Communications Bill

House of Commons, 25 February 2003.

New Clause 3 — Composition of Services in Radio Multiplexes

Kim Howells (Labour, Pontypridd)

I beg to move, That the clause be read a Second time.

Alan Haselhurst (Deputy Speaker, Saffron Walden)

With this it will be convenient to discuss the following amendments: No. 158, page 265, line 12, [Clause 303], at end insert 'and'.

No. 159, in page 265, line 13 [Clause 303], at end insert 'and music'.

No. 160, in page 265, line 16 [Clause 303], at end insert

'taking into account the way in which the existing range of programmes and music (taken as a whole) is calculated to appeal to a variety of tastes and interests'.

No. 181, in page 266, line 6 [Clause 304], leave out from 'services' to end of line 8.

No. 182, in page 266 [Clause 304], leave out lines 20 to 30.

No. 162, in page 267, line 4 [Clause 304], after 'news', insert 'and music'.

Government amendment No. 65.

Government amendment No. 68.

Kim Howells (Labour, Pontypridd)

I will deal first with new clause 3. At present, clause 239 allows the Secretary of State to set a minimum percentage of television multiplex capacity that must be devoted to broadcasting services and not, for instance, to data services. The Office of Communications may set a higher percentage in a particular licence, but not a lower one. There is a no similar provision for radio, and consequently any change in the percentage for broadcasting material on a radio multiplex can be made only by order.

We now think that it would be more sensible to bring these provisions into line by replicating the television provisions for radio multiplexes. This would allow Ofcom, rather than the Secretary of State acting through Parliament, to set a higher percentage for the minimum amount of broadcasting data that must be carried on a particular radio multiplex. The percentage set by the Secretary of State would still represent the lowest percentage that could be specified in a licence.

Amendment No. 65 corrects a minor omission from earlier drafting. Paragraph 3 of schedule 18 is a transitional provision to ensure that contracts and agreements between relevant parties are not terminated because the prevailing regime of licensing changes to one of general authorisations in cases where the contract or agreement depends on one or other of the parties holding a particular licence. Although it is mainly aimed at the holders of telecommunications licences, it also covers cases in which a Broadcasting Act licence may no longer be needed for a particular activity as a result of the Bill.

Paragraph 3(2) of schedule 18 defines "relevant licence" for the provisions of the paragraph. The list should also include satellite radio services as defined in section 84(2)(b) of the Broadcasting Act 1990. Such licences will be abolished and most services will be provided under radio licensable content service licences. However, it is conceivable that some services that currently need a satellite radio service licence might not need a radio licensable content service licence. That outcome will be made more likely because the Bill changes the jurisdiction rules. Our minor amendment rectifies that omission so that the list of licences to which the provisions apply is comprehensive.

Amendment No. 68 is to schedule 19 and repeals section 54(7) of the Broadcasting Act 1996 which is now superfluous.

Rosemary McKenna (Labour, Cumbernauld and Kilsyth)

I am interested in amendment No. 65. The Minister will be aware that many hon. Members, especially those in the cross-party music group, are concerned that local radio stations play the same music throughout the country and that there is no diversity. Will he reconsider our concerns and those of the industry and require Ofcom to ensure that local music is treated in the same way as news?

Kim Howells (Labour, Pontypridd)

We discussed that at great length in Committee and will revisit it on Report. I know that my hon. Friend cares passionately about the subject. I assure her that we want to do all that we can to promote and strengthen the localness and regional identity—by which I mean the cultural identity as much as anything else—of areas. As music is such an important factor in the health of broadcasting, especially radio broadcasting, we will give her suggestion serious consideration.

Section 54(7) provides for section 94 of the 1990 Act to apply to radio multiplex services. Section 94 gives Ministers power to require radio broadcasters to include specified announcements in their services or to refrain from including specified matters in those services. The Bill reproduces section 94 in clause 326 and repeals it. The application of section 94 by section 54(7) of the 1996 Act is therefore no longer needed.

John Greenway (Conservative, Ryedale)

New clause 3 seems sensible and will help to ensure that Ofcom has the flexibility to set higher percentages devoted to radio multiplexes which match the television arrangement, as the Minister said. However, as I said several times in Committee, we want a greater sense of urgency and a greater priority afforded to the roll-out of digital radio. The new clause would allow Ofcom to provide more digital radio opportunities if more of the multiplex was devoted to radio. I hope that the need to ensure a faster uptake of digital radio is well registered in the Minister's mind. We will need to consider his explanation of amendments Nos. 65 and 68, but we are happy to accept that they are minor drafting amendments.

I shall speak to amendments Nos. 181 and 182, which relate to the new provisions in the Bill now renumbered as clause 304, which seek to define localness for commercial radio stations. It is fair to say that the clause is the cause of deep resentment in the commercial radio industry. The clause was not included in the original draft Bill and was added after the Scrutiny Committee did its excellent work on the draft Bill, not as a result of anything that the Scrutiny Committee said about the original draft Bill, but as a result, we strongly suspect, of the decision by the Secretary of State—a decision that we wholly applaud—to change the original three-plus-one requirement to only two-plus-one.

That could be said to have given rise to concern that there may be a greater concentration of ownership, but the question for the House is whether the change justifies the far-reaching and, some would say, draconian powers given to Ofcom in respect of clause 304. The clause has been described by the Commercial Radio Companies Association as

"an astonishing leap from a proposed duty to protect output to a recipe for interfering in microregulation."

The CRCA is also critical of the fact that the clause makes no reference to the views of listeners. It is surely more important to base judgments on localness—on what the listeners think—than on the entirely subjective judgment of Ofcom, notwithstanding the requirement for it to consult with persons whom it thinks may have a view.

Nick Hawkins (Conservative, Surrey Heath)

As my hon. Friend knows, I have a long-standing interest both in communications, having served on the Committee that considered the previous Bill when we were in government, and in commercial radio. I endorse my hon. Friend's comments about the concerns of commercial radio companies, and urge him to press the Government hard. It would be hugely damaging if the regulator had powers that were so draconian, yet could not take account of the views of local people. That is the crucial point.

John Greenway (Conservative, Ryedale)

I am grateful to my hon. Friend for his intervention. I hope that by the time I sit down, he will think that I have pressed the Government sufficiently hard on the matter. He intervenes at an extremely interesting point. I was about to explain to the House how we approached the issue in Committee. I commend the debates in Committee on the matter, particularly the comments of my hon. Friend the Member for Chelmsford and East Maldon—sorry, Maldon and East Chelmsford (Mr. Whittingdale). We had seven weeks to get that right, but I still got it wrong.

In Committee, we sought to persuade the Minister to drop the clause. If I recall correctly, we even had a vote—quite a rare vote—in the Committee— [Interruption.] which the hon. Member for Ellesmere Port and Neston (Mr. Miller) says we lost. That is correct. We were not able to persuade the Minister. He insisted that the clause should be retained.

Not only did we win the argument, but with the help of my hon. Friend the Member for South Cambridgeshire (Mr. Lansley), we tried to persuade the Minister to make the provisions of the clause more akin to a longstop power for Ofcom to intervene, but to allow a self-regulatory approach, which is a key objective for Ofcom. Again, the Minister was unmoved, so today we are suggesting another approach which, although we do not agree with it, acknowledges that the clause might have some value. Let us take that as a base and assume that the clause has some value. We want to remove the elements that we and the commercial radio industry believe to be potentially the most damaging, and for which no real justification has been made—namely, the power of Ofcom to interfere in the day-to-day running of a local radio station to the extent that the station must employ local people, provide local training and development, and use

"premises within the area or locality"

served by the station.

We are in complete agreement with the general objective that local commercial radio stations should provide a local service. The vast majority thrive because that is precisely what they do. Since serving on the Committee, I have had the opportunity to visit Scotland. I went to Radio Clyde, and I commend a visit to it to the Minister. Everyone there would be very pleased to see him, and I am sure that they would apply to him the same arguments that they applied to me. At the end of our discussion, however, it was clear that we agreed with them, whereas, at present, the Minister would not.

Some years ago, Radio Clyde invested heavily in substantial new premises in Clydebank, and it runs its two radio stations from those excellent studios. The programming that it offers has huge appeal to local listeners, and provides the most popular radio stations for the two age groups: Clyde 1 for the younger generation, and Clyde 2 for the older generation. I asked the presenter of a lunchtime programme why they were so popular, and why people listened to them and not to Virgin Radio, Radio 1 or other BBC stations. The answer was, "We relate to the local community. Our output relates to it, and the nature of our whole programme is local. We talk about things that people are talking about locally, rather than nationally." Notwithstanding that, the main item for discussion on the news that day was the fact that there were tanks at Heathrow airport, although I did not see any when I was there.

John Robertson (Labour, Glasgow Anniesland)

As someone who lives only a mile and a half away from the studios that the hon. Gentleman visited, I hope that he drove through Glasgow, Anniesland and that he enjoyed that. May I ask him to cast his mind back to when we were discussing these matters in Committee? The great fear was that commercial radio would leave itself open to takeover by concerns outside this country. Working on the basis of what had happened to radio in America, it was felt that it would become centralised but still have a localness about it. Radio Clyde has been so successful owing to the fact that it is a west of Scotland radio station—or stations, as the hon. Gentleman rightly says—that caters for local people. This American import, which could happen—I am not saying that it will, but it could—would get rid of stations such as Radio Clyde.

John Greenway (Conservative, Ryedale)

There is so much that one could say in response to the hon. Gentleman's intervention. Yes, I did enjoy my visit to Glasgow. I particularly enjoyed going to Hampden Park for the Scotland-Ireland match, although not many locals enjoyed the result. The point that I would make to him, however, is that the Radio Authority does not have such powers now, so why is it thought necessary to give them to Ofcom? The Radio Authority has not found it necessary to intervene in this way. The idea that some gabby cabby in New York could have a 10-minute phone-in to Radio Clyde because it was now being transmitted from the United States of America is complete nonsense. Radio stations will be able to provide a local service only by using people on the ground locally. The issue is whether we should be asking Ofcom to micro-manage what the commercial radio stations do to such an extent as is provided for in the Bill, or whether we should point out that local radio stations have been hugely successful and that the most successful are those that provide the most local service. Why do the measures need to extend so far?

John Grogan (Labour, Selby)

Is not the simple reason for tighter regulation that media ownership rules are loosening? Does not the hon. Gentleman fear the experience in the United States, where Clear Channel has removed most concepts of localness from many of its stations?

John Greenway (Conservative, Ryedale)

No. There are real dangers in trying to predetermine what commercial radio stations may need to do. The issue for the regulator is content, to which the licence granted relates. That is the most important issue and the Bill provides for the powers that are needed. I urge the hon. Gentleman to read the three or four sentences that we seek to omit, which relate only to micro-managing of employees, training and premises.

Pete Wishart (Scottish National Party, North Tayside)

I am encouraged by the hon. Gentleman's knowledge of the radio stations of Scotland. I am sure that Radio Clyde is listening carefully to his remarks. As to local content, the hon. Gentleman seems to be referring only to the spoken word. Does he not agree that music is also important and that local acts should be included?

John Greenway (Conservative, Ryedale)

I agree with the hon. Gentleman's sentiment and will mention music later. It should not come as a surprise to any hon. Member that a Conservative party spokesman is familiar with the United Kingdom as a whole because we believe in precisely that.

Given the track record of local commercial radio stations such as Radio Clyde and Radio Forth, it is something of an insult—at the very time when the Government are promising a light-touch regulatory future—to give Ofcom such far-reaching powers as would allow it to question and determine who a station employs, how much and where employees are trained, and how premises are used. Those issues are not central to whether or not a station can be defined as providing a local service—which is determined by reference to content and the relationship between a station and its listeners. Those are matters that the broadcasters themselves should be allowed to determine. As long as a broadcaster provides content output that listeners believe to be local, that should be the test when determining whether or not a station meets the local content requirement.

In Committee, members of the Front Benches across parties agreed that Government and Parliament must be careful not to impose regulatory requirements on commercial television and radio broadcasters that may not be capable of being resourced in future. I understand the point made by the hon. Members for Selby (Mr. Grogan) and for North Tayside (Pete Wishart) that a greater concentration of ownership may mean that some studios may not be as local as now. However, given the harsh commercial realities under which many stations operate, surely that is for them to determine. They will not be successful in providing a local service unless they have local people on the ground. Interestingly, Radio Clyde—having moved to Clydebank—would now like a studio in Glasgow city centre, as that is where many of the people they want to interview are based. Scottish Television makes great use of its studio in Edinburgh for interviewing MSPs for local news and current affairs opt-outs. It seems physically impossible to provide a local service without a local presence but that is for the broadcasters to sort out, not a matter for interference by the regulator.

Nick Hawkins (Conservative, Surrey Heath)

Does my hon. Friend agree that in the early days of successful local commercial radio the commercial freedoms that he has argued for both on Report and in Committee made smaller stations most effective? He has given examples from Scotland, and I would point to a station that I knew well in the past—Radio Wave in Blackpool, which was successful because it had the very freedoms that would now be micro-managed, as proposed by the Government. We are opposed to that.

John Greenway (Conservative, Ryedale)

As ever, my hon. Friend is extremely helpful and has added to my argument.

Commercial radio is not hugely profitable. To make money, it has to be extremely successful. Success is achieved by offering something different—the local service. We should give broadcasters more credit for what they have achieved and ensure that the obligations—the longstop powers for Ofcom—agreed in the Bill are proportionate and necessary. The provisions in clause 304 are too prescriptive and give Ofcom too much power to micro-manage the workings of individual radio stations. As I have already said, I know of no difficulty experienced by the Radio Authority in ensuring localness in the past, and no case has been made for Ofcom to have such powers of interference in future. We therefore urge the Government to think again. I believe that they will encounter difficulty in relation to the clause in the other place, and it would be helpful if the Minister could signal his willingness to reconsider the matter, especially as the clause, as I have already said, was not subject to pre-legislative scrutiny.

Turning briefly to amendments Nos. 158 to 160, and amendment No. 162, I sympathise with hon. Members who are concerned about the interests of the music industry, especially about local music. Local bands feature prominently on local radio, more so on commercial radio than on the BBC as a matter of fact. I hope that Ofcom will keep in mind the views of the House when assessing and judging the quality of local service provision. It is unthinkable that "local material"—the definition used in clause 304—should be interpreted to exclude local music. Putting it more positively, music is the mainstay of much radio content, to answer the point made by the hon. Member for North Tayside in his intervention. Local music contributes greatly to the local material on local radio.

Kim Howells (Labour, Pontypridd)

It does not.

John Greenway (Conservative, Ryedale)

Perhaps it needs to feature more, but I would be surprised if the Minister said that local material, as defined in the Bill, should not include music—it should. Whether the word "music" needs to be added to that definition is a matter for the House to determine when it has heard the arguments that are about to be made by the hon. Member for Glasgow, Anniesland (John Robertson). However, we have considerable sympathy with the concerns of the music industry. As I have already said, in my experience, commercial radio stations—clause 304 applies to them, not to the BBC—are doing more to promote local music than the BBC.

John Robertson (Labour, Glasgow Anniesland)

I should like to draw the House's attention to my entry in the Register of Members' Interests. May I also add that British Music Rights gave me a ticket to last Thursday's Brit awards, which helped me to compile the information that I am about to use? I had an excellent time.

May I tell the hon. Member for Ryedale (Mr. Greenway) that while he was enjoying the Scotland-Ireland game in Glasgow, I was in my office in London enjoying the England-Australia game on television? I know that he would get back to me if I did not mention that.

I wish to speak to amendments Nos. 158 to 160, and amendment No. 162, which I tabled with my hon. Friend the Member for Gloucester (Mr. Dhanda), who unfortunately cannot be here as he is away on constituency business. The Bill could damage British music creators if it is not amended. A letter, which was also sent to me, has appeared in the Financial Times. In it, Mr. Tony Hadley, who used to be the lead singer of Spandau Ballet, said:

"Looking at the music business now, I realise how lucky we were when we started Spandau Ballet in the early eighties. We found our audience through a vibrant live music scene and through national and local radio stations playing music which, like ours at the time, was outside the mainstream. Musicians today have far fewer opportunities, and the Government's approach to the Communications Bill threatens them still further when it should instead be a great opportunity."

Michael Fabricant (Conservative, Lichfield)

Will the hon. Gentleman go further back in time and acknowledge the role of stations such as Radio Caroline and Radio London, without which we would never have heard of the Who or even the Beatles?

John Robertson (Labour, Glasgow Anniesland)

The hon. Gentleman is all too familiar with those radio stations. I could mention Radio Scotland, which was based somewhere in the Irish sea, and Stuart Henry, who was a great DJ from our parts. I agree with the hon. Gentleman, and commend those stations.

Mr. Hadley continued:

"Opening up our radio market to US competitors"—

I alluded to that in my intervention on the hon. Member for Ryedale—

"when the US does not grant the same rights to European operators is just foolish. US operators will do here what they have done in their home market—buy up stations, merge their operations, centralise and computerise their programming, and generate their playlists entirely from computers."

I expressed concern about that in my intervention. Mr. Hadley concluded:

"UK artists will undoubtedly lose out to US artists and both musical diversity and local character will also suffer. Fewer operators means fewer stations, fewer types of records played, fewer opportunities and lower earnings for UK performers. All for absolutely no corresponding benefit whatever for UK music or audiences."

A letter in The Guardian today signed by 29 professional artists says:

"The government's proposed changes to the radio sector make it all the more crucial that the BBC deliver on its local and regional remit to support the arts. The current bill offers a great opportunity for the government to do something. Yet it seems deaf so far to our pleas."

Nick Hawkins (Conservative, Surrey Heath)

I have been listening carefully to the hon. Gentleman. What he has just said about the BBC and its responsibility for its remit leads me to ask whether he has received letters from his constituents complaining bitterly that the BBC is dumbing down and chasing ratings, and that we are losing the best public service aspects that used to be the hallmark of the BBC? I am receiving lots of letters like that—is he?

John Robertson (Labour, Glasgow Anniesland)

I have received letters. If they were only about the BBC, I would not be so concerned, as we could tackle that, but they are about problems across the board, including those experienced by commercial radio stations. However, the hon. Gentleman is correct.

The letter in The Guardian continues:

"An NOP opinion poll in January found that 68 per cent. of 15 to 24-year-olds want to hear a wider variety of music played on general radio stations, and some 72 per cent. of people would support measures to encourage local radio stations to cover local music. It is time this government started listening."

Following my contribution today, I hope that that will be addressed.

The Bill may have been amended to provide reassurance to other creators, primarily independent television producers, but the introduction of relatively stiff content regulation has not been extended to cover music. Given the Government's deregulatory approach to foreign ownership and consolidation, particularly in relation to the radio sector, the omission of any consideration of, or means of redress for, music creators isworrying. If one asks people what single thing has had the biggest influence or effect on them, most would say music. The young in particular are influenced by the music industry. At a time when politics is not, shall we say, high on their list of priorities, is it any wonder that they switch off when we cannot even be bothered to consider their favourite pastime?

The amendments to clauses 303 and 304 are intended to counteract the potential for consolidation in the local radio market undermining musical diversity and local character. They are intended to act as a vital counterbalance to the power that the regulation will give the larger players to control access to, and thereby access within, the UK music market. The Bill defines a local radio operator as one who broadcasts to a specific locality or region within the United Kingdom, not nationwide. Given the technology that exists even now in both digital and internet radio, enabling people to listen to some so-called local stations from anywhere in the country, that premise is surely outdated before even being introduced. No matter how we seek to define it, for music creators local radio is a crucial route to national exposure.

My amendments are important for two reasons. They would provide support for music at grass-roots level, encouraging local stations to cover local musicians and musical events and, more crucially, to support the British repertoire. The more airplay our artists are given, the more likely they are to succeed in the United Kingdom, in Europe, in—importantly—the United States and, indeed, in the world as a whole, and the more likely they are to contribute to the UK economy.

I stress that this is not about setting quotas, as the French do. It is simply about giving our artists a better chance of breaking through. As was pointed out by the living legend Tom Jones, whom I saw at the Brit awards last week, "If you don't get played you don't have a career—it's as simple as that."

Amendments Nos. 158, 159 and 160 are intended to enable Ofcom to prevent the diversity of music from being diminished. Diversity of service results from careful approval of a range of programme applications.

Pete Wishart (Scottish National Party, North Tayside)

I, too, had the good fortune to attend the Brit awards on Thursday night; it was indeed a very enjoyable event. When I listen to local radio stations, however, I struggle to detect much local character and content, and presumably more foreign investment and ownership will cause local programming to decline further. Can the hon. Gentleman suggest any ways of encouraging local radio stations to include much more local content in their schedules?

John Robertson (Labour, Glasgow Anniesland)

The hon. Gentleman is a former member of Runrig, a band whose compact discs I have in my house. I enjoyed his music, along with that of his fellow artists.

It is difficult to force people to play certain music, and some would say that we were misusing our power if we did so. Last night I was present at a meeting with a telecom group, attended by the new chair of Ofcom. He agreed that local music must be given a chance, and said he would look favourably on any complaint that that was not happening. Perhaps the Minister will consider that when reports are produced on the extent of diversity among radio stations throughout the country. Who knows? Perhaps one day a private Member's Bill will be presented here with the aim of bringing about what the hon. Member for North Tayside (Pete Wishart) wants.

My amendments are intended to tighten the conditions that an applicant must meet in order to secure Ofcom's approval of mid-term changes in the character of a programme service. That would mean a requirement for Ofcom, before approving any mid-term licence changes, to be satisfied that the departure would not narrow the range of programmes and music available, by way of relevant independent radio services, to persons living in the area or locality for which the service was to be provided. Service providers should honour their licence commitments in regard to diversity, unless Ofcom is genuinely satisfied that all the conditions under clause 303(3) have been taken into account in a properly balanced way.

Clause 304 gives Ofcom a general duty to promote and protect the local content and character of local radio, specifically news broadcasts. However, the current definition of local material regrettably fails to provide the crucial safeguard for musical creativity and diversity. It is interesting to compare the conclusions of recent research carried out by commercial radio companies that want the clause removed—the hon. Member for Ryedale mentioned that—with those of the music industry, which wants it amended to mention music specifically. I wholeheartedly agree with that proposal.

The radio industry survey revealed that most young people no longer consider radio to be an important source of news. As I said earlier, however, an NOP world poll found that 68 per cent. of those aged between 15 and 24 would like to hear a wider variety of music on the radio. Perhaps if we supplied that variety the young would see radio stations in a different light, and as well as making local music available to young listeners we politicians might become accessible to them.

Michael Fabricant (Conservative, Lichfield)

Having implicitly criticised the BBC Light programme when I mentioned Radio Caroline and Radio London, I wonder whether the hon. Gentleman agrees that Radio 1 is performing a valuable role in broadcasting more experimental and less mainstream music than many independent stations.

John Robertson (Labour, Glasgow Anniesland)

I shall have to take the hon. Gentleman's word for that. I have now reached the age at which the music broadcast by Radio 2 becomes more one's kind of music. Radio 1's slot on the dial is sadly ignored these days: I am obviously getting very old. I understand what the hon. Gentleman means, however. I do not share the fears apparently felt by some of his colleagues about the BBC; I quite enjoy its coverage. My greatest fear is that it will be dumbed down, and will become a national rather than a local and regional service—covering, of course, not just regions but nations. That is intended for my nationalist colleagues on the Opposition Benches.

While music may be given appropriate recognition by Ofcom as material relevant to the definition in clause 304, I do not think the clause properly reflects the significance that music clearly has for the public—particularly younger audiences—in the context of local radio services. For the avoidance of doubt, Ofcom should be specifically required to take account of local music when drawing up guidance for radio stations on local material.

In amendment No. 161, which unfortunately was not selected, and in amendment No. 162, which was, I have sought to incorporate a safeguard for local jobs and skills in the music sector. The employment or use of local people is one of the determining factors in the requirement for local links to have been observed, but it is also important for that to reflect the way in which local radio provides a vital platform for the performance of local musicians and new bands that are establishing local fan bases.

I commend what the Government have done and the scrutiny of the pre-legislative Committee. Along with many Members on both sides of the House, however, I was disappointed by the omission of music. Music is singularly the most important thing in most people's lives, as I have said. We think that it is nice to talk about politics, but then again, we would, wouldn't we? Fortunately, I doubt whether there is a single Member of this House who does not regard music as one of the greatest influences in their lives, particularly during their formative years.

I hope that the Minister will take on board what I have said about our amendments, and that he will examine the issue and ensure that the word "music" appears in the Bill, and that musicians and local radio stations are encouraged to ensure that we develop a strong and vibrant music industry.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

I rise to express sympathy with the amendments moved by the hon. Member for Glasgow, Anniesland (John Robertson), and to express our view that the amendments on local commercial radio moved by the hon. Member for Ryedale (Mr. Greenway) should be resisted. As it stands, clause 304 provides quite a good arrangement for Ofcom's powers in respect of local radio. The hon. Member for Ryedale was right to point out that these discussions are continuations of those that began in Committee.

The hon. Member for Glasgow, Anniesland was right to point out that news may no longer be the principal item of local interest on radio stations. He put me in mind of a report that I read yesterday on the transition that is taking place in South Korea, where younger people in particular are turning to the internet as their primary source of news media, and a similar shift may well occur in the UK. As we write legislation, we must be aware that if we define local content in terms of news, even though people are no longer turning to radio stations to look for news, we may be missing the point. That strengthens the hon. Gentleman's argument that local music may be a primary determining factor in people saying that they want a local service, rather than a national one. They know that on a local radio station, they will get the local music content that they may not get anywhere else.

The hon. Member for Selby (Mr. Grogan) rightly mentioned the fear of the worst-case scenario—of what might happen if these powers are not given to Ofcom—and that is why we want to resist the amendments moved by the Conservatives. In a sense, we have to return to the underlying principle, which is that a radio spectrum broadcasting licence is a privilege. There is a limited supply of such licences, and conditions can be associated with the awarding of them that express certain public goods that go beyond those that the market alone might provide. Indeed, where the market alone does provide local radio stations that use local people, work from local premises, provide local music content, and so on, there is no reason for Ofcom to intervene. However, we have a legitimate fear, based on the experience of other countries, that that might not always remain the case. Owners of radio stations could seek to break down the local infrastructure, which is why provisions that extend the public good beyond mere content by referring to other requirements are significant.

The hon. Member for Ryedale said that we should talk only about content, but we disagree. In other areas, particularly local television production, we are going beyond the field of content by saying that a licence can have associated conditions that go beyond mere content of the material put out by referring to the media infrastructure. The awful phrase "media ecology" was used in Committee—I do not know whose fault it was; I certainly do not want to claim ownership of it—but it is true that elements such as the skill bases in local media and the associated training take a very long time to build up.

As I said in Committee, I am particularly sensitive to this issue. I come from Sheffield, which has quite a good media environment. A couple of local universities—Sheffield and Sheffield Hallam—have great media schools, but we are not the regional capital. The regional capital is Leeds, and even a reduction in local content that moved everything up to Leeds would be significantly to our disadvantage. As a result, a young Sheffielder who wanted to get into music, the media or broadcasting could be discouraged, because there would be nothing on his or her doorstep. It is essential that we retain localness, and I hope that we can keep clause 304 as it is. We hope that these powers will not have to be used in any significant way, and that Ofcom can adopt a very light touch. The media environment will be such that local radio licence holders will in any case want to do all the right things. However, we have to be prepared to use back-stop powers in situations where owners decide to do things differently and seek to withdraw local services for financial reasons. I do not believe that Ofcom would be so silly as to realise the fear that has been expressed by making the conditions so onerous that they put everybody out of business. That would be a nonsense. The reality is that there are plenty of bidders for limited spectrum local licences that are, as I said, in effect privileges. It is entirely right that we have a regulating public body that ensures that, in return for that privilege, we extract certain public goods that the market on its own may not deliver in all circumstances.

Andrew Lansley (Conservative, South Cambridgeshire)

I want to offer a word of support for my hon. Friend the Member for Ryedale (Mr. Greenway), who spoke to amendments Nos. 181 and 182, and to speak briefly about the other amendments. The hon. Member for Glasgow, Anniesland (John Robertson) advanced a very good argument for the inclusion of music in material for local radio broadcasting, and I do not disagree with the desirability of that. Of his various amendments, I hope that the House and the Government will incline towards amendment No. 162, so as to make it clear that music is comprised especially within the definition of local material. I cannot go along with him on amendment No. 160, however. If we start to litter the Bill with references to the desirability of appealing

"to a variety of tastes and interests",

one wonders why that objective was elevated to a general duty in clause 3. If that duty is included in clause 3, it should be one of Ofcom's strongest considerations in taking into account a range of other matters. I therefore see no need to repeat the provision in clause 303.

My hon. Friend the Member for Ryedale put forward a very strong argument concerning the manner in which Ofcom should regulate the local content and character of services. Given the desire expressed in clause 6 to maintain only those regulatory burdens that are necessary, it seems entirely inconsistent for Ofcom to be asked elsewhere in the Bill not only to pursue a purpose—the maintenance of local programming and content—but to specify precisely how that is to be achieved. My hon. Friend is seeking to remove from the Bill not the purpose of local programming, but Ofcom's effective obligation to specify training, employment, premises, and so on. In setting up Ofcom, it is clear that we must try to move away from that, and try instead to extend commercial freedom in terms not only of ownership, but of the manner in which such stations are run.

The hon. Member for Glasgow, Anniesland will recall from our deliberations in Committee examples such as 'Clear Channel', in Australia. It may have set out with a commercial desire and an imperative to cut costs that led to centralisation, but in so far as the result was a reduction in localness, it proved to be a commercial danger and a handicap to those services. The argument rests on the commercial imperative of localness as part of local radio stations. In the absence of it, any amount of legislation will not lead to localness. If it exists, we do not need to legislate for it to happen. If we pursue local content as a purpose, Ofcom will be able to regulate with a very light touch, because it will discover that that is what the radio stations themselves are setting out to achieve.

The Minister took us briefly through new clause 3 at the beginning of his comments, but I must confess that I am still unsure about the purpose of it. The Broadcasting Act 1996 provides for a 90 per cent. prescribed percentage for digital multiplex services. In 1998, that was reduced to 80 per cent. by way of statutory instrument. The nature of the argument is how far can one go while still retaining the necessary digital capacity to ensure not only the provision of services, but the CD quality of digital audio broadcasting, and the bit rate available for it. Those matters are quite technical, and it can happen over time that the parameters change, not only commercially but technically.

Section 54 of the Broadcasting Act made it possible for the Secretary of State to come to Parliament to change the percentage up or down, but the Minister is asking us to remove the ability to take that percentage below 80 per cent. I cannot construct an argument for why it would be necessary to go below 80 per cent., but changes in technology could mean that the requisite quality for digital audio broadcasting could be achieved with a lower bit rate and, at the same time, the simulcast of television services was considered desirable. It does not automatically follow that because something is broadcast on television, there is no demand to listen to it. For example, some people like to listen to news programmes from the television and others are happy to listen to soaps, perhaps with additional commentary, but not to watch them. Such services are not included in the list. It does not automatically follow that 80 per cent. is now and for all time the minimum percentage of capacity on the digital multiplex that is required for those particular services. I am, therefore, slightly concerned that the Minister is attempting to remove that flexibility.

Michael Fabricant (Conservative, Lichfield)

One of the attractions of the Bill was the light touch that it would give to Ofcom, so I am a little concerned that there will now be a little too much prescription. Hon. Members have made some interesting points. I especially liked the comments from the hon. Member for Glasgow, Anniesland (John Robertson), who mentioned the need for experimentation in music. It is its unique funding—as the BBC would call it—that enables Radio 1 to support that, and it is to be congratulated on it. Other, commercially funded, radio stations are attempting to do the same. However, it would be wrong for the Government or Ofcom to try to prescribe programming policy.

Ofcom makes the decision when it issues the licensing agreement in the first place. Once the agreement is made, it must be up to the independent radio broadcaster to decide for itself how to maximise its audience. As my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) said, the imperative for independent broadcasters is to be commercial. Ofcom can legislate as much as it likes, but it will do no good if a radio station goes out of business—as has happened with Centre FM, which was based in Leicester, and Gwent Broadcasting in Wales. The old Independent Broadcasting Authority tried to prescribe too much the sort of programming that those radio stations should put out. As a consequence, their overheads were too high and the advertising revenues they received were not enough to sustain cashflow and allow the stations to broadcast.

Simon Thomas (Plaid Cymru, Ceredigion)

The hon. Gentleman is making an important point about the commercial aspect of radio broadcasting, but that is only one side of the coin. The spectrum is owned by the nation and sold or licensed to those who wish to make profits from it. That is an effective use of the market to deliver a service to a wide number of people, but we must acknowledge an ongoing public service remit throughout all aspects of broadcasting. It is stronger in the BBC and weaker in commercial radio, but still present. We must ensure that the Bill contains a framework sufficient to ensure the relevance of local broadcasting, whether commercial or not.

Michael Fabricant (Conservative, Lichfield)

The hon. Gentleman raises an interesting point. It is almost a philosophical question. One could argue that if a radio station is popular and pulling in a large audience, it is providing a public service. One could also argue that if a radio station is broadcasting in the Reithian tradition of programmes that people ought to hear but it has no listeners, it is not providing a public service. As in all things, it is a question of balance. The thrust of the hon. Gentleman's question is right. There is a duty of care, including the need to ensure that the spectrum, which is one of the nation's assets, is used wisely. That includes the content of programming, such as music and news, and its localness—or indeed its Welshness, as the hon. Gentleman would have it.

If a radio station is solely funded through the sale of advertising time, it must be popular. It is not for Ofcom to impose conditions that would force the station into bankruptcy, because it would provide no public service if that happened.

John Robertson (Labour, Glasgow Anniesland)

We need a balance between what is local and what is popular. I am concerned that the popular takes over and the local is forgotten. Therefore, we need someone who oversees the matter and Ofcom will be in an excellent position to do that. It will have a light touch, but it is necessary. One of the great successes of the local radio stations that have survived is their identification of local audiences. The radio stations that fell by the wayside made the mistake of trying to be too popular.

Michael Fabricant (Conservative, Lichfield)

I disagree with the hon. Gentleman when he draws a distinction between local and popular as though they were mutually exclusive. They are not. As my hon. Friend the Member for South Cambridgeshire pointed out, Clear Channel in Australia—if not in the United States—discovered that a more centralised programming format, with all its output coming from Melbourne, proved to be unpopular. The whole point is that local can be popular. Ofcom should be a regulator, but it should have a light touch. The House would be right to resist anything that would mean Ofcom could interfere in the day-to-day programming of radio or television broadcasting.

Kim Howells (Labour, Pontypridd)

I wish to set the hon. Member for Sheffield, Hallam (Mr. Allan) straight on the origin of the appalling phrase "broadcasting ecology". I suspect that it was born on the media pages of The Guardian, but it was nurtured on the south-facing slopes of the Rhondda by the hon. Member for Lichfield (Michael Fabricant), who took an inordinate interest in that ecology. The hon. Gentleman reminded us of the great difficulties in trying to balance the question of localness and the worthy Reithian principle, with the hard realities of broadcasting in a commercial world. I congratulate him on having done that with great clarity.

Amendments Nos. 158 to 160 were tabled by my hon. Friend the Member for Glasgow, Anniesland (John Robertson). Among other things, clause 303 sets out the factors that Ofcom must take into account before agreeing to a request for changes to the character of a licensed radio service. A licence will contain conditions that are appropriate to securing that the character of a licensed service, as proposed by the licence holder when making his or her application, is maintained. Ofcom will be able to vary those conditions if, and only if, the departure would not substantially alter the character of the service or narrow the range of programmes available, which is an important consideration. The departure in the case of local licences would need to be conducive to maintaining or promoting fair competition or require evidence of significant local support for the change.

The final two elements added by the new clause are new factors for Ofcom to consider. The Government accept the case for some further relaxation to make it easier for licence holders to respond to local audience expectations and demand. In well-developed major markets, Ofcom will now also be able to allow format changes in mainstream stations to facilitate competition. That could result in stations going head to head, where it is felt that that would be beneficial to competition and to listeners.

Amendment No. 160 proposes that Ofcom should take into account the effect of any proposed changes on the range of programmes and music offered by a service. I have sympathy with the intention behind the amendment. It is clearly important that Ofcom takes into account the effect of any changes on the range of a station's music output. However, that in essence is what Ofcom will have to do under the new clause as drafted, as its purpose is to guide Ofcom in its consideration of changes to the character of commercial radio services.

We all know that commercial radio is about music. It would be impossible for Ofcom to consider the effect of a change in the range of programmes without also considering the range of music on offer. In this context, the two are virtually synonymous, and I do not consider that the amendment would add anything substantial or usable to Ofcom's range of powers. However, I fully expect that, in considering these issues, Ofcom will consider the implications for music.

I congratulate my hon. Friend the Member for Glasgow, Anniesland on raising a matter on which discussion of the Bill has been slow to touch. However, I spend much time travelling around the country, as do many hon. Members. I always listen to my car radio, and there is an incredible sameness and blandness about the music on offer everywhere.

I recently attended the biggest meeting of representatives from the music industry that I have ever attended. They banged their gums about the need to protect local music on radio. I asked what they meant by the term "local music", and no one came up with a clear answer. Does it mean British music or European music? Wherever I go, I hear the same sort of music on the radio.

I have great respect for the hon. Member for Ryedale (Mr. Greenway), but I got lost when he compared the BBC and commercial stations, which have different set-ups. Classic FM is an exception among commercial stations, as I think it was bailed out by American money when no British money was available. I think of Radio 3, and my hon. Friend the Member for Glasgow, Anniesland—who is getting old and past it—has talked about Radio 2. The subject of music and creativity is often discussed on Radio 4, which also some very good arts programmes. I do not see that variety in commercial radio in general. Indeed, I have gone on record with my disappointment about what has happened to Jazz FM. There is an incredible blandness through the day. It still has some decent jazz after 7 pm, thank God, but it disappoints people looking for variety in music, and for specialist music on some channels.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I was also present at last week's Brit awards, which demonstrate what British music is capable of. The BBC has a duty to promote different sorts of music. Radio 1 is a good example, but commercial stations, in the end, are obliged to attract listeners. This debate is more a commentary on the sad state of British music, a lot of the blame for which I attach to programmes such as "Pop Idol" and the various reality TV shows. London has a number of good commercial stations, such as XFM. It provides a very different type of non-chart music and is an example of how a commercial station can provide opportunities that are not always available on the BBC, let alone any other station.

Kim Howells (Labour, Pontypridd)

I agree, and I know that the hon. Gentleman is an avid listener to contemporary music on the radio, as he told us so in Committee. His analysis is broadly correct, and I was careful to say that, in general, the commercial stations around the country to which I listen have a sameness about them. However, the hon. Gentleman is right to say that there are exceptions, and they prove the rule.

Simon Thomas (Plaid Cymru, Ceredigion)

I should like to mention one such exception. I listen to Radio 1 on my way back to my constituency on a Thursday evening, because it opts out and becomes a Welsh station. Bethan Elfyn's two-hour programme covers the Welsh music scene. The programme is very popular, with live bands, reports and reviews and so on. It shows that the BBC can do such things, in contradiction of the contention from the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale). Commercial radio could act in the same way.

Kim Howells (Labour, Pontypridd)

Yes, indeed. I shall take no more interventions on the matter, as I am sure that many stations could be mentioned, but the hon. Gentleman is right: the programme is excellent and a real innovation. I hope that the policy of BBC Wales to nurture local bands and talent will continue, and that it will be replicated around the country. That is happening in some areas.

I note that it has been stated that the amendment would also ensure that Ofcom must be satisfied that all conditions are fulfilled before agreeing to any changes in licences. That is not so, but let us look at the intention. The proposed change would be more restrictive than the current legislation. I have heard no convincing reason why we should take such a retrograde step, which would mean that there could be no departure from the character of a station, even if a change would promote competition, or if there was evidence that people in an area would significantly support that change.

The hon. Member for Ceredigion (Mr. Thomas) gave an example of a programme that has a cult following in Wales. If it were a commercial station, and the amendment were accepted, would we say that the change was not in the original licence condition? We must be very careful and flexible about such matters, so that we do not tie ourselves down to a regime that would not allow the degree of flexibility and innovation that the hon. Gentleman described. If there is considerable local demand for a change, why should the regulator be prevented from agreeing to it? That would be self-evidently wrong.

The hon. Member for Ryedale moved amendments Nos. 181 and 182. We discussed the issues involved at some length in Committee. There is no difference of opinion between me and the hon. Gentleman about the importance of local radio to the community that it serves, nor about the overriding need for local radio to be genuinely local. We do not disagree either about the need for a code to safeguard localness—at least, I do not recall any such disagreement in Committee. We agreed that the code should be designed to ensure that programmes consisting of local material would be included in local services.

I am pleased that the importance and desirability of such a code is widely recognised. That should go a long way towards protecting the vital localness of local radio, regardless of who owns it. That very important point was stressed by the hon. Member for Ryedale, as that localness is what we have to protect. The disagreement hinges on what else the code should contain. We agree that it should cover outputs, but not about whether it should also cover what we call inputs. I want to concentrate on the nub of the disagreements—the importance of inputs—as all the rest is broadly agreed.

First, I shall explain what I mean by the terms "inputs" and "outputs". A station's output is essentially what one hears coming out of the speakers—the music, the news, the travel and weather updates and local information, and everything else that one hears on switching to a local radio station. We all agree that such material should have a genuine local flavour and relevance. We believe that the code will ensure that.

The inputs are the things that happen on the other side of the speakers. They are not necessarily heard directly, but they contribute to a station's distinctive character and give it a vital, physical presence at the heart of its community. I was perplexed by the example given by the hon. Member for Ryedale. He is right to stress how important it is that Radio Clyde feels that it should be right in the middle of the city—that it should be part of the public that it serves. That is why we have to consider carefully the inputs, which are the vital elements he talked about. They have a good effect on the character of a radio service and are good for the community that it serves.

Michael Fabricant (Conservative, Lichfield)

Just for clarification, what are the inputs? The Minister defined output as being that which comes out of the loudspeakers, but what does he mean by the inputs?

Kim Howells (Labour, Pontypridd)

The hon. Gentleman has such a vital and energetic brain that he is leaping ahead.

Clause 304 identifies a number of possible inputs that could be covered by the code, namely locally made programmes and local advertising, local employment opportunities, local training opportunities and the use of premises in the area. The amendment would remove some of the items from the code. The code should be able to include local employment opportunities, local training opportunities and the use of premises in the area. I stress the words "be able to". The code does not have to include them—the clause merely allows Ofcom to include them if it considers it appropriate to do so. That is an important proviso, because whether they are included is very much in the hands of the industry. The code should be able to include those matters for two reasons. First, local radio stations get their spectrum for free, as the hon. Member for Ceredigion reminded us, and therefore have an obligation to the local communities they serve that goes beyond simply playing popular music. Secondly, those factors can have a perhaps unquantifiable, but not insignificant, effect on the character and ultimately the sound of a station.

On the first point, local radio stations are awarded licences by the Radio Authority on the basis of a beauty contest based largely on their ability to appeal to the tastes and interests of those in the area, to broaden local choice and in recognition of the degree of local support for their proposals. Unlike national licences, those licences are awarded for free—apart from the application costs, which can be hefty. In those circumstances, it is not unreasonable that certain requirements should be placed on licensees. Those stations have, in a less explicit way than TV, certain public service broadcasting obligations, and it is reasonable to expect them to have a physical presence and to provide employment opportunities and training in the locality from which, after all, they generate their profits.

Michael Fabricant (Conservative, Lichfield)

Does the Minister accept that smaller radio stations may find that to be a particular burden? Although he is right to say that a local radio station should have a presence, it may be based out on an industrial estate—and why not, because the outputs that he spoke about will be just the same? Does he recognise that if the burdens are too tough the radio station's output will become nil, because it will not survive?

Kim Howells (Labour, Pontypridd)

I entirely agree. That is why I stressed that Ofcom will have to take those issues into account when it considers particular radio stations. As both the hon. Gentleman and the hon. Member for Ceredigion have said, there are two sides to the coin—a tightrope has to be walked, and it is not easy.

It is not unreasonable to expect local stations to be genuinely, not virtually, local. I take the hon. Gentleman's point about being stuck out on an industrial estate, as many stations are. However, they often employ local people and despite the fact that they are on an industrial estate they are nevertheless regarded as part of the infrastructure of the community. In my experience, those are important elements.

On my second point, real links with the local community can have a subtle impact on the quality of stations. In other words, the more physically local a station is, and the more roots that it has in its community, the better it will reflect the community's needs and wishes. It has long been recognised in broadcasting regulation that inputs have a clear and definite effect on outputs. To quote the Commercial Radio Companies Association in another context, "You are what you eat." That is why we have quota requirements for public service broadcasting in terms of television and regional production.

The industry has argued that localness is its bread and butter—its unique selling proposition—and that it does not need the regulator or the Government to tell it how to be local. However, the fact that the industry is opposed to the code including inputs shows that its view of localness is narrower than ours. We are about to enter a new world for radio, as my hon. Friend the Member for Selby (Mr. Grogan) said. The ownership rules have been and are being radically overhauled. We listened to representations from the industry and relaxed our original proposals, which were tighter than our latest proposals, and which already represented an enormous liberalisation so as to allow for the possibility—I hope that it does not come to pass—of two large radio groups dominating the UK market. If we do not take steps to prevent it, that level of concentration could lead to a drift away from localness. Many local radio stations strive to be more local. The hon. Member for Sheffield, Hallam gave an important example when he pointed out that there is an enormous difference between the idea of localness if one lives in the city of Sheffield and the idea of localness if one regards Leeds as the most vibrant commercial centre of the region—in effect, its capital.

Localness is the most expensive part of programming, so there is arguably a commercial incentive to do as little as one can consistent with maintaining audiences at a viable level. We have already seen nationwide playlists for local stations, the removal of local station managers in favour of national brand managers and extensive computer-driven automation of services. That has not been mentioned, but it is up and running. In the situation of a national near-duopoly, there could be a further drift away from the parts of programming that are expensive. One may think that if the other side is doing it, it is better from a business point of view to do the same and to cut costs accordingly, especially if one believes that local listeners are mainly interested in music—in international music, if I might use that expression. We need a localness code to prevent that from happening.

That brings me to an important aspect of the code. It does not have to include factors to which Opposition Members object, but it can. The extent of its coverage will depend largely on the actions of the radio industry itself. I am already on record as having said that the code should, as far as possible, be co-regulatory. That is also the view of the industry and the regulator. Clause 6 will place Ofcom under a duty to review regulatory burdens and it will have to have regard to the extent to which its duties can be secured or furthered by effective self-regulation.

Amendment No. 162 would make it clear that music should be specifically included in the definition of local material. I have a great deal of sympathy with that sentiment. Music is central to the output of any local radio station, and a degree of local music would be desirable in any station's output, if we are to believe the rhetoric that is put out by the commercial radio station owners. They say that localness is very important to them, so there should be no problem with their wanting to play local music. There is nothing in the Bill to prevent Ofcom from including music in the definition of local material—the hon. Member for Ryedale rightly made that point—and I would be rather surprised if it did not do so. Among other things, that would guard against playlists being concentrated in too few hands, with the result that it becomes difficult for new bands to be heard on the radio. The question turns on whether we need to put the point beyond doubt by making provision in the Bill.

There is always a danger that the more aspects that are specified in the definition, the greater the presumption that those that are not mentioned are excluded. That is the problem, although I have a great deal of sympathy with the point. I know fanatical members of the Cabinet, whom I could ring any time, night or day, when I worked with them, but never on a Sunday evening when they listened to "Poetry Now" on Radio 4. I never rang them at that time.

John Greenway (Conservative, Ryedale)

Local sport constitutes a good illustration of the Minister's case. I am sure that he would not want to miss local commentary on Pontypridd.

Kim Howells (Labour, Pontypridd)

Pontypridd is a great place.

John Robertson (Labour, Glasgow Anniesland)

I have never heard of it. I understand my hon. Friend's point about music, but his argument could apply to politics and news. Why include those subjects in the Bill? Why not simply refer to "programmes"? We believed that the definition should include news and politics. I believe that music should also be included. "Music" covers an enormous range. It could not be interpreted to exclude something because it encompasses so much. I implore my hon. Friend to reconsider and include the word "music" somewhere in the Bill.

Kim Howells (Labour, Pontypridd)

I understand my hon. Friend's point. However, I am not convinced that music should be included and I am wary of over-prescription. There is no need to specify music, although I support the sentiment behind my hon. Friend's amendments. I repeat my hope and expectation that Ofcom will consider music to be an important element of local material.

I hope that hon. Members will not press their amendments.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 4 — Investigation of the BBC by the National Audit Office

Edward Leigh (Conservative, Gainsborough)

I beg to move, That the clause be read a Second time.

Alan Haselhurst (Deputy Speaker, Saffron Walden)

With this it will be convenient to discuss the following: New clause 6—BBC research on television licensing—

'It shall be the duty of the BBC annually to commission and publish independent research into the efficacy, cost effectiveness and public acceptability of television licensing in the United Kingdom subject to such conditions and restrictions as the Secretary of State may by direction require.'.

New clause 7—OFCOM research on television licensing—

'It shall be the duty of OFCOM annually to commission and publish independent research into the efficacy, cost effectiveness and public acceptability of television licensing in the United Kingdom subject to such conditions and restrictions as the Secretary of State may by direction require.'.

New clause 8—Preserved rights in respect of certain concessionary television licence fees—

'(1) Part 1 of Schedule 2 to the Wireless Telegraphy (Television Licence Fees) Regulations 1997 (S.I. 1997/290) shall be amended as follows.

(2) After entry 5 in column 1 (type of licence), there shall be inserted—

"Television licence (including colour) (Accommodation for Residential Care (preserved rights))."

(3) After entry 5 in column 2 (description of licence), there shall be inserted—

"A licence to install and use television receivers at such parts of accommodation which, in whole or in part, previously met the requirements specified in entry 5 in this column, where the resident of a unit of accommodation was resident in that accommodation at the time that the accommodation or part of that accommodation met the requirements specified in entry 5 in column 2 and was paying the issue fee specified in entry 5 in column 3."

(4) After entry 5 in column 3 (issue fee), there shall be inserted—

"£5 for each unit of accommodation occupied by a resident, as defined in Part II of this Schedule, meeting the requirements specified in column 2.".'.

New clause 9—Public services fund—

'(1) The Secretary of State shall by order make provision for the establishment of a fund to be known as the Public Services Broadcasting Fund.

(2) There shall be at least 3 trustees of the Fund and the order shall make provision for the terms of their appointment, including their remuneration.

(3) The primary function of the Trustees shall be the making of financial contributions to groups or organisations which make or propose to make programmes of local, regional or sectional interest for inclusion in a programme service.

(4) The Trustees shall have such other powers as may be conferred on them by the order.

(5) The BBC shall pay to the Trustees for the Fund in January of each calendar year in accordance with the provisions of the order made under subsection (1) an amount equal to 1 per cent. of the licence fee received by the BBC in the preceding calendar year.

(6) The Secretary of State may by order vary the percentage for the time being specified in subsection (5).

(7) An order under this section shall not be made unless a draft of the order has been laid before Parliament and approved by a resolution of each House.'.

Edward Leigh (Conservative, Gainsborough)

The purpose of the new clause is to enable the Comptroller and Auditor General to enjoy full value-for-money access rights to the BBC and thus to open it up to exactly the same scrutiny on Parliament's behalf as all other bodies that are funded by tax.

I stress from the outset that we are not considering a party-political issue. There is total consensus among members of the Public Accounts Committee, on which I serve, and in both Houses that the BBC's position outside the Comptroller and Auditor General's remit is a matter for concern.

The new clause is supported by the right hon. Member for Birkenhead (Mr. Field), the hon. Member for Newbury (Mr. Rendel), who is in his place, my hon. Friend the Member for South Norfolk (Mr. Bacon), the right hon. Member for Swansea, West (Mr. Williams), who is Chairman of the Liaison Committee and one of the most senior Members of the House, the hon. Member for Croydon, Central (Geraint Davies), who is in his place, the hon. Member for City of Durham (Mr. Steinberg), my hon. Friends the Members for Fareham (Mr. Hoban), and for Tatton (Mr. Osborne), the hon. Member for Tamworth (Mr. Jenkins), my hon. Friend the Member for Maldon and East Chelmsford (Mr. Whittingdale) and the hon. Member for Knowsley, North and Sefton, East (Mr. Howarth).

Andrew Mitchell (Conservative, Sutton Coldfield)

A fine body of men.

Edward Leigh (Conservative, Gainsborough)

Indeed. Those names show that there is consensus, at least on the Public Accounts Committee. Like many hon. Members, I believe that the BBC should be in the same position as other public bodies.

John Bercow (Conservative, Buckingham)

Is the new clause confined solely to the audit of financial management in the BBC or would its purview extend to considering whether the BBC had honoured its obligations to observe due impartiality in matters of political and industrial controversy?

Edward Leigh (Conservative, Gainsborough)

I am grateful that my hon. Friend, with his usual perspicacity, has moved to the central argument. Let me make it clear straight away that there is no intention to undermine, affect or question the BBC's editorial independence through the new clause.

We all acknowledge that although we may tear our hair out about various aspects of programmes that we personally dislike, including political views with which we disagree and interviews on "Today", the new clause has nothing to do with that. I assure my hon. Friend the Member for Buckingham (Mr. Bercow) that the Comptroller and Auditor General, who is an officer of the House, is uninterested in what happens in programmes. He simply wants to subject the BBC to the same financial scrutiny as everyone else.

We are considering £2.5 billion of taxpayers' money, which is raised through a compulsory licence fee. Let us be honest: it is effectively a poll tax on the majority of people in the country. It is no longer sustainable to keep that large sum beyond our scrutiny. I believe that the Minister privately acknowledges that, that his civil servants recognise it and that many people in the BBC accept it. Even the current chairman of the BBC publicly acknowledged that before he took up his current position. Whatever the Minister's negotiating position, I believe that everybody realises that the time is right for the BBC to come under Parliament's scrutiny.

For those who are not familiar with the system, the Comptroller and Auditor General audits central Government and the bodies that they fund. I am delighted that the Government have made progress. They are in the process of correcting past anomalies—for example, the Comptroller and Auditor General was not allowed to scrutinise some non-departmental public bodies or Government-owned companies. I bend over backwards not to be party political when I speak on behalf of the Public Accounts Committee. I therefore pay tribute to the Government for their tremendous progress.

However, the position on the BBC is much less clear. The Comptroller and Auditor General has only limited rights of access, which are far short of what is necessary. He can examine the arrangements for collecting the television licence fee and the use that the BBC makes of the grant from the Foreign and Commonwealth Office to support the World Service. Those are only two small aspects of the enormous empire that constitutes the BBC. He cannot examine or report to Parliament on the bulk of the BBC's spending, which amounts to £2.5 billion. That is wrong. I want to convince the Minister that we must right the wrong now.

Michael Fabricant (Conservative, Lichfield)

Does my hon. Friend acknowledge that there is an argument, to which I do not especially subscribe, that, if the National Audit Office were allowed to investigate the BBC, it would be in a position to judge and interfere with programming and creative policy in the corporation? Will my hon. Friend either assure me that that would not happen or at least justify the reasons for it?

Edward Leigh (Conservative, Gainsborough)

I know that my hon. Friend takes a deep interest in those matters. He talks to senior executives in the BBC and understands their mindset. I assure him, and perhaps BBC executives through him, that we have no desire to compromise the BBC's independence or limit its creativity. It would be a retrograde step if Members of Parliament, the PAC, the Comptroller and Auditor General or anybody else tried to inhibit editorial independence. The argument that that independence would be compromised—if such an argument is being put forward—simply does not stand scrutiny. Let us consider what the CAG already does. He reports on the Arts Council and no complaint has ever been made by anybody in the Arts Council saying that the National Audit Office has been questioning their artistic judgments—[Interruption.] The Minister knows all about that. Perhaps people in the National Audit Office do not have the facility with words that he has shown on previous occasions in dealing with artistic matters, but there have never been any complaints about the activities of the CAG with regard to the Arts Council. The CAG also reports on our universities, but not a single complaint has come from any university saying that he has inhibited academic freedom. That simply has not happened.

The editorial judgments made by the BBC would be the CAG's starting point. He would say "I am not responsible in any way for the editorial judgments that are being made", but he would provide a valuable insight into how the public funds that are at the BBC's disposal are being spent. We are outlaying all the money and we want to know that it is being spent efficiently and without waste. The CAG would provide Parliament with an independent insight into the quality of the BBC's financial management. That is what the process is all about. This House started its work a long time ago in scrutinising the Executive and trying to ensure proper financial management. There are still only two areas where Parliament does not have a right to investigate financial management where public money is used—the BBC and the civil list.

Alan Williams (Labour, Swansea West)

Is not the ultimate absurdity the fact that the BBC squeals at the very thought of a non-policy Committee such as ours considering its finances, but turns up to give evidence at the appropriate Select Committee, which can consider policy?

Edward Leigh (Conservative, Gainsborough)

I am grateful that the right hon. Gentleman has mentioned that point, as I want now to deal with the Select Committee on Culture, Media and Sport. BBC executives have claimed that their appearances before that departmental Select Committee, which is involved in policy, while the Public Accounts Committee never is, provide some sort of accountability. I believe, however, that the appearances of BBC representatives before that departmental Select Committee have proved that, despite its best efforts, it does not have the expertise or support staff, including the support of the National Audit Office and its 700 staff, that are necessary to provide an in-depth analysis of what is going on in the BBC's financial management.

Brian Jenkins (Labour, Tamworth)

Surely my friend realises that no matter how much experience, expertise and will there is, without the figures, one cannot possibly make any judgment on effective use of resources?

Edward Leigh (Conservative, Gainsborough)

That is absolutely right; indeed, it explains why a Committee of Parliament that is supported by its own civil service in the shape of the National Audit Office is needed to investigate the BBC and ensure that £2.5 billion of our money, which we spend, is being spent properly. I understand that members of the Culture, Media and Sport Committee, some of whom are present in the Chamber, agree with me and realise that they cannot provide the sort of scrutiny that would be afforded by the CAG.

Last July, when the Culture, Media and Sport Committee took evidence from the BBC on its annual report, my hon. Friend the Member for Lichfield (Michael Fabricant), who is present in the Chamber, remarked to the BBC witnesses that the idea that his Committee could substitute itself for the NAO in scrutinising the BBC was—I hope that I am not misquoting him—"frankly ridiculous". That is the view of that departmental Select Committee and I entirely agree with it.

If there were some problem with editorial independence, surely a complaint would have been made about the scrutiny that we provide in respect of the World Service. As far as I know—I have checked this matter with the National Audit Office—there has never been any complaint from the chairman or chief executive of the BBC about any findings or recommendations on the World Service ever made by the Public Accounts Committee in working on Parliament's behalf. There has never been any complaint that we have interfered in the editorial judgments or freedom of the World Service. Our work on the World Service could be regarded as a pilot study. We have been looking at the World Service for all these years, we have done our studies and we have tried to improve the service and make it work better, and never has a single complaint been made about our compromising editorial independence.

The CAG is simply an officer of the House. He is wholly independent of the Government and is effectively appointed for life. The National Audit Office gives him complete discretion in respect of the topics that he chooses to examine, how he carries out his work and whether he produces a report. I cannot force him to undertake a particular inquiry and neither can members of my Committee. He is an independent officer and is completely outwith any sort of party political or even political process. He is supported by an expert staff. They have expertise and experience that are second to none, and we believe—I want to be helpful to the BBC—that they would add genuine value to the financial management of the BBC. We believe that they could help it. They are not bean counters who will crawl all over it and subject it to all sorts of difficulties and time-wasting processes. They can help the BBC, using all the experience of the NAO, in trying to ensure that that great organisation, of which we are all proud in our various ways, is as modern and progressive in its financial management as any other Government body.

Brian White (Labour, North East Milton Keynes)

One of the criticisms made in the IT world is that fear of the Public Accounts Committee inhibits innovation and risk taking in the public sector. How does the hon. Gentleman respond to that criticism in the context of modernisation of the BBC?

Edward Leigh (Conservative, Gainsborough)

That is a fair point and I am delighted that the hon. Gentleman has made it. The point that we make to Whitehall is that we are not risk averse—quite the contrary. We want Whitehall to take risks, as long as they are well thought out. My Committee has made numerous recommendations over the years that prove that point. We recognise that the BBC has to take risks. For example, it had to be prepared to take a risk in launching BBC News 24. All sorts of problems may be involved, but we would not create an atmosphere or background in which executives think "I am not going to launch a new television or radio channel because I might be summoned by the PAC to account for myself." If executives make mistakes and are wasteful or take decisions that result in the mishandling of tens of millions of pounds of public money, however, surely it is only right that they should be brought in front of Parliament to account for their actions.

Why should it be the case that in one part of the public sector—the BBC is effectively a part of the public sector—executives are not held to account by shareholders, of whom there are none, and are not subject to discipline under the Companies Act 1989, but are not accountable to Parliament either? I say to them that we are not trying to prevent them from taking risks. All we are saying is that, like everybody else in the public and private sectors, they should be held to account.

Michael Fabricant (Conservative, Lichfield)

Does my hon. Friend agree that executives who are in a position in which they can be investigated are also thereby given a degree of protection? From time to time, the corporation has been criticised on the ground that it has used public licence money to compete in the commercial market. It has always denied doing that, but it is currently its own judge and jury. Would not the locus of my hon. Friend's Committee include an investigation in that area if such an accusation were made? Does he agree that his work and that of his Committee might be more believable than that of the corporation in trying to defend itself?

Edward Leigh (Conservative, Gainsborough)

In some ways, I feel sorry for the BBC. It is the national butt of complaints. We all complain about it, saying that it is not doing this or that right. We all have an opinion on it. One reason for resentment of the BBC—from MPs, members of the public and its private sector competitors—is that it is an entirely independent empire that is not held to financial account by anybody. It would be a defence mechanism for the BBC to come in front of a parliamentary Committee to explain its decisions.

Kim Howells (Labour, Pontypridd)

rose—

Andrew Lansley (Conservative, South Cambridgeshire)

rose—

Edward Leigh (Conservative, Gainsborough)

I had better give way to the Minister first.

Kim Howells (Labour, Pontypridd)

No, it is all right.

Andrew Lansley (Conservative, South Cambridgeshire)

Perhaps the Minister and I were about to make the same point. I agree with my hon. Friend the Member for Gainsborough (Mr. Leigh), but I do not want his argument to stretch too far. He appeared to agree with my hon. Friend the Member for Lichfield (Michael Fabricant), but I think that the argument is being stretched too far. If the BBC were to use licence fee money to subsidise services in a way that went beyond its public service remit and interfered with competition, it would be subject to scrutiny from the competition authorities. This does not diminish my hon. Friend's argument, but we must be clear that there are certain BBC activities that are subject to scrutiny.

Edward Leigh (Conservative, Gainsborough)

I accept that. If there is unfair competition, or if the BBC is acting outwith its statutory framework, there are other ways of righting the wrong.

Kim Howells (Labour, Pontypridd)

The hon. Gentleman's hon. Friend the Member for South Cambridgeshire (Mr. Lansley) second-guessed me. However, I wanted to ask the hon. Gentleman another question. This is an important debate and I am enjoying his contribution very much. He said that people should be held to account. As a veteran of the PAC, I can well imagine that, if somebody had invested in a computer system—and such systems provided great fare for the PAC in many investigations by the CAG—and millions of pounds had been lost, that would be well worth investigating. However, what about an executive who was responsible for producing a series or a top-end drama that had lost millions of pounds? How would the PAC investigate that kind of loss, where earnings could have been made from the product but were not?

Edward Leigh (Conservative, Gainsborough)

That is an important intervention and it probably goes to the heart of what concerns BBC executives. It is difficult for me to give the House a categorical undertaking. I do not speak for the Comptroller and Auditor General in the way Ministers speak for their civil servants. I cannot tell the House exactly what the CAG would want to investigate. However, I have some experience of what he would want to investigate in other parts of the public sector. The Minister has put his finger on the central issue. I suspect that the CAG would, as the Minister suggests, be interested in the purchase of a new computer or information technology system that had not been properly thought through, resulting in major financial loss for the BBC. However, I cannot conceive of any circumstances in which the CAG would think that he had the expertise to second-guess the editorial judgment of senior executives in the BBC who had thought that a particular programme or series would be popular when in fact it was a great flop that nobody wanted to watch, leading to it being taken off the air with the waste of vast sums of money.

We all accept that creative people have to take risks and that sometimes they will get ahead of what public opinion wants. However, why anybody in the National Audit Office would think that they had the expertise to second-guess that kind of decision, I cannot imagine. It is not going to happen. It is not for me to speak for the CAG, but I think that I can give the Minister and the BBC that reassurance.

Brian Jenkins (Labour, Tamworth)

Does the hon. Gentleman accept that it is not what is produced that we want to consider, but how it is produced? Within the enclaves of the BBC—an organisation that is protected from the rigour of the world of commercial enterprise—we want to ensure that the most effective use is made of resources that are, in effect, a donation from the taxpayer. We are critical not of the programmes but of the methods used to put them together.

Edward Leigh (Conservative, Gainsborough)

The hon. Gentleman has put the argument far better than I could have done. What is being produced is none of our concern. We do not have the expertise to question whether a particular programme is desirable or not. However, how the BBC is run—this huge public corporation that spends £2.5 billion a year—is surely of some interest to Parliament.

Let me describe how the Public Accounts Committee works. The PAC does not question the right of the Government to make a particular policy decision—for example, to introduce individual learning accounts. If the Government of the day want to introduce ILAs, that is for the Government. We do not question that. However, we have a perfect right to say, "You introduced ILAs but you didn't get a sufficient grip and the whole thing went out of control. There was massive fraud and the taxpayer ended up losing tens of millions of pounds." A similar argument would apply to the BBC. We will not get involved in its policy decisions. That is the key. The PAC has a defence mechanism: we never get involved in policy decisions. We will not question a particular policy decision of BBC senior management to produce a series of programmes or even to set up an entirely new service. However, we would be interested in how the programmes were produced or the service set up.

Brian White (Labour, North East Milton Keynes)

rose—

Bill Cash (Conservative, Stone)

I apologise for coming to the debate rather late. I heard my hon. Friend talking about policy decisions. Does he agree that it is essential that the BBC should subscribe to its charter and to the ingredients that go with it? If it does not, it will be under attack on two fronts—on impartiality and the way that the guidelines function, and on its accounts.

Edward Leigh (Conservative, Gainsborough)

I am not going to be taken down the route of saying that we should in any way get involved in impartiality. To do so would be to defeat immediately all the arguments that I have been trying to elucidate for the past 20 minutes. It may be that the BBC is not impartial, but that is none of my business. Other mechanisms can deal with that issue, and I contend that they work perfectly well.

My hon. Friend refers to accounts management. That is something in which Parliament has a perfect right to get involved. There is no adequate mechanism—under the charter or by any other means—to question whether things are being done properly.

Another hon. Member has tried to intervene, but I must finish soon to allow other hon. Members to contribute.

Brian White (Labour, North East Milton Keynes)

I want to ask about the BBC's quota of independent productions. Would the PAC be involved in monitoring those contracts? If so, what is to prevent it from becoming a sort of court of appeal for independent contractors who feel that they have been hard done by?

Edward Leigh (Conservative, Gainsborough)

The hon. Gentleman has done a good job in presenting some fears that BBC management may have expressed. However, some people do not understand the way in which the Public Accounts Committee operates. In this country, we raise and spend the best part of £700 billion of public money every year. The PAC is only one Committee of the Parliament. We have twice as many hearings as any other Committee but we still meet only 60 times a year. I assure the hon. Gentleman, and anybody else who takes a close interest in these matters, that the PAC will not spend the whole year—or indeed a half or a quarter of the year—crawling over every aspect of the BBC, whether quotas or anything else. I suspect that, if Parliament gets this Bill right, people in the BBC will say, "Well, we'll have to be a bit careful about our financial decisions because we could be held to account." However, there will be only one hearing, or maybe two hearings, on the BBC each year. The CAG will feel his way extremely carefully. He is very attuned to all the sensitivities about his ever getting involved in editorial independence. He will not go down any route that will get him into trouble.

Michael Fabricant (Conservative, Lichfield)

The Minister intervened on my hon. Friend to ask an interesting question from which this discussion—this sub-debate, if you like—has arisen. The Minister asked about a series, or an individual programme, that made a loss. Does my hon. Friend accept that a programme that is made for the BBC cannot, in itself, make a loss? It is not made as a commercial production, unless we have to take account of some co-production deal with, for example, an American broadcaster. Does my hon. Friend—

Sylvia Heal (Deputy Speaker, Halesowen and Rowley Regis)

Order. This is rather a long intervention.

Edward Leigh (Conservative, Gainsborough)

I agree with my hon. Friend. I cannot conceive of a situation in which the CAG would want to become involved in decisions about the way in which the BBC is run, or in which it would be appropriate or right for the CAG to question why a series of programmes had been made. We can put that canard to rest now; it simply will not happen.

I wish to say in conclusion—I am trying to get to the end of my speech without too many interventions—that the practical and constructive work of the CAG has saved £1.5 billion over the past three years. His independence is a safeguard for the BBC and for Parliament. It is important that we keep in view the principle that lies behind the new clause: simply to increase parliamentary accountability of the BBC. In 2001–02, the licence fee raised £2.5 billion, yet although the CAG can examine its collection, he cannot look at how well the money raised is spent. That is a significant weakness in public accountability.

Arguments in favour of extending the CAG's rights of access to the BBC have been repeatedly and forcefully made on many occasions by the PAC, by the Culture, Media and Sport Committee, by Lord Sharman in his review of audit and by many others. I recognise that, in the Davies review, the BBC has been subject to some external reviews and other measures designed to improve its financial accountability, but, of course, they do not provide the ongoing parliamentary scrutiny and accountability that is needed.

The Bill provides a unique opportunity for the House to rectify a wrong that has existed for too long. It is essential that the BBC is opened up to proper parliamentary oversight. This argument will not go away; nor should it until the requirements of the House and the licence payers whom we represent are met and the new clause is accepted.

Jon Trickett (Labour, Hemsworth)

I rise partly to correct an omission: because of an oversight, my name did not appear in support of the new clause. I am a member of the PAC, and I would deplore any suggestion that the PAC's support for the proposal was anything but unanimous. All its members, from all parties, endorse all the points that have just been made so persuasively in making what is, frankly, an irrefutable case.

From time to time, probably quite frequently, all hon. Members will encounter constituents who wish to raise certain matters about the BBC and the licence fee. We are answerable for the fact that the licence fee is now well over £100 a year and is sometimes levied on extremely poor households. Yet, as we have just heard, Parliament is unable to scrutinise the mechanisms that the BBC uses to organise itself and its expenditure patterns. That is clearly wrong.

The Chairman of the PAC has just said that there are two only two areas of public expenditure where the Comptroller and Auditor General is not currently allowed to venture—the civil list and the BBC—but the PAC and certainly the NAO have looked at certain elements of royal expenditure, such as royal travel and grace-and-favour flats and other properties that belong to the royal household. So the principle itself has been accepted that Parliament, which votes the civil list, may consider certain items of royal expenditure.

The BBC is the last bastion to resist parliamentary control, although all hon. Members will notice that it frequently knocks on the door when it wants the licence fee to increase. If it expects us to be able to argue the case for raising money for the BBC, as we all do, it should accept the associated principles of accountability and transparency. A fairly puerile argument has been developed as a defensive mechanism by the BBC, which suggests that, somehow or other, its integrity would be affected by such scrutiny.

All hon. Members understand the difference between a democracy and a totalitarian arrangement. In totalitarian countries—for example, Zimbabwe—the press is subject to close control by politicians. That must be resisted in a democracy. Whatever the political, editorial and creative impulses behind the media, their independence must be protected at all costs. That is precious and must be kept independent of the political process. That is well understood, and for the BBC to develop such an argument in defending itself from financial scrutiny by Parliament is, frankly, an insult to ourselves as parliamentarians, to Parliament as in institution and to the electorate, by suggesting that they would allow elected politicians to interfere in something as precious and important as the BBC's editorial and creative independence. Frankly, that argument is not sustainable, and displays a fundamental misunderstanding of the way in which the PAC and certainly the CAG conduct their business.

The fact is that the argument about the BBC's editorial independence is almost exactly analogous to the argument that we in the PAC frequently have about policy. Every member of the PAC well understands that we may not stray into policy issues when questioning civil servants. The relationship between the policy advice given to Ministers and the ministerial response is beyond the PAC's remit; it is for Parliament to address. Although we understand that, our questions may be robust occasionally, but if a member of the PAC inadvertently strays into policy issues, the other members and certainly the Chairman—I pay tribute to him for his independence and the non-partisan way in which he chairs the Committee—would quickly remind that member that he or she was straying into an inappropriate area.

It is a fact that our modus operandi is well established—the PAC is the oldest Committee of the House—and we do not stray into policy issues, but we frequently tackle financial irregularities, inefficiencies and so on. That distinction is clear in our minds, and it is precisely analogous to the argument about the way in which the BBC's finances, but obviously not its editorial policy, should be accountable to Parliament through that process.

The NAO, supported by the PAC, has identified substantial savings across the public sector over the years. That has been well demonstrated, and I should have thought that the BBC would welcome any assistance that Parliament could provide in identifying savings, which could then be redeployed into additional programming and, perhaps, more creative activities. So, if anything, I see us as an ally of the BBC.

Finally, I would tell those in the BBC who think that they are defending it that they are actually exposing themselves to criticism. This is an Achilles' heel for the BBC. I see myself as a great advocate and friend of the BBC, and I suppose that most hon. Members feel the same. When constituents ask me, "You are raising £110 a year from me"—or whatever the licence fee may be—"How do I know that I'm getting value for money from the BBC?", I would like to be able to tell them that they are getting value for money, that the accounts are subject to close scrutiny and that we are convinced, because we can demonstrate that the BBC is being examined, that such efficiency has been achieved. However, the fact is that we cannot say that, so those hon. Members who would like to defend the BBC are unable to do so, and the BBC is doing itself a great disservice. The argument is beyond persuasive—it is irrefutable—and I hope that the Minister will indicate that the Government are moving in our direction even if he does not accept the new clause this afternoon.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I want to speak to new clauses 6, 7 and 9. Before I do so, I should say how pleased I am that my hon. Friend the Member for Gainsborough (Mr. Leigh) tabled new clause 4. I am even more pleased that the other members of the Public Accounts Committee have put their names to it. We debated the issue in Committee, and it was notable that everyone who spoke in Committee, from all parties represented on it, supported the idea that the BBC should come under the scrutiny of the National Audit Office. I had an impression from the Minister's response in Committee that he, too, could appreciate the arguments, and that it was a question of time rather than a debate about the desirability of such scrutiny. I hope that he may be able to provide a further guide on that point this afternoon.

My hon. Friend the Member for Gainsborough has set out a powerful case. The BBC receives some £2.5 billion of public money, and anybody who has had any dealings with the BBC recognises that it is not exactly a model of efficiency—one does not have to look hard to discover examples of waste. Nor is it a model of transparency. I am sorry that the hon. Member for Rhondda (Mr. Bryant) is not present this afternoon, as he played a considerable part in debates in Committee, and he is a former employee of the BBC. He said:

"When I was at the BBC, whenever there was a threat that somebody might start looking at the books, it was a bit like Saddam Hussein trying to hide things from the weapons inspectors; things would move from one office to another and an exciting time was had by all."—[Official Report, Standing Committee E, 6 February 2003; c. 1063.]

That is his account of his experience as a senior employee of the BBC—[Interruption.] I am sure that he performed an important function in the BBC—he told us that he wrote the chairman's speeches, as I seem to recall, which is a very important function. As a former speechwriter, I recognise that. Not only has almost every Member of the House who has spoken on this subject supported the idea of scrutiny, but almost every external examination of the BBC has reached the same conclusion that it is anomalous, to say the least, that the BBC, almost alone among public bodies, should remain outside the scrutiny of the PAC.

The report to which I wanted to draw attention in particular, to which my hon. Friend the Member for Gainsborough has already referred, is the review of the funding of the BBC conducted in 1991. It stated:

"The most serious lacuna that results from this structure concerns financial control. The BBC is disposing of a substantial sum of what is essentially public money."

The report concluded:

"The Panel does not accept, therefore, that more scrutiny need mean more interference. There is nothing in the National Audit Office's remit which threatens the proper independence of the BBC."

It is worth remembering that the person who chaired the committee that reached that conclusion is now the chairman of the BBC. It is strange, to say the least, that since arriving in his new position he has changed his mind on that point, particularly when we consider every other report that has been conducted. Reference has been made already to Lord Sharman's report, which concluded that the Comptroller and Auditor General

"should be given access to the BBC as originally recommended by the Davies Review".

The Culture, Media and Sport Committee reached the same conclusion, and the Public Accounts Committee has been making the case strongly, not just under the chairmanship of my hon. Friend the Member for Gainsborough but under its previous Chairman, my right hon. Friend the Member for Haltemprice and Howden (David Davis), who, I am delighted to see, has joined us in the Chamber. This is not a party political matter, as my hon. Friend the Member for Gainsborough said at the beginning of his remarks; the need for such scrutiny is widely recognised across all parties.

One or two reasons have been given for why the BBC has been so reluctant to allow the PAC and the National Audit Office access to its accounts. I recall that when the right hon. Member for Swansea, West (Mr. Williams) attempted to draw those out from the director-general of the BBC at the PAC hearings, the director-general said that he knew what they were but was not prepared to tell the PAC on that occasion. In the past, however, the BBC has argued that involving the NAO might result in interference with programming decisions.

In relation to the Minister's point about a programme that might lose money, my hon. Friend the Member for Lichfield (Michael Fabricant) is right: it is difficult to say whether a BBC programme loses money. The raison d'être of the BBC is not to make money but to fill a market failure and, therefore, make programmes that are likely to have a relatively small audience. It might be possible to sell those programmes overseas, providing an income in future, although BBC programmes are produced not for financial reasons but as part of the public service remit. I see no evidence to suggest that the Comptroller and Auditor General would wish to get involved in any question relating to programming decisions. Nor is there evidence that the involvement of the NAO would in any way affect the impartiality of the BBC, which is another argument that has been put by those who are opposed to allowing the CAG in.

My hon. Friend the Member for Gainsborough made the decisive point that the PAC and the NAO already scrutinise one part of the BBC's output—the World Service. If there is one part of the BBC in which it is most important that there should never be any suggestion of partiality, interference by Government or any political consideration, it is the World Service. The reason why the World Service is respected across the world is that people trust it for its objectivity and impartiality. When the permanent secretary was questioned on that point, she made it clear that the Foreign Office had never had any complaints about interference in the World Service. It is on that freedom that the World Service's reputation rests, yet it can be subject to examination by the NAO without any damage to its impartiality.

The arguments in favour of new clause 4 are absolutely overwhelming. I was encouraged when the Minister said in Committee that he was examining the matter, and that he would present the Government's conclusions in due course. I hope very much that he will be able to say this afternoon that he has reached a conclusion, and that he will support new clause 4, which has the unanimous support of all the members of the PAC.

New clause 7, which is linked to new clause 6, relates to the question of the future of the licence fee and its part in financing the BBC. That question, too, has a long history. It has been the subject of examination by outside bodies over several years. It was considered by the Peacock committee, and it was examined again by the committee chaired by Gavyn Davies in 1999. Most people who have examined the licence fee have recognised that, as a method of financing, it has many drawbacks. Until now, however, it has been argued that it is perhaps the least bad method of financing the BBC. Examination has been made of possible alternatives such as financing the BBC through advertising, subscription, and, possibly, direct Exchequer grant. I fully recognise that drawbacks are associated with each of those methods, too.

There is no question but that, since the issue was last examined, the whole broadcasting world has completely changed. I shall resist the temptation to refer to broadcasting ecology, as I share the Minister's distaste for the term, although I found in my research that it appeared in the original Peacock report, so it has been around for some time. The fact that we live in a world in which people have access to hundreds of television channels rather than just three or four means that the time has come when we need to look again at the licence fee. That appraisal is also particularly important given that the licence fee has been increasing year after year. Indeed, the Secretary of State confirmed only the other week that it would rise to £116.

The licence fee, as everyone who has examined it knows, is a highly regressive charge that bears heavily on those with the lowest incomes. The Gavyn Davies review said:

"The licence fee, correctly described, is a tax and a poor tax at that. It is levied on everyone who has a television set. It takes the same amount from every household, rich or poor. A wage-earner on the national minimum wage has to work for a week to earn enough to pay it, but pay it he or she must, whether they choose to watch the BBC or not."

That is an accurate description of its effect.

As my hon. Friend the Member for Gainsborough said, the licence fee is a poll tax. Indeed, it is considerably worse than the community charge, which attracted that label. Unlike the community charge, there is no means-tested benefit available for those who are on low incomes and who cannot afford to pay. It is almost impossible to think of any other charge levied by the state on almost every person in the country for which no means-tested assistance is available whatever.

Geraint Davies (Labour, Croydon Central)

Do not people over the age of 75 receive a free television licence?

John Whittingdale (Conservative, Maldon and East Chelmsford)

People over the age of 75 receive a free licence, and that is very comforting for them. However, the rest of the population—whatever their income—have to pay the licence fee, so it remains a poll tax.

The effect of the licence fee was examined by the Davies review and it conducted its analysis by splitting up the proportion into income deciles. The review discovered that the flat rate charge was highly regressive and represented 1.7 per cent. of the net income of the poorest decile, but just 0.28 per cent. of the income of the top decile.

Michael Fabricant (Conservative, Lichfield)

My hon. Friend is arguing that the licence fee is a highly regressive tax, but is he suggesting that it should remain a tax that is perhaps based on income or council tax bands? Alternatively, is he suggesting that there should not be a licence fee at all and that the BBC should be funded completely from commercial sources?

John Whittingdale (Conservative, Maldon and East Chelmsford)

I do not want to anticipate the rest of my speech, but I will argue that I agree with the Government in that there needs to be a full debate on this issue. I think that the arguments in favour of the licence fee are becoming weaker by the day. I will set out why I believe that to be the case, but before that I shall conclude my comments on the drawbacks of the existing system.

My hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) has tabled a new clause that has considerable merit. It draws attention to the enormous resentment that is felt by many people about the existing concessionary licence system in which some people find that they are eligible to pay just £5 whereas their next-door neighbour may have to pay the full amount. Those who pay the full amount may look around and see that others, who may be better off than they are, are able to claim a concessionary licence. That is a cause of great anger and frustration and I suspect that every Member will have heard people complaining about how unfair the existing concessionary licence scheme is. I therefore very much welcome my hon. Friend's new clause. I hope that she will elaborate on it shortly.

The other aspect of the existing system that gives rise to real anger is the way in which the collection system is enforced. The BBC has responsibility for collecting the licence fee and it contracts that operation out. That results, however, in many people being hounded by inspectors who refuse to believe that people do not have a television set and have no particular wish to possess one.

The Committee chaired by my hon. Friend the Member for Gainsborough conducted a useful examination of the system of collecting the licence fee. Other than the World Service, that is the only part of the BBC's activities that the Committee is currently allowed to examine. It reached the conclusion that, although the licence fee enforcement officers were extremely assiduous in trying to pursue people evading the licence, they were also remarkably unsuccessful. Out of 3.5 million visits conducted by inquiry officers, only 459,000 suspected evaders were actually caught. The result is that a huge number of people are hounded, and I have heard examples of that in my constituency. I am sure that other Members also know of people who have repeatedly been pursued despite the fact that they have made it clear to the licensing office that they do not have a television set and that they have no intention of acquiring one.

The criminal sanctions that are brought against those who do not have a licence are often brought against some of the poorest people in our community. In the most recent year for which figures are available, 120,000 people had proceedings brought against them for their failure to have a television licence. That resulted in a number of convictions over the year and in prison sentences when people did not pay the fines.

I have no particular wish to endorse in any way the failure to pay a fine or, indeed, the failure to purchase a television licence, but this part of the criminal law is biting at people who are among the poorest in our society. Indeed, I understand that, in some years, licence fee crime has accounted for more than half the criminal convictions among women. That is an extraordinary figure, and it is another reason why we need to reconsider whether the licence fee remains the best way of financing the BBC.

It has been said that the licence fee still commands public support and that most people regard it as providing value for money. Indeed, for many years the BBC ran campaigns on television in which it argued that many people were unhappy that they were not able to pay even more for the BBC because it provided such wonderful value for them. However, that view is not borne out by the evidence that has been accumulated. For example, the Gavyn Davies committee considered the future of the financing of the BBC—

Geraint Davies (Labour, Croydon Central)

The report of the Public Account Committee and the report of the National Audit Office that preceded it found that about 30 per cent. of those who had had fines imposed on them for not paying the licence fee simply did not pay their fines. The hon. Gentleman seems to be suggesting that those people should not have had to pay for the licence in the first place. However, in another report from the Public Accounts Committee, we found that a similar number of people were not paying any fines at all for criminal activity. Is the hon. Gentleman therefore suggesting that they should be let off? His arguments do not hang together. People should pay fines, but he seems to think that they should not.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I specifically said a few moments ago that people should pay fines and should pay the licence fee. However, as the hon. Gentleman's Committee has identified, many people do not pay the licence fee and do not pay fines. They are among the poorest in our society and, at the very least, that should give rise to questions as to whether the licence fee is the best way of continuing to finance the BBC.

I was about to say that the licence fee does not continue to command widespread public support. At the time of the Gavyn Davies review, an opinion poll was conducted. It found that 45 per cent. believed that the licence fee provided good value for money and that 42 per cent. did not. A majority of just 3 per cent. supported the view that it was good value. However, when they were asked whether the BBC should introduce advertising, 55 per cent. as opposed to 40 per cent. supported that view. When they were asked whether the BBC should introduce the sponsorship of programmes, the figure was 74 per cent. in favour as opposed to 16 per cent. against.

Since that time, a number of further opinion polls have been conducted. One conducted last October concluded that 46 per cent. favoured the licence fee whereas 51 per cent. favoured some other means of financing the BBC. In another poll conducted a few weeks later, 58 per cent. said that

"the licence fee was no longer justifiable in an era when as many as 300 television channels were available."

That resentment will increase as the licence fee increases, especially as other broadcasters are suffering and finding it far harder to raise money. The fact that in the past few weeks the Secretary of State agreed to a further increase in the licence fee to £116 merely adds insult to injury. The original decision to increase the licence fee was taken at a different time, when commercial broadcasters were much better off than they are today.

There is another cause of resentment. A large and growing number of people have access to digital television channels and pay to receive channels that they choose to watch. People who pay a subscription for additional channels that they want to see resent the fact that they are also made to pay a licence fee to receive channels that they might not want to watch. While those who can receive digital television are beginning to resent the imposition of the licence fee, those who do not receive it equally resent the fact that they have to pay a significant amount for the development of the BBC's digital channels when they have no opportunity of watching them.

Those problems have given rise to challenges to the licence fee. Hon. Members may be aware that a particular journalist, Mr. Jonathan Miller, publicly announced that he does not intend to pay his licence fee and, in doing so, cited the European convention on human rights. He pointed out that article 10 says:

"Everyone has the right to freedom of expression. That right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority".

The Minister may tell us that that does not apply to the application of the licence fee, but the BBC and the Government seem remarkably reluctant to put that to the test. Although they are happy to hound people who cannot afford to pay their licence fee and, in some cases, to send them to prison, there has been an interesting delay in taking any action against Mr. Miller.

Mr. Miller is not alone. Vladimir Bukovsky recently joined his protest. I would not go so far as Mr. Bukovsky, who has compared his anti-licence protest to the hunger strikes that he organised when in prison in the former Soviet Union, but he has said:

"The BBC's TV licence is such a medieval arrangement I simply must protest against it. The British people are being forced to pay money to a corporation which suppresses free speech—publicising views that they do not necessarily agree with."

There is also the test case in Liverpool which involves people who have failed to pay the licence fee. So a growing body of opinion is undoubtedly unhappy with the existing system of financing the BBC.

It appeared for a long time that the Secretary of State had ruled out the possibility of change to the licence fee system. She went on record as saying that she regarded it as

"somewhere between the improbable and the impossible".

However, she appears to have changed her mind in recent weeks. I welcome her statement that the BBC needs to demonstrate that the licence fee still represents value for money and to justify that it uses licence-fee payers' money, and earns their support,

"by offering services that extend the range and enhance the standards of what is available".

I am pleased that the Secretary of State has recognised that there will have to be a public debate in the run-up to charter renewal on whether the licence fee is still the best system for financing the BBC. Alternatives are available. It may be that no one single method is appropriate and that we have to look instead to a mix of different sources of finance for it, but the debate must happen and we contend that it must be properly informed. One way to do that is by determining the attitude of the public because they are the people who are required to pay the licence fee.

The purpose of new clause 7 is relatively modest. It would simply put a duty on Ofcom to carry out research into the efficacy, the cost-effectiveness and the public acceptability of the licence fee so that the debate, which the Secretary of State rightly said will take place, is properly informed and we know what the public think. We can no longer accept the assurance that the vast majority of people believe that the BBC is a wonderful institution for which they would happily pay as much as they are asked to contribute.

New clause 9 is also a relatively modest proposition. It suggests that part of the licence fee money is used to—

Geraint Davies (Labour, Croydon Central)

On a point of order, Madam Deputy Speaker. On the list of amendments selected for discussion, new clause 7 is not included in the group of amendments that we are debating.

Sylvia Heal (Deputy Speaker, Halesowen and Rowley Regis)

The group includes new clauses 6 to 9.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I am speechless. If the hon. Gentleman cannot read the list of selected amendments properly, it is not for me to correct him.

New clause 9 proposes that a small part of the licence fee proceeds should be put to one side and placed in a public service fund. The essential justification for having a state-owned and state-funded broadcaster is that it supplies public service programmes that the market would not otherwise produce. I accept that the BBC will be the main provider of public service programmes for the foreseeable future, but I do not understand why it has to have a monopoly on that. Commercial broadcasters are under an obligation, as part of their public service remit, to produce public service programming. Although one can identify many excellent programmes that are produced by the BBC which no one would argue are not part of the public service broadcasting obligation, for every "Lost Prince" that it produces there is a "Forsyte Saga" on ITV; for every "Daniel Deronda", there is a "Dr. Zhivago". Many programmes that are produced by the commercial channels are equally desirable and fit the public service remit. Indeed, it is sometimes hard to distinguish between the output of BBC and ITV.

New clause 9 would put just 1 per cent. of the licence fee to one side so that broadcasters could bid for it to receive finance for public service programming. The remaining 99 per cent. would stay with the BBC. Our proposal would inject that little bit of extra competition and break the monopoly that the BBC enjoys on receiving proceeds from the licence fee. The idea is not new. It has been proposed many times. The Davies committee recognised it as having merit and the Peacock committee discussed it. Many people think that there is no reason why the BBC should continue to enjoy a monopoly of public finance for producing public service programmes. I hope that the Government will consider our modest proposal.

Andrew Lansley (Conservative, South Cambridgeshire)

Does my hon. Friend recognise that there is an argument for going further than new clause 9 in respect of the proportion of the licence fee that could be available for competitive bids to provide the public service remit and to expose the BBC directly to competition? As it is drafted, it would take 1 per cent. out of the BBC's ambit as distinct from applying competitive pressure on how well it meets its public service remit compared with other public service broadcasters.

John Whittingdale (Conservative, Maldon and East Chelmsford)

Personally, I find that an attractive suggestion, and over time, the public service fund that we suggest could grow in size and achieve that purpose. In the new clause we make provision for the Secretary of State to increase the proportion of the licence fee that could be diverted to the public service fund. At this stage, however, I do not want to be too ambitious. We are suggesting a modest first step in that direction. Given the modesty that we are displaying on the matter, I hope that that will make it all the more attractive to the Minister.

Geraint Davies (Labour, Croydon Central)

I shall speak briefly in support of new clause 4, which would give the National Audit Office and the Public Accounts Committee unfettered access to the accounts of the BBC. Through their effectiveness, the NAO and the PAC are saving about £500 million of public money each year—10 times the cost of providing the facility. Given that the BBC spends £2.5 billion, it is not unreasonable to infer that the public would save millions of pounds if the National Audit Office were able to carry out value for money and financial audits of the BBC and if scrutiny took place.

It has been argued that that would undermine the editorial independence of the BBC, but, as has been said by others, the remit of the Public Accounts Committee extends not to policy, but to effectiveness. When we audit the national health service, for instance, we are in the business not of telling surgeons how to perform heart operations, but of telling people how to manage their affairs effectively to save money. As has also been said, the millions of pounds that we would undoubtedly save could be ploughed back to provide value for the viewer in terms of the quality of programmes.

Other speakers, particularly the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale), referred to the work of the Public Accounts Committee in the context of the BBC and the licence fee. As our report states, we found that of 3.5 million visits to try to catch evaders, 80 per cent. were unnecessary. In almost 60 per cent. of those cases, people failed to answer the knock at the door, perhaps because they knew who was knocking, or because they were not in. Twenty per cent. of the visits were to vacant properties, and a further 22,000 visits were to householders who had moved. Through that simple analysis, and by examining the number of prosecutions that ended in paid fines and in people getting licences, we provided valuable insights to improve value for money in the collection of the licence fee, and thereby to help the public.

It is clear, therefore, that the activity of the NAO can help to deliver value for money. In the past three years, savings of £1.54 billion have been achieved, so the arguments for allowing a national audit to provide better value for viewers and the public are virtually unchallengeable. I urge the Government to give positive consideration to the probing new clause.

Angela Browning (Conservative, Tiverton and Honiton)

I shall speak to new clause 8, which seeks to amend part 1 of schedule 2 to the Wireless Telegraphy (Television Licence Fees) Regulations 1997. I raise the matter because since those regulations came into law constituents and local authority housing departments have brought to my attention material changes concerning the effect of the licence on people who live in accommodation for residential care, and the concessionary rules that apply.

I wrote to the Minister last year on behalf of East Devon district council, and I hope that his portfolio tonight carries that correspondence. He wrote back to me on 25 March last year, and it may save time if I outline from the Minister's own correspondence the current qualifying criteria for what is called the ARC—accommodation for residential care scheme. They include the requirement that sheltered housing must be provided for occupation by disabled persons or retired persons aged 60 years or more. The criteria also include the requirement that that sheltered accommodation should have a person such as a warden whose function is to care for the needs of the residents and who lives on site or works there for at least 30 hours per week.

The purpose of the existing requirements is to ensure that qualifying sheltered accommodation is directly comparable to a residential home. Under those conditions, people living in such accommodation and over the retirement age—but of course now under 75 years of age—qualify for the £5 a year concessionary licence. In practice, although there may be purpose-built or purpose-acquired accommodation for an older population, many housing departments are finding that if at any time they cannot fill that accommodation with people who are disabled or over the retirement age, they necessarily have to put people of mixed age groups in the accommodation. They, of course, do not qualify for the concessionary television licence, and the status of the accommodation changes.

People who lived there and previously qualified for the £5 licence suddenly find that they no longer qualify. I had a case in Crediton in my constituency where an elderly lady living in such accommodation moved from the ground floor to the first floor. On the ground floor she had qualified for the £5 licence, but unbeknown to her, by moving to a different floor of the same building, she lost that entitlement. New clause 8 seeks to tidy up the regulations in the light of the changing circumstances to give people preserved rights, so that if at any time they had qualified in a particular building but the external circumstances had changed, they as individuals would continue to benefit from that £5 licence and the preserved rights would apply to them as individuals.

When I wrote to the Minister on behalf of East Devon district council last March, he wrote back to me and stated:

"The Government intends to introduce preserved rights for ARC beneficiaries whose accommodation ceases to meet the qualifying criteria in such circumstances"—

as I described—

"so long as it continues to be provided or managed by a local authority, a housing association or a development corporation."

I have no disagreement with that. The Minister went on to tell me that consultations had already begun between Department for Culture, Media and Sport officials and the BBC on the formulation of the necessary amendments to the television licence fee regulations.

The Minister stated that the Government intended to introduce the amendments as soon as they could. That was a year ago, so I was a little disappointed to find that he had not used the opportunity of the Bill to amend the regulations, as there seems to have been a reasonable amount of time for the details to be finalised. I hope that tonight the Minister will look favourably on the new clause in order to tidy up the existing regulations in the light of changing circumstances. Although there are not millions of people who would qualify, there are sufficient numbers of people. As I know from the individuals with whom I have spoken in my constituency, they feel aggrieved when they previously qualified for the concession and it is removed from them through no fault of their own.

John Grogan (Labour, Selby)

The remarkable speech from the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) deserves some response. He described his new clauses as being relatively modest and a first step, but it is clear in what direction he would take us and what his second and third steps would be were he to find himself the Minister for Culture, Media and Sport in 2006–07—we must imagine under which Prime Minister he would be serving. His remarks today were a sustained assault on the licence fee and, at times, on the BBC as well.

The hon. Gentleman referred to a recent article in The Sunday Times about a widespread refusal to pay the licence fee, and he offered us two examples—a gentleman called Jonathan Miller and a Soviet dissident, Vladimir Bukovsky. The hon. Gentleman said that he would not go quite as far as Mr. Bukovsky, but those two examples were supposed to demonstrate the widespread refusal to pay. He also referred to press attacks on the BBC and the general dumbing down of the BBC. He is right; there have been such attacks. I shall give the House three brief examples.

"The Corporation has fallen woefully short of its duties to the public";

"Many of the BBC's present popular programmes would have been condemned by the BBC itself five years ago as intolerably shoddy";

"The BBC's policy seriously threatens the unique role the BBC has played in the cultural and intellectual life of the country."

It could prove

"disastrous to the standards and quality of public service broadcasting."

The first quote came from The Times in 1958, the second from The Observer in 1960, and the third from a letter written in 1969. The fact that this is an old debate does not mean that it is not important. The BBC quite rightly has to justify its licence fee to each generation, but I believe that it can do so.

The hon. Member for Maldon and East Chelmsford rightly characterises his new clauses as modest, but I would also characterise them as somewhat lop-sided. In the case of new clauses 6 and 7, it is like the Government doing a survey on what the public think of VAT, then using the finding that they do not particularly like paying it to conclude that the public do not like the health service, the education service or whatever. The proposals are very lop-sided. I am sorry about that, given that the hon. Gentleman appears to have liked "The Lost Prince". Like him, I was invited to its première. I was among the B-list category of celebrities, in that I was invited to "The Lost Prince", and not to the Brit awards as most contributors to this debate seem to have been.

How about asking what the public think of the BBC's output, and whether they think, for example, that Radio 2 has a successful schedule or whether they like programmes such as "The History of Britain" and "The Blue Planet"? We were talking about dumbing down, but those programmes are watched by far more people of this generation—between 6 and 7 million—than ever watched landmark programmes such as "The Ascent of Man" and "Civilisation" in the late 1960s and early 1970s, which achieved only about 1.5 million viewers. It is important to take a rather more comprehensive view of public opinion than those two new clauses propose.

Obviously, there are conflicting pressures on the BBC in regard to the efficiency of licence fee collection. If it did not collect the fee with sufficient vigour, it would be open to the criticism—such as that levelled by the hon. Member for Gainsborough (Mr. Leigh)—that it was evading its financial responsibilities. It is worth noting that since 1991, when the BBC took over responsibility from the Home Office for collecting the licence fee, levels of evasion have shrunk considerably. In 1991, there were 19.4 million licences in force; last year, the figure had grown to 23.7 million, yet evasion rates dropped from 8.8 per cent. in March 2001 to 7.9 per cent. in March 2002, and to 7.6 per cent. this year.

Despite the existence of Mr. Miller and Mr. Bukovsky, I do not really detect a mass refusal to pay that would justify the comparison to the poll tax that the hon. Member for Maldon and East Chelmsford made. Life was very different when we had the real poll tax in operation some years ago. Obviously, the licence fee is economically regressive, although it has been pointed out that those over 75 receive not just a rebate but a complete exemption from it. Indeed, that exemption was introduced three days before my father was 75. That was the one time that he thought that I had any real political influence. Of course, the licence fee is economically regressive, but, in the wider context, it is extremely progressive, because it means that the very best of our culture and national life can be made available to everyone who has either a radio or a television. Those things are not only available to the wealthy on subscription. The hon. Member for Maldon and East Chelmsford mentioned subscription TV.

When we examine carefully the alternatives to the licence fee, I wonder whether the hon. Gentleman—who clearly wants to move away from the licence fee—would really carry his party with him. I would relish a political fight in the marginal seat of Selby if, for example, someone suggested introducing advertising to the very middle England Radio 2 channel, or privatising Radio 1. It is going to be hard to hold Selby next time, but a real challenge to the licence fee and the BBC would help me to reach parts of my electorate that I might not otherwise reach.

I do not think that such a challenge would be electorally popular, especially given some of the alternatives to the licence fee, such as advertising, subscription and sponsorship. If they were introduced, the BBC would have to serve commercial priorities, not just those of the licence payer. It would also have to start competing for revenues with other commercial broadcasters. If it were funded by subscription, it would no longer be able to serve everyone. No longer would everyone be able to watch the football World cup; only those who could afford the subscription would be able to do so. Direct funding by the Government would surely endanger the political independence of the BBC.

John Whittingdale (Conservative, Maldon and East Chelmsford)

The hon. Gentleman says that direct funding from the Exchequer would surely affect the political independence of the BBC. Does he think that the World Service is affected by the fact that it is directly funded by the Government?

John Grogan (Labour, Selby)

Under the Conservative Government, the World Service's whole financial structure was threatened by cut after cut. That really politicised the World Service in a way that proved very difficult at the time. Thankfully, the present Government have reversed the effect of some of those cuts.

The licence fee, which funds the BBC so well, and has done over so many generations, should not be thrown aside lightly. The hon. Member for Maldon and East Chelmsford said that other public service channels produce public service programmes, and of course they do. But part of the role of the BBC down the generations has been to raise standards and to raise the aspirations of some of the commercial channels that have other pressures. The fact that we see excellent public service programmes on ITV, for example, is partly a reflection of that.

Having had some measure of disagreement with the hon. Gentleman I would agree with him on one thing. The BBC's governors must take serious account of today's debate on new clause 4, regarding accountability to the National Audit Office and the Public Accounts Committee. I urge the BBC's board of governors to discuss this issue at an early date—I know that there are differences of opinion among its members—because it is inevitable that this change will be made at some stage. It is time that the BBC recognised that.

Another allegedly modest measure is the new clause that would set up a public services fund run by trustees and would, for the first time, split the licence fee from the BBC. Obviously, the long-term aim of that proposal is to increase the percentage from 1 per cent. to perhaps 5, 10 or 20 per cent. and perhaps to have an arts council of the air, as has been introduced in New Zealand, and destroy the BBC altogether. Again, I would urge great caution. In New Zealand, it has now been decided to reverse that measure and to re-fund the public service broadcaster, because a group of trustees sitting around doling out money cannot make quality public service programmes. The BBC has a value in terms of its public service ethos and of the creativity of its producers, its staff and its training that goes back for generations, and we must be very careful indeed before we rip up that tremendous heritage.

David Rendel (Liberal Democrat, Newbury)

I should like to start by making a few remarks about new clauses 6 to 9 on behalf of my hon. Friends—my hon. Friend the Member for North Devon (Nick Harvey), our chief spokesman on these issues, has suggested that, to speed up today's debate, I might make those remarks instead of him—before I go on to the real purpose of my speech, which is to speak in my capacity as a member of the Public Accounts Committee about new clause 4.

My hon. Friends and I believe that new clauses 6 and 7 are unnecessarily bureaucratic and would involve the BBC in a lot of extra research work. In practice, new clause 4 will fulfil the financial requirements. It is much better to hand to the NAO the job of making sure that the money is properly spent. We have no particular problem with new clause 8 and have some sympathy for it. New clause 9 introduces an interesting idea, albeit one that should more properly be discussed when the licence system is reviewed at the time that the charter comes up for renewal. The hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) pointed out that it would be possible for a future Government or a different Minister to increase the figure of 1 per cent. Since the whole basis of the hon. Gentleman's argument for new clause 9 is that 1 per cent. is so insignificant that we need not worry about it, for him to admit that it could be increased at the will of a Minister seems to destroy his argument.

I am delighted to join the Chairman of the Public Accounts Committee in his support for new clause 4, for which PAC members have been fighting for some time. I spoke on the proposal in the House a year ago; it was part of the Sharman report and it enjoyed the support of the PAC even before then. As the hon. Member for Maldon and East Chelmsford pointed out, the current chairman of the governors of the BBC was fully in favour before assuming that office. It is funny how people sometimes change their views. Nevertheless, if the Minister chooses to go down that route, he may not meet quite the resistance from the BBC that might have arisen under previous chairmen.

The only counter-argument to new clause 4 is that we must defend the BBC's independence. It is hard to understand why anyone should imagine that it is necessary to defend the BBC's independence against someone such as Sir John Bourn, the Comptroller and Auditor General. It is absurd to argue that Sir John would say it was important to have Jim Davidson rather than Sandi Toksvig on Radio 4 or that the NAO would ever interest itself in editorial decision making. It will examine not policy or editorial matters but whether the licence payers' money is used effectively. That is even more important now that the BBC is doing much more contracting out and buying in of programmes from independent sources. The more that is done, the more important it is to examine the contractual processes and procedures.

Only yesterday, the Comptroller and Auditor General, talking to the Public Accounts Committee about his budget for next year, made the point that he can in many ways be more objective even than a private sector auditor, who may work on a one year or three-year contract. As the contract comes up for renewal, the firm will begin to wonder whether it will be reappointed—so it comes under a little pressure to do what the client wants. Anyone who doubts the difficulties that that situation can create only has to think of the problems that Enron got into with an auditor that perhaps did not do its job well. If the National Audit Office were appointed for the BBC, it would not be under pressure to keep the BBC happy with its work because the NAO would be accountable not to the corporation but to the House.

Whereas company shareholders theoretically have the right to reappoint auditors or throw them out on a regular basis, television licence payers—in effect the shareholders of the BBC—do not have the same right. There is a standard case for appointing the NAO as the auditors for the public. It is not the Government's auditors but Parliament's auditors—and through Parliament, the NAO is the auditor for the public. Where large sums of money are spent on behalf of the licence payers, the NAO should serve as the objective watchdog guarding that money and making sure that it is properly spent.

Andrew Mitchell (Conservative, Sutton Coldfield)

I draw the attention of the House to my registered interests.

I enter into debate with some hesitation, having listened to an interesting discussion as an outsider surrounded by many experts on media and culture in all parts of the House.

The case made by my hon. Friend the Member for Gainsborough (Mr. Leigh) when moving new clause 4 was unanswerable. I am ashamed to say that I was not aware that his Committee was unable to look at the BBC in the manner in which he described. I hope that the Minister, who has an enviable reputation for his willingness to unsheathe his sword and do battle with powerful vested interests, will not forbear from doing so on this occasion with the governors of the BBC.

I rise to speak as a humble seeker after truth. The Bill clearly addresses an important lacuna in broadcasting arising from far more competition and much more economic activity. All independent surveys show that the media and other creative industries will grow enormously over the next 10 years and that we will all spend much more money on such activities. It is in almost everyone's interests that the position of independent producers is improved. There is a need for a good plural marketplace in which dominant broadcasters cannot be overbearing and property rights will be properly protected.

The BBC raises by means of a compulsory tax £2,500 million a year in public money. That represents a massive privilege for the BBC and a massive interference in normal practices and terms of trade in the commercial marketplace. I listened with great interest to my hon. Friend's comments about the licence fee. I do not entirely agree with his analysis but recognise the power of his arguments. I yield to no one in my admiration for the BBC, but where there is a powerful, rampant force in the marketplace it is important that we understand the ramifications.

The Minister will recall that in 1988 Lady Thatcher made the landmark decision that 25 per cent. of public sector broadcasting should be made by the private sector—a decision that was welcomed at the time. News and sport were exempted, so in fact the percentage is probably nearer the low teens.

I think we would all agree that the best ideas in the marketplace should attract the money. That is good for our culture and for our country. Some 75 per cent. of the BBC's production is therefore in-house. Given that that does not tend to vary much over the years, the 75 per cent. is clearly guaranteed; otherwise the figure might be 76 per cent. or even 80 per cent. in one year, and rather lower in another.

That brings me to a point made by one of my hon. Friends, whose view is that the BBC's position is entirely justified by the fact that it cures market failure. Certainly it is responsible for some wonderful productions, such as costume dramas and foreign affairs documentaries, but what worries me is that it seems to cause more market failure than it addresses. Let me give four examples.

First, I understand that the BBC—funded with public money—attracts more than 50 per cent. of all radio audiences. That must have a real effect on the marketplace. Secondly, I believe that the BBC has the dominant website in the UK. It does not, as I thought, cover only news, although it covers a huge amount of news; it also deals with entertainment, children's issues and lifestyle. That dominance is deeply resented by the commercial operators, and it must crowd out some of the commercial markets.

Thirdly—I mention this with some misgivings—there is BBC Worldwide. We should be fair to the BBC, which was charged with greatly increasing its revenues by commercial means. At the same time, however, it enjoys a luscious funding settlement. BBC Worldwide is, in my view, an example of unfair competition, although that is hardly its fault. It should be told either to maximise its income, or to trade fairly in the market. It cannot do both.

Fourthly—this strikes me as, in many ways, the most powerful justification for the argument—the BBC is a publisher of books and magazines. Those publications, however, seem to me to constitute an exploitation of pieces of intellectual property. "Top Gear Magazine" is an example. I do not think the BBC has any right to intervene in the magazines market in that way, or that it should be allowed to do so. Books and magazines should be licensed into the magazines market. There should be a bidding process to provide transparent valuations in the marketplace, enabling the licence fee payer to receive the benefit and preventing the magazines market from being distorted by public money.

I end as I began. We are dealing with a huge, rampant beast in the market, at a time when many of the companies with true commercial interests are in a greatly weakened state. That is clear from some of their share prices, valuations and profit schemes. In no other UK industry do we allow public money to distort the market in this way.

I hope the Minister will give us his views, and perhaps encourage us to believe that tight control will be exercised. I should certainly like to think that ministerial attention will be focused on the points I have made.

Michael Fabricant (Conservative, Lichfield)

My hon. Friend the Member for Sutton Coldfield (Mr. Mitchell) has raised an interesting and important point. The BBC would argue that the magazines to which he refers are not funded by licence fees, but operate in a commercial market. It would argue that the profits made from their production are used to supplement television licence fees so that programmes can be made. The point is that we have to take the BBC's word for that.

Perhaps the BBC is right, but we do not know. This returns us to a fundamental point that I made time and again in Committee, in connection with both the National Audit Office and Ofcom's role in controlling the BBC—that the BBC ought not to be its own judge and jury. Time and again, people and commercial organisations have complained about the BBC, and not just in respect of publications. When the BBC launched its own computer some years ago, in competition with other manufacturers, it was said that it was using the licence fee to fund a commercial operation.

The BBC has produced a grand document about fair trade. It states that the BBC will never compete using licence payers' money, that it always operates independently, that it is audited by a good firm of auditors, and so on. However, as I said, we can never be sure about such matters, and we need an independent organisation—not merely an auditor—to look after them. I shall be interested to hear whether the Minister proves to be the only person in the Chamber who argues against the NAO having the power to investigate such matters. It is quite extraordinary that in this day and age, only the civil list—as has already been pointed out—and the BBC are exempt from such investigation. Although I have the greatest respect for the BBC, I do not put its chairman, whose hospitality I so recently enjoyed, in quite the same category as Her Majesty the Queen.

The NAO would give protection to the BBC. Many of the accusations made against the BBC are probably not well founded. When the Bill was being considered in Committee, we were approached by The History Channel. It suggested that the BBC was acting unfairly in setting up UK History, which is available on Freeview. The BBC argued hard and well, saying, "No. We are operating in competition. Why should we provide programmes to The History Channel any more cheaply than we provide them to the public service broadcasting organisation in the United States, to the Australian Broadcasting Corporation, or to any other broadcaster?" I rather suspect that the BBC was right, but The History Channel rightly felt that this was yet another case of the BBC being its own judge and jury. How can we be sure that the BBC was right? In my view, the NAO would give the BBC the necessary protection in that regard.

I realise that the BBC would not want the NAO to interfere in its direct running, and particularly in the creative side of the corporation. The Chairman of the Public Accounts Committee offered good reassurance that the PAC has neither the time nor the inclination to interfere in that way; nor, indeed, would the Comptroller and Auditor General have the necessary resources or interest to do so. The Minister mentioned a particular programme or series perhaps proving a loss-maker. The only such programme that I can think of is "Eldorado", but on the other hand the BBC has to experiment. It seemed like a good idea at the time—isn't that what it always says?—and it would be very wrong for a particular organisation to say with the benefit of hindsight that the BBC was wrong to experiment. It is experimentation that has given the BBC its very strength.

I wonder whether you, Madam Deputy Speaker, saw "The Great War"—the 40-year-old series that was originally shown on BBC2, and which is being re-run on Saturday nights. Before it was broadcast, a documentary was shown about how it was made, including the arguments and the struggle within the BBC that led to its production. The series "The Great War" was earth-shattering—

George Osborne (Conservative, Tatton)

So was the war itself.

Michael Fabricant (Conservative, Lichfield)

As my hon. Friend points out, the war itself was obviously earth-shattering, but so was the series. It was the first time—

Sylvia Heal (Deputy Speaker, Halesowen and Rowley Regis)

Order. The hon. Gentleman should relate his remarks to the new clause.

Michael Fabricant (Conservative, Lichfield)

They are related to the new clause, Madam Deputy Speaker. The Minister rightly pointed out the locus of new clause 4, which would allow the NAO to investigate the BBC. I simply mention "The Great War" as an experimental programme made by the BBC. It was the first time that a broadcaster—ABC also showed the series—had ever invested in producing a 24-episode series on such a specialised issue. [Interruption.] Hon. Members may chortle, but from that came the series on the second world war. That was produced not by the BBC but by the old Associated Rediffusion, which reinforces the point made by my hon. Friend the Member for Maldon and East Chelmsford (Mr. Whittingdale) that it is not only the BBC that produces public service broadcasting. 5 pm

The National Audit Office would and should not look at that area, and as I suspect that that is the only area that concerns the BBC, it need not worry. The BBC can be reassured that the NAO would consider only the structure within which the corporation's operations take place in the broadest terms, not the cost of producing individual programmes, such as that groundbreaking series, "The Great War".

As my hon. Friends the Member for Maldon and East Chelmsford and the Chairman of the Public Accounts Committee have said, universities are investigated by the PAC and they have not complained. The Arts Council falls within the ambit of the PAC, and it has not complained. I hope that the BBC will regard the change as a protective shroud, not as something that will endanger the BBC or its ethos.

I have mixed feelings about the licence fee. It is a regressive tax, but there are no easy solutions. The BBC costs £2.5 billion, which is, on the whole, probably well spent. We do not know for sure, because the NAO has not been allowed to investigate. However, if £2.5 billion were taken out of the total amount of advertising revenue available to television now, it would cripple an already semi-crippled ITV, it would cripple Channel 4 and it would destroy Channel 5. Nor would it be possible for the BBC to be funded from subscription. In that case, it would be the BBC that was destroyed. It would no longer be the public service broadcaster that most of us respect at present.

On the other hand, I support new clause 7, which would provide for research on television licensing and alternative funding for the BBC. I do not share the fears of the hon. Member for Selby (Mr. Grogan)—he spoke eloquently in support of the corporation, and I agreed with much of what he said—that if the BBC were funded by a system based on council tax bands or a percentage of income tax, it would necessarily result in the Government interfering in the daily operation of the BBC. I do not seriously suggest either method as a way of raising funds for the BBC. A percentage of income tax might be a better form of revenue for local government, although I would certainly be out of order if I pursued that thought Madam Deputy Speaker. The NAO would not wish to interfere in the daily operation of the BBC either.

In 1936, the Government—I presume that it was a Conservative Government, although I look to the historians among us to correct me if I am wrong—

George Osborne (Conservative, Tatton)

National Government.

Michael Fabricant (Conservative, Lichfield)

The National Government set up the BBC World Service, which has received a grant in aid ever since. In 1940, there was a battle between the Government and the World Service over editorial policy, which the BBC won. Ever since, no such battle has taken place. No Government, Labour or Conservative—or a future National Government, God forbid—would ever wish to interfere with the internal editorial independence of the BBC, regardless of whether it was funded by licence fee or some form of income tax. We could always ensure that protection was provided, by modifying this legislation or the royal charter.

The BBC should regard the new clauses as helpful to its future governance. More importantly, I hope that the Government will consider them helpful, and that they will accept them.

George Osborne (Conservative, Tatton)

I begin by saying that I enjoyed very much the speech introducing new clauses 6 to 9 by my hon. Friend the Member for Maldon and East Chelmsford (Mr. Whittingdale). It was very eloquent and did credit to the Guild of Speechwriters, of which I am also a member.

I rise to support new clause 4, so ably moved by my hon. Friend the Member for Gainsborough (Mr. Leigh), the Chairman of the Select Committee on Public Accounts. I note that almost every hon. Member to speak in the debate also supports the proposal. The diversity of that support shows that this is a non-partisan issue. I draw the Minister's attention to the words of the right hon. Member for Swansea, West (Mr. Williams), who has enormous experience. He was a member of the Public Accounts Committee before I was born. I always bow to his much greater experience. In Committee, the Minister said that there was

"no one else in the House to whom I would look for more wisdom on the subject of public accountability."—[Official Report, Standing Committee E, 6 February 2003; c. 1065.]

The right hon. Gentleman has now joined the Chairman of the PAC and hon. Members of all parties to urge the Government to accept a recommendation from an inquiry set up by the Government. If the Minister were still a PAC member, I suspect that he would have put his name to the clause as well, and probably spoken in favour of it. I am sure that his instincts are correct and that we shall hear from him shortly.

In the bipartisan spirit in which the new clause was moved, I want to congratulate the Government on the way in which they set up the Sharman inquiry and on their acceptance of almost all the inquiry's recommendations. In the coming months and years, the Comptroller and Auditor General's remit will be extended to many non-departmental public bodies that previously escaped public and parliamentary scrutiny.

That that is an excellent thing is accepted on all sides of the House, and it makes all the more strange the Government's refusal to accept Sharman's recommendation about the BBC. That is the only major recommendation in Sharman that the Government do not support, and it is a glaring omission. The arguments advanced by the Government are not convincing to any hon. Member who has taken part in the debate.

My hon. Friend the Member for Gainsborough made it clear that the BBC is nervous about the proposal because it believes that it threatens the corporation's editorial independence, the way it goes about commissioning programmes or covering political events, and all sorts of other activities. That concern demonstrates an ignorance of the work of the CAG and the National Audit Office. I hope that that ignorance is genuine and innocent. As has been said several times, the new clauses deal with the implementation of policy, not with policy itself. That must be right, given the amount of public money—£2.5 billion—involved.

It must be a central principle in a democracy that there should be clear and transparent accountability when it comes to the spending of public money. That is not the case with the BBC at the moment. There are 12 BBC governors, supported by a small staff. Even if they had the inclination, they are unable to provide the same scrutiny of the BBC's finances as the NAO, which has more staff and greater expertise.

The BBC has nothing to fear. After they have survived an encounter with the PAC, departmental permanent secretaries say that they have learned something and that the discussion has served to improve the way in which they manage their Departments and run Government programmes. It is one of the reasons why the Government accept the overwhelming majority of the recommendations from the National Audit Office and the Public Accounts Committee. It would do the BBC a lot of good, on its own terms, to have its work scrutinised and improved on by the NAO. As my hon. Friend the Member for Gainsborough said, there is no question that the Comptroller and Auditor General would try to second-guess the BBC's right to make a drama series out of a Jane Austen book or to cover a particular political event. That would not happen; it is not the way in which the Comptroller and Auditor General operates. It must, however, be correct that someone—I would argue that it should be the Comptroller and Auditor General—should examine matters such as the way in which the BBC commissions programmes and the cost of commissioning programmes vis-à-vis other organisations, how it makes use of its extensive property holdings and whether those buildings are being efficiently used, how it provides digital services, and the way in which it commissions IT systems. That is the bread and butter work of the PAC and the Comptroller and Auditor General in relation to Departments, and they produce pretty outstanding results. The BBC has nothing to fear from that kind of scrutiny.

That is not just my view but the view of a vast range of organisations, reports and independent inquiries into the subject. It is the conclusion of the Sharman inquiry and of the independent review panel chaired by Gavyn Davies. It is worth reminding hon. Members of what the review panel's report said:

"The most serious lacuna that results from the structure of the BBC concerns financial control. The BBC is disposing of a substantial sum of what is essentially public money."

It then quoted a letter that had been sent to the panel by the then Chairman of the Public Accounts Committee, my right hon. Friend the Member for Haltemprice and Howden (David Davis), who said:

"The Comptroller and Auditor General's inability to report to Parliament on the way the BBC uses the licence fee seriously weakens the accountability of the BBC."

Gavyn Davies' review panel said:

"We agree and, accordingly, recommend that the National Audit Office should be empowered . . . to carry out periodic financial audits of the BBC's accounts and its fair trading arrangements."

It is also the view of the Select Committee on Culture, Media and Sport and the right hon. Member for Manchester, Gorton (Mr. Kaufman), who said to the BBC:

"The idea that Parliament, which creates you and funds you, ought not to have the right for the NAO to investigate you I have to say . . . is a misuse of the very important ethos of BBC independence in terms of politicians not interfering in any way with what you broadcast."

He was absolutely spot on.

I shall be interested to hear what the Minister says. Every hon. Member who spoke, on both sides of the House, supported the new clause. If the Minister were to say that it does not have to be done through legislation, but can be done by amending the BBC charter, and gives a commitment to do that, we would all be satisfied. I want to hear from him either a defence of the indefensible—the exclusion of the BBC from the remit of the Comptroller and Auditor General—or, I hope, a clear indication that the Government will move forward on a central recommendation of a report that they initiated.

Kim Howells (Labour, Pontypridd)

This is not an easy one for me. The hon. Member for Gainsborough (Mr. Leigh) spoke elegantly and convincingly. He is right that I am a veteran of the Public Accounts Committee, and I have a theory that once one has experienced that, one is changed for ever. When he responded to my intervention, he said some reassuring and important words about what the Comptroller and Auditor General does and what the Public Accounts Committee is interested in. I trust that those important words will be heard throughout the country.

I note that there are many race courses in the constituency of the hon. Member for Tatton (Mr. Osborne). I do not know whether that is significant. He said that he would perhaps think more kindly of the Government if I gave him an undertaking to consider the new clause.

John Whittingdale (Conservative, Maldon and East Chelmsford)

Not consider, but act.

Kim Howells (Labour, Pontypridd)

The master of semantics has spoken and I shall not argue.

The hon. Member for Gainsborough convinced me that the Comptroller and Auditor General is not interested in trying to influence editorial policy and that his scrutiny would not therefore constitute a threat to editorial independence or the governors' important powers. If I have anything to do with the matter, such scrutiny will be one of the most important matters that is considered in the course of charter renewal, and of the renewal of the agreement between the BBC and the Secretary of State.

Michael Fabricant (Conservative, Lichfield)

Will the Minister give way?

Kim Howells (Labour, Pontypridd)

In a second. Let me finish the point first.

As I explained in Committee in response to an almost identical new clause, the Public Accounts Committee's recommendation can be implemented without amending schedule 4 of the National Audit Office Act 1983, as new clause 4 proposes. Section 6(3)(d) of the 1983 Act permits the National Audit Office to carry out value-for-money reviews of the BBC by agreement between the corporation and a Minister of the Crown. I understand the difficulty that the hon. Member for Gainsborough experiences with that.

The amount of NAO access that the hon. Gentleman proposes could be achieved without changing existing legislation, but I agree that it is by no means such an elegant solution. It is complicated and should be examined at the appropriate moment, when the charter is up for renewal and we reconsider the agreement between the Secretary of State and the BBC.

David Davis (Conservative, Haltemprice and Howden)

The interim proposal that the Minister outlines is better than nothing but not much better. The NAO sought such powers over the Housing Corporation and housing associations; it now has them through the Government's response to the Sharman report. It explicitly sought to negotiate access, but that was denied it on the occasions when it was necessary, for example, in cases of criminal fraud. That is the problem. Negotiation of access gives people who are misbehaving, or not behaving as well as they should, the right to opt out of the process. That is why the Minister's option is so weak.

Kim Howells (Labour, Pontypridd)

I agree with the right hon. Gentleman that it is a weaker option, although not as weak as he suggests. It has been suggested that relying on section 6 of the 1983 Act would give the BBC a power of veto over NAO access. However, agreement between the Secretary of State and the BBC is at the centre of the corporation's regulatory framework. That arrangement works effectively and has not prevented the Government from introducing necessary regulatory measures.

Andrew Lansley (Conservative, South Cambridgeshire)

Does the Minister recall paragraph 18(4) of the BBC charter? It states:

"The Corporation shall at all reasonable times upon demand give to Our Secretary of State or Our Secretary of State for Foreign and Commonwealth Affairs and all other persons nominated by either of them full liberty to examine the accounts of the Corporation"

and so on. It is therefore not necessarily the case that access to the accounts happens with the BBC's agreement. Are the Government willing to use that paragraph of the charter?

Kim Howells (Labour, Pontypridd)

Obviously, I would have to consider the request that was made, but I am not aware of any request having been made in those terms. I may be wrong and the right hon. Member for Haltemprice and Howden (David Davis), who chaired the Public Accounts Committee, or even the hon. Member for Gainsborough, its current Chairman, might be able to help me, but I am not aware of any such request. If I discover that such a request has been made, I shall let the House know.

Michael Fabricant (Conservative, Lichfield)

I sought previously to intervene on the Minister to ask a question that it is even more suitable for me to ask now. He recognises that the proposed solution might be unsatisfactory as a short-term solution and has accepted in Committee and today that there is an argument for national audit investigation, although perhaps not under the mechanism proposed through my hon. Friend the Member for Gainsborough (Mr. Leigh). He said that if he was still around when charter renewal was discussed, the matter would then be considered. What is the current policy of the Department? Just as there may or may not be life after death, there must also be policy after a Minister goes.

Kim Howells (Labour, Pontypridd)

The policy is precisely what I am saying to the House: we can rely on section 6 of the National Audit Office Act 1983. However, I hope that I have hedged that about with enough reassurances to provide the hon. Gentleman at least with a clear picture of what this Minister thinks. I hope that that is helpful.

I recognise that many hon. Members feel strongly about this subject and I understand their arguments about the need to ensure the BBC's accountability to Parliament and licence payers. As I explained in Committee, successive Governments have been reluctant to grant the NAO greater access to the BBC because of concerns that that could compromise the corporation's editorial independence and inhibit its creativity. I repeat that I think that the hon. Member for Gainsborough eased very considerably the worries and concerns of this place in that regard. Instead, other means have been adopted to ensure financial accountability, and the BBC is subject to a range of external reviews as well as to independent audit. However, the Government will respond formally to the report of the Public Accounts Committee. It would not be right for me to pre-empt that response, but I can assure hon. Members that, in reaching our conclusions, we will certainly bear in mind the very powerful arguments that have been advanced here and elsewhere.

New clause 6 would require the BBC to commission and publish every year independent research into the efficacy, cost-effectiveness and public acceptability of television licensing in the United Kingdom. In contrast, new clause 7 would impose the same obligations on Ofcom. The National Audit Office already has power to carry out reviews on the economy, efficiency and effectiveness of arrangements for collecting fees and enforcing the television licensing system. The NAO's most recent report on the subject was published in May last year and the Public Accounts Committee published its report on 18 December last year. The independent research proposed by new clauses 6 and 7 might therefore be in danger of overlapping with the NAO and PAC review arrangements. Moreover, that research would have to be undertaken with a frequency that we do not believe to be necessary.

Of course, the question whether the television licence fee is the best way of funding the BBC is a different matter. Public acceptability of the licensing system is part of that broader question. We shall be considering that issue in detail during the charter review process, which is due to begin in 2004. The proposed research would therefore also duplicate the Government's own deliberations and consultations in the charter review period. If the television licence fee is retained as the mechanism for funding the BBC, it will be after very careful consideration of all the relevant issues, including its sustainability in the longer term. We therefore doubt the need for an annual review of the arrangements.

In any event, it seems inappropriate for such research to be commissioned by the BBC, as new clause 6 proposes. It is for the Government and not the corporation to determine how the BBC should be funded. New clause 6 requires the research to be independent. However, because the issue here is the way in which the BBC should be funded, we do not think that it would be appropriate for the corporation to be responsible for commissioning that research.

Let me turn to new clause 8. I can well understand the concern of the hon. Member for Tiverton and Honiton (Mrs. Browning) over the loss of entitlement to the accommodation for residential care—ARC—concession on the television licence. She gave the House some reasons for that, such as changes in the housing mix and the level of warden provision in sheltered housing schemes. I can also understand the sense of frustration that she and others feel—and I include myself in this—that the preserved rights to the concession, which the Government undertook to introduce nearly two years ago, are still not in place.

In drafting new clause 8, the hon. Lady may have appreciated the reasons for the delay. At least, I assume that she may have. The regulations that govern the ARC scheme are very complex and the scheme gives rise to a number of anomalies. We were anxious, when introducing preserved rights, to avoid creating new anomalies or further complicating the administration of the scheme—which has often been the effect of previous changes. I am pleased to tell the hon. Lady that, in the next few weeks, we shall introduce amending regulations that will introduce preserved rights to the ARC. The regulations will be subject to the negative resolution procedure but will be in place well before this Bill receives Royal Assent.

I should add that new clause 8, as it stands, would not achieve its aim of introducing preserved rights; it would require a person to have been paying the issue fee for a concessionary licence.

Angela Browning (Conservative, Tiverton and Honiton)

I am very pleased to hear what the Minister has said. As many others will be, I am delighted at his pledge to introduce the new regulations in the next few weeks. I tabled the new clause, but I had hoped that the Government would have done so. I accept that it may be technically flawed, but I wanted to prompt the Minister into the action that he has just announced.

Kim Howells (Labour, Pontypridd)

I think that the hon. Lady made a very good fist of it, which is why I wondered whether she had found it difficult. I certainly do.

Angela Browning (Conservative, Tiverton and Honiton)

I had a lot of help.

Kim Howells (Labour, Pontypridd)

That goes without saying—[Laughter.] I did not mean that in a nasty way—this place is besieged by lobbyists.

New clause 9 would establish a public services broadcasting fund, funded by the BBC licence fee, to pay grants to groups or organisations to allow them to make programmes of local, regional or sectional interest for inclusion in a programme service. As I understand the new clause tabled by the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale), the programme services that could benefit are not limited to BBC services. The fund would be set up by order of the Secretary of State and would be approved by a resolution of each House.

I am afraid that we cannot see our way to accepting the new clause. It would not be sensible—at least at present—to require that licence fee funds be deployed on the basis proposed. The BBC is at the heart of our broadcasting system and the licence fee is the way in which we have chosen to fund it. That decision was endorsed by Parliament at the time of the last renewal of the BBC charter—in 1996 under a previous Government. I accept that there is reasonable discussion about the proper role of the BBC and about the way in which it is constituted and funded. That discussion will no doubt lead to a more structured debate when we embark on the process of charter review in 2004.

The hon. Member for Newbury (Mr. Rendel) reminded us that the proposal in the new clause would amount not to a small sum of money but to £25 million. There would be no obvious means of accountability, which would be difficult to accept. As I have said, next year will see the beginning of the process of charter renewal.

Edward Leigh (Conservative, Gainsborough)

The Minister has said that he is prepared for the Comptroller and Auditor General to look into the finances of the BBC during the process of charter renewal, which he has said will be in 2004. When will the Government resolve this issue? Will the Minister start the process now, having listened to this debate? Will the process have ended by 2004? May we have an idea of the time scale?

Kim Howells (Labour, Pontypridd)

The hon. Gentleman is quite right to ask that question. The charter comes up for renewal in 2006, but the process starts in 2004. Therefore, it begins in a very short time.

As I have said, we will begin the process of charter renewal next year. I assure the House that the Government will be very content for the issues that have been touched on today to be fully examined in that context. At this stage, however, it does not seem to us that the proposed new clause could be justified in the framework of the BBC's current role and constitution, or that it would add anything useful to the arrangements on the BBC agreement set out in the Bill. I therefore ask the hon. Gentleman to withdraw new clause 4 and suggest that new clauses 6, 7, 8 and 9 should not be pressed to a Division.

Edward Leigh (Conservative, Gainsborough)

I wish to say a few words to thank all those hon. Members who have spoken in the debate. In particular, I wish to thank my hon. Friends the Members for Maldon and East Chelmsford (Mr. Whittingdale), for Tatton (Mr. Osborne), for Lichfield (Michael Fabricant), and for Sutton Coldfield (Mr. Mitchell) and the hon. Members for Newbury (Mr. Rendel), for Hemsworth (Jon Trickett), for Croydon, Central (Geraint Davies) and all those hon. Members who have spoken in favour of new clause 4. I am very grateful to them for their support.

Some people say that debates in the House do not matter. I am a parliamentarian; I believe that they do matter, and this debate has made a difference. Debates make a difference when strong and independent-minded Ministers are prepared to listen and respond to them, not to take refuge in the conceptual bullshit of their brief. The Minister has done precisely the opposite of that today. He has given a very important commitment on behalf of the Government. After all, Ministers speak on behalf of the whole Government; there is such a thing as collective responsibility, and therefore what a Minister says at the Dispatch Box must be considered with great care.

The Minister has said today that, hitherto, there was an objection to Parliament, in the shape of the NAO, having a statutory right of access to investigate the BBC's finances because of the concern about its editorial independence. One assumes that the Government accepted that concern. In reply to what I have said today, the Minister has said that he accepts our reassurances. He accepts my reassurance, as Chairman of the PAC, that in no way do we want to interfere with the BBC's editorial independence, and he did so speaking for the Government.

I believe that the debate has taken matters a great deal further. It is true that the Minister did not say that he accepts new clause 4. I did not expect him to do that—it is not the way the House operates—but he went almost as far as he possibly could in saying that, like every other hon. Member who has spoken, he accepts the inevitable logic of statutory access. Voluntary access is simply not good enough.

My right hon. Friend the Member for Haltemprice and Howden (David Davis) made an important intervention in saying that we simply cannot have a situation where an organisation's auditors have to request access to examine what may be a very difficult issue. That is not acceptable, but the Minister has given some important reassurances. I have listened to his speech very carefully, and I am grateful to him for what he said.

Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)

Does the hon. Gentleman wish to press new clause 4 to a Division?

John Whittingdale (Conservative, Maldon and East Chelmsford)

We would like to press the new clause to a Division.

New Clause 10 — Power to Confer Further Functions on OFCOM Relating to the BBC

John Whittingdale (Conservative, Maldon and East Chelmsford)

I beg to move, That the clause be read a Second time.

Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)

With this it will be convenient to discuss amendment No. 199, in page 171, line 22 [Clause 193], at end insert—

'( ) the BBC Charter;'.

John Whittingdale (Conservative, Maldon and East Chelmsford)

We have made it clear throughout that, in the main, we are supportive of the general provisions. We support the liberalisation of the ownership rules and the establishment of a new single regulator, Ofcom. As has been demonstrated in all the debates in the Chamber and in Committee, there is no doubt that Ofcom will be a powerful body. It brings together five existing regulators and will have considerable powers to oversee all the broadcasting organisations with one exception. It is that exception that the new clause is designed to address. The glaring omission from the Bill is the fact that the biggest and most powerful broadcaster—the BBC—is not fully within the scope of Ofcom.

The first part of the Bill deals with the regulation of the telecommunications sector. If one draws a comparison between that part of the Bill and the section dealing with broadcasting, it is like arguing that the telecommunications sector should be subject to regulation so that all the small companies seeking to compete are subject to scrutiny and regulation, but the biggest, in the form of British Telecom, is not subject to the oversight of the regulator. In the same way, the Government propose that all the broadcasters competing and operating commercially should be subject to oversight and regulation, but the BBC should not.

That would seem an extraordinary proposal at any time, but it is particularly so now, when the dominance of the BBC has continued to grow. As we discussed in the previous debate, in recent years the amount of resources available to the BBC has been growing steadily and now stands at more than £2.5 billion, with a further £100 million coming from the next increase in the licence fee. At the same time, other broadcasters have been subjected to a considerable squeeze as a result of the downturn in the advertising market, which has meant that many of the independent commercial broadcasters must make cuts. Channel 4 is now loss-making.

John Robertson (Labour, Glasgow Anniesland)

If the independent television companies had been receiving the same amount of money as in the past, would the hon. Gentleman still attack the BBC as he has done during our consideration of the Bill?

John Whittingdale (Conservative, Maldon and East Chelmsford)

I should like to think that I have not been attacking the BBC. I should like to think that my suggestions are helpful to the BBC. However, even if the commercial companies were not subject to a financial squeeze, it would not change the position: the BBC would still be the biggest and most powerful broadcaster in British broadcasting. Given that, the argument would still be overwhelming that it should be subject to the same scrutiny and oversight by Ofcom as other broadcasters are.

The overwhelming dominance of the BBC is not just financial. In recent years it has undertaken a programme of expansion that is still continuing. As new opportunities have arisen for broadcasting, both digital television programmes and digital audio stations, in each case the BBC has felt it necessary to enter those areas and to match the activities of the commercial channels. There are therefore concerns about the way in which the BBC is competing with some commercial broadcasters, and a more general concern that has been growing over many years about the way in which the BBC meets its public service remit.

There will be programmes that nobody could argue are not public service broadcasting in the finest tradition. We have covered some of them this evening. Some have also been highly successful. "The Blue Planet" was not just a wonderful programme that would certainly meet the public service remit; it was also extremely successful in terms of the number of viewers that it attracted and in terms of overseas sales. I am not by any means arguing that the BBC should not make successful programmes. The BBC has demonstrated that it is possible to make high-quality public service programmes and extremely successful programmes which command a very wide audience. However, there have been other activities by the BBC which, in my view and the view of many other people, have strayed a long way from the BBC's original public service remit. I do not want to give a great catalogue of examples, but I shall cite one or two. ITV developed an extremely successful concept in the form of "Pop Idol", which has been repeated in the form of "Popstars—The Rivals" and other reality music shows. I still do not understand why the BBC felt it necessary to try to emulate that by making "Fame Academy", particularly as it seemed to be a rather pale imitation.

At the same time, the BBC spends a great deal of money seeking to buy Hollywood blockbuster films. In bidding for those rights, it often finds itself in competition with commercial broadcasters. The overall effect of that is to increase the price that has to be paid to the American distributors. It also means that the British licence fee payer is having to spend a lot of money on purchasing American-made movies that would be shown anyway, since the commercial broadcasters have made clear their wish to purchase them. The effect is therefore simply to increase the amount of money that goes into American pockets from the licence fee payer. That, too, seems difficult to justify, particularly when we consider the BBC's record of showing British films, which is not that impressive. That issue is covered by amendments that we might debate later.

Simon Thomas (Plaid Cymru, Ceredigion)

Surely there is a public remit for the BBC to bid for blockbuster films. If the BBC did not go for them, they would possibly be available only on pay-per-view or satellite television. While it remains the case that the majority of people in this country have access only to analogue television, is it not right and proper that the BBC should provide the widest range of entertainment, including blockbuster films?

John Whittingdale (Conservative, Maldon and East Chelmsford)

Almost every film is first shown on a box-office channel, which is pay-per-view. Normally, they are then shown on a premium movie channel and finally end up on terrestrial television. So this is not a question of people being denied the possibility of seeing them because they are being shown on a pay channel; it just means that they usually have to wait a little bit longer. In the cases that I am describing, however, ITV was seeking to buy the films in question. The most recent example was "Harry Potter and the Sorcerer's Stone", over which a bidding war took place between ITV and the BBC. That seemed wholly unnecessary and simply meant that we ended up having to pay more for it than we otherwise would have done.

The BBC and, indeed, other broadcasters should be concentrating their efforts on screening British films, if they are to meet their public service remit. In this regard, the BBC's record is not at all impressive. In one study that I have seen recently, out of the total of 186 films broadcast by the BBC, only 44 were UK films, and only six were less than five years old. That means that recent British films only formed 3.2 per cent. of the BBC's output, yet one would hope that the BBC, above all, would be willing to give a platform to British film makers, rather than screening a constant succession of Hollywood movies that are easily available on other channels.

Michael Fabricant (Conservative, Lichfield)

I have considerable sympathy with my hon. Friend's argument about English—not just English, but British—films being shown on BBC television. But surely he cannot be arguing that the public service remit means that the BBC cannot also seek large audiences. If the BBC became a small ghetto with a tiny number of people watching it, there would be no justification for it at all.

John Whittingdale (Conservative, Maldon and East Chelmsford)

That is an interesting debate that could occupy the rest of the evening. The BBC should obviously not set out to become a ghetto broadcaster or to attract only very small audiences. "The Blue Planet" is a very good example of a high-quality public service programme that can also attract very large audiences. I differ to some extent from my hon. Friend in that it has always seemed to me that the prime purpose of—indeed, the justification for—the BBC is to provide programming that is not otherwise available. Its motivation should not be to attract audiences, but to make high-quality programmes that meet its public service obligations. If it does that well, it can also expect to win substantial audiences. The BBC has produced programmes that cannot by any definition be described as public service broadcasting. One recent example is "Celebrity Boxing"—which not even commercial channels would claim met their public service remit. At a time when the general view is that there is dumbing down and that many programmes cater for the lowest common denominator, there has been a growing lack of high-quality programming of the kind that the public think the BBC is designed to broadcast.

Much concern has been expressed in all parts of the House about the BBC's coverage of Parliament and politics in general. When that coverage was recently subjected to considerable change, we were given reassurances that the extent and depth of political coverage would not be diminished. Although it is early days, I do not believe that those reassurances have been met. The programmes that I have seen of the BBC's current political coverage do not provide anything like the depth of some of the programmes that they replace.

Considerable concern has been expressed also about the BBC's coverage of the arts—particularly the recent decision to drop "Omnibus", which for 35 years was the UK's premier arts programme. Jonathan Miller commented that unless one's idea is for a programme about decorating houses or chopping up vegetables, it is impossible to get anyone at the BBC to commission it. There is widespread concern that the BBC is straying from its central public service remit.

That matter is currently for the governors of the BBC. Unlike the other channels—which are required to report to Ofcom and are at the same time subject to monitoring and scrutiny by Ofcom to ensure that they meet their public service remit—the BBC, which should have a stronger public service obligation than any other channel, is excluded from scrutiny. Responsibility for that rests with the governors, which seems entirely wrong. The BBC above all, because of the strength of its public service obligation, should be subject to external scrutiny.

My hon. Friend the Member for Sutton Coldfield (Mr. Mitchell) spoke earlier of the BBC's capacity to compete with commercial broadcasters, take advantage of its privileged position, being funded by the licence fee, and offer unfair competition. One needs to distinguish between activities funded by the licence fee and others. A number of new BBC ventures have already given rise to complaints from commercial broadcasters that such developments represent unfair competition and replicate existing commercial programmes. The launch of BBC3 was delayed while the Secretary of State built in stronger safeguards against unfair competition. Even now, having watched BBC3, it does not seem to be a great innovation in public service broadcasting but competes head on with existing broadcasters such as E4 and Channel 4. Reviews of some BBC3 programmes shown to date do not justify the large sum of money that has been committed to that channel—including "Tories with Talent", despite the fact that about 1 o'clock this morning, I enjoyed watching my hon. Friend the Member for Gainsborough (Mr. Leigh) punch through a wooden log.

Similarly, BBC4 should in many ways define public service broadcasting, being dedicated to arts coverage. There have already been complaints from Artsworld, an existing broadcaster, and Digital Classics—which directly blames BBC4 for its closure after making losses in the last year. Digital Classics has said that the BBC's free digital cultural channel has distorted the digital market. Moreover, concern about BBC News 24 was so great that the Secretary of State felt it necessary to commission an independent report on its activities, which led to new requirements being placed on the channel to ensure that it was "distinctive and different".

It should not have been necessary for the Secretary of State to intervene. The fact that it was necessary demonstrates the inadequacy of the current arrangements, and the lack of action on the part of the governors. It would have been far better if an external body had been there to monitor the BBC's output constantly. Such a body could have ensured that the BBC was not breaching its fair trading commitment, and was providing channels that were both "distinctive and different" and in line with the public service obligation.

We already have eight children's television channels. The BBC has launched two of its own, CBBC and CBeebies. In many ways those channels are distinctive and different, but it is a cause of great concern when their controller says that his ambition is to create the biggest children's channel and to take over those currently watched on the commercial channels.

My hon. Friends have mentioned UK History, whose creation gave rise to complaints from the existing broadcaster, The History Channel, that it would merely replicate a channel that was already being provided commercially. UK History is not funded by the licence fee; it is part of the BBC Worldwide activities that are supposed to be separate and insulated from the licence fee. I agree, however, with my hon. Friend the Member for Lichfield (Michael Fabricant), who asked whose assurance we had that that was the case. Any complaints relating to whether the BBC is properly maintaining an arm's-length relationship between its licence-fee-funded and its commercial activities are subject to adjudication by the governors: only they can look into such complaints.

We now understand that there are to be two new channels, UK Comedy and UK Nature, on top of all the existing UK television channels. We have heard complaints about the BBC's provision of educational software: existing manufacturers of that software have complained vociferously about the unfair competition. The latest revelation is that the BBC has just acquired a stake in an Anglo-Dutch music and television production company, and will produce classical DVDs. There is already a thriving classical DVD market in this country, and I see no need for the BBC to move into it. The move is likely to prompt more complaints from those who are already in that area of the market, and who also consider that the BBC is engaging in unfair competition.

Whether or not those complaints are justified, if the public are to be reassured that the BBC is meeting its public service obligations and is not engaging in unfair competition with commercial operators, there must be a mechanism allowing independent examination of the complaints. There must be a public assurance that they will be properly examined; it is not enough to rest on the assurances given by the governors of the BBC.

The governors are, in fact, in an impossible position. They represent the overall management and control of the BBC, while at the same time being expected to act as independent adjudicators when complaints are made. A number of people think it is increasingly difficult for them to fulfil both remits. Many besides Conservative Members believe that Ofcom needs to extend its activities to cover the BBC. In recent years there has been a growing chorus of complaints from people who are certainly not the BBC's enemies. Lord Puttnam, a strong supporter of the BBC, says that there is a danger of "everyone's favourite Auntie" being turned into "an abusive Uncle". Barry Cox, a distinguished broadcaster and a great friend of the Prime Minister, has described the BBC as

"a cultural tyranny—a . . . benevolent one, but a tyranny none the less".

Lord Lipsey, another Labour peer, said that the current director-general of the BBC has failed to grasp

"the emerging threat . . . if the BBC is just doing the same thing as other broadcasters, what is the case for it? Why should it get public funding, regulatory privileges, legislative protection?"

Finally, in commenting on the current arrangements for oversight of the BBC, David Liddiment, ITV's director of programmes, said:

"If the BBC is, as it claims, the most regulated broadcaster in Britain, this must happen invisibly, because I can't see it. There's little evidence of the governors having an objective perspective on the organisation for which they are accountable."

So the truth is that many people feel that the existing arrangements for the oversight and control of the BBC are inadequate. The governors are trying to do two different jobs, and it is becoming increasingly difficult for them to do so. There is a need for an independent regulator, and Ofcom has been set up for that purpose. The purpose of new clause 10 is not necessarily for Ofcom immediately to take over the job of overseeing the BBC; it is to lay the ground for that to happen. In particular, it would allow the Secretary of State to make an order to extend Ofcom's powers to cover the BBC.

The Government have said that this matter should be considered in the run-up to charter renewal, and we are grateful for that concession. Nevertheless, we know what will happen. If the Government conclude that Ofcom should indeed take greater control over the BBC, we will be told that that is not possible without primary legislation, and that we will have to wait until a suitable opportunity arises. New clause 10 would give the Secretary of State the power to amend the legislation in order to give effect to any changes to the charter, or to the agreement, at some future date, without having to return to this House. We believe that such change will be necessary at some point, and the new clause is designed to ensure that it can be achieved easily.

John Grogan (Labour, Selby)

It is a great pleasure to follow the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale). I shall try to be brief, because, although we have heard a lot about the power of the BBC, we have yet to discuss media ownership and the powers of those such as Mr. Murdoch. I shall not be tempted to reply to the hon. Gentleman by making a complete tour of last month's Radio Times, but I shall respond to a few of his comments. The BBC's new children's channels, which carry no advertising, show very few cartoons and have a largely British content, do provide something very different for parents and for children. They are a prime example of public service broadcasting. Many of the new digital radio channels—such as BBC 7 and Radio Five Live Sports Extra, which broadcast comedy and drama, and additional sports coverage respectively—add something to the BBC's firmament.

The hon. Member for Maldon and East Chelmsford is obviously a man of very fastidious tastes. I quite enjoyed the celebrity boxing, and as for the new politics shows, the contributions of the right hon. Member for Kensington and Chelsea (Mr. Portillo) on the late-night Thursday show have been as incisive as his contribution to the debate on the future of the Conservative party.

I agree with the hon. Member for Maldon and East Chelmsford when he says that the BBC should try to encourage original British films. Indeed, since the demise of Film Four, BBC Films is the only company that is involved in the co-production of British films. In that regard, "Billy Elliot" stands out. In the debate about dumbing down, there is a danger of looking back to a golden age. One must not forget that in the 1980s, "Kojak" and "Dallas" were very much prime-time BBC1.

John Robertson (Labour, Glasgow Anniesland)

Does my hon. Friend agree that Ofcom perhaps needs to look at the provision and showing of British films?

John Grogan (Labour, Selby)

Indeed, and it is a pity that we will probably be unable to discuss the amendments relating to that issue today. On the question of exactly what the BBC should do, I would argue that blockbuster films on Christmas day, top quality sports coverage and good quality popular drama—all without adverts, which viewers seem to like—have a place in public service broadcasting. The BBC, in a way, exists to distort the market. Some Tory Members appear to think that the only thing that it should show is BBC Parliament. No one could argue with it showing that, but in every other sphere it will always have a commercial competitor somewhere.

Under the Bill, the BBC will come under the auspices of Ofcom. The BBC will be under Ofcom on tier 1 regulation of taste and decency, and on tier 2 regulation of quotas for regional production—introduced for the first time—as well as original and independent production. On tier 3, the BBC will be influenced by Ofcom, because periodically it will have to review the whole firmament—I had better not say ecology—of public service broadcasting, and that will include the BBC. It is only the back-stop powers of judging whether the BBC is fulfilling its programme policies and remits that will remain with the governors, and with good reason. Ofcom is meant to be a light touch regulator of public service broadcasting in commercial television. It would be a very different role for it to perform the heavy touch regulation that is needed for the BBC. If the BBC were completely under Ofcom, we could be sure that every 10 minutes some commercial opponent would complain to the regulator that the BBC should not be doing something or other. Before we embark on that course, which will be considered when the time comes for charter renewal, the least we should do is revisit the debate in primary legislation, not have the changes slipped through under an order. On those grounds, I oppose new clause 10.

Nick Harvey (Liberal Democrat, North Devon)

I am sorry that the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) has felt it necessary to go over this ground yet again, because we have had these debates several times before. He has heard the response from Ministers that charter renewal will be the time to consider the big issues for the BBC, and that is a reasonable position for the Government to take.

One cannot help but feel that the hon. Gentleman would like the BBC to provide for minority tastes and fill the gaps that the market does not otherwise fill. However, the point was made—correctly—by the hon. Member for Lichfield (Michael Fabricant) that if the BBC was penned into providing only for the minority tastes for which the market would not otherwise cater, it would inevitably become a ghetto and could not build the substantial audiences that it needs to fulfil its public service remit. By definition, everything that the BBC does distorts the market, because it has unique access to a privileged flow of income to which no one else has any equivalent.

It is a matter of public policy, not regulation, as to when and to what extent the BBC should be allowed to use that money to distort the market. The BBC is a market maker. If the BBC were not there, providing high quality programmes for large audiences, the overall quality of broadcasting would be much the worse for it. It is having a well funded and highly professional BBC setting the pace that means that the market forms around the lead that it gives. It is right and proper that that should continue.

The hon. Member for Selby (Mr. Grogan) makes the point, which has been made many times, that the Bill will put the BBC under the supervision of Ofcom in a substantial and meaningful way. What remains outside Ofcom is simply the test of whether the BBC has met its public service remit. The huge amount of money it has and the variety of television and radio channels it operates would mean that Ofcom's role would be completely distorted if it were tasked with the detailed supervision of the BBC in all its range and breadth. Some other apparatus has to be there for that purpose. The charter and the governing arrangements will be reviewed and revisited in the next few years. That would be the logical time to introduce such an apparatus.

The purpose of new clause 10 is to allow any changes that might emerge to be made on the nod—by order of the Secretary of State. I am by instinct usually opposed to Secretaries of State being allowed to act by order, and this is no exception. Substantial changes must be effected by primary legislation, and any short delay in their introduction would not matter much. Parliament must retain the right to decide such things through primary legislation. For that reason, I strongly oppose new clause 10.

Andrew Lansley (Conservative, South Cambridgeshire)

I rise to speak briefly to amendment No. 199, tabled in my name, and to express my general support for new clause 10.

My hon. Friend the Member for Maldon and East Chelmsford (Mr. Whittingdale) did not have the opportunity to set out at length his view of the purposes and structure of the BBC, but I do not believe that the BBC's role is to provide the broadcasting that the commercial sector is unable or unwilling to provide. The BBC is a public service broadcaster, not a residual broadcaster. It can do many things that extend beyond the residual approach.

Under the residual approach, one might leave the networks and the channels in the hands of commercial providers, which would package them together. That would leave the BBC as simply a provider of programmes, handing them out to anyone willing to show them. The BBC is subsidised through the licence fee, and programmes would be provided as a result.

The BBC is more important than that. It provides channels that, in themselves, help to shape broadcasting, especially in the public service sector. For example, the programme "EastEnders" is ground breaking in drama terms but, along with key sporting events and certain films, it also renders the channel on which it is still shown attractive to a large number of people. They want to watch it regularly. If the BBC did not run channels, public service broadcasting would not have the reach and public impact that it has at present.

We can have a debate about what the BBC is for, but all of us accept that that debate will take place in the run-up to charter renewal in 2006. That is what amendment No. 199 is about, and new clause 10 does not interfere with that. The amendment would simply ensure that the decision could be given proper effect, in legislation and in relation to the function of Ofcom.

The difference between new clause 10 and amendment No. 199 is that new clause 10 would allow the Secretary of State to alter the legislation, by order, and place the BBC in a position analogous, in various respects, to that occupied by the licensed public service channels. As a result, the BBC would become the creature of statute, as distinct from being a charter body.

At present, the BBC is bounded by statute in some respects, but it is primarily a charter body. The Bill means that the BBC will be regulated by Ofcom and that it will put itself in the analogous position that I have described, notwithstanding its charter obligations. That will happen because it will come to that agreement with the Secretary of State. We saw in Committee the draft of such an agreement. I might say in parenthesis that the reference to the difference relating only to the public service remit is insufficiently precise. Matters such as impartiality will remain strictly the province of the governors and will not be subject to scrutiny by Ofcom. In substantial areas—the public service remit is the most important—Ofcom will not be able to exercise its function.

My continuing belief is that a major discontinuity will arise over time in relation to Ofcom's pursuing its objective of examining regularly, within five years at most, the overall public service broadcasting obligations of the BBC and other organisations. It will be able to enforce the conclusions that it reaches on that basis in relation to every public service broadcaster apart from the BBC. If the governors continue down the path of trying to be independent of the BBC management, as they profess to be at the moment, it is difficult to believe that that independence will not be manifested in their having their own distinctive view of the BBC's remit and how it discharges it. Over time, the governors are bound to seek to manifest that independence as independence from Ofcom, as well as from the BBC. We will have to decide whether the governors are effectively the board of directors of the BBC, as in the case of the board of directors of Channel 4, which is a perfectly acceptable solution, or, as new clause 9 suggests, trustees of the licence fee. Those are two different functions that will need to be separated.

Either way, it will not suffice, when it comes to charter renewal, to leave it in the hands of the BBC to come to an agreement on the extent to which it is bounded by Ofcom's powers. No matter how we move forward, it is likely, under the constitution of the BBC, that Ofcom will need to have a role if it is to be able to give proper effect to its scrutiny of public service broadcasting obligations as a whole, and that that will appear in the charter. To include in the Bill a reference to the possibility that Ofcom will have functions bestowed on it through the charter, as distinct from an agreement made consequent on the charter, would be an accurate reflection of the likely situation at the end of 2006. Furthermore, it would preclude the possibility of the BBC believing that it can resist an agreement, or aspects of an agreement, by arguing that it was inconsistent with the obligations placed on it in the charter and that it would be unable to delegate to any other body its responsibilities for the BBC's functions. We should be clear now that, under the charter, Ofcom may have those responsibilities.

On the basis of that abstruse, quasi-constitutional argument, I profess my preference for amendment No. 199, but, in respect of the objective, I am sure that my hon. Friend and I are on exactly the same territory.

Michael Fabricant (Conservative, Lichfield)

I rise in support of new clause 10.

It was argued that the National Audit Office should be allowed to examine the operations of the BBC, partly to protect the organisation so that it can be seen not to be its own judge and jury. The same argument applies to Ofcom having control over the BBC, ultimately to demonstrate, as my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) explained, that the BBC board of governors cannot be its own judge and jury when people make complaints against the corporation. I do not hold the view that the BBC, in order to hold its public service remit, should be prevented from putting out popular programming. In an earlier exchange, I said to the hon. Member for Ceredigion (Mr. Thomas) that a fine balance must be struck between broadcasting specialist programmes and those of general public appeal. If the BBC has a small audience, not only will it fail to justify the way in which it is funded, but it could be argued that it does not provide a public service because it has few viewers and listeners.

The unique way in which the BBC is funded means that it is different from other broadcasters. That is apparent in the programmes that it transmits, including its news output. It is worth repeating a point that was made in Committee. The BBC has more journalists than ITN, ABC News, CBS, NBC, FOX News and CNN combined. The reason for that is demonstrated in the quality of its overseas as well as its United Kingdom news coverage. If one visits the United States or Australia, one sees that BBC reporters often appear on television stations there. They are ambassadors not only for the BBC but for the United Kingdom. The corporation does that well.

The corporation is not well served by being perceived as its own judge and jury. Being in the ambit of Ofcom would protect the BBC. The Bill is a culmination of legislation. If we consider the Radio Authority and the Independent Television Commission, it is clear that we would create an imbalance if the Bill did not have equal control over the BBC. Such control is in the BBC's interest and in our national interest.

Kim Howells (Labour, Pontypridd)

As the hon. Member for South Cambridgeshire (Mr. Lansley) reminded us, amendment No. 199 would allow the BBC charter to contain Ofcom's functions in relation to the BBC. He will not be surprised to learn that I shall resist the amendment because I do not believe that the charter is the appropriate place for setting out such provisions.

When the amendment was discussed in Committee, the hon. Gentleman pointed out that the way in which the charter is renewed could lead to inconsistency with the agreement. He suggested that it would be better to proof the legislation by specifying in the charter Ofcom's role in relation to the BBC.

I assure the hon. Gentleman that circumstances in which the charter and the agreement were inconsistent would not arise. The two documents should be considered as a package. A renewed charter would include a new corresponding agreement. The Government's policy has been to set out the BBC's regulation in the agreement. The agreement, not the charter, establishes the BBC's obligations and remit. It is therefore appropriate that when Ofcom has a role in relation to the obligations, it is woven seamlessly into the provisions in the agreement.

An agreement between the BBC and the Government is just that—a document to which both parties have signed up. It is valid only when the House has approved it. The agreement does not give the BBC carte blanche to interpret the charter as it chooses, as the hon. Member for South Cambridgeshire suggested in Committee.

By setting out the BBC's relationship with Ofcom in the agreement, we will bring the BBC into the overall regulatory framework while preserving its special position and its constitutional relationship with Parliament. That is a fundamental principle to our approach to the BBC's regulation.

The hon. Gentleman is right that I cannot pre-empt the outcome of charter renewal any more than anyone else can. There will be plenty of time for that during the debate on the review. The charter review itself could have any number of outcomes, many of which might require legislation. I am not convinced that it would be appropriate to single out a possible outcome for special recognition by catering for it expressly in the Bill.

New clause 10 would give the Secretary of State a Henry VIII power to amend the Bill after it is enacted when he considers it appropriate to do so to give effect to any new BBC charter, licence or agreement. As policy relating to the BBC is generally set out in the charter and agreement rather than in the Bill, no amendment of the resulting Act would generally speaking be necessary in practice to enable a new charter or agreement to have effect. Following the charter review, if the current system of regulation through charter and agreement were to be turned into something so radically different as to involve amendments to the Act, I would expect Parliament to be given the opportunity to debate those amendments fully in the context of fresh primary legislation rather than measures implemented under the power that new clause 10 would confer. That point is particularly important given the wide scope of the proposed power, which could, for example, be used to put the BBC on to an almost wholly statutory basis without any new primary legislation.

As my hon. Friend the Member for Selby (Mr. Grogan) pointed out, it is simply not true to say that the BBC governors will be judge and jury under the proposed regime. As he told us, in relation to most things, including most programme code standards, original productions, regional programme making, provision for the deaf and visually impaired, international obligations, equal opportunities and training, the BBC will not be judge and jury. In most cases, it will be Ofcom that decides whether the BBC has breached any requirements, as well as what those requirements will be. I therefore hope that Opposition Members will see fit not to press the new clause further.

Paul Farrelly (Labour, Newcastle-under-Lyme)

Will the Minister join me in expressing regret about the fact that the Opposition have turned this debate solely into a determined onslaught against the BBC, so we have had no opportunity to discuss on the Floor of the House very important issues of media ownership that were not discussed in Committee either?

Kim Howells (Labour, Pontypridd)

I understand my hon. Friend's ire about that. To be fair—I am a very fair person, except when I am watching England beating Wales at rugby—many defences of the BBC have been made, and they have come not only from the Labour Benches, but from the Opposition Benches. A sustained attack was made by the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale), but he had been behaving himself throughout the debate, so it had to come out sooner or later, as my hon. Friend saw. There is general agreement in the House that the BBC does a pretty magnificent job in most respects, but there is no question but that there is room for debate. As I said, that debate will be focused on charter renewal and renewal of the agreement with the Secretary of State.

Chris Mullin (Labour, Sunderland South)

I think that my hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly) was inviting the Minister to share the regret of a number of people in this place and, no doubt, outside the Chamber that no time has been found today—and nor will any be found—for any discussion about the enormous changes to ownership of ITV and Channel 5 that the Bill proposes. Is that not an extraordinary situation that reflects badly on this House?

Kim Howells (Labour, Pontypridd)

I am sure that my hon. Friend knows that there were 65 hours of Committee sittings on the Bill. There has been very rigorous scrutiny, including that of the pre-legislative scrutiny Committee, which was chaired by Lord Puttnam. This Bill has been crawled over like no other Bill that I have known in 14 years of having the privilege of being a Member of this House. There was a moment—I will not point any fingers at anyone in the Chamber—when certain amendments should have been moved, but it was very early in the morning, so they were not spoken to and we did not get around to the discussion that that would have involved. I regret that very much, as I think that we have a substantial and strong case to make with regard to our proposals about ownership.

John McDonnell (Labour, Hayes and Harlington)

For the benefit of hon. Members who were not members of the Committee but who wish to enter the debate on media ownership, does my right hon. Friend agree that we should re-examine the programming motion so that the matter can be brought back for discussion?

Kim Howells (Labour, Pontypridd)

No.

I hope that the new clause will not be pressed to a Division.

John Whittingdale (Conservative, Maldon and East Chelmsford)

We remain unconvinced by the Minister's arguments. We feel strongly that this is the biggest omission in the Bill. We hope that the Government will, in time, come round to that view. The purpose of the proposed new clause 10 was simply to allow that omission to be rectified without recourse to primary legislation. However, we have failed to persuade the Minister.

Bearing in mind the remarks of Labour Members to the effect that we do not have much time left, I am willing to withdraw the new clause to allow a little time to discuss the next group. However, in withdrawing it, I do not in any way suggest that we do not still feel that the case for it is overwhelming. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New Clause 13 — Meaning of Control

John Greenway (Conservative, Ryedale)

I beg to move, That the clause be read a Second time.

Michael Martin (Speaker, Glasgow Springburn)

With this it will be convenient to discuss the following amendments: No. 12, in page 290, line 38 [Clause 337], leave out paragraph (a).

No. 179, in page 290, line 39 [Clause 337], at end insert—

'(bb) paragraph 2 (disqualification for religious bodies);'.

No. 184, in page 294, line 5 [Clause 340], 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.'.

No. 149, in page 302, line 13, leave out Clause 347.

No. 114, in page 424, line 4, [Schedule 14], leave out from 'order' to end of line 5 and insert

'amend or repeal the preceding provisions of this Part, but any such amendment must not have the effect of increasing the restrictions on the holding of any licence and, in particular, may not increase any number (whether expressed in words or figures) in this Part'.

No. 2, in page 424, line 5 [Schedule 14], at end insert—

'Part 1A Channel 5 Services

John Greenway (Conservative, Ryedale)

New clause 13 seeks to clarify the meaning of control for the purposes of schedule 2 to the 1990 Act, which contains the provisions restricting cross-media ownership, and for the purposes of clauses 339 to 342, which introduce new powers for Ofcom where there is a change in control of a Channel 3 or Channel 5 licence holder. So many important licensing issues depend on what is meant by control that it cannot be right to introduce uncertainty into its meaning now. We are, after all, a long way down the path of development of the law in this area. We should have learned enough to be clear and certain in any alteration that we make.

The new clause is proposed as an alternative to clause 347, which, for the benefit of hon. Members who were not on the Committee, introduces the concept that a holding of 20 per cent. of equity or voting power is, of itself, evidence of control. That clearly is not logical or sensible. If enacted, it would introduce considerable uncertainty into this important area of media law. The presumption is rebuttable, but we all know how difficult it is to prove a negative. The 20 per cent. participant will, in many cases, be able to show that he does not control the company only by showing that another person does. However, there is no reason why he should have the necessary information to prove that another person has control. How would he know? The Government, in their response in Committee, did not justify the change. The Minister suggested that the reason for the change was that a 20 per cent. holding was the level at which questions started to be asked. We entirely agree with that, but it is a quantum leap from that position to the proposition that a person with a 20 per cent. holding should be deemed to be a controller unless he can show that he is not.

The hon. Member for Sunderland, South (Mr. Mullin) made an impassioned plea on the need for more time to debate these matters. He knows about the criminal law; if we were dealing with a criminal offence, the Government would be the first to agree that it would be quite wrong to move from saying that someone is suspected of committing a crime to saying that he is guilty unless he can show that he is not. That is the philosophy that underpins clause 347. That is the effect that it will have.

New clause 13 would change things so that a person would be deemed to have control only if that person does, in fact, have control—whether or not the control is exercised directly or indirectly, and whether or not it is exercised consistently. That would be so whatever the level of shareholding, but there is no chance that the licence-holding restrictions would hit someone who did not have control.

I want to make it clear to the Minister that what we are seeking to say is not that a 20 per cent. holding can never constitute control, but that such a holding does not automatically constitute control. Indeed, the new clause would still allow for lower percentages than even 20 per cent. to constitute control, but real control, not a mythical control that can never exist, would be considered under our scheme.

The new clause does not include the changes proposed in clause 347(1). We are still not sure what those proposals are intended to achieve—no clear explanation was given in Committee—but they appear to add to the uncertainty that we are trying to remove. After all, if a person is to be judged according to whether he can get his own wishes carried out, he will be so judged whether or not he actually does that. In so far as clause 347(1) is an attempt to extend the definition of control to cases of limited control, it clearly adds to the uncertainty.

What is meant by the word "significant"? What will happen if individuals take a genuine view that something is not significant, but Ofcom takes the view that it is significant? For example, finance directors can determine many significant financial dealings without generally being thought to control the company. Most executive directors make executive decisions of some importance. Are all those directors to be considered as controllers now?

Any director with specific managerial responsibilities is likely to be able to get the company to carry out his wishes so far as they relate to those responsibilities, but can that director be described, in all seriousness, as controlling the company just because he has that kind of influence? We think not. The proposals in clause 347(1) appear to extend the notion of control to almost anyone with any influence. The Government need to give much more information to justify those proposals.

The final part of the new clause—subsection (5)—would move what is now subsection (5)(1) of part 1 of schedule 2 to the Broadcasting Act 1990 into part 2 of that schedule. That is intended to clarify the meaning of subsection (5)(1), which, if left where it is, appears at first sight to have a much broader application.

I now turn to amendment No. 184, which relates to the ownership of ITN by ITV. Colleagues will know that the 1990 legislation introduced the requirement for a majority shareholding in ITN not to be owned by ITV companies. As I made clear in Committee, I opposed those measures in the 1990 legislation against my own Government from the Back Benches, and the consequences that I predicted, chief among which was reduced investment by ITV in ITN, have come true. We can see no logical argument as to why ITV, or Channel 3, should not own its own news services in precisely the way that the BBC does.

The Minister will know that I teased him in Committee by suggesting that perhaps he might like to ring up Mr. Greg Dyke and say that, in future, BBC news will be provided by someone else. That is not a case of BBC bashing; on the contrary, I am simply asking why, if the channel funded by public money is allowed to own its news provider, a commercial channel, which has no public money and pays money into the Treasury, is not.

The changes in the 1990 legislation were intended to give ITN access to increased investment in news programming, but the opposite is the case, as ITN has to bid competitively on price with other news providers and, in the latest competitive round, against Sky News. That drives down the price that ITV has to pay to ITN, thereby reducing investment. The result is that the investment value of the ITN contract from ITV went down from £80 million to just £38.5 million. In consequence, the value of non-ITV majority ownership is also undermined. So we propose in amendment No. 184 that we should sweep away the provisions in the 1990 Act to require a majority shareholding from non-Channel 3 companies.

I want to remind Labour Members, should we have the opportunity to vote on this matter, of what happened when it was discussed in the 1990 Committee. All the spokespersons of the then Labour Opposition spoke generally against the provisions, including the current Secretary of State for Transport and several prominent Back Benchers, as did the Liberal Democrats and Plaid Cymru spokespersons. The only two Conservative Members who were able to speak in favour of the proposal were Mr. David Mellor and Mrs. Edwina Currie. Not only will Labour Members therefore be in extraordinary company if they continue to support the proposal but, if they stick with it, the lesson is that they will lose their seat at the next election, although they will have a career in radio—

Andrew Miller (Labour, Ellesmere Port and Neston)

Egg on their face!

John Greenway (Conservative, Ryedale)

As the hon. Gentleman says from a sedentary position, they could get egg on their face. There are many more jokes that could be made.

In all seriousness, ITN itself wants the system scrapped—it is not just ITV Channel 3 companies saying that they would prefer to own their news provider. ITN can see that the time to reverse the proposal has come. Even if the nominated news provider system is retained, which is dealt with in another range of amendments and new clauses that we are unlikely to reach, amendment No. 184, which I commend to the House, at least scraps the nonsense of having to have majority shareholders other than those from ITV companies.

Finally, I come to amendment No. 179, which deals with an issue that I am sure will be familiar to every right hon. and hon. Member in the Chamber this evening: the vexed question of the existing restrictions on ownership of broadcast channels applying to religious organisations. I am sure that every Member present has received representations on the matter, and the Opposition have believed for some time that that unjustified discrimination should end. The amendment provides an opportunity for the Government to signal that they agree.

Andrew Selous (Conservative, South West Bedfordshire)

I am grateful to my hon. Friend—and to other hon. Friends on the Front Bench—for tabling the amendment. I congratulate him on supporting the removal of broadcasting disqualifications for religious bodies. Does he agree that if amendment No. 170 is defeated tonight, the House should have a further opportunity on Report to discuss amendment No. 86 to clause 4? That will allow the supposed reasons for the disqualification of religious broadcasters to be debated in the House. Furthermore, does he agree that it is out of order that religious broadcasters are still disqualified from using eight different types of licence under the Bill as it stands?

John Greenway (Conservative, Ryedale)

I am grateful to my hon. Friend. I believe that he is right—subject to your selection of amendments for the second day of Report, Mr. Speaker—that we may have an opportunity to consider this matter again. As we are almost out of time, other hon. Members who might have wanted to contribute on this matter may wish to take that opportunity. My hon. Friend is also right that there are several broadcast stations that religious organisations are prohibited from owning. We are in danger of dismissing the arguments of religious organisations, so the Government should take a much more realistic view of the requests of those organisations. They are not asking to be awarded licences; they are asking to have the opportunity to apply for licences and to make their case in the same way as everyone else.

We understand that the Centre for Justice and Liberty has expressed gratitude to the Government for allowing religious organisations to apply for digital programme services. However, that is not the request of such organisations. Instead of having to apply under exceptional determinations while still being disqualified, why cannot the religious disqualification be removed so that religious organisations can apply for licences on a level playing field with other citizens and secular competitors? That is what amendment No. 179 seeks to achieve.

The religious organisations ask why they cannot have the same rights in our communications and broadcasting law that are proposed for citizens of non-EU member states, such as Mexico, the USA and Canada. That is a fair point. Why is a profession entered into by people as a vocation to serve the community rewarded by the Government with a legal disqualification? That is what happens for practitioners of this profession. Disqualification means, at the starting point in law, that religious organisations do not have the right to apply to broadcast.

This issue has been long debated and the arguments are not unlike those that my hon. Friends have made in respect of the BBC audit. The matter has been under discussion for a long time, and we strongly believe that this part of our broadcasting law is no longer justified. The time has come for the Government to grasp the issue, so I commend amendment No. 179 to the House.

Chris Mullin (Labour, Sunderland South)

On a point of order, Mr. Speaker. I wonder whether you can assist me. There are relating major issues in the Bill to ownership—an issue on which we were just about to touch—but they have not been discussed either on Report or in Committee. However, a further day has been allocated for consideration of the Bill, so would it be possible to amend the timetable so that debate on the amendments dealing with ownership could be carried over?

Michael Martin (Speaker, Glasgow Springburn)

Order. I interrupt the hon. Gentleman to say to him that I am bound by the programme motion to which the House agreed. How we proceed is a matter for the House. I am therefore bound by the programme motion.

John Greenway (Conservative, Ryedale)

Further to that point of order, Mr. Speaker. May I remind the hon. Member for Sunderland, South (Mr. Mullin) and the House that the programme motion originally agreed by the House allowed for only one day of debate and—

Michael Martin (Speaker, Glasgow Springburn)

Order. We are not going into that, because I must allow the new clause that the hon. Gentleman has moved to be debated.

Chris Mullin (Labour, Sunderland South)

Further to that point of order, Mr. Speaker.

Michael Martin (Speaker, Glasgow Springburn)

Order. I am not going to allow any further points of order. Does the Minister wish to speak to the new clause? No. I call the hon. Member for Great Grimsby (Mr. Mitchell).

Austin Mitchell (Labour, Great Grimsby)

In the minute or so that remains, may I remind the House that the question of ownership has not been debated? Amendments Nos. 12 and 2 in this group deal with that very issue. They would prohibit American takeovers that would drive down the market and would prevent people and organisations, such as Murdoch and Sky, from taking over Channel 5 and changing the whole ecology of the broadcasting system by creating a monster competitor that is largely unregulated. That is the issue that we should be discussing and I am grateful to you, Mr. Speaker, for giving me the opportunity to mention it if only briefly.