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Baroness Buscombe: My Lords, we have had a very interesting debate in response to the gracious Speech. I want to join other noble Lords in congratulating the right reverend Prelate the Bishop of Durham, my noble friend Lord Steinberg, the noble Baroness, Lady Young of Hornsey, and the noble Lords, Lord Broers and Lord Maxton, on their excellent, informed and sometimes very entertaining speeches.

This Session promises to provide the opportunity to debate a number of issues central to the way in which our economy is managed. Falling under the umbrella of the economic affairs brief are subjects of great yet often understated importance to the cultural well-being of this country, including the arts, music, broadcasting, tourism and the National Lottery.

Changes are proposed to the National Lottery, a relative newcomer to the culture of this economy. When Her Majesty's then government established it 10 years ago, it was understood that money generated for good causes would be allocated to projects that the Treasury would not fund. That founding principle has been seriously eroded by this Government, as ever-increasing funds have been used to support state projects. As a direct result, many good causes have suffered.

If passed, the lottery Bill purports to create a single lottery identity—the Big Lottery Fund—by merging the current New Opportunities Fund and the Community Fund in a single community distributor. Any reduction in bureaucracy and consequent cost-savings afforded by effecting such a merger must be welcome, but that intended union must surely sound alarm bells, as the Government will effectively acquire control of an even greater share of lottery money. Only recently, the new chairman of the Big Lottery Fund, Sir Clive Booth, went so far as to encourage greater investment in state projects from lottery sourcing. At a recent conference entitled "Funding the Future", he stated:

"We want to add value to the Government's own programmes".

Further increase in the level of state project funding seems certain to appear, and we will unquestionably require assurances that, in particular, the levels of charitable support provided under the Community Fund will not simply be forgotten and swallowed up in the new conglomerate. The repercussions of such profound changes to lottery funding may affect numerous non-profit organisations that rely on such funding. For that reason, we must ensure that lottery funding is preserved for deserving causes and not merely utilised as an addendum to facilitate government policy implementation, which should rightly be funded through the traditional mechanisms. It seems as though I shall join the noble Lord, Lord Clement-Jones, in some interesting debates on the Bill.
 
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On the arts and our national heritage, I would like to touch on four issues that help to outline the importance to our nation of the tourism industry and both public and private heritage. First, I am pleased that the Government have responded to the Theatres Trust report, Act Now!, by setting up a working group to consider the future of our much loved privately owned theatres. I hope that, in the coming months, we will learn more about what the Government are prepared to do to underpin and support the long-term future of those theatres.

Secondly, we are disappointed by the failure of the Government to implement any of Sir Nicholas Goodison's recommendations set out in his report, Securing the Best for our Museums. It followed a review undertaken by Goodison at the Treasury's suggestion, given the widespread concern at the continuing sale of works of art overseas. In contrast, we welcome where there are good things happening for our museums. I include the current initiative for renaissance of our museums in the regions. Thirdly, with regard to English Heritage, I take with good faith the assurance that I received last week from the Minister in the House that the current efficiency drive is not designed to cut services.

On a separate and fourth note, we are deeply concerned about the unremitting pressure placed on the very survival of our privately owned heritage. In essence, we need to recognise that those who work tirelessly to preserve artistic entities in our privately owned historic houses for the benefit of the public are burdened with ever-more stringent regulation and costly repairs. That inevitably leads to the sale of more and more of the historical contents of our houses, diminishing our history, heritage and sense of place. The overall ability of the majority of owners to maintain their historic properties has deteriorated over the past seven years, and the new catch-all tax on pre-owned assets will exacerbate the problem and has already created great uncertainty. The Government have taken on board the need to address the future of our privately owned theatres; will they now also look to the long-term sustainability of our historic houses?

The Gambling Bill will pose a real challenge when it comes to our House early next year. We on these Benches appreciate that there is a serious need to consolidate our outdated gambling legislation and, in particular, to cover online gambling, betting exchanges and fixed-odds betting terminals. On a personal note, I must express my frustration that, after five years of consultation including the Budd report and two reports by the Joint Committee, the Government are in the process of changing their mind and amending the Bill. This feels like the then Licensing Bill all over again.

We note that the Government have agreed to limit the number of regional casinos to eight. Yet there is no excuse after five years for having got things so wrong. We are forced into a situation where we have to wait while the Government return to consultation. That is a deeply unsatisfactory and pretty shambolic way of legislating. In any case, we are still missing crucial information such as details of the code of conduct that
 
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the gambling commission will draw up and the information about the taxation regime, not to mention the huge swathes of secondary legislation which will carry most of the fine detail; gosh, I have heard that before. I hope that some of it will be available, at least in draft form, when the Bill reaches this House from the other place.

The Bill offers further complications because it involves co-operation and interaction between the DCMS, the Treasury and the ODPM, all three of which have different priorities and agendas. That is particularly apparent on the issues of planning—there is serious concern about that—taxation, tax breaks, incentives and bribery. I was not encouraged by the comments of the Minister at Second Reading in another place that:

"It is my job as Secretary of State for Culture, Media and Sport to establish the regulatory framework; it is the Treasury's responsibility to establish the taxation regime".—[Official Report, Commons, 1/11/04; col. 30.]

We must ask ourselves who is to benefit from this Bill. We need to be sure that we are legislating in such a way as to protect our own citizens, our towns and our existing indigenous gaming. Here, I wish specifically to include the bingo and casino industries. There are many people who believe that all three are threatened as a result of the Bill. We will do our utmost to ensure that that will not be the case.

The term ahead presents further challenges, once again, for the media industry—particularly for the BBC through the period of charter renewal. Furthermore, as technology progresses at an ever-increasing pace, the advance towards digital television and analogue switch-off is gathering momentum. The broadcasting industry as a whole will be forced to deal with issues concerning the opportunities and pitfalls provided by the switch to digital television, in addition to the challenges presented by the development of new medium and methods by which television and radio can be accessed.

In addition to the challenges confronting the industry in general, the BBC will be forced to face a fundamental re-examination of its unique role, scope and financing throughout the charter renewal process. A Select Committee on charter renewal will be established in the new year in your Lordships' House to scrutinise primarily the effects of four BBC-initiated reviews which are currently under way. In addition to those reviews, the BBC is undergoing a number of further changes, the most notable of which is the physical separation of the governors from BBC management. This is a move to correct the system whereby the Board of Governors was required to act both as external regulator and as the top tier of management—or, as has already been described, the champions of the BBC.

This move demonstrates a will to change which is welcome and should result in the better management and allocation of project funds. However, although the physical relocation of the governors may help to inspire confidence in their independence, this move alone does not go far enough to protect the public's
 
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investment and expectations of the BBC. Only two weeks ago, in a speech to the CBI, the chairman, Michael Grade, stated:

"The board I now chair at the BBC has just as clear an idea of the value it expects the BBC to create as the board of any FTSE company".

I worry that there is a view that the problem is already fixed.

We still need to be persuaded that this internal separation of roles is sufficient and fit for purpose, having long believed that the governance of the BBC should be conducted by an independent board possessing the necessary levels of expertise and experience. Governors must no longer be "place men" to meet the usual politically correct criteria; they should be properly resourced and focused to ensure that optimal value is derived from the licence fee—currently standing at around some £2.8 billion annually, and growing. In short, proper mechanisms need to be put into place to monitor the work of the governors to ensure that efficiency and accountability are delivered as of right.

There is an onus on the BBC to ensure that all of its activities are consistent with its public service remit. The Graf review of the BBC's online services arm criticised the BBC for competing in some areas with commercial services. By virtue of the public funding that the BBC receives, it is placed in a uniquely strong position when faced with competition from the independent sector. In possessing such power, it is time to review the BBC's fair trading commitment to ensure that those powers are not wielded unfairly. Notably, the BBC has recently ventured into the competitive world of subtitling, having won a contract with Channel 4 to provide its subtitling from January 2005. That ended a 15-year association that Channel 4 previously had with a commercial company. One must consider whether this sort of transaction really falls within the core strategy of the BBC's business. If there are questions marks, then there should be better and more direct ways to address such concerns.

A further prominent concern is that of the BBC's consistent failure to meet their 25 per cent independent production obligation and, therefore, its failure to assist in underpinning independent production itself. Under its public service obligations, the BBC should be doing far more to support and develop the independent sector, rather than concentrating on less relevant internal interests.

It would be entirely wrong to concern ourselves in this debate solely with the BBC. The onset of the digital age and the impact of changes to the internal workings of the BBC will have a significant impact on the wellbeing of all other broadcasters. In fact, the strength of the BBC is very much dependent on the health of the other beasts that inhabit the broadcasting landscape—the commercial public service broadcasters, Channel 4, ITV and Channel 5.

Strong, healthy competitors that are able to invest heavily in quality and innovation are essential to the BBC, because they help to keep it on its toes and to ensure that it raises its game. We do not want in this
 
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country a system where the BBC is the only broadcaster synonymous with high quality, indigenous programming. The market place must remain diverse, with interaction from multiple players who all play significant parts in servicing the public's programming needs.

Beyond your Lordships' House, much time has already been spent debating the future sustainability of Channel 4 and ITV. However, the process of digital switchover raises fresh issues. Historically, commercial public service broadcasters have relied on their privileged access to viewers to maintain high advertising premiums and high levels of investment in public service content. Unlike the BBC, those channels do not enjoy direct public funding. They have to earn their money in the market-place and, as the digital revolution spreads, so the privileges that have underpinned their historic investment in public service content are eroded.

In its first five-yearly review of public service broadcasting, Ofcom recognises that. In fact, the noble Lord, Lord Currie, recently suggested that broadcasters such as ITV and Channel 4 are standing very close to the centre of a volcano that is about to blow. It is against that backdrop that we need to consider with some urgency what measures might be necessary to maintain competition in public service television. Not only are broadcasters being asked to contribute to the vast cost of digital switchover; they are also being asked to buy into the fact that every additional digital household will mean less audience share, the result of which will be less advertising revenue.

In order for ITV to sustain its high levels of investment in original UK content, Ofcom proposes a lightening of its regulatory burden, both in terms of remit and licence payments to the Treasury, as we approach switchover. This is an inherently sensible proposal. The transition will not be easy and there is little point in maintaining obligations on ITV that are in the interests of neither the station nor the public. The focus must be upon allowing ITV financial room to manoeuvre so that it may invest more in programming and compete fairly with the BBC.

For Channel 4, less immediate assistance has been offered. Ofcom accepts that Channel 4 may be forced to pursue an ever more commercial agenda in order to maintain its market share, although that would be at the expense of its public service remit. That outcome should be avoided—not only for the benefit of the public but also because Channel 4 is a strong competitor to the BBC in terms of public service content.

The truth of the matter is that, at the point of switchover, Channel 4 will face a huge funding gap. Simple reductions in programming spend or commercial endeavours will not be sufficient to bridge it.

In the context of the wider broadcasting ecology, the BBC charter offers the opportunity to look at each of these concerns in detail and to get them right from the start.
 
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Ofcom itself has realised the difficulty of maintaining the public service remit in the digital age and has tabled a proposal for a new public service body—the public service publisher. This is developing into an interesting debate. However, prior to spending millions of pounds on a new service provider, everything possible must be done to sustain the vital public service contributions of Channel 4 and ITV.

Ofcom has adopted an ever more important and expansive role since its establishment in 2002. While hard work is being undertaken to preserve public service aspects within broadcasting, and while Ofcom's further role as industry regulator is being fulfilled, there are latent fears that Ofcom could overstep the mark and assume the role of governmental policy consultant rather than that of a body designed predominantly to review and regulate. Ofcom now employs more than 880 staff and it would appear that, as the headcount expands, so does the remit of Ofcom's governmental brief. The regulator's resources must be preserved for its activities as a regulatory body. Ofcom's role is, and should remain, one of consultant and barometer of industry health and capability.

I turn now briefly to the creative industries and, in particular, the music industry. It is important to note that the economic benefit provided by the music industry to this country is huge and not merely the peripheral issue that it is sometimes perceived to be. The law in relation to the protection of intellectual property rights, although well established, is not always well known or well used in industry circles. Copyright, for example, is a large and complex area, and the changes encouraged by digital radio and television raise new issues and challenges. A degree of commercial awareness and an understanding of the basic copyright principles employed in protecting works—musical or otherwise—is highly important and essential in fostering commercial exploitation of the opportunities afforded by the digital age.

However, with such significant changes being made within the media industry in relation to digital methods of broadcasting, it is important that, in addressing those opportunities, we also ensure that this springboard is used to address the current problems and interests of the industry as they presently stand.

An appropriate duration of copyright for performances and sound recordings is fundamental to the ability of the music sector in Britain to continue to take a leading role, culturally and economically, on the international stage. The discrepancy lies in that, while performers in the United States are assured of a lengthy period of protection for their performances and sound tracks, artists residing within the EU may face the prospect of having their rights expire after 50 years and during their lifetime. How can that be deemed proportionate when the songwriter enjoys copyright of his lyrics for a term of life plus 70 years? This obvious inequality now experienced by some of our most famous and longstanding artists who recorded tracks in the 1950s and 1960s serves no other
 
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function than to place our music industry on a weaker footing in comparison with other commercial centres such as the USA.

This commercial bias is likely to be ever more apparent as the digital age of streaming media and downloadable soundtracks reaches full pace during the coming years. Not least, the distinction in copyright term between Europe and the USA serves to confuse and bewilder both artists and producers alike. The commercial impact of such erosion of confidence in the European legislation is that both performers and producers move abroad in search of better terms. For example, the term of copyright will shortly expire for certain key repertoire in EMI's catalogue, thus deeming those tracks available for remixing, tampering or altering, while the artist or producer stands by helpless. That is a needless drain on our talent and on the business that supports it. In the forthcoming Session, we hope that we shall have the opportunity to discuss that important matter in depth and, in particular, to persuade the Government to lean on the EU Commission to review the EU term of protection.

It has been a very interesting debate. Many different issues have been highlighted. I very much look forward to the Minister's response and to a lively Session.

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