Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Thomson of Monifieth moved Amendment No. 146:

After Clause 146, insert the following new clause--

Duration and renewal of channel 3 licences

(".--(1) Section 20 of the 1990 Act (Duration and renewal of channel 3 licences) is amended as follows.
(2) In subsection (2) for "four" there is substituted "five".
(3) Subsection (3) is omitted.").

The noble Lord said: Amendment No. 146 is an important one. It is a significant piece in what might be described as a jigsaw of amendments that we shall discuss today. Taken together they seek to reshape the financial arrangements between Channel 4 and ITV, between the ITV companies and the ITC in terms of the renewal of their licences, and between the large ITV companies and the small ITV companies. The issues hang closely together, and it is a pity that the groupings do not allow us to discuss the whole area at the same time.

Suffice it to say at this stage, however, that one of the anomalies of the disastrous 1990 Act was that the timetables within that Act did not synchronise with each other. Under the Act the Channel 4 funding formula, which we shall consider later, can be reviewed and ended from January 1998. However, under that same Act the licences of the ITV companies cannot be reviewed and adjusted until January 1999 at the earliest. There is a glaring gap of a year in which the ITV companies could lose their subsidies from Channel 4

13 Feb 1996 : Column 525

without any chance of relief from the terms of their licences from the ITC. For some of the ITV companies that is critical.

The solution appears to be simple. It is to move forward by one year from 1st January 1999 to 1st January 1998 the earliest time when the new ITV licences could start. That involves bringing the specified date forward by five years from the end of the licence period--2003--instead of the four years that are specified in the 1990 Act.

This is perhaps a deceptively straightforward amendment. By accepting it, the Committee will simply correct one of several anomalies of time which exist between the Broadcasting Act 1990 and the new Broadcasting Bill.

Whatever the outcome of the Channel 4 argument later in the proceedings on the Bill, this should be a commonsense and uncontroversial amendment to establish consistent review dates within the new legislation. I beg to move.

Lord Crickhowell: I must first declare an interest as a director of the Channel 3 company HTV.

There is little that one need add after that admirable introduction by the noble Lord, Lord Thomson of Monifieth. He rightly described the situation as a jigsaw. The companies which have the unenviable task under the bidding arrangements of looking 10 years ahead and forecasting a range of changing circumstances have to consider all kinds of things and bring the totality together to form a judgment about their bids. One of those elements is clearly the Channel 4 rebate. We shall debate that later and I do not want to anticipate that debate. However, some of the money coming to the companies has proved even more important than was realised when the Bill was originally drafted. Certainly, for those companies with relatively high bids it makes a significant contribution to income.

If part of the prospectus on which the bidding process was based is changed, it is right that the whole should be taken together. If a private sector organisation put forward a prospectus and suddenly changed the rules it would be subject to great criticism. Here we have a situation where it may be that, as a result of the review, the financial position of the companies will be substantially altered, perhaps in 1998, but because of the absurd anomaly in the original timing of the events there is no opportunity for them to have the contract reviewed in parallel with the change, whatever it may be.

All that is suggested in the amendment is that those two elements should be brought together. There is no attempt to suggest what the outcome of the review should be or to impose a solution. The purpose is merely to ensure that if a change arises in one part of the package a balancing change can be made at that time in another part of the package to provide a fair situation for all the companies involved. The case is overwhelming and I hope that the Government will be able to accept the amendment.

The Earl of Arran: I too would like to support the amendment in the name of the noble Lord, Lord Thomson

13 Feb 1996 : Column 526

of Monifieth. Inasmuch as the Bill as a whole seeks to provide a sensible framework for the future of British television, the amendment can only be regarded as extremely welcome. These are uncertain times for independent television. If the Government adhere to the timetable for re-evaluating Channel 4's finances, as I profoundly hope they will, then 1998 threatens even greater uncertainty.

My interventions on these issues of broadcasting policy are fired by a desire to maintain quality television. However, 12 months of limbo will do nothing for confidence in the industry at any level--from the boardroom to the studio floor. Moreover, tomorrow's critics have an uncanny knack of blaming today's legislators. I am told that good lawyers loathe anomalies. The Minister has a reputation for being a very good lawyer. I commend the amendment to him and rest my case.

Lord Donoughue: From this side we totally support the amendment in the name of the noble Lord, Lord Thomson. It seems sensible and practical and I cannot see what the Government would have against adopting it.

Lord Inglewood: The noble Lord, Lord Thomson, explained the purpose of his amendment as being a means of providing Channel 3 companies with greater certainty of income levels in the light of expected changes to the Channel 4 funding formula. As already noted, we shall discuss the formula later this evening. I do not wish to pre-empt that debate by going into detail now. However, there are certain objections in principle to what the noble Lord, Lord Thomson, proposes.

The Broadcasting Act 1990 was absolutely clear as to the duration of the Channel 4 funding formula which it set in place. It made clear that no order providing for different payment thresholds should be made before the end of 1997, as has been explained. The Act was also clear on the duration of the Channel 3 licences. They should continue in force for 10 years, with application for renewal no earlier than four years before the date of expiry.

In bringing forward our proposals to amend the 1990 Act formula, we have made clear that we do not think it right to change the rules applying to the flow of payments between Channel 3 and Channel 4 before 1997. To do that would be unfair. It seems to us that by the same token Channel 3 companies cannot have any specific expectation of arrangements applying after that date. It follows that there is no case for re-opening the timescale for licence renewal as set out in the 1990 Act.

However, there are more general arguments against the proposal to bring forward renewal of Channel 3 licences to five rather than four years ahead of their expiry date. At only halfway through the licence period, the ITC would be less able to make a fully informed assessment of the licensee's performance to date. Indeed, it was the noble Lord, Lord Thomson, himself who made that point during the Committee stage of what became the 1990 Act.

If licence renewal four years in advance of renewal leaves the ITC a short time in terms of assessing the quality of the licensee, leaving only five years of performance and removing the ITC's power to defer

13 Feb 1996 : Column 527

consideration of the application seems to me significantly to erode the ITC's ability to assess the renewal of the licence properly.

As I mentioned, the amendment also proposes removing the ITC's discretion to defer considering an application for a licence renewal to a more suitable date. With the renewal of 16 Channel 3 licences to consider and with a variety of market interests affecting different regions, it is only prudent to permit the regulator the flexibility to assess the application at the most sensible time. For those reasons, we oppose the amendment.

Lord Thomson of Monifieth: I find that a deeply disappointing and in some ways rather baffling reply. In this major Broadcasting Bill we have probably the last piece of broadcasting legislation this century on such a scale. With it we have the chance to make a fresh start and put right the anomalies of the 1990 Act. Although that Act occurred under this Government, it was in a different mood. There is a fairly general feeling around, not entirely on this side of the Committee, that the 1990 Act has turned out in practice to be pretty disastrous. The bidding system for television contracts left grotesque anomalies between one regional area of commercial television and another.

We greatly welcome the noble Lord's presence at the Dispatch Box but he might have sought to ensure that we try to put right in the Bill some of the more glaring anomalies of the 1990 Act rather than stand on the arguments put forward during proceedings on that Act. They were poor arguments at the time and this is a chance to put matters right. I find astonishing the Minister's resistance to this simple example of at least getting two timescales to coincide with each other and enabling two parts of an integral commercial television system to be dealt with on an even footing. However, this is not the time to pursue such matters. There are many others related to them with which we have to deal tonight. Therefore, I beg leave to withdraw the amendment.

Next Section Back to Table of Contents Lords Hansard Home Page