§ 8.4 p.m.
§ Viscount Astor rose to move, That the draft order laid before the House on 21st November be approved—[4th Report from the Joint Committee].
§ The noble Viscount said: My Lords, I beg to move this order on behalf of my noble friend Lord Ferrers.
§ The order deals with the additional payments, more commonly known as the levy, which the Broadcasting Act 1981, as amended, requires ITV companies to pay through the Independent Television Commission into the Consolidated Fund. It proposes a reduction in the major part of the levy which is based on advertising revenue for 1992.
§ In 1993 we shall enter a new era, with the Channel 3 licensees taking over from ITV contractors. They will effectively set their own levy through the franchise payments that they have undertaken to make. The payments vary from company to company and the legislation has brought other financial changes, but the Government's aim will remain very much the same; namely, to secure a suitable return for the taxpayer while taking care to ensure that the companies are in a position to deliver their programme undertakings. I commend the order to the House.
§ Moved, That the draft order laid before the House on 21st November be approved [4th Report from the Joint Committee].—(Viscount Astor.)
§ Baroness Birk
My Lords, I thank the Minister for explaining the order with such clarity and brevity. We on this side of the House welcome the measure and are glad that the Government have recognised that they were taking too high a rate of levy from the advertising revenue of the ITV companies. There has 1272 recently been a big slump in advertising revenue and any forecasts of that increasing must be dubious in view of our lamentable economic condition at present.
It is estimated that the change that the order will bring about will be worth £100 million in the last year for ITV before the new Channel 3 appears in 1993. That is obviously to the good, but we cannot ignore the context of the already discredited Channel 3 franchise auction in which all this is set. In 1993 the companies will pay £100 million more to the Treasury than under the present system. They will therefore have £100 million less to spend on good programming. Incidentally, this week sees the end of the "Thames Reports" and City programmes. Although Thames did not win a franchise, it is obviously trying to save money in the last year of its current franchise. There has already been a noticeable slide in programmes even before we reach 1992, let alone 1993. If more relief had been given in the order, the companies would have had the possibility of investing more money in programmes and perhaps being able to prevent the current slide in programme standards as we have a whole year before us before we enter into the new Channel 3 arrangements.
There is also the question of equity as regards the way in which the matter has been handled. As I understand it, it is equally across the board for all the companies. It is the same for those that have lost their franchises, such as Thames, TVS, TVW and TV-am and, on the other hand, those who gained franchises from the awful auction. It may seem a little strange that those who have lost their franchises and are starting to go out of business should receive the same amount as those who have won franchises again.
There is furthermore the question of the great variety of bids that won franchises. Central Television, which paid £2,000, will receive £10.5 million relief under the order. Scottish Television, which also bid very low, will gain £4 million, HTV will receive £4.5 million and LWT will receive £9 million. There is something to be said for apportioning the relief, especially when one considers the case of Yorkshire Television which evidently grossly overbid in order to win its franchise.
Contrary to the way in which I and many other noble Lords argued during the passage of the Bill through the House, when we wanted a moratorium on take-overs to be extended for at least a further year, that moratorium finishes on 1st January 1992, which will doubtless create more turmoil and certainly some, if not a great deal, of upheaval.
As those of us concerned with broadcasting must be deeply and primarily concerned about the quality of programmes, the relief is not great enough to help launch a quality plan ready for 1993. Nevertheless, if it is all that we are to get, we have to welcome it.
My Lords, I am grateful to the noble Baroness, Lady Birk, for her support for the order. It is a matter of judgment exactly where to set the new rates. We believe that what we have proposed is a sensible and proportionate response in line with the commitments that we made when the new levy was introduced. The new rates will offset the over-recovery 1273 which has occurred so far. They will significantly ease the present burden on the ITV companies at what is obviously a difficult time for the system.
But in proposing the rates, we have also remained conscious of the need to avoid an under-payment of the levy should the economic recovery be greater or quicker than presently forecast. Noble Lords will recall that the Public Accounts Committee has been very concerned about this point in the past, and we have taken the message to heart.
As I said, I am grateful for the noble Baroness's support for the order.
§ On Question, Motion agreed to.
§ Lord Cavendish of Furness
My Lords, I beg to move that the House do now adjourn during pleasure until twenty minutes to nine o'clock.
§ Moved accordingly, and, on Question, Motion agreed to.
§ [The Sitting was suspended. from 8.11 to 8.40 p.m.]