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Lord Dixon-Smith: My Lords, I am grateful to the Minister for the trouble that he has taken on the issue. I have no doubt that I also owe thanks to others outside this Chamber. My noble friend states that he seeks a solution. I entirely accept that the wording of the amendment may not be in perfect form for legislation. I beg leave to withdraw the amendment.

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Amendment, by leave, withdrawn.

Clause 69 [Funding of Sianel Pedwar Cymru]:

Lord Cledwyn of Penrhos moved Amendment No. 13:

Page 60, line 27, leave out ("transmitting") and insert ("providing").

The noble Lord said: My Lords, the purpose of the amendment is to widen the power of the Secretary of State to take all the costs of providing a full digital service into account as well as the cost of transmitting the service. The effect would be to provide a fairer base for the new arrangement than the 1997 amount. It encompasses all the costs which will be incurred by the S4C digital service.

This short amendment follows the debate about the proposed new funding arrangements for S4C and, more precisely and importantly, the question of the fairness of the settlement. That lies at the centre of my argument. I am sure that the Secretary of State will recognise that.

During the passage of the Bill through the House, I noted that some noble Lords referred to the proposed funding arrangements for S4C. The matter was referred to at Second Reading and at Report stage. Let us look at the reality of the position. The fact is that at present S4C's funding formula is one based on 3.2 per cent. of total advertising revenues. The Bill proposes to change the formula from 1998 to one based on the 1997 funding plus RPI. Noble Lords have pointed out to the Minister that total advertising revenues have consistently risen at a higher rate than RPI and that this pattern is projected to continue.

What does this mean? It means that the proposed funding formula will give S4C a lower level of funding support in the future. Let us be clear about this. It will weaken the current analogue service; and, furthermore, S4C will be unable to take advantage of the opportunities presented by digital broadcasting. The cost of implementing a digital service must be reflected in the future funding arrangements. The opportunity to do more is there, but the means are not, and the availability of a Channel 4 digital service in Wales will have an effect on S4C's advertising revenue.

I know that S4C welcomes the reassurances given by the Government that commercial flexibility will be awarded in order to maximise other funding schemes. This is similar to the provision granted to the BBC. But there are marked differences between the BBC and S4C. They are at opposite ends of the spectrum in terms of scale. In terms of income, the licence fee provides the BBC with income 20 times greater than S4C. Commercially the BBC has a global market to exploit. S4C's market is more limited as it seeks to serve a minority audience, and S4C has a less established international brand.

Despite the noble Lord's assurance on 13th February at col. 602 of the Official Report, that,

    "The Government are committed to ensuring that proper arrangements are in place for S4C to continue to thrive. That includes the adequate provision of resources",

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the Government have not accepted any arguments which have sought to address the obvious conflict between a lower level of funding and the opportunity to provide an enhanced S4C service using digital technology.

This conflict is at the very heart of the concerns voiced by noble Lords and by S4C. Despite the opportunity and the will to exploit new commercial opportunities, S4C must always be heavily dependent on public funding--a fact accepted by the Government at the time of S4C's foundation. I am glad that the noble Viscount, Lord Whitelaw, is present this evening because 15 years ago he played a major role in the foundation of S4C, and Wales will always be grateful to him for that. He knows that what I say now is accurate. That fact is an undeniable reality for a minority channel. S4C's funding has to be protected and stagnation for S4C at a time when all other broadcasters in the UK develop their services is not an option and is patently unfair.

With the support of the Government and opposition parties, and with its own drive and imagination, S4C has developed into a major Welsh organisation in the space of 15 years. It has a central role in supporting and nurturing the Welsh language and culture. The fortunes of the Welsh language are on the upturn. I am glad to have the understanding and support of my noble friend Lord Elis-Thomas, the chairman of the Welsh Language Board. At least 25 per cent. of the population of Wales have a reasonable understanding of Welsh, and 19 per cent. are fluent in the language. The total number of Welsh speakers is stabilising after decades of decline and an increase is evident within the critical younger age group. In a recent survey conducted by NOP, 20 per cent. of those interviewed who had spoken a little Welsh at one time in their lives had been inspired to try to use the language by the existence of S4C. Twenty per cent. of those with no knowledge of Welsh also watched some Welsh programmes by availing themselves of the sub-titling service. S4C is central to the television viewing patterns of Welsh speakers today. Sixty one per cent. of fluent Welsh speakers watch S4C for at least half their total television viewing time.

Given S4C's influence on the improved state of the language, and given that its establishment has resulted in a remarkable level of social cohesion in Wales, it is surely vital that S4C's funding remains at a realistic and practical level. Government funding is given to S4C in order to produce television programmes. But it would be naieve to think that the benefits are limited to the channel's output. The effect of the Government's financial support on the language, culture and social harmony in Wales is immeasurable, but it is there for all to see. S4C is the major commissioner of work from independent producers in Wales. The security of thousands of jobs is inextricably linked with the financial well-being of S4C. These jobs have brought economic benefits to areas where other employment opportunities are limited. Any diminution of funding would have a negative impact on all those related issues. It would be a serious blow to Wales and one which would hurt the Welsh community from Anglesey to Gwent.

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Sixteen years ago, we had a long and difficult debate about the future of television in Wales in which I was closely involved, as was the noble Viscount, Lord Whitelaw, to whom we owe a great deal. The issues are fundamental in Wales today. I feel that the House and the Government should respond to the call and the plea of Welsh people at this time. I beg to move.

5.30 p.m.

Baroness Dean of Thornton-le-Fylde: My Lords, from these Benches I support the amendment, although I am probably the only person whose name is attached to it who does not speak a word of Welsh. However, the other three signatories do.

It is regrettable that the Government have chosen to make no moves in this important area for a small but nevertheless important television service to people in Wales. We feel that the Government have walked away from the advanced step that was taken when S4C was set up. It is a small company, covering 25 per cent. of Welsh speaking people in Wales. We have to be careful. It will be crushed in what will become an international big boys' game if the funding of S4C is affected in the way we believe it will be. A reduction of funding would weaken the analogue service. We would have a Broadcasting Bill which provided the means for S4C to go digital but did not provide the financial underpinning which is necessary. The channel would be kept in a competitive box unable to develop.

At the same time as digital services become available, Channel 4 in Wales will take a major part in the competition for advertising revenue in Wales. Noble Lords have been trying to find a means through discussion with the department and through amendments at Committee and Report stages, as well as now at Third Reading, to give S4C hope that it will not be allowed to shrink on the vine as it feels will happen. The channel will not be able to compete in a system which makes the competitive requirements fair to it. I hope that the Minister will be able to give S4C better news at this Third Reading than at the Committee and Report stages.

Lord Aberdare: My Lords, I wish warmly to support the amendment so well moved by the noble Lord, Lord Cledwyn. There are serious worries in Wales about the future of S4C. It has been universally acknowledged by Welsh and English speaking people in the Principality that S4C has been a great success. None of us wants to return to the unhappy period of social unrest that preceded its existence. It has been a significant factor in supporting and nurturing the Welsh language and culture. A whole network of supporting jobs has grown up around it. However, as has been said, its future depends on its funding arrangements. Efforts have been made at every stage of the Bill by many of us to ensure that it will be fairly treated.

At the Committee stage, my noble friend Lord Inglewood said:

    "The Government are committed to ensuring that proper arrangements are in place for S4C to continue to thrive. That includes the adequate provision of resources".--[Official Report, 13/2/96; col. 602.]

19 Mar 1996 : Column 1195

Fair words butter no parsnips--or should they be leeks? The facts are these. First, funding in future is to be linked to the retail prices index and is therefore likely to grow less than the proportion of advertising revenue did before. Secondly, as a minority channel S4C is and always will be dependent on public funding. It will do its best to increase its commercial resources, but its task will be that much harder when a Channel 4 digital service is available and in competition with S4C for advertising revenue.

We tried to persuade the Government to continue to pay the grant on 1st January. That was refused. We put forward an amendment for a slight widening of the Secretary of State's power so that the transmission costs of a digital service should include the cost of promotion. That too was turned down. This is our last effort to try to obtain help from the Government.

Throughout the passage of the Bill, S4C has been encouraged to continue talks with officials of the Department of National Heritage but so far without any satisfactory conclusion. As noble Lords have said, on this side of the House we can take pride in, and are especially proud of, my noble friend Lord Whitelaw's part in instituting S4C. We would be wise to ensure that it continues to flourish. We have a good record of economic success in Wales. We should not allow any failure in the broadcasting field to overshadow that achievement. I conclude by asking my noble friend on the Front Bench to give a positive response.

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