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Lord McNally: My Lords, perhaps it is appropriate for another English voice to support the amendment, although eagle eyes may see that my noble friend Lord Geraint is sitting behind to ensure that I keep close to the party line. I have another interest since I am married to a Swansea girl whose sister lives in north Wales, so I have a fully balanced view of the issues concerned.

The crux of the answer we wish to hear from the Minister was mentioned by the noble Lord, Lord Aberdare. The Minister referred to the Government's commitment at earlier stages of the Bill. At this point we ask whether the means will be available for the desired end. If not, all the good will in the world is of no use.

Broader issues are at stake than simply a Welsh interest. Some noble Lords have pointed out that when the noble Viscount, Lord Whitelaw, championed S4C he was cementing the Welsh nation into the British nation. We discuss Europe and the capacity of nations and regions to prosper and retain their identity. The willingness of the broader British state to commit itself to such an imaginative experiment as S4C was a sign of what can be done. I do not want to tempt other Members into a broadly European debate. However, I do think it is important in terms of regions and nations of Britain that the larger shows imagination and generosity in respect of the smaller.

In setting up S4C, the noble Viscount, Lord Whitelaw, showed that vision and breadth of imagination. What we need to see now from the Minister is a recognition that

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that confidence was not misplaced. As a number of noble Lords with great experience of Welsh culture, language and society affirmed, the television channel has been a cementer, strengthener and improver of all those things in the Welsh nation. We are looking now for a recognition of that success and of the dangers of underfunding, and for the Minister to give this House the commitment in spirit that he gave at an earlier stage.

Viscount Whitelaw: My Lords, as I believe the House knows well, I have been very much in favour of this development. I was persuaded completely by the noble Lord, Lord Cledwyn, long, long ago that I must do this. I did it; and I was right. I did exactly what the noble Lord told me to do, and it was not wrong on that occasion. I can only say to the Minister that he is a great friend of mine and he can do a great many things in this respect. I hope he will be able to think very carefully of something that has been a very considerable success in Wales.

Lord Elis-Thomas: My Lords, I am very grateful to the noble Viscount for contributing to this debate. He will remember the heated debate at the time he was making his various decisions on these matters. So too will his noble friend, the noble Lord, Lord Crickhowell, who will also remember our conversations in those days when my honourable friend in another place, Mr. Gwynfor Evans, decided to make a public stand on this issue. The noble Viscount will recollect that the issue had all-party support in Wales. I pay tribute yet again to the involvement of the noble Lord, Lord Cledwyn, in today's debate, as he was involved then.

It will not have escaped the Minister that the amendments we have moved on issues relating to S4C in Committee, on Report and now at Third Reading also have all-party support in this House. That mirrors the situation when the channel was established. I shall not repeat to the Minister what I said during the technical debates in Committee about the nature of the funding formula. What I will ask him to do is look to this consensus and to not breaking it. I ask him to ensure that the decision on that channel, established by his noble friend Lord Whitelaw on the principle that it should be adequately funded in order for it to compete successfully along with all the other broadcasters, will be upheld and that the momentum established by the channel will be maintained.

The Minister in particular, and his officials, have been prepared to discuss this whole issue with the authority. It is obviously up to the authority to justify its arguments in terms of the level of funding it requires. We are in difficulty here in that, short of having some independent arbiter (I do not suggest that, but it might be one way of proceeding) funding is very difficult to quantify in this area of broadcasting as we move through analogue into the world of digital. (I must say, the Welsh word digidol is much easier to say than the word "digital". I shall say digidol rather than digital.)

The point is this. As we move into a multi-media situation in new technology, it is essential that the authority should be able to compete. To measure the real costs of that revolution requires very careful, objective analysis of what the costs are likely to be.

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For those reasons I ask the Minister to assure the House that he stands by the statement he made at earlier stages of the debate. He committed himself and the Government to ensure "adequate provision of resources". If it becomes clear to the Minister and his department, through the submissions of S4C, that the present level of the formula set out on the face of the Bill is not adequate, on the objective evidence presented to his department, I hope that he will either take the route of seeking further independent advice or will ensure that resources are provided according to the clear views expressed by the authority and its officials.

I should have declared an interest as chair of Screen Wales, and also on behalf of the rest of my household. My son is employed as a post-production sound person in that excellent facilities company, Barcud. My wife's translation agency, Cymen, also benefits from contracts from S4C, including subtitling.

5.45 p.m.

Lord Prys-Davies: My Lords, at every stage in the passage of the Bill, as the noble Lord, Lord Aberdare, pointed out, we have been at pains to try to mitigate the funding formula which is in the Bill and at Clause 69, as we understand that the terms of that formula will inflict injury on S4C. But, depressingly, the Government have not accepted any of our amendments. However, I assure the Minister that we have not surrendered to the arguments he has advanced.

Initially, I remind noble Lords, the Government maintained that the reason for changing the formula was to provide S4C with a "more predictable and reliable formula". That argument has been demolished. It is inconsequential, because S4C has never experienced any difficulty with the formula and never asked for it to be adjusted.

Perhaps I may also remind the House that in Committee, the noble Lord, Lord Inglewood, threw a different explanation at us. The new terms, so we are told, will put S4C funding on a similar basis to that of the BBC. I took careful note of that comparison, because it appeared to me to be somewhat persuasive. However, I have reflected on that formula, and it is totally unfair.

There are at least four major defects in the comparison. First, it lacks integrity because it is used selectively. The comparison is resorted to when it is helpful to the Government for one purpose and one purpose only; namely, to reduce the funding of S4C. But it is entirely ignored when it comes to other purposes, such as giving S4C the same digital capacity as the BBC.

Secondly, as my noble friend Lord Cledwyn clearly pointed out, and I shall not elaborate, it is plain common sense that the BBC and S4C are at opposite ends of the spectrum, and one cannot draw a comparison.

Thirdly, it was not contemplated 12 or 13 years ago when S4C was established that its funding should be on a basis of comparability with that of the BBC. It was accepted, as I believe the noble Lord, Lord Aberdare, mentioned, that S4C would always be more heavily

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dependent on public funding than was the case with the BBC. But on that matter the Government have experienced a spasm and changed their mind.

The fourth and last defect is that the new funding formula will lead the Government's Welsh language policy into a farcical situation. I very much hope that the noble Lord will convey that argument to his noble friend the Secretary of State for Wales. Diminish or reduce S4C funding and S4C may become less effective than hitherto, with the inevitable result that the painstaking efforts of schools and teachers throughout Wales and the public and voluntary bodies will be greatly diluted or weakened, if not thwarted.

I should like to make one final point. No new measure will be taken to compensate for that loss because there is none that can be taken. To my mind, on that basis alone the funding formula embedded in Clause 69 needs to be amended and mitigated in favour of S4C. I very much hope that the Minister will give very careful consideration to this amendment, which has been ably moved by my noble friend Lord Cledwyn.

Lord Inglewood: My Lords, I am most grateful to the noble Lord, Lord Cledwyn, for setting out the rationale for this amendment, which aims to meet, as he himself said, similar concerns to those raised by the noble Lord, Lord Prys-Davies, in the amendments that he tabled on Report. I am also grateful to all noble Lords who have contributed to our discussion this evening.

Since the debate on Report, I again met very recently the chairman and chief executive of S4C. I listened carefully to their concerns for the future of S4C and what they see as the implications of the proposed arrangements for funding the channel for the way in which it carries out its activities and fulfils its remit. I shall elaborate in further detail on certain points relating to that. We shall also reflect carefully on your Lordships' remarks this evening.

The funding arrangements in the Bill already allow for extra provision for S4C's transmission costs. That is in line with the provisions of the 1990 Act. I have also indicated that we shall be making provision for S4C to increase its commercial activities and therefore enhance its self-funding capabilities, though I am afraid that time has not allowed us to bring forward the necessary amendments to your Lordships' House. We believe that these are sensible measures to ensure the continued success of S4C, while keeping the running of the channel, and in particular editorial control, sufficiently distant from government interference.

As I made clear on Report, S4C will be able to use its public funding to meet the costs of broadcasting S4C digital, including measures to promote receiver take-up which will be taken forward in partnership with the other broadcasters on the multiplex. S4C is unique among broadcasters in being given the possibility of additional funding to meet its transmission costs, both analogue and digital, and I cannot see why S4C should be given any extra funding to meet other costs which other broadcasters, including the BBC--although it is much bigger than S4C it is very similar inasmuch as it is publicly funded and is self-regulating--should meet from their existing sources of revenue. As I stated on

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Report, it seems that there is a line to be drawn with regard to what might legitimately be seen as an extra call on taxpayers' money. I believe that the line is sensibly drawn behind transmission costs.

This amendment would extend significantly S4C's ability to call on the Government for additional funding beyond that derived from the core funding formula. Following earlier representations from S4C and arguments made in our own debates, Clause 69 as drafted is careful to maintain and not to disturb the traditional arm's length relationship with the Government which all broadcasters have come to expect and, quite apart from the other considerations, I am convinced that what is proposed might prejudice that. Moreover, in its implication of generalised bids for additional funding, the amendment raises obvious questions of public expenditure control. I remain to be convinced that additional funding for S4C is necessary and also that, if it were, we should seek to provide for it in this way.

In conclusion, I have always found it advantageous to follow the advice given to me by my noble friend Lord Whitelaw on a whole variety of matters. I end by emphasising that we shall continue to take your Lordships' remarks very seriously in our continuing discussions with the channel.

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