What recent discussions she has had regarding BBC licence fee proposals.

The Government are currently conducting a funding review to determine the level of the new licence fee settlement that will apply from April 2007. We will announce the outcome in due course.

Given that the licence fee is set to increase by nearly 20 per cent. over the next seven years—

No, it is not.

It is, potentially. Given that fact, and given that the main purpose is to help to cover the cost that the BBC will incur in facilitating the switch from analogue to digital broadcasting, will not the licence fee be used as yet another stealth tax that will hit the poorest hardest?

No, that is not the case. With great respect to the hon. Gentleman, he is jumping ahead of the conclusions that the Government will reach as we consider both the BBC's proposals and the results of the independent assessment that we have commissioned. That will ensure that we reach a licence fee settlement under which the viewing public get what they want—continued high-quality and diverse programming and a BBC that is strong and independent of the Government.

May I thank the Under-Secretary, my hon. Friend James Purnell, for coming along to a recent meeting of the all-party commercial radio group to answer questions on this topic? One question put to him was about market impact assessments for new BBC services, so may I ask my right hon. Friend whether she has decided whether they would cover major changes to existing services and how much weight will be given to market impact assessments when the public value test is carried out for new BBC services?

I thank my hon. Friend for that question. He has identified one set of important considerations that we are looking into in connection with the White Paper proposals. We know how strong public support is for a well-funded BBC, but we also know that the BBC can have a serious impact on the competitiveness and performance of commercial broadcasters, so we must get the balance right. My hon. Friend is right to identify two forms of market impact assessment: those that apply to completely new services, which will certainly have such assessments, and those that apply where a substantial change is made to an existing service. What will help greatly is the BBC's proposal that every channel should operate a service licence, which will create more clarity than we have ever had before. Tougher discipline and greater transparency will play an important role for the BBC trust under the new arrangements.

Given that the BBC's total licence fee income has grown by 50 per cent. over the last 70 years—I mean seven years—

It seems like 70.

Yes. Given that the BBC's income now exceeds the combined total advertising income of ITV, Channel 4, Channel 5, GMTV, S4C and all the digital channels put together, does the Secretary of State agree that it is difficult to justify a licence fee increase above inflation at all, let alone 2.3 per cent. above the increase in the retail prices index that the BBC has asked for?

With great respect to the hon. Gentleman, who chairs the Select Committee on Culture, Media and Sport, I will not be drawn further on the outcome of deliberations on the level of licence fee. Voices from all around the Chamber will want to contribute to the conclusions, which will be announced in due course.

My right hon. Friend will know that many people in this country, including me, believe that the BBC licence fee provides good value for money. In the multi-producer and multi-provider industry that has now developed, however, should not the BBC charter include an obligation continually to assess value for money and to make the public aware of that work? The public could then believe that they do indeed receive value for money from the rather peculiar monopoly position that the BBC enjoys.

I thank my hon. Friend for that question. He will know that public consultation on the BBC charter—conducted for the first time ever—has reflected the public view that, by and large, the BBC licence fee represents value money. The new BBC trust that will oversee the management of the organisation and be responsible for its governance will also have precisely the responsibility that my hon. Friend has identified—to ensure that the licence fee payer, to whom the trust will be responsible, gets value for money.

Does the Secretary of State share the concern expressed by many of my constituents at reports of swingeing increases in the BBC licence fee? Does she not think that the concept of a flat-rate, regressive tax on households throughout the country is something of an anachronism?

No, I do not accept that, and the Government have already announced in the BBC Green Paper that the licence fee will continue to fund the BBC for the next 10 years. The hon. Gentleman says that it is a regressive form of taxation but, interestingly, when asked about it, the public, while recognising that it is a flat-rate charge, generally said that they believe that it is good value for money and fair. We will continue with it for the next 10 years.

Does my right hon. Friend agree that we should continue to celebrate the BBC's role as the great world public service broadcaster, producing everything from "Doctor Who" to Radio 4, from "Strictly Come Dancing"—won at the weekend by a Yorkshireman—to Radio 3? Should we not consider very carefully the BBC's proposal for an average £3 a year real-terms increase in the licence fee over the coming years, in order to provide more money for factual programming, high-definition TV and local and regional programming?

I thank my hon. Friend for that and I am sure that we will want to agree with everything that he said about the importance of the BBC's contribution to our national life, and to take this opportunity to thank Darren Gough for the example that he gave to potential "Strictly Come Dancing" contestants throughout the country.

I know that my hon. Friend Mr. Whittingdale, the current Chairman of the Culture, Media and Sport Select Committee, is going down the well-trod path of his predecessor, Sir Gerald Kaufman, but I wonder whether I might disagree, in that I believe that the BBC offers good value for money. However, I challenge the Secretary of State on this point: is she aware that the BBC is having to make provision for a spectrum stealth tax in 2013 of £200 million? Will that not put pressure on the licence fee?

In its initial bid for the licence fee, the BBC included all the costs that it might incur. The Government have set out their intention, in the light of the Cave report, to apply administratively efficient pricing in respect of the costs of spectrum. This issue will be visited post-switchover, in approximately 2010. It is true that broadcasters may incur this additional cost, and that will be taken into account in considering the licence fee settlement.