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Lord Cledwyn of Penrhos: My Lords, I cannot say that I am full of delight in responding to what the noble Lord said in his winding-up remarks. He could have been rather more constructive in his response, not only to what we said but to the feelings of the Welsh people at the present time. Nevertheless, he made one or two remarks which caused me to pause. He said--twice--that he would reflect on this debate and what has been said by noble Lords throughout the House. Secondly, he said that measures were being prepared but were not yet ready to be published or made known to Parliament. Let us hope that those measures will give us some measure of satisfaction.

Against that background, we realise that the Bill proceeds to another place. So there is ample opportunity for the noble Lord and his right honourable friend to consider very carefully the feelings on the Bill of noble Lords from the Principality in this House and at this time. I hope that he will do so. With those remarks, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 71 [Application of excess revenues of Channel Four Television Corporation]:

Lord Thomson of Monifieth moved Amendment No. 14:

Page 61, leave out lines 34 and 35 and insert--
("(a) for paragraph (a) there is substituted--
"(a) subject to subsection (1A) of this section, pay 50 per cent. of the excess to the Commission; and", and").

The noble Lord said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 15, 16 and 17. This series of amendments deals with the anomalies that lie in the financial relationships between

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Channel 4 and the ITV companies and the fact that what is meant to be a safety net for Channel 4 has become a rather large subsidy from ITV to Channel 4. The amendment also deals with the wider background, in a sense, of the financial relations between one ITV company and another. The two issues are linked and that affects the timetable that is proposed.

We have covered this ground a number of times during our proceedings on the Bill. It is fair to say that those on conflicting sides of the argument have both moved. On this side, we put forward our compromises. The latest is in the series of amendments that I now move. The Minister has also shown willingness to move and put forward his compromises. Those compromises are now set out on the consolidated list. The difference now left between us is not big but it is very important and not to be shrugged away.

On our side, we have conceded a timetable that moves a good way from the original desire for immediate abolition of the subsidy from Channel 4. It is a timetable which would reach zero by 1st January 1998 and during 1997 would reduce more gradually. The Minister at Report stage, characteristically ready to listen to the arguments of the House, moved very significantly indeed. We welcomed that at the time. He said that the Government were now ready to move and that the first reduction should take effect from 1998 and the second reduction would take effect from 1999. He then added these characteristically cautious ministerial words: "It is too early to say what the new levels will be". However, the Minister has shown himself ready in principle to make 1st January 1999 "zero date", if I may call it that. He is proposing in his amendments to provide the necessary legislative power for that possibility.

However, as I understand it, the Government are still unwilling to make a final commitment. I am making a last ditch stand tonight to seek to persuade the Minister to abandon his amendment and accept the arguments that I put forward for mine. Leaving uncertainty in the matter will continue to have a destabilising effect within the independent television system for the next couple of years while the final figures are haggled over. Other noble Lords no doubt received, as I did, representations from the Independent Television Association, which supports the Government's proposals rather than mine. I want to face that argument. I recognise the reasons for the Independent Television Association taking that view; but it is profoundly mistaken, even in its own interests.

Under the 1990 Act, 1998 is the year in which the contracts for the ITV companies are open for review. I am reinforced in my position by words from the well-known figure in the ITV world, Mr. Ward Thomas of Yorkshire Tyne Tees Television. He says that the view that I have been expressing, linking the problems of Channel 4 funding and ITV licence fees, is the way to resolve the issue. He said,

    "This can be the only practical way of eliminating the continuing 'bad blood' within the system that you have referred to in the House".

Linked with the Channel 4 subsidy are the grotesque arrangements for the ITV companies paying their licence fees that emerged from the 1990 bidding

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process. To take a single example of those distortions, Midlands licensee, serving 4.5 million homes, by a magnificent piece of risk-taking, managed to end up paying £2,000 per annum for the privilege of serving the great Midlands area of this country, whereas Tyne Tees, serving 1.4 million homes, pays £15.1 million per annum. Those anomalies are as unsustainable as the anomaly of the subsidy from Channel 4 to the ITV companies.

Over the whole period of ITV until the totally mistaken and disastrous 1990 Act, there was an even-handed arrangement between all the regions in regard to the proper contributions that they should make to the Treasury. It was in fact only the 1990 Act which, for the first time, reduced that to a system of blind options and enormous disparities. I mention that because, if there was certainty that during 1998 the commitment from Channel 4 to the ITV companies was going to reduce and that from 1st January 1999 there would no longer be any subsidy, it would clear the air for negotiations between the ITC and those ITV companies which are seeking a review of the arrangements. The matter must be seen as a whole. From the point of view of the ITV companies, if the Government get away with the timetable that they are proposing, the water will be muddied in that negotiation and the ITV companies' ability to obtain a fresh start will be obscured by the fact that there is still a possibility of some element of subsidy from Channel 4.

It is for those reasons that I argue the merits of this series of amendments. Before I sit down I should perhaps explain what the amendments do. Amendment No. 14 is a consequential amendment and I need not waste time on it. Amendment No. 15 represents a substantial concession from the position that I have argued for so far in these proceedings. It has the effect of reducing to zero the thresholds at which Channel 4's revenues over the 14 per cent. of total national advertising revenue would be paid from 1999 onwards. It makes a transitional provision for the year 1998.

Amendment No. 16 has the effect of placing in legislation the intention that the Minister announced and which we welcomed at Report stage; that is, that the Channel 4 reserve fund should be capped following the enactment of the Bill and that no further payments into it would be required from Channel 4. Amendment No. 17 has the effect of permitting the Secretary of State the opportunity to vary the thresholds once more after the year 2002 when the present cycle of ITV contracts comes to an end and when the government of the day can properly take stock of the impact that the digital revolution is having on the broadcasting scene. At that time it will be amply proved that Channel 4 can stand on its own feet. I hope that I may be there to see it happen; who knows? I beg to move.

6 p.m.

Lord Birkett: My Lords, in rising to support Amendments Nos. 14 to 17, I am conscious that the Minister's Amendment No. 19 comes shortly after. It is a little like coming round the corner and finding oneself face to face with the sphinx. I hope the Minister will not mind if I describe his amendments as a little "enigmatic"

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as I should like to join in the tributes paid to him today for the sheer intelligence, courtesy and capability with which he has handled the Bill. I am full of admiration for him. I say the amendments are enigmatic. I wish I were prescient enough to read between the lines. However, your Lordships may agree that the words "may be nil but", do not give a lot of space for reading between the lines.

It is clear from everything said by the noble Lord, Lord Thomson, that the intention behind the amendments is to clear away the anomaly of Channel 4 having to pay out anything to ITV once the date of 1997--it is generally agreed that that is the right one--has passed. I am well aware that at Report stage the Minister indicated--if I get him wrong perhaps he will tell me immediately--that in 1999 that may be the case, but 1998 he thought would be the transitional year. It was at that time that he announced the concession of Channel 4 not having to pay into the reserve fund. I am sure that that will be welcome to Channel 4. However, there is a big difference between being obliged to put one's earnings into one's savings account and being obliged to pay them out via a thumping great bill to somebody else.

I can see no justification, after the end of 1997, for any payments to go forth either way. It has often been said in the course of these debates that we cannot foretell the future, particularly in the world of television. I have two comments to make in that regard. First, we can tell a jolly sight better now than we ever did in 1990 when this formula was invented. It was invented, of necessity, on guesswork and we now know that that guesswork proved wrong. Justice and common sense suggest that we put it right as fast as possible.

Secondly, who knows what will happen in the future to Channel 5? I cannot find an informed television commentator who thinks, however successful Channel 5 may be, that there is the smallest remaining danger of Channel 4 foundering, and therefore this formula having to be invoked. I cannot see any justification for thinking that Channel 4 may still be in danger. It seems to me therefore that if 1998 is to be a transitional year, the amount paid in that year ought to be absolutely tiny. As I said at Report stage if indeed it could be nil, as the Minister's amendment would make possible, that would be the best of all solutions. I hope that when the Minister replies he will give some indication of what 1998 will bring. If he gives any indication that it would be less than 15 per cent., I should be exceedingly happy and immediately cease to support this amendment. However, if he does not, I recommend to your Lordships that the figure of 15 per cent. is quite enough. I hope it is unnecessary.

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