Legislative Reform (Renewal of Radio Licences) Order 2020

Baroness Barran Excerpts

Friday 27th November 2020 Lords Chamber

Moved by

[Baroness Barran]

That the draft Order laid before the House on 2 July be approved.

Relevant document: 20th Report from the Regulatory Reform Committee

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Baroness Barran) (Con)]

My Lords, I am pleased to introduce this statutory instrument. It is a short but important order that will bring clarity and certainty to the UK’s commercial radio sector. In particular, it will allow the holders of commercial analogue—that is, AM and FM—radio licences to renew those licences for a further 10 years. Additionally, it will give smaller stations the ability to renew their licences if they commit to carriage on small-scale DAB multiplexes, where these are available. This provision will have the most immediate effect for the three national licences—Classic FM and the AM licensees, Absolute Radio and talkSPORT—as well as around 100 local licences which are due to expire over the next decade.

The measure meets the tests set out in the Legislative and Regulatory Reform Act 2006. It has been approved by the Delegated Powers and Regulatory Reform Committee, and the Regulatory Reform Committee in another place, as being appropriate for a legislative reform order with the affirmative procedure. Since the launch of the Digital Radio Action Plan in 2010, the Government have supported the listener-led transition of radio from analogue to digital, through measures including the expansion of the digital transmission network to substantially match FM coverage. Digital now accounts for around 60% of listening, having been closer to the 20% mark only 10 years ago.

There is now a need for a new plan to co-ordinate the next phase. In February 2020, we announced a joint government-industry review of the future of digital radio and audio in the UK, which is due to report in March 2021. However, analogue broadcasting —particularly FM—remains an essential part of UK radio, and we expect this to be the case well into the 2020s. Analogue services are valued by listeners and, in some parts of the country, analogue provides the only means of accessing broadcast radio. During Covid, radio has played an essential role in providing reliable and trustworthy communications to the public. With existing licences due to reach their final expiry dates from the end of 2021, and with Ofcom having no authority under existing legislation to extend them further, it was therefore important to clarify the position for analogue licence holders.

In December 2019, we issued a consultation to explore the options for reform: a “do nothing” option, which would involve allowing the licences to be re-advertised; or to legislate to allow the further renewal of licences for either five or eight years. Having carefully considered the responses, our conclusion was to retain the long-standing arrangements for analogue licence renewals that previous Governments have used to support the development of digital radio.

While there are some arguments in favour of opening analogue licences to competition, a full-scale re-advertisement process would, in our view, be disruptive and expensive, and the impacts would outweigh any potential benefits—particularly at a time when commercial radio faces severe disruption from Covid-19 and increased competition from online audio and smart speakers. We reflected carefully on the impacts of Covid-19 on stations’ advertising revenues, which have seen significant year-on-year reductions. In the light of this, we took further views on a longer, 10-year renewal and the responses to this—in particular from Radiocentre, the industry body for commercial radio—were positive. In addition, the extension is likely to take matters towards a natural endpoint for analogue broadcasting by the end of the decade.

I should make it clear, however, that the Government, while supporting the transition, have made no commitments about a future radio switchover. We will of course take account of the findings of the digital radio and audio review that I mentioned earlier, when it is due to report in the spring of 2021. However, I confirm to noble Lords that any switchover decision remains some way off. It would require a clear understanding by broadcasters and others, including groups representing listeners, as to whether it would be an appropriate course of action for radio’s future.

I want to touch quickly on the second provision within the order relating to small stations. The change will allow stations to satisfy the digital carriage condition by broadcasting on an appropriate small-scale multiplex. Following the passage of the Small-scale Radio Multiplex and Community Digital Radio Order 2019 and Ofcom’s recent commencement of the licensing process for small-scale DAB, it will soon be possible for smaller stations to broadcast over digital without needing to do so via local multiplexes, which cover larger, county-sized areas and come with the costs that such coverage implies. The current legislation refers only to local and national multiplexes. The provisions in this order will update the legislation to refer to small-scale multiplexes too. This is a change widely supported by smaller stations and the wider radio industry.

In summary, the order will continue the long-standing arrangement of allowing licence renewal for a commitment from commercial radio stations to DAB. In effect, it is the no-change option. It will provide stability and certainty to the industry during this tough time while continuing the progress of UK radio and audio towards a digital future. I beg to move.

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[Baroness Barran (Con)]

My Lords, it has been a pleasure to debate this order with your Lordships, and I thank all noble Lords for the warm welcome they gave it. I will bask for a short moment in the huge praise from the noble Lord, Lord Foster of Bath, for the Explanatory Notes, which was echoed by the noble Lord, Lord Stevenson of Balmacara. I absolutely support that and thank all those involved in preparing the notes for their clarity and ease of use.

A number of your Lordships, including my noble friend Lady Gardner and the noble Lord, Lord Berkeley, emphasised the importance of local radio during the recent difficult months of the pandemic and the critical role that those stations have played in communicating messages, particularly on public health and Covid, in many parts of the country and in many community languages, which is of such critical importance.

My noble friend Lady Altmann and the noble Lord, Lord Stevenson, highlighted the significant impact that the radio sector has suffered as a result of the pandemic, with falls of 40% to 50% in advertising revenue. The noble Lord, Lord Stevenson, asked what else the department has done to support the sector. We have had the wider economic support packages, but DCMS has also negotiated a significant package of support for commercial radio stations, ensuring that smaller stations benefited from a six-month waiver of transmission charges, and we repurposed the Community Radio Fund to provide small grants to community stations that are facing financial challenges as a result of the pandemic. The fund has made a total of 112 grants, worth a little over £400,000, in two rounds. Finally, Ofcom has relaxed some regulatory requirements on the production of content to support radio stations to develop ways of working to cope with the lockdown and movement restrictions.

In response to my noble friend Lady Altmann’s question on how we are working with Ofcom on small- scale DAB rollout, we are working very closely with the regulator. The closing date for the first round of applications was this week. Ofcom has been carefully testing small-scale stations, with trials running since 2015.

I also thank the noble Lord, Lord Berkeley, for his generous words. The Government, the BBC and commercial radio have all invested in the expansion of the DAB network. We recognise that more investment is needed in Wales, which is one of the issues that the digital radio and audio review will look at.

Concerns were raised by my noble friends Lord Kirkhope and Lady Gardner, and the noble Lord, Lord Foster, about the risk of the reduced availability of local radio and loss of local content. As I have already said, the Government recognise the important role that radio plays in the provision of local news and information. However, the context in which it operates is clearly changing dramatically, as a result of structural and technological factors. We all know that there is a proliferation of ways to consume audio content, a shift from local to national listening, and greatly increased competition for advertising spend from the expansion of digital media and the rapid growth in online advertising.

However, Ofcom, which issues guidance on localness, has made no changes to the local news or information requirements for local stations, and those requirements will not be affected by this order. Indeed, following the consultation on future commercial radio regulation in 2017, we committed to strengthening local news and information requirements, which are the key public service aspects of local commercial radio, and to extending them to digital radio stations. We hope to bring forward legislation on commercial radio reform when parliamentary time allows.

The noble Lord, Lord Stevenson, referred to a “fudge” regarding the digital switchover dates. The specific issue of whether a formal managed switchover should take place, and if so when, will be considered as part of the review, as I mentioned, and we will get that report by the end of March 2021. Again, and to reassure the noble Lord, Lord Berkeley, no decision has been made to date as to whether or when a switchover should take place.

To return to the provisions of the order, we believe that it will allow commercial radio stations to focus their efforts at this difficult time on continuing to deliver the vital news and entertainment that listeners value most, while supporting the ongoing transition to a digital future for the radio sector. I commend it to the House.

Motion agreed.