§ 8.35 p.m.
§ House again in Committee on Clause 3.
§ The Earl of Northesk moved Amendment No. 13:
Page 3, line 29, at end insert—
"( ) the promotion of broadband competition in the United Kingdom at all levels of the market"
§ The noble Earl said: It may be for the convenience of the Committee if I speak first to grouped Amendments Nos. 315 and 316—which are straightforward and offer alternative and measurable definitions of what broadband actually is, which is hugely important.
The noble Lord, Lord Sainsbury of Turville, is only too aware of the issues that concern me—if only from the Written Questions from me that he has had to field. In November 2001, I asked the Government what data transfer feeds they used to determine whether an Internet connection can be defined as broadband. The noble Lord replied that they had
offered an initial definition of broadband as always-on, unmetered Internet services with a downstream (from supplier to home or business user) speed of more than 384 kbit/s".
Fair enough. I am sure that your Lordships will have grasped why I tabled an amendment that articulates a definition of broadband that is consistent with this. Unfortunately, the waters get murkier. In November 2002, the noble Lord offered me these words of wisdom, observing that
the speed of broadband connections, which at 512 kbps is 10 times faster than a standard dial-up modem".—[Official Report, 4/11/02; col. WA 77.]
I received that reply with some delight. For all sorts of reasons, that is my personal preference as a definition of broadband. Not unreasonably, I returned to the issue in March and April to see whether the initial definition elaborated upon last November had solidified into something more robust and definitive. The noble Lord's reply stated:
The Government view broadband as a generic term describing a range of technologies operating at various data transfer speeds".—[Official Report, 11/3/03; col. WA 179.]
Does it matter? It does, for a number of reasons. As Simon Goodley, writing in the Daily Telegraph put it:
If you were being particularly pedantic … the DTI's new definition could technically include ISDN services (which have been round for a decade) and might even extend to a carrier pigeon holding a floppy disk in its beak,
§ In effect, connections at less than 384 kbps—which most industry observers would define as either midband or narrowband—are included in the figures to assess the take-up of broadband, thereby seriously inflating the true position. It has been estimated that if all 128 kbps or less cable modem connections were stripped out of the data currently published by Oftel, 662 the realistic number of "true" broadband connections in the UK would drop from 1.4 million to—from memory—something a little over 700,000. Viewed from that perspective, BT's digital subscriber line market share rises to something like 65 per cent.
§ I understand some of the motivation behind Oftel and the Government adopting the definitional approach that they do—not least, international benchmarking. Nevertheless, I make no apology for my conviction that it does little to establish the healthy and vibrant competitive market across the whole sector that the Government maintain that they want.
Viewed from a technical standpoint, data transfer speed, and thereby an appropriate and accurate definition of broadband, is crucial. What matters is that the real benefits of Internet communication are constrained by the speed of data transfer. Simon Goodley from the Daily Telegraph again states that,
what cut-down services don't do very effectively is precisely what the Government said it wanted mass broadband for. Mid-band does not put us at 'the centre of the information economy', the place where the DTI constantly reminds us we need to be. It is also not much use for services such as video streaming, which may primarily be an entertainment source but also has commercial and educational applications. Whether you think any of this is beneficial, it is what the Government wanted broadband to do".
§ The point was vividly brought home to me in America—I duly apologise to the Minister—by news coverage of the war in Iraq. Because I was in the United States, I do not know to what extent the UK media chose to use the technology of videophones and so on to get the news to us. However, in America, grainy and fuzzy images of the star reporters of each network were broadcast pretty much every hour of the day. No matter that the images froze all the time, or cut the reporter off mid-sentence; from the networks' point of view, it was news in the raw, delivered live, up-front and as it happened. My guess would be that had the reporters been able to file, or rather broadcast, their stories at faster data transfer speeds, the quality on TV screens would have been much closer to the standard that we have come to expect.
I should say, too, that the Prime Minister has got himself involved in the issue. Members of the Committee will no doubt recall his statement on his return from the European Council meeting in Barcelona of March last year. He stated the Government's commitment, as an endorsement of a pan-European policy objective—the Minister referred to that on the previous amendment—to deliver broadband technology that will allow,
internet access at 10 times the present speed",
§ I am sure that Members of the Committee now see why I favour the 512 kbps measure.
It is also worth noting the recent judgment of the Advertising Standards Authority against NTL. Members of the Committee will, I am sure, be aware of the case where a complaint against NTL was upheld because it had advertised its 128 kbps Internet access service as a "high speed broadband product". In the
sense that NTL had been complying with Oftel's definition, there should have been no complaint. However, as a spokeswoman for the ASA put it:
If you just call it 'high-speed broadband' then consumers will take this to mean a service of at least 500 kbit/sec".
§ The perception and confidence of consumers is crucial. I cannot help feeling that if Oftel, the ASA and indeed the Government are confused about what properly constitutes broadband products, sure as eggs are eggs, consumers will be, too.
§ Finally, in so far as it could be portrayed as such, any slippage in the Government's definition can be interpreted as a watering-down of their commitment to broadband. That in turn calls into question targets such as establishing the UK as the most competitive broadband market in the G7 by 2007. All that explains why it is so important that a credible, clear-cut and agreed definition of broadband should be in general circulation. Amendments Nos. 315 and 316 set out alternative means for achieving that.
§ I apologise for spending quite so much time on those subsidiary amendments, but Members of the Committee will have grasped that much of what I have already said informs the purpose and intention of the lead amendment. Happily, I can therefore curtail some of the remarks that I might have wished to make. None the less, I should at least put a little more flesh on its bones.
§ I do not think that any of us would disavow the benefits that broadband can bring. That case is already well made. We all would acknowledge that take-up in the early stages of broadband development in the UK was extremely disappointing. No matter; that much is history. However, in reaching conclusions about how to take things forward and deciding the shape and direction of broadband development over the next 10 years or so, we must be absolutely certain of exactly where we are now. For example, email traffic is at its highest level ever, with some communications service providers in the UK handling more than 16 million emails across each of their networks every day. In terms of infrastructure, it is a simple fact that outside cable franchise areas, BT has a virtual monopoly on broadband products.
§ Whatever its virtue, very few telecommunications companies have entered the local loop unbundling market. Indeed, the regulator, David Edmonds, despite his high hopes for mass industry take-up, described it as a "niche market" in his evidence to the Trade and Industry Select Committee on 4th February of this year. That is the reality of where we are now.
§ It is crucial that Ofcom, as the front-line regulator of this area, should have the means at its disposal proactively to promote and encourage the benefits that broadband can bring and, more importantly, to ensure that there is an effective competitive market across the breadth of the sector. Anything less runs a serious risk that consumers will be short-changed in the future to an even greater extent than they are being at the moment. Hence the amendment.664
I am only too well aware of the defence that Ministers in another place have mounted against the thrust of my intention. It is neatly encapsulated in a comment from Dr Kim Howells, who said:
There is no specific mention of broadband because the Bill is technologically neutral. We are committed to the roll-out of broadband across the United Kingdom, but we do not feel that it requires a specific mention in the Bill. The Bill is designed to put in place a framework that can respond flexibly to developments in technology, but it is not about one technology rather than another".—[Official Report, Commons, Standing Committee E, 10/12/02; col. 29.]
I am sorry, but that completely baffles me. It is akin to the Government arguing that in the context of, for example, transportation, they have no wish to promote the technology of air travel because to do so might give it an edge over rail and road. That is ludicrous. If I am permitted to use this phrase, the beans were comprehensively spilled in a reply that I have already quoted from the noble Lord, Lord Sainsbury. He said:
The Government view broadband as a generic term describing a range of technologies operating at various data transfer speeds".—[Official Report, 11/3/03; col. WA 179.]
§ In other words, the Government do not perceive broadband to be a specific technology that cart be put ahead of any other. As the noble Lord said (as it happened, correctly) it is a "range of technologies"— DSL, cable, wireless, satellite and so on—all of which compete with each other, or attempt to do so, in the marketplace. What, therefore, is the Government's beef about putting such a technologically neutral—and, I should argue, eminently reasonable and desirable—concept and objective in the Bill?
§ For all sorts of reasons, and whatever the statistics may say, the UK is still not realising the full potential of its broadband opportunities. As things stand, there is a very real lack of competition in the sector, which is limiting customer choice on prices, service packages and service quality. However, by the same token, there is a real chance in this regard to produce legislation that not only addresses the problems, but looks and thinks forwards.
§ Should the Government choose not to agree to the amendment—I do not have many hopes for it—there is a significant risk that the chance will be lost for the foreseeable future. It may be worse—I sincerely do not believe that I am exaggerating—because it could put the regulatory clock back by perhaps as much as 20 years to a much more monopolistic era. The choice really is that stark. I beg to move.
§ 8.45 p.m.
§ Lord Gordon of Strathblane
I rise briefly in broad agreement with the thrust of the noble Earl's latter two amendments, but I want to I suggest a minor change to Amendment No. 13.
Towards the end of his speech, the noble Earl said that it should be Ofcom's duty to promote the take-up of broadband and to encourage competition. If only the first point as well as the second were inserted in the Bill, I should be happy. However, there is a grave danger of us overemphasising the potential of competition in this regard. In most of Britain, the great 665 problem is not competition but the total lack of anyone willing to provide a service. As the noble Earl will recall, the broadband stakeholder group produced last autumn a report which divided Britain into four categories: category one, plenty of competition; category two, only one provider but satisfactory service; category three, subsidies required; and category four, political solutions required—which sounds like very big subsidies.
In the light of that, to make it an obligation on Ofcom simply to go for competition could close off another option: to allow monopolies in large urban areas in exchange for a universal service provider to extend the service into rural areas which otherwise will not get it. At present, there is a bit of a fiddle whereby the Government one way or another through regional development agencies, or whatever, will be expected to foot the bill for Ofcom rather than the telecoms providers. I hope, therefore, that when the noble Earl returns to the matter on Report he will modify the amendment which otherwise would carry widespread support.
§ Lord Avebury
As the noble Lord implies, there is a trade-off between competition and take-up. We see that exemplified in figures which have been issued by the European Competitive Telecommunications Association. They demonstrate that in Germany there has been a high take-up. That is at the expense of monopolistic conditions because Deutsche Telekom has the total share of 100 per cent of the market. According to those figures, in Britain only a 51 per cent share of the market is held by BT. That is the lowest share of a major provider of any of the countries in Europe, apart from Germany which I have already mentioned. In France, it is 71 per cent; in Italy, 73 per cent; and in Spain, 77 per cent. According to those figures, the UK is about the most competitive country in Europe.
Before I come to the question of competition, perhaps I may disrupt the harmony that has pervaded the amendment of the noble Earl. I hope that the Government will not accept the writing into the Bill of a definition of broadband. It is a rapidly moving technology. If we write such a figure into the Bill, it may shortly be out of date. One can see that when considering the report of Oftel published yesterday on the review of the wholesale broadband access market. Among other things, it reviews the previous definition of broadband. For the time being, the working definition is, first, that broadband provides higher speeds in excess of 256K downstream capacity; secondly, that it is an always-on service, or at least has the ability to establish rapidly a connection to the Internet; thirdly, it allows the use of the exchange lines for voice telephony and Internet access at the same time; and, fourthly, it allows content delivery which is not practical on narrowband Internet access such as realtime video content.
The noble Lord may say that 256K is inadequate for some of the services that people demand. In particular, it is inadequate for video on demand. But the consumer is offered the choice. One can have a lower quality, 256K service, and one pays less for it; or one can have a 666 512K service and pay more for it. The market is sufficiently broad to allow for that customer choice to be exercised and for people to pick the service that suits their pocket and requirement. Some people may be perfectly happy to access news services on the Internet and to use it for sending and receiving e-mails in which case a 256K service is perfectly adequate for their requirements. Others may want something more sophisticated or to play games on the Internet. for example, and will want a high speed service. It is right that there should be that element of choice and as the services which are offered start at 256K, that is a useful working definition that Oftel should use, but it is not one that I feel would be appropriate to write into the Bill. In a year's time, or certainly within the lifetime of the Bill, things will be enormously different. If one considers the life span of any telecommunications Bill, we would expect it still to be working after 15 years. To put in a speed such as 384K would look quaint and old-fashioned by the end of that period.
The noble Lord's amendment provides a useful opportunity for discussing the state of the broadband market, and usefully coincided with the report which I have just mentioned by Oftel on the subject. The Oftel report reviews the latest developments, which show very healthy rates of growth in broadband take-up with the number of subscribers reaching 1.15 million in February this year. It shows also that BT has been gaining market share since the beginning of 2001, as the noble Lord points out. It now has 57 per cent of the market compared with 28 per cent for NTL and 24 per cent for Telewest. However, perhaps even more striking is that BT is winning something like 70 to 80 per cent of the new subscribers. That arises from the last price drops which BT offered the public in 2002 amounting to as much as 50 per cent. Those prices are due to be reduced again on 1st May from £14.75 wholesale to £13.00 per end user per month, with further discounts for volume which will enable BT Openworld to buy IPStream services at £12.74.
I declare an interest as a user of BT Openworld and I look forward to the further reductions in price which no doubt I shall be offered after 1st May as it gets the benefit of these lower wholesale prices. But during the same period there has been no equivalent reduction in Datastream charges, which cover the traffic from the exchange to the subscriber for the operator who wants to provide services over his own network. That is to say, this operator is providing services from the exchange backwards and not to the consumer from the exchange. Those users continue to pay £9.25 per end user per month. They say that in effect that difference is not enough to cover the cost of their network.
One such operator, Tiscali, complained formally to Oftel and pointed out that although BT had agreed to align the terms for IPStream and Datastream by the end of March this year, product enhancements that are available on the first are not available on the second and that there is a three-month minimum sign-up commitment on the first compared with 12 months on the second. There are other complaints such as the migration path between IPStream and Datastream, which BT says it can provide only after September 667 2003 at a cost of £30, whereas Tiscali says it could be offered now and that an appropriate price would be £5.
These competitive issues in the provision of broadband services are causing enormous arguments between the companies in the industry. However, the Bill allows for those matters to be considered by Ofcom and I hope it will take a robust attitude to the development of competition in the industry. We want all those services to be provided at a cost that users can afford.
It is not for the Committee, however great the technical knowledge of the noble Earl, Lord Northesk, to dictate to Oftel or Ofcom how it will exercise the powers that will be given to it. All we can say is that we want a fully competitive market. We do not believe that it exists at the moment because there is a significant market power in the hands of one company. However, we believe that the powers that are given to Ofcom in the Bill will enable it to solve the problems of the kind I have outlined. I should sooner leave the Bill as it stands and rely upon the forces of Ofcom to deal with the problems of market penetration and competition that we know exist.
§ 9 p.m.
§ Baroness Buscombe
I rise to support my noble friend's amendments. It is necessary to stress the significance of broadband technology to our economy. It is becoming increasingly important for future growth and development. Government targets are not being met: they have failed to provide a competitive structure within which this technology can grow and flourish. An ascertainable funding framework needs to be achieved; promotion alone—words alone—are insufficient.
I take note of the comments made by the noble Lord, Lord Gordon of Strathblane, in relation to the need also to prioritise uptake. I can do no better than to use the words of my noble friend in another place, John Whittingdale, the shadow Secretary of State, who said:A balance must be struck between promoting competition in the short term and encouraging investment in the short term and encouraging investment in the infrastructure in the longer term. In all such debates, the vital importance of increasing access to broadband must be a priority and Britain is lagging far behind in this respect. Although the number of households with broadband access has now passed 1 million, we are still way behind our competitors".—[Official Report, Commons, 3/12/02; col. 796.]I entirely support my noble friend's amendment, but perhaps thought might be given to including the word "uptake", or some such wording, in a revised amendment. I shall be interested to hear what the Government have to say in this regard.
§ Lord Roberts of Conwy
I have a brief contribution to make in this context in relation to Wales, because I believe that it is somewhat typical of rural areas in the rest of the United Kingdom. It is calculated that about 40 per cent of homes and businesses in Wales can have broadband through ADSL technology and cable modems. This compares with a UK average of about 668 70 per cent. Recognising the urgency of addressing this gap, the Welsh Assembly government have launched the Broadband Wales programme, which will spend about £115 million on a balanced programme of demand-side and supply-side measures to stimulate making broadband ubiquitous throughout Wales.
That level of public-sector support makes the broadband scene in Wales very different from that in other parts of the UK. It will obviously be important to ensure that Ofcom takes account of the situation. I am told that wireless systems have an important part to play in the roll-out of broadband in Wales—and, I am sure, elsewhere—which means that the licensing arrangements for suitable radio spectrum are also critical. I am told that the recent 3.4GHz spectrum licensing decision to split Wales into four parts, each linked with larger and more prosperous parts of England, was taken very much against advice in Wales. Again, that demonstrates the importance of making strong representations on behalf of Wales in future licensing rounds.
I say all this because not only is it relevant to my noble friend's amendment, but also because it is relevant to other later amendments that relate to the setting up of an Ofcom office in Wales, and its consequentials.
§ Lord McIntosh of Haringey
There are two quite different issues involved here. The first is the issue of government support for broadband, and the progress that is being made in the development of broadband in this country. The second issue is whether in support of that government objective it is either necessary or desirable to have in the Bill a reference to broadband of the kind proposed in these amendments.
I have not heard it denied that the Government have given very active support to broadband in this country. We have a target of achieving the most competitive and extensive broadband market in the G7 by 2005. By no means are we there yet. Last August we were assessed as being fourth for competitiveness and fifth for extensiveness. But we are pulling away from those behind us and catching up with those ahead. In particular, we are more competitive than our European neighbours, although less competitive than, for example, Canada or Japan.
Coverage and take-up of broadband are both increasing. The latest figures show that the number of broadband users now stands at over 1.75 million, and is increasing by 35,000 a week. In case the noble Earl, Lord Northesk, thinks that that is a phoney figure, only 20 per cent of those 1.75 million users are at a lower figure than 500K. So use is running at the least at 1.4 million within his definition, and certainly nothing like the 700,000 that he suggested.
Some 71 per cent of the population now has access to mass market broadband services. I acknowledge that the noble Lord, Lord Roberts, is right to point out that the percentage is far lower in Wales. That problem is being addressed by the Welsh Assembly.
Turning to the technologies, it is true that there are a number of different systems. Probably the most common is ADSL, but I have to say that it is an 669 intermediate technology. ADSL still uses coaxial copper cable. Within the expected lifetime of this Bill, I cannot imagine that ADSL will still be around. We have cable and fibre-optics, as well as fixed wireless access such as that provided by Firstnet. Furthermore, we have satellite provision, which is universal but, of course, more expensive. A bundle of different systems are all being called broadband.
That leads me to my second point. It would be inappropriate to seek to define broadband as being one of the specific and particular objectives of Ofcom in the Bill. The technology is currently varied and continues to change all the time. As the noble Lord, Lord Avebury, pointed out, during the lifetime of the Bill, figures of 384K or 512K will be laughable. We will be talking about different technologies and totally different speeds.
We have a perfectly good provision in Clause 3(3)(a), which sets out that Ofcom must have regard to,the desirability of promoting competition in relevant markets".It is inconceivable that the broadband market will not be considered by Ofcom to be relevant. If necessary, I am sure that I could secure a statement from the proto Ofcom to that effect.
The motivation behind the amendments is admirable and we all agree with it, but this is not a technology that should be specified on the face of the Bill any more than should the other technologies. I hope that the noble Earl, Lord Northesk, will feel that, although I have to resist the amendments, this is not what the noble Lord, Lord McNally, would call a "no".
§ The Earl of Northesk
I thank the Minister for that reply. Like my noble friend Lady Buscombe, I hear precisely what the noble Lord, Lord Gordon of Strathblane, has said. As he correctly anticipated, I shall take full account of the wisdom of his remarks in deciding how to return to this issue on Report. He also made the sensible point that to promote broadband in all cases is the wrong approach. I understand that point. I am merely grateful for his tentative support for the broad thrust of my intention.
I am bound to say to the noble Lord, Lord Avebury, that I am not wedded in any way to my definitional amendments. It is important that the Government's stance is properly understood and is as clear as possible. In my introductory remarks I sought to show that there was a degree of confusion about the matter. If the Government are confused, so must be the rest of us. However, my real concern is not the definitional amendments, which were a hook upon which to hang that element of the debate; it is the lead amendment. The definitional amendments were merely cosmetic embellishments for the purposes of debate.
I also say to the noble Lord, Lord Avebury, and the Minister that my judgment is that broadband is integral to the viability and usefulness of the new technology—perhaps I am getting to the heart of a potential flaw in the amendment, because by 670 broadband I mean increased and increasing data transfer speed. Subject to the caveat of the noble Lord, Lord Gordon, it is beyond question that a competitive market in broadband is needed, or, if the Committee prefers, a competitive market to provide the public with increasing and increased data transfer speed. The Minister agrees. My judgment is that increased and increasing data transfer speed—not necessarily the term "broadband"—is so important in its own right, particularly on the back of the progress or the lack of it so far, that it is justifiable that Ofcom should focus on it.
The Minister will be assured from my remarks that I will return to the matter on Report. I will take on board some of the observations, particularly the folly— maybe—of focusing on including the term "broadband" in the Bill. I think that I can address that problem. In the mean time, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ 9.15 p.m.
§ Lord Alli moved Amendment No. 14:
Page 3, line 29, at end insert—
"(g) the maintenance of a vibrant independent production sector"
§ The noble Lord said: I rise to move Amendment No. 14 and in so doing shall speak also to Amendments Nos. 42, 196, 199, 272 and 273, all of which deal with the nourishing and building of the independent production sector. In brief, Amendment No. 14 requires Ofcom to oversee the continued vibrancy of the independent sector; Amendment No. 42 creates a register of original programme ideas to help independent producers to protect their work, and Amendments Nos. 196, 199, 272 and 273 strengthen the existing independent quota system.
§ I declare an interest: I have been an independent producer in one form or another for almost the past 15 years, with the exception of a brief period as a broadcaster at Carlton Television. Like the noble Lord, Lord Gordon of Strathblane, I shall not repeat my declaration of interest in future Committee debates.
§ The independent production sector is the creative community that exists outside the ownership of broadcasters. They come up with ideas for programmes. At Second Reading, I said I believed we had some of the finest television programmes in the world and that if they were not the envy of the world they certainly should be. I put forward two reasons why our creative community is so strong. The first was a system of regulation surrounding public service broadcasting, and the second was the independent production sector, which was established with the birth of Channel 4.
§ For Committee Members unfamiliar with television production, let me explain how programmes are commissioned. There are three sources of programmes and programme ideas. The first is the broadcaster, which generally, with the exception of Channel 4, has a team of creators who come up with ideas for 671 programmes that they then make themselves. The second is the independent production community, which competes for the 25 per cent of hours that broadcast networks must commission out. The third is by acquisition of programmes from foreign broadcasters—in effect, that means America. The temptation of broadcasters is always to cut costs. Generally, the losers are the programme makers and, ultimately, the audience.
§ The independent sector is an important safeguard to the creative success of the UK. An exhaustive survey of 50 of the most popular new series, introduced between 1992 and 1998, found that nearly 40 per cent of the new formats had come from independent producers. There are dramas, such as "Spooks", "Clocking Off" and "Shackleton"; prime-time documentaries, such as "The Fall of Yugoslavia", "Faking It" and "Jamie's Kitchen"; hugely successful children's programmes, such as "Teletubbies"; shows that have pushed the boundaries of taste, such as "Big Brother" and "Who Wants To Be A Millionaire?"; history programmes, such as "The Great Plague" and "1900 House"; and documentaries, such as "Congo", and so on and so forth. This is the tip of a vast creative pool of world-class talent.
§ The international Emmy awards are the Oscars of the television world. UK independent producers have won over half of all Emmies awarded between 1990 and 2001. That is 38 awards out of a possible 71. Last year, independents also took over 60 per cent of the BAFTA programme awards.
§ Amendment No. 14 seeks to ensure on the face of the Bill an obligation by Ofcom to oversee that continued vibrancy of the independent production sector. It would be a great injustice to the creative community not to put a safeguard in this legislation to help them ensure that their regulator takes due account of their interests. It is easy in legislation of this size to ignore the people at the bottom of the food chain. I hope that my noble friend will at least feel able to accept this particular amendment.
§ Amendment No. 42 deals with the establishment of a register of original programming ideas. The ownership, creation, acquisition, sale and licensing of television rights are as important to the television industry as stocks and shares are to the stock market. However, to date, licensing and acquiring of rights has required not only strong industry knowledge but the deductive reasoning of Miss Marple. Other industries have been a lot more pragmatic in dealing with their rights. There are public registers for almost everything—property, patents, pharmaceuticals and even Internet domain names.
§ The time has come for the television industry to establish a public register of its own that will support copyright legislation and copyright protection agencies. It could remove some of the risks of costly litigation and remove the lame excuses that it is too costly to locate rights holders. Generally, these arguments will be made by the broadcasters who want to drive down loyalty fees and take ownership of as many assets as they can from a very privileged position of power.672
§ I have talked about the value of the independent production sector and the importance of safeguarding its creative work. At Second Reading I talked about the increasing trend of ideas being borrowed—euphemistically—by broadcasters. I likened it to the plight faced by engineers in the Victorian era who spent huge amounts of money and time developing solutions only to find the bigger companies stealing them. I talked about the incentive to create disappearing and the subsequent establishment of the Patent Office. I believe that we are witnessing the beginning of the creative incentive in this country disappearing in the television markets.
§ Why should I, as a producer, invest in developing ideas for television if, when I present them to a broadcaster, with some minor changes he can adopt the idea and produce it himself? There is no incentive to walk into a broadcaster and show them one's ideas. I am proposing a simple system as a first stage so that individuals and small companies can register their ideas and help protect them against theft. This is a first step. It is not a big step, but a first step. A television rights register makes a great deal of sense for this industry. I hope that my noble friend on the Front Bench sees this as a constructive way forward edging the broadcasters towards a higher standard. This should be seen very much as the carrot. If it does not work, I am sure that we can find a stick.
§ I turn now to Amendments Nos. 196, 199, 272 and 273 which deal with the independent production quota. As the law currently stands, there is a requirement by broadcasters—namely, the BBC and ITV—to commission out 25 per cent of the hours that they broadcast to independent producers. The quota originated in 1986 as a result of the Peacock report. It was first voluntary and then made statutory in the Broadcasting Act 1990. Parliament always intended this to be a minimum threshold and not a ceiling on independent productions.
§ Three things have happened as a result of the quota. The first is a truly remarkable creative community which has helped to maintain Britain at the forefront of programme making. Secondly, broadcasters have seen the 25 per cent as a ceiling and not as a floor. This particularly applies to the BBC which, for the second year running, has failed to meet its independent production quota. Thirdly, broadcasters have tried to commission out the hours that are the most difficult to make and that are at the cheaper end of the scale.
§ The Government were so concerned about safeguarding the independent production centre—for good, economic, commercial and competitive reasons—that they commissioned a programme supply review, undertaken by the ITC. I should like to thank my noble friend Lord Puttnam, who is in his place, for inspiring that report; Bob Phillis and the rest of the ITC's expert panel—Anne Bulford, with whom I worked at Carlton, Richard Eyre, Professor Bill Robinson and Sir Howard Stringer—as well as Robin Foster and his team at the ITC.673
§ The report suggested a number of actions falling into four areas: first, measures to strengthen the longer-term viability of the sector—it is also recommended that Ofcom should monitor the application of the quota and impose fines and sanctions if it was not met—secondly, further safeguards in the Bill to guarantee a continuing high level of UK investment in original programming; thirdly, support for productions in the regions and nations; and fourthly, strengthening the commitment to training.
§ I am grateful to the Government for following many of those recommendations but I should like them to go one step further. My right honourable friend the Secretary of State, when giving permission for BBC 3 to move forward, amended the quota system so that it would not only have to commission out 25 per cent of its hours but would also have to ensure that 25 per cent of its programming budget was spent with independents.
§ Amendments Nos. 196, 199, 272 and 273 reflect this change broadly across all broadcasters. It will mean that broadcasters, in addition to commissioning out 25 per cent by hours, will have to ensure that 25 per cent of their programme budget is spent with independents. That will prevent the broadcasters abusing the quota system and result in a further expansion of the independent sector.
§ I know that my noble friend the Minister has some reservations about extending the quota budget but her right honourable friend the Secretary of State has set the precedent for good reasons. This will be an opportunity, at least in the short term, to extend that principle.
§ The quota system is a complicated and technical configuration but it does work. My amendments will improve it and further protect programme makers in this country. The Government and the broadcasters have nothing to fear from this group of amendments.
§ Grouped with my amendments are Amendments Nos. 197 and 198 standing in the name of the noble Baronesses, Lady Buscombe and Lady Wilcox. I have read their amendments carefully. I understand in principle what they seek to do—that is, to inject additional capital into the independent production market. But perhaps they will look at their amendments again because I suspect that they may allow broadcasters such as Granada and Carlton to set up production entities and attack the independent production quota via the back door. I know that that is not their intention. The additional investment of capital would be much welcomed.
§ I apologise for taking up so much of the Committee's time but this group of amendments is the only group to deal with independent television production. It is such an important area that I felt it necessary to explain the reasons behind each amendment. They are not so-called probing amendments. I genuinely believe that they should be on the face of the Bill and I want these changes to be made. I believe that they will be in the best interests of 674 viewers and will stimulate an important sector of the economy. I hope that my noble friend on the Front Bench will at least leave the door open to enable us to take this forward at Report stage. I beg to move.
§ Baroness Buscombe
I support Amendments Nos. 14, 42, 196, 272 and 273. I have added my name to Amendments Nos. 14, 42 and 196. It was remiss of me not to have added it to Amendments Nos. 272 and 273.
We entirely support the amendments, which in turn support the independent sector. We believe that the amendments would lead to more independent production, which therefore would promote greater competition and greater transparency of the programme production market. They provide for the greatest push in programme exports and they would encourage entrepreneurs like the noble Lord, Lord Alli, to enter the television market. That has to be a good thing.
I move quickly on to Amendments Nos. 197 and 198, in my name, and note straight away what the noble Lord, Lord Alli, has said. The amendments are intended to introduce a definition of independence which would allow companies which gained no economic advantage from an ownership relationship with another broadcaster to produce programmes that qualify for the quota. At present, production companies that have an ownership relationship with a broadcaster—that is, they share the same parent, but have no preferential commissioning relationship with that broadcaster—are deemed to be non-qualifying independents—although to all intents and purposes they are, on a day-to-day basis, independent. Those companies are therefore at a disadvantage compared with both other independents whose productions count towards the quota and with in-house production teams. That is damaging not only to specific non-qualifying independents, but to the independent production sector more widely, as success for smaller independents and ensuing investment from larger companies can result in loss of independent status. Large UK producers are the most likely source of risk capital for small UK independent production companies. Similarly, up-and-coming producers are being discouraged from working for successful and supportive companies which are non-qualifying independents for fear that their work will not be commissioned.
I do hope that the Minister will look on these amendments sympathetically. Amendment No. 198 would require producers to show that they have derived no more than 33 per cent of gross revenues from production activity from a related broadcaster. We believe that this test would be easy to measure and account for. In addition, it means that should a production company change status and become economically dependent, it would then automatically lose its independent status—exactly what the law is intended to account for. I hear and accept what the noble Lord, Lord Alli has said. He has raised the 675 concern that notwithstanding his support of the principles and sentiments behind these amendments, the actual wording could mean that this would allow additional capital into the independent market for broadcasters to set up, as he put it, production entities by the back door.
I am grateful to the noble Lord, Lord Alli, for raising that point. I hope that the Minister will give a favourable response to the principle behind the amendments, bearing in mind that we would be keen and willing to take another look at the actual wording between now and Report stage.
§ 9.30 p.m.
§ Lord Crickhowell
I warmly support the first amendment, with its emphasis on the need to maintain a vibrant independent production sector. I believe that that is right. I confess to some doubts about the proposition that the register of ideas should be in the hands of Ofcom. In his Second Reading speech the noble Lord, Lord Alli, said that it was time to consider a system of registering ideas. I have no difficulty at all with that. In part of his speech this evening he said that it was time for the television industry to establish a register. I have no difficulty with that. However, I am sceptical that it can be the right job of a regulator like Ofcom, with all its other responsibilities, to hold the register, police it, and presumably see that something useful is done with it. I am not sure that that is the right place for the register and therefore I have serious doubts about those amendments.
When the noble Lord, Lord Alli, turned to my noble friend's amendments, he presented them as representing a possible attack on the independents by Carlton and Granada. I want to put a slightly different point of view. I no longer have any connection with either of those organisations, but I have some experience of the relationship of licence holders such as HTV with the independent sector. I suppose that together with my noble friend I can claim some role in promoting the independent sector through the part we played in establishing S4C. Probably the biggest boost to the independent sector in Wales was the establishment of S4C and the need therefore to produce Welsh language television.
However, there has been a boost to the independent sector not only in the field of Welsh language television, and perhaps I can claim some modest part in that during my time as a director of HTV. The relationship between a company such as HTV and other licence holders and the independent sector has been extremely important and productive.
Clearly, we cannot have a situation in which the programmes of a regional subsidiary would qualify as independent for its owner's network schedules, but there are strong arguments for suggesting that ITV regional companies should qualify as independents for other broadcasters.
The fact of the matter is that the relationship that we had, for example, in Wales between HTV and the independents led to considerable independent 676 production successes. We achieved successes in drama, documentary and current affairs strands. I believe that there is a risk that increasingly prescriptive independent quotas for the broadcasters, excluding that kind of operation, may threaten the continued close co-operation which would harm the independent sector.
There is a strong case for considering that if companies such as HTV could produce programmes for the BBC or other separate companies, they would be likely to work with independents and would encourage independent production. In Wales, we would certainly see a growth of English language independents in addition to the Welsh language independents.
I note that the noble Lord, Lord Alli, who has a particular interest in this matter, disagrees with me, but the view is strongly held by my former colleagues. They believe passionately in the case of the independents and perhaps for a particular reason. We as a company were among the first to feel the enormous financial burdens that fell on the industry as a result of the bidding process. We suddenly had to get rid of a large number of our former employees. We probably led the way in the industry. A large number of our former employees set themselves up as independent producers and we continued to work with them—only with the difference that they produced for us and for others, and did so in a different relationship. So I return to my starting point; that is, the passionate belief in the role of the independents.
However, I urge that we do not simply dismiss the idea that a partnership can produce even more productive results than an exclusion. I hope that further thought will be given to those relationships and that even the noble Lord, Lord Alli, will consider it a possibility. I give way.
§ Lord Alli
This is a dangerous argument. It is seductive to believe that ITV, when it is consolidated into a single company which still has brands out there called HTV, Scottish Television, Granada, Carlton or London Weekend, should, with the broadcaster resources, be allowed to qualify for quota for the BBC. That is an absurd suggestion. There is nothing stopping the BBC buying programmes from London Weekend Television or HTV, but it should not be allowed to use the quota as an incentive to subsidise the ITV broadcaster. That does not help the independent production sector, but helps a combined ITV owned by a single set of shareholders and not the creative community.
§ Lord Crickhowell
Perhaps I may make one further point in that regard. It is a subject to which we shall return on later amendments. It is production outside the M25. For some curious reason we have now entered into a situation where it is thought to be entirely satisfactory if television is produced two miles outside the M25, which counts as regional production.
But the reality is that we have to have production out in all the regions. If that is to be achieved, companies such as HTV producing in Cardiff and 677 Bristol should receive a respectable share of what is available and work with the independents within those regions.
I entirely agree with the proposition that has just been advanced by the noble Lord, Lord Alli, if we were going to have a centralised system in which all the production came from Pinewood or somewhere in the Home Counties. As I shall argue in a later debate, we have to strengthen regional broadcasting, in which I believe passionately. Therefore, the noble Lord should not close his mind entirely to the idea that partnership out in the regions is wholly helpful and constructive for the independent companies that have established themselves in those regions. I leave the matter there for the time being.
§ Viscount Falkland
We on these Benches broadly support the issues that are raised in this group of amendments. The noble Lord, Lord Alli, has eloquently explained the position based on his great experience. I fancy that none of us would disagree about the importance of the independent sector and the successes it has had, and continues to have, in providing vitality in this country's broadcasting output.
I had not been aware that the BBC is not yet meeting its quota. That is worrying. I am not quite sure why that should be the case. It may be that between now and the next stage of the Bill I can speak with the noble Lord, Lord Alli, to shed some light on the matter. I would not want to throw loose accusations around the Committee. The importance of the independent sector will not be lost on anybody, least of all on those taking part in the Committee. There is the vitality which the independent sector brings with a quick response to changing ideas and taste in different categories of the population, including the young and ethnic groups. It is stimulating as regards the creative work that is done by many people who might not otherwise have access to the machinery whereby their work can develop and be put into programming.
The debate on quotas has become a great deal more complex than I had expected. As we understand it, the current regime, well intentioned though it is, creates some difficulties for the independent sector where quotas apply. We all know about the minimum of 25 per cent of time allocated to the broadcasting of qualifying programmes.
We also understand that secondary legislation will shortly come before Parliament. That legislation is currently being redrafted. It will to some extent correct the definition of "independents". The noble Baroness, Lady Buscombe, explained—therefore, I shall not go into it in any depth—that independent companies which are under the umbrella, or in the orbit, of a large broadcaster now find themselves in a difficult position whereby they are not considered to be independents in the sense in which that term is understood under the current regime. That leads to serious consequences for those businesses.
678 The Secretary of State, Mrs Jowell, at the ITC's programme supply review at the Oxford media conference in January rightly announced a strengthening of the powers that would be given to Ofcom to police the independent production quota. But that has created a lot of disturbance from the point of view of the long-term commissioning process. Companies are now worried that those independents that they have been considering may not be qualified to provide programming for them. That is obviously an unintentional effect. I hope that the Minister will tell us whether there has been any further thinking on that point. Some of the larger independent companies have close shareholding relationships with larger broadcasters with which they have very little programme-making activity but do work for others, including the BBC. At the moment they consider that they are in an extremely vulnerable position. I believe that most noble Lords would agree that that matter must be looked at and corrected.
I do not intend to discuss the issue debated by the noble Lord, Lord Alli, and other noble Lords on further refinements of the matter we are discussing. I shall read Hansard very carefully. Presumably we shall revisit the matter at a later stage. It seems to us that the way in which Ofcom will deal with the future of the independents is one of the most important aspects of the legislation.
Having said that, we look forward to studying the matter very much more closely and perhaps being better equipped to enter into the very sophisticated debate which developed between the noble Lords, Lord Crickhowell and Lord Alli. We feel rather inadequately equipped to enter that debate at this stage although undoubtedly we shall do so at a later stage.
§ Lord Puttnam
I rise to support my noble friend Lord Alli and perhaps to offer a little context for this debate. In the five-and-a-half years I have been a Member of your Lordships' House I have meticulously never gone into any detail or bored the House in any way about my earlier career, but it seems almost perverse not to do so at this particular juncture.
I joined the film industry in 1969. At that point 90 per cent of the people involved in the industry were permanently employed and 10 per cent were freelance or independent. Some 34 years later those percentages have exactly reversed themselves. Today 90 per cent of the people involved in the industry are independent and 10 per cent are permanently employed. From 1969 to 1983 I was disbarred from producing any form of material for television because if you did not work for one of the television companies, you could not produce for them. This reached the apotheosis of ridiculousness when, rather like the noble Lord, Lord Crickhowell, I was a director of Anglia Television in 1980 but until 1983 I could not actually make a programme for Anglia. That was how daft the situation was.
679 Quotas allowed me to produce my first work for television both here and abroad. Another market distortion was introduced by the 1945 Labour government—the Eady levy. Thanks to the Eady levy I and my entire generation—every single member of my generation of film makers—made their first piece of work. I name a few such film makers: the noble Lord, Lord Attenborough, Sir Alan Parker, Sir Ridley Scott, Ken Loach, Stephen Frears. Every single member of my generation of film makers made their first films with the support of the National Film Finance Corporation. That was market distortion and regulation—not deregulation. The history of the independent sector in Britain has entirely relied upon a market-distorted process. My absolute contention is that it cannot survive in a free market. The market has changed very significantly.
My noble friend Lord Alli is quite right to table his amendment, because unless we protect and nurture the independent sector in this country, it will go back to where it was in 1969 and cease to exist.
§ 9.45 p.m.
§ Lord Roberts of Conwy
As a former television producer—so long ago that I can barely remember it—I heartily endorse the thrust of the amendments, because they support the proven creativity of the independent sector, which is economically and culturally important not only in the metropolis but beyond the magic circle of the M25.
Major production centres have developed in some of our provincial cities. That is welcome because they have introduced a new dimension of enterprise and creativity to local economies. In Wales, the independent sector has benefited from the presence of an additional public service broadcaster in the form of S4C. Some 60 per cent of its analogue service is supplied by the independent sector, rising to 80 per cent with the launch of its digital service.
It was never intended that S4C should produce anything very much of its own but should always go out for its programming. The Bill introduces an independent production quota of 25 per cent for S4C along with other public service broadcasters. That does not make sense in view of the reality that I have just described. I hope that the Government will look again at the anomalous position of S4C in that context. We want S4C not to reduce independent production, but to encourage it and provide a stable financial base.
In relation to the larger argument, there is always a propensity within licensed broadcasting organisations to do programming themselves rather than go outside. There is a bias against the independent sector, which is not as highly valued as it should be.
There are some 90 businesses in Wales involving independent producers. They have enjoyed success, even internationally, with an animation series produced for S4C. They are known as Welsh 680 Independent Producers—Teledwyr Annibynnol Cymru. It is on their behalf that I have said my few words.
§ Lord Brooke of Sutton Mandeville
I support the noble Lord, Lord Alli. His references to Channel 4 prompted me to realise that in an earlier speech today I declared no interest. I probably should share with the Committee the information that my second son has been working for Channel 4 for some years and is a reasonably senior manager there, on the digital side.
My interest in the issues raised by the noble Lord go back to my own period as a Minister engaged in this area between 1992 and 1994, when I remember being consistently impressed by the representations made by groups of independent producers about their development and problems. I am delighted to hear of the quota's success and will briefly return to the BBC later.
I warmly support my noble friends Lord Crickhowell and Lord Roberts in their remarks about S4C, which comes into the same category as Channel 4.
The noble Lord, Lord Alli, referred to the wide range of awards won. I cannot help feeling that that particular success contributes to the plurality of which we were speaking earlier in today's proceedings. Going back to my experience between 1992 and 1994, I share his misgiving about individual ITV companies contributing towards the quota. I understand the problem that has arisen, and I fear sclerotic consequences if concessions were to be made in that area. I fear that they would not contribute to the success behind the achievement that is Amendment No. 14—the generic amendment—which seems to me the touchstone test.
The BBC has written quite frequently to individual Members of the House over the past month. I am not absolutely confident that it has ever in correspondence with me explained why it has been missing the quota. I can even remember one letter that gave the impression that the BBC was quite pleased to have got as close to fulfilling the quota as it had. I understand why it does not raise the subject but, considering all the other things that it asks us to support it on—I have been happy to allude to them earlier today—it is slightly careless of it not to have described why it does that.
In the final analysis, the Minister's response on all the amendments tabled by the noble Lord, Lord Alli, and indeed by my noble friend, will be tested by some of us against the contribution that they make to achieving the fundamental premise that underlies Amendment No. 14. If the Government's heart is in the right place in terms of achieving what Amendment No. 14 talks about, they will have done well, certainly so far as I am concerned.
§ Lord Thomson of Monifieth
I want to emphasise the importance for Ofcom, once the Bill has passed into law, of having adequate powers in relation to independent production to ensure proper regional dispersal of production. Wales has an excellent record in that, of course, but it has certain linguistic advantages in making that possible.
681 In television production, in my experience, there is an immense magnetic attraction to the London area—to get inside the M25. In my time, S4C used to make very vigorous efforts to go up to Scotland to promote independent production there. I am not sure what the present position is. However, I have a suspicion that in general there has been a relaxation of that dispersal of independent production, and a greater concentration coming down into the London area. As ITV develops—if we get ITV plc—I greatly fear for all the great regional traditions of the ITV system. The pressures again will be toward independent production being concentrated down here in the London area.
In a completely different context, in my ministerial days I remember once trying to persuade the Home Office to engage in an effective dispersal of the Passport Office. With great agony, it finally produced plans to take us out to Ealing. Television has that same inner pressure towards the glories of the London area.
I searched as thoroughly as I could through the great volumes of the Bill for any reference to the importance of the regional dimension of independent production. I found none there. Before the Bill finally passes from this House, I hope that we might be able to do something about that.
§ Lord Dubs
I should first declare an interest as chairman of the Broadcasting Standards Commission, although that organisation's work has very little to do directly with my noble friend Lord Alli's amendment, to which I should like to give my warm support.
I first came across the issue of independent producers not through the glamour of having been a producer or through having operated at the heady heights of owning a television company, but on a very wet morning in Brighton during the Labour Party conference, when I was invited to breakfast by PACT. It had a briefing session at which it put me in the picture as regards the difficult situation in which independent producers found themselves. It was in a situation in which it had little economic power compared with the big battalions—the larger television companies, including the BBC and ITV. The fact that the scales were tipped against it made life pretty difficult. I was delighted when the committee of my noble friend Lord Puttnam made a firm recommendation that led to the Government accepting the proposal to give the ITC the responsibility of reviewing programme supply.
Various useful measures stemmed from that, including, I understand, the fact that the contracts under which independent producers have sometimes suffered will now be revised or at least he made more flexible so that they can negotiate better contracts. I understand that the previous position was that independent producers were tied in particular to the BBC and therefore had no independent right to market their production outside the UK; they were dependent on the BBC to do that. If the BBC chose not to do that, that was the end of the opportunity for the 682 independent producer to make more money from their creative work. I believe that that will change as a result of the ITC review.
I turn briefly to the question of the 25 per cent quota. I understand that it depends on what are called qualifying hours, which can be significantly less than the total number of hours for which there are programmes. That is caused by the number of exemptions—I refer, for example, to Open University programming, news, programmes with a large life content and so on. If one then examines the difference between the 25 per cent quota by time and the 25 per cent quota by value, which is what I support—I believe that it is the basis for some of the amendments tabled by my noble friend—one sees that the position would then become a little better for independent producers.
I was given some figures by PACT about the BBC; I am not trying to pick on the BBC in particular, for which I have a great deal of respect, I quickly add. We shall discuss it in relation to later amendments. Looking at the figures by value, the 25 per cent figure becomes about 13 per cent with regard to work commissioned from independent productions. It is lower because of the point about qualifying hours and because of the difference between time and value. We should convert the qualifying quota from time to value. That would give our independent producers a little more of a fair crack of the whip. It is a question of giving them an even chance to compete. I believe that we are moving in that direction; if my noble friend's amendments were agreed to, we should move much more significantly in that direction.
§ Baroness Blackstone
I shall endeavour to demonstrate to the noble Lord, Lord Brooke, and all other noble Lords who have contributed to this debate that the Government's heart is in the right place with regard to the independent production sector.
I strongly agree with the claim made by my noble friend Lord Alli, the noble Viscount, Lord Falkland, and practically every other speaker in this debate; that is, that the independent production sector is very important within the whole broadcasting environment. I also strongly agree that it produces some very fine programmes. If I did not acknowledge that, I should be in grave trouble with my daughter, who currently happens to make documentary programmes in the independent sector. I do not know whether that involves declaring an interest; the noble Lord, Lord Brooke, declared an interest in relation to his son.
The Government asked the ITC to undertake a review of programme supply in the UK, as the noble Lord, Lord Alli, and others mentioned, in response to concerns expressed during consultation on the Bill about the overall economic health of the programme supply market and the position of independent producers within it. It also commissioned that because it agreed with what my noble friend Lord Puttnam 683 said; that is, that the sector should be protected and nurtured. I agree with all the former and current producers who spoke this evening about that.
The ITC's authoritative and incisive report was published in November 2002 and was well received by the whole industry. The Government accepted almost all its recommendations. Following the review, we made a substantial body of amendments in another place to strengthen the Bill's requirements on independent productions.
Let me reassert, therefore—it is important to the noble Lord, Lord McNally—that the Government are listening and have already made a great many changes to the Bill of which this is another example. These amendments will require all broadcasters to draw up and agree with Ofcom codes of practice for their dealings with independent producers. They will give Ofcom the power to measure the independent productions quota by value as well as volume if appropriate. I say that to the noble Lord, Lord Alli, and my noble friend Lord Dubs. They will require Ofcom to review periodically the way the quota is working and report to the Secretary of State. They will give Ofcom the power to require broadcasters to make up any shortfall in the quota in subsequent years.
These amendments demonstrate our strong and ongoing commitment to the independent production sector. I am grateful to my noble friend Lord Alli and other speakers who have begun at least to acknowledge that. I can assure the Committee that the issue of independent productions will be very much at the forefront of Ofcom thinking. That is what the Government intend and expect of Ofcom. In particular, under its annual factual and statistical report, Ofcom must consider certain aspects of the programming quota for independent productions.
Paragraphs (e),(f) and (g) of Clause 351(3) require Ofcom specifically to consider the application of the quota and the effectiveness of the conditions and duties that are in force; whether to recommend to the Secretary of State that he exercise the power to change the quota or the way the quota is operated; and the extent to which independent productions are produced in the United Kingdom in a range of production centres outside the M25 area.
I believe that Ofcom's wide-ranging requirements adequately meet the concerns that prompted Amendment No. 14. I do not believe, therefore, that it is necessary to include a reference to the independent production sector as one of the overarching objectives contained in Clause 3(2). As far as a link between Ofcom's general duties and the UK programme supply market is needed, it seems to me that it is one of the "relevant markets" referred to in subsection (3)(e) and as such Ofcom will have to have regard to the desirability of encouraging investment and innovation in it. I hope, therefore, that my noble friend will not press his amendment.
684 Amendment No. 42 would insert a new clause proposing a new duty for Ofcom to promote the independent production sector. As I have explained in some detail, Ofcom will be very aware that to promote the independent production sector is already firmly within its remit. Furthermore, I am sure that Ofcom's radar is already fixed on this issue as one to which they must have particular regard. Again, I do not believe that that additional duty for Ofcom is necessary.
Furthermore, I am unsure as to the value of a register of programme ideas. Indeed, I am not aware that it has been raised as a specific concern in the broad consultation that has taken place on the Bill either by broadcasters or by the independent producers themselves. I agree, therefore, with the noble Lord, Lord Crickhowell, that keeping a register of all original programme ideas would appear to be a pretty big administrative burden to be placed on Ofcom, the benefits of which are not immediately obvious. Perhaps a register of original programme ideas might be considered a useful tool for independent producers. If that is the case, it would be appropriate, perhaps, for PACT, as the trade association which represents their interests, to develop and maintain such a register. Perhaps my noble friend would like to take that up.
Perhaps I may comment briefly on the issue of copyright protection, which my noble friend also raised. We are aware that some people have raised concerns about the existence of copyright protection for programme formats in the past. However, I think that many people now take the view that sufficiently elaborated original programme formats are already protected by copyright, and that is something with which the Government agree.
I reinforce what I have said by emphasising again that Ofcom will have an enormous amount of flexibility to promote the independent production sector in carrying out their duties. Therefore, I do not think that this new clause is necessary.
I turn to Amendments Nos. 196 and 199, which would require Ofcom to secure that every public service broadcaster in each year must meet a programming quota for independent productions by both "value" as a percentage of the broadcaster's annual budget allocated to qualifying programmes as well as by "broadcast time".
Amendments Nos. 272 and 273 to Schedule 12 would place similar requirements on the BBC. It is perhaps appropriate at this point to say that like the noble Viscount, Lord Falkland, and one or two other speakers, the Government are somewhat disappointed that the BBC has not managed to meet its quota targets. Indeed, my right honourable friend the Secretary of State has written to the chairman of the BBC about that. I am sure that we will have a reply very soon. We know about the particular problems caused by the issues of Endemol, but I do not think that that entirely explains why it has not reached its quota.
685 The ITC UK programme supply review specifically examined a recommendation of the committee chaired by my noble friend Lord Puttnam. The ITC review was not persuaded of the need at present for such intervention in broadcasters' scheduling decisions. However, the review recommended that Ofcom keep that position under review, with reserve powers in the Bill to monitor the programming quota for independent products by value as well as or instead of by broadcasting time if that seemed appropriate. The Government have accepted that recommendation. It does not quite meet what is proposed by the amendments but it goes a very long way towards doing so. I hope that what the Government are doing in that respect will be accepted.
An order-making power for the Secretary of State to effect that change was introduced in another place. That power, which must be triggered by a recommendation from Ofcom, would allow the Secretary of State to make an order which would give Ofcom a duty to set licence conditions for the public service channels—Channel 3, Channel 4 and Channel 5—which would secure in each year that the programming quota for the independent productions must be met by value as well as or instead of by broadcasting time.
The "by value" measure at Clause 273(5) means that the broadcaster in question must apply a certain percentage of its programming budget for qualifying programmes in a year to the acquisition of independent productions. That could be applied as well as or instead of the present measure which requires a certain proportion of broadcasting time to be devoted to such productions. Similar provisions were also introduced in Schedule 12 to extend that power to both the BBC and the Welsh Authority. I shall return to the issue raised by the noble Lord, Lord Roberts of Conwy.
I hope that noble Lords will agree that should it appear to Ofcom that a "by value" programming quota for independent products is needed, there are now appropriate measures in place to impose those requirements. I therefore hope that the amendments will not be pressed.
I turn to the points raised by the noble Lord, Lord Roberts of Conwy. S4C has never before had a quota for independent production, but the Bill includes S4C in the 25 per cent for the first time. As with Channel 4, the expectation is that S4C will achieve a higher percentage. I hope that that response meets the noble Lord's points.
The noble Baroness, Lady Buscombe, spoke to Amendment No. 197, which would insert the term "independent producers" into Clause 273(2)(b). Amendment No. 198 would define that term as a producer who is not an employee of a broadcasting company, and is not a body corporate deriving more than 33 per cent of its gross annual revenue from a related broadcaster.
686 Prior to the establishment of programming quotas for independent productions a decision was taken in the Broadcasting Act 1990 that the definition of both "independent productions" and "qualifying programmes" should be set by the Secretary of State by secondary legislation. This was considered to be a rather more flexible approach to ensure that the definition of the terms used within the primary legislation remain appropriate to achieving the objectives of the quota. Establishing a definition of the term "independent producer" in primary legislation would restrict the flexibility and scope of the order-making powers under the Bill. Therefore, it really would defeat the purpose outlined by noble Lords who contributed to this evening's debate.
As I am sure the noble Baroness is aware, defining "independent producers" in the way proposed was considered as part of the ITC UK Programme Supply Review. The review examined the role of independent producers within the programme supply market and specifically examined the current definitions. The ITC noted that it did not think that there was a case at present for changes in qualification criteria to include producers who have ownership links to UK broadcasters. It considered available evidence, which showed—contrary to what has been suggested tonight—that producers in this category were not being unduly affected by exclusion from the quota at present, and that a change of definition would most likely impact adversely on other independent producers.
I understand the arguments that noble Lords have made by way of these amendments. I can assure them that, through the ongoing monitoring of the quota, Ofcom will keep these definitions under review. I hope that helps noble Lords, at least a little. Any further changes to the definition can be made by secondary legislation. However, I believe that the programming quota for independent productions has worked well. It has served as a catalyst. It has also helped stimulate competition and diversity and encouraged a thriving and innovative production sector.
Through Clause 273 we aim to ensure that independent producers continue to make a significant contribution to the programme supply market in this country, as well as allowing us the flexibility to make some changes as circumstances dictate. I therefore see no reason to make such a fundamental change to the clause. I hope that the noble Baroness will not wish to press her amendment. Similarly, in the light of what I have said at somewhat great length in an effort to be helpful, I hope that my noble friend Lord Alli will feel able to withdraw his amendment.
§ Lord Alli
Given the lateness of the hour, I shall restrict my comments to just a few. I should like to thank my noble friend the Minister for her response. I also thank other Members of the Committee who contributed to the debate, and am grateful for the support that these amendments have received from all parts of the Chamber.
687 This is an important debate for the creative community and one which will have a profound effect on its future. No doubt I shall return to my discussion with the noble Lord, Lord Crickhowell, in terms of ITV companies pitching for independent quota. That conjures up in my mind the picture of a fox entering a chicken coop and saying, "Don't worry, I'll work with you, my dears".
I shall read carefully what my noble friend had to say and I shall reflect on the way forward on Report. In the meantime, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Moved accordingly, and, on Question, Motion agreed to.
§ House resumed.