Channel 4

Monday 9th January 2023 Commons Chamber

15:38

[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 future of Channel 4.

[The Secretary of State for Digital, Culture, Media and Sport (Michelle Donelan)]

Happy new year, Mr Speaker.

Channel 4 is a great British success story. It was set up by Margaret Thatcher and it has done exactly what she wanted it to do: positively disrupting British broadcasting and driving an expansion in the UK’s independent production sector, which is now surging at £3 billion. However, in the last decade, the media landscape has been transformed by technology and the entry of new, rapidly growing streaming platforms. Channel 4, along with all public sector broadcasters, faces unprecedented competition for viewers in terms of both programming and talent.

Channel 4 is uniquely constrained in its ability to respond to those challenges. There are limits on the broadcaster’s ability to raise capital and make its own content. Under current legislation, Channel 4 operates as a publisher-broadcaster, meaning that all its shows are commissioned or acquired from third parties, such as independent producers or other broadcasters, who typically retain the rights relating to those programmes.

The challenges faced by Channel 4 are very real. That is why the previous Administration decided to proceed with the sale in order to free the broadcaster from the constraints that were holding it back under public ownership. Over the last few months, I have carried out my own examination of the business case for the sale of Channel 4. I have listened to stakeholders and taken a close look at the broadcaster’s long-term sustainability and the wider economic outlook, and I have decided that pursuing a sale is not the best option to ease the challenges facing Channel 4. However, doing nothing also carries a risk. Change is necessary if we want to ensure that the corporation can continue to grow, compete and keep supporting our thriving creative industries. Anyone who says otherwise is burying their head in the sand.

After discussions with Channel 4, I am therefore announcing an ambitious package of interventions to boost the broadcaster’s sustainability. Under this agreement, Channel 4 will continue to play its own part in supporting the UK’s creative economy, doubling both the number of jobs outside London and its annual investment in the 4Skills training programme for young people. Meanwhile, we will introduce a statutory duty on Channel 4 to consider its sustainability as part of its decision making. We are working with Channel 4 to agree updated governance structures to support that long-term sustainability.

We will provide Channel 4 with new commercial flexibilities, including by looking to relax the publisher-broadcaster restriction to enable it to make some of its own content. In doing so, we will work closely with the independent production sector to consider what steps are necessary to ensure that Channel 4 continues to drive investment in indies, particularly the newest, smallest and most innovative producers. That includes increasing the level of Channel 4’s independent production quota, which is currently set at 25% of programmes, and potentially introducing specific protections for smaller independent producers. Any changes will be introduced gradually and following consultation with the sector. Finally, we will make it easier and simpler for Channel 4 to draw down on its private £75 million credit facility.

Alongside the changes to Channel 4, the media Bill will introduce a wide range of measures to modernise decades-old broadcasting regulations, including prominence reforms. Further details will be announced in due course.

[Lucy Powell]

First, I want to congratulate the Secretary of State on her happy news and to thank you, Mr Speaker, for granting this urgent question. It is extraordinary that this matter of huge interest to Members across the House was leaked to the media during the recess with no attempt to make an oral statement. Of course I welcome this decision, having campaigned against this terrible Tory plan since it was announced. The Secretary of State has at least reached the conclusion that was staring her in the face: that the plans for the sell-off were bad for Britain, bad for our creative industries and bad for British broadcasters and advertisers. The plans would have likely seen this treasured institution, which has been responsible for some of Britain’s best-loved films and exports, sold to a US media giant.

What a total waste of time and money this has been. At least £2 million has been spent, and there has been a huge opportunity cost not just for Channel 4, but across the creative industries, with the plans sucking the life out of all the important work that Ministers should have been getting on with. MPs on both sides of the House knew that the privatisation of Channel 4 was an act of cultural vandalism from a Government who simply did not like its news coverage. Can the Secretary of State give us her estimate of how much pursuing this flawed policy has cost the taxpayer, Channel 4 and our public sector broadcasters in lost opportunity?

This is the second time in six years that the Government have proposed this privatisation. What guarantees can the Secretary of State give that privatisation is off the agenda for good? How is she going to ensure future financial sustainability without damaging our vibrant independent sector? Prominence reform is key to that, so when will she bring forward the long overdue media Bill? Does she agree that these plans have been a massive distraction and have already led to British broadcasters losing out to the global streaming giants?

Finally, is it not the truth that after 13 years, this tired Government have run out of road and run out of ideas? They have no plan for growth to support our world-renowned creative economy; just infighting, time-wasting and petty vendettas.

[Michelle Donelan]

As the hon. Lady will know, we have outlined, including in today’s written ministerial statement, an ambitious plan to secure and safeguard the sustainability of Channel 4 so that it can thrive and survive. It is completely wrong to suggest that we are not doing anything, or that the money we have invested in looking at this proposal has been wasted.

In fact, as I have already stated, Channel 4 has now committed to doubling its investment in skills across the country to £10 million. This is a new package, and the money we have invested in considering Channel 4’s sustainability is very clear and on the public record. It is important that we now work together to secure the future of Channel 4 and of our independent sector. As I outlined in my opening remarks, we will particularly safeguard small, innovative independents.

[Mr Speaker]

I call the Father of the House.

[Sir Peter Bottomley (Worthing West) (Con)]

I follow the hon. Member for Manchester Central (Lucy Powell) in saying that, over the last 13 years, Channel 4 has done better than ever before. If we want to congratulate Channel 4, we should also congratulate the Government on making that possible by not disturbing its arrangements.

The Secretary of State is right to examine the proposals put forward a year or so ago. I would not have frozen the BBC licence fee, I would not have proposed the privatisation of Channel 4 and I would not have put pressure on Arts Council England to strangle the English National Opera, but there is more to be done to put them on the right path.

Alex Mahon, the chief executive of Channel 4, spoke for me when she talked about Channel 4’s innovativeness in reaching audiences that others do not serve so well, and I think the publisher-producer split is worth preserving. I hope Channel 4 will not be forced to make too many programmes in-house, as it is vital that we keep the independent producers going. I hope we are back here in 10 years’ time with no more proposals to change the ownership of Channel 4, which is a good public broadcaster that successfully operates commercially.

[Michelle Donelan]

I absolutely agree with my hon. Friend that it is essential Channel 4 remains an incubator of the independent sector, which is why one measure we will be taking forward is increasing, from 25%, the proportion of content it has to take from the independent sector. Let us not forget that the package of measures announced today is about giving Channel 4 the tools to be viable in the long term. Of course, it is up to Channel 4 what it does with those tools. Nobody is forcing it to do anything.

[Mr Speaker]

I call the SNP spokesperson.

[John Nicolson (Ochil and South Perthshire) (SNP)]

Happy new year, Mr Speaker.

I congratulate the Secretary of State, but I heard her refer to a previous Administration. There is no new Administration, just the same old Tory Administration. This is the second time I have sat on these Benches to listen to a Conservative Secretary of State reverse their predecessor’s damaging proposal to privatise Channel 4.

Channel 4 is a flourishing, much-loved public institution that is making record profits and offers fearless journalism. The Secretary of State says her decision is based on evidence, which is a good call, but evidence, rather than any personal agenda, should surely have been the guiding principle from the get-go. For those who are not aware, Channel 4 receives no public funds. Can I try again: how much public money went into this Government’s aborted attempt at privatisation?

[Michelle Donelan]

We have already put that amount on the public record. As the hon. Member for Manchester Central (Lucy Powell) said, the amount is just shy of £2 million, but that also covers the general sustainability work that led to the package we announced today.

[Damian Green (Ashford) (Con)]

It is clearly new year, new politics when the Opposition secure an urgent question to praise a Minister because the Government have got a policy right, and I echo their congratulations. My right hon. Friend the Secretary of State has got this absolutely right, but can she assure me that the independent sector, which has been a huge economic and cultural success since it was created in the 1980s, will be not only protected but enhanced by the measures announced today?

[Michelle Donelan]

I can absolutely guarantee my right hon. Friend that it will be. We will be working extremely closely with the independent sector throughout this period and consulting it to make sure we get this right, not just for Channel 4, but for our thriving independent sector.

[Kevin Brennan (Cardiff West) (Lab)]

The problem with TV repeats is that we all know what the ending is going to be in advance, and we have seen this movie before. However, I am interested in what the Secretary of State has to say about the media Bill. She said she had an announcement to make today, but she did not make a statement to the House. When are we going to see that Bill? When are we going to see the measures that are vital to the future of our public service broadcasters in this digital age and that will ensure their sustainability and prominence?

[Michelle Donelan]

I share the hon. Gentleman’s commitment to the media Bill, and we will be bringing it forward shortly. I cannot stipulate the exact timeframe here today, but I can reassure the House that this Government are absolutely committed to that Bill and to its important aspects, including prominence, for not just Channel 4, but all our public sector broadcasters.

[Simon Jupp (East Devon) (Con)]

Channel 4 is a great British success story, with creative hubs across the country, including in the south-west, creating jobs and improving our economy. Will my right hon. Friend confirm that this move will safeguard the future of our world-leading independent production sector and help Channel 4 remain sustainable?

[Michelle Donelan]

I assure my hon. Friend that this move certainly will make sure that Channel 4 has the tools—a range of tools—to be sustainable in a changing media landscape, where we know that the pressure is on things such as linear advertising, and to help it to continue to be an incubator for the independent production sector, which is home to many jobs in a number of our constituencies.

[Julie Elliott (Sunderland Central) (Lab)]

After the enormous waste of public money that this political exercise has been, I am very relieved that the Secretary of State has come to this decision. One thing Channel 4 has said is that it wants to thrive in the digital era. What steps is she taking to ensure that the outcome of the Government’s consultation on digital rights for listed sporting events is implemented as quickly as possible?

[Michelle Donelan]

We will be updating the House on that matter shortly.

[Karen Bradley (Staffordshire Moorlands) (Con)]

Happy new year to you, Mr Speaker. I thank my right hon. Friend for her answer today and for the sensible decision she has taken on Channel 4, which is exactly the right thing to do. Will she expand on how small, creative, independent production companies in north Staffordshire, and those wanting to become such companies, can benefit from this announcement?

[Michelle Donelan]

We will be working hand in glove with the independent sector to ensure that we put in place specific safeguards, especially for the most innovative, small and new independent sector producers. We will give an update shortly on that, but we are listening to them at all stages.

[Valerie Vaz (Walsall South) (Lab)]

Happy new year, Mr Speaker. May I ask the Secretary of State: why did right hon. and hon. Members only hear about this U-turn on “Channel 4 News” and why has she not put the package before the House?

[Michelle Donelan]

We are laying a written ministerial statement today.

[Sir Jeremy Wright (Kenilworth and Southam) (Con)]

Happy new year to you, Mr Speaker. I warmly welcome what my right hon. Friend has said. Is not the key point that Channel 4 operates in a distinctive niche in the broadcasting landscape, and everything we do should be designed to enhance that, not erode it? Is it not the case that what she has described today has the best chance of enhancing it, whereas privatisation would erode it?

[Michelle Donelan]

I came to the same conclusion as my predecessor that the long-term sustainability of Channel 4 was questionable. That is why we put in place a package, which is different from that of my predecessor but has the same goal in mind of ensuring that Channel 4 can survive, thrive and flourish in the future.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

Happy new year to you, Mr Speaker, and to everybody else. Who can forget the reading of the poem “Stop all the clocks” in “Four Weddings and a Funeral”, one of Channel 4’s greatest triumphs? The point I wish to make is that that film featured Scotland in it and “Derry Girls” features Northern Ireland in it. As a Unionist, I believe that the British Isles is like a diamond: each facet is important. Channel 4 contributes massively to that, so may I ask the Secretary of State what special efforts will be made with the production companies in the provinces—the parts of the United Kingdom other than England?

[Michelle Donelan]

We are working with the independent production sector across the UK, because it is vital that we protect job creation in all corners of our United Kingdom. I agree with the hon. Gentleman that this is not just an England-specific issue.

[Dame Caroline Dinenage (Gosport) (Con)]

Happy new year, Mr Speaker.

I warmly welcome the Secretary of State’s words. The creative industries are simply our global superpower, and it is right that Channel 4 has the flexibility to be able to move with the times, respond to the changing media landscape and take advantage of commercial opportunities. Part of this is about nurturing the skilled workforce of the future so that they can respond to the needs of our creative industries. What kind of flexibility and focus will there be for Channel 4 to have the ability to do that?

[Michelle Donelan]

As part of this package, Channel 4 has agreed to double its investment in skills for young people around the UK—from £5 million to £10 million—which will be important for the entire creative sector.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Happy new year to you, Mr Speaker, and to everyone working in the creative industries, especially those in Yorkshire and the north of England.

I do not want to be mealy-mouthed about this, because I am delighted with the Government’s change of course, but is the Secretary of State aware of the favour that she has done us? The campaign to save Channel 4 has been amazing in bringing together all the people in the creative industries in Yorkshire and the north, giving them a sense of purpose that will not go away. We are a vital part of the creative economy, and we will go from strength to strength in the future.

[Michelle Donelan]

The creative sector is important to the whole UK economy, not just to London. That is why I am delighted that, as part of this package, Channel 4 has also agreed to double the number of jobs outside London, which goes to the hon. Gentleman’s point that it is important that we are boosting the creative sector all around the UK.

[Damian Collins (Folkestone and Hythe) (Con)]

I agree with my right hon. Friend that reform is needed for Channel 4 to thrive in the future. Can she say whether the review will include Channel 4 having the ability not just to take a stake in programmes, which it cannot do at the moment, but to attract additional investment to go into programme making, as Channel 4 requested as part of its response to the Government’s review?

[Michelle Donelan]

On accessing borrowing, we will make it easier for Channel 4 to draw down on its existing allowance, but any additional borrowing will be taken on a case-by-case basis.

[Alex Sobel (Leeds North West) (Lab/Co-op)]

As a Leeds MP, I am delighted by today’s announcement, but I know from my constituents that it has been a wasted 18 months for them as they have had to deal with these privatisation proposals. Can the Secretary of State tell me what additional benefits will accrue to Leeds and Yorkshire from the announcements today, and, specifically, how many jobs will move from London to Leeds, so that people can have a much-improved life in Leeds and Yorkshire working for Channel 4?

[Michelle Donelan]

The additional jobs will be going not just to Leeds, but to other areas of the UK, including Glasgow and Bristol, and that will be a decision made and communicated by Channel 4 itself. As stated, the amount of jobs outside the capital will be double the number that has already been announced. The people of Leeds can take comfort from the decision that we have made today of putting Channel 4 on a sustainable footing so that its long-term future is secure.

[Michael Fabricant (Lichfield) (Con)]

I do recall, by the way, how Channel 4 had to be dragged kicking and screaming to move to Leeds, and even then the majority of personnel still remain in London. There is no question but that Channel 4 has some questions to answer on that. At the moment, Channel 4 has only 10% of the total audience. We want to increase that and we want to see Channel 4 survive. My question is that if that is to be achieved by borrowing, will Channel 4 not sink under debt? That was the reason why I supported its sell-off.

[Michelle Donelan]

As my hon. Friend will note, we have not increased the amount that Channel 4 can borrow. That will have to be done on a case-by-case basis. What we are doing is enabling Channel 4 to have the tools that it needs to survive in a very changed media landscape, including relaxing the publisher-broadcaster remit. That will enable it to have those commercial freedoms and to stop it having its current rigid business model.

[Sir Chris Bryant (Rhondda) (Lab)]

Would it not be really nice if, one day, when a Government Minister was appointed to replace another Government Minister and they knew that the policy their predecessor came up with was completely and utterly bonkers, instead of leaking a letter to the Prime Minister and letting it go out to the country rather than coming to the House first, they decided, “I know what I’m going to do: I’m going to come to the House of Commons and apologise. I’m going to say, ‘I am sorry, my predecessor had completely lost the plot for completely unknown reasons. I apologise to everybody for wasting all this time and energy and I am going to do better.’”? Or is that just the kind of plot that appears on Channel 4?

[Michelle Donelan]

As I am sure the hon. Gentleman knows, this topic has been looked at under various predecessors in this role. In fact, the consultation commenced well before my predecessor’s time. In terms of leaks, I can assure him that it was not a Government leak and there is an investigation going on.

[Andy Carter (Warrington South) (Con)]

I agree with my right hon. Friend’s assessment that Channel 4’s current business model is too rigid. Changing the publisher-broadcaster model will mean that Channel 4 can sell more of its products overseas, generating different revenue streams. Can she outline what percentage of the corporation’s overall revenue she expects to be generated from non-linear TV advertising in future?

[Michelle Donelan]

That is in the hands of Channel 4 and depends on what it does with the tools we are giving it. We are setting it up with the possibility of being sustainable in the future, but on the business model and how it reacts to the changes we have introduced, Channel 4 needs to be in the driving seat.

[Sir David Evennett (Bexleyheath and Crayford) (Con)]

I welcome my right hon. Friend’s statement and approach and the new package she has unveiled today. The media landscape is changing radically. Does she agree that it is essential that we give Channel 4 more freedom to generate income and to remain a sustainable business in future?

[Michelle Donelan]

I completely agree with my right hon. Friend. It is essential that we give Channel 4 the tools to succeed in a changing media landscape. To ignore the problem is to be in denial.

[Mr Toby Perkins (Chesterfield) (Lab)]

It appears that the best we can expect of this Government is that occasionally a Minister will come to the Dispatch Box and tell us they are not going to do the stupid thing that one of their predecessors had announced, so in that regard today is a day of triumph for this Government. The Secretary of State has said the status quo is not an option; will she expand on how she envisages the relaxation of the publisher-broadcaster restrictions on Channel 4 will work in practice? What does she think that will look like?

[Michelle Donelan]

We will be detailing that and it will form part of the media Bill. In the coming weeks we will work closely with Channel 4 and the independent production sector to make sure we get that absolutely right.

[Jason McCartney (Colne Valley) (Con)]

I welcome this boost to Channel 4’s sustainability and commercial freedom. With Channel 4, as we have heard, pledging to double its skills budget to £10 million and double the number of jobs outside London, and with its headquarters being in Leeds, does my right hon. Friend agree that this announcement is really good news for Yorkshire?

[Michelle Donelan]

This is good news for Yorkshire, but it is also good news for the taxpayer. Let us not forget that it is the taxpayer who owns Channel 4 and it is this Government who are putting it on a sustainable footing.

[Andrew Gwynne (Denton and Reddish) (Lab)]

I am not a churlish chap, so I want to thank the Secretary of State for her U-turn. I think she has come to the right decision on Channel 4; it is only a shame we had to spend £2 million to work that one out. May I ask her for a bit more detail on the package? She says there will be a statement at a later date, but can she explain to the House now whom the Department plans to consult and how in order to determine how it will relax the publisher-broadcaster restrictions on Channel 4?

[Michelle Donelan]

As I said, we will be working very closely with Channel 4, the independent production sector and public service broadcasters at large, and we will bring forward the details in the media Bill in due course.

[Steve Brine (Winchester) (Con)]

It is the right decision not to proceed with the sell-off of Channel 4 and the end—I hope—of picking fights. The channel told me at the Digital, Culture, Media and Sport Committee last year that it spent £220 million in 2021 supporting about 10,000 people down the supply chain in the nations and regions. Indeed, that was one of the main reasons I did not want to see this jewel sold. May I press the Secretary of State on the important independent sector? She mentioned increasing that portion to 25%: how might we get there and reach deeper into the creative industries in places such as Hampshire?

[Michelle Donelan]

I know that my hon. Friend’s constituency is a thriving hub for the creative sector, so people there will be listening very closely. As he stated, at the moment Channel 4 has to take only 25% of its content from independent producers. We will increase that. We will also look at what additional measures we can introduce to support in particular the small and most innovative independent producers by working with and listening to them.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

Happy new year, Mr Speaker.

Last year, evidence to an inquiry in the other place indicated that Channel 4 has commissioned about £84 million-worth of work in Wales over the last decade. What assurances can the Secretary of State give that DCMS will work with the Welsh Government to develop the relationship between Channel 4 and the Welsh independent production sector?

[Michelle Donelan]

I have an upcoming meeting with my Welsh counterpart to discuss that among other things. It is important that we work together on these agendas when they are vital for the whole of the UK.

[Nickie Aiken (Cities of London and Westminster) (Con)]

Happy new year, Mr Speaker.

I welcome the decision by the Government not to privatise Channel 4, and I thank my right hon. Friend for her time to discuss the matter with me. I am very proud that Channel 4’s headquarters are in my constituency. Does she agree that what makes Channel 4 so special is that it is a levelling-up company that supports jobs and production companies across the four nations? It is so important that we continue to support Channel 4 and ensure that it can sustain its business model.

[Michelle Donelan]

I know that my hon. Friend has been vocal on this topic. It is absolutely essential that we support Channel 4 in its levelling-up agenda. That is why I am particularly delighted that it is doubling its investment in skills and doubling the number of jobs outside London while retaining its footprint in the capital.

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

Part of the agreement is that Channel 4 will double the number of jobs outside London, so what discussions have Ministers had with the broadcaster about how many jobs that will lead to in Glasgow specifically?

[Michelle Donelan]

Channel 4 has been very open in saying that these jobs will be based in a number of locations, including Glasgow, but the exact number in each location will be a decision led by Channel 4, which will communicate that itself.

[Nick Fletcher (Don Valley) (Con)]

Channel 4 spends much of its money in the north—and is set to spend more, which I welcome—but much of that is spent in Leeds. Doncaster has a wonderful creative industry, so will the Secretary of State meet me to see how we can expand the opportunities for Doncaster’s creative businesses?

[Michelle Donelan]

Obviously, the exact location of staff is a decision for Channel 4, but I know that several opportunities spring from making sure that Channel 4 is sustainable, especially in the independent production sector. I am sure that Doncaster can lead the way in that area.

[Jim Shannon (Strangford) (DUP)]

I very much welcome the Secretary of State’s statement, on which I think we are all very much in agreement. It was announced last year that Channel 4 had a new partnership with Northern Ireland Screen in a bid to grow the production sector in Northern Ireland. In addition, there are two Channel 4 higher-education partnerships in Northern Ireland—in Belfast and Newry. What discussions has the Secretary of State undertaken with Channel 4 to ensure that Northern Ireland is still a crucial part of TV production in the UK, whether or not Channel 4 is privatised?

[Michelle Donelan]

In the conversations and work that I have undertaken with Channel 4, the sentiment has been very much about the importance of the UK in general—including Northern Ireland—not just England. I am sure that Channel 4 would be more than happy to meet the hon. Member to discuss that in detail.

[Scott Benton (Blackpool South) (Con)]

Channel 4 has an unmistakable liberal-left metropolitan bias in its programming, particularly in its news output—so much so that it almost makes the BBC look impartial by comparison. How exactly will a few pages in its annual report change that ingrained cultural bias?

[Michelle Donelan]

At the heart of this piece of work, and of my predecessor’s piece of work, was not impartiality but the sustainability of Channel 4. That is what we have achieved from this announcement. However, as part of that, Channel 4 has agreed to have a new section in its annual report detailing a review of impartiality and editorial content from the previous year. That is certainly a good start and something that I look forward to reading.