Television Programme Contractors (Levy Payments)

Bills Presented – in the House of Commons at 12:00 am on 23rd February 1971.

Alert me about debates like this

12.1 a.m.

Photo of Mr Christopher Chataway Mr Christopher Chataway , Chichester

I beg to move, That the Television Act 1964 (Additional Payments) Order, 1971, a draft of which was laid before this House on 16th February, be approved. The purpose of the Order is to reduce by half the amount of the levy payments due from the I.T.V. programme companies, so that, if the earnings of the companies stayed at the present level, the yield of the levy would fall from £20 million to £10 million in a full year. The draft Order requires the approval of both Houses of Parliament. If, as I hope, that can be secured, I intend to bring the Order into operation at the earliest practicable date after approval.

The House might like me to recall briefly the background to the levy payable by the companies. When they first started, the original I.T.V. companies incurred heavy losses. But it was not long before these losses were overcome, and the industry soon began to yield considerable profits, to the point where the return on their investment became excessive. The first attempt to tackle that problem was made by the then Chancellor of the Exchequer in the 1961 Budget, in which was introduced a television advertisement duty at a flat rate of 10 per cent., which was increased in 1962 to 11 per cent. That system turned out to be unsatisfactory. Charged at a flat rate, the duty bore excessively harshly on the smaller regional companies, but it still left the largest companies with very big profits.

To deal with this situation, the Television Act, 1963, introduced the new system of additional rental payments which at once became known as the levy. At that point there were to be two kinds of rental payments. The first kind was to be made by the companies to the Authority of amounts to be decided by the Authority so as to give it enough money altogether to construct and operate transmitters and carry out its other functions. In addition to rental payments there were to be other rental payments which were not to form part of the revenues of the Authority but were to be paid over as soon as possible after receipt into the Consolidated Fund. These payments were to be calculated for each company on a sliding scale. In the scale originally provided in the Act, no additional payments were due on the first £1½ million of a company's advertising receipts, with the effect that the smallest companies did not have to pay any levy. The Act empowered the Minister to vary the scale by Order—such as the draft Order that is now before the House.

After consolidation in the Television Act, 1964, the new provisions came into force in July, 1964. The scale laid down by the Act remained in operation for nearly five years, but in the 1969 Budget the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) announced that the Government had decided to introduce a new scale with the effect of increasing the yield of the levy by £3 million in a full year. However, there were—and the then Opposition drew attention to this—great increases in I.T.V's costs resulting from the new structure of programme companies with the new contracts awarded by the I.T.A. in 1968. There were also as a result of those changes new companies which had not had the opportunities to make the profits that the old companies had made. There were also increased costs resulting from the move into colour television.

Largely, as a result of these factors, in March, 1970, my predecessor, the right hon. Member for Wednesbury (Mr. Stonehouse), announced the decision, which took effect from April, 1970, to introduce a new scale, the effect of which would be to reduce the yield of levy by £6 million in a full year. At the same time he announced that the costs and revenue of the I.T.V. companies were being referred to the National Board for Prices and Incomes.

The N.B.P.I.'s report was published in October of last year. The Board's report did not directly comment on the level of the levy, since the terms of the reference to the Board had expressly precluded that, but the report highlighted the financial position of the industry and, as soon as it was received by the Government, I embarked on discussions with the Independent Television Authority.

The main findings of the report were as follows. Because of declining revenue, rising costs, and the levy, contractors had held back their expenditure on programmes and at the same time had substantially reduced their profits. The Board's projections of costs and revenues into the middle 1970s, on whatever basis they were made, suggested a continually worsening position. The Board saw some scope for improving revenue prospects by improved sales of advertising time and by more effective use of resources, but the Board considered that these measures by themselves would be unlikely to raise significantly the industry's rate of return on capital over the next few years. Finally, the Board suggested that some reduction in the number of television companies should be considered. In effect, it was suggesting that a modification of the regional pattern of I.T.V. should at least be considered.

The I.T.A. tells me that its contractors have been carefully studying the Board's recommendations for improved financial performance and that those recommendations have been followed up vigorously by the companies. The Authority, too, as the House will know, has agreed to some sharing of facilities between the companies. There have been one or two joint operations launched by the companies, particularly on the sales side.

The Authority, which is responsible for the programme company structure of independent television, has after consideration decided against reduction in the number of I.T.V. companies. This is a matter wholly for the Authority to decide. I am bound to say that I do not think it would be right for radical changes in the structure of the system to be made as a crisis measure in the middle of the contract period. The N.B.P.I. itself stressed that one of the needs of the I.T.V. system at the moment was for a period of certainty and to change programme structure in the middle of the contract period obviously would introduce considerable uncertainty. But this is a matter wholly for the Authority to decide.

The I.T.A. forcibly represented to me that, with all the improvements in the system which would be pursued, a very substantial reduction in the burden of levy on the companies was nevertheless essential. There were two particular factors which the I.T.A. brought out. The first was that if it were to keep pace with the programme of constructing U.H.F. television stations, undertaken as an integrated plan by the I.T.A. and the B.B.C., the I.T.A. needed to increase its rentals from a total £8 million to a total £11½ million. The second was that, with the existing burden of levy, the quality of the programme service provided by I.T.V. would be more and more at risk.

We have decided, as the draft Order provides, to halve the yield of the levy. This will provide the system with enough income to allow the I.T.A. to introduce the increased rentals, and, in distributing among the different contractors the new rentals, the I.T.A. is reducing the cost for some of the companies, notably the smallest companies not directly liable to pay the levy. Of the remaining £6½ million made free, some will be needed to improve the rate of return on capital earned by the industry. The N.B.P.I. concluded that, for the industry as a whole, a substantial improvement was necessary to support a sound financial structure, and some of the companies, of course, had been facing the prospect of losses.

The I.T.A. has assured me also that this reduction —

Photo of Sir Harmar Nicholls Sir Harmar Nicholls , Peterborough

Is my right hon. Friend suggesting that this Order will give the industry a sound financial structure? Surely the whole set-up is wrong, and this Order merely tinkers with it. Should not it go back to making payments based on profits after the deduction of expenses based on a proper formula? I hope that my right hon. Friend does not think that this Order will result in a sound structure. We started wrongly, and right hon. and hon. Gentlemen opposite compounded the wrong. I hope that my right hon. Friend will put it right.

Photo of Mr Christopher Chataway Mr Christopher Chataway , Chichester

I can assure my hon. Friend that I have ambitions in that direction, and I was about to come to the point which interests him most. I agree that, however looked at, the levy is not an ideal system.

I was telling the House that the I.T.A. had also assured me that this reduction in the levy should also make possible improvements in the quality of the programmes put out by the contracting companies and should enable I.T.N., which is jointly owned by all the contracting companies, also to enjoy some additional resources.

Photo of Mr Christopher Mayhew Mr Christopher Mayhew , Woolwich East

We are grateful for the right hon. Gentleman's assurance that the I.T.A. has assured him that this reduction in the levy will lead to an improvement in programmes. However, he will remember that, when the levy was reduced at the beginning of last year, the same assurances were given by the I.T.A. and the programme companies. Will he now say whether in his view that assurance has been fulfilled?

Photo of Mr Christopher Chataway Mr Christopher Chataway , Chichester

If that reduction last year, which followed closely upon an increase in the levy, had not been made, I have no doubt that there would have been a very serious reduction in the quality of programme standards of the I.T.V. companies. There are few people who have been involved with the I.T.V. companies over the last few years who will not be aware of the very serious effect that declining advertising revenue coupled with a very high rate of levy has had upon the companies. I think that the Report of the inquiry by the National Board for Prices and Incomes which was set up immediately after the reduction in the levy to which the hon. Gentleman has referred bears out the very substantial pressures that there have been on the companies and the fact that, in consequence, programme expenditure has declined. But I have considerable faith in the chairman and members of the I.T.A., who I am sure command considerable respect on both sides of the House. It would be odd if they did not, since most of them were appointed during the previous Government's period in office.

Photo of Mr John Gorst Mr John Gorst , Hendon North

Does not my right hon. Friend agree that, if more money is left in the hands of the contractors, they will be encouraged to experiment with new types of programmes and take more risks which, in the tighter situation which existed before, was difficult for them?

Photo of Mr Christopher Chataway Mr Christopher Chataway , Chichester

That is the point. The new Director-General of the I.T.A. has urged this upon the companies already. In the straitened circumstances of the last few years the I.T.V. companies have been able to take fewer risks; they have had to ensure greater successes, perhaps more than they ought to have done.

Photo of Mr John Mendelson Mr John Mendelson , Penistone

Does the Minister agree that, despite the assurance which he has received from the Authority, if capital control in some of the companies goes into the hands of people who have proved in other spheres that they can make more profit by lowering standards they will think that they are able to do it again? Or is the Minister insisting on strong measures being taken by the Authority to prevent such a development?

Photo of Mr Christopher Chataway Mr Christopher Chataway , Chichester

The hon. Gentleman knows that the I.T.V. system is constructed in such a way that there are considerable incentives not only to maximise audiences by taking account of what people want to watch, but to cater for minorities. Those companies which do not do so know that they face some risk of losing their contracts at the end of the contract period. The system is constructed not only to provide programmes which appeal to majorities, but to minorities. The hon. Gentleman need not feel that there will be inadequate incentive to produce programmes which will appeal to him.

It is my intention that the levy at this scale should last at least until July, 1972, which is the end of the next full levy year. For the longer period, I share my hon. Friend's view. I am doubtful about the present way that the levy is charged. As a charge on revenue, not profits, it continues at times when companies are much less readily able to pay it, because of rising costs and static or declining income. When that happens, profits fall and expenditure which can be cut is cut. That usually means that expenditure on programmes is cut.

We can change the sliding scale on the strength of the best assessment we can make of the profits of the different sizes of companies. This was how the scale was fixed in the 1963 Act and no doubt how the scales were fixed, or were intended to be fixed, in 1969 and 1970. But this, as I think many hon. Members will agree, is an uncertain instrument.

In 1963, when the levy was introduced, the idea of a levy directly related to profits was rejected, because it was felt that it was liable to encourage excessively lavish spending and would be likely to offer greater opportunities for avoidance. There may have been a good deal in that in the high profit situation which obtained at that time. But now, when the danger of excessive profits is, to say the least, remote, the Government have decided to have another look, in conjunction with the Authority, at the possibility of devising a new system which could operate more fairly, if a new system can be found. Obviously there are one or two other alternatives simply to that of an excess profits tax. I cannot promise that a new system will be found in this period, but we have decided to look at the possibility, and I believe that the majority would think that right.

If we are conferring in this system a monopoly, as in some senses we are, it is right that if very large profits are produced the State should have some share in them. But we want to try to devise a system which, while fair in that direction to the community and to the companies, also ensures that when things are not going so well programme standards and expenditure are maintained. I do not think that anyone would believe that we have as yet arrived at the best system.

As I indicated to the House the other day, there has been real concern about the financing of both broadcasting organisations. I was able then to announce changes in the B.B.C. licence fees which would yield the Corporation an extra £16 million in a full year. Most hon. Members on both sides—though I realise, not all—now accept the value of competition in television, and believe that there is value in an alternative commercial system. The changes proposed in the Order will, I believe, help to put that system upon a sound financial footing once more, and on that ground I commend the Order to the House.

12.20 a.m.

Photo of Mr Ivor Richard Mr Ivor Richard , Barons Court

The right hon. Gentleman quoted from paragraph 150 of the Report of the National Board for Prices and Incomes and said that it showed a continuously worsening situation in regard to N.B.P.I. projections of costs and incomes into the 'seventies. He did not, unfortunately, read the remainder of the paragraph, which states: … though without the levy profits would on average remain high in relation to profits in industry generally. So perhaps that Report did not produce quite the picture of gloom which the Minister gave us in respect of the television companies.

Certain things seemed to me to be lacking in what the right hon. Gentleman said. The first was in connection with advertising receipts and profits, and projections of advertising rates in future. My information is that net advertising revenue for Independent Television has declined fairly considerably in the years 1968, 1969 and 1970. I am told, for example, that net advertising revenue for the year to 29th July, 1968, was £94,930,000; to the same date in 1969 it went up to £98,623,000, and then it dropped somewhat in 1970 to £92,737,000. In 1970 we had the £6 million levy reduction introduced by the previous Government.

If the Minister came here tonight to tell us that the state of the programme companies is such that the levy has to be reduced by another £10 million, I should have thought that the first thing he would do was to give us the projection of either his Ministry or of the I.T.A. of the likely decline in advertising revenue in the year to 29th July, 1971. We also want to know, and these are legitimate requests, what the levy is likely to be on the basis of the projected advertising rates. Presumably the £10 million reduction he asks for is based on some figures, and is not just a sum plucked from the air. I shall have something to say later about the way in which the Minister proposes that the reduction shall be made, but quite apart from the way in which the companies are or are not to benefit from the reduction, I hope that the overall amount by which he thinks it right to reduce the levy is based on some concrete figures. If so, I should like to have them. Further, can the Minister tell us what was the net advertising revenue after levy in 1968, 1969 and 1970; and his projection of net advertising revenue after levy in 1971?

Finally, perhaps the crucial figure the House will want to have before it can decide whether a reduction of as much as £10 million can be sanctioned—this is an enormous figure—is the estimated profit figure of the programme companies, before tax, in the year 1971 and onwards. After all, the Minister has told us that this levy is to remain in existence at its current rate until July, 1972. Armed with that figure the House might be able to form some judgment as to whether the overall figure the Minister is asking by way of reduction, namely, £10 million, is correct. I am staggered that the Minister did not think fit to give us these figures in moving the Order.

Photo of Sir Harmar Nicholls Sir Harmar Nicholls , Peterborough

Why does the hon. Gentleman pretend that he wants somebody to give him an estimate? As one of his distinguished predecessors said, "Why look in the crystal ball when you can read the book?" Has not the hon. Gentleman seen the balance sheets of the programme companies? Has he not noticed the trend revealed therein? All this is public knowledge. Why is the hon. Gentleman pretending that we do not have the information, when it is clear for us to see and form conclusions on?

Photo of Mr Ivor Richard Mr Ivor Richard , Barons Court

That is an interesting question. It is the Minister, not the Opposition that is asking the House to reduce the levy by £10 million. In this situation the Opposition are entitled to ask the Minister for the figures upon which he has formed his judgment. If he has figures upon which he has formed his judgment, he should let us have them. The balance sheets of the companies will tell us the past profit figures. I know of no balance sheet which has yet been published which will give us the estimated profits of these companies for 1972, 1973 and 1974, and those are the figures upon which the Minister must form his judgment.

Photo of Mr John Gorst Mr John Gorst , Hendon North

The hon. Gentleman started by quoting part of a paragraph from the Report of the National Board for Prices and Incomes which he said had not been quoted. The hon. Gentleman has forgotten that since the publication of that Report a strike prevented transmission in colour, and that increased the costs of the contractors. Those increased costs, together with increased wage packets, must be met.

Photo of Mr Ivor Richard Mr Ivor Richard , Barons Court

I am obliged to the hon. Gentleman. May I through you, Mr. Deputy Speaker, throw the hon. Gentleman's point over to the Minister. If the situation has worsened since the publication of the Report, what is the Minister's estimate of the amendment by which it has worsened? If we knew that, we could form a judgment as to whether the overall figure of £10 million is correct. This is a serious matter. The Minister treated it in a somewhat flippant manner. [HON. MEMBERS: "No."] All that the Minister did was to give us a potted history of the levy over the past five or six years, read half a paragraph from the Report of the National Board for Prices and Incomes, and then say, "In my judgment, it means that the companies should get a reduction of £10 million". The right hon. Gentleman treated the House in a cavalier fashion, and it was unworthy of him.

It is a serious matter for the Minister to ask the House to approve a reduction in the levy by £10 million so shortly after he has announced an increase in the licence fee for the whole country. This means, as I said to the Minister last week, that both broadcasting authorities are in serious difficulties. Neither of the proposals that the Minister made can be more than a palliative. To that extent I agree with the point made by the hon. Member for Peterborough (Sir Harmar Nicholls). It means also that we shall want to debate in full the question of radio and television financing.

If Parliament is asked to sanction a reduction of £10 million in the levy, the Minister must justify it up to the hilt.

Also interesting is the way in which the Minister proposes to reduce the levy. If the object of this reduction was to aid those companies in the greatest financial difficulty, presumably those with the smallest income, which make the smallest profits, I would have expected a rather more subtle and helpful method of doing it than merely an overall reduction of 50 per cent.

It is interesting to compare the rates sanctioned in 1970 with those sanctioned under the Order. In 1970, for example, the rate of levy for a company whose advertising receipts were less than £2 million was nil. In the Order, the Minister not being able to halve nil, it remains nil. So for those companies at the bottom of the ladder the Order gives no financial help at all.

For those companies whose receipts are up to £6 million, the rate in 1970 was 20 per cent. and under the Order it is 10 per cent., a straight 50 per cent. reduction. For those companies with receipts up to £9 million, the rate was 35 per cent. reduced now to 17½ per cent. For those with receipts of £12 million, it was 40 per cent., reduced to 20 per cent. For those with receipts of £16 million, it was 45 per cent., reduced now to 22½ per cent., and for those with receipts of over £16 million, it has been reduced from 50 per cent. to 25 per cent.

It is clear that it is the companies which are better off and most capable of paying the levy which will benefit the most from the way in which the Minister has chosen to try to reduce it. It is rather like halving the income tax and then saying, "Look how well I am doing for those who pay the least." It is a fallacious argument. If what the Minister wants to do is genuinely to aid those companies at the bottom of the ladder, this is not the way to do it.

I have two questions about what is to happen to the £10 million. It is important to realise, as the right hon. Gentleman said, that £3½ million of it goes to the I.T.A. I am not certain what the I.T.A. will do with it. The Minister said something about possibly improving I.T.N., but I should like to hear more about that.

It is also perhaps apposite to consider in this context the position of London Weekend Television. I do not want to deal with it at great length, because that would be out of order on this Order, but I think that it is in order to ask whether or not the recent events in London Weekend Television justify us in giving that company the reduction in the levy which it would get if the Order were approved. To say the least, the recent affairs of London Weekend Television have been unfortunate. If Mr. Murdoch is to acquire it, and if he is to be relieved of this portion of the levy, certain questions arise which should be aired and answered—and the place for that is this House.

First, what should be the I.T.A.'s attitude to a change of shareholding of this sort? Second, should its attitude be any different from what it would have been if Mr. Murdoch had been making a fresh application for a totally new franchise? Should the I.T.A. now call in the franchise of London Weekend, as it has the power to do under the Act, in which case the Order would be meaningless so far as London Weekend was concerned, although it would come to have some relevance if a merger were sanctioned? Indeed, should the I.T.A. try to encourage a merger, or should it be content with a possible Murdoch acquisition?

We on this side would say that it is now very important that the I.T.A. should treat the Murdoch shareholding as though it was a fresh application for a vacant franchise—

Photo of Mr John Gorst Mr John Gorst , Hendon North

On a point of order. Is it in order in this debate for the hon. Member to smear the company concerned in this fashion?

Photo of Wing Commander Sir Robert Grant-Ferris Wing Commander Sir Robert Grant-Ferris , Nantwich

Nothing that the hon. Member for Barons Court (Mr. Richard) has said so far has been out of order. It has been the practice of the Chair on similar occasions to allow a fairly wide debate on the matter. To go into the merits of the Television Act would, of course, not be in order.

Photo of Mr John Gorst Mr John Gorst , Hendon North

Further to my point of order. Are the merits of individual contractors under that Act in order?

Photo of Wing Commander Sir Robert Grant-Ferris Wing Commander Sir Robert Grant-Ferris , Nantwich

Nothing that has been said so far has been out of order.

Photo of Mr Ivor Richard Mr Ivor Richard , Barons Court

I cannot recall saying anything about the merits or otherwise of Mr. Murdoch's application. I have merely pointed out that, given the present situation in London Weekend Television, we believe it to be important that the Independent Television Authority should now treat the present situation in London Weekend as if it were a fresh application for a franchise that was vacant. In other words, given the fact that there is genuine public unease and disquiet over the present position, I know of no other way by which the matter can be fairly and openly resolved.

Similar assurances should now be sought from Mr. Murdoch and the acquiring company as would be sought if it were a fresh application for a vacant franchise. Schedules should now be deposited with the I.T.A. as if this were a fresh application. The principle underlying this point is simply that if the provisions of the Act can be evaded merely by one company acquiring a share in another which at present has a franchise, then it makes nonsense of the safeguards which were built into the Statute and of the whole system.

As a number of my hon. Friends wish to speak in this debate, I will comment only briefly on the future of the levy. It is important to recognise that this has not proved to be the most satisfactory system by which the public can share in the use by the television authorities of what is obviously a public asset.

The levy has, to say the least, been haphazard. At times when the companies have been seen to be doing well, the levy has gone up. When they have been seen to be doing badly, it has gone down. If their revenue has gone up, up has gone the levy, but if it has gone down, we have been faced, as we are tonight, with an application for a reduction of as much as the enormous sum of £10 million.

Of far more importance than perpetuating the existing system is the need to devise a method which, while giving to the public a direct say in the way in which these public assets are used, nevertheless gives a greater degree of permanence and certainty than is given by the present system.

The Minister said that he was thinking along certain lines with an open mind. What are those lines, and in what direction is he thinking with an open mind? The House is being asked to relinquish £10 million worth of the system. It is time that the Minister answered these questions.

12.38 a.m.

Photo of Mr David James Mr David James , North Dorset

I understand that the House has had a number of late nights recently. I will, therefore, be brief, and I will certainly not speak for 1 hour 45 minutes.

While I am prepared to give a qualified welcome to this proposal—on the ground that half a loaf is better than no bread—I object in principle to the levy which we are discussing and I note that my right hon. Friend is considering the matter.

At least I can claim some historical continuity in what I am doing, for my hon. Friend the Member for Peterborough (Sir Harmer Nicholls), whom I am glad to see in his place, my hon. and gallant Friend the Member for Down, South (Captain Orr), who I regret is not here tonight, and myself are the only three surviving hon. Members of the Committee in 1963 who voted against this form of taxation on three separate occasions upstairs in Committee Room No. 10.

It is nice to be back in the game and to be able to continue the argument. Our reasons are simple. We of course accept—there can be no argument about this —the proposition advanced in paragraph 1 of the White Paper, Cmnd. 4524, which said that the levy was designed to reflect the fact that the state had conferred upon them —that is, the commercial television companies the sole right to operate a commercial television service within a given area". I accept that at the time that the Bill was going through in 1963, it was intended to deal with what, in the current phrase, were regarded as companies in a position to coin their own money. But that situation has markedly weakened now. With the improvements in techniques such as transmission of colour programmes by land line, Telstar and so on, it is possible that, in a couple of years, the monopoly position which gave rise to the levy will no longer effectively exist. Nevertheless, we accept that fact of history as the common ground from which this entire rather sad story started.

The point which my hon. Friend the Member for Peterborough and I hammered home, or tried to hammer home, without success, in 1963 is brought out in paragraph 141 of the P.I.B. Report: … the form of the levy … as prescribed by the Television Act, is related to advertising revenue. The basic defect of this method of assessing the levy is that it pays no regard to surplus or profit". That has been our case for seven years, and it remains our case today. A company which is producing first-class programmes may, in fact, be running into a loss situation.

Perhaps I should make clear at this point that I have no interest, commercial or otherwise, in this matter, save that I was an employee of the film industry for two years, and I have a strong emotional affinity, so to speak, with such people as the artistes, and, more particularly, the camera men, the lighting men, and all the technicians who are part of this industry, and I know the rate of unemployment which they have to face.

Photo of Mr Ivor Richard Mr Ivor Richard , Barons Court

Selective quotation from that Report seems to be the vogue on the benches opposite. It is a pity that the hon. Gentleman did not read the sentence in the next paragraph: We conclude that it is difficult to find a method of assessing the levy which is clearly better than relating it to advertising revenue".

Photo of Mr David James Mr David James , North Dorset

If I had wanted to emulate the hon. Member for West Ham, North (Mr. Arthur Lewis), who spoke yesterday for an hour and 45 minutes, I need not have been so selective in my quotations. I am trying to condense my argument. The consideration which I put to my right hon. Friend is that, while, reluctantly, I must accept what he has proposed as a make-shift solution, my whole case on the levy is that it is utterly wrong in principle and always has been. We accept the crumb of bread which he has offered as only an interim measure.

As we predicted seven years ago, there is no possibility under the present system of offsetting rising costs save for the Minister periodically to come to the House and involve us in a debate after midnight at a time when the House is hard pressed. It leads to a lack of funds for programmes. This is common ground between both sides of the House. It is common knowledge that the quality of programmes has fallen as a result of this ill-conceived levy. It has led to a high rate of unemployment.

I did my utmost when the Bill was in Committee in 1963 to persuade the trade union leaders involved to appreciate that it was a wicked old Tory who was arguing on the side of full employment for their members, for N.A.T.T.K.E. and the others. The present system has led to widespread unemployment in the television industry. Indeed, the entire impact of the levy was arbitrary and militated against creative television.

I am not prepared to accept the sort of "old rope" which is put about that these companies are not worth consideration because they have diversified into bingo halls and so on. So they have, but they have diversified into other fields only in order to fund the programmes which they wanted to put out. Incidentally, some of the series of programmes have gained for this country enormous Prestige in the United States.

Photo of Mr Phillip Whitehead Mr Phillip Whitehead , Derby North

The process of diversification began in the early 1960s, when some of these companies were earning about a 60 per cent. return on equity.

Photo of Mr David James Mr David James , North Dorset

I certainly accept that. I admitted that a monopoly situation probably imposed on the State the duty to impose an additional levy. All I am saying is that the process was accelerated by the arbitrary nature of a levy on gross profit as opposed to net revenue.

Photo of Gerald Kaufman Gerald Kaufman , Manchester Ardwick

I do not quarrel with the hon. Gentleman about diversification by independent television companies, whether financially they are doing well or badly. All companies, of whatever kind, should have the right to diversify. But does not the hon. Gentleman agree that therefore it is folly of the Government to attempt to prevent the National Coal Board, for example, from diversifying?

Photo of Mr David James Mr David James , North Dorset

The hon. Gentleman has brought in a very well-known argument rather ingeniously by the short hairs. I do not propose to pursue that in relation to television companies. Perhaps he would like to raise it on the Industrial Relations Bill or in some other way.

I hope that the House, having listened to some rather long speeches recently, will not confuse brevity with levity, and will accept that a number of us, perhaps on both sides, believe that historically my hon. Friend and I were right in believing that the levy was a death blow to creative television production. While I will always go for half a loaf rather than no bread, my earnest hope is that my right hon. Friend, come 1972, will produce a very much fairer system based, if such a levy is still necessary under the new technology we are to have in three years' time, on net profit and not on gross receipts.

12.47 a.m.

Photo of Mr Phillip Whitehead Mr Phillip Whitehead , Derby North

I prefer to give perhaps 1½ cheers and if necessary one vote to the Order. This is a palliative measure; it can be no more. It is tinkering with the system. We accept that the system is starved of funds and that the levy must be reduced.

I begin by declaring a past interest, in that I worked for three years for Thames Television, the largest of the independent contractors, during precisely that period during which the difficulties to which the Minister referred became apparent. I joined Rediffusion Television at the period when it lost its contract and was faced with all the problems of the merger, and then when the down-turn in television advertising revenue came Thames Television had the burden of the additional levy foolishly imposed by the previous Chancellor. This accentuated the problems of the companies.

The Minister asked the House to make certain assumptions, which many of us on this side could not make. First, he said that we all believed in competition. and should therefore see that the alternative system, the commercial system, was in reasonable strength. Many of us believe that there are different forms of competition. The Minister's various statements about commercial radio have always assumed that competition must be between a commercial system and a public service system. But there can be competition between alternative public service systems. The misgivings expressed on this side of the House tonight very largely come from what we see as the relative failure of the public service element built into the commercial system in the Acts of 1954 and 1964.

The Minister brushed aside again the merger recommendations of the Report of the National Board for Prices and Incomes, at paragraphs 140 and 155. He said that we should not consider mergers because they would be a grave disruption in the middle of the contract period. A much more serious disruption, and much less in the public interest, would be that permanent deterioration in programme quality which I think we shall get from unprofitable contractors who, because of the logic of profit maximisation, cannot put on, and are not prepared to put on, the kind of programme which the public have every reason to expect and which the Independent Television Authority should be compelling them to give us. Having said that, I want to quote what the Minister said in introducing this proposal to the House on 15th February. He said: … these reductions … are also designed to enable the companies to improve the quality of their programmes and those of Independent Television News. The Authority has assured me that it is its intention to use this opportunity to secure such an improvement."—[OFFICIAL REPORT, 15th February, 1971; Vol. 811, c. 1211–2.] It is our contention that, although the right hon. Gentleman clearly cannot instruct the Authority, and should resist those who tell him that he should be some sort of commissar of communications, he must be aware that the Authority is not a perfect organisation. The noble Lord, Lord Aylestone and his head prefect, Mr. Bryan Young, have not so far shown in the instructions they have been able to give to the companies that the companies can be forced to live up to their assurances.

It was on this point that my hon. Friend the Member for Barons Court (Mr. Richard) made a comment which the hon. Member for Hendon, North (Mr. Gorst) thought was out of order. I think that the hon. Member is not the first person in the House to say which commercial promises should be investigated and which should not. The sad case of London Weekend Television more than any other case history in commercial television shows what value we can place on assurances given by programme companies and contractors to the Authority. I remind the House of what was said in the tender put up to the Authority by the L.W.T. consortium in 1967. The tender said that its philosophy was a simple one, namely, … that while the stability and financial and business expertise of a potential programme company was obviously a paramount consideration for all concerned, nevertheless that it was a television company that was being planned and that there was no reason why people who knew about television, cared about television, and did television should not have an effective voice in the running of that company… Where have all the flowers gone? Gone to grave yards, everyone. Not a single person named in that submission remains with L.W.T., with the one exception of the Chairman, Mr. Aidan Crawley, a suitable figurehead, perhaps, to nail to any ship but not a particularly good figurehead to steer that company or any other into a safe harbour. Indeed, he is nailed to a very dubious privateer now.

I was a member of the delegation which went to the Authority on 25th September, 1969, to impress upon it that the sackings which had then taken place of Mr. Michael Peacock and others imposed upon the Authority a duty to invoke Section 11(4) of the Television Act. The Authority said that it could not do so because the change in the body corporate had been purely of programme people and not a change in the financial holdings.

There has now been a change in the financial holdings. Mr. Rupert Murdoch now holds 8½ per cent. of the voting shares and 35 per cent. of the non-voting shares. The Authority, in my view, therefore ought to be acting in this matter. It should be acting to ensure that Mr. Murdoch gives a full account of the kind of programme schedules he wishes to propose, and of his proposed production staff. He himself is de facto programme controller, although he carefully avoids the name, of course. He has not given the assurances for which the Authority should be asking. Instead, he is taking off for Australia when the Authority is to meet on Thursday to examine the control of the company.

Photo of Mr Norman Buchan Mr Norman Buchan , Renfrewshire West

There is a precedent. In the case of Scottish Television there was such an interview when the Thomson Organisation divested itself of some of its shares.

Photo of Mr Phillip Whitehead Mr Phillip Whitehead , Derby North

I was coming to that. The holdings of the Thomson organisation were reduced to 25 per cent. in 1968 for precisely the reason that it was felt by the then I.T.A. Chairman, Lord Hill of Luton, that Section 12 of the Television Act—which refers to the interest of newspaper proprietors and the way it might be harmful to the public interest—should be invoked. The holdings of the Thomson Organisation were, of course, reduced.

What those of us on this side of the House would say to the Minister before we go into the Lobby—if we have to do so—to vote for the Order is that the assurances which the Independent Television Authority is able to give about programme quality cannot be seen separately from the behaviour of the Authority in the recent past. We think that the Authority should now be asking various questions about this holding which are relevant to the kind of assurances which the Minister has sought. Would Mr. Murdoch have got this contract in 1967–68? My submission is that he would not. Secondly, is there not actual evidence from the newspapers which he operates, and more particularly from the three television channels which he operates in Australia, that the kinds of programme which he will put on are not the balanced programmes which the earlier Sections of the Television Act require?

The Sunday Press has had great fun with Mr. Murdoch about the world record which he holds for the number of old movies which he has been able to cram into his schedules in Australia. The least the Authority could do in this case is to require from Mr. Murdoch that the potential schedules are stated publicly and shown to the Authority, and and that a full statement should be submitted to the Authority before Mr. Murdoch is allowed to retain either financial control or programme control of this company.

Photo of Mr Christopher Mayhew Mr Christopher Mayhew , Woolwich East

Would not my hon. Friend go a little further and say that, in the light of his very public record, Mr. Murdoch is plainly not well qualified to take up this franchise?

Photo of Mr Phillip Whitehead Mr Phillip Whitehead , Derby North

I would not go quite as far as that. I would say that there was a prima facie reason for believing that Mr. Murdoch might not be so qualified and that therefore a public examination of the programmes he proposes to put on is needed and justified.

The Authority ought therefore to institute, and I hope that the Minister will urge it to institute, a full examination of the viability of this contract altogether and whether a 2½-day contract for the London area is viable. Plainly, the P.I.B. Report felt that it was not and more or less said so in paragraphs 140 and 155. If the Authority still feels that a 2½-day contract for the London area is viable, it should call in this contract and make Mr. Murdoch and anyone else who wishes to bid for the contract submit a public application to the Authority. I hope that the Minister will urge this course of action upon the Authority when it meets on Thursday.

If it decides that such a contract for the London area is not viable, it has a different course of action, which is to invite public bids once again from those other television companies in the area which might themselves effect a merger with London Weekend Television.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

Does not the Authority already have power to ask for the schedule of programmes in advance, and therefore presumably Mr. Murdoch would in fact have to submit such a schedule? Is it not true that programes may not be televised without approval of the complete programme schedule by the Authority? Is not that contained in the company's licence?

Photo of Mr Phillip Whitehead Mr Phillip Whitehead , Derby North

It is true that no programme may be televised without the approval of the Authority, but it is equally true that neither the personnel of London Weekend Television, nor the financial holdings nor the programming policy of the company have been properly scrutinised, but merely rubber stamped on the excuse of financial expediency. The best that people in the Authority have been able to say about the arrival of Mr. Rupert Murdoch is that they needed the money and therefore had no alternative.

My submission is that as the Minister is now saying that the money is available and that the levy will not bear too hardly, he should equally say that these conditions do not apply and that the Authority should look with much greater scrutiny at London Weekend Television. If this is not done, the I.T.A. will have lost all credibility as a watch-dog organisation, and the Television Act of 1964 will be seen to be unworkable. And that will be a sad day for commercial television.

1.0 a.m.

Photo of Sir Henry Legge-Bourke Sir Henry Legge-Bourke , Isle of Ely

I should like to pick up what has been said about the Independent Television Authority. As far as I am concerned it has lost its reputation for a rather different reason. As the Minister knows, I have for some time, together with the right hon. Member for Grimsby (Mr. Crosland) and others who are concerned about the programmes on Anglia Television, been pursuing with him and Lord Aylestone, Chairman of the I.T.A., the behaviour of the Authority over the future of Belmont Tower.

I can never trust anything that the I.T.A. says again until it puts this matter right. I have in my hand a letter written by Lord Hill, when he was Chairman of the I.T.A. It is dated 2nd August, 1967 and was written to Mr. Aubrey Buxton of Anglia Television. It says: Dear Aubrey, It was good of you to write so swiftly and so generously. Thank you. To save time my secretary left a message at your office (in your absence) on the Belmont issue. The Authority decided last Thursday that Belmont stays with Anglia in U.H.F. Yours, Charles. That letter, I should have thought on any reading, meant that Belmont Tower was to stay with Anglia Television as long as Anglia Television existed. There were no conditions attached whatever. Yet Lord Aylestone has now decided that in 1972, at the end of the present contract, Belmont Tower should no longer be used by Anglia. From this moment onwards I do not believe a word that the I.T.A. says, or anything said by any of its officials on its behalf. Unless Lord Aylestone rectifies this, I regard the I.T.A. as quite untrustworthy and I am saying this quite deliberately and with careful thought.

What disturbs me about this, although I am in favour of what my right hon. Friend is doing, is that the I.T.A. will get even as much as one penny out of this. I hope that my right hon. Friend realises how deeply all of us feel about this. He wrote to the right hon. Member for Grimsby on 14th January. I will not read that letter now, but we are by no means prepared to let the matter drop. It is outrageous that the I.T.A. should get even one penny from programme producers.

1.3 p.m.

Photo of Mr Geoffrey De Freitas Mr Geoffrey De Freitas , Kettering

I agree with a good deal of what the hon. and gallant Member for Isle of Ely (Sir H. Legge-Bourke) said about the treatment of Anglia Television by the I.T.A. Anglia Television is one of the outstanding organisations in this country and I agree that the I.T.A. has behaved outrageously.

I wish to raise another point. It is not the first Parliament in which I have protested that the Government of the day have not organised business in such a way that important matters like this do not come before the House at this time in the morning. Whatever the Government in power, in my experience they have always behaved outrageously in such arrangements. The present Government are even worse than the others and that is saying a lot. I ask the Minister to draw these few comments to the attention of the Leader of the House. I do not believe that such an important matter should be considered at this time.

1.5 p.m.

Photo of Sir Harmar Nicholls Sir Harmar Nicholls , Peterborough

I suppose that my right hon. Friend can take comfort from the fact that all these irrelevancies—important though they may be—

Photo of Sir Harmar Nicholls Sir Harmar Nicholls , Peterborough

I have only just started. They are irrelevancies and I have no doubt that that is some comfort to my right hon. Friend because it means that there is not a great deal of criticism of what he is suggesting in this Order. I think that what he is suggesting is inevitable.

Photo of Mr Phillip Whitehead Mr Phillip Whitehead , Derby North

In what sense can a discussion of the way in which previous assurances about programme quality have not been kept be irrelevant to a debate which the Minister opened by referring to such assurances?

Photo of Sir Harmar Nicholls Sir Harmar Nicholls , Peterborough

I cannot suggest that the hon. Gentleman was out of order because he was allowed to continue with his speech by the occupant of the Chair, but he did not connect what he said about what is happening to London Weekend Television with anything to do with this Order. But that is not my point. I am sure that the amount of time taken up by the Opposition on other things is some confirmation that what is behind the Order is well based and should be approved. I think that we accept that without question.

I take it that the House will accept the Order because it is inevitable. In view of the balance sheets, the general trend and the falling off in advertising revenue and all the effects which flow from that, it is obvious that something must be done. What gives me the greatest pleasure is the fact that my right hon. Friend and the hon. Member for Barons Court (Mr. Richards) accept that the present way of extracting the levy is fundamentally wrong. It has been made clear that at the earliest possible moment, 1972, the matter will be looked at with a view to making a base which is fair and which can be worked and which will not have to be varied every time there is a change in the advertising turnover of the company.

Both Front Benches, although they are occupied by different people now, are to blame for the situation. When the business of basing the levy on turnover was introduced, the Postmaster-General, representing the Conservative Government, had to rely on the wholehearted support of the Labour Opposition to get the proposal through against the feelings of hon. Members on the then Government side.

It was said that the reason that the levy could not be based on profits, which is the only way of doing it, was that there was a chance that the companies would "cook their books" as regards the expenses they put in and deliberately make it appear that there were no profits on which to base the levy. The point we made then, and which I make now, is that there are years of experience to show what the legitimate expenses should be. It is easy and indeed desirable for the companies to produce a formula which will show the amount of their income which should be spent on their productions. I hope that the promise which my right hon. Friend has given to look at this matter again means that any contribution they make to have this facility handed to them will be based on their profits and not on the turnover, which bears no relation to the expenses of running the programmes.

Photo of Mr Stan Orme Mr Stan Orme , Salford West

Would the hon. Gentleman agree that Lord Thomson did not help very much with his statement at that time?

Photo of Sir Harmar Nicholls Sir Harmar Nicholls , Peterborough

Certainly. It was a wild and silly statement and it was not true. In the early days of television the companies lost a lot of money. Many of them almost dropped out of existence. Lord Thomson, who is a flamboyant and shrewd character, used words which were taken up and used in a way which did much damage.

I was worried by something which the hon. Member for Derby, North (Mr. Whitehead) said. He suggested that the Opposition's view about competition had changed. He said that competition between commercial and semi-Government organisations is not what they have in mind. During the detailed discussion in Committee, the then spokesman for the Labour Opposition made it clear that they accepted competition. They started by saying that if they get back to power they would rule it out. I believe that on the strength of the words on the record my right hon. Friend was right to say that he understood that both sides of the House accepted competition. All that is in the past.

This tinkering about can do nothing but harm. It affects the continuation of the companies, as has been shown in the London troubles, and it interferes with the quality of the programmes. We should be thinking of the future. We should give the Order speedy approval and keep the right hon. Gentleman and his colleagues to their promise to place the future of independent television on a safer and more sensible basis.

1.10 a.m.

Photo of Gerald Kaufman Gerald Kaufman , Manchester Ardwick

I should first declare an interest as a member of the National Union of Journalists. I take very seriously the necessity for the continued employment of journalists, and I believe that that is relevant to the Order.

With all the shortcomings of independent television to which my hon. Friend the Member for Derby, North (Mr. Whitehead) referred, it is right that this grant of money should be made, though it ill becomes the present Government of all Governments to hand out £10 million to a lame duck, and it ill becomes the Minister to quote in aid the Report of the National Board for Prices and Incomes which his Government are busy abolishing.

Photo of Mr David James Mr David James , North Dorset

I want to question the word "grant". Why do hon. Gentlemen opposite always regard the remission of taxation as a grant? It is a return to the owners of their own money.

Photo of Gerald Kaufman Gerald Kaufman , Manchester Ardwick

That is so only if one believes that there should be no taxation or any kind. At the moment there is taxation, and the State has a right to decide how the money it has taken in tax should be dispensed. Having back £10 million is a grant to those who receive it.

It is right that this money should be given to the independent television companies. I hope, since it is happening in this makeshift and inefficient way, the independent television companies will use the money wisely. Current affairs programmes are needed on independent television. I say this because of my grave fears about the employment situation of journalists and also because current affairs programmes are necessary for civic education and are very popular. The radio programmes "World at One" and "Any Questions" are the most keenly listened to of any radio programmes, just as "This Week" is one of the most popular television programmes. Current affairs programmes are good viewing, popular viewing and provide necessary employment for journalists, opportunities for which are contracting.

The loss of advertising revenue has meant fewer and thinner newspapers, and there are likely to be fewer newspapers still. If the stories circulating in Fleet Street are true, from next Monday we shall have one fewer national newspaper, fewer employment opportunities and fewer voices to speak. Television, as a lasting medium, should therefore step in to redress the balance.

Hon. Members have referred to London Weekend Television and Mr. Rupert Murdoch. As one who has known him for a considerable time in various vicissitudes, I do not totally share the views which others hold of him. Although he is a rumbustious person who can introduce his fair share of vulgarity and irresponsibility into those areas of communication which he controls, he has saved the Sun newspaper and sent its circulation up to two million. He has done that partly by methods of which many of us would disapprove, but he is nevertheless maintaining a serious newspaper which comments on and covers politics in a responsible way within the acres of nude flesh which surround it. I would go further and say that, despite the various vulgarities included in the News of the World, Mr. Murdoch has improved that newspaper, too.

It is obvious that he will run London Weekend Television on entirely different lines than were planned. I deplore this because, although some of us did not approve of independent television and wish that it did not exist, the original promises for London Weekend Television were that it would be something one could swallow without being nauseated. But that set-up has gone, and if Mr. Murdoch had never stepped into the picture that set up would still not exist. It has got away with breaking promises.

Mr. Murdoch. with all his idiosyncratic characteristics, is a man who, nevertheless, takes some serious interest in the issues of the day, as is shown by the fact that he has gone to Australia to launch a serious Sunday companion to the serious daily paper he runs there. He now has, under this levy remission, another £880,000 for London Weekend Television.

I appeal to him to confound the people who have suspicions, which may not be ill-founded, about what he will do with the company and to use this money to introduce into London Weekend Television popular, serious, current affairs programmes of a kind which would restore the name of that company. That would justify Mr. Murdoch's regime and would even justify the hypocritical inconsistencies of the Government in paying out £10 million to private industry when they have said that that is something they are not willing to do.

1.17 a.m.

Photo of Mr Hugh Jenkins Mr Hugh Jenkins , Wandsworth Putney

I will not follow my hon. Friend the Member for Ardwick (Mr. Kaufman) in what he said about Mr. Murdoch, except perhaps to say this: I agree that Mr. Murdoch may have preserved the Sun, but when my hon. Friend said that Mr. Murdoch had preserved the Sun as a newspaper that seemed to be going a little too far. He may have kept it going as a daily magazine, but whether as a newspaper seems to be open to question.

If I may break new ground by referring to the Order which is before us, in my view it is a document which, as one whose general interest in television is supplemented by a particular interest on behalf of the performers in it, I must accept, but it is a hamfisted and I hope, a temporary measure. One of the reasons I think it is wrong is that it does not ensure that the companies which most need the money will be those to get it. In general, the effect in all probability will be that those companies which need the money the least will get the most. This is almost certain to be the case under this method.

The second criticism is that it is not certain that any part of the money will be used to improve the programmes. Therefore, the proposal I put forward, among others, which seems to be becoming popular, was that we should try to have a half-way house between the present method of deducting the levy from gross revenue and the other alternative, which is merely additional taxation on profits—in other words, that we should take the certified programme expenditure and charge the levy after that point. The effect of the latter would be to encourage the maximum expenditure on programmes. If it were certified in that way it would make sure that programme companies were not allowed to get away with anything they should not get away with.

As I have said, I regard this as a temporary measure. I do not share the admiration of my hon. Friend for Derby, North (Mr. Whitehead) for the 1964 Act. The Act was very properly criticised by the Pilkington Committee, which opposed the franchise system with its virtual necessity to develop elsewhere because of the possible loss of the franchise. This has nothing to do with improving programmes. Diversification is merely a financial insurance against the possibility of losing the franchise. The franchise system is a bad one.

The Pilkington Committee was right to say that the Independent Television Authority should be the recipient of advertising revenue, leaving the programme contractors to do their job, and that anything short of that would be a measure of a palliative character. Some better palliative than this Order is urgently necessary, and, if the House approves it, I hope that it will do so only in the sense of saying to the Minister, "We accept what you are doing on the undertaking that you will do something better before long."

1.21 a.m.

Photo of Mr Christopher Chataway Mr Christopher Chataway , Chichester

I am grateful to those hon. Members who have taken part in this short debate. It has been an occasion for highlighting a number of concerns about the independent television system, and it has produced a degree of unanimity about the Order and a fair consensus of opinion about the way in which the House would like to see the levy changed.

I must stress again that I am not in a position to guarantee that we shall find an acceptable substitute for the present levy system. I accept that it does not work well and has the disadvantages that a number of hon. Members have mentioned. There are difficulties about an excess profits tax and about the interesting variant produced by the hon. Member for Putney (Mr. Hugh Jenkins). However, I can assure the House that, before the end of the next full levy year, we shall explore every alternative, and I hope then to be in a position to suggest a satisfactary alternative system.

Photo of Mr Christopher Mayhew Mr Christopher Mayhew , Woolwich East

The right hon. Gentleman says that he will examine every alternative. Will that include the admirable suggestion made by my hon. Friend the Member for Putney (Mr. Hugh Jenkins)? Can we be assured that a reorganisation on the basis recommended by the Pilkington Committee will not be excluded?

Photo of Mr Christopher Chataway Mr Christopher Chataway , Chichester

No. I am not suggesting that, in the next 18 months, we shall overturn the entire I.T.V. system. That would be a strange undertaking to give. My undertaking relates solely to the levy and its operation, and not to the structure of independent television as a whole.

My hon. Friend the Member for Isle of Ely (Sir H. Legge-Bourke) took the opportunity, quite fairly, to raise the matter of the Belmont transmitter, about which he and the right hon. Member for Kettering (Sir G. de Freitas) feel strongly, as do quite a number of other hon. Members. I am sure that the I.T.A. will take note of what has been said, but I hope that I shall be forgiven if I do not follow my hon. Friend along that path in the few minutes at my disposal.

My hon. Friend the Member for Dorset, North (Mr. David James) suggested that it might be that, in the very near future, the commercial monopoly that the independent television companies have at the moment in their areas will be broken as a result of technological developments that he mentioned. The N.B.P.I. Report points to this possibility. However, I regard it as a longer-term possibility. I do not think that casettes, multi-channel wires or direct reception from satellites are likely to be develop- ments within the next few years which will totally alter the nature of broadcasting in this country. But I agree with my hon. Friend about the longer term, and I agree that, before we consider the structure of broadcasting in the post-1976 period, we must seriously consider all these issues—and preferably as near to the point as possible when information is available.

The hon. Members for Barons Court (Mr. Richard) and for Putney, and one or two others, expressed concern on behalf of the smaller, weaker companies in the I.T.V. system. The hon. Member for Barons Court suggested that there would be no financial joy for them. The reduction in the levy will be of value indirectly to those companies, because there is a system of cross-subsidisation which works in I.T.V. The I.T.A. has said that, as a result of the reduction of the levy, if it is approved by Parliament, it will be able to reduce the rentals to the smaller companies and at the same time impose a larger burden upon the bigger and more prosperous companies.

Another way in which the smaller companies will be helped is in the sums which they will pay for programmes which they get on the network. The charges made for programmes received on the network are related to revenue after the levy. Therefore, the larger companies will be paying more and the smaller companies will proportionately be paying less. This is a measure which should be of value to the small as well as to the large companies.

The hon. Member for Barons Court asked about the £3½ million rental increase of the I.T.A. and what it was principally intended to do. It is in part to meet increased costs to continue existing work, but also to continue the U.H.F. developments and the introduction of colour to enable the I.T.A., which has dropped behind the B.B.C., to catch up. It has always been intended that the I.T.A. and the B.B.C. should, so far as possible, march in step in these developments. The I.T.A. has taken the view that it is necessary to have this substantial increase in its rental if it is to catch up in these respects.

A number of hon. Members have expressed concern about developments over London Weekend Television. The hon. Member for Derby, North (Mr. Whitehead) said, quite fairly, that he hoped that I would resist invitations to set myself up as any kind of commissar of communications. I assure the hon. Gentleman that I shall certainly resist any blandishments of that kind. In doing so it will be necessary for me to make it absolutely clear that it is not me who determines whether there should be mergers during the course of contracts; and it is not me, or it should not be me, who determines whether changes in the shareholdings in individual companies constitute such a fundamental change in their nature as to warrant the withdrawal of a contract or any other measure. These clearly are matters which lie within the jurisdiction of the Independent Television Authority.

The I.T.A. has powers under Section 11(4) of the Television Act which are relevant to this matter. The House may know that the Authority has said that, in respect of the events which have been mentioned, it will be considering these powers when it meets later this week. The Authority has informed me that it will be keeping the company's programme schedules under careful review, but that it has taken no decisions in the matter as yet. These are the responsibilities of the I.T.A. and not matters in which it would be acceptable for the Government to intervene. However, it is proper that views on these issues should be expressed in this House, and the I.T.A. will take note of them.

Division No. 195.]AYES[1.31 a.m.
Alison, Michael (Barkston Ash)Green, AlanMoney, Ernie
Allason, James (Hemel Hempstead)Grylls, MichaelMonks, Mrs. Connie
Atkins, HumphreyGummer, SelwynMorgan-Giles, Rear-Adm.
Boardman, Tom (Leicester, S.W.)Gurden, HaroldNicholls, Sir Harmer
Boscawen, RobertHall, Miss Joan (Keighley)Noble, Rt. Hn. Michael
Bowden, AndrewHaselhurst, AlanNormanton, Tom
Bray, RonaldHornsby-Smith,Rt.Hn.Dame PatriciaOnslow, Cranley
Brinton, Sir TattonHowell, Ralph (Norfolk, N.)Owen, Idris (Stockport, N.)
Brown, Sir Edward (Bath)Hunt, JohnPage, John (Harrow, W.)
Butler, Adam (Bosworth)James, DavidParkinson, Cecil (Enfield, W.)
Chapman, SydneyJohnson Smith, G. (E. Grinstead)Percival, Ian
Chataway, Rt. Hn. ChristopherKing, Tom (Bridgwater)Pym, Rt. Hn. Francis
Churchill, W. S.Kitson, TimothyRaison, Timothy
Clegg, WalterKnox, DavidRedmond, Robert
Cooke, RobertLegge-Bourke, Sir HarryReed, Laurance (Bolton, E.)
Dykes, HughLe Marchant, SpencerRees, Peter (Dover)
Edwards, Nicholas (Pembroke)Longden, GilbertRoberts, Michael (Cardiff, N.)
Emery, PeterMacArthur, IanRoberts, Wyn (Conway)
Fenner, Mrs. PeggyMcCrindle, R. A.Scott, Nicholas
Finsberg, Geoffrey (Hampstead)McLaren, MartinShaw, Michael (Sc'b'gh & Whitby)
Fortescue, TimMcNair-Wilson, MichaelShelton, William (Clapham)
Gibson-Watt, DavidMarples, Rt. Hn. ErnestSpeed, Keith
Goodhart, PhilipMather, CarolSpence, John
Gorst, JohnMeyer, Sir AnthonyStanbrook, Ivor
Gower, RaymondMoate, RogerStuttaford, Dr. Tom

The hon. Member for Barons Court also asked about the profits of the companies and what effect these would have. Table 5 on page 19 of the Report of the N.B.P.I. gives a good deal of the information which the hon. Gentleman was seeking; but it might help the House if I give some additional information. The N.B.P.I. gave two estimates for 1971 —a low and a high revenue forecast—and it produced for the years thereafter two separate patterns: one based on a pessimistic forecast of what would happen and the other based on a more optimistic forecast.

In fact, the I.T.A. now believes that the revenue of the I.T.V. companies for 1971 will be somewhat below the low revenue forecast of the N.B.P.I. I cannot, therefore, hold out the expectation that the reduction in the levy which I am proposing will be sufficient to increase the rate of return on capital to the 13½ per cent. after tax which the N.B.P.I. suggested would be a reasonable rate of return for the television companies. As 1 say, I cannot pretend that the proposed reduction will necessarily be large enough to produce the rate of return which it was suggested over the period of the contract would be right for the companies. Nevertheless, this reduction will enable—

It being one and a half hours after the commencement of proceedings on the Motion, Mr. SPEAKER put the Question, pursuant to Standing Order No. 2 (Exempted business).

The House divided: Ayes 85, Noes 1.

Sutcliffe, JohnWaddington, David
Thomas, John Stradling (Monmouth)Warren, KennethTELLERS FOR THE AYES:
Tilney, JohnWhite, Roger (Gravesend)Mr. Reginald Eyre and
Tugendhat, ChristopherWilkinson, JohnMr. Victor Goodhew.
Vaughan, Dr. GerardWorsley, Marcus
NOES
de Freitas, Rt. Hn, Sir Geoffrey
TELLERS FOR THE NOES:
Mr. Michael Cocks and
Mr. James Wellbeloved.

Resolved,That the Television Act 1964 (Additional Payments) Order 1971, a draft of which was laid before this House on 16th February, be approved.