Communications Bill

Public Bill Committee, 30 January 2003.

Standing Committee E

Communications Bill

Roger Gale (Conservative, North Thanet)

Does any hon. Member wish to move amendment No. 404? No. The amendment is not moved.

Does any hon. Member wish to move amendment No. 405, or speak to any of the associated amendments?

John Whittingdale (Conservative, Maldon and East Chelmsford)

I do.

Roger Gale (Conservative, North Thanet)

Then you will have to move amendment. No. 405, which is the lead amendment.Clause 335 Modification of disqualification provisions

Clause 335 - Modification of disqualification provisions

John Whittingdale (Conservative, Maldon and East Chelmsford)

I beg to move amendment No. 405, in

clause 335, page 285, line 11, after 'States)', insert—

'(aa) paragraph 2 (disqualification of religious bodies);'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following:

Amendment No. 229, in

clause 335, page 285, leave out line 12 and insert—

'(b) paragraphs 2 and 6 (disqualification of religious bodies and advertising agencies).'.

Amendment No. 230, in

clause 335, page 285, line 13, leave out subsections (2) and (3).

Amendment No. 231, in

clause 335, page 286, line 30, leave out subsections (5), (6) and (7).

Amendment No. 433, in

schedule 19, page 533, line 32, leave out '(2) and (3)'.

John Whittingdale (Conservative, Maldon and East Chelmsford)

It comes as something of a shock that we appear to have dismissed what is probably the most controversial amendment to the entire Bill without its having been moved, but never mind. Perhaps the hon. Member who was to have moved amendment No. 404 has seen the light. Whatever the reason, he did not arrive in time.

We come to the question of the continuing proscription of religious organisations holding a limited number of broadcast licences. That has been the subject of some considerable controversy for many years. It is, perhaps, understandable that the religious organisations find it offensive that they are singled out under broadcasting legislation as being somehow unfit to hold broadcasting licences, and there has for some time been considerable opposition to that ban.

The Government have made welcome moves to relax the restrictions. The Secretary of State wrote to Committee members towards the end of last year saying that the Government intended to relax some of the existing restrictions and allow religious

organisations to hold digital local radio licences in future. Despite that welcome relaxation, religious organisations will still be excluded from holding licences in a certain number of categories under the Bill. Those categories of licence are as follows: local digital radio multiplex, local analogue television, local digital television multiplex, national analogue television additional services, national digital radio multiplex, national analogue television, national digital television multiplex and national analogue radio.

Over the years various reasons have been given for why the Government felt that it was not appropriate for religious organisations to hold broadcasting licences. There has been talk of the danger of American-style TV evangelists coming and taking over stations. For some time, it was said that the Churches themselves wanted the disqualification. The most recent reason that has been given is that because spectrum is limited and there is therefore a limit to the number of licences that can be held, special conditions must therefore apply.

Existing legislation contains controls on who can hold licences. In particular, there is a requirement that only a fit and proper person should be eligible. I certainly do not say that a religious organisation should necessarily have any advantage in applying to hold a licence—there may be strong arguments about why that might be inappropriate—but I object to the blanket disqualification of religious organisations even being able to apply, and I think that other Opposition Members object to it and find it especially offensive. There is a large question mark over whether that bar is compatible with human rights legislation.

Michael Fabricant (Conservative, Lichfield)

While I agree with 90 per cent. of what my hon. Friend is saying, does he agree that the issue relates not only to Christian organisations, but to other religious groupings that might be less tolerant than the Christian religion? It would not be appropriate or right for the Bill to discriminate in favour of one religion and against another.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I agree. It would not be appropriate to discriminate in favour of one faith group and against another, and we do not propose that. If an application raises concerns such as those suggested by my hon. Friend, which is possible if applications are made by smaller, more controversial religions of any faith, existing controls in legislation make it likely that the application would be rejected. None the less, I and many others do not agree that all religious groups should be covered by a blanket disqualification without having the chance to argue their case.

On Second Reading, the Secretary of State pointed out that the Bill, for the first time, carries a warning that it might contravene the Human Rights Act 1998. We talked about that when in our previous sitting we debated the ban on political parties paying for advertising on television. I asked on Second Reading whether another element of the Bill—religious broadcasting licences—might be subject to challenge under the European convention on human rights. The Secretary of State wrote shortly afterwards to say:

''The Government was challenged in the European Court of Human Rights by United Christian Broadcasters . . . Although the case was found to be inadmissible and Government succeeded, it is still in dispute with UCB over matters arising''.

The reasons why the Government argue that existing restrictions are not in breach of the Human Rights Act 1998 are summarised on the website of the Department for Culture, Media and Sport. Under the heading ''Ownership by religious bodies'', the explanatory notes to the Bill say:

''The Government's view is that the retention of the disqualification for religious bodies to the extent proposed by the Bill is compatible with the ECHR. The aim of the ban (as summarised by the European Court of Human Rights in ruling inadmissible the challenge . . . ) is—'to promote the efficient use of scarce resources i.e. radio spectrum in order to safeguard pluralism in the media, cater for a variety of tastes and interests and avoid discrimination as between the many different religions practised in the United Kingdom.''

The current justification for the ban is the fact that limited spectrum is available and only a few stations could be licensed, which could discriminate against one religion rather than another.

That argument is being challenged. The original finding of the Court on United Christian Broadcasters' application made the same point strongly. The Court said that it was reliant on the Government's evidence, and stated in its judgement:

''the restricted capacity for national radio broadcasting permits the grant of only three independent national analogue licences and one independent national digital licence.''

Equally, there are restrictions on local licences. It has been argued that giving licences to religious groups would mean reducing local licences in order to free up spectrum, but the huge expansion in the number of licences seen in recent years casts considerable doubt on the strength of that argument. I understand that the Court has agreed to re-examine the application because of representations from religious bodies, and the case is now the subject of such examination by the European Court. The Government's declaration that they have won their case in the Court and that there is no problem with the ECHR is not correct.

I also draw the Committee's attention to comments in the report by the Joint Committee on Human Rights on this aspect of the Bill: The Joint Committee states:

''In our report on the Draft Bill, we suggested that allowing religious organisations to hold licenses for local radio broadcasting, but not for national radio or any television broadcasting, brought into question the justification for interfering with their rights under ECHR Article 10 which had been upheld by the European Court of Human Rights in respect of the blanket ban under current legislation. The Government takes the view that the aim of the provisions has not changed, and that 'the less wide-ranging ban proposed by the Bill pursues a legitimate objective in a proportionate manner and is compatible with the ECHR.' ''

The report goes on to say:

''The Government has not offered any detailed explanation for its view that a ban on owning any television broadcasting licence, but only on owning national (not local) radio broadcasting licences, is a response to another place pressing social need so as to be 'necessary in a democratic society' for the purpose of establishing a justification for interfering with freedom of expression under ECHR Article 10.2.''

The Joint Committee on Human Rights has expressed some doubt about whether the Government's position, especially now that they have relaxed the rules for some aspects of the disqualification but not for others, is still compatible with the European Court's opinion. At the very least, we should examine that position.

Kim Howells (Labour, Pontypridd)

I am not sure whether the hon. Gentleman is aware of this, but we understand that the Court has not agreed to reconsider the application and that UCB has simply made an application to have it reconsidered. We do not yet know whether that will happen. That update might be useful to the hon. Gentleman.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I understand that the Court has allocated the application a case number, so it appears that the application will be reconsidered. However, I hear what the Minister says. The position will undoubtedly become clear in the coming months. I promise him that, even if he is not persuaded by the arguments advanced today, the issue will return when the Bill is examined in the other place.

I have a quote from the Bishop of Manchester that demonstrates the strength of feeling on this issue. Church groups across the board have strong concerns about the maintenance of the disqualifications, even though they are of a more limited type. Religious groups find it especially offensive that they are disqualified and that the disqualification should have exceptions in the case of particular licences. Obviously, it is welcome that the exceptions are expanded under provisions in the Bill, but it is the original disqualification that many religious groups find offensive. Of all the different interest groups that might want to apply for a broadcasting licence, they alone have been singled out in the Bill and will be disqualified by statute.

Chris Bryant (Labour, Rhondda)

What about political parties?

Michael Fabricant (Conservative, Lichfield)

Does my hon. Friend not understand why the anomaly exists? Whereas there are plenty of channels available on the digital spectrum, that is not true of analogue commercial radio, where there are only three or four licences available for any particular area of a reasonable size. For one of those licences to belong to a particular religious faith could be deeply offensive to those of a different religious faith, or, indeed, those of no faith.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I entirely understand my hon. Friend's argument. It is one with which I have some sympathy, but as I attempted to say earlier, that is easily dealt with, as we are not arguing that a religious body that applies for a licence should get one. We are simply saying that it is wrong that religious bodies should be barred from applying. In the circumstances that my hon. Friend describes, I can well believe—indeed, I think it probable—that an application from a faith group for one of the few licences available would be rejected on precisely the grounds that he suggests. However, faith groups should at least be allowed to submit an application, rather than be singled out as they have been.

Chris Bryant (Labour, Rhondda)

The hon. Gentleman was trying to suggest—although he has already resiled from the argument—that only religious organisations are not allowed to apply. He knows that that is not true: the prohibition applies also to political organisations. Does he accept that we do not want as part of the broadcasting ecology a series of channels that exist purely to proselytise? That is what unites the two types of organisation bound together under the provision.

John Whittingdale (Conservative, Maldon and East Chelmsford)

First, many faith organisations would not be especially happy to be lumped together with certain political groups. Secondly, the aim of the channel need not be to proselytise. There already exists a successful religious radio station, Christian Premier Radio. It has had considerable difficulties because the terms of its licence strictly prevent it from advancing any particular view. The station's director told me that it was hauled over the coals by the Radio Authority for carrying a sermon by a preacher who claimed that Satanism was wrong. Somehow, the Radio Authority thought that that was a breach of the terms of the licence. Strong controls are already provided elsewhere.

Chris Bryant (Labour, Rhondda)

The hon. Gentleman is caricaturing the Radio Authority. In the station's early days, it tried to get everyone who went on it—even on to the news programmes—to sign up to the Westminster confession, which is a very narrow understanding of Christianity. That is hardly what a broadcasting organisation using scarce spectrum should be doing.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I do not want to get into a great theological debate with the hon. Gentleman, because his knowledge of the subject is probably greater than mine and I know when I am on a losing wicket. However, I hope that he accepts the general point that the Bill provides quite strict controls over, first, what can be broadcast and, secondly, who can obtain broadcasting licences. Our case is simply that those controls are sufficient to deal with the vast range of interests and groups that might be thought inappropriate, and each application can be examined on those terms.

The measure does not relate to any particular application, but provides for an across-the-board blanket ban, and the merits or disadvantages of an application make no difference. Many find that blanket ban offensive. Understandably religious organisations think it extraordinary that the disqualification puts the Archbishop of Canterbury and the Chief Rabbi, for example, into the same broadcasting law category as murderers and rapists, and that a person who holds a position in a religious organisation should be disqualified from involvement in holding a broadcasting licence.

Let me quote the Bishop of Manchester. We should take him seriously as a representative of an established faith, and the Government should certainly do so because he and his colleagues are well represented in the other place, which is where the Bill is heading next. The bishop says:

''Christians will be pleased to hear that religious organisations will be allowed to own licences that enable services on the new DAB Digital radios . . . and on terrestrial Digital TV stations as well as local AM/FM radio, satellite/cable radio and satellite/ cable TV

licences. These freedoms will only come after Ofcom have made a determination whether they believe that that organisation is fit to obtain such a licence and for how long they may keep it . . . This requirement not only applies to religious organisations but equally to 'officers' of such an organisation . . . Many people in the Christian community feel such regulations are disproportionately restrictive, especially to an individual, who just happens to be an officer of a church or religious charity, and also to a broadcasting company wishing to operate a religious format that is owned by a charity that has the aim of supporting responsible religious broadcasting.''

The bishop goes on to question again whether the terms of the Bill are compatible with the European convention on human rights.

I do not wish to speak much longer on the matter. I am moving the lead amendment, which stands in the name of the hon. Member for North Devon (Nick Harvey), but the three amendments in the group tabled by Conservative Members are designed to achieve the same objective. We want to remove the blanket disqualification and allow religious bodies applying to hold a broadcasting licence to be treated in the same way as any other applicant. There may be an argument that anything other than that is incompatible with the European convention on Human Rights, but even if that were not the case, there is a compelling argument not to single out people who are active in such groups, and say that, for some reason, because of their faith, they are not eligible even to apply for a broadcasting licence. I am pleased to add my support to the amendment in the name of the hon. Gentleman.

John Robertson (Labour, Glasgow Anniesland)

On a point of order, Mr. Gale. Will you consider the clause stand part debate to have taken place during our discussion of the amendments, or will we have such a debate later?

Roger Gale (Conservative, North Thanet)

The amendments and the debates surrounding them embrace the entire clause. It is my expectation that there will therefore be no clause stand part debate. I do not propose to allow the Committee to go back over ground that has already been covered effectively.

I make it plain to the hon. Member for North Devon that the first group of amendments was offered to all hon. Members; no one chose to take them up and, as such, the amendments fall. It will be a matter of record that I wish the Clerk to inform Mr. Speaker that the amendments were not debated. They may therefore be retabled for discussion on Report. It will be up to Mr. Speaker to determine whether or not they are selected and debated. I hope that that makes the matter clear.

Michael Fabricant (Conservative, Lichfield)

On a point of order, Mr. Gale. When you report to the Speaker, will you point out such matters occurred because we started at five minutes to 9 o'clock and no Liberal Democrat Members were present?

Roger Gale (Conservative, North Thanet)

If the hon. Gentleman is seeking to draw the Chair into a party political dispute, he will be aware that I would deprecate it.

Nick Harvey (Liberal Democrat, North Devon)

I thank the hon. Member for Maldon and East Chelmsford (Mr.

Whittingdale) for moving amendment No. 405. Having done so with such aplomb, I shall refrain from adding to his remarks at great length, save to say that I concur with his arguments. I do not believe that the Government have satisfactorily answered the points that have been made on previous occasions and in recent correspondence.

Someone picking up the Bill for the first time and seeing the seemingly rather arbitrary prohibition on religious groups and organisations from owning broadcast licences, without hearing the arguments, would consider it bizarre. The ban on political parties, advertising agencies and religious bodies is almost as arbitrary as the prohibition on voting that applies to peers, criminals and lunatics. It reminds me of the questions people used to be asked when they sought admission to the United States of America, such as whether they were, ever had been or knew anyone who had been a communist or a homosexual, and whether they had or had ever had syphilis or knew someone who had it. People had to answer yes or no to the whole jolly lot. The argument that religious groups or organisations should be banned from applying for a broadcast licence is not sustainable.

It has been said that scarce spectrum means that such organisations should not be allowed unduly to dominate the available spectrum. That was challenged in the European Court and might be the subject of a further challenge, because it would seem, from a reading of the papers, that the Court was misled about the reality of the available spectrum at the time and it concluded that it had gained a false impression.

Kim Howells (Labour, Pontypridd)

Will the hon. Gentleman tell me what he meant by a reading of the papers? Did he mean official papers or newspapers?

Nick Harvey (Liberal Democrat, North Devon)

I am speaking of a previous case. I am not talking about papers that have been deposited for a forthcoming case. On 7 November 2000, the Court said that

''there is no restriction on the grant of local or satellite radio licences to a religious organisation, since such services are not subject to the same constraints on spectrum capacity . . . the limitation on the applicant's right to freedom of expression through radio broadcasting is far from being absolute, since there is no restriction on religious bodies applying for and being granted licences for local radio broadcasting''.

That is at variance with reality. There are several restrictions on the ability of religious organisations to have local radio licences. Whatever the outcome of the forthcoming case, it is inevitable that, in human rights terms, the Bill will be found to be on the wrong side of the line.

There may well be good, practical and sound reasons why, when specific licences are being allocated, particular religious groups should not be given them. There is no reason why Ofcom or whoever is responsible for making much decisions cannot do so on the basis of scarce spectrum and the effect that granting a licence to a religious body would have on the ecology of broadcasting. For them to be banned in principle from even being allowed to apply for a licence is fundamentally wrong.

Chris Bryant (Labour, Rhondda)

The hon. Gentleman makes his case for human rights and the rights of Christian organisations to hold licences. He started by saying that just because someone was homosexual should not be a reason why that person should not have a licence, and that such thinking should apply to Christian organisations. When the first Christian radio station was set up in the United Kingdom, my right hon. Friend the Chief Secretary to the Treasury was a board member, but when it refused to have homosexuals on its programmes my right hon. Friend felt that he had to resign from the board.

Nick Harvey (Liberal Democrat, North Devon)

The hon. Gentleman may have misunderstood my argument. I said that it seemed extraordinarily arbitrary for legislation to single out religious organisations for the ban. I was comparing that with the arbitrary nature of some of the questions posed by the US immigration authorities. He is reading much more into what I said. If, in the future, licence holder were to discriminate in the way to which the hon. Gentleman referred, surely that in itself would be adequate grounds for Ofcom or the licence granting authority to take action against the licence holder and not favour future licence applications. However, singling out these three groups and banning them, in legislation, from even applying for a licence, is arbitrary. As I said a moment ago, I can see good reasons why, in particular circumstances, they may not be granted a licence, but why they should not be allowed even to apply for one is much harder to understand.

Michael Fabricant (Conservative, Lichfield)

Does the hon. Gentleman not think it rather odd to be arguing that groups should be allowed to apply for a licence, when, if those groups do the very thing for which they were originally set up, they are not going to get the licence? Is that not rather a mealy-mouthed approach to the whole issue?

Nick Harvey (Liberal Democrat, North Devon)

I do not believe that it is, and I am not sure that I understand what the hon. Member for Lichfield (Michael Fabricant) means when he says that when groups do the thing for which they were set up they will not get a licence. If the hon. Gentleman and the hon. Member for Rhondda (Mr. Bryant) are saying that in no circumstances should those groups ever be allowed to broadcast, why will they be allowed to apply for particular licences? Why are we picking and choosing? If this is an issue of principle, those groups should be allowed to apply for any licence. If a particular application causes problems, Ofcom, or whoever else is responsible for granting licences, can sensibly balance the practical and pragmatic considerations and then state its reasons for awarding that particular licence.

I am concerned that we could write into legislation an absolute ban on those organisations from applying. That could not be justified. It would look very odd to someone considering the issue for the first time. Sooner or later, it would come unstuck at the European Court of Human Rights, because it would not be a sustainable position.

The hon. Member for Maldon and East Chelmsford said that the Joint Committee on Human Rights had issued a warning. Last year, it suggested that:

''the Government should give further thought to the need and justification for maintaining the disqualification of religious groups from holding national radio and television licences.''

The hon. Gentleman also said that the Joint Committee that scrutinised the draft Bill arrived at a broadly similar conclusion.

Many people in the House, and many outside, will understand why, in specific circumstances, it would not be appropriate to give a licence to a religious group or organisation. Nevertheless, to ban them, in primary legislation, from applying for a licence is not sustainable. We have the chance to consider legislation of this type only once a decade so we should ensure that we get it right. The alternative is the messy business of litigation dragging through the European Court of Human Rights and, eventually, the House having to crawl back and change the legislation. To my mind, the Bill clearly abuses the principles of human rights.

John Robertson (Labour, Glasgow Anniesland)

In discussing this clause, I wish to return to music. You will be surprised to hear that, Mr. Gale. My hon. Friend the Member for Gloucester (Mr. Dhanda) and I had a meeting with the Music Business Forum, during which we had a long discussion about the clause.

I want to raise a number of points. Music is used in almost all television programmes—in film soundtracks, signature tunes and indents, for example. Commercial recordings are used as background to sports news and events, as well as in dedicated music programmes. The changes to media ownership rules are almost certain to impact on the British music industry. Subsection (1)(a) of the clause would lift restrictions on ownership. It would allow non-European Union, European economic area companies to get into our system.

Roger Gale (Conservative, North Thanet)

Order. I have already indicated to the Committee that the moment to debate foreign ownership has passed. In addition, the other matters that the hon. Gentleman seems to be raising are not covered by the clause. I ask him either to return to order or to resume his seat.

John Robertson (Labour, Glasgow Anniesland)

I was merely laying the groundwork for some questions on this clause that I would like my hon. Friend the Minister to address. I will perhaps just ask those questions now. Has his Department assessed the economic consequences of the clause and of every proposed change of ownership both generally and in the music industry? If not, is he prepared to carry out such an assessment?

What safeguards exist to ensure that the liberalisation of media ownership does not lead to an increase in exploitation of the existing programme archives at the expense of opportunities for the current creators and music companies? Perhaps Ofcom could ensure that such issues are considered by having representatives from the creators on the content board. They would be able to advise about the impact of policies. May we have an explanation of why the rules should not apply to Britain and the rest of the world on a reciprocal basis?

Andrew Lansley (Conservative, South Cambridgeshire)

I can be brief because my hon. Friend the Member for Maldon and East Chelmsford has already eloquently put our arguments on the disqualification of religious organisations and for the removal of such disqualification.

I will vote to remove the disqualification when we reach amendment No. 405. The Joint Committee on the draft Bill examined the clause and took the view that the Government had not made a case for the retention of the general prohibition. In their response to the Joint Committee, the Government said that they would continue to consider the matter. They have failed to offer any new information to justify the continued retention of the general disqualification and the way in which they propose to modify it does not have sufficient basis.

I share the view of my hon. Friends and other members of the Committee that the general disqualification should go. The only argument in its favour is that there may be people with strong political convictions of an offensive type who do not necessarily belong to one of the ''bodies'' to which the Bill refers. Such people would not necessarily fall within the definitions in the Broadcasting Acts 1990 and 1996—[Interruption.]

Roger Gale (Conservative, North Thanet)

Order.

Andrew Lansley (Conservative, South Cambridgeshire)

Those definitions are geared to bodies whose objects are wholly or mainly of a political nature, similar religious bodies, or those who have undue influence over them. However, those definitions would not include, for example, wealthy individuals who happen to have strong opinions but who are not necessarily office holders and do not have undue influence over a body of a political or religious nature. There is a substantial loophole in the clause. It may well be concluded that the loophole could be met by the fit and proper person test. However, such tests have been applied in other contexts. They have been found to be a difficult instrument to use and not one that most regulators would find a convenient basis for preventing ownership of assets or bodies—or of licences.

I am not asking for a debate. I merely wish to draw the Committee's attention to the issue. Later on, when we reach clause 377, I will seek to move amendment No. 26, which is related to new clause 1, the purpose of which is to introduce a plurality test to the Bill. A general public interest—

Roger Gale (Conservative, North Thanet)

Order. I do not know whether it is the early hour—or what some people regard as an early hour, but others think is the middle of the day—but conversations are taking place that should have taken place in the Tea Room hours ago. I am trying to listen to the debate.

Andrew Lansley (Conservative, South Cambridgeshire)

It must be my fault. I read Tuesday's debate in Hansard, and there seems to be a conclusion that, from the anorak nature of my comments—see, I have read it—hon. Members probably assumed that they would not be interested in my comments. Perhaps they will read them later.

Kim Howells (Labour, Pontypridd)

Anoraks are extremely useful items of clothing, and I say that with admiration for the hon. Gentleman's knowledge of such matters.

Andrew Lansley (Conservative, South Cambridgeshire)

I am grateful to the Minister for that.

I will not speak at length, as I do not want to prejudice the debate that we will have later. One reason why I support the removal of a general disqualification for religious organisations is that I think that the introduction of a public interest test would be far more effective. New clause 1 would introduce a public interest test in relation to the Enterprise Act 2002, so that if someone proposed taking control of an organisation that held a broadcasting licence, we could apply a test of whether they would maintain a plurality of views, and ask whether there was a public interest

''need for

(a) accurate and impartial presentation of news and factual . . . programming; and

(b) free expression of opinion in broadcast television and radio services''.

That provision would not be confined to religious bodies or those associated with them. Its effect would be that the public interest test would bite on any person who wanted to take control of a body with a licence who was likely to prejudice the accurate and impartial presentation of news or the free expression of opinion.

The amendments, which we should support, are so structured that it would not be a case of simply removing the general disqualification for religious organisations, so that they were free to have licences in the same way as any other person. If there were any substance to the accusation that the holding of a licence by someone with religious views or from a religious organisation would affect the content of a radio or television station, not only would the licence conditions and format controls bite, but—if there were any a priori objections to that person—the public interest consideration could be brought to bear. That is a compelling reason for getting rid of the general disqualification, and that is why I would vote for doing so.

Michael Fabricant (Conservative, Lichfield)

We enjoy a free and varied press in this country. Newspapers and magazines represent the views of many different political and religious organisations, and that is right and proper. When there comes a time when there can be as many radio stations providing a local service as there are magazines and newspapers, the same should apply. I believe that radio stations should be allowed to be owned by religious or political organisations, as there is a degree of choice; if people do not want to listen to a radio station owned by a particular religious or political organisation, they are free to switch to a channel owned by a different religion or party.

Gareth Littler, the director of the Centre for Justice and Liberty, which represents the independent Christian broadcast media industry, wrote to all Committee members, and made an interesting point. He says:

''We are grateful for Government concessions, to allow us to apply for digital programme services. But, they may not have fully

understood our industry's request—that, rather than having to apply under exceptional determinations while still being 'disqualified', why can't our religious disqualification be removed, so that we can apply for licences, on a level playing field, with other citizens and our secular competitors?''

The answer to the question that he, and indeed the hon. Member for North Devon, poses is clear: the main difference between newspapers or magazines and analogue radio is, as I said, that there may be only four or five, and often fewer, radio stations serving an area. Therefore, if a licence were awarded to, say, an Islamic group, it would not be easy to provide one to a Christian or Jewish group; and if a licence were provided to such a group, it would prevent secular radio stations, providing the sort of rock music that my hon. Friend the Member for Maldon and East Chelmsford likes so much, from getting a licence. The frequencies are simply not there; there is a technical restriction. It is perfectly logical to allow religious organisations to go for digital audio licences because many more of them are available. Other restrictions, such as those on political broadcasters, should also be lifted, but only for digital audio licences.

Nick Harvey (Liberal Democrat, North Devon)

I do not disagree with the hon. Gentleman, but I do not understand why he thinks that a bizarre prohibition must be written into primary legislation in order to achieve his aim. If this is a technical issue, as he says, why can Ofcom not deal with that and publish a policy on technical grounds?

Michael Fabricant (Conservative, Lichfield)

The technical issue is a state of physics—that is, universal laws state that there is only a limited spectrum for analogue. Following on from the hon. Gentleman's argument, he could equally argue that the prohibition on political parties owning radio stations should be lifted or that every restriction should be lifted. His argument cannot apply to only religious broadcasters but not others.

John Whittingdale (Conservative, Maldon and East Chelmsford)

My hon. Friend seems to be arguing that there should not be a disqualification for digital spectrum licences but that disqualification should remain for analogue licences. Premier Christian Radio has held a local analogue licence for about seven years and achieves widespread support. I am not aware of complaints that other faith groups have been disadvantaged. Other groups have certainly not tried to establish stations.

Michael Fabricant (Conservative, Lichfield)

First, there have been complaints. The Radio Authority has had to keep a close eye on that station, which provides a valuable service. Secondly, that station is a local station in a unique market in which more than four or five analogue radio stations are available. Thirdly, the restrictions on Premier Christian Radio are such that it is not free to broadcast in the way in which I expect that it wants to, and I accept that. The frequencies are not available in hon. Friend's constituency, nor in mine and nor in other parts of the country. My hon. Friend is free to read the Radio Guide 2003 to check that fact for himself.

When we reach the stage at which we all listen to digital audio broadcasting and we all have the time and opportunity to listen to as many radio stations as there are newspapers and magazines available, I would welcome the right for anyone to apply for, and to be

rewarded, a licence. The current situation does not prevail in that manner. Simply arguing that stations should be allowed to apply for a licence, although they will not be issued with one, is hypocritical in the extreme.

Roger Gale (Conservative, North Thanet)

Before I invite the Minister to respond, I recognise that Back Benchers sometimes have to use considerable ingenuity in order to raise their points. I therefore chose to put the broadest possible construction on the remarks made by the hon. Member for Glasgow, Anniesland (John Robertson) and I assumed that he was referring mainly to religious music. If the Minister wishes to respond briefly to those remarks, I shall be prepared to allow that.

Kim Howells (Labour, Pontypridd)

That is very kind of you, Mr. Gale, and I shall be brief.

I thank the hon. Members for North Devon and for Sheffield, Hallam (Mr. Allan) for not moving a certain amendment this morning. I felt so much better this morning because I was able to spend three or four hours in my flat last night refreshing my mind about issues such as possible changes to ownership instead of refreshing other parts, for which I might have paid quite a bit of money. I thank you for your guidance about music, Mr. Gale.

Our policy is to control the ownership by religious bodies of broadcasting licences to ensure that scarce spectrum is used to satisfy as many viewers and listeners as possible and to ensure that everyone's beliefs are equally respected. When broadcasting opportunities are more plentiful, which is increasingly the case in the digital age, there will be no need to impose restrictions. The relaxation of the rules under the Bill will underline that policy.

Religious organisations can already hold radio and TV cable and satellite licences. They can hold local analogue radio licences, radio restricted service licences and analogue radio additional service licences. We intend to use the Bill to remove the restrictions on religious bodies holding TV restricted service licences; digital programme service licences, which is digital terrestrial TV; TV digital additional service licences; radio digital additional service licences; local digital sound programme service licences, which is local terrestrial digital radio; and national digital sound programme service licences, which is national digital radio.

In respect of national digital sound programme licences, the recent decision by Freeview to include radio services on the digital TV multiplexes formerly operated by ITV Digital, which did not include radio services, means that more spectrum is now available for use by radio broadcasters. In line with our policy, we concluded that there is no longer a strong case for a restriction on religious bodies holding national digital sound programme service licences. We have therefore removed it. Under the current legislation, religious bodies can own a local terrestrial analogue licence, but not a local terrestrial digital licence. Clause 335 will allow Ofcom to award local terrestrial digital licences as well.

I turn now to a fact that might be considered irksome by some members of the Committee. Religious organisations will continue not to be able to hold national analogue radio and TV licences, including Channel 3 licences; national analogue TV additional service licences; and radio and TV multiplex licences—licences, not the service that might be on the multiplexes. The restrictions on religious bodies holding licences are maintained only where there is spectrum scarcity. We have sought legal advice and are confident that the continuing restrictions on religious broadcasting are fully compatible with obligations under the European convention on human rights.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I want to ask the Minister a question before he moves on to hymns and carols. He said that he was confident that the Bill is compatible with the European convention on human rights. He will be aware that the Joint Committee on Human Rights has expressed concern about whether that is the case. It has asked the Secretary of State to set out why the Government still think that the Bill is compatible with the ECHR. Will the Minister make a copy of the letter available to members of the Committee? Will he check the current status of the application from UCB to have the case re-examined in the European Court?

Kim Howells (Labour, Pontypridd)

I am happy to do that. We have nothing to hide.

My hon. Friend the Member for Glasgow, Anniesland referred to religious music. We believe that the relaxation of restrictions on religious organisations and other rules on media ownership, including those that relate to bodies that might not be from this country, will be good for the UK media in general and for listeners. There is no reason to think that the UK music industry—that is, the religious music industry—will suffer. Radio and television both need music. ''Songs of Praise'' is one of the longest running and most successful British television programmes. The evidence from TV, like that from radio, suggests that there is a strong and ongoing preference for UK religious music content. Moreover, clause 302 introduces a code to protect the localness of local radio and of local religious music.

John Robertson (Labour, Glasgow Anniesland)

I apologise for inadvertently forgetting to mention the words ''religious music''. Many choirs in Scotland are well known throughout the world, and they will be pleased with what the Minister said.

Kim Howells (Labour, Pontypridd)

I am very glad to hear that. I am sure that religious musicians everywhere will celebrate.

I think that the hon. Member for South Cambridgeshire (Mr. Lansley) was saying that content regulation ought to be enough, but I am not sure—he looks sceptical. Perhaps he can elucidate.

Andrew Lansley (Conservative, South Cambridgeshire)

No, I do not think that I was saying that. I was saying that if the Minister were minded to accept later amendments and new clause 1, the combination of content regulation and an exceptional public interest test would be enough. There would be no other grounds.

There is a related question about mischief that might be occasioned by someone with extreme

religious or political views. If a fascist who had nothing to do with and no influence over a political party wanted to acquire a licence, the disqualifications would not bite on that individual; they bite only on bodies. Is it not better to have a general public interest test, rather than specific disqualifications?

Kim Howells (Labour, Pontypridd)

I believe that such public interest tests are contained in other parts of the Bill and that there is sufficient content regulation, as administered and applied by Ofcom, to ensure that what the hon. Gentleman suggests may happen does not happen. However, I take his point and we must consider that issue carefully. I am a firm believer in not limiting the liberty of groups or individuals in respect of access to radio and television and to communications.

Simon Thomas (Plaid Cymru, Ceredigion)

I am intrigued by the Minister's remarks. He accepted the example given by the hon. Member for South Cambridgeshire of what might happen if an individual—the hon. Gentleman mentioned a fascist, but it could be an extreme religious zealot—were to take up broadcasting. The Minister said that there is enough in the Bill, including content and public interest regulation, to control such a situation. Why then is there not enough in the Bill to control any problems that might arise from religious broadcasts? Surely, the whole thing can be controlled simply through content and public interest regulation. We do not need the rather spurious argument about spectrum.

Kim Howells (Labour, Pontypridd)

The hon. Gentleman missed the first part of the debate, so he missed the hon. Member for Lichfield explaining the iron laws of physics. [Interruption.] Perhaps he was in the Room for that. I would underline the argument that the hon. Member for Lichfield made. It would be entirely spurious—if I can turn that word back on the hon. Member for Ceredigion—to allow religious bodies to apply for all licences only for them to be turned down by Ofcom because there is not enough spectrum. That would be the height of hypocrisy. Government ought to have the guts to say that there is no spectrum available that would allow a degree of latitude. We ought to ensure that we take such decisions in Parliament, because that is what Parliament is for. Sometimes we have to be courageous and stand up against lobbying organisations when it is clear that we will not be able to allow such access. On that basis, I ask the hon. Member for Maldon and East Chelmsford to withdraw the amendment.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I am profoundly unconvinced by the Minister's argument, which appears to be that because of the continuing existence of limited spectrum in some areas, there are strong reasons why religious organisations would not be granted a licence should they apply for one. He has not explained why they need to be subject to an arbitrary blanket ban rather than to the controls to which my hon. Friend the Member for South Cambridgeshire, the hon. Member for North Devon and I have referred which would stop those expressions of concern about particular religious proselytising on the radio within a limited spectrum. I do not accept the Minister's

arguments. However, the matter will not be resolved today. The debate has been going on for a long time and it will continue for longer still. Moreover, there are strongly felt concerns in the other place.

Michael Fabricant (Conservative, Lichfield)

Can my hon. Friend and religious organisations at least take solace from the fact that in the longer term, when the digital switchover has taken place, there will be no such restrictions?

John Whittingdale (Conservative, Maldon and East Chelmsford)

That is not strictly true. There will be fewer restrictions, although there will still be some relating to digital multiplex licences.

Religious organisations object to the fact that they, along with political parties and advertising agencies, are singled out as being inappropriate—we are about to debate whether the other two sectors should be singled out. Those organisations are permitted to apply for a licence only under exemptions to the general prohibition in the Bill. I fully understand why they find that offensive.

Andrew Robathan (Conservative, Blaby)

The Minister argued that spectrum scarcity is the reason for the restriction, but does not that apply to every person who wishes to apply for a licence—or have I missed something?

John Whittingdale (Conservative, Maldon and East Chelmsford)

My hon. Friend is right. Limited spectrum scarcity will always mean that there are likely to be more applicants than the number of slots available. The Radio Authority now and Ofcom soon will have to make choices, and some arguments that might be used against agreeing to an application from a religious body would be taken into account by Ofcom in other cases.

Andrew Lansley (Conservative, South Cambridgeshire)

I do not wish to delay my hon. Friend, but does he agree that the Minister has not answered the point that a person with extreme religious views would not be disqualified from seeking a licence, notwithstanding spectrum scarcity? Religious organisations have been singled out, which is an absurdity. Bans have loopholes.

John Whittingdale (Conservative, Maldon and East Chelmsford)

My hon. Friend is entirely right. He has pointed out the absurdity of trying to deal with the generality when we should be considering specific applications and judging each one on its merits, not imposing blanket bans which are full of loopholes.

Kim Howells (Labour, Pontypridd)

I know that the hon. Gentleman is trying to make his argument, but the decision was made many years ago and it was supported by the Governments of Mrs. Thatcher, Mr. Major and others. If such a measure was so absurd, why did he, as one who worked for Mrs. Thatcher, support it then, but not now?

John Whittingdale (Conservative, Maldon and East Chelmsford)

There are few hon. Members who are greater admirers of Lady Thatcher and her Government than me. However, I must admit that even I disagreed with her on occasion. We will soon debate broadcasting matters that the then Government, who in the main I supported with enthusiasm, might have got wrong. However, time has moved on. I shall not prolong the debate. Although we will not press the amendment to a Division, the Minister should not think that we do not

continue to feel strongly that the Government have got it wrong.

Michael Fabricant (Conservative, Lichfield)

My hon. Friend used an interesting phrase: time has moved on. Does he accept that because time has moved on, because we might face a war in the Gulf and because this country has more immigrants from different religions than ever, some might say that there is an even stronger argument that the limited spectrum, which is no different now than it was before, should be policed even more strongly to ensure that one religious group is not antagonised or upset by another?

John Whittingdale (Conservative, Maldon and East Chelmsford)

If some did argue that, they would be wrong. I am not going to recap my arguments about how controls already exist to deal with my hon. Friend's concern.

We continue to feel strongly about the matter and although we shall not press the amendment, we will want to return to the subject. I am sure that this morning's debate will be read with great interest by those who will examine the Bill when it reaches the House of Lords. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Andrew Lansley (Conservative, South Cambridgeshire)

I beg to move amendment No. 21, in

clause 335, page 285, line 12, leave out paragraph (b).

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss amendment No. 170, in

schedule 19, page 533, leave out line 40.

Andrew Lansley (Conservative, South Cambridgeshire)

The lead amendment would remove the provision that will remove the disqualification of advertising agencies from holding a licence, and amendment No. 170 is a technical amendment to delete the same provision from the list of repeals at the back of the Bill.

I would like to remove the disqualification and leave people to use competition law to pursue cases, and there is no reason why we should not do that. However, as we will debate later, competition law properly buttressed in one or two ways, especially by using public interest tests, should suffice for ownership controls, given that there is an additional licensing process with conditions and format controls.

I tabled the amendment for two reasons. First, the Joint Committee that scrutinised the Bill said that the disqualification should remain and that advertising agencies should not be able to hold a licence because of obvious conflicts of interest advertising agencies and the ownership of broadcasting outlets. Secondly, speaking to the amendment gives me an opportunity to illustrate the absurd position that the Government are taking. As we will see later, they are proposing to retain a significant number of specific controls on who may own licences—we have talked about one—or combinations of media, including different types of channels.

The absurdity arises because the Government will argue that one of the principal reasons why controls should be retained is that a priori judgments can be made about conflicts of interest or degrees of

concentration of ownership that would arise if there were certain combinations of ownership of different media, or if specific people owned channels. It is curious that the Government are saying, in effect, ''In this respect and that respect and the other respect as well, we, the Government, can say that there are competition reasons why so and so should not own this channel and why a newspaper with such and such a concentration should not own a media outlet.'' If the Government argue that, we will present our arguments later.

However, the Government are trying to have it both ways. They say that they can make advance judgments about what competition law would provide in several respects, but then say that competition law is perfectly okay to address such an obvious conflict of interest as we are debating. If the Bill retains provisions that prohibit ownership and debar a specific person or category of person from owning a broadcasting licence when obvious competition problems arise, why do advertising agencies not require such a prohibition?

Kim Howells (Labour, Pontypridd)

Interestingly, the hon. Gentleman has not mentioned two concepts that he used quite a lot earlier. One relates to plurality of ownership and the public interest test—he alluded to some clauses that are to be debated later. The other is this one. I share his interest in competition matters, which are more to do with who is available to buy advertising and who is available to profit from that contractual process. The issues are very different.

Andrew Lansley (Conservative, South Cambridgeshire)

I understand the Minister's first point. The only reason that I have not mentioned those matters is that I was wrapping them up in my personal belief. I tabled the amendment to probe the consistency of the Government's position, not necessarily because I think that competition law, especially if buttressed by the exceptional public interest test, would not be a perfectly valid basis on which to disqualify advertising agencies from acquiring broadcasting licences.

I am not sure what the Minister is getting at in his second point—perhaps he can explain. I am not sure that I have divined what type of advertising agency the Government think will be able to buy broadcasting licences.

Kim Howells (Labour, Pontypridd)

That is the heart of the question. It is the business of advertising and the sale of advertising to one of its most potent carriers that could presumably be perceived as almost a vertical integration of the business between those who provide advertising, those who sell it, and those who buy it. That is the key difference between the clauses that we will discuss later, to which the hon. Gentleman alluded, and clause 335, which deals with whether advertising companies should be able to own television companies that might buy the very adverts that they create.

Andrew Lansley (Conservative, South Cambridgeshire)

If I understand him correctly, the Minister is saying that there is a difference in competition law terms between the degrees of horizontal and vertical integration. That is true. Some forms of vertical integration have benefits. For example, on Tuesday morning in Westminster Hall, I

discussed the necessity of vertical integration in the film industry.

I am not sure, however, that anyone is arguing that the degree of vertical integration implied by the ownership of broadcasting by advertising companies is desirable. It is pretty much the case that, when vertical integration has no existing basis in industrial structure and can be avoided, the competition authorities avoid it, which is a good thing. That brings me back to my question. In what circumstances do the Government contemplate an advertising agency being able to purchase a broadcasting licence?

Brian White (Labour, North East Milton Keynes)

One thing that is proliferating at the moment is travel agents' shows advertising holidays, which are one of the biggest purchases that we make each year. For example, Thomas Cook TV is a 24-hour cable and satellite television channel. Advertising agencies themselves cannot screen programmes on a wide range of products, but it is leading to sector specific programming. In effect, advertising agencies are putting on those shows.

Andrew Lansley (Conservative, South Cambridgeshire)

I am not quite with the hon. Gentleman—perhaps I have not watched enough travel shows to follow his argument. However, can the Government explain to the Committee the circumstances in which an advertising agency would be able to buy a broadcasting licence? To be frank, the advertising industry does not seem to be able to contemplate that set of circumstances—it is not fussed about whether disqualification is retained or not.

If the Government cannot explain, relying on the competition law is inconsistent with provisions that we will discuss later. I favour consistency. As it happens, I am consistently pro-competition. I would rather go down that route. I tabled the amendment to find out whether the Government could explain the thinking behind the clause, which was certainly not explained to the Joint Committee in any satisfactory terms.

Kim Howells (Labour, Pontypridd)

As the hon. Gentleman told us, the purpose of the amendment is to prevent advertising agencies from holding broadcasting licences. We explained the basis for the policy in the communications White Paper: we said that the current disqualification in respect of advertising agencies is aimed at ensuring fair competition in the advertising market. I am sure that the hon. Gentleman recalls that point—it was in the White Paper. The Competition Act 1998 makes the disqualification unnecessary. We are therefore revoking the rule, and relying on the competition authorities to judge the likely impact on competition of agencies holding licences.

The Bill gives Ofcom concurrent powers with the Office of Fair Trading to exercise the powers of the Competition Act in respect of communications matters, including broadcasting. Both Ofcom and the OFT will be able to exercise the powers provided by the Competition Act, so we have made sure that they consult together in respect of any new case arising and agree which of them should act.

As the hon. Gentleman knows, the Competition Act prohibits anti-competitive agreements and abuse by dominant firms. Competition authorities will consider whether an advertising agency is behaving anti-competitively, either by engaging in anti-competitive agreements or by abusing a dominant position. Advertising agencies are subject to the terms of the Competition Act in the same way as other economic players. Whether a particular agreement or conduct breaches the prohibitions can only be decided case by case following a full investigation. The investigation has to address various questions, such as what are the relevant markets in which the agreements or dominant positions are considered to arise and in which competition will be affected, and whether a firm holds a dominant position in any relevant market and is abusing the position anti-competitively.

Andrew Lansley (Conservative, South Cambridgeshire)

The Minister will recall that, under the Competition Act, the part 1 prohibition relates to associated practices between undertakings and the part 2 prohibition relates to anti-competitive practices by companies in a dominant position. It does not prohibit activity that might be anti-competitive by companies that are not in a dominant position and in other circumstances—such as on Tuesday morning when I was not in the Room—the Minister argued that for that reason, in relation to broadcasting, the Competition Act provisions will not necessarily be sufficient and that there might be a case for licence conditions.

Kim Howells (Labour, Pontypridd)

That is the point that I, in my stumbling way, was trying to make in my intervention on the hon. Gentleman. There is a qualitative difference between issues that rotate around questions of plurality and competition issues. That is why last night when I was reading for the Committee I was surprised to find that the hon. Gentleman had tabled the amendment. I am not sure, and I do not want to put words in his mouth, but I thought he said when moving the amendment that there is probably enough power in the Competition Act and in Ofcom's ability to use its judgment to decide whether to follow the sectoral competition rules or the Competition Act, the OFT and the Competition Commission to examine and control such issues to obviate the need for his amendment. He will have to tell us whether that is true—he is smiling with a touch of irony.

Given the rules in the Competition Act 1998 and the powers of Ofcom and the OFT to investigate such cases, we believe that there is sufficient protection for democracy and that additional regulation is unnecessary. While I understand the hon. Gentleman's concerns, I have heard nothing to persuade me that competition law is unable to prevent distortions in the advertising market. I hope that he will withdraw his amendment.

Andrew Lansley (Conservative, South Cambridgeshire)

The Minister rightly detects that my preference would be to rely on competition law, which would probably be sufficient. However, there are loopholes and it is conceivable that substantive conditions would have to be applied if an advertising

agency that was not in a dominant market position sought to acquire a broadcasting licence, because it might still be able to engage in anti-competitive practices through vertical integration. Competition law powers would be required for that purpose.

The Minister has detected my intention. The location of the clause in the Bill is helpful because it sets the scene for discussions on later clauses where the Government seem to be going in precisely the opposite direction by trying to impose conditions and controls when competition law would be perfectly sufficient, particularly if it were strengthened by a test of exceptional public interest. The Minister has rightly deduced that I do not wish to press the amendment to a Division. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Chairman, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of debate on the amendments proposed thereto, forthwith put the Question, pursuant to Standing Orders Nos. 68 and 89, That the clause stand part of the Bill.

Question agreed to.

Clause 335 ordered to stand part of the Bill.

Clause 336 - licence holding by local authorities

Brian White (Labour, North East Milton Keynes)

I beg to move amendment No. 601, in

clause 336, page 287, line 8, at end insert—

'(c) in subparagraph 1(1)(h) after ''interest'' there shall be inserted ''and where that participant is a body falling within paragraph (c) the body corporate is a regulated company for the purposes of the Local Government and Housing Act 1989''.'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss amendment No. 602, in

clause 336, page 287, line 8, at end insert—

'(c) in subparagraph 1(1)(h) before ''a body corporate'' there shall be inserted ''subject to subparagraph (4)'';

(d) after subparagraph 3 there shall be inserted—

''4A Subparagraph (1)(h) does not apply to a person in relation to a licence if—

(i) OFCOM have made a determination under this paragraph in the case of that person;

(ii) that determination is one made as respects licences of a description applicable to that licence; and

(iii) the determination remains in force.

(4B) OFCOM are to make a determination under this paragraph in a person's case and as respects a particular description of licence only if they are satisfied that it is appropriate notwithstanding subparagraph (1)(h) for that person to hold a licence of that description.

(4C) OFCOM are not to make a determination under this paragraph except on an application made to them for the purpose.

(4D) A determination under this paragraph may be made as respects only one or more of the following descriptions of licence—

(a) a licence to provide a restricted service within the meaning of Part 1 of this Act;

(b) a digital programme licence (within the meaning given by section 18 of the 1996 Act for the purposes of Part 1 of that Act);

(c) a digital additional services licence (within the meaning given by section 25 of the 1996 Act for the purposes of Part 1 of that Act);

(d) a licence to provide a television licensable content service (within the meaning of Part 3 of the Communications Act 2003);

(e) a licence under Part 3 of this Act which is not a national licence;

(f) a national digital sound programme licence (within the meaning given by section 60 of the 1996 Act for the purposes of Part 2 of that Act);

(g) a local digital sound programme licence (within the meaning given by that section for those purposes);

(h) a digital additional services licence (within the meaning given by section 64 of the 1996 Act for the purposes of Part 2 of that Act).

(4E) OFCOM must publish guidance for persons making applications to them under this paragraph as to the principles that they will apply when determining for the purposes of subparagraph (b) what is appropriate.

(4F) OFCOM must have regard to guidance for the time being in force under subparagraph (e) when making determinations under this paragraph.

(4G) OFCOM may revise any guidance under subparagraph (e) by publishing their revisions of it.

(4H) The publication of guidance under subparagraph (e), or of any revisions of it, is to be in whatever manner OFCOM consider appropriate.''.'.

Brian White (Labour, North East Milton Keynes)

As my earlier intervention on the hon. Member for South Cambridgeshire caused confusion, I hope that my explanation of the amendment will be slightly clearer.

The amendments are designed to provide a level playing field that will allow for the way in which communications companies are developing. The Government correctly identified a defect in the Broadcasting Act 1996 and brought companies with local authority interests into the more than 5 per cent. ownership licence regime and removed the restriction in the 1990 Act. However, under clause 336 such companies are restricted to the area in which the local authority has statutory obligations. Although that may be okay at the moment, the trend is that communication companies are developing very quickly.

With the rise of broadband, companies such as Kingston Communications in my constituency have been developing new systems, to which the Minister referred in his letter of 23 January to the hon. Member for South Cambridgeshire, saying that

''clause 347 would . . . rule 'out' traditional television delivered by certain emerging techniques that are being developed by the cable companies. Kingston Communications is a notable example.''

Kingston in Business in my constituency has local authority ownership of more than 5 per cent. and operates outside that local authority area, so it would be caught by the provisions of clause 336 and prevented from developing some of those emerging technologies.

Andrew Lansley (Conservative, South Cambridgeshire)

I am a bit confused because the disqualification on holdings of licences by local authorities applies now. Clearly it does not apply to Kingston Communications, because it is not controlled by a local authority.

Brian White (Labour, North East Milton Keynes)

My point relates to television licensable content service. My amendment seeks to address the fact that that reference would be caught by the clause.

It is important to mention that the council has no influence over Kingston Communications. However, communication companies will need to apply for television licensable content services licences so that they can deliver some of the new services. The amendments are my attempt to address the position of companies that deal with many different local authorities.

The first amendment uses the definition in the Local Government and Housing Act 1989 as a test of control, and the second would put the discretionary power in the hands of Ofcom, allowing it to make those judgments. If my drafting of either amendment is inadequate—judging by the expression on the face of the hon. Member for South Cambridgeshire, it has been as inadequate as my explanation—I seek the Minister's assurance that he will alleviate the concern expressed about this unnecessary restriction that could cause problems in future. I hope that he will find a solution to the problem, or provide an explanation why it is not actually a problem.

Andrew Lansley (Conservative, South Cambridgeshire)

Mr. Gale, you have not told us whether, if I range a little more widely than the amendments, we might avoid a debate on clause stand part. If clause 336 is to be retained, I confess that I do not know why the amendments tabled by the hon. Member for Milton Keynes, North-East (Brian White) would not be acceptable. They seem to me to have some merit, although I do not understand them in detail. However, I take a different position from the hon. Gentleman generally in that I do not think that the disqualification should be removed.

The Joint Committee wanted greater assurances about the safeguards and the oversight of broadcasting services provided by local authorities. The Government response to the Joint Committee illustrated the problem when it stated:

''Under section 2(1) of the Local Government Act 1986 there is already a statutory prohibition on local authorities publishing party political material.''

That is true. Happily, it is not a problem in my area, but plenty of hon. Members may have concluded that local authorities have produced material information for the purposes of their residents that might be regarded as having a bearing on political debate and matters of controversy while not contravening section 2(1) of the 1986 Act.

The Government response continued:

''Local authority services requiring a licence will also be subject to the standards objectives''.

I have no doubt that those standards objectives have some benefit in so far as they apply due impartiality, but local authorities may also influence the editorial content and the agenda of broadcasts. We have discussed due impartiality, but let me put it in a nutshell: we all know that it is possible to pursue broadcasting in terms that are consistent with due impartiality while choosing an agenda for debate that has a marked effect on political debate and

controversy. In that sense, the standards objectives do not bite sufficiently on whether there is editorial control over political debate in an area, particularly if the local authority has substantial control.

I confess that this has nothing to do with competition policy and everything to do with whether one thinks it is the proper role of local authorities to hold broadcasting licences and engage in such activities rather than provide information and advertising to residents in the normal way or supply information to others who hold broadcasting licences. Frankly, I incline to the view that local authorities should not be doing this and I would rather the disqualification were retained. I have seen nothing in the Government's response to the Joint Committee to comfort me on that point. I am not really saying that I am for or against the amendments tabled by the hon. Member for Milton Keynes, North-East. If we have the opportunity to do so, I would rather remove the whole of clause 336 and retain the disqualification.

Roger Gale (Conservative, North Thanet)

For the guidance of the Committee and as the hon. Member for South Cambridgeshire raised the point, let me state that I shall embrace this as a stand part debate, so if anyone has any contribution to make on this clause, speak now or forever hold your peace.

Kim Howells (Labour, Pontypridd)

I am sure that I can give the hon. Member for South Cambridgeshire comfort and my hon. Friend the Member for Milton Keynes, North-East grief.

Under the 1990 Act, licences cannot be held by a body in which a local authority has more than a 5 per cent. interest. The clause amends the media ownership rules by allowing local authorities to hold licences, but only in so far as the service

''is provided exclusively for the purposes of the carrying out of the functions of a local authority under section 142 of the Local Government Act 1972.''

In effect, a local authority will be able to give local people in its area information about its services or those that other public authorities provide in its area.

The clause makes no change to the provision that prevents bodies in which a local authority has more than a 5 per cent. interest from holding a licence. The amendment would give Ofcom discretion to disapply the rule in specified circumstances, thus allowing companies that were more than 5 per cent. local authority-owned to hold broadcasting licences.

I am aware that the amendment has been prompted by Kingston Communications (Hull) plc. and my hon. Friend has, quite properly, championed that remarkable company. Kingston Communications is concerned that Kingston Upon Hull city council's involvement means that it is unable to hold a TLCS licence and it has discussed that matter with officials in my Department.

The amendment would mean that Ofcom's discretion would apply only in the case of a company that is a regulated company under the Local Government and Housing Act 1989. Kingston Communications argues that Hull is not considered to control the company for the purposes of the 1989 Act. I have no reason to dispute that, but it is, I am afraid,

irrelevant. The Act deals with capital financing arrangements for local authorities. It does not follow that what is sensible in this context would be equally sensible in the different context of restricting the involvement of local authorities in broadcasting licences that are used for more than simply giving information about the local authority. That was hinted at by the hon. Member for South Cambridgeshire and I endorse the points that he made. I have, all too often, seen communications that bear little resemblance to public service publications and which look more like party political broadcasts. However, that is neither here nor there, as far as this issue is concerned. The 1990 and 1989 Acts have different purposes and consequently take different approaches.

Since 1990, we have taken the view that if a local authority holds more than 5 per cent. in a body, that body should be prevented from holding a broadcasting licence. We do not wish such licences to be held by bodies that are political in nature. Political parties and bodies in which political parties have more than a 5 per cent. interest are also forbidden to hold broadcasting licences. I understand that Hull has a 44 per cent. interest in Kingston Communications—that is a considerable interest. The nub of Kingston Communications' problem is that the current restriction on ownership of broadcasting licences works and they want to change it because it works and because it affects them. All I can say is that the provision is doing what it is intended do, which is to prevent a body from holding a broadcasting licence if a local authority has more than a 5 per cent. interest in it.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

The hon. Gentleman has just reiterated his point that ownership by political parties and bodies in the UK disqualifies people from holding a licence. Will he confirm that that also applies to any foreign owner? If a foreign-owned concern were partly or wholly owned by a political party or body, would it also be disqualified? There are examples from abroad of very close associations.

Kim Howells (Labour, Pontypridd)

We could have discussed that at great length this morning, if the hon. Gentleman had got up a little bit earlier. The answer is yes. I can confirm that that does apply to foreign ownership as well.

It would not be possible to make an exception just for Kingston Communications. The same exception would have to apply to all companies and local authorities. In short, the effect would be to overturn the rule because it does not suit one particular company.

Brian White (Labour, North East Milton Keynes)

Kingston Communications has developed products, such as electronic programme guides, which are at the forefront of technology and may benefit the country. The Minister is saying that British people will be denied the opportunities offered by that technology, simply because it was developed in Hull over a number of years, and because of the original shareholding.

Kim Howells (Labour, Pontypridd)

A 44 per cent. interest is pretty considerable. I have every confidence that my hon.

Friend's ingenuity will ensure that those great inventions, developments and initiatives can be used for the benefit of the British public without it being necessary for Kingston Communications to hold the kind of licence that my hon. Friend would like it to. I have made myself clear on that point.

John Greenway (Conservative, Ryedale)

At the risk of being ruled out of order, I suggest that there are many ways in which organisations such as Kingston Communications can benefit their community. Last Saturday, I was fortunate enough to go to the new Kingston Communications football stadium, which was paid for by funds that the local authority obtained through the sale of Kingston Communications. It is a marvellous stadium, and I recommend that the Minister visit it. It shows that some things can be done without the ownership of a broadcast station being necessary.

Roger Gale (Conservative, North Thanet)

Order. That was fascinating, but it has absolutely nothing to do with what we are discussing.

Kim Howells (Labour, Pontypridd)

I thank the hon. Gentleman for the invitation.

Roger Gale (Conservative, North Thanet)

Order. If I rule that it was fascinating, it was fascinating.

Kim Howells (Labour, Pontypridd)

Given the extraordinary confusion in Wales about the franchising of rugby clubs, we could end up playing in Hull.

I have heard nothing to suggest that the principle of the 1990 Act is wrong. The fact that the Act has an effect in practice is hardly a reason for condemning it. I hope that my hon. Friend the Member for Milton Keynes, North-East sees fit to withdraw the amendment.

Brian White (Labour, North East Milton Keynes)

I knew that today was going to be a bad day. I regret the Minister's comments about the amendment, because it deals with a serious issue about the way that technology is developing and how the Bill will interact with it, although the Bill is generally future-proof and allows for technology to develop. The amendment would not give local authorities carte blanche to do what the hon. Member for South Cambridgeshire and the Minister fear they might. It was designed to tackle a specific problem caused by an accident of history. For a long time, Kingston Communications was the only private telephone company in the country, and it is rather ironic that it is being restricted in the Bill because it is now deemed to be public.

I hope that the Minister will, after the debate, think again and decide that there are ways for innovative companies that will generate wealth for the country to operate without the sorts of restrictions and problems that the provisions will cause Kingston Communications. I will withdraw the amendment, but not very happily, and I urge the Minister to reconsider the matter, because although the issue may not be a problem today, the Department will have to address it in future. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 336 ordered to stand part of the Bill.

Clause 337 ordered to stand part of the Bill.

Schedule 14 - Media ownership rules

John Whittingdale (Conservative, Maldon and East Chelmsford)

I beg to move amendment No. 471, in

schedule 14, page 408, line 37, leave out from beginning to end of line 5 on page 411.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following amendments: No. 475, in

schedule 14, page 411, line 4, leave out paragraph 6.

No. 476, in

schedule 14, page 411, line 4, leave out 'or otherwise modify'.

John Whittingdale (Conservative, Maldon and East Chelmsford)

We come now to the debate on cross-media ownership. For you and me, Mr. Gale, this is déjà vu all over again. Some of the arguments that I am about to advance may have a certain ring of familiarity to them. The Minister might be tempted to remind me that the provisions in schedule 14 simply retain the limits on cross-media ownership that were put in place under the Broadcasting Act 1996. As I hinted in my response to the Minister's intervention in a previous debate, now is one of those rare occasions when I consider that the Conservative Government, which usually I supported loyally, may not have been wholly right to include such restrictions.

The specific restriction that the amendments are designed to remove will prevent newspaper proprietors who have more than a 20 per cent. share of the market from holding more than a 20 per cent. maximum stake in a Channel 3 licence holder. It is arguable that we could make a case for such a restriction in the past when we were dealing with a situation of much greater spectrum scarcity and a much more limited choice for viewers, although even then the restriction was unnecessary. However, there has now been a huge change to the broadcasting arena—I avoid the word ''ecology''—and viewers have a far greater choice because there is more competition and diversity. The only media player that has a significant market share throughout television and radio is the BBC.

The effect of the restriction that schedule 14 wants to retain would be to punish those companies that are most successful. It will limit innovation and investment. Because of the nature of their success in the print media, companies will be prevented from expanding into other media markets and from achieving the convergence of different media forms. Much of the Government's legislation is designed to recognise that that is happening, whether we like it or not. In many cases, it is regarded as desirable for us to move into the world of multi-media.

My argument has always been that there should not be an absolute ban at any level. In many ways, there are similarities between my argument now and that about religious broadcasters. Of course, there will be circumstances in which an individual application for a licence or an individual bid to take over a Channel 3 licence might be deemed inappropriate. There may well be serious competition concerns raised by such a bid. However, by their nature, thresholds are arbitrary and discriminatory. They deprive the regulatory and

competition authorities of the ability to scrutinise each individual application and adjudicate on the merits of the case.

What will happen instead is that the Government pick a number and say they will not allow anything over that number and that anything below it will not necessarily cause a problem, although the matter will still have to be examined by the competition authorities. Such a process has always seemed arbitrary, discriminatory and undesirable. Obviously, a potential bid to take over a Channel 3 licence, a Channel 5 licence or any other media outlet needs to be examined, particularly to see whether there are worries about competition issues under the Enterprise Act 2002. If, for example, a newspaper owner acquired a stake in a Channel 3 licence that gave rise to an investigation under the Enterprise Act, all the necessary provisions are contained within that legislation to ensure that there will be no anti-competitive effect. It is difficult to perceive any concern that the schedule might be designed to address that cannot be dealt with through existing competition legislation.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

Does the hon. Gentleman recognise that his argument is based on a small part of the television market? Newspaper proprietors and so on will not be prevented from going into other areas of television. A huge array of commercial channels is now available; they are not public service broadcast channels.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I recognise that, because it is palpably true. Just because such organisations have the freedom to invest in one area of the television market does not demonstrate why they should not have the freedom to invest in public service broadcasting. The provision applies only to a limited number of newspaper groups. Indeed, I strongly suspect that the Bill is designed to apply to one particular newspaper group. Some hon. Members have decided that it would be inappropriate for it to hold a licence. I see no objection to News International making a bid should it chose to do so. I expect it to be examined by the competition authorities, just as any bid should be examined. All the worries about potential dominance across the media could then be taken into account by the authorities. The provisions of the schedule will ensure that that company cannot make a bid. They are unnecessary, arbitrary and unfair.

Michael Fabricant (Conservative, Lichfield)

We could not debate amendment No. 404 earlier, because Liberal Democrat Members were not here.

Roger Gale (Conservative, North Thanet)

Order. The hon. Gentleman had every opportunity to move the amendment himself.

Michael Fabricant (Conservative, Lichfield)

I did not agree with it.

Roger Gale (Conservative, North Thanet)

Order. If the hon. Gentleman seeks remotely to go down that road, I shall immediately rule him out of order.

Michael Fabricant (Conservative, Lichfield)

I was not planning to do that. I made a mere digression, Mr. Gale, for which I crave your forgiveness.

Roger Gale (Conservative, North Thanet)

Order. Digressions are out of order.

Michael Fabricant (Conservative, Lichfield)

Does my hon. Friend agree that, if it were the wish of the Government that News International or News Corporation should not acquire a radio station, it would still not preclude Bertelsmann AG or German media groups from acquiring Channel 3? Indeed, News Corporation has shown considerable responsibility in its catalogue of newspapers in the United Kingdom by maintaining impartiality, given that some newspapers follow one party, some follow other parties and some follow no party.

John Whittingdale (Conservative, Maldon and East Chelmsford)

My hon. Friend is tempting me to stray into a debate that I would much enjoy.

Roger Gale (Conservative, North Thanet)

No, he is not.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I know that if I begin to deal with such matters I will be in danger of your ruling me out of order, Mr. Gale, so I shall resist the temptation. My hon. Friend has made a good point about the way in which the newspapers of the News Corporation have displayed an independence of mind. They often criticise my party, which I would have thought the Government would have welcomed. I do not think that they are the creature of their owner in the way that has been suggested.

I am not alone in believing that the existing competition legislation is entirely adequate and that the thresholds in the Bill are arbitrary and unnecessary. Some powerful speeches have been made in support of my argument. I shall quote from one or two of them, because members of the Committee may find that interesting. The hon. Member for Kirkcaldy (Dr. Moonie), now the Under-Secretary of State for Defence, made a powerful and persuasive argument against the retention of the cross-media ownership rule. He said that it was

''unnecessary and wrong . . . If the Government really believe in full and fair competition, they should accept that adequate rules and tests already exist and remove the 20 per cent. rule altogether. If even that is unacceptable,''—

and hon. Members on the Government Benches should take note of this—

''they should take the powers proposed in another amendment to vary the 20 per cent. rule by order. That would at least allow the Labour party to correct the anomaly next year, when we are in Government.''—[Official Report, Standing Committee D, 21 May 1996; c. 413.]

Sadly, the hon. Gentleman's prediction that the Labour party would be in government the next year proved to be correct. However, his expectation that the incoming Labour Government would remove the anomaly has proved incorrect. Indeed, not only have the Government failed to remove the anomaly, they are retaining the anomaly in this Bill.

It was not only the hon. Member for Kirkcaldy who spoke powerfully in support of the removal of that particular threshold. I am disappointed that the Minister for E-Commerce and Competitiveness, the hon. Member for East Ham (Mr. Timms), who in 1996 was the hon. Member for Newham North-East, is unable to join us this morning. However, an explanation for that may lie in the fact that he, too,

powerfully advocated the case six years ago for removing the anomaly. He said:

''the way in which the Government have gone about it, by imposing an arbitrary percentage, seems plainly unsatisfactory.''

He went on to support the amendment that I tabled along with my hon. Friend the Member for Hexham (Mr. Atkinson). I am sorry that he is not in the Chair today, Mr. Gale, because I think that he would have enjoyed this debate. The then hon. Member for Newham North-East went on to say:

''How can it be right that an organisation with a 19.5 per cent. market share can own a whole television station, whereas one with a 20.5 per cent. share can own only 20 per cent? There is something strange about the proposal. It is bound to cause problems as companies' market share changes over the years. The Committee must try to find something for the longer term which, unlike the present proposal, is workable in the real world.''—[Official Report, Standing Committee D, 21 May 1996; c. 426–427.]

A strong case has been made on both sides of the House for why this particular restriction is unnecessary and arbitrary. That is why my hon. Friend the Member for Hexham and I decided that we had no choice but to press our amendment.

Andrew Lansley (Conservative, South Cambridgeshire)

I do not wish to encourage my hon. Friend to prolong the debate unnecessarily, but he has not touched on the future-proofing of the Bill. It is not an entirely fanciful concept to say that, in future, Channel 3 and Channel Five could each have 20 per cent. of the audience share. As things stand, a newspaper could own Channel Five but could not own Channel 3. Where is the logic in that?

John Whittingdale (Conservative, Maldon and East Chelmsford)

My hon. Friend is right to ask that question—there is no logic at all. Other members of the Committee may well argue that a similar restriction should be imposed on Channel Five. We would oppose that. However, my hon. Friend is right to point out that it is hardly logical to apply the restriction to one channel and not the other—especially when some have argued that, one day, Channel Five may find itself with a bigger audience share than Channel 3. I find the logic behind the Government's concept difficult to understand.

My hon. Friend the Member for South Cambridgeshire also raised the interesting issue of future-proofing. The idea seems to have fallen from favour with the Government, but it was the Labour party that suggested, back in 1996, that one way of getting around future-proofing was to allow a variation of the threshold by order. That was why we felt it necessary, in 1996, to press our amendment to remove the 20 per cent. threshold. Sadly, we were unsuccessful. My amendment was defeated by one vote. I am sure that you will not mind me saying, Mr. Gale, that yours might have been one of the votes that defeated it. However, at the time, I was very pleased to be joined by not just my hon. Friend the Member for Hexham, but also by the current Minister for E-Commerce and Competitiveness, and indeed the hon. Member for Ellesmere Port and Neston (Mr. Miller), who I welcome to his place and who also bravely voted in favour of my amendment to remove the 20 per cent. limit.

Michael Fabricant (Conservative, Lichfield)

Is my hon. Friend aware that the only reason why I was unable to vote for his

amendment was that before the Standing Committee was formed I had informed the Whips that I agreed totally with the points that he was making and I suddenly found that I was not on the Committee.

John Whittingdale (Conservative, Maldon and East Chelmsford)

My hon. Friend reminds me that he decided to inform the Whips of his view. When I was summoned to the Chief Whip and asked to explain my conduct, I said that it was a matter about which I felt quite strongly at which point he responded, ''You never said you had views on this matter when you were asked to go on the Bill Committee''. That may reflect the way in which this place works.

Chris Bryant (Labour, Rhondda)

Some things have not changed, have they?

John Whittingdale (Conservative, Maldon and East Chelmsford)

Indeed, some things have not changed and I am delighted to have that confirmation from a Labour Member.

Given the strength of the argument in 1996, I find it surprising that the Government should find it necessary to go back on everything that was said at the time and retain the existing limit in this Bill. Given their powerful advocacy of its redundancy six years ago, I hope still that those who joined us back then in voting to remove it might once again have the conviction of their principles and vote with us today to take it out of the Bill.

Andrew Lansley (Conservative, South Cambridgeshire)

I shall not go on at length, but I fear that am becoming slightly persistent on this subject. It seems to me that, putting it in similar terms to the way in which the Joint Committee expressed it, if we include an exceptional public interest test in relation to media mergers—broadcasting mergers in particular—we will put in an additional safeguard in relation to competition law, which in itself would provide all the necessary safeguards that are required for the public interest, including plurality. The Government depart from this view, and they expressed it in their response to the Joint Committee when they said that was there ''little support from respondents'' to their consultation on media ownership rules. I do not think that the Government framed that consultation in the appropriate form and we have moved on a few stages since then. The Government say in their response that there would be

''uncertainty involved in its application on a cross-media basis'',

but that is only because such a test has not been available to be exercised on a cross-media basis. Interestingly, they go on to say that

''businesses generally preferred to be able to plan according to a clear set of rules.''

I contend that businesses and commercial operations do not operate within a clear set of ownership rules, but within a market. Markets involve risk and risk management and the transfer of ownership is an essential part of responding to those who do not manage risk successfully. It is analogous to the Government saying, ''Wouldn't it be much simpler if we had a rule that Tesco and Sainsbury couldn't own Safeway, but other people could.'' That would be a clear rule and it might correspond broadly to what

some people think, but it is not a basis for competition policy. I see no reason why we should conduct competition policy in relation to the broadcasting sector in a way that presumes that the Government can lay down rules in early 2003 that will serve the market to the greatest advantage in future. We shall discuss Channel 4 and Channel Five, but that applies equally to this arbitrary 20 per cent. rule in relation to Channel 3.

Michael Fabricant (Conservative, Lichfield)

My hon. Friend is making a very powerful point. Is he aware that in the United States the main terrestrial network broadcasters now have a much diminished market share compared with other cable broadcasters, so the point that Channel Five may have a larger audience than Channel 3 and therefore an extremely arbitrary decision made in the Bill may not work in future and is certainly not future-proof.

Andrew Lansley (Conservative, South Cambridgeshire)

I thank my hon. Friend for that intervention which reinforces my argument.

Essentially the Government have said that we do not need a plurality test because we have clear rules. However, in terms of future-proofing, flexibility and requiring businesses to justify themselves within the marketplace and, in the event of mergers, in a fashion that is responsive to whatever circumstances might arrive in years to come, and to respond to a public interest test, it is quite obvious that it would be far better to shift towards the exceptional public interest test and competition policy and, by extension, not keep specific rules. The 20 per cent. limit on national newspapers in relation to Channel 3 is a classic example of a rule whose time has passed. In a landmark Bill that is designed to set out the framework for the future—a Bill about the greater extent of competition-based regulation rather than ex ante rules in relation to the industry—this is a classic example of the Government understanding the philosophy but failing to jump the final hurdle.

There were three points of view in the Joint Committee. There was the pro-competition view to which I subscribe; there was the view that said ''Don't give us competition, we can have rules'', which perhaps the hon. Member for North Devon more or less subscribed to in this context; and the ''Make us competitive, but not yet'' faction, who ultimately won out. On balance, a majority in the Joint Committee recognised that when Ofcom has assessed the industry and started to review media ownership rules, it might well conclude that it wants to disapply some of those rules and make recommendations to the Secretary of State on that basis. It seems faintly absurd that we should be contemplating the possibility that Ofcom would make that recommendation, that the Secretary of State would have to respond to it and the House would have to consider it through statutory instruments without having elsewhere in the legislation precisely the exceptional public interest test that would give us greater confidence in disapplying media ownership rules. Hopefully, we shall debate that next week, but at this point it is important to recognise that we can go down a pro-competition path, as long as we have that safeguard available to us at a later stage.

Kim Howells (Labour, Pontypridd)

We have had an interesting debate and I want to make it clear to the Committee and to the hon. Member for Maldon and East Chelmsford that the clause is not about News International. I have made it known to the Committee many times my admiration for BSkyB. I think that News International has been responsible for nothing short of a revolution in the way in which the communications industry in this country operates. Indeed, there is some way to go in those changes and the changes that have been made, driven by News International have been the result of some imaginative and superb management analysis and decisions.

I also sympathise very much with the hon. Gentleman's problems with pronouncing the name of a Scottish constituency. I remember an incident involving my right hon. Friend the Member for Hamilton, North and Bellshill (Dr. Reid) before he became a Member of Parliament. We were all up in Glasgow canvassing because the late Roy Jenkins was standing for a seat there. My right hon. Friend stood up at a packed public meeting during a question and answer session and asked the late Lord Jenkins to pronounce one of the heroic local football teams—Raith Rovers. Lord Jenkins had great difficulty with that. [Laughter.]

John Greenway (Conservative, Ryedale)

For reasons that I will explain later, I have been trawling through the Standing Committee proceedings of the 1990 Broadcasting Bill, on which you and I served, Mr. Gale. I note that in column 320 on 25 January 1990, Mr. David Mellor said, ''Whatever else we are talking about, we are not talking about special arrangements for Rupert Murdoch'', so some things do not change.

Kim Howells (Labour, Pontypridd)

I did not mention the chap.

We believe that specific rules on media ownership are needed to retain the balance of different media viewpoints that make democracy work. The Bill seeks to remove unnecessary restrictions wherever possible to promote competition and investment that will lead to better quality for consumers. With that in mind, we have repealed the two rules that prevent the joint ownership of Channel 3. The way is now clear for a single ITV, subject, as the hon. Member for South Cambridgeshire reminded us, to the competition authorities being satisfied that such a merger would not be anti-competitive. That is a big proviso.

However, competition law alone will not guarantee that a significant number of different media voices will continue to be heard. We believe therefore that some additional regulation of ownership is needed. That is at the heart of the difference between the case put by the hon. Member for Maldon and East Chelmsford and that put by the hon. Member for South Cambridgeshire.

National newspapers are, at least editorially, the most influential mass medium. The deregulation proposed in the Bill will allow newspaper proprietors to buy into the national and local radio markets and into Channel Five, creating many new opportunities for investment and growth.

The intervention about Channel Five was very interesting. Someone could own Channel Five and a newspaper group could own Channel 3, and the question was asked whether it would be possible for both channels to have 20 per cent. of the market and whether we would have to abandon the rule at that point. We would certainly have to look very hard at the issue: there would be real competition in the markets because two companies would be equally powerful and challenging each other in a way that does not happen now. At the moment, the two big companies are the BBC and ITV. Things may be different in the future. That is something that we would have to carefully examine.

Andrew Lansley (Conservative, South Cambridgeshire)

I do not wish to pre-empt the debate, but the Government are proposing legislation that would prevent a national newspaper group with more than a certain market share in newspapers from owning Channel 3, but not Channel Five. Is the Minister saying that he already contemplates a situation in which the Government's clear rules would effectively be overridden by changes in market circumstances?

Kim Howells (Labour, Pontypridd)

At that point, we would have to look very carefully at the matter. If two powerful channels were operating, we would certainly have to revisit the problem. At the moment, we must judge whether the current dominance of ITV as opposed to Channel Five, whose market share at approximately 6 per cent. is much smaller than that of Channel 3, warrants making such decisions.

Our key aim is to ensure that there is a range of competing voices readily available to citizens so that they are free to form their own opinions. The amendment would mean that major newspaper companies would in future be able to buy substantially into Channel 3. If we allow the largest newspaper companies, which are already influential, to buy up Channel 3—the only commercial public service broadcaster that currently has universal access to a mass audience—we risk a significant reduction in the number of voices in play in the media, and there would be a risk that one voice could become much louder than the others. That would represent an unacceptable concentration of influence in the current circumstances. I believe that such a concentration in one voice would also be harmful to politics, because it could create a media owner so powerful that they could exercise direct influence over political decisions.

Michael Fabricant (Conservative, Lichfield)

Does not that argument presuppose that the owner of a newspaper group has a single voice that is translated through all his or her newspapers and Channel 3? Did not the Minister say only a few moments ago that NewsCorp has shown considerable presence of mind in allowing individual editors to express their own views? Would not that still be the case if NewsCorp were to acquire Channel 3?

Kim Howells (Labour, Pontypridd)

I agree entirely with the hon. Gentleman. I think that NewsCorp has shown a high degree of management insight in finding out what people want to read. It has realised that the British people—the British market—do not want to be served by one political viewpoint. It has also realised that it can have all kinds of editorial themes running through

its news coverage—if we read the newspapers every day we can see evidence of that. We have argued about how the localness of radio and local television can be an asset on which we can draw, and NewsCorp has understood that those elements are in place in the newspaper reading habits of the British public.

My point is that News International might not be operating in future. That is why I have prefaced what I was going to say in opposition to allegation levelled by the hon. Member for Maldon and East Chelmsford that the measure is really about News International or NewsCorp. In future there might be an entirely different media group that takes a different view to NewsCorp's about how such matters are dealt with. I can point to other countries in which such a situation is already causing concern.

I return to the cross-media ownership rules as they apply to Channel 3 licences. The rules retain restrictions on newspaper proprietors holding Channel 3 licences. Those are as follows. No one who controls more than 20 per cent. of the national newspaper market may hold any licence for Channel 3. No one who runs a national newspaper with more than a 20 per cent. share of the total national market share may hold more than a 20 per cent. share in a Channel 3 company. A company in which such a newspaper proprietor holds more than a 20 per cent. share cannot hold more than a 20 per cent. share in such a service.

There is a parallel local rule that states that no one may own a Channel 3 licence if he or she runs local newspapers that together have more than 20 per cent. of the local market share in the coverage area of the service. The holder of a Channel 3 licence cannot have more than a 20 per cent. interest in anyone who controls 20 per cent. or more of the national newspaper market.

Simon Thomas (Plaid Cymru, Ceredigion)

My concern is local and regional cross-media ownership as it relates to Wales. Is it not the case that the proposed arrangements would mean that someone could go for a Channel 3 licence in Wales, plus The Western Mail and the Daily Post, and still not come under the aegis of the restrictions? Is not the Minister concerned about that? Those are the main outlets that reflect the civil life of Wales. The rules could allow one voice to dominate to a certain extent in some areas of the UK.

Kim Howells (Labour, Pontypridd)

The hon. Gentleman makes a good point—we must watch that carefully. I understand that the difference is in readership. The Western Mail sells very few copies in north-east Wales and my constituency and that of my hon. Friend the Member for Rhondda. That is an important point, and it reinforces my point that Ofcom must have the flexibility to examine particular circumstances, because they will differ from case to case. As the hon. Member for Ceredigion implied, radio coverage—which we shall discuss later—does not just leak across into Wales; it is sometimes consciously directed at Wales, and stations capture audiences that cannot be divided by a line that is drawn arbitrarily along Offa's dyke. That is an important issue.

Amendments Nos. 475 and 476 would prevent the Secretary of State from modifying and repealing the cross-media restrictions assigned to the Channel 3 licence under part 1 of the schedule. We believe that those provisions are important to give the legislation the flexibility that it needs to be long lasting. It may be that, as convergence increases, the notion of separate media will become increasingly out of date. Although it is clear that that point has not yet been reached, paragraph 6 of part 1 of schedule 14 allows the Secretary of State to repeal or modify the provisions in the event of such a market change, making the legislation flexible and future-proof.

The rules set out in part 1 of the schedule will prevent any one company from becoming the most influential voice in both television and newspapers at local, regional and national level. We believe that those rules constitute a sufficient check on the power of newspaper proprietors for the public interest to be satisfied. I therefore hope that the hon. Member for Maldon and East Chelmsford will withdraw the amendment.

John Whittingdale (Conservative, Maldon and East Chelmsford)

As he usually does when responding to a debate, the Minister first entertained us with some amusing anecdotes but then stuck firmly to his brief. He has failed to explain why his concerns about the potential power of an owner who acquired interests in both television and newspapers could not be addressed by competition legislation and the safeguards already in place, and thus why the additional arbitrary limit is necessary. Nor has he mentioned the fact that his party strongly opposed all those measures a mere six years ago. Perhaps I can understand why he did not dwell on that fact.

Andrew Miller (Labour, Ellesmere Port and Neston)

The hon. Gentleman will agree that the measures in paragraph 6 of the schedule were not included in the Broadcasting Bill when he and I were crystal ball gazing and considering it back in 1996. Under that paragraph, we have given the Secretary of State the power to deal with the changing circumstances that the hon. Gentleman and I argued about at the time, and therefore the amendment has become unnecessary.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I congratulate the hon. Gentleman on his attempt to square the position that he took in 1996 with the one that I suspect he is about to take now, but I must say that I do not think that the argument quite works.

Andrew Lansley (Conservative, South Cambridgeshire)

Is it not curious that although the Government said, in their response to the Joint Committee, that

''businesses generally preferred to be able to plan according to a clear set of rules'',

the hon. Member for Ellesmere Port and Neston (Mr. Miller) wants to vote for the Government's clear set of rules on the basis that they might change them?

John Whittingdale (Conservative, Maldon and East Chelmsford)

That, too, is a valuable point that, in all fairness, I had better allow my hon. Friend.

Andrew Miller (Labour, Ellesmere Port and Neston)

Surely the legitimate point is that, as we said in 1996, the hon. Member for South Cambridgeshire and I cannot forecast what will be available to the consumer in future. I think that the

hon. Gentleman and I would agree on that. The point is that there is a built-in flexibility in the clause. If we were too prescriptive, we would face problems. I think that that paragraph solves the problem that he was addressing.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I looked at the speech that the Minister made in 1996 and he is correct to say that he drew attention to the issue. It did not feature prominently in the speeches made by hon. Members on the Labour Front Bench at the time, who argued strongly that it was the arbitrary and discriminatory nature of the threshold that should be removed. That is the point that the Minister has singularly failed to address. In 1996, it was arguable that there was a stronger case for a restriction of that sort than there is today, because in 1996 we were dealing with a far more limited choice in terms of the number of outlets on television available.

In the past six years, there has been an explosion of choice and, if the Labour party believed in 1996 that it was not necessary to impose the restriction, I fail to see why it has now decided, six years later, that it is after all necessary. I suspect that a degree of political opportunism in 1996 is probably the answer, but I am disappointed that the Minister will not be swayed by the arguments that have been made in the past by his hon. Friends. On that basis, I shall press the amendment to a Division.

Question put, That the amendment be made:—

The Committee divided: Ayes 6, Noes 16.

Nick Harvey (Liberal Democrat, North Devon)

I beg to move amendment No. 406, in

schedule 14, page 411, line 5, at end insert—

Channel 5 Licences

No. 406, , Ban on newspaper proprietors holding a Channel 5 licence

6A (1) A person is not to hold a Channel 5 licence if—

(a) he runs a national newspaper which for the time being has a national market share of 20 per cent. or more; or

(b) he runs national newspapers which for the time being together have a national market share of 20 per cent. or more.

(2) For the purposes of this paragraph, each of the following shall be treated as holding a Channel 5 licence—

(a) the actual licence holder; and

(b) every person connected with the actual licence holder.

(3) The provisions of paragraphs 2 to 4 of this Schedule shall apply for the purposes of this Part of this Schedule insofar as they relate to national newspapers as if a Channel 5 licence were a licence to provide a Channel 3 service.'.

Nick Harvey (Liberal Democrat, North Devon)

The amendment takes up where the previous group left in that we are looking at the different way in which the Government want to treat Channel 3 and Channel Five. Some of the arguments about the diversion treatment are convincing, but the Government have not answered the point well. The Minister pointed out today that, at present, Channel 3 enjoys a considerably bigger market share than Channel Five. That is true, but whether and for how long it will continue to be true is another matter. If we were to imagine circumstances in which Sky had bought Channel Five, we would see that, with its resources, financial muscle and ability to buy in the programme supply market, it could swiftly begin to catch up with Channel 3. Even if did not overtake it, it is not too far-fetched to imagine that, in a few years, it would be in easy sight of its market share. For that reason, it is odd that it should be treated so differently. To that extent, I share the analysis of the Conservative spokesman that reaches the opposite conclusion about what would be the desirable prescription.

Brian White (Labour, North East Milton Keynes)

One of the key pieces of evidence that was put to the Joint Committee was that a considerable amount of money would be required to up audience share by one percentage point. The amendment would make a requirement for investment in Channel Five that was many times larger than that required at present.

Nick Harvey (Liberal Democrat, North Devon)

I accept the hon. Gentleman's point, and that would be true of Channel Five's current owners. However, let us consider the peculiar circumstances of Sky purchasing Channel Five. Given the large amount that Sky does and its current market position, it could uniquely begin to build audience share without the financial outlay that another European owner would require.

The Government are guilty of underestimating the strength that cross-media ownership would bring. They have not recognised the opportunities for cross promotion of media products and exploitation of editorial space in order to get round normal restrictions and obligations that other owners might face. Although we were treated to a quote from the 1996 proceedings and the Minister also said that we are not talking about Rupert Murdoch, News International's position in the satellite market means that we are doing that, although I shall return to that point.

The Government's justification for special protection for ITV is that it is a major terrestrial broadcaster whereas Channel Five, at the moment, is not. However, Channel Five might be a more attractive prospect for somebody contemplating bidding for either Channel 3 licences or Channel Five because it comes with far less baggage and is not obliged to have some of the public service commitments that Channel 3 has. Channel Five does not have detailed regional prescriptions and obligations. Its requirements are very slight, which would make it a more attractive purchase. We cannot forget that one of the most likely bidders from the newspaper market effectively controls the dominant satellite television player, which is why it would be significant if it were allowed to come in.

When the hon. Member for Maldon and East Chelmsford moved the previous group of amendments, he was quite right to say that it is wrong to hold back newspaper interests from entering other parts of the communications market. However, Channel 3 and Channel Five form only part of the television market. There is nothing to stop such interests from putting together their own channels for satellite or cable television. In the future, there might be more opportunities to bid for spectrum on digital terrestrial television, although they do not exist at present.

If Channel 3 and Channel Five are public service channels, special considerations must apply to them that are separate and different from those that apply to the general commercial market. If the channels continue to be public service channels, it is perfectly legitimate and proper for Parliament to decree that considerations of public interest require the channels to have special treatment that would not be given to the rest of the market.

I welcome the fact that Ofcom will conduct market reviews from time to time. Some considerations might be different in future, and one of the issues that Ofcom must address is Sky's position as the controller of the satellite platform. That introduces an element to the debate that does not apply to any other newspaper group in the real world. It is naïve to bypass that and not to recognise the specific circumstances that it creates.

We would be well advised to keep the control on Channel 3 and Channel Five for the time being because Channel Five would otherwise be a very tempting prospect for Sky. However, we should take a considered view of the market after Ofcom has had the chance to conduct an analysis with the experts at its disposal.

It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past Two o'clock.

Standing Committee E

Schedule 14 - Media ownership rules

John Whittingdale (Conservative, Maldon and East Chelmsford)

I shall not detain the Committee for long. It will not surprise the hon. Member for North Devon (Nick Harvey) to know that I do not support the amendment. However, I pay him credit for following the logic of the case. As was pointed out by my hon. Friend the Member for South Cambridgeshire (Mr. Lansley), it is hard to understand why the Government think it necessary to maintain a restriction for one channel but not for the other. Although there is a huge disparity between the two at the moment, that may not always be so, and if one believes that it is necessary to protect Channel 3—Committee members know that I do not—that should also, in all logic, apply to Channel Five.

Secondly, I welcome the hon. Gentleman's honesty in admitting that all this is aimed at Rupert Murdoch. This morning, the Minister was at pains to try to claim that it is not. In practice he, or his company, is likely to fall foul of the provisions should he ever seek to acquire Channel Five or a Channel 3 licence. I can see the logic and the transparency of the amendment but, for the reasons that I rehearsed this morning as to why I think it inappropriate to maintain the restrictions on Channel 3, I believe even more strongly that it would be inappropriate to have them on Channel Five. Therefore, I fear that I cannot support the amendment.

Kim Howells (Labour, Pontypridd)

Part 1 of schedule 14 sets out the proposed restrictions on licence holding. In simple terms, anyone who owns national newspapers with more than 20 per cent. of the market cannot hold a Channel 3 licence. The amendment, as the hon. Member for North Devon has informed us, proposes to impose the same ownership restrictions for Channel Five.

I shall try to explain our thinking about the Channel Five licence under schedule 14. We want to impose ownership rules only where they are necessary to safeguard democracy. Channel Five is not a large enough service to need the same protection as ITV, as it has a relatively small audience—about 6.5 per cent. It does not reach the whole UK population and has fewer public service commitments than ITV. We are therefore removing all limits on Channel Five ownership. It will be able to attract investment from any newspaper, domestic television or radio company, or non-European company. We want to give Channel Five, a small channel, every chance to grow. It is growing and has been an enormous success. Under the new rules, it can use the investment to develop and provide more competition to ITV, which would be beneficial for viewers and good for the market.

Were the nature of the service to change, however, and its audience share to increase under new ownership, it would be possible to alter the public service obligations of the Channel Five licence. For example, Ofcom could increase the channel's original programming quota to ensure that the channel remains of a consistently high quality, or the Secretary of State could increase, by order, the programming quota for independent productions or introduce a nominated news-provider system for Channel Five.

I understand the concerns of the hon. Member for North Devon, but I hope that he has been convinced that they are unfounded. I hope that he will withdraw his amendment.

Nick Harvey (Liberal Democrat, North Devon)

I shall think a little more about what the Minister has said. However, he seems to have restated the Government's view that the only reason for treating the channels differently is their present difference in size.

I am disappointed that the Minister did not refer to my points about News International and Mr. Rupert Murdoch's interests. In effect, Mr. Murdoch also has control over the satellite platform. To return to the point made by the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale), this is, in a sense, the Rupert Murdoch amendment. There is nothing intrinsically wrong with the idea of Rupert Murdoch being able to bid for a Channel 3 or Channel Five licence; but the problem is that he already controls the satellite platform. For the reasons that I outlined earlier, I am concerned about someone controlling three major strands of ownership.

John Whittingdale (Conservative, Maldon and East Chelmsford)

The hon. Gentleman seeks to justify his amendment on the basis that Rupert Murdoch owns a satellite platform. If Mr. Murdoch were to divest himself of his newspaper interests, he

would not be caught by the hon. Gentleman's amendment. However, he would, I presume, still face the same objection.

Nick Harvey (Liberal Democrat, North Devon)

He would, and ought, to continue to, at least for the time being. Perhaps that point should be addressed by a later amendment. I am grateful for the hon. Gentleman's suggestion.

The Minister does not seem to have answered my points but I will consider what he has said. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

I beg to move amendment No. 632, in

schedule 14, page 411, line 5, at end insert—

'Part 1A

Restriction on holding of licences to provide Channel 3 services or Channel 5{**qc**}

6A No one person may at any time hold a licence to provide a Channel 3 service and a licence to provide Channel 5.'.

The amendment continues the theme of the previous amendment. We seek to establish a protected position for the diversity of output of Channel 3 and Channel Five. As my hon. Friend the Member for North Devon said, we believe that those channels have a special role as public service broadcast channels. We make a clear distinction between the public service broadcast channels and the range of television channels that are much more open to be bought by people who—either on their own or in conjunction with others—want to come into the market.

Channel 3 and Channel Five have distinct missions. With the amendment, we are trying to establish whether there are circumstances in which a single owner could own both of them, which we feel would be inappropriate. Market and competition considerations are, at the moment, likely to preclude that possibility—especially given the size of the market share of Channel 3. However, as we have repeatedly said, we have to look ahead and create a Bill that will last a decade, or at least a decent period. The market is becoming more fragmented, and it is entirely possible that Channel 3's market share will drop and Channel Five's market share will not build up. In future, competition considerations may not rule out joint ownership. However, even if that were to happen, their status as public service broadcasters means that they should be owned independently, to ensure diversity among public service broadcasters.

It is not the fact that its market share is between 30 per cent. and 40 per cent. that makes Channel 3 important; it is the fact that it is a public service broadcaster. Were its market share to fall, we would still believe that its special status made it different from other television channels.

We hope that the Minister will tell us what the Government feel about potential joint ownership of Channel 3 and Channel Five. We seek assurances that the Government have no intention of allowing a single owner to own both channels.

John Greenway (Conservative, Ryedale)

I was not going to intervene, but I do so briefly because I know that my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) wants to discuss the competition issues. With his experience of trade and industry matters, he will do that much better than I can. However, when we discussed the regionality of ITV and its financial position, I suggested to the Committee that, in looking ahead, it ought to know that the trend that is presently developing in British television is for a huge, monolithic BBC on the one hand and Sky on the other—a company that is growing in status, competence and size of operation, and which has an increasing audience. Channels 3, 4 and Five are stuck in the middle, all desperately short of money.

I am not suggesting that someone should put forward a business plan to put all three channels under one ownership, because that would not be appropriate. However, as the hon. Member for Sheffield, Hallam (Mr. Allan) and his colleagues have said on many occasions, it would be folly for the Committee, in trying to write legislation that lasts for a considerable time, to pass an amendment that prevented the coming together of Channels 3 and Five, if that is what is required to sustain those services financially in the future.

I make no apology for returning to the point over and again. As a Committee, given all the requirements, obligations and duties that we are placing on the commercial broadcasters, and all the limitations that we seek to place on their ability to make future changes that reflect what happens in the television marketplace and the financial world, we should keep it in mind that, sooner or later, we will have to deal with how we pay for all those obligations.

We should be flexible about the position of Channel 3 and Channel Five and not close down opportunities that we might need to take advantage of in future, which may involve those channels being under one ownership, or under ownership in which there are common interests within the existing 20 per cent. rule for Channel 3 that the Minister defended earlier.

I will refer later to discussions on the Broadcasting Act 1990. If there is one thing that we should learn from deliberations on that and the Broadcasting Act 1996, it is the need to think long term about what might happen in the television and broadcasting arena. We must ensure that legislation enables the regulators and the industry to have the flexibility that they need. The amendment would close off an important option that Channel 3 and Channel Five together might—only might—need to pursue.

Andrew Lansley (Conservative, South Cambridgeshire)

It will not surprise the Committee to hear that I believe that we should resist the amendment and the introduction of further rules that constrain the possibilities of media ownership changes in the future, an argument that my hon. Friend the Member for Ryedale (Mr. Greenway) set out very well. The Joint Committee report reinforced that argument. That Committee was not always right, but, if we are to have pre-legislative scrutiny, we should take account of what the Joint Committee said. After agreeing with the Government

''that the economic considerations relating to single ownership of ITV will be best determined by the operation of competition law, which would be significantly strengthened by the plurality test we have recommended. We also consider that matters relating to the consolidation of ITV and Channel 5 could properly be decided through competition law, strengthened by the plurality test.''

Again, it will come as no surprise that I think that if a plurality test were added, the case for the retention of a prohibition on Channels 3 and Five being held by one owner would substantially diminish.

Nick Harvey (Liberal Democrat, North Devon)

Does the hon. Gentleman acknowledge that the Government have not as yet said whether they accept the principle of the plurality test? Members of the Joint Committee who were quite concerned about combined ownership of Channels 3 and Five were nevertheless led by the hon. Gentleman into thinking that that would be best controlled in the way that he described. If the Government do not go down that route, some members of that Committee would look for another way.

Andrew Lansley (Conservative, South Cambridgeshire)

I am grateful to the hon. Gentleman, as what he says is entirely true. Some of us are in the awkward position of not yet being able to say what the final outcome on how competition policy will be exercised. It is curious that as a result of some aspects of the legislation we shall end up with belt and braces and a piece of string: the belt of media ownership rules, the braces of competition law, and the piece of string of the conditions and format applied. If I remember correctly, when the Government started on that track, it was not their intention to remove the prohibition on holding Channel 3 and Channel Five licences together. That changed in the subsequent policy document. The balances are not easy to get right. The more one rests on a current judgment of what the proper balance is, the more one is likely simply to get things wrong, because one is resting on the considerations of the present, rather than putting in legislation that has a proper framework for the future.

I would quite understand if the hon. Members for Sheffield, Hallam and for North Devon were to say, ''But we should leave this rule there and let Ofcom take its first review of media ownership rules, look at the changing scene and bring forward recommendations if it wishes to''. That is another way of proceeding. My strong personal preference is not to put in ex ante rules, but to have a proper competition test, properly buttressed, and I continue to operate on the basis that we might yet persuade the Government to have one. If we do not do that here, it might happen in another place. When that happens, belt, braces and a piece of string will be the last thing we want. The combination of the prohibition in relation to Channel 3 and Channel Five will be a constraint that we do not need.

My hon. Friend the Member for Maldon and East Chelmsford referred, if I remember correctly, to the increase in the proportion of television viewing of non-public service broadcasters on satellite, digital, terrestrial and so on. I think that public service broadcasters—in particular, commercial broadcasters—must look to their laurels in relation

to the competition for audience share that they are getting not only from the BBC, which is pretty tough for them, but from other commercial broadcasters not on the analogue platform. Before too long, it will be only by the benefits of bringing Channels 3 and Five together in some way or having some form of cross-marketing and cross-promotion between those channels—perhaps some form of inter-interconnected ownership that might be subjected to merge control, but with proper conditions—that those broadcasters can proceed. We do not need to debate that for too long, because the market circumstances might dictate matters as time goes on. However, I would rather see the market circumstances for the competition test than a further ex ante rule of the kind that the hon. Member for Sheffield, Hallam proposes.

Kim Howells (Labour, Pontypridd)

The amendment would prevent any one person from holding both a Channel 3 and a Channel Five licence, and I shall explain why we oppose it. I congratulate the hon. Member for South Cambridgeshire on his use of the simile about keeping one's trousers up. I notice that he did not mention rubber bands; that would be stretching it.

There is a rule that prevents joint ownership of a national Channel 3 licence and a Channel Five licence. However, there is no rule preventing joint ownership of ITV regional licences and Channel Five. In other words, joint ownership is now possible, and the amendment would have the effect of introducing new restrictions on ownership. Like past Administrations, we are not overly concerned with the possibility of one person owning Channel Five and Channel 3. Channel Five has a relatively small audience, does not reach all the British population, and has fewer public service commitments than ITV. The existence of the BBC and Channel 4 ensures that there are at least three separately controlled free-to-air public service TV broadcasters; in addition, there is the expanding range of digital channels. Certainly, we will not be short of competition.

As with joint ownership of Channel 3, we believe that joint ownership of Channel 3 and Channel Five can be left to the competition authorities. That was essentially the view of the Joint Committee, too. After all, I remember the representations that Channel Five made to us—and, I assume, the Joint Committee—about the need for new sources of investment. The hon. Member for Ryedale spoke, quite properly, about the dip in advertising revenue that affected many companies. Channel Five is a young TV channel with dynamic management and some very good ideas that have proved popular. It is expanding quickly, and clearly needs investment.

A Channel Five owned by Channel 3—and this will be real heresy to the hon. Member for Sheffield, Hallam—could end up being better resourced, and capable of producing even better programmes and competing more effectively with the BBC. I am all for that. A better-resourced company might also be able to shoulder more public service broadcasting obligations, although some members of the Committee might not be so keen on that. The licensing regime would allow Ofcom to consider introducing more demanding targets for original or

regional productions. I hope that the hon. Gentleman will bear that in mind.

The Secretary of State would also be able to introduce, by order, nominated news provider obligations or increase the quota for independent productions, and that must be good for what the hon. Member for Sheffield, Hallam is fond of calling the ecology of British broadcasting. I understand the hon. Gentleman's concerns, but I hope that what I have said will go some way towards convincing him that they are unfounded. I hope that he will withdraw the amendment.

Graham Allen (Labour, Nottingham North)

I am sad that the Minister suggests that I would think it heresy if there were decent investment in Channel 3 and Channel Five. One intention behind of the amendment was to guarantee precisely that. We thought that, by keeping the channels separate, there would be two distinct investors, one for Channel 3 and one for Channel Five. Our concern is that, if one bought the other, it would reduce, not increase, the opportunity for new investment. The logic was that the amendment would allow both channels to do well. We did not want to do them down.

I am sure that we will have a chance to come back to the subject later, either under the Bill or—assuming that the legislation lasts as long as the previous two Bills—in about six years, when a new Bill is introduced. We remain concerned about the separate investment channel streams for Channel 3 and Channel Five. However, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I beg to move amendment No. 472, in

schedule 14, page 412, line 37, leave out sub-sub-paragraph (e).

Peter Atkinson (Conservative, Hexham)

With this it will be convenient to discuss the following amendments: No. 473, in

schedule 14, page 412, line 39, leave out sub-sub-paragraph (f).

No. 474, in

schedule 14, page 414, line 38, leave out sub-paragraph (4).

John Whittingdale (Conservative, Maldon and East Chelmsford)

Amendments Nos. 472 to 474 deal with the holding of local sound broadcasting licences. You will perhaps rule that we will not have a stand part debate on the clause, Mr. Atkinson. This may be a suitable moment to stray beyond the amendment and say that the ownership rules governing the sound broadcasting licences caused some anxiety in the radio industry. The Government made a late, but welcome, move before the measure's final publication when they decided not to proceed with the three-plus-one rule. Had they retained the proposal to enforce that rule for radio ownership, we would strongly have resisted it in Committee.

It is important to separate ownership and content in the debates about ownership. We discussed content at length in earlier sittings; it is often the case, especially in radio, that enforcing different ownership leads to less programme choice than allowing one owner to hold two licences. For example, in London, two stations, Capital FM and Heart FM, provide similar

programmes. If Capital had had two franchises, there would have been no point in its duplicating the programmes on the first station.

I welcome the Government's acceptance that three plus one would have been unduly restrictive and their move to two plus one. I would get rid of two plus one and leave matters to be dealt with by competition legislation but we should not be too purist about such things.

The amendments relate to cross-media ownership, which becomes as important in respect of local radio stations as it does when dealing with national broadcasts. Concerns might arise if, for example, a local newspaper group also gained control of the local radio station. However, the issue should be dealt with under the competition legislation. We already have robust legislation and the amendment tabled by my hon. Friend the Member for South Cambridgeshire, which we have yet to debate, would strengthen that legislation and the competition regime, and we shall urge the Government to accept it.

That competition regime is the right way to deal with local sound broadcasting licences as well as the ownership of national television licences. I shall not repeat my earlier arguments on the subject, which also apply to the amendments.

Eric Joyce (Labour, Falkirk West)

I follow the hon. Member for Maldon and East Chelmsford in asking the Minister to clarify the two-plus-one rule. On one hand, it seems good sense but in Scotland, the Scottish Media Group is concerned that there might be constraints on its ability, as a small, independent organisation, effectively to consolidate and compete against other interests if, for example, Granada and Carlton were to emerge.

I am worried that the proposal might make it more difficult for Scottish Media Group to find ways of consolidating. It would be ironic if Capital or Heart could buy radio interests in Scotland but Scottish Media Group could not. I should be grateful if the Minister would say whether the rule will be interpreted in a way that would constrain the group.

Michael Fabricant (Conservative, Lichfield)

I support the amendment. There are 20 commercial radio groupings at present, some of which, such as Capital and GWR, are quite large. However, there are smaller ones such as Tindle Radio, which was mentioned in previous sittings. The mere ability to have two-plus-one radio station groupings does not necessarily mean that there will be such groupings. Ironically, I suspect that it would be the Tindle Radios of the world that might wish to hang on to their independence.

I have often thought that there is duplication between the legislation in broadcasting Acts and that provided for the Competition Commission. As we approach a period in which an increasing number of radio stations will be available, albeit on the digital audio spectrum, I believe that that should be controlled by the Department of Trade and Industry rather than through this Bill.

We have spoken previously about Clear Channel. Broadcasters in the industry fear that if Clear Channel were to take over 50 per cent. or more of radio stations, that would limit broadcasting opportunities in the UK. However, as my hon. Friend the Member for South Cambridgeshire has pointed out, in Australia, which arguably has a culture that is more similar to ours than that of the USA, that sort of format has not worked. Clear Channel found that it had to have local people presenting programmes on local radio stations, because otherwise the audience did not listen. The market dictates whether a radio station will be successful, and in commercial radio that market determines whether the company will be financially successful.

I wear a slightly pink shirt and am slightly pink at the edges—

Chris Bryant (Labour, Rhondda)

And pink in the face.

Michael Fabricant (Conservative, Lichfield)

And pink in the face, as the hon. Member for Rhondda (Mr. Bryant) helpfully points out. I do not believe that the market should always be free to determine the future of various markets. In this instance, there is sufficient flexibility in existing competition law for that law to prevail. [Interruption.]

Kim Howells (Labour, Pontypridd)

I had expected the hon. Member for Lichfield (Michael Fabricant) to speak for about a quarter of an hour, because I know that he is very interested in this area.

As the hon. Member for Maldon and East Chelmsford told us, after publication of the draft Bill we engaged in long and productive consultation on proposals for local radio ownership. We concluded that further deregulation was both appropriate and desirable. A draft of our plans for local radio has been published, and an order will be ready after the Bill has completed its passage into legislation. We are now in the final stages of consulting on the detailed drafting.

I will briefly describe the principles of that order for the information of the Committee. We propose to set a limit of 55 per cent. on ownership of any one radio market, to achieve a two plus one result—that is, that there should be at least two radio stations plus the BBC in any one market. That is based on a system of points attributed to services that overlap with each other to a greater or lesser extent.

The position then becomes more complicated. That 55 per cent. limit means that no individual person may hold a licence that shares 50 per cent. or more of its audience with two other licences that he holds, if that would mean that his licences accounted for more than 55 per cent. of all the points attributable to all the licences in the area.

We remain convinced that local newspapers and regional television companies must be subject to slightly tighter limits on the ownership of radio stations in the same area. A 45 per cent. limit will therefore apply to such cross-media owners.

We have removed most of the ownership rules in areas where there are only one or two local analogue radio licences. However, we are not prepared to accept local monopolies. An existing ownership rule will

prevent anyone from controlling a regional ITV licence and more than 20 per cent. of the local or regional newspaper market in that ITV region. That should prevent any monopoly of regional newspapers and TV in major cities.

We will also impose a new rule to prevent ownership of a local radio station by any company that owns 50 per cent. or more of the local newspaper market in the coverage area of the local radio station and the relevant regional ITV licence. This will mean that even in smaller or less populated areas, where the 20 per cent. rule might still allow all regional TV and newspapers in those areas to be joint-owned, there will be at least two separate commercial media owners in addition to the BBC.

To my hon. Friend the Member for Falkirk, West (Mr. Joyce), I can answer yes. Rules relating to licences for local sound broadcasting and local digital sound programme service licences will be replaced by new rules, as outlined in part 3 of schedule 14. The rules are based on the number of points in an area, allocated according to the degree of overlap between stations. The details are set out in a draft order, a copy of which has been placed in the Library.

Under existing rules, TV licencees are unable to hold local radio licences in their licence area. The order, when approved, will allow them to hold such licences, and they will be subject to a maximum of 45 per cent. of the points in the area. That is enough to guarantee the presence of three separate local media owners in all reasonable-sized markets. The region of which my hon. Friend spoke is certainly one of those.

In addition, an ITV licencee will not be able to hold a licence where it also owns 50 per cent. or more of the local newspaper market in the coverage area of the local radio station. That will prevent local monopolies and will mean that, even in small or less-populated areas, there will be at least two separate commercial media owners plus the BBC.

To prevent concentration of ownership of local digital sound programme services, we have set a limit on the number of programme services that can be provided by a person on any local radio multiplex. The limit is 55 per cent. of the total number of programme services on the multiplex in question. Notwithstanding that limit, however, any person will always be able to provide a minimum of four programme services on a local multiplex.

Let me turn to joint ownership between national newspapers and radio. Our current draft of the Media Ownership (Local Radio) Order 2003 is not concerned with national newspaper ownership. That is because we judge that national newspapers are not local media operators and should therefore be subject to the same radio ownership restrictions as any other media owner.

Where a national newspaper company owns a local paper, it will be subject to the stricter limits applied to cross-media owners. The new rules under the draft radio order will ensure that at least two other companies provide local services, which will maintain a plural voice at local level.

Michael Fabricant (Conservative, Lichfield)

This is not really a probing question, but I invite the Minister to acknowledge that when a national newspaper group owns local newspapers, they often have different editorial policies. I give for example Trinity Mirror, which if not Blairite is certainly left-wing. Local papers that it owns may not take the same stance. I want the Minister to explore a little not the Blairite issue, but the issue of whether the ownership of local papers by national papers maintains a monopoly or duopoly.

Kim Howells (Labour, Pontypridd)

I have no difficulty with that. The hon. Gentleman is right: editorial lines and approaches to news can vary dramatically across a group. At the moment, the Daily Mirror looks like the official Opposition, and he should read it occasionally because it is extraordinary.

The issue of local newspaper owners who hold local radio licences should continue to be looked at because the broadcasting industry changes. As I have stated previously, it is important to have the flexibility quickly to respond to changes in the broadcasting market. The Bill provides for regular assessment of the ownership rules, which is important because it has the future-proofing about which we have been talking in Committee. Clause 377 will make all media ownership rules subject to regular review by Ofcom, which will make recommendations to the Secretary of State setting out the changes that should be made to the existing regime in response to changing market conditions.

On amendment No. 474, the power to include definitions in any order made under the schedule is a vital element of the order-making powers for sound programme services. Allowing flexibility around definitions as the market changes will not make the order-making process less rigid, which is the thinking behind the draft order for local radio ownership. We have consulted at length with all the stakeholders, and the new rules have wide support. On that basis, I hope that the hon. Gentleman will consider withdrawing the amendment.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I am glad that the Minister has had an opportunity to set out the new structure for radio-ownership rules, which will be valuable for those observing proceedings. We welcome the new structure, which is a step in the right direction. Given that we are making progress, I do not want to be churlish and press my amendment. I suspect that further liberalisation in that area, which we may revisit, will be necessary in due course. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I beg to move amendment No. 478, in

schedule 14, page 416, line 33, leave out subparagraph (1).

This is a probing amendment. It is a taster for the debate, which we will have next week, on Ofcom's role in questions relating to the ownership of newspapers. It would leave out paragraph 15(1), which requires the Secretary of State to consult Ofcom before making an order under the schedule. We want to omit that provision because we will argue that Ofcom should not be involved in advising the Secretary of State how to

exercise powers in relation to newspapers. That is a matter for the competition authorities, and it is one in which Ofcom will not have great expertise because its expertise lies in broadcasting.

Andrew Lansley (Conservative, South Cambridgeshire)

My hon. Friend may be going on to explain this, but the amendment's effect would be wider because it would relate to all orders made under the schedule. That would presumably include orders made by the Secretary of State to amend part 1 of the schedule, which relates to television, as well as part 2 of the schedule, which relates to radio, rather than orders relating only to the relationship between newspapers and radio.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I suspect that my hon. Friend is absolutely right, which is why I described the amendment as ''probing''. Our specific concerns are cross-media ownership and Ofcom's role in considering matters connected with newspapers. I do not want to press the amendment, but, perhaps in anticipation of a future debate, it would be useful for the Minister to say a few words on why Ofcom should have a role in that specific aspect of the schedule.

Andrew Lansley (Conservative, South Cambridgeshire)

I asked my hon. Friend that question to see whether he was going to probe the other issue. He has not done so, so I will. We shall come in due course to clause 377, which relates to Ofcom undertaking a review of the ownership rules, including some of those contained in schedule 14. Clause 377(2)(b) refers to

''the provision made by or under Schedule 14 to this Act''.

Therefore, the Secretary of State will receive Ofcom's recommendations.

As I understand it—the Minister will tell me if I am wrong—paragraph 15 in part 4 of the schedule allows the Secretary of State to make orders, including orders

''giving effect to recommendations made by OFCOM''

in respect of

''a review under section 377''.

As I recall it, the Joint Committee did not see that part of the schedule in that form, but rested on the expectation that Ofcom, with its knowledge of the media market, would make substantive recommendations to the Secretary of State. If the Secretary of State wants to make changes of that kind, relating to the Channel 3 licences, the 20 per cent. rule in relation to national newspaper groups purchasing Channel 3 licences and so on, she does not need an independent regulator between her and media owners. She can simply go ahead. That might be good for her, but it might also be bad, because she may find it useful to have Ofcom standing between her and the ability to make media ownership rules. I thought that we were trying as far as possible to get out of politically determined media ownership rules that interfere with the marketplace and leave regulation to Ofcom.

Am I right in believing that the Secretary of State could change the rules in ways that are not recommended by Ofcom, having merely consulted Ofcom before doing so? If so, is that wise? I suspect that it would be wiser to provide that she acts only on Ofcom's recommendations.

Kim Howells (Labour, Pontypridd)

The Bill provides that the Secretary of State must consult Ofcom before making an order that changes the rules on media ownership. That consultation must take place unless the order is concerned solely, as the hon. Member for South Cambridgeshire just told us, with effecting the recommendations of a report of a media ownership review by Ofcom under clause 377—in other words, when Ofcom has made its view clear to the Secretary of State. The amendment would withdraw that requirement, which would allow the Secretary of State to lay before Parliament an order on media ownership without consulting Ofcom. That is why we oppose the amendment.

Our proposal takes account of concerns that either the Secretary of State or Ofcom could have too much power to amend rules by legislation. The Bill gives Ofcom the responsibility of carrying out reviews under clause 377 and recommending changes, but puts the order-making powers in hands of the Secretary of State, who must consult Ofcom before exercising her powers, which must be done by the affirmative procedure. Parliament will thereby have the opportunity to scrutinise any proposed changes before they become law.

John Whittingdale (Conservative, Maldon and East Chelmsford)

May I ask the Minister one small question? The schedule says that Ofcom must be consulted before the order is made, but there is also a procedure whereby Parliament will approve the draft order. Can the Minister confirm that consultation with Ofcom will take place before the parliamentary approval process as well as before the final making of the order?

Kim Howells (Labour, Pontypridd)

Yes, indeed. I imagine that the order will be laid, Parliament will debate it, subject to an affirmative resolution, and then the Secretary of State will see Ofcom.

Consultation with Ofcom will be an important part of that process. It will have an in-depth knowledge of all aspects of the communications sector and will be able to take into account all relevant issues and how they interact with one another. It is right that the Secretary of State should be required to draw on Ofcom's expertise before making media ownership decisions. I hope that that clarifies the situation. We want to foster constructive relations between the Government and Ofcom, and effective communications on important policy changes are vital to that. I hope that the hon. Gentleman is reassured and will withdraw the amendment.

John Whittingdale (Conservative, Maldon and East Chelmsford)

It was a probing amendment, so I shall not press it. I am grateful to the Minister for that clarification.

Andrew Lansley (Conservative, South Cambridgeshire)

It might be worth mentioning that I made a number of points that seemed quite important to me, but to which the Minister has thus far not responded. Let me remind him, since he is having difficulty remembering them. The point of my remarks was not to stress the desirability of consulting Ofcom; that is pretty much agreed. It was that the Secretary of State has the power to make orders outwith the recommendations of Ofcom relating to media ownership. Am I right to think that the schedule

allows that, and if so, does the Minister really believe that that is wise? Perhaps we can discuss later whether it is wise. I do not think that it is, but the Minister has not replied to the point.

Kim Howells (Labour, Pontypridd)

I apologise to the hon. Gentleman. The short answer is yes—at least, my brief says so—schedule 14 allows the Secretary of State to amend all media ownership rules after having consulted Ofcom, but we anticipate that the Secretary of State will normally respond to a report or recommendations from Ofcom. I am sure that the hon. Gentleman will be reassured by the fact that Parliament will still have the opportunity to scrutinise any proposed changes before they become law. That is the bottom line.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 14 agreed to.

Clause 338 - Restrictions relating to nominated news providers

John Greenway (Conservative, Ryedale)

I beg to move amendment No. 44, in

clause 338, page 288, line 24, leave out subsections (1) and (2) and insert—

'(1) Subsection (9) of section 32 of the 1990 Act (limits on participation in nominated news providers) shall cease to have effect.'

Peter Atkinson (Conservative, Hexham)

With this it will be convenient to discuss the following:

Amendment No. 257, in

clause 338, page 288, line 25, leave out '40 per cent.' and insert '60 per cent.'.

Amendment No. 258, in

clause 338, page 288, line 42, at end insert—

'(4A) It shall be the duty of OFCOM to carry out a review of the operation of the provisions of subsections (8) to (11) of section 32 of the 1990 Act no later than 12 months after the commencement of this section.'.

Amendment No. 45, in

schedule 19, page 531, line 7, at end insert—

'Section 32(9).'.

John Greenway (Conservative, Ryedale)

Clause 338 relates to one of the most important issues that we are likely to discuss this afternoon. A constant feature of our deliberations has been the frequency with which we have returned to the debates that took place on the Broadcasting Acts of 1996 and 1990. I am sure that it will be fascinating for students of these matters to note that the arguments have barely changed over the last seven or 13 years, depending on which proceedings are being discussed.

On 15 February 1990, which was my birthday—unfortunately, we will be finished in Committee before the next one—we discussed how far the 1990 Bill affected ownership of a nominated news provider for ITV—for Channel 3. In fact, the 1990 Act created the concept of the nominated news provider and imposed restrictions on ownership. No ITV company—in those days, there were still 15 of them—could own more than 20 per cent. of the ITN news company. Interestingly, the author of that proposal was

Alastair Burnet. He convinced Lady Thatcher that that was a good idea, so this was one of the few issues on which the Government of the day were not prepared even to consider changing their mind. In many respects that Bill was significantly improved in Committee. Sadly, that is not the case for this Bill. I strongly opposed the ownership restriction, but accepted the benefits that might accrue, certainly in the short term, from having a nominated news provider, which would provide greater independence for ITN.

Some would say that that change brought benefits through the nominated news provider system, but I do not believe that brought any tangible benefits in respect of ownership changes. The Conservative party believes, as do ITV and ITN, that it is time to reconsider and move on. The bidding process is perverse. ITN has to bid against another news provider. ITV ends up paying a lower price, and ITN has less money in its coffers for the provision of its service. I am well aware that ITV shareholders are a bit hard pressed at the moment. Their shares have gone down, particularly because of problems with ONdigital, which became ITVDigital. I cannot see why it should be the Government's business to take an interest in a measure such as that proposed here, particularly when there is no comparable requirement on the BBC, which entirely owns its own news service.

I oppose the concept of the change of ownership rules. I could not see why the ITV companies could not continue to own all of the news service at ITN. In the debate on my birthday, I was supported by the right hon. Member for Edinburgh, Central (Mr. Darling)—now Secretary of State for Transport—by Lord Corbett, by the hon. Member for West Ham (Mr. Banks), by Lord Elis-Thomas on behalf of the Welsh Nationalists and by Lord Maclennan on behalf of the Liberal Democrats. At one point, and I treasure this, Robert Maclennan said that I spoke ''with great force''.

Kim Howells (Labour, Pontypridd)

Would the hon. Gentleman agree that they were being nice to him because it was his birthday?

John Greenway (Conservative, Ryedale)

They certainly were, although it was not my amendment. It was proposed by Lord Corbett, and supported by the current Secretary of State for Transport. Like this Committee, that Committee was good-natured and had a good atmosphere. The only two people who spoke in support of the ownership proposals were Mr. David Mellor and Mrs. Edwina Currie. I therefore ask hon. Members to reflect on the company they would be in if they chose to resist the amendment this afternoon.

John Robertson (Labour, Glasgow Anniesland)

When the hon. Gentleman quoted Robert Maclennan, was he sure that there was not a misprint? Was it perhaps an ''a'' rather than an ''o''?

John Greenway (Conservative, Ryedale)

No it was definitely ''force''. Indeed, Lord Maclennan reiterated all the arguments that I deployed. I do not want to go over all the arguments again, but I will touch on those matters when I speak

formally to the amendments. I oppose this for three reasons: it would undermine quality, it would reduce investment in the ITN news service and there is a constitutional issue that has never been answered. Prior to 1990, the Independent Broadcasting Authority was the broadcaster and therefore the publisher of programmes. The old IBA was responsible if something went wrong. The 1990 Act made the Channel 3 licensees the publisher and broadcaster, and therefore responsible for whatever they broadcast. However, they were given only a 49 per cent. maximum stake in the ownership of the company whose news programmes they were going to have to publish.

Let us imagine the furore that there would be if the Minister spent tomorrow in his office instead of going back to Wales—looking at the snow outside, he might not get there and I might not get to Yorkshire—and telephoned Mr. Greg Dyke to say that we had decided to impose on the BBC's news service the kind of restrictions under which ITV has to work. It would be nonsense.

Ministers have acknowledged that there is a need for change. Clause 338 proposes a new collective restriction on the ITV shareholders' ownership of the nominated news provider of 40 per cent. instead of 20 per cent. In a Bill that proposes to sweep away ownership provisions in almost all other areas, that is both anomalous and unnecessary. Amendments Nos. 44 and 257 would either lift all ownership restrictions or allow ITV shareholders to take a controlling stake in their news provider. Amendment No. 44 would impose no limit on ownership. Amendment No. 257 would increase the 40 per cent. figure in the Bill to 60 per cent. so that if there were a single ITV company, which is on the horizon, it would at least have a 60 per cent. majority shareholding.

The proposed legislation is anomalous for two reasons. First, I am aware of no other major broadcaster in the world that is prevented from owning its own news provider. I have referred to the fact that the BBC does—and so does Sky, the likes of TF1 in France, RTL and ARD, which are also in Europe, and NBC and CBS in the United States. Indeed, ITN was established and run successfully by the ITV companies for the first 30 years of its existence.

Secondly, the Government argue that raising the 20 per cent. ownership bar to 40 per cent. will encourage investment and decision making, but they appear to be alone in thinking that. Even ITN does not see it that way. The Minister referred to the excellent launch party for the ITV news channel. I am sure that he spoke to the ITV executives, who will have expressed their view that it is time to scrap such provision and to make some fundamental change.

In a recent article for the Westminster Media Forum publication, which has already been referred to several times, the ITN chairman, Mark Wood, suggested that not only will the new rules result in an artificially large number of shareholders around the

board room table, thus making strategic and investment decisions more difficult, they could also

''undermine ITN's future commercial development, hampering the company's ability to forge new partnerships and closing off the potential to merge with other companies or for shareholders to increase their stake.''

He goes on to say:

''In this respect, the Bill fails to deliver the Government's objective of maintaining ITN's public policy role as a strong, alternative force in the provision of broadcast news in the UK. In fact, in the case of ITV, the rules will actually be more restrictive than the old ones as, in theory at least, under the current Act, the existing 5 ITV shareholders could each own a 20 per cent. stake in ITN''—

notwithstanding the 49 per cent. that I have mentioned—

''and thus own it outright.''

The problem is that we are likely to see one ITV company.

Carlton and Granada's recent decision to take a controlling stake in ITN's 24-hour news channel—I have already referred to its relaunch—when other shareholders favoured closing the channel demonstrates that the ITV companies have an incentive to support ITN if given the chance. However, the new rules will prevent the same ITV companies from increasing their investment in ITN. That is not only perverse but illogical.

As I argued earlier, maintaining an extra layer of regulation for ITN, whether in the form of the nominated news provider system or special ownership rules is unnecessary if the rationale is simply to guarantee independence and editorial integrity on-screen.

Kim Howells (Labour, Pontypridd)

I am interested in the hon. Gentleman's argument. He will know that 10 years ago the ITV news contract was worth more than £80 million per year—that was its budget. This year it will be worth a little over £36 million. Does that worry him?

John Greenway (Conservative, Ryedale)

Yes it does, but I have already explained why that is. ITN had to compete against Sky and lower its price, otherwise the ITV companies would have had no choice but to accept the Sky offer. That is why the provision is perverse, and ITN understands that. I cannot understand the rationale behind persisting with a system that drives down the money available to ITN to invest. I am glad that the Minister intervened; now it is clear that he does not understand the argument.

Brian White (Labour, North East Milton Keynes)

Is the hon. Gentleman saying that there should be no competition for the ITV contract?

John Greenway (Conservative, Ryedale)

There is no longer any case for competition. What is the point of it? ITV is a separate channel from the BBC, Sky and Channel 4. I doubt that Channel 4 will choose to go somewhere else because through ITN it broadcasts arguably the best news service in the country: the 7 o'clock news. If I could watch only one news broadcast, that is the one I would watch. Sadly, we are often voting at 7pm so I miss the beginning.

As a result of competition, a commercial channel is investing less money in news than it would if it were given the freedom to do what it wanted. I could understand the argument if the ITV network were supported by public money, although the BBC, which is supported by £2.5 billion-worth of public funds, has no such restriction. So if the hon. Member for Milton Keynes, North-East (Brian White) wants to introduce competition, let him table a new clause on Report stating that the BBC will have to compete over which will be the news channel. That is why I teased the Minister in suggesting that tomorrow morning he might ring Greg Dyke and say that he has decided that that is what the policy is to be so that the BBC can be on all fours with Channel 3. It is nonsense. It is time to put this provision in the dustbin where it belongs.

The extra layer of regulation is unnecessary for editorial integrity on-screen, because that is already enshrined for all news services in licence obligations and the ITC programme code. ITV companies would face fines or even heavier sanctions if their commercial interests intruded in any way on the editorial content of their news programming. That is provided under existing legislation and the Bill. There is no argument about editorial integrity.

What ITN needs above all, like all businesses, is the security of long-term investment to enable it to grow and develop in the face of increasingly intense competition in the market for news provision. That means creating incentives for and not maintaining legislative barriers to investment. That answers the point made by the hon. Member for Milton Keynes, North-East. The reality is that the ITV companies are best placed to provide that investment and in doing so create a genuinely integrated regional, national and international force in UK news to take on the BBC and Sky at every level.

Michael Fabricant (Conservative, Lichfield)

Does my hon. Friend agree that the one bad investment decision that ITN made was the purchase of the Grays Inn road premises, which were far too big for it? If it had a much more consolidated ownership, such bad investment decisions would not be repeated.

John Greenway (Conservative, Ryedale)

I am not sure about that. Arguably, it was easier for ITN to take that decision when it had £80 million than it would have been with the £38 million that it has now. The decision was taken in the days when ITV was much more profitable and I suspect that that decision reflected that. I do not agree that ITN's headquarters at Grays Inn road are a white elephant. It has excellent studios and facilities and I always enjoy going there.

In the event that the Government remain committed to retaining special ownership restrictions on ITN, we propose that Ofcom should be required to undertake a review of the efficacy of those provisions no later than 12 months after the Bill comes into force, which is the purpose of amendment No. 258. It mirrors the recommendation of the Joint Committee, as my hon. Friend the Member for South Cambridgeshire will know, because paragraph 255 of the Joint Committee report recommends that Ofcom should conduct an early review to determine whether the current limits are

''the best way of ensuring that there is a strong news provider to compete with the BBC and BSkyB.''

There is one ray of hope and one shaft of light as the snowstorm increases in intensity—that used to be what one saw on one's television screen, but thanks to digital transmission it is a thing of the past. The ray of hope is in clause 273, which we sadly could not debate because of the guillotine. The clause provides for the nominated news provider system to be scrapped in the future. That indicates that Ministers think that the present system cannot last. I would like the Minister to be more bold and decisive and to get rid of it now.

Nick Harvey (Liberal Democrat, North Devon)

I support the amendment and I congratulate the hon. Member for Ryedale (Mr. Greenway) on making his argument with great force despite the passage of 12 years. His logic was right.

I put value on the fact that our country has three high-quality news providers: BBC, Sky News and ITN. What is the best way of ensuring that ITN continues to thrive and provide a third news service to give the others a run for their money?

Michael Fabricant (Conservative, Lichfield)

While the hon. Gentleman is mentioning those three providers, will he pay tribute to Channel 4 news, which is a slightly separate organisation, and to CNN? Even in the United States, 40 per cent. of CNN's output comes not from Atlanta but from its operation in London. The United Kingdom is a major international news provider.

Nick Harvey (Liberal Democrat, North Devon)

In commending ITN, I was clearly including its high-quality news products for Channel 4. CNN is a different operator altogether, although it certainly produces high-quality output.

ITN has fallen on hard times. Its budget is smaller than it was and it has laid off many staff. It does not have an international network on the scale of that in the past and it is ailing in every sense. As we look forward, we must ask how it is best likely to recover strength. Will it be by maintaining the current ownership restrictions to take account of the Carlton-Granada merger and the periodic auction described by the hon. Member for Ryedale, or will it be better off within ITV? Would that position provide better protection?

The history of the regional ITV companies getting together and having one stand-alone, serious news provider was sound, but as we progress towards a single ITV, the attraction and the logic of that diminishes further. As the hon. Member for Ryedale said, ITV Channel 3 is unique by its being prevented from owning its own news provider. There must be a strong justification for maintaining such a perverse restriction, and I do not believe that there is any more.

We must face the fact that news gathering and news production is not profitable; it is a loss-making business. Whoever provides that service, whether for ITV or any other company, must cross-subsidise it from its other activities. If the news provider continues to be owned by a body that has to have several

different owners, will that be more likely to allow the provider to grow, to thrive and to attract the necessary investment; or would it be better for the cross-subsidy to come from ITV Channel 3 itself, from its other areas of activity? There are certain synergies between Reuters—one of the current shareholders—and ITN. However, having a multiplicity of ownership has not served ITN well, as nobody has been in clear command and few bold investment decisions have been taken.

The viewing public and the regulatory authorities should be able to apply pressure on ITV Channel 3 to supply high-quality news. Ideally, they should also be able to insist on certain levels of investment in that news. However, they will not be able to do that effectively if the owners of ITN are companies in other sectors, on which no pressure can be applied. The public and the regulatory authorities can put pressure on ITV and insist that its news is of a certain quality, duration, prominence and so on. An ability on the part of Ofcom to lean on ITV to ensure that its news is of high quality would be a more effective lever than that available if ITN were owned by a variety of companies, some of which Ofcom had no control over whatever.

The hon. Member for Ryedale was challenged by the hon. Member for Milton Keynes, North-East about periodic auctions. There seems to be no good reason for those auctions. As has been pointed out, neither the BBC nor Sky has to go through such an exercise. Auctions can be downright damaging. Mischief-making consortiums can be formed to participate in the auction and drive down the price. We have seen that happen; the product and scale of the operation can be severely damaged as a result. If a mischief-making consortium then finds itself competing with ITN for other business, it will have succeeded in fundamentally weakening its competitor. Such activity serves no useful purpose. A time might come—we saw a similar thing last time round in respect of Sky—when a consortium wins the bid. We would then have killed off the third news provider. I do not know how ITN could survive significantly if it were covering only Channel 4 and Channel Five.

I think that the Government half accept that the arrangement cannot endure, because they have included sunset provisions. The arrangement is already doing serious harm, and ITN has already been seriously damaged by the reduction in the value of the Channel 3 contract. The whole mad system ought to be ended now. Parliament is having a considered look at the entire communications sector and it would be better to kill off all such arrangements now, rather than wait for that to be done later under the sunset provisions.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I shall not repeat the excellent speech of my hon. Friend the Member for Ryedale, in which he put the case powerfully. I want to make some small observations.

We referred briefly to the nominated news provider requirements and to the fact that, had we had a chance to debate them earlier, we would have resisted them for some of the reasons that my hon. Friend described. Part of the justification for them was to introduce a

little competition, but that has failed because the three commercial channels all use the same news provider. So, there is not much competition. As the Minister rightly pointed out, the requirements have driven down the price that ITN receives for the contract.

Although it is always good to have a spur for efficiency, the fact that the contract is worth half what it was 10 years ago is a demonstration of the problems that have been caused by depriving ITN of investment. The Government say that the Bill liberalises the rules—and, in theory, the rules are being liberalised. The ownership limit is being increased from 20 per cent. to 40 per cent. However, if the merger goes through, there will be no progress, because the ITV company will have the maximum allowable stake. One person said to me recently that a 40 per cent. limit is the worst of all possible worlds. It does not give any incentive to invest in ITN seriously, which is what it desperately needs.

Having spoken to people in broadcasting, I know that ITN believes that the clause will be damaging to its future development. ITV is opposed to it, because it prevents it from bringing ITN in-house, should it wish to do so. It will create a strong competitor to BBC and BSkyB. The BBC has no objection to that happening. I understand that Channel 4 has no objection. I have yet to find anyone who thinks that the Government are right.

Kim Howells (Labour, Pontypridd)

The ITC.

John Whittingdale (Conservative, Maldon and East Chelmsford)

That is the Government's body of course. I therefore find it difficult to understand why the Government insist on pursuing the matter. I hope that the Minister will listen to the force of the argument made by my hon. Friend and the hon. Member for North Devon.

Kim Howells (Labour, Pontypridd)

We have had an interesting debate. At present, the Broadcasting Act 1990 prevents one company from owning more than 20 per cent. of the ITV nominated news provider. Clause 338 makes provision for that ownership limit to be raised to 40 per cent. Amendments Nos. 44 and 45 would remove the limits and allow a person to own the nominated news provider outright. Amendment 257, on the other hand, proposes that the limit should be raised to 60 per cent. I shall explain why we need limits and why we believe that the 40 per cent. figure is right.

During consultation on media ownership we were persuaded that the current 20 per cent. ownership rule for the nominated news provider inhibits dynamic investment and decisive management. At the same time, however, TV is an important source of information and opinion. Viewers have a high awareness of its impartiality. People regard TV news as particularly trustworthy and many rely on it as their main source of information.

A recent poll found that 59 per cent. of people identified television as their primary media source for trustworthy information. Therefore, we must be sure that most people receive high quality and editorially independent views from free-to-air television. ITV news, as the main competitor of the BBC, must provide that. A 40 per cent. restriction could reduce the number of shareholders from five to three. In

addition, Channel 3 licensees will not be allowed to control more than a 40 per cent. share, whether alone or in combination. That will ensure that the service is independent of the licensees, that it is unaffected by any of their commercial concerns, and that it will not force any of the existing shareholders to disinvest. It will also provide ITN's ownership and decision-making structure with a greater degree of flexibility and dynamism than it enjoys at the moment.

Amendment No. 257 proposes a limit of 60 per cent., but that would still not allow Carlton and Granada to own ITN between them. The amendment's provisions would still be subject to the rule of subsection (2), which states that Channel 3 licensees will not be allowed to control more than a 60 per cent. share, whether alone or in combination. The amendment would allow two or three owners, rather than three or four, depending in each case on how many ITV companies have a holding. It is an example of salami slicing: if 40 per cent. is allowed, why not 60 per cent.; and if 60 per cent., why not 75 per cent.? That would be a matter of judgment. We think, however, that increasing the ownership limit to 40 per cent. is about right and that it strikes a reasonable balance between responding to calls for more relaxed ownership rules and ensuring the necessary independence of the nominated news provider.

If the market changes—this is an important point—and there is sufficient competition to ensure plurality for viewers, there will be the flexibility to alter the ownership rules. As we said in the Communications White Paper,

''we expect that the market will eventually ensure that the BBC has sufficient competition for the nominated news provider no longer to be necessary.''

Subsection (3) makes provision for the Secretary of State, in consultation with Ofcom, to repeal or modify the limit on the ownership of the nominated news provider. That will mean that, if the environment changes, we will have the flexibility to change the restrictions on ownership of the nominated news provider.

Amendment 258 would require Ofcom to review the limits on Channel 3 nominated news provider arrangements—which are set out under subsections (8) to (11) of section 32 of the 1990 Act—within 12 months of the commencement of the provision. Clause 377 already requires that Ofcom review all media ownership rules within three years of commencement. That review will include recommendations relating to news provision, and there is nothing to prevent Ofcom conducting a review sooner that that.

Ofcom must under clause 377 produce a report on each review for the Secretary of State. Reports will include recommendations on whether the Secretary of State should exercise her powers to modify, repeal or revoke rules in enactments by secondary legislation. Ofcom must publish every report and it must ensure that they are brought to the attention of those persons whom it considers to be likely to be affected by them.

Ofcom may also, if it considers it appropriate, carry out and publish results of reviews in addition to the

regular ones required under clause 377. It may also make recommendations to the Secretary of State on changes to provisions. Under the new rules, the Secretary of State may if she considers it appropriate also initiate consultations with Ofcom on the ownership limit of the nominated news provider.

We consider that the arrangements will be sufficient to guarantee that news provider provisions are re-examined to ensure their continued relevance. The Bill provides a long-stop requirement for a review every three years. Beyond that period, we see no benefit to requiring Ofcom to review the nominated news provider within a prescribed timetable. It is for Ofcom to determine its own priorities and the appropriate timing for reviews. If Ofcom were persuaded by ITV companies that an alternative ownership structure would safeguard the quality, impartiality and investment in news on ITV, changes may be made sooner rather than later.

I hope that the hon. Member for Ryedale is convinced that the changes are necessary and I therefore ask him to withdraw the amendment.

John Greenway (Conservative, Ryedale)

Towards the end of his remarks, the Minister gave a reasonably optimistic view of the potential for review and change, such as to make amendment No. 258 unnecessary. However, we think that a review in the short term would make sense. There is clearly not a meeting of minds on the issue of continuing with the nominated news provider system. I cannot see the logic behind the argument that it is okay to go up from 20 per cent. to 40 per cent. but not okay to go up to 60 per cent. Rather than continuing to argue about amendment No. 44, we will press it to a Division in order to register our view.

Question put, That the amendment be made:—

The Committee divided: Ayes 8, Noes 11.

Clause 339 - Changes of control of Channel 3 services

Kim Howells (Labour, Pontypridd)

I beg to move amendment No. 550, in

clause 339, page 289, line 3, leave out 'regional'.

Peter Atkinson (Conservative, Hexham)

With this it will be convenient to take the following:

Government amendments Nos. 551 to 567.

Government new clause 39—Changes of control of Channel 5.

Government new clause 40—Action following review under s.[Changes of control of Channel 5].

Kim Howells (Labour, Pontypridd)

The amendments are another key component in the implementation of the recommendations of the Independent Television Commission's review of the programme supply market.

As hon. Members will know, the Government asked the ITC to undertake the review in response to concerns expressed during consultation on the draft Bill about the overall economic health of the programme supply market. We wanted to establish the facts, including the likely impact of changes to the media ownership rules, and consider ways in which the market might operate more efficiently and a strong UK production base be encouraged. The ITC's report was published in November and has commanded respect from the whole industry.

We have already heard that the ITC's review concluded that the Government's proposals for reducing barriers to international investment and ownership could lead to a number of benefits, including increased investment for programming, access to new management and expertise and talent, new approaches to commissioning, and access to critical mass and distribution. The ITC did, however, recommend that we introduce a range of new measures as an insurance policy against any risk of an adverse impact on UK programming.

We listened to the ITC and acted on its recommendations. We have already considered changes to provisions relating to independent production and regional production. The amendments will implement another ITC proposal, which is that clauses 339 and 340, which require Ofcom to undertake a review of the change of ownership of Channel 3, should be strengthened and extended to cover Channel Five.

Amendments Nos. 550, 551 and 562 extend the scope of clause 339 to apply the change of control provisions not only to a regional Channel 3 service but to a national one.

Amendment No. 553 extends Ofcom's duty to review the effect on regional programming in the event of a change of control of Channel 3 to cover regional production, original productions and news and current affairs programmes. Amendment No. 559 makes special provision in the case of a review of a national Channel 3 service.

Clauses 339 and 340 allow Ofcom to vary licence conditions as a result of their review. Amendment No. 565 allows Ofcom, when doing so, to take into account the performance of the licence holder throughout the 12 months immediately before the date of the relevant change of control instead of in a three-month period during the previous 12 months. That will ensure that a new owner of the Channel 3 service cannot run it down. Where the old owner was performing in excess of the minimum licence requirements, the new owner will not be able to retreat from that position. For the

new owner, the baseline will be raised from what it was in the licence to what the previous licence holder actually produced throughout the 12 months before the licence changed hands.

Amendments Nos. 552 and 564 are consequential and effect the substantive changes made by amendments Nos. 553 and 559. Amendments Nos. 554 to 558 are minor drafting changes to clause 339. Amendments Nos. 566 and 567 are similarly small amendments to clause 341 to ensure consistency of drafting.

New clauses 39 and 40 require Ofcom to undertake a similar review to that provided for in relation to Channel 3 in clauses 339 and 340 in the case of a change of control over Channel Five, and provide the same power to make variations in the licence. The provisions, and the other amendments tabled as a result of the ITC's review, are designed to help ensure that the United Kingdom has a healthy programme supply market, able to deliver a wide range of high-quality programmes for the home audience and better able to compete in the global market.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I, too, admire the work of ITC in carrying out its recent review of the programme supply market.

I shall concentrate on new clauses 39 and 40, which appeared late in the day. That had less to do with implementing the recommendations and more to do with craven surrender to the lobbyists. I draw the Minister's attention to the report in The Guardian on the new clauses, which states:

''In an effort to pre-empt a revolt in the House of Lords, new clauses will give the government and . . . Ofcom an influence over Channel 5's programming if the broadcaster is sold''.

This morning, the Minister expressed admiration for Channel Five's efforts since being established, but it is still a fairly small and weak broadcaster. It is not making money, and it does not have a very large share of the market. I hope it will grow; we have been discussing the possibility that it might do so in time, but it is still a fragile flower.

Kim Howells (Labour, Pontypridd)

Does the hon. Gentleman agree that Channel Five is in a far better state than AOL/Time Warner?

John Whittingdale (Conservative, Maldon and East Chelmsford)

That may be true, certainly in terms of the scale of losses. That said, the Government cannot do very much about AOL/Time Warner, but they can help Channel Five.

What really disturbs me about new clauses 39 and 40, and similar clauses that cover Channel 3, is the confusion in trying to determine the quality of content and linking it with ownership. The Minister, slightly to my surprise, was quite open in saying that the purpose of the new clause was to raise the threshold in the event of a change of ownership. He is saying that it is all right for an existing owner to cut back on production outside the M25 area as long as it is still above the minimum. It would be fine for an existing owner, who might be achieving 30 per cent., to cut back to 25 per cent., but if there is a change of ownership, the threshold goes up to its level when the change of ownership takes place.

It is not clear why a new owner should have to deal with a completely different licensing requirement to the existing owner. If the Minister believes it necessary to amend the terms of the licence, that should be possible; it should not necessarily happen just because the ownership changes. The owner should inherit the terms of the existing licence and should not suddenly be subjected to completely new terms. That is what I object to in new clauses 39 and 40, which will impact more seriously on Channel Five where there could be a change of ownership. There is a fear that poor old Channel Five may be subject to more and more regulatory burden without gaining a new owner. Therefore we need to ensure that we are not making life more difficult for what is still a struggling channel.

The rest of the debate is in Hansard.