HC Deb 31 July 1981 vol 9 cc658-9W
Mr. Nicholas Baker

asked the Secretary of State for the Home Department if he is now in a position to report to the House the conclusions of the review of the independent television levy which he announced during the passage of the Broadcasting Bill in 1980; and if he will make a statement.

Mr. Whitelaw

In conjunction with my right hon. and learned Friend the Chancellor of the Exchequer, I have reviewed the basis of the additional payments—the levy—under section 26 of the Independent Broadcasting, Authority Act 1973, as amended. We have considered whether an alternative structure might be devised which would reduce the high marginal rate of payments by the ITV programme contractors to the Exchequer, which the present system—together with corporation tax—produces. I told the House during the Report stage of last Session's Broadcasting Bill—[Vol. 987, c. 324]—that we had rejected a return to a levy based purely on advertising revenue, but that we were considering a system which combined elements of a revenue-based and a profit-based levy.

We have come to the conclusion, after consultation with the IBA, that a change in the structure of the levy at the present time would not be desirable. The independent television system is experiencing major changes with the new franchises which will take effect on 1 January 1982, the introduction of the fourth channel in the United Kingdom and the Welsh fourth channel in the autumn of 1982, and breakfast television in 1983. These changes will have significant financial implications for the ITV programme contractors and are expected to reduce their profits markedly in the next two or three years. The effects of introducing an element of revenue-based levy on the position of particular contractors are difficult to predict with precision at a time of structural change in the system, and we believe that it would be wrong to introduce additional uncertainties over the next two or three years.

My right hon. and learned Friend and I propose to review the basis of the levy, in consultation with the IBA, in two or three years' time when the changes to which I have referred have been absorbed into the system. So that we can identify the earliest opportunity to consider the matter, we shall in the meanwhile be keeping a close watch on the financial position of the ITV programme contractors.