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Volume 447: debated on Wednesday 21 June 2006

[Relevant documents: The Second Report from the Culture, Media and Sport Committee, Session 2005-06, HC 650-1, on Analogue Switch-off; the Government response thereto, Cm 6850; and the uncorrected transcript of evidence taken before the Committee on 13 June 2006, HC 1091-iv, on new media and the creative industries.]

We now come to the main business. I inform the House that I have selected the amendment in the name of the Prime Minister.

I beg to move,

That this House recognises that the BBC is renowned throughout the world for its quality programming; further recognises the high regard in which it is held by the British public; expresses concern that the final decision over the new licence fee settlement has been delayed without adequate explanation by the Secretary of State; believes that greater transparency of the process is required to deliver value for money for the licence fee payer; expresses concern that a larger than necessary increase will undermine public confidence in the licence fee and will hit low income families the hardest; further expresses concern at the continued uncertainty over the costs of digital switchover; believes that the National Audit Office should be allowed a greater role in scrutinising the BBC’s accounts; and calls for a debate on the floor of the House on a substantive Motion to approve any new licence fee settlement.

The subject of this debate is the future of the BBC, and that is precisely what we seek to ensure—a future for the BBC that allows it to continue to fulfil its public service role to educate, inform and entertain the British public long into the future, while, crucially, also offering value for money to the taxpayer.

It is a considerable disappointment that the Secretary of State for Culture, Media and Sport is not present, not least because of events that we witnessed two weeks ago. Many Members of this House—and many in the other place—have taken a keen interest in the debate on charter renewal and in the negotiations on the BBC licence fee. However, we learned that the licence fee announcement had been postponed from the expected date in late July until some time at the end of this year not from the Secretary of State on the Floor of the House, or anywhere else in the House, but from comments she made at a recent drinks party, which The Guardian reported.

Can the Minister tell us why the decision was announced in that way? Can he also tell us the reason for the delay, because as yet we have received no official explanation? Indeed, it does not even warrant a statement on the Department for Culture, Media and Sport website. Is the reason for the delay, as some suggest, that the recent reports by PKF and Indepen have undermined the submission made by the BBC, or has the Secretary of State simply kicked the decision into the long grass?

All that adds to a sense that there has been a lack of transparency in how the negotiations have so far been conducted. The process has been dogged by delays and uncertainty, to the point where many of the figures submitted in the initial document are now very out of date. For example, the estimate of the cost of the move to Salford has now been reduced by £200 million.

The recent PKF report, which was commissioned by the DCMS, was very critical of the figures used by the BBC in its submission, citing the “changing numbers” involved in the negotiations, and concluding that

“there are areas which point towards a significant need for discussion in regard to the BBC’s red book bid for the licence fee settlement.”

Given that we are talking about a settlement of £4 billion, surely the Minister will accept that the new figures must be made public, and that arguments about commercial sensitivities just will not wash.

The BBC spends more than £3 billion-worth of taxpayers’ money; effectively, it is paid for by a poll tax. Does my hon. Friend not think it ridiculous that there is no proper parliamentary scrutiny of the BBC through the National Audit Office and the Public Accounts Committee? After years of campaigning we have achieved a voluntary agreement. Will my hon. Friend commit a future Conservative Government to ensuring that we get full scrutiny of the BBC, like any other spending Government Department, through the NAO?

I am very glad that my hon. Friend is here this afternoon and can take part in our deliberations; he performs a magnificent role for this House—and, indeed, for the country. I think that he will be happy with what I am about to say, because I very much agree with his sentiments.

We have long made the case that the decision to have the debate on charter renewal and the level of the licence fee in isolation made no sense. The arguments about what we want the BBC to do and what it will cost the taxpayer are inextricably linked. Thanks to the decision to delay, we now have much more time between the two decisions. It is therefore all the more important that we have a clear picture of what the costs submitted by the BBC are, if we are to have confidence in the decision reached.

It is important that everyone concerned—broadcasters, Parliament and licence fee payers—have a clear understanding of the negotiations. Will the Minister therefore confirm that he will make public the current figures that his Department is working with?

Does my hon. Friend also understand that a substantial proportion of the licence fee increase includes an element for a spectrum tax? The Government have not made it clear precisely how much that stealth tax will be. Should that not be an important part of our considerations today, and the debate on the total licence fee package?

My hon. Friend makes a good point. Of course, the Secretary of State and her Department are in denial about the existence of that spectrum tax, which we know is very likely to feature rather large.

Given that PKF made clear its belief that the savings made by the BBC could be significantly improved, can the Minister assure us that he will ensure that those efficiencies are maximised, in order to reduce the settlement?

Another issue raised in the Indepen report was super-inflation and an over-funded BBC, leading to a spiralling of salary costs. Surely the Minister must accept that recent leaks about the pay levels of presenters only add to the argument that too generous a settlement will damage the broadcasting sector, and could lead to the BBC outspending or outgunning the opposition in a hunt to bag star names.

On payments for presenters, in what universe does my hon. Friend think that Jonathan Ross is worth £18 million? Is that not the kind of absurd and inflated contractual arrangement that really gets up the noses of our licence fee paying constituents and brings the existing system into disrepute?

A parallel universe. The Secretary of State is reported in the newspapers as saying that she thinks—my hon. Friend, and neighbour, will probably agree with her—that

“high wage costs across the corporation need to be addressed”.

It is clearly not up to Ministers to interfere in the pay of presenters, but it is essential that the BBC management justify to licence fee payers the money that they spend. If the Minister believes, as his Secretary of State clearly does, that there should now be transparency in what the BBC pays its presenters, he will get cross-party support. So will he confirm the briefings to the newspapers, and get on with putting them into practice?

There is huge support among the public for the BBC, but an unacceptably high licence fee will surely undermine that support. Does the Minister not accept that a settlement in excess of £180 will simply be too high for many families on low incomes? We must ensure that we get the best deal possible for the licence-fee payer.

Would the hon. Gentleman like to comment on the fact that although many people think the licence fee a good thing, they are not convinced of that when they are unable to get the same deal from the BBC as those in many other parts of the country? In my constituency, one can get the full range of BBC services only by paying Rupert Murdoch some money for a Sky box. Does the hon. Gentleman believe that it is time the BBC pressed ahead with its Freesat option, which was promised a year ago but still seems not to be on the cards?

The hon. Gentleman makes his customary point, and it is a very good one. The BBC is striving to achieve universal coverage, and although it is doing a good job in that regard, it can never achieve it. It is important not only that people have a fair and transparent licence fee, but that there is as much parity as possible between what they can access—so on the whole, I tend to agree with the hon. Gentleman.

Can the Minister not see the good sense in allowing the NAO to provide full and transparent scrutiny of the spending of licence fee payers’ money? As I said, it plays an important role in bringing about a culture of efficiency and value for money. Should it not have a role in safeguarding the use of £4 billion-worth of public money?

It is important to recognise the BBC’s impact in the media world—

Does the hon. Gentleman not agree that the NAO can play another crucial role at this very difficult time? As has been pointed out, there are conflicting claims about the BBC’s proposed licence fee increase. If the NAO could look at those figures and the various independent reports, that would help all Members of this House to come to a conclusion.

That is precisely right: if the NAO had been involved at an earlier stage, I suspect that we would not have needed this debate today.

That is an important point. It will be said that we must preserve the BBC’s editorial independence, which is absolutely right. It has also been said that the public do not want politicians interfering with the BBC, but that is not what we are talking about with regard to NAO involvement. The World Service has had the NAO looking at its books since its inception, and no one has ever suggested that the NAO has any impact on editorial independence. That is a red herring.

Again, my hon. Friend is entirely right. The NAO has examined the World Service’s books for many years, and it is increasingly able, almost by invitation, to examine some of the BBC’s books. But the 30 per cent. of people questioned who expressed dissatisfaction with the BBC might be more inclined to express some satisfaction if they knew that there was full and transparent accounting of where the money is going and what, at the end of the day, they are being invited to pay for.

The BBC has established a worldwide reputation for excellence, but that does not mean that it should be involved in every possible area of media activity.

If I may, I will make some progress.

I accept that the public gain a benefit from the BBC’s involvement in the promotion of new technology, but we cannot ignore the possibility that, given its almighty spending power and commercial weight, it will stifle competitors and make it untenable for others to be profitable in newly emerging markets. If the licence fee is excessive and the measures put in place by the BBC Trust are insufficient, the potential for markets to be distorted and innovation prevented is obvious.

The recent Beethoven downloads exercise saw the BBC make available 1 million free downloads, with a value of £8 million in the marketplace. If repeated, that could severely damage the commercial market. The BBC has already outlined ambitions to establish online communities, blogs and open access, and to become

“the premier destination for unsigned bands and to seize the opportunities of broadband, podcasting and mobile”.

We are told that the trust and the advisory powers of Ofcom are sufficient to prevent the BBC from crowding out competition, yet the Ofcom role is purely advisory and can be ignored. We hope that that will not happen, but it is none the less concerning to hear Mark Thompson, Director General of the BBC, say:

“The BBC is the only European brand that could take on Google and AOL”.

He is clearly a man with ambition, but should that be the ambition of Britain’s public service broadcaster? What message does that send to all the little guys in the world of technology—let alone the big ones—about the BBC’s intentions?

Does my hon. Friend agree with the proprietor of the Kent Messenger Group? He wrote to me saying the following about web services:

“The danger is that instead of a robust local market developing with a number of local content providers, or facilitators, the BBC will be one of a very few UK players, funded as it is by the licence fee…None of the commercial media companies are against competition, if it is fair competition…However, it seems unfair if the opposition is funded by statute to the tune of approximately £89 million a year from Kent alone.”

That sentiment is echoed throughout the country, as hon. Members are only too aware. That is why we are suggesting that Ofcom should have a beefed-up role, and that the task should not be left to the trust, with Ofcom in an almost advisory capacity.

Has my hon. Friend had time to look at the online streamed regional news coverage from the BBC, and to compare that with what ITV offers? If he does so, he will see that the ITV offering is vastly superior, and that the BBC regional news broadcast online is primitive—despite the fact that many millions of pounds of taxpayers’ money are going into the BBC product. Does that not exemplify the need for caution in agreeing to greater sums for digital services?

Caution would be a good watchword, with the ever-changing technology and the pace at which that technology is coming on stream. We need to ensure that we do not allow the BBC to spend tens of millions of pounds of taxpayers’ money on technology which is not competitive, not innovative or out of date by the time it is introduced.

With that in mind, I raise the issue of the sole service licence for the wide range of content and services made available through the domain. Everything from news online, as my hon. Friend the Member for Tunbridge Wells (Greg Clark) mentioned, to podcasting, video on demand, the BBC’s new i-player, the proposed Ultra local television, and even plans to broadcast news to mobile phones, is subject to one single licence, although each will have to undergo the public value test. Does the Minister agree that the scale of the BBC’s online services is now so considerable that it is increasingly absurd to group them together under one service licence?

Returning to the subject of public service broadcasting, does the Minister agree with his colleague Lord Bragg, who said in the debate in the other place last week that ITV had been “hung out to dry”? Why are we currently debating the public service broadcasting role of the BBC and the public service requirement for Channel 4 in 2007, but not looking at the role of ITV, another key PSB provider, until 2012? Why, when we all agree about the need for plurality in the provision of PSB, have the Government singularly failed to consider PSB in the round?

That brings me to the topic of digital switchover. On the plus side, we have a Minister whose knowledge of switching over is second to none, yet on the minus side we are still in the dark about the final costs of switchover.

The hon. Gentleman says that the Under-Secretary of State for Culture, Media and Sport, the hon. Member for St. Helens, South (Mr. Woodward) is very poor. He is not. If that is poverty, bring on poverty.

We are two years away from turning off the analogue spectrum, yet we still have no idea about the costs of targeted help for the vulnerable, which the director-general of the BBC thinks could cost

“the far side of a billion”.

Can the Minister confirm that we will have a final figure for this assistance before any licence fee settlement is announced? If not, we will be writing a blank cheque.

I have touched on only a few of our concerns about the BBC’s demands for a £4 billion a year settlement. We remain concerned about the process, the impact of an over-generous settlement on the media industry, the problems of an over-funded BBC crowding out the little guy, and the desire of the BBC to enter every new market. We are unconvinced by the submissions, and we believe that we must have clarity about the figures. The debate will show the desire in Parliament to ensure that we have a strong and innovative BBC fit to meet its unique responsibilities in a rapidly changing and competitive environment. I commend the motion to the House.

I beg to move, To leave out from “public” in line 3 to the end of the Question, and to add instead thereof:

“notes that the decision on the next licence fee settlement will represent best value and be announced in good time to take effect before the current settlement expires in April 2007; further notes that the decision-making process has been one of unprecedented public consultation and transparency and that the settlement should ensure a strong and independent BBC; further notes that the costs of switchover will be one of the considerations in setting the level of the licence fee; welcomes the strengthening of the arrangements for the National Audit Office’s involvement with the BBC; and recognises that changes to the level of the licence fee are subject to Parliamentary scrutiny by the negative resolution procedure.”.

The hon. Member for East Devon (Mr. Swire) is right. I am a switcher, but just as we are switching off analogue in 2012, I hope that we will by then have switched off the Conservative party, too.

I was extremely pleased to hear one thing from the hon. Gentleman—that he was glad to be able to support the future of the BBC. However, like a child picking a daisy and proceeding to pull every petal off until there was nothing left, he and his hon. Friends proceeded to attack it, describing it in terms of poll taxes and stealth taxes and as being over-funded. He asked us not to interfere, then asked us to interfere in the pay of presenters. As always, one contradiction followed another.

It may be helpful if I bring some appropriate clarity to what is really happening, as opposed to the caricature presented by the hon. Gentleman, and by the leader of his party in a recent speech to the Newspaper Society, with regard to what the BBC is doing and what we are doing in the review of the charter and the settlement of the licence fee.

The review of the BBC charter has been conducted against a background of unprecedented public consultation. From the beginning of the review at the end of 2003, we were determined that it would be the most comprehensive and open process in the history of the BBC. For the benefit of hon. Members, and to help the hon. Member for East Devon, I remind him that we have so far held three major public consultations, with more than 10,000 respondents. We have run a comprehensive research programme, inviting further responses from the public. We have held regional tours, seminars, webcasts and public meetings. During the review there have been four Select Committee reports and several parliamentary debates in both Houses. In addition, we have produced a Green Paper, a White Paper and two draft charters and agreements.

The purpose was clear from the beginning and it remains our guiding principle to deliver the strong and independent BBC that the public want. We recognise that the BBC has a unique place in the esteem and affection of the nation. It is one of the most trusted public institutions in the country, and it is an institution with which we have all grown up. In today’s debate, let us try not to play politics with the BBC. Let us recognise the role that we believe the public want the BBC to play for the future. If we get that right, we will do the right thing not just for ourselves and our respective parties, but for the public.

The BBC is the largest employer in my constituency. The representations that I receive from staff show that although they are appreciative of the consultation process, they are looking for a decision and for clarity with respect to oversight and funding. Why have those key decisions been postponed? That is not good for morale in the BBC. The Minister would have the support of key staff in the BBC if he brought about some accelerated decision making.

The Minister rightly claims credit for the wide consultation that has taken place. Consultation is all very well, but what matters is whether the Government listen. Does he acknowledge that the vast majority of respondents have expressed grave concern about the proposals for the governance of the BBC? Is it not the case that the Government have so far refused to listen to any of them?

I am grateful for the hon. Gentleman’s acknowledgement that we have undertaken a large-scale consultation exercise, but I do not agree with his conclusions. I will deal later with the governors and the trust.

I wholeheartedly agree with my hon. Friend that we need a strong BBC and that we should not fetter it so much that it is unable to flourish in future generations. Britain would sadly miss the BBC. However, in some areas, particularly in commercial radio, there are legitimate concerns about the overweening power of the BBC, as reflected in Radio 1 and Radio 2, both of which I enjoy listening to. I wonder whether the BBC sometimes crowds others out of the marketplace.

The BBC, of course, engages in new media and new technology. People who are being asked to pay a licence fee would expect that. The questions that my hon. Friend raises are dealt with in the finalised version of the charter, which we will very shortly publish for the House. None the less, I take on board the points that he makes.

Does the Minister agree that if the BBC is to continue to have national support, it is essential that it should not be too concentrated in London and the south? Will he use his good offices to try to ensure that the planned move of production to Manchester goes ahead as quickly, as smoothly and as comprehensively as possible?

I fully recognise the hon. Gentleman’s point. He is an excellent constituency MP in the north-west, and I know how strongly he has lobbied. I am sure that he will have been pleased by last week’s announcement by the governors. In the course of my remarks, I will discuss the proposed move to Greater Manchester—specifically, Salford media city.

Whatever partisan view we may take in the course of a parliamentary debate, we should put on the record the fact that hon. Members on both sides of the House think that the BBC epitomises the best of what the nation has to offer in service industries. It commands respect around the world—indeed, it sells its programmes around the world—and has endured and evolved in the context of a vibrant, dynamic commercial sector. We should pay close attention to the charter review and involve the public because we are, after all, setting the direction of the BBC, which will inform the direction of the market for the next 10 years. We must get it right, and that includes the licence fee.

Will my hon. Friend directly address the crowding-out argument? The BBC crowds out the bad, the inferior and the second rate, which is exactly the kind of crowding out that we want.

If my hon. Friend means the excellent programmes that the BBC makes, I agree absolutely. If he means the way in which the BBC appropriately gets involved in innovation so that it can compete in the global media market, that is right, too.

The hon. Member for East Devon suggested that the Government somehow made known the date for the announcement at The Guardian cocktail party. However, he chose to forget the fact that a specific date has never been set for the announcement of the date for settlement of the licence. There is a date by which the announcement must be made, which is early next year, but I am sorry to tell the hon. Gentleman that, despite the jokes and caricatures, he is simply wrong. Throughout the process, we have made it clear that the figure will be produced by the beginning of next year. We have always said that, although if we can produce the figure more quickly, we will.

What matters is that we get the fee right. The hon. Gentleman cannot have it both ways. One cannot say that one wants absolute certainty that value for money has been obtained, that the bid has been taken to pieces and that the figure is right, but then say that it would be far better to publish the figure tomorrow. What matters is getting it right for the BBC and for the licence fee payer. The settlement will not be driven by inappropriate pressure or haste. Trying to play politics with settling the licence fee by arguing for an early settlement is not in the interests of the hon. Gentleman’s constituents or of viewers throughout the country.

My hon. Friend the Member for East Devon (Mr. Swire) raised specific questions about BBC funding, particularly in relation to the licence fee, and the heart of the matter is the cost of the spectrum charge. One reason why we called the debate is that the figures used to calculate the licence fee are ambiguous. Will the Minister take the opportunity to discuss who will pay the spectrum charge and how it will relate to the taxpayer and the BBC?

The spectrum charge is not the biggest component of the bid, and, if the hon. Gentleman can contain himself, I shall discuss it later, because it is better dealt with in context.

There are legitimate concerns among commercial broadcasters about advertising revenue, and an excessive licence fee settlement would distort the market and prevent some commercial broadcasters from spending money on quality productions, such as dramas. It would not be good for the viewing public if the BBC were to produce all such content and end productions by commercial broadcasters.

The hon. Gentleman has made an important point about the commercial sector and advertising. However, it may be worth reminding him that the problems faced by the commercial sector in television and advertising are not unique. Some regional newspapers, for example, face a crisis generated by advertising spend. Advertising and the commercial media is a huge issue, and the danger is that it is viewed as a problem created by the BBC, which is not the case. The last licence fee was settled seven years ago, when there was unprecedented growth in advertising for commercial television. Since then, the market has changed dramatically, which has created a whole new set of pressures.

We must examine the impact of the settlement on not only commercial ITV, but regional newspapers. There is a problem, but there is also an opportunity. Most people who run regional newspapers agree that they have been slightly late in recognising the advantages offered by online facilities. Innovation and competition will probably allow regional newspapers to sort out some of their problems, but there is no simple solution for the commercial problems faced by ITV in a market in which overall advertising has decreased in the past few years. It is a mistake to caricature the matter by saying that the problem is the fault of the BBC and that it can be fixed by removing the BBC from certain areas. That is not the right solution, and it would be dangerous to go down that road.

The Minister has rightly said that regional newspapers must look to alternative methods of distribution, such as online content, in order to preserve their market position. Does he recognise that that will be made much more difficult if the BBC moves into that market and makes local television available for nothing? The BBC should work with local newspapers rather than competing against them.

The hon. Gentleman has made a fair comment. The new charter and the agreement contain measures to mitigate the impact of some of the points about which he is worried.

I want to make some progress, although I regard interventions as an essential part of having a constructive debate in the House.

I take the Minister’s point about putting terms in the contract. Does he accept that if the BBC has an increase in its budget over the next few years of nearly £6 billion, which would be 6.6 per cent. above the retail prices index, it will be bound to compete unfairly with other sources of media, which, as he has said, face declining revenues because of changing advertising budgets?

The hon. Gentleman has a great ability to look into the future—I am sure that he sees a bright future for his party and its leader in late November this year. On speculation about the settlement, I urge a little caution, for reasons that I shall later adumbrate.

The Government are committed to getting the settlement of the licence fee right and ensuring that it provides value for money for licence fee payers. Conservative Members have asked us to allow Parliament to approve the settlement of the licence fee, but they never wanted to introduce such a provision when they were in government.

They also say that the process is not transparent enough. I would say in all honesty to the hon. Member for East Devon, who reminded the House that I have a little experience of his party, that I was not aware of a great rush for more transparency on any subject during the two years when I sat on his side of the House. Looking back on the way in which Conservative Members conducted themselves in relation to the BBC and the licence fee review, let alone the charter, I do not recall that transparency was up front. That compares significantly with the process in which we have been engaging.

The hon. Member for East Devon completely ignored the levels of public consultation that we have engaged in relentlessly for three years. He completely ignored the work of the independent advisers commissioned to scrutinise the bid of the BBC and the fact that we have published, and will continue to publish, the advice that we receive. He ignored the research we have conducted into the public’s willingness to pay, which we have said we will publish, as we will. That research is helping to inform us in the Department in getting the right figure rather than the hasty figure that he would like. He ignored the work that has been done by Lord Burns in the course of advising us on the settlement, and he ignored the advice that we have invited and received from the industry.

If it is transparency and robust scrutiny that inform the demand for debate, I urge hon. Members to reflect on the sheer scale and volume of consultation and the transparency in which it has been conducted. It is of course open to Parliament to express its views on such matters in such debates, as it is to Select Committees. In fact, Select Committees have been looking at this issue for some time, not only in this House but in another place. It is right that they offer clear advice and conclusions about the level of the licence fee and the process that produces that settlement. Parliament has the right to object to changes to the level of the licence fee. Under the negative resolution procedure, it remains open to the House to debate the statutory instrument that sets that level.

Before we lose sight of the real argument, let us remember that in the course of the consultation we went directly to those people whom we represent here in this House, as we have relentlessly for three years. One of the documents produced more than two years ago on the review of the charter said that when the public were asked who they wanted to have a greater say in running the BBC, Parliament did not do very well. I suggest that hon. Members who want more and more say should go back to what the public said to us about whether they wanted us to have more involvement or less. One cannot have it both ways. One cannot say, “Let’s have less interference,” and then demand more.

The crucial matter at the heart of this is that the licence fee is now called a licence tax. That means that we have a right to debate it here in Parliament, regardless of what other views there are. Does the Minister agree that from now on we should have a debate in the Chamber, not in some Committee on a statutory instrument?

The hon. Gentleman may be aware that there is a debate happening now, and we will offer the House a debate on the BBC later this month. It is always interesting to see changes made inside the Conservative party, and it is stunning to see them being made at the speed that they are the moment. If the hon. Gentleman and his hon. Friends are offering a prospectus for how they will deal with this in future, we would be delighted to see it, but he would have to cap a process of consultation, openness and transparency that has never happened before in the history of settling the charter or the licence fee.

Of course it is a tax; that is why the Government should be at the heart of setting it and should not abdicate the responsibility to the National Audit Office. The NAO should be involved in advising us, but at the end of the day it is rightly a decision for Government.

Let me offer further reassurance to Conservative Members who say that they are concerned that the BBC might have a larger than necessary licence fee settlement. It is very simple: it will not. That is why we are not proceeding with the hasty and pressured response that the hon. Member for East Devon would like. The settlement will give the BBC the funds that it needs to deliver its work for the public—in the words of an author slung out of the Conservative party, “not a penny more, not a penny less”. The licence fee is not flawless. We recognise that for those on lower incomes a greater proportion of their disposable income will be spent on their licence fee—that is common sense. However, as a percentage of household income, it has declined since 1982. In survey after survey, the licence fee still emerges as the best way to continue funding the BBC. We may call it the least worst option, because nobody much enjoys paying tax, but nobody has come up with a better way of doing it that commands the same incredibly high level of public support.

I agree with the hon. Gentleman, but the licence fee settlement takes us only as far as 2017. The press has reported his thoughts about the future funding of the BBC after 2017, which seem to indicate that the Government are thinking along the lines of a sort of digital tax on personal computers and the like. Will he expand on those remarks?

It would be tempting to talk about our plans for Government in 2017, but I think that that might be a little premature. However, I would be happy to do so on another occasion if the hon. Gentleman invites me.

We have a very clear view on the way ahead to benefit the licence fee payer. The vision that we have expressed in the White Paper is for a strong BBC independent of Government—a BBC that delivers the quality of programme making that the public expects, has expected and continues to expect, with the highest quality broadcasting, efficiently produced, and with the creation of a trust to serve as guardian of quality and efficiency that is able to prioritise on that basis.

I agree with everything that my hon. Friend has said about the licence fee, but does he agree that the BBC’s enforcement of it could sometimes be done a little more tactfully and sensitively?

There is hardly a television programme on the BBC these days that does not involve people voting for somebody or something. Is there any reason why licence fee payers should not be able to vote for somebody or some people and thereby gain direct representation on the new governing arrangements for the BBC?

That is a tempting idea, and I hope that the trust might want to consider it. Applicants are submitting themselves to the selection process, which has a deadline of 26 June. We want to involve the public more. As to whether we end up with an “X Factor” for trust members, we will have to ask Simon Cowell if he can come up with a suitable way of doing it. In the long term, there is no teleological reason why the logic of what we are doing should not be extended to that, but I would have to disappoint my hon. Friend in the short term as regards changing the current arrangements. However, I am open to offers from my hon. Friend, especially if he wants to submit himself.

One of the most important changes in the new charter is the creation of the trust and the executive board. Let me briefly explain what that means. For the first time, there will be an effective separation of the responsibility for challenging, scrutinising and strategic oversight of the BBC. The trust will undertake that responsibility. In a separate structure, the executive board will look after day-to-day management. That separation of powers is critical. That is critically different from what happens with the existing board of governors because we want to ensure that the conflicting roles that governors have been obliged to play in the past are appropriately separated.

The governors were responsible for both the delivery and the oversight of BBC services. Under the new charter, a new executive board will be formally constituted for the first time. It will assume responsibility for delivering the BBC’s services, allowing the trust to maintain the objective distance from the day-to-day running of the BBC that is needed for it to be effective in its oversight role.

Surely the Minister is wrong. Is not it the case that the chairman of the BBC Trust will be called the chairman of the BBC? Does not that show that a conflict will remain?

Only in the hon. Gentleman’s mind, I am afraid. We are clear about the separation. The hon. Gentleman, by interestingly tying himself up in matters of nomenclature, ignores the fundamental strategic difference, which we have been at pains to set out in various papers and the published charter review.

Will my hon. Friend remind hon. Members that the new chairman of the BBC has moved his offices from Broadcasting house and from the television centre to a separate location in Marylebone road to establish the fact that the governance of the BBC will be separate from its running?

My right hon. Friend’s brilliance is that I no longer need to remind hon. Members because he has so eloquently done so for me. He is right and gives a good example of the separation of powers.

The Minister is right that the powers of the public value test will reside with the trust rather than the Department for Culture, Media and Sport, as currently happens, and that Ofcom will provide the market value impact assessment. However, would not providing for Ofcom, rather than the trust, to make the final decisions about market value impact assessment on a new service be one solution to the uncertainty that the varying roles create?

I am grateful for the hon. Gentleman’s acceptance of the clarity and division between the roles of the trust and the executive board. However, I disagree with his interpretation and his conclusions about who ultimately determines the services that the BBC offers. I shall revert to that shortly.

We were concerned about the dual role that the board of governors played as regulator and cheerleader. The old system was not up to the job of providing clarity, which all hon. Members want, of direction and purpose for the BBC, especially in an increasingly complex global communications market.

The charter and agreement will define the responsibilities of the new bodies clearly. That is critical in ensuring that the trust can hold the executive board to rigorous account in the interests of the public, who are the licence fee payers. The trust will have wide-ranging duties to consult the public and publish the reasoning behind decisions.

We and the public believe that the trust represents the most efficient way of protecting both the independence of the BBC and the interests of the licence fee payer. To do that, it needs the expertise to discharge its responsibilities in a professional and businesslike way. To have the best trust, we must ensure that its members are paid an appropriate salary to do their job. I recognise that criticisms have been made from some quarters in the House as well as in the wider press of the remuneration of the trust members.

I stress that the decision on the rate of remuneration reflects the increased responsibilities and the commitment of time needed from trust members. That is entirely in line with the proposals in the White Paper on the charter review, which proposed that rates should be comparable with those for Ofcom board members. We believe that that will attract the widest range of candidates with stronger backgrounds and ensure that new trust members are the best people for the job.

Since we put out the advertisement, we have received many applications and we expect more before 26 June. We want to encourage a diverse range of appropriate applicants. I stress to hon. Members who are present and those who may read the debate in Hansard that we should encourage those who are interested in broadcasting to apply. When hon. Members say that a flood of constituents come to their surgeries every Friday afternoon or Saturday morning to discuss the BBC, a short-term but good solution might be to ask some of them whether they have considered applying. It would be appropriate for more members of the general public, whatever their background, to put themselves forward to represent the public as trust members.

I understand that the selection panel for trust members will include someone from the Department for Culture, Media and Sport and the current chairman of the BBC. How can we be assured that trust members will be truly independent?

The point is that we are not trying to draw up an A list of candidates—we are trying to invite the public to apply. We should have an appropriate process for bringing the candidates together and interviewing them. We are complying with all the Nolan recommendations and using all the appropriate procedures. It is right to have some expertise on the panel—people who know about the Department with which the candidates will deal. The hon. Gentleman will appreciate that it is helpful when one goes for an interview if someone on the other side of the panel has a vague idea about the job. If he genuinely advocates having nobody there who has a clue about the BBC, the applications procedure will end in chaos.

The Minister has given the game away. Someone who applies for a job is interviewed by the employer. The hon. Gentleman clearly suggests that the Government and the chairman of the BBC will be the trust members’ employers. The trust will, therefore, not be independent.

I have long admired the hon. Gentleman’s logic, but I think that I have lost it this afternoon. I hope that I will encounter it again on a future edition of “Sky at Night”.

We are also inviting the public to describe how they would like trust members to represent them on the trust. In the next few weeks and months, we will continue to invite further consultation with the public on the sort of responsibilities that they would like to be added to the work of trust members. It is an ongoing process of consultation and I believe that it is the best that we have managed to do in any review or appointment of people to the BBC so far. I am sure that, in the future, we can improve on that. We have made significant progress in producing a fairer and better way of running the BBC.

We are aware of questions, especially by some in the local newspaper industry, about the new trust’s effectiveness as a regulator and its ability to hold the executive to account. That seems neither correct nor fair. I remind hon. Members of what we are proposing. The trust will be underpinned by an unprecedented obligation to openness and transparency; a duty to have regard to competition issues; a system of purpose remits, which sets out strategic priorities in each of the public purposes and for how performance will be judged; a system of service licences and the public value test—with market impact assessments by Ofcom.

In addition, there will be new duties on value for money and a strengthened role for the National Audit Office in the existing arrangements. It should be provided with the information about the BBC’s activities that it reasonably needs to make judgments about matters for examination. The trust must and will ensure that that happens. The governors and the NAO have also agreed that it would be helpful for the NAO’s reports to be published as soon as practicable after completion. We welcome the response by the current BBC chairman, Michael Grade, to whom I pay tribute for his work in the past few months, especially as he takes the BBC through a period of change, in not only recognising why we are taking action but acknowledging the spirit in which we are doing that.

He has already made a commitment to invite the NAO to examine the extent to which future self-help targets are met. This potentially powerful new development should not be underestimated.

The DCMS has, however, decided not to give the NAO unfettered access to the BBC’s accounts. If it did so, it would risk encroaching on the editorial independence of the BBC and would conflict with the principle of direct accountability to the licence fee payer. I remind hon. Members of what the public have told us again and again. They do not want greater involvement by outside bodies in the BBC.

The Minister just stated that he believed that the National Audit Office would interfere with the editorial integrity of the BBC. That was the most extraordinary statement. Will he give some examples? What does he fantasise that the National Audit Office might say to the BBC that would affect its independence?

I am sorry to disappoint the hon. Gentleman, but I do not fantasise about the NAO in any shape or form, and I am not going to indulge him by doing so now. However, if he wants to write to me about this, I will be very happy to write back.

The White Paper puts the BBC firmly in the role of a trusted guide, bringing the benefits of new technologies to audiences. To do this, it must have the flexibility to deliver its content in new ways. We want to see increased competition in this marketplace. However, we do not want to dilute the BBC’s ability to continue to set standards; nor do we want to create a neo-protectionist market in which existing and new competition are unable to thrive. The broadcasting landscape is more complex today than ever before, and one of the most important aims of the new charter is to provide clarity.

That is why we have defined the BBC’s public purposes more clearly than ever before. That is also why, in setting out its priorities, the trust will have to work with the grain of what others have to offer. The new purpose remits will provide a vehicle for ensuring that the trust engages with the world outside the BBC in deciding how the public purposes should be delivered. It is also why, to embed transparency and certainty in its decision making, we have put in place a new triple-lock system, comprising service licences, content characteristics and the public value test. It is important that the BBC’s place in the market is not subject to caricature. Let me assure hon. Members that there will be a new public value test to scrutinise new services, as well as significant changes to existing BBC services, with a market impact assessment provided by Ofcom.

I am grateful to the Minister for giving way again; he has been extremely generous. I must take him back to the question that my hon. Friend the Member for Ludlow (Mr. Dunne) put to him, as it is fundamental to the way in which we scrutinise the work of the BBC. Will the Minister please give us an illustration of how the editorial content of the BBC could be challenged by the corporation having its accounts audited by the National Audit Office?

We believe that we have set the appropriate arrangements in place. I shall not fantasise about exercises that I cannot imagine for the benefit of the hon. Gentleman. That would be absurd. We believe that we have set up the appropriate governance arrangements for the BBC, based on consultation with the public and the industry, and on the advice of Ofcom and of others who have given us expert advice over nearly three years. We believe that we have found the right way forward, and in about a week’s time the hon. Gentleman will have the opportunity to examine for himself the evidence that we have put forward.

We have also put in place a new competition framework. Ofcom will have a powerful role in the new system, in which the trust will set specific rules in areas likely to give rise to competition concerns. Taken together, this is a powerful set of reforms for the BBC. For the public, that will lead to improvements in production and in the quality of the programmes that they see. They want a better BBC, and we intend to help them to have it. One of the mechanisms that we want to use to achieve that is the window of creative competition, which will help to stimulate further competition to produce quality and quantity in the programmes produced and put out by the BBC.

On regional production, the hon. Member for Altrincham and Sale, West (Mr. Brady) asked about the proposed move to Salford. I think that we should all welcome such a move. It involves the prospect of several thousand new jobs opening up in the north-west, and several departments of the BBC—not only sport but, appropriately, new media—going to Salford. That will present a very exciting opportunity.

My hon. Friend will know that we have recently seen a 30 per cent. increase in the number of films being made in Manchester. The number of films being made in Merseyside has reached a new peak, and a new Hollywood feature is being filmed in Cumbria. This has all happened since the BBC move was announced. Will my hon. Friend comment on the further potential for investment and production that will result from the move, which will involve a new base not only for the BBC but for independent companies and other production facilities?

We need to understand that last week’s announcement was that Salford is the preferred bidder. This has not been finalised yet, and it is important to consider the matter in that context. The BBC has clearly declared its interest in that area, and it is now conducting firm negotiations for the future there. My hon. Friend asked me about the potential of such a move. I spent 10 years working in the broadcasting industry in the 1980s, when it would have been almost impossible to conceive of the new media and new opportunities that exist now. This is a bit like trying to see round corners. The media city will provide the kind of opportunities that we see when we visit places such as Seoul or Dubai, where media opportunities have been created as a result of extraordinary growth.

I do not know whether the hon. Member for East Devon has taken the time to examine what has happened in Seoul or Dubai. He does not need to spend any money actually visiting them; he can do the research here. If he does, he will see that such development leads to huge growth, massive numbers of new jobs and—in the case of Salford—the opportunity to bring in not only the BBC, independent production houses and commercial competition but the games industry, the software industry, the music industry and the film industry.

My hon. Friend the Member for Worsley (Barbara Keeley) mentioned some of the activities that are already happening in the north-west. We have to see this development in the context of the fantastic renaissance and regeneration that is happening in the north-west generally. Liverpool will be the European capital of culture in 2008, for example. There is an awful lot happening, and it is absolutely right that the BBC has made this strategic decision, and that it has chosen the Salford bid. Everything that I have heard about the bid tells me that it was very well put together. It was based on a lot of research and, critically, on an understanding not only of the television industry but of the needs of all the creative industries in the north-west.

I am very grateful to the Minister for his support for the devolution of many of the BBC’s functions and personnel. He knows as well as I do, however, that there are factions in the BBC, fuelled by cosmopolitan arrogance, that are fighting hard against the relocation to Salford Quays. Will my hon. Friend do everything in his power to ensure that the BBC does not use the blackmail of a lower licence fee, or any other argument, to prevent the move to the north-west?

Having had a number of conversations across the industry, I have not received the impression that the senior managers in the BBC who are making this decision have any intention of wriggling out of it. They genuinely see the advantages of moving to the Greater Manchester area, and of diversification and greater regional production. They also see the advantages of bringing in talent that has been constrained by the perception of the BBC as being so London-centric. My hon. Friend has made an extremely good case for his constituents and for others in the Greater Manchester area in helping to secure this bid.

The people involved in the bid have been smart enough to recognise that, by not going down the protectionist route of saying, “Let’s stay in London,” and by recognising the advantages of opening themselves up to more competition and diversification, they will bring in greater talent and creativity to the BBC. At the end of the era, if it does not have that, it will not have the services to offer. They have also recognised that places such as Dubai, Seoul and other locations in the far east—which offer different services but use a similar model—create opportunities through diversification, which does a huge amount of good to the local, regional and national economy.

One of the big tasks ahead in the UK is to recognise the role of creative industries, as I know my hon. Friend does. The future for Britain lies very much with those industries, which represent nearly 8 per cent. of gross value added for the UK economy. It is a huge mistake to think that we can handle it all out of London. It is absolutely right to see it as regionalised and absolutely right to go to places such as the north-west, when we know that incredible talent can be harnessed to one of the main growth industries for the whole of the UK.

Does the Minister agree that more than just personnel and resources are involved in devolution, as the mindset is also important, along with recognition of the different features and factors of the modern UK? Scotland has its own Government and its own national life, but we still have a news service that is metropolitan based and becoming increasingly irrelevant. Surely as part of devolution, we should start looking into having a Scottish news service that serves the Scottish people. We should be moving towards regional and national news services.

I acknowledge that. Of course we believe in devolution, but the programmes are a matter for the broadcasters. We already have services such as BBC Scotland. Some hon. Members were rather denigrating the BBC’s creation of local news services earlier. I invite them to go and see what the BBC does and the services it offers. In an interactive age, it will get easier for people to make local programmes—exactly what the hon. Member for Perth and North Perthshire (Pete Wishart) is asking for. The BBC is moving in the direction of empowering local communities to produce local news services and local programmes. That is why I welcome the innovation that the BBC has embarked upon.

My final point about digital switchover is that we believe that the BBC is uniquely placed to deliver the benefits of digital to every viewer. That is why we put it at the heart of our plans for digital switchover. It is absolutely right that we have designed a scheme of targeted assistance to help elderly and disabled people, who are most vulnerable.

Members understandably ask whether we should do more to help the poorest people in our communities, so one important thing needs to be said about targeted assistance and digital switchover. We have learned from the 70 per cent. of the UK that has gone digital so far that the real barrier is not income. By and large, the barrier to has been age and disability. If targeted assistance is to mean anything and we are to get best value from the money given to the BBC to enable the rest of Britain to complete switchover by 2012, we will have to take some tough decisions.

On the Government Benches—and, increasingly, from what we hear, on the Opposition Benches—we all want to do something to help poorer people, but the fact of the matter is that, when it comes to digital switchover, the biggest impediment to making the switch is not one’s income. I do not deny that it might be in some cases, but the real barrier is the people who are 75 or 80—or even my age of 47—and feel challenged by a remote control. We have to deal with that problem. The Bolton trial helped us to realise that more needs to be done, and the several hundred million pounds of targeted assistance will be used to help the elderly, particularly those on pension credit, the disabled and people who are registered blind or partially sighted.

The Minister has provided us with important information, because vulnerable older people often have contact only with a small number of people. Some of the most significant groups are charities and voluntary organisations, so will the Minister ensure that they are properly involved in the process?

We are now about two years from the commencement of digital switchover, so it is critical to know what the licence fee will be before it begins, but there appears to be some dislocation. When we debated the announcement of the licence fee, the Minister stated categorically that at no stage would a date be published. However, I have with me a document, “BBC Charter Review: Your BBC, Your Say”, which was printed five minutes ago from a DCMS website. It states that phase 3 includes

“Mid 2006 Parliamentary debate on Charter and Agreement”,

which we are having now, I concede, but it also refers to

“Mid 2006 Licence Fee level agreed”.

It is now mid-2006 and the Minister says that the licence fee level has not been agreed. One source must be wrong. Is the Minister wrong, or is it the website? If it is the website, I suggest that the Minister urge his civil servants to amend it. If he is wrong, perhaps he will retract his statement.

I am grateful to the hon. Gentleman for bringing that to our attention. What it reveals is that we said that we were going to have a debate, which we are having. Secondly, it shows that we said that we would make an announcement about the licence fee. The hon. Gentleman has referred to the fact that a document mentions mid-2006, but it does not provide a specific date—[Interruption.] That is what the hon. Gentleman said. Let me tell him that he will get a date when it is right for us to make the announcement. What we will not do, however endearing, charismatic and persistent he is in his demands, is make the announcement before the right time, which will be when we have achieved the right number.

After nearly three years, this process is drawing to a close and the announcement on the fee will be made shortly. It might be made in a few months, but I am afraid that the hon. Member for East Devon will have to wait. We have conducted the debate with extensive public consultation and the issues have been discussed in Parliament through Select Committees and in Green and White Papers. An extensive process of consultation has taken place on the charter and the licence fee settlement. The end product will be a BBC that is right and forward-looking, helping to create the appropriate marketplace for the UK in the digital age.

Whatever our disagreements, at least we all agree that for the last 80 years, the BBC has been the pre-eminent public service broadcaster, making a major contribution to our democracy, to our culture and to our standing in the world. I suspect that we all agree that in the rapidly changing world of broadcasting, we must ensure a future for the BBC that enables it to remain the best in the world and the envy of the world. That means, in my view, that it must be strong, independent—not least from the Government—and well and securely funded. It must be equipped to meet the challenges of the digital multi-channel, multi-platform age.

We believe that much in the White Paper, to which the Minister has already referred, and in the draft charter and agreement will help to achieve those aims. Liberal Democrats certainly welcome the decision to have a 10-year charter, which will provide stability for the BBC through the period of digital switchover. We welcome the increased opportunities for independent television production through the window of creative opportunity, but I hope that the BBC will work harder to provide more opportunities for independent radio producers than they have at present. We welcome the concept of service licences for each BBC service, but like the hon. Member for East Devon (Mr. Swire), I certainly believe that we need greater differentiation in the services covered by such licences.

Although I have some concerns, which I shall explain in a few moments, we welcome the improvements in the system to assess market impact and public value in respect of new BBC services or the development of existing services. We accept that the licence fee is, as the Minister described it, the least worst option currently available. It is certainly far better than alternatives such as direct Government funding, subscription, advertisements or sponsorship. We also welcome and support the planned move to Salford Quays in Greater Manchester.

As critical friends of the BBC, we have a number of remaining concerns about some of the Government’s proposals—most notably governance, which the Minister dwelt on. He was absolutely right to say that the old system under which the governors were both flag wavers for and regulators of the BBC was simply untenable and had to change.

We propose that a totally independent regulator should be established for all public service broadcasters. We certainly do not believe that what the Government propose will give us what is urgently needed—a genuinely independent regulator. For example, some of the existing governors will transfer to the new trust. That is certainly evidence of continuity, rather than radical overhaul. Perhaps more importantly, the White Paper very clearly describes the BBC Trust as a

“sovereign body within the BBC”,

not separate from the BBC. Whatever the Minister might say about my point about the chairman of the trust being called the chairman of the BBC being pedantic, that too adds to the confusion.

The Minister said that it was right and proper for Select Committees to give clear advice to the Government. Certainly, he will be aware that the House of Lords Select Committee on the BBC Charter Review gave very clear advice on the issue. It said that the

“proposals for reforming the governance…of the BBC are confusing, misguided and unworkable.”

As I said in an intervention earlier—yes, it is surely right that the Government have carried out an extensive consultation exercise, but what matters is that they then listen to what people have said during the consultation.

We are convinced that the trust is an improvement on the current governor arrangements, but it still does not provide an independent regulator, so the BBC will be its own judge and jury. That will certainly give no confidence to people who fear that, as was suggested by the hon. Member for Rhondda (Chris Bryant), the BBC will use its powers to crowd out others from the marketplace if it does not have an independent regulator to make those decisions.

Indeed, we have already heard from a number of hon. Members that similar concerns have been expressed by a wide range of bodies in the broadcasting and media sector. I have certainly heard such views from local and regional newspapers— including The Bath Chronicle in my constituency, which is excellent—from the commercial radio sector and from other TV and internet companies. Yes, we have a better system now, but if the BBC is ultimately to be its own judge and jury, the system will not give the BBC’s competitors confidence about whether they will be protected from being crowded out.

Just before I turn to the licence fee, I want briefly to mention three other issues relating to the BBC’s future. First, although I acknowledge the advice that Lord Justice Auld gave in 2001, I fail to understand why licence fee evasion should continue to be a criminal offence. I hope that the Government are prepared to reconsider that issue, and find out whether such evasion could become a civil offence—and, incidentally, whether we could introduce a fixed penalty system, like those used for failing to pay parking fines, the congestion charge or whatever.

Secondly, hon. Members have already expressed the view that we want to see a strong BBC, but not an omnipotent BBC. The BBC benefits from competition in public service broadcasting. A monopoly would benefit no one, including the BBC. We need to do more than is currently proposed to protect the other players who deliver public service broadcasting, including some, such as Sky and those in the commercial radio sector, who are not defined as public service broadcasters but make an important contribution to public service broadcasting. I certainly welcome the BBC’s proposals to work in partnership with, for instance, Channel 4, but we also need not only stronger measures to protect the market but a much more urgent review than is currently planned of what the hon. Member for East Devon called PSB in the round.

Thirdly, all hon. Members would accept that the World Service is the jewel in the crown. Many of us are delighted at the World Service’s proposals to introduce a new television service in the middle east, but I simply fail to understand why, for the sake of just £6 million, we cannot ensure that it becomes a 24-hour service, rather than the 12-hour service that is proposed.

Now I come to the crucial issue of the licence fee. Like others, I am concerned by the undoubted delay in the Government’s announcement of the licence fee. It worries me enormously that we will end up with two separate announcements—one about the charter and agreement, and the other about the licence fee. Surely those announcements need to be brought together. In other words, we need a menu with prices.

I, too, applaud the hon. Gentleman’s sentiments about the BBC World Service, but does he agree that it is regrettable that the BBC is cutting some radio services to eastern Europe?

In fairness, I must say that the BBC has looked very carefully at that issue, and has been in discussion with the Foreign Office about the services that it will cut. I hope that the hon. Gentleman will agree that the listening figures for the vast majority of those services do not justify their continuation in comparison with the benefits that will accrue from the new television service in the middle east. Of course, in an ideal world one would want the continuation and development of all those services, but people must work within a tight budget. Sadly, the BBC cannot even get an extra £6 million for the middle east television service.

On the overall figure, the BBC proposes to use the formula of the retail prices index plus 2.3 per cent. Since it made that announcement in November, a number of its figures have changed. For example, the cost of the welcome move to Manchester has gone down, whereas its expected pension costs have gone up. I understand from the BBC that the net effect of all the changes will not substantially alter the proposal to use the RPI plus 2.3 per cent. formula. I hope that, as the Minister has indicated, the most up-to-date costings supplied by the BBC will be published in the near future.

I suggest that, for two reasons, the BBC’s proposed figure is too high. First, we must be mindful of the effect of a cash-rich BBC, combined with inadequate independent regulation, on the rest of the broadcasting and media ecology. That point has been well made already. Secondly, the BBC’s figures include costs that simply should not fall on the licence fee payer. Providing free television licences for the over-75s was a Government policy, and the Department for Work and Pensions rightly hands over millions of pounds every year to the BBC to make up its lost revenue. Similarly, digital switchover is a Government policy, so it should be paid for by the Government, possibly from the revenues that they will gain from the disposal of the analogue spectrum. It certainly should not be a cost for the licence fee payer.

Similarly, the Minister talks about the hundreds of millions of pounds that will be spent on the very important targeted assistance to help the elderly and vulnerable to benefit from the digital revolution. That is a sensible policy, but it is a Government social policy, and therefore it should be paid for by the Government, not by the licence fee payer. Those are not broadcasting costs, as the Government keep describing them, but Government policy costs. Charging the licence fee payer for them is simply a smash-and-grab raid—yet another stealth tax, as others might call it.

If the Government were to go still further, as some have already suggested, by imposing a spectrum charge on the BBC, which, in turn, the licence fee payer would have to bear, it would be yet another smash-and-grab raid. I therefore hope that the Government will look carefully at the independent report produced in April this year by .econ that concluded:

“Overall we find that the case for imposing spectrum charges on such broadcasters”—

the BBC and Channel 4—

“is weak, and that it risks disrupting their ability to fulfil their public service obligation with no countervailing benefit.”

I hope that the Government will listen to that view. The case for imposing spectrum charges on public service broadcasters simply has not been made. The RPI plus 2.3 per cent. formula contains items that should not be paid for by the licence fee payer.

As other hon. Members—notably, the hon. Member for East Devon—have already pointed out, it has been argued in various other reports, such as ITV’s Indepen report or the PKF report, that the BBC’s licence fee is too high for other reasons, and I shall deal with those reasons briefly.

The hon. Gentleman is presenting a number of very good arguments. He said that the BBC’s bid of RPI plus 2.3 contained elements that were unjustified. The assistance package is not included in that figure; once it is included, the bid becomes even larger.

That is absolutely true. A number of other issues have not yet been taken into account, which is why it is so important for us to debate them. However, because I do not believe that any Member of Parliament—and that includes me—is capable of doing full justice to all the competing claims that have featured in the Indepen report and the PKF report and have emanated from the BBC and others, it is also crucial for us to ask the National Audit Office not only to take a greater role in scrutinising the BBC’s accounts, but to take a much greater and an immediate role in scrutinising the various reports and proposals. As I am sure the hon. Gentleman knows, some reports have suggested that the BBC has not taken adequate account of the number of new homes that will be built and the number of households that will consequently pay the licence fee. The hon. Gentleman will also know that a number of people have said that the BBC’s proposals do not give enough weight to the savings that could be made through greater efficiency.

I am aware that the BBC has contradicted those claims, but as I have said, I am not in a position to judge the competing claims being made. That is why the NAO must have that crucial scrutiny role, and must report to Parliament following its scrutiny. Not only is that in the Conservatives’ motion, but the Liberal Democrats proposed it back in 2003.

The hon. Member for East Devon was absolutely right to say, as does the motion, that Parliament should have the final say on the level of the licence fee. That is not a subject for a debate in a Committee Room on a negative resolution. There must be a substantive amendable motion, which must be approved on the Floor of the House. I accept what the Minister said about research evidence: the public will be willing to wear an additional licence fee—but only if they are confident that they will not be paying for things for which they should not be paying, and that they will benefit from improved quality and value for money.

This is a crucial debate, and one that the Government should have initiated by now. The BBC is the envy of the world, and we want it to remain so as we begin to meet the challenges that the digital age brings. As I have acknowledged, the Government's plan will help—but I hope that they will not just listen to, but act on the concerns expressed by many who have responded to the consultations and to those expressed here today, so that the BBC can continue to be strong, independent, and well but not excessively funded.

Order. Before I call the next speaker, I remind the House that Mr. Speaker has imposed a ten-minute limit on all Back-Bench speeches.

I think the House will agree that under its new chairman, Michael Grade, and its new director-general, Mark Thompson, the BBC has made a fresh and encouraging start, and that the work they have done since their appointments is commendable.

One thing that the BBC has done is make a major contribution to digital switchover through the innovation of Freeview, following the failure of the ITV digital project. I pay tribute to Greg Dyke for his initiative in bringing that about. Another of his initiatives, also deserving of tribute, is the decision to move to the north-west. I am convinced that the BBC fully intends the move to go ahead. It would be idle of me to deny that there is disappointment in the city of Manchester over the provisional decision to move to Salford—I understand that that is likely to happen, although not overwhelmingly likely, as the BBC has still to make the final decisions—but whether the move is to the constituency of my hon. Friend the Member for Manchester, Central (Tony Lloyd) or to Salford Quays, which is a superb area of innovation, what is important is the recognition that a new centre of media initiative and a new cluster of enterprise is being created. I pay tribute to the BBC for making it clear, very firmly, that it wants the move to the north-west to go ahead.

It is obvious that all broadcasters face huge challenges. As a tax-funded public corporation, the BBC has a special responsibility for meeting those challenges. When the Select Committee on Culture, Media and Sport, which I chaired before the election, looked into BBC charter renewal, we wanted—anticipating the possibility of a new 10-year charter—to think about the nature of the technological and content-related environment not just in 2006, but in 2016. Since the Committee reported and since the Government decided that the BBC should have that new 10-year charter, technological change has moved exponentially ahead within not much more than a year. Given the prospect of 10 more years following the end of this year, it is essential for the BBC, when making its plans, to take account of what Bernard Shaw had in mind in his play “Back to Methuselah” when he entitled the last act “As Far as Thought can Reach”.

Already, over the past few months, we have seen vast changes. A year ago, the iPod was an enviable cult object; today it is pretty universal. The downloading to mobile phones of news, information, entertainment and music is proceeding rapidly—and, as I have said, this is only the beginning.

There is great concern—and rightly so—about the declining attention paid to the BBC and other conventional broadcasters by the young people who will be key participants in technological communication in the future. Anyone who moves around any of our cities, such as London or my own city of Manchester, will see young people wearing earphones and constantly looking at their mobile phones, not simply to make calls and send text messages but for all sorts of reasons. If the BBC is to be ahead of the game, as we all want it to be, and if it is to attract the kind of participation that will justify its being financed by a tax, it is essential for it to understand one thing. Although the concerns of many Members of Parliament are focused on the most conventional forms of BBC transmission, such as Radio 4, Radio 3 and even Radio 1 and Radio 2—mentioned by my hon. Friend the Member for Rhondda (Chris Bryant)—those are now very small minority channels in comparison with what a large number of people are using the BBC and broadcasting for. The BBC must not simply keep pace with technological change; it must keep ahead of it.

It is good that—as those of us who have been watching the World cup matches will have observed—the BBC has progressed to high-definition. So far it has one high-definition channel, and I hope that it will have many more. However, the BBC needs to take another careful look at its non-direct broadcasting activities. The interactive services that it provides on BBC News 24, for example, are miles behind what Sky provides. The BBC mechanism is very clumsy, whereas Sky’s is very clear.

At one time, the BBC’s principal website was regarded as the pioneer for all such sites, receiving large numbers of hits. I fear that that is no longer so, and newspaper websites such as those of The Guardian and The Daily Telegraph are far ahead of what one gets from BBC Online. That is another matter that the BBC needs to consider.

It is perfectly clear that we need a public service broadcasting corporation that is not funded by advertising. I am very glad that we have the public service Channel 4, which does a superb job, as does the More4 channel. Channel 5 is now doing very well with its innovative and cultural broadcasting, but the BBC is unique, because it is funded by a tax. The House of Commons has decided that there should be a new BBC charter, and it is extremely important that the BBC reciprocates by ensuring that it leads technological change.

That must not happen just for its own sake, as the BBC must take account of social change in this country. More and more people—mainly but not exclusively young people—are creating their own visual and audio entertainment and information channels.

The day has gone when people would sit in front of a box, or drive along in their cars, and be fed by what was provided. People now create what they want. In many ways, the proliferation of the addiction to mobile phones is maddening, but it shows that people have a new way of communicating, and that they want their own voices to be heard as much as they want to listen and be told things.

On occasion, I have been considered to be something of a sceptic about the BBC, but we owe it a lot. However, as I have explained, I believe that it, in recompense and reciprocation, owes us a lot too.

I by thank my colleagues on the Opposition Front Bench for giving us this opportunity to debate the future of the BBC. Despite the Minister’s claims about the number of debates that have been held and the scrutiny that has occurred, this is the House’s first opportunity to debate it since the general election. We last debated it in March last year, when we considered the report of the Select Committee on Culture, Media and Sport, which I now chair, but which at that time was chaired by the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman). It is a great pleasure to follow him this afternoon.

Since then, the Government have published a White Paper on charter renewal, and the BBC has unveiled its bid for a licence fee settlement to cover the seven years from next April. The BBC’s chairman and director-general chose to reveal the bid for the first time during the course of their evidence to the Select Committee last October. The Select Committee was able to question them about their plans, and I congratulate the BBC on a bold and brave initiative, which I hope will be maintained.

The BBC bid was for 2.3 per cent. each year, over and above inflation. At the time it looked excessive, but increasing pressures since on commercial broadcasters have made it look even more disproportionate. However, if we are to consider the case for a licence fee increase, we must look at the case made at the time of the previous licence fee settlement. That was for 1.5 per cent. over inflation each year for seven years from 2000, and has led to the licence fee rising by well over a third since 1997. Yet the income from the fee has risen much faster, as the number of homes has increased steadily as well. As a result, the BBC’s total licence fee income has grown by more than 50 per cent.

At the time of the previous settlement, the then Secretary of State said that he was

“not going to allow the BBC the massive injection of funds that it has sought from the licence fee—an increase reaching more than £700 million a year by 2006.”—[Official Report, 21 February 2000; Vol. 344, c. 1239.]

In fact, the BBC’s income in the period will have risen by very nearly £1 billion, so it is no wonder that the present director-general said—when he was in another capacity at Channel 4—that the BBC had been bathing in a jacuzzi of cash.

At the same time, the funds available to commercial broadcasters have been squeezed. There has been a proliferation of digital channels, and the switch to digital has meant that the main commercial broadcasters have seen a steady decline in the market share that they command and, as a result, in their advertising revenue as well.

Moreover, advertising spend has been diverted to online services. Yesterday, the Select Committee heard that TV’s share of advertising had declined from 32 per cent. in 2004 to a forecast 27 per cent., while internet advertising has grown by 50 per cent. The introduction of personal video recorders and timeshifting will exert even greater pressure on commercial television. For that reason, the BBC’s claims that, even after the licence fee settlement, it will have a smaller share of media revenues is at best disingenuous, since that includes internet advertising.

In 1998, ITV and Channel 4 revenues exceeded the licence fee income by £300 million. Indeed, the BBC argued at the time of the previous settlement that it needed an increase to keep up with commercial television. Now, the income from the licence fee is significantly greater than the combined advertising income of ITV, Channel 4, Channel 5, GMTV, S4C and all their associated channels.

That is the context in which this licence fee bid must be judged. The BBC is already by far the biggest player: an increase of the size suggested would distort the market still further, and place it in too dominant a position.

Of course, the BBC claims that the licence fee is good value for money. That is supported by some opinion surveys, but as long as the fee remains a compulsory television tax that people have no choice but to pay, it is difficult to judge its acceptability.

The Government claim that the licence fee is subject to parliamentary scrutiny, but the Minister said earlier that that is achieved through the negative procedure. In no other area is a £3 billion tax increased by a procedure that does not allow amendment and which is often not even debated. When it is debated, the proceedings last 90 minutes in a Committee Room upstairs.

The negative procedure also means that Parliament has no ability to approve or disapprove particular uses of licence fee money. We know that the BBC has asked for an increase of 2.3 per cent., but that does not include the cost of the assistance package. My Committee, like others, took the view that the licence fee is a social rather than a broadcasting cost, and that it should therefore be financed from Exchequer funds. I regret that the Government are unwilling to accept that.

I hope that the hon. Gentleman will forgive me, but I have very little time.

We still do not know the total cost of the assistance package, but it will represent an extra amount on top of the licence fee. It will not be just a stealth tax, but rather a stealth poll tax, as the licence fee, as the motion correctly points out, hits low-income families hardest.

The reason for that is a flaw in the licence fee itself. In the previous Parliament, the Select Committee under the chairmanship of the right hon. Member for Manchester, Gorton reported that the fee was regressive and unfair. In the long term, I do not think that it is sustainable, and I regret that the Government appear to have batted that question into the long grass for the course of the next licence fee period. I hope that the Government will consider at least some of the anomalies when they come to make their announcement. One in particular has been identified by the Select Committee—that people who pay the licence fee by instalments end up paying more than those who make a one-off payment. That is another way, therefore, in which those on the lowest incomes have to bear the largest burden.

I want to speak briefly about charter renewal. I welcome the creation of the BBC Trust; it improves the position of the governors, which was widely recognised as unsustainable after the Hutton report. However, Michael Grade had already put in place arrangements to distance the governors from the management of the BBC, so it is not clear how the new arrangement differs from what the BBC has already done. It does not resolve the underlying difficulty that the final arbiter of the behaviour of the BBC is a body that is part of the BBC. Ofcom has responsibility for tier 1 questions, but not for the key areas of the BBC’s public service remit—impartiality and fairness. Nowhere is that more important than in the area of the BBC’s creative futures plan.

The world is changing rapidly, as the right hon. Member for Manchester, Gorton pointed out; people are accessing media via the internet, iPods and mobile phones. It is right that the BBC should make programmes available on whatever platform people choose to use, but the BBC’s plans go considerably further. It is not just making its programmes available on different platforms; it proposes to introduce whole new services. To take just one example: the BBC plans to make news content available to mobile providers for nothing, so that the consumer will pay a charge only to the mobile operator and not to the news provider. When asked about the impact of that new service on ITN, the BBC told the Committee that ITN could finance the service through advertising, but advertising is not developed on mobile so that suggestion is wholly unrealistic. The result will be that the BBC service undercuts a commercial service before it has even got off the ground.

As has been said, there are concerns about the BBC’s ambitions in the area of local newspapers, the creative archive and MyBBC Player, and the fact that the BBC’s licence fee bid is for £1.2 billion to finance new digital services means that there will be a major impact on the market. Under the new arrangements, the BBC’s new services will be subject to a market impact assessment and a public value test, which is certainly a step forward. However, although Ofcom is due to carry out the market impact assessment, the final decision—the public value test—will rest with the BBC. By definition, that will be a subjective judgment. What criteria will the BBC apply to judge the public value of a new service when compared to the market? I share the view of my Front-Bench colleagues that it would have been better to give that decision to Ofcom rather than leaving it with the BBC. If the BBC is to make it, it is essential that each new individual service is subject to a public service licence and a market impact assessment. It is not good enough to have one service licence embracing all of them.

The BBC is an immensely powerful organisation and is often a force for considerable good, but it needs to be subject to proper checks. The measures in the motion will achieve that.

I am a firm supporter of a strong, independent BBC. The BBC is a world-standard broadcaster of international renown and enjoys a high level of domestic satisfaction, which we should remember. We like the Beeb. I want to see the BBC grow, prosper and diversify.

In 2004, the BBC gave a commitment to relocate some of its activities to the regions. That will complement the Government’s strategy for investment in the regions, and the north-west is perfectly placed to nurture that creative investment and capitalise on it, which will be most beneficial to my Eccles constituents.

In 2004, the BBC committed itself to establishing a state-of-the-art BBC centre in the Manchester area with

“brilliant career and creative opportunities”,

moving London-based children’s TV and radio—including CBBC and CBeebies—BBC Sport, Five Live and Five Live Sports Extra, new media headquarters, research and development and formal learning departments to the Manchester city region; moving an estimated 1,800 staff from London to the Manchester city region; increasing the amount of TV drama filmed outside London from 30 to 50 per cent. during the next charter period; and creating a media zone that could include other broadcasters, publishers and independent companies. All that was to be achieved by 2010.

It is a wise commitment. In the past decade, cultural and economic development in the north-west has been increasing rapidly, and the area is now the busiest production centre outside London. The success of the BBC’s investment will be central to sustaining the growth of the media industry and the regional economy. I shall summarise that growth. Filming in Manchester rose by 30 per cent in 2005-06, with 2005 being the busiest year ever. In the first quarter of this year, production in Merseyside reached £6.7 million, constituting a huge increase on the previous year. Following the opening of North West Vision’s film office in Cumbria, a two-week shoot in the county was secured for the Hollywood feature film “Miss Potter”, starring Renee Zellweger. The Cheshire-based company Mackinnon and Saunders won its first children’s commission for the BBC after receiving development investment from North West Vision. One hundred and fifteen Lancashire-based crew and facilities companies with current TV credits have registered on the North West Vision database used by productions that need to employ crew and use facilities.

Last week, the BBC announced in principle that it is proposing to establish a northern centre in Salford’s MediaCity:UK, based at Salford Quays, subject to resolving some outstanding issues. The project must also pass the two tests of value for money for licence fee payers and affordability, so the BBC has said that a final decision cannot be taken until the licence fee settlement is known. There are lots of t’s to be crossed, but everything is still to play for.

I do not blame the BBC for using its bargaining strength to get the best possible funding deal. As a former negotiator myself, I respect that tactic. However, although I support a reasonable increase in the licence fee, I point out to the BBC that the Salford MediaCity:UK is such an exciting, world-class development that its move there should be confirmed in any case. The move should go ahead whether or not there is an above-inflation increase in the licence fee.

Although the new MediaCity:UK—about which I would like to say a little more—will be located in Salford, it will bring considerable benefits to the Greater Manchester area and the region as a whole, as I have just demonstrated. The project has the support of the Northwest Development Agency and a range of partners across the region. The vision is powerful: a globally significant, new media city to compete with emerging media cities in Seoul, Singapore and Dubai; and a modern, digital city for the UK, surrounded by four excellent universities, which will be the centre of BBC production on Salford Quays. Salford will have a silicon canal to match the US silicon valley and Scotland’s silicon glen. It is estimated that the project will bring 15,500 jobs, and it includes a recording studio for the BBC Philharmonic orchestra, floating stages for concerts and theatre, studio and technical facilities for media industries, a media skills institute and a research academy. I support the proposal that the BBC should become a world player as a search engine, but I am also keen to see the corporation established as a media and communications-oriented digital global university.

I understand that some BBC staff may be fearful of a move north. Relocations have to be managed positively and sensitively, but I believe that BBC workers will be pleasantly surprised by the varied and vibrant environment of Greater Manchester. I hope that the Government will give the BBC all the support it needs in that regard.

To sum up, we need an early but considered licence fee decision from the Government. It is important to get that right. Even if the BBC does not achieve the licence fee it wants, it should carry out its commitment to relocate to the Manchester city region and be a partner in the development of the exciting new media city in Salford.

I hope that the House will forgive me if I leave now, as I hope to contribute to the Westminster Hall debate on funding for local transport—yes, the new media city proposal will involve development of our successful Metrolink tram network to service the city and local people, so I shall go into the Government Lobby to oppose the Conservative motion.

It is a great pleasure to follow the hon. Member for Eccles (Ian Stewart). I would like to say that he is a friend of mine. I like him very much and my wife is very fond of him as well, as he knows.

The most important thing that I have picked up in the debate—I was listening carefully to what the Minister said—from the point of view of politicians and the scrutiny by Parliament of the BBC, is the question raised by my hon. Friend the Member for Gainsborough (Mr. Leigh), the chairman of the Public Accounts Committee. He called for a greater role for that Committee in scrutinising the BBC licence fee. I was greatly encouraged by my hon. Friend the Member for East Devon (Mr. Swire), when he assured us that the next Conservative Government would allow greater interaction from the Public Accounts Committee on that issue. I am still somewhat mystified by the Minister’s response. I do not really understand what he said in that regard, so I shall write to him.

The BBC is a tremendous asset for our country. The first time that I realised its importance was on a visit to Warsaw in 1983, immediately after the martial law imposed by General Jaruzelski. Many of my friends in Warsaw were listening intently to the BBC World Service, which brought a true reflection of the world to those oppressed people—it brought them the reality. It also brought great hope to people behind the iron curtain. It could be argued that the BBC World Service helped to bring about the revolutions in eastern Europe that finally drove out the communist oppression that had held them for such a long time. People could not trust their local radio. I feel a great shame, as I said in my earlier intervention, that the service to eastern Europe will be cut. I am pleased that the Foreign Secretary was defeated by 24 votes to one in her intention to stop the BBC and other channels broadcasting the events of the Council of Ministers, because broadcasting has an important role to play in the scrutiny of this Parliament and of what goes on in Brussels and the European Parliament.

The BBC’s pedigree is tremendous, and gives it the opportunity to challenge CNN and other American broadcasting corporations when it comes to being the global voice of broadcasting. That is important in today’s global world. I know that President Chirac of France is intent on spending hundreds of millions of euros on trying to come up with an equivalent to the BBC World Service and CNN. He realises that France is losing out on a tremendous amount of influence globally because it does not have an equivalent. The French version of events is not being broadcast around the world.

The BBC World Service is excellent and is very broad in scope. Its programmes involve many discussions about political, social and economic issues all around the world. Recently, I watched a television programme on the BBC World Service that was extremely incisive about the new political developments in Bolivia. I wish that we had more of that type of broadcasting in the United Kingdom. We need to have more programmes like that to teach our children about other countries and cultures. We live in an increasingly multicultural United Kingdom and we need to make sure that our young citizens know about the good things around the world, rather than just listening to the coverage at the moment, which is so negative about world events. [Interruption.] Yes, about the Government in particular—quite right. I should say negative but effective and correct. The programmes that we tune into on the domestic BBC tend to focus on problem areas such as Iraq, Afghanistan and other areas of great conflict. There is a tremendous amount of good going on around the world, particularly in developing countries. The BBC World Service does a good job of highlighting that and I regret that the domestic BBC does not follow suit.

There have been suggestions that the licence fee could rise to £180 by 2013. Many vulnerable groups would struggle to pay that sort of fee. I applaud the Government for the action that they have taken to introduce free TV licences for those over 75. I hope that if the licence fee does go up to £180, the next Conservative Government—of course, we will have a Conservative Government by then—will ensure that other vulnerable groups are helped to pay that fee.

The impartiality of the BBC is critical to the future success of the corporation, and its impartiality has been debated on a number of occasions. I remember in 1986, as a passionate young Conservative, being furious about the BBC coverage of the bombing of Tripoli in Libya. I believed at the time that the coverage was extremely biased. However, I was greatly encouraged by the way in which the BBC exposed the Labour Government over the weapons of mass destruction in Iraq and the way in which it stood by its guns over the issue. That has led me to believe that although there are times when political parties feel that the BBC is acting against their interests, overall it is impartial.

Does my hon. Friend share my concern that an independent report on the BBC’s coverage of the middle east showed that it tends to report the middle east in an extremely biased way and is very anti-Israeli? That report has been completely glossed over by the BBC governors.

I do, and I thank my hon. Friend for that intervention. Although the BBC is impartial on domestic politics, there is a lot that it can do to counteract that bias against the Israeli authorities.

Will the hon. Gentleman comment on what a senior BBC executive said to me only a couple of weeks ago? He believes that the Welsh nationalist party was founded in the bowels of BBC Wales and is mostly sustained by BBC Wales.

Well, as a Member of Parliament in England, albeit with a border with Wales, I try not to get involved too much in Welsh politics—I will leave that to my hon. Friends who represent Welsh seats. However, I take the hon. Gentleman’s point on board.

The BBC is impartial, but we need to safeguard its impartiality. We need a regulator with teeth to arbitrate and manage that impartiality. I was quite surprised by the way in which Greg Dyke behaved during the course of the controversy with the Government. Although he was a socialist and a supporter of the Government, he stood up to the Government—despite all the pressure that was being put on him. He went up in my estimation for the way in which he handled the situation. However, we cannot leave it to chance that we will always have somebody like Greg Dyke who will stand up for the best interests of impartiality and the BBC, no matter how much force is brought to bear on him or her. I will go as far as to say that I was appalled by the way in which members of the board of trustees left him out to dry. It is important that we have more professional people on that board and that they stand by their director-general and look after the interests of the BBC, rather than pander to the Government.

I want to give my hon. Friends the chance to speak, so I will conclude on a more light-hearted note. I wish that we could have more culture programmes on the BBC. My wife and I love to watch romantic costume dramas such as “Pride and Prejudice” and Charles Dickens programmes—[Interruption.] The hon. Member for Rhondda (Chris Bryant) and others might not be especially interested in culture and theatrics. Perhaps the hon. Gentleman does not realise that such programmes give young people tremendous benefits from the point of view of culture and a historical background.

It is a pleasure to follow the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski), who spoke with great verve and style about the international role of the BBC and the importance of the BBC’s independence, as well as costume drama. I will concentrate on perhaps the oldest service that the BBC has provided, although it is one in which there has been plenty of innovation in recent years: BBC radio. Before I do so, however, I wish to make a few observations.

It is possible to overstate the strength and power of the BBC. I respond directly to the remarks made by the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale)—we have discussed this matter before. We should consider the total industry revenue. I admit that advertising has declined in the commercial sector, but Sky’s subscription revenue and online revenues are extremely buoyant. When Mrs. Thatcher left office, the BBC had more than 40 per cent. of total market revenue, but now it has 23 per cent. Even if the BBC got what it wanted from the licence fee settlement, best estimates suggest that it would have a fifth of industry revenue. It is thus worth putting the power of the BBC in perspective.

As the Minister pointed out, the licence fee has fallen as a proportion of people’s income in recent years, and it will probably continue to do so. Importantly, the licence fee has also fallen as a percentage of the income of the bottom 10 per cent. of the population, although that is not to say that it is not a burden on many households.

We must consider the overall output of our system of broadcasting, of which the BBC is such an important part. In Britain, $75 a head is spent on home-produced programming each year, which is more than is spent in the United States and Germany. That is a product of a strong BBC and a strong licence fee.

We have heard about the BBC’s plans to innovate. My right hon. Friend the Member for Manchester, Gorton (Sir Gerald Kaufman) talked about the success of Freeview, and we have heard about the success of BBC Online under Greg Dyke’s predecessor, John Birt. Those proposals were controversial in their time. The commercial sector asked whether it was right for the BBC to go into those areas, just as it now asks whether it is right for the BBC to create an open and a creative archive so that licence fee payers can access BBC content. People ask whether it is right that the BBC produces local television news. There are many options for partnerships with commercial interests. For example, in the west midlands, where local television news is being pioneered, the BBC has signed a joint letter of intent with Trinity Mirror, the commercial organisation that runs the main evening newspapers in Birmingham and Coventry.

It is thus possible for the BBC and the commercial sector to be partners, but I would urge hon. Members to be sceptical about some of the commercial sector’s claims that the BBC crowds it out. Since the BBC’s inception, it has been in competition with the private sector and has thus distorted the market. BBC Parliament is probably the only BBC product that does not distort the market because it does not have a commercial competitor—[Interruption.] It is unlikely to have one, too.

To respond to a point made by the hon. Member for Shrewsbury and Atcham, is it not one of the great glories of the independence of the BBC that all the different views expressed in this debate, some of which will be critical of the BBC, will be reported on “Today in Parliament”? After the Hutton inquiry, output at all levels of the BBC reflected the different views expressed. Sky News would never broadcast a discussion on the Murdoch empire or the fact that no one is watching test match cricket on Sky and that access to one of our crown jewels of sport is thus being reduced. One of the great things about the BBC is that it has such independence and thus no thought can be unspoken.

Let me move on to radio, as I promised. The commercial sector makes three criticisms of BBC radio: it is too big; it should be more involved with the independent sector on programming; and Radio 1 and Radio 2 should perhaps be privatised. It is true that the BBC has a 56 per cent. share of the radio market. Two or three years ago, the BBC and the commercial sector were saying that given the advent of more stations due to digital radio and the powers in the Communications Act 2003 to allow commercial radio stations to merge, the BBC’s share would have gone down considerably by this stage. To an extent, the BBC is embarrassed by its success. The situation reflects not only the decline in the independent sector’s advertising revenue, but the sector’s lack of ambition. The programming on many commercial stations is in exactly the same format.

The Commercial Radio Companies Association has a case to make, but sometimes it overstates it. For example, its briefing for today’s debate says:

“Radio 2 has refocused towards younger listeners.”

BBC Radio 2 has changed in recent years, so I wondered whether the allegation that it had suddenly abandoned the middle aged and elderly of Britain and gone for 15 to 24-year-olds was true. The audience of Radio 2 is very homogenous. The average age of listeners to Terry Wogan is 52, as is the average age of listeners to Jeremy Vine. The average age of listeners to Jonathan Ross—we have heard about him—is 52, and the average age of listeners to Steve Wright is 50. That makes me feel like a young man again.

Radio 2 has innovated and has a broad range of programming. Radio 1 and Radio 2 play much more original music than the commercial sector and have a much richer range of programming. We have heard about the importance of involving youth in the BBC and the media. “Newsbeat”, which is broadcast on BBC Radio 1, is the news programme that attracts more 16 to 24-year-olds than any other, as it has done for many generations. In debates in previous Sessions, Conservative Front-Bench spokesmen talked about privatising BBC Radio 1 and Radio 2. I am glad that we have not heard such comments today. Such privatisation would be a shame, not least for the commercial sector, because unless the advertising market expanded by 25 per cent., many existing commercial stations would lose out.

Let me say a word about the contribution of the independent sector to BBC radio. I am pleased that BBC radio is committed to more than doubling the proportion of hours that it will guarantee to independents. It says:

“The floor will move from around 2,600 hours at present to 7,300 hours by 2007/8”.

Although the outsourcing of television programmes to independents has been successful, it is more difficult to outsource radio programmes. Part of the reason for that is the fact that the independent sector is still developing in the radio market and much of radio is live. It would probably be difficult to outsource a lot of programming on BBC local radio, which is one of the jewels in the crown of BBC radio that reaches all our communities. Indeed, there might be cost advantages in keeping programming in-house, and I am pleased that the BBC is addressing the matter. Some radio sport coverage is being outsourced. For example, the coverage of grand prix has been outsourced this year for the first time.

I hope that the Government will continue to value both the international BBC World Service, which, as we have heard, has record audience figures, and BBC radio itself. I am pleased that it looks as if we will have much-needed competition from the commercial sector on speech radio for the first time. If Channel 4 successfully gains digital space, it will be good for the BBC and will probably reduce its 56 per cent. share of the market slightly.

I conclude by saying a word about BBC Sport and the importance of having a well-funded BBC to take on subscription TV in particular. It is a joy in Britain that all the World cup matches are available on BBC or ITV, unlike in Germany, where half are on subscription TV, or in Spain, where more than half are on subscription TV. That is not an accident but the result of an intervention in the broadcasting market, as a result partly of a desire to show the crown jewels of sport, of which the World cup is one, and partly of the fact that we have a sufficiently funded BBC licence fee, so that it can compete in the market and secure such rights. Is not it a joy, Mr. Deputy Speaker, to watch some of the games without adverts? Is not it a joy that every pub and restaurant in London can put up a TV and everyone can watch them? Is not that a contrast with cricket, which is only shown on subscription TV and has only 200,000 viewers on Sky? Long may the BBC have a sufficiently funded system so that, according to the old adage, it can make the good popular and the popular good.

I shall confine my remarks to the future of the BBC as it applies to Scotland, which is perhaps not unsurprising. It is fortuitous that we are holding the debate because I do not think that the BBC has ever been as irrelevant—it is almost approaching irritating—to the people of Scotland as it is now. It might surprise a few hon. Members to know that the vast majority of viewers in Scotland do not want or require an early update on the progress of Wayne Rooney’s foot or Michael Owen’s knee. Sometimes we like watching our football games with the real World cup contenders—the Argentinas, the Netherlands and the Portugals—without constant reference to the English football team. Perhaps at half-time we could get an analysis of the game that we are watching, not some extended update about the progress of the England team. All that is fine for English Members—it is great that they are getting that; it is fantastic, right and appropriate— but Scotland does not need the commentary on another nation, but that is exactly what we are getting.

We can use the red button on our remote to get different BBC commentaries, but they range in their support for England from the mildly hysterical to the apoplectic. The button that we in Scotland are using more and more is the volume button to turn down some of that nonsense.

While that is merely irritating, it starts to get a bit more serious when it comes to news coverage, which is increasingly irrelevant to public life in Scotland. The crux of all that is the need, desire and real requirement for a Scottish 6 o’clock news that will adequately reflect Scottish public life and political life post-devolution, with our own Scottish Government.

The history of that campaign has been protracted and is one of the greatest stories of political subterfuge in the past few years. We witnessed the actions of the former director general, John Birt, who took it upon himself to make it a political mission to stop the “Scottish 6” happening. He saw it as a great threat to the Union of the United Kingdom. To support his cause, he involved the most powerful allies he could, including the Prime Minister. John Birt is clear in his autobiography what he got from him. He went to the Prime Minister, who was quick, as ever, to grasp the case. “Let’s fight,” the Prime Minister said. He of course enlisted the help of Peter Mandelson, who at the time was Minister without Portfolio, and his most trusted aide-de-camp, and he worked with the BBC on a plan of action to stop the “Scottish 6”.

That was later confirmed in the diaries of Lance Price when he recorded on Friday 30 October 1998 that

“John Birt has been in touch. He wants to stop BBC Scotland doing their own six o’clock news on TV and wants help leaking a survey showing most Scots don’t want it.”

It was collusion at the highest level between the Government and the BBC to stop a “Scottish 6”. That is the campaign that the “Scottish 6” was exposed to. It is entirely at odds with the commitment in the BBC’s royal charter. It is intended to be an independent corporation. That is why it remains such a hot issue. Most recently, the new director-general of the BBC once again ruled out a “Scottish 6”, saying that there was no clamour in Scotland for such a service.

The hon. Gentleman says that that is a hot issue in Scotland. I have been an MP only since October, but I have never had one letter or heard from one constituent, one friend or one individual on the subject.

The hon. Gentleman has obviously not engaged in debate in Scotland on that. It is supported across the political spectrum, not just within political parties, but in civic society as well. There is a determination that a “Scottish 6” is a requirement. Opinion polls clearly show that the majority of the Scottish people want it. Let me assure him that come the run-up to the next Scottish parliamentary elections, we will hear a lot about the future of Scottish broadcasting. We believe—this is fundamental and important—that we require our own broadcasting in Scotland to develop the talent in our creative industries. There is a great source of people working within the television sector in Scotland.

Concessions were given. We were denied the “Scottish 6”, but were given “Newsnight Scotland”—a 20-minute opt-out at the end of “Newsnight”. Some of my less charitable colleagues refer to it as Newsnicht, but it has been supremely successful. It has more viewers than the traditional UK-wide programme. People are tuning into “Newsnight Scotland”—

Yes, of course.

Those viewing figures are reflected across the spectrum, whether it is “Reporting Scotland” or the ITN version. People are turning on and tuning in to see Scottish news coverage because they believe that it is important that their national life is seen on the television.

It is a challenge to the BBC. Why does it not accept that? I have written to Scottish Television to say, “Get ahead of the BBC on this one. If you provide a Scottish 6 o’clock and 10 o’clock news service, you could steal a march on the BBC. Grasp the thistle. Go for it, Scottish Television.” It would find that it could probably steal a march on the BBC by securing the viewers for the rest of the evening.

Furthermore, we can do that on radio. We have the supremely important and successful “Good Morning Scotland” programme, which competes very effectively with the “Today” programme—in fact, it beats it in terms of listeners. They want a diet of Scottish news in the morning and it had some 11.2 per cent. of audience share in Scotland in 2004. The question has to be asked: if we can do that so successfully on radio and corner such a large share of the market, why can we not do it on television?

We then have to ask: what do Scottish viewers get out of the 6 o’clock and 10 o’clock bulletins? Aberdeen university asked that question, researched it, and came to the depressing conclusion—not very much at all. Just 2 per cent. of stories on the 6 o’clock news network could roughly be called Scottish compared with 34 per cent. of those that could be considered English. It found that there was probably 10 times more English cricket on the BBC 6 o’clock news than there was Scottish politics. We are constantly served a diet of irrelevant news stories, which headline the 6 or 10 o’clock news. They are to do with English health, English education or English criminal justice, which have nothing whatsoever to do with the Scottish people. In fact, they are as irrelevant to the Scottish people as the health and education policies decided by the French Government.

The people of Scotland pay their fair share of the BBC licence fee and are right to demand that BBC programming reflect their interest on an equally fair basis. There is at least recognition—[Interruption.] Does the Under-Secretary of State for Scotland want to intervene?

There is recognition at last by some of the people and players in the BBC. The former national governor for Scotland said that there was “some way to go” in the BBC

“to properly reflect the devolved nature of Scotland in national programming.”

Michael Grade at last recognises that there is

“an imbalance and a lack of sensitivity”

towards Scotland in the BBC’s coverage of the UK in its national news bulletins. Quite, Madam Deputy Speaker.

It is not just in the core areas of news and sport that Scotland is short-changed by the BBC. We are told that the new licence fee—the massive inflation-busting hike—is to pay for all the new interactive services that are supposed to be put in place, but many of my constituents cannot access the new digital services. However, they will be asked to pay an increased licence fee.

We have also looked at the disparity of what is collected in Scotland through the licence fee and what we are given back in return. In 2003-04, the licence fee raised was £2.798 billion, of which the Scottish 8.5 per cent. pro rata contribution was £246.2 million. However, Scotland has 9 per cent. of all UK households, suggesting that the licence revenue from Scotland could be as much as £251.8 million. In contrast, BBC Scotland’s income was a mere £160.4 million, of which £10.1 million came from external sources. Under the current arrangements, Scottish broadcasting expenditure is £32 per person. If the full revenues were realised, Scotland’s figure could be up to £50 per person.

If we compare like-sized countries throughout Europe—comparing Scotland to, say, independent Ireland or Denmark—it is clear that less money is spent and fewer jobs are created in Scotland’s creative sector. RTE in Ireland, for example, employs 2,169 people and DR in Denmark employs 3,464 people. That compares with 1,427 employed by the BBC in Scotland. Clearly Scotland is getting a poor return from its licence fee contribution under the devolved settlement, in which broadcasting remains under the control of Westminster and the BBC is controlled from London. If every pound paid by Scottish licence payers were reflected in jobs, Scotland would see an additional 690 broadcasting jobs for no additional cost.

A distinctive BBC in Scotland is now absolutely required to allow us to promote our indigenous culture and to portray Scotland to the rest of the world. A distinct channel would be our window to the world, reflecting our people’s priorities and playing an integral part in everyday Scottish life. By establishing a sustainable television industry north of the border, high-value jobs would be created, boosting our economy and offering opportunities for the skilled media graduates. The charter review provides an opportunity to go down that road, making the BBC in Scotland truly autonomous, giving Scotland control over its broadcasting, increasing the capacity in Scotland and ensuring that the BBC in Scotland reflects the cultural life of our nation.

Order. There is already a time limit on Back-Bench speeches, but I notice that the time left for this debate is getting shorter, so perhaps Members would like to reduce their comments and then more might be successful in catching my eye.

I will take heed of what you have said, Madam Deputy Speaker.

I start by declaring an interest. In my previous profession as an independent television producer, I benefited from BBC commissions and suffered from its management.

There has been agreement on many things across the Floor of the House in this debate. Of course the BBC must be efficient; of course any increase in the licence fee must be justified; of course the management of the BBC must be transparent; and of course the BBC must not crowd out competition in a very fast-moving industry. There is general agreement, too, that the BBC is an excellent national institution of which we can all be proud—but I am concerned that there has been relatively little discussion this afternoon about the source of that excellence: the people who work in the BBC. It is no accident that the BBC is so excellent. Good broadcasting and communications are the product of training and experience in a centre of excellence, and the BBC is the major source of that for the entire industry in this country.

Any efficient market must operate within an infrastructure that is often not provided by that market. That is the case in broadcasting and other communications industries, and in this country the BBC is the major source of that infrastructure. For generations it has acted as a centre of excellence, training some of the brightest young people in this country and giving them the experience of making programmes—letting the talent flourish in a secure environment. That is largely as a result of the existence of the licence fee. We would be very foolish indeed to do anything that jeopardised that centre of excellence, because it fertilises the entire industry.

When we talk about crowding out, unfair competition and everything else, I hope that Members will remember that it is the BBC that enables the market to work so well by providing the talent and training the talent that everybody needs. When we consider the public value test and the market impact assessment, I hope that we will also remember the role of the BBC in providing the infrastructure. When we look at the independent sector—not much has been said today about its role; I speak as a former independent television producer—I hope people will not be deceived by any belief that it can provide the breadth of training and expertise that the BBC can provide.

Of course the independent sector has a role to play—I was grateful in my previous life when that role was extended, as I benefited from it—but we should not go too far. It is an ephemeral and polarising industry, which is highly segmented and driven by very short-term considerations. It cannot take the long-term perspective or train people and give them experience in programme making as the BBC does across the piece. Many hon. Members have today rightly characterised the industry as fast moving, and we cannot preclude the BBC expanding into such areas in order to provide the experience and expertise necessary to fertilise the industry as a whole.

I hope that when we consider the motion we will reflect carefully on how the Government have tried to balance all those different perspectives. It is a very difficult job. My hon. Friend the Minister made a cogent and compelling argument for why the Government have taken the approach that they have. They have the balance right; their approach will enable the BBC to continue to flourish as that centre of excellence and as an organisation that will give the country the talent that it needs for the creative industries to flourish. I therefore hope that the House will vote against the Opposition motion.

I am grateful for the opportunity to participate in the debate, and to follow the hon. Member for North Swindon (Mr. Wills), who, as he said, benefited very much from the largesse of the BBC—and also did his bit to support the career of my hon. Friend the Member for Surrey Heath (Michael Gove) when he was a journalist.

I share the hon. Gentleman’s point—indeed, I was going to make it myself—about the cross-fertilisation of the BBC and the private sector, but with the greatest respect to him, his experience is based on broadcasting and programme making, and the problem that I want to address in my remarks is the enormous expansion of the BBC into areas where hitherto it has not had a role. That expansion has been driven by new technology. There are those who advocate that the BBC should certainly be playing a role in those new areas, but the House must be aware of the hugely damaging impact that the BBC’s expansion might be having on creative industries in those new areas. I certainly take on board the point that, as Salford media city gets under way, the BBC will act begin to as a pump primer for many new technology industries, but I want to put the other side of the case, about how it could inadvertently undermine some successful private companies in this country.

In the debate in the other place on the House of Lords Select Committee report on the media, the Government spokesman said that the BBC had to operate in a market without strangling or unduly compromising the competition, and I agree with every word. It is welcome that the Government recognise the importance of scrutinising the BBC in that area. However, the power of the BBC has increased, is increasing and ought to be diminished. In some areas, the BBC is becoming the Roman Abramovich of the content-broadcasting digital world. It has a huge amount of financial muscle and can quite easily outspend its competitors.

The hon. Gentleman is generous in giving way. I accept his point, but he characterised me wrongly. I accept that the BBC can crowd out new industries. Indeed, as an Education Minister I fought unsuccessfully to try to prevent it from doing just that in one sector. Does he agree, however, that it is important that the BBC is in such areas, partly to provide the pool of talented people who can if necessary leave the organisation to set up creative industries in this fast-changing world?

I certainly agree with the hon. Gentleman, although I would add that the BBC is now drawing on a pool of talented people who gained their experience in the private sector. There is cross-fertilisation—and the BBC’s role in education is precisely what I want to talk about.

Earlier in the debate, the hon. Member for Cannock Chase (Dr. Wright) said that the BBC was crowding out the private sector because it was driving out mediocre and bad firms. I am very much looking forward to writing to the chief executives and employees of the two firms to which I am about to refer, which are being crowded out, to let them know that a senior Labour Back Bencher considers them to be mediocre and bad people.

The two companies that I am thinking of are RM plc in my constituency—a classic British success story, which was started 30 years ago by two graduates and now employs 2,000 people—and Harcourt Education, part of the Reed Elsevier group, which is based just outside my constituency and employs many people. Both of them, as the hon. Member for North Swindon is aware, are successful providers of educational software, but they face a significant threat from BBC jam. We could have a separate debate on BBC jargon and names, but BBC jam—formerly the BBC Digital Curriculum—provides a broadband learning service for five to 16-year-olds. It was launched in January 2006, after extensive consultation and approval by the DCMS in January 2003.

At the time the industry warned that BBC jam would be anti-competitive, and would threaten the existing commercial market and drive out innovation and diversity. To their credit, the Government accepted that argument, because the DCMS said that

“the proposal would have had a significant: impact on the market, potentially disproportionate to the evident public benefit, in the absence of measures which would prevent such an impact”.

To mitigate that impact, the Government set out 18 conditions, the fourth of which stated:

“The service must innovate continually, and exploit the extensive archives of the BBC and its media-rich resources, and promote technological and pedagogical experimentation. The service, taken as a whole, should be distinctive from and complementary to services provided by the commercial sector.”

Hon. Members will not be surprised to learn that people who know the service well do not think that the BBC has exploited its extensive archives, or provided a complementary service.

In summer 2005, the content advisory board wrote to the BBC expressing concern about the development of BBC jam, and questioned whether the service complied with the fourth condition. That board was set up by the Government, and its members include officials from the Department for Education and Skills, the Department for Culture, Media and Sport and the Department of Trade and Industry. DCMS approval for BBC jam included a requirement that

“the BBC…work closely with the…Content Advisory Board”.

In summer 2005, the board recommended that BBC jam be subject to immediate review to address the question of whether it had complied with the fourth condition. In February 2006, however, Lord Adonis, a Minister in the Department for Education and Skills, rejected that recommendation. On 7 March, in a written answer to a question that I had tabled, he confirmed that it was “too soon” to review the service.

BBC jam will be launched in full in September 2006. Industry sources estimate that its advertising budget is £3.5 million—three and a half times the advertising budget of its nearest private sector competitor. That figure does not, as far as I am aware, include the promotion and cross-fertilisation of programmes in the BBC family—a practice that has become all too prevalent. Should we be worried that a big beast has moved into the sector? On the surface, the BBC is about to offer primary schools free broadband digital content. That sounds fantastic, but in fact that content is not free, because it costs the taxpayer £150 million a year. If the service is successful, it will be at the expense of jobs, opportunities and innovation in the private sector, and it will damage leading global businesses in the UK.

The provision of educational software to schools is not simply a matter of sending a pack to schools, because the companies that I have mentioned have enormous experience in the field, and work extremely closely with schools and other organisations to provide technical support, know-how and training for teachers. The BBC, however, is in danger of creating a monopoly. It has blundered into the area without careful thought, simply because it has the money and resources to do so. That small example, which is close to home as it affects my constituency, is symptomatic of the new BBC. People who worked for the BBC used to be prepared to accept lower pay in return for greater job security and a better pension. Now, however, people who work for the BBC earn as much as people in the private sector, if not an astonishing amount more. The salaries received by Jeremy Paxman and Jonathan Ross are not simply a matter of tabloid tittle-tattle, because they go to the heart of what is happening in the new BBC. As a matter or urgency, the Government should make the BBC publish a list of salaries, as they are another example of BBC largesse distorting the market.

There has been extensive discussion of the BBC’s coverage of the World cup. That, too, is an example of its largesse, as it has three times as many technicians and reporters in Germany as ITV. The BBC has therefore not made the case for an enormous increase in the licence fee.

In conclusion, we should look at the role of the private sector in public service broadcasting. There is false consensus that the BBC alone can undertake public service broadcasting; if it does not operate in a particular field, it is thought, a public service is not available. I bumped into the broadcaster Henry Bonsu two days ago. He left the BBC to set up a radio station for a black audience, because the BBC thought that a black audience wanted only music and entertainment, when in fact it wanted talk, politics, debate and discussion. He has set up a digital station—Colourful on the Sky platform—thus providing public sector broadcasting that does not cost a penny of taxpayers’ money. I hope for his sake that he is not too successful; otherwise in a year’s time the BBC will set up a rival and drive him out of business.

I am delighted to participate in our debate and intend to be brief so that another Member can contribute.

I congratulate commercial broadcasting organisations throughout the United Kingdom, and not just Scotland. In the spirit of the contributions from the hon. Member for Wantage (Mr. Vaizey) and my hon. Friend the Member for North Swindon (Mr. Wills), I shall consider whether the BBC contributes to the well-being of broadcasting and whether there is cross-pollination. We have excellent commercial broadcasting, simply because of the existence of the BBC, which drives up standards. In our debates, we must focus on transparency and the cost to licence fee payers while supporting the BBC and the innovations that it hopes to achieve.

The White Paper on the BBC outlined clear pathways in respect of what the BBC is about, which is high-quality programmes that are challenging, original, innovative and engaging. Those are qualities that we can all sign up to, and they offer a clear opportunity for the BBC’s future. In the few years preceding the White Paper, we began to wonder about that future, but I firmly believe that this debate will demonstrate that it is very safe.

I well remember that a constituent of mine, Mr. Wheeler, launched a one-man campaign to get himself on to the BBC board of governors, because he was very concerned about its lack of openness and transparency. He had an absolute hatred of the irritating little logo that appears in the corner of the screen from time to time—many Members present probably share that view—often in the middle of an important programme. Mr. Wheeler will greatly welcome the new plans for the BBC, because they very much involve what he was looking for: a champion and a proper voice for licence fee payers, to ensure that there is no muddling of their views.

We may not be actually pleased to pay the licence fee, but, as with most of the bills that we receive, we know that we have to. However, we have to make sure that it is worth paying, and this debate is about ensuring that we understand that point. We must keep a careful eye on the most vulnerable groups, who may have difficulty paying their fees. Although this point does not relate strictly to the BBC, I sincerely hope that we will look carefully at the criminalisation of licence fee payers. I do not believe that people should not pay the licence fee simply because they cannot be bothered, or because they do not think that they need to, but we should take a genuine look at those for whom paying is a major problem.

The problem with today’s debate is that the biggest issue in broadcasting has not been raised: the demise of “Top of the Pops”, which is a very serious matter. Looking around the Chamber now, I see quite a few Members who must have watched the show at a particular time. However, although its demise is sad, I completely understand the reason for it. This is an opportune moment to reflect on its demise and to realise the difficulties that the BBC faces. For many of us who grew up in the 40 years since it was first broadcast, “Top of the Pops” was the only way to get to know exactly the sort of music to listen to, and who was fashionable and what they were wearing. Young people today have a very different panoply of media to go to, which demonstrates the challenges facing the BBC.

I have noticed that there is a growing interest in podcasting. It is now possible to get John Humphrys on tap; to be frank, that would not be heaven for me, but it is a different way of using our media. We need to respect and understand why the BBC has to change, and why Members of Parliament need to take a close interest in these issues on our constituents’ behalf. I hope that the Minister will say a little more about the question of Members consulting constituents on these issues, because we are interested in their views and want to put them forward. We also want the BBC to thrive and flourish.

Mr. Philip Dunne (Ludlow) (Con): It is a pleasure to follow the hon. Member for Crawley (Laura Moffatt), and I congratulate her on bringing the passing of “Top of the Pops” into this debate. She is right say that that illustrates that programming has to change and evolve regularly. It is extremely rare to find a BBC programme that has endured as long as “Top of the Pops”, and personally, I see its passing as a sad reflection of my advancing middle age, as much as anything else.

In the time available to me, I should like to touch on a few points, the first of which is the size of the licence fee. The Minister said that the Government were going to take time to get it right and that the proposed increase would not be excessive. I regret to say that he did not tell us the criteria by which that increase will be judged, or the methodology that the Secretary of State intends to use in arriving at the eventual figure. The Minister did claim that the licence fee had declined as a percentage of household income in recent years—I think that that was the comparison he made; I fail to recall exactly what period he was referring to—but that is not a very spectacular claim when the cost of media hardware and software has been falling around the world. It is because costs have been coming down, thanks to technological advances, that there is such a proliferation of alternative outlets for media use, so there is no great argument over whether the licence fee, as a proportion of household income, should be coming down. By definition, it should be, so such a decline is no justification for the above-inflation increases that the BBC is proposing.

Why should the BBC get the generous settlement that it seeks for the next seven years? It is looking for twice inflation, guaranteed for seven years. In the context of any other economic endeavour, that would be extraordinary. Across the commercial sector, any sector would be delighted to have a guaranteed source of income of twice inflation during an era of rapid price deflation in most of the markets in which it operates.

Let us compare another sector, the water industry, which is subject to regulatory oversight by a regulator, Ofwat. Water bills are affected by the K factor. In the first years after the water industry was privatised, that meant inflation minus a K factor. Subsequently that has changed to a positive K factor, but not to the level sought by the BBC. All that took place when the water industry had an enormous capital expenditure obligation to fulfil each year to renew its decaying pipe infrastructure, which had been in significant decline. Can the Under-Secretary of State for Culture, Media and Sport, the hon. Member for Tottenham (Mr. Lammy) tell us what comparators the Government will use when they come to set the licence fee?

In an intervention on the Under-Secretary of State for Culture, Media and Sport, the hon. Member for St. Helens, South (Mr. Woodward), I raised the issue of transparency. I very much welcome the pledge given by my hon. Friend the Member for East Devon (Mr. Swire) to bring the BBC within the remit of the National Audit Office under the next Conservative Government and to allow the Public Accounts Committee to scrutinise all spending of the licence fee, and not just by permission. I was disappointed by the Minister’s reaction. He was signally unable to give a single example to support his contention that that would mean some undermining of editorial integrity. I will take up his generous offer and write to him, to give him an opportunity to explain what he has in mind.

There is no doubt that as technology constantly evolves and the outlets for BBC output expand, there is a need for regulatory oversight of this increasingly substantial amount of what is effectively a tax, as we have heard today. That in itself justifies the full scrutiny powers of the National Audit Office.

I shall touch briefly on two aspects of what the licence fee should cover. The Minister spoke about digital switchover. It is appropriate for the BBC to have a responsibility to secure coverage for those who are paying for the service. I raise the matter with an eye on my constituency and my own household. At present, analogue access is poor on both sides of the Welsh border, including in my constituency in Shropshire, where many households, including my own, do not receive a clear signal through an aerial. [Interruption.] From a sedentary position, my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) includes Shrewsbury in that category. I am sure he is right. In my home it is not possible to receive BBC Radio Shropshire either, because of the topography.

At present, I understand, there are no plans for the digital signal to expand its coverage when the analogue signal is switched off. It is entirely reasonable that part of the increase in licence fee should be used to bring TV coverage to people who are paying their licence fees, so that we achieve 100 per cent. coverage. It is extraordinary in the 21st century that we are proposing a new system of technology that does not allow for universal coverage.

If the hon. Gentleman will excuse me, I have very little time.

On the second service aspect, Labour Members referred to the pilot local TV service that has been introduced in the west midlands, covering six counties, including Shropshire. For hon. Members who are not familiar with it, the service provides a 10-minute per hour magazine-style feature of four to six packages. It is a high-quality service, as one would expect from the BBC. It is welcome to those of us who occasionally feature on it and, I assume, to those who are able to view it.

The service is of considerable concern to the commercial media outlets. Representations have been made by local newspapers in particular, whose revenues are under pressure from the decline in advertising revenues, about which we have heard. It is important that a market impact assessment be undertaken on the impact of the local TV service before we find ourselves setting up a tax-funded monopoly that crowds out other local outlets.

It will take me about one minute to express my thoughts.

I am glad that we are having this debate, although I am curious about where the Secretary of State is today, because we have still not had a response from the Government on that front.

We are all products of the BBC, which I grew up with. One of my heroes was Brian Cant on “Playschool”, and I am sure that everyone was moved when John Noakes’s dog died on “Blue Peter”. I also remember when “Nationwide” flummoxed us all by giving us the impression that spaghetti grows on trees. We take an interest in the BBC not only because we are taxpayers, but because it has been part of our lives throughout the past few decades.

Why has the National Audit Office been ruled out of having an accounting profile in looking after the BBC? The Minister was asked twice to give an example of when the editorial content of the BBC would be challenged if the NAO were to play a role.

Although the debate has been thorough, we need another, because we have identified more questions than answers. I hope that the Under-Secretary of State for Culture, Media and Sport, the hon. Member for Tottenham (Mr. Lammy) will reflect on some of those questions when he winds up. We still do not know how the trust will be made up, how accountability will be established, why the NAO will not have a role or who will pay the spectrum charge.

Time is running out, but I hope that we will have more opportunities to debate this important aspect of British society.

My hon. Friend the Member for Bournemouth, East (Mr. Ellwood) has summed up our proceedings this afternoon by pointing out that the debate has raised more questions than answers. Judging by the list of speakers, the debate has been popular, and it is regrettable that they had so little time because the Minister took nearly an hour of Opposition time at the Dispatch Box.

No, I will not give way. It is normal courtesy for the Minister who is leading on an Opposition day to say why the Secretary of State is not present.

The Minister has said that the BBC will get the settlement that it needs to deliver public service broadcasting—a sentiment with which we can all agree—but without proper debate the charter review and licence fee settlement will not enjoy universal or even majority support. He boasted of the unprecedented consultation conducted by his Department, but are the Government and the BBC actually listening? We cannot have a proper debate without openness and transparency, particularly in the definition of what actually constitutes public service broadcasting and in the detailed scrutiny of the figures and planning assumptions behind the BBC’s application for an unprecedented increase in its licence fee.

Indeed, the Minister seems miffed that we have called the debate, which was warmly welcomed by my hon. Friends the Members for Shrewsbury and Atcham (Daniel Kawczynski), for Wantage (Mr. Vaizey) and for Maldon and East Chelmsford (Mr. Whittingdale) and the hon. Members for Bath (Mr. Foster) and for Eccles (Ian Stewart). It is no argument to say that the Government are calling a debate on the BBC next month, because that debate will cover only charter renewal and not the licence fee.

My hon. Friend the Member for East Devon (Mr. Swire) has already mentioned the DCMS website, but the Minister failed adequately to deal with his point. The section of the DCMS website entitled “BBC charter review” states that the charter review is expected to be completed in mid-2006. It also states:

“Mid 2006 Licence Fee level agreed”

and—this is the crunch point—

“Mid 2006 Parliamentary debate on Charter and Agreement.”

In other words, both the charter and the licence fee were expected to be on the table for next month’s debate.

On 6 June, however, the Secretary of State, who was speaking to the all-party group on the media at a Channel 4 bash, said that the decision would be made towards the end of the year. Why did the media section of The Guardian state that that comment scotched speculation that a deal might be concluded before Parliament goes into its summer recess? The “speculation” was on the DCMS website. Mid-2006 does not mean October and November, but June and July—when Parliament is sitting, not when it is in recess.

The DCMS website gives the game away. Something has happened between the publication of that and what the Minister said today and the Secretary of State said at the drinks bash the other evening. The real reason is that the DCMS has been rocked by criticism from the independent commercial sector. The PKF report commissioned by the Department, which is yet again mired in an ongoing difference of opinion with the Treasury, concluded:

“there are a number of areas which point towards a significant need for discussion in regard to the BBC’s Red Book bid for the licence fee settlement for the next period. We consider that our detailed report contains specific information for the Government to progress discussions with the BBC which would point to a lower settlement than currently sought. There are, however, a number of areas, especially in relation to digital switchover, where figures can only be finalised following policy decisions by Government”.

In his excellent opening speech, my hon. Friend the Member for East Devon called for several questions to be answered. We need proper scrutiny of the BBC through the National Audit Office, not the voluntary scheme that we have at the moment. What is the point of the NAO being told by the BBC when it can and cannot look into financial matters? The Minister said that the NAO should be involved in licence fee negotiations. Perhaps the Minister who responds could clarify what he meant by that. He said that there could be an attack on editorial independence, but he did not answer a straight question and give some examples of what he meant by that.

Will the Minister confirm at the Dispatch Box next month, when we have the debate on the charter review, that all the figures featured in the Government’s negotiations with the BBC will be public and transparent so that everyone can see what is going on? There has been a powerfully expressed view in the media that the bid offered by the BBC in October 2005 requesting the RPI plus 2.3 per cent. settlement presents no more than a superficial wish list of spending demands that is not grounded in adequate evidence or justification. The House of Lords Select Committee on the Review of the BBC Charter said that the BBC’s costings were

“rudimentary and could be significantly reduced…the BBC has admitted that the figure in the bid was based on the easiest calculation possible rather than on a real estimate of how best value could be provided.”

The PKF report found that

“costings used to support the investment programme are generally best estimates…in the past five years…the BBC…has delivered only marginal cash releasing organizational efficiency savings”.

Several Members pointed out that the extra money going to the BBC in future might distort the marketplace and stifle innovation. My hon. Friend the Member for Maldon and East Chelmsford said that it would crowd out competition and asked why Ofcom will have only a limited input in looking into BBC practices. According to the way in which the charter review is worded, the BBC Trust will act as both poacher and gamekeeper. Licences for online services seem to be lumped together whereas, as several hon. Members have said, each online activity should have its own specific licence.

A report published last month by the consultancy, Indepen, commissioned by ITV, said that the BBC’s bid risked fuelling “super-inflation” in the recruitment of on-screen talent. It also claimed that the proposed above-inflation rise in the licence fee would hit lower-income families harder and contradicted the BBC’s claim that the cost would fall as a percentage of disposable income.

I have had only 10 minutes and there is much more to say, but I need to leave 10 minutes for the Under-Secretary’s winding-up speech. It is a pleasure to see the Secretary of State in her place. However, it would have been far better if she had been here at the start to deal with the Government’s lack of response on the subject.

The debate has been stimulating, and pre-empts the debate that we scheduled for next month. Some constructive—but also not so constructive—contributions were made on a range of issues.

During the charter review, we found a great appetite for discussing the BBC among the range of stakeholders and the public. It is clearly one of the nation’s most trusted and loved institutions, which touches the lives of almost everyone in the country. That appetite has been reflected in the breadth of debate today and the wider parliamentary and public discussion that has taken place in the past two and a half years. Hon. Members will have another opportunity to debate the new charter and agreement in full. That will provide further openings for hon. Members to make their points.

The policies in the White Paper that are given life in the new charter and agreement provide for a strong BBC, independent of Government but accountable to licence fee payers. They provide for a BBC that will co-exist with a vibrant and dynamic commercial sector, which is the envy of the world. They also provide for a BBC that can continue to fulfil its role as a trusted guide, bringing the benefits of new technologies to audiences.

The BBC has always played such a role, from the earliest days of radio, to black-and-white and then colour television, to FM radio, digital television and radio and the internet. We have much for which to thank the BBC. In many ways, it has grown the market. That is why I do not agree with the hon. Member for East Devon (Mr. Swire), who contests the idea that Mark Thompson should be ambitious to ensure that the BBC competes with the best in digital and online services.

We have heard a great deal today from Opposition Members, especially the hon. Members for East Devon and for Maldon and East Chelmsford (Mr. Whittingdale), about a lack of parliamentary involvement in setting the licence fee. As my hon. Friend the other Under-Secretary set out in a compelling case, apart from the fact that Parliament has the right to object to changes in the licence fee, the process so far has been characterised by an openness not previously experienced under any Government. I remind Conservative Members that since the BBC’s inception, most charter reviews have been conducted under Conservative Administrations. There has been more openness under the Labour Government than ever before.

The public have told us that they do not want Parliament to have more control than it currently has. That raises wider issues beyond the scope of the debate, but it means that the focus of the argument has been, rightly in the Government’s view, on the public rather than the parliamentary sphere. However, in that context I pay tribute to the work of the Select Committee on the BBC Charter Review in another place, whose thorough scrutiny over a lengthy period has contributed much to the debate. I must not overlook the work of the Select Committee on Culture, Media and Sport, whose review in 2004, towards the start of the process of charter review, set the tone. We are especially indebted to my right hon. Friend the Member for Manchester, Gorton (Sir Gerald Kaufman), whose characteristically robust approach was of considerable influence.

Today, my right hon. Friend set out, in an insightful and intelligent speech, the opportunities and challenges that the BBC and the media more widely face as technologies change. We agree that the BBC must be able to respond and even lead the changes, to stay relevant to licence fee payers. It is also important that the BBC should not stifle growth and development in the commercial sector. These principles are at the heart of the new charter and agreement.

The hon. Member for Bath (Mr. Foster) was supportive of the new arrangements to the extent that he agreed that we should keep the licence fee. He also agreed about the role of—

I will not give way, given the short amount of time that I have available.

The hon. Member for Bath agreed that—

On a point of order, Madam Deputy Speaker. For the benefit of the House, will you tell me whether I am right in saying that this debate does not have to finish at 4 o’clock?

That is absolutely right, but it is in the gift of Her Majesty’s Opposition to determine when the debate finishes, and I have had an indication of when they wish that to happen.

I want to reassure the hon. Member for Bath that the new trust will be a powerful body that will have ultimate responsibility to the licence fee payer, as defined in article 9.3 of the agreement. Hon. Members have raised the issue of the delay in the announcement of the licence fee, but we have never specified the date on which we would make that announcement. We have said that this is an important issue and that it is right that we think about it clearly and work with the BBC and others to get it right. We will make that announcement in due course—

I have said to the hon. Gentleman—I hope that he can understand English—that in the four minutes that I have available, I will not give way. I want to deal with the points that all hon. Members have raised.

The hon. Member for Maldon and East Chelmsford raised the issue of the role of Ofcom and the BBC Trust in relation to the public value test. We recognise that Ofcom has a key role to play, in that it will provide the market impact assessments that will be an important element of the public value test. The hon. Gentleman says that he accepts that. The trust will be the body that is responsible for upholding the interests of BBC licence fee payers, so it is right that it should make the final decision about whether a new activity should go ahead. It must make such decisions objectively, after consultation, and it must publish the reasons for its decisions. The hon. Gentleman also—

On a point of order, Madam Deputy Speaker. I am left with no alternative but to raise a point of order as the Minister will not let me intervene on him. He has raised a number of points, not least on the delay in the announcement of the licence fee. As you have heard, this was announced by the Secretary of State—who has now honoured us with her presence— albeit at a drinks party rather than in Parliament. Neither she nor any other Minister has given any proper explanation as to why they were unable to attend this debate. I understand that the Secretary of State was at the lottery monitor conference this morning in London, but she was spotted at a nearby restaurant between the hours of 1 and 2 o’clock, when she could readily have been attending this debate to do her job—

Order. That is not a point of order for the Chair. The appointments of any Minister or any Member have nothing at all to do with the Chair.

Thank you, Madam Deputy Speaker.

The hon. Member for Maldon and East Chelmsford raised the issue of the BBC’s income increasing by £1 billion. Much of its additional income is due to its own efforts to reduce evasion and cut collection costs, which must be a good thing. Over the period, the range of services offered by the BBC has grown and licence fee payers and the public say that they support that.

My hon. Friend the Member for Eccles (Ian Stewart) gave an engaging speech about the importance of the BBC’s move to the north-west to that region. Underlying his comments was his deep concern, as we would expect, with issues of social inclusion. We rightly welcome the latest indications from the BBC governors that they are serious about moving significant amounts of production to centres outside London. The governors’ announcement on 15 June to give Salford preferred bidder status—

Mr. Patrick McLoughlin (West Derbyshire) (Con) rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the original words stand part of the Question:—

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.

Madam Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.


That this House notes that the decision on the next licence fee settlement will represent best value and be announced in good time to take effect before the current settlement expires in April 2007; further notes that the decision-making process has been one of unprecedented public consultation and transparency and that the settlement should ensure a strong and independent BBC; further notes that the costs of switchover will be one of the considerations in setting the level of the licence fee; welcomes the strengthening of the arrangements for the National Audit Office’s involvement with the BBC; and recognises that changes to the level of the licence fee are subject to Parliamentary scrutiny by the negative resolution procedure.’.