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democracy needs the BBC; I have been reading some things in the newspaper about whether the BBC needs him. To save me phoning his estimable programme "606", which I never miss on a Saturday evening, will he tell us that he will remain firmly in that chair and continue to answer questions from Chelsea supporters, comme moi?

Mr. Mellor: I am happy to reassure the hon. Gentleman that, for want of anything better to do on a Saturday evening, that happy process will continue.

Mr. Maxton: Is that from one Chelsea supporter to another?

Mr. Mellor: To get back on track, as it were; in recent years we have managed to create a climate that is far more favourable to a sensible, objective discussion of those issues than it used to be. It is a recommendation, not a cause for criticism, that there is much common ground throughout the Chamber when we discuss them. In a free, pluralistic society such as ours, there is no merit in the fact that the future of major organisations such as the BBC should be the subject of deep and intense partisan debate.

If the BBC is to preserve its position as a broadcaster that is the recipient of a flow of public resources that no member of the public who owns a television set has any choice but to provide, and which bears harshly on certain members of the community who do not have a great deal of money, the BBC must not retreat into programmes that are thought to be unsuitable for commercial production. It must offer something to everyone; otherwise we are in the ridiculous position of the man in the Putney or Newham or Glasgow council house subsidising the cultural tastes of the dweller in Hampstead--or wherever else the literati and glitterati are supposed to live these days. That argument cannot be sustained.

It is not in the best interests of commercial radio and television that the BBC should privatise services, which then enter into competition for what remain, in radio at least, very limited funds. I am happy to note that the share of the pot taken by commercial radio from advertising is increasing, but the plain fact is that it remains a very limited pot. The last thing that commercial radio needs is a privatised Radio 1--even one with the somewhat decreasing audiences that have recently been contrived. That is the one station on which I do not feature, I am happy to say, so I cannot be blamed for that, irrespective of anything else.

I participated in debates about broadcasting in the House intermittently for the period of more than a decade when I was involved in broadcasting policy. There are always people searching for the holy grail, the alternative to the licence fee but, in my opinion, the alternative to the licence fee does not readily exist. All that talk about subscriptions ultimately founders on the rock of the recognition that often the people who are the most glued to the box are the least able to pay for it. We need not waste much energy on that.

I hope that the licence fee will continue, not least because it is indeed, as David Frost once memorably said, the great strength of British broadcasting that twin rivers of finance flow quite separately into it-- from the licence fee and from advertising. One would throw that away at one's peril.

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The case for the BBC, interestingly, has been extremely well argued in the Institute for Public Policy Research document that was published as recently as this week, which said--I hope that the House will agree that it sums up the argument very well--

"Through its output, the BBC provides an important benchmark of standards below which competitors' services sink at their own peril. In a multitude of ways, from technical standards to the development of innovative programme forms, the very existence of the BBC compels other broadcasters to maintain and improve the quality and character of their own services."

One might add that the contrary is also the case. The fact that there is an active, vibrant and dynamic commercial sector forces the BBC to look to its laurels. From that creative tension, rivalry and competition comes, one hopes, genuine choice for the consumer. One can go to New York, as I did not so long ago, push one's way through 30 channels on the television and find nothing that remotely engages one's attention. That is not choice; that is the absence of choice. It is,

"Little boxes, all the same".

It is trash and rubbish from the archives, badly presented, thrown into a pot; it is not quality broadcasting of a type that we want to watch.

Mr. Maxton: Is not one of the great beauties of BBC programmes that they do not have any advertisements in them, and that therefore one's concentration is not interrupted by having to watch awful advertisements for awful products?

Mr. Mellor: I think that the advertisements are sometimes a blessed relief from the programme; but if one can fund a programme service without advertisements, why not? We should not find ourselves in a position of insisting that no programmes should have advertisements or that unless everything is commercial, it cannot be justified.

I unashamedly stand up for the things that the BBC stands for, which only the BBC can do. Mention was made of the phrase, "a cultural patron". That may sound emptily pompous, but it means that, for instance, millions of people in the country can go to the Royal Albert hall in the summer and, for next to nothing, become acquainted with the great works of symphonic literature. The BBC should be proud of doing that, and we should be proud that the BBC does so. We should be proud of the fact that the BBC sustains the quality of musical life throughout the nation, notably in the regions. In Scotland and Wales, there are exceptional orchestras. In Manchester, the BBC Philharmonic is an orchestra of international class. We should also be proud of the fact that, interestingly, 50 per cent. of Radio 3's production is of recordings, or live relays, of music that was produced specifically for Radio 3. There is a case for simply reaching out, taking down a compact disc and playing that--I do not knock that--but it would be awful if recorded music were played at the expense of live music. If music is not a living thing, it is merely a part of the heritage industry. That would be a bad thing. I believe in the BBC as a cultural patron. However, obviously the BBC cannot be run in an inefficient, outmoded way merely because it receives the money from the licence fee. I do not suppose that anyone in the House would say seriously that they did not want a BBC. Nevertheless, if we all sat down today and tried to create

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a BBC, we would not have created the BBC as it was found by the present management--the BBC that employed 28,000 people.

I take no pleasure in witnessing jobs being destroyed, but that was necessary for a radical reform to prune the bureaucracy. It has had enormous benefits, and it is time that I paid tribute to them--the flow of resources from tail to teeth and the fact that, in the past two years alone, about £225 million of additional resources has been liberated by those reforms, to be spent on new programming. It used to be sickening when, as we sat upstairs in debates on broadcasting, people groped around in their minds for examples of quality broadcasting. We said "The Jewel in the Crown", however old and fuzzy people's memories of it--perhaps they thought that it was of more value the less they could remember the detail of it. Once again, such programmes are being produced, and it is good that the BBC is producing them.

Interestingly, there is an audience for such programmes. If one considers "Middlemarch" or "Martin Chuzzlewit", those productions, which cost many millions of pounds, were possible only because the BBC had liberated resources from the bureaucracy. The fact that "Martin Chuzzlewit"--shown on BBC1, repeated on BBC2--attracted an audience of more than 8 million people, shows that, to misquote Milton, "the hungry sheep look up and are being fed by the BBC". The series "The Buccaneers"--the Edith Wharton novel --which is on television at the moment, managed to attract an audience of 9 million people the other evening, in competition with the film "Home Alone". That is a sign, not only that the BBC is producing a quality product, but that, contrary to the denigrating and condescending way that people often talk about audiences, the truth is that audiences--the public whom we deserve--are not morons. They are people who, if they are given a quality product, will watch it, and in great numbers. The budget for "Four Weddings and a Funeral" was £4.25 million. The budget for the new "Pride and Prejudice" that is being filmed at the moment is £5 million --in other words, a scale of budget that might usually be employed on a cinema film. We should be pleased that those resources can go into the BBC. Those are the benefits of the reforms.

The public owe a huge debt of gratitude to two people. First, to "Duke" Hussey, who has often been criticised. If it had not been for his leadership of the governors, it would not have been possible to have initiated those reforms or to have developed the confidence, crucial in the early stages, to make the changes to the BBC. That confidence was essential at the crucial point when the reforms were first introduced. I congratulate Mike Checkland on his role at that time, which was then carried on by John Birt. John Birt is now being lauded to the skies by those who see from the White Paper the benefits of his work. It was not always so, but it needed firm control of the governors that it should be so.

John is, by his own decision, a controversial character. Whether one agrees or disagrees with his Dublin speech, he made it. How easy it is for someone in his position to be mealy-mouthed and say nothing by just filling the space. He said something; people found it controversial. That is the nature of the man. That is what leadership is all about. At a crucial time in the BBC's history, he has shown leadership. I know only too well from working in

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the bowels of the BBC that that has caused problems--

[Interruption.] Does the hon. Member for Nottingham, North (Mr. Allen) wish to intervene or is he trying to be a third-rate Caruso? Does the hon. Gentleman want me to give way?

Mr. Graham Allen (Nottingham, North): For the next speaker.

Mr. Mellor: That comment is unnecessary and--

Madam Deputy Speaker: Order. I expect good standards of behaviour from all, but particularly from Front-Bench spokesmen.

Mr. Mellor: I am trying to make a serious speech about an issue I know something about; two things that the hon. Gentleman might like to bear in mind for his future contribution.

The problem for John Birt is keeping the confidence of BBC staff at a time when the changes, as they roll out, are seen merely to threaten their livelihood. Those changes have obviously been difficult and have totally transformed the environment in which the staff work. The key thing for the future management of the BBC is that the BBC should be able to show that those changes are not an end in themselves. The impression should not be given that the changes represent an empty Gradgrind approach to efficiency. The BBC must make sure that staff know that reforms are aimed at a purpose- -to liberate resources, as they have already done, so that the BBC can produce the quality of programme that will itself win the BBC its audience and guarantee its future.

The BBC should not forget that it needs high morale among its staff. One of its crucial roles in British broadcasting is to produce and train quality personnel, who then become part of the rest of the broadcasting environment.

It is not entirely plain sailing ahead for the BBC. It must battle for audiences. Although I would deeply regret it if the question of the licence fee were to be reopened because of falls in audience, that is inevitable. The BBC knows that the challenge is to prove that it is worthy of that universal levy through the quality of what it produces.

People talk glibly about superhighways and digital transmissions of one kind or another without having any clear idea of how they will work out or their likely impact. We come back to the New York example. I am not excited by the idea of 10 or 12 television stations when we used to have one or two. The number of stations proves nothing unless quality material is produced to fill them up; otherwise they just offer the kind of nonsense to which I have already referred.

International communications represent another problem. The Government have rightly put the BBC and other British broadcasters under pressure to go out to show the world what they produce. We complacently tell ourselves that we have the best broadcasting in the world, but we must go out and prove that. In fact, the BBC does rather well, because it has a net credit balance of some £50 million a year on its sales overseas as against what it buys in. It accounts for an extraordinarily high proportion of European sales of television programmes to the United States.

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I can understand why it was sad, as the hon. Member for Islington, South and Finsbury (Mr. Smith) said, that for whatever reason, the BBC was slow--or perhaps the Government were slow to encourage it--to get into world service television. Cable News Network, CNN, is a success for one reason alone--it exists. Its success is not due to it offering a particularly good service, but because an American entrepreneur had the courage to go out and make it happen. If there is one thing that we stand for in this country, surely it is objective news values and the production of news that people believe and do not take as propaganda.

The challenge for the BBC in the future is to offer such news to the world. That may require it to embrace commercial partnerships, but provided that is done transparently and fairly, let it go ahead and do that. The increasingly dismal Balkanised world of today needs the free passage of news more than anything else. Surely that is something that the BBC is in an outstanding position to produce. That is the challenge of the future.

5.44 pm

Mr. Gerald Kaufman (Manchester, Gorton): The Order Paper makes the point that the second report of the Select Committee on National Heritage, "The Future of the BBC", is relevant to the debate. The Select Committee is gratified that the general framework for the future of the BBC contained in the White Paper is that which the Committee's report recommended.

The charter is to be renewed for another 10 years, and the licence is to be continued as a source of funding. Those at the BBC might well say, "So, that's that, then. We've got our charter; we've got the licence that we advocated and campaigned for; we've been given a vote of confidence, so we can carry on as before."

The BBC has certainly been given a vote of confidence in general. It does maintain high standards of public service broadcasting. It does act as a role model for ITV and Channel 4. It does have a beneficial influence on public service broadcasting throughout the world. It does have a reputation that is respected throughout the world, and a brand name that is recognised throughout the world. All those factors do not mean, however, that everything that the BBC does is good.

Many share my concern at the decline of nationally transmitted BBC radio. That is not a reflection on the contribution of the right hon. and learned Member for Putney (Mr. Mellor). Many are concerned about the reduction in the audience of BBC 1, and about the intermittent vulgarity of Radio 5. They are concerned about the reduction in standards of the BBC flagship, Radio 4. They are concerned about the trivialisation of too much of Radio 3. As I listen to the gibbering and twittering of the early morning programme from 7 to 9, I sometimes think that the intellectual level would be improved if commercials were included.

There is concern, too, about the imperviousness to criticism expressed by dedicated listeners about some of the things that are taking place on BBC radio. The wholly mistaken belief apparently held by Liz Forgan is that the way to retrieve lost radio audiences--the BBC's share of the radio audience is now less than half of it--is to chase competitors down market. The right hon. and learned Member for Putney referred to Classic FM. I do not

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believe that the future for Radio 3 lies in trying to copy that station, although I fear that far too much of Radio 3 is doing exactly that.

The secure future of the BBC for another 12 years does not mean that the BBC has the right to be complacent. I say "12 years" because we have two years of the present charter still to run, followed by 10 years of the proposed new charter. That complacency is unjustified, not simply because the BBC has had for a long time consistently fewer television viewers than ITV and Channel 4 combined, but because all four terrestrial channels are now on a downward trend, as satellite and cable relentlessly increase their share of the market and as choice therefore increases.

Mr. Chris Mullin (Sunderland, South): Does my right hon. Friend agree that the regulations about the amount of domestic content that govern commercial television should also be extended to satellite television, so that they all compete on a level playing field?

Mr. Kaufman: I do not believe that such a regulation would be enforceable. As the choices proliferate and the number of channels increase, the current regulation of terrestrial television will become less feasible and effective. Of course, the regulations of the European Union require to be observed, but, as the BBC's share of the television audience goes down, one can see the challenge it faces. At the end of last month, the BBC had 42.7 per cent. of the television audience, compared with 48.6 per cent. at the same time in 1991. In 1991, satellite and cable did not reach audience figures worth counting. By 1992, they had attracted 3.9 per cent., by 1993 the figure was 5.2 per cent., and by 1994 it was 6.1 per cent. Last month, they had 7.5 per cent. of the television audience. The number of households with access to cable and satellite television has risen from 1.3 million in 1990 to 3.9 million by the end of 1994. This week, BSkyB announced in its reports on the latest successes that more than 4 million households now have access to cable and satellite. The country's streets are being dug up relentlessly. I received a letter from Nynex about large sections of my constituency which are about to be excavated, and I have responded with a serious warning that it had better behave if it is to avoid trouble from me. Soon, those who are watching satellite and cable will outnumber the audiences of BBC 2 or Channel 4, each of which now has around 10 per cent. Satellite and cable already have 7.5 per cent.

The number of hours being broadcast by terrestrial television is dwindling in proportion to the number of television hours overall. At present, the four terrestrial channels are transmitting 32,000 hours of television per year, whereas satellite and cable are transmitting 100,000 hours per year.

This is only the beginning. On-demand and interactive services have not even started. The interaction of computers, TV games and CD-ROM is not yet happening, but although we cannot forecast the time scale, it is clear that it is only just over the horizon.

The 10 years of the new BBC charter may also be the last 10 years of any BBC charter. By the time the new charter comes up for renewal, the BBC, if it is to survive, will have to be changed beyond all recognition. If it does not, it will dwindle into the British equivalent of the

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American Public Broadcasting Service, with a small niche audience which responds fitfully to on-air appeals for funds to top up a meagre Government grant.

If that were to happen, the BBC would be providing public service broadcasting which, instead of being produced in-house or commissioned from independent producers as it is now, to our great advantage, would have to be bought in because the BBC would not have a reliable source of funds to finance its own programming. A niche audience cannot expect the mass of the population to provide licence fees to fund its specialised minority tastes. It is essential for the BBC to transform itself if it is to survive, and if the ethos of public service broadcasting is to survive. The great contribution of the BBC and Britain to world communications is the ethos of public service broadcasting which pervades broadcasting in many parts of the world and would never have existed without the BBC.

The media world now is already much changed, not only from what it was when the present charter was instituted, but even from what it was when our Select Committee report was published and when the Government published their responding White Paper. Already, the boundaries between print, computers, telephones and television are breaking down into one visual continuum. Several newspapers, such as The Times , are available on-line. If one wants to read The Daily Telegraph , one can read it on computer as well as by going to a shop and buying it. Those changes are just beginning; they are relentless, and we cannot pretend that we or the BBC can ignore them. We live in a world in which cross-media ownership is changing, a world in which the Daily Mirror and Associated Newspapers have their own television stations which are permitted under the cable regulations; we invest in overseas television and, as I shall be pointing out in a moment, overseas television invests in us. It is a world in which the BBC grows, or, to all intents and purposes, the BBC will die.

Mr. Nigel Forman (Carshalton and Wallington): An unstated assumption of the right hon. Gentleman's argument, which I have been trying to follow closely for the past few minutes, seems to be that there is a zero sum gain. In other words, as satellite and cable expand and all the new multi- media technologies expand, the BBC is doomed to lose. Is it not at least possible that one of the changes is precisely that people want a variety of media forms to be available, and that the BBC can survive if it does its known thing well?

Mr. Kaufman: Far from the BBC being doomed to lose, if it organises, structures and prepares itself properly, it can be stronger than it has ever been, and can play a major part in future developments. Only if it thinks small and constrictively will the BBC be doomed to lose.

Ten years ago, the BBC's competitors were ITV and Channel 4. Today, BSkyB and other satellite and cable services are biting into its audience, with already dozens of choices for the increasing number of subscribers to non- terrestrial services. Tomorrow--by "tomorrow" I mean a time scale that is impossible to specify, but which, nevertheless, is attenuating as we proceed--there will be hundreds of alternative choices.

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In their White Paper following up the Select Committee report, the Government say that the BBC should be able to evolve into an "international multi-media enterprise". That sounds very nice. It is a good piece of phraseology, but what does it mean?

May I put to the House what an international multi-media enterprise really is? I quote from an article in the New Yorker of 16 January written by one of the most authoritative commentators on television, Mr. Ken Auletta. This is how he described the scope of Viacom in the United States:

"The company . . . has branches in almost every area of entertainment, including movie and television production (Paramount Pictures and Paramount Television); music programming (MTV and VH-I); children's television programming (Nickelodeon); pay TV (Showtime, the Movie Channel) books and CD-ROMs (Simon & Schuster).

It owns the world's dominant video-store chain"--

which has nearly 4,000 stores--

"and one of the world's busiest music retailers (Blockbuster), and five regional theme parks. It owns twelve television stations and fourteen radio stations. Its cable systems have a million one hundred thousand subscribers. It has a seventy-eight-per-cent interest in the Spelling Entertainment Group, whose head, Aaron Spelling, is the most prolific television producer in Hollywood. It owns fifty per cent. of the All News Channel and the USA Network and fifty per cent. of the Comedy Central channel. Viacom is the largest single customer of the Hollywood studios (through Blockbuster, Showtime, and the Movie Channel) and of the record companies (through MTV and Blockbuster). It has joint ventures with several other companies, and this month it is launching, with Chris-Craft, a new TV network. Through Viacom Interactive Media, it is also involved with the development and distribution of interactive-television programming, video games and on-line computer services. And it owns a library containing a total of fifty thousand hours of TV programs and feature films." That is the environment in which the BBC will have to operate; it cannot ignore that fact. If it is to be an international multi-media enterprise, as the Government rightly say it should be, that is the sort of competition it will be up against. Viacom is not the biggest media and entertainment company in the world; it is No. 2, behind the United States company Time Warner.

The White Paper is right when it says that the BBC is competing in a market which is increasingly dominated by aggressive, very large enterprises. How on earth can the BBC compete with leviathans like that? Happily, it has already started to, as it is constructing a global partnership with a British-owned media conglomerate, Pearsons.

I can say without undue complacency that that is exactly what I recommended 18 months ago--I even named Pearsons as the appropriate partner for the BBC. I said that when the director-general of the BBC was still saying that he had lots of time to consider his options. He has certainly learnt a lesson, and I am pleased about that. With Pearsons--which is a publisher and a newspaper owner, as well as having an interest in television--the BBC has launched its first domestic United Kingdom satellite channel, UK Gold. As the right hon. and learned Member for Putney (Mr. Mellor) pointed out, since last month the BBC has been transmitting a 24-hour international news channel, BBC World, which is funded by advertising. It reaches 1.2 million homes on the European mainland, and has a potential audience of 8.4 million homes.

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The BBC's European entertainment satellite channel, BBC Prime, which is funded by subscriptions, already reaches 2.3 million homes. Two United States channels are to follow, which will be transmitted by satellite and funded by cable subscription.

Cox Communications, a huge American company, is a partner in the BBC- Pearsons European venture. It is also involved in UK Gold and in another satellite channel, UK Living, to which the BBC supplies programmes. That is, and must be, only the beginning. The BBC's new global partnership, though formidable, is incomplete.

Sir John Gorst: Does the right hon. Gentleman believe that the role that he describes for the BBC in the future will be compatible with the suggestions from both sides of the House that it should also be concerned with regionalisation? We have heard how the BBC has scaled down its production in various centres outside London. Is it possible for the BBC to maintain its production levels and, at the same time, compete in the world market which the right hon. Gentleman describes so correctly?

Mr. Kaufman: Yes, indeed. We are on the verge of implementing digital compression. When that comes along, we will be able to have not only regional programmes, but local, city and neighbourhood programmes. Advances in technology will allow the BBC to become a global operator and, at the same time, provide programmes of local interest in a way that has not been possible previously with broad-brush television channelling.

The BBC's partnership is incomplete. The BBC is a provider of what is now called "software"--that is, the programmes--and it is allied with the major and powerful publisher Pearsons. However, the BBC must have a guaranteed market at home for its public service entertainment, news and education programmes.

That guaranteed market is the infrastructure that is essential for providing the high-quality programmes which the BBC and its partners can market worldwide. I do not believe--I differ from the right hon. and learned Member for Putney on this point--that the BBC is marketing its programmes as effectively as it should. We refer to that point in our report. If the BBC is to be a strong competitor, it must have a non- terrestrial highway into UK homes which will enable it to provide on-demand and interactive services.

I was very disappointed by the Secretary of State's response to the intervention by my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton). I also regret the extremely short-sighted decision of the President of the Board of Trade about British Telecommunications plc as a potential broadcaster. BT is the most obvious partner for the BBC. It already has access to many millions of homes in this country, it has developed the necessary optical fibre technology, and it is probably the most cash-rich organisation in Britain.

I find it inexplicable that the Government have decided to maintain the ban on BT becoming a broadcaster until into the next century, when, within that time scale, the cable companies will become literally entrenched in this country. Those companies are permitted to compete with BT in offering telephone services, and many of them are owned or part-owned by American telephone companies.

For example, several of the cable companies which are now permitted to broadcast in this country are part-owned by Southwestern Bell, an American telephone company.

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Telewest owns several other UK cable companies, and it is 74 per cent. owned by two enormous American companies. One company is TCI, a giant which challenges Viacom, and which is the world's largest cable systems operator. It owns 49 per cent. of the satellite Discovery channel and has a 12 per cent. voting interest in Turner Broadcasting, which owns CNN, TNT and the Cartoon channel.

The other company is US West, which is America's fourth largest provider of local telephone services, serving 25 million customers in 14 states. It is a partner with Warner Brothers Filmed Entertainment, which is part of Time Warner--a company even bigger than Viacom, whose scope I have described.

What possible sense does it make to have a regime under which an American telephone company is permitted to broadcast television programmes in this country, but under which the premier British telephone company is banned from doing so? That was an

extraordinarily perverse decision for the Government to make, a Government who--I quarrelled with them for doing so--privatised BT, but now prevent it from being a competitor in a market in which advantages are given to enormous United States telephone companies.

Mr. Roger Gale (Thanet, North): I have great sympathy with much of what the right hon. Gentleman has been saying, but will he perhaps consider and recognise that, since its creation as a private company, BT has taken a dog-in-the-manger attitude to the use of its ducts for cable, not only through its own companies--by its investment in cable throughout the country--but through other companies? It is, in fact, BT that is denying the House and others who live in Westminster access through Westminster Cable to, for example, the new Channel One cable service in London. If BT took a more positive attitude, perhaps the House would.

Mr. Kaufman: I do not carry any particular flag for BT. I wish that it was still publicly owned. I wish that it had a greater sense of community responsibility, but that is not the argument that I am making. The localised problem in Westminster is nothing compared with the fact that that huge British company, which has the technology and facilities to provide broadcast programmes, is not permitted to do so, whereas American telephone companies are.

Whether the BBC is able to go into partnership with BT, it is clear--to me it is welcome--that the BBC is developing into a major commercial enterprise. It is transcending its original terms of reference by going into partnership with even bigger commercial enterprises here and abroad. Such changes in the BBC's character and structure are, in my opinion, essential if it is to survive and prosper, but further changes are necessary.

At some stage before too long, a new BBC chairman will be needed to succeed Mr. Marmaduke Hussey when he retires. I trust that, when the Government fill that vacancy--when it arises--they will not do so by dipping their hand into the bran tub and coming up with another venerable member of the great and the good.

In this new environment, the next chairman of the BBC should be a young man or woman who is dynamic, has a strong business sense and understands thoroughly the new

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technology and the new market, who can provide leadership to take on Viacom and Time Warner and have a chance of coming out on top. Several hon. Members rose --

Mr. Kaufman: I am delighted that my hon. Friends were so enthusiastic about my speech that they were about to give me a standing ovation, but I have a moment or two more in which I seek to detain the House.

In the Select Committee's second report, we said:

"The British Broadcasting Corporation, which was among the world's pioneers in first radio and then television, will, if it is to survive in any form, have to find a role and a structure which enable its enormous strengths and unrivalled international reputation to prevail in this new and exciting environment."

In the somewhat smug briefing note that the BBC sent around in connection with the debate, it repeats the nonsense that revenues from commercial enterprise will be no more than 15 per cent. of the corporation's total revenues. No effectively run commercial enterprise can sensibly place a limit on the business it gets. The BBC had better go for the maximum possible revenue, because, sooner or later, licence payers will revolt against paying a poll tax to maintain an organisation, which, even now, the majority--before long the predominant majority--do not watch as their primary source of entertainment, education and news.

Moreover, if the Government decide--by Government I mean any Government who are in power; my own preference is obvious--to limit or reduce the licence fee in the review scheduled for 2001, the BBC will have to get more commercial income. In any case, at some stage, that income may--I hope it will--exceed the licence income. Any future Government, including a Labour Government, may at that point need to consider whether it makes sense for the BBC to remain in the public sector. It is already a hybrid organisation --part public, part private. The waters on which the new BBC will sail will not be calm--they may be turbulent--but the voyage may be enjoyable as well as exciting, and the destination will be alluring.

For nearly three quarters of a century, the BBC has served the nation well. If it did not make those at Broadcasting house and the television centre even more complacent than some of them already are, I would echo Michael Grade's panegyric of the BBC as a "national treasure". If the whole concept of public service broadcasting is to survive, that treasure needs a new setting. I hope that those responsible for the BBC will have the enterprise and imagination to ensure the organisation's new role in the new and challenging century.

6.15 pm

Sir Peter Lloyd (Fareham): I agree with much that the right hon. Member for Manchester, Gorton (Mr. Kaufman) said, although I shall approach some of the points that he made from a different angle. I congratulate the Government on producing a rather dull White Paper. Alas, not every Department has the courage to be boring when it needs to be, but this is certainly not the time for the Government to impose radical new departures on the BBC, not because it does not need some radical changes--it does--but because the

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changes required can effectively come only from the BBC itself. It has made a very impressive start in that direction in recent years. I am particularly glad that the White Paper recommends keeping the licence fee. It is not very much liked, as the right hon. Gentleman said so clearly, and it cuts very little ice to say, as the BBC so frequently does, that it costs less than the price of a daily newspaper. However, as the Select Committee made clear, for the present and the foreseeable future it is the least bad method of raising the necessary revenue.

Advertising is a very good way of paying for many television and radio channels, but certainly not for all of them. If the BBC went over to advertising, wholly or in part, it would undoubtedly diminish choice. Some struggling competitors would find that they did not get enough advertising to survive. The BBC would certainly become more like its rivals than it is now, further diminishing choice. The BBC without advertising in the United Kingdom is rapidly becoming much more commercial: first with producer choice, and the internal market. In the early days, there were scarcely muffled cries of pain emerging from Broadcasting house, and stories circulated of idiotic time wasting, and straitjackets imposed by accountants who would not know how to organise a test card and a record of "Sailing By". I have no doubt that many of those stories were true, but it seems as though most of the initial crudities have been ironed out, and producer choice is yielding efficiencies and thus savings, which can be ploughed back into the making and the improving of programmes. If that is so--I believe that it is--it is a very necessary and impressive achievement.

Undoubtedly, producers with set budgets, freed to shop around inside and outside the corporation, become more cost conscious and more interested in the benefits that competition can bring, in economy, naturally, but in ideas as well. In such competition, there is, of course, no new temptation for the BBC to compete for ratings. That already comes from the BBC's knowledge that, the lower its ratings, the harder it is next time around to justify the licence fee, not least to my hon. Friend the Member for Hendon, North (Sir J. Gorst).

Audience figures make a direct and immediate financial impact overseas, however. It is too early to say whether the new worldwide BBC satellite television channels in Europe, the middle east, Japan and the Indian sub- continent have all the potential that is hoped for, and whether the BBC and its partners will secure that potential if it is there; but, as the right hon. Member for Gorton suggested, the essential point is that success will depend on its winning and retaining overseas audiences for whom advertisers want to pay. The more success the BBC has in that regard and the larger the profits that accrue, the more inevitable will be a shift away from the United Kingdom in the BBC's centre of gravity. That will change the corporation's attitude to commercial considerations, notwithstanding what my right hon. Friend the Secretary of State said about keeping domestic services separate from foreign services and commercial broadcasting separate from broadcasting financed by the licence fee. That is possible in accounting terms, but it is not psychologically possible to maintain such a distinction in the organisation.

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I imagine that the change will be increasingly visible at home as the BBC engages in private sector partnerships to exploit the opportunities offered by digital and cable broadcasting in education and a series of "niche" markets, as well as more general entertainment markets. It is clear that the BBC's future is increasingly and ineluctably commercial, but it should evolve naturally: the BBC should be encouraged to take advantage of the immense opportunities which it has overseas--thanks to satellite and cable television--and at home--thanks to technological developments such as digital broadcasting. That would be better than setting about the corporation with a legislative tin opener, as some have suggested that the Government should do. I am glad to say that those ideas seemed to disperse before the publication of the White Paper, but they were very much in the air a few years ago.

I am not unduly worried that BBC quality, whatever that is, will suffer; rather the reverse, as long as the BBC takes a hard and understanding look at its markets. It knows that its success overseas and in the domestic market will depend heavily on its brand name, and that in the long run its fortunes will rest on the protection and projection of its well-earned but easily lost reputation. It would be pleasant to think that in due course the BBC's profits in the rest of the world will be so great that it will be able to dispense with the licence fee at home, but it is more likely that the question that has been referred to several times this afternoon will still be there in 10 years' time, and almost as intractable. It will have changed its form because by then digital technology will probably have made encryption and direct-subscription BBC a practical possibility. However, that bridge must be crossed in the next century rather than now.

Like the hon. Member for Islington, South and Finsbury (Mr. Smith), I do not want to return to the question of the licence fee too soon, because I feel that the certainty of the BBC's income in the next few years is vital. The present Government's job is to keep out of the way while the BBC makes its own progress according to where opportunities and audience needs beckon and what technology makes possible. If I read the White Paper correctly, that is essentially the Government's view as well. There is simply not enough money from the licence fee--certainly not enough from the general tax revenue that Governments of any flavour would be willing to invest--to expand BBC activities in any other way. The BBC's task will be to exploit commercial opportunities internationally without losing its public service ethos, as the right hon. Member for Gorton pointed out. As for the BBC's transmission service, surely the main question is not whether it should be sold off but how and when it can be freed to compete fairly in the market. In that regard, I agree with the hon. Member for Islington, South and Finsbury. National

Transcommunications Ltd. has had a useful period in which to establish itself; it is a fine company, which I was delighted to privatise when I was the Minister responsible for broadcasting. There should be more competition in the market now, however. I should like to see the transmission service at arm's length from the BBC, with a substantial private sector shareholding. I should like the BBC to benefit from the one-off capital receipt from a partial sale, and from a continuing share of the profit that I hope will be earned from the winning of non-BBC contracts by the new, separate transmission company.

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I am sorry that my hon. Friend the Under- Secretary will not be able to give an idea of the Government's thinking when he winds up the debate, as my right hon. Friend the Secretary of State made clear; but I hope that a decision will not be long delayed, because it is already overdue.

I am glad that the Broadcasting Complaints Commission and the Broadcasting Standards Council are to be merged. The reduction by one in the number of regulatory bodies is welcome, and there should be some saving in overheads. I hope that my hon. Friend the Under-Secretary will make it clear that the Treasury will not take all the savings, and that he will ensure that the new body has enough resources to sustain an effective research programme.

No one else will carry out regular, original, fundamental research on the changing impact of television. The industry will seldom produce more than viewing statistics and audience reaction to different programmes. In a rapidly changing broadcasting environment, programme makers, public bodies and the public at large need a better understanding of the evolving impact of television and radio on attitudes and perceptions, not least those of children. If my hon. Friend feels that he cannot prevail on the Treasury, I hope that he will ensure that appropriate funds are obtained from fees levied on the broadcasters themselves.

6.27 pm

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