Channel 4: Privatisation (Communications Committee Report)
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The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Ashton of Hyde) (Con)
My Lords, I am grateful to the noble Lord, Lord Best, and his committee for all their work on this subject, and to all noble Lords for their interesting contributions today. I welcome the noble Lord, Lord Griffiths, who has just spoken in his first outing on DCMS. I congratulate him on his speech and look forward to many further contributions from him on DCMS subjects in future.
I also thank noble Lords who approve of the Government’s actions on this matter, a somewhat rare and pleasant experience for a member of the Government. Clearly things have moved on somewhat since the committee’s report was published last summer, but the issues raised remain vital in ensuring a successful future for one of the UK’s most important cultural assets. I am therefore very pleased to be here today and to have the opportunity to listen to noble Lords’ views and set out the Government’s position.
Channel 4 is an important part of the UK’s broadcasting landscape, as the noble Lord, Lord Best, laid out clearly at the beginning of the debate. Commercially funded yet publicly owned, and operating as a “publisher-broadcaster”, it has a unique role in providing for audiences and stimulating the wider creative industries. Channel 4’s remit includes requirements to be distinctive, to innovate, to promote alternative views and new perspectives and to appeal to a culturally diverse society. In the 35 years since it was launched, it has made an indelible mark on UK culture and society. The noble Lord, Lord Best, and my noble friends Lord Sherbourne and Lord Holmes mentioned the Paralympics as an example of landmark programming.
Yet the channel faces challenges from what is a very fast-changing broadcasting landscape, particularly given its reliance on advertising revenues, a challenge highlighted by developments in the advertising market over the last year or so. Channel 4 is a public asset. It is therefore entirely sensible for the Government to consider from time to time how best to secure its future, including whether it would be better placed to succeed under private ownership. As noble Lords will be aware, the Government set out earlier this year that Channel 4 will remain publicly owned. I know this was welcomed by members of your Lordships’ Communications Committee, as confirmed today by the noble Lord, Lord Best. I reaffirm today the Government’s commitment to a publicly owned future for Channel 4. I hope that will partially reassure—temporarily, at least—the noble Lord, Lord Birt.
As a publicly owned broadcaster, though, Channel 4 must deliver value for the public who own it. That value can come in different forms, as the noble Baroness, Lady Kidron, pointed out, both on screen and off. Off-screen, Channel 4 has delivered value through its pivotal role in the development of the UK’s independent production sector. The sector is now world-renowned, generating £3 billion of revenue each year. Channel 4 provides on-screen value by delivering the remit prescribed in legislation and in meeting the programming quotas set by Ofcom. My department’s written evidence to the committee’s inquiry set out that:
“The government regards C4C’s ability to deliver against its remit and maximise public value in a sustainable manner as a priority”.
Channel 4 has a strong record in many areas of its remit—as the noble Baroness, Lady Kidron, says, in some areas it exceeds it—but there is room for improvement. The committee concluded, as the right reverend Prelate the Bishop of Chelmsford has reminded us today, that the current programming for older children and young adults is “unsatisfactory”, echoing concerns raised by Ofcom over recent years. We have made it clear that we expect a stronger commitment from Channel 4 in this area. We have also given Ofcom new powers through the Digital Economy Act to impose children’s content quotas if it deems that necessary. The provision of other areas of core public service content, such as arts programming, has also been low. More broadly, the Government have also made it clear that we want Channel 4 to deliver even more of the innovative and challenging public service programming that it was set up to offer. We look forward to seeing how the new chief executive and director of programmes take on this challenge.
Both on and off-screen, we believe Channel 4 must deliver value for the whole country that owns it. This means contributing to balanced economic growth, stimulating creative industries and serving audiences across the UK. I am grateful to the noble Baroness, Lady Quin, for her support—albeit, I have to say, slightly geographically qualified—for this concept. PACT, the TV production trade body, has found that of the £2 billion budget for UK productions in 2016 just 32% was spent outside London. Similarly, only one-third of UK production-sector jobs are based outside London. As has been mentioned, only 3% of Channel 4’s staff are based outside London, and it spends around twice as much on programming made in London as in the rest of the UK combined. Furthermore, earlier this year Ofcom said it had concerns about Channel 4’s representation of people in the nations and regions.
We feel that decisions about Channel 4’s programming should not all be made in the bubble of Westminster. Very importantly, people seeking to work in the media should not feel that they have to move to London. This is a barrier not only to people from different regions but to people of less affluent financial backgrounds. This point was ably made by the noble Lord, Lord Storey.
The transformation of Salford’s MediaCity over the past decade, led by the BBC, is truly impressive. With more than 250 companies employing more than 7,000 people, it has become a world-class cluster. It demonstrates that the television sector in the UK does not have to be all about London, but I accept that the BBC and Channel 4 are not an exact parallel, and I would not claim them to be.
As a result, we launched a consultation earlier this year on how Channel 4 could increase its regional impact, primarily through moving staff and increasing commissioning. We published the results of this consultation last month. The overwhelming majority of respondents stated that Channel 4’s regional impact would be enhanced if more of its people and activities were located outside London. A significant majority further agreed that increasing Channel 4’s commissioning quotas, as mentioned by the noble Lord, Lord Razzall, and my noble friend Lord Holmes, would be an appropriate and effective way to enhance Channel 4’s impact in the nations and regions. Alongside the consultation, we have commissioned external consultants to analyse the potential regional economic benefit and cost of relocation and increasing commissioning in the nations and regions. This will be published imminently, and we will see whether it addresses the points made by the noble Lord, Lord Gordon.
As the Secretary of State set out in her speech at the Royal Television Society last month:
“TV must reflect the real world and the country that we live in”.
Relocation may not mean relocation of the whole business, but the Government are clear that Channel 4 must have a major presence outside London. We are also very interested in the potential for Channel 4 to increase its commissioning in the nations and regions.
We look forward to working with Channel 4’s incoming chief executive, Alex Mahon, who is due to start at the beginning of next month. We await her plans for Channel 4, and will continue to work closely with the channel over the coming months. This will not be an overnight process, I reassure the noble Lord, Lord Griffiths, but we hope to reach agreement with Channel 4 on the direction forward by the end of the year.
A couple of points were raised during the debate. I cannot let the comments of the noble Lord, Lord Razzall, about diversity on the board go unanswered. Last year, the Secretary of State approved the appointment of four individuals who met the job descriptions of the post, which was advertised by Ofcom, out of the five put forward by Ofcom, so it was very much in answer to the specific job descriptions that they were selected. Ofcom is currently undertaking a process to recruit three new non-executives to the Channel 4 board, and I am confident that it will make every effort to ensure a diverse field of candidates.
The noble Baroness, Lady Quin, made the very reasonable point that we cannot expect Channel 4 to solve the regional deficit on its own. We agree, and we do not think that there is a direct comparison with the BBC, but it is true that more than half the BBC’s public service staff are outside London, whereas 97% of Channel 4’s staff are in London. We feel that, as a publicly owned broadcaster, it must do more for the whole country.
In conclusion, Channel 4 is a vital public asset, it is one that we support, and it will remain so. In continuing under public ownership, the Government are clear that Channel 4 must play its part in a country that works for everyone. It should strengthen the creative industries that are such a successful part of our economy and provide a platform for new voices and untold stories from across the UK, celebrating the diversity mentioned by the right reverend Prelate.
I again thank the committee for its work on this important matter, and I look forward to returning to discuss progress on these issues in due course.