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Lord Trefgarne: My Lords, I am grateful to my noble friend. He confirmed that he intends to bring forward an amendment, perhaps better drafted, at Third Reading in order to deal with this matter. On that assumption, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 154 not moved.]

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4.15 p.m.

Lord Kirkhill moved Amendment No. 155:

After Clause 66, insert the following new clause--

Channel 3 Licence conditions

(".--(1) Section 20 of the 1990 Act is amended as follows.
(2) After subsection (6)(b) there is inserted--
"(c) may vary the licence so as to include such conditions relating to the matters specified in subsections (3) and (4) of section 21(A) as they consider appropriate.".
(3) After subsection (8)(b) there is inserted--
"(c) the condition to be included in the licence under subsection (6)(c).".").

The noble Lord said: My Lords, I hope that the amendment is now in its appropriate place in the Marshalled List. I have tabled the amendment because I believe that the ITC should be able to take into account all the factors cited on the clause when a Channel 3 licence is renewed and not merely at the point of change in control. It is again an opportunity to underpin the regional flavour of the ITV system. Such an opportunity will be fulfilled where the regulator is able to make renewal subject to the licence holder accepting conditions to safeguard or, as appropriate, to enhance the regional character of the service. That is an extremely important point. The amendment makes provision for that possibility, and I beg to move.

Lord Trefgarne: My Lords, I am not keen on the amendment. It appears to grant a draconian power to the ITC which, on reflection, your Lordships might not think wholly appropriate. I hope that the noble Lord will not persist with the amendment.

Lord Inglewood: My Lords, as your Lordships will know, Clause 66 of this Bill seeks to introduce a new part, Section 21A, to the Broadcasting Act 1990 which prevents any diminution in the range and quality of regionality in a Channel 3 service where there is a change of control in the licence holder. The noble Lord, Lord Kirkhill, seeks in this amendment to extend that protection where a licence is renewed so that, where the current licence holder is performing in excess of what his licence requires in terms of the amount and quality of regional programmes he provides, it can be made a condition of his licence being renewed that he continues to perform at this higher level. The noble Lord proposed a similar amendment in Committee and I have, as I said I would, reflected on that proposal and discussed the issue with the Independent Television Commission.

The commission would ideally like to have such a power because current licence holders regularly outperform licence requirements in the area of regionality, and it seems prudent, in anticipating the changes which the relaxation of media ownership controls we are proposing generally in the Bill will bring, to preserve such overperformance for the benefit of viewers. However, we must consider not only what is prudent but what is fair. Clause 66 is fair because it seeks to guard against any attempt to run down regional services by a company with no previous track record for that region. But the renewal proposed by the noble Lord seeks rather to penalise the good will of the current

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licence holders by saying, "You have been doing more than you promised, so now you must make a more onerous promise".

The commission agreed licence conditions with the current licence holders of Channel 3, an agreement formed when the licences were bid for and awarded. I do not believe that it would be right for us suddenly to change that agreement to take advantage of the fact that licence holders see it as in their interests to provide a good range of regional services. And as I said in Committee, if we are to agree that we may reasonably ask licence holders to accept more onerous conditions on renewal where their performance has shown that they can achieve them, is it right that regionality should be singled out? Should we not also seek to consolidate performance in children's programmes or in original drama, for example? While I sympathise with the noble Lord's intentions, I believe that in accepting this amendment we would be in danger of discouraging our current licence holders from striving to achieve the best regional service they can in any given period by threatening that they will be required to maintain that level ever afterwards.

The noble Lord will be aware that the Government have looked carefully at which might be done further to strengthen Clause 66 so that a change of control cannot interfere with the high quality of regional programming that viewers of Channel 3 now enjoy. I am sure that the noble Lord will be disappointed by what I have had to say, but I hope that he will accept that we are committed to this issue and, in the light of our considered view that the current licence holders know where their best interests lie on this subject and that it would be unhelpful to meet their good will and commercial common sense with unnecessary post hoc regulation, he will withdraw his amendment.

Lord Kirkhill: My Lords, I shall withdraw the amendment but perhaps, first I may place on record the fact that the Minister and I have been over this ground before. I do not consider that a particularly onerous condition to impose upon the various companies. At present, they are not doing much beyond the minimum. They plead that they are, but if one analyses what they do it is not much more than the minimum. Past experience shows that unless Parliament, in its wisdom, makes a firm regulatory system effective it becomes so flexible that the true intent of Parliament is obstructed. There is every possibility that the good spirit behind Clause 66 may in reality not have the effect for which we hope. That said, I formally beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Thomson of Monifieth moved Amendment No. 156:

After Clause 66, insert the following new clause--
(" .--(1) Section 45 of the 1990 Act is amended as follows.
(2) After section (9) there is inserted--
"(10) A licence to provide a non-domestic satellite service shall include conditions requiring the licence holder to pay to the Commission (in addition to any fees required to be so paid by virtue

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of section 45(1)(b)) in respect of each accounting period of his falling within the period for which the licence is in force such amount as the Commission may determine representing a percentage of the qualifying revenue for that accounting period.".").

The noble Lord said: My Lords, this amendment is in exactly the same terms as the one that I moved at Committee stage. I have tabled it again, first, because of the importance of the principle and issue that lie behind it and, secondly, because there was limited time at the Committee stage to discuss it and I wished to give your Lordships the opportunity to examine the issue again.

The purpose behind the amendment is clear from its wording. It is to try to establish a fairer basis of taxation for all those who compete in the commercial broadcasting field; that is, to put the satellite and cable broadcasters on the same footing as the terrestrial commercial broadcasters. In arguing the matter at Committee stage, the Minister based his argument on what I thought was a mistaken premise. He argued that BSkyB, as the principal satellite broadcaster, was outside the fiscal jurisdiction of this country because the frequencies that it used were on an international basis, whereas the terrestrial frequencies are a national asset under the jurisdiction of Her Majesty's Government.

I sought to argue from a different basis--that of the ordinary television viewers. When they watch a BSkyB programme or a programme from any of the other satellite operators, or watch terrestrial programmes, they simply see television as contributing to the general entertainment and instruction of British people. Satellite broadcasters have, through their own enterprise, now had a perhaps justified tax-free holiday. However, I thought that the time had come to put them on the same footing as other commercial competitors. That is what lies behind my amendment.

I do not want to labour the point when we wish to make as much progress as possible. However, I use the occasion to make an additional point which arose out of our discussions on Tuesday. It is the role that BSkyB plays in financing original programming. Speaking as a former regulator of broadcasting, I would be more in favour of funding from BSkyB going to the provision of original programming. If there has to be a choice I would prefer it to go there rather than to the provision of revenue for the Treasury.

I offer the Minister a possible fallback position, if he wishes to take advantage of it. If he refuses to accept the case for fiscal fairness then he should at least accept the case for greater fairness in the promotion of original programmes. The Minister sought to tell us on Tuesday that he believed that the record of original programme-making for BSkyB was creditable. He used language that indicated that it at least matched the original programming of Channel 4. Since Tuesday's debate, therefore, I have taken the opportunity to look at the figures. The figure for original programming for Channel 4 in 1995 was £194 million, 85 per cent. of its total programme budget. The figure for BSkyB's programmes that it provides is £150 million. However, that £150 million consists largely, I am told, of sporting rights. We have argued about them separately. In my definition, that does not count as original creative

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programming at all. The truth is that so far BSkyB has done little, if anything, to provide any original children's programmes, situation comedies or original drama.

If the Government are unwilling to establish a basis of fair taxation, then in the terms about which we argued on Tuesday for a fair proportion of original programming as part of the obligation of being a broadcaster in this country, they ought to use their influence to persuade BSkyB greatly to improve its record. I beg to move.

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