Legislative Reform (Further Renewal of Radio Licences) Order 2015

Lord Stevenson of Balmacara Excerpts

Monday 7th December 2015 Grand Committee

We believe the analogue radio licence extension set out in the order strikes the most effective balance between addressing the issues arising from the slower than expected digital radio migration while at the same time reducing the burdens on commercial radio that would otherwise arise if no steps were taken. I beg to move.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I thank the Minister for the quick transition from department to department, the fluency with which he adopts his new brief and the quality of his representation which I have much enjoyed.

However—there is always a however—the reason for this legislative reform order, which is an interesting choice of vehicle for the process, although I do not disagree with it, is because the previous coalition Government and this Government are shooting themselves in the foot on this matter. There would not be a problem if the Government would face up to the fact that what is required is an early and specific date for digital switchover. That would drive the responsibilities of commercial and public service broadcasting and would build on the very successful change that has already happened in the automotive industry from FM and analogue radio to digital radio. The huge majority of new cars sold in this country now have digital radio.

It is all there for the taking. Covered in glory, crowned in his new raiment and wearing the arm of the digital reformer that at heart he surely is, the noble Earl could rise from his seat and proclaim to the world that at last there was a decision from a department not known for giving many decisions— or if it does, they are not very good ones—and we could all get back to normality. Is it not true that the emperor has no clothes and that this is a stop-gap measure? Choosing to extend radio licences in the commercial sector for five years—we are talking about three national radio stations and more than 60 local radio stations, which is a fair whack of the radio stations in this country—is simply going to repeat the uncertainty and chaos that has bedevilled us over the past five years and we will have to be back here in five years’ time extending this yet again. Who knows what we will do the next time? Will we be standing here suggesting that we just give them a permanent licence to print money, a permanent licence for radio broadcasting in order to continue to serve, I suppose faithfully, the 80% of people who say they are satisfied with what they have? I do not know, but the Government are making a mess of this and they ought to ’fess up and set a date, even at this late stage, which will give everybody a chance to work together to make it the success that the television changeover was.

Having said that, I enjoyed the document that was provided, and I thank the officials for it. It is one of the best I have seen in terms of explaining what the issue is and of setting out the context in which the decision has been reached. I do not agree with a lot of things said in it, but that does not take away my admiration of the way in which it attempts to be as transparent as possible. I recognise that and I am glad it is being minuted. Too often these things are just passed over.

I have five issues that I want to log at this stage. Our feeling on this side of the Committee is that this is the wrong way to go. We should set a date for digital switchover, stick to it and put all our effort into making that a success. If we are not going to do so, the proposal made is probably the least worst of the options presented.

First, will the noble Earl be a little more transparent than he has been about what will happen if there is no switchover by 2021? The order is effectively a five-year pause in a process that has an ineluctability about it. Will he give us any idea about what he thinks will happen in 2021? A lot of the evidence from the consultation meetings reflected on the fact that the worst thing for those involved in this area is uncertainty. While they will get certainty now as a result of the order, it will be for only a limited term. Many will have to think very hard about their business plans and whether they will extend beyond 2021.

Secondly, I am not at all clear that the explanatory document is right in suggesting that the issues that have swayed thinking on this were based on the possibility that, by advertising these licences now, there would be a churn, fuelled mainly by competition, that could be a stipulation on the product that comes out of the radio system as a whole. Those are my words, not exactly how it is put in the document. The Government—and the Opposition, too—believe that competition is a great spur to creativity. If we are interested in a broader and more successful creative economy, surely the right thing to do is to seek all the opportunities we have for competition, not to avoid them. Here we have an option where, although it would have been extra work for Ofcom—poor Ofcom—it could, in a reasonably short period of time, have advertised and received submissions from those who currently have licences and those who want them, in order to try to redraw the map of radio as we currently have it.

The document reflects a failure of the process. It says:

“Whilst there is little to no quantitative evidence on how many, and which, new entrants, might bid for any re-advertised licences, research by Value Partners demonstrated anecdotally that, should these licences be re-advertised, there would be some interest in them from new entrants particularly for the national and large city licenses”.

So we have some evidence that there would be interest in the larger franchises—even in some of the local ones. That would have provided some change. The document goes on to explain that that might have been about 10%. A 10% increase in competitiveness and creativity is not to be sneered at. If we had that in other industries we would be quite pleased with it. However, the document—signed off by Ministers—says:

“We do not believe that the hypothetical benefit to listeners and industry of a small number of new services outweighs the cost to the wider industry and to listeners of a wholesale re-advertisement process. We therefore consider that, taken as a whole, the provision in the draft Order strikes a fair balance between the public interest and the interest of any person who might be adversely affected by it”.

Not to readvertise is quite a big decision. I hope the noble Earl will not take it wrong when I say that this bit is a bit thin. We could have had more evidence. He could have sent this document back to officials and said, “I think if I’m going to stand up here and try to defend this against the fearsome Lord Stevenson, I need better evidence than just simply saying ‘anecdotally’ and ‘on balance’”.

I mentioned my concerns that some of this decision has been driven by worries that Ofcom might be troubled by having to do all this work. Ofcom is, of course, a body that covers most of its costs by recouping them from those concerned. Therefore, it is not a cost issue, but a volume or process issue. That is really in the hands of government. Again, it is infelicitous to blame Ofcom, which might be too busy to do this, for a decision that is being taken for different reasons. I would be interested to hear the noble Earl’s responses on that.

If we are not minded to support competition and creativity, we are worried about poor little Ofcom and we are not concerned about having to do this again in five years’ time, what are the other issues? There are two things I want to mention. The first relates to the paper provided in support of the LRO, which goes through the things that Ministers must decide. One of the things that Ministers must decide, as I am sure the Minister is aware, is whether or not the provision is of constitutional significance. The Government cannot be serious about this, surely. We are talking here about a range of diverse views and opinions; the ability of people up and down the country to receive news, comment and opinion; and the freedom of the press, independence and plurality. For the document to say the provision is not of constitutional significance does not bear scrutiny. I really think that is something that the Government should think very hard about. If they do not have that view about commercial radio on a national basis, why are they bothering? They may as well just give operators’ licences in perpetuity because it is obviously not important enough for them to be concerned about. I disagree. I think this is really important, and as part of our understanding of how the constitutional process works we need the contribution of a free and independent press, including radio and television, and a plurality of voices in order to make good decisions about that.

My final point is about the consultation process. There are many good things about the document but the best thing is the fact that at last we see some of the notes from the various meetings that have been held. Reading these through, there is just a slight feeling that we were talking to the establishment rather than the wider context. I did not see much there from people who might have been considered to be applicants for radio licences. Obviously, we might not know who they are but looking at the lists of people who were invited to these consultation meetings in Edinburgh and London, they were largely the establishment of radio. Again, looking at the written responses, we did not get much of a range of the general public. There were one or two freelance media consultants, I note, but not very much from the wider public. The Minister praised Radiocentre for supporting this proposal. Actually, it did not support the proposal in its evidence; it supported option 3, not option 2. It subsequently said that it supports option 2 and wishes it to go through—it would, wouldn’t it? It is involved in part of this process.

But enough from me—we are faced with a fait accompli in this matter because without a digital switchover date there is not much we can do about it. But I hope these points might be considered.

[The Earl of Courtown]

My Lords, I thank the noble Lord, Lord Stevenson, for his comments. Although he had concerns, I think he was generally supportive of the move. I do not want to put words in his mouth.

[Lord Stevenson of Balmacara]

I said that we are facing a fait accompli, which is certainly not the same thing as being supportive.