Communications Bill

HL Deb 03 June 2003 vol 648 cc1168-233

3.15 p.m.

The Minister of State, Department for Culture, Media and Sport (Baroness Blackstone)

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.—(Baroness Blackstone.)

On Question, Motion agreed to.

House in Committee accordingly.

[The CHAIRMAN OF COMMITTEES in the Chair.]

Clause 261 [Public service remits of licensed providers]:

Viscount Falkland

moved Amendment No. 189: Page 232, line 43, leave out subsection (2) and insert— (2) The public service remit for every regional Channel 3 service is the provision of a wide range of high quality and diverse programming which, in particular, includes a substantial range of high quality original production and satisfies the tastes and interests of the part of the United Kingdom for which that service is licensed. (2A) The public service remit for every national Channel 3 service is the provision of a wide range of high quality and diverse programming which, in particular, includes a substantial range of high quality original production. (2B) The public service remit for Channel 5 is the provision of a range of high quality and diverse programming. The noble Viscount said: The noble Lord, Lord Puttnam, has asked my noble friend Lord McNally and me to move this amendment for him in his place. At the same time I shall also speak to Amendment No. 190, which is down both in my name and that of my noble friend Lord McNally. Amendment No. 189 concerns the Channel 3 service, which was the subject of some debate in the pre-legislative scrutiny that was chaired by the noble Lord, Lord Puttnam. The amendment expressed the concerns that were evident on that occasion about the public service remit for every regional Channel 3 service. There was a concern, which is the substance of the amendment, that there should be a continued provision of a wide range of high quality and diverse programming.

The amendment provides an opportunity to debate the recommendation of the joint committee that the public service remit for each of the Channel 3 services should require urgently the provision of this range of high quality and diverse programming. That would include a high proportion of high quality original production. In particular it should satisfy the tastes and the interests of that part of the United Kingdom which that Channel 3 service served. The pressures could be great on the Channel 3 services, as I am sure that noble Lords will realise, with limited sources of advertising and increased strong competition which exists even now before the provisions of the Bill, should they be passed, become an Act.

Amendment No. 190 in my name and that of my noble friend Lord McNally deals with other aspects of Channel 3. In the Government's White Paper of December 2000 they promised that Channel 3 would have continuing responsibilities for a similar range of programming to that of the BBC and Channel 4, albeit with targets set at lower levels. The genres of programming are clearly set out in Clause 260, but the degree to which ITV is expected to abide by them depends on its individual remit. That remit is, perhaps alarmingly, exactly the same as that of Channel 5, even though Channel 3 has a universal reach, which Channel 5 does not. At present, Channel 3 has a share of the peak-time audience of around 33 per cent, whereas Channel 5 has a reach of around 6 per cent. Furthermore, the programme budget of Channel 3 is around six times that of Channel 5.

Channel 3 has an historic place in broadcasting ecology as a mixture of commercial and public service provision. It is a successful competitor to BBC 1 and in particular has been a successful provider over a number of years of regional programming. Channel 5 bears lighter obligations because it was intended that it should be a small, niche commercial channel.

We contend that the public service broadcasting ecology I have mentioned would be greatly undermined if ITV's remit freed it from its Tier 3 obligations. This could be further aggravated by the ownership rule changes, allowing ITV to centralise and to he taken over by possibly a large non-British corporation. In such an environment, it is vital within the British ecology that Channel 3 has a strong public service remit which, to put it as mildly as I can, acts as a strong reminder to any aggressive new owner—whether that be a UK owner or, more possibly, an international corporation—and underwrites the commitment to regional programming and to general factual programming. I beg to move.

Lord Phillips of Sudbury

I want to make some boring, lawyers' points which nevertheless are not unimportant in terms of the construction of the Bill. I am sure that one of the most difficult tasks of the parliamentary draftsman was to try to write into Clauses 260 and 261 the burden of expectation placed upon them by almost all Members who have spoken in favour of the Bill supporting public service standards. My questions in relation to Amendments Nos. 189 and 190 revolve around understanding how Clause 261 fits with Clause 260.

Clause 260 refers in its heading to the "public service remit" for television at large. Nowhere does it make any statement that it is subject to the provisions of Clause 261. The point is that Clause 261, which sets out the public service remit for Channels 3, 4 and 5, is infinitely narrower in scope than the provisions of Clause 260. Clause 260(4) lists the "purposes of public service television broadcasting" and the clause twice makes reference to "relevant television services".

My question intends to achieve a greater understanding from the Minister. I have given late notice of the questions, for which I apologise, but in the face of such large pieces of legislation one is operating on a just-in-time basis. I would be pleased to know how one construes the fact that the public service remit of Channel 3 and Channel 5 are confined by Clause 261(2) to, the provision of a range of high quality and diverse programming". I compare that with the requirements of Clause 260(4)(d), which refers separately to "content", "quality" and "editorial integrity". My question is whether the absence of any reference in Clause 261 to "content" as opposed to "quality", and absolute omission of reference to "editorial integrity", is supposed to imply that those two requirements do not carry across into the public service remit for the public service channels, 3, 4 and 5, governed, as it would seem, by Clause 261. Put another way, is Clause 260 generally applicable to Channels 3, 4 and 5 or is the effect of Clause 261 to narrow the scope of Clause 260 with regard to Channels 3, 4 and 5 to just those matters dealt with in Clause 261?

I want to raise at this juncture one other point, bearing in mind that we are at the Committee stage and trying to be of help both to the Government and the Committee. When looking at Clause 261(3), which deals with the public service remit for Channel 4, which is more expansive than that provided for Channels 5 and 3 services, I wonder why it appears to go wider than Clause 260. It deals with "innovation, experiment and creativity", which is not part of the many provisions of Clause 260. That clause refers in only one place to originality and that is with regard to programmes for young persons and children. Similarly, Clause 261(3) talks of programming exhibiting a "distinctive character" as being a public service requirement for Channel 4, but there is nothing like it in Clause 260.

I therefore have a double conundrum. In one sense, Clause 261 is much narrower than Clause 260, but in respect of the distinctive character of programming on the one hand and innovation and creativity on the other, Clause 261 appears to step outside the ambit of Clause 260.

I apologise to the Committee for having to put those technical matters in a way which will be difficult to follow and comprehend, but, frankly, I know of no other way of contending with them in the method that is required; that is, on the Floor of the Chamber.

Baroness Jay of Paddington

Without wanting to follow on the technicalities of the points that have been raised, it is helpful to the Committee and the Bill that Amendments Nos. 189 and 190 attempt to be more specific about the nature of the public service remit. That is of value.

I am concerned that we might feel some trepidation about being too precise in trying to identify what we feel is realistic in terms of public service remit and in trying to be prescriptive in identifying the qualities necessary in statute for a public service remit to be observed. In that, we have a British concern that we may be trying to over-regulate in statute an issue which should be left to more vague and less clearly identified roles and qualities.

I want to draw the attention of the Committee to a broader point raised in Amendments Nos. 189 and 190. It is the statutory obligation that some of our neighbours and colleagues impose in the public service context on their broadcasters. I think specifically of France and Spain in the European Union and Canada and Australia in the Commonwealth countries. There are very precise statutory obligations ensuring a fair and proportionate broadcast investment contribution to the culture and industry of their respective countries by the broadcasting channels concerned. I am indebted to the former MEP, Carole Tongue, who has produced a useful summary of comparative regulation in various countries within the OECD. If I may just quote briefly from the Australian legislation, it is clear what it expects: It is to promote the role of commercial television in developing and reflecting a sense of Australian identity, character and cultural diversity by supporting the community's continued access to television programmes produced under Australian creative control. It seems to me that if that kind of specific legislation is statutorily embraced within a Commonwealth country—I could go on at much greater length on more specific obligations—then those are some of the issues that we should consider when we look at these amendments.

3.30 p.m.

Lord Bernstein of Craigweil

I should like to support the intention behind Amendments Nos. 189 and 190. I speak as a former television executive. ITV was set up very much with the public service remit that established the BBC. Licences were awarded to companies which could demonstrate the ability to produce programmes of a wide range and of high quality. We had a very effective regulator over many years who insisted that that remit was carried through.

By the end of the 1980s the system was creaking. It needed a review. What it did not need was the Broadcasting Act 1990 which was enacted in the full flow of the Conservative Party's belief in market forces. It decided that money, not programmes, should be the arbiter of the licence renewal system. The intention was to auction franchises to the highest bidder. Fortunately, some of the worst effects were mitigated by the Minister of State at the Home Office inserting some last minute amendments to the Bill and by the pragmatism of the Independent Television Commission in awarding the contracts. Nevertheless, the auctions took place. Many companies overpaid, some by tens of millions of pounds. The inevitable result was that the money that should have gone into programmes went into the pocket of the Treasury.

I do not wish to say that the current picture is totally black. Some companies within the ITV system still aim to provide public service broadcasting but things are changing. Satellite television is getting both more powerful and more competitive and the ownership of the ITV companies may well change. This Bill would allow United States owners to acquire ITV and US companies are not particularly known for their sensitivity for home-grown original programme-making.

The intention behind these amendments is correct. I take my noble friend Lady Jay's point that one can be over-prescriptive but I believe that the amendment which includes the phrasing. a substantial range of high quality original production'. is important and should be on the face of the Bill.

Lord Puttnam

I thank the noble Viscount, Lord Falkland, for moving Amendment No. 289. 1 have two things to add. I have just spent a most informative weekend at Ditchley Park discussing the relationship between the media, politics and the public with a parallel group of 15 Americans. One thing that most distressed the American group was the almost total absence from American broadcasting of documentaries about the rest of the world. They have become as dead as a dodo.

Amendments Nos. 189, 193 and 194 are all of a piece. They are an attempt to hold the licensees' feet to the fire in terms of programme quality. As an example of why this is necessary, it has already been decided that Channel 3 is no longer required to provide programmes of international interest. The obligation to provide documentaries about the rest of the world has been removed from its licence obligations. That is an example of slippage. It was a foolish thing to do. It is unreasonable to expect that entire area of programming to be left to the BBC. We shall have a diminished television environment as a result. That is the reason for Amendment No. 189, and I am sure it will also have a great bearing on why we will pursue Amendments Nos. 193 and 194.

Lord McIntosh of Haringey

I am very grateful for the way in which these amendments have been spoken to. I do not think the noble Lord, Lord Phillips of Sudbury, should at all apologise for raising the issue of the construction of the Bill because it is indeed complex. If I spend a little time setting out the relationship between Clause 260, which your Lordships' House has already debated, and the following clauses which we are now debating I hope that things will become a little clearer. They did to me when I was trying to work out what they all meant.

Clause 260 sets out the overall remit for all public service broadcasting. To answer the noble Lord's question, that includes Channel 3, Channel 4 and Channel 5. However, it is not an obligation on broadcasters; it is a very detailed set of standards set out for Ofcom. When we debated Clause 260, it was generally accepted that this was the most comprehensive definition of the content of proper public service broadcasting that we have ever had. If my noble friend Lord Puttnam looks at Clause 260(6)(c) he will see that coverage of international affairs in news and current affairs and in factual programming is covered in the definitions of Clause 260.

The purpose of it being an obligation on Ofcom is that Ofcom should have the responsibility of reviewing the performance of public service broadcasters, of reporting on that review and of enforcement action. That is not in Clause 260. It comes, as we shall see, in later clauses. It is absolutely essential that we should understand straightaway that Clause 260 is not just a set of words but standards that have to be adhered to, and if they are not adhered to Ofcom has a duty to take enforcement action.

Clause 261, instead of setting the overall remit for all public service broadcasting, defines the remit for each licensed public service channel provider. It divides that up into Channel 3 and Channel 5 for whom the criterion is a range of high quality and diverse programming and for Channel 4 where there is more precise wording. The reason for that is that Clause 261 repeats the existing remit for Channel 4 which was in place when Channel 4 began. It has been generally agreed to be an admirable remit for a public service broadcaster with advertising but without private shareholders.

However, that is not the end of it. We have been talking so far about quality obligations under tier 3 and what these amendments seek to introduce into Clause 261 is quantitative standards under tier 2. I suggest to the Committee that that is unnecessary since all of those requirements are set out in later clauses.

In Clause 274, the requirement for original programming for Channel 3, Channel 4 and Channel 5, which is set out in these amendments, is provided on the face of the Bill.

In Clause 282 the requirement for regional programming in a different sense, that is, programmes made in and of particular interest to the relevant part of the United Kingdom, is set out for Channel 3. In Clause 283 the regional remit for Channel 4 is also set out on the face of the Bill. All of the matters introduced into Clause 261 by the amendments are not necessary because they are spelt out in detail in subsequent clauses of the Bill. I found that enormously difficult to understand and I do not blame anyone, including the noble Lord, Lord Phillips, for finding it difficult, but it is necessary to do it that way.

However, that is not the end. Amendment No. 189 extends the definition for Channel 3 to cover tier 2 matters which, as I said, are already covered. Amendment No. 190 does the same for Channel 3 and for Channel 5, which is a national channel. Here we have a very detailed description of how public service broadcasting should be defined in terms of all the kinds of good programming required from public service broadcasters. That must cover not just factual and entertainment matters, as specified in Amendment No. 189, but all of the other matters specified in Clause 260 plus the elements set out in Clause 261.

All the points raised are valid and have been taken into account in the drafting of the Bill. I hope that I have shown that our approach is rational and logical and that the Bill's proposals, if not easy to follow immediately, do cover the ground.

Lord Puttnam

For the sake of clarity, the Minister is right in one sense. The words "around the world" are included under programming described as news and current affairs. They have been omitted, or removed, I should say, from, programmes that reflect the lives and concerns of different communities and cultural interests and traditions". I would be completely happy if the words "and from around the world" could be added to paragraph (h); I would be a very content person.

Lord McIntosh of Haringey

Let us think about that. We have already debated Clause 260, but that does not mean that further improvements at the margin are not possible at later stages of the Bill. It is a legitimate point. I do not want to dismiss it without thinking about it.

Lord Phillips of Sudbury

Do I summarise fairly the Minister's proposition by saying that the provisions of Clause 261 are in addition to the provisions of Clause 260; that is, that where one refers to Channel 3, Channel 4 or Channel 5 services, all of the provisions of Clause 260 will apply to those channels notwithstanding the provisions of Clause 261?

Lord McIntosh of Haringey

That is correct. Clause 260 is the overall remit for all public service broadcasters. Clause 261 defines the remit, deliberately in summarised form, because we do not want to repeat everything for Channels 3, 4 and 5.

Lord Phillips of Sudbury

Does the Minister concede that Clause 261 summarises what is in Clause 260 and does not repeat everything, the phrase, I think, that was used? I understand what the Minister says. Is there not a danger that others—as I did—will read Clause 261 as being a more specific requirement for Channels 3, 4 and 5, set out separately in Clause 261, and that therefore there could hereafter be deemed to be a clash between the two? Put another way, everything in Clause 261 is in Clause 260 "with knobs on". One therefore wonders what on earth is the point of Clause 261.

Lord McIntosh of Haringey

The point about Clause 260, as I hope I made clear, is that it is enforceable. It is an obligation on the programmers to put programme policies to Ofcom. It is an obligation on Ofcom to review those programme policies, to report on them and to see that what has been promised is adequate in terms of the detailed requirements of Clause 260 and is carried out.

Clause 260 specifies the difference between Channels 3 and 5. One does not need to repeat everything; one just refers to high quality and diverse programming, which summarises but will not replace the obligations in Clause 260. However, it has to be distinguished from Channel 4 where we have made a deliberate decision, which I hope is welcome, to repeat the successful remit established when Channel 4 was first set up. Because of the enforcement powers leading from Clause 260 there is no possibility of lower standards driving out higher standards.

Viscount Falkland

I am grateful to the Minister for his full and interesting reply. I am also grateful to the noble Lord, Lord Puttnam, for his amplification to the content of the amendment, which I moved in his name. The debate has been lively and fascinating. We have reached a subject central to the changes which are taking place or are envisaged in the Bill. I am grateful also to my noble friend Lord Phillips of Sudbury who, in his usual articulate way, has analysed a problem. The House will be in his debt and that of the Minister for having to some extent resolved the difficulties of bringing together Clauses 260 and 261.

The remarks of the noble Baroness, Lady Jay, with her experience, were apposite. I took seriously what she said. One can be over-prescriptive and over-regulate. It is possible that there is a tendency with our tradition to do that. Nevertheless, I hope that our public service remit, unique as it is, will remain in the way we have envisaged it even though we may not have expressed it in a way entirely suitable for the Bill. Having said that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 190 not moved.]

Clause 261 agreed to.

Clause 262 agreed to.

Clause 263 [Changes of programme policy]:

[Amendment No. 191 not moved.]

Clause 263 agreed to.

Clauses 264 and 265 agreed to.

Clause 266 [Enforcement of public service remits]:

Lord Holme of Cheltenham

moved Amendment No. 192: Page 237, line 22, at end insert— ( ) Such failure shall include, without exclusion of other public service responsibilities, a failure to provide such coverage of the proceedings of Parliament, and other elected legislatures within the United Kingdom, as is appropriate and necessary for civic understanding of their purpose and practices. The noble Lord said: The purpose of Amendment No. 192 is to ensure that whatever other criteria may be used to define a failure to meet public service requirements, they shall include a failure to ensure proper coverage of Parliament and its proceedings and, indeed, of other democratic parliaments or assemblies within the UK. Put more positively, the aim is to ensure that coverage of Parliament is a core element of public service obligations in broadcasting.

There are some—I include myself—who believe that accountability, transparency and governance of the BBC, which after all is the gold standard of public service broadcasting, would be greatly improved with a clear definition of "public service". I am not in favour of the British vagueness of which the noble Baroness, Lady Jay, spoke so warmly. I am rather in favour on an important issue such as this of precision.

However, the amendment is not about that larger question; it deals with the very specific issue of parliamentary coverage, on the basis that public service in a parliamentary democracy must mean as an irreducible minimum the promotion of proper understanding by the citizens of the way in which they are represented and governed.

I should declare an interest here, as chairman of the Hansard Society for Parliamentary Government, which coincidentally tonight is launching a report entitled A Tale of Two Houses, which examines how Parliament and parliamentarians are viewed by those who are not traditionally involved in Westminster, drawn in this case from regular viewers of "Big Brother". I can assure the Committee that it makes extremely interesting reading—and very depressing reading in many ways.

It is not the purpose of the amendment to say that much good work is not done by broadcasters. "Yesterday in Parliament" on the radio is a fine example of what can be done. The recent reform of using Central Lobby to get immediacy after debates is a great step forward. But we cannot be entirely confident that the management of broadcasters who have public service obligations will always be sensitive and will always treat this issue with the importance that it deserves. In our society, particularly now that the press relies increasingly on sketches and dramatic political controversy, the broadcasters are one of the main means by which citizens understand what their representatives are doing and why.

No doubt we could do a great deal more on our side of the fence to make the proceedings of Parliament more accessible and comprehensible, as the Select Committee on the Modernisation of the House of Commons has indicated, and as the former Leader of the House, Robin Cook, also intimated. But I believe that broadcasters have a bottom-line responsibility, and they must not be allowed to evade it.

In 1999 MORI carried out an opinion poll for the Hansard Society which showed that 75 per cent of the general public agreed that it was important to have live extracts from Parliament, showing what MPs actually say. Of those who had seen such live extracts, 85 per cent agreed that it was very important to have that, rather than simply intermediation of political reporting. Interestingly, the public are far more likely to recall live coverage of parliamentarians speaking than they are political commentators reporting on what was said in Parliament.

In particular, I do not think it is desirable for Parliament to be treated wholly and solely as a prop in the adversarial drama of partisan politics. It is a sort of tabloid agenda: very high on stimulating sensation, but very low on creating understanding. The amendment is addressed as much as anything to what we might call the populist tendency, which is represented at very senior levels in the BBC and other broadcasters, and the populist tendency is to believe that Parliament is simply a subset of politics, and that politics is simply a subset of showbiz. That tendency must be discouraged, which is the intention of the amendment. I hope that it will be taken as encouragement by all those in the BBC—there are many of them—and in the other public service broadcasters, who, often in the face of internal pressures to trivialise, keep the mission of clear communication of Parliament's work alive and kicking.

Baroness Buscombe

I rise to support the amendment, to which my name has been added.

As the noble Lord, Lord Holme, said, the clause seeks to ensure that if Ofcom is of the opinion that a public service channel or teletext provider has not fulfilled its public service remit, Ofcom may exercise its powers under the clause. The amendment ensures that the public service obligation will not be deemed to have been satisfied if there is a failure to provide coverage of the proceedings of Parliament or other elected legislatures. It provides a necessary democratic safeguard by offering members of society the opportunity to remain informed about parliamentary work and procedure. Whilst we appreciate the importance of choice, we believe that providing the freedom to choose can be effected only if the information is supplied by the appropriate institutions.

Baroness Howe of Idlicote

I rise to speak to my Amendment No. 193, which relates to any failure to meet public service broadcasting obligations. The aim is to ensure that any exemptions are not too easily granted.

Unlike Amendment No. 192, whose subject matter is very interesting, the amendment does not add words to the Bill. Rather, it removes a few, because they do not seem to be necessary. As a result of their deletion, Ofcom would be able, still at its discretion, to take action if and when a channel failed to fulfil its public service broadcasting remit or to make an adequate contribution towards the purposes of public service broadcasting.

The words to be removed are: and is not excused by economic or market conditions". It will be noted that "economic and market conditions" are mentioned in subsection (3)(e), which surely provides sufficient safeguards against any potential injustice.

I have to admit that my intention is not just to save a few words in an over-heavy Bill. It is also to ensure that Ofcom is not encouraged to respond too easily to pleas of poverty without exploring other factors.

Lord Lipsey

I rise to support Amendment No. 192, in the name of the noble Lord, Lord Holme, to which I have appended my name.

If we in Parliament do not show that we take the coverage of Parliament seriously, who on earth do we think will? The answer is "No one", and that is why the amendment deserves to be incorporated in the Bill.

Lord Crickhowell

Amendment No. 194 is included in this group, and as my name stands to it I rise to remind the Committee what the Joint Scrutiny Committee said on the subject.

We have heard in the debate so far that we now have a very clear set of definitions of the public service remit, and we have just heard suggestions for tightening things up still further. The public service remit is clearly of the greatest importance. It was the view of the Joint Scrutiny Committee that if the public service remits had to be changed that would call into question the entire framework of public service broadcasting established by the new legislation, and would surely justify Parliament's looking afresh at the entire issue by considering further primary legislation.

The suggestion that the order-making power should reside with Ofcom rather than the Secretary of State acting solely upon a recommendation by Ofcom would make the matter worse, not better, since it would entail one less safeguard for what could in effect be a very significant change. So the Joint Scrutiny Committee said in paragraph 346 of its report: We oppose the power to amend the public service remits of licensed public service channels by means of secondary legislation and recommend accordingly that this provision in Clause 188(1)(a) be removed. The effect of Amendment No. 194 is to do just that.

Lord Peyton of Yeovil

I warmly support Amendment No. 194, moved by the noble Lord, Lord Holme.

The trouble, of course, is that much of what goes on in Parliament is profoundly boring and terribly dull. The BBC criterion, in its modern populist mood, is never to show the public, or as far as possible to avoid showing the public, anything which is not entertaining, amusing or shocking. I know that it is a rather broad generalisation, but I still believe that television represents one of the greatest forces with which to influence public opinion. If public service broadcasters do nothing to sustain the importance of Parliament, then Parliament will decline in the public mind.

The amendment is very important. I cannot believe that the Government would allow their evident disrespect, at times, for Parliament to take over altogether. I hope very much that the noble Lord, Lord Holme, will press the amendment today or later. I can assure him of my very enthusiastic support for it.

4 p.m.

Lord Brooke of Sutton Mandeville

It is a faint irony that, two-and-a-quarter centuries ago, John Wilkes, who was not the Member of Parliament for my former constituency but Lord Mayor of London, sought to change the reporting of Parliament from oratio obliqua, which was carried out by people such as Doctor Johnson, who sat in the Gallery and tried to remember afterwards what had been said, to oratio recta. It is to the credit of Parliament that, two-and-a-quarter centuries later, we are as anxious to see not only that the public have the opportunity to receive public service broadcasting, but that broadcasters are obliged to ensure that it occurs.

Lord McNally

One of the votes during my short-lived tenure at the other end of the corridor of which I am most proud was that I was the "one" in the majority—I always think so—that first carried a vote for the broadcasting of Parliament. The Motion was carried by one vote. There was much concern at that time about the effect on this House and another place of televising Parliament. I also had the leisure time inflicted by the voters of Stockport to watch the first televised broadcast from this House, when Lord Stockton made an electrifying speech about privatisation being akin to selling off the family silver. I remember the great enthusiasm of broadcasters at that time and how heavily we were lobbied to let the cameras in. Then, of course, like children with a toy, they all got bored with us and tried to think of different ways to provide coverage.

The amendment goes to the heart of the matter. When the process started, I told the BBC that it was a wonderful opportunity to win friends by initiating and innovating in its coverage of Parliament and politics. There has not been much fresh thinking on coverage in the past 20 years. Most of the standard flagship programmes are 20 years old or more. The BBC responded with a great internal think, which, so far as I can see, and as my noble friend said, has resulted in a camera in Central Lobby and presenters not wearing ties at weekends. Broadcasters' thinking seems to be overlaid by a great fear that if they try to show an intelligent, thoughtful political programme they will lose audiences, and that that is the be-all and end-all.

I have another fear that, unless we have a watchdog on such coverage, there will be a continuation of the already clear trend of forcing political coverage to the extremes of the schedule, or, even worse, with the new opportunities that digital provides, that political coverage will be ghettoised into a single channel. If that happened, statistics would show that a broadcaster had showed so many hours of political programmes and parliamentary coverage, but all the coverage would be shown on minority digital channels. I want the BBC, in particular, to return to the second and third part of the famous Reithian mantra "to educate and inform".

It cannot be purely accidental that the cynicism and apathy towards our political processes, which we all see as dangerous to our democracy, has coincided with a similar cynicism and apathy in coverage of the political process by all sections of the media. It was pointed out recently that, on reading souvenir editions of newspapers published to mark the Coronation, it is striking how much more adult the coverage of news events was 50 years ago, and how much more time was applied to it. Most of us grew up with the impact of flagship programmes such as "Newsweek" and "Panorama" being shown at peak time to large audiences. There is a grave danger of the ghettoisation of politics, which would only accelerate the apathy, cynicism and sheer lack of knowledge of the political process that endangers our democracy. I hope that the Government will treat this very important amendment with the respect that it deserves.

The Lord Bishop of Manchester

Many of the remarks made in this part of the debate echo those already voiced about religious broadcasting in the public service remit and the dangers of marginalisation and moving subjects into ghettos. I have much sympathy with the points being made, not least because I think that there are some allied interests. Like the noble Lord, Lord McNally, I hope that those aspects will be taken very seriously by the Government. I warm to what is being said.

Lord Puttnam

I wish to speak in favour of this group of amendments and to point out a paradox. During the Committee stage, it must have become evident to all of us how seriously we take the issue of broadcasting and the impact of broadcasters. I beg the Front Bench to look across the range of amendments that we have discussed today. Any one of them alone is not necessarily important. We are possibly urging the Government to be over-prescriptive. It may not be so necessary to push for changes by secondary legislation. Is that on its own a big issue? Is it a very big issue that an individual licensee can claim that its economic situation makes it impossible to conform with the obligations that it agreed to? But taking all the issues across the piece—secondary legislation, relaxation because of economic problems, a lack of prescription of obligations—are we really being serious enough about the medium that we are here to reinforce and, to a degree, to protect? I suggest that the Government look across the piece. Taken singly, the issues are not huge, but, taken together, they begin to look a little lackadaisical.

Lord Phillips of Sudbury

I echo the words of my noble friend Lord Holme of Cheltenham and other Members of the Committee who have spoken warmly in favour of Amendment No. 192. I declare an interest as president of the Citizenship Foundation, a charity that I set up 15 years ago precisely because it was quite clear then—as it is even clearer now—that the civic understanding referred to in Amendment No. 192 was simply not present among the majority of young people.

As our deliberations in Parliament year by year grow evermore voluminous and complex, overlaid by a European system of institutions which adds geometrically to the distancing, impersonality and complication of political life generally, it seems as obvious as the nose on one's face that such a clause should be in the Bill. I take the point made by others that we could continue adding and adding to the Bill, but it is already 520 pages long, and the temptation to add a couple of lines is almost irresistible when dealing with a matter of such importance.

It is a pity that the European Union is not mentioned here. The Bill refers only to this Parliament and the legislatures in Scotland and Wales. Whatever view one takes, linkages with European institutions grow year by year. The public discontent and lack of understanding towards the European institutions is undoubtedly higher than with regard to this place. Perhaps we shall see an amendment to the amendment at the next stage.

The noble Lord, Lord Lipsey, referred to this issue. If we are honest, we do not do a very good job of making what we do available to the public. A tiny staff deals with public information and press relations. The greater part of what we do in this House is completely unheard and unknown by the wider public. If we intend to thrust upon broadcasters the duties outlined in Amendment No. 192 we should consider more seriously how we may bring home to the people of this country what we purport to do in their name.

I wholeheartedly support Amendment No. 193. We have spent much time and effort over the previous two days in Committee on this part of the Bill. Ultimately, it comes down to an enforcement clause. Clause 266 states in terms that there will be no enforcement unless, first, the failure is serious; and, secondly, it is not excused by economic or market conditions. That is bizarre. It is almost as though the law of theft states that only if the court were of the opinion that the failure of the shoplifter is not serious, and is not excused by hunger or hardship, shall there be a prosecution. It is about the most uncertain note which could be sounded in terms of Ofcom's duty to enforce. Many noble Lords believe that the market conditions, market forces and economic considerations already have too high a profile in this Bill and should not be reinforced in this enforcement provision.

Baroness Jay of Paddington

I rise to speak only because the tenor of some noble Lords' remarks has demonstrated that in my infelicitous use perhaps of double negatives it was thought that I was arguing for less prescription in the public service area rather than the prescription proposed in the previous group of amendments. That is certainly not the case.

I support in general terms the group of amendments to which we now speak. I agree with the remarks of the noble Lord, Lord Phillips, about the characteristics of the enforcement processes under Ofcom. We raised the issue on the previous day in Committee. I was assured then by the noble Baroness, Lady Blackstone, that those enforcement procedures would be regularly enforced and monitored by Ofcom. But I believe that there is an area of concern to which the noble Lord, Lord Phillips, rightly referred.

Like the noble Lord, Lord McNally, I can go back to the golden days of political programming. I declare an interest. I was both a producer and a presenter of the "Panorama" programme when it was shown at eight o'clock on Monday evenings to an audience of 8 million people. I regret that that is no longer so. However, I am not as convinced as the noble Lord, Lord McNally, that that has exclusively to do with the scheduling of the programmes but perhaps more to greater choice and the diminution of interest in the political or mainstream affairs of the kind referred to by the noble Lord, Lord Holme.

4.15 p.m.

Baroness Blackstone

Most of the debate has been about the coverage of Parliament. However, I shall start with the broader issue of enforcement.

The Bill currently provides that Ofcom's enforcement powers can be used only if it considers that the broadcaster's failure is serious and is not excused by economic or market conditions. The enforcement powers include removing the broadcaster's self regulation—in the third tier of the public service regime—and imposing direct regulation on that broadcaster.

These powers apply to both the broadcaster's fulfilment of his individual public service remit and to his contribution to the overall purposes of public service broadcasting on which, as we know from previous debates, Ofcom will report at least every five years.

Amendment No. 193 would prevent Ofcom from considering whether a broadcaster's failure in these respects might be excused by economic or market conditions. It would reduce the circumstances in which Ofcom could exempt a broadcaster to those in which the failure was not considered to be serious.

Although we want to ensure, of course, that Ofcom has power to intervene when necessary so that we do maintain quality, I do not believe that it would be either realistic or reasonable for Ofcom to ignore the impact of economic and market conditions on the ability of broadcasters to fulfil their remits. Licensed broadcasters operate in a commercial market and are affected by external economic conditions—for example, those which have an effect on advertising revenue.

In discussing an identical amendment in another place, concern was raised that because "economic and market conditions" are mentioned twice in Clause 263, that might allow economic and market conditions to become Ofcom's overriding consideration when making a judgment about the enforcement of a broadcaster's public service remit. I shall explain briefly why I do not believe that that will happen.

Under subsection (2)(a) Ofcom has to consider whether the failure of the provider is serious and is not excused by economic or market conditions. Under subsection(2)(b) it has also to determine that the situation requires the exercise of its powers having regard to a number of matters, including the general economic and market conditions affecting broadcasters. The reference to general economic and market conditions, therefore, forms part of the judgment which has to be made under subsection (2); but it is only one of a number of matters which Ofcom will have to take into account.

I should also point out that it will be a matter for Ofcom to decide whether the failure is excused by economic or market conditions, although it has to consult the relevant service provider before taking enforcement action.

In short, we believe that the Bill as it stands formulates Ofcom's enforcement powers in a sensible way and that it would not be right to remove the existing reference to economic or market conditions.

I turn to Amendment No. 192. I have to say at the outset that it is not an amendment that the Government can accept. However, that is not because of any disrespect for Parliament. I was extremely interested in what the noble Lord, Lord McNally, said about the introduction of television. The televising of this House took place before the televising of another place. Indeed, I think that some people in this House were a little disappointed when another place decided to let the cameras in because it meant that the spotlight was moved from your Lordships' House to the House of Commons. I believe that the motivation behind the remarks of the noble Lord, Lord Holme, is laudable. I share it. However, the Bill currently permits Ofcom to take enforcement action if a licensed broadcaster has either failed to fulfil his individual public service remit or failed to make an adequate contribution towards fulfilling the overall public service broadcasting remit. This amendment would require Ofcom to consider enforcement action in the event of a broadcaster's failure to provide appropriate coverage of Parliament or other relevant legislative assemblies in the UK.

While the Government fully accept that coverage of the democratic process is an important element of public service broadcasting, the amendment would in practice create an inconsistency within the public service broadcasting regime. It would in effect create a sanction for failure to provide a service which is not explicitly required under any part of the public service broadcasting regime as enshrined in the Bill. The noble Lord, Lord Holme, might believe that it should be, but it is not. Therefore, his amendment does not work technically.

The noble Lord, Lord Peyton of Yeovil, was a little hard on the BBC. The BBC agreement does include an obligation on the corporation to broadcast a daily account of parliamentary proceedings, which it does. However, so far as the Bill is concerned, there is no direct requirement to provide coverage of Parliament or other legislative bodies, whether in the context of the first tier; the second tier of quantitative obligations for public service broadcasters; or the third tier. On the other hand, a key element of both the second tier quotas and the overall public service remit is the coverage of news and current affairs, which of course encompasses matters relating to politics, the democratic process and, indeed, Parliament.

Our overall approach to the regulation of public service broadcasting is to establish a spectrum of obligations, ranging from the BBC at one end to Channel 5 at the other. Within this framework we do not see a case for imposing a direct—and, indeed, a uniform—obligation in respect of parliamentary coverage across the whole public service broadcasting sector. Given the absence of such an explicit obligation, it would obviously make no sense whatever to include failure to provide parliamentary coverage as one of the grounds on which Ofcom may initiate enforcement action.

As to Amendment No. 194, under Clause 267 as it stands, the process of modifying the public service remits can take place only within the framework of reports submitted by Ofcom. The Ofcom reports in question may be those prepared under Clause 260, which deal with the fulfilment of the overall public service remit, or those reports prepared under Clause 226, which Ofcom submits in anticipation of a new licensing round.

In the context of the Clause 260 reports, the Secretary of State can exercise her power to modify the remit only where Ofcom had made a specific recommendation to that effect in its most recent report. However, within the Clause 226 reports, the procedure can be slightly different. In the case of the Clause 226 reports—and only in that case— there is a power for the Secretary of State to modify a remit in the absence of a specific recommendation by Ofcom. She can act in this way provided that Ofcom has made a report within the previous 12 months and, in the light of that report, the Secretary of State considers it right to modify a remit, notwithstanding the absence of a specific recommendation to that effect.

The amendment would remove the Secretary of State's power to take such action in relation to an individual remit but not in relation to the general remit. Although I understand the concern that broadcasters' individual remits should not be modified without good reason, it is right that, solely in the context of the end of a licensing period, the Secretary of State should retain the power to modify both the overall and the individual remits even without a direct recommendation by Ofcom.

Such an opportunity would, in the nature of things, arise only very infrequently on those occasions when the licensed broadcasters' licences came up for renewal. Even when Ofcom had not made a direct recommendation, there could be circumstances where the Secretary of State took the view that it was right to modify a licensed broadcaster's individual remit, and we believe that the Bill should give her the flexibility to do so. However, no such modification could be made without prior consultation with Ofcom, with the broadcaster affected and any other relevant interests. I should emphasise that any order modifying a public service remit must be approved by Parliament.

In the light of what I have said, I hope that the Committee will agree that the approach to enforcement and modification of public service remits set out in the Bill is the right one and that the noble Lord will not press the amendment.

Lord Holme of Cheltenham

I reply exclusively in regard to Amendment No. 192. I regret the rather dusty answer given by the noble Baroness. She will have sensed that a number of senior parliamentarians—the noble Lords, Lord Peyton and Lord Brooke, and the noble Baroness, Lady Jay—support the idea that a public service obligation must include proper coverage of Parliament in a parliamentary democracy.

The Minister may well be right in saying that there is a better of way achieving this—perhaps it should be attached to the black hole of what is public service broadcasting—but when she can say in the same response that parliamentary coverage is an important part of public service broadcasting but, moments later, that it is not an obligation in the definition of public service broadcasting, we have an indication of what the problem is. We do not have an adequate definition of public service broadcasting which includes this vital aspect.

I am most grateful to all Members of the Committee who contributed to the debate—my co-signatories to the amendment, my noble friend Lord Phillips and the noble Lord, Lord Puttnam. I am not quite sure about the clerical embrace. I am dealing exclusively with the issue of parliamentary coverage. The right reverend Prelate has his own, very understandable, agenda and I am not sure that I fully accept the analogue.

The only dissentient was the noble Baroness, Lady Howe, who I had the honour of succeeding at the Broadcasting Standards Commission. I am not absolutely sure that I can do justice to her objection so I shall not even try.

But, with that exception, there seemed to be a very strong feeling that the Government should find a way of addressing this problem rather than simply saying that it will be all right on the night. I shall withdraw the amendment now but it is a subject to which we shall return at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Howe of Idlicote

moved Amendment No. 193: Page 237, line 24, leave out from "serious" to "and" in line 25. The noble Baroness said: Perhaps I may start by correcting the impression that the noble Lord, Lord Holme, gained from what I said that I was against his amendment. Far from it. I would be totally in support of it. I was merely using the excuse that I was able to withdraw a few words from the Bill rather than having any objection to the interesting proposals outlined. I hope that he will forgive me and accept my apology.

I find what the Minister said about the amendment rather extraordinary. I am not a lawyer—I remain to be corrected later—but, bearing in mind what was said by the noble Lord, Lord Phillips, of how this gives an impression of over-dominance of the market, which is absolutely true, I should have thought that removing this repetition, which is exactly what it is, from the Bill would have improved matters.

As I read the Bill, omitting from subsection (2) the words suggested in the amendment would mean that there had to be a serious failure and that Ofcom would have to determine that the situation required the exercise of its powers. In making such a determination—it is yet further qualified—Ofcom would have to take account of all the other matters, including the points that I thought we were busily removing from the Bill.

I am a little unhappy about the Minister's reply. I shall of course go away and read exactly what she said but, at the moment, I am not very content. I wish only temporarily to withdraw the amendment.

The Deputy Chairman of Committees (Lord Ampthill)

The noble Baroness, having spoken to the amendment previously in its place in the group, has now spoken again at some length. I therefore have to ask her to move the amendment so that there can be a further response. The noble Baroness cannot speak to the amendment without moving it.

Baroness Howe of Idlicote

In which case, I beg to move.

Baroness Blackstone

I have nothing to add to what I said. The amendment was grouped with Amendment No. 192, which has already been withdrawn.

The Deputy Chairman of Committees

What does the noble Baroness now wish to do?

Baroness Howe of Idlicote

I hope that I am doing the correct thing. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 267 [Power to amend public service remits]:

[Amendment No. 194 not moved.]

4.30 p.m.

Clause 61 [Must-carry obligations]:

Lord Avebury

moved Amendment No. 195: Page 62, line 23, at end insert— (g) any local digital television service, (h) any access radio service. The noble Lord said: Clause 61 contains provisions which ensure that services on the must-carry list are carried by networks used by a significant number of end users as their principal means of receiving television. Subsection (3) is the starting list of the services, which can be amended by the Secretary of State following a review under subsection (8). That review must consider the public benefit which any additional service would offer, the spare capacity available to the providers of the electronic communications networks to whom the must-carry obligations apply, and whether the burden of compliance is proportionate to the objective of securing that particular services to be added to the list are made available to the public by this means.

In this amendment we ask for local digital television and access radio to be added to the list in the Bill without having to wait for a review. The Joint Committee said at paragraph 144 of the report that the extension of the must-carry list was, a matter of considerable public interest and the Government envisaged that the power to amend the list might be used to include, further channels which may have a general public service remit, or may offer Government or local information services". We suggest that adding these services now would encourage rapid growth of local digital TV and access radio all over the UK. The Community Media Association tells us that it regularly receives inquiries from groups, often involved in regeneration projects or community development, who would like to run a local channel on cable but have been unable to interest the cable channels in their proposals. In fact, some existing local and community television stations such as Leicester Channel 7, Cambridge and Birmingham, have closed down as the cable industry has consolidated.

Other countries have must-carry obligations in their rules similar to those in this amendment. In the US, Canada, Germany and Sweden, that has led to the creation of many successful local and community channels. These can provide a unique service of local news, local sport and culture, and offer to local people the possibility of becoming involved in their own programming. In the context of this Bill, Clause 241 already requires that local digital TV brings social and economic benefits to the area. Clause 258 requires that access radio, confer significant benefits on the public". Therefore, the public benefit requirement is already satisfied. It is a question of looking at the network capacity and the proportionality of the burden to the advantages of adding these services to the list. Since this comparison must have been made already in the four countries mentioned, it was concluded that the must-carry obligation should be extended in the manner we suggest here. I hope that the Government can accept the amendment. I beg to move.

Lord Lipsey

I shall speak to Amendments Nos. 195A and 195B, which are grouped with Amendment No. 195. Basically, they represent level playing field amendments. I hate that analogy but it serves to accelerate matters. It is the level playing field between cable and satellite as regards must-carry. The position at the moment is that cable must-carry carries for nothing. On the whole, satellite carries for quite a lot of money because of the need to buy additional access.

The amendments tackle the problem by asking that regard be had to, not just the sheer cost to cable, and so on, of supplying cable must-carry services, but, more importantly, the opportunity costs. They take up band width on the cable which someone else cannot buy. That should be taken into account and not merely the financial cost.

The amendments further ask that regard be had to the level playing field and the adverse effects on cable relative to satellite if too much is ladled on to cable operators in terms of their must-carry obligations. These are modest amendments. I hope that the Minister can give me either comfort or agree to accept them.

Lord McIntosh of Haringey

We are in the curious position of returning to Clause 61, which is what happened in another place as well. It seemed to make sense that we should deal with must-carry together with must-offer and must-provide. That accounts for the order in which we are taking these matters.

The purpose of Clauses 261 and 268 to 272 is to give effect to our policy on must-carry, must-offer, which is to ensure that all public service channels are universally available on all main platforms free to view both before and after switch-over. Clause 61 lists the services which must be carried. The clause also provides that the list cart be amended by the Secretary of State. Any amendments will be subject to an assessment of the impact of an amendment to the list and also consultation with the network operators. I believe it will be understood that we are resistant to making any additions as Amendment No 195 would, without making an assessment of the impact or without consultation with the network operators.

Apart from anything else, the whole of the must-carry regime has been designed to be restricted to television and not extended to radio as Amendment No. 195 seeks. The reason for keeping the process as streamlined as possible and restricting it to all main platforms is very straightforward. We recognise that there are burdens with must-carry with costs and benefits. They have to be assessed. Clearly, local digital television, although admirable, is not in the same category as those described as public service channels which are universally available on main platforms.

I turn now to Amendments Nos. 195A and 195B. They would add further factors to the consideration in making a list of must-carry. The noble Lord, Lord Lipsey, has been very clear in setting out that it is not simply a matter of cost, but also of opportunity costs when there is restricted band width. But the principle that we have worked on in Clause 61 is that there should be an opportunity for review and consultation with network operators. It does not require further primary legislation.

I am well aware of the costs for network operators in must-carry and that cable companies are conscious of the burden. For cable companies the burden of carrying must-carry stations is balanced by the opportunity they have of getting more viewers subscribing because they provide a wider choice. That is why we have the provision for review.

Amendment No. 195B aims to ensure that must-carry will not create any discrimination or competitive imbalance between network operators. It is very difficult to read it in any other way than preventing the implementation of must-carry. Clause 61 applies only to those networks, by means of which public electronic communications services are provided that are used by a significant number of end-users as their principal means of receiving television programmes". Networks that are not used in this way will be unaffected. Therefore, to this extent the imposition of must-carry obligations is bound to lead to some degree of "discrimination" if we are to take that term literally.

I am aware that cable operators feel they are at risk of suffering competitive disadvantages as compared with other network providers, such as satellite operators. I understand their concerns. We will have regard to the competitive status of all the affected markets—the broadcasting market, as well as the market for the provision of broadband services. But we see must-carry as a key means of ensuring the universal availability of public service broadcasting, both before and after switch-over. It is a central component of our broadcasting policy, which we could not jeopardise in the way that Amendment No. 195B does, although no doubt unintentionally.

Turning to government Amendment No. 195D, Clause 271 provides the initial list of must-provide services and gives an order-making power to the Secretary of State to modify that list. In its report on the Communications Bill, the Select Committee on Delegated Powers and Regulatory Reform commented that this was a "significant" power and recommended that either the power should be made subject to the affirmative resolution procedure or that the criteria according to which it is to be exercised should be specified. We prefer to specify the criteria because that helps to align it with Clause 61.

Therefore, we set out the criteria for the exercise of the power to amend the list. It cannot be exactly the same as Clause 61 because the two clauses serve different purposes. Clause 61 deals with "must-carry". Clause 271 relates to the "must-offer" provisions in Clause 269 and the "must-provide" provisions in Clause 270. "Must-provide" relates to broadcasters and would place a much more specific obligation on them collectively to make arrangements for persons who cannot otherwise receive digital television to have access to it, free, via satellite.

This amendment provides that, in exercising her power under subsection (2) to amend the list of must-provide services, the Secretary of State must have regard to the public benefit to be secured by the modification, the likely financial effects of the proposed modification on the affected parties and the proportionality of those effects when set against the public benefit secured. I shall seek to move this amendment in its due place.

Lord Avebury

I am sure that all Members of the Committee are aware that neither the cable nor satellite operators have any objection to what is in the must-carry list at the moment. The question is whether there should be any additions to the list at this stage or under what conditions there should be additions later.

Having listened to the explanation given by the noble Lord, I still consider that we know enough about access radio and local digital television to say that we could add those to the list without imposing a substantial burden on the operators. If that is not the case, I am surprised that the Minister is unable to produce figures because they would have had to be produced if such a decision was made following the review of Ofcom. I am certain that within the department there must be some fairly good ideas of what these costs would be and how they would work out. Obviously, we shall not receive a reply on that today.

As regards the first amendment moved by the noble Lord, Lord Lipsey, I understand his point that we should have the level playing field and that there are opportunity costs involved in any additional must-carry obligations that may be imposed on cable operators in the future. I wonder whether, while everyone is happy about the existing list and the cable operators in particular have not raised an objection to it on the grounds of the costs imposed on them, a different burden is imposed owing to opportunities that have to be foregone as a result of this obligation. I am sure that what they have said to everyone—not just to the noble Lord, Lord Lipsey, and myself is that if future obligations are laid on them, this could have an inhibiting effect on certain other policies which they would like to pursue and which the Government would like them to pursue—in particular, the expansion of broadband capacity. There is something to be said for looking differentially between cable and satellite operators in terms of any future additions that may be made to the must-carry list. It would be useful if the Government would agree to that proposition.

As regards government Amendment No. 195D, power of the Secretary of State to add to the list of must-provide services for the purposes of Clause 270 was, as originally drafted, completely unfettered. While it is unlikely that she would ever be tempted to exercise that power unless there was a significant public benefit to be secured, it is logical that paragraph (a) of this amendment mirrors the similar provision in the must-carry obligations in Clause 61. However, thereafter, the amendment departs from Clause 61(10) in that it refers to the costs to be borne, whereas Clause 61(10)(d) refers to the burden.

Does that mean that the drafters had in mind some non-financial penalties that would be imposed on the providers by adding to the must-carry/must-offer lists, but that any arrangements entered into or imposed under Clause 270 are precisely quantifiable?

4.45 p.m.

Lord McIntosh of Haringey

I have already explained the reason why the wording of Amendment No. 195D departs from the wording of Clause 61. It is dealing with must-provide rather than must-carry. I had better write to the noble Lord, Lord Avebury, on the issue of whether there could be any non-financial penalties. None has occurred to me.

Lord Avebury

I assumed that there probably were not, hut I asked the question to be absolutely certain. I should be most grateful if the Minister would be so kind as to write to me. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 195A and 195E not moved.]

Clause 61 agreed to.

Clause 72 [Conditional access systems and access to digital services]:

Lord Gordon of Strathblane

moved Amendment No. 195C: Page 72, line 36, at end insert— (2A) It shall he the duty of OFCOM to draw up and to issue guidance as to the manner in which access-related conditions set in accordance with subsection (2)(b) (and in particular the first indent to sub-paragraph (b) of Part I to Annex I to the Access Directive) may be satisfied in relation to each protected programme service. (2B) Such guidance must be issued by OFCOM within twelve months from the commencement of this section. (2C) Before publishing or revising the guidance OFCOM must consult with every person providing a protected programme service and any other person as they think fit. (2D) It shall be the duty of OFCOM to carry out regular reviews of the operation of the access related conditions set in accordance with subsection (2)(b) and the guidance in respect of them and to prepare and publish a report on every review in such manner as they consider appropriate for bringing it to the attention of persons who, in their opinion, are likely to be affected by it. (2E) Every report published by OFCOM under this section must set out OFCOM's findings in carrying out the review, any recommendations made by them and any changes to the guidance as OFCOM consider appropriate. The noble Lord said: As the Minister pointed out in replying to the previous debate, the issue of the balance between must-carry and must-offer is extremely complicated and varies according to the platform to which we are referring. Equally, we have all been bombarded with propaganda—I give it no other name—from both the BBC and Sky on the issue of conditional access and the appropriate terms for such to the digital platform.

In some ways, the nature of the argument changed with the announcement made by the BBC that it was to go unencrypted from 1st June. However, I would remind Members of the Committee that 1st June has come and gone and the BBC still has not gone unencrypted. To that extent, the issue of due prominence on the electronic programming guide occupied us on the first or second day in Committee. However, we still need to address the issue of conditional access and the terms on which it would be granted. That issue, first, may arise again and, secondly, not all public service broadcasters may be able to go wholly unencrypted. I refer in particular to Channel 3 which has, quite properly, heavier regional obligations than the BBC.

From the point of view of the Government, the history is a question of changing tack several times. I do not complain about that: it is a complicated issue and it is much better to change one's mind if one thinks it is wrong. The Government said that they would introduce in May last year 34 clauses on must-carry, which were published in July but then withdrawn before the Bill went to the House of Commons. In Committee in another place, the Liberal Democrat MP, Nick Harvey, tabled the same clauses as the Government first said they were going to introduce and then withdrew. The Government successfully argued against them.

It is very difficult to sift one's way through the propaganda supplied by the BBC, which feels that Sky is going to relegate it adjacent to the porn channels in the electronic programming guide. Sky say that this issue will lead to war with Ireland because channel 101 is RTE in Ireland and the BBC cannot possibly be there. I am not trying even to fix a price. I am simply suggesting that surely it should be the duty of Ofcom to be transparent in how it will arrive at what is a fair price for conditional access.

Make no mistake, this is an important issue. All the talk about content is of course important but if I were the only printer in Europe, no matter how many authors, I would have a fair amount of power. Sky Subscribers Services Ltd, entirely to its credit, has significant market power in the area of conditional access to the digital platform so we must make sure that we get it right; otherwise, we shall have a body controlling access to the digital airwaves that effectively will not be under proper control.

Significant powers exist under the European Union communications directives, provided that Ofcom declares that Sky has significant market power—which, to my mind, is self-evident. Ahead of that, Mr. Kim Howells, speaking in an Adjournment debate in the other place, mentioned that Ofcom has a much wider arena than Oftel, so can look carefully at the problem and decide a proper and fair charge for carriage.

My amendment does simply that. It asks Ofcom to consult and draw up new binding guidelines within the first 12 months of its existence that set out in detail how a fair price is to be determined for all categories of broadcaster, including public service broadcasters. Ofcom would be required to conduct reviews of a fair, reasonable and non-discriminatory regime in light of its functioning and practice. That is simply spelling out to Ofcom what we expect it to do, not trying to do Ofcom's job. I hope that my noble friend the Minister will find that he can accept the amendment.

Lord Peyton of Yeovil

I was rather mystified by the way in which the noble Lord moved his amendment but I rise with some trepidation because he knows a great deal more about the subject. I rather suspect that this long amendment would only do what will happen anyway. Does anything in the Bill stop somebody who has access going to Ofcom and saying. "What do these conditions mean?" If so, with great respect to the noble Lord, the proposed rather tricky exercise—which he daringly described as simple—is a waste of time.

Lord Gordon of Strathblane

I am fully in sympathy with the noble Lord's objection to redundant clauses—he wanted to delete Clause 3(6) for that reason—but the amendment goes further than the Oftel system, which has proved entirely unsatisfactory even in terms of the time taken to reach a decision. That is why the amendment is necessary.

Baroness Wilcox

We on these Benches do not disagree with the principle behind the amendment. It is important that Ofcom provides guidance where necessary and reviews and reports regularly on its operation. It is crucial that any publication should be preceded by extensive consultation. It is not, however, necessary to be so prescriptive. Even without the amendment, Ofcom will automatically undertake the functions in question as part of its everyday operations.

If the Government accept the amendment, it should be toned down a touch—not imposing on Ofcom such rigid operational requirements as the publication of guidance "within 12 months" and regular reviews of the operation of the access-related conditions". By all means let the regulator provide guidance where it deems that necessary and review the operation of conditions—but at a pace and frequency of its own choosing.

Proposed subsection (2C) would require that before revising the guidance, Ofcom must consult with every person providing a protected programme service and any other person, as it thinks fit. If consultation is to be required, it should explicitly include the providers of conditional access systems as well as the users, so that all relevant views are canvassed.

Lord Avebury

The noble Lord wants Ofcom to elaborate on the manner in which the conditions set under Clause 72 are to be satisfied, but as the clause already gives Ofcom a power that corresponds precisely with the wording of the directive, the conditions ought themselves to contain enough information for operators to understand what is required of them.

If that were not so, every other clause that gives Ofcom powers to set conditions—such as Clause 74 dealing with the imposition of privileged supplier conditions—would have to be accompanied by a similar set of criteria to those in the amendment, including regular reviews accompanied by reports. Ofcom will of course consult service providers and consumer interests when drawing up the conditions and conduct periodic reviews of the way in which they are working as part of its normal day-to-day operations. I am not sure that it is necessary to spell out those duties.

Lord McIntosh of Haringey

I have rather more sympathy with my noble friend Lord Gordon than others who have spoken. It is a difficult issue, as he recognises, and it is not entirely resolved by saying, as we do in Clause 72, that operators of conditional access systems should offer services to all broadcasters on a fair, reasonable and non-discriminatory basis. As the noble Lord, Lord Aveybury, said, that is the wording of Part 1, Annex 1, of the access directive being implemented by the Bill.

It is a complicated matter and has proved complicated in the past. Oftel has already been giving guidance. I am sorry that my noble friend is not satisfied with it—or with the speed at which it has been given. I hope that when Ofcom takes over those responsibilities and has in addition the responsibility for complying with Part 1, Annex 1, of the directive and the wording of Clause 72, it will provide the guidance that my noble friend seeks without spelling that out in the Bill.

On Second Reading, the noble Lord, Lord Currie, asked us not to add anything that was not absolutely necessary to the obligations placed on Ofcom in statute. The noble Baroness, Lady Wilcox, and the noble Lords, Lord Peyton and Lord Avebury, have all emphasised that point and I urge it on my noble friend.

Lord Gordon of Strathblane

Despite the existence of Oftel, none of your Lordships knows how much Sky charges for conditional access to a whole range of broadcasters. Is that a satisfactory situation? Can we ensure that Ofcom behaves differently? I am sure that it will. I hope it will. If my noble friend the Minister had said the same as the noble Baroness, Lady Wilcox, with the force of a Ministerial statement, I would be considerably more content. For the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 72 agreed to.

Clause 73 agreed to.

Clause 268 [Must-offer obligations in relation to networks]:

[Amendment No. 195CA not moved.]

Clause 268 agreed to.

5 p.m.

Clause 269 [Must-offer obligations in relation to satellite services]:

Baroness Wilcox

moved Amendment No. 195CB: Page 241, line 26, leave out "to be broadcast The noble Baroness said: I will speak also to Amendments Nos. 195CC and 195CD. Clause 269 sets out must-offer obligations for public service broadcasters in relation to satellite services.

The principle behind these amendments is to ensure that the clause reflects the openness of the satellite platform and the fact that public service broadcasters do not offer their services to Sky or to any other pay TV service or channel packager but broadcast them themselves using satellite capacity obtained from Astra, as do literally dozens of other free-to-air channels on the platform. The proposed amendments change the clause to reflect the fact that when a must-provide service is offered as available, it is not offered to an intermediary such as Sky to be "broadcast" but is actually broadcast by the PSB itself.

Concern has been expressed to us that the clause as currently drafted implies that the BBC and other PSB channels can be made available to viewers only by offering as available their channels to, for example, Sky to be "broadcast" on D-Sat. In other words, that as drafted, the wording suggests that there are other intermediary players in the satellite broadcasting process to or through which PSBs must offer their service arid consequently that the digital satellite platform is not an open platform.

This implication results from text that was devised at the stage of the draft Bill that contemplated PSBs offering their channels to satellite packagers. The Government have now rejected the concept of must-carry provisions for satellite packages, recognising that as an open platform any broadcaster, including public service broadcasters, can lease channel capacity from satellite operators such as Astra and Utilstat and offer their services independently of any packager. That is exactly what the BBC, ITV, Channel 4 and Channel 5 already do.

I am aware that the Government may argue that the current wording in Clause 269 is intended to reflect the fact that there are technical elements of the broadcasting process on satellite that the PSBs have to ask others to do, such as uplinking and downlinking the signal or making the necessary technical arrangements for the broadcasting of interactive services. It appears to me, however, that the clause is concerned only with defining where the ultimate responsibility lies for making the service available to viewers by satellite and not the various technical arrangements that might need to be entered into with the satellite platform operators. I hope, therefore, that the Minister will see fit to accept the amendments. I beg to move.

Lord McIntosh of Haringey

Clause 269 is part of the mechanism set out in the Bill to provide quasi universal availability, free to view, of public service broadcasting. I have already explained why I have to refer to quasi universal availability.

I wish to start by setting out the background to the clause. I believe that my understanding of it is the same as that of the noble Baroness, Lady Wilcox. There was much controversy about the best means of securing the availability of public service channels on satellite. The decision made by the BBC to go unencrypted on satellite—although, as the noble Lord, Lord Gordon, said, that was supposed to happen on 1st June but I believe that it did not—might cast some new light on the issue but it does not change it fundamentally. We do not know whether all the technical issues have been solved or whether other broadcasters will follow suit. There is still scope for various models of satellite broadcasting. While some broadcasters will do all the work themselves, others will use a satellite service operator. At the moment, it is in the shared interests of broadcasters, cable operators and satellite providers to see PSBs continue to be available on all platforms. But we have to be prepared for a time when that consensus might change, but where, in order to deliver our public policy goals, we still need to see PSBs carried across those platforms, including satellite and cable. The widespread availability of public service channels via satellite, in particular, is an important element of our policy of maintaining universal free access to those channels up to and beyond digital switchover, the must-provide provisions of Clause 270 arc also important here.

I should like to stress that all digital platforms are different, and that, therefore, the way in which the Bill deals with them is different. Different rules apply because there are different kinds of system, but the outcome is the same. The satellite platform is "open" in the sense that any broadcaster, including a public service broadcaster, can approach the operator of a satellite and negotiate facilities for the transmission of the service. That is what happens at present with all the public service channels. At present, the broadcasters also buy conditional access and electronic programme guide services from Sky in the UK, enabling their services to be targeted at the right regional audience, for example, and avoiding problems with broadcasts spilling over into countries where the broadcasters do not own the rights to transmit the material in their programmes. In doing so, they operate under the provisions of the Access Directive, which requires—as we have already discussed—that they be offered access on fair, reasonable and non-discriminatory terms. But they may not need such services: as we are aware, the BBC is planning to broadcast "in clear".

Turning to the amendments themselves, I understand that the promoters of these amendments are concerned that the clause wrongly implies that PSB channels can be made available to viewers only by offering their channels to, for example, Sky to broadcast on satellite. But this clause is less concerned with the means by which the channels are made available as the result that the clause delivers, which is the availability to satellite viewers of public service channels. Under subsection (2) it is up to Ofcom to impose the conditions it considers appropriate to secure that the licensed public service channels are at all times offered as available to be broadcast by means of every satellite television service that is used by a significant number of the persons by whom the broadcasts are received in intelligible form as their principal means of receiving television programmes.

The first objective aims to secure that the channel provider does not refuse to provide his channel to the provider of a satellite service, if they can agree terms. It is, therefore, quite different from the second objective which requires the channel provider to ensure that its service will be made available to satellite viewers, and to ensure that as many people as practicable can receive the service. The second objective does not mean that an intermediary is required: the second objective might be secured that way, but it need not be, as the "satellite television service" might he provided by the broadcaster itself.

While we are pursuing those three objectives, Ofcom might not need to impose conditions to secure all three of them. So, as things stand, the second objective might suffice, but if the situation changes, the other objectives could be brought into play to ensure universal availability. It might also be the case that, because a public service broadcaster is broadcasting its channels itself, the third objective is superfluous, as public service broadcasters are already required to make their services available for free; otherwise, it serves the purpose that the provider of a satellite television service cannot charge for reception of the public service broadcaster alongside the pay channels. The clause gives Ofcom the tools to achieve the policy aim which I believe we all share.

Whether public service broadcasters choose to use an intermediary provider is a commercial decision for them but the results of the end user must be the same— availability of their public service channels free to view.

Baroness Wilcox

I thank the Minister for his comments. The fact that the BBC did not go encrypted on 1st June means that we are off to rather a poor start. I believe that all Members of the Committee are aware how nervous everyone is about this enormous Bill and about the fact that the words "might" and "may" occur so often. We shall try hard to obtain the reassurance we seek on the Bill. However, having listened to the Minister's comments, I see no point in pursuing the amendment at this stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 195CC to 195CE not moved.]

Clause 269 agreed to.

Clause 270 [Securing reception of must-provide services in certain areas]:

Baroness Wilcox

moved Amendment No. 195CF: Page 243, line 13, leave out paragraph (c) and insert— ( ) that all persons providing must-provide services contribute such proportion of the cost of making that facility available as is determined by OFCOM as appropriate; The noble Baroness said: In moving Amendment No. 195CF, I wish to speak also to Amendments Nos. 195CG and 195CH. The effect of these amendments is to give Ofcom maximum discretion to decide who should pay the costs associated with Clause 270, and in what proportions. Clause 270, furthermore, should not be activated until six months prior to the commencement of the digital switchover process at the earliest.

The purpose of Clause 270 itself is to ensure that as far as is practicable, all UK viewers will continue to be able to receive the public service channels free at the point of consumption once the terrestrial analogue television signal is turned off. More specifically, it would mean that anyone who was obliged to adopt satellite technology in order to receive the free-to-air channels post-switchover was not required to pay for the necessary card to decode the signal and receive the channels. That card is commonly known as the solus card, and the Bill proposes that once Clause 266 is activated, it shall become the shared responsibility of the public service channels—Channels 3, 4 and 5 and the BBC—to meet that cost.

Clause 270 is a safety net that the Government quite sensibly seek to put in place to protect viewers who are unable to receive the digital terrestrial signal post-switchover. The rationale behind passing the cost of the solus card on to the public service broadcasters is based on an assumption that if they fail to build the digital terrestrial network out so that its coverage replicates that of the current analogue network, it should be their responsibility to pick up the solus card costs for those viewers forced to rely on satellite technology.

However, given that it is government and not public service broadcasters that will be the chief beneficiary of digital switchover in terms of spectrum release, I wonder whether it is right that broadcasters should be required to meet the costs in their entirety. As the Minister in Committee in another place pointed out during the debate on "must carry, must offer": The decision to turn off the analogue signals but to ensure universal access to PSB channels has been taken by the Government and its cost should not be borne by private companies".—[Official Report, Commons Standing Committee E, 21/1/03; col. 656.] It also seems premature to be committing the public service broadcasters to what are, at present, unquantified costs. Several questions will remain unanswered until we have a more detailed spectrum plan for switchover. For example, how many people will be entitled to solus cards? How is the cost of the cards to be set? Will the obligation be to provide one card per household or for each TV set? Clause 270(3) merely speaks of viewers being provided with a "facility" for receiving digital TV. What does that mean exactly? Perhaps the Minister will tell me.

I am aware that detailed work is already under way within the digital TV action plan, and that the intention is to produce a comprehensive cost-benefit analysis for switchover in the next few weeks followed by a spectrum plan by the end of the year. It is at that point that it may be appropriate to decide who should bear the costs of the obligations arising from Clause 270. I therefore favour wording the Bill in a way that gives Ofcom discretion to make the final decision. That is what the first of our amendments is designed to provide.

Irrespective of who pays for the solus cards and how many are needed, it is clear that the Government's rationale can sensibly apply only at switchover, at which point the currently universally available analogue services will cease to broadcast. Our second amendment seeks to clarify the position by specifying that fact in the Bill.

I understand that officials have privately reassured the broadcasters that the clause will not be activated in advance of switchover, and my colleague in another place, Mr John Greenway, has received similar assurances from the Minister in written correspondence. I hope that further clarification can be given by accepting the amendment. 1 beg to move.

5.15 p.m.

Lord McIntosh of Haringey

Clause 270 requires Ofcom to include in the licences for the must-provide services conditions which secure free satellite reception of those services for people who cannot receive them by other means. Nearly everyone will continue, after switchover, to be able to receive their television services through their terrestrial aerial, but a number of households will have to get their digital signals through a satellite dish and a satellite receiver. Like everybody else, they will have to get their digital equipment and pay their licence fee.

As the public service channels have to be encrypted on satellite, however, those households might also need a smart card, software, or some other system allowing them to decrypt the signals and watch the services. As the noble Baroness, Lady Wilcox, said, the current technology is a solus card, but there could be other technologies in future. Those who cannot get their digital public service channels by other means and who have the relevant equipment—the box and the dish—will get the solus card or equivalent system free of charge.

The cost will be shared by the public service broadcasters, including the BBC, and in the event of a dispute Ofcom will determine what each of them has to pay. Although it was not clear to me from what the noble Baroness said, Amendment No. 195CF seems to require Ofcom to set the proportion of the cost that each broadcaster will have to pay a priori, even before any dispute has arisen. That is not how we see regulation. We should let broadcasters discuss together and try to come to an agreement, and only if they fail to do so should Ofcom intervene.

Clause 270 also includes a provision, in subsection (11), to ensure a period of at least six months between the making of a commencement order under Clause 103 and the date on which the clause comes into force. That is to allow time for the licensees of any affected services to apply for a review of the financial terms of their licences under Clause 223, which allows for new terms to be set should those obligations come into force. Amendment No. 195CG would keep the safeguard for the broadcaster, but would prevent commencement from occurring more than six months before digital switchover, which Amendment No. 195CH seeks to define.

I understand the purpose of the amendments, but cannot agree with them. We are working on our plans to implement digital switchover, and we believe that we might need between three to four years to switch off signal access across the whole country. That is because, for technical and logistical reasons, we will not be able to convert all the networks at the same time. The timing that would be imposed by the two amendments might prove totally unrealistic.

We want as many people as possible to be ready for switchover before it actually happens. We might need to commence the clause in advance of switchover, to ensure that people who will have to rely on satellite can, once they have bought the equipment, get the solus card and other facilities that they need before the analogue signals in their region are switched off. I hope that that explains why we have to resist the amendments.

Baroness Wilcox

I thank the Minister for that very helpful answer. I shall withdraw the amendment, but I would be interested to know whether he could answer the question about the solus cards. Perhaps he cannot at this stage, but it would be interesting to know whether one card will be provided for a household or for each TV set. Can he give us that information?

Lord McIntosh of Haringey

The idea is that it will be free for everyone, but the technology will change. I do not expect that solus cards will be restricted to individual sets rather than to households, and 1 am sure that they will be replaced by other forms of software in due course. If I can add anything to that, I shall gladly write to the noble Baroness. I think the issue is temporary, and we do not want to enshrine an answer to it in the Bill.

Baroness Wilcox

I can understand that. I was just testing. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 195CG and 195CH not moved.]

Clause 270 agreed to.

Clause 271 [Must-provide services for the purposes of s. 270]:

Lord McIntosh of Haringey

moved Amendment No. 195D: Page 244, line 29, at end insert— ( ) In determining whether it is appropriate, by an order under subsection (2), to add a service to the list of must-provide services or to remove a service from that list, the Secretary of State must have regard, in particular, to—

1. (a) the public benefit to be secured by the addition of the service to the list, or by its retention in the list:
2. (b) the likely effect of the proposed modification as respects the costs to be borne, under arrangements entered into or imposed under section 270, by the persons who, after the coming into force of the modification, would have to be parties to those arrangements: and
3. (c) the extent to which that effect is proportionate to the benefit mentioned in paragraph (a)."

On Question, amendment agreed to.

Clause 271, as amended, agreed to. Clause 272 agreed to.

Clause 273 [Programming quotas for independent productions]:

[Amendments Nos. 196 to 199 not moved.]

Lord Crickhowell

moved Amendment No. 199ZA: Page 246, line 25, at end insert— ( ) It shall be the duty of OFCOM to carry out regular reviews of the operation of the provisions of any order made by the Secretary of State under subsection (2), and the first such review must be carried out no more than 12 months after the commencement of this section and subsequent reviews must be carried out at such intervals as OFCOM may determine. ( ) OFCOM must send a report of every review to the Secretary of State and publish such report in such manner as they consider appropriate, and the report on a review must set out OFCOM's recommendations, in consequence of their conclusions on the review, for the exercise by the Secretary of State of his power to make an order under subsection (2) describing the programmes that are to be independent productions for the purposes of this section. The noble Lord said: The aim of the amendment is to ensure that Ofcom is required to consider whether ITV regional companies should be accorded the status of independent producers in relation to companies where there is no ownership link.

I have two preliminary observations to make. The first is to take as a text paragraph 192 from the recent ITC review. It states: Proposals from Granada and others to reclassify ITV regional centres so that they qualify for the quota are potentially attractive from a regional perspective, but require a more detailed cost benefit appraisal before any changes can be made on this area". That is a very interesting comment. It makes clear that the issue is by no means settled and that more work needs to be done.

My second observation is that I am reviving an earlier debate to which the noble Lord, Lord Alli, contributed. We did not entirely agree on this subject during the course of that debate. The noble Lord, Lord Alli, is one of the big, strong, fierce cats of the independent sector. He roams in the big cities of London and Manchester. I am speaking on behalf of the smaller animals out in the countries and the regions, far away from those great places. It is with the position of those regional broadcasters that I am concerned.

There are three other brief points that should be made at the outset. First, the independent production sector is rightly promoted in the Bill and I acknowledge that. Secondly, the quality of programme ideas is the basis on which the commissions should be made by broadcasters. Thirdly, the independent production quota should be regarded as a floor and not as a ceiling.

A number of contributions in earlier debates emphasised the importance of regionality and regional production. The Bill places great emphasis on out-of-London production and on a range of production centres. We will debate later amendments that deal with production centres beyond the M25—far beyond it. The interests of the nations and regions are recognised within the structure of Ofcom, but despite the Government's best intentions, the future economic and cultural contribution of ITV regional companies is being constrained in practice.

Surely the role of the ITV companies should not be confined to their regional licence obligations. ITV regional companies are a means of delivering programmes that reflect the diversity of the nations and regions on UK networks. One cannot isolate the ITV regional companies and divorce them from the rest of the creative community in which they operate. There is an interdependency which contributes to the general health of the regional production market.

The ITC report on television in the nations and regions, to which I have already referred and which was published last year, stated: Television production is also part of the expanding knowledge economy, and can help support and build high quality employment across the UK. Combined with other creative and technical sectors, it can contribute growth to areas under economic pressure, and can help the UK achieve a more balanced economic development across the country". As a former Secretary of State for Wales, and in the presence of another former Welsh Minister, I can say that we both have great experience of exactly that happening in the Principality during the time that the noble Lord, Lord Roberts of Conwy, and I had responsibility for such matters.

The key to the debate can be found in the paragraph that I have already quoted, paragraph 192, and in paragraph 47 of the review. Paragraph 47 states: We therefore suggest that the current rules should remain unchanged unless a full and detailed economic cost benefit analysis shows that there are clear net benefits associated with this proposal. If the definition of qualifying independence were to change, proposals for raising the quota itself might well need to be considered". The review is therefore saying that although there are obvious benefits to be gained from something of that kind, the possible negative effect on other independent producers has not yet been adequately measured for a final decision to be taken.

However, the ITC review identified concerns about the, health of the programme supply market in the Nations and Regions", adding that, economic pressures are creating new challenges for the sustainability of production outside London". The downturn in advertising revenue is well documented and therefore it is imperative that ITV regional companies are given the opportunity to exploit other potential revenue streams in the programme supply market. The only reason that independent producers would be fearful of competition from ITV companies is if they lack confidence in the quality of their own ideas. After all, the more successful the ITV regional companies are, the better able they will be to continue to support the independent companies in their area. That they do support those companies, I can vouch from my experience as chairman of HTV in the past.

The ITC review had a public interest objective, to seek effective measures which will support a vibrant and sustainable production sector throughout the UK". A review of the disqualification is part of seeking those effective measures, particularly as the report also acknowledges that, producers in the Nations and Regions of the UK face increasing economic challenges". This is not an issue that can be finally settled by debate across the Chamber. Whether or not I could win the argument with the noble Lord, Lord Alli, were he here, I doubt. It is an argument that depends on further analysis, further information and further review. It is therefore just the kind of argument that Ofcom is being established to settle. It is for Ofcom to decide what role the ITV companies can play in the UK programme supply market over and above their regional licence obligations. It is for that reason that I have tabled an amendment to ensure that it holds a prompt review, and further ones if necessary, so that it can settle a matter which is of great importance for broadcasters in the nations and regions. The strength of feeling on both sides of the debate is a testament to the fact that a review within 12 months is necessary to make a proper assessment of the situation. I beg to move.

Lord Bragg

I support the noble Lord, Lord Crickhowell. I agree with many of the points that he made with such eloquence and in such detail, so I shall be brief.

The current definition of an independent production under the order excludes regional ITV companies from qualification when they are producing for other broadcast networks. That is the nub of it. Perversely, Endemol, which is a large, London-based independent producer, part-owned by an EU broadcaster, continues to qualify. It is partly owned by Spanish interests. What is sauce, or Madeira, for Spain should also be sauce for Newcastle and Carlisle.

The current arrangement undermines Parliament's declared objective of sustaining strong, regional production business around the UK. Like the noble Lord, Lord Crickhowell, I would welcome an obligation being placed on Ofcom to review that matter early in its existence.

The regions have absolutely no guarantee of contributing to the ITV network. I do not know whether that is widely known. They have to fight for their place against tough competition from the big boys from London. If they do not gain access to the ITV network, they can have no sales anywhere else. We should seek to redress that state of affairs. Nearly 90 per cent of all independent production is in London, yet time and again people say how much we should succour—look after and help—the regions. Here is a chance to do so.

Many noble Lords bring far greater experience to the Bill in different ways but I have worked in two of the regions: for Border Television as a producer and later as chairman with Tyne Tees Television in Newcastle. These issues are very important to those communities. They get a high skills base; a feeling of confidence inside a community is generated; and there is employment. The ramifications involve broadcasting and the cultural presence of the place. Children and young people can say, "This is a way in". Many people who have done extremely well in British broadcasting and world broadcasting got their start in such companies when they were flourishing. I cannot emphasise enough how much they bring to those communities. This is a chance to do something to help them to build again from a base that has been undermined, partly by the diminution of advertising.

Everything that the noble Lord, Lord Crickhowell, said about cultural and economic importance can be fully endorsed by myself, those who work there and everyone who has lived in the regions and properly examined what is going on. I support the proposal strongly. It is just the sort of issue in relation to which Ofcom should test itself as early as possible.

5.30 p.m.

Lord Roberts of Conwy

I, too, support my noble friend's amendment. In doing so, I draw the attention of noble Lords to the positive contribution of one ITV company that my noble friend knows very well; namely, HTV. It has made a remarkable contribution as an independent supplier of Welsh-language programmes for the Welsh channel S4C. I contrast that position with the company's disqualified status as an independent producer in the English language.

Since 1958, when I was a founder staff member of Television Wales and West, TWW, the ITV contractor for Wales and the west of England has made an outstanding contribution to the provision of quality programmes in the Welsh language. That long and honourable tradition has been continued by HTV since the late 1960s. Before the establishment of S4C, HTV was responsible for making and transmitting Welsh-language programmes on ITV. When S4C came on air in 1982, HTV became a major commercial supplier of programmes for the new fourth channel. As of today, HTV Wales is commissioned to make 110 hours of programmes a year for S4C, including its long-running current affairs programme, "Y Byd ar Bedwar"—"The World on Four"—and one of its most popular rural series.

HTV is considered to be part of the Welsh language independent production sector and is a member of TAC, the Wales independent producers' association. The ability of HTV Wales to bid for commissions on the same terms as other independent companies has stimulated competition and diversity in the Welsh language programme supply market. The relative strength of that market was highlighted in Committee on 22nd May. The Minister, the noble Lord, Lord Evans of Temple Guiting, said: We acknowledge not only the authority's linguistic and cultural contribution but the important role it plays in supporting creative industries in Wales…Such industries are doing tremendously well and are, in many ways, making the Welsh economy much stronger than that of its neighbours".—[Official Report, 22/5/03; col. 982.] HTV Wales, as a supplier to S4C, played its part in the development of that economy. It demonstrates the contribution that ITV regional companies can make to the creative industries over and above their licence obligations. To disqualify HTV Wales from replicating the contribution that it makes to Welsh-language television in the English language is totally inconsistent. I strongly believe that that disqualification has hampered the ability of English-language programme makers in Wales to make programmes for the UK market. The contribution is underdeveloped, reflected in the relative lack of Welsh-made programmes on UK networks. That is a very serious issue.

Having commended the role that S4C plays in Wales and its positive impact on the creative industries, I ask the Government why other UK television channels should not be able to make use of the ideas and talent of programme makers working within ITV regional companies on an equal basis with other suppliers. Surely, the competition that the Government are so keen to encourage in the UK programme supply market would be given further stimulus by lifting the disqualification on ITV companies as independent producers.

I am all in favour of the independent producer and I supported the amendment of the noble Lord, Lord Alli, in Committee. However, on reflection, I am sure that it is a grave error to handicap regional ITV companies in producing locally programmes that may well have a wider—national or even international—appeal. I cannot forbear from saying that I once had the great pleasure of producing a programme called "This World of Wales" with the late Richard Burton. I am glad to say that it was even seen coast to coast in America.

Lord Gordon of Strathblane

I support the amendment of the noble Lord, Lord Crickhowell. The automatic disqualification of ITV regional companies acting as independent producers should be removed but I agree that that should be left to Ofcom.

I was intrigued when the noble Lord, Lord Roberts, said that a precedent had been set with Wales and the Welsh channel. The important point is that this is an opportunity to amortise the capital costs of running a small regional ITV operation. I refer not only to the capital costs but also to the human costs. One is able to retain good staff if there is an outlet for people's talents outwith the station. I recognise that in giving them that outlet, they may well end up cutting the umbilical cord and moving off on their own. One hopes that they will not do so outwith the area, although I regret that most of them will probably be on the high road to London and that all the best attempts to stop the inner-M25 region growing out of all proportion will fail.

There should be no automatic prohibition on an ITV regional company being regarded as an independent unless it is clear that it is acting not as an independent but as part of a concert party. That involves saying, "You scratch my back, I'll scratch yours", and a contractual relationship with another ITV company. Ofcom is perfectly capable of seeing through that concert party arrangement. That should not be automatic; it should be judged on a case-by-case basis. I support the noble Lord.

Lord Peyton of Yeovil

I rise to my feet again with great trepidation because I am, so far, in a minority of one. I see that the noble Baroness nods in assent—I always look forward to that; it gives me great pleasure. The four noble Lords who have spoken so far are extremely expert in this subject—much more so than I am. Those noble Lords, including my noble friend Lord Crickhowell—I stand in great awe of him—have taken root and are part of the Bill's family, if that is not too disgraceful a thing to be. They were nurtured in the Select Committee and came here already very knowledgeable. The noble Lord has other sources of information.

All I am trying to say, in my lame way, is that I differ from those noble Lords only with the utmost diffidence and doubt, and I must face the virtual certainty that I may well be wrong. That is because the Bill, as far as I am aware, does not for one moment allow for the possibility of Ofcom not being aware of its responsibilities to the regions. I am astonished to note that my noble friend, who knows so much more about the Bill than I do, should wish to increase its volume by adding the amendments, which I regard as unnecessary.

I find myself in the difficult position of disagreeing with those with whom I normally agree. It is not always that I have the pleasure of agreeing, as I apparently do, with the noble Baroness, Lady Blackstone, on the Front Bench. That is a privilege that I rarely enjoy with some discretion. Nevertheless, I enjoy that very much on this occasion. I hope that she will correct me if I am wrong, but the Bill as it stands does not allow for the possibility of Ofcom ignoring its duties to the regions. My knowledge of the regions ever since I have been in Parliament suggests that if Ofcom were to dare to disregard the interests of the regions, Wales and Scotland, the possibility of Ofcom not becoming a serious, if not fatal, casualty of the battle that ensued would be remote. I cannot believe that the Government would welcome the amendment.

Lord Lipsey

The noble Lord unnecessarily disparages himself. He is so knowledgeable about the matter that he even knows the answer that my noble friend the Minister will give before she has given it. Some might say that the noble Lord does not fully appreciate that the clause is aimed at an extremely specific question—that is, the regional production capacity of ITV companies—and not at the general duties of Ofcom with regard to the "indies".

When is an indy not an indy? We found out recently and quite dramatically when it turned out that Endemol, which was previously an indy, on being taken over by a Spanish television company, ceased to be an indy. As a result the BBC missed its quota targets for last year. The Government were helpful to the BBC in that regard and have rushed to change the definition so that being owned by a Spanish television company is not a disqualification from being an indy. I certainly do not wish to dispute that decision.

Also I do not necessarily want to argue that all ITV companies should be regarded as indies. There are strong regional arguments where they should be, but there are no doubt strong arguments on the other side. The amendment moved by the noble Lord, Lord Crickhowell, which I strongly support, does not say that they should or they should not be regarded as independents. It says that Ofcom should look at that. With the changing definition, and the difficulty of definition, that seems to be no more than common sense. I hope that the Minister will disappoint the noble Lord, Lord Peyton, but please the great majority of noble Lords who have spoken in the debate by giving the amendment a sympathetic reception.

Viscount Astor

I support my noble friend's amendment. It cleverly covers the arguments that were put against making ITV part of the independent sector during the early stages of the Committee. Noble Lords who were against such an amendment at that stage were concerned that the large ITV companies would simply be able to call themselves independent, and that it would not help the small regional companies, such as that of the noble Lord, Lord Bragg—Border. The great advantage of the amendment moved by my noble friend is that the decision will now be left to Ofcom. It can make that decision and give us the best of both worlds, because it will not only encourage the independent sector, but will allow those within the ITV network—particularly the smaller players—to be considered by Ofcom as to whether they can be part of that independent production sector. The amendment is sound because it covers all the arguments that were put against that process at an earlier stage.

5.45 p.m.

Lord Thomson of Monifieth

I rise to intervene very briefly on hearing the unexpected words from the noble Lord, Lord Peyton, that he might be mistaken in his views on the matter. I suggest that in this case he is unusually mistaken. The truth of the matter about production in that field is that the development of independent production—one of the major developments in British television broadcasting over the last decade or so—was itself very healthy. However, it was a highly centralised development despite all the efforts that were made at various times by various regulators. It was the great Wen of the M25 that was the fatal attraction for independent producers. There has been deprivation of opportunity for television production in smaller regions of the country. That needs positive and vigilant action by Ofcom when it takes on fully its responsibilities. It is production centres such as that of the noble Lord, Lord Bragg, of Border or Grampian that I used to see much of in Scotland, and other small regional television areas, where having a special place in the independent sector would be a necessary countervailing force to the way the independent operation of television has worked.

Lord Brooke of Sutton Mandeville

When we debated these matters on 29th April in those halcyon days at the beginning of the Committee stage, I was an ally of the noble Lord, Lord Alli, in opposition to my noble friend Lord Crickhowell and my noble friend on the Front Bench who had moved the relevant amendments about the regional producers. However, I feel appreciation and gratitude to my noble friend Lord Crickhowell for moving the amendment. When the Minister wound up in the last minutes of that hour-long debate on 29th April she alluded to the ITC UK programme supply review and said that the ITC had noted that they did not think that there was a case at present for changes in qualification criteria. The words were "at present" and she went on to claim for Clause 273 that it aimed to ensure that independent producers: would continue to make a significant contribution to the programme supply market in the UK as well as allowing the Government the flexibility to make some changes as circumstances dictate".—[Official Report, 29/4/03; col. 686.] As I said in that debate, I was impressed by the representations made by the independent producers when I was the relevant Minister 10 years ago. However, it seems that the regional companies also need their day in court. The virtue of my noble friend's amendment is that it confers a procedure under which those days in court could occur.

Lord McNally

I supported the absent noble Lord, Lord Alli, when he moved his various amendments in favour of the independent producers. I could well imagine his concern at the tenor of this debate because those who were on the pre-legislative committee remember that it was the persuasive advocacy of PACT and the other independent producers that made us call so strongly for an examination of the case for more help to the independent producers.

That produced rapid action from the Government and the ITC against a background where the feeling was that the approach to independent production by the big battalions had been one of ceilings rather than floors in terms of encouragement. I can well imagine that the independent producers, having made the breakthrough with the pre-legislative scrutiny committee and the ITC, and seeing those new opportunities opening up before them, suddenly saw them being closed just as rapidly by the perhaps newly consolidated ITV companies who used that consolidation to appear as champions of regionality while simply underpinning their own power bases. I am trying to guess at what fear might be expressed. I accept the advocacy of the noble Lords, Lord Crickhowell and Lord Bragg, in such matters and have a gut feeling that there is a case to be examined.

As has been hinted at, not all the independent producers are the barefoot boys and girls waiting for crumbs dropping out of the limousines of ITV and BBC moguls. There are a variety of power bases. My guess is that there is scope for greater encouragement for the independent production sector. Several Members of the Committee also expressed the realisation that by getting production out into the regions and supporting the creative industries, we do a great deal both for the local economies and the self-esteem of those regions. There is a danger of concentration.

As my adopted county is Hertfordshire and around St Albans there are support services for television and film production, I can say to the independent producers that they can come up north to St Albans and be outside the M25 and avoid all the strictures that are made in that regard. In relation to regional and independent production, there have been accusations that the BBC and large ITV companies, rather than approach the matter with generosity of spirit and attempt to get production out into the independent companies and the regions, sit down and think, "How can we get around these regulations?".

There is a case for further study. The amendment is sensible and modest because many of the arguments the noble Lord, Lord Alli, put forward at an earlier stage remain valid. Furthermore, the ability to help regional production and the smaller ITV companies needs careful study and Ofcom is well suited to carry out that study. We support the amendment.

Baroness Buscombe

I support the amendment tabled by my noble friend Lord Crickhowell. I had drafted an extensive note setting out the reason for that support, but it would be otiose of me even to attempt to repeat the words of my noble friend and others who have spoken in support of the amendment.

Baroness Blackstone

I believe that the debate will conclude with the noble Lord, Lord Peyton, and me against everyone else! Therefore, I am grateful for a little support from him. I, too, do not believe the amendment is necessary, at least in part for the reasons he gave.

I am also puzzled because I can see little in the amendment which relates to our debates on regional output. Indeed, there is nothing in it. I shall be strict and stick, as we should in Committee, to the amendment. I shall not go over old ground that we discussed during our debates on independent production earlier in Committee. I hope that Members will accept that I am not being unfair but am merely trying to stick to a sensible procedure.

I support the intention behind the amendment, but it is unnecessary because of the amendments made in another place following the ITC's UK programme supply review. Among other things, the amendments have given Ofcom the duty to undertake a review of the programming quota for independent productions as part of their annual factual and statistical reports. So, just as the noble Lord, Lord Peyton of Yeovil, said, we are already requiring Ofcom to take on this responsibility.

Under Clause 351(3)(e), Ofcom must consider what it is appropriate to achieve by conditions and duties under Clause 273 in relation to Channels 3,4 and 5 and paragraphs I and 7 of Schedule 12 in relation to the BBC and the Welsh authority and the effectiveness for that purpose of the conditions and duties for the time being in force. In subsection (3)(f), Ofcom must consider whether it would be appropriate to recommend to the Secretary of State that he exercises any of his powers under that clause or those paragraphs.

These subsections give Ofcom a duty to consider all aspects of the programming quota for independent productions, including the definitions that the Secretary of State has made by order under Clause 273 and Schedule 12 to define qualifying programmes and independent production and, furthermore, to make recommendations that he exercise any of his powers under those provisions if appropriate. Moreover, under Clause 351 Ofcom will also be required to publish the report, which is exactly in line with what the noble Lord, Lord Crickhowell, is proposing.

I therefore believe that Ofcom will have all the powers necessary to undertake exactly the duties that the noble Lord, Lord Crickhowell, set out in his amendment and I therefore hope that he will withdraw it.

Lord Crickhowell

I am grateful to the nine Members of the Committee on all sides who supported my amendment. I hope that the Committee will forgive me if in the interests of time I do not name them all. I am grateful to my noble friend Lord Peyton for breaching a long-standing alliance. I must confess that I felt like President George W Bush must have felt when President Chirac launched into him during recent months. It was a sad moment.

My noble friend Lord Roberts of Conwy made an important point which needed making in the light of some of the comments made in earlier debates, particularly by the noble Lord, Lord Alli. The impression was given that if the ITV companies in the regions were given the right to enter the field, they would somehow crush the independent companies. The reality of what happened with Welsh language broadcasting is extremely interesting in this regard. My noble friend is right that before the arrival of S4C, we in HTV had a large share of that Welsh language programming. With the arrival of S4C, we quickly found ourselves losing a large share of it and having to compete like fury to retain an important sector of our output. As the independents came out in competition with us, so they grew in strength and numbers. The effect of that has been to create a vibrant Welsh language broadcasting sector.

As my noble friend said, that has not however been the case in the English language sector. If my noble friend Lord Peyton wondered why this matter needed highlighting, I can give him one good reason. It was as recently as last July that the ITC, now part of Ofcom, produced its report and reached a negative conclusion. I acknowledge what the Minister said about the past and I am pleased that she said it. However, I suspect that now, instead of Ofcom saying, "We looked at that. The ITC looked at it last year. That need not be a priority for us. We have an awful lot to do in the next few years and we can kick that one into touch for a long time to come", it will know that the Minister has drawn attention to its various duties and tasks. It will also know that nine Members of the Committee—a substantial majority of those who spoke—have supported the case for re-opening the issue.

The issue is important now because of the difficulties faced by the ITV sector at this time as a consequence of the recent loss of advertising revenue. So this is an urgent question and although I shall withdraw my amendment, I do so in the knowledge that we have perhaps emphasised to Ofcom that this is an important matter. We need action within a very short time. This is not a matter to be kicked into touch.

Amendment, by leave, withdrawn.

Clause 273 agreed to.

Clause 274 [Programming quotas for original productions]:

Viscount Falkland

moved Amendment No. 199A: Page 247, line 6, at end insert— ( ) In determining appropriate proportions for the purposes of subsections ( I ) and (2), OFCOM shall have regard to the number of viewers of the public service channel in question. The noble Viscount said: I beg to move Amendment No. 199A which is, in fact, Amendment No. 201 that has been re-tabled. I also speak to Amendments Nos. 215, 224 and 234. I apologise to the Committee for an error that has crept into Amendment No. 224 where there is a reference to subsection (1). It should be subsection (3). I hope the committee will indulge me in nevertheless allowing me to refer to this amendment.

Amendments Nos. 199A, 215, 224 and 234 should be viewed as complementary amendments to achieve a single purpose. To give the regulator the ability—not the obligation—to review at any time whether the public service requirements on Channel 5 as shown by its audience share, are proportionate to its role in the mainstream television market. The key amendments are Amendments Nos. 199A—formerly 201—and 224. However, in order to apply the principle fairly across the market, Amendments Nos. 215 and 234 are also required. They would give the regulator a similar ability to consider the audience shares of Channels 3 and 4 when applying tier 2 quotas.

As I have said on previous amendments, Channel 5 was originally envisaged as a small commercial niche channel with relatively light public service requirements. It would not be expected to threaten the Channel 3 or 4 market. Government policy, as expressed in this Bill, positively encourages investment in the channel in order to drive up audience share. Were Channel 5 to raise its audience share by three or four percentage points, it would indeed have a comparable audience to Channel 4 and BBC2. In reality, of course, it would not be comparable. Its very light public service obligations would give it a distinct competitive advantage over those two other channels which would both inevitably struggle to fulfil the high levels of public service in both tiers 2 and 3. The regulator would have no power to correct this imbalance as the Bill currently provides Ofcom with the ability to impose quantitative quotas under tier 2 for original and regional production only in the event of a change of ownership of Channel 5.

What is at stake is the fulfilment of those protections of citizens' interests which the Government have repeatedly said they wish to uphold. The four dominant channels, in return for their market privileges, are rightly expected to provide the citizen with high levels of original and regionally based programming, tailored to their needs and interests. A competitive drive against them by a channel without such obligations will produce a downward trend or even a spiral of quality in their public service output. In introducing a sliding scale of public service obligations with the BBC at the top end and Channel 5 at the bottom end, the Government must put in place regulation to take account of movements up and down this scale. We believe they must continue to apply these principles to Channel 5, regardless of any changes to media ownership. If the Government's proposed changes to those rules remain intact, there is an overwhelming case for these amendments.

Respected media analysts and academics, which include Professor Steven Barnett of the University of Westminster, noted in a recent letter to the Financial Times that, in the event of Channel 5 being owned by News International—that company is the obvious example, although it may not be interested in Channel 5—it would not be unrealistic to expect that Channel 5 would drive its audiences up to a level which would compete and go beyond those of BBC2 and Channel 4. It could even rival Channel 3 with 16 per cent of market share. Professor Barnett has written in a briefing paper: Through heavy cross-promotion from its newspapers and satellite TV platform, through negative coverage of competitor channels and by exploiting its ability to buy key sports and movie rights across pay and free-to-air platforms, News International could potentially transform Channel 5 into the United Kingdom's highest rating television station". Under these circumstances, a large part of the programming thus being transferred and cross-promoted would probably be imported from outside the United Kingdom. In this scenario, the regulator must have the ability to act to protect original and regionally-produced programming in our mainstream television market beyond the point at which the change of ownership took place. I beg to move.

Lord Peyton of Yeovil

Each time a clause and a line of this Bill comes up, some noble Lords want to give Ofcom yet more things to do. Ofcom will already be very heavily loaded with duties and simply to add to them may give satisfaction to those noble Lords who propose it, but it will be back-breaking for a new organisation. I do not have the pleasure of knowing the noble Lord, Lord Currie, but I have never yet heard in your Lordships' House any suggestion that the noble Lord is not very well suited to the job. Therefore, if the noble Lord, Lord Currie, is all that is claimed by those who know him better than I do, it is high time someone said that he deserves to be trusted with what is already a very difficult job without being given a load of complicated advice, some of which, together with some of the tasks imposed on him, he could not possibly fail to perform. As for the noble Lord, Lord Currie, being told to take account of numbers, they are an all-important part of the game.

Lord Puttnam

I rise to speak to Amendment No. 200. I am a little puzzled at the need for the amendment as this is an area in which I felt that the Joint Scrutiny Committee and the Government were to a very great extent ad idem. The purpose of the amendment is literally to try to place on the face of the Bill some of the duties which the noble Lord, Lord Currie, and Ofcom will fulfil, and the timings. By far the most important purpose is to ensure that Ofcom is able to review production commitments, including regional programme-making commitments of the public service channels and Channel 3 in response to any significant change in the revenue or audience share of the relevant channel. It is important to allow a level of flexibility so that if the market-place, audience shares or revenues, change dramatically, Ofcom has the ability to review that situation and act accordingly rather than be boxed into specific time periods.

6.15 p.m.

Lord Renton of Mount Harry

I rise to speak to Amendment No. 233A in this group. I tabled the amendment only yesterday, and therefore appreciate that it is not included in the sixth Marshalled List, although it has been printed and I have it in my hand. In case Members of the Committee have not had time to study the amendment carefully, perhaps I may remind them what it contains.

The amendment suggests that a new clause should be inserted after Clause 282, which will be headed, Variation of Public Service Obligations of Channel 5". Subsection (1) suggests that, In the event that the share of audience or share of revenue of Channel 5 for any twelve month period is in excess of 15 per cent, as measured by OFCOM in their review under section 351, the Secretary of State may, by order, require OFCOM to review the conditions placed upon Channel 5 under sections 274 and 281". The first of those sections deals with the amount of original programming and the second with regional programmes.

Subsection (2) of the new clause suggests that: Such a review shall be required to increase the proportions of original and regional programmes to those most recently produced by Channel 3". Finally, subsection (3) contains a caveat that, In the event that Channel 3, in the same period, had a share of audience or share of revenue below 15 per cent, the proportions of original and regional programmes should be equivalent to those levels produced by Channel 3 when its share of audience was at 15 per cent or above". I carry on the point made by the noble Viscount, Lord Falkland, and the noble Lord, Lord Puttnam. However, I suggest a rather starker and perhaps simpler solution than that proposed in their amendments. Their amendments rely on such words as, OFCOM shall have regard to the number of viewers of the public service channel in question", whether that be Channel 3 or Channel 5.

It is extremely difficult, necessarily, for any outsider, anyone who may have an eye on trying to get control of Channel 5, to know just what those words mean. Surely it would be better to be much more precise in that context and to set a numerical yardstick by which it is clear that if that yardstick is met, if Channel 5 were to have a 15 per cent share of audience as measured by Ofcom at that stage, it would have to match the obligations of Channel 3 in relation to both regional and original programming.

I hope that I may even persuade my noble friend of many years, Lord Peyton, to follow me in this. I do not suggest a new duty, a new thought for Ofcom, something else which it has to consider. I suggest specifically that under these circumstances, the Secretary of State may, by order, require OFCOM to review the conditions placed upon Channel 5". I believe that that emphasis is important. Either later tonight or Thursday we shall move into the area of cross-media ownership. If it is on Thursday I very much regret that due to other commitments I shall not be here. However, it is necessary that anyone who considers taking over, trying to gain ownership, of Channel 5 should have in advance a very clear view of what are likely to be the public service conditions laid upon him and his company. It would not be right to leave it to a vague way of thinking, "If I do get the audience share up to 15 per cent or 20 cent I shall have to argue with Ofcom about it and I shall lobby Ofcom to see whether I can twist its arm and persuade it that for any reason, whatever it is, precisely the same condition should not be put on me as on Channel 3". It would be a very great mistake to leave that kind of open gap at this time. It would be much better to put this on the face of the Bill.

s That is why—this was considered in the pre-legislative committee of which I was not a member it would be more sensible to insert into the Bill a clause such as I mention at this early stage. Whether the appropriate figure is 15 per cent, 10 per cent or 20 cent would be a matter for further consideration and decision by Members of the Committee. But it would be a starker and, perhaps for that reason, more uncomplicated solution than that suggested by other noble Lords, of simply saying to Ofcom, "If this happens, you must have another look at it and one of the things you should think about is the number of people in the audience".

I believe that Members of the Committee would agree that it is interesting that we are having this debate on the day after the Federal Communications Committee in the United States agreed on substantial further deregulation there, allowing media companies greatly to increase their ownership of either television or radio stations. That caused considerable furore in the United States, as is reported in today's press. Many people in the United States believe that that is a movement in the wrong direction. At this stage of the Bill and in the debates we are shortly to have, we shall have the same considerations before us.

As regards the public service obligations of Channels 3 and 5, I hope noble Lords will forgive me for quoting remarks made by Tessa Jowell, the Secretary of State for Culture, Media and Sport, in today's business section of the Guardian. Ms Jowell suggested the Bill had been misrepresented, insisting again that it is 'proprietor neutral'. She said the change in the Five ownership rules would be matched by the most draconian programme regulation in history. If Five changed hands or substantially increased its audience share"— these are the key words, the new media regulator, Ofcom, would review its public service responsibilities with a view to toughening them". That is just what we should not allow. We should be much more specific; hence the clause I propose to the Committee.

The Culture Secretary ends her interview with the rather touching words that she wholeheartedly believed in the Bill. She stated: I've spent a huge amount of my life over the past two years on this; I think it's good legislation and I have confidence in it". I spent two years on the Broadcasting Bill between 1987 and 1989 when I was Minister of State to Douglas Hurd, the Home Secretary, now the noble Lord, Lord Hurd. We spent a great deal of time trying to ensure the future independence and continuation in existence of the 14 regional ITV companies. We had no idea of the degree to which satellite would dominate television in this country, satellite that is increasingly owned and dominated by one very substantial newspaper proprietor.

Perhaps I may say to the Culture Secretary that I very much hope that she will not be as disillusioned by the next 10 years of developments in the television and radio world as I have been by the past 10 years after working hard for two years on the Broadcasting Bill of 1990.

Lord Davies of Oldham

The noble Lord, Lord Peyton, has won another friend and influenced another Minister by his contribution to this debate, which has enabled me to reduce the length of my reply. That is because we entirely accept his contention that the main thrust of our response to the amendments is that we already have within the Bill the necessary obligations upon Ofcom for it to do its job, which is to safeguard the very objectives defined by the amendments. that we broadly share them, and that therefore it is not necessary to be as specific as the amendments would indicate.

I shall address myself to the amendment of the noble Lord, Lord Renton, in the context of its grouping and the issues that it raises on the question of increasing potential audience share. He will forgive me if I do not join him in a major debate on the potential change of ownership of Channel 5. We are scheduled to have that debate either in the wee small hours of tomorrow morning or, more likely, on Thursday. I regret that he will not be present then, but that is when the big issues are to be discussed, and that is when we shall have that more wide-ranging debate. However, I shall, I hope, do him the courtesy of responding to his amendment.

Of course, the Government recognise the importance of a strong programme production sector to the health not only of the broadcasting industry, but of our creative economy as a whole. I was pleased to note from the recently published Independent Television Commission annual report that Channel 3, Channel 4 and Channel 5 are all meeting their licence requirements for original and regional production—and in some cases meeting them comfortably. That said, I can of course understand the view of noble Lords that requirements for independent, original and regional production should reflect audience size and the changing revenues and audience share of particular channels, which has been the burden of several of the main representations on these amendments.

Those are certainly factors that Ofcom may want to take into account in setting and maintaining production and programme-making targets, but they are not the only ones. Ofcom may also wish to consider, for example, the existing levels of original or regional production achieved and the broader requirements of the public service remit for the channel in question. The Bill already gives Ofcom a range of tools to enable it to set and maintain targets at the right level, and I am not therefore persuaded—any more than the noble Lord, Lord Peyton, was—that that new powers are needed.

I must also confess to some concern that the amendments as drafted might actually prove counter-productive in operation. There are three main concerns.

First, in setting the targets, Ofcom will have its discretion circumscribed if it must in all circumstances give weight to the number of viewers of the channel in question.

Secondly, it is entirely possible under the new clause in Amendment No. 200 that Ofcom's review would lead to decreases in the various requirements on public service channels in response to falling revenues and audience shares, rather than to increases. This could be the case for only one public service channel if, say, Channel 3 lost market share to Channel 5, but all the public service channels could find themselves in weaker market positions as multi-channel viewing gained ground. In such a situation, Ofcom could come under pressure to reduce the production and programme-making requirements for all the public service channels, leading to a net loss for the viewer. That cannot be right.

Thirdly, if, on the other hand, revenues and audience shares for the public service channels—or some of them—increase, and the requirements are increased, as proposed by Amendment No. 233A of the noble Lord, Lord Renton, that will amount to a penalty for success. What incentive would there be for a young channel such as Channel 5 to grow if the result is an automatic increase in its public service commitments, without any consideration being given to the other factors I mentioned earlier as being relevant in the round in setting targets? Far better, a shrewd channel owner might conclude, to manage revenues and audience share at a point where such new obligations do not cut in. That surely cannot be right, either.

Aside from those concerns, I believe that the Bill already provides sufficient protection for programme production and sufficient powers for Ofcom to ensure that targets are set and maintained at the right levels. In the case of the original production quota, that means an appropriate level for ensuring that the relevant channel is consistently of a high quality, and in the case of the regional programme-making quotas it means an appropriate level for ensuring that a suitable proportion of the channel's programmes are made in the UK outside the M25 area—and, one hopes, in a number of cases further north than St. Alban's, although I have nothing against that town and for the licensed public service channels that a suitable proportion of their expenditure relates to a range of production centres outside that area.

Ofcom is already required to carry out, as soon possible after the end of the first 12-month period beginning with the commencement of Clause 260, and thereafter at least every five years, a review of the extent to which the public service broadcasters have provided television services which, as a whole, fulfil the purposes of public service broadcasting in the United Kingdom. Ofcom must prepare a report on its findings, with a view to maintaining and strengthening the quality of public service broadcasting.

Ofcom is also required to publish an annual factual and statistical report. The report will follow a review by Ofcom of the provision of television and radio services in the United Kingdom during the relevant period, and will include consideration of the financial condition of the market and any trends appearing or operating in the size of the audience, which is a substantial burden of the amendments. The review will also focus in particular on the operation and effectiveness of the arrangements currently in place in relation to independent productions.

In addition, we have strengthened Ofcom's power to amend licence conditions on a change of control of a Channel 3 licence holder, and given it similar powers in relation to Channel 5. When it is notified of a relevant change of control, Ofcom must review the effect on various programming and production requirements, including original and regional production, and may vary the licence to ensure that the new owner cannot cut back on what the old owner actually delivered. The aim is to ensure that the change of control does not in itself lead to a reduction in the quality of the service.

These strengthened provisions were introduced in response to the ITC's review of the UK programme supply market, which in turn followed concerns in this area raised by my noble friend Lord Puttnam, to which he referred this evening, and by his colleagues on the Joint Scrutiny Committee on the draft Bill. I draw the Committee's attention to the fact that the Government have changed their position in the light of the committee's work and the Bill's progress in the other place.

The ITC's excellent report was published towards the end of last year, and the Government announced shortly afterwards that they had accepted practically all of the ITC's recommendations. As a result, over 60 amendments were made to the Bill in another place. I hope that the Committee will agree that this substantial body of amendments has vastly improved the Bill. They also indicate that the Government have kept an open mind about improvements to the original draft measure.

As well as the specific powers I have mentioned, the Bill preserves for Ofcom a general right under the Broadcasting Act 1990 to vary a licence, having given the holder a reasonable opportunity to make representations. So Ofcom may at any time alter the original and regional production requirements, following consultation with the licence holder. The level of the independent production quota is set by the Secretary of State by order, so Ofcom does not have the power to alter this; nor would it be able to do so under the proposed new clause in Amendment No. 200, unless there were further changes.

I hope that I have reassured the Committee that we take production and programme-making very seriously and have made provision in the Bill to ensure that the broadcasters deliver. As the noble Lord, Lord Peyton, said, we must now trust Ofcom to do its job, to set the right targets for regional and original projects, to review them as appropriate and to take action where necessary. Ofcom has the tools to do that and to ensure that the UK has a healthy programme production market able to deliver a wide range of high-quality programmes to the home audience and better able to compete in the global market.

The Bill already contains more than 400 clauses. It is so long because it is a comprehensive measure set out through consultation and through the benefit of work by many noble Lords in the past few months to produce the right structure for the industry. I hope, therefore, that it will be recognised that the amendments are not necessary and that those who moved them will feel able to withdraw them.

6.30 p.m.

Lord McNally

I am growing increasingly worried about the love affair between the Government Front Bench and the noble Lord, Lord Peyton. Since the Government Whip is interested in speeding up passage of the Bill, would it not be an idea to invite the noble Lord, Lord Peyton, down to the Front Bench?

Lord Peyton of Yeovil

What a suggestion, and from what a source. Indeed, how should you spell source? The noble Lord has excelled himself. I am in an opposite camp to the noble Lord, as he reminds me. The noble Lord tends to favour pumping up already large Bills to make them even more obese and gross. I am thoroughly against him in that regard. It is a very respectable point of view. If the noble Lord, Lord McNally, makes a point of rebuking me, I shall hand back those rebukes with interest.

Lord Brooke of Sutton Mandeville

Before the amendment is withdrawn, I intervene extremely briefly. I shall not talk about ownership, as the Minister advised us in relation to Thursday or possibly the small hours of this morning. My noble friend Lord Wakeham, who chaired the relevant Cabinet committee in 1993–94, will recall that, as the Minister, in making propositions I was in exactly the same position as the noble Baroness, Lady Blackstone, and the noble Lord, Lord Davies, in having only one ally in the forum in which we discussed matters. The noble Lord, Lord Peyton, was not on the committee. Had he been, no doubt he would have been my ally.

My noble friend Lord Renton of Mount Harry will not be present on Thursday. I was, in some senses, the godparent of Channel 5 in that, as is probably reasonably well known, there was what I shall neutrally call a debate between the DTI and what was then the DNH on whether Channel 5 ought to be brought into existence in line with the pledge that the party had previously given. It was determined that it should be brought into being. Much credit should go to my then special adviser, who now runs a venture capital company in the media field. As the godparent, I have a great deal of sympathy with the thoughts that underlie the relevant parts of the amendments proposed by my noble friend.

Viscount Falkland

We all love the noble Lord, Lord Peyton of Yeovil, no less than the noble Lord, Lord Davies of Oldham. I agree in general terms with what the noble Lord, Lord Peyton, said. But we are all human beings, and, human nature being as it is, we all favour our own amendments. We hope—vainly, often—to have our proposals included in the Bill. It would be unnatural of me not to think that the Bill should specifically improve the prospect of Ofcom's job being simpler, not more complicated.

I understand from the reply of the noble Lord, Lord Davies, that there are already provisions in the Bill to deal with the very particular points about Channel 5 and the prospect of an increase in audience share. I am sure that, if I had riot raised those points in my amendment, I would have been viewed as very remiss by the executives of Channel 3 and Channel 4, to name but two broadcasters. There are distinct fears that a situation such as the one that I described will introduce great problems and complications to the television industry. After all, radical concepts have been introduced by the Government in this Bill—for example, widening ownership opportunities. The noble Lord, Lord Renton of Mount Harry, has introduced a very interesting, practical idea. I share with him the view that there may he a need to include in the Bill an indication to potential purchasers of such channels the public service obligations that they will face in certain circumstances.

Having said that, it has been a very interesting debate. I thank all those who have taken part. I suspect that several of the points made will stimulate interest outside the Committee. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 274 agreed to.

[Amendment No. 200 not moved.]

Clause 275 agreed to.

Clause 276 [Appointed news providers for Channel 3]:

Baroness Buscombe

moved Amendment No. 202: Page 249, line 11, leave out paragraphs (a) and (b). The noble Baroness said: I shall speak also to Amendments Nos. 203 to 206 and to the Question that Clause 343 stand part of the Bill. As many Members of the Committee are aware, Clauses 276 and 277 deal with establishment of the system requiring Channel 3 to appoint a nominated news provider. Clause 343 proposes ownership restrictions on that nominated supplier. The combined effect of the amendments in the names of the noble Lords, Lord McNally and Lord Gordon of Strathblane, and myself would be to amend the current system requiring the Channel 3 news supplier to be selected only from those companies granted nominated status by the ITC and to do away with ownership restrictions on the Channel 3 news supplier.

Like the Government, we recognise the importance of a high-quality news supplier on Channel 3 that is able to compete with the BBC and Sky. That is why we support retention of the content aspects of Clause 276. Amendment Nos. 202, 203 and 206 leave in place the obligation on Channel 3 to supply a national news service that can compete with those of other national operators. They also retain the obligation on the individual ITV companies to come together to appoint a single supplier. In addition, we accept the new requirements contained in the Bill that give Ofcom the power to ensure that the Channel 3 news supplier is properly resourced to fulfil its functions and to give it the final right of approval of the terms of any contract. Taken together with Clause 275, those are powerful conditions designed to maintain quality and competition in news supply on the UK's terrestrial broadcasters, and we support them.

The introduction of new powers in Clause 276(3)(d) giving Ofcom final approval of the Channel 3 news contract obviates the need for the regulator to grant nominated news status to bidders. Under the current system, suppliers seek nominated status prior to bidding, and the regulator is able to check their financial bona fides at that point. However, they have no say over whether the terms of the final contract are likely to deliver the quality of service that Parliament expects of Channel 3. The shortcomings of the system were exploited to the full in the previous Channel 3 news bidding round by a competitor consortium to ITN, which consisted of Sky News, UTV, CBS and Bloomberg. That competitor consortium, having been granted nominated status by the ITC, bid very low for the contract. As a result ITN was forced to bid very low and the price of the contract was considerably reduced. The ITC had no final say over the terms of the contract.

However, the Government have now introduced measures in the Bill which will prevent that situation recurring. Ofcom will issue guidance on what it believes to be appropriate terms for the contract and will have final approval of the contract. As such, retention of the requirements on Ofcom to consider applications for nominated status is unnecessary.

At the time of the next bidding round, Ofcom could find itself considering applications for nominated status from three or four consortia. What is the point of obliging it to go through the painstaking progress of examining whether or not to award nominated status to each one, including ITN, when Parliament has granted it the power to examine and approve the terms of any contract struck between Channel 3 and its chosen supplier? This, we believe, is a pointless, regulatory burden for a regulator that already faces an in-tray of epic proportions. Our amendments would sensibly do away with it.

Amendments Nos. 204 and 205 propose that the Secretary of State should not only have the power to repeal Clause 276 by order but also to modify it. At present, the Bill proposes that the Secretary of State may repeal Clause 276 in its entirety. This seems to us to be something of a nuclear option. As I pointed out, there are content elements of the clause that Ofcom may wish to retain for some time.

I turn now to the main issue: the question of ownership of Channel 3 news supplier and our opposition to Clause 343 standing part of the Bill. This amendment would remove the Government's current proposal to limit any company's shareholding in ITN to 40 per cent. We oppose this clause because we believe that its effect is to inflict significant damage on ITN and in particular its ability to secure investment. It is also in complete contradiction of the Government's general policy, which we on these Benches support, of liberalising ownership where possible and where there are strong content rules and a strong competition law regime in place.

There are detailed provisions in the Bill which safeguard the quality of ITV's news output, whoever owns its supplier. These rules are so extensive that even the joint scrutiny committee, not generally a friend of much of the Government's ownership liberalisation, concluded that, we are not convinced that the retention of the nominated news provider provisions for Channel 3 provides a safeguard for the quality and impartiality of news on ITV that could not be provided by licensing and networking arrangements". The committee went on to recommend an early review by Ofcom of the ownership aspects of this issue.

I know that for many of Members of the Committee this may seem something of an esoteric issue, but for ITN and its employees it is one with hard edged and very real consequences. The imposition of a fragmented ownership structure makes it more difficult to secure shareholder agreement and investment. Perhaps this can be best illustrated by reference to the example of the ITV News Channel. This 24-hour news channel was originally named the ITN News Channel. It was set up by ITN shareholders as a competitor service to Sky News and BBC News 24. However, as noble Lords may imagine, the 24-hour news market is not a very profitable one and after a relatively short period of time a number of the news channel's shareholders wanted the service to close down. However, Carlton and Granada, the main shareholders in ITV and ITN's biggest client, could see a real value in keeping the service on air. So they increased their shareholding in the channel to keep it afloat.

In the wake of the recent war, the wisdom of this decision has been borne out. ITN has been able to maximise the value of its coverage of the war by screening full 24-hour coverage on the ITV News Channel. This has been good for its staff and correspondents who have had increased opportunities to get their material on air. It has been good for viewers who have had greater access to exclusive ITN reporting and a wider choice of 24-hour news channels; and it has been good for the quality of news in the United Kingdom in general as it has increased competition with Sky News and BBC News 24.

As this example demonstrates, allowing businesses the freedom to alter their shareholdings in order to maximise investment can be the difference between success and failure. In an increasingly competitive media market, the Government's proposal to limit the maximum shareholding in ITN of any single company to 40 per cent is likely to be to the company's detriment. That is clearly the view of ITN, whose chairman, Mark Wood, wrote in a recent Westminster media forum publication that the ownership cap, could undermine ITN's future commercial development, hampering the company's ability to forge new partnerships and closing off the potential that all other commercial media companies have to merge with other companies or for shareholders to increase their stake". If the Government are prepared to rely elsewhere on content rules as the safeguard for liberalisation of media ownership, there is no reason why they should treat this area any differently, especially as the content rules on Channel 3 news in this Bill are more explicit and tougher than those currently in place.

On these Benches we share the Government's commitment to retaining competition in the news supply market in the UK but disagree profoundly with the way in which they propose to achieve it. Restricting ITN with burdensome ownership rules that will hamper its ability to secure investment will weaken competition in the news supply market and ultimately be to the detriment of viewers and democracy as a whole.

In another place, the Minister, Dr Howells, intimated that the Government would be relaxed about Ofcom reviewing this matter as an early priority. Indeed, the Government have introduced a sunset clause at Clause 277 which would allow repeal of the current system. However, given the extremely heavy workload that Ofcom already faces, I urge Ministers not to pass the buck for this one but to have the courage of their convictions on media ownership and support change now. I commend these amendments to the Committee. I beg to move.

6.45 p.m.

Lord McNally

We on these Benches are very supportive of the amendments and the way in which the noble Baroness put them forward. As she emphasised, they are positively "Peytonite" in their intent. Although the noble Lord is not in his place, I am sure that he hears the praise. I feel him with us now.

I make two brief points. First, without a doubt, when ITV was brought in in the mid-1950s its two greatest achievements were its regional reach and ITN. ITN transformed the way in which television news was presented. In particular, "News at Ten" became the great, popular flagship news programme for almost 20 years. The noble Lord, Lord Renton of Mount Harry, indicated mea culpa about the 1990 Act. One of its most disastrous effects was the change of ownership of ITN and the way that ITN related to ITV. I cannot understand why the Government do not follow through the logic that a single ITV would nurture its own news programmes just as Sky nurtures Sky News and the BBC nurtures BBC News. To insert these fiddling restrictions is beyond comprehension.

To have BBC with its 24-hour news channel support, Sky with its 24-hour news channel support and ITN with its 24-hour news channel support would give us good, competitive programming. But, as it is now structured, ITN will be at a permanent disadvantage. As the noble Baroness indicated, at the time of the Iraq war, when the owners injected more money into the service, it demonstrated again that the basic spirit of ITN is still there. I believe that if the Government were to accept the amendments and to allow ITN freely to link up with ITV in a productive way, ITN would quickly recapture all its old glories. We strongly support the amendments.

Lord Peyton of Yeovil

Despite the noble Lord's inability to recognise my presence just now, I should like to repay him in a most generous way by saying that I entirely agree with everything he said—that I supported my noble friend's amendment—which I heard.

Lord Gordon of Strathblane

I, too, support the amendment. For the life of me I cannot understand where is the public interest in removing control of ITN from the ITV companies. After all, ITV founded ITN—for the first 35 years it wholly owned it--and it was one of the least satisfactory aspects of the 1990 Act that removed the control of ITN from ITV. If you trust people to run a franchise, surely you will also trust them to produce what is obviously their flagship programme—that is, their news programme.

In any event, they will already be producing their local news programmes. Do you trust them to do that? Or should we get in a nominated news provider—with no one holding more than 20 per cent or 40 per cent of that—for local news? The whole thing is daft.

As it is a relic of the 1990 Act, I honestly cannot understand why the Government do not go the whole hog and, instead of saying, "We look to Ofcom to consider the matter in the near future", get rid of it now. Let us get back to the good old days when ITV ran ITN, and ran it very well.

Two red herrings have been brought in. One of them, introduced by the ITC, is that somehow there is a danger of foreign ownership. Let us be quite clear, the only people in favour of foreign ownership are on the Government Front Bench and the Opposition Front Bench. No one else in the House will vote for it. When it comes to a vote—as it will at Report stage—I am confident that the Government will be defeated. I shall be very proud to be one of those who defeat them on the issue of foreign ownership. It is the Government who are raising the horror of foreign ownership, not the rest of the Committee.

In any event, the ITC that is now raising that as a spectre, as the noble Baroness pointed out, is the selfsame ITC that approved a bid from a consortium which was predominantly foreign owned. How hypocritical can you get?

The only issue that genuinely worries me concerns Channel 4. It is true that Channel 4 is an extremely important news outlet for ITN. It is ITN's flagship programme. It is probably the best broadcast news programme—possibly because of its duration of close to a full hour. It is in ITN's own interest to ensure that "Channel 4 News" remains in that pre-eminent position.

Perhaps I may quote a vested interest in reverse. Like all other radio companies, most of my companies subscribe to IRN. In my day, we handed over our Independent Radio News international news gathering to ITN because we had so much confidence in it. I do not believe that there is any danger of it deliberately withholding any news in order to advantage a television company against a radio company or Channel 3 against Channel 4. That is beyond comprehension. I invite the Government to accept the amendment.

Viscount Astor

My Amendment No. 293 is grouped with these amendments and is very similar to the amendment moved by my noble friend.

As the noble Lord, Lord Gordon, reminded the Committee, the 1990 Act introduced the concept of a nominated news provider for Channel 3 and imposed the restriction on its ownership that no company could own more than 20 per cent. Interestingly, these rules were not designed to prevent the ITV companies—all 15 of them at the time—from owning ITN in its entirety but to ensure plurality of ownership at a time when spectrum scarcity created a high barrier to entry into the television market. As we know, consolidation within ITV has meant that the ITV companies themselves are no longer able to own, under the current rules, the majority of ITN.

The concept of a nominated news provider, with strict rules governing its ownership, is outdated. It deters investment in ITN and should be scrapped. It undermines the prospects for the maintenance of a strong independent third force in the supply of news in this country alongside the BBC and Sky. Unless it is changed, we run the risk that ITN may lose the Channel 3 news contract. This would be the death knell for the company. As my noble friend said, in the last round Sky and Bloomberg bid for that contract. Allowing ITV to own its own news provider would be far more likely to secure the future of a third force in this country's news supply.

There are clear obligations on Channel 3 to provide national and international news of high quality in peak time, and on Ofcom to guarantee its quality and to ensure that that news supply will occur in this country. ITV would have an incentive to maximise the efficiency of its news operation by continuing existing news contracts with other broadcasters such as Channel 4.

We should also note that under the Government's proposals the Bill would grant Ofcom a new power to approve the terms of any new ITV news contract to ensure that the ITV news supplier is adequately resourced to meet all the legislative requirements and any guidelines. This is a power that the regulators have never had in the past. In almost every other country the main commercial broadcasters—for example, CBS, NBC and ABC in America, Channel 9 in Australia and TF1 in France—are allowed to own their own news provider. Single ownership would provide certainty for ITN and help to guarantee investment going forward.

I have read very carefully the debates on the Bill in another place. In all those debates, the Minister singularly failed to offer an adequate reason why the ITV companies should not be able to own their nominated news provider.

Lord Bragg

I support the amendment moved by the noble Baroness, Lady Buscombe. Some of the arguments made in regard to the ownership of ITN bear repeating. As has been said by many noble Lords—it should be repeated in Hansard as often as possible—ITV is the only broadcaster prevented from owning its own news provider. BBC News is at the heart of the BBC and Sky News is at the heart of Sky. I have no idea what ITV has done to be so unjustly and unfairly penalised. It has not been brought to my attention in any argument offered by the Government why it is being so uniquely penalised.

Its record in news is a good one. It showed its true colours—it needs stabilisation in the evening, which is coming to fulfilment—in its coverage of the Iraq war, as has been said and deserves re-saying. At the time of the biggest advertising recession in history, another £6 million was put into its news. It was broadcast at nine o'clock and sometimes attracted 10 million viewers. As has been said by the noble Baroness, Lady Buscombe, and others, when the 24-hours news coverage looked as though it was going down the tubes, ITV bought it. Granada and Carlton put more money into it and increased its audiences by 180 per cent. That is evidence of good intent, good management and good news gathering.

If ITN ownership should revert to ITV—we have heard the mea culpa of how it slipped out of the grasp of ITV, which should also be a part of the argument—there will be a huge opportunity to allow ITV's regional news teams to work more closely with the ITN team in a £100 million news machine. The current ownership rules make this very difficult. The semidetached status of ITN makes it more difficult for good regional news reporters and producers to migrate from the regions to national news and for there to be cross-play between regional and national news.

The ownership cap was responsible for a bidding process that has allowed Sky to push down ITN's budget. The proposed 40 per cent cap on ownership—which I cannot understand—is counter-productive.

Far from projecting a third news force it allows Sky to take control of more of ITN than any individual ITV company.

We need an ITN which is a big public service news gatherer and broadcaster, as the noble Lord, Lord McNally, said. That is in sight if we accept these amendments and slim the Bill. Very rightly, the Bill is careful of many of the BBC's public service interests and Sky's interests. ITV's public service interests sometimes seem far less well protected and yet it is a big public service provider which gives massive private investment to public service projects and is watched by a great number of people in this country. I have no doubt that if the amendments were accepted it would strengthen ITV, it would strengthen ITN and it would strengthen public service news. I urge the Government to take them on.

7 p.m.

Lord Crickhowell

I am in the happy position of agreeing with almost everything that has been said. Certainly I agree with the speech that has just been made. My noble friend Lady Buscombe will be delighted to hear that I agree also with everything said in her admirable speech. She will be less happy to hear that I agree with everything said by the noble Lord, Lord Gordon, but that takes us to matters that we shall be debating later.

As I listened to the noble Lord, Lord McNally, who spoke in such dogmatic terms, I wondered why we in the Joint Committee took such a cautious view. Whatever the reasons, the world has moved on. ITN's performance during the war in Iraq, of which it provided admirable coverage, showed the quality of its production. That and the state of the market the importance of not handicapping companies with ridiculous rules about sources of capital—together provide compelling reasons for the change that my noble friend proposes.

Lord Lipsey

My noble friend Lord Bragg said that the arguments in favour of the amendment bear repeating. Nevertheless, I shall forbear from repeating them and say one word: viewers. If the Government had brought before your Lordships or the other place a convincing rationale for believing that viewers get a better news service as a result of the existing arrangement, I would stand behind them. There are compelling reasons to think otherwise. Why should companies put a lot of money into something when they can own only a maximum of 40 per cent of it between them?

The integration of regional news with national news is by far the biggest weakness of bulletins at the moment. It can partly be tackled under existing structures but not properly. Some of us favour the amendment because we want better competition in news for viewers—not to please the companies, which are mere instruments, but to please the people we ultimately service. The Government have got to be much better at producing a rationale for ignoring what, on the face of it, seems to be in their overwhelming interests.

Baroness Howe of Idlicote

I have listened with great interest to what has been said and agree with every single word. The noble Lord, Lord Crickhowell, questioned why the pre-legislative committee had been a little cautious. Perhaps the answer is that we have had time to reflect. Certainly everything that I have heard and read has more and more convinced me that the amendments of the noble Baroness, Lady Buscombe, are the right way to go.

It is constantly leaked about the place that the Government are not going to give way on anything in the Bill. I hope that they recognise the strength of feeling in the Committee and have had time to think more carefully.

Lord Bernstein of Craigweil

As someone who works in ITV, it seems to me totally bizarre that it should be the only major television channel in the world that cannot own its own news service. My experience of working within a consortium in the broadcasting industry is not a happy one. To persuade all shareholders to agree a policy, to change and sometimes to take a risk is extremely difficult. I am sure that the Government's proposed structure for ITN will put it at a disadvantage in competing with other news services.

Baroness Blackstone

It is not true—as was said by the noble Baroness, Lady Howe—that the Government are resisting everything. They have made a number of concessions and will be making more later today.

Noble Lords

Oh!

Baroness Blackstone

So the noble Baroness should withdraw that remark.

There is obviously strong feeling in the Committee on this particular group of amendments. I must disappoint noble Lords because this is not one that the Government will concede.

If Amendments Nos. 202 and 203 were agreed, there would be no nomination system for news. ITV would be free to appoint any news provider that it chose but it would have to meet the same quality and funding requirements that the current system sets out. Amendment No. 204 would allow the modification rather than the repeal of the requirement in Clause 276. We do not accept that all the changes suggested are appropriate at present, although we acknowledge that there may come a time when part or all of what some Members of the Committee are advocating will become appropriate and be acceptable.

We are already loosening the ownership restrictions, moving from a 20 per cent to a 40 per cent limit to encourage more investment and more dynamic management. The new limit means that instead of a minimum of five owners, ITN can have three.

As to our arguments for retaining the other restrictions at this stage, TV is a vital source of information and opinion. Viewers think of TV news as trustworthy and impartial. We want to make sure that viewers continue having a choice of high-quality, editorially independent national news from free-to-air television. The nominated news provider system ensures that ITV News, as the main competitor to the BBC, will play a major role in contributing to that choice.

Lord Gordon of Strathblane

I do not believe that any Member of the Committee has suggested anything different. Surely the Minister is not suggesting—if she is, she is sadly wrong—that ITN was anything other than that prior to 1990, when it was wholly owned by ITV.

Baroness Blackstone

No, I am not. ITN has always been an extremely good and reliable news service, watched by a great many people. That does not mean that I should accept entirely my noble friend's arguments.

Licence obligations and other content rules in the Bill can go a considerable way to maintaining high standards but the news provider requirement for Channel 3 provides an additional safeguard in securing a news service that is independent from ITV and the commercial pressures that it may sometimes face.

The Joint Committee agreed that we were right to include the nominated news provision. I am sure that the noble Lord, Lord Crickhowell, accepts that is so and that I do not need to quote the Joint Committee.

As to Amendment No. 293, the Bill already proposes to relax the ownership limit from the current 20 per cent ceiling. We recognise that the limit is inhibitive to investment and management. The newly relaxed limit will provide ITN's ownership and decision-making structure with a greater degree of flexibility and dynamism. Ownership limits are still necessary. A 40 per cent limit on Channel 3 licences, whether alone or in combination, will ensure that the service is independent of the licensees but it will not force any of the existing shareholders to disinvest. The limit merely reflects the current position, which is that five owners hold 20 per cent each. Two of those owners are ITV companies. At the same time, the 40 per cent figure is a good balance between the push for good regulation and securing independence in the news provider.

On Amendments Nos. 205 and 206, we are not suggesting that the current arrangements will remain in place for ever. On the contrary, as the TV market develops that should ensure that the BBC has sufficient competition and the need for ITV to have a separately-owned news provider will be removed.

The Bill already gives the Secretary of State power to repeal the nominated news provider system altogether or to change the limits on ownership of the provider. That means that we will be able to change the restrictions on ownership of a nominated news provider as the environment changes. To this end, Clause 384 requires Ofcom to review a number of provisions including those relating to the nominated news provider, and then report the conclusions to the Secretary of State. That report must set out Ofcom's recommendations as to how the Secretary of State should exercise her powers to amend the provisions in the Bill relating to news provision.

The first review must be carried out within three years of Clause 384 coming into effect— in other words, quite soon—but there is nothing to prevent Ofcom conducting a review sooner than that. If it were persuaded in the course of a review that an alternative system of ownership structure would safeguard the quality, impartiality and investment in news on ITV, changes may be made sooner rather than later. The Joint Committee also recommended an early review and we believe that that is a very sensible recommendation. No doubt Ofcom will consider it carefully.

I say to the noble Lord, Lord Crickhowell, that I do not believe, as he claimed, that the world has changed so dramatically in the past six or nine months since the committee, of which he was a member, reported. In line with that thinking and after listening to the arguments which have been put this evening, we will look into the possibility of increasing flexibility for the future. One possible avenue is, as Members of the Committee have said, to separate the nomination process and ownership provisions from those aimed at maintaining high quality and competition in news provision and of securing the adequacy of the resources of the news provider. If that proved to be appropriate, that would keep open for the future the option of removing part of the news provider system that requires the nomination of news providers without needing to sweep away altogether the other protections built into the system. I make one concession and that is that we will consider this matter further and bring forward amendments at Report.

To conclude, we acknowledge that the nominated news provider system may require changing in the future, but we do not believe that we have quite reached that point. ITV is going to face very considerable changes with the removal of the ownership rules which currently prevent a single ITV. We want to wait for Ofcom to be able to assess properly the new environment when there may be a single ITV, and make recommendations that are based on Ofcom's research and expertise. For the time being we believe that the system and the ownership limits associated with it will serve to buttress the quality and the independence of the ITV news service, which I believe everyone in this House wishes to see. We believe that that is particularly important at this time as we reposition our media against the newly deregulated backdrop.

Lord Bragg

Before the Minister sits down, perhaps I may ask a question and make an observation with regard to her response as to why the noble Lord, Lord Crickhowell, might have modified his position. The Minister asked what had changed so dramatically in the world in the past six or nine months. A great deal has changed, including ITN's ability to show its true colours in providing news at the highest possible level in the public service fashion.

Sadly, I did not hear an answer to the question as to why ITV is so uniquely penalised in being prevented from owning its own news provider unlike any other major company in the world. It means that ITV is shackled; the ITV regional news is in a straitjacket and ITN is hobbled. I still do not understand why it should be so uniquely penalised. It is a very straightforward question and I would love an answer.

Baroness Blackstone

I do not accept that ITV is hobbled, shackled and uniquely disadvantaged, as my noble friend suggests.

Lord Bragg

With the greatest respect to my noble friend—

Baroness Blackstone

May I finish my answer? I want to be as responsive as I can to my noble friend. I believe that he is using purple prose. I know that he feels very strongly about this matter. What I have said, and made absolutely clear, is that the Government are ready to look at change here. The only matter which divides us is when we do it. Some who have spoken in the debate want change immediately despite the fact that there are likely to be rather sweeping changes as far as ITV is concerned, as opposed to those who believe that we should hold on for a short period, look at the impact of that change, allow Ofcom, with all its expertise, to undertake a review, and then make a change. That seems a sensible and cautious way forward and exactly what the noble Lords, Lord Crickhowell, Lord Puttnam and other members of the Joint Scrutiny Committee proposed only a few months ago.

7.15 p.m.

Viscount Astor

The Minister's response to this group of amendments is enormously disappointing and unsatisfactory. She has given a huge hostage to the future because in effect she said that ownership of ITN affects the regulation by Ofcom of the nominated news provider. In effect, she has linked ownership with regulation. It seems to me, as in many other parts of the Bill, that the Government have sought to separate those two things. She has implied that ownership, whether 20 per cent, 40 per cent, 80 per cent or 100 per cent, will somehow affect the regulation of the nominated news provider.

I believe all Members of the Committee who have spoken reject that argument. The Minister has provided no evidence. She has failed to provide any evidence as to why the Government's position is either in the public interest or the viewers' interest: it is simply not there.

It leads one to wonder why the Government are being so stubborn on this issue. The Minister said that the matter might be considered in the future. That begs the question as to whether the Government have some political reason that we do not know about and whether they might have some kind of lever. I hope that is not the case. Unless the Government rethink this matter they will get into very serious trouble because their defence seems to be contrary to all the other principles that we have argued throughout the Bill.

Baroness Buscombe

I thank the Minister for her very full response. The Minister is right in saying that there is strong feeling in the House. My noble friend Lord Crickhowell had the support of nine Members of the Committee in an earlier amendment. I also have the support of nine Members who have spoken eloquently in favour of these very important amendments.

The Minister said that these changes are not appropriate at present. We believe that that says it all. It shows that it is not a principle at stake, but a question of timing. We simply cannot understand what is wrong with making these entirely sensible and appropriate changes now. What are the Government afraid of?

My noble friend Lord Astor spoke of a lever. I have my own thoughts about arm-twisting. There is no clarity to the Minister's argument. There are powers in the Bill to repeal restrictions on ownership rules, but why not now?

Perhaps I may repeat very quickly some of the words of Members of the Committee. As the noble Lord, Lord McNally, said, a single ITV would nurture its own news programme. That is what we are looking for. As the noble Lord, Lord Gordon of Strathblane, said, the current set-up is daft. I entirely accept what he said as regards Channel 4. In our view there is nothing for Channel 4 or others to be afraid of in these proposals.

As my noble friend Lord Astor said, single ownership would provide certainty for ITN. That is what we are looking for. The noble Lord, Lord Bragg, asked again: why should ITN be so uniquely penalised? I do not believe that the Minister gave an adequate reply. The ownership cap on ITN is not in the best interests of the company. In an increasingly competitive news market, ITN needs the flexibility of ownership that will allow it to attract investment so that it can develop and provide robust competition to other news providers.

As Members of the Committee have said, ownership restrictions act as a disincentive to the company's shareholders to invest in the long-term future of the company, making strategic decision making difficult. It also prevents ITN being able to exploit the potential of mergers and acquisitions. I could go on. We believe that the thinking of the Government is entirely inconsistent with their policy on liberalisation of ownership, coupled with strong content rules and a strong competition law regime in place.

I am grateful to the Minister for her reference to having further thought with regard to aspects of these amendments. I look forward to seeing the government amendments that will be tabled on Report. However, I must say that the strength of feeling from all side of this Committee confirms to me that this is an issue on which we shall most probably divide, and win, at Report stage. But, for now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 203 not moved.]

Clause 276 agreed to.

Clause 277 [Power to repeal Channel 3 news provider provisions]:

[Amendments Nos. 204 and 205 not moved.]

Clause 277 agreed to.

[Amendment No. 206 not moved.]

Clauses 278 to 280 agreed to.

Clause 281 [Regional programme-making for Channels 3 and 5]:

Lord Puttnam

moved Amendment No. 207: Page 253, line 1, leave out "suitable" and insert "substantial The noble Lord said: In moving Amendment No. 207, I shall speak also to Amendments Nos. 212, 216 and 221, and so provide a real opportunity to crack on. The Joint Scrutiny Committee was unanimous in its view that "substantial" is a more suitable word than "suitable" because "suitable", we felt, was not sufficiently "substantial".

Why did we come to that belief? At the time we were trying not to be timorous. What has surprised us a great deal is the response from the Government to what we thought was a very sensible suggestion. Page 38, paragraph 117, of the Government's response states that, we do not consider that amendment to the draft Bill is necessary. There is no reason why a 'suitable' amount cannot be a 'substantial' amount, and, indeed, we would expect it to be so. However, the current wording provides for flexibility so that targets can be maintained at appropriate levels". The reason for the amendment was to ensure that appropriate levels were substantial. I beg to move.

Viscount Falkland

On these Benches, we support what the noble Lord, Lord Puttnam, has just said. The word "suitable" is extremely sloppy, weak and subjective. Should a club decide that it wants a certain standard of dress or behaviour, it refers to "suitable" behaviour. Who knows what the behaviour will be? The wording needs to be stronger and "substantial" seems to be the appropriate word in this case. I cannot see anything wrong with it; it seems to be utterly appropriate.

Lord McIntosh of Haringey

I am delighted that these amendments have been moved so, what the noble Lord, Lord Kingsland, would call, telegraphically. The amendments are about words, not policy. The clauses have been strengthened as a result of the ITC review. They now clearly show our intent that the preservation of regional programming and programming for the regions should be a high priority.

I ask two questions of my noble friend Lord Puttnam because I do not think we are disagreeing about the importance of the issue. Why cannot "suitable" or "sufficient" be substantial? There is no reason why they cannot. Is there not a risk that "substantial" or "significant"—the words proposed by the amendment—would be unsuitable or insufficient? It would be very undesirable to have something which could be unsuitable or insufficient. There is no risk in the Bill, as drafted. There is risk in the amendments.

Lord Puttnam

I honestly think that the answer was in previous conversations in Committee when we were talking about the difference between floors and ceilings in respect of quotas. The whole point of the word "substantial" is to ensure that there is a sense of reaching for something entirely worthwhile. The word "suitable" is de minimis and can easily end up in avoidance. Frankly, I think that the Government are being silly. Here was a slamdunk for them to win a great deal of goodwill and move matters along. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 208 to 224 not moved]

Clause 281 agreed to.

Clause 282 [Regional programmes on Channel 3]:

[Amendments Nos. 225 to 233 not moved]

Clause 282 agreed to.

[Amendment No. 233A not moved.]

Clause 283 [Regional programme-making for Channel 4]:

[Amendment No. 234 not moved.]

Clause 283 agreed to.

Clauses 284 to 289 agreed to.

Schedule 11 agreed to.

Clauses 290 to 294 agreed to.

Lord Evans of Temple Guiting

I beg to move that the House be resumed. In moving this Motion, perhaps I may suggest that Committee stage begin again not before 8.28 p.m.

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

House resumed.