Digital Economy Bill (Tenth sitting)

Christian Matheson Excerpts

Committee Debate: 10th sitting: House of Commons
Thursday 27th October 2016 Public Bill Committees

[Matt Hancock]

That was an excellent assessment of the pros, cons and challenges around the proposed changes to appeals. Much of the analysis and thinking that the hon. Lady has just set out is what we went through in coming to the same conclusion that it is sensible to change the appeals process.

I will set out some of the detail of the changes and then I will answer the specific questions that were put. The clause alters the standard review applied by the Competition Appeal Tribunal when deciding appeals brought under the Competitions Act 2003 against decisions made by Ofcom. This is in order to make the appeals process more efficient. The changes will not apply to appeals against decisions made by Ofcom using powers under the Competition Act 1998 or the Enterprise Act 2002.

Currently, appeals can be brought and decided on the merits of a case, and this exceeds and effectively gold-plates article 4 of the EU framework directive that requires that the merits of a case are taken into account in any appeal. The result of this over-implementation is an unnecessarily intensive and burdensome standard of review that can result, as the hon. Lady set out, in very lengthy and costly appeals litigation, which can hinder timely and effective regulation, and risks Ofcom taking an overly risk-averse approach to regulating the sector properly.

[Christian Matheson (City of Chester) (Lab)]

Would it also not give Ofcom much more credibility in the eyes of the organisations that it regulates, because they would realise that they had much less ability to overturn its decisions?

[Matt Hancock]

That is right. We heard the evidence from Three and TalkTalk, who are in favour of this change. That is no surprise, as they are essentially the insurgents in the infrastructure market, and the incumbents were less keen on this change. We also heard from Which? and Citizens Advice, which explained that it is no surprise that large companies want to keep the status quo.

It is not my job to bask in the reflected glory of the appreciation from Three or TalkTalk, nor is it to have undue concern, rather than due concern, for the complaints of those who disagree with this change.

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[Louise Haigh]

We do not wish to oppose Ofcom’s new role in regulating the BBC, for which clause 75 provides—as the Minister knows, we supported the BBC charter agreement last week in the House—but we have some concerns, which are shared by the BBC, about how Ofcom’s new role will work out in practice.

Distinctiveness is an absolutely vital characteristic of the BBC and its services. It is one of the things that justifies its public funding. The BBC should deliver its public purposes and mission, and it should serve all audiences, through distinctive services. Critically, distinctiveness should be judged at the level of services, rather than programmes. That does not mean that the BBC should focus on “market failure” programming or never make a programme that the commercial sector might make. Instead, the test should be that every BBC programme aspires to be the very best in its genre. Overall, the range of programmes in the BBC services should be distinguishable from its commercial competitors. There is a concern that Ofcom could be too prescriptive in the standards it expects of the BBC. For example, it might focus on quotas, such as the number of religious or news hours, rather than a substantive, qualitative assessment, and rather than a standard, such as high-quality journalism.

Evidence shows that BBC services are distinctive and have become more so in recent years. Audiences agree: more than 80% of the people responding to the Government’s charter review consultation said that the BBC serves audiences well, almost three quarters said that BBC services are distinctive and about two thirds said that they think it has a positive impact on the market.

The definition of distinctiveness in the agreement and the framework for measuring it are therefore critically important. The section of the charter agreement that relates to the new powers that will go to Ofcom requires Ofcom to set prescriptive and extensive regulatory requirements, which must be contained in an operating licence for BBC services. Ofcom must have a presumption against removing any of the current requirements on the BBC—there are about 140 quotas in the BBC’s existing service licences—and seek to increase the requirements overall by both increasing existing requirements and adding new ones.

Ofcom has been given detailed guidance about what aspects of distinctiveness it must consider for the BBC’s TV, radio and online services. That follows an old-fashioned approach to content regulation based on prescribing inputs, rather than securing audience outcomes, such as quality and impact. The BBC is concerned that it will introduce a prescriptive and inflexible regulatory framework that could restrict the BBC’s editorial independence and creativity.

Clarity about the definition of distinctiveness would be welcome. It should be applied to services, not individual programmes. The extensive content quotas in clause 2 of the charter should be a response to a failure to be distinctive, not the starting point.

[Christian Matheson]

Does my hon. Friend share my concern that, when the Government came up with the idea of distinctiveness, they themselves were not absolutely clear what it meant? Frankly, we are still at the stage at which the Government might say, “We don’t know what it is, but we might recognise it when we see it.”

[Louise Haigh]

That is a very great concern. There is a serious risk of confusion about how the new regulatory regime is going to work for both Ofcom and the BBC. To be frank, I do not think quotas are appropriate in this respect. I have got nothing against quotas—I was selected on an all-women shortlist, which aim to increase the number of women in the parliamentary Labour party.

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[Calum Kerr]

Absolutely. I see we are on a bus theme, which must be because the hon. Member for Hyndburn has returned to his place.

We must consider the risks inherent in this shift. With its budget potentially squeezed in future, the BBC is the one faced with choosing a priority. The BBC will have to decide whether someone should get a free TV licence. Fundamentally, that is welfare policy. I hope the Government are listening and will reconsider. The new clause is well worded and I fully endorse it on behalf of the Scottish National party.

[Christian Matheson]

I support the new clause and congratulate my hon. Friend the Member for Sheffield, Heeley on an outstanding contribution among numerous outstanding contributions during the Committee’s considerations.

The hon. Member for Berwickshire, Roxburgh and Selkirk is absolutely right that the proposal is an outsourcing of responsibility, but there is more to it than that. The Government are not only putting a further financial squeeze on the BBC, but when, as may be inevitable, the allocation of TV licences to the over-75s has to be reviewed, they will apparently have a clean pair of hands. It will be, “Not us, guv—it was the BBC what did it”, when that may well have been the intention all along. It is, again, outsourcing of responsibility and an attempt to evade responsibility, put on the financial squeeze, take a step back and say, “It’s nothing to do with us. It’s that bad BBC. Because that bad BBC is so bad, we shall cut them even more to punish them for how they have treated pensioners.”

My hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly), who does not serve on this Committee, described the events of June and July 2015 when the so-called negotiation took place as a drive-by shooting when we were in the Culture, Media and Sport Committee. Hon. Members have today talked about negotiations with a gun to the head; a drive-by shooting is an appropriate description of what happened.

The BBC board was taken by surprise by the motives of the then Chancellor of the Exchequer, the right hon. Member for Tatton (Mr Osborne), and the then Secretary of State for Culture, Media and Sport. The Select Committee asked the chairwoman of the BBC Trust whether she and her fellow trust members had considered resigning in protest at what was happening; she declined to answer. I am sure that there were discussions.

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[Kevin Brennan]

Is there not a further cynicism to this? The Government did that in the full knowledge that the policy had what the Treasury often calls “future reach”, as the number of over-75s is likely to go up. Even given that the Government are partially compensating the BBC for this, they know full well that the policy will become more expensive.

[Christian Matheson]

That is an extremely good point, and it reads back to the point that I made earlier: when there has to be a review of the cost of the policy, and perhaps a reduction in the availability of free TV licences, Ministers—perhaps they will be shadow Ministers by that time—[Interruption.] We fight on to win. Conservative Members will be able to point to the BBC and say, “It was the BBC what done it”, in order to evade all responsibility. But they will not evade responsibility, because this will not be forgotten, if they get away with doing it. There is a much better alternative: the excellent new clause proposed by my hon. Friend the Member for Sheffield, Heeley.

[Louise Haigh]

I am appalled by what is, as my hon. Friend is clearly laying out, a naked attempt to evade responsibility. Does he share my concern that this is the beginning of a slippery slope? Where exactly does this end? Once the principle that the Government are attempting to put in the Bill is in legislation, to whom else can they outsource responsibility for their social security policies?

[Christian Matheson]

My hon. Friend makes a good point. I am cautious about straying too far from the point under discussion, but she says that this is the beginning of a slippery slope. It is not, because the Government have form in this area. I look to you, Mr Streeter, for a little bit of latitude here.

There are, for example, massive cuts to local government funding; the Government have taken huge amounts of money away from local authorities, expect them to come up with cuts and reductions in services, and then say, “It is nothing to do with us; blame your local authority.” There is one point on which I would disagree with my hon. Friend the Member for Sheffield, Heeley: this is not the beginning of a slippery slope; it is a continuation of form. The Government have been rumbled, and they know it.

[Graham Jones (Hyndburn) (Lab)]

The amendment is important. It defines the Opposition against the Government. We value the BBC, but there is always a criticism, and the Government are reaffirming people’s view that the Government do not really trust the BBC. If they can do anything to undermine the BBC, they will, instead of supporting it. During the passage of the charter, there has been to-ing and fro-ing, and criticism of the BBC, using the stick of distinctiveness and other sticks, such as the five-year break clause.

The Government always say that they are there to stand up for the BBC and give it the freedoms that it wants, but this is not a freedom, of course; it is a shackle. As my hon. Friend the Member for Cardiff West said, the Government are trying to outsource responsibility. They will not do it on bus passes; they will not say, “We’ll make the bus companies make the decision on free bus passes”, but they will make the BBC accountable for the over-75s’ free TV licences. I do not think that the Government can escape that responsibility, or the accusation that they are continually chipping away at the BBC.

Let us talk about the issue in numbers. By 2020, when the BBC has to pay fully, the figure will be £700 million. That is a considerable amount of money for the BBC to find at a time when the Government have chipped away at BBC budgets through a bit of slicing here and another bit of slicing there, and even with a cap on the licence fee.