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Lord Crickhowell: My Lords, I thank the Minister for giving way. As regards ITN, the precepting is on Channel 3 providers; it is not on the local authorities. And in the case of the Environment Agency the precepting is not on local authorities. Surely these are the levying of charges and not precepting on local authorities. There are already exceptions, are there not?

Lord McIntosh of Haringey: My Lords, I said that there have been exceptions. They were all hard fought. For the ITC it was introduced at the same time as the BBC.

National museums and galleries simply do not meet the precept levying criteria and if they were admitted it would be difficult to apply a defensible yardstick to prevent entry to other non-departmental bodies. The VAT incurred by non-departmental bodies is about £400 million which is partly offset by central grants and business activity on which input tax can be reclaimed. The tax loss could be in the region of £50 million to £70 million in this area.

In the European context, yes, of course we are aware of the views which have been expressed by the European Commission. We do not dispute that part of the Commission may hold that Section 33 as framed at present is outside the terms of the sixth directive and European Community law does not cover it. But if it were to be considered as part of the law, which might be the case if there were an extension, then the Commission would take infraction proceedings against the United Kingdom. We have known this for a long time, but there is uncertainty to the extent that membership could be extended to the semi-commercial sector that could still prompt the Commission to take infraction action.

As regards setting the precedent--the floodgates argument--I have spoken of the cost regarding charities and the £400 million tax which could be at risk. The noble Lord, Lord Strabolgi, and many others said that the cost for the charging of museums and galleries would be £3 million. If we extended that to the non-charging museums and galleries we should be talking about £30 million. In any case, other non-departmental public bodies could well be pressing for similar treatment.

We are not stupid. This is public money. If the money is going out to museums and galleries and is being recovered in the form of VAT, you do not seriously think that the Treasury, Customs and Excise, and the Department for Culture, Media and Sport have not taken that into account not only in the way in which our VAT laws are framed but also in the way in which the size of grant for the DCMS is framed. A number of noble Lords have spoken as though this were somehow a quick fix. The noble Lord, Lord Gibson, said that there was no repercussive effect. Of

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course there is a repercussive effect. If we set targets for public expenditure in this country--and noble Lords opposite who have been Members of government know that I am right about this--in the knowledge that some of our expenditure is gross and sums are recovered in VAT, then we are looking at the net effect on public expenditure; and that is what we publish in our Budget figures. It is the basis on which the allocations in our spending reviews are based. Every noble Lord who has been a Minister must know that to be true.

I do not say firmly and finally that there is no prospect of change in Section 33. We shall continue to look for the possibilities of change. I am not saying that there is no possibility that other ways may not be found of improving the funding of museums and galleries. After all, that is the subject of the spending round 2000 which is going on. But I have to say that anyone who thinks that there is a cost-free fix in changing the VAT law is deluding himself.

Noble Lords have done an excellent job for museums and galleries by their determined advocacy of free access and of the worth and means of museums and galleries. That cannot be taken away from them.

7.27 p.m.

Lord Freyberg: My Lords, I am immensely grateful to everyone who has spoken today. It has been an informative and lively debate. I am particularly grateful to the Minister for his comments and for explaining the Government's position. I am sorry that he is unable to move in our direction. I understand the purpose of Section 33. I see no logical and, with great respect, no legal basis on which to limit it. I note that in 1984 when a Labour MP asked the Chancellor of the Exchequer in a Question for Written Answer whether the national museums and galleries should be put on the same footing as local authority museums under this very power, he was told by the Treasury Minister, Barney Hayhoe--now the noble Lord, Lord Hayhoe--not that it could not be done but, on the contrary, that no VAT refund was needed because national museums grants were designed to cover VAT. That is patently no longer the case. The refund is now badly needed, not least in order for the Government to deliver their admirable policy of universal free access. Mr Hayhoe's answer clearly indicates that the Treasury at that time had no intention of declaring this power off limits. Indeed, it is extraordinary that many local authority museums have the benefit of this power, which is denied to their national colleagues.

Are the Government saying that they cannot add national museums to Section 33 or that they do not want to? As there do not seem to be any overwhelming objections, I urge the Government to find the political will to add national museums and galleries to Section 33. I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.

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Wireless Telegraphy (Television Licence Fees) (Amendment) Regulations 2000

7.30 p.m.

Baroness Anelay of St Johns rose to move, That an humble Address be presented to Her Majesty praying that the regulations laid before the House on 8th March be annulled (S.I. 2000/630).

The noble Baroness said: My Lords, I beg to move the Motion standing in my name on the Order Paper.

The statutory instruments to which my Prayer relates will have a significant effect both upon those who pay taxes and those who buy TV licences. The order makes three changes in one fell swoop. The TV licence fee has increased from £101 per year to £104 for colour and for black and white by £1, giving the BBC an extra £200 million every year. Free licences for people over the age of 75 will be introduced from 1st November this year; one per household. The third part of the order amends the licence fee concessions available to those in sheltered accommodation.

I make clear from the outset that I do not propose to put this Motion to a vote. One might ask why I tabled it. Looking around the Chamber, which seems dripping with BBC governors and an ex-director-general--not quite an ex-director-general; I beg his pardon, there are a few days yet to go--the noble Lord, Lord Birt, in the Chamber, I begin to wonder why on earth I tabled it. My colleagues in another place last night did not have to face quite such a battery against them on that occasion. However, I hope it will not end up as a battery against what I have to say.

I have three reasons for tabling the Motion. First, quite simply, it was the only way in which this House could have any opportunity to ask the Government questions about changes that are made here by negative instrument and to give the Minister the opportunity to put on record the explanation of the Government for the changes and the thinking behind them.

Secondly, I should like the Minister to give the House an assurance--this might sound a strange thing to say, not least from me--that the BBC will not be required to bear the administrative costs associated with the Government's pre-election give-aways. Thirdly, I want to draw attention to a narrow point which I believe has been missed in another place. The order could, in practice, remove from people over 60 who are currently in sheltered accommodation the right to concessions in certain narrowly defined circumstances. I do not believe that that is what the Government intend and I want to explore that.

I have approached the debate from my viewpoint as a friend of the taxpayer, a friend of the licence fee payer and, I would still say, a friend of the BBC. I shall carry on with that, regardless. It is true that I am a candid friend, but I sent a draft copy of my speech to the BBC last week. I am not too sure how many people had a heart attack, but they are still talking to me--just. I met the head of TV Licensing on Monday. I am grateful to him for his detailed and patient answering

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of my questions. Noble Lords will be aware that TV Licensing is, in a sense, a brand name of the BBC, but it is a wholly-owned subsidiary.

We on these Benches recognise the achievements of the BBC and its importance in setting the benchmark of quality in national and international broadcasting. The BBC has made, and I hope it will continue to make, a major contribution to the cultural life of the nation. However, as noble Lords are all aware, the broadcasting world is changing rapidly. Already more than 3 million households have access to multi-channel digital television. That explosion of choice raises fundamental questions about the current and future role of the BBC and, necessarily, about its funding.

Perhaps there are good reasons for letting the BBC now break the existing agreement that was intended, when made, to give it scope to develop the digital services. I would simply maintain that when the Secretary of State made his Statement in another place, it was he who failed to make that case effectively. Those who feel tonight that this will be a bash at the BBC's speech will find that it is not quite that. Perhaps others might want to do that in future debates we have on broadcasting. I hope that we have the opportunity to explore the role of public service broadcasters in general during the course of this coming year in our Wednesday debates.

I have questions about the operation of Parts 2 and 3 of the order, if I may call them that. I refer to the parts which affect the free licences for the over-75s and the extension of concessions, or so it would appear, to those in sheltered accommodation. I turn first to the free licences which will be available to the over-75s. I was intrigued to note that when the Secretary of State made his Statement in another place he said that the concession would be made provided that primary legislation can be passed to enable it to be made. We now find that that change is to be effected by secondary legislation. What advice did the Government receive between 21st February this year when the Statement was made and 8th March when this instrument was laid to change their minds about the need for primary legislation to effect the change?

Can the Minister confirm that some primary legislation may still be needed in order to give the BBC full access to all our national insurance information--the numbers held for us by the DSS at Newcastle--so that those who claim a free licence can have that claim verified?

The heart of my questions are: what are the financial implications of the change for both the Treasury and the BBC? How has the Treasury calculated the £300 million which the Secretary of State announced would be paid every year to the BBC as compensation for the loss in income for the sale of those licences to the over-75s? Is £300 million really an accurate figure or is it, indeed, as I have been led to believe by advice, closer to £340 million in the first year and about the same thereafter?

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Is the estimate of the compensation to be paid linked to the number of those who are currently over 75 who are estimated to hold a licence? Are such figures available? How many people have a licence over 75? Or is that compensation amount linked to the number of households that the Government expect to make a claim to have a 75 year-old living with them after 1st November this year? Let us suppose that my mother came to live with me in my household. As she is 86, I would be able to transfer my licence fee into her name and obtain a free licence for my household.

I note that the compensation is strictly for the amount of free licences issued. There is the question of the cost of administration. Such costs are excluded from the estimate of £300 million, if that, given by the Secretary of State. Can the Minister confirm that the estimated cost of the work to be carried out by TV Licensing is about £22 million in the first year and about £8 million to £10 million thereafter? They will be required this year to write to every single household in the land to inform those who are over 75 about the scheme and explain how it operates. They must verify the claims and police the system thereafter to ensure there is no fraud. That is their job. Can the Minister assure the House that the Treasury will pick up the bill for all that work, both this year and in ensuing years?

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