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Lord Bragg: My Lords, I shall be brief, but I cannot let this moment pass without adding my congratulations to my noble friend Lord Puttnam whose work in this respect has been mighty, as I and several other noble Lords know, and to my noble friend the Minister for the intelligence and directness of his answer. It proves to me that the Government have listened to their supporters—to those of us who, in the words of the noble Lord, Lord McNally, want to make a good Bill better. The new clause sets out to do just that and I am very pleased that the Government have responded so carefully and so effectively to my noble friend's amendment.

Plurality and adversity—I mean diversity; I have been thrown a bit by my noble friend Lord Eatwell—applied to the spirit of my noble friend the Minister's remarks, should see us through—us being the British public— to preserving the public service interest at the heart of the Bill. We are much further forward after today.

Lord McIntosh of Haringey: My Lords, with the leave of the House, I want to avoid making a second speech and, with three very brief—the stopwatch starts—exceptions, I can do so. I shall respond to all the points about the relationship between plurality and foreign ownership when we deal with Amendment No. 193. I shall deal with the point about religious broadcasting when we reach the appropriate amendment.

Apart from that, I want only to correct something that I said to the noble Baroness, Lady Buscombe. In fact, under Section 58 of the Enterprise Act 2002, a public interest consideration may be added by an order subject to the affirmative resolution procedure. That would cover the two media plurality considerations that I cited. However, in the light of the debate, it has been generally agreed that it is advantageous to write the provision into the Bill.

Lord Puttnam: My Lords, no Oscar speech, I promise. It goes without saying that I am enormously grateful to all noble Lords who have supported this endeavour—it has been an endeavour—for the past 14 months and have brought us to this point. There is one thing that I want to get off my chest. I am very conscious—and not at all comfortable with the fact—

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that I have been unable to extend to the noble Lords, Lord Crickhowell and Lord McNally, the loyalty that they extended to me. That troubles me.

It is hope fulfilled, I suppose, but I suspect that my heart will remain in my mouth for a few more years. Ofcom will find itself challenged—quite quickly, I suspect—and only then will we know if we have placed our trust in the right quarter. As a matter of fact, I have every confidence that we have.

There are a few people whom I should like to thank because they have been very much behind the scenes. The noble Lord, Lord Grabiner, who has, as it were, been "behind the behind the scenes", has steered me magnificently on the legal aspects of the conclusion at which we have arrived today. I know that my noble friend Lord McIntosh would join me in thanking the noble Lord for his help. The honourable Andrew Lansley—who, I believe, may well be in the Chamber, but I shall not look to find out—was in every respect the architect of this concept. The rest of us have been happy messengers. I hope that he feels that we have handled his child with sufficient care.

It is also well worth saying that 12 people from each party and from both Chambers have supported the concept from day one. If that is not an example of politics at its best, and of the way that scrutiny and cross-party relationships can bring about an excellent result, I am not sure that I shall ever live to see one. Without embarrassing her, perhaps I may also thank the noble Baroness, Lady Buscombe. She has been a model of consistency and common sense in the most difficult and trying of circumstances. I am not sure how I should have managed during the past week to 10 days if she had not been so utterly fair-minded and so genuinely helpful whenever she could be.

With that said, this has been a good day for the House and maybe—who knows?—a good day for the country. I beg to move.

Noble Lords: Oh.

Lord Puttnam: I knew that I should not get to the end of this properly. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 190 to 192 not moved.]

Lord Crickhowell moved Amendment No. 193:

    Before Clause 340, insert the following new clause—

(1) For paragraph 1(2) and (3) of Part 2 of Schedule 2 to the 1990 Act, there shall be substituted—
"(2) Sub-paragraph (1) shall apply in relation to any Broadcasting Act licence other than a licence to provide a Channel 3 service and a Channel 5 licence as if paragraphs (a) and (b) (and the reference to those paragraphs in paragraph (i)) were omitted."
(2) OFCOM shall carry out the initial review for the purposes of this section within a year of the coming into force of this section.
(3) OFCOM may carry out a subsequent review for the purposes of this section at any time during the period which commences a year after the completion of the initial review under subsection (2) and which concludes with the coming into force of the order made under subsection (7).

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(4) A review under this section shall consider whether, in the opinion of OFCOM—
(a) the provisions of section 273, 274 and 280 to 284 are operating in such a manner as to provide for a fair and transparent programme supply market with respect to Channels 3 and 5;
(b) the relevant provisions of Chapter 4 of this Part are operating in such a manner as to provide for effective content regulation of Channel 3 and Channel 5 services;
(c) the provisions of sections 260 to 267 are operating in such a manner as to provide for a continuing significant contribution by Channel 3 and Channel 5 services towards the achievement of the purposes of public service television broadcasting in the United Kingdom specified in section 260;
(d) the provisions of sections 344 to 349 provide adequate additional safeguards in case of change of control of Channel 3 services or Channel 5; and
(e) the powers available to OFCOM under the Competition Act 1998 (c. 41), Part 4 of the Enterprise Act 2002 (c. 40) and sections 309 to 311 of this Act are adequate to promote effective competition in the broadcasting market in the United Kingdom.
(5) When, as a result of a review carried out in accordance with subsections (2) or (3), OFCOM consider that each condition specified in subsection (4) has been met, they shall make a report to that effect to the Secretary of State, giving reasons.
(6) The Secretary of State shall lay any report made to him under subsection (5) before Parliament.
(7) When a report has been laid before Parliament in accordance with subsection (6), the Secretary of State may by order repeal paragraph 1(1)(a) and (b) of Part 2 of Schedule 2 to the 1990 Act and make such consequential amendments to that Part of that Schedule or to other provisions of that Act or this Act as he thinks fit.
(8) No order is to be made containing provision authorised by subsection (7) unless a draft of the order has been laid before Parliament and approved by a resolution of each House."

The noble Lord said: My Lords, we have just heard that the Government are to introduce very important amendments at Third Reading. However, nothing that the noble Lord, Lord Lipsey, said about the matter makes me change my mind and I do not believe that they are likely to make any difference to the issues covered by my amendment, Amendment No. 193.

The noble Lord, Lord Puttnam, need not feel any guilt. He has negotiated a deal that greatly improves the Bill. It is the nature of deals that something has to be given in return and the House will understand perfectly why he has now withdrawn his name from the amendment. However, the noble Lords, Lord McNally and Lord Hussey of North Bradley, and I have not been party to the negotiations and we feel that the arguments in favour of our amendment remain as strong as ever.

Amendment No. 193 would delay the lifting of restrictions on non-EEA foreign ownership. The Joint Scrutiny Committee, of which we were all members, saw no immediate need for the lifting of the present restrictions. We concluded that to do so before Ofcom is firmly established and has the opportunity to review the state of the market and the way in which regulation is operating would put at risk some of the crown jewels of British broadcasting.

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The amendment would require Ofcom to hold an initial review within a year and subsequent reviews as required. If, as a result of a review, it concluded that the restriction could safely be lifted, Ofcom would report that to the Secretary of State and Parliament. An appropriate order could then be laid to be approved by affirmative resolution.

The case in favour of lifting restrictions on foreign ownership now were summarised in Committee by the Minister then in charge of the Bill, the noble Baroness, Lady Blackstone, who said that it should lead to increased investment, productivity and efficiency, together with new skills and ideas. That argument had been advanced at Second Reading by my noble friend Lady Buscombe. My noble friend asked, "What is there to fear?" She told us that we should have more confidence in our culture and allow the consumer to choose. The Minister took a totally different line. She did not propose to leave it to unfettered consumer choice. Responding to what I and others had said about the state of broadcasting in the United States and the massive power of conglomerates, she said that the Government wholeheartedly understood and sympathised with the concerns that had been expressed. She argued that,

    "the UK has strong content regulations which will maintain the quality and impartiality of our programming"—[Official Report, 5/6/03; col. 1474.]

Those who regard public service broadcasting as one of the greatest glories of British broadcasting may, like me, have more confidence that it would be better protected by effective legislation than it would by leaving it all to consumer choice. I shall return to the subject of consumer choice, but I wish first to examine the circumstances in which Ofcom will have to try to enforce regulation and compare them with the very different circumstances in which the rich culture of public service broadcasting was established and developed. Professor Michael Tracey of the University of Colorado, in his latest, remarkable contribution to the argument, reminds us that,

    "the ITV system, while commercially funded, was not market driven. It was based on a monopoly of advertising in a given region, all based on the expectation that it would fulfil certain public service commitments. Channel 4 had a guaranteed income precisely so that it did not have to worry about the market".

As a former director of an ITV company, I can vouch for the fact that in those happy, far-off days, when the advertising revenue came in a rich flood, those of us with responsibility to our shareholders were immensely careful to obey in the minutest detail every regulatory command, and the regulators had no problem in enforcing their will. By the time I finally left the industry, the situation was rather different. A combination of large bids to retain licences and rapidly declining advertising revenue meant that the companies had to cut costs to survive and that the regulators had to relax their controls and respond with understanding to the financial realities of the market.

Ofcom will be taking over its responsibilities in circumstances that will make its task of enforcing regulation very difficult. As the Joint Scrutiny Committee pointed out, and as my noble friend Lady Buscombe observed last night, it will face an enormous

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range of challenges immediately after it assumes its functions. It will also be taking over at a time when the fall in advertising revenue for Channel 3 licence holders is so severe that it threatens the ability of some of them to fulfil existing commitments and maintain existing standards. In this situation Ofcom will have to use its powers with discretion or may find that the very existence of those companies is imperilled.

Some people might say, "Well, that's one reason why we need foreign investment". However, if foreign investment were to be made in those circumstances, it would not be to obtain the rich pickings from the advertisers' table, or in the expectation that the arrival of investment and ideas would suddenly boost advertising revenue. No, the aim of new owners would be to buy when share prices were depressed, cut costs—by reducing original drama output, for example—and to bring in as much existing material as possible already paid for by US sales on which margins would be large. At the same time, local content would increasingly be created with the object that it could be marketed to international audiences rather than with the particular aim of retaining local character and meeting local need.

In Committee, I referred to the large amount of evidence received in the Joint Committee that that was exactly what would happen. The noble Baroness, Lady Jay of Paddington, and the noble Lord, Lord Bernstein, reinforced the case on the basis of their own direct experience in the market. The usual challenge was thrown out that, if this was the case, why did European countries that have no restriction on their ability to buy British companies not take advantage of the situation and do the same? The fact is that they do not have vast existing libraries of English-speaking product waiting to be disposed of in that way.

I add only two more points before turning to the question of consumer choice and the alleged benefits to the UK of opening up our market. One of the principal benefits of attracting investment and ideas that has emerged in markets other than television is that it can be of great help in making possible sales to other countries, including the United States. Bizarrely, however, the proposal is that we open our markets without any reciprocal opening of the US market. That is one more good reason for not moving fast down the route proposed by the Government, and I warmly support Amendment No. 195 in the name of the noble Lord, Lord Gordon of Strathblane, and my noble friend Lord Fowler.

There are those who argue that because content regulation has been tightened up, there are now adequate controls to ensure that new overseas owners would have to behave themselves. As a regulator of a different industry, I learned that there is a huge difference between regulating the conduct of those who respect what the rules hope to achieve, and who are, by instinct, inclined to conform, and attempting to regulate those who have contempt for the rules and seek to avoid them for their own advantage. I remain to be convinced that Ofcom will find it easy to ensure compliance by a great international conglomerate.

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Public service broadcasting is now comprehensively defined in Clause 260 in legislative language. We are talking about creativity, diversity and standards. Can we be confident that such matters will be what consumer choice will safeguard? I suspect that Hugh Carleton Greene, a great director general of the BBC, was right when he argued that what he called the "basic moral values" of truthfulness, justice, freedom, compassion and tolerance are constantly endangered species that one needs to breed and then protect.

In the competitive marketplace of the US, the demand of advertisers always to maximise audiences has led to a reduction in real news broadcasting, the decimation of children's broadcasting and the extraordinary success of reality TV. In a world where the consumer may have a hundred channels he can watch, there is plenty of scope for reality shows. Yes, we can and should have consumer choice, but we have got it, and there is no shortage of choice available to consumers. I am not arguing that there should be. I am arguing that if we value the standards that have been established for public service broadcasting, we cannot and must not leave those to consumer choice.

Speaking in this building on 26th June, Pat Mitchell, the president and CEO of PBS, the United States' public service broadcasting organisation, who has spent nearly 25 years in commercial media and the past three years with the only non-profit media organisation in the United States, warned of a further consolidation of power among a few global conglomerates. My noble friend Lady Buscombe says that we should allow the consumer to choose. Pat Mitchell says that we cannot have a democracy without having a healthy, democratic media system and that the media are too important to leave to the marketplace to control, or direct.

Public service broadcasting, as we know it in this country, is too important to be put at risk by rushing helter-skelter down the de-regulatory slope at a time when the new regulator is likely to be overstretched and relatively feeble, when market conditions make regulation hard to enforce and when the moguls may see an opportunity to exploit. My amendment would not shut the door for ever. It would provide time for Ofcom to establish itself and give it the opportunity to explore the validity of the arguments that we are considering today.

The Government, for reasons that are remarkably unconvincing, are trying to persuade Parliament to take a risky road. We should not allow them to do so, and I find it extraordinary that my Front Bench should be prepared to underwrite the Government's approach. When my noble friend the Chief Whip circulates a note saying that we are being watched closely—minute by minute and in detail—by the media and that the most careful consideration has been given to the issues by senior colleagues in both Houses, I know that those who tell me that heavy pressure has been applied by media moguls are right. My reaction is not to climb down in the face of such pressure but to feel even more strongly that the Bill needs strengthening, not weakening.

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The Government and Opposition Whips will usher their flocks into the same Lobby. I hope that there will be many in all parts of the House, and a substantial number in my party, who will feel as I do and will insist on retaining effective safeguards for a system and for standards that are immensely valuable and need our protection. I beg to move.

5.45 p.m.

Lord Gordon of Strathblane: My Lords, I speak to Amendment No. 195, which stands in my name and that of the noble Lord, Lord Fowler. I agree entirely with the remarks made in the previous debate by the noble Lords, Lord Crickhowell and Lord Fowler, to the effect that this is a separate issue from that of the public interest test and should not even be considered in the same breath.

I favour Amendment No. 194, the second of the noble Lord's amendments, rather more than I favour Amendment No. 193. It is not good enough just to give Ofcom breathing space. Amendment No. 194 takes out the disapproval altogether. My amendment is an attempt to achieve reciprocity: we will do it, if they do it. I freely concede that, frankly, if we achieve reciprocity, events will overtake us all, and it will happen automatically.

The man in the street would think that we had taken leave of our collective sense, if he heard that we had decided unilaterally to allow the Americans to own British media, without insisting that they grant a similar right to us. It is, after all, a fundamental principle of trade that it is bilateral. I welcome the removal of barriers. I concede that there are some concerns about United States ownership that, even if the barriers were down and we had reciprocity, might fall foul, in certain circumstances, of the public interest test proposed by the noble Lord, Lord Puttnam. But that is a separate matter.

Discussions go on constantly in GATT on the matter. The great irony is that this might happen at precisely the point at which America might consider it sensible to drop our media restrictions that stop anyone owning more than 20 per cent. I remind the House that one of our most able and talented Commonwealth citizens had to renounce his Australian citizenship, take a primary school test in American history and become an American citizen in order to own anything in the United States. That is how strict they are; that is how resistant they are, even to big media moguls. If progress is to be made, it will not help our negotiators if we give in in advance as regards precisely the prize upon which they might feel tempted to remove their own restrictions.

The reason that America might give in is that boundaries are becoming meaningless nowadays, anyway. Any of us could sit at home and watch al-Jazeera all day, if we wished. We can receive it through satellite. Likewise, in New York, the highest-rated radio programmes on the Internet are both British. I concede that there is an element of distortion of the market, in that expats probably use the Internet

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because they do not have access to British programmes any other way. However, television is now crossing frontiers—in fact, that is the title of a directive from Europe. To some extent, we can keep out ownership, but we cannot really keep out programmes. It is programmes and programming that influence the public. I am not trying to say, "Never"; I am simply saying, as a principle of trade, "Let us in, if we let them in".

I squirmed with embarrassment at the statement about how ridiculous it was that we were allowing the French, the Germans and the Italians to own but not the Americans, the Canadians and the Australians, as though, somehow, it had been a slip of the draftsman's pen. It is straight common sense. For all that we may dislike some of our European colleagues, particularly the media owners, the fact is that, at the moment, as part of our membership of the European Union, we have access to ownership of their media, and they have access to ownership of ours. Prior to that, Section 12(5)(a) of the Independent Broadcasting Authority Act 1973 insisted that British media must be owned by people who were British. It was only when we joined Europe that we extended it.

We have not felt the impact of Europe very much for the obvious reason that, because of language differences, there has not been the degree of vertical integration—sometimes called "dumping"—that there has been from the United States. That has not happened. It could happen with the United States, Canada or Australia. We must consider that—quite properly—under the public interest test. Even if we had reciprocity of ownership, it would be proper, under the public interest test, for the Secretary of State to say, "I know that we are treating you on all fours with European and UK media, but we think that the danger that you will unload your junk programmes is such that it is not in our interest". That would be fine. The only thing that would happen is that no media owner could be debarred simply because he was American. There might be other issues. That is where the public interest test is required, as well as the foreign ownership restriction. But one is not a substitute for the other.

I invite noble Lords to re-read paragraphs 247 and 248 of the report produced by the noble Lord, Lord Puttnam. I shall not go on about it, as I know that he feels embarrassed about it. In those paragraphs, he examines the arguments made for the benefits of foreign ownership. The noble Lord said that he found the arguments "variously lacking in force", which is a polite way of saying that they do not stand up to too much examination.

I am open-minded on whether we should follow the amendment tabled by the noble Lord, Lord Crickhowell—I prefer the second to the first—or, indeed, people might vote for mine. In the light of some amendments that the Government have tabled, which I do not quite understand, it might be appropriate for us to delay a Division until Third Reading. I do not want to heap up more trouble for Third Reading, but I believe that this is such an important matter that a Division is appropriate. I will

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support another amendment, if that is the preferred route, or invite others to support mine in the Division, which might be more appropriate at Third Reading.

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