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Lord Thomson of Monifieth: My Lords, I thank the Minister for his extremely clear explanation of what is involved in this order. Independent television producers with a protected quota are a healthy and creative feature of the broadcasting landscape, and have been so for a long time now.

As the Minister said, the order makes three changes. One is technical and relates to digital technology. The second also reflects the fast-changing landscape. It

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ensures that independent programmes are defined as "independent" at the time they are commissioned and completed rather than at the time of transmission, when ownership may have changed in these fast-moving times. That seems sensible to noble Lords on these Benches.

However, as the noble Baroness, Lady Buscombe, has already made clear, it is the third change that raises more difficult issues. It deals in effect with the special case of Endemol, a brilliant and, it must be said, essentially British independent programme-making company, but now financially owned by a Spanish broadcaster that does not broadcast in Britain. In our view and as the Government appear to believe, it is a deserving special case, but it is clear from the remarks made by the noble Baroness that special cases make dubious law. This needs to be looked at very carefully indeed. Certainly it is to be hoped that this precedent does not create difficulties for our own system from other continental European broadcasting organisations. The Government and the new Ofcom will need to keep a vigilant eye on the situation.

One of the difficulties is that all this will lead inevitably to claims for quasi-independent status for other broadcasting organisations in the United Kingdom, including quasi-independent status for small ITV regional companies. At the Committee stage of the Communications Bill I expressed a nostalgic and romantic affection for small ITV companies such as Grampian and Border. In the light of what the Minister has said, I should like to make it clear that the definition of independent status is one thing—it is a vital element in the whole system of an independent production quota—and the spread of regional programme production centres is a separate matter which is equally important for the health of the British broadcasting industry.

My honourable colleague in another place, Nick Harvey, put the matter succinctly. I am happy to rest on his remarks. He said:

    "An independent production house should be just that. It should be independent of the broadcasting industry, and the programme supply industry and the broadcasting industry should be kept apart".—[Official Report, Commons, First Standing Committee on Delegated Legislation, 19/5/03; col. 016.]

I endorse that view.

In the days, long ago, when I was chairman of the Independent Broadcasting Authority, the original impulse behind the independent quota was to stop the abuses of vertical integration in both ITV and the BBC which produced some of the most ludicrous and wasteful restrictive practices in the history of the British trade union movement. It is that historical background which creates a difficulty for some of the remarks made by the noble Baroness, Lady Buscombe, about the more domestic aspects and implications of the order.

In our view, it will remain an important responsibility of Ofcom to preserve, on the one hand, the purity of the independent system—it is better to keep that absolutely clear cut—and, on the other hand, to promote vigorously regional distribution of television programme-making, both among the

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independents that enjoy the protection of the quota and the BBC and ITV. Ofcom will need continually to remind broadcasters and programme makers that the real broadcasting regions in the UK lie a long way beyond the M25.

Lord Gordon of Strathblane: My Lords, I shall be brief because I do not wish to impede the smooth progress of the order. I know that the Minister will reflect on today's brief debate when we come to the Communications Bill. I agree with the noble Baroness, Lady Buscombe, that it would be highly appropriate for the Government to produce an amendment to the Communications Bill. Frankly, if they do not do so, other people will. I am sure that a government amendment would be much better drafted than anything I, for a start, could attempt.

I disagree mildly with the noble Lord, Lord Thomson. He suggested that we should not import this principle domestically. In my view, if you accept the logic of article 3(a) of the draft order—that is, that a production house owned by a foreign broadcaster is not interfering with UK broadcasting—the same logic would apply to an ITV company acting as an independent producer for the BBC.

There is a very simple definition of independence. You are an independent producer where you are not able to influence the placing of the contract for the making of the programme. It is as simple as that and I commend the definition to the Government. I hope that they will bring forward an amendment to the Bill.

Lord Davies of Oldham: My Lords, as I expected, given that our minds are honed to these issues because of the passage of the Communications Bill, we have had a short and precise debate. I have heard the representations that have been made and I have noted the indications that the Communications Bill may give rise to further discussions on this subject. So be it.

Let me reply to the point made by the noble Baroness, Lady Buscombe, and perhaps persuade my noble friend on the matter. The advantage of the order as opposed to the Bill is that it gives greater flexibility in rapidly changing times. This is the second order related to this issue since the Broadcasting Act 1991. Noble Lords will have noticed that, by a happy coincidence, another Communications Bill is passing through the House at the present time and that it would have been 10 years since change had been affected. Most of us will recognise that the process of change is accelerating all the time and that we need an order on these issues to give us the necessary flexibility to adjust to changing circumstances. Although I have not the slightest doubt about the merits of the debates and the amendments to the Bill—they help in establishing accurately the basis of the legislative framework—changes of a more limited nature enshrined in orders will increase flexibility.

The noble Baroness raised the issue of the definition of independent productions and referred to Fremantle in particular. We do not see the order as the end of the story. The issue is still very much at the centre of our desire to maintain and continue to develop a healthy

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vibrant programme supply market where the contributions of all creators are recognised and rewarded.

As will be recognised from our deliberations on the Bill—which we will happily continue next week—we see a very important role for Ofcom and its annual factual and statistical report in considering aspects of the programming quota for independent productions. So, through the framework of the Bill and the envisaged role of Ofcom, we are also engaged in a careful evaluation of the quotas and how they are working. Combined with the flexibility contained in the orders derivative from the legislation—assuming that the Bill is enacted—we shall have a framework for addressing these issues. We recognise that, wherever the line is drawn, there will be compelling arguments on just the other side of that line. The noble Baroness made a forceful point in that regard.

I am grateful for the remarks of the noble Lord, Lord Thomson, in support of crucial aspects of the order. The issue is not only about Endemol, although the noble Lord is right to identify that as the issue that came most sharply into focus in establishing the independent quota when it was taken over by a foreign company. It should be established that where the parent company is not broadcasting into the UK and not in any way, shape or form affecting UK transmissions, the issue of ownership is quite different and it would be appropriate to regard companies such as Endemol as independent.

That then raises the next question in regard to where the line is to be drawn: why are not other independent television companies regarded as sufficiently independent to be considered as independent producers for the quota? Our anxiety is obvious. The problem with a definition that would allow a regional ITV company producing a programme for the BBC—and allow the BBC to produce programmes for ITV—to count as independent cannot be squared with the broad objectives that underpin the whole concept of the independent quota—which is how we in this country, with our resources, increase competition, multiply the sources of supply and stimulate creativity and new talent.

I am not in any way, shape or form seeking to deny the role of the BBC or the independent television companies in terms of fulfilling criteria on creativity and talent, but the independent quota is designed to assist fresh sources of supply to be generated. The moment one translates the international position into the British one, the big broadcasters could effectively be competing in the quota area by their offshoots, defined as independent. That is our reservation.

The order contains merits which I think are recognised on all sides of the House. But circumstances are rapidly changing. This is an exceedingly exciting industry to regulate. It is enormously important to our nation. We know the significant role that television plays in our national life. I identify the order as having the merits of addressing particular issues at this time which need the case made out for them while pursuing a course in

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which we recognise, in our discussions on the Communications Bill, that we need to retain areas of flexibility for considering the very powerful arguments of where our lines are defined. On that basis, I commend the order to the House.

On Question, Motion agreed to.

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