Public Bodies Bill [HL]

Lord Roberts of Conwy Excerpts

Wednesday 9th March 2011 Lords Chamber

[Lord Roberts of Conwy]

My Lords, first, I thank those previous speakers who have referred to my part in the birth of S4C when I was a Minister in the Welsh Office. Since we began our proceedings on this Bill, my noble friend Lord Taylor of Holbeach has tabled some very welcome amendments, in particular the new clause in Amendment 114 requiring consultation on any draft order proposed under Sections 1 to 6. The new clause set out in Amendment 118 specifies the detailed procedure to be followed. That differs, of course, from the normal procedure with orders, but is not quite the super-affirmative procedure in full. These new clauses and the amendments tabled to them are yet to be discussed, so they are not in their final form. But whatever the final outcome, these clauses allow ample opportunities for consultation on a proposed order by Welsh Ministers, interested parties and parliamentarians. The many organisations and individuals who have written to us about S4C will, I hope, have the chance to have their say on the future of the channel in the consultation on whatever orders may eventually emerge.

The inclusion of a body in Schedule 4, in this case Sianel Pedwar Cymru or S4C, means that the Government have the power to modify its funding arrangements by order. Its removal from the schedule would mean that the power was removed from government. I am not quite convinced at this stage that removal is in the best interests of the channel or its viewers. The reason for my hesitation is that I am not sure what the financial position of S4C will be if there is no order. Does the channel continue to be financed as prescribed in the Broadcasting Act 1990 as amended? I should be grateful if the noble Lord who is to reply would clarify the position.

It is well known to most of us that the Government have advanced quite far in their plans for the future financing of S4C. We know this from a letter, which has been made public, from the Secretary of State at DCMS, the right honourable Jeremy Hunt, to Sir Michael Lyons, chairman of the BBC Trust, dated 21 October last year. A subsection of the letter, headed “New partnership and funding model for S4C”, states:

“The government remains committed to a strong and independent Welsh-language TV service”.

This statement of principle is repeated later in the subsection in the context of future funding of the service after 2015 when the comprehensive spending review period has ended and the funding situation of S4C is again under review.

Quite frankly, the critics have not given the Government the credit due for this very clear affirmation of their commitment to sustaining the Welsh language service. It has been reiterated by Ministers on a number of occasions, but it goes unheeded by those who do not wish to hear. A reduction in funding for S4C is not an attack on the Welsh language, as some have alleged, any more than a cut in defence spending is an attack on our forces.

The letter makes it clear that the DCMS will continue to fund S4C in 2011-12 and 2012-13 at agreed levels. The current level is not sustainable because, under the Broadcasting Act 1990, the channel’s annual grant increase is tied to the retail prices index. It is clear that that link must be broken to effect the deficit reduction programme which is fundamental to the coalition Government.

I understand that S4C will receive some £90 million from DCMS next year, plus £20 million of cost-free programmes from BBC Wales as well as some £3 million of revenue from advertising and commercial activities. It also has some £27 million in reserves. Therefore, S4C is not facing an imminent financial crisis. Indeed, it appears to have financial security for four years ahead, which is not to be deprecated. After this two-year period of DCMS funding, the BBC will contribute £76.3 million in 2013-14 and £76 million the following year, 2014-15, from licence-fee money collected from the public by the BBC. One must stress, as has already been done, that those moneys do not belong exclusively and as of right to the BBC, although it is responsible for them. DCMS will give a further £6.7 million and £7 million in those two years respectively. S4C will also have funding again from the sale of advertising and other commercial operations.

Why is all that spelt out in a letter to the BBC? It is because S4C is part of the new funding package negotiated between DCMS and the BBC whereby the BBC World Service, some local TV services and BBC Monitoring will be funded from the licence fee as well as S4C from 2013 on. It is worth noting that only DCMS with its extensive responsibility for broadcasting matters could have made this arrangement for S4C to be funded from the licence fee, which is collected by and so jealously guarded by the BBC. The National Assembly for Wales and their Government could not have done it. Besides, broadcasting is not a devolved matter anywhere in the United Kingdom.

All this provision for S4C funding—I stress that funding is all I am referring to—makes reasonable sense to me in our current, straitened national circumstances. Some have said that there is no provision beyond 2015, but four years of certainty as regards funding is not to be despised. Furthermore, we are promised a review in good time before that period comes to an end. There is also a thinly veiled threat to the BBC that if the new partnership with S4C does not work for any reason, the Government will not take the licence fee money themselves but nor will the BBC have it either, except to reduce the licence fee.

There is strong pressure on all sides to make the funding system work and it probably will. I cannot see any other satisfactory alternative being produced in time. Of course, if the final order to implement the new funding scheme is grossly unsatisfactory, both Houses have the power to reject it—rarely used though that power may be in your Lordships’ House. Where the problems will arise is in the inter-relationships between the organisations involved, but these cannot properly be resolved in the context of a Schedule 4 order and belong more properly to another schedule, possibly Schedule 3, which relates to the power to modify constitutionally in the sense of internal arrangements of public bodies. Clearly, the Government have not yet decided the detailed arrangements for the governance of S4C, which has come in, as the noble Lord, Lord Wigley, said, for some hefty criticism recently from Sir Jon Shortridge, formerly Permanent Secretary of the National Assembly and the Wales Government. It is understandable therefore that the UK Government placed S4C in the pending tray of the purgatorial Schedule 7, now to be abolished with certain exceptions.

S4C may well need to adapt its internal organisation, not only because of the new situation that will result from its new funding arrangements, but also because of recent events and public concern about its governance, which is the subject of Sir Jon Shortridge’s very thorough report. The present position, as it has developed, is that there is a supervisory authority and an executive team which manages and provides the day-to-day service. To put it mildly, this system has not worked satisfactorily in recent years, possibly because of the curious, and I believe wrong headed, separatist policy pursued since 2006 of keeping the authority and the management of the service as far from each other as possible. I shall not go into the painful consequences, which have become all too public, but I shall quote from the Shortridge report:

“Too many decisions were taken by management which should have gone to the Authority; there was too little transparency; when members of the Authority were invited to take decisions they too often felt that they were not given sufficient time and that they were denied the information they needed to enable them to make the necessary judgements; and they also lacked the information they needed to assess the decision taking and performance of management”.

Clearly, that was an unhappy state of affairs and it is surprising that it was allowed to continue as long as it did. A new authority will, I hope, have learnt lessons from the past and will be constituted differently, with a fresh mandate, mission statement and declaration of duties and responsibilities. The foundations are clearly laid down in Sir Jon’s excellent report. I am glad to say that some of his recommendations have already been acted upon by the existing authority.

I turn to the new partnerships scenario implied by the new funding arrangements agreed between the DCMS and the BBC Trust, incorporated in the same letter from the Secretary of State to the chairman of the BBC Trust, dated 21 October last. The key principles are clearly stated:

“The S4C service must retain its brand identity and editorial distinctiveness, as well as its special relationship with the independent production sector in Wales”.

The Secretary of State goes on:

“HMG holds that a new partnership model with the BBC is the best way of securing the long-term future of the service”,

and adds that the partnership would be,

“along similar principles to BBC Alba”.

That similar partnership would not be acceptable in Wales. It is difficult to see how that could be reconciled with the independence of S4C. It is not that the BBC’s extensive contribution to Welsh language programming on radio and television is not recognised and highly valued, but pluralism is all important in Wales as elsewhere, especially in news and current affairs. We do not like to see all our eggs in one basket.

The Secretary of State’s letter describes a fairly complex bipartisan series of negotiations, beginning with the BBC Trust and the authority setting out the strategic goals and broad editorial requirements of the service. Then, a combined board of the authority and the trust would oversee delivery of the same and, finally, there would be a joint management board to operate the service with its own commissioning structure and composed with a majority of independent directors appointed by the trust and the authority. It is no wonder that the Secretary of State’s next sentence is that,

“further discussion will be required about the exact form of the partnership, and the Government will play its part in those discussions”.

It is a curious set-up which requires a lot of tidying up.

What is the alternative? If possible, the licence money which is to provide the bulk of S4C’s money from 2013-14 should be allocated alongside the DCMS grant and be subject to the same accounting procedures. Could the Minister say whether this is possible now or in the context of the BBC licence renewal negotiations? It is crucial to split the BBC from the dispersal of the licence fee moneys that it gathers. At present, as Sir Michael Lyons, chairman of the BBC Trust, pointed out in a letter dated 10 November to the then-chairman of the S4C Authority, John Walter Jones, the trust is accountable to Government for the use of the licence money and that would extend to such moneys as were received from the licence fee by S4C in future years. This puts the BBC in a very dominant position vis-à-vis the S4C Authority.