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

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Michael Fabricant: Although the Minister was right to say that the increase is 1.5 per cent. above the rate of inflation, will he at least concede that it is less than wage inflation, in particular the wage inflation being experienced by the corporation and other broadcasters?

Dr. Howells: We all benefit from the hon. Gentleman's knowledge of these matters. I agree that inflation in broadcasting, and in communications in general, has increased a good deal more than general inflation.

As the debate has made clear, people hold strong views about the BBC, both because it is our principal public service broadcaster and because of the way in which it is funded. The television licence fee raises high expectations among the BBC's viewers and listeners. The right hon. Member for South-West Surrey is right to stress the importance of a strong sense of contact between those who pay the licence fee and those employed to run the BBC. Those high expectations relate to the range and quality of the services provided by the corporation and the way in which it manages its resources.

The hon. Member for Vale of York mentioned a number of people who have argued that we could perhaps do away with the licence fee. I have come across such people. Indeed, there has recently been a spate of letters on that subject to the Department. I am sure that when the right hon. Member for South-West Surrey was Secretary of State she would have received them as well. I do not know whether she gave the answers to a junior Minister such as me to read and sign; I can imagine that she would have done.

The argument is often made that the television licence fee is no longer sustainable as a method of funding the BBC and that the corporation should now be funded through advertising or subscription. Like the hon. Member for Sheffield, Hallam, I do not understand that argument. Every time I speak to Carlton, Granada or any of the other services that depend on advertising—or radio—a look of horror comes across their faces when the subject is raised.

In its 1999 report, the independent review panel on the future funding of the BBC looked at the possibility of allowing the BBC to introduce advertising, sponsorship or subscription to its public services. It concluded that all those options would be likely to damage the BBC as a public service broadcaster or that they might set in train undesirable, head-to-head competition with private broadcasters for scarce revenue. Again, the hon. Member for Lichfield emphasised just how serious the downturn in advertising revenue has been for the private channels.

Miss McIntosh: I hope that the Minister does not think that I was proposing to dispense with the licence fee. Does he agree that the advertising downturn has

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had a disproportionate impact, leading to lower revenue for the commercial channels, and that if the BBC is allowed to rely entirely on the licence fee, for example, to fund new programmes and roll-out of digital networks, that is not the most equitable basis for financing television in this country?

Dr. Howells: Loth though I am to disagree with the hon. Lady, I have to say that I am not with her on that point. I return to the point made by the hon. Members for Sheffield, Hallam and for Lichfield and say that to go down that route would be to court serious dangers. I am entirely in favour of a continuing debate on the way in which the BBC is funded and from the briefing that I am sure we have all been sent, I can see that the BBC is very interested in that debate. However, the BBC is in a strong market position—I think that it is stronger than it has been for decades. I therefore fear that such competition would not do the independent channels much good. The BBC, through its funding system, sets a benchmark. Someone—I cannot remember whom—described that system in terms of the licence fee revenue being a kind of risk capital for British broadcasting. It sets the standard in so many ways, and I would be loth to see that endangered.

The Government have tried to make it clear that the licence fee will remain the main source of BBC funding until at least the expiry of the corporation's current royal charter, at the end of 2006. The funding arrangements after that date will need to be considered as part of the charter review process, which will begin in 2004.

I am informed on the interesting subject that the hon. Member for Sheffield, Hallam raised. I have a friend who works as a web designer and who listens to a jazz station based in Boston, on the eastern seaboard of the United States, while he works. He knows more about what is going on in Boston than about the town in which he lives, but he listens because the music is good. Of course, he gets that via his computer. A great many people listen in that way. I would do it myself if I could get my kids away from the one satellite television that we have in the house.

On television on the internet, I am informed that a television licence is needed to receive television programme services as defined by the Broadcasting Act 1990. It is for the BBC, as the licensing authority, to determine whether a licence is required for specific equipment and to watch specific services. The communications Bill will include television licensing provisions with the flexibility to accommodate future changes in the way in which people receive their television services. As I understand it, that was the point that the hon. Member for Sheffield, Hallam made. It is important to have that degree of flexibility. I am convinced that more and more people will receive their entertainment and information through those media.

Mr. Allan: I agree entirely that flexibility is needed, but would also throw in the word ''accountability''. It is over that element that there seems to be a gap. If that is covered in the communications Bill, and that means bringing in regulations that this House can question if we receive complaints from constituents who feel that the fee is being applied inappropriately,

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then all well and good. I hope that the Minister agrees that, without that accountability, there is a gap.

Dr. Howells: I agree with the hon. Gentleman. I have to say, and it was a point made by the right hon. Member for South-West Surrey, that the BBC's special position comes from its establishment as a charter body and its relationship with Parliament through the licence fee. That is the important connection in so many ways. I feel quite optimistic and confident about that, although I have no doubt that it will be a subject of extensive debate during the communications Bill's passage. I hope that the hon. Member for Sheffield, Hallam will make his views known during the next three months of the consultative period for the draft Bill published yesterday.

Michael Fabricant rose—

The Chairman: Order. We are not going to get involved with that Bill.

Michael Fabricant: May I just throw in a word of caution, relating to the point raised by the Minister and the hon. Member for Sheffield, Hallam? If the BBC were to extend the licence fee, which is what this order is all about, to streamed video to computers, that could be a disincentive for people to invest in computers in homes—such as second homes—where they might not already have a television. That would be a very unwise direction in which to go.

Dr. Howells: I have heard that message, and I am sure that the BBC will hear it. The hon. Member for Sheffield, Hallam spoke about the need, and I agree with him, for a strong, free-to-air digital presence. I could not possibly comment on the possibility of the BBC helping in a significant way to take that project forward.

As I think that the hon. Member for Lichfield said—well, I am going to say what I thought that he said—call me old fashioned, but I think that content will be the main driver. People will want digital because they want to watch or listen to something that they cannot receive in any other way. The advent of BBC 4 is important in that respect, and I hope that much more of that different, challenging content will be made available.

On the point made by the hon. Members for Lichfield and for Sheffield, Hallam about the approval of BBC 3, we felt that any new BBC service should complement and challenge the market, but not undermine it. I know that the hon. Gentlemen feel as strongly about that as I do. There are digital services on which the proprietors have literally put their shirts. They are providing a good service, and I am very much in favour of that entrepreneurial and innovative spirit being encouraged, or not being blown out of the water without some pretty fierce debate as to whether approval given is correct. The Secretary of State is concerned about approving a bid that is too competitive, especially as many commercial companies are feeling the squeeze from the biggest fall in advertising revenue in a decade. The BBC and the Independent Television Commission have different

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views as to the market impact of BBC 3 and are now working together to reconcile their positions before the Secretary of State reaches a decision on the application.

The hon. Members for Sheffield, Hallam and for Vale of York mentioned BBC expenditure on radio services and the importance of radio. As someone who gets his news mainly from the radio, as I suspect do many hon. Members, I feel that it is very important. I thought that it would be useful for the Committee if I detailed some of the sums that the BBC expends. It spent £290 million on its five UK-wide radio services in 2000–01, plus £163 million on national, regional and local services and £4.5 million on its new digital radio service. Those are considerable sums. The increase in the BBC Digital Radio service will be reflected in future increased expenditure. It is a good deal of money.

Miss McIntosh: Does the Minister have comparable figures in respect of what commercial radio has paid for digital radio? My impression is that investment in that has been enormous.

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