Channel 4 Privatisation

Debate between Jesse Norman and Robin Millar

Tuesday 14th June 2022 Commons Chamber

[Robin Millar (Aberconwy) (Con)]

As so many on these Benches have said, Channel 4 has marked the landscape of our lives. Loved or loathed, the landmarks are all there to see across the broadcasting landscape. For me as a youngster, it was the NFL coverage of Super Bowl on Sunday nights that sticks in my memory. More recently, as an engineer, I enjoyed the prominence and accomplishments of the characters on “The Big Bang Theory”, and there are others that have taken our attention as a nation. Who could forget the cultural contributions of the likes of Homer Simpson, particularly his contribution to the English language of “Doh”? Perhaps I am the first Member in this House to mention that in this place. For the benefit of the hon. Member for Ochil and South Perthshire (John Nicolson), that was a cultural reference.

The motion moved by the Labour party opens with the words:

“That this House supports the UK’s much loved cultural institutions, which are celebrated around the world while creating jobs and growth across the country”.

I am sure that those words are unanimously supported by Members across the House. I am proud of this Government’s support for, and recognition of, the immense value of our cultural institutions. After all, it was this Government who opened the £1.6 billion cultural recovery fund, which protected museums, galleries and other cultural treasures from the existential threat that the pandemic presented to much of the UK’s cultural landscape. It was a Conservative Government who saved it.

Let me be clear that I believe the right sale of Channel 4 will help it to thrive in the modern era. Other hon. Members have made that point, so I will not dwell on it. I also believe that a change of ownership can give it access to funds, as other hon. Members have pointed out.

My main point, in answer to several hon. Members who have raised this, is about why a sale is necessary. This is an important point to make because it speaks to how we manage public assets—the buying, holding and exiting of those assets. The word “ideology” has been used several times by Opposition Members. Perhaps this is a gross characterisation—hon. Members will forgive me—but often the Opposition are characterised as being ideologically driven and those of us on the Government side are characterised, or criticised even, as being over-pragmatic. It is interesting to see our actions and words here viewed through an ideological lens. Actually, we are making a pragmatic response.

As a state, we have a poor track record—across all parties and all Governments. We are very good at spotting problems, designing a response and delivering a solution, but then we tend just to hold on. We think that is virtuous, but in fact we risk creating self-perpetuating institutions that become an echo of the past. The real question is not whether this is an ideologically driven or pragmatic response; it is which is the better driver for creativity. I am mindful of bodies such as NatWest, because until two months ago the Government were still the majority shareholder.

What happens when we hold an institution—this has been shown time and again—is that institutional calcification occurs. Inevitably, funds are diverted, with more and more resource going into self-preservation. But the right sale, well managed, would break that up.

[Jesse Norman]

I am enormously grateful to my hon. Friend for his comments, but does he have any evidence that the calcification he talks of is actually happening to Channel 4? There is obviously inflation in the sector. Does he think that Channel 4 is markedly less innovative than other players in the sector? Could he say a bit more about why he thinks privatisation would make a positive difference, given that Channel 4 has managed to flourish over 40 years of state ownership? There are other state organisations, such as the Bank of England, that we would not consider privatising because they have shown their value over many years.

[Robin Millar]

I thank my right hon. Friend, who pre-empts my next comments. Indeed, I will come on to why flourishing is not just measured in finance. For every supply chain that might be disrupted by a sale, a new opportunity for entrants to the sector is created. We have already heard one such example in the intervention from my hon. Friend the Member for Lichfield (Michael Fabricant). Some of the production companies that started with Channel 4 in the early days were cutting-edge start-ups, but now they are becoming institutions in their own right, and we have seen the same pattern—to answer my right hon. Friend’s question —in silicon valley. For agrarians and those who enjoy gardening, sometimes we prune a successful fruit tree in order to encourage further flourishing and production.

After all, Channel 4 has achieved its objective, and this is the point. It was set up by a Conservative Government, under Margaret Thatcher, to create competition in our now thriving independent production sector. Now, having fulfilled this purpose, we are supporting our public service broadcasters to continue to grow, export British content and compete globally. To sell is a responsible question to ask.

By way of further example, about a year ago I spoke to the former chief executive of S4C—Sianel Pedwar Cymru, as we say over the border. It was clear then that S4C was being drawn away from the traditional broadcaster role into more of a media company role, but the funding arrangements in place were hindering that. I see a parallel with the situation facing Channel 4. To be clear, and in response to the hon. Member for Cardiff West (Kevin Brennan), success is not shameful and a sale is not punishment.

In conclusion, the Opposition should not fear change, nor should they resist the responsible management of public assets. It is the responsible thing and it is the right time now to ask the question: what next for Channel 4?

--- Later in debate ---

[Jesse Norman]

The hon. Member makes an interesting and fair point. Of course, if advertising revenue were so unattractive, the rest of the market would not be piling into it. At the same time, no matter who the owner of the enterprise will be, they will not be immune from wider inflation in programming costs. That is the nature of the business, and the question is what innovative and constructive responses will be undertaken by the management team to address that.

The plan is also bad economics from a public standpoint. The House will know that I spent a couple of years as a Treasury Minister, including during the period the Secretary of State talked about when all the support was given to the cultural sector, and I think it is bad economics. Even if the constraints were relaxed in the way that has been described, the revenue to be derived would be only, on a net basis, in the order of £500 million to £1 billion. My successor, the present Chair of the Digital, Culture, Media and Sport Committee, my hon. Friend the Member for Solihull (Julian Knight), has pointed out that that is a drop in the ocean compared with the wider problem. At a 4% interest rate, £500 million amounts to £20 million a year. Are we really going to give up all the control, energy, drive and impetus that exists in Channel 4 now, and the £200 million of directed programming from independent production companies that comes from that, in return for the equivalent of a £20 million annuity? I do not think that makes any economic sense at all.

Overall, this is not a Conservative proposal. What matters in this case is the quality of the ownership. Channel 4 has an independent ownership structure; it happens to be owned by the state, but its ownership structure has made it resilient to political pressure and able to commission highly innovative, risky and interesting forms of programming, for which we celebrate it.

[Robin Millar]

Will my right hon. Friend give way?

[Jesse Norman]

I cannot, as I do not have much time, but I may take my hon. Friend’s intervention later.

It is not a Conservative proposal to sell Channel 4, and even if it was sold now does anyone really think the value generated would not itself be a reflection of the proposed doom scenario in advertising revenues because of the way in which future cash flow works? The key issue here is that we should support an enterprise that itself supports independent production companies, many of them in our nations and regions, that proactively supports disabled people, that supports the Union, and that supports levelling up. That is what Channel 4 does.

I have no doubt that Channel 4 can be further improved and enhanced, and I see its next episode as a down payment on the next generation of its own thinking about how its module could be further leveraged and enhanced, but at the moment it is doing a superb job. We should not sell it; we should proceed and support it in any way we can in the future.

Finance Bill

Debate between Jesse Norman and Robin Millar

Report stage & 3rd reading
Monday 24th May 2021 Commons Chamber

[Robin Millar (Aberconwy) (Con)]

It is a privilege to follow my hon. Friend the Member for Redcar (Jacob Young). Like him, I shall take this opportunity to make a few brief remarks in support of freeports, although, as hon. Members would expect, they will be in support of a freeport in Wales, and north Wales in particular. In doing so, I shall speak against new clause 25.

Freeports and free economic zones are a common feature of international trade, with dozens utilised by our closest allies. Not only have they propelled many of the world’s previously impoverished nations to prosperity, but there are well-established international frameworks for their operation. Indeed, the OECD code of conduct for clean free trade zones is an example, to which this Government have already pledged compliance.

The measures set out in new clause 25 are simply unnecessary, and the additional costs, such as the paperwork proposed, will only reduce the attractiveness of Britain’s ports. Let us make no mistake: the ultimate bearer of extra costs will be not multinational business, but the workers of this country who will miss out on prosperity from export-driven work.

Wales occupies a vital position in UK trade. If we consider just the Republic of Ireland, we will see that in 2019, two thirds of goods carried from the Republic of Ireland came via Wales, and four fifths of goods carried to the Republic of Ireland went via Wales. I also note that Holyhead is on the international trade routes that link Dublin to Moscow, such is the strategic importance of the location and role of Wales—particularly of north Wales. It is essential, therefore, that we create an environment there that is attractive to investment and private finance. According to the British Venture Capital Association, Wales has one of the lowest average investments from venture capital in the UK, accounting for just 3.3% of all funding over the period 2016 to 2018.

A freeport offers a structured environment for investment. Whether linked with the advanced manufacturing cluster of north-east Wales—Wales’s hottest economic growth spot—or the green energy projects and innovation found on Ynys Môn, or the leading telecoms research at the University College of North Wales, the structured reliefs and incentives of a freeport offer businesses and investors a clear and attractive proposition and are a clear demonstration of the Government’s commitment to the area.

This Finance Bill makes clear the Government’s aim of growth, development and levelling up for Wales. It also presents an exciting opportunity for co-operation and collaboration with the Welsh Government. With their assistance on, for example, the additional reliefs possible for the planning laws within their control, there is an opportunity not only to deliver a freeport in Wales, but to create one of the most attractive freeport models for investment in the UK.

In conclusion, our United Kingdom is an island nation and a trading nation, and our prosperity has always come from across the seas. Freeports are an essential step towards stronger trade and exports in a global Britain, and this Finance Bill will deliver that. In Wales, we know that, although we are outward-looking, our strength comes from within. For centuries, we have exported our goods and resources around the globe. North Wales slate has roofed the world, and copper from the Great Orme in Aberconwy was used to forge bronze-age implements used in areas ranging from Brittany to the Baltic.

A freeport in Wales—in north Wales—is an opportunity to ensure our connection to a global economy, to bring investment and growth that will bring jobs, and to secure our tradition of global export for another generation. I shall be voting against new clause 25.

[Jesse Norman]

I thank all Members who have commented or spoken in this debate on freeports. As the House will know, freeports are a very important part of the Government’s policy to level up the British economy and to bring investment, trade and jobs to parts of the country that in many cases have not had the economic vibrancy that we as a nation would have wished. They symbolise and reinforce the opportunities provided by this country’s status as an outward-looking trading nation, open to the world.

Finance Bill (Sixth sitting)

Debate between Jesse Norman and Robin Millar

Committee stage & Committee Debate: 6th sitting: House of Commons
Thursday 11th June 2020 Public Bill Committees

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

We have no real issue with the clauses, as they are understandable in the context of the overall measures proposed.

I will draw the Minister’s attention to some technical concerns raised by the Institute of Chartered Accountants in England and Wales, which I hope he can address. In September 2019, it wrote:

“Given the complexities which a business could encounter in identifying and quantifying DST revenues, we are concerned that notification within 90 days of the accounting period is unhelpful. It would make sense to tie this notification into the deadline for filing accounts—6 months for a plc or 9 months otherwise”.

The institute also states that there should not be a need to notify HMRC in advance of the payment deadline, as

“businesses will require more time to review their accounting records, analyse and quantify revenues to decide whether they are”

required to pay under the tax. It recognises that such obligations would not pose a problem for larger digital companies, but would be more problematic for marginal cases requiring “advice and review”, so

“the notification deadline should be aligned with the payment date.”

Regardless of whether we believe that the measures go far enough, or whether the tax is set at an appropriate rate, we believe that its implementation and administration should be fair, to give businesses—in particular those that fall on the margins of the scope of the measure—adequate time to provide accurate calculations of what they should be paying. I invite the Minister to respond to those points to provide some clarification.

[Robin Millar (Aberconwy) (Con)]

As much as we have heard excellent contributions on matters of delivery and on technical matters, which are far beyond my knowledge of accounting and such, it strikes me that, as we are talking about the introduction of a new tax, this is the moment at which we should reflect on its meaning and on the purposes behind it.

The phrase that caught my eye is in clauses 53 and 54 —“Duty to”. My sense is that tax should not be, or should not only be, a catch-up exercise—chasing after developments in industry and the disruption brought to different sectors. Nor should it be about how much money we gather, although that is clearly of keen and close interest to us. It is also about the privilege of membership of a community and of participation in the UK economy. I find it interesting that it falls to a Conservative Government to introduce a tax such as this, which I consider to be progressive in its nature and intent.

In support of that, I pray in aid consideration of the principle of permanent residence, for example. Permanent residence was traditionally attached to the ability to trade in a nation, and tax therefore followed. If not trading in—that is, without that permanent residence—someone would be trading with, so coming under a different regime. Now, we have disruption in the digital economy, which means that we are trading in even though there is no permanent residence.

I also point to the development in the understanding of value over the years. At one point, value was measured in amounts of gold, so the question was one of setting a price, or offering gold in return for something; that was in essence a measurement of weight. The free trade argument slugged that one out with the mercantilist over many years, but the free trade argument won because it made the case effectively that the value of gold could be expressed in terms of the labour required to extract it. Discussions of value therefore moved from a physical object to the notion of labour.

As the Financial Secretary to the Treasury mentioned earlier, we are now talking about user-generated value. The notion of value itself has changed, and there are many debates about what value is and how it is best measured and captured. I suggest that they are extremely relevant to a discussion of tax, especially the introduction of a new one.

To look at tax solely in terms of being punitive, a “fair share” or a certain quantum, is to miss the point. Returning to the issue of leadership that was mentioned this morning, tax properly administered is surely more than a statement of how much money we can collect. It is more a statement of what we are trying to become—tax used as an instrument of government. What kind of society do we wish to become? It is not even, as might be suggested, a statement of how well we can co-ordinate with other nations. For this Government—I am interested in whether the Minister agrees with me—it is a statement of leadership, of what we are trying to become as a nation and, in particular, how we are trying to capture value through the proper encouragement of those industries as they participate in our economy.

[Jesse Norman]

Let me start with the interesting remarks made by my hon. Friend the Member for Aberconwy. I think he is absolutely right to notice and bring to public attention the question of the basis of tax. He is absolutely correct to call upon an idea of tax as a privilege and obligation associated with membership of a community, and to highlight that that notion of tax, which in some sense has always been implicit in the idea of tax, is being drawn upon in this wider sense of a UK user contribution. He is absolutely right about that.

All government derives from the consent of the governed, as the cliché goes; but in order to give that consent, the governed must feel not merely that the tax is fair and equitable in its own right, but that it springs from a conception of government that fundamentally puts the wellbeing of society at its heart. In that sense, it is about not just an economic or fiscal change, nor necessarily who we want to become, but, as my hon. Friend said, who we are. It will come to no surprise to members of the Committee that I think Edmund Burke—one of my great heroes—put this well when he spoke about a nation as a moral idea. That is why the nation has historically been the basis of taxation: the nation provides the consent and, therefore, the guarantee of future taxation, which can underlie effective long-term public spending.

Going slightly beyond that point, it is notable that when crisis hits a country, that country and its Government must draw on that moral capital in pulling the alarm cable and using the power of taxation to secure future borrowing or future public spending that may be required to address the crisis. There is a very deep way in which my hon. Friend is getting to the centre of a very important fact about human life in democratic society, so I thank him for that.

On the more mundane and practical, but none the less vital points that the hon. Member for Houghton and Sunderland South made about notification periods, I will simply say this: these are businesses that keep this data in real time. Of course, it is by no means only UK companies that are caught by this tax. The whole point of a UK user contribution is to capture companies’ revenue sources that might be derived from UK users and from that sense of community my hon. Friend the Member for Aberconwy mentioned, but without being resident as such in a formal tax sense in this country.

The data is immediate. The tax does not merely apply to UK companies. It does apply from the end of an accounting period—90 days after the end of an accounting period. We think that is a proportionate, appropriate and internationally recognised way of levying this tax.

Question put and agreed to.

Clause 51 accordingly ordered to stand part of the Bill.

Clauses 52 to 55 ordered to stand part of the Bill.

Schedule 7 agreed to.

Clause 56

Meaning of “group”, “parent” etc