Lucy Powell (Manchester Central) (Lab/Co-op)
(Urgent Question): To ask the Secretary of State for Digital, Culture, Media and Sport if she will make a statement on the privatisation of Channel 4.
The Minister for Media, Data and Digital Infrastructure (Julia Lopez)
Our TV and radio industry is one of our great success stories, and public service broadcasters such as Channel 4 are central to that success. Our PSBs sit at the heart of our broadcasting system, delivering distinctive, high-quality content and helping to develop skills, talent and growth across the entire country.
However, the broadcasting world has changed beyond recognition in recent years. Rapid changes in technology and the rise of American streaming giants such as Netflix, Amazon Prime and Disney+, not to mention YouTube and social media platforms, have transformed audience habits. Viewers can watch what they want, when they want, on their laptop, phone, smart TV or Fire stick. As a result, while streaming services have enjoyed a 19% increase in subscribers in recent years, the share of total viewers for linear TV channels such as the BBC and ITV has fallen by more than 20%.
The Government are determined to protect the role of PSBs in our nation’s economic, cultural and democratic life, and to make sure that they remain at the heart of our broadcasting system no matter what the future holds. Tomorrow, therefore, we will be publishing a White Paper that proposes major reforms to our decades-old broadcasting regulations—reforms that will put traditional broadcasters such as the BBC, ITV and Channel 4 on an even playing field with Netflix, Amazon Prime and others, and enable them to thrive in the streaming age. We will set out the full details of our proposals when the White Paper is published.
It is important to understand that the sale of Channel 4 is just one part of that major piece of reform. Like the rest of the White Paper, it is a reflection of the transformation that broadcasting has undergone in the last few years and the need to make sure that our PSBs can keep pace with those changes.
Channel 4 has done a fantastic job in fulfilling the original mission that it was set by the Thatcher Government: to spur independent production and deliver cutting-edge content. The independent production sector has exploded in the last few decades, growing from a £500 million industry in 1995 to an industry of approximately £3 billion in 2019. However, since it was structured to address the challenges of the 1980s, there are limits to Channel 4’s ability to adapt to the 2020s and beyond.
Channel 4 now faces a new set of challenges. It faces huge competition for audience share and advertising spend from a wider range of players, many of whose deep pockets have been driving up production costs. Streamers such as Netflix spent £779 million on UK productions in 2020, more than twice as much as Channel 4. While other PSBs, such as the BBC and Channel 5, have the freedom to make and sell their own content, Channel 4 has no in-house studio and relies almost entirely on linear television advertising spend at a time when those revenues are rapidly shifting online.
Under its current form of ownership, Channel 4 has few options to grow, invest and compete. The Government believe that it is time to unleash the broadcaster’s full potential and to open Channel 4 up to private ownership and investment—crucially, while protecting its public service broadcasting remit. We believe we can sell Channel 4 to a buyer who will fund emerging talent and independent and impartial news, and invest in every corner of the UK.
We intend to use the proceeds of the sale to tackle today’s broadcasting challenges. As I said, our independent production sector is thriving. Only 7% of its revenue comes from Channel 4. The much bigger challenge we face is a shortage of skills. Our film and TV studios are booming. We need to give people the skills to fill the jobs in them, so we will reinvest the proceeds of a Channel 4 sale into levelling up the creative sector and giving people in left-behind areas the training and opportunity to work in the industry.
The sale of Channel 4 will not just benefit the broadcaster; it will deliver a creative dividend for the entire country. As I said, the future of Channel 4 is just one part of our wider reform of the entire broadcasting sector, and I look forward to providing the House with the full details shortly.
Lucy Powell
The sell-off of Channel 4 is an important matter for Parliament, yet instead of a statement we had announcement by tweet during recess, and now we hear that a White Paper is to be published tomorrow, when we will not be here and there will not be an opportunity for statements. Where is the Secretary of State to defend her policy today? It is a pattern, and it is a disgrace. Nothing screams rudderless Government like fixating on the governance of Channel 4 while people’s energy bills are going through the roof. It did not even make the list of pretty bad ideas discussed at yesterday’s Cabinet.
Why sell off Channel 4, and why now? Is it because there is an overwhelming clamour from the public? The Government still have not published the 60,000 consultation responses, but my understanding is that the vast majority were against any sale. Is it to help level up the country? Given that Channel 4 commissions half its budget outside London, creating a pipeline of talent across the nations and regions, and stimulating the creative economy in places such as Leeds, Glasgow and Bristol, of course it is not. Is it to create more British jobs in our world-leading creative industries? The Minister and I both know that the likely buyers are going to be the big US media companies, looking for a shop window for their own content. That will mean fewer British-made programmes for British audiences and fewer British jobs. Any UK bidder could lead to less competition, and of course they would be looking at economies of scale.
Is it to support the independent production sector? Channel 4 is currently, uniquely, a publisher-broadcaster, allowing start-ups and independents to retain the value of their own programmes, helping them grow and export. No buyer is going to continue with that model. That is why the UK independent production sector is so overwhelmingly against the sell-off. Or is it to save the Treasury money? I know that the Secretary of State was a bit confused about this in front of the Select Committee, but Channel 4 does not cost the taxpayer a single penny. Indeed, its profits are all reinvested in British jobs and programming.
The Secretary of State says the sell-off is needed to help Channel 4 compete with the likes of Netflix and Amazon. The truth is it will be gobbled up by them. She says the sell-off will generate a pot of up to £1 billion for her to dish out in grants, but Channel 4 already invests that amount here, commercially, each and every year. She says she will protect the essence of Channel 4 in a new remit, but I thought that was the straitjacket she wanted to free it from. The truth is that the sell-off just does not stack up, and the Secretary of State is running scared of Parliament. In fact, it is going to clog up Parliament for months to come because she has no mandate to do it and there is widespread opposition to it on her own Benches.
I can only conclude that this is a deliberate distraction from partygate, a vendetta against Channel 4 news coverage, or another act of cultural vandalism. Channel 4 is a great British asset, owned by the public, that does not cost them a penny. It commissions award-winning British programmes owned by the small independent sector. That is why Margaret Thatcher invented it, and that is why the Government are wrong to sell it off.
Madam Deputy Speaker (Dame Rosie Winterton)
I really do need to remind both Front Benchers that in an urgent question the Minister has three minutes, the shadow Minister has two minutes, and the SNP spokesperson has one minute. [Interruption.] No—if it is a statement, it is different. I call Minister Lopez.
Julia Lopez
Thank you, Madam Deputy Speaker. It is important to say that tomorrow is a sitting day, and we bid for a ministerial statement on this subject.
We are very keen that the House understands that the Channel 4 sale is not a stand-alone issue; it sits within a very important series of reforms that we as a Government want to make to the public service broadcasting system. Channel 4 is an incredibly important economic asset in that ecosystem, and we want to make sure that it is sustainable not just now but long into the future. We think it is our responsibility as the Government to do that future-gazing and to make sure that Channel 4 has the freedom and flexibility it needs to be able to make changes to thrive.
There are two important things to understand about Channel 4. First, it cannot retain control of its own intellectual property, and therefore it does not have the same financial flexibility as the likes of ITV and the BBC, both of which have their own studios. Secondly, its borrowing sits on the public balance sheet, and therefore if it required greater financial flexibility in the future, the Treasury would need to be content with that.
As I say, tomorrow is a sitting day. We had very much hoped that we would be able to set the sale of Channel 4 in the context of a wider series of incredibly important reforms that we wish to make to the public service broadcasting sector. I regret that the hon. Member for Manchester Central (Lucy Powell) does not think this is an important issue and has dismissed it as some culture war. That could not be further from the truth. The last time that important broadcasting reforms were made was 2003. I hope she will agree that the broadcasting world has changed immeasurably since then, and that the Government would not be responsible if we did not address some of those changes.
We think the public service broadcasters play an incredibly important democratic, cultural and economic role in our nation’s life and we want to sustain that role, so we think the privatisation of Channel 4 is an important part of a wider series of reforms. We will make further details available to colleagues, and I will be engaging one-to-one with colleagues who have concerns as we go forward.
Sir Peter Bottomley (Worthing West) (Con)
The Minister may or may not have been convinced by the words that she read out, but I do not think that they convinced the House. Channel 4 is in the best state that it has been in creatively or financially for decades. We were told that it is supposed to be able to compete with Netflix, but Netflix is a loss-making, debt-ridden business whose share price is now $198 when it was $700—an enormous drop.
If the choice for the country is about Channel 4’s specific remit and structure as a publisher-commissioner that does not hold programme rights, the Government could do best by leaving it alone. If they do not, they could engage with Channel 4’s management team about its proposals—I am not sure that we have all seen them in public—and explain why they prefer to go to the United States than to have a state broadcaster that is independent of Government.
Those in government may not like Channel 4 because it may criticise the Government in its news output, but it is better to be in government and criticised than to be in opposition and cheer.
Julia Lopez
I thank my hon. Friend for his comments. It is important to understand that the Secretary of State and I went into the entire process with a very open mind—[Interruption.] That is certainly true. We went into this looking at what is best for the public service broadcasting sector as a whole going forward. We looked incredibly carefully at alternatives, and I hope that the material that we will publish tomorrow will assure him of that fact. We think that we can get the right blend by retaining Channel 4’s public service broadcast remit, which maintains its distinct and unique appeal, while enabling it to get the private sector capital investment that it requires to deal with some of the wider challenges presented by the likes of Netflix.
I appreciate what my hon. Friend said about changes in subscriptions. I think that underlines the volatility of the market and the need to be able to compete and invest in content. That is incredibly important. If Channel 4 is to remain uniquely appealing, we need that investment in content, and we believe that the reforms will give it greater sustainability going forward.
John Nicolson (Ochil and South Perthshire) (SNP)
Well, here we go again: a Secretary of State, oblivious to the unanimous opposition of the sector, is ploughing on with a politically motivated privatisation. She knew so little about Channel 4 that she thought it was publicly funded and had to be corrected by a Tory colleague on camera. Channel 4 costs the taxpayer nothing. The cynical motivation for the policy is simple: it is payback time; it is revenge. The Government hate “Channel 4 News” and its rigorous journalism holding Ministers to account.
The Minister mentioned a Netflix-style model, ignoring the fact that Netflix, unlike Channel 4, loses money—it is currently $15 billion in debt—and does not send war correspondents to Ukraine. Will she therefore listen to the experts, or must we wait for the Sue Gray report, the Prime Minister’s defenestration and the Secretary of State’s replacement?
Julia Lopez
I thank the hon. Member for his question. I did not suggest that Channel 4 would pursue a Netflix subscription model; I simply made the point that Netflix and others—this is not a Netflix issue alone—are changing the dynamics of the marketplace very rapidly. People now view content in very different ways and I do not think it would be a wise, sensible or responsible approach to leave PSBs untouched and unable to have the flexibility that they need to address some of those fundamental challenges.
The hon. Member made a number of unpleasant comments about the Secretary of State. She is not the first Secretary of State to have considered this question. This is not a Secretary of State-specific point of view but a question that has been live for a number of years. It was looked at previously, and the fundamental changes in the market have only deepened since that time with the move away from linear advertising and the rapid change in viewing habits. She took the responsible decision to look not just at Channel 4 but at how we ensure that public service broadcasters have the flexibility they need to be able to provide the content that we all love. She has done a sensible thing in looking at the decision afresh and dealing with it head on, and she has courage in doing so.
Madam Deputy Speaker
I call the Chair of the Digital, Culture, Media and Sport Committee, Julian Knight.
Julian Knight (Solihull) (Con)
I am concerned to hear that the media Bill White Paper will be published tomorrow, a day when we may not have an opportunity to see the full details. I hope that we will not have to rely on the media round in the morning to get those details.
On Channel 4 privatisation. I start from the position that everything should be in the private sector unless there is the strongest of cases that public ownership is absolutely essential. I therefore broadly welcome the concept of privatisation, but what assurances can the Minister give me that the privatisation is a game worth the candle? Will it be part of a redesign of public service content ensuring prominence, collaborative working of a whole new order and a continued driver of BBC reform to gradually and safely wean it off the licence fee?
Julia Lopez
First, I thank my hon. Friend for his engagement on the issue and for the work of his Committee, which the Department very much values. I was able to speak to him about the proposal previously, and I am glad that we have a meeting scheduled for later today, for which my plan had been to take him through some of the wider reforms that we wish to make in the PSB sector and offer him the assurances that he seeks. As he knows from previous conversations, the Secretary of State and I were adamant that the proposal needed to go hand in hand with a creative dividend and a wider set of reforms to make it a success.
Chris Bryant (Rhondda) (Lab)
The UK has the best broadcasting in the world by a country mile. In so many different genres—drama, comedy and natural history—we lead the world, which is remarkable considering that we are a relatively small economy compared with the rest of the world. Channel 4 is intrinsic to making all of that work because it does something that no other broadcaster in the world ever did: it guarantees diversity through the private sector for everybody. I therefore cannot understand why the Minister would want to dismantle it. Will she say just one thing to me? If she does sell it off, will she ensure that it can be owned only by people who pay taxes in this country?
Julia Lopez
I agree with the hon. Member about how fantastic our broadcasting sector is—it has unrivalled creativity—and we are seeking fundamentally to preserve that in the reforms that we are making. In this country, we are able to have a great blend of specific public service remits that private broadcasters can deliver, and that is what we would seek to do with Channel 4 going forward, protecting the things that we enjoy and love about it. We believe that any future buyer of Channel 4 would seek to purchase it precisely to tap into the specific markets that it appeals to.
Julia Lopez
I will not speculate on the nationality of any company. We will be looking at bidders who share our vision for Channel 4, the important role that it plays in investment in our creative industries and the distinct and unique remit that it has in our country. We can provide further details as the process goes on, but I will not stand here and make commitments and crowd out particular buyers for an important UK company.
Mrs Helen Grant (Maidstone and The Weald) (Con)
Channel 4 is a prized national asset that was created by Margaret Thatcher 40 years ago. It puts public service before profit and continues to be sustainable, so why are the Government failing to consider its detailed plans to address their concerns? The plans were set out very clearly in a document entitled “4: The Next Episode”, which was provided to the Government on 28 January this year.
Julia Lopez
My hon. Friend plays an important role through her work with the all-party parliamentary group for Channel 4, and I am glad for the engagement that we have already had on the issue. I am also glad that she recognised the role of the Thatcher Government in creating this special entity. As I mentioned in my statement, it was set up to spur independent production in this country, and it has done a fantastic job in that, but the world has changed fundamentally.
My hon. Friend raises the alternatives that Channel 4’s management put forward. I assure her that we gave detailed consideration to those plans and tomorrow we will provide further details in a set of documents as to why we decided that they are not the right way forward. We also have duties to the taxpayer, to the wider creative sector and to the audience. Our reforms are really to sustain Channel 4’s place in in our creative ecology.
Alison Thewliss (Glasgow Central) (SNP)
Channel 4 invests about £20 million a year in Scottish independent production companies, contributing £36 million in gross value added and supporting about 400 jobs. I am proud that it has a hub in my constituency. Glasgow-based indies do get contracts with Netflix and the others, but they are clear that the Channel 4 model is at the heart of their success. Why would the Minister put all that at risk with privatisation?
Julia Lopez
We do not think we are putting it at risk. There are a number of things we can do via the PSB remit on quotas for independent production and we would seek to maintain those. We will be bringing forward a series of reforms that we hope, ultimately, will grow the sector over the period of time we are talking, such that all independent producers will benefit.
Jeremy Wright (Kenilworth and Southam) (Con)
My hon. Friend was right, of course, to say that previous Secretaries of State have considered the privatisation of Channel 4, but she will also recognise that not all of us were persuaded at the time that it was the right thing to do. If the Government are determined to privatise Channel 4, she will also recognise, I am sure, that one of the things that makes Channel 4 distinctive is its willingness to take risks and commission work it cannot be sure will be successful. By doing so, it encourages creatives in the sector to take risks themselves. That is good for the sector and good for our broadcasting. Can she reassure me that if privatisation proceeds, the Department will be particularly focused on making sure that that provision is retained in the broadcasting landscape?
Julia Lopez
I thank my right hon. and learned Friend for his question. In recognition of what he says, the reason that previous Secretaries of State looked at this matter was that they could see a number of trends, particularly on spend on linear advertising, that were only going in the wrong direction for a broadcaster like Channel 4, which is uniquely dependent on that spend. Something like 70% of its revenues come from linear advertising spend. I think he would recognise the speed of change in the sector and the fundamental changes in viewing habits, particularly among younger audiences. We think it is responsible for any Government to be very cognisant of that. He will be aware that a number of things can be done in terms of remit and how we engineer the sale to ensure that what is unique, distinct and valued about Channel 4 can be maintained and protected going forward.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I feel a bit sorry for the Minister, because the Secretary of State is not here. We all know what the game is: this shabby little bunch in No. 10 are determined to undermine public service broadcasting in our country. As she said, this is part of a wider attack on the BBC and all public service broadcasting in the week when the forces of darkness, in the shape of the richest man in the world, have gobbled up Twitter. The fact of the matter is that if we do not stand firm—[Interruption.] The Whip is either having a bad attack or he has indigestion, but this is not funny. For a party and a Government who believe in levelling up, this will do great damage to Leeds and the creative industries in the north of England. The forces of darkness are on the rampage. Channel 4 will be gobbled up in no time by someone like the richest man in the world.
Julia Lopez
I am desperately grateful for the hon. Gentleman’s sympathy and I am sure I will need it going forward. I would just simply say that the reforms we seek to make are about the fundamental sustainability of the public service broadcasting system. If the Opposition wish to bury their heads in the sand and pretend that those fundamental changes are not happening, then that is for them to worry about. We are making a series of fundamental reforms. As I say, the legislation was last looked at in 2003. This Secretary of State is looking fundamentally at this area to make sure that we are serving audiences, the taxpayer and the wider creative sector. I commend her for having the courage to make those changes.
Damian Green (Ashford) (Con)
My hon. Friend is aware of my profound scepticism about the wisdom of the action the Government are taking on this matter. I keep reading that the Prime Minister wants Departments to do Conservative things. May I therefore urge on the Minister the very Conservative action of listening to the voice of small business—the many small businesses and creative companies—that Members from all sides of the House are praising because they provide innovation, creativity and jobs around the country, precisely serving the levelling-up agenda? Can she tell us, having looked at the consultation responses the Government have not published, what is the overwhelming voice from those small businesses? They are all saying that Channel 4 is not broke and does not need fixing in this way. They are urging the Government not to go down this route.
Julia Lopez
I thank my right hon. Friend for his engagement already on this issue and I appreciate the conversations we have had. We will publish the consultation responses tomorrow. As I said, we have a whole package of information that hon. Members will no doubt scrutinise and hold us to account for, but I hope that they will also welcome it, because this is a series of important reforms. This is fundamentally about growing and sustaining our fantastic creative sector to the benefit not only of audiences but of the small businesses he cites. One thing we are keen to secure is a creative dividend to deal with the challenges that companies are actually talking to me about, which are the skills required for the booming production sector we have in this country.
Naz Shah (Bradford West) (Lab)
Ampere Analysis says that privatisation would put independent production companies out of business. As the Member of Parliament for Bradford West, Channel 4 in Leeds makes a real difference to diversity, especially in news channels and in journalism as a whole. Can the Minister assure me that if we go down that road and they privatise it, the buyer will be required to maintain the presence and trajectory of workforce growth in Channel 4’s regional offices in Leeds, Glasgow, Bristol and Manchester?
Julia Lopez
The hon. Lady is right to highlight the great investment that Channel 4 has made in Leeds, which was actually at the encouragement of previous Secretaries of State when we previously looked at the question of privatisation. In our relationship with Channel 4, we have encouraged it to seek to increase what it does in the regions and nations of our country, and we think it has done a great job of that. We value the contribution it has made to regions and cities, and we will very much seek to preserve that in any sale process.
Stephen Hammond (Wimbledon) (Con)
Channel 4 has been a driver of the independent sector. As the Minister knows, the independent sector trade body is raising considerable concerns about the impact of privatisation on the sector. Will she tell the House whether she intends to retain, in the privatisation details, an obligation and a quota for the independent private sector?
Julia Lopez
I thank my hon. Friend for raising the important point that we can get a number of our aims in relation to independent production via quotas in the public service broadcasting remit. We will be seeking to do that. We will provide further details as the process goes on, but I hope that when we are able to publish the White Paper tomorrow he will see that we will seek to retain and modernise the approach we take to independent production such that the companies he is concerned about will be able to benefit.
Ian Paisley (North Antrim) (DUP)
The small businesses in the creative sector in Northern Ireland have revolutionised television production in Northern Ireland beyond recognition. No one would have thought that a film about four or five wee girls growing up in the maiden city in Northern Ireland would have been such a dramatic success in every single aspect. That would not have happened without Channel 4. That is the reality. There are 81 jobs in Northern Ireland supported directly by Channel 4. It contributes £8 million annually to Northern Ireland’s GVA. Over a quarter of £1 billion is contributed to Northern Ireland as a result of television and film making. Nine television dramas and six major films were made last year in Northern Ireland. What will the Minister do to ensure that the production fund and the independent fund, which have supported jobs, production and apprenticeships in companies such as Waddell Media, Stellify Media, Strident Media and Fired Up Films, will be protected going forward?
Julia Lopez
I am glad to hear the hon. Gentleman remind the House of the thriving creative sector in Northern Ireland, and the tremendous programmes and content that have come out of the place that he represents. That is something we all celebrate. We think that any future buyer would look at the unique and distinct content that Channel 4 provides as one of its great assets. We are able to protect some of that via the remit, which we would seek to do, but it is also important that Channel 4 is only one part of why the creative sector has been very successful in Northern Ireland. I commend him and his constituents for the contribution they have made to that success.
Andy Carter (Warrington South) (Con)
I agree with the Minister that there have been massive changes to the broadcasting sector, in particular in TV advertising and particularly for linear TV. It is right that we do not leave PSBs in aspic, but will she confirm that there will be an ongoing commitment in PSBs for prime time news? It is important that we have a diversity of voices in news. Will there be that commitment to prime time news for Channel 4 under a new ownership model?
Julia Lopez
It is frustrating that I cannot set this entire question within the wider context of the reforms that we seek to make. Public service broadcasting is valued by the Government precisely because it provides the kind of content in which a lot of commercial operators are not necessarily inclined to invest. The challenge is to want to make channels continue to be PSBs. The reforms that we are introducing will provide people with a number of advantages in being public service broadcasters that we hope will mean that the important democratic content, which we all value, is retained in the future broadcasting system. I hope that that reassures my hon. Friend and I am happy to continue to engage with him during the process, because he is a champion for the sector and has a number of important views that need to be considered.
Rachel Hopkins (Luton South) (Lab)
Under private ownership, Channel 4’s output will be dictated by profit rather than public service, and I share the concerns about creative risk taking and the impact on diversity when commissioning content—would we see “Derry Girls”, “The Last Leg” and Mo Gilligan? Does the Minister agree that private ownership will dilute, rather than enrich, broadcasters’ programming?
Julia Lopez
There is a fundamental misunderstanding that private ownership and being a public service broadcaster are at odds with each other. The whole point of what we are trying to achieve is to get capital investment and have a distinct public service broadcasting remit. We hope that that blend will sustain Channel 4 long into the future. It is important that those who are not in favour of privatisation answer some of the fundamental questions about the long-term trends that concern us as a Government.
Jason McCartney (Colne Valley) (Con)
How do the proposals genuinely fit in with our levelling-up agenda? What protections and safeguards would be put in place to ensure that Channel 4’s HQ not only stays in Leeds, but continues to flourish there? What safeguards can be put on Channel 4’s excellent commitment to quality regional TV production so that it can continue to flourish, particularly because Channel 4 currently invests more in independent production companies outside London than any other broadcaster and supports thousands of jobs outside London?
Julia Lopez
I know that my hon. Friend is concerned about Yorkshire and the importance of ensuring that creative businesses there thrive. We share that fundamental aim. As I mentioned to my hon. Friend the Member for Warrington South (Andy Carter), the key thing is that we need broadcasters to wish to retain their public service broadcasting remit, because it includes our ability to impose quotas on production spend, including outside London. My hon. Friend the Member for Colne Valley (Jason McCartney) will know that his area has benefited substantially from that. We are seeking to stitch those kinds of commitments into not only the PSB remit, but the sale process, so that our aims on levelling up align with any future owners’ aims on levelling up.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
Shall we just remind ourselves of what things were like in the past? When I was growing up, there was an awful lot of pretty mediocre stuff on the box from across the pond, such as “The Lucy Show”, “Lost in Space” or “Batman”. As the hon. Member for Rhondda (Chris Bryant) said, however, we have had a cultural renaissance since then. Today, we have a British broadcasting product that is the envy of the world. Let us remember that, for the United Kingdom, that equals soft power, which is very important in these dark days. I have a straightforward economic question for the Minister. A new owner will want to make a profit and they will take money out. How will that possibly not impact on the money that would otherwise be spent in genuine local production companies the length and breadth of the United Kingdom, including in Scotland?
Julia Lopez
I always enjoy engaging with the hon. Gentleman. The Government do not see “profit” as a dirty word; profit is key to creating investment in the companies and kinds of content that he is concerned about. He is right to celebrate Channel 4. We celebrate it and all the fantastic content that it brings, but this is about maintaining and increasing spend on content. That is why we will have a series of reforms in tomorrow’s broadcasting White Paper that I hope will reassure him of our intentions as a Government to have a sustainable PSB sector. I go back to the point that, through the PSB system, we get commitments in the remit to the kind of news content that he is absolutely right to highlight as incredibly important to our soft power.
Alun Cairns (Vale of Glamorgan) (Con)
Channel 4 spent £516 million on original content in 2006. That number fell to £329 million because advertising incomes fell at a similar pace. Does my hon. Friend agree that unless we do something, Channel 4 is at risk of stagnating, and that we can keep a similar news remit, commitment to diversity and investment in nations and regions in a different model?
Julia Lopez
I agree about the fundamental trends that my right hon. Friend highlights, and about some of his concerns. Channel 4 has fundamentally accepted those concerns in providing us with a range of alternative options, which we have looked at very carefully. We believe that the route we are highlighting is right because, through that, we will have a more sustainable public service broadcasting system, and we will be able to maintain the content and our commitments to some of the less commercially viable programming that audiences very much value.
Grahame Morris (Easington) (Lab)
During the previous statement, the Under-Secretary of State for the Home Department, the hon. Member for Torbay (Kevin Foster), told the House that it was difficult to predict the huge surge in the demand for passports once the lockdown restrictions had been lifted. Surely, however, it was possible to predict that over the lockdown period, the demand for Netflix subscriptions would increase dramatically because people did not have any alternative. It is surely also completely predictable that now that those restrictions are lifted, the demand for Netflix subscriptions will decline. That is reflected in subscriptions and share prices. Given the cost of living crisis, why push ahead with forcing a successful, publicly owned Channel 4 to adopt a privately financed model when subscriptions are becoming a luxury that many people and families simply cannot afford?
Julia Lopez
The hon. Gentleman needs to understand that we are not seeking to have a subscription model for Channel 4. On the issues that we have highlighted relating to Netflix, there are trends that predate the pandemic, involving younger audiences, certainly, moving away from linear television and the decline in linear television advertising. The Government think that addressing all those things is incredibly important, because our public service broadcasters produce a whole range of free-to-air products that we want to maintain as free-to-air products. The range of reforms that we will introduce tomorrow are about the sustainability of the whole PSB sector. I hope that that reassures him that his constituents will continue to get high-quality British content long into the future.
Dr Neil Hudson (Penrith and The Border) (Con)
Up and down the country, public service broadcasters, such as Channel 4, the BBC and ITV, are treasured national assets, delivering vital news, education, entertainment and sport. In rural areas such as mine, people depend on free-to-air terrestrial TV, especially in areas with poor internet coverage. I know that the Government are working on that, and my hon. Friend is working with me to help to improve that situation in rural Cumbria, but please, please can I urge the Government to rethink this Channel 4 privatisation idea? Now is the time to support and bolster our public service broadcasters, not challenge them or lead them to being a competitive, subscription-based service, which is the last thing that our rural communities need.
Julia Lopez
I thank my hon. Friend for all his work on connectivity in his constituency. I am pleased to say that Cumbria is one of our priority procurements for gigabit roll-out and I look forward to working with him on that. I simply refer him to my previous answers: we would maintain Channel 4 as a free-to-air service. We are not looking for a subscription model. Everything that we are doing seeks to bolster the public service broadcasting sector. I hope that when he sees the context in which this decision has been made, he will feel reassured.
Ben Lake (Ceredigion) (PC)
Diolch, Madam Deputy Speaker. I echo concerns that others have raised that the privatisation of Channel 4 might jeopardise its investment in communities across the UK as part of its public service remit, and its quotas relating to commissioning content in each nation of the United Kingdom. That investment has amounted to more than £77 million in Wales in the past 10 years, and supported over 200 jobs in 2019 alone. Will the Minister elaborate on how the Government will seek to ensure that that valuable contribution continues, even if privatisation proceeds?
Julia Lopez
I appreciate the hon. Gentleman’s comments about the importance of creative investment in his region. I cannot be too detailed at the moment, because the White Paper is coming out tomorrow, but I hope that he will have taken heart from my comments about how we can put quotas in the public service broadcasting remit to ensure a certain level of non-London production spend and investment in our regions and nations.
Simon Jupp (East Devon) (Con)
Independent production companies across our nations and regions rely on Channel 4’s current operating model. Channel 4 is an important public service broadcaster, but that does not mean that it has to be owned by the Government. Will my hon. Friend explain how levels of independent production can be protected as the channel is sold?
Julia Lopez
In having a more sustainable public service broadcasting system, we seek to not only maintain investment and content production, but expand them. If we did not make the series of reforms that we seek to, we would be concerned about the withering of something that we believe audiences and the creative economy cherish. When we are able to provide further details, I hope that my hon. Friend will be reassured by some of the things that we hope to do in this field.
Mike Amesbury (Weaver Vale) (Lab)
This is not levelling up, is it, Minister? It is levelling down. It is closing down independent producers, largely in the north of England. For the supply chain, it will mean laying off up to 2,000 workers. Look, cut the ideological rubbish and think again. Make your mark as a Minister and put this in the bin.
Julia Lopez
I am not sure that I wish to thank the hon. Gentleman for his slightly demeaning approach. I do not think that I have been particularly ideological in anything that I have said today; I have been clear that the reforms we seek to make are about the sustainability of the public service broadcasting sector that I value, he values, this House values and—most importantly—audiences value. We need to make sure that the PSB sector is sustainable. The Opposition can bury their head in the sand when it comes to current trends, but fundamentally, the reforms that we are bringing forward tomorrow aim to ensure that the things that the nation values culturally, democratically and economically are taken forward in tomorrow’s broadcasting system.
Madam Deputy Speaker (Dame Rosie Winterton)
The hon. Member for Weaver Vale (Mike Amesbury) knows that he should not address the Minister directly like that.
Rob Butler (Aylesbury) (Con)
Having worked as a news presenter both at the BBC and at Channel Five, my feeling is categorically that the commitment to high-quality journalism is just as strong in the private sector as in the public sector. Rightly, much has been made of the calibre of some of Channel 4’s programming, but tonight’s schedule includes “The Great Home Transformation”, “Grand Designs: The Streets”, “Bling Ring: Hollywood Heist” and “Shocking Emergency Calls UK”. I assume that the Minister might agree that those programmes could just as easily be produced by a private sector owner.
Julia Lopez
I very much enjoyed my hon. Friend’s contribution to the reception celebrating 25 years of Channel Five. The channel has made some very interesting news investments recently; it has taken up top-quality presenters and has really invested in its news content. That proves that private sector investment in our broadcasters can mean higher-quality content that is more attuned to what audiences of the 21st century want. I welcome the interest of any company that wants to do to Channel 4 what has happened to Channel Five, with the high-quality programming that it provides.
Matt Western (Warwick and Leamington) (Lab)
I may have my facts wrong, but as I understand it, Channel 4 is phenomenally successful. Its subscription service levels are something like a third higher than Netflix’s in the UK, and All 4 is the largest subscription service in this country. Channel 4 does not cost the taxpayer anything, yet it generates £1 billion per year for the UK economy. Other than the scrutiny of Government, what is not to like?
Julia Lopez
The Government are thinking carefully about the fundamental sustainability and future of the Channel 4 model. The hon. Gentleman may be aware of two key points about Channel 4: it does not retain ownership of its intellectual property, and any borrowing it does sits on the public balance sheet. Given its dependence on linear advertising, we have concerns, looking at viewer trends, that that model will be difficult to sustain if Channel 4 is to continue to make the investment in content that I think we all want. We are therefore looking afresh at what Channel 4 needs, not only to sustain itself, but to grow. I hope that what we bring forward will help the hon. Gentleman to understand how this reform sits within a wider set of reforms to sustain our public service broadcasters.
Brendan Clarke-Smith (Bassetlaw) (Con)
We have seen some excellent examples of public service broadcasting. I grew up not too far from the Central Independent Television studios in Nottingham and have been a fan of Channel 4 over the years, particularly “Fifteen to One”, “Football Italia”, and my favourite, “The Crystal Maze”. I am not too sure which zone the Opposition are in today, but does the Minister agree that this deal not only makes really good financial sense for the Government, but allows the purchasers of Channel 4 to raise capital to produce even more of the independent programming that we all value?
Julia Lopez
I very much welcome the opportunity to talk in this House about “The Crystal Maze” and the fantastic content that Channel 4 has produced over the years. Our reforms are fundamentally about making sure that Channel 4 can continue to make the investments that my hon. Friend and I both want in that kind of unique, fun and distinctive programming.
Margaret Ferrier (Rutherglen and Hamilton West) (Ind)
All 4 is the UK’s largest free-of-charge streaming service, providing entertainment and educational programming across the UK, without regard to users’ income, which is particularly important in this economic crisis. How can the Government believe that removing that service will benefit low-income families?
Julia Lopez
I thank the hon. Lady for her question and her concern, but I do not think that anything we seek to do in relation to Channel 4 would deprive low-income families of free-to-air content on it. Channel 4 has made really great strides in the digital space. We think that that will be attractive to any future buyer, and that any future buyer would seek not only to sustain that, but expand it.
Jim Shannon (Strangford) (DUP)
I am convinced that the Minister believes in the importance of maintaining an impartial media. At a time when the phrase “fake news” has risen to prominence, that is vital. Furthermore, it is critical for the Minister to state that the integrity of independent journalism is a priority, and that the Government are at pains to maintain it. Can she confirm that for Hansard, please?
Julia Lopez
I always welcome the hon. Gentleman’s comments and his perspective from Strangford. As I hope I have reassured him through my comments today, this is about the fundamental sustainability of the public service broadcasting sector. If channels wish to remain PSBs, they will still take on the obligations that the Government place on them through their remit, which can, importantly, include the production of impartial news content. I hope that the reforms that we bring forward will assure him that such remits will be taken forward and sustained, so that we have high-quality, important journalism going forward.