Wireless Telegraphy (Television Licence Fees) (Amendment) Regulations 2002

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Michael Fabricant: The increase suggested in the regulations is not that large. I note that the licence fee will rise from £109 to £112, which is considerably less than the inflation rate for people employed in the broadcasting industry or that for any staff salaries.

On how the BBC should be funded, I take the view that having the BBC wholly, or mainly, funded by advertising would have a major deleterious effect on commercial broadcasters in the United Kingdom. Although I tend to agree with the Chairman of the Culture, Media and Sport Committee, the right hon. Member for Manchester, Gorton (Mr. Kaufman), on most matters regarding the BBC, I disagree on this issue. On purely economic grounds, I believe that making the BBC wholly commercial would destroy ITV, Channel 4 and Channel 5 and would have a dangerous effect on the future of Sky.

I disagree with the Minister's suggestion, made in an intervention on my hon. Friend the Member for Vale of York, that the outlook for advertising revenues is good. I do not think that it is. ITV has lost about 13 per cent. of its advertising revenue during the past 12 months, and it lost about 9 per cent. the

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previous year. There has been a very small upturn in the past month or two, but there is no guarantee that it will continue. If it does, the rate will be such that, unless there is a massive increase in improvement, it will take some five or six years to achieve the advertising revenue that ITV attracted only two years ago.

My hon. Friend the Member for Vale of York raised some interesting points. I do not believe that the BBC should be funded mainly by advertising or other commercial activities, but it is not wholly pure, in the sense that it derives income from commercial operations. I applaud it for that. My hon. Friend mentioned the Radio Times, but the BBC produces a whole suite of different magazines and publications, including BBC Top Gear Magazine. I am a regular purchaser of both. They generate a useful income, which helps to produce programmes.

The BBC should go further, however. Despite the fact that the hon. Member for Sheffield, Hallam (Mr. Allan) seems to think otherwise, the BBC should investigate using limited advertising on BBC Online. I agree that too much advertising would reduce the number of hits on that already very popular website, but there is a balance, as in all things.

I note that the BBC spends about £52 million on BBC Online. At present, it comes mainly from the licence fee, but advertising could offset some of that. Advertising need not be on every page—for example, the news page—but that would be a commercial and editorial decision for the BBC. The BBC's claim that it is wholly pure is wrong. It has advertising in its publications and non-broadcast activities, and I do not count BBC Online as a mainstream broadcast activity. It is a very good and popular website; nevertheless, it is a website. It is not broadcast radio or television.

Another stream of income that would offset the income from licence fees is the profit deriving from BBC Worldwide, which currently runs at £96 million. On that, it must try harder. For the volume of programmes sold, £96 million is not much. The BBC produces excellent programmes, but it also has excellent headquarters, which I know only too well from my previous career and more recent visits to White City.

I sometimes wonder whether the BBC's overheads are particularly high, when I compare its sales to those of Warner Brothers, CBS, ABC, NBC or Fox in the United States. However, it seems that that particular operation is man and woman-heavy, which is why only £96 million in profit is derived. That money should be and is going into programming and subsidising the licence fee, but much more would be available if the BBC were as tough on the operations of BBC Worldwide as the previous director-general, John Birt, was on the operations of programme makers.

In short, the licence fee must continue. I do not believe that there is an alternative. It is like democracy: it is not perfect, but I see no better example anywhere in the world. In Holland, where I have worked, the Nederlandse Omroep Stichting, the state radio and television service, is funded by the licence fee and radio and television advertising. One tends to drive out the

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other, with the Government saying, ''You're getting advertising revenue.'' Therefore, the licence fee becomes less and less. For all those reasons, I do not believe that such an arrangement is in the best interests of broadcasting in this country. It is not in the best interests of the BBC and its listeners and viewers, or of the listeners and viewers of the commercial channels.

As the hon. Member for Sheffield, Hallam said, ITV Digital is in dire straits—in fact, it is bust—so it is essential that a body such as the BBC continues free to air. I commend the BBC for launching BBC 4, and I hope that the Secretary of State gets her finger out, although I am not sure what she should get her finger out of, and allows the BBC to go ahead with BBC 3. BBC Choice is neither one thing nor the other, but the plans for BBC 3 are particularly good and exciting. Who says that I am always anti-BBC? That is not the case.

I commend the regulations to the Committee. I believe that they represent good value for money and I for one shall keep buying the Radio Times.

4.55 pm

Virginia Bottomley: I commend my hon. Friend the Member for Vale of York for praying against the regulations, because I believe that the BBC, funded as it is, must give an account of its behaviour and that great care should be taken over the way in which the process works.

4.56 pm

Suspended for a Division in the House.

5.10 pm

On resuming—

Virginia Bottomley: I was commending my hon. Friend the Member for Vale of York for insisting on a proper debate about the regulations. The licence fee is imposed on almost all the British population and it is only right that the BBC should be aware that parliamentarians take the matter seriously. I have to declare that at my geriatric age and after many years I am definitely in the corner of those who believe that the licence fee is here to stay and, like Hilaire Belloc,

    ''always keep a-hold of Nurse

    For fear of finding something worse.''

Michael Fabricant: For one horrible moment I thought that my right hon. Friend was about to say that at her age she has a free licence, but I am sure that that is not so.

Virginia Bottomley: I have always disapproved of the free licence approach and have no respect for the recent measure to introduce them because they are too subject to abuse and are rather patronising to older people. If income support is necessary, that is a much better approach. Be that as it may, Governments apparently must be popular and free licences seem to be one way to that.

It is important to debate the regulations. It feels as thought licence fee negotiations and charter renewals are ever with us, but the BBC has a uniquely important role not only in this country but worldwide. It is also important that, while we respect its significance in a democracy and in totalitarian countries around the

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world where the BBC is the one trusted voice, that must never lead to arrogance or complacency within the BBC. While the right hon. Member for Manchester, Gorton is Chairman of the Culture, Media and Sport Committee, the BBC is unlikely to become complacent. It is important always for the holder of that office to have a healthy scepticism about the BBC. I am full of admiration for its work and activities and the steps taken by Christopher Bland and John Birt, as well as the work that Greg Dyke and Gavyn Davies are putting in hand.

We have heard some preliminary views about whether commercial sources of revenue are possible, appropriate, or could be exploited further. My understanding has always been that the BBC should exploit every possible commercial option, subject to cries of foul from commercial broadcasting companies. It seems to work relatively well, although the economy is always hard to predict and judge.

Our constituents mind greatly how the BBC behaves, and about its editorial judgment and matters of taste and decency. I hope that letters of complaint and concern from constituents will continue to be respected by those in the BBC and that replies to Members of Parliament will continue to be signed by the chairman or director-general because there should not be a reduction in that sensitivity to the views of those who fund the BBC. For several months, its programmes have again been of central importance to our national life and I do not have it within my heart to oppose the regulations.

It may be that in urging my hon. Friend the Member for Vale of York, who fills her role so admirably, to be more politically partisan I felt that I should try to practise what I preach. With that in mind, I hope that, when the Minister responds, he will tell the Committee whether he sees some of the proceeds from the licence fee increase forming part of a salary for any re-employment of Mr. Martin Sixsmith.

5.14 pm

Dr. Howells: As ever, it is a pleasure to serve on a Committee with you, Mr. Pike.

Nobody enjoys paying a licence fee—at least I never have—but any increase in the fee, especially one above the rate of inflation, low though that is at present, is an emotive issue.

I thank the right hon. Member for South-West Surrey (Virginia Bottomley) and the hon. Members for Vale of York and for Lichfield for their constructive contributions. I shall start by responding to some points raised by the hon. Member for Vale of York, who asked why there is a systematic increase in the licence fee.

The regulations increase television licence fees in line with the funding formula for the years 2000–01 to 2006–07, which were introduced by the Government in 2000. They also include consequential amendments in relation to the various instalment schemes for payment of the television licence fee.

The funding formula was based on the recommendations of the independent review panel on

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the future funding of the BBC in its report of July 1999. It provides for television licence fee increases of 1.5 per cent. above the rate of inflation, as measured by the retail prices index each year until the expiry of the BBC's charter at the end of 2006.

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Prepared 8 May 2002