Digital Economy Bill

Lord Macdonald of Tradeston Excerpts

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

[Lord Macdonald of Tradeston (Lab)]

My Lords, two years ago, when your Lordships debated the Deregulation Bill in Grand Committee, the noble Lord, Lord Grade, moved an amendment to repeal Section 73 of the Copyright, Designs and Patents Act 1988, and almost all noble Lords supported repeal. The noble Lord, with his wide media experience, highlighted again today how broadcasters in the United States are able to invest billions of dollars from retransmission fees paid by cable and online streaming services to boost their programme outputs, which now include many excellent big-budget drama series sold and transmitted worldwide. However, here in Britain, this Act, introduced 28 years ago with the good intention of stimulating our emerging cable industry through Section 73, has become the loophole which denies our public service broadcasters the ability to negotiate retransmission fees for the right to carry their PSB channels on cable or, increasingly, online.

As the Minister will know, the PSBs asked the Intellectual Property Office for the repeal of Section 73 back in 2008. Since then, they have spent a lot of time and money on litigation on the issue. Meanwhile, the proliferating online streaming services have been able to retransmit BBC, ITV, Channel 4 and Channel 5 programming and sell advertising around programmes which are largely paid for by UK viewers. Bear in mind that the commissioning budget for original UK-made programming totalled about £2.5 billion a year. At long last, the Bill promises, in Clause 29, repeal of Section 73.

As any arrangements post-repeal will, I hope, be reached through individual commercial negotiation between parties across global media markets, it is hard to quantify how much our public service broadcasters might gain from the retransmission of their products, but it could over time be a substantial sum. My concern in this regard is that the Government have said that they might favour a “no net payments” approach, suggesting that cable and online services might pay no money in return for the PSB channels continuing to be given prominence near the top of cable and online electronic programme guides. That does not seem a sensible long-term solution in such a rapidly changing digital marketplace.

A related concern is that, even after all this time and all the litigation and consultation, it is being suggested that there should now be a further two-year transition period. The Minister will recall that, in the Commons, there was cross-party support for repeal without delay, and I echo other noble Lords in saying that, to make up for lost time, the Government should implement the repeal of Section 73 immediately on Royal Assent.

The new charter and agreement for the BBC is a much better settlement than many of us thought likely last year. Although the requirement on the BBC to bear the cost of free television licences for the over-75s is still understandably criticised, we should not risk unravelling the agreed deal at this late stage when we debate Clause 77. With the Government compromising on many of their more radical proposals for a new charter, and with agreement on an inflation linking of the licence fee and an end to top-slicing to fund pet government schemes, it appears that the BBC would prefer to bank what it has won and move on. I think noble Lords should support its pragmatic approach.

The role of Ofcom as the BBC’s regulator has also been widely welcomed. Last week, it published Ofcom’s Preparation for Regulation of the BBC. Noble Lords may recall from recent debates in this House on diversity that the BBC accepts that it could have done more during the previous charter period to ensure greater diversity across the breadth of its operations. The new charter and agreement requires the BBC to reflect the diversity of the UK, with particular regard to underrepresented communities. Ofcom can now hold the BBC to account on how it meets those obligations. I note that the Campaign for Broadcasting Equality responded positively to the statement from Ofcom on diversity, which says:

“We will measure and scrutinise what the BBC is doing, and report on its delivery. We will also have the power to set appropriate regulatory requirements on the BBC’s output in this area”.

However, as we have heard, concerns have been expressed about the new regulatory powers given to Ofcom in other sectors covered in the Bill, particularly in Clause 75. At present, appeals against Ofcom rulings by communications companies have a review standard to be judged, in legalese, as “on the merits” grounds, which allow a complete review of Ofcom’s decisions. The Government believe that the “on the merits” test is overly burdensome and that the delays caused by constant, costly and extended litigation inhibit effective regulation—a view shared by the consumer group Which?, which described the present effect on Ofcom of the “on the merits” approach as “chilling”. By contrast, large incumbent operators such as BT and Sky are strongly opposed to replacing the present test with one that sets the judicial review standard, which they say is too weak and narrow. Ofcom supports the proposed changes, saying that it wants an appeal standard that allows bad or wrong decisions to be challenged but which makes regulatory progress less difficult.

In the Commons, Labour Members supported these changes, which were set to bring Ofcom into line with the standards set for other utility regulators. Can the Minister confirm in his reply that that is the case? Are any amendments to Clause 75 in prospect to address the concerns of BT and Sky, which highlight the potentially large cost of bad Ofcom decisions for them and other companies across the UK communications industry? The noble Lord, Lord Clement-Jones, may address that question in further detail when he sums up for the Liberal Democrats.

Finally, like the noble Lords, Lord Aberdare and Lord Holmes, I was a member of your Lordships’ Digital Skills Committee, whose report we discussed earlier this year. I welcomed the late addition to this Bill in the Commons—namely, Clause 87—which will allow for basic digital skills to be publicly funded in training and offered to adults over 19 free of charge in England. That is a start. In our Digital Skills report, we concluded that a key objective of government should be to ensure:

“The population as a whole has the right skill levels to use relevant digital technologies”.

As the noble Lord, Lord Ashton of Hyde, said earlier, the current estimate is that 10 million adults in the UK lack basic digital skills. In a recent Written Answer, he said that the intention was to put digital skills on the same footing as maths and English as part of the common core of adult education, and funding would come from the adult education budget of the Department for Education. Can the Minister give more information on how and when this commendable initiative will be rolled out?