Community Radio Licences

Lord Vaizey of Didcot Excerpts

Friday 28th February 2014 Commons Chamber

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)]

I am not sure that I can welcome you to the Chair, Madam Deputy Speaker, in as fulsome a fashion as my hon. Friend the Member for Milton Keynes South (Iain Stewart). I confess that I do not know whether this is the first time that I have made a full speech in front of you, but I know that I have appeared in the Chamber when you have been in the Chair. I echo what he said about it being a great honour and privilege to debate in front of you. It is my understanding that you own a digital radio. That is a subject to which I may turn my attention during my remarks.

I thank my hon. Friend the Member for Milton Keynes South for bringing this important issue to the attention of the House. He began by talking about his radio habits and revealed a penchant for Radio 4 and Classic FM, which I share. I am a strong supporter of Classic FM. I take a busman’s holiday view that we spend so much time in this House debating the news and politics that it is nice to switch off, so I have taken to listening to Classic FM and the Chris Evans breakfast show on Radio 2 instead of listening to Radio 5 Live and Radio 4, which is my usual habit.

My hon. Friend brought to our attention the important radio station, MKFM. I confess that I have not yet listened to it, but I have visited its website. It certainly looks like an incredibly impressive operation. Indeed, this debate is flagged up as the No. 1 news issue on its website at the moment. I have no doubt that, after this debate, my hon. Friend will be a frequent, if not more frequent, guest on that important radio station.

My remarks may appear to be somewhat facetious, but I completely echo what my hon. Friend said: I, too, am a fan of radio. In this digital age, when one’s attention is diverted to so many different ways of accessing content and to so many new types of content, it is my belief, and the evidence shows this, that the medium of radio is as popular as, if not more popular than, it ever was. I am therefore a strong supporter of the measures that we are undertaking to continue to promote radio.

One of those measures is to support digital radio. My hon. Friend was right to recall the debate in this House at the end of last year. We have not yet announced a date for switchover or even made an in-principle decision on when we might switch over to digital radio. However, we do not want to lose the momentum towards digital radio that has been built up by putting in place the infrastructure, encouraging people to buy digital radios and encouraging people to convert their cars to digital radio, which is becoming ever easier and cheaper to do. That will help a station such as MKFM, which is broadcasting on digital radio, as my hon. Friend pointed out. Milton Keynes tends to be ahead of the trend and its rate of digital radio ownership is ahead of the national average, probably beaten only by places such as London.

It is important to stress that digital radio remains an increasingly important part of the radio mix. Another important element of the radio mix, which we could perhaps say is at the other end of the spectrum, is community radio. The framework for community radio was set up in 2004 by the last Government. In my view, it has been an astounding success. Community radio is run by not-for-profit organisations that provide a social gain to the communities they serve. It provides original, distinctive and—crucially—local output, and relies on a huge amount of effort and support, with stations receiving an average of around 214 volunteering hours every week. They are supported by the Community Media Association, which does a fantastic job of representing the sector and providing information and advice to stations and prospective start-ups. Community radio has shown that it can deliver wider social objectives, connect communities together, and give a real focus for local engagement. It does not surprise me that in a community the size of Milton Keynes, there should be a great deal of pressure to see the community radio station MKFM launch as soon as possible. The value of the sector is not just in its listening share or reach, but in the lives it touches and often changes for the better.

The recent connect:transmit project is a good example of how community radio comes together to support skills and training for young people. It was funded by the Paul Hamlyn Foundation and co-ordinated by Radio Regen, a charity supporting the community radio sector. It worked with four community radio stations: Shmu FM in Aberdeen, BCB in Bradford, Future Radio in Norwich, and Preston FM.

I hope that my hon. Friend and the rest of the House will agree that community radio has grown and established itself as part of the UK’s diverse and vibrant radio ecology. As has been mentioned, a number of community radio stations are reporting problems and struggling to remain viable, with some stations reporting a decline in income and difficulties in accessing funding. That is supported by Ofcom’s market analysis, which shows that community radio stations have consistently operated on very small margins. For example, in each of the last four years, the average expenditure of the sector has been greater than the average income.

Ofcom’s communications market report of 2013 showed that the percentage share of income generated by community radio stations from grants fell from 45% in 2008 to 29% in 2012. That figure is likely to fall still further, although it is partly offset by a slight increase in the overall value of on-air advertising and sponsorship revenue, which increased in 2012 from 26% to 29%. It is important to make such points because I want to bring the attention of the House to the consultation that we launched a couple of weeks ago on 13 February. It is a wide-ranging consultation on the funding rules that apply to community radio, because we want to consider how we can relax some of the rules and restrictions on how community radio is funded. It is a consultation that the community radio community has long called for. We think that restrictions are still needed to preserve the distinctive characteristics of community radio and ensure that small commercial radio stations are not adversely affected. The consultation will close on 23 April, and will enable us to assess the extent to which rules can be relaxed to give community radio more scope to raise funding, and to help the sector’s long-term sustainability.

Although there are challenges to community radio, I am encouraged by high levels of demand for community radio licences across many parts of the country. I fully understand my hon. Friend’s desire for his constituency radio station, MKFM, to establish itself as a local community radio station. The regulatory framework was set out in the Community Radio Order 2004, and lists the powers under which Ofcom can license community radio stations. That gets to the nub of what my hon. Friend wishes to discuss.

Detailed implementation of licensing is the responsibility of Ofcom, and in developing its approach to licensing and regulating the sector—including the current licensing round, which is the subject of concern to my hon. Friend and MKFM—Ofcom has consulted a range of stakeholders, including the Community Media Association. Ofcom has decided to invite applications for licences on a region-by-region basis, to co-ordinate the approach in a fair and consistent way, and to give prospective applicants time to develop strong and sustainable proposals. Within that framework, the licensing process is applicant-led, and the applicant identifies where they wish to set up their station. Ofcom does not decide the locations or target communities to be served by stations, but it does advise on areas where there are already existing stations, or where sufficient frequencies may not be available.

The decisions are complicated and need to take account of the various requirements in the legislation. Ofcom has to consider four things. First, it has to assess the application and establish whether the frequency is available. Secondly, it needs to look at the different proposals, which may have different objectives, and there may be many proposals for particular areas which need to be co-ordinated. Thirdly, it needs to assess the plans to see whether the proposed service meets the characteristics set out by the legislation in terms of social gain and the likelihood that the plans are likely to be viable. Finally, it needs to assess the impact on local commercial radio and, if necessary, place restrictions on the amount of commercial revenue that the community radio station may generate.

The difficulty at the moment, which affects MKFM, is the high level of demand and competing applications. This is frustrating for stations that are on air already and want to acquire a community radio licence to strengthen their community engagement and grow their listenership. They want to move more quickly. The suggestion made by my hon. Friend is that we should adopt a demand-led process which might lead to some applicants in some areas getting on air sooner, but it would lead to a piecemeal approach that would slow progress overall as decisions were made in an unco-ordinated way.

The way in which Ofcom manages the process overall strikes the right balance between the operational challenges of managing the complexities associated with licensing and its stated aim to license a community radio station for every community that wants one. In fact, since the legislation was passed, 276 community radio licences have been awarded.

The current timetable was announced in April 2011 and invited applications on a region-by-region basis, starting with Wales and the south-west, then Northern Ireland in March 2012 and then four English regions, one every six months. Licences for each region are then awarded in batches on a rolling basis, allowing the complex spectrum planning and frequency planning to be managed together. If the number of applications received for any region is high, consideration of all applications can take longer than anticipated, as was the case in autumn 2013, so that Ofcom had little choice but to revise its timetable for inviting community radio applications in its current round.

In mid-October, for example, Ofcom received 38 applications from locations in west and south Yorkshire, Humberside and the north-west of England. That was far more than it had anticipated, and therefore in fairness to all potential applicants from other regions, Ofcom revised its timetable in order to give itself time to process those applications before moving on to other regions. That is the cause of the frustration that MKFM is experiencing. I do not want to dampen its enthusiasm and I shall take on board some of the points that my hon. Friend made. I am not ready to fast-track licences for people who are prepared to pay more, because that would still involve a lack of co-ordination. At the moment, the process is fair with a very low licence fee for anyone who wants to run a community radio station, although I want to look at whether we can speed the process up.

I thank my hon. Friend for bringing this issue to my attention, and I suggest that I discuss this with Ofcom to see if we can find a way to move the process forward. I also wish to invite him and MKFM to a meeting in my Department, should they wish to take advantage of that offer. He has brought several suggestions to my attention, although I do not think that moving Milton Keynes out of the south-east is either in my gift or would be a practical way of taking forward MKFM’s application. I hope to discuss that further with him when we meet.

Question put and agreed to.