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Business of the House: Debates, 17th January

3.20 p.m.

The Lord Privy Seal (Viscount Cranborne): My Lords, I beg to move the Motion standing in my name on the Order Paper.

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Moved, That the debate on the Motion in the name of the Lord Morris of Castle Morris set down for tomorrow shall be limited to three-and-a-half hours and that in the name of the Lord Carter set down for the same day to two hours.--(Viscount Cranborne.)

On Question, Motion agreed to.

Police Bill [H.L.]

The Lord Chancellor (Lord Mackay of Clashfern): My Lords, I beg to move that this Bill be now read a second time. This is a consolidation Bill which brings together and makes more readily accessible the existing law relating to the organisation and administration of the police which is presently to be found in the Police Act 1964 and certain other enactments. For the most part, the Bill extends to England and Wales only, because Scotland and Northern Ireland each have their own legislation in this area.

Consolidation is desirable in this case because the 1964 Act has been heavily amended by later Acts, most notably Chapter I of Part I of the Police and Magistrates' Courts Act 1994. The Bill also includes those provisions of the Police and Criminal Evidence Act 1984, as subsequently amended, governing the establishment and operation of the Police Complaints Authority.

I take this opportunity to offer my thanks--and I am sure those of the whole House--to the draftsman of the Bill and of the other consolidation Bills which will follow it during this Session for continuing their important work. If your Lordships are content to give the Bill a Second Reading, it will be referred in the usual way to the Joint Committee on Consolidation Bills. I commend the Bill to the House.

Moved, That the Bill be now read a second time.--(The Lord Chancellor.)

On Question, Bill read a second time, and committed to the Joint Committee on Consolidation Bills.

Employment Rights Bill [H.L.]

The Lord Chancellor: My Lords, I beg to move that this Bill be now read a second time. The Bill is the first of two linked consolidation Bills in my name on the Order Paper. If I may, I shall speak to them together and then move the second formally.

The two Bills restate most of the employment legislation which remained unconsolidated after the Trade Union and Labour Relations (Consolidation) Act 1992. Your Lordships will note that the Bills have the same short titles as Bills which were introduced in the last Session of Parliament, and indeed their form and content are very similar as well. The previous two Bills did not complete their passage through this House as a number of relevant developments took place after they had been considered by the Joint Committee on Consolidation Bills. These included amendments which were made during the passage of the Bills which became the Pensions Act 1995 and the Disability Discrimination Act 1995, the making of new regulations providing for

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consultation with the representatives of employees who are to be made redundant in circumstances where they are not represented by a trade union, and the increase of various monetary limits in the Employment Protection (Consolidation) Act 1978.

Each of those developments needed to be reflected in the two consolidation Bills. Taken together, however, they would have necessitated heavy amendment of those Bills at a comparatively late stage in their progress. I concluded therefore that the better course of action would be not to proceed further with the consolidation Bills in the last Session but to introduce new Bills this Session, which could then be considered afresh.

If your Lordships are content to give the Bills a Second Reading, they will be referred in the usual way to the Joint Committee on Consolidation Bills. I commend the Employment Rights Bill to your Lordships.

Moved, That the Bill be now read a second time.--(The Lord Chancellor.)

On Question, Bill read a second time, and committed to the Joint Committee on Consolidation Bills.

Industrial Tribunals Bill [H.L.]

The Lord Chancellor: My Lords, I beg to move that this Bill be now read a second time. I have already referred to the Bill and I commend it to the House.

Moved, That the Bill be now read a second time.--(The Lord Chancellor.)

On Question, Bill read a second time, and committed to the Joint Committee on Consolidation Bills.

Broadcasting Bill [H.L.]

3.23 p.m.

The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood): My Lords, I beg to move that this Bill be now read a second time.

I am delighted to bring forward the Broadcasting Bill. It amends the regulatory structure introduced in the 1990 Broadcasting Act and is designed to ensure that the new digital technology benefits viewers and listeners and that British industry maintains and develops its leading position in this area.

I am confident that your Lordships will scrutinise it rigorously, but I also hope you will be able wholeheartedly to support its aspirations. I do not, however, suggest that the Bill as drafted cannot be improved. Indeed, the Government intend to introduce some amendments at the Committee stage, to which I shall refer later.

The Bill is very complicated, but reflects four key policy principles: first, to safeguard and encourage plurality and diversity; secondly, to maintain our unique tradition of public service broadcasting, including not only the public broadcasting corporations but also the independent sector; thirdly, to foster the competitiveness

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of the UK broadcasting industry, which leads the world in digital technology; and, finally, to maintain standards of impartiality, taste and decency.

I should like now to turn to Parts I and II of the Bill, which concern digital terrestrial broadcasting. I shall begin with digital terrestrial television. Digital television promises to have a greater impact than the introduction of colour. Sound and pictures are converted into binary code. Using a process called digital compression, the transmitter sends not the whole image, but only the information needed to effect changes between frames. This uses much less spectrum than the existing "analogue" process.

Through another process, known as "multiplexing", the signals of several broadcasters are combined into a single stream on a single frequency channel. Thus there is no longer a direct one-to-one relationship between a television service and a frequency. The signals are finally received and decoded by digital receivers or set-top boxes attached to existing sets.

Initially these advances will offer at least 18 national television channels on six multiplexes, which, in the medium term, will serve from 60 to over 90 per cent. of the population. There will also be improvements in picture quality, increased potential for widescreen, and some potential for interactivity, enabling viewers to choose different soundtracks or camera angles for the same programme.

In the longer term, the coverage of digital terrestrial television can be increased to levels similar to that of current analogue transmissions. Once that happens, frequencies currently used for analogue transmission might be released for other uses. Five years after the introduction of digital terrestrial television or once 50 per cent. of the population has digital receivers, whichever is the sooner, the Government will review setting a date for the so-called "analogue switch-off".

Cable and satellite broadcasters can provide hundreds of channels. They can begin digital transmission now. But terrestrial delivery has certain advantages. It is capable of being received by virtually the whole country; it uses existing aerials; it will not require a satellite dish or expensive cabling; it will be better suited to portable reception and it provides flexibility for regional programming.

Digital technology offers much for radio as well, particularly for the quality of in-car reception. And it is on radio that the first digital terrestrial services have already begun. The BBC began its existing national services on its own digital multiplex on 27th September 1995, and those services will soon be supplemented. In addition there will be a multiplex for at least six digital independent national radio services and, in most areas, a multiplex offering six local digital services. We have decided that a further digital radio multiplex should be used for extra local services in areas of greatest demand, including London and other major cities. Unfortunately, technical constraints and international agreements mean that some areas may in the medium term be unable to receive local digital radio services. We shall clarify the position as soon as possible.

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Digital technology will also enable improved additional services; for example, advanced teletext, data services, or in-car direction finders. However, since the spectrum employed is primarily intended for broadcasting, the Bill ensures that at least 90 per cent. of digital capacity on each multiplex must be made available for the provision of television and radio programmes.

At present there are no digital television sets or set-top boxes. The digital audience is almost zero. Major investment is needed to produce the transmission infrastructure and the programming to be carried on it. We therefore concluded that frequency channels should be allocated to multiplex providers rather than individual broadcasters. That makes it easier for large numbers of broadcasters to participate, not just those large enough to manage a whole channel. It also allows non-broadcasters with relevant technical and commercial expertise to participate.

The Independent Television Commission will license television multiplexes, which will be awarded to those who are best able to meet three key criteria: investment in infrastructure; investment in promotion and marketing (perhaps involving measures to reduce the cost of receivers) and programme variety. The Radio Authority will license independent radio multiplexes.

Digital broadcasting is a major, long-term investment. Its investors must have a fair chance of a return. So multiplex licences will run for 12 years, with the opportunity to renew for 12 more. No payments will be made to the Exchequer in the first period. But, except for local radio, a percentage of revenue reflecting the state of the market will be payable for the second.

Public service broadcasters have particular requirements and duties placed upon them. We would like them to help launch digital broadcasting. So we shall reserve half a multiplex for each public service television channel. The BBC will be offered control of the multiplex with the greatest potential coverage. Channel 3, Channel 4, Teletext, and, in Wales, S4C will share the multiplex with the second greatest coverage.

Channel 5 will be offered half the space on the multiplex with the third highest coverage. This is expected to reach around 80 per cent.--more than the projected reach of Channel 5's analogue service.

In return for their guaranteed places, public service broadcasters will be required to simulcast their existing analogue services on digital--that is to say, to broadcast them at the same time--in their entirety and free-to-air.

Public service broadcasters will also be able to do completely new things. Half a multiplex is sufficient to simulcast in widescreen and to provide at least one, and possibly two, further full programme services, which may be funded by advertising, by subscription, by pay-per-view or by a mixture of all three. The BBC is also free to provide new programme services on its multiplex, and has said it plans to do so.

On radio, the BBC is already operating its own national multiplex. The three existing independent national stations--Classic FM, Virgin and Talk Radio--will be offered guaranteed places on the second national multiplex. This will leave space for three new stations.

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Digital capacity is tighter for radio than for television, so there is less scope for existing broadcasters to provide new services.

Currently, independent radio licences are awarded for eight years, at the end of which there is full re-tendering. It would be unattractive for the independent national radio companies to invest in digital when they could lose their analogue licence, and thus their digital guaranteed place, within a very few years. We therefore propose that existing independent national radio broadcasters who accept guaranteed places will be able, for one period only, to renew their analogue licence, subject to revised cash payments negotiated by the Radio Authority. We shall be introducing a government amendment to that effect.

BBC local radio bears public service responsibilities, and capacity will be reserved for them on local multiplexes. But limited capacity precludes guaranteed places for independent local radio stations. However, independent local stations which are part of successful applications from multiplex providers will, like their national counterparts, be allowed to renew their analogue licences once.

I should like to conclude my remarks on the digital elements in the Bill by mentioning three specific points. The first is programming at local, regional and UK national level. Our revised proposals for Wales mean that Channel 4 will be able to offer digital viewers its existing analogue service, in full and with the same scheduling as the rest of the UK. And, on digital, S4C will be free to expand or complement its peak-hour Welsh language service, which itself must be simulcast.

More generally, there is likely to be demand for increased regional and local television programming throughout the UK. The Bill caters for this. As I have said, one of the principal criteria on which the ITC will judge applications is the variety of programme services prospective multiplex providers intend to transmit. We expect the ITC to take full account of proposals for local, regional, community and special interest channels and programming as an important element in assessing variety. Moreover, digital broadcasting will make it easier to split services between different regional and local areas.

The second point relates to ownership. The Bill seeks to encourage investment in digital technology while preventing the abuse of dominant positions and the excessive accumulation of control over the new digital channels. To encourage investment, there will be no constraints on cross-ownership between multiplex providers, broadcasters and the providers of the conditional access systems. A transmission provider may also be a multiplex provider.

Multiplex providers' licences will require them to treat broadcasters,

    "fairly, reasonably and on a non-discriminatory basis".

Moreover, the Bill provides that no more than three of the six television multiplexes may be controlled by the same organisation. Nor may a single broadcaster dominate the digital medium. For television, there will be a points system limiting any broadcaster to around

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25 per cent. of new digital services. For radio, broadcasters will be limited to one national station, and to one (or in some cases two) local stations per multiplex.

The third point concerns the control of conditional access systems. Digital broadcasting will allow subscription and pay-per-view services on terrestrial television. Providers of the encryption technology and subscription management services should not be able to abuse their position as "gatekeepers". We intend, through licensing, to ensure that they do not discriminate unduly between broadcasters or multiplex providers and that they do not unreasonably refuse access to their services.

This issue is not covered by the Bill because the controls will be introduced through amendments to licences issued under the Telecommunications Act 1984. The Government yesterday published a paper setting out detailed proposals on exactly how this should be implemented.

I turn now to the proposals in Clause 62 and Schedule 2 to the Bill concerning media ownership. These aim to allow British companies greater scope to respond to technological change, while maintaining diversity and plurality. Since 1990, the media industry has seen major changes. Cable and satellite broadcasting has expanded dramatically. Commercial radio has grown very considerably. New technology has forced down costs for the press. Digital broadcasting provides further potential for major expansion. It was against this background that the Government decided to review the cross-media ownership regulations in the Broadcasting Act 1990.

We remain convinced that, because of its ability to inform the public, influence opinion and engender political debate, the media make up an industry unlike any other. It is central to our culture, our democratic system, our access to information and our way of life. Its regulation must reflect that. Nevertheless, technological and business developments make liberalisation of the extensive existing ownership controls highly desirable.

Most British media companies specialise in one single area: the press, television or radio. That fragmentation is underpinned by prohibitions on cross-media ownership. But technological change provides the opportunity for newspapers, broadcasters and production companies to apply their traditional expertise in new and complementary areas.

Meanwhile, competition is increasing. Only major media companies can make the investments and take the risks associated with the modern media market. We want to see UK companies succeeding in the domestic and international marketplace. The new rules therefore relax existing constraints on cross-media holdings, allowing groups to control a mix of newspapers, television and radio licences. They will also abolish the limits on the number of Channel 3 television and independent radio licences which one company may control, replacing them with a simpler single measure based on shares of the overall television and radio markets.

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These new limits directly reflect readers', viewers' and listeners' actual use of the media, at both national and local level. We intend to use audience share to limit holdings in television, and newspaper circulation to limit the ability of powerful newspaper groups to buy into broadcasters. The radio points system (which measures potential audience) will remain as the method for limiting holdings in radio. Audience share relates directly to the principle of plurality. That makes it appropriate in this context. Revenue shares reflect the market power of a media enterprise, rather than its ability to influence opinion and engender debate--and market power is primarily controlled through competition legislation.

Currently, nobody may control more than two licences to provide Channel 3 and Channel 5 television, or more than 35 local radio licences. The Bill abolishes these rules and proposes instead limits of 15 per cent. share of the total television audience, and 15 per cent. of the total points in the radio points scheme. We propose, however, to retain a few additional controls, specifically aimed at preserving plurality and diversity. No one will be permitted to own more than one national radio licence. No one will be allowed to hold a licence to provide a national Channel 3 service (such as breakfast television) and the licence to provide Channel 5. And where, as in London, there is more than one regional Channel 3 service, they must be separately controlled. All of these represent unavoidably scarce and powerful sources of influence--nationally or regionally--which must not be aggregated even within the overall 15 per cent. limit.

Newspapers are not subject to overall market share limits. However, it is important that dominant newspaper groups do not also become dominant broadcasters. The Bill will therefore prevent those groups having 20 per cent. or more of national newspaper circulation from acquiring Channel 3 and Channel 5 licences or radio licences or vice versa. But this restriction does not apply to the emerging markets of cable, satellite and digital terrestrial broadcasting.

For the same reasons the Bill also seeks to prevent the emergence of local media monopolies. The existing rule that the same person may not control regional Channel 3 and local radio licences whose areas significantly overlap therefore remains. We shall also retain the restrictions preventing one company holding multiple radio licences in a particular area. Radio operators will still only be allowed to own one FM station and one AM station in areas which are substantially the same.

Local newspapers will be able to own the holders of regional Channel 3 licences only where they have less than 20 per cent. of local newspaper circulation in that region. They may not own a local radio licensee if they have 50 per cent. or more of local newspaper circulation in the area concerned, and, where they have 20 per cent. or more of the circulation, they may not own local radio licensees who account for more than 50 per cent. of the radio points for the area. Reciprocal restrictions will apply to the stakes that broadcasters may hold in local newspapers within their broadcasting area.

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In determining the local newspaper market for the purpose of these controls, we shall include local freesheets but exclude national newspapers. Freesheets increasingly carry significant amounts of news and editorial. So they should be subject to the same restrictions as paid-for newspapers. They are part of the market in reporting news of local and regional significance, whereas national newspapers do not focus on reporting local issues. But if a national newspaper substantially differentiates its local or regional editions, the regulator will treat these as local papers, and they will be within the scope of these controls.

The Bill also proposes to allow joint ownership of cable, terrestrial and satellite television licences. However, since national newspaper groups have been able to establish significant holdings in cable and satellite, we propose to prevent those cable and satellite groups in which national newspapers with 20 per cent. or more of national circulation have an interest of more than 20 per cent. from controlling licences to provide Channels 3 and 5, or national and local radio. Again, the aim is to prevent joint control of dominant newspapers and dominant broadcasters.

Currently, local newspapers, local radio stations and regional Channel 3 services are prevented from owning cable franchises in their areas of operation. But since cable operators control a means of delivering programmes, not the programmes themselves, the Bill proposes to abolish these cross-ownership restrictions.

The Bill also revises the definition of "control" in the Broadcasting Act 1990. Our aim is to ensure that the legislation cannot be circumvented by arrangements which, while producing control in practice, do not technically breach the statutory definition. The revised definition allows the relevant regulator to conclude that control is exercised if it is reasonable, having regard to all the circumstances, to expect that a person will be able, by whatever means and whether directly or indirectly, to secure that the affairs of the body in question are conducted in accordance with his wishes.

These measures represent a substantial liberalisation. But we have also built a number of important safeguards into the Bill. First, alliances between newspapers and broadcasters will be subject to a public interest test. The Independent Television Commission and the Radio Authority will have the power to prevent newspapers acquiring broadcasting licences if they judge this to be against the public interest. There will be three criteria to assess this: promoting media plurality and diversity; maintaining a strong industry for the benefit of the country; and ensuring the proper operation of markets. The ITC and the Radio Authority will seek advice as necessary from the competition authorities.

A second important safeguard will ensure the regional nature of the Channel 3 network. The unique regional nature of ITV is a major strength. Channel 3 licences include commitments to both regional programming and regional programme production, which are closely monitored by the ITC. Most of the ITV companies regularly exceed their regional programming commitments and see that as in their commercial interests.

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Nevertheless, some fear that consolidation within the ITV network and newspaper control of Channel 3 licences could mean more metropolitan domination. Clause 63 of the Bill therefore enables the commission to vary a Channel 3 licence following a change of control, to include new conditions to preserve the quality, range and regional character of the existing programming.

Clause 64 of the Bill changes the current funding arrangements for the Welsh Fourth Channel Authority. Under the current system S4C receives a grant from my department equivalent to 3.2 per cent. of all territorial television revenues from advertising sponsorship and subscription in the previous year.

The television advertising market fluctuates considerably. This is unsatisfactory both for S4C, which needs to make business plans for serval years ahead, and for Government in planning public expenditure. The new arrangements will be based on the payment to be made to S4C in January 1997 under the existing formula. That amount will then be increased from 1998 onwards in line with the RPI. The Bill also empowers the Secretary of State to alter S4C's funding to reflect transmission costs.

Clause 66 amends the formula for securing the income of Channel 4. It gives the Government powers to alter by order the distribution of any Channel 4 revenue above its guaranteed income, by adjusting the percentages allocated to the ITV companies, to Channel 4's reserve fund and to Channel 4's current expenditure.

The present arrangements are not a subsidy to the ITV companies, but a form of insurance premium as a guarantee of Channel 4's long term future. Channel 4 has been tremendously successful in the past two years. But with Channel 5 and new digital services in prospect we still see the need for a safety mechanism for Channel 4 to secure its continuing success within its existing remit. Nevertheless, we want to be able to allow Channel 4 to retain more of its own revenues to invest in programmes. We propose to specify the relevant percentages nearer the time, taking account of the prevailing circumstances of the broadcasting market.

The BBC's new draft Charter and draft Agreement, discussed by your Lordships last week, provide for the development of the BBC's commercial activities. But they also ensure that the commercial operations are funded separately from the public services supported by the licence fee. Accordingly, the Bill empowers the ITC and the Radio Authority to license and regulate commercial services which are owned or partly owned by a company in which the BBC has a stake.

We announced on 27th November that the BBC's transmission services would be privatised and that the BBC would handle the sale. The Bill includes provisions designed to assist the BBC to transfer in the sale those rights within the BBC's transmission services which currently either cannot be transferred at all, or cannot be transferred without the consent of a third party. These provisions are similar to those at Schedule 9 of the Broadcasting Act 1990 concerning the former IBA's transmission network.

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Part IV of the Bill merges the existing Broadcasting Complaints Commission and Broadcasting Standards Council--another change foreshadowed in the 1994 White Paper.

We need effective mechanisms to benchmark standards, for canvassing viewers', listeners' and the public views, and to investigate complaints. The proposed new Broadcasting Standards Commission will build on the work of the two existing bodies in fulfilling these functions. It will be a single, recognisable, independent body dedicated to maintaining standards in broadcasting.

The new body's powers and functions differ slightly from those of its predecessor. In addition to the Code of Practice previously produced in the areas of taste and decency, the commission will now be invited to produce privacy and fairness guidelines. It will also be required to publish, in its regular reports, summaries of every fairness or standards complaint, whether they have been upheld in whole or in part, and details of all steps taken by broadcasters as a result of findings made against them. Such action would include both the direct response to the commission's conclusions and any internal measures taken. Broadcasters will thus need to demonstrate to the public that they have given the complaint due and proper attention within any timescale set by the commission.

One further proposal, which the Government intend to introduce as an amendment to the Bill, is to simplify the procedure for re-advertising independent local radio licences. The 1990 Act generally requires all local radio licences to be re-advertised at the end of their term. The Government propose to enable the Radio Authority to invite expressions of interest in an expiring independent local radio licence. If only the existing licensee is interested, then provided the authority is satisfied that the other criteria in the Act would continue to be met, the licence could simply be renewed. But if others are interested, and deposit a bond as a back-up, then it will be re-advertised in the usual way. This should reduce uncertainty, concern and expense, and allow radio companies to concentrate on making programmes, without damaging the chances for prospective newcomers.

Finally, your Lordships will wish to know that we shall be bringing forward government amendments on a number of technical points relating to the 1990 Act, following representations we have received from the regulators.

I began my remarks by noting that this Bill deals with an enormously complex subject, to which this speech is just an introduction. I have had to compress verbally what I wanted to say and I hope I have "multiplexed" my message clearly. I look forward to listening to your Lordships speaking with the plurality of voices we in government are keen to encourage. But, as I also said, I hope our debate will proceed on a largely non-partisan basis and we shall always be willing to help explain points informally if asked. The issues involved are very important for the future of our society, of our economy and our democracy. We have already shown we shall respond to well reasoned suggestions for improving our

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proposals, and I assure your Lordships that I shall pursue our debates in this House in a receptive but critical frame of mind.

The Bill is complicated, but it merits careful and constructive examination, not least because it deals with revolutionary technological developments at the cutting edge of the broadcasting and multi-media changes of the late 1990s, which are so important to both our citizens and our industry. I commend this Bill to your Lordships.

Moved, That the Bill be now read a second time.--(Lord Inglewood.)

3.49 p.m.

Lord Donoughue: My Lords, I thank the Minister for presenting us with such a comprehensive Bill which seeks to shape the structure and to regulate the behaviour of a wide range of diverse media activities. That required some courage and ingenuity on the part of the Government since the future of broadcasting is not easy to forecast. We on this side will try to be as positive and constructive as possible, not least because that is the spirit which the Minister usually brings to the House. I must add that I am grateful that I do not have to repeat all the technological explanations which the Minister so courageously went through.

Before getting down to the nitty-gritty of the Bill, I must first say how much I am looking forward to the maiden speech of the noble Baroness, Lady Smith of Gilmorehill. Her introduction to this House gave me personally as much pleasure as any in my decade here. She revives many memories, happy and sad, and her interest in the arts and media field is well established. She comes from a marvellous Scottish stable and we shall all enjoy her contributions today and in the future.

Noble Lords will be relieved to hear that I do not propose today to trudge through this highly complex Bill in great technical detail. That lies ahead in Committee. However, several issues of great principle are wrapped up in its technical jargon. We wish to highlight them now and shall later propose amendments relating to them. I suspect that some of our main concerns will be shared across the parties.

There is much in the Bill that we welcome, as it amends or fills the gaps in the tattered 1990 Act. It also grasps the digital nettle which promises several technical benefits to broadcasters and to viewers. We especially welcome the guaranteed access for existing terrestrial broadcasters. However, it is not all that simple or rosy. Technology is not the sole or the prime priority of broadcasting. Broadcasting is above all about programmes for the public to watch, and we shall judge the Bill by how it affects that.

Perhaps I may now summarise what seem to me to be the broad general consequences of the Bill for broadcasting. I would say that they will be to expand the commercialisation of British broadcasting; to multiply the broadcasting channels available while at the same time increasing the concentration of power controlling them; that many new channels will be targeted pay-per-view, thus fragmenting the national audience; and that, as well as a reduction in universal

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access, there will inevitably be reduced access for the less prosperous groups and localities in our society. Therefore, beneath an appearance of increased choice there will be a reality of reduced access to broadcasting for some.

Not all of that will give us great pleasure. Certainly the fragmentation of the audience, with some groups excluded, has implications for the cohesion and common knowledge of our democratic society. The share of public service broadcasting in that future landscape is apparently bound to be reduced. We regret that and will look to resist it while of course accepting that much of the technological tide is irresistible. However, what we do not always accept is the underlying philosophy of the Bill that the commercial tide is not only irresistible but also to be encouraged in every form described in the Bill.

We certainly welcome the fact that the BBC has been guaranteed a whole digital multiplex. I am not wholly clear how it will finance that risky investment. Last week we discussed the BBC's new Charter. The BBC's basic dilemma is that it must dramatically increase its commercial activities and revenues, including by pay-per-view which will be at the heart of digital broadcasting, yet that is bound to call into question its right to the licence fee which is essential to its public service broadcasting functions. I am not sure how it gets out of that vicious circle. Certainly, its share of British broadcasting will seriously decline, especially if it is excluded from televising major sporting events.

The principle of universality of access originally--long ago--provided free-to-air to all by the BBC is very important to us. That cannot now mean in practice that every single person can watch every programme on every channel regardless of ability to pay, but it does mean that there should be as far as possible access without technical hindrance by broadcasters to frequencies and by viewers to programmes--and viewers should include those with impaired hearing or impaired sight. That means that all broadcasters deemed fit and proper should have fair and equal access to a digital multiplex and to the decoders. It also means that all viewers should have fair access to the decoding technology which releases broadcasts to their sets. To us, that means satellite and cable as well as terrestrial.

The set-top boxes are potentially, but not inevitably, a natural monopoly. Most consumers will want or be able to afford only one. If that one is controlled by a programme service provider, and technologically can exclude other competing services, it is a vehicle of monopolistic practice. That critical issue is not properly addressed in the Bill. We do not accept that the existing telecommunications legislation is sufficient. There should be a strongly enforceable statutory requirement for common, fair and non-discriminatory access to any encryption or subscription management system. If the Government do not provide that here--I am bound to say that last night's press statement on licensing from the Department of Trade and Industry, which, unhelpfully, was not distributed to us, is probably not good enough--we shall seek to protect the public interest by tabling amendments in Committee against potential monopoly abuse.

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We are also concerned that there is no criterion of quality in the process of selecting multiplex operators. The miserable 1990 Act at least flirted with a quality threshold, but here there is no mention of programme quality among the several criteria for issuing multiplex licences. Do the Government not care about quality in our broadcasting? I am sure that that is not true. Are commercial expansion and profit their prime concerns? I hope that that is not true. We shall seek to reintroduce the quality criterion and I suspect that the ITC, as licence issuer, will welcome that.

The provisions on cross-media ownership covered by Clause 62 and Schedule 2 are somewhat changed since the White Paper and will attract much attention. They often take us, as they took the Minister, nearly into the realms of higher mathematics when assessing permitted ceilings of control and dominance. We support much of that. We accept that some loosening is required as the different forms of media--print, picture and sound--converge, but I must warn the Minister that I do not accept all the free market arguments currently floating around. Broadcasting is not like any other commodity, subject only to market forces. I agree with all that the Minister said on that. Because of its immense political and cultural significance, any excessive concentration of media power is of political as well as economic concern. That is why we welcome the safeguard of public interest to be applied to ownership and control issues.

We are, however, still concerned to preserve the precious regional identity and independence in British broadcasting. It seems likely that the proposed changes that will follow from the Bill could result in us having just two dominant ITV companies--I guess that one will be based on Carlton and another on Granada--plus perhaps a confederation on the Celtic fringe. We should try to establish minimum levels of regional programmes, staff and facilities. We must be very careful to ensure that local near-monopolies do not develop among our regional TV, radio, newspapers and cable. We will carefully scrutinise Clause 63 onwards and the relevant schedules accordingly.

It is worth pointing out that radio, which is often forgotten, is an important part of the Bill. British radio is of high quality and is often helpfully locally focused. We welcome the decision to roll forward the licences of existing radio companies, such as the very good Classic FM, provided that they take up the digital audio slots.

It puzzles me a little that independent local radio does not appear to have the same rights of access to the multiplexes as those provided for national radio and for local BBC and we will want to look closely at that. It also seems that radio is more constrained than TV in its scope for expansion. It is also more vulnerable to predators from other sectors.

I am concerned too that low population areas may not be able to support a fully subscribed local multiplex. We must consider how we ensure that they get off the ground viably. That is part of the continuing thread of my concern about the Bill. I am concerned about those who will lose out in the future media world--the outer areas of the United Kingdom which may not be

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adequately covered by digital and the less prosperous groups in society (the poor, the old and the unemployed) who will not be able to afford access to this expensive technology, either to the receiving equipment or to the pay-per-view services.

That raises the central question that is not answered in the Bill. What will be the date for switching from analogue to digital? When that happens will the marginal groups and the localities be deprived of most of the best of broadcasting if digital pay-per-view is beyond their reach or beyond their pockets? That issue must be faced and, it is to be hoped, resolved.

While talking of groups which lose out from the Bill, I must point out that its cross-media ownership clauses specifically discriminate against one newspaper group through the 20 per cent. ceiling on the national newspaper market. That excludes the Mirror Group from joining in terrestrial TV. I assume that that is not because it is the largest newspaper supporter of the Labour Party. I have heard argued that that is not discrimination because the 20 per cent. ceiling also excludes News International. But that is disingenuous and meaningless in commercial reality since the latter group has its own large share of the television market and, I presume, would not wish to enter the crowded and less profitable terrestrial market. It would seem to me fair to correct that particular discrimination if possible. It strikes me, without any commitment, that an amended ceiling at, say, 25 per cent. would do that and then the continuing public interest test could still be applied.

A number of other particular issues warrant the attention of the House. The Channel 4 funding question, which is covered in Clause 66, has aroused much heat and a great volume of briefing paper. The compromise formula proposed by the ITC--that is, moving to zero payments but retaining the mechanism after 1997--has practical attractions, especially with the uncertainties of Channel 5 ahead. No one handling the 1990 Act ever imagined that it would work out so unfairly to Channel 4, with so many millions of pounds moving out of Channel 4 programmes and into the pockets of ITV shareholders. Had that been foreseen the Bill would never have passed. We shall look at it carefully to see how to get a fairer balance. What is certain is that we must have clarity after 1997 and must not have an annual battle over the amount of cross-funding. It is not clear that we can achieve that with the present mechanism.

While considering television funding, we shall want to look at the whole issue of taxation and levies on television. It is not currently a level playing field. We shall consider ways of ensuring fair taxation of our broadcasters. We also want to ensure fair access to programming by British and European programme makers, whether by minimum programme origins or in terms of investment or percentage of turnover, and we shall be influenced by the developing European position on that.

A large section of the Bill treats the accountability for standards in programme content and the merging of the bodies that monitor that into the new Broadcasting Standards Commission. We broadly welcome that

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rationalisation, although I personally would like to see more provision for greater involvement by the consumers of broadcasting. They should be involved not just in after-the-event complaints about taste and so forth but in influencing what the consumers want from broadcasting; for example, on the televising of sports or on the date for switching off analogue.

The privatisation of the BBC transmitters will also attract our close attention. I can say now that our reaction will depend on whether the Government can clarify exactly how the proceeds are to be distributed to the BBC and also on the precise arrangements to regulate the transmitters to avoid predatory pricing and discrimination when they are privatised.

I began by stating our prime concern with the fundamental principle of common and fair access to broadcasting which is not satisfactorily guaranteed or indeed even covered in the Bill. My final specific and probably most important point also relates to a further aspect of common access; that is, the televising of sports. That is also ignored by the Bill.

We have recently seen dramatic developments in this area, with satellite subscription channels buying up virtual monopoly rights to televise whole areas of British sport. As examples I can mention the following: in rugby the super league and the championships; in Rugby Union the club, county and perhaps soon the five nations; premier league soccer; in tennis the Davis Cup; in cricket the overseas tests, home one-day internationals, the county championship and Sunday league; in golf the Ryder Cup, the US Open and the US and European PGA; in boxing many managers of leading boxers; basket ball; ice hockey; the snooker opens; and the Olympics around the corner.

I am not concerned to oppose the particular broadcaster involved. In the future it may well be another. We are concerned here with the principle. The implications of this are profoundly worrying and I especially look forward to the speech of my noble friend Lord Howell, who has unequalled experience and authority in this area. This development means that the majority of the British people will not have access to most great British sporting events where in the past they have had national and free access. The poor, the old and the unemployed will certainly not be able to afford much subscription or pay-per-view. The BBC and ITV will not be able to afford to buy the rights to broadcast them; and without sport their chance of survival in the highly competitive media world described in the Bill are worryingly thin.

Anyone who cares that the nation should have access to great sporting events and that the BBC and ITV should be enabled to survive must care about this issue of principle. The Prime Minister certainly cares and has said so publicly. I hope that the Minister noted that. The all-party Select Committee concluded recently that major sporting events must be preserved for universal access. Mr. David Mellor, who when he was a Minister steered through the 1990 Act, said last week that he had made a mistake and that protection must now be strengthened. So far, the Government have said that this is a matter just for the market and that the sporting

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bodies must be allowed to sell sport at the highest price to any bidder, however minority a broadcaster that bidder may be. We do not wholly accept that.

Our understanding is that sport should receive as much money as is reasonable, given the other claims. The 1990 Act tried to provide some guarantees but it ignored the one real threat; namely, subscription satellite. We shall look for ways, through amendment, in which to reinforce the intentions of the 1990 Act and to review the protected list.

I ask all sides of the House to join us in finding a solution which is fair to the broadcasters, to the public and to the sporting bodies. It will be sad if that balanced and moderate approach is opposed.

Finally, I should like to put to the House what I see as the central dilemma at the heart of this Bill; namely, how do we make the digital revolution happen? When one listens to the cheerleaders of the free market, one can get carried away into believing that we shall automatically have this world of a limitless choice of wonderful programmes. I have said that in fact the choice will not be for all.

I doubt also the automaticity. The digital revolution, costing £8 billion to launch, may prove very cautious and patchy. At present there are no viewers, no broadcasters and no equipment. Viewers will not pay £500 to £600 for new receiving equipment until there is a range of high quality digital programmes. Programme makers, including the BBC, will not commit themselves expensively until there are more guaranteed viewers and revenues. Multiplex operators can do little without broadcasters, and equipment makers will not invest heavily without a big market. It would be like one of those bicycle races where everybody goes as slowly as possible compatible with staying upright and waits for somebody to take the lead in order to ride in the slipstream. Only one broadcaster, Sky Satellite, would stand outside that paralysed circle. Through a mixture of entrepreneurial foresight, which I admire, and privileged treatment by this Government, it will sit with its digital technology in place, with more channels to offer, with its experience of pay TV and free from the taxes and levies which burden its terrestrial competitors.

Terrestrial digital television will be launched successfully and will survive on a national scale only if the initial investment can be encouraged and the programmes have the necessary quality and variety, including the sports coverage which its viewers require.

The question for broadcasters and the Government is how that can be achieved. I suggest that it can be achieved only by encouraging the rapid national take-up of digital receivers so that broadcasters have an audience and the equipment manufacturers have a mass market. The switch-over day can then be guaranteed. The Government may need to inspire that since market forces may not. I look forward to hearing any of the Minister's views on how to ensure that the digital revolution takes place. It will certainly need vision to bring about the best kind of British broadcasting future.

4.14 p.m.

Lord Thomson of Monifieth: My Lords, I join

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immediately with the noble Lord, Lord Donoughue, in saying how much I look forward to the maiden speech of the noble Baroness, Lady Smith of Gilmorehill. I also join the noble Lord in thanking the Minister for explaining so clearly this complex and technical Bill. He even managed to increase my understanding of the complexities of multiplex digital broadcasting.

As has been said, because of the character of the Bill and because it has so many different parts, even though they are interlocking parts, it is essentially a Committee Bill. It is likely to have a rather long Committee stage. Therefore, on Second Reading, I shall concentrate on what seem to us on these Benches to be some of the main issues in the Bill and on some issues which are not in the Bill but should be. I welcome the Minister's readiness to consider improvements to the Bill and I hope that he will listen to ideas with a sympathetic ear.

This is a very important Bill. Together with the new BBC Charter and Agreement, which we debated last week, it is probably the last major broadcasting legislation of this century; it will shape British broadcasting in the early years of the 21st century. In the face of vast technological change, the development of digital transmission, and the fact that multi-channel television is now with us and that the old frontiers between print and electronic media are disappearing, the challenge for Parliament and the Government is to try to define what is the public interest in a very difficult situation and how it can best be preserved.

Alongside traditional players--the BBC and commercial broadcasters--there are now, with digital broadcasting still to come, new players in satellite and cable television. Among them is the dominating presence of BSkyB. And behind BSkyB is Rupert Murdoch and his News Corporation. The Bill surely presents the opportunity for the Government and the Labour Party in Opposition to summon up their courage regarding the future role of Murdoch's interests in the British media scene.

By any standards, Rupert Murdoch is in my judgment a brilliant and aggressive media innovator and a risk taker on a breathtaking scale. He has made the most of the government-created loophole, the so-called non-domestic satellite. Now that BSkyB has reaped the rewards of the risks he has taken, surely the time has come for it to be treated fairly but on the same terms as its competitors.

Sky's successful establishment of, for example, the 24-hour news service is a major advance in the public interest. The creation of its sports channel--we shall come in a few moments to some of the implications--providing single-sport coverage over long periods of time, again, is in the public interest because it is something beyond the capacity of other terrestrial broadcasters. It enhances choice.

Now that newspaper groups are to be allowed to bid for ITV franchises and vice versa, I believe that Sky has a case in that area. I put the matter more generally than the noble Lord, Lord Donoughue, who expressed it in terms of the particular interest of the Mirror Group. But there is an objection to the 20 per cent. rule in that

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sphere. In effect, it is a practical ban on two newspaper groups--the News International group and the Daily Mirror group. For reasons of general equity, I cannot see why, for example, the Daily Mirror should be banned from going into the TV ownership business because it is a few ownership percentage points above the Daily Mail or the Daily Express.

I agree entirely with the Minister that dominant newspaper groups should not be allowed to become dominant broadcasters. But would it not be better to treat all the press tycoons equally and then apply a rigorous public interest test via the Office of Fair Trading and the Monopolies and Mergers Commission?

If my plea for fairness between newspaper groups is heeded, should there not be fairness between commercial broadcasting groups? ITV pays nearly £400 million per year to the Treasury and under the ITC licences is obliged to spend large sums of money on original programmes. Sky is licensed by the ITC, as are all the other organisations, but pays only £750,000 for its licence. It pays nothing to the Treasury and so far has a very poor record of expenditure on original programming despite revenues which now approach £800 million. The Government's excuse is that ITV consists of domestic broadcasters using domestic frequencies while Sky is that rare breed--the non-domestic broadcaster using satellite frequencies. That is absolute humbug. Sky is a domestic broadcaster which produces television programmes for domestic audiences in competition with ITV. I fully concede and welcome that it provides useful British jobs in both London and Scotland. Its satellite frequencies are international but they are allocated under an agreement to which Her Majesty's Government are a party. In our judgment Sky should be treated as the domestic broadcaster it is. We should look at the Bill to see what opportunities exist to press that proposition.

The noble Lord, Lord Donoughue, raised the question of conditional access and the technology of the smart card for subscribers to satellite and cable operations. At present this is dominated by a Murdoch company called Videocrypt. On any principle of competition law it seems wrong that there is no public control where a programme provider is also the gatekeeper and can control access to other programme providers who compete with him. I echo the words of the noble Lord, Lord Donoughue. Sky argues that others could have taken the risks it did and could still set up rival systems. However, what matters is the interests of ordinary viewers to be able to buy a single black box.

I am genuinely puzzled by the government position. The Minister mentioned some announcement by the DTI yesterday. Like the noble Lord, Lord Donoughue, I had no notice of that but I read carefully the questions and answers provided by the Secretary of State when the Bill was launched. I find the information curiously evasive. It talks about doing something sometime in the future in relation to digital television under a European Union directive but promises nothing on present analogue broadcasting on satellite and cable. Yet the Secretary of State is on record as saying:

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    "I recognise we must take steps to prevent unfair competition in this field ... The Government is committed to a vigorous response to proven anti-competitive behaviour in this field as in others".

What is the Government's response to those stirring words? The Secretary of State's response to the question of whether Murdoch's dominance could be challenged was that the market would decide. The public interest now requires that in the proposed legislation there should be a provision to force the Murdoch interests to license Videocrypt to other service providers for a regulated fee. This is a serious broadcasting issue rather than a DTI issue, and for my part I believe that the right body to establish that fee is the ITC.

My final point on Sky relates to sporting rights. Mr. Murdoch's money has transferred sporting events to exclusive broadcasting on pay television, depriving millions of viewers of what they had been accustomed to see free on public service channels. Sky's latest bid is to buy next century's Olympic Games. As was made clear by the noble Lord, Lord Donoughue, this is not an easy issue. The legislation offers an opportunity to strike a new balance between, on the one hand, the very proper interests of Sky, which I concede freely has added to public choice of programmes in the sporting field, together with the interests of sports providers, who did not have a fair deal under the old duopoly of the BBC and ITV, and, on the other hand, the principle of universal reception of major sporting events in this country. There is need to draw up a fresh list of these events and to legislate to ensure that such events cannot be exclusively transferred to subscription channels. In this regard, I refer not only to pay-per-view channels, as is the present law, but also to monthly subscription channels. I do not believe that the considerations here are mutually exclusive. If one has regard to sporting occasions that continue over many days, as some do, there is a lot to be said for a subscription channel that covers the whole activity from beginning to end, provided that the major events within those few days are available to everyone on the basis of universal reception.

I turn to the Bill's changes relating to the ownership of television companies. The vitally important issue here is the preservation of the regional character of ITV in the face of greater concentration of ownership. The ITV system provides twice as much regional programming as the BBC, and all the figures show that it is among the most widely appreciated programming in terms of the audience. Clause 63 is crucial in this respect. I welcome its inclusion in the Bill. However, we shall seek to strengthen it with amendments to ensure that regional programmes continue to be made in the region by programme makers who live in the region and know all about it, not simply by people who fly in from outside. The Minister will appreciate that many of the smaller regional companies, who are potential targets of takeover bids, are proud of their local programming and often do a good deal more than the minimum required by the licence. We shall also want to look at amendments to ensure that on takeover the new owner is required to maintain the enhanced level of programming which viewers have been enjoying from the incumbent rather than simply the original minimum under the terms of the licence.

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Clause 66 is concerned with the new formula for Channel 4. I do not want to go over arguments that the noble Lord, Lord Donoughue, has already mentioned. It was never the intention of Parliament in erecting an insurance policy--as the Minister termed it--for the special remit of Channel 4 that there should be massive subsidies from the minority channel to the ITV companies who provide the mass appeal channels. It is right that once the present timescale is completed at the end of 1997 there should be a new arrangement. I say to the Minister that our present disposition is that at that stage the best solution will be to abolish the funding formula altogether. I believe that Channel 4 was unreasonable some time ago in seeking an immediate change in this matter. The point at which the Bill provides a moment for review is the right time to do it. For my part, I believe that it is better to go for a simple abolition at that stage rather than the Bill's compromise, which is a recipe for continuing bad blood in the Independent Television system.

I leave the complications of the digital multiplexes to the Committee stage, except for two points. One relates to the need to insert a quality criterion and the other relates specifically to the Welsh fourth channel. Unlike other existing broadcasters, the Welsh fourth channel feels that the arrangements, which will prevent it having half a multiplex, mean that in Wales it will not be allowed to develop the possibilities of digital broadcasting, high-definition television and wide screen that will be available to fellow citizens in other parts of the United Kingdom. We wish to have an assurance from the Minister that when sufficient band width eventually becomes available ways may be found to redress that inequality.

The Minister also mentioned the new funding arrangements. There is great concern in S4C about the implications of those arrangements. It believes that, given the extra costs of digital broadcasting, it may face an extra £27 million in the three years from 1998. I am sure that my noble friend Lord Geraint will develop those matters more fully, and with greater authority, than I can. I hope that the Minister will be able to give a reassuring response to those concerns.

There are many other aspects of the Bill. There is, for example, the question of standards which I do not wish to go into beyond referring to the Broadcasting Standards Council. I was an original critic, in days gone by, of the establishment of the council, but under the experienced direction of Colin Shaw, and now under the chairmanship of Lady Howe, it has been performing a constructive, serious and sensible role in terms of sustaining the standards of broadcasting in this country. I also echo what has been said about radio. Radio is continually overshadowed by television issues--it has been overshadowed in my speech today--but I am very much aware that radio is an important medium. For millions of people it is sometimes more important than television. There are various matters in relation to radio that we shall want to apply our minds to in Committee.

I come back to where I started. The Bill underlines that we are no longer in a cosy world of national broadcasters cosily regulating. There is now a global world--indeed a global marketplace--of information

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technology, of which broadcasting is just a part. The British broadcasting industry is only a small part of this global scene, although from Britain's point of view it is an important part. The broadcasting industry in Britain employs 42,000 people and it contributes more than £3.5 billion to the British economy. Britain is the biggest exporter of broadcast programmes after the United States although I think it is a good long way behind the United States. That is all of great significance. Of even greater significance, however, is the fact that, as the Minister said, broadcasting--indeed, the media industry--is an industry which, in his words, is unlike any other. It is much more than an industry. It accounts for the way people spend 40 per cent. of their leisure time. According to an astonishing and terrifying statistic, in a third of our homes there are more than three televisions. Broadcasting is the biggest single factor as regards making an impact on the climate of opinion in this country and on our national culture. That is the justification for this Bill finding forms of regulation that make the new telecommunications technology our servant and not our master.

4.32 p.m.

The Lord Bishop of Southwark: My Lords, the Bill that is before us seems at first sight a very technical Bill, dealing as it does in a large part with regulating the development of digital broadcasting. The detail of such a system is something that is certainly beyond my knowledge, capabilities or expertise, but the implications are clear--there will be more channels available and media ownership will be concentrated in broader based companies.

Friends who travel more extensively than myself tell me of the size of the New York TV listings guide. They say that it is more like a telephone directory. There is a vast array of channels and enormous variations in the standards of programming that can be seen. In our own country with the advent of satellite and cable we are beginning to experience something of this. There is more choice and there is more specialisation available for those able and willing to pay. The developments that this Bill prepares us for will not only extend this trend but will also provide much greater potential for the expansion of services that are available.

Since the Church fell out with Galileo, Christians have often been seen as people who want to stand in the way of progress. I am not of that mind and neither is the Church. I welcome this Bill and the developments that will follow, but that does not mean that I do not have concerns. I was particularly interested to read Part IV of the Bill which effects the merger of the Broadcasting Complaints Commission and the Broadcasting Standards Council. One statutory new body will be established in their place--the Broadcasting Standards Commission. On the basis alone that this reduces the number of quangos that exist I warmly welcome that recommendation. It seems to me that this new body, the BSC, by combining their roles will be better able to perform the functions of its predecessors and will have more teeth to enable it to do so. It has to be said, however, that the detail of the

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working of the new body will require careful consideration. I believe that there is a good deal of work to be done in this respect.

With the growth in the number of broadcasters and the number of programmes broadcast there will be a need for greater vigilance if standards of taste and decency are to be maintained and if programmes are to deal fairly with individuals and not misrepresent the truth. There is an ongoing debate, to which some of your Lordships may well have contributed, that centres on whether broadcasters should set standards of taste and decency or whether they must reflect the standards current in society; whether television and radio are merely mirrors on society, or whether they are agents and catalysts for change.

Integral to this debate is the whole question of whose standards are the ones that count. The values that I hold dear and that shape my life would certainly not be held by some. The values that many espouse nowadays I find difficult to accept. Yet I believe that even in such a pluralist society as our own there is still a set of core values to which the majority would subscribe. It is this set of values, among them respect for human life; respect for personal freedom; and respect for the individual, that I believe it is the duty of broadcasters to uphold. These values are worked out in the response we make to violence, sexual exploitation, blasphemy and a general inhumanity and lack of decency that we sometimes see on the television screen in particular. Even if we pay to see a channel of our choice in the privacy of our sitting room, should we be allowed to watch something that degrades another person or offends the values of the majority in our society? I believe that we should not, because those who are most easily influenced by what they see or hear might be inclined to turn their fantasy into our reality and so continue what is seen by many as the downward spiral in moral values.

This may be an unpopular thing to say and something that would be condemned by those who argue for civil liberties. While personal freedom is fundamental to the Christian understanding of the individual, yet higher on the agenda is responsibility for one another. When the liberty of one person to commission, broadcast or view something threatens the liberty or the integrity of another, I believe that we have a duty to protect the freedom of the latter before the liberty of the former.

I believe that in the age of digital broadcasting and of broader and more concentrated media ownership, the BSC will have a tremendously difficult job to do and will carry great responsibility for monitoring on our behalf what is happening on our television screens and on our radios. I believe that the provisions made for the Broadcasting Standards Commission in this Bill will provide the right sort of body to shoulder this important task on behalf of the nation. I would simply ask that those who lead it do so with courage and with a strong sense of promoting the very best of values, and not of being pulled down to the level of the lowest common denominator. Only in this way can we hope to maintain those core values that continue to give us identity,

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witness to our humanity, and provide something of the social cohesion that is so vital to the health and wholeness of our nation.

4.39 p.m.

Lord Blake: My Lords, I welcome the Bill and the admirable speech of my noble friend who introduced it. It is a complicated Bill and there will no doubt be a great deal of discussion of it in Committee.

It would be unwise for any one speaker at this stage to try to cover even half of the provisions of the Bill. Therefore, I shall concentrate on the particular provision which happens to interest me. In doing so I should declare an interest. I was a non-executive director of Channel 4 many years ago. At that time, as I believe is still the case, there was a system of rotating directorships under which one served for three years and was then chucked out. Since then I have had no financial connection with Channel 4. Even then the finances were not very lavish.

I agree entirely with what the noble Lords, Lord Donoughue and Lord Thomson of Monifieth, said about Channel 4. The formula that was produced to finance Channel 4, however well meant it was at the time--and I am sure there was a genuine effort to produce a safety net for Channel 4, whose fortunes at one time perhaps looked doubtful--is out of date and irrelevant. There is no danger of Channel 4 failing to reach the benchmark of 14 per cent. of total terrestrial advertising revenue. Most media analysts are equally convinced that that is not likely to happen. Therefore, the case for continuing the arrangement is nil.

The Government have recognised that in Clause 66 of the Bill. It is gobbledegook, but if one can unravel its meaning it provides that the Secretary of State will have the power to diminish the take of the independent television companies from 50 per cent. downwards. (There is an argument about whether it should be 50 per cent. or half. I always thought that they were the same, but apparently it is an important matter to substitute "50 per cent." for "half".) That is something, and presumably it will give the Secretary of State the power to reduce the 50 per cent. figure to nil.

On the other hand, as the noble Lord, Lord Thomson, said, that is a formula for trouble. It is a formula for endless bickering and dispute between the ITV companies and Channel 4, year after year, about exactly what the amount should be. Therefore, I strongly agree--and I know that Channel 4 would certainly wish--that the arrangement should be abolished. That formula should not continue and Channel 4 should stand on its own. There is something ludicrous about a public service broadcasting organisation subsidising, quite lavishly, private broadcasting organisations, and, for example, helping a particular private broadcasting organisation to take over a chain of hotels. Surely that cannot be what Parliament or the Government intended. The whole situation is ludicrous.

I hope that my noble friend on the Front Bench will at least consider the possibility of modifying the Bill by removing those clauses altogether and leaving it to

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Channel 4 to stand on its own and do as best it can without subsidising the independent television companies.

4.44 p.m.

Baroness Smith of Gilmorehill: My Lords, in addressing your Lordships' House for the first time, perhaps I may begin by saying how much I appreciate the warm welcome I have been given by noble Lords on all sides of the House. Members of the House have been particularly kind and helpful to me as a newcomer, and that has made my presence here much easier.

I recognise that my presence in this House is to a large extent due to my role in supporting my late husband throughout his political life. I hope, therefore, that I may be forgiven for making one of his cardinal principles my starting point in addressing the issues contained in the Broadcasting Bill.

John set great store by the principle of public service. It is one of the best traditions in British public life and one which is much admired in other countries. It is so ingrained in the public's expectations of the way their leaders should behave that lapses from it cause justifiable outrage and disappointment at any fall in public standards.

The public service tradition is not the monopoly of any one political party but has inspired those of all political beliefs to put something back into our country, from which they feel they have benefited so much.

Public service broadcasting is one of those traditions. It should not be regarded as the exclusive preserve of the BBC. Indeed, I believe that the real success of the public service tradition in the UK has been that it has permeated both the BBC and the independent systems. The distinction between them is therefore primarily one of sources of funding. Partly for that reason, I was very happy to accept an invitation from Scottish Television to become a non-executive director, which is an interest that I now declare.

One of the key ingredients in public service broadcasting tends to be taken for granted. Universality of provision has ensured that television and radio services are available to all parts of the United Kingdom, irrespective of the costs involved to the transmitting authorities. That surely has been a force for cohesion in our society, providing the entire nation with a common corpus of knowledge, and perhaps even attitudes, which must be a prerequisite for any form of national debate let alone consensus. But it is important that that universality of provision also applies to some elements of programme content. Coverage of key national sporting events must not be restricted on grounds of geography or ability to subscribe to an additional service. Otherwise the alienation felt by some sections of the population unable to enjoy such events, or to participate in the discussion of them afterwards, would be a dangerously divisive influence on society.

That universality of provision runs the risk of being eroded. While it is right to consider that the current core services should be supplemented by others whose availability is restricted on the basis of geography or

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income, anything which diminishes the central role of the current public service broadcasting authorities should be resisted.

There is a danger, which must be guarded against, that the new services, while not in themselves as popular or as universally receivable, might, however, by fragmenting the audience or outbidding for coverage of key national events, reduce the capacity of public service broadcasting organisations to continue to serve the public and to ensure that coverage of national sporting events is not restricted to a minority.

The reputation of Britain's broadcasters and programme makers has been built on the quality of their programming--and that depends ultimately on the quality of the workforce. The BBC has long been the wellspring that has supplied the whole of the industry with much of its creative and technical talent. It has therefore been the BBC's standards of training and production which have become the benchmark standards for the whole industry and have helped to guarantee the vitality of a system that has served us well and is still admired throughout the world. We neglect this at our peril.

The Bill has two main themes, the first of which concerns the introduction of digital technology which could facilitate the introduction of many more television and radio services, while the other proposals on media ownership might be thought to make greater concentration of ownership more likely. Both, I believe, should be judged by the criterion of what is best for the listener and viewer.

For we must resist the technological imperative whereby invention has become the mother of necessity. Technology has dramatically increased the options open to broadcasters. Better communications have made the news agenda of both radio and television truly that of the global village. Technology increases the range of options open to us but it does not, and must not, determine how they should be used. Decisions on the number of services must be based not on technical considerations but on listener demand and the availability of resources, both human and financial, to provide the programming they wish.

Few people would want to admit publicly that as human beings we are powerless to control the technology we have created. Yet it has a power to freeze our critical faculties and produce a sense of inevitability about the nature and direction of change which comes pretty close to inducing an abdication of responsibility.

On ownership, I believe that there may be a stronger case for permitting a relaxation of ownership restrictions within television and radio rather than making them more vulnerable to bids from newspaper groups, which, whatever their other qualities, come from a different tradition.

In conclusion, I should like to suggest that there is perhaps a danger in looking at one or other aspect of broadcasting in isolation. Since the Annan Committee was set up more than 20 years ago, no one has looked at broadcasting in the round, yet surely the financing of the BBC, the scope of the services it will provide, the

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use to which additional spectrum is put by the independent sector, the regulation of satellite or cable TV, the possibilities of digital broadcasting, and cross-media ownership rules, cannot be looked at in isolation. If those issues are examined separately, there is a danger that conclusions will be reached without adequate attention being paid to the knock-on effect on other aspects of broadcasting. I am aware that technology seems to move the goalposts all the time and it is never possible to find the ideal time to deal with the various complex issues facing broadcasting at the moment. But, if the time is never right, the task nonetheless needs to be attempted, and now seems to be the most appropriate moment for us to ask what sort of broadcasting we want in the future, and what steps we can take to ensure that we have it.

Broadcasting is truly at the crossroads, and decisions taken now will irretrievably determine its future pattern. Broadcasting is too important to leave its future to chance--or even to the market place.

4.53 p.m.

Lord Chalfont: My Lords, it is a great pleasure that it falls to me to be the first to congratulate the noble Baroness, Lady Smith of Gilmorehill, on her maiden speech. When, last year, after the sad loss which she suffered in 1994 (a loss, if I may say so, which was shared and felt by the entire country) she took her seat in your Lordships' House, it gave all of us great pleasure; and it has given us great pleasure today to hear her make her maiden speech on such an important issue. We have all listened with admiration and interest to her speech based upon personal knowledge of the media, a speech delivered in the calm and thoughtful way which is in the best tradition of your Lordships' House. It has been an impressive maiden speech and I hope that the noble Baroness will not think it merely a conventional form of words if I say that I hope that it is the first of many contributions that she will make to your Lordships' deliberations.

I fear that my speech may be slightly longer than that of the noble Baroness, and may even be slightly more controversial. A Bill containing 97 clauses and eight schedules is not a document to be rapidly absorbed or lightly treated, especially when it proposes legislation which is designed to make provision for television and sound broadcasting not only into the next century and next millennium but also in a new and completely uncharted technological environment. My concern in the debate is not technological. It can be summed up in one word--quality.

As the noble Baroness suggested, we should not be hypnotised by new technology to the extent that we fail to give attention to what I believe to be the real significance of the Bill. Behind the unavoidable jargon of multiplexes, wideband and bit compression, lies, as the noble Lord, Lord Donoughue, said, the important question of the product which is being delivered to the viewer and listener. Among computer programmers there is an expression which sums up all this--GIGO; an acronym for garbage in, garbage out. It is a truth which is as valid for radio and television programmes

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as it is for computer programmes. If a programme maker produces third-rate drama, rubbishy soap opera, sloppy documentaries, ill-mannered interviews or slanted news, that is what the licence payer will get however ingenious the technology to transmit it may be. The question then is: does this legislation provide the framework within which broadcasters not only can produce but are required to produce programmes of high quality?

It is, of course, a highly controversial piece of legislation. Indeed, it may be only a slight exaggeration to suggest that the only clause of the 97 which will command universal agreement is the last clause--the Short Title. But for the rest there are bound to be heated arguments--indeed, they have already started--about such crucial matters as impartiality, taste and decency, the functions of regulatory authorities and cross-media ownership. These concerns affect both television and radio. As we have already heard today, many television companies are rightly worried about Channel 4 funding and ITV licence fees, about the regional character of independent television (so eloquently referred to by the noble Lord, Lord Thomson of Monifieth) and about the rules governing ownership.

But in the interests of reasonable brevity I want at this stage in the consideration of the Bill to confine myself to two parts of it: first, Part II dealing with digital terrestrial sound broadcasting--or, to put it more briefly, radio--and Part IV which effects the merger of the Broadcasting Complaints Commission and the Broadcasting Standards Council. In the first case, radio, I must declare an interest as a recent chairman of the Radio Authority. Although that is a past rather than a current interest, it would be surprising if my approach to the legislation did not carry with it some of the perceptions of the radio industry which I formed during my time at the authority. Let me say at once that as regards sound broadcasting, I believe that the Bill will be generally welcomed in the industry.

There are, however, certain aspects of it which need to be closely scrutinised, and which will almost certainly be the subject of amendments during the Committee stage. The most sensitive area with which I am concerned is, perhaps, that dealing with the relaxation of the rules governing what is generically known as "cross-media ownership". That is not simply a matter of monopolies and financial engineering. It is an issue which is absolutely crucial to the standards of quality and diversity--those two concepts are closely interlinked--in broadcasting.

It is vital to balance the dangers posed by the monopolistic concentration of broadcasting outlets against the benefits of diversity and choice which may result from plurality of ownership. For example, Schedule 2 of the Bill we are now considering seeks to relax some of the rules governing the ownership of radio stations by newspapers. The question is: will this result in reduced choice and lower standards--often the result of the establishment of monopolies--or will it result in fresh ideas and wider sources of news and information? That is not an easy question to answer and it is one of those which will have to be answered by the Radio Authority which is now, under this legislation, to have the responsibility of deciding whether, and when, this

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kind of cross-media ownership is in the public interest. That is a welcome safeguard and one which I am convinced the Radio Authority will discharge with efficiency and will indeed be in the public interest.

It might be relevant to remark in passing that the legislation seems at first sight to have a certain inconsistency between its approach to cross-media ownership on the one hand and, on the other hand, the principle (in itself sound) that radio companies are not allowed to own two licences on the same waveband in a single locality. That is a wise principle but if no single radio company is allowed to dominate the scene it would be difficult to justify any legislation which allowed the local press to do so instead. In considering the Bill, it will be important for Parliament to ensure that anti-monopoly safeguards remain firm and effective. We must look at that carefully at Committee stage.

Another important aspect of the Bill concerns the renewal of licences, especially for national radio stations. As will be familiar to most noble Lords, under the 1990 Act the renewal of a national radio licence is subject, save in exceptional circumstances, to the highest financial bid. In other words, as the noble Lord, Lord Donoughue, has already hinted, when the licence period of a station such as Classic FM--one of the great success stories of commercial radio--comes to an end, it could lose its licence to someone bidding £10 more than Classic, whatever the track record or background of the bidder. The Government have now evidently accepted the general principle that, possibly subject to some safeguards regarding quality and track record, such as a performance threshold, there should be automatic renewal of national licences. That is a welcome development and I look forward to pursuing it at Committee stage.

I now wish to turn to Part IV of the Bill dealing with the establishment of the Broadcasting Standards Commission, the regulatory body which, together with the Independent Television Commission, the governors of the BBC and the Radio Authority, will now be the principal guardians of quality and excellence in broadcasting. At this stage I shall not dwell on my belief which I have stated before in your Lordships' House and which I still hold that there ought to be one overarching regulatory authority comprehending all television and sound broadcasting. I shall simply say that the merger of the BSC and the BCC is a small step in the right direction. There are, however, one or two aspects of Part IV which cause me some concern.

The first is that there is no specific requirement under the Bill as at present drafted for the new BSC, when publishing its findings or complaints, to state clearly not just whether a complaint has been upheld in whole or in part but specifically whether or not each separate part of a complaint has been upheld. It would close a significant loophole in the legislation if that could be provided for.

Something to which I shall almost certainly wish to return at Committee stage is that more generally, and perhaps more important, it is difficult to understand why there is a distinction in one significant respect between complaints made to the new BSC on matters of fairness and those made on matters of standards.

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In summary, as I understand the Bill in its present form--and perhaps the Minister will correct me if I have misunderstood--fairness complaints concerning partiality, impartiality and objectivity may not be entertained by the BSC unless they are made by someone directly affected by the programme concerned; while standards complaints may be made by anyone, provided that they are made within a specified time after the transmission of the programme. It may be that that is no more than a hangover from the remit of the two separate bodies, the BCC and the BSC which are now to be amalgamated. I would be grateful if, when he comes to reply, the Minister would explain whether there is any deeper significance in the desire to treat the two categories of complaint differently.

One consequence, for example, could be that a complaint of unfairness against the notorious programme on the Hiroshima atomic bomb could only be entertained if it were made by someone directly affected by the events in the programme. That would be unlikely. Is that what is intended by treating the two categories of complaint differently? I hope that the Minister can clarify the position. I believe that the new Broadcasting Standards Commission needs sharper teeth than the Bill seems to adumbrate. That is something to which we shall return at Committee stage.

Finally, without attaching too much weight to it, perhaps I may comment on the references which the Minister made in his introductory speech to what I believe to be a misleading concept of "public service broadcasting"--a sound bite which has become current in the media debate. It seems in some cases to assume that public service broadcasting is the monopoly of the BBC. The Minister made clear in introducing the Bill that there is a substantial amount of public service broadcasting on independent television and radio. The only valid distinction, in my view, is between publicly funded and commercially funded broadcasting. The whole concept of public service broadcasting is becoming less relevant as the BBC develops into a mass entertainment organisation, competing for listeners and viewers with the independent sector. I make the point just as an aside designed, with very little hope of success, to remove a virtually meaningless cliche from the debate.

The important thing about the Bill is that, in the words of the Secretary of State for National Heritage, it seeks to establish a framework for broadcasting in the 21st century. In the words of a former shadow heritage Secretary, that framework has to allow British broadcasting companies to meet the challenges of explosive technological change. However, as I said at the beginning of my remarks, what matters in my view is not what astonishing technology is used to provide a framework for our information and our entertainment; it is the quality of that information and entertainment when it reaches us that counts.

5.8 p.m.

The Earl of Arran: My Lords, it is a great delight to me from this side of the House to be the first to congratulate the noble Baroness, Lady Smith of

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Gilmorehill, on what I think noble Lords will agree was a fine, perceptive and knowledgeable maiden speech. I join the noble Lord, Lord Chalfont, and many others of your Lordships in expressing the strong hope that she will speak many times in the future.

In the spirit of the times I will declare an interest: I like British television. I think it is the best in the world. But I am not yet convinced that the industry needs all of this new Broadcasting Bill to keep it that way. My noble friend has argued that the coming of digital television and radio is a revolution for which the country must be prepared. I have no dispute about that. The Bill contains 97 clauses and the first 61 concentrate exclusively upon digital matters. Then, after the break, so to speak, comes the rest of it. It is some of the rest of it with which I am worried.

Part III of the Bill in particular is concerned with amendments to the Broadcasting Act 1990. The individual clauses, once passed into law, will radically change the ownership rules for ITV companies. My interpretation is that an excellent system of regional ownership and diversity in commercial television will be in danger as soon as the legislation is on the statute book this year. A rash of takeovers will probably follow. The big will follow the small and "local" may not mean "local" for very much longer. I hope that noble Lords, and particularly my noble friend the Minister, will take heed of a straightforward plea for much more thought on this issue. Indeed, this particular point was strongly alluded to both by the noble Lord, Lord Donoughue, and the noble Lord, Lord Thomson.

The history of commercial television in Britain is relatively short. In the mid-1950s the Government decided to create a network of independently financed television companies. Eventually there were 15 different stations licensed to broadcast. The ITV structure probably had its faults, but regional television spawned genuine originality. Anglia gave a superlative series on wildlife conservation; Granada pioneered documentary journalism. Would there have been any hope for either programme species if the ownership of ITV had been confined to a few rich conglomerates? I doubt it. Yet that is precisely the course upon which Part III of this Bill now sets us.

I regard regional diversity as the United Kingdom's most precious asset. We are not a nation of look-alike, sound-alike, think-alike Anglo-Saxons. But the crude realities of chain store economics are ever conspiring against us. These days you cannot tell the difference between a McDonald's hamburger in Exeter or Edinburgh. Sainsbury's shelves are stacked with much the same goods from Truro to Telford. And, if we are honest, everyone probably owns an identical item of Marks & Spencer underwear.

Identical clothing, groceries and fast food are one thing. Identical culture is quite another. No National Heritage horror plot would ever seriously suggest identical arts in every corner of an identikit kingdom. So let us reconsider the risk to regional television. It was never meant to be the same, or owned by the same people. That was realised by previous legislators when they drew up the ITV regional map 40 years ago.

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Even those responsible for the much criticised 1990 Broadcasting Act did not forget the importance of regionality. Within their original framework was a simple interpretation of the two classes of ITV companies. "Big ones" were expected to make programmes for the network; "small ones" were to concentrate on those vital regional ingredients; and no financial group could own a big company and a small one at the same time. That was the original rule. It was perhaps too strict for common sense, so it was relaxed and re-set as a two-licence limit.

Two licences was still the sensible boundary by the time the Government published their White Paper on media ownership last May. My right honourable friend the then Secretary of State had invited consultations from big ITV companies and from small ones too. But Secretaries of State come and go, and continuity is always the loser. The present Secretary of State decided to abandon the two-licence rule, and did so without any formal consultation with the group of small ITV companies.

It is worth reminding the House of her hurried decision-making. The White Paper on media ownership was published in May, under Stephen Dorrell's careful stewardship. Mrs. Bottomley's Broadcasting Bill appeared just after Christmas--and here we are again, just after it. I have always had my doubts about legislating in haste; for with a general election 16 months or less away, there is no time at all to repent at leisure.

My personal concern is for quality regional television. As a West Country man I genuinely value my local station, Westcountry Television. It has done much more than the regulators ever expected or demanded. It is locally owned, and most of the staff are shareholders too--a far cry from the "bastions of restrictive practice" so reviled by my noble friend Lady Thatcher when she examined the ITV patient and prescribed the 1990 Broadcasting Bill.

I have listened carefully to the Government's explanation of this policy: it takes big players to succeed in global markets, so they say. But I have yet to hear a satisfactory explanation for this question: if Carlton TV or Meridian bid for my local station, how will it help them compete worldwide?

Where is the economic logic for the Government's assertion that big is beautiful? I read the White Paper on media ownership very carefully. I was impressed with the calibre of research on other matters. But not a shred of evidence is cited to substantiate this obsession with size. Indeed, these days large entrepreneurial projects are usually undertaken by consortia, joint ventures or alliances rather than by single industrial giants. That way, risks are spread and particular talents are introduced as required. That is as true of engineering work, such as the Channel Tunnel high-speed rail link, as it is for television.

Let us look at the track records of our big ITV companies. If Carlton, Granada and Meridian were really so keen to break into world markets, why has there been no sign of it? What is their international strategy? If the Government believe that past legislation

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has stifled expansion, how does anyone explain the rise of Mr. Murdoch's satellite empire in Britain? Did he not reach for the sky entirely within the law?

Such anomalies make me suspicious of the whole argument. Building larger media companies in order to fight the world brings no guarantee of success, and may hamper the entry and growth of small innovative companies into the domestic market. It is an old-fashioned policy that is very unlikely to work. Indeed, if you let the big get too big at home, why should they bother competing abroad at all? It is no disrespect to my profitable local TV station, but if Carlton or Meridian have their eye on Westcountry it is unlikely to have anything to do with a great global plan.

My point is simplicity itself. The ITV companies at greatest risk of takeover are the very ITV companies regarded as important enough to protect in previous legislation. What is more, these companies can contribute very little to the world expansion of British television envisaged in the mind of the Secretary of State. No global ambition requires a new studio in Barnstaple, surely! Westcountry has installed one--and a very good one it is, too. It is handy for me, of course, but it is also a real feather in the cap of the region as a whole. For it is from Barnstaple that Westcountry's weekly bulletin of news about the region is compiled for the benefit of Breton viewers, in fluent French too. It is a healthy innovation, a worthwhile contribution to the regional balance of payments. But it is hardly the stuff of multi-national TV development.

So let us suppose that this Bill goes through unchanged, and the noble Lord, Lord Hollick, for instance, or one of his expansionist rivals, snaffles up my friendly neighbourhood ITV station. In that event, Ministers insist, I am not to worry. They have thought of everything! New powers will be given to the Independent Television Commission to ensure that any new owner maintains the same high, regionally diverse standards. Hurrah! But these fine men and women at the ITC are just regulators, are they not? They are those same people who were sucked into the muddle of licence-bidding after the 1990 Broadcasting Act--a muddle that still means that Central TV pays only £2,000 a year for its privilege to broadcast, while Yorkshire TV has to find around £38 million for an identical licence.

Regulators have difficulty enough these days dealing with simple commodities such as water, electricity and gas--the sort of commodities that are pretty well identical in composition, if not always in price. But how do we expect regulators to make meaningful value judgments, on regional grounds, for ITV? It is no good simply counting the hours of local programmes and checking them against some arbitrary performance yardstick. To take my own area again, when Westcountry Television began, three years ago, not even the ITC believed in the value of seven separate studios around the region, all linked by the very digital technology that now causes my right honourable friend the Secretary of State such excitement. Westcountry was there first, offering viewers in remote areas entirely local coverage. And how would the ITC measure the quality of political programmes? Westcountry's

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hypothetical new owners could surely knock together a regular political series, and meet the quantity rules. But Westcountry happens to spend more on politics than any other ITV station, bar one. The smallest company on the mainland is outspent only by one of the largest, Granada.

I sense incredulity in the House. Why should a little regional company spend so much money on a subject that even politicians are glad to avoid? I will tell the House why. Once you arrive as far as Taunton and beyond, you are almost 200 miles from Westminster. And the further you go, the more remote the government machine seems to be. Ministers and shadow Ministers come to visit us sparingly. Their idea of a trip to the West Country is Bristol. So it may be that the very distance from the political centre gives West Country people a taste for political reporting. But it takes a local ITV station, with truly local management, to know its own audience and risk big budgets satisfying demand.

Westcountry Television was the only ITV station to respect the British Legion's call for broadcasting silence at the 11th minute of the 11th hour on the 11th day of the 11th month last year. Not even the BBC made the effort. I believe that that is another example of a TV station which is responsive to the real needs of its viewers. Anyone who knows my part of the world knows how deep the military traditions run there. But would a small branch of the Carlton/Central empire ever have been allowed to turn off the programming? Could local managers have reached the moguls in London in time? Frankly, I do not want my local TV station owned by some invisible bankers. I am far from convinced of the economic arguments for changing the ownership rules to the extent proposed in this Bill at the moment.

I believe that the small companies need and deserve the kind of protection from predatory takeover that previous legislation has always granted. At the very least, the Government should consider an amendment to the Bill ensuring adequate safeguards against predatory takeovers of the small companies.

5.20 p.m.

Baroness Jay of Paddington: My Lords, it is a great privilege to be the first speaker on this side of the House to congratulate most warmly my noble friend Lady Smith of Gilmorehill on her very interesting and important contribution to the debate. I was particularly glad that she emphasised the longstanding tradition of public service and its resonance in the broadcasting policies of this country. I am sure that that theme will continue through the contributions that are made at every stage of the Bill from this side of the House.

As I have a longstanding commitment to another speaking engagement this evening, which was arranged before the date of this Second Reading was set, I must apologise to the House and to the Minister for having to leave before the conclusion of the debate. I must also declare a series of interests as a contributor for many years on a professional basis to several television and radio companies which have been mentioned today, and to others which have not been mentioned, and also as

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having been a long-term employee of the BBC. It is, however, as a consumer--as a viewer and a listener--that I want to address a few remarks to the House. After all, as my noble friends Lord Donoughue and Lady Smith emphasised, it is as consumers of good quality programmes that we should judge the contents of the Bill and not its contribution to the commercial marketing forces which may underlie it.

I wish specifically to speak about the new Broadcasting Standards Commission in Part IV of the Bill. The provisions are fair enough so far as they go, although I echo the concerns felt by the noble Lord, Lord Chalfont, about the very narrow basis of legitimate concerns and complaints about specific programmes. It seems to me that a chance has been missed in the Bill to develop and expand the role of the viewer and the listener as consumers in broadcasting policy in this country.

I should like to propose--perhaps rather radically, but I believe that it can help our understanding of the role of the consumer in broadcasting--that the new body should not be called the Broadcasting Standards Commission but rather the Broadcasting Consumers Commission or, indeed, the Broadcasting Consumers Council. To use that title would not simply change a formal framework of words but would enable a much more positive, less reactive and more proactive position to be adopted by a consumer body in the formation of strategy and policy about broadcasting. I should like to see a Broadcasting Consumers Council have within its remit formal consultation and advice on a much broader agenda than the rather reactive agenda contained in the legislation. For example, there could be a statutory role for setting the strategy for overall quality of programmes. My noble friend Lord Donoughue alluded to that.

There are proposals which enable the new Broadcasting Standards Commission to have a research capacity and to develop positive policies in areas concerned specifically with its areas of remit on violence, taste and decency. But, in my view, it should be possible to elaborate and expand that research role in such a way that contributions are made on a much broader agenda about specific areas of quality.

I am interested that in Clause 82 of the Bill the new body is allowed to represent the UK on international bodies concerned with setting standards for TV programmes. That seems to suggest a general quality remit which is perhaps more broad than the narrower national one suggested earlier in the legislation. At home, it seems to me that if the Broadcasting Consumers Council or the Broadcasting Consumers Commission were to have a wider range of responsibility, it should also be reflected in a wider range of membership of such a consumer body.

My noble friend Lord Donoughue referred to the very important regional identity of broadcasting and the noble Earl, Lord Arran, gave a vivid picture of the special regional interests in individual programmes. It seems to me that if we are to continue to conduct a broad policy approach to such regional identity, the broadcasting consumers need to be represented at that

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kind of regional level. Perhaps at least their concern should be reflected in regional outposts of any new body intended to reflect consumers' interests. That is particularly important in the light of the renewal of the BBC Charter, a subject mentioned in the debate last week, which, unfortunately, I was unable to attend. The powers of national governors and national broadcasting councils of the BBC will be reduced under the new Charter.

Another significant message from the Bill related to consumer involvement is the whole issue of broadening and opening the appointments procedure to any new body. Given that the legislation was drawn up after the report of the noble and learned Lord, Lord Nolan, on standards in public life, I am surprised that there is no mention of the relevant recommendations that he made about future appointments to public bodies. Perhaps I can take a few moments to mention those specific recommendations and those which should be relevant to an appointments system to a new body. First, selection on merit should take account of the need to appoint boards which include a balance of skills and backgrounds. All appointments to executive non-departmental public bodies should be made following advice from a panel or committee which includes an independent element. A new independent commissioner for public appointments, who may be one of the Civil Service commissioners, should be appointed. The public appointments commissioner should monitor, regulate and approve appointments procedures. I hope to be able to introduce or support amendments to achieve that kind of openness in appointments to the new body.

In conclusion, I re-emphasise that the new body of consumer interests, which, as I said, I should prefer to see renamed the Broadcasting Consumers Council, must be an essential part of achieving and maintaining general quality of programmes in a proactive rather than simply a reactive way. To achieve good quality must be the basic aim of the legislation. Personally, I look forward to supporting all attempts that are made to place on the face of the Bill the most stringent requirements for good quality in the future of broadcasting in every way.

5.28 p.m.

Viscount Caldecote: My Lords, as my noble friend Lord Inglewood said, this is a complex, important and valuable Bill. I very much hope that we shall treat it largely as a non-party Bill. Two main subjects are covered: the issues relating to the availability of digital multiplex techniques; and, in Part IV, the regulation duties of the new BSC.

I should like to make a few comments on Part IV. I welcome warmly the combining of the old BSC and BCC. But there are many obligations of the new BSC which are excessively permissive rather than mandatory. If this is not corrected, it will give rise to misunderstandings and the kind of weakness on the part of the new BSC that we have seen occurring in the old organisation.

I shall give a few examples. Clause 68(1) states:

    "The BSC may draw up guidance relating to principles to be observed".

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Surely it would be better to say that the BSC "shall" draw up "rules": that would be much better wording and give more teeth to the BSC. Again, in Clause 69(1) the Bill states:

    "It shall be the duty of the BSC to draw up, and from time to time review, a code giving guidance".

What is the point of the words "giving guidance"? It should draw up a code or rules to regulate practices within its field. Again, in Clause 70(2) it states:

    "the BSC may make reports on the matters specified ... on such occasions as they think fit".

Surely the word "may" should be replaced by "shall". Those are indications of the comparative weakness of the new BSC which I deplore and hope that we can correct at Committee stage.

Clause 80 determines the action to be taken by the BSC when it considers complaints on fairness or standards. Inter alia, the BSC must report on "any action taken"--laid down in Clause 80(7)(c)--by the offending broadcaster. Again that is too weak. The BSC should also state what action it instructed the broadcaster to take.

Clause 84 requires the BSC to publish an annual report. The existing BSC publishes monthly summaries of complaints, indicating those which are upheld and those which are not. That should be made mandatory too, for an annual report leaves matters open for far too long.

The most important omission from the new powers of the BSC is any reference to complaints on impartiality. The noble Lord, Lord Chalfont, made the point that it was possible to complain about individuals being unfairly treated on the grounds of not observing the impartiality rule; but that does not cover organisations, whether political or commercial. It is extremely important that we bring within the powers of the BSC the ability to deal with complaints on impartiality. The ITC has full powers under Clause 6 of the Broadcasting Act 1990 to deal with complaints relating to impartiality. But the public, the licence holders, can complain to the BBC itself only about the lack of impartiality which is required in the new Charter and Agreement.

As I made clear in the debate on the Charter and Agreement, the BBC is thus judge and jury in its own case. That is completely illogical. Company directors do not themselves decide whether regulations on, for instance, the provision of financial information or on health and safety at work are being complied with when complaints are made. Neither do trustees of great charities themselves judge as to whether they are acting within the powers given to them by the Charities Act. Why therefore should the BBC be allowed to be judge and jury in its own case on this important matter of impartiality, which was referred to by the Select Committee in another place as being of the utmost importance?

There are two possible solutions. The first is to have an independent, over-arching--as the noble Lord, Lord Chalfont, called it--supervisory commission with similar duties and powers relating to impartiality in BBC programmes as the ITC has for ITV companies,

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acting right over the whole field of complaints. That is an unnecessarily bureaucratic solution. The best way is to give the new BSC powers over complaints relating to impartiality and to make that clear, just as, under Clause 68(1) of the Bill, it has powers to deal with standards of fairness and decency. That would provide a judgment independent of the BBC governors on matters of impartiality and would give confidence that such complaints will be dealt with fairly and squarely.

I hope that, in dealing with that point when he winds up, my noble friend will not argue that it is part of the regulatory functions of the governors, for they cannot regulate themselves when, at the same time, they are responsible for monitoring the approved objectives of the BBC which they themselves laid down. This is a crucial issue in the Bill and we must consider amendments to correct the ridiculous anomaly, however much the BBC governors and management may want to retain the Bill as drafted.

I want to turn briefly to digital broadcasting. It will make available many new TV channels, both satellite and terrestrial. Existing satellites carry up to 14 transponders, each transmitting one channel at present. Digital transmission will enable each transponder to transmit up to 16 channels, thus increasing the number of channels from up to 14 to some 200; that is an enormous change. Digital terrestrial transmission will also allow a more efficient use of the existing frequency spectrum, so increasing the number of programme channels available; but that will be to a smaller extent than in satellite digital transmission.

It is therefore important to prevent satellite broadcasting, with its huge revenue from subscription channels, from having excessive dominance over terrestrial broadcasting. That may lead, as many other noble Lords have said, to the big sporting events being monopolised by satellite. It will also discourage the production of programmes within the UK.

Another problem, also referred to, relates to the set-top boxes which will be required to receive digital transmissions before it becomes economic to build the facility into the TV sets themselves. The set-top boxes are already required for satellite and cable programmes. But other boxes will be needed in the future for receiving available satellite and terrestrial programmes. It is highly desirable, both on account of cost and opportunities for UK manufacturers, to plan from the start to have a standard specification enabling all the different types of transmission to be received. That is a point on which the noble Lord, Lord Thomson of Monifieth, spoke so eloquently and clearly and I hope that it will be taken seriously by my noble friend.

Those points raise complex issues which we shall need to discuss at later stages of the Bill, not least to determine the optimum balance between legal restrictions and flexibility to take full advantage of the new opportunities provided by digital broadcasting.

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Finally, I draw your Lordships' attention to the huge and important contribution made by engineers in devising and successfully developing the new digital techniques which will have such far-reaching effects on our national life.

5.39 p.m.

Lord Kirkhill: My Lords, I shall be brief because I wish to concentrate on one aspect of this complex Bill--ITV's regional broadcasting service and the possible threat it may face in the event of any change in ownership. My own regional television service is provided by Grampian Television, which covers a vast area of great diversity, cultural, linguistic and even scenic in nature, and includes those parts of the United Kingdom which are the most remote from Westminster.

As a weary foot soldier, returning home from frequent Council of Europe meetings, usually held outwith the United Kingdom, I, too, know what it means to return home and to catch up with more local interests. Although my remarks may concentrate on my own regional service of Grampian, they probably apply--indeed, I am certain that they do--to all of the regional services.

It is well documented that viewers appreciate regional programmes. Yet, as national and international channels proliferate, only ITV offers a regional service. Therefore, the proposal to relax the rules governing cross-media ownership has given rise to concern, a concern which I share, and this unique aspect of ITV broadcasting could be threatened--indeed, on one reading of the Bill is threatened--in the event of a change in the ownership control of any regional company.

Regional programming is enshrined in existing licences. For instance, under its licence--I cite this merely as an easy example for me to give--Grampian Television must transmit seven-and-a-half hours of regional programmes each week, of which 80 per cent. must be produced in the area covered by the licence. In practice, Grampian transmits nearly nine hours of regional programmes, of which almost 100 per cent. are produced in the area. In November last year National Opinion Poll Research asked viewers in mainland ITV areas to assess the quality of their local regional service. Viewers in north Scotland placed Grampian first across 12 categories of regional programming. So there is fair evidence that the service is valued by its viewers. Most programmes broadcast on other channels are made outwith the north of Scotland, which has its own cultural diversity. It has, if you like, a multilingual heritage--English, Gaelic and Doric, which is the language of my own area. It is geographically distant from all the main production centres.

I am glad that Clause 63 of the Broadcasting Bill recognises that new licence conditions may need to be imposed in order to maintain the standards of a regional Channel 3 service where control of either the licence holder or the body providing programmes for the service is changed. However, I am concerned that, as currently drafted, the clause does not protect the level of service being provided at present. I am of the view that this part

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of the Bill could be justifiably strengthened. Without such a strengthening both the quality and the quantity of regional output could be jeopardised. I believe, therefore, that the best way to protect the quality and quantity of regional output is by means of the benchmark of existing services at the time of any change of control and not by means of the licence minimum. As a result, viewers would suffer no diminution in service.

I am firmly of the opinion that the quality of a regional programme service to an ITV area is directly linked to the decision-making and editorial control being resident in that area. Clause 63 recognises the importance of regional programmes being made within the region and makes provision to vary licences if necessary. But it does not go far enough to guarantee protection. Because it is an enabling rather than a compulsory measure it gives too great an element of discretion to the Independent Television Commission. It seems to me self-evident that the interests of the viewer and of the regions would be best served by reducing just such an area of discretion which is, as the Bill stands, to be given to the Independent Television Commission.

I am also somewhat concerned that the definition of "regional programming" may not be as clearly and comprehensively defined as it could be. I hope that this will be taken into account by some of us in the form of suitable amendment when the Bill reaches its complicated Committee stage. It is surely only by providing such a clear definition that Clause 63 will have its intended effect.

The preservation of proper regional programming has wider implications than the justly important consideration of viewer satisfaction. The structure of the regional economy and the retention of skills, often in quite remote areas, must also be taken into consideration. A good example of this is the construction and operation of the Grampian television studio in the far distant Stornoway. An indigenous regional television company has one great asset. It knows its area. It understands what binds its viewers together and what does not. It understands that it must cater for the real and varied interests found within its area; and in its programming it will balance these interests with, one would hope, a good judgment.

I am an Aberdonian. Indeed, I am a former Lord Provost of that city. Naturally, I am interested in programmes about that community, one I know so very well. But I do not, and I should not, expect the viewer in, say, Ardnamurclan, or Achiltibuie, or Achmore, or Alness to share my enthusiasms. It is not enough for the makers of regional programmes to be able to locate such places on a map. They have to know and understand them from the inside. I would therefore welcome an additional definition of the concept "made within the area" to mean programmes whose creation covers all stages of the production process, from inception through to transmission, and which are subject to decision-making and editorial control within the area. As far as I can tell, there appears to be no such definition within licences or other ITC documentation. Without a definition, I could envisage that an unscrupulous owner

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would have a licence to undertake all stages of production at its base outside the area and then merely send a camera crew to shoot film on location.

As I conclude, perhaps I may observe that one of the underlying principles of the Bill--namely, the objective of improving international competitiveness--is laudable. It is laudable in itself and laudable as an underlying principle. But it must not be at the expense of the great strength of the current ITV system--that of the regional programming element.

5.50 p.m.

Lord Geraint: My Lords, on behalf of the Liberal Democrats, I congratulate the noble Baroness, Lady Smith, on her excellent maiden speech. It was constructive and the presentation and content were good. I can assure the noble Baroness that, once having made her maiden speech in this House, there will be no stopping her from now on.

Perhaps I should declare an interest, in that a member of my family works for the BBC World Service. The Minister touched in his opening remarks on, and referred quite often to, S4C, the television channel that we have in Wales. Today, I am going to confine my remarks to the setting up of S4C, which came into being in 1982. It is fitting that I should begin my contribution, although he is not in his usual place today, with a generous acknowledgement of the role of the noble Lord, Lord Cledwyn, in the long and arduous campaign to establish a dedicated and properly funded channel to serve Welsh speakers within the Principality. It took patience, diplomacy and determination-- a determination based on the resolve that never again should Welsh be downgraded to inferior status as it was by those young English commissioners on their visitation to Wales in the last century. They were perhaps well intentioned, but their findings have gone down in the history of Wales as the "Treachery of the Blue Books". There is an old Welsh proverb which I am sure all noble Lords have heard: he who is without his language is without nation. By trying to deprive them of their language the treachery was to undermine the identity of the Welsh.

But times have moved on. The cycle of history has turned and times have changed. I am delighted to see the noble Viscount, Lord Whitelaw, sitting opposite on the Government Benches. We owe so much to him, because when he was a Minister in the other place he gave us S4C, the Welsh channel. He was responsible, with the noble Lord, Lord Crickhowell, who was Secretary of State at the time. Who knows?--perhaps if they had given the programmes to two channels, things in Wales today would not be as good as they are. But in their wisdom they gave Wales its own Welsh channel and it has proved to be of good use to the people of Wales. I say to the noble Viscount that if ever he comes to Cardiff or to Wales, perhaps we shall jump and sing the old favourite, "We'll keep a welcome when you come back to Wales again".

We recently had a new Welsh Language Act upgrading the official status of the Welsh language. Perhaps I may also pay generous tribute to the untiring efforts of the noble Lords, Lord Prys-Davies and Lord Williams of Mostyn, for putting that legislation in place. I would also

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like to pay tribute to the Government and to the noble Earl, Lord Ferrers, who was responsible for guiding the legislation through this House. It has proved to be worth while. We now have the language on the rise because parents desire their children to be bilingual. There is no second-class image, thanks to the Government. Welsh speakers enjoy confidence in the quality and nobility of their culture. I have no doubt that this is due in no small measure to the tremendous international successes that S4C has delivered. "Hedd Wyn" achieved the accolade of a nomination for an Oscar in the best foreign language film category. S4C obtained 26 international awards and nominations last year alone--a first-class achievement from a first-class channel!

Perhaps I may now turn to the Government, run as they are by a party which has only minority support in the Principality of Wales. Perhaps that has something to do with the minority being conscious of the needs of another minority. But the Government did establish the Welsh Language Board to foster growth in the language and they have found resources to give the language financial support on a significant scale. They have given a proper, first-class position to Welsh in the school curriculum. That much at least must be acknowledged by those of us in Opposition.

I genuinely believe that the Department of National Heritage wants to do right by the second public service broadcaster in the United Kingdom. I am more concerned that it may not realise some of the implications in this Bill as drafted. I am sure that the majority of noble Lords would fight for the independence of broadcasters from government. It is an important buttress of our democracy. Your Lordships should have regard to Clause 64(2), which allows the Secretary of State to intervene annually in the settlement for S4C and effectively to ignore the principles underlying the new formula. That does not make for the certainty of sure-footed planning for S4C. There should not be this Sword of Damocles hanging over the authority, because the danger is that it will be used to exert political influence over broadcasters. I hope that the Minister will be able to reassure me on that point when he comes to sum up this debate.

Perhaps I may finish by returning to the danger of giving, or seeming to give, second-class status to Welsh. The Department of National Heritage plans to give only half the capacity to S4C that other terrestrial broadcasters will enjoy. It means that Welsh speakers will not be able to benefit from the exciting advances that digital will bring to viewers on other channels. So other channels will increasingly have the edge over S4C as viewers switch to digital. It will have unfortunate historical echoes if Welsh speakers find that they are being given such second-class status in the Principality. I pray that that does not lead people to a path of struggle and unrest once again. By law, Welsh has equal validity in the official life of Wales. Let us also have equal validity on the airwaves in Wales. I hope that the Minister can give an assurance to the people of Wales that S4C will have its rightful place within broadcasting in the years to come.

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5.57 p.m.

Baroness Rawlings: My Lords, I am delighted that this important piece of legislation, announced in the gracious Speech in November, has come to your Lordships' House so soon. It has been long awaited. This has been for a very good reason. The Government published several proposals and working papers last year, especially so they could be discussed and debated before this highly complicated legislation came to us. And how right they were! The interest was and is enormous.

In the European Parliament we had naturally, as in any other Parliament, many people lobbying and briefing us, but the prize went, year after year, to the same group; the animal welfare lobby. They managed just to beat the farming lobby. We received thousands of letters; reams of paper and more trees than one would ever wish must have been chopped down to supply the paper. But the flood of information that has landed on my desk, and no doubt on the desks of many of your Lordships, for this Broadcasting Bill, seems to have outstripped both the animals and the farmers!

Despite this, I shall be brief today and touch on only two aspects of this very important but highly complex Bill, as I spoke in some detail on the subject in the debate on 22nd November last year. There are also many speakers today and there will be further opportunities for detail during the progress of the Bill.

The Bill is essential because of all the rapid changes in broadcasting. Even as we speak, new inventions are being made related to either the Internet or other forms of transmission. We are certainly living in exciting times. As Leibniz said:

    "The present is great with the future".

Broadcasting has such an enormous influence on our lives that it has to be taken seriously. Apart from the great potential for influence, there are vast possibilities to make gigantic sums of money, of lottery proportions. Here, the Government have tremendous responsibility, and for this reason they need to be congratulated. They have published the discussion documents, listened and substantially altered and built on the original ideas. They listened to all sides, to both the producers and the consumers. For example, on digital terrestrial broadcasting, they have increased quite significantly the amount allowed to each existing broadcaster. That should allow the broadcasters to develop in a major way, if they wish, additional news services, advertising and subscription possibilities. That will further encourage them to invest. They are as a result on the whole, dare I say, mostly satisfied customers looking forward to an exciting future.

This legislation will affect not just our national market; nor are we looking at the European market alone. Surely our target is the global market. Here I would beg to differ with my noble friend Lord Arran in his very fine speech. He may be right concerning analogue, but where digital is concerned we must compete globally. After all, cross-media ownership and broadcasting know no boundaries, and we need to liberalise to be able to compete worldwide.

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We in this country have some of the best broadcasting in the world, with a reputation higher than most, especially in the case of our World Service. In this new climate, legislation is needed to protect that position. There are changes taking place in our public sector broadcasting which needed to be addressed. We saw that happen last week with the new Charter and Agreement. The BBC's role is to provide high quality programmes with wide-ranging appeal that educate, inform and entertain.

    "There are only two forces that carry light to all corners of the globe, the sun in the heaven and the Associated Press".

Mark Twain said that many years ago. For "Associated Press", today I would substitute "television and the wireless".

There is overwhelming support for Part IV of the Bill, the merging of the Broadcasting Complaints Commission with the Broadcasting Standards Council. I hope that that body will be more efficient and easier to operate. The new commission's role will be to act as an independent body to which the public will be able to complain about matters of taste, decency and violence in respect of the content of broadcasts. I mention that even though we have heard a great deal about that part of the Bill. It is a very sensitive subject on which everyone holds strong views.

With the advent of digital broadcasting, we are likely to see many more channels available. It will be of paramount importance that standards are maintained, so perhaps I may ask my noble friend the Minister to make certain that the new commission will have adequate power to keep decent high standards. I am aware nonetheless of what a media mogul said many years ago:

    "It is the duty of a newspaperman to comfort the afflicted and afflict the comfortable".

But the media as well as the Government do have a responsibility to the millions who listen and watch daily. The responsibility is built into the freedom of the media. As Clemenceau said:

    "Freedom is nothing in the world but the opportunity for self-discipline"--

that is to say, voluntarily to assume responsibility.

Let us hope that with this new Bill will come a new exciting era where Britain will serve the public trust and continue to be a world leader.

6.4 p.m.

Lord Prys-Davies: My Lords, I too congratulate my noble friend Lady Smith of Gilmorehill on her thoughtful maiden speech. I particularly welcomed its central theme.

I propose to concentrate on the concerns of S4C about some aspects of the Bill as it stands and the proposed arrangements for digital television in Wales. I very much regret that my noble friend Lord Cledwyn, who played a significant role in the events which led to the setting up of S4C, is unable to speak in the debate for reasons which are unavoidable. However, as is my normal practice, I have discussed with my noble friend

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the concerns in Wales and in particular those of S4C. He feels deeply about them and I believe that he agrees with the thrust of my comments.

I should like to emphasise that the concerns expressed by the board of S4C are very important. They are important because S4C is a powerful promoter--possibly the most influential promoter of all--of the popular use of the Welsh language. If the capacity of S4C to hold the continued support of its viewing audience was to be imperilled as a result of the advent of digitalisation, it would have serious implications for the prospects for the Welsh language in the coming century and possibly for social harmony within Wales.

The case for a separate Welsh language television service was made by a succession of authoritative reports, in particular that of the Crawford Committee published in 1974 and that of the committee that was chaired by the noble Lord, Lord Annan, published in 1977. That led to the setting up of S4C in 1982. Today it is almost unbelievable that the plans for the service were drawn up, according to a respected opinion--and here I pick up a phrase from the 1978 official report of the Home Office Working Party on the Welsh Television Fourth Channel Project--as "an act of faith".

We now know that the separate Welsh television channel has been strikingly successful. The noble Lord, Lord Geraint, reminded the House of some of the achievements of S4C. I should add that it broadcasts 33 hours a week of Welsh language programmes. At other times it broadcasts Channel 4 programmes. It has been a powerful stimulus to the creation of an impressive pool of independent television programme-makers in Wales. Certainly, S4C's capacity to attract sales revenue is inevitably constrained by the small size of its potential Welsh-speaking audience--an audience of just over half a million or so. Yet by now it succeeds in generating yearly about £6 million of advertising revenue. For all those reasons, as well as its record of achievement as set out by the noble Lord, Lord Geraint, we are fully justified in saying that S4C has been a success.

We have rightly heard this afternoon that digital technology heralds great changes and opens up exciting opportunities. But the Welsh-speaking community asks: where does S4C go from now on? Is it to be allowed to take full advantage of all the benefits of digital technology?

S4C has two principal concerns. They have already been outlined by the noble Lord, Lord Thompson of Monifieth, and the noble Lord, Lord Geraint. I see that the noble Lord, Lord Elis-Thomas, is in his place and I am sure that this point will be developed by him also. His words are of special significance because he happens to be the Chair of the Welsh Language Board, which is a statutory board charged with the duty of promoting the use of the Welsh language.

The first concern is that it will have to share the frequency with Channel 4 in Wales. That means that the viewers in Wales will be able to receive both Channel 4 and S4C, which is welcome. However, the sharing arrangement also means that S4C and Channel 4 in Wales will not have access to the full digital capacity that will be

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available to their competitors in Wales--BBC1, BBC2, HTV and Channel 5. Each will enjoy only half of the capacity of their English language competitors in Wales. Therefore, the resulting quality of the digital service transmitted by S4C will be inferior to that of its competitors. It will not be able to broadcast wide screen programmes of satisfactory quality. In the result, its programmes will be increasingly associated with old-fashioned technology. That would be unfair to S4C, to the Welsh-speaking population and to the Welsh nation.

It is our submission that there should be a clear recognition that S4C must be able to compete for Welsh-speaking viewers with its principal competitors on equal terms. If that principle is right, and I believe it to be right, its implementation is not insoluble. The practical solution is to allocate full separate digital capacity to S4C and to Channel 4 in Wales on the same basis as other broadcasters. I hope that the Minister will be able to say that that option is available.

The introduction of a digital service by S4C cannot take place in isolation from a consideration of the funding of S4C. That is the second principal concern of the board of S4C. It is concerned about the adequacy of the statutory funding. The formula is set out in Clause 64, which introduces a significant departure from the present arrangement. It means that from 1998 onwards S4C will receive the amount of the January 1997 funding as increased by the yearly percentage increase in the RPI, adjusted "to have regard" to the cost of transmitting S4C. I should like to know whether those words include the full costs of the new digital service.

I was not all surprised to hear the Minister say that the proposed index-linked arrangement will give S4C a source of security of future funding. Indeed, that was stated in the question and answer document issued by the Department of National Heritage. That formula seems to have attraction in the sense that the amount of the future subsidy will be more predictable than if it were to be a share of total television revenue, which forms the basis of the present formula.

However, there is another view. The board of S4C has calculated that, in practice, the new formula will mean that S4C will be less generously funded than it would be under the current formula--and substantially so. We have already heard from the noble Lord, Lord Thomson of Monifieth, that the board has concluded that the loss could be more than £9 million per annum over the three years 1998 to 2000. Such a sum would be in the order of 12 to 15 per cent. of its total yearly income. That would be damaging, and that at a time when the provision of digital service will involve S4C in increased expenditure, and also at a time when the introduction of digital Channel 4 service into Wales could lead to a marked loss of advertising revenue. That has not been mentioned. All that would weaken significantly the capacity of S4C programmes to hold their own against the English language programmes on the other channels.

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There is another difficulty with the funding clause as it stands. The funding formula which I have described is not necessarily the end of the story. Under subsection (2) the guaranteed index-linked payment may be replaced by,

    "such other amount as the Secretary of State may from time to time by order prescribe",

so the funding is not guaranteed, as claimed by the department. As Clause 64 stands, the index-linked formula can be replaced at the sole discretion of the Secretary of State. The noble Lord, Lord Geraint, expressed his concern at the existence of that power given to the Secretary of State. Many of us would be opposed to giving that power to the Secretary of State to be exercised solely at his discretion unless it were to be used only when the Secretary of State was satisfied that the product of the index-linked formula would be inadequate to match the necessary requirements of S4C. If that is the intention, the use of the power should be confined to that situation and the limitation should be incorporated in Clause 64. I hope that in reply the Minister will clarify the position.

Before I sit down I wish to endorse the concern so eloquently expressed by the noble Lord, Lord Thomson of Monifieth, the noble Earl, Lord Arran, and my noble friend Lord Kirkhill about the need to safeguard the quality and the quantity of regionally produced programmes in the event of a change of ownership of the licence holder. Does Clause 62 need to be strengthened in Committee? I hope that the Minister and his advisers will give sympathetic consideration to those points and to other matters relating to S4C and the regional committees which are raised in the course of the debate.

6.17 p.m.

Lord Ackner: My Lords, it is a wise advocate who takes his best point first. Mine is that I shall not detain your Lordships long. I rise essentially to support the observations made by my noble friend Lord Chalfont and by the noble Viscount, Lord Caldecote. Part IV of the Bill makes elaborate provision for the Broadcasting Standards Commission, its establishment and its field of operation. However, I am bound to say that in many respects it has the characteristic of a toothless watchdog. Clause 68 provides that the BSC may--the noble Viscount, Lord Caldecote, pointed out that that is merely permissive--

    "draw up guidance relating to principles to be observed".

Those are the words that I wish to stress. Why should it not draw up a code stating the principles to be observed so that everybody will know where they are?

Clause 69(2) states:

    "It shall be the duty of each broadcasting or regulatory body, when drawing up or revising any code relating to standards and practice for programmes, to reflect the general effect".

That provides a very good basis for saying, "Well, it does reflect the general effect. It may not be in the way that you, the standards authority, intended but it certainly is a bona fide exercise by us of our opinion".

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When one comes to complaints, which are dealt with in Clause 71, I do not quite understand why, in regard to the complaints relating to unjust or unfair treatment or unwanted infringement of privacy, the BSC has to adjudicate on such a complaint, whereas it merely makes a finding as regards complaints relating to standards. But that is probably a subtlety which I have failed to penetrate.

Clause 80 deals with the effect and the power of the BSC. One merely sees there that there must be published by the offending authority a summary of the complaint, which is not difficult, the BSC's findings on the complaint, or a summary of them, and in the case of a standards complaint any observations by the BSC on the complaint or a summary of such observations. All that has to be done under Clause 80(7), where a direction is given, is a summary of any action taken by a broadcasting body to provide a licensed service in pursuance of the direction. I cannot see anything in that which does not prevent the authority saying, "We have taken no action because we do not agree with your finding". There is no obligation to provide an apology or compensation and there is no provision, as far as I can see, for the BSC to say exactly what action should be taken.

I thought that I heard the noble Lord, Lord Inglewood, say, when he opened, that Part IV is designed to maintain impartiality and standards of taste and decency. I cannot find anything which relates to impartiality in the breadth of the activity which the BSC is entitled to undertake.

When one wishes to use robust language, one can often do no better than to turn to what has been said by the noble Lord, Donoughue, on the relevant subject. That is no doubt a by-product of his affection for boxing. In the debate on 9th January on the BBC draft Charter and Agreement he said:

    "It may be seen as a weakness that the Charter suggests only guidelines"--

and that, of course, is all that is suggested in this Bill--

    "which are ultimately unenforceable. In the modern media world, where the trashy gutter standards of tabloid journalism are increasingly infecting television, that may indeed be risky. Bad television drives out good. Perhaps that should be nailed down with an enforceable code, as with the Radio Authority".--[Official Report, 9/1/96; col.26.]

I do not think that I can end on a more satisfactory note than that in support of my submission.

6.24 p.m.

Lord Astor of Hever: My Lords, it gives me particular satisfaction to welcome this Broadcasting Bill. The Government have put forward a timely measure which improves the ownership regime and provides an opportunity for really prompt progress to be made with digital broadcasting.

It is no exaggeration to say that the Bill gives broadcasters and their associated industries the opportunity to show that this country can lead the world in digital broadcasting and that it will help United Kingdom media companies to compete more effectively by allowing them to exploit opportunities in the ever-expanding global media market.

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I congratulate my noble friend Lord Inglewood on having made such a good start with this Bill. We all know that a great deal of work remains to be done on the detail. In particular, the idea of the multiplex provider as an extra tier in the broadcasting system will need some careful attention as regards the wording of the Bill. This is a good solution to the complexities of digital broadcasting but we must not allow a new power base to be established which stands outside the regulatory process and which runs the risk of becoming a monopoly element within broadcasting. We need to be clear also as to who is going to review the developing technologies to ensure that they are inter-operable and can work together as seamlessly as possible.

I also congratulate my noble friend on having resisted the lobby which describes itself as the "community radio lobby". Local independent radio, which is community radio in its true sense, has made excellent progress under the Radio Authority. I had the pleasure of visiting Star FM in Slough last summer when my 16 year-old daughter was doing her work experience there. Star FM is chaired by my noble friend Lady Flather and serves a small area with programmes which are popular and widely appreciated. It provides good coverage of local affairs and manages to thrive, despite being overlapped by no fewer than 24 other commercial and BBC radio services.

Incidentally, Star FM manages to achieve viability in a small catchment area because its studio equipment is state-of-the-art digital. It is one of the many small companies in the commercial radio system which is already taking advantage of digital technology to very good effect and is working within the system which Parliament has established. It makes no demand on public funding, nor is it seeking any special privileges which might allow enthusiasts to broadcast even if the listeners are not interested in hearing them.

Creditable community radio enthusiasts have shown themselves prepared to apply for independent radio licences and to compete with commercial interests. In many instances, they have won those licences and run effective stations. Of the 53 new licences issued by the Radio Authority since it was established, 20 serve areas with an adult population of 100,000 or less. There are several successful models within the existing ILR system for linking community aspirations with commercial operations. The new frequencies spectrum, which lies between 107 and 108 MHz, has been allocated specifically to serve those smaller-scale aspirations.

Finally, many of us listen to and greatly esteem the English language services of the World Service of the BBC. Its current affairs programmes and especially its new broadcasts are really first class. The World Service is much less parochial--some would say objective--than Radio 4. The problem is that the World Service is often inaudible in this country. The wave band on which it is available in Britain during the day and evening is 648 medium wave. That is intended for southern Europe and is audible--often not very clearly--only as fall-out in the south of Britain. I admit that during the small hours the World Service is now broadcast on Radio 4

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frequencies. I ask the Government to ensure that in future the World Service is allocated frequencies that are audible throughout the United Kingdom. The additional cost of my proposal will be minimal. I hope that my noble friend will react sympathetically to my suggestion.

6.30 p.m.

Lord Blease: My Lords, my intervention in this Second Reading debate will be brief, but brevity is not an indication of the level of my concern about and interest in the important issues and vital implications of the legislative provisions proposed in the Broadcasting Bill. The Bill is timely and is to be welcomed. In the United Kingdom there is an urgent need to establish new and effective structures for the provision and regulation of the dynamic technological changes that confront broadcasting throughout the country. The Bill is particularly welcome because of the acute need to exercise suitable, effective accountability over the huge and growing amounts of private and corporate finance now directly involved in this powerful and important public service.

What is perhaps of more importance is the need to examine and provide suitable parliamentary accountability and democratic control over the social implications and the regressive cultural impact of some forms of broadcasting output on the staple and proven forms of community life throughout the United Kingdom. Broadcasting and broadcasters now almost dominate the national and local political scene. They set the agenda and determine the issues.

Clause 97 of the Bill provides that the legislation will extend to Northern Ireland. Northern Ireland people value highly television and radio services. I understand from an official report that the Province has the highest percentage of viewing and listening public in the United Kingdom. There is considerable interest in and discussion of the Bill among broadcasting and media personnel in Northern Ireland. In particular, concern is expressed that all aspects of broadcasting in the Province should be fully considered before any properly informed changes are made. The capacity to maintain and develop regional production at current levels is vital for a number of reasons. Issues relating to ownership and Channel 4's current financial provisions are among those matters that require close examination as they affect Northern Ireland. In this connection, during the Committee Stage, Clause 63 will be of importance.

Many essential issues will emerge during the debate on the Bill. I look forward to hearing the views of noble Lords, especially those with the necessary expertise and practical knowledge of today's broadcasting ramifications. We hope to improve the text of the Bill and promote improvements that are in the best interests of public service accountability at all levels of broadcasting in the United Kingdom.

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6.34 p.m.

Baroness O'Cathain: My Lords, it is difficult to forecast the long-term effects of the huge advances in technology in the broadcasting industry. Most of us are just capable of coping with the new technology. However, I have yet to meet an adult aged 30 and over who can confidently assert that he or she is competent to operate a video recording machine. But how many of us have the ability to consider how the latest developments can and will impact on broadcasting in the future? We must avoid supporting every aspect of the Bill, which looks fine now but which may, in a short time, prove to have results that are unacceptable. I fear that this Bill contains an area of concern which, if not remedied, may be invidious for the future health of broadcasting in this country. Before I deal with it, I should like to echo the words of the noble Lord, Lord Thomson of Monifieth, who thanked the Minister for his stated readiness to listen to all the considerations brought forward today.

The development of satellite and cable services has reached a point where a great number of people have grown used to having these services as the primary means of receiving the four terrestrial television services: BBC 1, BBC 2, ITV and Channel 4. Currently, cable operators carry the four terrestrial channels as a free service to their clients. They offer the BBC's two services prominently in their programme guides. That has been an excellent marketing ploy on their part. It encourages would-be viewers to take up the cable options that can, by the very nature of the advanced technology, give better reception. The nub of my concern is that there is no obligation on the satellite and cable companies to continue to carry and offer these services. As the number of subscribers to cable and satellite channels increases, a situation may develop where BBC 1 and 2, ITV and Channel 4 are dropped, as the attraction of carrying those broadcasts--i.e., the sprat to catch the mackerel--is significantly reduced.

Inevitably, new distribution systems will fragment the audiences and the BBC's future as a universally available public service will be seriously undermined, unless an obligation is placed upon cable and satellite operators to carry those services. I believe that this is a serious omission from the Bill which needs to be rectified.

The BBC, which is funded by the licence fee that all viewers are obliged to pay, is exceptionally good value for money. That was acknowledged in the debate in your Lordships' House last week. It is a national asset of which we are all duly proud, particularly when we are holed up in a hotel room overseas, zapping through the channels of the local television stations and constantly bemoaning the fact that there is no BBC. It is also the primary mechanism through which emergency information is carried to the public--for example, in times of war or national disasters. Access to BBC services is fundamental to guarantee that the public receive information in times of emergency.

Regulations that require distribution systems to carry and offer BBC services prominently will ensure that in a multi-channel environment publicly-funded channels

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are available as a matter of course via all delivery systems--cable, satellite and, who knows, any other system that is still only a gleam in the boffin's eye--without the need for viewers to buy new equipment. If audiences are to be guaranteed access to core licence-fee funded public service broadcasting--i.e., BBC transmissions--in the digital world there should be a guarantee of "must carry" status to those channels on wire-based services, and "must offer" status through satellite conditional access boxes.

In addition, as electronic programme guides become increasingly the norm and allow viewers to choose what they want from the menu on the screen, it must be right that the services of the BBC, as the primary publicly-funded broadcaster--I send a nod of thanks in the direction of the noble Lord, Lord Chalfont, for putting me right on the definition--are given prominence in such guides. In that way the public will maintain their familiarity with those services, for which they pay, and must pay, through the licence fee. I urge the Minister to consider these requirements, and I look forward to his comments.

6.38 p.m.

Lord Ashley of Stoke: My Lords, I apologise to the House for my absence during some earlier speeches. I was attending a meeting with the Minister for Disabled People which was arranged some time ago.

I am glad that the noble Baroness referred to the "must carry" provisions of the BBC, which I endorse strongly. I shall develop that point in a moment. By way of recompense for my earlier absence, I propose to cut my speech from 25 to five minutes. The Bill is an official declaration that the starting gun of the new broadcasting gold rush has been fired. The Klondike of the digital age offers massive fortunes to a few and more viewing opportunities to the many, but in the stampede some viewers and listeners will be trampled upon, standards can fall, and wealth can dominate. That is why this debate is of such importance. I was delighted to hear the speech of my noble friend Lord Donoughue and those of other noble friends before I had to leave the Chamber.

The challenge for the Bill is not only to provide a legislative framework for digital television and radio but also to ensure fairness for all, high quality programmes and comprehensive access to good television and radio. A sensible and indeed necessary provision of the Bill should be one requiring quality as an important aspect of licensing. That matter was referred to by my noble friend. The Minister made a good speech but it was not particularly impressive as regards the question of quality. It was not definite or specific enough. Perhaps, when he replies, he will be far more insistent and far more specific on the provisions. Without the provision for quality the licensing authorities are prohibited from taking account of programme quality. It is bizarre to prevent the licensing authorities even considering quality. It brings the licensing authorities into disrepute and it certainly provides a loophole for unscrupulous people. I hope that the Minister will be able to respond constructively to that point. I know that he will try to do so.

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Another major issue is access. Many noble Lords have referred to that matter. I simply wish to add my support to the BBC's call for "must carry" and "must offer" provisions. Competition can only be beneficial if there is access to the market and that means no barriers whatever through gateways for any broadcaster--the BBC or any other. I feel rather redundant in referring to sport because that matter was dealt with so admirably by my noble friend and by many other noble Lords, and I know that the noble Lord, Lord Howell, will give a tour de force. I am a great fan of sport. Sky is trying not only to please existing viewers but also to attract new ones. That is fair enough but in essence it is using sport as supermarkets use loss leaders--to attract new customers. Therefore it is not genuine competition. That is one reason why I find the present situation unacceptable.

The basic problem is satisfying the viewers, rewarding the players and being fair to the broadcasters. That basic and profound problem is the nub of the whole debate. Obviously there is no simple satisfactory solution. There have to be compromises to reduce the gap between what the BBC and ITV can afford and what Sky will pay. There needs to be movement on both sides. Of course sponsorship is a possibility. We already have pseudo-sponsorship. As a fan and indeed proud patron of the Widnes Rugby League club, I am sorry to say that every major Rugby League match involves Wigan. It breaks my heart to say so. Every Wigan jersey is plastered with the name of Norweb and yet the BBC receives no money for promoting Norweb. That is absolutely ridiculous. Something more is required. The Government should take a hand and consider making direct payments.

Finally, I believe that this Bill should cater for deaf and blind people. I have some considerable experience of the problems of deaf people. We should aim at 100 per cent. subtitling and a special channel for those people who need signing. We should use audio description for blind people. I hope that at the Committee stage the Chamber will listen sympathetically to detailed amendments.

6.45 p.m.

The Earl of Stockton: My Lords, why is it that I have a sense of dejo vu? I look around your Lordships' Chamber and see so many familiar faces among whom I have spent so many long and, by and large, happy hours debating the intricacies of broadcasting and the media over the eight years since I became a Member of your Lordships' House.

I am sure that my noble friend Lord Inglewood will forgive some of us if we say to Her Majesty's Government, "We told you so!" My noble friend was at that time a Member of the European Parliament in Strasbourg, or, as we might say, dans un autre endroit, and so he will not recall that we warned the Government that the new bidding system for ITV licences would prove to be anomalous and unworkable. The Government have had to vary the system and conditions by order on a number of occasions since.

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We cast doubt on the wisdom that allowed the Murdoch empire's satellite arm to be outside the cross-media provisions of the Act. Little did we imagine that before the ink was dry on the Royal Assent, BSB would be swallowed up by Sky. Little wonder, therefore, that Sky mobilised such powerful support in your Lordships' House to resist the concept that Sky should fall within the scope of UK legislation at a certain level of market penetration, because even as we were debating the Bill in Committee it knew that with the assimilation of BSB it would have passed the threshold in a matter of days, not months. I endorse, therefore, the wish of the noble Lord, Lord Thomson of Monifieth, to regularise the position of Sky.

I hope that my noble friend will appreciate the irony when I tell him of my suggestion that the regulation of broadcasting was a task singularly unfitted to the Home Office, and that what this country needed was a ministry of culture. That suggestion was rejected, not to say ridiculed by my noble friend Lord Ferrers as foreign, alien and essentially un-British. Ah well, one Minister's ministry of culture is another's Department of National Heritage!

Nevertheless, there is much in this Bill that is to be welcomed. Britain is good at broadcasting. It is something in which this country excels and something of which we have every reason to be proud. All over the world British programmes and British broadcasters command respect and admiration for their quality and authority. The creative talents and skills of our programme makers are second to none. This is not by chance. The quality of our broadcasting is the product of choice; choice that has been secured and widened by successive Conservative governments. They have put in place a strong framework that combines the public interest with effective competition; a healthy environment in which high standards have been maintained and in which the viewer and listener enjoys real choice. I have to say as one who is relentlessly middle-brow that the success of Classic FM has added much to the quality of my life, especially when I am behind the wheel.

Let us not forget that it was a Conservative Government who created an alternative to BBC television by setting up the independent network in 1955. It was a Conservative Government who established Channel 4 in 1982, operating under a statutory remit to innovate and to extend choice but without any subsidy from the public purse. The present Government have continued to support the BBC, as we discussed last week in your Lordships' House. They have reinvigorated ITV and have promoted competition in the commercial marketplace by allowing Channel 4 to sell its own air time. That is a welcome extension of advertiser choice at a time when the number of ITV sales outlets has been reducing.

The Bill before your Lordships reflects the ever-increasing tempo of change and technical innovation. I remember a pundit telling me in 1990 that he saw no way that digital terrestrial television would be feasible before the end of the first decade of the next century. So much for pundits! First, there is a new

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framework for the introduction of these digital services. Secondly, the ownership rules are to be liberalised to encourage new players and new ideas as broadcasting expands and as the viewing and listening public demand a wider range of programmes and services.

As a publisher, I welcome this further liberalisation. Broadcasting, like publishing, can only benefit from wider choice and a more plural marketplace.

Before turning to the future, there is one hangover from the 1990 Act which is not corrected in the Bill. That is the funding arrangements for Channel 4, as has been pointed out by the noble Lord, Lord Donoughue, and my noble friend Lord Blake.

Your Lordships will recall that in the last legislation the Government's three objectives for broadcasting were competition, choice and quality. In the case of Channel 4, choice and quality were to be guaranteed by the continuation of the statutory programme remit, established in 1981, which requires innovation and the extension of viewer choice beyond the output of ITV. Whatever your Lordships may think of Channel 4's programmes, no one can argue that the channel has not carried out that part of the brief imposed on it.

Competition was to be encouraged by requiring Channel 4 to sell its own airtime as a freestanding organisation, thus ending the monopoly by ITV of the sale of terrestrial television advertising. Channel 4's new task was to earn its revenue competitively and to fulfil its remit by returning the proceeds to programmes, for the benefit of audiences. The ITV companies, on the other hand, being in the business of making profits for shareholders, among whom I know are a number of your Lordships, were quite properly required to make voluntary bids for the right to broadcast.

In 1990 the Government were still concerned that, despite Channel 4's initial success in winning audience share, it might not be commercially viable nor earn sufficient revenue to support its service. They put in place a safety net against failure by which the channel would be subsidised by ITV if its advertising revenue fell below a certain threshold. It is important to emphasise that this was not a deal with ITV. It was not intended to provide either long-term income for ITV, or to sustain ITV's own programme remit. Indeed, the safety net was registered, quite properly, with the European Union for clearance as state aid, as designed to support the public service remit of Channel 4.

Three years into the funding formula its effects are clear--and completely perverse. Far from being a failure, Channel 4 has been a great success, making profits before payments to ITV of £39 million in 1993 and £84 million in 1994. It has reserves of nearly £200 million. No serious independent analyst expects Channel 4 to be in a position of receiving money from ITV; nor does the Independent Television Commission, and nor, I suspect, does my right honourable friend the Member for Surrey South-West in another place.

All I ask my noble friend the Minister is, if he continues to believe that Channel 4 still needs to buy an expensive safety net from ITV, on what figures does he

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base such a forecast? Without such supporting figures, if he continues with that assertion I can only assume that it is merely a departmental shibboleth.

If Channel 4 did need help after 1997, ITV could not really provide it. Under the terms of the funding formula Channel 4 would have to lose one-third of its annual advertising revenue (namely, £150 million) and a further £150 million from its reserves before triggering a subsidy, which would at any rate be limited to £40 million a year--certainly not enough to rescue it in that event! I find it difficult to envisage any scenario in which the safety net would be invoked and in which it could save Channel 4. The very Ministers who devised the formula in the 1990 Act have stated that it has not worked as they, or Parliament, intended. It has therefore proved to be unnecessary and ineffective.

That alone would be good enough reason to change, but in fact the position is worse in that the formula has become counter-productive. Instead of supporting Channel 4 it has become a drain on the company's programme-making capability. Under the terms of the formula Channel 4 is obliged to pay to the ITV companies half of its so-called excess advertising revenues. By the end of 1997, when the formula is due for revision, the ITV companies will have received around £300 million--three times what they forecast when they bid for their licences in 1991. That is no more and no less than a direct subsidy to them from Channel 4 at the expense of programmes and films.

I have to ask myself, and my noble friend, why the ITV companies require such a subsidy. They are not using it to support their programme making. They all have profits considerably in excess of the Channel 4 transfers and can hardly claim that they need the money to ensure their survival. No, my Lords, the money is going to the shareholders, numbered in thousands, and not to the viewers, numbered in millions. Does a company like Granada need £15 million from Channel 4 when it can afford to bid billions of pounds for the empire of my noble friend Lord Forte?

Parliament, in the 1990 Act, always intended that this matter should be reviewed. The Government recognise that, because they propose in this Bill to take powers to reduce the 50 per cent. figure after 1997. My noble friend must accept that the formula is working perversely. Clearly the ITC accepts that, as does the National Heritage Select Committee in another place.

The Government's proposals set out in Clauses 65 and 66 of the Bill fail to solve the problem; they merely prolong the agony. Tinkering with the percentages may marginally staunch the flow of funds, but it will lock the ITV companies, Channel 4 and the Secretary of State into a regular, perhaps endless, battle over the prescribed percentages. It will be a continual battle over who gets what proportion of Channel 4's earned income, and is no way to organise a fair and competitive commercial situation.

My noble friend has suggested that £300 million is a reasonable insurance premium for a maximum claim of £40 million, with the insured bearing the

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first £300 million in damages himself. I cannot agree with him, for it is axiomatic that insurance policies are agreed and not imposed, and I trust that when we come to the Committee stage he will be minded to agree with amendments that I shall table to remove this anomaly once and for all.

Turning briefly to the future, I trust that in creating the regulatory framework for terrestrial digital television we are minded to allow the development of not only regional but sub-regional and local broadcasting. The limited range of digital transmitters allows, for the first time, the real possibility of parish pump television broadcasting. Not only would such programming, inevitably limited to a few minutes a week, be of inestimable service to the local community, it would I believe be a very real extension of local democracy, and one that I suspect might find favour with the Members of another place.

There is one small but significant technical point to be addressed. In common with many noble Lords, I am concerned that the provision of digital services will entail considerable cost to the consumer, especially to those least likely to change their sets--the less well-off, the unemployed and the elderly, who can least afford it. I shall be examining the possibility of some kind of short-term levy on the providers of programmes on the digital network to alleviate this, and also the obligation on the manufacturers of the necessary black boxes to decode the digital signals to make them compatible with other digital, cable and satellite transmissions. One black box that accepts all cards must be achievable.

Lest my noble friend considers that I have been overcritical, let me assure him that I welcome the Bill most sincerely. I congratulate him on the way he introduced it, and I look forward to working with him and your Lordships' Committee and his department in turning what is a good Bill into a potentially great one.

7 p.m.

Lord Elis-Thomas: I am very pleased to follow the noble Earl, Lord Stockton. There is always a danger on Second Reading of a technical and detailed piece of legislation that we end up simply flagging the amendments we intend to introduce. However, the noble Earl made a good point, not only in relation to the Channel 4 formula--I am sure that there will be support from some noble Lords on these Benches on that issue--but also the important technical issue regarding the nature of the change in technology. As he described, we can now have not only international, national and regional, but also local communication and broadcasting.

I sat on the Standing Committee in another place on the 1990 legislation. I was concerned that we always fail as legislators to regulate in good time and to anticipate technological changes. That is why we visit or re-visit broadcasting and the media at least once every five years, and no doubt it will be a shorter timescale in future. As we move from broadcast technology to a multi-media context, we are dealing with rapid changes which at member state level we often fail to regulate. That is why matters such as the achievement of European standards in this area are crucial.

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All aspects of relevant technology may not be covered by the Bill. Perhaps I may flag up one issue which I intend to raise. I refer to microwave video dissemination. The Government are addressing microwave video distribution in a number of departments. The DTI has undertaken substantial research into the whole area. It is important that when the Department of National Heritage deals with broadcasting legislation it should work in close harmony with other departments that are taking the lead in areas of technological development. We shall wish to return to that issue.

On a local level--it is very attractive to some of us who live in valley communities, surrounded by mountains--the system could create a greater range of programming and dissemination opportunities than the digital terrestrial proposals set out in the White Paper and the Bill.

I agree entirely with, and indicate my support for, any proposed amendment from my noble friend, as perhaps I may call him, Lord Ashley. I agree that we need to address far more strongly the issue of the deaf and visually impaired. We are beyond the code of guidance suggested in Clause 19 of the Bill. I shall support any amendment of the noble Lord which strengthens not just the Teletext services but the audio-described television he indicated. The technology is already available to provide far greater access to the media for those who are deaf or visually impaired. We need to address that issue more strongly in the Bill. I give notice of support for any amendment that he will produce.

I, too, congratulate warmly the noble Baroness, Lady Smith of Gilmorehill, on her maiden speech. She addressed what I believe is the central issue of the debate: the relationship between the attempt to hold together a public service broadcasting culture with the technological determinants that face us and the influence of the market. It was a thoughtful, philosophical speech in the best tradition of Scottish moral philosophy. I cannot pay a higher compliment than that.

The Bill has four large parts to it. The first deals with terrestrial television. We shall need to consider a number of aspects, in particular that of cost. For example, as regards Wales and the hills and valleys model, the cost of adaptation of the six main transmitters serving Wales would not be massive. That, I believe, would be NTL's estimate. But what would happen with the 180 sub-transmitters? What will be the cost of the adaptation of all those repeaters in order to make reception possible throughout hilly and mountainous areas? It concerns me that the government estimate of the early stages of population coverage--that is before we come to the switch-over and removal of the analogue service--may be over-optimistic. We shall wish to pursue that issue in Committee. It is a matter on which we shall require technical advice. Those of us who proposed that there should be early legislation for digital broadcasting in the 1990 Act will return to some of the advisers we then had. We look forward to an ongoing technical debate with the Government's advisers on the issue. Members of this House and of another place need all the advice to be obtained as we pursue the issues.

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The second part of the Bill deals with digital audio broadcasting. Since I forgot to declare an interest, as chairman of Screen Wales, when I spoke about television, I must remember now to declare an interest as a director of Marcher Sound, an independent local radio station which serves the Marches of Wales and the North Wales coast.

I am a little concerned that the regime proposed in the Bill and set out in the White Paper for ILR may not be as rigorous as for INR. Again, we shall wish to pursue that in Committee. I am aware that in the Radio Authority we have a regulating body which has proved its worth over the years, certainly since it was renewed under the 1990 Act. We shall wish to consider again as to how the licensing and multiplexing for radio will operate at the local level to ensure that there is a diversity of service.

The third part of the Bill deals with the funding formulae which were devised in our 1990 legislation. I have already referred to that concerning Channel 4. The other has been referred to eloquently by my colleagues. We do not form a Welsh mafia; we agree on important issues. However, it is nice to have the agreement on these issues of the official Liberal Party and the official Labour Party with the official Cross-Bench spokesman on Wales.

S4C has deep concern about its ability to continue to meet the technical challenges of a public service broadcaster in a "smaller" language. The authority and its chief executive are determined that they will respond effectively and with imagination to the challenge. But they need a level playing field. For those reasons they are concerned about the allocation of frequency, the way in which the multiplex will operate and their proportion of the frequency. That issue has been covered. They are concerned too with the funding mechanism to meet those challenges.

We have heard that the current funding on the present formula is based on 3·2 per cent. of the revenue from terrestrial broadcasting advertising. The transfer from DNH to the authority in 1995 amounted to some £63 million. The authority also raised nearly £7 million in other commercial activities. That global figure relates to its own commercial activity. It indicates that it is an enterprising channel. However, it is a matter of concern that while moving from the previous formula to the formula of RPI may appear to bring about a level playing field, because of the additional costs of digitalisation, the channel may well be unfairly penalised in relation to the topographical issues that I discussed earlier--potential transmission costs and so on. Therefore I ask the Minister to give an assurance at Committee stage that the formula will be one upon which, as he said in opening the debate, the channel can plan its business for the future.

Concern has been expressed that the wording of the Bill might indicate potential political interference by a Secretary of State. I am certain that no Secretary of State for National Heritage would wish to interfere with the internal activities of any broadcaster. I am sure that the Government are looking for a formula that will allow the Minister to pay such sums as may be necessary for

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the additional cost of digitalisation, to remove the funds when they are no longer available and to do it in a way that also guarantees a regular and consistent income for the channel.

The present form of words in Part III is not as helpful as it might be. I would like the Minister to look at that, as I am sure he will do, before we reach Committee stage. Others will wish to consider the wording. There are some formidable Welsh lawyers in this House, as noble Lords will know.

I wish to turn to one more important issue in relation to S4C which has already been mentioned. I make my final declaration of interest as chair of the statutory Welsh Language Board. As it happens, in our usual timely way we have managed, S4C and ourselves, to publish figures which are a good measure of the effectiveness of the channel. They are based upon an NOP survey of viewers in Wales. It appears that over 61 per cent. of the sample--that is the total population of Wales in a structured sample--watched some programmes in Welsh. If we take into account that only 18 per cent. are fully fluent in the population, that sample included a substantial figure who do not follow Welsh as well as the noble Lords, Lord Geraint and Lord Prys-Davies. Fourteen per cent. of those who can receive S4C said that they spent more than half their time watching television on S4C, receiving, we hope, a varied cultural output. Six out of 10 fluent Welsh speakers claim to watch at least half their television on S4C. A more important figure for me, as someone who is charged with extending the domain of the language, is that even among those who can speak no Welsh at all, 20 per cent. watch at least a bit of their programmes in Welsh. That includes the population in the Wirral who are tuned in to "Sgorio" and other sports programmes on S4C.

Twenty per cent. of all those who have ever spoken any Welsh--even a few sentences--who were sampled by the survey said that the use of Welsh on S4C encouraged them to try to use it more often. Clearly the channel is already fulfilling the duty laid upon it by the Government in the early 1980s to provide for a smaller language to have access to the mass media and for it to be part not only of providing cultural output for the population of Wales but of providing valuable employment. That includes my number two son who is employed by a facilities company, Barcud, in Caernarvon. That is my final declaration of interest, and I should remember it. There are over 100 independent companies, as well as the big Facilities House, which work for the channel, creating a cultural industry in Wales. The channel has provided employment throughout Wales, particularly in the north. That is an important investment in the country and the industry.

The Government are well aware of all I have said. They have done their fair share in developing the resource. I only hope that in the Bill we will do nothing to damage a success story in terms of the media in the UK.

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7.13 p.m.

Lord Dixon-Smith: My Lords, I welcome the Broadcasting Bill, which is market-oriented and deregulatory in intent. The main aim appears to be to allow the market to achieve a greater measure of consolidation so as to produce stronger media companies better able to compete on the international front.

My purpose in speaking is to draw attention to a problem at the bottom end of the market where independent local radio stations provide services that have proved to be very popular. The Association of Independent Radio Companies has pointed to an area of unnecessary regulation which was acknowledged in the broadcasting White Paper but appears to have slipped through the net in the preparation of the Bill. Companies are unable at present to apply for two FM licences in the same area. The department has so far demurred at change because it appears to believe that this might lead to over-dominance by particular companies.

One needs a sense of proportion about local radio concentrations. The concentrations are very small compared with television, which we have spent most of the afternoon discussing. The largest radio concentration would have a total current market capitalisation of some £400 million. Granada-LWT's market capitalisation is £4 billion--10 times as much. The Bill expects that TV concentrations will grow further. In that context, radio companies are minnows by comparison and restraining local radio seems unreasonable.

I can see an argument in favour of restricting companies to one FM licence in areas where healthy competition does not exist. But, in urban areas where strong competition already exists, the argument for artificial restraint disappears. In London, for example, there are already some 20 local radio stations and more in the pipeline. We heard from my noble friend Lord Astor of Hever about Star FM, which operates in a limited market but one where there are 24 overlapping local stations.

If stations achieve popularity within this context, that is a good thing and more power to their elbow. But, if spectrum is a scarce resource, then popularity should be an attribute worthy of rewards rather than penalty. In any event, it seems anomalous to restrict development of local radio stations when there is no restriction on co-ownership between local radio and local newspapers.

If considerations of over-dominance nevertheless remain, let that be for the Radio Authority to take into account in its consideration of competitive bids for a new licence. There are also powers for the Office of Fair Trading to ensure a competitive market. Do we need to have a rule which prevents even an application for a second FM licence? That seems to be unnecessary.

I make a final point in favour of this measure of deregulation which I request. It might be argued that the restriction protects diversity. In fact, the reverse seems often to be the case. If there is a successful commercial format on one FM licence in an area, competitors all too often try to imitate that format when they are in competition. However, if one company owned two FM frequencies in its area, then it would be much more

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likely that the second FM channel would be different from the first. Diversity of ownership does not necessarily imply diversity of output.

The Committee stage will allow us to research these matters more closely, but I should appreciate an initial reaction from my noble friend on the Front Bench to the arguments that I have deployed on behalf of the local radio industry.

7.18 p.m.

Lord Howell: My Lords, first I must declare an interest as I am a non-executive director of Birmingham Cable, although I shall not touch on any of its affairs today. Secondly, I wish to say what a privilege it is to take part in a debate in which my noble friend Lady Smith made such an excellent maiden speech. It was particularly gratifying to those of us who were friends of John Smith and have admired Elizabeth Smith, if I may call her that, over the years.

We had some excellent openings from the Minister, my noble friend Lord Donoughue and the noble Lord, Lord Thomson of Monifieth. They set the tone for the debate and I am glad that we shall approach the Bill in a spirit of co-operation. I hope that tonight the Minister will depart a little from the technicalities of the Bill, which he covers so well, and deal with some of the big issues which arise, particularly sport. He was unable to deal with it when we debated the Charter last week.

I give advance notice of the topic to which I shall return in a minute and I especially hope that the Minister will deal with a question I wish to raise. I have to disclose to the House that in the forthcoming World Cup cricket tournament the entire nation will be deprived of seeing any highlights on the BBC as a result of the withdrawal by Sky Television from the agreement into which it had entered. That is a very serious matter, and I shall return to it shortly. I give notice to the Minister that I should like him to express the same concern as some of us already have done on this subject.

The Bill is an essential piece of legislation, given the technical revolution now available to broadcasters. Vital questions are raised, and they have to be dealt with in this Bill. Previously, every legislative approach has been an attempt to catch up with the existing broadcasting situation, which has seemed to be ahead of the legislators. I hope that this Bill will reverse that process. The Television Act 1954 established ITV; the Broadcasting Act 1981 granted powers of regulation in relation to sports coverage of (and the House should note these words) "events of national interest". That was a declaration by Parliament of immense importance--now challenged, I am afraid, by Sky and some sporting bodies--that the coverage of sports events on television affects the national interest. Parliament visited this subject again in the Broadcasting Act 1990, when these events of national interest had then come to be called "listed events"--about which we shall hear much during the passage of this Bill.

The crucial question in 1990 led the Minister in charge of the Bill, the noble Earl, Lord Ferrers, to put the issue, as then seen, very clearly to the House. I will quote his remarks:

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    "The rights to sporting events are ... a form of property. The sale of those rights is one of the principal means by which sporting bodies ... could raise revenue. The Committee would ... have to consider whether the apparent mischief which the amendments seek to prevent warrants such a measure"--

as was then being put before the Committee. The "apparent mischief" was that listed events would soon be available only on satellite channels--a mischief indeed!

The noble Earl concluded:

    "a satellite channel would not be able to show a listed event on a pay-per-view basis. It would therefore almost certainly only be able to show a listed event at a substantial loss".--[Official Report, 26/7/90; col. 1691.]

That statement, which has proved to be totally inaccurate, though I do not blame the noble Earl, has dominated government thinking, and still does. It is that fundamental thought that has to be corrected. The reality of today is a million miles away from that situation, and it is the reality that we now have to address.

The face of British sport, as it is broadcast to the nation and the world, is determined nowadays not by sport but by Mr. Murdoch, his News International and Sky Television. I join with the two Front Bench speakers in saying that I admire very much some of the things that he has done and the programmes that he has brought about. I have two subscriptions to Sky, one in London and one in Birmingham. I take advantage of it. So I am not prejudiced in that direction. But the time has come for this monopoly to be opened up. That is the essence of the matter.

The major spectator sports division of the Central Council for Physical Recreation wrote to many of us, certainly to me, demanding no interference with its right to maximise its earnings through selling sport to satellite television. We should take note of that. That committee is chaired by the chief executive of the Rugby League, who has just negotiated one of the most extraordinary deals in relation to the future of his sport ever seen in the history of British sport.

Conflicts of interest litter the membership of that committee. Some are legitimate; others are not. Members of the committee are entitled to safeguard their financial interests, as noble Lords on the Front Benches said. But we have a duty to protect the national interest, and that consideration must be supreme. We must not deny this facility to millions of householders who have no access to satellite, mainly through high costs-- I believe Sky has increased the cost of its sports coverage three times, an increase of about £100 in recent years. To deny the millions of elderly who supported their sport in better days the opportunity to do so now, in old age or difficult circumstances, is not acceptable. It is anti-social.

I am very sorry to say, as senior vice-president of the CCPR, that to remove from the screens of BBC, ITV and Channel 5 the exposure to sport which millions of young people will undergo if these trends continue would remove from future generations the inspirational effect of British sport which television brings to youngsters, who see the events on television and then want to take up those sports. Therefore, this policy is self-defeating in terms of the future interests of British

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sport. I regret that none of these considerations finds time or space within the CCPR letter. It should think again and make sure that they do.

To return to the activities of Sky, we must note again what some of us mentioned in last week's debate on the BBC Charter: the control of Rugby League by News International; the saturation coverage of some sports now, particularly football, with all the dangers that that brings for the future, which again might well rebound on the football authorities that allow it; the exclusivity now beginning to creep into cricket coverage, of which I just gave an illustration and to which I shall return; and the removal of much golf, especially the great Ryder Cup victory, in which we all took pride but which was denied a showing to the majority of people in this country. That cannot possibly be right if we regard important sporting occasions as being of national interest. If ever there was a national interest, the Ryder Cup certainly provided one.

These examples are just for starters. Who can doubt that next will come attempts to corner Wimbledon tennis. Let us hope that Wimbledon and the LTA will maintain the resolve that they have shown so far to ensure that maximum audiences for their sport are in their interest, and that they will resist the financial temptations that will no doubt be put in their way. So, too, with Formula One racing.

The most spectacular example of all is the future of the Olympic Games, for which I understand (if reports are accurate) Mr. Murdoch is now offering £1.2 billion for exclusivity. There is no more important sporting festival in the world, bringing the world together, uniting the world with 60 nations competing, than the Olympic Games. We must hope that president Samaranch, who has always maintained a realistic sense of duty in these areas and has always insisted on working through such bodies as the European Broadcasting Union so that the games can be available to the widest possible audiences, will maintain that principle, even though Mr. Murdoch is trying to seduce him. As I know from my own experience, president Samaranch is a difficult man to seduce.

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