To ask Her Majesty’s Government what steps they will take to increase the number of suitable applicants for school headships.

My Lords, in 2007, we asked the National College for School Leadership to develop a succession planning strategy to ensure that we have a sufficient number of suitable applicants for headship. That work is undertaken locally through local authorities and faith bodies and tailored to specific needs. The National Professional Qualification for Headship ensures that new heads have the right skills for the job. We shall launch the new Accelerate to Headship programme next year.

My Lords, I thank the Minister for that reply and for the good news that she has given. The evidence from Professor Howson’s research at Warwick shows that one in five of our schools has had to readvertise for headships and that schools are having great difficulty in recruiting. Does she agree with the two head teacher associations, which have said that the reason for this is that there have been so many changes from the Government over education and that heads suffer from bureaucracy, workload and expectations?

My Lords, I often agree with the unions on many matters. However, we have a significant demographic challenge around the numbers of heads who are approaching their entitlement to retirement. There are important demographic issues here. We should find hope in the fact that the NCSL’s headship indicator in 2008 showed that 151,000 teachers—35 per cent—have the ambition to become heads. While we have a really major challenge in securing enough heads, there is a great deal of hope for the future in these people coming forward.

My Lords, the matter is very complex, but does the Minister agree that part of it must be proper career progression? In other words, we must make it worth while for teachers to seek promotion into the management team, where they can get experience and take some of the responsibilities of head teachers and then be supported properly when they do the leadership qualification.

My Lords, the noble Baroness is right. Getting the right leadership team at the top of a school is very important. Obviously, that is a challenge in some smaller schools and faith schools. However, we are working through the NCSL with local authorities to promote succession planning, and we know that the programme is starting to reap results. So I think that the noble Baroness makes a good point.

My Lords, to inject an element of party politics into the questions, is it not true that under this Government primary schools have improved enormously? Therefore, they are more popular and more parents want their children to go to them, which will shortly be reflected in an increased number of excellent heads.

My Lords, I am delighted to do so. Let us be absolutely clear about this: we have invested in more schools, we have better school property, we have more teachers than ever before and we have better results than ever before. I am optimistic that more teachers than ever before would like to go forward and become head teachers.

My Lords, what is the cost to her department and to local authorities of schools having to employ large numbers of temporary agency staff?

My Lords, it might be difficult to pinpoint that exact figure. The important thing we need to look at is the vacancy rates. The vacancy rates for the maintained sector have remained stable at below 1 per cent. That is very important because the demographic change in the headship population is a challenge. By 2020, 55 per cent of the current head teacher workforce could be looking at retirement, so there is a specific challenge. We have invested £30 million in our succession planning strategy.

My Lords, I salute the Government’s investment in teachers over the years. Is the Minister aware of the excellent support offered to groups of head teachers—highly valued by them—by the child psychotherapist Emil Jackson based at the Brent Centre for Young People? May I write to her on his work?

My Lords, I should be very grateful to receive such a letter.

My Lords, will the Minister give her view on the arrangements made in Kent of federations with so-called superheads heading up groups of schools, which obviously facilitate the overseeing of head teachers being trained up in such schools? I think it is a very good arrangement. Does the Minister agree?

My Lords, I agree with the noble Baroness’s analysis. We need to be ambitious, flexible and creative about developing the future population of heads by ensuring that schools work together, work in partnership and use mentoring, and that local authorities are activated about the innovative solutions to which she refers. We have to have a flexible approach.

My Lords, going back to the questions of the noble Baronesses, Lady Walmsley and Lady Shephard, how are current head teachers being encouraged to make both time and resources available for existing members of their management teams to engage in personal development activities? On the whole, teachers are hard-pressed and finding time for these personal development courses is pretty difficult.

My Lords, as the noble Baroness knows, the Government take very seriously the need to tackle teacher workload. We recognise that head teacher workload particularly remains high. I am encouraged that, following the work done around the national agreement with our social partners, we have seen a reduction in the average weekly working hours. Part of this is about making sure that there are new entitlements for protected time for such matters as concentrating on leadership and management and guaranteed time for planning and preparation of teaching work where head teachers still have a teaching load. A lot of hard work is being done to give head teachers protected time for their responsibilities and to reduce the overall average weekly working hours.

My Lords, does the Minister agree that the skills required for teaching in a school and for running a big school are very different and require different people to do them. What are the Government doing about making the career path easier for teachers who are not terribly good at teaching but very good at administering? At the moment, it seems to be the academics who normally come to the top.

My Lords, we have done a number of things. One of the most important has been developing the role of support workers in schools, such as the school bursar, to ensure that head teachers can concentrate on the leadership of teaching and learning in a school. As the noble Lord suggests, we must ensure that we allow school staff to play to their strengths and deliver to the best of their abilities.

To ask Her Majesty’s Government whether the United Kingdom will be represented at the Holocaust Era Assets Conference to be hosted by the Czech Republic in Prague.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. I declare a possible interest, in that there might be a claim by members of my family.

My Lords, I can confirm that the United Kingdom will be represented at the Holocaust Era Assets Conference which will be hosted by the Czech Republic in Prague on 26-30 June this year.

My Lords, I thank the Minister for that assurance. Is he aware that there are some elderly British Holocaust survivors who have tried in vain to recover some part of the property that they once owned in Poland? Will he ensure that our delegation focuses on the failure of the Polish Government, alone among European nations, to enact any restitution law relating to property seized by Nazis and communists despite repeated undertakings and obligations owed under European and international law—this after 20 years of democracy?

My Lords, the noble Baroness is quite right that Poland lags behind other countries in this regard. We have been regularly lobbying the Polish Government on this point. We understand that a draft law on restitution is under discussion by the Polish Council of Ministers, which is expected to go to their parliament later this year. I assure the noble Baroness that we will continue to lobby for its implementation.

My Lords, I declare an interest as a trustee of the Foundation for International Cultural Diplomacy. Is it the Government’s intention to work towards the establishment of a regime of international law that would enable the resolution of cross-border disputes about cultural property on a consistent and effective basis as an improvement on the present hodgepodge of national jurisdictions which so often renders a just solution impossible?

My Lords, my noble friend makes an interesting point; if it is not our intention, I suspect that it should be. I would like to look into this further, but he is quite right that there are currently a lot of different jurisdictions through which people must work to try to achieve restitution. The system does not offer even, transparent justice for these claims.

My Lords, will the Minister accept that we on this side of the House strongly support the point made by the noble Baroness, Lady Deech? Does he agree that it may not be fully appreciated that this conference is not just about Jewish, but also non-Jewish, claimants? It is not just about property seized by the Nazis and their German supporters in the Second World War without restitution, but also property seized or held by the communists and not returned to the original claimants. Will the Minister ensure that our strong delegation is instructed to press Poland hard, and to press the general point that the most ghastly event of the 20th century—maybe of all time—is never forgotten?

My Lords, I completely endorse what the noble Lord has said. This is an important conference and we are sending a large delegation. It is the latest in a series of conferences, the first of which was held here in London and which was followed by an important one in Washington in 1998. We must keep the momentum moving forward and, as the noble Lord rightly says, we must not forget that what spurred this was that most horrific of events, the Holocaust.

My Lords, thinking of our own obligations here, with all-party support, Andrew Dismore’s Holocaust (Stolen Art) Restitution Bill has reached Public Bill Committee stage. I declare an interest as chairman of the Association of Leading Visitor Attractions, members of which include virtually all the museums and galleries named in the Bill.

The Bill only covers England and Wales. Can the noble Lord tell us how discussions with the Scottish Executive are proceeding?

My Lords, as the noble Lord knows, the UK Government support the Bill. To be honest, I am not aware of where it stands with the Scottish Executive, and I will get back to him on that.

My Lords, Britain has led the way and made great efforts to achieve the implementation of the 11 Washington conference principles formulated in 1998. We should not forget that the late Robin Cook, who was then our Foreign Secretary, was hugely instrumental in building the initial 1997 restitution conference in London, which I attended. What steps will Her Majesty’s Government now take at this month’s Holocaust Era Assets Conference in Prague to encourage other countries to follow Britain’s lead in implementing these principles? Does my noble friend consider that these should be achieved by the conference and, if so, how?

My Lords, we hope that the force of the delegation we send, which may even include my noble friend, will ensure that we are able to carry this agenda forward. As he indicated, its roots lie in the original conference organised here in London in 1997. A number of issues have been tabled for the meeting, which I think everyone involved agrees is a watershed meeting. We have to get closure, because a number of claimants are very elderly, and this may be the last chance for some to make a successful claim.

My Lords, as I served on the Claims Resolution Tribunal for Dormant Accounts in Switzerland, which was very successful in finding the rightful owners of the assets, may I suggest that the experience of that tribunal may be relevant if progress is made in this case?

My Lords, I will certainly take that point under close advisement.

My Lords, in view of the importance of the conference, will the Minister attend it? If not, which Minister will?

My Lords, we are watching with interest to see at what level delegations will be led. I have other commitments on those dates. If we need to send a Minister, we will, but at the moment it appears that most delegations will be led at the senior official level.

My Lords, as somebody who has benefited indirectly from compensation paid by Germany to my mother, who was a refugee, I know that it made an enormous difference to how she felt about the land of her birth, although she was a very proud British citizen. Will the Minister assure the House that today, which is the 20th anniversary of democracy in Poland, he will make representations to the Polish Government, as we have heard that there will be legislation next year or later this year—we have heard that before—that this Government hope to see the relevant legislation passed in Poland?

My Lords, as I said, we are making representations but, given that 20th anniversary, I take this opportunity to say for the record that we hope the Polish Government will finally do the right thing on this.

To ask Her Majesty’s Government whether they support the implementation of Sharia Law in the United Kingdom.

My Lords, Sharia law is not part of the law of the United Kingdom and the Government have no intention of making any change to that position.

My Lords, I thank the noble Lord for that reply which, however, suggests that the Government may be disturbingly complacent about the fact that Sharia law is incompatible with the values and law of this country, as it denies not only equality before the law between men and women, Muslim and non-Muslim, but also freedom of religion. So, first, will the noble Lord give your Lordships a clear assurance that Sharia law will never be allowed to take precedence over British law? Secondly, and for instance, will Her Majesty’s Government take steps to ensure that resident Muslim men will no longer be allowed to commit bigamy by bringing in their second, third and fourth wives and all their children to enjoy the benefits of our welfare state?

My Lords, I shall repeat myself: Sharia law has no jurisdiction in England and Wales. We do not intend to change that position. Regardless of religious belief, we are all equal before the law. We cannot prevent individuals seeking to regulate their lives through religious beliefs or cultural tradition. Communities and other groups have the option to use religious councils or any other system of alternative dispute resolution and agree to abide by their decisions. Nothing in the law in England and Wales prevents people abiding by Sharia principles if they wish, provided that their actions do not conflict with the law in England and Wales. If they do, the law in England and Wales prevails.

My Lords, is the noble Lord aware that Shaykh Siddiqi, the chairman of the governing council of the Muslim Arbitration Tribunal, tells us that six cases of domestic violence have been dealt with by it resulting in anger management classes being ordered against men, but with the women then dropping their complaints to the police and the police investigations ceasing? Does the Minister agree that that is highly undesirable, and that women should be properly advised on their rights when they come before these tribunals?

My Lords, my understanding was that the Muslim Arbitration Tribunal, which works only under the Arbitration Act 1996, did not deal with matters involving crime or family law. Sharia councils can deal with matters under family law, but of course either party can get consent from the family courts in this country. That consent will not easily be given to any arrangement that is not satisfactory. The noble Lord will also know what huge advances have been made by the courts in terms of domestic violence and the practice direction that the president put out in 2008.

My Lords, is the Minister aware that Sharia family courts and councils were introduced into Canada at the request of local Muslim community leaders, but were subsequently withdrawn and proscribed when women were allowed proper consultation? Many of those women argued that they had gone to Canada precisely to flee Sharia provisions. Will there be opportunity for similar adequate and comprehensive consultation with all women on the issue in this country?

My Lords, we very much intend that that should be the position. The most practical and effective way of ensuring that the vulnerable are protected is to encourage the registration of mosques and imams for the purpose of carrying out marriages that comply with and will be recognised under the Marriage Act. We are working to achieve that and to raise awareness, particularly among Muslim women, of the formalities required for a legally recognised marriage in England and Wales. I am grateful to the noble Baroness for sending me helpful material before that question was asked.

My Lords, the Minister sets out the legal position very well, and I am sure that we all absolutely support him in that. However, does he recollect that, a few years ago in the East End of London, there was a system of arbitration of disputes run by the Kray brothers? Is he not aware that extreme pressure is put on vulnerable women to go through a form of arbitration that results in them being virtually precluded from access to British law? That is a difficult matter, I know, but how does he think that we can help those who are put in that position?

My Lords, the noble Lord sets out a problem that undoubtedly exists, but any decision made by anybody that is outside English law cannot stand against English law. For example, if consent is sought for some issue around children or family assets, the English courts decide. Other councils—not courts—can make an agreement, if the parties themselves want to. That applies across the board, but always behind that is the fact that those agreements cannot be enforced except by an English court.

My Lords, can the Minister confirm whether the Government, and specifically their officials connected with the area, are appropriately aware of the distinction between Sharia and Sharia law? Are Muslim arbitration tribunals engaged in the adjudication of dispute resolution in the spirit of Sharia, or in the implementation of Sharia law as an alternative to English law?

My Lords, the Muslim Arbitration Tribunal may apply Sharia law only, and I emphasise only, if the disputing parties expressly agree in all arbitrations that decisions will be enforceable by the English and Welsh courts and the requirements of the Arbitration Act 1996 are satisfied. If any decisions by these tribunals were illegal or contrary to public policy under the law in England and Wales, they would simply not be enforceable. As I understand it, the Muslim Arbitration Tribunal deals largely with civil matters between two parties who agree that the decision of the arbitration tribunal will stand. If one of the parties then breaks the agreement, the course would be to go to the English courts to make sure that the matter is put right.

To ask Her Majesty’s Government what discussions they have had with the Governments of China and Russia to encourage a united response to the decision of the North Korean Government to conduct an underground nuclear explosion, to fire six short-range missiles, and to revoke the truce that ended the Korean War in 1953.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare a non-financial interest as chairman of the All-Party British-North Korea Parliamentary Group.

My Lords, we are working with UN Security Council partners including China and Russia to secure a robust resolution in response to the nuclear test carried out by the DPRK on 25 May. This includes action in New York as well as in capitals. What has happened is a breach of UN Security Council Resolution 1718 and we have strongly condemned the DPRK Government for their action. The DPRK’s decision to fire short-range missiles and the threat to “rip up” the 1953 armistice agreement are provocative and will further damage regional stability.

My Lords, I am grateful to the Minister for that reply. Does he recall that, when the armistice was signed in 1953 at the end of the Korean War, 3 million people had died, including 1,000 British servicemen? Did he note the figures from the report that my noble friend Lady Cox and I sent to him following our visit there in February of this year that the United Nations estimates that some 400,000 people have been executed by the regime, that 200,000 are in the camps and that 2 million Koreans died in North Korea during the 1990s as a result of the famine? Should not North Korea’s decision last week to revoke the 1953 armistice underline the urgent need for a concerted effort to prevent a repetition of a major war and the inevitable exodus of refugees into China—that is certainly disturbing the minds of Chinese diplomats at present—and for engagement in a Helsinki-style process? In the present dangerous climate, would not a declaration by the United States of a willingness to establish a diplomatic presence, as we have done in Pyongyang, and of the need to create a treaty to end the war be the first steps in a Helsinki-style process of engagement?

My Lords, the noble Lord and the noble Baroness, Lady Cox, made an important report after they returned from North Korea, which emphasised the need, as the noble Lord has done again in his Question, to balance the sticks of sanctions against the carrots of diplomatic engagement. Fundamentally, that remains the right twin track. Obviously, in the face of such extraordinary provocation by the regime and such a direct threat to regional stability, this is perhaps not the moment to be talking about the Helsinki engagement track. There must be a firm response, but over time we must return to engagement, because this is in every sense an outlaw regime, which is doing appalling things to its citizens outside the limelight of global public opinion.

My Lords, is the Minister aware that, while we are meeting here this morning, two journalists are on trial in Pyongyang, having been arrested on the border with China after reporting on the flow of refugees into China and the terrible fate awaiting those who are forcibly returned, who are regularly imprisoned and tortured? Can he inform the House whether our excellent ambassador in Pyongyang is monitoring that trial and working with other members of the international community to try to ensure that those journalists are not used as political pawns in the present confrontation over nuclear issues?

My Lords, let me reassure the noble Baroness that we certainly are monitoring the trial and have been following it closely. I think that Europe—not Britain alone—has some role as a bridge builder in the context of the DPRK, but we should not consider our influence to be more important than it is. This is a situation where the so-called contact group of six—the five outsiders being neighbours, with the exception of the US—probably has more direct influence on these issues than we do.

My Lords, we appreciate very much the expertise of the noble Lord, Lord Alton, and the noble Baroness, Lady Cox, on North Korea and the point about the need for twin tracks. However, have we not now reached the point where the six-party diplomacy has been brutally rebuffed by North Korea, which clearly has no intention of abiding by it at all? On the stick side of greater pressures, we should be mobilising and helping with the responsible efforts made by China and Russia, because they are the countries that will be most hurt by North Korea continuing on its wild course. Does the noble Lord accept that now really is the time to think about far greater examination of North Korean cargos and shipping, much more effort to stop North Korean arms exports and even travel bans on North Koreans so that serious pressure is imposed on this horrid little country?

My Lords, first, China and Russia are very engaged at the moment in crafting a sanctions resolution in New York and they are very much taking the lead in advising on which sanctions steps are practical to take and which, in the eyes of China in particular, might further aggravate the situation and become a casus belli that would further escalate the situation. I think that we have to defer to China’s judgment, in particular, on some of this because, as was said earlier, it is the country that would receive the influx of refugees and be most hit by a collapse of the regime or a renewed war. Secondly, yes, we need to hit hard against this provocation, but we also need to remember that there is a pattern to this. Missile and even nuclear tests have happened repeatedly and therefore the need for engagement remains important. Even Henry Kissinger, in an article yesterday, recommended that we try to keep the diplomatic track alive.

My Lords, perhaps on this day it might be appropriate to ask the Minister whether he agrees that North Korea, together with Burma, is the most sovereign country in the world, that UKIP members would clearly be happy to move there and that other countries have compromised their sovereignty by international co-operation to a much greater level. Having said that, I ask him to explain to us how we cope with a country that clearly depends on paranoia about the outside world to maintain its sovereignty. Is there any way that we, together with other countries, can promote cultural dialogue, with visits of one sort of another, to demonstrate that the outside world is not a threat to North Koreans and that the hostile approach to the outside world that keeps them going is self-defeating for them as well as for us?

My Lords, there is a balance between trying to keep engagement going and not allowing the regime to use its provocations and our reaction to feed its political base via paranoia. Ensuring that engagement keeps the lights on in the country is key. We were continuing English language training there, for example, and we continue to support the UN in its development and technical assistance programmes, but equally we cannot allow North Korea or the world to believe that this kind of flagrant threat to international peace can be left unanswered.

That Standing Order 41 (Arrangement of the Order Paper) be dispensed with on Thursday 11 June to allow the Motion in the name of Lord Tyler to be taken before the Motion in the name of Lord Bradshaw.

That the debates on the Motions in the names of Lord Bragg and Lord Haskel set down for today shall each be limited to two and a half hours.

That the draft regulations be referred to a Grand Committee.

To call attention to the contribution of the creative industries to the United Kingdom economy; and to move for Papers.

My Lords, I think that I shall wait a moment until the select few have gathered. I am grateful to have been given the chance to mount this debate. I hope that it will prove once and for all that the creative industries in this country are the flagship and the most powerful identifying characteristic of what we in the UK in the 21st century can do well both at home and abroad, and in the process enrich not only the economy but the minds and imagination of people here and around the world.

A recent analysis by NESTA suggests that between 2009 and 2013 the UK’s creative industries will grow on average at 4 per cent per annum—more than double the rate of the rest of the economy. By 2013 this sector is expected to employ about 1.3 million people—more than the financial sector; it is likely that there will be 180,000 creative businesses here compared with 148,000 today; and it is expected to contribute £85 billion to UK value-added, up from £57 billion today. Last April, the Business Secretary, the noble Lord, Lord Mandelson, acknowledged the contribution of the creative industries to Britain’s economy and said that it was central to ensuring the future success of the country.

I shall continue for a moment with statistics. For most of them, I am indebted to the National Campaign for the Arts, the UK’s only independent lobbying organisation representing all the arts, cross-party, cross-culture and, as its president, I can say always across the subject.

Moreover, it is worth hammering away for a few moments because there is still a stolid, ostrich, unimaginative conviction that the arts are somehow whimsical, marginal and verging on the dismissible. It is rumoured that even some of those in government still hold to that view. The industrial fact, to use the devil’s argument, is that the creative industries in this country have outstripped and will continue to outstrip even those ancient and venerable giants that powered and traumatised this country through the Industrial Revolution.

In 1997, our creative economy accounted for less than 4 per cent of UK gross value-added. In 2007, it stood at 7.3 per cent, having grown at 6 per cent per annum compared with 3 per cent for the rest of the economy. The UK has the largest creative sector in the EU and, relative to GDP, probably in the world. It employs a host of golden specialists who can and do travel the world with their crafts, works, books, music and arts, like roving European medieval scholars. Regarded as a sideshow by some, the overall impact of British theatre alone is £26 billion annually from a subsidy of £120 million.

The musicals of the noble Lord, Lord Lloyd-Webber, and Sir Cameron Mackintosh, for example, spin around the globe like Ariel in “The Tempest” and bring in profits simply unheard of in any other age. These two men started out as kids on the block doing the thing they loved but they were hugely aided by the cultural density in this country and, with that help, have become creators and supporters of highly specialised skills as well as writers, composers and producers of world renown in their own right.

Inside these statistics are individuals or very small groups who form an astonishingly modern cultural collective. Curiously enough, this is very like the way in which the first Industrial Revolution—the mechanised Industrial Revolution, probably the greatest revolution of all time—got under way. Talented, pig-headed, brilliant individuals—mostly in the north of England—followed their own obsessive path. I think that what we are seeing now is the first rocket stage of what will prove to be a creative cultural revolution that is perhaps just as radical and influential.

Take as a small example the 6,000 employees in Birmingham’s magnificently rejuvenated jewellery quarter—niche craftsmen who command a world clientele. They are joined at the hip with those northern inventors of the late 18th and 19th centuries. And we have a good enabling history here. Our progress in the creative arts is not a fluke: from the Committee for the Encouragement of Music and the Arts which came out of the Second World War; to Jennie Lee at the Arts Council in the 1960s; to Sir John Major and the noble Lord, Lord Gowrie, and the lottery funding—boom time throughout Britain; and on to the Labour Government who, since 1997, have put up funding by 73 per cent.

Private support has grown too, through tax breaks and philanthropy, and now the sum is more than £600 million a year. And of course there are shortcomings, and missed opportunities, and bureaucratic bungling, and the constraints of philistinism, and the British sound of moan which is sometimes justified. But fair’s fair. There has been an overall success, even triumph, in culture and the arts during the past 15 or 20 years, and until very recently it has been one of our best kept secrets.

Speakers in this debate will wish to cover different parts of the territory. I see my role as giving the overview, and I shall concentrate on only two or three specific aspects. I stress again that although larger economic forces are at work and must continue to work for the creative industries—of course we need art colleges and schools and academies for film, theatre and music; and we need structures such as the Arts Council and overseeing agencies such as the DCMS; and we need the BBC, with its invaluable and massive cultural presence; and other broadcasters, such as ITV, Channel 4 and now Sky Arts—in my opinion, this is at root the story of individuals. They must be allowed to breathe and flourish.

My fear, as I read government initiatives now climbing on what I hope I may be forgiven for calling the bandwagon, is that the weight, even the blight, of bureaucracy will stifle the enterprise of those individuals. Already in the past year or two, to take a small example, overcomplex rules about the playing of live music in pubs and clubs have not only threatened the seeding ground of our exceptionally successful popular music culture, but ruined many people's idea of a good night out.

An even more harmful example of unintended consequences of government regulation and interference was pointed out yesterday in the Times by Dame Joan Bakewell, the chairman of NCA. She wrote:

“The Home Office is making a mockery of Britain's reputation”.

She wrote that immigration controls are proving so unnecessarily difficult for artists from abroad, that they are turning away rather than waste time and money on our bureaucratic complexities. She wrote that Sokolov, the Russian pianist, lost patience and called off concerts at the Barbican and the Royal Festival Hall. The Iranian director of ENO’s “Cosi fan tutte” has not been admitted into the country. As Sir Richard Dearlove pointed out at the Hay Festival last week, over-extensions of the Terrorism Act threaten liberties elsewhere. For this country, a great international centre for the arts and a refuge for some of the greatest artists and musicians, to become a no-go area is surely the unacceptable fact of a lack of joined-up government thinking. Lord knows what they would have done at the time of the Industrial Revolution if they had gone north—probably strangle it at birth.

I fear the grasping claws of quangos. There is a fine book on oral history by George Ewart Evans entitled Ask the Fellows Who Cut the Hay. I suggest that the Home Office, the DCMS and all the other cultural bodies impale these words on their notice boards and websites. The arts in this country have always flourished either in solitary confinement or when two or three are gathered together in small clusters, in which individuals, a few like-minded individuals, have given us great riches. It is a delicate balance to cultivate without crushing, but to achieve that balance is one of the most important missions for the immediate future of the creative industries.

In my opinion, the way to kill the creative industries is to straitjacket them in regulations and subject them to that influential new army of consultants who, bewilderingly, claim merit from starting with a clean slate—that is, knowing nothing about the subject. Artists have their own slates and knowing about their subject is their life’s work, so ask the artists who do the work.

Of course, there is something to say about money. There always will be. Sir Christopher Frayling, who stood down as Arts Council chairman earlier this year and is still rector of the Royal College of Art, said recently:

“Most of the big performing arts companies get about a third of their funding from the Arts Council, a third from the box office and a third from merchandising or sponsorship. If government money wobbles during a recession … that means the second two-thirds of the funding will fall away too, which could be disastrous for many companies”.

Frayling’s successor at the Arts Council, Dame Liz Forgan, who has seen a small cut in comparative terms to the Arts Council budget, announced that an extra £445 million would be invested during the next two years specifically to help maintain artistic excellence during the economic turndown. That is the good news: there are good hands on the tiller.

Kevin Spacey, the artistic director of the Old Vic, is a remarkable and unusual example of success with a company that receives no public subsidy whatever. Despite that, he has put together not only an exceptional programme inside the Old Vic, but a thrilling programme of workshops, school projects and community productions involving literally thousands of children from low-income families who live just outside the Old Vic, in its immediate neighbourhood. He wrote recently that,

“the creative industries lead the UK economy and are the envy of the world. Having lived here for seven years, I genuinely believe that the UK’s pre-eminence in the arts and culture constitutes one of the nation's most powerful resources”.

Sometimes it is useful to see ourselves as others see us, such as Kevin Spacey and his fellow American, the late Sam Wanamaker, who recreated the Globe and gave us so much.

It would be flattering to ourselves to think that we had a natural and unique genius for the arts in this country, although perhaps there is something in that. More importantly, we have great traditions: first, in some of the finest artists and examples of the past centuries, but also in our colleges and in the workplace of theatres, orchestras and choirs. Perhaps even more important than that, it is a living tradition regrouped and refreshed through generations by new generations, and added to by them, and it goes on and on. The recent surge has been greatly helped by more training and interest in schools, as we see in our classical music, which is so strong at the moment, and tracks back through youth orchestras to school orchestras and now even to primary school orchestras. One million young people benefit from the Youth Music programme, and in the past few years more than 100 new arts buildings have been opened and more than 500 refurbished. It is not only classical music. The whole brass band tradition is undergoing a renaissance. We have the world’s leading brass band players among our children. And on popular music in this country, well, where shall we begin? There is a breadth and quality here unmatched anywhere outside the home of popular music, the USA, which has a five times bigger population.

I want to draw attention to an even more fundamental aspect of the creative arts. In the course of making a recent “South Bank Show” film on the violinist Tamsin Little, we went with her to Gallions Primary School in Newham, east London. She did several workshops with the children, and we filmed her performing with them. One of our team told me that the school is an inspiration. It opened eight years ago and took in children from multiracial, multilingual and very difficult backgrounds, including sink estates. Nearly all the children had failed in previous schools, and both they and their parents were disillusioned with the concept of education. To begin with, it was chaos, and the children were disruptive to the point of actually throwing the school furniture at each other. However, the staff had all been recruited because of their arts expertise, and they developed an ethos of arts education that would have an impact on the children's attainments, achievement and overall happiness. They obtained funding from JP Morgan and invested in musical instruments for the entire school. Every child studies music and plays an instrument. Within a week or two, certainly within a month or two, behaviour improved, concentration improved and results across the board in other subjects improved. It has had the most extraordinary effect, and the school is a delight to visit. When Howard Goodall did a film for the programme some years ago about choirs in schools, he came back with exactly the same story. However, there now seems to be a reluctance to develop and build on this, and that is worrying. Narrowly focused studies lead only to narrowly focused citizens.

All this has been hugely aided by the extension of free admission to some galleries and museums, a policy driven through by my noble friend Lord Smith of Finsbury, who sadly cannot be here today. Visitor numbers have risen by 87 per cent, but for me one further statistic stands out: since that happened, there has been a 21 per cent increase in visits from socio-economic groups C2, D and E, in short, people who would never have got there before, and some of them too will become part of the bedrock.

I must mention here the all-but-unimaginable rise in the numbers of festivals in all the arts, in music, of course, with the BBC Proms, nonpareil on the planet, and Glastonbury, too, in its own way, but let us talk about the literary festivals. From a few rather lonely outposts 20 or 30 years ago, we now have armies of audiences in their hundreds of thousands marching to the tent cities of Hay and Edinburgh, taking the town halls of Cheltenham and Glasgow, the Dome of Brighton and the theatre of Salisbury and captivating towns and villages across the land from Southwold to Keswick, from Bridport to Aldeburgh, from Ilkley to Chester to Bristol to Charleston. The land is alive with the voice of authors and the ever-growing involvement of readers.

We cannot overlook the London factor. This city now has a fair claim to be the greatest arts centre in the world. The regiment of institutions lined up along the South Bank makes it the jewel in its crown. This gives us a creative churn of invaluable enriching interconnections. The centre of our theatre is here, as is our film and television industry, many of our great and fine small galleries, the concert halls, opera and ballet, exhibition spaces and, of course, museums, some of which, such as the British Museum, have become works of art in themselves as well as housing great art. This cannot be overestimated, and I would stress again the influence of television, particularly in drama and film, which feeds into the film and theatre industries, irrigating and nourishing this metropolitan garden of delights.

Perhaps crucially, these industries extend the inner life, feed the energy for insights into a richer life and give people something like a faith in what is possible, what is rare and what can be reached through imagination. They lead us not into the soulless automaton state of the old Industrial Revolution, but into the unexplored treasures of the mind.

In my view, the creative economy should be developed and encouraged to the hilt. It is a proven performer, a pillar of the cultural tourist trade, an educative and inspiring force for young people, a conduit of skills and self-confidence in schools, a high-quality aggregation of niche specialisms in a country which must develop such talents if it is to flourish, a source of gaiety to the nation, intellectual and spiritual profit, and a focus and stimulation of imagination to people who want to reach out for a greater private life through work which lights up their private world. The creative industries are our new wealth and our new industrial enlightenment. I beg to move.

My Lords, I am very grateful to the noble Lord, Lord Bragg, for initiating this debate. He continues to make a great contribution to cultural life in this country and his opening words reflect the breadth of that experience.

As I am sure the noble Lord would agree, the pivotal challenge in any creative enterprise is to manage the creative talent. That talent is sometimes difficult, usually arrogant, often self-important, but it is the engine of everything that we do. The best managers in these industries are, unfortunately, also often difficult, arrogant and self-important, and I declare the interest of being one myself.

I have spent my entire working life managing creative people in the media, marketing, PR, arts, advertising, graphic design—all those kinds of activities—and I have bought and sold, downsized, upsized, and built and broken creative businesses in just about every part of the world. So this debate offers me the opportunity to try to answer three interrelated questions which have often puzzled me. First, what makes a good manager of creative enterprise and talent? Secondly, why does that talent rarely succeed when transferred into the public—that is to say, government-supported—arena? Thirdly, what can Government do to establish a greater pool of such managers and, therefore, help in that transition?

First, what makes a brilliant manager of creative people? I could recite a litany of character traits, but I want to emphasise just three or four as they will lead to answers to the other questions that I posed. First, these managers have an obsessive dedication, focus and concentration on the activities of the enterprise. Some managers make it all look so easy, but their focus is absolute and demands 110 per cent of every minute of every day. Secondly, they believe, without remainder, in their own judgment. They cannot be wrong. They believe themselves to have an instinctive understanding of what the customer wants and how the enterprise can be organised to respond to those needs. That umbilical chord between the customer and the manager is absolute. That is why accountants can very seldom manage creative people. Thirdly, this kind of manager, together with their creative partners, tears up the rule book as they go. They break conventions. They establish new rules and new codes of business activity.

If that originality is lost, the whole creative process begins to collapse and the enterprise becomes mediocre, with the inevitable loss of market differentiation. But there is one space, as the noble Lord, Lord Bragg, pointed out, in which the manager and the creative will often have guaranteed conflict—over money. So often, really creative people feel shackled by what they see as mundane financial constraints. Great managers of the creative process, however, believe exactly the opposite: they believe that financial controls make for greater creativity and financial laxity for creative mayhem. If the skilled manager can get the creative to agree the financial agenda, the enterprise can really sing. It is a golden place to find yourself. It rarely lasts for long, but for a fleeting moment, the commercial music can sound celestial.

So why have these managers such a poor record in public service? We can all think of some who have made it, but there are so many more who have failed or who just have not bothered. Let me offer some possible reasons. The first is management style. A great manager gives the impression of providing free rein to those who work for him, delegating authority and managing with a light touch, with little attention to soft issues such as time-keeping, dress code and so on. In a large corporation, such light-touch management is almost impossible to achieve.

The second is the rule book. I have about 1,600 creative people working for me at the moment, and every day we tear up the rule book at least once. In many of our businesses there appear to be no rule books at all, or at least the rules which apply to one part of the group do not seem to apply to another. Public corporations are held together by rule books.

Thirdly, in businesses our size, the customer—the user—is the centre of the organisation. There are no organisation charts; there is a dartboard, with the customer in the bull’s eye and everything is gathered around him. That is almost impossible to achieve as companies grow, developing or inheriting different masters or stakeholders to whom management must answer—particularly Government!

The fourth is meetings. We simply do not have them. We hate them. The best-run creative groups just work with the people they like, in an atmosphere they like, in a way that they like. Meetings spoil all that. Meetings are for suits and for accountants. Big public organisations thrive on meetings. You have to have them. You need to be accountable.

Finally, the ultimate bugbear: accountants, red tape and targets. It does not mean that they are wrong; it just means that they establish an environment that is, or at least feels, counter-creative.

Can we increase the number of these gifted managers so that more chance their arm in the public sector? I have five observations for your Lordships to consider. First, most new creative businesses are SMEs. The sources of risk equity and long-term capital for this sector are drying up. This is the 1930s Macmillan gap all over again. We must address this issue immediately, particularly since the recent banking collapse.

Secondly, these smaller businesses, as has already been pointed out, are throttled by regulation: employment law, health and safety, and any amount of other legislation and red tape which is not only inappropriate but stifles growth and enterprise.

Thirdly, tax issues in creative industries are all about income and founder equity. To have top people working for more than 60 per cent of the year for the Government and facing a rise of 80 per cent in capital tax on equity will not encourage entrepreneurship.

Fourthly, we need London to be the global centre of all the creative industries. How can we attract more and more people in this global, creative and digital world to make London the centre of their creative businesses?

Finally, we should start in the schools and the universities, particularly the schools. We should look at the work of organisations such as the Enterprise Education Trust, which has 50,000 children up and down the country involved in more than 1,000 business appreciation courses.

As we recognise the importance of the creative industries to our economy, our focus must also be on encouraging, motivating and rewarding those who successfully build and lead these creative enterprises. They are not just the source of national wealth, they are the future of our state-owned creative industries too.

My Lords, I appreciate this opportunity to take part in what will be a very wide-ranging debate. The noble Lord, Lord Bragg, has initiated it, and the noble Lord, Lord Chadlington, has opened a window that I never dreamt existed. To make the most of this opportunity for a free-running Welshman to contribute from a Welsh angle, I shall speak about a possible opportunity, and dilemma, for minority languages.

Let us look first at the world of publishing in Wales. Some Wales-wide publications in the Welsh language—long-standing newspapers and so on—have ceased publication because of reduced advertising, falling circulation, rising costs and myriad other things. Some continue as inserts in English-language dailies, but the ordinary national Welsh-language paper has failed, and efforts to establish a daily Welsh-language newspaper have been put on hold. What is happening in Wales is that community newspapers reflect local life. In 60 areas in Wales we have Papurau Bro, community newspapers run by volunteers which have circulations of 1,000, 2,000 or 3,000 and which make a definite and effective contribution to the life of their localities.

As for book publishing, I spoke this morning to a publisher and also to the Welsh Books Council. With a budget of only £1.3 million for investment in Welsh-language book publishing, it is questionable whether a single Welsh-language book could be published in many areas. We are so dependent on grants, through the Welsh Books Council, from the Welsh National Assembly. However, many people help to support the Welsh-language input, and we have the value of the printed word itself. We also have the various Welsh-language websites to which many thousands of people turn every day. But there is a flipside to that. Because they are reading on the web, as I do, many publications—the ordinary books and magazines—do not succeed.

The noble Lord, Lord Bragg, mentioned the free admission to museums and art galleries. I am delighted to say that it was the Government in Cardiff—led by a friend of mine, Jenny Randerson, who was the Minister at the time—who first introduced free admission in the United Kingdom. As has been said, it has succeeded in bringing in many people who never before would have visited that kind of building.

Wales is known as the land of rugby. I am not asking for a subsidy for Welsh rugby; I do not think that we need it at present. It is also known as the land of song, but I am not sure that that is always true. If you listened to me sing, you would not say it.

We have heard mention of the Hay festival, but we have not yet heard mention of the three major Eisteddfods, or Eisteddfodau, that we have in Wales. They are major cultural events for the Welsh community. The Urdd Eisteddfod was held in Cardiff last week, and some 45,000 Welsh youngsters were involved in activities leading up to it. The Urdd Eisteddfod encourages schools and young people, and by developing the dimensions of song, dance and the spoken and written word, we all benefit from it immensely. For older children—those in the sixth forms of our schools who have uncertain futures and limited employment prospects—this cultural dimension keeps their hopes alive.

In the 1930s there was horrendous unemployment in Wales—in Merthyr Tydfil, 60 per cent of the population were without a job—and yet the choirs and the bands continued. The valleys of unemployment were also the valleys of music, and that kept hope alive. So we must make certain that nothing hinders this dimension of our culture. Through the arts, music and so on, we can keep hope alive until better economic times dawn upon us.

The national Eisteddfod not only gives opportunities to people of all ages; it uncovers new talent. It is, as has been said, similar to festivals throughout the United Kingdom, but it also provides many opportunities for people who may be having difficult times. It restores their hope and confidence and contributes to the harmony of our communities.

I thoroughly enjoyed parts of “Britain’s Got Talent”. It was valuable because it introduced a massive viewer population—I am sure that is not the right way to describe it—to things like community groups such as the street dancers, Flawless and Diversity. If their influence can now spread to other communities and young people, that will be a tremendous benefit to us. The programme even gave my granddaughter an idea—I have seven grandchildren, at the last count. She saw this grandfather and granddaughter competing, and next I had a phone call: was I willing to enter “Britain’s Got Talent” with her next year? If the House is abolished I might have time on my hands, and we will be able to have an alternative career.

Then we come to the third Eisteddfod, Llangollen. I speak as a vice-president of that international music festival. Formed in 1946, its motto is, “Blessed is a world that sings; gentle are its songs”. Through music and dance you are able to bring people together. I often think that if you can laugh or sing together, that is a massive step forward. Pavarotti started his career at the festival; the Vienna Boys’ Choir became world-famous there. I hope—and the Government might be able to move on this quickly—that new immigration rules will not hinder applications from outside the European Union for people, choirs and dance groups to participate in festivals of this sort. Edinburgh and other places are also facing a possible dilemma here. I remember the battle we had over the Watoto children from Kampala—but they are singing in the Parliament next week, so at least we have overcome that hurdle.

The contribution is not only in money but in people. It provides dignity and confidence in difficult times; it builds communities and gives hope where there is little of it. That is why the sort of projects and festivals that I have outlined are immensely important for the well-being of our country.

My Lords, I, too, thank the noble Lord, Lord Bragg, for securing this debate and for his powerfully delivered overview of the creative sector, as well as for his long-term pioneering commitment to high-quality arts and cultural programming, of which “The South Bank Show” is just one example. I also thank Louise de Winter from the National Campaign for the Arts and Clare Cooper from Mission, Models, Money for briefings, discussions and ideas. The NCA is an independent organisation, as the noble Lord has stated. Mission, Models, Money is also independent, producing debates and action research projects that provoke fresh thoughts about sustaining the arts. Both are effective, fleet-footed, creative organisations that stimulate thoughts, and they have an influence far greater than their size would suggest was possible.

At this point I should declare several interests, mainly to do with being on the boards of various arts organisations including the Southbank Centre, the Nitro theatre company and the National Archives. I also chair a new group set up by the Commonwealth Foundation on culture and development.

The noble Lord, Lord Bragg, has helpfully covered all the statistics, so I will not go into them again. The creative industries, as defined by DCMS, cover a wide range of creative endeavour, including music, film, television, radio, architecture and designer fashion, which is a subject to which I will return.

Although for the purpose of policy or debate we might wish to make a distinction between the arts, museums, archives and libraries and the creative industries, or indeed between the subsidised and commercial sectors, in truth the boundaries are permeable and constantly shifting. Art, cultural and creative activities are interdependent, as are the publicly subsidised and commercial sectors. At times the categories are indistinguishable and may co-exist in the same organisation, as when a play produced by an Arts Council-funded theatre transfers to the West End and later to Broadway, and is made into a film that is then broadcast on television. So public investment in the arts has been and will continue to be essential to the success of Britain’s creative industries.

Even though the focus in this debate is on the economy, we should not forget the important contribution that creative expression can make to social, community and cultural development, a point that has been alluded to. Put simply, there is no point in being economically successful if people are unhappy and do not have ready access to an expressive, full, creative life. Such values are especially important in these difficult times, when financial and moral orthodoxies seem on the point of collapse.

Mission, Models, Money has turned its thoughts to the kind of questions with which many of us who work in the sector are concerned. For example, what new knowledge, skills and competencies do creative organisations and individuals need to develop to be able to thrive in the next decade or so? How do we support the sector to operate effectively in a new environment where potential investors are ever more risk-averse—a real problem for a sector that is, by its nature, risk-taking? What tools can we develop to help us to optimise digital communications technologies, which redraw or erase boundaries—boundaries between communities, cultures and nations, between audience and producer, and between cultural forms? What are the new economic structures that promote more sustainable lifestyles? That is an important point for me. If there is really going to be a shift—“a great turning”, as some people have described it—from a society based on continued industrial growth to a less consumer-driven, more sustainable way of living, what is the role of the arts in shaping national consciousness and informing the development of values that will be of importance to the economic structures of the future?

This social consciousness is not anything new for the arts and creative sector—on the contrary. But there is a greater sense of urgency given what is happening at the moment and the challenges that we are all facing. I want to say something in this regard about the creative, designer end of the fashion industry, not an area historically associated with social responsibility. First, I again declare an interest as I am in the process of looking into setting up an APPG on ethical fashion. This is a very broad term, indicating clothing and accessories produced using renewable fabrics, chemical-free dyes, organic materials or taking into consideration the people involved in the production of the garments and the humane treatment of animals.

I have been speaking to several people recently who care passionately about the subject. Increasingly, awareness is being raised within the industry about its responsibilities in terms of its environmental impact, exploitative employment and trading practices, and animal welfare. Awareness-raising among the public is crucial, as is encouraging a different approach to fashion, rejecting a high turnover of goods that are produced cheaply by exploited labour and which have a negative environmental impact.

Because this debate is about the creative industries, I am referring to designer clothing—an issue in itself, as of course it tends to be out of the price range of most people. But it is important because designers increasingly work across a range of markets, with the likes of high-end designers such as Matthew Williamson and Stella McCartney creating clothing for the high street. What they do and how they work is reported on extensively in glossy magazines and consumed by a great many people, particularly young women.

The noble Lord, Lord Hunt of Kings Heath, launched Defra’s sustainable clothing action plan at the start of February’s London Fashion Week; colleagues in the industry tell me that his catwalk performance was very much appreciated and highly rated. It is an admirable document with much to recommend it. In particular, it lives up to its title, because it is about action, not just words.

Cross-departmental co-operation really adds value to this type of project. Although the plan has been generated by Defra, the DCMS, DfID, the Department for Innovation, Universities and Skills and other departments have, or should have, active roles in ensuring that this initiative is given the best chance of being successful in the long term.

I make this point about fashion partly because many see it as frivolous, trivial and a conscience-free zone. But the number and quality of organisations that have signed up to the actions demonstrate the importance and economic significance of the market. Larger companies that have signed up, such as Tesco, Sainsbury and Marks & Spencer, are well known and have the resources and clout to make an impact, but they are not the prime focus of my remarks. It is the small-scale, innovative designers such as From Somewhere, Adili and People Tree that need support, especially those that have been pioneers of ethical fashion for a decade or more.

This economic climate is particularly unfavourable for the SMEs and micro-enterprises that populate the creative industries in general and the fashion industry in particular. I would very much like to hear from the Minister about initiatives under way at government level. In London, we are fortunate to have had the GLA produce several booklets of guidelines on becoming green in different areas, such as Green Screen Guide, Green Music Guide and Green Theatre Guide. Is anything besides the SCAP happening at a national level that can facilitate the further development of the creative sector and maintain its reputation for innovation, is economically resilient with a 21st-century skills set and is socially responsible and environmentally sustainable?

My Lords, I thank my noble friend Lord Bragg for his initiative in securing this important debate and for his entertaining and forceful review of our creative life. I grew up in Scotland before television, and a pretty bleak time it was. Our most exciting cultural activities were watching films and listening to music from America. We saw very little that reflected our own lives, and a career in what we now call the “creative industries” was open to very few. Well, how things have changed.

When I left school in the mid-1950s, about four pupils in 100 went on to university. Today, almost half of pupils go on to higher education, more than half of whom are women—another remarkable measure of our progress in the past half-century. And, of course, many of those students now choose media-related courses, or study for careers in other creative activities.

As chancellor of Glasgow Caledonian University, I see hundreds of gifted media students graduating each year. In recent times, their options for further training have multiplied in all sorts of fascinating niches. For instance, as a former television executive, I am delighted to see our university being used by broadcasters and independent producers, led by Shed Productions, to train scriptwriters of long-form dramas, from serials to soap operas, with the opportunity of working live on location.

In previous educational roles, on the council of Sussex University, as a governor of the National Film and Television School and as a visiting professor of film and media studies at Stirling University, I endured all the inane jibes about “Mickey Mouse” degrees in media studies. My most effective response was to say that when I was chief executive of Scottish Television, there was nothing “Mickey Mouse” about the profits that we made producing the “Disney Club” each week for ITV.

However, it took a long time to persuade politicians and opinion-formers that our creative work was also a serious business, in which Britain often led the world. I think that that argument has been won, and it is accepted that we are now well into the revolution that is shaping a very different, service-based, online economy.

I recall back in the 1990s a pioneering effort by Glasgow, an industrial city in decline, to rebrand itself, quite brilliantly, as the first European City of Culture, although that, for me as a Glaswegian, is a title permanently held by Edinburgh, which hosts each August the most exuberant collection of festivals anywhere on the planet. Once dismissed as arty and frivolous, that festival is now seen as an economic and aesthetic treasure—and I speak as a former chair of the Edinburgh Film Festival who endured what Bernard Levin once denounced as Edinburgh’s “annual ceremony of the grudging of the money”.

Just last month, our ambitious and successful arts festival in Brighton, where I now live, attracted many visitors from abroad and kicked off a summer holiday season. As my noble friend Lord Bragg said, we must surely marvel at all the activity that is going on: music festivals, book festivals, art exhibitions, poetry readings, opera events, free and more attractive museums and, as the noble Lord, Lord Roberts, said, dance groups such as Diversity from Dagenham—Britain has indeed got talent.

We have all this, and Liz Forgan now chairing the Arts Council, where we shall all benefit from the bubbling energy of the kind which she showed in her time running BBC Radio and, before that, at Channel 4, where she helped create a whole new industry sector of independent producers of television. Six hundred indie companies now turn over about £2 billion a year and employ more than 20,000 people. It is another huge success in our media sector, helping us to maintain our reputation for producing the world’s best broadcasting.

As noble Lords will hear in a later debate today, your Lordships’ Select Committee on Communications has been conducting inquiries into the state of our television and film industries. Here it is not, alas, all good news. One great achievement of broadcasting policy in the UK was the creation of a network of commercial broadcasters, mostly based in the regions and coming together in the national ITV network to compete with the BBC in the quality of their public service broadcasting. For 50 years, this very robust business was funded by television advertising, but the ITV network now faces acute problems. Despite maintaining pretty decent audience ratings, ITV sees its advertising migrating to online services. Newspapers are also in financial trouble, as ad revenue is sucked out of the UK economy by global operators such as Google. The ITV regional companies have now mostly been absorbed into a consolidated ITV plc, based increasingly in London.

To compensate for the loss of ITV production from centres across the English regions, I am sure that the Minister will want to give every encouragement to the BBC in its plans to devolve operations outside London. Perhaps Ofcom, while considering how best to support ITV, would have a word with it about its obligations to support training in television by renewing its vital contribution to Skillset, the sector skills council for the creative media. Skillset does a great job and support for it should be mandatory from all companies that benefit from our systems of public service broadcasting. Our talent base is what underpins the success of our television industry at home and in international markets, and is also what attracts international film makers to shoot in Britain and work with British crews. I congratulate the DCMS and, in particular, our own the noble Lord, Lord Smith, on setting up the UK Film Council, which has been a force for progress across what has always been a rather unco-ordinated but talent-driven business. That talent has to be trained, as my generation was not, to maintain the remarkable position that the UK has achieved as a global leader in the creative industries.

I trust that the Minister and politicians of all parties will follow a basic rule of business; invest in success and back your winners. If we are in for a lengthy recession and the possible shrinking of the financial sector, it is all the more important that the Government continue to invest in new skills and talent, which will build new creative businesses, starting in our schools and universities. The White Paper on Digital Britain, to be published later this month, will highlight the challenges and opportunities of the online revolution.

Let us be under no illusions: a wave of disruptive technology is sweeping across our creative industries. We are already counting the casualties in regional newspapers and television. Piracy has to be suppressed; global predators and free-riders have to be confronted. Levies may have to be imposed to pay for the support of this vital industry sector, which is a creative cluster of talent, uniquely British—and irreplaceable if allowed to atrophy. Above all, we need strategies in government that help our creative industries to understand and deploy these new technologies ahead of other nations. I hope that the Minister and official bodies such as Ofcom will conclude that, in times such as these, they may have to be as radical as reality itself.

My Lords, since adding my name to the speakers list only a few days ago, I have received briefing documents on a wide variety of subjects, which highlight the importance of our debate this morning. I have heard from ITV, Channel 4 and Sky Arts. I have received information on the Digital Britain report, highlighting the need to protect and create jobs in the creative industries. PPL has contacted me on the problems of copyright infringement and stressed that that lies at the core of the business models of all the creative industries. I have notes on online piracy and illegal file sharing.

Although I am grateful for this information, it is important that I remind your Lordships of the significant contribution of jazz to the economy. I declare an interest as a very mediocre trumpet player and co-chairman of the All-Party Parliamentary Jazz Appreciation Group. We had to change the name from the All-Party Jazz Group to the All-Party Parliamentary Jazz Appreciation Group because of all the requests that came to Westminster to book the non-existent parliamentary jazz band.

Today musicians throughout the country play jazz. Many UK jazz musicians have developed international reputations for live performance and have recordings that are seen and bought by a worldwide audience. There is an active jazz scene in all major UK cities. Mature musicians with established reputations and young musicians, many with great flair and originality, seek a serious audience who can understand and enjoy their music. They perform in a variety of settings: concert halls, arts centres, hotels, ballrooms, village halls, restaurants and coffee and public houses. Every year there are jazz festivals all over the country, many attracting some of the finest jazz musicians in the world. More than 3 million people patronise these events with five times that amount expressing a definable interest in jazz.

On 20 May, the parliamentary group—sponsored by PPL—hosted the widely acclaimed parliamentary jazz awards, where we recognised the contribution made by musicians, their recordings, broadcasters, educators, journalists and jazz venues.

The annual turnover of the jazz sector of the British music industry is in excess of £88 million. The report by Jazz Services Ltd as part of its Arts Council England lottery development project found that sales of CDs through shops and websites and at gigs reached almost £40 million, while ticket sales for jazz concerts and festivals were worth £22.5 million.

The Value of Jazz in Britain report estimated that there were over 45,000 jazz performances per year in the UK and said that a significant area of growth was the number of annual festivals. A survey of jazz promoters showed that half of pub gigs were given free of charge or cost £5 or less to enter. The typical admission charge for a jazz club event was between £5 and £7.50, while tickets for concerts at arts centres or concert halls typically cost between £7.50 and £10. The income of promoters and musicians from admission charges is supplemented by public funding from arts councils and local authorities, with smaller amounts from arts charities and commercial sponsors. The report estimates that jazz received over £4 million per year in public funding and a much smaller amount in commercial sponsorship.

Audience research on music and other art forms showed that over 3 million adults had attended at least one jazz performance in the previous year, with a core audience for jazz estimated at 500,000 compared to 400,000 for classical music concerts and 100,000 for folk music events.

Sadly, as the noble Lord, Lord Bragg, mentioned, the performance of jazz has been restricted by the licensing legislation. The Act included the playing of recorded music in the description of regulated entertainment, but it was changed in the transition to the new regime for existing bars, pubs, restaurants, hotels and any premises that were already licensed to sell alcohol. Those places were allowed to keep jukeboxes or other systems for the playing of incidental recorded sound and broadcast events, no matter how powerful the amplification. However, the automatic permission to have one or two musicians in such venues—amplified or not—has ceased. That was the live performer element of the so called two-in-a-bar rule, which, since 1961, had been available in those premises as an exception from the general requirement to hold a public entertainment licence for live music. This restrictive legislation has had serious implications for jazz. It has removed hundreds of venues where young musicians can perform and learn to play to an audience.

As a result of extensive lobbying, the Government announced on 18 July 2008 an examination of the effects of the Licensing Act and the impact on live music. In evidence, the committee heard from UK Music and the licensed trade that the Act was harming small gigs. Despite that, the Government seem now to have abandoned their promise to hold in the spring of this year a public consultation on further exemptions for low-risk performances.

In March 2009, the noble Lord, Lord Clement-Jones, asked why the consultation had not taken place. The noble Lord, Lord Davies, replied:

“There is no formal review of the live music provisions of the Licensing Act 2003. However, the Department for Culture, Media and Sport continues to discuss the effect of the Licensing Act 2003 on live music with representatives of musicians and local government. These discussions include consideration of how low impact live music events might be further encouraged”.—[Official Report, 24/3/09; col. WA 122.]

A report by the House of Commons Culture, Media and Sport Committee, published on 14 May, agreed that something more needed to be done to try to make it easier for smaller and secondary venues to host live music performance. It states, on page 30:

“We recommend that the Government should exempt venues with a capacity of 200 persons or fewer from the need to obtain a licence for the performance of live music. We further recommend the reintroduction of the ‘two-in-a-bar’ exemption enabling venues of any size to put on a performance of non-amplified music by one or two musicians without the need for a licence. We believe that these two exemptions would encourage the performance of live music without impacting negatively on any of the four licensing objectives under the Act”.

I know that the Minister will have a look at this. I am concerned that draft DCMS guidance that accompanies the new minor variations amendment includes a very weak statement in support of live music applications. It says that,

“the addition of live or recorded music to a licence may impact on the public nuisance objective, but this will depend on many factors. Licensing authorities will need to consider factors such as proximity to residential areas and any noise reduction conditions volunteered by the applicant. It is very much the Government’s intention that applications to vary a licence for live music should benefit from the minor variations process unless there is likely to be an adverse impact on the licensing objectives”.

Could it be that, despite government promises of a public consultation this spring on further exemptions for live music, faced by Local Government Association opposition, Ministers have little enthusiasm for such exemptions in pubs and bars?

I have a final thought. Can the Minister comment on the plan by Sing London to place 30 pianos in different areas of London? Some of the sites will be in licensed areas, but some will not. Will he be advising the local authorities how this contravention of the licensing law will be managed?

My Lords, I, too, am extremely grateful to my noble friend Lord Bragg for initiating this debate, which comes just a week or two ahead of my noble friend Lord Carter’s Digital Britain report. This Labour Government, I am proud to say, and my noble friend Lord Smith of Finsbury should take enormous credit for having put the creative industries on the public policy map since 1997.

Twelve years on, and with a severe contraction in our financial services sector as well as elsewhere in the economy, it feels as though the creative industries’ time has finally arrived. We have the strongest creative talent base in the world, certainly on a per capita basis and possibly even on an absolute basis. We need to invest in that talent and to harness it to both our industrial and our cultural ends. Should we do so, the rewards will be immense. I should like to identify myself with the remarks made by my noble friend Lord Macdonald of Tradeston in what I thought was a marvellous speech about the talent base. The talent base is everything. Without the talents and skills, this entire debate becomes, I am afraid, something of a waste of time; with them, it becomes packed with potential.

The really big thing that has happened since 1997 in relation to this sector is the serious arrival of digital technology. My noble friend Lord Carter, who sadly is not in his seat today, knows this better than anyone in your Lordships’ House, and I am sure that we all look forward to the imminent publication of his report.

The digital environment, and the huge changes that it brings with it in terms of access to audiences and the use of our creative output, is a massive opportunity. It means, for example, that organisations such as the Tate, the Royal Opera House, the National Theatre and the British Film Institute, all of which were once thought of simply as cultural organisations, are suddenly in the digital content business—and on a global level. The Royal Opera House and its production arm, Opus Arte, are now delivering their productions to cinemas across the UK, Europe, the United States and well beyond. Last year, over 450 million people in China saw one of its productions.

Some of this work is being done in 3D. As anyone who has seen a demonstration of 3D cinema knows, it pretty well knocks your socks off. Tate Media has taken one of the best-known brands in the country and created and commissioned content that expands on and contextualises its activities in all sorts of innovative ways via its Tate Player. Later this month, the National Theatre will screen “Phaedra” with Helen Mirren live to a chain of cinemas across the UK. This is a huge opportunity for the UK, culturally and commercially. In fact, the two happily go hand in hand. Building on our cultural assets, we can create global commercial value, while also delighting audiences at home who, both as taxpayers and as lottery players, helped to subsidise that content in the first place.

However, the creation of new content, vital though it may be, is only part of the contribution that our creative industries can make in a digital age. I happen to think that we are simultaneously entering a fascinating phase in the development of this country’s literal treasure trove of archival content. Much of it was funded by the public purse in the name of our creative industries, although they were not called that at the time, and much of it was for years hidden from public view. In other words, they are creative assets that have not been allowed to sweat their value to the benefit of the creative economy and, indeed, to the broader public. This content is staggeringly rich and diverse, ranging from hundreds of episodes of “The South Bank Show”, courtesy of my noble friend Lord Bragg, to award-winning amateur films about life in rural England, few of which have ever seen the light of projection.

I offer just one example. Inspired, I am sure, by the runaway success of its Mitchell and Kenyon titles, the British Film Institute moved up a gear last year with the restoration and release of the public information masterpieces, which it put out on DVD, entirely made up of archival material. The British Transport Films collection, the stunning collection of public information films collected together under the generic title “Land of Promise” and the GPO film packages are all absolutely invaluable to anyone with the remotest interest in this nation’s recent past.

The next phase is to really build on the BFI’s existing online activities, such as www.screenonline.org.uk, and make sure that schools and colleges of every kind across the UK make use of these films in citizenship classes and, indeed, in modern history classes. These are films that can and should be used for a whole series of different purposes. It is hard to argue the case for producing a brilliant series on British Rail if it is going to reach and engage only a few hundred rail anoraks; I sincerely apologise in advance to those one or two anoraks who invariably emerge from the depths of your Lordships’ House as world experts on pretty well every subject on earth. On the other hand, if, through films such as these, citizens across the UK, young and old, develop a better understanding of the overwhelming importance of our transport infrastructure, that can surely only be a good thing. There is real added value in ensuring that, for example, a national debate on the future of rail is both informed and stimulated as a result of the availability of such material.

Within the context of many issues surrounding future sustainability, such films suddenly become an even more valuable teaching and learning resource. Until we encourage people, particularly young people, past the so-called expert custodians and allow them to understand the implications of the many irreversible decisions being made daily on their behalf, we are merely delaying the opportunity of creating a more engaged, better informed and more responsible citizenry.

Let me put that another way. By combining the availability of an extremely rich array of material from the UK’s archive and the possibilities offered by digital technologies, we have the opportunity of looking at things and, as it were, reassembling them. We can try to reimagine our world as it might be, or even as it might become. All this is part of what is really an enormous opportunity for the strategy for UK screen heritage, for which the Government have recently given the UK Film Council a capital allocation to begin to bring forward.

I am also enormously encouraged by the work that Roly Keating is now leading as director of archive content at the BBC. The decision by the BBC’s management to make one of its most senior executives head of this whole area signals something very important. It is the kind of management change that suggests a serious interest in releasing this potential.

Tony Ageh, the BBC’s controller of archive development, recently came up with an extraordinary and prescient analogy in which he compares archives to energy. He makes the point that coal has for ever lain underground and was for millennia just sitting there to be dug up from time to time because it burns slowly and you can warm yourself by it. Basically, it was an entirely passive asset. However, eventually someone realised that this coal stuff was really quite useful. Under the right conditions you can generate sufficient heat to make tools and weapons and do all sorts of other useful things. A few thousand years go by and along comes James Watt, with another enormous leap forward to the realisation that you can turn heat into steam and thus generate energy, so passive coal became active energy. Surely that is exactly what we should now be trying to do in moving our archives from their passive, collection-based status to a thorough-going, energy-generating, productive resource—effectively a brand-new form of invaluable intellectual energy for our creative economy. As during the first Industrial Revolution, culture and commerce can go hand in hand as an engine of growth.

In the end, though, our ability to deliver all this rests on our commitment to invest in our creative and technological talent. It seems absolutely self-evident to me that without that commitment, which has to be a judicious mix of public and private investment, we cannot be among the winners in this new economy.

I am absolutely persuaded that, as we enter the era of the digital economy, our creative industries have the potential to be world leaders in many respects. I do not have time today to touch on the contribution that our games sector, designers and musicians make to that economy both at home and abroad. But we have the creative talent. We have the creative and cultural assets. All we really now need in order to deliver our potential is the vision, ambition and energy that demonstrate our commitment to these creative industries as being the real standard-bearers for our national prosperity in the 21st century. I very much hope that today’s debate will reinforce the fact that all sides of your Lordships’ House recognise the opportunity and the fact that it is there for the taking.

My Lords, I declare a non-pecuniary interest as chairman of the Wales Millennium Centre and president of the Royal Welsh College of Music and Drama. I join in thanking the noble Lord, Lord Bragg, for securing this debate.

We have heard persuasive arguments. The sector is vital, not just for the wealth that it creates, but for its contribution to the social and intellectual well-being of our country. It was my intention to expand upon such matters on a national canvas, until I had the fortune—good or otherwise—to pick up yesterday this excellent document which was thoughtfully placed in our Library. I refer to the 2007 report published by UK Trade and Investment entitled Creative Industries UK.

As I scanned its helpful pages, I realised how London-centric the messages were. The word “Cardiff” is mentioned once, “Wales” twice, “Scotland” once and “Edinburgh” thrice. In the section on useful contacts, there is no Arts Council of Wales or Wales creative industries’ Hub, although Scottish Screen does get an entry. I could go on, and the Minister may wince as I return to themes that I have already used in your Lordships’ House in connection with the funding of the Olympics and its negative financial impact on arts funding and the unsatisfactory Cultural Olympiad programme which is unfolding; unsatisfactory because, despite government statements to the contrary, it is again largely centred on London organisations. Where is the legacy promised to the United Kingdom?

The former Prime Minister stated in 2007 that, years before he came to government, he said that he would,

“make the arts and culture part of our ‘core script’ … no longer to be on the periphery … an essential part of the narrative about the character of a new, different, changed Britain”.

I, like many others, am still waiting for this to happen.

After a false start, Liverpool achieved much in artistic, social and economic terms by successfully completing its year as European City of Culture—so much so that the Government then suggested at the beginning of this year that they would support an initiative to have a British city of culture annually. Since the initial publicity there has been silence. I remind the Government that those UK cities which reached the shortlist for 2008 each spent at least £1 million. The question I have raised with the DCMS is that, rather than start a whole new contest in these economic times, why not just nominate the cities that were shortlisted, put them in alphabetical order and, if they accept it, just get on with it? Perhaps the Minister would care to comment.

As Wales has been left off the UK Trade and Investment cultural map, I fear that I must compensate for this omission. For some time, the creative industries in Wales have been identified as a key driver of our business growth. The sector employs 21,000 people—just over 4 per cent of the UK creative industry's workforce—contributing more than £900 million GVA to the UK economy. By 2014, the industry is expected to grow by another 5,000 jobs. By 2011, the BBC will have moved more of its drama production to Cardiff, adding to the growing stable of network drama produced in the city, including the award-winning “Doctor Who”, “Torchwood” and “Gavin and Stacey”.

One of Dylan Thomas’s more memorable lines is:

“Praise the Lord, for we are a musical nation”.

As I speak, the Welsh capital is preparing for the BBC Cardiff Singer of the World 2009 and the Wales Millennium Centre is literally buzzing with rehearsals for competing singers from 25 countries for the hugely prestigious title, won in the past by many now globally famous stars. The event will attract audiences from all over the world. Nowhere is performance better showcased than at the Wales Millennium Centre with its 1,900-seat lyric theatre, studio theatre, state-of-the-art recital hall, dance house and one of the UK's largest free performance programmes. The centre is home to eight creative organisations: Welsh National Opera; BBC National Orchestra of Wales; Academy; Hijinx Theatre and Touch Trust, two artistic companies working with people with learning disabilities and severe learning disabilities; Ty Cerdd, the amateur music federation; Diversions, the national dance company; and Urdd Gobaith Cymru.

Last week the centre hosted the Urdd National Eisteddfod—the noble Lord, Lord Roberts, may have referred to that—one of Europe's largest youth cultural festivals, attended by 100,000 over six days. The centre is a creative factory, a true furnace of creativity, with almost 1,000 people employed under one roof. Noble Lords may agree that this is a significant workforce even by large-scale manufacturing standards. Since opening in 2004, the centre has been visited by nearly six million people, making it the number one tourist attraction in Wales and one of the top 10 cultural attractions outside London. This figure is far in excess of the original predictions of key stakeholders, including the Welsh Assembly Government.

We have seen unprecedented growth in recent years in the arts, securing the UK's position as a world centre, if not the world centre. The sector has also held up well—as it has done in the past—against recession. Last month, for example, we sold £l million worth of advance tickets for our Christmas presentation, Cameron Mackintosh's “Les Miserables”, touring for the first time in 15 years.

As we have frequently heard, the Government seek to grow our way out of recession. I firmly believe that the seeds of investment need to be spread on this most fertile ground—the creative industries. The impact on the lives of people of all ages and backgrounds is now well known.

Returning for a moment to UK Trade and Investment—an organisation for which I have a lot of respect and with which I have had a great deal to do in the past—earlier this year a YouGov survey conducted among a panel of business leaders cited the provision of arts and culture as being a critical determinant in investment location decisions, even more important—this may be hard to believe—than a favourable tax regime. There is no doubt that the Wales Millennium Centre has become a symbol for what is innovative and attractive about Cardiff and Wales, and for the devolved Administration it is a symbol of national identity.

Lastly, Wales is a centre of excellence in creativity, with our higher education institutions punching well above their weight in producing some of the UK's leading talent in music, drama and film. I hope that I have contributed to noble Lords’ understanding.

My Lords, I, too, thank my noble friend Lord Bragg for introducing this debate at a very timely moment. His remarks cheered me up. In a dark time it is wonderful to hear such enthusiasm. I agree most profoundly with what he said about the contribution of the arts and culture to—as he put it—feeding the inner life. If only we could talk about this with less embarrassment, not in this House, of course, but elsewhere.

I should declare a variety of interests—the term “creative industries” draws together a variety of enterprise which includes the live performing arts, where I spent most of my professional life and where I retain connections through membership of several boards, including that of the Roundhouse in north London, the National Opera Studio and the Royal Academy of Dramatic Art. Today, however, I want to talk about two aspects of the creative economy with which I have no personal association, except to the extent that my son started in one of them and now works in the other. The first is television drama—that was briefly mentioned by my noble friend Lord Bragg—and the second is the fashion industry, about which I thought I might be alone in making observations. However, I reckoned without the excellent contribution of the noble Baroness, Lady Young.

I am privileged to be a member of your Lordships’ Select Committee on Communications. I am sorry not to be able to take part in the debate later today on the committee's report on public service broadcasting because many of the issues raised in the report have a direct bearing on matters under discussion in this debate. In particular, it draws attention to the current gaps in public service provision and asks some searching questions about how those gaps are to be filled, both in terms of funding and content. My own principal anxiety centres on the future of high-quality drama for television. For the purposes of this debate, I use the term “high-quality” to refer to the kind of work exemplified by, for example, Granada's work in the 1980s such as “Jewel in the Crown” and “Brideshead Revisited”, and more recently by productions such as Channel 4’s recent “Red Riding” or “The Devil's Whore”, and some of the best of the BBC's output such as “Life on Mars” and “Cranford”.

I recently embarked on a programme of acquisitions for my own DVD library in order to get together as many of the television drama series that I remembered enjoying over the past 25 years, have another look at them and see whether they stood up to scrutiny. So in the past few months I have watched “Brideshead Revisited”, many adaptations of various Dickens novels and of novels by Trollope, Thomas Hardy and George Eliot, two series based on John Le Carre's Smiley novels, “The Edge of Darkness”, a brilliant original drama commissioned by the BBC—now something of a cult piece—in which the late and in my view very much lamented Bob Peck gave one of his finest performances, and a lot else besides. Your Lordships may think that I have too much time on my hands. But the fact is that I am not embarrassed to share this aspect of my leisure activity with the House because this little research project focused my mind not on recalling a supposed golden age when there was always something good on telly—although a lot of this work is very good—but on wondering whether in 25 years’ time my children will have a similarly impressive volume and range of television drama to remember in their dotage. For the danger in which we stand now is that the cost of making this sort of home-grown work is so high, particularly when compared with the relatively low cost of buying in product from the USA, that television companies are able to do less and less of it and almost invariably need co-production money to do it at all.

We have heard about the crisis facing the independent television companies. ITV has already told us that drama is one of the areas it will cut back. Channel 4's drama output, once one of its great glories, is also likely to decline as the company struggles to find a sustainable way forward. The BBC, although still in the forefront of producing UK drama, is under increasing pressure to share its resources with others, and we must wonder what impact this will have on how it fulfils its commitment to drama in the future. Why does this matter—in particular, why does it matter to the economy? Why should we not leave things to the market and content ourselves largely with a diet of imported drama, mostly from Hollywood? In thinking about this I am indebted to Professor Peter Grant of the Law Faculty at Toronto University. In the illuminating evidence he recently gave to the Communications Committee, he noted the need for Governments and regulators to maintain and enhance their involvement with locally produced drama to avoid a decline in what Ofcom and others accept is the most popular genre of programming on television.

Professor Grant says:

“People appreciate having their own stories told and their own experience reflected on the small screen”.

He goes on to point out that there is a clear economic justification for government support, noting the importance of creative clusters to economic strategy. He says:

“Creative clusters are essentially groupings of the creative personnel in cities and regions who are able to produce quality cultural products of all types … Drama is the one category that uses all of the creative energies and all of your creative forces together. It is the highest cost within programming but it is also the most ambitious and if you have a structure in the country that supports local drama it is a major contribution to the development of these creative clusters. There have been studies ... in many countries ... about the importance now of creative clusters to the economic well-being of a nation”.

The UK is rich in the talented people who form these clusters, and their skills are sought after worldwide, as a number of speakers have said. Furthermore, what they create is popular and highly valued by audiences both at home and abroad. Will my noble friend say when he replies in what way the Government intend to encourage broadcasters and programme makers to maintain their commitment to UK television drama? Will they, for example, consider the introduction of levies, as was mentioned by the noble Lord, Lord Macdonald, and as has been done in other European countries, to provide an additional source of funds for this vital work?

Finally, I shall have a brief word about fashion. I love fashion; it is perhaps another indication of my fundamentally frivolous nature, but it is not just because I like nice clothes. I am intrigued by the way the fashion industry represents the bringing together of often radical design ideas with strong commercial imperatives. It is an industry that is highly consumer-focused and depends on innovation—some might say on novelty—making it highly dynamic and highly globalised, for example in relation to the sourcing of textiles, as has already been pointed out by the noble Baroness, Lady Young. As she also said, it has not always been at the forefront of ethical thinking about trade, but now, in a world faced with huge social, economic and environmental challenges, some practitioners are beginning to develop systems to address the negative impacts of current practices and push the huge creative energy within the industry towards imagining—I use the word advisedly—a future based on collaborative models of sustainability and ethical practice. For example, the Centre for Sustainable Fashion, set up in 2008, at the London College of Fashion is already working with big fashion retail businesses to take some of these ideas forward, looking to develop skills and technologies as well as design talent, to create, as it says,

“better lives through a sustainable fashion economy”.

I will be interested to hear how my noble friend responds to the remarks of the noble Baroness, Lady Young, about government support for the sustainable fashion initiatives already under way.

In these dark times, and despite all the difficulties, the creative industries in this country provide us with something to feel good about. There is so much to be proud of, and so much to lose if we fail to understand the significance of what these industries contribute. I hope that the Government will continue to do everything possible to support and encourage them.

My Lords, I am extremely grateful to the noble Lord, Lord Bragg, for introducing the debate, and particularly for—on a slightly different tack from the noble Baroness, Lady McIntosh—emphasising the creative industries’ economic significance to Britain. That is particularly important in the context of what I might call the post-financial-crash world, although I am tempted as an aside to comment that I suspect that the trouble there was a trifle too much creativity. The point about the creative industries’ talent and creativity is that it does not come from nowhere; it needs to be nurtured, appreciated and rewarded. In my few remarks, I would like to say a little about, first, failure, which we have not talked about yet; secondly, the past; thirdly, leadership; and fourthly, education.

The older I get, the more I am staggered by the number of bad paintings in the world. An awful lot of them were thought to be good at the point at which they were created. If you go into a bookshop, it is unbelievable how many bad books are on the shelves; if you go into the basement of a second-hand bookshop, it is even worse. You have to realise that, for the people who created them all, they were important intellectual projects. However, to have a successful creative economy—rather like having an effective programme of scientific research, a point made recently in an article that I read by the noble Lord, Lord Rees of Ludlow—it is necessary to understand failure. Society must know how to handle it and deal with its financial implications. I remember talking long ago to Sir Sydney Samuelson about film, and I said, “Can you predict which film will be a success?”. He said, “No, but I can tell from a group of 10 which film will become successful; nine of them will flop”. The problem is rather like something that I was saying to the noble Baroness, Lady McIntosh, yesterday about the Treasury’s approach to the previous regime about film finance; it appeared to be too successful—in other words, it involved too much money—and somehow it had not produced, in its view, enough good films. However, to have a successful creative economy, there has to be failure and an understanding that that is inevitable.

For there to be a continuing pool of talent, it must be continuously replenished from the younger generation. The characteristic of the younger generation, in every generation, is that it rejects history. The world did not start in 1997, 1979 or 1879; it is always a case of one generation reacting against and moving on from the previous one. The pendulum swings backwards and forwards. One of the essential preconditions of a thriving creative sector of the economy is a thriving education sector, which has to understand history and the context in which we are living. Yet do we as a society properly fund and support what I might call the framework for that sort of education to take place? The Victoria and Albert, to name but one such institution, was established as much as anything else as a resource for students. That is true of many of the great provincial museums round this country. We do not fund them properly. We are a country that seems to have gone to war in Iraq without really thinking twice about its cost. If you take the longer view, which is more important to our country in the future? Do we have our cost-benefit analysis properly worked out?

Another important contextual aspect, on which nobody has yet touched, is the influence of old buildings and landscape on every member of society. That is probably the way in which we are touched by what has gone before in a bigger and wider sense than almost any other, yet how does society operate? The state seems to put hurdles and barriers in front of people who want to improve and maintain things. I always suspect that neglect and lack of maintenance has done far more to destroy our cultural architectural heritage than the Luftwaffe ever did. Again we come back to the question of whether those who take the decisions fully balance the benefits and costs represented by a world where the creative economy is becoming important.

As I said, much of what is created is not very good. The market sorts some of it out, but not all of it. I often wonder whether those involved in cultural leadership necessarily give enough support and credit to those who understand, and who can point out to the rest of us who follow, what is good. Some of us may have been to see the pictures that the British Council bought that are on show in the Whitechapel art gallery. It is an extraordinary testament to the ability of the original purchasing team to see what it acquired then. The noble Lord, Lord Bragg, will know that Carlisle—my home city, and very close to where he comes from—had the most enlightened policy of art acquisition between the wars and after the Second World War; Carlisle city gallery has a remarkable collection. That policy was made by those in political authority acting on the judgment and expertise of those who knew what they were doing, and not simply being swayed by a kind of—if I can be rather crude about it—debased populism.

I have touched on what is crucial for the future: that we have an education system to develop the talent that will enable us as a nation to derive the economic benefits that the creative industries are capable of providing for us. That education system must be rigorous and properly founded. I suspect that the chances of it turning out, certainly at degree-show level, material that the Members of this House might appreciate and enjoy at first blush are pretty remote. Indeed, I suspect that something would be wrong were it to do so. However, the danger that faces the country is that, if the system of education is organised on a kind of tick-in-the-box measurement output basis, we will stifle the creativity that will be so important economically for the future. Again, how is the cost-benefit analysis working in this area?

For me, the key to understanding creativity lies in one’s analysis of what “Culture” is all about. Too much now in this country, the “C” in “DCMS” has become synonymous simply with what people do in their spare time; that is not as it should be at all. In this country—it is a characteristic that seems to go back many years—I fear that we do not really care much about this. We, particularly the English, pride ourselves on having common sense and our feet on the ground. As a result, we do not give proper credit to the economic significance of these areas of human endeavour. It was summed up to me succinctly some years ago when I went as our country’s representative to the informal Culture Council in Bologna. There was I, and my Italian counterpart was Walter Veltroni, then Deputy Prime Minister. While I do not think that Italy is a very good political comparator, I suspect, perhaps at least in this little regard, that it may have got it a bit more right than we did.

The problem is that those in the public sector who view these things cannot evaluate what the cultural and creative sector contributes to our country—not in aesthetic, artistic or spiritual terms, which are important anyway, but in hard economic terms. In the post-industrial world into which we are moving, that will become increasingly important. It is important that this issue is revisited in a hard-nosed way to make sure that the bean counters and the accountants, in putting together our “national plan”, have this issue clear in their heads. The underlying problem is that culture, like politics, is something that we in this country want on the cheap. And look where that has got us—we seem to know the price of everything and the value of nothing.

My Lords, I recently came across the following quote:

“The stuff that creates new insights, delights and experiences, that stirs our senses and enriches our lives, is also the stuff that is propelling a larger slice of our economic output. How we create the architecture that will incubate rather than stunt creative industry growth is a major policy question”.

Those are the wise words of Will Hutton, the chief executive of the Work Foundation. This debate is an important contribution to creating that architecture and I congratulate my noble friend Lord Bragg on bringing it about.

Defining the sector is not always straightforward, but it should include everything from advertising to architecture, music and film to design and publishing, fashion and computer games to TV and DVD; and we should not overlook the fact either that it also includes the sciences, because what on earth are scientists if they are not creative? But that, of course, is a subject more appropriate for the debate that will follow this one.

Taken as a whole, the creative industries make a huge contribution to our economy as well as to our social and cultural life. They employ around 2 million people. They produce a higher proportion of GDP in the UK than they do in any other country, and they contribute considerably more to our balance of trade than does construction, insurance or pensions, and twice the amount of the pharmaceutical sector.

Our creative industries are therefore not some lightweight or marginal sector contributing on the periphery of our economy. They are serious business. Our music industry alone—a recognised world leader—supports 125,000 jobs and contributes nearly £5 billion to the UK economy, of which one-third derives from exports. The UK film and video industries employ more than 50,000 people, with British television’s overseas earnings bringing in around half a billion pounds. Pinewood Studios has recently announced plans to double its size as it challenges Hollywood for the next generation of blockbuster films. Importantly, those plans include working with the National Film and Television School to set up an onsite academy to train set designers and costume makers, and Pinewood is projecting its plans as an opportunity to form a creative cluster, adding to a media park that houses companies such as Technicolor.

We have the largest market in Europe for computer and video games, as people in Britain now buy more computer games than record singles. In 2008, the UK video and computer games industry generated £2.5 billion and more than 20,000 people were employed in games development, publishing and retail. Most multinational games companies choose to locate their European HQ in the UK, and we have by far the largest concentration of games development studios in Europe, with clusters around Cambridge, Coventry, Dundee, Leeds and Liverpool, to name but a few. Our design industry is now worth over £5 billion a year, employing 70,000 people, and our designer fashion industry—as the noble Baroness, Lady Young, said—has grown tenfold in the past decade. Collectively, that is big business indeed.

In the Government’s first two terms they championed the creative industries, driven largely, as many noble Lords have said, by my noble friend Lord Smith of Finsbury in a previous life. The challenge now is to promote creativity and innovation in every part of our economy, because creativity is as important in the retail industry and in education, health and business as it is in the creative industries. The cultural sector in its widest sense should become the dynamo of the creative impulse that can serve all of those areas. My noble friend Lord Bragg quoted the key employment statistics for the creative industries, but he was referring to direct jobs. A great many creative jobs are within the many businesses supporting these industries.

The Government understand and have recognised the value of the creative industries. They have lain out in clear and decisive terms what needs to be done to nurture the sector and ensure that the economy gains maximum value from their products. It was an excellent example of joined-up thinking and cross-cutting government that produced the creative economy strategy entitled Creative Britain: New Talents for the New Economy. DCMS, in partnership with BERR and the Department for Innovation, Universities and Skills, set out a wide range of commitments outlining how the Government will take action to support the creative industries. Most measures are self-explanatory, such as giving all children a creative education, supporting research and innovation, or helping creative businesses to grow and access finance, and all contain a raft of measures that will help develop and sustain the sector.

Perhaps the most important measure is the one known as supporting creative clusters, because the spin-off effects of such developments can be of real benefit to more than the creative industries themselves. These companies can prove to be the drivers of wider growth, sometimes leading the regeneration of cities experiencing post-industrial economic slump.

My home city of Dundee provides a prime example of that. Left reeling from a sharp reduction in heavy engineering and an end to shipbuilding, the city suffered from relatively low innovation and export levels. The response over the past 15 years has seen a ground-breaking collaboration between Dundee City Council, Scottish Enterprise Tayside, the city’s universities and its businesses to rebalance the local economy as a city region. Driven by Dundee University’s College of Life Sciences and the University of Abertay’s School of Computing and Creative Technologies—both recognised as world leaders—a creative media district was developed. The area already housed the renowned Rep Theatre and the Duncan of Jordanstone College of Art and Design, which is now part of Dundee University, and its cultural credentials were further enhanced with the arrival of the Scottish Dance Theatre and a visual arts centre, Dundee Contemporary Arts. Dundee’s Digital Media Park, now known as Seabraes Yards, was established, and the multiplier effect on employment, inner-city regeneration and the city’s reputation far and wide has been remarkable. More than 2,000 people are employed in the thriving creative media sector in Dundee, and this will drive further growth.

Other major UK cities have gone down a similar route: Glasgow’s flagship creative industries project, the Digital Media Quarter, is taking shape at Pacific Quay, a £500 million public and private sector redevelopment project that is anticipated to deliver 3,600 jobs by 2013. It is one of the flagship undertakings in the regeneration of the River Clyde waterfront, with neighbours including BBC Scotland, Scottish Television, Film City Glasgow and the city’s Science Centre.

The Cultural Industries Quarter in Sheffield is an example in another post-industrial city, and there are further instances in Birmingham, Liverpool and Newcastle as the regional development agencies increasingly identify the creative industries as one of the foundations for building a strong and dynamic regional economy. The London Development Agency has established Creative London to champion and support the capital’s creative industries. In Scotland, public agencies are supporting the country’s creative talent, formally joining forces to support the creative industries, a key sector for Scotland's economy which makes an important contribution to prosperity and growth. In 2007, these industries generated a turnover of more than £5 billion and supported more than 60,000 jobs. It is vital to build on that. In February this year, the Scottish Government published a framework document outlining the roles and responsibilities of key support organisations, including Creative Scotland, the enterprise agencies and local authorities.

The UK’s universities play a vital role in developing and sustaining the creative economy. The universities grouping Million+ has helpfully provided noble Lords with a briefing for today’s debate outlining the recommendations of its Creative Futures report. One of its group, the University of Abertay Dundee, is a partner in Scotland’s centre for research and teaching in the creative industries, the Institute for Capitalising on Creativity. Last year, the ICC was awarded a £1.5 million grant from the UK’s Economic and Social Research Council to conduct research in the creative industries in Scotland. The institute combines the expertise of four Scottish universities and is dedicated to a novel postgraduate programme of research, knowledge transfer, continuing professional development and networking/hub activities, including seminars, think tanks and conferences. The grant was one of only four to be awarded in the UK under the ESRC’s Capacity Building Clusters in Business Research and Engagement scheme, and was the sole grant to focus on the creative industries. Its award is a testament to the strength of those industries in Scotland.

This debate is indeed timely. As much attention as possible should be drawn to the cultural sector and the creative industries, and I trust that my noble friend the Minister will confirm that the Government will ensure that those industries continue to receive the necessary support to enable them to maintain their essential contribution to our economy.

My Lords, I thank my noble friend Lord Bragg and congratulate him on the masterly way in which he introduced the debate. However, I gently chide him for overlooking the astonishing contribution of the members of the Lunar Society in Birmingham—among them James Watt, Matthew Boulton, and Michael Faraday, to name but a few—who saw the problems facing people at the end of the 1700s and into the 1800s. They met on the night of the full moon because there was no street lighting, and they set about solving those problems. Although it is a small matter, it is the West Midlands and not quite the north.

That apart—and it might be something for the next debate rather than this one—there is expanding success in our creative industries. That success, as has already been said, is built on a very wide and deep base of talent—in schools, colleges and universities, amateur dramatic groups, choirs, orchestras and musical groups—and among all those people inspired to put the book which we all have inside us on to paper or on the screen. Musicians, film makers, script writers, authors, TV producers and designers are world renowned alongside a wide range of other talents, and the artists and programme makers do not all have to live within the M25 belt.

In Birmingham and the West Midlands, we have the Royal Shakespeare Company, the City of Birmingham Symphony Orchestra, the Birmingham Royal Ballet and the Birmingham Museum and Art Gallery among many other companies, both professional and amateur, which enrich our cultural lives and take their talents into schools and community groups to encourage others to enjoy what is on offer and perhaps to participate themselves. Advantage West Midlands, the development agency, has a £1.3 million fund to support festivals and events to underpin the region’s leisure tourism. These include the Shakespeare birthday celebrations, an international dance festival and a film premiere with Screen West Midlands. As has already been said, Britain truly has got talent.

Making a massive contribution to Britain’s creative energy, as well as to the enjoyment of its viewers and listeners, is of course the BBC. There is no other public broadcaster in the world, publicly funded, which is able to offer such a wide variety of programmes in sound and vision and digitally, and, in the process, to discover and nurture the talent and skills which this range of output needs and depends on, all paid for out of the licence fee. Only the BBC can sustain investment in a huge swathe of musical events, ranging from the joyousness of the Proms at one end to the big band concerts at the other. I very much agree with what Sir Michael Lyons, the chairman of the BBC Trust, said last week:

“The licence fee is key here … And when people come up with ideas about ‘top-slicing’ the licence fee for other causes or commercial players, they would do well to remember that licence fee-payers give us their money in good faith, believing it will be spent on BBC services and content. To suddenly tell them midway through the settlement that their money is being siphoned off, as some have suggested it should be, would be more than an act of bad faith, it would be tantamount to breaking a contract”.

The BBC also makes increasing use of the independent production sector, which stimulates and encourages talent outside London as well, to bid for programme commissions. Channel 4 does the same, investing around £400 million a year in core independent production companies and also supporting digital content production. Similarly, ITV, the largest of the commercial broadcasters, invests around £800 million a year in original content, encouraging and using the talents of writers, actors, musicians, designers, directors and editors. It also gets overseas revenue of around £300 million, up last year by 25 per cent compared with the previous year.

All these activities in the audiovisual sector face serious theft issues—the theft of intellectual property. Copyright theft alone costs the sector an estimated £0.5 billion a year, meaning a loss to the economy of £1.2 billion a year and cheating the Exchequer out of £85 million a year in VAT. Organised criminals pocket this cash instead of it going where it should through physical and digital distribution. A report last week by the Strategic Advisory Board for Intellectual Property revealed that,

“50 megabytes-per-second broadband access can deliver 200 MP3 music files in five minutes, a DVD of Star Wars in three minutes and the complete digitalised works of Charles Dickens in less than 10 minutes”.

The UK Film Council told the authors of the report that there were,

“just under 100m illegal DVD downloads in 2007 and the global film industry is thought to lose more than £4bn a year”,

through this theft. Respect for Film, which campaigns on behalf of the moving image, commissioned Oxford Economics to look at how legislative changes might help. It concluded that tightening laws to tackle physical and digital copyright theft would increase UK economic output from this sector by £614 million. That should interest any Chancellor of the Exchequer in these straitened times.

What changes could be made? One example is to make camcording illegal in cinemas. This is the source of 90 per cent of seized first-release films and DVDs. It is already a criminal offence in France, Italy and Spain, and, in my view, there is no reason why it should not be made a criminal offence here. Next, there needs to be better regulation by local authorities’ trading standards departments of car boot sales and other markets. It is said that the Digital Britain White Paper, which we are expecting later this month, will commit the Government to the aim of reducing the file-sharing of illegal content by 70 to 80 per cent within two to three years as one step towards reducing online copyright theft. If that is the case, I much welcome it. I well understand that it is a complex issue but ways can and must be found to protect intellectual property rights for the future of our creative industries.

This debate is right to celebrate the value of our creative industries socially, culturally and economically, and the depth and range of the talent that underpin them. I do so with enthusiasm.

My Lords, I appreciate being allowed to make this brief contribution in support of the education and research which underpin what other noble Lords have shown to be the huge success of the creative industries.

I argue—I declare an interest as chief executive of Universities UK—that this success has been built on the foundations of forward-looking education and research in higher education institutions, yet I am concerned that, in the laudable effort to promote study and research in traditional science subjects, we risk losing sight of the importance of the arts, humanities and social sciences, all of which play a role in underpinning our efforts in the creative fields. Research and education in fields such as design, interactive media and digital content, as well as more conventional creative subjects such as art, drama and music, are the lifeblood of our creative industries.

Therefore, I ask the Minister to comment on just one issue. Is it correct that the current definitions of R&D inadvertently position research for the creative industries and other arts and humanities outside the current R&D and innovation agenda? As I understand it, the guidelines for R&D tax credits state:

“Work in the arts, humanities and social sciences, including economics, is not science for the purpose of these Guidelines”,

thus excluding knowledge transfer activity relating to the creative industries, as well as R&D within the creative industries themselves, from tax relief of this kind. Therefore, a sector of industry which is often characterised by SMEs and which thrives on cutting-edge research does not receive the incentive to invest in that research.

So I urge Ministers, in considering how to achieve the best value for public funds, not to forget the lesson of the creative industries. We need education and research in the arts, humanities and social sciences. They are an integral part of the intellectual ecosystem of the UK—a part that, yes, provides powerful economic benefits but so much more as well.

My Lords, I join in thanking the noble Lord, Lord Bragg, for securing this debate. The number and variety of speeches today are an indication of how central the contribution of the creative industries is to the UK economy and also, I argue, to the well-being of the UK. As Sting pointed out at the Hay festival, while the country does not produce much any more,

“we do make art and music”.

He is so right. As I have said before, in an era which has seen manufacturing jobs halved since 1997, the creative sector is the new economy. As I think the noble Lord, Lord Watson, mentioned, it has been estimated that music alone contributes £5 billion to the UK economy.

Many noble Lords have mentioned festivals today—we have heard about Wales and Edinburgh—and I feel that I have to speak up for the south. I went from Hay to the Wylye Valley art trail, a nine-day celebration of the visual arts in and around the Wylye Valley where I live. It was an opportunity to visit artists’ studios, see the range of artwork being carried out in the area and to meet and talk to artists and craftspeople. Up the road, the Salisbury festival has for the past two weeks been host to music, dance, theatre, workshops and even, I believe, the noble Lord, Lord Bragg.

It not just about art, music and theatre; the range and diversity of the creative industries, as the noble Baroness, Lady Young, pointed out, stretches from fashion to film, advertising, architecture, television and video games. The cultural and creative industries make up 7.3 per cent of the national economy, contributing £60 billion a year and collectively employing 2 million people. We believe that that should be a key route to getting us out of the recession. But we must keep ahead of the game. The UK is lagging behind in the deployment of super-fast broadband. The Government’s commitment in the interim Digital Britain report to a rollout of two megabytes per second, when the average is already 3.6 megabytes per second, is not nearly ambitious enough and will not provide the catalyst for recovery that is required.

One of the greatest threats to the growth of this sector, as mentioned by the noble Lords, Lord Corbett and Lord Macdonald, is the knotty problem of the protection of intellectual property rights in our digital age and the ease with which copyright can be and is, flouted via online piracy and peer-to-peer file sharing. The report, to which the noble Lord, Lord Corbett, referred, Strategic Advisory Board for Intellectual Property stated that around 7 million people in the UK are involved in illegal downloads, costing the economy tens of billions of pounds. Of course, this behaviour spans from those involved in intentional online piracy to many who are uncertain about what is illegal. The fact that so much on the internet is free confuses people.

A new settlement is needed between artists, consumers, rights-holders and intermediaries, with copyright at its core. Good copyright protection is vital for the encouragement of creativity and the health of the creative sector. The Government’s interim Digital Britain report acknowledges the importance of creative capital. However, its suggestion of a digital rights agency without statutory powers seems to offer little hope of ending the problem. A collective approach from internet service providers, rights-holders and government is needed to make it more likely for court cases such as that brought against the founders of Pirate Bay to succeed. Moves by the ISPs to send warning letters to repeat offenders are welcome and evidence suggests that they would have a good chance of making a difference. However, we do not think that the “three strikes and you are out” policy being considered in France is a desirable solution. ISPs cannot be both judge and jury.

It is to be welcomed that part of the remit of the proposed rights agency is, according to the noble Lord, Lord Young, in a recent debate on online piracy,

“to focus on encouraging respect for the creative industries and increasing public awareness of the easiest way to access legal content”.—[Official Report, 2/4/09; col. 1224.]

I think that we would all agree about the need for education alongside regulation. We must not forget that we are talking about the creative world—a fast-moving, dynamic world that the explosion of digital content has nurtured. Alongside the need to find a solution to online piracy, we need to exercise proportion—cultivate without crushing, as the noble Lord, Lord Bragg, said. But the new world brings with it problems for the old.

Broadcasting has historically made a hugely important contribution to the British creative economy. I declare an interest as an associate of an independent production company. The inspired creation of the BBC—followed by ITV, BBC2 and then Channel 4—has played a crucial role in sustaining and fuelling British creativity. More recently, changes in TV terms of trade have seen remarkable growth in the independent production sector. As well as nurturing British talent and British content, radio and television channels have provided virtually free access to all across the creative spectrum. But as the noble Lord, Lord Macdonald and the noble Baroness, Lady McIntosh, said, British broadcasting has reached a critical point. A transition is under way. Competition from digital channels and the internet has led to a decline in advertising revenue for the commercial public service broadcasters, which is exacerbated by our being in recession. The funding model, which has seen an annual investment of £3 billion in UK-originated content is under severe threat.

However, the statistic that is most relevant is this: the five terrestrial channels—those that are universally available and free—are responsible for about 90 per cent of the investment in UK-originated content; whereas the new players—the digital channels and the internet—contribute less than 10 per cent. That is despite the fact that together they receive two-thirds of the income coming into UK TV.

The British creative industries need our public service broadcasters and we must protect the BBC licence fee from topslicing and suggestions of arbitrary freezing, as made recently by the Conservative Party. According to an independent report commissioned by the BBC Trust last year, the BBC’s activities put £5 billion per annum into the creative industries. We must not return to the days when the BBC was a monopoly. We welcome the Government’s commitment in the interim report of the noble Lord, Lord Carter, Digital Britain, to maintaining a plurality of public service broadcasters. Can the Minister confirm that the Government support the idea of a partnership between Channel 4 and the BBC’s commercial arm Worldwide?

As a publisher-broadcaster, Channel 4 makes an enormous contribution to the creative economy. It stimulates competition in the UK’s creative economy and it is vital that it survives. A snapshot of the creative industries can be seen in the new manufacturing industries and the phenomenon of Harry Potter. The films are made at a place called Leavesden aerodrome, where Rolls-Royce used to manufacture helicopter engines. Now instead of that kind of industry, it employs vast numbers of people from across the creative spectrum from the most advanced new media to practitioners of crafts in the shape of carpenters, painters, actors, and so on. But for this, there needs to be a skills base, and that starts with education.

Creativity needs to be nurtured from the, beginning, as the noble Lords, Lord Puttnam and Lord Inglewood, mentioned. Yet creative skills are stifled in our schools by a system that is dominated by exams and league tables. With the rejection of the Tomlinson report, the national curriculum continues to undervalue vocational qualifications. Creativity needs status, which has been recognised across the Atlantic by President Obama, who has committed to reinvest in arts education. He said:

“In addition to giving our children the science and math skills they need to compete in the new global context, we should also encourage the ability to think creatively that comes from a meaningful arts education.”

Will the Government follow his lead?

In their Creative Britain paper, the Government committed to establishing 5,000 apprenticeships annually in the creative industries by 2013. There is no money ring-fenced. Instead, the commitment turns out to be raising the awareness of employers of the benefits of apprenticeships. In other words, the commitment is to a concept, and so far I believe that only 50 places have been provided. The Chancellor said in his Budget speech that job creation and employment for people of all skill levels would be vital to long-term recovery. The Government should be investing in these apprenticeships.

The creative industries are a key to economic recovery. Two years ago, the cultural sector got together and published a manifesto called Values and Visions. I end with its words that,

“Britain’s economic prosperity will not depend on industrial prowess, natural resources or cheap labour but on developing, attracting, retaining and mobilising creativity. In this 21st century, goods, services and industries driven by knowledge and creativity will define Britain’s competitive edge”.

My Lords, I join in the thanks to the noble Lord, Lord Bragg, for introducing this interesting debate, which has covered such a wide range of subjects, all under the heading of creative industries.

A number of noble Lords have pointed out the huge contribution that the creative industries have made to the economy of this country and, as the noble Baroness, Lady Young of Hornsey, pointed out, the enormous variety of fields that come under the description. Creative industries cover architecture, advertising, the performing arts, television, theatre—you name it. It is immense.

In some areas, that contribution is made in spite of the obstacles put in the way of that industry. For example, there are artists’ resale rights, or droits de suite, as they are more commonly known. At present, droit de suite applies to living artists. That imposition by the European Union is difficult and expensive to administer. A recent study shows that fewer than 1,000 of the 85,000 living artists have received anything, while the top 10 per cent shared 80 per cent of the total money paid out in the first 18 months of the scheme.

The United Kingdom has a derogation, so that droit de suite applies only to living artists. That is due to expire in 2012, when the droit de suite will be extended to all European Union artists who have been alive in the past 70 years. I urge the Minister to impress on Her Majesty's Government the importance of extending the exemption for the United Kingdom. The United Kingdom is, both through its dealers in art and its salesrooms, a leading player in the art market. Credit crunch permitting, I declare an interest as a purchaser in the salesrooms. The art market is global, but with none of the leading competing markets, such as Asia, Switzerland and New York, having the droit de suite, business will inevitably gravitate away from the United Kingdom to countries outside the European Union, to the detriment of all.

Some might say that salesrooms and dealers in art are not a creative industry, but they provide a marketplace for a broad range of products, not just the headline-grabbing items that feature in the media. Those intermediaries therefore play an important role in the overall prosperity of the creative sector. Impositions such as droit de suite can only drive business away from these shores. The argument has been made that only the big-ticket items will disappear. That argument is not valid, as diminishing the marketplace as a whole will have a consequent knock-on effect that will end up by reducing the ability to deal in the more mundane and everyday articles of artistic or rarity value.

A significant impediment to prosperity within much of the creative industry is, as the noble Lord, Lord Corbett, and the noble Baroness, Lady Bonham-Carter, mentioned, illegal file-sharing and intellectual piracy. The internet has made that possible on such a huge scale that it has been estimated that a quarter of the population has been guilty of that abuse at some stage or other. There is no easy answer to that problem. If there was a simple and straightforward solution, it would have evolved in the huge amount of discussion on the subject and the reams and reams of paper that have been produced.

As my noble friend Lord De Mauley said in a previous debate, in such a fast-changing environment, where everything from users’ habits to the technology and the source of the desired content changes at such bewildering speed, it is impossible to expect the Government or a regulator to keep up. Instead, we must look to the industry itself to both tempt users away from illegal options and identify the worst abusers.

When one looks at what has happened in the past 25 years in the world of the internet, it is almost certain that there will be further developments in forthcoming years that no one here today has thought of or can probably even imagine. Given the huge changes that are occurring and will continue to occur on an almost daily basis, it is pointless to pretend that legislation can be devised to deal with the problem of creative talent being hijacked with no payment. Given that proposition, one with which I find it difficult to argue, it is for the industry itself, which has benefited so much in the past from technological developments—the wireless, telephone, television, gramophone records and so on, all of which have created huge streams of income—to find a solution, or perhaps even revert to life as it was before the days of electronic communication.

That evolution can already be detected in the world of popular music. Only recently, live tours were used to promote the sale of recordings. Now it is the recordings that are used to promote the live tours, which generate enormous sums of money, or there are the shows to which the noble Lord, Lord Bragg, referred. There may be a role for government here, but the role will be to facilitate the creative industries to act rather than for any direct action by the Government, as some have called for.

The noble Lord, Lord Bragg, and my noble friend Lord Chadlington both referred to the problem of bureaucratic interference and red tape of one sort or another. Some of that cannot be avoided. If government subsidy is accepted, it must be recognised that there will be a greater level of government interference. Examples such as that of Kevin Spacey and theatres such as the Globe, given by the noble Lord, Lord Bragg, which receive not much, if any, subsidy, demonstrate how effective theatre can be without interference and subsidy. From that, should one question whether subsidy can do as much harm as it does good and whether it should therefore be treated with great caution, lest creative talent is stifled? If theatres such as those can survive, surely television will be able to continue to produce quality drama without too much help.

Before sitting down, I would like to say that, having listened to him play, my noble friend Lord Colwyn grossly underestimates his talent as a trumpet player. It is a pleasure to listen to him.

My Lords, I share with the House my gratitude to my noble friend Lord Bragg for his introduction to this very important debate, and for stimulating such a range of constructive contributions, varied in geographical range and in the issues addressed, making this an extremely difficult debate to which to respond adequately. I will do my very best to answer the particular points raised. At the same time, I emphasise that in his introduction, my noble friend surveyed the contribution of the creative industries to our society and economy in a manner that I could scarcely match. The Government have revised the figure of the creative industries contributing 7.3 per cent of the economy; we now identify it as 6.4 per cent, which is a slightly lower contribution but, nevertheless, one that reflects the expansion during the past decade. There is no doubt that the creative industries are important in the employment that they provide, their contribution to the economy and, as my noble friend identified, our exports.

All that is not to measure the arts and the creative industries purely in terms of their economic contribution, but it would be remiss not to mention—I was grateful to my noble friend for emphasising this fact—that in these straitened times, we need to put our analysis of sectors such as the creative industries into an economic perspective. It is a dynamic sector. Over the past decade, it has grown faster than the rest of the economy. Employment in creative jobs has grown by more than 400,000 since 1997, which means that creative employment has grown at twice the rate of employment in the economy as a whole.

All of us on the government side—although I think it is recognised a great deal more widely than that—would say that one of the most popular, constructive and important decisions taken by the Government on coming into office in 1997 was the abolition of charges for galleries and museums. That has been justified by the enormous, overwhelming demand shown in the attendance figures at art galleries and museums since then. As my noble friend indicated, several of our great museums are now part of the national consciousness. That gives us hope that some of the suggestions made in this debate about the necessity for educational change are partially being met by this extension of opportunity and understanding.

My noble friend Lord Bragg mentioned education, and other noble Lords commented on it, including my noble friend Lord Puttnam. I was encouraged by the fact that an education Minister was sitting beside me for the early part of this debate and taking on board the important point about the extent to which the creative industries depend upon the successful education of our children. I say to those who are anxious about education that their anxieties might well be allayed by visits to schools. We all recognise that schools have to meet targets with regard to performance in a range of ways, but there is not a junior school in the country that does not show commitment to creative work for young children. Nor is there any real anxiety that the creative industries may not get the necessary support from young people emerging from our schools and universities. That argument cannot be sustained if we look at the kind of A-levels that many students take—in other parts of the House to some disparagement—because arts subjects are pursued to a great extent at A-level, and at university level, we have seen enormous expansion in opportunities in creative industries. I make the obvious point that one of the strongest growths in educational opportunity in higher education is in media studies. That is sometimes regarded in educational circles as some kind of a soft option, but let me emphasise that universities providing media studies often find that students on those courses are more successful in gaining their first jobs than those on more traditional courses. I look upon that as a positive factor. I am glad that my noble friend mentioned this in his introductory remarks.

My noble friend Lord Bragg will have drawn considerable solace from the immediate support that the noble Lord, Lord Chadlington, gave to the issues in this debate. There is no doubt that management in the creative industries is an important dimension of success. I was grateful for his contribution because it emphasised skills and talent, which the Government have been concerned to address. We need to look at the way in which the creative industries make demands upon the educational system and upon training. The Government are well aware of that, and are very concerned that action should be taken. My noble friend Lord Puttnam, who always speaks on these matters with great authority, was reinforced by my noble friend Lord Macdonald, who spoke about the television industry. The skills agenda is of the greatest importance. We are concerned to develop 5,000 apprenticeships before 2013 in the crucial area of the creative industries. That reflects the fact that the Government recognise that investment in skills is crucial.

In this context, I mention again that the Government are concerned about innovation. The success of the creative industries is clearly based on technological and non-technological innovation, and we are seeking to support and encourage innovation in various ways, including through NESTA and the Technology Strategy Board. It will be recognised that £10 million has been invested in the Technology Strategy Board in research and development relevant to the creative industries. This is where the Government can play their crucial role of giving support.

Several noble Lords made the point that the creative industries and creative people must not be strangled by overregulation. The noble Lord, Lord Colwyn, criticised the Licensing Act. He has spoken on this issue before. The Government are concerned about this matter. The noble Lord will know that certain aspects of licensing are vested in local authorities and that they have important interests to balance. However, I assure him that his point is well taken and the Government are looking at ways in which they can relax certain aspects of the regulations in order to sustain, as far as we can, live music in as many locations as possible. He will recognise that the Government have been reviewing the Licensing Act in that respect.

We have also been concerned to develop our Creative Britain initiative. It aims to move the creative industries from the margins to the mainstream of economic and policy thinking and to bring together a range of government departments that have relevant responsibilities, not only the DCMS, which is bound to be a lead department in this area, but the Department for Business, Enterprise and Regulatory Reform for regulation and support and, as my noble friend Lady Warwick reminded us, the Department for Innovation, Universities and Skills, on higher education. I am having a little difficulty in replying to the noble Baroness’s rather precise point about taxation and support. However, I assure her that the Government are fully aware of her important point about where incentives can be adduced, and I will write to her in some detail after the debate when I will have the chance to address some of the issues that I have not been able to address successfully.

Intellectual property was raised by a number of noble Lords. The noble Baroness, Lady Bonham-Carter, emphasised it in her contribution, and my noble friend Lord Corbett was concerned about it. The noble Lord, Lord Howard, was generous in his remarks on this matter when he identified that this is not an easy issue for the Government to address. The Intellectual Property Office has taken action on intellectual property enforcement and education and is concerned with this crucial issue. However, there is no doubt that we recognise that online piracy on the internet is difficult for national regulation and government in action. In order for the UK to remain one of the best countries in the world in which to produce and invest in content, we need to ensure that the necessary protection and incentives are in place for our creative workers. Therefore, we need to safeguard their achievements. However, the issue is complex, so our approach is multifaceted. We will legislate to require internet service providers to inform their subscribers when rights holders identify them as engaging in unlawful file sharing, and we will oblige ISPs to maintain a list of individuals identified by rights holders as being the most frequent copyright infringers. Subject to a court order being obtained, this will allow targeted legal action by rights holders against the most active infringers. All this activity will be subject to a code of practice supervised by Ofcom.

None of us underestimates the challenge represented by developing technology. Legislation always takes considerable time to enact and then to enforce, and the pace of change can overwhelm us if we are not careful as we develop that legislation. We are all therefore well aware that this is one of the most difficult areas in which to legislate effectively. I want to reassure the House that we do not have the slightest doubt about its importance to the creative industries and the need to preserve intellectual property and copyright positions.

Several contributions ranged probably more widely than my expertise and even that available to me from the civil servants was somewhat stretched. As they have both been in the news this week, I know rather more about Nicole Farhi’s husband and his work than about her products. However, I recognise the importance of the creative work of fashion, which was introduced by my noble friend Lady McIntosh and the noble Baroness, Lady Young. In particular, we applaud the point emphasised by the noble Baroness, Lady Young; namely, that sustainability is important. Creative fashion is an art form which strikes many with the most enormous enthusiasm, a point which my noble friend Lady McIntosh conveyed. The economics of the industry and the sustainability of the fabrics it uses are also important. I want to emphasise the importance of those points.

I am also conscious that the debate had a geographical dimension. My noble friend Lord Bragg worried me a little. I understand entirely his point about some of the ravages of the Industrial Revolution, which were not always attended by a skilful, creative force in terms of art. I recall however that in some of our major industrial cities, major industrialists were most concerned to construct some surpassing examples of Victorian art form, including architecture, to include some outstanding Victorian art and what had preceded it. We should pay tribute to the Industrial Revolution for some of the outstanding art galleries and museums in our northern cities and the Midlands.

I could not possibly allow the contributions made by those concerned with other parts of the country, particularly Wales, to pass without reference. The noble Lord, Lord Rowe-Beddoe, suggested that when the cities of Britain make a bid to become the city of culture, with which Liverpool was blessed in terms of its outstanding position in 2008, they be put in alphabetical order. I note that Cardiff begins with a “C” and that, therefore, a little special pleading was going on. All sides know the importance of Welsh culture, particularly with regard to music and poetry. I am grateful for those contributions.

I inevitably am short of time for covering such a wide-ranging debate. However, I again emphasise that we have been debating areas in which we all have an intrinsic interest because of the joy and advantage we all derive from the work of the creative industries. Of those, television is bound to be very important because of its appeal to the nation. Therefore, I emphasise to the noble Baroness, Lady Bonham-Carter, to my noble friend Lord Corbett, and to my noble friend Lord Macdonald, who spoke with his usual authority in this area, that we are addressing crucial support for aspects of the industry which are under pressure. We all know the difficulties of independent television and the pressures on the provision of regional news and programmes. There is no doubt that the BBC has an important part to play in responding to those challenges. In just over a week’s time, my noble friend Lord Carter will report on digital Britain and the future of the media in the broader sense, of which television is very important. We will be able to discuss this more intensively at that time. I hope noble Lords will therefore forgive me for not being able to speak too intensively about that aspect now.

Finally, my noble friend Lady McIntosh said that one of the things she enjoyed most about the opening speech made by our noble friend Lord Bragg was that he filled the House with cheer in these somewhat gloomy times, which he did. We all recognise the difficulties that the economy faces and the difficulty of resources for aspects of the creative industries. But we should also recognise the extraordinary advantage that we have. My noble friend described London as the city of delights. Whether or not we accept that at face value, we know what he means; namely, that London is the world capital for art. It leads an immensely creative country and this debate has shown all its richness and its importance. We should support it in every way we can.

My Lords, I thank all those distinguished speakers from whom I have learnt so much. The debate was very impressive and very informed. Alas, I do not have the time to point out your Lordships’ individual contributions, which is a great shame, given their quality. There is clearly real knowledge of and commitment to the creative industries in your Lordships’ House. As so often, this House stands for what is best in Parliament and in the country. I beg leave to withdraw the Motion for Papers.

To call attention to the contribution of science, technology and engineering to the United Kingdom; and to move for Papers.

My Lords, it is very appropriate that we should have this debate on a European election day, because science, technology and engineering are becoming more political and more central to our lives and are part of our membership of the European Union.

I say this for two reasons. First, we look to science, technology and engineering to solve our problems, such as coping with climate change, looking after an ageing population, feeding a growing population, finding new sources of energy, lifting billions out of poverty, competing in today’s globalised knowledge economy and even fighting terrorism. The list is endless.

The second reason why we are going to hear a lot more about science and engineering is that of balance. Although an economy leaning heavily towards financial services served us well for a number of years, it has turned out to be unreliable. The economy emerging from this crisis needs to be more evenly balanced and spread. This is Prudence in her latest guise. Much of the burden of achieving this will fall on science, technology and engineering, which must take the strain. I believe that they can because we have all the ingredients—some good and some not so good—to create a balanced economy. What we must find is the will and the skills to marshal them effectively.

These elements are not just science, technology and engineering taken in isolation; there are social and cultural factors, too. A society that accepts and does not demonise technological progress is important. A balanced economy requires a culture that accepts new knowledge and technological progress as well as the institutions that seek it. It requires us to create and nurture businesses and companies that use science, technology and engineering to bring about economic and commercial progress. I think that we have such companies to a much greater degree than is normally accepted. Amazingly, we also have a number of charities devoted to developing science, technology and engineering, and I pay tribute to those who set them up.

But having these individual ingredients is not enough. They have to be brought together in order to be marshalled effectively. We have institutions such as the Technology Strategy Board to do that, as well as the knowledge transfer networks that bring a new and different focus on innovation. We also have to bring different cultures together. Science, technology and engineering need the social sciences to help us to solve our problems. How can we persuade people to change their ways so that we are able to cope with climate change?

Like Martin Luther King, I have a dream. My dream is that all these elements and centres of excellence will come together. The result will be a balanced economy. Let us take a closer look at each of these elements and see whether I have reason to be confident. Mine is an overview, because other noble Lords know an awful lot more about each of the individual elements. However, science, technology and engineering are changing our society whether we like it or not. You only have to use the phrase “Digital Britain” to demonstrate how accepting of new technologies we now are. Technology has changed our lives in ways that we find useful and acceptable, but that has not happened purely by accident. We used to think that, in order to persuade people to accept science, all that we had to do was explain it—the noble Lord, Lord Jenkin, chaired a committee that produced an important paper on this. But that view was too simple and too condescending. We now know that science must understand the concerns of society. Indeed, many institutions in this country are dedicated to doing this: universities, charities, museums, science learning centres and media centres. Also, National Science and Engineering Week engages thousands of people from the bottom up.

All this is dedicated to building mutual trust. In fact, mutual trust helps scientists and the public to make more informed choices. Trust also enriches the culture of science, which is especially valuable when the public have to choose between opposing views on issues such as MMR. Instead of making decisions based on prejudice, people make judgments based on the values of those making the case. As long as we do not underestimate the public, we will progress towards making science, technology and engineering socially acceptable. Much of this has been brought about by the great institutions that have become part of our culture, such as the Royal Society, the Royal Institution, the Royal Academy of Engineering and the medical colleges. All are proudly dedicated to continuing education and knowledge and to raising standards among people working in their specialties.

Central to the role of science, technology and engineering in our culture, society and a balanced economy are our universities and colleges. Others can elaborate better than I can, but our universities and colleges perform pretty well in terms of papers and citations. Writing in Science magazine, Tony Blair said that,

“the science base is the absolute bedrock of our economic performance”.

So it is disappointing that, in the recent Budget, the science research budget is to be cut by £106 million, even though this money is to be reinvested in key areas of economic potential. I hope that the Minister can put our minds at rest on this.

Science education does not start at university. It starts at school. In my time, science and technology were for the dumber students like me. Fortunately, this has changed, partly thanks to the popularisation of science. The current obsession for forensic science, stimulated by television and news programmes, teaches students a lot about science without them realising it. Thanks to organisations such as STEM, with over 18,000 ambassadors—yes, 18,000 and rising—to schools and colleges, young people are having their feel for science, technology and engineering turned into something more real. Science, technology and engineering are not second class any more. The ambassadors also do valuable work with young people’s concerns about the environment. We have to persuade them that science, technology and engineering need not be dirty and polluting. These ambassadors do valuable work in that area.

The last few years have seen science, technology and engineering become embedded in our political life and in the Civil Service. The Office of Science and Technology was created in 1993 by a Conservative Government carrying out a promise made in a Labour Party manifesto. Is science transcending politics? I hope so. We have a Chief Scientific Adviser who reports directly to the Prime Minister and a scientist in most government departments. Scientists are central to the green agenda, and even the security services have recently appointed a scientific adviser. However, we are still waiting for the Treasury to appoint one. We are well served by our own Parliamentary Office of Science and Technology, and we must not forget the work of the parliamentary Select Committees. No other nation in the world has a structure like that. The new American Administration are moving towards it; when appointing several scientists to senior posts, President Obama said that “promoting science” is,

“about ensuring that facts and evidence are never twisted or obscured by politics or ideology”.

I say amen to that. It seems to me that socially, culturally, academically and politically we have the ingredients to fulfil my dream of a balanced economy.

What about business and industry? Do we have sufficient commercial strength? Over the past 25 years, we have relied on consumer spending and financial services to expand our economy. As a result, industry has declined from about 30 per cent of our GDP to 17 per cent. It is this that we have to reverse at a time when private spending will be far more restrained.

There is some good news. Our ability to attract inward investment demonstrates that Britain is a good place to do business. Things are changing. We are breaking down the artificial difference between manufacturing and services. We are breaking down the barriers between pure and applied science. Moreover, the financial sector will also have to reform its priorities. Balance means thinking in industrial terms as much as financial. This means moderating demands for the short-term results looked for by many financial institutions, which conflict with the longer-term needs of scientific and technological development. Surely this is a prime example of the need to moderate sectional interests in line with the national interest.

But our industrial base is small. We cannot do everything; we need to choose. There is a great deal of talk about the future being in low carbon. The recent Budget earmarked nearly half the strategic fund for this purpose. But this is a risky business, because low-carbon energy is likely to remain more expensive than the traditional sources.

There are many other economic opportunities, however. An illustration is the 11 potential sites for nuclear power stations that have been identified: 40 per cent of the cost is in their building but 60 per cent is in the equipment that goes into them. John Rose of Rolls-Royce recently listed this work: high value-added manufacturing, robotics, electro-mechanical engineering, materials science, complex software and control systems, and, the Minister will be pleased to hear, all this on the back of a privately financed project.

Is this not a good focus for the strategic fund announced in the Budget? Is this not an opportunity to bring our businesses up to date in these new technologies so that we can compete internationally? Is this not an opportunity for businesses large and small to commercialise new techniques? I hope that the Minister will say something about this fund.

A key ingredient of a balanced economy, of course, is innovation. Not only does innovation find new and better ways of doing and making things, but it is also required to deal with society’s problems. How do we design hospital fabrics and furniture so that they look good, perform well and help to get rid of MRSA? These interfaces are where a lot of innovation happens nowadays and make it less risky.

There used to be a wide range of organisations aiming to improve the technology and innovation capability of British business. The task of joining them up and marshalling them was given to the Technology Strategy Board. To this has been added the task of responding to the challenges that society makes on business and industry for things such as low-carbon vehicles, intelligent transport systems, low-impact buildings and assisted living. We seem to be achieving some focus thanks to the various innovation platforms that have been prepared by the TSB.

Some of this work takes place through the knowledge transfer networks. I declare an interest as honorary president of perhaps the largest one, Materials UK. Again, these networks help to make innovation happen rather than just leaving it to chance. This work is important because business will not automatically do these things on its own. This kind of joined-up working is better developed here than in most other countries. Even so, it can be and must be done better because the TSB and its networks are an important part of our balanced economy.

In the short term, we all know that the urgent problem is to ensure that business and industry have the credit available to survive the current crisis and to hold on to their staff and to their skills. But I think that later there is a good chance of my dream becoming a reality. Recessions stimulate and accelerate change; new and different business models and markets emerge. Yes, we have all the ingredients to achieve a balanced economy. All we need in this changing landscape is the skill, the imagination and the will to make it all work in the way that we want. I hope that the Minister agrees. I look forward to hearing the remarks of other noble Lords. I beg to move.

My Lords, it is a real pleasure to follow the noble Lord, Lord Haskel. I congratulate him not only on selecting this topic for debate but on his excellent and wide-ranging speech. I do not always agree with what he argues in your Lordships’ Chamber but on this occasion I agree 100 per cent with what he said.

I declare some interests in the subject. I am the honorary chairman of Cambridge University’s technology transfer office, Cambridge Enterprise Ltd, and I have a financial interest in about a dozen high-technology companies either as a director or an investor. I should therefore like to concentrate on one specific aspect of the challenge facing the United Kingdom in developing and encouraging science, technology and engineering activity, at the start-up end. It involves pre-revenue high-technology companies which rely largely on seed funding not only from the Government but from universities. This is the seed corn for the future in terms of developing the quality of science, technology and engineering in this country.

I agree with the noble Lord, Lord Haskel, that the great resources in this country, for which we are world famous, will solve our practical problems. The previous debate might lift the spirit but this debate deals with the urgent practical problems and challenges facing this country.

It is a pleasure to see the Minister, the noble Lord, Lord Drayson, in his place. He was a great loss to the Ministry of Defence but I am delighted that he is back in government as Minister for Science and Innovation. This debate and his concluding remarks will be followed with great interest by the royal academies and by many universities interested in this subject.

The United Kingdom, if not pre-eminent, leads the world in innovation in this field. Perhaps I may compare our great universities with those in the United States. We develop and register more innovations but perhaps exploit fewer of them commercially and financially. However, we have a proud record to defend and nurture. The problem which I am identifying occurs at a very early stage in the development of technology: financing the development and proving of the technology before it is exploited commercially.

Many initiatives and programmes are available in this country. Perhaps I may single out, within the public sector, Partnerships UK. I pay tribute to what it has done, but it is very small in comparison with the resources needed; its total capitalisation, I think, is of the order of £45 million. There are also great foundations—in part led largely by the noble Lord, Lord Sainsbury, and a very generous benefaction to many universities in the development of science and technology—individual business angels; some venture capital companies; Capital for Enterprise, sponsored by the Department for Business, Enterprise and Regulatory Reform; and corporate venture capital funds. The great problem is that this traditional source of financing is beginning to dry up, presenting a real crisis in the development of technology in this country. Once the tap has been turned off, we will pay, five or 10 years down the road, in the lack of innovation that has been commercially exploited.

Before I follow the noble Lord, Lord Haskel, in turning to the Government’s latest proposals I ought to acknowledge some present sources of alleviation. So far as the European Union is concerned, the Commission has just announced a doubling of the funding for future and emerging technologies, from about £88 million this year to double that by 2015. That is warmly welcomed, although sometimes bidding for these funds presents a serious challenge in terms of both energy and the detail required. However, it is certainly welcome.

The public procurement pull-through, which the noble Lord, Lord Drayson, has talked about in the past—in other words, the public sector providing financial resources in order to pull technologies through before they are either developed further in the public sector or commercialised in the private sector—has an important role to play. Again, I pay tribute to the All-Party Group on Small Business , which is specifically focusing on how to improve public sector procurement at the moment. One must also congratulate the British Library’s Business and IP Centre; it is spending a relatively small sum but it is an excellent resource for young technologists and small business men seeking information about patents, intellectual property and comparable technologies around the world. I congratulate the British Library on what it has already achieved.

The Department for Business, Enterprise and Regulatory Reform has shown focus in producing an excellent pamphlet called Solutions for Business. It is the first occasion when all the various sources of financial advice have been drawn together.

In terms of what is currently available, I single out Scottish Enterprise as quite a sensible model for the regional development agencies or whatever succeeds them. Scottish Enterprise takes the lead in providing matching funds for small high-technology start-ups, particularly those being spun out of the Scottish universities. It has been bold and brave in backing a number of companies, and it has already had its successes.

I turn to the kernel of my argument: all this activity, expenditure and support is not enough. In the Budget, the Chancellor talked about a £750 million strategic investment fund to take over from and provide much the same services as the old Industrial and Commercial Finance Corporation and 3i, until 3i decided to pull out of its traditional role of nurturing new technology. Then, on 20 April, the Prime Minister made a promise at Loughborough University; the idea was to set up a state-backed bank to address the funding gap for start-up ventures, so this was a specific proposal derived from the bigger innovation, the strategic investment fund. Now we read today in the newspapers of the appointment of Mr Christopher Rowlands, formerly of 3i, who is going to lead an official review of how a state-backed bank should be set up, reporting to the noble Lord, Lord Mandelson. It would be helpful if the Minister could confirm that that is indeed the case, along with the terms of reference and a timescale for the review.

We should be grateful to the National Endowment for Science, Technology and the Arts—NESTA—and the British Venture Capital Association for supporting the idea of a state-provided but privately run or privately managed fund for high-tech start-up businesses. Richard Lambert, the director-general of the CBI, deserves specific credit for helping to derive that suggestion.

In conclusion, the three principles that should govern this new initiative on spending public money to support high-technology, early start-up enterprises are: first, that we need an allocation of funds, and the £250 million that has been talked about by the Government in your Lordships’ House is of the right order of magnitude; secondly, that we must embrace the private sector to help to manage and exploit the assets available, because I do not think it should be run entirely by the public sector; and, lastly, that we ought to be picking winners, backing technology that has already had proof of concept in our universities or research institutes and technology that is either proven or capable of being proven. We do not want to spread the available money too thinly across many projects all over the country.

The time to act is now, and the Minister’s support is vital to the success of the project.

My Lords, I congratulate the noble Lord, Lord Haskel, on drawing attention to this timely topic. As a research neuroscientist at Oxford University and director of the Royal Institution of Great Britain, I endorse, and shall try to amplify, some of the noble Lord’s comments. A good first step could be to identify some of the bottlenecks in scientific culture that are preventing UK plc from making the most of the current opportunities.

First, there is the relationship of science with the media. By definition, it is the print and broadcast media that outreach with greatest impact to all aspects of our society. While the recent coverage of swine flu was comprehensive and, for the most part, accurate, many scientists would feel that there is still a long way to go before we can with complete confidence consign to the past the all too familiar demonisation of science and scientists, the sensationalist, oversimplified reportage of facts and the wariness and aversion many scientists have of talking to the press.

At a basic level, I see the difficulty lying in a conflict of different cultures between scientists, journalists and, indeed, politicians. The ensuing clash is one of very different agendas and timescales. In order to be an effective politician, one has to have some kind of platform and power, and the normal timescale of operations is, say, a couple of years. High on the agenda is sensitivity to public opinion. Meanwhile, a scientist has not traditionally needed to communicate directly with the general public, but top of their list is the need for large amounts of money to fund experiments that are increasingly dependent on expensive high-tech equipment and escalating running costs. Without significant grant money, scientists cannot even begin to ply their trade, and even then they have to do so in a zig-zag progress that can constitute a whole career, spanning decades.

Compare the mindset that will most likely subsequently result with that of the journalist, with deadlines of hours at most, and the defining goal—enabling them to do their job—of attracting and retaining large numbers of readers, listeners or viewers. It is easy to see how there may be some bafflement and lack of understanding on all respective sides, as a long-term, and always provisional, discovery of a truth seems to be sacrificed in favour of a dramatic and usually scary conclusion which, above all, makes for an immediate soundbite. Alternatively, it is easy to imagine how a genuine inquiry by a journalist for covering a scientific news item might be met with, at best, an incomprehensible, circumlocutory response or, at worst, prevarication and frank hostility from the scientist.

Ways forward for building bridges between such otherwise disparate sectors are starting to make their mark. For example, Sense About Science, an initiative started by the noble Lord, Lord Taverne, and the Science Media Centre at the Royal Institution have done much over the past few decades to create a common forum where different agendas and timescales can be reconciled. Yet such initiatives are still not supported by all scientists as part of their mainstream activity, and some journalists can still be prone to exaggerate, oversimplify and scaremonger.

We will see a truly effective outcome of this culture clash when we have not only laudable initiatives but a buy-in from all sectors; when every rank and file scientist sees it as part of their job to help—yes, actively help—the media; and when every news journalist taking a scientific angle sees their job as really helping to empower their readers and viewers with knowledge, rather than giving them a quick frisson of second-hand horror. Prizes and acclaim should be given to journalists who can turn this culture around, while more weight should be given in the scientific research assessment exercise and in giving research grants to scientists conspicuously working hard to democratise science.

A second bottleneck also arises from another culture clash, this time between scientists and the private sector. Although the landscape has been transformed over the past few decades in the collaboration of universities with industry, there is still a residual mindset endemic within the technology transfer units of some universities, and indeed in the attitudes of the scientists themselves, that prevents realisation of the opportunities for commercialising on basic research. The respect of the business community for apparently highly paid management, the need to submit patent applications before publication and seemingly rigid milestones are as unpalatable for scientists as a high burn rate, jargon-ridden incomprehensible technology and a lack of obvious exit strategies are to disenchanted potential investors in biotechnology.

Moreover, basic research should not be unattractive just because relatively little money is required, and hence little return possible, for seemingly blue-sky research. The Weizmann Institute in Israel, for example, a research centre dedicated to basic non-applied research, none the less has one of the highest numbers of patents and one of the most stellar commercialisation track records in the world. Surely there are lessons for us to learn here.

A third bottleneck is the frequent disempowerment of up to 50 per cent of the potential scientific workforce. When I headed up a report for the Government in 2002 on recruitment and retention of women in science, we found that much needed to be done. Today, still only 7.5 per cent science, engineering and technology professors in UK universities are female.

Aside from the need to persuade schoolgirls to look beyond sexist stereotypes, and the importance of giving women of professorial level the confidence and support to apply for glass-ceiling positions, another problem between these two stages became apparent that can be solved, not by a slippery cultural shift, but by simple resources. Money could be ring-fenced for those, including men, who had taken significant time off at a formative stage in their career, to look after a baby. Indeed, the retention rate of female science, engineering and technology graduates is merely 25 per cent compared with the male retention rate of 40 per cent. In a study conducted by the Royal Society of Chemistry in conjunction with the UK Resource Centre for Women in Science, Engineering and Technology, this so-called “leaky pipeline” was attributed to the uncertainty of the short-term contracts available and the inconsistency with raising a family.

Building on the aforementioned study, here is a solution that, while not being easy to implement in the current economic climate, is at least simple to conceptualise. It is to put aside a realistic level of funds so that those not in established posts and returning from childcare—probably mainly women—could compete for fellowships for re-establishing their research, not with the same probability, or lack of it, of winning the lottery, but with a chance that ensured the scheme worked to bring back effective and significant numbers of talented young scientists into the research workforce. With the advent of an estimated 2.9 million new science jobs in the UK by 2017, it is vital to ensure that both sexes receive an equal opportunity in benefiting from this growth.

The fourth bottleneck is perhaps the most pervasive and relevant to this debate: scientific literacy. There may be ever fewer individuals who are like one old lady who apparently said she would never eat tomatoes with genes in them, but if we are to make the most of the 21st century, then science, engineering and technology are still not where they need to be—at the heart of society, and in the hearts and minds of the next generation.

Cultural shifts cannot be realised overnight, but a scheme that could well give such a nebulous idea some substance comes from bringing together three very different, seemingly unrelated facts. First, the general public like attending science-based events where they can interact and challenge scientists speaking in general lectures, debates or panels. At the Royal Institution we have an audience of 200-strong on average up to three times a week throughout the year. Secondly, on most weekends and many weekday evenings, the lecture theatres of most universities lie empty and unused. Thirdly, many academic scientists who are mid-career in lectureships often feel that they are on a treadmill of recycling the same old courses, the endless audits and—even more endless and demoralising—the writing of grant applications, with a success rate of about 10 per cent to 15 per cent. How can they become reinvigorated to persist with cutting-edge research? How can they act as role models for their students? And how might they widen their general skills?

The answer could lie in drawing together these three disparate strands. Imagine a scenario where every weekend and perhaps during the week, your local university opened its doors to science events for the public. The science faculty who spent time running these events would gain new and exciting experiences, new skills and insights, while being paid in teaching remission or, indeed, overtime. In turn, the funds could come from a socially-sensitive box office fee—after all, it should be and could be the equivalent of a good night out at the cinema—plus subsidy from the appropriate government departments. I gather that a beacon scheme that is being developed might meet some of these needs.

Everyone would win: the rank and file science academic would gain skills for talking to the media and, indeed, for gaining more of a “wood” rather than “trees” perspective of their subject. The universities would gain by having more motivated staff and the buy-in and support of their local community. The general public would gain by having an immediate and interactive route to scientific literacy. The Government would gain by having a society eager and informed enough to make the most of what science, engineering and technology have to offer.

While a “change in culture” is an easy and frequently used phrase, it is hard to define operationally, let alone realise. But what is certain is that such changes are harder still without resources. Surely relatively modest sums of money invested in, for example, initiatives for women scientists and the democratisation of science for the public within their local communities, would give disproportionately valuable returns for making the most of science, engineering and technology in the 21st century.

My Lords, I pay tribute to my noble friend Lord Haskel for leading this debate with the knowledge and precision that is his hallmark. I entirely agree with the noble Lord, Lord Freeman, about funding start-ups.

I begin by declaring an interest: as director of Warwick Manufacturing Group at the University of Warwick, I have long believed that science and technology are central to almost every issue we face as a nation. Over the past decade, science and technology issues have become frontline news, and academic research has increased in prestige. At the same time, the increase in higher education funding has meant expansion, a growth visible in the new buildings we see on every university campus.

Of course, issues remain, and are high profile. It is usually difficulties, not successes, which command immediate attention. Despite this, I think most of us will agree that the past decade has been, if not a golden age, then at least an era of significant silver.

This increased funding, as well as our growing understanding of the world, means there is hardly any aspect of our national life where scientific research is not making a vital contribution. I noticed that many noble Lords chose to speak in the debate on creative industries earlier today. It occurs to me that without the contribution of science and technology, British creative industry would be very limited indeed. From the printing press to wireless technology, from cinema to videogames, from television to broadband, the framework of scientific and technological progress has shaped the growth of creativity industries. Indeed, the Digital Britain report compares the creation of broadband infrastructure with electrification in the Edwardian age in its power to transform. This manifests itself in many ways. Last week, Scottish scientists announced that they have been able to recreate digitally, then build, a lost musical instrument, the lituus.

So new digital technology means a seismic shift in many industries, from internet radio to classical music. In the same way, scientific research is reshaping many of our most pressing social problems. After all, without the pioneering work of Crick, Watson and Sir Alec Jeffreys, the current debate over DNA fingerprinting would not be possible.

Science is also the key to climate change. A fortnight ago, the new American energy secretary, Steven Chu, suggested we paint our roofs white to reflect sunlight and reduce demand for air-conditioning. He proposed this because research by the Lawrence Berkeley National Laboratory suggests that changing the colour of 100 square metres of roof could offset 100 tonnes of carbon dioxide emissions a year. Yet some argue that focusing on adaptive technologies will distract people from the need to reduce their carbon footprint. This highlights one of the problems with our attitude to science: a lack of cultural belief in the power of technology to transform lives.

As the Times said on Tuesday, this year is the 50th anniversary of CP Snow's famous “Two Cultures” lecture. Today we have a choice between “two attitudes” to science. The first holds that science and technology can somehow be reserved for a caste of qualified researchers, whose ideas emerge as bolts from the blue for the rest of society. This attitude isolates hard science from economics, and scientific research from the real world. It can be a comfortable arrangement. Scientists receive a small tithe of public expenditure, stability, and a certain status. In return, they are expected to produce research their peers regard as useful, while the wider population waits hopefully for scientific solutions. I believe that this attitude creates two castes—those who do science and those who have science done to them. This might explain why, despite outstanding research being done in our universities, only 1 per cent of British businesses say that universities are of high importance to them as a source of innovation.

Of course, companies which fully engage in research and development can gain great success. My noble friend the Minister is certainly aware of the enormous value that innovative research can give to a business—after all, he has proven its importance himself. The Government have made great efforts in this direction, establishing the Technology Strategy Board and publishing the innovation White Paper. The research councils, especially the Engineering and Physical Sciences Research Council, now include the economic impact of research when evaluating projects. Despite this progress, the sharing of innovation and success between academia and industry is too often the exception when it needs to be the rule. To change this, we must embrace a new attitude of constant engagement between science and society, as the noble Lord, Lord Haskel, mentioned. We must encourage scientists to focus on our shared challenges and translate their research into reality.

At the same time, we must give independent researchers the freedom to innovate, challenge and experiment. In other words, we choose where the goal posts are placed, but free up the path to goal. If you ask a dozen scientists to reduce carbon emissions, you will get a dozen research proposals. Perhaps half of them will work. The trouble is, as John Wanamaker famously said about advertising, you do not know which half. The same is true of spin-off companies. Not all innovators will succeed; there can be no guarantee of success. Risk is at the very core of innovative research. Innovation always involves venturing into the unknown. We must develop an attitude of embracing risk by supporting innovation anywhere it can be found—in businesses, universities, corporate research laboratories or the work of a young entrepreneur.

The innovation White Paper set out some useful steps for achieving this. As it suggests, we should offer an “innovation lottery”, so that it is easier for companies to get funding for small-scale research with academic partners. We also need a cultural change, so that knowledge transfer is central to academic life. We must bring manufacturers, researchers and customers together, so that they can share ideas to improve products, from batteries to plastic electronics.

Next, we should remove the hurdles, the bureaucracy and the form-filling that can blight new research projects. The noble Lord, Lord May, who is not with us today, addressed this recently in his role as president-elect of the British Science Association. The noble Lord pointed out that the last Research Assessment Exercise would have prevented Crick and Watson getting shared credit for their research. This type of box-ticking, while well intentioned, is anathema to innovation. One of the issues with the RAE is that the evaluation between economic impact and perceived research excellence is tilted towards the latter and not balanced. This is right for “blue sky” research subjects, but in applied sciences, gaining substantial economic benefit is a key to success and we need to be much bolder. These barriers to innovation typify much of the Research Assessment Exercise. That must change.

However, we must go further than lotteries or replacing the RAE. We need a transformation of our attitude to science and society. We should double, treble or even quadruple the money available to fund applied science projects such as technology demonstrators, incubators and low-carbon research. The Technology Strategy Board has a budget of £1 billion for the next three years for all applied research. To make a real contribution, we should invest at least £1 billion each year.

Naturally, business must play its part in bringing science to the heart of society. Let me be blunt: if British companies do not invest in exciting new technologies and products, companies in other countries will. Sir James Black’s work on Beta blockers made a major contribution to both our physical and economic health because we had both a strong pharmaceutical industry and, in the NHS, a ready market for its products.

Yet the equally innovative work of George Gray and Cyril Hilsum, the pioneers of liquid crystal displays, found a market not in Britain but in the companies of the Far East that saw the market value of their work. I can speak from personal experience. When I served as a young apprentice at Lucas Industries, the company was a global leader. Yet a lack of investment in innovation meant Lucas was very quickly overtaken by emerging companies from Germany and Japan. They are now global giants, while Lucas no longer exists.

The Government have increased the research budget enormously, yet we have not seen British competitiveness improve as a result. That is why we must not let research breakthroughs from British universities be transferred from the laboratory to the wider world by others. We must help innovative companies and researchers develop scientific and economic goals together and back their efforts to take their successes to the marketplace.

The challenge that our society faces, from climate change to healthcare, are too great to be ignored by scientists, while the progress that scientists are making, from low-carbon cars to virtual surgery, is too useful to be ignored by society. To meet our social challenges and help our economy grow, we must bring science and society together.

My Lords, I join other noble Lords in thanking the noble Lord, Lord Haskel, for his thoughtful and comprehensive review and introduction to this subject. It is a pleasure to follow the noble Lord, Lord Bhattacharyya, who speaks with great authority about the Midlands, an area which was, is and will remain of major manufacturing importance.

Most of my remarks will be Cambridge-oriented, and I declare many prejudices in that respect. Sixty years ago, I was coming to the end of my first year as an undergraduate in the engineering faculty at Cambridge. I had always wished to be an engineer, but very quickly realised that I was not competent enough, as did my first employer. However, it was the most marvellous discipline in which to be educated and an invaluable training for life, for which I remain eternally grateful. Indeed, it stood me in good stead when, many years later, in a very long business career—mostly overseas—I became for eight years a non-executive director of a group of engineering companies. Later still, I had the honour to succeed the noble Baroness, Lady Platt of Writtle, as honorary president of the Cambridge University Engineering Association. In this respect, my noble friend Lady Greenfield can take some comfort, as the next director of the engineering faculty in Cambridge is no less than a distinguished scientific lady.

My links with Cambridge continue, as my daughter’s eldest son has just completed his second year as an undergraduate in the engineering faculty. I therefore remain very closely connected and can see how radically things are changing since my days there. And of course in this debate, we shall listen with great pleasure to my noble friend Lord Rees of Ludlow, a most distinguished scientist and, I am glad to say, master of my former college.

The UK’s track record is one of having been very good at inventions such as TV, radar and jet propulsion—the list is endless—but less good at exploitation and commercialisation of these developments. However, this has now changed, and Cambridge University, among others, has devised an excellent system for it. Among many incredible developments—many during the time that my noble friend Lord Broers was at Cambridge—there has been, for instance, the Institute of Manufacturing within the engineering faculty. I am reliably informed that there are no fewer than 1,800 small industries within 10 miles of the centre of Cambridge. That is major progress and demonstrates what can happen as a result of scientific and engineering developments.

What are the obvious areas of opportunity that will assist with our national economic recovery? There are many, but I shall mention just a few. They include civil infrastructure—in which we are world-leading consultants—energy efficiency, as has been mentioned already in this debate, security and materials. This last item will be crucial in the evolution of nuclear fusion. In that case, the science has been solved at Culham, but is now being developed further at the large international experimental plant, ITER, in southern France. The problem has moved from a scientific one to an engineering one—in other words, to find new materials that will withstand the very high temperatures within the combustion chamber and in the electromagnets that are necessary. It is not an easy task, but it is essential to get it right and find the solution if we are to solve our energy problems in the long-term future.

It is clear that science and engineering are taken quite seriously in this Parliament, particularly within the various all-party groups on this subject, such as the Parliamentary and Scientific Committee, which has been ably chaired to date by Doug Naysmith in another place and has now been taken over by Ian Taylor. All those initiatives, like the college of science committee and the chemistry society committee, are extremely valuable. It is also extremely encouraging that the debate will be answered by the noble Lord, Lord Drayson, who is, I am glad to say, a nuclear fusion supporter and the only engineer in the Government. I have always thought that government would be improved with more engineers trained to produce solutions that work, which is their motivation, and fewer economists, but that is a prejudice which I shall no doubt continue to hold as things develop in future. I am glad that I am now to be followed by my friend—although not my noble friend—the noble Lord, Lord Howie of Troon, with whom I have discussed engineering on many occasions.

My Lords, I am very grateful for those kind words. The noble Viscount, Lord Montgomery, and I have debated for many years on a variety of subjects but this, I believe, is the first time we have ever been on the same side. I am very glad of it; it might happen again—who can tell?

I am pleased that my noble friend Lord Haskel raised this subject, because engineering has been my life and is not really debated in this House or the other place nearly often enough. It is interesting to note that the earlier debate today on the contribution of the creative industries drew a full house in this Chamber, whereas the discussion of engineering is listened to by only a select few. That is the norm, and it is what I am going to talk about. First, I declare my interest as a fellow of the Institution of Civil Engineers and an honorary fellow of a variety of other institutions of the same kind. I spent more than 20 years in consulting engineering as an engineering designer, followed by 25 or so years as an engineering journalist—something in which I still dabble in a small way. I believe that my monthly column in the Highways magazine has four readers, one of whom is the editor. I do not know who the other three are.

I want to talk not just about the contribution that science and engineering make to the United Kingdom, which has been well rehearsed by other noble Lords, but about whether that contribution is properly recognised and, if not, what, if anything, can be done to remedy that. We know that generally speaking, with the construction industry rather than engineering as a whole, when a notable building such as the Millennium Dome is discussed in the press, its design is attributed to the architect—in this case, my noble friend Lord Rogers. There is a sense in which the architect is entitled to some recognition for the Dome, which is not a dome at all, of course. Why it has been called a dome, I do not know, as it actually looks like a saucer turned upside down. It is really a big top, such as Bertram Mills used to have, or a tent or marquee. However, let us call it a dome, as that is what the press likes to call it, although engineers prefer to describe it differently. The real designers of the Dome were not the architects, however much they put into it, but Buro Happold. It is a complete engineering structure.

There are many more such examples. The lead designer of the Millennium Bridge, which wobbles, was not the noble Lord, Lord Foster, but Arup. I noticed that the noble Lord, Lord Foster, came forward with a certain amount of verve on the opening day, raising his arms as he does, but that when it started to wobble he ran for his life and said that this was really a matter for Arup—which was true. There is also the Pompidou Centre, which was really designed by Ted Happold and Peter Rice, again of Arup, which again invited Richard Rogers and Piano to come in as architects to help to complete the building. Just down the road is Waterloo Bridge, which, in every guidebook, is described as having been designed by that very eminent architect Sir Giles Gilbert Scott, who was actually employed by the engineers Rendel, Palmer and Tritton, with which I spent 13 happy years when I was younger, although not under Waterloo Bridge. It is interesting that people think of Waterloo Bridge as a kind of arch structure when it consists of two horizontal reinforced concrete box girders, screened by a kind of façade, which is presumably the architect’s work. During the war a temporary handrail was put on the bridge and the official history of Rendel, Palmer and Tritton says:

“The elegance of the free flowing clean design was preserved when it was decided to leave in place the simple tubular handrail, erected as a temporary wartime economy, in place of the ornate railing of the original design and also to omit the arches over the approaches as earlier proposed by Sir Giles”.

The architect was in that case luckily unable to carry out his plans.

What could be done to improve recognition in the press, the media as a whole and in this Parliament? There is a remedy at hand: in 1988, Parliament passed the Copyright, Designs and Patents Act 1988, which brought into our law a continental notion called the moral right—that is, to be recognised as the designer or author of a piece of work. In the case of a book, it is quite simple: the author puts a paragraph in the flyleaf saying that he asserts the right to be regarded as the author of the book.

When the Bill came before this House in 1987, the moral right was extended beyond books, musical composition and so on to include architecture and structural design. The Bill said that the architect had the right to assert his moral right to be regarded as the designer. Efforts were made in the House to change that part of the Bill so that it said “architect or engineer”. While the idea was welcomed on the government side, it somehow seemed inappropriate to put the word “engineer” into the Bill. So, instead, Whitehall in its wisdom deleted the word “architect” and inserted the word “author”. In later debates during the passage of the Bill, “author” was defined as being either the architect or the engineer, although that never got on to the face of the Bill; had it done, a great deal of confusion would have been avoided.

It is up to engineers to assert their moral right under the Copyright, Designs and Patents Act 1988. They have to do this apparently in writing. That is where it becomes a little difficult again because it is hard to know who to write to. Obviously you write to the owner of the building, whoever that happens to be. You may, like Martin Luther, nail a letter to the door of some place or another and assert your right there, or put a letter around a lamp post the way that planning authorities do, and assert your right in that way. I would like the Minister to explain the mechanics by which that should be done.

I have one last word. Some years ago, I was at an event in the Great Hall of the British Museum, which is ascribed to Norman Foster once again. His bit is very good, but the bit of the Great Hall that is of real interest is the roof, which is a very complicated structure, designed once again by Buro Happold of Bath. I noticed that the names of Foster and Spencer De Grey, one of his partners who did the principal design of that building, were then inscribed on the wall of the Great Hall. I suggested to the director that it would be a good idea if the name of Buro Happold were added. He agreed that this was a very good idea and then retired the following day.

I then spent some considerable effort, with the agreement of Buro Happold, Norman Foster and Spencer De Grey, to get that name added to the inscription on the wall. Unfortunately, the members of staff of the British Museum kept retiring. I am happy to say that last year the name of Buro Happold was added to the Great Hall, as it should have been originally. It only took seven years to get it done. I sincerely hope that future engineers can achieve such events more rapidly than I was able to do.

My Lords, other noble Lords have declared interests of various degrees of science and engineering distinction. My only declaration is that I happen to be the president of the Parliamentary and Scientific Committee, to which reference has very kindly been made, and chairman of the Foundation for Science and Technology. As I did no science at school or university at all, I have to describe these offices as wholly ornamental.

I have listened to the debate with enormous interest and agree with a great deal of what has been said. Indeed, I agreed with my noble friend Lord Freeman when he said that he could not find anything in the speech of the noble Lord, Lord Haskel, with which he disagreed. I shall want to read it very carefully, but my impression was much the same, and we are much indebted to him for launching the debate.

The noble Baroness, Lady Greenfield, who made a very interesting speech, referred to the Science Media Centre. As I shall have something to say about the question of communication, I should like to pay tribute to her for her initiative in getting that immensely valuable organisation set up and for appointing Fiona Fox to run it. It really has been hugely successful.

I do not want to repeat what other speakers have said at this stage of the debate. However, I should like to refer to a very interesting event that took place just before the Recess, namely a seminar organised by the Lord Speaker on 12 May. This was the second in a series of seminars launched by the noble Baroness intended to bring together noble Lords and outside commentators, entitled “Science, Policy and Ethics: Potential Future Flashpoints”. Three of our most distinguished scientists, the noble Lords, Lord Krebs and Lord May, and the noble Baroness, Lady Greenfield, addressed us at the outset, and their speeches were very interesting and informative. That was followed by a discussion. In my 10 minutes I cannot hope to cover all the subjects that were discussed. For me, the really interesting outcome of that seminar was the reaction of the 11 invited senior science journalists. I am familiar with the expertise of my noble colleagues, but this was a very interesting exposure of what has been referred to by other noble Lords as an interaction between science, politics and the media.

In passing, I might say that one of the very early points that arose was how in an all-elected House of Lords you are going to keep these distinguished scientists available. I hope without embarrassing the noble Baroness, I would like to say that she dealt with that extremely robustly. The result was that no other journalist raised the matter during the course of the discussion. Her view was that there are alternative methods of accountability to elections and that, as an expert House with a different role from another place, this House must be able to secure the expertise that gives us our distinctive role in our constitution.

I turn to the issues that are relevant to the debate. I was struck once again by the journalists’ insistence on the need for good communication. That point came back repeatedly. It has been a subject close to my own heart ever since the House issued our Select Committee report, Science and Society, to which the noble Lord, Lord Haskel, referred; an inquiry which I had the honour to chair. If, indeed, science and technology are essential—I believe that they are—to meeting the challenges with which we as a world are faced, particularly in this nation, those engaged in promoting this must secure and retain the trust of the public. This was a key point in that report and is widely accepted. Scientists and engineers practise with an implicit consent of the public. If that is forfeited, the damage that could be done is huge.

Much has been achieved. Almost all major professional organisations in this field now have their “science in society” committees and activities, not least the Royal Society; it is good to know that I shall be followed by the noble Lord, Lord Rees of Ludlow. In passing, I particularly commend the work of the Royal Society of Chemistry, which really has made a notable contribution to this whole business of explaining the importance of science—not just chemical science, but all science—and to solving the many problems with which we are faced. It has put this aspect at the centre of its activities, and deserves praise for that.

At the Lord Speaker’s seminar, it was emphasised again and again that,

“scientists had an important responsibility to engage the public in debate about their research”.

Is the Minister, who I am pleased to see in his place, satisfied that this is now sufficiently recognised in universities? In particular, is the research assessment exercise, even after its review, still an obstacle to recognising the credit that should be given to scientists who successfully engage with the public? This point was raised with us 10 years ago in the science and society inquiry. I am not convinced that there has been sufficient change.

There was much talk at the seminar about important challenges such as climate change, food security, energy security and so on. Indeed, the noble Baroness, Lady Greenfield, gave us a disturbing account of the effect of the small screen on children’s minds and attitudes. However, something was also said about the often malign influence of the green lobby, which seems to oppose so many of the solutions to these problems, like nuclear energy, GM technology and so on. Noble Lords asked why the media seem to give these voices such prominence in their coverage. One explanation that was offered, which I suppose one has been aware of in a sense but it was stated very clearly, was that these bodies operated,

“almost like multinational companies, deploying large and sophisticated marketing and public relations departments”.

One sometimes gets the impression from reading the media about their activities that the media still think that they are tree-huggers in sandals. They are not. They are extremely well organised and their motives need to be ruthlessly exposed. They are often very damaging to the solutions to the problems that we all face.

Another explanation was that the scientists too often seem to focus,

“on ‘what is not known’ rather than on ‘what is known’”,

inevitably raising public fears that these scientists themselves do not understand what they are doing. A huge amount of science is known. It must be part of the scientific community’s role constantly to reassure people that this is known and certain science. We are on the way to solving the problem of nuclear waste, but it has been a long, hard battle. That is just one example; there are many others.

I applaud the Minister for what he said at the Cheltenham Science Festival yesterday. I have here the Times headline, to which I was much attracted:

“Making everyone feel guilty ‘is not the way to combat climate change’”.

I am sure that that is right. There is a streak of opinion in this country that the world will be a better place only if we all put on hair shirts. It simply does not work like that. I was present at a foundation seminar last night on science in the cities, where much the same point was made by the Mayor of London, Boris Johnson, talking about better homes and building insulation: if you want to secure your objectives, the public must know that it will pay them to do it. This is regarded in some circles as somehow immoral, which is not right. That is the way you achieve your objectives and that is the way you get the attitude change.

One of the points that came through at the seminar and last night is the importance of the social sciences in this. They have much to offer and they need to be listened to and consulted more frequently on how to get these changes. Of course, if we are to meet the many challenges that confront the world we must support, applaud and reward the scientists and engineers who are doing this work. Like others, I am not always satisfied that that is done. Recognition is hugely important, as the noble Lord, Lord Howie, said. I warmly support the Motion and thank the noble Lord, Lord Haskel, for introducing it.

My Lords, we should be grateful to the noble Lord, Lord Haskel, for initiating this debate and for his speech. In the current febrile political atmosphere, it would be especially ungracious not to acclaim the Government’s sustained support for science and to acknowledge the dynamism and commitment of the noble Lord, Lord Drayson, who fought hard for the ring-fencing of the science budget.

In science, engineering and medicine, the pay-off for R&D sometimes takes decades. The tap cannot be turned off and then back on. It would be tragic if we lost the momentum developed during the past 12 years. Indeed, to retain our international competitiveness, we must raise our game. That is because the Obama Administration have given America’s scientific community a massive boost in morale and in substance. The new President has eased the ban on stem cell research and has appointed a “dream team” of science advisers. Moreover, his economic stimulus package includes new, one-off investments in federal R&D worth more than $13 billion for the NSF and NIH, and a much larger sum for R&D in energy. Our success in attracting and retaining mobile talent will be at risk unless we respond.

As a scientific nation, the UK is, by many indicators, second only to the US. It is important to recognise why this is so. It is largely because of our strong research universities. We are the only country outside the US to have several in the premier league. I should at this stage declare an interest as a Cambridge professor and as president of the Royal Society, and I want to speak from these perspectives. The Royal Society aims to promote excellence in science and technology for its own sake and for enhancing human welfare. One of my predecessors, Lord Porter of Luddenham, averred that there are two kinds of science: applied and not yet applied.

The most readily measurable economic benefit of academic research is direct knowledge transfer from university labs to industry. But that is only a small part of the total. Research universities fulfil other key roles that are harder to quantify. They are networked with the whole world’s research. Their graduates spread expertise throughout the private and public sectors. That is more important than direct knowledge transfer.

There is a strong correlation between the research quality of a university and the strength of the commercial cluster that is attracted around it. Talent attracts talent and big companies, too. Success breeds success and, just as important, failure is accepted as a step towards later success. In places such as Cambridge, a dynamic and interactive high-tech community has developed that offers, in the words of a Financial Times article, a,

“low risk place to do high risk things”.

Academics are often derided as living self-indulgently in ivory towers but I strongly contest that. Excellent universities are of immense social and economic value. The global challenges that confront us cannot be effectively tackled without the expertise in them.

I am fortunate to know most of the leading UK scientists—those who have won Nobel prizes or the equivalent. They are all individualists, but there is one thing that they would all agree on: they would highlight the long-term nature of their work, the unpredictability of its outcome and the need for a supportive environment. To ensure that our universities stay internationally competitive, it is crucial that they continue to offer this environment, relative autonomy and the prospect, without undue hassle, of gaining “responsive mode” funding for the research to which they are prepared to dedicate their lives. That is a fair expectation if you are at Harvard, Stanford or Berkeley; it must be so here if we are to compete for mobile talent at the highest academic level. In research, it is the top quality that counts; there is no virtue in coming second.

It is in this context that there have been concerns about some signals sent by research councils. For instance, applicants are required to state what the impact of their research will be. This cannot be more than a guess. Even the wizards of venture capital find it hard to assess the viability of a commercial proposal involving research that has already been done, so it would seem very implausible to expect applicants, or a research council official, to make such judgments before the research is done.

Another concern is a possibly undue focus on so-called priority areas. Again, that might stifle the most original or cross-disciplinary work—the biggest breakthroughs are the least predictable. Indeed, it seems topsy-turvy that a Government who are rightly reluctant to pick winners in industrial policy should aspire to do that upstream, as it were, in the field of research.

It is surely in our own interests to support real excellence across the board. That is affordable, even in these straitened times; I refer to funds inside the so-called ring-fence for academic research. Funds administered by the research councils and the HEFCE QE funds are the main source. When we confront more costly developments, funded outside the ring-fence, of course the UK needs to focus. Strategic criteria should certainly become priorities then, as they did in Obama’s stimulus package.

We should plainly do all that we can to sustain and exploit our excellence in biotechnology. The pharmaceutical industry’s success has been grounded in the UK’s strong research base in biomedical science, which is strong because governmental support for biomedical sciences has been massively supplemented by the Wellcome Trust, the major cancer charities and, of course, the heavy R&D spend of the industry itself.

But what about other sectors? A broad constituency in academia and business is now urging the need for sustained public support for the physical sciences—mathematics, all of physics, material science, chemistry and engineering—and perhaps even for a slight rebalancing of public funding to allow a catch-up by those subjects after the prioritising of medical research in recent years. The advocates for breadth in basic science include biomedical researchers themselves. Sir Paul Nurse had a fine letter to the Times urging that point, and the heads of the MRC and Wellcome Trust have spoken in similar vein. Cross-disciplinary expertise, spanning physical and biological sciences, is now at a premium. Peter Mansfield’s Nobel prize-winning work on MRI was done in Nottingham’s physics department. The exciting new field of synthetic biology involves physics and engineering, and computer science now pervades all of biology. The physical sciences in our universities are vulnerable because they cannot draw on supplementary sources of private funding that parallel the Wellcome Trust and the medical charities, or on industrial support to match that of the pharmaceutical industry.

The earlier ministerial stint of the noble Lord, Lord Drayson, at the MoD, where he oversaw procurement of high-tech equipment, will have convinced him that our manufacturing sector in physics-based industry is patchy. There is a paucity of major high-tech manufacturing companies in the UK. Indeed, as the noble Lord, Lord Bhattacharyya, reminded us, the weakness of our electronics industry stems from short-sighted policies and lost opportunities in the 1970s and 1980s, from which lessons can surely be learnt. At a time when we need to rebalance our economy away from finance and towards high-tech manufacturing and services, we should invest in efforts to recover our strength in the industries based on the physical sciences. R&D on energy in particular is, worldwide, at far too low a level to meet the global challenge—anomalously low compared to the scale of medical and health R&D. Moreover, that is a strategic area where we could align with the expanding US effort to mutual benefit. Although I have just mentioned the US, we must also engage with Europe. When Europe acts together, as it does in pure science at CERN, or in the aircraft or space industry, it can match the US. There is a need for more co-operation in other areas, particularly energy and its infrastructure.

Finally, I would like to engage in a bit of positive thinking, taking my cue from the noble Lord, Lord Bragg, in the previous debate. Britain has a great scientific tradition and great scientific strength today; we must build on it and aspire to be the best place in the world to do science. If we can, benign positive feedbacks come into play; the law of increasing returns applies; talent attracts talent. We do not know what will be the 21st-century counterparts of quantum theory, the double helix and the computer, or where the great innovators of the future will get their formative training and inspiration. However, one thing seems a near certainty: unless we in this country get smarter, we will get poorer. The UK’s relative standing will sink unless we keep our competitive edge as discoverers and innovators and unless some of the key creative ideas of the 21st century germinate and, even more importantly, are exploited here in the UK.

My Lords, it gives me great pleasure to take part in this debate and, like others, I thank my noble friend Lord Haskel for creating this opportunity. Before I move on to my contribution, I should say how impressed I was by the interesting speech made by the noble Baroness, Lady Greenfield, whom I had not previously heard. Her commitment was evident in the enthusiasm with which she spoke. I wish, having heard the noble Lord, Lord Jenkin of Roding, that I had cleared my diary to go to the event that he went to. He recalled—again, with excitement—what happened that evening. I am sure that I could have learnt a lot, too.

I want briefly to mention how science and engineering support the wider manufacturing sector—many noble Lords talked about it—before looking to the future and at how science and engineering will continue to have a positive impact on all our lives and every sector in the UK economy.

This Government have proved themselves to be committed to manufacturing and have supported it well. The recent publication of the manufacturing strategy, New Industry, New Jobs, gives us all a chance to boost and boast about manufacturing in the UK. The document describes the importance of industrial activism in safeguarding the UK’s global position in manufacturing, which is on everyone’s agenda. All of us, no matter what our background or politics, have been influenced by these industries. We owe much of this country’s historical influence and current global position to their contribution.

Science and engineering companies provide the invention and innovation to drive the manufacturing process, as well as producing the manufactured goods. These companies do not just create new products; almost daily, they revolutionise the tools and processes by which they are produced. By combining the blue-skies thinking of pure research with the practical solutions of applied research, the science and engineering sectors enable manufacturing as a whole to provide the goods and services that we all need. They provide the scientific know-how and engineering solutions to enable manufacturing to make its goods, to transport these goods around the world, to service products and to communicate with their customers.

As for science, the pharmaceutical industry, to which other noble Lords have referred, is a wonderful example of how companies bring together pure science and mass manufacturing. In developing medicines, vaccines, and treatments that are ever more effective, pharmaceutical companies begin the process with the purest of scientific research. After, in some cases, years of applied research into efficacy, a great idea becomes a mass-produced product, manufactured to the very highest specifications that we require. By working beyond scientific boundaries into manufacturing processes, pharmaceutical companies demonstrate how modern industry is not constrained by arbitrary sectoral definitions; instead, it brings together all the skills and processes necessary for success.

Science and engineering companies can provide the excitement to attract and engage young people with learning. We all need that to happen. The young person sufficiently excited by the latest Formula 1 car to keep studying science and mathematics will find a whole world of careers open across the manufacturing sector and beyond. However, we can be confident that the future of these key industries is safe only when young people are convinced that these skills and subjects are what they aspire to. We need to do more to build understanding by young people of the links between these important industries and how science, engineering and manufacturing coexist in the modern economy.

To understand this modern situation, it is worth looking back at how science and engineering have been the cornerstone of British economic success for many years, although I could not do that with half the humour that my noble friend Lord Howie used when he described some of the major constructions around this wonderful city and others. However, there can be no doubt that the engineering sector is embedded in the British landscape, both physically and psychologically. It provided the powerhouse of the Industrial Revolution, which in turn laid the foundations for the UK’s continuing place in global innovation. We might say that the entire history of the UK over the past 200 years has been coloured by industrial reform, invention and mass production. The seismic changes in British society can be linked to the earliest technology and the breakthroughs that ensued.

I now turn to the contribution that science and engineering have made to the country as a whole. They have already given the UK a standard of living that surely surpasses the dreams of those early pioneers and inventors. Mass transportation gives individuals the freedom to explore the world as never before. Modern communications technology has brought businesses and people closer together. There are daily scientific breakthroughs in the fight against diseases that limit life expectancy and the quality of life. The worlds of music, entertainment and film—a subject covered in the debate introduced by the noble Lord, Lord Bragg—have been revolutionised in the past 100 years through science and engineering. We should all be proud of the contributions that these industries have made to the quality and richness of life—many of us enjoy them as part of our daily experience.

Many of your Lordships will know that the value of skills in science and engineering to British industry is incredibly high. People with these skills not only work for companies in the science and engineering sectors but are much in demand across all sectors. A report from the ETB last year found that, of the engineering and technology graduates who entered employment, a quarter joined companies that did not have engineering and technology as their primary activity, but only 11 per cent of all engineering and technology graduates were employed in non-engineering and technology jobs. This means that non-technology companies are employing many engineering graduates in engineering roles. Engineering and technology occupations permeate all sectors, and the skills of these people help to make companies successful across the economy.

Companies in all sectors want to employ science, engineering and technology specialists and they want to employ them right across the piece in their organisations. For England, we hope that the new diplomas in engineering, manufacturing, product design and science will help young people to experience the excitement of these subjects at a very much earlier age. With these diplomas, which are designed to help students to progress into employment, higher education and work-based learning, we have a real opportunity to boost the volume and quality of these skills in the workforce.

Of course, science and engineering contribute a great deal to the economic wealth and well-being of the UK, as many speakers have said. I ask myself and all noble Lords, including the Minister: what of the future for science and engineering? If we succeed in raising performance and competitiveness, what will the science and engineering sectors be able to contribute in the future? I suggest that, in addition to a direct contribution to the economy through the sale of goods and services, these sectors can improve all our lives in ways that we can only begin to imagine. As the UK faces challenges such as disease control, the ongoing fight against terrorism, and an ageing population, science and engineering can provide the tools and skills to ensure that we face the future with more confidence. Many other noble Lords have referred to that issue.

I received a helpful briefing for this debate from the Royal Society of Chemistry, to which the noble Lord, Lord Jenkin, referred. It is very encouraging to see the work that it is doing to identify opportunities where in the future chemistry, and science generally, can make a crucial contribution towards tackling the major challenges of our time—issues such as climate change, food security, energy, water and health—and help to build a strong UK economy. I hope that my noble friend Lord Drayson will agree with the RSC that UK science will be crucial in enabling us to emerge from this recession.

The legacy from the Olympics in 2012 will be not just in sport but in the construction, engineering and scientific breakthroughs that hosting such a prestigious and ambitious event in the UK will bring for us all. In addition, the Government’s recent announcement of ongoing support for a low-carbon economy will draw on all the energy expertise that science and engineering can provide. We have a real opportunity to use what we already know to ensure that we gain the knowledge that we will need to meet the changes and challenges of the future. We must ensure that Britain can capitalise on these opportunities and continue to build on its scientific and engineering capability.

In conclusion, we must ensure that every employee can develop their full potential, as we need a highly skilled and adaptable workforce, particularly to support advanced manufacturing, life sciences and green and emerging technologies. We can give ourselves the best possible future by keeping our focus on the importance of science and engineering skills across the workforce.

My Lords, although I suspect that a debate with this title would be important at any time, I congratulate the noble Lord, Lord Haskel, on his timing, because there is, as many noble Lords have said, a great sense of urgency about the subject. Part of the reason for that is the point which he himself made about this being a time of recession. Those who succeed in such times are those who can look beyond the recession and identify what is needed, innovate and be ready for it. In many cases that will be the scientists and technologists.

As many noble Lords also said, there is also the crisis of climate change, where again we need technological innovations. We have some major issues to address on how to fund and implement those innovations. However, I want to talk about medical science, and I shall focus on putting research into practice and actually ensuring that things happen for patients and for the health of the population. We have a great and illustrious history in this area. Many great scientists and clinical scientists have enhanced not only the health of the UK but our position in the world.

Perhaps I may mention just one individual: the late Professor Philip Poole-Wilson of the National Heart and Lung Institute, whose memorial service is being held as we speak, where I would have been now were I not here. Philip exemplified three things that are important to us in this debate. He was a great cardiologist, but he was also a great clinician, great researcher and great teacher. In this field, we often need those three sets of qualities together. We have an excellent environment in which we can bring together the clinical, the research and the teaching: the National Health Service—in which I declare my interest as a former chief executive—which is an excellent environment for learning and research. The noble Lord, Lord Drayson, has recognised that and, as I understand it, one of the issues in his current work is to ensure that we draw sufficient research and scientific development from our extraordinary integrated health service to enable us to put it into practice and understand it in practice.

I pay tribute to the recent developments in the Department of Health and the NHS in making sure that research is much better co-ordinated. Under the leadership of Dame Sally Davies, we have the Office for Strategic Co-ordination of Health Research, which is making sure that there is more effective translation of health research into health and economic benefits for the UK. It is very important work that could be taken much further. I was interested to hear that, from his new Office of Life Sciences, the noble Lord, Lord Drayson, will be producing a life sciences blueprint in July. It will be interesting to hear how he wants to take that further forward.

We know that health research has an economic benefit for the country. An interesting study was done a year or so ago, entitled What’s it Worth?, which estimated the economic benefits of medical research in the UK. It made some broad estimates in a number of areas, but in the one that it considered in some detail, cardiovascular disease, it estimated that there was a 9 per cent rate of return annually on the research. That is a significant rate of return and one that it is important that we understand when talking about the importance of medical research.

I want to draw attention to three points. One comes directly from that area of research. Anyone who has read that study—I have, and I had better declare another interest as a trustee of RAND Europe, which was one of the authors of the study—can see how difficult it was to evaluate the impact of medical research, because there are so many confounding factors and so many ways of measuring. I hope that in the new Office of Life Sciences, attention will be paid to how we effectively evaluate the impact of medical research—not just the quality of the medical research itself but its impact on real life. That will be an important way to help inform policy for the future. I ask the Minister to comment on that.

The second point on which I ask the Minister to comment, and to tell us whether the life sciences blueprint will refer to it, concerns the spread of practice once research has demonstrated what works. We often talk about getting things from the laboratory to the bedside. The study to which I just referred stated that in cardiovascular disease it took 17 years on average to get things from research to the bedside. I am interested in the time that it takes not just to get things from the laboratory to the bedside but from one bedside to every bedside, making sure that it is normal practice everywhere. I suspect that we do not pay very much attention to that. Part of that is about how we spread best practice, and part of it is knowledge transfer. That may be a particular issue for medical sciences, but I suspect that it is true elsewhere. There was a famous article in the Lancet that said that if we applied all the knowledge that we have today, we would have more impact than any medical breakthrough that we may be likely to have in the next 10 years. I suspect that that may be true elsewhere and that we may not pay enough attention to that latter bit—getting it from one bedside to every bedside.

It is not just about spreading good practice. The noble Lord, Lord Jenkin, made a point about the social sciences and natural sciences interface. We know that there is resistance to the findings of science among the population in all kinds of ways. The noble Lord, Lord Haskel, made the point—his words were very interesting—that in the great MMR controversy, people were judging us on our values and the reasons for which we were making the change. They were making judgments about the people who were saying, “You should have this vaccine”, and not making a scientific judgment. That is true in all kinds of different areas of medicine.

We know that about 30 per cent of drugs do not get taken by the patients for whom they are prescribed. That seems to be universal in developed countries. The social sciences can help us to understand how to get the products of natural sciences into action so that we can get better evaluation and results for the population.

My second question for the noble Lord, Lord Drayson, is how he sees the interaction between the natural and the social sciences. How important does he see that in the life sciences, particularly the question of how to spread practice from one bedside to every bedside?

My third point is again health-related but may have other relevance. Anyone who has had responsibility for managing health services will know that there is an ultimate tension between prevention and treatment. We often get dragged down to the far end of treatment when we want to be spending a bit more resource on prevention. There are issues here for the direction of science in medical research. I think particularly of the pharmaceutical industry. To what extent are we expending great effort on developing drugs for the latter stages of treatment and less attention to the biological markers of diagnosis? For example, we know that if we can catch cancer early and treat it early, we have a much better chance of the patient surviving and that it is a much cheaper option, whereas if you catch it later it is much more expensive and the patient has much less chance. We should of course try to prevent cancer, but there is also an argument for improving the way in which we handle diagnosis. Does the Minister feel that there is room for greater emphasis on what Sir Bill Castell described as early health as opposed to the treatment of late disease? Should that be where we should be thinking about going in medical research? More emphasis on that would not, of course, prevent the emphasis on late disease.

My Lords, I join other noble Lords in thanking the noble Lord, Lord Haskel, for introducing this interesting and timely debate. It is timely because in the current recession we are looking at ways in which we may emerge from it, and we all agree that we need to look at rebalancing the economy and shifting towards industries and services that have a considerable science and technology content and could play a bigger role. I think that the creative arts and heritage industries will also play a substantial part in our recovery, but that does not mean that science and technology do not play a part in those industries. If one looks at computer games and animation one recognises that digital technology, which did not exist 20 years ago, and the creative and media industries have come together there.

An area in which I have a particular interest because I chaired a sub-committee of the Select Committee on Science and Technology is science and heritage. Looking at how we can engage people in the role of science and technology, I was fascinated by the degree to which the general public are fascinated by, for example, how the Madonna of the Pinks in the National Gallery was identified as the original by chemistry that identified the paints that were used at the time. When galleries expose conservation techniques to the general public, they find that the general public are interested in them. It is a means of breaking down barriers and the clash of cultures to which the noble Baroness, Lady Greenfield, referred.

On the whole, we in Britain feel that we punch above our weight in science and technology, which a number of speakers mentioned. We say time and time again that we have an extraordinarily good science base, although we have some reservations about how far we manage to translate it into technology. The Government must be congratulated on the degree to which they have given priority to science and technology over the past 12 years. If we look at it in terms of how much money has gone into the research base, it has increased in real terms from £2.4 billion to £5.9 billion; that is, it has more than doubled over the past 12 years. However, the other part of public sector R&D, spending on government departments, has remained more or less static. While business R&D has increased from £11.7 billion to £13.4 billion, as a proportion of GDP overall it has gone down from 1.25 per cent of GDP to 1.08 per cent of GDP. The UK as a whole has set its target at 2.5 per cent.

The noble Lord, Lord Bhattacharyya, mentioned the role of business R&D, which is real and worrying. He said that when he started as an apprentice with Lucas there were two German firms allied to the work he was doing and that the two German firms have gone on to become multinationals, whereas Lucas has disappeared from the scene. That is too often the story in relation to British companies. One of the features of business R&D in the UK is the real role that foreign companies play. In terms of R&D as a whole, it is very disappointing that, having set the target of 2.5 per cent, in 2006 we were down to 1.78 per cent of GDP. In Japan, it was 3.4 per cent; in the US, it was 2.66 per cent; and in Germany, it was 2.54 per cent. As a number of noble Lords have mentioned, President Obama has pledged a doubling of public investment in R&D with an injection of $21 billion, which is a huge amount of money. In business, we have no room for complacency. It is vital that we still move forward.

It is worth mentioning that, although we have 4 per cent of the population of the world, we have 8 per cent of scientific publications and 12 per cent of highly cited publications. In that sense, we produce good science. But we have an ageing population of scientists and very real worries about the number of young people coming forward to study science in our universities. In the past five years, 80 university science departments, mainly in physics and chemistry, have closed. These statistics are very worrying.

What are the current proposals? The Government have pledged to continue their investment in science and technology to 2014, carrying through their 10-year investment plan. The Budget promised a further allocation of £750 million into a strategic investment plan to support advanced industrial projects in growth areas. The research councils have been asked to reallocate £106 million of their funding into those same growth areas.

Two interesting strands of thought are developing. In February, the Secretary of State, Mr Denham, at the Royal Academy of Engineering, said that,

“of course, any research base which does not include a substantial element of fundamental, curiosity-driven research conducted by researchers who simply want to know, will not be relevant economically in anything but the shortest of terms. Many defining moments in science are the fruits of research started and funded years ago—research which proceeded unevenly and serendipitously over time. So stop such work and we kill the goose that lays the golden egg. (We would kill a lot of other geese who would not lay … at all of course, but knowledge for knowledge’s sake is also … worth having). While the driver of fundamental research is curiosity, we shouldn’t, though, lose interest in its links with economic value. A recent MRC and Wellcome Trust report suggests that the average return on investment from the exploitation of fundamental research is 39p annually for every pound invested from the outset”.

That is a very high rate of return, which certainly is worth pursuing.

I am somewhat disturbed by the degree to which the noble Lord, Lord Drayson, has suggested that we should now perhaps concentrate on areas where the UK is likely to be number one or number two in 20 years’ time and that there should be a concentration of resources into a number of growth areas. That has been linked with the new industrial strategy that is emerging from the Department for Business, Enterprise and Regulatory Reform. The strategy talks about ensuring that British science and technology are at the heart of the revolutions in industrial production that we defined in the 20th century, but looking to the future, the strategy identifies the need to pay particular attention to those technological changes that are shaping industries and highlight several sectors, such as low-carbon technologies, digital media, life sciences and advanced manufacturing.

What does all this mean? There is talk of a greater concentration of resources. Are we seeking to pick the winner? The Minister indicates that no, we are not. This takes me back to the 1970s and 1980s when I worked in the National Economic Development Office. We firmly denied that we were picking the winners but were scenario-planning and looking at other forms of moving forward. I look back also to the 1990s and the work I did with the Science Policy Research Unit on the UK Foresight programme. How much is the noble Lord, Lord Drayson, using the Foresight unit in his department and the Horizon Scanning Centre to look at areas where there is growth potential? We have established these Foresight facilities and they are very important.

I end on a note of warning about trying to identify where we are going to be in 20 years’ time. In the early 1970s, the late Lord Rothschild, who led the job of looking at funding for science and technology, considered the Laboratory of Molecular Biology in Cambridge. In those days it had a budget of around £20 million. He asked why all that money was being spent on advanced molecular biological research and where it would take us. But it was the eve of the revolution in biotechnology and all that has stemmed from it. It is extremely dangerous not to invest in a broad science base from which will come a high rate of return and to identify too narrowly from where the benefits may come.

My Lords, it has been a privilege to listen to and learn from noble Lords who have spoken today. I thank the noble Lord, Lord Haskel, for giving us the opportunity to hold this debate, and I agree with the noble Lord, Lord Crisp, and the noble Baroness, Lady Sharp, that his timing is excellent. There is no argument about the important role that science, technology and engineering increasingly will play in the future of our country. These subjects have a central role in promoting innovation and are the key catalysts for productivity growth and competitiveness. New ideas drive enterprise, create new products and markets, and improve efficiency. They deliver benefits to businesses, their customers and society as a whole. Scientific and technological advances also drive improvements in quality of life, particularly through services such as healthcare and security, through environmental protection and energy saving, as well as many other areas already mentioned by noble Lords.

Several noble Lords, including the noble Lord, Lord Haskel, have spoken about the creation of a culture in our wider society that is more receptive to science and engineering. My noble friend Lord Jenkin and the noble Baroness, Lady Greenfield, spoke in particular about the importance of public communication. A moment ago, I mentioned productivity and competitiveness in the same breath because we cannot have the latter without the former. Redesign of the nuts and bolts of an industry or organisation can be as important as innovation. Blue-sky thinking and research need to go hand in hand with improved efficiency of processes.

Despite the importance of science, technology and engineering, we face a number of deficiencies, notably in the realms of education. The noble Lord, Lord Haskel, rightly said that education is where it all starts. For example, there is a lack of skilled teachers which the Campaign for Science and Engineering in the UK has described as “severe”. In 2006, 26 per cent of state secondary schools had no physics specialist and 12 per cent no chemistry specialist. Furthermore, the Government’s science and innovation investment framework 2004-2014 claims that they would continually improve the number of pupils gaining an A*- C grade in at least two science GSCEs. Yet only yesterday it was reported that there are whole areas of England where not a single child has the opportunity to sit separate science GSCEs.

Pupils in some of the poorest areas, who might in better circumstances be capable, are being denied access to top careers in engineering and medical research while, on the other hand, our brightest 16 year-olds are not being stretched. Without a good understanding of science subjects at 16, it is almost impossible for pupils to get top marks in these subjects at A-level and therefore progress to a science degree at a top university. There is a worrying deficiency in the numbers of science, technology, engineering and maths students. Alarmingly, in the United Kingdom only 8 per cent of graduates are engineering graduates compared, for example, to more than 30 per cent in China.

The Government proposed to reform education, training and apprenticeships for young people and adults and to provide new powers to strengthen children’s trusts, improve standards in schools and increase confidence in qualifications. We have had no trouble in supporting such ambitions. The noble Baroness, Lady Wall of New Barnet, among others, spoke of the need to enthuse young people. It is important, too, that the Government have identified that investment needs to be made to encourage the development of skills.

However, as feed-back from all sides of the House confirmed on Tuesday at its Second Reading, the Apprenticeships, Skills, Children and Learning Bill has all the hallmarks of a wasted opportunity. In particular, the statutory entitlement to an apprenticeship proposed in the Bill is meaningless without the mechanisms and the funds to implement it. We will propose a number of key amendments to try to improve the Bill substantially.

On investment more generally, the strategic investment fund of £750 million announced in the Budget, intended to support valuable industrial projects of strategic importance, is, despite disappointment following rumours that it was to have involved a larger sum, welcome. However, there has been considerable vagueness about the details and the real availability of funds, prompting fears that it is a political slush fund for the run up to the general election, to be allocated to perceived winners in fashionable areas of industry and in key marginal seats. We look to the Minister to show why such fears are unfounded. While on the subject of funding, perhaps he could also update us on indications that the Science and Technology Facilities Council is to suffer cuts and delays.

An effective system of intellectual property laws is a key requirement to underpin the knowledge economy and our creative industries. The 2006 Gowers review of the UK’s IP regime identified a number of areas where improvements were needed. So far, as I understand it, only about half of its recommendations have been implemented. I would be grateful if the Minister will tell the House when the rest will. On the subject of IP, I join my noble friend Lord Freeman in congratulating and thanking the British Library on what it is doing in this area.

As my noble friend Lady Thatcher once put it,

“Science and the pursuit of knowledge are given high priority by successful countries, not because they are a luxury … but because experience has taught us that knowledge and its effective use are vital to national prosperity”.

A chemist herself, she of course understood the vital importance of science.

From 1999 to 2006, I jointly owned and ran a technology business. Indeed, I am still a substantial shareholder in the technology company to which we sold it. Such businesses need highly qualified people and so I have a keen appreciation of the importance of STEM skills to our future economy. In Britain, we are lucky indeed—the noble Lord, Lord Haskel, and my noble friend Lord Freeman referred to this—to have so many scientific institutions of international standing, several of which have been represented today by your Lordships, notably the noble Baroness, Lady Greenfield, and the noble Lord, Lord Rees of Ludlow. We on these Benches much appreciate the value of the advice of your Lordships and of those institutions.

Indeed, I particularly welcome ideas as to how, for example, we can improve the retention in this country for commercial development, with the resultant jobs and tax revenues, of more of the, frankly, brilliant ideas which come out of our research, particularly from our great universities. My noble friend Lord Freeman focused on this and gave some helpful ideas. As he said, the issues go wider than finance. As the noble Lord, Lord Bhattacharyya, said, these ideas and innovations are of high quality yet, currently, too often go overseas for commercial development. The noble Viscount, Lord Montgomery, also spoke of this.

If we are to respond successfully to the challenges we face, an approach based on sound science is vital. In subjects such as genetics, nanotechnology and synthetic biology, where research is moving fast, opportunities are opening up for us. Some of these, of course, come with ethical issues, but these need to be addressed with sound evidence.

I referred earlier to the credentials of my noble friend Lady Thatcher. Conservatives have a long history in science. That is why it is so important to us that those in public office are scientifically literate—the noble Baroness, Lady Greenfield, referred to this—and indeed why I, like my noble friend Lord Jenkin and other noble Lords, am pleased that the Government have available the services of people like the Minister. The future prosperity of our country will depend upon our intellectual capital, so it is vital that we continue to invest in research.

I am afraid, though, that all is not well. Our country has been driven to the brink of bankruptcy by a Government who encouraged an over-reliance on financial services and on debt. We should not be surprised that the edifice has collapsed, but, as the noble Lord, Lord Rees of Ludlow, has said, through both private and public investment in research, technology and engineering, we have an opportunity to rebalance our lopsided economy. The noble Lord, Lord Haskel, also emphasised the need for this rebalancing, as did the noble Baroness, Lady Sharp.

Our universities, science parks and hi-tech and creative businesses provide solid foundations on which we can rebuild. Indeed, our creative industries, to which the noble Lord, Lord Bhattacharyya, referred and which, as the noble Lord, Lord Howie, said, have already had an outing in this Chamber today, are now worth over 7 per cent of GDP. Britain really has got talent, particularly in areas such as design and digital media, which offer great potential for growth.

We must acknowledge, though, as several noble Lords have, that there are always limits to the funds, especially the public funds, that are available. The noble Lord, Lord Bhattacharyya, and the noble Baroness, Lady Sharp, among others, rightly spoke of the importance of private sector investment. Taxpayers’ money must be allocated and controlled effectively. Future funding plans must be credible. We must clearly identify—the noble Lord, Lord Crisp, among others, touched on this—where the money is to come from so that research continues while the economy is stabilised.

We must also look seriously at the burden of regulation that can depress productivity. There is a strong danger that cries to increase regulation, aimed in reality at our financial sector, will drown those for a reduction in red tape in our honest-to-goodness engineering and manufacturing sectors, the sectors of which the noble Baroness, Lady Wall of New Barnet, spoke.

As a nation, we must be clear about our research spending priorities. We must maintain a robust science base, with a stable funding system. It is imperative that we look back on this dire period in our economy not as another lurching step on our downward path but as a new beginning. It is axiomatic that science and engineering are now more important than ever to our future national prosperity.

My Lords, I thank my noble friend Lord Haskel, for securing this important and timely debate. In fact, as the noble Lord, Lord Crisp, said, this is an urgent debate. I thank all noble Lords who have spoken today; their contributions reflect the true expertise in this House on these matters and reflect well on its expert role.

Science, technology and engineering represent a public good, in the best and strictest sense, growing in value as they are used and shared and yielding tangible benefits for our society, our democracy and our economy. Indeed, our only hope in dealing with the major challenges facing the United Kingdom and the rest of the world—clean energy, disease, sufficient food and water—is to address them through science, technology and engineering. For our economy to achieve sustainable growth, it requires a constant stream of top-quality research to generate new ideas, products and processes so that we can compete in the next-generation industries in the modern world. However, as my noble friend Lord Howie said, it also requires us to ensure proper recognition of our scientists, our engineers and our science entrepreneurs. This Government, I believe, have done that and are doing it. This Government have treated science as one of their highest priorities for public investment and they will continue to do so.

As my noble friend Lord Haskel argued, post-credit crunch, there is an urgent need to rebalance our economy. We need to ensure that those areas where the United Kingdom has the potential to generate future growth are ones in which we continue to invest. Science is key to building Britain’s future. We see approximately 2.7 million new jobs over the next 10 years based around science and engineering. I could not put it more clearly than my noble friend Lady Wall did when she spoke about science being key to getting out of this recession.

When I speak here of science, I mean not only the physical or medical sciences but the social sciences. I trust that noble Lords will allow me to employ the word “science” in its broadest sense. Let me be clear: I believe that we should fund science even if it produces no measurable economic benefits. Building a greater understanding of our universe is worthy of investment in itself. But I believe that in practice there is no such dichotomy in terms of science spending. There are no hard and fast lines between pure and applied science but, rather, a range of potential benefits when scientists tackle interesting questions.

History has shown us repeatedly that, when world-class scientists are given the resources to ask new questions and introduce fresh perspectives to older ones, they generate insights that ultimately drive the economy, improve the quality of our lives and achieve more besides. After a lifetime in science, I am optimistic about the capacity of this country’s research base to rise to the challenges of the 21st century. In the past six months, in my role as Minister for Science Innovation, everything that I have seen has increased that optimism. I have seen the talent at work in this country.

It is no accident, as we have heard from a number of noble Lords, that the UK is ranked No. 1 or 2 in the world in almost every area of science, or that our researchers are more productive per pound spent than those of any other major nation. They are twice as productive, for instance, as their counterparts in the United States. There is something very special in the water, so to speak, in the United Kingdom when it comes to what we do in science.

This world-class performance is also as a result of a dramatic and sustained increase in public investment over the past 12 years. More than £1 billion has been spent on developing our research infrastructure, reversing years of crippling underinvestment under the previous Government. It is the result of, for example, ring-fencing science funding, which has created stability and enabled long-term planning, and of the freedom provided through quality-related research funding for our universities. It is also the result of preserving the independence of the research councils, which make decisions that are in the best interests of their own specialist areas.

The impact of this investment and the effectiveness of the systems through which it is channelled are clear. We can see from the results that it is working. Universities’ external income rose to £2.6 billion in 2006-07—a 50 per cent increase in real terms since 2001. Early indications show another real-terms increase in 2007-08. Even in this very difficult global economic environment, university spin-outs raised more than £1 billion of outside investment last year. UKTI reports that the strength of our research base attracted 251 R&D investments to the UK during 2007-08 alone.

As the noble Viscount, Lord Montgomery, recognised, we have always known that we have been brilliant at invention, but there has been a transformation over the past 10 or so years. We are also now brilliant at commercialisation. I saw for myself the changes that took place in Oxford University through the late 1990s into the early years of the 21st century. From the perspective of scientific breakthroughs, our research base has really delivered.

However, despite all this success, I agree with the noble Lord, Lord Rees, that we still need to raise our game. Competitors are becoming more numerous and many more countries are focusing on these areas of science. Recent investment made under the new Administration in the United States has shown the way to go.

What is the role of modern government? It is certainly not to tell scientists how to do their jobs, what experiments to do and which hypotheses to explore. We rightly separate ourselves from those decisions in accordance with the well established Haldane principle, but the Government can, and must, look at the big picture and towards the long term, so that this country is in a position to address the inevitable challenges of the future such as coping with climate change or the effects of an ageing population. It is entirely appropriate for government to direct the attention of scientists and engineers to these issues, not telling them how to tackle them, but asking them to find solutions none the less. That is precisely what we have done by creating cross-council programmes in areas such as global security. The research councils are already exploring how to tackle this and other issues in a co-ordinated way. I am very keen for this culture to become more firmly embedded across the science community.

The noble Lord, Lord Freeman, rightly highlighted the fact that, despite our significant investment in our science base over the past 12 years, there is as a result of the global credit crunch a dire shortage of venture capital to enable the spin-off businesses from our universities to grow. I am happy to confirm that the Government are working on programmes to identify actions that they can take. I am happy to clarify that the discussions relating to a state-backed bank recognise that two separate problems need to be addressed: first, the lack of venture capital for those companies that are typically pre-profit and how capital can be generated during this market failure to ensure that the money is available to take them through to profitability; and, secondly, the provision of development capital, as the noble Lord said, post the transition of 3i into larger, more highly geared private equity deals. There is also a lack of development capital for companies that are already profitable to take them to future growth. We are looking at both those areas.

My department, DIUS, working with other government departments such as BERR, is at the forefront of making sure that science and innovation can fulfil their potential, identify problems and come up with solutions. I note the points made by the noble Baroness, Lady Sharp, based on her extensive experience in this area. While we need to need to learn the lessons of the past and from the failures of this type of industrial policy, we still need to recognise that intelligent choices need to be made.

We have had successes. For example, we recently secured agreement on the European Space Agency’s first investment in a facility in the United Kingdom, at Harwell. That is excellent news, which raises the profile of another thriving UK industry, the domestic space industry, and will increase the involvement of our scientists in international programmes.

I am delighted to have the opportunity in response to the noble Lord, Lord Crisp, to highlight the work of the Office for Life Sciences, which has been set up to drive change across government departments in support of what is now, post the credit crunch, our single most important industrial sector. I am happy to confirm the themes that he highlighted: the promulgation of best practice across the NHS and the recognition that in the NHS we enjoy a competitive advantage that no other country has. We need to exploit that advantage properly, particularly the patient database going back to 1948.

Many noble Lords have mentioned the importance in all this of science communication and the engagement of science with the wider community, which is why the Prime Minister and I earlier this year launched the “Science: So What? So Everything” campaign, not to target the science community but to address the sense, as mentioned by several noble Lords, that science is seen too much as the preserve of the elite and not as something affecting everyone’s lives. The campaign has been very successful and we will maintain it, using the media and celebrity ambassadors to convey the relevance of science in every part of our lives.

As the noble Baroness, Lady Greenfield, highlighted, we need to recognise the cultural clashes that exist between the timescales in different parts of our society. I pay tribute to the work of the Science Media Centre, which noble Lords have mentioned, but we need to take this further if we are to make the UK a continued leader in science.

Our ability to exploit our science base to deliver economic growth is in part to do with making better use of the Government’s massive procurement budget to support and drive innovation. That is why we are putting effort into our small business research initiative, which supports the high-technology SMEs at a critical stage of their development. In particular, we are developing the Technology Strategy Board, which I am grateful to a number of noble Lords for highlighting, particularly my noble friend Lord Bhattacharyya. It has been a success, which is why we have put more investment into it—an additional £50 million, allocated to the board through the strategic investment fund. The noble Lord opposite described it as a slush fund, but it is anything but that; it is a strategic investment fund, going into those areas of growth where the United Kingdom has real competitive advantage, such as life sciences, clean tech, new energy and renewables, digital and IT. It reflects the continuing importance of investing in technology and innovation for the sake of our long-term competitiveness.

At the same time, we must continue to extract maximum value from the public investment in science. Maintaining our investment under the 10-year science framework gives a clear sense of our commitment to do that. Of course, the global recession makes increased efficiency a universal virtue and increases demands for accountability. The Government must make efficiency savings in all areas, science included, but I reassure my noble friend Lord Haskel that there has been absolutely no cut in the science and research budget. The ring-fence remains intact despite the spending pressures. The science community is in the unusual position of having a commitment that all efficiency savings that can be generated—through the lower rate of inflation, for example—can be invested directly back into scientific research. The research councils have announced that projects related to such areas as life sciences and the green economy would benefit from this. However, I stress that it is the science community that decides what the areas are and where the research investment should go.

Whether we are experiencing a downturn or enjoying economic growth, people have every right to know that their taxes are going to best use. They have every right to expect that scientists with support from the Government are looking at every opportunity to derive benefits from the excellent research that they undertake. That requires the science community to look hard at the knowledge that it generates; irrespective of whether that knowledge emerged from a project that is pure or applied, it should consider the potential impact. The research councils now ask all grant applicants to do this, and I believe that that is right.

Also, it is the fundamental responsibility of scientists funded by the taxpayer to engage with the public and to explain the value of the work that they do. We need scientists to talk not just to one another but to people in business, public services and the Government through the media. The best way in which to encourage them to do this is through the way in which the research is assessed. As the noble Lord, Lord Jenkin, highlighted, they should have the opportunity to stress what is known as well as what is not known. Therefore, the Government have asked the Higher Education Funding Council to make sure that the new research excellence framework reflects the quality of researchers’ contribution to policymaking and public engagement and makes it easier for researchers to move between academia and the private sector.

Let me say a few words about focus. The recession poses a far greater challenge for us than just the need for efficiency. We need to reshape our economy to be competitive in the industries of the future. As the noble Baroness, Lady Sharp, said, I offered three criteria that I asked the research community to consider, so that it, business leaders and the Government could decide together where science investment may be best focused to help to rebalance the economy. I stressed areas where the growth opportunities over the next two decades will be significant, where the UK has a realistic prospect of being No. 1 or 2 in the world and where we have a clear competitive advantage.

The research councils have reported back to me on how the science community can best support this, and the Government will say more about this through sector-specific policies in the months ahead. This is how, for example, we will be employing the £750 million strategic investment fund. It is an example of why a full £250 million of the fund will be targeted at low-carbon projects.

For all my emphasis on efficiency and focus, I want to conclude by reiterating the quality of UK science and by stressing the Government’s continued commitment to science. That has to be right for our long-term success, which depends on our having faith in the ability of our researchers to make the profound discoveries that have defined this country’s scientific legacy to date and which will meet the challenges of the future. I again thank my noble friend Lord Haskel and other noble Lords for this fascinating and informed debate. A number of points have been made that have given me constructive ideas, particularly those made by the noble Baroness, Lady Greenfield, which I will take forward. Any points that I have not answered I will write to noble Lords on.

My Lords, I thank all noble Lords for speaking in the debate and for their kind words. Sadly, there is not enough time for me to reply to every noble Lord. I have learnt an awful lot. There has been a lot of agreement about the value of science, technology and engineering, and the urgent need for communication and engagement. Over the years, many people have asked me what the value and purpose are of the debates that we have in your Lordships’ House. Surely, I am told, our job is just to legislate, to hold the Government to account, to hear from the Government and to hear from the Opposition. It is not. The response is that, in debating these issues, we provide a valuable opportunity for those with no organised voice to be heard and to hear the voices that need to be heard. Today we have heard those voices. I hope that the Government and society are listening. I beg leave to withdraw the Motion.

That this House takes note of the report of the Communications Committee on Public Service Broadcasting: Short-term Crisis, Long-term Future? (2nd Report, HL Paper 61).

My Lords, first, I thank my committee for its exceptional, hard work on the report and, indeed, for its work on all the other inquiries that we have conducted. Secondly, I acknowledge receipt of the Government’s response delivered this lunchtime, which shows Whitehall catching up with the transport concept of “just in time delivery”. It responds, in several respects, very constructively to the points that the committee made. It is an extremely well written response, which I put down entirely to the new broadcasting Minister, the noble Lord, Lord Carter.

Perhaps the first question is, “What exactly is public service broadcasting?”. We could so easily spend the next two hours debating its scope and how it is expressed. For the purposes of the debate, however, I suggest that the working definition we give at paragraph 13 of the report—

“an approach that focuses on the provision of core elements including national and regional news, current affairs programmes, the arts, children’s programming, programmes dealing with religion and other beliefs and UK content”—

roughly describes the area that we are in.

In the provision of these kinds of programmes, there is no doubt that the BBC is, and has been for three-quarters of a century, the pre-eminent provider. It is something of a national pastime to hurl bricks at the BBC. Sometimes they are justified. For example, personally, I am on the side of the Public Accounts Committee, which was reported this morning to have said that the BBC should give information about the salaries and fees that are paid to its very expensive presenters. It should make that a term of the contracts that it provides.

However, it should also be recognised how important a national asset the BBC is. One of the lessons that the Communications Committee has learnt in its short career is just how valued the BBC is at home and how much admired it is overseas. No other broadcaster is able to provide the promenade concerts or range of drama, for example, that are provided on Radio 4 and, indeed, on Radio 3. No other media organisation in this country is able to provide the range of home and overseas news that is broadcast by the BBC.

I am not one of those who believe that the future somehow belongs to citizen journalists. By their very nature they are part-time and issue-driven. They undoubtedly have a part to play, but the real need in an increasingly complex world is for professional journalists with the ability to dig beyond the press releases. Here, again, the BBC sets a standard of professionalism and objectivity that is difficult to match.

Having said that, it is always important to remember that the BBC is not the only public service broadcaster in this country. In the committee’s view, it would be entirely unsatisfactory if it was ever to become so in Britain. The Government’s response also makes that point clear. ITV, Channel 4 and Five make important contributions. With regional news, for example, ITV attracts four to five million viewers every evening and the research shows that audiences value the choice that this gives them.

Of course, however, as the committee points out, the commercial public service broadcasters currently share a common feature: they are all having to deal with the severest financial weather to hit broadcasters for over half a century. The transfer of analogue to digital has deprived them of the implied but very real subsidy that was being provided. The internet provides increasing competition for advertising revenue, and the world recession has meant company after company cutting back on spending. The impact is severe and undoubted.

My speech will concentrate on news provision, not least because, earlier in the day, the noble Lord, Lord Bragg, dealt with many of the issues surrounding the arts. We face the prospect that, unless action is taken, much broadcast news will simply disappear. ITV has already made it entirely clear that, under present arrangements, its regional news programmes—much valued but expensive to produce—will go. Equally, the much admired “Channel 4 News” programme has always relied on cross-subsidy from Channel 4 itself. In the present cold economic climate, the subsidy cannot continue indefinitely.

So the questions are those of what could be done and, of course, whether anything should be done. One argument is that it should all be left to the market. We rejected that argument, partly because some of the alternative programmes—good as they might be—could not be accessed free by the public but depend on subscription, but crucially because, if you take the area of news, going the market way would end up with a virtual BBC monopoly, which I think would be totally undesirable in a democracy.

A range of solutions were examined by the committee. There was a proposal to merge Channel 4 and BBC Worldwide—corporate engineering, as one witness described it—leading, as the Minister memorably put it, to PSB2. The government response indicates that this is still on the table for consideration. Such a merger would undoubtedly be to the benefit of Channel 4, but the evidence we heard suggested that it was opposed by the BBC. Perhaps that is not the best basis for a merger, but others may have things to say on that point. There was another proposal to put together Channel 4 and Five. This was enthusiastically supported and pursued by Five and just as enthusiastically rejected by Channel 4.

Having looked at all those options and others, the committee proposed that the best way forward would be a system of contestable funding. I think that was first advanced by the noble Lord, Lord Burns, not only in his evidence to us but previously. The noble Lord has the great advantage of previously having been an adviser on broadcasting to the present Government.

There is a danger in today’s media world of being buried in jargon, so I shall explain in practical terms what “contestable funding” actually means and how it could relate to regional news. The prospect with ITV regional news is that unless something is done it will disappear. We will be back to the 1950s: the BBC will be the monopoly provider. In fact, it would be appreciably worse than the 1950s. In those days, regional newspapers had large readerships. There were flourishing morning newspapers and very strong evening newspapers. In those circumstances no one would talk of a BBC monopoly. But today regional newspapers face as serious a crisis—perhaps an even greater crisis—than the broadcasters. Some newspapers have already closed and more closures are threatened, just as in the United States. Evening newspapers in the big cities face particular challenges. I here declare a past interest as a former chairman of the Yorkshire Post Group, based in Leeds, and of the Birmingham Evening Mail and Post Group, based in the West Midlands.

I shall try to explain why contestable funding provides a way forward. ITV would continue to provide the slots—if you like—for regional news programmes on channel three, but would neither provide the news nor bear the cost of producing it. Public funding would be offered to companies that could provide that news, but that process would be open to competition. Regional newspapers would be allowed to take part in those consortiums competing for contracts, meaning that it would be necessary to change the regulation here, and so, too, would an organisation such as ITN. However, I would welcome confirmation from the Minister that the case for relaxing regulation by allowing newspapers to take part in those consortiums would receive favourable treatment from the Government.

The net result of all that is that in the end you could have news provided with the television skill of ITN and the local knowledge of the regional press. We should remember that much of today’s regional television news is a follow-up to the newspaper stories that appear in the evening press. That plan is very close to the Ofcom proposal of independently funded news consortiums. As Ofcom points out, there is a choice between retaining the current ITV regions or going below those regions.

We should not believe that the present regional boundaries necessarily represent local interest. When I was Member of Parliament for Nottingham South, there was little interest there in what was happening in Birmingham. When I became Member of Parliament for Sutton Coldfield in Birmingham, 40 miles away, there was little interest in what was happening in Nottingham, but they were both covered by the same regional company. Of course, I add that what I propose about the regions of England also applies to the nations of Scotland and Wales, and to Channel 4’s evening news programme, which is already contracted out.

The big question then becomes how you support such a system—where does the money come from? The committee rejected more taxpayer support but made a number of other proposals. At that point in their response, the Government became remarkably coy and basically said, “Wait for the final report”. I have the utmost confidence that that is exactly what the Minister will say tonight, but let me set out some of the ways in which money can most certainly be raised.

First, there is the obvious potential in increased partnership between the BBC and other broadcasters. Whether it be BBC Worldwide co-operating with Channel 4 or studio space being made available at a regional level, the potential is great, although I accept that it will take time to deliver and develop. It will also require a commitment by the BBC to partnership that has not always been evident in the past. Secondly, the digital switchover scheme—financed by agreement by the BBC—is underspent. There is no reason why that money should not be used also and, even more so, why that amount should not continue to be used to provide secure future finance. Thirdly, although we are moving to digital from analogue, there is still a value in analogue. It is not unreasonable to say that as analogue provided the undoubted subsidy for public service broadcasting in the commercial sector, that sector might also benefit from the sale of analogue spectrum.

I do not run away from the prospect that in the final event those measures may not be sufficient or, more likely, will not be able to provide the resources quickly enough. If that is the case, there would be no other option but to use the money—or a little of it—from the licence fee. We might remember that, between 1927 and 1961, a portion of the licence fee was devoted to general public funds. I obviously recognise that that would not be welcomed by the BBC and agree with it that the licence fee should not be treated as some kind of milch cow available for the Government to finance any proposals that they happen to have in mind. Personally, I think it is questionable whether the licence fee can be diverted for providing broadband, for example, but that is doubtless a debate that we may come to. There is a much stronger case for using some small part of the licence fee for providing broadcasting; after all, that is what the public believe that they are paying for. The public would not want a situation where the BBC was the only television news provider. It would put far too much power in the corporation’s hands. Frankly, I do not think that the corporation would welcome it either.

This proposal is not an attack on the independence of the BBC. It would be ludicrous to characterise it in that way; it is to ensure proper competition and proper choice for the public. It also recognises that, in the middle of the worst recession since the 1930s, the BBC has a unique advantage of a secure income of over £3.5 billion a year. The BBC should not be defensive on this; it should not seek to defend its budget to the last pound. It is in a uniquely privileged position and should take a leadership role to help all public service broadcasting, particularly the news, through this challenging and difficult time. I take some comfort from the Government’s response, which says that they agree with the committee that,

“responding to current challenges requires a greater role for the BBC … using its talent, facilities, resources”.

We will see exactly what that means in practice.

I also believe that what I am saying is what the public would want. In the Government’s response we come to the department’s familiar Stalinist tradition. I remain of the view that it is a great pity that our elected Parliament does not have a greater say in some of these affairs.

I emphasise that I am not seeking to intervene in the day-to-day running of the BBC or challenging its independent reporting. That is a lazy argument of last resort used by those who simply want to defend the status quo. But the public’s view is crucial in deciding exactly the case that I have been arguing: whether some part of the licence fee should be used for other purposes, such as helping to support public service broadcasting in the commercial sector. That is where Parliament has a proper role to play.

Those who oppose that might consider what happens at the moment. The Minister will certainly remember that the BBC charter and what flows from it are not the subject of legislation or any serious decision in Parliament; it is a straightforward deal between the Government and the BBC in which Parliament has no meaningful role. In this age of much greater transparency and promised reform, I do not believe that the present system deserves to last.

Even more, what I and the committee want is a range of public service broadcasting in this country with the BBC remaining in the lead, but with other broadcasters being enabled to make their contribution. That is the aim and the goal and it is the challenge, over the next years, that we must meet. I beg to move.

My Lords, as a member of your Lordships’ Select Committee on Communications, I pay tribute to our chairman, the noble Lord, Lord Fowler, for initiating our brief but very timely inquiry, for his skill in editing our deliberations in such a cogent form and for that excellent review of the issues that we have heard today. I declare my interests as an adviser to Macquarie Capital, whose funds invest in and manage Arqiva and Red Bee, which are companies supplying transmission and other services to broadcasters.

We await the publication of the Digital Britain White Paper this month with great interest, but we do so in the knowledge that some of its proposals are unlikely to be implemented until after the next general election. Therefore, I trust that those drafting party manifesto policies will note our concerns and the options explored in our committee report and in this debate today.

The good news today for public service broadcasting is that the policies of the past decade have protected and expanded the BBC. For that, the Government should be applauded. Licence fee income is now about £3.5 billion a year and BBC Worldwide turns over about £1 billion more. The licence fee money, as the noble Lord, Lord Fowler, said, is also being top-sliced, as they say, to help to fund the transition of households from analogue to digital broadcasting.

Looking forward for cash to sustain other parts of public service broadcasting after digital switchover is completed in 2012, the option to keep top-slicing the huge licence fee total will be almost irresistible for any cash-strapped Government, I predict. Today’s switchover subsidy may well become tomorrow’s contestable funding, in Ofcom’s phrase—money that could be bid for to fund good works such as regional news or children’s programming. Our report calls for the introduction of contestable funding to support public service broadcasting outside the BBC.

Our report also suggests that a partnership between Channel 4 and BBC Worldwide should be pursued. A joint venture might generate profits of up to £200 million a year—a win-win deal, one hopes—but an important consideration in structuring such a partnership must be to ensure that BBC Worldwide is not distracted by internal politics or fettered in its international ambition. In its highly competitive global marketplace, up against media giants many times its size, BBC Worldwide is Britain’s last best hope of producing a national champion. For politicians, that should be a priority, and any partnership with Channel 4 should be fashioned to strengthen BBC Worldwide as our global player.

It is worth noting that after 26 years on air Channel 4’s audience share is still below 10 per cent. In terms of the quantity of popular quality output, particularly in drama, ITV is the most important public service broadcaster in the commercial sector as regards programme investment and employment. It is accepted that the regulatory constraints on ITV should now be relaxed so that it can continue as a viable public service broadcaster. I therefore welcome the prospect of ITV being released from any outdated undertakings that limit its ability to get a fair share of the television advertising markets.

If the economy begins to pick up later this year, ITV will hope that past experience of television advertising being the first to suffer in a recession but the first to recover will still hold true. However, we accept that there will be a continuing threat of a loss of advertising to the internet and that that will continue to undermine the traditional business model of commercial broadcasters in the future.

That said, one area where Channel 3 must continue to compete with the BBC, and ideally match its peak-time audiences, is in news and current affairs, both nationally and regionally. Despite the quality of UK news on Channel 4 and Sky, both have relatively small audiences. The BBC, like all big, long-lived institutions, has developed its own distinctive culture, which inevitably influences its news agenda and colours its reporting. With a medium still as influential as television, it is important that peak-time audiences can still watch their popular alternative news and current affairs on Channel 3. This is particularly important in the three nations of the United Kingdom peripheral to England, which, with 83 per cent of UK viewers, naturally dominates the London-based news services.

Since Scotland got its Parliament and Wales and Northern Ireland their Assemblies, the BBC has broadcast news services adapted to the new needs of the devolved nations. Therefore, it is to be hoped that the surviving independent broadcasters on Channel 3—namely, STV in Glasgow and UTV in Belfast—are encouraged to pursue their ambitions to supply distinctive national services in greater measure than is required of any English region. In this regard, we should keep in mind that in English regions it does not matter quite as much if you have restricted local coverage because almost all you see on the ubiquitous UK news broadcasts will reflect other aspects of your nation, England.

The Government and Ofcom are understandably sympathetic, as I am, to ITV plc’s plea that it be allowed to shed its remaining public service obligations. However, ITV plc also wants to renegotiate its contract to supply programmes on the Channel 3 network to STV and UTV. Clearly, this would not be a negotiation of equals, and a deal imposed by ITV could undermine the viability of both smaller companies. A condition of the merger that created ITV plc was the network arrangement imposed by Ofcom regarding the supply of network programmes to the two smaller companies. Can the Minister assure us that Ofcom is playing a constructive role in brokering an agreement on this issue? Can we also be assured that the release of ITV plc from other public service obligations will be conditional on a settlement that ensures that STV and UTV can still aspire to make programming appropriate to the needs of nations with their own distinctive cultures and politics?

Our Select Committee concluded that the affordability and practicability of a new Scottish network and digital platform deserved further exploration. The proposal for a Scottish network broadcasting specifically Scottish programming came from the Scottish Broadcasting Commission, set up by the Scottish Government. Its report, Platform for Success, has been endorsed by all parties in the Scottish Parliament. The obvious question is how to pay for a new network costed at between £50 million and £75 million a year. Could that be a candidate for contestable funding?

Will my noble friend explore whether the Scottish Government are prepared to co-fund a new Scottish network, as the previous Scottish Executive did in alliance with BBC Scotland to launch the Gaelic language channel, BBC Alba? In the twilight of the old duopoly in public service broadcasting, it might be timely to reflect on the fact that Scotland, a nation of 5 million people, is almost unique among comparable countries in not having a television network that it can call its own.

Let me end with positive news for the UK’s other nations. Thankfully the BBC, with its licence fee income of £3.5 billion a year, has never been better off. For the three smaller nations that make up 17 per cent of all those BBC licence payers, the good news is that, at long last, their pitiful share of programme production for the BBC’s UK channels will rise to 17 per cent. For Scotland, that means 8.6 per cent of a network production budget of almost £900 million—an increase from just over £30 million a year at present to more than £70 million a year. That is a huge boost for which I give all credit to the director-general of the BBC and to the BBC Trust.

I have one concern: the 8.6 per cent target may not be reached until 2016. Surely, after half a century of marginalisation, that is too long a transition, especially in these rapidly changing times. I hope that Ofcom can put further pressure on Channel 4 to push up its percentage of programmes made outside England. I trust that our report Public Service Broadcasting: Short-term Crisis, Long-term Future, which has been so ably outlined by our chairman, will help my noble friend and the Government to preserve what is best in our broadcasting industry so that we can continue to make what I believe is still the best television in the world.

My Lords, I am grateful to the noble Lord, Lord Fowler, not only for bringing the debate to the Chamber but for so clearly stating the case. That was extremely helpful because not all of us have the noble Lord’s experience.

I have always had one anxiety. I think that we in this country treat the BBC as a sacred cow. I am sure that noble Lords know what I mean. The BBC can get away with far more than any of the commercial channels, whether in its regulation or in showing something that would count as advertising in a commercial broadcast but does not in the BBC. I feel strongly that as we pay not £3.5 billion but £3.6 billion for the BBC this year, the regulation should be the same; there should at least be a level playing field in regulation because there is not one in any other sense.

I have had some small experience in a regional television company called Meridian Broadcasting, which I joined when it started and stayed with until it was absorbed into ITV. There was always a feeling that the regulators came down much harder on the commercial companies than on the BBC. If there was a dispute, the BBC had an internal mechanism for resolving it while the ITV companies did not. I have never been happy with that. We should start looking at the BBC as part of the total provider sector in this country and not as something special to be protected as a sacred cow.

When we started to talk about digital switchover, I thought that there was bound to be a lot more competition. There would be a lot more channels and a lot more people providing advertising, and that would affect us.

I do not remember people getting very worked up about that. I was very surprised by that. I am not an expert, but it seemed to me logical to think that there would be a problem with having all those channels. I read somewhere that there was an idea that more time could be provided for advertisements. Clearly, that will not work because there is a finite amount of advertising. It just means that companies will compete with each other for that advertising; the total pot will not increase. Secondly, I fear that the quality of advertisements will decrease. I think that we have quite good quality advertisements in this country and we should protect them. We should not allow advertisements to become ridiculous and of poor quality.

As has been stated, with that £3.6 billion there is now a gap between ITV and the BBC. For the first time, the BBC has more money than ITV, and that gap will grow. Next year, there will be a gap of £1 billion. Clearly, ITV will not be able to provide what it has been providing. It is useless to imagine that it can bridge that gap through revenue, which has been hurt not only by competition but by the current financial climate. That kind of gap will mean that we will not be able to stop at just finding a way to provide regional news; will have to find other ways to help commercial companies to stay viable and provide the best television.

As has already been said, we have the best television, but I would also say that we do not have the best television from the BBC. No commercial provider would make some of the programmes broadcast on the BBC. Meridian was offered a programme about Spain—I have forgotten what it was called, but it was a serial about Spain. Meridian said that it was a ridiculous programme and refused it, but the BBC took it on. It ran for a while, but it was always a ridiculous programme. There was a very expensive serial called Gormenghast. I do not know if any noble Lords saw it or followed it, but I still do not know what it meant or what it was about. Perhaps I am stupid, but it did not seem to me worth sitting to watch.

We get a lot of what I feel is a waste of a good amount of money. If you have to earn every penny and set up a department that has to sell advertising to get the money in, you do not make that sort of programme. Then you value the money that comes to you. If the money just arrives in the pot, obviously there is a slightly different attitude towards it, which is not a good thing.

I once watched 48 hours of regional broadcasting from the BBC for diversity content. I am sorry to say that it had very poor diversity content. We were given cassettes, I am glad to say, because we could not have done it otherwise, but it had very poor diversity content. A lot of the documentaries that the BBC makes about minorities and minority areas are not nearly as good as those of Channel 4. I cannot imagine who would ever think that we can bring Channel 4 and five together. I do not see much merit in channel five. It never had merit to begin with and it has not acquired it. I do not speak for channel five.

My other point is that the BBC paid money to Sky to go on its digital platform—£40 million, I am told. ITV tried to find an alternative. If the BBC had joined ITV to try to create an alternative platform, that would have meant real competition, because everything is now controlled by Sky, including cable. I have also been part of a cable company, and all the packages are put out by Sky. It controls them all. I find that distressing. Of course, it is water under the bridge and we can do nothing about it. However, it is time to start supporting our partner broadcaster in this country.

My Lords, it is a privilege to serve on this Select Committee under the excellent chairmanship of the noble Lord, Lord Fowler. He has eloquently expressed many of the concerns of those on the committee. The case for public service broadcasting has never simply been about certain subject matters themselves, but about how specialist knowledge of those genres within the industry can help to inform other programme-making and, in turn, permeate our culture. No aspect of public service programming should ever be seen as a weight around the neck of broadcasters, but rather as an opportunity to enrich the fabric of our shared society. The loss of some of that sense of responsibility and the chasing of ratings as a primary objective have led to some gaping sectors of programming which the marketplace, if left to itself, would simply not provide. In other words, there are certain definable core elements of public service content that should continue to be supported. The noble Lord, Lord Fowler, alluded to that at the beginning of his speech.

In connection with that, I was delighted when the imaginative plans for MediaCityUK in Salford were announced because among the combination of creative ingredients there seemed to be a clear commitment to enhancing some of those core elements of public service broadcasting. The BBC insists that its plans for moving departments are on course, and that includes children’s programmes, but what children’s programmes? Many of us are dismayed about the diminution of quantity and quality in children’s television provision. Some noble Lords will be too young to remember “Blue Peter”, “Crackerjack” or “The Railway Children”. Such programmes owed much to the fact that those who commissioned them were deeply conscious of their role as cultural mediators and, in a sense, still bore the Reithian torch of,

“everything that was best in every department of human knowledge, endeavour and achievement”.

Of course, we are no longer in a Reithian age, but nevertheless there are certain norms that are true in each generation. As the Voice of the Listener and Viewer has astutely observed, the quality of programmes children watch as they grow will affect the quality of our society when they form the adult population. I find it enormously disappointing and deeply concerning that this aspect of public service broadcasting appears to be given such short shrift.

Meanwhile, ITV has pulled out of the Salford plans and will now remain in Manchester in new accommodation. With both those cities in my diocese, for me to make an appropriately judged comment would require more than the wisdom of Solomon. However, I can say that this withdrawal by ITV may have a significant impact on the training facilities and experience that are a key aspect of MediaCityUK’s proposed role. As the noble Lord, Lord Puttnam, told our Select Committee in its current taking of evidence, when ITV was released from so much of its PSB obligation, it virtually walked away from its commitment to training. That is very serious, not least for the future of public service broadcasting of quality.

The third major ingredient in MediaCityUK was heralded as the independent programme-makers, which were part of the trio with BBC and ITV that would make it a world-class centre and enhance public service broadcasting. But the chairman of Northwest Vision and Media, a strategic authority for the creative industries in the region, said last month that broadcasters and educational establishments, which include the forward-looking media studies department at Salford University, will need to have the resources to get the benefit of the lower-cost content that could be made in these more modern methods. He said:

“The whole thing is a bit of a circle”.

That reinforces my huge concern that the training opportunities, which were such a key part of the imaginative MediaCityUK plans, may become much less than hoped for. That is so serious because our national reputation for high-quality public service broadcasting in particular has depended on high-quality training. I hope that the noble Lord, Lord Puttnam, will forgive me for quoting him again. He said that an abundance of talent of every kind is the only certain way of ensuring a bright future for the whole of the sector. Another department destined for MediaCityUK is religion and ethics, which, along with children’s programmes and local and regional television news, is an aspect of public service broadcasting mentioned in our report and specified as a requirement in the Communications Act 2003.

In 2007, an Ofcom survey showed that 75 per cent of people believe that,

“TV should help to promote understanding of religions, cultures & lifestyles”.

This week, two top award-winning programmes came from the BBC religion and ethics department. They were called “Around the World in 80 Faiths” and “Miracle on the Estate”, the latter of which was filmed in Manchester’s most deprived area. Those programmes demonstrated well PSB’s role in promoting understanding and social cohesion.

I am glad to note that the BBC has established a standing committee on religion and belief. No other genre in the BBC has this. It is to be chaired by my friend, the right reverend Prelate the Lord Bishop of Norwich, who cannot be in his place today. It will reflect the diversity of the nation’s religions and those of no faith. The director-general of the BBC has personally assured me of the corporation’s determination to strengthen its religious output as part of the BBC’s public service broadcasting remit. I welcome that and will watch and listen closely for it.

Public service broadcasting that fails to reflect the complex realities of faith in the modern world will fall short of helping people to understand themselves, the communities in which they live and the global issues we all face. The composer, James MacMillan, in a lecture to the Sandford St Martin Trust, which I chaired last year, said that,

“religion is, and will continue to be, for good and for ill, a constant in humanity’s narrative about itself”.

Therefore, I find it curious that although the Select Committee’s first recommendation specifically mentions programmes dealing with religion and other beliefs, the Government’s response mentions all the other core elements of public service broadcasting that the noble Lord, Lord Fowler, cited, included in our recommendation, but they exclude religion and other beliefs. Why?

Perhaps it is included in the phrase, “among other things”. But what does that mean? Is it meant to cover a multitude of sins or a plurality of religions? If it is the latter—for I hope that there can be no other conclusion—why is it so squeamish? In the light of what must have been a conscious omission, the final sentence of the Government’s response to our recommendation sounds a bit ominous. They say:

“There may well be a need to balance competing priorities”.

Perhaps I have succumbed to a fit of paranoia and, if so, I am sure that the Minister will be quick to reassure me.

Part of public service broadcasting strength in this country is its ability to touch mass audiences and not to be consigned to a ghetto. The opportunity now is for PSB to be available on as many platforms as possible—in other words, to expand and not to decline. Further withdrawal, for example from local TV news, would have an adverse effect in many of the places where I serve. It would hit local pride and community cohesion. So I hope very much that the Government will soon come to a decision about, for example, Ofcom’s proposals for independently funded news consortia and the BBC’s counterview, to ensure the continuing plurality of regional news. It really does affect places such as Manchester. The noble Lord, Lord Fowler, mentioned the decline of local newspapers, and that is demonstrably true across Greater Manchester. Only last week, I stood among the few remaining staff in the huge, almost empty building that contained what was Rochdale’s once hugely successful newspaper. Although still valued, it is sadly only a shadow of its former self.

What is clear in our report and the Government’s response is that public service broadcasting simply must not be left to the BBC alone. Partnerships would be a step in the right direction, but funding issues require tenacious long-sightedness and a genuinely sustainable model that does not risk scuppering the long-term future of PSB because of short-term expediency, an unwillingness to face up to tough questions or a desire to shrink from radical interventions.

Ofcom research showing that the public are willing to pay for PSB over and above the licence fee should not be jettisoned just because of the recession; that will end. Nor is the advertising situation terminally hopeless. The rise of internet players such as Channel 4’s 4 On Demand opens new doors for internet advertising, and the on-demand audio channel Spotify is an example of the successful provision of free advertising-funded web content. On that subject, a pot of money from which broadcasters could bid for PSB funding could be part of the solution. While we all agreed on the committee that there is opposition to top-slicing the licence fee, and from some quarters to the proposed diversion of ring-fenced digital switchover funds to help other broadcasters after 2012, I wonder whether negligible inflation allows enough slack in the RPI-linked licence fee to make this at least worth revisiting.

Whatever options for funding are chosen, securing a sustainable future for public service broadcasting cannot be left to chance. The Government’s response, so far as it goes, is encouraging and I look forward to their forthcoming report on digital Britain. I pray God, and it must be permissible for me to say that from these Benches, that a thriving dynamic plurality of public service broadcasting, which for so long has been such a key ingredient in what has made British broadcasting the envy of the world, will continue to inform and enlighten our culture in the United Kingdom.

My Lords, in his opening remarks, the right reverend Prelate the Bishop of Manchester said what a privilege it was to serve on the Communications Committee under my noble friend Lord Fowler. I do not want to gainsay that, but it is a pleasure and a delight to do so. My noble friend had considerable trouble getting this debate, and in so doing I dare say he abandoned his customary congeniality, but it is important that he has done so because it appears that there is an immediate problem with public sector broadcasting. That being the case, it is only right that Parliament should discuss it. Moreover, given that there is a problem with public service broadcasting, the Government must get involved. If they do not, there is likely to be blood on the carpet and wreckage from the sector as we have come to know it. Again, it is important to note that if that were to happen, Parliament should discuss it.

I believe, first, that public service broadcasting as we have it continues to be important. Secondly, I believe that PSB should not be a BBC monopoly, and in this as in other areas of life, pluralism must be what we aspire to. Finally, PSB must be at arm’s length from the Government.

I declare an interest as chairman of the CN Group, a local newspaper group in Cumbria. It has been suggested by some that the Government should subsidise local newspapers. I should like to put it on record that, for my part, I am entirely opposed to that. Equally, I think it is right that the taxpayer should not bankroll publications that are in competition with local newspapers. As has already been touched on today, in our report we have considered whether contestable funding has a place in the context of the current crisis. Even bearing in mind my caveat about chairing a local newspaper group, I think it may well do. It is an important possibility that needs to be looked into with care.

But, because of the nature of the immediate problems facing the public service broadcasting sector, I suspect that there is a fairly narrow range of options in front of us; these are, in general terms, outlined in the report. I am extremely anxious—I use that word in a general sense—that the matters described in the report will be a precursor to a series of much more intractable problems. It is not simply because I have spent too much time listening to the noble Lord, Lord Maxton, that I believe convergence between the internet, radio, TV, film and newspapers is taking place; it is more or less on us now. Because of this we need not only to identify what a public service broadcaster might be, but what a broadcaster, pure and simple, might be. At the same time we need to identify the kind of intellectual property regime which will form the legal framework within which all this will be carried on in the future.

It is clear from the evidence that the Communications Committee has been receiving recently that, for example, the distinction between film and television as it has traditionally been is beginning to break down. Equally, the same is happening between material in the printed newspaper and material on the internet. These are merely two examples of a much wider phenomenon. The character and the means of both distribution and reception of digital material is myriad. Audiences are increasingly flexible in the way in which they consume it, and they approach it differently according to the means of distribution employed. For example, watching a film on a mobile phone or on a laptop is a very different experience from going to see the film in the cinema and are not alternatives to most people who do that.

In a world where there is no monopoly of distribution, everyone becomes a supplier of digital material. This has obvious and massive implications for public service broadcasters and what they do. Equally, as a consequence, it has implications for the way in which they are going to be funded. This obviously includes the licence fee. It may have been set for a period up to 2012 but I am not sure that that will be of any relevance by the time we reach 2012. Given the speed with which change has crept up on us, all this needs to be thought about extremely deeply and thoroughly, and soon. We are facing immediately a crisis brought about by the congruence of the collapse of advertising revenue and technological change. But I do not think it is the end of the story because we are not going to go back to the status quo ante when the current financial crisis is over. I suspect that the broadcasting/digital world may be very different from the one we have been used to. It may well be the case that we ain’t seen nothing yet.

My Lords, I add my thanks to the noble Lord, Lord Fowler, for not only securing the debate but for the excellent report on which it is based. His committee goes from strength to strength and I am far from alone in the House in hoping that as soon as possible it could lose its provisional driving licence and have its long-term future secured.

It will not have escaped your Lordships’ notice that we are rapidly approaching what might be described as the end game in terms of the direction likely to be offered by the forthcoming government report Digital Britain.

Here I declare an interest as deputy chair of Channel Four. That is the same hat I was wearing when, in April last year, I accepted an invitation to a very pleasant dinner hosted by the BBC Trust, then quite recently formed. That evening we discussed the future of the BBC and of public service broadcasting more generally, and I strongly recommended that the BBC ensure that it takes on the role of the architect of the future of PSB in this country, which everyone at that dinner regarded as being, in the long term, an endangered species. I got no sense but that this view was generally accepted as being sensible, and certainly the right direction of travel. I probably should have known better—I had forgotten the lessons of history.

From its inception, the BBC has only ever truly been the architect—I could say, the all-consuming architect—of its own immediate future. In this respect, it is probably worth taking a quick canter through the corporation’s history. Originally starting as a private company, it became a public corporation only in 1927. Success as our sole national radio broadcaster was rapid, and the first serious challenge to its sense of self-preservation came, ironically, from within.

Early experiments in television had been treated benevolently, but with little serious interest from the top. It was not until the televising of the 1948 Olympics that things started to get serious, when the number of receivers in the London area increased fourfold to over 66,000 by the end of the Games. The then Comptroller of Television, Norman Collins, was sufficiently jubilant to write:

“once television is truly national it will become the most important medium that exists … the first casualty of television, possibly the only casualty, is not the local cinema or the local country theatre, it is sound radio”.

For daring to question the then received wisdom—that is, the primacy of radio—Norman Collins was quickly given the boot. Lord Reith was no pushover but, as far as I can make out, it was this that set the seal on future decades of autocracy.

The next threat rolled along a few years later in 1952, when on 11 July Parliament started to seriously discuss the possibility of a second television channel, opposed in principle by the then doyenne of television, Grace Wyndham Goldie, who reportedly told a parliamentary committee that the whole idea of a second channel was fatuous as she could barely put together a talented enough team to deliver one channel. Market forces, driven by scarcity, were obviously in play even at that early date.

There then began a two-year struggle for what was described as “the soul of the nation” when the then Conservative Government had the temerity to suggest that the most appropriate competition might be mounted by an advertising-supported channel and not one controlled and operated by the BBC. The corporation mounted a fearsome rearguard action, and the Bill establishing what became ITV was passed by only six votes, to receive Royal Assent on 30 July 1954.

More battles followed. As chancellor of the Open University, it saddens me to recall that the creation of the OU was initially opposed root and branch by the BBC as being an imposition on its editorial independence. Happily, those two organisations seem to be rubbing along rather better nowadays.

I could go on at great length, but I hope my point is clear: here is an immensely successful organisation that seems compulsively to feel that any development within the media space it occupies represents a threat, possibly a mortal threat, to its survival.

So we reach today and the regrettable possibility of a continuation of the corporation’s them-or-us attitude towards the whole of the rest of the content world. I remain a huge admirer of the BBC but, as wiser heads than mine have pointed out, it seriously endangers itself if it seeks to remain part of the problem instead of becoming that architect of a long-term answer—that is, achieving the plurality of voice that a broad consensus of both Houses and all parties appears to regard as essential to the future of democracy.

I will not delay the House by niggling about the inappropriate parsimony of the corporation’s approach to what it describes as “partnerships”. It will suffice to read the letter from ITV’s chief operating officer, John Cresswell, in yesterday’s Financial Times regarding his frustrations in trying to achieve an agreement with the BBC over the sharing of regional news obligations. Sadly, the experience he relates is all too familiar to those who have ever attempted to design a sustainable future for all the various components of our broad public service offering.

In the coming few days the BBC has a unique opportunity to change the habit of a lifetime by proving my analysis quite wrong in generously and unambiguously setting out a future for public service broadcasting that is plural, inclusive and, in production terms, as broadly based as possible. When I walked off into the night following that meeting with the trust, I was confident that it had in mind exactly this type of outcome. I find it almost tragic that the ghost of autocracy past appears to have come back to haunt its deliberations.

Without unduly delaying your Lordships, I have one very specific proposal that I would like to take the opportunity of today’s debate to float out into the ether. Our public service broadcasters are in receipt of a variety of forms of support from the public purse, which gives them a clear line of responsibility to the taxpayer as well as to the licence fee payers they serve. However, they are often unable to prepare programming and online services in a timely fashion to reflect major political debates, as they have little access to key policymakers and other political thinking on a wider number of crucial social issues. The problem is exacerbated by the long lead times the broadcasters require to prepare the very best of such material. As a consequence, their ability to deliver public value to the taxpayer and to the licence fee payer in the form of public understanding and participation is greatly diminished.

I would like to see a secure and non-partisan channel of communication established between government officials and public service broadcasters to help the latter prepare content, where they feel it is appropriate, that could better reflect the breadth of thinking and the possible options in relation to critical forthcoming debates, at both a national and international level. I propose that a mechanism be created which would enable the editorial and policy units—particularly, but not exclusively, those attached to the public service broadcasters—to have a formal and privileged access to emerging government thinking on a range of political, social and economic issues, as far in advance as is practicable. To ensure the non-partisan nature of this arrangement, any such discussion should fall under the aegis of the Cabinet Office and, through it, to the relevant Permanent Secretaries, along with such senior officials as they may designate.

This country currently suffers from a crippling trust deficit. Any such scheme that was able to inject trust and co-operation into the widening gap between policy development and public understanding would, in my judgment, be a small but significant step forward.

Let me be crystal clear: in no way is this a proposition that is designed to tame the broadcasters—quite the contrary. In an age often said to be laden with political spin, I hope that it would allow them much more effectively to be the grit in the oyster of many political debates, putting down serious challenges to the Government of the day and to the Executive, but based on fact, not theory. In fact, I think this kind of proposal is all of a piece with the kind of thinking about the public value of public service broadcasters which underlies the whole of the noble Lord’s report. As I say, I also think that it is the kind of partnership which broadcasters would welcome if they are really to step up to the plate on their public responsibilities, most particularly in an age when it is ever more difficult to sort the wheat from the chaff, deluged as we are with vast amounts of information every minute of the day.

Today we have gone to the polls to vote on Europe. I do not think that anyone could honestly claim that young people in this country have a clue, or have been adequately informed, about what these issues are. Therefore, any proposal which could enable better, more accurate and more timely information to be available to young people must be a step forward. I recommend it to the House.

My Lords, I add my congratulations to the noble Lord, Lord Fowler, on his quite exceptional chairmanship of our Communications Committee. It would be hard to find a more diligent and hardworking Select Committee, and I certainly hope, along with the noble Lord, Lord Puttnam, that it will at last be established on a permanent basis.

Debating our report before the Government had fully responded was clearly not ideal. However, I am grateful for their interim reaction which at least gives your Lordships a further opportunity to re-emphasise the points that we regard as crucial if public service broadcasting is indeed to survive in this economically challenged and rapidly changing digital world.

As the report starts by saying, defining public service broadcasting has challenged many of our interviewed experts, quite apart from ourselves. Inevitably, we all have our own preferences. I prefer—perhaps not least because of the citizen consumer battles during the passage of the Communications Act 2003—the definition proposed by my noble friend Lord Birt of “a programme tradition with citizens rather than consumers in mind”.

I shall emphasise four issues in the report, the first of which, the Government’s response indicates, will find favour. British experience since the BBC ceased to be the monopoly public service broadcast provider has convinced everyone that there must be at least one public service competitor for the BBC. I agree with other noble Lords that ITV, with its successful track record of combining PSB with commercial programming and, above all, its impartial, independent news, is the one of the most obvious candidates. We should not forget either its commendable record of sourcing UK content. On the other hand, because of the undeniable and increasingly rapid move of the advertising industry to the internet, ITV, as it made abundantly clear to us, will need adequate financing for any future PSB role, all the more so in light of the Treasury’s confiscation of the valuable analogue spectrum.

I underline, secondly, the crucial need for the continuance of a second nationwide, independent, impartial public service broadcaster news service. Again, ITV’s track record clearly makes it one of the major candidates, so long as the necessary finance and partnerships are assured. It is clear, too, that UK citizens want this. Ofcom’s research showed that 86 per cent of our citizens wanted international news to be available on more than one public service broadcasting channel.

In this context, the BBC has already suggested some sharing of facilities and the use of some of its material in regional news programmes. One understands that many conversations are still under way and one expects to see many of these initiatives rolled out in due course. In light of Ofcom’s research showing high citizen demand—72 per cent—for specific nations and regions news services, I agree that the Government should also consider the relaxation of competition rules to allow some combination of print news and broadcast media companies.

Children’s PSB programming is another area where more resources are needed, with 76 per cent of parents urging more UK-sourced provision. Here, too, PSB competition is important, but—I could not agree more with the right reverend Prelate the Bishop of Manchester—the BBC clearly has the major responsibility. We must therefore hear rather more from the BBC about what priority children’s programmes will have in its future plans. I would include in that not least its online programmes. Many people, for example, will want to know what will replace the recently axed children’s online service, BBC Jam.

There was particular concern at Radio 4’s decision to end the last existing BBC children’s radio programme, put out on a Sunday evening. My noble friend Lady Warnock made a quite brilliant speech on behalf of Sound Start—which has previously piloted a children’s radio programme—on 14 May, criticising Radio 4’s decision and stressing the importance of listening for the development of children’s imagination. I urge those responsible for Radio 4’s programming and, failing that, the BBC Trust to think again.

My third point is on the proposals being advanced for partnerships and alternative forms of funding for public service broadcasting. The BBC Worldwide/ Channel 4 merger suggested by Ofcom, and perhaps still favoured by the Government, seemed to many if not all of us on the Select Committee a step too far. It would make good sense—and it is one of the benefits of the state that we are in—to use this time to see what kind of partnership can be developed and to see whether the BBC will form as good a partnership as it has promised to form. BBC Worldwide, under the direction of John Smith, has done exceptionally well. Not least, it earned one of this year’s prestigious awards for industry. Channel 4, with its hugely successful record of commissioning films, has far more international revenue to be exploited. A partnership would also give time to see how all that could be developed.

My fourth point is on the vexed question of where further funding can possibly come from for the underfunded, yet citizen-valued, PSB areas; whether news, drama or children’s programmes. As we say in paragraph 81 of our report, in some of those areas a case may already be outlined for contestable funding, to which would-be PSB programme-makers could apply. If by 2012 there is an underspend of the BBC licence fee fund—and many figures have been put on this—I, too, would go along with believing that it should be one source of funding. I am less sure about going much further than that.

Equally, I can see no reason why the considerable value of analogue spectrum should accrue only to the Treasury. However, if that was to happen—which I would support—how should such resources be allocated? It would not, I hope, be through the creation of yet another quango. Surely, Ofcom could do the job by setting up an organisation not dissimilar to its consumer panel. We may all have been aware of the fact that, although there was something called a content board, it was in fact the consumer panel that seemed to do a considerable amount on behalf of the citizen. Above all, it published its reports so that they were in the public domain. I urge that particular form on Ofcom and the Government to think about very seriously.

My Lords, we must be profoundly grateful to the noble Lord, Lord Fowler, and his colleagues, many of whom have spoken in this debate, for the admirably succinct, clear and well argued report. I shall focus on one issue—how we preserve Channel 4.

Despite the advocacy of the noble Lord, Lord Puttnam, the affairs of Channel 4 get only a fraction of the attention in both Houses of Parliament as those of the BBC or even ITV. That is partly because there is an All-Party Parliamentary BBC Group, as there is one for ITV, admirably chaired by the noble Lord, Lord McNally, but there is no Channel 4 group. That needs to be remedied in the very near future. Leaving aside the formalities of all-party groups, if you talk television with Members of this House—and with our hours being what they are we watch only a fraction of the television that normal human beings watch—it is surprising the extent to which it is Channel 4 that people are talking about and not the other main channels—even among those who, peculiar though it may seem, are not interested in racing, where the BBC is stuck in the starting stalls while Channel 4 proceeds to make the running.

Without Channel 4, the BBC would have a monopoly of non-commercial public service broadcasting. ITV has deserted or is deserting the field. Under its present leadership, it has downgraded—I apologise for the pun—anything that could claim to be public service broadcasting. Axing the “South Bank Show” is an act of cultural vandalism that future generations will wonder at. Sky Arts does a great job on limited resources, but it is of course an arm of a gigantic commercial broadcaster and relies on its benevolence to keep it going. Absent Channel 4, there would be the danger of a BBC monopoly. Monopoly is, ipso facto, undesirable, even if it is a monopoly in the hands of a world-class institution such as the BBC. Certainly, that is the view of the committee of the noble Lord, Lord Fowler. It says:

“We believe there would be dangers if the BBC were to become an even more dominant provider of public service programming”.

Channel 4 has done a quite remarkable job. It sometimes seems almost to defy gravity. That cannot go on for ever. The economics of the television market are such that it will not go on doing it on the present basis; it needs more money. Some sources can be ruled out. The advertising market’s extremely weak short run is likely to remain quite weak and in the end there will not be more money. Given the state of public finances, it does not have a prayer of getting more money from the Treasury. It is hard to avoid the conclusion that one way or another there is only one source of more money, and that is the BBC and its licence fee.

However, there is an obstacle. The BBC is a world-class institution and, among the things that go with being a world-class institution, it is a world-class lobbyist. The BBC’s position at Westminster has been noticeably weakened these past 12 months by the Jonathan Ross affair and its stance on the Gaza emergency appeal. That is not a statement of opinion on either of those things, but a measurable fact from talking to people around the House. If it were not so, the Tories would not have dared move their recent populist motion in another place to freeze the licence fee. To put it crudely—they thought there were votes in it. However, the BBC remains a giant beast in the jungle. I still bear the scars of the long battle to get it to be subject to some form of public account scrutiny. It came up again today with the BBC trying—rightly or wrongly—to keep Terry Wogan’s salary away from the committee. You get into a very dangerous and long drawn-out battle if you do not entirely take the BBC’s view on things.

The BBC will fight tooth and nail against topslicing, contestability, the reallocation of its digital switchover money and anything else that might cost it a bob or two. That is why the solution advocated by the noble Lord, Lord Fowler—and I hope that Channel 4 will get some money through some sort of partnership with Worldwide—is a good one. The devil is in the detail and the detail is proving very testing, but agreement there has to be. It is not the most logical solution—the most logical solution would be to take a chunk of licence fee money and give it to Channel 4—but it may be the most practicable solution, and I would rather that Channel 4 got more support through an illogical means than no support because we insisted on the logical means.

An immediate question arises from this—I think I am talking in this Chamber only to supporters of the BBC and I really mean it when I say it is a world-class institution—can the BBC afford to give up any money to Channel 4 while maintaining its role as a full service public service broadcaster? Can it even afford a larger knock from a direct subvention to Channel 4 as opposed to the indirect subvention involved in the Worldwide deal?

I was a member of the Davies committee on the BBC licence fee in 1999, and a great experience that was. The committee had a mixed membership but it agreed, as it happened, on everything except one thing; how much money the BBC needed. I recall that my noble friend Lord Gordon, who is unfortunately unable to be with us this afternoon, was on the low end of the spectrum. The chairman, Gavyn Davies, was at the high end of the spectrum, which was as well as he went on to be chairman of the BBC. I was somewhere in the middle, with all the other members scattered in between. I make that point simply to say that well-meaning people with a strongly pro-BBC view in life, which every member of that committee had, came to quite different conclusions on how much money it needed. It is a matter of judgment.

To conclude our Thursday Back-Bench contributions on a rather wicked note, my own yardstick is that so long as the BBC can afford BBC Three it has too much money. Here is a channel, much to most of the content of which is paltry, aimed at appeasing a mythical target audience of young viewers who the commercial market can adequately cater for in any case, at a cost of some £125 million per annum, and which is watched by the average viewer for three minutes a day. Compare that with the use that Channel 4 could make of money on that scale, which amounts to nearly a third of its total programme budget, and there is no contest.

My Lords, I join with others in congratulating the noble Lord, Lord Fowler, on initiating today’s wide-ranging and fascinating debate. This short report and today’s debate have rightly created a great amount of interest, not least from broadcasting organisations which believe that the noble Lord, Lord Carter, may still be in receiving mode prior to the imminent publication of the Digital Britain review. I also congratulate the noble Lord, Lord Fowler, and his committee on eliciting such a lucid holding response from the Government.

This is a brief but extremely impressive report, particularly the succinct—I note that the noble Lord, Lord Lipsey, used the same adjective—introductory discussion of what is meant by “public service broadcasting”. I agree that the nature of the content is increasingly crucial, as is universal access, but we should decreasingly predicate on which platform the content should be made available, particularly in the light of the spread of broadband. On that matter I strongly agree with the remarks of the noble Lord, Lord Inglewood.

The crisis in commercial PSB has been more drastic and happened more quickly than anyone ever expected because of the recession. That said, little planning was done to anticipate the inevitable. As we have heard today, ITV and Channel 4 are at particular risk. I worked at London Weekend Television in the 1980s, but I am not sentimental. At that time we saw the birth of Channel 4, breakfast television and home video. We have been extremely lucky that the PSB ecology of the past 20 to 30 years has lasted as long as it has, but now we need to recognise that the model needs changing.

However, it is essential—the public are insistent on this—that the plurality of PSB provision continues. If it does not, we will have the danger of the BBC being the elephant in the room, unduly dominating all forms of television activity. The committee made this point well. As it points out, however, we need better financial information from the commercial public service broadcasters. On any judgment, we are seeing PSB market failure.

I am a keen Sky news watcher, but I do not accept Sky’s denial that there is no crisis in advertising-based models. I do not want ITV, with its great PSB tradition which was so well described by the noble Lord, Lord Birt, in his evidence to the committee, to walk off into the purely commercial sunset—not least because of the impact that that would have on STV and UTV—or to allow Channel 4, with its extraordinary track record of innovation, to fail. That would have a huge impact on the creative industries, particularly independent producers.

In this debate, however, we should see the BBC’s position and strength as an opportunity and not a problem. We will not solve problems at ITV and Channel 4 by reducing the BBC’s ability to make good programmes. On these Benches we fundamentally disagree with the Conservative attempt in the other place before the Recess to freeze the licence fee. We are generally satisfied that the BBC is using its resources wisely, making considerable economies and efficiencies—some £2 billion over the past eight years. The answer is not to hobble the BBC but to ensure that it is part of the solution. We need to harness its increasingly innovative approach to the benefit of the wider PSB universe.

I usually agree strongly with what the noble Lord, Lord Puttnam, has to say, but I thought that he was unduly apocalyptic about the BBC in his speech today. On these Benches we are opposed to top-slicing. We opposed the use of licence fee money for digital switchover. We took the view that this was a government social policy that should be paid for by the Government in the same way as they pay for reduced or free licences for the over-75s.

In 2005, Sir Michael Grade said that,

“top slicing would break the clear and well understood line of accountability between the BBC and the licence-fee payer … would pose a threat to the political independence of the BBC, handing a punitive fiscal sword of Damocles to any unscrupulous government that wanted to bring the BBC to heel”.

That was strong but characteristic language and these Benches agree with that view.

The BBC has a long history of working in partnership with other broadcasters for the public benefit—for example, on Freeview, Freesat, DAB, Canvas, SAC Wales—and there are many partnership proposals on the table or in the pipeline. Given that the BBC is already entering into creative partnerships—for example, sharing regional news facilities with ITV—we should formalise this role by establishing a duty on the BBC in the BBC Charter to work in partnership with other broadcasters for mutual benefit and added public value. The BBC could then set up a partnership fund for this work. This could include the anticipated £250 million digital switchover surplus and the money already identified as going into partnership work. In the future it could include the equivalent of the digital switchover part of the licence fee.

Any projects being funded out of the partnership fund should be justified and properly overseen. Any proposal would have to pass some basic tests before being considered, such as whether it benefits the BBC, the licence fee payer or a third party. Crucially, in order to ensure proper oversight of this new duty in the BBC Charter, we must set up an independent PSB regulator along the lines originally proposed by the noble Lord, Lord Burns, whose evidence to the committee I found fascinating. The BBC Trust would be folded back into the BBC and essentially act as a conventional board of directors responsible for strategy and governance.

In contrast, the committee advocates the idea of contestable funding for PSB content. That is a very attractive idea in many ways; the problem is where the funding for it is to come from if not from the licence fee. In our view it is viable only if we can deliver additional funding that does not raid the licence fee, such as through sales of the analogue spectrum. However, I suspect that that money has already been notionally spent twice over by the Government.

We have talked much about the financial crisis facing ITV. It is hardly surprising that a consistent theme of Sir Michael Grade’s term as executive chairman has been the need for ITV to throw off some of its PSB obligations to save costs. Some of its decisions are understandable but others are extremely regrettable, such as the decision to axe the “South Bank Show”. Ministers claim that they understand the crisis facing ITV and indeed other commercial broadcasters, but they have failed to provide a crucial piece of help which was within their power—allowing product placement. We should trust broadcasters to know how to advertise without destroying their viewers’ experience. If people do not like the way that broadcasters use product placement they will go elsewhere for their entertainment. Product placement is already being seen by British audiences in much of the imported content that we have on our screens. The decision by the Secretary of State, Mr Burnham, earlier this year means that British producers and broadcasters will lose out on that vital income. On some estimates this could amount to an additional £150 million per annum in revenue to ITV, which would be a significant boost.

Then, of course, there is the question of ITV’s regional news services. I am a Londoner, so others might be more qualified to speak about the value of regional news. However, we must find a solution and continue to provide a viable alternative to BBC regional news services. There is clearly a massive difference in perception on the right way forward, with the BBC seemingly in fundamental disagreement with Ofcom and ITV. The BBC has entered into a partnership with ITV to share some local resources, but although it provides some benefit, it is clearly not satisfactory to either party. Has the time come to have a partnership between the BBC and a new third party regional news provider, rather than to continue with ITV limping along as the provider? This should be discussed. I agree completely with what the noble Lord, Lord Macdonald, said about STV and UTV. It is vital that we ensure that they are able to carry on with their broadcasting without having ITV in such a strong position in the negotiations.

Like others, I have been following the progress of negotiations on a link-up or even merger between BBC Worldwide and Channel 4. At first I was very sceptical about whether that would work. I thought that they were very different animals set up to do very different things and with different rights granted by programme creators. However, I am now a convert, largely for the reasons put forward by the committee—that there is a common culture and it could work to the advantage of both organisations. Also, the enthusiasm shown by both BBC Worldwide and Channel 4 must be taken into account, as must the belief that a profit of £200 million per annum could be generated by a joint venture. But a merger—described as “corporate engineering” in the evidence to the committee—may not be a viable option. At the minimum, I hope that a joint venture is possible. If it is to happen there needs to be leadership, and I hope that both the Minister—the noble Lord, Lord Carter—and the Digital Britain report itself will provide that.

Although the noble Lord, Lord Carter, was very positive about the need to support children's television in his evidence to the committee, there are strong rumours that the Digital Britain review will do little to help. I therefore wrote to him on behalf of the Liberal Democrat shadow DCMS team urging him to consider that area anew. Less than 1 per cent of children's TV programmes broadcast in the UK are made in the UK. The situation is getting worse. Ofcom confirmed that UK children's television is a key public service genre and faces funding issues. It identified the clear market failure in children's television. It found that £40 million has come out of the industry in recent years, and that investment in new UK children's TV programmes is forecast to halve over this decade, with the BBC left as the only significant broadcaster outside pre-school programmes.

Both the House of Commons Culture, Media and Sport Select Committee and our own House of Lords Communications Committee, in reports last year, supported funding for children's television. The Digital Britain interim report acknowledged Ofcom's findings and stated that UK children's content would be a priority in its conclusions. Ofcom's most recent consumer research identified that parents valued children's programming as highly as nations and regions news, and in fact considered children's content a higher priority than regional news in terms of the need for an increase in current provision. A number of models have been put forward including an extension of Channel 4's remit. We on these Benches have advanced the idea of a tax credit akin to that enjoyed by the film industry. There is clear justification for special treatment to ensure the future production of UK children's television programmes, and it is vital that the Digital Britain review tackles the subject and provides solutions.

We are all setting great store by the forthcoming Digital Britain report, and are extremely grateful to the committee for its well timed report. I hope that the Government will take note of the many excellent points made by the committee but firmly set their face against top-slicing in favour of a strong partnership role and obligations for the BBC.

My Lords, I too thank the noble Lord, Lord Fowler, for securing this diverse debate on this informative and important report by the Communications Committee on public service broadcasting. Having heard so many praises from all his committee members, I wish that I, too, had had the chance to be on the committee under his enlightened leadership.

The committee has made a number of recommendations aimed at modernising the public service broadcasting industry so that, in these difficult and challenging economic times, it may survive this short-term crisis and secure a long-term future. The perceived crisis within some areas of PSB could be seen as a little exaggerated, apart from in advertising. The report’s evidence illustrates that none of the channels is particularly suffering, perhaps with the slight exception of ITV, which experienced revenue losses of 3 per cent in 2008 and is predicted to have to make cuts to the tune of £245 million by 2011. However, even it remains confident that it will survive and be,

“in a fitter state when the economy eventually turns”.

Channel Five’s owner, RTL, stated in its annual report that in 2006-07 revenue was up by 7 per cent, pre-tax, and that it was pretty self-sufficient. It, too, thought that it would weather the changes in the industry, despite the difficult economic conditions. The Enders Analysis report in 2008 stated that in many ways Channel 4 is financially in the strongest position among advertiser-funded public service broadcasters. The channel holds substantial reserves and has no pension deficits or indebtedness. Finally, the report describes the BBC’s financial position as being securer than that of virtually any other business in the country. The corporation’s total income in 2008 was £4.4 billion.

It would be wrong of me not to mention at this stage that the UK is held in the highest respect worldwide for our PSB, especially the BBC, which, as my noble friend Lord Fowler stressed, is a national asset. I totally agree with him. Why then is so much attention now being given to the possibility of various mergers and contestable funding as ways of saving PSB when, from this report, there is little evidence that PSB is experiencing any real financial problems?

It has been suggested that the reason why Channel 4 does not believe that it will continue without additional public support,

“has more to do with the company’s laudable aspirations to extend its business into many new areas ... than any real dangers to its core business”.

As many of your Lordships have asked, could this just be a guise for channels to seek more taxpayers’ money to fund their own commercial projects? What protections have we against channels with these motives? Should we not insist that any corporation receiving or seeking taxpayers’ money be subjected to proper scrutiny and independent review?

Could other areas within the industry be evaluated and trimmed down to provide cost savings? For example, it can be argued that the royal charter, the BBC Trust and Ofcom are all charged with approximately the same responsibility of upholding the independence and high standards of PSB and of acting in the best interests of licence fee payers. Could that be considered an overlap or overregulation and a waste of resources which, in this climate, might be better used elsewhere? Their aims are enshrined in the spirit of ensuring independence. After glancing at their composition, I think that their ability to perform this role could be questioned. According to the website, the chairman of the BBC Trust is a former Labour Party councillor, and the chief executive officer of Ofcom is a former policy adviser to Tony Blair who worked at another company as an adviser to Gordon Brown. Furthermore, as we all know, the appointment to the board of Ofcom is made by the Secretaries of State for the Department of Trade and Industry and the Department for Culture, Media and Sport. Does the noble Lord honestly believe that, as a result, these bodies are genuinely at arm’s length from the Government, as stressed so clearly by my noble friend Lord Inglewood?

Despite the tone of the report being centred on the lack of funds, curiously it finishes by discussing what could be done with the underspend of the digital switchover programme after completion. Can the Minister explain to the House why this money could not be used to keep vital regional news programmes on air, together with, for example, fine programmes such as “The South Bank Show”, especially in the light of the Government’s refusal to waiver this year’s 2 per cent licence fee rise, as requested earlier this year by the Conservative Party? Does this not illustrate the Government’s lack of judgment in relation to the public finances and does it not do little to maintain the bond of trust between the PSB, the Government and the people? I greatly look forward to the Minister’s response.

My Lords, we are all grateful to the noble Lord, Lord Fowler, for his presentation of the report, his introduction of the debate and his chairmanship of the Select Committee. The committee has produced a timely report because the House will recognise that the final report on Digital Britain will be produced soon and will take account of all these representations. The House will readily appreciate, however, that I am somewhat inhibited by the fact that that is only nine or 10 days away, and it ill behoves me to pre-empt its conclusions. I hope that I will be forgiven if I cannot be as definitive in response to some of the proposals as I would ordinarily like to be. The advantage of the report being presented at this time is that it helps the Government’s thinking on these critical issues, and I am grateful to the noble Lord and his committee for clarifying some of those that need to be addressed.

I emphasise that I have some difficulty in reconciling the anxieties of the committee, which are well founded in certain areas of television production. We are all aware of the problems of advertising revenue in view of the competing areas in which advertising can be presented to television. We are all aware of the fact that ITV and Channel 4 are under stress. The noble Lord, Lord Fowler, with his considerable experience in an additional area of news—the regional newspapers—brought that within the framework of this discussion.

I appreciate that the noble Lord, Lord Inglewood, has had to leave before this response, but he, too, emphasised the difficulties facing independent television in particular. I am having a little difficulty in accepting the analysis of the noble Baroness, Lady Rawlings, that all is fine in the garden, that there are not too many problems around and that a little slicing off the BBC budget will produce an easy answer to all that. First slicing the BBC budget is not a concept that I recognise, having listened to and participated in debates on committee reports in the past about the role of the BBC. I was greatly involved in the debate on the charter, the difficulties in that institution and the necessary resources and, as testified in the debate today, how well those resources are devoted to ensuring that the BBC is the foremost broadcaster in the world with a substantial role in exports, which also enjoy such a huge reputation.

I listened carefully to what my noble friend Lord Puttnam said about the history of the BBC and its somewhat jealous guarding of its resources. He is right that that should be subject to scrutiny. It may be timely that the BBC has to be a little more open to its potential rivals. In all fairness, he will have recognised areas in which the BBC is already beginning to think of partnership with independent television with regard to news provision. All is not closed on that front, nor let me say are the Government closed on the necessity of some further stimulus towards such co-operation. The committee is right to identify that there may not be a long-term crisis in British television, but there are short-term anxieties given the real difficulties at this time. The full report, for which we have less than a fortnight to wait, will address all those issues.

I can dispose of one or two issues. The noble Lord, Lord Clement-Jones, was fair but challenging in almost equal measure. He is always fertile with fresh ideas or, if not, indicating that he sees little difficulty in ideas that have been rejected. I fear that product placement fits into the latter category. The Government gave detailed consideration to all the responses on the issue, but we have not been persuaded that there are any convincing arguments in favour of allowing product placement. Although, as the noble Lord rightly enjoined the Government to do, we will address ourselves to the issue of necessary funding, we do not think that that is an avenue that can be usefully pursued, and we will not be emphasising that dimension.

The BBC is important as a global force producing wide-ranging programmes of quality and innovating successfully in new forms in today's multimedia, multiplatform age. We all recognise that public sector broadcasting gives a unique advantage to this country. It is important that the BBC has strong competition from the commercially funded public sector broadcasters: ITV and Channels 4 and Five, which, first, help to keep the BBC on its toes and, secondly, ensure that we get the most innovative and creative possibilities for our television.

ITV's regional news provision provides audiences with a different perspective from the BBC and provides a balanced view reflecting communities across the country. As the noble Lord, Lord Fowler, said in his opening remarks, it is important that we recognise that with regional newspapers under pressure, the regional dimension of news is of considerable importance.

The noble Baroness, Lady Howe, and the right reverend Prelate the Bishop of Manchester emphasised the importance of children's programmes. There was scarcely a mention of Channel Five in the debate, but we should pay due regard to the “Milkshake” brand on Channel Five, which provides high-quality organised preschool programming for children. Although I appreciate that there is concern about the quality of provision for over-10s—I think that the noble Baroness defined it in those terms—we should appreciate programming of high quality.

There is no doubt that children's programming must be an important dimension of public sector broadcasting, but a degree of competition ensures plurality of voices and competition for quality which, in turn, drives down some costs. The challenge for the Government is to examine how we could sustain public sector broadcasting provision, including the BBC, in the new multichannel digital age with all its challenges. The Digital Britain interim report, which we published a few months ago on 29 January, set out our early thinking on these matters and outlined the key priorities that we think need to be addressed. Our starting point was certainly that a strong, fully funded and efficient BBC acts as an enabler for the rest of the sector. Most of the fruitful ideas that have emerged from the committee’s useful report and that have been presented during this evening’s debate, build on the BBC as the cornerstone.

However, we also need strong alternatives to the BBC. My noble friend Lord Macdonald emphasised that in relation to the provision of television in the nations. He will appreciate that aspects of the relationship between ITV and the channel 3 licensees as a whole are essentially regulated by Ofcom and the OFT. In 10 days’ time, we will set out in Digital Britain our views about how we see that relationship developing, but I reassure my noble friend that his strong voice on the necessity of ensuring that this dimension of public sector broadcasting is given due attention will be testified in that report. I know that noble Lords will take the earliest possible opportunity of pressing the issues further.

Underpinning the initial position is the Government’s belief that public sector broadcasting requires plural provision. Where there are anxieties about public sector broadcasting outside the BBC, we need to address them. That is why I am grateful that this debate gives us the chance to do so. The committee argued that to deviate from the current, accepted definition of public service broadcasting would be counterproductive, and we agree. It is the cornerstone of this debate. There are enough challenges with regard to the points that have been made in the committee’s report and in this debate without us wrangling over definition. We believe that the concept and framework that we set out in the Communications Act 2003 and the characteristics and public purposes put forward by Ofcom provide the proper starting point for examining public service content, and we are grateful to the committee for confirming that that is how it sees things.

In response to calls for plurality of public service broadcasting beyond the BBC, let me restate that we have repeatedly given our firm commitment to sustaining public service content provision including and beyond the BBC, which is why we address the issues that the committee identified. It will be seen from the Government’s response that we seek to respond to them positively. I am grateful to the noble Baroness, Lady Flather, for introducing the issue of diversity. Plurality of sources does not meet the requirement if we do not have plurality of voices and do not give due regard to minority cultures. I am grateful for her contribution on this matter, just as I am grateful to my noble friend Lord Macdonald for expressing a similar viewpoint with regard to the nations of the United Kingdom and how they need to be considered as we conclude our thinking.

Following Ofcom’s public sector broadcasting review, the Government have been looking at a number of options, including the feasibility of contestable funding, structural changes, new networks or commissions or making no further intervention in this market at all. I am glad that the committee did not think that the last was an option for the Government, because we will be positive in the final Digital Britain report, which is imminent. The Government, like the committee, welcomes the BBC’s commitment to commissioning more network programming from the nations. The timetable and the commitment are a matter for the BBC, and we should support the BBC’s endeavours to reach its targets as quickly as it can.

Particular reference was made to Channel 4, not least by my noble friend Lord Lipsey. We noted that Ofcom, in its final PSB statement published in January, recognised that production from and portrayal of each nation and region of the UK on UK networks was a concern for many, which is why Ofcom decided to increase Channel 4’s out-of-London production quotas to 35 per cent in spend and volume. Within that it also embedded a quota for 3 per cent for production from Scotland, Wales and Northern Ireland. But that is a demand on Channel 4. My noble friend Lord Lipsey was eager to identify that Channel 4 also needs some support, which is why I emphasise that in 10 days’ time we will identify progress on these matters.

I cannot adopt the somewhat complacent position of the Opposition Front Bench with regard to the challenge facing ITV in terms of resources. But I want to emphasise—I am sure that the noble Baroness, Lady Rawlings, will join me—that independent television is a tremendously important dimension of our broadcasting world. ITV1 remains the UK’s largest commercial channel. In 2008, it achieved an audience share of 17.2 per cent, which is more than twice the share of its nearest commercial rival, Channel 4. It should be therefore recognised for its significance. Across peak viewing hours, ITV1 remains the UK’s most popular channel with a share of 23.9 per cent, which is slightly ahead of BBC1 with 23.4 per cent. We should recognise how much independent television and ITV1 are appreciated by the nation. Of course, it has held its share of the television advertising market over a long period, despite the fact, as we all appreciate, that there are now competitors outside linear television which help to create the present difficulties.

ITV’s commitment to public service content has not only contributed to sustaining a wide range of voices and perspectives, but it has also helped to improve the standards of the UK media landscape. I believe that independent television not only has played a significant role in the recent past, but that that role needs to be sustained. However, content markets are changing significantly with the development of alternative viewing patterns, which is why the committee’s report talked in terms of short-term crisis and why I am pleased to report both the committee’s constructive response to some of these areas and that of other noble Lords. The noble Lord, Lord Clement-Jones, was concerned to emphasise partnership and the Government certainly think that that needs to be exploited and developed.

I also accept that the regulatory framework that applies to ITV may need to change further to reflect the changes in the media landscape. My noble friend Lord Macdonald made that point with great force. I cannot comment in detail without pre-empting the more general position to emerge shortly. But that point is very well taken. Of course, I want to emphasise that the Government are considering a new entity which builds on Channel 4’s assets from purely public ones to perhaps public-private partnerships to achieve our objective of a large-scale, sustainable and flexible provider of high-quality public service content.

I know that that is too general an expression to satisfy my noble friend Lord Lipsey who would want me to be more precise about the commitment to Channel 4. I can express only this general commitment, but he knows that that presages a considerable degree of detail in the report, which we all await with, I have no doubt, considerable impatience. However, I have greater patience than many because it enables me on this occasion to postpone conclusions on some of the more difficult issues. My noble friend Lord Carter will address these issues before the House in the near future.

In conclusion, changes are required in the commercial broadcasting sector if we are to secure the plurality of provision that both policymakers and audiences want. Our aim is to build on the strengths and traditions that will redefine and meet the very new and challenging digital age. Government intervention in the marketplace is difficult to determine and I am grateful to the Select Committee for recognising the difficulties in its report and recommending that we tread with delicacy and care. There is no easy, overriding and simple solution for this area. We need to think carefully before we tread at all, and of course, at the heart of this lies the crucial question of affordability.

The Digital Britain agenda is ambitious and encompasses public service broadcasting along with the wider digital and creative industries. The report is imminent and I know that the House is looking forward to it as much as I am. For the moment, I can only express gratitude to the committee, which has advanced the debate considerably with this report.

My Lords, this has been a good debate, and coming before the Government’s White Paper, it is also well timed. I thank everyone for their contributions. The noble Lord, Lord Macdonald of Tradeston, emphasised the need to make BBC Worldwide a national champion, and I agree with what he said about STV and UTV. The noble Baroness, Lady Flather, had cautionary words for the BBC which it would do well to heed. The right reverend Prelate the Bishop of Manchester raised the issue of the new MediaCityUK in Salford, where we may be on the verge of missing a great opportunity, particularly in training. He also underlined the state of broadcasting, and the Minister would do well to note what he has had to say.

My noble friend Lord Inglewood underlined the importance of the long-term impact of the digital revolution. The noble Baroness, Lady Howe, emphasised the need for an alternative regional news service to that of BBC programming. The noble Lord, Lord Lipsey, talked about the importance of Channel 4 and had some words to say about BBC Three, which no doubt are now being pored over in BBC House.

I thank the three Front-Benchers. As always, I agree with part of what each of them said and disagree with other parts. The noble Lord, Lord Clement-Jones, emphasised the need for a plurality of public service broadcasting and I certainly agree with him. However, he came out against any top-slicing of the licence fee. In an ideal world I might even agree; but we are not in an ideal world, we are in a crisis, and we will not be thanked if we do not examine options such as contestable funding. My noble friend Lady Rawlings spoke well about the position of regional news and I agree with what she said, but she did rather underplay the critical financial position of commercial broadcasters in this country.

The noble Lord, Lord Davies, spoke with his usual charm about the problems being encountered by broadcasters. I was encouraged by his aside about regional newspapers, but I continue to disagree with the Government’s position as set out in their paper that everything in this area should be decided between the BBC and the Government, and that there should be no effective role for Parliament. I will not repeat my arguments on that because he has heard them before. He nods his head in assent, but I say to him that in the end, we will win.

Lastly, and in many ways most importantly, I refer to the speech of the noble Lord, Lord Puttnam. He made a fundamental point when he said that it seems that the BBC is concerned only with its own future. Indeed the noble Lord, Lord Lipsey, pointed out that while it is a world-class organisation, by golly it is also a world-class lobbyist. I agree with the noble Lord, Lord Puttnam, that all public service broadcasting is in a crisis today and that the BBC must play a leading part in getting us out of it. In other words, the BBC must look outwards. Unless it does so I do not think it will be truly forgiven.

It has been a good debate. We now wait for the Government’s final report. I think I detected in the Minister’s remarks that he promised us a debate on that final report. Being a wise man, he does not nod or make any gesture of any kind on that point. In all seriousness, I hope that we will have a debate upon it. With those words, I commend the Motion.