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Lord McNally: My Lords, I realise that by putting so many questions to the Minister, we may well run out of time for the answers and so shall lose some of the sparkling eloquence planned for tonight.
Needless to say, we on these Benches support the broad thrust of the settlement of which the regulations are a part. We thought it was a good idea during a period of change to give the BBC guaranteed adequate funding to carry out its remit both in terms of present channels and of making a proper commitment to the development of digital in this country. Therefore, we think it right that the regulations should pass. We
believe that the BBC should be encouraged to continue to explore all levels of technical development, which it is. The noble Baroness, Lady Anelay, asked what we are getting for our money. I believe that we are already seeing that in programme development, and that is sensible.I want to make two brief points. The crisis in ITV Digital and some of the developments we are seeing in France, Germany, Italy and indeed in this country should make us pause before we think that the wonderful entrepreneurs always get it right. They can make catstrophically wrong decisions. We should not, therefore, put so precious an asset as our public broadcasting system into pawn just at their say-so. Also, we should be well aware that many of our media owners have massive vested interests in the great gamble that is going on. Therefore, we should be cautious about how cross-media ownership is used. I refer only to the hysterical attacks by the Daily Mail on the BBC as a forewarning over the next few months that we may see many more like that. We should pause to think whether the publishers of certain newspapers also have massive broadcasting interests, which would benefit much by the weakening of the BBC. Apart from that, I look forward to the debates to come.
I share with the noble Baroness, Lady Howe, a suspicion that we should not buy a pig in a poke in putting the BBC fully in the control of a totally untried OFCOM. I welcome the healthy idea of a joint Select Committee to examine many of these issues. I welcome also the fact that the BBC is, as indicated by the noble Lord, Lord Lipsey, bringing efficiency into its own management. I agree with the noble Lord, Lord Gordon, that it is very important that we retain that digital platform, perhaps as a platform for free-to-air services and to spearhead the take up of the free-to-air services.
Today's debate has indicated that the noble Lord, Lord Pearson, will keep all his old prejudices and that there will be a wide variety of views in this House about the future of broadcasting. I hope that I have given the Minister the 10 minutes that are her due.
The Minister of State, Department for Culture, Media and Sport (Baroness Blackstone): My Lords, I am enormously grateful to the noble Lord, Lord McNally, for cutting short his no doubt incredibly eloquent speech, but I am sure that we shall hear him on many other occasions on the subject. I am also grateful for what he and the noble Baroness, Lady Howe, said about the Government's intended arrangements with respect to the BBC and Ofcom. I share their views. I think that that is the right approach.
In the time available I shall not be able to respond to all the issues raised. I have listened carefully to all that the noble Baroness, Lady Anelay, and other noble Lords said.
The regulations which have prompted the debate are increased television licence fees in line with the funding formula for the years 2001 to 2006-07 which were announced by the Government in February 2000.
They also include consequential amendments in relation to the various instalment schemes for payment of the licence fee.The funding formula was based on the recommendations of the independent review panel on the future funding of the BBC in its report of July 1999. It provides for television licence fee increases of 1.5 per cent above the rate of inflation as measured by the RPI. As the debate has made clear, many people have strong views about the BBC, both because it is our principal public service broadcaster and also because of the way it is funded.
The licence fee understandably raises high expectations among viewers and listeners. Those expectations relate to both the range and quality of the services that the BBC provides, as well as how it manages its resources. But perhaps I may say to the noble Baroness, Lady Anelay, that I profoundly agree with what my noble friend Lord Lipsey said. A huge debate took place at the time that the decision was made to increase the licence fee over this period by above the rate of inflation. The BBC's case for extra expenditure was gone into in great detail. As my noble friend said, "It was crawled all over".
I very much accept what the noble Lord, Lord Stoddart, and the noble Baroness, Lady Howe, said, that on the whole we get fairly good value for money in terms of what we have to pay for the licence fee. I accept the view expressed that this increase is not so enormous that most people cannot afford to pay it.
I turn to one or two specific questions. The noble Baroness said that it was intolerable that the Government should be taking so long to decide about BBC3. Any new BBC service should complement and challenge the market but it should not undermine it. My right honourable friend the Secretary of State is concerned about approving a bid to competitors, especially because many commercial companies, as stated in this debate, are feeling the squeeze from the biggest fall in advertising revenue for a decade.
The BBC and the ITC have different views regarding the market impact of BBC3. They are now working together to try to reconcile the position before the Secretary of State reaches her decision. I am afraid that I am not going to be able to tell my noble friend Lord Lipsey what the outcome will be.
My noble friend Lord Lipsey also commented on reducing overheads in the BBC. It is committed to putting more money into programme making. In 1999 the BBC spent 24 per cent of its income on overheads. It has set a target of reducing that to 15 per cent—a very substantial reduction—by 2004.
The noble Lord, Lord Blackwell, thought that the BBC should receive licence fee funding only for public service broadcasting and not where it competes or duplicates the commercial broadcasters. The Government remain committed to a BBC which provides a broad range of programmes catering for all viewers and listeners, as described by the noble Lord, Lord Hussey. The corporation's current broad remit cannot easily be divided without undermining its whole role. Public support for licence fee funding
would be unlikely to survive on a much more narrow remit limited to what the commercial sector will not provide.The noble Baroness, Lady Anelay, asked about providing more information to consumers about digital television. The BBC is making substantial contributions to the provision of information in that area. Indeed, the commitment made by the Government to the BBC's new digital services last year was that it should take steps to promote more understanding of what digital services can provide.
The noble Baroness also asked about the estimated cost to the taxpayer next year of providing free licences to those over 75. The provisional out-turn for 2001-02 was £376 million, including administrative costs. I shall try to write at some later date with the forecast figure for 2002-03.
The noble Lord, Lord Hussey, made an eloquent speech in defence of the licence fee. He was supported by my noble friends Lord Gordon of Strathblane and Lord Lipsey. The noble Lord said that for all its weaknesses and limitations it was the best way for the BBC and its public service commitments to be funded. It protects the BBC's independence. It is a fundamental principle of our approach to broadcasting in this country that the Government do not intervene in detailed issues of programming content or scheduling. The system of funding should also support that.
I am about to run out of time. I want to make a couple more comments to my noble friends Lord Gordon and Lord Lipsey who took different positions on the issue of whether there should be a separate fee for digital services. The Government's position is that a digital licence supplement might well act as a disincentive to the take up of digital services and would certainly add to the cost of administering the licence systems. For that reason we have rejected it.
The noble Lord, Lord Hussey, made some comments about the role of the National Audit Office and the Public Accounts Committee, but the NAO in particular. Perhaps I can drop him a line on that matter and explain the Government's position. We did not accept the review panel's recommendation that the NAO should be given inspection rights to carry out periodic financial audits. But I shall follow that up in a letter.
The noble Lords, Lord Pearson of Rannoch and Lord Stoddart of Swindon, repeated their criticism about the quality of programming on the BBC. I do not accept their wide-ranging criticism—in particular, their allegations about its Europhile or other bias.
I should also like to respond to what the noble Baroness, Lady Howe, said about increased funding for some areas of the BBC that contribute to quality. To take arts and music programming, for example, during the next financial year there will be a substantial increase in funding for those areas, which I am sure that all noble Lords will welcome.
Again, I shall write to the noble Lord, Lord Pearson, about his points on governance. The letter that he sent to my right honourable friend the Secretary of State will of course be answered as soon as possible.
I hope that I have been able to reassure the House that the television licence fee increases introduced by the regulations are justified to ensure that the BBC can continue to provide its full range of services and maintain their quality. I therefore commend the regulations to the House.
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