Communications Bill

HL Deb 22 May 2003 vol 648 cc940-1038

11.30 a.m.

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

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

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

On Question, Motion agreed to.

House in Committee accordingly.

[THE CHAIRMAN OF COMMITTEES in the Chair.]

Clause 195 [Functions of OFCOM in relation to the BBC:]

Baroness Buscombe

moved Amendment No. 146: Page 175, line 27, at end insert "and to enforce the terms of the BBC Fair Trading Commitment as currently drafted

The noble Baroness said: This amendment seeks to extend Ofcom's regulatory functions to include the BBC's fair trading commitment. The Royal Charter currently requires that the commitment is enforced by the BBC Board of Governors. The fair trading commitment places a strong obligation on the BBC to trade fairly and not to use the publicly-funded licence fee to its advantage against other commercial broadcasters. While we welcome such a commitment, we believe that the BBC governors have failed to effectively enforce its requirements to date.

The position of the BBC fair trade commitment, and the process by which compliance is achieved by the governors, requires closer scrutiny. The fair trade document contains provisions asserting the means by which the BBC brand should be used, in addition to including fair trade obligations that we believe should be subject to external regulatory oversight. The amendment ensures that the fair trade commitment as currently drafted would be subject to further scrutiny.

The power of the BBC brand cannot be underestimated. It is critical that its commercial activities are regulated in such a way that no question of cross-subsidy between licence fee-funded activities and commercial interests arises. It is critical that public confidence in the institution is maintained. If doubt arises as to the legitimacy of the commercial activities of the corporation and no, or insufficient, mechanisms exist to ensure transparency, public confidence will be lost.

The role of the governors is of paramount importance in the BBC. It is twofold. The governors are responsible for policy formation, albeit strategic, and for internal regulation. The amendment, coupled with Amendment No. 152, seeks to give Ofcom the necessary authority to confer legitimacy and to ensure compliance with the fair trade commitment as it applies to the BBC's commercial activities.

Amendment No. 152 concerns the monitoring of the BBC's commercial activities. It seeks to confer a duty on Ofcom to monitor compliance by BBC companies with self-published guidelines regulating their commercial interests. It is essential that the regulatory framework within which the BBC commercial arm operates is clearly defined and monitored to remove any ambiguity among other parts of the commercial broadcasting sector.

The procedure through which compliance is currently adjudicated remains unclear. It is not appropriate within today's broadcasting ecology for such practices to remain without an adequate mechanism to ensure conformity. The amendment supports the proposal suggested by Amendment No. 146 and would enable Ofcom to obtain any BBC information, including access to books of account or contractual documents, as it believes necessary to fulfil its obligations under the clause.

The amendment would create a level playing field for all commercial broadcasters and would clarify the position of the BBC governors and Ofcom in respect of BBC Worldwide. It would ensure that the BBC's fair trading commitment and the relating commercial policy guidelines are scrutinised both internally by the governors and then externally by Ofcom. Implementing the clause alone would not remove the power from the governors to enforce these obligations; it would simply allow Ofcom to monitor the BBC's regulatory compliance. Amendment No. 146 would provide the mechanism of enforcement while Amendment No. 152 would grant Ofcom the necessary power to discharge its duty effectively.

The commercial arm of the BBC—BBC Worldwide—is not licensed by Ofcom but is conferred authority by the Royal Charter. This produces a notable irregularity. The commercial activities of the BBC would not, as the Bill is drafted, fully come under the external regulatory scrutiny of Ofcom, which does not have the same powers to monitor or request information from BBC Worldwide as it does from other commercial broadcasters. The only power that Ofcom will retain is the concurrent power exercisable with the OFT if it is proved that the BBC or BBC Worldwide are guilty of abuse of their dominant market positions, or if the BBC can be proved to have distorted the market. Such an abuse of power would be extremely difficult to assess and substantiate.

Transparency within the BBC is essential to guarantee the confidence of other broadcasters and the public, who are so important in this process. If the governors are certain that the fair trading requirements have been adhered to, there should be no resistance to the proposed external scrutiny of the BBC fair trading obligations. Such an amendment can only serve to ensure that trust is developed within the industry as a whole and that any ambiguity as to the BBC's commercial activities is removed.

Amendment No. 275 seeks to ensure parity between the BBC and commercial operators in the matter of cross-promotion. It seeks to confer a duty on the BBC to make arrangements to secure that any rules made by Ofcom regarding the regulation of promotion of programmes, channels and related services are observed. This would ensure that any rules set by Ofcom which apply to commercial broadcasters apply equally to the BBC, thus reflecting the objectives of Amendments Nos. 146 and 152.

It is important to emphasise the problem of one-sided, unbalanced cross-promotions which can confuse viewers seeking to make informed choices between services to the detriment of broadcasting as a whole. Cross-promotions for mass market channels can be used to stifle competition unfairly. In both areas there is a strong case for the BBC to adhere to much more concrete and objective standards and to he subject to some kind of external scrutiny.

This is not only a theoretical problem. Many viewers and listeners complain—only slightly tongue-in cheek—that the level of advertising on the BBC is now worse than on commercial channels. Equally, there are concerns among rival broadcasters that new BBC digital services enjoy the benefit of free promotional airtime on BBC1 which would, if purchased from commercial stations, costs millions of pounds. Now that the BBC is a fully-pledged partner in the digital terrestrial platform, it is noticeable that its advertisements for digital television contain a throwaway reference to cable and satellite, followed by a eulogy on the benefits of Freeview.

A code on cross-promotions, most recently reissued by the ITC in January 2002, contains rules to which all commercial licensees must adhere. Consulting on the rules at the time, the ITC said that it sought to strike a balance between, giving viewers greater access to more information about the choice of services available in a multi-channel digital environment. whilst limiting the amount of promotional clutter and protecting the quality of the viewing experience".

In implementing this eminently sensible policy, the ITC introduced specific rules on avoiding excessive amounts of cross-promotional activity in any given period; avoiding excessive promotion of a particular channel, service or suite of channels or services; and a restriction on the promotion of any particular digital platform or platform service provider outside paid-for advertising minutage. In-programme promotions should provide information likely to be of value to the viewers of the programme containing the promotion and must not become advertising or compromise the editorial integrity of the programmes within which they are placed.

We would expect this code, or something like it, to be taken up by Ofcom. Ironically, the rules are now at least as much relevant to the BBC as they are to its main commercial rivals. It would appear that the BBC falls outside the code and has no intention of operating within it. In our view this is unacceptable. The code, by its nature, encompasses both content rules and competition rules, both of which the BBC and the Government have stated should apply to the BBC going forward. The amendment, which would add cross-promotion to Schedule 12 alongside all other matters where the BBC is expected to act as if subject to Ofcom's jurisdiction, plugs this important gap. I beg to move.

Lord Lipsey: I support Amendment No. 152, which stands in my name and that of the noble Baroness, Lady Buscombe. I sat as quiet as a mouse through the first four days of the Committee's proceedings—rising only briefly to squeak when unutterably provoked—hut I am afraid that noble Lords will hear rather too much of me today because there are three successive amendments standing in my name. I apologise in advance if I bore the Committee. I declare an interest as a non-executive director of London Weekend Television.

The philosophy of the Bill is clear in that the BBC will be half-in and half-out of Ofcom. It will be in for tier one and tier two and, broadly speaking, in for competition issues. The public service remit of the BBC is outside Ofcom—rightly in the view of some, wrongly in the view of others—but commercially it is within Ofcom.

There is a problem in the Bill, as the noble Baroness, Lady Buscombe, described very well, about the fair trading commitment and its implementation. Let me first clear up the confusion that bedevils our discussions on fair trading.

Sometimes when people talk about the BBC trading unfairly, they mean something very broad. They mean something like, "We have 'Sky News' and the BBC comes along with 'News 24'; the BBC is paid for by a licence fee while we have to earn our living. That is unfair". That is an arguable proposition; we could argue both sides of it and no doubt the Committee will return to it.

But that is not what this is about. This is about a much narrower concept of unfair trading: whether the BBC, an organisation with public service and commercial sectors, is appropriately treating those two activities as arms-length activities and not cheating in its commercial activities by cross-subsidisation from its non-commercial activities, or other forms of cheating.

The fair trading rules laid down by the BBC are governed by a code of internal practice of extraordinary complexity and detail. It is hard to argue with it. I am pleased to say that those rules are independently audited by somebody other than the BBC's auditors, and that is all to the good. However, there is still concern, not so much about the rules as about how they are implemented by the BBC. This has rung true in various reports. The noble Lord, Lord Gordon, who sat with me on the Davies committee on the licence fee, chaired by Gavyn Davies, will remember that we said: Despite the BBC's efforts to put in place procedures intended to achieve transparency and separation of public service and commercial operations, these procedures have not yet inspired public confidence". We went on to say: We do not consider this is possible without some form of external scrutiny". That is relevant to the BBC's internal reviews. There has been some scrutiny since by Professor Whish. and, like me, he cannot find fault with the rules, but this is outside his terms of reference. Professor Whish, who conducted the review for the Government, went on to say: A commitment to fair trading must be supplemented by adequate measures to ensure that compliance is maintained". I do not know whether or not compliance is maintained, but one hears so many traveller's tales from people in the independent sector and the BBC's competitors, who I accept have an interest, about what the BBC gets up to. I heard from the head of the History Channel the other day. It wanted some film released by the BBC for a programme it was making— no dice. Was that a fair editorial decision to protect the public service or was it an attempt to shackle a channel that was competing with one of the BBC's? Is the BBC asking for fair value for its library items? Is it bundling together things that it wishes to sell in an unsatisfactory way so that people have to purchase things they do not want in order to get the things they want? I raise these questions as they are raised with us and with every noble Lord in this House who is available to hear them.

In conclusion, this is not an anti-BBC amendment— far from it. If everything is fine in the current set-up, independent scrutiny by Ofcom will find it to be fine. Ofcom will find these tales to be exaggerated or invented, the BBC can go ahead with its set of rules, and there is no problem. That would be a huge gain for the BBC—it would not be sniped at and attacked all the time, in this House and elsewhere. for its behaviour. I simply do not understand why the BBC does not enthusiastically endorse an Ofcom role as part of a sensible solution which would allow it to be free to conduct its public service broadcasting without fear that it is using that unfairly to subsidise its commercial activities.

11.45 a.m.

Lord McNally

I accept that the noble Lord, Lord Lipsey, has intervened only with the benefit of the BBC in mind. Only in Britain could we have a public enterprise body that is a market leader and a world success, and then spend so much time working out how we can cut it down to size. If some other public enterprises performed with the excellence of the BBC, the Prime Minister would probably sleep a lot easier at night.

It is worth putting this into context. Of course the BBC has been aggressively commercial. That was part of the deal for the last licence settlement. The BBC was told then that it could not just sit complacently on its archives and its assets—it had to work them and sweat them. Therefore, it is a little unfair to say, when it is carrying out its part of the agreement with the Government, "You should not be doing it like this". I am a little worried that we will tie the BBC down like Gulliver with a thousand different strings. I am also worried that Ofcom—which, my goodness, has to keep an eye on some other customers that I trust a lot less than the BBC—will have to face what I would describe as the whine of the week from the commercial sector about what the BBC is or is not doing. I have explained before that I want to see the commercial side of broadcasting as successful as it possibly can be, as long as they understand that it is the will of the British people and the will of this Parliament that we have a strong, aggressive, successful, public sector broadcaster called the BBC. That is an absolute distortion of the market as far as the purists are concerned. That is what we, the British people, want. We want a distorted market in our broadcasting because it allows us to have a public sector broadcaster that can influence our democracy, our culture and the overall standing of our broadcasting.

Baroness Buscombe

I am grateful to the noble Lord for allowing me to intervene. Could he explain how these amendments would in any way destroy or undermine the success of the BBC? That has nothing to do with the amendments. We are talking about proper external scrutiny of the commercial arm. We are here to underpin the success of a strong, commercial activity which we wholeheartedly support.

Lord McNally

I have heard the noble Baroness promising to support the BBC before. Indeed, I look forward to Mr. David Elstein's report on the BBC for the Conservative Party. That is like asking Count Dracula to look after the blood transfusion service.

The noble Baroness and the noble Lord, Lord Lipsey, referred to the concerns about the BBC's aggressive commercial activity, and there is a case to answer. I will be listening very carefully to the Government's assessment of these amendments. We are only at Committee stage.

I hope that the BBC listens to some of these concerns and loses some of its macho commercial attitudes, because they weaken its friends' defence of it. But I will not sign up to restriction after restriction, thin thread after thin thread which, in the end, will lead the BBC hog-tied and weakened, like Gulliver. It is a question of an overall judgment. I probably will not intervene as often as the noble Lord, Lord Lipsey, as this speech-fest on the BBC unfolds, but we on these Benches will look at the overall picture to see what it does. We will not simply be responding to commercial pressures from those who do not like a successful BBC.

Lord Gordon of Strathblane

I had not intended intervening in this area of the debate, but I am prompted to make a brief contribution in the hope that it illuminates what the amendments are trying to do and the market distortion that is being left totally undisturbed.

The major market distortion in this country, fully endorsed—I agree with the noble Lord, Lord McNally—by everyone in the House, comes from the fact that the BBC is allowed to run many more television channels and radio services than any commercial operator. It is also allowed to cross-promote from one into another in a way that is impossible in the commercial sector because companies are under separate ownership. If I asked people from Scottish television to promote Scottish radio, they would rightly look for some money. The BBC is also allowed to intervene in the market place for magazines. Some BBC magazines are top sellers because the programmes they mirror are very popular.

That whole area is being left wholly undisturbed—a major market distortion. There is very little we can do about it if it is our decision—a decision I would endorse—that the BBC should be able to do all those things. The amendments address the question at a much lower level and do not affect the major position.

Lord McNally

I thank the noble Lord for his intervention. I conclude with one point on cross-promotion, which illustrates that the BBC simply cannot win, as when it fulfils its commitment to maximise its resources and is then accused of commercialisation. Unless the BBC uses its power to sponsor and promote free digital, we will not get digital switchover. Therefore, when the BBC is accused of using its power to promote free-to-air digital, it is carrying out a national interest and a government policy. It is totally unfair to say that it is abusing its power when it is simply responding to that interest.

I shall not intervene on every amendment of this sort, but when we reach Report stage we must take an overall view instead of hearing these reasonable cases for yet another silken thread to be spun over the BBC.

Baroness Noakes

I hope that I may be permitted to speak today, for although I have not taken part in deliberations on the Bill I have followed the proceedings in Hansard.

I want to take part because I feel that I have some knowledge that could be useful to the Committee. In my former life as a partner in KPMG, I was responsible for services provided to the BBC, which included both the financial audit and the audit of the BBC's fair trading commitment. I am probably the only person here who has practical experience of auditing the fair trading commitment, although I acknowledge that my noble friend Lady Hogg has considerable and more up-to-date knowledge of how it works from the governors' perspective.

It is fair to say that the BBC has become very much more open about its fair trading commitment over the years. I first became involved during the 1990s when the commitment and its audit first emerged. On looking at the 2001–02 annual report I was struck by how far the BBC has moved in terms not only of the process of oversight of the commitment but also in disclosing the issues relating to fair trading. I pay tribute to the BBC for that and to the governors who have been committed to seeing greater transparency through their compliance committee.

As the noble Lord, Lord Gordon, said, there is a potential for the BBC to trade unfairly, which is why it has the fair trading commitment. On the whole, the BBC has a good record on its commitment to the fair trading principles. On that basis it should have nothing to fear from the amendments. I understand that no organisation likes to subject itself to outside scrutiny. and I see where the BBC is coming from in that regard. It has devoted significant resources to monitoring its compliance to the commitment and can doubtless see no useful purpose in additional examinations.

The crucial features of the fair trading commitment are its complexity arid subjectivity, however. The governors' statement in last year's annual report said that fair trading issues were complex. From my experience, that is something of an understatement. When I was involved, the issues with which we had to grapple involved very difficult judgment calls, covering issues that were both intellectually and technically complex. They are not easy issues. The auditors' report emphasises both that the audit is not an absolute assurance that there are no breaches of the commitment and that the judgments applied by the BBC can be open to challenge. Both those points are entirely reasonable, and I do not criticise the auditors for making them. But they underline the fact that there are no absolutes when dealing with the fair trading commitment. That is why I believe that extra scrutiny from outside the BBC would be a valuable safeguard.

I have no doubt that the governors, who oversee the fair trading commitment through the compliance committee, approach their duties conscientiously and fairly. But the governors are also involved in making strategic decisions about the BBC, some of which may have fair trading consequences. Consciously or not, the governors carry some baggage with them into the compliance committee. I have no reason to doubt any single judgment made by the governors in relation to fair trading, but there are underlying concerns that the process is closed within the BBC and not sufficiently open to be robust over time. I hope that the Government are prepared to consider the amendments.

Baroness Cohen of Pimlico

I had not intended to intervene at this point, but I have some relevant experience inasmuch as I was a BBC governor and a member of the fair trading committee in the early days, and I was a member of the pre-legislative scrutiny group.

The BBC fair trading committee was unique in my commercial experience. No commercial company would dream of having a committee that agonised over the question of whether it was competing fairly or unfairly. My experience of the fair trading committee was that the benefit of the doubt was always given to the complainants. One had to remind oneself that one was in severe danger of hobbling the whole organisation.

I also used to remind myself and my colleagues that the BBC was and remains subject to the ordinary competition law of this country. Our commercial rivals tend to speak as if competition law had in some way been suspended in favour of the BBC. It has not and it is not, and any action brought against the BBC on normal competition grounds has so far failed.

While I am moved to tears by the vision of the sunlit uplands, with happy commercial companies being able to get the answer that they want from Ofcom. I do not believe a word of it. This is in the normal area of people trying to deal with powerful rivals. We should bear in mind the view expressed by the noble Lord, Lord McNally. The fact that the BBC is powerful and successful is something that we have willed, and we should hesitate to undermine it.

Noon

Baroness Blackstone

I shall do my best to take the overall view suggested by the noble Lord, Lord McNally. I begin by immediately emphasising what my noble friend Lady Cohen has just said—that UK and EU competition law applies to the BBC, as it does to other broadcasting organisations.

The Bill gives Ofcom concurrent powers with the Office of Fair Trading to apply UK competition law to broadcasting and related activities. Ofcom's functions in that respect are set out clearly in Part 5 of the Bill. Over and above the requirements of competition law, the BBC is also obliged under the terms of its charter and agreement to adhere to the corporation's own fair trading commitment, the enforcement of which is the responsibility of the governors.

The fair trading commitment is reflected within the BBC's published commercial policy guidelines. As the Government explained in their response to the Joint Scrutiny Committee, the guidelines are internal documents designed to ensure that the BBC is properly equipped to comply with competition law in carrying out its activities, and that all those activities are consistent with and supportive of the BBC's core purpose as a public service broadcaster. The guidelines underpin compliance with the law, but do not substitute for it. The BBC's fair trading framework is also subject to annual audit by independent auditors, as we have heard, and their opinion is published in the BBC's annual report and accounts.

Given the nature and role of the fair trading commitment, it seems to us entirely right and proper that its enforcement should continue to be a matter primarily for the corporation's own board of governors, rather than an external regulator. It is an internal document like those used by many large companies and we would not expect Ofcom to enforce it. To give Ofcom the responsibility for enforcement would be wholly inconsistent with both its status and indeed its purpose.

The effect of Amendment No. 152 would be that, where the BBC had published guidelines for BBC companies undertaking any commercial activities in the UK relating to the making, acquisition or selling of programmes, the responsibility for monitoring compliance with such guidelines would rest with Ofcom. That would effectively give Ofcom the function of enforcing further aspects of the BBC's fair trading commitment, which, as I have already said, is, and should be, the responsibility of the board of governors. So this amendment gives rise to the same objections as Amendment No. 146.

Amendment No. 275 appears to be designed to address the fact that, since Ofcom will not licence the BBC's public service channels, those channels will not be subject to Ofcom's cross-promotion rules. There are a number of points to be made about this. In the first place, the BBC's promotional activities are of course—I say this once again—covered by competition law which applies to the corporation, and which, as I said, will in future be enforced concurrently by both Ofcom and the OFT.

Lord Gordon of Strathblane

Something extra might be required for the BBC precisely because, under the current ownership rules, only the BBC would be able to behave anti-competitively by being able to cross-promote from radio to television and indeed into magazines. No private operator in this country would be allowed to own a television station and a radio station—and indeed magazines—in the same market. That is prohibited under ownership rules. The competition rules have not actually emerged because there is no opportunity to be anti-competitive. There is an opportunity in the case of the BBC. For that reason, one must be extra vigilant; no more than that.

Baroness Blackstone

I am grateful for my noble friend's intervention. However, I am afraid that he is worrying about something that he need not worry about. I believe that the BBC's own commercial policy guidelines are directly relevant here and that they operate effectively. They contain commitments that the BBC's core public services will not be used unfairly to promote BBC commercial activities, and there will be no promotion of BBC commercial products and services within BBC programmes on the public services.

I should also point out that the promotion of licence-fee funded services is in the interest of licence payers, because it informs them about the whole range of services for which they are paying. What could be the matter with that? Noble Lords will no doubt remember that the BBC's fair trading policies were subject to an independent review by Professor Whish, in 2001, which concluded that they were appropriate to ensure that the BBC does not distort competition in commercial markets. I think that we should accept the recommendations made by that completely independent review.

Lord Lipsey

We do accept them. However, Professor Whish's terms of reference precluded him from looking at whether the policies have worked in practice, and that is the problem that I have raised this morning.

Baroness Blackstone

I believe that the evidence shows that they are working in practice. I say to my noble friends Lord Lipsey and Lord Gordon of Strathblane that the OFT has negotiated undertakings with the BBC which regulate the BBC's ability, for example, to promote magazines on both BBC1 and BBC2. Those undertakings have now been in operation for more than 10 years.

The BBC also reports against its performance in its annual report. Of course I accept that the issue of BBC cross-promotion is an important and sensitive one. None the less, the Government's judgment on balance is that the current approach is the right one. We believe that the BBC's position is best handled on the basis of clear commitments by the BBC itself—and enforced by the governors—that licence-fee funded services will not be used to promote the corporation's commercial activities, such commitments being set firmly within the overall framework of UK and EU competition law.

I was extremely interested in what the noble Baroness, Lady Noakes, said about the conscientious and fair way in which the BBC approached this issue and in the remarks of my noble friend Lady Cohen. I hope that in the light of what I have said the noble Baroness, Lady Buscombe, will feel able to withdraw her amendment.

Baroness Buscombe

I thank the Minister for her response. I also thank the noble Lords, Lord Lipsey and Lord Gordon of Strathblane, and my noble friend Lady Noakes for their support for the amendments. I was somewhat disappointed by the inference from the noble Lord, Lord McNally, that we are somehow seeking to cut the BBC down to size. I do not actually know what that means. I hope that he listened to what I said in my opening remarks. I sometimes feel—I certainly felt it in last Thursday's debate—that no one has listened to a word that I said in speaking to an amendment. Last Thursday noble Lords seemed to have their speeches on the amendments ready and there was no deviation from them.

We are not seeking to cut anyone down to size. We are seeking to underpin the success of the BBC and to instil and entrench public confidence in the BBC to the greatest possible extent. The BBC is enormously successful. It is a unique animal. As the noble Baroness, Lady Cohen, has made absolutely clear, and she is absolutely right, a commercial company would not even attempt to dream up ways of deciding whether it has been completely fair with others; it would perhaps largely care less about it. The BBC is indeed a very different animal.

The BBC has a very successful commercial arm, so much so that we are pleased to report that that activity has provided additional funding to the BBC's publicly funded activities of £106 million. That is great. However, the BBC also has an input of £2.5 billion of taxpayers' money as well. In newspaper articles in recent weeks the BBC has openly and freely admitted that it feels that there is a problem with cross-promotion, for example, as viewers are beginning to ask, "What do we have here? Is it a commercial business? Why are we paying a licence fee?"

I accept that there is an annual report which is extraordinarily helpful. I agree entirely with my noble friend Lady Noakes that the BBC has become much more open and transparent. We applaud it for that. However, most viewers do not read annual reports. They do not understand what they see as a breakdown in delineation between what they are paying for and what they are receiving. Most people assume when they pay their licence fee that they will not get any commercials. But they are getting commercials—for the BBC.

A number of very helpful points have been made. The noble Lord, Lord Gordon of Strathblane, made it absolutely clear that we seek to allow the BBC to prosper. We accept that the BBC is allowed to prosper in a way that it would find impossible in the commercial sector. All we seek is some external scrutiny of the fair trading commitment under the umbrella of Ofcom.

I thank my noble friend Lady Noakes for her helpful contribution. I believe that all Members of the Committee appreciate the input of someone with practical experience of auditing the fair trading commitment. As my noble friend said, these issues are complex and involve a certain amount of subjectivity. As my noble friend also said, we are asking for extra external scrutiny which would act as a valuable safeguard. That is a very important point.

I shall not press the amendment at this stage but before I withdraw it, I ask the Minister for advice. The BBC Agreement is about to be amended. The draft amendments can be examined. But will we in Parliament have the opportunity to debate those draft amendments to the BBC Agreement or will they simply be decided and agreed between the BBC and the executive? I ask the question because, following on from what I said on Thursday—which I shall keep repeating so long as we debate any aspects of the BBC—Her Majesty's Opposition are very keen to ensure that there is independence from government on the part of the BBC. We want to make sure that the BBC remains as independent from government as possible. That is why we have tabled the amendments that we are discussing. We want to help the BBC to remain independent from the executive. That is why we are very keen that any scrutiny should come under the wing of Ofcom as opposed to the executive. For now I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 147 and 148 not moved.]

12.15 p.m.

Baroness Buscombe

moved Amendment No. 149: Page 176, line 15, at end insert— (10) It shall be the function of OFCOM to oversee the terms of trade between the producers of independent radio and the BBC. (11) In subsection (10), a reference to the producers of independent radio is a reference to such producers as the Secretary of State may by order specify.

The noble Baroness said: The noble Viscount, Lord Astor, is unable to be here this morning to move Amendment No. 149. I agreed to move it on his behalf.

The BBC is required to commission at least 25 per cent of its television programming from the independent sector yet there is no such requirement for radio. The BBC operates a 10 per cent voluntary target for analogue radio. In a statement last year it said: We remain fully committed to our voluntary pledge that 10 per cent of eligible hours on our national analogue network will be made by independents. We also wish publicly to emphasise that we will continue to view this 10 per cent commitment as a floor not a ceiling". There is no logical reason for the discrepancy in the treatment between BBC TV and BBC radio. As the Secretary of State, Tessa Jowell, said, the licence fee is the venture capital for creativity in this country. The ITC backed that up arguing that the licence fee was not just designed to create public networks but was also aimed at ploughing significant moneys into indigenous production. Yet in radio, unlike television, the BBC has complete discretion as to how it invests this money.

The Government have so far rejected calls for a statutory independent production quota for BBC radio. The noble Lords, Lord Alli and Lord Lipsey, have tabled an amendment that would introduce such a quota. That is supported by my noble friend Lord Astor. My noble friend's amendment would help to boost the independent radio production sector in the absence of a statutory quota on BBC radio. It would give Ofcom the power to regulate the terms of trade between the BBC and independent radio producers, preventing the BBC, therefore, from using its dominant position—it controls over 50 per cent of all radio listening in the United Kingdom—to dictate terms of trade that disadvantage its suppliers.

Unlike television the independent radio production sector is characterised by a single commissioner—the BBC. The BBC is far more dominant in radio than it is in television. Most independent producers are faced with a monopolistic—that is, a single—buyer of their services. What is more, that buyer is able to source products internally. That puts the BBC in an enormously powerful position vis-à-vis independent radio producers and means that it can effectively determine the terms on which it trades. Independent scrutiny is essential to ensure that the BBC does not abuse its dominant position.

The amendment would give Ofcom a duty to review and regulate if necessary the terms of trade between the BBC and independent radio producers. It has the support of a number of independent radio producers including UBC Media, Somethin' Else, Neon and Smooth Operations. My noble friend states that the BBC has nothing to fear from the amendment. Indeed, it should welcome the transparency and openness that it would inject into its negotiations with independent producers. Only last month the BBC said: We will work to open up commissions where appropriate to independent producers in order to develop the United Kingdom production sector".

My noble friend says that the amendment would do just that. I beg to move.

Baroness Jay of Paddington

Later we may have a similar debate on the amendment in the name of my noble friend Lord Alli, to which the noble Baroness, Lady Buscombe, referred. However, at this stage it is worth making several points about the difference in the nature of television production as opposed to radio production and about why it is more appropriate to stick with the present voluntary commitment of the BBC to 10 per cent of independent radio production.

The point that has been made to me, and which I certainly recognise as an old-time radio producer, is that 70 per cent of radio production—I believe that it rises to 90 per cent on some of the BBC radio channels—is live production. That is a very different situation from television production where most of the programmes are what is called in the jargon "built"; that is, they are recorded or prepared beforehand or are in some way already on the stocks when they are transmitted to the television audience. It is obviously more difficult to plan programmes that are concerned primarily with news, live music and recorded live music—if one can use such an expression—as many of the radio stations do.

As the noble Baroness, Lady Buscombe, said, the present situation in which the BBC has a voluntary target of a 10 per cent figure with regard to independent radio programming works well. As she also said, the BBC regards that as a floor and not a ceiling. I understand that more recently the figure has risen to 14 per cent.

Commercial radio does not share that ambition and, therefore, has no commitment either voluntary or otherwise to independent production. Although I agree that it is obviously important that local independent radio is as vibrant as it can be, it is also worth noting that more than 30 per cent of the BBC network production spend is now devoted to production outside London. Small production units are involved with BBC radio. That is a success both from their point of view and that of the listeners.

I understand that the BBC management regard the 10 per cent figure as the floor not the ceiling of independent radio programming. As I say, that figure has risen recently to 14 per cent. But we must recognise the very different nature of television programming which, as I say, is often "built" in the sense of being pre-recorded. In the case of live radio, commissioning independent production is more complicated.

Lord Lipsey

I wish to speak to Amendment No. 274, which stands in my name and that of my noble friend Lord Alli. I apologise on his behalf for his absence; he is in Ethiopia, working with UNICEF. By the end of today, many of us might wish we were in Ethiopia as well.

I shall first respond to what was said by the noble Baroness, Lady Jay. I do not think that the amendment is unfair to the BBC: at least it is commissioning 10 per cent of independent programmes and the commercial sector is not. Incidentally, that is precisely the reverse of the situation in television, where the BBC has been the laggard and the commercial sector has been the leader. However, I am absolutely delighted that there have recently been very strong signs that the BBC is radically changing its attitude to "indies". This year it might even meet its 25 per cent quota—who knows? It did not last year.

The case for increasing independent production in radio is very much the same as that in television. There is a cultural case because it favours diversity. That will become very important later when we reach, for example, cross-media ownership. There is also an economic case because, unless we have a vibrant independent sector, how can we benchmark the costs of the public service satisfactorily? There is a broad case for more independents.

I do not find the argument of the noble Baroness, Lady Jay, wholly convincing—the BBC repeats it—that there is some fantastic difference between radio because it is live and television because it is not. I defer to her experience as a radio producer.

Baroness Jay of Paddington

And as a television producer.

Lord Lipsey

The wisdom and experience of the noble Baroness extends globally, and certainly to both those subjects.

Although it is perfectly true that there are differences between live and recorded material, it is perfectly easy—I have confirmed it with the noble Lord, Lord Alli, who also has experience of the subjects—to work out a form of contract that would enable station integrity and personality to be preserved, even though individual programmes were made by an independent. The producer-provider split ought not to be news or problematic in this House in 2003. I do not accept the argument.

I partly accept the argument about the worry that the BBC is highly focused in its regional studios, and that a rapid move would undermine that. Equally, it is very important that we have a vibrant independent sector of production outside London that does not refer to some London-based organisation. In time, I hope that we can move to that.

Referring specifically to the amendment, I do not think there is any particular magic to 25 per cent. My noble friend Lord Alli and I thought, "Well, it's 25 per cent for telly, it might as well be 25 per cent for radio". However, we are open to bids and for the best figure possible. I should say for myself—I do not know whether it is true of my noble friend—that I have no particular desire to see the provision implemented statutorily in the Bill. The indies would like that, but it does not bother me in the slightest.

In response to the issue that we have raised, I would like a greater commitment from the BBC to push up that 10 per cent floor and the 14 per cent that it is achieving, and a wholehearted embrace of the principle of a growing independent sector. With that, I would like the commercial stations to feel that they too could experiment more in the area and increase the size of the independent sector. We do not have an argument about goals. I accept much that the noble Baroness said about the shortcomings of the amendment as a way of getting where we want to go, but it is right that the issue should be canvassed and the BBC invited to respond positively, as I hope and believe that it will.

Lord Gordon of Strathblane

I support most of the remarks made by the noble Baroness, Lady Jay. Obviously, it would be inconsistent with my previous position if I did not welcome the idea of greater transparency and, indeed, external regulation of how the BBC treats independents. However, I genuinely believe that it is entirely right in its contention that there is a major difference between television and radio. In the light of that difference, the BBC's achievement of 10 per cent or even more independent production is, frankly, remarkably high.

I have taken part in BBC programmes commissioned by independent producers. They were programmes that could he recorded in advance; they were programmes, as distinct from what we regard as programming—DJs who are on for three hours in the morning. Physically, how could one have a BBC in-house disc jockey on between 9 o'clock and 12, and then switch outside from 12 until 2 o'clock without having the same access to BBC traffic information, weather information and so on?

My reason for supporting my noble friend Lady Jay is that I genuinely believe that the distinction between programmes and programming, which tends to apply in radio but not television, makes the imposition of a higher target on the BBC undesirable and unworkable.

Lord McNally

I speak only because the noble Lord, Lord Lipsey, with his usual political ruthlessness, airbrushed me out of Amendment No. 274, to which I also put my name. I did so as a gesture to our leading fluffy, the noble Lord, Lord Alli, whom we all wish well in Ethiopia. I also did so because I was under whelmed by the BBC evidence to the Puttnam committee about its commitment on television. Mr Greg Dyke was at his most churlish when he referred to that commitment. The evidence left me with the feeling that the BBC needs a prod and a nudge on such matters. It has failed to hit the target of 25 per cent in television, so it worries me that the commitments are ceilings rather than baselines.

When I discovered from the noble Lord, Lord Alli, that the commitment in radio was much lower, I again thought that a prod was useful. I did so based on a conversation that I had with the noble Lord, Lord Bragg, on the margins of the debate about the growing importance of the creative industries within our whole economy. I was recently at a presentation by the GLA on what it wanted to do about London. London's base for the creative industries was greatly emphasised and the noble Lord, Lord Bragg, and I said that that was equally true of many regional centres. That ties in with Tessa Jowell's comments about the licence fee being venture capitalism for the creative industries.

I added my name to the amendment because I want to prod the BBC. We will refer to the subject later in relation to commercial matters and music. I want the BBC to use the independent sector in radio and television to encourage creative industries, and to use its strength and power to support them, especially in the regions. As was said by the noble Lord, Lord Lipsey, we are not tied to any particular percentage at this stage. I say to the BBC that the amendment should not be seen as a threat, but a real opportunity to win friends and influence people by using the creative talent of the independent sector as venture capital and to strengthen greatly the quality of what is given to BBC listeners.

12.30 p.m.

Baroness Blackstone

As many Members of the Committee will be aware, there has been a statutory independent production quota for TV since 1990, and the Bill makes provision for that to go on. The BBC will also be subject to requirements on how it trades with independent television producers, and those will be enforced by Ofcom. In accordance with our general approach to the BBC, those requirements will be set out in the agreement rather than the Bill.

As my noble friends Lady Jay and Lord Gordon of Strathblane rightly said, there are major differences between independent production for TV and radio. In TV, independent producers have the option of a number of different commissioners—namely, public service television broadcasters—thereby providing a genuine market for the supply of programmes and the capacity for the independent supply industry to grow.

The independent radio programme supply market is, by contrast, characterised by a single commissioner, the BBC. It would therefore be difficult to build up an independent production sector by way of a quota, because, having only one commissioner for its programmes, the sector would not have capacity to develop it in the same way as it is done for television.

The corporation has consistently met, and often exceeded, its 10 per cent target ever since it committed itself to a target. It has reaffirmed its view that the 10 per cent commitment is a floor, not a ceiling. As my noble friend said, it often goes above the floor. The BBC believes that the independent radio production sector provides innovative and creative programmes which make a valuable contribution to its output.

I say to the noble Lord, Lord McNally, and to my noble friend Lord Lipsey that the BBC's commitment in this area is clearly set out in its statement issued in December 2002. It is keen to open up commissions to independent producers and to develop the independent production sector. We believe that it is entirely right that the BBC should be commissioning a significant proportion of radio output from independent producers and we absolutely endorse the voluntary target which the corporation has set itself.

We are not persuaded that it is necessary to set a formal independent radio production quota which could apply only to the BBC. Nevertheless, the Government will keep the position under review as the radio market develops.

Turning to the terms of trade issue, the BBC is, as I have said, subject to a code governing the terms of trade with independent television producers. But that is not a requirement that applies only to the BBC; rather, it mirrors the requirements placed on all licensed public service broadcasters.

The code was developed in response to concerns raised by the Joint Scrutiny Committee and by the ITC in its programme supply review report. We are not persuaded that there is a case for applying a similar requirement, and one which applies only to the BBC, in the radio context.

The Government attach importance to the role of the independent radio producer sector and we want to see it grow. I know that the BBC takes a similar view; however, I do not believe that these amendments will help to achieve that aim. I therefore hope that the noble Baroness, Lady Buscombe, will be willing to withdraw the amendment tabled by her noble friend.

Baroness Buscombe

I thank the Minister for her full response to the amendment. This has been a helpful debate. I shall encourage my noble friend Lord Astor to read the Minister's remarks in Hansard. For the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 195 agreed to.

Baroness Buscombe

moved Amendment No. 150: After Clause 195, insert the following new clause— DUTY OF COMPTROLLER TO FULFIL REVIEW AND REPORTING OBLIGATIONS (1) It shall be the duty of the Comptroller—

1. (a) as soon as is practicable after the period of twelve months beginning with the commencement of this section; and
2. (b) as soon as practicable after the end of each subsequent period as may be selected by the Comptroller for the purposes of this section,

to fulfil the review and reporting obligations. (2) The period selected by the Comptroller for the purposes of subsection (1)(b) must be a period of not more than three years beginning with the end of the previous period for which the Comptroller has satisfied those reviews and reporting obligations. (3) The review and reporting obligations for a period are—

1. (a) an obligation to carry out an examination into the efficiency, economy and effectiveness of the BBC's services;
2. (b) an obligation to prepare and publish a report on the matters found on the review.

(4) Subsection (3) shall not be construed as entitling the Comptroller to question the merits of the policy objectives of the BBC's services. (5) In this section— BBC's services" means the television and radio broadcast services provided by the BBC; the Comptroller" means the Comptroller and Auditor General as identified in section 3(1)(a) of the National Audit Act 1983 (c. 44). The noble Baroness said: Amendments Nos. 150 and 151 address 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.

I think it important to say straight away that this scrutiny would not impinge in any way on the editorial independence of the BBC, but that it would give some measure of accountability and transparency. We believe that that would be in the best interests of the BBC.

A number of noble Lords spoke at some length about this matter at Second Reading. I should like to inform the Committee of some progress that has been made since that debate. Perhaps I may quote the remarks of the chairman of the BBC, Mr Gavyn Davies, on 6th May to the BBC All Party Parliamentary Group: In addition, in terms of talking about scrutiny, I know that many of you would like such improvements to involve the National Audit Office. The Governors are not opposed to this in principle, but are emphatically opposed both in practice and in principle to any NAO involvement which would undermine the authority of the Audit Committee or threaten the basic independence of the BBC from the political process. I am hoping that a way can be found of squaring this particular circle before the matter arises once again in the House of Lords in coming days or weeks. If so, then I will enthusiastically support a sensible way forward which protects our genuine concerns about independence, but also offers Parliament better reassurance about our use of public money". We believe that that is a very helpful statement. In a sense it complements concerns; it responds to a letter written by the Public Accounts Committee to me and to others who have been involved in this debate.

The chairman of the Public Accounts Committee, my honourable friend Edward Leigh. MP, wrote with regard to National Audit Office scrutiny of the BBC: I can give firm assurances that what is proposed would present no risk to the BBC's editorial freedom, its independence and integrity. Nor would it in any way duplicate or undermine the role undertaken by the BBC Governors, internal auditors or external auditors". That is an important point. There is no wish on our part in any way to supplant the role of the BBC governors.

With regard to scrutiny by the National Audit Office and the Public Accounts Committee, the chairman of the Public Accounts Committee went on to say that scrutiny would not challenge the BBC's editorial integrity. He said: It has sometimes been suggested that the National Audit Office might interfere with the BBC's editorial independence or somehow risk damage to the quality of its programming. I fully understand the concern but I cannot conceive of any circumstance in which the Comptroller and Auditor General would seek to second-guess the BBC's decisions as to the programmes they make or their editorial content. The Comptroller and Auditor General is concerned only with sound financial management and achievement of value for money. I feel confident that he would not look at what programmes the BBC chooses to make, but at how it goes about doing it. In fact, the Comptroller and Auditor General is prevented by statute from commenting on the merits of policy objectives. Any suggestion that the Committee of Public Accounts would behave differently and attempt to interfere with the BBC's programming policy fundamentally misunderstands the way in which the committee works. The committee never gets involved in policy decisions". My honourable friend went on to say: As for the BBC's independence, it is worth noting that the National Audit Office already has a role on some of the BBC's activities, including the collection of the licence fee. It is also able to scrutinise the BBC World Service and there has never been any suggestion that this has in any way compromised the service's independence. There are other bodies whose independence is important which arc subject to NAO audit, such as the research councils or the British Council, and again there has never been any suggestion that this in any way compromises their essential freedoms. The NAO also audits a number of bodies with creative purpose, such as the Film Council. Again, this has not compromised their activities in any way … The Committee of Public Accounts encourages well-managed risk-taking and innovation. It has sometimes been said that fear of scrutiny might discourage entrepreneurial risk-taking and innovation. In fact, the Committee of Public Accounts has made many recommendations over the years in support of risk-taking, as long as risks are well thought out. But where there is waste or mishandling of public money, it is right for Parliament to hold those responsible to account. Ninety per cent of the recommendations made by the Committee of Public Accounts are accepted, surely also demonstrating that our work, supported by the staff of the National Audit Office, consistently adds value".

My honourable friend went on to say: The role being sought for the Comptroller and Auditor General is quite separate from the role that will continue to be exercised by the BBC governors and its existing internal and external auditors. The role proposed for the Comptroller and Auditor General is that he should be able to carry out value for money examinations on behalf of Parliament into the economy, efficiency and effectiveness with which the BBC has spent public money. In proposing that the Comptroller and Auditor General should be able to inspect the BBC's financial affairs in this way, I am not suggesting that he should audit the BBC's annual account. That work is already done by private sector auditors", and my honourable friend sees no reason for those arrangements to change. He continued: A concern has been raised that the right to appoint auditors will be taken away from the BBC governors. It would not. Those arrangements and the specific responsibilities of the BBC's audit committee to oversee the audit process would continue intact. The National Audit Office's work on other bodies suggests a wide range of issues that would surely also be relevant to an organisation as large and diverse as the BBC. Those include matters such as good financial management, construction project management, implementation of information technology projects, routine procurement and best practice and performance measurement. None of those areas would impact on the BBC's editorial decisions but if money could be saved, surely that could only help to improve the quality of the BBC's programming output". My honourable friend concluded by saying: I can understand if the BBC may be looking for further reassurance, particularly that National Audit Office access would not threaten its editorial independence. A good precedent in how this might actually be achieved has been established in the way the noble Lord. Lord Sharman's recommendations to extend the Comptroller and Auditor General's remit in other areas has been handled. Officials at the Treasury and the National Audit Office prepared a practicalities paper setting out the detailed arrangements. In this instance, I can envisage a similar process involving the Department for Culture, Media and Sport and the BBC. I understand that the National Audit Office will be very willing to make its input into such discussions in order to reassure the BBC on matters that understandably concern the corporation. But the point of principle that needs to be established first is the clear and unambiguous statutory right of access". I want to say little more than that because there is a genuine commitment on the part of the BBC—as was so clearly articulated by Mr Gavyn Davies—Her Majesty's Opposition, the Public Accounts Committee and the National Audit Office to try to seek consensus with regard to this issue between now and Report. I very much hope that we can achieve a consensus, which would benefit us all. Apart from anything else, it is important that it would maintain proper independence between the BBC and the Department for Culture, Media and Sport. I beg to move.

12.45 p.m.

Lord Lipsey

I rise to speak to the amendments standing in my name and that of the noble Baroness. Although this risks defying the long-established customs of the House, I shall not repeat the argument that I made at Second Reading for NAO scrutiny. I refrain from doing so partly because I perhaps showed a certain passion on that occasion. At this stage, the sooner that the heat is taken out of this issue and the cold light of reason applied, the better off we shall all be.

I want to make two points on the broad argument about issues that have been raised since Second Reading. The first involves the excellent article in the Guardian by my great friend, Will Wyatt, the former director-general of BBC television. He argued that the licence fee was not public money and therefore was no business of the NAO. That is a good try. The licence fee is voted by Parliament; it is a compulsory levy on everyone who has a television. If one does not pay up—this emerged in our debate the other day—one can even end up in gaol. I defer to many in this House in my knowledge of ornithology but if something swims like a duck, flaps its wings like a duck and quacks like a duck, so far as I am concerned it is a duck. To say that that is riot public money is ingenious but not plausible.

The second argument that has been raised—this is even more important and involves a genuine concern—relates to the belief that if the BBC were subject to such scrutiny, because the BBC falls under the Department for Culture, Media and Sport and because the accounting officer for that department, as at all departments, is the Permanent Secretary, the Permanent Secretary would somehow or other get involved in the process. I see that the noble Baroness, Lady Hogg, nods in agreement. I make it absolutely clear that if there were any danger of that, I should be as strong an opponent of that way forward as she has been.

That interpretation of what would happen cannot be sustained when one sees how the PAC proceeds. Concrete examples may be more helpful than abstractions. On 30th April, Mr Phil Wheatley, the director-general of Her Majesty's Prison Service, appeared before the PAC. He was not accompanied by any Permanent Secretary; he is the accounting officer and he was accountable for what he said, not the Permanent Secretary at the Home Office. On 14th May, Dr John Bell, the chief executive for the Food Standards Authority, appeared. Again, there was no Permanent Secretary—he was responsible; he was the accounting officer. I am afraid that it is a misunderstanding—I well understand how it came about—to think that reporting to the PAC would involve the Permanent Secretary as the accounting officer. I am sure that any reassurances that anyone required on that subject would be freely given by the PAC and the Comptroller and Auditor General. But that just is not so. It is for the BBC to say who would appear. I imagine that the director-general would appear and that he would be accompanied by John Smith, the head of the BBC's finances and a jolly good accountant. There is no question of any involvement by the Permanent Secretary.

That brings me—

Lord Burnham

Order.

Lord Lipsey

I believe—

Lord Swinfen

The noble Lord is speaking from the Gangway, which is out of order.

Lord Lipsey

I am so sorry to be in had form in the Chamber. That is two conventions that I have broken in one speech.

That brings me to my third and most important point. There have been misunderstandings about the proposal and great concern has been expressed, which I understand. That makes me determined to find a way forward that is based not on conflict but on agreement. I am, I hope, a reasonable chap, and I favour compromise over conflict in all circumstances. However, there is a further and much more important reason in this regard. We do not want the arrangement just as a totem of BBC accountability; we want it because we, the Comptroller and Auditor General and the PAC believe that bringing their great knowledge and experience of public sector economies to the BBC can help the BBC to save money.

That is much more likely to happen in an environment in which the BBC is going along with the NAO and the PAC being involved than in a situation in which it is hostile to that. The BBC is a marvellous organisation but among the things at which it is marvellous is bureaucratic delay and obfuscation. However, if the BBC gets in gear with this arrangement, something really creative and good for public money could come out of that way forward. I am encouraged not only by the remarks of my other good friend, the chairman of the BBC, to the Peers' meeting the other day, but also because I believe that privately he would strongly be of the view that if the BBC is going to go into this arrangement, it should do so wholeheartedly and with full commitment and it should try to make it work. Then, at charter renewal, all of us will have a chance to think again.

That is why I so welcomed the proposal put forward by the noble Lord, Lord Sharman, to resolve this issue. I believe that since then further progress has been made in discussions, including indications given by the Comptroller and Auditor General. But it might well be for the convenience of the Committee if we were now to hear from the Minister on how they are going because we do not want to have an argument about things we do not need to have an argument about.

Lord Maclennan of Rogart

I rise to—

Baroness Blackstone

It would be helpful if, as invited by my noble friend, I intervened at this point. It might speed debate on the issue and, to pick up the terminology used by my noble friend, take some heat out of the issue.

We believe that safeguarding the BBC's editorial independence will always be a matter of the utmost importance. For this reason, we take the view that programming and policy decisions must remain the preserve of the BBC governors and not be subject to review by the National Audit Office or the Public Accounts Committee, or to any form of political oversight or intervention.

However, I acknowledge that those who advocate extending NAO access to the BBC give assurances that the Comptroller and Auditor General does not comment on the merits of policy objectives and is prevented by statute from doing so. Nevertheless, successive governments—Conservative and Labour—and the BBC have judged that extending NAO access to the corporation would compromise the BBC's editorial independence and would undermine its existing audit arrangements.

On the other hand, we recognise the strengths in the argument that there should be clear accountability for the large sums of television licence fee revenue received by the BBC. Like my noble friend Lord Lipsey, I do not accept the view of my old friend, too, Will Wyatt, that this is not public money.

Therefore, the Government welcomed the extremely positive contribution which the noble Lord, Lord Sharman, has made by suggesting a possible way forward. I can say to the Committee that provided we can satisfy ourselves on some of the details of the proposal, the Government intend to give their support to the arrangement that he has outlined, which would be put into effect by way of an amendment to the BBC agreement.

With your Lordships' permission, I would therefore like the opportunity to take the proposal away and examine it in detail. My intention would be to indicate the Government's conclusion before we reach Report stage. While that may not go quite as far as the noble Baroness, Lady Buscombe, would have wished, I hope that it will reassure your Lordships of the Government's intentions and that this is something around which we are able to build a consensus.

Lord Maclennan of Rogart

I am most grateful to have had the opportunity of hearing the intervention of the noble Baroness before we have carried the debate too far today. I also recognise that coming to the debate at this stage, parachuting into the discussion as I have, may be a not wholly welcome intrusion. My credentials for doing so are that I served on the Public Accounts Committee for 16 years; for the duration of the 1990s I was a spokesman on broadcasting in another place; I have great concerns about the protection of the BBC; and I also have wider-ranging constitutional interests in ensuring parliamentary control over public funds.

No doubt at the Report stage we will hear more about the proposals of my noble friend Lord Sharman, which have been made available only in outline. But while the detail of those proposals is being borne in mind, it is important to remember the significant principles that must be recognised in any compromise. My view is neatly summed up by the chairman of the Public Accounts Committee, Edward Leigh, in the last sentence of the letter which the noble Baroness, Lady Buscombe, read to your Lordships. It stated that, the point of principle that needs to be established is the clear and unambiguous statutory right of access".

In considering these matters, it is perhaps sensible to take as a point of departure the earlier report made for the Government by my noble friend Lord Sharman on public accountability and external audit. The noble Baroness will recall that that report gave the reasons for external audit and pointed out that it has a wide purpose. It indicated that a crucial element of public accountability is independent external scrutiny. It provides a means of assurance to Parliament that public money has been properly spent. Public audit has a key part to play in helping public services to achieve value for money. Public audit is also deemed to he a key element in establishing public confidence that public money is properly spent.

In the light of the helpful remarks made by the noble Lord, Lord Lipsey, it is not necessary to animadvert on whether the licence fee is public money. He has effectively established that beyond question. But if there had been any doubt about it, one could reasonably turn to the report of the Gavyn Davies committee, which fully acknowledged that the licence fee is indeed public money; that it is essentially paid to the department which in turn pays the equivalent to the BBC.

It is also worth recording what the Gavyn Davies report said in considering the future funding of the BBC. The present chairman of the BBC was chairman of that committee and I know that he has subsequently distanced himself from some of its key recommendations. Its members comprised several Members of this House, including the noble Lords, Lord Lipsey. Lord Gordon of Strathblane and Lord Newton, and a number of distinguished independent figures.

The committee concluded—and it is worth quoting this and having it on the record—that the arrangements which apply to the commercial television companies which are subject to external regulation are missing in the case of the BBC and that the tension between the regulator and those whom they regulate, which is desirable, is absent here. According to the Davies report, it is not clear whether in the BBC such a divergence of interest can become transparent and effective. It goes on to say in terms and clearly that the most serious lacuna that results from this structure concerns financial control. It then points out that the annual grant of £ 170 million to the World Service is reviewed by the NAO and the Public Accounts Committee but that the much larger amount which comes from the licence fee is not.

The report quotes the view of a former chairman of the Public Accounts Committee, Mr David Davis, under whom I had the honour to serve for a certain time, although not as long as under the distinguished chairmanship of the noble Lord, Lord Sheldon. The report states that the committee agreed and accordingly recommended that the Comptroller and Auditor General's inability to report to Parliament on how the BBC uses the licence fee seriously weakens the public accountability of the BBC. It agreed and accordingly recommended that the National Audit Office should he empowered to carry out periodic financial audits of the BBC's accounts and its fair-trading arrangements.

The report refers to the BBC's fear that such an audit would provide politicians with a handle with which to beat the corporation on its policy and even on its individual programmes. However, that is suitably dispensed with by references already made in the debate which demonstrate that by statute that is not open to the Comptroller and Auditor General. The report also states that the knowledge that BBC executives might be second-guessed by politicians could result in timid and safety-first decisions by programme makers.

Furthermore, the Davies report states that if the committee felt that these fears were justified it would not recommend a change, but it did not. It says that a comptroller is appointed by Parliament and not by the Government; that it is not his job to report on matters of policy; and that the fact that the licence fee collection and enforcement arrangements are already audited by the National Audit Office—the National Audit Office also audits the grant-in-aid for the World Service—demonstrates that it can have a legitimate role in ensuring due process in the BBC.

In the light of what we have heard about the discussion of a possible compromise being made, it is not appropriate for me to speak at length. However, it is important to remind noble Lords how in practice the Public Accounts Committee works; how its work differs from that of the Department of Culture, Media and Sport committee, which already has a right—and exercises that right—broadly to oversee the BBC through scrutiny of its annual report; and how its chairman, Mr Gerald Kaufman, is not adverse—on his day—to making fairly trenchant criticisms of the BBC.

The Public Accounts Committee is quite different. It agrees the facts with the subject of the study before the report is published. It operates in a wholly non-partisan function. It produces unanimous reports. For more than 100 years, it has never produced a report in which there has been a dissenting voice. Its function and operations have always been at least as concerned with assisting the subject of the inquiry to do better as with underscoring any deficiencies which may have been drawn to the attention of the public by the National Audit Office. It is not an adversarial organisation. It is unsuited to being one. In my judgment it has provided a wholly non-partisan security to the public that their money is being spent wisely and that they receive value for that money. I hope that the advantages of that route will not be underestimated by the BBC and by the Government in considering the best way ahead.

1 p.m.

Lord Sheldon

My Lords, I want to put some of the debate into context. The National Audit Act 1983 excluded the BBC from examination by the National Audit Office. I was involved in the passage of that Bill. That was prior to my becoming chairman of the Public Accounts Committee. The questions I put to the committee are: what were the arguments then; and, how far have they changed over the intervening 20 years? The Public Accounts Committee looked at those bodies whose accounts would be examined by the National Audit Office.

The passing of the National Audit Act in 1983 was a close-run thing. It was passed on the last day of the 1979 to 1983 Parliament, when any remaining legislation that has not already been passed comes before the House of Commons. All that is needed to block any Bill is for one Member—any Member—to shout "Object". That task was willingly provided by Dennis Skinner and a few others. On this occasion I personally went around explaining the importance of the Bill. Fortunately no dissent was heard and the Bill passed.

The accounts audited by the National Audit Office included such organisations as the British Airports Authority, the British Airways Board, British Telecommunications and so on. The BBC did not fit into the usual pattern of non-governmental organisations, so the legislation excluded it. Later, in 1987, when the BBC's World Service came before the Public Accounts Committee, the committee concluded that it should be examined by the National Audit Office. What were its reasons for concluding that? Why did it distinguish between the World Service and the BBC? That was a conscious decision and not an oversight. It was based on the fact that the World Service is financed largely by the Foreign Office. However, it also concluded that the present arrangements for voluntary examination of the BBC should remain.

The National Audit Office Act enables the National Audit Office to do value-for-money reviews with the agreement of the BBC and the Minister. I always thought that that was sufficient protection and that the advice, which I am sure would be valuable, was available if required. The expertise of the National Audit Office was therefore fully looked after.

Let me briefly explain how the National Audit Office goes about its work. The National Audit Office considers the areas for investigation. It looks at the whole range of expenditures. It then selects a number for examination—usually about 50 reports each year. The preliminary stage might take a few months when the decision is taken whether to investigate further. A full examination may take from about three months to well over a year. The report, after agreement, is then presented to the Public Accounts Committee. That committee has a meeting with the accounting officer and produces its report, which can then form part of the detailed annual debate in the House of Commons.

The process has worked very well indeed, as the noble Lord has mentioned. During my time as chairman more than 600 reports were published, all of which were unanimous. There are a number of difficulties in dealing with the BBC. First, the National Audit Office and then the Public Accounts Committee examine it for value for money. How can it be audited? It looks at economy, efficiency and effectiveness. What is the effectiveness of the BBC? How do we define it? Should we define it on the basis of how many viewers there are? Is the criterion a balanced output? Is it fair? Are the problems of complaints addressed properly? Should the range of programmes and how they are arranged be discussed? Are all those aspects available?

In the case of the BBC there are difficulties in auditing the effectiveness of arts programmes, in auditing a news service and in auditing an entertainment channel. As to ITV one has the test of profitability and only within that does one have to consider questions of fairness, decency, and so on. This is an impossible burden, which is obviously not put upon the National Audit Office.

I would wish to see the current position maintained. I understand that the noble Lord, Lord Sharman, has a proposition. I look forward to hearing it. But, after all, we have to consider what has gone wrong in those 20 years. Why has the situation changed? During that period many other aspects of the press, radio and television have either performed badly or could easily be improved. Attention might be focused there. But the BBC still stands as the one outstanding public service. That success has been achieved over a period of 80 years with the multitude of changes that we have seen since then.

Lord Maclennan of Rogart

On the issue of what has changed, does not the noble Lord agree that the BBC has become subject to trenchant attacks in that period, some of which have suggested that money voted for one purpose was being used for another—digitalisation being funded by money intended for programming? Such charges may be totally without foundation, but they are wide and damaging. Would it not provide the best possible assurance that they are seen off, as it were, to entrust consideration to that established process?

Lord Sheldon

We have the governors of the BBC, one of whom is present. I want to say something about their role and how I admire the work they have performed over a long period.

The task of examination of the accounts is undertaken by the National Audit Office. The Comptroller and Auditor General is an officer of the House of Commons. It was Sir Gordon Downey who implemented most ably and successfully the setting up of the National Audit Office. The current Comptroller and Auditor General is Sir John Bourn, who succeeded him. I have enormous admiration and respect for Sir John.

Under the 1983 Act, the selection of the Comptroller and Auditor General is made by the chairman of the Public Accounts Committee, with the agreement of the Prime Minister. I considered that to be one of the most important decisions of my parliamentary career. Following my interviewing of 15 candidates, Sir John stood out and I proposed him in a letter to Mrs Thatcher, who moved the appointment in the House of Commons.

Sir John has been an outstanding success. The National Audit Office has effectively been made in his image: efficient, innovative, and the very model of what I believe an institution created by a civil servant should be. But I must consider the problems of a future National Audit Office. How far could it become embroiled in controversy? No one in Whitehall or Westminster is more proud than I of the National Audit Office and of the C & AG. It is much better to leave those matters to the governors of the BBC in the manner that has worked, is working well, and continues to meet the requirements laid down so many years ago.

The question is: how could a future Public Accounts Committee behave in the years to come? How could the House of Commons behave when the PAC report came before it? The floodgates of criticism in the House of Commons could be opened, with much of the press on a bear hunt. That would be an excellent means for the anti-BBC press and others with their own agenda to harass the BBC. That is why I wanted to exclude the BBC. I still do, although I await further details of the proposals of the noble Lord, Lord Sharman.

Baroness Noakes

I am encouraged by what my noble friend Lady Buscombe said about the progress made since Second Reading. I am interested in what the Minister had to say about what she saw as possible ways forward. In the light of that, and because it was very encouraging, I shall keep my remarks brief.

The existing audit arrangements do not go far enough. I cite two reasons. First, they are limited in scope. A financial audit simply considers financial controls and states whether the accounts show a true and fair view, to use the jargon. That is a limited scope when considering public money. The second problem is that the reporting is not public. Although the audit report is public, it is written in an especially technical way and is not subject to examination of the detail that lies behind it.

It is important when considering the accountability of public money—I am glad that we all agree that we are discussing public money—to consider the scope of examination and the possibility of public reporting. In the light of the recommendation of the noble Lord, Lord Sharman, which was for full and unfettered access to the BBC, how far does the Minister envisage the proposals that may emerge meeting or falling short of that? Full access to consider economy, efficiency and effectiveness on any grounds is important, as is the ability to report publicly on all that.

The noble Lord, Lord Maclennan, explained how the PAC process was not threatening but fair and balanced. In my experience of working with the NAO and with Sir John Bourn in particular, that, too is a balanced and fair process. NAO reports give praise where praise is due and have a good track record of finding value in improvements to the organisations they examine—a value that far outweighs the cost of the audit process itself. Sir John Bourn and his National Audit Office have a good track record of sensitive handling of difficult areas. They know perfectly well how to avoid policy areas and many of the other difficulties that have been discussed.

As I said, I am very encouraged, but I should like more detail.

1.15 p.m.

Lord Brooke of Sutton Mandeville

To be other than brief at this juncture would be self-indulgent. I have never got as far as the Scottish judge who said that the phrase, "A change for the better", was a contradiction in terms, but I have sympathy for the BBC, especially after so long in a different condition.

That said, I recall speaking in the previous Parliament in another place in support of Mr David Davis in his efforts to secure the right to have access to audit the Housing Corporation. The noble Lord, Lord Lipsey, laid out the issue of public money against the background of the article in the Guardian. I remember, during the passage of the National Lottery etc. Act 1993, it being explained to me that when a punter goes into a newsagent and spends a pound buying a lottery ticket, by some process of alchemy and metaphysics, as the money crosses the counter, it becomes public money and is therefore subject to all the full constraints of the law. I am not sure that the punter thought of it in that way, but if that is so, patently, the licence fee falls into the same category.

I welcome what my noble friend Lady Buscombe said in her opening speech; I also welcome what the Minister said in reply. I further sense that if we can reach a genuine concordat with the BBC, that will be in the best traditions of the BBC's evolution.

Baroness Jay of Paddington

I promise the Committee that I shall be extremely brief, but it is worth picking up in general terms one point that the noble Lord, Lord Brooke, made about the Housing Corporation. In the same speech by Mr Gavyn Davies to which the noble Baroness, Lady Buscombe, referred in moving the amendment, he said later that, while accepting in principle the idea of further consideration of the audit of the BBC: The BBC is a creative, risk-taking institution … We must beware of fostering an excessively risk-averse culture, for fear of subsequent public castigation. This would be fatal to the central purpose of the BBC, which is to take creative risk". So there is a difference between the Housing Corporation, for example, and the BBC in that respect.

Like other Members of the Committee, I am happy that there has been some breaking of the log-jam, if I may put it that way, through the exchange of correspondence between the honourable gentleman, Mr Leigh, and the noble Lord, Lord Sharman. I am grateful to my noble friend the Minister for her early and positive response to that.

Lord McNally

I shall be very brief. Over my years in politics, I have decided that if going into deep water it is best to go with someone who can swim, which is why I asked my noble friend Lord Sharman to consider the issue. The dilemma that faces the House is best exemplified by the speeches of the two veterans of the Public Accounts Committee, both with enormous experience and commanding great respect in the House, who have come to different conclusions. That is why I asked my noble friend Lord Sharman to consider the matter.

I shall break the rule of the noble Lord, Lord Lipsey, and remind the Committee of something I said on Second Reading. The genius of the BBC was that cordon sanitaire set up 80 years ago between the politicians and the working of the BBC by the governors. Any Parliament considering the BBC for the 21st century would be reckless to disturb that cordon sanitaire. However, the strictures of the noble Lord, Lord Lipsey, my noble friend Lord Maclennan and others must be taken to heart. Things have changed in the past 20 years.

I welcome the flexible approach taken by the noble Baroness, Lady Buscombe, in moving the amendment and the Minister's response. There is scope for a compromise here and I look forward to hearing the results of further consultation on Report.

Baroness Hogg

I declare an interest as a governor of the BBC. In that capacity, I wish to say how much I benefited from listening to the contributions to the brief debate on this issue, and how greatly I appreciate the sensitivity on all sides of the Committee to preserving the independence of the BBC. I know that that has been borne strongly in mind in discussions, although obviously I am not party to them. As a governor whose duty is to preserve the independence of the BBC, I appreciate the importance of the issue.

Lord Lipsey

At the risk of enraging the Minister, who wishes to get on, perhaps I may detain the Committee for one more minute. It will save time later if I do. I welcome the words just uttered by the noble Baroness, Lady Hogg. To get where we are, there had to be tremendous flexibility on behalf of the BBC and, to be fair, the Comptroller and Auditor General and the chairman of the Public Accounts Committee—let us not forget that they have their needs. If we achieve the deal as outlined by the noble Baroness, it will be an experiment, which means giving up quite heavily felt PAC doctrine. The committee is to be highly commended for its flexible approach.

For the agreement to crystallise, three points must be made clear. First, the compromise of the noble Lord, Lord Sharman, which many will have seen, makes clear that the subjects to be investigated by the NAO on behalf of the BBC—the BBC may investigate others itself—should be done through dialogue with the BBC. I feel sure that that dialogue would be productive. The BBC could help by making very clear that it would not unreasonably withhold its consent to a subject proposed by the Comptroller and Auditor General. I am sure that that would be true, because if it withheld consent unreasonably, there would be big trouble.

The second point is that the noble Lord, Lord Sharman, makes clear that the report of the audit committee is made to Parliament. I take it as axiomatic that it is a matter for Parliament to decide which committee the report is made to. I also believe that the Public Accounts Committee would be chosen. I accept entirely that further reassurance of the BBC may be needed on the point about the accounting officer, which, as we agreed, is critical.

Lord McNally

That is a very important point. People would find it extraordinary if a report by the Comptroller and Auditor General went to the DCMS committee, which, as my noble friend indicated, has some special characteristics all of its own, notably those in the field of accountancy and public spending—

Lord Lipsey

—and not of friendship towards the BBC over the years, I might also say. I am most grateful for that intervention.

My final point is that an agreement should make clear that everything is subject to charter renewal. This is a brave experiment in trying to do something better. I hope that it will evolve so that by the time of charter renewal, special provisions and so on will not be felt necessary and we will be able to proceed. I would like an assurance that primary legislation will not be required at that time to change the agreement so that we can move ahead as seems best in the light of the experiment.

If we can nail down those three points, I believe that we shall have a deal that will satisfy everyone, and, most importantly, one that will satisfy the needs of this Parliament.

Baroness Blackstone

I have listened carefully to the contributions to this debate. I understand that some Members of the Committee, such as my noble friend Lord Sheldon, wish to maintain the existing position, and that others, such as the noble Lord, Lord Maclennan, may still feel that full Audit Office access to the BBC is necessary. However, the Government see tremendous merit in the compromise proposal put forward by the noble Lord, Lord Sharman. Our initial reaction is that it would provide the assurances on BBC efficiency, effectiveness and economy that the promoters of these amendments are anxious to see, while preserving the BBC's editorial independence and the primacy of its audit committee.

In response to the noble Baroness, Lady Noakes, at this stage I cannot add much to what the noble Lord, Lord Sharman, set out in his letter to Edward Leigh. I am sure that she has seen a copy of the letter, but, if any Members have not, I will make sure that the letter is placed in the Library, if it is not there already.

I can give my noble friend Lord Lipsey categorical reassurance that primary legislation would not be required. It is important to make clear that what is being proposed would not preclude consideration of the case for wider National Audit Office access to the BBC in the context of the charter review. As I am sure the noble Baroness, Lady Hogg, is aware, the onus will be on the BBC to satisfy Parliament and licence fee payers that the proposed new arrangements have in practice ensured value-for-money and transparency in the BBC's management of its finances.

I conclude by reiterating the Government's willingness to take away the proposal, to study it, and to report back to noble Lords as quickly as possible. In the light of that, I very much hope that the noble Baroness, Lady Buscombe, will feel able to withdraw her amendment.

Baroness Buscombe

I thank the Minister for her response to the amendments. I also thank the noble Lord, Lord Lipsey, for his support of Amendment No. 151. I am grateful to my noble friend Lady Hogg, who has been extremely helpful to us in our attempt to develop—do not want to call it a compromise—what I think is best described as a way forward. It is clear that those who do not want change are now very much in the minority, certainly in another place. I think that I can be absolutely sure when I say that, if we did not move forward, our honourable friends in another place would not let the matter rest.

The contribution of the noble Lord, Lord Maclennan, was extraordinarily helpful. The noble Lord referred to a tax that continued to be made on the BBC. I agree with the noble Lord that that is one of the key differences between the situation now and the world of the BBC to which the noble Lord, Lord Sheldon, refers, in 1982 and 1983, when we probably still had the home service. Much has changed, including the make-up and organisation of the BBC. That is no bad thing. But there is no question that there is a strong consensus in all parts of the Committee to support the BBC by trying to break down and deflect those attacks through proper scrutiny. I am very grateful to my noble friend Lady Noakes, who also has experience through her work with the National Audit Office, and has given us a practical perspective in assisting us in this somewhat delicate matter.

Members of the Committee may have noticed that I did not mention in my opening remarks the possible compromise suggested by the noble Lord, Lord Sharman. The suggestion that the noble Lord has made thus far is certainly an important step in the right direction. But I must make clear here and now that, in our view, the proposal does not go far enough.

I do not wish to delay Members of the Committee by repeating the contents of the letter to which reference has been made. The Minister has helpfully said that she will make a copy of it available in the Library of the House for all to see. However, one of the concerns of Her Majesty's Opposition is the suggestion that in order to discharge the responsibility the audit committee should, on the basis of a dialogue with the Comptroller and Auditor General, contract with him, or another agency if more suited, to carry out a programme of reviews over a period of years. The contracting party would then report to the audit committee. We believe that that contracting party should be the National Audit Office. However, that is not to say that there need not be other value-for-money reviews that the BBC may wish to carry out concurrently.

The noble Lord, Lord Lipsey, made it clear that consultation will take place. It would make sense, therefore, to have strong consultation between the BBC and the Comptroller and Auditor General as to the matters that should perhaps be reviewed. However, we believe—as, we believe, does the Comptroller and Auditor General—that the final veto as regards the subject for review should rest with the C&AG. That is fundamental; otherwise, the Comptroller and Auditor General would merely be acting as an extension of the executive management of the BBC. His position must be maintained as being entirely independent—an independent auditor.

The noble Baroness, Lady Jay, quite rightly followed on from the quote that I gave from Mr Gavyn Davies with regard to making it clear that the BBC is a creative, risk-taking organisation. I know that one of the concerns of the governors—one that I entirely accept—is that those who would be involved in auditing the BBC on behalf of the NAO should have the right kind of expertise: they should be the right people with the relevant experience to carry out such reviews; otherwise, it would make a nonsense of the job at hand. I believe that the Comptroller and Auditor General will accept that concern, given the fact that, as I understand it, he takes such considerations into account in terms of other reviews that are undertaken by the NAO.

It is worth noting that the NAO is charged with reviewing organisations responsible collectively for £ 400 billion of expenditure each year. Therefore, in practice, we are probably talking about one value-for money audit each year. There need he no involvement—nor, in our view, should there be—by or with the Department for Culture, Media and Sport. That is a matter for clarification between now and the Report stage.

The remarks made by the noble Lord, Lord Lipsey, with regard to the accounting officer were most helpful. I give way.

Lord Sheldon

I am obliged. The noble Baroness has mentioned "one value-for-money audit" a year. But there is hardly one government department, or any body, audited by the NAO that has to succumb to audits of that frequency.

Baroness Buscombe

I hear what the noble Lord says. Perhaps I exaggerate; perhaps it would be fewer than one review each year.

Lord Sheldon

I find that absurd.

Baroness Buscombe

It seems that the noble Lord has misunderstood why we are asking for this amendment. We are seeking to protect the interests of the BBC. Whether it is one review a year, or one every five years, a most important principle is at stake: we are talking about £ 2.5 billion of taxpayers' money. It would he a helpful exercise for all Members of the Committee to read in the Official Report the contribution made earlier by the noble Lord, Lord, Maclennan. in which he made that point most eloquently. That is why we are debating these amendments.

We are most grateful to the Minister for what we see as a move in the right direction with regard to our wishes, as set out in our amendments. We very much hope that we can reach an agreement between now and the Report stage. If we cannot do so, I am certain that my colleagues in another place will not let this matter rest. It would he a great achievement on the part of all noble Lords if we could achieve such an agreement in this Chamber. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 151 to 153D not moved.]

Clause 196 agreed to.

Schedule 9 agreed to.

Clauses 197 and 198 agreed to.

1.30 p.m.

Clause 199 [Borrowing limit for C4C]:

Lord Evans of Temple Guiting

moved Amendment No. 154: Page 177, line 20, after "may" insert "by order". The noble Lord said: The amendments now before the Committee are all drafting amendments. Clause 199 gives power to set a borrowing limit for the Channel 4 Corporation (C4C). Although the intention is fairly clear from the remainder of the clause, subsection (1) does not expressly state that the power is exercisable by order. Amendment No. 155 simply puts the matter beyond doubt by adding the words "by order" to subsection (1) of the clause.

I should add at this point that C4C has been fully consulted in determining the limit of its borrowing, which will be £ 200 million. That limit is well above C4C's existing level of borrowing.

Amendments Nos. 155 and 156 relate to Clause 202, which gives the Welsh Authority powers to provide certain additional services including, among other things, television programme services. Any additional television programme services must be approved by the Secretary of State and must comply with the other conditions set out in the clause. These include the condition at subsection (4) that any new services must broaden the range of such, services available for reception by members of the public in Wales". However, subsection (4) of Clause 202 twice inadvertently uses the expression "television broadcasting service", which is out of step with the reference to "television programme services" throughout the rest of the clause, and Clause 201. This mismatch could make the limitation less effective than we intend. The two amendments proposed would substitute the word "programme" for "broadcasting" in each place where it is used in subsection (4), thus aligning this subsection with the remaining provisions in Clauses 201 and 202. I beg to move.

Lord Livsey of Talgarth

I have not been able to attend the proceedings on this Bill as much as I should have liked. I have been engaged in the considerations on the Water Bill, and on other legislation. Amendments Nos. 155 and 156 refer specifically to Wales. I seek some clarification from the Minister on the following points. The effect of Amendments Nos. 155 and 156 is to provide a television programme service instead of a broadcasting service. How does the Minister define that? It seems to me that this is about broadening the range of television programmes.

I should point out to the Minister that there is a difference between programmes and broadcasting. Can he say whether there is any restriction on the Welsh channel, S4C, within the amendment that would prevent it from broadcasting on different channels—for example, digital—as compared to normal channels? Amendment No. 155 is about the provision of additional public services, for which S4C in Wales has some responsibility.

Amendment No. 156 would, again, insert the word "programme" instead of the word "broadcasting". It refers to availability for reception by members of the public in Wales. To me, that means the provision of additional public services. That is particularly difficult in Wales. We do not have uniform reception by the public in remote areas, and we must rely largely on satellite television, often supplied from a single source. Broadcasting ought to be a more comprehensive matter than the simple one of a programme service—terrestrial versus digital, perhaps. Regional programmes could be slotted in, with a national Welsh programme, as far as S4C is concerned. I ask for clarification on those points.

Lord Evans of Temple Guiting

My understanding is that the amendments will give greater flexibility to C4C, so that, rather than defining things to make life difficult for it, we are defining things in such a way as to enable it to do whatever it wishes to do in the programme and broadcasting range. That is my view, but I would like to talk to officials and write at length to the noble Lord, Lord Livsey of Talgarth, explaining the detail of what I said.

Lord Livsey of Talgarth

I thank the Minister for that.

On Question, amendment agreed to.

Clause 199, as amended, agreed to.

Clauses 200 and 201 agreed to.

Clause 202 [Powers to provide other services]:

Lord Evans of Temple Guiting

moved Amendments Nos. 155 and 156:

Page 179, line 24, leave out "broadcasting" and insert "programme" Page 179, line 26, leave out "broadcasting" and insert "programme"

On Question, amendments agreed to.

Clause 202, as amended, agreed to.

Clause 203 agreed to.

1.45 p.m.

Clause 204 [Welsh Authority finances]:

Lord Prys-Davies

moved Amendment No. 156A: Page 181, line 26, after -Authority)," insert—

1. "(a) for "may" there shall be substituted "shall"; and
2. (b) "

The noble Lord said: I shall take a few minutes of the Committee's time to move the amendment, which addresses the issue of the funding of the Welsh fourth channel, S4C. The setting up of S4C in 1982, after a long, difficult and controversial debate was an important landmark. It was a crucial political achievement. S4C has also been a fine broadcasting achievement, and we want it to continue to be a success.

I believe that the great majority of the people of Wales—Welsh-speaking or not—and Welsh people beyond Wales wish for a flourishing Welsh language television channel. I am satisfied that I can claim that the existence, strength and vitality of S4C are of overwhelming importance to the survival of the Welsh language, which is the living language closest to the old British tongue. A television service can be only as good as its structures, the creative talents available to it and its income. The three are necessary. The amendment is concerned with funding.

Basically, S4C relies for its income on statutory funding from DCMS. The funding formula is in Section 61 of the Broadcasting Act 1990, as inserted by Section 80 of the Broadcasting Act 1996. The formula takes the grant-aid payment to S4C in 1997 as the starting point, to be updated annually thereafter in line with RPI. Under the present formula, the Secretary of State is empowered to increase the annual uplift over and above the RPI, if she is satisfied that it is appropriate to do so, having regard to the cost of running the S4C service. That power has never been exercised. There has been an annual problem since 1998, and it has been the cause of considerable concern for the S4C authority.

The S4C authority had grave anxieties about the formula when it was brought in by the 1996 Act. The authority was then faced with a need to develop a digital service, and the cost of providing that service was not fully provided for in the formula. During the passage of the 1996 Bill through your Lordships' House, the then Minister said: I cannot see why S4C should be given any extra funding to meet these other costs which other broadcasters, including the BBC, will need to meet from their existing sources of revenue".— [Official Report, 7/3/96; col. 438.] It is my understanding that, in practice, the BBC was not so constrained. I understand that the BBC' and every other public broadcaster received extra funding, through various mechanisms or reliefs, to meet the considerable additional cost of providing a digital service. Yet, as I said, the S4C increase has always been capped at RN, The RPI has fallen far short of the increased staffing costs associated with digital transmission. S4C has done its best to generate revenue from commercial activities, hut, as the Welsh audience is small, its efforts are inevitably constrained.

I wish to emphasise briefly three other considerations. The first—we have heard a great deal about it—is that the debate is taking place in the environment of a fiercely competitive market with a huge range of English language programmes. There is no question that the viewers of Welsh language programmes expect just as much, if not more, from their single Welsh language channel as they do from the many tens of English language programmes available to them.

In the last annual report, Professor Elan Close Stephens, the chair of the S4C Authority warned that, The effect of tying S4C's funding to the retail price index has been to gradually erode our ability to compete in an increasingly competitive broadcasting environment". It is a glimpse of the obvious to state that a second-class product simply cannot compete successfully against a first-class product.

The second consideration is that S4C has demonstrated that it can be trusted to handle its budget well. I understand that its administrative costs have been less than 10 per cent of its total expenditure. That compares favourably with that of the main public service broadcasters. It has also insisted on implementing efficiency gains on the part of its independent producers. I understand that S4C programmes cost, on average, one-third or BBC programmes.

Over and above those two broadcasting considerations, there is a third to be borne in mind. S4C spends more than 95 per cent of its programme budget in Wales. It has been estimated by an independent body that S4C is responsible for some 2,000 jobs in Wales, many of them in Welsh-speaking areas where employment opportunities are limited. The Government would be wise to take note of this consideration.

S4C and I welcome Clause 204. It is an improvement on Section 61 as it requires the Secretary of State to take into account the costs of providing S4C services and S4C digital services. I believe—no doubt, my noble friend the Minister can confirm—that Clause 204 implements Recommendation 130 of the report of the Joint Committee. S4C appreciates the response of the Joint Committee to its difficulties and appreciates its understanding of the problem.

However, the clause, as drafted, does not place a duty on the Secretary of State to uplift the grant aid over and above the RPI even when she considers it appropriate. Therefore, the position is that the Secretary of State exercises two discretions. She determines whether it is appropriate to increase the award over and above the RPI—that is her discretion. Secondly, at her complete discretion, she decides whether to exercise that power. Our amendment would remove the second discretion.

Finally, it should not be forgotten that the Bill offers no guidance as to the criteria which would influence the exercise of the power to uplift over and above the RPI. Neither is there an independent review mechanism to which S4C can appeal against the Secretary of State's decision not to uplift the award when satisfied that it would be appropriate to do so. Therefore, it appears that without an amendment along the lines of Amendment No. 156A, or in the absence of appropriate assurances by my noble friend on the Front Bench, S4C will remain unprotected against under-funding. I beg to move.

Lord Livsey of Talgarth

I strongly support this amendment. The critical situation with the Welsh language is that we have a television channel which is helping, in very large part with S4C, to sustain that language. I come from a family where all my grandparents were Welsh speaking, my parents were not, and we have ensured that the next generation is. There are many families like that in Wales.

The noble Lord, Lord Prys-Davies, has very ably moved this amendment. I do not wish to repeat what he said, except to say that he has made an extremely strong case, particularly on the crucial issue of funding and the 1997 formula. I would point out to Members of the Committee that broadcasting is not a devolved function to the National Assembly for Wales. Many of us have views about that, but none the less that is a fact. That is why we are discussing this amendment.

The fact that the amendment proposes that we shall have a duty to ensure that S4C is properly funded over and above the RPI is absolutely crucial. I should like to draw attention to the fact that in survey work there are 450,000 Welsh speakers in England alone and 500,000 in Wales. Therefore, we are discussing an important issue. Indeed, if this amendment is agreed, it will ensure that it will continue to thrive in a modern media environment. I am very happy to support this amendment.

2 p.m.

Lord Temple-Morris

It is a pleasure for me to follow the noble Lord, Lord Livsey, for the second time within about 10 days. I, too, support the amendment proposed by my noble friend Lord Prys-Davies. I am very grateful, as are other noble Lords, for him putting this down because it gives us the opportunity to have a short but very relevant debate in Welsh terms. Indeed, it is for that reason I added my name to support my noble friend Lord Prys-Davies who moved this amendment in a very able and dignified way.

Some Members of the Committee may be looking at me and wondering what Lord Temple-Morris is doing speaking to essentially a Welsh amendment. Those noble Lords who have known me for some years will know that I have a considerable Welsh background. Some do not realise this because I spent so many years in another place—27 years to be exact—as a Member of Parliament for an English constituency.

I come from a Cardiff family. I have a long background in that city and that county. I am very proud of that background. Indeed, it is fair to say that my father always taught me to be proud of the Welsh side of my ancestry. I was never left in any doubt whatever about who I should support on the rugby field. I have carried that out throughout my life. I only wish now that they played as well as they did in the days of my youth. Anyone else of Welsh ancestry here will know how heartfelt is that plea.

I want to say a few words, coming from where I am—not, incidentally, as a Welsh speaker. I say that quite deliberately: I am not a Welsh speaker and I was, indeed, educated in England. That is where I am coming from with the Welsh background. I think that it helps my noble friend Lord Prys-Davies that not being a Welsh speaker I shall speak about the Welsh language and my Welshness in the way that I am. I think that it strengthens the case. I am talking now about the atmosphere when I grew up in Cardiff in the 1950s and there has been a remarkable change. People tended then to stress their Englishness rather than their Welsh side. Some stressed it, I think, far too much and far too obviously in a false way. There was not even a Welsh Office, let alone a National Assembly.

Not much Welsh, hardly any, was heard by me and others in the Cardiff of that time. I was a young barrister in court on a number of occasions, and even in the Court of Appeal, when the Welsh Language Society and its members faced prosecution for refusing official requests written in the English language on officially communicated documents. Now it is the norm in Wales for everything to be produced in bilingual form. That marks part of the progress which has been made.

The problem was compounded by the fact that Welsh was not always taught well in schools. Sometimes its very presence was criticised. I well remember the then Lord Lieutenant of Monmouthshire saying some very cryptic things about it in the late 1950s.

I shall end this section of what I have to say by looking back to the 19th century. It explains not only where one is coming from today, in 2003, but also the incredible extent of the progress which has been made. Back in 1847, regional reports called the Blue Books were made for the government. I shall quote what was said in one of those reports about the Welsh language. It highlights the neo-colonial nature of the time: The Welsh language is a vast drawback to Wales and a manifold barrier to the moral progress and commercial prosperity of the people. Because of their language, the mass of the Welsh people are inferior to the English in every branch of practical knowledge and skill". Noble Lords will appreciate its significance when I say: how times have changed. Today, Cardiff is a prosperous capital city. Not only is it an administrative centre both for itself and the county, but also in a national sense. Welsh institutions have been created and expanded: the National Assembly, the Welsh Office, BBC Wales, the Welsh Development Agency—which has done outstanding work over the years—the National Library of Wales, a flourishing university and, at the heart of it, Channel S4C. The television channel is at the heart of this because of the Welsh language.

I shall comment briefly on the importance of the Welsh language because it is absolutely central to the national culture as well as being absolutely central to the national confidence, which was not always high in the 1950s. Now it is socially acceptable to choose to speak Welsh. I welcome the remarks of the noble Lord, Lord Livsey of Talgarth, about his family being educated in Welsh in this context. The language is now spoken with confidence, which in itself promotes confidence. At the centre of this aspect, as well as generally, is Channel S4C, which has been central in bringing the Welsh language into the mainstream.

The contrast today is very considerable. Welsh is heard frequently in Cardiff. Young people are bilingual. I mention that because it is particularly significant when making a case for S4C. People often choose to speak Welsh. Outstanding Welsh-medium schools have developed which can match anywhere else across the entire United Kingdom. Furthermore, people choose to watch Welsh language programmes.

That brings me to the vital role played by S4C and the need to preserve it. The channel is in the business not only of providing Welsh television programmes, but of providing quality programmes. It must maintain that level of quality or its bilingual audience will switch over to English language programmes. That is an important point. Everyone who chooses to watch S4C does so in the overwhelming majority in order to watch that channel. Perhaps the viewers enjoy the Welsh language and want to participate in it. At the same time, however, if the programmes are not of the necessary quality, viewers are able to choose anything else from an increasingly vast menu. S4C has to be fairly and adequately funded.

I do not wish to repeat the points made by my noble friend Lord Prys-Davies, but they should be considered in the light of the expense of the shift to digital and the fact of much greater competition from the increased number of channels, along with the central and all-important social and cultural roles played by S4C in the Welsh nation. The financial case was very well put by my noble friend Lord Prys-Davies and I do not intend to repeat it. He mentioned the large number of jobs generated and money spent in Wales entailed by running the channel.

I shall be brief because I do not want to repeat anything that has been said. However, I want to reinforce one aspect of the remarks made by my noble friend in proposing the amendment. To that end, I shall quote from the departmental Explanatory Notes on the Bill. The notes explain what is at the centre of the amendment, which seeks to delete the word -may" and insert the word "shall": "Subsection (7) amends section 61 of the Broadcasting Act 1990 so that the Secretary of State may increase the annual grant paid to the Welsh Authority if she is satisfied that additional funding is appropriate in light of the costs they incur in providing their public services and broadcasting or distributing such services". In welcoming that as it stands—we have already made that clear—the amendment makes the reasonable case that if the Secretary of State is satisfied that additional funding would be appropriate, it seems awfully mean if the Secretary of State does not then go ahead and give that extra funding to Channel S4C. She would have the discretion to be satisfied or not to be satisfied, but if she is satisfied, we ask that the additional amount "shall" be given, bearing in mind that the amount of additional funding is at the discretion of the Secretary of State.

S4C is uniquely important to Wales. It is essential to the development, expansion and enjoyment of the Welsh language, which itself is at the centre of the remarkable changes that have taken place over recent years. It respects the pride and culture of the country and as such it should be preserved and encouraged.

Lord Roberts of Conwy

It would he very remiss of me not to lend my support to the noble Lord, Lord Prys-Davies, but I am conscious of the fact that I was not in my place to hear his opening words. One of the disadvantages of the long stretch of a Committee day is that one must eat at some time. Obviously I chose the wrong moment because I wanted to be in the Chamber to hear the noble Lord's opening remarks. However, that does not prevent my expressing support for his amendment.

A Conservative government established Channel S4C in the early 1980s and it has been an astonishing success. As many noble Lords know, it means a great deal to those of us who live in Wales. The channel faces considerable competition, although that has always been the case in terms of Welsh language programmes. But S4C has also been something of a pioneer in relation to digital television. As we all know, that is an expensive business. Nevertheless, the channel has devoted considerable resources to developing the S4C digital channel. Because of the expenses involved in developing that channel, while keeping the terrestrial analogue channel going at the same time, the amendment is quite proper in seeking to ensure that such additional resources as are required "shall" be devoted to the authority.

Judging by the past 20 years or so that the channel has been operating and considering the excellent use made of the resources available to the authority, if the Government do devote additional resources to S4C, they will be well rewarded. The authority will ensure that the Government get good value for their money.

Lord Brooke of Sutton Mandeville

I shall be as brief as I was on Amendment No. 150, which we discussed around half an hour ago. I can assure my noble friend Lord Roberts of Conwy that he did admirably on behalf of these Benches from his own Welsh-speaking base. In my case, the land of my fathers is the land of my mother's fathers. My late noble relative sat in your Lordships' House with a relatively unpronounceable Welsh title and her father had played scrum-half for Wales in the first decade of international rugby. During the earlier period to which the noble Lord, Lord Temple-Morris, referred, my late noble kinsman sat as the Minister for Welsh Affairs, as well as being Minister for Housing and Local Government. He did so for four years.

When the late great Sir Keith Joseph became Minister for Welsh Affairs, he approached my late noble kinsman and asked him whether he had any advice. My late noble kinsman said that the only advice he had for him was that he should learn the words of the Welsh national anthem and he would sometimes find on platforms in south Wales that he was the only person singing the correct words. It is somewhat unfortunate that my colleague in another place, Mr Redwood, did not receive similar advice before taking up office.

One of my favourite stories about my late noble friend Lord Whitelaw relates to a man offering him confidential advice—so confidential that he was obliged to speak in French. The late Lord Whitelaw said afterwards that the man had been more confidential than he imagined because he spoke not a word of French himself. It is to his additional credit that someone so monolingual as the late Lord Whitelaw should have played a seminal role in setting up S4C. I am proud of what S4C has achieved, is achieving and will, under this group of amendments—some of which we passed over undebated—continue to achieve.

I support the amendment. I shall not add to what has been said by the noble Lords who brought it forward. There was a famous occasion in the 18th century when, after Edmund Burke had concluded a speech, the Member who spoke next simply said "Ditto" to Mr Burke. I stand by the arguments that they have advanced.

2.15 p.m.

Lord Evans of Temple Guiting

My noble friend Lord Prys-Davies has spoken eloquently in support of the amendment and more generally on the subject of funding for the Welsh Authority. I am grateful for the contributions of the noble Lords, Lord Livsey, Lord Brooke and Lord Roberts, and, in particular, for the contribution of my noble friend Lord Temple-Morris, who gave the Committee a fragment of his autobiography and paid great tribute to the Welsh, Wales and the Welsh language, as did other noble Lords. I heartily concur. Time does not allow me to share with the Committee my Welsh background. Two weeks ago I visited the Assembly in Cardiff, which is now an extraordinarily different place from the one I visited some 15 or 20 years ago.

The authority currently receives £ 83.6 million a year in government grant. As we have been told. this figure is uprated annually as measured by the RPI. The Secretary of State has discretion to increase the prescribed amount if she considers it appropriate to do so having regard to the costs to the authority of transmitting S4C and S4C Digital.

In its report on the draft Bill, the pre-legislative scrutiny committee noted the Welsh Authority's representations about the particular importance of developing digital television services in Wales to enable the provision of full Channel 4 and S4C services throughout the country and the cost implications of providing digital services. The committee recommended that the Bill should amend Section 61(4) of the 1990 Act to enable additional payments to be made to the authority to support the development of digital services.

The Government agreed that, in considering the case for an increase in the Welsh Authority's grant, the Secretary of State should be able to take into account factors broader than simply transmission costs, as she has in the past. It was noted, however, that a specific reference to the cost of digital services would restrict the considerations that could be taken into account. Clause 204(7) therefore amends Section 61(4) of the 1990 Act in such a way as to enable the Secretary of State to have regard to the cost to the authority of providing its full range of public services as defined in subsection (9) and of broadcasting or transmitting those services. These include not only S4C and S4C Digital but any new public services approved by the Secretary of State under Clause 202 of the Bill.

The Government are fully committed to the authority's role of providing high quality Welsh language television services. We acknowledge not only the authority's linguistic and cultural contribution but the important role it plays in supporting creative industries in Wales. A similar point was raised earlier in relation to England. Such industries are doing tremendously well and are, in many ways, making the Welsh economy much stronger than that of its neighbours. We also appreciate the authority's commitment to digital broadcasting and its achievements in increasing the hours of Welsh language programming and widening the availability of its services.

We understand the concerns of noble Lords and the authority about the additional financial pressures that digital broadcasting has placed on the authority. The Secretary of State will of course consider on its merits any case that may be made for an increase in the Welsh Authority's grant. However, she must also, inevitably, take into account the finances of her department. That is a fact of life that goes with the considerable advantages of direct government funding, which offers security and protection from fluctuations in the economy.

At nearly £ 84 million a year, the Welsh Authority's grant is a substantial amount of money. As Section 61(4) of the Broadcasting Act 1990 provides for an increase in the prescribed amount based on the annual RPI uprating, any such increase will continue into the future. It would not be right, therefore, for the Secretary of State's discretion to be circumscribed in the way proposed by the amendment. The practical effect of the amendment is difficult to judge given that the Secretary of State must be satisfied that any increase in the grant is appropriate before she is placed under a duty to take any action. Nevertheless, it is right and proper that the Secretary of State should keep the current discretion of whether or not to increase the grant having concluded any review of the authority's funding needs.

My noble friend Lord Prys-Davies rather suggested that the BBC had got a better deal. In fact, the BBC's television licence settlement was not only based on the cost of digital broadcasting. The BBC was required to raise more than £ 1 billion over the period of the settlement through efficiency savings, reduced bureaucracy and extra income through public-private partnerships and joint ventures.

We have raised wit h the authority—I hope this will be an encouragement to the Committee—the possibility of a formal review of its funding requirements. This would look at efficiency and effectiveness and other sources of funding, and might extend to a wider consideration of its operations. The authority has expressed enthusiasm for such a review and we are currently awaiting more detailed proposals from it. Whatever the outcome of such a review, any increase in the authority's grant will still depend on other spending pressures and considerations in the department.

The question of the Secretary of State's discretion to uplift moneys should she wish to do so was also raised. Exercise of the power is subject to judicial review. For example, if it were to be exercised unreasonably or irrationally, that could be held by the courts to be unlawful.

I hope that I have answered the points raised. In the light of my explanation I hope that the noble Lord will feel able to withdraw the amendment.

Lord Prys-Davies

I am sure the noble Lord, Lord Temple-Morris, will join me in thanking noble Lords from all parts of the Committee who have spoken in support of the amendment. I also very much appreciate the tenor of the Minister's speech.

It is clear that the funding formula is of crucial significance to the Welsh Authority. I am pleased to hear the Minister confirm that the department, with the authority, is considering the possibility of mounting a review of the current formulae. That would be a positive step forward.

Finally, the Minister will know that the department has submitted a claim for increased funding. I very much hope that it will approach the request positively, in the spirit of the Minister's speech. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 204 agreed to.

Clause 205 [The Gaelic Media Service]:

Baroness Michie of Gallanach

moved Amendment No. 157: Page 182, line 20, leave out "may finance, or" and insert "must finance, and The noble Baroness said: The purpose of this group of amendments in my name and that of my noble friend Lord Mar and Kellie is to seek clarification on a number of points with regard to Gaelic broadcasting and to make suggestions for improvement.

It was very good to hear the noble Lord, Lord Prys-Davies, talk about how important Welsh is and how necessary it is to fund S4C properly. Indeed, other noble Lords who spoke spelt out that the Welsh language is important not just to Wales and the United Kingdom but to the whole world.

I should like to establish my rugby credentials. The noble Lord, Lord Brooke, has left his place, but my father played 37 consecutive times for Scotland and held the record until 1964. So the noble Lord and I have a great deal in common in terms of rugby playing and language.

I do not intend to repeat what I said on Second Reading. I made it clear how important the Gaelic language is to the people of Scotland and the whole of the United Kingdom, as well as beyond.

Amendment No. 157 deals with finance—always a thorny problem. We heard about it in the previous debate. When the Gaelic Television Fund was set up in Scotland in 1991, it was given £9.5 million a year. I pay tribute again to the Conservative Party, because it was the noble Lord, Lord Forsyth of Drumlean, who set it up. But it was not index-linked and has since fallen by 33 per cent in real terms. As a consequence. television hours have had to be reduced from 195 in 1991 to 150 today.

I believe the proper funding should be restored and protected and, indeed, increased to a realistic sum in order to make use of the new technology. Hence the replacement of the word "may" in the amendment by the word "must". To say the service, may finance, or engage in

is really very tentative and weak, expressing only a possibility. Surely the wording should be more specific than that in the Bill which, it could be argued, gives an option to the Gaelic Media Service to do little or nothing.

I did not understand the response of the Minister, the noble Lord, Lord McIntosh of Haringey, to the Second Reading debate. He said of Gaelic broadcasting, that is the responsibility of the Scottish Parliament".—[Official Report, 25/3/03; col. 788.] Section K1 of Schedule 5 to the Scotland Act 1998 makes it clear that broadcasting is a UK matter—a reserved matter for this Westminster Parliament and for this Government, who ratified the Council of Europe charter for regional and minority languages. Initially, funding was provided by Westminster, specifically for Gaelic broadcasting, but it was not ring-fenced. Nor was it index-linked. On two occasions during its short 10-year history, substantial sums have been diverted from the fund for other purposes. The Bill gives the Gaelic Media Service additional responsibility but no additional funding.

I looked at the Broadcasting Act 1990 again. Section 183 deals with the financing of programmes in Gaelic out of the Gaelic Television Fund. Subsection (1) states that the Secretary of State:

1. "(a) may, for the financial year beginning with 1st April 1991, and
2. "(b) shall, for each subsequent financial year,

pay to the Commission"— that is what is was called then— such amount as he may"— or she may, obviously— with the approval of the Treasury, determine to be appropriate for the purposes of this section". That was all changed. I believe that the Government are failing in their duty if they seek to dump the financial costs on to the Scottish Parliament. In other words, they are saying, "We retain the power here but you pay for it up there".

I wanted to know when this changed, when it was agreed, why and by whom. Was it contained in one of the many concordats that came after the devolution Act? Perhaps the Minister will be pleased if I tell him that I had a fax message just before we started this debate which told me when it had all changed: Section 183 of the Broadcasting Act (1990)—the power to make payments to the Gaelic Television Fund—was transferred to Scottish Ministers by The Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 1999 Statutory Instrument 1999 no. 1750)". We are still trying to find out where this statutory instrument was debated and who decided that this should happen. It really is making life extremely difficult when it comes to the resources needed for Gaelic television. People are finding it difficult to continue to produce the programmes. The issue of resources has not been addressed in the Bill and that, I believe, is a grave deficiency

On Amendment No. 158, Clause 205 establishes the Gaelic Media Service, which is welcome. I hope that it opens the way for a dedicated Gaelic language digital channel to provide for the first time on television a comprehensive and integrated service which can be scheduled to meet audience needs, which does not happen at present. We are all aware of the achievements and successes of the Welsh Broadcasting Service. While Gaelic language broadcasting has also been successful in attracting larger audiences, especially of non-Gaelic speakers, learners and those who are interested in the culture, it occurs in a different context from that of Wales and on a much smaller and more sporadic scale—in fact, erratic to say the least. There is no Gaelic TV channel, so Scotland has no counterpart to S4C, which has average audiences of 700,000. Gaelic language programmes average audiences of more than 300,000, which is three times greater than the pool of Gaelic speakers in Scotland. That demonstrates that the interest is there. The channel in Wales has played a significant role in the increase in the number of Welsh speakers, as shown in the recent census.

The wording of Clause 205 does not make it explicit that such a channel can be established. New subsection (4B) describes at some length what the service cannot do, but is less explicit on what it is allowed to do. For example, does it mean that a dedicated channel is prevented from transmitting radio broadcasts and certain graphic-only programmes?

Members of the Committee will note that the amendment includes the words "and elsewhere". With all the new technology, it should be possible for the delivery of programmes elsewhere in the United Kingdom. I referred in my remarks at Second Reading to the many Gaelic speakers furth of Scotland. For example, there are thousands here in London who would welcome access to such a digital channel. We need to reach as many of the Gaelic-speaking population as possible. I hope. too, that this new channel and new service will be able to distribute Gaelic programmes via the Internet, so that we can communicate with the Scottish diaspora across the world, especially the Gaelic speakers in the United States, Canada, Australia and New Zealand. We believe that the word "elsewhere" is more embracing than the reference to "and to others" on page 183, line 16. In fact, I should be grateful if the Minister would explain who the others are.

I turn to Amendments Nos. 159 to 168. New subsection (5) in Clause 206 makes it mandatory for membership of the Gaelic Media Service to include nominees of the BBC, the Highlands and Islands Enterprise and Bord Gaidhlig na h-Alba—the Gaelic Development Agency. New subsection (7) places the responsibility on Ofcom to ensure that the interests of regional Channel 3 services in Scotland and those of the independent television and radio production industries are adequately represented.

The BBC competes with the Scottish Media Group—SMG—and with the independent sector for grants from the Gaelic broadcasting fund. Hence, there is a public perception of a danger that members nominated by the BBC and any chosen to represent the interests of the independent production sector and SMG would face serious conflict of interest. That would hamper decision-making in the Gaelic Media Service, both in policy formulation and in the implementation in relation to allocation of funding. The potential for conflict of interest could reduce the effectiveness of the involvement in the Gaelic Media Service of members who are nominees or who are appointed to represent sectoral interests. It could also affect public confidence in the impartiality of the Gaelic Media Service.

The mechanism of creating a consultation group encompassing those interests to advise the service is designed to negate conflict of interest and to ensure that the Gaelic Media Service appointments are on individual merit, based on skills and experience rather than on a representational basis. It has been suggested in another place that the composition of the Gaelic Media Service board, as proposed in the Bill, is designed to ensure that it has access to expert advice from the industry. The structure proposed in our amendments deals with that but seeks to prevent the conflict of interests inherent in a structure in which all recipients of Gaelic Media Service funding are represented on the board of the Gaelic Media Service.

It could be argued that the two-tier structure proposed in the amendments is an over-bureaucratic response to the issue. However, Ofcom, under the amendments, could resolve that problem. Ofcom could choose to appoint no more than six members to the hoard of the Gaelic Media Service and no more than six members in the consultation group. Thus the two-tier structure proposed would have the dual merits of dealing with conflict of interest but would have no more individual members than are currently envisaged to be involved in the board of the Gaelic Media Service under the provisions of the Bill.

There is, incidentally, a precedent for a consultation group. The old Highlands and Islands Development Board benefited from the advice and expertise of such a body, although it met only about four times a year. It was not a very expensive exercise, but it gave tremendous advice to the HIDB. I beg to move.

Baroness Wilcox

New subsection (5) in Clause 206 makes it mandatory for the Gaelic Media Service to include nominees from the BBC, Highlands and Islands Enterprise Board and the Gaelic Development Agency. I apologise for not being able to pronounce the Gaelic name.

New subsection (7) places a responsibility on Ofcom to secure that the interests of regional Channel 3 services in Scotland and those of the independent television and radio production industries are adequately represented. The BBC competes with SMG and with the independent sector for grants from the Gaelic broadcasting fund. Hence, there is a public perception of a danger that members nominated by the BBC, and any chosen to represent the interests of the independent production sector and SMG, would face serious conflict of interests which would hamper decision-making in the Gaelic Media Service both in policy formulation and in its implementation, especially in relation to allocation of funding. The potential for conflict of interests could reduce the effectiveness of the involvement in the Gaelic Media Service of members who are nominees, or who are appointed to represent sectoral interests. It could also affect public confidence in the impartiality of the Gaelic Media Service.

The mechanism of creating a consultation group encompassing those interests to advise the Gaelic Media Service is designed to negate those conflicts of interest and to ensure that Gaelic Media Service appointments are on individual merit, based on skills and experience rather than on a representational basis. It has been suggested in another place that the composition of the Gaelic Media Service board as proposed in this Bill is designed to ensure that the Gaelic Media Service has access to expert advice from the industry. The structure proposed in these amendments encompasses that intent but seeks to negate the conflict of interest inherent in the structure where all the recipients of the Gaelic Media Service funding are represented on the board of the Gaelic Media Service.

It could be argued that the two-tier structure proposed in these amendments is an over-bureaucratic response to these issues. However, that could be resolved by Ofcom under the amendments. It could choose to appoint no more than six members to the board of the Gaelic Media Service—although it could choose, at its discretion, up to 12—and no more than six members to a consultation group. Thus the two-tier structure proposed would have the dual merit of negating the potential for conflict of interest but would have no more individual members than are currently envisaged to be involved on the board of the Gaelic Media Service under the provisions of the Bill.

2.45 p.m.

Lord Evans of Temple Gutting

Before responding to the amendments I should like to clarify the posit ion of Gaelic broadcasting in relation to the devolution settlement as a misunderstanding has been carried through from Second Reading.

I can confirm that the matters addressed in the current Bill as regards Gaelic broadcasting are wholly within the reserved policy area. As the Committee will appreciate, we are seeking in Clauses 205 to 207 to amend legal provisions in the Broadcasting Act 1990. Such broadcasting matters are reserved to the UK Parliament. However, it is true to say that the funding of Gaelic-medium programmes through the Gaelic Broadcasting Committee is being provided by the Scottish Executive. The Scottish Executive funding is channelled to the Independent Television Commission for distribution to the CCG. That arrangement will continue via Ofcom once the current legislation is enacted. The executive is not responsible, however, for programmes supported by the Gaelic Broadcasting Committee.

For completeness, I can also confirm that responsibility for promoting Gaelic language and culture lies entirely with the Scottish Executive. Policy and financial responsibility for the newly established Bòrd Gàidhlig, mentioned in Clause 206, together with funding for education including teacher training in Gaelic medium are all matters within the devolved competence of Scottish Ministers.

Clearly there is, and there should be, a synergy between language promotion and development and the benefits of Gaelic-medium broadcasting. That is why we are keen to see by means of this legislation closer co-operation between broadcasters and Gaelic language and culture interests together with those representing the wider community through membership of the Gaelic Media Service Board. I hope that those remarks will reassure the noble Baroness that the clauses on the Gaelic Media Service accurately reflect the legal and policy issues in relation to Gaelic broadcasting.

Amendment No.157 to Clause 205 seeks to place a duty on the Gaelic Media Service to finance and engage in the making of programmes, the provision of training and the carrying out of research in discharging its functions. However, the intent behind the amendment is not clear. As matters stand, Clause 205 already empowers the service to finance or engage in these activities as part of its new responsibilities for Gaelic broadcasting. Currently, the Gaelic Broadcasting Committee merely has the power to finance others for those purposes. The Bill will, in addition to the above powers, allow the new service to commission programmes, hold a licence and receive income from sources other than the Gaelic broadcasting fund. The Government feel that the enhanced powers being proposed for the new service are consistent with our vision of strengthening regional broadcasting and should perhaps be welcomed.

We are confident that, once the circumstances are right, the service will be in a position to take advantage of the new powers in Clause 205. That may take both time and careful forward planning. We do not see any merit in making that mandatory at this stage. If Members of the Committee were seeking to provide for the Gaelic Media Service a stronger lever to elicit extra investment, I do not think that the word-change suggested would achieve it. The whole issue of resources has been discussed in another place. The Parliamentary Under-Secretary at the Scotland Office made it clear that this matter could be revisited only at the next spending review, in 2004. It is a matter primarily for the Scottish Executive to determine.

Amendment No. 158, when read with Amendment No. 157, seeks to add a new subsection to Clause 205 to the effect that the Gaelic Media Service must hold a licence from Ofcom to provide a service of Gaelic television and sound programmes so as to be available to persons in Scotland and elsewhere. That is not compatible with Ofcom's responsibilities for the award of licences.

We believe that it is right for the Gaelic Media Service to be able to broadcast a dedicated television channel, and, under the current provisions, the service will be eligible to hold the relevant licences from Ofcom in order to do so. I hope that the noble Baroness, Lady Michie, will be pleased to have that reassurance. The Gaelic Media Service may hold any Ofcom licence, except those specified in subsection (4B) which Clause 205(3) inserts into Section 183 of the 1990 Act, the holding of which would be beyond the service's powers. Therefore, with that reassurance, I hope that the Committee will accept that there is no need to include specific provision.

There is also no need specifically to extend the service beyond audiences in Scotland. Clause 205(4) makes clear by amending Section 183 of the 1990 Act that in Sections 183 and 183A of and Schedule 19 to the 1990 Act a reference to being available to persons in Scotland includes being available both to persons in Scotland and elsewhere. Those are the others about whom the noble Baroness was so worried. They are people living outside Scotland.

I turn to Amendments Nos. 159 to 163 and 164 to 167. These are concerned with the membership of the Gaelic Media Service Board and the creation of a new consultation group—defined as an "expert advisory body"—with members appointed by Ofcom and approved by the Secretary of State. I am afraid that I must be blunt. We cannot accept any of these amendments as they would negate one of the Government's key aims in reforming the arrangements for Gaelic broadcasting—that of increasing the representative base, including the broadcasting expertise, of the Gaelic Media Service Board.

In essence, these amendments would remove from the face of the Bill any obligation on the part of Ofcom to include representation on the board of the Gaelic Media Service from critical key players—namely, the BBC, the Gaelic Development Agency and Highland and Islands Enterprise. They would also remove its obligation to secure as far as practicable that, among others, Channel 3 licence holders in Scotland and independent television and radio production industries have their interests adequately represented on the board. As a consequence of these amendments, the Gaelic Media Service would be reduced from not more than 12 to not more than nine members.

We believe that it is right for organisations such as those mentioned, which these amendments seek to relegate to the proposed consultation group, to be involved at board level. They have a wealth of expertise and knowledge to bring to the table. Our view is that their contribution will have the maximum impact, and hence add most value, by participation at board level.

However, we recognise that there are concerns in certain quarters about the risk of serious and sustained conflicts of interests, particularly among members nominated by external agencies. We have addressed that in two ways. First, as provided by new Section 183A, Schedule 19 to the Broadcasting Act 1990 will apply to the service. That sets out the processes and procedures for handling actual or potential conflicts of interest. Secondly, the statutory guidance on appointments to be issued by the Secretary of State for Scotland to Ofcom under new Section 183A will play its part in managing the risk of nominated members facing conflicts of interest that might impact adversely on the smooth running of the Gaelic Media Service Board. I can give an assurance that we shall keep the appointment arrangements under review to ensure that no difficulties of that kind arise.

I refer to my own personal experience as a governor of the British Film Institute for 17 years. That body had on its hoard representatives of many of the bodies that received funds from it. There was never any question of impropriety as mechanisms were in place—so far as I know, they are still in place—to ensure that that did not occur.

These amendments also seek to remove the requirement on Ofcom to appoint one of the members of the service as board chairman. The intention seems to he to ensure that the chairman of the new service is in place before the other board members are selected. We are already in discussion with ITC and Ofcom with a view to advertising the three current vacancies on the board and appointing one of the successful candidates as chairman designate of the new service.

Finally, I turn to Amendment No. 168. Again, our view is that this amendment would run counter to the Government's stated aim of increasing the broadcasting expertise on the Gaelic Media Service Board. In excluding anyone employed by any of the bodies in receipt of funding from the Gaelic Media Service from membership of the board, it would effectively rule out representation for the BBC, the Channel 3 companies in Scotland and the independent production sector. We believe that that would not be in the best interests of the service.

However, our clear view is that that can be overcome by Ofcom ensuring that any nominee from a body which is, or has the potential to be, in receipt of funding from the service is not directly involved in the provision of Gaelic programming. We shall ensure that that point is addressed in the statutory guidance to be drawn up by the Secretary of State under new Section 183A.

In the light of what I have said, I hope that the amendments will not be pressed.

Baroness Michie of Gallanach

I thank the Minister for his response to the various amendments. I warmly congratulate him on his correct pronunciation of the word "Gaelic". He pronounced it in the Scots not the Irish way. On a personal note I congratulate the Minister on pronouncing my name correctly. I am grateful for that. Incidentally, I wonder whether the Minister has noticed, or whether those who drafted the Bill are aware, that the Gaelic Media Service will be shortened to GMS and that the Gaelic title, Seirbheis nam Meadhanan Gàidhlig, will be shortened to SMG. There will he confusion throughout Scotland as those are the initials of the Scottish Media Group. I thought that I should draw that to the Minister's attention.

I hope that Ofcom will listen to what the Minister had to say on the question of conflict of interest. I am grateful to the noble Baroness, Lady Wilcox, for her support for the amendments. I am glad to hear that there are appropriate procedures in place. Ofcom will no doubt read what has been said today.

I also very much welcome the Minister's assurance that there is scope for a dedicated channel in Scotland. That will make a difference to our fostering and developing the Gaelic language. I was glad to hear that the words "broadcast to others" mean broadcast elsewhere. That is very welcome.

However, I still remain greatly concerned about the funding. In the great scheme of things what is required is only a paltry amount—peanuts, in fact. But Gaelic broadcasting, given a secure basis, could make all the difference to the language beginning to flourish again. I remain unconvinced about the financial aspect in particular and hope to return to the matter at a later stage. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 158 not moved.]

[Amendments Nos. 158A and 158B had been withdrawn from the Marshalled List.]

Clause 205 agreed to.

Clause 206 [Membership of the Service]:

[Amendments Nos. 159 to 166 not moved.]

Clause 206 agreed to.

[Amendment No. 167 not moved.]

Clause 207 [Supplementary provisions about the Service]:

[Amendment No. 168 not moved.]

[Amendments Nos. 168A and 168B had been withdrawn from the Marshalled List.]

Clause 207 agreed to.

Clauses 208 to 210 agreed to.

Clause 211 [Digital Channel 3 and Channel 5 licences]:

Baroness Wilcox

moved Amendment No. 168C: Page 186, line 45, at end insert— ( ) For the purposes of this section, "ancillary service" does not include any service which is not a broadcast service. The noble Baroness said: In moving Amendment No. 168C, I wish to speak also to Amendments Nos. 169ZA, 195CA and 195CE. The purpose of these amendments is to seek some clarification from the Government on the services for which public service broadcasters are allowed to make a charge. Some key clauses of the Bill could be interpreted as preventing public service broadcasters from charging for some ancillary services which, up to now, they have been permitted to charge for.

Public service broadcasters have in the past been permitted to charge viewers for certain "opt-in" two-way ancillary services on digital television such as voting, for example, for their favourite contestant in Channel 4's "Big Brother", or entering a quiz to win a prize or entering a draw. This has always been permitted when, for example, viewers use their traditional landline or mobile telephone to call premium rate telephone numbers to enter a broadcaster's competition or to enter their vote, and has also been permitted when these services are made available to viewers through a telephone line connection to set-top boxes.

At the moment, however, Clause 211(8) (relating to digital C3 and C5 licences) and Clause 228(9) (relating to the replacement of the C4 licence) would appear to prevent ITV, Channel 4 and Channel 5 from charging for the reception of any ancillary service. Clearly, this would be wrong and would impose far greater restrictions on the public service broadcasters than exist at present.

The same problem arises in relation to Clauses 268 and 269, which set out the must-offer obligations for public service broadcasters. As presently drafted, the clauses allow Ofcom to determine which ancillary services also fall within the definition of a must-offer service, which are then subject to the provision that no charge be made for an entitlement to receive those services. Thus, Ofcom could decide that some previously charged for ancillary services should form part of the must-offer service, which would then mean that these could not be charged for.

My amendments seek to address those concerns. The solution is a simple one. They provide a distinction between ancillary services which are broadcast by a public service broadcaster, and therefore may not be charged for—for example, a choice of different camera angles on a sports programme broadcast, or additional statistical information which may form part of the core public service offering—and ancillary services which are not broadcast (that is, are made available along a telephone line) which may be charged for.

I very much hope that the Minister will be able to accept these amendments today. If he is not, it would still be extremely helpful if he could at least confirm that it is not the Government's intention to prevent public service broadcasters from charging for certain interactive services offered along telephone lines. Can the Minister reassure us that the Bill, as drafted, will not prevent that? I beg to move.

3 p.m.

Lord Evans of Temple Guiting

The noble Baroness, Lady Wilcox, seeks clarification with the amendment, and I hope that I will be able to give it to her. One essential feature of public service television is that it has to be free to view. Once someone has acquired the right equipment and paid the television licence fee, they should be able to receive the public service channels free of any further charge, and we want to ensure that that continues to be the case in future, after the switchover to digital television. Therefore, the Bill provides for a specific prohibition against charging viewers for reception of those services. That is not a new policy as similar provisions are already contained in, for instance, the licences for Channels 3 and 5.

For clarification, that is not to preclude any applicable commercial charges between broadcasters and those who buy the right to carry or otherwise retail their services—for example, on satellite. Nor is it to preclude any public service broadcaster from selling programmes to other broadcasters in the UK or abroad. Similarly, we do not wish to prevent a public service broadcaster from charging, even at a premium rate, for the phone call made by a viewer to vote—the noble Baroness, Lady Wilcox, gave the example—a character in or out of a programme or to enter a competition. The Bill does not prevent broadcasters from charging for such specific requests, so long as everyone can receive for free the programme on which the vote is made.

It is not prohibited to charge those who want to vote or gamble on some features of the service using their phone line as a return path. If the purpose of the amendments is to make that clear, we believe that they are superfluous. However, if they propose to create a distinction between ancillary services that are broadcasts and those that are not, that would not only fail to add clarity but might be flawed. I am not sure that that is what the noble Baroness, Lady Wilcox, is proposing.

The prohibition to charge the viewer for the reception of a public service channel applies not only to the main services, but to any ancillary services within the meaning of Section 24(2) of the 1996 Act, as amended by Schedule 15, such as subtitling and other forms of assistance to the disabled. I am sure that we all agree that such services must be free. However, some other services might be included in the public service channels that we want viewers to receive free of charge, such as some interactive services.

The distinction that the amendments would introduce between ancillary broadcast services, which have to be free, and ancillary services that are not broadcast services, which would be charged. fails to add clarity and might well be flawed. Today's technology means that some services are not technically broadcast, but delivered in response to requests made by the individual users, although they are and have to be regulated as broadcast services. All cable providers may well soon stop providing the signals carrying normal broadcast television directly to homes, and instead receive and store all programming on local servers that serve perhaps 500 homes. It would not be fair that a cable viewer could be charged for the reception of those programmes, while a viewer receiving the same programmes via a true broadcast was not.

I hope that, in the light of those explanations, the noble Baroness will feel able to withdraw the amendment.

Baroness Wilcox

I thank the Minister very much for his explanation of what the Government propose. I shall read what he said in Hansard carefully to see whether it suffices. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 211 agreed to.

Clauses 212 to 214 agreed to.

Clause 215 [Duty to secure the provision of a public teletext service]:

Lord Addington

moved Amendment No. 169: Page 191, line 18, after "form" insert "or for so long as the digital teletext service remains inaccessible to visually impaired and deafblind people The noble Lord said: The aim of the amendment is incredibly straightforward. It is basically to ensure that the visually impaired and, more importantly at this level, the deafblind still have access to teletext. The reason why that is felt to be necessary is simply technical, as the techies would say, to use the original description given by my noble friend Lord McNally. Apparently on analogue only at the moment do we have the technical ability to transform teletext into other forms that are more readable, such as Braille.

Normally when we have talked about the issues in terms of disability, I have structured my points in relation to technology having enabled us to answer most of the problems. Here is an example where technology has not caught up. The current types of technology do not allow the reading of the digital signal. In a society rich—indeed saturated—with news and information, if we want two groups who are in danger of being cut off from the outside world to become a full part of that society we must allow them to continue to have the service.

I will break my usual practice by reading a letter from one Michael Gerwat, who is deafblind. He writes: I am deafblind and the only way I can access the news from the outside world is by Teletext connected to a Braille computer. Now, when things go digital there is no provision for that teletext service to remain. It will just be axed and as yet there is nothing to take its place. Now I feel that OFCOM should have the power to say you must create something to replace that and make that accessible before we take the old one away. I know it is to do with manufacturers, I know it is to do with commercial demand and all that. but have you ever been deafblind yourself? Have you lived in a world where there is not a single sound at all and I mean silence, and the only access you've got to every day news is through the Teletext system. Please don't take it from us until you've found something to replace it". The closest I can come to imagining what it is like to be deafblind is being placed in a padded cell with your eyes and ears permanently covered. You cannot access what is going on around you. You are trapped in there. I should have thought that this, or a similar provision, was essential for this group of people. I beg to move.

Baroness Wilcox

I support this amendment ensuring the continuation of the analogue teletext service for so long as the digital equivalent is inaccessible to visually impaired and deafblind consumers.

Teletext is a lifeline for many disabled people. It provides an invaluable link into the world of television, from which they can otherwise be excluded. We are all familiar with page 888 giving subtitles. The service brings to life a huge range of programmes, from news to entertainment, for those who are deaf or hard of hearing. In a similar way, teletext services bring benefits to the partially sighted, delivering up-to-date information in a clear format which can be enlarged and read by those with minor visual impairments too.

Furthermore, as we have heard, analogue teletext can be interpreted by talking teletext equipment or devices that turn it into Braille. Unfortunately, that is so far not the case for digital services, which cannot be read or interpreted by machines. It would be a real shame if this example of best practice in including disabled consumers were to be phased out for the sake of change.

The amendment does not require an analogue teletext service to go on for ever, but only so long as the digital version remains inaccessible. This would cease to be relevant once the technology became available to allow the visually impaired to use digital teletext in the way in which they can currently take advantage of analogue teletext.

In a similar vein, we welcome Clause 298 under which Ofcom is required to publish a code providing guidance to services on the promotion of subtitling, audio-description and sign language and which gives a time-frame for meeting targets. Amendment No. 246 extends this to include services which are primarily broadcast abroad, which seems a sensible suggestion.

After all, under this Bill cable and satellite broadcasters will, for the first time, have to meet targets on services that benefit disabled consumers. If the principle of access for all consumers applies to audiences within the UK, surely there is no reason why that should not be relevant to audiences further afield.

Baroness Wilkins

I support the amendment. I spoke about the future problems that would be raised in regard to digital teletext for blind and deafblind people at Second Reading. It is such a serious matter for this group of people that I feel sure that the Government will respond favourably to the amendment.

The potential isolation caused by being deafblind, as the noble Lord, Lord Addington, so graphically set out, is hard to contemplate. Surely we must do everything we can to alleviate it. Teletext has become a vital source of information, news and education for many thousands of blind and deafblind people and has played a major part in putting them in touch with the world around them. To remove that vital resource just because technology has moved on is surely too cruel. I hope that the Minister will respond favourably to the amendment.

Lord Lipsey

I rise to speak to Amendment No. 246 standing in my name. Members of the Committee could be excused some slight confusion. First, the amendment has nothing to do with the very important subject of teletext services for deafblind people. I wholly endorse every word that has been said on that subject. Secondly, it seems to me that I have made a mess of the drafting of the amendment so that it does not even do what I want it to do.

My concern relates to people making television programmes in this country for broadcast to other countries. Under the Bill as drafted it seems possible—this is probably unintentional—that they would have to observe for those television services that will only be shown abroad the same standards as will rightly be applied by Ofcom to programmes to be shown in this country. That seems a rather inappropriate and heavy-handed use of resources. The standards that should apply to such programmes, in terms of subtitling and so on, should be those of the country in which they will be shown and the markets into which they will be sold, not those of this country. That is what sovereignty is about—each country determining such matters for itself.

It is true that Ofcom can get round this under Clause 298 by ruling as to exactly what should be done for each service. But that seems a huge burden on Ofcom. It would seem more sensible to provide for this automatically by alleviating all those channels for which programmes are made in and broadcast from the United Kingdom but not shown here. There is also a commercial motive in this regard. If we do not do that and impose the obligations, the channels can easily be moved and broadcast from another country. We should simply lose that benefit to the industry. I hope that my noble friend will consider the amendment carefully.

Lord Bragg

I rise briefly to support the powerful case made by the noble Lord, Lord Addington. I work with the Royal National Institute for the Blind and know what a vital facility the service is. I cannot support the noble Lord strongly enough.

Baroness Darcy de Knayth

I would like to support the amendment equally briefly but equally firmly. The noble Lord, Lord Addington, and others made a very good case for it. I hope that the Minister will be sympathetic but I implore her, if she cannot give us a good answer now, to think more firmly about it and perhaps come back with an answer or meet with us in between the Bill's stages.

3.15 p.m.

Baroness Blackstone

I share the views expressed around the Chamber about the importance of allowing the visually impaired and the deafblind in particular to have access to those services. I want to give a sympathetic response but I am afraid that there is a technology issue in this regard. It will not be possible for the public teletext licensee to continue to provide an analogue text service after the switchover to digital as the spare capacity on which the service is broadcast will no longer be available. Nor can the equivalent of the analogue service be provided on digital terrestrial television because of capacity restraints.

I fully appreciate the value that visually impaired and deafblind people place on access to digital teletext services, but I do not believe that putting requirements in the Bill on the public teletext service licensee or on Ofcom is the most effective and practical way in which to find a solution to the problem.

However, I believe that there is a solution. My officials understand from the Independent Television Commission technology group that it believes that it will be possible to design a digital version of the talking teletext equipment that would work with digital teletext instead. It suggests that the equipment manufacturer works with broadcasters and set-top-box manufacturers. I will ensure that that is taken forward within the work of the technology and equipment group of the digital action plan. One of its tasks is to consider the specific equipment needs of disabled people. The commercial solution, which will be available, would not need to be reflected in provisions in the Bill.

Amendment No. 246 would mean that the code would not apply to any television licensable content service with an intended audience most of whom lived outside the United Kingdom. However, Clause 298(6) provides that, in considering exclusions from the subtitling, signing and audio description targets, Ofcom must have regard to the factors that are set out in Clause 298(6)(a) to (f). They already include, in Clause 298(6)(d), the extent to which members of the intended audience for the programmes are resident in places outside the United Kingdom.

I believe that that amendment is unnecessary as there is already a provision in the Bill to allow Ofcom to consider the extent to which the intended audience is outside the United Kingdom. Furthermore, there may actually be some occasions on which it is appropriate for services with a primarily non-UK audience to provide assistance for the disabled. Were we to accept this amendment, however, we would leave Ofcom powerless to ensure that suitable—

Lord Lipsey

I am grateful to my noble friend. Before she moves on, could she explain what services she has in mind in that regard? I should find that enormously helpful.

Baroness Blackstone

I could not quite hear the question.

Lord Lipsey

I beg my noble friend's pardon. She said that there were some services shown outside the UK for which the requirement would be appropriate, but she did not list any. Could she give me some examples of what she has in mind?

Baroness Blackstone

There may be some occasions, as I was saying, on which it is appropriate for services with a primary non-UK audience to provide assistance for the disabled. There could be a whole variety of different services, to which the disabled want access. I cannot particularly specify any one kind of service. News services—

Lord Lipsey

I just want an example.

Baroness Blackstone

If I could finish. Let us take Europe-wide news services as an example. There may be many others, such as pan-European sport. Such services are provided across the Continent of Europe and are not primarily for a domestic audience.

In conclusion, if we agreed to the amendment, it would mean that Ofcom could not ensure that suitable provision was made in those circumstances. I hope that the noble Lord will withdraw the amendment.

Lord Addington

I thank the Minister for her response. The gist of it was, "Yes, you have identified a problem but, don't worry, the problem will disappear shortly". Answers like that remind me of the fact that although audio description is being produced, we cannot get a box. Thousands of hours of television are bring produced but cannot be accessed.

Is the Minister at this point prepared at least to guarantee the best efforts of the Government to ensure that not only is the work carried out, if it can technically be done, but that the service will be in an accessible format and the Government will give assistance to those who need it?

Baroness Blackstone

I am surprised by the noble Lord's question. I thought that I had made it absolutely clear that the Government would do all they can to encourage the technology group which is looking at these issues to ensure that the service is available. Therefore, I am not sure why he is asking me the question again.

Lord Addington

For the simple reason that it was technically available in the case of audio description but as no one was producing the box no one could get at it. We therefore want to ensure that not only is it possible technically to provide the service but that it is available. That is the real cruncher. It does not matter that it is possible technically to provide the service if it is not readily available.

Will the Government do their best to ensure that the situation is not repeated here? It is probably more important in this case. Will they give an undertaking at least to do everything they can within the current structures to enable that to happen?

Baroness Blackstone

I have already said that the Government are committed to ensuring that this particular group—the visually impaired and the deafblind—have as much access as is technically possible to the kind of services they may want to watch.

I cannot go beyond that. I cannot anticipate exactly how the technology will turn out. I understand the point the noble Lord makes about gaining access to the technology, but I can only say that what I said earlier will stand.

Lord Addington

I thank the Minister. At least we know where we are. In moving the amendment, I have received advice and speak for a coalition of interests. I would like to take the Minister's answer away and to allow those who have more technical knowledge to have a look at it. I believe that the Minister is trying to give me as good an answer as she is able, but whether it addresses the point is something which experts will have to look at. Under those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 215 agreed to.

Clause 216 agreed to.

Schedule 10 agreed to.

Clauses 217 to 227 agreed to.

Clause 228 [Replacement of Channel 4 licence]:

[Amendment No. 169.ZA not moved.]

Clause 228 agreed to.

Clause 229 [Meaning of "television licensable content service"]:

Baroness Buscombe

moved Amendment No. 169A: Page 205, line 15, leave out "or sounds (or both)" and insert ", sounds or data (or any combination of the three)

The noble Baroness said: In moving Amendment No. 169A, I shall also speak to Amendments Nos. 169B, C and D. During the first day of Report stage in another place, the Government brought forward a number of amendments to those clauses of the Bill relating to the television licensable content service—TLCS licence—in particular Clauses 229 and 230. Following discussions with various industry representatives, my Front Bench colleagues in another place had intended to put a number of important questions to the Minister concerning the workings of the clauses and the Government's amendments. Alas, these were not reached in the time available and were adopted without any debate.

I understand that my honourable friend the shadow Secretary of State for Culture, Media and Sport, John Whittingdale, then wrote to the Minister for Broadcasting setting out the questions which he had hoped to put to the Minister at Report stage, but he has yet to receive a response to the letter. I understand that responding to letters takes time, particularly those that deal with significant levels of detail. But we are anxious to get some answers to the questions raised in order that we can understand clearly the implications of the clauses to hand. I have tabled these essentially probing amendments to enable me to put the outstanding questions to the Minister in the hope that some clarity may be forthcoming.

Amendments Nos. 169C and 169D relate to the definition of "relevant ancillary service" in Clause 229(6). For those Members of the Committee unfamiliar with this part of the Bill, a "relevant ancillary service" falls under the same TLCS licence as the main service and does not require a separate licence. Clause 229(6) currently defines "relevant ancillary service" as, a service or facility provided or made available by the provider of the main service that consists of or gives access to… any other service…which is ancillary to one or more programmes so included and relates directly to their contents". Following government amendments moved in another place on Report, the definition now includes "a facility" as well as "a service". I understand that this term is intended to catch menus—for example, the interactive service menus that are accessed by pressing the red button on Sky's channels—and similar linking or jumping technologies that may not easily be seen as a service in their own right. There are concerns, however, that the inclusion of the term "facility" could unintentionally widen the scope of the licensing provisions so that it would potentially catch hardware; for example, set-top boxes or viewing cards and even other software and middleware contained in the set-top box as that might be said to be provided to give access to any other service.

Clearly, such facilities should not be licensed as a form of television services. Therefore, it would be helpful if the Minister could confirm that the addition of "facility" in this definition is not intended to widen the scope of a TLCS beyond the form of menus or other linking technologies, to which I have referred; and that a "facility"—as proposed by my amendment—is intended only to relate to on-screen navigation facilities or facilities made available for reception by members of the public. If the facility is broadcast "for reception", it would seem to preclude it from covering hardware or any software integral to that hardware.

Government amendments moved on Report in another place also amended the definition of "relevant ancillary service" by changing "relates" to "relates directly", implying a stricter interpretation of what ancillary services may be included within the same licence as the main service. That change could result in significant practical implications for broadcasters. Yet, given the lack of parliamentary debate in another place, the Government have not stated why they believe that there is the need for a higher threshold and therefore why the term "relates" is insufficient.

It would be helpful to know the extent to which the Government have considered the consequences of that change. For example, the need for services to be directly related could lead to an onerous process requiring separate additional licences to be obtained regularly for one-off programming where the material is only deemed to be related. At the very best, regular discussion will need to be held with Ofcom on whether a separate licence is required every time the main service provider is considering broadcasting additional content, in order to ensure that licences are required for all the correct services and facilities.

The stricter definition of "directly related- might be interpreted to require broadcasters to acquire a separate licence for content that it makes accessible through a multi-screen application, such as Sky's "Sky News Active". It is unclear when that might be required. The BBC has, for example, shown horseracing behind international rugby programming. Could that be said to he directly related? Channel 4 has shown -Big Brother- programming behind programmes such as "ER" and "Friends". Could that be said to be directly related?

Furthermore, would the test be applied across the range of programming on the channel, so that a general entertainment channel would enjoy greater flexibility in that regard than a dedicated sports or documentary channel, or would the direct relationship have to be with the programming being shown at the particular time? I suggest that the inclusion of the word "directly" has added another level of uncertainty for broadcasters without any commensurate policy gain.

Ultimately. a far more sensible approach would be to allow all services ancillary to the main service to come under a single licence. The system should be sufficiently flexible to permit third-party content providers to acquire a separate licence if they want to or, if they already possess a separate licence, for that licence to cover all the content they are providing. Such a position would still ensure that all relevant services were caught by the licensing regime while removing much of the complexity and subjectivity of the regime currently proposed.

My probing amendments, Amendments Nos. 169A and 169B, propose the inclusion of the word "data" in the text of Clause 229(5), in addition to the words "visual images" and "sounds". There is concern that the absence of that word unintentionally implies that certain services that are not currently licensed by the ITC may fall to be licensed as part of a TLCS. For example, the voting application on Sky News or "Big Brother" involves the transmission of data from set-top box to voting servers. That is not at present a licensed activity, as is such activity on-line, but may be caught by the currently proposed TLCS regime, as it would not be excluded as a two-way service.

I understand that the Government have resisted the inclusion of the word "data" so far on the basis that it may take certain services, such as those provided by Kingston Communications, outside the scope of the TLCS regime where data is transmitted one way to call up channels from the server and video images are sent back. If the Government feel unable to accept the amendment for that reason, it would in any case be helpful to have the Minister's assurance that all on-line interactive services, including those that involve the sending of data, such as voting applications, are intended to be excluded from the scope of TLCS. I beg to move.

3.30 p.m.

Lord Avebury

The Explanatory Notes state that two-way services, as defined in subsection (5), encompasses video conferencing, but they do not state what other services may be included. Presumably, the intention of the draftsman was to make the exclusion as broad as possible so that TLCS is not applied to activities such as Internet shopping. I recall that concern was expressed in the Joint Committee by the Internet Service Providers' Association that the definitions in the clause would inadvertently secure that Internet content would be caught by the licensing requirement.

I have not had time to ask the Internet Service Providers' Association whether it is satisfied that the concerns expressed in that memorandum have since been met. As I did not receive the answer immediately, I assume that something remains to be dealt with and that the conversations between the ISPA and the Government continue.

On Amendment No. 169C, I agree with the noble Baroness, Lady Buscombe, that the wording of the clause is ambiguous. Again, I turn, as I normally do if I am not entirely au fait with what a clause is intended to do, to the Explanatory Notes. I must congratulate the Government on providing such extensive Explanatory Notes. In this case, a long paragraph deals with what are ancillary services, giving a number of helpful examples, but the effect is spoiled when one reaches the end of the paragraph where one reads that, everything would depend on the exact nature of the services and facilities offered and the circumstances in which they were offered". So the question asked by the noble Baroness is legitimate: could the current phraseology include hardware, or is it, as she requests, confined only to onscreen interactive services of the kind described?

Amendment No.169D would delete the word "directly". We need a definition, and I am glad that the noble Baroness said that it was a probing amendment on which we require further elucidation.

Baroness Blackstone

I accept that these are probing amendments. However, if accepted, they would only confuse the internal logic of Clauses 229 to 231. 1 freely admit that the clauses relating to satellite and cable services are very complex and perhaps aim at a final perfection of legal certainty that is not easy to achieve. However, we are clear that the drafting makes real, intelligible distinctions between which are licensable content services and which are not.

The first two amendments are, in our view, unnecessary, because data transmission services are outside the scope of licensing. I shall say more about that in a moment. The noble Baroness referred to a letter sent to the department by her honourable friend John Whittingdale including all the questions that she listed. The department has not received the letter. By far the best approach would be for the department to answer all the noble Baroness's questions in writing, as it is a complex area. I will copy my reply to the noble Lord, Lord Avebury.

I wonder whether I need respond further to these amendments, given that they are probing, other than to answer the question put by both the noble Baroness and the noble Lord, Lord Avebury, about whether the facility includes hardware. It does not; it relates only to onscreen facilities and software. In the light of what I have said, I hope that the noble Baroness will withdraw her amendment. We shall write as soon as possible.

Baroness Buscombe

I thank the Minister for her response. I apologise; I have no idea what has happened to the letter, and as soon as I leave the Committee I shall try to find out. We are certain that it was sent. I am very grateful to the noble Baroness for offering to respond in writing to the rather complex questions that I have raised this afternoon, and also to write to the noble Lord, Lord Avebury. The last thing that I want to do is to confuse the internal logic, to use the Minister's words. However, I am grateful for her assurance that hardware is not included. In the hope and expectation that we shall receive replies to the questions. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 169B to 169D not moved.]

Clause 229 agreed to.

Clauses 230 to 232 agreed to.

Clause 233 [Direction to licensee to take remedial action]:

Baroness Wilcox

moved Amendment No. 170: Page 208, line 42, at end insert— (8A) OFCOM shall publish a statement setting out by what means complaints concerning a contravention of a licence condition may be made and how OFCOM will consider such a complaint. (8B) A statement under subsection (8A) shall include—

1. (a) an account of arrangements for the publication of details of a complaint,
2. (b) information on the time available for making representations, and
3. (c) an account of the process of consideration between the making of complaints and the issuing of directions under this section."

The noble Baroness said: Clause 233 permits Ofcom to direct a licensee to take remedial action if it is satisfied that the licensee has contravened a condition of the licence. Clause 233 sets out clearly what Ofcom can do in those circumstances, but it lacks sufficient detail on how the process will work. If I understand it correctly, Ofcom decides whether there has been a contravention of the licence condition; it then gives the licensee the opportunity to make representations to Ofcom regarding the alleged contravention; and, if Ofcom remains satisfied that there has been a contravention, it can direct the licence holder to include a correction or a statement of findings in the licensed service. That is all fairly clear.

What is not clear is how Ofcom will deal with the process and what timescales will be involved. Clause 233 hinges on Ofcom's satisfaction that a contravention has taken place. That is how the clause begins. But how will Ofcom arrive at this position'? Amendment No. 170 attempts to clarify the process. It attempts to make the process more transparent for all concerned by its requirement that Ofcom should publish a statement laying out its proposed actions in detail. The time available for the licensee to make representations is particularly important. The clause would be much improved by clarifying the processes whereby Ofcom and the licensee interact on the issue of contravention, so that no party is in any doubt over what action may be taken. I beg to move.

Viscount Falkland

We support this amendment, and look forward to the clarification that doubtless the noble Baroness is about to give to the Committee.

Baroness Blackstone

Clause 233 has the simple purpose of updating the provisions in the Broadcasting Act 1990 to allow Ofcom to require a cable or satellite broadcaster which has breached a licence condition to broadcast a correction or Ofcom's statement of findings where Ofcom is satisfied that this would appropriately remedy the contravention. The provisions in respect of other broadcasters remain broadly unchanged from those in the 1990 Act, other than being updated by Clause 337 to refer to broadcasting the statement of Ofcom's findings rather than an apology.

The new provisions in this clause are required for cable and satellite broadcasters simply because the Bill replaces the separate cable and satellite licences with a single licence for a television licensable content service. This amendment would introduce a requirement for a complaints procedure in respect of any breach of a licence condition. We do not believe that that would be appropriate. Requirements for complaints procedures to be put in place already exist for the areas that most directly affect viewers, particularly in respect of standards and fairness complaints. Those licence conditions that do not relate to content standards are neither of much direct relevance to members of the public, nor the kind of matter best addressed through a complaints procedure; for example, they cover payment of Ofcom fees, media ownership provisions, and statutory advertising limits established under a European directive. Therefore, they are very much of interest to the industry, but not to the public.

As for the standards code, the provisions about the complaints process in relation to all licensees are to be found at Clause 318 of the Bill. Those provisions already prescribe that Ofcom shall include a condition in every broadcasting Act licence that the licence holder must observe Ofcom's codes to safeguard standards and maintain procedures for dealing with complaints. Not only shall licensees have procedures for handling and resolving complaints, but Ofcom shall also establish such procedures.

In relation to fairness and privacy complaints, the detailed procedures set out in the Broadcasting Act 1996 remain in force and responsibility for their enforcement will transfer to Ofcom. All the procedures will need to be clear to all parties. Clause 321 requires the broadcasters to publicise complaints procedures for breaches of both standards and fairness codes.

I should mention in passing that we do not understand why this amendment targets the provisions governing television licensable content services alone. Be that as it may, we believe that it is unnecessary in any event given the provisions of the Bill to which I referred. I wonder, therefore, whether the noble Baroness will feel able to withdraw her amendment.

Lord Avebury

Before the noble Baroness, Lady Wilcox, takes that decision, perhaps I may ask one question. As the Minister referred to Clause 321 and the requirements that it places on Ofcom to publicise the means of making complaints, whether by broadcasts or otherwise, would it not be appropriate for details of the means for making complaints by members of the public to appear on Ofcom's Internet site?

Baroness Blackstone

That sounds like a perfectly sensible suggestion. I shall certainly take it away for consideration, and let the noble Lord, Lord Avebury, know whether, as it seems to me, the experts also find it sensible.

Baroness Wilcox

I thank the Minister for her reply and the noble Viscount for his support from the Liberal Democrat Benches. It sounds as if I shall not get what I want but the noble Lord, Lord Avebury, will get what he wants. I should just retire hurt. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 233 agreed to.

3.45 p.m.

Clauses 234 to 240 agreed to.

Clause 241 [Local digital television services]:

[Amendment No. 171 not moved.]

Viscount Falkland

moved Amendment No. 172: Page 216, line 42, leave out subsection (7). The noble Viscount said: In moving Amendment No. 172, I shall speak also to Amendment No. 173.

Amendment No. 172 relates to local digital television services and to Clause 241(7), which provides powers for Ofcom to introduce restrictions on the inclusion of advertising and sponsorship. The amendment would delete the subsection in its entirety on the basis that it provides Ofcom with powers to introduce an unnecessary regulatory burden on future local digital television services.

Local and community television services, whether free-to-air, on cable or on other platforms, should he free to draw on various funding sources. Local commercial television will depend primarily on advertising and sponsorship, but for non-commercial community television services the principle of a mixed funding base is important to their viability and independence. Therefore, we consider the subsection to be unnecessary and even a threat to the future viability of local digital television.

The inclusion of subsection (7) implies the possibility that there will be regulation when, we maintain, none is required and there is no obvious social or economic benefit. To prohibit or restrict private funding sources would he to impose an onerous and unnecessary regulatory burden.

I shall now speak to Amendment No. 173. As a result of changes introduced by the Broadcasting Act 1996, there is a diverse and developing local and community television sector. There is a range of ownership and economic models, as well as a wide variety of approaches to programming. The present licensing arrangements are highly deregulatory. There is no recognition or incentive for public service content and few restrictions on the accumulation of broadcast licences and speculative licence trading.

The problems were highlighted by the acquisition, in 2000 and 2001, of a large number of restricted service television licences before the proposed services had even commenced broadcasting. Later, the company making those speculative acquisitions collapsed and hopes for a rapid roll-out of new local television services received a severe setback. In 2001, the Independent Television Commission reviewed the framework for restricted service television licensing and concluded that a more robust framework was required where services with a strong non-commercial public service remit could be ring-fenced and protected against take-over.

The proposals would establish at least two categories of local television. One category would be for local television services run for profit and open to acquisition and accumulation by companies with interests in investing in local commercial television. The second category would be community television services run mainly for social benefit and with no plans for or expectations of profit.

Such a distinction of category is of particular importance to the ability of commercial community television services to raise capital investment from public and private sources, as it would provide reassurance and some protection against take-over and conversion into a profit-making venture. This amendment would make explicit that the powers contained in Clause 241 would enable Ofcom to introduce a category distinction to protect and define not-for-profit community television services. We believe that the amendment would improve the Bill. We might face the possibility of these provisions being subject to future secondary legislation if the amendment was not on the face of the Bill. I beg to move.

Lord McIntosh of Haringey

I understand the thinking behind the amendment and one is always sympathetic to the cause of community. But the amendments do not recognise the virtues of the provisions in the Bill. Clause 241 provides a very flexible licensing regime for local television services.

We do not know yet, and we cannot know, what the right balance is or will be between different kinds of services. We might have enough spectrum to accommodate both non-commercial and commercial services. There are benefits of both. After all, if people have a choice of what they want to watch, some who have access to non-commercial services may choose to watch commercial services. That is their privilege. Some services provided for commercial reasons might bring a large number of benefits to a particular community. There is not always a contradiction between public interest and commercial interest.

If, when we come to make orders under Clause 241, we believe that there should be only "public interest" or "community" services, which is really what the amendments are proposing, the drafting of this clause will allow us to do that. If, on the other hand, we want and can afford to provide for a wider variety of services, Amendments Nos. 172 and 173 would hinder our ability to do that. The thinking seems to be that Amendment No. 173 would make subsection (7) superfluous and that is why it is removed by Amendment No. 172. That would be a mistake. Subsection (7) does something quite different from Amendment No. 173. It allows a more subtle control of the nature of services licensed under Clause 241 than would be possible by simply adopting Amendment No. 173.

Where the amendment specifies in broad terms the general nature of the service to be licensed, subsection (7) provides one of the means by which it might he achieved. One might say—I rather think that the noble Viscount, Lord Falkland, was saying it—that we should not have subsection (7) because we can rely on other provisions in the clause to prevent the services being too commercial in nature. But I believe that subsection (7) is necessary. Without it, our ability to shape the future of local digital television will be significantly impaired. With it, we will be able to act more flexibly on a case-by-case basis.

It may be that we want to provide for different types of services with different: types of business plans. Some might be able to receive grants from associations or even support from local authorities. But if that were the case, we would want to ensure that they did not enter into unfair competition for advertising income with commercial TV licensees. To do so would need a specific power of the type set out in subsection (7) rather than the alternative proposed by Amendment No. 173. Clearly, we are seeking the same end, but the rather complex and obscure drafting, I have to say, of Clause 241 achieves what the noble Viscount, Lord Falkland, wants.

Lord McNally

Before the Minister sits down, I mentioned at an earlier stage our shared experience of mutuals and co-operatives as perhaps a third way of stopping one of the aims of these amendments. We have been here before in that the technology has provided for real local and community identity and ownership, but commercial forces have caused amalgamations and consolidations which have lost that. Since we are at another stage of technology where we really might be able to obtain local television and local radio, we should be exploring ways in which once they are set up they are protected from predators.

Lord McIntosh of Haringey

If there is room for everyone, the Bill allows for that. If there is not sufficient room for everyone or if there is a threat of a non-commercial interest being swamped by a commercial interest, the Bill allows for Ofcom to discriminate in favour of the non-commercial interest. I think that that is what is being sought by the noble Lord, Lord McNally. It is in place.

Viscount Falkland

I thank the noble Lord, Lord McIntosh, for what was by and large a sympathetic, detailed and thoughtful response. These are difficult problems and unforeseeable events will have to be dealt with in the future. I shall study carefully what he has said and, if necessary, return to the matter at a later stage. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 173 not moved.]

Clause 241 agreed to.

Clause 242 [Regulation of independent radio services]:

Baroness Buscombe

moved Amendment No. 174: Page 218, line 14, at end insert— ( ) Where OFCOM receives notification that may give rise to a change of control in ownership of independent radio services, or that a relevant change of control takes place (whether or not that change has been previously notified to OFCOM), OFCOM shall carry out a review of the impact on music diversity and local character. The noble Baroness said: We turn now to Clause 242 which concerns the regulation of independent radio services. In moving Amendment No. 174, I shall speak also to Amendments Nos. 251 and 252. Amendment No. 174 would ensure that Ofcom reviews the impact on music diversity and local character in the event of a proposed change in ownership of a radio licence.

While we believe it is important for the Bill to create a market environment which enables UK media companies to invest and compete on the global stage, we are concerned that this should not be achieved at the expense of one of our major creative and commercial successes; that is, the British music industry. The Government's proposals on local radio ownership could create a situation where in effect only three people, two in commercial radio and one at the BBC, will act as gatekeepers between music creators and their audiences.

We believe, therefore, that in the interests of creative growth and consumer choice, Ofcom should carry out an impact assessment on music diversity when a relevant change in ownership is proposed. Given the important interrelationship between radio and music, we are keen to see this measure specified on the face of the Bill rather than relying on the Government's proposal that reference will be made to music diversity in the accompanying guidelines. While other provisions in this legislation provide Ofcom with the ability to carry out impact assessments, it seems sensible for a review of musical diversity to be specified in this clause.

Important aspects of independent commercial radio stations are their programming formats. These are agreed when a licence is issued and account for the output a station provides when it applied for its licence. For example, they indicate how much output will be speech and/or music and what kind of music will be broadcast. In theory, a station currently may not deviate from its format without the consent of the Radio Authority. Station formats are intended to prevent a licensee from substantially changing the character of the service offered without the approval of the Radio Authority.

Already there exists a phenomenon known as "format creep". The Radio Authority itself acknowledges that a new owner already operating other radio stations might wish either to highlight or to underplay elements of a format in order to fit the station into its brand for the future. From a musical point of view, stations with supposedly different formats could then start to sound alike if their play-lists began to emphasise the more middle-ground elements of their format. Surely the institution charged with monitoring such franchise holders must be given the remit to assess the impact of any proposed changes in ownership, together with the power to employ clear sanctions when franchise conditions are broken.

I turn now to Amendments Nos. 251 and 252. The first of the amendments seeks to broaden the scope in this clause from "programmes" to "programmes and music". This would serve to ensure that music is taken into account when Ofcom makes an assessment of an independent radio licensee's departure from the character of its service. The effect would be that Ofcom would be legally required to consider music in its deliberations rather than relying only on the apparent assumption that it will be considered in its deliberations.

Amendment No. 252 relates to taking into account that the existing range of programmes and music is calculated, appealing to a variety of tastes and interests. This would mean that the licence review would depend on meeting a requirement to broadcast music catering for a range of tastes and interests matching local audience requirements.

During a debate in another place, the Government stated in relation to this clause that they expect Ofcom to consider the implications for music. The Minister said: It would be impossible for Ofcom to consider the effect of a change in the range of programmes without also considering the range of music on offer… the two are virtually synonomous …However, I fully expect that, in considering these issues, Ofcom will consider the implications for music".—Official Report, Commons, 25/2/03; col. 159–60. If the Government already accept that music should be taken into account, surely it should be a regulatory certainty by referring explicitly on the face of the Bill to music. I beg to move.

4 p.m.

Baroness Warnock

I support this group of amendments. The noble Baroness has made clear the essential connection between radio and music. I doubt whether there is anyone who has ever had builders in their house who does not realise that music forms a crucial part of radio output.

We had earlier a brief discussion on the need to preserve the relics of local character in the music output of independent local radio. Even more important is the need to preserve a range of choice and a variety of musical output. Diversity is even more important than locality.

As the Bill now stands, there is a real danger that ILR may become more unified. Although there are safeguards against this, the connection between music output and independent local radio should be spelt out specifically on the face of the Bill. I am not denying that, under the Bill, Ofcom has the ability to consider the changes in musical output that may come about with a change of ownership, but the issue is so important that it should be spelt out on the face of the Bill.

The Committee may well think that the music output of commercial radio is not great anyway and that it does not very much matter if it becomes more uniform—that it will be uniformly horrible—but that would be a grave mistake. At the moment, there is a diversity of musical output on ILR. Anyone who has experienced local and commercial radio stations in the United States—owned by giants in the field such as Clear Channel—will recognise that the American model is very different from our own. We need genuine certainty written into the Bill that we will not go in that direction. It must surely be an explicit part of Ofcom's regulation of radio to ensure that we are not subjected to the kind of undifferentiated, blanket Muzak heard on American radio.

As we are dealing with commercial radio, profitability of course has to form a large part of our considerations. But profitability should be balanced by a concern for public service in its broadest sense as regards music. I take it that to preserve this balance is Ofcom's chief function and I hope, therefore, that somewhere on the face of the Bill this may be spelled out with regard to music.

Viscount Falkland

I speak to the amendments to which my noble friend Lord McNally has put his name. I freely confess, as this is clearly a probing amendment, that we on these Benches recognise the complexity behind the amendments in terms of predicting the future. After all, music is one of this country's major cultural exports. It accounts for about £5 billion worth of business, and the local commercial radio industry accounts for half a billion pounds a year.

I agree with the Commercial Radio Companies Association. To use the rather colourful phrasing in its brief: No sensible owner will cannibalise listeners to his existing services by creating services that replicate each other". That is probably right. In this country, popular music in particular has a certain amount of sophistication in the way that it is marketed and exploited. However, one notices and takes seriously that, where deregulation has occurred, particularly in Australia, Scandinavia and New Zealand, there is evidence that the supposed diversity has in fact resulted in what one could interpret as just the opposite happening.

It is not a straightforward situation. Obviously, our main concern—and there is no difference between any of us on this—is to support the British industry and its diversity. Whether the Bill will prejudice that worries us all. We hope that whichever Minister replies to the amendment will put the weight of her, or his, opinion into the debate, but it is a difficult one.

We support the concerns expressed in the amendments. Whatever the Minister intends to do about them, we will look at this subject very carefully, because it is vital to get it right.

Lord Gordon of Strathblane

While I have sympathy with the idea of preserving musical diversity, the sight of the noble Earl, Lord Ferrers, in his place reminds me of the difficulty of defining it. I was not in this House, but was clearly interested in its deliberations, when the provisions were going through about the creation of independent national radio. There was a very convoluted attempt to define what was not popular music. I recall the noble Earl's immortal words that as far as he was concerned, it was thump, thump, thump. That was much more graphic than the 14 or so lines used at the time to describe it.

Popular music is difficult to define. The danger of creep does not arise at the extremes. There is no danger of a station which has won its licence on a promise to provide classical music switching to pop, or jazz switching to classical. However, I concede that there is a danger of creep at the woolly centre—what, in America, they called, when they had format regulation, "adult contemporary". In America, the packaging is everything. They have soft adult contemporary, rock adult contemporary, almost mint-flavoured adult contemporary. The danger is that nobody can really define what it is. It covers a huge soft centre.

I want to cheat slightly in this amendment. The true way to preserve diversity of musical output is to allow greater freedom of ownership. The same owner will deliberately choose much more diverse music across a range of services. It is only when too many separate owners are permitted to compete in the one market that they all zero in, subconsciously or not, on the fluffy centre, which we are trying to prevent them from doing.

Lord Puttnam

I shall briefly speak in support of the amendment. Here again, we have deregulation threatening to lead to consolidation and consolidation inevitably to conformity. Like other Members of the Committee, I have been approached by an enormous range of people from the music industry, who are very concerned at the spectre of change in this sector and believe that it will be negative. It is an important industrial or economic sector, and they are not silly or irrelevant people. They do not believe that they have been listened to or that the Government have thus far fully taken account of their concerns. It would do them and the Government a great deal of good to listen to those concerns between now and Report stage.

This is a real issue, which will not go away—indeed, I suspect that it will rumble on. The Government have been generous in taking account of what is seen as the Clear Channel threat, and they are right to do so. However, there is a concern in the music industry, and I am delighted that the noble Baroness, Lady Buscombe, has raised the matter.

Lord Colwyn

I also support the theory of this amendment. Speaking as a musician, I believe that it is important that there are safeguards for music creativity. Radio operators should not be able to walk away from their licence obligations relating to music programming.

The noble Lord, Lord Gordon, mentioned jazz and Jazz FM, of which I was a director. I parted company with that station on this very issue. However, speaking as a chairman of a company that is applying for a licence, I believe that all radio stations should and must abide by the format setting out the type of music that they must broadcast—a format that, in theory, cannot be changed without the regulator's consent.

This amendment would duplicate the powers that Ofcom already has in Clause 349, which, as I read it, covers the aims of the amendment but perhaps in more detail. I look forward to what the Minister has to say on that.

Lord Brooke of Sutton Mandeville

The noble Baroness, Lady Warnock, referred to Clear Channel. I shall read one quotation from the chief executive of that company. In line with the remarks of the noble Lord, Lord Gordon, I give him the benefit of the doubt.

The chief executive said on 2nd March in Sunday Business, If anyone said 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 customers' products". I would give the chief executive the benefit of doubt on that remark, having not seen the total context of the article in which he wrote it. I would assume that, if he was seeking to sell their customers' products, he would be as sensitive and sensible as the noble Lord, Lord Gordon, suggested. However, the fact remains that one cannot be certain that that is so, and that it might not be so, as the noble Lord, Lord Puttnam, said a moment ago when he spoke of people's continuing anxiety.

For myself, I find a most agreeable interaction between the personality of the advertisers and the particular music with which they seek to sell their products—although I acknowledge that they do not choose the music themselves. When I was a postgraduate student at the Harvard Business School, my roommate and I built an entire world around the Boston classical music station, which advertised such things as hi-fis, oriental carpets and fine wines. We created a private world of our own from those particular advertisers.

There is the risk, as the number of providers decreases, that the choice and diversity will diminish. I would err at this juncture on the side of caution and, in that respect, I support my noble friend's amendment.

4.15 p.m.

Lord Evans of Temple Guiting

As has been explained, Amendment No. 174 would require Ofcom to review the possible impact on, musical diversity and local character", of changes in control of local radio licences.

We entirely understand and sympathise with the thinking behind the amendment. However, under Clause 348, Ofcom already has a duty to conduct a review when local licences change hands, and can make licence changes where it believes that there will be a deleterious effect in respect of the character of the station, the quality and range of programmes, or the localness of the station.

I entirely agree that it is important that Ofcom takes into account the effect of any changes on the range of music output of a station. I am not persuaded, however, that we need to add the words "musical diversity" to the Bill to achieve that. The vast majority of local radio stations' output is music. It is therefore very difficult to see how Ofcom could consider the effect of a change in the character of the station or the quality and range of programmes without considering the effect on diversity of music.

I would also suggest that the amendment does not fully take into account the central role of formats in protecting musical diversity. Formats are the first and most important defence of diversity of all kinds, particularly in music. The noble Baroness, Lady Buscombe, raises the spectre of format creep. We recognise that that is a problem and that formats are deliberately light touch. The purpose of the new "localness" duty in Clause 307 is designed to address that by allowing Ofcom to flesh-out the formats.

All local and regional radio stations have a format which is part of their licence and sets out clearly and concisely the sort of music that the station will play. The formats—such as that for Classic FM—are available for inspection on the Radio Authority's website. To take another example, the format for Plymouth Sound states in part that, music programming will be current chart hits, new releases or hits up to 10 years old. Up to 25 per cent may be hits over 10 years old". The conditions are very specific. To take another example, Kiss FM—

Lord McNally

Hear, hear.

Lord Evans of Temple Guiting

I am sure that, as regular listeners, all noble Lords will be familiar with Kiss FM's format which, comprises, and fully reflects, the musical styles known as House, Garage, Soul, Soul/Jazz. Rap, Reggae, Ragga and Swing together with any developments of these and other related forms of dance music".

Lord McNally

My comment was due to the fact that I have a 13-year-old son. My difficulty is finding a place in the house where I cannot hear Kiss FM.

Lord Evans of Temple Guiting

The noble Lord should be generous and buy him a set of headphones. They do not cost much.

When a station changes hands, the format remains a part of it. In other words, when you buy the station, you buy the format, and the format will continue to ensure musical diversity regardless of who owns the licence. That is the real protection of diversity and the Bill has no plans for changing that basic approach. In short, I believe that the existing provisions on formats, and reviews under Clause 348, do everything required to protect musical diversity.

Clause 306, which Amendments Nos. 251 and 252 seek to amend, sets out the circumstances in which Ofcom can agree to a request for a change in local radio licence conditions. The clause amends powers currently exercised by the Radio Authority under Section 106 of the Broadcasting Act 1990, which Ofcom will inherit in its amended form. I should explain Section 106. It first provides that a licence shall contain conditions to secure that the character of the service is maintained. In practice, such conditions are reflected in the "formats" that I have just spoken about. Then, it allows the regulator to allow a station to depart from the "character" set out in the licence if, but only if, one or more specified criteria are met. One such criterion is that the change would not, narrow the range of programmes", available in the area.

Amendments Nos. 251 and 252 would extend that to the range of programmes, "and music". Again, these amendments raise an important issue to which I am quite sure that Ofcom will be alive. However, let us look at the practical application of Ofcom's powers. Where the owner of a station seeks to make a substantial departure from the existing character of its service by changing the range of music played, that would trigger the controls under Section 106. Ofcom would then need to examine the proposed change and decide whether any of the criteria justifying a departure are met. If it could not avoid looking at the range of music played, and proposed, it is hard to see how a station could reduce substantially the range of music played without also narrowing the range of programmes available in the area.

I also assure the Committee that in practice the Radio Authority does consider changes in music when considering a request to agree to changes in the character of a station, and I believe that Ofcom will do the same. I hope that the noble Baroness will be reassured that the protection for musical diversity that her amendments seek, and which the Government wholeheartedly share, is already present in the Bill as drafted, and that her amendments are unnecessary.

From a technical standpoint, the amendment does not seem fully to take into account the meaning of the term "programme" as set out in the 1990 Act. Section 202 states that, 'programme' includes… in relation to any service… any item included in that service". Obviously music is included in a service and therefore is already included in the definition of a programme. There is no need to add express references to music in this clause. Indeed, I am fearful that adding music here would just raise a groundless doubt as to whether we intended music to be regarded as part of radio programming where the word "programme" is used elsewhere in the legislation.

Lord Bragg

Before my noble friend the Minister sits down, I hope that I may ask a short and simple question. My noble friend was as clear and as persuasive as he always is but I simply do not understand why this matter cannot be dealt with.

There is serious anxiety about the matter within a broadly based community of very well informed people in a huge and profitable industry. We are told that it does not make any difference whether or not the words "musical diversity" are on the face of the Bill. Clearly, it would make a great deal of difference to the people I am discussing. It would be a public reassurance of intent that could be followed through. I am slightly puzzled that it is not possible to include the words on the face of the Bill.

Lord Evans of Temple Guiting

I say to my noble friend Lord Bragg that I share his puzzlement. As the short debate developed it occurred to me that there appeared to be a huge gulf between what we as a government were saying and what Members of the Committee were saying. There may be a mismatch and someone has the position completely wrong. However, I undertake to read Hansard and to reread my speaking notes. If there is a discrepancy, I shall write to the noble Baroness, Lady Buscombe.

Baroness Buscombe

I thank the Minister for his response to this interesting and helpful debate. I join the Minister in advising the noble Lord, Lord McNally, to buy his son some headphones. I bought my three teenage children headphones a long time ago. They are worthwhile and make for a quiet life in more ways than one.

As I say, it is helpful to have this discussion. As the noble Lord, Lord Bragg, just said, there is real concern in the industry about this important matter. As I believe the noble Lord, Lord Bragg, also said, there is no harm in having the words "musical diversity" on the face of the Bill. We believe that they would do a lot of good.

As regards the concern that we are asking for more regulation, that is not the case. The measure would constitute good regulation. I accept what the noble Lord, Lord Gordon of Strathblane, said: namely, that diversity is difficult to define. The noble Lord, Lord Puttnam, was concerned that consolidation in terms of ownership leads to conformity. My noble friend Lord Colwyn was concerned that we should seek to have the right safeguards with regard to musical creativity although he questioned the necessity to include the term that I am discussing on the face of the Bill.

I am grateful to the noble Baroness, Lady Warnock, for her support for the amendments and for what she said in relation to her concern with regard to the risk to musical diversity. I am also grateful to my noble friend Lord Brooke for his contribution.

The matter is clearly of considerable concern in the industry, concern that we endorse and support. However, the Minister agreed to take the matter away. Perhaps the difference is that the Minister is used to reassuring words of comfort from officials when discussing such issues. However, those of us who seek to probe the Government in such matters are concerned to ensure that as little ambiguity as possible is left in the Bill when it passes through the House. For now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 242 agreed to.

Clauses 243 to 257 agreed to.

[Amendment No. 175 not moved.]

Clause 258 [Access radio]:

[Amendments Nos. 176 and 177 not moved.]

Clause 258 agreed to.

Clause 259 agreed to.

Clause 260 [OFCOM reports on the fulfilment of the public service remit]:

Baroness O'Neill of Bengarve

moved Amendment No. 178: Page 230, line 17, leave out "five" and insert "two The noble Baroness said: In moving Amendment No. 178 tabled by my noble friend Lady Howe of Idlicote, who is unable to be present today, I shall speak also to her other amendments in the group. We are all aware of the importance of Clause 260, and of the terrible warning that public service broadcasting in the United States provides for us of the possibilities should we get the clause wrong. I am all too aware that there are many considerable experts on the issue in the Committee, but one must not be daunted by that thought.

Amendment No. 178 is intended as a probing amendment. Clause 260(2) of the Bill sets an upper limit of five years on the frequency with which Ofcom must review and report on broadcasters' contributions to their public service broadcasting remit. The White Paper proposed an interval of three years. The scrutiny committee of the noble Lord, Lord Puttnam, preferred a two-year interval. Amendment No. 179, tabled by the noble Lord and others, proposes three years. I look forward to hearing his reasons behind the shift from two years to three, and to hearing from the Minister the reasons for preferring up to five years.

Whereas Clause 351 proposes an annual review of the broadcasting market, Ofcom's reviews of the fulfilment of public service broadcasting requirements will be the indispensable means for Parliament, the Secretary of State and the public to judge whether broadcasters are living up to or falling short of those requirements. Those reviews will be central to decision-making on the performance of licensees, and surely they should be sufficiently frequent for performance to be assessed, made public and, if necessary, strengthened more frequently than every five years.

I shall deal with Amendments Nos. 180 and 181. The Bill proposes that public service broadcasters be judged on their performance taken together—that is to say, taken together to determine whether their programming meets the purposes of public service broadcasting. That is an easygoing approach to review, which would allow some broadcasters to coast—indeed to free-ride—on the others' fulfillment of those purposes.

Ofcom's approach should surely be to see that all licensees contribute widely, although diversely, to those purposes—indeed, in many cases, that they compete in providing major genres of programming, listed under Clause 260(6)—rather than to allow some to set aside many or all sorts of programming that contribute to public service broadcasting, in a cosy foreknowledge that others will provide. Hence Amendment No. 180 provides that Ofcom judge whether licensees meet the purposes of public service broadcasting, both individually and taken together; and Amendment No. 181 is consequential. Taken together, these two amendments would require Ofcom to take an overview of each licensee's annual policy statement of their individual commitments to public service broadcasting programmes and of their individual as well as their composite performance.

Amendment No. 183 focuses on ways of fulfilling the purposes of public service broadcasting. Clause 260(6)(e) sets a requirement for programmes on educational matters. I believe that this is too limited—indeed, I suspect that it is wrongly focused. A programme about your Lordships' House debating educational policy would be on educational matters. So would programmes about school life. Both might be fascinating—or perhaps not. But news items about educational issues are not the same as educational programming. The amendment seeks to ensure that educational programmes, through which broadcasters have contributed so much at every level, from preschool through to adult education, remain a central way of fulfilling the purposes of public service broadcasting. I hope that the Minister will agree that the phrase "programmes on educational matters" is inadequate and that the Government may be able to accept this amendment.

Amendment No. 185 proposes a further specification on children's programming to ensure that it includes programmes that provide children growing up in the UK with access to programmes that reflect and enrich their cultural heritages, whether of language, literature, music or history. Today's children will form tomorrow's electorate and need to get their bearings in the world that they actually inhabit. This amendment may be the more important if the Government's intention of permitting foreign ownership is realised. Children need some protection against the homogenisation and simplification that programmes made for international consumption too often inflict on historical and cultural content. I hope that the Government may feel able to accept this strengthening amendment.

Amendment No. 186 is similar in nature to Amendment No. 183. It adds to the purpose of Clause 260(6)(h), which is to provide, a sufficient quantity of programmes that reflect the lives and concerns of different communities and cultural interests and traditions within the United Kingdom, and locally", a specific requirement to include, a sufficient quantity of programmes of a religious nature". This may seem redundant, since Clause 260(6)(f) allows programmes "dealing with religion" to fulfil the purposes of public service broadcasting. But I believe that this way of drafting, like the drafting of the clause on programmes on educational matters, is inadequate. It would allow programming which deals with religion only from a sociological or historical perspective to be substituted for religious broadcasting.

The right reverend Prelate the Bishop of Manchester and the noble Lord, Lord Phillips of Sudbury, have tabled Amendments Nos. 182B and 183A, and my noble friend Lady Howe has put her name to the former. If these amendments were accepted, Amendment No. 186 to which I have just spoken would be redundant. I beg to move.

4.30 p.m.

Lord Puttnam

I rise to speak to Amendment No. 179 and formally to commend Amendments Nos. 187 and 191.

Amendment No. 179 is an interesting amendment. To put it simply, the Joint Committee recommended a two-year reporting period. We were extremely impressed by the Government's statement on page 39 of their response. We felt that we had perhaps been over-zealous and backed off to three years—only to be slightly stunned by the fact that the Government then shifted their position to five years.

We regard a period of five years as wholly unacceptable for two reasons. First, as has been stated many times during this debate, the communications industry is fast moving. Changes seem to occur with amazing speed. Frankly, within five years the picture can change dramatically. We did not feel that a five-year period was legitimate. It must also be remembered that it means that within a nine-year period only one review will have been published—which is patently absurd. I urge the Government to accept the helpful compromise that we came up with—namely, three years—which should be more than acceptable to them.

The Lord Bishop of Manchester

I rise to speak to Amendments Nos. 182B and 183A, which stand in my name. I am most grateful for the wide support of noble Lords who put their names to them.

I emphasise that the amendments are intended not only for Christians, but for all faiths and those of no faith who value the beauty of much religious worship and expression and who see the importance of spirituality and religion although they do not themselves believe.

Clause 260(6) provides the first mention—a very long way into the Bill—about religion in the context of defining a public space in broadcasting. The political philosopher John Gray has been cited in other debates and his comparison is apt in this regard. He said: Public service broadcasting is like the streets and parks of a well-ordered city with its public places for gathering and promenading, its byways for loitering and sauntering no less than for getting speedily from place to place". The provision of television services that explicitly reflect, support and stimulate cultural activity properly forms part of that public space in broadcasting. However, as the clause stands, we can fall into the trap of thinking that public service broadcasting is about promoting culture alone rather than also about reflecting all human experience. Within human experience, religion and spirituality have a unique and important place. In order to reflect that, there must be stronger acknowledgement in the clause of the place of religion and spirituality in public service broadcasting. That is what my amendments seek to address.

Reflecting, supporting and stimulating are key aspects of public service broadcasting but they go beyond cultural activity and include reflecting the life of our faith communities in their worship and in their serving of the wider community. That is not adequately provided for at present in the clause. I am grateful to the noble Baroness, Lady O'Neill, for her comments on the inadequacy of dealing with religion from only a sociological or historical perspective.

Religion and spirituality are an important part of our national identity. Dunblane, September 11th and the Golden Jubilee are just a few of the many occasions in recent years at which public space—both in places of worship and through broadcasting—has provided vast numbers of our population with the opportunity to share the religious and spiritual dimensions of experiences of great joy and deep sorrow.

Similarly, in my former diocese of Wakefield, when eight members of one Muslim family were killed in an arson attack, the public space was provided by the local Church of England parish church, into 'which, later that same day, Muslims, Sikhs, Hindus, Christians and people of no faith at all packed together in a poignant mix for a moving community memorial service, which I helped to lead. It was also given space on regional and local broadcasting services, as was the subsequent funeral, which was attended by some 8,000 Muslims, at which I was invited to speak from a Christian perspective and was honoured to do so.

I mention those matters because this religious and spiritual use of public space helped to do something very important. It released emotion and contained anger to the benefit of the whole community. The public space provided by television for worship and reflecting on the tragedy in a moral context enhanced the capacity of religion and spirituality to be cohesive forces. That is one of the reasons for wanting to strengthen the place of religion and spirituality within the clause, as parts of our national life requiring reflection, support and stimulation by their representation in public service television.

The importance of religion and spirituality was, as noble Lords well know, illustrated by the national census, for which religion was deemed sufficiently important by the Government to have its own section. It was helpful to have the full details of that census made available to noble Lords in published form last week.

I remind Members of the Committee that the census showed that 71 per cent of the population marked themselves as Christians; 3 per cent as Muslims; and 3 per cent as other faiths. In other words, nearly 80 per cent of the nation in the Government's census, and from the privacy of their own homes, deliberately chose to associate themselves with religion and spirituality. And as the newly published report shows, the largest age group responding to the religion question was aged 25 to 49. Niche times and niche broadcasting alone cannot provide for the appetite of this age group and that of the general population for spiritual content in broadcasting. The regulator must support broadcasters who are seeking peak time for high-quality religious and spiritual content.

Of course we know that only 12 per cent attend regularly a place of worship, but the 80 per cent who chose to see themselves as religious or spiritual are people who wander in and out of places of worship—shrines, grave yards—loitering and sauntering in the byways and who connect with religion from time to time. And that is the reality of our nation's life and experience. It must be reflected in the public space in broadcasting. The "Today" programme, in its albeit unscientific survey about who should be England's patron saint, hardly displayed a country indifferent to religion. Listeners voted for St Alban, our first Christian martyr.

I believe that the Government are sincere in their often expressed view that our faith communities have a significant part to play in promoting social inclusion and racial harmony. I very much hope they will also recognise the significant part that religion and spirituality have in this nation's life and that they will give religion and spirituality the prominence in this Bill they objectively and popularly deserve and which my amendments seek.

Baroness Whitaker

I declare an interest as the deputy chair of the Independent Television Commission. I should like to support Amendment No. 179 hut, speaking in a personal capacity, to address Amendment No. 184.

The amendment simply brings the Bill in line with the Human Rights Act 1998 and the International Convention on Civil and Political Rights, to which the UK is, of course, a signatory. The Human Rights Act, incorporating Article 9 of the European Convention, deals with the right to freedom of religion or belief, and so does Article 18 of the international convention, in almost identical wording. The words "or belief" have been glossed by the authoritative United Nations Human Rights Committee as protecting, theistic, non-theistic and atheistic beliefs as well as the right not to profess any religion or belief".

Case law has confirmed this interpretation. In that spirit, the EU directive on religious discrimination in employment, which the UK had adopted, says "religion or belief" and the UK's own implementing regulations repeat it in their very title—the Employment Equality (Religion or Belief) Regulations 2003.

So perhaps it is an oversight which left out "or belief" among the subjects for programmes which Ofcom needs to check are included in the public service broadcasters' remit, along with religion, science, social issues and international specialist matters, all of which it seems to me to be proper to specify. If it is an oversight, it ought to be put right as it sends out the message that the only context for belief, moral principles or ethical systems is religion.

I am grateful to my noble friend for her letter to me of 16th April on the subject. I understand its view, no doubt close to that of the parliamentary draftsmen, that "religion" is understood to mean the whole range of belief; that is, including non-religious belief. But law is used by other than lawyers. It is read and used by all sorts of non-legal people. I cherish the high ambition that law should be understood by ordinary people, by whom "religion" will be construed as religion and not as non-religion. To make it clear to regulators. to broadcasters and to those who call them to account, that our society recognises that there are other bases for morality than revealed religion, the Bill needs those two extra words.

Unless "or belief" is explicit, Ofcom has little encouragement, and broadcasters even less, to respect the perspective of that 15 per cent of people—nearly 1 million—who said in the 2001 census that they had no religion; and even that is a much smaller figure than the British Social Attitudes' 39.5 per cent "with no religion", or than the much larger proportion of young people. So I fully understand the views of the right reverend Prelate. If we leave it out, there is no status given to the longstanding western agnostic tradition. I shall not weary noble Lords by giving the famous names, but they will know that from Democritus to David Hume to many of our most distinguished contemporary scientists and philosophers we have a culture which ought not to be ignored. It would be simple to put this right—two words.

Lord Phillips of Sudbury

If the noble Baroness, Lady Whitaker, is correct in her definition that agnosticism is not within the scope of the word "spirituality", then I accept entirely her amendment. It is certainly not the intention of those who have tabled the amendment—of whom I am one—for this to become some kind of evangelical Trojan horse, let alone an evangelical provision for Christians.

Clause 260, which deals with the public service remit of Ofcom and broadcasters, is not judgmental; nor is the amendment. Clause 260 deals with the world as it is. Perhaps I could draw the Committee's attention to Clause 260(4)(c) which describes the purposes of public service broadcasting as, meeting the needs and satisfying the interests of the available audiences". That is a pragmatic and not an ideological test. It is no more relevant to look at the deeds and misdeeds of those who have acted in the name of religion with regard to this clause or the amendment than it would be vis-à-vis culture or science, which are the two other matters dealt with by the clause.

Perhaps I may say, en passant, that it is more than a pity that the White Paper, which was a prelude to the Bill, referred to the potential of religion for stirring up hatred. The potential of politics is no less vitriolic. It is quite improper for that to be in the White Paper. I emphasise that it is not the intention of those who have tabled the amendment to ask for the Committee's views on whether Christianity is the true faith or something less.

As clarified by the right reverend Prelate, there is probably no single interest group in this country as large as those of spiritual and faith communities. I still find it astonishing that 80 per cent should in the latest census have described themselves thus. Therefore, if the Bill is indeed to reflect "needs and interests", in this subsection in particular, we believe that the amendment is necessary.

Some may think it understandable that 80 per cent of the population describe themselves as the right reverend Prelate stated, given the values and ideals at the heart of the great religions, which undoubtedly foster and project values that are common to our culture and are traditional to all faiths—the values of truth, generosity, public service, human dignity and love—and that the present age may be thought to be saturated if not dominated by commercialism and materialism. The Bill is a deeply commercial Bill. That is why it is important that in the hierarchy of significance of the clause, religion should have a place alongside culture. We have couched the amendment in the same sort of language used to describe Ofcom's duties in respect of culture.

On a matter of drafting, the amendment means that the reference to religion in the subsection would not be subject to the qualifying phrase that currently applies to it and several subsidiary subsections: "as appears to Ofcom". It places it a step higher in the hierarchy of the clause.

Baroness Jay of Paddington

I support the amendment tabled by my noble friend Lord Puttnam, Amendment No. 179. I realise that in doing so I am not following on from the noble Lord, Lord Phillips. I must say that the grouping owes more to the dexterity of the business managers than to the intellectual or policy coherence of its subject matter, but that is the sort of issue that one raises outside the Chamber.

Turning to the amendment tabled by my noble friend. I had hoped that the compromise, if one can call it that, at which his Joint Committee arrived, in proposing a three-year period for the reviews of public service broadcasting, would be attractive to the Government. Like many others, I felt that those periodic reviews were probably a good bulwark against the possible encroachment of programming inconsistent with public service values if ownership of particular channels changed hands. I am specifically thinking of our later debates about the ownership of Channel 5.

There was comfort for those of us who understood from various speeches and publications by members of the Government that the possibility of revising the public service commitment of any channel was one of the shots that remained in the locker for those concerned about any change of ownership. Realistically, that can happen only if the review takes place regularly and influence is maintained consistently, so that people can regularly dip into the public service commitment and remit of individual channels.

Three years seems almost too long, but having listened to the noble Baroness, Lady O'Neill, I understand that she proposed two years but my noble friend Lord Puttnam felt that some kind of agreement had been reached following the Joint Committee's report. I support Amendment No. 179 in that spirit. I also understand that the Secretary of State for Culture, Media and Sport said in evidence to the Joint Committee that there needed to be a clear distlnction between the overall periodic reviews by Ofcom of public service in general and the reviews of specific programming in the public service remit of individual channels in the commercial television sector. If the Government understand that there will be that disparity and that individual programme reviews for individual channels will occur much more regularly than every five years, many of my concerns will be assuaged.

In the meantime, the points made by my noble friend in speaking to Amendment No. 179 have yet to be properly answered.

Lord Bragg

I support the notion of a three-year review proposed by my noble friend Lord Puttnam. It is exactly the right period. I know from reviews that we have had in the television industry that a two-year review gives you enough time only to get the system going before you must start to fuss about whether it will stay in place, whether you should reclaim ground or keep claiming it. Three years allows you to set up a system, to see how it works and to spend the next year having it properly examined. It is precisely the right number of years; we have that right.

There is an immense amount to say following the speech of the right reverend Prelate the Bishop of Manchester, but I will not try to express it all at present. I wholly support what the right reverend Prelate said. It is of immense importance that the Bill is strengthened in this way. I take into account the remarks of my noble friend Lady Whitaker also. Good public service broadcasting should be something to aspire to. It is extremely difficult to make such programmes. In my experience in ITV, with the best backing that one could imagine in a current terrestrial system in this country, we still find it extremely difficult to make programmes that encompass the values mentioned, to demonstrate them on screen and to bring in the audiences that we know are out there to receive them, as noble Lords have proved. But, unless the Bill reinforces that aspiration, people trying to make those types of programmes will have less of a chance to do so. I endorse what has been said and hope that noble Lords are successful in pressing the amendment.

Lord Brooke of Sutton Mandeville

I shall speak to Amendments Nos. 182B and 183A, which were tabled by the right reverend Prelate the Bishop of Manchester, and to which I have added my name. I shall give an example that Members of the Committee may think extreme, but it is one with which I am particularly familiar. I refer in the first instance to Northern Ireland, which, I acknowledge, is not typical of the Kingdom as a whole. The distinctions between the two sides of the community in Northern Ireland were not religious; they were tribal, cultural and political. Religion was simply a mantle draped over those tribal, cultural and political differences. That mantle was sufficiently important that church-going in Northern Ireland is on a scale much closer to America than to Great Britain.

The next example that I shall give is, I acknowledge, also extreme. When institutions and communities break down, as some did in Northern Ireland during the troubles over the past 30 years, the Government look not to cultural or sporting bodies but to the Churches as the one set of institutions with whom they can interact. I can conceive of exactly the same example occurring in cities in the northern part of Great Britain where there are large Muslim communities in similar circumstances.

The medieval tradition of church towers and steeples was intended to emphasise profile. Churchill wrote a pessimistic passage in the years after the First World War, when the Troubles in Ireland, to which the Black and Tans were the response, and then the civil war were tearing the island apart. He referred to, the dreary steeples of Fermanagh and Tyrone emerging once again". If I may coin a phrase, we should thank God that they—and the distinctive architecture of other faiths—retain a centrality in our own society.

I wish to make a personal observation. One of the passages that made the deepest impression on me when I was an adolescent was from the novel The Tiger in the Smoke by Margery Allingham. The villain finds his way into a darkened church where a defenceless vicar is standing in the pulpit. There is a dialogue of seminal importance between them similar to that between Warwick the Kingmaker and the Bishop of Beauvais in St Joan. That sense of drama conferred by the church—and indeed by the priest in the pulpit—made a deep impression on me as a young man.

5 p.m.

Lord McNally

I shall speak briefly on the two amendments in this group to which I have attached my name. Amendment No. 182 is simply an attempt to take out of the Bill what we consider to be slightly weasel words; namely, taking them all together over the period as a whole". We believe that Ofcom should be enabled in its periodic reports to judge the relative contributions of the whole spectrum and, perhaps, each channel. There is a danger of ghettoising public service commitments. Nothing in the Bill should encourage that tendency.

Amendment No. 188 takes us back to radio. We have discussed radio, but the intention behind the amendment is to ensure that the public service broadcaster—the Plus 1 at the local level—actually provides a safeguard in the provision of musical diversity.

Baroness Buscombe

I shall speak briefly to some of the amendments in this group. I support Amendment No. 179 standing in the name of the noble Lord, Lord Puttnam. I do not understand Amendment No. 185, which is tabled in the name of the noble Baroness, Lady Howe. Looking at the Bill and the wording of the amendment, I simply do not understand the intention behind the words, a significant proportion [of programmes] should be intended for audiences in the United Kingdom". I appreciate that the noble Baroness is not in her place today, but is she saying that foreign-made films for our children are somehow inferior to those made in this country for our young people? If that is so, I entirely disagree with the noble Baroness. Many films made in other countries that were originally intended, if one can put it that way, for children and young people are excellent. When I was young, I sincerely enjoyed watching a number of foreign films that originated from Australia and America—for example, "Lassie" and "Tin Tin", though the latter originated in France. Indeed, there are many more.

I have to say that my young teenage children now watch very few programmes that are made in this country for children and young people. That echoes the experiences of all their friends and of the young people to whom I speak frequently. They are not watching many English-made programmes; they enjoy programmes with a global outlook that happen to be made in other countries—

Baroness O'Neill of Bengarve

The amendment is not about where programmes are made; it is about the audience for whom they are intended. I believe that my noble friend Lady Howe is concerned about the cultural specificity of programmes. She seeks simply to ensure that at least some programming for children is intended for them, not for a lowest common denominator indeterminate audience.

Baroness Buscombe

I am grateful to the noble Baroness, Lady O'Neill, for her explanation of the amendment. However, given the kind of content of many programmes made for children and young people at present, I question whether that would be an enormous hill to climb. That is why so many children are not watching programmes originally intended for young UK audiences. In the view of young people, such programmes are not up to scratch.

I support Amendments Nos. 182B and 183A tabled in the name of the right reverend Prelate the Bishop of Manchester. However, I am concerned about the wording of Amendment No. 187. I believe that the word "contribution" is confusing. The word usually refers to a financial contribution. If the intention is the use the word in the sense proposed, I should point out that Ofcom is already under a duty to consider any financial contribution made by broadcasters other than public service broadcasters. Subsection (7)(b) directs Ofcom to consider, the sources of income available to

public service television broadcasters for meeting the costs of fulfilling the purposes of public service television broadcasting.

Therefore, I suspect that the word "contribution" refers to a contribution other than a financial one. If that is correct, the amendment could be re-worded so as to refer to the television services provided by broadcasters other than public service broadcasters that fulfil the purposes of public service television broadcasting. That would make it clear that Ofcom had to have regard to other television services, rather than the contribution made by broadcasters other than public service broadcasters.

Amendment No. 191 will remove subsection (2) from Clause 263, which deals with statements of programme policy that contain proposals for significant change. Subsection (2) requires the provider to, consult Ofcom before preparing the statement; and to take account …of any opinions expressed…by OFCOM".

The amendment will remove that requirement and, instead, merely require the provider of the channel to have regard to the annual report of Ofcom, prepared pursuant to new subsection (3). As the provider must merely have regard to that report, the provider is entitled to give little weight to what is in it. That would give the provider greater freedom from Ofcom. We need convincing that that is appropriate.

The amendment is, to a certain extent, otiose. Under Clause 262, the provider of the channel, in preparing a statement of programme policy must have regard to guidance given by Ofcom, take account of reports published by Ofcom and must take special account of the most recent such reports. It is difficult to see what the amendment adds to that requirement.

Baroness Blackstone

The amendments relate to the third tier of the new broadcasting regulatory regime. The Government's basic objective here has been to establish a clear framework of self-regulation throughout the whole public service broadcasting sector, while providing for speedy and effective Ofcom intervention against the licensed broadcasters in the event of a decline in the quality of their output. In framing the legislation, we tried hard to strike the right balance between those two considerations, and my main concern about the amendments is that they risk upsetting that balance.

I shall start with Amendments Nos. 178 and 179, although I am afraid that I shall disappoint several of my noble friends. We are not persuaded of the case for modifying the timescale of Ofcom's reporting cycle on the lines suggested by either of the amendments.

Lord Puttnam

What was the purpose of stipulating three years in the original White Paper? I presume that, at that point, three years was regarded as an adequate and correct timescale. We are returning to the Government's original suggestion.

Baroness Blackstone

It would be helpful if I could explain why we reject the amendments before I am interrupted. The reasons may become clear to my noble friend.

I understand the concerns that Ofcom should be able to keep abreast of any problems or emerging challenges for the public service broadcasters. The Government's original view, as reflected in the draft Bill, was that three years was the right interval between Ofcom's reviews of the public service sector. However, the pre-legislative scrutiny committee chaired by my noble friend Lord Puttnam recommended more frequent reviews, and that prompted us to reconsider the matter.

In the light of that reconsideration, the Bill as it now stands provides for two separate Ofcom review cycles: first, a factual and statistical review of the entire radio and television sector in the UK, to be carried out annually; and, secondly, a review of public service broadcasting, to be undertaken at least once every five years. That dual approach will ensure that the general state of the broadcasting industry as a whole can be monitored regularly, leaving Ofcom to undertake its heavyweight, in-depth reviews of the public service sector alone at the more extended interval of five years.

Of course, there will be absolutely nothing to prevent Ofcom undertaking its public service reviews at less than five-year intervals if it seems right to do so. Ofcom will be able to initiate enforcement action at any time should any licensed broadcaster fail to fulfil its individual public service remit or make an adequate contribution to the overall remit.

As I made clear at the outset, the third tier provisions are intended to constitute an essentially self-regulatory framework, under which Ofcom will exercise a distinctly lighter touch than in the case of the first and second tier requirements. Given this core principle we took the view that Ofcom's review and reporting functions would be best framed in terms of the public service broadcasting sector as a whole, rather than the contribution of each broadcaster individually.

In that way, we make clear that Ofcom's primary role in this context is a strategic one which requires it to look across the whole range of public service broadcasting rather than, as Amendments Nos. 180, 181 and 182 would have it, sitting in close judgment on the broadcasters individually and second-guessing all their decisions. Our approach also underlines the fact that the contribution of each broadcaster to the fulfilment of the overall remit will not be uniform but will properly reflect the spectrum of obligations across the public service sector, ranging from the BBC at one end to Channel 5 at the other.

None the less, Ofcom will, as I have said already, have a clear enforcement role in relation to the individual licensed broadcasters. We will be able to take firm action in the event of self-regulation being seen not to work.

Most of the other amendments in this group are all in their different ways concerned with the specified requirements of public service broadcasting—in other words, the various programme types—which are listed in Clause 260 and which underpin Ofcom's review and reporting function. Under Clause 260, as drafted, one of the specified requirements is the provision of what Ofcom considers to be, a suitable quantity and range of programmes on educational matters". Amendment No. 183 would extend that to include programmes, of an educational nature and educative value". The underlying concern appears to be that the current wording may result only in programmes which deal with issues related to education, rather than programmes which are in themselves of educational value to the audience.

An educative function is at the very heart of public service broadcasting and it is important that the programming requirements set out in Clause 260 should properly reflect that. We have taken the view that the phrase "educational matters" is a broad term which broadcasters will understand to cover the full range of programmes of educational value. Nor, of course, is this the only item on the list of requirements which relates to the educational dimension. The first entry on the list in Clause 260(6) includes specific reference to "the provision of education". That said, I have registered the concern that the educational role of public service broadcasting may not perhaps be adequately captured by the term "educational matters". I am therefore willing to take this issue away and to look at it again.

A further item in the list of requirements is the provision of what Ofcom considers to be a suitable quantity of high quality and original programmes for children and young people. Amendment No. 185 would specify that a significant proportion of such programming should be intended for audiences in the UK. Such a requirement seems quite unnecessary. In our view, the requirement that programmes for children and young people must be of high quality and original will in itself be sufficient to ensure that such programmes appeal to the tastes and interests of relevant audiences within the UK. In that sense, I accept some of what the noble Baroness, Lady Buscombe, was saying.

I should point out that Channel 4 is unusual in this regard. The Bill sets obligations for Channel 4 to provide schools programmes which meet the needs of schools throughout the UK and Ofcom will establish a minimum number of hours to be allocated to schools programmes as part of the licence conditions. Channel 4 will also be required by its licence conditions to consult people with an interest in schools and schools programming.

5.15 p.m.

Lord McNally

I am grateful to the noble Baroness for giving way. The noble Baronesses on both Front Benches have demonstrated a degree of complacency about children's programming that is not reflected in the wider concern outside. There is a real danger that our children will watch Disney, Fox and little else. While I do not dispute that they will want to watch those channels, given that we worry so much about promoting chocolate, we should beware of the form of obesity to be found in the pap that is served up to children on the television, although undoubtedly it is popular.

I know that the noble Baronesses will deny any complacency, but the real concern generally being expressed about children's television is not reflected in the responses.

Baroness Buscombe

I must intervene to say that I hope that I did not infer in any way that I am complacent about children's programming as it is. I wish that it was of a higher quality. We need programmes that reflect a greater strength of culture and interest in order to attract larger audiences among our children and young people.

As a mother I feel a good deal of concern with regard to the types of programming for children on our television stations today. It is an issue that I would love to debate at greater length on another occasion. It is a matter of deep concern to many people. However, it is important to emphasise that our children are watching certain programmes which happen to be made in other countries. They do so because some of those programmes are of high quality. I make no bones about it. My children watch many programmes on, for example, the History Channel and the Discovery Channel, so I am not referring only to comedy programmes, soap operas and so forth. However, I want to point out that the cultural programmes my children watch are, on the whole, foreign made.

Baroness Blackstone

The noble Baroness opposite has denied complacency and this noble Baroness shall do so as well.

We understand the concern expressed by the noble Baroness, Lady O'Neill, that potential American owners of licensed public service broadcasters might produce programmes in this country whose true target audience is in the United States. We do not agree that this is a likely development. Even if such a change of ownership took place, the production of programmes in this country which did not appeal to audiences in the UK simply would not make common or commercial sense.

Moreover, children's television is a qualitative matter and as such is part of the third tier of regulation, as it should be. Therefore it would not be appropriate to establish anything along the lines of a quota, such as the proposed "significant proportion", within the context of this particular clause.

The provision for children's television in the public service remit is unique among the list of requirements in that it specifies that programming should be both high quality and original. These requirements highlight the unique importance of children's television within the public service remit, as all public service broadcasters are required to maintain high standards of content and quality, and each will have to meet established quotas for original programming. So we can see no case for introducing the distinction implied by the amendment.

I shall discuss Amendments Nos. 182B, 183A, 184 and 186 together. Having listened carefully to the arguments put forward in favour of these amendments, we have concluded that there are issues here which merit further thought. I propose therefore to take them away and reflect on the concerns which have been voiced and consider how far we might be able to meet them by way of an amended clause. It is unlikely that we shall be able to accept the precise amendments as tabled, but we shall look very hard at the scope for amending the current reference to religion in Clause 260 with a view to reflecting the concerns that have been expressed.

As to Amendment No. 188, we support the view that music should be a prominent part of public service broadcasting. The public service remit as it stands will achieve this. Music is universally recognised as an important aspect of cultural activity which will have to he included in programming. We expect broadcasters to understand "music" in this context to encompass not only broadcasts of live performances and recorded music, but also programmes dealing with musical subjects, composers, performers, and so on. We cannot see a case for the additional wording suggested by the amendment.

Turning to Amendment No. 187, I acknowledge the concern that there may well be commercial broadcasters providing services which fall within the remit set out in the Bill. None the less, it would not make sense to extend the scope of Ofcom's reviews beyond those broadcasters who are under formal public service obligations. To do so, as we said in our response to the pre-legislative scrutiny committee, could be a source of confusion and would hardly be consistent with the role of Ofcom's reviews as a key building block of the third tier regime.

I remind the Committee that Ofcom's annual factual and statistical reviews of radio and television broadcasting under Clause 351 will encompass all broadcasters, both television and radio. In our view that is sufficient to ensure that Ofcom will be able to monitor developments over the broadcasting industry as a whole.

Amendment No. 191 would change the procedure relating to the annual cycle of statements of programme policy. As the Government made clear in their response to the pre-legislative scrutiny committee, the requirement on broadcasters to publish an annual programme policy statement, and to consult Ofcom only where the statement involves a significant change from previous years, constitutes an integral aspect of our approach to the third tier regime, which I outlined at the beginning of my speech.

While we expect Ofcom to take account of the licensed broadcasters' performances annually, we believe that a formal annual reporting process on the lines proposed in the amendment would be inconsistent with the principle of self-regulation. Our view is that the existing provision for statements of programme policy strikes a sensible balance. Accordingly, I hope that the noble Baroness will withdraw her amendment.

Baroness Jay of Paddington

Before the noble Baroness speaks to her amendment, perhaps I may ask my noble friend a question in regard to Amendment No. 179. I am afraid it may be that I am being somewhat obtuse, but I am still not entirely clear about the dual approach to the public service revision by Ofcom.

Let me give a practical example. If Ofcom decides that a channel has evaded its public service commitments and is anxious to undertake what the noble Baroness described as enforcement procedures, will it be possible to do so under what the Minister described as the statistical review, which takes place every year? Can it be clone only on an ad hoc basis when Ofcom decides that a breach has occurred? Or does it have to wait for the five-year review? I am unclear about the distinction between the different reviews and where any interest by Ofcom would have purchase in getting a channel to revise its programming.

Baroness Blackstone

As I understand it, Ofcom can intervene and enforce change whenever it believes there is a case for doing so. It does not have to wait for the five-year review.

Baroness O'Neill of Bengarve

I shall withdraw the amendment. Nevertheless, the frequency of the review is an important issue. We have not heard reasons why the combination of the annual review, which is quite restricted in scope, with a permitted five-year period is adequate. The Committee may feel able to support the amendment of the noble Lord, Lord Puttnam. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Puttnam

had given notice of his intention to move Amendment No. 179. Page 230, line 17, leave out "five" and insert "three

The noble Lord said: It is late, and although I shall not move the amendment, I should like to talk to those on the Front Bench and others, because I am not entirely convinced by their argument.

[Amendment No. 179 not moved.]

[Amendments Nos. 180 to 182 not moved]

Lord Lea of Crondall

moved Amendment No. 182A: Page 231, line 13, at end insert— ( ) that sufficient high quality original drama is broadcast covering a range of issues in a variety of formats; The noble Lord said: Amendment No. 182A deals with high quality drama. Amendments Nos. 184A and 184B are included in this group. My noble friend Lady Turner of Camden will be speaking to them.

The result of the grouping on Clause 260 means that some of these matters have been touched on, but they are all part of Clause 260. Following meetings with Equity and other unions, we have concluded that Clause 260(6)(b), which contains the only reference to drama, can be provided for just by broadcasting soap operas. That is our major worry. There is great concern among people dealing with drama that that will be the result, and we would like to hear the arguments.

Drama is an essential part of public service broadcasting. Whether a single drama or a drama series, the genre contributes to the British understanding of social issues and the UK as a community, as well as providing entertainment. The reliance on drama only as a means to reflect cultural diversity rather than as drama in its own right will detrimentally affect the quality of broadcasting in the United Kingdom.

Drama can be, but is not always, expensive. Without a positive requirement on broadcasters to produce high quality in a world of greater competition, we are concerned that original and innovative drama in a variety of formats is likely to be reduced.

For evidence of what is happening with virtually the same language that we have in Clause 260, let us look at Canada. Since its changes two or three years ago on this sort of formulation, home-grown drama has virtually disappeared. The equivalent clauses have provided what a Canadian colleague called a charter for philistines. We are concerned that this Bill could be a charter for philistines when we add the dangers arising from Channel 5 being snapped up by a big multinational operator which could make that an outlet for its back catalogue. That puts greater weight on Clause 260 to get this right.

There is the worry, the spectre, the scenario, that the 9 p.m. slot could be filled by a film on Channel 5, a game show on ITV, with the BBC, in time, being undermined. The Minister will no doubt give the other side of the argument. We shall listen with great care to what she says. We are left wondering whether the only clinching argument for a programme company putting high quality drama on television would be that it looks good in the annual glossy report and can lead to some self-congratulatory awards.

We want an assurance that the eight hours of drama on Granada, 12 hours of drama on Channel 4, and so on, as provided for in the broadcasting legislation, would continue to be provided and that Ofcom would be in a position to make sure that that was done.

5.30 p.m.

Baroness Turner of Camden

I support the amendment so ably moved by my noble friend Lord Lea. I shall speak also to Amendments Nos. 184A and 184B, which are included in the group.

Since I became partially disabled, I have spent rather more time in front of the television set than I used to. I am a great fan of television drama, but when one is looking for something to watch in the evening, one thinks, "Oh, not more cops and robbers, not more game shows". There is not enough of the good quality drama that we can produce in this country, such as "The Forsyte Saga", "Gathering Storm" and "The Lost Prince", whose names are redolent of quality. I can remember all the way back to "Brideshead Revisited". They were marvellous programmes, and arrangements should be in hand to ensure that such programmes continue to be made and increase in number.

Amendments Nos. 184A and 184B relate to children's programmes. It is clear from the contributions already made this evening that that is a matter of concern to Members of the Committee. The Independent Television Commission is on record as saying that there are signs that children's programming is often the first to suffer from harder times, as the pressure to cut costs in a more competitive environment is likely to lead to disproportionate effects on children's TV. The Bill does not ensure that those vital programmes should be original and sufficiently diverse in content. Without our amendment, or something rather similar, high quality domestic programming will inevitably be replaced by cheaper imported programming, to the great detriment of our children.

I note that the Minister has already taken on board some of the comments that have been made. One hopes that before the Bill leaves this House, we can have some commitment in the text of the Bill to ensure that, like adult consumers, children, who cannot always make informed choices and do not necessarily have access to digital or premium services, for example, will have access to good quality and programmes that are educative and culturally diverse. I hope that the amendments, or something similar to them, will commend themselves to the Government before the Bill leaves this House.

Viscount Falkland

I support strongly the amendment moved by the noble Lord, Lord Lea of Crondall. High quality broadcasting of drama has been a feature not only on television but, before that, on the radio as well. It is an absolute cornerstone of public service broadcasting.

In the past fortnight, I have had dinner here with an independent producer of high quality drama, who is extremely concerned about the effect that the provisions will have on the ability to continue to make the kind of productions that have won awards, and which have been consistent with the quality that we expect from the BBC and high quality broadcasting generally. Assurances from the Minister in response to the amendment will he of great interest to us on these Benches. As other Members of the Committee have said, drama is extremely and increasingly expensive to produce. The drift towards cheaper programming, which is evident today, is likely to carry on apace under the regulation unless proper safeguards are built in. I could not stress more strongly our support for the amendment.

Lord Brooke of Sutton Mandeville

I mean no disrespect to the noble Lord, Lord Lea of Crondall, but he used the term "philistines" as a term of abuse. These are a cultural groups of amendments and I warmly support them, but I have to say to him that recent archaeological evidence demonstrates that the Philistines have had a much worse press down the centuries than they should have done.

Baroness Buscombe

We also strongly support these amendments, the case for which was admirably made by the noble Baroness, Lady Turner. It is tremendously important that we ensure that there is sufficient high-quality original drama being broadcast, not least for the benefit of our children. They want drama as much as everyone else.

Lord Bragg

I should like to add my total support for the amendment. However, I do not think that it is time to despair yet. On ITV1 , for example, in the past few months we have had "Doctor Zhivago" and the "Othello" drama, and the new "Forsyte Saga" is coming back. There is also quality in some of the more popular drama. "William and Mary", for example, is a very high-quality popular drama. However, a good time to consider such an amendment is when we are still ahead of the field in quality drama—to reinforce its place in future schedules. I wholly support the noble Lord, Lord Lea.

Lord Bernstein of Craigweil

I also support the amendment. In doing so I have to declare an interest as I have a pension from Granada Television and hold shares in that company. I am driven to speak because I have great pleasure that "Brideshead Revisited" was quoted as one of the great television dramas. It occurred when I was chairman of the Granada Group, and under the aegis of my colleague Sir Dennis Foreman, who was chairman of Granada Television. Drama is indeed expensive and difficult. It is difficult also to make it relevant to what is going on in society today. It can do no harm to include such provision in the Bill to emphasise its importance.

Baroness Blackstone

It goes without saying that drama programmes should be a core aspect of the public service remit. None the less it does not seem to us that this amendment is necessary. The importance of drama in public service broadcasting is already clearly demonstrated by the fact that the list of specified programme types already refers to drama as one aspect of the UK's cultural activity. To add a further specific reference to drama would not in our view strengthen the Bill.

I should also point out that drama, along with all the other items mentioned in the list of programme types in subsection (6) of Clause 260, is encompassed within the overarching provisions of subsection (4), which specify the "purposes" of public service broadcasting. Those purposes include explicit references both to programmes dealing with a wide range of subject matter and to programmes which embody high general standards with respect to content and quality. In short, therefore, quality of programming and diversity of subject matter are requirements that run across the whole of the third tier regime, each one applying to drama as much as to any other programme type. So we can see no case for the additional requirement proposed by my noble friend.

Amendment No. 182B would require each individual public service broadcaster to provide a suitable quantity of high-quality and original programmes for children and young people. As I said in my response to Amendments Nos. 180, 181 and 182, the third tier provisions will constitute a self-regulatory framework under which Ofcom will exercise a lighter touch than under the first and second tier requirements. We therefore think that Ofcom's review and reporting functions should be directed at the public service broadcasting sector as a whole rather than the contribution of each broadcaster individually. That principle holds for children's and young people's programming as much as for any aspect of the public service remit. Moreover, that approach ensures that the contribution of each broadcaster to fulfilling the remit will reflect the spectrum of obligations across the public service sector, ranging from the BBC at one end to Channel 5 at the other.

I have considered the arguments put forward on Amendment No. 184B. I am extremely supportive of the intention of the amendment to strengthen safeguards on the range of television for children and young people. The Government are therefore willing to take this amendment away, to consider it and to come back on Report with a suitable government amendment. I therefore hope that the noble Lord will withdraw his earlier amendment.

Lord Lea of Crondall

I refer to a matter on which we should like more information before Report stage. Am I in the right, or is the Minister in the right in saying that the measure we are discussing is not necessary? Overseas evidence suggests that the form of words in the Bill is precisely the form of words that allows a coach and horses to be driven through the provision of drama. I refer to the provision of drama by Granada that has been mentioned. At this stage I shall withdraw the amendment but there is every likelihood that—

Lord Puttnam

I thank my noble friend for giving way. Our proceedings are about to finish and I seek to help the Government. We are about to embark on a recess which gives the Government the opportunity to rethink some clauses. When we return, big battles will commence on certain very important clauses. As my noble friend Lord Lea said, those battles will concern evidence-based objections to non-evidence-based assertions.

I bring to the attention of my noble friend the Minister a PIU document of January 2000 which was described by a former Cabinet Secretary as a seminal document. The document concerns evidence-based policy making and has been read by all Ministers. It states that Ministers should routinely demand rigorous analysis to support decisions on all policies and programmes and that senior civil servants should see as a key aspect of their job ensuring a reliable supply of such analysis.

The document refers to a culture in Whitehall that rewards Ministers and senior officials for good analysis and holds them to account when policies are not evidence-based. It further states that Ministers should publish details of the models used by government and the data that support them. There is a requirement to publish a regulatory impact assessment with all new legislation setting out the impacts on business. The RIA must also be produced by departments as a condition of Cabinet endorsement of any policy. These mechanisms stimulate demand for analysis of the impact of policy options. Their force derives in part from the simple requirement that such analysis is carried out and in part from the requirement to make public the results of the analysis.

The next two weeks will be typified by an enormous volume of analysis being brought forward to argue against many of the Government's intentions on cross-media ownership and media ownership generally. I very much hope that the Government will refer to the above mentioned document and, in rebutting or dealing with the arguments that are put forward, will come back continually with their own evidence base, their own impact assessment and the evidence that they have really thought through these very important policy objectives and are not merely relying on a wing and a prayer and assertions.

Lord Lea of Crondall

I am grateful to my noble friend Lord Puttnam for his remarks. I am also grateful for the support of the noble Lord, Lord Bragg.

I am sorry that I have given the Philistines a bad press. If the Minister's only problem is that the measure we are discussing is not necessary, as opposed to its being positively incompatible with the Bill, I have every hope that we shall make progress. The measure constitutes an important guarantee in terms of the provision of high-quality drama on British television in the future. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Bishop of Manchester

had given notice of his intention to move Amendment No. 182B: Page 231, line 18, at end insert— ( ) that religious and spiritual activity in the United Kingdom, and their diversity, are reflected, supported and stimulated by their representation in those services (taken together); The right reverend Prelate said: I thank the Minister for her remarks. I also thank Members of the Committee for their support. I look forward to hearing further from the Government. I shall not move the amendment.

[Amendment No. 182B not moved.]

[Amendments Nos. 183 and 183A not moved.]

Baroness Whitaker

had given notice of her intention to move Amendment No. 184: Page 231, line 31, after "religion" insert "or belief The noble Baroness said: I thank my noble friend for her very constructive response. I have common cause with the right reverend Prelate and the noble Lord, Lord Phillips, and I shall not move my amendment.

[Amendment No. 184 not moved.]

[Amendments Nos. 184A to 188 not moved.]

Clause 260 agreed to.

Lord Evans of Temple Guiting

I beg to move that the House do now resume.

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

House resumed.

House adjourned at fourteen minutes before six o'clock to Monday 2nd June at half-past two o' clock.