Channel 4 Privatisation

Baroness Laing of Elderslie Excerpts

Tuesday 14th June 2022 Commons Chamber

[Madam Deputy Speaker (Dame Eleanor Laing)]

We will now proceed to the second Opposition day motion. I hope that Members who have just participated will have the courtesy to leave the Chamber.

--- Later in debate ---

[Michael Fabricant]

On a point of order, Madam Deputy Speaker. I may have inadvertently misled the House. I said that it was Netflix that produced “Game of Thrones”, but it was not. It was HBO and Sky Atlantic that invested a quarter of a billion pounds in Northern Ireland, considerably more than any other broadcasting company.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I thank the hon. Gentleman, but that was more of an intervention; it was supposed to be a point of order. None the less, I am grateful to him for correcting the record so swiftly, so I thank him for his point.

[Ian Paisley]

Further to that point of order, Madam Deputy Speaker. As a matter of accuracy, would it not have been better if the hon. Member for Lichfield (Michael Fabricant) had confirmed that over £250 million is paid into film making in Northern Ireland annually without any of those companies?

[Madam Deputy Speaker]

I thank the hon. Gentleman for that point of order. I do not know whether that would have been better, because it is not a matter for me to comment on; it is an additional point of debate.

[Ms Dorries]

Our responsibility is to consider the long-term sustainability and future of Channel 4. As a responsible Government, we are prepared to acknowledge those challenges head-on, and to do what is needed to protect one of our most important public service broadcasters not just today, but in the years to come. We therefore believe that it is time to unleash Channel 4’s full potential—the hon. Member for Manchester Central (Lucy Powell) slightly misquoted me on that—and open up the broadcaster to private ownership while, crucially, protecting its public service broadcasting remit. That is a fundamental point: we are protecting its public service broadcasting remit. For those Opposition Members who are complaining and throwing up faux concerns, I repeat that we are protecting it as a PSB.

A sale will allow Channel 4 to grow and access greater investment, meaning that it can create more great programming, made by people who live and work in the UK, without losing what makes it distinctive. Just look at another public service broadcaster, Channel 5. After its sale to Viacom, Channel 5’s overall content budget grew by, on average, 7% a year. It is my genuine belief that this much-needed, long-term investment and the associated risk that comes with it—because investment does not come without risk—should come from private ownership, rather than being borne by the taxpayer.

--- Later in debate ---

[Ms Dorries]

It is exactly as my hon. Friend has outlined. The hon. Member for Manchester Central asked me what Channel 4 said, and one of its responses was that it wants to raise money. It wants to invest and raise money. The state—[Interruption.] Channel 4 is state-owned. The state cannot own a public service broadcaster that takes on the risk of borrowing money. If that goes wrong, it is the taxpayer who has to pay that debt. We as a Government cannot burden the taxpayer with risk, potential debt and responsibility.

Removing the restriction will allow Channel 4 to do exactly what my hon. Friend the Member for Folkestone and Hythe (Damian Collins) says: to raise that revenue stream and improve its long-term sustainability. We can do all those things with a sale, while protecting all that makes Channel 4 unique. We are not looking for any old buyer for this broadcaster. We are looking for the right one—one who shares our ambition for the business and our belief in what makes it special. It is precisely because of what Channel 4 does, and how it does it, be that distinctive programming, news content or film, that we are confident that we will find the right buyer.

Unsurprisingly, though it is early days, there has already been a lot of initial interest from a wide range of potential bidders. When a sale is secured, it will not just benefit Channel 4; we intend to use the proceeds to benefit the entire country. As I said, Channel 4 was originally established to help boost independent production, and it has been successful in that mission—so successful, in fact, that we face a new and very positive challenge. Production studios across the country are booming. They are so in demand that we need more and more people to work in them. We therefore intend to funnel some of the proceeds of the sale into addressing that new challenge and giving people up and down the UK the skills and opportunity to fill those jobs, delivering a creative dividend for all.

As I have to keep reminding those who choose to ignore it, the sale of Channel 4 is just one crucial part of a much larger piece of broadcasting reform, and the question of Channel 4’s long-term sustainability is—[Interruption.] The accusation is being thrown at me from a sedentary position that I am going to get rid of the BBC. It is not good enough to invent accusations from the Front Bench. Commentary has to be based on what the Government are actually proposing and what is actually happening. [Interruption.] Okay, so we did freeze the licence fee—yes. In this environment, that is a cost of living saving. There is absolutely no way, in today’s environment, that we could go to the country and ask individuals to pay for an increase in the BBC’s licence take. I am absolutely amazed that Opposition Front Benchers think that would be an acceptable thing to do, when hard-pressed families are struggling to pay their bills—[Interruption.]

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. The shadow Secretary of State must stop shouting at the Secretary of State from a sedentary position. If she wants to make a point, she should get up and intervene. I cannot hear what the point is. I can hear the Secretary of State’s answer, because presumably she can hear the hon. Lady, but nobody else can. That is why we debate properly in here by standing up and making a point, not shouting like football supporters—[Interruption.] I withdraw that. I am not criticising any group in society; I am just saying that it is unacceptable.

[Lucy Powell]

Perhaps the Secretary of State will give way on that point, then, Madam Deputy Speaker.

[Several hon. Members rose—]

[Madam Deputy Speaker (Dame Eleanor Laing)]

It will be obvious that a great many people wish to take part in the debate with a limited amount of time left, so we will begin with a six-minute time limit on Back-Bench speeches, after the SNP spokesman, the hon. Member for Ochil and South Perthshire (John Nicolson).

--- Later in debate ---

[John Nicolson]

It is making plenty of programmes. In fact, the Secretary of State already said that so many production companies are being successful that they cannot keep up with the current demands. Conservative Members need to marshal their arguments and work out which they are advocating.

Once again, so we are all clear: 96% of the public in the Government’s own consultation process, which the Secretary of State said it would be an abuse to ignore, said that they opposed Channel 4 privatisation—so much for respecting the public will. It appears that the public matter as little as industry experts.

Let us turn to one of the main arguments put forward for the privatisation of Channel 4. The Secretary of State often says that she wants it to be able to compete with

“streaming giants such as Netflix and Amazon”.

She may have noticed that they do not have war correspondents, or at least that those who do appear are actors in movies, not journalists dealing with breaking news. The comparison is far from ideal, but let us briefly explore it anyway.

Amazon Prime is owned by a trillion-dollar company that uses its video streaming end as a loss leader. Unlike Channel 4, it does not make a profit, so it is far from a role model. What about Netflix, the other role model that the Secretary of State has in mind for a privatised Channel 4? That is not going so well either. It has racked up billions of dollars of debt and its share price has fallen by more than 70% in the last six months, which demonstrates the volatility of the market.

Unlike the Secretary of State’s chosen examples, Channel 4 is a commercial success that runs a profit, not a loss. Its real competitors are the current UK public service broadcasters such as the BBC and ITV. We all know that the future is digital and here Channel 4 leads the UK. We all know that linear numbers are down, but it is in a strong position to benefit from that trend as it is the UK’s biggest free streaming service, despite having a considerably smaller budget than the BBC. Also, of course, because it is publicly owned, it can reinvest extra revenue.

What if the nightmare happened and the Secretary of State got her way? Some on the Tory Benches—I suspect not those invited to participate in this debate—may be swithering and wondering what the future of Channel 4 will hold. They might consider that the Secretary of State, however dodgy her grasp of facts and of the issue, has promised that Channel 4 will remain a public service broadcaster. They might think, “We will have sold off another piece of the family silver, but at least we can all muddle through and things might not change that much.”

Well, not so fast: although the Secretary of State did promise that, whatever fate befalls Channel 4, it would always remain a public service broadcaster free at the point of use, that undertaking fell apart somewhat under cross-examination at the Select Committee. We discovered that Channel 4’s buyer need only keep it as a public service broadcaster for 10 years. The Secretary of State has now made it clear that the Government will have no locus over the broadcaster once that period is over. When asked if the owners would have to consult the Department after 10 years, the Secretary of State said:

“No, it will be privately owned. It will be up to owners.”

So I say to Tory Back Benchers who are uncertain about what to do, if the new owners want to make Channel 4 a streaming service, they can. If they would like to ditch the award-winning “Channel 4 News” with its new chief anchor Krishnan Guru-Murthy, it is up to them. The Secretary of State may be too scared to go into the studio to face him about Channel 4 privatisation, but do those Tory Back Benchers not want him and the news channel to be around to tackle the next Labour Prime Minister? Short-termism may come back to bite them. Say goodbye to “Unreported World”, which sends intrepid correspondents off to tackle unreported stories in some of the world’s most dangerous hotspots. They are astonishingly brave, but the show is expensive to make. Would a privatised company make it? No one at the channel thinks so.

The new owner could break up the company and sell it off. They could move it out of the UK. It is up to them entirely. The Secretary of State may argue that that is unlikely or would not make commercial sense, but do you really trust her judgment? Do you think she understands the detail? Will she even be around once this Prime Minister is gone? Who knows—it doesn’t really matter. What is important is that, once this 10-year period is over, the Government will have absolutely no power; it will be too late.

Reasoned argument has been tried and tested over Channel 4 privatisation. The arguments for privatisation never stack up. As a previous Secretary of State told me:

“too expensive, too unpopular, and too little in return.”

That Secretary of State had listened to the experts. This one does not seem to want to listen to the experts.

With an 80-plus seat majority, this ultimately, as we all know, will be up to Tory Back Benchers. Those of you not on the Government payroll do not much like your leader—we saw that and we saw how you voted. That we know and you often tell me you do not really believe in the culture wars—

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. The hon. Gentleman is not really addressing the Chair when he says “You”. He means “They,” not “You.”

[John Nicolson]

I beg your pardon. I try to avoid that, Madam Deputy Speaker.

Now is the chance for Conservative Back Benchers to join us on this side of the House in the mainstream. Please stand up for a national treasure.

[Several hon. Members rose—]

[Madam Deputy Speaker]

We now have a time limit of six minutes. I call the Father of the House, Sir Peter Bottomley.

--- Later in debate ---

[Kevin Brennan (Cardiff West) (Lab)]

I endorse what the Father of the House just said. That is not to say that I do not have sympathy with Ministers. I was a Minister in the last Labour Government and I understand that Ministers face very difficult decisions. It is not always a decision between simply what is right and what is wrong. Sometimes, it is not a decision between good and evil. Sometimes, it is a decision between the unacceptable and the unpalatable. So I have sympathy with Ministers when they are considering policy.

However, I have been trying to imagine the meeting that the Secretary of State and her Ministers must have had to discuss this topic. Presumably, the permanent secretary came along and said, “Secretary of State, I’m afraid that I’ve got some bad news for you: we haven’t got a problem.” The Secretary of State said, “Really? That’s worrying. What haven’t we got a problem with?” The permanent secretary said, “I’m afraid we haven’t got a problem with Channel 4.” The Secretary of State said, “Why? What has it been doing?” The permanent secretary said, “I’m afraid to tell you that it hasn’t been costing the taxpayer a penny while it has been operating as a public service broadcaster. It gets worse. Last year, it brought in £1.2 billion in revenue and a record financial surplus of £100 million. If that is not enough, it does not even need to borrow any money to finance its operations. I’m afraid to tell you, Secretary of State, that there is much more of this. It has also been rapidly growing its digital advertising revenue, moving into the advertising market that is the future in a way that is far outstripping all of its commercial competitors. Worse still, its digital strategy is way ahead of all its commercial competitors. It has been, annoyingly, fulfilling its remit to appeal to young people. It is the most successful broadcaster of any commercial broadcaster in reaching 16 to 34-year-olds and hugely diverse audiences.

On top of that, I’m afraid to tell you, Secretary of State, it has been commissioning content from independent producers all over the country—”

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. The hon. Gentleman is doing it, too. You cannot say, “I want to tell you, Secretary of State.” You have to say, “Madam Deputy Speaker, I want to tell the Secretary of State.”

[Kevin Brennan]

I apologise, Madam Deputy Speaker, but I was quoting, in an imagined scenario, the permanent secretary. I was not referring to you, Madam Deputy Speaker. This is a creative debate about the creative industries. I was creating an imagined conversation, so I do apologise if—

[Madam Deputy Speaker]

Order. I apologise to the hon. Gentleman. I had not quite picked up on the context. He is probably allowed to make an imaginary quotation, saying, “You, Secretary of State.” Fine—proceed!

[Kevin Brennan]

I know that satire and irony does not translate very well into Hansard, Madam Deputy Speaker. Perhaps it could be put into italics, so that everybody can realise.

[Kevin Brennan]

I have a feeling that that might not be in order, Madam Deputy Speaker.

[Madam Deputy Speaker]

Order. I would just point out to the right hon. Member for Hereford and South Herefordshire (Jesse Norman) that he might find he is disappointed at the end of the debate when he himself loses a minute.

[Kevin Brennan]

I am very grateful to the right hon. Gentleman for his motives. I hope he achieves his objective, but I am not sure whether I will get that extra minute.

In the imaginary conversation, the permanent secretary might have gone on to say, “On top of that, Channel 4 works with 300 production companies a year. It spends more on external production in the nations and regions than any other commercially funded broadcaster, dedicating over half its total content spend to content produced there. I’m afraid to tell you, Secretary of State, that, in addition, Channel 4 has created hundreds of high value jobs in the nations and regions, including by moving a large part of its operations out to Leeds”—I am afraid it was not Cardiff; I wish it had been Cardiff, but it has moved an important HQ out to Leeds—“and announcing plans to significantly increase its investment in skills.”

The permanent secretary might have continued, “On top of that, I am afraid it has been taking decisions with the public interest at heart. I’m afraid to report, Secretary of State, that it has been taking those sorts of decisions, including broadcasting the Paralympics, which otherwise would not have been exposed, and giving a whole hour every night in prime time to news. The news, which counters the misinformation that is such a blight of our age because of the internet, is subcontracted to a production company”—as ever, to ITN—“and subject to Ofcom’s rules of impartiality. And it has been absolutely integral to the success of our film industry.”

“In other words, Secretary of State,” the permanent secretary must have said, “it is a shameful litany of success from Channel 4, and we really ought to do something about it.” Presumably, the Secretary of State would have said in response, “Well, quite clearly, we cannot allow things to go on as they are, because we are going to risk the Government’s reputation for incompetence if this carries on. We have to protect it, and, after all, we were absolutely silent in our manifesto on the issue of privatising Channel 4. Therefore, it is absolutely imperative that we should definitely do it. We did not seek a mandate from the electorate to privatise this successful, publicly owned, public service broadcaster, so we absolutely ought to do it.”

I say to the Minister for Media, Data and Digital Infrastructure, the hon. Member for Hornchurch and Upminster (Julia Lopez)—a very thoughtful Minister, who I am sure will make the best fist of this whole thing both here and eventually in Committee, if this lamentable proposal ever gets that far—that that is where we are at the moment: caught up in an episode of “Parliamentary Pointless”, with a policy that nobody promised in search of a problem that nobody perceives.

Lord Parkinson, the Arts Minister, appeared before the Digital, Culture, Media and Sport Committee this morning, and told us he has six Bills coming down the track in the House of Lords. I would have thought he had enough on his plate, without a pointless proposal of this kind. If colleagues in this place do not prevent this daft proposal from going any further, and the idea ends up down in the House of Lords, I am telling you—you, Madam Deputy Speaker, and the House—that it has no chance of making swift progress in the House of Lords, because it was not in the manifesto. As a result, as Lord Parkinson accepted this morning, the Salisbury convention will apply, and their lordships will feel as free as ever to delay the proposal and if necessary, as they are constitutionally entitled to do, invoke the Parliament Act. The proposal is pointless and should be abandoned.