My Lords, Clause 31 forms an essential component of our plans to support Channel 4’s long-term sustainability so that the channel remains an important and distinctive part of our broadcasting system for many years to come. It is always a pleasure to hear praise from the Benches opposite for the legacies of the Thatcher Governments.
The publisher-broadcaster restriction, as set out in Section 295 of the Communications Act, is unique to Channel 4 and prevents it from being involved in the making of programmes for the Channel 4 service, except to such an extent as Ofcom may allow. As a result, Channel 4 is significantly more dependent on advertising revenue than other commercial broadcasters—a point that we have touched on, as the noble Lord, Lord Bassam, rightly reminds us, in the debates that we have had on alternative means for securing money for the channel’s long-term sustainability. In particular, two-thirds of Channel 4’s revenue comes from linear television advertising, the market for which is both highly cyclical and in long-term structural decline because of the declining number of people watching linear television.
In response to these challenges, last year the Government announced a package of reforms that would help to support Channel 4’s long-term sustainability while retaining it in public ownership. The removal of the publisher-broadcaster restriction is a key element of that package that will open up opportunities for Channel 4 to further diversify its revenues away from advertising by making its own programmes, should it choose to do so. The Government undertook an assessment of the impact of that and published it on GOV.UK. We will happily direct the noble Lord and others to that so that they can see the assessment that we set out when bringing the package of mitigations forward.
I understand the concerns set out by the two noble Baronesses about how the change might affect Channel 4’s support for the independent production sector across the UK, which were also raised when this issue was discussed in the other place, and we touched on it in our first group of amendments today. That is why, when we announced our intention to remove the restriction, we were clear that we would work closely with the production sector to ensure that Channel 4’s important role of driving investment into the sector would be safeguarded. The outcome of that work was a substantial package of mitigations that we announced in November, some of which, such as the introduction of new Channel 4 commissioning duties and an Ofcom-led review, are included in the Bill. Those mitigations, which also include increasing the level of Channel 4’s
independent production quota, will be implemented in the event that Channel 4 incorporates a production company.
Channel 4 itself has welcomed the removal of the restriction and has said that in-house production could offer good long-term support for financial sustainability, while reaffirming its commitment to continue to invest in and champion independent producers, as it has done for the last 40 years. Ultimately, a stronger and more resilient Channel 4 will be best placed to continue playing its integral role in our broadcasting ecosystem for many years to come. By contrast, failing to remove Channel 4’s publisher-broadcaster restriction would mean passing up an opportunity to help it to deliver on that important ambition. That is why Clause 31 is an important clause and should stand part of the Bill.