subsection (3) has effect from the date on which it is made or such later date as may be specified by the Tribunal."
2.—(1) Section 134 of that Act (licences in respect of works included in re-transmissions) is amended as follows.
(2) At the beginning of subsection (1) there is inserted "Subject to subsection (3A)".
(3) After subsection (3) there is inserted—
"(3A) This section does not apply in relation to any application under section 73A (royalty or other sum payable in pursuance of section 73(4))."
3. In section 149 of that Act (jurisdiction of Copyright Tribunal) before paragraph (a) there is inserted—
"(za) section 73 (determination of royalty or other remuneration to be paid with respect to re-transmission of broadcast including work);".
4. In section 205B of that Act (jurisdiction of Copyright Tribunal under Part II) after paragraph (c) there is inserted—
"(cc) paragraph 19 of Schedule 2 (determination of royalty or other remuneration to be paid with respect to re-transmission of broadcast including performance or recording);".
5. For paragraph 19 of Schedule 2 to that Act there is substituted—
"Reception and re-transmission of broadcast in cable programme service
19.—(1) This paragraph applies where a broadcast made from a place in the United Kingdom is, by reception and immediate re-transmission, included in a cable programme service.
(2) The rights conferred by Part II in relation to a performance or recording included in the broadcast are not infringed if and to the extent that the broadcast is made for reception in the area in which the cable programme service is provided; but where the making of the broadcast was an infringement of those rights, the fact that the broadcast was re-transmitted as a programme in a cable programme service shall be taken into account in assessing the damages for that infringement.
(3) Where—

(a) the inclusion is in pursuance of a relevant requirement, but

(b) to any extent, the area in which the cable programme service is provided ("the cable area") falls outside the area for reception in which the broadcast is made ("the broadcast area"),

the inclusion in the cable programme service (to the extent that it is provided for so much of the cable area as falls outside the broadcast area) of any performance or recording included in the broadcast shall, subject to sub-paragraph (4), be treated as licensed by the owner of the rights conferred by Part II in relation to the performance or recording, subject only to the payment to him by the person making the broadcast of such reasonable royalty or other payment in respect of the inclusion of the broadcast in the cable programme service as may be agreed or determined in default of agreement by the Copyright Tribunal.
(4) Sub-paragraph (3) does not apply if, or to the extent that, the inclusion of the work in the cable programme service is (apart from that sub-paragraph) licensed by the owner of the rights conferred by Part II in relation to the performance or recording.
(5) The Secretary of State may by order—

(a) provide that in specified cases sub-paragraph (2) is to apply in relation to broadcasts of a specified description which are not made as mentioned in that sub-paragraph, or

(b) exclude the application of that sub-paragraph in relation to broadcasts of a specified description made as mentioned in that sub-paragraph.

(6) Where the Secretary of State exercises the power conferred by sub-paragraph (5)(b) in relation to broadcasts of any description, the order may also provide for sub-paragraph (3) to apply, subject to such modifications as may be specified in the order, in relation to broadcasts of that description.
(7) An order under this paragraph may contain such transitional provision as appears to the Secretary of State to be appropriate.
(8) An order under this paragraph shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(9) Expressions used in this paragraph have the same meaning as in section 73."
6. After paragraph 19 of Schedule 2 to that Act there is inserted—
"19A.—(1) An application to settle the royalty or other sum payable in pursuance of sub-paragraph (3) of paragraph 19 may be made to the Copyright Tribunal by the owner of the rights conferred by Part II or the person making the broadcast.
(2) The Tribunal shall consider the matter and make such order as it may determine to be reasonable in the circumstances.
(3) Either party may subsequently apply to the Tribunal to vary the order, and the Tribunal shall consider the matter and make such order confirming or varying the original order as it may determine to be reasonable in the circumstances.
(4) An application under sub-paragraph (3) shall not, except with the special leave of the Tribunal, be made within twelve months from the date of the original order or of the order on a previous application under that sub-paragraph.
(5) An order under sub-paragraph (3) has effect from the date on which it is made or such later date as may be specified by the Tribunal."'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 266 to 270.
Moved, That the House do agree with the Commons in their Amendments Nos. 266 to 270.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
271 Schedule 7, page 126, line 38, after 'paragraph (b)' insert—'(i)"
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 271. In speaking to this amendment I should like to speak also to Amendments Nos. 272 and 274. These amendments relate to quality. Section 2 of the 1990 Act requires the ITC, inter alia, to ensure that, taken as a whole, the services that it licenses are of high quality and calculated to appeal to a wide variety of tastes and interests. Within that general remit, there are specific statutory arrangements spelling out the criteria to be applied in granting particular categories of licence. These take account of the very different circumstances of different licence categories.
The Bill is designed to give digital terrestrial services a fair opportunity to compete with cable and satellite. The regime applying to them is rightly more relaxed than that applying to the scarce analogue terrestrial frequencies, which still command the lion's share of national television audience. The general duties in the 1990 Act which I mentioned at the beginning will be applied by the Bill to the new digital programme services. This is what is secured by these amendments. Under the Bill the regulators will be free to take account of quality considerations in assessing just how likely a particular programme package proposed by a multiplex applicant is to appeal to viewers and listeners and thereby promote their take-up of digital receiving equipment. Similarly, quality considerations can be taken into account in considering as the market develops the acceptability of any licence variations relating to programming which a multiplex operator may propose. In the Government's view, this strikes the right balance between the need to ensure that the market can prosper and the need to allow the regulators to avoid any danger of a flood of low-quality or stale programming. I commend the amendment to the House.
Moved, That the House do agree with the Commons in their Amendment No. 271.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
272 Schedule 7, page 126, line 39, at end insert—
'(ii) after "television programme services" there is inserted "and multiplex services (as defined by section 1(1) of that Act), and
(iii) for "such services" there is substituted "television programme services.'.
273 Page 127, line 7, at end insert—
'. In section 72 of the 1990 Act (local delivery services), in subsection (2) —
(a) after paragraph (c) there is inserted—
"(cc) any digital programme service (as defined by section 1(4) of the Broadcasting Act 1996);", and.
(b) at the end there is inserted "and
(f) any digital sound programme service (as defined by section 34(5) of the Broadcasting Act 1996)." '.
274 Page 127, line 27, at end insert 'digital sound programme'.
275 Page 127, line 33, at end insert—
'.In section 112 of the 1990 Act (licensable sound programme services), in subsection (2)(a), after "sound broadcasting service" there is inserted "or a radio multiplex service (as defined by section 34(1) of the Broadcasting Act 1996)".'.
276 Page 127, line 36, at end insert—
'. In section 176 of the 1990 Act (duty to provide advance information about programmes), in subsection (7), in the first column of the table—

(a) after "Welsh Authority" there is inserted "and the service referred to in section 57(1A)(a)", and

(b) after "Radio Authority" there is inserted ", any simulcast radio service (within the meaning of Part II of the Broadcasting Act 1996), and any national digital sound programme service (within the meaning of that Part of that Act) subject to regulation by the Radio Authority" '.

277 Page 127, line 49, at end insert—
'10A. In section 33 of the 1990 Act (conditions requiring holder of Channel 3 or Channel 5 licence to deliver licensed service) in subsection (3) after "subsection (1)" there is inserted "or section 21A(3) or (4)".'.
278 Page 127, line 49, at end insert—
'10B.—(1) Section 43 of the 1990 Act (domestic and non-domestic satellite services) is amended as follows.
(2) In subsection (3), after "shall", where first occurring, there is inserted "subject to subsection (3A)".
(3) After that subsection there is inserted—
"(3A) For the purposes of this Part, any non-domestic satellite service which is composed by, and transmitted for, a BBC company, a Channel 4 company or an S4C company—

(a) shall be regarded as provided by that company and not by the relevant broadcasting body (even if the relevant broadcasting body is in a position to determine what is to be included in the service), and

(b) shall be regarded as provided from a place in the United Kingdom."

(4) At the end of subsection (4) there is inserted—
"relevant broadcasting body" means—

(a) in relation to a BBC company, the BBC,

(b) in relation to a Channel 4 company, the Channel Four Television Corporation, and

1136

(c) in relation to an S4C company, the Welsh Authority."'.

279 Page 128, line 2, after 'inserted' insert 'a multiplex service (as defined by section 1(1) of the Broadcasting Act 1996),'.
280 Page 128, line 9, at end insert—
'13A.—(1) Section 84 of the 1990 Act (regulation by Radio Authority of independent radio services) is amended as follows.
(2) In subsection (3), after "shall", where first occurring, there is inserted "subject to subsection (3A)".
(3) After that subsection there is inserted—
"(3A) For the purposes of this Part, any satellite service which is composed by, and transmitted for, a BBC company, a Channel 4 company or an S4C company—

(a) shall be regarded as provided by that company and not by the relevant broadcasting body (even if the relevant broadcasting body is in a position to determine what is to be included in the service), and

(b) shall be regarded as provided from a place in the United Kingdom.

(3B) In subsection (3A) "relevant broadcasting body" means—

(a) in relation to a BBC company, the BBC,

(b) in relation to a Channel 4 company, the Channel Four Television Corporation, and

(c) in relation to an S4C company, the Welsh Authority."'.

281 Page 128, line 9, at end insert—
'. In section 188 of the 1990 Act (power to give broadcasting bodies etc. directions relating to international obligations), in subsection (2)(e), for "Broadcasting Standards Council" there is substituted "Broadcasting Standards Commission".'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 272 to 281. I have already spoken to these amendments.
Moved, That the House do agree with the Commons in their Amendments Nos. 272 to 281.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENT
282 Schedule 7, page 128, line 9, at end insert—
'. In section 202(1) of the 1990 Act (interpretation)—
(a) after the definition of "broadcast" there is inserted—
""a Channel 4 company" means—

(a) any body corporate which is controlled by the Channel Four Television Corporation, or

(b) any body corporate in which the Corporation or any body corporate falling within paragraph (a) above is (to any extent) a participant (as defined in paragraph 1(1) of Part I of Schedule 2);"

(b) in the definition of "connected", for "licence" there is substituted "person", and
(c) after the definition of "programme" there is inserted—
""an S4C company" means—

(a) any body corporate which is controlled by the Welsh Authority, or

1137

(b) any body corporate in which the Welsh Authority or any body corporate falling within paragraph (a) above is (to any extent) a participant (as defined in paragraph 1(1) of Part I of Schedule 2);"'.

MOTION MOVED ON CONSIDERATION OF COMMONS AMENDMENT No. 282
282A Page 45, line 5, leave out ("in relation to his additional services licence").
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 282, and do propose the above consequential amendment to the Bill.
Moved, That the House do agree with the Commons in their Amendment No. 282, as amended by Amendment No. 282A.—(Lord Inglewood.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
283 Schedule 7, page 128, line 9, at end insert—
'. In paragraph 2(1) of Schedule 1 to the 1990 Act (persons disqualified for membership of the Independent Television Commission), for paragraphs (c) and (d) there is substituted—
"or
(c) a member or employee of the Broadcasting Standards Commission."'.
284 Page 128, line 9, at end insert—
'. In paragraph 2(1) of Schedule 3 to the 1990 Act (persons disqualified for membership of the Channel Four Television Corporation), for paragraphs (d) and (e) there is substituted—
"or
(d) a member or employee of the Broadcasting Standards Commission."'.
285 Page 128, line 9, at end insert—
'. In paragraph 2(1) of Schedule 6 to the 1990 Act (persons disqualified for membership of the Welsh Authority), for paragraphs (b) and (c) there is substituted—
"or
(b) a member or employee of the Broadcasting Standards Commission."'.
286 Page 128, line 9, at end insert—
'. In paragraph 2(1) of Schedule 8 to the 1990 Act (persons disqualified for membership of the Radio Authority), for paragraphs (d) and (e) there is substituted—
"or
(d) a member or employee of the Broadcasting Standards Commission." '.
287 Page 128, line 22, at end insert—
'PART III
AMENDMENTS OF OTHER ENACTMENTS
The Welsh Development Agency Act 1975 (c. 70)
15. In section 19 of the Welsh Development Agency Act 1975 (the Agency and the media) in subsection (11)—

(a) in the definition of "the appropriate authority"—

(i) in paragraph (a), after "Act 1990" there is inserted "or Part I of the Broadcasting Act 1996", and

(ii) in paragraph (b), for "that Act" there is substituted "the Broadcasting Act 1990 or Part II of the Broadcasting Act 1996", and

1138

(b) in the definition of "relevant licence" for "(as the case may be) Part III of that Act" there is substituted "III of the Broadcasting Act 1990 or Part I or II of the Broadcasting Act 1996.")

The Representation of the People Act 1983 (c. 2)
16. In section 75 of the Representation of the People Act 1983 (prohibition of expenses not authorised by election agent), in subsection (1)(i) after "Broadcasting Act 1990" there is inserted "or Part I or II of the Broadcasting Act 1996".
17. In section 93 of the Representation of the People Act 1983 (broadcasting during elections), in subsection (1), for the paragraphs (a) and (b) inserted by paragraph 35(4)(a) of Schedule 20 to the 1990 Act there is substituted—

"(i) broadcast by the British Broadcasting Corporation or Sianel Pedwar Cymru, or

(ii) included in any service licensed under Part I or III of the Broadcasting Act 1990 or Part I or II of the Broadcasting Act 1996".

18. Without prejudice to the generality of section 20(2) of the Interpretation Act 1978, any reference in paragraph 16 or 17 to a provision of the Representation of the People Act 1983 includes a reference to that provision as applied by any regulations made under paragraph 2 of Schedule 1 to the European Parliamentary Elections Act 1978.
The Copyright, Designs and Patents Act 1988 (c. 48)
19. In section 69 of the Copyright, Designs and Patents Act 1988 (recording for purposes of supervision and control of broadcasts and cable programmes), for subsections (2) and (3) there is substituted—
"(2) Copyright is not infringed by anything done in pursuance of—

(a) section 11(1), 95(1) or 167(1) of the Broadcasting Act 1990 or section 95(4) or (6), 96(5) or 97 of the Broadcasting Act 1996;

(b) a condition which, by virtue of section 11(2) or 95(2) of the Broadcasting Act 1990, is included in a licence granted under Part I or III of that Act or Part I or II of the Broadcasting Act 1996; or

(c) a direction given under section 109(2) of the Broadcasting Act 1990 (power of Radio Authority to require production of recordings etc).

(3) Copyright is not infringed by—

(a) the use by the Independent Television Commission or the Radio Authority, in connection with the performance of any of their functions under the Broadcasting Act 1990 or the Broadcasting Act 1996, of any recording, script or transcript which is provided to them under or by virtue of any provision of those Acts; or

(b) the use by the Broadcasting Standards Commission, in connection with any complaint made to them under the Broadcasting Act 1996, of any recording or transcript requested or required to be provided to them, and so provided, under section 95(4) or (6) or 96(5) of that Act."

20. In Schedule 2 to the Copyright, Designs and Patents Act 1988 (rights in performances: permitted acts), in paragraph 17 for sub-paragraphs (2) and (3) there is substituted—
"(2) The rights conferred by Part II are not infringed by anything done in pursuance of—

(a) section 11(1), 95(1) or 167(1) of the Broadcasting Act 1990 or section 95(4) or (6), 96(5) or 97 of the Broadcasting Act 1996;

(b) a condition which, by virtue of section 11(2) or 95(2) of the Broadcasting Act 1990, is included in a licence granted under Part I or III of that Act or Part I or II of the Broadcasting Act 1996; or

1139

(c) a direction given under section 109(2) of the Broadcasting Act 1990 (power of Radio Authority to require production of recordings etc).

(3) The rights conferred by Part II are not infringed by—

(a) the use by the Independent Television Commission or the Radio Authority, in connection with the performance of any of their functions under the Broadcasting Act 1990 or the Broadcasting Act 1996, of any recording, script or transcript which is provided to them under or by virtue of any provision of those Acts; or

(b) the use by the Broadcasting Standards Commission, in connection with any complaint made to them under the Broadcasting Act 1996, of any recording or transcript requested or required to be provided to them, and so provided, under section 95(4) or (6) or 96(5) of that Act." '.

288 Schedule 8, page 128, line 24, at end insert—
'PART I
ENACTMENTS REPEALED'.
289 Page 128, line 45, column 3, at end insert—
'In section 32, in subsection (9), paragraph (b) and the word "and" immediately preceding it, in subsection (10) the words from 'and for this purpose' onwards and in subsection (13)(a), the word "and".'
290 Page 128, line 47, column 3, at end insert—
'In section 72(2)(d), the word "and".'.
291 Page 129, line 1, column 3, at end insert—
("Section 104(5) and (6)(a).")
292 Page 129, line 9, column 3, leave out 'paragraph 1(4)' and insert—
'paragraphs 1(4) and 2(2) and (3)'.
293 Page 129, line 11, column 3, at end insert—
'and paragraph 5(c) and (d)'.
294 Page 129, line 13, column 3, at end insert—
'In Schedule 20, paragraph 50.'
295 Page 129, line 13, at end insert—
'PART II
SUBORDINATE LEGISLATION REVOKED

Number

Title

Extent of revocation

S.I. 1991/1176.

The Bro adcasting (Restrictions on the Holding of Licences) Order 1991.

Article 2, and Parts II, III and IV.

S.I. 1991/1246.

The Cable (Excepted Programmes) Order 1991.

The whole order.

S.I. 1993/3199.

The Bro adcasting (Restrictions on the Holding of Licences) (Amendment) Order 1993.

The whole order.

S.I. 1995/1924.

The Bro adcasting (Restrictions on the Holding of Licences) (Amendment) Order 1995.

The whole order.

296 In the Title, line 6, after 'interest' insert 'to amend in other respects the law relating to the provision of television and sound programme services'.
Lord Inglewood: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 283 to 296. I have already spoken to these amendments.
Moved, That the House do agree with the Commons in their Amendments Nos. 283 to 296.—(Lord Inglewood.)
On Question, Motion agreed to.

Armed Forces Bill
7.42 p.m.
Baroness Trumpington: My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Armed Forces Bill, has consented to place her prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Bill read a third time.
Clause 2 [Enlistment or entry for local service]:
Lord Judd Lord Judd moved Amendment No. 1:
Page 2, line 13, at end insert—
("(3) Within 6 months of the coming into force of this section the Secretary of State shall, before proceeding to any further replacement of Ministry of Defence police, lay before both Houses of Parliament a report relating to the outcome of any pilot projects for alternative arrangements under subsection (1) for duties which have been undertaken by Ministry of Defence police.
(4) No proposal for alternative arrangements under subsection (1) for duties which have been undertaken by Ministry of Defence police shall have effect unless it is confirmed by order made by statutory instrument and subject to approval by resolution of both Houses of Parliament.").
The noble Lord said: My Lords, perhaps I may say at the outset that these amendments are the same as those we tabled on Report. We did not press them to a Division at that stage because we believed that it was important to give the Government and the Minister time to consider the arguments and the substance of the amendments in the hope that we might receive reassuring positive answers this evening. We shall be listening most attentively, because we want to be able to leave the Chamber reassured.
Clause 2 deals with what could be in danger of becoming—I hope that I am not unkind—a sort of "Dad's Army", with second class conditions of service but with potential for duties way beyond what is initially described. Anyone enlisting in that organisation should be wary of buying a pig in a poke. Nowhere is that better illustrated than by the fact that the homework does not yet seem to have been completed, even as to what will happen about pensions. If, for example, a regular soldier leaves the normal Army, with expectations of a certain pension, and enlists in this new-fangled organisation at a lower rate of pay, what will then happen to his pension, because of course he will be part of the Army in this new organisation?
I believe that it is fair to say that the proposal that we are considering in Clause 2 is more marked by the uncertainties which arise from it than from any certainties. The amendment is concerned with the military local service engagements for which the Government are preparing, and for the military provost guard service.
It is clear that if the Bill goes through in its present form, we shall have given the power to the Executive as to whether or not this new organisation is brought into existence. There can be no argument about that. Ministers may reassure us that they will come back and consult and enable us to have debates, but the Bill will entitle the Executive to make the decisions. The House should have no uncertainty about that. It is clear that that is what we are doing.
Therefore we are looking to the Minister tonight for convincing evidence that there will be no question of the Government proceeding if the pilot projects—as they have been described—give any grounds for anxiety about the scheme, and that there will be a chance for both Houses to express their views and to consider in some detail what has been experienced in the course of those pilot projects.
Perhaps I may be permitted briefly to mention some of the issues upon which we should be glad to have reassurance from the Minister this evening. First, what correspondence has he received from the Chief Constable of the MoD Police on the future viability of the reduced police force which will result from the new scheme? What was it that the Chief Constable had to say about it all?
Secondly, what will really be the basis for what the Government have described as this one-for-one replacement of present members of the MoD Police by members of the new MPGS? I ask that because the more I have gone into the matter, the clearer it becomes that, whatever the Minister may in good faith be saying, it is difficult to find any member of the MoD Police in the country who is doing guarding duties alone. Almost all of them are caught up in wider police activities. So just how is the calculation being made of what is one-for-one in terms of replacing guarding duties by members of this new organisation?
Next, Chilwell is one of the places that has been chosen for the experiment. But am I right in believing that Chilwell was chosen for the experiment before the
1142
decision was made and confirmed and the process under way for the Army Technical Services Agency to move into Chilwell, bringing with it 1,000 new civilian jobs, plus the civilian element of the Royal Engineers? In the new context of the reality of what Chilwell will become in those new situations, does it still make sense as a place in which to undertake a pilot project of that kind?
Then, what about the anxieties which exist about the whole issue of the remoteness of the mobile area MoD Police units, how long they will take to be on the spot if they are needed in support? How definite and firm are the arrangements with the local civilian police, should their support be needed in the short term? On that of course there are cost elements about which in a wider context the House should be concerned, because are we potentially shifting some of the responsibility for guaranteeing the policing of communities and the rest from what has been a de facto responsibility of the MoD Police onto the civilian police, so that we are putting responsibility for what had been defence tasks onto other elements of public expenditure?
Then there is the related issue about how the new MPGS will operate in the wider areas surrounding the bases. Only today I was involved in conversations which informed me that in the Nottingham area there is a great deal of anxiety about the matter. In communities which may not be largely defence-oriented we may see armed soldiers in Army vehicles touring civilian areas. Have local populations been prepared for that? What are the implications of it? Those are the kind of worries which we all have about the quality of life and about people's expectations on the mainland of the United Kingdom.
If the MPGS is drawn in to wider activities—I hazard a guess that sooner or later it will be drawn in one way or another—what will be the redress of the public if the public have complaints? I have raised that matter before, but we have not had a satisfactory answer. If the Ministry of Defence Police do something about which a member of the public wishes to complain, the Police Complaints Authority has jurisdiction over the MoD Police. However, the Police Complaints Authority will not have jurisdiction over the members of the MPGS. We need to have firm assurances from the Minister about that.
In the Minister's courteous way, he and his officials have been at pains to have meetings to try to explain the issues. I am grateful for that. Tonight it is important that the noble Earl tries to get convincing answers on the record in this Chamber. However well-intentioned was his full letter to me of a few days ago about some of the matters raised, I must give him notice that among some of those immediately concerned the letter raised more anxieties than it provided answers. I believe that during the course of the pilot projects and so forth he will hear a good deal more about some of the points made in the letter. What he believes to be the situation on the ground is not how it is seen by those immediately involved. I beg to move.
Lord Mayhew: My Lords, we on these Benches support the amendment and look forward to hearing the Minister's answers to the pertinent questions asked by the noble Lord, Lord Judd. We have been over much of

1143
the ground before and I shall content myself by asking a single simple question. Will the Minister assure the House that he will not give a go-ahead to other pilot schemes before the existing pilot schemes have been completed and properly assessed? I ask the Minister for that simple assurance, which I am sure he can give me.
Earl Attlee: My Lords, I remind the House that I have an interest in this matter. The noble Lord, Lord Judd, questioned the Minister about the wider duties of the MPGS. Perhaps I may remind the Minister that during our debate on the Defence Estimates last Friday I asked him whether the MPGS would be used for patrolling against mortar baseplate locations. I hope that he can give a definite answer to that question which is causing a great deal of concern.
The noble Lord, Lord Judd, referred also to the plans to move ATSA to Chilwell. He raised an important point. Perhaps the Minister should look at a more suitable location or a trial.
The Parliamentary Under-Secretary of State, Ministry of Defence (Earl Howe): My Lords, on Report I congratulated the noble Lords, Lord Judd and Lord Redesdale, on their persistence in relation to Clause 2. They posed a formidable number of questions during our debate that evening. I answered a few of them then and I hope that the letters which I subsequently sent to the noble Lords reassured them on at least some of their other concerns. However, I note what was said by the noble Lord, Lord Judd, about my letter having raised further concerns beyond those which I was trying to cover. I recognise that it will be helpful today to place on the record the Government's position on some of those issues and I hope that the House will bear with me if I take a few minutes in doing so.
At the Report stage, the noble Lord, Lord Judd, expressed concern about whether we were intending to embark on a genuine pilot scheme or whether, once Clause 2 and the enabling regulations for military local service engagements had been enacted, the move to introduce the full Military Provost Guard Service scheme would be a fait accompli. He has repeated that worry tonight. I can assure your Lordships that the pilot scheme will be precisely that—and no more. The Army and the Government would have no interest in introducing the full MPGS scheme if the pilot scheme had proved to be a failure.
The undertakings which have been given to report to this House and to the Select Committee on Defence on the outcome of the pilot scheme bear repetition. I can also reassure noble Lords that there will be full consultation on the outcome of the pilot scheme before a decision is taken to proceed with the main scheme.
I was asked on Report whether I had seen a paper by the Defence Police Federation proposing what it considers to be the most cost-effective arrangements for the MPGS pilot scheme. I have only just seen a copy of that paper and have not had time to consider it fully. Indeed, I understand that the paper had not been completed when we had our last debate, so perhaps I
1144
should be congratulating the noble Lord, Lord Judd, on the quality of his inside information. I shall undertake to study it with due care.
However, in essence, the federation's paper contains two proposals. The first is that the introduction of MPGS and the withdrawal of Ministry of Defence Police from the pilot scheme sites should be phased, and that the MPGS should be monitored by some authority with specialist knowledge. The second is that Chilwell is an inappropriate site for the pilot scheme and that the Defence Animal Centre at Melton Mowbray would be a better choice.
One of the DPF's arguments for phasing the pilot scheme is that it would avoid the loss of 50 MDP officers through voluntary early retirement or voluntary early severance. However, as the consultative document issued on 29th May makes clear, we do not anticipate that any MDP voluntary early retirement or severance will be required as a result of either the pilot scheme or the main scheme. All MDP job losses resulting from the conversion of posts to MPGS should be covered by natural wastage.
In any case, to have members of both the Ministry of Defence Police and the Military Provost Guard Service simultaneously undertaking armed guarding duties at pilot scheme sites would not provide a sound basis for assessing the effectiveness of the MPGS. For such an assessment, the MPGS needs to take over the full guarding task at the pilot scheme sites from the outset.
As for the need for the pilot scheme to be monitored by a body with specialist knowledge, the Commander in Chief Land Command, who will be monitoring the scheme, meets this requirement precisely. He has overall responsibility for the guarding and security of Army establishments and has the necessary specialist staff to ensure that the Army's security requirements are met.
As I have already said, the Army has no interest in using the MPGS if it proves not to meet the requirement, and I can assure your Lordships that there is no question of our being anything other than open in reporting on the outcome of the pilot scheme.
As for the Defence Police Federation's suggestion that the Defence Animal Centre at Melton Mowbray would be a better pilot scheme site than Chilwell, I am afraid that we cannot agree with this. Melton Mowbray is guarded by full engagement regular soldiers and MoD Guard Service personnel, not MDP officers. MoD Guard Service guards cost a great deal less than MDP officers and there is no general financial or other case for using MPGS soldiers to replace them on unarmed guarding duties. The full engagement regular soldiers undertaking guarding at Melton Mowbray are complemented for other duties for which they would still be needed if the MPGS took over their guarding tasks.
In its paper, the federation continues to assert that the MDP at Chilwell fulfil a policing role. I assure your Lordships that the review at Chilwell has confirmed that MDP officers there are complemented for armed guarding duties. The civil constabulary requirement there is limited and can be met by an area policing team. Indeed, I am happy to be able to report that it has been agreed that an area policing team should be based at

1145
Chilwell. I should add that we are, of course, ready to listen to the arguments of the DPS on whether any of the posts at Chilwell are required for policing. Indeed, I repeat the assurance that I gave that that paper will be given full attention.
I know that the noble Lord, Lord Judd, is concerned about the ability of area police teams to cope with the demands which may be placed on them given the size of the areas which they will cover. It is worth noting that most defence establishments currently do not have an MDP presence and that at many establishments civil police requirements are met by the Home Department police. It is envisaged that the creation of area police teams will give the chief constable of the MDP more flexibility to provide a civil policing service throughout the department where required than has been possible hitherto.
Concern was expressed on Report that MPGS soldiers would get drawn into dealing with situations which required constabulary powers. Their position will be no different from that of full engagement regular soldiers, or indeed of members of the civilian MoD Guard Service, who detect incidents that require a police presence; that is, they will have to seek the assistance of a police officer. I should add that complaints by the public against members of the MPGS will be treated in exactly the same way as complaints against other service personnel, many of whom have of course long been engaged on armed guarding at the perimeters at service establishments. They will be investigated fully by the relevant service authorities. As now, members of the public will also have the right, depending on the nature of a complaint, to pursue it through the courts.
A further point raised by the noble Lord, Lord Judd, concerns the pension arrangements for MPGS personnel. MPGS soldiers will be offered membership of the Armed Forces Pension Scheme. Some detailed aspects of the application of the rules of the scheme need clarification and approval. However, we anticipate that former full engagement regulars will be able to carry forward into their new local service engagements any preserved pension earned in their previous service. I understand the importance of trying to ensure that we get this right and that we do not have pension arrangements which act as a disincentive to would-be recruits.
Concerns were also expressed on Report about MPGS initial training. The intention is that all those recruited directly from the services would undergo a four to six-day selection and induction course. We believe that most of them would have sufficient experience as military guards not to need further training. However, if the selection and induction course showed that further training was required, it would be provided. If necessary, the soldiers concerned would attend the whole of the MoD Guard Service course at Wethersfield and have additional firearms training. We will not cut corners over this.
It is of course true that if more ex-full engagement regulars required full training than we currently expect, training costs would increase above the level assumed
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in the investment appraisal. The effect would, however, be relatively minor. The break-even year would be unchanged.
Even if many more than 5 per cent. of the MPGS had to be recruited directly from civilian life, it would still not raise costs sufficiently to undermine the financial viability of the scheme. The break-even year would then be deferred by a year, to 2001–2002. However, we do not believe that this will happen, as we believe that the MPGS will attract sufficient ex-full engagement regulars to meet its needs.
The noble Lord, Lord Judd, asked about reserve commitments. I can confirm that MPGS soldiers will not incur any additional reserve liability from their MPGS service, whether they are ex-full engagement regulars or join directly from civilian life. Reserve liability resulting from previous regular service will run concurrently with MPGS employment. We see the task of MPGS soldiers in war as being to continue to guard their respective establishments; and they would therefore be put to the bottom of the list in the unlikely event that it became necessary to mobilise all ex-regular service personnel. This arrangement will have no significant effect on the Army's reserve capability.
The noble Lord, Lord Judd, referred this evening to armed military patrols off-base. If such patrols occur, they can take place only with the approval of the local chief constable. Therefore, I suggest to the noble Lord that there is a safeguard there. It is not something which will happen as a regular routine matter.
The noble Lord asked me also about what correspondence I had had from the chief constable of the MDP about our proposals. The chief constable has been party to our discussions on the MPGS scheme and he has expressed confidence in the future viability of the MDP. Once again I refer the noble Lord to the assurances which I gave at previous stages of the Bill about our firm wish to see the MDP remain as the viable and essential force that it is today.
The noble Lord, Lord Judd, referred specifically to Chilwell. The MPGS will be there to protect service personnel at Chetwynd Barracks. Policing will be undertaken by the MDP area policing team, as I have said already.
The noble Earl, Lord Attlee, asked me about patrols off-base. I apologise to him for not answering his question last Friday due to the time constraints. MPGS soldiers, like any other soldiers, will undertake general security patrols off-base as required by the unit's commanding officer. There is close co-operation with the local police in relation to security arrangements for the protection of defence property and personnel. Any armed patrolling by service personnel off-base takes place only if authorised specifically by the local chief constable. I am sure that noble Lords would not expect me to go into further details in what is, as I am sure the noble Earl will appreciate, a sensitive area.
I shall attempt to sum up the underlying concerns—these appear to be that the pilot scheme might not be conducted properly; or that Parliament might not have a proper opportunity to assess its outcome before that main scheme was introduced.

1147
I think that the first of these concerns is somewhat unfair to the Army; and to the Commander-in-Chief Land Command, who would be responsible for ensuring that a full, fair and comprehensive report was made. It would certainly be in the Army's interest to evaluate the pilot scheme properly, since it is Army personnel and property that the MPGS will be protecting. I have no doubts at all that they can be relied upon to do so. However, to make assurance doubly sure, my honourable friend Nicholas Soames and I personally intend to monitor the progress of the pilot scheme very closely. This will include receiving a full interim report at the end of the first year, which we could make available to Parliament, if it was considered that it would be useful to do so.
As to the second of those concerns, I am not sure what more I can say to reassure the noble Lord, Lord Judd, and the other proposers of this amendment. My honourable friend Nicholas Soames has promised a report on the outcome of the pilot scheme to the Select Committee on Defence and I have promised a report to this House. I have no doubt that those reports will be very thoroughly scrutinised; and that any problems or difficulties would be fully exposed.
However, we fully recognise the concerns which have been expressed here and in the other place. We equally recognise the need to take Parliament with us. If it was the wish of the House to debate the matter between the issue of the report on the outcome of the pilot scheme and beginning work to get a main scheme underway, that would of course be something we could discuss at the time.
If it would offer any further reassurance to noble Lords, I can tell them that I believe that a government might be open to the charge of having acted rashly, were they to choose to proceed with the main scheme in circumstances where Parliament had clearly demonstrated that it was unconvinced that it was right to do so. I imagine that the noble Lords might agree with that.
Lord Mayhew: My Lords, before the noble Earl sits down, perhaps he would be kind enough to give me the very simple reassurance that I asked for. I am sure that he will be able to do so. Can he confirm that no further pilot schemes will be started before all the monitorings and assessments of the scheme are carried out?
Earl Howe: My Lords, I tried to cover that point in my response. It is unthinkable that any further pilot schemes should be commenced—or, indeed the main scheme commenced—if the pilot scheme had not been fully evaluated and found to have been a success.
Lord Judd: My Lords, perhaps I may, first, make the observation that I always appreciate the optimism of the noble Earl that it will in fact fall to him and his honourable friend Mr. Soames to make the evaluation in a year's time. Of course, it will be those of us who find ourselves on this side of the House this evening who will be making that evaluation. Nevertheless, we
1148
listened carefully to the responsibilities which the Minister has placed upon us. No doubt we shall do our best to discharge them to the full.
I turn now to the very firm assurances which the Minister has given this evening, which we take most seriously. First, he said that there will be no question of proceeding if the pilot scheme is a failure. That, of course, is reassuring. Secondly, he said that there will be full consultation with all involved; that there will be an opportunity for Parliament to debate the matter, and that Parliament's views will be taken into account. In the light of such assurances I am prepared to withdraw my amendment.
However, I wish to make the following observation. I believe that there is a constitutional issue at stake. It is not satisfactory that what is in fact happening is that we are giving the Executive a go-ahead on a scheme because, in the end, it will be the Executive who consults and the Executive who makes the decision. We are doing so before we have available to us the outcome of the pilot studies. As I said, that is not satisfactory. Nevertheless, the Minister is a man of great good faith; indeed, I am sure that no one in the House doubts that fact. We take what the Minister said seriously. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.15 p.m.
Clause 21 [Sex discrimination: Great Britain]:
Lord Judd Lord Judd moved Amendment No. 2:
Page 15, leave out lines 30 to 45 and insert—

("(9B) A complaint to which subsection (9A) applies may be presented to an industrial tribunal under section 63(1).
(9C) Nothwithstanding subsection (9B) of this section, a complaint to which subsection (9A) applies may be made to an officer under the service redress procedure applicable to the complainant.").
The noble Lord said: My Lords, in moving the above amendment I shall, with the leave of the House, speak also to Amendments Nos. 3 to 17. The amendments deal with those clauses in the Bill which cover issues of racial and sexual discrimination, grievances concerning equal pay, employment rights and industrial relations matters. The purpose of the amendments is to enable those with a complaint or grievance to go straight to a tribunal and not to make their access to a tribunal dependent upon first pursuing a complaint internally, which is what the Bill proposes.
In moving the amendment, perhaps I may re-emphasise—as, indeed, I did on Report—that there is no question but that we on this side of the House strongly favour the internal procedures. That is the way that you build a strong organisation. In that way an organisation can learn from its experiences. It is also a way to keep high morale; indeed, our amendments recognise that. However, what we do not understand is the Government's insistence on keeping the services special in terms of the right to go direct to a tribunal. If that right exists, it is a guarantee of the quality of the internal arrangements.
In my view, if the internal arrangements are working well, there is virtually no chance that anyone will want to go to a tribunal directly because those with a grievance or complaint will have confidence and would much prefer to see the matter settled internally rather than face the hassle and doubts about the future which would inevitably arise if the matter were dealt with outside. We believe that that is an unnecessary, self-imposed handicap on the future of the services. It will be good to hear tonight what the Minister has to say on the matter.
Perhaps I may briefly mention four specifics. First, in the Bill as proposed, we see a retreat on the provisions as they have so far operated in relation to the Sex Discrimination Act. Under those provisions it has been possible for someone to go straight to a tribunal. In the interests of consistency—and, of course, we see the importance of consistency—the Government are moving back from that position. That seems to us to constitute a loss. We believe that to be a pity.
Secondly, there remains the issue of the need to pursue up through the chain of command a complaint or grievance should it arise. The armed services have all the formality of a big organisation and that, inevitably, could be very intimidating for the person concerned. It also has the potential disadvantage that if it were decided at a later stage to take the matter to a tribunal, having first gone through the internal procedures, some of those with whom the complainant may have been pursuing the case could then become witnesses for the services. That seems to us to be a problem.
I suspect—indeed, I believe that I know—that the Minister will tell us tonight that there will be provision for other officers to move in so that, if there were a complaint about the particular officer, that officer would not be hearing a complaint against himself. But that does not deal with the issue of what happens if there is a general culture in a particular part of the armed services which is giving rise to concern. If there is a general cultural problem in a particular area, it seems to me that that right to be able to go to a tribunal becomes most important.
Then there is the issue of the oral hearing. I believe that the Minister misunderstood our case at an earlier stage, but I believe that he came to appreciate the grounds upon which we were arguing on Report. The important point about an oral hearing is that it enables the complainant, the person with the grievance, to hear the evidence against him and to cross-examine those concerned. Anything that the Minister can say on that subject will be most helpful.
Finally, I should like to make one point. I do so in the context of one who has become quite convinced that the services are taking extremely seriously the whole issue of racial discrimination; the need to tackle it and root it out. At this Third Reading stage, I should like to repeat what I said at an earlier stage of the proceedings. I believe that the handbook produced by the Adjutant General is a model; indeed, it is superb when one sees military language being employed to spell out what should be decent behaviour. It somehow puts all the
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academics and others into perspective. It is very clear and uncompromising language. All concerned, especially the Adjutant General, should be commended.
However, we know that there have been problems. I hope, therefore, that the Minister will realise that there is no room for complacency. The services are working to get it right. They are working with the Commission for Racial Equality, which thinks very highly of the endeavours that the services are making. I believe that we should look again just briefly, as we did in Committee, at the work being done at Glasgow University by Lieutenant-Colonel Crawford. The Minister will recall his research has revealed that, of the 103 service personnel who reported to him in his survey that they had been victims of racial discrimination, only 14 sought redress through official channels. Colonel Crawford himself comments, and I quote:
"This shows quite simply that the army's grievance procedure is not working".
We have to take that point very seriously, hence the background to our amendments. I beg to move.
Earl Attlee: My Lords, I have listened with interest to the amendment of the noble Lord, Lord Judd. We have heard the argument before and it is a good one. But I would like to introduce a consideration which perhaps the Minister finds a little difficult to introduce, and it is this.
Sometimes the course of action taken by soldiers is not perhaps the wisest one. I fear that, if they are able to complain outside the services' chain of command, there may be a danger that they will rush off and make a complaint. The organisation to which they have complained would then be able to accept that complaint and act on it. The whole matter could snowball out of all proportion. If a soldier has to go through the internal procedures for what may be a minor issue, the matter could perhaps be sorted out by an apology without the need to involve outside agencies.
I would also like to touch on the comments made by the noble Lord on race. It is a very important matter. He said that there were not many complaints under the redress of complaints procedure, and I am not surprised. The answer, therefore, for the services is actually to get rid of race discrimination themselves so that there is no need to go for redress of complaint.
Earl Howe: My Lords, I am grateful to both noble Lords who have spoken to this amendment. As the noble Lord, Lord Judd, has rightly indicated, Clauses 21 to 27 of the Bill essentially make provision for servicemen and women to submit complaints on certain matters to industrial tribunals. They also include a requirement for them to use the services' internal redress of complaint procedures before they may make application to the tribunal. The clauses ensure that, whatever the statutory basis for the complaint, the arrangements for access to tribunals will be on a consistent basis. The proposed amendments to Clauses 21 to 27 would remove the requirement for prior use of the internal service procedures.

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I have given further careful thought to the arguments which were put forward in Committee, and again at Report stage, which questioned the need for the mandatory prior use of the internal procedures.
I very much welcomed the assurance of the noble Lord, Lord Judd, that there was no dispute between us over the importance of these internal procedures for considering complaints. As he rightly added, the Equal Opportunities Commission and the Commission for Racial Equality also believe strongly that their use should be encouraged. I know that from my own dealings with those bodies. It is also perhaps worth noting here that the equal treatment directive refers to a right to pursue claims by judicial process,
"after possible recourse to other competent authorities".
However, there does seem to remain some misunderstanding about the internal procedures and, in particular, about the question of oral hearings.
I should start by saying that the internal procedures do not attempt to match the industrial tribunal procedures. The two systems serve quite different purposes. Industrial tribunals are a means of satisfying the requirement, under EU law, for an independent and judicial remedy in the event of complaints on such matters as equal treatment. The vast majority of complaints considered under the services' internal redress procedures are not such as to require this type of external scrutiny. However, for those that do, such as those concerning discrimination, the industrial tribunal hearing will now be available if the complainant is not satisfied with the decision under the internal system.
The internal redress system serves quite a different purpose. It is there to investigate complaints and to provide, where possible, a swift resolution. It is, essentially, a management tool, designed to help both managed and the manager. Generally speaking, therefore, it would not be appropriate to make a requirement for formal oral hearings to be a part of such a system. We have to be wary of making the procedure so full of formal stages as to be off-putting to would-be complainants.
Nevertheless, the internal system does provide for oral hearings if the case reaches the appropriate service board. It would simply not be practicable to have oral hearings at every stage of its progress through the chain of command. During such hearings the complainant will be able to question witnesses. The noble Lord, Lord Judd, was actually mistaken when he said during the debate on Report that that was not possible.
Once a complaint has reached the service board, the board must, in every case, decide whether an oral hearing would be appropriate and any request for a hearing made by the complainant would naturally be considered very carefully. The board will be fully aware that a subsequent industrial tribunal hearing will be able to question any decision not to hold a hearing and that, moreover, a complaint about the way a case has been handled internally can itself be added to the grounds of application to a tribunal.
If an oral hearing is held, the complainant must be given the opportunity to question any witnesses called. He or she will already have received copies of all the
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evidence which has been submitted to the board. Thus, board members and the complainant will be in exactly the same position.
This is, of course, as it should be. The board is seeking to establish the facts of the case and to provide a remedy if it finds that a wrong has occurred. The board does not constitute, as it were, "the other side" in a dispute with the complainant. The services' system is not adversarial. The purpose in calling witnesses is to clarify any points which are not sufficiently clear from the written evidence.
I should also reply to another point which the noble Lord, Lord Judd, raised on Report. He said that it was unfair to expect a complainant to argue his case through the chain of command when any of those who dealt with it might be called as witnesses at a subsequent tribunal hearing. In fact, I think that the only circumstances in which something like this could happen would be if a complainant added to the tribunal application a complaint about the way the original complaint had been handled. However, that is unavoidable for any employer.
It might be helpful if I explain that Clause 20 amends the Service Discipline Acts to ensure that complaints will in future be made to "such officer as may be prescribed" in Queen's Regulations. Currently all complaints must be made to the commanding officer even if he is the subject of the complaint.
The regulations will provide for complaints about a commanding officer, or anyone else in the command chain, to be made to a different officer and will, of course, make clear that any officer with any involvement in the complaint should not be invited to consider it at any stage. We shall, of course, make the regulations as flexible as possible to ensure that sensible and pragmatic solutions can be made to suit the circumstances of individual cases. I hope that that takes care of the particular point raised by the noble Lord, to which he could not see a solution.
I very much hope that I have been able to clear up any remaining misunderstandings. I do assure the noble Lords opposite that our aim in including these provisions in the Bill is not to make life more difficult for servicemen and women. Quite the contrary, in fact. We wish to ensure that service personnel have immediate access to a procedure which will investigate any complaint thoroughly and with despatch. I was very much in tune with what the noble Earl, Lord Attlee, said in that regard.
We are conscious that the demands made on service personnel are very different from those made on the vast majority of employees. The services themselves feel very strongly that the concomitant need for absolute loyalty and trust makes it essential that the redress of complaint system is used in all cases and should not be able to be bypassed in some instances. I stress again that no serviceman or woman will be denied the right to put an eligible case to an industrial tribunal. They are simply being required to use their own internal redress system first.

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I accept that for sex discrimination cases there will no longer be a right for cases to be taken direct to industrial tribunals. However, as I have explained in previous debates, it was never the intention that this should be a permanent arrangement. This Bill has presented the first appropriate legislative opportunity to bring the Sex Discrimination Act into line with the provisions for prior use of the internal system first introduced in 1993 by amendment to the Employment Protection (Consolidation) Act 1978.
For race discrimination cases, of course, we are introducing a new right of access to industrial tribunals. Having said all that, however, it has become clear during the course of our debates that there is perhaps a need for information on such questions as oral hearings and the opportunity for complainants to question witnesses to be disseminated more widely. Each of the services already has procedures for regularly drawing the attention of all personnel to the detailed Queen's Regulations on the use of the redress of complaint procedures. However, I believe that these could usefully be supplemented by information on the guidelines followed by the chain of command and the service boards in dealing with individual complaints. This will include advice that, although the decision as to whether an oral hearing is to be held is for the service board, complainants may submit a request for one if their complaint reaches that level. We will be taking steps to include such information both in the "permanent" regulations such as the Queen's Regulations, and in the services' equal opportunity directives and the pamphlets issued to individual service personnel—the Army version of which the noble Lord, Lord Judd, has, to our great pleasure, kindly commended in his remarks this evening and in previous debates.
As I have already mentioned, the services place great importance on their statutory redress of complaint system and on the system being used in all cases. Its value would, I strongly suggest, be undermined if it could be bypassed in some cases. I therefore put it to the noble Lord, Lord Judd, that, if there are problems with the internal procedures—and there may well be in individual cases—then the best approach is to seek to improve these, by in any event keeping the procedures under review as part of our normal business; by addressing specific concerns and criticisms; and by ensuring that the detail of the procedures is more widely known through the services, as I have already indicated we intend to do. I would suggest to your Lordships that this will be a more productive approach than adopting these amendments, which imply the acceptance of a number of criticisms of the internal system, and suggest that the only remedy is to bypass that system rather than to seek improvements to it.
8.30 p.m.
Lord Judd: My Lords, first I must say that of course we appreciate the considerate response given by the noble Earl. What he had to say about the increased amount of information on procedures is encouraging. However, I found the candid observations of the noble
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Earl, Lord Attlee, rather worrying. If there is a likelihood that soldiers will rush off to an independent tribunal if they have the possibility to do so, that seems to suggest there is something wrong as regards the team spirit, cohesion and the rest that is so important to the Army. I do not think we can have it both ways. If the team spirit and the cohesion are working well, a soldier will not rush off to an independent tribunal. To have the right to go to a tribunal is the guarantee that the team spirit is working well. If that is not the case, soldiers will rush off to such a tribunal. There is a certain illogicality in the remarks of the noble Earl, Lord Attlee, which bears consideration.
I have held the Queen's Commission myself and I have been a service Minister. Therefore I know what is being talked of here and it is important to the ethos of the services. Sometimes people say that the services are unique. However, I do not think that argument is completely credible in a modern society. I refer to the flight deck of a civilian airliner and other demanding situations in civilian life. I refer to people in the fire service and the new hazards that sometimes arise when coping with disasters that occur in urban areas and elsewhere. I believe that some of the principles we are discussing apply to those situations too. To argue that there is something particularly special about the services is becoming increasingly difficult to sustain convincingly in the context of certain situations.
I note what the Minister said about oral hearings. That was encouraging, but I am sure he will agree that he indicated it was not a right but a possibility. We should all be clear about that. In terms of what I was discussing a moment ago; namely, the need for cohesion and the importance of having an ethos and a team spirit in the services, if another officer is to step in and hear a complaint about a commanding officer or someone else I suspect that might be difficult for people in the armed services to handle. The situation could be defused by having an independent body look objectively at the situation. In that way the embarrassment of confronting officer to officer relationships within the services would be avoided.
Therefore I believe there are still some issues at which we need to work. Before I conclude I return briefly to the research of Lieutenant-Colonel Crawford. The work he has undertaken is of tremendous importance. I quote from his research where he posed the following question:
"'Having been a victim of racial discrimination, why did you not seek official redress?' The answers to this question show why the Army's grievance procedure is not working. Respondents could identify more than one reason if appropriate, and therefore absolute numbers do not match the 89 individuals who said they had taken no action. Forty individuals … said that they did not complain because they believed such a step might adversely affect their careers. Twenty-seven … thought they would not be taken seriously; 23 … feared increased discrimination; while 20 … did not complain".—[Official Report, 18/6/96; cols. CWH35–36.]
as the person to whom they would have to make representations was involved in the discrimination against them. That illustrates the size of the problem.
However, I am greatly encouraged by the seriousness with which the Army, the Ministry of Defence and Ministers are treating this issue. I am convinced that

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they want to see racial discrimination rooted out in the armed services. I believe that what is now proposed is definitely a move in the right direction. More may have to be done at a later stage, but it is a move in the right direction. Far from falling into that awful trap of saying, "The bottle is still half empty" I want tonight to say, "The bottle is apparently at least half full, and let us fill it" in terms of adopting the right approach. It would be unfortunate to pursue any kind of negative stance this evening. I wish therefore to finish on an encouraging note.
I am sure there is a great deal of agreement between both sides on this matter. The armed services are there to protect what will be for all time a multi-racial society in Britain. Therefore the more the armed services can reflect that multi-racial society and—if I may digress slightly—the more the Houses of Parliament come to reflect that multi-racial society in all manifestations; namely, MPs, Peers, officials and others, the stronger our society will be. However, that is another issue.
It is important that that should occur in the armed services. I believe the armed services are determined to move in that direction. I commend them. I hope the noble Earl will forgive my having just emphasised some of the handicaps and difficulties which I believe may still have to be tackled. I wish the armed services well in what they are trying to do. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 3 and 4 not moved.]
Clause 22 [Sex discrimination: Northern Ireland]:
[Amendments Nos. 5 to 7 not moved.]
Clause 23 [Racial discrimination]:
[Amendments Nos. 8 to 10 not moved.]
Clause 24 [Equal treatment: Great Britain]:
[Amendments Nos. 11 to 13 not moved.]
Clause 25 [Equal treatment: Northern Ireland]:
[Amendments Nos. 14 and 15 not moved.]
Clause 26 [Other complaints: Great Britain]:
[Amendment No. 16 not moved.]
Clause 27 [Other complaints: Northern Ireland]:
[Amendment No. 17 not moved.]
Clause 30 [Greenwich Hospital]:
Lord Judd Lord Judd moved Amendment No. 18:
Page 25, line 28, at beginning insert—
("Where he is satisfied that the purposes set out in paragraphs (a) to (c) of subsection (2) will be fulfilled.").
The noble Lord said: My Lords, Amendment No. 18 is an issue that we have debated at various stages of the Bill. It is encouraging to see in Clause 30 that the Secretary of State is to:
"have regard to … the importance of preserving for the benefit of the nation the historic buildings and monuments on the land and of maintaining the architectural integrity of the Royal Naval College site … the desirability of securing reasonable public access to the land (and in particular to the historic buildings and monuments on the land); and … the desirability of preventing any use of the land appearing to him to be out of keeping with its unique character and history".
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Of course it is reassuring to see those words. There had been anxiety that the Minister may be tempted into believing that the only thing that mattered was to maximise the financial return on the handling of the land. It is therefore good to see that provision. The worry is how far the rest of the clause which follows actually delivers the right outcome in terms of the matters to which the Secretary of State will have had regard.
I am aware of all the problems. I am aware for instance, that we may be moving into the realms of a hybrid Bill—God forbid! a terrible parliamentary sin—or something of that kind and that we must be wary. However, although it is good to see the aspirations, it is whether they are acted upon effectively that matters. Anything that the noble Earl can say this evening to reassure us will be welcome. I beg to move.
Earl Howe: My Lords, let me say at the outset that I understand the concerns that have led the noble Lord, Lord Judd, to table this amendment. I am sure that the whole of your Lordships' House shares his anxiety that the future of Greenwich, that magnificent site, should be protected as far as the law can allow.
The present Government are determined to establish a worthy future for the site. I can understand the anxiety that there is no guarantee that governments in the future will always share such worthy intentions. The noble Lord, Lord Judd, made it clear on Report that he was not wedded to any specific words and urged the Government to find an amendment which would reflect his concerns.
It would be difficult for me to over-emphasise the amount of concern and effort which has gone into framing Clause 30. I suspect that Ministers and officials have explored every avenue that the noble Lord considered—and probably more beside.
Your Lordships will recall that in another place the Government tabled a series of amendments, notably the present subsection (2). That was designed to ensure that the anxieties about the future use of the Royal Naval College, expressed by Parliament and elsewhere, were given prominence in the legislation and that the Secretary of State for Defence (as trustee for the charity Greenwich Hospital, for whose benefit he holds the Royal Naval College), would be empowered to take account of wider interests.
The legislation as now framed would place an obligation on a future Defence Secretary to have regard to the considerations of heritage and access as defined in subsection (2). It does not allow a future Defence Secretary to treat those considerations as some optional extra. If he failed to have regard to them, he would be open to challenge by way of judicial review.
The wording of Clause 30 also makes it clear that the considerations in subsection (2) must be borne in mind in all decisions relating to those buildings—and not just in decisions relating to a lease under subsection (3) which is the only decision to which the noble Lord's amendment relates.

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Amendment No. 18 seeks to require a future Defence Secretary not simply to have due regard to those considerations, but to make them into considerations to be fulfilled. The desire to prescribe the future of those fine buildings is wholly understandable. However, as a result of our own search for wording for this clause, we had to reject that objective. Not only could such conditions make the legislation potentially inimical to the private interests of the charity, Greenwich Hospital, but they could also work against the best interests of the Royal Naval College. They could make the legislation unworkable.
Decisions on the future of the site could well involve a future Defence Secretary having to balance a complex series of interests in circumstances which cannot now be anticipated. Those interests may not always be compatible. It is not impossible to envisage circumstances where the differing considerations in subsection (2) may not be compatible. Venerable buildings can pose difficult choices between, for example, occupancy (which may be regarded as unworthy in some way) and being left empty, with the risk to the fabric that that might pose. Likewise, preservation is not always compatible with public access.
I am not wishing to suggest that there are problems now in meeting the considerations in subsection (2). But we are passing legislation which will govern the site until Parliament chooses to change it—and that could be a long time. The present form of the clause recognises that future decisions could require difficult balances to be struck. It requires that the Secretary of State must take account of specified key issues, but it avoids tying the hand of the Secretary of State in a way which could make the process of finding the best solution for the site even more difficult.
I have tried in these few words to address the spirit of the noble Lord's amendment, as the noble Lord asked me to do, and not the precise letter. I hope that he will understand that in framing Clause 30 as a whole we have had regard to precisely the interest which motivated his amendment; namely, the best interests of the Royal Naval College, together with those of Greenwich Hospital, which I am sure it was not his intention to disadvantage.
I hope that that response is helpful. I hope that it will enable the noble Lord to withdraw his amendment. Even more, I hope that we shall find a satisfactory solution to the occupancy of Greenwich Hospital that will command the approval of your Lordships' House and the wider public.
Lord Judd: My Lords, given the very firm statements made by the noble Earl, I am reassured about his intentions whatever the reservations about how far the situation is totally buttoned up. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.45 p.m.
Earl Howe: My Lords, I beg to move that the Bill do now pass.
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Our discussions on this year's Armed Forces Bill have covered some ground that will be familiar to those who, over the years, have followed the debates which accompany the five-yearly review of service legislation. In Committee we had a full debate on the death penalty in the Armed Forces which gave us all cause to reflect on that most sombre of issues. We also touched on racial and sex discrimination—areas where the services have made significant progress in the past few years. Nevertheless, the Ministry of Defence is the first to acknowledge that there is no room for complacency.
Much of our time has been spent debating issues which are particular to this Armed Forces Bill. I have in mind, of course, parts of the Bill such as those to which we have returned again this evening—providing for local service and for the future of the Royal Naval College, Greenwich. I believe that we can fairly say that we have covered those subjects exhaustively—I was tempted to say "exhaustingly".
Without going over the ground again, I hope that our discussions have done something to reassure those who had anxieties and worries that they were perhaps misplaced. Debates in this House can be invaluable in teasing out the real areas of concern about any issues and in then giving us the opportunity to see whether we can allay those concerns. I understand perfectly a number of the anxieties expressed by the noble Lord, Lord Judd, and by noble Lords on the Liberal Democrat Benches.
When we had our Second Reading debate a few weeks ago, I described the court martial reforms which we proposed as the centrepiece of the Bill. That appears to have had the effect of concentrating your Lordships' interest on other parts of the Bill! However, I wish to place on record my appreciation of the generous welcome which the reforms have received from all parts of the House. They represent a major step forward in the administration of service discipline.
Whatever else these five-yearly Bills may address—and this year's Bill is perhaps more wide-ranging than most—much of the focus will always be on the search for improvements in the system of discipline in the Armed Forces. Very often it will be simply a question of, at most, a little fine tuning. This year, as your Lordships are aware, the changes have been on a rather larger scale than that.
The objective though will always be the same: to strike that essential but difficult balance between preserving a discipline system which is actually fit for the purpose of maintaining discipline and safeguarding the rights of the men and women who are subject to that system. We are confident that the arrangements for discipline which will result from the passage of this Bill will strike that balance in a way which accords with the expectations both of today's service men and service women and of the society from which they are recruited.
Before concluding, I wish to express my appreciation of the contributions which many noble Lords have made to our debates on the Bill. I cannot mention them all but it is right that I should extend my particular gratitude to the noble Lords, Lord Judd, Lord Mayhew, Lord

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Redesdale, Lord Williams of Elvel and Lord Williams of Mostyn, as well as the noble Earl, Lord Attlee. They have all enriched our discussions on the Bill and I appreciate the constructive way in which they approached often difficult subjects. I believe that all noble Lords who have spoken have done us a service. I commend the Bill to the House.
Lord Williams of Elvel: My Lords, it is with diffidence that I rise to respond to the Motion because my attention has not been wholly concentrated on the Bill. It has been diverted elsewhere in your Lordships' House, as has the noble Earl's attention from time to time.
At Second Reading I expressed our general support for the Bill. It would be wrong for me to withdraw that support. Some difficult issues had to be teased out in the course of debate: the Ministry of Defence Police and the future, the tribunal provisions, the courts martial, the Greenwich problem. I hope that my contribution at Second Reading on the issue of homosexuality was helpful to the Government, despite certain remarks made last Friday by the noble Lord, Lord Wallace of Saltaire, from the Liberal Democrat Benches which he subsequently withdrew.
I can only reiterate our support for the Bill and for the Armed Forces of the Crown. They are the Armed Forces of the Crown and not the property of any government. I can assure the noble Earl that in a year or so, when we switch places, we will continue to give the Armed Forces of the Crown the support that we believe the noble Earl has given them. In that spirit, I wish the Bill well and hope that, in whatever theatre they may serve, the Armed Forces will continue to receive the support of governments of whatever party and of your Lordships' House. I am sure that they will.
Lord Mayhew: My Lords, the noble Earl quite rightly said that compared with preceding Bills this one is important. I agree. It is also a liberal Bill in its balance, especially in the courts martial reforms, which we discussed very little. It is a liberal Bill. That is the highest possible praise that a Bill can be given.
However, it is disappointing that the Third Reading should begin late on a Thursday evening and that the Committee stage should take place below stairs in the Moses Room. I also recall that the estimates debate was on a Friday morning. I must warn the Government that if they are not careful Parliament may resist the trend towards devaluing debates on defence that we have in the House. That may have happened in the opposition to the Bill in that we have not given the Government the benefit of the doubt on certain points: for example, the coming into operation of the pilot scheme. It is also true in the use of the usual channels. We have not given the Government the benefit of the doubt, and part of the reason is that the Government have not been generous to the House in their allocation of time and opportunity.
Nevertheless, we thank the noble Earl. He has taken infinite trouble in replying to our questions, not only courteously but in thorough detail. He never raises his voice in debate, and that is a great point, especially to those of us who come from the other place. If we have
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spent years there, it is a great relief to listen to a Minister who does not raise his voice. It is much appreciated. I also wish to thank him because, following the debate on the death penalty in Committee, he wrote to me saying that he proposed to set up an inquiry on issues surrounding the death penalty. It was a long and cautious letter which dealt at length with the statement by Mr. Archie Hamilton that the death penalty would never be imposed in time of peace. I was much encouraged by the noble Earl's statement that:
"These matters will be looked at with an open mind and with no predetermined agenda … I hope you will consider the prospect of a fresh examination of the issues to be a positive development".
I take that to mean that it will be a fairly wide-ranging inquiry. I am glad that the Minister apparently agrees with me. It should have been done long ago. It is 50 years since the death sentence was invoked and it is a remarkable anachronism. I hope that the inquiry will ask pertinent questions.
It is hard to believe that the penalty will ever be used and that is a major point which the inquiry needs to consider. Not only is the number of offences for which it can be imposed limited, but also the offence must be committed with intent to help the enemy. Again, that makes its use unlikely. It is possible, though difficult, to imagine someone in our new volunteer professional Army being guilty of mutiny, but that would not lead to the imposition of the death penalty. It has to be mutiny at a time of war with intent to assist the enemy.
When the inquiry considers such points seriously, I am sure that it will conclude that the death sentence has become a relic, an anachronism which is no longer valid. It is not a matter of great concern. In our debate at the Committee stage I recall that the Minister mentioned strong feelings on the subject. I do not feel very strongly, because I regard the provision as an outworn relic which will never be used. The question the inquiry will have to ask is: what value is it to the Army? If it is not going to be used, what possible value can there be in keeping it? It does not help the image of our new Armed Forces at all. The idea of a firing squad contradicts everything that we project the Army as doing, and the idea of freedom. If the Minister had the desire and drive to abolish the death penalty in the Armed Forces, he would find that it would improve the image of the Army in the minds of the public. It would give it a friendlier feeling; and perhaps mothers and fathers would be rather more inclined to urge their daughters and sons to join.
I thank the Minister for taking this issue seriously and for setting up the inquiry. I am glad to hear that it will raise the fundamental questions involved. If it is properly administered and run, it will reach the conclusion that this is a very sensible, overdue reform.
Will the Minister tell the House a little about the administration of the inquiry? Who are to be its members, and when will it report? We shall follow the issue keenly and not wait for the next Bill in five years' time to raise it again. If, after 15 years, I am still spokesman on defence for the Liberal Democrats in this House, I shall certainly raise the matter when the provisions are renewed in a year's time.

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Finally, I thank my absent colleague, the noble Lord, Lord Redesdale, who did the hard work in Committee. Again I express our warm appreciation of the way in which the noble Earl has answered our questions.
9 p.m.
Earl Attlee: My Lords, I had not intended to speak to this Motion, not least because I have not yet had a substantial meal today. I listened with interest to the earlier remarks of the noble Lord, Lord Mayhew. He referred to the proceedings in the Moses Room. Those proceedings went extremely well, particularly in relation to the Reserve Forces Bill and, to a slightly lesser extent, on this Bill.
The noble Lord also referred to our tradition of having the debate on the Statement on the Defence Estimates late in the Session. Matters have improved quite a lot. My recollection is that, the year before last, it was practically the last business we took; the year before that it was definitely the last business. So the debate is being taken at a better time.
Perhaps I may address one or two other matters. I was disappointed that we did not have a full debate on the difficult question of homosexuality in the services—simply because this House has so much experience of service matters. I should like to have seen the balance of the arguments explored in this place. I feel that the debate could probably have been won by those who want a relaxation in the rules.
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Taking part in the proceedings on this Bill has been a fascinating business. I am grateful to all who contributed.
Earl Howe: My Lords, I am conscious of the hour. I shall simply say that I am grateful for the remarks of all three noble Lords who just spoke.
In response to the query raised by the noble Lord, Lord Mayhew, the terms of reference of the review that we propose to undertake will be widely drawn. We are drawing them up now. We intend it to be an internal review involving officials, members of the Armed Forces and Ministers. I am not yet sure how long the review will take. We want it to be thorough. We want it to examine exactly those questions which the noble Lord raised. I am sure that when we have reached a conclusion, we shall wish to have a full debate. I have no doubt that your Lordships will not be slow in prompting such a debate. Having welcomed all the contributions that have been made, I commend the Bill to the House.
On Question, Bill passed.

Nursery Education and Grant-Maintained Schools Bill
Returned from the Commons with one of the Lords amendments disagreed to with a reason for such disagreement and with the remaining amendments agreed to. Commons reason ordered to be printed.
House adjourned at six minutes past nine o'clock.