§ Mr. Geoffrey Johnson Smithasked the Secretary of State for the Home Department whether he will make a statement about arrangements for adjusting the levy 76W payments of the independent television companies in order to compensate them for the additional costs of the Welsh fourth channel.
§ Mr. WhitelawWhen it was decided, during the passage of the Broadcasting Bill in 1980, to establish a single channel for Welsh language television, it was agreed that the ITV companies should be compensated for the additional costs of the Welsh fourth channel by means of an adjustment to the ITV levy. A means of adjusting the levy exists in section 39(3) of the Broadcasting Act 1981, previously section 16 of the Broadcasting Act 1980, which enables me in deciding whether, and if so by how much, to vary the rate of the additional payments under section 32 of the 1981 Act (i.e. the levy), to have regard to the increased payments to be made by the programme contractors to the IBA in respect of the cost of the fourth channel in Wales. Accordingly I announced on 22 July 1981 that, with the agreement of my right hon. and learned Friend the Chancellor of the Exchequer and after consultation with the IBA, I had decided to lay an order before Parliament which would have the effect that, as from 1 April 1982, the profits of each programme contractor which would not be subject to levy—the "free slice"—would be increased to £650,000, instead of £250,000, or 2.8 per cent. instead of 2 per cent. of advertising receipts, whichever was the greater.
However, closer examination has revealed that to proceed in this way would be inexpedient. This is because the effect of paragraph 5(2) of schedule 4 to the Broadcasting Act 1981 is that such an order, whenever made, splits the accounting periods of most programme contractors into two parts; and because of the uneven incidence of their revenue and expenditure through the year the result would be that certain programme contractors would pay more levy in the year of the adjustment than if no order had been made. There is no way round this difficulty save through legislation; and the Government intend to include appropriate provisions in the Finance Bill to remedy the situation by amending paragraph 5 of schedule 4 to the Act, and related provisions, so that when an order under section 32 is made the companies' accounting periods are not split, but instead the two rates of levy, or free slice, are applied to the companies' profits for their accounting periods in proportion to the periods of time for which they were applicable. The Government's intention will remain unchanged—to increase the amount of the free slice to £650,000 or 2.8 per cent. of advertising receipts, with effect from 1 April 1982.