Public Service Broadcasting (Communications Committee Report)

My Lords, I join with others in congratulating the noble Lord, Lord Fowler, on initiating today’s wide-ranging and fascinating debate. This short report and today’s debate have rightly created a great amount of interest, not least from broadcasting organisations which believe that the noble Lord, Lord Carter, may still be in receiving mode prior to the imminent publication of the Digital Britain review. I also congratulate the noble Lord, Lord Fowler, and his committee on eliciting such a lucid holding response from the Government. This is a brief but extremely impressive report, particularly the succinct—I note that the noble Lord, Lord Lipsey, used the same adjective—introductory discussion of what is meant by "public service broadcasting". I agree that the nature of the content is increasingly crucial, as is universal access, but we should decreasingly predicate on which platform the content should be made available, particularly in the light of the spread of broadband. On that matter I strongly agree with the remarks of the noble Lord, Lord Inglewood. The crisis in commercial PSB has been more drastic and happened more quickly than anyone ever expected because of the recession. That said, little planning was done to anticipate the inevitable. As we have heard today, ITV and Channel 4 are at particular risk. I worked at London Weekend Television in the 1980s, but I am not sentimental. At that time we saw the birth of Channel 4, breakfast television and home video. We have been extremely lucky that the PSB ecology of the past 20 to 30 years has lasted as long as it has, but now we need to recognise that the model needs changing. However, it is essential—the public are insistent on this—that the plurality of PSB provision continues. If it does not, we will have the danger of the BBC being the elephant in the room, unduly dominating all forms of television activity. The committee made this point well. As it points out, however, we need better financial information from the commercial public service broadcasters. On any judgment, we are seeing PSB market failure. I am a keen Sky news watcher, but I do not accept Sky’s denial that there is no crisis in advertising-based models. I do not want ITV, with its great PSB tradition which was so well described by the noble Lord, Lord Birt, in his evidence to the committee, to walk off into the purely commercial sunset—not least because of the impact that that would have on STV and UTV—or to allow Channel 4, with its extraordinary track record of innovation, to fail. That would have a huge impact on the creative industries, particularly independent producers. In this debate, however, we should see the BBC’s position and strength as an opportunity and not a problem. We will not solve problems at ITV and Channel 4 by reducing the BBC’s ability to make good programmes. On these Benches we fundamentally disagree with the Conservative attempt in the other place before the Recess to freeze the licence fee. We are generally satisfied that the BBC is using its resources wisely, making considerable economies and efficiencies—some £2 billion over the past eight years. The answer is not to hobble the BBC but to ensure that it is part of the solution. We need to harness its increasingly innovative approach to the benefit of the wider PSB universe. I usually agree strongly with what the noble Lord, Lord Puttnam, has to say, but I thought that he was unduly apocalyptic about the BBC in his speech today. On these Benches we are opposed to top-slicing. We opposed the use of licence fee money for digital switchover. We took the view that this was a government social policy that should be paid for by the Government in the same way as they pay for reduced or free licences for the over-75s. In 2005, Sir Michael Grade said that, ""top slicing would break the clear and well understood line of accountability between the BBC and the licence-fee payer … would pose a threat to the political independence of the BBC, handing a punitive fiscal sword of Damocles to any unscrupulous government that wanted to bring the BBC to heel"." That was strong but characteristic language and these Benches agree with that view. The BBC has a long history of working in partnership with other broadcasters for the public benefit—for example, on Freeview, Freesat, DAB, Canvas, SAC Wales—and there are many partnership proposals on the table or in the pipeline. Given that the BBC is already entering into creative partnerships—for example, sharing regional news facilities with ITV—we should formalise this role by establishing a duty on the BBC in the BBC Charter to work in partnership with other broadcasters for mutual benefit and added public value. The BBC could then set up a partnership fund for this work. This could include the anticipated £250 million digital switchover surplus and the money already identified as going into partnership work. In the future it could include the equivalent of the digital switchover part of the licence fee. Any projects being funded out of the partnership fund should be justified and properly overseen. Any proposal would have to pass some basic tests before being considered, such as whether it benefits the BBC, the licence fee payer or a third party. Crucially, in order to ensure proper oversight of this new duty in the BBC Charter, we must set up an independent PSB regulator along the lines originally proposed by the noble Lord, Lord Burns, whose evidence to the committee I found fascinating. The BBC Trust would be folded back into the BBC and essentially act as a conventional board of directors responsible for strategy and governance. In contrast, the committee advocates the idea of contestable funding for PSB content. That is a very attractive idea in many ways; the problem is where the funding for it is to come from if not from the licence fee. In our view it is viable only if we can deliver additional funding that does not raid the licence fee, such as through sales of the analogue spectrum. However, I suspect that that money has already been notionally spent twice over by the Government. We have talked much about the financial crisis facing ITV. It is hardly surprising that a consistent theme of Sir Michael Grade’s term as executive chairman has been the need for ITV to throw off some of its PSB obligations to save costs. Some of its decisions are understandable but others are extremely regrettable, such as the decision to axe the "South Bank Show". Ministers claim that they understand the crisis facing ITV and indeed other commercial broadcasters, but they have failed to provide a crucial piece of help which was within their power—allowing product placement. We should trust broadcasters to know how to advertise without destroying their viewers’ experience. If people do not like the way that broadcasters use product placement they will go elsewhere for their entertainment. Product placement is already being seen by British audiences in much of the imported content that we have on our screens. The decision by the Secretary of State, Mr Burnham, earlier this year means that British producers and broadcasters will lose out on that vital income. On some estimates this could amount to an additional £150 million per annum in revenue to ITV, which would be a significant boost. Then, of course, there is the question of ITV’s regional news services. I am a Londoner, so others might be more qualified to speak about the value of regional news. However, we must find a solution and continue to provide a viable alternative to BBC regional news services. There is clearly a massive difference in perception on the right way forward, with the BBC seemingly in fundamental disagreement with Ofcom and ITV. The BBC has entered into a partnership with ITV to share some local resources, but although it provides some benefit, it is clearly not satisfactory to either party. Has the time come to have a partnership between the BBC and a new third party regional news provider, rather than to continue with ITV limping along as the provider? This should be discussed. I agree completely with what the noble Lord, Lord Macdonald, said about STV and UTV. It is vital that we ensure that they are able to carry on with their broadcasting without having ITV in such a strong position in the negotiations. Like others, I have been following the progress of negotiations on a link-up or even merger between BBC Worldwide and Channel 4. At first I was very sceptical about whether that would work. I thought that they were very different animals set up to do very different things and with different rights granted by programme creators. However, I am now a convert, largely for the reasons put forward by the committee—that there is a common culture and it could work to the advantage of both organisations. Also, the enthusiasm shown by both BBC Worldwide and Channel 4 must be taken into account, as must the belief that a profit of £200 million per annum could be generated by a joint venture. But a merger—described as "corporate engineering" in the evidence to the committee—may not be a viable option. At the minimum, I hope that a joint venture is possible. If it is to happen there needs to be leadership, and I hope that both the Minister—the noble Lord, Lord Carter—and the Digital Britain report itself will provide that. Although the noble Lord, Lord Carter, was very positive about the need to support children's television in his evidence to the committee, there are strong rumours that the Digital Britain review will do little to help. I therefore wrote to him on behalf of the Liberal Democrat shadow DCMS team urging him to consider that area anew. Less than 1 per cent of children's TV programmes broadcast in the UK are made in UK. The situation is getting worse. Ofcom confirmed that UK children's television is a key public service genre and faces funding issues. It identified the clear market failure in children's television. It found that £40 million has come out of the industry in recent years, and that investment in new UK children's TV programmes is forecast to halve over this decade, with the BBC left as the only significant broadcaster outside pre-school programmes. Both the House of Commons Culture, Media and Sport Select Committee and our own House of Lords Communications Committee, in reports last year, supported funding for children's television. The Digital Britain interim report acknowledged Ofcom's findings and stated that UK children's content would be a priority in its conclusions. Ofcom's most recent consumer research identified that parents valued children's programming as highly as nations and regions news, and in fact considered children's content a higher priority than regional news in terms of the need for an increase in current provision. A number of models have been put forward including an extension of Channel 4's remit. We on these Benches have advanced the idea of a tax credit akin to that enjoyed by the film industry. There is clear justification for special treatment to ensure the future production of UK children's television programmes, and it is vital that the Digital Britain review tackles the subject and provides solutions. We are all setting great store by the forthcoming Digital Britain report, and are extremely grateful to the committee for its well timed report. I hope that the Government will take note of the many excellent points made by the committee but firmly set their face against top-slicing in favour of a strong partnership role and obligations for the BBC.