Public Service Broadcasting (Communications and Digital Committee Report)

Lord Gilbert of Panteg Excerpts

Thursday 27th May 2021 Lords Chamber

Moved by

[Lord Gilbert of Panteg]

That this House takes note of the Report from the Communications and Digital Committee Public service broadcasting: as vital as ever (1st Report, Session 2019, HL Paper 16).

[Lord Gilbert of Panteg (Con)]

My Lords, I am pleased to introduce this debate on the Communications and Digital Committee’s report, Public Service Broadcasting: as Vital as Ever. I declare some interests. I was a guest of S4C at a Wales v Ireland rugby match in March 2019 and of ITV at the National Television Awards in January 2019. I was invited to participate in the Royal Television Society Cambridge conference in September 2019 in my capacity as committee chair. The conference was hosted by ITV, which provided hospitality and accommodation.

I am grateful to the committee staff for their assistance in preparing the report. Our clerk was Theodore Pembroke and our policy analyst Theo Demolder. They and the committee were provided with great support by Rita Cohen. I also thank Professor Steven Barnett, who provided expert advice throughout the inquiry, and the many witnesses who gave us evidence.

I am looking forward today to hearing from noble Lords who were members of the committee at the time of the report, and others who have joined the committee since. As always, they have bought extensive experience and expertise to the work of the committee and the deliberations of this House.

We issued our call for evidence a little over two years ago, in March 2019, and reported 18 months ago in November of that year. Since then, much has changed. Covid has hit us all and led to huge disruption for PSBs, accelerating some changes already under way in the industry while bringing new challenges to the thriving production sector and the wider creative economy and, in particular, its large freelance workforce.

The Government have announced what looks like a blanket and untargeted pre-watershed ban on HFSS advertising that will impact the business models of commercial PSBs while leaving online platforms untouched.

Ofcom has published its five-year review of PSBs. Like us, it found:

“Public service content still matters hugely to people and society”


and that PSBs

“underpin the UK’s creative economy.”

However, it argued that

“radical changes to support PSBs shift … to online”

are needed.

The report from Lord Dyson shocked many of us who want a strong, independent and trustworthy BBC. The Government, in their so-far measured response, have indicated further changes in the way the BBC is governed, which I hope the Minister will be able to say more about today.

In introducing this report, I cannot help feeling that the hard work of Select Committees, the engagement and commitment of our witnesses and the time put into responding by Ministers and officials deserve more timely debate in this House while reports remain topical. This inquiry focused on the role of PSBs—both the BBC and commercial PSBs—the financial pressures they face, the nature and future of the PSB model and the impact of the changing production landscape in the age of video on demand.

We looked in great detail at drama and factual content, which account for around 70% of Netflix and Amazon programming, with eye-watering budgets of up to £15 million per hour. News and current affairs, barely covered by the SVODs, was not a focus of our inquiry but was considered in more depth in our subsequent report on the future of UK journalism, where we called for much greater diversity in newsrooms and highlighted the danger of groupthink and narrowness of thought.

Trust, though, is everything, and that trust has been badly hit by what Lord Dyson found at the BBC. Drawing on our inquiry, it seems to me that it is vital that we restore that trust because, as we concluded, the evidence we heard indicated that public service broadcasting is as important as ever. The Government agreed and, in their response, said that PSBs provide

“significant cultural, economic and democratic value to the UK”

and that the broadcasters

“will need to adapt to the changing media landscape to sustain their value”.

As we all know, the way in which we watch television is changing—20 years ago, most people relied on five free-to-air channels provided by the PSBs. These broadcasters now face competition from hundreds of other channels and online services. Subscription video on demand services—or SVODs—such as Netflix and Amazon Prime have enjoyed rapid success. They have made available thousands of hours of content and offer each viewer a personalised experience. More than half of UK households now subscribe to an SVOD, while YouTube is also a major competitor. SVODs operate globally and have enormous resources, leading to concerns that PSBs are being priced out of the market for making high-quality television, limiting their ability to create drama and documentaries that reflect, examine and promote the culture of the UK.

We sought to understand the contemporary role of PSBs and whether the compact—the obligations they take on in exchange for privileges—is fit for the age of video on demand. I would like to outline the importance of the committee’s recommendations for the thriving of public service broadcasting. Our evidence, like Ofcom’s, overwhelmingly indicated that public service broadcasting is as important as ever to our democracy and culture, as well as to the UK’s image on the world stage. PSBs contribute to the economic health of the UK and support the wider creative industries.

A wide range of witnesses told us how PSBs inform our understanding of the world, reflect the UK’s cultural identity and represent a range of people and viewpoints. Although other channels and services offer high-quality UK programmes, the availability and affordability of PSBs through digital terrestrial television remain unmatched. Their availability allows them to provide “event television”: moments that bring the nation together, such as major sports events, documentary series and landmark drama such as the virtual water-cooler drama “Line of Duty”, commissioned by the BBC from an ITV-owned production company, and Channel 4’s powerful and important “It’s a Sin”, which told a story that needed to be heard and which was public service broadcasting to a T. To strengthen the availability of event TV, we recommended that the Government should review the listed events regime to extend the availability of significant sports events on free-to-air television.

I should add that, while the committee was clear that losing universal and affordable public service broadcasting would make our society and democracy worse off, we recognised the contribution of great content from non-PSBs that met many of the broader public service objectives—content of great quality that was original and made for Britain—and recommended that Ofcom should consider the contribution of content from non-PSBs when reviewing the PSB landscape. But we found that PSBs are struggling to achieve their mission to serve all audiences in the face of increased competition and changing viewing habits. They are not serving younger people and people from minority backgrounds well enough. Their legitimacy depends on serving these groups better.

To do this, PSBs must be willing to take creative risks and do more to involve people from different backgrounds in developing and making programmes. We recommend that Ofcom should be empowered to gather data on the diversity of commissioners and production crews making programmes for PSBs. We heard concern about representation of the nations and regions of the UK. Investment in TV production is too heavily concentrated in London. Many viewers believe that London and the south-east, as well as hub locations such as Glasgow and Cardiff, are overrepresented at the expense of other areas. Although progress has been made and new entrants have made high-budget series outside the capital, the economic benefits of investment have not spread widely enough.

Public service broadcasters are obliged to commission a certain percentage of programmes outside the M25, in the regions and nations of the UK. This is critical to building a skills base in different areas and ensuring that viewers see their localities represented on screen, but Ofcom must ensure that PSBs uphold the spirit of these obligations. The best way to support production in the regions and nations is to invest more in returning—rather than one-off—series and to commission production companies with headquarters outside London.

The UK TV production sector has enjoyed impressive growth in recent years, including in exporting programmes. SVODs and other commissioners such as HBO and AMC have driven significant investment, encouraged by high-end tax relief. However, public service broadcasters remain essential to the UK production sector. They spend considerably more than SVODs and other broadcasters on original UK programming.

The terms of trade—the code of practice drawn up by PSBs setting out principles for agreeing the terms of commissioning independent productions—encourage independent production companies to work with them. We heard from many witnesses that the terms of trade were one of the main reasons they work with PSBs. Their success relies on both PSBs and the production sector being willing to update the terms of trade as the market changes.

PSBs are also vital to the success of SVODs, as part of the UK’s thriving mixed ecology—a mutually reinforcing system of specialist skills, labour, production companies, broadcasters and other assets that are supported by both public and private investment. This ecology is integral to the wider creative industries. It nurtures creative and other skills used in filmmaking, and it is a vehicle for exhibiting British talent to an international audience. PSBs are at the heart of this ecology. We heard from Netflix that co-production

“works extremely well for us as a model and it seems to work extremely well for the rest of the industry as well.”

Between 2014 and 2018, co-commissions between SVODs and broadcasters almost doubled, from 16 to 30.

The health of the independent production sector depends on maintaining the supply of production crews to meet increased demand. There is a serious risk of the sector reaching full capacity and overheating. We recommended that the Government should address skills shortages in the sector through urgent reform of the apprenticeship levy and extending the high-end TV tax relief. Public service broadcasters are especially vulnerable to further cost inflation. The apprenticeship levy simply does not work for much of the creative sector; the committee has illustrated this time and again in a number of reports. The Government’s response is largely one of denial, with commitments to some small-scale pilots. As we shape up for a post-Covid national effort to train young people for the roles of the future, what plans do the Government have to do something really impactful to sort out this failing policy area?

If public service broadcasters are to continue to serve us, and to be able to afford to make world-class programmes, they must remain financially viable. The BBC should not be given further responsibilities without a corresponding rise in income. We expressed concern that the integrity of the licence fee, the guarantor of the BBC’s financial independence, has been undermined. In particular, the Government should not have asked the BBC to accept responsibility for over-75s’ licences, nor should the BBC have agreed to take it on.

A new, independent and transparent process for setting the licence fee is necessary. We recommended establishing a new body, to be called the “BBC Funding Commission”, which should be in place in time for the next round of negotiations. The Government have not chosen this route, but will the Minister commit today to a transparent and open process next time round? When we call for transparency, we have the BBC as well as the Government in mind.

The obligations public service broadcasters take on and the privileges that they receive in return must be balanced. However, we heard that, in a competitive environment, the PSBs’ traditional privileges were becoming less valuable. Most importantly, public service broadcasters have historically received mandated prominence, listed as the first five channels on the electronic programme guide. We supported Ofcom’s proposals to update this principle for the digital age, so that it covers on-demand viewing, but implementing a solution seems to be taking for ever, and I cannot understand why.

Digital terrestrial television will remain essential for the many viewers who cannot afford, or do not have access to, internet or pay TV, and free access to spectrum for PSBs must continue to be guaranteed. Given the pace of change in the market, we recommended that Ofcom should review whether TV platforms should be required to pay commercial PSBs a retransmission fee for carrying their channels.

Much of the regulation affecting broadcasting and TV production dates from a time when PSBs were dominant. They remain the largest producers in the UK, and regulation has enabled smaller players in the ecosystem to thrive. However, the sector is facing major changes because of the rising popularity of US-based SVODs, which are themselves likely to become consolidated.

As we found in our report, Regulating in a Digital World, regulation needs to become faster at reacting to changes in the digital economy. An example of this was the Competition Commission’s decision in 2009 to block the creation of Kangaroo, a joint venture of the PSBs to aggregate content from BBC Worldwide, ITV and Channel 4. In a report at the time, the committee strongly regretted the Government’s failure to intervene on public interest grounds. In 2018, Sharon White, the chief executive of Ofcom, said that the PSBs will need to “collaborate to compete” in the new environment. The opportunity that Kangaroo presented for Britain to be in on the ground floor at the start of video on demand is not the kind of opportunity that comes along often. That it was stopped on the runway is an example of a regulatory approach that harks to the past rather than looking to the future. It illustrates the need for much more flexible, forward-looking and joined-up regulatory thinking than we have.

If the UK is to continue to be a world leader in the creative industries, public service broadcasters must be enabled to thrive in the digital world. They must be held to account for their obligations, afforded full access to the commensurate privileges and supported to ensure that the important work that they do remains financially viable in an ever-more competitive environment.

I started by looking at the changes that have happened in the industry since we reported. Of course, the other big change is that the Government were re-elected with a thumping majority, an agenda to level up Britain, and no hesitation at all about playing a role in helping business to thrive in this fast-changing world. From their response, we know that the Government believe that PSBs play a central role in the ecology of the creative industries but that they need to adapt quickly to survive. I ask the Minister: what role do the Government envisage for the creative industries in their industrial strategy? How do they plan to support the production and content distribution sector? How can skilled work in production and content distribution contribute to levelling up? Will the Minister tell us what the Government will do to help to ensure that PSBs continue to provide, in the Government’s words,

“significant economic, cultural and democratic value across the UK”?

In particular, what will the Government do to help PSBs to adapt to the changing media landscape so that they continue to make that vital contribution? I beg to move.

--- Later in debate ---

[Lord Gilbert of Panteg (Con)]

My Lords, I will be brief. I thank all noble Lords for this excellent debate, with special thanks to members of the committee, past and present. I enjoyed the contribution of the noble Baroness, Lady Merron; it is great to see her on the Front Bench, in full grip of what I think is the best brief in government. I was moved by the tributes to Lord Gordon. He was a giant in the industry, but that was nothing to his reputation in Glasgow, which we visited during the inquiry and where literally everyone we met knew Jimmy.

Listening to the debate, it is clear to me that the industry will look very different in the years ahead—I do not disagree with everything that my noble friend Lord Hannan said. It seems to me that, in 10 years from now, the funding will look very different too. However, my noble friend Lord Holmes hit the nail on the head when he reminded us that it is all about the content. As the noble Baroness, Lady Grender, said, our mission is not to see public service broadcasting survive but thrive.

I thank the Minister for her reply. I also thank her, her ministerial colleagues and her officials for their support and co-operation with the committee’s work, and I would be grateful if she would pass that on. She gave full and measured responses. I welcomed her reaffirmation of the Government’s commitment to public service broadcasting and her recognition, again, of its vital economic, cultural and democratic role. I was very glad that she recognised so clearly the role of the Government in helping PSBs navigate the challenging future they face. I beg to move.

Motion agreed.