Orders of the Day — Independent Broadcasting Authority Bill

Part of the debate – in the House of Commons at 12:00 am on 31st January 1974.

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Photo of Mr Robert Cooke Mr Robert Cooke , Bristol West 12:00 am, 31st January 1974

There we are—the hon. Gentleman quotes a newspaper report about some alleged document. It would be nice to have the document.

We all seek to benefit television, although we may have different ways of going about it. There is no doubt that the Bill contains a positive incentive to spend on programmes. That surely is what television is all about. I have followed the television debates as they have ranged—not always raged—through the five Parliaments during which I have had the privilege to be a Member. I have tried at the same time to learn at first hand about how the independent side of the industry works. I do not have, and have not had for some time, any financial interest.

At the outset, one might ask why the Bill was not introduced 10 years ago, because a levy on profits was canvassed then. But the Government of the day were not entirely happy that profits would not disappear before tax in lavish expenditure. I suppose that in those days long ago there were still some people who thought that television was rather like Hollywood was before the war. But we have come a long way since then, and the IBA has had 10 more years' experience of intimate relationship with the programme companies.

Beyond question, we have learned that the levy on advertising revenue is—and here I find myself using the same words as my hon. Friend the Minister of State, Treasury, but one must put up with Ministers pinching one's thoughts—the bluntest of blunt instruments and always inevitably changed at the wrong time. When we reduced the levy in February 1971 on a falling market, we found that there was then a rising market to such an extent that by mid-1973 the revenue was so buoyant that there was a justifiable call to raise the levy. We have now had the oil crisis and other problems, producing a sharp fall, and if the fall is maintained it will mean perhaps a 25 per cent. drop in revenue this year, although last year's total will still be up because the trend changed only towards the end.

Many people now support the new procedure of the levy on profits after programme costs, and the Bill also contains other marginal reliefs which I hope my right hon. Friend will spell out because they have only been hinted at so far. The Bill was introduced by a Treasury Minister and so the Treasury presumably is happy about the present arrangement—and who are we to question that? I have learned in my considerable experience that the Treasury has been uniquely successful in collecting its share of any profits which happen to be around. Anyone who has been in business knows that in this country people do pay their taxes.

Some people have questioned the relationship between the IBA and the programme companies, but let us not forget that the IBA has the power of life and death—and death it has sometimes been. Certainly it is in constant touch with the programme companies, and its area officers are skilful and powerful people not slow to give advice. I should be surprised if the IBA's equipment is not at present being strengthened by further staff with financial expertise in order to work the new system. The IBA knows the industry pretty well by now.

The Bill imposes a 66·7 per cent. levy on profits, but let us not forget that those profits are then going to be taxed and that dividends are going to be taxed. The Treasury is seldom very far away. Some people ask whether the levy is enough. Certainly, in the industry itself, some people think that it is too much. But all taxpayers say that, and when one considers these provisions I believe, despite some of the rather gloomy prognostications, that the figure is probably justified, although I am sure that my right hon. Friend will, with his usual interest in these matters, keep very closely in touch, if not with the day-to-day situation, with the trends as they develop, because I know that he has the interests of the industry and of television very much at heart.

The first £250,000, the free slice, or tranche as it is called—not free of taxation but free of levy—will be a considerable help to the smaller companies. It is a great safeguard for them. The House has often welcomed their unique regional contribution. This will be safeguarded, although the Channel company has its own special problems. I hope that my right hon. Friend will bear them in mind because there is no hon. Member to speak up for its viewers and listeners.

I do not want to get involved with detailed Committee points but my hon. Friend the Member for Newcastle-upon-Tyne, North (Mr. R. W. Elliott), who unfortunately cannot be with us today because he has to be in Newcastle, has asked me to mention a couple of representations which he has received. I think that the hon. Member for Islington, East must have seen the same representations because he made the point, as I do, that where a company lost, before the new levy, say, £1 million—and new companies or companies with new responsibilities could also find themselves in this position—it might, under the terms of the Bill, not be able to charge the £150,000 or so interest which it would have to find to finance the £1 million which would have to be borrowed to cover the loss. I hope that my right hon. Friend will direct his thoughts to that and comment upon it in reply.

The other point, also made by the Opposition, is the question of who shall judge what is excessive expenditure. According to the Bill, the IBA would appear to have the last word. There is no arbitration, and we can see that if there was there would be certain difficulties. I should be grateful if my right hon. Friend would explain in a little more detail what rights the companies would have in the courts. There are rights explained in the Bill but not perhaps in terms which a layman would understand.

There are some people in the industry who feel that the power of the IBA is too sweeping. That should please Labour Members who have always felt that the programme companies should be kept firmly under control. Most responsible people would recognise that a public monopoly should be subject to an element of public control. The Bill imposes some pretty tight financial controls. The IBA, according to other critics, could impose its will on the programme companies to the detriment of freedom of expression in programme production.

I can certainly envisage a situation in which if a company decided to make a 36-part colour documentary on the two different types of Communism, involving outside broadcast facilities in various far-flung parts of the world, the IBA might say "Enough is enough".

I cite that rather ridiculous example to give force to the argument that if companies were to embark on absurdly extravagant expenditure they would not get away with it, and even if they did, it would not pay them. They would find that they had unsaleable material which they could not possibly justify to their shareholders and they would not be able to pay a dividend. They have to be able to do something for their shareholders to remain in business.

I do not believe that the freedom of expression largely comes through the most costly programmes, anyway. The most costly programmes will be those that would earn a certain amount of money in the export market. We have only to look at recent examples. The costly programmes which can earn money as exports will get marginal relief under the Bill. I do not feel too unhappy about that, and we do need the foreign exchange which they can earn.

I know that my right hon. Friend is anxious to improve the quality of television. In him the creative geniuses at work in the industry have a real ally. This is a financial Bill, and the new levy will pour into the Consolidated Fund the sum of about £30 million a year. This is in sharp contrast to the BBC, which, according to the latest figure, received £137·6 million a year from licence revenue. The taxpayer pays even more than that because there is the cost of collection. In exchange, he gets two channels on BBC-TV and the radio programmes.

In contrast, ITV has to pay the taxpayers about £30 million a year, and in exchange receives one channel. The House will not be surprised when I say that that leads me to stress the infinite possibilities of a further channel for ITV. The taxpayer will get an even better deal from two ITV channels, and even more revenue will be collected. My right hon.

Friend has given certain undertakings in the House about a decision on the fourth channel. Perhaps I might give him further food for thought.

If my hon. Friend felt able to authorise ITV-2 there would be a period during which, when it was being set up, costs would have to be met by the IBA—engineering costs and so on. The programme companies, in whatever form they participated—and the IBA has a great many options open to it—would initially set increased programme costs against profits and the Consolidated Fund would have to forgo some of this revenue from television. It would not be long, however, before advertising revenue increased, and the final result, after about three or four years from now, would be a wider choice for the viewer and a higher tax yield.

I am sorry that my hon. Friend the Minister of State at the Treasury has left the Chamber. If he were here I know that he would be delighted if that was the situation. My right hon. Friend, who is perhaps less concerned with Treasury yield and more concerned with the future of broadcasting, will I am sure be delighted if there is a wider choice, even if he is not prepared today to give more encouragement along the lines I am arguing.

What would ITV-2 be like? It would not be another ITV-1. It would be like BBC-2, which does not have to look over its shoulder for a mass audience. My hon. Friend the Minister of State at the Department of Education and Science who has responsibility for the arts was described by the Opposition spokesman as a wilted flower, sitting in isolation on the Treasury Bench yesterday afternoon. I believe that his appearance there was fortuitous in the sense that he had no particular responsibility. I do not suppose that any Minister did in a sense, because this was a private Member proposing a certain thing and another private Member opposing it. The Minister of State was there in solitary isolation on the Treasury Bench. I do not think that he looked particularly like a wilted flower. I was sitting behind him, also in isolation.