Outlook: Creeping Americanisation would be an improvement on ITV

Squandered windfall; Railtrack bonuses

The joint Committee on the Draft Communications Bill, chaired by the film legend Lord Puttnam no less, wants to overturn Government plans to allow American media giants to takeover British TV companies. It also wants to strike out the dispensation that would have allowed the business interests of Rupert Murdoch to acquire Channel 5. Both aspects of the bill were introduced at the last moment at the express instructions of Number 10 Downing Street. Everyone suspected at the time that the concession was the result of a sweetheart deal between Tony Blair and Mr Murdoch – Channel Five in return for Government support. They may have been right. The Prime Minister needed to introduce some kind of a sop to Mr Murdoch into a bill that was generally quite hostile to his interests, and this may have been it.

None the less, the Government is absolutely right to want to open up the British media industry to foreign takeovers and influence. ITV has made a terrible hash of its own affairs. It completely failed with ITV Digital and it seems quite incapable of providing a decent alternative to the BBC in free to air and BSkyB in pay TV. In any normal industry, the management of both its leading companies, Carlton and Granada, would by now be history and as likely as not the companies themselves would have been taken over.

The only reason this hasn't happened is that they are protected. Lord Puttnam and his committee seem to live in a bygone age of closed shops, cream teas and cultural irrelevance in complaining about "the creeping Americanisation" of British TV. In a globalising world, the only way of having a vibrant media industry is by also having a vibrant economy and culture, and the best way of achieving these two things is to be open, not closed, to foreign money and influence. Americanisation is a danger, but the most likely result of a US takeover of a British TV company would be all the other way, providing new outlets for our production houses and unparalleled opportunities for our media talent.

The Prime Minister is right to argue that it is wrong in principle to distinguish between European companies, which are allowed to takeover British companies, and American ones. It is true that British companies don't have a corresponding right, as things stand, to go shopping in the US, but nor in practice can they do so in Europe, where media ownership is tightly held and guarded. It is most important that Britain takes the lead on free trade principles of this type. There are a lot of things wrong with the Communications Bill, but deregulation of foreign ownership is not one of them.

Squandered windfall

It's what every city councillor dreams of. Out of the blue, along comes a huge windfall to swell the city coffers, so that whatever those rotters in central government say or do, the council can spend as much as it likes. That long-desired sports stadium, double glazing and central heating for council tenants, better schools, better roads, hanging baskets on every street corner – you name it, the local authority can afford it.

Well, it actually happened to Kingston upon Hull City Council, thanks to the fact that it owned the local telecommunications company, Kingston Communications. At the height of the telecoms boom, the council had the where with all to float the company on the stock market. Unfortunately, that is about the only decent decision councillors ever made. Hull City Council has become like one of those lottery winners, who squander their jackpot in double quick time and then complain that the experience has ruined their life.

Yesterday Hull Council suffered the ignominy of being referred for Government intervention – which essentially means it is too incompetent to carry on running its own affairs – after a truly damning Audit Commission report in which it was accused of setting unrealistic budgets, failing to grip the problem of a growing surplus of council housing, ineffective decision making, bullying, infighting and much else besides.

It's a sad end to what should have been a golden period of local government. Just two years ago the council received £263m from the sale of a 55 per cent stake in Kingston Communications. Rather than using the money to reduce council taxes, councillors instead set about spending it. Some £32m went on repairing council buildings, another £32m was spent on a new "super stadium", aptly known as The Deep. The biggest sum of all, £96m, was spent on central heating and double glazing for the city's 38,000 council houses.

All these things might be deemed a reasonable use of money. Hull is listed as the 13th most deprived district in Britain with 40 per cent of households drawing benefit of one form or another. Educational attainment is low and the city's population has been in decline for years. The area obviously needed a bit of luck. But to spend the money on substandard council housing improvements when everyone is shipping out as fast as their legs can carry them, leaving the council with a huge surplus of unfilled housing?

Hull has become an object lesson on the dangers of public spending. The Government take note, as it embarks on the biggest increases in public spending since the war. Hull may be an extreme case, but it has gone a long way to proving the point that the public sector is quite incapable of spending money wisely. Hull has overpaid for substandard work of doubtful use or economic benefit. At least in Hull's case it is only a windfall that has gone down the drain, rather than the hard earned cash of council tax payers. None the less, Hull City Council has squandered its inheritance. As the Audit Commission observes, local people deserve better.

Railtrack bonuses

Imagine a rail company where the executive directors are all on big fat bonuses. Then imagine a business which has access to a seemingly bottomless pit of taxpayers' money. Finally, conjure up, if you can, a company which is technically in the private sector but dependent for all practical purposes on the continued support of government.

If you are thinking of Railtrack then think again. The beast described above is actually its successor Network Rail, the not-for-profit company which Alistair Darling says will run the trains so much better. There are many similarities between the two companies. Ian McAllister, the ex-Ford man brought in to take charge of Mr Darling's new train set, will rely, like his Railtrack predecessor, on public funds to run the business. Except that in Mr McAllister's case he will have a cushion worth £21bn – the sort of money Railtrack could only ever have dreamed about.

The Network Rail executives, led by John Armitt, have also been recruited on Railtrack-style salaries and will be allowed to earn big bonuses to incentivise them in the absence of carrots like share options. In fact the only real difference between the two is that unlike Railtrack, which was at least answerable to shareholders, the line of accountability above Network Rail disappears into a blancmange-like supervisory body made up of more than 100 members drawn from all over the place.

To earn their bonuses, Railtrack's directors had to keep the shareholders sweet. To earn his bonus (50 per cent on a £400,000 base salary), Mr Armitt will have to make the trains run safely and on time. There's another tall order the two organisations share in common.

jeremy.warner@independent.co.uk