Public Bodies (Abolition of the Registrar of Public Lending Right) Order 2013

Lord Stevenson of Balmacara Excerpts

Monday 8th July 2013 Grand Committee

[Lord Gardiner of Kimble]

My Lords, the Government are proposing to use the powers in the Public Bodies Act 2011 to abolish the registrar and transfer its public lending right functions to the British Library. Both the registrar and the British Library are non-departmental public bodies of the Department for Culture, Media and Sport.

The Public Bodies Act 2011, which received Royal Assent in December of that year, is the legislative vehicle resulting from a 2010 government-wide review of all public bodies. Its overriding aims are to increase transparency and accountability, cut out duplication of activity and discontinue unnecessary activities. In conducting individual reviews of their own public bodies, departments were asked first to address the overarching question of whether a body needed to exist and whether its functions needed to be carried out at all and, following from this, whether it met specific tests that would justify its retention.

The department was of the view that the public lending right functions must be maintained as they are required by law, but that it was not necessary for the registrar to be retained as a stand-alone public body in order to carry out those functions. Therefore, options for a suitable, and more efficient and economical, home were explored.

Perhaps I may give some brief background on the public lending right scheme and the public body managing it, formally known as the Registrar of Public Lending Right. The position of registrar was established by the Public Lending Right Act 1979, which gave authors a legal right to receive payment for the free lending of their books by public libraries. Under the 1979 Act, funding is provided by central government, and payments are made to eligible authors and other rights holders in accordance with how often their books are lent out from a sample of UK public libraries. The registrar is a corporation sole and is appointed by the Secretary of State for Culture, Media and Sport to maintain a register of eligible rights holders and books, and to supervise the administration of the scheme. Around 23,000 rights holders receive a public lending right payment each year, up to a maximum of £6,600.

The registrar receives grant in aid from the department to fund both the administration costs and the payments to authors. Given the current economic climate, the decision was taken in October 2010 to reduce the resource grant-in-aid budget for public lending right by 15% in real terms over the spending period from April 2011 to April 2015, and the proportion of grant in aid used to administer the scheme was capped at £756,000 a year. With the registrar currently operating at near maximum efficiency, and given the limitations in efficiency savings that a body of its kind could make, this necessitated some radical thinking in order for the public lending right scheme to operate within its new budget while minimising the effect of the reduction in funding on authors.

Transfer of the public lending right functions to the British Library emerged as the preferred option because it fulfils the Government’s aims of maximising the efficiency, economy and effectiveness of the public lending right scheme and reducing the number of public bodies. The transfer offers greater efficiency savings than are achievable by a stand-alone body the size of the PLR. The transfer is expected to save £750,000 in real terms over 10 years and therefore maximises the proportion of available grant in aid which could be allocated to authors.

This low-risk transfer will retain the operation and workforce in Stockton-on-Tees, which is working well at present and is highly valued by respondents to the consultation, and the increased efficiency and economy of the scheme will benefit PLR rights holders. Furthermore, the transfer would not only ensure continuity of efficient systems and processes but would develop a more solid infrastructure, which the larger organisation enables.

Subject to the approval of Parliament, it is expected that the abolition of the registrar and transfer to the British Library will take effect on 1 October 2013. The current registrar will be contracted by the British Library from the transfer date for an appropriate period of time, likely to be until March 2015, to ensure a smooth transition and successful transfer of knowledge.

I turn now to the scrutiny given to this order, which was laid before Parliament on 9 May. Orders under the Public Bodies Act have a minimum 40-day scrutiny period, with a committee of either House able to extend this to 60 days if that is felt necessary. This order has been scrutinised by several Select Committees: in your Lordships’ House by the Secondary Legislation Scrutiny Committee; in another place by the Culture, Media and Sport Select Committee; and collectively by the Joint Committee on Statutory Instruments. None of these triggered the optional 60-day extended scrutiny period.

The Secondary Legislation Scrutiny Committee reported on this order on 23 May. The committee was satisfied that the order met the four tests set out in the Public Bodies Act, noting in particular the strong case of increasing economy. The Act states that a Minister may make an order,

“only if the Minister considers that the order serves the purpose of improving the exercise of public functions”,

having regard to: securing accountability to Ministers, which the order achieves by amending the British Library Act 1972 to stipulate that its annual report must include a report on the PLR scheme; efficiency, which the order achieves by enabling the more efficient running of the PLR scheme through a larger non-departmental public body, with all the advantages of shared back-office services and economies of scale; effectiveness, which will be maintained as authors will continue to receive the same high-quality service already provided by the PLR office; and economy, with the savings in running costs to maximise the proportion of grant in aid available for distribution as PLR payments.

The committee recommended that the department should carry out a review of the effectiveness of the post-transfer arrangements in spring 2016; that is, within a year of the end of the transition period. The department acknowledges the conclusions of the committee and has taken on board the views expressed; in particular, it agrees with the recommendation to review the transfer in 2016.

The department remains committed to the public lending right scheme, which is a source of income for many authors and other rights holders. The value that the Government place on the PLR scheme was evident in the recent announcement that the scheme will be extended to cover on-site loans of e-books and audiobooks, with effect for loans from July 2014. PLR will continue to evolve in line with technological advances in public libraries, and the department is committed to ensuring that the scheme continues to be managed as efficiently and economically as possible, for the benefit of authors.

In challenging economic circumstances, the transfer offers the best means of safeguarding the future of the scheme and maximising the proportion of available grant in aid to be distributed to authors, thereby supporting and rewarding their creativity at the same time as offering better value for money to the taxpayer. Therefore, it is right that the functions should be transferred to the British Library, and I commend this draft order to the Committee.

[Lord Stevenson of Balmacara]

My Lords, I want to start where the Minister finished, by welcoming the extension of the PLR to e-books and audiobooks on-site. This was subject to much discussion in the Chamber a few weeks ago, when the Minister was not able to give us an assurance one way or another, but, since then, other events have intervened. The Chancellor’s announcement in the recent spending review was very welcome. However, I note that this applies only to e-books and audiobooks borrowed on-site. It still leaves open the question of how the PLR is to be extended—if, indeed, it is to be extended—to those borrowed through the web or alternative ways yet to be discovered. Given the way in which the technology is moving, e-books will not be requested in terms of their physical presence in the library. Perhaps the Minister could respond to that when he sums up this debate.

I would also like to praise the way in which the department has gone about this operation. It has been a long time since I have read such a good consultation exercise. I am constantly coming up against them in secondary legislation debates, where they are sometimes somewhat perfunctory in approach. This seemed to be a genuine consultation which offered real alternatives and suggested possibilities available for those who wished to consult. It is a model of its type. The department should be very pleased that it has been bold enough to try to take this all the way out and to take responsibility for the answers that came back.

The problem with a consultation as open as this is that it might get answers back that, perhaps, the department was not looking for. It is therefore not altogether surprising to discover that nearly 95%, I think, of those who responded were against what the department was proposing. Given that the department consulted authors and others interested in the written word, the responses were somewhat well written, rather redolent of deeper and other worries, and must have made rather uncomfortable box reading for the Minister when he came to review them. Not surprisingly, the department has found a way of eliding any real criticism from approaching its proposed solution. It will not take account of the consultation or, indeed, the very singular report that came in from those who were consulted. I am sorry about that. It is quite clear that this measure does not command support among those who were consulted.

That raises the question of why this is being done. Is it because the department wants to reduce the number of its bodies? I find that rather surprising because it was clear throughout both the consultation exercise and, indeed, the reports of the various committees of your Lordships’ House and the other place that have looked at this, that the registrar does a good job and has done it with considerable economy. There are no apparent suggestions that the registrar is at fault in any of the ways in which it is going about its job. The registrar is regarded as a friend of the authors and seems to have good relationships also with the public libraries that have to come up with the funding as a result of the lending and to work with a very small staff and a very inexpensive foundation in Stockport. The registrar seems to be doing a very good job indeed.

It is relevant that the jobs have been located to a relatively poor area of the country, and it is good that there are jobs of this high calibre there involved in such good activity. It is therefore a bit surprising that the department does not recognise that, by making this change, we are also introducing some risk about whether those jobs will continue. The real essence of what is requested at the heart of this proposal is that costs be reduced rather than that the number of bodies be reduced, because the transfer is actually being made to the British Library. Although it looks as though we are losing one body and simply absorbing it into another, it is clearly a different function which must be added on to the existing work of the British Library. To some extent, therefore, there is not really a reduction in its activity or the management spread in which it will be involved.

On the cost argument, which I presume has been part of this, there will also be costs in the British Library. The change seems to be financed by the reduction of one post—that is, the loss of the registrar post. Indeed, the whole operation seems to revolve around the fact that the cost of that post will no longer be counted against departmental spend. Of course, when the Minister introduced this, he made clear that it was now unlikely to result in savings until March 2015, which perhaps cuts into the overall savings that have been requested. Several respondents and both committees which have looked at this have pointed out that the existing provision in the registrar’s office is extremely efficient. When the House of Commons reviewed this in May, it said:

“So far the office of the Registrar has been successful in keeping its operating costs below the budget cap of £756,000 per annum which was set at the last comprehensive spending review. Operating costs in 2011/12 represented 11.6% of the PLR payments … made to authors”.

It goes on to say:

“The Registrar has identified savings that will bring annual running costs down further … from 2014/15 onwards”,

which seems to be well within the 15% real-terms reduction that was requested by the department.