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Lord Harris of Greenwich: My Lords, before the noble Lord finishes his speech, would he like to explain to us what exactly happened in the House of Commons when these orders were rejected by the appropriate House of Commons committee?
Lord Inglewood: My Lords, my understanding is that the matter was debated in Committee and the measures were lost in Committee. However, the matter will be considered in the normal way by the House as a whole. I beg to move.
First, I congratulate my noble friend on his new position. It is one in which I spent an immensely enjoyable and interesting time in the Department of National Heritage and I wish him luck and great success in that position. He did not mention the independent productions order. Are we debating that at the same time or separately?
Viscount Astor: My Lords, I should then turn to the broadcasting restrictions order on radios. The primary aim of the amendment order is to liberalise the ownership arrangements for radio. The radio sector has expanded rapidly during the past few years and it is vital that the regulatory regime should recognise that and, where necessary, adapt to those changes. It is expanding faster than any other media businesses, including television, and for two years running has been the fastest growing advertising medium.
There has been a huge surge in the number of licences over the past few years. The number of licensed independent local radio stations has grown by 30 per cent. in the previous three years from 135 in 1992 to 175 in 1995. The proposed change in the licence limit is therefore proportionally less than the increase in the total number of licences. As a result, many of the existing ownership rules are redundant. These changes represent a way to respond quickly to the immediate needs of the industry.
The current rules prevent UK companies which have a relatively large number of licences from expanding. One of the deficiencies of the present system as it is at the moment with the outdated 20 licence limit is that it prevents companies from expanding to reach anywhere near the 15 per cent. points limit without exceeding the 20 licence threshold. This position has of course favoured the expansion of overseas companies with little or no UK presence rather than established UK media companies.
More importantly, a licence with a small share of the market is treated in the same way as a licence with a large market coverage. For example, the Isle of Wight with a total survey area of just over 100,000 adults and Capital Radio with a total survey area of over 9 million adults are each counted as one licence. The current rules clearly favour city licence operations over those acting in the more rural parts of the country. Rural licences have smaller audiences and tend to be more financially marginal.
These changes have been welcomed by the industry, including the association of independent radio contractors. They are necessary because we must not treat this important industry as a cottage industry. For these companies to be major players they have to achieve a certain size. There was an interesting debate in the Standing Committee in another place. Perhaps the noble Lord, Lord Donoughue, after the leader of his party has been on an excursion to Australia, will give us the entire new Labour broadcasting policy and will explain to us what this now means after this "love-in" with Mr. Murdoch. I look forward to hearing that.
There were objections to this order in another place. One can deal with them quite simply. Why should we allow these mergers? They allow a more effective use of capital and consequently more production. That increases the overall level of investment in the industry. More value is created by putting two companies in the same industry sector together than by combining two in related sectors; for example, a newspaper and a radio station as opposed to two radio stations. There are good reasons not to delay. Shareholders are not being disadvantaged, but they would be if the order were delayed, as was suggested in another place.
I also welcome the brief glint of light introduced by the Minister in another place when he opened the door on the possibility of cash auction bids for independent national radio licences when he said that he would look at the issue again. That is to be welcomed.
The order is an improvement for the industry. I wholeheartedly endorse it and welcome it. So does the industry. I hope that the noble Lord, Lord Thomson of Monifieth, and the noble Lord, Lord Donoughue, will also do so.
Lord Thomson of Monifieth: My Lords, the noble Lord, Lord Inglewood, as a new Minister, whom we have all congratulated, is having an interesting day. He did not have the happiest of times earlier when, from both sides of the House, he had to defend the Government, who, two-and-a-half years after the Calcutt Report, managed to come to us with a very tepid Statement of their intentions. Now we have the interesting situation of the new Minister for the Department of National Heritage describing the orders to us, followed immediately by his immediate predecessor defending one of the orders strongly. I am sorry to say to the noble Viscount, Lord Astor, for whom I always had the highest regard when he sat in the Minister's place, that I am going to disappoint him and will not support him. One of the orders raises some serious issues which the House ought to consider very carefully before reaching a conclusion.
Whereas the Government took two-and-a-half years to come to their decision on the Calcutt Report, it was on 23rd May that the then Secretary of State for the Department of National Heritage put forward his White Paper on cross-media ownership, among which were the proposals we have before us now. Within three days, one of the local radio companies had made a hostile bid for another local radio company. Here we are in the dying days of this particular part of the Session being asked to take this order through both Houses, and in circumstances in which the Government have announced major primary legislation in this field for the Queen's Speech and the next Session.
That situation caused such disagreement in the Standing Committee on Statutory Instruments in the other place, where nobody but the Minister spoke up for this particular order, that at the end of the day it was rejected by the committee in the other place which deals with these matters.
I am not sufficiently experienced in the procedures of your Lordships' House to know whether it is unusual for us to be asked to pass an order after it has been rejected by the appropriate committee of the other place, but it seems an odd procedure. I know that the general convention in your Lordships' House with statutory instruments is that, if they have been accepted by the elected Chamber, they should not be disputed, although they may be debated, here in your Lordships' House. This is an important constitutional issue. We are being asked to pass an order at the tail end of the summer when the other place has voted against it.
Perhaps the Minister can enlighten us on this matter, but I understand that the Government hope that, having obtained the acquiescence of your Lordships' House in the dinner interval when we are not at our most numerous, the matter can then be raised on the last day of the Session in the other place and, on the basis of the House of Lords having agreed to it, the other place will
Behind that issue lies the other issue of policy that I have mentioned. I agree that in the White Paper it was forecast that this secondary legislation would come forward immediately. However, I remain puzzled as to why in this particular field it is necessary to rush matters in this way. I have no objection to the other order relating to independent producers and am all in favour of the Government showing proper expedition in their legislation. However, the holdings order deals with the pattern of ownership of commercial local radio and does so against the background of an important Statement by the Government that they intend to introduce major primary legislation in the Queen's Speech in November which will greatly liberalise this whole matter. That is bound to affect the pattern of ownership of independent local radio.
Certainly those who are engaged in the present takeover battle between GWR and Chiltern Radio recognise that the rushing of this particular order has major implications for both sides. It is not for this House or for me to take sides in that takeover battle, and I do not seek to do so. In these situations my emotional sympathy tends to lie with the small shareholder. I know from my past connection with the commercial radio industry as one of its regulators that it is often the small shareholders who help to found these companies in the first place. Therefore, on the whole my sympathies are with them as against the great battalions.
It is, however, on the policy that I want to press the Minister. Is it sensible that at this stage, in July, on a matter of such importance that the Government should be rushing the order through in the last 72 hours before the Summer Recess? It is a very strange business indeed that the Government, having been unable to carry their own business in Standing Committee 3 in the other place last Wednesday, have thought fit to bring the order to your Lordships this evening. I suggest to the Minister that at the least that is pretty high-handed action. We are entitled to a thorough explanation before we decide what course of action we pursue.
Lord Donoughue: My Lords, first I should like to welcome the noble Viscount, Lord Astor, to the Back Benches, where I notice he looks much happier than he ever did on the Front Bench. He certainly must be pleased not to have had to defend this afternoon's Statement on privacy. In relation to the question of politicians dealing with newspaper proprietors, which the noble Viscount mentioned, that is not a question of policy. It is a matter of the personal taste of individual politicians; some presumably have more catholic tastes than others.
Regarding the draft order relating to the holding of licences, I must ask another question on timing; the matter was raised by the noble Lord, Lord Thomson. Having delayed the issue so long, why not wait a few more months until it is covered by the promised primary legislation? Why are we debating secondary legislation ahead of the primary legislation on television and newspapers? By so doing, it gives the big radio companies an advantage over television and newspaper companies in potential mergers in this field. It also produces an unwelcome concentration.
For instance, should GWR obtain Chiltern Radio, then GWR and Capital will shortly own all the main-line independent local radio stations in Southern England. Those two companies already have a 20 per cent. cross-holding. Therefore the Government are in the process of creating an artificial market tilted in favour of a few big radio companies. That will mean less return for those companies in any merger situations; and if the big television and newspaper companies were able to bid, they would be able to bid more and in cash rather than offering volatile shares.
The legislation gives small radio stations no chance to seek and accept a white knightan acceptable controlleras opposed to one of those in the radio field. Therefore I believe that the small shareholders are disadvantaged. Surely there are serious reasons not to proceed, and good reasons to delay until the primary legislation comes before us. We could then have a complete level playing field.
Perhaps I may say a little on the points of substance. We on this side of the Chamber deplore the fact that sufficient weighting is not given to quality regarding radio stations. For instance, when Classic FM's licence expires, it could be bought by a higher bidder which has no intention to supply the special quality which Classic FM provides. We believe that the radio authority should be given the extra powers to negotiate higher quality, as does the ITC for television.
We are also worried about lack of protection for community radio stations which in this bout of prospective expansion may be taken over and eliminated effectively as community radio stations. Could we not have special licences for community radio stations, accepting that they do not compete on the same scale as the large commercial companies?
However, the main issues are these. It is surely wrong to push this measure through in this Chamber tonight after rejection by the Commons. I simply cannot understand why it has to be dealt with now. Why cannot we wait until the primary legislation comes through, which gives a level playing field regarding television, newspapers and radios? The Government may have a secret agenda for rushing the measure through. We should like to know that. However, if there is no such agenda, why do not the Government withdraw one of the two orders and then bring back the measure when the Commons have decided?
Lord Inglewood: My Lords, I was extremely grateful to my noble friend Lord Astor for his kind remarks. It seems as though I am an enormous disappointment to the remainder of your Lordships today. Every time I have opened my mouth, I have been told that I have been a huge disappointment. However, in responding to the remarks of the noble Lord, Lord Thomson of Monifieth, and the noble Lord, Lord Donoughue, it is important to be clear about this. I have made inquiries to check the position. There is nothing in any way untoward about dealing with this particular order in the manner that we propose tonight. After all, the matter was rejected in Committee in another place, not by the whole House in another place. The matter will go forward to another place for consideration by the whole House which is what I understand happens in any event, whatever decision the Committee may reach.
When all is said and done, these are matters to be determined by each House against the background of its procedures and conventions. Of one thing we can be reasonably sure; it is improbable that another place will take a view on the matter, acquiescing with the decision of your Lordships' House. It is rather contrary to the normal practice in that regard. There is nothing in any way constitutionally improper.
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