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Lord Peston: My Lords, I can demonstrate without a shadow of doubt that, according to economics, competition in broadcasting must lower standards and remove diversity. My problem is that I was wrong. My difficulty is that I do not know why I was wrong.

Viscount Astor: My Lords, I suspect that that is a dilemma faced by many economists teaching their subject when trends move rapidly in the opposite direction from that which they are promoting.

However, this has been an extremely interesting debate. One other point that I will remember is that, as the noble Baroness, Lady Bonham-Carter, pointed out, it is sad that the noble Lord, Lord Birt, is not in his place. It is extraordinary that the appearances in this House of a man who knows a lot about broadcasting are rarer than sightings of the white rhino. I shall leave it at that.
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2.20 pm

Lord Davies of Oldham: My Lords, this has been a most interesting and valuable debate. We owe a debt to the noble Lord, Lord Fowler, not just for his presentation of the report. I could almost address my reply only to his opening speech because he covered all the salient points brought to the fore in the report as challenges for the Government. He will forgive me if I do not do just that but also reply to other points that have been made in the debate. We owe him a great debt both for today and for his chairmanship of the committee, which has produced such a valuable report. I wish the committee well in its continuing work. If the committee continues for a very long time, to the distant day when I leave the Front Bench, I must declare an interest in membership of such a committee. I know that it does such valuable work and very much enjoyed a similar role in the other place a decade or so ago.

The committee set out to define areas where it was in conflict with the Government. All members of the committee who have participated in the debate have been generous enough to recognise that the Government have been involved in a long period of consultation on the renewal of the BBC charter. Prior to the Green Paper, we launched more than a year of widespread consultation. Ministers travelled up and down the country addressing and, more important, listening to public meetings while the Government considered the issues that confronted us. The Green Paper is a product of substantial consultation and research; I think that that has been recognised. What has been deplored today are certain aspects of the concrete within the flexible—I think that I shall drop the pistachio model for today; I am not sure that I will be able to follow that metaphor very far.

Let me emphasise aspects on which the Government take a strong line. Some of the issues that we debated today were debated with many of the same participants during the passage of the Communications Act, to which the noble Lord, Lord McNally, referred. To take the most obvious points within the framework of the Act, we considered the issues relating to the major broadcasting companies and the BBC and set up Ofcom. It is not surprising that the Government have some clear lines to draw on the role that Ofcom ought to play in relation to the BBC.

I take some solace in the fact that, although I was unable to detect division in the committee on that point—I know the skills of the noble Lord, Lord Fowler, in bringing committee conclusions into a coherent framework in which there is broad agreement—some noble Lords took the Government's position in the debate, such as the noble Lord, Lord McNally, and my noble friends Lord Dubs, Lord Lipsey and Lord Peston. I was on the brink of omitting my noble friend Lord Peston when he referred directly to economics and the fact that Ofcom was an economic regulator. There is a question about whether it is an appropriate body to regulate the BBC. The Government have taken a firm line on that from which we do not intend to budge. We had those debates two years ago. It is therefore unsurprising that we feel that
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we have argued the case at length in this House and in another place and have reached our conclusions. However, there are areas of flexibility. This debate is at a most apposite time and gives us a chance to respond. Arguments have been forcefully presented. The noble Lord, Lord Fowler, was supported by the noble Lord, Lord King, and, from the Front Bench, the noble Viscount, Lord Astor. All emphasised that the relationship between the BBC and Parliament was due for a change. We disagree. The charter and agreement have served us well for many years. We believe that the best way of giving the BBC the independence and stability that it needs is by renewing the Royal Charter for another 10 years.

Of course, the committee reached a different view in concluding that the BBC should be established by an Act of Parliament. We think that that would leave the BBC much more open to political intervention. Although noble Lords may argue that the legislation could be framed in such a way that it would obtain over a substantial period and that there would be no question of it being subject to change every year, it would be a brave Member at either end of the Palace of Westminster who would dare to foretell from where the challenges will come in the build-up of public pressure leading to the amendment of Acts of Parliament. The noble Lord, Lord Holme, mentioned the danger of the panic of the moment and said how unwise things could be done in haste. The central issue for the BBC is for it to maintain a distance from such immediate pressures, to which all governments can succumb. We see that there are various methods of putting pressure on the BBC. Our judgment is that an Act of Parliament and a legislative framework would occasion many more opportunities for that kind of pressure to emerge, to the detriment of the independence of the BBC.

That brings me to a point that I respect and with which I am in complete agreement with the committee, as one would have anticipated under the chairmanship of the noble Lord, Lord Fowler. We all agree on the broad objectives of the role of the BBC in our society. All sides recognise the value of the BBC and how its independence is crucial, and we want accountability, to which we are entitled. I say that because public money is involved on a huge scale with regard to the BBC. While it is true that those moneys are not the vote, the licence fee is a form of taxation on all our fellow citizens and the use of those resources demands accountability. We may interpret differently how that accountability might be developed, but we all recognise that we are working within the fairly well agreed parameters of the actual framework of the BBC. I would not want to emphasise any great difference between the Government and the committee except in the areas that I shall address in a moment.

Inevitably, the noble Lord, Lord Fowler, raised the issue of how the BBC should be governed by Acts of Parliament. He also considered the role of the BBC in the digital age, as did a number of other noble Lords. I am well aware that my noble friend Lord Maxton
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seems to have developed a particular role in the committee, given his undoubted enthusiasm for technological innovation, which no doubt has allowed him to play a significant and useful part in its work.

We believe that the BBC has a unique role among public service broadcasters, which means that we must ensure that all householders, especially the most vulnerable, have access to the benefits that digital television can bring. My noble friends Lord Maxton and Lord Gordon considered the technology that should be employed and said that we should keep an open mind on certain issues. We have that open mind. We are aware that the speed of technological change means that the BBC must have the framework and the flexibility to enable a quick-footed response to innovations. The committee is right to draw the matter to our attention. By definition, I cannot go into detail at present, but I assure your Lordships that we are engaging specialist experts to examine the position. We recognise the necessity of being open on those points.

The noble Lord, Lord Fowler, referred to the licence fee, which is the crucial link between the public and our responsibilities. The fact that the Government negotiate with the BBC to establish the licence fee emphasises the need to ensure value for money. The noble Lord is right: we would be reneging on our responsibilities as a government if we did not concern ourselves with the fact that value for money across the whole range of BBC activities must form an important part of the licence fee settlement. The debate and the experience and work of the Select Committee help to clarify our position on how value for money can be achieved.

Several noble Lords referred to the potential role of the National Audit Office. The BBC co-operates with the National Audit Office. There are no complaints from the National Audit Office about the openness of the BBC and its co-operation over a great deal of its work. So there is no difficulty there.

We have a difficulty with the proposals relating to Ofcom intrusion. However, the issues there have been addressed rather more in terms of content. Ofcom is in its early stages now, and noble Lords and the committee recognise that it could be strengthened by the development of its content board to play a more valuable role. We have been debating the issue for a considerable period of time, and the Government do not consider that Ofcom should fulfil that role.

Inevitably, the issue of the BBC World Service was raised, again with plaudits from all noble Lords who referred to it. My noble friend Lord Judd introduced the issue first. The World Service is an extremely valuable part of the BBC, and the Government subscribe to the plaudits given to it today. We recognise that, in many ways, the world's perspective of Britain is conveyed through the work of the World Service. We all wish to see an extension of the service and lament the circumstances in which the service is less extensive than we would like it to be, but the World Service, too, is constrained by resources. Issues have been raised about whether the BBC plans to develop
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an Arabic station. We continue to expect the BBC to plan against the reasonable expectation that questions on funding will be unremitting, so it has to balance such a development against its likely overall budget, which, by definition, cannot be limitless.

The noble Lord, Lord McNally, challenged me about discussions between No. 10 and Rupert Murdoch or anyone representing the Sky enterprises. He wanted detailed minutes, but he is not going to get that. He will recognise that there are relationships with all stakeholders who are concerned with television and radio transmissions. Broadcasting is such a crucial part of public life. It would be as surprising for the Government not to talk at times with broadcasters as for them not to talk to newspaper editors, owners, or even to one person who is both those things. I will not be able to give the noble Lord too much assurance on that point.

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