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It would be wrong of me not to mention at this stage that the UK is held in the highest respect worldwide for our PSB, especially the BBC, which, as my noble friend Lord Fowler stressed, is a national asset. I totally agree with him. Why then is so much attention now being given to the possibility of various mergers and contestable funding as ways of saving PSB when, from this report, there is little evidence that PSB is experiencing any real financial problems?

It has been suggested that the reason why Channel 4 does not believe that it will continue without additional public support,

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As many of your Lordships have asked, could this just be a guise for channels to seek more taxpayers’ money to fund their own commercial projects? What protections have we against channels with these motives? Should we not insist that any corporation receiving or seeking taxpayers’ money be subjected to proper scrutiny and independent review?

Could other areas within the industry be evaluated and trimmed down to provide cost savings? For example, it can be argued that the royal charter, the BBC Trust and Ofcom are all charged with approximately the same responsibility of upholding the independence and high standards of PSB and of acting in the best interests of licence fee payers. Could that be considered an overlap or overregulation and a waste of resources which, in this climate, might be better used elsewhere? Their aims are enshrined in the spirit of ensuring independence. After glancing at their composition, I think that their ability to perform this role could be questioned. According to the website, the chairman of the BBC Trust is a former Labour Party councillor, and the chief executive officer of Ofcom is a former policy adviser to Tony Blair who worked at another company as an adviser to Gordon Brown. Furthermore, as we all know, the appointment to the board of Ofcom is made by the Secretaries of State for the Department of Trade and Industry and the Department for Culture, Media and Sport. Does the noble Lord honestly believe that, as a result, these bodies are genuinely at arm’s length from the Government, as stressed so clearly by my noble friend Lord Inglewood?

Despite the tone of the report being centred on the lack of funds, curiously it finishes by discussing what could be done with the underspend of the digital switchover programme after completion. Can the Minister explain to the House why this money could not be used to keep vital regional news programmes on air, together with, for example, fine programmes such as “The South Bank Show”, especially in the light of the Government’s refusal to waiver this year’s 2 per cent licence fee rise, as requested earlier this year by the Conservative Party? Does this not illustrate the Government’s lack of judgment in relation to the public finances and does it not do little to maintain the bond of trust between the PSB, the Government and the people? I greatly look forward to the Minister’s response.

6.20 pm

Lord Davies of Oldham: My Lords, we are all grateful to the noble Lord, Lord Fowler, for his presentation of the report, his introduction of the debate and his chairmanship of the Select Committee. The committee has produced a timely report because the House will recognise that the final report on Digital Britain will be produced soon and will take account of all these representations. The House will readily appreciate, however, that I am somewhat inhibited by the fact that that is only nine or 10 days away, and it ill behoves me to pre-empt its conclusions. I hope that I will be forgiven if I cannot be as definitive in response to some of the proposals as I would

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ordinarily like to be. The advantage of the report being presented at this time is that it helps the Government’s thinking on these critical issues, and I am grateful to the noble Lord and his committee for clarifying some of those that need to be addressed.

I emphasise that I have some difficulty in reconciling the anxieties of the committee, which are well founded in certain areas of television production. We are all aware of the problems of advertising revenue in view of the competing areas in which advertising can be presented to television. We are all aware of the fact that ITV and Channel 4 are under stress. The noble Lord, Lord Fowler, with his considerable experience in an additional area of news—the regional newspapers—brought that within the framework of this discussion.

I appreciate that the noble Lord, Lord Inglewood, has had to leave before this response, but he, too, emphasised the difficulties facing independent television in particular. I am having a little difficulty in accepting the analysis of the noble Baroness, Lady Rawlings, that all is fine in the garden, that there are not too many problems around and that a little slicing off the BBC budget will produce an easy answer to all that. First slicing the BBC budget is not a concept that I recognise, having listened to and participated in debates on committee reports in the past about the role of the BBC. I was greatly involved in the debate on the charter, the difficulties in that institution and the necessary resources and, as testified in the debate today, how well those resources are devoted to ensuring that the BBC is the foremost broadcaster in the world with a substantial role in exports, which also enjoy such a huge reputation.

I listened carefully to what my noble friend Lord Puttnam said about the history of the BBC and its somewhat jealous guarding of its resources. He is right that that should be subject to scrutiny. It may be timely that the BBC has to be a little more open to its potential rivals. In all fairness, he will have recognised areas in which the BBC is already beginning to think of partnership with independent television with regard to news provision. All is not closed on that front, nor let me say are the Government closed on the necessity of some further stimulus towards such co-operation. The committee is right to identify that there may not be a long-term crisis in British television, but there are short-term anxieties given the real difficulties at this time. The full report, for which we have less than a fortnight to wait, will address all those issues.

I can dispose of one or two issues. The noble Lord, Lord Clement-Jones, was fair but challenging in almost equal measure. He is always fertile with fresh ideas or, if not, indicating that he sees little difficulty in ideas that have been rejected. I fear that product placement fits into the latter category. The Government gave detailed consideration to all the responses on the issue, but we have not been persuaded that there are any convincing arguments in favour of allowing product placement. Although, as the noble Lord rightly enjoined the Government to do, we will address ourselves to the issue of necessary funding, we do not think that that is an avenue that can be usefully pursued, and we will not be emphasising that dimension.

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The BBC is important as a global force producing wide-ranging programmes of quality and innovating successfully in new forms in today's multimedia, multiplatform age. We all recognise that public sector broadcasting gives a unique advantage to this country. It is important that the BBC has strong competition from the commercially funded public sector broadcasters: ITV and Channels 4 and Five, which, first, help to keep the BBC on its toes and, secondly, ensure that we get the most innovative and creative possibilities for our television.

ITV's regional news provision provides audiences with a different perspective from the BBC and provides a balanced view reflecting communities across the country. As the noble Lord, Lord Fowler, said in his opening remarks, it is important that we recognise that with regional newspapers under pressure, the regional dimension of news is of considerable importance.

The noble Baroness, Lady Howe, and the right reverend Prelate the Bishop of Manchester emphasised the importance of children's programmes. There was scarcely a mention of Channel Five in the debate, but we should pay due regard to the “Milkshake” brand on Channel Five, which provides high-quality organised preschool programming for children. Although I appreciate that there is concern about the quality of provision for over-10s—I think that the noble Baroness defined it in those terms—we should appreciate programming of high quality.

There is no doubt that children's programming must be an important dimension of public sector broadcasting, but a degree of competition ensures plurality of voices and competition for quality which, in turn, drives down some costs. The challenge for the Government is to examine how we could sustain public sector broadcasting provision, including the BBC, in the new multichannel digital age with all its challenges. The Digital Britain interim report, which we published a few months ago on 29 January, set out our early thinking on these matters and outlined the key priorities that we think need to be addressed. Our starting point was certainly that a strong, fully funded and efficient BBC acts as an enabler for the rest of the sector. Most of the fruitful ideas that have emerged from the committee’s useful report and that have been presented during this evening’s debate, build on the BBC as the cornerstone.

However, we also need strong alternatives to the BBC. My noble friend Lord Macdonald emphasised that in relation to the provision of television in the nations. He will appreciate that aspects of the relationship between ITV and the channel 3 licensees as a whole are essentially regulated by Ofcom and the OFT. In 10 days’ time, we will set out in Digital Britain our views about how we see that relationship developing, but I reassure my noble friend that his strong voice on the necessity of ensuring that this dimension of public sector broadcasting is given due attention will be testified in that report. I know that noble Lords will take the earliest possible opportunity of pressing the issues further.

Underpinning the initial position is the Government’s belief that public sector broadcasting requires plural provision. Where there are anxieties about public sector

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broadcasting outside the BBC, we need to address them. That is why I am grateful that this debate gives us the chance to do so. The committee argued that to deviate from the current, accepted definition of public service broadcasting would be counterproductive, and we agree. It is the cornerstone of this debate. There are enough challenges with regard to the points that have been made in the committee’s report and in this debate without us wrangling over definition. We believe that the concept and framework that we set out in the Communications Act 2003 and the characteristics and public purposes put forward by Ofcom provide the proper starting point for examining public service content, and we are grateful to the committee for confirming that that is how it sees things.

In response to calls for plurality of public service broadcasting beyond the BBC, let me restate that we have repeatedly given our firm commitment to sustaining public service content provision including and beyond the BBC, which is why we address the issues that the committee identified. It will be seen from the Government’s response that we seek to respond to them positively. I am grateful to the noble Baroness, Lady Flather, for introducing the issue of diversity. Plurality of sources does not meet the requirement if we do not have plurality of voices and do not give due regard to minority cultures. I am grateful for her contribution on this matter, just as I am grateful to my noble friend Lord Macdonald for expressing a similar viewpoint with regard to the nations of the United Kingdom and how they need to be considered as we conclude our thinking.

Following Ofcom’s public sector broadcasting review, the Government have been looking at a number of options, including the feasibility of contestable funding, structural changes, new networks or commissions or making no further intervention in this market at all. I am glad that the committee did not think that the last was an option for the Government, because we will be positive in the final Digital Britain report, which is imminent. The Government, like the committee, welcomes the BBC’s commitment to commissioning more network programming from the nations. The timetable and the commitment are a matter for the BBC, and we should support the BBC’s endeavours to reach its targets as quickly as it can.

Particular reference was made to Channel 4, not least by my noble friend Lord Lipsey. We noted that Ofcom, in its final PSB statement published in January, recognised that production from and portrayal of each nation and region of the UK on UK networks was a concern for many, which is why Ofcom decided to increase Channel 4’s out-of-London production quotas to 35 per cent in spend and volume. Within that it also embedded a quota for 3 per cent for production from Scotland, Wales and Northern Ireland. But that is a demand on Channel 4. My noble friend Lord Lipsey was eager to identify that Channel 4 also needs some support, which is why I emphasise that in 10 days’ time we will identify progress on these matters.

I cannot adopt the somewhat complacent position of the Opposition Front Bench with regard to the challenge facing ITV in terms of resources. But I want to emphasise—I am sure that the noble Baroness,

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Lady Rawlings, will join me—that independent television is a tremendously important dimension of our broadcasting world. ITV1 remains the UK’s largest commercial channel. In 2008, it achieved an audience share of 17.2 per cent, which is more than twice the share of its nearest commercial rival, Channel 4. It should be therefore recognised for its significance. Across peak viewing hours, ITV1 remains the UK’s most popular channel with a share of 23.9 per cent, which is slightly ahead of BBC1 with 23.4 per cent. We should recognise how much independent television and ITV1 are appreciated by the nation. Of course, it has held its share of the television advertising market over a long period, despite the fact, as we all appreciate, that there are now competitors outside linear television which help to create the present difficulties.

ITV’s commitment to public service content has not only contributed to sustaining a wide range of voices and perspectives, but it has also helped to improve the standards of the UK media landscape. I believe that independent television not only has played a significant role in the recent past, but that that role needs to be sustained. However, content markets are changing significantly with the development of alternative viewing patterns, which is why the committee’s report talked in terms of short-term crisis and why I am pleased to report both the committee’s constructive response to some of these areas and that of other noble Lords. The noble Lord, Lord Clement-Jones, was concerned to emphasise partnership and the Government certainly think that that needs to be exploited and developed.

I also accept that the regulatory framework that applies to ITV may need to change further to reflect the changes in the media landscape. My noble friend Lord Macdonald made that point with great force. I cannot comment in detail without pre-empting the more general position to emerge shortly. But that point is very well taken. Of course, I want to emphasise that the Government are considering a new entity which builds on Channel 4’s assets from purely public ones to perhaps public-private partnerships to achieve our objective of a large-scale, sustainable and flexible provider of high-quality public service content.

I know that that is too general an expression to satisfy my noble friend Lord Lipsey who would want me to be more precise about the commitment to Channel 4. I can express only this general commitment, but he knows that that presages a considerable degree of detail in the report, which we all await with, I have no doubt, considerable impatience. However, I have greater patience than many because it enables me on this occasion to postpone conclusions on some of the more difficult issues. My noble friend Lord Carter will address these issues before the House in the near future.

In conclusion, changes are required in the commercial broadcasting sector if we are to secure the plurality of provision that both policymakers and audiences want. Our aim is to build on the strengths and traditions that will redefine and meet the very new and challenging digital age. Government intervention in the marketplace is difficult to determine and I am grateful to the Select Committee for recognising the difficulties in its report

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and recommending that we tread with delicacy and care. There is no easy, overriding and simple solution for this area. We need to think carefully before we tread at all, and of course, at the heart of this lies the crucial question of affordability.

The Digital Britain agenda is ambitious and encompasses public service broadcasting along with the wider digital and creative industries. The report is imminent and I know that the House is looking forward to it as much as I am. For the moment, I can only express gratitude to the committee, which has advanced the debate considerably with this report.

6.41 pm

Lord Fowler: My Lords, this has been a good debate, and coming before the Government’s White Paper, it is also well timed. I thank everyone for their contributions. The noble Lord, Lord Macdonald of Tradeston, emphasised the need to make BBC Worldwide a national champion, and I agree with what he said about STV and UTV. The noble Baroness, Lady Flather, had cautionary words for the BBC which it would do well to heed. The right reverend Prelate the Bishop of Manchester raised the issue of the new MediaCityUK in Salford, where we may be on the verge of missing a great opportunity, particularly in training. He also underlined the state of broadcasting, and the Minister would do well to note what he has had to say.

My noble friend Lord Inglewood underlined the importance of the long-term impact of the digital revolution. The noble Baroness, Lady Howe, emphasised the need for an alternative regional news service to that of BBC programming. The noble Lord, Lord Lipsey, talked about the importance of Channel 4 and had some words to say about BBC Three, which no doubt are now being pored over in BBC House.

I thank the three Front-Benchers. As always, I agree with part of what each of them said and disagree with other parts. The noble Lord, Lord Clement-Jones, emphasised the need for a plurality of public service broadcasting and I certainly agree with him. However,

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he came out against any top-slicing of the licence fee. In an ideal world I might even agree; but we are not in an ideal world, we are in a crisis, and we will not be thanked if we do not examine options such as contestable funding. My noble friend Lady Rawlings spoke well about the position of regional news and I agree with what she said, but she did rather underplay the critical financial position of commercial broadcasters in this country.

The noble Lord, Lord Davies, spoke with his usual charm about the problems being encountered by broadcasters. I was encouraged by his aside about regional newspapers, but I continue to disagree with the Government’s position as set out in their paper that everything in this area should be decided between the BBC and the Government, and that there should be no effective role for Parliament. I will not repeat my arguments on that because he has heard them before. He nods his head in assent, but I say to him that in the end, we will win.

Lastly, and in many ways most importantly, I refer to the speech of the noble Lord, Lord Puttnam. He made a fundamental point when he said that it seems that the BBC is concerned only with its own future. Indeed the noble Lord, Lord Lipsey, pointed out that while it is a world-class organisation, by golly it is also a world-class lobbyist. I agree with the noble Lord, Lord Puttnam, that all public service broadcasting is in a crisis today and that the BBC must play a leading part in getting us out of it. In other words, the BBC must look outwards. Unless it does so I do not think it will be truly forgiven.

It has been a good debate. We now wait for the Government’s final report. I think I detected in the Minister’s remarks that he promised us a debate on that final report. Being a wise man, he does not nod or make any gesture of any kind on that point. In all seriousness, I hope that we will have a debate upon it. With those words, I commend the Motion.

Motion agreed.

House adjourned at 6.45 pm.

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