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Wireless Telegraphy (Television Licence Fees) (Amendment) Regulations 2000

– in the House of Lords at 7:30 pm on 29th March 2000.

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Photo of Baroness Anelay of St Johns Baroness Anelay of St Johns Conservative 7:30 pm, 29th March 2000

rose to move, That an humble Address be presented to Her Majesty praying that the regulations laid before the House on 8th March be annulled (S.I. 2000/630).

Photo of Baroness Anelay of St Johns Baroness Anelay of St Johns Conservative

My Lords, I beg to move the Motion standing in my name on the Order Paper.

The statutory instruments to which my Prayer relates will have a significant effect both upon those who pay taxes and those who buy TV licences. The order makes three changes in one fell swoop. The TV licence fee has increased from £101 per year to £104 for colour and for black and white by £1, giving the BBC an extra £200 million every year. Free licences for people over the age of 75 will be introduced from 1st November this year; one per household. The third part of the order amends the licence fee concessions available to those in sheltered accommodation.

I make clear from the outset that I do not propose to put this Motion to a vote. One might ask why I tabled it. Looking around the Chamber, which seems dripping with BBC governors and an ex-director-general--not quite an ex-director-general; I beg his pardon, there are a few days yet to go--the noble Lord, Lord Birt, in the Chamber, I begin to wonder why on earth I tabled it. My colleagues in another place last night did not have to face quite such a battery against them on that occasion. However, I hope it will not end up as a battery against what I have to say.

I have three reasons for tabling the Motion. First, quite simply, it was the only way in which this House could have any opportunity to ask the Government questions about changes that are made here by negative instrument and to give the Minister the opportunity to put on record the explanation of the Government for the changes and the thinking behind them.

Secondly, I should like the Minister to give the House an assurance--this might sound a strange thing to say, not least from me--that the BBC will not be required to bear the administrative costs associated with the Government's pre-election give-aways. Thirdly, I want to draw attention to a narrow point which I believe has been missed in another place. The order could, in practice, remove from people over 60 who are currently in sheltered accommodation the right to concessions in certain narrowly defined circumstances. I do not believe that that is what the Government intend and I want to explore that.

I have approached the debate from my viewpoint as a friend of the taxpayer, a friend of the licence fee payer and, I would still say, a friend of the BBC. I shall carry on with that, regardless. It is true that I am a candid friend, but I sent a draft copy of my speech to the BBC last week. I am not too sure how many people had a heart attack, but they are still talking to me--just. I met the head of TV Licensing on Monday. I am grateful to him for his detailed and patient answering of my questions. Noble Lords will be aware that TV Licensing is, in a sense, a brand name of the BBC, but it is a wholly-owned subsidiary.

We on these Benches recognise the achievements of the BBC and its importance in setting the benchmark of quality in national and international broadcasting. The BBC has made, and I hope it will continue to make, a major contribution to the cultural life of the nation. However, as noble Lords are all aware, the broadcasting world is changing rapidly. Already more than 3 million households have access to multi-channel digital television. That explosion of choice raises fundamental questions about the current and future role of the BBC and, necessarily, about its funding.

Perhaps there are good reasons for letting the BBC now break the existing agreement that was intended, when made, to give it scope to develop the digital services. I would simply maintain that when the Secretary of State made his Statement in another place, it was he who failed to make that case effectively. Those who feel tonight that this will be a bash at the BBC's speech will find that it is not quite that. Perhaps others might want to do that in future debates we have on broadcasting. I hope that we have the opportunity to explore the role of public service broadcasters in general during the course of this coming year in our Wednesday debates.

I have questions about the operation of Parts 2 and 3 of the order, if I may call them that. I refer to the parts which affect the free licences for the over-75s and the extension of concessions, or so it would appear, to those in sheltered accommodation. I turn first to the free licences which will be available to the over-75s. I was intrigued to note that when the Secretary of State made his Statement in another place he said that the concession would be made provided that primary legislation can be passed to enable it to be made. We now find that that change is to be effected by secondary legislation. What advice did the Government receive between 21st February this year when the Statement was made and 8th March when this instrument was laid to change their minds about the need for primary legislation to effect the change?

Can the Minister confirm that some primary legislation may still be needed in order to give the BBC full access to all our national insurance information--the numbers held for us by the DSS at Newcastle--so that those who claim a free licence can have that claim verified?

The heart of my questions are: what are the financial implications of the change for both the Treasury and the BBC? How has the Treasury calculated the £300 million which the Secretary of State announced would be paid every year to the BBC as compensation for the loss in income for the sale of those licences to the over-75s? Is £300 million really an accurate figure or is it, indeed, as I have been led to believe by advice, closer to £340 million in the first year and about the same thereafter?

Is the estimate of the compensation to be paid linked to the number of those who are currently over 75 who are estimated to hold a licence? Are such figures available? How many people have a licence over 75? Or is that compensation amount linked to the number of households that the Government expect to make a claim to have a 75 year-old living with them after 1st November this year? Let us suppose that my mother came to live with me in my household. As she is 86, I would be able to transfer my licence fee into her name and obtain a free licence for my household.

I note that the compensation is strictly for the amount of free licences issued. There is the question of the cost of administration. Such costs are excluded from the estimate of £300 million, if that, given by the Secretary of State. Can the Minister confirm that the estimated cost of the work to be carried out by TV Licensing is about £22 million in the first year and about £8 million to £10 million thereafter? They will be required this year to write to every single household in the land to inform those who are over 75 about the scheme and explain how it operates. They must verify the claims and police the system thereafter to ensure there is no fraud. That is their job. Can the Minister assure the House that the Treasury will pick up the bill for all that work, both this year and in ensuing years?

Photo of Baroness Anelay of St Johns Baroness Anelay of St Johns Conservative

My Lords, I am delighted to hear the Minister remind me, from a sedentary position, that when we talk about the Treasury paying we are talking about each and every one of us paying. Indeed, pensioners between the ages of 65 and 75 will pay more for their TV licence, not receive a free licence and, if they are a taxpayer, still pay even more for the administration costs.

My question is simple: will the taxpayers, through the Treasury, bear that cost or will the BBC be expected to make further savings or dip into the money it has been given to provide for its digital expansion? Will it have to do that to pay for the administration costs? I hope that that would not be the case.

There are some complexities in the way the free TV licence will operate. For example, can the Minister confirm that those who are over 75 must still apply for and hold a licence, even though it is free? What happens if somebody over 75 fails to apply for a licence or, having applied for it, fails to complete it and send it in? If detected, can the Minister confirm what I believe to be the case; that is, that over-75 year-olds will still be subject to prosecution? I have this ghastly vision of the first ever case of the TV licensing people having no choice but to prosecute somebody aged 90 because that person does not have a TV licence, even though the licence is free. I see that as a potential bureaucratic nightmare.

Finally, I turn to the third change made by the order; the ARC system--the licensing system which covers those in sheltered accommodation. Last night, when this order was taken in another place, the Minister stated at col. 301 of the Official Report, that this provision,

"will have the additional benefit of safeguarding the entitlement to the concession of residents in sheltered housing schemes with male residents aged between 60 and 64".

I fully acknowledge what the Government are trying to achieve. But I have been advised by TV Licensing that the way in which the order is worded introduces a new and unwelcome anomaly that in practice could remove the right to hold concessionary licences from those people over 60 who live in sheltered accommodation. It works like this.

As the situation currently exists, if I am living in sheltered accommodation and am just over 60 and there is a gentleman living in that sheltered accommodation between the ages of 60 and 65, because he is not of pensionable age he should in theory knock me out from having access to concessionary licences. TV Licensing has been exercising a discretion to ignore the presence of that man and therefore allow the concessionary licences to apply. At times it has been taken to court by bodies which say that if it exercises discretion in that case, it should exercise it in others. I am sure TV Licensing would welcome the fact that this change means it is not in the invidious position of having to decide whether or not to exercise discretion.

I can therefore see the logic behind what the Government are trying to achieve. It looks as though the BBC would be OK and people in sheltered accommodation would be in an acceptable position. But I am advised by TV Licensing that, if a man aged between the magic ages of 60 and 65, lives in sheltered accommodation and works over 15 hours a week--that means he can no longer be calculated as retired--this order will abolish the right of everybody else in that sheltered accommodation to hold concessionary licences. Noble Lords will be aware that there are several good practice employers like B&Q who actively recruit older workers. It is therefore possible that the scenario I described could occur.

I contacted Age Concern to discuss this matter and found that it was not aware of this potential anomaly. Matters came to a head so late because I only saw TV Licensing on Monday and it has not been possible to follow it through. But I undertake to try to do so. None of us want this to occur. I am seeking from the Government an answer as to whether or not they are aware of this development and this advice from TV Licensing. Whatever is the position, will they undertake to look at the situation urgently after the order goes through, as go through it will, so that, if there is a potential anomaly, we are able to put it right on a future occasion?

I come back in a rather elliptical way to where I began a long while ago--this is a complex order--to say that, of course, this is a statutory instrument and as such it cannot be amended. So even if there is fault in it, it must go through. I commend the Prayer to the House.

Moved, That an humble Address be presented to Her Majesty praying that the regulations laid before the House on 8th March be annulled (S.I. 2000/630).--(Baroness Anelay of St Johns.)

Photo of Lord McNally Lord McNally Liberal Democrat 7:45 pm, 29th March 2000

My Lords, having taken advice from the table I should declare an interest in that a company with which I am associated under Category 2 of the Register of Members' Interests has worked for the BBC. I am also President of the British Radio and Electronic Equipment Manufacturers' Association (BREMA). Both those interests are registered in the appropriate fashion.

Listening to the noble Baroness, Lady Anelay, I sometimes wonder whether the Government do not put their proposals on concessions to pensioners on the old "bike shed" process of getting material through council budgets. The council always used to put in the cost of repainting the bike shed, knowing that that would dominate the ensuing debate and the rest of the council budget would go through on the nod. I dipped into last night's debate in the Commons and a lot of attention was paid to these concessions to pensioners. I see the noble Baroness, Lady Greengross, glaring at me. That in no way implies that it is not a welcome concession to pensioners and one that is not appreciated. However, it is away from the main and welcome thrust of this order; that is, the increase in licence fee. Indeed, if the noble Baroness had pressed her Prayer this evening we would resolutely have voted against it.

It is also a pleasure to see the noble Lord, Lord Birt, in his place. I am not sure he has the same brooding presence that Lord Reith must once have had in this Chamber. But he brings considerable experience to our deliberations.

The noble Baroness does not need to apologise for bringing this Prayer before the House. As she said, it gives us an opportunity to air a number of points in relation to the Government's decision on the licence fee. The way that she put forward her views was a welcome change to what was once the strident anti-BBC rhetoric which used to come from the Conservative Benches. The BBC needs friends and, as she put it, it needs candid friends.

The licence fee has always been politically sensitive. I was first brought into this game when the noble Lord, Lord Callaghan, asked me, as his political adviser in Number 10, to keep an eye on what the Home Office was up to in relation to the licence fee in the late 1970s. The idea that the licence fee is a great imposition has been slightly changed with the coming of subscription television. We now see what a bargain the licence fee is compared with that asked by cable or satellite subscription services.

I am glad also that the noble Baroness did not trot out the canard that the licence fee is a poll tax. I believe that by each person paying a licence fee we spread the cost of our public service broadcasting in a way that makes quality public service broadcasting available to all. That is something that should be welcomed by all. For that reason I welcome the new settlement. It provides new resources and gives the BBC a vote of confidence which enables it to plan ahead at least until the review of the charter. The way that the Government and the BBC have come to this agreement is welcome. It re-establishes BBC1 as the BBC's flagship channel. It writes in a commitment to education, to exploring the world of interactivity and to enhancing services to the devolved nations and regions of the UK. At the same time it places pretty heavy burdens on the BBC to find further cost and efficiency savings.

The Secretary of State has declared his intention to implement independent reviews of BBC news services, starting with News 24. I have no objection to such a review as long as it is in the context that if the BBC is to remain at the forefront of news coverage it should be as part of a 24-hour news service. There has been much sniping at News 24, but Sky still has minute audiences for its news service. I believe that Mr Murdoch well realises that an effective 24-hour news service is not only a benefit in itself but a useful political calling card. CNN spent many years establishing itself as a 24-hour service. ITN is now moving in that direction. I am quite willing--as I am sure is the BBC--to see News 24 examined. I am quite sure that News 24 is capable of improvement. However, we should not allow News 24 to be sabotaged by critics who have vested commercial interests in their criticism.

We have come to the end of a 12-year battle over the future of the BBC. I hope that the remarks of the noble Baroness signalled that. Almost throughout the 1990s questions were raised as to whether we wanted the BBC; whether it should be split up; or whether it should be privatised. I believe that the national consensus is that we want to retain the BBC. If we are of a mind to retain the BBC, we must give it the resources to do the job that we want it to do. I very much welcomed the statement of the Secretary of State that,

"the BBC should provide a strong and distinctive schedule of benchmark quality programmes on all its services and should drive the take-up of new digital and on-line services. A strong BBC is crucial in ensuring that everyone can have access to information, news, education and current affairs, using efficient modern methods".

I believe that that is a statement of intent, a mission statement, which we can all support.

The BBC has made a unique contribution to the cultural life of this country in the 20th century. I believe that in the new century it is essential to the health of our democracy. Its cultural role is essential as our values are constantly challenged by the dominance of American media. As was pointed out in the agreement with the BBC, its political role has increased in importance with regional diversity. We need the BBC to bring us together as a nation. I am convinced that, like democracy, the licence fee is a bad system of funding until you compare it with all the alternatives. As one of the alternatives which was rejected, I thought that the Davies committee's solution of a digital levy was a bad solution. I know that the noble Lord, Lord Birt, agrees with me because at one time he was for the digital levy and, at another time, against it. That was a good each-way bet which meant that he was on the winning side in the end!

The problem with the digital levy is that it is a catch-22 situation. We need a successful switch to digital to drive forward the digital revolution, yet the digital levy would have made people less keen to switch. We must therefore promote free-to-air digital. I know that the Secretary of State has promised a campaign on free-to-air digital. One wonders when we shall see that. However, there is a danger. We see at the moment what I would call predatory subsidy--the offering of so-called "free" set-top boxes which lures viewers into what is termed "walled gardens". Once they enter the subscription market, they are trapped. We want interoperability and a free-to-air offer, not just because that gives choice to the viewer but also--here I declare my BREMA interest--because it gives a good base for a manufacturing industry in which Britain is at the moment in the lead.

I hope that the Government will campaign hard on the free-to-air offer. They have shown commendable courage in ignoring the vandals who wish to dismember the BBC and they have supported higher standards. On that basis the BBC should be able to go forward with confidence.

A demonstration of that confidence is the BBC talent initiative. The BBC should be looking for new performing, creative and technical talent. Quite frankly, I do not think that it should worry about so-called "star performers" being poached. They rarely twinkle quite so brightly once they are away from the BBC. The BBC has constantly shown its capacity to find new talent and to bring on new stars.

There are two mantras worth preserving: first, the one that the noble Lord, Lord Hurd, used in his White Paper over a decade ago; namely, that we must have quality, diversity and choice for British broadcasting. The best way to achieve that is through a well funded BBC that can operate in all centres of technology and not be restricted by either lack of funding or by attempts by commercial interests to undermine its initiatives. The BBC still has that old Reithian objective to entertain, educate and inform. I believe that that is as important as ever to the health of the nation.

Photo of Baroness Young of Old Scone Baroness Young of Old Scone Labour 8:00 pm, 29th March 2000

My Lords, the noble Baroness, Lady Anelay, was right to point out that there is a veritable phalanx of "BBC types" in the Chamber tonight. I particularly welcome the noble Lord, Lord Birt. I declare an interest as a vice chairman of the BBC and also as the daughter of a blind mother over 75 years-old.

There are three questions on which we might legitimately dwell tonight. The first is the question that is perhaps central to the licence fee increase; namely, is an increase in the licence fee justified? I am always slightly bemused when that question arises because if you go anywhere outside these islands and ask people whether the BBC is a good thing, you hear paeans of praise heaped upon it. People are in no doubt whatsoever as to the value of the BBC. People abroad often think that we are rather mad to question that. It is now the second most recognised global brand after Coca-Cola. The BBC is promoting Britain right across the globe.

Back here in the UK the BBC fulfils a clear and distinctive public service role. Any doubt expressed about that needs to be closely examined. The smokescreen of saying that there is uncertainty over the BBC's public service role in the digital age is indeed a smokescreen. I believe that the BBC will continue to be a benchmark for quality and for influencing the whole of the broadcast ecology. It will continue to provide universality of access irrespective of ability to pay when more and more broadcasting is on a pay-per-view or subscription basis.

At the end of the day, it cannot be denied that the BBC offers a bargain. Viewers receive two analogue television channels, four digital television channels, five national radio stations, a range of local radio stations and the biggest on-line content site in Europe, with over 150 million page impressions every month. That represents a bargain now; and it will represent an even bigger bargain in the future. Alongside an increase in the licence fee, there is an agreement with government to produce over £1 billion in internal savings and to redirect the maximum amount of resources to programme-making, and there is a clear package of new developments spanning creativity, citizenship, learning and services for the devolved nations as part of the UK. People receive all that for less than the price of a packet of crisps a day--so it is a veritable bargain. I believe that the increase in the licence fee can be justified to the man in the street.

The second issue that is worth touching on briefly is the vexed question of concessions. Who should receive concessions is a decision for government. We have seen one major benefit this year for which we must be thankful; namely, the free licence for those over 75. That reduces to 130,000 those who are subject to the other, much vexed, concessionary licence schemes, in relation to which there are always anomalies and problems of boundaries.

A third issue concerned me which has not been touched on in the debate. It is the question of whether there is a risk to the independence of the BBC if 13 per cent of its licence fee income comes direct from a government department. I hope that the concessionary schemes have been designed specifically to ensure that the BBC's independence will not be eroded. The strong principle will remain that each household must still have a licence; the only difference will lie in how the cost is met--by the DSS or the individual. DSS payments will not come from a capped budget subject to spending review control. The only question is whether the household will pay directly for the licence or whether the payment will be made automatically by the DSS. I hope that that goes some way to reassuring the noble Baroness, Lady Anelay, who expressed concerns about whether the BBC will be faced with a shortfall if the sum currently predicted were not to be met. It will indeed be met. Over the past few months I have felt more reassured that the new system of concessions will not erode the independence of the BBC. The BBC guards its independence ruggedly, and intends to remain independent while making sure that it receives and collects a proper payment for the services that it provides, to a high standard, to each household.

Photo of Baroness Hogg Baroness Hogg Conservative

My Lords, I, too, begin by declaring an interest. I am the "other half" of that "battery" of governors referred to by my noble friend Lady Anelay. I am not sure that, between us, the noble Baroness, Lady Young of Old Scone, and I could man a battery very satisfactorily. However, I share my noble friend's disappointment that we form so high a proportion of those who are present for this debate. My noble friend has performed a great service in providing an occasion for the discussion of this important set of issues. I should like to assure her that the guns in my battery are certainly not trained towards her. A candid friend--and I stress the word "candid"--is exactly what the BBC needs.

I commend the Government on providing the BBC with security of funding in the licence fee settlement for a sufficient period of time to enable it to evolve something that presents extreme difficulty; namely, a strategy for public service broadcasting of the quality that Britain has come to expect from the BBC in a world that is changing extremely fast technologically. I should like to take this opportunity to congratulate the noble Lord, Lord Birt, on all he did to help the BBC think its way through to that new world at the same time as focusing on the programming that it was presenting in the old one.

I also commend my noble friend for raising a number of issues relating to concessionary licence fees. It is important that the Government are given this opportunity to respond to the questions that she has raised. If the Minister will forgive me saying so--and if my friends in the Treasury will forgive me--it would be a not unfamiliar Treasury trick to allow some of the cost to trickle back on to the BBC. That would, of course, be to the disbenefit of all licence fee payers. I am sure the Minister will provide satisfactory answers to the questions raised by my noble friend. I conclude by again congratulating her on raising them.

Photo of Lord Gordon of Strathblane Lord Gordon of Strathblane Labour

My Lords, I intervene briefly simply to spare the embarrassment of the Board of Governors of the BBC, who feel that they may be monopolising the debate! I was a member of the committee that examined BBC funding. The committee was unanimous in its feeling that the BBC should be given more funding. Any body which depends on an RPI-based settlement needs that settlement re-examined between five and 10 years in to the period of funding because it inevitably gets out of kilter with what is happening in the real world.

I disagreed with my colleagues on the committee who advocated a digital licence fee. I suggested that the current agreement, which was meant to be RPI-minus for the next two years, should be broken and restored to an RPI-plus basis. My principal reason was to guarantee the BBC extra funding. The Government have gone marginally further than I would have done and the settlement is more generous than I suggested. I do not quarrel with that--I would rather err on the side of generosity to the BBC than the other way.

My main argument against a digital licence fee--and I am glad the Government have rejected the idea--was that the prospect had united every other broadcaster against the BBC in a way that I have not seen in 40 years in broadcasting. That would have posed grave dangers for the survival of the licence fee in 2006. I hope that it will survive. It is a distinctive form of funding and one which should be retained.

A further point raised by the noble Baroness, Lady Young, was whether there was a danger to the BBC's independence from the direct government funding of licences for pensioners over the age of 75. The situation would have been even worse had the Government done nothing and left the BBC as a kind of surrogate Department of Social Security and the licence fee as an form of extra taxation that did not count as taxation. It is much better that the Department of Social Security should fund benefits where it believes that they should be funded. It should not be part of the BBC's job to do that.

Thirdly, it is important to distinguish public service broadcasting from public funding--a point that has not been touched on so far. The triumph of broadcasting in this country under successive governments is that public service broadcasting has extended across the ITV network. One need only look to the fact that the current chairman of the BBC, the most recently retired director-general, the noble Lord, Lord Birt, and his successor, Mr Greg Dyke, have all emanated from London Weekend Television. That suggests that, unless they underwent a road to Damascus conversion during the taxi ride from one building to another, public service principles imbue traditional commercial broadcasting in this country as well. It is vitally important that we preserve that. Frankly, the 1990 Act did immense damage to ITV, some of which is now becoming apparent in a reduction in the quality of quite a lot of the programmes.

However, it is important that there should not be an automatic assumption that, if there is to be public service broadcasting, it can be provided only by the BBC. If the Secretary of State decides, for example, that he wants a new service to be a public service, it may well be that it should then be open to the ITNs of this world to go for that as well as the BBC. That will produce a healthier broadcasting ecology. If we confine public service broadcasting to the BBC and let the rest run riot, we shall eventually end up with the equivalent of the public service channels in the United States, which attract a tiny minority audience. We need public service broadcasting across the spectrum so far as is possible.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, I have never played this game before and do not know the rules about how the Government Front Bench should respond to a Prayer to annul an order. Apart from expressing regret that the noble Lord, Lord Birt, did not seize the opportunity to make an impromptu maiden speech--he would have been within his rights to do so--I shall precis the long speech that I have before me in praise of the BBC and then answer the questions posed by the noble Baroness, Lady Anelay. I agree with virtually everything that has been said by other noble Lords who have taken part in the debate. I make one exception. I believe that the comments of the noble Lord, Lord McNally, about interoperability and other matters fall outside the scope of the order.

In so far as all noble Lords have spoken about the role of the BBC, the importance of security of funding and the licence fee, and have said how much they welcome the decision that has been taken, I do not believe that there is much point in repeating in detail the speech which was made last night in another place. The first paragraph of my speech states that the Government are committed to the continued role of the BBC as the United Kingdom's principal--not the only--public service broadcaster. I emphasise those words for the benefit of my noble friend Lord Gordon. My noble friend is quite right that public service broadcasting principles should apply to all broadcasting, not just to the BBC. The paragraph goes on to say that the BBC's central role is the provision of free access to its public service channels with a high standard of information, news, education and current affairs programmes.

The next paragraph of my speech states that of all the options for funding the corporation the current television licence fee has distinct advantages; in other words, it is probably very bad but it is better than all the alternatives, as the noble Lord, Lord McNally said. I agree with the noble Baroness, Lady Hogg: we thought that it was important to provide sustainable funding up to the end of the Royal Charter at the end of 2006 in the expectation that, if that policy was successful, it would lead to continued stability of funding thereafter. We appointed Gavyn Davies to chair an independent review panel which came to the conclusion that the licence fee, with modifications, was the correct way forward. We have taken account of the report of the panel and also commissioned a review of the BBC's financial projections by independent consultants to assist our decisions on finance and an analysis by the Department for Culture, Media and Sport.

We have not adopted all the proposals of the review panel. For the reasons that have been well expressed, we have rejected the view that a digital licence supplement is an appropriate alternative or addition, but we have agreed with the panel that additional funding should come in the first instance from self-help. Therefore, we have challenged the BBC to help itself by efficiency savings, partnerships, joint ventures, reductions in bureaucracy and other means. We have set a target of £490 million by 2006/07 over and above the £600 million which the BBC has itself estimated. We recognise that that is a more demanding target than that set by the Davies panel. On that basis, we have decided to provide the required additional licence fee funding via annual increases of 1.5 per cent over RPI from April this year through to 2006.

We have also accepted the general thrust of the review panel's recommendations about transparency, fair trading and accountability. We shall institute procedures for the introduction of new services which will include an opportunity for public consultation before the Secretary of State reaches decisions on proposed new services. There will also be a programme of reviews of all the current BBC digital services--"News 24", "Choice", "Knowledge" and "Parliament"--to ensure that they achieve their stated purpose. We do not expect the licence fee to fund services such as dedicated film and sport channels where there is no distinct and separate public service remit.

We shall commission independent scrutinies of the BBC's fair trading policies and financial reporting and publish the results. As to concessions, we have already gone beyond the Davies recommendations with the announcement of free licences for those over 75. The noble Baroness, Lady Anelay, asked me why the Government had changed their view about the means by which that should be achieved. Free television licences can be introduced under the provisions of the Wireless Telegraphy Act 1949, as amended. However, an amendment to the BBC's agreement with the Secretary of State will be required to enable the Department of Social Security to make payments to the BBC to cover the cost of free television licences. That will be done by affirmative resolution.

The Government will also bring forward primary legislation to enable the Department of Social Security to provide information to the BBC. That will assist in the efficient administration of the scheme and, in most cases, enable the application procedures to be greatly simplified. Without going into the history of how these decisions have been arrived at, I can say only that they have been taken on the advice of the highest possible authorities. The cost to the taxpayer of free licences will be approximately £368 million. The administration cost will be £24.3 million, and the ongoing costs are expected to be £10 million in the first year and £8 million per annum thereafter. All of those costs will be borne by public funds, not the BBC.

The noble Baroness, Lady Anelay, asked about those over 75 who applied for licences. That question has already been dealt with by my noble friend Lady Young. The answer is that all households will need a licence. I am glad that my noble friend Lady Young is reassured that that will help to preserve the independence of the BBC's funding. The noble Baroness, Lady Anelay, asked me about the removal of the right to a free television licence where a man in sheltered accommodation aged between 60 and 64 worked more than 15 hours a week. I do not know the answer to that question. The noble Baroness has apparently been given that question by the BBC's licensing unit. It would have been helpful if it had given the department its opinion before the order was framed but it did not do so. That matter must be investigated. I shall provide an answer to the noble Baroness and copy it to all those who have taken part in the debate.

I do not believe that it is for me to defend the order any more than I have. The basis on which the Prayer to annul is made is very limited. I am grateful to all noble Lords who have taken part in this short debate.

Photo of Baroness Anelay of St Johns Baroness Anelay of St Johns Conservative

My Lords, I am grateful to the Minister for his response. As he points out, the basis of the Prayer is narrow. I assure the noble Lord, Lord McNally, that I do not see the roles of the BBC coming to an end; they are just beginning. When the BBC has a strong and growing online system, is becoming an Internet service provider and goes into realms that neither it nor any of the users of these services could have expected of any broadcaster, we shall continue to ask questions as to what the role of a public service broadcaster, or any broadcaster, should be. I believe that those matters fall within the remit of a debate, not a Prayer to annul. Therefore, I have sought to restrict my remarks very closely. I am grateful to the Minister for addressing himself to the questions that I posed. I beg leave to withdraw the Motion.

Motion, by leave, withdrawn.