STV

Ian Murray Excerpts

Thursday 3rd February 2011 Commons Chamber

[Anas Sarwar (Glasgow Central) (Lab)]

I am grateful for the chance to speak about an issue that is of great importance to the city of Glasgow and to Scotland. The challenge of jobs and growth will be a defining political issue in the coming year. People want to know where new jobs and future prosperity will come from. Those in the private sector, who must create the jobs and wealth that Britain needs, will want to know whether everything that could be done is being done to support their efforts. They will want to know whether our Government are making the right choices on jobs and growth, and the right choices for the future of Britain.

One such company already asking those questions is STV Productions in my constituency. STV Productions is one of the few businesses of scale in the Scottish television production sector. It is a hugely important part of the Scottish creative industries cluster and a key employer in Glasgow’s thriving media hub on the banks of the River Clyde. The growth of STV Productions can help to secure and develop a thriving, sustainable television production sector in Glasgow and throughout Scotland, delivering significant economic, social and cultural benefits. The growth of STV Productions will also secure and create much-needed private sector jobs.

The Chartered Institute of Personnel and Development says that the impact of Government spending plans will mean a 200,000 drop in employment this year. Under those headlines are larger numbers of job losses. PricewaterhouseCoopers calculates that public sector cuts will lead directly to around 500,000 private sector job losses over the spending review period. The CIPD has previously said that 1.6 million jobs could be lost, with the increase in VAT estimated to cost 250,000 jobs. Jobs will be created in the recovery, but the challenge to replace all the jobs lost through public spending cuts, as well as those lost as a result of the unemployment remaining after the global banking crisis and the impact of VAT, will be huge. The jobs that Britain needs can be created only by successful and growing private companies. They need the confidence and certainty that will justify their investing. Public policy must be focused relentlessly on creating the conditions for growth. Today the Government are making a series of wrong choices that will hamper the ability of private companies to grow.

Last November, the Secretary of State for Culture, Olympics, Media and Sport made a choice that denied STV Productions the independent status that it sought. Officially classifying STV as an independent television production company would have allowed it to compete for programme commissions under production quotas reserved for independents by broadcasters such as the BBC and Channel 4. In short, independent status would have offered STV Productions the chance to create employment opportunities in Glasgow. Ofcom broadly welcomed STV’s aspirations, saying that independent status would encourage greater access to network commissioning by external producers. Meanwhile, Ofcom’s advisory committee for Scotland endorsed the broad policy position of ensuring that television production be enhanced in the nations. The Secretary of State decided to overlook that advice and to deny STV independent status.

STV Productions currently supports 305 full-time equivalent jobs. The company’s combined direct, supplier and income impacts stand at £15.3 million of gross value added in the Scottish economy. If STV Productions maintains its current market share in 2016, its economic impact will increase to 317 jobs and £15.9 million in GVA.

[Ian Murray (Edinburgh South) (Lab)]

I congratulate my hon. Friend on securing this important debate on Scottish television. It is a shame that we could not have a motion of no confidence in the Government right now, given that there is nobody on the Government Benches, but I know that that is not the way procedure works. My hon. Friend is eloquently outlining STV’s contribution to the economy. Independent producer status would allow that contribution to grow even further, leading not just to STV’s growth, but to the growth of the entire production sector in Scotland, helping it to branch out from its hub in Glasgow to many other parts, including my constituency.

[Anas Sarwar]

I thank my hon. Friend for staying for the debate. I agree wholeheartedly with his comments. Independent status would not only benefit STV, create jobs in the company and create growth in the city of Glasgow, but help other independent production companies in Glasgow and throughout Scotland to branch out in many of the sectors involved.

Had STV Productions gained independent status, its competitiveness would have increased in the BBC market and other domestic and international markets. By 2016, such an increase in competitiveness could have increased its economic impact by 30% to 396 jobs and £19.8 million in gross value added. However, as a result of the Secretary of State’s decision, the economic impact of STV Productions in 2016 is expected to be £3.9 million less than it could have been.

The provision of 79 full-time equivalent jobs would have been great in itself, but as was pointed out by my hon. Friend the Member for Edinburgh South (Ian Murray), independent status for STV Productions would also have had an effect on the economic impact of the wider production sector in Scotland. The growth of a company of scale would have led to an increase in the competitiveness of the sector as a whole., and that increased competitiveness could have allowed independents with Scottish headquarters to compete against international production companies with a presence in Scotland. By 2016, the resulting growth could have increased the economic impact of the sector as a whole to £98 million and supported 1,847 jobs. That is private sector growth on a scale that the Government cannot afford to ignore.

The Secretary of State could have secured a bright future for the independent production sector in my constituency and beyond. Instead, his decision will allow independents with headquarters outside Scotland to gain at the expense of the growth of STV Productions and those with headquarters in Scotland. The overall effect will be a reduction in the future economic impact of the television production sector in Scotland. The decision fails to recognise that STV is perhaps the only Scottish company with sufficient capacity to take on such large-scale productions. It fails to show a full understanding of the measures needed to secure a viable and sustainable broadcasting industry in Scotland. Above all, it fails to encourage private sector job creation in my constituency and throughout Scotland.

The creation of a strong and competitive private sector must be central to the society that we are trying to build. We must support people who are in business and leading businesses. We need growth and job creation over the next year, but we also need to lay the foundations for a stronger, better balanced economy in the future.

I recognise the concerns of smaller independent production companies in Glasgow and in Scotland as a whole, and I accept that STV Productions will have to address many of those concerns if it wants independent status, but I genuinely believe that all independent production companies—including STV, if it could acquire its licence—would benefit from the resulting growth in the sector.

I want to see companies such as STV Productions grow, create more profits and create more jobs. With that in mind, I invite the Secretary of State, along with his colleagues, to visit STV Productions in the beautiful city of Glasgow, on the banks of the River Clyde, and to review his decision. That would benefit my constituency, the city of Glasgow and Scotland as a whole.

--- Later in debate ---

[John Penrose]

I plan to deal with some of the remarks made by PACT later in my speech. I am sure that the hon. Gentleman is right about part of its remarks, but we have to take into account not only its remarks in their totality, but all the other remarks and consultation submissions made in response to the Government’s request.

The Secretary of State believed it inappropriate to consider this matter in isolation, given the wider and more comprehensive review of public sector broadcasting and regulation that the Government are undertaking over the term of this Parliament. On that basis, he concluded that the proposal should not be taken forward. The Government appreciate that this decision will not be welcomed by everybody. Implementation of the proposal was not, however, in the interests of the Scottish economy as a whole, nor was it likely to promote competition or diversity of production in the long run.

The responses to the public consultation are published on my Department’s website, but I wish to highlight some of the specific points raised by the existing independent production sector. They perhaps deal with some of the interventions that have been made, and they highlight the concerns raised and give some background to the decision.

Many respondents were concerned about the displacement of commissions from the existing Scottish independent production companies to STV. PACT said:

“There is significant risk that the proposed change in the definition would potentially severely damage the Scottish production sector by displacing commissions from other Scottish producers”.

Its contribution expanded on this by saying that

“our main concern, though, is that STV will displace commissions not from London companies but from other, typically smaller Scottish independents, with the resulting damage to the Scottish production sector. The last five years have seen the growth of larger, typically London-based independent companies. However, with a few exceptions, Scotland remains characterised by small companies specialising in one or two genres. A 2008 report, for example, indicated that average turnover for an independent company in Scotland was just £1.33m per year.”

[Ian Murray]

On PACT’s point about the sector in Scotland being characterised by small production companies, the issue for Channel 4 in trying to commission more programmes from Scotland to try to get its percentages up—everyone in Scotland is keen that that should happen—is that there is not sufficient critical mass up there to produce something that Channel 4 could do on a returning basis to achieve that. The only organisations that could do that are the BBC, which cannot do it for licensing reasons, and STV Productions, which cannot do it because it does not have independent producer status, so there is a bit of circular argument on this issue.

[John Penrose]

I appreciate the hon. Gentleman’s logic, but the burden of what PACT has said is that the danger of giving STV independent production status is that it would cannibalise existing Scottish independents and we would end up with a much smaller number of larger producers, with STV massively in the lead. That is a possible outcome, but clearly the Secretary of State, in balancing what he was asked to consider, did not view it as strongly as some of the alternative outcomes.