My Lords, the Government are committed to a strong and vibrant community radio sector. Since the sector’s establishment in 2004, it has developed into an important and integral part of the modern radio landscape—valued by the communities that it serves and reflecting a diverse mix of cultures and interests.
Stations range from those targeted at a particular community, those run for our forces and those targeted at students and hospitals to stations serving small and rural communities. Community radio stations are required, by legislation, to be run by not-for-profit organisations and to provide original, distinctive and, crucially, local output. Two hundred and twenty-three stations are currently on air. This is made possible by the huge amount of effort and support that stations receive from their army of volunteers—on average, the equivalent of 214 volunteering hours per week, every week. Community radio also attracts young volunteers, who gain really valuable skills.
Although demand for community radio licences up and down the country has remained high, the position for existing licences has not been easy. We have received representations that community stations have had to turn down sponsorship—not advertising—from local businesses. For the 19 stations not allowed to take any income from sponsorship or advertising, such as Swindon 105.5, the issues are particularly acute.
The other concern expressed was the position of stations launched in 2005, whose licences would, under the current law, start to expire from October this year. Quite rightly, community radio stations wanted to know whether they would be able to renew their licences or whether they would need to go through an open competition for a new licence.
In the Connectivity, Content and Consumers strategy paper, published in July 2013, the Government said that they would consult on possible changes to the restriction on commercial funding of community stations. We also said that we would look at whether there was a case to allow community stations that continued to fulfil their remit to have licences renewed for a third five-year period. We carried out this consultation between February and April last year and received more than 100 responses. We published our response to the consultation in January this year. It is fair to say that there was strong support from community radio stations for the changes, although some were concerned that the changes might affect the characteristics of community stations. RadioCentre and commercial radio stations were, overall, opposed to the changes. In essence, they
wanted to maintain the precautionary approach taken when the Community Radio Order was adopted in 2004.
Given the lack of common ground, we took further soundings from both RadioCentre and the Community Media Association before publishing the conclusions to the consultation. I acknowledge the frustrations of the community radio sector about the delay, but it was important that we should make sure that, in setting the new arrangements, we got the absolutely right balance between the legitimate needs of both sides.
We need to ensure that there remain protections for the smallest independently run commercial stations, and we have reflected that in our conclusions. We therefore believe that the so-called “absolute rule”, which enables Ofcom to place restrictions on some community stations, preventing them receiving any income from sponsorship or advertising, should be modified but not removed entirely. Instead, the order introduces a new arrangement allowing all community radio stations, including the 19 stations currently subject to the “absolute rule”, as a minimum to raise up to £15,000 per year from those commercial sources. This figure represents a quarter of the average revenues for community stations. Stations not subject to restrictions will be able to raise 50% of income above that level from commercial sources. This increases the headroom for all community stations, but helps most those community stations with smaller average revenues.
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The final aspect is that those stations that were subject to restrictions due to being in the same area as a small commercial station where that commercial station is now part of a larger group will also be able to raise up to 50% of their annual income from those sources. The effect is that, where restrictions are no longer needed because of consolidation with commercial radio groups that are taking advantage of the ability to share premises and network content, those community stations should be treated the same as community stations with no restrictions.
Finally, the order recognises that many community stations need a 15-year rather than a 10-year window to establish themselves fully, given a station’s set-up cost and the effort involved in creating and establishing services. In recognising this problem, the Government have decided to address this concern by giving Ofcom the power to renew licences. Licences are currently awarded for up to five years with one further period of up to five years, making a total of 10 years. This order permits Ofcom to renew licences for one further period of up to five years, allowing community radio stations to operate for up to 15 years, provided licensees meet their licence conditions. The order also permits holders of local TV licences also to hold a community radio licence.
The purpose of the order is to give community radio stations more scope to raise funding from commercial sources while protecting the characteristics of community radio. The changes are quite modest. There are no changes to the basic requirement that community stations must be run by not-for-profit organisations for social gain and we have retained
protections for smaller independent commercial radio stations. We believe that there will be minimal impacts on small commercial stations, but we will keep the position under review. The changes also allow the longest established community stations, which are valued by their communities, to apply for a further five-year renewal of their licences—something strongly welcomed by community radio stations. I commend the order to your Lordships.