Digital Economy Bill

Debate between Lord Wood of Anfield and Lord Ashton of Hyde

Report: 3rd sitting (Hansard): House of Lords
Wednesday 29th March 2017 Lords Chamber

[Lord Wood of Anfield (Lab)]

My Lords, I express the support of these Benches for the amendments of the noble Lord, Lord Best. I also support the intention behind the amendment of the noble Lord, Lord Lester.

It sounds obvious that the process of negotiating a charter and the process of setting a licence fee should be separated so that the licence fee is set at a level to ensure the BBC has the resources to do what the charter asks of it. However, those of us who have had some involvement in the process in the past know that this is not quite how it works. The connection between the two processes is indirect and shrouded in political pressures. As a result, the process of setting the licence fee is far too little about matching the funding of the BBC to its functions in the charter, and far too much about balancing a range of other considerations: the politics around the licence fee rate, interests of other broadcasters, and the temptation to smuggle government policy on to the BBC’s books—midnight raids et cetera. Governments of all varieties—Labour, Conservative, whatever—like to play the game of pumping up the tasks that go into the charter and clamping down on the licence fee needed to fund it. The result of all this is bad not just for the BBC but for all parties concerned. It is a bad deal for the BBC because it faces increasingly intolerable pressures to deliver what is expected of it, and threats to its operational autonomy and independence. It is bad for the Government because of a growing suspicion of unwarranted political interference in the BBC, and it is bad for licence fee payers because the process of allocating funds to charter functions is surrounded in opaqueness and devoid of transparency.

Therefore, we support the amendments of the noble Lord, Lord Best. We think they are based on sound principles—the independence of the process, consultation with the public, transparency of the contents of the deal and requiring the Secretary of State to be accountable for turning his back on or challenging the express will that comes out of consultation. We think this is a way of restoring the functionality and transparency of the licence fee setting process, and ensuring that the BBC can be funded to do what we all expect the foremost public service broadcaster to do.

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, we return to an issue that I know interests a great many noble Lords: the funding of the BBC. I take this opportunity to remind noble Lords of what the Government have already committed to do to increase the transparency of the process whereby the funding of the BBC is decided. The BBC’s new charter regularises, for the first time, the timing of the BBC’s next financial settlement, which will be in five years’ time. The BBC has certainty over its funding for the next five years, having agreed a settlement with the Government whereby the licence fee will rise with inflation each and every year for the next five years.

On the amendment in the name of the noble Lord, Lord Best—in answer to his question, I accept that Amendments 32B and 32C are, if not consequential, linked—I make clear to the House how grateful the Government are for the contribution of the noble Lord and of your Lordships’ Communications Committee, which he chairs, throughout the charter review. Indeed, the Government accepted most of the committee’s recommendations for the new charter, such as making the next charter for a period of 11 years and the scope of the mid-term review.

The charter states that, in determining the funding settlement, the Secretary of State must assess the level of funding required for the effective fulfilment of the BBC’s mission and promotion of its public purposes, consider an assessment of the BBC’s commercial income and activities, and consult the BBC. For its part, the BBC is required to provide information and assistance to the Secretary of State ahead of the next licence fee settlement to inform the Secretary of State’s determination of that settlement. It is therefore explicit that the BBC will be able to make its case and the Government of the day will have to consider that case.

However, the Government also stated in their White Paper, published last May, that they would consider taking independent advice at the next settlement should it be appropriate. While that will be a matter for the Government of the day, the sentiment behind it is right and sensible. In answer to the noble Lord, Lord Maxton, the licence fee itself may well be a question for the next charter renewal—in which I think I can say I will not be involved. Taking independent advice is an important factor, and I take this opportunity to set out what this may include. The Government may, for example, wish to seek independent advice to inform their assessment of the data the BBC will provide. They may commission experts to consider the BBC’s likely commercial income for the coming years; the effect of population growth on licence fee revenue; the impact of sector changes on BBC funding needs; and, in turn, the impact of BBC funding on the wider sector.

The noble Lord, Lord Best, suggests that there should be a BBC licence fee commission. This is a departure from his amendment in Committee, which sought to give Ofcom a similar power, and I appreciate the thought he and other noble Lords have given this. However, at the risk of repeating myself, the licence fee is a tax, and the Government do not seek advice in this way for any other type of taxation. On the question of the licence fee being a tax, I know that not all noble Lords like this designation. However, we rely on the definition provided by the European System of Accounts, which is the system of national accounts used by the European Union. I will spare your Lordships more detail on this, which I could give. I reiterate that taxation is a matter for the elected Government. Only the Government have oversight of the balance of taxes from different sources; rates of tax are set, taking into consideration a range of factors, including wider economic considerations and spending decisions. It would therefore not be possible for an independent body to have oversight of the interaction between this tax rate and other tax burdens that the same group face.

Next, on public consultation on the appropriate level of funding for the BBC, I have already made my reservations clear on this aspect of the noble Lord’s amendments in Committee. Funding a public service is not a straightforward topic for public consultation. The BBC’s funding needs are a complicated and technical issue, as we have seen at every licence fee settlement—

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[Lord Ashton of Hyde]

My Lords, public service broadcasting prominence on the EPG is an issue that has come up at every stage of the Bill in this House, and Amendment 33ZG does so for this stage. The Government recognise the high-quality programming of our PSBs and their importance for maintaining the thriving and healthy UK broadcasting sector. We also recognise the strength of a mixed broadcasting ecology that features commercial broadcasters as well as commercial and non-commercial PSBs. We are showing our support for them in two ways that we have already debated: first, in the government amendment on listed events and, secondly, in our support of the noble Baroness, Lady Benjamin, in respect of children’s television. Thirdly, although this is not in the Bill, we have announced that Channel 4 will not be privatised.

Our clear policy of supporting PSBs is why the Government gave considerable thought to the issue of the EPG prominence regime during the balance of payments consultation, the response to which was published last year, before this Bill reached this House. Our conclusion was that we had not seen compelling evidence of harm to PSBs to date and we decided not to extend the EPG prominence regime for PSBs to their on-demand services. This absolutely remains our view, and is supported by evidence, such as the success and continued growth in the popularity of the BBC iPlayer, which has no prominence at all and saw a record 304.2 million requests for TV programmes in January 2017—double the rate of five years ago. After the iPlayer, what are the most watched on-demand services in the UK? The answer is the ITV Hub and All 4, neither of which are currently subject to prominence requirements.

Additionally, PSB on-demand players already occupy the most prominent positions in the on-demand sections of major TV platforms such as Sky and Virgin. Why is that? Platforms make them prominent because they need to react to viewers’ preferences. It takes, for example, a mere four clicks to get to the iPlayer from Sky Q’s home page. As I stated during the last debate, when PSBs make excellent content, audiences will find it, whether it be catch-up or live content. A good example is children’s PSB channels, of which many noble Lords have spoken. CBeebies and CBBC are the most watched children’s channels by a considerable distance—which shows that there are no problems for audiences in finding these channels. The content is easily accessible on demand within the iPlayer itself.

Micromanagement of how audiences need to be guided through menus and sub-menus cannot be the answer when the technological landscape is shifting quickly. The fact is that platform operators respond to consumer feedback and needs in developing their products; therefore future developments in the EPG will be customer driven, not driven through legislative change. Further, it has been suggested by technology companies that, if this requirement was enforced, it would create a need for bespoke products in the UK. For example, smart TV manufacturers’ user interfaces are developed with a global market in mind, but a separate product would need to be developed for the UK market.

Rather perversely, the amendment goes far beyond the prominence which Parliament has afforded to linear PSB channels, because it would give prominence to the PSBs’ on-demand programme services, which include not only PSB content from commercial PSBs but also content originating from their non-PSB portfolio channels. We do not think that that is justifiable.

I confirm to noble Lords and to viewers who have found the BBC Parliament channel—the noble Viscount, Lord Colville, mentioned this, too—that, if this amendment is not agreed, the existing PSB regime will remain as it is today. People will still be able to switch on their ordinary TVs and find BBC1 and BBC2 at the top. But, if it is agreed by the House, it will remove Ofcom’s discretion to require the prominence it considers appropriate for the linear regime; it will micromanage Ofcom’s guidance; it will extend PSB privileges to non-PSB content; and it will affect worldwide manufacturers, many of whom operate in the UK, putting up prices for UK consumers—all against a background where iPlayer, ITV Hub and All 4 are already the most watched on-demand services. I therefore hope that the noble Lord will withdraw his amendment.

[Lord Wood of Anfield]

I thank all noble Lords for an excellent short debate; I will respond very briefly. I thank the Minister for his response but I am afraid that it has made me even more determined to push this amendment through, because his response seemed to be based on the premise that supporting prominence for traditional linear TV watching is a principle that the Government support more strongly than ever, but that somehow the principle falls into abeyance when viewing habits and technology change; and that, in the new future, there will be no need for further prominence rules because the choice of consumers will somehow magically replace the need for the current PSB protections in the prominence rules for linear TV.

I do not understand why the emphasis on prominence, which has been a cross-party principle for a long time, is suddenly thrown out of the window when on-demand and more sophisticated technologies develop. So I am afraid that I do not find the Minister’s response at all satisfactory—and nor do I think that the threat of losing Ofcom’s existing powers has any empirical basis whatever, by the way. So I would like to test the opinion of the House.

Digital Economy Bill

Debate between Lord Wood of Anfield and Lord Ashton of Hyde

Report: 2nd sitting (Hansard - continued): House of Lords
Monday 20th March 2017 Lords Chamber

[Lord Wood of Anfield (Lab)]

I thank the noble Lord, Lord Inglewood. I think the principle of maintaining the independence of the BBC unites virtually everyone in this House. However, the question is: do we agree on what constitutes a challenge to that independence, and do we agree to provide extra protection to the BBC when the independence is under threat?

This amendment sets out concerns about three kinds of independence being compromised: editorial independence, operational independence and financial independence. As the debate in Committee showed, there are widespread concerns about independence of these three varieties being challenged in different ways. Therefore, I think the statements of intent and principles in the amendment of the noble Lord, Lord Inglewood, enjoy widespread support. I think most people would agree that they should govern the approach of the legislature and the Executive to the BBC. However, I wish to bring a couple of issues to the surface. Although the amendment raises these crucial principles, it also suggests the difficulty of using the power of the state to protect bodies outside the state against interference from the state.

I have two concerns in particular. First, there is a larger principle here of putting the independence of a major institution of British public life on a statutory footing. I am personally sympathetic towards that but it is a principle which deserves debate on its own terms, both as a principle and as applied to specific cases such as the NHS, which has been debated before, or the BBC. Secondly, what exactly constitutes independence—not simply politically but legally—needs clarification and precision. Imposing a duty on Ministers and other bodies to ensure that the BBC can operate independently opens the question of how that can be defined, both so that we can recognise it in the observance and the breach, and enforce it. Again, this is something that needs further debate and discussion.

The amendment touches on a cornerstone issue for the BBC and broadcasting policy and the ethos and integrity of public life more generally. However, it raises a broader issue which deserves a more lengthy proper scrutiny in future.

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, I am grateful to noble Lords for their remarks. In returning to this issue, I am sorry that the noble Lord, Lord Lester, is not here to speak to his amendment as we have debated this issue at length with him as part of the recent discussions on the BBC’s royal charter. We have debated it at Second Reading, in Committee and in other debates and Questions. The amendments that the noble Lord, Lord Lester, has tabled, and my noble friend Lord Inglewood has proposed, seek to constrain future royal charters for the BBC through statute. I should have said that I hope the noble Lord, Lord Lester, makes a speedy recovery and returns not to bring this subject up again but other subjects.

I note that, following the discussion we had in Committee, the noble Lord, Lord Lester, made a number of changes to his amendments proposed tonight in the areas of governance and funding. I appreciate the thought that he put into this and the dialogue that we have had on this so far. However, we still maintain that very serious risks are associated with the amendments and therefore we cannot support them.

As noble Lords will by now appreciate, the disagreement between the Government and those who tabled this amendment comes down, as the noble Lord, Lord Wood, said, to a matter of principle. Is the BBC best governed and protected through a charter or through a charter underpinned by legislation? I accept that there are instances where it is desirable and appropriate for a charter to be underpinned in statute but it is the Government’s view that this does not apply to the BBC.

Noble Lords may be interested to know that this is a discussion as old as the BBC itself—indeed, it is almost exactly 10 years older than the noble Lord, Lord Lester. When the then Postmaster-General announced in July 1926 that the BBC would be established through its first royal charter, he remarked that the new corporation would derive its authority from royal charter rather than from statute to make it clear to the public that it was not,

“a creature of Parliament and connected with political activity”.

In practical terms, noble Lords will appreciate that there is little difference between the effect of the BBC’s charter and its accompanying framework agreement and an Act of Parliament. Both are binding on the BBC and on Ministers. Article 3 of the current charter provides:

“The BBC must be independent in all matters concerning the fulfilment of its Mission and the promotion of the Public Purposes, particularly as regards editorial and creative decisions, the times and manner in which its output and services are supplied, and in the management of its affairs”.


That carries the same weight in a charter as it does in primary legislation, but in my view the latter option carries unacceptable risks to the independence of the BBC. From a practical point of view, amending an Act of Parliament in the event that a change is required—with all the party-political debate and pressure that that would entail and the uncertain legislative timetable—is not the right vehicle to make sure that the BBC can be governed effectively. Who can tell what political pressures will exist entirely unconnected to the detail of the BBC charter when the charter comes up for renewal?

Charter review remains the right vehicle. It affords an ample opportunity for debate and consultation but also allows for full consideration of all the connected and complex key issues, for effective decision-making and, crucially, for a negotiated agreement with the BBC.

Incidentally, I cannot resist mentioning that my noble friend Lord Inglewood referred to the Government as Dick Turpin in this case. I may be entirely unfamiliar with the story of Dick Turpin but I did not realise that he gave £3.7 billion annually to his victims.

Therefore, I submit that a statutory underpinning will leave the BBC under constant threat of change and monitoring what the Parliament of the day sees as the national interest. I fear that fellow parliamentarians, some of whom may not have my noble friend’s pure motives, will find it an irresistible temptation to tweak here and there, and, even with the best of intentions, we cannot expect the BBC to operate effectively and plan for its future in such circumstances.

I believe that this should be a matter for the Government of the day to decide ahead of the next charter review. The charter model has stood the test of time since 1926—through economic depressions, world war and huge technological change—to achieve what has been praised throughout the passage of this Bill as the BBC we have today. Given your Lordships’ ongoing interest and informed views, I am confident that the Government of the day will be minded to consider this carefully. With that explanation, I hope my noble friend will be able to withdraw his amendment.

Digital Economy Bill

Debate between Lord Wood of Anfield and Lord Ashton of Hyde

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

[Lord Wood of Anfield]

My Lords, I thank noble Lords for that excellent short debate. I agree with much of what the noble Lord, Lord Gordon, said about the risks of a target—such risks definitely exist—but I also agree with other noble Lords that leaving it to Ofcom is probably not the best solution. There is definitely a need for some parliamentary clarity. Ofcom wants statutory clarity so that it can be a regulator in virtue of clear rules, rather than be thrown into the contentiousness that the judgments that this would require would embroil it in. So I think that the Ofcom route is not the best route forward.

I also agree with the noble Lord, Lord Wigley, that there are certain tough cases with any rules, in particular with the Welsh and Gaelic language carrying of live sporting events. In response to the Minister, I suppose I am 10% reassured and 90% not reassured at all. To say that noble Lords can be reassured that there is no threat is not really a reassurance, because the threat does not come from the Government’s intentions being in doubt.

[Lord Ashton of Hyde]

I think the noble Lord misunderstood me. I was trying to reassure him by saying that we will not let it be under threat.

[Lord Wood of Anfield]

I appreciate that and I am grateful for it, but I fear that it is under threat by virtue of technological change and changes in viewership—not because of changes in government policy. There is a threat emerging—one can see it in the graphs and the numbers—and it requires some pre-emptive thinking. There was a hint that maybe some pre-emptive thinking is going on behind closed doors on this, but it is just not true to say that there is no threat when all five PSB channels line up and say that the numbers suggest that not one of them will qualify under the existing rules by the end of the Parliament. They are either right or they are wrong—and if they are right, there is a problem.

[Lord Ashton of Hyde]

I am sorry to keep interrupting the noble Lord; what I said was that the regime is not under threat at this time.

[Lord Wood of Anfield]

Well, I take “this time” to be this Parliament: that is the one I am in, and by the end of it there seems to be a big problem brewing. So I suspect that we will come back to this later. But for the moment I beg leave to withdraw the amendment.

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[Lord Ashton of Hyde]

No, what I am saying is that we do not see that there is compelling evidence of harm to PSBs.

[Lord Wood of Anfield]

My Lords, we have had various contributions across the House of excellent quality. We have the noble Lord, Lord Low, and the noble Baroness, Lady Benjamin, talking about children’s content; the noble Lord, Lord Wigley, and my noble friend Lord Hain talking about Welsh language provision; various comments about innovation and the future from the noble Viscount, Lord Colville, and the noble Baroness, Lady Bonham-Carter, and my noble friend Lord Puttnam.

For the sake of brevity, I will respond to the Minister directly. I am slightly confused by the logic of the Minister’s response. Either electronic programming guides work in pointing people towards PSB—and the general view is that they are absolutely crucial for audience share in traditional TV—or they do not. I find it difficult to know why the logic that has traditionally held for intervention to ensure that PSB content paid for by the public has pointers towards it should no longer apply in an age when viewing habits are changing. I totally accept that it is more complicated, but I do not understand why we should throw our hands up and say, “People will find good content”, when up to now, with linear TV, we have taken great strides to ensure that people are pointed towards the content that is funded by licence fee payers. I find that discrepancy between the two worlds quite baffling.

Secondly, it is not a new set of regulations that noble Lords are asking for; it is updating the existing set of regulations—which has pretty much worked okay, with the exception of children’s TV and a few other areas—into a new age. That will require some imagination and collaboration and thinking, but it is not ripping up everything and starting again that it is being asked for. So I am disappointed that the Minister has closed the door on thinking this through further. I will definitely think more about what to do and where to take this, but for the moment I beg leave to withdraw the amendment.