HL Deb 25 March 2003 vol 646 cc655-790

3.9 p.m.

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

My Lords, I beg to move that this Bill be now read a second time.

Media and communications have a powerful reach. They touch our lives everyday with both subtlety and strength. They are vital to the way we live, the way we do business and the way our democracy functions.

The Communications Bill will transform the regulation of those important industries by creating a new framework: a framework that is rooted in competition; balanced by tough safeguards to protect the interests of citizens and consumers; and flexible enough to respond to a rapidly changing business environment.

The Bill is a delicate balancing act to preserve the best of what we have, while ensuring that we do not close off future opportunities. It will sweep away regulation in many areas, but it must also protect the quality, diversity and plurality of the British media. At the heart of what we want Ofcom to do will be its role to uphold the long tradition of public service broadcasting in this country.

The Bill is the result of close co-operation between my department and the Department of Trade and Industry. I am grateful to my noble friend Lord McIntosh of Haringey, who will wind up the debate. I will therefore concentrate on how the Bill will affect broadcasting; my noble friend will cover in his closing speech the provisions about electronic communications networks and services and the radio spectrum.

Before I turn to the substance of the Bill, I should like to acknowledge those who have helped to shape it. The Bill has been carefully consulted on and has benefited greatly from pre-legislative scrutiny. Under the chairmanship of my noble friend Lord Puttnam, the Joint Committee worked tremendously hard. I am sure that I speak for all noble Lords in thanking him and my noble friend Lady Cohen of Pimlico, the noble Lords, Lord Crickhowell, Lord Hussey of North Bradley, Lord McNally and Lord Pilkington, for the part that they played in making a good Bill better. The Government took their report seriously and accepted more than 120 of their recommendations. We continue to listen and to welcome improvements.

Part 1 contains details of the functions that will be transferred or assigned to Ofcom, bringing together functions currently exercised by: the Broadcasting Standards Commission, the Independent Television Commission, the Director-General of Telecommunications, the Radiocommunications Agency and the Radio Authority. This part of the Bill sets out the general duties of Ofcom and the establishment of the consumer panel and the content board.

Ofcom's general duties will be its touchstone. They will be crucial in determining how Ofcom operates. As a result of continuing consultation and review, the Government made changes in another place to leave no doubt whatsoever that Ofcom will have a duty to further both the interests of consumers and the interests of the wider community.

The consumer panel will be the independent voice of consumers—close enough to influence but with the right degree of separation and independence to represent their interests and to carry out research. The content board will ensure that there is proper provision for public interest representation on content issues of citizens, viewers and listeners, and especially of the different nations and regions of the UK.

As I said, my noble friend Lord McIntosh wall set out the provisions in Part 2. Part 3, covering public service broadcasting, is where I want to focus. Public service broadcasting is an essential feature of our heritage. High quality television and radio programmes free at the point of use and available to all are the cornerstones. Programmes that inform, educate and entertain while reflecting the views and needs of all listeners and viewers help to shape our society. They are essential to our democracy as well as being a key part of the broadcasting ecology.

Public service broadcasting is not only part of our heritage; it is part of our future. Our commitment to public service broadcasting is unequivocal. But we must make changes in the way that it is regulated if it is to survive in this digital, multi-channel, multi-media age. We want public service broadcasting to do more than just survive—we want it to thrive and flourish.

The Bill introduces a three-tiered structure for the regulation of broadcasting. Tier I will ensure guaranteed standards across all broadcast services—public service or not. Tier 2 will ensure a healthy, diverse production industry capable of delivering high-quality, original programmes from around the UK. Ofcom can take firm action against any public service broadcaster who is in breach of the requirements.

Under tier 2, there are quotas for all public service broadcasters covering: the amount of independent productions, original and regional productions and regional programming; the provision of high quality national and international news and current affairs programmes in peak times; the provision of party political broadcasts; and the provision of schools programming.

Tier 3 sets out for the first time in legislation a clear account of the kind of programmes that make up public service broadcasting. While the broadcasters are given vital flexibility in how to deliver the remit, Ofcom has a duty to ensure that audiences are guaranteed high-quality public service programmes.

Our aim is to establish a common framework of regulation across broadcasting. We are therefore providing for the BBC to be covered by obligations that are broadly similar to those applying to other broadcasters. The BBC's obligations are set out in the agreement between the BBC and the Government. In that way, we can ensure that the BBC's constitutional relationship and accountability to Parliament are maintained.

We have published the text of our proposed amendments to the BBC agreement to assist Parliament's consideration of the relevant provisions of the Bill. The effect of the amendments is to impose new obligations on the BBC that mirror the corresponding provisions in the Bill, to the appropriate extent. Under the revised agreement, the BBC will undertake to be bound by most of the same rules as other broadcasters.

It is in the context of those provisions, which ensure quality of content and the protection of public service broadcasting, that I shall set out our proposals for changing the rules on media ownership. Foreign ownership of UK broadcasting licences exists now. There are no foreign ownership restrictions of any sort on certain UK broadcasting licences, such as cable and satellite television licences. Where foreign ownership restrictions apply, they apply only to non-European Economic Area countries.

The anomaly of the current rules would allow a huge EEA-based company with significant operations around the world to buy anything that it wanted, whereas similarly global firms such as AOL/Time Warner or Viacom are barred. That does not make sense in the global market. It cuts us off from a potential source of increased investment at a time when our media industries could benefit most.

The amendments brought forward by the Government in another place as a result of the Independent Television Commission's review of the UK programme market strengthen Ofcom's powers to regulate content with quotas to retain the vitality of our independent and regional production industry. There is no threat of programme dumping or lowering of standards on change of ownership.

On ownership of Channel 5, we must recognise the clear difference between its position and that of Channel 3. Channel 5 has only 6 per cent of audience share, compared with 24 per cent for ITV. Channel 5 reaches only around 80 per cent of the UK population.

In the spirit of the Bill, we want to remove unnecessary restrictions wherever possible to promote competition and investment, so that consumers can benefit from better programmes. That is not about giving favours to anyone; it is entirely proprietor-neutral. It is about giving Channel 5 access to a wider pool of potential investors so that it can compete on a more even footing with the other public service channels.

Ofcom has the power to review the public service obligations of Channel 5 whenever it feels it appropriate to do so. If Channel 5's audience expands to a level comparable with ITV's the Secretary of State could introduce a nominated news provider system, with or without the advice of Ofcom. Ofcom will also be required to undertake a review of Channel 5's original and regional production, news and current affairs programmes if there is a change of control of the channel. Those are substantial safeguards.

We are removing the ownership restrictions that prevent a single ITV. There have been calls for us to abolish at the same time the nominated news provider scheme for ITV. I shall set out why we have resisted that, as it is particularly relevant in the current circumstances. When 59 per cent of the population consider television to be their most trustworthy source of information, we must ensure that high quality and editorially independent news is available on free-to-air television from more than one source. ITV news, as the BBC's main competitor, must provide it. The nominated news provider system, together with the associated ownership limits guarantee both quality and independence.

So far, I have talked only about television, but a vital part of our broadcasting industry is radio, which will be a key part of Ofcom's remit. We are radically changing the radio ownership rules in a way that will bring significant benefits to listeners and the industry. There are new freedoms, but, to balance any future consolidation in the radio industry, the Bill introduces a new duty on Ofcom to protect the localness of local radio. Those are the key issues that the Bill addresses in respect of broadcasting.

The Bill also reforms the newspaper merger regime contained in the Fair Trading Act 1973. We are modernising the existing newspaper merger regime and integrating it with the new merger regime in the Enterprise Act 2002. We are deregulating, where we can while continuing to protect the public interest. Where the Secretary of State intervenes in a newspaper merger, Ofcom will have a purely advisory role specifically related to the impact of a merger on accurate presentation of news, free expression of opinion and the plurality of views in the press. We believe that the involvement of Ofcom will bring greater transparency, independence and depth to the process of advising Ministers, and can only enhance the quality of decision-making under the new regime.

I have not been able to make a statement of compatibility under the Human Rights Act 1998 in respect of one provision of the Bill. I am grateful for the view expressed by the Joint Committee on Human Rights in its fourth report of this Session that our position in this matter is considered to be both legitimate and respectful of human rights.

For many years, successive governments have maintained a complete ban on advertising of a political nature on television or radio. The Government intend to continue with the current ban—a ban that was supported by the Neill committee when it reported on the funding of political parties in 1998—and to define more precisely what is meant by "political" so that Ofcom may continue to use the broad reading of the word used by the existing regulators.

Some noble Lords are no doubt aware of the judgment by the European Court of Human Rights against Switzerland, which maintained an apparently similar ban. Having examined all the facts, and following extensive legal advice, I have concluded that very strong arguments could be advanced in favour of the ban contained in the Bill being compliant with the ECHR. However, the Government apply testing standards to their consideration of the compatibility of their legislation with the convention. Given the existence of the Swiss precedent, I must ask the House to consider the Bill with a Section 19(1)(b) statement attached to it.

That does not mean that we believe the Bill to be incompatible with the ECHR We would mount a robust defence if it were legally challenged. Of course, if that defence subsequently failed before the domestic courts, we would need to reconsider our position. Beyond that, we take our international obligations seriously. There is no question but that we would amend the ban in accordance with any judgment of the European Court of Human Rights in Strasbourg that ruled against the UK legislation. As things stand, however, the Government believe it right to ask the House to continue that ban.

In response to the European Court's judgment and to the JCHR's initial concerns, we looked closely at the current ban to see whether some minor changes would make it more certain that it was human rights compatible. Unfortunately, any such changes would have allowed substantial political advertising. I hope that all noble Lords will agree with me that that would not be a desirable outcome. The present ban denies powerful interests the chance to skew public debate, thereby safeguarding the public and democratic debate and protecting the impartiality of broadcasters.

Broadcasting and electronic communications have advanced rapidly over recent years. The Bill seeks to prepare the way for some of the changes that lie ahead. Some of those changes may be evolutionary; some, no doubt, will be revolutionary. The only certainty we have is that change will happen. This Bill will preserve the best of what we have and open the way for more investment, better and new services and a digital future that we can all look forward to. I commend the Bill to the House.

Moved, That the Bill be now read a second time.—(Baroness Blackstone.)

3.27 p.m.

Baroness Buscombe

My Lords, we welcome and support the Bill. We welcome the creation of a new framework for the communications industries, including the liberalisation of ownership of the media.

There has been an almost unprecedented amount of debate in advance of the Bill. That was partly to be expected, given the nature and character of the industries involved and the detailed scrutiny of the draft Bill undertaken by the Joint Committee, which was so ably chaired by the noble Lord, Lord Puttnam. I wish that the same could be said of scrutiny in another place. I know that I speak for all my honourable colleagues, who feel a deep sense of frustration that a good 25 per cent of the Bill was not considered at all by elected representatives.

Notwithstanding the overall attention given to the Bill, I wish to make it absolutely clear now that scrutiny to date does not, in our view, obviate the need for noble Lords properly to consider the Bill in its entirety. Although we support the Bill in principle, there are a number of important issues on which we do not agree with the Government. We hope to persuade the Government to change their minds on those issues as we proceed. Given the list of eminent speakers today, I have no doubt that we can look forward to some eloquent, lively and, it is to be hoped, constructive debate that will assist the Government in their thinking.

Although we support the general thrust of the Bill in its approach to economic regulation, we are also aware that the EC directives dictate significant aspects of it. It is to be noted that the Government have said: As competition becomes more pervasive in the supply of communications services, it is expected that OFCOM will be able to rely increasingly on [competition] powers, rather than powers specific to the sector, in addressing concerns about competition. However, many aspects of the sector-specific framework, e.g. universal service provision, will remain necessary and will not disappear or become redundant in the foreseeable future". The noble Lord, Lord Currie, chairman of Ofcom, said: Where competition is reasonably robust or where it can be developed to be so, it is usually better for sector regulation to withdraw and reliance placed on competition policy". We urge those responsible for executing the provisions of the Bill to keep firmly in view the aim of using competition law powers wherever possible rather than ex ante regulatory powers. In particular, even if the Government are right and certain sector-specific aspects will need to remain, they should, wherever possible, be universal obligations and not company-specific conditions. Significant market power conditions, which, by definition, are imposed on some undertakings and not on others, and., in particular, price controls should play an ever-smaller part in the sector because of their inevitably distorting effect on competition. In addition, it should be noted that the EC directives are more prescriptive than most economists think appropriate. We believe that Ofcom should make the greatest possible effort to reach a deregulatory outcome when working within those provisions.

It is vital that the regulatory framework to be established by the Bill is capable of dealing with a fast-changing and market-led environment. No one can predict the mix of communications products, services and technologies that will capture consumers' interest in the future. Nor should government or communications regulators attempt to pick winners, be they technologies, services or particular players in the marketplace.

I turn to the specific duties of Ofcom. We are pleased that the Government have seen fit to respond to pressure from Her Majesty's Opposition by including the interests of the community in Clause 3. That said, we ask the Government how that duty to facilitate the interests of the community will be met. In addition, we shall seek clarification that advertisers, who are by far the biggest source of funding for the UK's commercial media, are consumers of the "relevant markets" referred to in Clause 3(3).

Regulatory uncertainty remains in Clause 3. Although the Government endorsed the principles set out by the Better Regulation Task Force that regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed, Ofcom is not under a duty to apply those principles in all its functions. It need have regard to them only as appears to be relevant in the circumstances. The principles of better regulation should properly underpin Ofcom's general duties. An example of an industry that would benefit if we got that right is mobile telephony. It is a significant success story, but that continued success depends on the right regulatory environment. The industry developed quickly through intense competitive rivalry that has benefited consumers beyond anyone's expectations.

I turn to media ownership. The Bill is intended to be deregulatory, but, although we welcome the move to liberalise existing restrictions prohibiting media convergence, we believe that the Government's approach to ownership is prescriptive and timorous. That is well illustrated by the prohibition on shareholders owning more than 40 per cent of the nominated news provider or NNP. The statutory imposition of a fragmented ownership structure on any core business is bound to undermine its ability to grow and innovate. Limited ownership will act as a disincentive to shareholders in the NNP to invest in its long-term future. Concern has been expressed that, without those rules, the NNP might fall into US hands. That is not a sustainable argument, as the rules do not eradicate that possibility, as practical experience has already shown.

The removal of restrictions on the ownership of national terrestrial broadcasting licenses will open up the broadcasting media to new sources of investment and ideas. Foreign investment has already enabled cable and satellite television to grow in this country. What is there to fear? The concern that liberalisation will lead to a flood of foreign content is misplaced. Commercial companies in a competitive marketplace simply cannot afford to ignore consumer demand. All the evidence suggests that domestic programming is popular in the UK. Any media company that wants to be successful here must provide the local content that people want, or it will not survive. In essence, content is driven by consumer demand, not by ownership. The two issues should not be confused. We should have more confidence in our culture and allow the consumer to choose.

On a separate note, although the restrictions governing ownership of different media could previously be justified with reference to the scarcity of available spectrum, the media have changed exponentially in the past decade, with the advance of new technology and communications. The provisions in the Bill should reflect that change and the different climate in which we now live and work.

Although the Government have decided to lift the restriction prohibiting a newspaper proprietor controlling more than a fifth of the national newspaper market from owning Channel 5, their decision not to disapply that restriction in the case of Channel 3 appears arbitrary and discriminatory. The argument advanced for the limitation by Kim Howells MP in another place was that it was necessary to retain the balance of different media viewpoints. What evidence do the Government have to justify the distinction between the role of Channel 5 and Channel 3? It has been suggested that Channel 3 is universally accessible and has the largest audience share of a commercial broadcaster. That may be the position this week or this month, but what will happen if Channel 5 too becomes universally accessible, as indeed it is likely to? What if Channel 5's audience share increases significantly? What action do the Government envisage taking in such circumstances?

That said, we are supportive of the Government's approach to "must carry", "must offer" and "must distribute" provisions that enable Ofcom to impose conditions requiring particular services to be carried on broadcasting networks that are used by a significant number of end-users as their principal means of receiving television. However, we are concerned by the introduction of a general duty to maintain plurality of providers. That is of particular concern to the newspaper industry, which is wholly united in its objection to the involvement of Ofcom in the newspaper merger regime.

Despite the Government's protestations to the contrary, Ofcom will inevitably have a role in determining newspaper content. That is because, as the Bill is drafted, Ofcom will be inextricably involved in the merger regime at several stages of the merger process on the issue of public interest considerations. How is it possible to judge public interest and thereby test plurality, without taking into account the key players, whose editorial and political stance will be known?

The duties of political impartiality, so integral to the broadcasting field, do not exist in the newspaper realm. Indeed, strong opinion is a mainstay of newspaper publishing. Given the highly subjective nature of the assessments that Ofcom will be required to make before determining its advice to the Secretary of State, is it not probable that its experience and, more importantly, its instincts in broadcasting will influence its advice on newspaper mergers?

I turn to the BBC. I shall set the scene by emphasising our support for the BBC. Any suggestion during the passage of the Bill through your Lordships' House that Her Majesty's Opposition are anti-BBC will be instantly refuted by me. The BBC belongs to us all; its future is the responsibility of all of us, and its relationship with all other broadcasters and viewers alike is intrinsic to the effectiveness and success of Ofcom. That effectiveness will be measured from day one, not 2006 or thereafter.

The UK broadcast media ecology must be kept in a delicate balance that satisfies the needs of public service and commercial elements. The pace of change in a paradoxical era of simultaneous media fragmentation and convergence is rapid and its future direction hard to forecast. Steering the right course and maintaining the balance is a subtle task and one that can be carried out only by a single, independent helmsman—Ofcom. The ecology is out of kilter, given the over-commercial, ratings-chasing approach of the BBC, a combined result of an extraordinarily generous licence fee and a weak advertising market. That is the source of much of the debate about and criticism of the BBC, which, unlike its rivals, operates in a virtually risk-free environment, allowing it, for example, to trial programmes on niche channels, build audiences for them and then promote them on mainstream channels. That is the stuff of dreams for the commercial players, who cannot compete on those terms.

If Ofcom is to act efficiently and fairly, it must be allowed to take an entirely holistic approach, unfettered and uncompromised by having a different set of rules and a different timetable for the public service broadcaster with, by far, the biggest market share. I cannot resist a quote from the Financial Times: Not having the BBC fully under OFCOM is like having the Simpsons without Homer". It has been suggested that Ofcom will have enough to cope with at the outset without the BBC fully on board. The Liberal Democrat MP, Nick Harvey, said that it would be a "huge gamble" to give it—an as yet unproven body—full responsibility for the BBC. That is saying that Ofcom may not be up to the job, but that it is fine to use the commercial sector as guinea pigs while Ofcom gets its act together. That is simply outrageous. The Government have said in response—and I quote Kim Howells MP— the BBC does a pretty magnificent job in most respects, but there is no question but that there is room for debate".—[Official Report, Commons, 25/2/03: col. 217.] The Government have entirely missed the point and in so doing invite and encourage animosity from all quarters, causing great damage to the industry and, most particularly, to the BBC.

We shall also be addressing the need to enable the Comptroller and Auditor General to have full value for money access rights to the BBC and thus to open it up to the same scrutiny on Parliament's behalf as all other bodies that are funded by tax. There is total consensus among members of the Commons Public Accounts Committee on this issue. This scrutiny would not impinge in any way upon the editorial independence of the BBC. What it would do is give some measure of accountability and transparency and that must be in the best interests of the BBC.

Extracts from the recommendations of the Independent Review Panel reporting in July 1999 on the future funding of the BBC, a panel chaired by Gavyn Davies, encapsulate our position. I quote: The Government should amend the Royal Charter to give the National Audit Office inspection rights to carry out periodic financial audits of the BBC's accounts and its fair trading arrangements; and it should focus only on administrative efficiency and on proper financial management and accounting and not question policy objectives and programming issues and matters of editorial or artistic judgement". I turn now to radio. This is an industry that has achieved fantastic growth in the past 10 years and is a world leader in digital radio. We need to show our pride in this industry and to give it room to consolidate and grow, particularly bearing in mind that it has a tough competitor in the BBC. We are concerned that certain provisions in the Bill that micro manage the industry are unnecessary and restrictive. Ofcom should allow the industry to concentrate on what listeners actually want—not what politicians and Ofcom might think they want. We believe that the focus should be on outputs, not inputs—namely, what the listeners hear—and not where, how and by whom it is produced, let alone where those producers live.

While commercial radio understands the importance of localness—indeed, the entire industry has been built on that—it does not need regulation to ensure that localness is retained or what this should mean. The Bill also introduces new restrictions on the development of radio where previously there were none, including a limit on ownership of digital multiplexes in overlapping areas. Similarly, the ownership regime for digital radio licences is more restrictive than for analogue. Surely there must be some mistake.

While we welcome the. Government's moves so far to relax the restrictions on the involvement of religious bodies or individuals in broadcasting, the Bill retains a complete ban on religious organisations holding national analogue radio and television licences and multiplex licences. We believe that this is a clear case of discrimination against people holding a religious office in local churches or religious charities and we shall seek to reverse it.

There are many more issues in the Bill which I fear time does not allow me to address today, including for example, spectrum use and conditions and appeals procedures for the provision of networks and services. In addition to the Internet, there are two issues of real significance which, while not captured by the Bill, are central to the development of communications. The first is broadband; an extensive debate in another place highlighted the crucial importance of balancing the need for investment in a competitive market. Investment is vital to ensure that universal access is achieved as expeditiously as possible. This technology will facilitate greater accessibility and social inclusion and must be encouraged.

The second issue is analogue switch off. We believe that it is incumbent upon the Government to act now, as a matter of priority, to raise public awareness of the timetable and implications of digital switch. It its not reasonable to expect industry, which is striving to remain at the forefront of digital technology worldwide, to continue to invest in the future, without proactive support, as opposed to words, from Government.

The communications industry is flagship to our nation and deserves our serious attention. In order to assist Ofcom in carrying out its duties, we need to ensure that the Bill is sufficiently robust to endure change while flexible and deregulatory to allow all our communications industries to thrive for the benefit of us all.

3.45 p.m.

Lord McNally

My Lords, although approaching this Bill in the same constructive manner as I heard from the noble Baroness, Lady Buscombe, having heard the explanations given by the Minister on how the public interest will be protected by this Bill, I think that I shall advise my three children to become communications lawyers. Ofcom will certainly need them in abundance to match the serried ranks ranged against them when it tries to enforce the provisions of the Bill. But the first thing to say about the Bill is that anyone who has been involved in it during the past 18 months will have gone neither hungry nor thirsty.

The extent of the lobbying and consultation is both a tribute to the Government in the way that they have approached this legislation and an indication of public interest and concern about its final shape and outcome. The very size and complexity of the Bill is the give away about the importance of communications. The communications industries cannot be regulated like other parts of our economy because they occupy a different place in the scheme within our society. They determine how we speak to each other and to the world. They underpin our culture, our democracy and our regional diversity. That is why in addition to enterprise and competition in these industries, we insist on quality, diversity and choice.

The concept of a super-regulator for the converging communications technologies was conceived at the height of the dot.com boom. To some extent, this legislation creates a structure for a convergence which has not yet happened. During our examination of this legislation we shall look again at what has been described as the "techie" end of the Bill, and look in particular at such matters as the roll out of broadband, competition in the telecom sector and the effective use of spectrum. In this scrutiny, I shall be aided by my noble friend Lord Razzall on competition matters and, like the noble Baroness, Lady Blackstone, I have the commonsense to leave the technical issues to someone else—namely, my noble friend Lord Avebury who, as noble Lords know, is an engineer and therefore well acquainted with wires, valves, crystals and the like.

On matters of cultural and regional content, domestic music and drama production, the distinctive roles of Welsh language and Scots Gaelic, as well as the need to recognise and protect the rights of the citizen, I shall be supported, as the speakers list demonstrates, by a positive galaxy of experience and talent from these Benches.

Today, I want to make one clear declaration of intent on behalf of my party and to flag up a number of areas in which we shall seek fundamental changes in the Bill during its passage through the House. That declaration is clear and simple: it is the intention of my party that there should emerge from this legislation a strong, independent and well-funded BBC, which will be the iron pole around which we shall construct our commitment to public service broadcasting. That does not mean that we shall not sometimes criticise the BBC or urge on it reforms which provide for more transparency and greater accountability. We shall do both.

But we shall defend the BBC for what it is—a great broadcasting organisation with a name recognised throughout the world as synonymous with accuracy, quality and trust—and we shall resist and oppose any proposals which weaken or undermine that position. I noted what the noble Baroness, Lady Buscombe, said about the position of the Official Opposition on these matters. We shall see where our respective parties stand when push comes to shove in defending the integrity of the BBC.

As to our overall approach, my honourable friend in another place, Nick Harvey, gave a broad welcome to the overall intentions of the Bill. As in other parts of the economy, we welcome attempts to lift the burden of bureaucracy from entrepreneurs and to regulate with a lighter touch.

The House must ask itself whether the Bill as it stands gets the balance right between giving entrepreneurs freedom to exploit the market for personal and shareholder benefit and the responsibility of Parliament and government to protect the wider interests of the citizen.

I am sure that the name Mr Rupert Murdoch will come up from time to time in our discussions. I am not sure as yet that the Bill, unamended, reflects the same burning ministerial desire to protect the public interest as Mr Murdoch shows when promoting his shareholder interest. Indeed, there is an almost blind faith on the part of Ministers that deregulation to promote competitiveness and investment will produce the most dynamic and competitive communications industry in the world. Maybe so—or it may result in concentrations of power in the hands of multi-media global conglomerates which will pose a threat to programme quality, cultural diversity, regional identity and the effective workings of our democracy.

I have had the pleasure on a number of occasions of listening to Dr Kim Howells, the Minister who took—some would say steamrollered—the Bill through the Committee stage in another place. On the scale of Pauline conversions, his must come fairly near the top. His faith in the market now seems total and, like many late converts, he can be disturbingly belligerent in his commitment to the new faith.

But in fact he reflects only in its more brutalist form a more general weakening of commitment to wider public interest in favour of market-driven solutions, which is now found inside No. 10, in the DTI and in the DCMS and is reflected in the Bill.

Take, for interest, the attitude towards the fate of ITV Channel 3. There is an almost naïve belief, quite unsubstantiated by fact, that by allowing American companies to buy Channel 3 we will, according to Tessa Jowell, end up with the best of both worlds: their money and our standards". I am tempted to remind the House of when George Bernard Shaw met Jean Harlow and it was suggested that their union would produce the perfect child, with her beauty and his intellect. "But", said the great man, "what if he ends up with my looks and her brains". It is a legitimate question. AOL-Time Warner, Disney and others would be interested in making money from us and working to their standards.

The British-born but American-based expert on communications, Professor Richard Tracey, gave a warning in an essay written for the Joseph Rowntree Foundation and the Campaign for Quality Television. He said: The whole story of the US media since 1981 has not just been the elimination of costly high-quality programming—an essential part of public service broadcasting—but the progressive elimination of any programmes which do not maximise profits". "Why", as Nye Bevan memorably said, "look in the crystal ball when you can read the book?" I challenge Ministers to read Professor Tracey's essay and then to tell the House why there is such a determined rush headlong into American ownership of ITV, without any reciprocity on the part of the United States and without, as the Puttnam committee recommended, giving Ofcom the opportunity to examine the merits of the case. It is a pig in a poke solution and should be resisted.

The Liberal Democrat study group into broadcasting advocated that ITV should be consolidated under single ownership. We believe that ITN should be wholly owned by the channel so that the ITV news provider can be sustained and nourished by its owner in the same way as the BBC and Sky nourish their news channels. When that process is over and Ofcom has had an opportunity to study the merits of any further opening up of the market, then and only then should other changes be contemplated.

As for Channel 5 and its possible purchase by Mr Murdoch under the weakening of cross-media rules, I simply ask Ministers committed to a dynamic and competitive communications industry the same question as the one posed by Mr Chris Mullin, the chairman of the Home Affairs Select Committee in another place, who said: [Would not] removing the cross-media ownership rules from Channel Five enable a newspaper proprietor who already owns, say, four national newspapers and one television channel to purchase Channel Five and use it to subvert ITV and Channel 4, in the same way that he has subverted much of the rest of Fleet Street?". It would be a concentration of power unacceptable in any industry at any time, and certainly unacceptable in the communications industries in a democracy. The House should insist on an amendment which prevents such a gross distortion of the market.

The so-called ratchet solution is no solution at all. Ministers seem unwilling to comprehend that it is the concentration of media power which should be resisted in a free society. Simply attempting to tie down such power with post facto service requirements ignores the real threat that the concentration of ownership presents to our society.

As regards both the print media and radio, the Bill again promotes relaxation of ownership rules in order to promote competition and investment. We should examine these proposals very carefully in Committee.

I was recently invited to a meeting of the All-Party Media Group to meet Mr Ralph Bernard, the chief executive of the GWR Group. The invitation told me that the company operates Classic FM, Core and Planet Rock, 32 local radio stations, the commercial national digital radio multiplex company and 16 digital radio licences. That, I remind the House, is before the further consolidation allowed by the Bill.

I have no particular axe to grind about GW R, which runs some excellent stations, but it all seems to be a long way from local radio, with the local news, local music and local content we were once promised by the commercial sector. Now we have news hubs, central programming and what has been described as the "blanding" of content to dilute the local distinctiveness of local radio. I hope that we will have time in Committee for a thorough examination of these issues, including proper protection and promotion of access radio, an issue on which my noble friend Lady Walmsley will speak further.

As regards the print media, as well as looking at the cross-media ownership implications of the Bill I hope that we will be able to give Ofcom the power to run its self-regulation accreditation slide rule over the Press Complaints Commission. The evidence of the newspaper owners to the Puttnam committee was churlish and defensive. The reaction of our newspapers—the editors of the Guardian and the Independent being notable exceptions—to the modest examination of their record by the DCMS Select Committee under Mr Gerald Kaufman was what I can only describe as the Violet Elizabeth Bott reaction —they scweemed and they scweemed and they scweemed.

Yet the print media, local and national, is part of convergence. I recently heard the editor of the Guardian say that the paper now has more readers on the Internet than buy the printed version. Among younger people that trend is likely to continue. So there is no doubt that the print media falls within the context of the Bill.

Indeed, the newspaper organisations seem very willing to take the benefits of conversion where it suits them. If they are to have the benefits of self-regulation, then Parliament and the public have the right to insist that such self-regulation is conducted in the public interest, to the highest standards and with genuine transparency. I shall bring forward an amendment to bring this about and enable the House to have a thorough debate in Committee on the workings of the Press Complaints Commission.

This is a vast Bill and we shall need a long time in Committee to do it justice. We shall have to examine in detail issues such as "must offer/must carry", religious broadcasting, children's programming, media literacy, protecting the rights of disability groups, protecting content quality, protecting regional distinctiveness and genuine independent production and creativity in radio and television for both music and the spoken word. All these causes have champions on these Benches and across the House. These and the technical and competition issues to which I referred earlier must be thoroughly scrutinised in Committee.

When doing so, I hope that the House will keep in mind the warning of the distinguished American broadcaster, Ted Koppel, when speaking of the American experience. He said: We are ripping down those institutions, large and small, within which democratic culture was intended to be undertaken. Institutions that once destroyed, amidst the whimsical destructiveness of the market, will be extraordinarily difficult to reconstitute". The charge against Ministers and against this Bill from these Benches is that, unamended, the Bill puts too much faith in the whimsical destructiveness of the market and pays too little attention to the protection of the interests of the citizen and the wider cultural and democratic responsibilities of the industries involved.

Recently I visited Swansea, the birthplace of Dylan Thomas, whose most famous work, "Under Milk Wood", was a play for voices commissioned by the BBC. Running through my head in relation to the Bill are the lines Thomas wrote: Do not go gentle into that good night, … Rage, rage against the dying of the light". I believe very strongly that, without amendment, the Bill does mark the dying of the light for a communications ecology which, for all its faults, is still the envy of the world. We still have quality, diversity and choice. We still have public service broadcasters who seek to educate and inform as well as to entertain.

That is what the legislators of the 20th century bequeathed us. The Conservative Party in particular can take pride in what Conservative governments have done. It was a Conservative government which founded the BBC as a public body protected by a licence fee and independent governors from day to day government interference. It was a Conservative government which established commercial television and radio with strong local, regional, news and public service commitments, and the name of Lord Whitelaw will always be associated with Channel 4. Indeed, the noble Baroness, Lady Thatcher, in all her pomp, never contemplated the abeyance to the market contemplated in this Bill.

It is because Ted Koppel is right that institutions once destroyed will be extraordinarily difficult to reconstitute that we shall fight hard to change the Bill. We will not rage against the passing of the light, but we shall argue with passion and conviction so as to preserve the bright beacons of public service broadcasting and the diverse and pluralistic media which is our legacy from the past, and which it is now the responsibility of this House to safeguard for the future. In that task, we shall be looking for support from all parts of the House.

4.2 p.m.

The Lord Bishop of Manchester

My Lords, in some respects this is a courageous Bill and the Government deserve praise for trying to make our unique public service broadcasting ethos compatible with commercial interests and deregulation. But as it stands, with the Bill's central thrust of economic policy as the prime motivator, public service broadcasting is a secondary concern. One can understand why, but for all the Government's good intentions, the Bill's effect, by strengthening rather than containing market forces, could be to put public service broadcasting on the margins.

The noble Lord, Lord McNally, has already quoted the phrase of the Secretary of State at the Department for Culture, Media and Sport: "their money, our standards". As he indicated, the Government's hope that they can promote high-quality television through market forces and "light touch" regulation is not helped by the American experience: the progressive elimination of good programmes because they do not boost ratings or maximise profits; an increase in programmes that hurt, humiliate and appeal to greed, as well as stifle diversity of view and impartiality of reporting. That is why a strong and effective codification of the public service remit, both for the BBC and the independent broadcasting sectors, is so important.

But are the Bill's provisions strong enough? A review of public service broadcasting is proposed only once every five years. The ITC recommended that it should be annual to be effective. I am concerned, too, about the "taken together" basis which allows a channel to be excused its obligation to an area of its public service remit if another channel has produced an above-average output. The effect could be to let certain channels off the hook in terms of, say, the religious remit. Another clause permits a public service licensee to be excused public service broadcasting commitments in unfavourable economic circumstances.

On these Benches, we should like to see specific obligations written into the legislation in such a way that minimum requirements have to be kept, for example, for art, science, religion and children's programmes, not only on the BBC but also on each individual commercial channel. It would be a tragedy if such key aspects of our cultural heritage and future were to be lost from the main free-to-air channels or pushed to the edges.

Earlier government proposals would have diluted specific legislation on religion. The White Paper placed it in the third tier as a part of education, thus endangering broadcast worship and overtly spiritual presentations of faith, so I am glad that religion has now been, as it were, upgraded to sit alongside science as a subject in its own right.

However, there remains a vagueness of definition. Broadcasters are to provide a, "suitable quantity of religion". A similar phraseology is used for regional content, which has to be of, "appropriate range and proportion". How does one measure those things? How is Ofcom to hold broadcasters to account if almost anything can be explained away as suitable or appropriate, unless there is to be endless wrangling and possibly litigation? The public service provisions will need to be more specific and more robust if the Government are to succeed in their finely balanced task of maintaining and strengthening these elements of our culture alongside increased commercial competition through deregulation.

Here I come to a vexed matter. On these Benches we have welcomed the relaxation of regulations for licence ownership by religious organisations to include digital local and national sound programme licences and digital local TV licences, but we continue to believe that that does not go far enough. I share the concerns forcefully expressed by the noble Baroness, Lady Buscombe, that religious groups and their officers cannot own licences for national AM/FM radio frequencies, a nation-wide analogue TV channel, or more than 5 per cent of a multiplex from which the new radio and TV digital programmes are broadcast.

There is a blanket disqualification on religious organisations of all faiths from even being able to apply. I suggest that that is an arbitrary prohibition, one which has inhibited the development of an independent Christian broadcasting industry. The Government's arguments for the prohibition have now settled solely on spectrum scarcity, but they have used other arguments which, for a government that have often encouraged faith communities in other spheres, suggest a strangely ambivalent attitude towards religion.

In the White Paper the Government claimed that religious ownership requires special treatment because, religious content has a capacity to offend". As a letter from the DCMS put it last month, if we were drafting the White Paper today, we would not use the same language". Quite so, for if anything has the capacity to offend on British television, it is the level of gratuitous sex and violence. I hope the commitment to toughen powers for content regulation properly addresses that, although I have to say that there has been a backing-off from what used to be termed "taste and decency" with phrases such as "generally accepted standards". How are those standards to be set, and ought there to be an appeals procedure over Ofcom decisions rather than only judicial review? Certainly the content board must have strong powers to protect not only the adult citizen, but also children from hearing and seeing harmful and offensive material.

No sooner had the DCMS distanced itself from the offensiveness of religion as the reason for its uniquely stringent regulations and exclusions over religious ownership than it was quoted in the Daily Telegraph as saying that the prohibition was, to avoid giving one religion an unfair advantage". That sounds like the kind of hot-cross-bun political correctness that is based on little or no understanding of any faiths. My experience of working with other faith leaders indicates that they would like the Christian faith to be more strongly owned by this country.

But perhaps the Government are using the pluralist argument as a cloak for an underlying secular agenda. For how does all this square with the fact that, in the privacy of their homes, 72 per cent of the population noted their religion as "Christian" in the census. Of course they are not all in church; but almost all of those 42 million have a radio and a television. Incidentally, the British Social Attitudes Survey had predicted that 40 per cent would put down "no religion". In fact, only 15 per cent—8 million—did so. An editorial in the Guardian on this matter said: The census figures are reminders that religion in general, and the church in particular, are not marginal anachronisms doomed to terminal decline in modern society. On the contrary they seem to be remarkably resilient and enduring parts of the social order". From these Benches, we seek to ensure that that remarkably resilient and enduring part of the social order has its rightful place in this Bill. We will press for the strengthening of protections for public service broadcasting—and especially that part of its remit that reflects the strength and diversity of the nation's cultural and religious richness. We will press for moves to strengthen standards of taste and decency; and we will press for the remaining disqualifications on religious ownership to be lifted.

4.11 p.m.

Lord Puttnam

My Lords, the Government quite rightly have very high ambitions for this Bill. We have just heard these ably set out by my noble friend the Minister in her introduction.

When introducing the Second Reading debate in another place, my right honourable friend the Secretary of State for Culture, Media and Sport said: The Bill deals with the means by which our society speaks to itself and, as it were, hears the echo. It is the means by which we talk to the world. It is a shaper of our culture, our identity and our values. For the Government, therefore, the Bill is not simply a device to regulate or deregulate an industry: it plays a vital role in every one of our wider aspirations for Britain. It will give consumers choice—the variety that they demand and deserve—and will give citizens the information that they need". The Bill, the Secretary of State went on to say, would prepare the UK for "a digital era" and, preserve what has always been our proudest boast: that we have the best free broadcast media in the world".—[Official Report, Commons, 3/12/02; cols. 782–783.] Those ambitions were shared in every respect by those Members of your Lordships' House who sat on the Joint Scrutiny Committee—which makes it all the more regrettable that they are so badly let down by two significant, possibly even fatal, flaws at the centre of the Bill.

To paint a balanced picture, overall the Government have listened. They have amended and improved the Bill, in some respects almost beyond recognition. But there remain a number of minor, and in some cases not so minor, improvements for which we grizzled veterans of the Joint Scrutiny Committee will continue to press. These range from complex issues, such as the appropriate use of secondary legislation, to the plain daft, as in the case of the proposal to allow advertising agencies to become major media owners.

At Committee stage, I, and others, will wish to go into some detail regarding the future relationship between the BBC and Ofcom. I shall certainly be nagging away regarding the provision of training for an industry that is so reliant on highly skilled people. I also look forward, like the noble Lord, Lord McNally, to what I anticipate will be a lively debate on the future of the Press Complaints Commission. It is certain that your Lordships will be hearing more on this and many other issues as the debate progresses.

In the short time available to me, perhaps I may focus on the two "fatal flaws" that I mentioned. Surely, if this legislation has any one overriding objective, it is to put in place a new and highly effective regulatory body. Ofcom, with the statutory reach and the resources to guide a volatile, complicated and incredibly "noisy" communications industry through the next decade of its technology fuelled development.

When taking evidence, it became overwhelmingly apparent to the Joint Scrutiny Committee that the recent history of regulation in this country was, at best, patchy. As to what had gone wrong, the arguments were many and varied, but one consistent theme emerged: regulation in Britain had always suffered, like so much else in public life, from an insufficiency of resource, in terms of both Treasury and troops.

Speaking of troops, it is my sincerest hope that the Ofcom board will not be deflected from seeking out and hiring the very best people that money can buy. If recent history has taught us one thing, it is that entanglement with the big battalions of any "dominant incumbent" has, for regulators in most sectors, proved an unequal struggle—in some cases laughably unequal. I can only hope that the quality of the Ofcom team, led by my noble friend Lord Currie, will, over time, find itself more than a match for the scale and complexity of the challenge.

Unless Ofcom is more than adequately resourced, with a clear underpinning from the public purse, it frankly begs the question: why bother with the Bill in the first place? I find it utterly baffling that the funding of Ofcom's competition powers failed to receive any attention whatever when the Bill was in Standing Committee in another place.

The second fundamental flaw in the Bill results from a confusion of aims and means. The achievement of "plurality and diversity" is not just the stated aim of this particular government; it must be a core ambition of any plural democracy. It tends not to happen by accident and, when it does occur, it can, and to my mind should, be supported by intelligent and sensitive regulation.

What is absolutely certain is that plurality and diversity are not a natural by-product of unregulated market forces. That is particularly true of a market in which the "cost of entry" has become all but entirely prohibitive. For that reason, I shall be opposing in every respect the provision that would allow Channel 5, or any terrestrial channel, to be wholly or partially owned by any large newspaper group. This is the issue of so-called "cross-media ownership".

The existing regulations, thoughtfully inserted into the 1990 Act by the then Conservative government, and avidly supported by my own party, have up until now sensibly prohibited this form of market dominance.

Where did this unwelcome provision come from? Who on earth sought it? Try as we might, the Joint Scrutiny Committee could never get any sensible answer beyond an unattractive repetition of free market dogma and the mumbled plea that "poor little under-capitalised Five"! was too small to worry about. Under-capitalised? Its principal shareholder is five times the size of Granada and Carlton put together.

Most frustrating of all to the committee was an almost wilful refusal on the part of the Government to study or discuss the myriad competitive implications of well-orchestrated "cross-platform" promotion.

Perhaps I may set out one possible example of what that could come to mean. Should News Corp. or any of its associates, under the proposed provision, acquire, say, 35 per cent of Channel 5, its capacity to cross-promote that channel using its dominant satellite position and its newspaper holding would be entirely without precedent. The bleat that "Five" has only 6.4 per cent of the market would very quickly become history, as "Super Soar-away Five" dug deep into the market share of Channels 3 and 4.

Both of those channels, constrained, as they might see it, by significant public service obligations, would complain bitterly at their inability to compete on equal terms—at which, government, on the advice of Ofcom, would almost certainly release Channel 3 from at least some of its obligations.

Goodbye to 40 years of commitment to regional programming, and almost certainly a good deal more besides. Another uproar would quickly be inevitable: and to placate the market a by now damaged Channel 4 would be required to take on a slew of additional public service obligations—underwritten, in all probability, by top-slicing the BBC's licence fee. So, here we have the entire ecology of the Secretary of State's, best free broadcast media in the world", turned on its head; and for what? To allow Britain's most powerful media groups the opportunity to become that much more powerful?

The very notion that you stimulate plurality and diversity through the encouragement of market dominance is, frankly, risible. Recent history points only one way—towards the inevitable consolidation of conformity and power.

Your Lordships should not simply take my word for it, but should listen to the words of the noble Lord. Lord Birt. In his excellent and prescient New Statesman lecture, delivered in July 1999, shortly before he left the BBC, he said of regulation in the digital age: Let me say, with all the force I can muster, that now is the time to act and to apply, with rigour, clear regulatory principals for the digital age. It will be even more difficult later than it is now to dislodge those who will benefit massively from their grip on the gateway … Let me suggest what Governments should do; let no group, in any distribution system, both control the gateway and be at the same time a substantial provider of services". Those were wise words then and they are wise words now, and I look forward to hearing more from the noble Lord in a moment.

Like the noble Lord, Lord Birt, my noble friend Lord Bragg and many others in this House, I have fought all my life for a media environment in film, television and the press that we can all be truly proud of. Like most of us in this Chamber, I am a fortunate inheritor of a remarkably successful public broadcasting system. As the noble Lord, Lord McNally, said, the Conservative Party, to its great credit, can lay far and away the best claim to having nurtured that system. I hope that the Conservative Party remembers that as the debate progresses through the House.

I have long felt that the most valuable service that we can fulfil for future generations is to ensure that the finest qualities of our analogue age are shepherded intact into their digital future. That can be achieved only by offering the best possible example in our programming output, supported by the best and most sensitive regulation possible. That is why the Bill is so overwhelmingly important.

The Bill has so much to commend it. I beg the Government to think again on the two crucial issues that I have attempted to highlight. Should they decide not to listen, only one of two things will happen. Either the House will, in its wisdom, require the Government to think again, or the law of unintended consequences will bear down and never again will any Secretary of State be able to celebrate Britain as the home of the best free broadcast media in the world.

4.22 p.m.

Lord Birt

My Lords, I declare an interest as an adviser to McKinsey's global media practice, and as chairman of Lynx Capital Ventures, which invests in the communications sector.

We are moving through an age of explosive possibility, driven by the extraordinary, still developing and unstoppable power of digital technology, which does not use valves, transistors or even crystals. This new technology will have a profound impact on both our capacity to create wealth and our national culture.

Many media consumers, once largely passive, are now intensively active, involved and mobile. They face expanding choice from a multiplicity of services from home and abroad, increasing opportunity to watch what they want when they want: to interact, to chat or to play games with one another online; to communicate energetically by a variety of means; or to use the magical power of the Internet to uncover information, to find their own personal needle in a worldwide haystack. Increasingly, consumers will be able to do all those things, on whatever multipurpose device they favour, whether at home, at work, or out and about around the globe. The world is at their fingertips, just a click away.

The challenges for the legislator and regulator in this converging universe of technology, media and telecommunications are to foster the greatest possible diversity of choice—real choice for the consumer; to encourage a plurality of providers of content and services of all kinds; to facilitate ease of use and simplicity of access for users; and, lastly, to ensure that there is effective competition to drive innovation, quality and efficiency at every link of the value chain, from consumer to producer. For the regulator, it is the consumer—the user, the viewer, the listener, the citizen—that needs to be centre stage, and not, important though they are, the leviathans and Goliaths who most press for our attention.

There are legion issues for your Lordships to address, but I shall focus on three that may receive insufficient attention. First, a number of powerful players have already won a dominant position in the digital universe, some through admirable foresightedness and boldness, at a whole series of new gateways—on the desktop, or providing new network services via satellite or wire-based systems. The task of the regulator will be to ensure that competing service providers can always reach the consumer through these gateways on equitable and non-discriminatory terms, whether as suppliers of software, of new television networks, or of online services.

Secondly, we need to ensure that the customer interface is designed in the user's interest. In digital television, that means the electronic programme guide. Just as we have more than one television magazine guide, and not only the Radio Times, so we should encourage competing electronic guides. That would enable consumers readily to uncover what is available in a genre of their choice—their selection of movie, sports event or science programme, for instance, on any channel. We cannot do that now, but we should be able to.

Improving the functionality of the electronic programme guide in this way is likely to be resisted as long as some systems are highly vertically integrated, bundling access, guide, and service provision from a single owner. In the short term, the regulator needs to use its powers to open up the system to competition at every point. In the long term, the drive of regulation must surely be, subject to investors first receiving a proper reward for the real risks that they have taken, to unbundle ownership and to have different owners as well as meaningful competition at each point in the value chain.

Thirdly, the UK has been a proud pioneer in broadcasting, and in digital television and radio in particular, but we have made a sluggish start as a nation in achieving broadband connectivity. We seem now, at last, to have turned the corner, but our inauspicious broadband beginnings seem to have been a material failure of regulation, from which Ofcom needs to learn. A key challenge for the new regulator must be to ensure, if we are to maintain a national competitive advantage, that there is sufficient competition to drive infrastructure, penetration and innovation, and to enhance functionality in the home and at the desktop.

If Ofcom can get a grip on those issues and create a level playing field for competition, we will have a thriving economically vibrant, commercial communications sector in the UK. That will not be enough, however. If we want our unique national culture to flourish; if we want to maintain the vitality of original British expression in every cultural domain; if we want an informed debate on crucial matters of national significance; if we want widespread exposure to illuminating and thought-provoking programmes which extend understanding of nature, science, history or the arts, we will need to maintain, in a very different era, the tradition of public service broadcasting fostered by successive governments in this country more successfully than in any other.

As we move towards a period of spectrum abundance, with none of the privileged access to the consumer that characterised the analogue age, the blunt if uncomfortable likelihood is that we are not many years away from a world of such intense competition that the public service light will soon be extinguished in commercial broadcasting in the UK. That will be a sad day—for the ITA's, then the IBA's, then the ITC's nurturing of public service in commercial broadcasting has been a triumph of regulation admired the world over. We should delay the moment for as long as we can, fostering original British production in the commercial sector for as long as possible, but we should not kid ourselves that the moment will not one day come.

Maintaining the British public service tradition in the longer term will fall in part to Channel 4, but overwhelmingly to the BBC. The key issues for the next BBC Charter are what the role and scope of the corporation should be in this very different environment; and, equally important, how the BBC should be regulated to ensure that it fulfils its charter remit. Those fundamental and critical questions are best settled in the charter review process that is about to begin, and not as part of the consideration of this Bill—the prime focus of which is, and should be, the commercial sector.

In conclusion, the UK has an unequalled if not unblemished record in regulating the communications sector. This well-considered Bill in the generality chimes with new needs and is to be welcomed. It should enable the UK to optimise the opportunity of the new technologies, to reap the digital dividend. It gives Ofcom clear and tough powers to address the issues that I have identified. But the new regulator will need to be bold and courageous to use those powers in the consumer interest—for if and when it does, Ofcom will certainly rattle some cages. The noble Lord, Lord Currie, should convey to his colleagues not only our hopes, but our good wishes and support for the awesome tasks that lie ahead.

4.32 p.m.

Lord Wakeham

My Lords, I support the Bill, but I do so with considerable reservations—and even before the noble Lord, Lord McNally, has had a go at it. I suspect that we shall have some very lively exchanges in the latter stages of the Bill.

This is the first time that I have risen to take part in a debate on the media without having to declare an interest. As noble Lords will know, I was for seven years the chairman of the Press Complaints Commission. During my time, I sought to encourage press self-regulation and press freedom—which in my view is fundamental to a free society. I did my best to see that it worked in the interests of ordinary people. Self-regulation is like any aspect of freedom: it has rough edges and it is not perfect. But it does work and it has no doubt raised standards of reporting over the years. My concern with this massively important Bill is that contained within it are all the ingredients necessary to undermine a free press, self-regulation and the quick, common-sense resolution of complaints. The damage will be, in my view, to ordinary people who at present complain to the PCC—and that is 95 per cent of the complaints that I had over those seven years. The rich, the famous and the crooks will be able to look after themselves.

There is a great deal in the Bill that I fully support. I think that it is sensible from the point of view of the public as well as of the industry for there to be one regulator for radio, television and communications. I instinctively support the deregulatory aspects of the Bill. In an age in which communications industries are developing and evolving day by day, it is quite right that we should be cutting away at the red tape that stifles innovation rather than adding to it.

I wish that I was more reassured by Ministers' statements that there is no way that Ofcom will have a significant role in press freedom or in the editorial content of newspapers. Although I am quite sure that they mean it, the problem, it seems to me, is that Ofcom will be responsible for advising on newspaper mergers. Its remit, in that case, is too wide. It is hound eventually to lead Ofcom into the territory of press regulation, which is precisely where it should not be.

First, I am concerned about the extent of Ofcom's responsibility on the issue of mergers themselves, which will hit regional and local newspapers—the lifeblood of all local communities—particularly hard. The vast majority of existing newspaper companies, large and small, seeking to make even the most modest of newspaper purchases are likely to be caught by the criteria in the Bill for the exceptional public interest test. That will give the Secretary of State substantial powers to refer the vast majority of newspaper acquisitions to the Competition Commission for scrutiny, and will also mean public consultation, with the uncertainty and problems that that brings. My fear is that that will have a profound impact among local newspaper companies, which need a substantial market share to survive and compete. That in turn will affect their economic vibrancy. The loser, over time, will of course be the local communities and ordinary readers throughout the country. The Government should look at that again. Again, I do not believe that the Government intend that that should happen, but that is what I fear in practice will happen.

Secondly, in discharging its functions relating to newspaper mergers, Ofcom will inevitably be dragged into the whole area of editorial content and the work of the PCC. For, in advising about a range of issues such as fairness, accuracy and opportunity to reply, it will of necessity need to form a view about a newspaper or magazine publisher's record in implementing the Editor's Code. That would inevitably place Ofcom as a statutory overseer of the PCC and self-regulation. That is statutory press control by the back door, something against which the Government—like the previous government of whom I was a member—have quite rightly set themselves.

Worse still, there is I think a danger that someone will try to use the courts, via the Human Rights Act—which has profound implications for public authorities such as Ofcom—to drag the print media within the scope of that Act. The courts—which have rightly fought shy of using the Act as a backdoor privacy law, and all credit to them for that—will be back in an arena in which they do not wish to be. The whole business of dispute resolution by the PCC, and the common-sense manner in which it administers the code, both to the advantage of ordinary people, will be under threat yet again. It may take some time for that threat to develop; it may happen more quickly; but unless something is done to ensure Ofcom has no role whatever in newspaper merger matters, develop it surely will, for the Bill puts the entire apparatus in place.

I have never argued that self- regulation is perfect, but I am greatly concerned that this good Bill will have consequences that I do not believe the Government want. My profound interest in this matter is—as it has been all along—to ensure that where newspapers and magazines are concerned, ordinary people who have a grievance will have some effective, non-legal and free redress. They have it at the moment. Although it is not perfect, it is far preferable to any of the alternatives. The Bill could end up by damaging self-regulation, and that must not happen. I therefore urge the Government to look again at that part of what I think is a very good Bill.

4.39 p.m.

Lord Avebury

My Lords, this enormous Moab of a Bill is, in fact, several Bills rolled into one. I intend to concentrate, as my noble friend Lord McNally said, solely on Part 2 which is concerned with network services and the radio spectrum. In doing so, I disclaim any technical expertise my noble friend attributed to me. He rather gave the game away when he referred to valves, wires and crystals, because those were the most advanced technologies when I was learning my engineering, some 60 years ago.

That part of the Bill covers every electronic means of disseminating information, including the Internet, local area networks, wide area networks, cable, radio and television. One might imagine, considering the extensive consultations which have taken place on the Bill, referred to by every noble Lord who has spoken so far, and the wide discussions throughout Europe on the four directives which are the basis of the legislation, that there would have been very little to say by the time it reached us. That, evidently, is not the case, from the speeches we have heard so far and given that 51 noble Lords are taking part in the debate. There seem to be a few matters requiring your Lordships' attention in this part of the Bill in particular.

First, there is the Government's change of policy on the "must carry" provisions, which have been referred to briefly. In the draft Bill, these applied to both cable and satellite, but now they extend only to cable. What is termed a general condition under Clause 42, including the "must carry" condition, is no such thing. Under Clause 43(2)(b), it can be applied only to a provider of a network or a service of a particular description. Although no indication is given either on the face of the Bill or in the explanatory notes of how this discrimination is to be exercised, we understand that the "must carry" condition is not to apply to Sky, thus imposing a competitive disadvantage on cable.

NTL does not object to the list of services it is obliged to carry under Clause 61, but it fears the power that Ofcom is given to add to the list, pointing out that every additional channel it is required to carry means half a million fewer broadband connections. Therefore, the provision could conflict with the Government's declared policy of wanting to roll out broadband to every consumer in the country.

NTL also says that the adoption of proprietary technical standards by Sky for its subtitling and audio description services imposes additional costs on it, and it would like Ofcom to have a duty to promote the use of common standards in this area. Apparently, the promotion of common standards in general was not an objective of the EC directives, but that does not prevent us from considering it here. I ask the Government to think about incorporating into the Bill some power for Ofcom to promote standards in general, and in this area in particular, to benefit the cable industry and equalise competition between cable and satellite.

Sky was proposing to charge the BBC £85 million for encryption and other services over the next five years, for the privilege of transmitting its programmes through Sky decoders. The BBC therefore decided not to renew the contract when it expires in May 2003. Instead, it will spend £40 million of the savings on buying additional satellite transponder capacity, so that all the regional variations of BBC1 are available on satellite, as they are on cable. It is moving to a different satellite operated by Astra, which has the additional advantage of a footprint aimed closely at the UK, so that overspill of rights to neighbouring countries of their free-to-view services will be relatively small. It also plans to make all regional and national services available to terrestrial digital viewers in all parts of the country.

The BBC is the first to move to unencrypted broadcasting in the UK, although many public service broadcasters have done so in other European countries. The way is now open for other PSBs to follow their lead when their contracts with Sky expire. Theoretically, viewers could buy a satellite box and a dish and receive dozens of programmes, including all the BBC's free-to-view channels, without paying a further subscription. That would be of particular benefit to viewers in areas not covered by Freeview, in which 25 per cent of the population live. To be able to do that, the BBC still has one requirement to make its programmes easily accessible to viewers. Sky's electronic programme guide, which is like a combined Radio Times and channel selector, needs to be modified so that viewers can select which national or regional version of BBC1 and BBC2 they want to appear when they press 101 or 102 on the guide.

The current EPG regulation, which is over five years old, requires "due prominence" to be given to public service broadcasting, but it says nothing about facilitating the choice of regional variations or about the price that can be charged for amending the software. Under Clause 71(2), Ofcom has a power to impose an obligation on the providers of EPGs to secure that the guides are provided on terms that are fair and reasonable, but this may be too general. I suggest that in Committee we might consider how the requirement could be tightened to deal with the particular circumstances in which Sky might be looking to recover some of the revenue it is losing through the non-renewal of its BBC contract.

Our next concern is with recognised spectrum access, or RSA. We understand the arguments in the consultation document and we note that Ireland and Portugal already have systems of spectrum charging. We are also aware that some 26 representations have been made to the DTI opposing the principle of the scheme, and that the Minister, Stephen Timms, has agreed to meet representatives of the UK and European satellite industry on 8th April. The additional costs of some £20,000 per channel will have to be passed on to users, and Professor Martin Cave, who originated the idea of RSA in Britain, acknowledges that the effect could be harmful to channels like Discovery Channel 27. The IEEE says that RSA should be introduced at the same time throughout Europe, to avoid putting our own satellite service operators at a competitive disadvantage.

The Select Committee in another place was scathing about RSA. It found little support for the Radio Authority's proposals, and said that charging for RSA was an attempt to extract payment from operators using spectrum for which licence payments could not be levied. Select Committee members agreed with a witness who said that this was like a protection racket. The Government's response rejected this categorically, but went on to make what sounded rather like a threat—Ofcom would allow users to encroach on the frequencies of any operator which declined to make the so-called voluntary payment.

If there is no RSA, which is concerned entirely with satellites and was intended to put the use of satellite and terrestrial on an even footing, where does that leave spectrum pricing and trading? Here the Select Committee recommended the allocation of frequencies by means of auctions, as in the past, but with conditions attached to prevent the hoarding of spectrum or to specify roll-out and usage obligations. It was not clear how pricing of the broadcast spectrum would allow for the intangible value of public service broadcasting, nor how the pricing of the radio astronomy spectrum could serve any useful purpose.

I have run out of time, but I wanted to say one thing about broadband. There is nothing specific about it in the Bill but it is important that your Lordships consider not only how to promote its roll-out but whether the regulatory framework is such as to encourage it. We must look to the future when the reception of programmes via television or via computer will be a matter of consumers' choice, and when video on demand is a normal, everyday matter. The regulatory framework must ensure that those matters are taken into consideration. The convergence that has been predicted for so many years is only a few years away. I hope that this can be taken into consideration.

4.50 p.m.

Lord Currie of Marylebone

My Lords, I add my voice to those of other noble Lords who have expressed their welcome for this Bill. I must at the outset declare an interest as the chairman of Ofcom. It is both a considerable privilege and responsibility to have that position. My interest in the Bill could not therefore be keener. The Bill sets out the duties that Parliament is to lay upon Ofcom, and the powers that Ofcom has to fulfil those duties. And it sets out a great deal more beside for which Ofcom must have regard. The final shape of the Bill when it becomes law will provide the framework for all that Ofcom does over the coming years.

It is therefore a source of considerable comfort to me that the Bill is in such good health as it comes before your Lordships' House. This contrasts with the Bills that established the FSA and Ofgem, the two previous examples in other sectors of the converged regulator that Ofcom will be in the communications space. Its health is a testimony to the effectiveness with which the two sponsoring departments—the DTI and the DCMS—have worked together. The Bill team has done an excellent job in stewarding the Bill and in working closely with existing regulators and with the nascent Ofcom organisation. I can personally attest to the effectiveness of that team led by Chris Woolard.

The two Secretaries of State have provided the leadership and vision for this excellent example of converged government. The Joint Scrutiny Committee played a key role in improving the Bill and was so ably chaired by the noble Lord, Lord Puttnam. And I look forward to observing the skill with which the ministerial team—the noble Baroness, Lady Blackstone, and the noble Lords, Lord McIntosh of Haringey and Lord Davies of Oldham—steer the Bill through your Lordships' House. I wish them safe passage.

This Bill comes in excellent health and I hope that it leaves in similar good health. I am conscious that many noble Lords have plans for the Bill: to remove a digit or a minor organ here and transplant an additional limb or organ there. At this stage of your Lordships' consideration of the Bill, I would merely enter a plea that it leaves your Lordships' House in at least as good health as it enters. In broad terms, the Bill incorporates the right balance of powers and regulation for Ofcom to do its job.

I hope that your Lordships will avoid the temptation to add many more specifics on one aspect of the Bill or another. Ofcom needs some freedom of manoeuvre to carry out its duties in the interests of all consumers and citizens, in a proportionate way that ensures that we have a thriving and dynamic communications sector.

It is tempting, to shift metaphor, to see Ofcom as a Christmas tree on which to hang one's favourite decoration. But let us ensure that those decorations enhance Ofcom and do not weigh its branches down. And let us not destroy the balance of Ofcom by lopping off some branches.

There will also be a temptation to wish to tie Ofcom down on a number of dimensions. I urge against this course for it will pre-empt the outcome of discussions that Ofcom needs to have on key and complex issues with all its stakeholders. There may be the fear that without legislative compulsion Ofcom will not behave sensibly. But l can assure your Lordships that Ofcom will consult, will reflect carefully and will be answerable for its considered, measured and evidence-based decisions.

Ofcom recognises that it is essential to find effective ways of interacting with the very real interests of the nations and regions, of consumers and citizens, of disability groups and of many other of its crucial stakeholders. Stakeholders can be assured that Ofcom will be listening to them.

Ofcom will also be developing effective ways of answering to Parliament for the exercise of the powers that Parliament has laid upon it. Recognising the very substantial powers and responsibilities that Parliament has given Ofcom, Ofcom will be to the fore in looking for effective and powerful mechanisms of consultation and accountability.

One of the principal arguments for Ofcom is that within a converged regulator, and only within a converged regulator, it is possible to ensure that both citizen and consumer interests are properly heard and balanced; that economic imperatives are balanced against broader cultural and social issues; and all within the context of a big picture overview of the modern communications sector. The Bill is carefully crafted in this regard. The content board will manage the high-profile content issues within a strategic context set by the main Ofcom board, so that the main board will not be diverted from its crucial role as a strategic competition authority for the communications sector.

Indeed, in an area of huge importance for the UK economy and business—namely, management and oversight of spectrum—the Bill specifically and correctly requires Ofcom to have regard to the interests of all users, ranging from the 3G mobile operators who paid more than £22 billion for their licences, through the broadcasters and the emergency services, down to the small taxi firms, the yacht radio owners and the amateur enthusiasts. The challenge, to which Ofcom will rise, will be to look after this breadth of interest while promoting market mechanisms to improve the efficiency of spectrum use and keep Britain among the world leaders in the effective use of this scarce and crucial medium.

There are many examples that I could adduce for the need for this convergent approach to regulation. But one good example is the programme supply market for television. This involves the business of broadcasting and programme formats, but it is equally concerned with creativity and innovation in content. The ITC's review of this market in the autumn has rightly drawn praise and has led to broadcasters and producers working together to produce codes of practice for commissioning. Ofcom is ready to ensure that this process, including what is laid down in the Bill, is carried forward seamlessly.

I look forward to the rest of this debate and your Lordships' consideration of this Bill in Committee and on Report. I will listen to as much of the debate as I can and will read those contributions that I cannot hear in person. I trust that noble Lords will understand if I do not intervene in some of the substantive debates that will occupy your Lordships' House. Ofcom's role is to discharge the responsibilities laid on it by Parliament, not to determine those responsibilities. It will generally, though not always, be unhelpful for me or other members of Ofcom to comment on the desirability or otherwise of the arrangements to be determined by Parliament.

This Bill and the creation of Ofcom provides a unique opportunity. We are creating a new regulator, with a new culture and a new approach to effecting regulation. We have a real opportunity to look afresh at the way we do regulation and to be world class in all that we do. We will look at regulatory process anew. We will put in place consultation processes which ensure that the voice of all key stakeholders is heard. We will establish a rigorous research base for all that Ofcom does. We will ensure that its people and processes are of the highest calibre to ensure that what Ofcom delivers matches the excellence of the sector that it oversees. We will foster a regulatory discourse that allows Ofcom to engage with consumers, citizens and the communications sector in a professional, constructive and, where necessary, robust manner.

A high-quality, converged regulator of this kind will not be the cheapest, though it will deliver value for money and be subject to scrutiny by the Public Accounts Committee and the National Audit Office. But most stakeholders to whom I speak tell me that it is worth footing the bill for high-quality regulation, because ineffective, poorly resourced regulation imposes a high commercial cost on regulated companies. This Bill allows us to create a world-class regulator for a world-class communications sector and we must seize that opportunity.

The process of creating the new, converged Ofcom is well under way and we are on track for Ofcom to be fully operational before the end of the year. And this leads me to the timing of the Bill. It is right and proper that your Lordships should subject this Bill to full and robust scrutiny. But Ofcom has been long in the making and this has meant a lot of uncertainty for many in the communications sector as well as for the staff of the five regulatory bodies that are merging into Ofcom. I hope that your Lordships' scrutiny of this Bill can be timely and does not extend this uncertainty yet further.

In parallel with your Lordships' consideration of this Bill there will be other lines of inquiry germane to Ofcom and its functions. The Constitution Committee is examining the question of the accountability of independent regulators to Parliament—an issue on which Ofcom places great importance. Ofcom looks forward to giving evidence on this matter to the Constitution Committee. This issue becomes all the more significant with the development of co- and self-regulation. The Bill enjoins Ofcom to promote effective co-regulation, and Ofcom will take this responsibility very seriously indeed. As part of this, we need to think through and address the additional issues of accountability that this raises.

Similarly, a Select Committee in another place is considering the issue of privacy in the broadcast and print media. I look forward to giving evidence to that committee. But I say to noble Lords now what I shall say to that committee about Ofcom and the press. First, if Ofcom is entrusted by Parliament—as the Bill proposes—with the advisory function to the Secretary of State on newspaper mergers, after due consultation Ofcom will put in place a transparent and clearly defined regime that is not unduly burdensome and which gives the industry maximum predictability. Secondly, I shall express my personal view that the Government are right to limit Ofcom's involvement with the press to that role. Some noble Lords may argue that the press needs a more effective self-regulatory or co-regulatory arrangement than that currently in place. But it would be unwise to extend Ofcom's content powers further to include the press.

The Bill provides us with the basis for modernising communications regulation and making it fit-for-purpose for the rapidly changing communications sector of the 21st century. With it, Ofcom will be able to regulate the sector in a proportionate way, intervening robustly where necessary and letting go of regulation wherever appropriate. It will allow this vital sector to develop in a dynamic and creative way to the benefit of consumers and citizens.

5.1 p.m.

Lord Alton of Liverpool

My Lords, the convergence of the media and telecommunications industries clearly demanded an end to the split of responsibilities between five regulators. I therefore support one of the principal objectives of the Bill—the creation of Ofcom—the question to which my noble friend Lord Currie of Marylebone returned us. Everyone in the House will wish him well in the onerous duties that lie ahead of him as he chairs Ofcom.

If this one-stop regulator is to be able to withstand huge vested interests and not be swamped by them, it could indeed become the guardian of consumers' interests and a watchdog with real teeth. However, before setting the seal to the Bill, we would do well to consider carefully the two fatal flaws identified by the noble Lord, Lord Puttnam. He rightly homed in on how best to deepen further the quality of programming.

Within the public service and private sector Ofcom will need to be the guardian of the public's access to a wide spectrum of good quality programmes. In Committee we shall no doubt debate the efficacy of the BBC's Board of Governors and the desirability or otherwise of additional accountability to the National Audit Office. There is a good argument for revisiting those two questions in the context of the renewal of the BBC Charter in 2006 once we have evaluated the impact of Ofcom. I also wonder whether the noble Lord, Lord McIntosh, will tell us when he replies to the debate what more the Government might do to provide the right of appeal against contested decisions of Ofcom.

Ofcom will not only need to weigh the conflicting and competing demands of broadcasters, it will also have to be far more engaged in issues of quality and accountability. Last year I hosted a lecture by Greg Dyke at Liverpool John Moores University where I hold a chair. I declare that interest. Echoing something of what Sir John Reith said in 1931 when he dedicated the BBC to the service of the nation, Greg Dyke said: The role of the BBC is to inform, educate and entertain. The first two are quintessential values of citizenship. I would also argue that the third is also citizenship. It is about the quality of our lives. Robust democracy depends upon a healthy sense of citizenship. Broadcasting plays an essential role and provides an analytical tool for making informed decisions". In 1931, when Sir John Reith and the other governors of the BBC dedicated Broadcasting House to the service of the country, he said—these words are on the wall of Broadcasting House as one enters its foyer— It is their prayer that good seed sown may bring forth a good harvest and that the people, inclining their ear to whatsoever things are beautiful and honest and of good report, may tread the path of wisdom and righteousness". Those are timeless values which we need to continue in both public and private broadcasting.

Like it or not, the media have become one of the most potent forces in our personal lives and one of the most powerful influences on our communities and their values. That can, of course, have a corrosive as well as a benign effect. Bruce Gyngell, as managing director of Tyne Tees Television, understood that well when he said: What we are doing to our sensibilities and moral values and, more important, those of our children, when, day after day, we broadcast an unremitting diet of violence … television is in danger of becoming a mire of salaciousness and violence". In saying that he sounded the same kind of warning that we heard from the right reverend Prelate the Bishop of Manchester earlier.

Undoubtedly, Ofcom and its consumer panel will need to do far more to curb the exponential increase in gratuitously violent material which is broadcast on television. One of the central recommendations of the Joint Scrutiny Committee of the noble Lord, Lord Puttnam, was that Ofcom's primary duty should be, to serve the interests of all citizens". It is a pity that those who drafted the Bill chose the language of consumerism rather than duties towards citizens and the community. Here I endorse much that was said by the noble Lord, Lord McNally, who rightly said that we should not rely so much on market forces. Clearly, an individual consumer may desire, for instance, to see an unremitting diet of violence, but is that in the community's interests?

Only last week the Broadcasting Standards Commission and the ITC published a report indicating that more than half of the public believe that there is too much violence on TV, and that the level is increasing. That report coincided with a study published on 9th March by Professor Jeffrey Johnson of Colombia University, and the New York State Psychiatric Institute. It concluded that children exposed to violent programmes are at greater risk of becoming aggressive young adults. He said: Media violence contributes to a more violent society". One year ago the US Surgeon-General concluded that, televised violence, indeed, does have an adverse effect on certain members of our society". As television, the flickering box in the corner, has replaced the flickering fire around which families once sat and conversed, the line between fantasy and fact, reality and unreality, truth and lies is often blurred. An average adult in Britain spends at least 27 hours a week in front of the television. The television hierarchy insist that there is no correlation between what people watch—unreality—and how they subsequently behave—reality. Yet the advertising industry spends a colossal £4 billion a year trying to sell us its wares via television. Clearly, it believes that what one watches affects how one behaves; otherwise, that phenomenal outlay would be a monstrous waste of money. Professor Elizabeth Newsome, and nearly 30 of the UK's leading child psychologists, psychiatrists and paediatricians said that they had been "naive" in underestimating the link between what children see and how they behave.

Ten years ago I was successful in another place in securing amendments to the Criminal Justice Act that curbed video violence. At the time in a letter to me, the noble Lord, Lord Puttnam, got to the heart of the matter when he asked: What proof are we looking for? Does the railway company wait for someone to be killed by a train before fencing off the railway line? I was sorry that a further amendment that I promoted, which sought to allow viewers to purchase TV sets with a "V" chip (V for violence)—a chip that automatically screened out violent images—was narrowly defeated. I hope that Ofcom will return to that issue and carefully assess programme output and issues such as the watershed.

However, violence should not be Ofcom's only concern. It will also need to be proactive on issues such as taste and tolerance. I give the House one example. Channel 4's recent programme, "Beijing Swings", which included an adult eating part of a dead unborn child, should have led to significant penalties against the programme makers. I invited the chairman of Channel 4, Vanni Treves, to come to your Lordships' House to screen the programme and to take part in a discussion with your Lordships about the motives in screening that barbarism and the extraordinary justification of the programme as art. In a letter declining that invitation, Mr Treves stated: More generally, however, these works are not only of interest in themselves but represent significant works in the Chinese avant-garde art movement. 'Eating People' by Zhu Yu was staged and photographed in Beijing at his 'Open Studio' and was exhibited in the Shanghai Biennale later the same year. It was also featured in a show curated by the artist Ai Wei Wei and widely seen as the most important show of contemporary art ever staged in mainland China … The finished programme was referred to the Director of Television who viewed it before transmission. It was his view that though deeply shocking and disturbing it exemplified the dark message of the Season as a whole". It seems to me that that plumbed new depths.

In addition to the high hopes that many of us have for Ofcom in dealing with these questions of taste, tolerance and violence, the Bill also encourages a more competitive broadcasting environment. I have no intrinsic objection to that. A more coherent and efficient ITV should not be feared and with appropriate safeguards would continue to provide strong regional programmes. ITV's ability to own ITN outright would also enhance its news coverage and should not be feared either.

Paradoxically, as the right reverend Prelate pointed out, Clause 337's impediment on religious broadcasters runs counter to that spirit. It also runs counter to European convention rights and international experience. It will mean that Ofcom will be undermined if there is one law for the Medes who declare themselves openly to be religious, and another for the Persians who omit to declare themselves as religious. In that regard, I very much support what the noble Baroness, Lady Buscombe, said earlier. If it comes to a Division, I will most certainly support her on that question.

Ofcom will have the power to grant, refuse or revoke licences, to impose fines, and to implement broadcasting codes including criteria on fit and proper persons to engage in ownership or broadcasting. That is exactly how things should be. Ofcom will be in a position to evaluate which people should hold licences. Parliament's job should surely be to insist on common standards of diversity, tolerance, quality and decency. In so far as the Bill sets out to achieve those objectives, I will support it. Where it does not, I hope that it will be challenged and amended in Committee.

5.11 p.m.

Lord Crickhowell

My Lords, those of us who served on the Joint Committee feel that we have been sentenced to a second spell of hard labour as we grapple with this enormous Bill. I am grateful at least for the fact that it is a much better Bill than that considered by the Joint Committee, and that the Government responded positively to many of the suggestions that we made. However, once again the time for scrutiny in another place has been inadequate, so there will be a major job for us to do in this House. Among the most important amendments to which I intend to put my name are those dealing with the duties of Ofcom, the charging by it and the funding of its regulatory powers—the noble Lord, Lord Puttnam, pointed out that that was amazingly not discussed at all in another place—media plurality and public interest considerations, foreign ownership, regional broadcasting and the BBC. Noble Lords may have noticed that my list is largely concerned with media and broadcasting issues. That is not to suggest that the part of the Bill concerned with electronic communication is less important. On the contrary, it deals with crucial nerve centres of our national economy. To give credit where credit is due, my apparent neglect of that part of the Bill may well be due to the fact that the Government engaged in a thorough process of consultation and succeeded in producing a much broader consensus than might have been thought possible at the outset.

I very much welcome the fact that the Government have responded to the criticism of the original Clause 3 that set out Ofcom's duties. In particular, I welcome the fact that there is now the duty to further the interests of the community as a whole and not only of consumers, that Ofcom must have regard to the desirability of encouraging investment and innovation and of the principle that its activities should be, transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed". Much better that than the original catch-phrase of "light touch" regulation.

Despite those and other improvements, the House will want to consider whether the Government were right to reject the Joint Committee's proposal that there should be a principal duty, achieved whenever possible by promoting effective competition. The annual report that Ofcom will be obliged to produce about how it reconciles tensions between its duties in important cases will certainly make interesting reading.

I turn to the part of the Bill that covers the media and broadcasting. I agree that we will need to discuss the restrictive rules that apply to the nominated news provider. In its report, the Joint Committee stated that, given the current uncertainty surrounding the ownership structure of ITV and its commitment to investment in news, we have concluded that the Government is right to include a nominated news provider clause in the Bill". However, we also said that we were not convinced that that was a safeguard for the quality and impartiality of news, that could not be provided by licensing and networking arrangements". We urged early review.

I suspect that, apart from ownership issues, the Government's attitude was influenced by irritation over the change made to the timing of the main evening news and doubts about the TV companies' commitment. Time has moved on. I do not think that that commitment can now be in doubt. The fragmented ownership of ITN, with some of the smaller investors reluctant investors, undermines ITN's ability to be a strong alternative force to the BBC and Sky. The ITC's recent commentary on that is unconvincing. It is also misleading when it implies that existing contracts with other channels would be at risk if the restriction were lifted.

The Bill seeks to guarantee access for public sector broadcasters to cable and digital terrestrial homes. ITV argues that the Bill does not include sufficient safeguards to ensure access to satellite platforms in terms that protect the public interest. The Bill relies on the community rules designed to require access on. fair, reasonable and non-discriminatory terms". The accusation is that those rules give platform operators too much scope to include unrelated costs and almost unlimited flexibility to raise conditional access charges. Of course. Sky argues exactly the opposite case. It is an issue that we must explore because access to the satellites on reasonable terms is absolutely vital if a digital service is to be provided over a very large part of Britain.

One amendment to which I will put my name concerns the relaxation of the cross-media ownership rules as they apply to Channel 5, and which have been mentioned by a number of speakers so far. The Joint Committee concluded, that the case for lifting the prohibition on joint ownership of Channel 5 and a major national newspaper group has yet to be made". The Government have rejected that advice, basically on the grounds that Channel 5 is very small compared with Channel 3. My belief is that the counter-arguments about concentration of power in particular advanced by ITV, and in the debate today extremely powerfully by the noble Lords, Lord Puttnam and Lord McNally, are very strong indeed. If we proceed on the present basis, there could be serious consequences for Channel 4, ITV and even the BBC.

Clearly that is something that we shall have to consider very carefully. We shall also have to look at another ITV concern about the current definition of an "independent production", which excludes programmes made by local ITV licence holders for other channels. That is an important issue for my old company, HTV, and others that want to see strong production units right round the United Kingdom.

On the BBC, the House will want to ask how we can have an effective regime supervising public sector broadcasting if the largest broadcaster, funded by £2.5 billion of public money, is left outside crucial areas of that supervision. Essentially, the Government's position is that everything must await charter renewal at the end of 2006. The case was strongly pressed in another place that even if it were right to wait until charter renewal to make changes, scope should be taken in the Bill to obtain by regulation any consequential statutory authority rather than wait for the opportunity provided by some future broadcasting Bill. We shall need to press the case that a great deal of future-proofing is required for the BBC.

Of course I acknowledge that UK and European competition law applies to the BBC. It is true that the BBC will come under Ofcom on tier I regulation for taste and decency and on tier 2 regulation for regional and independent production, and that Ofcom will be able to fine the BBC for breaches. It is also true that the BBC has its own fair trading commitment, the aim of which is to see that it complies with competition law. The difficulty is that, confronted by complaints, the governors are the rulers of the BBC and they cannot, at the same time, be independent adjudicators.

Even greater difficulties are likely to arise because Ofcom has the job of reviewing, on a regular basis, the overall public sector broadcasting obligations of the BBC and other broadcasters. Ofcom will be able to enforce the conclusions that it reaches in relation to every other public sector broadcaster but not the BBC, whose governors may take a wholly different view of their obligations. Mr Gavyn Davies, in a speech on 18th March, said that there may be occasions when Ofcom may helpfully jog the elbows of the governors. The truth is that those whose elbows are jogged very often do not think it at all helpful.

Mr Davies also quite substantially misrepresented the Joint Committee about what he called, the delicate relationship between Ofcom and the BBC which has emerged", and which he said was a compromise, 'supported by Lord Puttnam's scrutiny committee". Anyone who reads our report—I re-read the section myself this morning—will see that on this issue we took a very non-committal stance indeed.

I now turn to a final topic where I fear I part company with my own Front Bench. We are confronted with the remarkable fact that the subject of ownership by non-EU companies was not discussed at all in another place. It was set to be debated in Committee, but the Liberal Democrat Members did not arrive in time to move their amendments. During the Report stage, the amendments were not reached. The Secretary of State for Trade and Industry commented at Third Reading; I have no doubt … that it will be debated … in another place".—[Official Report, Commons, 4/3/03; col. 776.] Indeed, it will be.

We are told that we need investment and overseas management skills. I do not need lessons about the importance of inward investment for many industries and for the economy. I spent a very large part of my eight years in Cabinet rather successfully working to encourage it. Within the scope of this Bill, it has made a vital contribution to the development of cable networks. But it is far less obvious that there is an urgent need for it in the case of the ITV companies. The Government have strengthened the licence regime and content obligations designed to protect regional production and the fulfilment of licence obligations. I am absolutely satisfied that, with those safeguards, further consolidation of UK ownership is not only acceptable but desirable.

However, when we reach the Committee stage, I shall set out my reasons for thinking that those safeguards may be much less effective if our regional licence-holders are controlled by the major US players, who have an overriding priority to produce homogeneous output that can be sold in a wide variety of forms in every market in the world. Perhaps current conditions and the financial state of those companies will provide the protection that I seek during the period when Ofcom's eye may not be on the ball because of the immensity of the job that it will have to do during the first years of its existence. None The less, like the noble Lord, Lord. McNally, I see no reason why we should rush recklessly down this road, and without reciprocity, when the alternative is to allow Ofcom time to review the position and to establish itself as an effective regulator.

Having said that, perhaps I may make it clear that, on the whole, this is a good Bill with the right objectives. I believe that the Government have chosen well in selecting the noble Lord, Lord Currie, to lead Ofcom. I wish him well.

5.24 p.m.

Lord Addington

My Lords, my contribution to the Bill will be rather narrower than many of those that have gone before me. I want to concentrate primarily on the legislative scope provided by the Bill to cash in on the opportunities that are expanding for those with disabilities to access the global network of the communications revolution, which we hear so much about and which is growing around us.

I hope that my noble friend Lord McNally will not mind my quoting, or misquoting, a conversation that he had with some of us earlier. He described us as breaking down into two groups: the "fluffies" and the "techies". The techies were those with an interest in wavelengths and so on; and the fluffies were those who would worry about contact. This is an occasion where the techies have allowed the fluffies in.

All the opportunities that I have seen for expanding access for the disabled have come about because the technical revolution has reached a point where such access can be made in various formats. Effectively, the technicians have given the broadcasters a problem, but something can now be done. We have established in law over many, many years that the disabled should not be excluded merely on the ground that they are disabled. I do not suggest that we take an overwhelming step forwards, but appropriate action should be taken to allow people in. For a shopkeeper, that involves installing a ramp and being prepared to carry out a box to someone in a wheelchair or being prepared to talk slowly and clearly to someone who has a hearing problem.

For broadcasters, who are dealing with a very technical subject, the answers themselves are more technical. The Bill does take steps forward and, indeed, measures have been taken in areas such as sub-titling and audio description. Indeed, in Clause 3, although I cannot remember the exact words, the Bill states that there will be regard to the disabled.

I shall now go into Oliver Twist mode: we wanted more. We wanted stronger commitments in the Bill that the disabled would be consulted more thoroughly. I could list the areas where I believe that that should happen, but I suspect that we shall spend many hours in Committee going over that issue. I simply give notice that we are considering the matter. We need to become involved in the Bill to ensure that Ofcom knows what is going on and expands its services for the simple reason that it has the capacity so to do. It must persuade people to listen to it on this occasion. If we work only on existing technology, we shall be able to expand on what we are already doing.

There are also certain areas where circles need to be squared. Audio description is one of the oddest things that I have ever come across. The technical ability is there to deliver a service which means that those who have no, bad or even slightly impaired eyesight can gain a good experience from television and need not be excluded. But the problem is that we do not produce the necessary box for terrestrial broadcasting, although Sky can provide the service. I hope that my noble friend will forgive me for saying something nice about Sky.

The fact is that one broadcaster—the one you pay for—can provide the service, but the one to which you contribute through a licence fee does not allow you in. It is not the fault of the broadcasters—they are producing audio description titles. The problem is that only about 45 people in the country can access the service because the boxes are not being produced. I do not know whether it is technically possible to do so within the Bill, but I say to the Government that they should do something to get those boxes produced. I am referring to an item that costs less than £200, although I forget the exact figure.

It would be a major step forward if we could get those boxes on to television sets. It will not be easy because unfortunately, by definition, the disabled are more likely to have lower incomes or, indeed, to be unemployed than those who are able-bodied. That is simply the way that things stand at present. But surely we can call upon the Government to act through the agencies and then perhaps the BBC, for example, can become involved in some way. It has considerable commercial experience. Surely it, or another broadcaster, can become involved in ensuring that such items are produced. It would mean that the hours of broadcasting that are prepared would be available to those with sight difficulties.

Following on from that is the run-in time for subtitling. When one sets a long run-in time of say 10 years it becomes a long-term project. Then it becomes an intermediate-term project and then it becomes a short-term panic. Often the longer-term projects tend to get put off because they are someone else's problem, or not enough is done. That has happened in many other services relating to disability legislation.

Surely, we could bring these issues together. We now have the technical ability. It would concentrate the mind. The halving of a 10-year run-in period would surely not overly extend any of the huge bodies involved. As regards the granting of exemptions for subtitling or audio description, I would hope that smaller broadcasters are treated fairly roughly, especially if they happen to be a small broadcaster in a bigger chain or if they happen to produce, for instance, a cheap programme that is repeated about 20 times on certain channels, which I have seen by scanning through the broadcasting schedules of many TV guides. Can we make sure that there is no great flood to grant exemptions because it might be inconvenient and only do so when it would stop the programme?

In order to obtain the full benefit of this service, surely we should provide—at least as vigorously as we do in other commercial services—for the fact that you must have an incredibly good reason not to do so, and not merely because it is slightly more inconvenient. That is the standard that we apply in other parts of life.

5.31 p.m.

Baroness Howe of Idlicote

My Lords, as no. 13 out of 49 speakers, I am clearly one of a great many who are glad that the time has at last arrived for your Lordships to bring your considerable expertise and experience of the communications industry to bear upon this important Bill. You have heard some brilliant examples of that expertise already.

As some of your Lordships know, I would have preferred two separate commissions —one that was responsible for the economic and telecommunications side of the industry and the other responsible for public service broadcasting standards and content issues. But, there comes a point when it becomes fruitless to pursue an issue that falls upon continually deaf ears.

As a step in the right direction, however, I congratulate the Government on their decision specifically to include a content board in the legislation, and, indeed, the pre-legislative scrutiny committee on its role, both in persuading the Government to accept that point and in securing the adoption of so many other improvements to the Bill.

However, I remain sure that the establishment of a content board will not stop internal arguments as to which aspect of the commission's work should take precedence or secure the lion's share of resources. That kind of concern is certainly not imaginary; it has already surfaced in another place. Of course the old Radio Authority knows that only too well from its own experience as part of the Independent Television Authority, before it was liberated—with its own budget and priorities—in the 1990s. Now, of course, it is due to be swallowed up all over again.

Neither does the establishment of a content board really meet my other major concern. Will complainants alleging unfair portrayal or unwarranted infringement of privacy, accept as unbiased the judgments of a regulator who also licenses the broadcasters and sets the terms under which those licensees operate? Will those decisions be seen as "transparently independent" from the point of view of human rights legislation, as were those of the BSC, for example? Sadly, but honestly, I very much doubt it.

No doubt the content board will try to be as open as possible in its dealings with the public. So I hope it might think of referring complaints on taste and decency and fairness and privacy which reach its level for decision by an outside, and more visibly independent, panel. If, as I suspect—and wrongly I think—it decides against that and keeps this responsibility "in house", then surely it should be content board members themselves and not staff who decide the majority of complaints. It should, in other words, continue with the current practice of the BSC, rather than follow the unconvincing ITC's example, where decisions on many complaints were made by staff members. Charges of "agency capture" are far less likely to be made, and less likely to be justified if it follows the BSC's precedent. Having said all that, I am not sure whether it is a good or a bad thing that I have the noble Lord, Lord Currie, sitting directly in front of me.

I now want to turn to one or two specific issues. First I deal with diversity. Equal opportunities for women has been a constant theme with me over the years. The racial aspect of diversity—of equal opportunities—is at least as important as that for women and for the geographical and ability/disability diversity, which are specifically written into the Bill as Ofcom's duties, particularly when one remembers the ever increasing range of nationalities and religions that today make up the UK population. I hope the Minister will address that point.

Next, continuing the religious theme, there are the restrictions on licence ownership for those with religious backgrounds. The Government are to be congratulated on removing certain of those restrictions in the draft Bill. But, inexplicably, some remain. I join with the noble Baroness, Lady Buscombe, and with the right reverend Prelate the Bishop of Manchester—who put the case so compellingly—in calling unreservedly for all such restrictions to be removed. The conditions on which such licences are granted and the regulations which have to be complied with are quite sufficient to deal with any possible breaches that might occur.

I turn to the BBC, which is clearly still controversial. It is right that it should be subject to, and fined for, any breaches of tiers 1 and 2 of Ofcom's regulatory system, should that become appropriate. It should also be required to publish an annual statement of programme policy, and be judged against that by Ofcom and be subject to competition law. And, of course, we should all continue to expect, and press for, the very highest standards of public service broadcasting from all its programmes.

However, I remain unconvinced that the BBC should be regulated in exactly the same way as commercial TV and radio, from which we expect considerably less public service broadcasting. I am also unconvinced that there is a need for it to come within the remit of the National Audit Office. None of us should forget, however critical we may be of some aspects of current BBC policy or programming, that the BBC, with its proud history, is still—much more often than not— the bench-mark. It is the bench-mark against which others, and especially terrestrial channels, can match themselves, and, on occasions, surpass the BBC with the quality and originality of their own public service broadcast programmes.

Next I deal with taste and decency. I am glad, of course, that the structures of Ofcom are being designed with far more emphasis on light touch/self regulation. But equally, I have no doubt that what we see does influence our behaviour to some extent, often of course for the better, but not always. That is why issues of bad language, sexual behaviour and, above all, the portrayal of violence on the screen will continue to cause considerable citizen anxiety. One has only to look at the recent ITC/BSC research, The Public's View, which was published in 2002, to realise that concern about taste and decency issues—55 per cent felt that they had got worse—will not disappear with the establishment of Ofcom, or even with the establishment of the content board. Concern remains high about children's programmes and the viewing to which they are subject. So, though we must of course beware of over-nannying, it remains vital for society to retain some effective balancing influence on unbridled consumer demand.

However, if judgments are to be balanced, they need to be well-informed. So it is quite right that Ofcom should be given the duty to commission and publish research. That duty must surely be delegated to the content board.

Will the Minister assure the House that Ofcom, alongside its commitment to more detailed and in-depth research, will continue to research and monitor changes in citizens' attitudes about what is broadcast—not just from time to time, as the Bill provides, but year on year? It will surely be more important in future to have that information regularly available if Ofcom is to know whether the degree of self-regulation permitted is working satisfactorily for the community interest.

Lastly, I share the concern about Channel 5 and cross-media ownership. That has clearly fuelled ongoing unease about whether the press media should be subject to some form of statutory—as opposed to voluntary, Press Complaints Commission—regulation. I am sure that views will remain divided on the issue, not least because of the historic importance of freedom of speech, which of course remains. However, perhaps there is a need for some kind of half-way house—some more public accountability. That is why I am especially glad that both your Lordships' House and the pre-legislative scrutiny committee have accepted the proposition that a House of Lords communications Select Committee, which will include the print media, should be established once the Bill is enacted.

As the noble Lord, Lord McNally, said, this is a vast Bill. I am sure that as a result of that, and of what we have heard today, we can all look forward to many hours of stimulating debate.

5.41 p.m.

Lord Alli

My Lords, I probably fall into the category of a "fluffy". However, I must first declare the following interests. I am a director of a number of independent television production companies, including Shine Limited and Castaway Television; I was a senior executive of Carlton Television; and I have some, although not significant, holdings in a number of media and radio companies. I refer your Lordships to my entry in the register of interests.

Lord McNally

Oh, you are a fluffy!

Lord Alli

But I am a fluffy.

We have some of the finest television in the world. If it is not the envy of the world, it should be, and we should be proud of what we produce. Why do we have such a great creative heritage? Is it because our airwaves are different from those of our competitors? Is it because the equipment on which we receive our television pictures or radio broadcasts are different from those of our competitors? Or is it because the owners of our media are nice and more philanthropic than our competitors? I would say, probably not.

The reason is our strong tradition of public service broadcasting. We have not just the BBC and Channel 4 but, through our regulatory system, our commercial broadcasters have a set of public service obligations. The Bill must safeguard those public service obligations and, in some cases, probably strengthen them.

I welcome the Bill. It seems to have struck the right balance between regulation and protection of our media industry. I shall concentrate on three areas: First, content and content regulation; secondly, public service broadcasting; and, thirdly, the structure of regulation.

Content occupies much of my working life. I am a television producer and, when not in your Lordships' House, spend my energies thinking about how to entertain and make people think, producing programmes that I believe will stimulate the British public, as well as people abroad.

Like my noble friends Lord Puttnam and Lord Bragg, I take ideas—concepts. We add words to pictures and, at the end of it, we produce a bit of magic. So great is that magic that the Bill must regulate the people who publish, broadcast and seek to own it.

I want to talk about the independent production market. It provides some of the best, most popular and challenging television programmes world-wide. The independent production market was established with the advent of Channel 4 and it has developed by the application of a quota system.

It is clear that one of the points of contention about the Bill is that of the proposed changes to the media ownership rules. If we are to accept ever greater vertical integration and investment from overseas—that is a big if—the responsibility to protect and strengthen the UK's creative sector becomes ever more important. The real danger is that the UK production industry becomes dominated by vertically integrated, risk-adverse broadcasting organisations. This is why the quota system becomes ever more important and, in my view, needs further strengthening.

It is with that in mind that the ITC's recently published programme supply review was so welcome. I shall not bore your Lordships by repeating its recommendations, but I hope that my right honourable friend the Secretary of State will keep her beady eye on the broadcasters as we develop the codes of practice that it recommends.

I also give notice to my noble friend Lady Blackstone that I intend to press to change the quota from being based on hours to being based on value and volume. I also intend to ask her to include BBC Radio, which is currently excluded from the quota system. I hope that she will sympathetically consider those changes.

While we are dealing with quotas, I have just one complaint. Here is my bauble for the Christmas tree. It is totally unacceptable for the BBC not to meet its quota obligation for the second year in a row. I hope that Ofcom will look long and hard at how the quota system is operated by the BBC.

Enough of quotas, and back to ideas. As producers, we trade in ideas. Ideas are the life blood of the creative industry. There has been an alarming rise in the number of ideas from independent producers and others that find their way onto the screen because an enterprising broadcaster feels that it does not need to reward the originator. That is the biggest threat to the creative industry.

It was a situation not dissimilar to that which led to the establishment of patent laws in the 18th and 19th centuries. Energetic engineers were spending large amounts of time and money overcoming problems and coming up with solutions to problems, only to find that their ideas were being easily copied and sold by companies who did not have to spend a penny on development.

For a short while, that benefited the big guys. But our wiser ancestors realised that it was not in anyone's interest—people would just stop inventing. So they came up with the idea of registering people's ideas.

It is time for us to consider a system for registering TV ideas. I wonder whether the Minister would consider working with Ofcom to develop such a register of ideas, which would at least provide the basis of protection.

I am a great advocate of public service broadcasting, and I have one warning for noble Lords when considering the Bill. It is easy to denigrate the BBC and Channel 4. Only a few years ago, the cry from the commercial sector was that the BBC was failing and that we should redistribute its licence fee. How things have changed. Much is due to the foundations laid by my noble friend Lord Birt, the inspired leadership of Greg Dyke and the commitment to public service broadcasting of Gavyn Davies.

Now the cry is that the BBC is too successful and should be further regulated. Let us recognise that cry for what it is: commercial self interest. I do not believe that it is healthy in a democracy for there to be a single content regulator, and I ask your Lordships to resist the temptation to put the BBC under the National Audit Office or further extend its accountability to Ofcom—for the time being.

The BBC, like Channel 4, is there, as has been said by countless speakers, to inform, educate and entertain. Greg Dyke recently tried to develop those values and came up with six values that he believed should guide the work of the BBC. I think that they are as applicable to the Bill as to the BBC.

First and foremost, he said that trust is the foundation of everything that we do, that we should safeguard independence, impartiality and honesty; secondly, that the audience should be at the heart of everything we do; thirdly, that we should take pride in delivering quality and value for money; fourthly, that we recognise that creativity must be at the centre—the life-line—of the organisation that we try to build; fifthly, that we respect and celebrate our diversity; and, lastly, that great things happen when we work together.

If we can work together on the Bill, I think that we can safeguard those values. That is a task of which we could all he proud.

That brings me, finally, to Ofcom. It has a heavy responsibility to safeguard those values. I have worked with regulators in the past—primarily the ITC but also the Radio Authority, the BSC and many others. It is a tough job and the temptation to give in to commercial pressures is great. Witness the consolidation of ITV or the "News at Ten" fiasco.

We must make sure that the noble Lord, Lord Currie—he is no longer my noble friend—and Stephen Carter, the new chief executive of Ofcom are given the best opportunity to make Ofcom work. But they must he resourced properly. The idea that putting together a number of regulators under a single office should yield synergy savings is misguided. Arbitrary talk of a 25 per cent reduction in costs is dangerous. Cheap regulation is just that. It will be pliable, easy to manipulate and, in the end, a busted flush.

I urge the Minister and her colleagues in the DCMS to ensure that Ofcom is properly resourced, for it has a monumental task. This Bill has been a long time in the making. I wish it safe passage and look forward to dealing with more of the detail in Committee.

5.50 p.m.

Baroness Gould of Potternewton

My Lords, like the noble Lord. Lord Addington, I shall comment more narrowly than many others. I wish to concentrate on clauses that have not yet been mentioned—Clauses 117 to 121. They are a small but important part of the Bill. The regulation of premium rate services is of crucial importance to consumers who suffer considerable distress when those services are misused. I declare an interest as a member of the Independent Committee for the Standards of Supervision for Telephone Information Services (ICSTIS). For the past 17 years, it has been the regulatory body responsible for premium rate services (PRS).

By way of background, PRS services are used by an increasingly cosmopolitan group of service providers. Services include voting on TV shows, competitions, chat and adult services, horoscope lines, Visa, government agency services, sport, weather and directory enquiries. PRS was the mechanism used for allocating tickets for the Golden Jubilee concerts at Buckingham Palace last year. PRS is also used for pay-to-play charges for game channels on digital television. Services can be accessed on land lines, mobile phones, interactive digital television and the Internet. At present, calls cost from 10p per call to £1.50 per minute. The money paid for calls is shared by the telephone companies carrying the service and the organisation providing the content.

ICSTIS is the largest co-regulatory body dealing with converged services in the communications field, It is funded by a levy on the industry and currently receives back-stop support from Oftel through telecom licences. Those licences place certain obligations on telephone companies when making available premium rate services.

ICSTIS regulates the content and promotion of services through its code of practice, which allows it to investigate complaints, to fine companies and to bar access to services. In 2002, ICSTIS dealt with 150,000 enquiries and investigated more than 10,000 complaints dealing with 99 per cent plus of all PRS complaints. As a result, it closed down around 100 services and levied fines totalling around £1 million. However, that should be set against a background of an industry that has tripled in value in three years to be worth nearly £1 billion. The UK PRS market is the largest in the world. It is now significant in its own right in the communications sector. Regulatory failure would be commercially significant.

I make those points, first, because there is a lack of knowledge about what PRS is, but, perhaps more importantly, to illustrate how crucial it is that the Bill continues to allow absolute protection for consumers using premium rate services.

The creation of Ofcom has implications for the regulation of premium rate services. Although not part of Ofcom, ICSTIS will need to establish new relationships to replace existing ones with Oftel and the other bodies merging to form Ofcom. It is crucial that the arrangements underpinning the effectiveness of ICSTIS's regulatory regime are recreated in the Bill. It is particularly important, because the means by which ICSTIS currently receives support from Oftel—through telephone licences—are being swept away under the Bill.

The Bill will affect ICSTIS in several ways, as defined in Clauses 117 to 121. Ofcom will assume statutory back-stop powers in case a network fails to fulfil its obligations to ICSTIS under the Bill. The Bill will also affect ICSTIS's funding and the definition of the stakeholders—networks and service providers— that it regulates. To ensure continuity of regulation, ICSTIS has worked with mobile phone companies in tabling amendments that received cross-party support in another place. It was encouraging to see that the Government took those amendments on board at Report stage.

So far, the amendments have ensured that the Bill maintains ICSTIS's holistic approach to effective regulation in so far as it deals with premium rate promotions, the marketing of services and the content of services. They have also ensured that the legislation maintains the important role in effective regulation played by the telephone companies when it is necessary to terminate access to services and to withhold revenues. However, the Bill requires further changes to ensure that their effectiveness is not undermined.

By parliamentary convention, the Bill is limited to activities undertaken in the UK by providers of premium rate services. However, many of the problems that ICSTIS deals with emanate from the global market-place. All too often, they involve services providing such material as child pornography, which must be dealt with speedily. Recently, ICSTIS had to stop the operation of Internet services in Spain and Germany using deeply offensive marketing and "corrupt" dialer technology designed, without doubt, to trap people into incurring bills of several hundred pounds. If the Bill and the supporting code of practice cannot address that, there is a serious threat that many providers of such services will simply, and at little cost, relocate outside the jurisdiction, thus creating grave consumer harm in a way that will be unregulated. That would damage the reputation of companies that provide useful services to the public.

The Bill is also designed to ensure that all companies in the value chain providing premium rate services are clear that ICSTIS regulates "service providers"—companies that contract with telephone companies for their numbers. But the system does not allow for regulatory evasion through the creation of intermediary bodies. All companies contracting telephone numbers from networks must remain under ICSTIS's authority if it is to continue to be effective. If the draft provisions appear not to achieve that, I hope that the Government will be ready to make any further necessary amendments.

A key focus of ICSTIS's work in 2003 will be increasing media literacy among consumers and those working with them. That means informing and empowering consumers so that they are better able to understand how premium rate services work on a variety of platforms and a range of devices—the Internet, digital interactive TV and mobile messaging services. ICSTIS wants consumers to know what to look for when deciding whether to use a premium rate service. It also wants them to know how to protect themselves and their families from unwarranted contact or harmful content by using call-barring or filtering devices.

An informed, confident consumer is the key to preventing consumer harm and increasing confidence in PRS as a billing mechanism. When the pace of technological development outstrips consumer knowledge there is potential for consumer harm.

There must be concern over unauthorised use, serious, wilful consumer deception and the inappropriateness of some services, particularly sexual entertainment.

Child protection from consumer harm, inappropriate content and contact with strangers, especially through the Internet, is of particular concern. It is not easy to wrestle with the difficulties raised by the Internet dimension, but they must be faced. We must foresee a time when the analogue signal is turned off and practically every house in the country has a digital TV with Internet access. Such sets will soon find their way into children's bedrooms.

Because the future can be seen so clearly, we should also put the industry on notice that it should produce a code of practice, as with video on demand, to show how it intends to grapple with the child safety agenda raised by the ease of Internet access. I appreciate that the content board will have the responsibility of considering that area, as will the Home Office Internet task force on child protection. Child protection would benefit, if the sentiment were included in the Bill, and there may be amendments to that effect. We cannot let such an important matter slip out of sight.

It is important to the consumer that effective regulation be maintained and, where necessary, enhanced. As the Minister, Stephen Timms, said in Committee in another place, ICSTIS does an excellent job, and is a good model of effective self-regulation without, until now, any legislative support. We recognise the success of ICSTIS, and want to support and strengthen its work".—[Official Report, Commons Standing Committee E, 7/1/03; col. 321.] To my noble friends on the Front Bench, I say that, bearing that in mind, I hope that the Government will ensure, by further amendments to the Bill, that we maintain the scope and general structure of a regulatory regime that has served consumers well in rapidly changing times.

6.1 p.m.

Baroness Hogg

My Lords, I start by declaring an interest as a governor of the BBC. As such, my desire today is to listen to the great range of expertise in your Lordships' House, including to those on whom, I hope, the BBC governors can count as candid friends.

But I also hope that your Lordships will allow me to make three brief points. The first is a personal tribute from one whose years of journalism were conducted from the safety of an office desk. At a time when our thoughts are with our Armed Forces, we are also reminded that the job of war correspondent is dangerous, as well as difficult. It is also an essential part of the apparatus of a free democracy. Technology has not made warfare or communication free from personal risk.

Secondly, in welcoming the creation of a single economic regulator and the appointment of its excellent chairman, I must make clear my view that the remit should cover the BBC. Economic regulation, which is essentially concerned with the way in which organisations compete, must embrace all of them. I make a distinction between that and the BBC's public service responsibilities, which, as the noble Baroness, Lady Howe of Idlicote, rightly said, are greater—not less—than those of other broadcasters. It is the governors' job to monitor and maintain that part of the BBC's role.

My third point is about that system of independent governance. I declare a specific interest, as a member of the audit committee of independent governors of the BBC. As members of other boards have discovered, the authority of the audit committee over the management of an organisation is crucial to good governance. Authority over the audit process is critical, as are the board's right to appoint external, independent auditors and the responsibility of those auditors to the audit committee.

I am concerned, therefore, at the suggestion that the right to appoint independent and external auditors might be taken away from the governors. We must be clear: that would be the effect of putting in the National Audit Office instead. The NAO would not, and could not, be accountable to the audit committee of the governors. It would not, and could not, take instructions from the audit committee, whose authority over the audit process and the management would be severed. I am advised that it would create a line of accountability from the director-general of the BBC to the Permanent Secretary of the Department for Culture. Media and Sport. That would be a significant change in the governance of the BBC.

I have the greatest respect for the NAO and the work that it does in investigating whether government departments deliver government policy cost-effectively. But the BBC is not a government department, and I am anxious that, even with the best of intentions, your Lordships should not push it further under the wing of Whitehall. Moreover, the BBC needs a range of expertise in its external auditors that the NAO does not, and could not, have. Indeed, the NAO might have to call on such expertise, possibly from the auditors that we use at present. In passing. I would add that Sir Robert Smith, the Government's chosen expert on audit, has joined the BBC audit committee and has given me permission to say that he shares my concerns.

I do not claim perfection for the BBC's system of governance, by any means. I believe and hope that, at charter renewal, the checks and balances of independent governance will be thoroughly evaluated. That will be the proper moment to consider the big step of bringing the BBC within the ambit of the NAO, should that be your Lordships' view. In the mean time, I point out that an independent review of the BBC's financial reporting was carried out for the DCMS in 2000, and that there was a review of its fair trading arrangements in 2001. There is, however, still more that the BBC could do to publish information on how value for money is assessed. With the chairman of the audit committee, I have recently been involved in leading some work on that for the governors. If he were here, I could assure my noble friend Lord Crickhowell that some elbow-jogging would not be unwelcome. Perhaps we can return to that in Committee.

I hope that I have not tried the House's patience by raising the point at so early a stage. It is up to Parliament to decide whether, at charter renewal, it wants to overhaul the BBC's governance. Meanwhile, in building up a strong audit committee, I believe that we are not only following best practice but strengthening the hand of the governors. I ask noble Lords, in considering the Bill, not to chop off that hand at the wrist.

6.6 p.m.

Baroness Walmsley

My Lords, I shall concentrate on two subjects. The first is the matter of access radio. The Bill takes tentative steps towards assisting the development of community media in the UK. It provides for the introduction of a new type of not-for-profit radio licence. That is what is commonly called "access radio".

Community media have developed in exciting ways in the UK in the past few years. Radio stations have been established by not-for-profit organisations right in the heart of communities and have forged productive partnerships. It is the residents themselves who run the radio stations, make the programmes, present the local news and run community campaigns. They offer something different from what is offered by commercial radio stations. If the Government's objective is to promote social inclusion and give people a voice and a chance to make a difference in their community, there can be no better tool than access radio. The Bill presents an opportunity either to support and stimulate it or to strangle it at birth. I trust that it will be the former.

Noble Lords may be aware that I am a BBC widow. My late husband was a BBC radio producer with GMR, the Manchester-based local radio station. Nearly 15 years ago, GMR ran an experiment in neighbourhood radio. For three months, my husband ran a station based in a large caravan trailer in a school playground; it was called Radio Trafford. Although he had a long and distinguished career in local radio, he found it one of the most enjoyable and rewarding periods of his career. That was because of the warm response of the local people and their appreciation that their local radio station had made the effort to come to them. However, it was a short experiment and did not have the chance to achieve the social benefits that the recent pilots in access radio have done.

Today, we are addressing the need for licences and wavebands—not for BBC experiments but for the not-for-profit stations that have already shown their power to deliver social change. I shall give your Lordships some recent examples, also from the Manchester area. In 2001, Nadia Ali, an unemployed single mother from Longsight, responded to a flyer about a two-week trial broadcast for ALL FM. Soon, she was presenting a daily afternoon show, playing music and discussing the concerns of her neighbourhood from the point of view of someone who had lived there all her life. She raised the sensitive issue of forced marriages in the Asian community and, when she interviewed city council leader, Richard Leese, her questions came from the neighbours on her street. She enrolled as a Radio Regen trainee, and, before she finished her course, she successfully applied to join the staff of ALL FM. Last month, sadly for ALL FM, she joined a new local Sure Start project, nearly doubling her salary. However, she is about to become a trustee at Radio Regen, an organisation run by a former colleague of my late husband that provides training and support for the stations. Nadia is not alone. At its peak, ALL FM has over 120 active programme makers involved every week.

Longsight is part of the target area of ALL FM and has at least two active armed street gangs. These are not "organised" criminals, but young men who have embraced a criminal lifestyle in which loyalty and fear is enforced by the gun. There have been many deaths and woundings of both gang members and innocent passers-by. There is now a backlash from families and friends of the dead; these good people have been given an unparalleled platform by ALL FM which has contributed to the recent success of their "Gangstop" march and associated public meetings.

Part of Wythenshawe FM's "patch" is Benchill ward, which has the dubious distinction of being the most disadvantaged ward in the country. The whole area is beset by social disadvantage, including appalling levels of domestic violence. When women were killed by their partners in Wythenshawe over Christmas 2001, the groups and agencies concerned decided to increase the support available to women at risk. They teamed up with Wythenshawe FM to publicise these services. Last December, the station ran an intensive campaign on the subject for a week, with programmes made by local people. The station knows of at least nine women who asked for assistance as a result of that work and one of them even dropped in to give her personal thanks to the team that helped her to get away from her abusing partner.

Those three stories are only the tip of the iceberg. The evaluation report of the Wythenshawe Partnership commented on how engaged local people are with their community radio stations. It stated: We have more volunteers here than you can shake a stick at". For those noble Lords who do not understand, that is a northern expression.

Local people know the value of access radio, but there has also been an independent evaluation of its benefits by Professor Anthony Everitt. His recently published report stated that this kind of radio will be one of the most important cultural events of recent years. And no wonder; look at the benefits.

First, these stations develop individual skills in members of the local population and boost self-esteem and ambition. Secondly, they provide an effective information infrastructure for the locality, address negative images and provide a voice for under-represented groups. Thirdly, they provide an acceptable and effective delivery mechanism for mainstream services, such as the police, schools and social landlords.

Given all those good things, there can surely be no opposition to the further development of this sector. However, there are threats in this Bill. The first and most significant is the lack of priority for frequency allocation. There is a shortage of FM frequencies available for any new stations, but surely we do not need any more commercial ones playing the same old chart hits.

Secondly, there is a wastage of frequency capacity due to BBC control of significant parts of the waveband, particularly in its reserving frequencies in its national sub-bands. That allows BBC national stations to be heard on different frequencies in different parts of the country, without allowing other use of the unused bits of frequency. I am a gardener and am very familiar with the concept of planting radishes between the cabbages to use all available ground in a small vegetable patch. Perhaps we should envisage the FM waveband as a small vegetable patch and allow small community radio stations, broadcasting to a small geographical area, to use those bits of unused FM frequency—the bits between the cabbages. The benefits will be huge. I call on the BBC to co-operate with this idea and on Ofcom to promote it.

Given the massive delivery of social gain and the protection of regional diversity demonstrated by these stations, what reassurance can the Minister give me that Ofcom will recognise this and prioritise the provision of enough FM frequency for access radio?

Finally, I turn briefly to the plight of Britain's music creators. Our songwriters, composers and musicians are the envy of the world. We must do everything we can to protect them and enable all of us to benefit from their talents. However, there is much concern about the impact upon them of deregulation in the radio sector.

For the music industry, further consolidation in the commercial radio sector will only increase the risk that there is less diversity of music on independent local radio and mainstream airwaves. However "local" is defined, local radio must be a vital route to national exposure for musicians and writers. I am therefore anxious that local music-writing and performance is protected. We must ensure that there is a counterbalance to the power that deregulation might give to the larger commercial radio players to control access to, and thereby success in, the UK music market.

As drafted, the Bill gives Ofcom a general duty to promote and protect the local "content and character" of local radio, specifically news. However, the current definition of "local material" in the Bill regrettably fails to provide the crucial safeguard for music creativity and diversity.

What does the Minister believe will be the impact of this legislation on our music makers and how does he intend to ensure that our music industry continues to thrive for the benefit of us all following the passage of this Bill?

6.16 p.m.

Baroness O'Neill of Bengarve

My Lords, this vast and complex Bill is needed because of changes in communication technologies and their uses and it proposes large changes in their regulation. The regulation is charged to Ofcom, and to the noble Lord, Lord Currie, to which the Bill assigns—to Ofcom rather than to the noble Lord—only two general duties. Those duties are set out in Clause 3(1): (a) to further the interests of consumers in relevant markets, where appropriate by promoting competition; and (b) to further the interests of the community as a whole in relation to communications matters". I do not believe that I shall be the only Member of your Lordships' House who is concerned that these are the only general duties, that duties to the consumer play a more fundamental role in the Bill than duties to the public, or that in this central clause, even in its present form, duties to the public are reduced to an extremely opaque duty, to further the interests of the community as a whole in … communications matters". We shall have failed in this legislation if we do not build in a clearer and more robust view of the public interest—namely, build it into the general duties of Ofcom.

As we all know, the communications industry and the media are not businesses like any other. They are fundamental to culture and to politics and their products are not mere items of trade. Their power is enormous. I believe that it is also widely recognised that, at present, the ways in which that power is exercised are not entirely satisfactory. Writing in Prospect last October, the distinguished journalist John Lloyd observed that, The media have become startlingly uncivil—intrusive into private lives, scornful of politics, hugely arrogant in their power", I believe that as we debate this Bill we must consider how it needs changing if freedom of the press is to serve the public interest rather than to inflate media power. Press freedom traditionally has been prized for three reasons: as a means to the discovery of truth, as a concomitant of freedom of expression, and as an element or bulwark of democracy.

I do not think that many of us today would judge press freedom alone an effective means to truth. Professor Sir Bernard Williams pointed out in Truth and Truthfulness: … in institutions that are expressly dedicated to finding out the truth, such as universities, research institutes, and courts of law, speech is not at all unregulated. People cannot come in from outside, speak when they feel like it, make endless irrelevant, or insulting, interventions, and so on; they cannot invoke a right to do so, and no-one thinks that things would go better in the direction of truth if they could". So press freedom is not justified as a means to truth today.

Freedom of expression also sits ill with some current uses of press freedom. Freedom of expression is a protection for the individual, for the powerless and, above all, for the citizen. I know of no good reason to suppose that powerful corporations, including media conglomerates, should have unrestricted freedom of expression. They have, so to speak, borrowed it from individuals and citizens. Press freedom is important in so far as it secures freedom of expression for individuals, but it is not acceptable if it is used to limit or channel individual freedom of expression.

Nowadays it is the third argument for freedom of the press that is most compelling. The most serious aim in configuring freedom of the press is to ensure that it serves democracy by fostering robust debate in which a plurality of voices can make themselves heard. Any configuration of freedom of the press that does not serve this aim is not adequate.

We shall have to ask ourselves whether the proposed regimes for cross-ownership and foreign ownership, and other safeguards contained in the Bill, are robust enough to secure these fundamental aims. We should also ask whether Ofcom should be charged with an explicit and general duty to further the public interest by ensuring that a plurality of voices can be heard and take part in all forms of public communication. I believe that citizenship is more fundamental than consuming.

6.21 p.m.

Lord Gordon of Strathblane

My Lords, it has been a long time since December 2000 and the publication of the White Paper. However, I venture to suggest that we have all benefited from the delay in the production of the legislation and its postponement by the Government from a previous parliamentary Session to the current one.

It has been beneficial for two reasons. First, the world has changed in that period. When the White Paper was produced we were at the height of the dot.com bubble; we were all talking about convergence and that it was all going to happen tomorrow. We all know now that it will not happen tomorrow. The take-off of digital radio is still painfully slow. We all hope that it will happen, but it is not happening at a very fast rate. Secondly, it has yoked together DCMS and DTI for another Session, where they will have to work in tandem to safeguard the Bill. That will be highly beneficial.

It has become fashionable to quote Mr Nick Harvey in the debate in the House of Commons. As regards Ofcom and the BBC—I am not making a point about the BBC at the moment—he said: As Ofcom is a predominantly economic regulator and secondarily a content regulator, it has not evolved or matured enough for it to have ultimate responsibility for the BBC".—[Official Report, Commons, 3/12/02; col. 805.] Whatever we may think about the BBC issue, I would be concerned if we viewed the duties of Ofcom and the purpose of the Bill solely in economic terms. The reason we are all concerned is that we are not talking about baked beans or paper tissues but about our media, which are a vital link in the democratic chain. Unless we have an educated and informed electorate, democracy will be a failure. We look to our media to educate and inform. Content is therefore a vital function for Ofcom.

The fact that the Bill has been around for a long while and that there have been various seminars and so on over the past couple of years does not mean that it has been subjected to a great deal of scrutiny. Obviously the Puttnam committee did a great job. If ever we needed a positive advert for pre-legislative scrutiny, the noble Lord, Lord Puttnam, and the members of his committee have provided it. I thank them for their efforts. It is perhaps unkind to say that if ever we looked for a negative justification for pre-legislative scrutiny, it would be the absence of it in the Licensing Bill which recently passed through the House. In much the same way, finishing at 2.26 a.m. today, as I did, was a negative justification for the reforms I am glad the Leader of the House introduced last year which ensure that we normally finish at about 10 o'clock.

A great many things have changed since the Puttnam committee sat and some clauses have not been subjected to scrutiny at all. I declare an interest as chairman of Scottish Radio Holdings. Clause 307 had never been heard of until after the ownership rules were changed. It was then brought in to define in micro-detail the inputs required to produce localness. In my view, we should scrap that clause in its entirety and go back to the way in which we all thought Ofcom was going to work—and, indeed, the way in which I believe it wants to work. It will need to define the objective—that is, the presentation of localness—and work together with the industry, through co-regulation, to deliver that objective.

The powers given to Ofcom to enforce localness-which includes ensuring that studios are in the right place, that there is enough local advertising, that enough local people are employed and so on—amount to micro-management. That is not the business of Ofcom. However, that is what has been laid down. In defending it in another place, Kim Howells said that the fact that Ofcom may do it does not mean that it will do it. On that basis you could give local authorities the nuclear deterrent to enforce planning decisions. We do not want it to operate in that way.

I fear that there is also a Parkinson's law of regulation, which means that regulators will increase to fill every regulatory post and still ensure that they are understaffed. Regulation will multiply. Despite the considerable efforts of the noble Lord, Lord Currie, there will be a tendency for people to say, "Lord Currie. I must point out that the statute requires that X, Y and Z must be ticked, ticked, ticked before we do anything".

I take issue with my friends on the Liberal Democrat Benches. I feel that I am coming from the same place as they are and it distresses me that we are seeing things from a totally different viewpoint. I have mentioned my connection with Scottish Radio Holdings. If I now speak in its praise it is not by way of boasting of achievement but simply to say that Radio Clyde in Glasgow, which I started some 30 years ago, has a bigger audience than Radios 1, 2, 3, 4, 5 and Radio Scotland put together.

Why is that? Is it because I have chosen better disc jockeys, better music, better news reporters than anyone else?

Noble Lords


Lord Gordon of Strathblane

My Lords, it is a nice thought, but I would not like them to hear that because they will be looking for a rise.

The answer is that we concentrate on such earth-shattering issues as Glasgow traffic rather than London traffic. Believe it or not, the people of Glasgow are more interested in hearing about that than the fact that the Blackwall tunnel may be blocked. It is in the self-interests of an operator to concentrate on local activities because that is where he can beat the BBC. Frankly, the BBC is such a professional organisation that we could not take it on at doing what it does extremely well on Radio 1 and Radio 2, and on Radio 4 for that matter. But where we can beat the BBC is by being more local than it is and by appealing to the local community. On that basis, self-interest and public interest coincide. That is what I would like to see happen.

We should not regard common ownership as a bad thing. If I owned three radio services, it would be in my interests to make them all different. I would not want them to be the same. If, on the other hand, three different people owned them, we would probably all zero in on the one most attractive part of the audience and sound very much the same. Let us be quite clear that ownership itself does not adversely affect quality of output. It probably enhances it.

There is another example of a clause where provisions have been slipped in which are in excess of current regulation. I am in the presence of the current chairman of the Advertising Standards Authority. I bow to him and I will put my name to an amendment if he brings one forward. But, as regards advertising, in addition to the provisions already in the Bill that it must not be misleading, harmful and offensive, which are in the 1990 Act, the Government have inserted a catch-all provision of "unsuitable". In other words, if we cannot think of another reason against it we can get it under the heading of unsuitability. That is the kind of catch-all provision from which we are trying to get away.

I take issue on the question of the BBC for three reasons. If someone came down from the planet Zog and we said, "We are trying to converge regulation on all our media but we are going to leave out the biggest player in television and radio", he would think we were off our heads. Yet that is what we are doing.

I also take issue as a strong supporter of the BBC itself. The Government have argued the point by saying, "Yes, we will do it, but we will do so when we come to renew the Charter", which, it should be borne in mind, will take place next year. I am worried that if it is delayed, there could be a backlash against the BBC. It would be much better to do it now, under Ofcom. I say that for a further reason; that is, it will improve Ofcom itself. It may require changes to the staffing or even the structure of Ofcom if it becomes responsible for the BBC. The noble Baroness, Lady Buscombe, when opening the debate for the Opposition Benches earlier today, mentioned the point made by Nick Harvey MP that Ofcom can muck around with ITV and ILR as much as it likes, but that it is not good enough to touch the BBC. That is quite a frightening statement. If that is how little we think of independent broadcasting in this country, then we are in a very bad way.

I shall canter quickly through some further points on which I shall either move amendments or support other noble Lords in their amendments. As regards foreign ownership, my sole but extremely important objection to that is reciprocity. Others may think that it leads to dumping; I do not know enough about it. What I do know is that if we are going to give up something that the Americans will not give back to us, then frankly we should not do it.

I turn next to ITN. I cannot see the public interest argument against allowing ITV to own ITN as it used to when I was a television reporter. Indeed, it is probably a good thing for the principal customer also to be a shareholder. The customer will then have an interest in the quality of the service as well as the profits generated by it. Incidentally, the question of 20 per cent ownership for control again seems daft. Under that definition the current ITV had five shareholders, all of whom controlled it. That cannot he right. Surely it would be better to return to what is the case with the Radio Authority; namely, a 30 per cent holding. That is what the Stock Exchange regards as triggering a bid.

On the issue of Channel 5, again, I am agnostic about ownership. However, I cannot understand the inconsistency here. In introducing the debate the Minister said that Channel 3 and Channel 5 were very different. Channel 5 has only 6 per cent of the audience while ITV has 24 per cent. Furthermore, Channel 5 has coverage of 80 per cent against coverage by Channel 3 of 100 per cent. Those figures are variable. If Channel 5 were being run by someone with considerable media interests and who chose to promote, the odds are that the figures could be remedied very quickly, at which point the distinction drawn by the Government would he meaningless.

On "must carry/must offer", the Government put clauses into the Bill and then took them out. It should be possible for Ofcom to fix a tariff which would be binding on everyone. BSkyB says that that would not give sufficient flexibility. I would reply to that in the manner of Harold Wilson: one man's discount is another man's premium. There is an interest in us all knowing where we are.

I hope also that Ofcom will regard itself as having a duty of care to ensure that we do not flood the market with more services than it can support, thus reducing quality overall. In the area of broadband the body will have to be proactive if we are to go beyond the two-thirds of the country that even have the possibility of ever accessing it. I live just outside Glasgow, hut I am not getting broadband. I have my name down on BT's waiting list and once the list reaches 200 names, BT might think about providing it. While I fully understand the economic rationale, we can forget the idea that broadband is going to sweep the country. It is not going to reach beyond two-thirds of the population unless someone takes action. In the first instance, that someone should be Ofcom.

I doubt whether any other speaker will touch on my final point. The business of licence renewal, whether it be for ITV or radio, has been parked, as it were, by putting it so far in the distance that none of us is exercised about it. That is a daft way to do things. The termination of a contract is a recipe for drying up investment and nothing happening. I should like to see a return to what we had in local radio at its inception: that is, rolling contracts. If you are doing badly, you are given a yellow card. If you have not smartened up within a year, you are off the park. That safeguards the public interest, is fairer to contractors and, I suggest, is the way ahead.

6.34 p.m.

Lord Dubs

My Lords, it is a pleasure to follow my noble friend Lord Gordon, all the more so because I agree with much that he said, although perhaps not all. Perhaps I may first declare an interest. I am chairman of the Broadcasting Standards Commission and for a time two or three years ago I was deputy chair of the Independent Television Commission.

The Bill is probably one of the largest pieces of legislation in British parliamentary history. It is enormous and it has received a great deal of pre-legislative scrutiny, very ably conducted by the committee chaired by my noble friend Lord Puttnam. Despite that, I understand that we are not going to consider the Bill in Grand Committee; it is to be taken on the Floor of the House. To be frank, I think that is absurd. We can spend more time on it in Grand Committee and go into great detail. We would be able to vote to our hearts' content on Report and at Third Reading. Why in heaven's name are we going to try to debate it in Committee on the Floor of the House? Anyone who has served on a Grand Committee knows that we can better put the arguments and discuss any points raised in more detail. Often we receive a more sympathetic response from the Minister. Except for reasons of a wider political scheme on the part of the Opposition, I cannot understand why the Bill will not be taken in Grand Committee.

Let me give Ofcom a warm welcome. I think that it is a good thing that we have Ofcom, that we shall have one regulator rather than a multiplicity of regulators which could occasionally overlap and come to differing conclusions. That is not helpful to the cause of broadcasters. I welcome too the fact that the Ofcom board is small. I resist the arguments that it should be representative of all the nations and regions of the country, which would then require 12 to 15 non-executive directors. That is not a good idea. It is right that Ofcom should be small, lean and hungry. I believe that the biggest threat to the effective working of Ofcom would be that, given its size, it might become a little bureaucratic. I know that my friend, the noble Lord, Lord Currie, is well aware of that. I am delighted that he has been appointed as the chair of Ofcom; it augurs well for the body. Under his chairmanship it will go from strength to strength. However, there is a danger that it could become overly bureaucratic and so it is important, when seeking to move amendments, that we test them to see whether they could make the organisation more or less bureaucratic.

I turn now to an issue that has not been raised so far; that is, cultural diversity. The Bill currently sets out that Ofcom has a general duty to have regard to, the different interests of persons in the different parts of the United Kingdom and of those living in rural and urban areas". That is fine as far as it goes, but I should like to see the duty extended to include people of different ethnic origins and communities. We could debate the details of the proposal in Committee, but it would be a worthwhile improvement to the Bill if such an amendment could be introduced.

On the question of media literacy, I welcome the fact that under Clause 10 Ofcom will have a duty to promote media literacy. That is extremely sensible. We live in an increasingly electronic age. Electronic media have changed out of all recognition from what they were only 10 or 15 years ago. It is important therefore for Ofcom to be responsible for educating and informing people—individuals in the community—so that they know how to work their way through the multiplicity of electronic media and how to exercise effective and informed choices. That is all part of the democracy argument referred to a few moments ago by my noble friend Lord Gordon.

The content board will be an excellent feature of Ofcom. I hope that it will take to itself the best experience and practice of the Radio Authority, the Independent Television Commission and the Broadcasting Standards Commission. However, I was a little puzzled that the right reverend Prelate the Bishop of Manchester thought that the Bill ought to take a tougher approach to standards on television and radio. I dealt with this for some years while chairing the BSC. It is not an easy area and I would not want to see us become so restrictive that we begin to nanny the entire British population. Equally, I would not want to see us move the other way to a society where "anything goes" on television. The balance is just about right and I look forward to debating with the right reverend Prelate his views when we discuss the point in Committee.

I was a little concerned by the remarks of the right reverend Prelate about religious broadcasting, not so much as regards what is now in the Bill, but as regards his wish to see it widened. I am not clear what constraints the right reverend Prelate would apply to stop all different kinds of religious broadcasting. He will understand what I mean by that. I do not refer to the mainstream religions, but other, smaller religions. How would he stop them from owning radio stations and perhaps using those stations to propagate a particular aspect of their beliefs? We have seen that happen in the United States and I would not be happy to see it in this country. One needs certain constraints. When the right reverend Prelate spoke he did not refer to constraints, but I am sure that he will develop the point in Committee.

I turn to the BBC. Like so many Members of this House, I respect the BBC enormously. I have great affection for it and believe that it is a great British institution. However, in turn, the BBC must expect its most fervent supporters to utter words of criticism from time to time. We do so because of the respect and affection in which we hold the corporation, and because we want to ensure that it remains as good as it possibly can be.

I have argued in earlier debates that all tiers of control of the media and Ofcom should cover the BBC—tier 3, as well as the others. I did so for one main reason: I believe that it is better for the independence of the BBC that it should be regulated by Ofcom rather than by the Secretary of State. That said, I am bound to say that the weight of argument appears to be that we should leave that point until charter renewal rather than argue it in relation to this Bill. I accept that point; but it will remain an important argument when we debate charter renewal.

In that context, perhaps I may refer briefly to the role of the BBC governors. I am sure that they do an excellent job. I have the highest possible regard for those whom I know personally. However, I wish that they were rather more open and transparent in the actions that they take on behalf of citizens. They are there, in their own terms, to protect the interests of citizens. They are there to protect us—in the same way as Ofcom will protect us in other respects. I believe that they are doing a good job, but why do they not tell us, and put us in the picture? That would not be too difficult, and it would lessen the fervour of the arguments when we debate charter renewal.

I am in some difficulty as regards the National Audit Office. I understand the force of the argument that the NAO should not get mixed up with editorial matters. Of course it should not. On the other hand, I cannot help thinking that an organisation as large as the BBC could benefit from some form of scrutiny such as the NAO could provide. If we can find an amendment which protects the editorial autonomy and independence of the BBC, but allows for the possibility that bureaucracy is creeping in and efficiency is not all that it might be, I should welcome the chance to bring the NAO into the picture.

I strongly agree with the remarks made by my noble friend Lord Gordon on Clause 307. It is extraordinary that, when talking about broadcasting output, we should suddenly look at the internal workings of a broadcaster. To subject what may be very small radio stations to that type of scrutiny—for example, asking where the staff live, where they come from, and so on—seems to me to exercise not a light regulatory touch but a very heavy one. I hope that the Government will reconsider that provision.

I want to make two further brief points. Under the Good Friday agreement signed up to by the Government, quite a lot was said about the British Government's responsibilities in Northern Ireland as regards Gaelic language broadcasting—both in terms of funding such programmes and in terms of the coverage of TG4 in Northern Ireland. Some commitments have been made on this. Perhaps the Government will be able to elaborate on those.

In conclusion, we all believe in public service broadcasting. We believe that it is something positive which has made broadcasting in Britain better than that in many other countries; it has set standards which other countries have not been able to emulate through their different systems. I fully accept that there is a difficult trade-off, which Ofcom will have to referee, as between public service broadcasting and allowing market forces to enable individual broadcasters in the commercial sector to develop their potential to the full. I look forward to seeing the way in which Ofcom will rise to that challenge.

6.44 p.m.

Lord Fowler

My Lords, it is a pleasure to follow the noble Lord, Lord Dubs, with his experience of these matters. My background is in journalism. I worked for The Times in the 1960s, and in the dozen years from 1990 to last year, I was chairman of two regional newspaper companies. I am also a lifetime member of the National Union of Journalists—although the union did at one stage say that, although it valued my membership, it wished that I would take some notice of its policies!

I shall confine my comments at this stage to the news organisations and how Britain can strengthen its position in this area. I shall approach the subject from the ground upwards rather than from Whitehall downwards.

Emergencies, conflicts and wars bring out the best in British journalism. The war in Iraq is no exception. I pay tribute to Terry Lloyd and to the ITN crew. They were obviously very brave men. It is worth making the additional point that, were it not for the efforts of war reporters, the public could simply be manipulated by the propagandists. Objective and skilled reporting is essential for public understanding of what is happening on the ground and is an indispensable foundation for democratic debate. It also throws a light on what we are discussing today; namely, the source of news for the public.

I remember reporting on the Middle East war in 1967. It was not always easy to discover what was happening, particularly if you were reporting from the side which was obviously going down to defeat. One image that stays in my mind from the time I was in Beirut is of an American correspondent, out in the open, a transistor to his ear, listening to the BBC World Service. Coming forward to 2003, a Times reporter waiting with the US Marines to go over the border commented: Still wearing flak jackets, helmets and gas-mask holsters, we listened to the BBC World Service and waited for the war to begin". It makes one point about our discussion. We in this country are capable—a point made on the regional side of the debate—of providing a service which is recognised as authoritative, objective and, above all, professional. In the true sense of the word, it is world-class.

The media world has changed radically in the past 30 years. Methods of communication have been transformed. The old cable office is something of a distant memory and powerful news companies such as Sky and CNN have emerged. Nevertheless, both in radio or television, the BBC remains a major force which, if we have the slightest sense, we shall want to preserve and develop. It provides news in depth, and it provides balanced news. By any measure, it is among world leaders. Its reporters—I stress that I am talking about its reporters—are among the best in the world.

Yet, for some reason, there is an antipathy to the BBC which turns confirmed deregulators into strong interventionists when it comes to looking at the affairs of the corporation. So far as concerns this Bill, I shall not support measures that weaken the BBC.

Nor do I think it enough to say that the Bill is deregulatory, and assume that that simply finishes all argument. For one thing, as with newspapers, it is anything but clear that it does sweep away regulations. For another, it would appear that one undoubted act of deregulation is likely to leave the rest of the world looking on in wonder at this magnificent act of generosity on our part which it has not the slightest inclination to reciprocate.

We should do much better to look at the Bill and ask what is in the best interests of UK plc, and to do so in an objective and non-political way. I say that because, whenever politics and issues of media control come together, independent judges should look exceptionally hard at the position. Currying favour with powerful media owners is not exactly unknown in our political system. I make that point quite irrespective of political party. The role of this House must be to look behind some of these proposals, particularly because—and I deplore the fact—so much of the Bill has been left without scrutiny in another place.

At this stage, I have four areas of concern. The first is the ownership of ITN. I agree with the point made by the noble Baroness, Lady Buscombe, and by the noble Lord, Lord McNally, in a spirited speech. ITN was at one stage a worthy rival to the BBC. It is, frankly, no fault of the journalists that their position has weakened in the past few years. To move the news about as it has been defies all common sense.

There is no guaranteed solution, but time has moved on, as my noble friend Lord Crickhowell said. The most hopeful way forward would be for ITV to take ownership; there should be one ITV company, made up of Carlton and Granada together, with one news company. That would be in the best British interests.

That brings me to my second point—the ownership of Channel 3. The proposal in the Bill that a United States company should be able to take over here while we are barred there is frankly extraordinary. I am not entirely reassured by the hope expressed by Ministers that, in future, the United States will relent. I cannot believe that these tactics of negotiation were taught at any sensible business school in any country, nor that any American company that might benefit would contemplate these tactics for one moment. I give notice that I shall certainly not support that provision.

Thirdly, like others I have doubts about the policy proposed for Channel 5. It is certainly deregulatory—one cannot complain on that score—but it is a form of deregulation that benefits only one company. As the other independent television companies point out, News Corp could take full control of Channel 5, with the effect that it is the single owner of the largest newspaper group in the UK, the UK's dominant digital platform, our most-watched 24-hour news channel and our lightest regulated national commercial terrestrial channel. I would need some persuasion that that was in the interests of the United Kingdom.

Fourthly, I am not convinced that the Bill has done anything to improve the position of newspapers—especially the position of regional and local newspapers. That point was touched on by my noble friend Lord Wakeham. The Newspaper Society believes that the Bill will give the Secretary of State discretion to refer a substantial majority of newspaper acquisitions to the Competition Commission, however small. Note—however small.

There is a 220-page report from the Competition Commission from May 2002. It is not an examination of the transfer of one national group taking over another but the transfer of eight free newspapers, distributed under titles ranging from the Northampton Herald and Post to the Derby Trader. The one point not in contest was that the most that could be said financially was that they broke even. Indeed, by the time of the reference, they were clearly in loss. Nevertheless, after an elaborate investigation, the Competition Commission found against and the merger was scotched. I am doubtful whether that was in the interests of the regional press.

The regional press should be taken seriously, and should not be underestimated. Like regional radio, it remains trusted by the public and financially sound when able to make its own decisions.

I unreservedly applaud one procedure used to examine the Bill—the pre-legislative scrutiny—and I congratulate the chairman and all members of the committee. Some of the issues have been teased out precisely because of that examination. However, it has often seemed to me that what is needed with much legislation is not only pre-legislative scrutiny but post-legislative scrutiny, to see how the Government's plans have worked out in practice. In my experience, it is the lack of objective checks after the legislation has been passed that too often runs us into trouble. I suspect that such a process would benefit this legislation, whether by a special committee or a permanent Select Committee, as advocated by the noble Baroness, Lady Howe.

I would like to be enthused by the Bill, and I support some aspects of it with no difficulty. However, on several important points, I am decidedly sceptical about it.

6.54 p.m.

Baroness Michie of Gallanach

My Lords, I am grateful for the opportunity to take part in this debate on the long-awaited Communications Bill, because it gives me a chance to reflect once again on the future of Gaelic broadcasting in this age of modern technology, with particular reference to Clauses 205 to 207.

The survival of the Gaelic language in Scotland and the needs of those who speak it in its heartland and in the many communities to which the Gaelic diaspora has contributed is very important. Against a background of global attrition of world languages, the endurance of Gaelic is remarkable. Its continued use as a daily medium of communication is even more significant when we consider that its most direct competition is English, the world's fastest-expanding and most dominant language, which is hugely supported by government policy and institutions.

Under the pressures of anglicised education, social and economic changes and political ill will, the use of the Gaelic language in Scotland has declined over the centuries. Yet it lives, and with the will of the community and the nascent political support of the past 15 years, new initiatives have emerged in education, the arts and broadcasting, which give hope for the future.

I pay tribute to the noble Lord, Lord Forsyth of Drumlean, who when a Minister at the Scottish Office had the courage to see to it that the television fund set up in 1991 was given £9.5 million a year. I also commend the Government, who in July 2001 ratified the Council of Europe Charter for Regional or Minority Languages.

I hope that the Bill opens the way for a dedicated digital Gaelic television channel. Scotland has no equivalent to the Welsh S4C, which has played such a significant part in helping to develop an interest in Wales and increasing the numbers speaking Welsh. Many of your Lordships have said that we must celebrate diversity. Although Gaelic television programmes are few in number and often shown in the middle of the night—insomniacs welcome them—they are successful, with average audiences of more than 300,000. One such programme is "Eorpa", which examines current affairs in Europe in a distinctive way. The audience figures for that programme can be as high as 86,000, compared with the figures of 71,000 for "Newsnight UK" and only 35,000 for "Newsnight Scotland". Those figures show that Gaelic television programmes are of interest to many who are not native Gaelic speakers.

The Bill establishes the Gaelic media service. I hope that we will hear from the Minister, if not tonight then at Committee stage, that it opens the way for a dedicated Gaelic digital channel. I hope, too, that there is provision for the transmission of programmes available to people in Scotland and elsewhere. For example, thousands of Gaelic speakers live in London, and there is a long established and active Gaelic society. Three per cent of the population of Corby are Gaelic speaking. Asda has even put up Gaelic signs in the supermarket in Corby, or so I am told.

Will the Minister also confirm that the new service will be able to distribute programmes via the Internet, which would be of huge interest to Gaelic speakers throughout the world, to say nothing of the potential for the economy—especially the tourist industry in Scotland?

I return briefly to the matter of resources, which is always a thorny issue. It is not addressed in the Bill, and I believe that that is a grave omission. A successful service must have continuity and guaranteed levels of funding which should be index-linked. In its 10 years of existence, the grant has already decreased by just under £4 million. From an initial target output of 200 hours of television per year, the fund can now deliver only about 160 hours per year. There is no point in saying that funding is a matter for the Scottish Parliament, because this is UK legislation. This is a UK Bill. The United Kingdom reserved broadcasting to the United Kingdom Parliament and should therefore take responsibility.

I should like to touch on other matters such as the membership of the Gaelic media service, but time does not allow. I conclude by saying that although the recent census showed a further decrease in the number of Gaelic speakers, the decline has slowed. With the many new initiatives and the interest in the language, we believe that there is hope for the future of this precious asset. Gaelic television broadcasting must play its part.

7.1 p.m.

Baroness Jay of Paddington

My Lords, it is a fascinating paradox of the Bill that it deals with the fastest moving, most rapidly evolving part of economy and yet, as the noble Baroness, Lady Michie, has just said, it has been a very long time in gestation. I agree with my noble friend Lord Gordon of Strathblane that that time has been very well spent, particularly in the pre-legislative scrutiny so ably led by my noble friend Lord Puttnam, which has been widely referred to by speakers today. I think that the point brought out by that scrutiny is that various points have been taken, dealt with and appropriately referred to and amended by the Government. However, I think that we have to return to some of the other issues that have probably either been put aside by another place or inappropriately dealt with.

I have two special interests to declare. I am a non-executive director of British Telecom and a non-executive director of the Independent News and Media Group. I also join the noble Lord, Lord Fowler, in being a member of the NUJ.

Like other noble Lords who have spoken, my most serious policy concerns lie in Part 3 and Part 5 of the Bill, particularly as they affect media ownership. However, before I speak about the media, I should like to touch on the immense importance of the telecoms industry, which is the subject of the earlier part of the Bill and has perhaps had less attention today. I am very glad that my noble friend Lord McIntosh will, I believe, focus on that industry in his reply from the Front Bench.

It has indeed been a long two-and-a-quarter years since the White Paper, and much has changed. As we heard, the so-called dot.com boom has gone bust. At the same time, however, the telecoms industry has faced static or, in some cases, falling demand for some of its other principal products and services. My noble friend Lord Gordon spoke of being unable to access broadband outside Glasgow. I should perhaps tell him that, just today, I was told that there are now 40,000 new connections every week. So broadband must be rapidly moving up even towards him. Some 42 per cent of the population—three times as many as in 1999—are now operating online. That is an enormous difference to the way in which people organise their lives. It also brings with it, as noble Lords are well aware, new social problems—the so-called "digital divide".

We cannot underestimate the fact that the UK's success in the 21st century will depend crucially on the telecoms industry. I do not think that it is inappropriate that the telecoms infrastructure is sometimes called "the central nervous system" of the whole new economy. Telecoms are also crucial to delivering improved public services. We know about e-government, but education and health are also now dependent on innovation in ITC systems. Our knowledge-based prosperity will grow only if we exploit the power of the converging technologies and, of course, ensure that they are appropriately regulated. Until very recently, the regulatory mantra for this sector of the economy was "light touch", but that has now been replaced in the Bill by the concept of "proportionality". I think that we need to wait to see how that concept will develop. It may indeed he one of the candidates for the post-legislative scrutiny that the noble Lord, Lord Fowler, suggested.

Fortunately, under its general duties, Ofcom is to have regard, to encourage investment and innovation". That may turn out to be fundamentally important to expanding telecoms, at a time when many companies are suffering from sector-specific capital problems as well as global uncertainties. I think that there are some particular ways in which the Bill could he improved to encourage an environment of positive development in this area. Overall, however, I think that the proposals provide a realistic and balanced approach. If, as is intended, the Bill becomes law next summer, it will come into force at the same time as the new EU directives. I think that those directives, together with the Bill, will provide a very good platform for Ofcom to deal with what I think we will very rapidly be calling—pace my noble friend Lord Gordon—"The Broadband Age".

However, I expect that our debates in this House will be dominated less by the possibilities of broadband than by the current issues of broadcast. The BBC has been the focus of much scrutiny today. Unlike some of my political colleagues as well as members of the Opposition parties, I am content with the balance of the Bill's proposals on the regulation and governance of the corporation. I think that the new obligations to Ofcom sit well with the governors' continuing responsibility for the standards of public service. At this point I must congratulate Gavyn Davies, who, since he became chairman of the BBC, has reinforced the governing body's independence and capacity to meet its core tasks. As we heard, both the internal and the external regulatory arrangements will be reviewed in 2006 when the Royal Charter comes up for renewal. Until then, it seems sensible to allow the regulatory compromise time to develop.

Overall, I am anxious that the BBC should not be diverted from its role as the most successful public broadcaster in the world. Public service broadcasting, both by the BBC and, as we have heard, by ITV, has been rather like the NHS—one of this country's greatest contributions to the quality of people's lives for the past 50-odd years. As parliamentarians, I feel that we have a special role, to try to ensure that those high standards continue and strengthen into this century. That is why I am alarmed by some of the proposals in the Bill about the ownership, and therefore the governance, of commercial companies.

My first concern is the issue of foreign ownership—that is, extending the capacity to hold broadcasting licences beyond the European Economic Area—in other words, letting the Americans into our broadcasting business, as my right honourable friend Tessa Jowell readily acknowledged in the Second Reading debate in another place. As we are aware, the Government have advanced various economic reasons for allowing such American ownership. However, I agree with the words of the Joint Scrutiny Committee when it unanimously responded that each of those arguments "variously lacked force". We will no doubt return to those economic points in detail. Like the noble Lord, Lord Fowler, and other noble Lords, I will also want to raise the question of reciprocity.

In addition, however, I am perfectly happy to admit to a cultural prejudice against a huge number of imported American programmes that could be screened here by US channel owners and—this is the economic point—at marginal cost to themselves. The enthusiasts constantly tell us that we will have more "West Wing" and further versions of "Friends". My fear is that the mass of programmes would probably more closely resemble early evening viewing in, let us say, Des Moines or Detroit, and I have certainly experienced both. That would certainly be the best business case for any US owner.

The noble Lord, Lord Birt, whom many of us seem to be quoting this afternoon, put this succinctly in his seminal New Statesman media lecture in 1999 when he said: There is a risk to our national culture. We have already seen in this century the emergence of a global culture that is essentially American…The coming globalisation of media … may intensify this trend, undermining the uniqueness of national cultures". I was therefore surprised that the Government rejected the proposals of the Puttnam committee to defer the issue of foreign ownership at least until Ofcom had established itself and been able to review the general questions of media ownership. If my noble friend Lord Puttnam or any other noble Lord proposes an amendment to give force to the Joint Committee's recommendation, I will support it.

I would also support amendments which could protect Channel 5 from a takeover by major newspaper businesses. Like earlier speakers, I am uncomfortable with the proposals to lift the so-called 20/20 restrictions on cross-media ownership. Again, I think the Joint Committee's recommendation to delay this change was very sensible.

I am attracted to the idea of a new plurality test to be used in connection with all mergers and takeovers across the media. In the same way as Parliament has a duty to try to promote high quality public service broadcasting, we must try to promote diversity of ownership. It may he a cliché, but it is none the less true, that we will maintain a vigorous democracy and vigorous political debate only if citizens receive information and opinion from the widest possible variety of sources.

My final point relates to another concern about the apparently all-powerful newspaper industry. As several speakers have said, the Bill has stimulated a vigorous debate on whether and how Ofcom should have any relationship to the Press Complaints Commission. The opponents of the debate, let alone of any change, have been led by various newspaper proprietors, journalists and editors crying "Censorship" from the rooftops. But recently one or two press voices have been raised expressing different views. In a recent article, Alan Rusbridger of the Guardian, acknowledged that, even the most vocal defendants of the PCC will privately admit to reservations about its workings". Simon Kellner, editor of the Independent, has expressed his reservations publicly. In his evidence last month to the House of Commons Select Committee inquiry on privacy and media intrusion, Kellner said: I do not have any problem with some sort of press ombudsman who sits above the PCC, possibly under the umbrella of OFCOM, because there are real problems with the PCC … it should have more teeth, it should be less cosy". In another place, my honourable friend Clive Soley tabled a new clause, which was not debated, giving Ofcom the function of reviewing the PCC. Mr Soley was advised that this was within the scope of the Bill, and it seems a fruitful area for us to explore. I expect to return to this issue as the Bill progresses.

In conclusion, I emphasise my overall welcome for the direction of the Bill and, in particular, the powers and responsibilities of the new single regulator. The Government are to be congratulated on introducing such all-encompassing and forward-looking legislation in one of the most important areas of 21st century life. My concerns—to borrow again from my noble friend Lord Puttnam—are to make a better Bill the best yet.

7.13 p.m.

Baroness Whitaker

My Lords, it is a pleasure to follow my noble friend Lady Jay, whose views on the importance of the telecoms industry for our economy and for our democracy I share.

Apart from my interest as the deputy chair of the Independent Television Commission, I welcome this Bill as a private citizen. To many, television, in particular, is culture. It is also, as my noble friend the Minister said, the most widely used and trusted source of news and information. For those reasons, it needs a framework which enables creativity, and it must affect our democratic values. The Bill does pretty much all that; and I also welcome measures to encourage competition, investment and growth.

I propose to focus on a couple of citizens' needs from broadcasting—the reflection on what is going on in our society and accurate knowledge of the real world around us. At a time when we mourn the death in action of the ITN reporter Terry Lloyd, news still needs protecting. Its total audience has been in decline for the past eight years, although those for good individual programmes, like Channel 4 News, have increased. The advent of more and more specialised niche channels tends to marginalise news. The decline is even more marked in the United States. The National Geographic magazine found last year that fewer than 20 per cent of young Americans could locate news-making countries such as Iraq, Afghanistan and Israel on a map, although perhaps they could now. Is there not a connection with America's foreign policy here?

Although this turning away from news in the USA is serious, it would be additionally damaging if it happened significantly in this country. The USA has a large internal market, but the UK is a small trading nation. It needs to be at home in the wider world, informed, unprejudiced, open to change and understanding change. This simply cannot be achieved nationwide without radio and, particularly, television news—not because television news is better but because more people watch it.

So, for the present, I welcome the proposed obligation on ITV to ensure that the nominated news provider is properly funded to fulfil its role, continuing the requirement for "a sufficiency of news", independently sourced, in peak time, and keeping—again, for the time being—the proposed restrictions on ownership. Ofcom will be able to keep its eye on this as the broadcasting ecology develops.

What could be done now, as the voluntary sector pressure group Public Voice recommended, is to strengthen ITV's remit to require factual programming as well as entertainment; and, as the right reverend Prelate the Bishop of Manchester also said, to remove exemptions for penalties on grounds of economic conditions for channels which cannot meet public broadcasting standards. For factual programming is another endangered species. Television can contribute uniquely to the understanding of recent history, as in Brook Lapping's programmes over more than two decades from "The Death of Yugoslavia" onwards. But there is a decline, in particular in the coverage of hard issues in the developing world, well mapped in another report, Losing Reality. Noble Lords might remember that before October of last year, Bali was presented as a holiday destination and that the BBC once did a three-part programme on the Congo which omitted any mention of the war and its 3 million dead. I should add that hard issues are not necessarily bad news—VSO's report, Live Aid Legacy, sets out many examples of harmful stereotyping of developing countries as places uniformly of poverty and despair.

So it is welcome that my right honourable friend has accepted the arguments of the Public Voice campaign to include "matters of international significance" and "science" in the remit for public service broadcasting. Ofcom could well report on this with the rest of these aspects of public service broadcasting much more frequently than the five years that the Bill proposes.

By news, we mean impartially delivered information. We need to be sophisticated about impartiality. Shared values can be narrow values, which present events with a particular focus In ITC research carried out by Professor Ian Hargreaves, only 65 per cent of ethnic minority groups thought they were well served for local news, as against 83 per cent of white people; 46 per cent of black people said that much of TV news was not relevant to them. That is an argument for plurality as well as diversity. Both need to be safeguarded in the Bill. Ofcom could also assess how well broadcasters have reached under-served groups. I hope that is not too much on the Christmas tree of the noble Lord, Lord Currie.

The Joint Committee on Human Rights, of which I am a member, recommended that the Government should respect freedom of religion and belief by lifting some restrictions on religious organisations, which they did. I assume, although the Bill does not say so, that it includes non-religious ethical organisations like the British Humanist Association or the National Secular Society. Balance is wanting here, too. It is a matter of regret that the BBC continues to deny any slot in "Thought for the Day" for the long-standing humanist movement, thus repressing any reflection of the great European traditions of sceptic morality.

A sizeable proportion of people in the UK say that they have no religion—more than some of the faiths. Do they not deserve the occasional programme on topical moral issues which reflects and illuminates their views? In another place, my right honourable friend undertook to look at this. I should be grateful if my noble friend could tell me what her conclusions are.

I have two anxieties, the first of which follows the recommendation of the Joint Committee on Human Rights that the Government should have to set out criteria for those exceptional cases when they may direct broadcasters; that is, eliminate freedom of expression—the sort of thing we associate with war; a massive terrorist attack or other national emergency. At present, in Clause 329, no such context is given. The Government's power is completely untrammelled. It is unattractive in a democracy and we can do better.

My second anxiety concerns the continued criminalisation of BBC TV licence defaulters. Most people who refuse to pay for the purchase of a service are sued by the creditor, not prosecuted as a criminal. The fee takes a progressively larger proportion of the living standards of the poorest viewers since it rises by one-and-a-half times more than inflation, and benefits rise only according to prices. When I used to sit regularly as a magistrate, TV licence defaulters were almost uniformly poor; often so poor that they had to choose whether to have their electricity cut off or to pay their TV licence. Many were lone parents, for whose children TV was almost the only entertainment. We can have different views about what other opportunities parents of such children could provide, but to criminalise their mothers for a civil fault seems to me wrong. There are other ways to obtain the licence payment.

In conclusion, we are a nation which knows the characters of "EastEnders", though not those in politics, and where more watch the weather than the news and more watch "Coronation Street" than either. This Bill provides most of the basic framework for the broadcast media to grow, and grow soundly, in the citizen's and the community's interest.

7.23 p.m.

Lord Pilkington of Oxenford

My Lords, I am the penultimate member of the pre-legislative scrutiny committee to speak today. Before turning to my major points, I want to say first how successfully the noble Lord, Lord Puttnam, managed to rally together a diverse committee so that party allegiances were forgotten. Noble Lords need only look at the votes of the committee to see how we abandoned the ideology of our parties.

On the whole, like many other noble Lords, I was pleased with the response of the Government, who accepted many of our recommendations. It may seem uncharitable if I then concentrate on the recommendations that they did not accept; but that is the way of the world. Like other noble Lords, I feel that the Bill could be improved if some attention were given to some of the areas where our recommendations were rejected.

I begin with the content board, a very important element of Ofcom. I must confess to a slight worry. I welcome the appointment of the noble Lord, Lord Currie, but I share the worries of the noble Baroness, Lady Howe, that although we are at an early stage in the making of appointments there is a tendency for the competition element of the body to prevail over the content aspect.

As a former chairman of the Broadcasting Complaints Commission, which was later incorporated into the standards commission, I am very concerned that its functions—the old broadcasting standards complaints—with regard to fairness and the infringement of privacy should be protected. These are not the most sexy parts of broadcasting regulation, but they cause enormous distress to individuals. They demand a great deal of time. It is a ombudsman-like role and I must confess to noble Lords that I fought on the committee to have included in this board a ring-fenced, ombudsman-like role—and I lost. I am therefore expressing a view that I lost in the committee, but many of my fellow members accepted what I was saying.

I would therefore support additional independence and power being given to the content board. In particular, I will support amendments which I believe the noble Lord, Lord Puttnam, will table to give the body executive responsibility for the regulation of tiers 1, 2 and 3. I would support one other non-executive member of the main committee being given a place on the content board in addition to the chairman. I am worried about the fact that preliminary investigations seem to show that such an enormous amount of work can be done in about three days a month. On the broadcasting standards and broadcasting complaints bodies we were doing it every week. We must remember that individuals are suffering—and that it is not just a question of the whole business of standards of taste and decency. Therefore, the ombudsman-like role needs protection. I hope that the noble Lord, Lord Currie, will cast his mind occasionally from competition to the very important element of content.

I am afraid that I join other noble Lords and part from my Front Bench on the issue of non-European Union ownership. I hope that the Government will take note of our recommendation that before we allow foreign—in other words, American—ownership of television, without reciprocity, Ofcom should examine the issue. My goodness, it was a modest suggestion. We do not ask for an amendment because it is the most modest suggestion one could make—our Lord himself would be pleased with it. But, lo and behold, the Government rejected the recommendation.

It is a modest but important safeguard. I am not plugging the book written by the noble Lord, Lord Puttnam, but I read it. It is a history of America's relationship with the media in the past 100 years and it shows that in no sense was it ever kind to foreign owners. Certainly, our film industry suffered and lost. If the proposal goes through, I would not he happy to be an independent producer in the United Kingdom. I hope that the Government believe in creativity and will take note of our recommendation.

I am afraid that I also have to be difficult—again I part company from my Front Bench—and say that I will support amendments from the noble Lord, Lord McNally, which would restrict ownership of Channel 5 by a major newspaper group. Our committee considered the matter and took evidence on it. Ultimately, it decided that there was no justification for it. I agree with the noble Lord, Lord Puttnam, and other noble Lords that considerable problems would be caused to the British broadcasting organisations. I find it amazing that people believe that Channel 5 —I reiterate the view of the noble Lord, Lord Puttnam—is so bad when there is powerful money behind it. I look at it myself and enjoy it—in fact, I enjoyed a breakfast on its behalf today.

On the BBC, I accept the position of the noble Baroness, Lady Jay. I believe that it must be approached in the next two years with sensitivity. I should like to remind noble Lords that the reason we are in this regulatory position—I ask noble Lords to cast their minds back to the late 1970s—is because the Annan commission said that the BBC was so cavalier with regard to complaints that it set up the Broadcasting Complaints Commission. Therefore, any development of relationships between Ofcom and the BBC demands sensitivity on both sides. The noble Lord, Lord Currie, must show sensitivity, but so must the mighty BBC. As it moves more and more into commercial activities, it must show sensitivity to complaints. Its destiny will be created by itself and by Ofcom.

On the business of spectrum charging, I am glad that the Bill also allows Ofcom to consider that. It is a difficult matter. My own belief, for what it is worth, is that some spectrum charging might be beneficial. The Ministry of Defence has given up some of its large hand of the spectrum. If there is money involved, the Treasury might demand that it gives up more. The BBC tends to take a little more of the spectrum than it needs. It is like a vegetable garden where lettuces are planted but not radishes in between. For example, Classic FM has less of the spectrum than some of the BBC channels. It is a matter to which Ofcom ought to be allowed, and be prepared, to give attention. It is not a matter on which I have made up my mind, but it needs to be considered.

As regards financing, I totally agree with noble Lords who say that the body that we are discussing must be adequately financed. When I presided over the Broadcasting Complaints Commission, the Treasury was very mean towards it. We were dealing with the giants of industry who could employ lawyers. If they liked our lawyers, they offered them a higher salary and employed them as well. The body needs to be properly financed. If the Government think that a saving of 25 per cent or whatever will be made through amalgamating various bodies, the powerful media giants will produce 25 lawyers to their one. As I say, those media giants will say to a good lawyer, "Come and work for us. We shall double your salary".

Those are all the points I want to make. I hope that the noble Lord, Lord McIntosh, in replying to the debate, might, like the committee, abandon ideology and welcome our proposals. Again I say, patting the members of the Broadcasting Complaints Commission on the back, that we did a decent job. We united—Tories and socialists voted together. That was the first time I had voted with socialists. It might be worth while for the Government to listen to us; otherwise their amendments may be contested. I say that not as a threat, but as a fact.

7.32 p.m.

Lord Thomas of Gresford

My Lords, for about 15 years I was chairman of an independent local radio company which broadcast to about 2 million people across north Wales and Cheshire. Therefore, I know a little about the problems that the Bill throws up.

First, I turn to Welsh representation on the Ofcom board. Broadcasting plays a vital part in cultural and public life in Wales. The devolved National Assembly is a democratic policy-making forum which both creates and implements public policy in many of the areas where Ofcom will also have responsibilities. So there is a great need for mutual understanding between the two. We feel that the position of the National Assembly is not sufficiently spelt out in the Bill. It is a unique broadcasting environment using both English and Welsh. The reporting of news and of politics is very distinct in both languages. Although we have at the moment representation from Wales on the ITC, the Radio Authority and the Broadcasting Standards Commission, there is none proposed at Ofcom level in the Bill. The appointments that we already have have ensured that the organisations have the ability to deal with linguistic aspects unique to broadcasting in Wales.

S4C has commissioned very successful programmes in Welsh—contemporary drama, children's programmes, animation (the recent Mabinogi feature, and the Gogs, which I once saw in Hong Kong to my great surprise as it is a Welsh animation film). The Gogs come from Y Gogledd in north Wales. We are known as the Gogs to the southerners. Serious documentaries are covered. Recently Ann Clwyd was followed to Iraq in Y Byd ar Bedwar. Y Stryd won an ITC 2003 award for its programme on drug misuse in north Wales.

Ofcom will be a public body for the purposes of the Welsh Language Act 1993 which will require it to produce Welsh language schemes indicating its compliance with the Act. There are also in Wales ongoing problems with broadcasting reception difficulties due to topography. A large proportion of the population receives signals from English transmitters. Indeed, it is very difficult to pursue, for example, an election to the National Assembly when 40 per cent of the viewers or listeners have their aerials turned to English programmes. The signals come from English transmitters and that affects the commercial viability of television in Wales. If it is intended to loosen the ownership of broadcasting, there is a danger that the specific needs of Wales will be brushed aside by commercial companies.

We do not feel that our distinctive interests are adequately protected by the content board proposed in Clause 11 which provides equal representation to all regions of England, Scotland and Northern Ireland, as they have different problems. The functions of the content board in Clause 12 are woolly and non-specific. Although there may at the moment be a member from Wales on the current Ofcom board, that may not always be so. We believe that there is a need to promote consultation with the National Assembly with a firm guarantee that Ofcom will contain a Welsh member.

I turn to access to services. The Bill does not do enough to secure that all public service channels, including the BBC, ITV, Channel 4, Channel 5 and S4C are easy to access. There should be a clear "must carry" obligation on BSkyB to carry public service broadcasts on digital, with Ofcom empowered to regulate a fair price for them. Electronic programme guides are already used by those people with access to digital television to choose which channel they would like to watch. With the growth in channels to 200 and beyond, the regulation of EPGs will be more important in the future than it is today. The Welsh language broadcaster, S4C, is particularly concerned that its place in this new digital universe will be secured and that the Government will ensure that Ofcom has sufficient powers to ensure that S4C remains easily accessible for those viewers, both in Wales and beyond. Your Lordships will not be surprised to hear that nearly 200,000 people a week watch Welsh language programmes—not just rugby on Friday night—on S4C's digital service in other parts of the United Kingdom.

NTL in Cardiff has relegated S4C to channel 752. NTL neither lists S4C's programmes in its marketing nor does it provide any information on its availability to its customers. Consequently viewers are deprived even of the opportunity to find out what is offered by S4C. We know that many Welsh-speaking families in Cardiff now watch far fewer Welsh programmes than in the past.

S4C remains the only public service television service not to have received any sort of financial recognition from this Government that broadcasting in the new digital age does lead to additional costs. Every single one of our terrestrial public broadcasters has been helped in some way. But S4C's funding formula is determined by statute and, although this legislation makes some changes to allow the Secretary of State to increase S4C's funding to take account of the new digital environment, there is no undertaking as yet in the Bill that that funding will be made available. S4C has done a magnificent job over 20 years of broadcasting. It has had five Oscar nominations and awards from the Royal Television Society. It can compete for audiences and succeed in the future only if the Government provide it with sufficient funding.

It is essential that the cultural diversity which makes the United Kingdom such a very special place is reflected on our screens and through our radios. For us in Wales, our national identity and our particular cultural expressions, whether in the English or Welsh languages, are of great importance. BBC2W is coming on-stream on digital, but more effort needs to be made in having programmes in the English language that deal with Welsh matters.

As my noble friend Lord McNally pointed out, too much of the debate around the Bill has focused on all those issues which may well be of great interest to the powerful, the institutional shareholders, and the great global and international corporations. However, that forgets that we want a broadcasting ecology which can deliver programmes of excellence to people across the UK to provide not only the lazy entertainment, but inspire them and enrich their lives. We feel that there is a great opening for broadcasting in Wales, both on television and radio, and we will do our best to ensure that the Bill provides the framework in which that broadcasting can be carried out.

7.41 p.m.

Lord Harris of High Cross

My Lords, there is clearly much to welcome in the Bill. I particularly rejoice that it proposes a further measure of liberalisation in the market by loosening or removing state regulation. We have seen that process already in telecom, as we have heard, and in energy, air travel, financial markets and similar dynamic spheres of economic activity, of which broadcasting and the printed media are leading examples.

I have often regretted that the House is not more backward-looking. Who now cares to remember, and draw lessons from remembering, the world of the 1950s, when what we called "wireless" was jealously monopolised by the dear old BBC? The menu was confined to Home and Light Services, with restricted hours of broadcasting, later supplemented by the Third Programme for high-brows. The BBC defended its monopoly on grounds of limited wavelengths, which was largely bogus even in the days before the introduction of frequency modulation. The only competition was from Radio Luxembourg and sundry pirate radio stations. On television, the peasants were permitted two BBC channels until the 1950s, when Churchill dared to permit a commercial programme, which old Labour instantly pledged to abolish the moment that it came into power.

It is central to my analysis, and to my challenge to much that we hear from the Liberal Democrats, that all the remarkable progress that we have seen in communications in the past couple of decades owes absolutely nothing to politicians or governments of any party, not even the Liberal Democrats. Like all material advance, the progress starts from innovative engineers, scientists and others. Yet their groundwork would be barren until fertilised by entrepreneurs—they are fearsome characters in Liberal Democrat eyes—prepared to invest their capital in the hope of profit, but at the risk of loss.

Of course, governments have a vital role in setting the framework within which the competitive system best operates. The Bill is part of that legal framework, and our chief task is to judge whether the proposed rules are appropriate to one of the most dynamic fields of economic endeavour. In exercising that judgment, our watchwords should not be caution and safety first, but confidence and freedom. Above all, we should avoid the risk of weakening the springs of future enterprise.

On the controversial issue of foreign ownership of broadcasting licences, the Bill removes antiquated restrictions. I gather that the Liberal Democrats wish to reverse that, yet what could be more liberal or democratic than opening a market to the widest possible global competition and talent, without nervous, narrow, tit-for-tat governments trying to exclude other nationalities?

The Bill has gone some way towards liberalisation on newspaper mergers, by removing the need for prior consent of the Secretary of State and the threat of criminal sanctions. But why should the Bill include a role for Ofcom, which has neither the knowledge nor the experience of the industry and, as a statutory regulator, can control the content of licensed media? I caught a whiff of anxiety on that in something that the noble Lord, Lord Wakeham, and my noble friend Lord Currie said earlier.

As an economist, I enormously welcome the whole idea of trading in the radio spectrum, long delayed and overdue. I also welcome the power of Ofcom to fine the BBC for unfairness and infringements of privacy. However, I oppose the provision that the BBC governors should have the last word on its commitment to impartiality. Why should the BBC be judge and jury in its own court? On a central issue in British politics—a referendum on the euro, which would dwarf all other issues—the BBC must be checked from continuing as what my noble friend Lord Pearson of Rannoch calls "the Brussels Broadcasting Corporation". He has repeatedly presented what seems incontrovertible, independent and professional evidence of sustained bias from the BBC on the European Union, yet the governors have blithely continued to display a total lack of interest.

In our debates at later stages of the Bill, dare I venture to urge the noble Lord, Lord McNally, and what he said was his serried army of supporters, to ponder how far it is either liberal or democratic to seek to punish pioneers in the competitive TV stakes such as Sky, which has succeeded most conspicuously in widening choice? In responding to the Queen's Speech, a Liberal Democrat spokesman in another place acknowledged: Technology is changing fast and Britain must keep up with the game". However, on Second Reading, the same MP hinted heavily that Mr Rupert Murdoch should be kept out of Channel 5 at all costs, despite its low viewing figures that he might be able to improve.

I find myself wondering, from a Liberal Democrat perspective, whether the aim of broadcasting is to serve customers or exclude entrepreneurs of whom party men frequently disapprove? In much the same spirit, a leading Liberal Democrat said that, the Government still relies too much on a rigorous competition regime to deliver the goods. Radio, television and newspapers cannot rely on market forces alone to deliver quality, diversity and choice". Rigorous competition? Market forces alone? I find myself wondering what would be left of either if the Liberal Democrats had their paternalistic and restrictive way.

7.48 p.m.

Lord Bragg

My Lords, I wish to begin by declaring an interest. I work as a programme maker for Granada Television. I also work as a broadcaster for BBC Radio 4. I have worked in radio and television for more than 40 years, all of it in public service broadcasting. Like many noble Lords, I greatly welcome the broad and complex Bill, and wish it well.

It is to the public service heartland of television that I will address my remarks. My aim is to test the Bill against what in my opinion are the interests of public service broadcasting. I shall put it through that prism which I and millions of others believe has served and continues to serve viewers and listeners in this country so well.

Public service broadcasting in our society, after a patrician beginning, has come to stand for a system that guarantees, among other things, that it will deliver at all times a diversity and quality that the market may or may not deliver, often understandably. It is also based, crucially, on the conviction that the public service sector should be big and powerful.

Our broadcasting system is founded on the belief and the positive evidence from practice that an appropriate degree of regulation is necessary for the widest choice to be offered to the public, and for the public to be, unashamedly, offered opportunities for continuing education and enlightenment, original entertainment and comedy. It is also founded on the belief that the public should be properly informed about civic and political matters, domestic and international—a vital part, as my noble friend Lord Gordon of Strathblane said, of the democratic process. It is an ideal uniquely conspicuous for its proven performance and its wide acceptance in our country.

One of the strengths of public service broadcasting has been the competition for public service broadcasting. Over the past 40 years at least and increasingly since the 1980s, the BBC—the licence fee-funded cornerstone—has had to compete with ITV and then Channel 4, which has competed in strict public service terms in money, manpower and commitment. I believe there is no reason why that cannot be maintained. It could be said that the BBC needs ITV and Channel 4 every bit as much as Wellington needed Blucher at Waterloo.

The BBC is the overwhelmingly mighty and key public service champion and it holds the ring. Under its present bold leadership, it holds it well. Greg Dyke was rightly praised in the excellent speech of my noble friend Lord Alli. But I would argue that its own public service reach is buttressed by—perhaps even dependent on—the public service commercial broadcasting channels. ITV and Channel 4, whose interests, I believe, have been rather neglected with possibly serious unintended consequences in the Bill. Were the BBC to be left as the sole public service broadcaster, it would, I am convinced, gradually wither into an over-worthy marginal player, overburdened with public responsibility and isolated from the mix of market and regulation which has helped it to thrive.

A key question is whether the BBC should be a full part of Ofcom, to which all good fortune, and to the noble Lord, Lord Currie, all good fortune. The BBC is already included in tiers 1 and 2. It runs its programmes subject to the usual laws of the land; its own form of governance has served it long and, on the whole, well; and there is evidence that recently it has been strengthened. This is a difficult one, especially as the BBC Charter review and renewal will soon be upon us. And it can be argued that Ofcom, in its first years, will have enough to do without attempting to absorb the governance in one swallow of more than 40 per cent of British broadcasting which is already working well.

Then there is a concern about the monopoly of taste. Logic says that both the BBC and Ofcom would be mutually stronger were they to merge. But for two or three years I would be like Mr Asquith and would wait and see. Nor am I persuaded that the BBC needs the attentions of the NAO, but it, like much else, must wait for the Committee stage.

The merger between Carlton and Granada is going ahead, subject to the Competition Commission. It is an anomaly at least and extraordinary at most that, of all the major advanced democracies, Britain is the only one not to have produced an international television company, other than the BBC, whose primary purpose is to serve the British licence-fee payers at home—those who support it. Whether or not your Lordships approve of the major European and American companies, the fact is that, outside the BBC, we are far too small to compete. Our historical regional structure has tied us down in this area and held us back. I believe that keeping the BBC as the sole international player puts an unfair and potentially damaging burden on its raison d'être and its resources.

That merger has been referred to the Competition Commission, which is to judge the size of the market. But what market do we mean? Do we mean only the terrestrial television market or the whole media market? Some advertisers have expressed anxiety, of course, and their views deserve to be heard. Yet I believe that advertisers themselves surely need, and will appreciate, one big commercial public-minded company which delivers the unique portfolio of massive audiences and cracking public-service specialist programmes.

So what is the best for the public good here? Is it to continue with relatively small and inevitably fractious players—pawns on any international chessboard—or to give the Carlton-Granada couple the benefit of the doubt and, suitably regulated, as they are so used to being, encourage them to be fast at home and let loose abroad?

I move on to the question of whether ITV should own its own news—again, like every other major broadcaster in the world and, again, I suspect, there is prejudice that ITV is not quite to be trusted. That puts it at an unfair disadvantage. Both ITV and ITN believe that, in retaining rules that guarantee a fragmented ownership structure for ITN, independent news is less likely to be sustained as a proper competitive force to the BBC and, now, Sky. ITV also believes that, were it to own ITN outright, it could combine national and international news more effectively with the wholly owned regional news service, which is very important in this country, providing a full competitive and comprehensive news alternative to the BBC.

One role of public service, regionally anchored commercial television is perhaps to be the third force between what could otherwise be a bare-knuckled contest between BskyB and the BBC. Much of that is highlighted in the ownership rules for Channel 5. My noble friend Lord Puttnam, whom I congratulate on his scrutiny committee, has been eloquent and passionate on the matter and I am in his camp. So it seems are my noble friends Lord McNally and Lady Jay, who also gave powerful speeches.

My fear is the domino effect. By massive and unprecedented cross-promotionߞand why not?—and combined buying and selling—and why not?—a News Corporation take-over of Channel 5 could quickly double or even treble its current 6 per cent share. That could only have severe effects on the public service remit of the BBC, ITV and, most crushingly of all, on Channel 4, which would have nowhere to go. Briefly, I believe that all of them would have to jettison most of their expensive and restrictive public service obligations to keep audiences and just to survive. They cannot be expected to conspire in their own obliteration.

Finally, I turn to the subject of the regions. Noble Lords will have heard often enough that ITV makes more regional programmes than BBC1 and BBC2 combined. At present, and more importantly I believe, more than three-quarters of all television production is in London. Surely that matter must be addressed. One way is for the BBC to allow ITV regional companies to bid for programmes as independents. We hear that the BBC is under-quota. From working for Border Television and Tyne Tees Television, I know how much it means for people at a local level to receive other national channels.

There will be no conflict of interest. I have heard the BBC complain that there are not enough good independents. There are in the regions, and a generous pro-bono BBC would look at this possibility with an open mind. Regional television enriches us all. It provides skilled employment; it fortifies local identity; it keeps talent near its roots; and it can produce work of a flavour found nowhere else.

There is much more to be said on a range of subjects, but that will have to wait for the Committee stage. My basic concern—one which is, I know, shared by many of your Lordships and by many people in this country—is that in our broadcasting the very best be encouraged and that excellence be given space and resources. We should show all that is finest in our culture and make it available on the most democratic medium ever known.

How do we retain the system that produces that? How do we let it breathe and grow and not simply preserve it and make a Miss Havisham of public service, but enrich it further and, above all, pass on what we have had to succeeding generations? The Bill, with some amendments, makes that possible.

7.58 p.m.

Lord Borrie

My Lords, it is a very great pleasure to follow my noble friend Lord Bragg. Whether it is 8 p.m. in this House or 9 a.m. on another media, he invariably has something of great interest and substance to say.

Clause 3 of the Bill says, among other things, that Ofcom must have as one of its objectives the desirability of promoting and facilitating the development and use of effective forms of self-regulation. I mention that because, since last year, the Advertising Association has convened a task force of advertisers, broadcasters and others to devise a scheme of self-regulation to control advertisement content appearing in the broadcast media—television and radio—modelled on the scheme that operates for the non-broadcast media under the aegis of the Advertising Standards Authority.

I declare an interest as chairman of the ASA for the past two years. My predecessor, the noble Lord, Lord Rodgers of Quarry Bank, brought about a number of significant changes, including the application of Nolan principles to the appointment of the independent non-industry members of the ASA Council, who constitute the majority, and for an independent review of the adjudications made by the ASA Council.

Even before the time of the noble Lord, Lord Rodgersߞunder the chairmanship, I believe, of the noble Lord, Lord Thomson of Monifieth—the vital matter of adequate financial resources was secured, as they have been continuously over the years, by the very successful device of a levy imposed on advertisers and agencies. The task force to which I referred has undertaken to submit to Ofcom a viable properly resourced scheme for broadcast advertising in the next month or so for Ofcom's consideration.

My experience of the Advertising Standards Authority is that effective self-regulation is by no means the same thing as deregulation. It may be a lighter touch, but it is not a soft touch. Advertisers in the non-broadcast field have a healthy respect for the independence and objectivity of the ASA and for the system's ability to secure compliance with its adjudications.

One of the advantages of self-regulation, whether it be in the field of print advertisements or—I dare to suggestߞbroadcast advertisements, is a commitment to the system. Another is flexibility to respond to change in fast-moving media landscapes. The current code of practice has just been revised to cover e-mail, text messaging and the Internet. Imagine having to await primary legislation to keep abreast of developments in the new media, now or in the future.

The noble Lord, Lord Currie, the chairman of Ofcom, has thrown down a challenge to the advertising business and commercial broadcasters of all kinds. I believe there is every chance that an effective scheme will be presented for broadcast advertisement content control that is worthy of Ofcom's support and as being very much in the public interest, which is of course what counts.

I now want to say something about cross-media ownership because I am keen that we in the United Kingdom should have the maximum plurality in the media; but I am not too keen on the retention of a priori detailed prohibitions. I accept the Government's view that to allow a major newspaper proprietor to own a major stake in a Channel 3 provider is undesirable.

The Minister has pointed out that Channel 3 is currently the only television channel, apart from the BBC, that has a mass audience. She quoted a 24 per cent audience figure. But any fixed limit on who can or who cannot take over that, based—for example as the Government have doneߞon a 20 per cent market share, is bound to be arbitrary. Why not instead trust Ofcom and the Competition Commission to reach what I suppose would be an appropriately adverse conclusion if News International bid for a Channel 3 service?

What the legislation needs—which it does not have in its current state—is a provision for intervention by the Secretary of State, on Ofcom's advice I suggest, referring any takeover proposal to the Competition Commission. It needs public interest criteria set out for the Competition Commission to follow, similar to those contained in the newspaper merger provisions of the Bill—which of course are not new; they have been around for a long time, but in the narrow field of newspapersߞsuch as the value of diversity, plurality and so on.

Given the right statutory criteria the Competition Commission is well capable of looking beyond classic competition concerns of dominance, as it has done over the years with the aid of a number of special people appointed to a newspaper panel when dealing with newspaper mergers.

The Bill is meant to last For some years. The Minister must surely not wish to return in a year or two and propose amendments. Television audiences have a tendency to be not static. Indeed, such broader provisions in the Bill for exceptional public interest references to the Competition Commission would also be of value in the case of any newspaper takeover of Channel 5. Channel 5 may have only 6 per cent—some people say 6½ per cent—audience share now, but what about the future? Even now, as my noble friend Lord Puttnam pointed out earlier today, a newspaper takeover would provide opportunities for cross-promotion that should be looked into critically, not as it is now when the audience share is relatively modest, but how it may change over a relatively short time.

An arbitrary prohibition on a newspaper proprietor owning a Channel 3 service and an equally arbitrary free-for-all in respect of a newspaper proprietor owning Channel 5 are both unattractive.

Noble Lords will gather that I am rather fond of the public interest desiderata listed for the Competition Commission's consideration of newspaper mergers set out in Clause 368 of the Bill. They talk about the, accurate presentation of news", the free expression of opinion", and the plurality of ownership. They are, as I have indicated, not new. They even predate the Fair Trading Act 1973 to an Act of Parliament of 1965—a Labour Government I am happy to point out to Members of your Lordships' House opposite—but they could be given a wider application than just newspapers buying other newspapers. They could be given an application to one kind of media taking over another kind of media. We should put in place machinery and criteria that will satisfy the test of time and prevent the kind of dominance in this country to various platforms and various media that Mr Berlusconi enjoys in Italy, which is such an offence to democracy.

8.6 p.m.

Baroness Flather

My Lords, first I declare an interest. I am chairman of a radio station called Club Asia, which will cater for the needs of young Asians in the London area. I am also involved in an application for a limited licence in another area.

My remarks will be restricted to radio because that is a subject I know a little about. There is anxiety in our field because we wonder whether, without a dedicated regulator, as much attention will be paid to radio as at present. That is understandable, because radio forms a relatively small part of the whole regulatory field.

Radio has expanded hugely and beyond expectations. It must be looked after and regulated carefully for the future. Radio is the one medium that must cater for local needs. I am talking about independent local radio, in case people think that I am talking about the BBC, which does not have to do anything, because we pay for it. Independent local radio must generate its own funds. If it does not cater for local needs, it cannot generate its own funds and therefore cannot keep the business going.

I have concerns for the future. There are now two or three large companies in the field that own huge numbers of radio stations and also multiplexes, which are, as we have heard, the gateways to other licensees. In that climate, there is deep concern about whether ethnic minority stations will ever be able to flourish or increase in number.

There is no ethnic minority—or minority—station on FM in the London area. There are two or three smaller stations in the Midlands, but none in the London area. When we consider the ethnic minority population of London, that is clearly a big worry. There is no level playing field, but I would further say that there is no playing field at all for minority stations.

On the one side, we have the BBC, which is extending its reach through new stations and channels and, in fact, doing many of the same things that other people outside want to do. In fact, some of the ideas have been taken from other people, but I shall not go into that now. On the other side, the big companies have the clout, money and so on and are anxious to obtain as many licences as they can. That is understandable.

The Radio Authority has told us that access radio should provide ethnic minorities with a means of having something of their own, but access radio is very small-scale although we are not now dealing with so few people. Access radio has a limited ability to cater for any sophisticated matters; it is about community news and issues. We deserve better than that.

We are often concerned because small stations have little voice in the Commercial Radio Companies Association. That is not because we are excluded, or told that we are excluded, but because of circumstances. Usually, small stations cannot either afford or find personnel who can spend their time attending the meetings where the issues are discussed.

I shall say a few words about religious broadcasting. It is interesting that so much has been said about it, but there is religious broadcasting at present. There are several stations airing religious broadcasting. There are restrictions on certain religious bodies or officers of those bodies owning radio stations, but there is no restriction on religious content. I should have thought that that met many of the points that have been made in the debate.

Several local analogue, satellite and cable licences have religious broadcasting as their main content. Once the Bill is enacted, there will also be digital sound programme service licences for religious broadcasting. So that anxiety exists without it having been properly considered what is currently possible and whether it is really necessary to extend provision to specific groups that set out to perform a certain kind of religious broadcasting. Then, of course, we enter the problem of having a level playing field. There are lots of religious groups; should they not all have the opportunity to own stations? That is a deep concern.

I see that my noble friend Lady Wilcox is nodding, but we could get into difficulties there, because not every group is perhaps middle of the road, if I may put it as gently as that. We must be a hit careful about what may happen when everyone thinks well of everyone. Some things may not work when certain issues are involved.

My plea is based on the concern that thought must be given to some small radio stations if they are to survive and flourish; otherwise we will have just three, four or perhaps only two big companies. The CRCA does not like to think along those lines, but it is practically the case now.

8.14 p.m.

Lord Phillips of Sudbury

My Lords, I commend the work of the committee chaired by the noble Lord, Lord Puttnam, as did others. It has been a remarkably effective and useful prelude to this massive piece of legislation. My noble friend Lord McNally gave a bravura performance and expressed much of what I and most on these Benches would have wished to say. Although I have been a practising solicitor throughout my life, I have had close involvement with the media. For 26 years I had a slot on a BBC Radio 2 programme. I also presented "The London Programme" for London Weekend Television and a series for Anglia Television. For a decade, until last year, I was a trustee of the Scott Trust, which owns a large media group including the Observer and the Guardian. My interest could be said to be semi-informed but very intense.

The first thing that strikes me about this wonderfully complicated Bill, which at 570 pages will be a bonanza for my profession, is that only a handful of people will ever really understand it. I wonder whether yet again both Houses—the other House must have its share of the blame—have come up with a measure so complicated that, to some extent, it will be self-defeating in time, and whether we are placing on Ofcom a wholly unrealistic burden. I hear the arguments about isolating and giving power in one hand, but, as we go through the Bill, we must keep a canny eye on it to see whether it can be simplified. I wholly concur with the proposal by the noble Lord, Lord Fowler, for a downstream impact assessment.

I am strongly in favour of the 20:20 rule in relation to cross-media ownership and Channel 5. It would not be remotely effective to try to achieve public interest protection through powers given to Ofcom that can be used only after such a merger. Our statute book is littered with such powers and discretions, which are often unexercised or exercised capriciously or ineffectively. The threat of a distracting, expensive legal action against the regulator by big media battalions is a real deterrent to effective operation.

Chapter 2 of Part 5 of the Bill deals with newspaper mergers. I hope that I have not got the wrong end of the stick, but it seems to amend the Enterprise Act 2002, which has been in force for only less than a year. That Act retained the special provisions on newspaper mergers first introduced by the Fair Trading Act 1973. They were relatively concrete and relatively effective. When Tiny Rowland and Lonrho took over the Observer in 1981, the Secretary of State was able to impose a severe, effective network of provisions. Those provisions controlled Tiny Rowland when, in 1985, he tried to cajole the independent directors into undermining the position of the then editor. When he did not get his way, he withdrew all the advertising that came to the newspaper from his empire. Still that did not achieve the trick. Those provisions will be much weakened by the new measures.

In her opening speech, the noble Baroness, Lady Blackstone, called the provisions in Clause 368 "advisory" requirements on the part of Ofcom to ensure, -accurate presentation of news", "free expression of opinion" and, a plurality of views in newspapers". I suggest that that is much too insubstantial to be an effective constraint.

The other broad issue underlying my opposition to weakening the newspaper and cross-media ownership rules is the already powerful effect on our national life of the giantism that has grown out of the original ITV concept. Although I agree with everything else that the noble Lord, Lord Bragg, said, I must part company with him in that regard. It says it all that we are awaiting a decision on whether or not to allow the amalgamation of the only two survivors of the great ITV experiment. From the "let regional flowers bloom" concept based on independent regional television companies that are regionally staffed, independently directed and have regional studios and production, we are now in thrall to two giants. Of course, they would say that they are not giants and that only by joining can they punch their weight in world markets.

I accept that there is a conflict between that aspiration and the regionalism or localism in favour of which the noble Lord, Lord Bragg, spoke so eloquently. Perhaps we cannot have it both ways, but I would have thought that if we can build Airbus in two disparate countries, we can surely combine to achieve some of the great programming that we all want to see. I think that the noble Lord, Lord Puttnam, called the contrary a risible idea.

It is certain that the centralisation of power that has, in my view and that of my party, so damaged our society in recent decades is no less a commercial than a political phenomenon. Those who want to see the BBC on a so-called level playing field ignore the massively distortive effect of modern commercialism on life in general. Unrivalled as an allocator of goods and services, the market should not be the sole determinant of the shape of British television. I blanched at the prediction made by the noble Lord, Lord Birt, that, in not many years, the sole significant provider of public interest broadcasting would be the BBC.

I suppose that that view is based on what I agree to be the reality; namely, that modern financial markets are morally and culturally indifferent to everything but money return. The very workings of the City are anti-cultural. The efforts of those markets have destroyed regional television. I think of my local TV channel, Anglia, swallowed up a few years ago by Meridian, a vehicle of the noble Lord, Lord Hollick. In spite of assurances given at the time that the level and quality of local productions would be maintained, both have in fact been decimated. Today, Norwich is a shadow of its former self.

The need to salvage and sustain what is left of regional production makes me oppose letting the ITV companies further off the hook by treating them as independents when making programmes for broadcasters outside ITV. I agree with the right reverend Prelate the Bishop of Manchester who criticised the "taken together" judgment allowed to Ofcom in its oversight of the public interest test. I also share the view of Public Voice that it is laughably vague for Ofcom to be able to require Channels 3 and 5 to source merely a "suitable" proportion of programmes outside the M25.

As my noble friend Lady Walmsley said, British Music Rights has effectively drawn attention to the plight of independent music makers. Capital, Chrysalis, Emap and GWR operate a central playlist for their local stations, with an overlap of approximately 90 per cent in the records that they play. That is vastly destructive of the diversity and local talent that is the seed-bed for the stars of tomorrow.

I concur wholeheartedly with what the noble Baroness, Lady O'Neill of Bengarve, said. She drew attention to the extraordinarily reductionist goals of this mammoth Bill, set out in Clause 3. We must give a less dispiriting view of what the Bill is all about, and I look forward, with your Lordships, to doing just that.

8.23 p.m.

Viscount Chandos

My Lords, I welcome the Bill, but I welcome it in the same way as I greet my doctor's recommendation to do 100 press-ups twice a day. I am sure that it is good for me, but, as I look at the 403 clauses and 19 schedules, I cannot help, like the noble Lord. Lord Phillips of Sudbury, wishing that there was an easier way.

Of course we must recognise that the creation of a single regulator -there are five now—and, through that, the establishment of an integrated and, I hope, consistent regulatory regime for the communications industry represents the construction of an edifice that, like Rome, cannot be built in a day. But it should be a clear objective that for every hour that your Lordships spend on considering the Bill, many thousands of hours of subsequent regulation will be eliminated. A complex Bill covering a complex and important subject should not lead inexorably to more burdensome regulation. Time invested wisely now in Parliament should give a return of more time for the companies and bodies which Ofcom will regulate to serve their customers and their audiences.

Extraordinary amounts of time have already been given by my noble friend Lord Puttnam and his colleagues on the committee to the benefit of the Bill and, hence, to the benefit of all of us who enjoy the relevant services to be regulated by Ofcom.

Among my interests listed in the register are some which relate to this Bill. In particular, I am a shareholder and a former director of a company providing broadband television and video-on-demand services over BT's ADSL network. I am a director of a company, owned by two major advertising agencies, which provides the principal ratings research for the UK television industry. My only interest in broadcasting itself, however, is in a Russian television network. While I should welcome Ofcom bringing a little rationality to its regulation, I suspect that my noble friend Lord Currie would regard that as being several steppes too far.

I previously suggested to your Lordships that debating broadcasting regulation induces the sensation of being in the recurring world of "Groundhog Day", trying to remember whether this great issue or that was central to the Act of 1996—or was it the 1990 one? In 1996, there was not one single digital television home and now over half the country's homes are multi-channel—most of them digital. How many homes then had PCs, let alone Internet connections, even narrow hand ones?

When we return like clockwork to the issue of broadcasting and communications regulation, the perennial challenge is to think what these worlds will be like at the end of the useful life of the legislation, not just at the beginning. What will be the landscape in, say, 2010 when next this House (however composed) considers new legislation?

Therefore, the underlying approach of Ofcom allowing emerging competition, whenever appropriate, to supplement regulation is absolutely correct, precisely because of the dynamic markets and the vibrant creativity—which my noble friend Lord Alli described so well—that characterises this industry.

Ofcom, mandated through this legislation, will be responsible, on the one hand, for ensuring a ferociously efficient communications infrastructure for consumers and businesses; and, on the other hand, for preserving all that is so good about our public service broadcasting heritage, which other noble Lords have described far better than I can.

Even if the highest ratings are likely to be achieved for the passion and the fury with which the latter issues are debated in the weeks to come, we must not neglect the less glamorous areas of telecommunications. As the noble Baroness, Lady Buscombe, said, the market for mobile telephony is a remarkable story which we should be careful not to harm unnecessarily. More than that, we should learn from the success of that market when we seek to stimulate other and new markets, such as broadband.

The economic regulation which Ofcom will undertake will run alongside that of the OFT, under what I think is the medieval doctrine of concurrence. Reluctantly, I accept that there is no alternative to this duplication if we want to afford any special protection for our media. But, as has always been the case in the past, we must be ready for it to create endless confusion.

Today, the noble Lord, Lord 'McNally, cried that the combination of newspaper and television interests which he feared would follow from the provisions of this Bill would represent, I think he said: a concentration unacceptable in any industry-. Fear no more noble Lords, I suspect that such a level of concentration, even if it was not forbidden under this legislation, would be swiftly despatched by the OFT under the terms of the Competition and Enterprise Acts.

In the short time available, I am not sure that I can bring any new perspectives on the ecology of public service broadcasting. I believe that the BBC and Channel 4, extraordinary and unique organisations that they are, lie at the heart of British television's excellence. Every change that is contemplated should. inter cilia, be considered in the light of its possible impact on those broadcasters.

On the other hand, I am deeply wary of perpetuating an overly prescriptive regulatory regime which attempts to design the garden rather than to foster the ecology. I cannot agree with the suggestion of the noble Lord, Lord Birt, that the ITA, the IBA and the ITC successively presided over a "triumph of regulation". The history of ITV's regulation has been a story of regional promotion and protection, coming at a devastating cost to achieving the full potential of the nation's television and—film—industry.

Ironically, that does not make me sympathetic to the proposed merger of Carlton and Granada which, whatever the final form of the Bill, will be determined, in a classic example of concurrence, by the Competition Commission. ITV has squandered its extraordinary inheritance largely through its own devices, like a wastrel son in a—probably BBC— costume drama, and is owed no special favours.

I believe that the Competition Commission faces an unusually difficult task in assessing the concentration of advertising revenue attributable to the two companies. ITV's share will, I am sure, continue to decline. I have long believed that by the time it has reached a level which may be acceptable under the Competition Act, the penetration of digital may have reached a level where it would be feasible for the two companies to compete nationally on digital networks rather than cosily merge, thereby separately stimulating new programming and production far better than would be the case together.

My noble friend Lord Alli cited trust as the first principle of public service broadcasting—I believe that he was quoting Greg Dyke—and, in the end, the best resolution for the shape of television may come through placing trust in Ofcom to exercise its judgment and powers in a way that strikes the best balance between commercial market forces in its economic regulatory role and the preservation of public service broadcasting values.

Could that create a very litigious environment as the noble Lords. Lord McNally and Lord Phillips, fear? Possibly. But if we do not believe that Ofcom is strong enough for the fight perhaps we should all pack up and go now. In any case, if this leads the noble Lord, Lord McNally, to putting his children to work as communication lawyers, it conjures up the prospect, with a little help from a noble friend, of a distinguished new firm—McNally, Alli and MacBeal.

I shall end by flagging one specific issue for the later stages of the Bill in the area of training. Declaring one extra interest as a former governor of the National Film and Television School. I very much hope that the provisions in the Bill for Ofcom's promotion of training may be fine-tuned to ensure that the broadcasting industry's support for the NFTS will continue to allow its extraordinary work to be safeguarded.

8.33 p.m.

Viscount Astor

My Lords, I welcome the Bill. Our communications regulation is outdated and in need of reform. I congratulate the noble Lord, Lord Puttnam, and his Joint Committee on the fine work that they have done on the draft Bill. They have produced an excellent report on an enormous piece of legislation in a very tight timescale.

A year ago I would have had to declare an interest as a director of ITV Digital. Sadly that company is no more, leaving the Government's digital terrestrial ambitions badly dented and the prospect of analogue switch-off now some years away.

Its collapse demonstrated quite clearly the need for a single regulator. Attempting to improve digital terrestrial television coverage in conjunction with a plethora of different regulators, all with competing agendas, proved impossible. Of course there were management failures, but these alone did not put the company out of business.

Broadcasting is not a licence to print money; it is a risky business. ITV Digital cost its shareholders about £1 billion. But BskyB lost around that amount on Open, and even more on its investment in Kirch. Cable companies in this country have lost many billions of shareholders' funds in establishing their networks.

However, I want to look forward and to address six areas of concern raised by the Bill. I shall start with the BBC. The BBC is a wonderful institution which produces fantastic programming both on television and radio. Under the charter and agreement, the BBC should be answerable to Parliament., but there is no adequate mechanism which currently allows that to happen. I have no issue with the licence fee and believe that when the current charter and agreement ends, the licence fee should form the basis of any new agreement. However, I take issue with the lack of parliamentary scrutiny over how the licence fee is spent. We are considering £2.5 billion-worth of public money that is raised via a compulsory, levy.

It is no longer sustainable for such a large sum of money to be beyond public scrutiny. Both the National Audit Office and the Public Accounts Committee should carry out value-for-money and financial audits of the BBC. Opponents argue that that could undermine the editorial independence and governance of the BBC. I have to say that I believe those arguments to be very weak. The National Audit Office and the Public Accounts Committee will not examine the editorial policy of the BBC, but whether licence fee payers' money is being spent effectively.

The position is similar to that of government departments. Both the National Audit Office and the Public Accounts Committee know that they cannot question the merits of any particular policy, but they can investigate whether the money used to implement any policy has been spent effectively. I believe that the BBC' has nothing to lose; in fact it has much to gain. Parliamentary scrutiny would not affect the role of the governors, and to those who say it would, I say this: it is like claiming that shareholders at an AGM inhibit the role of a board.

In 1999 Gavyn Davies's own committee of inquiry recommended that the BBC should be audited by the National Audit Office. The alternative would appear to be more scrutiny by the Government, in particular by the Department for Culture, Media and Sport. That would risk political interference in the management of the BBC. I should have thought that scrutiny by an independent auditor and by Parliament, conducted in an open and transparent manner, would be far preferable.

There is also the risk of widening the debate when the BBC's charter comes up for renewal in 2006. The BBC should be independent of government but answerable to Parliament in the same way as other bodies funded by taxation. As a compulsory levy, the licence fee is in fact a tax. My next concern relates to the BBC and Ofcom. As drafted, the Bill limits Ofcom's remit over the BBC to the second and third tiers. The BBC is a large player in the market and a strong competitor to commercial operators. Like the other public service broadcasters, ITV and Channel 4, it should be brought fully within Ofcom's remit. The defence put forward that the backstop should reside with the governors of the BBC is not good enough. We need independent scrutiny and that should be conducted by Ofcom. The BBC has the ability to cross-promote via television, radio and publications like no other broadcaster. Ofcom should also have overall responsibility for approval of any new BBC services and scrutiny of existing digital channels. That is not to downgrade or inhibit the role of the governors. I believe that it would make life easier for them and it would protect the BBC as it faces charter renewal.

I turn next to the issue of media ownership. The proposals from the Government lack consistency. They agree that, subject to competition law, ITV should be one company. I agree with that; ITV needs to consolidate in order to survive, otherwise it will remain a minnow in comparison with its European competitors. Let us take RTL, owner of 35 per cent of Channel 5. It is worth £3.5 billion—double the combined market capitalisation of Carlton and Granada—and a staggering £11 billion less than BskyB is currently worth. Those figures put the values into perspective.

As we have heard, the Bill prevents single ownership of ITN. Every other major television channel in the world is allowed to own its own news supplier, but apparently not ITV. Single ownership of ITN would provide focus, secure future investment and strengthen rather than diminish it.

The cross-media ownership rules in the Bill are arbitrary. For example, they would allow a newspaper proprietor with just under 20 per cent of circulation to own Channels 3 and 5, with a combined audience share of around 40 per cent. But on the other hand, they would restrict a proprietor with just over 20 per cent of newspaper circulation share to Channel 5, which has an audience of only 6 per cent. Can the Minister explain the discrepancy? How can the rules be "proprietor neutral", as the Minister claimed in her opening remarks?

Will the Minister explain why some regulations on media ownership are in the Bill or are governed by Ofcom, but other cross-media ownership issues are left to the competition authorities? What are the principles, the rationale, governing these policies? What is the reason for that split? How did the Government decide which body should govern what?

Rights of appeal are vital if operators in the communications business are to have the confidence to invest—as they guarantee an independent decision on flawed decisions. I have some concerns that the Bill as drafted does not give broadcasters sufficient rights of appeal. It allows telecoms operators to appeal to an independent tribunal against any Ofcom decision made under Part 2 of the Bill, but limits appeals by broadcasters under Part 3 to decisions made for competition purposes only. For example, a mobile phone operator would have a guaranteed right of appeal against an Ofcom decision to regulate the packages it offered or the prices it charged; yet, were similar restrictions to be applied to a broadcaster, that broadcaster would have no right of appeal if Ofcom purported to make the decision on consumer protection grounds.

The Government have introduced a series of amendments to the Bill bolstering the position of the independent production sector. I welcome those. However, it appears that there are still a few gaps.

Two weeks ago, the OFT announced that the BBC had missed its statutory obligation to ensure that at least 25 per cent of its qualifying programmes were made by independents. One way of helping both the BBC and the independent sector would be, as we have heard from many speakers, to allow regional ITV productions to count towards the quota. So, for example, Border Television could bid to make BBC programmes which would count as part of the BBC's independent production quota. That would help the BBC and would have the added benefit of boosting regional production.

I am also concerned about the situation in radio. The independent radio supply market is dominated by the largest commissioner—the BBC. That puts the BBC in a powerful position over independent radio producers. One solution would be to extend the 25 per cent independent production quota provisions to BBC Radio. Another answer could be for Ofcom to be given responsibility for regulating the terms of trade between independent producers and the BBC. That would introduce an element of external scrutiny into the process.

I turn to the "must carry/must offer" rules in the Bill. There seem to be a number of inconsistencies which I should like the Minister to explain. Will the Minister explain why cable operators, which are subject to "must carry" obligations, cannot charge public service broadcasters for carriage on a fair, reasonable and non-discriminatory basis? Why do the "must offer" obligations not cover the BBC? As drafted, they apply only to public service channels licensed by Ofcom. Will the Minister explain why?

Finally, will the Minister explain the Government's position regarding regulations covering electronic programme guides (EPGs)—the on-screen TV listings? Current regulations require that public service broadcasters must be given due prominence and the system is regulated jointly by the ITC and Oftel. The current regulatory regime appears to work well. Is there a need for change? The BBC is pressing for change. Could that be connected with its decision to broadcast unencrypted—without making use of Sky's conditional access facilities—on satellite?

Will the Minister confirm that the BBC will be able to broadcast in the clear without regulatory change? If change is needed, how will that affect ITV? A requirement for satellite and cable broadcasters to give due prominence to every permutation of public service broadcasters' regional Output could severely affect ITV.

I apologise to the Minister for asking so many questions, but the Communications Bill is a huge piece of legislation. I do not expect all the answers this evening, but I hope that the Minister will be able to write to me before Committee stage.

We have heard a great diversity of views from all sides of the House. Many issues need to be resolved. I look forward to debating them in more detail in Committee.

8.44 p.m.

Baroness Cohen of Pimlico

My Lords, I should declare that I was a governor of the BBC from 1994 to 1999, at which point, in the endearing BBC terminology, I expired. I was also a member of the pre-legislative scrutiny committee that considered the Bill. In that context, I would dearly like to wring your Lordships' hearts with an account of our trials and tribulations, hut it would take time and, anyway, it should really be set to music.

Suffice it to say that we received nearly 300 written pieces of evidence of varying quality and length. That was before we took evidence from some 50 witnesses and participated in several breakfast seminars. At times it seemed like a continuous session, lasting for three and a half months. Through it all, my noble friend Lord Puttnam kept his head, his manners and his good temper and extended such a warm welcome to all contributors that they found the process a pleasure rather than a burden.. He also formed his little group into a stroppy organisation that took no account of party politics.

Those of us who speak at number 34 in a debate have a duty to throw away those parts of their speech that someone else has already given. I have done that, but I cannot bear not to make three quick points.

Given the care and thoroughness with which the committee considered the key provisions of the Bill which relaxed the conditions of cross-media ownership and removed all prohibitions on foreign ownership of our major TV channels, it is the more surprising that the Government took no real account of our views. The idea that the owner of four major newspapers and one major television channel could also own a majority of Channel 5 struck the committee as more than peculiar. I, at least, shall join my noble friend Lord Puttnam in tabling amendments in Committee; indeed, I shall probably go further than him. Perhaps the prohibition should be for ever, rather than allowing Ofcom a crack at it in three years' time.

The Government have continued to insist that only good and new capital can come from allowing any overseas company to own our major television companies. That seems equally daft. Anyone who has ever dealt with or thought properly about major American television companies knows that, like the good businessmen they are, they seek to sell their programmes in as many markets as possible. Being American, they make their programmes in English— that may have escaped people's attention. That means that there is little additional cost in selling the programme that they have already made. It is especially easy if the same company owns the channel on which the programme would be transmitted. In business terms, the turnover drops straight to the bottom line. Anyone who believes that we as audiences will sensitively reject material not specifically made for us in a foreign land cannot have watched much television lately, and certainly not in the daytime.

The committee did not believe that quotas for local production would not be eroded, almost immediately, by the continual legal challenges and salami slicing that powerful companies would deploy in a businesslike pursuit of their best interests. I cannot except the United States in that regard. The realistic protection against all this lies, as it always has, in protecting the ownership of channels.

On the subject of salami slicing, I have listened to a variety of attacks on the BBC, usually prefaced by the profession of unqualified admiration for this jewel in our midst. I believe that the Bill has the balance right Ofcom should regulate tier 1 and 2 services but regulation of content should stay with the governors. As my noble friend Lord Alli observed, one needs to look carefully at where the sniping is coming from. In my experience, a commercial experience is usually involved, at least in loading the rifle. I commend leaving the BBC where it is in terms of regulation.

8.49 p.m.

Lord Inglewood

My Lords, I begin by declaring an interest as chairman of the Cumbrian Newspaper Group, which owns several local newspapers in northern England and some commercial radio stations throughout the United Kingdom. We have several concerns about the contents of the Bill, but it is not for me to argue them this evening.

This Bill's predecessor was the Broadcasting Bill, subsequently the Broadcasting Act 1996. I think that the debate surrounding that legislation may have been dazzled by the shiny newness of digital technology's application to radio and television and the possibilities that it offered. Perhaps we were less focused titan we should have been on the economic and social consequences of the changes that we were discussing. The tentacles of this Bill—with its overall embrace of telecommunications—spread deeper into the economy and society. Its impact on everyone in Britain today will be enormous. Show me someone who does not have a television set, a radio, a mobile phone, access to the internet or a credit card, or who is not in some way affected by all those things, and I will show you someone who will not be affected by it. In reality, it is going to affect all of us, probably in more ways that we do not immediately recognise than in those that we do.

Let us not forget that the sector of the economy which we are discussing is very important. Telecommunications and television broadcasting revenues alone amount to about 5 per cent of GDP. No serious business in Britain is going to be unaffected. The aggregate of the differences between getting it right and getting it wrong are going to be quite significant; indeed, I would say enormous.

We are discussing matters not only domestically to Britain. Particularly in the telecommunications sector—perhaps personified by Sir Chris Gent and Vodafone, with its takeover of Mannesman—UK business has established very valuable holdings abroad. Equally, we are world leaders in certain aspects of television and radio. It is therefore very important that we create a sound domestic framework for these industries here at home which will enable them to flourish and to expand abroad.

During the forthcoming discussion in your Lordships' House we shall hear a lot about quality in our media, and quite rightly so. However, we must not overlook the connection between prosperity and quality. In all areas of life, better quality goods tend to cost a bit more than shoddy wares. If we want good quality television, radio and telecommunications, they are going to have to be underpinned by thriving businesses supplying them.

As for free-to-air services funded by advertising, there has to be enough advertising to generate the necessary money. I think that we sometimes tend to gloss over the fact that, apart from the BBC, all other free-to-air public service television and radio is funded by advertising. So their performance is inevitably directly linked to the advertising market, which in turn is not infinitely elastic.

As I previously explained to the House, I believe in public service broadcasting as a benchmark in the domestic broadcasting scene and as a means of providing a component of quality television and radio. However, no one has to look at or listen to it. Nevertheless they, like the National Gallery and the Victoria and Albert Museum, are there for those who want them. Equally, I think that it is far too easy to assume that public service broadcasting alone is worth while and that everything else is not. There is plenty of top-rate television on satellite and cable, and much of it comes from abroad. I think that we should acknowledge that and do so ungrudgingly.

Equally, there are plenty of good things on public service broadcasting that I do not think much of. But, after all, many of those are not intended for white, 50-year-old men in suits who sit in the House of Lords—which by any analysis is a very niche sector in the market. Indeed, I recall one of my daughters rebuking me for moving to turn off a well-known Australian soap with the words, "It's my news, Dad". As noble Lords may gather, I do not much care for soaps—but I dare say that that was what Jane Austen wrote.

Anyone who travels by train or air has the chance at the terminus bookstall to buy a wide range of books and magazines, on most of which I would not want to spend my time or money. But if others do, why should they not? Surely the same is true of television and radio. Surely we should be relaxed within the framework of the rules regarding defamation, privacy, taste and decency, bias and so on, not least when there is a vein of public service broadcasting available.

In today's world, with its globalising media marketplace, especially in the English-speaking world, I believe that the BBC, the only UK business of a size to be a global force by itself, is right to have moved into the production of commercial services. But of course that poses a series of questions about fair competition, transparency, accountability and regulation. These questions are already widely canvassed, but it does not make them any easier to deal with. Suffice it to say, however, that although I do not think this Bill is the place for dealing with many of them— that is for the charter and agreement renewal in 2006—I am increasingly coming to the view that changes in the constitutional and legal status of the corporation may be appropriate, and that its regulatory and accountability arrangements are becoming anachronistic. In fact, I think such changes might well enable the BBC to be better able to get on with its prime purpose—broadcasting.

As for cross-media ownership rules, I believe it is appropriate to have safeguards above and beyond those afforded by competition policy alone. Equally, those rules should be as unintrusive as possible and address real abuses in a realistic way that is proportionate to the mischief they are intended to combat.

As I have already pointed out, the media and telecommunications sectors are commercial and are always changing, stimulated by the marketplace. This is generally good and delivers for society, although that is not an invariable outcome. In particular, for as long as the proposed merger between Carlton and Granada is subject to a Competition Commission inquiry, I would not want to express a view about where the balance of advantage lies, but such a move clearly has some benefits. Equally, were it to proceed, I cannot see why the merged company cannot have its own news provider if it wants, despite the Minister's rather flimsy attempt earlier to persuade me otherwise.

Just as all politics is local, so is the media. What affects or interests us as individuals is what matters most. Hence the regional component to Channel 3 is important, although increasingly in the contemporary world, the distant is ever-closer, as the coverage of the Iraq war shows so vividly.

Now that the United Kingdom public service broadcasters are finding ways of transmitting all their regional channels by satellite, it is important that they are all accorded appropriate prominence on electronic programme guides. I welcome this extension of regional services. It is depressing enough waking up in a hotel room in Brussels, but then to turn on the television and be told what is happening in Gravesend when you are more interested in Carlisle does not make it any easier.

Moreover, while on the subject of regionality, can the Minister say what plans the Government may have for the roll-out of broadband through the more distant and sparsely populated parts of the United Kingdom, particularly given Commissioner Monti's recent remarks that he accepts that it will be legitimate under state aid policy for public money to be used to assist this process?

There is one aspect of the media and telecommunications industries which often tends to be overlooked—the huge significance of the regulators. The aggregate impact of the myriad decisions they take will have a very material effect on the future well-being of the industries. The noble Lord, Lord Currie, and his colleagues are shouldering onerous burdens and taking on great responsibilities. As parliamentarians, we should recognise their independence from us and exercise our responsibilities as the body to which, ultimately, they must give an account.

One particular area in which Ofcom will be engaged will be in the transposition and implementation of the considerable body of European legislation that affects this part of the single market, since United Kingdom policymakers are quite tightly constrained by decisions taken at EU level in a number of areas which we are discussing this evening. I hasten to add that I am not complaining about that, but I hope that the House will carefully watch these developments as part of its wider scrutiny role. Certainly, as the Minister responsible for much of the negotiation of the last Television without Frontiers directive, I felt I was hardly held to account by Parliament regarding what I was doing on behalf of the country. It is to be reviewed again quite soon, and while I know the noble Baroness has plenty of things to fill her day, I hope that she may be able to keep us up to speed as and when these negotiations are put in hand.

I hope that the Communications Bill, when enacted, will not have a long life on the statute book in its present form, just as the Broadcasting Act 1996 is now being unpicked. No sector of the economy is moving faster than telecommunications, the media and broadcasting and legislation must guide its evolution, not kill it off.

This Bill proposes some good things, but it could do more. I hope that the noble Baroness may be able to find it in her power to enhance its benefits and to mitigate its shortcomings during its passage through the House.

9 p.m.

Lord Lipsey

My Lords, like my noble friend Lady Cohen, I recognise that at this time of night the only chance of a hearing is to be brief. But I cannot resist making one short preliminary remark. It is 31 years this year since I first worked in these Houses of Parliament. For the bulk of that time I watched with alarm as it seemed to me that Parliament was moving from what Bagehot called the efficient part of the constitution to the dignified part of the constitution, counting for less and less.

With the Joint Committee, so magnificently chaired by my noble friend Lord Puttnam, for the first time I feel a genuine hope that that process has been reversed. Here, through the evidence and the report and the debate, we saw Parliament right at the centre of a national debate on these matters. Whatever the outcome, therefore, this is a great victory for Parliament and we should celebrate it today.

The only substantive issue I want to talk to today also concerns Parliament, in particular the relationship between Parliament and the BBC. As a young student of politics, I was taught that the textbook role of Parliament was the scrutiny of supply; that is, the voting and monitoring of public spending. The Public Accounts Committee is the parliamentary committee charged with this task. It is chaired by a leading member of the Opposition—currently, Edward Leigh. It is serviced by the National Audit Office, itself headed up by an officer of Parliament, the Comptroller and Auditor-General.

It is not—and this is crucial—concerned with policy. It is concerned with whether, given the policy, public money is spent efficiently for the purpose for which it has been granted. But it is not concerned with all public money, for the BBC is outside its remit. That anomaly was rejected by the committee on the future of the BBC licence fee, chaired by my good friend, now chairman of the BBC, Gavyn Davies, on which I sat. However, I see that he has now told noble Lords that he was opposed to this particular recommendation in the report which he signed.

It was authoritatively rejected by the committee on the audit of public spending, chaired by the noble Lord, Lord Sharman. The whole PAC, irrespective of party, has asked that it be lifted. And now we have a Secretary of State who is not the BBC's messenger girl in this matter. Ministers have made it clear that if Parliament decides the restriction should go, go it will.

I understand the BBC's concerns in this matter. However, I believe that some of them are down to misapprehension. The noble Baroness, Lady Hogg—I am sorry she is not in her place—seemed to believe that the National Audit Office would be auditing the BBC's accounts, appointing its auditors and interfering with her audit committee. It has no such intention. Some people seem to believe that it is a Trojan horse for Ofcom. I backed PAC responsibility towards the BBC for precisely the opposite reasons. I fear that Ofcom will take too large a role too soon in this and that unless the public have some guarantee that the BBC is accountable to someone for the public money it spends, it will speed up that process. That is why I oppose it.

Most seriously—and this is a genuine concern—the BBC worries that the NAO will interfere with the editorial content of programmes. I, too, believe that concern to be misplaced. Every noble Lord will agree that there is no part of the BBC whose independence is more important than that of the World Service It is a beacon of impartiality throughout the world, particularly at times such as these. Yet by a quirk— it is funded by a grant in aid from the Foreign Office— the World Service is subject to NAO and PAC scrutiny. Needless to say the BBC fought a rearguard action to the last drop of Chablis to persuade Members of both Houses to get it exempted. Fortunately, they failed. There is no suggestion anywhere, including from the BBC, that this has led to any meddling with its editorial independence. Yesterday I checked with a former distinguished head of the World Service, Sam Younger, who now runs the Electoral Commission. Mr Younger confirms not only that there was no illegitimate interference but also that NAO scrutiny was a spur to the efficiency of the organisation he ran.

But it is a case of belt-and-braces and the BBC needs reassurance. Let us see what we can do. I understand that the NAO is perfectly happy to sit down with the BBC and discuss with it how it would plan to conduct its scrutiny should the rules change. I believe that it will do so—having had some insight into its thinking—in a way that satisfies any legitimate concern that the BBC and its supporters may have.

As the Davies committee found, the BBC licence fee is by far the best way to finance the kind of services that the BBC provides. But it is a particularly onerous tax. It is a poll tax, one that it can take a low paid worker a whole week of labour to earn. Parliament has decided to be generous with the BBC and to increase the fee each year by 1.5 per cent more than inflation. That is why the BBC can achieve so much today. I signed up to that on the Davies committee and I do not resile from it in any way today. I was persuaded by the noble Lord, Lord Birt, that every penny was justified. But I do argue with all the force I can muster in your Lordships' House that we can do that and continue to do that only if we can assure the people that that money is being spent efficiently and not frittered away, as in the pre-Birt days I fear much of it was.

I want a BBC that is independent. I believe in an independent BBC as strongly as any Member of this House. But I also want a BBC which is accountable, and accountable above all to this Parliament. By asserting the rights of the PAC subject to the sound assurances that it is prepared to give, this House will, with the Bill, have an opportunity to strike a blow for an efficient Parliament as well as an efficient BBC.

9.7 p.m.

The Duke of Montrose

My Lords, I wish to address issues that are a little more local than those addressed by the noble Lord, Lord Lipsey. The idea of replacing five separate regulatory boards with one single regulator has a nice tidy administrative feel about it. It will particularly give reassurance that there is not some element of communications that is going to fall outside the net as it exists at present. The element that we shall need to guard against is that with communications being handled by one large body it does not start to lose touch with the grass roots, although I realise that that is not perhaps the view of the noble Lord, Lord Dubs.

There are three issues I can think of that will be of concern particularly to those who have a stake or an interest in Scotland: national and regional consumer representation; regulations governing the electronic programming guide; and the development of broadband in remote areas. Given the time of night I shall touch on just two of those matters.

Noble Lords will be well aware that Scotland has distinct social and cultural characteristics. The higher than average number of households living on low incomes might also be a factor, but I refer more particularly to the numbers and remoteness of some communities. Large swathes of the country are still subject to an effective BT monopoly as far as fixed line telephony is concerned. Scottish research has shown that outside the cabled areas of the central belt over half the customers are unable to name a single competitor to British Telecom. They may even be like me and not really want to know of a competitor while having to rely on BT for the maintenance of overground lines in our rough northern maritime climate. I certainly hope that by having to deal with only one company as a supplier, it may be possible to achieve a speedier remedy to any problems that I face.

We heard a most interesting speech from the noble Lord, Lord Gordon of Strathblane, on the advantages of regional emphasis in communications. Currently the need for regulation to recognise Scotland's special characteristics is allowed for by the statutory Scottish board members on both the Independent Television Commission and the Broadcasting Standards Commission. In addition, there is the Scottish Advisory Committee on Telecommunications. I certainly accept that the Bill as drafted allows for Ofcom to set up an office in Scotland, and for the content board and the consumer panel each to have a member for Scotland appointed by the main Ofcom board.

Of course, I am delighted to see in Clause 205 the transmogrification of the Gaelic Broadcasting Committee into the Gaelic media service, although I would wait for details from those more familiar with its work, such as the noble Baroness, Lady Michie of Gallanach, who spoke earlier, to know whether and where the provision can be improved. On that point, I have to declare an interest as having been signed up as a life member of An Comunn Gaidhealach in the days before I could even walk.

All that will make it extremely difficult for only two Scottish positions to be filled by individuals who can adequately represent all the different stakeholders. Have the Government given consideration to requiring the consumer panel to have a committee for Scotland? It would perhaps be constrained by the remit of the consumer panel itself, but would go some way to replacing the Scottish consumer input currently provided by the Scottish Advisory Committee on Telecommunications.

Now that the multiplicity of channels and what I believe are called platforms are moving into double figures—the noble Lord, Lord Birt, termed the way in which they are doing so as a spectrum of abundance?— we already have experience in this country of regulating the provision of electronic programming guides. My noble friend Lord Inglewood referred to that a few minutes ago.

In speaking to some of the representatives of the BBC, I have been made aware that it no longer has a policy of encrypting its public service programmes when providing them for satellite broadcast. With the money saved from the encryption process, the BBC proposes to make all regional variants of its programmes and news available on satellite. If that becomes the norm for all Scottish broadcasters, it means that enthusiastic Scottish football supporters in London will be given the chance to watch their own regional football coverage on a Saturday evening, as if they were watching one of the Scottish regional channels. That recommends itself to many Scots.

Because the construction of the electronic programme guides is very much subject to the whim and financial interest of the provider, the role of the regulator becomes extremely important. It has to see that the public service element does not become completely buried and that viewers have ready access to the right regional version of the public service channels provided for them. All that means that Ofcom must be given the clear objective of updating and maintaining the regulation of electronic programming guides to protect the public interest.

9.13 p.m.

Lord Ashley of Stoke

My Lords, I warmly welcome the Bill, with its wide-ranging remit, but I must say frankly to my noble friend on the Front Bench that quite a few amendments will be required before it is satisfactory to some of us.

I propose mainly to deal with the Bill's effect on disabled people, as did the noble Lord, Lord Addington. On a more general issue, I hope that the Bill will be made to work for the benefit of consumers now and in the longer term.

I am anxious to make a specific point. I agree with the noble Lord, Lord Puttnam, on the proposed changes to media ownership laws. I hope that the Government will accept his suggestions, which I very strongly support.

I particularly welcome the Bill's proposals to extend subtitling and signing requirements to cable and television services. Their exemption showed a scandalous disregard for disabled people, and is a classic example of the naivety of governments in the face of commercial lobbying which claimed that subtitling was too expensive. That is an absolutely nonsensical claim. Goodness knows why Ministers bought it.

The basic fact about subtitling of television is that, without it, television simply does not exist for people with a serious hearing impairment. For them, it is a silent or mumbling box of moving pictures, devoid of all sense and substance—a teasing reminder of our greatest medium of communication but rendered meaningless by the absence of subtitles. It is a ridiculous situation when subtitles can transform the understanding of television for profoundly deaf people. If subtitles are not available, such people cannot watch television because they cannot understand it.

The targets proposed in the Bill for subtitling are reasonable—for example, 90 per cent every week for Channels 3 and 4, and 80 per cent every week for other services. But we should not lose sight of a 100 per cent target, which is the eventual aim.

Many of the 50,000 profoundly deaf people whose first language is British Sign Language do not have the necessary language skills to allow them to follow subtitles. They need on-screen signing, and the targets for that are inadequate and certainly need to be revised in the Bill.

However, if the targets for subtitles are reasonable, the target date of 10 years is laughable and absolutely nonsensical. IT companies, which often aim at target dates of 10 weeks or 10 months, must be laughing at the Government's target of 10 years. By then, of course, we may well have television sets on our watches or even our spectacles! Providing subtitles should be child's play. Whoever put the case for 10-year targets and persuaded the Government to accept them was skilful at pulling the wool over the eyes of Ministers.

That is yet another example of commercial interests pleading poverty, regardless of the fact that, if successful, they would damage the interests of deaf people. I urge the Government to change their minds, and I shall give them an opportunity to do so with amendments in Committee and on Report seeking a five-year absolute maximum within which subtitling should be at 100 per cent.

Another source of concern is the proposal for exemption from the suggested provisions for subtitling. Many factors will be taken into account in considering whether a channel should be exempt, and Ofcom will properly make some exemptions. I presume that it will not readily dish them out like confetti, but there is a danger that it will allow them on flimsy grounds, to the detriment of deaf people. Again, I shall be making suggestions at a later stage of the Bill.

I turn briefly to some issues that affect people who are blind as well as those who are deaf and, indeed, those with other disabilities. Equipment design that includes meeting their needs is very important. Many products connected with television, such as video recorders and subtitle access, are more complex than they need to be and they create major difficulties for disabled people. What we call "add-ons" are costly and expensive, but if we have inclusive design— that is, if such add-ons are prepared at the manufacturing stage—the costs to the manufacturer are minimal and the disabled person gets a better product.

Another issue that affects people with all kinds of disabilities is the issue of an advisory committee with a special remit on disabled and older people. Without that, the problems encountered by such people could easily be overlooked—indeed, they will be—despite the provisions in the Bill, which I regard as inadequate. Such an advisory committee to the consumer panel should be set up to articulate the needs of disabled and older people.

Much of what I said earlier applies to audio description and other problems for sight-impaired people. Audio description provides a commentary to fill in the picture for those who are blind and cannot see it. It is a very valuable exercise and one that is indispensable for blind people. We should have far more of it.

The provisions of the Bill will affect the lives of people with sensory disabilities. With appropriate amendments, which I am sure the Government will look on kindly and sympathetically when we reach the Committee and Report stages, the Bill can be of enormous value to them or it can leave them still excluded from some of the wonders of television. I am optimistic that the Government will help.

9.19 p.m.

Lord Pearson of Rannoch

My Lords, I was fortunate enough to have an Unstarred Question in your Lordships' House on 11th March last year, to ask the Government whether the BBC was fulfilling its duty to produce political programmes which were impartial, wide-ranging and fair. I have a feeling that at this late hour your Lordships might appreciate it if I do not repeat again now what I said then, so I shall refrain from so doing, but I should like what I said in that debate at cols. 654 to 656 to be taken into account by the Government in their consideration of the Bill.

That debate took place because the Euro-sceptic movement in this country believes that the BBC is guilty of consistent Euro-phile bias. Because bias, like beauty, is often in the eye of the beholder, the noble Lords, Lord Harris of High Cross and Lord Stoddart of Swindon, and I decided to commission genuinely independent research to find out if those fears were justified. So, through our research unit, Global Britain, we commissioned Minotaur Media Tracking, which is run by Mr David Keighley, a former publicity officer for BBC TV news and current affairs and a former director of corporate affairs at TV-am, to analyse the BBC's political output.

By 11th March last year, we had received six surveys of the BBC's political coverage of the European issue. Those reports showed alarming Euro-phile bias, some of which is detailed in our debate that day.

Since then we have commissioned four further reports, which, alas, continue to show the same picture. The nature of broadcast monitoring is obviously laborious, and the 10 surveys we have so far commissioned run to some 507 pages for the main reports, supported by 674 pages of background analysis and 1,412 transcripts, which run to a further 2,750 pages. The first six reports can be judged for themselves because they are on the www.Globalbritain.org website, together with our contemporary correspondence with the chairman and management of the BBC and with the Secretary of State, going back to Minotaur's first survey of the BBC's coverage of the European Parliament elections in 1999.

We have not put on the website any of the later reports or correspondence since March 11th last year because we have been trying to get the BBC to honour its public service remit by changing its editorial stance, but I fear we may have failed.

I am aware that a number of your Lordships may share the BBC's view that the European Union is an obviously benign institution and that our membership of it is so clearly in the national interest that anyone who disagrees must be mad. Now is not the time to debate that question and I hope it will not cloud our consideration of the Bill. What is beyond dispute, and what is relevant to this debate, is that a substantial proportion of the British people do want to leave the European Union, and even if the BBC thinks they are all mad, it has a duty to air that significant strand of public opinion.

For instance, according to opinion polls, some 30 to 40 per cent may want to leave the EU, sometimes more, depending on the question asked. But so far the BBC has refused to represent their view. The BBC does not deny that. In his latest letter to me of 25th February this year, the chairman writes as follows, it is accepted that the euro-sceptic point of view that Britain should withdraw from Europe deserves inclusion in the BBC's coverage, but the fact that none of the main political parties has adopted this position will inevitably influence the prominence with which it is covered". Fair enough, except that it is not a question of the prominence which the BBC accords to this subject; the fact is that the BBC has never permitted or encouraged serious debate about whether we should stay in or leave the European Union. It is also disingenuous, to put it politely, of the BBC to imply that it gives only minimal coverage to positions which are not shared by the main political parties.

For instance, the BBC gives plenty of airtime to those who oppose GM crops and food and to those who favour the legalisation of cannabis and other drugs. It also gave ample airtime to the anti-monarchist view in the run-up to last year's Jubilee. None of these positions has been adopted by the main political parties as far as I am aware. Of course, there are other examples with which I do not have time to trouble your Lordships now.

I gather that the BBC's defence for giving so much time to republicans before and during last year's Jubilee may be that the Jubilee was a major national event and that it was therefore required by its public service remit to reflect all shades of public opinion. Fair enough, one accepts that. But the BBC has, by comparison, almost completely ignored the new EU constitution emerging from Mr Giscard D'Estaing's Convention on the Future of Europe. That has fundamental implications for the future of our democracy and may therefore turn out to be much more important than the Jubilee. So that excuse does not wash either.

Our second complaint, which I made on 11th March last year but which I repeat because the BBC refuses to do anything about it, is that the Minotaur reports are passed by the chairman to the BBC's management, and not to the governors. Yet it is the governors who are responsible for the BBC's duty to be impartial, wide-ranging and fair; to educate and inform. Not surprisingly, on every occasion, the management tells the chairman that the report's conclusions are unfounded and he duly reports the message to us. In an attempt to be helpful, we have therefore twice suggested that the reports should go to an independent arbiter for adjudication. The chairman has twice turned down that suggestion flat, presumably because the BBC fears the result of such independent Validation. That is a pity from our point of view, because independent adjudication would also reveal whether the reports find that the BBC is indeed guilty of Euro-phile bias just because they have been commissioned by such well-known Euro-sceptics as the noble Lords, Lord Harris, Lord Stoddart and myself.

That suggestion was even advanced, I regret to say, by some of your Lordships in our debate on 11th March last year—understandably, perhaps, because he who pays the piper often calls the tune. But it is a bit more worrying when the BBC's only defence to the press against the Minotaur reports is that they were commissioned by arch-Eurosceptics and must therefore be unreliable. That appears to be the case. Anyway, we have offered to put them to the test but have been turned down.

It is also not frightfully helpful when the chairman suggests, as he has on more than one occasion, that we should address our complaints to the BBC's Programme Complaints Unit, or even to the Governors' Programme Complaints Committee, because both those committees deal with complaints about specific programmes or items and are not geared to hearing complaints about consistent editorial bias.

Perhaps partly in answer to that impasse, the chairman last year set up a new Governance and Accountability Department, to support the governors' public service role. A week ago he made a speech about the Bill and BBC independence, which I expect has been circulated to most of your Lordships. It reached me this morning, and contains one error of such fundamental importance that I feel that I should put it before the House. The chairman says: The need for the Board of Governors to act as a buffer between the services of the BBC and outside forces in the worlds of politics and business remains as great as ever". Quite so. He continues: We have completely revamped the way in which the Governors set objectives for the organisation, and then hold the executive to account. We have established a new department to give the Governors entirely independent advice and support in these areas, and in ensuring BBC compliance with the law … For the first time, the Governors are now supported by a substantial body of professionals, who work outside the control of the executive". The fundamental misconception about those statements is that the people who work in the new Governance and Accountability Department are not independent of the BBC. They may show up in a separate box on the BBC's organisation chart, but they have merely been shuffled across from other departments and are still employed by the BBC. They therefore still owe their prospects and careers to Mr Dyke, Mr Damazer and the other top brass, whom they would be most unlikely to offend by, for instance, advising the governors that the Minotaur reports should be taken seriously. It is not surprising that we have seen no sign of that new department bearing fruit in the year since it was introduced.

So we made another helpful suggestion: the new department should be employed by separate trustees to guarantee the independence of their advice to the governors. The chairman also turned down that idea, but it may be worth airing it in Committee.

There are other areas on which the BBC stands accused of editorial bias. But those claims are not supported by such a substantial body of research as that which underpins the accusation of institutional Euro-phile bias for a long time. If the BBC cannot cure the problem, it might as well go under Ofcom.

9.30 p.m.

Lord Eatwell

My Lords, I declare an interest as chairman of the Commercial Radio Companies Association, which represents virtually all commercial radio companies, large, medium and small.

Radio is the Cinderella medium in the great communications debate. Yet radio listening is rising as TV viewing declines. As a consequence, radio employs more people than television does. Commercial radio is a £500 million business providing three national stations and almost 250 local stations. By comparison, the BBC manages only 40 local stations. Commercial radio is a very local medium. Almost half of commercial radio stations serve communities of fewer than 300,000 people, and a fifth serve fewer than 100,000 people. It is the responsibility of Government and the task of the Bill to ensure that that wonderful local medium flourishes. In many ways, that is exactly what the Bill achieves.

The radio industry welcomes the philosophy of regulation embodied in the Bill. It welcomes the commitment to light-touch regulation and the fundamental theme of competition-based regulation. The commercial radio industry welcomes and is most grateful for the manner in which the Government have approached the construction of this complex measure, both through the committee of the noble Lord, Lord Puttnam, and the extensive opportunities for consultation offered by Ministers and civil servants.

An important outcome of the consultation process was the Government's acceptance of the radio industry's concerns about restrictions on the ownership and scale of local radio. The Government have made clear that Schedule 14 will be used to create a framework for a listener-friendly consolidation of the local radio industry, providing a wider range of programming and on the scale to provide the truly local services that benefit listener and broadcaster alike.

That will come about by means of the Government's proposed two-plus-one rule, which provides that within a listening area of appropriate size there must be at least two different owners of commercial radio stations plus the BBC. I pay tribute to Ministers for the manner in which they were prepared to debate their concerns on the issue with the industry, to work hard to gain a full understanding of the industry's character and needs and to elicit assurances that the consequent deregulation of radio ownership would enhance diversity in local markets. In the light of those achievements, it is all the more disappointing to find that at the last moment the Government have introduced to the Bill an entirely new layer of micro-regulation without any consultation whatever. I refer to Clause 307, on which the noble Lords, Lord Gordon of Strathblane and Lord Dubs, commented. The clause is apparently designed to ensure localness. It is totally redundant.

Has the Minister ever paused to reflect why there are so many local commercial stations? They exist because localness is a successful competitive strategy. Any local station that ceases to be local will soon lose its listeners. No local station needs either the Government or the noble Lord, Lord McNally, to tell it to be local. None the less, the Government already have belt-and-braces powers to ensure localness.

Clause 306 reaffirms and strengthens the regulatory powers contained in the Broadcasting Act 1990. Those powers ensure that, when issuing radio licences, Ofcom will be able to specify the format of local radio stations' activities. As currently practised, format control determines matters such as where programmes are made, how much news is broadcast, the type of music to be played, community information broadcasts and so on. Clause 306 ensures that those controls will remain in place in the future. The radio industry supports format control and supports the development of a clear localness code.

Given the competitive imperative for localness and given the fact that all the necessary powers for defining localness already exist in Clause 306, will the Minister tell the House what Clause 307 is for? Precisely what powers does it add to the Bill that are not already there in Clause 306? More generally, what will Clause 307 require local radio stations to do that they are not doing now? Can the Minister, in his winding-up speech, give the House a couple of examples of how the content of local programming will be changed by Clause 307?

Although Clause 307 is redundant, it embodies a worrying indication of the approach that the Government intend Ofcom to take to the regulation of localness. One might expect that a localness strategy would be concerned with the range and content of programmes that are available to listeners—not a bit of it. Clause 307 expresses no concern about the quality and content of programmes. It is concerned entirely with inputs.

We must examine the content of that peculiarly intrusive piece of micro-management. Subsection (1)(a) refers to the need for "local material". That seems reasonable enough, until we consider what it might mean. We might consider the case of a station broadcasting modern music. What does "local material" mean? Can my noble friend Lady Blackstone of Stoke Newington tell the House what, in Stoke Newington, is distinctive local modern music? Can my noble friend Lord McIntosh of Haringey comment on the local musical heritage of Haringey?

Lord McIntosh of Haringey


Lord Eatwell

My Lords, what is a local music station to do, if there is no distinctive local music? What is the local station to do, if the local music is so had that to broadcast it would result in everyone switching off?

That is not all. As we read on, we see that the micro-management becomes even more bizarre. Subsection (3)(b) includes in the definition of localness, the extent to which … local advertisements are included in the services". By "local advertisements" are meant advertisements for, goods or services manufactured or supplied by a person whose business is carried on from premises in the area or locality", or, goods or services which are supplied primarily to persons living or working in that area or locality". Does the clause apply, for instance, to the local branch of Sainsbury's or the local garage, run by BP? In both cases, they supply goods, primarily to persons living … in that area". Is the firm in Buckinghamshire that produces vellum primarily for use by this Parliament a firm that is local to Buckinghamshire or Westminster, or both? Will Ofcom have an army of advertisement wardens, armed with detailed Ordnance Survey maps, checking up on whether advertisers are truly local or are a few feet across Ofcom's imaginary boundary?

Clause 307 goes on to say that there must be local premises and local training programmes. It even specifies where local employees must live. They cannot live a few feet across the boundary; they must move house to get a job. It is all about inputs, and there is nothing about the quality of local programmes. Why? It is the programmes that matter. The Government should not tell companies how to run their business. They should aim to meet the needs of the local listener, not to create a lazy, box-ticking regulator.

Clause 307 represents a serious regression in government thinking away from the bold philosophy of light-touch, competition-led regulation that distinguishes the Bill. Such a clause could have been introduced only under cover of darkness, without any consultation. I am sure, now that it has seen the light of day, that it will be dropped, which will enhance the coherence and good sense of the Bill.

I would like to draw to your Lordships' attention one other aberration in the Bill. Clause 350 sets out the definition of "control" of the company—an important issue in economic regulation. The key element is paragraph (2) in which a person is assumed to have control if he or she is a participant with a 20 per cent interest in a company, unless the contrary is shown". In other words, the onus of proof is on the shareholder, not on Ofcom. A person is guilty unless he can prove himself innocent. Everyone knows how difficult it is to prove a negative, particularly in advance of even making an investment. The result will be that Ofcom will be flooded with requests for advice and "pre-judgments" and minority investments will be actively discouraged—just the type of investments that were crucial to getting Classic FM off the ground. Someone has clearly made a mistake here, and it needs to be put right.

The radio industry welcomes this Bill and the philosophy that informs its main measures. With the removal of a couple of aberrant clauses that betray the spirit of the Bill, it will provide a firm foundation for a prosperous industry providing a service to the listening public of which we can all be proud.

9.40 p.m.

Lord Colwyn

My Lords, first, I express my admiration of the Government's Front Bench team—namely, the noble Baroness, Lady Blackstone, and the noble Lord, Lord McIntosh—and of my noble friend Lady Buscombe. To transfer from the Licensing Bill to the Communications Bill within one or two weeks is remarkable. The Communications Bill is far more complex, although it has had the advantages of starting in another place and the pre-legislative scrutiny of the committee chaired by the noble Lord, Lord Puttnam. At Third Reading, there was agreement that the Bill had been improved during its passage through the Commons, but several speakers criticised the level of scrutiny—some even described it as grossly inadequate.

As in the Licensing Bill, I support the music creators and will comment on how the transition between the Radio Authority and Ofcom is causing difficulty for new commercial radio stations. I declare my interest as a part-time "music creator"—or is that musician? In the old days of quotas, when some live music was compulsory, I recorded for commercial radio stations, but never made a commercially available record. Recently, I became chairman of Banbury Local Radio—a company applying for a local radio licence at the end of the year.

The radio industry is valued at £500 million and the music industry at £4.6 billion annually. I know that the Musicians Union (MU) is deeply concerned that there is little or no consideration for music creators in this Bill. The noble Baroness, Lady Walmsley, who, sadly, has just left her place, made that point strongly. I wish that she had been here to speak in similar terms on the need for musicians and the abolition of the "two-in-the-bar" rule a couple of weeks ago. The MU believes that further consolidation in the commercial sector will mean less diversity of music on independent local radio and mainstream airwaves. The Bill gives Ofcom a general duty to promote and protect the local content and character of local radio, but it fails to provide a safeguard for music creativity and diversity.

The expansion of the radio environment should promote cultural diversity. The music creators are concerned that if the access is controlled by too few players, choice and competition are endangered. I regret the remarks of Lowry Mays, chief executive of the Clear Channel in Sunday Business on 2nd March. He stated: If anyone said that we were in the radio business, it wouldn't be someone from our company … We're not in the business of providing news and information. We're not in the business of providing well-researched music. We're simply in the business of selling our customer's products". What he did not say is that commercial radio must attract listeners and that local input is essential for local stations.

The music creators fear that the Bill may increase the risk to diversity and say that there should be safeguards for music creativity as regulation evolves. There is a concern that radio operators can walk away from licence obligations relating to music programming when ownership is transferred. Given that the deregulatory nature of this legislation is likely to lead to further consolidation in the radio sector, it would seem sensible to specify the need to assess the impact of such changes upon music provision in the Bill itself.

Unpopular music does not sell well and does not help music radio. The job of the radio industry is to serve its listeners with a relevant and popular product. The fortunes of the UK local commercial radio industry and the UK music industry are closely entwined. Local radio stations reflect local choice of "national" pop music and the success of local bands where they exist. Given that local commercial radio in the UK is likely to come out at the end of this process with rather more content regulation, I am concerned that Ofcom should not be given still more powers to stipulate, for example, who should schedule the music on commercial stations. It was precisely that kind of over-intrusive regulation which statute forced the IBA to apply until the 1990 Act came to the rescue of UK independent radio.

Stations need to remain local in order to distinguish themselves from their better-funded BBC and national competitors, and format regulation that is already required under existing legislation—and will be under Clause 306—ensures that local content is broadcast.

Perhaps I may emphasise the point made by the noble Lord, Lord Eatwell, about the concern of local commercial radio in regard to Clause 307. There was no consultation over this new approach which introduces an extra and unnecessary layer of regulation. Why should Ofcom be able to determine who a radio station employs, where its office is, where its managers work and how it generates its income? I support regulation to ensure that local listeners receive relevant local content, but there has been no indication that the present legislation is deficient in any way. The noble Lord, Lord Gordon of Strathblane, made a very strong case for local content earlier.

The new rules proposed in Clause 307 have no relevance to listeners but allow Ofcom to interfere with the running of the business. These rules will stifle innovation rather than safeguard the product that listeners receive. There is no need to regulate the amount of local advertising on local radio and it is inappropriate to regulate how radio stations make their programmes and run their businesses. I will support any amendments that seek to change this at the Committee stage.

The Radio Authority has overseen a commercial radio industry that has grown beyond all recognition. When it took over from the IBA there was no national commercial radio and no regional commercial radio as we know it today. At the same time, local commercial stations were struggling against heavy losses. The industry was taking only 2 per cent of the advertising market. The position has now changed with, I thought, more than 260 stations—the noble Lord, Lord Eatwell, says 250 stations—on air, with a 6 per cent share of the advertising market that is continuing to rise. New licences are being granted by the Radio Authority at the rate of one per month and the industry is expected to increase its advertising market share to 7 per cent or 8 per cent.

During recent years the Radio Authority has produced an annual "working list", identifying the areas that will soon be given their own local stations. The most recent list was published on 21st May 2002 and confirmed the intention to advertise new licences at a rate of up to one per month.

Based on this list, groups have formed throughout the UK and have spent considerable sums on research and trial broadcasts. I am aware of prospective stations that have worked towards specific dates for their licences being advertised and awarded, with trial broadcasts and promotions already planned. But the Radio Authority has now decided that the last licence it will advertise will be in April 2003. The remainder of the list will be handed over to Ofcom.

I appreciate that there has to be a point where the Radio Authority has to stop and Ofcom has to take over, but it is important that any delays are kept to a minimum. The Bill is legally too complex for me to suggest specific changes at this time, but I may take advice on whether it will be possible to ensure that the changeover does not slow down the new licence system. Any period of stagnation could limit the growth and expansion of an industry that is one of the success stories of the past 10 years.

9.49 p.m.

Baroness Wilkins

My Lords, having worked for about 20 years as a presenter and producer in documentary television, I welcome the introduction of the Bill and congratulate the noble Lord, Lord Puttnam, on his pre-legislative scrutiny. I shall take the advice of my noble friend Lady Cohen and not repeat material which has already been covered in the debate. Your Lordships will be glad to hear that I have scrapped most of my speech. My noble friend Lord Ashley and the noble Lord, Lord Addington, have covered most of the points that I wish to make so admirably that they do not need repetition. I shall therefore speak briefly.

My media career started in the early 1970s with a "World in Action" programme questioning whether the building of a segregated village in Holland for severely disabled people should be replicated in Britain. At the time I was about to start work at MIND with a politically-minded social worker called Tessa Jowell as my assistant director. How much has changed since then.

One of the most important changes for disabled people is that our full inclusion in all areas of life has become central to government policy. The Bill holds the potential to further or to threaten that full inclusion. In order to take part in this information society that grows faster and more complicated every day, we must all have access to and be able to afford the digital communications technology that is our future. It is a prerequisite for equal citizenship and full inclusion. But there is a widespread fear among disabled and older people that we face increased exclusion.

Digital technology provides a two-edged sword for disabled people. It holds the potential to do things undreamed of by former generations but, as my noble friend Lord Ashley showed so clearly, it can shut us out from even the most basic communications services when our needs are not taken into account. If disabled and elderly people are not to be made the second-class citizens of the information society, I believe that the Bill must lay down watertight regulation to ensure that the broadcasting and telecommunications industries do not exclude disabled people. Ofcom needs to be given powers on the face of the Bill to eliminate that risk of exclusion.

In addition to the amendments forewarned by my noble friend Lord Ashley and the noble Lord, Lord Addington, I should like to add one more. I seek a guarantee of continued access to a text-based teletext service. Teletext is a vital source of education, information and news to thousands of blind and deaf-blind people. It is accessible on analogue through equipment which turns the text into Braille or large print. But digital is based on pictures and no device can read a picture. It is essential that this vital lifeline for deaf-blind people to the world around them is not simply cut away, leaving them at the mercy of the market-place.

This threat to deaf-blind people exemplifies how essential it is that specific duties to ensure the full inclusion of disabled and older people are laid on the face of the Bill. As the noble Lord, Lord Currie, emphasised, Ofcom is a creature of statute. Therefore what the Bill does or does not make explicit really matters if issues such as these are not to be lost along the way. The future inclusion of disabled people in the information society is too important to leave to ad hoc arrangements, the discretion of officials or, most important, the whim of the market.

The Government have done much to meet the needs of disabled and older people in the Bill, but I am afraid that it is not enough. The Bill will set the standard for many years to come. It must ensure that disabled people are fully included if we are to take part in the information society as equal citizens.

9.53 p.m.

Lord St John of Bletso

My Lords, at this late hour I do not want to dwell on the broadcasting aspects of the Bill, but to focus on what the noble Lord, Lord McNally, referred to as its "techie" side, and to join other noble Lords in commending the work of the noble Lord, Lord Puttnam, and his joint committee on the pre-legislative scrutiny of this complicated piece of legislation.

At the outset I should declare an interest in my capacity as chairman of the trustees of Citizens Online, a charity committed to universal access to the Internet throughout the United Kingdom. I am also a consultant to a NASDAQ-listed Internet service provider.

As the Minister outlined in her introductory speech, the Bill aims to create in the United Kingdom the most dynamic and competitive communications industry in the world. I naturally applaud the objective, although to be frank I have one or two reservations as to whether it is achievable, and I certainly have reservations about cross-media ownership. While I have always opposed attempts to regulate the Internet and favour self-regulation of the industry, I wholeheartedly support the important role of Ofcom and the role it will play in encouraging competition, thereby promoting the long-term interests of consumers.

My particular interest lies in the promotion of affordable broadband services. Whereas these services were relatively expensive a year ago, the price of high-speed access to the Internet is now falling dramatically.

With that in mind, I had hoped that the Bill would incorporate new measures to support the roll-out of broadband access across the United Kingdom. While 63 per cent of UK households and businesses are able to receive A DSL services, my understanding is that there has been a comparatively low take-up of these services, largely as a result of the historically high cost of broadband. Fortunately, with the advent of WI-FI, broadband access has become far more affordable. Can the Minister provide the statistics relating to the current level of take-up of broadband services, as well as outlining exactly what is being done to ensure that rural communities also have affordable broadband?

Further, will the Minister elaborate on how the Government plan to spend the pledged £1 billion which has been committed to broadband connectivity in the public sector between 2003 and 2006?

I wholeheartedly support the work of the UK Broadband Task Force, created by the Government. With 30 per cent of UK households currently beyond the reach of terrestrial broadband services, satellite broadband could potentially accommodate those areas.

However, concern has been expressed that the proposals in the Bill for spectrum management will not help to encourage the business plans of emerging satellite broadcast companies, and the additional "tax" on satellite spectrum being sought through these measures risks undermining UK broadband initiatives as well as opportunities for the business sector.

The new obligation for all "electronic communication companies" to pay for a licence and to comply with its conditions will result in a significant additional cost, particularly to the smaller Internet service providers.

There has been a great deal of commentary on digital television and analogue switch-off. I believe that this evolution—or perhaps I should say technological revolution—needs to run its course in tandem with broadband roll-out.

The rapid expansion of broadband services will inevitably lead to massive changes in the way the Internet is used. We have already seen rapid changes and advances in webcasting.

Finally, I am aware that concerns have been expressed by the British Internet Publishers Alliance (BIPA) regarding the lack of effective regulation of the BBC's activities on the Internet. While accepting that the BBC's Internet services are of high quality, BIPA is concerned that the lack of effective regulation of the BBC's activities on the Internet has distorted and inhibited the market for commercial publishers and has crowded out potential competitors.

It is currently the role of the BBC governors to adjudicate on how the BBC's Internet activities impact on commercial markets, but BIPA feels that this body lacks the impartiality and the specialist commercial skills required. It has been recommended that Ofcom, being the overarching regulator of the converging media sectors, is best equipped to take on the task of providing an informed and impartial overview of all the interests involved in Internet publishing.

I certainly have sympathy with the view that Ofcom will have the expertise and authority to guarantee the free and fair environment in which both the BBC and its commercial competitors will be able to deliver a wide range of choice to the British public.

Will the Minister, in replying, explain how Her Majesty's Government will ensure that Ofcom exercises its competition powers with regard to the BBC, and what role the new regulator will play in ensuring that the BBC's Internet interests do not distort growing media markets?

10 p.m.

Lord Bernstein of Craigweil

My Lords, I should declare an interest. I used to be chairman of Granada Group, which is the parent company of Granada Television. I receive a pension from Granada and still hold shares in the company.

This is a good Bill which has benefited from wide consultation and from the work of the joint scrutiny committee under my noble friend Lord Puttnam. However, I have two matters of concern—the role of the BBC and the issue of cross-media ownership. Both those matters are vital to the success of television in this country.

The BBC will be subject to some regulation by Ofcom, but its governance and public service role will remain with the governors. That is recognition of the fact that it is one of Britain's most important and successful institutions, which is why successive governments have agreed to maintain the licence fee system and, no doubt, why the present Government agreed a licence fee annual increase in excess of inflation. The BBC is doubly privileged. It has been permitted to maintain its method of governance and has been guaranteed a large and growing income, which is the impossible dream of any public institution. Even Lord Reith, who was notoriously difficult to please, must be rejoicing in whatever region of the afterworld is reserved for ex-director generals of the BBC.

With that privilege comes responsibility, however. Does the BBC fulfil those responsibilities as it should? The answer, sadly, is not as much as it used to. I recognise that the corporation's essential problem is that, to justify its licence fee, it must gain high ratings. If it does not, the public can question why they should finance a service that is not attracting an audience. Equally, however, the BBC must maintain a public service ethos. If it does not, why should it be treated any differently from a purely commercial organisation? That is a narrow line to follow, and I have some sympathy for the BBC's dilemma—but not a lot.

What has happened to current affairs on BBC 1? "Panorama" is shown only very late on Sundays and, more importantly, there are only about 25 programmes a year. That does not represent a serious commitment to current affairs. What has happened to arts programming? There have been no regular series of arts programmes on BBC 1 for the past couple of years. I was glad to read that Alan Yentob will be presenting a new arts series, but, even so, it will be a series of only 10 programmes, compared with the 22 programmes of the "South Bank Show" on ITV.

Why is the BBC not honouring the agreement to commission 25 per cent of its programming from independent companies? The BBC has missed that target two years running, while ITV, with all its difficulties, has met the target. Is that a responsible position for a publicly funded service?

What is the BBC's vision? It used to see itself as providing creative leadership, nurturing new talent and as a powerhouse for new writing. Does it still believe in that? Can it show that its role is to be distinctive rather than merely popular? Gavyn Davies, the chairman of the governors, accepts that the governors need to set strategy and regulate output. In his most recent annual report, he states that he does not, have any desire simply to replicate services which can be provided equally well by the private sector". That is obviously right. Unless the BBC can show that it has a unique role, why should it he treated any differently from its commercial competitors, which fall under the full remit of Ofcom?

On balance, I do not believe that the BBC should come under Ofcom, but I am glad that Tessa Jowell has announced a comprehensive review of the BBC and its funding as part of the charter review. If it is to retain its independence, the BBC needs to state its vision, provide transparency into the way it works and show us in its programmes that it means what it says.

I turn to the issue of cross-media ownership, particularly as regards Channel 5. I know that several previous speakers have referred to this issue, and it is getting late, but it is important. I hope that noble Lords will not mind my spending a few minutes on it.

The Bill maintains the current position whereby newspaper companies that have more than 20 per cent of the national market are forbidden from holding more than 20 per cent of any Channel 3 company. It concludes, quite rightly, that it would he wrong for a newspaper group to own what Tessa Jowell calls "a mature universal broadcaster". There is no similar provision for Channel 5, on the basis that it is "a much smaller enterprise". So any major newspaper group could acquire it.

I see no possible justification for that. Why reduce the diversity of media control? Newspapers already have considerable political power which they do not hesitate to use. Why should they be granted more political power and a stronger commercial base? It is true that Channel 5 has less than a 7 per cent share of the market. But that is not set in stone. What would happen if it doubled, even trebled its share? Obviously what would happen is that it would become a mature broadcaster. It seems to me that the Government have got themselves into a completely untenable position. In principle they assert that a newspaper group should not own a mature broadcaster. In practice, they are giving it the means to do so.

It is true, of course, that Ofcom will have the power to impose certain conditions if the Channel 5 audience grows substantially, but that is just tinkering. It will still leave a newspaper group with substantial cross-media control. If the purchaser of Channel 5 were to be News Corp, it will then control the largest newspaper stable in the UK, the country's dominant digital platform and supplier of premium pay TV content and, with Channel 5, the country's lightest regulated national commercial terrestrial channel. That cannot be right.

This is not an attack on Mr Murdoch, who is a courageous and outstandingly successful businessman. If he is able to dominate the media scene. "Then good luck to him", you may say, "Why should be not benefit from his investment and hard work?" But that is not the point. The point is whether it is right for one company—and not one man, for even Mr. Murdoch is not immortal—to have so much power. It cannot make sense for a democracy to permit that. What other country would allow this amount of media control to rest in the hands of one owner?

With News Corp's enormous financial strength and its ability to market its services across the media, it is likely that it could greatly increase the ratings for Channel 5 and therefore its advertising revenue. That could have a disastrous effect on two of the elements which the Government hold most dear. First, they have stated their firm belief in a strong regional broadcasting base. Independent television has a commitment to the regions and in fact produces vastly more regional broadcasting than the BBC. If ITV were to become beleaguered by a cross-media giant, finance for regional broadcasting would certainly become a casualty of a media war, as would some of its other public service obligations.

Secondly, the Government are committed to an independent Channel 4, with its brief for distinctive programming. Pressure on its advertising revenue from Channel 5 would inevitably force Channel 4 to respond by dropping distinctiveness in favour of popularity. Do we want to put regional broadcasting and Channel 4 under threat? I cannot believe that we do.

Finally, I believe that the future success of television in this country rests mainly on two pillars. One is the ability of the BBC to take its leading role in presenting quality popular programming and supporting public service broadcasting. The second is the ability of the independent sector to support the distinctiveness of Channel 4 and the quality of regional broadcasting.

For all its good points, the Communications Bill will be judged severely if it undermines these two pillars and lets the edifice of a vibrant and diverse television industry collapse.

10.10 p.m.

Lord Sheldon

My Lords, despite the comments of the noble Lord, Lord Bernstein, about certain aspects of the BBC, I believe that it is the most important cultural institution in the country. So many speakers have praised public service broadcasting, and it is the BBC which has created such respect for it. Because of its very existence, it has been operating as a benchmark which has set so many of the standards throughout the broadcasting media. Kofi Annan has said that the BBC World Service was Britain's greatest gift to the world in the 20th century. This is the great legacy from 80 years ago which we must cherish and defend against those who see the BBC as a privileged organisation in the fiercely competitive trade of media businesses.

The BBC is at the heart of our broadcasting system and the licence fee is inseparable from its success. In the 1980s, the then government were determined to open up the BBC to their uncompromising glorification of market forces. The description given was that the BBC succeeded only by means of a compulsory levy with criminal sanctions. That is what they called it. That was how the then government described the way in which the BBC occupied its world-wide eminence.

Fortunately, at the BBC at that time were Joel Barnett and Duke Hussey—now my noble friend Lord Barnett and the noble Lord, Lord Hussey of North Bradley. Duke Hussey was the chairman and Joel Barnett was the vice-chairman. In meeting after meeting, they played the role of Scheherezade. The House will recall that Princess Scheherezade was to entertain the sultan and at the end of evening was to lose her life. By rolling the discussion along until the following evening, she saved herself night after night from the execution that was to be her end.

In a less glamorous but very effective way, my noble friend Lord Barnett and the noble Lord, Lord Hussey, managed to keep the discussion going until the anticipated weakening of the corporation was lost in the more immediate problems facing that government. While accepting other valuable contributions that my noble friend and the noble Lord, Lord Hussey, have made to our national life, I believe that this was their greatest service. Their greatest achievement has been the essential task of saving the BBC as we know it and as we have been fortunate in receiving itߞthe civilising, broadcasting medium which would have been most seriously damaged if the government then had had their way and the events of 20 years ago had worked out differently.

The BBC does not fit into the usual pattern of non-governmental organisations. When the World Service was examined by the Public Accounts Committee in 1987, I was the chairman, and concluded that it should be examined by the National Audit Office—it is financed largely by the Foreign Office—but it also took no action to change the arrangements for the examination of the BBC. Section 6(3)(d) of the National Audit Act 1983 enables the National Audit Office to undertake value-for-money reviews with the agreement of the BBC and the Minister. It already has that power; it is there to be used if it wishes. That would be a safeguard for the future. Sir John Bourn was the NAO's outstanding Comptroller and Auditor-General. We must beware future situations about which we have no knowledge.

I always thought that the power of examination by the Minister and the Comptroller and Auditor-General was sufficient. I would have wished to see that position maintained and used. After all, what has gone wrong? Many other aspects of the press, radio and television could easily be improved. That would be no problem, and attention should rightly be focused there. But the BBC remains one of the outstanding successes in public service. That has been achieved over a period of 80 years, during the many changes that we have witnessed in our national life. In peace, war, prosperity and recession, in all our national successes and failures, it has survived them all with its reputation intact. Survived? I would say triumphed. It has been the outstanding feature of our national life and we should be most careful when we play around with such a body. It has done extraordinary well. We have heard people condemning it, but some of them may not have the most obvious of motives.

I turn to cross-media ownership about which we need to be careful, as the noble Lord, Lord Fowler, reminded us. Currying political favour with media owners is not unknown in the relationship between politicians and the media. As Chris Mullin said on 3rd December at col. 806 of Commons Hansard, the Bill allows the United States companies to own ITV and other commercial broadcasters; a company with four national newspapers and a TV channel may purchase Channel Five and subvert ITV and Channel 4 in the same way as much of Fleet Street has been subverted. Some of us have long memories and remember when the Sun newspaper was sold off because it had a small circulation. We saw what happened to that. The whole of Fleet Street's standards were reduced and the Sun was the benchmark of all those that tried to compete with it.

One contrast between newspapers and the broadcast media is that many people buy only one newspaper, but with the different television channels and the different radio stations, different viewpoints are set out. Viewers see more than one outlet. Added to that, it is the BBC which over the years has set the standard for impartial sources of ormation. The BBC, after all these years, still sets the benchmark for impartiality, quality and innovation.

I want to deal with one further aspect of the Bill: the removal of the restrictions on religious bodies. I am concerned about this. There are many ways in which the religions of our country can get their messages across. There are also many ways in which the religions can come into conflict with one another. There is the serious risk that television will exacerbate the religious and cultural differences which are now playing a more dangerous part in the life of our country, as the noble Lord, Lord Alli, has mentioned. As the noble Baroness, Lady Flather, said, not all religions are middle-of-the-road religions—as she rather delicately put it. I feel that at a sensitive time, this development should not proceed.

In conclusion, the BBC is one of our very greatest national institutions. It is also one of our greatest national successes. Nothing we should do in this Bill should imperil it in any way. This should be our dominant concern.

10.18 p.m.

Lord Faulkner of Worcester

My Lords, when I helpfully told the usual channels that I would not mind speaking fairly late on in the debate, I did not expect to be the 46th and last speaker. With that in mind, it is inevitable that many of the points which I would have made had I spoken earlier have been made by others. However, one subject has not been covered by previous speakers and I want to concentrate on that. It is my concern about the provision of sports coverage and the need to match the understandable desire of sports bodies to maximise income with the legitimate expectation of enthusiasts to obtain as much free television and radio coverage of their favourite sports as they can.

Clauses 294 to 297 of the Bill relate to listed sporting events and provide for the continuation of the present arrangements whereby listed events are divided into two groups; group A and group B. The group A events are sometimes described as the Crown jewels and include the Olympic Games, the FA Cup Final, the Grand National and the Wimbledon tennis finals. Three further events were added to that list in 1998. Group B events include cricket Test matches played in England, the Commonwealth Games and the Ryder Cup.

It was unfortunate that there was no live TV coverage, or even proper highlights, of the recent cricket World Cup in South Africa on anything other than Sky's subscription only channels. It meant good business for pubs with large screens but a pretty rotten deal for other cricket fans who did not have Sky. Had England progressed beyond the first stage, there would still have been no live coverage on a free-to-air channel as the cricket World Cup is a Group B event, unless the Secretary of State had chosen to move the England matches into group A.

It will be important that the listed events are kept under constant review. The Government must he prepared to resist pressure from sports governing bodies which want to sell their events to the highest bidder rather than make them universally available to broadcasters on a free-to-air basis.

I should make it clear that I am a big fan of the BBC's sports coverage. I think that the quality of its football and rugby commentaries leaves its competitors in the shade. Like millions of football supporters, I mourned the departure of Gary Lineker and Alan Hansen from Saturday night's "Match of the Day", and I even miss John Motson's commentaries.

As a relatively new digital TV customer, I am also impressed with the way the BBC uses new technologies to provide an integrated and improved service in its sports coverage. I mention that in the context of the Bill because it shows what we need to safeguard in regulating our public service broadcasters, and why the regulatory framework must recognise the differences between purely commercial broadcasters, the commercial public service broadcasters and the BBC. Here I disagree totally with my noble friend Lord Bernstein but agree completely with my noble friend Lord Sheldon in the views of the BBC they expressed just a few moments ago.

The Government want to ensure that all broadcasters are subject to common external regulation at its tier 1, covering basic requirements such as standards of taste and decency under Ofcom. At tier 2 all public service television broadcasters—the BBC, ITV, Channel 4 and Channel 5—should be subject to quotas to ensure a proper amount of original UK programming, programmes for audiences in different parts of the UK, and so forth. At tier 3, broadcasters will effectively self-regulate with Ofcom having back-stop powers over the commercial public service broadcasters and the BBC Board of Governors, subject to the Secretary of State, ensuring that the BBC meets the public interest. Have the Government struck the right balance in establishing the three tiers? I believe that they have. There needs to be a common framework over competition policy where all broadcasters are subject to Ofcom. But at the same time the BBC, as Britain's principal public service broadcaster, must continue to have the headroom to innovate, and the income to bid for events which the public wish to watch.

I share the view that others have expressed that the board of governors acts as a buffer between the BBC's programming and the outside pressures of politicians and commercial interests. Like other speakers I am also unpersuaded that anything would be gained by subjecting the BBC to the National Audit Office. That could undermine both the governors' independence and the BBC's ability to innovate and take creative risks. The reasons the BBC should stay subject to its governors rather than to the Public Accounts Committee remain: the BBC works because its independence allows it to develop a strategy and implement it free from changing political priorities and short-term political irritations.

More than a few Members of your Lordships' House who have held high office when Members of another place have complained in their time long, hard and bitterly about the political bias of the BBC. What is remarkable about those allegations is that they come successively—and occasionally simultaneously—from members of all three political parties. Sometimes they arc genuine complaints about things that the BBC could have done better. Sometimes—and I certainly name no names tonight—the charges are brought in an attempt to intimidate or silence the broadcasters.

I hope that the BBC continues to resist the interfering politician and continues to develop its role as a world-class broadcaster, competent, accurate and efficient—yes, all those three—but also objective, fair and authoritative.

My noble friend Lord Sheldon referred to the comments of Kofi Annan about the BBC World Service. Similar comments are made by Nelson Mandela in his autobiography. The role of the BBC World Service is of immense importance, and it is vital that nothing is done to affect the coverage that it provides and the respect in which it is held all over the globe.

If we are to change the relationship between the BBC and its audiences, or between the governors and the Government, we should do so through the charter renewal process, and not in the context of the Bill. The Government have got the balance in the Bill between regulation and innovation about right, and I wish the Bill well.

10.25 p.m.

Viscount Falkland

My Lords, the noble Lord, Lord Faulkner of Worcester, does well as the 46th speaker to introduce a new topic. Most of the other topics have been covered, but I congratulate him on that.

I cannot follow my noble friend Lord Phillips of Sudbury, who had a long list of qualifications to speak about broadcasting. I have been interested in the subject ever since I was a small boy when my mother bought a house just after the war in which a Belgian refugee was a tenant. He took kindly to me, and left me a zither and a crystal set. The zither was a bit beyond me and I shelved it very quickly, but I went on to use the crystal set. I regretted that later on due to "The Third Man", a film that many noble Lords will recall, which had a background of zither music. I wished then that I had thrown away the crystal set and taken up the zither.

A noble Lord

Sing it!

Viscount Falkland

No, my Lords, I shall not sing it. The hour is too late. The crystal set soon developed into a one-valve piece of equipment, which I took to a terrible boarding school to which I was sent. I had headphones, and hid in the evening and listened to theatre and other broadcasts. When I was at home, I became a film buff as a result of listening to someone called Peter Noble. Those who are old enough will remember him. He had a programme on films every Sunday, which incidentally is something that we need now. It gave quite lengthy reviews of films and played their soundtracks, a concept that we might revisit. I am glad to see the noble Lord, Lord Bragg, nodding at that.

The debate has been very interesting. In winding up, it would be invidious to single out any of the speeches. Usually when I wind up, I have a few remarks written on the Order Paper. On this occasion, it is absolutely black and blue with comments on what noble Lords said in all their excellent speeches.

I absolutely share the views expressed about pre-legislative scrutiny, especially as I have just been through the Licensing Bill, which clearly needed pre-legislative scrutiny. Such scrutiny will probably be a thing of the future. I agree with the noble Lord, Lord Fowler, who recommended post-legislative scrutiny. That is an excellent idea.

There has been a lot of talk, not only in the Chamber tonight, but particularly by the noble Baroness's right honourable friend in another place, Mrs Jowell, about consumers and citizens and the balance that needs to be created between those two groups. Consumers are citizens and vice versa, of course. It is a curiously bold move of the Government to introduce much of what they have suggested since the White Paper, which includes the enabling of foreign broadcasters to come into our market without any reciprocity. The Government seem confident that they can control the standards that we have long enjoyed in the light of those developments. Many noble Lords have expressed at least their scepticism about that.

We had an excellent speech, one of the most notable of the debate, by the noble Lord, Lord Puttnam. He chaired the committee that conducted the pre-legislative scrutiny so admirably. I shall try to paraphrase the remark that he made in the middle of his speech and which I considered to be at the absolute core of it. I am sure that many of your Lordships would agree with me about that, but not, I venture to suggest, the noble Lord, Lord Harris of High Cross. Incidentally, the Liberal Democrats have had a very good evening—we have been mentioned by many speakers. The noble Lord, Lord Puttnam, said that it was absolutely certain that plurality and diversity, which most of us would agree are desirable aims, are not a natural by-product of unregulated market forces, particularly where the cost of entry is so prohibitively high. That struck me as being the key part of his speech.

As noble Lords would expect, another excellent speech was made by the noble Lord, Lord Alli, who has experience in broadcasting. He drew attention to the importance of the independent TV production market, in which he has played an important part. He gave some of the strongest praise to the BBC—our public service broadcaster—of any speaker in your Lordships' House. I was interested to hear him say that much of the denigration of the BBC places it in a position where it cannot possibly win. I agree with that. If the BBC is successful, then everyone starts to squeal and squeak and whinge about it being too successful. I understood him to say that when the BBC is not successful, then we hear the cry that perhaps we should put an end to our public service broadcaster and open up what it does to the rest of the market. I agree with the noble Lord about that.

Many people attack the BBC, for example, for using licence payers' money for film production. I am not particularly interested in film, but I hold the BBC in high regard, as I do Channel 4, for the way that it produced a quality hybrid product which held what we called our "industry" together. That product could be shown equally in theatrical exhibitions as well as on television screens. The BBC, in particular under Mark Shivas, its director of production, carried out such work during the difficult times encountered by the film industry in this country. The BBC still seeks to play a part in our film culture and I do not believe that it should be attacked for that.

I also agree with the remarks of the noble Lord, Lord Alli—as mentioned by several other noble Lords—that one of the worst things that could arise from the regulation through Ofcom, which it seems we all welcome, would be if it were done on the cheap. We see the dangers of large multinational media companies coming into our arena. If undoubted struggles take place with expensive law cases, that will not happen on the cheap. They will steamroller us. That is one scenario which I hope we shall discuss.

Incidentally, I took very seriously the point made, I believe, by the noble Lord, Lord Pilkington, that many of the issues discussed by the committee of the noble Lord, Lord Puttnam, were thrown out by the Government, and we have not had the privilege of hearing about them yet. I believe he said that it would be far better if the next stage of the Bill were held in Grand Committee.

I agree that many of the issues could be better explored within that environment because there is much common ground between the Government and those who have doubts; for example, in relation to the business, which we broadly favour, of the National Audit Office and the BBC's auditing. We are not absolutely certain about that. We tend to favour it, but there may be strong arguments against it which perhaps could be better explored in Grand Committee.

I say that particularly in the light of an interesting remark made by the noble Baroness, Lady Hogg. I am sure that she had good reason for saying that the result of scrutiny by the National Audit Office would lead to a new avenue of transparency or responsibility between the director general and the Secretary of State. I had not heard that argument before. It is a worrying thought that the conducting of the BBC audit and its effect would effectively disappear and that the director-general would have a responsibility to have a closer relationship with the Secretary of State. That would be in no one's interest.

I do not wish to continue for much longer. I had much more to say, which happily I shall not have to say now because much of it is very pompous. In an advanced society such as ours there is the economic and the cultural imperative. It seems to me—as it may to other Peers—that the economic has rather taken precedence over the cultural. Noble Lords may agree that that is reflected in our society, in what is commonly known as the "yob culture". There is a lot of confrontation and disaffected young. If that is translated into the communications world, it could lead us down the path that has been experienced in the United States.

The United States is not fortunate enough to have our public service broadcasting background. It is absolutely central to our culture, and comes from our literary culture. In the US 10 major conglomerates have consolidated. Noble Lords may say that there is a lot of high-quality television. There is indeed quality television in terms of the basic concepts. The creative urges that drive them are quite different from production values that one sees on the screens.

There is never anything wrong with American production values, whether in cinema or on television. They are superb. The "Sopranos", which is a home box office programme, is always held up as an example of American television. It is superb. No one would deny that. But there is a great deal of scurrilous stuff on American television which panders to the lowest possible taste. I mention just a few. There is Reality TV, much of which sets out to humiliate people. It plays on people's sense of schadenfreude, the enjoying of other people's suffering. There is celebrity boxing. Whoever has heard of anything so ridiculous? I was tempted, like most people, to look at a celebrity boxing match. It was ludicrous, disgusting and awful, and, incidentally, an insult to boxing.

Voyeurism and narcissism is rife in this country and in the United States in the way that programmes are developing and catering for demand. I part company with the noble Baroness when she gives a great welcome to the market forces and customer demand. This field must be tempered with a great deal of—I think she said—"delicate balance". Otherwise, we will have an increase in brutal images on our screens and the presentation of facile, sexual images, and populism and civic values will conflict one with the other.

However, what is more important, especially to Members of your Lordships' House, is apathy, both political and moral. Political apathy is represented by the number of people who do not take any interest in politics whatever and who will not vote. To say that people do not like voting is ridiculous. They will vote on anything except politics because politics and what underlies our democracy has become boring to young people. Somehow we must liven it up. Perhaps I should run through those things again about voyeurism and narcissism and hope that it will get reported to liven it up.

That is the end of my speech. I welcome the Bill on behalf of these Benches. I do not need to mention my colleague in another place because that has been done by the noble Lord, Lord Gordon of Strathblane. Liberal Democrats have been given a very good evening. The noble Lord, Lord Harris of High Cross, has mentioned us several times. We have had, as they say, "a lot of column inches" from him. It is much better being noticed than not. So I thank him for that.

Broadly, I wish the Bill well, but there are matters of great concern. I am quite sure that we who have concerns, and the Government, do not have any major differences. I am quite sure we all agree that we need to retain the high-quality broadcasting that we have in this country as well as moving into the modern digital era. I wish the Bill well.

10.39 p.m.

Baroness Wilcox

My Lords, for me, winding up the debate feels a bit like opening the envelopes at the Oscar ceremony. The House has been full of stars. We have witnessed some wonderful performances from veterans of the industry. The bravura performance of the noble Lord, Lord McNally, as master of ceremonies for the Liberal Democrats, set us off by introducing what he called the galaxy of experience and talent supporting him. I am sure that that has been vindicated tonight.

My noble friend Lord Wakeham spoke about press freedom and Ofcom's role in mergers. The noble Lord, Lord Birt, spoke about consumer choice and electronic programme guides. The noble Lord, Lord Gordon of Strathblane, spoke about licence renewal and rolling contracts. My noble friend Lord Fowler spoke, as a journalist, about what is best for UK plc. The noble Lord, Lord Bragg, cantered through a paeon of praise for public service broadcasting. The noble Lord, Lord Borrie, urged us to trust Ofcom and the Competition Commission—I am with him on that. The noble Lord, Lord Harris, gave us historic perspectives of open competition. The noble Lord, Lord Puttnam, led his high-stepping group of grizzled veterans.

We heard from new kids on the block. I have decided that our new kids today have been as follows. The noble Lord, Lord Alli, talking of his magic and of creativity; my noble friend Lady Flather, discussing minority stations and Radio Asia; the noble Baroness, Lady Walmsley, discussing access radio; and my noble friend Lord Inglewood, who spoke bravely for his daughter getting her news from the soaps and the viral text transmissions so favoured by the young. We have learned from the Government that the old production houses have been merged into one huge block-buster: a new, independent, super-regulator called Ofcom.

From these Benches, we generally welcome and support the Bill. As my noble friend Lady Buscombe said in her opening remarks, we welcome the creation of a new framework for the communications industries, including the liberalisation of ownership of the media. Although we support the Bill in principle, like many of your Lordships who have spoken, we do not agree with the Government on a number of issues. We hope to persuade them to change their mind in the days and weeks ahead.

As a spokesman on trade and industry, I am passionately for the consumer and believe in free trade. For the consumer, I fear that the Bill does not go far enough to promote access for all. For consumers who are deaf or visually-impaired, insufficient information has been provided on the availability of subtitles and more effort should be made to encourage formats and design that are user-friendly for disabled consumers. The noble Lords, Lord Ashley of Stoke and Lord Addington, and the noble Baroness, Lady Wilkins, spoke with great experience as campaigners on that subject.

On free trade, as chairman of the National Consumer Council, I spent two long, hard years researching the fairest possible provision of goods and services to advantaged and disadvantaged consumers throughout the world. Free trade, open doors and the greatest possible liberalisation won hands down.

The Office of Fair Trading does an excellent job, as does the Competition Commission for industry, although my noble friend Lord Fowler may not agree with me, from his example report into free newspapers that he brandished earlier. I do not view this industry as any different from any other, and I am encouraged in that by the words of the noble Lord, Lord Currie, the chairman of Ofcom, when he said: where competition is reasonably robust or where it can he developed to be so, it is usually better for sector regulation to withdraw and for reliance to be placed upon competition policy". So foreign ownership of national terrestrial broadcasting licences should hold no fears for us, and I support the removal of the ownership qualifications. Let the investment and innovation flow; it brought us cable and satellite. British consumers need the widest possible choice. Our culture is deep and strong and I have confidence in our people's stubborn ability to look, listen and make up their own minds. We have no reason to feel threatened by Johnny Foreigner.

We welcome the Government's move to resist one recommendation made by the Puttnam committee: that foreign companies should not be able to own British licences. We believe that a lack of reciprocity does not justify protectionism.

Other recommendations from the committee, as so eloquently expressed by my noble friends Lord Pilkington and Lord Crickhowell, and the noble Baroness, Lady Cohen, have already been accepted by the Government, and we support many of them. I congratulate the noble Lord, Lord Puttnam, as did noble Lords around the House, on the informed, painstaking work undertaken by the committee under his fine leadership. As the noble Lord, Lord Lipsey, commented, Parliament is the better for it.

We believe that the BBC belongs to us all and has served us long and well. I have a long list of noble Lords' comments on the BBC, but it is a little late to repeat them all. I am certain that the BBC provides the best public service broadcasting in the world. I was privileged to serve for six years on its advisory committee under the noble Lord, Lord Birt. My experience with the Beeb leads me to believe that it will damage itself if it insists on staying outside the full regulatory regime of Ofcom. My noble friend Lord Crickhowell spoke convincingly on that, as did the noble Lord, Lord Gordon of Strathblane, and my noble friend Lord Astor.

Like other bodies funded by tax, the BBC must open its books to the scrutiny of the Comptroller and Auditor General for full value-for-money access rights. What has it to hide? I am delighted that someone as experienced as the noble Lord, Lord Dubs, is prepared to debate the issue during the passage of the Bill, and that my noble friend Lord Astor and the noble Lord, Lord Lipsey, regard such scrutiny as beneficial to the BBC. I encourage the noble Baroness, Lady Hogg, to read in Hansard tomorrow the reassurances of the noble Lord, Lord Lipsey, about her role on the BBC audit committee.

We are concerned that certain provisions to micromanage the radio industry are unnecessary and restrictive. The noble Lord, Lord Eatwell, made a wonderful speech on that—I could say it no better than he did—and so did the noble Lord, Lord Colwyn. The noble Baroness, Lady Walmsley, expressed concern about access radio; the noble Lord, Lord Alli, spoke about radio quotas, and the noble Baroness, Lady Flather, spoke about minority stations.

What sort of discrimination is it to ban religious organisations from holding national analogue radio and television licences and multiplex licences? The right reverend Prelate the Bishop of Manchester spoke passionately and convincingly of the unfairness of that arbitrary prohibition. Many in the country will be heartened to hear that he will press for the remaining disqualification on religious ownership to be lifted. We on these Benches will do the same. The right reverend Prelate has been supported by the noble Lord, Lord Alton, and the noble Baroness, Lady Howe. If nothing else, the ban is surely a restriction of consumer choice.

I make a small plea for a voice for business—the new generation of communication companies. Multimedia goods and services sectors are still young and barely established. The formation of Ofcom could help to reduce red tape and enable UK businesses to develop innovative commercial relationships and competitiveness. Yet those huge strides forward that have demonstrated the crucial value of new technologies are under serious jeopardy because businesses will be unable properly to scrutinise, and provide advice on the activities and decisions of the regulator and because of insufficient transparency, predictability and openness in Ofcom's decision-making process. The current version of the Bill ensures, rightly, that established media and consumer groups can voice their opinions on the content board and the consumer panel. That was expressed very well tonight.

By contrast, businesses will have to rely solely on the good will and discretion of the Ofcom board. The current Government may appear to have good will and good intentions to develop a competitively oriented regulatory environment, but that may not be the case in the future. It is vital that that paternalistic bias is rectified in the Bill.

Today this House has reflected upon the wonder of our age. It would not be an exaggeration to say that communication has undergone a revolution in my lifetime. An example is the access and immediacy of the war being waged in Iraq as we speak. Images of it are beamed to us in real time.

If I look back, I can remember my son as a baby staying up to see the first man walk on the moon. Like me, some noble Lords might remember a black-and-white television set with a nine-inch screen and the snowstorm that cleared just enough to show us the coronation of our dear young Queen. Before that, I listened to Dick Barton on the wireless. Before that, I sat in silence with my parents to hear Winston Churchill speak on the BBC to give us courage during the Blitz.

Now we have a new wonder to explore. The noble Lord, Lord Currie of Marylebone, hopes that the Bill will leave the House in good health. I hope that, by the time that it leaves the House, it will be an even better Bill than the fairly good one that it is today.

10.50 p.m.

Lord McIntosh of Haringey

My Lords, one would not know it from today's debate, but broadcasting is only a subset of the wider issues covered by the Bill. The "fluffies" have crowded the "techies" out of the debate, with the noble exception of the noble Lords, Lord Avebury and Lord St John of Bletso, and my noble friend Lady Jay of Paddington, and a few chance remarks by others.

The Bill is not just about broadcasting; it is about the networks that carry voice, data, pictures and a range of news services. It is about radio spectrum—the lifeblood of communications. It is about a communications industry that has grown at the rate of 10 per cent every year for the past 10 years and employs tens of thousands of people. It is about getting the right regulatory framework in place so that that growth is sustained and sustainable, now and in the future.

Part 2 of the Bill puts in place a framework for electronic communications networks and services and for spectrum that can respond better and more rapidly to markets that are evolving and technology that is developing and converging, although, as my noble friend Lady Jay of Paddington and the noble Lord, Lord Avebury, said, that is not happening as fast as we once thought. A key part of the new regime is the implementation of four European Community directives on electronic communications that the UK was instrumental in negotiating: the framework directive; the authorisation directive; the access directive; and the universal service directive. That will remove the need for 400 telecommunications licences—the noble Lord, Lord Harris of High Cross, ought to be in raptures about that, but I suppose that, because the licences were removed by European directives, it will be only modified raptureߞand replace them with a flexible system of general authorisation and specific obligations to protect consumers and guarantee competition. Implementation by all member states will provide a harmonised framework for regulation of those activities throughout the European Union, and that must be the right approach. The markets for electronic communications networks and services, unlike the markets for the content that they carry, do not recognise national boundaries or cultural differences; neither should their regulation.

The new framework is based on competition for the benefit of consumers. Ofcom will be able to tackle potential abuses by companies that have significant market power in communications markets. Work is already being carried out by Oftel to review the competitiveness of the relevant markets, and it has launched consultations on the specific obligations that it proposes to place on companies. Once it is up and running, Ofcom will be required to review the key communications markets systematically and to remove obligations where it finds that a market is effectively competitive. That is good news for the industry. Over time, the removal of regulation will reduce the costs of compliance with the UK regime.

Ofcom will be a powerful regulator, which is why Part 1 of the Bill contains a series of checks and balances to ensure that it will also be a good regulator. When regulating, Ofcom must have regard to the principles of good regulatory practice: its activities must be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed. The Bill imposes a duty on Ofcom to review the carrying out of its regulatory functions to ensure that it is not imposing or maintaining unnecessary burdens. For any proposals that are likely to impose a significant impact on business or on the general public, Ofcom will have to carry out and consult on an impact assessment. Ofcom must publish promptness standards and keep to them. We have given powers to the Secretary of State to intervene and require Ofcom to revise the promptness standards, if she believes that that is appropriate.

Those are significant balances that should reassure the business community. In addition, Chapter 3 of Part 2 gives a full right of appeal against Ofcom's decisions on matters connected with networks and services or with spectrum.

Of course, unless we make the best possible use of the radio spectrum, the vision that we have for the digital future cannot become a reality. As we move to a culture in which people want mobility in their communications, spectrum is becoming increasingly important. We need to ensure that it is managed efficiently and effectively and that it balances the needs of users—from the private astronomer, to mobile telephone customers, to the military.

Ofcom will be responsible for the management of this valuable resource and the Bill will give it tools to ensure effectiveness and efficiency. Spectrum trading offers flexibility to make spectrum available faster. Giving a financial incentive to sell or lease unused spectrum should encourage the development of new services and innovations.

Trading will be an effective tool, but it needs to take place within a framework of regulation—to maintain competition, ensure compliance with international obligations and prevent harmful interference.

But there are other ways of managing the spectrum, to which the noble Lord, Lord Avebury, referred. We want to be sure that Ofcom will be able to make use of them as well. The Bill therefore provides for a scheme for recognised spectrum access, which will deliver enhanced security and spectrum quality for satellite and other services which, for whatever reason, cannot be licensed. I understood the noble Lord, Lord Pilkington, to be in support of that.

It will also enable Ofcom to treat different groups of spectrum users as equitably as possible. I stress that those powers in the Bill are enabling powers—we are not waving the starting flag on either trading or RSA. Ofcom will carry out full and considered consultation on the detail of what these schemes would mean for all spectrum users affected by them, before it puts any new regime in place.

Having tried to rush through some coverage of the "techie" side of the Bill, it is my duty to respond to the debate as best I can. I do so knowing that there have been responses which have been mutually contradictory, which are sometimes helpful to the Government in Division Lobbies. But I suspect that it may not always be so in this case.

First, from this Bench we must say that we are pleased to have such a strong board in place—namely, to have my noble friend Lord Currie as an excellent chairman; to have a chief executive, Stephen Carter, with a strong business background; and to have non-executive directors who bring a range of skills, knowledge and experience. My noble friend Lord Puttnam described us as needing the best that money can buy; my noble friend Lord Currie said that this would not be the cheapest regulator in the business. But I assure my noble friend Lord Puttnam that there is not really any problem of the funding of competition costs. It has been agreed by Ofcom, by the DTI and by Her Majesty's Treasury. That is set out both in this Bill and in the paving Bill.

Ofcom will also, of course, be accountable. My noble friend Lord Currie recognised that these great powers require accountability to Ministers and to Parliament, as well as to the stakeholders. Therefore, Ofcom must be transparent, in keeping with the principles of good regulatory practice. That is set out not just in Clause 3 but also in Clauses 6,7 and 8, which concern publication.

As regards the issue of citizens and consumers, we do not use the word "citizen" because it has a special nationality sense in this country. I think that talking about consumers and about the community does the trick fairly well. It is not a simplified system set out in Clause 3; it is a very complicated system, which I should be glad to discuss with the noble Baroness, Lady Howe, who had concerns about it.

Baroness O'Neill of Bengarve

My Lords, I thank the Minister for giving way. There is a sense of the word "citizenship" in which it is tied to the possession of a passport and is exclusive. The more normal, the more traditional and the deeper notion of citizenship is not tied in that way. It covers the broad civic culture of this and other advanced societies. It does not exclude those who are not citizens but who are members of the community. I believe that we have reason to introduce a notion of citizenship into the Bill.

Lord McIntosh of Haringey

My Lords, I do not disagree with that at a philosophical level. But we are talking about legislative language. It is important that even though there are, in some senses, harmonics—which one might call it in our language—about citizenship, it is better not to run the risk of being confused with issues of nationality. Again, I shall be glad to debate these matters in Committee.

If your Lordships will forgive me I shall resist the temptation to give way to interventions. I have been speaking for nine minutes and I have hardly started to reply to the debate.

In addition to the simple provisions in subsection (1) of Clause 3, a complicated argument needs to be discussed in regard to its subsequent subsections. I also recommend that noble Lords look at Chapter 4 of Part 3 of the Bill, in particular at Clause 260, which defines the public service remit in much greater detail than ever before.

The right reverend Prelate the Bishop of Manchester referred to the clause and objected to the use of the phrase "taken together" in parts of the definition. But that phrase simply means that you cannot require all channels to be identical. If you did not have the phrase "taken together" to ensure that the service provided to consumers and the community conformed to the public service remit and did it in another way, you would be arguing against diversity and plurality.

Some noble Lords wished to add further provisions to Clause 260—the noble Baroness, Lady Whitaker, referred to international affairs and science and the noble Lord, Lord Faulkner, referred to sports—and those issues can be discussed.

The most controversial issues of foreign ownership and cross-media ownership come down largely to the question expressed clearly by the noble Baroness, Lady Cohen—that is, will we seek to restrict ownership or will we rely on regulation to achieve the objectives that we all want, whatever our view on these matters. We already allow foreign ownership of UK broadcasters. The Bill seeks to remove an anomaly that allows big European countries to invest but not investors from elsewhere.

There is no dispute that when you operate in global markets you need the widest possible opportunities for new investment, initiatives, skills and management. If we did not have American investment in Classic FM, for example, we would not have Classic FM, and 6.7 million listeners a week would be worse off.

It comes down to whether you want to restrict ownership or look to standards. The noble Lord, Lord McNally, was scathing about the phrase "their money and our standards". Incidentally, it was George Bernard Shaw and Mrs Patrick Campbell, not Jean Harlow, who were the subjects of the noble Lord's story. It happened long before Jean Harlow came to prominence.

Many noble Lords were sceptical about the argument on reciprocity. The noble Lords, Lord Gordon, Lord Fowler and Lord Pilkington, and the noble Baronesses, Lady Jay and Lady Cohen, thought that we should not extend the possibility of investment to the United States if it would not reciprocate. I take a purely pragmatic view. Our interest in the Bill concerns British broadcasting. If it is a good thing for British broadcasting, it is worth doing even without reciprocity.

The noble Lord, Lord Bragg, and the noble Viscount, Lord Astor, referred to content regulation. We believe that it is tough enough to protect programming, with requirements for origin in the European Union, original productions, regional productions and programming, and independent productions. If necessary, all of those can be ratcheted up if it proves that the protection is not good enough.

I have to disagree with my noble friend Lord Bragg and the noble Viscount, Lord Astor, about the suggestion that regional TV should be treated as independent from the point of view of the BBC. An ITC study was conducted on this which concluded that if that was done, it would disadvantage the real independents; that is, those producers who are independent of broadcasters.

Of course I have sympathy with those who want to increase the plurality of provision of media, whether it is print or broadcast media. I spent a year in Columbus, Ohio, where there was only one television station and one main radio station, both called WBNS and owned by Wolf Brothers News and Shoes, the company which ran the shoe factory in the town. It also ran one of the two newspapers, the only other newspaper belonging to William Randolph Hearst. We had a pretty poor choice and I do not want us to get anywhere near that position.

However, I am interested in the conflict that has arisen today about Channel 5. My noble friend Lady Blackstone set it out: Channel 5 is small, with a 6 per cent share of the audience. If it is to have a future, then while it is small it must continue to have more freedom from regulation than others. The noble Baroness, Lady Buscombe, wanted not only to lift any restriction on Channel 5, but to extend that relaxation to Channel 3. That was a step forward, or backward, in Conservative thinking which I have not heard before—until I heard my noble friend Lord Borrie agree with her. My noble friend was against any fixed limits on ownership, whether for Channel 3 or for Channel 5. I have to say, however, that both noble Lords were in a small minority. A large number of speakers, starting of course with my noble friend Lord Puttnam and the noble Lord, Lord McNally, and extending to acknowledged agreement around the House, remarked that the lifting of restrictions on Channel 5 could cause a concentration of ownership which a number of noble Lords thought very dangerous. No doubt we shall discuss this at length in Committee and so I shall not express any further views tonight.

I turn briefly to electronic programming guides. The noble Lord, Lord Birt, made an interesting point when he said that there should be competing guides because of the danger of a single owner bundling programmes with the guides. The principle behind that view is sound; namely, that we should seek objectivity in the guides and that it has to be enforced in some way.

On the issue of "must carry" and "must offer", again strong differences were expressed by noble Lords. The Bill will allow the imposition of "must carry", "must offer" and "must provide" obligations, but they have huge implications for industry and for viewers. We have received strong and conflicting opinions. We have said "allow" because cable operators and public service broadcasters have struck deals so that they do not need to have the regulation. I should say to the noble Lord, Lord Avebury, and the noble Viscount, Lord Astor, that it is not true that the Bill now covers only cable and not satellite. It could be electronic communications networks delivering satellite TV, but of course anyone can buy into satellite, although in order to access the conditional access system, under the access directive they would have to be fair, reasonable and non-discriminatory. That offers some protection.

The issue of the BBC also caused huge disagreement, which I shall not be able to resolve tonight. It is clear that the BBC is subject to extra obligations and constraints which do not apply to other broadcasters. The overall effect of our approach is that, given the new responsibilities that we are conferring on Ofcom, referred to by my noble friend Lord Bernstein, along with other noble Lords, alongside the continuing role of the governors, the Secretary of State and Parliament, the BBC will emerge as the most heavily regulated of all broadcasters. I think that my noble friend Lord Dubs recognised that. It is regulated in tier 1—bound by Ofcom's codes—but the regulation of impartiality is left to the governors. In tier 2, it must have quotas under the same headings as other public sector broadcasters; and it must agree those quotas with Ofcom—although I note what my noble friend Lord Alli said about the quotas not being kept for two years running and I was interested in his suggestion about other ways of calculating them.

Tier 3 is regulated by the governors rather than by Ofcom, but the characteristics of the system are identical. The BBC has to produce a statement of programme policy for each of its channels, with the Secretary of State rather than Ofcom having the backstop powers if the requirements are not met. Of course, there is the provision for the BBC to be fined if necessary. I have some lovely quotations about the BBC, but I shall spare the House hearing them again.

On the issue of the National Audit Office, there were hugely mixed messages. My noble friend Lord Gordon, the noble Viscount, Lord Astor, and my noble friend Lord Lipsey all say: do it now; put it under the National Audit Office. My noble friend Lord Alli says: do not do it at all. My noble friend Lord Faulkner, the noble Lord, Lord Birt, my noble friend Lord Bragg and the noble Lord, Lord Alton, all think that our proposal to leave it to the Charter review is the right approach. I think that my noble friend Lord Lipsey was right. It is not the proposal to carry out the audit; it is the value-for-money study that is being proposed. That would not affect the Audit Committee of the BBC, of which the noble Baroness, Lady Hogg, is a member.

Without pursuing the argument on broadcasting competition, I should say that we are giving Ofcom a suite of powers to regulate competition within the broadcasting sector—concurrent powers with the OFT under general competition law—and providing for a continuation of the sector's specific powers. I note the welcome given to this proposal by the noble Baroness, Lady Buscombe. I say to the noble Lord, Lord Fowler, that no amendment of the Enterprise Act is involved. This is an implementation of the merger provisions in the Enterprise Act.

On disability provisions, I hope it is recognised that the Bill delivers many benefits for disabled people. The noble Lord, Lord Addington, recognised that when he spoke about the general duties of Ofcom, which cut right across the remit. It must have regard, where relevant, to the needs of persons with disabilities, the elderly and those on low incomes. The consumer panel in particular has the duty of carrying that out.

On the particular issues of audio description we are sympathetic, but I understand that there are still technical problems. I am glad to have the support of my noble friend Lord Ashley for the extension of subtitles. I note his dissatisfaction with the time targets. But I have never known my noble friend to welcome anything and not then ask for more I do not blame him. That is how he has made his remarkable reputation—by asking for more, and getting it. I heard what my noble friend Lady Wilkins said about a text-based Teletext service, and we shall have to consider that.

On the nations and regions, we had eloquent pleas from my noble friend Lord Dubs about Gaelic broadcasting in Northern Ireland, from the noble Baroness, Lady Michie, and the noble Duke, the Duke of Montrose, on Gaelic broadcasting in Scotland—although that is the responsibility of the Scottish Parliament; reserved matters are only for cross-UK provision—and from the noble Lord, Lord Thomas, about Welsh broadcasting. The Bill contains provision for offices to be maintained in Scotland, Wales and Northern Ireland, and for the content board and the consumer panel to have designated members to represent the interests of people in Scotland, Wales and Northern Ireland. I say to the noble Duke, the Duke of Montrose, that there is provision under the paving Bill for a committee for Scotland if that is required.

On ITN as a nominated news provider, again there were very mixed messages. It is worth saying to the noble Lord, Lord Crickhowell, that Ofcom will be free to recommend the removal of the system of a nominated news provider when it feels that the time is right. The noble Lord, Lord McNally, said, "Then and only then" in a menacing way. Ofcom will have to review the arrangements every three years; there is nothing to stop it reviewing the arrangements earlier if it wants to.

I was surprised by some of the debate about religious ownership, because the Bill delivers the main aim of those who have campaigned against religious broadcasting ownership restrictions. The only restrictions that remain are for analogue radio licences, of which there are only three, and national TV licences, of which there are only two. Ownership of multiplexes does not affect any actual channel. I cannot believe that there is any mileage in some of the comments made by noble Lords.

With great respect to the noble Lord, Lord Alton, the noble Baroness, Lady Howe, and the right reverend Prelate the Bishop of Manchester, I cannot believe that there is much more scope for removing restrictions. On the contrary, I listened carefully to the comments of the noble Lord, Lord Alli, the noble Baroness, Lady Flather, and the noble Lord, Lord Sheldon, on the need to secure plurality of religious coverage and diversity—a wide variety of religion and belief. That is what the Commissioner for Racial Equality said, and it is an important consideration.

On the subject of newspaper mergers, we are modernising the regime to bring it in line with the Enterprise Act 2002. We are deregulating where we can. The noble Lord, Lord Phillips, said that we were amending the Enterprise Act 2002; we are not doing that. We are continuing to protect public interests when they are at stake. We have no plans for the OFT to have a role as regards newspapers, beyond the functions in relation to the newspaper merger regime. I can tell the noble Lord, Lord Wakeham, that ministerial statements could not have been clearer about the threat of content regulation over newspapers, even though some noble Lords would have wished it to happen.

On local radio, some changes will have to be made because there is a change in the radio ownership rules that will allow greater concentration. I listened to what the noble Baroness, Lady Flather, the noble Lord, Lord McNally, and the noble Baroness, Lady Walmsley, said about the risk that that might reduce localness, but there are many reasons for believing that will not happen. The noble Lords, Lord Gordon and Lord Eatwell, expressed that view. Surely, good local radio stations will strive to be local; they will have to be, because they will not survive unless they are.

We saw a head-on conflict between the noble Lord, Lord McNally, and the noble Baroness, Lady Walmsley, on one side and the noble Lords, Lord Gordon and Lord Eatwell, on the other, about Clause 307 and protections for community radio and for music. Again, the noble Baroness, Lady Walmsley, and the noble Lord, Lord Colwyn, were concerned about that. Clause 307 says that there must be a code of guidance, but it does not say what the code should comprise, because that is a matter for Ofcom. There is scope for many happy hours of debate on Clause 307.

On broadband, of course it is our strategy that there should be an increase in broadband from the present 67 per cent coverage and 1.4 million take-up. However, there must be commercial considerations in the speed at which that happens. We did not mention broadband in the Bill because the terminology in the Bill has to last a good deal longer than many technologies last. That does not mean, however, that there is any lack of determination to ensure that broadband expands.

I listened to the noble Lords, Lord Borrie and Lord Gordon, on broadcast advertising, but I do not think that the situation is that much changed. "Unsuitable" simply means that advertising could be unsuitable for certain times and certain audiences. It is very similar to the ITC powers.

The noble Baroness, Lady Gould, certainly is going to table amendments on premium rate services. I can confirm that the Bill does provide statutory backing for co-regulation by Ofcom and ICSTIS and that content services charged through the telephone bill can be regulated. However, I shall listen with interest when I see the amendments themselves.

I think that I can give the noble Baroness. Lady Howe, the assurance that she seeks on privacy. We shall be consulting on the privacy directive and we will implement it by updated regulations under the European Communities Act. That comes back to something that the noble Baroness, Lady O'Neill, said. Where newspapers are concerned, it is a matter for the courts to strike a balance between, on the one hand, the provisions of the Human Rights Act and the right to privacy and, on the other, freedom of expression and a free press.

With that race through the very wide number of contributions, I thank the noble Lord, Lord Puttnam, and his committee. I thank all noble Lords who have taken part in this lengthy debate. I look forward to the Committee and subsequent stages.

On Question, Bill read a second time, and committed to a Committee of the Whole House.

House adjourned at twenty-two minutes past eleven o'clock.

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