HL Deb 07 March 1996 vol 570 cc418-82
The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood)

My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.—(Lord Inglewood.)

On Question, Motion agreed to.

Clause 66 [Variation of regional Channel 3 licence following change of control]:

Lord Trefgarne moved Amendment No. 139: Page 56, line 40, at end insert— ("() On being notified of a prospective change of control, the Commission shall investigate the prospective owner (or if a relevant change of control takes place, the new owner) who shall be required to provide such information to the Commission as is requested by the Commission.").

The noble Lord said: My Lords, my noble friend Lord Kinnoull had intended to be here today but for very understandable reasons is unfortunately unable to do so and has asked me to speak to this amendment on his behalf.

The amendment is designed to empower the ITC to investigate potential owners and to ensure that prospective owners are obliged to provide full information to the ITC. The amendment would also ensure that the ITC has similar powers to investigate and require information from any new owner should no notice of control be given. I hope your Lordships agree that this is an appropriate addition to the Bill. I beg to move.

Lord Prys-Davies

My Lords, I support the amendment. In Committee there was a general welcome for Clause 66, as it is now, but it was thought at the same time that the safeguards which are in the clause should be strengthened. The safeguards in subsections (3) and (4) are triggered when it appears to the commission that the relevant change of control is or would be prejudicial. It seems to us that there is no great difficulty when a change of control is prejudicial. The facts should speak for themselves. But what information would have to be before the commission to enable it to form a view as to whether the proposed change of control would be prejudicial? To assist the commission in that situation, we believe that it should be authorised to obtain all relevant information from the proposed new owner. Under the 1990 Act it already has the power to requisition information from the holder of a licence. This amendment would extend the power and enable the commission to obtain the information from a proposed new owner.

Lord Forbes

My Lords, I welcome Clause 66 of the Bill. It will protect regional Channel 3 services in the event of a change of ownership. This clause quite definitely should be strengthened so as to empower the commission to investigate any prospective new owner. I believe that the amendment should give strength to the commission in protecting regional services. It has been demonstrated time and again that it is the regional services that people want. This amendment should ensure that people do not suffer any loss of Channel 3 regional service if there is a change of ownership. I therefore support the amendment.

Lord Thomson of Monifieth

My Lords, we on these Benches support the amendment. This matter was gone into thoroughly at the Committee stage and the Minister was forthcoming in his reply to the discussion. We all welcome the clause which the Government have tabled but feel that the regional character of ITV is of such importance that there are various ways in which the clause can be strengthened beyond peradventure. This amendment is designed for that purpose.

Lord Inglewood

My Lords, while I sympathise with the purpose of the amendment I doubt whether it is necessary or helpful absolutely to require the ITC to investigate the new owner where a change of control is proposed. We are, after all, talking about a situation in which the prospective owner may be very well known in great detail to the ITC by virtue of being an existing and longstanding licence holder itself. Moreover, it may for business reasons be of the essence that a change of control which everyone agrees is in the public interest should proceed. So I hesitate over the first part of the amendment.

Nevertheless, I sympathise with the principle that in coming to decisions whether or not to act to use its powers under the clause the ITC should have available to it all relevant information and those concerned should be required to provide that information. I should therefore like to consider further whether the ITC already has sufficient powers, as indeed the noble Lord, Lord Prys-Davies, pointed out, or whether something like the second half of the amendment needs to he added to the Bill. If it does, the Government will introduce an amendment for that purpose. I very much hope that in the light of that assurance my noble friend will feel it is not necessary to press the amendment at this stage.

Lord Trefgarne

My Lords, I think I am right in understanding that my noble friend accepts the principle of the amendment but would like to look at its wording and has undertaken to bring forward an appropriate amendment with the right wording at Third Reading. On that assumption, I am happy to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Prys-Davies moved Amendment No. 140: Page 57, line 12, leave out ("included") and insert ("originating from each regional services area and offered for inclusion").

The noble Lord said: My Lords, I am comforted by my understanding that the commission may consider that there is merit in this amendment. I hope therefore that I can deal with it briefly. If regional broadcasters are to be able to continue to make their contribution to the diversity of British society it is essential that they should be able to continue to offer their productions to the Channel 3 network. Of course, it would be for the network to accept or reject what is being offered. Nevertheless, the commission ought to he satisfied that they can have access to the network. To the best of my recollection, at Cotnmittee stage no Member of the Committee spoke against a similar amendment. Indeed, the noble Lord the Minister promised that the department would consider carefully what had been said. I beg to move.

Lord Inglewood

My Lords, an amendment similar to this one was tabled by my noble friend Lord Crickhowell at Committee. I have discussed the issue with the Independent Television Commission. We believe that the correct formulation is to protect the quality and range of programmes a regional service makes available to the ITV network. This includes the idea of a continuing capacity to provide programming, while still keeping reasonably close to the programmes viewers are actually able to see on the network. We intend to bring forward at Third Reading a government amendment which, while it may not reflect the wording of this amendment exactly, will mirror it closely and protect levels of programming made available to the network by Channel 3 companies. I very much hope that this will provide the assurance that the noble Lord seeks.

Lord Prys-Davies

My Lords, I am very grateful to the Minister for his response and, in reliance on it, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Kirkhill moved Amendment No. 141: Page 57, line 21, leave out from ("service") to ("a") in line 22 and insert ("having regard to").

The noble Lord said: My Lords, I believe we now know that, as a result of the Minister's very careful explanation during Committee stage, Clause 66 was introduced into the Bill—the noble Lord accordingly received suitable congratulations—to ensure that the ITC can protect the regional character of the independent television system. This clause enables the ITC to amend regional Channel 3 licences, following a change of control, to ensure that the regional character of the service is not diminished.

Clause 66 also allows the ITC to place additional requirements on a licensee if, for example, it appears to the commission that the merger would be prejudicial to the quality or range of regional programmes or would result in a significant reduction in either the amount of regional programmes, or the use of offices or studios in that particular region. In addition, it safeguards those obligations which were undertaken by Channel 3 licensees at the time that the licences were awarded.

It is vital to the valued regional character of independent television that such obligations should not be diluted by merger or acquisition. However, in my view there are limitations inherent in the clause as it stands. Certain restrictions are placed on the circumstances in which the ITC can act which I believe are prejudicial to viewers' interests.

At the heart of Clause 66 is the concept that any change in control should not be prejudicial to the regional service. However, subsection (4) of that clause limits the actual interpretation of "prejudicial" to represent only "a significant reduction" in the regional service. It is surely the case that the definition of "prejudicial" must be allowed to capture a wider set of circumstances. It is difficult to anticipate what effect future mergers may have. There may well be repercussions which do not fit the label of "significant reduction" but are nonetheless unwelcome. In my view, the regulator ought not to be fettered in such a way, but should be allowed flexibility to apply his reasoned judgment on a case-by-case basis. It is on that basis that I move this amendment. I beg to move.

Lord Thomson of Monifieth

My Lords, I am happy to support the noble Lord, Lord Kirkhill, in this amendment, which is one of the more important amendments seeking to strengthen Clause 66. The noble Lord has rehearsed the arguments pretty thoroughly. My own feeling is that the phrase "significant reduction", which is on the face of the Bill at present, is too high a hurdle for the ITC to perform its responsibilities in this matter. It implies that the change of service will need to be a fairly major one before the ITC can act, otherwise it might he vulnerable to legal challenge. Moreover, no such hurdle is applied to the aspects of the service referred to in subsection (3) of the clause. For that reason the elimination of the phrase "significant reduction" and the insertion of the words proposed in the amendment will he a very significant and necessary strengthening of the purposes of this clause.

Lord Prys-Davies

My Lords, this amendment is grouped with Amendment No. 141A, which is in my name, because it is connected with the same subject matter. However, with the leave of the House, I do not propose to move my amendment as the wording of Amendment No. 141 is preferable to my own.

Lord Inglewood

My Lords, in considering these matters I understand that those promoting the amendment are seeking to remove the provision that the ITC must perceive a threat to regionality by foreseeing a significant reduction in regional programming or the use of regional personnel and resources in order to vary the licence conditions to protect them. It is replaced by a provision which will require the commission simply to perceive a threat to regionality, and that is defined in terms of hours of regional programming or the use of regional personnel and resources.

I understand that the noble Lords are seeking to prevent the ITC having to make a judgment which may be challenged about whether and when a new controller may attempt to run down the regional services. However, what concerns me is that I do not believe that the amendment, as proposed, makes its position any less open to challenge. If anything, it makes a challenge more likely because it is less transparent. I do not quite understand how we can see a change as being prejudicial to regionality in terms of these things unless we see grounds for expecting a reduction to occur.

There are concrete, measurable aspects of regionality. It still seems to me appropriate, in spite of the noble Lord's persuasive arguments, to refer to a likely reduction in them as a trigger for the commission to act. Indeed, it seems logical to say that a threatened reduction is the trigger because the protective licence variation which meets the threat is likely to take the form of requirements in terms of the numbers of hours of programming or the percentage of personnel involved. I hope that I have explained the Government's attitude to Amendment No. 141.

I understand that the noble Lord, Lord Prys-Davies, does not propose to move Amendment No. 141 A, which seems to us to be a helpful amendment. We agree with it because, on reflection, a reduction is inherently sufficiently significant if it is such that it prejudices the regional character of the service. I am not entirely clear what the appropriate procedure is in these circumstances.

Lord Kirkhill

My Lords, with the leave of the House, perhaps I may intervene. In the Minister's response to my Amendment No. 141 he restated the position that he outlined in Committee so I am not totally surprised. I shall withdraw my amendment at this stage and then leave the matter to the House.

Amendment, by leave, withdrawn.

Lord Prys-Davies moved Amendment No. 141A: Page 57, line 22, leave out ("significant").

The noble Lord said: My Lords, I was immensely impressed and persuaded by the Minister's speech on Amendment No. 141. As I have already spoken to Amendment No. 141A, I beg to move.

Lord Trefgarne

My Lords, perhaps I may advise my noble friend the Minister that I, too, prefer Amendment No. 141A and hope that the House will agree to it.

Lord Inglewood

My Lords, I understand that it is normal from the Dispatch Box for the Government to explain that they would like to take an amendment away to fine-tune the drafting. However, on this amendment, parliamentary counsel feel that nothing extra could possibly be done with it.

On Question, amendment agreed to.

[Amendment No. 142 not moved.]

Lord Prys-Davies moved Amendment No. 143: Page 57, line 35, at end insert (", including those in positions which are designed to exercise editorial and management control of programmes in the areas,").

The noble Lord said: My Lords, it is important that the commission should be satisfied that regional programmes will continue to be made by people who live in that region and who have a thorough knowledge and full understanding of the interests and the views of the people there. It is that combination of knowledge and relationship with viewers which ensures that regional productions identify with, and reflect, the genuine interests of the region.

I believe that the underlying idea was, and is, acceptable to the commission. Indeed, in Committee the Minister said on 13th February, at cols. 590 and 591 of Hansard, that he was also sympathetic to the idea but that it was probably encompassed within the wider concept of "making" a programme in what was then Clause 63(4)(b). However, the Minister promised that he would discuss the matter with the commission to see whether it would welcome clarification. The only question, therefore, is whether the amendment is necessary. In our submission, the amendment provides important clarification. I hope therefore that it will be acceptable to the Minister.

Lord Inglewood

My Lords, in Committee various noble Lords, including the noble Lord, Lord Prys-Davies, proposed adding to subsection (4)(c) of the clause which provides for the protection of levels of use of regional employees and offices as an important facet of the licence holder's regionality. If I understood the provisions correctly, they were aimed at preventing a company following the letter of the provision by using regional employees but avoiding the spirit of the clause and damaging regionality by not using those employees in posts where they would have an effect on the content and choice of programming.

As the noble Lord explained, the amendment is similarly intended to close that perceived loophole. I said in Committee that I would consider what might be done to strengthen the protection of regionality in subsection (4) and I have done so. I have also discussed the provision with the commission and found it sympathetic to the noble Lord's point. The Government therefore propose to table an amendment to Clause 66(4) on Third Reading similar in purpose and wording to that put forward by the noble Lord. In the light of that assurance, I hope very much that he will not pursue his amendment.

Lord Prys-Davies

My Lords, in the light of what the Minister has said I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Kirkhill moved Amendment No. 144: Page 57, line 41, at end insert— ("(4A) Without prejudice to the generality of subsections (3) and (4), the Commission may also vary the licence, by a notice served on the licence holder, so as to give effect to any proposals made or assurances given in relation to or in connection with improving the service by the licence holder or by any person having or proposing to acquire control over the licence holder in connection with the relevant change of control.").

The noble Lord said: My Lords, I understand from the grouping and I assume that the Minister agrees—that is, if he has the same grouping, which is not always the case—that we are now considering Amendments Nos. 144 to 152, also taking in Amendment No. 155. It is on that basis—

Lord Inglewood

No.

Lord Kirkhill

My Lords, let us be clear. That is what I have in front of me.

Baroness Trumpington

My Lords, there has been a rearrangement of the groupings. Amendment No. 155 should be grouped with the following group of amendments and not with Amendment No. 144 et cetera.

Lord Trefgarne

My Lords, with the leave of the House, I hope that Amendment No. 155 will be taken separately.

Lord Kirkhill

My Lords, I am always subject to the will of the House and I am delighted to agree with everyone else. My grouping included Amendment No. 155 with Amendment No. 144. But there you are. I am usually incompetent about these matters of fine detail—and about many other matters which are not of fine detail.

I must apologise to your Lordships—or continue to make some apology—because I tabled Amendment No. 148 in error. I was trying to refine Amendment No. 144 and did not mean to include Amendment No. 148 on the list. I apologise to both the Minister and your Lordships.

The Bill provides for circumstances in which stronger companies could develop within Channel 3 and so benefit the viewer. A consolidated, stronger system might well offer added benefits for regional programming and production as well as for shareholders. Indeed, there is a precedent. In 1993 the merger of Yorkshire Television and Tyne Tees Television resulted in a completely new sub-regional service for viewers broadcast from a new studio near Middlesbrough.

As I read the Bill, it would not be open to the ITC to secure such improvements for the viewer as a result or consequence of a merger similar to that I have just described. Under Clause 66(6) the ITC cannot vary the licence to include any additional requirements. In other words, the ITC can ensure that viewers do not lose an important regional element they already enjoy but it cannot go further whatever the merits of the case.

My amendment would enable viewers to share the benefits brought about by such a merger. The ITC should be given such powers to enable it to secure improvements to the regional service so that viewers, as well as shareholders, share the benefits of greater industrial and commercial strength. I beg to move.

The Chairman of Committees (Lord Boston of Faversham)

My Lords, in view of the fact that Amendments Nos. 147 and 148 have been spoken to, I should point out to your Lordships that if Amendment No. 147 is agreed to, I cannot call Amendment No. 149, and that if Amendment No. 148 is agreed to, I cannot call Amendment No. 149 on that account also.

I should also indicate to your Lordships, for the purpose of clarification, that the noble Baroness, Lady Trumpington, is right. A note was circulated recently—it cannot have reached the noble Lord, Lord Kirkhill—saying that Amendment No. 155 is no longer grouped with this series of amendments. It will, in fact, be called separately.

Lord Thomson of Monifieth

My Lords, once again I am happy to support the noble Lord, Lord Kirkhill, in his amendment. As I have before me almost exactly the same brief as the noble Lord, I shall not take up time by repeating his arguments. He put the case clearly and forcefully. Amendment No. 144 is important. It gives the ITC the right to seek improvements when there are changes of control. I am happy to support it.

4 p.m.

Lord Inglewood

My Lords, the Government take the view that these amendments are unnecessary. In our view, Amendment No. 144 undesirably blurs the focus of Clause 66 on the key issue of protecting regional broadcasting which is the purpose of the clause.

If there are other issues relating to programming quality which the ITC wishes to consolidate in the licence, it can always resort to its general powers under Section 3(4) of the 1990 Act to vary the conditions of the licence if it wishes to do so. The new powers in Clause 66 are designed specifically to focus on something which is of particular importance at the time of a prospective takeover; namely, the possibility that existing levels of regional programming over and above what is required may be jeopardised. There is specific reason to suppose that greater consolidation within ITV might otherwise lessen its regional character and therefore particular reason to concentrate relatively narrowly on the regional issues within Clause 66 as it is currently formulated.

As to enhanced licence conditions beyond existing performance, they should be possible only if they are entrenched with the new licence holder's consent. We believe that the amendments subtract from, rather than add to, the effectiveness of the clause. For those reasons, we cannot support them.

Lord Kirkhill

My Lords, this was a basic disagreement which existed across the Floor of the House at an earlier stage of the Bill. My view, which I have expressed via my amendment, is that Clause 66, although entirely desirable, as I said earlier—and I welcome its inclusion in the Bill—nevertheless needs to be strengthened because the issue of regionality must be embedded more firmly within the clause. Of course the Minister says that he will not give way on this issue. I do not intend to divide the House. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 145 to 148 not moved.]

Lord Trefgarne moved Amendment No. 149: Page 58, line 5, leave out from second ("the") to end of line 6 and insert ("relevant period").

The noble Lord said: My Lords, I move the amendment on behalf of my noble friend Lord Kinnoull, and I shall speak also to Amendment No. 154. The amendments seek to establish that the existing quality and quantity of programmes, together with the infrastructure which provides for them, are the benchmark for any licence variation imposed by the ITC. If the benchmark is to be the level of existing services rather than a licence minimum, it is crucial that there is a fair definition of existing services.

The underlying principle behind the amendments is to ensure fairness to all parties who may be involved in a potential change of ownership. Hence the 12-month time period rather than a snapshot period; for instance, just before advance notice of a bid or at the time of change of control, which could enable the incumbent licence holder to raise the regional programming to an unrealistic level in the short term to deter a potential takeover. Such an action would be unfair and anti-competitive. I hope therefore that your Lordships will agree to the two amendments. I beg to move.

Lord Thomson of Monifieth

My Lords, this is one of the important amendments being proposed to strengthen the clause. The clause as it stands sets out the benchmark period for setting new licence conditions as the period in subsection (6): immediately before the relevant change of control". That would mean that a regional service could be wound down to the minimum required by the licensee before the change of control takes place. The ITC could then be forced to accept the minimum provision.

If the Minister had been a little more forthcoming on the previous amendment—I am sorry that he was so negative with regard to the deletion of subsection (6)—that would have solved the problem. The positive step to take is the one proposed in the amendment; that is, that the proper benchmark should not be whatever is the snapshot, as the noble Lord described it, immediately before the change of control but the actual situation over a reasonable period. A reasonable period is a period of 12 months. Twelve months is in fact the usual period over which the ITC assesses programme performance, and so it is sufficiently long to allow for variations in the pattern of scheduling. I hope that we will receive a more positive response from the Minister on this amendment than on the previous one.

Lord Cullen of Ashbourne

My Lords, I support the amendment so ably moved by my noble friend Lord Trefgarne and spoken to by the noble Lord, Lord Thomson of Monifieth. I hope that your Lordships will support it.

Lord Inglewood

My Lords, as your Lordships will know, an amendment similar to this one was tabled in Committee by the noble Lord, Lord Kirkhill, and I was not then sympathetic to it. I believed that there was a danger, in assessing the licence holder's performance over a 12-month period, rather than in the period "immediately before" a change of control, of failing to take account of the current position—the one from which the new controller would have to take the licence holder forward. I thought that if there had recently been a diminution in performance because of some outside factor, it would not be fair to require the new controller to achieve levels no longer achieved. Correspondingly, I thought that if there had recently been improvements to the regional service, assessment of a 12-month period might prevent their being consolidated in the licence.

However, I have given the matter further consideration and have discussed it with the ITC. It is not clear precisely how performance over 12 months would be assessed. Would the commission take as its reference point the peak of performance in the period, or the average, or take into account seasonal variations? In some ways that imprecision is also the strength of such a proposal. It allows the commission to look at performance over a year and judge what standard it would be fair, given all the circumstances, to preserve through varied licence conditions. I am now persuaded that allowing the commission to look at a 12-month period when assessing the performance of the licence holder will give it flexibility to set conditions which best reflect what should be expected of a new controller. I accept, in principle, my noble friend's amendment and the Government will bring forward its own amendment at Third Reading to include this provision.

Lord Trefgarne

My Lords, I am most grateful to my noble friend. On that basis, I am happy to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 150 to 152 not moved.]

Lord Trefgarne moved Amendment No. 153: Page 58, line 20, leave out from ("is") to end of line 22 and insert ("designed to be of particular interest to and to be first broadcast for persons living within the area for which the service is provided (or any part of it), and which complies with and is no less comprehensive than current directives issued by the Commission in accordance with its powers under this Act.").

The noble Lord said: My Lords, circumstances have changed since a regional programme was defined within Section 16 of the 1990 Act. There is a definition contained within the ITC's invitation to apply for a licence upon which the ITC has since expanded. It is my understanding that that may be updated in the near future.

However, I am told that the ITC recognises that an inadequate definition in the Bill is undesirable and believes that Section 4 of the 1990 Act can set down wider definitions as a condition of the licence. However, that has not been tested. Furthermore, I believe that new legislation should be clear and unambiguous. The purpose of the amendment is to encompass in legislation any definition directed by the ITC to ensure that there is no ambiguity or inconsistency. I beg to move.

Lord Prys-Davies

My Lords, I support the amendment. It is really about the definition of regional programmes under subsection (10). It occurs to many of us that the definition is inadequate and possibly defective. It is inadequate because the only criterion which has to be satisfied is that the programme should be: of particular interest to persons living within the area". That pitches it pretty low. It may be defective as it does not address the position where there are well-defined territories within the television region which possess significantly different cultural identities. I am thinking of the HTV area in Wales and Bristol. It provides programmes for two separate and significantly different areas with different cultures and backgrounds. I believe that almost by definition some of the programmes will not be of interest to all the people living in that region. Amendment No. 153 seeks to correct the deficiency by inserting "any part" into the definition.

I am mindful of the fact that the Minister, who has been helpful and constructive throughout the stages of the Bill, has always placed an emphasis on the need to ensure that the commission has flexibility. He is against introducing too much rigidity into the Bill. We have taken full note of that advice. This definition offers the combination of a broad statutory definition while at the same time giving the commission the right to exercise its broad judgment and to define what it means in further directives. We believe that that combination is the best approach to the problem and it gives me great pleasure to support the amendment.

Lord Forbes

My Lords, I believe that the definition is far better than that contained in the Bill. I support the amendment.

Lord Inglewood

My Lords, we have no quarrel with the basic purpose of this amendment. We are happy to consider further with the ITC how the definition of "regional programming" might be improved. We shall briefly set out here what seem to us to be the key considerations in the matter.

Perhaps I may begin by saying that not as much turns as it might on what falls within the definition of a "regional programme". This is because Clause 66(3)(b) also includes within the protection of the new ITC powers other programmes which contribute to the regional character of the service. Nevertheless, particularly as regards measuring the extent to which regional programmes are made within the region, it is important that the definition of "regional programme" is right.

It seems to us that this amendment is probably on the right lines in including both a general statement of the principle of what a regional programme is, which appears on the face of the statute and cannot be tinkered with, and a capacity for the ITC in applying the Act to interpret that general provision in detail. Our two principal reservations about the precise formulation put forward in the amendment are as follows. First, we wonder whether it is necessary to specify that a programme cannot be regional unless it is first broadcast for persons living within the licence area. This does not seem to us to be of the essence in the same way as it is crucial that the programme is designed to be of particular interest to persons living within the licence area. It is an essentially contingent factor which would normally apply to a regional programme but on occasion may not, because the programme is in fact also of particular interest to people in an adjacent region or regions or, exceptionally, is, while being incontestably regional, shown more widely on the network. This seems to us to be the kind of issue which the ITC should be free to interpret in detail. Our second reservation concerns the need to make clear that the ITC's power of interpretation is subordinate to the general terms of the definition in the Act. The amendment as drafted places the ITC on a par with Parliament in determining what is regional and we are not sure that that is quite right.

Nevertheless, as I have said, the Government are happy to consider this further with a view to bringing forward an amendment of their own at the earliest stage. I hope that in view of that assurance my noble friend will agree to withdraw his amendment at this stage.

Lord Trefgarne

My Lords, I am grateful to my noble friend. He confirmed that he intends to bring forward an amendment, perhaps better drafted, at Third Reading in order to deal with this matter. On that assumption, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 154 not moved.]

4.15 p.m.

Lord Kirkhill moved Amendment No. 155: After Clause 66, insert the following new clause—

CHANNEL 3 LICENCE CONDITIONS

(".—(1) Section 20 of the 1990 Act is amended as follows. (2) After subsection (6)(b) there is inserted— (c) may vary the licence so as to include such conditions relating to the matters specified in subsections (3) and (4) of section 21(A) as they consider appropriate.". (3) After subsection (8)(b) there is inserted— (c) the condition to be included in the licence under subsection (6)(c).".").

The noble Lord said: My Lords, I hope that the amendment is now in its appropriate place in the Marshalled List. I have tabled the amendment because I believe that the ITC should be able to take into account all the factors cited on the clause when a Channel 3 licence is renewed and not merely at the point of change in control. It is again an opportunity to underpin the regional flavour of the ITV system. Such an opportunity will be fulfilled where the regulator is able to make renewal subject to the licence holder accepting conditions to safeguard or, as appropriate, to enhance the regional character of the service. That is an extremely important point. The amendment makes provision for that possibility, and I beg to move.

Lord Trefgarne

My Lords, I am not keen on the amendment. It appears to grant a draconian power to the ITC which, on reflection, your Lordships might not think wholly appropriate. I hope that the noble Lord will not persist with the amendment.

Lord Inglewood

My Lords, as your Lordships will know, Clause 66 of this Bill seeks to introduce a new part, Section 21A, to the Broadcasting Act 1990 which prevents any diminution in the range and quality of regionality in a Channel 3 service where there is a change of control in the licence holder. The noble Lord, Lord Kirkhill, seeks in this amendment to extend that protection where a licence is renewed so that, where the current licence holder is performing in excess of what his licence requires in terms of the amount and quality of regional programmes he provides, it can be made a condition of his licence being renewed that he continues to perform at this higher level. The noble Lord proposed a similar amendment in Committee and I have, as I said I would, reflected on that proposal and discussed the issue with the Independent Television Commission.

The commission would ideally like to have such a power because current licence holders regularly outperform licence requirements in the area of regionality, and it seems prudent, in anticipating the changes which the relaxation of media ownership controls we are proposing generally in the Bill will bring, to preserve such overperformance for the benefit of viewers. However, we must consider not only what is prudent but what is fair. Clause 66 is fair because it seeks to guard against any attempt to run down regional services by a company with no previous track record for that region. But the renewal proposed by the noble Lord seeks rather to penalise the good will of the current licence holders by saying, "You have been doing more than you promised, so now you must make a more onerous promise".

The commission agreed licence conditions with the current licence holders of Channel 3, an agreement formed when the licences were bid for and awarded. I do not believe that it would be right for us suddenly to change that agreement to take advantage of the fact that licence holders see it as in their interests to provide a good range of regional services. And as I said in Committee, if we are to agree that we may reasonably ask licence holders to accept more onerous conditions on renewal where their performance has shown that they can achieve them, is it right that regionality should be singled out? Should we not also seek to consolidate performance in children's programmes or in original drama, for example? While I sympathise with the noble Lord's intentions, I believe that in accepting this amendment we would be in danger of discouraging our current licence holders from striving to achieve the best regional service they can in any given period by threatening that they will be required to maintain that level ever afterwards.

The noble Lord will be aware that the Government have looked carefully at which might be done further to strengthen Clause 66 so that a change of control cannot interfere with the high quality of regional programming that viewers of Channel 3 now enjoy. I am sure that the noble Lord will be disappointed by what I have had to say, but I hope that he will accept that we are committed to this issue and, in the light of our considered view that the current licence holders know where their best interests lie on this subject and that it would be unhelpful to meet their good will and commercial common sense with unnecessary post hoc regulation, he will withdraw his amendment.

Lord Kirkhill

My Lords, I shall withdraw the amendment but perhaps, first I may place on record the fact that the Minister and I have been over this ground before. I do not consider that a particularly onerous condition to impose upon the various companies. At present, they are not doing much beyond the minimum. They plead that they are, but if one analyses what they do it is not much more than the minimum. Past experience shows that unless Parliament, in its wisdom, makes a firm regulatory system effective it becomes so flexible that the true intent of Parliament is obstructed. There is every possibility that the good spirit behind Clause 66 may in reality not have the effect for which we hope. That said, I formally beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Thomson of Monifieth moved Amendment No. 156: After Clause 66, insert the following new clause— (" . —(1) Section 45 of the 1990 Act is amended as follows. (2) After section (9) there is inserted— (10) A licence to provide a non-domestic satellite service shall include conditions requiring the licence holder to pay to the Commission (in addition to any fees required to be so paid by virtue of section 45(1)(b)) in respect of each accounting period of his falling within the period for which the licence is in force such amount as the Commission may determine representing a percentage of the qualifying revenue for that accounting period.".").

The noble Lord said: My Lords, this amendment is in exactly the same terms as the one that I moved at Committee stage. I have tabled it again, first, because of the importance of the principle and issue that lie behind it and, secondly, because there was limited time at the Committee stage to discuss it and I wished to give your Lordships the opportunity to examine the issue again.

The purpose behind the amendment is clear from its wording. It is to try to establish a fairer basis of taxation for all those who compete in the commercial broadcasting field; that is, to put the satellite and cable broadcasters on the same footing as the terrestrial commercial broadcasters. In arguing the matter at Committee stage, the Minister based his argument on what I thought was a mistaken premise. He argued that BSkyB, as the principal satellite broadcaster, was outside the fiscal jurisdiction of this country because the frequencies that it used were on an international basis, whereas the terrestrial frequencies are a national asset under the jurisdiction of Her Majesty's Government.

I sought to argue from a different basis—that of the ordinary television viewers. When they watch a BSkyB programme or a programme from any of the other satellite operators, or watch terrestrial programmes, they simply see television as contributing to the general entertainment and instruction of British people. Satellite broadcasters have, through their own enterprise, now had a perhaps justified tax-free holiday. However, I thought that the time had come to put them on the same footing as other commercial competitors. That is what lies behind my amendment.

I do not want to labour the point when we wish to make as much progress as possible. However, I use the occasion to make an additional point which arose out of our discussions on Tuesday. It is the role that BSkyB plays in financing original programming. Speaking as a former regulator of broadcasting, I would be more in favour of funding from BSkyB going to the provision of original programming. If there has to be a choice I would prefer it to go there rather than to the provision of revenue for the Treasury.

I offer the Minister a possible fallback position, if he wishes to take advantage of it. If he refuses to accept the case for fiscal fairness then he should at least accept the case for greater fairness in the promotion of original programmes. The Minister sought to tell us on Tuesday that he believed that the record of original programme-making for BSkyB was creditable. He used language that indicated that it at least matched the original programming of Channel 4. Since Tuesday's debate, therefore, I have taken the opportunity to look at the figures. The figure for original programming for Channel 4 in 1995 was £194 million, 85 per cent. of its total programme budget. The figure for BSkyB's programmes that it provides is £150 million. However, that £150 million consists largely, I am told, of sporting rights. We have argued about them separately. In my definition, that does not count as original creative programming at all. The truth is that so far BSkyB has done little, if anything, to provide any original children's programmes, situation comedies or original drama.

If the Government are unwilling to establish a basis of fair taxation, then in the terms about which we argued on Tuesday for a fair proportion of original programming as part of the obligation of being a broadcaster in this country, they ought to use their influence to persuade BSkyB greatly to improve its record. I beg to move.

Lord Donoughue

My Lords, I wish to speak briefly but strongly in favour of what my noble friend Lord Thomson said. When we discussed the matter previously it was striking that what the Minister described was the hypothetical "legalese" position of satellite. What the noble Lord, Lord Thomson described is the reality that this is a major UK television performer. In terms of fair fiscality, it should be treated accordingly.

I was also pleased to hear the figures from the noble Lord, Lord Thomson. Those quoted by the Minister recently immediately created astonishment on this side and incredulity as well as astonishment in the outside broadcasting world. I wish to give the maximum support to my noble friend.

Lord Inglewood

My Lords, the noble Lord, Lord Thomson, set out his reasons for the amendment when it was debated in Committee. I must tell him at the outset that the Government's position has not changed since then. I appreciate that it is not one which the noble Lord accepts, but I am grateful for his helpful comments about programming, on which I shall reflect further.

I wish briefly to reiterate the Government's position. As I made clear in Committee, BSkyB does not operate on a frequency which is allocated by international agreement to United Kingdom control. The Astra satellite on which BSkyB broadcasts uses spectrum allocated to Luxembourg and it is for the Luxembourg authorities to determine the payments for the use of that spectrum. As I made clear, it is our understanding that payments are made to the Luxembourg Government by the owners of the Astra satellite. We are sure that the payments will be reflected in the payments BSkyB makes for the use of the Astra satellite.

The noble Lord, Lord Thomson, explained in Committee and reiterated this afternoon that the ITV companies and BSkyB function—BSkyB not entirely, but principally—in the domestic market place. He argued that therefore they should receive equality of taxation. However, as companies operating in this country they work under identical rules applied by the Inland Revenue and Her Majesty's Customs and Excise. The government amendments, accepted on Tuesday, equalised the level of fines which the ITC can levy on all its licensees for breaching those licences. That will enable the ITC to treat all its licensees, including non-domestic satellite services, on an equal footing.

The sole difference between ITV and non-domestic satellite operators is the simple fact that—I do not believe that it is hypothetical, as the noble Lord, Lord Donoughue, tried to suggest—Channel 3 licensees pay moneys to the Exchequer for their franchises which reflect the use they are given of a scarce UK resource; that is, the UK spectrum from which they profit. It is not a tax on their operation; it is a fee for the use of the spectrum. Non-domestic satellite operators, by definition, do not use UK spectrum and so the UK Government are not in a position to charge a fee for the use of that spectrum. I hope that that makes the Government's position on the matter quite clear.

4.30 p.m.

Lord Desai

My Lords, before the Minister sits down, perhaps he will be kind enough to clarify one matter. BSB used to operate on a domestic spectrum but when Sky bought BSB out it sold that domestic spectrum to foreign broadcasters. Therefore, while BSkyB broadcasts from Luxembourg, is it not a fact that it owns property in frequencies which it sells to foreign broadcasters? That means that the difference between domestic and non-domestic is not as sharp as outlined by the Minister.

Lord Inglewood

My Lords, with the leave of the House I shall respond to the noble Lord. The noble Lord is obviously familiar with the detail of the matter hut, on the basis that he described, it seems to me that one of the component elements which formed BSkyB—BSB—had some UK spectrum. If anyone has the rights to UK spectrum and then sells that spectrum, to use the words of the noble Lord, it must follow that he ceases to have any property in that particular spectrum. If you divest yourself of something, you then cease to have any property in the item which you have disposed of. I do not think that the proposition as advanced by the noble Lord takes the argument any further in the direction that he desires.

Lord Thomson of Monifieth

My Lords, I am grateful for the intervention of the noble Lord, Lord Desai, and was much interested in it. When the matter is examined, I believe that it will be discovered that the noble Lord is factually absolutely right. The original BSB operation did not depend on domestic frequencies; it depended on satellite frequencies for a British geo-stationary satellite on the position in the stratosphere that had been allocated to the British Government by international agreement.

In that sense, the loophole that Sky television has been able to take advantage of on the basis of the ingenuity of its predecessors was to go to another bit of the international spectrum, so to speak. That is the reality of the situation. The remarks of the noble Lord, Lord Desai, greatly undermine what the noble Lord, Lord Donoughue, called the hypothetical basis—although I believe that he partly meant theoretical—of the Government's proposition. Indeed, the noble Lord, Lord Desai, has greatly weakened the base of the Government's argument.

I retabled the amendment today as a matter of principle. I did not expect the Government to reveal any change of position on the matter, and I do not wish to take up any more time on the issue. However, I can assure the Minister without any rancour that it will not go away. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 67 [Funding of Sianel Pedwar Cymru]:

Lord Prys-Davies moved Amendment No. 156A: Page 58, leave out lines 36 to 39 and insert—

("(1) The Secretary of State shall, for the year 1998 and each subsequent year, pay to the Welsh Authority at the beginning of the relevant year an amount representing the prescribed amount as increased by the appropriate percentage.").

The noble Lord said: My Lords, in moving the above amendment I shall, with the leave of the House, speak also to Amendments Nos. 158 to 161. It will take me just a few minutes to try to do justice to these five important amendments which deal with the future funding mechanism of S4C, which is, if I may say so, fundamentally altered by Clause 67. I should point out that in tabling the amendments I rely heavily on advice from the S4C officers and those who advise them. They have also had valuable consultations with the Minister's department. If the Minister cannot agree to the five amendments this evening, I very much hope that he will take them away and consult with his advisers.

There are three main elements in the group. The first is to be found in Amendment No. 156A which would merely remove any doubt that there may be as to the date when the payment is to be made: it is to be made "at the beginning" of the year. Without those words, the payment could be made in instalments during the passage of the year. I am advised that there is a precedent for that wording in Section 61(2) of the 1990 Act. I hope that the department will look graciously at the amendment.

The second element is to be found in Amendment No. 158. It provides that the right starting point is the sum of £73.3 million. That figure is to be found in the published estimates of the department for 1997. Obviously that would be indexed, but the knowledge that that is the starting point would give S4C a reliable basis for planning its future. The officers of S4C have a sound confidence in that figure.

The third element is to be found in Amendment No. 160. Its purpose is to include in the funding during the transitional period the cost to be incurred by S4C of promoting the new digital service. S4C believe that there should be such an additional provision. I shall briefly explain the reasons for it.

The multiplex operator may decide, understandably, not to give the highest priority to promoting a digital service to 500,000 Welsh speakers, three-quarters of whom live outside the heavily populated south-east corner of Wales often in the poorer parts of Wales, and many of whom are elderly. I believe that it is prudent to fear that the needs of that audience may not rank high in the priorities of the multiplex operator.

The second reason for Amendment No. 160 is that S4C, not unnaturally being a Welsh language television service, wants to ensure that the promotion of the digital service to Welsh speakers is undertaken through the medium of the Welsh language. S4C considers that to be of paramount importance. I believe that the concerns of S4C which are reflected in Amendment No. 160, and which I have sought to express, are entirely legitimate.

Finally, if Amendment No. 158 were accepted, obviously subsection (3) of the clause would become redundant and Amendment No. 161 would be consequential. I very much hope that the Minister will say that he is prepared, once again, to give careful consideration to the amendments. I beg to move.

Lord Aberdare

My Lords, it gives me great pleasure to support the amendment so clearly moved by the noble Lord, Lord Prys-Davies. I shall try not to go over the ground that the noble Lord covered but, although they are grouped together, the amendments fall fundamentally into two groups. The first three amendments relate to the so-called "prescribed amount" for 1997 upon which the future funding of S4C entirely depends. The Bill provides for that prescribed amount in subsequent years to be increased in line with the retail prices index. Hitherto, S4C's funding has been geared to total terrestrial advertising revenue and past experience suggests that that is likely to rise more rapidly in the future than the RPI. That is the reason for S4C's fear that it will receive less funding in the future than it does under the present system.

The noble Lord clearly explained what lies behind the first three amendments; namely, to insert a figure of £73.3 million as the prescribed amount for 1997. That is the figure that appears in the department's own published spending estimates. That figure would then form the basis of the prescribed amount for 1998. I should emphasise the concern expressed by the noble Lord that it is most important that the department should stick to its present practice and pay the amount due each year on 1st January—that would be 1st January 1998 and subsequent years. That would enable S4C to earn some interest on deposit which would go some way to help it maintain its present analogue service.

Amendments Nos. 160 and 161 relate to the Secretary of State's power under the Bill to increase the prescribed amount if he is satisfied that it is appropriate to do so having regard to the cost of transmitting a new digital service. The amendments would give him power, in addition, to have regard to the cost of promoting the new service to S4C's viewers in Wales and encouraging them to invest in the required equipment. The noble Lord, Lord Prys-Davies, has given two compelling reasons why this is so important, especially for S4C, and I shall not repeat them. I think we must be working from the same Welsh text. My noble friend Lord Inglewood has shown great sympathy towards S4C throughout our discussions. I hope that he will look favourably on these amendments.

Lord Thomson of Monifieth

My Lords, I speak without the expertise of either of the noble Lords, Lord Aberdare and Lord Prys-Davies. However, speaking from the Front Bench of the Liberal Democrats I wish to make it clear that we strongly support the case that has been made so persuasively and so thoroughly by both the noble Lords who have spoken. I speak, of course, on behalf of my noble friend Lord Geraint.

I have said on earlier occasions that the Welsh fourth channel, S4C, is a remarkable achievement in public broadcasting. It is perhaps even more remarkable in its way than the fourth channel itself, which we shall discuss in a moment or two, because apart from being a great broadcasting achievement S4C was also a great political achievement. It ought to be properly cherished because of the special role of the Welsh language within the Welsh nation. In those circumstances it is rather worrying that the new formula, as proposed, appears to provide a disadvantageous base line for the funding of S4C compared with its previous position. It would result in S4C being less well off—as I understand it—than under the original estimates of the Department of National Heritage.

Given what we know about the broadcasting advertising market, I am not quite sure why the Government felt it would be an advantage to S4C to move from an advertising-based formula to an RPI-based formula. All the experience of commercial broadcasting over recent years—indeed of broadcasting generally—has shown that the RPI of broadcasting tends to be significantly higher than the general RPI for the nation as a whole. S4C is right to be concerned about that aspect of the matter. We await with interest the Minister's remarks on the case that has been put so strongly by both noble Lords who have spoken on this matter.

As regards the other amendments which relate to the future digital provision, here again it is fair to say that Wales is a special case in that there is a political dimension to these issues—over and above the purely broadcasting dimension—which needs to be taken into account by the Government in seeking to ensure that the scattered Welsh-speaking population in the remoter areas of Wales will be able to enjoy the benefits of the diversity of digital broadcasting when that is provided. S4C had political origins rather than broadcasting origins. The Government would be wise to take careful note of those anxieties.

4.45 p.m.

Lord Inglewood

My Lords, the noble Lord, Lord Prys-Davies, and my noble friend Lord Aberdare have most clearly and helpfully set out the rationale for these amendments. I have explained to your Lordships' House on previous occasions the case for moving to an RPI-based formula. I am glad that this approach is implicitly accepted in the noble Lord's remarks in proposing the amendment. The issue which the amendment specifically addresses concerns the precise base figure to be used and the amounts of money involved.

We believe that in changing from one formula to another the fairest approach is that the base figure on which the Bill's provision is indexed is the last payment under the 1990 Act formula. Therefore Clause 67 of the Bill provides that in the amended Sections 61(2) and (3) what is defined as the "prescribed amount"—that is, the base figure for the new formula—should be the amount paid by the Secretary of State to the Welsh Authority for the year 1997 under the 1990 Act.

We do not believe that S4C's predictions for total national advertising revenues for 1996—we are only some two months into the year—should lead the department now to commit itself to paying the maximum provision we have taken to meet our current statutory obligations. This provision may, of course, be an overestimate—it would be wrong to budget on any other than a prudent basis—and does not necessarily represent the actual amount of meeting the current statutory obligation which must be the proper basis for any future arrangement. Of course I fully recognise S4C's desire to have a firmer basis on which to plan future funding and to achieve as much money as it can. However, the Government do not accept the case for the amendments which have been tabled.

The noble Lord, Lord Prys-Davies, has explained that Amendment No. 156A is intended to retain the current system whereby S4C receives its statutory funding in a single lump sum every January. It will probably not surprise the noble Lord that we are not keen to continue a system which arose from what was, candidly, an error in the 1990 Act. S4C is almost unique in government in receiving Exchequer payments at the beginning of the year rather than being drawn down on the basis of need throughout the year. We therefore intend to restore S4C's funding to the system that was originally envisaged, and that is consistent with prudent financial management of public spending.

Amendment No. 160 would allow the public funding provided for S4C to be increased in respect of expenditure necessary to promote and encourage the acquisition of digital receivers by viewers in Wales. As your Lordships know, multiplex licences will be awarded to applicants whose proposals for investment in the transmission infrastructure and for encouraging the take-up of receivers at least meet the minimum requirements established by the ITC. In this respect, assuming that S4C were to accept the guaranteed place being offered to it on the multiplex carrying Channels 3 and 4, S4C would need to contribute to the costs of meeting each of those requirements.

The funding arrangements in the Bill already allow for some extra provision with regard to the first part—that is, transmission costs. This is in line with the position in the 1990 Act. S4C will also, of course, be able to use its public funding to meet the costs of broadcasting S4C Digital, including measures to promote receiver take-up which will be taken forward in partnership with the other broadcasters on the multiplex. But I cannot see why S4C should be given any extra funding to meet these other costs which other broadcasters, including the BBC, will need to meet from their existing sources of revenue. It seems to me that there is a line to be drawn with regard to what might legitimately be seen as an extra call on taxpayers' money. It is a line which is sensibly drawn with transmission on one side and all the costs of mounting a digital service on the other.

I wish to emphasise that we have had a useful and constructive debate with S4C. I appreciate that the remarks that I have just made may be disappointing to S4C. However, I hope that what may be perceived as a disappointing reply will not in any way get in the way of continuing the debate that we have had hitherto.

Lord Prys-Davies

My Lords, I am disappointed with the Minister's reply. Clearly it was a considered reply. His words will be studied carefully by the officials of S4C and their advisers. However, I believe the Minister left the door open to the possibility of S4C having further discussions with the department to see whether it can meet some of the Minister's anxieties. With those few words, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 157 had been withdrawn from the Marshalled List.]

[Amendments Nos. 158 to 161 not moved.]

Clause 69 [Application of excess revenues of Channel Four Television Corporation]:

Lord Thomson of Monifieth moved Amendment No. 162: Page 60, line 17, at end insert— ("( ) After subsection (3) there is inserted— ( ) The percentage stated in subsections (1)(a) and (3)(a) of this section shall be zero for the years 1998, 1999, 2000, 2001 and 2002.".").

The noble Lord said: My Lords, I apologise for rising time after time. The Minister kindly indicated to me that once I had moved this amendment there might be something he would like to say to your Lordships before the rest of the debate takes place. We live in hope and look forward to that. I hope it will meet the convenience of other Members of your Lordships' House that that should take place.

In that spirit I wanted to say before I move this amendment how grateful we are for the decision of the Government, announced at the Committee stage at col. 622 of Hansard, to cap at an appropriate level the statutory reserve fund of Channel 4. This should have the welcome effect of releasing significantly more funds to Channel 4 to spend on programmes. Whatever arguments we have in a moment about other timetables for dealing with Channel 4, I hope the Minister might be able to confirm that this welcome capping and the release of these funds could take place once this Bill has become an Act of Parliament and need not await the end of 1997.

The amendment seeks to take account of the various views that were expressed in the debate at Committee stage. It seeks to offer what I hope will be regarded as a constructive and conciliatory compromise between those of us who felt that the right course was to abolish the existing funding formula for Channel 4 after the end of 1997 and let it stand on its own feet as it wishes to do. The view of the Government and, I am bound to say, of the ITC is that the special remit of Channel 4 in a much more competitive world may still require a statutory safety net.

This amendment seeks to end the subsidy from Channel 4 to the Channel 3 companies, the ITV companies, from the beginning of 1998, the date which is already in the 1990 Act when a change can be made. It also seeks to maintain the position in which neither Channel 4 will subsidise the ITV companies, nor, indeed, will Channel 3 subsidise Channel 4 in any way if circumstances change during these years until the end of the current ITV franchise period in the year 2002. By that time the future of digital television will be at least a little clearer than it is at present. It is always dangerous to forecast the future, but there may very well be proof one way or the other of how robust the rather special Channel 4 remit, with its audience limitations, is in attracting revenue in a multi-channel, multi-competitive broadcasting age.

I recognise that the Government's present Clause 69, and indeed the position of the ITC, would allow the formula I have in my amendment to be implemented by the Government from 1998 onwards, if that was the Government's will. But I think there are great advantages in seeking now to put this formula for the funding on the face of the Bill. It will provide certainty for both Channel 4 and the ITV companies from the moment the amendment is passed and prevent the continuing bad blood that there has been between them over this issue becoming a running sore within the independent television system for the years that lie ahead. That is the main thrust of the arguments behind the amendment that I have moved.

Without going over the ground that we covered in the Committee stage, perhaps I may make one or two additional comments about the background. It is wholly understandable that recipients of subsidy resist giving up that subsidy. That is, of course, the position of the ITV companies. They resist giving up the subsidy as stubbornly as the Treasury has been resisting giving up any possible loss of revenue from a sensible reform of the broadcasting system. However, the figures show conclusively that by the end of 1997 the ITV companies will have received in the first five years of their franchise more than they ever estimated in their bids they would have received over a period of 10 years. If at the end of 1997 the grotesqueries of the bidding system leave any individual company short of its 10-year forecast, then, as those of your Lordships who followed the Committee stage of the Bill know, Channel 4 has undertaken to reimburse them.

I do not think that it can seriously be argued in any sort of equity that an enterprising company like Carlton Television, for example, with profits of £122 million should go on receiving a £22 million subsidy from a minority channel. The concern about these matters, as so often, has been particularly concentrated by the big TV companies on what they profess to believe to be the interests of the smaller regional TV companies. It is, of course, familiar to all in your Lordships' House that hard cases make the best persuasive arguments. It is a pretty fallacious argument.

We have been arguing the interests of the smaller regional companies very vigorously this afternoon and the Government have recognised that in Clause 66. The smaller regional companies for the most part, although there may be an occasional exception, receive a comparatively small amount of Channel 4 advertising revenue, and fortunately in the present circumstances most of them are pretty profitable these days.

That quite apart, some of the larger ITV companies have been using the argument to their weaker brethren, and using it to those of us who may be more gullible in your Lordships' House, that if the ITV companies are to be left without this ongoing subsidy from Channel 4, then this will put the present charging in the network system at risk and may prevent the regional companies from having the resources to fulfil their regional obligations. It has been put forward by Granada Television—that well-known hotel company that now has a television company as well—that its regional programming might be somewhat cut back if there had to be all these changes. It is a totally bogus and slightly disreputable argument, because both the network discount arrangements and even more positively the regional programming arrangements are written into the licences of the larger television companies. Neither the network discount nor the regional programming arrangements can be damaged or reduced except with the consent of the ITC. For my part, I am ready to recognise that the ITC is a totally adequate watchdog in these matters provided it gets the reinforcement of a decent Broadcasting Bill.

It is for all these reasons that I put before your Lordships' House this compromise amendment on the future of the financial arrangements between Channel 4 and the ITV companies. I beg to move.

Lord Peyton of Yeovil

My Lords, perhaps I may say a word before my noble friend replies. I am a little confused. When the noble Lord, Lord Thomson, rose I was under the impression that he would move an amendment very briefly and that my noble friend the Minister would reply and give him something. While I hate to disturb the cosy relationship which appears to exist between them, I should like to grab the opportunity—I do not have many—to say that there is a sensible provision in the 1990 Act. That is the one that we now seek to change. I hope that I am wrong, and I hope that my noble friend will not make too great a compromise in the direction of the noble Lord, Lord Thomson.

5 p.m.

Lord Inglewood

My Lords, I am grateful to my noble friend. At this stage in the debate I hope to make a few points which may be for the convenience of the House. I do not wish to curtail the debate, but I should like to make a contribution which may be helpful to those who follow me in the debate. Speaking as I do from the Dispatch Box, I hope that that will be a constructive way of approaching the matter.

The noble Lord, Lord Thomson of Monifieth, explained that his amendments to Clause 69 aim to provide by statute that Channel 4 should make no payments either to the Channel 3 companies or to the statutory reserve for the years from 1998 to 2002; and that no order to alter that regime may be made before the end of the year 2001.

It is, of course, an implicit element of the noble Lord's amendments that the funding formula would remain in place. That is in line with the Government's approach. We have made clear that we want to retain the formula as a prudential measure, but to operate it with flexibility so that Channel 4 can retain significantly more of its revenue for programmes.

A key word here is "flexibility". We do not think it right to seek to determine at this stage the possible level of Channel 4 payments to Channel 3 companies two years or more from now. Nor is it, in our view, wise to rule out all possibility of further adjustment, either to those payments or to the payment of funds to the reserve, in the years up to and including 2002. Such an approach would be inconsistent with the need for flexibility in response to fast-moving developments in the broadcasting sector. The Government accordingly oppose the specific amendments which the noble Lord, Lord Thomson, has tabled.

As to timing, the noble Lord's amendment proposes changes to Channel 4 payments into the reserve and to the Channel 3 companies to take effect from 1998. I see no need to perpetuate Channel 4's payments into the reserve until 1998. At over £80 million the reserve represents a significant safeguard against a downturn in income. To respond to the noble Lord's particular anxiety, the Government's intention is accordingly to present an order to terminate Channel 4's future payments into the reserve shortly after enactment, to take effect as soon as possible.

The timing of adjustments to Channel 4's payments to Channel 3 is arguably more complicated. The noble Lord, Lord Thomson, proposes that new arrangements should come into effect from the start of 1998. That is the assumption underlying his earlier "gap year" amendment to which I have referred. It is also clear that it is a general expectation of the ITV companies that any new formula would come into effect from early 1998. The Government are not averse in principle to introducing changes from that date.

However, there is an alternative argument that no change should be introduced affecting any payment before the one to be made a year later, at the start of 1999. That is because Section 26(10) of the Broadcasting Act 1990 specifies that no order to amend the specified elements of the funding formula may be made before the end of 1997. Taking account of the lead times inherent in the formula, that would mean that the form of the formula contained in the 1990 Act would continue to apply until the end of 1998. If one follows that logic ruthlessly, the so-called "gap year" ceases to exist. Of course, the amendments which we propose do not apply to the specific elements in the 1990 Act formula to which I have referred, and there is no formal constraint. Nevertheless, the argument can he made that, based on the precise terms of the 1990 Act, any change to the funding formula should not affect payments before the one to be made at the beginning of 1999.

There is a balance to be struck here. On the one hand, the Government accept the concern that Channel 4's payments into the reserve and to Channel 3 have been higher than expected when the 1990 Act went through Parliament, and that early action should be taken to correct that. On the other hand, we recognise concerns expressed by the noble Lord, Lord Thomson, and widely echoed in the Chamber, at the prospect of a significant drop in Channel 3 companies' income from Channel 4 in the immediate run-up to digital investment and a year before they are able under the 1990 Act to apply to the ITC to renegotiate their licences. We must also remember that the payments under the formula are paid in the February of the year following the year for which they are calculated. It thus follows that the payment in respect of the year 1997 is paid in early 1998, and if there is a "gap year" in terms of cash flow in a calendar year, it can more accurately be said to be 1993, which was the year in which the Channel 4 arrangements in the Act came into effect, since no payments were made in respect of that year until 1994.

The Government's proposition is that we should proceed by a phased approach, which would seek to meet the interests both of the Channel 3 companies and of Channel 4. As a first step, we should seek to make an order on enactment to end Channel 4 payments into the statutory reserve with immediate effect. To put that into perspective, Channel 4's payment into the reserve for 1995 was £37 million. If our proposed order is agreed, the effect will be that in respect of the payment relating to 1996 and later years Channel 4 will have more revenue to apply to programmes. In effect, the gain as against earlier expectations will be equivalent to two years' payments into the reserve.

As a second step, we propose to introduce reductions to Channel 4 payments to Channel 3 in two phases. The first reduction would take effect from 1998; the second would take effect from 1999. It is too early to say what the new levels would be, but we have indicated that we expect significant adjustment in Channel 4's favour, and we are taking powers which would in principle enable us—if we so judge nearer the time and Parliament agrees—to reduce Channel 4 payments to Channel 3 to zero from 1999. Whatever the final level, there would be a stepped reduction towards it from 1998.

We believe that that phased approach will help to cushion the impact on Channel 3 companies of a reduction in their funding from Channel 4. At the same time, it should prove significantly positive in net terms to Channel 4, not least because uncovenanted gains from early capping of the reserve are likely to outweigh any phased payment to the Channel 3 companies in 1998.

I hope that that fairly full explanation of the Government's thinking has proved helpful. It is intended to find a way forward which is fair to all concerned.

Lord Birkett

My Lords, before the Minister spoke I had intended to say how strongly I support the amendments. How much happier I am to rise and say that what the Minister said is enormously encouraging. I hope that after the very helpful things that he said he will not think it churlish of me to remind him that the ITC view is that the funding should come down to zero from the beginning of 1998, exactly as proposed by the noble Lord, Lord Thomson, in his amendments. I confess that that is what I would have preferred. Since it is also what the ITC recommends, and since it is very much up in the air how the phased reduction in payments will work, I urge the Minister to consider very carefully whether he will not take the advice of the ITC and make the amount so small by the end of 1997 and the beginning of 1998 as to make no difference whatever.

When I said that I hoped that the noble Lord would not think me churlish I was simply going to say that the ITC is, after all, the generally acknowledged watchdog in this area of communications. I intended to remind him of the old adage that one should not keep a dog and bark oneself.

Viscount Astor

My Lords, I congratulate my noble friend the Minister on coming up with a very ingenious solution. It seems to me that he has gone a long way to solving the conundrum which was highlighted by the noble Lord, Lord Thomson, in discussion on an earlier amendment in relation to the gap of a year between the Channel 4 funding finishing and the ITV companies renegotiating their licences. My noble friend has come up with an ingenious solution. I think he is entirely right. We cannot tinker with any part of the formula without considering the problem as a whole, which he has done. It is an extremely good solution. I recommend it to your Lordships. I hope that the noble Lord, Lord Thomson, will feel able to withdraw his amendment as a result of my noble friend's announcement.

Lord Burnham

My Lords, the Minister gave an indication earlier that he would surprise the House with something that he might say with regard to the amendment. He has duly done so. However, one point worries me. The Minister may not be able to answer the question at present. What will be the balance as regards release of moneys to Channel 4 between the uncapping of the statutory reserve a year earlier and the moneys which the ITV companies will still receive from Channel 4?

I agree with my noble friend that everything the Minister said seems extremely helpful. We shall have to consider the matter more carefully when we see it in writing. I cannot speak for the noble Lord, Lord Thomson. It may be necessary to return to the issue at Third Reading, although it may not be traditional so to do.

Baroness Birk

My Lords, it is a shock to be suddenly faced with new proposals. They are encouraging in some ways. But they are not the whole story. Channel 4 will still have difficulties to iron out. It will still be paying out £80 million; and the £37 million is in the reserve anyhow. Therefore the position is not quite as good as it may sound. As I am sure the Minister will appreciate, it is difficult to make a snap judgment having just heard the announcement. When we see it in writing, perhaps we shall understand better.

I agree with my noble friend Lord Thomson of Monifieth that as we were unable to achieve the complete abolition that many of us preferred, as was indicated in Committee, this is the next best option. I do not know whether it will be necessary to amend the proposed provisions. I do not believe that we should commit ourselves without reading the proposal and considering it further. However, we have gone a little further. As we were unable to achieve the complete abolition which seemed to me and a number of other noble Lords—I do not refer only to my noble friends—the best way forward, we shall have to find a way of dealing with this next option which is fair to Channel 4 and fair all round.

The Earl of Stockton

My Lords, your Lordships may not be surprised to know that even the amendment in the name of the noble Lord, Lord Thomson of Monifieth, does not meet the criteria I sought to establish at an earlier stage of the Bill. To be asked to compromise still further by the Minister at relatively short notice is a surprise.

My back-of-envelope calculations show that the difference for Channel 4 between the payments under what one might call the Thomson regime and those under the Inglewood regime would be in excess of £80 million. It is therefore no cheap compromise in terms of Channel 4's payments.

It is not clear from what my noble friend said exactly where the proposal will appear in the Bill. Does he propose to make an amendment at the next stage so that it will appear on the face of the Bill? Or is it to be assumed to be part of the munificence of his department in making the arrangements subsequently? Before the noble Lord withdraws his amendment, if that is what he is inclined to do, we need an additional reassurance from the Minister. If the noble Lord does not receive it, I would very much urge him to press the amendment.

5.15 p.m.

Lord Inglewood

My Lords, with the leave of the House, I do not wish to add a great deal. I am grateful for what noble Lords said. Obviously I would have preferred the entire House to say with one accord that the Government have got it completely right. However, I could not expect your Lordships to respond in detail to the proposal that I made without reading the particulars.

Perhaps I may respond to two specific points made by my noble friend Lord Stockton. First, we have not put detailed figures to the general approach I have just described. Secondly, I can confirm—as I believe I intimated—that we shall be bringing forward the relevant clauses for doing the kind of things I have described under the general principles of the 1990 Act. I hope that that is helpful.

Lord Thomson of Monifieth

My Lords, I thank the Minister for saying on the narrower but not unimportant point that I raised that he proposes that once the Bill becomes an Act he will immediately, by order, enable the capping of the reserve to take place and those resources to be made available to Channel 4 for programming rather than sterilised in the reserve. That is clear; there is no dubiety. I am grateful for his prompt response.

On the wider proposition, I thought that I had put forward a reasonable compromise. The Minister has now, in a sense, compromised my compromise. Many noble Lords know enough about the realities of these matters to appreciate the efforts that the Minister has made to bring about the proposals before us. They are not minor. They constitute a significant change in the Government's position. Although the noble Lord is a deeply respected Minister in this House he is not himself the Secretary of State. And beyond his Secretary of State we all know that there is a Treasury. To have got as far as he has done with the proposition that he put to us is a very considerable achievement. It would be grudging if one did not pay immediate tribute to that. Nevertheless, in many ways he has put forward such a substantial modification to my amendment that we shall all wish to examine it in some detail before Third Reading. We shall want to know from the Minister the answer to the question posed by the noble Earl, Lord Stockton. What will it mean in money terms during the 1998 year? For how much longer, and in what quantity, will the rather grotesque subsidy from Channel 4 to the profitable ITV companies continue? It arises out of the Government's formula as against the formula I put forward in my amendment.

We shall wish to examine the legislative arrangements for enacting the provision. I do not wish to take away from the fact that the Minister has made a substantial concession which it, cannot have been easy for him to win. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 163 not moved.]

Viscount Astor moved Amendment No. 164: After Clause 69, insert the following new clause—

MATTERS RELATING TO CONDITIONAL ACCESS SYSTEMS AND SUBSCRIBER MANAGEMENT SERVICES AND LICENCES TO RUN SYSTEMS

(" . After section 191 of the 1990 Act there shall be inserted the following sections—

"Matters relating to conditional access systems and subscriber management services.

191A.—(1) Any person who runs a conditional access system or a subscriber management service in relation to a television programme service shall be required to obtain from the Director a licence for the running of such system or service.

(2) The Director may after consultation with the Commission and such other persons as appear to the Director to be appropriate grant a licence for the running of a conditional access system or a subscriber management service in relation to a television programme service.

(3) A licence granted under this section shall be in writing and, unless previously revoked in accordance with any term in that behalf contained in the licence, shall continue in force for such period as may be specified in or determined by or under the licence.

(4) A licence granted under this section may be granted to all persons, to persons of a class or to a particular person.

(5) A licence granted under this section may include—

  1. (a) such conditions as appear to the Director to be requisite or expedient having regard to the duties imposed on him by subsection (9) below;
  2. (b) conditions requiring payment to the Director on the grant of the licence or payments during the currency of the licence or both of such amount or amounts as may be determined by or under the licence; and
  3. (c) conditions requiring any person who is authorised by the licence to run a conditional access system or a subscriber management service to furnish to the Director, in such manner and at such times as he may reasonably require, such documents, accounts, estimates, returns or other information as he may reasonably require.

(6) Without prejudice to the generality of paragraph (a) of subsection (5) above, conditions included by virtue of that paragraph in a licence granted under this section to a particular person may require that person—

  1. (a) to comply with any direction given by the Director as to such matters as are specified in the licence or are of a description so specified;
  2. (b) except in so far as the Director consents to his doing or not doing them, not to do or to do such things as are specified in the licence or are of a description so specified; and
  3. (c) to refer for determination by the Director such questions arising under the licence as are specified in the licence or are of a description so specified.

(7) A licence granted under this section otherwise than to a particular person shall be published in such manner as the Director considers appropriate for bringing it to the attention of the persons for whose benefit it will ensure.

(8) Any sums received by the Director under this section shall be paid into the Consolidated Fund.

(9) It shall be the duty of the Director to exercise his function in the grant of licences hereunder in the manner which he considers is best calculated—

  1. (a) to ensure fair and effective competition between persons engaged in the provision of conditional access systems, subscriber management services and services connected with them in particular television programme services;
  2. (b) to promote the interests of consumers, purchasers and other users in the United Kingdom (in particular in respect of the prices charged, the quality and variety of service) of conditional access systems, subscriber management services and services connected with them in particular television programme services.

(10) The holding by any person of a licence authorising the provision of a conditional access system or subscriber management service shall not relieve him of any requirement to hold a licence under section 7 of the Telecommunications Act 1984 in connection with the provision of such a service or system.

Licences to run systems.

191B.—(1) Any person who runs a conditional access system or a subscriber management service within the United Kingdom shall be guilty of an offence unless he is authorised to run such a system or service by licence granted under section 191A above.

(2) A person guilty of an offence under this section shall be liable—

  1. (a) on summary conviction to a fine not exceeding the statutory maximum;
  2. (b) on conviction on indictment, to a fine.

(3) No proceedings in respect of an offence under this section shall be instituted except by or on behalf of the Director.

(4) Without prejudice to subsection (2) compliance with this section shall be enforceable by civil proceedings for an injunction or interdict or other appropriate relief.

(5) In this section and in section 191A— broadcast" includes transmission by wire or other electromagnetic means; conditional access system" means any system or apparatus designed or adapted for the origination, initial transmission and final reception of signals for the actuation, operation or control from another place of other apparatus by means of which such signals comprising encrypted television programme services (save for such services which are broadcast in digital form) broadcast for general reception may be received and decrypted; Director" means the Director General of Telecommunications; subscriber management service" means a service provided to any person operating a conditional access system or to any other person in connection with television programme services (save for such services which are broadcast in digital form) provided or transmitted by another person whether or not that last person is in the United Kingdom for billing or payment handling in respect of charges for and payments received from viewers of encrypted television programme services broadcast for general reception in the United Kingdom.".").

The noble Viscount said: My Lords, we debated this issue twice in Committee and at the Report stage on Tuesday, so I will not repeat the arguments. My amendment on conditional access for analogue satellite television has all-party support. It has the support of the television companies, the cable companies and programme makers; and also of EUTELSAT, the intergovernmental organisation in Europe; and of course the Government support the principle of conditional access for digital satellite television.

My noble friend the Minister was as usual most helpful and allowed me to take my case directly to the DTI, which will be responsible for future regulation in this area. I was unable to persuade the Minister at the DTI. I have to say that I think the DTI has its own agenda for broadcasting. It feels that it is only necessary in the future for digital to have conditional access, and contends that digital is just round the corner.

If the 1990 Act taught us anything, it is that in the broadcasting world it is very difficult to predict the future. Even the industry is not predicting the date when digital transmission will commence. Analogue may be with us for quite a long time. This issue is one of the most important in the Bill. I beg to move.

Lord Donoughue

My Lords, I wish most strongly to support what I consider, apart from the sporting items, to be the most important central issue of the Bill.

As we know, the Government propose to regulate conditional access services for digital, through licence, under the Telecommunications Act 1984 and for them to be regulated under the Act by Oftel. We accept that. As we have said, we are very sympathetic to arguments, which my noble friend Lady Dean and I put at previous stages, that the ITC should be the regulator since the issues are broadcasting ones. The Government have resisted that; and we acknowledge that, because to us what matters is not who regulates but that there should be regulation. We believe that we should apply to analogue what the Government apply to digital.

I follow the noble Viscount, Lord Astor, and shall not repeat all the arguments. The heart of the matter, which should be borne in mind, is that the conditional access system controls who receives broadcast programmes. Conditional access in Britain, under analogue now, is dominated by Videocrypt, which is installed in over 95 per cent. of UK satellite receivers. It is owned by one company, News International, licensed to Sky. Therefore, the leading satellite broadcaster also controls access by its broadcasting competitors to home satellite receivers. That is a position of potential abuse which should be regulated.

On digital, the Government say openly that there is a future danger that one or two providers of conditional access may come to dominate and restrict choice through the conditional access gateways. That is a future danger. The present reality is there, in one monopoly provider of analogue conditional access systems. So the same concerns and the same solution—the Government's own solution, which we support—should apply.

The Government's main argument seems to be that analogue is a transitional technology. I accept everything that the noble Viscount, Lord Astor, said in questioning that. Analogue will be the majority technology for at least the next decade. That is the gap that should be regulated. Monopoly control by just one provider over that decade will, in broadcasting practice, provide the basis to purchase dominant control of film rights and sports rights, to see it into, in a dominant position, the digital decades after that.

The Government may also say that present competition law offers sufficient remedies against dominant abuse. We do not accept that. Competition law, as we know, operates slowly and unpredictably. Inevitably, there will be a long period of uncertainty which will effectively deter new broadcasters from entering and investing in rights unless they have the confidence that they will have what they do not have under the present analogue system; namely, equal and unfettered access to all pay-television homes. Only this amendment will secure that.

On a final general point, as we said at Second Reading the key question with this whole digital landscape ahead is how to get it off the ground. It needs incentives to broadcasters, viewers and manufacturers. But the refusal to regulate analogue works in a contrary direction.

Leaving one dominant controller in that privileged position on analogue conditional access gives it an incentive to stay with analogue, and with that privilege, and not to move forward to the more regulated digital. For all those reasons I urge support for this amendment.

Lord Colwyn

My Lords, I have listened again to my noble friend's explanation and to that of the noble Lord, Lord Donoughue. In fact, I re-read the argument advanced in Committee. Again, I do not think it is necessary to introduce new licensing requirements for analogue conditional access and subscriber management systems.

My noble friend took me to task during my short speech in Committee, as it was clear to him that I may not have had as much time to study the amendment as I should. However, I have done a little more homework and wish to make some more points.

First, until new European legislation forced the Government to accept licensing for digital conditional access systems, they were opposed to the idea. Rather, they argued that there is no need for the licensing of any conditional access system because current competition policy in the form of MMC, OFT and other safeguards is sufficient. To force additional regulatory obligations onto as yet uncommitted manufacturers or operators of digital conditional access systems would be foolhardy, creating strong disincentives for them to invest in the first place.

Secondly—and here I want to answer the question that my noble friend asked me in Committee—it is also the case that, while analogue satellite channels reach only 15 per cent. of all UK homes, those digital channels that replace them will eventually reach virtually all UK households. Furthermore, it can be argued that the analogue market is unlikely to grow much further because virtually no analogue transponder capacity is available on the independent Astra satellite system. If a case is to be made for any further regulation, it should apply much more to the huge potential of digital than to the limited achievements of analogue.

I am treading a little more carefully this time. I am reluctant to disagree with my noble friend Lord Astor, whose knowledge of this issue I respect, but I am informed by Sky that, whatever the number, location and variety of subscriber management systems used by a satellite broadcasting company, consumers will never need to change their black-box decoder. The decoder is part of the conditional access system and it functions on a wholly separate basis to the SMS.

In Committee my noble friend Lord Inglewood touched on the wider implications of these amendments. To change the rules governing a well-established analogue market-place would undermine investment confidence and place a large questionmark over the Government's general commitment to regulatory stability. There is no need for this amendment.

Lord Thomson of Monifieth

My Lords, from these Benches we also strongly support the amendment moved by the noble Viscount, Lord Astor. I do not intend to go over the arguments around this subject that we have had on a number of occasions, but simply add a couple of points. First, the present system is not working well, certainly not from the point of view of many cable operators. The truth is that BSkyB has a vertical integration of all the three processes that go into this form of programming. As I have said repeatedly, that is wrong in principle, but the only way to deal with it is to have an effective regulatory system, an effective licensing system.

Cable operators, for instance, would like to offer a wide range of programming packages which they are prevented from operating because of the dominant control that BSkyB has over those arrangements. They would like to do "mini" basic packages of several channels, rather than having to produce the great packages that suit BSkyB's economic interest. I do not labour the point. I say simply that the present system already calls for an adequate licensing control.

I mention one other argument that has not so far been fully developed. It concerns the future and the Government's hopes of making a success of the digital revolution. The fact is that BSkyB's dominance of analogue conditional access will allow it to build a dominant position in digital pay television. BSkyB has two enormous advantages in the transition to digital broadcasting arising from its existing dominance of the analogue market. It already knows the identity and detailed viewing habits of the core audience in this field. A successful service depends on the acquisition of the most attractive pay television rights—largely films and sport. Key rights holders sell pay television rights as a package, including both analogue and digital transmission. Therefore, if BSkyB continues to enjoy a virtual monopoly of high value pay television rights and controls conditional access for the existing network of 3.5 million direct-to-home viewers, it alone will have the benefit of established scale in bidding for new rights and it alone will be able to spread the cost of such rights over both digital and analogue receiver networks. That situation calls for the kind of licensing system for which the noble Viscount argued. As the noble Lord, Lord Donoughue, said, along with sporting issues this is probably the most important issue in the Broadcasting Bill. I hope that the noble Viscount will receive from the Minister as forthcoming a response to his amendment as I recently had to mine.

Lord Annan

My Lords, I hope that the noble Lord will take account of the remarks of the noble Viscount, Lord Astor. He is absolutely right in saying that nothing is more difficult to forecast than the future in television. I thought his case very strong.

Lord Inglewood

My Lords, we return again to this subject, as a number of noble Lords said. I am extremely grateful to all those who have taken part in the debate for, I think, the fourth time. That reflects the importance that noble Lords who have spoken attach to the proper control of conditional access arrangements, which is also the concern of the Government. I shall be brief but that is not to dismiss the views expressed. Rather, I do not wish to detain the House reiterating arguments I have previously expounded at length. Indeed, the opinion of the House on the central issue has already been tested.

As explained, the amendment seeks to establish a common regulatory regime for both analogue and digital conditional access. My noble friend models his approach around that of the Telecommunications Act. I am happy that we agree that this is in principle the right framework and that Oftel is the most appropriate regulator. Indeed, the Government's own proposals cover fully the regulatory effect of the amendments as they apply to conditional access services for digital television. Where we differ is on the judgment of whether it is appropriate to extend this form of regulation to analogue services.

I can only summarise again the Government's judgment, which was supported in the vote on Tuesday. I entirely understand the anxieties of those opposing us on the issue but we believe they are not justified on the facts. We remain of the view therefore that the amendment is not appropriate. We consider it risks doing more harm to UK interests than good.

The background to this judgment is that analogue conditional access is an established part of the market which has strictly limited potential for growth and which is likely to give way relatively quickly to digital markets. At this very moment the OFT is addressing concerns about behaviour in the market. Its investigations will conclude during the passage of the Bill. This process provides for any further action which may be necessary if those concerns are substantiated. Further .specific regulation of an established, and limited, market is not appropriate without substantiation of this kind. The potential for damage to investment confidence in UK markets because of concern about regulatory instability is very clear, as can be seen from our experience in the last several years in the cable sector. I referred to that on Tuesday. In the absence of confirmation of the need for specific regulation from the competition authorities, the benefits which might flow from the amendment are unclear. That, in a nutshell, is the Government's position. And it is why I very much hope that my noble friend will agree to withdraw the amendment, which we cannot accept.

Viscount Astor

My Lords, I am grateful to my noble friend the Minister. As always he put his case clearly and with great care. My noble friend Lord Colwyn raised a number of issues. With great respect, I believe that we dealt with them on Tuesday when we addressed the amendment of the noble Baroness, Lady Dean, which was fairly similar. I do not feel that it would be helpful to the House for me to go into those matters today.

I wish to make two main points. I do not believe that my amendment will damage investor confidence. I believe that it will improve competition. It is supported by those in the industry who wish to invest in digital. They want the amendment. If they did not want it, they would say so. I am not one to push it forward. I am very much against damaging any investor confidence.

I am a deregulator. I believe in deregulation and the Government's deregulation initiatives. But I do not believe that we should deregulate monopolies, and that is what we have at the moment. My amendment would benefit the industry and above all the consumer. It pains me to be at odds with my noble friend the Minister, but this is a crucial issue. I must test the opinion of the House.

5.36 p.m.

On Question, Whether the said amendment (No. 164) shall be agreed to?

Their Lordships divided: Contents, 101; Not-Contents, 103.

Division No.1
CONTENTS
Acton, L. Castle of Blackburn, B.
Annan, L. Chalfont, L.
Ashley of Stoke, L. Chandos, V.
Astor,V.[Teller] Clinton-Davis, L.
Barnett, L. Cocks of Hartcliffe, L.
Beaumont of Whitley, L. Craigavon, V.
Birk, B. Dacre of Glanton, L.
Blackstone, B. David, B.
Borrie, L. Dean of Thornton-le-Fylde, B
Broadbridge, L. Desai, L.
Bruce of Donington, L. Diamond, L.
Carmichael of Kelvingrove, L. Donoughue, L. [Teller.]
Carter, L. Dormand of Easington, L.
Dubs, L. Monkswell, L.
Falkender, B. Montgomery of Alamein, V.
Falkland, V. Morris of Castle Morris, L.
Fitt, L. Nelson, E.
Gallacher, L. Nicol, B.
Geraint, L. Norrie, L.
Gibson, L. Orr-Ewing, L.
Gladwin of Clee, L. Plant of Highfield, L.
Graham of Edmonton, L. Prys-Davies, L.
Halsbury, E. Rea, L.
Harris of Greenwich, L. Redesdale, L.
Haskel, L. Renton, L.
Hayhoe, L. Richard, L.
Hilton of Eggardon, B. Robson of Kiddington, B.
Hollis of Heigham, B. Rodgers of Quarry Bank, L.
Holme of Cheltenham, L. Russell, E.
Howell, L. St. John of Bletso, L.
Howie of Troon, L. Saltoun of Abernethy, Ly.
Seear, B.
Hughes, L. Sewel, L.
Hylton-Foster, B. Shannon, E
Jay of Paddington, B. Shepherd, L.
Jeger, B.
Jenkins of Putney, L. Smith of Gilmorehill, B.
Kilbracken, L. Stockton, E.
Kirkhill, L Stoddart of Swindon, L.
Lauderdale, E. Strabolgi, L.
Lockwood, B. Strafford, E.
Tenby, V.
Lovell-Davis, L. Thomson of Monifieth, L.
Macaulay of Bragar, L. Thurlow, L.
Mackie of Benshie, L. Tope, L.
McNair, L. Turner of Camden, B.
McNally, L. Wallace of Saltaire, L.
Mayhew, L. Walpole, L.
Merlyn-Rees, L. White, B.
Mersey, V. Williams of Crosby, B.
Milner of Leeds, L. Williams of Mostyn, L.
Mishcon, L. Winston, L.
not-contents
Addison, V. Finsberg, L.
Ailesbury, M. Gisborough, L.
Ailsa, M. Goold, L.
Archer of Weston-Super-Mare, L. Goschen, V.
Ashbourne, L. Greenway, L.
Belhaven and Stenton, L. Harding of Petherton, L.
Beloff, L. Harlech, L.
Birdwood, L. Harrowby, E.
Blake, L. Hemphill, L.
Blaker, L. Henley, L.
Boardman, L. Holderness, L.
Boyd-Carpenter, L. Hooper, B.
Bridgeman, V. Howe, E.
Brougham and Vaux, L. Inglewood, L.
Burnham, L. Jenkin of Roding, L.
Cadman, L. Knollys, V.
Campbell of Croy, L. Lindsey and Abingdon, E.
Carnegy of Lour, B. Liverpool, E.
Carnock, L. Long, V.
Chelmsford, V. Lucas, L.
Chesham, L. [Teller.] Lucas of Chilworth, L.
Clanwilliam, E. Lyell, L.
Clark of Kempston, L. Mackay of Ardbrecknish, L.
Colwyn, L. Mackay of Clashfern, L.
Courtown, E. [Lord Chancellor.]
Cranborne, V. [Lord Privy Seal.] Marlesford, L.
Cumberlege, B. Massereene and Ferrard, V.
Denham, L. Merrivale, L.
Denham of Wakefield, B. Miller of Hendon, B.
Dixon-Smith, L. Milverton, L.
Dundee, E. Monteagle of Brandon, L.
Eden of Winton, L. Mottistone, L.
Elles, B. Mowbray and Stourton, L.
Elliott of Morpeth, L. Munster, E.
Elton, L. Murton of Lindisfarne, L.
Norfolk, d. Stanley of Alderley, L.
Northesk, E. Stewartby, L.
O'Cathain, B. Stodart of Leaston, L.
Orkney, E. Strange, B.
Oxfuird, V: Strathclyde, L. [Teller.]
Pender, L. Strathcona and Mount Royal, L
Peyton of Yeovil, L. Sudeley, L.
Pilkington of Oxenford, L. Swansea, L.
Rankeillour, L. Swinfen, L.
Rennell, L. Teynham, L.
Renwick, L. Tollemache, L.
St. Davids, V. Trefgarne, L.
Seccombe, B. Trumpington, B.
Shaw of Northstead, L. Vivian, L.
Skelmersdale, L. Willoughby de Broke, L.
Skidelsky, L. Wynford, L.
Soulsby of Swaffham Prior, L. Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

5.45 p.m.

Lord Barnett moved Amendment No. 165: After Clause 69, insert the following new clause—

PROVISION OF NEWS ON CHANNELS 3 AND 5

(".—(1) Section 31 of the 1990 Act (provision of news on Channels 3 and 5) is amended as follows. (2) For subsection (2) there is substituted— (2) The Channel 3 licence holders shall appoint a single nominated news provider who shall be responsible for the broadcast on Channel 3 of news programmes which shall—

  1. (a) be of high quality dealing with national and international matters;
  2. (b) presented live; and
  3. (c) broadcast simultaneously with the broadcasts of news programmes provided by the single nominated news provider which are made by other holders of regional Channel 3 licences in compliance with conditions so imposed.".").

The noble Lord said: My Lords, Amendment No. 165 is tabled in my name and that of the noble Lords, Lord Thomson of Monifieth, Lord Peyton of Yeovil, and Lord Archer of Weston-super-Mare. I was asked to emphasise that they not only added their names, but also strongly agree with the amendment, as do others who unfortunately cannot add their names because no more than four are allowed on the Marshalled List.

It is clear from the words of the amendment that this is not a party political issue. The first part of the amendment substitutes a new subsection (2) to Section 31 of the 1990 Act—specifically subsection 2(c). As I said in Committee, without the new subsection a situation would arise which none of us want to see; that is, a fragmentation of news programmes on ITV presented by a variety of news providers at different hours. I hope your Lordships will agree that that cannot be helpful to providing high quality news.

The noble Lord, Lord Thomson of Monifieth, was upset when I said that I did not watch "Gladiators". I do not have grandchildren who might otherwise drag me in to see it. It seems crazy to me that such programmes, as with comedy programmes, are always seen at the same hour, whereas without the amendment news programmes may be provided at different times. Subsection 2(c) is therefore particularly important; that is, that the broadcasting of news should be simultaneous on Channel 3.

There is anxiety in some quarters that the amendment may create difficulties. But it does not necessarily have to apply to all channels. For example, it would not apply to Channel 5, or to other channels if there were any. Even in relation to Channel 3, the Independent Television Commission could nominate more than one news provider, provided they meet its criteria. It is then for the ITV companies to choose one other than ITN. That would certainly be within the rights of the ITC.

I turn to the second part of the amendment. As I said in Committee, it may seem surprising that a recent deputy chairman of the BBC should move an amendment like this. I hope it is not surprising. As I emphasised in Committee—again I know that there is anxiety about the amendment—I do not want to see a monopoly of TV news, whether on the BBC or ITV. I know that the BBC does not want that either. What matters to me, and I hope the House, is the quality of the news programmes on both ITV and BBC, and who should decide on the news provider. That should not be decided by the government of the day; it should be decided by the Independent Television Commission, which is truly independent. It may choose ITN or some other qualified news provider. As the amendment makes clear, that would be decided by the ITC.

I say again: it will not be the ITV companies who decide; it is not a party political matter; and it is not a monopoly matter. We need this proposal or something like it. If the Minister does not want to accept the amendment, although he might, perhaps he will put down his own amendment at Third Reading. Without something like the amendment one could have a news provider who does not have the necessary ability to provide a range and balance of news coverage.

Perhaps it is worth quoting here what we said previously. No, it is not worth quoting because I want to catch a train. It is a long quotation but the Minister knows what I said. As the Bill stands, there is a lack of clarity, as I hope the Minister will agree. The amendment should not be controversial. It seeks to do what most people thought was always intended. I hope the Minister and the House will accept that. On that basis, I beg to move.

Lord Inglewood

My Lords, if it is of assistance to the noble Lord, I willingly say that we would like to take away Amendment No. 165 and allow parliamentary counsel to work on it and table a similar amendment at Third Reading. We have certain objections to the second amendment.

Lord Barnett

My Lords, I do not want to withdraw the amendment at the moment because I know some noble Lords, including the noble Lords, Lord Archer of Weston-Super-Mare and Lord Thomson of Monifieth, want to speak.

Lord Thomson of Monifieth

My Lords, I am always glad to hear the Minister accept something so I do not want to interfere too much. I happily support the amendment. Perhaps I may make one point clear from these Benches. Indeed, the noble Lord, Lord Barnett, made the same point. The amendment is neutral as between ITN and any other bidder to provide a nominated news service, including Sky News. So far as I am concerned, ITN has had a good record over many years. Channel Four News produces a very special and distinguished news service. On the other hand, Sky News has enhanced our degree of choice with the country's first British based 24-hour news service which is of good quality. What I am opposed to is what has been canvassed within the ITV system—the possibility of having two competing nominated news providers, which indeed is possible under the 1990 Act. A single nominated news provider for Channel 3 is part of the national cohesion which we all talk about. It is certainly part of the essential national spine of the ITV broadcasting system. I would hate to see that fragmented.

Perhaps the Minister will clarify a point for me when he replies. Our amendment is entitled "Provision of news on Channels 3 and 5". I would not in principle be in favour of the same nominated news provider providing both ITV news and Channel 5 news. As I read the original Section 31 of the 1990 Act, it does not say that the nominated news provider should be the same in both cases. It merely indicates that there should be a nominated news provider and that it should be one of quality. With those qualifications, I strongly support what the noble Lord, Lord Barnett, has said.

Lord Orr-Ewing

My Lords, I always think that BBC news should be sacrosanct but I find it disturbing that it is made by Granada for the BBC. Who controls that if there are imperfections in the standards being set? I am not saying that there are, but does it come under the ITC as it is produced by Granada, which is an independent company? Presumably it comes under the BBC if it has it on its channel. It does not sow quite the same confidence when I see that it is news made for the BBC by Granada. It is a small point. I think purity of the public service is very important, particularly in the news area.

Lord Ashley of Stoke

My Lords, perhaps I may make two brief points. First, the signatories to the amendment are either Cross Benchers or Social Democrats but there is support for the amendment on this side of the House. I tried to add my name to the amendment but, as the noble Lord, Lord Barnett, indicated, other people had jumped in first. I want to emphasise the fact that there is some support for the amendment on this side of the House.

Secondly, I am delighted that the Minister accepts the principle of the amendment.

Baroness Seear

My Lords, I am sure the noble Lord meant Liberal Democrats. He said "Social Democrats".

Lord Ashley of Stoke

My Lords, I never get the names right. The Liberal Democrats are such a wonderful party but I am always confused about the actual name. I did mean the name the noble Baroness mentioned—a very fine name indeed!

I trust the Minister to accept the spirit of the amendment. But when he gets in cahoots with his officials I hope he will emphasise to them that we do not want a patchwork provision. There must be. one provider; not necessarily ITN, as the noble Lord said, although I hope it will be ITN. I have to declare that one of my daughters works for ITN. There should be one provider. Otherwise we shall have a patchwork provision and we shall have news being shown at different times in different parts of the country. That is the last thing we want. I hope the Minister will bear that point in mind.

Lord Archer of Weston-Super-Mare

My Lords, perhaps I may begin by pointing out to the noble Lord, Lord Ashley, that I am a Conservative and that my name is attached to the amendment. It is very cruel of him not to remember that I am a Conservative as he was my pair when I was in the lower House. Perhaps I may also say how aware I am that the noble Lord, Lord Barnett, hopes to catch a train to Manchester at a particular hour, so I shall not repeat arguments that have already been put forward.

I am bound to say, though, as a man who believes in free enterprise, that it would be natural for me to want to see as much competition as possible. But in this particular case it is a matter of wanting quality rather than anything else. I was moved by the comments of John Birt at the 40th anniversary of ITN—it is not ITN we are actually discussing here; it is anyone who might have this job—that the strength of the BBC as a news agency for the whole world was the strength of ITN. As long as you had outstanding competition for the BBC, the BBC had no choice but to make sure it was as good if not better. That is what we are fighting for in the House today. It is to make sure that the BBC has to stay on its toes for ever. I do not believe that would happen if this task was given out to many people and the standards were lowered. For that reason alone I back this amendment and back the noble Lord, Lord Barnett.

I want to be able to say whenever I travel around the world, and whenever I see anyone else's television, particularly in the United States, that we still have the best news service in the world. The way to keep that best news service in the world is to darn well make sure it is on its toes morning, noon and night. We shall not achieve that by dividing the talents we have among many people. We shall achieve it by making sure that they work together.

I am happy to support the amendment in the name of the noble Lord, Lord Barnett, and I am pleased to have my name to it as well. I am pleased to remind my good and very old friend Lord Ashley that I am a member of the Conservative Party.

Lord McNally

My Lords, I rise with some trepidation because I know that the noble Lord, Lord Barnett, is heading for the six o'clock train. But I have always assumed that the Manchester train would not dare leave without him.

I wish to add something that takes on a political, but not a party political, line. It is extremely important, at a time when more and more people receive their news primarily from television, that there is that element of competition in quality to which the noble Lord, Lord Archer, referred. There is no doubt that the impact of ITN over the years has been a major spur towards improving the quality of BBC news coverage as well. I go further and slightly divert from what my noble friend Lord Thomson said. One of the advantages that we have had in recent years—and it is an added bonus—has come from Sky Television in the very high quality of Sky News. I would like Sky News to stay where it is as another competitor to the single provider for Channel 3 and the BBC. I agree with my noble friend Lord Thomson: I would like to see other providers coming in for the fifth channel.

We want diversity and quality in television news, but that does not happen by chance or accident. This Bill has to have in it the amendments which have been put forward by the noble Lord, Lord Barnett—I know what the Minister said—because they are needed. Without them there will be a tendency to go for the cheap and cheerful. As I said in Committee, the bean counters will prevail and news may well be forced to the margin of the third channel without the guarantees of this initiative put forward by the noble Lord, Lord Barnett, and his colleagues. I commend the amendment to the Minister.

6 p.m.

Baroness Dean of Thornton-le-Fylde

My Lords, from these Benches we support this amendment. I am delighted at the enthusiasm of my noble friend Lord Ashley in jumping up and getting in his remarks, but my name was attached to the original amendment. It would have appeared with the amendment today, but as it has only four lines it could not be entered there. We felt that it was far better to have support from right across the House. As a fellow Mancunian, far be it for me to delay my noble friend Lord Barnett any longer. We strongly support this amendment.

Lord Inglewood

My Lords, with the leave of the House, although I thought that it might have been convenient to your Lordships—or one of them—to have indicated my response earlier, I would like to thank the noble Lord and his supporters in the "rainbow coalition" for having so clearly set out the purpose and rationale of the amendments.

When your Lordships debated this issue in Committee I undertook to reflect carefully on what was said about the provision of news on Channel 3 and I promised to make the Government's position clear today. I am pleased to do so.

A powerful case has been made for restricting the provision of news on Channel 3 to one provider. Having carefully considered the arguments, I can inform your Lordships that the Government agree with the purpose of Amendment No. 165. We are persuaded that there are significant benefits in requiring Channel 3 to have a single news provider and in amending the 1990 Act accordingly.

We accept that a single Channel 3 news supplier is an important counterbalance to the BBC and will help to provide competition for audience share and in the production of high quality newscasting. We agree that a single news provider can provide continuity in bulletins throughout the day and throughout the country and help define Channel 3 as a national network. Limiting Channel 3 to one news provider will ensure that all regions get the same high quality of news. We accept the concern voiced by the ITC and others that a completely free market might lead to a diminution in the quality of news provision in some ITV regions.

In accepting the case for a single news provider we recognise the valuable role played by the ITC in vetting possible applicants for quality and therefore want to retain the ITC's role as the body which designates nominated news providers as such. We would not want, however, the ITC to take all Channel 3's decisions for them. We therefore propose that the ITC may nominate as many news providers for Channel 3 as it deems fit, but that it is left to the ITV network to choose which single provider best meets their requirements from those deemed fit. Such a framework will have the additional benefit of ensuring proper competition between news providers when the contract to the chosen provider nears the end of its term.

As I made clear in Committee, the Government are opposed to attempting a definition in statute of a quality broadcast news service which has not heretofore been needed. I therefore remain opposed to the revised attempt of the noble Lord in Amendment No. 166 to do so. We have a firm and effective regulator in the ITC and I see no need to tell them how to do their job in defining the quality of news provision which they have managed quite satisfactorily in the past.

With the permission of the noble Lord, Lord Barnett, I should like to take Amendment No. 165 away, permit parliamentary counsel to work on it, and to table a similar Government amendment at Third Reading. I very much hope that the noble Lord accepts my reasons for opposing his second amendment and that, in the light of what I have said, he might consider withdrawing them.

Lord Barnett

My Lords, I again pay tribute to the Minister for the way he has handled this Bill, the BBC Charter and Agreement and the discussions which we had about it. We are very grateful for his knowledge and ability and the way in which he has handled matters.

I am happy to take away Amendments Nos. 165 and 166. I hope that I said that there can be many news providers. I do not object to them at all. If the ITC nominates other news providers who will meet their own criteria it will be for the ITV companies to choose which one they want to use. I have no objection to that because it is absolutely right. With the principle that the Minister set out and the way in which he agrees to Amendment No. 165, I beg leave to withdraw the amendment. We shall look at the proposed amendment which I assume the Government will put down at Third Reading.

Amendment, by leave, withdrawn.

[Amendment No. 166 not moved.]

Lord Inglewood moved Amendment No. 167: After Clause 70, insert the following new clause—

RESTRICTED TELEVISION SERVICES

(". After section 42 of the 1990 Act there is inserted—

"CHAPTER IIA RESTRICTED SERVICES

Restricted services.

42A. In this Part "restricted service" means a service which—

  1. (a) consists in the broadcasting of television programmes for a particular establishment or other defined location, or a particular event, in the United Kingdom, and
  2. (b) is provided on a frequency or frequencies assigned to the Commission under section 65.

Licensing etc. of restricted services.

42B.—(1) An application for a licence to provide a restricted service shall be made in such manner as the Commission may determine, and shall be accompanied by such fee (if any) as the Commission may determine.

(2) Subject to subsections (3) and (4), sections 40 to 42 shall apply in relation to such a licence as they apply in relation to a licence to provide a Channel 3 service.

(3) In its application to a licence to provide a restricted service, section 41 shall have effect with the omission of subsection (2); and the maximum amount which the holder of such a licence may be required to pay by way of a financial penalty imposed in pursuance of subsection (1)(a) of that section shall not exceed whichever is the greater of—

  1. (a) £50,000, and
  2. (b) the amount determined under subsection (4).

(4) The amount referred to in subsection (3)(b) is—

  1. (a) in a case where a penalty under section 41(1)(a) has not previously been imposed on the holder of the licence during any period for which his licence has been in force ("the relevant period"), 3 per cent. of the qualifying revenue for his last complete accounting period (as determined in accordance with section 19(2) to (6)); and
  2. (b) in any other case, 5 per cent. of the qualifying revenue for that accounting period (as so determined);
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 qualifying revenue for that accounting period (as so determined).".").

The noble Lord said: My Lords, as I explained in the debate in Committee on Amendment No. 192, tabled by the noble Baroness, Lady Dean, the Government are keen to see the expansion of smaller scale television operations where there is suitable available spectrum. This amendment follows representations made to us by the Independent Television Commission and mirrors, almost exactly, the provision for radio restricted service licences, and it is our hope that it will be as popular.

I should stress that this amendment applied to the current world of analogue transmission. With the arrival of digital and its more efficient use of spectrum, the multiplex provider will be in a position to include all manner of local television services aimed at special events or particular sections of the community. These will be a matter for contract between broadcasters and the multiplex provider.

Last year the Radio Authority issued over 300 restrictive service licences for 28 days or less and there are over 40 longer term RSLs operating in hospitals, universities and colleges. The economics of establishing a television service are somewhat different in scale than is the case for radio. We therefore envisage that the Independent Television Commission will need to consider carefully how best to encourage the take-up of these licences. However, the Government are keen to give the ITC the maximum possible room for manoeuvre in awarding them and this is why the amendment before your Lordships is drafted in broader terms than that put forward in Committee by the noble Baroness, Lady Dean.

My department and the ITC are aware of the wish of the Silverstone race circuit to broadcast television services during events held there and we would envisage such broadcasts being licensed as restricted services provided there is spectrum available for such use. I am sure that there will be many more demands for such licences for special events and from the likes of university campuses keen to have a student television service.

I should explain that the provisions of new Section 42B merely replicate the enforcement provisions and the level of fines for breaching a licence which apply to all the ITC's other licensees, as amended by the government amendments debated on Tuesday. I beg to move.

On Question, amendment agreed to.

Lord Inglewood moved Amendment N0. 168. After Clause 70, insert the following new clause—

ENFORCEMENT OF LICENCES TO PROVIDE NON-DOMESTIC SATELLITE SERVICES

(".—(1) Section 45 of the 1990 Act (licensing etc. of non-domestic satellite services) is amended as follows.

(2) In subsection (5), for "and" there is substituted "to".

(3) In subsection (6), for "shall instead be £50,000" there is substituted— shall not exceed whichever is the greater of—

  1. (a) £50,000, and
  2. (b) the amount determined under subsection (6A).

(6A) The amount referred to in subsection (6)(b) is—

  1. (a) in a case where a penalty under section 41(1)(a) has not previously been imposed on the holder of the licence during any period for which his licence has been in force ("the relevant period"), 3 per cent. of the qualifying revenue for his last complete accounting period (as determined in accordance with section 19(2) to (6)); and
  2. (b) in any other case, 5 per cent. of the qualifying revenue for that accounting period (as so determined);
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 qualifying revenue for that accounting period (as so determined)."

(4) Subsections (8) and (9) are omitted. ").

On Question, amendment agreed to.

Lord Inglewood moved Amendment No. 169: After Clause 70, insert the following new clause—

ENFORCEMENT OF LICENCES TO PROVIDE LICENSABLE PROGRAMME SERVICES

(".—(1) Section 47 of the 1990 Act (licensing etc. of licensable programme services) is amended as follows.

(2) In subsection (8), for "and" there is substituted "to".

(3) In subsection (9), for "shall instead be £50,000" there is substituted— shall not exceed whichever is the greater of—

  1. (a) £50,000, and
  2. (b) the amount determined under subsection (9A).

(9A) The amount referred to in subsection (9)(b) is—

  1. (a) in a case where a penalty under section 41(1)(a) has not previously been imposed on the holder of the licence during any period for which his licence has been in force ("the relevant period"), 3 per cent. of the qualifying revenue for his last complete accounting period (as determined in accordance with section 19(2) to (6)); and
  2. (b) in any other case, 5 per cent. of the qualifying revenue for that accounting period (as so determined);
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 qualifying revenue for that accounting period (as so determined)."

(4) Subsections (11) and (12) are omitted.").

On Question, amendment agreed to.

Lord Inglewood moved Amendment No. 170: After Clause 70, insert the following new clause—

RENEWAL OF LICENCES TO PROVIDE NATIONAL RADIO SERVICES

(". After section 103 of the 1990 Act there is inserted—

"Renewal of national licences.

103A.—(1) A national licence may (subject to the following provisions of this section) be renewed on one occasion for a period of eight years beginning with the date of renewal.

(2) An application for the renewal of a national licence under subsection (1) may be made by the licence holder not earlier than three years before the date on which it would otherwise cease to be in force and not later than the relevant date.

(3) Where any such application is made before the relevant date—

  1. (a) if no simulcast radio service provided by the applicant is being broadcast in digital form when the application is made, the Authority shall postpone the consideration of the application until the relevant date or, if earlier, the date on which the broadcasting of such a service in that form begins, and
  2. (b) in any other case, the Authority may postpone the consideration of the application for so long as they think appropriate having regard to subsection (8).

(4) Where an application for the renewal of a national licence has been duly made to the Authority, they shall (subject to subsection (5)) grant the application if, but only if—

  1. (a) the Authority are satisfied that the applicant would, if his licence were renewed, provide a national service which complied with the conditions included in the licence in pursuance of section 106 (whether as originally imposed or as varied under that section),
  2. (b) the applicant has given notice to the Authority under section 35(2)(6) of the Broadcasting Act 1996 of his intention to provide a service for broadcasting in digital form, and
    3. 463
  3. (c) a simulcast radio service provided by the applicant is being broadcast in digital form or the Authority are satisfied that by the relevant date the applicant has done all that it would in the circumstances be reasonable to expect him to do by that date to procure the broadcasting of such a service within such time as the Authority consider reasonable.

(5) Section 100(4) to (6) shall apply in relation to an applicant for the renewal of a national licence as those provisions apply in relation to such an applicant as is mentioned in section 100(4), but as if any reference to the awarding of such a licence to the applicant were a reference to the renewal of the applicant's licence under this section.

(6) On the grant of any application under this section the Authority—

  1. (a) may, in a case where a simulcast radio service provided by the applicant is not yet being broadcast in digital form on the relevant date, determine a date by which the broadcasting of such a service in that form must begin;
  2. (b) shall determine an amount which is to be payable to the Authority by the applicant in respect of the first complete calendar year falling within the period for which the licence is to be renewed; and
  3. (c) may specify a different percentage from that specified under section 98(1)(d)(ii) as the percentage of qualifying revenue for each accounting period of his that will be payable by the applicant in pursuance of section 102(1)(c) during the period for which the licence is to be renewed.

(7) The amount determined by the Authority under subsection (6)(b) in connection with the renewal of a licence shall be such amount as would, in their opinion, be payable to them by virtue of section 102(1)(a) if they were granting a fresh licence to provide the national service in question.

(8) Where the Authority have granted a person's application under this section they shall formally renew his licence not later than the relevant date or, if that is not reasonably practicable (whether because subsection (3)(a) precluded the consideration of the application before that date or for any other reason), as soon after that date as is reasonably practicable; and they shall not so renew his licence unless they have notified him of—

  1. (a) any date determined by them under subsection (6)(a),
  2. (b) the amount determined by them under subsection (6)(b), and
  3. (c) any percentage specified by them under subsection (6)(c),
and he has, within such period as is specified in that notification, notified them that he consents to the licence being renewed on those terms.

(9) Where a national licence has been renewed under this section

  1. (a) any conditions included in it in pursuance of section 102 shall have effect during the period for which the licence has been renewed—
    1. (i) as if the amount determined by the Authority under subsection (6)(b) were an amount specified in a cash bid submitted by the licence holder, and
    2. (ii) subject to any determination made under subsection (6)(c);
  2. (b) (subject to paragraph (a)) that section shall have effect in relation to the period for which the licence has been renewed as it has effect in relation to the period for which a national licence is originally in force;
  3. (c) where the Authority have determined a date under subsection (6)(a), they shall include in the licence as renewed a condition requiring a simulcast radio service to be broadcast in digital form throughout the 464 period beginning with the date determined under subsection (6)(a) and ending with the date on which the licence (as renewed) is to expire; and
  4. (d) the reference in section 111(4) to the end of the period for which a national licence is to continue in force shall, in relation to the licence, be construed as a reference to the end of the period for which it has been renewed.

(10) Subsections (6)(a) and (9)(c) do not prejudice the generality of section 42(2)(b) of the Broadcasting Act 1996 (power to vary national licence to include conditions relating to digital broadcasting).

(11) In this section— simulcast radio service" has the same meaning as in Part III of the Broadcasting Act 1996; the relevant date", in relation to a national licence, means the date which the Authority determine to be that by which they would need to publish a notice under section 98(1) if they were to grant, as from the date on which that licence would expire if not renewed, a fresh licence to provide the national service formerly provided under that licence.").

On Question, amendment agreed to.

Lord Inglewood moved Amendment No. 171: After Clause 70, insert the following new clause—

FINANCING OF GAELIC SOUND PROGRAMMES

(".—(1) Section 183 of the 1990 Act (financing of television programmes in Gaelic out of Gaelic Television Fund) is amended as mentioned in subsections (2) to (6).

(2) In subsection (2), for "Gaelic Television Fund" there is substituted "Gaelic Broadcasting Fund".

(3) In subsection (3), for "Comataidh Telebhisein Gaidhlig (the Gaelic Television Committee)" there is substituted "Comataidh Craolaidh Gaidhlig (the Gaelic Broadcasting Committee)".

(4) After subsection (3) there is inserted—

"(3A) Before making any appointment under subsection (3) the Commission shall consult the Radio Authority.".

(5) In subsection (4), in each of paragraphs (a)(i) and (b), after "television" there is inserted "and sound".

(6) In subsection (6)—

  1. (a) after "will" there is inserted "—(a)"; and
  2. (b) for "but" there is substituted—

(b) widen the range and improve the quality of sound programmes in Gaelic that are broadcast for reception in Scotland; but". (7) In Part II of Schedule 1 to the House of Commons Disqualification Act 1975 (bodies of which all members are disqualified) there is inserted at the appropriate place—

"Comataidh Craolaidh Gaidhlig".).

The noble Lord said: My Lords, the 1990 Broadcasting Act established the Gaelic Television Committee and gave it a remit to use the Scottish Office-funded Gaelic Television Fund to finance the making of Gaelic television programmes. Since the committee began its work in 1992, it has financed a wide range of programmes. Indeed, the amount of Gaelic television broadcast has almost tripled and the enhanced service has been warmly received by the Gaelic-speaking audience. It complements other government support for the language and culture. The successful development of Gaelic television production from a very small skills base is a credit not only to the committee but also to the broadcasters and the independent producers in Scotland who have worked hard to deliver a range of high quality programmes for Gaelic viewers.

The rapid expansion in television programme production has not, however, been without its problems. Many people previously working in Gaelic radio have moved into television thereby creating a significant staffing turnover in BBC Radio nan Gaidheal. It has also proved difficult to develop satisfactory programmes in some categories, particularly comedy, where it is felt that radio would be a better medium to develop talent and ideas before embarking on expensive television production.

The amendments seek to address those problems by extending the committee's remit to cover radio and by giving it powers to fund some Gaelic radio production and meet some of the training costs involved for people employed in Gaelic radio. I do not envisage that the new powers will make a significant impact on the committee's budget since radio production is much cheaper than television.

I should stress that in making these amendments we are not seeking to transfer responsibility for meeting the costs of BBC nan Gaidheal to the committee. We expect the BBC to continue to maintain its Gaelic radio service, paid for from the licence fee, and to include a commitment to that effect in the statement of pledges to its audience which it is currently preparing. We recognise the importance of the Gaelic radio service to Gaelic speakers in Scotland. Indeed, recent research has shown that Radio nan Gaidheal is listened to by 66 per cent. of its potential audience of 69,000 Gaelic speakers, which is impressive when compared to the next highest BBC service in the survey, BBC Radio 1, with an audience share of just 27 per cent. The amendments, if enacted, will enable the committee to fund additional Gaelic radio programmes on BBC and commercial radio stations in Scotland which will enhance the range and quality of radio for listeners there.

The amendments have the effect of renaming the Gaelic Television Committee the Gaelic Broadcasting Committee to reflect its enhanced role and to give the Radio Authority a say in the appointment of membership to the committee and in the approval of the committee's expenditure plans in respect of radio. Responsibility for the oversight of the committee and its work remains with the Independent Television Commission. It would be our intention to bring the provisions into effect on 1st April 1997. In speaking to Amendment No. 171, I have also covered Amendments Nos. 220A, 221, 222 and 224. I beg to move.

Lord Kirkhill

My Lords, I hope that the Minister will accept that I am not in any sense trying to get in behind him in the comment that I now make. I genuinely seek information. I assure him of that. However, when the Bill was published the noble Earl, Lord Lindsay, said that the Government might at some stage table amendments to improve the quality of the scheduling of Gaelic television programmes. So far that has not been done. I wonder whether the Minister can tell me the Government's intention.

6.15 p.m.

Lord Thomson of Monifieth

My Lords, perhaps I may say on behalf of these Benches that we welcome the Minister's proposal to extend the remit of the Gaelic Television Fund to make it the more general Gaelic Broadcasting Fund. We agree with everything the Minister said about the record of Gaelic broadcasting since the fund was set up.

I do not want to strike an ungenerous or sour note. However, it is one thing to extend the operations of the Gaelic Television Fund to radio broadcasting and to say that it will have some extra resources. To do so against the background that the present funding is not being increased to cover radio—indeed, the total funding is being severely restricted—is another thing. As I understand it, if the Gaelic Television Fund had been fortunate enough to enjoy the provisions which the Government are now writing into the Bill for the Welsh-language S4C and had index-linked the fund, it would today have about £6 million more. The Gaelic Television Fund is struggling financially and although it welcomes the opportunity to expand into radio, I think it a pity that it is not being given extra funding for the purpose.

I wish to raise another matter with the Minister and gain his reaction to it. The Gaelic Television Fund people are anxious, as the Welsh-language broadcasters were anxious, that they should have their fair share of the opportunities of the new digital age when it comes. I assume that with the many new channels that digital technology will bring through the multiplexes there may be an opportunity for greater concentration of Gaelic programming. I wonder whether the Minister has thought about the possibility of consolidating the Gaelic programmes on the various terrestrial channels that exist at the moment on a designated digital channel—perhaps not on a round-the-clock basis but at least for several hours a day. Encouragement in that direction would he most welcome.

It would offer a further opportunity. I know that those involved feel that they have done well in terms of the programmes they have funded. They have won some creditable awards for their programmes. But they feel frustrated that final commissioning decisions are always left to the terrestrial broadcasters such as Scottish Television or Grampian Television on the ITV side and to BBC Scotland. I have explained to them that I do not think that they can hope for any change because editorial responsibility for the commissioning of programmes must rest with the terrestrial broadcasters. However, multiplex offers a new world—does it not?—and it may well be possible to have a digital Gaelic channel in one of the multiplexes and for the Gaelic Broadcasting Fund to be the commissioner. I hope that that idea can be explored. I should be grateful to know the Minister's thinking.

In general therefore I welcome the extension of the fund's responsibilities but put in a plea that its overall funding might be looked at more generously.

Lord Inglewood

I turn first to the question from the noble Lord, Lord Kirkhill. We recognise that there are difficulties in finding sufficient time during peak viewing hours on Channel 3 in Scotland for the scheduling of Gaelic television programmes. My department and the Scottish Office are considering how the present scheduling of programmes might be eased following the introduction of digital television. I hope that that answer indicates to the noble Lord that both my department and the Scottish Office are concerned about the problem.

The noble Lord, Lord Thomson, raised the question of funding. We must be clear that the Gaelic Television Committee is not a broadcaster. It is a statutory body which gives grants for the making of television programmes. We see no reason why its funding should be treated any differently from that of any other grant-awarding body in Scotland, such as the Scottish Arts Council and the Scottish Film Council. That is perhaps a better comparison than that of S4C, suggested by the noble Lord, because S4C is a broadcaster. I am sure that the Secretary of State for Scotland will note the views that have been expressed on the need to provide adequate resources to support Gaelic broadcasting and that he will take them into account when setting the fund's budget in future years.

The noble Lord suggested having a specific digital channel for Gaelic. The basis of the allocation of multiplex licences depends upon inter alia the variety of the programmes offered and—I am now concentrating on later in the story than now—if there were to be local multiplexes, it is clear that there would be a strong case, in meeting that variety criterion, for any potential applicant to include a Gaelic service on that multiplex. On national multiplexes, it is still too early to say how the variety criterion might be met in respect of Gaelic provision, bearing in mind that its 69,000 speakers are only a small part of the total national audience.

It is interesting to focus on that matter but we must remember that once we have digital television the origin of the programme will not necessarily be all that clear to the viewer. It may not even be necessary to have a specific Gaelic channel, because there may be a number of different services, each of which, as part of its general move towards providing a wide variety of programmes, will introduce Gaelic programmes. There is plenty of potential for Gaelic in the digital future.

On Question, amendment agreed to.

Lord Thomson of Monifieth moved Amendment No. 172: After Clause 70, insert the following new clause—

ITC: ANNUAL REPORT

(".—(1) The 1990 Act is amended as follows.

(2) In section 197, in subsection (3)(a), at the end there is inserted "in a review included pursuant to paragraph 15(2A) in any report by the Commission under paragraph 15 of Schedule 1 to this Act; or

(3) In Schedule I, there is inserted after paragraph 15(2)— (2A) The report shall include a review by the Commission of developments in and the financial performance of the services regulated by the Commission; and in conducting the review the Commission shall have regard to the need to exclude from the review, so far as is practicable, any matter which relates specifically to the affairs of a particular person whose interests would, in the opinion of the Commission, be seriously and prejudicially affected by the publication of that matter.").

The noble Lord said: My Lords, I hope that your Lordships are not becoming as weary of the sound of my voice as I am. As the Minister will be aware, this is an amendment inspired by the ITC, which I believe has been in discussion with the Government about the possibility of statutory backing to enable the ITC to publish more information about the financial structure and performance of the television industry. I am sure that in seeking that the ITC does not wish to place any additional burdens on any class of ITC licence in terms of supplying data to the commission. What is required is a explicit power to publish data it already has, with the necessary safeguards about commercial confidentiality.

In recent months there has been a qualitative change in the nature of the work that the ITC does from the days when it was under the old IBA. Independent television is much more a business than a purely broadcasting service. One has only to look at the financial press to see that it is the financial changes which dominate discussion about the industry's future shape. It would allow much more informed debate about the UK television industry if there were a specific obligation on the ITC to perform this regulatory task, which is carried out in other regulated industries through their own statutory provisions. I hope that the Minister will give a sympathetic response to the request from the ITC. I beg to move.

Lord Inglewood

My Lords, the noble Lord, Lord Thomson, has explained clearly the merits of the Independent Television Commission publishing an annual overview of the broadcasting sector and the reasons why he believes that in order to do so as part of its annual report, it needs statutory provision. As ever, the noble Lord has made his case most persuasively. The Government have taken the view that since the ITC has produced such a review in its 1994 annual report without any legislative provision, we need to be convinced to create such a statutory provision now in order for it to continue to do so. After all, it has explained that it is not seeking additional information beyond that which it currently obtains without statutory support.

Nevertheless, I recognise the force of the arguments. Without any commitment, we should like to consult the ITC's licensees on this matter. The department will also seek the views on the amendment of the ITV Association, the Cable Communications Association and other interested parties. I shall inform your Lordships of the result of our inquiries on Third Reading. I hope that that will reassure the noble Lord.

Lord Thomson of Monifieth

My Lords, I am grateful to the Minister for the positive way in which he has reacted to the suggestion. What he proposes seems to be a sensible approach to the matter. In the light of his assurance that he will go on in the way that he has suggested, I am happy to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Dean of Thornton-le-Fylde moved Amendment No. 173: After Clause 70, insert the following new clause—

LICENSING OF ADDITIONAL SERVICES

(" . After Section 49(2) of the 1990 Act insert— ("(2A) The Commission shall do all that they can to secure, in relation to the spare capacity for the provision of additional services on frequencies on which Channel 5 is provided, that a single teletext service is provided on that spare capacity; but any such service shall be provided on only so much of that spare capacity as the Secretary of State may approve.".").

The noble Baroness said: My Lords, I shall speak at the same time to Amendments Nos. 174, 175 and 176, all of which are related. This is a new amendment. We did not consider it in Committee. It concerns teletext on the new Channel 5 service, which is not on air at the moment, as noble Lords will be aware.

The 1990 Act provided for the ITC to advertise and then award a licence for a public teletext service on Channels 3 and 4 and on S4C. Under the 1990 Act, the ITC set its quality threshold before applicants' cash bids could be considered. That threshold included the allocation of minimum numbers and main teletext pages to high quality national and international news, regional information, and the diversity of other types of information, including, for instance, travel, sports, arts and leisure, and education.

They were the minimum requirements of that threshold. Additional requirements were included in the winner's application, which was Teletext Limited. The ITC also monitors the service to check on compliance with the contract. For teletext capacity on Channel 5, there are no such provisions as those provided for in the 1990 Act.

The Channel 5 licence was awarded last October. Noble Lords may be aware that there was a legal challenge to the ITC decision on the award of that licence. One of the unsuccessful applicants applied to the courts. That legal challenge was disallowed by the courts in January this year.

The spare capacity on Channel 5 can, and I gather will be, licensed separately by the ITC. However, even though the Channel 5 service itself is part of public service broadcasting, teletext on Channel 5 is not subject to any public service requirement.

We ask whether that was intended when the Bill was drawn up. We have the position where those who provide teletext on Channel 5, under the present provisions—no provisions as I would interpret it—will be able to cherry-pick the most commercially attractive elements of Teletext Limited's service as provided on the other channels, without any kind of quality threshold being applied.

We suggest that the results could well be that public service teletext on Channels 3 and 4 and S4C will be undermined seriously by a competitor who does not have that quality threshold. We believe that the 1990 Act should be amended to provide such a provision. The amendments do provide that. They would introduce for a second public teletext service using the capacity on Channel 5 a licensing and regulatory regime similar to the provisions currently applying to the public teletext service on Channels 3 and 4 and S4C.

Channel 5 itself is to be a national service. It probably will not need an appropriate requirement on regional information, but there should be requirements equivalent to those contained in Schedule 5 to the Broadcasting Act 1990 for high quality national and international news and for a range of other information calculated to appeal to a wide variety of tastes and interests.

I hope that the Minister will feel able to accept the amendments, which will provide that dreadful term—a level playing field. I beg to move.

Lord Thomson of Monifieth

My Lords, my name is to the amendment, but the noble Baroness has said it all, and I am content to rest on the case that she has put to the Minister.

Lord Inglewood

My Lords, as the noble Lord, Lord Thomson, said, the noble Baroness, Lady Dean, has set out clearly the case for an additional public service teletext broadcaster on Channel 5. She pointed out that that is what the Independent Television Commission wants. It may help your Lordships in the consideration of these amendments if I explain where the difference of opinion on this matter lies between the Government and the ITC.

The ITC put its views on Channel 5 teletext to my department last year and we gave them serious and careful consideration, during the preparation of the Bill. The Government fully accept that there is a need to regulate the services on our principal broadcast channels, including the teletext services. That is why paragraph 9 of Schedule 7 to the Bill extends the consumer protection aspects of Section 6 of the Broadcasting Act 1990 to include teletext services on Channel 5. It is not the case that the teletext service would be entirely unregulated.

The amendment in the noble Baroness's name goes further than the Bill's provision and lays specific public service requirements on Channel 5 teletext which the Government believe are unnecessary. Quality public service teletext broadcasts are already provided by the BBC and by the single Channel ¾ licensee, Teletext Limited. We remain to be convinced of the need or the benefit to the public of imposing public service broadcasting obligations upon the Channel 5 teletext licensee. We had rather seen this teletext service, with its lesser UK coverage, flourishing with only the lightest of regulatory touches.

We have taken careful note of the ITC's concern that the Channel 5 teletext licensee might cherry-pick the most profitable services from the public service licensee. Our view is that the market is large enough to support both services and the inherent advantages that the Channel ¾ licensee has will ensure that the Channel 5 licensee will not seriously affect its performance, which in turn means it will have different characteristics. The current licensee, Teletext Limited, has a much larger service to offer across its two channels against Channel 5's single channel. Teletext Limited has national coverage against Channel 5's forecast 70 per cent. coverage. Finally, Teletext Limited provides a valuable regional service whereas Channel 5 teletext will probably remain a national service. For those reasons, we see no need to impose public service functions on Channel 5 teletext.

Finally, Amendment No. 175 seeks to add restrictions on the ownership of Channel 5 teletext. As I have said, the Government foresee that Channel 5 teletext could be a very different service from that provided currently by Teletext Limited and it follows, therefore, that we do not see any difficulty with co-ownership of the teletext services on all three commercial channels. For those reasons, we do not accept the need for ownership controls on the Channel 5 teletext licence.

Baroness Dean of Thornton-le-Fylde

My Lords, I thank the Minister for giving the background to the department's thinking on the issue. It is the first time that I have heard that explanation. It has left me with a number of questions. Channel 5 is a public service broadcaster. Teletext Limited put in its application for coverage on Channels 3 and 4 services against the background which prevailed at the time. It is now confronted with a new channel going on air next year in respect of which the teletext provision could cherry-pick the services that it provides. That is unfair competition and does not allow the kind of level playing field that one would expect in the commercial field.

I heard what the Minister said and, clearly, I need to think about it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 174 to 176 not moved.]

6.30 p.m.

Baroness Smith of Gilmorehill moved Amendment No. 177: After Clause 70, insert the following new clause—

AWARD OF NATIONAL SOUND BROADCASTING LICENCES

("After section 100(1) of the 1990 Act insert—

"(1A) For an existing licensee, the Authority shall not proceed to award a licence for a further term to that applicant even if he submitted the highest bid if in the opinion of the Authority it appears to them that any of the following apply—

  1. (a) that the existing service has not proved to be of broad appeal, having failed to provide a diversity of programming calculated to appeal to a variety of tastes and interests: or
  2. (b) that the level and nature of upheld complaints about programming or advertising or both exceeds acceptable levels for the licence currently in force; or
  3. (c) that the character of the licensed service, as proposed by the licence holder when making his application for the licence currently in force has not been maintained throughout the period for which the licence has been in force.

(1B) For an existing or a new licensee, the Authority shall not proceed to award a licence to the applicant who submitted the highest cash bid if in the opinion of the Authority any of the following apply—

  1. (a) that he would not be able to maintain the proposed service to a satisfactory standard throughout the period for which the licence would be in force; or
    2. 472
  2. (b) that there is not sufficient evidence that the format proposed would continue to be of broad appeal throughout the period for which the new licence would be in force; or
  3. (c) that the applicant's proposals submitted under section 98(3) do not consist of a diversity of programmes calculated to appeal to a variety of tastes and interests".").

The noble Baroness said: My Lords, this remains an important amendment, even though its precise wording may now need changing in view of Amendment No. 170, which was put down after Amendment No. 177.

Our concern is simple and it reflects views expressed in all parts of the House throughout the debates on the Broadcasting Bill. It is the need to introduce a quality-of-performance yardstick in the licensing of national commercial radio stations rather than merely relying upon the highest cash bid and the operation of the market.

Perhaps I may speak first about the general principle which the amendment addresses. I will then deal with its importance for the renewal of analogue licences granted by the earlier amendment to those companies committing to the digital option. At present, commercial radio licences must be awarded by the Radio Authority to the highest cash bidder unless there are exceptional circumstances. That carries great risks, as the early months of Talk Radio UK illustrate only too well. Had it not been for the firm actions taken by the Radio Authority and the response by the changed owners of that radio licence, the effect of the 1990 legislation would have been to give a national licence to an unacceptable radio service.

As things stand now, when national licences come up for rebid the same difficulties could arise. Furthermore, there is no way in which to take into account the past performance of an existing licensee which is seeking to win back its licence. It is possible to imagine a situation in which there is a national commercial radio licensee whose performance is very much less than satisfactory, although not bad enough for a licence to be revoked. Despite its unsatisfactory performance, if it reapplies for its licence and is the highest cash bidder it will get the licence back. I cannot believe that the Government would be content for such a situation to exist without safeguards.

This amendment provides those safeguards. It would establish a performance threshold which the highest bidder would have to cross before the Radio Authority could award a licence to it. The amendment is drawn to allow such a threshold to be applied both to existing bidders reapplying for their licences and to new applicants. It is an eminently sensible safety net and I hope that the Government can see their way to adopting it or an equivalent provision.

We have now seen the Government's plans to allow national commercial radio licensees to enjoy an automatic extension of their licences if they take up the digital option. But the performance issue still remains. Would the Government really think it in the public interest that an existing licensee should enjoy that automatic extension even if its broadcasts are unsatisfactory, there is a high level of complaint against it or it fails to broadcast the format for which the licence was originally granted?

Of course, sanctions remain to the Radio Authority to deal with individual aspects of performance, but those are ongoing and do not deal with what could be an obvious injustice at the time of licence renewal. The performance thresholds that we are proposing provide an important safeguard in that respect too. I hope the Minister will see the value of adding such a provision to the new Section 103A. I beg to move.

Lord Inglewood

My Lords, the noble Baroness, Lady Smith, has fairly and clearly explained the purpose of her amendment. We do not accept the need for the amendment, which cuts across both the workings of the 1990 Act and the Government's own provision for the renewal of independent national radio licences contained in the Government's Amendment No. 170, which we have already passed.

In my confusion with my papers I did not speak to that amendment and, trustingly, your Lordships approved it. It is an important amendment and I hope that your Lordships will permit me to explain a little about it in order to put on the record what it deals with.

The Government announced on publication of the Bill that we would be bringing forward an amendment to provide for the existing independent national radio stations to be given the chance to renew their analogue licences, provided that they took up their guaranteed places on digital. I apologise to your Lordships that it was not possible to bring it forward sooner. The new clause in Amendment No. 170 is based upon Section 20 of the 1990 Act, which permits Channel 3 television companies to renew their licences, but there are three important differences to which I would draw your Lordships' attention. Before doing so I should like to remind your Lordships of the rationale for this provision.

Digital broadcasting will be a considerable and risky venture for the three independent national radio stations. We believe that their involvement is important to the overall success of DAB, and it is of course vital that their established services be available on DAB if, in the future, we are to be able to reclaim the analogue spectrum. That is why we have offered the guarantees. But it is clear that the return from investment in DAB will not be realised overnight. Providing a one-off option for renewal will give the INR stations greater security from which to mount their venture into DAB.

I return to the three differences from the arrangements for television which I mentioned earlier. First, the new clause will permit renewal on one occasion only. We have no desire to provide the incumbent operators with licences in perpetuity. There is little frequency spectrum available for such services—even digital techniques will provide an increase only from three to six independent national radio services. So the spectrum is a valuable resource and there is always competition for its use. And new radio stations can begin operation more easily than new television services, where, for example, the start-up costs are considerably higher.

The second difference is that application for renewal may be made up to three years before the analogue licence is due to expire rather than four years, as provided for Channel 3. This is because radio licences run for eight years and not 10.

Thirdly, the Channel 3 television licensees need to meet performance requirements to qualify for renewal of their licences. This criterion will not apply to the independent national radio stations since the authority is not currently required to monitor performance and it would be inappropriate to add this further layer of regulation in a deregulatory Bill. Also, the licences will roll over only once, whereas Channel 3 licences can he rolled forward in perpetuity. That has a direct bearing on the amendment that we are considering.

I would also like to reassure your Lordships that the requirements in the clause relating to a starting date for digital broadcasting are not an attempt to rush the radio operators into precipitous action or otherwise cause them difficulty. The intention is to avoid any applicants obtaining renewal of their analogue licences by false pretences. But there may be situations beyond their control in which, for instance, the multiplex provider may be experiencing technical difficulty in beginning his service or it simply may not have been possible to finalise all of the arrangements between the broadcaster and the multiplex provider by the time the renewal must be determined. The new clause accordingly requires the radio station to make all reasonable endeavours to begin a digital service and to agree a date with the authority when broadcasting will start.

We want to encourage the independent national radio stations to invest in digital audio broadcasting and believe that they will find the offer of an eight-year extension to their analogue licences, subject to their taking up their guaranteed places on the digital multiplex, to be a real incentive.

Before concluding these remarks about independent national radio licence renewal, I ought to offer an apology to your Lordships that the clauses relating to independent local radio are not yet ready for consideration. However, as I have indicated previously during the passage of the Bill, we will also be making provision for independent local radio renewals. In addition, it is the intention to bring forward an amendment to clarify the circumstances in which the Radio Authority need not re-advertise an expiring independent local radio licence under Section 104(5) of the 1990 Act. That will provide for the authority to invite expressions of interest in an expiring independent local radio licence and for such parties to demonstrate their firm interest with a financial bond. Those amendments will be introduced at Third Reading.

As I have already mentioned, the Radio Authority is not required under the 1990 Act to monitor closely the performance of the independent national radio stations but reacts to complaints and concerns expressed to it by members of the public or other interested parties. Amendment No. 177 seeks to lay a heavier burden on the authority, which, in turn, would also add to the Radio Authority's regulatory costs. Since the authority is funded by its licensees, this would increase the financial burden on the independent national stations at a time when we hope they will be investing in digital technology.

I have referred on a number of occasions during the passage of this Bill to the Government's commitment, where appropriate, to a light regulatory touch. The Radio Authority does an excellent job and is a fine example of that light touch in practice. With only 32 staff, it polices the independent sector most effectively, paying proper attention to the needs of the public at both a local and national level.

I understand that the amendment is intended to protect listeners, ensuring the maintenance of the quality and diversity of programme material broadcast by the independent national radio stations through the licensing system. This is a worthy objective and is an aspiration which the Government share. However, this amendment proceeds by introducing additional subjective tests for the Radio Authority to carry out via licensing. Such a process cuts across the well proven competitive tender procedure, which provides a more open and objective means of allocating licences, as part of a system which is committed to delivering a range of programmes of different varieties and which has served the public well.

This amendment could also in the medium term harm the move to digital audio broadcasting by adding a further burden to those very national radio licensees who will have their analogue licences rolled for a further period of eight years only if they take up their guaranteed digital place. The proposals accepted by your Lordships in our amendment earlier this afternoon, which I have just described, will enable the current licensees to continue to provide their services on analogue for which they have a licence while at the same time it offers them the incentive to invest in digital.

I am sure that the noble Baroness supports the movement towards digital broadcasting and would agree that it would be a great mistake at this point to make a provision which might risk slowing down the impetus towards that. I wish also to add that we would regard much of the new subsection (1B) in the amendment as an unnecessary duplication of the provisions already contained in Section 99 of the 1990 Act, whereby the Radio Authority in considering a licence application must have regard to diversity and the ability to maintain a service throughout the period of the licence.

I crave forgiveness for having gone on so long but I hope that I have explained our position on this to your Lordships and the noble Baroness.

Baroness Smith of Gilmorehill

My Lords, I am grateful to the Minister, but am a little disappointed by his reply. There is a strong feeling in the House that quality cannot be left to the market. Nor should it be sacrificed in the interests of giving an artificial stimulus to digital broadcasting. The existing national commercial radio operators raise no objection to the idea of a performance threshold and there is widespread support among listener groups as well as in this House. I am sure that my noble friend Lord Dormand will wish to consider further the Minister's reaction to our amendment. We wish to return to the subject at Third Reading. At this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.45 p.m.

Clause 71 [The Broadcasting Standards Commission]:

Baroness Jay of Paddington moved Amendment No. 178: Page 61, line 12, at end insert— ("(4) In appointing members of the BSC, the Secretary of State shall so far as is practicable, ensure—

  1. (a) that the members of the BSC include members who, by reason of their familiarity with the special requirements and circumstances of different groups of viewers and listeners and of the different areas of the United Kingdom, are able to represent the interests of viewers of and listeners to television and sound programme services;
  2. (b) that the membership takes into account the diverse interest of society, including women, different racial groups and disabled people,".).

The noble Baroness said: My Lords, I beg to move Amendment No. 178 and speak 'to Amendment No. 179 at the same time. The purpose of the amendments is to ensure that the new Broadcasting Standards Commission includes members who will specifically represent the geographical and cultural diversity of the United Kingdom and the diversity of groups with special interests who are viewers and listeners. The amendments will also give statutory force to the proposals of the report of the noble and learned Lord, Lord Nolan, on Standards in Public Life about appointments to public bodies as they would apply to the new Broadcasting Standards Commission.

The two amendments are amalgamations and syntheses of the issues that we raised and the concerns which we expressed at greater length and greater depth at Committee stage. They are particularly important because at the Committee stage the Government rejected our attempts to extend the broader remit of the Broadcasting Standards Commission in which we had intended to create a more widely based consumer organisation with what one might call a general population base and a general policy mission.

We hope now that by specifying the characteristics of the membership of the new BSC (which is included in Amendment No. 178) and by creating a more open framework for their appointment (in Amendment No. 179) the listening and viewing public will be reassured that the new Broadcasting Standards Commission will be a body which can truly reflect their concerns and interests and not just become another cosy and closed quango.

At Committee stage, I drew your Lordships' attention to the recommendations of the noble and learned Lord, Lord Nolan, on the subject. In his report he said: The basis on which members are appointed (to public bodies) and how they are expected to fulfil their role should be explicit. The range of skills and background which are sought should be clearly specified". That is the purpose of our Amendment No. 178. Yet, although the Government say that they have accepted the recommendations of the noble and learned Lord, Lord Nolan, they seem content to allow the Secretary of State total discretion about who is to be appointed to the BSC.

At the Committee stage, the noble Lord, Lord Inglewood, spoke of the need for "flexibility" and not, fettering the discretion of the Secretary of State". On Tuesday of this week, in early deliberations at Report stage on the Bill, the Minister gave the same type of response to my noble friend Lady Dean in reply to her Amendment No. 50. In regard to equal opportunities employment in the broadcasting industry he said 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".—[Official Report, 5/3/96; col. 245.] It may seem a matter of course to the Minister, and naturally we on these Benches entirely accept the bona fides of the intentions of the present Secretary of State. But would it not be preferable if some of those aims were guaranteed in the future and made statutory and placed on the face of the Bill?

The same applies to Amendment No. 179 on the methods of appointment. The words of the amendment are taken directly from the Nolan recommendations. I remind noble Lords that it was precisely because there was public and parliamentary disquiet about patronage and political "cronyism" in public appointments that Nolan was asked to conduct part of his inquiry. The Government accepted his recommendations on appointments. In other important areas—for example, in the National Health Service—the appointments to the new unitary health authorities which take up office next month, in April, have been made on the basis of the Nolan recommendations.

In Committee, the Minister said that the Government had no need to amend the legislation relating to each public body in order to incorporate their commitment to the Nolan recommendations. But we are not asking the Government to amend existing legislation; we are asking them to demonstrate their explicit commitment to Nolan and all that it means by accepting these proposals in new legislation about the Broadcasting Standards Commission which is, after all, a new and important public body. I beg to move.

Lord Annan

My Lords, I support the remarks made by the noble Baroness. I do not know that the wording of the amendment satisfies me, or, indeed, the Minister. But greater openness in appointments to such bodies is much to be welcomed and is very much in line with what has happened in the honours list where the public is now invited to suggest names of those who deserve recognition for the public service they have given. The spirit of the amendment is not only in line with the Nolan report; it is also in line with something that is happening in public life. I hope that the Minister will be able to give some encouragement along those lines to the noble Baroness.

Lord Burnham

My Lords, I am ashamed to say that I was not listening to the words spoken by the noble Baroness, Lady Dean, because I was sitting here on the Back Benches contemplating, with a certain amount of horror, the constitution of the BSC under this immaculately worded and politically correct amendment. The amendment states that the membership should be representative of, the special requirements and circumstances of different groups … of the United Kingdom", and that it should take, into account the diverse interest of society, including women, different racial groups and disabled people". The Bill says that the BSC will consist of 15 people, including the chairman and two deputy chairmen. If we are to have a representative body which will include all those groups—and indeed every other group that anyone can think of as being suitable at present—it will not be a body of 15: it will be a body of 1,500. We all know that the best committee is the committee of two of which one person is absent. Surely 15 members will be enough.

Amendment No. 179 states that such appointments should be, made after advice of a panel or committee which includes an independent element". But who will appoint that independent element? Will we have to start all over again and include all those people to whom I referred? It seems totally impracticable and unnecessary. It is also unnecessary from the point of view of Nolan. If the Government have accepted the recommendations of the Nolan Report, surely the Secretary of State will take them into account when making the appointments. There is absolutely no need to complicate matters by stating such requirements in the Bill.

Lord Thomson of Monifieth

My Lords, I should, first, declare an interest as a member of the Nolan Committee. I hope that the Minister will respond sympathetically to the remarks made by the noble Baroness rather than listen to the words just spoken by the noble Lord. I am not sure that the noble Lord has really studied the recommendations made by the noble and learned Lord, Lord Nolan. I do not believe that what he said was wholly consistent with them.

I hope that the Government will look positively at Amendment No. 179. The truth is that getting together some kind of representative group of the consumers of broadcasting is a difficult task. No easy solution has been found. In years gone by when I had some part in such matters I am bound to confess that, although we conscientiously tried to recommend appointments reflecting a wider basis as set out in Amendment No. 178, in reality it very easily becomes a rather cosy organisation and one tends to recommend the appointment of the kind of people who one feels might be congenial to one's self. As the noble Lord, Lord Annan, said, a much more open system in which there are outside people—although they may be uncomfortable people for those who are running broadcasting organizations—would be a thoroughly healthy development.

Lord Inglewood

My Lords, I understand the wish of the noble Baroness to ensure that the membership of the BSC is able properly to represent the concerns of the range of different groups of television and radio audiences. That is a wish which the Secretary of State would share. However, as I said in Committee, I do not believe that it is desirable to fetter in this way the Secretary of State's discretion to make the best possible appointments to the commission. That means taking account of a wide range of qualities, including ability, experience, skills and background, and having the flexibility to provide the best possible combination of them at a particular time.

Amendment No. 179 relates to recommendations of the Nolan Committee on standards in public life. I said in Committee that the Government have, for the most part, accepted those recommendations, as my noble friend Lord Burnham pointed out. As the recommendations either have been—or are in the process of being—implemented, we see no need for further statutory controls. However, I am able specifically to reassure the noble Baroness and the House that, first, all new appointees to the BSC will be required to complete a declaration of political activity; secondly, all appointments will continue to be made on the basis of merit, and job specifications will be drawn up in each case; thirdly, from July of this year appointments will be subject to scrutiny by an advisory panel with independent members; and, fourthly, the BSC will fall under the jurisdiction of the new Commissioner for Public Appointments (CPA), who has the power to audit an individual appointment and ensure that the correct procedures have been followed.

As regards the advertising of appointments, all government departments have recently been issued with draft guidance from the Commissioner for Public Appointments which includes provisions on that subject. My department is currently considering those proposals and will report back shortly. The noble Baroness said that she hoped that the public would gain reassurance from my response. I hope that I have achieved that. I also hope that the House is reassured.

Baroness Jay of Paddington

My Lords, I am most grateful to the Minister for that reply. It is certainly a great reassurance to know that guidelines are being drawn up by the Minister's department. I hope that it will be possible for them to be available at least before the Bill completes its passage through another place.

As regards representation on the BSC, I am grateful to noble Lords who supported the points I wished to make. I must tell the noble Lord, Lord Burnham, that I am most flattered to be confused with my noble friend Lady Dean. I see that the noble Lord wishes to speak. I give way.

Lord Burnham

My Lords, I thank the noble Baroness for giving way. I should point out that I did in fact mean to refer to the noble Baroness, Lady Dean. Indeed, I would not have confused her with anyone over the past 20 years. I was actually referring to the noble Baroness, Lady Dean, in the context of the earlier amendment she moved.

Baroness Jay of Paddington

My Lords, we are grateful for the noble Lord's clarification. Indeed, my noble friend had pointed out to me during the course of the noble Lord's contribution that it was perhaps a scarred experience from earlier days at the Daily Telegraph which had imprinted her so firmly on his mind.

However, as I said, we are most grateful to the Minister for not exactly making concessions but for at least having the inspired idea of taking forward the points we made about the recommendations of the Nolan Committee. I suspect that our anxieties about greater representation on the Broadcasting Standards Commission will be addressed again in another place. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 179 not moved.]

7 p.m.

The Deputy Speaker (Viscount St. Davids)

My Lords, before calling Amendment No. 180, I should point out to the House that, if it is agreed to, I shall not be able to call Amendment No. 181.

Lord Dubs moved Amendment No. 180: After Clause 71, insert the following new clause—

PARTY POLMCAL ADVERTISEMENTS

(". In section 8(2)(a)(i) and section 92(2)(a)(i) of the 1990 Act, after "wholly or mainly of a" insert "party"").

The noble Lord said: My Lords, I tend to call this amendment, by way of shorthand, the Amnesty International amendment although, if passed, its benefits would range across a wider number of organisations than simply AI. At present Amnesty International suffers from a total ban on any form of radio or television advertising. That means that it cannot advertise a fund-raising concert—indeed, it cannot even advertise its Christmas cards on radio or television—yet any commercial organisation is able to do so. That is a serious disadvantage to an organisation like Amnesty International and to others which are caught in that way. My amendment would prevent such a total ban. It would enable Amnesty to advertise fundraising events and to sell Christmas cards and other items to fund its activities. It would also enable Amnesty to put out messages about its work, provided that was not directed towards any specific political end.

The immediate origin of the present difficulties lies in Sections 8 and 92 of the 1990 Act. These are similar sections but one covers radio and the other television. Section 8(2)(a) and Section 92(2)(a) state: a licensed service must not include—

  1. (i) any advertisement which is inserted by or on behalf of any body whose objects are wholly or mainly of a political nature,
  2. (ii) any advertisement which is directed towards any political end, or
  3. (iii) any advertisement which has any relation to any industrial dispute".
Amnesty is deemed to be a body which is wholly or mainly of a political nature. By inserting the word "party" before the word "political" so that the provision would state, mainly of a party political nature", I am advised that the amendment would enable Amnesty and other organisations to achieve some, but not all, of the things they wish to achieve. There would still be limitations.

Let me illustrate this by way of a few examples. I am advised that if this amendment were passed, Amnesty would be able to advertise its Christmas cards. It would also be able to advertise the fact that the organisation is against the use of torture because that is not a controversial point. It is totally accepted in this country that we as a country are against torture and unlawful killings by governments. Amnesty would be able to make those points in its advertising. However, under my amendment Amnesty would not be able to oppose capital punishment in advertisements because that would come under the heading of something that is intended to achieve a political end. Political ends in advertising are not accepted, and my amendment does not seek to alter that.

It seems to me that although these distinctions have to be clearly understood, my amendment will enable Amnesty and other organisations to achieve some of their aims but would not open the door to organisations seeking to use advertising to achieve specific political ends. It would therefore put Amnesty on an even footing with commercial organisations that wish to advertise their products. I do not intend my next point as a threat, but I understand that if this amendment is not accepted, Amnesty might seek recourse to the European Court of Human Rights. My advice is that, on the narrow point I have illustrated, Amnesty would probably win its case.

It is embarrassing that we as a country lose so many cases in the European Court of Human Rights. I am sure the Government would not wish to lose another one. However, I do not say that as a threat. It is a fact of life that when constraints of this sort exist, they are quite likely to be in breach of the European Convention on Human Rights. Be that as it may, my proposition here is simple. It is clear and it states what organisations such as Amnesty would be allowed to do. It prevents them from trying to pursue political ends through advertising. I commend this amendment to the House. I beg to move.

Lord Inglewood

My Lords, the noble Lord, Lord Dubs, suggested in moving this amendment that the advertising codes of the ITC and the Radio Authority are too restrictive in preventing advertising by bodies which are political campaigners but are not party political. I recognise the intentions behind the proposed amendment. I was grateful to the noble Lord for permitting me yesterday to see the legal opinion about the effect of the amendment.

The provisions restricting political advertising go back to the start of commercial television in 1954 and have remained substantially the same. They have served well for over 30 years. We have avoided broadcast advertising becoming part of the political process in the way it has, for example, in the United States—much to the relief, I suspect, of most of the public. There is much to he said for seeking to retain that benefit while removing restrictions on non-political broadcast advertising by humanitarian or philanthropic bodies. It is, however, important to ensure that controversial campaigning, which of course goes much wider than party politics, cannot be unexpectedly and unwelcomely injected into unsuspecting households via broadcasting. In the circumstances therefore we propose to consider the amendment further and consult more widely, in particular with the regulatory authorities responsible for enforcing the prohibitions. However, I must make it clear that I am giving absolutely no commitment to any change.

Lord Burnham

My Lords, before my noble friend sits down, is it not the case that this type of campaigning—it also hit Oxfam—is covered in the Charities Act?

Lord Inglewood

My Lords, with the leave of the House, my noble friend seems to be rather ahead of me on that point.

Lord Dubs

My Lords, I thank the Minister for his helpful comments. I appreciate there is no commitment in what he said but his remarks were helpful. In the light of those assurances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Trumpington

My Lords, I beg to move that consideration of the Report stage of this Bill be adjourned until five minutes past eight o'clock.

Moved accordingly, and, on Question, Motion agreed to.