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"( ) In determining whether it is appropriate, by an order under subsection (2), to add a service to the list of must-provide services or to remove a service from that list, the Secretary of State must have regard, in particular, to—
(a) the public benefit to be secured by the addition of the service to the list, or by its retention in the list;
(b) the likely effect of the proposed modification as respects the costs to be borne, under arrangements entered into or imposed under section 270, by the persons who, after the coming into force of the modification, would have to be parties to those arrangements; and
(c) the extent to which that effect is proportionate to the benefit mentioned in paragraph (a)."

On Question, amendment agreed to.

Clause 271, as amended, agreed to.

Clause 272 agreed to.

Clause 273 [Programming quotas for independent productions]:

[Amendments Nos. 196 to 199 not moved.]

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Lord Crickhowell moved Amendment No. 199ZA:

    Page 246, line 25, at end insert—

"( ) It shall be the duty of OFCOM to carry out regular reviews of the operation of the provisions of any order made by the Secretary of State under subsection (2), and the first such review must be carried out no more than 12 months after the commencement of this section and subsequent reviews must be carried out at such intervals as OFCOM may determine.
( ) OFCOM must send a report of every review to the Secretary of State and publish such report in such manner as they consider appropriate, and the report on a review must set out OFCOM's recommendations, in consequence of their conclusions on the review, for the exercise by the Secretary of State of his power to make an order under subsection (2) describing the programmes that are to be independent productions for the purposes of this section."

The noble Lord said: The aim of the amendment is to ensure that Ofcom is required to consider whether ITV regional companies should be accorded the status of independent producers in relation to companies where there is no ownership link.

I have two preliminary observations to make. The first is to take as a text paragraph 192 from the recent ITC review. It states:

    "Proposals from Granada and others to reclassify ITV regional centres so that they qualify for the quota are potentially attractive from a regional perspective, but require a more detailed cost benefit appraisal before any changes can be made on this area".

That is a very interesting comment. It makes clear that the issue is by no means settled and that more work needs to be done.

My second observation is that I am reviving an earlier debate to which the noble Lord, Lord Alli, contributed. We did not entirely agree on this subject during the course of that debate. The noble Lord, Lord Alli, is one of the big, strong, fierce cats of the independent sector. He roams in the big cities of London and Manchester. I am speaking on behalf of the smaller animals out in the countries and the regions, far away from those great places. It is with the position of those regional broadcasters that I am concerned.

There are three other brief points that should be made at the outset. First, the independent production sector is rightly promoted in the Bill and I acknowledge that. Secondly, the quality of programme ideas is the basis on which the commissions should be made by broadcasters. Thirdly, the independent production quota should be regarded as a floor and not as a ceiling.

A number of contributions in earlier debates emphasised the importance of regionality and regional production. The Bill places great emphasis on out-of-London production and on a range of production centres. We will debate later amendments that deal with production centres beyond the M25—far beyond it. The interests of the nations and regions are recognised within the structure of Ofcom, but despite the Government's best intentions, the future economic and cultural contribution of ITV regional companies is being constrained in practice.

Surely the role of the ITV companies should not be confined to their regional licence obligations. ITV regional companies are a means of delivering

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programmes that reflect the diversity of the nations and regions on UK networks. One cannot isolate the ITV regional companies and divorce them from the rest of the creative community in which they operate. There is an interdependency which contributes to the general health of the regional production market.

The ITC report on television in the nations and regions, to which I have already referred and which was published last year, stated:

    "Television production is also part of the expanding knowledge economy, and can help support and build high quality employment across the UK. Combined with other creative and technical sectors, it can contribute growth to areas under economic pressure, and can help the UK achieve a more balanced economic development across the country".

As a former Secretary of State for Wales, and in the presence of another former Welsh Minister, I can say that we both have great experience of exactly that happening in the Principality during the time that the noble Lord, Lord Roberts of Conwy, and I had responsibility for such matters.

The key to the debate can be found in the paragraph that I have already quoted, paragraph 192, and in paragraph 47 of the review. Paragraph 47 states:

    "We therefore suggest that the current rules should remain unchanged unless a full and detailed economic cost benefit analysis shows that there are clear net benefits associated with this proposal. If the definition of qualifying independence were to change, proposals for raising the quota itself might well need to be considered".

The review is therefore saying that although there are obvious benefits to be gained from something of that kind, the possible negative effect on other independent producers has not yet been adequately measured for a final decision to be taken.

However, the ITC review identified concerns about the,

    "health of the programme supply market in the Nations and Regions",

adding that,

    "economic pressures are creating new challenges for the sustainability of production outside London".

The downturn in advertising revenue is well documented and therefore it is imperative that ITV regional companies are given the opportunity to exploit other potential revenue streams in the programme supply market. The only reason that independent producers would be fearful of competition from ITV companies is if they lack confidence in the quality of their own ideas. After all, the more successful the ITV regional companies are, the better able they will be to continue to support the independent companies in their area. That they do support those companies, I can vouch from my experience as chairman of HTV in the past.

The ITC review had a public interest objective,

    "to seek effective measures which will support a vibrant and sustainable production sector throughout the UK".

A review of the disqualification is part of seeking those effective measures, particularly as the report also acknowledges that,

    "producers in the Nations and Regions of the UK face increasing economic challenges".

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This is not an issue that can be finally settled by debate across the Chamber. Whether or not I could win the argument with the noble Lord, Lord Alli, were he here, I doubt. It is an argument that depends on further analysis, further information and further review. It is therefore just the kind of argument that Ofcom is being established to settle. It is for Ofcom to decide what role the ITV companies can play in the UK programme supply market over and above their regional licence obligations. It is for that reason that I have tabled an amendment to ensure that it holds a prompt review, and further ones if necessary, so that it can settle a matter which is of great importance for broadcasters in the nations and regions. The strength of feeling on both sides of the debate is a testament to the fact that a review within 12 months is necessary to make a proper assessment of the situation. I beg to move.

Lord Bragg: I support the noble Lord, Lord Crickhowell. I agree with many of the points that he made with such eloquence and in such detail, so I shall be brief.

The current definition of an independent production under the order excludes regional ITV companies from qualification when they are producing for other broadcast networks. That is the nub of it. Perversely, Endemol, which is a large, London-based independent producer, part-owned by an EU broadcaster, continues to qualify. It is partly owned by Spanish interests. What is sauce, or Madeira, for Spain should also be sauce for Newcastle and Carlisle.

The current arrangement undermines Parliament's declared objective of sustaining strong, regional production business around the UK. Like the noble Lord, Lord Crickhowell, I would welcome an obligation being placed on Ofcom to review that matter early in its existence.

The regions have absolutely no guarantee of contributing to the ITV network. I do not know whether that is widely known. They have to fight for their place against tough competition from the big boys from London. If they do not gain access to the ITV network, they can have no sales anywhere else. We should seek to redress that state of affairs. Nearly 90 per cent of all independent production is in London, yet time and again people say how much we should succour—look after and help—the regions. Here is a chance to do so.

Many noble Lords bring far greater experience to the Bill in different ways but I have worked in two of the regions: for Border Television as a producer and later as chairman with Tyne Tees Television in Newcastle. These issues are very important to those communities. They get a high skills base; a feeling of confidence inside a community is generated; and there is employment. The ramifications involve broadcasting and the cultural presence of the place. Children and young people can say, "This is a way in". Many people who have done extremely well in British broadcasting and world broadcasting got their start in such companies when they were flourishing. I cannot

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emphasise enough how much they bring to those communities. This is a chance to do something to help them to build again from a base that has been undermined, partly by the diminution of advertising.

Everything that the noble Lord, Lord Crickhowell, said about cultural and economic importance can be fully endorsed by myself, those who work there and everyone who has lived in the regions and properly examined what is going on. I support the proposal strongly. It is just the sort of issue in relation to which Ofcom should test itself as early as possible.

5.30 p.m.

Lord Roberts of Conwy: I, too, support my noble friend's amendment. In doing so, I draw the attention of noble Lords to the positive contribution of one ITV company that my noble friend knows very well; namely, HTV. It has made a remarkable contribution as an independent supplier of Welsh-language programmes for the Welsh channel S4C. I contrast that position with the company's disqualified status as an independent producer in the English language.

Since 1958, when I was a founder staff member of Television Wales and West, TWW, the ITV contractor for Wales and the west of England has made an outstanding contribution to the provision of quality programmes in the Welsh language. That long and honourable tradition has been continued by HTV since the late 1960s. Before the establishment of S4C, HTV was responsible for making and transmitting Welsh-language programmes on ITV. When S4C came on air in 1982, HTV became a major commercial supplier of programmes for the new fourth channel. As of today, HTV Wales is commissioned to make 110 hours of programmes a year for S4C, including its long-running current affairs programme, "Y Byd ar Bedwar"—"The World on Four"—and one of its most popular rural series.

HTV is considered to be part of the Welsh language independent production sector and is a member of TAC, the Wales independent producers' association. The ability of HTV Wales to bid for commissions on the same terms as other independent companies has stimulated competition and diversity in the Welsh language programme supply market. The relative strength of that market was highlighted in Committee on 22nd May. The Minister, the noble Lord, Lord Evans of Temple Guiting, said:

    "We acknowledge not only the authority's linguistic and cultural contribution but the important role it plays in supporting creative industries in Wales . . . Such industries are doing tremendously well and are, in many ways, making the Welsh economy much stronger than that of its neighbours".—[Official Report, 22/5/03; col. 982.]

HTV Wales, as a supplier to S4C, played its part in the development of that economy. It demonstrates the contribution that ITV regional companies can make to the creative industries over and above their licence obligations. To disqualify HTV Wales from replicating the contribution that it makes to Welsh-language television in the English language is totally inconsistent. I strongly believe that that

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disqualification has hampered the ability of English-language programme makers in Wales to make programmes for the UK market. The contribution is underdeveloped, reflected in the relative lack of Welsh-made programmes on UK networks. That is a very serious issue.

Having commended the role that S4C plays in Wales and its positive impact on the creative industries, I ask the Government why other UK television channels should not be able to make use of the ideas and talent of programme makers working within ITV regional companies on an equal basis with other suppliers. Surely, the competition that the Government are so keen to encourage in the UK programme supply market would be given further stimulus by lifting the disqualification on ITV companies as independent producers.

I am all in favour of the independent producer and I supported the amendment of the noble Lord, Lord Alli, in Committee. However, on reflection, I am sure that it is a grave error to handicap regional ITV companies in producing locally programmes that may well have a wider—national or even international—appeal. I cannot forbear from saying that I once had the great pleasure of producing a programme called "This World of Wales" with the late Richard Burton. I am glad to say that it was even seen coast to coast in America.

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