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Lord McNally: My Lords, not for the first time in this journey, it is a pleasure to follow the noble Lord, Lord Crickhowell. I should make it clear that we on these Benches have never been hostile to foreign ownership or production in our media industries. However, from the start of this exercise there have been two curious contradictions.

The noble Lords, Lord Crickhowell and Lord Fowler, referred to the rum way of conducting trade negotiations, in which one throws in one's hand before the negotiations start. That ties in with another aspect—how far we have retreated in recent years. I started this exercise in the belief that we had in ITV, particularly a unified ITV with its own news provider, the basis of a company that could be a world player. It has always seemed odd to me that we should put that company in play at the most vulnerable time of its existence, rather than that it should be given the opportunity to regroup and find its real worth, as the Joint Committee suggested.

ITV was never given that chance, owing to what I can only call an animosity towards it from within the Government that has almost reached the stage of a vendetta. There appears to be a belief that existing ITV management had somehow betrayed and let down the Government and that it was so worthless that almost anyone would do better at running ITV. I have never really got to the bottom of that, but it is true. I have spent the past two years attending seminars, round tables and conferences, and I have heard things at the margin from very involved people working at No. 10 and in departments. That animosity is not a figment of my imagination. The Minister must know as well as anyone else the contempt with which ITV has been referred to by people who have had a hand in drafting the strategy. It is both unfair and quite barmy, and it has produced a strange policy whereby we give away our negotiating hand in advance and then go forward on what can only be called a wing and a prayer.

I went to a Royal Television Society seminar address by Tessa Jowell. This takes us right back to Second Reading. She said that this was a magnificent win-win situation in which we would get American management,

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skills and money while retaining the power to make our own programmes and sustain our own creative industries. It would be a wonderful win-win situation, but there is not one shred of evidence to support that possibility.

All of the pre-legislative committee's demands to give Ofcom the time to turn its expert eyes to this matter have been steadfastly refused. Instead, our approach continues to be that of a wing and a prayer. It is astonishing that some of the very successful names which might have sprung to mind a few years ago as welcome buyers of ITV have been responsible for some of the most massive losses and most astounding mismanagement in world corporate history. Again we see the danger.

In this part of the Bill, as in so many other parts, I think that the Government are mounting a tiger. I truly wonder where they will end up in that rather exciting ride.

Lord Gordon of Strathblane: My Lords, I, too, support the amendment. As I said at the previous stage, it is almost unbelievable that we should be giving away our rights without demanding something in return. The man in the street will find it even more unbelievable that the House of Commons did not debate this issue at all, and still more unbelievable that the House to which he must turn to serve as custodian of the nation's interests is liable to give in on it.

It has already been stated that, until quite recently, it was government policy and opposition policy that we do not give anything without getting something in return. The Government's response has been, "We have listened to representations"—but representations from whom? Have they come from the BBC? The BBC is against foreign ownership without reciprocity. Have they come from ITV? It is against foreign ownership without reciprocity. Have they come from Channel 4? Channel 4 is against foreign ownership without reciprocity. From whom have they come? Send your answers on a postcard, please. The only bodies that have offered any evidence to the Government in favour of foreign ownership without reciprocity is Sky and the allies of Sky. No one else is in favour.

We have heard claims at various times in the Bill's passage that we have the finest broadcasting system in the world and we must protect it. Do we really believe that? If we believe it, why do we deny our broadcasting system access to the biggest market in the world—to the United States, with which we share a common language? Why do we make it less likely that our broadcasting interests can achieve reciprocity in the United States by giving away our strongest card?

When the Government published the White Paper they shocked many by saying that they favoured a unified ITV. What was their justification? It was that such an organisation could play a part on the world stage. But would it be the world stage? We would have to forget America because America will not let us in. Perhaps it could be called the world second-stage stage. It is just a nonsense.

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If we believe that reciprocity is desirable, as some Ministers have said it is, then surely we should play our cards to try to achieve that end. The way to do that is to refuse America entry into the UK until we get entry into America. I fully concede that the economies of scale are such that it is unlikely that a British company will take over one of the American networks, but it could at least take over individual television stations or radio stations in major city outlets in the United States. That would be a beginning. If we truly believe that we are better at this than the United States, then that is something in which we should have confidence. We should not be virtually ruling that out by giving the Americans what they want without their having to give anything in return.

It is worth remembering that America is the most powerful nation in the world with huge internal market power and yet it considers it appropriate to impose a limit that no foreigner can own more than 20 per cent of the American media. Why does it consider that appropriate? Why is it so afraid of competition from anywhere else in the world? Are there not perhaps lessons for us in that? Why should we give in so easily?

On Report it was said that all this was really covered by the plurality test. It is not. It is a totally separate issue. I have never met Signor Berlusconi and I do not know whether he is a nice man or not. He may well be a lot nicer than the British media portray him to be. If he applied to take over ITV, he would not fall foul of any nationality interests because he is an EU citizen, but under the public interest test one might wish at least to examine whether it was desirable that he should own our media. The two issues are totally separate. What would happen if an American media company tried to acquire British media? If we had reciprocity with the United States, that company would be allowed in. It would then pass or fail the public interest test, but without nationality being taken into account. It would stand or fall according to how it met the other tests to which Ofcom would subject it. But if it did not grant Britain reciprocity in the United States, it would not even reach that stage. It would not be considered.

It is honestly incredible that we are giving away something that we regard as one of Britain's finest achievements without a fight. I am extremely sad that the Government should have thought of this admittedly quite late in the day. It was not in the White Paper. It was only about a year ago that they dreamt up the idea of allowing foreign interests to come in without demanding reciprocity. I hope that even at this late stage the Government will change their mind.

9.30 p.m.

Baroness Howe of Idlicote: My Lords, I, too, support the amendment moved by the noble Lord, Lord Fowler. On the previous occasion the matter was debated I was completely convinced by the arguments. Having listened particularly to the noble Lord, Lord Gordon, again I am even more convinced than I was on the previous occasion. It seems such an obvious

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first step that one should expect reciprocity between countries on ownership of such an important asset as our broadcasting system, or part of it.

The other advantage of the measure is that it would give Ofcom time to settle in before any reciprocity was arrived at and give the Government time to negotiate with the USA and come to a satisfactory conclusion. We heard it rumoured that that was exactly what was going on. In that case, why not wait until that moment? I very much hope that the Government will think again. We have heard some very important speeches this evening. They could not have been better put. I hope that they will carry the day.

Lord McIntosh of Haringey: My Lords, I think that I have heard all this before. It has been interspersed with flattering quotes from my speech on Report, but otherwise the arguments have not moved on at all as regards the point of view of the noble Lord, Lord Fowler, and his supporters. We voted on foreign ownership amendments on Report and the Government's policy was supported on a Vote in this House. The aim of these amendments—leaving aside whether they will succeed—is to overturn on Third Reading the Vote of this House on Report. That is the truth of the matter. They are aimed at ensuring that television channels in this country will not be opened up to foreign ownership.

The noble Lord, Lord Fowler, argues that the Government should negotiate reciprocity on foreign ownership. Generally, the United Kingdom does just that. The Government are strongly committed to trade liberalisation and work hard with their EU partners and key world trade organisations—I was fascinated to hear about GATT negotiations going on, because my officials and DTI officials know nothing about them!—to remove the barriers which currently block so many potential trading opportunities. However, we do not always work multilaterally if we see something in our interest.

The benefits of opening up markets to foreign investment, as I made clear on Report—and no one has sought to contradict that—are proven. A more liberal investment environment has facilitated increased overseas investment. I congratulate the noble Lord, Lord Crickhowell. I am glad to hear again of his success as Secretary of State for Wales in encouraging inward investment. By 2001, the world stock of foreign direct investment was equivalent to 21 per cent of world gross domestic product, compared with less than 6 per cent in 1982. It is that investment that we want in this country, and it is those opportunities that we want to have overseas.

Some people argue that we are undermining a common European Union position, and that the United States is on the brink of moving on this. Let me reassure the House. There is no common European Union position to undermine. A large number of EU and EEA countries have unilaterally liberalised: Germany, the Netherlands, Portugal, Spain, Denmark, Finland, Belgium and Luxembourg and the only other native English speaker—Ireland.

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In the World Trade Organisation, the European Union negotiates on a common position under Article 133 of the Treaty of Rome. As many noble Lords will know, France effectively maintains a veto on cultural matters and did so at Doha and in Seattle. Unless France has a drastic change of heart, there will be no negotiations on this topic. In other words, it is a matter for individual member states.

So we could enter a long dialogue with the United States about some form of bilateral deal, because that is all that is open to us. We could spend years on this. However, considering the comparative gain for the United States against the comparative gain for this country, I do not somehow think that it will be top of the Federal Communications Commission's priorities.

It is important to remember that some investment is already possible in the United States. The noble Lord, Lord Fowler, acknowledged that. A United Kingdom company could own up to 20 per cent of a US company with a broadcast licence, or 25 per cent of a company whose subsidiary company comes with a broadcast licence.

In reality, the restrictions in place are unlikely in practice to hinder UK investment in US communications. It is doubtful that any British company would be in a position to take a stake larger than what is permitted anyway. As I said on Report, would a company such as Granada, with advertising revenues of 440 million, be likely to try to buy an NBC or a CBS, which share 3.2 billion of advertising revenue between them? If the noble Lord, Lord Gordon, thinks that we can buy individual TV companies in the United States without involving NBC, CBS or the other companies, I do not think he understands very much about the structure of television in the United States.

Perhaps I may remind the House that it is not only the Government who do not think that reciprocity is a key issue. The Puttnam committee has been mentioned on a number of occasions. I remind the House that this is one of the few issues on which the Puttnam committee was divided; and, as I understand it—I do not know about majority or minority views—the conclusion of the committee was that the issue of reciprocity was not "pivotal". It had some reservations about foreign ownership more generally, but it stated:


    "we do not view the argument on reciprocity as pivotal".

The noble Baroness, Lady Cohen of Pimlico, made a similar point in more demotic terms.

The fact is that we do not want to wait for the potential benefits for the viewer. Our critics, the noble Lord, Lord Fowler, and others will say, "But it won't be better for the viewer; investors will just dump their programmes here". The remarks of the noble Lord, Lord Gordon, about Berlusconi absolutely proved my point on this issue. He said that Signor Berlusconi could not come to this country and flout all our rules. The same applies to any potential investor from outside the European Economic Area. The system protecting content is such that any investor, including those—

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