Lords Sitting of 5 March 1996

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

The Lord Bishop of Carlisle
Ian, Lord Bishop of Carlisle—Was (in the usual manner) introduced between the Lord Bishop of Worcester and the Lord Bishop of Southwark.

The Fire Service College
2.44 p.m.
Baroness Fisher of Rednal Baroness Fisher of Rednal asked Her Majesty's Government:
When they expect to make a decision on the future of the Fire Service College.
The Minister of State, Home Office (Baroness Blatch): My Lords, it has been decided that, for the time being, the Fire Service College should continue as a Next Steps agency operating as a trading fund. A number of measures have been taken or are still being considered which are intended to strengthen the college's financial position and to secure its place as the central provider of both command and specialist training for the UK fire service.
Baroness Fisher of Rednal: My Lords, I thank the noble Baroness for that reply. I believe that she will appreciate, as do the general public, the fine professionalism of the fire service not only in fighting fires but as regards accidents on the motorways and humanitarian aspects. That professionalism results from the training in which they participate and the facilities at the Fire Service College. Does the Minister agree that it is terribly important that such training continues? The safety of people whom they protect through training is important to us all.
Baroness Blatch: My Lords, I absolutely agree with the noble Baroness. It is a fine service and does a brilliant job, for which it must be trained. I promise the noble Baroness that I will leave no stone unturned in my department to ensure that we secure the future of the Fire Service College. It is important that whatever the outcome of the debate today the fire service should be properly trained and it is our determination that it should continue to be so.
Lord Allen of Abbeydale: My Lords, when I was at the Home Office I was rather proud of the creation of the Fire Service College. I have been watching the troubles about its finances with great concern. Since 1992, the Fire Service College has been both an executive agency and a trading fund, to use the modern jargon. However, the Civil Service College at
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Sunningdale, although an executive agency, is not a trading fund. The Police College at Bramshill—a comparable service—is neither an executive agency nor a trading fund. Can the Minister say why the Fire Service College was picked out for different treatment from the others and made subject to a financial regime as a trading fund, in which—to put it charitably—some element of miscalculation must have been involved?
Baroness Blatch: My Lords, the noble Lord is right in his observation on the distinctions between the three colleges. There are 110 agencies, only 12 of them with trading fund status. The problems of the Fire Service College do not derive from anything other than the circumstances at the college. The problems have nothing to do with the college's present situation. Prior to agency status it was a cost on the Home Office's Vote. Wherever the cost is, it has created a considerable deficit. The problem is that it occupies a large site which is substantially under used. At the moment we are trying to find complementary activities which can take place on the site and which will make the overheads of running the site and all that happens on it economically viable. The problem is not about the distinction between agency status and whether it is on the Home Office Vote or even the local government Vote.
Lord Greenway: My Lords, we recognise that the debt burden imposed on the Fire Service College is partially responsible for its present parlous financial state. However, is it not a worry that the reduction in the county fire brigade budgets and local government budgets affect the training of young firemen? After all, they are the seed corn for the Fire Service College in the future. Would it not be a tragedy if the magnificent facilities which can cope with almost any fire eventuality were to be lost? That would be not only from the point of view of training our own young firemen but also of its use by industry and foreign fire brigades.
Baroness Blatch: My Lords, the facility of training will not be lost to the fire service because we have an obligation under the law to provide fire service training. Each of the fire brigade local authorities, whether free-standing metropolitan fire authorities or fire authorities within county brigades within the county council, nevertheless, still has an obligation under the law to provide adequate training. We use the inspectorate system to ensure that that is the case.
If any local authority or fire authority believes that it cannot provide adequate funding for training it must put the case to the Department of the Environment, which will consider it. One authority did that last year and had a relaxation of the cap so that it was able to meet its obligations under the law.
Lord Dean of Beswick: My Lords, is the Minister aware that there is a feeling across the political spectrum regarding the fire service that over the past five years the reduction in real terms in the funding of our fire brigades has reached an all-time dangerous low? Should that not be a matter of concern for the Government, and will they look into it?
Baroness Blatch: My Lords, I do not agree that funding has reached an all-time dangerous low. As I just

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said, there is an obligation under the law: fire brigades must meet their obligations to provide fire cover in their areas. If there are authorities that believe they cannot do that there is a proper process for them to present their case. That is not to say that there are not financial tensions. However, I understand that the noble Lord's own party is not offering local authorities very much more money to provide services. We are aiming to make sure that we have the most efficient use of resources that are available to local authorities.

Signal Crayfish: Control
2.50 p.m.
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
Whether they are providing guidance on the infestation of inland waters by American signal crayfish since they were first imported in the 1970s.
Lord Lucas: My Lords, the Government will shortly be making regulations effectively to prohibit the keeping of signal crayfish in those areas where they are not currently found in the wild. In other parts of the country, where signal crayfish are already well established, the scale of the problem can best be reduced by reminding everyone that they are easy to catch and delicious to eat.
Lord Campbell of Croy: My Lords, I am grateful to my noble friend for his reply. It indicates that the Government are taking action. Does he agree that this crayfish is the aquatic equivalent of the grey squirrel? Can he confirm that it has already eliminated native crayfish in some areas and is devouring freshwater creatures of many kinds? Unlike the squirrel, however, it is, as my noble friend indicated, very good to eat. Will the Government encourage as wide a consumption of it as possible, including drawing it to the attention of the Refreshment Sub-committee of this House, in the interests of preserving some ecological balance?
Lord Lucas: My Lords, I believe that the scale of the effect of this creature on the environment is a little over-stated. It is an active predator, but it lives quite happily in its native habitats with a wide range of fish and other species. We do not expect it to have any devastating effect on our native wildlife. It carries a fungal disease which kills our native crayfish, and that is the reason for our wanting to keep it in its present bounds. So far as the Refreshment Department of this House is concerned, I should be very happy to see squirrel on the menu. It is, I can tell the House, quite delicious.
Lord Stoddart of Swindon: My Lords, is not the greatest danger at the moment not the infestation of crayfish in inland waters but the infestation of Spanish fishermen in our coastal waters?
Lord Lucas: My Lords, that is a little wide of this Question.
Lord Carter: My Lords, is the Minister aware that the American signal crayfish—or Pacifastacus leniusculus, as we usually call it in Wiltshire—has been described as an alien omnivore which is voracious, aggressive and fertile or, to put it another way, over-fed, over-sexed and over here? Is he further aware that the narrow-clawed (Turkish) crayfish is believed to have got into our waters by escaping from restaurants in London? I am intrigued to know how that happened. Did they just perhaps pop down the Strand and dive into the Thames? The problem has been known for 15 years; and the Ministry has accepted that it should have acted much faster. Does the Minister agree?
Lord Lucas: My Lords, I cannot follow the noble Lord in his erudition. I rarely can. However, I can tell him that the contract for fishing crayfish in the Serpentine is currently vacant. The Turkish crayfish is there. If he wishes to go for the red swamp crayfish, he will find it in the men's bathing pond in Hampstead. But it is quite fond of fresh meat. So it is not sensible to stay still for too long.

Rail Freight: Privatisation
2.54 p.m.
Baroness Castle of Blackburn Baroness Castle of Blackburn asked Her Majesty's Government:
Why they have decided to sell all three rail freight companies to one bidder and what is the price at which they have agreed to sell.
The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen): My Lords, the market's strong preference was for a combined sale of the three companies. The terms of the sale, including the price, are commercially confidential.
Baroness Castle of Blackburn: Was not one of the Government's main reasons for breaking up the rail network into a number of fragmented private companies that it was a way to achieve competition? Has that therefore not proved to be a complete myth? Is it not also a myth that this Government believe in open government, when they will not even tell the House the price at which they have sold one of our important national assets?
Viscount Goschen: No, my Lords, that is not the case. There are, of course, very strong elements of competition that we are trying to bring into the railway market. However, in this case we laid down no pre-conditions; we let the market tell us what it felt were the best circumstances and the best way to ensure the long-term future of the industry. There was a very clear preference for this type of sale.
In many of our other rail privatisation units we are introducing competition. And competition exists between newly-formed companies which can come in and move heavy freight on the railways as well as the existing trainload freight companies.
Lord Carmichael of Kelvingrove: My Lords, can the Minister assure the House that Section 113 of the Railways Act regarding the disposal of the BR companies states quite clearly that there must be competition; management bids must be promoted; and that the best value for the assets must be achieved? In the end, all three services went to the Wisconsin Central Transportation. The Minister says that the figure is confidential. The figure I have received, from a fairly reliable source, is £225 million. Is that true; and was there a management buy-out offer of £240 million? Is it also true that the assets of the three railway companies together were something like £6 billion? Is there not a case for the Audit Office to have a close look at this whole business?
Viscount Goschen: My Lords, I can neither confirm nor deny the figure that the noble Lord put forward. The price has not been disclosed in order to protect BR's negotiating position in future sales—for example, the BR infrastructure service companies. We shall give figures for individual sales in due course. All figures are made available to the National Audit Office.
As to whether or not this was the highest bid, North and South Railways, the arm of Wisconsin that took the purchase forward, submitted the highest relevant bid that was in compliance with the rules of competition. I can confirm that we have acted within the terms of the Act.
Viscount Montgomery of Alamein: My Lords, quite apart from competition, will my noble friend agree that one of the objectives of privatisation is the creation of greater efficiency in the system?
Viscount Goschen: Absolutely, my Lords. My noble friend is quite right. We believe that privatisation across the various types of company being brought into the private sector will bring exactly those benefits.
Baroness Castle of Blackburn: Can the Minister assure the House that in the negotiations and sale there have been no secret subsidies, no writing-off of debt, as we have seen in so many other cases? Does he accept that it is only honourable to disclose the figures in detail to the parliamentary Membership?
Viscount Goschen: My Lords, we were scrupulously fair to all the parties concerned. Bids were made on the basis of the objectives for sale. That was the same for all the companies involved. There was no favouritism whatever.
Lord Bruce of Donington: My Lords, in which case, is it not time that the noble Viscount was also fair to Parliament?
Baroness Castle of Blackburn: Hear, hear.
Lord Bruce of Donington: My Lords, will he give Parliament the full particulars to which it is entitled? It is a national asset that is being disposed of. It does not belong to the Government, and neither does it belong to any of their minions.
Viscount Goschen: My Lords, I quite agree with the noble Lord. This was a national asset that has been taken
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forward into the private sector. However, we are in the middle of a bidding process for a number of BR businesses. We feel strongly that to disclose that information at this stage would prejudice BR's bidding position in future.
Lord Bruce of Donington: Be open about it!
Viscount Goschen: My Lords, the noble Lord must want, as we do, the best proceeds for the taxpayer from the disposal of businesses in future.
Lord Carmichael of Kelvingrove: My Lords, by the time we get the figure, it will be too late. The difference between the offer made by Wisconsin and the value of the assets might be quite staggering. It may be that there was not a great deal of difference in the figure for the management buy-out offer—£15 million. They would be entitled to be very disappointed. Will the Minister also tell the House whether, as was rumoured, 6,000 job redundancies are involved? It will be a national disaster if that is also the case.
Viscount Goschen: My Lords, I repeat the assurance that I gave the House that the bid which was accepted was the highest compliant bid. I hope that that reassures the noble Lord. In terms of jobs, rail freight must improve its efficiency and reduce its costs, if it is to win traffic back onto the railways. The new company will look very carefully at its cost base. We all want the railways to become more efficient and more freight to be attracted onto the railways. To do that, rail freight must first improve its efficiency and, secondly, reduce its cost base.
Lord Dixon-Smith: My Lords, does my noble friend agree that there is immense scope for confusion in the question of valuation? If a site is valued on the basis of its disposal for alternative development, one figure may be placed on its value; if it is valued on the basis of its value as a continuing business, it will be given an entirely different figure. Is not that difference sufficient to explain the kind of discrepancy that noble Lords opposite mentioned?
Viscount Goschen: My Lords, theoretical valuation is not a cut and dried matter. There are always different opinions about the value of a particular business. But in the final result, it depends on what the market will pay for it. The market expressed a great deal of interest in rail privatisation and this has been a successful sale.

Legal Aid: Criteria
3.1 p.m.
Lord Dean of Beswick Lord Dean of Beswick asked Her Majesty's Government:
When they expect to announce the change in the criteria for claiming legal aid.
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, on 28th February, I asked the Legal Aid Board to establish a special investigations unit as soon as possible to handle legal aid means assessments where

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the applicant's financial circumstances are exceptionally complex. On 1st June this year two new regulations will come into force. The first will allow the assets of friends and relatives of the applicant to be included in the financial assessment. The second will introduce into legal aid assessments a limit of £100,000 on the equity allowable in the applicant's home, the amount of mortgage that can be offset against the equity and the amount of repayable mortgage allowable against income.
Lord Dean of Beswick: My Lords, I am grateful to the noble and learned Lord for his detailed reply to my Question. I also thank him for the reports that he sent me, although as a lay person I have not yet been able fully to digest them. Have the criteria altered or do we still have the criteria used in cases such as Maxwell, Barlow Clowes and Roger Levitt? If deemed to have submitted the correct detail, could future cases be funded at the level of those recent ones? If so, the noble and learned Lord the Lord Chancellor must be made aware that there is a groundswell of feeling among ordinary people about those involved in crime which has driven tens of thousands of pensioners into penury being financed at such a level in order to get themselves off the hook. Does the noble and learned Lord consider that it is time to have a full review by a Royal Commission or some such body, which will come up with proposals to ensure that members of the family do not continue to live off the ill-gotten gains of those who perpetrated the crime?
The Lord Chancellor: My Lords, the purpose of establishing the special investigations unit and of the first of the regulations to which I referred is to apply the general system in a new way so far as particular people with complicated financial situations may require. The feeling in some quarters—for obvious reasons, I do not make reference to any particular case—is that some people have been able to obtain legal aid because technically they qualify themselves at the same time as they seem to enjoy a lifestyle somewhat better than many of us enjoy. The question is how to attack that. The first of the regulations is intended to do that by enabling the legal aid authorities to take account of the assets of friends or relatives who may be in fact helping to support that lifestyle. This is a way of addressing the problem that the noble Lord raised.
Lord Boyd-Carpenter: My Lords, does my noble and learned friend's Answer mean that it is the policy of the Government not to allow the grant of legal aid to people of ample wealth but to restrict it to those who need legal aid if they are to be legally represented?
The Lord Chancellor: My Lords, that is the policy and that is the way in which the regulations are framed. The regulations apply to everyone. Faced with an expensive criminal trial, it may be that a person who might enjoy some financial resources will not have sufficient to deal with the case, and the legal aid arrangements take that into account. The important point is that the regulations are the same for everyone but there are situations whereby, because of apparent
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support from friends and relatives, people seem to enjoy a better lifestyle than their position would suggest under the exact terms of the regulations. That is why I propose to change the regulations, as I said. I believe that that will address this problem in a fairly fundamental way and will be in pursuance of the objective that my noble friend has just enunciated.
Lord Clark of Kempston: My Lords, does my noble and learned friend agree that the regulations need drastic amendment so far as concerns the Legal Aid Board? Can he confirm that under no circumstances should an illegal immigrant obtain legal aid which is funded by the taxpayer? Does he further agree that it is a complete and utter waste of taxpayers' money given to illegal immigrants?
The Lord Chancellor: My Lords, the circumstances in which legal aid is available are set out in regulations which, on the whole, are fair and reasonable in application. But one must take account of the possibility that I mentioned earlier of people being supported outside the scope of the present regulations. Perhaps I should mention in fairness to the Legal Aid Board that, where it is a matter of legal aid in criminal proceedings, generally speaking the legal aid authority is the court rather the Legal Aid Board. But the court applies the regulations under which legal aid is available.
Lord Williams of Mostyn: My Lords, there is a certain amount of public disquiet about very substantial sums disbursed in legal aid for criminal trials. Over what period of time following the conclusion of a trial is the remit of the investigations unit intended to extend? Does the noble and learned Lord agree that circumstances may differ quite substantially at the time legal aid is granted before a criminal trial and after the conclusion of some trials?
The Lord Chancellor: My Lords, the principal objective of the unit is to investigate the situation at the time the question arises of whether or not legal aid should be granted and the conditions under which it should be granted. Those can be reviewed, as the noble Lord will know, in the light of changes of circumstances, when they come to the notice of the legal aid authorities. But the primary purpose of the unit is to deal with people whose finances appear complicated at the stage at which legal aid is being considered.
Lord Dean of Beswick: My Lords, the noble and learned Lord must be aware of the recent case of a person who was shot by the police during an armed hold-up being granted legal aid. If my information is correct, certain other information was then discovered and the legal aid was withdrawn. I put quite a pointed question. It would appear that the amount of legal aid depends on the amount of information submitted by lawyers on behalf of the claimant. If a lawyer acting on behalf of an accused person deliberately or knowingly withholds information or perjures himself by giving wrong information to the board or court, can he be brought before the court for perjury?
The Lord Chancellor: My Lords, if a lawyer is party to any kind of fraud on the legal aid authorities,

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consequences will follow. But in relation to the specific case to which the noble Lord refers, it is worth pointing out that the legal aid granted was only at stages; it was not full legal aid to pursue the whole matter.
The Legal Aid Board is dependent on the information submitted to it. It is not a court of trial. It must proceed on the basis of the information supplied to it, and that information may develop as the case develops. It is therefore right that it should review the matter. As the noble Lord, Lord Dean, said, that is what happened in the case to which he referred; further information came to the knowledge of the Legal Aid Board after the initial information had been given which led it to initiate the proceedings to discharge the certificate in question.

Broadcasting Bill [H.L.]
3.10 p.m.
Report received.
Lord Howell Lord Howell moved Amendment No. 1:
After Clause 1, insert the following new clause—
"UNBUNDLING" OF SPORTS BROADCASTING RIGHTS
(".—(1) Notwithstanding the provisions of section 182 of the 1990 Act, the Commission or the Radio Authority shall do all that they can to ensure that broadcast sporting events are available as widely as possible in the United Kingdom and in particular shall ensure that, in respect of any person who is a licensee either of the Commission or the Radio Authority—

(a) where such person is the holder of exclusive live rights for the broadcasting of such an event, if he proposes to exercise those rights in the course of providing a subscription or pay-per-view service, he shall offer, upon reasonable terms, to a universal broadcaster (whether or not the same person as the provider of the subscription or pay-per-view service), the right to broadcast television highlights of that event on the same day as the live broadcast of the event taking place; and

(b) where such a person is the holder of exclusive live rights for the broadcasting of such an event, if he proposes to exercise those rights wholly or partly by means of a universal broadcasting service, he shall offer, upon reasonable terms, the right to broadcast television highlights of that event on the same day as the live broadcast of the event taking place to a person offering a subscription or pay-per-view service (whether or not the same person as the universal broadcaster);

(c) where such person is the holder of exclusive rights to broadcast television coverage of any sporting event, if he is also the holder of the right to broadcast live coverage of the sporting event on radio ("radio rights") and is not able to exercise those radio rights, he shall offer the radio rights, on reasonable terms, to a universal sound broadcasting service;

(d) where such person is the holder of exclusive radio rights which he will not be exercising to a substantial extent he shall offer such radio rights on reasonable terms to a universal sound broadcasting service,

and for the purposes of this subsection "television highlights" means a recorded extract of the coverage of a whole sporting event, such selection to be made by the universal broadcaster for the purposes of paragraph (a) and by the subscription or pay-per-view broadcaster for the purposes of paragraph (b).
(2) For the purposes of this subsection—

(a) a programme is included in any service on pay-per-view or subscription terms if subscribers shall or may be obliged to pay a specified fee or
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charge specifically in consideration for the right to view a particular transmission or a particular television channel; and

(b) a broadcasting service is universally received if it is received by or delivered to over 90% in aggregate of all households in the area appropriate to the sporting event, and

(i) the terms "universal broadcaster" and "universal broadcasting service" shall be construed accordingly, and

(ii) "universal broadcaster" shall be deemed to include Channel 5.

(3) Every licence granted by the Commission and the Radio Authority pursuant to this Act and the 1990 Act shall include such conditions as are necessary for securing compliance by their licensees with directions given by the Commission or the Authority in the discharge of their duties under this section, and such directions shall he enforceable at the suit of the Commission or the Authority as the case may be.
(4) In discharging their duty under subsection (1)(c) and (d) the Commission or the Radio Authority shall have regard to the interests of the local area or national region as far as the sporting event is concerned.
(5) If the holder of exclusive rights is a licensee neither of the Commission nor the Radio Authority, and is not S4C or the BBC, and he fails to make those rights available on reasonable terms for the purposes of subsection (1) the Commission or the Radio Authority shall refer the matter to the Director General of Fair Trading who shall determine the terms on which those rights or any of them are to be licensed.
(6) The Governors of the BBC shall be under a duty to ensure that the BBC complies with subsection (2) as if the BBC had been expressly referred to in that subsection.
(7) The Welsh Authority shall be under a duty to ensure that S4C complies with subsection (1) as if S4C had been expressly referred to in that subsection.
(8) For the purposes of subsection (1) above any agreement for exclusive rights for the broadcasting of any sporting event shall be registered with the Director General of Fair Trading.").
The noble Lord said: My Lords, Amendment No. 1 is concerned with a subject with the unfortunate title of "unbundling"; or, to we laymen, the right to show highlights of sporting events on television on any channel when those events have been negotiated live by another channel. It follows naturally from our discussions in Committee and the vote taken by this Chamber on that occasion to protect the eight listed events so that they are always available on terrestrial television.
The Government announced yesterday that they have accepted the will of the House on that matter. I immediately welcome that decision and thank the Minister for it. So far so good. Such a decision will be appreciated throughout the country by the millions of people who do not have access to Sky or cable. However, we have not yet had sight of the amendment and need to look at that before giving the statement a total and unqualified welcome.
The noble Lord, Lord Inglewood, said in his statement that one of his objectives was to make the list "more transparent", whatever that means; to establish a criteria,
"as a reference point for the future";
and to give further consideration to this "interesting suggestion". I have no quarrel with any of that. However, the Minister will appreciate that we must wait to see what that means in practice, especially in relation to any period of time for review of the matter.
I turn to the amendment, which deals with the question of highlights of all sporting events outside the listed events; that is, the majority of sporting events which appear on television. It is a question of major importance for the sporting public and for television viewers. Your Lordships will have some idea of the events in question when I refer to the Ryder Cup in golf, the Open Golf Championship, the Cheltenham Gold Cup Festival, Royal Ascot, the Five Nations Rugby Tournament, the European Golf Tour and the Rugby League Cup, among others. That will tell the House how important is the matter that we are discussing.
Unless action is taken to protect the rights of the public, those events could disappear from the television screens in millions of homes. I illustrate the point by reference to the Open Golf Championship, for which I understand Mr. Murdoch offered £24 million. It has not yet been signed up. If he secures that event, and if there is no provision such as is sought by the amendment so that the highlights can appear on the BBC, independent television or Channel 5, then three-quarters of this nation will see nothing of the event on their television screens. If we apply that argument to the other events I mentioned, the House will gain an insight into the seriousness of the situation that will arise.
I cannot believe that the Government want that to happen. Undoubtedly there would be an uprising in the land if all that sporting excellence is suddenly removed from the television screens in the homes of so many people, which is what happened in regard to the Ryder Cup. The House will recall that when we last debated the matter I quoted the exclusion clause which excluded the BBC. Sky has since told me that the BBC got it wrong and was in fact referring to other golfing tournaments. I do not accept that, but as I have only just been given that information I shall need to look at it with care.
In my judgment it will do a great disservice to sport as well as to the national interests of the viewing public if we allow the dangers I outlined—which are very real—to exist. The Murdoch millions could remove a great chunk of British sport from the television screens of the great majority of British viewers.
The amendment seeks to say that where a pay television broadcaster has exclusive live rights it must make the highlights available to a terrestrial broadcaster; where a terrestrial broadcaster owns the exclusive live rights it must make highlights available to a pay TV broadcaster; and, where a broadcaster holds the radio rights but is unable to exercise that right because, for example, it does not have a radio station, then it must ensure that the live rights are sold to another broadcaster and are not hoarded.
The amendment attempts to be even-handed and provide the rights to both terrestrial and subscription television. It places a specific duty upon the Independent Television Commission to ensure that, if live rights have been sold into one market, then the highlights should be sold into another. If a pay channel has exclusive live rights—as, for example, in the forthcoming boxing match between Tyson and Bruno—then highlights
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should be offered on reasonable terms to universal broadcasters, and vice versa. The Radio Authority is given a similar responsibility in respect of rights holders which are commercial radio stations.
The term "television highlights" is given a legal definition with the selection of extracts to be made by the purchaser. The legislation is intended to cover the BBC, with clear obligations on the governors to ensure, first, that it complies, and on the Welsh Authority in relation to S4C; and, secondly, that the matter is effectively dealt with. That obligation is also upon Channel 5, where it is included in the universal market to reflect the obligations it has taken on to maximise its audience by spending money to retune video recorders.
A new duty is created to register all those deals and to give the Office of Fair Trading the power to unbundle where the offending party is not a licensee of the ITC or the Radio Authority. The price for these events—a reasonable price—would be decided between the purchaser and the vendor. That is happening today—this very day—with cricket World Cup highlights being shown to BBC viewers under an agreement between the BBC and Sky. Noble Lords will remember that we informed them of that in the previous debate. I believe that it came about largely because of the tabling of the amendment we are now discussing. The offer was made again to the BBC and taken up at a price of £1 million. Whether I am right about that is a matter of small consequence. What is important is that the highlights have been made available. Every night we can watch World Cup cricket. We can hope that the England team get it right and do a bit better. I am happy to say that I think the £1 million well spent. I hope that it will be better well spent when we reach the quarter finals of the competition in a few days' time.
On the "Today" programme on 6th February Mr. David Elstein, head of programmes for Sky, told James Naughtie, that our proposals would be,
"wonderful news for Sky. We would now get highlights of all the listed events".
Exactly, my Lords. He got it right. I am very pleased that it is good news for Sky. I hope that Sky and Mr. Elstein will maintain that posture about the rest of the highlights we seek to protect. I hope that they are not opposed to the amendment. From discussions I have had I fear that I may be hoping in vain.
The Minister will tell us, according to the statement he issued yesterday, which again we appreciate—he was being very helpful as he always is—the result of the Government's ludicrous consultation exercise. We were told that the Government would consult all and sundry—everyone in the land—over a period of two years. I am sorry, I should have said two weeks. Two years would have been more appropriate. I am sorry for that slip. He will claim that that is what they have done. He will say, I believe, that his consultation exercise shows no substantial demand for protecting the highlights and that all the concern is about the listed events. That is not the case. I am sorry to say to the Minister that I take issue with him about his interpretation of his consultation exercise, although we really do not know much about it.
For example, the Independent CHA Sensor Poll, carried out on 20th February, which is only a week or two ago, found that two-thirds of cable and satellite viewers were unlikely to take up pay TV and that 80 per cent. of all viewers think the Government should legislate to protect the highlights. I hope the Minister will tell us today the organisations which were consulted and which could speak for the 30 million people without cable or Sky television. That is an important matter. I, for one, would like to meet the organisations the Government believe speak for the nation in order to find out exactly what they said and why the Government have not accepted their advice. They have rejected their advice.
One of the organisations consulted was the Voice of Listener and Viewer organisation. I have had the opportunity this morning to speak to Professor Vincent Porter of Westminster University who tells me that he was consulted. He spoke to officials in the department for one-and-a-half hours. What he told me is quite fascinating. He said that he drew the Government's attention to the fact that the Copyright Act guarantees,
"freedom to report news and current events".
That removes from our discussion any doubt as to whether the terrestrial channels can show on news programmes events which Murdoch has bought. That seems to have been cleared up, and I should like the Minister to confirm that.
Professor Porter drew my attention to a case in the European Court. I know that this is not a good day to quote in aid the European Court; nevertheless it decides what European law is. Therefore, we have to take account of it. The professor told me that it had recently made case law in a case which the BBC lost. The court determined that any holder of a contract for live television would be in breach of competition policy if it did not provide for the separation of highlights. That is a recent decision of the European Court. Not to do so would be contrary to the competition directive of the European Commission. The European Commission is apparently following up the matter.
The key is that the policy has to be exercised for the maximum benefit of the viewer. The European Court decided that not to allow highlights would not be for the maximum benefit of the viewer. If that case law is right there is no need for my amendment. I am anxious to hear what the Minister has to say. I assume that the Government know about the decision of the European Court. No one has informed us about it until now. I assume that since the professor spoke to the officials in the department the Government have had the opportunity to examine what the professor told them. I hope that the Minister feels able to give an authoritative comment and ruling today. If this viewers' organisation is wrong, we must persist with our amendment. If it is right, we shall probably need to think again. We await the Minister's response.
There is one final point. If we cannot protect the highlights of so many events of such importance to millions of people, and if, as appears to be the case, the Government do not wish to assist us to do that, then almost inevitably we shall have to do the job ourselves
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at Third Reading. We shall have to seek to add to the list of events. The Five Nations Rugby and some of the other events I read out need to be protected. That is my judgment and, I believe, the judgment of many of your Lordships and certainly masses of the public. If the Government will not protect them, and if they are not protected, I hope the Minister will take note that inevitably we shall have to return to the matter at Third Reading and attempt to extend the number of listed events in order to achieve our objective.
As I said, I hope very much that, having moved this amendment in what I hope is a reasonable spirit of conciliation with the Government, we can get some movement. I am aware that the Sports Council is trying now to draw up a voluntary code of conduct in these matters. I am not usually very enamoured by voluntary codes because often people find ways to break them. It will be a significant advance if a voluntary code is drawn up and all the television companies and sports bodies agree to accept it. We shall have to wait and see how that goes. I do not expect the Minister to be able to tell us much more about it now.
I hope that I have done enough to convince your Lordships that this is another matter of major importance, but perhaps we might have to do more work on it. However, it is right to raise it now and possibly to seek a vote either today or at Third Reading. I beg to move.
3.30 p.m.
Lord Aberdare: My Lords, I congratulate the noble Lord, Lord Howell, on his success at Committee stage in getting the present Clause 1 written into the Bill. I also join with him in thanking my noble friend the Minister in having agreed that this is a worthwhile clause and that he is to produce another amendment at Third Reading which will help it along.
At first sight, and from what the noble Lord said, this amendment too is very attractive despite that most unattractive word "unbundling". The amendment has been eloquently moved. But I have come to the conclusion that it is not an amendment which your Lordships should accept. It is immensely complicated. Your Lordships have only to look at the amendment on the Marshalled List to see how difficult it is to understand. Even after the noble Lord's explanation, I do not believe that I really understand what it is all about. I am sure it will cause great difficulty in its implementation, both to broadcasters and to the governing bodies of sport.
More importantly, it interferes radically with the rights of the sports bodies to negotiate freely with the broadcasters. They own these rights and they are used to negotiating with the broadcasters, covering all the various alternative arrangements that are available, from live broadcasting, recorded broadcasting and radio broadcasting. It is one thing to interfere with the so-called "jewels in the crown". That covers an already existing list, presently applied to terrestrial broadcasting only, and great national sporting occasions, which should indeed be available to the widest possible public. It contributes to that expression which we were discussing recently in another debate, "social cohesion".

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But to go further and interfere by statute in all sporting rights is a much more serious step. Is it really necessary? Rights holders with sufficient mass appeal are already unbundling their rights. Cricket, football and Rugby Union authorities have all chosen a mixture of satellite and terrestrial coverage. The noble Lord mentioned the World Cup. I saw the England v. Pakistan World Cup highlights and I agree with him that it was not always pleasurable viewing; but there it was on Channel 2. Sports authorities are perfectly well able to decide between the large financial incitements offered by BSkyB and the far greater audiences offered by BBC and ITV. That has proved the case where the Olympic Games and lawn tennis have both opted in favour of large audiences.
These are complicated negotiations that have to take place each time and in my opinion they are much better left to be decided without statutory interference. Moreover, there are a number of minority sports where compulsory unbundling would be quite inappropriate and probably to their disadvantage. Is it intended, then, to issue another list of sports liable to unbundling?
Recently the noble Lord, Lord Howell, criticised the Central Council for Physical Recreation. I say nothing about his criticism, but I believe that even he would recognise that the views expressed by the CCPR do represent those of most, if not all, the governing bodies of sport. They have benefited greatly from the increase in sports broadcasting and they would greatly resent any statutory interference with their rights.
Lord Howell: My Lords, I am grateful to the noble Lord for giving way. Perhaps I may inform him that the views that he ascribes apply to one part of the council; namely, the major spectator sports division. It makes them no less important, but that is the case. The chairman and the executive of the Central Council for Physical Recreation represent 300 bodies and they have never been consulted about these matters since the letter was sent out in the past few days, which I believe the noble Lord mentioned.
Lord Aberdare: My Lords, I am grateful for what the noble Lord says. I am not in any way denying how he criticises the leadership of the CCPR. What I am saying is that all major national sports bodies are not anxious to have statutory interference with their negotiations on their own rights.
I believe that the present system of freely negotiated coverage is the best for all parties. But I do welcome also, like the noble Lord, the idea of a sports council and a voluntary code of conduct. I believe that would fill the bill admirably and would be much preferable to the present idea of statutory interference. I hope that your Lordships will not accept this amendment.
The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood): My Lords, my noble friend Lord Aberdare is much quicker on his feet than I am. I hope that it might be of assistance to your Lordships, before we turn to the specific amendments, if I outline the Government's
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position on the important issue of broadcast sports rights. Noble Lords may recall that I explained to your Lordships at Committee stage that I would come back with the Government's position by Report stage and I feel that I must do that at the outset.
I am sure that we shall have another useful debate. No one can be in any doubt about the strength of feeling on this issue. Parliament has the last word on it and it is for Parliament to decide. Your Lordships' House is playing a full part in that process. The Government will take careful note of all the points of view expressed this afternoon.
Since your Lordships last debate in Committee on 6th February, the Government's consultation exercise has proceeded and is now effectively complete. We have had meetings with broadcasters, regulatory authorities, consumer groups and sports bodies. I shall willingly send a list of them to the noble Lord, Lord Howell. We have received a number of written representations to supplement extensive correspondence from Members of Parliament, sporting and other interests and, above all, from the public. We have reviewed the recommendations of an earlier report on this subject by the National Heritage Select Committee in another place. Of course, we have had very much in mind your Lordships' earlier contribution in discussion of the Broadcasting Bill.
Overall, the consultation process has proved useful. It was welcomed by all the participants. It has given everyone concerned the opportunity to put their case when they knew the matter was under consideration. It has allowed the Government to reach a clearer and better informed understanding of the complex issues involved.
There are no easy answers here. Current arrangements for the broadcasting of sports events have brought significant benefits for sport in the form of investment in new facilities and training programmes at all levels. There is more sport on television than ever before. But the Government recognise public concern that the next stage in the development of subscription television could affect the ability of terrestrial free-to-air broadcasters to provide coverage of key sporting events—that is to say, those which have a resonance not only to sports fans—and we believe that legislative change to secure this is justified. In deciding the terms of such change, we need to find a measured balance between all the interests involved.
It is clear from the representations that we have received that the public's primary concern relates to listed events and to how coverage of them should be protected for free to air terrestrial television. In that context, I am referring to the vast majority of letters from members of the public direct to Ministers or via their Members of Parliament. They are concerned at the loss of live coverage of sporting events and are not seeking extensive highlight coverage.
That moves me towards the issue covered by the noble Lord's amendment on which your Lordships voted in Committee, and which now stands as Clause of the Bill. It extends the existing controls in the Broadcasting Act 1990 to prevent the live transmission

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of listed events on an exclusive basis by pay-per-view or subscription services. The Government had already put forward that idea in their own discussion paper. We accept that an extension of existing protection along the lines which your Lordships voted so emphatically into the Bill is justified and that a clause modelled on the amendment tabled by the noble Lord, Lord Howell, should accordingly form part of the Bill, but we should like to build on the thinking underlying the amendment and in addition to put right some specific deficiencies to which I drew attention in Committee.
For that reason, the Government propose to introduce at Third Reading an amendment to guarantee the availability of live coverage of listed events to terrestrial television and to provide for a number of associated measures to secure the best deal for sports bodies, broadcasters and the public. I am sorry that it has not proved possible to table an amendment for Report stage, but I hope that it may help the House if I outline now the main elements of the Government's proposed approach.
Our intention is that a subscription or pay-per-view service would not be permitted to broadcast live coverage of a listed event unless rights were made available to a terrestrial service on fair and reasonable terms. Equally, on the basis of reciprocity, a terrestrial service would not be permitted to broadcast live coverage of a listed event unless rights were similarly made available to a subscription or pay-per-view service. Within classes of service, exclusive sales to individual broadcasters would he possible.
Such an approach would safeguard listed events for terrestrial television, but at the same time be more liberal than the controls in the 1990 Act which imposed a rigid ban on the live coverage of listed events on pay-per-view services. It would help to sustain competition on price in the interests of sports bodies. There would be scope for subscription broadcasters to offer alternative or fuller coverage of a listed event which was shown on a terrestrial channel. This would be to the benefit of the viewers who might wish to avail themselves of it. Enforcement would be through the ITC by analogy with the 1990 Act provision; and we should expect the BBC to commit itself to a regime along similar lines. There should be a review mechanism to reflect the need for flexibility in the fast-moving broadcasting sector.
Such an approach goes fully with the grain of the amendment passed by your Lordships' House. It is also in line with an earlier recommendation of the Select Committee of the other place. We believe it strikes a fair balance between the reasonable interests of all those concerned; and I hope that our planned amendment to this effect will commend itself to your Lordships when we present it to you.
I have said that public interest has focused very largely on listed events. Alongside calls for added protection for coverage of listed events there have been various suggestions that the list itself should be modified. The Government keep the list of listed events under continuing review. Any proposals to add to or subtract from it need to be considered carefully in consultation with the various interests specified in the
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1990 Act. One point that has been made in consultation is that the process of deciding on the contents of the list should be made more transparent, and in particular that criteria should be established to act as a reference point for future discussions. The Government think that this is an interesting suggestion and we shall consider it further.
This might be an appropriate moment for me to sit down because, with your Lordships' leave, I should very much welcome the opportunity to hear the comments of other noble Lords on the amendment before commenting on it myself on behalf of the Government.
3.45 p.m.
Lord Thomson of Monifieth: My Lords, I am sure that the whole House is indebted to the Minister for what he has just said which is for the convenience of the House. It will be helpful to discuss the amendment which was so ably moved by the noble Lord, Lord Howell, against the background of the announcement that the Government have just made.
We should also congratulate the Minister on having conducted one of the fastest processes of consultation in the history of this somewhat slow-moving and dilatory Government. If there were an Olympic gold medal for speed of consultation, I think that the Minister should now be enjoying it. We shall want to study carefully the detail of what the Minister has said about the amendment which he is to move on Third Reading to deal with the listed events provisions which your Lordships passed at an earlier stage.
I shall say no more about that at this stage beyond underlining what the noble Lord, Lord Howell, said about one aspect of the consultation. If I remember rightly, the consultation paper relied largely on statistics provided by BSkyB. The Minister seemed to rely on the rather speedy consultation process and on letters that he has received on the matter. He should not rely too much on the fact that ordinary, concerned citizens who give their views should, as he put it, have an interest only in protecting listed events and do not have an interest in the wider area of the broadcasting of sporting activities. I do not think that the ordinary concerned citizen can follow the detail of these matters too closely. The noble Lord, Lord Howell, quoted a figure from one newspaper opinion poll suggesting that 80 per cent. of people felt that Parliament should legislate to protect sporting events more generally rather than simply the listed events. That figure should be given due weight.
Having said that, I turn to the amendment moved so ably by the noble Lord, Lord Howell, who has great knowledge and experience of these matters. He put his case extremely modestly and fairly. It is important to realise the distinction between listed events and protected events and what we are discussing in this amendment which goes a great deal wider. The listed events, the so-called "Crown Jewels" as the noble Lord, Lord Aberdare, called them, are more than sporting events. They are national occasions. They are part of the social Cohesion about which the noble Lord spoke.
Beyond that, a wide range of major sporting events are now broadcast. The proliferation of satellite and cable channels which are mainly dependent on

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subscription has meant that sporting events are now more widely available, as the Minister has just said. Undoubtedly, in general that has been good for the sporting organisations which can now get a much fairer price for their sporting rights than was the case in the days when only the BBC and independent television competed for them. It has been good for BSkyB and other satellite and cable operators. In general, it has been good for viewers and listeners, apart from the concerns which are the main thrust of this amendment.
In my judgment, given the spread of the broadcast of sporting events, our starting point ought to be that there is now ample money to go round if no one is too greedy or too shortsighted and if there is a willingness to put the interests of the general viewing and listening public first.
We must bear in mind that for some years ahead the vast majority of people will depend on the main public terrestrial channels for their viewing of sporting events. All the research indicates that well into the next century main viewing will remain with the terrestrial channels. The rights to television highlights or to live radio should therefore not be "hoarded", to use the word of the noble Lord, Lord Howell. Where a broadcaster has bought exclusive live rights for subscription, there should be a legal obligation to make the highlights available to channels with a universal audience.
We believe that the ITC should be responsible for regulating that. It can do so through the conditions that it already imposes in licences on subscription broadcasters. One should not forget that once the Bill becomes law the ITC will be able to regulate the BBC if the BBC decides to go in for a minority subscription channel in the future in just the same way as it can regulate BSkyB and other satellite operators.
The amendment does not prefer one channel to another. The ITC would regulate those over which it had coverage; the Radio Authority would regulate the radio channels; and the Director General of Fair Trading would, of course, have the ultimate sanction. If concern remains about the BBC avoiding regulation, the provisions can—I would support this—be made binding upon the governors. It goes without saying that the changes that we propose in the amendment are in no way retrospective. There is no question of existing contracts being hit.
The change can help the sports bodies—I say this to the noble Lord, Lord Aberdare—if they take other than the most short-term view of where their interests lie. It will help to create a longer term market—a new set of secondary sporting rights. They will be able to negotiate in different markets and extract the highest price from them all.
My experience of the preparations for the Bill, and the vigorous lobbying that we have all received from the various interested parties, has been a vivid insight into the fact that the market place for sporting rights has become a jungle in which everyone fights fiercely, and understandably, for their own interests. I do not in the least regard the BBC or ITV as knights in shining armour with regard to operations within that
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marketplace. No one who has spent time as chairman of the IBA could ever regard ITV as a knight in shining armour. Nor do I regard the other side, represented by the subscription broadcasters, as being the forces of darkness.
In the amendment we are genuinely trying to strike what the Minister called the balance of various conflicting interests. From these Benches, we believe that in the interests of the viewer and listener the marketplace requires some statutory regulation. It cannot be left just to voluntary codes of conduct and to the chance of agreements being made, as they have sometimes been made recently, at the very last minute. In such cases, I believe sometimes that it is only because the matter is being debated in your Lordships' House. For those reasons, we believe that the amendment is the best way to look after the interests of the viewer and listener, and it is the best long-term bet, incidentally, to stop undesirable monopolies emerging.
Viscount Whitelaw: My Lords, this is an important advance. My noble friend Lord Thomson—if I may call him so—has put forward a generous offer. He believes that it is the right way for the Government to go forward. I understand the important way the noble Lord, Lord Howell, has put forward the matter. It should be considered carefully, but when one hears what my noble friend the Minister said—he has worked extremely hard in a difficult situation—I feel that it is an opportunity for the House to make a valuable advance which can be taken forward by the Government when the Bill goes to another place.
This seems to be a sensible plan for many people who are anxious and want to see the service developed. I thank my noble friend the Minister for having made a considerable effort in moving in what I believe to be the right way.
Lord Barnett: My Lords, I believe that the Minister has done a marvellous job generally in his handling of the Bill. I would be the first to concede that he has done an excellent job generally throughout our discussions. The discussions I have had with him have confirmed that.
The noble Lord, Lord Aberdare, said that he did not understand the issue of unbundling. Perhaps I may try briefly to explain. For example, last night—the noble Viscount, Lord Whitelaw, with his previous interest in the north east may be sorry to know this—Newcastle lost to Manchester United. I was pleased about that, but I did not have an opportunity to see the match. I should have liked to have seen it. Under my noble friend's amendment, we would have had a chance to see it on terrestrial television. That must be helpful. I see that the noble Viscount agrees. I hope that if the Minister does not accept the amendment today he will at least come back, as he has done on the main amendment, at the next stage of the Bill.
It is important that the ITC, and no one else, as the noble Lord, Lord Thomson, said, should have the responsibility. That is not because, as he said, the BBC and ITV are knights in shining armour. As a former vice-chairman of the BBC I never saw myself as a

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knight in shining armour, as I know he is aware. The change could help everyone concerned. This is the big issue. It helps the sports bodies. It would help them create a new set of secondary sporting rights. There would be live rights on television for all concerned.
There would be no question of doing anyone out of the responsibility of presenting the sporting programmes that we all want to see. I see that one noble Baroness, the noble Baroness, Lady O'Cathain, does not want to see them. I know that there are some people who do not want to see sport on television, but they can watch other channels or not bother at all.
To answer the noble Lord, Lord Aberdare, the matter is simple. There are no complications about this. Anything a monopoly television power has on its subscription or other channel should be available elsewhere. Even if it is a monopoly to the BBC or ITV, that should equally be available elsewhere. That is all that is being said by my noble friend Lord Howell. The change would work in the interests of viewers, listeners, and the sporting bodies themselves. It is also in the best long-term interests of stopping monopolies emerging any where.
My noble friend Lord Howell will correct me if I am wrong, but that is the main purpose of the amendment. Put briefly in that way, I hope that your Lordships will support it.
Lord Newall: My Lords, at first glance I had great sympathy with the amendment, but after looking at it more carefully I feel that it is not right. Many of the movers of the amendment are friends of mine. I have supported them and they have supported me. I support the Government over my noble friend the Minister's recommendation that the so-called unbundling provisions are neither desirable or necessary.
As noble Lords know, and as I have said on many occasions, I have an interest to declare as chairman of the British Greyhound Racing Board. Greyhound racing, together with all other major spectator sports in this country, strongly opposes the suggestion that rights for live and recorded television and radio rights should be sold separately.
Recorded rights could lose all their value, as any broadcaster could claim them by statutory right. That is not what we want. The bidding process would be almost impossible. It would be impossible for a rights holder to agree a price with a broadcaster for exclusive rights if neither party knew the extent or the price of the highlights package. That is important, although it is complicated.
We have to ask what are the reasonable terms which the amendment suggests, and how are they arrived at. Who would have to agree them? It is a minefield. The Government are wise to oppose instant legislative solutions in this area. We need to look at this issue in much more depth in the future. Without taking a great deal of time, I agree with my noble friend the Minister and oppose the amendment for the reasons I have given.
4 p.m.
Viscount Astor: My Lords, I support what my noble friend said. Perhaps I may comment on the amendment and say who it affects. The main beneficiaries will he those who operate the terrestrial television channels. It is worth noting that the ITV Association, which represents all ITV companies, has said that on balance it prefers to allow the market to take its course on unbundling within existing competition rules rather than the complicated legislative process which the noble Lord, Lord Howell, is suggesting. We must remember that competition rules carry weight. If there is any anti-competitive behaviour those who feel hard done by can go to the OFT. The problem with the amendment is that it is extremely complicated and, I believe, unworkable. The terrestrial broadcasters who are affected say that they would prefer the market to take its course.
The BBC, which is also affected, states that it is in favour of the amendment. However, we must remember that the BBC is a past master at anti-competitive behaviour because it does not make its highlights available to other broadcasters. The noble Lord, Lord Howell, criticised the Minister's consultation exercise as ludicrous. I offer the same criticism of the noble Lord's survey, which was the same as asking, "Do you wish to have everything for free?". Of course, the answer is always yes and we must not read too much into the survey. We must look at what those in the industry say and take their comments to heart. My noble friend the Minister has made an offer which we should consider most carefully.
The Earl of Harrowby: My Lords, my noble friend Lord Astor said that the main beneficiaries will be the organisations concerned. Perhaps I may remind him that the main beneficiaries should be the viewing public, who we must also consider.
When the related amendment was debated in Committee I was snow-bound and regretted that I was unable to support it. When I entered the Chamber I intended to support the noble Lord's amendment and I still intend to do so. However, I would qualify that because I would wish to read what my noble friend the Minister has said. His comments were difficult to follow exactly and they could alter one's opinion.
Two issues are involved. The first is that we are dealing with individual assets and it has been asked whether it is right to circumscribe one's rights to deal with those assets. That is not a unique problem and it would not be a precedent to say, "No, you cannot". Perhaps I may remind your Lordships that, for instance, I am not allowed to sell a mantelpiece in a house that I happen to own freehold. There are innumerable instances of inability to have freedom to deal with assets.
The second issue is the financing of sport. The phrase "short-termism" has been mentioned and I endorse the comment. In my view, the opponents are adopting extreme short-term attitudes if they believe that by eliminating 85 per cent. of the viewing public they are advancing the interests of their sport. In the short term

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they might be doing so, but I am sure that in the long term it will be the ruination of their sport. That is why I support the original decision reached by the House and this amendment.
I conclude by asking the Minister to mention to the Secretary of State the fact that I can think of no better way of losing for her party and mine 500,000 votes at the next election than by denying the general public the opportunity to watch not the finals of Wimbledon but the whole of Wimbledon.
Baroness Rawlings: My Lords, I fully support what was said by the noble Lord, Lord Aberdare, but I understand what was said by the noble Lord, Lord Barnett, about the screening of a football match last night that he was unable to watch. But why does the noble Lord believe that if the amendment were accepted he would be able to watch such a match? If no one could afford to pay the subscription he still would not be able to see the match. I support the Government and I agree with the noble Viscount, Lord Whitelaw, that we need to consider the matter again. I oppose the amendment.
Lord Orr-Ewing: My Lords, I support the idea because it is important that the highlights should be shown separately from the main event. Time is of the essence for television because many people are not at home when events are shown live during the afternoons. It is desirable that highlights are shown in the evenings, perhaps on a different channel.
The Minister was sensible in proposing flexibility because that is also desirable. Circumstances are changing fast, not only technically but in sport too. The Boat Race used to be one of the highlights of the reserved sporting events. Although it is still televised it is not a protected event. Rugby League was played mainly north of The Wash but now it is a popular event and the finals must be considered. There will be many more changes and I am in favour of flexibility and consultation taking place over the years. These items are not set in tablets of stone and they will change. Therefore I ask the Minister to build flexibility into the system.
Lord Dixon-Smith: My Lords, I agree that public taste in sport changes. It may well be that in future there must be negotiations about what have been defined as the crown jewels of sport. However, that is not the purpose of this amendment. It deals with the issue of highlights appearing on the screen if there is an exclusive contractor for pay television on the terrestrial channels or vice versa.
Such matters are one's of taste and judgment. It is my opinion, because I am an impatient man and I do not mind admitting it, that the highlights are considerably more worth while seeing than the original event. I should have thought that any contractor such as Sky, which has exclusive rights to a match or series of matches, would have a valuable market in which to sell the highlights. However, the value of that market is difficult to determine.
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The amendment provides for "reasonable terms". The difficulty with that phrase is that it will be a part of the law which will depend on the agreement of third parties who are not party to the law. They may be susceptible to it but they are not party to it. What will happen if they do not agree? That being the case I ask: why bother with an amendment? I believe that we should allow a reasonable market for what I regard to be a most valuable commodity. In that case the BBC or ITV will, if they wish, readily purchase for a reasonable sum the highlights of an event to which they do not have exclusive rights. I believe that the matter would be best left in that form and therefore the amendment is unnecessary.
Lord Ashley of Stoke: My Lords, the issue of the crown jewels has already been settled and my noble friend rightly seeks to go further. I believe that that is the proper thing to do. I never regarded the crown jewels as being the major issue. It is an important issue but we wish to go wider because people are interested in more sport than is included in the crown jewels. When noble Lords opposite say that we should leave it to competition they appear to assume that the academic concept of perfect competition can be operated. However, it does not operate like that in any industry and certainly not with broadcasting and sport because the so-called competition leads to monopoly. A monopoly means that the vast majority of people cannot watch sport because the monopoly rests with those who can afford to pay the most. That is the nub of this debate.
The noble Lord mentioned Rugby League. That is now of national interest. It is of national interest because it was not confined to Sky Television. The BBC televised it. That is why we must preserve the freedom for the majority of people to watch sport, and that is why my noble friend's amendment is the right way forward. I hope that the Minister will accept it.
Lord Donoughue: My Lords, I thank the Minister for accepting the will of this House and the country on Clause 1. I was intrigued to read that the Secretary of State was in favour of our clause all along. You could have kidded me in view of the tussles which took place beforehand. However, we graciously welcome the conversion.
We are still not happy with the Government's statement, especially in regard to highlights. In that respect we support everything which my noble friends Lord Howell and Lord Ashley and the noble Lord, Lord Thomson, said. I did not add my name to the amendment but that reflects what I might call the clamour for signatories. On these Benches we give the amendment total support.
I shall not repeat all the arguments because we have a great deal more work to do today. However, I emphasise that the amendment is basically an implementation of the basic principles of Clause 1 which the Government have accepted. Those are the principles of national public access and non-exclusivity. I believe that the 85 per cent. of the British sporting public who do not pay hundreds of pounds a year for satellite television should not be

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excluded from watching the highlights of golf, rugby and its Five Nations competition, Formula One, and so on. In practice, such exclusion would be the consequence of rejecting the amendment.
The Government's main argument against the amendment will be the familiar one of market forces. I do not accept that. The purchase and sale of monopoly rights for a minority audience is not the ideal example of the free market in operation. In fact the amendment seeks to safeguard competition by ensuring broadcasting competition and consumer choice. Above all, it prevents minority monopoly control. Nor do we believe that the sporting bodies which control golf, rugby and so on will benefit if they create a monopoly view for 15 per cent. of supporters. They have an obligation to their wider constituency of supporters, including the young, the old and the poor who cannot afford satellite fees. I believe also that it is not in their interests to create a monopoly purchaser. I agree with everything the noble Earl, Lord Harrowby, said about that.
I make a particular point which I ask the Minister and the Government to take into account. The logic of eliminating highlights from protection will increase the pressure to extend the protected list. It is possible to have a short protected list when people have highlights of other sports such as, for example, golf. But if 85 per cent. of the nation is not able to view any golf—for example, the British Open or the Ryder Cup—then there will be great pressure to put it on the protected list. That will apply also when the rights to the Rugby Five Nations competition are renegotiated. I believe that Sky will purchase the rights to live coverage. If the highlights are not protected most people will not be able to watch any rugby. Therefore, if the highlights are not protected we shall have to consider adding to the protected list.
The amendment is not anti-pay TV and not anti-subscription satellite. It gives to Sky the same rights to highlights when the BBC or ITV are showing live coverage as happens vice versa. Clause 1 gives Sky the same non-exclusive live coverage rights as it gives the BBC. In our view it is a fair amendment. It is fair between broadcasters and it is fair to television and radio customers. I hope sincerely that before Third Reading the Government will think again.
4.15 p.m.
Lord Inglewood: My Lords, with the leave of the House, I hope that I may turn now to the amendment in the name of the noble Lord, Lord Howell. I begin by confirming that in that area the fair dealing provisions contained in the Copyright, Design and Patents Act 1988 apply. That permits the use of news clips of sporting events in news programmes. That would have enabled the noble Lord, Lord Barnett, to have seen at
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least the goal to which he referred. I speak with sadness as a Member of a House full of Newcastle United supporters.
Lord Thomson of Monifieth: My Lords, I am grateful to the noble Lord for giving way so quickly. Would it allow any of us to see the knock-out in the big fight if it lasts only one minute?
Lord Inglewood: My Lords, my understanding is that one could not only see the knock-out but the whole fight. The Government have considered unbundling with great care. We have discussed it with all the relevant interests as part of our consultation process. I am very grateful for the comments made by my noble friends Lord Whitelaw and Lord Orr-Ewing. But we remain unpersuaded that any advantages of an unbundling provision would exceed the disadvantages of a major and complex interference in the market. We are therefore not able to support it.
This amendment is different in kind from the amendment on listed events. It introduces an entirely new concept unparalleled in any other aspect of broadcasting here or, to our knowledge, elsewhere in the world. Its scope is far wider than the listed events amendment. All events of national and local interest, actual and potential, are covered. The financial effect on sporting bodies could, we believe, be considerable, with corresponding damage to investment in facilities and training. Moreover, it imposes rigidities at a time when broadcasters need flexibility to respond to technical and market developments.
Nor are such controls justified by public policy considerations. As I explained, we are taking action to protect the sporting events which are of acknowledged special importance to the nation as a whole, and we retain the power to extend that protection by adding to the list of listed events. There is no substantive public demand for wide-ranging new powers to make more sport available on television and radio. Viewers can already enjoy over 2,500 hours of sport a year on terrestrial free to air TV. There is no question of an insufficiency of sport in general. Coverage includes items on the list and live coverage of many other events, highlights of major events, and a plethora of lesser interest sports. At an average of seven hours a day on terrestrial free to air television, I do not think that viewers can seriously consider themselves deprived of sport. Indeed, some respondents in our consultation exercise thought that broadcast sports coverage was already excessive. And we must not overlook that large proportion of the public, of whom my noble and learned friend Lord Hailsham spoke, who do not like sport and want to look at other things on television.
The Government understand, as my noble friend Lord Astor pointed out, that the ITV Association thinks it preferable that the market should take its course within existing competition rules and sees advantages in this approach. Furthermore the Government also understand that the Sports Council advocates a voluntary code of conduct including an agreement by governing bodies of major spectator sports that viewers and listeners should have the widest possible access to

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major sporting events. The Government also see attractions in that approach and invite the Sports Council to develop it with the governing bodies. No doubt they will bear in mind the comments of my noble friend Lord Harrowby and the fact that the popularity of sport depends on the public's access to it.
The amendment implies, as my noble friend Lord Aberdare pointed out, an intrusion into the legitimate rights of sports rights holders which we consider unwarranted as drafted. It fails to recognise the reality that in general there is widespread availability of highlight coverage, duly negotiated between the sports bodies and broadcasters. It is clearly in the interests of sports bodies to secure wide coverage for their sports. Despite a number of specific causes célèbres, some of which may not be quite as generally supposed, we do not believe that the case has been made for the kind of changes proposed. Indeed, the publicity generated by your Lordships' House in debating this subject is, we believe, likely to focus sports rights holders and broadcasters on the central issues involved and we hope that this will lead to sensibly thought-out policies recognising the implications for all those affected. In short, the amendment would impose controls where we believe they are not justified on grounds of public policy, as my noble friend Lord Newall pointed out. I must conclude by saying to the noble Lord, Lord Howell—I am sure that it will be a disappointment to him but not a surprise—that the Government cannot support his amendment.
Lord Howell: My Lords, I am most grateful to all the speakers who have taken part in our reasonably brief but fascinating debate and for the spirit in which they have done so. I shall be brief and comment on just one or two points that were made. The noble Lord, Lord Aberdare, wondered whether the principles were necessary here, having previously told us that he supported the same principles in the Division Lobby regarding the listed events for which I expressed my appreciation. But we are now dealing with the very same principle; indeed, it is the very same principle that I am asking the House to accept and extend to major sports not included in the listed events. I repeat what my noble friend Lord Donoughue said; we may have to look again at the listed events. I believe that that is what the country would want us to do.
The noble Earl, Lord Newall, told us that it would be difficult to agree a price for such matters if highlights were to be negotiated. Why would it be so difficult? There has been no difficulty in negotiating the price of World Cup cricket: it was £1 million and both sides agreed that that was a reasonable price. Indeed, that has happened where other highlights have been shown. There is no difficulty in agreeing a price when reasonable people want the highlights to be shown. All the mechanisms of supply and demand apply.
I am most grateful to the noble Earl, Lord Harrowby, for the point that he made. Indeed, he raised matters which the House will know concern me regarding the social responsibilities of sport. However, I shall not repeat that argument, except to say that I have raised the
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matter several times in Committee and on Second Reading and in private correspondence to some of the major sports bodies. I have asked the latter how they intend to discharge their social responsibilities regarding the elderly and others who do not have Sky or cable television because they cannot afford it—£300 to install and a yearly charge just to look at sport. I have also asked them, "How do you intend to discharge your responsibilities to the youth of the country?". If millions of homes are deprived of seeing any sporting excellence, that might undermine the future of British sport. The noble Earl was right to raise the matter again, because we have received no response whatever from those sporting bodies as to how they intend to meet that situation. If they cannot tell us how they intend to discharge their social responsibilities to the nation, they can have no complaint if this House decides that we must do something about it. Those responsibilities remain.
The noble Lord, Lord Dixon-Smith, told us that we could have highlights concentrated in the evening and that that would be most valuable. I am inclined to agree with him—
Lord Hailsham of Saint Marylebone: Get on with it!
Lord Howell: My Lords, I can tell the noble and learned Lord that I am getting on with it. I am sorry that he feels a little exhausted, but that is because he does not like sport; indeed, he likes to see legal matters, which is hardly the sort of sporting contest that the rest of us enjoy.
I should tell the noble Lord, Lord Dixon-Smith, that it is because there is no commitment at present to show highlights that we have this problem. If the commitment was there by subscription and terrestrial TV—and I believe the Government hope that that will be the case, especially if the voluntary code of conduct of the Sports Council comes into being—that would deal satisfactorily with the matter.
As always, the Minister has dealt with the matter most kindly and gently. I believe that, like us, he is trying to reach some sort of agreement, or consensus—if the latter word is more appropriate. The reason for the issue of highlights not arising in his consultation process is that no one has been talking about them. The whole public argument on television, in press reports and elsewhere has been about listed events. Had we gone into the subject of highlights at an earlier stage I can assure the Minister that his postbag would have reflected the situation; indeed, that would be the case were we to do so now.
I am disappointed that the Minister has not responded to the point that I made about the ruling of the European Court. I regard that as being extremely important. As I said earlier, if the European Court has decided that highlights must be sold separately under European competition policy, that is an important consideration. However, I do not ask the Minister to comment now on that aspect because the course of action that I am about to ask the House to follow will enable him to give more consideration to it just as I intend to do. Indeed, the point was only brought to my attention this morning.

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If it is right that the European Court's decision now means that, according to case law, it will now be unlawful not to "unbundle" highlights from the main contract, then obviously that would render my amendment unnecessary. I also have regard to the fact that the Sports Council is trying to negotiate a voluntary code of conduct. I am prepared to give that a fair wind. I hope that the council will be able to do so and that it will be able to tell us how it has got on by the time we reach Third Reading. If the council makes progress and if all the sports bodies and the terrestrial and subscription channels of television find it possible to agree to a code of conduct as a voluntary matter, I am sure that that would be a great relief to all of us. It would unite both the Minister and myself and obviate the necessity to proceed much further.
It is because I want to bring that agreement about and ensure that in future we do not have another case like the Ryder Cup, where a great event was screened but denied to the majority of the public, that I believe the amendment should be withdrawn now in the knowledge that, when we have all reflected further on the matters which have arisen, we can return to the issue on Third Reading. That being the case, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Howell Lord Howell moved Amendment No.2:
After Clause 1, insert the following new clause—
HOLDING OF LICENCES: RESTRICTIONS ON INVOLVEMENT IN ADMINISTRATION OF SPORT
(".—(1) Sections 5 and 88 of the Broadcasting Act 1990 are each amended as follows.
(2) In subsection (1)(a), after "who" insert—
("(i) is involved, or any of whose employees, agents or representatives is involved, in the government or administration of any sport in respect of which he is the holder of any exclusive broadcasting right, or
(ii)".
(3) At the end there is inserted—
"(8) In this section "exclusive broadcasting right" means any contract or agreement providing for the exclusive right to include in a broadcasting service any programme which consists of or includes the whole or any part of a sporting event, or of a recording of that event.".").
The noble Lord said: My Lords, I call this the "conflict-of-interest amendment". That ought rightly to be prevented, but many of us have a suspicion that it may be necessary to do so by legislation. It seems increasingly clear that in certain sports people are speaking both for the sport and for the television company in discussions which they are holding with each other. I shall not spend much time on the matter, but I should like to point out that when we negotiate such important contracts, which involve large sums of money and the rights of television companies, it is absolutely vital that there should be a clear distinction between the executives of the television companies and the governing bodies of sport. Therefore, the amendment has been tabled to express that opinion and
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to seek the Government's views as to whether they think that that is a danger for which Parliament ought to legislate. I beg to move.
Viscount Astor: My Lords, I read the amendment with great care. I have to tell the noble Lord that, while one has a certain sympathy for much of what he said as regards his earlier amendment and indeed the one that he moved on the last occasion when we debated the matter, the current amendment would seem to have a rather dangerous effect. When the noble Lord replies to the Minister's response, I wonder whether he could answer a few questions. First, why should those who have a stake in a sport not be allowed to have a stake in its broadcasting? There seems to be no reason why they should be excluded.
I shall give a couple of examples. The noble Lord's amendment would affect the Racecourse Association which owns a share of SIS which is the service which is transmitted to betting shops and also, via cable or satellite, into people's homes. Under the noble Lord's amendment such services would be excluded because they would be classed as shareholders in a broadcaster, and as sporting bodies. Further, a sport which is currently unable to find an outlet on television might, in order to try to encourage interest in the sport, commission its own programmes and then transmit them on a cable channel, whether that be in London or in the noble Lord's home town of Birmingham. It might do that for the sound reason of encouraging interest in that sport.
I believe that the noble Lord's amendment would stop any of those things happening and that must have a bad and restrictive effect on sport and sports' ability to be broadcast. All noble Lords know that the noble Lord, Lord Donoughue, is a keen racing aficionado. I hope that he will consider the impact of this measure on racing. I believe that the amendment of the noble Lord, Lord Howell, could be damaging to certain sports' bodies.
4.30 p.m.
Lord Inglewood: My Lords, I am grateful to the noble Lord, Lord Howell, for explaining that this amendment is intended to avoid possible conflicts of interests for those involved in negotiations between sports rights holders and broadcasting bodies. I am sure we would all agree with the sentiment underlying the first of these amendments. Conflicts of interest for those involved in negotiations between sports right holders and broadcasting bodies are clearly wrong. However, the Government are not persuaded of the case for legislation to deal with a matter that is best dealt with under the criminal law which has a full range of sanctions at its disposal.
Legislative provision along the lines of the amendment would also have damaging effects of the kind alluded to by my noble friend Lord Astor. It would prevent the development of new television services by sports bodies, using digital broadcasting techniques—that idea is being seriously considered by a number of sports—which in turn would damage digital television

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and digital audio broadcasting. We do not believe this could possibly be in the public interest. For that reason the Government do not support this amendment.
Lord Howell: My Lords, I am grateful to the noble Viscount, Lord Astor, for his comments, and to the Minister for his explanation. The short answer to the noble Viscount, Lord Astor, is that we should not allow people to negotiate with themselves. I agree with what was said about the possibilities of digital techniques and about some sports' bodies wishing to promote their own programmes, or to engage producers to put a programme together. I do not object to that concept, but I object to people who negotiate with themselves. I believe there is some evidence that that is happening, or there is a danger that it could happen. However, this amendment has served its purpose for the moment by enabling us to have a brief discussion on this matter. I hope that my friends involved in sport and in television will take note of the discussion and of the fact that we do not want any conflicts of interest in negotiations on the televising of sport. The advent of digital television may be some years away, but I hope that when that matter is discussed these principles will be borne in mind. As I have said, the amendment has served its purpose in allowing me to express these anxieties. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Howell Lord Howell moved Amendment No. 3:
After Clause 1, insert the following new clause—
ADVISORY COMMITTEE FOR BROADCASTING AND SPORT
(".—(1) The Secretary of State shall establish a committee to be known as the Advisory Committee for Broadcasting and Sport.
(2) The Committee shall consist of—

(a) a Chairman appointed by the Secretary of State, and

(b) fourteen members appointed by the Secretary of State representative of the interests of—

(i) broadcasters,

(ii) sporting bodies, and

(iii) viewers of and listeners to broadcast services.

(3) The Committee shall—

(a) review such matters relating to the broadcasting of sport as it considers appropriate, and

(b) consider any matter referred to it by the Secretary of State,

and shall from time to time report and make recommendations to the Secretary of State.
(4) Any report or recommendations made under subsection (3) shall be laid before Parliament.").
The noble Lord said: My Lords, I regard this amendment as one of considerable importance. It seeks to establish an advisory committee of people representing the interests of broadcasters, sporting bodies, and viewers of and listeners to broadcast services, to advise the Secretary of State on matters concerning listed events. It is incredible that the matter of whether or not an event should be labelled a listed event depends entirely on the whim of the Secretary of State.
When Mr. Kenneth Baker, when he was Home Secretary, drew up the previous list in 1990, he consulted no one. Out of the blue he declared that the
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eight listed events that we are discussing today—and have discussed on previous occasions—were the jewels in the crown. He was more or less correct in that assertion but it is monstrous that one Minister should be able to take such a decision without being required to consult anyone and without any known criteria having been established. We have applied our minds to this matter to establish what we can do to prevent that position persisting in the future. We have sought to suggest who should be represented on the committee. We propose that the Secretary of State should be allowed to appoint the members of the committee. We are not trying to impose any members on the Secretary of State whom he would find unacceptable.
We believe there are three main areas of interest where the relevant people should be consulted when listed events are determined. Those people are the broadcasters, the sporting bodies and the viewers of and listeners to broadcast services. That seems to me to be perfectly reasonable. I hope that the Minister can embrace the principle, if not the wording of this amendment. If he cannot do so, I hope he will tell us how in future the Government will determine listed events. We shall return to these matters from time to time but I should prefer to have a simple, tidy and permanent solution as to how these matters will be determined, and what criteria should be applied. This amendment seeks to achieve that solution. I beg to move.
Lord Inglewood: My Lords, the noble Lord, Lord Howell, has most helpfully put forward the case for a committee to assist the Secretary of State by advising her on matters relating to the broadcasting of sport. I can see the arguments for a committee of this sort although I remain to be convinced of its precise remit and added value. The Government are prepared to consider this proposal further although, obviously, can give no commitment. I hope on the basis of that assurance the noble Lord, Lord Howell, will feel able to withdraw his amendment.
Lord Howell: My Lords, I am delighted to receive that assurance. I believe that as this day has progressed we have moved closer together in what we intend to achieve. That is a good sign. Sport should not be a matter of party political argument. We should seek to reach agreement, as I have endeavoured to do, on the principles of these matters, even if some of the wording is not quite right. I welcome what the Minister said. In the circumstances I am content to leave the matter with him. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Dean of Thornton-le-Fylde Baroness Dean of Thornton-le-Fylde moved Amendment No. 4:
After Clause 3, insert the following new clause—
MEANING OF "SUBSCRIBER MANAGEMENT" AND "SUBSCRIBER AUTHORISATION" SERVICES
(".—(1) In this Part a "subscriber management service" means a service provided to any holder of a licence under the 1990 Act to provide a television programme service, or to any holder of a licence under this Act to provide a digital programme service or a multiplex

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service, for billing or payment handling in respect of charges for and payments received from viewers within the United Kingdom of encrypted television programmes.
(2) In this Part a "subscriber authorisation service" means a service provided to any holder of a licence under the 1990 Act to provide a television programme service, or to any holder of a licence under this Act to provide a digital programme service or a multiplex service, for the remote actuation, processing or control of equipment for receiving encrypted television programmes within the United Kingdom.").
The noble Baroness said: My Lords, in moving Amendment No. 4 I wish to speak also to the whole list of amendments grouped with it. The purpose of the amendments is to create a legislative framework for the ITC to license and regulate for the provision of conditional access and subscriber management for digital terrestrial, digital satellite and analogue satellite. At the moment the ITC cannot apply a code to News Datacom—that is the company which supplies the Videocrypt conditional access system used by BSkyB—or to any other provider which is not an ITC licensee. The matter was debated in some detail on the second day in Committee. That debate makes very interesting reading. The noble Lord, Lord Thomson of Monifieth—I hope that he will not object to my calling him my noble friend—with his support not only for these amendments but also for the amendment in the name of the noble Viscount, Lord Astor, spoke of the Clydeside MP, Jimmy Maxton, and his reference to riding two horses at one time. Perhaps I should refer to what might appear to be another "riding of two horses" at one time. My noble friend Lord Donoughue has his name in support of the amendment of the noble Viscount, Lord Astor, Amendment No. 164. As my noble friend Lord Donoughue supported the amendments of the noble Lord, Lord Thomson, and the noble Viscount, Lord Astor—and I hope that he will support my amendment today—my mind turned back to the old proverb attributed to G. Herbert dating back to 1640. Noble Lords will understand that one carries this sort of saying in one's head day in and day out. The proverb came into my thoughts:
"For the want of a nail the shoe is lost;
for the want of a shoe the horse is lost;
for the want of a horse the rider is lost".
We do not want to lose our horse. If we lose our rider, the viewer—in modern-day parlance—will be lost. That is why we have put down the amendments.
The amendment before the House today is not the same as the amendment in Committee in the name of the noble Viscount, Lord Astor. This group of amendments has a wider application. The key difference is that we refer to the role and the involvement of the ITC whereas the noble Viscount's amendment leaves the matter to the DTI and Oftel.
To use the horse analogy, we should not allow this important matter to become a battle for turf, although I rather suspect that that might have been a factor behind the scenes in the discussions on the European directive between the DNH and the DTI when considering the issues. How much easier it would be if we had not had such a proliferation of regulatory bodies in the communications field.
Conditional access has become one of the key issues in our consideration of the Bill. It is not surprising that that is so. The availability of wider choice, of diversity of programming, will themselves be dependent on the gateway access availability—a gateway which must not be so restrictive as to squeeze out competition and the start up of small service providers.
The issue of open competition and access was of concern to the noble Lord, Lord Thomson of Monifieth, at Committee stage. Indeed, the area of competition and access was referred to by the Minister at Second Reading.
On these Benches, we readily accept investment. The courage and money available to take a gamble in the market place have to be recognised and not penalised. However, the viewing public interest has a place in this debate. In dealing with broadcasting, one cannot simply treat the issue with a class licence as one does in telecommunications. In the nature of broadcasting, content will be a crucial factor, not just for diversity but in leading to commercial success too. We readily accept that the new digital era will provide not just broadcasting and television services but a range of services, many of which we have not even thought about as we discuss the Bill today.
I believe that it is in that area of broadcasting—diversity for the viewer—that the ITC has the prime experience: that of balancing the requirements of fair, effective competition with content. Indeed, it has such a responsibility under the 1990 Broadcasting Act.
The Minister confirmed, as does the DTI consultative document on conditional access, that the ITC will be consulted. But what does that mean? One can consult a range of people when making changes. It could end up a useless consultation with the views of the ITC not required to be taken on board by the regulator or the Secretary of State for the DTI. If there is open competition at present, as we are told by so many, why is there no rival to Sky Sport or some of the other services which one would think would be attractive to the public, having a range of similar services available?
At Committee stage, at col. 351, the Minister referred to the review of BSkyB's position by the Director General of Fair Trading. It was referred to earlier today. That review relates to the cable industry. The problem is that the review is due to be completed by May of this year. That is too late for consideration before this Bill leaves this House. Depending on the consultation procedure, it is probably too late for the other place to consider it when dealing with the Bill.
When dealing with the amendments at Committee stage, the Minister referred to an extension of powers necessary for the ITC which would place operators under the risk of regulatory double jeopardy. Of course, no one wants that. Under the 1990 Act, the ITC's duty in relation to fair and effective competition extends to services such as conditional access and subscriber management where they are connected with the licensed programme services. These amendments do not take the ITC into new or totally unoccupied territory. They allow the regulator to perform his duties across the sector rather than in selected and therefore defective areas of it.
I believe that the cable companies are concerned—I believe that the anxiety was raised in Committee—that regulating conditional access could lead to unequal treatment of their sectors. Let me assure noble Lords that that is not the intention of the amendments. We recognise that there are issues so far as concerns the cable sector.
The amendments—they are the same as those discussed in Committee—are before us today because although it has been the Government's intention to keep conditional access outside the Bill, it has been very much at centre play in our considerations. I hope that the amendments find approval with your Lordships today. I beg to move.
4.45 p.m.
Lord Thomson of Monifieth: My Lords, I am happy to support my noble friend Lady Dean of Thornton-le-Fylde on the amendment that she has so ably moved. I congratulate her on the work that she has done in producing this series of amendments. My name is on the Marshalled List in support of the amendment in the name of the noble Viscount, Lord Astor. As I said in Committee, whether the body is the ITC or Oftel is not the fundamental issue. Perhaps understandably my balance of attraction goes to the ITC because, generally speaking, in the new developments between telecommunications and broadcasting I am always anxious to safeguard the broadcasting considerations. Those seem to be more considerations of creative value than of the technical issues as regards the DTI. However, that is not the most fundamental issue here. The fundamental issues are those which the noble Baroness stated.
Amendment No. 4 seeks to define rather usefully the encryption system on the one hand and the subscription system on the other. It is important to bear in mind that those are two different operations, sometimes with different although linked considerations. At present, with analogue transmission BSkyB is the gatekeeper for rival programme providers with which it competes. I do not wish to repeat my arguments at Committee stage. However, that seems to me to be fundamentally wrong in principle. It demands an open and transparent licensing system. For the life of me I still cannot see why what is regarded by Government as essential for the digital future (albeit for European Union reasons)is not regarded as necessary for the analogue present, which may be with us for a long time.
I leave that side of it and move on to the digital aspects of conditional access. I am becoming disturbed by what I hear about the Government's attitude to the European Union's directive and proposals for digital encryption. As the Minister will know, the directive provides for a standard encryption system but leaves conditional access to a code of conduct. There is a risk in that. The code of conduct is intended to make it possible for any conditional access system to work both with the standard European encryption system and with any subscriber management system to link them.
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The two systems now becoming available on the continent, I am told—Multicrypt and Simulcrypt—satisfy that condition. But there is no assurance that Videocrypt, which is developed by BSkyB, does. I understand that the Government are reluctant to face up to the situation. If they do not it will leave BSkyB able to impose its own proprietary system in the new digital age. There will be created a new de facto monopoly.
In common with other noble Lords, I have received a letter from EUTELSAT, the inter-governmental organisation for European telecommunications. It emphasises the same point—the need in the Bill for a single common conditional access interface. The letter goes on:
"A mandatory common Conditional Access interface will mean that the same receiver/decoder can be used to access all channels even though the Conditional Access systems may differ…Key to achieving choice and accessibility will be the development of a Common Conditional Access Interface".
That is linked with the need to have a receiver/decoder which,
"should be able to receive from all types of distribution be it terrestrial, satellite or cable".
During the progress of the Bill I have tried to make a test of the views I have expressed from these Benches—the viewer and listener interest. I well recognise that there are many conflicting and valid interests to be balanced, as the Minister said. But the viewer and listener interest is extremely important. Together with the noble Viscount, Lord Whitelaw, I am a patron of the Voice of the Listener & Viewer. That society puts the issue in simpler language than I have been using from authoritative sources. It says:
"The universal adoption of a common interface would enable manufacturers to simplify their products and bring prices down most rapidly".
I conclude by asking the Government to seek to define what is essentially the public interest in this complex matter. I believe that the public interest is that the consumer has a single black box with a common technology that enables him to move freely between the various on-line services. Linked to that is the ability of the providers of programmes and other interactive services to use a common interface to bid for customers. If the Government were ready to look at the case for a mandatory interface, it would enable both manufacturers and retailers to compete in the high street stores with the new device alongside any other electrical appliance. That would speed up the digital revolution by bringing prices down.
I hope that I am wrong in hearing that the Government appear in discussions to be setting their face against a mandatory common interface. I hope that they will reconsider the matter. If they do not, once again we will need to look at the European dimension to see whether, through the European Union, we can bring about a mandatory arrangement that the Government in this country are not ready to recognise as being in the public interest of viewers and listeners

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here. That is a new development since we discussed matters in Committee. I thought it right to bring it to your Lordships' attention at Report stage.
Viscount Astor: My Lords, my Amendment No. 164 is similar to that of the noble Baroness. Although it is not grouped with hers, it is on the same issue, except that my amendment makes Oftel the regulator while hers makes ITC the regulator. The noble Baroness said that she was letting the noble Lord, Lord Thomson, know that she was going to ride two horses. I am more modest. I find great difficulty riding one horse at a time. Therefore, I shall speak to my amendment when it comes, but it may help your Lordships if I say a few words on Amendment No.4.
First, I wish to thank the Minister for arranging a meeting for me with the Parliamentary Under-Secretary at the Department of Trade and Industry. It is the policy of the department that affects the issue. I am grateful to the Minister for meeting me. We had a useful discussion after which we understood each others' views much more clearly. Unfortunately, having said that, at the meeting I was unable to persuade the Minister of the validity either of my case or of that of the noble Baroness. His arguments were not dissimilar to those we discussed previously: first, that digital would arrive relatively quickly; secondly, an amendment could undermine investor confidence in the future by the fact that we are changing the rules; and, thirdly, analogue transponder capacity is limited and therefore it is a much more serious obstacle than the terms that would be offered from BSkyB. In any event, the Minister's final point was that it was all covered by competition law.
There are good answers to those points. First, as regards digital arriving quickly, even BSkyB cannot say when it will begin transmitting by digital satellite. If anyone knows, it should. As we have heard, no one can say when there will be a switch off for analogue satellite broadcasting so we do not know when it will happen. The second point was that any amendment could undermine investor confidence. The simple answer to that is that any future investor in digital will have to abide by the same rules. All we are doing is taking the Government's own rules and extending them to analogue. Thirdly, there is the point that analogue capacity is limited. Of course it is. There are about 80 channels, some more successful than others. They change hands between broadcasters; the spectrum is bought, sold, transferred and rented out. That does not mean that anyone could be excluded. Fourthly, we all know that competition law covers the area. As the noble Baroness said, the OFT is looking into the issue, but we know that the review will take at least six months. OFT reviews always seem to take at least six months. The point of putting it in the Bill is that it does not have to take six months; it is there as a licence condition.
It is worth making another two points. I just about understand my amendment; I do not understand that of the noble Baroness because it is even longer. I am sure that mine does not stray into the area of regulation in cable transmission capacity. I believe that the focus should be on conditional access systems only. Any regulation of cable would remove incentives from cable
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operators to invest in network provisions. I believe that I am right in saying that neither the noble Baroness's amendment nor mine applies to the underlying networks.
My other point is that my amendment and that of the noble Baroness have strong support throughout the industry; the ITV companies support them. The thrust of the amendments is important because we believe in competition. I hope that we believe in fair competition. Without the amendments there is the possibility that BSkyB will have an unfair advantage over anyone who wishes to join the market. Without this amendment companies face the possibility of having to wait until the introduction of digital. We know that that is somewhere down the line. By the time digital is introduced, BSkyB will have had the ability to saturate the market. It will be too late. The very reason that BSkyB has been so successful—and we must commend it on its success—is that the 1990 Act prevented ITV companies from joining in the game. They are not allowed to by statute. We are not trying in any way to inhibit the growth of BSkyB, or affect it. What we say is that there must be fair competition. I very much support in principle the noble Baroness's amendments. I hope that mine are marginally better, since they offer Oftel as the regulator, which seems to be the way things are going, and follow the Government's line.
As the noble Lord, Lord Thomson, said, what matters is not who the regulator is, but the fact that there is regulation.
5 p.m.
Viscount Chelmsford: My Lords, I make two points. First, the best technical advice that I have been able to receive concerning digital and set-top boxes is that it would be dangerous at this moment to plump for any one of the particular systems mentioned and that, if we hang on, something better may emerge which allows everything that the noble Lord, Lord Thomson, seeks and which I wholeheartedly endorse. I caution against fixing on something at this particular stage for digital.
Secondly, I am grateful to the noble Baroness, Lady Dean, for her comment that her amendments are not intended to include cable companies. However, I draw her attention to Amendment No. 43, which links subscriber management systems to local delivery services. Local delivery services include cable companies. They provide a gateway for access provision. As I hope everyone realises, those gateways are wide open. The more the companies can bring through the cables, the happier they are.
Lord Colwyn: My Lords, I spoke briefly in Committee on this group of amendments covering analogue conditional access and subscriber management systems. I have to admit that, as the debate continued, I realised that I did not fully understand the position. However, I have now done some homework and, regretfully, I still cannot support the amendments. I hope to be able to cover some further points on this matter, including the analogue/digital position, in further

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discussion on my noble friend's Amendment No. 164. At this stage, I ask the House to reject these amendments.
Lord Inglewood: My Lords, once again we have had a very useful debate on this subject. In addressing my remarks to it, I shall speak to the grouped amendments to which the noble Baroness, Lady Dean, referred. I shall also touch on the substance of the amendment tabled by my noble friend Lord Astor. I suppose that it will enable your Lordships to have a preview of some of my later arguments. But at the same time I hope it may assist the House in the general consideration of what is by any standards an important subject.
We saw in Committee the general substance of these two amendments. They seek two broad results: first, to institute a licensing regime for both analogue and digital conditional access services; and, secondly, to establish the ITC as the regulator in this area. In Committee, as the House may remember, I gave a full account of our reasons for selecting Oftel as the appropriate regulator, and many noble Lords indicated that this was, to quote the noble Lord, Lord Thomson, "obviously not an issue we would wish to die in a ditch over". The greatest attention focused on the question of analogue conditional access, on which I intend to concentrate.
First, let me just rehearse, briefly, the question of which regulator. As I noted in Committee, conditional access systems already require licensing under the Telecommunications Act framework—they are concerned fundamentally with the transmission and processing of telecommunications signals. The ITC's powers would need to be extended to deal with them, and this could result in regulatory double jeopardy. Close co-operation would in any event be required by our proposals between the DTI, Oftel and the ITC in administering the licensing regime. Broadly speaking, Oftel licenses communications-related systems, while the ITC is concerned primarily with broadcast services. This is, in our view, a sensible division of labour which is already working well.
The noble Baroness, Lady Dean, referred to the question of the content that flows through the conditional access gateway. She made the point that because it is the content that is so important—and Oftel is a regulator principally concerned with the mechanics of gate-keeping rather than the substance of what passes through the gate—it is therefore appropriate that the regulator should not be Oftel but should be the ITC, since it is the best body to deal with the matter of regulating content. That overlooks the important fact that the content passing through this particular gate is not just content "plucked out of thin air"; it is either content that will be regulated by the ITC under general broadcasting legislation, or content coming to this country under the rules of the single market, with the relevant safeguards and regulatory systems inherent in that. What we are seeing here is not a gateway which is a form of tariff through which an enormous cascade of unregulated content will pour, but rather a gateway through which content regulated and controlled content
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at a previous stage in its existence will pass. I therefore feel that that particular approach by the noble Baroness is inappropriate for the reasons I have just given.
So far as digital conditional access systems are concerned, the Government's proposals seek to provide the necessary support for effective competition in the market-place. This includes requirements to offer services on fair, reasonable and non-discriminatory terms, to prohibit linked sales, to implement accounting separation, and to allow the director to demand published tariffs where necessary. They also provide, in our view, for more effective and comprehensive remedies for anyone affected by abuse of a dominant position or anti-competitive behaviour.
I believe that our debate has again underlined that we all wish to see the development of an efficient and competitive market in television programme services. The difference between us appears to be only a question of judgment as to the benefit of new regulation in analogue satellite broadcasting.
The question has been raised on several occasions: if regulation is needed for digital, surely it must also be needed for analogue—what is the difference? The fundamental difference is that when digital services are fully developed the digital conditional access services will be the gateway to every home and customer in the country, over every delivery mechanism—that is, for terrestrial as well as cable and satellite broadcasts.
Analogue satellite, by contrast, serves just 15 per cent. of homes in the country. It is unlikely that this will grow significantly in the future. Even with the latest advances in conditional access technology for analogue systems, the scope for any of the existing broadcasters using satellite to support a significantly larger pay-TV base seems distinctly limited, particularly on pay-per-view. Our judgment is therefore that the market is unlikely to grow to any significant degree.
The reason is that any of them would probably need to cannibalise some of their existing channel capacity for conditional access signals, which would reduce the attractiveness of their offerings. That is because the signals needed to authorise a set-top box to descramble a particular programme have to be packed onto the available analogue frequencies along with the programme itself. The bandwidth available for this is extremely limited in analogue, but more is required if there are to be more subscribers. Any substantial development of pay-per-view services is even more demanding of bandwidth. Taken together with the absence of a return path from the customer to the service provider, this makes significant expansion of pay services on analogue satellite before the move to digital highly unlikely.
In considering the move to digital, there is a clear advantage to being the first mover in the new markets. With the prospect of competition between terrestrial, cable and satellite there is a clear strategic incentive to begin the move sooner rather than later. Once begun, it would be beneficial to move subscribers across quickly to focus resources on the new markets with growth potential and to build the subscriber base as quickly as possible.

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Analogue satellite is therefore a small segment of the total analogue market which is unlikely to grow significantly but which is likely to give way relatively quickly to digital services. That is not the sole basis for the Government's view of the need for licensing, as some have attempted to suggest. But it is the background against which we have to judge the balance of interest in imposing a major change in the regulatory framework for an established market.
One key issue we must consider in reaching this judgment is the investment environment for companies in long-term projects such as new broadcasting services. It is important for companies, and their investors, to understand clearly the framework of regulation which will apply at the outset of their investment. Stability in this framework is very important in maintaining investment confidence, particularly in financing bond and equity markets. That is why we have set out our proposals for digital conditional access now—before the markets have developed. We have to consider the impact of a major change in regulation for an established but limited market on investment confidence—not just in analogue, or even in digital, but in the wider market opportunities in the UK. We have to take account of the potential impact that such a move could signal in the widest context.
We know well the importance of regulatory stability in this regard from our experience in setting the framework for competition in the provision of cable entertainment and telephone services. Here, a guarantee of regulatory stability produced a step change in the investment in alternative telecommunications infrastructure in this country to the tune of over £10 billion in this decade.
That does not mean that we are prepared to tolerate abuse of a dominant position or anti-competitive behaviour to the detriment of competition and consumers. Ex post facto, additional regulation may be justifiable where such behaviour has been demonstrated. The Government are committed to making a robust response to any proven instances of anti-competitive behaviour. There is already a proper framework and process for all established markets through the general provisions of competition law. Noble Lords will know that that is currently being used to examine questions in the very area that we are debating, as has already been mentioned. The Director-General of Fair Trading is conducting a thoroughgoing review into various aspects of BSkyB's wholesale supply of programming. Should he have a concern about competition, options open to the director include seeking binding, enforceable undertakings from the offending parties or referring all or parts of the matter to the Monopolies and Mergers Commission for a ruling. Both give the scope to introduce any further measures that are demonstrably required.
A second key issue that we must build into our considerations is what benefit there might be in introducing new regulation. We must ask who could gain from this new regulation. It has been suggested that, for example, existing ITV companies, which prior to the changes proposed in this Bill were prevented from offering satellite transmissions, might now wish to offer
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subscription or pay-per-view services on analogue satellite, before the move to digital. If so, it is argued, they would not wish to develop their own analogue encryption system, but would naturally seek to use the News Datacom Videocrypt system to provide the conditional access services that they would need. They might, however, get a more favourable commercial deal for the provision of conditional access services if detailed regulation were imposed specifically to drive down prices.
However, the most fundamental issue for any broadcasters wanting to take this step for the first time is likely to be not conditional access, but the availability of analogue satellite transponder capacity. Analogue satellite capacity is basically saturated at present. Astra—the principal satellite provider—is now providing new capacity as digital only. Although there may be some scope to buy out, or take over, existing channels from a variety of other broadcasters currently using analogue, there is in practical terms very little room, if any, to accommodate them alongside the wide range of broadcasters already transmitting through the satellite.
Contracts for conditional access services in analogue markets are in any case already covered by the general provisions of competition and contract law to regulate any anti-competitive behaviour. Furthermore, there is nothing, as I understand it, to prevent such broadcasters from seeking encryption services from BSkyB while providing subscription management themselves or seeking it from other providers—of which several already exist. That would certainly provide a basis for negotiation of acceptable terms. The question is whether it is appropriate to intervene directly in a transaction between two companies in an established market with further specific and detailed regulation. The outcome of the OFT inquiry into the current practice on issues of this kind will be known by the time any such moves for new analogue channels come about. It is, in our view, only justifiable to introduce such additional regulation ex post facto, if there is a clear case of anti-competitive behaviour. To date, that case has not been made, but should the Director-General of Fair Trading have competition concerns, then it will be possible to implement any necessary action at that time, as I have already noted.
Before concluding, I should like to make some comments on the points made by the noble Lord, Lord Thomson, about what I might describe as the establishment of a mandatory single interface. In this context, I echo the remarks of my noble friend Lord Chelmsford. From this perspective, one cannot be sure what might be the best form of interface, if one were to go down that particular road. It is relevant that the digital television group is working currently in co-operation among its various component members on this very problem.
As I understand it, the European directive sets certain standards without establishing a single form of mechanism. In doing so, it also specifies that one cannot so arrange matters as to exclude one's competitors. Indeed, that is underscored by competition policy. Equally, later I shall move an amendment on behalf of

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the Government in respect of the multiplex licensing criteria, which is concerned particularly with ensuring that the way in which the ITC—we are talking here principally about television—looks at possible multiplex proposals has to be judged against an overarching criterion of measuring it against its ability to drive forward the successful take-up of digital television. In itself that is a very considerable impetus towards bringing subscription management and encryption systems together in such a way that any individual player in the game has to try to devise his proposals in a manner that will encourage the take-up of digital as a whole; and anyone doing the kind of things to which the noble Lord, Lord Thomson, alluded—namely, to try in some way or other uncompetitively to exclude some other player in the game—would undoubtedly be undercutting efforts to develop the digital terrestrial television in this country as a whole.
In summary, the Government remain of the view that the suggested amendments are not needed. The Government have published proposals for regulating digital conditional access systems. Analogue satellite is an established market segment, which has strictly limited growth potential, but which is likely to give way relatively quickly to digital markets. Concerns about behaviour in this market are being addressed through the current OFT investigations. This process will be able to provide for any further action which is necessary if those concerns are substantiated. The case for benefits which might flow from the amendment is very unclear. On the other hand, the potential for damage to investment confidence in UK markets is very clear, on the basis of our experience in the last several years. This is the balance of our judgment and why we shall oppose the amendments if the noble Baroness wishes to press them to a vote.
5.15 p.m.
Baroness Dean of Thornton-le-Fylde: My Lords, first, I must thank all noble Lords who supported this group of amendments in the discussion. Perhaps I may sum up on three key points that have emerged from the debate. In front of me I have the consultative document from the DTI. The Minister put up a valiant argument as to why the DTI is the appropriate department. But the Secretary of State for National Heritage said that:
"we have always recognised the importance of conditional access to digital television … I welcome the DTI's proposals and in particular their commitment to full co-operation with the ITC".
To me, such Whitehall language is saying, "We put up a valiant fight but we didn't win. We just hope that the DNH and the regulatory bodies accountable to us will have some part to play in the future of regulation in this field."
The noble Viscounts, Lord Astor and Lord Chelmsford, quite rightly raised the issue of cable. I should like to give an assurance to the House that there is no intention in the amendments that I put forward in any way to harm the cable industry. That is not the intention of the amendments.
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The third point was the issue of fair competition. The OFT can always look at that as they are looking at BSkyB at the moment, as can the Monopolies and Mergers Commission. But those bodies take a long time. In my experience when a service provider has an idea for a service to put on, it is nipped in the bud if it comes up against a power bloc which does not allow it reasonable access to promote those services.
I hold a press release from New Media Markets dated November 1994 which says that a company called Travel wanted to provide a service through BSkyB. Discussions took place—no one has ever said that there have not been discussions. The company did not go on line with BSkyB because it was told that the satellite company wanted a 50 per cent. stake in the channel which was to provide the travel service. The result was that it did not go on air. Those are the kinds of worries I have in relation to free competition. That is not the market at play; that is dominance at play. That is one of our concerns and one of the reasons the amendments were tabled.
I am grateful to the noble Viscount, Lord Astor, for lifting the curtain on the discussion that took place between himself and the junior Minister for the DTI. At the end of the day it would appear that the amendment of the noble Viscount will be opposed up to the hilt, as this one has been. I am becoming extremely concerned about the whole area. There is general consensus across the House that conditional access is crucial in the Bill. It is crucial for the consumer, for the industry and to ensure that we have competition, fair access and that the new services are successful.
We seem to be up against a brick wall, though in the course of the debates we have seen the Government make a considerable number of acknowledgements and changes. They have been extremely co-operative. The Minister has been complimented, and rightly so, for the open-minded way in which the Bill has been approached; that is, until we came to this crucial issue. We need to test the opinion of the House. This is an important part of the Bill and I ask the House to decide the issue.
5.22 p.m.
On Question, Whether the said amendment (No. 4) shall be agreed to?
Their Lordships divided: Contents, 110; Not-Contents, 136.

Division No. 1

CONTENTS

Acton, L.

Carter, L.

Addington, L.

Castle of Blackburn, B.

Ashley of Stoke, L.

Chandos, V.

Astor, V.

Chapple, L.

Barnett, L.

Cledwyn of Penrhos, L.

Beaumont of Whitley, L.

Cocks of Hartcliffe, L.

Berkeley, L.

Darcy (de Knayth), B.

Blackstone, B.

David, B.

Blease, L.

Dean of Beswick, L.

Broadbridge, L.

Dean of Thornton-le-Fylde, B

Brooks of Tremorfa, L.

Devonport, V.

Carmichael of Kelvingrove, L.

Diamond, L.

191

Donaldson of Kingsbridge, L.

Marsh, L.

Donoughue, L.

Mason of Barnsley, L.

Dormand of Easington, L.

Mayhew, L.

Dubs, L.

Merlyn-Rees, L.

Falkender, B.

Milner of Leeds, L.

Falkland, V.

Molloy, L.

Farrington of Ribbleton, B.

Monkswell, L.

Fisher of Rednal, B.

Morris of Castle Morris, L

Gainsborough, E

Nicol, B.

Gallacher, L.

O'Cathain, B.

Geraint, L.

Orr-Ewing, L.

Gladwin of Clee, L.

Prys-Davies, L.

Glenamara, L.

Rea, L.

Graham of Edmonton, L.

Redesdale, L.

Gregson, L.

Richard, L.

Grey, E

Rippon of Hexham, L.

Halsbury, E.

Robson of Kiddington, B.

Hamwee, B.

Rochester, L.

Hanworth, V.

Rodgers of Quarry Bank, L.

Harris of Greenwich, L.

Russell, E.

Haskel, L. [Teller.]

Seear, B.

Sefton of Garston, L.

Hayman, B.

Serota, B.

Hilton of Eggardon, B.

Shaughnessy, L

Hollick, L.

Shepherd, L

Hollis of Heigham, B.

Simon, V.

Holme of Cheltenham, L.

Smith of Gilmorehill, B

Hooson, L.

Southwark, Bp.

Howell, L.

Stedman, B.

Howie of Troon, L.

Stoddart of Swindon, L.

Hughes, L.

Strabolgi, L.

Jay of Paddington, B.

Taylor of Blackburn, L.

Jeger, B.

Temple of Stowe, E.

Jenkins of Hillhead, L.

Tenby, V.

Jenkins of Putney, L.

Thomson of Monifieth, L. [Teller.]

Kennet, L.

Kilbracken, L.

Tordoff, L.

Lockwood, B.

Turner of Camden, B.

Longford, E.

Varley, L.

Lovell-Davis, L.

Wedderburn of Charlton, L.

McIntosh of Haringey, L.

White, B.

Mackie of Benshie, L.

Williams of Crosby, B.

McNair, L.

Williams of Elvel, L.

Mallalieu, B.

Winchilsea and Nottingham, E

NOT-CONTENTS

Aberdare, L.

Courtown, E.

Addison, V.

Craig of Radley, L.

Ailsa, M.

Cranborne, V. [Lord Privy Seal.]

Allenby of Megiddo, V.

Crathorne, L.

Archer of Weston-Super-Mare, L.

Crawshaw, L.

Ashbourne, L.

Crickhowell, L.

Bathurst, E.

Cross, V.

Bethell, L.

Cumberlege, B.

Blaker, L.

Dean of Harptree, L.

Blatch, B.

Denham, L.

Boardman, L.

Denton of Wakefield, B.

Boyd-Carpenter, L.

Dixon-Smith, L.

Brabazon of Tara, L.

Eden of Winton, L.

Brigstocke, B.

Ellenborough, L.

Brookeborough, V.

Elles, B.

Brougham and Vaux, L.

Elliott of Morpeth, L.

Bruntisfield, L.

Elton, L.

Campbell of Alloway, L.

Faithfull, B.

Carnegy of Lour, B.

Ferrers, E.

Carnock, L.

Gardner of Parkes, B.

Chalker of Wallasey, B.

Geddes, L.

Charteris of Amisfield, L.

Gibson-Watt, L.

Chelmsford, V.

Gilmour of Craigmillar, L.

Chesham, L. [Teller.]

Gisborough, L.

Clanwilliam, E.

Goschen, V.

Clark of Kempston, L.

Gray of Contin, L.

Clinton, L.

Grimston of Westbury, L.

Coleraine, L.

Harding of Petherton, L.

Colwyn, L.

Harmar-Nicholls, L.

192

Harrowby, E.

Northbourne, L.

Henley, L.

Northesk, E.

Holderness, L.

Orkney, E.

Hooper, B.

Oxfuird, V.

Hothfield, L.

Park of Monmouth, B.

Howe, E.

Pender, L.

Inglewood, L.

Peyton of Yeovil, L.

Jenkin of Roding, L.

Plummer of St. Marylebone, L.

Johnston of Rockport, L.

Prentice, L.

Kenilworth, L.

Pym, L.

Kimball, L.

Rankeillour, L.

Knollys, V.

Rawlings, B.

Lane of Horsell, L.

Rawlinson of Ewell, L.

Lauderdale, E.

Reay, L.

Lindsey and Abingdon, E.

Rees, L.

Long, V.

Renwick, L.

Lucas, L

St. Davids, V.

Lucas of Chilworth, L.

St. John of Fawsley, L.

Lyell, L.

Saint Oswald, L.

McColl of Dulwich, L.

Savile, L.

McConnell, L.

Seccombe, B.

Mackay of Ardbrecknish, L.

Shaw of Northstead, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Skelmersdale, L.

Stewartby, L.

Mancroft, L

Stockton, E.

Manton, L.

Stodart of Leaston, L.

Marlesford, L.

Strange, B.

Masham of Ilton, B.

Strathclyde, L. [Teller.]

Strathcona and Mount Royal, L.

Massereene and Ferrard, V.

Sudeley, L.

Merrivale, L.

Swansea, L.

Mersey, V.

Teviot, L.

Miller of Hendon, B.

Thomas of Gwydir, L.

Montgomery of Alamein, V.

Torrington, V.

Mountevans, L.

Trumpington, B.

Mowbray and Stourton, L.

Tugendhat, L.

Munster, E.

Ullswater, V.

Murton of Lindisfarne, L.

Vivian, L.

Newall, L.

Whitelaw, V.

Norrie, L.

Willoughby de Broke, L.

Resolved in the negative, and amendment disagreed to accordingly.
5.31 p.m.
Baroness O'Cathain Baroness O'Cathain moved Amendment No. 5:
After Clause 5, insert the following new clause—
DIGITAL BROADCASTING SERVICE LICENCES
(".—(1) Any person who operates a conditional access system, for digital television broadcasting, receivable in the United Kingdom must have a licence granted by the appropriate regulatory authority.
(2) In discharging their functions as respects the licensing of the service referred to in subsection (1) the appropriate regulatory authority shall ensure that there is fair and effective competition in the provision of such services and the access services connected with them.
(3) Conditions may be attached to such licences requiring system or service operators to—

(a) offer all broadcasters fair, reasonable and non-discriminatory access to such services,

(b) ensure that access to any system is not conditional upon the use of any subscriber management or other support services,

(c) ensure that tariffs are unbundled with prices for transport or access services separately identified,

(d) comply with European Union competition law and other related legal broadcasting requirements; and

(e) ensure that there is a clear business separation in cases where the owner of the system or service operator is also a broadcaster.").

The noble Baroness said: My Lords, in rising to move this amendment I wish to speak also to Amendments Nos. 6, 7 and 49. The noble Lord, Lord Donoughue, and the right reverend Prelate the Bishop of Southwark have put their names to these amendments and the noble Lord, Lord Ashley of Stoke, has put his name to Amendment No. 7. The amendments are linked. In the interests of coherence, and to save time, I think it best to deal with them together. The subjects of the amendments are conditional access, "must offer", "must carry" and electronic programme guides.
We have already discussed the fact that competition policy and broadcasting policy go hand in hand. Therefore an amendment is needed to ensure that there is effective competition for conditional access and for subscriber management services. My noble friend the Minister's commitment at Committee stage to implement the European Directive on Television Standards is very welcome and I hope that it will achieve the aims of Amendment No. 5; namely, fair, reasonable and non-discriminatory access to conditional access. However, important though competition policy is, it will not achieve everything. Competition authorities would not feel comfortable or able to take decisions on the grounds of universality or—this is a very important point—preserving our national culture. I believe that this last point is of prime importance to all noble Lords but it would not necessarily be top of the agenda for a non-national television service provider through satellite or cable. Because of that, "must offer" is needed.
The European Television Standards Directive does not mention free public service channels. It states that equipment manufacturers would not be able to prevent viewers getting channels broadcast free to air. But public service broadcasters may well not be distributed free to air because they need to target their channels at one country. That is where they are funded from and it would be wrong for them to spend public money on buying the rights that would be needed to cover the entire satellite footprint which could indeed extend right across Europe.
The European Television Standards Directive is also the basis for ensuring that subscription services are provided on fair terms. But that would not cover free public service channels either. Public service channels cannot charge their customers. They would therefore be disadvantaged by a pricing regime that was created for subscription broadcasters. Under the directive all that the competition authorities would have to ensure is that public service channels were not discriminated against. But that means there would be nothing to stop public service channels being forced to charge viewers. There would be nothing to stop conditional access providers charging free channels the same for carriage as subscription channels and there would be nothing to ensure that public service channels broadcast over satellite were easy to find. That is why all the amendments link together.
Competition law is too slow for "must offer". It can take five years or more. For example, the Government and Oftel proposed the need for number portability in
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1990. It was not until November 1995 that the Monopolies and Mergers Commission finally ruled that number portability should happen, and it may be another year or even more before the service is actually offered to customers. Five years is half the term of the BBC Charter and quite honestly the BBC could not afford to lose 10 or 20 per cent. of its viewers for that long. As anyone knows, in business, if you lose your customers for that period of time, it is a difficult task to get them back again; and it could be that the damage would be irreversible.
In a normal competition situation there can be financial compensation. But how would you compensate the BBC for loss of public support, perhaps indeed leading to the end of the licence fee if it did not have enough public support having lost it that way, or indeed leading to the non-renewal of the Charter? How could that be financially compensated? Satellite companies would know that the BBC could not afford to take this risk. It could be a case of delivery blackmail in which the BBC was forced to accept unreasonable terms or even to charge for its service. "Must offer" is needed to avoid that.
The amendment would ensure that viewers had automatic access to public service channels which were distributed by satellite. This is an extension of the principle in the European Television Standards Directive that conditional access providers should not be able to prevent viewers receiving channels broadcast free to air. The directive also states that subscription channels will be able to contract with conditional access providers on fair, reasonable and non-discriminatory terms. However, the directive does not cover free channels that are also encrypted. In future, public service channels may be encrypted, for obvious copyright reasons, to ensure that they are not received outside the intended country. But they would still be free. "Must offer" is needed to fill this gap in the regulation and to ensure that consumers can receive free but encrypted public service channels.
The aim of the amendment on "must carry"—Amendment No. 7—is to guarantee viewers access to public service channels in the digital age by ensuring that cable companies must carry public service channels. There are two types of cable licence: those granted under the Cable and Broadcasting Act 1984 and those granted under the Broadcasting Act 1990. Holders of the 1984 licences must carry the BBC's publicly funded services and Channel 3 and Channel 4 public service broadcasting; in other words, BBC 1, BBC 2, ITV, Channel 4 and S4C. The 1990 Act removed that obligation. It was a move in the field of deregulation, which of course I support. But, in these circumstances, some of the cable franchisees have the 1984 statutory requirement but the 1990 ones do not. But eventually all cable franchisees will have to apply for the 1990 Act licences. Therefore, ultimately, all cable franchisees could stop distributing the public service channels.
The amendments would extend the "must carry" obligations to the 1990 Act licences ensuring that all cable companies carry the BBC publicly funded services plus Channels 3, 4 and S4C—that is to say, all public service broadcasting. In return for this "must carry"

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obligation, the cable companies get free carry. The Copyright Act 1988 gives the cable company exemption from copyright law when re-transmitting public service broadcasts which are neither encrypted nor broadcast by satellite. With digital broadcasting encryption will be more common. As worded, the exemption would therefore not apply to many future public service channels.
The Cable Communications Association, in response to the White Paper on digital broadcasting, specifically requested that the Copyright Act should be amended to allow free carriage of new digital public service channels, whether or not they are encrypted. Therefore, subsection (5) of the new clause proposed in Amendment No. 7 grants the cable companies an exemption from copyright when carrying out their "must carry" obligations.
Amendment No. 49 deals with the electronic programme guides. It seeks to ensure that electronic programme guides cannot be used to prevent effective competition or to bury deep down 127 or 150 free public service channels. In the world of hundreds of television channels, which is quite feasible, electronic programme guides will be essential for viewers in order to make an informed choice about what they will want to watch. The electronic programme guides can be extremely sophisticated, acting like an electronic media helpmate in effect, learning their owner's programme preference; remembering to video their favourite programmes; guiding them towards new programmes that they will enjoy. All this sounds wonderful for those of us who are technologically challenged at the moment! They will be very powerful.
However, if there is no effective competition in the market for electronic programme guides, the owner of the dominant electronic programme guide could abuse that position to guide viewers towards their programmes. Public service channels, which the electronic programme guide owner may see as free competition to his pay television channels, could be buried at the bottom of the programme guide. Amendment No. 49, therefore, seeks to create effective competition in the market for EPGs by creating a pro-competitive licensing regime regulated by the ITC and ensures that if a dominant electronic programme guide does develop, it cannot be used to bury public service channels. I beg to move.
The Lord Bishop of Southwark: My Lords, I welcome the opportunity to support the amendments tabled by the noble Baroness, Lady O'Cathain. In speaking to them I do so as someone who carries within the Church a particular responsibility for the regulation of the broadcast media, chairing as I do the Central Religious Advisory Committee.
The quality of provision of our public service channels is world renowned. The networks produce programmes such as "Cracker", "Prime Suspect", "The People's Century" and "Pride and Prejudice"—award winners which, in addition to securing huge audiences at home, are in demand throughout the world. Whereas every other advanced European broadcasting economy
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has a "must carry" rule, and whereas so many other countries cherish public service broadcasting, here we threaten its role.
What is that role? I wish to highlight but two crucial functions. First, the provision of important programming that is not viable in a commercial, profit-oriented environment. That applies especially, but not solely, to the BBC and, most importantly, to programmes that address religious and moral issues from a mainstream perspective. The public service broadcasters in this country have an excellent record of meeting the spiritual needs of the population in their programming. Indeed, it is part of the BBC's Charter which has just been renewed for the next 10 years.
At the same time, and not dissociated from this work, are those challenging and excellently produced programmes which examine life from a moral standpoint; programmes such as "Everyman" and "Heart of the Matter" to name only two. They constantly seek to address issues of the day from a perspective that values ethics in a modem society.
These programmes do not draw the largest of audiences, but they draw substantial audiences; not perhaps large enough to make them into attractive money-making possibilities, but large enough for them to be sadly missed if no longer available to the vast majority of the population. I believe that if there is no obligation to carry and offer public service channels, the effectiveness of mainstream religious and ethical broadcasting will be seriously damaged.
The second function of public service broadcasting is to provide a national focus. That is especially important at critical times in the life of the nation. Royal and national events receive outstanding coverage in this country. The BBC has long played a role in providing dignified, thoughtful and commanding coverage of those occasions that draw the nation together and contribute to a sense of belonging and social cohesion. To lose that would be a very damaging step in an already fragmented society. Despite changes in society over recent years, there was still a huge audience for the VE and VJ Day celebrations last year. There remains a great need for this kind and standard of broadcasting.
I shall be voting for the amendments which propose that the providers must offer; that they must carry and that the programmes must be easy to find because I believe strongly that this is important for the nation. I hope that your Lordships will agree with me that we must not destroy a great tradition of public service broadcasting which is the envy of the world, but must ensure that it is there and freely available for all the people of this country in the years to come.
5.45 p.m.
Lord Ashley of Stoke: My Lords, I hope that the Government are able to support these amendments. I am encouraged by the comments made by the noble Lord, Lord Inglewood, in Committee as regards Amendments Nos. 6 and 7. He said that the Government were in full agreement with the aims behind them. This amendment is seeking to secure something of very great value for all viewers in the next century. We have comprehensive,

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first-class television programmes providing for all sections of the community in our society. The BBC and ITV are now the core of our television provision, with some additional extras that have to be paid for. But those who do not want or cannot afford to pay extra are getting as much excellent television as they want just for the price of the licence fee. That fee is like a season ticket to television.
We all know that the future of television will be profoundly different. There will be a plethora of channels and an abundance of programmes. That point has been made repeatedly in this House. Of course, these will all be wonderful programmes—perhaps! I am sure that they will not all be free and that is what matters. People who want season tickets for any service are those who use it often. That applies to rail travellers, health club enthusiasts and equally to television viewers.
The people who watch television a great deal are those who, for one reason or another, spend a lot of time at home. They are the elderly people, those who are ill or disabled, the carers, people with children, the unemployed and those on low incomes. Those are the people who will suffer if they are unable to watch what I would call "season ticket television" and if they are left increasingly with merely subscription or pay-per-view programmes. That would be for the minority.
The Minister seems to think that there is no risk of that happening. He also seems to think that if it does happen there will be time to change the system. That was the clear impression that he gave in Committee. I am sure that he will correct me if I am wrong. I happen to disagree with the Minister's view on that because it is true that the cable companies so far have willingly transmitted the main television channels. They have done so to attract customers. However, I think that we should anticipate, and be prepared for, the new television world. Commercial interests will feel no affection for our current broadcasters. That is realism. That is the truth of the matter. They can and will be competitors for each others' offerings. If it suits their commercial interests—I believe that it will—they will obviously not hesitate to squeeze out the old favourites. In their terms, that makes commercial common sense.
I was particularly concerned by the Minister's comment that the public service channels,
"have an important role to play in generating demand for new programming services and that consequently cable and satellite companies will wish to carry them".
That is a remarkable statement.
Our television is praised all over the world, yet the Minister damns it with such faint praise. The BBC and ITV have a far greater role to play in our society than merely being generators of demand for new programme services. If ever their role as generators of demand diminishes and if the gateways are allowed gradually to close, that would hit the people to whom I referred earlier—those who simply want to enjoy their television for free after paying the licence fee. I am certain that it is our present structure which has given us such high quality television. Of course, the BBC and ITV watch both pounds and pennies, but the certainty of their
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respective incomes has given them the assurance to provide what is undoubtedly the best television in the world. If the amendments are accepted, that will continue well into the next century. That is why I regard Amendments Nos. 6 and 7 as being particularly important.
I should like to say a brief word about the electronic guides, to which the noble Baroness referred. I support the amendment, as I did in Committee, because it gives a cast-iron guarantee of a prominent place for BBC and ITV programmes on the electronic guides. This is an issue of growing importance because, over time, the electronic programme guides will become the main shop window, displaying the programmes available.
I know now that I was too critical of Videotron when I accused it in Committee of manipulation, which I regarded as dirty tactics. Mr. Phil Kirby of Videotron has explained the situation in a letter to the noble Baroness, Lady O'Cathain, with a copy to me. It seems that Videotron's action in relocating Channel 4 on its cable television network was necessary. There was, I believe, no manipulation intended to dissuade viewers from watching the channel. However, that episode illustrates the difficulties that non-technical people like myself find with procedures that are transparently clear to the scientifically minded.
I hope that the Government will be able to give a more constructive and more sympathetic response to this amendment than they gave in Committee. Although I welcome the Minister's awareness of the importance of the amendment, I really do not think that it is an adequate response for him to say that we should rely on European and domestic competition law and the review. We need visibility for our traditional channels and protection against anti-competitive behaviour and potential abuse. Those basic principles should be written into the Bill. That can be done most effectively by the Government accepting the amendment.
Viscount Chelmsford: My Lords, not for the first time we have heard some stirring words, but they do not altogether seem to tie up with the wording of the amendment. I should like to make three points. The first is technical and can easily be changed. We are dealing now with digital terrestrial broadcasting and the amendments are wide enough to include satellite.
Subsection (1) of Amendment No. 5 states that any person who operates a conditional access system requires a licence. The licence can apparently tell him that he "may", if the regulatory authority chooses, not be able to use his own conditional access system. I cannot see why he should bother to apply for a licence in the first place. I do not think that that is what was intended.
Turning to Clause 6, we find that it is the duty of the regulatory authority, under paragraph (b), to ensure that the broadcaster is not paid other than through a television licence. If he is a satellite broadcaster, he is hardly going to broadcast if he does not have any revenue coming in. It seems to me that there are some curious drafting errors in the amendments.
Lord Thomson of Monifieth: My Lords, I hope that it is sufficient for me to say from these Benches, with the serried ranks in support behind me, that we agree totally with what the noble Baroness, Lady O'Cathain, said about "must carry", "must offer" and the electronic guides. In some ways, the electronic guides are the most important. It may very well be the case that what the noble Lord, Lord Ashley of Stoke, called commercial common sense will be sufficient to ensure "must carry" for some years ahead, but electronic guides are a much more immediate matter and I hope that the Government will respond positively on that point.
Lord Dixon-Smith: My Lords, I must admit to being slightly puzzled. I understand the need to carry so-called "public service broadcasting". I use that term deliberately because people are perhaps over-defensive of it and seem worried that it will not be able to stand the heat of the competition that is coming. I do not share that lack of confidence.
I accept that such broadcasting must be free to the recipient who has paid for it through his licence. However, if I understood correctly, what was being suggested was free carriage of such programmes down the cable. I am not sure that I can go along with that. There are costs in transmitting down cables, so I have some difficulty in understanding why public service broadcasters, such as the BBC, should not pay those who carry their service for them—in other words, the cable companies—for the privilege of having their public service programmes sent down the cable. Therefore, although I accept the concept of the service being free at one end, I have the gravest difficulty with the concept of it being free throughout. That applies particularly to what I would call the "transmission end". I have some problem in resolving that point.
Baroness O'Cathain: My Lords, if I may rise now I hope that I shall be able to put noble Lords' minds at rest. If there are costs involved by the satellite people or the cable people—
Noble Lords: Order!
Baroness Trumpington: My Lords, I must remind my noble friend that this is Report stage.
Baroness O'Cathain: My Lords, I am sorry. I tried to check whether I could intervene.
Baroness Trumpington: My Lords, I do hope that I am right.
6 p.m.
Lord Inglewood: My Lords, I shall try to take the amendments in order. I shall begin with Amendment No. 5 but speak only briefly because we have just had a discussion of most the issues involved. I reiterate that the Government have published proposals in the policy document The Regulation of Conditional Access Services for Digital Terrestrial Television which cover in full all the matters covered by the amendment. Indeed, those proposals are based on the need to ensure that digital conditional access providers offer all
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broadcasters fair, reasonable and non-discriminatory terms. They also prevent providers refusing to supply encryption and subscriber management services separately and making supply of those services dependent on acceptance of others. The proposals, in line with the European Community directive on advanced television standards, require separate accounting for conditional access services whether or not the provider is also a broadcaster.
I shall be glad to have further discussions with my noble friend. I wish now, however, to move on to Amendment No. 49, an important amendment which covers electronic programme guides. Again, I am happy to assure my noble friend that the Government to a large extent take the same view as she does and have proposals in place to address it through the Bill we are debating.
Let me once again state unequivocally that the Government are concerned to ensure that electronic programme guides are not used to distort competition between broadcasters. It therefore seems eminently sensible for the Bill to establish certain principles, as it does. EPGs will need an additional services licence and as such will be subject to the ITC's general power and duty to ensure fair and effective competition in the provision of all the services it licences. In that context it means that one cannot deliberately bury someone else's offering on the system.
Commercial as well as regulatory considerations are likely to work in favour of public service broadcasters. They will have an important role to play in generating demand for new programming services and consequently cable and satellite operators will wish to carry them. For the same reasons, the public service broadcasters will have a strong negotiating position with regard to the presence of their services on EPGs. Nevertheless, as I made clear in Committee, the Government intend to monitor the situation carefully. And should EPGs in the digital market develop in a way which makes further regulation necessary, we shall introduce it. But we cannot yet predict exactly how they will develop either in technical or commercial terms.
What is not sensible therefore is to write on to the face of the Bill specific requirements which depend on a particular conception of how EPGs might be configured. And that is what the second part of this amendment would do by requiring that the existing public service broadcasters be given a prominent position on the first page of all guides. By the time digital television is up and running, this sort of terminology may well be obsolete. Indeed, some existing guides do not even have first pages but scroll continuously through pages so that the viewer's point of entry depends on the exact moment he or she consults the guide, in the same way as multi-page Teletext entries. EPGs might also be configured by type of programme. Thus, if you were to call up an EPG and ask it for a selection of sports programmes currently showing, and no public service broadcasters were showing a sports programme, it would not be reasonable for their services to appear on the first page. To take an example which might be more redolent of science fiction—but how many existing technologies appeared

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not so long ago to be fantasy—it is not too far-fetched to suggest that some EPGs might eventually be speech-activated. I use that example merely to illustrate the unpredictability of the technology we are debating. If we set down a requirement of the sort my noble friend proposes it would either mean that all EPGs had to have a designated first page or that those that configure their system in another way will not be covered by the regulation she suggests.
The effect of that sort of prescriptive requirement, depending on exactly how it is set out and interpreted, might therefore be either to constrain providers of EPGs in terms of the technical arrangements they can make or, conversely, strictly to regulate something that to all intents and purposes does not exist while allowing providers to evade the principles of that regulation. Having said that, the Government are in agreement with my noble friend in that we want fair competition. We also want to see that the public service channels continue to be available to all and that they are accessible without difficulty. But the way to fair competition is to regulate by reference to principles, not to speculate on what technology might look like in 10 or 15 years' time. In view of those considerations, I hope that my noble friend will be reassured.
I turn now to Amendment No. 6. Again, I thank my noble friend for raising the points in the amendment and for the helpful discussion she had with me and my officials following Committee stage. I hope I shall be able to offer her a considerable degree of reassurance.
First, conditional access services, including subscriber management, for digital satellite television are clearly covered by the provisions in the EC directive on advanced television standards and the proposals in the Government's policy document The Regulation of Conditional Access Services for Digital Television, published in January. Such services will require a licence as has been said a number of times today, issued by the DTI and enforced by Oftel, both in close co-operation with the ITC. That licence will include a number of conditions intended to ensure fair and effective competition. I do not propose to go into detail here. Instead I refer noble Lords to the policy document concerned.
Those conditions are also relevant to the second part of the amendment, which, if I understand my noble friend correctly, is intended to ensure that viewers have access to public service channels through their satellite set-top boxes where those services are transmitted by satellite. I understand from my own discussions with the BBC last week, at which my noble friend was present, that what is sought in the amendment is an assurance that public service broadcasters using satellite delivery will be able to reach viewers through satellite set-top boxes whether the services they are transmitting are encrypted or not. If those services are not encrypted, then Article 4(a) of the directive requires that all digital consumer equipment shall be able to receive them.
As my noble friend said, even programme services for which the broadcaster does not intend to charge viewers might be encrypted in order to avoid encroachment into countries where they are not intended to be received.
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In that case, of course, the broadcaster concerned will need either to provide for himself, or to purchase, encryption services. Providers of such services, according to our legal advice on the meaning of the directive, will be required to provide them on a fair, reasonable and non-discriminatory basis to all relevant broadcasters. If the BBC, or any other public service broadcaster, wishes to provide an encrypted service, regardless of whether the viewer is to be charged for the key, and if that public service broadcaster has contracted with a provider of satellite transmission capacity, say Astra or EUTELSAT, then a conditional access provider cannot unreasonably refuse to supply the encryption and de-encryption services necessary to enable those viewers who have digital satellite set-top boxes to receive the service. It will, of course, charge the broadcaster a fair price for them. But the viewer will pay nothing beyond the cost of his TV licence and the set-top box if the broadcaster does not wish to charge him anything.
In summary, if I have understood the purpose of the amendment correctly, so far as concerns digital satellite television, the intention behind the amendment is already achieved by the proposals I have spoken of. If a public service broadcaster wishes to transmit a service, free to air or encrypted, via digital satellite, it will have to meet the costs of doing so, just as it needs to meet the costs of its terrestrial broadcasts. But it will not be possible for a conditional access provider to use its position in the market to prevent viewers receiving that service by denying the broadcaster supply of encryption services on reasonable terms. I appreciate that I have spoken at some length. I shall be happy to have further discussions with my noble friend if she would find that helpful.
I turn now to Amendment No. 7. Again, I do not wish to go over the ground I covered in response to my noble friend in Committee. However, I think it worth repeating that the Government are in full agreement with the aims behind her amendment in so far as we want the services of existing public service broadcasters to continue to be available to all the people of the United Kingdom. Indeed, that is one of the key principles on which our proposals for digital terrestrial television are based. It is why we are offering them guaranteed places. But there are other principles from which I am very reluctant to depart and which this amendment infringes. One of those is that regulation should be introduced only where necessary. Another is that industry should not be faced with frequent moving of regulatory goalposts. The amendment would involve rescinding provisions made in the 1990 Act, as my noble friend pointed out, regarding the conditions of local delivery licences during the validity of a number of such licences. This might be largely symbolic. As I shall explain, we do not think whether or not regulation is reintroduced in this area will affect cable companies' behaviour. But we must give a message to industry more widely that the regulatory environment will be stable. I made that point earlier today.
As I also said in Committee, the Government intend to monitor the situation as it develops. That will be a continuous process, though the review of the scope for analogue switch-off, due to take place within five years

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after the commencement of digital terrestrial television, will clearly need to cover among other issues the matter of the availability of the public service channels. There is no reason at this stage to take unnecessary regulatory action. Indeed, we believe that to do so would be precipitate.
Currently, all viewers can receive the public service channels via terrestrial aerials; and analogue services will not be switched off until the vast majority of viewers have acquired digital receiving equipment. Until then, viewers will continue to be able to receive the BBC and Channels 3, 4 and 5 in the same way as they do now.
It is pretty clear that viewers like those channels. That is a great vote of confidence in them and echoes the views of the right reverend Prelate. Even in homes with cable and satellite they are by far the most watched, which is a credit to those who provide them. Everything suggests that they have every reason to be confident that viewers will not suddenly turn against their programmes. Viewers will not simply renounce terrestrial and switch to other means of reception unless they know that they will continue to receive the public service channels. Is there something which public service broadcasters imagine will make them do that? If so it would be interesting to hear of it.
Once viewers have the appropriate set-top boxes or digital receivers they will, at no further cost and using their existing aerials, be able to receive a substantial number of free-to-air services, including the existing channels and new services, at very high technical quality, via digital terrestrial transmission. I believe that that will be an attractive proposition. To compete with it, it will be all the more necessary for cable companies to provide what people want, and that includes the terrestrial channels.
All cable companies currently choose to carry the services of terrestrial broadcasters and will continue to do so. They want to attract customers and I repeat that public service broadcasters attract customers. What is more, once cable goes digital operators will have far more capacity. This will make it even more likely that they will continue to wish to carry the main terrestrial channels. If they carry them now, when they have 40 or so channels to play with, why would they stop when they have 500? Introducing regulation to ensure that cable companies carry the BBC, ITV and Channel 4 would simply be obliging them to act in their own interest.
I am aware of the fear of the noble Lord, Lord Ashley, that cable companies might offer the public service broadcasters, along with their other services, for a while and then once they have built up a significant customer base, drop them and leave their customers marooned. In the first place, this supposition betrays a view of the cable industry which I am bound to say is self-evidently somewhat cynical. It is also unrealistic to suppose that industry wins by acting against its customers' interests and wishes, in particular this kind of industry. But I am glad to reassure your Lordships that any such case of a monopoly franchisee abusing its dominant position to deprive customers of services they want to receive,
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or making access to those services deliberately difficult, having attracted custom on the basis that it would offer those services, would swiftly attract the attention of the fair trading authorities. Indeed, the phrase "their feet would not touch the ground" would seem apt.
All of that said, however, let me repeat the assurance that I previously gave. Should further action become necessary, and I am far from certain that it will, we shall take it. But far better to take that action once we have a fuller picture of exactly what dangers, if any, we are seeking to eliminate and what the problem we are seeking to remedy might be. For example, if by the time analogue is switched off the industry has developed receivers able to receive all three modes of transmission—terrestrial, cable and satellite—then what would be the point of requiring more than one of those to carry particular broadcasters? Meanwhile, we can recognise the continuing success of British public service broadcasting and the success of the cable industry. Neither is a threat to the other. They are complementary, not mutually exclusive, and the cable operators clearly realise this. That is why they carry public service broadcasting.
I recognise the real and heartfelt concerns that have been expressed in the debate. However, I hope that on hearing that exposition of the Government's position and the legal background to it noble Lords will come to the conclusion that the kind of amendments being proposed are not appropriate for dealing with the problems that they are intended to tackle.
6.15 p.m.
Baroness O'Cathain: My Lords, I am grateful to the Minister for giving us such a detailed, conciliatory and helpful response to the four amendments. Perhaps I may deal with them in turn. As regards Amendment No. 5, the Minister said that he was prepared to discuss the matter further with me and I shall be taking him up on that offer. I thank him for it.
As regards Amendment No. 6, he spent a great deal of time talking about everything that is reasonable. I began by looking at the whole Bill on the basis that everyone was innocent until proved guilty. However, the more I look into what is happening with satellite and cable and the way in which the operators view public service broadcasting the more concerned I become.
I accept that our public service broadcasts take the great proportion of viewing time at the moment. However, I must remind the Minister that the satellite and cable companies are in business to obtain as many of the viewers' hours as possible so that in turn they can run a commercial business. If they cannot say to their advertisers, "We are gaining a market share. We now have 25 per cent. of the viewers' hours", they will not have a good commercial future. Therefore, commercial reality is such that there will always be a pressure on the satellite and cable companies to push their product ahead of public service broadcasts. That is what the marketplace is like.
I repeat that the public service broadcasting companies in this country—that is, the BBC, ITV, Channel 4 and S4C—represent to a greater or lesser

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extent the culture of this country and we must be sure that we preserve that situation. We cannot have wall-to-wall imported programmes. Although the companies might carry public service broadcasts, if they do not carry them in a prominent position or, by extension, do not allow them to be advertised prominently on electronic programming guides there is a concern about the future. I promise noble Lords that I am not looking for problems but I feel greatly uneasy about that. However, my noble friend the Minister asked us to be reasonable, so I shall be; but I will enter into further discussions on the matter.
As regards electronic programming guides, I was given many crumbs of comfort by the fact that my noble friend said that the Government will monitor them and any abuse will be dealt with. I take the point that, with the ever galloping advances in technology, it could well be that the amendment will appear to be stupid because it requires the public service broadcasting to be on page 1 of the guide and there may not be pages in the guide. But at the moment pages are suggested on the guide and while that is the case I should like to see the public service broadcasts on page 1. I take the point that if one were to scroll the guide looking for a sports programme but there did not happen to be an offering on a public service broadcast network the provision would be a little foolish. However, I believe that we are trying to anticipate what the technology will be and I am a little concerned about that issue.
As regards Amendment No. 7, I agree that regulation should be introduced only when necessary, but that apparently makes a nonsense of making a regulation in 1984, removing it in 1990 and then proposing to implement it again. Of course, a stable regulatory environment is needed. I subscribe to all of that. However, I am scared—and I put it as strongly as that—that the competition from the satellite and cable companies will leave us in a situation in which the public service broadcasts will suffer.
It may be that I am being very suspicious and highly cynical about this, which is not in my nature. I am anxious, but my anxieties have been reduced to quite a large extent by my noble friend's offer of further talks between now and Third Reading, and I shall avail myself of that offer. I thank all noble Lords who have taken part in the debate and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 6 and 7 not moved.]
Clause 8 [Multiplex licences]:
Baroness Dean of Thornton-le-Fylde Baroness Dean of Thornton-le-Fylde moved Amendment No. 8:
Page 7, line 38, leave out ("and (f)" and insert (",(f) and (ff)").
The noble Baroness said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 10, 16 and 23. These amendments refer to a single set-top box. I am aware that we strayed into that area when we talked about conditional access and we also did so in Committee.
If these amendments are accepted, they will ensure that there is a single standard set-top box providing availability of access for all digital terrestrial services. As presently drafted, the Bill makes no such provision. In fact, without the amendments the reverse could happen.
In Committee the noble Viscount, Lord Chelmsford, said that it is too early to look at technical standards for a single set-top box. I know that the noble Viscount, Lord Chelmsford, has some expertise in this field and is president of the European Informatics Market, of which I am a member. The noble Viscount was referring to the fact that the main European suppliers have agreed a voluntary common standard for set-top box equipment—a DVB agreement, which has been referred to today. The view of EURIM is that there is still a potential problem in that the agreed standard allows two options: the first providing a single set-top box with several slots so that several channels can be received with access by use of a smart card which is paid for; or one box with one slot for a proprietary conditional access system.
The amendments do not seek to state which technical standards should apply. I suggest that the Bill provides the only opportunity for discussion on that single standard. We must not have a monopoly dominance, as we do at present, which prevents people having access unless they pay for a different box. I believe that we all have the same aim; namely, one box for which an entrance fee is paid which provides access to whichever services or channels one wishes to access. But the technical requirement should be a single standard. We must bear in mind also that although we are discussing this Bill now, it will not reach the statute book until much later this year and I understand that talks are taking place at present about that very issue.
When we discussed this on the first day of Committee, the Minister accepted that there were concerns about the whole area. He said that he was prepared to look at the criteria to be applied by the ITC. As yet, we have had no response, but I do not criticise the Minister because I see how many amendments there are on the Marshalled List and in view of the number of changes that have been made, it may be that there has not been an opportunity to deal with this matter.
In Committee, the Minister referred to the DTI consultation document on conditional access, a copy of which we received on the day of that debate. The Minister went on to say that many of our anxieties were dealt with outside the Bill; and therein lies the problem. Those anxieties are real. They refer to broadcasting. I presume that the Minister is referring to the DTI consultation document.
The fact is that the DTI document gives no assurances that the viewer will see the emergence of a single standard through which access can be gained to digital services. The ITC has said that an integrated digital receiver, which is capable of receiving all digital terrestrial programme services, is in the best interests of the viewer. It is not surprising that he said that because I believe that that is generally accepted as the commonsense view. The amendment does not mean that

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there will be one identical receiver—in other words, a monopoly supply. We are talking about a single technical standard.
The difference between us is not whether a single set-top box is desirable, because I have heard no opposition to that proposition. We all agree that it is desirable. The difference is whether we accept that there is a need to make provision on the face of the Bill for the ITC to take into account proposals for set-top box compatibility when assessing applications for multiplex service licences. We believe that there is a need to have that on the face of the Bill.
In Committee it was mentioned that the German companies had concluded agreements on a standard decoder and that is referred to in the paper by the European Informatics Market and the review that it has carried out. The noble Viscount, Lord Chelmsford, is right in thinking that there may be some drawbacks to that. I gather that talks are taking place in the UK but I have heard only rumours and I do not have much detail about them. The Minister referred to that earlier today.
If there is nothing on the face of the Bill to ensure that we have a single decoder system and if no industry-wide agreement is concluded, where do we go? It means that we reach a position in which there is no fair competition. If it is not on the face of the Bill, it will be too late to take measures which may be needed to deal with the problem. I suggest that it will be too late not only for the viewer but also for the many services which we all hope will take off.
We cannot leave this matter to chance or even to common sense. Unfortunately, all too often there is too little of that about when one is dealing with money and competition. Since we discussed this matter in Committee, I have received two interesting briefing notes. The noble Lord, Lord Thomson of Monifieth, referred to one of them from EUTELSAT, the European Telecommunications Satellite Organisation. That organisation also refers to the need for a single decoder. It notes the amendments put forward in Committee and that they were subsequently withdrawn. It urges us to put forward those amendments again at this stage. EUTELSAT is not a consumer organisation but it rightly says that market forces will determine an acceptable level of charge for the services, which is our intention. We want the customer to pay what he is prepared to pay. But to have a system which means more than one decoder box will not allow that competition to develop.
The other letter which I received is from the British Radio and Electronic Equipment Manufacturers' Association whose members last year manufactured 5.6 million colour television sets and 3 million video recorders in the UK. The association makes it quite clear that there are shortcomings in the Bill on set-top boxes. It does not want the issue to be left open—and it represents the manufacturers of televisions and video recorders here in the UK—to a voluntary agreement being reached. The association supports the ITC; as we do on these Benches. It wants the ITC to have the authority in the Bill to take into account how proposals from applicants for multiplex licences will ensure viewer access to the whole range of the new digital terrestrial services.
As BREMA says in its briefing note, the general principle which motivates its anxieties—and ours—that there should be a single standard is that there should also be a free market which would encourage consumers to purchase equipment in the knowledge that it will be cost effective and will give them access to the variety of services available. It will be convenient to use; it will be flexible; and it will not tie people to any one particular programme or service provider. How right BREMA is! That is what the amendments are intended to achieve. Those are the principles lying behind them.
6.30 p.m.
Lord Thomson of Monifieth: My Lords, I strongly support the noble Baroness in what she said. She put the case most carefully and thoroughly. I believe her argument that such a provision ought to be on the face of the Bill at this time is a strong one. I shall not say more beyond that because, as the noble Baroness said, I strayed into the matter during the course of debate on her earlier amendments. Therefore, having committed the sin of trespass, I think that the best price I can pay is to say that I am content to stand on the arguments that I put to the Minister earlier.
Viscount Chelmsford: My Lords, I certainly support the noble Baroness on the desirability of having a single set-top box for digital terrestrial transmission, although it would be nice if we could have one that was wider. I also support the noble Baroness that it is right for the ITC to put pressure on all the parties concerned to try to move towards that position. However, I am neutral on whether there is a need for such a provision in the Bill. Indeed, I am not sure. I do not remember the ITC's latest briefing paper requesting further powers in that respect, and it has not been backward in asking for powers when it felt that it did not have sufficient. Finally, I thank the noble Baroness for promoting me, but I am only a director of EURIM.
Lord Inglewood: My Lords, as the noble Lord, Lord Thomson, said, the noble Baroness very comprehensively explained the amendments which relate to the matter of a single set-top box for digital terrestrial television. The amendments would make co-ordination between multiplex providers on a single set-top box a criterion for the award of a multiplex, and would allow the ITC to set minimum requirements to be met by all applicants seeking those licences. The implementation of the measures proposed for co-operation would then, in turn, become conditions in the licence.
As I said when we debated the amendments in Committee, the industry is well seized of the importance of co-operation to the success of digital terrestrial television. Fragmentation would be in no one's interests. The existence of the Digital Television Group is proof of that. I am pleased to inform your Lordships that, since we last discussed the issues, membership of that group has continued to expand so that now some 24 companies are involved.
Noble Lords will also be aware that I am moving an amendment to Clause 9 which fulfils the commitment that I made in Committee to look again at the criteria

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for the award of multiplex licences. I referred to that amendment earlier when responding to a point made by the noble Lord, Lord Thomson, which was indeed the beginning of the trespass in which we all seem to have become involved. In particular, I said in Committee that we would consider whether we might do more to take into account the extent to which an individual multiplex applicant's proposals would contribute to the overall development of digital terrestrial television. It is clear that a multiplex provider's commitment to co-operation on the provision of a single box could be a significant element in the contribution his proposals might make to that end.
Therefore, I hope that the noble Baroness will not seek to press the amendments. I also hope that she will support my amendment, the purpose of which both she and the noble Lord, Lord Donoughue, welcomed in Committee. It will pull together the future development of set-top boxes without prescribing the form that any particular box might take—which might well in fact be illegal under the rules of the single market—in a form within the general parameters imposed by the licensing conditions and competition policy. I hope that my response will reassure the noble Baroness.
Baroness Dean of Thornton-le-Fylde: My Lords, I thank the Minister for his detailed response. We looked at his amendment to Clause 9. It seems that we are in fact backing two horses in this Bill. However, we think that ours is a stronger one because we believe that our amendment would give the viewer much more assurance for the future.
I hope that I can persuade the noble Viscount, Lord Chelmsford, towards my point of view regarding the ITC. He asked whether such a provision was needed on the face of the Bill. We believe that it is because we shall have a proliferation of service providers, not just the very narrow group that we have seen thus far in the UK. Experience shows that the more people one gets in the ring, the more likely one is to face litigation about one's authority. If such a provision were on the face of the Bill, such a possibility would be avoided.
The Minister would like us to support his amendment. But, with my background as a trade unionist, I am inclined to enter into a little negotiating here and suggest to the noble Lord that we will support his amendment if he will support ours. However, I do not believe that that would succeed in this arena. I believe that we could have provided a good measure for the viewer had we been able to put such a provision in the Bill, although it is always possible that the matter will be raised in another place. It is with great reluctance that I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 9 and 10 not moved.]
Lord Inglewood Lord Inglewood moved Amendment No. 11:
Page 8, line 19, at end insert—
("( ) In subsection (4)(f) "acquisition" includes acquisition on hire or loan.").
The noble Lord said: My Lords, in moving the above amendment, I shall speak also to Amendments Nos. 18, 54 and 56. The amendments seek to clarify two existing provisions in the Bill. The Bill provides that applicants for television multiplex and national radio multiplex licences must submit proposals for promoting the acquisition of digital receiving equipment by consumers in the area of their service. The amendments seek to clarify that the word "acquisition" does not just mean purchase but also includes equipment acquired under hire or loan arrangements. I beg to move.
On Question, amendment agreed to.
Clause 9 [Award of multiplex licences]:
Lord Inglewood Lord Inglewood moved Amendment No. 12:
Page 8, line 43, leave out from ("regard") to end of line 44 and insert ("to the extent to which, taking into account the matters specified in subsection (2) and any representations made to them in pursuance of section 8(7)(b) with respect to those matters, the award of the licence to each applicant would be calculated to promote the development of digital television broadcasting in the United Kingdom otherwise than by satellite").
The noble Lord said: My Lords, the award of multiplex licences is the key element in the establishment of digital terrestrial television and radio. The multiplex provider plays a pivotal role in the introduction of the new technology and the new services.
The Bill, as introduced, provided for the award of a television and a national radio multiplex licence to be made mainly on the basis of three particular criteria. First, there are the applicant's plans and time-scale for putting in place the transmission infrastructure, so that the services on his multiplex might be received as widely as possible and as quickly as possible throughout as much of the country as can be reached by the multiplex.
Secondly, there is the capacity of the broadcast services to be offered on the multiplex to appeal to a variety of tastes and interests. Thirdly, there are the applicant's proposals for promoting or assisting viewers and listeners to obtain equipment capable of receiving digital broadcasts.
Each of those elements is vital to the successful launch of digital terrestrial broadcasting. However, as I have already indicated, in response to amendments tabled by the noble Baroness, Lady Dean, there is a further factor particularly important to television which needs to be taken into account; namely, the way that, taking everything together, a prospective multiplex provider's proposals will contribute to the overall development of digital broadcasting.
The amendments which I have tabled address this issue. In doing so they provide the regulators with a framework, a common currency, in which to weigh the separate elements of the proposals put to them by the applicants for the multiplex licences. The regulators will therefore be able to look at the applicants' proposals in the round and judge them by looking at the contribution they will make to the successful launch of digital terrestrial broadcasting as a whole. This means that the ITC can look at proposals for promoting and encouraging the acquisition of set-top boxes, and

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consider whether they are likely to lead to a cohesive rather than a fragmented market. They can look at whether multiplex providers intend to co-operate with each other on other aspects, too; for example, the roll-out of transmission infrastructure, where significant economies of scale might be achieved through co-operation with other multiplex providers.
I believe that these amendments go a long way towards meeting the concerns of noble Lords opposite, and will provide a clearer and more effective framework for the regulators to do their job. They establish the development of digital terrestrial broadcasting as a whole as the touchstone for decisions on multiplex licences. We all want this enterprise to succeed. We cannot do that by state direction, but we believe that willing co-operation between the various parties involved is likely to make a successful outcome more likely, and this measure we believe will help to achieve that. These amendments will help ensure that digital terrestrial broadcasting is given the fairest of winds as it sets sail. I beg to move.
On Question, amendment agreed to.
6.45 p.m.
Baroness Jay of Paddington Baroness Jay of Paddington moved Amendment No. 13:
Page 9, line 7, at end insert ("and the extent to which such services (taken as a whole) may be expected to include programmes of quality,").
The noble Baroness said: My Lords, in moving Amendment No. 13 I wish to speak also to Amendment No. 14—which stands in the names of my noble friends Lord Donoughue and Lady Dean of Thornton-le-Fylde—and to Amendments Nos. 17 and 19, which stand in my name. The purpose of all of these amendments is to make a further attempt to ensure that requirements about the quality of future services are placed on the face of the Bill. The arguments about the importance of quality in broadcasting have been rehearsed at earlier stages of your Lordships' deliberations but it is worth summarising and highlighting a few of them again.
It has been generally agreed on all sides that we in the United Kingdom have an enviable tradition of high programme standards, of which we are justifiably proud. However, the Government now seem to feel that it is enough to rest on our past laurels and that little needs to be done to try to ensure that those high standards continue into the digital world. There are, of course, exceptions. The obvious one is that of simulcast transmissions of existing services where existing quality regulations will continue. However, the situation we should be considering now is that of the medium term when digital broadcasting will be the only terrestrial system for any listener or viewer. As the Minister predicted at Second Reading, there will be initially—I stress the word "initially"—18 national channels on six multiplexes.
The Government have proposed that together with technical ability, variety not quality will be the touchstone against which service bids for a multiplex will be judged. At Second Reading the noble Lord, Lord
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Inglewood, said that the ITC would take full account of proposals for local, regional, community and special interest channels and programming as an important element in increasing variety. Amendments Nos. 14 and 19 would simply ensure that on that same basis and formula, quality as well as variety is considered. After all, variety in broadcasting is certainly a commendable and appropriate aim but it does not by any means always embrace quality. There can be an enormous variety of programmes, all of them of poor quality. Any of your Lordships who have switched between the 20 or 30 cable channels on offer today in any large American city will have a vivid and pretty depressing picture of what low quality multiple-choice TV can produce, however it is delivered in a technical sense.
In Committee, the Government also seemed to believe that the powers of the new Broadcasting Standards Commission to publish guidelines and to consider complaints about taste, decency and impartiality will in the future be sufficient protection against the worst excesses. Your Lordships will remember from the Committee proceedings that we on these Benches do not think that the present proposals for the remit and the activities of the Broadcasting Standards Commission are sufficiently pro-active to act as a significant voice of the viewer and the listener. In our opinion, they are certainly not robust enough to establish and monitor general quality standards. In this context, noble Lords may have been as apprehensive as I was to read the remarks of Mr. Kelvin MacKenzie, the ex-editor of the Sun newspaper and now head of Live TV, at a media conference last week. He looked forward to more and more TV channels which would result in an electronic freedom to match that of print. Mr. MacKenzie gave an example when he said:
"My own guess is that 20 years from now people will look back at the impartiality requirements of broadcasting as a quaint piece of history… The present rules will not be heeded and they will wither away".
Surely that is something which we should try to prevent in this Bill, not, as my noble friend Lord Donoughue said in Committee, to achieve lofty cultural ambitions but simply to raise the sights of the digital operators.
The Minister has argued that to impose quality constraints on multiplex providers would badly inhibit the development of new services. In Committee the Minister warned that in his opinion a tight corset of regulation would mean that entrepreneurs would simply not bother to invest in digital television. It might, he said, be strangled at birth. He spoke somewhat dramatically as though this were a threat to our cultural life as we know it. We on these Benches do not see it in that way at all. The prospect of an absolutely unregulated market of expanding digital services does not seem irresistible, particularly if it produces dozens, or indeed hundreds of television programmes all of the type which—as I have said—we can already see on American cable networks, or as enthusiastically envisaged by Mr. Kelvin MacKenzie. In those circumstances it would seem that there is no advantage to the viewer. We would be quite happy for choice and variety to be less and quality higher.
It is, of course, a question of achieving the right balance between appropriate growth and appropriate standards. However, as the Bill stands, the balance seems to be tilted too far towards uninhibited development. Frankly, I think that the Government have been too cautious. After all, there is nothing whatsoever in the history of television development—since the days when we talked about the licence to print money when ITV was set up in the 1950s—to suggest an entrepreneurial reluctance to invest in new opportunities.
The ITC apparently believes that quality criteria will not stop digital TV taking off. It has sought an additional qualification, as expressed in Amendment No. 13. In Committee, in reply to the noble Lord, Lord Thomson of Monifieth, the Minister admitted that the Government had rejected the ITC's advice on this matter, but nonetheless the commission continues to press for statutory powers to be able to evaluate applications for quality. Amendments Nos. 13, 17 and 19 propose a flexible formula to allow the ITC to ensure that multiplex operators provide quality programmes within a range of programme services. They do not insist that each and every programme available on a multiplex should fulfil those criteria. It is not too late for the Government to empower the ITC in this way. After all, in 1990 in the previous Act the Government created the quality threshold for licence applications which undoubtedly mitigated but did not harmfully impede the free flow of market forces. These amendments simply seek a similar environment for the digital future. I beg to move.
The Earl of Stockton: My Lords, I support the broad thrust of the argument of the noble Baroness, but there were one or two aspects which concerned me slightly. I have to confess to being a book publisher, which is perhaps an extremely outdated form of communication in terms of this Bill.
I detected a prescriptive element here. One of the successful aspects of broadcasting is that it should be as broadly cast as possible. I was a little nervous that we were getting into the realm of somehow having organisations, or even Parliament, deciding what people should be watching. The terms of the amendment bring us dangerously close to that. On the other hand, like the noble Baroness, I have the deepest suspicions of people who would exploit public taste. I have no doubt that she agrees with me that William Randolph Hearst was probably right when he said that no man ever lost money by underestimating public taste.
However, I believe that the terms of the amendment are probably unnecessary. In the 400 years in which the publishing industry has been fairly active in this country, there have been very bad publishers and very good publishers. I can reassure the noble Baroness that on the whole it is the good publishers who survive.
Lord Renton: My Lords, I, too, was sympathetic to what the noble Baroness said. I raised my hopes when I saw the word "quality" in Amendment No. 13. I listened carefully to the noble Baroness but I was a little
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mystified as to whether the word went far enough to eliminate the violence and sex of which we have much too much on the television even now.
When considering Amendment No. 19 and the meaning of quality, we find reference to matters which, quite frankly, do not have much to do with quality. It refers to,
"programme production from the regions; new and original programmes; independent productions; British-made programmes; and programmes catering for minorities".
There is not a word there about good taste or the avoidance of violence or sex.
Although I have a great deal of sympathy for the way in which the noble Baroness presented her case, I am not sure that her amendments fulfil her desire.
Lord Inglewood: My Lords, I have listened most carefully to the noble Baroness, Lady Jay, presenting her case for fundamentally shifting our country's approach to digital terrestrial television, an industry which hardly exists now and which requires millions if not billions of pounds to create. I have listened; I understand her concerns. I sympathise with some of her aspirations, but I have not been convinced by her arguments. Were these proposals to be accepted, I do not believe that we would somehow acquire some kind of "superior" digital terrestrial television. I think that we would have none at all.
We have been told that it is in the public interest to require quality by statute: that it is necessary to legislate for programme services that are free to air, or consist of original productions or programmes catering for minorities; that it is necessary to pile obligations upon requirements on to prospective multiplex providers and broadcasters. I should like to step back from the detail of each individual amendment—Amendments Nos. 9, 13, 14, 15, 17 and 19—and assess the overall impact. What messages do these amendments give the two groups most important to the success of digital terrestrial television—the industry and the viewer?
I believe that those contemplating investing in the programmes, the multiplexing and the transmission necessary to launch digital terrestrial television, would think again, and then probably think no more, if these proposals were imported into the Bill. They are looking for encouragement and flexibility. These amendments would box them in on every side. They would conclude that "the game is not worth the candle".
And what message goes out to the viewer? It is that the programming on the new channels will not be designed to meet their viewing wishes. Rather, it will be predetermined by high-minded and well meaning people who know better than they what they should watch and spend their money on. They are the up-to-date manifestation of the "men from Whitehall" who know best.
Perhaps I may revert briefly to the comments of my noble friend Lord Stockton. He referred to publishers. As he said, what applies to publishers also applies to television programmes. Those books which are read and re-read are good books. Those television programmes which are viewed and re-viewed are good programmes.

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I believe that the kind of world painted for us by the noble Baroness is one where those potential viewers will vote with their feet, their wallets, or perhaps I should say their smart cards. They will not buy the sets; they will not watch the programmes being broadcast at such great expense. That in turn would undermine the whole enterprise.
During the Committee stage of the Bill, I explained fully the Government's views on these issues. I should like briefly to remind noble Lords of the salient points.
We, like the Opposition, value public service broadcasting which, as I mentioned earlier, is popular. It is and will remain at the heart of broadcasting in this country. That is why we are providing for four, soon to be five, terrestrial broadcasters to move to digital, and why the existing licence regime for those broadcasters will continue in place for their digital simulcasts. The BBC will have scope to expand the range of quality programmes that it provides under the terms of its Charter and Agreement. I suspect that the other existing terrestrial channels will be keen, too, to maintain their reputations as quality broadcasters in any new services they provide.
But the future digital world is different. More spectrum and more channels will be available. There is no inherent need to extend the present public service broadcasting regime with its quality and other thresholds to the further new services which digital technology makes possible. As we all know, they will be subject to the general rules relating to taste, decency and impartiality and so on which apply to all broadcasters.
It seems inherent in what has been said from the Benches opposite that there is some underlying assumption that the market must deliver rubbish. But surely that is not the case. After all, the real case is that instanced by my noble friend Lord Stockton.
The key issue for us now is that we must do all we can to create the right environment for digital terrestrial television to take root and flourish. The Bill as it stands does that. We are taking steps to improve it where possible and we welcome all the constructive suggestions that we have been given. We have been given plenty of helpful comments and suggestions throughout the currency of the Bill. We want to create an enabling framework, not a disabling one.
It is for those reasons, and in the interests of the future success of digital terrestrial television, that I hope that those who propose the amendments will not seek to press them.
Baroness Jay of Paddington: My Lords, I am grateful to those Members of your Lordships' House who took part in the debate, and to the Minister for his reply. My first concern is that all noble Lords who spoke seemed to imply that some level of prescription was going to be devised by some body of the great and good. It was not entirely clear whether it would be great and good enough for the noble Lord, Lord Renton, or too great and good for the Minister and the noble Earl, Lord Stockton.
Put simply, the aim was to put the regulatory device in the hands of the ITC. Whether the ITC qualifies under this heading is not perhaps relevant to this debate.
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But the aim was certainly not to set up some additional star chamber to police those concerns. That may be one misunderstanding; perhaps I did not make the position sufficiently clear.
I take up the point of the noble Earl, Lord Stockton, about parallels with publishing. As has been mentioned at all stages of debate on the Bill, the broadcast media have enormously greater powers, sometimes for good and sometimes for bad, than even the most reputable and distinguished publisher of books. It is in that context that we on these Benches are a little more fearful of the influence of the market.
The Minister considers that we are cynical—he did not use that word—or over-suspicious in believing that the market must always deliver rubbish. We do not wish to believe that, but my example of the cable television diets that we are offered in the United States as a possible prospectus of what we might be offered here on digital television is not necessarily unrealistic.
I am concerned that the Government do not feel that they need to be consistent about the adoption of quality standards as provided in the 1990 Broadcasting Act, or that they need to ensure that those standards will remain in the new technological future. I hope that another place will return to these arguments. We feel strongly that they are relevant to the enormous power that the broadcasting media have on the culture and social life of our society. The noble Lord, Lord Renton, rightly drew attention to that. However, for the moment, I beg leave to withdraw the amendment.
Amendment, by leave withdrawn.
[Amendments Nos. 14 to 17 not moved.]
7 p.m.
Lord Inglewood Lord Inglewood moved Amendment No. 18:
Page 9, line 14, at end insertߞ
("( ) In subsection (2)(e) "acquisition" includes acquisition on hire or loan.").
On Question, amendment agreed to.
[Amendment No. 19 not moved.]
Lord Inglewood Lord Inglewood moved Amendment No. 20:
Page 9, line 15, leave out subsection (3).
On Question, amendment agreed to.
Clause 10 [Power to require two or more multiplex licences to be granted to one person]:
[Amendment No. 21 not moved.]
Clause 11 [Failure to begin providing licensed service and financial penalties on revocation of licence]:
Lord Inglewood Lord Inglewood moved Amendment No. 22:
Page 10, line 27, after ("or) insert ("whichever is the greater of—

(a) £50,000, or

(b) ").

The noble Lord said: My Lords, Amendment No. 22 is grouped with a large number of other amendments and unless your Lordships wish I shall not read out all the numbers. The numerous amendments relate to one topic: the system of fining licence holders who have failed to comply with their licence conditions.
Current provisions in the Bill hold that the amount of any financial penalty should be calculated according to percentages of the multiplex revenue accountable to a licence holder for his last complete accounting period. This system of fines is used right across the board—for multiplex licence holders, digital programme service licence holders and additional service licence holders for both digital television and digital radio.
However, we are concerned that in the start-up period, multiplex revenue may be modest and the proposed percentages will therefore mean only negligible fines. This would undermine the enforcement regime. The sums involved may provide an inadequate sanction.
Our amendments make provision for the two types of penalties which may be levied: first, the penalty for failure to begin providing the licensed service, which by definition can only fall upon the multiplex provider. Our amendments provide that a penalty levied for this reason should be whichever is the greater of £50,000 or 7 per cent. of the multiplex revenue attributable to him. The other type of penalty is against failure to comply with conditions of licence; this may be levied against multiplex providers, programme service providers and additional services providers. We need to be more flexible here in recognition that there will be companies of hugely differing sizes within this group. Our amendments provide that the penalty for breach of licence conditions should not exceed whichever is the greater of £50,000 or the appropriate percentage of multiplex revenue attributable to the licence holder. The important difference is that the regulators are granted discretion to set the penalty at a figure which is less than £50,000 or calculate the appropriate percentage of multiplex revenue. This gives the regulators some discretion as to which base it is appropriate to invoke and to decide whether a £50,000 fine or a fine based on a percentage of multiplex revenue would provide the most appropriate penalty. I believe that this will allow more realistic and more effective sanctions.
The purpose of these amendments is therefore to bring the Bill into line in the various sections.
There is also another provision to which I would draw your Lordships' attention. The new clauses to be inserted after Clause 30 and Clause 61 allow the Secretary of State to vary by negative resolution the £50,000 figure set out in the clauses on financial penalties. This recognises the fact that such a figure may need to be varied at some point in the future in order to take account of inflation.
In addition, Amendments Nos. 168, 169 and 223 have been brought forward following representations we have received from the Independent Television Commission to regularise the position of all their licensees. I should stress that these amendments deal solely with the maximum levels of fines for breaches of ITC licences. The level of actual fine imposed and in what circumstances remains a matter for the ITC. The amendments bring the holders of non-domestic satellite service licences and the holders of licensable programme service licences into line with Channels 3, 4 and 5.
Under the current provisions of the Broadcasting Act 1990, the maximum financial penalty the ITC can impose on these two categories is £50,000. That limit can be altered by the Secretary of State by order. With the growth of the broadcasting industry and particularly rapid growth in some sectors we accepted the ITC's point that such fine limits could quickly become out of date. Rather than the Secretary of State having to amend limits by order, we agreed with the ITC that it was more sensible to base maximum fines on the same basis that applies to Channels 3, 4 and 5; namely, a financial penalty up to 3 per cent. of the qualifying revenue for the licensee's last complete accounting period for the first offence and a fine not exceeding 5 per cent. for subsequent offences.
While the new limits bring the non-domestic satellite service licensees and licensable programme service licensees into line with other broadcasters, we have retained the £50,000 provision as well, since for some licensees such as small community cable channels, it is more sensible to keep the cash limit as qualifying revenue can be negligible.
The differing arrangements were made at a time when many satellite and cable services were newly established and needed significant help to get off the ground, but there is no reason now why they should not face the same level of fines. I beg to move.
On Question, amendment agreed to.
Clause 12 [Conditions attached to multiplex licence]:
[Amendment No. 23 not moved.]
Lord Inglewood Lord Inglewood moved Amendment No. 24:
Page 11, line 43, leave out subsection (6) and insert—
("(6) No order under subsection (5) shall be made unless a draft of the order has been laid before and approved by a resolution of each House of Parliament.").
The noble Lord said: My Lords, with this amendment I wish to speak to Amendment No. 62. The first of the amendments relates to television, the second to radio and they mirror one tabled by the noble Lord, Lord Donoughue, at Committee stage and on which I undertook to think further. They provide that the Secretary of State's power to alter the percentage of the broadcasting spectrum which may be used for additional services should be subject to affirmative rather than negative resolution. We accept the noble Lord's argument that an order which alters the extent to which the broadcasting spectrum is actually available for programme services might well raise substantial issues for which the affirmative resolution procedure would be justified. I beg to move.
Lord Donoughue: My Lords, I thank the Minister for being so constructive and helpful on the matter.
On Question, amendment agreed to.
Clause 15 [Attribution of multiplex revenue to licence holder and others]:
Lord Inglewood Lord Inglewood moved Amendments Nos. 25 and 26:
Page 15, line 9, leave out (" 17(2)") and insert (" 17(2A)").

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Page 15, line 23, leave out (" 21(2) or section 25(2)") and insert (" 21(2A) or section 25(2A)").
On Question, amendments agreed to.
Clause 16 [Duration and renewal of multiplex licences]:
Lord Inglewood Lord Inglewood moved Amendments Nos. 27 to 30:
Page 16, line 12, leave out subsection (4) and insert—
("(4) At any time before determining the application, the Commission mayߞ

(a) require the applicant to furnish—

(i) a technical plan which supplements that submitted by the licence holder under section 8(4)(b), and

(ii) proposals which supplement any proposals submitted by the licence holder under section 8(4)(f), and

(b) notify the applicant of requirements which must be met by that supplementary technical plan or those supplementary proposals and relate to the matters referred to in section 8(4)(b)(i) and (ii) and (f).

(4A) The consent of the Secretary of State shall be required for any exercise by the Commission of their powers under subsection (4) and for any decision by the Commission not to exercise those powers.").
Page 16, line 25, leave out from beginning to ("or") in line 28 and insert—
("(b) any supplementary technical plan or supplementary proposals submitted under subsection (4)(a) fail to meet requirements notified to the applicant under subsection (4)(b),").
Page 16, leave out lines 32 and 33 and insert—
("(7) Subject to subsection (7A), on the grant of any such application the Commission may with the consent of the Secretary of State, and shall if so required by him—").
Page 16, line 42, at end insert—
("(7A) Where an order under section 13(2) is in force on the relevant date, no percentage of multiplex revenue shall he payable as mentioned in subsection (7)(a) during the period for which the licence is to be renewed.").
The noble Lord said: My Lords, I beg to move Amendments Nos. 27 to 30 and speak to Amendments Nos. 65 to 68. We have provided in the Bill as it stands for multiplex licences to be awarded for 12 years and to allow licence holders to renew their licences at the end of the first licence period for a further 12 years. These arrangements recognise the investment needed and the likelihood that the return on that investment will begin to be realised towards the end of the first licence period.
As I have so often emphasised, we cannot be certain how far and how fast the digital terrestrial market will develop. But we certainly hope that it will develop in such a way that will allow us to set a timescale for the withdrawal of analogue frequencies and to switch to an all-digital regime. It could well be that, as we approach the end of the first multiplex licence period, we are in a position to prepare the ground for the end game in our analogue switch off strategy.
The Bill already provides for the ITC and the Radio Authority to set new minimum requirements for the roll-out of transmission and the promotion of receiver take-up which licence holders would have to be prepared to meet if they wanted to renew. My amendments require the regulators to obtain the Secretary of State's approval of those minimum requirements. This does not undermine the proper role
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of the regulators, but rather underlines the Secretary of State's role in determining the timescale for analogue switch off—a policy issue which is clearly for Government rather than the regulator.
My amendments also require the regulators to obtain the Secretary of State's approval to the percentage of multiplex revenue to be paid on renewal, again reflecting the importance of creating the right conditions for the future of digital broadcasting and for analogue switch off. I would remind your Lordships that we have already stated clearly our intention that no payments to the Exchequer should be made during the first licence period. We will need to reassess the position as licences fall due to be renewed, and will take into account then the state of development of the market and the need for licence holders to provide the taxpayer with a reasonable return in exchange for the use of spectrum, which is of course such a valuable commodity. I beg to move.
On Question, amendments agreed to.
Clause 17 [Enforcement of multiplex licences]:
Lord Inglewood Lord Inglewood moved Amendments Nos. 31 to 33:
Page 17, line 25, leave out from beginning to ("3") in line 27 and insert ("shall not exceed whichever is the greater of—

(a) £50,000, or

(b) the amount determined under subsection (2A).

(2A) The amount referred to in subsection (2)(b) is—
(a) in a case where a penalty under this section has not previously been imposed on the holder of the multiplex licence during any period for which his licence has been in force ("the relevant period")").
Page 17, line 30, leave out ("shall, in any other case, not exceed") and insert ("in any other case").
Page 17, line 32, at end insert—
("and in relation to a person whose first complete accounting period falling within the relevant period has not yet ended, paragraphs (a) and (b) above shall be construed as referring to 3, or (as the case may be) 5, per cent. of the amount which the Commission estimate to be the share of multiplex revenue attributable to him for that accounting period (as so determined)").
The noble Lord said: I beg to move these amendments en bloc.
On Question, amendments agreed to.
7.15 p.m.
Clause 19 [Duration and conditions of digital programme licence]:
Lord Ashley of Stoke Lord Ashley of Stoke moved Amendment No. 34:
Page 18, line 36, at end insert—
"(c) that by the eighth anniversary of the commencement date of the digital programme licence not less than 95 per cent. of the programmes to be broadcast in the service are subtitled to such technical standards as is specified by the Commission,
(d) that by the eighth anniversary of the commencement date of the digital programme licence not less than 10 per cent. of the programmes to be broadcast in the service are presented or interpreted into sign language and
(e) that by the tenth anniversary of the commencement date of the digital programme licence not less than 50 per cent. of the programme hours to be broadcast are audio-described.").
The noble Lord said: My Lords, of all the amendments to the Bill this is the most significant for deaf, hard-of-hearing and blind people. I regard the amendment as terribly significant for those people who are very often deprived of enjoying television. I hope the Minister will be able to accommodate us tonight. Millions of deaf people and blind people are looking forward to the Government's co-operation in opening television to them.
The amendment seeks to set targets for subtitling, signing and audio-description for digital services. As the noble Lord will know, the respective targets are 95 per cent. for subtitling; 10 per cent. for signing; and 50 per cent. for audio-description for blind people. The reason for the 95 per cent. is that we want to accommodate the difficulties and technical problems that will arise. We do not want to penalise people if they cannot keep to 100 per cent. However, we do want to achieve mass coverage. Therefore we are setting a target of 95 per cent. Ten per cent. for signing is a very small step forward but a very important one for those who depend on signing. Blind people need audio-description to explain what is going on.
The point of the amendment is that the targets are to be achieved by fixed dates. Targets are essential if those who are seriously impaired are to follow and enjoy digital television. In Committee the noble Lord, Lord Inglewood, rejected similar amendments. He expressed concern about "the need to strike a balance" and to avoid "suddenly imposing onerous requirements out of the blue." The Minister wanted to avoid deterring new entrants. He was right. I do not want to deter new entrants either. Nor do deaf people; nor do blind people. I am anxious to strike a balance, as the Minister wanted. I also want new entrants into television. By specifying now what will be required in eight or 10 years the amendment removes uncertainty, itself a great deterrent to entry. It also ensures that there are no sudden, onerous requirements on the television companies. The requirements are carefully—some would say too crefully—phased in. I hope that that allays the anxieties of the Minister.
For sensorily impaired people, the expansion of television through digital channels will be welcome; but it is not enough. There will be no gain from the entry of even 1,000 new companies if they are all unintelligible, as they will be if there is no subtitling for deaf people, no signing for hard-of-hearing people and no audio-description for blind people. In other words, provision for television can be multiplied as much as we like, but it will remain inaccessible to deaf, hard-of-hearing and blind people without the provisions of the amendment. Without parliamentary pressure that could happen. Those people will still be deprived while television provision is expanding for everybody else. We have a responsibility to those people which I hope the House, and especially the Government, will accept.
History is on our side. We know that it was the addition by the Minister—I underline the word "addition"—to the 1990 Broadcasting Act of the amendment to set targets that resulted in the gradual but definite increase in subtitling. Subtitling is now at
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37 per cent. but is on course to meet the target of 50 per cent. by 1998. It is significant that the ITV companies are doing no more and no less than the Act requires. The targets set in the Act are determining progress. That is why those targets are essential. It is also significant that there has been no increase in signed programmes comparable with that of subtitled programmes. The reason is that there were no signing targets in the 1990 Act.
Each year hearing people have available to them, according to ITC/BBC figures, over 200,000 hours of terrestrial, satellite and cable television. Yet 62,000 profoundly deaf people, reliant on sign language, have no access to general programmes. That means they are prohibited from watching television. The new technology will enable signing to be done without being visible to the hearing audience. That will be encouraged by the amendment. If the amendment, or any measure that the noble Lord can present to the House, does not become part of the Bill there is no doubt whatever that deaf, hard-of-hearing and blind people will be excluded from enjoying digital television. That would be a terrible deprivation. We have a unique opportunity to include them in the new television era.
On the question of cost, the seemingly miraculous simultaneous presentation of words on a screen as they are spoken is not unduly expensive in relative terms. In fact it is very cheap. I put the figures to the Minister in an interview with him a short time ago. The cost of subtitling is about £600 an hour. That has to be compared with the cost of £600,000 an hour for television drama, £120,000 for documentaries, and £34,000 for sport. So £600 is a very tiny amount, especially when official figures show that some 10 million people use the subtitling provision. Apart from the "See Hear" programme, there is no signing or audio-description. I am reliably told that the cost of that provision would be of the same order.
The amendment calls for the targets on subtitling and signing to be met by the eighth anniversary of issuing a licence and by the 10th anniversary for audio-description. In an area where technology is galloping ahead those timescales are very generous. In the 1990 Act, a five-year period was allowed. We are now allowing an eight-year and 10-year period. Today it is far easier to advance subtitling because the mechanisms are well understood. Much of the expertise is available, although there will be a need for more trained operators. Once the size of the market is defined and the salary earned by operators becomes well known, I anticipate that market forces will establish training schools. At present the BBC is doing virtually all the training.
I hope the Minister will not say that the amendment is not required because we have the Disability Discrimination Act. I know that. The noble Lord was number two on that Bill as it passed through Parliament. There are good reasons why we should not leave the question of digital television access for seriously impaired people to that Act.
The Disability Discrimination Act rests on what is "reasonable". Until codes and regulations are published we have no idea what the Government will consider to

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be reasonable. This is an issue of very great importance to broadcasters and disabled people. It should not be left to others—in this case the ITC and civil servants—to decide what is "reasonable". It should be decided by Parliament and hence be part of the Bill.
It will also take some time before the codes and guidance emerge. But with this amendment companies planning to enter this exciting market will know, immediately the Act is passed, precisely what is required of them. That is beneficial to the companies and to a large section of their potential audience. It is far better to develop those facilities as they go along rather than try to tag them on at a later date. The "tagging on" approach would inconvenience the television companies and is an inappropriate and unacceptable way to meet the needs of disabled people.
I hope that the Minister will be able to respond constructively. On his words tonight will rest the hopes of millions of deaf people and blind people of watching television. I hope that he is able to oblige. I beg to move.
Lord Inglewood: My Lords, I do not want now to cover all the ground that I covered in responding to the noble Lord in Committee. I repeat that the Government take this issue extremely seriously and fully acknowledge the importance of the services described in the amendment to people with a sensory disability. I should also like to say how grateful I am to the noble Lord, Lord Ashley, for the helpful meeting that he arranged with representatives of some of those suffering from disabilities.
I apologise to the House for the fact that we have not yet managed to bring forward the amendments in this area which I agreed in principle to accept at Committee. I refer to the amendments requiring the ITC to consult representatives of those with sensory disabilities before publishing its code on provision for those people and to publish the code in accessible forms. I intend to bring those forward at Third Reading, with the House's permission.
We want to ensure that the maximum amount of subtitling, signing and audio-description is provided compatible with the investment needed to launch digital terrestrial television and make it a success. But we must also bear in mind that other relevant legislation has also recently been passed. I may disappoint the noble Lord, but I should like to refer to the Disability Discrimination Act of last year, which in Section 21 states:
"where an auxiliary aid or service would enable disabled people to make use of a service, it is the duty of the provider of that service to take such steps as it is reasonable … for him to have to take in order to provide that auxiliary aid or service".
That is the approach we need to take here. A general principle has been established in law, and it should be followed through.
Of course, the crux of the matter is how we define "reasonable". The Disability Discrimination Act does not attempt to do that on the face of the Act, but provides for detailed provisions to be drawn up. After all, "reasonable" will mean different things in different circumstances. And what is reasonable can change over time. For example, a technological improvement making an auxiliary aid or service cheaper to provide may make
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it reasonable to expect an increase in its provision. I think that in dealing with the issue of provision for people with sensory disabilities by digital terrestrial broadcasters, it makes sense to ensure that we achieve the flexibility to take account of differing and changing circumstances. That is the principle behind the provision in the Bill for the ITC to draw up a code of practice and I see no reason to depart from that principle. The approach ties in well with the provisions of the Disability Discrimination Act. One way of dealing with this matter—though I shall need to look into it further—might be a regulation brought forward in that Act which would simply make it clear that, so far as broadcasting is concerned, the circumstances in which it is reasonable for auxiliary aids or services to be provided are set out in the Broadcasting Act 1990 and in the code drawn up by the ITC in this Bill, on which there will be detailed consultation. However, we deal with the relationship before the two pieces of legislation. I am convinced that a code is the right way forward.
I acknowledge that the code represents a different approach from that adopted in the 1990 Act, which, as I said, predates the Disability Discrimination Act, for subtitling by existing analogue broadcasters. As the noble Lord explained, the 1990 Act sets down progressively increasing minimum requirements for commercial broadcasters, and those are also reflected in the BBC Charter and Agreement. But we were dealing then with a set of circumstances considerably clearer and less uncertain than our current vision of the digital future.
I should like to set out the main differences. I do so shortly, bearing in mind the time of evening. First, in 1990 the four existing analogue channels had established audiences and revenue flows. The audience for digital terrestrial will initially be close to nil. Secondly, they had large programme budgets. Thirdly, those existing broadcasters were using an existing transmission network and broadcasting to sets that already existed. Fourthly—and it is an important point—the existing analogue broadcasters all provide heterogeneous services which include comedy, films, drama, sport, news, and current affairs and, even more importantly, those which include a mixture of live unscripted, live scripted and pre-recorded programmes. The increase in the number of programme services permitted by digital technology will mean that many new broadcasters are likely to provide specialist services, just as cable and satellite broadcasters do.
The effect of that is that, depending on the nature of the programme broadcast, the costs of doing the relevant subtitling—if I may so describe it in shorthand—will vary considerably. For example, some programmes might cost as little as £200 an hour, whereas others, involving unscripted live performances might be up towards £2,000 an hour. We are concerned that the nature of the programmes offered will have a very big impact on the nature and cost of the type of subtitling, and so on, which will be appropriate. Against that background, there will be problems of what is reasonable for a particular broadcaster. If the

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broadcasters are all new broadcasters, it means that they all start from a very low base and incur quite different costs.
I appreciate that much of what I said will be felt by the noble Lord as offering little comfort. But I should like to make some suggestions which I hope will convince your Lordships that the Government have taken full account of the points raised and, having done so, are prepared to make sensible alterations to their position without compromising the principles that I set out in my earlier remarks and promising things which, quite honestly, cannot reasonably be delivered by broadcasters.
As I said in Committee, broadcasters will act in their own interests to provide as extensive a service as they can for disabled people. This Government believe that regulation for its own sake should not be imposed. But I recognise that that cannot be guaranteed. We might need to look again, once the market is up and running, at the status of the code. If some broadcasters, after a reasonable time, do not comply, it might be appropriate to take steps to enforce compliance. But we believe that the position from which we start should be that we should not place figures on the face of the Bill. We believe that that would be both inflexible and unfair. Rather, we believe that the code is the right delivery mechanism (if I may use a television analogy), which will allow the industry the flexibility to adjust requirements on provision for disabled people both in the light of the development of the market as a whole and the differences in the situation of broadcasters within that market.
That is in line with the principles of the Disability Discrimination Act. Therefore, it is a solution that we continue to support. We believe that it is the right way to deal with this particular important problem, in the context of the very differing abilities of new broadcasters to deliver, at the same time bearing in mind the significant differences in the products that those new broadcasters will place on the market.
I hope that my words help explain to the noble Lord first that we take these matters very seriously and secondly that this is the right way to address them.
Lord Ashley of Stoke: My Lords, I must not detain the House. I know that people are waiting to get on to other business. But perhaps the House may hear a very brief response to some of the points raised by the Minister.
The fact that the new companies begin from a low base means nothing whatever. If they are unable to make provision for deaf people and blind people, they should not be in business. The BBC and ITV have incurred the expense of subtitles and icons of audio description. Therefore, with digital television, they should do likewise.
The nature of the programmes and the nature of the subtitling is irrelevant. If a programme is on TV, it should be subtitled. If it is not subtitled, deaf people cannot follow. There is no point arguing about the lack
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of need for subtitles and saying that it cannot be done on this or that programme. Subtitles are subtitles; they are the key to understanding for deaf people.
The Minister says that it is in the interests of the programme companies to provide the service; that is not the case. History proves that it is only because of the provisions of the 1990 Act that subtitling was brought forward—admittedly, the BBC is the exception—and the programme companies only maintain the targets laid down in the 1990 Act. That is why we want targets on the face of the Bill.
The Minister says that we should wait until the programmes are up and running. That is the wrong way to go about it. It is like tagging an out-house on to the main building of a house; it is an oddity. It is far better to build as one goes along. The subtitling and the audio description can be integrated.
The Minister says that there should be no target. That is quite wrong. The target is crucial. We are leaning over backwards; we are saying five years, eight years and 10 years. We are giving more than adequate notice. When the Minister considers the rights of the programme contractors I beg him to bear in mind the rights of deaf people and blind people to follow television. Those are basic fundamental rights and they go by the board unless targets are laid down in a Bill passed by both Houses of Parliament. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.30 p.m.
Clause 21 [Enforcement of digital programme licences]:
Lord Inglewood Lord Inglewood moved Amendment No. 35:
Page 20, line 18, leave out ("two years") and insert ("one year").
The noble Lord said: My Lords, in moving Amendment No. 35 I shall speak also to Amendments Nos. 39, 72 and 77. They are technical amendments. I beg to move.
On Question, amendment agreed to.
Lord Inglewood Lord Inglewood moved Amendments Nos. 36 to 38:
Page 20, line 22, leave out from beginning to ("3") in line 24 and insert ("shall not exceed whichever is the greater of—

(a) £50,000, or

(b) the amount determined under subsection (2A).

(2A) The amount referred to in subsection (2)(b) is—
(a) in a case where a penalty under this section has not previously been imposed on the holder of the digital programme licence during any period for which his licence has been in force,").
Page 20, line 28, leave out ("shall, in any other case, not exceed") and insert ("in any other case").
Page 20, line 30, leave out ("(2)(a)") and insert ("(2A)(a)").
On Question, amendments agreed to.
Clause 25 [Enforcement of digital additional services licences]:
Lord Inglewood Lord Inglewood moved Amendments Nos. 39 to 42:
Page 22, line 39, leave out ("two years") and insert ("one year").

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Page 22, line 43, leave out from beginning to ("3") in line 45 and insert ("shall not exceed whichever is the greater of—

(a) £50,000, or

(b) the amount determined under subsection (2A).

(2A) The amount referred to in subsection (2)(b) is—
(a) in a case where a penalty under this section has not previously been imposed on the holder of the digital additional services licence during any period for which his licence has been in force,").
Page 23, line 3, leave out ("shall, in any other case, not exceed") and insert ("in any other case").
Page 23, line 5, leave out ("(2)(a)") and insert ("(2A)(a)").
On Question, amendments agreed to.
[Amendments Nos. 43 to 46 not moved.]
Baroness Trumpington: My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion, I suggest that the Report stage begins again at 25 minutes before nine o'clock.
Moved accordingly, and, on Question, Motion agreed to.

Reserve Forces Bill [H.L.]
7.35 p.m.
Read a third time.
Clause 121 [The lieutenancies]:
The Parliamentary Under-Secretary of State, Ministry of Defence (Earl Howe)The Parliamentary Under-Secretary of State, Ministry of Defence (Earl Howe) moved Amendment No. 1:
Page 63, line 25, at end insert—
("(2) It is hereby declared that the validity of the appointment of a lord-lieutenant after 20th April 1980 is not affected by the fact that the instrument appointing him refers to the power of appointment previously contained in the Local Government Act 1972 or the Local Government (Scotland) Act 1973 and not the corresponding power under the Reserve Forces Act 1980.
This subsection shall come into force on the passing of this Act.").
The noble Earl said: My Lords, when last week the House was considering this Bill on Report, I raised an issue relating to the appointment of lord-lieutenants which had been brought to my attention by my noble and learned friend the Lord Chancellor, and I said that I hoped the Government would be able to bring forward a suitable amendment on Third Reading.
The statutory powers governing the appointment by Her Majesty of lord-lieutenants for each county in England and Wales are contained in Section 130 of the Reserve Forces Act 1980. That was a consolidation Act, and the provisions of that section repeat word for word provisions previously contained in Section 218 of the Local Government Act 1972. In Scotland the corresponding provisions are in Section 131 of the 1980 Act, which re-enacted Section 205 of the Local Government (Scotland) Act 1973.
Until 1980 the instruments of appointment rightly referred to the 1972 or 1973 Act, depending whether the appointment was in England and Wales or in Scotland. Thereafter, they should of course have referred to the Reserve Forces Act 1980, but regrettably that was not
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always the case; many of them continued to refer to the 1972 or 1973 Act. It is quite likely that those appointments are nevertheless legally valid, but it is thought sensible to make it clear that that is indeed the case. The purpose of this amendment is therefore to dispel any doubts there may be about the validity of these appointments, and about the validity of any acts done by a lord-lieutenant whose instrument of appointment cites the wrong Act. I beg to move.
On Question, amendment agreed to.
Clause 122 [Safeguard of employment for members of reserve forces]:
Earl Howe Earl Howe moved Amendment No. 2:
Page 63, line 40, leave out subsection (3) and insert—
("(3) For subsection (1) of section 17 (prohibition of dismissal for liability to whole-time service) there shall be substituted the following subsection—
"(1) If the employer of a person who may be required to enter upon a period of whole-time service—

(a) terminates that person's employment without his consent at any time when he is not in that service, and

(b) does so solely or mainly by reason of any duties or liabilities which that person may be liable to perform or discharge—

(i) if required to report at any time or place with a view to entering into whole-time service; or

(ii) if he enters upon a period of whole-time service,

the employer is guilty of an offence and liable on summary conviction to a fine not exceeding level 3 on the standard scale."").
The noble Earl said: My Lords, in moving Amendment No. 2 I shall speak also to Amendment No. 3.
These amendments relate to the Reserve Forces (Safeguard of Employment) Act 1985. I mentioned them during the Report stage. The change to Section 17 of the 1985 Act will mean that individuals who report as required on call-out or recall but are, for whatever reason, not accepted into service, remain entitled to the protection of the Act. The omission of Section 20(4) is consequential. The change to Section 20(3) introduces an explicit reference to maternity leave, and follows up a point raised by the noble Baroness, Lady Turner. I beg to move.
Lord Redesdale: My Lords, I support the amendment but ask for a point of clarification. I take it that the phrase "whole-time service" does not include members of the reserve forces who sign up to become members of the high readiness reserve.
Earl Howe: My Lords, I believe the noble Lord is correct. If I am wrong, I shall write to him straight away.
On Question, amendment agreed to.
Earl Howe Earl Howe moved Amendment No. 3:
Page 64, line 3, at end insert—
("( ) For subsections (3) and (4) of section 20 (interpretation) there shall be substituted the following subsection—
"(3) A period of whole time service shall not be regarded as having ceased by reason of any absence on leave (including sick leave or maternity leave) before release from service or discharge."").
The noble Earl said: My Lords, I spoke to this amendment when moving Amendment No. 2. I beg to move.
On Question, amendment agreed to.
Schedule 11 [Repeals]:
Earl Howe Earl Howe moved Amendment No. 4:
Page 97, line 28, column 3, at end insert ("140, 151").
The noble Earl said: My Lords, Amendment No. 4 relates to pensions issues. As I mentioned during the Report stage, the Bill includes the repeal of almost the whole of the Reserve Forces Act 1980. Some sections of that Act are superseded entirely by the Bill and will be repealed immediately the relevant provisions are brought into force. Other sections will continue to have effect for limited purposes and will be repealed when they become spent.
Sections 140 and 151 of the 1980 Act give authority for the payment of war pensions to former members of the Ulster Defence Regiment and the Home Guard. It has been suggested to me that the inclusion of those sections in the repeal schedule might give the impression that it was the Government's intention to cease the payment of pensions to the individuals concerned, or perhaps to exclude new applicants who develop a disability attributable to their service. That is very much not the case, and to put the matter beyond doubt I have put forward this simple amendment to remove those two clauses from the ambit of the repeal. I beg to move.
On Question, amendment agreed to.
An amendment (privilege) made.
Earl Howe: My Lords, I beg to move that the Bill do now pass. This is an important Bill. It will bring the law on reserves up to date, and it will permit those reserves to be used more flexibly. The Bill is complex and, in many respects, technical. Its scope means that it is necessarily lengthy. For the record, I might say that it runs to 132 clauses and 11 schedules, covering 98 pages.
The Bill has been the subject of a very extensive consultation exercise. I believe that that has been most productive. The policy which the Bill implements has been fully aired, and the provisions themselves considered widely. I am sure that that has been an important factor in the general support which the Bill has received from all sides of the House.
I should like to take this opportunity to thank all noble Lords who have contributed to our debates, at Second Reading, in Committee, on Report and indeed today. I am most grateful for the constructive spirit in which the Bill has been considered.
Although time prevents me from mentioning every noble Lord who has contributed, I should like to express my particular and genuine thanks to the noble Lords, Lord Williams and Lord Judd, and the noble Baroness, Lady Turner. I very much appreciate the considerable efforts they have made to improve the Bill. I have, of course, felt it necessary to oppose some of the amendments that they have put forward, but I have
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always recognised that their motivation has been positive. However, in very many more cases I have been able to agree with the points which they have raised, and to accept amendments which they have tabled.
Perhaps I may also mention the contribution to our debates of the noble Lord, Lord Redesdale, who has provided some useful insights on a range of issues. I am grateful to him. I am confident that your Lordships' careful scrutiny of the Bill has delivered up a better Bill and that it will considerably ease the burden on those in another place when they come to consider it.
I should now like to touch briefly on some of the topics which we have debated during the passage of the Bill. We spent some time in Committee on various matters concerning special agreements under Part IV of the Bill. I believe it was a very useful debate, and I hope that the details I was able to supply were helpful to your Lordships. Special agreements are necessary if we are to be able to guarantee the availability for operations of individuals with particular skills. They will be skills in short supply in the reserve forces, meaning that it would not be sensible to rely on seeking volunteers possessing those skills at a time of crisis.
The noble Earl, Lord Attlee, tabled amendments concerning the sponsored reserve concept under Part V of the Bill. I was grateful for his contributions on this, as on other matters, and was able to offer him reassurance in Committee and further details in correspondence. We believe that the Bill offers a flexible framework within which each service will be able to adapt the concept to suit various applications as they arise. In assessing the suitability of a given area of work for the concept, particular attention will be paid to the maintenance of operational capability.
The flexibility I mentioned includes scope to adjust the training syllabus for sponsored reserves according to the circumstances. There are a number of useful precedents for the assimilation of support personnel with particular skills and qualifications into the service rank structure when they are needed, and we do not expect any difficulty on that score. We do believe that the concept will allow the extension of the market testing programme into new areas, to the benefit of both the services and the defence industry.
The noble Lords, Lord Williams and Lord Judd, and the noble Baroness, Lady Turner, raised a number of issues connected by a common thread—their concern for the position of the individual. I might include in that category the amendments they tabled concerning the position of conscientious objectors; discrimination against reservists by employers; and statutory protection for civilian pensions. I believe that in each case I was able to explain that the present or, in the case of pensions, proposed arrangements were sufficient.
On conscientious objectors, the existing longstanding arrangements apply to both regulars and reservists. They work well, and I would not wish to make any change to them. Both in Committee and on Report the noble Baroness, Lady Turner, pressed for the Bill to include a provision prohibiting discrimination by employers. I hope that I said enough to persuade her that, far from encouraging the employment of reserves, such a move

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would be likely to harden employers' attitudes, and would be counterproductive. Furthermore, to achieve an effective provision would require quite a substantial Bill in its own right.
On the question of pensions, I repeat the assurance I gave on Report. The Government understand the necessity to safeguard the civilian pension provision of reservists. As the House will recognise, pensions issues are complex. We will be consulting closely with the pensions industry, employers and other interested parties as ideas are developed.
I think that the issue which prompted the greatest interest among your Lordships was the maximum length of obligatory service after call-out for peacekeeping, humanitarian and disaster relief operations. Certainly, the debate on Report on the amendment moved by the noble and gallant Lord, Lord Bramall, drew contributions from the noble and gallant Lords, Lord Carver and Lord Craig of Radley, from my noble friends Lord Vivian and Lord Renton, from the noble Earl, Lord Attlee, and from the noble Lord, Lord Williams. I mention last, but it goes without saying very much not least, the most interesting point made by the noble Lord, Lord Callaghan of Cardiff. My thanks are due to all those noble Lords for their contributions.
I explained that the period of nine months in the Bill was the result of very careful consideration. I added that the nine month period was supported by the TA colonels, including my noble friend the Duke of Westminster, and by the chairmen of the 14 Territorial, Auxiliary Volunteer Reserve Associations. The nine months would be a maximum period of obligatory service after call-out, but it was our intention that reservists, like regulars, would not normally serve more than six months on operational tours. As the noble and gallant Lord, Lord Bramall, put it, the penny has dropped on that point. Indeed, if I may say so, the notional penny has been in its fallen position for some considerable time. It was on that understanding that the noble and gallant Lord agreed to withdraw his amendment.
Altogether I have listened with great attention to the various debates on the Bill's provisions. Your Lordships have, with no little knowledge and insight, made your usual valuable contributions. I am grateful for the broad support the Bill has received from all sides of the House. I hope that that will continue in another place. As I said earlier, I am confident that your Lordships' careful scrutiny of the Bill will considerably reduce the consideration that is required there. I commend the Bill to the House.
Moved, That the Bill do now pass.—(Earl Howe.)
Lord Williams of Elvel: My Lords, at Second Reading I gave the Bill a welcome from these Benches because we recognise that the 1980 Act was out of date, that it needed revising and that there was a case for a new role for the reserve forces. I also emphasised that the reserve forces form a vital umbilical cord, if I may put it like that, between the regular forces and the civilian population. That is the role that has been emphasised by a number of noble Lords in the course of our debates.
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The noble Earl listened carefully to my point that we would explore a number of matters in Committee. The Government agreed with a number of the points that we put forward and those have been written into the Bill. I am particularly pleased that the penny dropped on the question of pensions in the end because the Government started off from a position that we regarded as being untenable—indeed, not only untenable in equity but one which would discourage people from signing up as reservists. I am glad that the Government have conceded that point. As the noble Earl said, he was unable to accede to a number of our amendments. I fully understand that.
I believe there are four points that will be matter for another place; indeed, they will perhaps be debated at some length there. The first is the question of key personnel who are called up for humanitarian relief. We debated that in Committee. My noble friend Lord Callaghan of Cardiff referred to doctors in the NHS and the noble and gallant Lord, Lord Craig of Radley, referred to the problem of medical services generally in the Royal Air Force. It is particularly acute when we come to humanitarian relief because, as was mentioned in Committee and at Report stage, people who are employed for humanitarian relief domestically may well not enjoy being called up for humanitarian relief outside the United Kingdom. They probably have enough to do, particularly in the NHS, at home. That could, and does, give rise to all sorts of problems.
The second point that will be matter for debate in another place is that of discrimination, protection and conditions of employment. Despite what the noble Earl said, I have to put on record that I do not believe he went quite far enough for our liking. Under the Bill as drafted we believe that reservists can be discriminated against, particularly in their conditions of employment. We would like to make sure, not in the interests of the individuals, as the noble Earl said, but of the whole system because if that is right people will sign up as reservists. If the system is wrong people will not sign up. Obviously, we have our concerns about individuals but above all it was in order to get the system right that we moved the amendments.
The third point is the vexed question of nine months versus six months for humanitarian relief operations. I have no doubt that that matter will come back again in another place. It links with the fourth point which is the structure of the Bill. I do not believe that we touched on it except peripherally from time to time. There seems to us to be a certain fuzziness in the distinction between call-up in Clauses 52, 54 and 56. It is the difference between what is a warlike operation and a humanitarian relief operation and when a humanitarian relief operation suddenly becomes a warlike operation. The position is somewhat less than clear. I offer this as an afterthought to our discussions. It would make sense if there were a category all on its own, as it were, which dealt with pure, humanitarian relief operations and never got into anything that could be on the edge of warlike operations. If that were the case, then the call-up period of six months—and I put this forward as a personal

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view—would be appropriate. No doubt it is something that will be debated in another place and the Government will ponder it.
We went into Committee in the Moses Room. I believe that that generally was a success. After the Government had, as the noble Earl said, consulted widely on the Bill and indeed had drafted a Bill and published it, it was unfortunate that they had to produce a whole raft of amendments even before we began in Committee. Somewhat against my will, I was forced to accept the Government's amendments in toto on the understanding that we would recommit the Bill and at that point have a Bill that the Government were prepared to defend. It seemed to me rather odd that we had more than 100 amendments before we even went into Committee when this was the first House to examine the Bill.
Having said that, I consider the Committee experiment in the Moses Room, after we had overcome that rather difficult hiccup, to have been a success. The fact that it was a success is due not only to the participation of noble Lords who had great knowledge of the subject of reserve forces but also to the flexibility and courtesy of the Minister himself. I take this opportunity of reciprocating and thanking the noble Earl, Lord Howe, for his courtesy, kindness and the general flexibility and good humour he displayed throughout what were at times somewhat tense debates. The House is indebted to him. He can feel proud of the way in which he carried the Bill through the House. My thanks are also due to my noble friends Lord Judd and Lady Turner of Camden who helped me on specific aspects of the Bill and I hope, as the noble Earl said, with some effect. We had a good team. I believe that we made some impression on government thinking.
In conclusion I wish the Bill well. It seems to us to be a Bill that, in its present form, is reasonably well drafted, subject to the points I mentioned and to further opinions that no doubt will emerge in another place. The Bill is certainly needed; it is one which will give heart to the reserve forces. I believe that it will give heart to the regular forces as well. We welcome it as such. I wish the Bill well. We look forward to seeing what happens to it in another place and whether amendments will be introduced which your Lordships will discuss.
Lord Redesdale: My Lords, I would like to add my words of welcome to the Bill. The Bill is needed. Not only will it be welcomed by all sides of the House but, more importantly, it will be welcomed by the Territorial Army itself and the reserve forces because it will give added impetus to their role. For many people in the reserve forces it will provide a focus on which to train and a reason for retention. I believe that that is the main reason behind the Bill added to the fact that people get "in-field" experience. One of the major problems that the Bill has brought to light—and I understand the Minister's reservations about introducing legislation—is discrimination.
The Bill in its entirety is only a vehicle through which actions can take place such as people signing up to become members of the high readiness reserve force. If
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there is a feeling—and I believe that this is why the debate occupied so much time and effort—within the reserve forces that discrimination will rain down on them from their employers, we shall be in difficulty in the future. However, having said that, I am sure that the matter will be raised in another place. I add my thanks to the Minister for the way he has undertaken the Bill.
Earl Attlee: My Lords, I express my gratitude for the way in which the Minister and his predecessors consulted so deeply and at all levels and for the fact that consultation has been genuine. The Minister obviously acted on the information he received. As to the future, I look forward to taking advantage of the Bill personally and also allowing the men under my command to take advantage of it.
Lord Mottistone: My Lords, I too want to thank my noble friend the Minister. I agree with what the noble Lord, Lord Williams, said about his great courtesy and the immense care he took to deal with each and every possible amendment, including some relatively little ones of mine. I congratulate my noble friend on having handled this very important Bill so very well.
The advice I have received from those parts of the Territorial Army with which I have dealt for many years is that they very much welcome the Bill. That endorses what those noble Lords with experience in the area have said. I believe that it will be a very good Bill and I hope that another place does not ruin it. I look forward to it returning to your Lordships' House more or less as it is now.
Earl Howe: My Lords, I should like to reply briefly. First, I must thank all noble Lords for their kind and positive words about the Bill and my part in its passage through the House. I thank particularly my noble friend Lord Mottistone not only for his most recent comments but for his contributions generally to our debates which have been most constructive at all times.
I should like to make two points in response to the noble Lord, Lord Williams of Elvel. He expressed doubt about the availability of reservists for humanitarian purposes overseas. I take note of his concern, but it is likely that only willing individuals would be called out for that type of operation.
The noble Lord also implied that the Government had given some ground on the issue of pensions. We had a useful debate on that matter. I agree with the noble Lord that many important issues were aired. In fact, we have not changed our position on pensions. The power to safeguard civilian pensions has always been in Part VIII and our intentions, which I set out at Report stage, have been clear for some time. Nevertheless, I am glad that I was able to satisfy the noble Lord and his noble friends on those issues.
Once again, I thank your Lordships for the constructive spirit in which the Bill has been debated. It has been a pleasure to be responsible for a measure which is welcomed by all parties and which has stimulated many interesting debates. I suspect that at the forefront of all our minds is the realisation that the reserve forces want to play a significant part in our

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military contribution to future crises. They have a most valuable capability to do so and this Bill will enable that to be used. With that thought, I ask your Lordships to agree that the Bill should now pass.
On Question, Bill passed, and sent to the Commons.
Viscount Long: My Lords, I beg to move that the House do now adjourn during pleasure until 8.35 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.2 to 8.35 p.m.]

Broadcasting Bill [H.L.]
Further consideration of amendments on Report resumed.
Clause 26 [Provision for broadcasting of services provided by independent analogue broadcasters]:
Lord Cledwyn of Penrhos Lord Cledwyn of Penrhos moved Amendment No. 47:
Page 24, line 11, at end insert—
("(c) ensure that the amount of digital capacity to be reserved for the Welsh Authority and Channel 4 respectively in Wales shall not be less than the digital capacity reserved for the Channel 3 and Channel 5 services in Wales.").
The noble Lord said: My Lords, I regret that I was unable to attend the Second Reading of the Bill and the Committee stage, but I have been following events carefully and reading the Hansard reports of the debates. I see that the case for the amendment has already been argued in a number of powerful speeches. I wish to reinforce the central theme of those speeches; namely, that S4C must be in a position to compete for viewers on the basis of equality between it and its competitors. It must be a competition between equals. But on the evidence of the White Paper—this has been confirmed by the Minister during the debates on the Bill—there will not be a level playing field.
According to the White Paper, S4C, as will be the case with Channel 4 in Wales, will enjoy only a quarter multiplex, whereas it is intended that its competitors—namely, BBC1, BBC2, ITV and Channel 5—will be guaranteed twice as much digital capacity as S4C and Channel 4 in Wales.
Unlike its competitors, S4C will be unable to provide all the technical benefits of digital broadcasting. It is not fair. It is not acceptable to the Welsh people. If S4C cannot offer to its viewers the technical benefits which will be on offer from its competitors, its services will be seen as old-fashioned and second-rate, and many viewers will not choose to watch its programmes. As a result, S4C will inevitably lose some of its audience. Surely that is unfair to S4C.
I am sure that there is no need for me to remind the House that the Act of Union of 1536 relegated the Welsh language to an inferior status in the public life of Wales for centuries. It was one of the black spots in our history. It was my great privilege as Secretary of State for Wales to pilot the Welsh Language Bill 1967 through the other place. The central purpose of that Bill
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was to confer on the Welsh language, for the first time since 1536, a status of equal validity with the English language in the public life of Wales. That has been the policy of successive governments since then.
It was also my privilege to co-operate with other noble Lords, in particular the noble Viscount, Lord Whitelaw, in setting up S4C 15 years ago. I can assure the House that the founders of S4C never intended that its programmes should be of second-rate technical quality compared with English language programmes. It was intended that they should always be technically comparable with the English language programmes of its competitors. Otherwise, how on earth could they hope to withstand competition? They have been technically comparable and, as the whole House heard on Second Reading, the S4C programmes have been a huge success. It is an achievement of which we are proud.
I would respectfully say to the noble Lord, Lord Inglewood, who has shown great understanding and compassion in the course of our debates on the Bill, that it is far too late in the day to expect Wales to put up with a Welsh language service which is inferior in technical quality to alternative services in the English language. Indeed, Welsh speakers would feel justifiably aggrieved if they were deprived of Welsh language television services of technical comparability with the English language television services. This amendment would ensure that such a grievance would not arise.
My amendment affords the opportunity for the Government to promise that they will think again. I hope that the noble Lord and his right honourable friend will respond positively to it. If he does so the news in Wales will be received with pleasure. If he fails to do so there will be great disappointment in the Principality. I beg to move.
Lord Aberdare: My Lords, I am pleased to support the amendment. We all want the Bill to succeed. It will have been a terrible waste of time if the digital revolution never occurs. We all assume that it will occur because there will be an incentive for ordinary viewers and listeners to invest in the new digital equipment.
Aside from the arguments in equity that S4C should enjoy equal access to capacity which the other main terrestrial broadcasters enjoy, there is the argument that the Welsh viewers of S4C will have little incentive to invest in digital technology if their programmes can be delivered only at analogue quality or if the ancillary features which will be available on other channels will be unavailable on S4C.
We can all appreciate the unique remit that S4C has in delivering Welsh language programmes of quality to its viewers. The other side of the coin is that Welsh-speaking viewers have no other channel to which they can turn in order to view programmes in the language of heaven. It follows that the Department of National Heritage is missing out on a particularly strong marketing opportunity by depriving Welsh-speaking viewers of the prospect of enjoying full digital capacity on S4C. The achievements of S4C in creating an independent film and television industry essentially from scratch have already been rehearsed in this House.

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It has been a significant contribution to the richness and diversity of culture within Wales and the UK. It has helped to diversify the economy of Wales, once so dependent on heavy industry.
If S4C is to continue to seed such welcome development and growth it will need to be able to commission programmes with full digital capacity. If a constraint of capacity is put on S4C, that constraint will be reflected to the independent production industry in Wales. It would handicap the development of the industry, making it less viable in the face of competition from companies elsewhere, experienced as they will be in the production of content dependent on the latest technology.
Perhaps I may ask my noble friend one question. Is there any inescapable shortage of capacity in the Principality which makes awarding S4C parity of capacity impractical? Is there really no multiplex with adequate coverage that would accommodate S4C's requests? As I hope I have explained, if there is parsimony in the award of capacity the danger is that the move to digital will be slower in the Principality and the emerging production industry in Wales will be handicapped. I am sure that that is not the Government's intention.
8.45 p.m.
Lord Elis-Thomas: My Lords, I support the amendment which stands in my name and in the names of the noble Lords, Lord Prys-Davies, Lord Aberdare and Lord Cledwyn of Penrhos. We are facing a difficult issue as regards the relationship between technology and culture. In a sense, we are speaking in the dark because we are not clear about the nature of the frequency planning exercise. It would be helpful if in response the Minister could let us know the state of play on the ongoing frequency planning exercise. Can he also tell us what news he has of the technical capacity that is becoming available?
I was involved in discussions on the broadcasting legislation which established capacity for the IBA, as it then was, to begin the engineering work for what became S4C in Wales and Channel 4 and to carry on later when the channel was established. I am anxious about the tendency to make a more limited form of technology available for the channel. If there were an argument as regards the then terrestrial capacity and the fact that it was appropriate to allow the technology of S4C to develop later in terms of the fourth station on the repeaters and on the main transmitters in the 1970s and 1980s it is certainly not the case that it is inappropriate to allow S4C to have full capacity at the present stage. We are not talking only about the broadcasting capacity but about all the other digital services which we hope S4C will be able to provide.
I am grateful to the Minister for the discussions that he has had in this Chamber and outside about the arrangements. No doubt he will tell us that it is not the Government's view that digital capacity should be put on the face of the Bill. I submit that the form of the amendment clearly indicates that we are arguing that the
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capacity should not be less than the capacity for Channels 3, 4 or 5. We are arguing for a flexible form of delivery on whatever multiplex is most appropriate but we are seeking parity of delivery on that particular multiplex with the other services being made available. In view of the total capacity which will be available through the new digital system it seems a reasonable argument that we are putting forward.
S4C and Channel 4 in Wales have been offered one-quarter of a multiplex. Channel 3 and Channel 5 have been offered one-half of a multiplex in Wales, as in the rest of the UK. I believe that that is an unacceptable structure. It will limit the possibility of S4C being able to develop a wider choice of services, unlike its competitors. We are awaiting the Minister's further amendments on the question of the commercial flexibility available to the channel, as we discussed in Committee.
By denying S4C as equal an access to multiplex as Channels 3 and 5 the Government are in danger of undermining the possibility of the very commercial flexibility of which they say they are in favour. There must be the technical capacity to be able to deliver that range of services but that will not be made available under the present arrangements. It will also seriously limit the possibility of the Welsh authority to raise additional commercial revenue at a time when the Government—and I agree with their emphasis—are looking for commercial partnerships as the funding for additional services.
As we have indicated, there has been a level of commercial success in terms of the income generated by the Welsh authority and the possibility of generating further income may well be reduced as a result of this decision if S4C is unable to have the same technical capacity as the other players in the field.
For all those reasons, I hope that the Government will indicate that they are prepared to accept the spirit, if not the letter, of my noble friend's amendment. We are seeking to ensure that the full capacity available to the other channels in Wales should also be available to S4C. I am pleased to support the amendment.
Lord Prys-Davies: My Lords, I support this important amendment. The Minister will know that since the Second Reading debate we have tried to extract from the department the assurance which is embedded in this amendment.
On the first day in Committee, in responding to a similar amendment, the Minister said:
"We are providing guaranteed places for S4C and Channel 4 in Wales".—[Official Report, 6/2/96; col. 229.]
Of course, we welcome the terms of that guarantee as far as they go. But with the greatest respect, the wording does not in itself meet the anxiety expressed this evening by my noble friend Lord Cledwyn and the noble Lords, Lord Aberdare, and Lord Elis-Thomas. That anxiety relates to the digital capacity which has been reserved for S4C.
It seems to me that to reserve for S4C a lesser capacity than that for its competitors will be transparently unfair to S4C, its viewers and the Welsh

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nation. Anyone who is familiar with the history of Welsh language broadcasting from the beginning will know that in the past it was always claimed that frequencies were not available or could not be found until the distant future. My noble friend Lord Cledwyn made it abundantly clear that Wales is no longer prepared to tolerate such unfairness.
I support entirely the anxieties expressed by the noble Lord, Lord Aberdare, as to which frequencies are currently available for digital broadcasting in Wales. If the Minister is unable to accept the principle of Amendment No. 47 this evening, will the department disclose the identity of the engineers upon whose advice it is relying? That would be extremely helpful.
I suggest that the engineers for S4C and the engineers for the department should exchange reports with a view to establishing the present position and to get at the truth before the Bill proceeds to another place. For those reasons, I support the amendment but I suggest that it is perfectly fair to ask for the engineers' reports to be exchanged.
Lord Inglewood: My Lords, I begin by saying how glad we are to see the noble Lord, Lord Cledwyn, in his place and to hear him again in such persuasive form.
I first congratulate the noble Lords who have moved this amendment on their persistence and ingenuity in pursuing the cause of S4C. This is certainly not the first time that we have debated the provision we propose to make for S4C with regard to digital broadcasting and I suspect it will not be the last. But I welcome the opportunity to look at the new angle which the noble Lords have put before us today.
As I have emphasised before, our main concern is to ensure that the Welsh language programming which is at the core of S4C's purpose and remit is made available in digital form as widely as possible throughout Wales. I make it clear that it is absolutely no part of our remit that that channel should be anything less than first class. That has to be our primary objective. That is why we announced that S4C would be allocated its own capacity on the multiplex assigned to the ITC which offered the widest possible geographical coverage, because that would guarantee S4C the widest possible reach in Wales.
The planning of frequencies for digital terrestrial broadcasting is a long and complex process. The ITC, the BBC and NTL are co-operating on this work at the moment, and have yet to finalise their report. I understand that the bulk of the work will not be finished until April. Although it seems that noble Lords have had privileged access to some early findings, those must inevitably be tentative and subject to revision. I therefore believe it would be premature to move from our original assumption about the outcome of the exercise and that the best coverage in Wales will be on the multiplex offering the widest coverage overall.
However, I assure noble Lords that, if it transpires that there is no significant difference in coverage in Wales between the top multiplex assigned to the ITC and the next best, I will certainly look again at the position of S4C. In doing this, however, I should remind
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noble Lords that I will need to take other factors into consideration as well. I know, for example, that another aspect of the debate about the coverage of multiplexes is the fact that there can be a trade-off, at the margins, between coverage and capacity. Thus it may be possible to increase the capacity available without moving broadcasters from one multiplex to another.
I should say to the noble Lord, Lord Prys-Davies, that the department relies on the advice of the Radio Communications Agency and the ITC. I understand that S4C is in touch with the frequency planning exercise being conducted by the ITC, BBC and NTL and with work led by the ITC on the capacity available on the multiplex. I point the noble Lord, Lord Prys-Davies, in that direction towards the ITC in relation to those technical engineering matters.
A further point was raised by the noble Lord, Lord Elis-Thomas, about S4C's commercial services. I must apologise to your Lordships because I do not have ready the amendments which I had hoped to put before the House. Suffice it to say that we intend the regime for S4C to be along the lines of those applied to the BBC's commercial services or to any new service provided by the Channel 3 companies on their guaranteed capacity. I hope that that answers the noble Lord's questions.
I put forward those points not because they are in any way decisive but to illustrate the complexity of the issues involved. Nevertheless, I hope that what I have said gives noble Lords a sufficient assurance that we are listening to their anxieties and are doing our best to achieve the most satisfactory result for S4C. Against that background, I hope that noble Lords will feel reassured.
Lord Prys-Davies: My Lords, will the Minister confirm whether there is any objection to the engineers exchanging their reports?
Lord Inglewood: My Lords, I can see no objection from the department's point of view. However, I am not involved intimately in the exercise and nor do I necessarily fully understand all the implications of such an exchange.
Lord Cledwyn of Penrhos: My Lords, I am grateful to the noble Lord, Lord Aberdare, and my noble friends Lord Elis-Thomas and Lord Prys-Davies for what I thought were constructive speeches which have obviously made an impression on the Minister.
I am grateful also to the Minister for what I thought was a constructive response to what we said. He certainly left me with a measure of confidence, especially when he said that he will reconsider the whole problem when he receives the report in due course. It is in that spirit—a spirit of hope—that I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 27 [The S4C digital service]:
Lord Prys-Davies Lord Prys-Davies moved Amendment No. 48:
Page 25, line 11, after ("57(4)") insert ("58(1),").
The noble Lord said: My Lords, in Committee on 8th February at col. 340 of Hansard, I drew the Minister's attention to the situation which this amendment seeks to correct. Although I do not have a copy of Hansard with me, I understood from the Minister's reply that he would be bringing forward an amendment on Report. I am rather concerned that I have not seen that amendment. Does the Minister intend to accept the amendment? Can he give us that assurance? If he is not minded to do so at present, can he give us the reasons for his hesitancy?
9 p.m.
Lord Inglewood: My Lords, the explanation for the noble Lord's amendment is most helpful. I appreciate the way that it has been brought forward. As I understand it, the purpose of the amendment is to ensure that the BBC would continue to be obliged to provide S4C with 10 hours a week of Welsh language programming after the frequencies carrying the analogue channels were switched off. I believe that the effect of the amendment would, in fact, be to double the obligation placed upon the BBC while both S4C and S4C Digital were being broadcast simultaneously. I am not sure whether that is the intention behind the noble Lord's amendment and would like some reassurance in that respect.
Lord Prys-Davies: My Lords, it is my understanding that it is not the intention that the contribution of the BBC should be doubled, so to speak, but that the contribution should be available when the analogue service is switched off.
Lord Inglewood: My Lords, I am much obliged.
We have looked at the issue and I can certainly assure the noble Lord that it is our intention that the obligation on the BBC should continue beyond the time when analogue frequencies were turned off. However, I must here admit what is, perhaps, a shortcoming of the Bill. It does not deal, nor does it pretend to deal, with all of the issues which would arise from the cessation of analogue broadcasts. The Bill is concerned with getting digital broadcasting off the ground. That, as we all now know, is quite complex enough. I fear that we must accept that further legislation will be needed to deal with all the implications of analogue switch off.
Even though we all hope that that day will come, even the most optimistic among us must, I think, accept that it is reasonable to expect that there will be plenty of time for at least one more Broadcasting Bill before that day actually dawns. The alternative would be to take very wide-ranging delegated powers now to deal with an event which is certainly some, and probably many, years in the future. It is much better, in our view, to focus on today's requirements and not seek to overcomplicate matters by trying to anticipate all the implications of analogue switch off.
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I hope that what I have said will reassure the noble Lord as regards the first part of his concerns. In the circumstances, I hope that he will feel that I have given him a sufficient explanation of the longer term view.
Lord Prys-Davies: My Lords, I must say that I am not reassured by that response. However, the Minister has been very frank with us and I appreciate that fact. I propose to reflect on what he said. Obviously I would prefer to have a bird in hand, but I shall take instructions and possibly return to the matter at the next stage. In the meantime, I thank the Minister for his frank information. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 49 not moved.]
Clause 29 [Promotion of equal opportunities]:
Baroness Dean of Thornton-le-Fylde Baroness Dean of Thornton-le-Fylde moved Amendment No. 50:
Page 25, line 26, at end insert—
("( ) to adhere to a code of practice, drawn up by the Commission, to promote equality of opportunity in the employment of women, paying special attention to the participation of women in decision-making and editorial processes, to make arrangements for promoting it, both with the licence holders and independent companies working with them,
( ) to set up clear monitoring procedures, to review progress and to publish statistics annually on progress within the agreed arrangements, and
( ) to ensure that in its membership, the Commission itself will reflect fairly the diversity of society, including women, different racial groups and the disabled.").
The noble Baroness said: My Lords, in moving the above amendment, I shall speak also to Amendment No. 81. Both amendments deal with equal opportunities. The first relates to equal opportunities in television and Amendment No. 81 relates to the area of the Bill dealing with radio provision.
The amendments are not new. Indeed, we discussed them in Committee but, unfortunately, because of the time factor we grouped them with amendments covering the areas of racial discrimination and disability. We felt that we should bring them forward again and talk specifically to the area of equal opportunities relating to women in an industry which has substantial numbers of women employees.
If accepted, the effect of the amendments would be to change the emphasis from the multiplex or digital licence, including conditions requiring the licence holder to make arrangements for promoting equal opportunity, to one of adhering to a code of practice drawn up by the ITC and then promoting that code. So it would be very much a proactive role for the ITC rather than a reactive one.
A further amendment to the Bill would require the licence holders to set up monitoring procedures which would track the progress, or otherwise, of the equal opportunities policy in their companies. It is not a new or unique proposal; in fact, this happens in a number of the very broadcasting companies which will be covered by the Bill. The BBC is just one of them. As I said, it is not unusual and we do not believe that it would prove to be too much of a burden on companies.
The last subsection in both amendments seeks to ensure that the Commission itself which will be monitoring and drawing up the code reflects "diversity" in society. Again, that is not a unique development; it is happening continually now in representative bodies. In Committee, the Minister referred to the Equal Pay Act and the Sex Discrimination Act. He said that they were there to take care of the problems in equal opportunity provision in companies and that, therefore, those Acts would cover the clauses in the Bill which deal with equal opportunities.
The words in Clause 29 as it stands at present were in fact in the Broadcasting Act 1990. I should like us to consider what has happened from the time that the 1990 legislation was enacted. Quite frankly, its provisions have proved to be totally insufficient in achieving their worthwhile aims; namely, equal opportunity within the industry. It may be helpful to the House if I were to quote some statistics. I am told that women make up less than 35 per cent. of the employees in ITV companies. Let us remember that we are dealing with broadcasting which is received in all our homes and which is supposed to reflect society and the diversity within it.
Women constitute less then 10 per cent. of the membership of the boards of ITV companies. All prime time commissioning editors of the BBC and of the ITV Network Centre are men. Moreover, women appear in front of camera less often than men and, when they do, they get paid less. We are talking about an Act of Parliament which is now nearly six years old and which has not moved this ground on very far.
Even television companies themselves recognise that there is a problem, though their policies are not in any significant way changing the situation. In May of last year a Charter for Equal Opportunities for Women in Broadcasting was endorsed at a conference which took place at the BBC. The charter was endorsed by 49 European broadcasting organisations and 14 British broadcasting organisations. The BBC, ITN, Channel 4, Carlton and Granada were among them. It is no good signing charters or saying how good we are, let us look behind the words at what is happening in this industry.
The Bill requires a commitment to equal opportunities, as did—as I have said—the 1990 Broadcasting Act. However, the requirements for implementing that commitment are vague. The ITC has a mandatory responsibility to review each company's performance annually against its franchise contracts. The 1993 review made it clear that the monitoring procedure on equal opportunities needed to be more rigorous. Why not treat failure to meet equal opportunity requirements—which are provided in this Bill, and in the 1990 Act as a real requirement on companies—as seriously as non-compliance in other areas?
The Bill calls for the equal opportunity arrangements to be reviewed from time to time. What does that mean? Does it mean at the end of the licence period, or when someone feels moved to do it? The expression "from time to time" can mean that nothing is done at all. I think, quite frankly, that is what may be happening in some cases. I agree with the phrase in relation to good
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business that if one cannot measure it, one cannot manage it. That is a clear, factual statement. If one cannot measure the equal opportunity improvements that this Bill is intended to implement—the 1990 Act sought to implement those improvements, but has failed abysmally—one cannot monitor them. Monitoring should take place annually. The position should not be reviewed from time to time; it should be reviewed annually. I suggest that the results of that monitoring should be published in a company's report. I beg to move.
Baroness Rawlings: My Lords, naturally I would not he against anything that favoured women, but I do support the original text in this case because if we try to introduce quotas of any kind, it would invariably be unsatisfactory. We have seen the same problem in the past with the Télévision sans frontiérs report to the European Parliament when the French tried to introduce Euro quotas barring American and Australian programmes. That was a disaster. It does not work and I urge your Lordships to support the original text.
Baroness Jay of Paddington: My Lords, as a signatory to the amendment, I should tell the noble Baroness that the amendment does not mention quotas. My noble friend simply talked of the commission adhering to a code of practice on equality of opportunity rather than promoting any concept of numbers of women. As she said in her concluding remarks, she seeks to introduce the clear monitoring procedures which are necessary to measure the appropriate employment of women as part of that process. Certainly the word "quotas" and reference to the numbers of women to be employed are not mentioned in this amendment.
Baroness O'Cathain: My Lords, would it not be possible in the circumstances to meet the principle of this amendment in terms of putting some sort of obligation on the companies which recommends them to follow the leadership 2000 programme whereby companies are committed, on a year-by-year basis, to increase the proportion of women in senior positions? That is not a matter of quotas but of making a public commitment through annual reports that they will try to help younger women to achieve promotion and acquire senior management positions in the longer term. I make that suggestion because most large, respectable companies in the private sector are doing just that.
Lord Inglewood: My Lords, I inevitably open my remarks by saying that I feel a trifle diffident as the only man to participate in this debate. I am answerable to a lady Secretary of State, so I am pinned in on every side. I understand the wish of the noble Baronesses to see a higher representation of women in broadcasting. Of course the Government agree with that, but we do not believe that it is necessary to introduce a code of practice of the kind suggested, as the ITC and the Radio Authority licence holders are already bound by the terms of the Sex Discrimination Act 1975 and by the United Kingdom's implementation of a succession of EC directives in the equal opportunities field.

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In addition, the Bill as drafted already requires television and national radio multiplex and programme service licence holders to make arrangements for promoting, in relation to employment by "him"—which presumably includes "her"—equality of opportunity between men and women and between persons of different racial groups, and to review those arrangements from time to time. Therefore, I do not believe there is any need for further provisions above and beyond this. The suggestion put forward by my noble friend Lady O'Cathain seems to be a possible way forward in this area. I also believe that it would be quite improper to expect regulators to interfere in the internal affairs of independent companies working for broadcasters. The Equal Opportunities Commission already has a code of practice on sexual discrimination in employment which would apply to independent companies.
In respect of the third subsection of both amendments, the Government do not believe that it is necessary for the Secretary of State to be directed in the manner specified when making appointments to the ITC and the Radio Authority. As a matter of course, the Secretary of State already ensures that the best possible appointments are made from the pool of talent available at any one time. She has asked particularly that candidates should reflect the diversity of the viewing and listening population and would like to achieve across all broadcasting appointments at least 35 per cent. women, and representatives from different ethic and disabled groups.
We also hold firm to the principle that only the best candidates should be appointed. I understand that that may not go as far as the noble Baroness would like. However, having heard what I have said, I hope that she will withdraw the amendment.
Baroness O'Cathain: My Lords, before the Minister sits down, perhaps I may make a correction. I referred to Leadership 2000. I meant Opportunity 2000. I apologise.
9.15 p.m.
Baroness Dean of Thornton-le-Fylde: My Lords, I thank the noble Lords who have joined in the debate. I assure the Minister that he should not feel too lonely when he is the only one of his sex who has spoken. It happens to women all the time.
In responding, I declare that I am a member of the target team of Opportunity 2000 and have been since it was formed. The BBC is a member of Opportunity 2000 and has been since it was formed.
I do not believe in quotas; I never have. I think that they turn people off. They do not encourage people to make equal opportunities happen. Quotas were the subject of one of Opportunity 2000's earlier debates. Targets are better. It is far better to have targets set individually within the company. The Bill does not provide for targets. It is woolly and vague, as is the 1990 Act.
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Opportunity 2000 also requires that companies who are members monitor their progress annually, publish their progress in their annual report and have internal reviews and discussions on it. That is what a code of practice would do. However, the Bill and the 1990 Act do not provide for that.
As regards the code referred to in the amendment, I would expect the ITC to consult industry on that code. It would not simply draw up the code and impose it on industry.
The Minister believed that it was wrong for a regulatory body to interfere in the internal management of companies. What then does the clause in the Bill require, if that is the view of Government? I am strengthening a clause already in the Bill which requires the licence holder to make arrangements for promoting.
I am not sure whether the Minister was given briefing on this issue, but the ITC already publishes figures with regard to women in this industry. It must obtain them from individual companies. So we do not seek to impose more on companies but to attain a better structure and ensure that progress is monitored year on year against a code issued by the ITC and measured within the industry.
The Minister hoped that I would withdraw the amendment. I seek to be realistic. Looking around the Chamber, perhaps we might have eight members voting against my amendment with six for it, unless the Government blow the whistle and draw Members in on the Government Benches. It is regrettable that I have to beg leave to withdraw the amendment, but that is the leave that I seek.
Amendment, by leave, withdrawn.
Lord Inglewood Lord Inglewood moved Amendment No. 51:
After Clause 30, insert the following new clause—
POWER TO VARY AMOUNT OF FINANCIAL PENALTIES
(".—(1) The Secretary of State may by order amend any of the provisions specified in subsection (2) by substituting a different sum for the sum for the time being specified there.
(2) The provisions referred to in subsection (1) areߞ

section 11(5)(a);

section 17(2)(a);

section 21(2)(a); and

section 25(2)(a).

(3) An order under subsection (1) shall be subject to annulment in pursuance of a resolution of either House of Parliament.").
The noble Lord said: My Lords, I have spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Clause 33 [Interpretation of Part II]:
[Amendment No. 52 not moved.]
Clause 34 [Radio multiplex services]:
Lord Inglewood Lord Inglewood moved Amendment No. 53:
Page 27, line 40, leave out ("provided for any area of") and insert ("provided without any restriction by virtue of this Act to a particular area or locality in").
The noble Lord said: My Lords, this is a minor amendment but one which we believe makes fully watertight our definition of national radio multiplex.

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The amendment provides that a national radio multiplex is by definition any multiplex which is not by virtue of this Bill a local multiplex. This will avoid any problems of definition which might otherwise occur. I beg to move.
On Question, amendment agreed to.
Clause 40 [National radio multiplex licences]:
Lord Inglewood Lord Inglewood moved Amendment No. 54:
Page 34, line 26, at end insert—
("( ) In subsection (4)(f) "acquisition" includes acquisition on hire or loan.").
On Question, amendment agreed to.
Clause 41 [Award of national radio multiplex licences]:
Lord Inglewood Lord Inglewood moved Amendments Nos. 55 to 57:
Page 35, line 3, leave out from ("regard") to end of line 4 and insert ("to the extent to which, taking into account the matters specified in subsection (2) and any representations received by them in pursuance of section 40(7)(6) with respect to those matters, the award of the licence to each applicant would be calculated to promote the development of digital sound broadcasting in the United Kingdom otherwise than by satellite.").
Page 35, line 23, at end insert—
("( ) In subsection (2)(e) "acquisition" includes acquisition on hire or loan.").
Page 35, line 24, leave out subsection (3).
The noble Lord said: My Lords, I have spoken to these amendments. I beg to move.
On Question, amendments agreed to.
Clause 43 [Duty of Authority to reserve digital capacity for certain purposes of BBC]:
Lord Colwyn Lord Colwyn moved Amendment No. 58:
Page 36, line 33, after ("BBC") insert (", and to all independent local radio services in operation at the relevant date, except where the number of existing analogue licences exceeds the number of available channels on the multiplex,").
The noble Lord said: My Lords, I beg to move Amendment No. 58 and speak to Amendment No. 59. Your Lordships will be pleased to hear that the subject has not come up during the passage of the Bill so far and is appropriate to the Report stage.
Many people will be pleased that independent national radio is to be guaranteed right of access to the national multiplex and that the Secretary of State has promised that national stations will be able to renew their national analogue licences for a further eight years if they take up their guaranteed digital radio places. I understand that similar renewal of analogue licences will be offered to local commercial stations that elect to take out DAB licences. That might encourage commercial radio participation in DAB and is a good thing. However, it is less easy to understand why current local commercial radio services are not afforded the same courtesy as that granted to local BBC services. That is, guaranteed places on the local multiplexes.
Commercial radio might be said to be treated as a second-class citizen in the Bill, despite enjoying a greater share of listening than the BBC. Each national commercial radio station must be in separate ownership and so will not be allowed the same DAB advantages
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as those available to the BBC which will own its own national multiplex and may own and operate all the services on it. In addition to giving the BBC that important national monopoly advantage, the Government wish local commercial broadcasters to compete for multiplex places while BBC local services are guaranteed a presence on all local multiplexes, irrespective of either the popularity or merit of the BBC services concerned or the business interests of the commercial broadcasters involved.
Perhaps the Minister is unable to treat local commercial radio with the same care as he has shown to BBC local radio because it is not possible to get all the current London independent stations on the available local DAB space currently set aside. Please do not allow this local London difficulty to affect the rest of the country. There is no need for it to do so, as the words of the amendment make clear. It seeks automatic access only where that is possible. I urge the Minister to reflect on the need for DAB to be strongly supported by all radio broadcasters as soon as possible. The BBC wishes commercial broadcasters to participate fully, swiftly and loudly so that the fruits of the corporation's enormous investment in DAB come through swiftly. The gesture I seek will improve the prospects for that to occur.
If either the amendment I have proposed or the principle behind it is accepted, no doubt subsequent related clauses will also need to be changed. I hope that my noble friend and his department will be able to help in that way. I commend the amendment to the House and take the opportunity to raise briefly a related issue which I hope the Minister will take into account as the Bill proceeds. I have already mentioned the Government's announcement at the time of the Bill's publication which proposed to offer extensions of analogue licence to those who take up digital opportunities. This was encouraging.
However, I understand that some parts of the United Kingdom (mainly along the south coast and in East Anglia) are unlikely to have DAB frequencies made available until around 2005. If and where that is the case, I hope those stations that wish to participate in DAB once it is licensable will be able to declare their interest and claim an extension to their analogue licence, even if they have to wait considerably longer than those more fortunately placed. I am sure that the Minister will share my concern at the possibility of DAB creating a two-tier independent local radio system. I beg to move.
Lord Inglewood: My Lords, as my noble friend Lord Colwyn explained, the amendments seek to require the Radio Authority to reserve digital capacity for independent local radio services as well as for the BBC's local services.
Independent local radio companies have petitioned for some time to be given a guaranteed place on a digital multiplex, arguing that this would give them parity both with BBC local services and the national independent radio services. However, there are important differences which lead us to believe that the case for guaranteeing capacity for independent local radio cannot be sustained.

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Let us first consider the position of the BBC. The BBC has been assigned a full multiplex for its UK-wide services, and indeed began broadcasting those services in digital form last September. However, at the local level the BBC's local radio stations must be broadcast on frequencies allocated to the Radio Authority for independent local radio. It is therefore necessary, on the face of the Bill, to provide for the BBC's local services in that context.
Under our proposals, the BBC will negotiate capacity for its local services with the authority. This does not amount to a guarantee that every BBC local and regional service available in an area will automatically gain a place on a digital multiplex. Rather, it allows the authority to look at the coverage of each digital multiplex and agree with the BBC a suitable allocation. If the BBC and the Radio Authority cannot agree, the Bill provides for referral to the Secretary of State for her to determine the matter.
This arrangement is quite proper, given that the BBC has certain duties and obligations placed upon it to ensure that if fulfils its public service broadcasting remit—something which is not the case for local independent radio.
Independent national radio has also been allocated guaranteed slots on a multiplex; but here again there are important differences with the situation for local radio. Independent national radio is subject to a different licensing regime, and competitive tender against formats determined by Parliament. That is not the case for local radio. At the national level, there are important spectrum gains to be made—guaranteeing INR capacity on digital opens up the possibility of eventually reclaiming their analogue frequencies. At the local level, we envisage that digital and analogue services will continue to be broadcast alongside each other for the foreseeable future. On the national multiplex, the guaranteed slots will occupy just half of the capacity available. Guaranteeing local radio services capacity might, in some areas, completely fill a multiplex and prevent new entrants to the market. In many areas, however, where there are only two or three local services, they will probably find little problem in going digital if that is what they want to do.
Local multiplexes do not have to put forward proposals for promoting or assisting the acquisition of receivers, nor will they be required, at any stage, to pay a percentage of multiplex revenue. I also remind noble Lords that we intend to provide greater security for independent local radio licence holders going digital by allowing them to renew for a further eight-year term, their analogue licences.
Extension to analogue licences, as I explained, linked taking up the digital audio broadcasting place. We shall consider the point that my noble friend raised, although we can see difficulties in giving open-ended guarantees of the kind that he asked for.
I believe that the regime we propose recognises both the needs of the BBC and the differences between national and local independent radio. It provides ILR licence holders with the incentive to invest in DAB and
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the security to ensure that they can benefit from that investment. For these reasons, and in the light of my remarks, I hope that the noble Lord will be reassured.
Lord Colwyn: My Lords, I thank my noble friend the Minister for that long and complex answer, and I think a hint of encouragement.
BBC local radio is very well cushioned. It does not have to bid for its licence or pay part of its revenue. However, I feel that it should perhaps have a guaranteed place on the multiplex. If there is not enough space, then perhaps places should definitely be made available to existing broadcasters. However, I have listened, and I look forward to reading my noble friend's remarks. At this stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 59 not moved.]
Lord Inglewood Lord Inglewood moved Amendments Nos. 60 and 61:
Page 40, line 31, leave out ("national").
Page 40, line 34, leave out from ("period") to (""the") in line 35 and insert—

("(a) in the case of a local radio multiplex licence, a financial penalty of £50,000, or

(b) in the case of a national radio multiplex licence, a financial penalty of whichever is the greater of—

(i) £50,000, or

(ii) the prescribed amount.

(6) In subsection (5)(b)(ii)").
The noble Lord said: My Lords, I have spoken to Amendments Nos. 60 to 80 with Amendments Nos. 22, 24, 27 and 35. In those circumstances, with the leave of the House I beg to move Amendments Nos. 60 and 61.
On Question, Amendments agreed to.
Clause 48 [Conditions attached to national or local radio multiplex licence]:
Lord Inglewood Lord Inglewood moved Amendment No. 62:
Page 41, line 47, leave out subsection (3) and insert—
("(3) No order under subsection (2) shall be made unless a draft of the order has been laid before and approved by a resolution of each House of Parliament.").
On Question, amendment agreed to.
Clause 51 [Attribution of multiplex revenue to licence holder and others]:
Lord Inglewood Lord Inglewood moved Amendments Nos. 63 and 64:
Page 45, line 35, leave out (" 53(2)") and insert (" 53(2A)").
Page 46, line 1, leave out (" 56(2) or section 60(2)") and insert (" 56(2A) or section 60(2A)").
On Question, amendments agreed to.
Clause 52 [Duration and renewal of national or local radio multiplex licences]:
Lord Inglewood Lord Inglewood moved Amendments Nos. 65 to 68:
Page 46, line 36, leave out subsection (4) and insert—
("(4) At any time before determining the application, the Authority may—

(a) require the applicant to furnish—

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(i) a technical plan which supplements that submitted by the licence holder under section 40(4)(b) or 44(4)(b), and

(ii) in the case of a national radio multiplex licence, proposals which supplement that submitted by the licence holder under section 40(4)(f), and

(b) notify the applicant of requirements which must be met by that supplementary technical plan or those supplementary proposals and relate to the matters referred to in section 40(4)(b)(i) and (ii) or 44(4)(b)(i) and (ii).

(4A) The consent of the Secretary of State shall be required for any exercise by the Authority of their powers under subsection (4) and for any decision by the Authority not to exercise those powers.").
Page 47, line 4, leave out from beginning to ("or") in line 8 and insert—
("(b) any supplementary technical plan or supplementary proposals submitted under subsection (4)(a) fail to meet requirements notified to the applicant under subsection (4)(b),").
Page 47, leave out lines 12 to 14 and insert—
("(7) Subject to subsection (7A), on the grant of any such application the Authority may with the consent of the Secretary of State, and shall if so required by him—").
Page 47, line 23, at end insert—
("(7A) Where an order under section 49(2) is in force on the relevant date, no percentage of multiplex revenue shall be payable as mentioned in subsection (7)(a) during the period for which the licence is to be renewed.").
On Question, amendments agreed to.
Clause 53 [Enforcement of national or local radio multiplex licences]:
Lord Inglewood Lord Inglewood moved Amendments Nos. 69 to 71:
Page 48, line 9, leave out from beginning to ("3") in line 11 and insert ("shall not exceed whichever is the greater of—

(a) £50,000, or

(b) the amount determined under subsection (2A).

(2A) The amount referred to in subsection (2)(b) is—
(a) in a case where a penalty under this section has not previously been imposed on the holder of the radio multiplex licence during any period for which his licence has been in force ("the relevant period"),").
Page 48, line 14, leave out ("shall, in any other case, not exceed") and insert ("in any other case").
Page 48, line 16, at end insert—
("and in relation to a person whose first complete accounting period falling within the relevant period has not yet ended, paragraphs (a) and (b) above shall be construed as referring to 3, or (as the case may be) 5, per cent. of the amount which the Authority estimate to be the share of multiplex revenue attributable to him for that accounting period (as so determined).").
On Question, amendments agreed to.
Clause 56 [Enforcement of digital sound programme licences]:
Lord Inglewood Lord Inglewood moved Amendments Nos. 72 to 76:
Page 51, line 2, leave out ("two years") and insert ("one year").
Page 51, line 9, leave out from beginning to ("3") in line 11 and insert ("shall not exceed whichever is the greater of—

(a) £50,000, and

(b) the amount determined under subsection (2A).

(2A) The amount referred to in subsection (2)(b) is—
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(a) in a case where a penalty under this section has not previously been imposed on the holder of the digital sound programme licence during any period for which his licence has been in force,").
Page 51, line 15, leave out ("shall, in any other case, not exceed") and insert ("in any other case").
Page 51, line 17, leave out ("(2)") and insert ("(2A)").
Page 51, line 32, leave out subsection (7).
On Question, amendments agreed to.
Clause 60 [Enforcement of digital additional services licences]:
Lord Inglewood Lord Inglewood moved Amendments Nos. 77 to 80:
Page 53, line 25, leave out ("two years") and insert ("one year").
Page 53, line 32, leave out from beginning to ("3") in line 34 and insert ("shall not exceed whichever is the greater of—

(a) £50,000, and

(b) the amount determined under subsection (2A).

(2A) The amount referred to in subsection (2)(b) is—
(a) in a case where a penalty under this section has not previously been imposed on the holder of the digital additional services licence during any period for which his licence has been in force,").
Page 53, line 38, leave out ("shall, in any other case, not exceed") and insert ("in any other case").
Page 53, line 44, leave out ("(2)") and insert ("(2A)").
On Question, amendments agreed to.
Clause 61 [Promotion of equal opportunities]:
[Amendment No. 81 not moved.]
Lord Inglewood Lord Inglewood moved Amendment No. 82:
After Clause 61, insert the following new clause—
POWER TO VARY AMOUNT OF FINANCIAL PENALTIES
(".—(1) The Secretary of State may by order amend any of the provisions specified in subsection (2) by substituting a different sum for the sum for the time being specified there.
(2) The provisions referred to in subsection (1) are—

section 47(5)(a) and (b)(i);

section 53(2)(a);

section 56(2)(a) and (4); and

section 60(2)(a) and (3).

(3) An order under subsection (1) shall be subject to annulment in pursuance of a resolution of either House of Parliament.").
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
9.30 p.m.
Lord Thompson of Monifieth Lord Thompson of Monifieth moved Amendment No. 83:
Before Clause 65, insert the following new clause—
DURATION AND RENEWAL OF CHANNEL 3 LICENCES
(".—(1) Section 20 of the 1990 Act (Duration and renewal of Channel 3 licences) is amended as follows.
(2) In subsection (2) for "four" there is substituted "five".
(3) Subsection (3) is omitted.").
The noble Lord said: My Lords, this is the same amendment that was tabled at Committee stage, unlike the previous amendment of the noble Lord, Lord Colwyn, whom I congratulate on having introduced new material into our proceedings. I should not have brought

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forward the amendment again in the same terms if I had not been encouraged by the tone of your Lordships' Chamber when this matter was discussed at an earlier stage and by the not unsympathetic response of the Minister at the end of that discussion.
I do not wish to take up much time at this stage but this is a very important amendment in terms of the Bill's consequences for the overall financial relationships within independent television. We shall certainly want to try to come to a conclusion on this matter before our proceedings ultimately end.
It is sufficient to say that the amendment reflects the fact that one of the many anomalies of the 1990 Broadcasting Act was to lay down a different timetable for the financial arrangements in relation to Channel 4 from the financial arrangements in relation to the bids that the ITV companies had made for their contracts. I am very happy to see the noble Lord, Lord Crickhowell, in his place. I know that he feels strongly about this matter. He has some direct personal knowledge of the problems created by it.
Before we leave the subject this evening, I remind the Minister that this Bill gives a very important opportunity to the Government to put British broadcasting generally on a more sensible and even base for the challenges of digital technology that lie ahead and to correct some of the major unfortunate consequences of the 1990 Act. Two things went wrong. One was that the bidding system produced results which, even by the standard of Treasury hopes at the time, must have seemed totally grotesque. In the Yorkshire area, which is a prosperous region of the country, there was a bid around the £30 million plus mark; in the neighbouring central region around Birmingham there was a bid of £2,000; and there was a bid in Scotland for £2,000. The most grotesque anomalies arose.
The second major mistake in the 1990 Act occurred with the Channel 4 formula, which was well intentioned and meant to sustain Channel 4 on an independent basis of selling its own advertising with a possibility of a subsidy if it became necessary to enable it to fulfil its remit. In our Alice in Wonderland world that formula has been stood on its head. Channel 4 has been heavily subsidising ITV companies, including some very prosperous and profitable ones.
The general point that I wish to make to the Minister is that there is an opportunity in this Bill to deal with those anomalies and try to obtain a timetable for a change in the Channel 4 arrangements which coincides with a timetable for a change in the ITV arrangements. It is a nonsense that they should be on different timetables. If the Channel 4 formula is altered in a way that reduces the payments from Channel 4 to ITV, there should be a year's gap so that the ITV companies have the possibility of seeking in some cases to renegotiate their arrangements.
The Minister has been understanding and sympathetic about this matter. I have no complaint about that. I recognise the difficulties. But those grotesque mistakes—that is the proper description of them—have produced a certain financial result which affects the
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Treasury. Trying to put right those mistakes may very well reduce, if only marginally—I do not know the figures—the return to the Treasury. I know very well from my own experience long in the past that anything which affects the return to the Treasury produces the deepest resistance for all Ministers, however understanding they are of the sense and basis of principle of a proposed change.
I do not ask tonight for a response from the Minister of the kind that I hoped for when I tabled the amendment. I know the difficulties. I know that he recognises the strength of the case and indeed the strong views on all sides of the House. For instance, the noble Lord, Lord Peyton, spoke of this in Committee.
We will need to come back to the issue; but I beg the Minister, in whatever he feels able to say to me tonight, not to close the door on the matter. I say that not merely because of this amendment, but also because it is in the interests of the Government, if they wish to produce a Broadcasting Act 1996 that will correct the great mistakes of the Broadcasting Act 1990, to leave the door open to bring about the necessary changes. I beg to move.
Lord Crickhowell: My Lords, I speak in very much the same spirit as the noble Lord, Lord Thomson of Monifieth. Again, I declare an interest as a director of HTV.
As I shall indicate, Amendment No. 83 has considerable significance for HTV and for other Channel 3 companies. There are not many who now defend the Broadcasting Act 1990 as being fault-free legislation. But whatever its shortcomings, it was the foundation on which business plans and bids were based by those who won and those who lost in the somewhat bizarre bid process. My company had to make a relatively high bid to retain the franchise, though not as high as some others. We pitched it about right. If it had been much lower we would have been beaten and, after a difficult period in which we had to fight literally for survival, by improving efficiency and widening the market for our products we have been able to announce a good result for our shareholders while maintaining the outstanding regional programmes which are both a licence obligation and a subject of which we are justifiably proud.
In putting together those bids, companies looked at the prospectus as a whole—pluses and minuses; obligations and opportunities. Those pluses and minuses included the Channel 4 funding formula and the possibility of—in the event the actual—loss of net advertising revenue (NAR) to the new channel.
Channel 4 complained loudly and with great effect about the consequences of the funding formula. Practically every day I drive past its splendid new palace and see its great advertising hoarding proclaiming the iniquities of the system. Among other things, Channel 4 argued that the sums it pays deprive it of money that would otherwise be spent on UK productions. One can argue about the extent to which money would be spent in that way; no doubt the amounts would be quite large. However, much of the same money is at present being

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spent by Channel 3 companies on their existing production in the UK and specifically on regional programme making.
It was suggested by some at Committee stage that the sums were pretty marginal for Channel 3 companies. They are certainly not marginal for Yorkshire Tyne-Tees and HTV, to take just two companies. If the Channel 4 rebate were to end in 1998 without other adjustments, I would guess that my company would either see about 40 per cent. off the bottom line or, because there would have to be a combination of effects, less would be spent on regional programme making and UK programme making, which would have to be squeezed to offset the consequences. As any change in the funding formula has a variety of consequences, and not just for one channel—the noble Lord, Lord Thomson of Monifieth, referred to the Treasury as well—I am certain that the Government are right to think that it should not be written into the Bill now but should be the subject of detailed review and analysis in 1997 before final conclusions are reached. However, I think it not unlikely that the result of that review will be either the ending of the formula or a substantial dilution of it. If that is so, there must be a parallel examination of the consequences for Channel 3, which will be very great, and for the Treasury, and of any other impacts there will be.
The trouble with the 1990 Act is that it does not make that parallel consideration possible. Under the existing rules, the Channel 3 companies cannot go to the ITC until a year later to ask for their bids and their licences to be reviewed. That is an absurd anomaly which must be corrected. Furthermore, if they ask for their licences to be reviewed there is no obligation on the ITC to carry out that review immediately or indeed at any time until the end of the licence period. It is those faults that the amendment seeks to correct. The case is overwhelming. The amendment does not seek to impose a solution on the ITC or on the Government. It seeks to bring into line the two reviews that ought to take place at the same time and to allow for the possibility that the potentially very severe consequences for Channel 3 companies should be adequately considered.
On Thursday, when regrettably I shall not be able to he in the House—I have to chair the final board meeting of the National Rivers Authority on that day and I decided that it had a prior claim on my time—another series of amendments will be considered about regional programming. We have been delighted to hear the commitment made by noble friend the Minister to strengthening the clauses already written into the Bill to protect regional programming. That is an indication of the importance the Government attach to regional programming. In a debate on an earlier amendment we considered Welsh language broadcasting and the impact of changes to digital. I have to say that the abolition of the present funding arrangements for Channel 4, without any parallel changes in the arrangements for the Channel 3 companies, will have adverse consequences—more severe consequences—for a far larger number of people in Wales than the consequences debated a few minutes ago of digital on Welsh language broadcasting.
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This is a very important matter. It affects a crucial aspect of broadcasting. Like the noble Lord, Lord Thomson of Monifieth, I do not expect to get a definitive answer from my noble friend tonight. I know that he has to argue a case elsewhere with the Treasury and I know that he is giving most careful and sympathetic consideration to the case. But I do not want to leave him in any doubt of the importance which I, too, attach to this matter and of my determination, along with the noble Lord, Lord Thomson, to return to the matter later in order to find a satisfactory way forward.
Viscount Astor: My Lords, I support what my noble friend Lord Crickhowell said and in general give my support to the amendment on the noble Lord, Lord Thomson. However, as he said, his amendment is not without problems. We have to remember that we cannot deal with this issue without looking at the Channel 4 funding situation. Noble Lords should remember the concession that my noble friend the Minister gave Channel 4 at an earlier stage, which will be worth £30 million to it. It is achieved by releasing money from the reserve.
The effect of this amendment, if the two dates are brought together, will be that those who make low bids will not want to negotiate and they will hang out for as long as possible. Those who make high bids will want to negotiate as early as possible. As my noble friend said, the problem is that that will fall foul of the Treasury, and it will mean less revenue.
How will the Treasury make it up? Will it take some of the money that Channel 4 is currently paying to the ITV companies? The Treasury will be getting an extra £22 million from the licence fee of Channel 5, which is going to be a new sum of money coming in. Will the amendments of the noble Lord, Lord Thomson, on domestic satellites make them fall into the net so that they can charge? It is a very difficult issue.
The point I make is that when we come to look at the matter we should not be in a position where the companies who got their bids right end up subsidising the companies whose bids were too high. That seems iniquitous and unfair. As my noble friend said, the bids were put forward on a commercial basis. We must be careful when we come to look at this matter. I very much support the general principle of what the noble Lord, Lord Thomson, said. I am sure that the Government will have to look at the whole issue with great care. I emphasise again that it is a crucial issue for the future of terrestrial broadcasting.
9.45 p.m.
Baroness Wharton: My Lords, I agree with much of what my noble friend Lord Thomson said, so I am not going to add anything to this debate other than to say that I believe we should negotiate the Channel 4 funding at the same time as we deal with the Treasury and the Channel 3 licence fee payers. It seems very unfair to take one out of context with the other. They should be dealt with at the same time. I support the amendment.
Lord Donoughue: My Lords, I completely support my noble friend Lord Thomson. This amendment seeks

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to simplify and rationalise the ill consequences and irrationalities of the 1990 Act. We appreciate that there are problems within it. I agree with everything that the noble Viscount, Lord Astor, said.
We know the problems of dealing with the Treasury. If the Minister can come up with any kind of package solution that silences the Great George Street gang, but produces a simpler and more rational situation, I am sure that we will look at that very constructively.
Lord Inglewood: My Lords, the noble Lord, Lord Thomson, most helpfully and candidly explained the purpose of his amendment. He very clearly set out the implications of the issue we are discussing. I am very grateful to him for that and also to my noble friend Lord Crickhowell for talking about this issue from his perspective. I am also grateful to all noble Lords who have contributed to this debate. I have listened very carefully to what has been said and I shall note it with very considerable care.
This amendment is predicated on assumptions about the timing of changes to the Channel 4 funding formula and about the level of Channel 4 payments to Channel 3 companies in future. We shall return to this subject in discussing Amendment No. 162 of the noble Lord, Lord Thomson, as regards Clause 69, but not, I trust, this evening. For the time being I say only that a range of possibilities exist for changes to the Channel 4 funding formula and that these issues are not cut and dried.
Leaving aside that underlying issue, the Government see objections in principle to what the noble Lord, Lord Thomson, has proposed in his amendment. The Broadcasting Act 1990 was clear as to the duration of the Channel 3 licences. They indicated that they should continue in force for 10 years with applications for renewal no earlier than four years before the date of expiry. That was the basis on which the Channel 3 companies bid for their licences. Nothing has changed the underlying legislative framework since that time and as a matter of principle the Government are not persuaded that a change in the statutory ground rules is appropriate at this stage.
The noble Lord indicated that the purpose of his amendment is to enable Channel 3 companies to seek an early renegotiation of their licence conditions in order to compensate them for the projected loss of income from Channel 4. In effect, the proposition is that there should be an early reduction in Channel 3 companies' payments to the Exchequer. The Government do not accept that taxpayers should be asked to accept an uncovenanted loss in order to offset a reduction of Channel 3 companies' income in that way.
As I have said, we shall return to the noble Lord's amendment on the Channel 4 funding formula at a later stage, but, for the reasons I have given, the Government do not support the noble Lord's amendment on the duration and renewal of Channel 3 licences. As I said at
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the beginning of my remarks, we shall take careful note of all that has been said this evening. I am absolutely sure that we shall be debating the matter further.
Lord Thomson of Monifieth: My Lords, I am not surprised, and in that sense I am not disappointed, by what the Minister said but I ask him to take back to his Secretary of State and ask her to take to the Cabinet more generally the unanimous view that has been expressed even in this modest House. All sides of the House have been represented and have tended to express the same view.
It is a question of trying to deal with the problems that have arisen from the 1990 Act and achieving a more sensible outcome from this Bill. In view of the feelings on all sides of the House I hope that the Minister will return to the matter in a more positive manner than he has shown in simply reciting his Committee brief. He has not moved any further forward. However, I know that he recognises the feelings of the House and that the proposal has some merit. I am content to rest with that tonight, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 84:
Before Clause 65, insert the following new clause—
AMENDMENT OF THE BROADCASTING (RESTRICTIONS ON THE HOLDING OF LICENCES) ORDER 1991
(".—(1) The Broadcasting (Restrictions on the Holding of Licences) Order 1991 is amended as follows—
(2) In article 12(3) for "two" there is substituted "three".
(3) In article 13(1)—

(a) for "hold a licence" there is substituted" hold more than one other licence"; and

(b) for "holder of a licence" there is substituted "holder of more than one other licence".

(4) In article 13(2)(a) for "for which the service" there is substituted "for which a service".
(5) In article 13(2)(b) there is inserted "and
(c) provided as a local radio service falling into category A or B".
(6) After article 13 there is inserted—
"Radio service licences
13A—(1) Subject to paragraph (5), a person who holds a licence to provide a local radio service shall not at any time hold a licence to provide a local radio service to which this article applies; and, subject to paragraphs (3) and (4), such a person shall not be a participant with more than 20 per cent. interest in a body corporate which is the holder of a licence to provide a local radio service to which this article applies.
(2) This article applies to a local radio service which is—

(a) provided for an area which is substantially the same as that for which the service provided by the person mentioned in paragraph (1) is provided; and

(b) provided on the same frequency band as that service; and

(c) provided as a local radio service falling into category C or D.

(3) A person who holds a licence to provide a local radio service may be a participant with more than a 20 per cent. interest in a body corporate which is the holder of a licence to provide such a local radio service as is described in paragraph (2) if the number of persons over the age of 15 resident in the smaller area does not exceed 10 per cent. of the number of such persons resident in the larger area.

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(4) Where such a person as is described in paragraph (3) is a participant with more than a 20 per cent. interest in a body corporate which is the holder of a licence to provide such a local radio service as is described in that paragraph he may not be a participant with more than a 20 per cent. interest in any other such body corporate.
(5) Nothing in this article shall prevent a person from holding licences to provide local radio services if—

(a) that person was, immediately before the grant of the licences, a local radio contractor for an area which was substantially the same as the area in respect of which those licensed services are provided: and

(b) he provided two or more different programme services on different frequencies pursuant to his contract.

(6) For the purposes of this article two areas are to be regarded as substantially the same if at least 50 per cent. of the persons over the age of 15 resident in the smaller area are also resident in the larger area.".").
The noble Lord said: My Lords, this amendment returns us to the more intimate field of independent local radio. It has been tabled to bring a limited relaxation of the regulation which at present controls that sector by permitting an independent local radio station to control two FM channels in particular circumstances. It is not my purpose tonight to go over the ground which I advanced at Second Reading and which was developed in Committee by the noble Lord, Lord Desai, and others. However, the amendment has been amended in the light of our Committee debates.
I regret that the noble Lord, Lord Chalfont, is not in his place because his concern in Committee related to the possibility of local monopoly. I spoke to him earlier today. He had received a copy of the revised amendment which puts in place both limitations on the possibility of holding two FM channels in terms of population size—it can happen only in communities of more than 1 million people—and an arithmetical formula which would limit the power of monopoly. The noble Lord was kind enough to inform me that we had answered the vast bulk of his concerns about the original amendment.
I do not propose to take up any more of the time of the House. The case is a strong one and I hope that my noble friend on the Front Bench may find it possible, in the light of this revised amendment, to agree that such provisions should go forward. I beg to move.
Lord Thomson of Monifieth: My Lords, since our debate in Committee, developments have reinforced my view about the risks of excessive monopoly arising out of the proposals in the amendment. I am not sure that I fully understand all the complexities of the amendment. If there is room for manoeuvre in less populous areas of the country in the direction proposed, I am ready to look at it. In terms of the great centres of population, I must say—
Lord Dixon-Smith: My Lords, the purpose of the amendment as now drafted is to ensure that the less populous areas of the country would not be areas where it would be possible for a local station to have two FM channels.
Lord Thomson of Monifieth: My Lords, I am ready to look at that before coming to a conclusion. I note from the media press since we last discussed this matter that, for example, the degree of sales monopoly that is
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developing in independent commercial radio is very worrying indeed. There is now a sales group in independent local radio that, together, controls almost 90 per cent. of total advertising sales. The advertising industry has a legitimate point of view in this matter which has not been much heard in the debate. If the great stations—I welcome their success—were to be allowed to expand further, the reality is that there are no frequencies for them and they would expand by further mergers and takeovers. One would have a greater degree of concentration and of monopoly. I am reluctant to see that happen.
Baroness O'Cathain: My Lords, when a similar amendment was discussed in Committee my noble friend the Minister raised some interesting points that I should like to address in an attempt to allay the Government's fears relating to diversity of output and market domination in any particular area.
The principle of market forces undermines any rationale for a company that owns more than one station on a similar waveband to replicate its broadcasting output. No company would establish a direct rival with itself. My noble friend the Minister appeared especially worried about the convergence of news output. I understand from a leading independent radio operator who owns 28 licences that it has always produced different news items on its AM and FM channels. For example, on its AM channel it might deal with the Budget, whereas on its FM channel, which is mainly music, it might deal with the latest developments in the life of Michael Jackson.
That common practice would extend to companies owning more than one licence on the same waveband. My noble friend the Minister was also worried that in a certain area there was not enough existing competition to allow one company to own more than one station. However, we should consider the listener and the diversity of output. Without the shared resources that would enable one company to offer two stations, a second service might not be economically viable. Therefore, the local listening population may not have the opportunity of diversity to benefit from a second service.
There are two key issues on market domination. The first is that the BBC already dominates the FM market in any area with Radio 1, Radio 2 and the local radio network. All three stations broadcast on the better frequency; that is, the one which has fewer reception problems. Some may say that the independent sector, however, has domination in some localities by way of population reached. We cannot legislate against those organisations that use the same resource more successfully than another. That happens to be business.
Secondly, the Bill provides the Radio Authority with increased powers to scrutinise changes of shareholding and corporate structure. In addition, the Bill allows for the Radio Authority to impose conditions as a result of those changes. The interpretation of such powers can be far-reaching, and would ensure that diversity and listener choice are preserved through revising the promise of performance or other licence requirements.

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To conclude, the key reason for my support of the amendment is that I believe we have a strong Radio Authority that, with its additional powers as proposed in the Bill, will regulate the industry effectively to preserve diversity and equity.
We honestly do not need to make decisions on behalf of the Radio Authority imposing prescription legislation on an industry which is developing very fast. I am sure that we all agree that legislating for broadcasting is extremely difficult. That has been proved during today's debate. Simple solutions do not reflect the diverse nature of the industry across the country. The Radio Authority is strong and active. Let it have the freedom to examine each case on its merits, as it has done so effectively since the introduction of the 1990 Act. We must allow for flexibility. I am sure that this Bill is the Bill for the future.
10 p.m.
Lord Colwyn: My Lords, I too support the amendment. In Committee I spoke in favour of allowing a station to run two different services on the same waveband in a single area. Nothing I heard the Minister say then persuaded me to change my mind, but I hope that he will be able to offer some encouragement tonight.
It seems to me that we may be in danger of trying to do the Radio Authority's job for it. We cannot know in advance what circumstances will prevail in, for example, Liverpool, Newcastle or Worcester. It may well be that a minority service of great value is proposed which can be best supported from within a company already broadcasting in the area whose credentials and ability to serve the community concerned have been well established. Let the authority make up its mind in the circumstances that prevail at the time rather than those that prevail at present. Let us free our regulators to regulate in a way that can reflect future circumstances rather than shield them behind legislation based on yesterday's experiences. I support the amendment.
Lord Inglewood: My Lords, we have once again had an interesting debate on this question. It is an important one for local radio. Moreover, my noble friend Lord Dixon-Smith has done me the kindness and courtesy of seeking in his amendment to address some of the points that I made in debating the similar amendment put down in Committee. So I hope the House will forgive me if I seek in responding now to set out the Government's position in a little detail. However, I wish to avoid going over the ground already covered at some length on the previous occasion.
As my noble friend made clear, his amendment is designed to respond to the reservations about plurality which I expressed in responding to earlier suggestions that the current limit should be generally removed. Let us examine a little further, however, exactly what benefit would accrue from accepting the amendment before us. There is not really appreciable potential gain in terms of the diversity of services offered to the listener. That is separately guaranteed by the Radio Authority, which has a duty to develop it and seeks to
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secure it by licensing new services, both on AM and FM, which are commercially sustainable and extend choice. Diversity, then, is not primarily in the hands of the programme service provider or at the mercy of that provider's choice. Of course greater diversity might well indeed be promoted were existing licence holders in an area free to take up new FM licences awarded by the authority; that is, licences to which they could bring existing local expertise and a ready-made incentive to cultivate a different audience. But frequency scarcity dictates that there are likely to be very few further FM licences awarded for category A or B areas. Once a further Greater London licence has been awarded—and that process is likely to begin as soon as next month—there are only three further category A or B licences for which frequencies are likely to be found. Ironically, the case for removing for the existing one FM licence limit to promote diversity is in fact strongest in category C and D licence areas, where the same frequency scarcity considerations do not apply, and allowing what is often the only existing operator to open a further station might be the only way of providing a further commercially viable choice. But, of course, this goes flatly against the purpose of promoting plurality.
Much the likeliest way, then, of companies actually using the freedom they would gain from the relaxation of the current limit in category A and B areas is in fact to take over other existing licence holders. This would facilitate greater consolidation within the radio sector, given that it is usually easier to expand from an existing base in a given area. It is indeed this facilitating of consolidation within radio that is the real benefit which might in practice obtain from relaxing the limit. As the noble Lord, Lord Desai, put it when we debated these matters in Committee, the future will not be mainly to the cuddly local radio station, and arguably only the larger consolidated business emerging from expedited rationalisation will be able to launch the improved service for the listener which digital broadcasting offers.
I confess also to aspiring to a future where there is a place both for strong cross-country conglomerates and for smaller, genuinely local, radio stations. That is certainly what the Radio Authority is seeking to achieve. We should also bear in mind that, as I mentioned in Committee, the Bill removes any limit on the number of radio licences a company may control, subject only to a maximum of 15 per cent. of the total points in the radio system. That represents substantial room for growth, albeit across the country rather than in particular areas.
The Government therefore have various conflicting considerations to assess in deciding whether to amend the existing local radio licence limits. I hope that I have sufficiently indicated in the debates we have had that I have a reasonably open mind on the issue and am aware of the various cross-currents surrounding it. I propose to discuss this matter further with the Radio Authority to see whether the current arrangements can be improved. However, in doing that I hope that no Member of your Lordships' House will take that as being a commitment to do anything.

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I assure the House that in their further considerations, the Government will have the overall interests of the viewer primarily in mind while recognising that the continued development of strong and successful players within the radio sector is by no means necessarily opposed to those interests. I hope that that explanation of the Government's position has been helpful to your Lordships, especially to my noble friend Lord Dixon-Smith. In the light of that explanation, I hope that he will not seek to press the amendment this evening.
Lord Dixon-Smith: My Lords, I am reassured by the detailed reply given by my noble friend. While he avoids giving any commitment to do anything, I hope that he will forgive me if I continue to press him for a commitment to do something.
Perhaps I may answer to some degree the point raised by the noble Lord, Lord Thomson of Monifieth, on the question of dominance in advertising. It must be said that the reason for that apparent dominance is the successful organisation of MSM by Capital Radio which handles a very great deal of advertising on behalf of other independent local radio stations. It happens to find that that is the best way to deal with its business.
In all the circumstances and in the light of the debate, I am happy to withdraw the amendment; but in doing so, I look forward to some action rather than no action by the Minister. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Thomson of Monifieth Lord Thomson of Monifieth moved Amendment No. 85:
After Clause 65, insert the following new clause—
(" . At the end of section 45(2) of the 1990 Act there is inserted "and section 16(2)(g)".").
The noble Lord said: My Lords, this is a modest but not unimportant amendment which, to judge from my mailbag, seems to have caused excessive alarm in some quarters.
The amendment is intended to ensure simply that non-domestic satellite services should be encouraged to do more original programming than they have so far been able to do. Non-domestic satellite services cover a wide variety of activities. Some of them are specialist services like 24-hour news services where there is no opportunity for original programming. But BSkyB, by its own enterprise, has been very successful and is now an extremely profitable business. It does some original programming but it should do a good deal more.
There have been fears that my amendment intends to impose some sort of quota. I should like to put on record that I am opposed to quota in that aspect of broadcasting policy and have been over many years. The wording of the Broadcasting Act 1990, which we seek to insert into this Act, is simply that non-domestic satellite services should ensure that a proper proportion of the matter included in their programmes is of European origin. "European origin" is a term of art for original programming in this country. It is in that spirit that the amendment is tabled. That is a perfectly legitimate demand to make, particularly on BSkyB. I beg to move.
Lord Donoughue: My Lords, my name is to the amendment and I support everything which my noble
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friend Lord Thomson said. I have a further question for the Minister. As I understand it, under the European directive the Government—in this case, the Department of National Heritage—have the responsibility for monitoring the extent to which licensees meet the targets of the directive.
Can the Minister tell us what his reaction would be were we to suggest that those targets should be monitored by the ITC, which seems a much more appropriate body than a heavily overworked and deeply understaffed Whitehall department? In my view, it is not appropriate that those in the department should be wasting their time monitoring the matter in detail. In attempting to do so, it may be the case—as is so often suggested—that they are perhaps a little more accommodating and slack towards Sky's meeting of those targets. Does the Minister agree that it might be more appropriate if the ITC monitored the matter and reported it to the department? The department could in turn report to the Europeans on the extent to which those targets had been met.
There are two points for the Minister to consider. First, I support the noble Lord in all he said about European origin programmes. Secondly, there is the question of whether the department would actually be best employed in monitoring such matters.
10.15 p.m.
Lord Inglewood: My Lords, the noble Lords, Lord Thomson and Lord Donoughue, have raised a number of important points. It may appear to be an apparently modest amendment, but it is one that would have significant implications. I hope that your Lordships will bear with me while I talk to the amendment at some length. I do so because, as I said, it is an important matter.
Noble Lords will be aware of the obligations laid on all European member states in the 1989 Broadcasting directive. That is the directive we spoke about in Committee under which,
"Member States shall ensure where practicable and by appropriate means that broadcasters reserve for European works, within the meaning of Article 6, a majority proportion of their transmission time, excluding the time appointed to news, sports events, games, advertising and teletext services. This proportion, having regard to the broadcaster's informational, educational, cultural and entertainment responsibilities to its viewing public, should be achieved progressively, on the basis of suitable criteria".
The UK has implemented the directive administratively and my department is in regular communication with individual non-domestic satellite broadcasters to discuss the degree of practicability and the targets and timescales for implementation of agreed percentages. We have deliberately not made an order under Section 188 of the 1990 Act directing the Independent Television Commission to act on our behalf.
The amendment, if your Lordships were to agree to it, would achieve the same result and oblige the ITC to make "a proper proportion" of European content a condition of a licence for non-domestic satellite broadcasters. So I ask your Lordships to consider most carefully what I say and the reasons why the Government cannot accept the amendment which, on the

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face of it, would merely transfer the existing government-broadcaster dialogue to one between the ITC and the broadcaster.
The provision in Section 16(2)(g) of the 1990 Act places a requirement on Channel 3 licence applicants to reflect "a proper proportion" of European works in their programming. Similar obligations are placed on Channel 4 and on Channel 5 applicants in Sections 25(2)(e) and 29(2)(b). They are terrestrial free to air channels with a guaranteed audience base of many millions. This particular public service obligation, as well as complying with the majority quota laid down in Article 4 of the directive, must also be seen in the wider public service context of Section 16(2) which requires such licence applicants to provide high quality and diversity in programme material. That must especially reflect adequate news and current affairs coverage, regional interest material where appropriate, religious and children's programmes, and programmes to appeal to a wide variety of tastes and interests. Clearly, much of that will properly and inevitably be of British origin. We in this House easily translate it also to mean European and vice versa. So the ITV and Channel 4 terrestrial commercial channels carry over 70 per cent. of works of European origin, demand led by their audiences which, in turn, attract a solid advertising base to fund those channels.
Why do the Government not wish to place a similar direct obligation, as an ITC licence condition, on non-domestic satellite channels? I believe that that question lies at the heart of the amendment. Noble Lords suggesting the amendment have agreed that their proposals reflect the flexibility allowed for in the 1989 directive with "a proper proportion" giving adequate scope for individual satellite channels to establish the amount appropriate to the individual themes and commercial viability. But the amendment does more than that. It would place an obligation on the ITC to assess, when a licence is first applied for, what amount of European programming would be "proper" for that channel. At present a licence applicant needs to satisfy the commission that he understands and will comply with the general conditions in section 6 relating to impartiality, taste and decency. Interpretation of these matters is never black and white; there are no clear cut boundaries beyond which a broadcaster may not step. Alleged breaches of these conditions are always looked at very carefully, in the overall context of the programme and of the nature of the channel itself.
But this contrasts with a pre-licence condition relating to quantity. A satellite broadcaster, before he has even had the opportunity to test the market for his product, would be asked to give firm projections of how much European programme content he intends to include, and to convince the ITC of the reasonableness of his assessment at that point. We consider this to be onerous, and potentially counter-productive. Why is the kind of protection inbuilt in the amendment helpful to the European production industry? Why should it not produce what the viewer wants like everyone else in the market place? Knowing that sanctions are available against him, an individual broadcaster will be inclined
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to make cautious and conservative assessments. That is likely to act as a brake on the development of new channels, because broadcasters are not able to predict exactly how things may develop. Indeed, it might even kill off potential channels before they are born.
The regime which the Government presently operate, where it discusses with individual channels the quantity of European programming practicable to a channel and over what period with the aim of achieving as much as possible, preferably a majority, is a satisfactory regime. It has led to the United Kingdom being in the forefront of satellite broadcasting, with today 100 channels licensed by the ITC.
This administrative regime is delivering what the subscriber wants. I am pleased to say that it is also beginning to deliver what noble Lords wish to achieve by statutory means in their amendment. Just as UK viewers on terrestrial channels demand recognisable and largely home produced programmes, alongside—it has to be said—a preference for American movies, so, too, are these same consumer demands being reflected in the content of some of the satellite channels. The oldest of these, BSkyB, is now making a significant investment in original programming.
In the fiscal year 1995, Sky spent some £328 million in total on programming, which represents 62 per cent. of operating costs; £150 million of this was spent on original programming. Sky still has only 4.5 per cent. of the total audience share, compared with the 90 per cent. of the four terrestrial channels. Therefore, the £30 million per audience percentage point spent on original works compares favourably with, for example, Channel 4, with 11 per cent. audience share, spending £19 million per percentage point. Another, much newer entrant, Turner Broadcasting, also is steadily building up European programming and original production. In 1996 it will spend £70 million in the United Kingdom, with about £55 million of that in original production, which is not bad for a channel with an audience base of well under a million in this country.
We should do nothing in this Bill to affect adversely this healthy industry. We should particularly bear in mind that that figure of 100 today could, with the advent of digital satellite as well as terrestrial channels, easily become 1,000. A regime which encourages European-origin programme content, by means of quotas or quantity, regardless of quality, as in the broadcasting directive, will become as increasingly irrelevant as it would be in a bookshop. This is why the majority of member states in the European Union would prefer abolition of the quota provisions.
We would be swimming against the tide of developments in the broadcasting industry if we were to place an onerous and, in our view, an increasingly unworkable and irrelevant statutory obligation on the ITC in relation to satellite broadcasting. Far better, we believe, to leave matters as they stand. Administrative implementation of our European quota obligations can more easily reflect new developments and changes in Brussels legislation. It is correct that we should continue to expect our existing terrestrial broadcasters to include a proper proportion—much of that is British

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programming—demanded by their large viewing audience. Even if there was no such statutory requirement, they would produce what their audience expected in order to maintain their commercial viability, and attractiveness to advertisers, and in the case of the BBC, to meet licence fee obligations.
Largely subscription channels are quite different, looking to satisfy particular interests or hobbies to maintain their viability. For that sort of reason, the proper proportion may be zero. It may be, as with some existing channels, as high as 100 per cent. We must look forward to the days of real consumer choice and not backwards to the days of a few monopoly channels where legislation sought to provide the viewer with a varied and quality menu. Provided that proper standards of impartiality, taste, decency and consumer protection in advertising are maintained, we should be less and less concerned with the origin of programme material. Why should not the viewer have what he wants rather than what someone else thinks is good for him or her?
The amendment would seek to make us more and more concerned, and suggest that we are immobilised like rabbits in a car's headlights by the prospect of the future. I urge your Lordships not to go down that path. We believe that the right way to encourage domestic programme making is to have as many channels as possible wanting domestic programmes for their own commercial reasons. I very much hope that this response will explain to the proposers of the amendment the thinking behind the Government's position in these matters.
Lord Thomson of Monifieth: My Lords, my goodness! I did not expect our very modest amendment to provoke such an extraordinary exposition of the total free market philosophy in terms of British broadcasting. When that explanation is read tomorrow morning people will feel that the Minister has abandoned a good deal of what we thought was the main motive of British broadcasting policy: to do what one could to promote excellence in broadcasting. That carried the free market philosophy of just going for the lowest common denominator and the maximum number of bums on seats rather far. When what he said is examined in Hansard tomorrow morning by Michael Grade and David Elstein, I foresee some fireworks in the letters columns of the press on the claim that BSkyB is engaged in more original programming, more original film making, than Channel 4.
However, I am far too sleepy tonight to wish to raise the temperature. In all the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 2 [Amendments of Broadcasting Act 1990 relating to restrictions on holding of licences]:
Lord Thomson of Monifieth Lord Thomson of Monifieth moved Amendment No. 86:
Page 79, line 31, at end insert—
("(3A) After sub-paragraph (3) there is inserted—
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"(3A) Notwithstanding the provisions of sub-paragraph (3) above the ITC may, where it considers that the purpose of an arrangement is to prevent disqualification arising or a breach occurring in any other provision of this Schedule, consider control to arise in that arrangement."").
The noble Lord said: My Lords, at this time of night, in my present state of sleepiness, I am sorry to have to move Amendment No. 86 which is a serious and rather major amendment. It is one on which I need to say a word or two.
I say to the Minister straightaway that I found great difficulty in drafting the amendment which seeks to define more precisely and effectively the control responsibilities of the Independent Television Commission. Therefore if the Minister wishes to say that the amendment is not effective in terms of its wording, I am ready to accept that.
However, underlying the amendment is a real problem which upsets me a good deal and has certainly upset the Independent Television Commission. It relates to the fact that the various franchise holders of the independent television system now have got themselves into a mood—I think encouraged by the climate created by the present Government—that they do not need to observe the spirit of broadcasting law so long as they can find clever enough lawyers to get round it with the letter of the law.
I refer, for example, to the ownership of Independent Television News. We argued a great deal about the pattern of ownership for ITN in the 1990 Act. At the end of the day, the Act emerged with certain provisions which limited the amount of shareholding by individual ITV companies. If I remember rightly, the figure was 20 per cent. In fact, two shareholders—Granada and Carlton—today have 36 per cent. each. The ITC is always patient and understanding in these matters— I think excessively patient in this case. It gave both those companies an extended time beyond the letter of the law to make the necessary divestments by the end of last year. At the end of the year, they did not make those divestments. They engaged instead in the so-called deadlocking formula, blatantly defying the spirit of the law which Parliament passed and the ITC has the responsibility of administering. I noticed that in the proposed merger of MAI and United Newspapers, involving the Meridian television company, the same deadlocking device has been used, defying the spirit of the law and getting clever people to follow its letter. In that case, it went even further.
I have spent most of my working life in Parliament in one way or another. I do not like Parliament being taken for granted. We are engaged in passing a Broadcasting Bill, which has still to go from here to another place and return. Who knows what the final Broadcasting Act 1996 will be after we have managed to persuade the Government to make various amendments? However, there are people using the deadlocking device, getting round the normal definition of "control" in order to take for granted what will finally come out of Parliament and anticipating legislation. Anticipating legislation is not so serious a matter as going in for retrospective legislation, but I find it distasteful. It is particularly distasteful that in the present spirit which

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exists in certain quarters in the ITV system there is a mood that one can find clever people to get round the undoubted wishes of Parliament and the spirit of the law that the Independent Television Commission has to administer.
I am not privy to such matters these days but I understand that there have been discussions between the Government and the ITC to find a more effective definition of control and more effective legal powers to make control a reality and prevent deadlocking devices being operable. That is the motive behind the amendment. I do not expect the Government to say at this stage that they will deal effectively with the matter. I wish them to say that they are as concerned about the underlying ethics as I am and will consider whether there are remedies for what is undoubtedly an objectionable situation. I beg to move.
The Earl of Stockton: My Lords, I support the amendment. I vividly remember the discussions that took place during the passage of the 1990 Bill through your Lordships' House. I recall the noble Lord, Lord Thomson, and myself forecasting precisely the present possibility. My noble friend's predecessor at the Dispatch Box rejected it as not being the kind of thing that broadcasters would do — people would be fair and live within the spirit of the Act. Once again, we come to the problem. The track record of broadcasters, irrespective of the various topics which we are discussing, does not fill one with hope when it comes to people taking apart the carefully expressed wishes of Parliament and driving a coach and horses through them. That is what has happened on this occasion.
I urge my noble friend to listen carefully to what the noble Lord, Lord Thomson, said. If his amendment does not meet the situation—and I accept the noble Lord's reservations on the drafting which is very difficult— I ask the Minister to come back at the next stage with a proposal which will lock the matter up tight.
Lord Inglewood: My Lords, the remarks of my noble friend Lord Stockton and the noble Lord, Lord Thomson, echo the Government's concerns. The amendment is concerned with the definition of "control" in the Bill and your Lordships are anxious that it should be adequate to deal with ownership structures which use devices such as deadlocking and warehousing arrangements in an attempt to get round the limits set out in Schedule 2. Since the 1990 Act, we have seen a number of instances where that has occurred within the letter of the law but contrary to the spirit of it. There is no need for me to enumerate them.
The new definition of control in the Bill is one which we believe will be effective in most instances. However, we recognise the concerns of the noble Lord, Lord Thomson, and others that the new definition of control may not catch all ownership permutations. Indeed, both the ITC and the Radio Authority remain concerned that the definition may not be adequate to deal with all circumstances.
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We do not as yet have proposals for amendments, but I assure all noble Lords that we are considering this matter very carefully. If we deem it necessary, we certainly shall bring forward proposals for amendments in due course.
I very much hope that my remarks will have provided noble Lords with some reassurance and explained just how seriously we regard this matter.
10.30 p.m.
Lord Thomson of Monifieth: My Lords, I am very grateful to the Minister for his remarks. His opening sentence in respect of me brought me total reassurance that he has taken this concern on board and that the Government share it. I am very content indeed in this case to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Inglewood Lord Inglewood moved Amendment No. 87:
Page 79, leave out lines 46 and 47.
The noble Lord said: In moving this amendment I should also like to speak to Amendments Nos. 98, 99, 102, 113, 114, 127 and 128.
This is a group of highly technical amendments, primarily aimed at removing the operators of cable systems—local delivery service licensees, to use the jargon—from the scope of various order-making powers in Schedule 2 to the Bill.
I will willingly expand on these amendments. However, bearing in mind the lateness of the hour, if noble Lords are prepared to accept that they are simply technical amendments, I am prepared to move them in that spirit. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 88 and 89 not moved.]
The Chairman of Committees (Lord Boston of Faversham): My Lords, in calling Amendment No. 90, I should point out that if it is agreed to, I cannot call Amendment No. 91 or Amendment No. 92.
Lord Harris of High Cross Lord Harris of High Cross moved Amendment No. 90:
Page 82, line 5, leave out from beginning to second ("a") in line 16 and insert—
(".—(1) Subject to the following provisions of this paragraph, the Secretary of State may at any time refer to the Monopolies and Mergers Commission the holding by any person of one or more licences to provide relevant services falling within one or more of the categories specified in paragraph 1(2)(a), (b), (c), (d), (f) or (h) in any case where during the relevant 12 months the audience time attributable to those services exceeded 15 per cent of total audience time for the same 12 month period.
(2) Paragraph 2A below shall have effect in relation to a reference under this paragraph.
(2A) In this paragraph "the relevant 12 months" means, in relation to any reference, any consecutive 12 months falling within the 15 months immediately preceding the date of the reference.
(3) For the purposes of this paragraph, "relevant service" also includes").
The noble Lord said: My Lords, these two groups of amendments are directed at the issue of imposing a 15 per cent. upper limit on television audience share.

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I am sorry to detain noble Lords at this late hour, but these amendments were due to be discussed in Committee, when I was "bushwhacked" and did not arrive here in time to move them.
Amendment No. 90 is linked with Amendment No. 96. It seeks to replace the 15 per cent. maximum television audience limit by requiring a reference to the Monopolies and Mergers Commission. Amendments Nos. 91, 92 and 94 are simply referred to as presenting a different way of tackling the 15 per cent. by resting on the 25 per cent. that is commonly thought to be in line with competition policy. Amendment 95 would exclude the 15 per cent. limit where growth in audience viewing was due to "organic growth" rather than to a merger or takeover.
I must confess, even approaching the witching hour, that a belief I have developed over 40 years of studying economics is that, faced as we are in this particular market with the quite unfathomable uncertainties of rapid change, competitive markets cope, not perfectly, but better than the inevitably bureaucratic procedures, targets and plans of fallible government.
I have already welcomed the general emphasis of the Bill on liberalisation. There are many parts of it that I greatly support. However, I think there are unfounded fears, or well-funded pressure groups, that inhibit the Government from consistent support for competitive enterprise as the best discovery mechanism towards the evolving new structures in television and other forms of broadcasting to which the Minister has referred in other contexts. Instead of opting wholeheartedly for deregulation, the Bill opts in some respects for re-regulation.
I do not know whether, in some years' time, we shall look back with astonishment to our obsession with the phantom threats to plurality and diversity that we all very much uphold. There are already sufficient safeguards in place. If the noble Lord, Lord Thomson of Monifieth, says that they are not functioning or are being evaded, by all means let them be strengthened, where they are safeguards that have been well established.
I asked my research assistant to let me have a note of some of the safeguards and my fax machine was overwhelmed with yards of material. It told me that there is a two licence limit, positive programme requirements for Channel 3 and Channel 5 licences, impartiality and consumer protection for all broadcasts. There are of course increasing market opportunities through satellite, cable and digital delivery, and there are competition laws with a presumption against control of more than 25 per cent. of the market. Now the Government are fearful of domination by a company striving and struggling to work from 10, 11, 12, 13, 14 per cent. and breaking through the 15 per cent. limit.
More irksome than any other feature of the Bill is that the 15 per cent. limit on audience share entirely omits the BBC, which already enjoys 43 per cent. of the viewing audience. That gives me an opportunity to say that if we look back 40 years (which is still in the memory of some of those in the Chamber this evening)
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we may remember that commercial television was introduced in 1953 or 1954. Before then, the BBC enjoyed not 15 per cent. or 25 per cent. but 100 per cent. of television and radio audiences, with the exception, I believe, of Radio Luxembourg. Does that mean that our nation was dominated by the successors of Lord Reith? Did it mean that the BBC ran the country? Was 100 per cent. of television viewing so terrifying? Was that a black period? We had a diverse press and political debate. What is now going on that people should quake in their shoes and stay awake at night worrying about whether it should be 15 per cent. 16 per cent. or 20 per cent?
I wish that there was a better sense of perspective and less fear and fright about all these things. The objection to the BBC monopoly was rather that it enlisted political support to obstruct competition; and, as noble Lords will remember, it relied on the scarcity of wavelengths, which led it in the end even to try to rule out programmes being carried by rediffused wire down in Guildford, because they had not come from the BBC. Rediffusion was radio broadcasting—Radio 1 and Radio 2 or the Third Programme of those days. The BBC was not interested in increasing the number of channels, catering for minorities, 24-hour news, minority programmes or even majority programmes if they were thought to be vulgar.
I must remind the House, which I am sure has a large number of unpaid and voluntary supporters of the BBC's dominating position, that the ITC's Public View showed that a good proportion of the objections and complaints to the Broadcasting Standards Council on partiality and all the rest of it were directed at the BBC. So why should the audience ceiling of 15 per cent. be imposed on commercial programmes, leaving the BBC still with 43 per cent. of the television business? Why is it 15 per cent? It is more restrictive even than the 20 per cent. for television holdings proposed in the Green Paper for the longer term. It is lower than the 25 per cent. in general competition policy.
I do not want to stir up the Minister too much at this hour. But in my view this kind of element in the Bill is more appropriate to the Department of National Heritage and the slightly nostalgic, backward-looking days of monopoly control. There is a certain suspicion of business. I wish that the Department of Trade and Industry was running the operation because it has a real interest in increasing the vigour of this marvellously expanding market.
We have had a 10-fold increase in television channels over the past decade; from four to 40. I have seen that announced somewhere. That great development will continue. This country needs in broadcasting, as in other aspects, strong, expanding companies able to compete with international diversified giants in rapidly-growing world markets. I scorn anyone who supposes that companies will monopolise the eyes, the ears and the minds of an increasingly sophisticated and selective audience. I beg the Government to exhibit less fear about the future and the possibilities that it will bring

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with it in this exploding information market of television, radio, press, Internet and so forth. I beg to move.
The Chairman of Committees: My Lords, I should point out to your Lordships that, Amendment No. 93 having been spoken to, if it is agreed, I cannot call Amendment No. 94.
Lord Inglewood: My Lords, in responding to the amendments of the noble Lord, Lord Harris, I do not want to repeat the arguments I gave in Committee for the Government's view that distinct controls on the media are appropriate above and beyond those of general competition policy. The thought occurs to me that in a nutshell it is precisely because broadcasting has been so heavily regulated in the past that wholesale immediate deregulation would have arbitrary and potentially uncompetitive effects. Hence it is important to bear in mind that we are talking about an interim regime. That is why we introduced a measured deregulatory step in the Bill.
I am grateful to the noble Lord for drawing to my attention matters of 40 years ago. I am afraid it was more or less before my time—not quite—and I am therefore not in a position to respond first-hand to that. I was slightly surprised to hear his remarks about our fear of the future. Two amendments earlier I was slightly chided by the noble Lord, Lord Thomson of Monifieth, for taking a face-to-face view of the future. I feel therefore that the noble Lord was being rather unfair in some of his strictures.
The Bill proposes a relatively simple way of regulating television ownership. Companies will be allowed to expand up to 15 per cent. of the total television audience. They will not, however, be able to breach that limit. It will be clear to broadcasters from the outset whether they are likely to breach the limit, and it will be up to them to take remedial action in the event that they do so. A failure to take remedial action could lead to the ITC imposing a fine or revoking a television licence.
The absolute 15 per cent. total television audience share limit was set because television has a uniquely powerful influence and it is important that undue concentrations of ownership are not allowed to develop. In the case of terrestrial television in particular, there is, and will remain, a substantial element of rationing of a scarce resource, given the limited number of channels available. Fifteen per cent. is not an unrealistic limit. Currently, the largest commercial broadcaster in audience terms, Carlton, has a 9.4 per cent. share of the audience. Its nearest rival, Granada, has a 6.9 per cent. audience share. The largest cable and satellite broadcaster, BSkyB, has a 4.5 per cent. share of the audience. The 15 per cent. limit will therefore allow considerable scope for all commercial broadcasters to expand, while ensuring continuing plurality and diversity in the provision of television programming. We believe that the 15 per cent. limit is appropriate for television; that it should remain an absolute limit; and that it should not be subject to a discretionary test.
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Given the current audience shares for major television companies, I find it difficult to foresee a situation in which a service would breach the 15 per cent. audience limit by organic growth alone. Carlton could not breach the 15 per cent. limit without acquiring further television licences. Similarly, BSkyB could not breach the limit without providing additional television channels. Indeed, Amendment No. 95 seems to acknowledge that through its reference to,
"new services which commence during that period".
The point is that once there is a risk of a service provider breaching the 15 per cent. limit, they should not be allowed to provide new services which would lead to them exceeding that limit.
It follows that we do not believe that there is any need for a separate assessment of the public interest should the threshold be exceeded—either for the ITC or for the competition authorities. I should, however, add and emphasise that media ownership regulation in no way inhibits the operation of competition legislation. Where any merger between broadcasters creates or increases a market share of at least 25 per cent. or involves a takeover of assets exceeding £70 million in value, the Director-General of Fair Trading will advise the Secretary of State for Trade and Industry as to whether or not to make a reference to the MMC. Similarly, the monopoly provisions of the Fair Trading Act will continue to apply to broadcasting in the normal way.
The 15 per cent. television audience share limit is simple and transparent. It was set after careful consideration of the television market. At present no commercial broadcaster has more than a 10 per cent. share and most are well below that. The 15 per cent. threshold will allow considerable concentration within the industry. However, it is up to companies to ensure they do not breach the limit and to take remedial action if they do. The Government do not see the case for making the 15 per cent. threshold discretionary; and nor do we see a role for the MMC.
I turn to Amendments Nos. 91, 92 and 94. Our policy document, Media Ownership: The Government's Proposals, published in May last year, made it clear that the Government had concluded that there was a continuing need for specific media ownership regulation beyond that applied by general competition law in order to protect the plurality of the British media industry. As I have said on a number of occasions, the media industry is unlike others because of its ability to influence opinion and engender debate.
In setting the market limit for television at 15 per cent. of the total television audience, which is to include all public and commercial broadcasting services, we took careful consideration of the current market shares of major television companies. At present, the commercial group with the highest audience share is Carlton, with 9.4 per cent. The next largest is Granada, with 6.9 per cent. The 15 per cent. limit really will allow significant room for expansion.
We expect the expansion of cable and satellite broadcasting to continue for some years. The market will also expand significantly with the advent of digital

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terrestrial television. We may therefore need to raise the threshold from 15 per cent. to say 20 per cent. in the future when there are a substantial number of services available.
If we were to move immediately to a 25 per cent. market share limit for television then it would have damaging consequences for plurality. It would mean one group could control about 70 per cent. of the ITV network. Additionally, such a group could notionally control up to 20 per cent. of national newspaper circulation and up to 15 per cent. of the available radio points. I believe that such a move would damage the British media industry because it would allow the development of extremely powerful groups which could undermine the competitive position of smaller media companies. Things may look different in some years' time, if the number and market share of cable and satellite services continues to grow and digital terrestrial services emerge. But for the present, we believe that 15 per cent. strikes the right balance between allowing television companies to expand and maintaining plurality, particularly in the Channel 3 network. For those reasons, the Government oppose the amendments.
Lord Harris of High Cross: My Lords, I accept what the noble Lord says about the Government's position but I find it totally incomprehensible. I find it impossible to understand how even, if I may say so, a young Minister, unaware of the secrets I have revealed about the 1950s, can go on talking as though the BBC can be trusted with 43 per cent. of something, but that Carlton or BSkyB must be content with 15 per cent.—they are, after all, puppies; they have only 7 or 8 per cent. and there is room for them to grow. It is a preposterous kind of condescension coming from someone in the public sector about another part of the public sector.
I welcome the Minister's statement that this is an interim regime between severe restriction and regulation and greater freedom. If I were given to making predictions, I would say that we shall be back with another Broadcasting Bill. It is five years since the last one. It will be less than five years before we come back with substantial changes. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 91 to 96 not moved.]
Lord Inglewood Lord Inglewood moved Amendment No. 97:
Page 83, line 33, leave out ("national Channel 3 services") and insert ("a national Channel 3 service").
The noble Lord said: My Lords, this is a technical amendment. I beg to move.
On Question, amendment agreed to.
Lord Inglewood Lord Inglewood moved Amendments Nos. 98 and 99:
Page 88, line 4, leave out ("to (f) or paragraph 1(2)(j),") and insert ("(c) or (e),").
Page 88, line 6, leave out ("to (f) or paragraph 1(3)(j),") and insert ("or (f),").
On Question, amendments agreed to.
Lord McGregor of Durris Lord McGregor of Durris moved Amendment No. 100:
Page 91, line 44, leave out ("local").
The noble Lord said: My Lords, I have tabled seven amendments—Amendments Nos. 100, 101, 108, 110, 131, 132 and 134—for the single purpose of attempting to reduce some of the discriminations in the Bill, as I interpret them, against regional and local newspapers which might wish to own regional broadcasting services. Accordingly, although my amendments are scattered within the latter groupings, I hope that it may be for the convenience of the House and the noble Lord, Lord Inglewood, if I save time at this hour by speaking very briefly to all of them in general terms.
As the Bill stands, it disadvantages regional and local newspapers as against national newspapers, which will be able to own radio stations in circumstances in which a local newspaper is prohibited from so doing. Regional and local newspapers compete with national papers for readers and advertising. The Government are making cross-media ownership more available to national media companies as a response to competitive pressures, domestic and international. But the Bill will not give local newspapers the opportunity to create locally-based media companies so that they can exploit for themselves the opportunities for linked marketing, cross-promotion and the sharing of resources for reporting and newsgathering.
Local media will become more diverse with new technologies, with the onset of cable, on-line services, the proliferation of commercial radio services and increased free-sheet distribution. Where news is concerned the strengths of local newspapers derive from the community in which they are based and their strengths need to be sustained if the social need which they serve is to benefit. That cannot happen if local newspapers are weakened, as this Bill will weaken them, in the face of competition.
As they stand, the Government's proposals are likely to undermine diversity, not underpin it. The Bill fails to follow the logic of the current rules, which enable local newspapers to provide news services to radio stations. They should be allowed to own a radio station as well and thereby be able to respond to market pressures and technological opportunities.
In the Bill the Government have separated diversity in local newspapers from competition, but the two are the same issue. If they cannot compete effectively, local newspapers will lose market share, and the plurality and diversity of local media will diminish.
These amendments would strike a better balance. The public interest test would be maintained, but the threshold calculations would be amended; first, to take account of the sales of national newspapers; secondly, to reflect where there is a BBC local radio station or Channel 3 service; and, thirdly, to take the market share to 30 per cent. as the Government first proposed. The amendments would also ensure that restrictions are applied only where newspapers have a substantial penetration of households in the area. I hope that the Minister will reflect on the amendments and on the arguments which support them, and undertake a more realistic analysis of the market for regional and local papers and media groupings.
I believe that the amendments accord with the aspirations of the regional and local press, which were set out decisively in a letter today in The Times by the director of the Newspaper Society, who wrote:
"The Bill would allow multimedia conglomerates and most national newspapers to purchase local broadcasting outlets, while prohibiting local newspapers from doing so. The former would have massive commercial advantage over the regional press in the day-to-day competition for advertisers, readers, news stories and markets.
To thrive, a lively and locally responsive media sector needs scope to expand and diversify into locally-based media companies by being able to compete on a fair basis with other industry sectors".
I hope that the Minister may be sensitive to those considerations and that he may be willing to consider whether the Government will be able to introduce their own amendments to meet those points at the next stage.
Baroness Rawlings: My Lords, I fear that, as the noble Lord just said, the clause discriminates against local and regional papers, many of which compete with the nationals, although some are owned by the nationals. I am concerned that the Bill might prohibit a regional or local newspaper from owning a radio station in circumstances in which the newspaper's circulation in the radio station's area was modest. It would allow a national newspaper with a high circulation in a licensed area to own local broadcasting stations. I hope that the Government will amend the provisions to make them fairer.
Baroness Wharton: My Lords, as I understand them, the amendments seek to ensure that regional newspapers are treated fairly when in competition with national newspapers especially when bidding for local stations in their own areas. Local papers are a major factor in creating cohesion in a local community, often giving greater value for money as they tend to be far more responsible than the national press in that they are directly answerable to the local community that they serve. A regional newspaper with a circulation smaller than that of a national newspaper should not be automatically barred from being able to compete for a local station in its own area. It is with that in mind that I support the amendments.
The Earl of Stockton: My Lords, having listened to the debate and particularly to the contributions from the two noble Baronesses, I am a trifle concerned. This was precisely the position in many towns and cities in the United States before and after the Second World War when the local radio station was often controlled by the same business group as the local newspapers. It was for that reason that restrictions to inhibit that were introduced by the Federal Broadcasting Commission, later the Federal Communications Commission, because for obvious reasons local business interests took control not only of them but of local politics. While there are good commercial reasons, there are dangerous democratic reasons in allowing the amendment to go forward in its present form.
11 p.m.
Lord Inglewood: My Lords, since the noble Lord, Lord McGregor, spoke also to the other amendments in his name, I feel that it would be appropriate for me to respond in general terms. As he explained, all his amendments are designed to remove or relax the restrictions in Schedule 2 imposed on local newspapers seeking to control local broadcasting services.
I should like to respond for now with a few general remarks. What Schedule 2 does is to liberalise the arrangements for cross-media holdings, while continuing to protect plurality at both national and local level. Indeed, in my view, one of the strengths of this Bill is that it pays particular attention to protection of plurality at local level.
The local market share proposed in Part IV is intended to ensure that no one player can assume a position of dominance in the local media market place; that is, that part of the media which has a specifically local or regional focus: regional Channel 3 services, local radio stations and regional and local newspapers. I am sure that your Lordships acknowledge that national and local newspapers are distinctly different products in terms of their editorial focus.
I accept that national newspapers compete to some extent with local papers for readers and advertisers. They do not, however, provide the local news and information, for which readers turn to local and regional newspapers. Our proposals are about protecting plurality, and not about regulating competition in the markets. Newspaper markets and advertising markets will continue to be subject to normal competition law.
As the Bill stands, local newspapers will be free to buy broadcasters outside their circulation areas and to apply to control broadcasters within their own areas where their circulation is within the thresholds. The 50 per cent. threshold proposed for local newspapers buying into local radio already allows a considerable level of local media concentration. It seems to us that any local newspaper so dominant within its own area as to fall foul of that threshold should not also be allowed to control the local radio station. That was the point made by my noble friend Lord Stockton. The inclusion of national newspapers in the calculations would seriously dilute our proposals and remove in practice the protection of plurality at local level at a stroke.
In summary, we remain broadly satisfied that cross-media ownership restrictions as set out in the Bill are needed to limit local newspapers' capacity to buy into local broadcasters. However, we accept that some detailed improvements may be needed, and I hope that with those assurances and explanations of Government policy the noble Lord will feel that he now understands the position that we have taken in this regard.
Lord McGregor of Durris: My Lords, I thank the Minister for his remarks. I understand the position that he outlined, but I still believe that it is mistaken. I do not believe that we can increase local plurality of information by weakening one important group of providers of information. There is no doubt that the Government's proposals in the Bill will weaken the

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local press considerably. I am disappointed that the Minister felt unable to say that he would consider the issue further. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 101 not moved.]
Lord Inglewood Lord Inglewood moved Amendment No. 102:
Page 92, leave out lines 11 to 15.
On Question, amendment agreed to.
Lord Thomson of Monifieth Lord Thomson of Monifieth moved Amendment No. 103:
Page 92, line 17, at end insert—
("Public interest enquiries where paragraphs 4 to 8 otherwise apply
.—(1) The restrictions imposed by or under paragraphs 4 to 8 shall not have effect in relation to—

(a) the participation (direct or indirect) of any person in any other person, or

(b) in a case falling within paragraph 8, the control by one person of another,

unless the relevant authority has found that participation or control to operate or to be expected to operate against the public interest.
(2) Paragraphs 10 and 11 shall apply, with such modifications as may be necessary, for the purposes of sub-paragraph (1) above as they apply for the purposes of determining whether a situation within paragraph 9 operates or may be expected to operate against the public interest.").
The noble Lord said: My Lords, as I read the Marshalled List, this is the last amendment of substance and I will not detain your Lordships at this late hour. However, I cannot resist remarking that it is perhaps a reflection of a Broadcasting Bill which has not divided us on party lines that an amendment tabled in my name has attracted the support of s, Lord Harris of High Cross and Lord Pearson of Rannoch. I am fairly sure that this will be the only occasion on which the noble Lord, Lord Pearson, and I will be together on the same amendment. In the case of the noble Lord, Lord Harris, it is a different matter; he is an old Liberal and I am a new Liberal Democrat. I am professionally a regulator and he is a free marketeer of deep conviction. But we both come from around St. Andrews and we have not always disagreed on everything. Therefore I am happy to see his name attached to the amendment.
The amendment is a re-draft of one that I moved in Committee. I will not weary the House with the detail, but it has been re-drafted in order to meet the various objections which the Minister made to my original amendment. It also seeks to deal with some of the objections which the Minister made to the amendment proposed by my noble friend Lord Donoughue. My starting point was the belief that as regards the particular case of restrictions on national newspapers the right course was to apply a rigid public interest test as to whether ownership of a television contract by any of the great national newspaper groups should be acceptable rather than to apply the arbitrary numerical test which affects only two newspaper groups.
Your Lordships have been very patient with me during our proceedings on the Bill and as you will know I am not an uncritical admirer of Mr. Rupert Murdoch. However, I believe that a provision which discriminates
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simply on numerical grounds solely against the Daily Mirror and the Murdoch newspapers is the wrong way to approach the problem. As a matter of general principle, I believe it right to apply a rigid public interest test to any aspirations that either of those groups have for the ownership of television stations rather than have them put in this particular position.
That is the background to the amendment. It has been revised in a way which I hope will meet some of the Minister's objections. However, I recognise the fact that it does not meet the basic objection. I simply put it forward again as a matter of general principle. I beg to move.
Lord Harris of High Cross: My Lords, I am pleased strongly to support the amendment. The effect of this on the noble Lord, Lord Pearson, seems to have been to land him in hospital. He will no doubt read the debates with great interest. He asked me to apologise for being unable to be present.
I shall not go over the argument, but shall make two observations. First, this is a joint effort by the noble Lord, Lord Thomson, and me to rescue the noble Lord, Lord Donoughue, from having to put forward the awkward amendment raising the limit to 25 per cent. in order to keep Rupert Murdoch out of reach, but allowing the Daily Mirror under the wire. No doubt if the noble Lord, Lord Desai, were here he would join us in saying that the limits are arbitrary and of all arbitrary limits 20 per cent. is the wrong one to choose.
My second observation is that in a fair world we have the Minister on the run. A moment ago he made a fantastic emphatic appeal saying that television is most important and dominant; it rules the world; we must watch it; it has a unique influence and so forth. Now he says said that newspapers are also important and that we must not have more than a 20 per cent. control of newspapers because owners will control the world and distort our affairs. That is a narrow, blinkered, fearful, backward-looking attitude for a young man, as the Minister is. However, he has time to get better, which is one encouragement. I believe in the idea of moving from a 20 per cent. fixed limit on which you bang your head and must not go above, to having a public interest test, as suggested by the noble Lord, Lord Thomson of Monifieth.
Lord Colwyn: My Lords, I am delighted to be able to add my name to the list of supporters of the amendment. Like the noble Lord, Lord Harris, I have been inundated with briefs on the subject. However, I rejected them and turned to the Conservative Research Department brief which I found extremely interesting. Addressing the issue of media ownership, it summarises the changes by saying that,
"the main proposals on media ownership in the Bill will allow greater cross-holdings between newspaper groups, television companies and radio stations, at both national and regional levels".
It then covers other points such as the removal of the two-ITV-licence limit and the restrictions on local newspapers with over 50 per cent. of circulation having local television and radio holdings. It concludes that the ITC and the Radio Authority will continue to regulate

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television and radio and that existing competition legislation will apply to mergers involving broadcasters. It ends up highlighting the new public interest test,
"by which the regulatory authorities can assess and approve mergers or acquisitions between newspapers and television and radio companies. The public interest test will be based on whether the proposed merger poses a threat to diversity and on certain economic criteria".
That all seems very reasonable but, as I said in Committee, it does not mention that the public interest test does not actually apply to everybody. Noble Lords will be aware that some newspapers, by virtue of the fact that they are bought by more readers than others, will not have the privilege of being assessed in the light of the particular circumstances of their case. For the largest newspapers, there is an automatic and insurmountable prohibition on their serious involvement in mainstream television.
My research department brief sounds so obviously reasonable but beyond it there is that great anomaly. Could it be because those prohibitions were included as an afterthought? They certainly do not make sense when considered with the logical and eminently fair system of public interest tests. Getting rid of the 20 per cent. rule is not the same as saying that large newspaper groups will enter ITV. It is merely saying that if the newspaper group is to be refused entrance it should at least have its case properly looked at and the reasons given.
It is not possible to imagine the reasons which might be given—no doubt justifiably. Perhaps permission will be refused because of the newspaper's high market share; perhaps because it has more than, for example, 20 per cent. But at least the ITC will have looked at the issues, weighed them up, and come to the conclusion that the 20 per cent. level is the right one at that time. It may prefer 25 per cent. or 15 per cent. That is fine, but it should say so and rule the merger against the public interest. At least it should do the company the basic decency of listening to its arguments, giving them some genuine thought and giving reasons. That is natural justice at its most rudimentary and removes the capricious nature which otherwise characterises a single and apparently arbitrary percentage figure. Everyone will accept a well reasoned refusal. That is what this amendment is saying. I support it.
The Earl of Stockton: My Lords, the Government's assertion that those who sell more newspapers are less to be trusted seems rather dangerous. I can think of some very limited circulation broadsheets which I would regard as having a totally corrupt influence on the public consciousness. Noble Lords opposite might not agree with my particular choice. However, the concentration on numerical values rather than, as the noble Lord, Lord Thomson, said, having a genuine public interest test will lead the Government into some very strange waters.
Lord Inglewood: My Lords, in responding to the amendment, it may be helpful to go over the background before addressing the particular points raised by the amendment. In liberalising the restrictions on cross-media ownership we decided that there was a need for a public interest test to meet concerns about alliances
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involving newspapers and broadcasters. Uniting the leading sources of news with the most potent sources for influencing opinion through broadcasting carries the risk of concentrating too much influence in the hands of one organisation and, in our view, is therefore against the public interest. That is why we have set clear thresholds, which we ask Parliament to endorse, to prevent the most dominant newspaper groups from also becoming dominant broadcasters. I sense from the debate this evening that your Lordships do not take fundamental exception to that underlying principle. However, we recognise that there may be circumstances in which a merger between a newspaper group and a broadcaster could still represent a threat to plurality, even though it would otherwise be permissible under the thresholds.
The threshold indicates a level beyond which a newspaper's dominance makes it clearly undesirable for it also to have a leading position as a broadcaster. But there may be cases where a newspaper below the threshold proposes a particular acquisition which might be thought to imply excessive concentration. Hence the public interest test which acts as a kind of safety net, especially given that the current rules simply keep national newspapers out of terrestrial broadcasting (and local ones out of broadcasting in their area).
Plurality of ownership is the key to the test which we propose. However, in developing the public interest test, we realised that, while common ownership of a broadcaster and newspaper might threaten plurality, there may be other over-riding economic reasons for allowing the merger to proceed. For example, a radio station or a newspaper may not be economic as a going concern but may be able to survive if a merger is allowed to take place. In such an instance, the relevant regulator could conclude that the merger did not operate against the public interest, notwithstanding that it would threaten plurality of media ownership in the local market.
In practice we expect the regulators to presume that a merger between a broadcaster and a newspaper group, which is allowable under the thresholds, should proceed unless there is a clear threat to plurality. We think that the regulators will soon be able to determine whether there is such a threat which is worthy of further investigation by reference to the coverage areas and circulation areas of the services concerned. If they conclude that the matter warrants further investigation, they may call for such information as they think fit in order to make a decision. Where the ITC or the Radio Authority conclude that plurality is threatened, they may then extend their inquiries to consider economic matters and, where appropriate, seek the advice of the Office of Fair Trading. Inquiries under the public interest test will not normally need to be lengthy and elaborate. However, that does not mean that the findings will be less thoroughgoing than those of a more formal inquiry, as both the regulators are respected for their knowledge and understanding of the media industry. The regulator will inform the parties of its reasons for concluding that a merger would be against, or could be expected to operate against, the public interest. As with other

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decisions made by the ITC and the Radio Authority, such conclusions can be challenged in the courts by way of judicial review.
The amendments of the noble Lord, Lord Thomson, would introduce a much more formal procedure for applying the public interest test, based on the procedures operated by the Monopolies and Mergers Commission under the Fair Trading Act. The regulator, having made a finding on the public interest, would then be required to deliver a report to the Secretary of State to be published in such manner as she thinks fit. We see no reason to give the regulators the power to require the attendance of witnesses, take evidence on oath and order the production of documents on pain of a fine if the orders are not complied with and to require them to produce a report of their findings for publication. The Government's view is that such a quasi-judicial procedure is not appropriate, and, if adopted, would fundamentally alter the relationships between the Radio Authority, the ITC and the media industry.
The amendments would also extend the public interest test to participation in a broadcaster by a newspaper group by way of minor shareholding. In my view it would be wrong to include participation, as opposed to control, within the scope of the test. That would place more of a burden on the industry and the regulators. We intend to bring forward regulations to limit the ability of newspapers and broadcasters to exert a material influence over each other through the shareholdings in due course. That will be done through a replacement for the Broadcasting (Restrictions on the Holding of Licences) Order 1991. So there will be clear limits to minority shareholdings by interested players. We are also of course proposing a wide, de facto test of whether a particular body is exercising control of a licence holder. Given that, inquiry into the public interest in a shareholding seems to us unnecessary and bureaucratic.
The amendments of the noble Lord, Lord Thomson, would also change the wording of paragraph 11 of Part IV which sets out the matters which the regulators should take into account when applying the public interest test. I am concerned that the noble Lord's wording does not include a reference to "plurality". In our view, plurality of ownership is desirable as well as diversity of information sources.
It is perfectly true that a single owner may promote a variety of information sources, but that is not necessarily healthy in securing a range of different views. I am also concerned that the wording that the noble Lord proposes for paragraph 11(1)(b) is not as precise as the present draft which makes it clear that, in considering the economic benefits, the regulator must have regard to the holding of a licence by a newspaper proprietor as regards the holding of that licence by any other body. The wording used in paragraph 11 has been carefully drafted to keep the scope of the matters which the regulators should take into account as narrow and specific as possible.
What I have endeavoured to do in my remarks—I apologise to your Lordships for taking a little time about it—is to explain how we envisage the system will work
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and to set that against the consequences of the test of the noble Lord, Lord Thomson. I dare say the noble Lord will say that he prefers his way of dealing with these matters, but I wanted to make it clear to your Lordships exactly why we have adopted the position we have.
11.15 p.m.
Lord Thomson of Monifieth: My Lords, I am grateful to the Minister for dealing with my amendment at this hour of the night as carefully and as conscientiously as he has. I have listened to his words carefully and will read them even more carefully tomorrow. I am bound to say that if I had thought that including the word "plurality" in one of my amendments would have been acceptable to the noble Lord I would certainly have included it, but, even had I done that, I doubt whether the main thrust of what I seek to do is likely to be acceptable to the Government in their present mood. I still think, in relation to these two newspaper groups, that the present way of dealing with the question of where the public interest lies is a peculiarly arbitrary one. I listened carefully to what the noble Lord said. In the light of that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Donoughue Lord Donoughue moved Amendment No. 104:
Page 92, line 21, leave out ("20") and insert ("25").
The noble Lord said: My Lords, I sadly have to decline the kind offer of the noble Lord, Lord Harris, to rescue me from moving this embarrassing amendment. I am sorry about that as he and I have had much in common over the years. I have often felt that we both share dislikes. We are both on the liberal extreme wings of our respective parties; he is on the liberal extreme wing of the 19th century Liberal Party, and I of the 21st century Labour Party.
However, I shall continue as my amendment follows on from what went before; namely, dissatisfaction with the arbitrary limit that is imposed on national newspaper groups. My approach is to take the Government's arbitrary limit of 20 per cent. and to suggest my own arbitrary limit of 25 per cent., because if we are into arbitrary limits we might as well have a better arbitrary limit.
The reason behind this, as set out in Committee—there is no need to go over that in detail again—is that the Bill discriminates, ultimately, against one newspaper group. It appears to discriminate against two, but the largest newspaper group does, through its ownership, have a large television presence, whereas the Mirror Group, through an arbitrary limit, and an arbitrary definition of national newspapers—not including local content—is in practice excluded, certainly from terrestrial television in this country. We feel that that is wrong and unfair. It applies to the only major group that supports the Labour Party and so we feel it is doubly wrong: We suggest that that discrimination be removed.
I wonder whether the Minister has anything new to say on that since our exchanges at Committee stage, and any response to what I said about the legal situation. We

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are advised that this discrimination against the Mirror Group would not stand up in European law. I beg to move.
Lord Inglewood: My Lords, when the noble Lord, Lord Donoughue, first moved these amendments in Committee, he made it clear—as he has done this evening—that he was, above all, concerned about what he saw as discrimination against the Mirror Group. In withdrawing them then, he made it clear that he would return to this matter on Report, and has done so most eloquently.
On current circulation figures, the 20 per cent. national newspaper market threshold will, as the noble Lord said, prevent both the Mirror Group and News International, to which he alluded in passing, from applying to control licences to provide Channel 3, Channel 5, and national and local radio licences. National newspaper groups falling below the threshold will be permitted to control such services subject to the public interest test. As I said, our policy objective is to prevent those national newspaper groups which enjoy a dominant position in the market from also becoming dominant broadcasters and vice versa. National newspaper groups above the 20 per cent. threshold will be limited to a 20 per cent. stake in Channel 3 or 5 or radio licences because those are the most dominant forms of broadcasting currently available. Approximately 98 per cent. of all homes have access to free-to-air Channel 3 services whereas only 20 per cent. of homes have access to cable and satellite broadcasts.
Let us put this into perspective. I emphasise that the opportunity still exists for dominant newspapers to become broadcasters. All national newspaper groups will be free to control licences to provide domestic and non-domestic satellite services, local delivery services, licensable programme services, digital multiplex services and digital terrestrial television programme services. That is the current position. It may be helpful if I explain in some detail the thinking behind our decision to set the thresholds at 20 per cent. I believe that that is the question the noble Lord, Lord Donoughue, wished me to address.
The 20 per cent. national market share threshold for newspapers was set after careful consideration of the market. It is not a figure that has simply been plucked out of the air, nor has it been chosen with the deliberate intention of penalising the Mirror Group.
As a result of the consultation on our media ownership proposals, the Government concluded that there remains the need for separate media ownership controls, in addition to normal competition legislation, in order to protect plurality. A 25 per cent. threshold was judged to be too high, as that is the level at which competition law would normally bite. By contrast, 15 per cent., which is the level at which the market limits are set for television and radio, was judged to be too low, because while the opportunity to become a broadcaster is restricted by spectrum scarcity, no such hurdle faces those who wish to become newspaper proprietors.
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Analysis of newspaper market share figures shows that there is a wide difference in share of circulation between the larger newspaper groups and the medium-sized groups (some 9 per cent. in the case of the Mirror Group and United News and Media). We therefore set the threshold at a level which distinguished clearly between those groups with a large share of the newspaper market. Circulation and audience based measures are used in assessing market share because these best reflect plurality and the ability of individual media groups to influence opinion. No account is taken of revenue measures. These tend to reflect market power, which is subject to separate control through competition legislation.
Because national newspaper groups having 20 per cent. or more of the national market have such a significant share of the overall newspaper market (including both national and local newspapers) those publications tend to have a much higher circulation in the regions than many local papers, whose focus is on that specific region. In preparing our proposals, the Government commissioned independent research from National Economic Research Associates (NERA). This reveals that if the share of national press and share of regional press is calculated for each major newspaper group at national level and for the top four newspaper companies in each ITV region, both the Mirror Group and News International come out among the top four newspaper companies in every single ITV region. The only regional titles published by the Mirror Group are its Scottish titles, the Daily Record and Sunday Mail. News International does not publish any regional titles. Thus the respective shares of these two groups at regional level is made up almost exclusively of national titles. It is this degree of influence that caused us to decide that such dominant newspaper groups should not also be allowed to dominate the more influential areas of broadcasting.
It will be clear from what I have said that it is not just newspaper groups having 20 per cent. or more of national newspaper circulation that are prevented from owning Channel 3 companies; others are also caught by the provisions which are aimed at protecting plurality at local and regional level. It is an important point when considering the possibility of acquisition of Channel 3 licences. We do not consider that it is appropriate to rely on the public interest alone to regulate cross-ownership between newspapers and broadcasters. The Government believe—it is a point I made in response to an earlier amendment—that there must, as a matter of public policy which it is right for Parliament to decide, be a cut-off point beyond which a newspaper group is judged to be too large to be allowed to control Channels 3 or 5 or national or local radio licences.
Finally, the noble Lord returned to the point he made in Committee that the Mirror Group has been advised that the restrictions in the Bill could constitute an infringement of the group's right to freedom of expression under Article 10(1) of the European Convention on Human Rights. I should like to reassure the noble Lord that the Government are seeking legal advice on this point and I hope by the time of Third Reading to be able to let him know the outcome.

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I simply wish to say that the threshold was determined solely on market share considerations. I must emphasise that no account was taken of the editorial direction or nature of the products published by individual newspaper groups, not least because they may come and go. Other newspaper groups which may be regarded as being "opposition media", such as the Guardian, are not caught by the provisions because their market share is below the 20 per cent. threshold. But newspapers published by News International, for example, are caught because they are above the 20 per cent, threshold.
The Government have concluded—and this is the crux of our argument—that in order to protect plurality in the media there is a continuing need for specific regulations governing media ownership beyond those which are applied by general competition law. But there is a need to liberalise the current ownership regime. Our proposals will set market limits for holdings in television and radio. Holdings in television will be limited to 15 per cent. of the market, measured by audience share, and in radio to 15 per cent. of the available radio points.
There is no market share limit for newspapers, but we have decided that it is appropriate to set a threshold which will limit the ability of the most dominant newspaper groups to acquire holdings which would allow them to become dominant broadcasters. After careful consideration of the market, this threshold was set at 20 per cent. of national newspaper circulation. Similar controls apply at local level whereby local newspapers having more than 20 per cent. of circulation in the relevant area are limited to a 20 per cent. stake in regional Channel 3 licences and local radio licences. We believe that those thresholds strike the right balance and that is why we have adopted that policy.
Lord Donoughue: My Lords, I thank the Minister for explaining the Government's position. I do not accept it on behalf of the Mirror Group which I still feel is cornered in a way that no one else is.
On the legal question, I was interested in what he had to say, and at Third Reading we shall listen with great interest to his report on what legal advice he receives. If he gets legal advice similar to that which we have had—and I am interested that the noble Lord has seen it, I am sure he read it in a controlled environment—presumably the Government will have to think carefully about not proceeding further along those lines. Another newspaper group will be equally interested. Presumably we would not wish to waste Parliament's time further on something that is legally fragile.
Lord Inglewood: My Lords, with the leave of the House, I have been in such a controlled environment that I do not believe that I have seen the legal opinion to which the noble Lord referred.
Lord Donoughue: My Lords, if the Minister would accept reading it in a padded cell with three guards, I should be happy to provide him with a copy. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
11.30 p.m.
Lord Harris of High Cross Lord Harris of High Cross moved Amendment No. 105:
Page 92, line 21, leave out from ("shall") to second ("a") in line 22 and insert ("control").
The noble Lord said: My Lords, Amendment No. 105 goes with the others grouped with it on the Marshalled List. I would rather move an amendment to my local train timetable at this time of night, so I shall be brief. If the noble Baroness, Lady Dean, will avert her ears, I shall proudly repeat my declaration of interest as an independent national director of Times Newspapers. I have no direct financial or other interest in BSkyB, except that last week, carried away by the debate which I had been listening to in this House, I signed up. I can only say that if you have not got BSkyB you have not lived. Last weekend I had a new experience with marvellous old films, starting with "Lost Horizon" which I had not seen for 63 years.
The purpose of the amendments is to prevent BSkyB being excluded from control of a terrestrial TV company because it is "controlled" by a newspaper, News International, with a shareholding of more than 20 per cent.
The Green Paper is full of encouraging noises. It talks of changing environments; exciting possibilities; breaking down the traditional distinctions between the various media; information technology, and so on. It acknowledges that barriers are already crumbling, and points to a unique opportunity to evolve in previously unthought-of ways. That is pure Hayekian, spontaneous evolution. It talks of a market-place in which risks and rewards are high, both for individual firms and national competitiveness. That was the Green Paper.
Nowhere does the Bill fall further short of this high promise than in Schedule 2, pages 93 to 96, before us now. As I am instructed, this legal gobbledegook has the effect of constructing a wholly artificial barrier to obstruct BSkyB as pioneers of satellite broadcasting—and much else—from enjoying the new freedoms in cross-media ownership conferred on others by the Bill. It achieves that wretched exclusion by a wholly contrived device which I believe mocks common sense and legal logic. In a Gilbertian twist worthy of the hard-pressed Lord Chancellor in "Iolanthe", ownership of more than 20 per cent. of the shares of a satellite by a newspaper group is deftly defined as "control" and used to exclude the offending party from acquiring one of the multiplying terrestrial TV licences.
I really do regard this part of the Bill as an abomination. It is a not very cunning device, aimed like a sniper's rifle at News International, which owns 40 per cent. of BSkyB. We should thank heavens for Sky's pioneering enterprise in all kinds of ways, and even give a nod—which I have heard from the noble Lord, Lord Thomson, and others—in the direction of Murdoch's enterprise for gambling his firm (in American parlance, "betting the farm") on satellite broadcasting when he had not sold a single dish or signed up a single subscriber. Instead of any kind of gratitude, the Bill defines 20 per cent. as "control" in order to ostracise this most galvanising, enterprising force in the television revolution.
We have been over this, and I shall be very brief. It is understood that News International does not, and cannot, control Sky. It is understood that the other main shareholders are Granada, Pearsons and BSB and 25 per cent. are traded in the open market. Stock Exchange rules, etc., require that the company should operate independently of any shareholder with 30 per cent. or more of the voting rights. There is a whole rigmarole like that on which I could keep the House awake about the careful rules and defined issues that should be brought before a quorum at which a majority are non-News International directors. There are 18 directors, and only five are appointed by News International. One could hardly secure News International, in the person of Rupert Murdoch, more from dominating this situation without putting him into a straitjacket or putting him in irons. There is no substance to the fear that there is control. Yet it is used, uniquely, to exclude BSkyB.
I ask the Minister, even at this late hour, whether he will reconsider this excess of regulatory zeal, and think of the benefits that have been derived from this great satellite development—in employment, technical innovation and foreign earnings; in opportunities for new, independent programme makers; although not enough, according to the noble Lord, Lord Thomson—in unrivalled support for the British film industry, the consumer electronic sector, with PACE, the de-crypter, providing one in three satellite receivers in Europe; and not least in the marketing of dishes and the management of subscribers.
All of this is very innovative. My advocacy, I hope noble Lords will accept straightforwardly, is not based on the petty interests of a director of Times Newspapers, but rather on my experience as a lifelong, independent economist—winning adherents, I may say, in all parties for Mr. Blair's new-found enthusiasm "for a dynamic market economy". My conviction is that economic and technical progress throughout history owes more than is commonly understood to a combination of exceptional talent, dedication and courage of a rare order. So far—it may be ripe for a fall—BSkyB has turned out to be a conspicuously successful examplar of those qualities. I believe that we should have more confidence in shaping the future by market forces, which is only another way of saying that we should allow the future to be shaped by the free play of consumer choice in both programmes and the means of delivery. I beg to move.
Lord Inglewood: My Lords, if I understood him, the gist of the noble Lord's argument was that certain barriers had been put in the way of BSkyB controlling the Channel 3 licence because BSkyB itself was controlled by News. I understood that that was not in fact the case, along the lines which the noble Lord described.
The point about the relationship between BSkyB and Channel 3 licence holding is that, for the reasons I described earlier (which I accept that the noble Lord, Lord Harris, does not accept) we have stipulated that where a newspaper group has more than 20 per cent. of national newspaper circulation it may not have more than a 20 per cent. interest in the Channel 3 licence holder. That reads across through other organisations in which it has more than a 20 per cent. share.
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The point about BSkyB and Channel 3 licences is not that News controls BSkyB. As I explained, I understand that BSkyB is not controlled by News. The point is that BSkyB is 40 per cent. owned by News. That is the reason whereby it falls foul of the thresholds that we have put into the Bill.
Lord Harris of High Cross: My Lords, I withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Inglewood Lord Inglewood moved Amendment No. 106:
Page 92, leave out line 25.
The noble Lord said: My Lords, as the Bill currently stands, a newspaper proprietor with 20 per cent. or more of the national market is restricted to a 20 per cent. stake in a corporate body which holds a licence to provide a domestic satellite service. A reciprocal restriction is applied to the stakes that such a licence holder may have in national newspapers. These amendments remove an unnecessary barrier to the potential development of domestic satellite services. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 107 to 112 not moved.]
Lord Inglewood Lord Inglewood moved Amendments Nos. 113 to 115:
Page 93, line 7, leave out from second ("a") to end of line 9 and insert ("local radio service").
Page 93, leave out lines 10 to 13.
Page 93, leave out line 26.
On Question, amendments agreed to.
[Amendment No. 116 not moved.]
Lord Inglewood Lord Inglewood moved Amendment No. 117:
Page 93, leave out lines 34 to 38.
On Question, amendment agreed to.
[Amendments Nos. 118 to 121 not moved.]
Lord Inglewood Lord Inglewood moved Amendment No. 122:
Page 93, leave out lines 47 to 51.
On Question, amendment agreed to.
[Amendments Nos. 123 to 126 not moved.]
Lord Inglewood Lord Inglewood moved Amendments Nos. 127 to 129:
Page 94, line 45, leave out from ("a") to ("may") in line 46 and insert ("local radio service").
Page 94, line 47, leave out from ("newspaper") to end of line 48.
Page 94, leave out lines 49 to 51.
On Question, amendments agreed to.
[Amendments Nos. 130 to 138 not moved.]
Baroness Trumpington: My Lords, I beg to move that further consideration on Report be now adjourned.
Moved accordingly and, on Question, Motion agreed to.
House adjourned at a quarter before midnight.