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10.12 am

Mr. Peter Ainsworth (East Surrey): I offer the apologies of my hon. Friend the Member for West Suffolk (Mr. Spring), who has donned his tourism industry hat and is visiting a coastal resort. I welcome my hon. Friend the Member for Mid-Dorset and North Poole (Mr. Fraser) to the Front Bench; he will wind up the debate for the Opposition.

I welcome this opportunity to discuss the future of broadcasting. It is a bit of a pity that the Government have tucked this debate away on a quiet Friday at half term, in a week of thin business. Broadcasting deserves better; it

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is a dynamic, growing, highly skilled industry, a powerhouse of new jobs that contributes an increasing amount to our gross domestic product, and something that we do extremely well. Britain is at the forefront of exploiting many of the new technologies. Our broadcasting industry is a showcase for our creative talent: our writers, actors, producers, directors and presenters. We can be justly proud of their work.

Like so much else that is sponsored by the Department for Culture, Media and Sport, broadcasting is of immense importance to our quality of life and a powerful influence on society. People feel passionately about it. A headline in today's Financial Times--it will probably make it into the tabloids tomorrow--informs us of BSkyB's £1 billion offer for the Premiership rights. One need look no further than that for an assessment of the centrality of broadcasting issues to many people's lives.

The Secretary of State touched on the question of sporting rights. Conservative Members recognise that the rights in any sport are the property of the sporting body. Substantial sums have flowed into sport from the sale of television rights in recent years. It is profoundly important that a significant part of that money should be used to support the grass roots of sport, as otherwise sport will suffer in the long run.

As well as reflecting our society, broadcasting helps to shape our attitude towards ourselves, our neighbours and the world. It is the most powerful and pervasive medium ever invented. It can educate and inform like no other medium. It can also misinform like no other medium. It can create celebrities. It can even, it has been alleged, create Prime Ministers. Clearly, it is an important industry. It is so important that Governments have historically taken a very close interest in its affairs.

Back in 1966, I believe, the right hon. Member for Chesterfield (Mr. Benn), no less, famously remarked that broadcasting was too important to be left to the broadcasters. For once, he was in step with mainstream opinion. Hence, in the intervening years, there have been numerous Broadcasting Bills. In the 1980s, they took on a deregulatory flavour and we witnessed the establishment of Channel 4; the advent of cable; the liberalisation of communications; the arrival of satellite television; the dawn of local and national commercial radio; and later, the creation of Channel 5.

The most recent Broadcasting Bill heralded the beginning of the digital age, opening the door to new and, for many people, baffling and slightly scary opportunities: a world of 200 television channels, interactivity, media convergence and technical jargon definitely understood by the few and not the many--and, frankly, I suspect, not understood by many of the few either. It is easy to get lost in the jargon, and many have fallen victim to the temptation to get lost in messianic predictions of precisely how technology will change our lives.

I commend the Government on taking a relatively cautious, pragmatic and evolutionary view of the impact of the multi-media age. Technology is moving so quickly that the one thing of which we can be certain is that almost every prediction that we make today will prove wrong tomorrow. Most people would have predicted a few years ago that we would all be watching more television at the end of the 20th century, but it turns out that we are watching less.

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I want to focus on what is possible--in the sense of being achievable--not on what is probable, and therefore probably wrong. I am pleased that the Secretary of State has recognised the need for a radical overhaul of the way that we regulate the media. It is always a matter for great anxiety for Opposition spokesmen when they find that the Secretary of State is doing something sensible. It does not happen very often but I believe that, when it does, it should be recognised.

The Government are right to approach the future of regulation in consultative mode, but I do not understand why the Secretary of State has given the task of developing the new regulatory agenda to the Independent Television Commission. The ITC's remit runs only to the independent commercial sector and no review of broadcasting regulation can hope to be comprehensive if it fails to take the position of the BBC fully into account.

Mr. Chris Smith: I fear that the hon. Gentleman may be under a misapprehension. The immediate-term review, considering what can be done to ease the regulatory burden within the present legislative environment, is indeed being led by the ITC; but the medium-term exercise of preparing major legislation for two or three years' time will be led by the Government ourselves, taking into account the views not only of the ITC but of a wide range of other sources.

Mr. Ainsworth: I am grateful for that clarification, because there is some misunderstanding about that in the industry and some have been baffled by the ITC's role, so it is good to have the true position on the record. If the ITC is given too strong a role--let us not forget that it is part of the regime that the Secretary of State intends to overhaul--the right hon. Gentleman's approach to reforming regulation will be in danger of taking on a rather partial view, without a sufficiently dispassionate overview.

A good starting point would be to aim to make the next Broadcasting Bill the last for a considerable time. As the purpose of successive Broadcasting Acts has been to deregulate, that would mean taking deregulation as far as it will go. Subject to normal competition policy, we should let the market decide the future shape of the commercial broadcasting industry. More than 30 years after the young Technology Minister, the right hon. Member for Chesterfield, made his remark about the importance of broadcasting, the time has come to say that broadcasting is too important to be left to politicians.

There is an important caveat. If the future lies, as many believe that it should, in a single regulatory authority, that authority will need two arms--one with a light touch, encouraging competition and innovation, and the other dealing with content. The time for detailed minute- by-minute analysis of radio and television schedules is probably over, but the public rightly continue to expect protection from degrading, gratuitously obscene and violent material.

That is especially true and important with regard to children. Recent findings by the Broadcasting Standards Commission suggest that there is growing public concern about violence on television, and about the increasingly cynical approach to portrayals of explicit sexual activity, which are seen as simply a ploy to attract ratings.

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Whatever new regulatory regime emerges, there will be a continuing need to ensure that the young and vulnerable are protected. The Opposition believe that breaches of acceptable broadcasting standards should be the subject of tough penalties.

Mr. Swayne: That process must be open to political lobbying; my hon. Friend will be aware that it is to their Members of Parliament that people write and complain. It would be a bit weak if we had to reply, "Actually, we have no leverage over those standards."

Mr. Ainsworth: My hon. Friend makes a good point, which will be familiar to everyone in the Chamber--and nobody is better equipped than he to conduct political lobbying.

We also believe in maintaining the present watershed, with rigorous enforcement. We must, however, also recognise that parents have a duty to regulate what their children watch, and that adults are the prime regulators of their own viewing habits; every television has an off button.

I see no reason why all broadcasters should not be subject to the same degree of authority. That is by no means to say that they should be required to produce the same type of programming, but merely to say that they should be subject to the same scrutiny, accountability and sanctions. At the earliest opportunity, the BBC's programme content should be brought under independent and impartial regulation.

The debate is about the future of broadcasting, not about the future of the BBC. However, as the BBC is so important within the United Kingdom broadcasting universe, the two are closely bound together. I doubt whether anybody in the Chamber does not admire the BBC. Since its inception, it has played a pivotal role in the life of the nation, providing a benchmark of quality to which all other broadcasters aspire. I want that to continue, and I agree with the Secretary of State that, in future, that role is likely to grow in importance.

However, I am not persuaded that the BBC's demands for extra funding are justified. The starting point of any inquiry into its funding should be the question: what is the BBC for? The remit handed to the Davies panel by the Secretary of State did not permit it to ask that question, and the result is a report that, although well considered, is fundamentally flawed. There is a need for the BBC to redefine its mission as a public service broadcaster in the light of a radically changed media environment. Only when that has been done can funding issues be properly addressed.

We set out our views on the Davies issues in some detail in our submission to the panel last summer, and I shall not rehearse them all today. However, I welcome the fact that, on several important issues, the panel reached the same conclusions as the Conservative party. For example, there is the introduction of private capital into BBC Worldwide, and the sale of the bulk of BBC resources. There is also the emphasis on greater accountability, financial transparency and the reduction of waste. There is a proposal to improve the discount for blind people, and the idea of advertising sponsorship or subscription on the BBC's public services is rejected.

We are however disappointed that the panel did little to challenge the BBC's underlying assumption that it requires extra funding. It has been interesting to hear

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today that the Secretary of State appears to share some of our scepticism. I welcome the fact that he is now appointing consultants to look into the BBC's books, but I cannot help observing that it would have been helpful if he had done that before establishing the Davies committee in the first place.

Let us have a quick look at the BBC's finances. Under the arrangements established in 1996, the corporation has received the benefit of licence fee increases above the rate of inflation. The sale of the home service transmitters raised £244 million. Incidentally, that sale was supposed to fund the BBC's entry into digital broadcasting, so it is disappointing that, only three years later, it has come back to ask for more money for precisely the same purpose.

Since 1996, the commercial businesses under BBC Worldwide have brought in about £210 million in extra revenue. Efficiency savings have realised £267 million for programmes over the past three years. In total, the increase in resources between 1996 and 1999 has been about £1 billion, which is equal to half the corporation's annual income from the licence fee, and considerably more than the £750 million that it costs to run BBC1.

It should also be noted that the BBC enjoys privileged free access to the spectrum. According to figures published by the Radio Authority and the ITC, national commercial radio pays £9 million a year and terrestrial television pays £345 million a year to the Exchequer for the use of the spectrum; the BBC pays nothing. Arguably, that represents a further financial benefit.

In future, although the licence fee is set to increase by less than the rate of inflation, current projections of household growth suggest that the BBC can still budget for a rise in licence fee income in real terms over the next 10 years. In addition, the contribution from the commercial activities is forecast to quadruple over the next six years.

In other words, it is not obvious to me that the BBC is short of money. I am not at all convinced, either, that the scope for efficiency savings has been exhausted. The BBC's corporate centre still costs the licence fee payer £60 million a year. A much greater effort needs to be made to eliminate waste; the BBC should be looking for ways of reducing rather than increasing the licence fee.

The Opposition do not accept the panel's arguments in favour of a digital licence supplement, although we are not surprised--presumably, the Secretary of State is not surprised either--that a panel chaired by Gavyn Davies, who had the idea of the licence supplement in the first place, should recommend it. We note the ingenuity with which the panel has finessed this proposal, but we still believe that a digital licence tax would be wrong in principle and in practice. It would represent a tax on new technology and innovation and it would impede the take-up of digital services, even against a distant background of analogue switch-off. We also believe that the new tax would bear most heavily on families on low incomes.

We note that, for its assessment of the impact of a digital licence fee, the panel relied for its principal evidence on a report commissioned by the BBC. We regret that the panel did not seek evidence from more independent sources. The Secretary of State will no doubt be aware of a report, featured in today's newspapers, by the economic consultants, NERA. In its view, the digital tax, as proposed by Gavyn Davies, could delay the take-up of digital by between two and four years.

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The panel's proposal to sell a 49 per cent. stake in BBC Worldwide represents an uneasy halfway house that is unlikely to satisfy industry concerns about fair trading or to raise a sufficiently attractive capital sum. We believe that a better long-term solution for the licence fee payer, for BBC Worldwide itself and for the industry as a whole, would be to sell the commercial operations outright. We regret that the panel did not investigate more thoroughly whether new services, such as News 24 and BBC Choice--which have cost the licence fee payer more than £100 million in the past two years--are properly justified under the public service banner, especially bearing in mind the charter commitment to universal access.

The question of licence fee concessions has attracted much interest. Everybody agrees that the present arrangements for concessions are arbitrary, complex and, in many ways, unfair. The problem is that nobody can agree on how to make them better. Disappointingly, the Davies committee was evasive on the question of concessions for pensioners. The panel was not much help to the Secretary of State, who will now have to decide between three options. He could leave the present unsatisfactory arrangements in place, and put the issue in a drawer marked "too hard"; he could irritate the BBC by requiring it to deliver a more generous arrangement; or he could try to persuade his colleagues in the Treasury that the attractions of a pre-election bribe outweigh the last election pledge to reduce the welfare budget. The Government's control of the welfare budget has already been shot to pieces, so he may well choose the latter option. It is not necessary to do so.

We believe that there is scope for a fairer and more generous concession scheme, but the question of paying for increased concessions cannot be divorced from the overall context of the need to reduce unnecessary expenditure by the BBC and to reduce waste.

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