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Lord Howie of Troon: My Lords, if the noble Lord wishes to meet me outside the Chamber I shall explain this matter to him and all will be made clear in a few moments.
3.45 p.m.
Lord Inglewood: My Lords, as I hope I intimated in my opening remarks I intended to oblige your Lordships with these two amendments. I am reassured that the noble Lord, Lord Howie, is grateful that his house has been listed. People do not always feel that way about the process.
The point that my noble friend Lord Stewartby made is one that I made on the previous occasion that we discussed this matter. I have been given legal advice to the effect that the addition of engineering will not extend the scope of the Bill, and that the trustees will not now be enabled to do anything more than they previously would have done had this word not been suggested for inclusion. We tabled this amendment because a number of noble Lords felt strongly that this was an important statement about the importance of engineering in our society. I do not think anyone would dissent from that basic proposition.
As regards the second point that my noble friend made when he asked how old something has to be to be considered historic, we are entering the realms of theology. I have absolutely no doubt that something of the kind he is describing that will commend itself to the trustees will almost by definition be sufficiently important in the development and evolution of whatever activity we are referring to to make it historic in the context of that form of technology, and hence bring it within the scope of the word "historic" as used in this Bill. I shall consider the remarks made by the noble Lords, Lord Howie and Lord Monkswell. I said on the previous occasion we discussed this that I did not think that anything was added to the substance of the matter. However, I shall reconsider the matter, but I do so making it quite clear that I give no guarantee to be as obliging on the next occasion as I have been on this occasion.
On Question, amendment agreed to.
Lord Inglewood moved Amendment No. 2:
The noble Lord said: My Lords, in moving Amendment No. 2 I wish to speak also to Amendment No. 3. With these two amendments we return to the issue of lottery funding for the Victoria County History, the Dictionary of National Biography and other similar projects. I loosely described those projects at the Committee stage as being benchmark works of historical research. I believe there is total agreement across your Lordships' House that such works should be within the funding remit of the trustees of the National Heritage Memorial Fund. It was with that fact in mind that my noble friends Lord Beloff and Lord Pilkington and the noble Lords, Lord Donoughue and Lord Strabolgi, added their names to amendments at the Committee stage. It also prompted me to bring forward amendments in my own name.
However, on that occasion doubts were expressed as to whether my amendments would achieve the desired effect. As the House will know, I therefore decided not to move them and agreed to look at the matter again. Since then I have examined the matter further and had the most helpful discussions with my noble friends Lord Beloff and Lord Pilkington and the noble Lords, Lord Donoughue and Lord Strabolgi. In that light I now bring forward revised amendments as on the Marshalled List.
The legal advice that I am receiving is still that the new Section 3A of the 1980 Act as amended, in accordance with the earlier ideas that I had, would
I am satisfied that these amendments will ensure that the Victoria County History and other comparable undertakings are within the remit of the fund and are thus eligible for lottery support. The noble Lords with whom I have discussed the matter agree and I am delighted that my noble friend Lord Pilkington has added his name to the amendments, as have my noble friend Lord Beloff and the noble Lords, Lord Donoughue and Lord Strabolgi.
It will of course be for the National Heritage Memorial Fund trustees themselves to determine their funding priorities in the light of their statutory powers and the resources available. The Government's willingness to bring forward this provision must not therefore be seen as prejudging the view which the trustees take of any funding application they receive in respect of the Victoria County History or a similar project. I must also stress that this extension of the National Heritage Memorial Fund's powers does not mean that the lottery can now be regarded as a potential source of funding for mainstream academic research and publication in the field of history. Nor would I expect it to be available to support publishing ventures that should be self-financing. On that basis, I commend the amendments to the House.
On Question, amendment agreed to.
Lord Inglewood moved Amendment No. 3:
On Question, amendment agreed to.
Schedule [Consequential Amendments]:
Lord Inglewood moved Amendment No. 4:
On Question, amendment agreed to.
Lord Inglewood rose to move, That the draft order laid before the House on 15th October be approved [1st Report from the Joint Committee].
The noble Lord said: My Lords, the Broadcasting (Application of Excess Revenues) Order 1996, which we are debating today, honours the commitment I gave at Report stage of the Broadcasting Bill on 7th March to end Channel 4's compulsory payments into its statutory reserve at the earliest parliamentary opportunity.
The draft order is made under Section 27(7) of the Broadcasting Act 1990 as amended by Section 83(4) of the Broadcasting Act 1996. It will reduce from 50 per cent. to nil the percentage of excess revenues Channel 4 must pay into the reserve under the provisions of the Channel 4 funding formula set out in the 1990 Act.
Although many Members of the House are familiar with the intricacies of the Channel 4 funding formula contained in the Broadcasting Act 1990 from our debates on this issue during the passage of this year's Act, I shall set out for the benefit of others a brief precis of the history to the order.
Under the terms of the 1990 Act, Channel 4 is guaranteed funding from the Channel 3 companies should its income from advertising fall below 14 per cent. of total national television advertising revenues. To date that has not happened, and Channel 4's income is currently 21 per cent. of advertising revenues.
The 1990 Act, however, also provides that if Channel 4's income from advertising rises above the 14 per cent. threshold, the excess revenue above that threshold must be distributed according to arrangements also specified in the 1990 Act. Half of that excess goes to the Independent Television Commission for onward distribution to the Channel 3 companies, 25 per cent. goes to a statutory reserve fund held by Channel 4 and 25 per cent. can be added to Channel 4's current expenditure plans. Should Channel 4's income fall below the 14 per cent. threshold, however, the funds which have accrued in the statutory reserve are its first recourse to make good the shortfall in funding. If and when the funds in the reserve are exhausted, it is for the Channel 3 companies to make up the shortfall between Channel 4's income and the 14 per cent. threshold. The liability of the Channel 3 companies is, however, limited to 2 per cent. of total national advertising revenue in any one year.
The funding formula was introduced by the 1990 Act as part of new arrangements whereby Channel 4 was to sell its own advertising rather than rely on financing from the Channel 3 companies. Prior to the 1990 Act, Channel 4 had been financed by a subscription from the ITV companies which sold Channel 4's advertising airtime. The funding formula was a safety net, because it was feared that the new arrangements might not provide Channel 4 with sufficient income properly to fulfil its remit.
During the passage of the Broadcasting Bill earlier this year, there were calls to abolish the Channel 4 funding formula. Many, including Channel 4 itself, believed that, in the light of the success that Channel 4 has enjoyed since it began selling its own advertising, the financial safety net was no longer required and the payments being made by Channel 4 to the ITV companies should be ploughed back into the channel's programme production.
The Government were not wholly persuaded by these arguments. It was accordingly decided to retain the basic framework of the funding formula but to take steps to increase the level of income Channel 4 can retain. The Broadcasting Act 1996 therefore introduced the power to adjust by order the distribution of Channel 4's excess revenues above the statutory threshold of 14 per cent. of television advertising revenues.
The level of funds in the statutory reserve, which stood at £84.8 million on 31st December 1995, is sufficient to cover any conceivable shortfall in income in the immediate future. To that end we have tabled the order before the House today which removes the requirement for Channel 4 to make any payment into its reserve and thereby doubles at a stroke the proportion of advertising revenue above the threshold level which Channel 4 is able to retain.
The Government have also long made it clear that we intend to amend the proportion of any such "surplus" which goes to the Channel 3 companies. However, as we stated during the passage of the Broadcasting Bill, the provisions of the Broadcasting Act 1990 did not permit any change in the financial equilibrium between Channels 3 and 4 under the funding formula before the end of 1997. As it was on that basis that the Channel 3 companies bid for their franchises, we are not willing to make any change to the operation of that relationship before 1998.
I also announced during the passage of the Bill the general lines on which we propose to use the new power in respect of payments to Channel 3 companies. We would reduce the level of payments from Channel 4 to the Channel 3 companies from their current level of 50 per cent. of Channel 4's excess income above the 14 per cent. threshold. These changes were to be in two stages, taking effect from 1998 and 1999 respectively. The Government, as I said, intended to make decisions on the exact changes to the percentages in the formula nearer 1998. That remains the position.
The order before us today will enable Channel 4 to spend tens of millions of pounds per annum on programming. It fulfils a specific undertaking to Parliament which was widely welcomed on all sides and in both Houses. I commend the order to the House. I beg to move.
Moved, That the draft order laid before the House on 15th October be approved [1st Report from the Joint Committee].--(Lord Inglewood.)
On Question, Motion agreed to.
Page 2, line 42, leave out ("or").
Page 2, line 43, at end insert--
("(c) publish archive material, or
(d) compile and publish a comprehensive work of reference (or publish a comprehensive work of reference that has previously been compiled),
or to do any ancillary thing.").
Page 4, line 13, at end insert (", engineering").
3.52 p.m.
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