Broadcasting (Amendment) (EU Exit) Regulations 2019

Lord Ashton of Hyde Excerpts

Wednesday 6th February 2019 Lords Chamber

Moved by

[Lord Ashton of Hyde]

That the draft Regulations laid before the House on 13 December 2018 be approved.

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

My Lords, now that we have disposed of the business expected to be brief, I am glad that we can get on to the main business.

These instruments are being made under the European Union (Withdrawal) Act 2018. They make appropriate amendments to correct deficiencies in domestic broadcasting law in a no-deal EU exit scenario. I think we can all agree that, no matter what our respective views on EU exit are, we need to ensure that television services available in the UK are regulated properly and that the public continue to be effectively protected from harmful content after we leave the EU. We also need to make sure that the same laws and rules that are currently in place in the UK continue to apply, providing continuity and certainty.

I have to stress that these draft regulations address only the necessary technical amendments to ensure that the law is operative on exit day, rather than introducing sweeping new powers into law. The Delegated Legislation Committee has been content with these draft regulations and Her Majesty’s Opposition in the other place agreed that,

“this is a necessary measure that has to be taken”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 29/1/19; col. 5.]

As noble Lords may know, the European Union’s Audiovisual Media Services Directive currently underpins several pieces of UK primary legislation, including the Communications Act 2003. We are therefore using Section 8 powers from the European Union (Withdrawal) Act 2018 to fix deficiencies in primary legislation to ensure that Ofcom continues to have jurisdiction over services that are available to UK audiences, or are established in the UK.

Let me summarise the main provisions of the draft regulations and why they are important. If we leave the EU without an agreement in place, the Audiovisual Media Services Directive will no longer apply. The directive—“AVMSD” as it is commonly known—establishes minimum content standards and provides for freedom of reception and retransmission for audio-visual services such as television and video on demand. Crucially, AVMSD provides that a service which is regulated in one member state can adhere to that country’s rules while being available all across the EU. Services are thus allowed to operate with a single regulator’s licence, regardless of where the service is received in the EU. This is known as the country of origin principle.

In the event of the UK exiting the EU without a deal, the country of origin system of authorising services would be deficient, as reciprocal arrangements created by AVMSD would no longer exist. Without the amendments carried out through this instrument, television services originating in EU member states would still be allowed to be broadcast in the UK without a licence, thereby leaving the UK with no possibility of regulating the content of such services and protecting UK viewers from harmful content. The draft regulations remedy this deficiency by introducing the country of destination principle, which will require any television service that is available in the UK, whatever its country of origin, to be licensed by Ofcom.

However, a licence will not be required for television services provided by broadcasters in those countries that have signed and ratified the Council of Europe’s European Convention on Transfrontier Television, known as the ECTT, which the draft regulations would implement into UK law. The ECTT was signed and ratified by the UK in 1993, but it has not been implemented into UK law because of a disconnect clause in the convention which provides that EU member states must apply the relevant EU legislation in their mutual relations instead. The convention provides for a similar system of freedom of reception and transmission between the parties to the convention as the country of origin principle. All but seven of the EU 27 countries are parties to the ECTT.

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[Lord Puttnam (Lab)]

My Lords, is there anything in the Ofcom response to indicate that any of these changes will benefit the UK production economy, or indeed the UK economy in general? Is there anything in the Ofcom response that suggests this is not negative?

[Lord Ashton of Hyde]

My Lords, I am very grateful for all those interesting points and particularly for the speed at which they were delivered. We might set a record on this SI, with any luck.

[Lord Adonis]

Does the noble Lord think we are going too fast? We can certainly slow down.

[Lord Ashton of Hyde]

I cannot always keep up with the noble Lord, but I will try. I am very grateful, as I said in our last outing, for his interest in DCMS matters, which is fairly new.

I shall start in a fairly random order with answers to some quick questions before we get on to some of the points that the noble Lord, Lord Foster, made. The noble Lord, Lord Pannick, asked whether non-ECTT EU countries would be required, therefore, to be licensed in this country. The answer is yes: we have identified 50 to 60 channels which may need a licence from Ofcom in order to continue to be received in the UK. These are mainly specialist minority channels, religious channels and adult services.

[Lord Pannick]

May I ask a question in relation to that? Would it not be more sensible, given that these broadcasters have been broadcasting into this country already and have been licensed in an EU member state, to grant them a licence automatically, rather than their having to apply? Then, of course, Ofcom would regulate them thereafter. If there is a problem, Ofcom may impose conditions or sanctions on them.

[Lord Ashton of Hyde]

If I am allowed to continue, those services that now need to apply for a licence so that they can continue to be available to UK audiences will have a grace period of six months, so they will continue to broadcast into this country. They will have six months to apply for a licence. It is necessary for them to apply for a licence because they should still be regulated by Ofcom in this country; otherwise we cannot control what they produce because we will not have recourse to the EU dispute resolution services. Of course, the six months is not a difficult problem for them because they start on the same basis—today, they are regulated by the AVMSD. We will start on an equal footing for Ofcom to begin to regulate them after the grace period of six months.

[Lord Pannick]

I am grateful to the Minister, but that does not address my point. Why should these broadcasters, who are already broadcasting into this country with, presumably, no difficulty at all, have to go through the administratively burdensome task of applying for a licence after six months? Why should Ofcom have to consider the details of their case and grant them a licence? Would it not be more sensible to say, “Let us continue the status quo, let us deem them to have a licence and, thereafter, Ofcom can regulate them”? Why a new licence? That is my question.

[Lord Ashton of Hyde]

Effectively, that is what is happening after six months. They are being allowed to continue for six months, after which they will have to have a licence. The reason Ofcom is licensing them is so that, in the future, we can make sure that the content they produce is in accordance with the licensing conditions, which we would not be able to do if we were relying only on the AVMSD.

The noble Lord, Lord Puttnam, asked about the Ofcom response and whether there was anything positive or negative. First, there was not a response per se, so it was not asked that question. It was, of course, consulted and the basis of this SI—here I have to disagree with the noble Lord, Lord Pannick—is not trying to create new policy, because all it is trying to allow is for television channels that would otherwise not be regulated to be regulated, because the method by which Ofcom regulates channels is using the AVMSD, and that will not apply any more. Where the noble Lord, Lord Puttnam, is correct is that he gets to the crux of the problem, which is that leaving the EU is the issue that may or may not create a problem for broadcasters, not the actual details of this SI.

The noble Baroness, Lady Crawley, asked what advice I would give broadcasters. My advice to them would be to read the technical notice that we published in September: it precisely answers the question of what they should do and gives such things as the order of priority for being recognised in EU countries, whether it is establishment criteria or technical criteria such as satellite uplink. That is explained there and it makes the point, which I shall come to later, that ECTT may not be the answer in every case and that they should take advice and will possibly be required to have a licence. I shall come to that in a minute. I was foolish to think this would be quick.

The noble Lord, Lord Foster, mentioned video on demand. It is true that one of the differences is that the ECTT does not cover video on demand because, as noble Lords mentioned, it is a relatively old convention. I have to echo my friend in the other place: we are aware of the need to consider a long-term approach to regulating those video on-demand services that are available in the UK, but we cannot do it in this statutory instrument. It would be new policy, to take the point of the noble Lord, Lord Pannick, if we started regulating video on demand. There are some video on-demand channels today, for example, that come from America and are unregulated. We accept that it is a problem and we will have to deal with it in the future, but not through this SI.

The noble Lord, Lord Foster, and my noble friend Lady McIntosh talked about support for the sector: I think they were talking about the creative industries in general rather than just broadcasting. There is no change in the direct impact on such things as creative sector tax relief, which will still apply because they are established in UK legislation and the cost is entirely borne by the UK Exchequer. We have provided reassurance that the Government will underwrite the payments of awards for programmes such as Creative Europe, and have entered into a number of bilateral film and television co-production agreements with other countries, including Canada, Australia and China. I think my noble friend was talking about co-production in particular. We are also party to the Council of Europe’s Convention on Cinematographic Co-production, which will continue to operate after exit. There is a new version of that convention which we are intending to sign.

Lastly, and very importantly, this SI means that, by implementing the ECTT, UK content will continue to qualify as European works. The EU Commission has confirmed that will be true, even if we leave with no deal.

[Baroness McIntosh of Pickering]

Presumably this is potentially one of the measures in the £39 billion package that we will agree if we have a deal on leaving, because that particular line of the European budget, to which we will have been subscribed in this seven-year period, relates to co-productions. It was very specific, and has brought benefits to this country. I do not expect my noble friend to have the answer at his fingertips, but I would be grateful if he could write to me.

[Lord Ashton of Hyde]

I thank my noble friend. I do not have it at my fingertips—mainly because this is a no-deal SI, and that is the basis on which I have prepared—but I will write to my noble friend with that answer.

The noble Lord, Lord Liddle, mentioned in a rather pessimistic way that this was the end of the jewel in the crown of broadcasting. I was not sure whether he was talking about broadcasting or the creative industries. I have mentioned that we will continue to support the creative industries. I agree that they are a jewel in the crown. We are, of course, aware of some reports in the media about broadcasters relocating their licence to other countries. But the reports also suggest that companies are relocating only a minority of their workforce, in order to comply with the licensing requirements. There are no signs of a mass exodus from the UK. It is too early to tell, but the technical notice spells out clearly that it is not always necessary to transfer even the head office or the editorial elements of a company to qualify for an EU licence under the AVMSD. Most broadcaster satellite uplinks are in France or Luxembourg, so, if you can use technical methods such as the satellite uplink, technically you can get a licence in one of those two countries because that would bring you under the jurisdiction of the AVMSD.

[Lord Berkeley of Knighton (CB)]

My Lords, on the question that the Minister has just addressed, have the Government made any assessment of the likely impact on the creative industries, a sector whose income they broadly welcome on a regular basis?

[Lord Ashton of Hyde]

This SI does not relate specifically to the creative industries; it is more to do with the broadcasting industry. There is a link between the broadcasting industry and the creative industries, but this deals with things such as production, which have historically tended to follow broadcasting. We have not made that assessment yet, because it is too early to tell, but clearly there is the possible danger that, if all broadcasters move their editorial and head offices to an EU country, production might go with them. Obviously, that would depend on where they go. It is too early to tell on that specific point, but the tax credits and other things I talked about will specifically help the creative industry, rather than broadcasters.

[Lord Liddle]

I am grateful to the Minister for answering the points I raised, but I am concerned about two things. First, I am a bit disturbed to hear that the Government are reading about what is happening in the newspapers, rather than being in constant consultation with this important sector of the industry. Secondly, if there were good will, the European convention might be an adequate substitute for European regulation; but in this situation we are talking about no deal, where there will be no good will.

[Lord Ashton of Hyde]

We are not—as noble Lords might have realised—reading about this only in the papers, although we do read them. We have had extensive consultation—not perhaps the public consultation where all pros and cons are publicised, as the noble Lord, Lord Adonis, would prefer. But noble Lords should be under no illusions: we have had extensive consultation on this situation and this specific SI, not only with Ofcom, which has been instrumental in drafting the SI to address the problems of regulation of television services—how they should be construed and defined—but with the sector. We have organised round tables at ministerial and official level. We have included AETN, AMC Networks, BBC Studios, Channel 4, Discovery Channel, Disney, ITV, NBCUniversal, Nordic Entertainment Group, Sky, Sony, WarnerMedia, Viacom and Viasat. We have met these and further broadcasters on a bilateral basis, because a lot of these discussions are commercially sensitive, depending on what they are going to do with their establishments to meet the problems of Brexit. I reiterate that this is an issue about Brexit, not about this SI, which is about the regulation—making sure that a regulatory system exists if we have no deal.

[Lord Griffiths of Burry Port]

I say simply that to have mentioned in the memorandum that this impressive list of people had been consulted in various ways might have allowed us to finish in record time, as the hope for that had been expressed.

[Lord Ashton of Hyde]

I take that point, although I would not bet on it myself. On that point, I emphasise that the ministerial round tables took place not just once but regularly between August 2016 and March 2017, led by the Secretary of State, and in March and July in 2018, led by the Minister. But I take the point about explaining that. The difference between this and the SI we talked about the other day is the commercial sensitivity of the decisions that have to be made in moving head offices, the effect on the workforce, and so on.

I will address the general issue of whether we are being complacent about relying on the ECTT. We acknowledge that it might be possible that some services will require two licences—one for the purposes of the AVMSD, and one for Ofcom—because this is the case for services which are available in both ECTT and non-ECTT countries. In the way that these services are received—by satellite—it is difficult to exclude some countries from the distribution. There are about 500 Europe-facing services out of the 1,200 that Ofcom currently licenses. To date, we are aware of about 130 licences moving. It is fair to say that broadcasters are concerned about the risk of dual regulation, and are reluctant to rely on the ECTT—it is considered an untested convention, as EU law has been in place for so long. Nevertheless, I am sure noble Lords would agree that we should not ignore conventions and international agreements that we have signed up to, nor should the other countries which have signed them.

[Lord Foster of Bath]

If we follow the Minister’s logic, he said earlier that there are about 50 or 60 channels that are currently not EEA members but which are based there, and which will need a licence. They will get a six-month period, a point raised by the noble Lord, Lord Pannick. In view of what the Minister is saying, is it not quite likely that the number of channels that are in EEA EU countries will themselves decide to get an Ofcom licence? What assessment has he made of the number that may well choose to do that, and in considering that, is he aware that the latest information I have received is that only one company is considering basing all of its planning on the ECTT? Following from that, presumably there will potentially be a large number of people wanting licences from Ofcom, so can he also tell us how long it will take Ofcom to deal with each licence and whether it will be able to get through the requisite number in the six-month period?

[Lord Ashton of Hyde]

I do not agree with that premise. We have said that we will apply the ECTT, and in fact, this SI brings it into law.

[Lord Foster of Bath]

That was not the point I was making. The point is that I understand that it is quite likely that a number of companies that are providing services to the UK, which could rely on the ECTT to not require a licence, will, none the less, make the decision that it is in the best interests of their protection to seek such a licence from Ofcom. Presumably, they will be required to do it within the same six-month period, so there is a potential problem with the number of licences that Ofcom can handle.

[Lord Ashton of Hyde]

I am still not clear why, given that we have explained that we will accept ECTT countries, they think they should have to take the precautionary approach of getting a licence as well.

[Lord Foster of Bath]

I will give a specific example: it could be in relation to the differences that exist in the advertising regime, to pick up the point I raised earlier in my initial contribution about any changes that we might make. Given that there is not a formal legal redress system under the ECTT, they may feel it better to have a licence here and simply stick to the rules that we impose.

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[Lord Ashton of Hyde]

Of course, that is a possibility that was not available to them under the AVMSD, and it may be of benefit to them. It is impossible to say. I agree that they may do that. I think it is unlikely, but the noble Lord is absolutely right that it is possible.

Very few services would be able to rely solely on the ECTT. First, the main broadcasters already have a physical presence in the EU, which brings them into EU jurisdiction. As I said, it is also extremely difficult to limit services to being available in purely ECTT countries because of the way that satellite transmission works. One of the problems with the AVMSD is that it does not set down any hard and fast rules about which services fall to be regulated; it talks about services receivable on standard consumer equipment, which is a benefit that the new Ofcom definition will address.

To date, we are not aware of any companies currently licensed in the UK which intend to rely on the ECTT. The smaller companies based in the UK which provide an EU-facing service only would be able to access the AVMSD market under the technical criteria, based on their satellite uplink. Therefore, I do not think we are being complacent about relying purely on the ECTT. The evidence for that is the fact that in the technical notice, we specifically said:

“If the service is available in the EU and only available in one or more of the 20 ECTT countries noted above, freedom of reception should be permitted in accordance with ECTT. However, you should seek local legal advice to check how national law deals with ECTT obligations to permit freedom of reception of the service and what action (if any) needs to be taken … You should be aware that you may need to have two licences”.


We have been clear on that.

Finally, I confirm to the noble Lord, Lord Foster, our commitment to regulate video on-demand services. Just to reiterate, a letter that my honourable friend the Digital Minister wrote to Kevin Brennan in the other place says that the Government are aware of the need to consider a long-term approach to regulating video on-demand services in the UK but that such changes cannot be introduced under the draft regulations.

I hope that I have covered most of the points that noble Lords raised. I am grateful for them.

Motion agreed.