Digital Economy Bill

Lord Gordon of Strathblane Excerpts

Committee: 4th sitting (Hansard): House of Lords
Wednesday 8th February 2017 Lords Chamber

This is a very modest amendment and a tiny part of what will surely be a global standard, but it lays down a marker. Although Sharon White is on the record as saying she does not believe that Ofcom should play a part in regulating the internet, I wonder whether her position has as much to do with expertise and capacity at Ofcom as a strongly held philosophical position. It might not be a perfect amendment but I say to the noble Lord that it is a perfect idea because it does not overreach but offers the prospect of transparency and correction. The technology we are talking about brings with it a great deal of creativity and social good but it is, as the noble Lord said, disproportionately powerful and opaque. I urge the Minister to consider what the Government might offer to deliver the intention of the amendment, if not in this form then perhaps in another.

[Lord Gordon of Strathblane (Lab)]

My Lords, I, too, support the amendment. Yesterday, along with many of your Lordships, I attended a meeting with Channel 4 on the subject of fake news. Here we are not talking about opinion, where people can legitimately take one view or another in a democracy, but about things that are demonstrably totally false. Yet there is no mechanism at the moment for screening them out of social media. If in the United States 44% of the population regard Facebook as their primary source of news, there are dangers for democracy.

I do not know whether the noble Lord’s amendment will work. I do not know whether, for example, the companies will regard algorithms as commercially confidential and refuse to release them. I do not know what powers we actually have over these bodies, but it is worth exploring. It would be ridiculous if this massive Bill, which deals very well for the most part with a wide range of subjects, were to leave out the most topical and potentially the most dangerous of all: social media.

[The Lord Bishop of Chester]

My Lords, this is an important amendment because it touches upon the bigger issue of the impact of artificial intelligence on all sorts of aspects of our lives. There is a law called Moore’s law, which says that every two years the power of computers doubles. That has been true over the past 20 or 30 years and we should assume that that power will continue to develop. Artificial intelligence in all its impacting forms will be more and more prevalent in our society and more and more potent in the hands of terrorists in the years to come.

We cannot ask Ofcom to solve all the problems in this area, but I would like to know where the ownership of these risks and the rapid changes in our society falls in the eyes of the Government. Perhaps Ofcom has a role in this regard—search engines or whatever—but it is really part of a bigger picture of how we get ahead of the game with the impact of artificial intelligence. We read in the papers about driverless cars appearing on our streets, and in many other areas of life artificial intelligence will impact upon us. Where is this owned in the corridors of government?

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[Viscount Colville of Culross (CB)]

I declare my interests in broadcasting as set out in the register. I support this group of amendments. I think it is about time that we seriously considered statutory underpinning to protect the independence of the BBC so that it can operate free from the influence of Ministers and other public authorities in the UK.

The last two charter negotiations have both ended up being a smash and grab by the Government on the BBC’s funding and independence. In my view, the negotiations for the 2017 charter have been the most egregious attack by Ministers in the history of the corporation. The new charter has been portrayed as a great victory that has not only saved the licence fee but also extracted an annual inflation-linked increase in the fee. However, the director-general and the strategy team at the BBC spent a great deal of the last three years constantly anticipating and fending off attacks by Ministers—surely a serious distraction at a time when public service broadcasting has been under unprecedented attack by satellite and internet rivals.

I particularly welcome the new clause that would be inserted by Amendment 218, which states that the BBC should be independent in all matters concerning,

“the content of its output, the times and manner in which its output is supplied”.

There is a groundswell of opinion among many politicians that the BBC needs to concentrate on content that cannot be provided by the market. Noble Lords have only to look at PBS in America to see that, although its programmes are very worthy and wholesome, they are watched by a tiny minority of the audience and are not really relevant to national discussion.

What was most extraordinary about the most recent negotiations for the charter was the level of interference attempted by the Government in BBC content provision. Your Lordships should know that the rumours in the press that the Government wanted to interfere not only in the content but even in the scheduling of BBC programmes were true. They wanted to force the BBC to move the “Ten O’Clock News” to another time. Surely that really is none of their business—even if many noble Lords who like to go to bed early might have appreciated the move.

I also welcome proposed subsections (3) and (4), safeguarding the BBC so that it can “exercise its functions” by providing,

“sufficient funds, through the licence fee and otherwise”.

“Otherwise” is an important word for me. As part of the charter negotiations the Government quite rightly demanded that the BBC find sources outside the licence fee to raise revenues. BBC Worldwide, the corporation’s sales arm, has been doing just that—and very well indeed. It promises to return over £1 billion to BBC content provision over the next five years.

As a former BBC programme maker myself, I know that the uplift from worldwide funding for a programme budget can transform its content. The extra money allows an increase in the number of days’ filming, the locations to be used and the ability to work with a craft film crew—all of which means that viewers can see the money on screen and have a better viewing experience. Yet in the last negotiations the Government very nearly managed to privatise BBC Worldwide. I believe that these proposed subsections would stop such a threat in future.

Many attempts to reduce the independence of the BBC were eventually successfully fought off this time round. But the existing charter mechanism allows similar interference by the Government in the BBC in the future. The risk of placing the future of the BBC on a statutory footing is that there are plenty of politicians from all parties who would like to do the corporation harm, or even to interfere directly in how and where the BBC spends its money. Amendments could be made by Peers and MPs which would atomise the BBC so that its content served their own interests or constituency, which would damage one of the great unifying institutions in our country.

However, if noble Lords look at Channel 4 and its statutory underpinning, they will see that it has made public ownership of that organisation more secure. Last year’s threat to privatise Channel 4 was only too real, but in the end it would have needed a very controversial Act of Parliament to carry out that threat. And what did we see? No such Bill was presented to Parliament, and Channel 4 remains in public hands. I am convinced that this group of amendments would give the BBC powerful protection from future government attacks on its independence. I urge the Minister to give them serious thought.

[Lord Gordon of Strathblane (Lab)]

My Lords, I cannot work up the same sort of enthusiasm for the statutory underpinning of the BBC. Although I deplore interference with the running of the BBC and the licence fee, and welcome the promises of better behaviour in future in the recent licence settlement, it seems to me that statutory underpinning creates a platform for statutory interference as well, which could be a lot more dangerous. Things are run quite well and we now have a royal charter that will last for 11 years. That gives us time to reflect on possible changes at some point in the next 11 years—but certainly not at the moment.

[Lord Birt (CB)]

My Lords, I accept that I have a special interest, but I have yet to be bored by the noble Lord, Lord Lester, on this matter. Indeed, I applaud his tenacity and hard work. The day this House discussed the royal charter was the lowest day in all my time in the House. It was a particularly distinguished debate, and there was a wide consensus on all sides that the charter was inappropriate. I do not plan to rehearse the arguments that I made on that day again, but there was wide agreement that, although we had all long believed that the charter was the right way of governing the BBC—I certainly believed that when I was the director-general—we had learned the hard way that it was not.

The royal prerogative is simply archaic; it flows from our history, with its origins in medieval times. Its shortcomings have just been unfolding in the Supreme Court; it has been found wanting there. That was a low day for me because, despite consensus across the House, the Government did not give an inch. I do not expect them to do so today. However, the good thing about this debate and about what the noble Lord, Lord Lester, and his colleagues are doing is that it puts this issue firmly on the agenda. If it is not won today, I predict that it will be won one day. The BBC simply has to be put on a statutory basis.

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[Baroness Bonham-Carter of Yarnbury (LD)]

I add my support to these amendments and also pay my respect to the noble Lord, Lord Best, who so ably chaired the Communications Committee, of which I was a member, and produced this report. As everyone in this debate has said, a greater level of transparency must be introduced into the setting of the licence fee. Never again can there be backroom deals.

What these amendments seek to achieve is that in future there will be clarity and public scrutiny. The public, after all, pay the licence fees. These are moderate proposals which will rightly leave an elected Government with the final say in determining the BBC’s revenue, but introduce an important element of accountability into the process, which is surely appropriate for such a vital national institution. There is obviously room for debate as to which body oversees this process, but I hope that the noble Lord agrees that there should be a more open and transparent process.

[Lord Gordon of Strathblane]

My Lords, I was a member of that licence fee commission under Gavyn Davies in 1998. It may interest the House to know that we had a subcommittee under the late Lord Newton looking at the issue of possibly funding a licence fee for over-75s and making it free. The unanimous conclusion of the committee was that that was a very bad idea and wholly inappropriate for the BBC.

[Lord Wood of Anfield]

My Lords, I wish to speak to Amendments 222B, 222C and 222D, which go together and which draw on the spirit of the excellent arguments from the noble Lord, Lord Best, and share many of the features of what the noble Lord, Lord Lester, set out. The idea is to reinforce the credibility of the licence fee, to ensure the BBC receives the resources it needs to fulfil its responsibilities under the charter. These amendments go together because, logically, the problem is that the process of negotiating the charter and setting a licence fee level do not always sit easily together.

At present, the connection between the charter process and the licence fee process is, at best, an indirect one. Each has its own political dynamics, so in setting the licence fee Governments have a range of considerations and pressures to contend with. One of those is the interests of the BBC to fund what the charter says it has to do, but it also includes the interests of other broadcasters, the politics around the headline licence fee rate—which is a huge thing for Ministers, proving to the public that they have got more for less out of the BBC and the overall settlement—and, as we discussed earlier, financial pressure to offload government responsibility on to the BBC without extra cost. So the temptation always exists for government to inflate the ambition of the charter and to put a lid on the increases in the licence fee simultaneously. That not only threatens the BBC’s autonomy but risks casting the Government with the suspicion of unwarranted interference.

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Moved by

[Lord Gordon of Strathblane]

224A: After Clause 79, leave out inserted paragraph (b) and insert—
“(b) that the service is a service which, in the opinion of OFCOM, is capable of reaching the vast majority of the population and likely to achieve a significant audience.”

[Lord Gordon of Strathblane]

My Lords, Amendment 224A has the same objective as Amendment 224 but takes a marginally different approach. I will not go over the statistics because my noble friend Lord Wood has done that admirably, but I would add that PSBs are responsible for only 5% of sports output on television but 60% of the viewing. Their role in sports coverage is absolutely vital and I fully endorse the need to protect the listed events regime against the risk of becoming obsolete.

I must apologise to the Committee because the language I used in drafting Amendment 224A is more than sloppy. In an age that regards a majority of 52% in the EU referendum as overwhelming and a 55% majority in the Scottish referendum as equally overwhelming, the phrase “vast majority” is wholly inadequate to reflect what I really mean, which is as close to universal coverage as is humanly possible. However, the main point of my amendment is to get rid of fixed targets because they can become obsolete. My noble friend may be right when he says that it might happen to all five PSBs within the next Parliament, so why substitute 95% with 90% which may become equally obsolete in the ensuing two or three years? Why not leave it to the judgment of the regulator, Ofcom? It should reach a decision on which broadcasters could qualify.

The other point on which I slightly disagree with my noble friend is going for 90% in the preceding year. First, that could be overly restrictive, and secondly, it could lead to a situation where an organisation deliberately becomes free to air but hides its main sports coverage behind a paywall. It would be much better to leave this to the judgment of Ofcom. It can determine what coverage is going to be required and who can qualify as a free-to-air broadcaster. Apart from those points, I endorse entirely the need to protect the listed events regime and I beg to move.

[Lord Addington (LD)]

My Lords, I apologise for not having spoken at Second Reading. Free-to-air broadcasting is something that is very good because it helps the entire sporting structure by encouraging people to watch sports events, which in turn may make them actually get out there and play some sport, a point that has not been mentioned yet. The fact is that if you have not seen something you cannot get involved in it, and equally, unless it is culturally acceptable you do not get involved. This is an odd and imprecise correlation that everyone knows about. The effort to build a healthier nation is helped by broadcasting. Oddly enough, being able to watch sports while sitting on the sofa encourages people to go out and try them, and thus makes them likely to spend slightly less time on that sofa.

The most important part of Amendment 224 moved by the noble Lord, Lord Wood, is that the affirmative procedure would have to be used to make any changes. That, along with a commitment to ensuring that Parliament takes an interest in this issue and monitors it carefully, is probably most important in terms of reflecting the spirit of the amendment. If we were to leave this to some sort of outside structure, as we heard from the noble Lord, Lord Gordon, it is going to be difficult to pin down in a fast-changing world. Unless we have something that states that PSBs must continue with this provision, it will come under pressure and people will always be sniping at it. The fact is that sport seems to be something which people want to pay to access and view, so there will always be pressure. Representatives of the big five who came in to talk to my colleagues about this issue said that they are happy with the situation as it is at the moment, but there will always be someone who will think, “We can get so much more money and could do so many wonderful things if we restricted viewing”. As I say, there is always that bit of pressure.

We owe it to the public to make sure that any change that is made to something like this, which is a very good thing, is done in the full glare of public scrutiny. I hope that my comments are taken in the spirit in which they are intended, which is that this regime is bigger than the sports events themselves. It is part of our current fabric and we should take an interest in it. Whichever criteria are used, making sure that Parliament, to which the public have democratic access, is involved in the discussion is essential. If any changes are made, we will want to know why, because a price will have to be paid no matter what benefits are gained for certain sports.

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[Lord Wigley]

My Lords, I am delighted to add my support to the amendment, and to thank the noble Lord very much for the work he has put into this. As one who has campaigned on disability issues over the years in another place, alongside certain other colleagues who are in the Chamber tonight, I know that it is vital, in line with the social definition of disability, to make sure that handicap is not caused by the failure of those who can control our environment, whether that be the social, the physical or the psychological environment.

We are talking about creating a social environment in which it is possible for people who could depend so much on, and enjoy so much, the benefits of broadcasting to get that full benefit—provided that the necessary adjustments are made. I was for some years a member of the S4C authority, and I am acutely aware of the challenges of meeting the necessary standards. It is not a cheap option—but, as the noble Lord rightly said, technological changes are taking place that make it possible for translation, both between languages and with sign languages and other means of conveying information, to be done almost automatically, at low cost. Undoubtedly this will be much more available in the future. I hope that we will look at this amendment with an eye to that future, and that we will harness all the technology that may be available, so as to prevent—as I am sure we all wish to do, where we can—a disability becoming a handicap.

[Lord Gordon of Strathblane]

My Lords, there is a general air of unanimity and approval for this amendment: I think the noble Lord has backed a winner. Any changes that I have in mind I can discuss with him at some point between now and Report, and I am confident that he would probably agree. Reference has already been made to the difference between the linear services—which are already up to speed and are becoming more and more effective, and cost-effective—and some of the online platforms, which are quite complicated. We might need to insert the word “proportionate” into the amendment, but apart from that, I think that everybody in the Committee endorses what the noble Lord is trying to do.

[Lord Grantchester (Lab)]

I support Amendment 225, tabled by the noble Lord, Lord Borwick, and thank him for introducing it. We on this side of the House would claim that it has our fingerprints all over it, as it was introduced and spoken to in the other place by our honourable friend Louise Haigh MP. We agree that people with hearing or sight disabilities should be able to watch catch-up or on-demand services in the same way as they can watch standard linear TV, whether on a traditional television or on a computer, tablet or mobile phone.

We agree that broadcasters have not made sufficient progress—with the exception of the BBC, which has 98% accessibility on iPlayer. I understand that 76% of the UK’s 90 on-demand providers still offer no subtitles at all, that 85% of Sky’s on-demand content via its set-top box is inaccessible, and that only 5% of Virgin Tivo on-demand services have subtitles. I understand that on linear TV 16% of content is watched with the subtitle option switched on. The noble Lord, Lord Borwick, may well be correct to say that other broadcasters are moving in the same direction as the BBC.

This service provision is critical for people with sight or hearing disabilities, who can feel isolated and socially excluded from family, friends and society in so many ways, especially with this new way of watching TV. In the other place the equivalent amendment was withdrawn following the Minister’s commitment to take action.

We are content that this amendment would enable the Government to introduce a statutory instrument to give Ofcom the powers to fix the exact level of the quota necessary, balancing the need to make content accessible with the cost to the industry. Following consultation, Ofcom can replicate the mechanisms used for linear TV, which works on a sliding scale that requires large broadcasters to provide access services on a higher percentage of their content than the smaller ones. Furthermore, Ofcom may cap the total cost of meeting those requirements at 1% of a broadcaster’s relevant turnover.

Two issues remain, both of which the noble Lord, Lord Clement-Jones, mentioned. Both were also raised by the Delegated Powers and Regulatory Reform Committee. First, the “appropriate regulatory authority” should be named on the face of the Bill. My understanding is that the 2003 Act has Ofcom as the default regulator unless an alternative is specified, and that Ofcom has the power to designate an alternative regulator. If the Minister can confirm that this is the position, and that the custom and practice of most modern enabling legislation is similar, we would understand that the recommendation of the Delegated Powers Committee might fall away.

Secondly, we would support that committee’s recommendation that the statutory instrument should be enacted through affirmative resolution, and not by the negative procedure. There are significant reasons why that should be so, which are not limited to mere detail and technical content.

The appropriate regulatory authority, Ofcom, will have significant powers to impose substantial financial penalties for any contravention. The regulations will impose important new statutory duties on broadcasters, which may be required to increase their provision over time. Of course, all this will attract significant public interest, and the interest of both Houses of Parliament. I am sure the Minister will also confirm that Ofcom will consult widely, most notably with organisations representing people with sight or hearing difficulties.

We understand that the Minister will be minded to accept the amendment, for which we are grateful to him. Has he had discussions with Ofcom, and can he give an indication of when Ofcom might undertake, and conclude, its consultation process? I would be grateful if he could tell us when he might expect that this provision could be enacted.

Digital Economy Bill

Lord Gordon of Strathblane Excerpts

Committee: 4th sitting (Hansard - continued): House of Lords
Wednesday 8th February 2017 Lords Chamber

[Lord Watson of Invergowrie (Lab)]

My Lords, I support Amendment 229 in the name of the noble Baroness, Lady Benjamin, who I congratulate on formulating the amendment and for moving it so comprehensively with her usual chutzpah. I declare an interest on two levels, first as the Opposition Front-Bench spokesman on children and families, although I am clearly not speaking in that role today; and secondly, I have a more direct interest as the parent of a five year-old.

It is a source of both regret and concern that there is a dearth of UK original content in children’s television. Less than 1% of television hours available for UK children are original, first-run British programming. I very much doubt that the average parent would appreciate that, and I suspect that they would be both surprised and disappointed when told. I know that I certainly was. While Ofcom requires public service broadcasters to offer a minimum number of hours of original productions—70% for CBBC, 80% for CBeebies—they can include, and invariably for the most part consist of, repeats and spin-offs. Evidence presented last week on Welsh broadcasting to the Welsh Affairs Committee in another place suggested that the effects were particularly felt by regional public service broadcasters, where the number of repeats broadcast has increased exponentially since the Communications Act 2003. The example was given of the Welsh language channel S4C, where the share of broadcasts comprising repeats has risen to 57%. That decrease in original content threatens seriously to impoverish UK children’s cultural exposure, in particular to local and regional identities and experiences to which they can relate.

Reduced funding has been both a cause and an effect of that. The latest figures from Ofcom show that UK children’s programming decreased again, as the noble Baroness, Lady Benjamin, said, in both spend and output in 2015, the last year for which figures are available. Spend on first-run UK-originated children’s programmes showed a year-on-year decrease of 13% in real terms. That is a real worry. Recent tax reliefs for animation and children’s live-action content have provided a welcome boost for the sector. However, they do not ultimately increase the size of the funding pot available or incentivise the commercial public service broadcasters to return. The Government’s pilot £60 million contestable fund over the next three years will work only if public service broadcasters are compelled to commission more content, but of course the fund is not just restricted to children’s broadcasting; religious and other cultural programming is covered by it as well.

An increasing reliance on licensing revenue means that quality is not being maintained, because it has reduced in importance. Licensing plays a significant part in the commissioning of new children’s shows because so little money comes from broadcasters. The global TV brand licensing industry is reckoned to be worth around $190 billion and the ability of a programme to generate merchandise in the form of DVDs, books, branded clothes and toys now tends to determine its future. That is a concern because it creates a financial incentive to tick all the right boxes to produce a brand that can be easily licensed. As we all know from experience, box-ticking is rarely a positive driver, in any situation. Children are now spending more time online than in front of the television. My son increasingly wants access to the iPad to watch varying content of variable quality on YouTube. Fortunately, his mother is well qualified to ensure that he does so safely, but for his generation, watching a small screen is already second nature.

Although television remains a huge influence on young people, children’s programmes are competing not only with other genres for space on public service broadcasting but with online content for children’s attention. An Ofcom report in 2015 came to that conclusion, and unsurprisingly, online streaming providers such as Netflix are exploiting this market. While support of independent children’s production by online service providers is to be encouraged, public service broadcasters have a responsibility to carry at least equal weight in the provision of enriching children’s programming.

Such original children’s programming has the potential to be a thriving industry and an exporter of high-quality British product. That product in particular is digital, interactive and produces some of the most innovative content, generating huge revenues overseas with many iconic programmes. “Teletubbies”, which first aired on the BBC in 1997, has been shown in 120 countries and in 45 different languages. It generated a reported £200 million in revenue and some £50 million in merchandising. Those are impressive figures by any standard. I have moved through the age-appropriate levels with my son and have enjoyed almost as much as he has CBeebies productions such as “In the Night Garden”, “Show Me Show Me”, “64 Zoo Lane”, “Charlie and Lola”, “Grandpa in My Pocket”, with the inimitable James Bolam, “Octonauts”, “Katie Morag” and “Nina and the Neurons”. Those and many more children’s productions combine entertainment, play and learning; surely one of the fundamental purposes of public service broadcasting. They do so in a manner unimaginable when I watched “Andy Pandy” and “The Flower Pot Men” with my mother a very long time ago.

In the uncertainty of the post-EU world, maintaining and even increasing this strong international presence will be vital to supporting the UK’s economy and cultural currency. As the noble Baroness, Lady Benjamin, said, between 2003 and 2013 commercial public service broadcasting participation plummeted by 93%. Without a vibrant market the industry is in danger of dying out, and without that industry the nation’s children will not grow up with the programmes that the adult population took for granted. That is why, last September, I was one of the signatories to a letter to the Secretary of State for Culture, Media and Sport on behalf of Save Kids’ Content UK, setting out the current position on the decline of the independent children’s TV production industry in the UK and asking what the Government would do to support it. I regret to say that it took five weeks for a reply to arrive, and from a junior Minister at that, which told the sector nothing it did not already know, and concluded with the patronising words:

“Thank you for taking the time to share your views on this issue”.


However, that letter was a cry for help, not a sharing of views. To be dismissed in such a manner was unacceptable. The Government need first of all to understand the nature of the problem—which, as that letter demonstrates, is a position at which they have not yet arrived—and then they need to work with the sector to seek solutions. Amendment 229 would be a first step and I hope that the Minister will take the opportunity offered by this short debate to begin the process, with a sympathetic response and a commitment to return to the issue on Report with a suitable amendment.

[Lord Gordon of Strathblane (Lab)]

My Lords, I am in the awkward position of being unable to give this my full support, which I very much regret. I am now a grandparent, with four grandchildren who watch children’s programming avidly. Inevitably, I watch it with them; I greatly value the British content and want it increased. The question is, how do we do that? We cannot in fairness ask ITV to do children’s programming while at the same time this Parliament has legislated that no advertising in children’s programming will be allowed. A service that depends on advertising for its funding has been denied funding to do the sort of programming somebody wants to do—so we have got to find another way round it.

That is why the Government have come up with the idea of the contestable fund. I would agree that this is a higher priority than local television, for example. If I were in the Government, I would allocate all the contestable fund to children’s programming. It would then be possible, through contestable funding, to get some programmes made. The difficulty then would be to find a platform that will air them, given that—as has been rightly recognised—nowadays nobody puts children’s programming on their main channel. The BBC does not do it; it is not on BBC1 or BBC2, but CBeebies. If ITV were to do it, it would have to be on CITV. The question is how one gets people willingly to commission children’s programming that is not going to make them any money, unless it is an absolute winner. If there were “Teletubbies” round every corner, everybody would be making children’s programmes every day. The fact is, though, that it is extremely difficult to get right: “Teletubbies” is 20 years old. “In the Night Garden” is wonderful, but children grow out of that quite quickly. Children are quite demanding. It becomes almost a rite of passage; they are almost proud of growing out of things. “That’s for little people; I’m a big boy now”.

We have got to find some way of helping the sector to get the exposure on British television and then launch it internationally. I think one idea might be to invite ITV and Channel 4 to have a say in the selection of the recipients of the contestable fund. If they had helped to commission the programme they would then be in a less strong position to refuse to accept it once it was completed. That might be a way forward. I find it very difficult to find another way, because ITV faces more competition now than it did in 2003, when Ofcom took the decision that it was reasonable to downgrade children’s programming from tier 2 to tier 3. The position has not improved since then. Netflix, Amazon and so on are all producing programmes in a way that was not even thought of in 2003, so the position is even more difficult. We have got to find a way of getting enlightened self-interest to lead broadcasters to do children’s programming and screen it. I think that the contestable fund is a way forward.

Scotland Bill

Lord Gordon of Strathblane Excerpts

Tuesday 19th January 2016 Lords Chamber

[Lord McCluskey (CB)]

My Lords, I have added my name to several of these amendments and I need add nothing to what has been said by the two noble and learned Lords in support of them. However, perhaps I may draw attention to one thing. As has already been made clear in relation to two of these amendments, the Bill appears to depart expressly from the clear recommendation or agreement that appears in the Smith report, paragraph 32 of which states:

“Responsibility for the management of the Crown Estate’s economic assets in Scotland, and the revenue generated from these assets, will be transferred to the Scottish Parliament”.

Similarly, as the noble and learned Lord, Lord Wallace, just said, there is a provision which appears to be departed from. Amendment 48A relates to further devolution to local communities. The provisions in the Bill show that a recommendation or an agreed decision in the Smith report is not written in stone. Hitherto, the Government have made a great point of saying that the Smith commission must be enacted in full. Here we have two instances, at least, where the Government have departed from, and indeed contradicted, what the Smith report advised. Are we to take it that, if the Government come to the view that Smith did not get it quite right in some way for some clear, sound reason, the Smith recommendation need not be followed? Will that apply to other provisions in the heads of agreement relating to other matters in respect of which the Government have hitherto followed the Smith line?

[Lord Gordon of Strathblane (Lab)]

My Lords, I shall intervene briefly on two points. First, as regards the discussion about “may” and “must”, while I concede that “may” sounds too permissive and does not adequately reflect Smith, it could be argued that “must” sounds as if one needs to coerce an unwilling UK Government. Surely, the word “shall” would be the obvious alternative.

Secondly, as regards the point made by the noble and learned Lord, Lord Wallace, while I agree entirely that the island authorities are wholly competent to manage the Crown Estates, and I hope they will be allowed to do so, the agency for handing over the power must be the Scottish Parliament. For this Parliament to insist in advance that it goes is not devolution, it is compulsion.

[The Earl of Kinnoull (CB)]

My Lords, I shall speak to Amendments 45 and 47. First, I thank the Minister and his officials for the generous amounts of time they have given to date to discussing these matters. These amendments arise from my concern that the Bill is not consistent with the Smith commission agreement and would make Crown Estate assets politically available ones, rather than things held independently for the people of the nation. The wording of the amendments is illustrative only.

As has been observed, the Crown Estate’s core constitutional document is the Crown Estate Act 1961. That document, however, is a cold discussion of constitution and functions and does not address how the Crown Estate works in practice, especially how it works together with Ministers. That is in the HM Treasury and Crown Estate framework document, which is publicly available on the website. That document, which is a model of clarity, makes it abundantly plain that the Crown Estate assets are to be managed on an arm’s length basis. Paragraph 3 states that,

“it is not an instrument of government policy, it is a public body”.

The values of the Crown Estate are clearly set out and include stewardship. The document states:

“Stewardship is deeply engrained in our culture; because of our history and because of our heritage, we act at all times as good stewards of the properties we manage. We strive for the best standards of management: in our parkland and gardens; in our farmland and our forestry; in the marine environment; and in our buildings and streetscapes. So our commercial approach is supported by a clear recognition of our stewardship responsibilities”.

Nothing in the Smith commission agreement suggests in any way that any party to that agreement sought to change the arm’s-length basis that the Crown Estate operates under, or the values by which the assets are managed, including that of stewardship.

I turn to the phrases in the Smith commission agreement, especially paragraph 32, which the noble and learned Lord, Lord McCluskey, just read from. In this, I detect not one iota of any agreement that seeks to change what I just said about the arm’s-length nature of the relationship between the Government and the Scottish Crown Estate. I ask the Minister my first question: does he agree with my assertion?

Secondly, the commission agreement is in respect only of the economic assets of the Crown Estate, which presumably is not all the assets. Will the Minister explain why the Bill currently refers to all the assets, as the noble and learned Lord, Lord McCluskey, said? If this is a change to the Smith commission agreement based on sound reasoning, then would the Minister agree that this type of logic might apply in other situations?

Thirdly, the agreement sees the transfer of management to the Scottish Parliament, as has just been discussed, but if the Minister argues that such transfer is not possible, as I suspect he will, then would he agree that it would be much more in keeping with the Smith commission agreement to maintain the arm’s-length relationship between the Government and the Scottish Crown Estate, using language similar to what I have proposed?

My amendments do not address onward devolution. I am very much in favour of this and I found the speech of the noble and learned Lord, Lord Wallace of Tankerness, compelling. My rather less compelling thought had been that the new Scottish Crown Estate commissioners should make suitable provision for this, in line with the Smith commission agreement and, indeed, with Richard Lochhead’s own words in his document, Administration of the Crown Estate in Scotland—Case for Change, at paragraph 21:

“In particular, there is widespread support in Scotland for an approach to land management which seeks to support communities—particularly in rural and isolated areas—taking responsibility for their own futures”.

I can only think that he and the SNP would therefore not object to onward devolution being in the Bill.

I do not believe that my amendments are in any way inconsistent with the Smith commission agreement; the Bill’s clauses as currently cast are. I would transfer the management of the Scottish Crown Estate assets to a similarly run independent body, so that these important things cannot be used for political purposes, and so that their stewardship continues to be managed on a long-term basis for the people of Scotland.

Scotland: Fiscal Framework

Lord Gordon of Strathblane Excerpts

Wednesday 16th December 2015 Lords Chamber

[Lord Dunlop]

I know that my noble friend is suspicious of the Scottish Government’s motives. We are entering and taking part in these negotiations in good faith. The discussions we have had so far have been constructive, and we are confident that a deal can be reached.

[Lord Gordon of Strathblane (Lab)]

Does the Minister agree that it is nothing short of ludicrous that the Bill should have passed all its stages in the House of Commons before the full fiscal framework has been spelled out in detail? Will he give an assurance that it will not pass all its stages in the House of Lords before we know all the details of the full fiscal framework?

[Lord Dunlop]

As I have said, we want to reach an agreement as soon as we can. I cannot give guarantees as to the end point—we have debated these matters fully at Second Reading—but I can assure the House that once an agreement has been reached, there will be an opportunity for it and the other place to give full scrutiny to that agreement.

Scotland Bill

Lord Gordon of Strathblane Excerpts

Tuesday 8th December 2015 Lords Chamber

[Lord Gordon of Strathblane (Lab)]

In the light of what the noble Lord has said, would it not be logical that legislative consent from the Scottish Parliament should have preceded the legislation that the Committee is discussing today? The Bill is, after all, affecting Scotland yet we do not have the legislative consent of the Scottish Parliament in advance.

[Lord Stephen]

I agree that there is an issue there. I wonder whether the discussions that will take place in coming weeks, and perhaps even months, behind closed doors between the Scottish Government and the UK Government would be greatly assisted if there was a clear statement on the record from the Scottish Parliament that it supported this legislation. While I believe that both Houses will eventually indicate their support for this legislation, it would be helpful to have that clear support on the record now.

A lot has been said today about the monolithic, unassailable sovereignty of the UK Parliament but I ask the Committee to consider this point: the UK Government have introduced a concept called English votes for English laws. Perhaps the Minister would care to comment on this: the Government are pursuing a course whereby legislation passed by the House of Lords and the House of Commons can be vetoed by a subset of the House of Commons, so this Government have already conceded the point of a limitation on the sovereignty of the UK Parliament. If it is sauce for the English goose for elected English MPs to veto legislation for England on devolved matters, it must be sauce for the Scottish gander for properly and democratically elected Members of the Scottish Parliament to be able to veto Westminster legislation affecting Scotland on devolved matters.

Scotland Bill

Lord Gordon of Strathblane Excerpts

Tuesday 24th November 2015 Lords Chamber

[Lord Gordon of Strathblane (Lab)]

My Lords, I welcome in particular three speeches: first are the two maiden speeches this afternoon from the noble Lord, Lord Campbell of Pittenweem, and the noble Baroness, Lady McIntosh of Pickering; the third is the speech of the noble Lord, Lord Smith of Kelvin. In a debate on the Smith report, it is vital that one of the key issues to consider is whether the Bill meets in full what the report—adopted by all five parties—called for. It was vital that we heard directly from him that it does. I congratulate him on a very fine speech and it was very nice to see him back in the Chamber. I will also say that the three former Secretaries of State for Scotland did not do badly this afternoon, either; all of them made very good speeches.

We are where we are. The vow, the panic of the three party leaders, was frankly ludicrous but we are where we are. I judge this Bill partly by how far it meets the recommendations of the Smith commission but also by how far it genuinely delivers accountability. When you get into accountability, it is impossible to decide whether the Bill is good, bad or indifferent until we have the full fiscal framework. That does not mean delaying the Bill; it may mean asking the people who are examining this to maybe work a wee bit harder. Meetings once a month is frankly rather leisurely. What is wrong with once a week? Why can we not get them moving on this? It is impossible to reach a decision and the SNP are quite right. It is a disgrace that the Bill left the House of Commons without this ever being debated. I said to one of the SNP MPs the other day, “You guys should surely have made sure that this was fair to Scotland before you passed it,” and he said, “We’re leaving it to the Scottish Parliament to do that for us.”

That is fine for the SNP but it is not actually fine for either the Conservatives or the Labour Party to have allowed it through without scrutinising it properly. I hope that we will have that scrutiny here.

[Lord Forsyth of Drumlean]

Does the noble Lord think it is conceivable that it might have dawned on the SNP that in moving from a block grant, which is 20% more per head of population than the rest of the UK, towards a point where a large part of that is substituted by a tax-raising power where the tax base is not 20% higher, there is going to be a gap? Does he think that they are deliberately not reaching agreement because they do not want to face an election telling the Scottish people that there will be less money?

[Lord Gordon of Strathblane]

If the noble Lord waits until the end of my speech he will find that on this, as on so many other things, we are totally of one mind. The problem is that we had a very narrow escape last year. The fall in the oil price is not the fault of the SNP but had the vote gone 10% the other way we would have been landed in a situation where Scotland would be heading for bankruptcy very quickly. We lost our independence through bankruptcy way back in 1707 and the Darien scheme and we could well have been returned to it. It is vital that we put a cost on things.

Everyone has concentrated on the no vote and whether the vow mattered. I am rather more interested in the 45% of my fellow countrymen who voted for independence on a false prospectus because this document—the White Paper—which I imagine every Scot read cover to cover before using it as a very convenient doorstop, predicated oil revenues in 2016-17 of £6.8 billion. The oil revenues are of course a lot smaller. They then sneaked out a document without any ministerial statement, published in Oil and Gas Analytical Bulletin two hours before the Parliament closed for the summer recess, predicating oil revenues of £0.6 billion in 2016-17. That is a hole of very nearly £6 billion and compared to the proportionate effect of anything that George Osborne has in mind in welfare, it is six times worse than anything George Osborne is thinking about. We are heading for super austerity in Scotland if we are going to balance the books. It amazes me that my fellow countrymen are not constantly quizzing the SNP saying, “What taxes are you going to raise or what services are you going to cut to bring the books into balance?” They need not exactly balance—I fully accept that you can borrow—but you cannot go on borrowing for ever and ever.

It is very important that we put price tags on things, and there is a price tag I invite the Minister to consider. There was an amendment in the House of Commons asking for the Government to appoint a body, including representatives nominated by the Scottish Parliament, to estimate the effect of full fiscal autonomy. I think it should be possible to do that. It was voted against by the Government on the premise—mistaken, in my view—that we have done the sums already and we all know that. The trouble is that the Scottish people do not believe you. It is a tragedy and it is very unfair but I am afraid it is true. We need something that people believe in. The SNP rejected it because they did not think that anything appointed by the Conservative Government would be impartial because they are against full fiscal autonomy.

Now I am fairly certain that full fiscal autonomy is a disaster and I agree with the noble Lord, Lord Forsyth. I think the SNP feel it is a disaster as well but do you think they are going to admit it is a disaster? If full fiscal autonomy is a disaster then full independence, which goes one step further, is even worse. The SNP is unlikely to do that. It is more likely to pick holes in the way that the sums were calculated. That is why the report of the committee chaired by the noble Lord, Lord Hollick, is so important and that it is so important that we debate it.

Reference has been made, particularly by the noble Lord, Lord McCluskey, to the absence of the SNP. It is not our fault that it is not here: it has been given ample opportunity to have representatives here. It is very important that we hear the SNP viewpoint on what methodology is used to calculate the reduction in the block grant. I am quite prepared to take representations from the SNP and put them forward as amendments on the block grant here, if only to give them an airing. However, who knows? I might even agree with them. Nobody knows, because we do not know what the block grant reduction system will look like. It is very important that we get adequate information on that.

Likewise, we must make sure what the fiscal framework actually means. It is very complicated, and I entirely respect and do not mock the idea of it being negotiated behind closed doors. That is perfectly sensible. I think that we will have to wait for a complete package before either party wants to admit what they are negotiating on, because there will be trade-offs and compromises. I do not regard compromise as a dirty word in politics; it is what politics is all about. I am quite happy to wait until the conclusion of the process, but the parties must be told that there is no deal without the process being complete. Why should it be singularly the Scottish Parliament which can reject this purely on the grounds of the fiscal framework being wrong?

There was an interesting article last week, just before the committee of the noble Lord, Lord Hollick, reported, from Anton Muscatelli, the principal of Glasgow University. He said that, depending on which system is chosen, there could be a disastrous effect on the block grant. That was echoed by the committee in its report. To be honest, my concern is that whatever system is chosen, there will be a bad deal for Scotland, because the economics of independence, or of much more devolution, do not work. It is better to have a system where we spread risk throughout the entire United Kingdom.

I fully accept that the Scottish Parliament is elected; I am not. If its Members choose to go for that deal, that is entirely up to them and I will respect that decision—I will not leave Scotland as a result, or anything like that—but they must tell the Scottish people first. It is all very well accepting a bad deal if you think you will feel better about it because you are independent and doing it yourself. That is fine—I fully respect that—but to deceive the Scottish people would be totally wrong. So there is quite a lot we could go for here, but it is very important that we nail in advance any suggestion that the Treasury is choosing unfavourable methods of calculation—otherwise, the SNP will blame that for the breakdown of negotiations.

--- Later in debate ---

[Lord Dunlop]

I thought that the noble Lord, Lord Smith, answered that question very well. He put it in the context of an agreement, every aspect of which they signed up to—but, clearly, the SNP is a party that believes in independence, and therefore the whole context should be seen in that light.

The Deputy First Minister has agreed that finalising the fiscal framework is essential to delivering the Smith commission proposals. To touch on what the noble Lord, Lord Smith, said earlier, in the debate, he has spoken to both Governments and is confident that talks will deliver a fiscal framework in line with the principles set out in the agreement. As I said in my opening speech, talks have been constructive. We have agreed every step jointly with the Scottish Government and are working hard to agree a fiscal framework that is built to last, and is fair for Scotland and for the UK as a whole.

[Lord Gordon of Strathblane]

Without in any way wishing to hold up the Bill, is it not possible to increase the work rate of those working on the fiscal agreement? Meeting once a month seems pretty leisurely to me.

[Lord Dunlop]

I assure the noble Lord that these are ministerial meetings of the Joint Exchequer Committee. In between those meetings, very intensive work is going on to agree the fiscal framework. If, unlike me, you believe—