Phonographic Performance Ltd

Pete Wishart Excerpts

Wednesday 6th July 2011 Westminster Hall

[Ms Margaret Ritchie (South Down) (SDLP)]

I am grateful for the opportunity to have this important debate under your chairmanship, Mr Bayley. I want to talk about the licence regime operated by Phonographic Performance Ltd, which governs copyright for musical recordings, and by the associated Performing Rights Society; they issue music licences that cover the copyright for musical and lyrical compositions. Both licences are required by businesses if they want to play music in public places or hold a live performance.

I want to draw attention to the over-complex and expensive licensing regime in this market. The problem has been highlighted by the European Union and the Federation of Small Businesses, and by various businesses and constituents throughout my constituency in Northern Ireland. The regulations impact financially on many small enterprises across Britain and Northern Ireland, which are already over-burdened by Government regulation and red tape. Broadly speaking, as we seek to develop and grow the economy in Northern Ireland, such measures can place an undue strain on businesses that already have narrow profit margins.

The Government have acknowledged that the economy in the north of Ireland needs to be rebalanced, and the proposed steps to devolve corporation tax powers to the Northern Ireland Executive are encouraging. However, it has been noted that businesses are still subject to around 60 regulations, including licensing arrangements, which cost firms throughout the UK £13 billion. Those regulations may be particularly burdensome for our small and medium-sized businesses, which may not have staff dedicated to compliance issues. It is therefore important that we pay attention to the criticism that such firms have expressed about the licensing arrangements for performance music.

I would like to draw attention to more specific issues within the broader context of the debate. In March 2009, the PRS introduced an exemption rate for businesses with fewer than four employees to cover employees playing music in private that was not audible to the public. Under that arrangement, such companies were to pay £44 a year plus VAT, and that decision has since been upheld by the High Court. Such exemptions are welcome, but unfortunately they are some way short of a classification that would help small and medium-sized enterprises, given that SMEs are classed as organisations with fewer than 50 employees. I want to encourage the Government to examine such exemptions, and to make them more consistent with the definition of a small business.

[Pete Wishart (Perth and North Perthshire) (SNP)]

After 10 years as a Member of Parliament, I have not received one complaint on the subject from an SME in my constituency, and I, too, represent a rural area. Most small businesses are content to pay a small price to enable them to use wonderful music to enhance their businesses. When the hon. Lady is talking about exemptions, is she thinking about the musicians, most of whom survive on less than £16,000 a year? If small businesses with fewer than 50 people were exempt, the impact on musicians would be massive. Does she understand that musicians are struggling, and survive on the scraps that they get from the PRS?

[Ms Ritchie]

I thank the hon. Gentleman for his welcome intervention. I recognise that in another life he was a musician, and is a member of a popular Celtic folk band in Scotland, which has played in Northern Ireland on several occasions. I recognise the musicians’ plight, and that they and the music industry are an integral part of small businesses. I am reflecting on the position of small and medium-sized enterprises in Northern Ireland, where we have a predominantly public sector-led economy, and are trying to grow our economy and encourage small businesses. Any additional taxation or fees simply imperil their financial situation.

--- Later in debate ---

[Mr Hayes]

I shall deal with that specific question before I finish speaking. No doubt inspiration will wing its way to me to inform my response—the hon. Lady knows what I mean by that. She has made it clear that there are areas in which we can make improvements, notwithstanding the constraints to which I have referred. Ah! Inspiration may already have reached me, but I want—not tantalisingly, but temptingly—to delay what I say about that for a few moments.

[Pete Wishart]

I am very much looking forward to the Minister’s reply to tomorrow’s debate on the Hargreaves recommendations. He knows that nothing in the Hargreaves report suggests or recommends exempting small and medium-sized businesses with fewer than 50 people, so can he now rule that out and ensure that musicians continue to get fair play from the wonderful recorded works that they provide, which enhance so many businesses up and down the country?

[Mr Hayes]

We will not exempt small firms. That is the answer to the question. The hon. Gentleman has raised the issue, and there is a case for exempting small firms, but the frank answer to his question and the question asked by the hon. Lady is that the UK would almost certainly be in breach of its international and European obligations if it did so. I can be very clear about that.

Let me deal with the hon. Lady’s intervention. Within the next month, she will learn more—because I will insist on it—about the Government’s response and thoughts on how we can take forward the review’s recommendations, where we feel that it is appropriate to do so.

I want to say more about what further progress can be made. First, we need to ensure that people understand the law and understand what not only PPL but all collecting societies from whom they need a licence are doing. We know from the ministerial postbag and from our constituency postbags and surgeries that many small businesses are unaware that they need a licence for the activities that we are discussing. The hon. Lady has made the point clearly. Many businesses question why they need a licence from PPL and PRS for Music to have the radio on in business premises when the broadcaster has already paid for a licence. Many ask why they need a licence at all. Where they do require licences from both PRS for Music and PPL, some businesses query, reasonably enough, why they are not told clearly that they need two licences and why joint licensing is not used to cut costs and the time that they have to spend on that.

PPL tells us that it is doing more to raise awareness among licensees and potential licensees. As a result of this debate, our further consideration and representations made to us from outside this place and within it, we will continue to press PPL to fulfil that commitment. Indeed, as a result of the debate, I will ask Baroness Wilcox, who is the Minister with responsibility for this area, to meet representatives of PPL to talk about how they can make the commitment real and what further steps they will be taking to address some of the questions that I have raised. Trade associations, too, must continue to build on the work that they do to raise awareness among their members. We will certainly involve them in that discussion.

Secondly, where charges are justified, they should be applied in a clear, unambiguous and efficient manner. Those wanting to start new businesses must not be deterred by uncertainties about charges that have no bearing on their core business. Thirdly, inquiries suggest that not all trade associations are aware that they can have a role in negotiating the terms and conditions of the licence for their sector. Some trade associations and licensees are even unaware that they can take a case to the Copyright Tribunal, if they are unhappy with the terms and conditions. They simply do not know their entitlements. The tribunal secretariat is working to raise awareness in those areas. It hosts regular user group meetings, which are aimed at making the tribunal more accessible by familiarising users, especially SMEs, with its procedures and giving them an opportunity to meet the chairman and lay members. The secretariat also hosts regular meetings of collecting societies to discuss, among other things, concerns raised by licensees.

I will also ask Baroness Wilcox to advance our work with trade associations. Of course, we do not exert executive power in that respect, but we will take the work further to ensure that all the steps are accelerated. It seems to me that a seminar might be appropriate. I am thinking of a seminar in which the interested parties are brought together to talk through what further steps might be taken to deal with some of the specific issues relating to small businesses raised by the hon. Lady. Perhaps my ministerial colleague will write to her and other interested hon. Members, addressing the possibility of just such an initiative.

I have heard much in this debate that provides food for thought. We do not take these matters lightly. In relation to charities, PPL has agreed to joint licensing with PRS for Music, which should reduce administrative burdens. The hon. Lady will know about that. We might be able to discuss, at the type of event that I have described, further steps along those lines, because there are community organisations—some of them are very small—that struggle to deal with some of these matters, not least in terms of information and understanding. On that basis, I welcome the agreement that has been reached and encourage exploration of other areas for joint licensing, notwithstanding the point that I made about exemption and the perfectly proper point that the hon. Gentleman has raised.

We will reflect carefully on these matters before responding formally to the recommendations of the review. We will continue to work to ensure that the framework is explicable and accessible and that it operates fairly. There is a balance to be struck between the interests of different parties, as I think has been made clear in this brief debate. Those parties have a legitimate expectation that the system will work fairly. The regulation should certainly not be burdensome, and we need to ensure that we have some understanding of the costs of the regulation. When we promote steps that are designed to ensure that a system is operating fairly, we should always do so on the basis of understanding the cost burden that it creates. We also feel—I am sorry; I am using the royal “we”. I also feel that measurement of the function of these agencies is important, so having proper lines of accountability to ensure that what is being done is working as it should be is important.

This has been a useful albeit short debate. As I have said, it is remarkably timely. I hope that I have made reasonable commitments to the hon. Lady as a result of it. She will hear more very soon about our further reflections.