He also raises concerns about the digital switchover's effect on TV coverage in the Welsh border areas.3.32 pm
Mr. Philip Dunne (Ludlow) (Con): It is a pleasure to follow the hon. Member for Crawley (Laura Moffatt), and I congratulate her on bringing the passing of "Top of the Pops" into this debate. She is right say that that illustrates that programming has to change and evolve regularly. It is extremely rare to find a BBC programme that has endured as long as "Top of the Pops", and personally, I see its passing as a sad reflection of my advancing middle age, as much as anything else.
In the time available to me, I should like to touch on a few points, the first of which is the size of the licence fee. The Minister said that the Government are going to take time to get it right and that the proposed increase will not be excessive. I regret to say that he did not tell us the criteria by which that increase will be judged, or the methodology that the Secretary of State intends to use in arriving at the eventual figure. The Minister did claim that the licence fee has declined as a percentage of household income in recent years-I think that that was the comparison he made; I fail to recall exactly what period he was referring to-but that is not a very spectacular claim at a time when the cost of media hardware and software has been falling around the world. It is because costs have been coming down, thanks to technological advances, that there is such a proliferation of alternative outlets for media use, so there is no great argument over whether the licence fee, as a proportion of household income, should be coming down. By definition, it should be, so such a decline is no justification for the above-inflation increases that the BBC is proposing.
Why should the BBC get the generous settlement that it seeks for the next seven years? It is looking for twice inflation, guaranteed for seven years. In the context of any other economic endeavour, that would be extraordinary. Across the commercial sector, any sector would be delighted to have a guaranteed source of income of twice inflation during an era of rapid price deflation in most of the markets in which it operates.
Let us compare another sector, the water industry, which is subject to regulatory oversight by a regulator, Ofwat. Water bills are affected by the K factor. In the first years after the water industry was privatised, that meant inflation minus a K factor. Subsequently that has changed to a positive K factor, but not to the level sought by the BBC. All that took place at a time when the water industry had an enormous capital expenditure obligation to fulfil each year to renew its decaying pipe infrastructure, which had been in significant decline. Can the Under-Secretary of State for Culture, Media and Sport, the hon. Member for Tottenham (Mr. Lammy) tell us what comparators the Government will use when they come to set the licence fee?
In an intervention on the Under-Secretary of State for Culture, Media and Sport, the hon. Member for St. Helens, South (Mr. Woodward), I raised the issue of transparency. I very much welcome the pledge given by my hon. Friend the Member for East Devon (Mr. Swire) to bring the BBC within the remit of the National Audit Office under the next Conservative Government and to allow the Public Accounts Committee to scrutinise all spending of the licence fee, and not just by permission. I was disappointed by the Minister's reaction. He was signally unable to give a single example to support his contention that that would mean some undermining of editorial integrity. I will take up his generous offer and write to him, to give him an opportunity to explain what he has in mind.
There is no doubt that as technology constantly evolves and the outlets for BBC output expand, there is a need for regulatory oversight of this increasingly substantial amount of effective tax, as we have heard today. That in itself justifies the full scrutiny powers of the National Audit Office.
I shall touch briefly on two aspects of what the licence fee should cover. The Minister spoke about digital switch-over. It is appropriate for the BBC to have responsibility to secure coverage for those who are paying for the service. I raise the matter with an eye on my constituency and my own household. At present, analogue access is poor on both sides of the Welsh border, including in my constituency in Shropshire, where many households, including my own, do not receive a clear signal through an aerial. [Interruption.] From a sedentary position, my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) includes Shrewsbury in that category. I am sure he is right. In my home it is not possible to receive BBC Radio Shropshire either, because of the topography.
At present, I understand, there are no plans for the digital signal to expand its coverage when the analogue signal is switched off. It is entirely reasonable that part of the increase in licence fee should be used to bring TV coverage to people who are paying their licence fees, so that we achieve 100 per cent. coverage. It is extraordinary in the 21st century that we are proposing a new system of technology that does not allow for universal coverage.
Mr. Angus MacNeil (Na h-Eileanan an Iar) (SNP) rose-
Mr. Dunne: If the hon. Gentleman will excuse me, I have very little time.
On the second service aspect, Labour Members referred to the pilot local TV service that has been introduced in the west midlands, covering six counties, including Shropshire. For hon. Members who are not familiar with it, the service provides a 10-minute per hour magazine-style feature of four to six packages. It is a high-quality service, as one would expect from the BBC. It is welcome to those of us who occasionally feature on it and, I assume, to those who are able to view it.
The service is of considerable concern to the commercial media outlets. Representations have been made by local newspapers in particular, whose revenues are under pressure from the decline in advertising revenues, about which we have heard. It is important that a market impact assessment is undertaken on the impact of the local TV service before we find ourselves setting up a tax-funded monopoly that crowds out other local outlets.
3.39 pm
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PHILIP'S OTHER CONTRIBUTIONS TO THE DEBATE
Mr. Philip Dunne (Ludlow) (Con): The Minister just stated that he believed that the National Audit Office would interfere with the editorial integrity of the BBC. That was the most extraordinary statement. Will give some examples? What does he fantasise that the National Audit Office might say to the BBC that would affect its independence?
Mr. Woodward: I am sorry to disappoint the hon. Gentleman, but I do not fantasise about the NAO in any shape or form, and I am not going to indulge him by doing so now. However, if he wants to write to me about this, I will be very happy to write back.
