Public Service Broadcasting (Communications Committee Report)

My Lords, as a member of your Lordships’ Select Committee on Communications, I pay tribute to our chairman, the noble Lord, Lord Fowler, for initiating our brief but very timely inquiry, for his skill in editing our deliberations in such a cogent form and for that excellent review of the issues that we have heard today. I declare my interests as an adviser to Macquarie Capital, whose funds invest in and manage Arqiva and Red Bee, which are companies supplying transmission and other services to broadcasters. We await the publication of the Digital Britain White Paper this month with great interest, but we do so in the knowledge that some of its proposals are unlikely to be implemented until after the next general election. Therefore, I trust that those drafting party manifesto policies will note our concerns and the options explored in our committee report and in this debate today. The good news today for public service broadcasting is that the policies of the past decade have protected and expanded the BBC. For that, the Government should be applauded. Licence fee income is now about £3.5 billion a year and BBC Worldwide turns over about £1 billion more. The licence fee money, as the noble Lord, Lord Fowler, said, is also being top-sliced, as they say, to help to fund the transition of households from analogue to digital broadcasting. Looking forward for cash to sustain other parts of public service broadcasting after digital switchover is completed in 2012, the option to keep top-slicing the huge licence fee total will be almost irresistible for any cash-strapped Government, I predict. Today’s switchover subsidy may well become tomorrow’s contestable funding, in Ofcom’s phrase—money that could be bid for to fund good works such as regional news or children’s programming. Our report calls for the introduction of contestable funding to support public service broadcasting outside the BBC. Our report also suggests that a partnership between Channel 4 and BBC Worldwide should be pursued. A joint venture might generate profits of up to £200 million a year—a win-win deal, one hopes—but an important consideration in structuring such a partnership must be to ensure that BBC Worldwide is not distracted by internal politics or fettered in its international ambition. In its highly competitive global marketplace, up against media giants many times its size, BBC Worldwide is Britain’s last best hope of producing a national champion. For politicians, that should be a priority, and any partnership with Channel 4 should be fashioned to strengthen BBC Worldwide as our global player. It is worth noting that after 26 years on air Channel 4’s audience share is still below 10 per cent. In terms of the quantity of popular quality output, particularly in drama, ITV is the most important public service broadcaster in the commercial sector as regards programme investment and employment. It is accepted that the regulatory constraints on ITV should now be relaxed so that it can continue as a viable public service broadcaster. I therefore welcome the prospect of ITV being released from any outdated undertakings that limit its ability to get a fair share of the television advertising markets. If the economy begins to pick up later this year, ITV will hope that past experience of television advertising being the first to suffer in a recession but the first to recover will still hold true. However, we accept that there will be a continuing threat of a loss of advertising to the internet and that that will continue to undermine the traditional business model of commercial broadcasters in the future. That said, one area where Channel 3 must continue to compete with the BBC, and ideally match its peak-time audiences, is in news and current affairs, both nationally and regionally. Despite the quality of UK news on Channel 4 and Sky, both have relatively small audiences. The BBC, like all big, long-lived institutions, has developed its own distinctive culture, which inevitably influences its news agenda and colours its reporting. With a medium still as influential as television, it is important that peak-time audiences can still watch their popular alternative news and current affairs on Channel 3. This is particularly important in the three nations of the United Kingdom peripheral to England, which, with 83 per cent of UK viewers, naturally dominates the London-based news services. Since Scotland got its Parliament and Wales and Northern Ireland their Assemblies, the BBC has broadcast news services adapted to the new needs of the devolved nations. Therefore, it is to be hoped that the surviving independent broadcasters on Channel 3—namely, STV in Glasgow and UTV in Belfast—are encouraged to pursue their ambitions to supply distinctive national services in greater measure than is required of any English region. In this regard, we should keep in mind that in English regions it does not matter quite as much if you have restricted local coverage because almost all you see on the ubiquitous UK news broadcasts will reflect other aspects of your nation, England. The Government and Ofcom are understandably sympathetic, as I am, to ITV plc’s plea that it be allowed to shed its remaining public service obligations. However, ITV plc also wants to renegotiate its contract to supply programmes on the Channel 3 network to STV and UTV. Clearly, this would not be a negotiation of equals, and a deal imposed by ITV could undermine the viability of both smaller companies. A condition of the merger that created ITV plc was the network arrangement imposed by Ofcom regarding the supply of network programmes to the two smaller companies. Can the Minister assure us that Ofcom is playing a constructive role in brokering an agreement on this issue? Can we also be assured that the release of ITV plc from other public service obligations will be conditional on a settlement that ensures that STV and UTV can still aspire to make programming appropriate to the needs of nations with their own distinctive cultures and politics? Our Select Committee concluded that the affordability and practicability of a new Scottish network and digital platform deserved further exploration. The proposal for a Scottish network broadcasting specifically Scottish programming came from the Scottish Broadcasting Commission, set up by the Scottish Government. Its report, Platform for Success, has been endorsed by all parties in the Scottish Parliament. The obvious question is how to pay for a new network costed at between £50 million and £75 million a year. Could that be a candidate for contestable funding? Will my noble friend explore whether the Scottish Government are prepared to co-fund a new Scottish network, as the previous Scottish Executive did in alliance with BBC Scotland to launch the Gaelic language channel, BBC Alba? In the twilight of the old duopoly in public service broadcasting, it might be timely to reflect on the fact that Scotland, a nation of 5 million people, is almost unique among comparable countries in not having a television network that it can call its own. Let me end with positive news for the UK’s other nations. Thankfully the BBC, with its licence fee income of £3.5 billion a year, has never been better off. For the three smaller nations that make up 17 per cent of all those BBC licence payers, the good news is that, at long last, their pitiful share of programme production for the BBC’s UK channels will rise to 17 per cent. For Scotland, that means 8.6 per cent of a network production budget of almost £900 million—an increase from just over £30 million a year at present to more than £70 million a year. That is a huge boost for which I give all credit to the director-general of the BBC and to the BBC Trust. I have one concern: the 8.6 per cent target may not be reached until 2016. Surely, after half a century of marginalisation, that is too long a transition, especially in these rapidly changing times. I hope that Ofcom can put further pressure on Channel 4 to push up its percentage of programmes made outside England. I trust that our report Public Service Broadcasting: Short-term Crisis, Long-term Future, which has been so ably outlined by our chairman, will help my noble friend and the Government to preserve what is best in our broadcasting industry so that we can continue to make what I believe is still the best television in the world.