Digital Economy Bill

Lord Lester of Herne Hill Excerpts

2nd reading (Hansard): House of Lords
Tuesday 13th December 2016 Lords Chamber

[Lord Lester of Herne Hill (LD)]

My Lords, in my opinion, which is widely supported across the House, we need to amend the Bill to provide statutory underpinning for the BBC’s royal charter. With support from across the House, we will table amendments in Committee. Those amendments will in no way delay the coming into effect of the draft charter and agreement but will protect the future independence and viability of the BBC in performing its public service functions.

Ministers have claimed that statutory underpinning is unnecessary and that the charter provides sufficient protection of the public interest. That argument has been rejected in our debates by three former chairmen of the Communications Committee, by the former chairman of the BBC and by its former director-general. Many others across the House support the need for statutory underpinning.

The Government have themselves recognised the value of statutory underpinning in their National Citizen Service Bill, and have done so by a combination of statute and charter. The DCMS is the parent department of that Bill and the present Bill, with the same Minister, the noble Lord, Lord Ashton, in charge of both Bills’ passage through the House. It is difficult to understand why a combination of statute and charter is appropriate for the NCS Trust and not for the BBC.

What I mean by statutory underpinning is that Parliament should prescribe the basic principles protecting the independence of the BBC in all matters concerning the content of its output, the times and manner in which its output is supplied and the governance and management of its affairs. It should require the Prime Minister, the Secretary of State, the BBC, Ofcom and all other persons and bodies responsible for matters relating to the governance and establishment of the BBC to ensure that the BBC is able to operate independently from Ministers and other public authorities in the UK.

In carrying out that duty, the Secretary of State and other Ministers should be required by legislation not to seek to influence the BBC’s decisions. In addition, the Secretary of State should be required to have regard to: the need to have regard to the BBC’s independence; the need for the BBC to have the financial and non-financial support needed to enable it to exercise its functions; and the need for the public interest to be considered in regard to matters relating to the BBC.

The Secretary of State should be required to make available to the BBC sufficient funds, through the licence fee and otherwise, to enable the BBC to perform its functions and public purposes as a public service broadcaster. It is also essential for the Bill to ensure that the licence fee is for the exclusive benefit of and use by the BBC and to fund the performance of the BBC’s functions and public purposes. The licence fee should be index linked and increased at least in line with the consumer prices index. The Secretary of State should be forbidden from transferring to the BBC the responsibility for, the liability for or cost of any public expenditure. Ofcom should be responsible for overseeing the performance of the BBC’s functions as a public service broadcaster.

As regards governance, the BBC should be governed by an independent board of not more than 14 people with the knowledge and experience needed to perform the board’s functions as a public service broadcaster. Its members should be drawn from across the nations and regions of the United Kingdom, and should include BBC licence-fee payers and present or former members of staff. The Prime Minister should appoint the chair and other members of the board on the basis of a recommendation made by an independent appointments committee established by the Commissioner for Public Appointments. The board should carry out its functions in an open and transparent manner.

As regards the licence fee—this is pathetically weak, but deliberately so—the board should publish a recommendation to the Secretary of State on the amount of funding the Secretary of State should make available to the BBC. The Secretary of State should publish the Government’s response.

These amendments would not delay the coming into force of the current draft charter and agreement, and are designed to protect the BBC and the public for the future. I recognise that legislation by itself is not a panacea. It has to be interpreted and applied wisely. The safeguards must be proportionate—no more than appropriate and necessary, but also no less, in protecting the BBC’s independence and viability as a leading public service broadcaster.

Members of both Houses debated the draft charter, and there was detailed and sustained criticism of its perceived flaws. However, the Government refused to make any changes to the draft. The charter fails to protect the BBC against political interference or a repeat of the wholly improper slicing of the BBC’s revenue by transferring responsibility for the free television concession from the DWP to the BBC, which has had a drastic effect on the BBC’s revenue. The Government rely on the fact, as did the Minister in opening, that the BBC Trust consented to the transfer, but in the real world the BBC Trust was over a barrel and its consent was involuntary.

The charter that is about to come into effect does not protect the BBC’s financial viability through sufficient funding, whether from the licence fee or otherwise. It does not protect the BBC against excessive regulatory interference by Ofcom in regulating editorial standards, nor, unlike the charter proposed by the Government for the NCS Trust, does it provide for a merit-based method of appointing the chair and members of the BBC board—something that, in the light of recent developments, Channel 4 might wish that it could do. As the noble Lord, Lord Gordon, has said, what was done to the BBC in dumping the free television concession on it must never happen again. As I have explained, we need to amend the Bill to include that necessary protection.

Just as it is important to protect the BBC against ministerial interference, it is also important to protect it against parliamentary interference with its editorial independence in performing its public service functions. That is why I do not propose making future charters subject to parliamentary approval. What is needed is neither a statutory straitjacket devised by Parliament nor ministerial interference but a constitutional framework that will safeguard the BBC’s future in the public interest to the extent necessary, and no more.

I am a pathetic optimist by nature, and I hope the Minister will be able to indicate, either today or hereafter, the Government’s sympathy for this moderate and practical approach.

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[Lord Ashton of Hyde]

We think it should be left to the market to decide that. My noble friend Lord Grade and the noble Lords, Lord Foster, Lord Storey and Lord Macdonald, and probably others talked about the length of the transitional arrangements, and basically said that we should get on with it. The Intellectual Property Office has recently consulted on this, as is right and proper. The Government are considering the responses received and we will state our intentions on how this reform will be implemented shortly.

The noble Baroness, Lady Janke, asked about counterfeit electrical goods. The Government have committed in their recent IP enforcement strategy to develop a methodology for assessing the availability of and harm caused by counterfeits, which will of course include counterfeit electrical goods. Government officials regularly meet with major online retailers to help reduce the availability of counterfeits on their platforms and to help co-ordinate efforts with law enforcement to take action against sellers. In addition, as required by EU law, most online platforms already have routes to allow suspected IP-infringing content to be reported and promptly removed.

Data sharing is an important part of the Bill. The noble Baroness, Lady Janke, and the noble Lord, Lord Clement-Jones, expressed concern about bulk data sharing. Under the powers, data sharing must comply with the Data Protection Act. Information can be shared only for the specific purposes set out in the Bill, and only the minimum data required to achieve these purposes will be shared—a point reinforced in our draft codes of practice.

The noble Baroness, Lady Kidron, asked whether data would be shared without consent. Where possible, consent will be sought, but this is not always possible. These new powers are to allow government to reach out and help. We have given examples of reaching out to the fuel poor and to the vulnerable so that help and support can be offered rather than sought. These people may not have consented to data sharing, but that is partly because we often never know when we might need to help in future. We will, where appropriate, conduct privacy assessments and publish them, and we will always protect personal data under the Data Protection Act.

Several noble Lords raised the question of health data. As noble Lords appreciate, health data are of great value to research, as they address multiple complex issues that affect individuals, households and other purposes. However, great sensitivities are involved in how this is handled, which is why we are excluding the use of health and adult social care data from our powers until the recommendations of the National Data Guardian’s review have been implemented and public confidence in the way the health and care system uses confidential personal data can be demonstrated. I should mention that the Government support Jo Churchill MP’s Bill on the National Data Guardian, which has its Second Reading on Friday.

The BBC is an important part of the Bill and we have debated this as part of official business 18 times since last June—and I suspect we may do so again. When we scrutinised the new charter on 12 October, there was a consensus that enormous progress had been made. The charter has now been approved by Her Majesty the Queen and will soon be in force. The noble Lords, Lord Lester and Lord Stevenson, the noble Baroness, Lady Kidron, and the noble Viscount, Lord Colville, talked about the budget deal last year. This was part of a negotiation with the BBC that is complete. The BBC said only two weeks ago that,

“the overall funding settlement reached with the government provides the financial stability for a strong creative BBC”.

The BBC is clear that reopening the settlement would just create uncertainty and potentially leave it worse off.

With regard to the future process, let me be clear. The charter, for the first time, sets the timing for the BBC’s future financial settlements at once every five years. The charter also requires the BBC to provide data ahead of each licence fee settlement. The BBC will be able to use this to make its case, and the Government of the day will be able to consider that.

The noble Lords, Lord Lester and Lord Foster, mentioned the National Citizen Service charter. I agree that that was a royal charter and that it had a Bill, but we think that is different. I could go into the reasons, but undoubtedly we will talk about that in Committee, so I will not do so at this time.

[Lord Lester of Herne Hill]

I am very grateful to the Minister as the hour is late. I am sure he appreciates that I made it clear that I did not favour undoing the deal that had already been done. However, I am looking to the future. Will he be able to address in some form, before Committee, the reasons why the Government reject any statutory underpinning—if that is their position?

[Lord Ashton of Hyde]

That is their position and I certainly will do that. If that point was not in a specific question, I will certainly endeavour to address it. I expected the noble Lord to raise that point because he warned me during the debate on the BBC that it would be coming.

We are reaching the end of our time and there are still a few things that I could talk about. I will have to write to noble Lords about extending EPG prominence and about subtitles on on-demand and audio-visual services, which we are intending to bring in. A lot of noble Lords asked about ticket bots. We agree that there is a problem and that the Government should fix it. A series of round tables has been held at enforcement agencies and with the sector. The Government will give full consideration to what was said at those round tables, in Parliament and in the Waterson report on ticket bots and harvesting tickets.

I think that we have run out of time. I thank noble Lords for all their constructive and interesting comments on the Bill and I look forward to further discussions. It is clear that the Bill is complex but, despite all the seasonal jokes about its Christmas-tree appearance, I hope that your Lordships can take inspiration from Antony Gormley’s tree at the Connaught, which has not a single bauble upon it.

The Digital Economy Bill will support investment in digital infrastructure and support consumers and businesses in taking advantage of the opportunities of the digital economy. It will also enable the digital transformation of government. I commend the Bill to the House and ask your Lordships to give it a Second Reading.

Digital Economy Bill

Lord Lester of Herne Hill Excerpts

Committee: 4th sitting (Hansard): House of Lords
Wednesday 8th February 2017 Lords Chamber

[Lord Aberdare (CB)]

My Lords, as I indicated at Second Reading, I am extremely uncomfortable with the proposed shift from a merits-based to a judicial review standard of appeal from Ofcom decisions, and I very much support these amendments moved by the noble Lord, Lord Clement-Jones. Indeed, he has made the case so thoroughly and strongly that I can be extremely brief.

It is inappropriate that in a market as innovative and fast moving—indeed, fast changing—as telecommunications, it should not be possible to test decisions made by the regulator not just on their legality but on their correctness and fairness in terms of the merits of the issues raised. As the noble Lord mentioned, I have received briefings both from Ofcom and from a group representing the bulk of the telecoms industry and industry more widely, through the CBI, as well as from the technological sector through techUK.

I remain slightly baffled at the apparent contradictions between the arguments cited by the two sides. I would encourage the Minister to look very carefully at these arguments to establish as clearly as possible where the evidence points—perhaps one could describe it as the merits of the case—before proceeding towards allowing only judicial review-based appeals.

I will not go through the detailed arguments because there is not a single one on my list that the noble Lord did not cover better that I could hope to do. However, from what I have heard, I am far from convinced that the proposed narrowing of the appeals standard will benefit either consumers or investors—and we need a great deal of investment in this sector—let alone the wider national interest in fostering a fair, competitive and vigorous telecommunications marketplace. I am therefore happy to support either or both of the proposed amendments. I hope the Minister will have another careful look at this issue and consider introducing amendments of his own, designed to ensure that important issues relating to the merits of Ofcom reviews can be properly challenged.

[Lord Lester of Herne Hill (LD)]

My Lords, I support these amendments, which seem a very good compromise. They ensure fairness and balance and avoid the very narrow approach of judicial review regardless of merit in any circumstances, without going into the substance of matters in a way that would turn the review into a whole general appeal. For those reasons, I am glad that the noble and learned Lord, Lord Keen, is taking part in this debate. He will know a great deal about the subject from his private practice as well as his public practice. This is a good compromise. It may be that the Government can come up with something better, but this is certainly better than Clause 75 as it stands.

[Lord Stevenson of Balmacara]

My Lords, I am not a lawyer—I feel a bit uncomfortable joining this debate; I am sure there are issues it is much beyond my abilities to deal with. But I say to the Minister before he responds, the point made about the degree of concern in the industry is important. This is a big and complicated Bill with many different aspects. It reaches far into aspects of our digital world. This clause, however, is the one that has generated the largest number of responses and—to judge from the meetings I have had with people—the most anger.

In a sense, so what? If it is the right decision, it should go ahead. However, it is clear that there is a lot of support for the current situation, even though there are arguments against it. The point was made time and again that the existing arrangements seem to work well, so why are we changing them? The industry, as I said, is pretty well united against it. One or two are speaking up for it but they do not represent the majority of voices we have heard.

There is also a real danger that—particularly at a time of uncertainty over technological change and regulatory positioning—having a period when we deliberately create confusion and delay until the new guidelines, or baselines, are established, is probably not the best way of making progress. Uncertainty over a long period will affect investment, which is not what we want. So there are reasons for asking the Government to be very clear that this is the right way forward.

We all share the same wish: we want an efficient and trusted regulator that can deal with this complicated, fast-moving and complex area. But it would be quite improper to have a situation in which there was a very limited right of appeal on any case determined not to have been carried out correctly—not so much about the judicial aspects, but on the merits of the case; in other words, where the evidence does not support the decision that has been taken.

I do not understand quite what the difficulties are. I have looked back over comments made by the noble and learned Lord when he was Advocate-General for Scotland. He is on the record in a number of places and a quick search with an algorithm of some complexity, which I could not possibly describe, reveals him to have said several things about judicial oversight. As it has developed, he says, it has,

“provided us with a flexible standard of oversight, which in many senses is wide-ranging”.

However, judicial oversight is the issue and that is what we have to emphasise. He might like to reflect on that in relation to what has been said. There are other things—I will not quote them as I am sure he is embarrassed enough already, or perhaps not. But the issue needs bottoming out—there is a serious point at its heart. There are issues that will affect the whole nature of the business we are regulating in this manner which need to be resolved.

[The Advocate-General for Scotland (Lord Keen of Elie) (Con)]

My Lords, I am obliged to the noble Lord, Lord Clement-Jones, for raising this matter because it has generated a great deal of heat and debate in the context of the Bill. I appreciate the point made by the noble Lord, Lord Stevenson, with respect to the number of responses there have been. I just emphasise that judicial review is a form of judicial oversight, and a very effective one, but I will elaborate on that in a moment.

We are aware that the major telecoms operators in particular, and their agents, have lobbied vigorously and in detail on this point. Indeed, the noble Lord, Lord Clement-Jones, brought out many of the points that have been made by their agents in the course of that vigorous and detailed lobbying. I shall not go into the detail of Ofcom’s position on this. It has expressed its position very clearly and we understand it. What I would say is that there is no single position for all utility sectors, and both judicial review and appeals on the merits may be used in the same sector for different kinds of appeals. It is not a black and white situation.

The Government’s case is not that this change is needed to ensure consistency with other utility sectors but that the public interest will be best served in the communications sector by an appeals regime that focuses on errors which Ofcom is alleged to have made, rather than asking the court to reach a different conclusion. Let us remember that Ofcom is a qualified regulator and its decisions are entitled to respect. They are informed decisions and they are not irrational. They are not determined on the toss of a coin. That is why judicial review is an appropriate approach.

The noble Lord, Lord Clement-Jones, also talked about consumers. I find that interesting. Perhaps I may refer briefly to the Which? response to Clause 75. It sees this measure as one of the most important currently contained in the Digital Economy Bill, saying that it will give the regulator the power and confidence to take the necessary actions to protect consumer interests without fear of costly and lengthy litigation procedures. Introducing a judicial review standard for appeals in telecoms will mean that decisions made by Ofcom in the interest of consumers should be easier to implement and quicker to take effect. That is a reflection of Ofcom’s own view of the matter. This is not necessarily about coming to the aid of Ofcom but about recognising these matters from the perspective of the consumer. That is extremely important.

Currently, appeals brought under Sections 192 to 196 of the Communications Act against Ofcom’s regulatory decisions are decided “on the merits” by the Competition Appeal Tribunal. That exceeds and, as the noble Lord, Lord Clement-Jones, acknowledged, effectively gold-plates Article 4 of the EU framework directive, which requires that the merits of the case are duly taken into account in any appeal. That is not quite the wording of the proposed amendment.

The result of this over-implementation is an unnecessarily intensive and burdensome standard of review that can result in very lengthy and costly appeals litigation, which in turn can hinder timely and effective regulation. Some of the appeals that have taken place have done so over extraordinarily lengthy periods. Of course, the very large communications operators are in a position to fund that sort of appeal process. Clause 75 will change the standard of review so that the Competition Appeal Tribunal will decide appeals against Ofcom’s decisions by applying the same principles as would be applied by a court on an application for judicial review and, in particular, judicial review of other administrative actions. This will focus appeals on the key questions of the legality and reasonableness of Ofcom’s decision-making.

The noble Lord, Lord Stevenson, suggested that there might be cases in which there was simply no merit in a decision. If that was so, and if Ofcom proceeded without reliance on the facts of a particular case, that would be amenable to review under a judicial review standard.

[Lord Lester of Herne Hill]

Judicial review itself varies according to whether or not there is a European element. If the review is about a case where free speech under the convention is concerned or an EU directive is concerned, then judicial review embraces the principle of proportionality. However, if it is not about a case where European law can be involved—either system of European law—under the deciding case law, judicial review does not apply the principle of proportionality. In other words, it still—in my view, wrongly—does not look at whether the means employed to pursue a legitimate aim are necessary to achieve that aim. Is not what I have just said an indication of the unsatisfactory nature of relying on judicial review as the solution?

[Lord Keen of Elie]

With respect to the noble Lord, Lord Lester, I have to say no, because here we are dealing with judicial review in the context of the EU framework directive, which requires that the merits of the case are duly taken into account in any appeal, therefore effectively introducing the issue of proportionality into that process. Therefore, even if there are cases which some might criticise as involving too narrow an approach to judicial review, that does not apply here. This is an incidence in which the issues of proportionality will arise in the context of judicial review. By taking this route, we are applying an appropriate standard to Ofcom’s decision-making.

As has been acknowledged by noble Lords, this is a fast-moving sector, and regulation needs to be able to keep pace with technological and market changes. This is rather difficult when appeals can drag out for a year after a regulatory decision has been made. As the UK’s expert regulator in the telecommunications sector, it is right that Ofcom itself should be given an appropriate margin of appreciation by the tribunals. That is why we have an expert regulator there—so that it can make an informed decision that should be given an appropriate margin of appreciation by the Competition Appeals Tribunal.

A judicial review basis for appeals is intended to be a flexible process that will ensure that those affected by Ofcom’s regulatory decisions can still challenge those decisions effectively within the framework of Article 4 of the EU framework directive. A number of Ofcom’s regulatory decisions are already appealable only on a judicial review basis. I made the point earlier that, with regard to individual regulators, you can find instances in which there is a merits-based appeal for some matters and a judicial review standard in respect of others.

By changing the standard of review to reduce over-lengthy and costly litigation, this clause will enable consumers to benefit sooner from the outcome of decisions made by Ofcom in pursuit of its statutory duty to further the interests of consumers. I emphasise that: one of Ofcom’s statutory duties is to further the interests of consumers. The clause will also remove a significant potential barrier to the participation of smaller communications providers in the appeals process, benefiting smaller, “challenger” communications providers. Again, they are inhibited by the prospect of massive merits-based appeals going before the Competition Appeal Tribunal.

The noble Lord, Lord Clement-Jones, has tabled two alternative approaches. Amendment 215 would replace the existing “on the merits” standard with a requirement for the tribunal to take,

“due account of the merits of the case”.

I acknowledge that the amendment essentially replicates the wording of Article 4 of the EU framework directive, albeit it is not identical to it. While this would in one view remove the gold-plating of the existing standard in a technical sense, the Government consider that it would not lead to any substantive change in approach. That might be why this proposal is being pushed so hard by the major operators in the telecoms sector. It would not, therefore, result in quicker appeals, timelier implementation of regulatory decisions or resultant consumer benefits.

Amendment 216 would alternatively replace the existing “on the merits” standard of appeal with a list of specified grounds. The tribunal would be able to uphold an appeal only where it was satisfied that Ofcom’s decision was wrong on one or more of these grounds. However, as noble Lords may be aware, the previous Government consulted on a similar approach in 2013 and we do not consider that this approach has merit. On balance, we consider that such an approach would risk significant satellite litigation if it were to be introduced—about the nature of the new standard of appeal, for example, which could lead to longer appeals and further regulatory delay. A standard of review based on judicial review principles, including the principles of proportionality in the context of the application of the European directive, which is well understood and used in many other sectors, will minimise this kind of uncertainty. In these circumstances, I invite the noble Lord to withdraw his amendment.

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Moved by

[Lord Lester of Herne Hill]

217: After Clause 76, insert the following new Clause—
“The BBC Charter: timing
(1) The Communications Act 2003 is amended as follows.(2) After section 198ZA (inserted by section 76 of this Act) insert—“198ZB The BBC Charter: timing(1) The first BBC Charter to be granted following the day on which this Act is passed must have effect for a term of 11 years beginning with the day on which it is granted, and each subsequent BBC Charter must have effect for a term of 10 years beginning with the day on which it is granted.(2) In this section “the BBC Charter” has the meaning given by section 362(1) of the Communications Act 2003.””

[Lord Lester of Herne Hill]

My Lords, this is a paving amendment for this group of amendments. My noble friend Lord Clement-Jones asked just now what the appropriate collective description of Queen’s Counsel is. I was pondering that; at first, I said to myself, “Avarice”, but then I thought that the true answer would be given by The New Yorker book of cartoons, which had a cartoon of a lawyer looking at his client and saying, “How much justice can you afford, Mr Pitkin?”

The Committee will be deprived of several speakers who cannot be here today, who have supported this amendment and the others in the group. They include the noble Lords, Lord Pannick and Lord Inglewood, who asked me to apologise on their behalf.

I explained in previous debates why I believe that statutory underpinning is needed to protect the BBC’s independence and viability, free from political interference. During the take-note debate on the draft BBC charter on 12 October 2016, I expressed the hope that the drafts would be amended. I pointed out that the central problem with the Government’s proposals for the charter—raised across the House by, for example, the noble Lords, Lord Fowler, Lord Inglewood and Lord Best, former chairs of the Communications Committee, the noble Lords, Lord Stevenson of Balmacara, Lord Burke, Lord Pannick, Lord Colville and the noble Baroness, Lady Deech, and my noble friends Baroness Bonham-Carter and Lord Foster of Bath—is that there are no statutory criteria or requirements that must be met in the charter or the agreement with the Secretary of State.

I noted that the draft charter and agreement did not put the Government under any duty to ensure that the BBC remains independent. They contain no obligation to ensure that the BBC is properly funded to perform its public functions. There is no commitment to avoid further top-slicing of the licence fee after the transfer of the cost of free licence fees for the over-75s, which will have a serious adverse effect on the BBC’s funding and programming—a 20% to 25% cut in licence fee funding. In my view, that was unseemly and deeply regrettable, but it is now too late to reverse it.

I criticised the lack of an independent process for appointing the members of the new unitary board on merit, to prevent cronyism. I warned that Ministers remained able to determine what “distinctiveness” means. There was no protection for the BBC against much richer competitors, challenging the current and future BBC programming. Powerful criticisms to similar effect were made across the House, but the Minister did not give ground on any of those points. The new charter and agreement were brought into force completely unchanged. As the Minister may confirm—I hope that he will—the Government retain the right to make further inroads into the BBC’s revenue by transferring responsibility, including liability and costs, for any public expenditure.

I also spoke during the Second Reading debate on the Bill on 13 December 2016—I am becoming something of a BBC charter bore in this House. I explained that what I meant by statutory underpinning is that Parliament should prescribe the basic principles protecting the BBC’s independence and viability as a public service broadcaster. I concluded by describing myself as an optimist and expressed the hope that the Government will sympathise with our moderate and practical approach. I am still optimistic that we may reach agreement with the Government on a protective framework of principles during the remaining stages of the Bill’s passage. That would be in the Government’s, and the public, interest.

A question raised by these amendments is one of principle, to which I would be grateful for the Minister’s reply. The question is this: is statutory underpinning of a royal charter both possible and legitimate? I hope he will confirm that the answer is yes.

There are several precedents for a combination of legislation and charter, notably the Leveson legislation on the print media and the National Citizen Service Bill. Both provide underpinnings for royal charters, although no doubt civil servants will come up with clever arguments as to why they are different. However, I am not raising that question but the question of principle: is there any reason in principle why statutory underpinning is incompatible with the idea of a royal charter?

In his letter to me of 4 January, for which I am grateful, the noble Lord, Lord Ashton of Hyde, claimed that the Government had increased the BBC’s freedom, “to use its money as it sees fit”. I should be grateful for his confirmation that the BBC’s revenue from the licence fee is indeed the BBC’s and not the Government’s money, and for his assurance that there will be no further raid by this Government on the BBC’s revenue. Will he also confirm that without legislation, a future Government would be free to make further raids: in other words, that the most he can do is give an assurance about this Government? The Minister went on to say in his letter that the Government remain of the view that any statutory underpinning to the charter which would expose the BBC to party political pressures would not be in the interests of an independent BBC. There is a whiff of the Brexit debates about that statement. Ministers exercising monarchical prerogative powers claim to be better able to protect the interests of the BBC than Parliament. I agree that the BBC needs to be protected against politicians, whether in or out of office. Ministers are as susceptible to party political pressures as other MPs, and the BBC needs to be protected against both. If the amendments are agreed to, they will give protection and can be abolished or weakened only by a future Act of Parliament. I submit that Parliament’s use of its legislative powers provides better protection than ministerial assurances, which in any case are outlived when the Government change.

I turn now to the specific amendments and hope that the Minister will be able to reply to each of them at the appropriate point. I introduced them in some detail in my speech at Second Reading, so I will not bore the Committee by going through them again. I simply wish to explain to those who are interested what the amendments are designed to. Your Lordships will see that Amendment 217 on the Marshalled List is simply a paving amendment to provide the statutory underpinning that follows. Amendment 218 deals with the independence and funding of the BBC. I am not going to read out the whole amendment—some of it can be found in the royal charter, but in my view all of it ought to be in legislation. If it can be in the royal charter, I am puzzled as to why the Government believe it should not find its way into the Act of Parliament. For example, subsection (2) would insert proposed new section 198ZC, in which new subsection (1) states:

“The BBC is to be independent in all matters concerning the content of its output, the times and manner in which its output is supplied, and the governance and management of its affairs”.


Does the Minister agree with that? I am sure that the answer is yes. Proposed new subsection (2) goes on:

“The Prime Minister, the Secretary of State, the BBC, OFCOM, and all other persons and bodies with responsibility for matters relating to the governance and establishment of the BBC must ensure that the BBC is able to operate independently from Ministers and other public authorities in the United Kingdom”.


Again, does the Minister agree with that? I would expect him to say yes.

Proposed new subsection (3) states:

“In carrying out the duty … the Secretary of State and other Ministers of the Crown must not seek to influence the BBC’s decisions; and … must have regard to the need to defend the BBC’s independence; and the need for the BBC to have the financial and nonfinancial support necessary to enable it to exercise its functions”.

Does the Minister agree? Surely, he does. Then, in carrying out the duty, the Minister,

“must have regard to the need for the public interest to be considered in regard to matters relating to the BBC”.

Again, I see no cause for controversy.

Proposed new subsection (4) states:

“The Secretary of State must make available to the BBC sufficient funds, through the licence fee and otherwise”—


because there are other ways of funding apart from the licence fee—

“to enable the BBC to perform its functions and public purposes as a public service broadcaster”.

I cannot see any conceivable controversy about that notion.

Proposed new subsection (6) states:

“The licence fee is to be for the exclusive benefit of and use by the BBC to fund the performance of the BBC’s functions and public purposes”.


Again, I should have thought that was obvious. Then there is indexation, but I do not need to pause for that.

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[Lord Ashton of Hyde]

I will come to that. Of course, future Governments will have to make their own arrangements in negotiations with the BBC. The BBC licence fee is a tax. Of course, the Chancellor of the Exchequer and the elected Government have a say in how taxes are raised and spent.

[Lord Lester of Herne Hill]

The Minister has twice said that the licence fee is a tax. What is the basis of that? I would have thought that the licence fee is a service charge for a service provided to those who pay the licence. That does not sound like a tax. It is not imposed by the Treasury. It is a service fee. When I watch television, because I am old I no longer have to pay, for some reason—that is another matter—but I cannot understand how it can be regarded as a tax. By calling it a tax, surely the Minister is making a threat about future inroads into the BBC’s revenue.

[Lord Ashton of Hyde]

I certainly do not intend to make threats and I am hardly in a position to do so. I called it a tax because it is so classified by the Office for National Statistics. It is regarded officially as a tax.

The funding agreement announced last July included a number of measures which will increase the BBC’s income—for example, the closure of the iPlayer loophole and the increase of the licence fee with inflation. In combination with the transfer of funding for the over-75s concession, this means that the BBC will have a flat cash settlement to 2021-22, not a 20% cut. Indeed, the director-general said in July last year:

“The government’s decision here to put the cost of the over-75s on us has been more than matched by the deal coming back for the BBC”.


The amendments in the name of the noble Lord, Lord Lester, would endanger the effectiveness with which the BBC can be governed, and weaken the incentives for the corporation to strive for excellence and efficiency, as well as public support for the BBC’s funding.

As noble Lords know, both Houses had many opportunities to shape the future of the BBC throughout the charter review, and the Government appreciate that valuable input. But we remain of the view that the royal charter in its current form has served the BBC extremely well over many decades. The BBC agrees. The BBC’s director-general, Tony Hall—the noble Lord, Lord Hall—has welcomed the new charter, saying that,

“we have the right outcome for the BBC and its role as a creative power for Britain. It lays the foundation for more great programmes and journalism”.

With that, I hope the noble Lord will withdraw his amendment.

[Lord Lester of Herne Hill]

I am grateful to the Minister for his reply. I am not at all surprised and I remain optimistic. What I shall now do is read very carefully all the points he has made, look at the amendments that we have been discussing, strip out anything which can reasonably be objected to in the opinion of the Government and those taking part in the debate, and come back to the matter on Report—

[Lord Ashton of Hyde]

If it is helpful, I am very happy to meet and discuss this.

[Lord Lester of Herne Hill]

What I am hoping will happen is that Lord Hall of Liverpool—the director-general—will meet Ministers himself. He has been quoted in particular ways now and I will not attribute any views to him, because that would jeopardise the independence of the BBC, but I very much hope that he will meet the Secretary of State and explain privately what he thinks about these issues. From my point of view, as a would-be midwife, all I am trying to do is create a framework of principles which do not have any of the detrimental effects that the Minister has pointed to. I will seek to do that, and I hope that it will not be necessary on Report to divide the House. I am optimistic enough to believe that a thinking, open-minded Government in discussion with the BBC could come up with some statutory underpinning that would give a framework of principles without these detrimental effects. On that basis, I shall withdraw this amendment and will not pursue others in the group.

[Lord Birt]

Before the noble Lord sits down, I wonder if I might remind him that it is “Lord Wood of Anfield” and “Lord Birt, of Liverpool”, but “Lord Hall of Birkenhead”. It is very much on the other side of the Mersey.

--- Later in debate ---

[Lord Lester of Herne Hill]

I apologise to the places, their populations and to the noble Lord, Lord Hall, himself. I beg leave to withdraw my amendment.

Amendment 217 withdrawn.

--- Later in debate ---

The adoption by my committee of the Ofcom route—rather than going for a new body—was pragmatic. We thought that the use of an existing regulatory agency, and one with an excellent track record, would be most acceptable. But if the Government were attracted by the proposal in the alternative arrangements, I am sure that the Communications Committee would be delighted. We would of course want the Secretary of State influenced not only by the external independent recommendation but by the outcome of public consultation and parliamentary debate. The process that we wish to replace is of the Secretary of State simply imposing a funding settlement on the BBC without any checks or balances. Having this sword of Damocles hanging over the BBC’s board and management, and the knowledge that in the relatively near future the Secretary of State could exercise unfettered life-or-death authority over the BBC’s funding, would have a chilling effect on the freedom of the BBC to act independently of government. This amendment to bring to bear independent judgment, transparency and a proper consultative process would end a serious deficiency. I beg to move.

[Lord Lester of Herne Hill]

My Lords, I am very grateful to the noble Lord, Lord Best, for his amendment. I agree with the object, but not the means. In fact there are not three but four options open to the Minister. The first, and most pathetically moderate, is of course my original one in Amendment 219, where I borrowed from the way that we deal with judicial salaries and revenue by proposing in new subsections (9) and (10) that “the board”—that is to say, the BBC board—

“must publish a recommendation to the Secretary of State on the amount of funding that the Secretary of State should make available”.

This is on the basis that the BBC should know best what it needs. Then the Secretary of State publishes,

“a response to each recommendation made under subsection (9)”.

If this is rejected, we are in a completely hopeless position so far as this subject is concerned.

My problem with the amendment of the noble Lord, Lord Best, is that it is a bit odd to give the regulator the function of recommending an increase in the licence fee. That is why I have produced Amendment 222A to create an independent body—the licence fee commission. The disadvantage of this is that we do not like creating a whole lot of new bodies unless there is some very important reason. Then the noble Lords, Lord Stevenson of Balmacara and Lord Wood of Anfield, have a more modest way of achieving the same thing: they would have a BBC licence fee commission to do it. Those are, I think, the four options. My own view is that the Government should now accept one of them or come up with a formula of their own that we can agree on Report. I am optimistic that this will happen, so I am now watching this space with great enthusiasm—and suspense.

[Lord Birt]

My Lords, I support the drift of the amendment of the noble Lord, Lord Best; I think that we need a proper, open, rigorous and transparent means of setting the level of the licence fee.

A little bit of history is that we did have a commission in the late 1990s, when the then Government appointed Gavyn Davies, a very distinguished economist and later chairman of the BBC, to do just that. As you would expect, he produced a searching, rigorous report. A further little bit of history is that he made a recommendation, and the Secretary of State, as you expect in politics, lowered the recommendation; as you do not expect, it went to No. 10, and the then Prime Minister not only upped his Secretary of State but recommended a level for the licence fee which was higher than that which Gavyn Davies recommended. It was the famous RPI plus 1.5% for seven years settlement, which allowed the BBC fully to enter the digital age. It was the process that Gavyn Davies led that enabled the Prime Minister to make a considered judgment.

However it is done, that body needs to look at the total environment. The most important issue in British broadcasting today, barely discussed at all, is the long-term decline of UK production. It is not going up; it is going down. It is going down because of the economic position of ITV and Channel 4. Any discussion of the level of the licence fee should look not only at the BBC but at the totality of the broadcasting production environment in the UK.

Some suggest that the licence fee should be linked to the RPI. There can, from time to time, be good reasons for that. I think that, strategically, it should be linked to GDP. The BBC performs a fundamental role in society, like the Armed Forces. We have a view of GDP and the investment we should make in the rest of the world; we should have a view in relation to GDP of how much we invest in our most important public service broadcaster. When GDP is stretched, as it has been over the past 10 years—though, thankfully, it is going up again—and if the country’s economy is suffering a reverse, then the BBC’s revenues should go down. If the country is prospering, so should the BBC—so should society’s investment in its most important public service broadcaster.

--- Later in debate ---

[Lord Ashton of Hyde]

My Lords, I am grateful to the noble Lords who tabled these amendments today, and in particular to the noble Lord, Lord Best, and the Communications Committee, which he chaired. I am also grateful for the contributions of the noble Lord, Lord Birt, and the noble Viscount, Lord Colville, on the future of the licence fee itself and how it may be arranged in the future, which is slightly separate from the debate we are having today about the process for doing it. I accept that, as technology changes, the way it is structured may have to be changed in the future. I hope we can have debates on that separately at some stage in the future. I am also grateful to the noble Lords, Lord Lester and Lord Stevenson, for their amendments.

Today we are debating a new nuance regarding the BBC licence fee. On a number of occasions, Members of the House have been clear that they would like to see an end to what some have called “midnight raids” on the BBC licence fee, and we have listened to that. The BBC’s new charter regularises the BBC’s future financial settlements for the first time, and the next one will be in five years’ time. In the meantime, there will be an inflation-linked increase.

The current charter also requires the BBC to provide data ahead of each licence fee settlement to inform the Government’s decision. It is, therefore, explicitly clear that the BBC will be able to make its case and the Government of the day will be able to consider that. It also follows that anyone with valuable views and thoughts on the subject, including noble Lords—many of whom I know have experience in these matters—can share these views with the Government when the time comes.

The noble Lord, Lord Best, suggests that Ofcom should recommend what the level of funding for the BBC should be, and he proposes further that there should be a public consultation on the appropriate level of funding. It is entirely appropriate that the assessment of the BBC’s funding needs and the subsequent level of the licence fee should remain a matter for the Secretary of State. As I said before, the licence fee is a tax paid by the licence fee payer, and taxation is a matter for the elected Government rather than an unelected regulator. It is right that the Government should have some responsibility for decisions that affect the tax bills of UK citizens, as I have set out before. We would be setting potentially odd incentives for the BBC’s regulator if—as the noble Lord, Lord Lester, pointed out—it would now also be called upon to make funding recommendations. The now-abolished trust model showed that mixing regulatory and strategic functions breeds confusion and conflicting incentives. The consensus has been that this has not worked and we do not want to recreate this model.

Ofcom needs to concentrate on regulating the BBC effectively. The noble Lords, Lord Lester and Lord Stevenson, have both proposed the establishment of an independent licence fee commission to make recommendations to the Secretary of State. We agree with the sentiment of independent advice. The Government stated in their White Paper, published last May, that they would consider taking independent advice at the next settlement should it be appropriate. However, that is a matter for the Government of the day. As with Ofcom, it would not be appropriate for an independent commission to make recommendations on level of taxation.

[Lord Lester of Herne Hill]

As I listen to the noble Lord, the problem arises when he says, “That would be a matter for the Government of the day”. All this is very interesting and relevant, but none of it is binding. Effectively, the Minister is putting forward perfectly reasonable ideas for the future, but none of them has any bite. None of them is binding unless Parliament makes it so. I am afraid it is a question of wriggling to find ways of avoiding any parliamentary underpinning at all. It is that which everyone who has spoken in this House, but one, believes to be wrong. Therefore we will have to come back to it on Report.

[Lord Ashton of Hyde]

I understand the point the noble Lord is making; he illustrated it right at the beginning of his speech in the previous debate. This is a matter of principle: whether we think statutory underpinning is the right mechanism for the royal charter for the BBC. I acknowledged to him that in some cases it might be, but I did not agree that it was appropriate for the BBC. I take his point and his due warning about Report. I agree it is relevant to this, but we have established that we have a disagreement on that point of principle. As for binding future Governments, of course we do not want to do that, and, in fact, we cannot.

The next question is that of public consultation on the settlement or the level of the licence fee. As noble Lords will appreciate, funding a public service is not a straightforward topic for public consultation. For example, the recent charter review found that almost 75% of the public consider the BBC’s programming to be of a high quality, but just 20% said that they would like to see the licence fee rise in line with inflation, thus helping the BBC maintain these high standards. Public consultation, therefore, needs to be approached with due sensitivity.

The BBC’s funding needs are a very complicated and technical issue, as we have seen at every licence fee settlement. The judgment about the overall package is a fine one. It should therefore remain for the elected Government to decide how to approach reaching an appropriate level of BBC funding in a detailed and extensive negotiation with the BBC. As I have said, this resulted in a position that the director-general has said is a strong deal for the BBC that gives it financial stability.

Finally, Amendment 223 seeks to remove the ability of the BBC to set age-related licence fee concessions in the future. I have already explained that the licence fee is a tax and it is right that the Government should retain the ability to determine the outline priorities of what it should be spent on. The BBC explicitly sought responsibility for the age-related licence fee concession. Removing the BBC’s ability to determine this policy—for which it will pay—simply prevents the BBC being the master of its own destiny. I believe it is particularly arbitrary to withdraw the BBC’s ability to set this concession without knowledge of what the overall funding package for the BBC will be at that future point. I do not believe that that is in the BBC’s interest, now or in the future. With those explanations I hope that, for the time being, the noble Lord will feel able to withdraw his amendment.

Digital Economy Bill

Lord Lester of Herne Hill Excerpts

Report: 3rd sitting (Hansard): House of Lords
Wednesday 29th March 2017 Lords Chamber

[Lord Lester of Herne Hill (LD)]

My Lords, I regret that my ill health prevented me from being present on Monday 20 March, when the noble Lord, Lord Inglewood, moved the amendment on the BBC’s independence and funding late that evening. I am grateful to him for doing so, and I have read the speech by the noble Lord, Lord Wood of Anfield, and the Minister’s reply. I agree with the critique of the noble Lord, Lord Best, but I will confine myself to Amendment 32E, included in this group. It is supported by the noble Lords, Lord Inglewood, Lord Pannick and Lord Alli, to whom I am grateful.

The noble Lord, Lord Ashton, accepted in his reply on 20 March that there are instances where it is desirable and appropriate for a charter to be underpinned by statute, but he said that the Government’s view is that that does not apply to the BBC. He also said, intriguingly, that in practical terms there is little difference between the effect of the BBC’s charter and accompanying framework agreement and an Act of Parliament because both are binding on the BBC and Ministers.

The modest purpose of Amendment 32E is to create a link between the BBC’s charter and the Bill. It requires the Secretary of State to ensure, in accordance with the BBC’s mission and purposes under the charter, that the BBC is funded so as to be able to function independently and effectively as a public service broadcaster. Unlike the amendment moved on 20 March by the noble Lord, Lord Inglewood, supported by the noble Lords, Lord Stevenson of Balmacara and Lord Pannick, and by me, Amendment 32E does not refer specifically to the licence fee. That is in the hope that being less prescriptive will be more acceptable to the Government. I see the Minister smile wanly, as he knows that I am an optimist.

Do the Government accept that they have the duty to ensure, in accordance with the BBC’s mission and purposes under the charter, that the Secretary of State must ensure that the BBC is funded so as to be able to function independently and effectively as a public service broadcaster? If not—if the answer is no—what do they accept as their duty in this respect? Remembering that on 20 March the Minister said that in practical terms there is not much difference between a charter and legislation, I ask this question irrespective of whether there is a charter or legislation. I repeat: do the Government accept that the Secretary of State has that obligation, whether under the charter or otherwise?

The amendments made to the Bill in this House will need to be considered by the House of Commons after it leaves here. I hope that at that stage, if not now—I would prefer now—the Government will respond positively with an amendment on the lines of Amendment 32E. I have in mind that by that time we will be coming near to the end of the Session, the Government will want the Bill to go through and that this will at the least be something that needs to be considered then, if not now.

I am grateful to the noble Lord, Lord Ashton, for having met me informally and suggesting that I might usefully meet the Culture Secretary. I would welcome that opportunity and would be grateful if the Minister could say whether that would be acceptable.

[Lord Inglewood (Con)]

I refer briefly to our previous debate when the House was considering the Bill, when I raised my concern about the independence of the BBC and its relationship with the Government of the day, because there must be a relationship and it is important that it is both transparent and rules-based. That is why I have added my name to a number of the amendments; I do not want to elaborate further than that to explain clearly why I have done so.

I also owe an apology to my noble friend, because on that occasion I referred to the Government as behaving like Dick Turpin in respect of the licence fee. He picked me up on that point and said he thought that it was very wrong because a lot of money was being given back, so I apologise for suggesting that; instead, I should have said Robin Hood.

--- Later in debate ---

[Lord Ashton of Hyde]

The point that I made was that, when setting taxes, the Government have to take account of the overall revenue raising, and this is just one element of revenue raising. I agree that whether it is a hypothecated tax is another question, but the point is that it is a tax and the Government do not consult on taxes.

Perhaps I may continue. I was talking about public consultation. The BBC’s funding needs are complicated and technical, as we have seen with every licence fee settlement, and agreeing the overall package is a finely balanced act. The requirement to ask the BBC for information and seek external advice is a sensible way of ensuring that Ministers’ decisions are well informed.

Despite what the noble Lord, Lord Best, said about consultations, the recent charter review found that, although almost 75% of the public consider the BBC’s programming to be high-quality, just 20% said that they would like to see the licence fee rise even in line with inflation, thereby helping the BBC to maintain those high standards. At the same time, the BBC also needs to become more efficient from reducing layers of management and property costs.

Public consultation needs to be approached with due sensitivity. It is right that decisions that balance the funding needs of the BBC and pressures on family budgets are taken by Ministers, who are accountable for those decisions, and that they are not decisions strongly influenced by an unelected new body. In answer to the noble Lord, Lord Pannick, the Government’s view is that it should therefore remain for the elected Government of the day to decide how to approach reaching an appropriate level of BBC funding in a detailed and extensive negotiation with the BBC. Despite the difficulties associated with the last licence fee settlement, as I have said, it resulted in what the noble Lord, Lord Hall, has said is a strong deal for the BBC, giving it financial stability, and we can see that the licence fee will rise for the next five years.

The noble Lord, Lord Lester, has tabled an amendment to put a duty on the Secretary of State to ensure that the BBC is funded to function effectively and independently as a public service broadcaster. I am pleased to see the noble Lord in the Chamber today—it was unfortunate that he was not able to participate in last week’s debate on his previous amendment. Without repeating myself unduly, I remind noble Lords that the Government remain of the view that the BBC is best governed through a royal charter. A statutory underpinning, however limited initially, would leave the BBC under a constant threat of change from what parliamentarians of the day might see as the “national interest”. Where a change might be genuinely required, the uncertain legislative timetable, party-political debate and pressure could all militate against resolving the issue at hand in an efficient manner.

[Lord Lester of Herne Hill]

The Minister has not answered my question, which was, quite simply, whether this Government—not one in five years’ time—accept that the Secretary of State has a duty, whether under the charter or otherwise, to ensure that the BBC is so funded as to function independently and effectively as a public service broadcaster.

[Lord Ashton of Hyde]

I was aware of the noble Lord’s question and was just about to come to it. The BBC charter already provides that the Secretary of State, in determining the funding settlement, must assess the level of funding required for the effective fulfilment of the mission and public purposes.

[Lord Lester of Herne Hill]

What does that answer mean? The charter does not say what I have just asked the Minister. Is he saying that, in looking at the charter, the Government accept this obligation and that it is embodied in the charter? If so, I welcome that. However, I am not clear whether the Government accept this duty or not. My final question, which no doubt he will come to, is this: please can I come and see the Culture Secretary with him?

[Lord Ashton of Hyde]

I think I can answer that to the noble Lord’s satisfaction. Yes, I will certainly talk to the Secretary of State and ask that the noble Lord can come and see him—with or without me, depending on his choice.

I do not want to dwell on this too much, but when we talk about sufficient funding and what the Secretary of State has a duty to do, of course the Secretary of State has a duty to abide by the royal charter in the same way that the BBC, the new unitary board and Ofcom do. I said:

“The Secretary of State, in determining a funding settlement, must … assess the level of funding required for effective fulfilment of the Mission and promotion of the Public Purposes”—


which is what the charter says. I agree that the Secretary of State must do what the charter says. I hope that answers the noble Lord’s question.

I will go further. The noble Lord’s amendment talks about the independence of the BBC, but Article 3 of the BBC’s charter already states:

“The BBC must be independent in all matters concerning the fulfilment of its Mission and the promotion of the Public Purposes, particularly as regards editorial and creative decisions, the times and manner in which its output and services are supplied, and in the management of its affairs”.


The question of enshrining parts of the BBC’s royal charter in statute should be a matter for the Government of the day to decide ahead of the next charter review. Given noble Lords’ ongoing interest and informed views, I am confident that the Government of the day will be minded to consider this carefully.

In summary, the Government have already increased the transparency of the way in which the BBC’s funding settlements are agreed. We have given the BBC stability by regularising the settlement period, which is now removed from the election cycle. The BBC will be required to provide information to the Secretary of State on its funding needs, and the Government of the day will consider taking independent advice. The licence fee is a tax and the Government do not consult on taxes. The amendments could have unintentional consequences in constraining the ability of the Government—

Digital Economy Bill

Lord Lester of Herne Hill Excerpts

3rd reading (Hansard): House of Lords
Wednesday 5th April 2017 Lords Chamber

[The Earl of Erroll (CB)]

My Lords, I add my great thanks to the Minister, on behalf of all the people I was talking to, for his intelligent and sensitive handling of the rather difficult, tortuous, twisting turns which were confusing what we saw as the perceived prime purpose of Part 3. I think we got there and have something that is going to be workable. I just hope that the regulator, when it gets operational, will find that what is coming out of the British Standards Institution PAS 1296 will be helpful in trying to make sure that age verification works in protecting children from accessing all the adult content online, which was the only bit that I was dealing with. Thank you very much indeed.

[Lord Lester of Herne Hill (LD)]

My Lords, I suspect that this is au revoir and not adieu to the Bill, if one is still allowed to use French in this House. I thank the Minister for putting up with endless conversations with me about statutory underpinning or something instead. I thank him for arranging for me to see the Culture Secretary, which I look forward to doing if she is free to do so before the Bill comes back. I make it clear that I am agnostic about how to achieve the protection of the BBC’s independence and viability—whether in the charter, in statutory underpinning or in undertakings given by Ministers. My difficulty at the moment is that we have still not had those undertakings, but I look forward to future debates.

Bill passed and returned to the Commons with amendments.

Digital Economy Bill

Lord Lester of Herne Hill Excerpts

Ping Pong (Hansard): House of Lords
Thursday 27th April 2017 Lords Chamber

On the decision over the licence fee hangs the future of the BBC. It is vital to ensure that that decision is based on both an understanding of what the public want and hard evidence of what expenditure the BBC needs to fulfil its public purposes. I conclude this expression of disappointment with rather limited thanks to the Minister for acknowledging that this is a technical and complicated matter, one on which the Government will consider taking advice. They would be well advised to do so. We have five years until the licence fee is reset. During that time, it may be worth your Lordships returning to this matter.

[Lord Lester of Herne Hill (LD)]

My Lords, about a year ago I introduced a Private Member’s Bill that was too low in the ballot to have any chance of being debated or passed. When that became evident, I decided instead to use this Bill as a vehicle to protect the independence and funding of the BBC. As the Minister will, I am afraid, recall painfully, we debated these issues as a result throughout most of the last year.

The first problem that we debated was whether it was proper to have legislation and a charter. The Government originally took the position that they were inconsistent. I am grateful that eventually, having listened to the authority of the noble Lords, Lord Inglewood, Lord Fowler—while he was a free man—and Lord Best, about how a charter is nothing more than what Ministers desire and is not like legislation, the Government eventually concluded that there was nothing incompatible between having a charter and statutory underpinning, too.

The next question was why any statutory underpinning is needed. The answer, if you read the current charter, is that there is no obligation in it upon the Government to provide sufficient funding or even to respect the independence of the BBC. I made it clear before the Bill left the House for the other place that I was not wedded to any particular solution to the problem of ensuring that the Government would provide sufficient funding and respect the independence of the BBC, and would do anything in their power to secure that. As the noble Lord, Lord Best, indicated, one way this House expressed our view was by adopting his rather more moderate approach than mine. His commission would not bind the Government to anything in particular other than to consider the outcome of the review commission. My approach would create an obligation upon the Government as regards funding and a prohibition against top-slicing, the transfer to the BBC of matters that were the obligation of the Department for Work and Pensions, to ensure that that never happened again.

As I understand it, we are now in a position, before we finally approve this Motion, where the Government do not accept any obligations on them with regard to the sufficiency of funding or respecting the independence of the BBC. I asked this of the Minister the last time and he could not answer. I ask him this time please to assure the House that the Government accept that there is an obligation to provide sufficient funds to the BBC, whether through the licence fee or otherwise, to ensure that it can fulfil the public purposes as an independent public service broadcaster that are enunciated in the charter. Do they also accept the obligation to ensure that the independence of the BBC is guaranteed and that there will be no further raids upon it through top-slicing? If the Minister can give those assurances today, I will not feel that I have wasted the best part of the last year in these debates. If he cannot do so—I very much hope that he will—I am afraid that I will have to bring in another Private Member’s Bill at the ballot.

[Viscount Colville of Culross (CB)]

I regret that the Government decided not to accept Lords Amendment 242. The Minister in the other place said in his speech yesterday that the technology of broadcasting and internet-based on-demand viewing are completely different. I am afraid that that is not right. The two technologies are merging as television sets become multipurpose computers. We are seeing convergence between television and the internet increasing at a massively rapid pace. It is crucial that the prominence regime should keep pace with changing viewing habits.

However, the response from the other place gives me some heart. At least there is to be an Ofcom review of the PSB prominence guidelines in the internet age. I urge the Minister to ensure that Ofcom starts that review as soon as possible and not allow it to put that off until 2020. Every month, we see PSB on demand and digital services become more important for broadcasters. I am sure that your Lordships would like viewers to have easy access to programmes that in the BBC’s case are funded by public money and in Channel Four’s case are publicly owned.

--- Later in debate ---

[Lord Ashton of Hyde]

My Lords, I am grateful for all noble Lords’ contributions. I will start with the noble Lord, Lord Best. I am grateful for the limited thanks he gave me. I give him unqualified thanks in return. We have talked about this for a long time, both in and out of the Chamber. The one thing I can say about the Government’s view on the BBC licence fee is that we have been entirely consistent.

I say to the noble Lord, Lord Lester, that in conversations over a period of time, both in and out of the Chamber, I have never given him any reason to expect that we would change our view on this. He said he was pathetically optimistic. I hope he remains optimistic in other things but we have been entirely consistent on this matter. As I explained at length, we do not believe that it is right for a tax to be consulted on.

I understand the issues and the strength of feeling in this House. That is why we have made some changes during the charter renewal process. We have outlined, as I said, that we have protected the funding for five years so that we will not have any so-called midnight raids. It is also protected from inflation, which it was not before. We have agreed that we will take in information and expert advice before the process goes ahead in five years’ time. I of course take the threat from the noble Lord, Lord Lester, about a Private Member’s Bill extremely seriously. I must assume that there is a possibility it will be forthcoming and I look forward to debating it with him. At the moment, I do not believe that our situation is likely to change but of course in 11 years’ time, it might. I do not think I will be involved in it at that time.

The noble Lord asked a number of questions about whether the Government will guarantee the independence of the BBC, agree not to top-slice the licence fee and adequately fund the BBC. The new charter endorses the role and independence of the BBC—and increases that independence in a number of ways—and this Government will of course live by the provisions of the royal charter, as far as the independence of the BBC is concerned. On funding, we have agreed to give it a five-year period and will ensure that it is properly funded for the future but a negotiation will take place at that time.

As for the point made by the noble Viscount, Lord Colville, about timing, Ofcom will get going when it feels it necessary. What we have done is to put an end date on that in our amendment, so that it will have to produce its report in about two and a half years’ time. That is a great advantage.

[Lord Lester of Herne Hill]

Did I understand the Minister to have given an assurance to the House just now that the Government regard themselves as under a duty to respect the independence of the BBC, and to provide sufficient funding to pursue its purposes as an independent public service broadcaster? If the answer to those questions is yes, I am extremely grateful and if the answer is no then I say to the Minister: power is delightful and absolute power is absolutely delightful but that should not be his motto.

[Lord Ashton of Hyde]

What I said was that we of course abide by what we have put in the royal charter, which mentions the independence of the BBC and enhances that independence from what came before. As far as funding is concerned, we have a five-year deal and the funding negotiation will go on but it is clearly not the Government’s desire to prevent the BBC carrying out its purposes. There will be a negotiation—this is a tax to provide for the BBC—and each five-year period will be taken on a separate basis.

The noble Lord, Lord Stevenson, referred to the next funding period and the election cycle. An 11-year cycle was carefully chosen to remove funding from the electoral cycle, I think at the suggestion of this House among others, and it is of course unfortunate that it has been changed by the absence of the fixed term. But the Fixed-term Parliaments Act is not a guarantee of a five-year Parliament—the provisions were written into the Act to make sure that that was the case. The new five-year settlement will be reached before the next election while the funding settlement is based on an 18-month to 24-month negotiation so, assuming the Parliament goes to the full five-year term, it would be in place before the election.

Fundamentally, a long charter allows the BBC to operate with greater certainty and with the freedom and confidence to deliver its objectives. It is also worth remembering that in the course of the BBC’s 100-year history, the charter renewal process has coincided with the electoral cycle on a number of occasions. Yet the process has always managed to conclude successfully, to ensure that the BBC can continue to thrive.

Moving on to the EPG, there was a suggestion that we should take a broad Henry VIII power. I think that the noble Lords, Lord Clement-Jones and Lord Stevenson, both mentioned this. It is an unusual situation where both Opposition Front Benches are asking—almost demanding—the Government to take a broad Henry VIII power. I would normally say that I probably agreed but in this case, the problem is that the power would have to be very broad and wide-ranging. Amendments could be necessary to the Communications Act 2003 and the Broadcasting Acts of 1990 and 1996. Depending on what Ofcom recommended, a wider amendment might be needed beyond traditional broadcasting legislation to other areas which we would not necessarily wish to capture, such as other online services. We think this is the best way forward.

The noble Lord, Lord Stevenson, also asked about our belief in public sector broadcasting. We have accepted the arguments from your Lordships’ House on listed events, to maintain them on our free-to-air channels, and from the noble Baroness, Lady Benjamin, on children’s TV to ensure the adequacy of provision. These are evidence of our support for PSBs.

I know that noble Lords were disappointed about the BBC licence fee. As I said, we were entirely consistent on this. The commitment that we and the Minister in the other place have made on EPG should be some comfort to those who were disappointed with our answers on this. As a result, I hope that they will be able to accept this amendment.