Amendment 16

Media Bill - Committee (2nd Day) – in the House of Lords am 3:32 pm ar 20 Mai 2024.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Baroness Fraser of Craigmaddie:

Moved by Baroness Fraser of Craigmaddie

16: Clause 14, page 16, line 43, at end insert—“(4A) After subsection (6) insert—“(6A) When determining the number of hours OFCOM consider appropriate under subsections (1) and (3), they must ensure that the number of hours would result in at least 50% of programmes broadcast, measured both by hours and expenditure, being made outside of London and 16% from the nations of the United Kingdom other than England, in proportion to their relative populations.””

Photo of Baroness Fraser of Craigmaddie Baroness Fraser of Craigmaddie Ceidwadwyr

My Lords, I rise to speak to Amendments 16 and 17 in my name and in doing so I declare my interests as laid out in the register as a board member of Creative Scotland. The noble Baroness, Lady Foster of Aghadrumsee, who has added her name, has asked me to apologise to the House as she cannot be here in time today due to a prior engagement in Northern Ireland, but she wanted me to indicate that the points I will be making have her strong support from a Northern Irish perspective. I also thank the noble Viscount, Lord Colville of Culross, and the right reverend Prelate the Bishop of Newcastle for their support, which is greatly appreciated.

Never before have I stood up in this House and felt such a weight of responsibility on my shoulders. My amendments have the backing of all three devolved Administrations, the screen agencies of Scotland, Northern Ireland and Wales, industry bodies from across the nations and regions as well as countless numbers of independent production companies. The noise outside this Chamber and outside London is deafening, and it is united.

The Media Bill is to be welcomed, and I know the Minister and the Secretary of State—and, indeed, all of us—wish it to pass quickly. However, if it passes unamended, it will have ignored the vibrant but delicately balanced screen ecologies in the nations and regions of the UK, and it risks removing the foundations upon which those thriving screen sectors have been able to build: namely, commissions from PSBs, the very channels for whom representing the lives and experiences of the nations and regions of the UK should be at their heart.

According to the Office for National Statistics, around 68 million people currently live in the UK. About 10 million people live within the M25, but, like much of our politics, our media can often be seen as being too London-centric. My amendments seek to ensure that public service broadcasters provide a suitable range of programmes for the roughly 58 million people who do not live in London, and that a proportionate share of those programmes are made outside London by the talented people who live and work all across the UK. That these should be measured by both hours and expenditure would ensure that PSBs did not simply fulfil their regional quotas with low-value daytime live discussions.

Section 287 of the Communications Act 2003 required Channel 3 to provide a sufficient amount and a suitable range of regional programmes, including news and current affairs, regulated by Ofcom quotas obligated by its licence. If it were not for those quotas then the plurality of news in the nations and regions provided by ITV and STV, in addition to that of the BBC, would be lost. Equivalent requirements and national and regional quotas apply to the BBC under the BBC framework agreement.

The BBC and Channel 4 have already responded to criticism that they do not reflect the public they serve by moving part of their workforce outside of London to regional centres in Salford, Leeds, Bristol and Glasgow. During the debate around the proposed privatisation of Channel 4, its chief executive, Alex Mahon, speaking at the opening of the channel’s new studios in Leeds, argued that privatisation would inhibit the channel’s plans to expand outside London and help the levelling-up agenda. Ms Mahon led a campaign against privatisation by declaring that Channel 4 was “for all the UK”, and regional producers in the nations and regions stepped up to support it. However, as soon as privatisation was taken off the table, Channel 4 abruptly stopped developing its commissioning capacity outside London, recently making its most senior commissioner in Leeds redundant and losing one of its small Glasgow-based commissioning team.

Ofcom requires that the BBC must ensure that in each calendar year at least 16% of the hours of network programmes made in the UK are made outside England, and at least 16% of the BBC’s expenditure on new network programmes is applied across Scotland, Wales and Northern Ireland, which is in line with the three home nations’ share of the population. My amendments would simply extend those requirements to all public service broadcasters, ensuring that these public assets deliver fairly for all the UK.

If we do not have such regional quotas then we risk not having any of the production centres of which we are so rightly proud, and in that case Amendment 54 from the noble Lord, Lord Wigley, becomes somewhat academic. As much as I wish to support him in requiring Ofcom to ensure that the out of London nations and regions production criteria support inward investment in regional production centres, while encouraging the pipeline of talent from across the UK to thrive, without national and regional quotas the only option to fulfil any regional out of London production would be by brass-plating.

Channel 4 is a commercially funded but publicly owned PSB. It does not produce regional news content as ITV and STV do, but to date it has played an extremely important role in the success of the UK’s creative industries, pioneering innovation in, investing in and stimulating the production sector and acting as a world-leading accelerator. However, despite Channel 4’s “for all the UK” campaign, it has had to be dragged kicking and screaming by Ofcom into accepting the rise of its out of England quota to only 9% in 2020, and it has recently argued for that 9% minimum to sustain across the next decade, on the basis that producers outside London are too small.

This Bill will remove the existing publisher/broadcaster restriction and give Channel 4 valuable new flexibility to make some of its own content. While I understand the Government’s desire to ensure that Channel 4 is able to grow and better compete in the age of streaming giants, they are giving away the very thing that makes Channel 4 unique among PSBs, at no cost to the taxpayer but of considerable importance to the regional creative economy and independent production sectors. They are doing so without demanding anything in return. As a publicly owned PSB with its own stated strong commitment to represent the whole of the UK and to stand up for diversity across the UK, surely the Government must ensure that Channel 4 fulfils this remit for the benefit of the UK as a whole, supporting the sustainable growth of the industry outside London and across all four home nations.

My amendments do nothing other than echo the voluntary commitments that Channel 4’s chairman and chief executive have already made. In November last year, Sir Ian Cheshire issued a statement saying:

“Channel 4 remains entirely committed to its presence, programme-making and impact across the Nations and Regions. This includes its commitment to regional producers, voluntary investing 50% of its commissioning budget outside of London”.

I am asking the Minister therefore to write this voluntary commitment into the Bill, along with a separate nations’ quota in line with that of the BBC. According to the independent producers’ industry body, PACT, increasing these quotas to 50% outside London and 16% outside England would cost Channel 4 only an additional £136 million over 10 years—just over 2% of its anticipated budget for new programmes across the next decade. The benefit to the creative economy across all the UK, to British audiences and to Channel 4 itself would be significantly higher.

Channel 4’s resistance to increasing national and regional quotas to match the BBC’s has caused what I can only describe as a real stushie among the independent producers, the freelance TV talent, the devolved Administrations and the screen agencies in Northern Ireland, Scotland and Wales, all of whom have written to Ofcom—and I am delighted to see its chairman in his place—and made public their desire for national and regional quotas and their support of my amendments. I am grateful to the three screen agencies—Screen Scotland, Northern Ireland Screen and Creative Wales—and PACT, as well as the many independent producers who have engaged with me and many other noble Lords in preparation for this debate, and who recently felt so strongly about this that they made the effort to come to the House to brief us in person. I can only apologise to them that voting on the safety of Rwanda rather truncated our discussions on that day.

The independent producers who recently wrote a public letter to Ofcom, urging it to reconsider the lifting of the current production 91% “made in England” production quota for Channel 4, are long-term, trusted suppliers of Channel 4, ITV and the BBC, as well as Netflix, Disney+, Sky, Amazon and National Geographic among many others. They cannot be dismissed as being “too small” for the PSB broadcasters to work with. The key to fostering and safeguarding the regional TV production sector lies in securing network commissions, not just ad hoc regional talent and skills schemes.

Quotas work. Both the BBC and Channel 4 have met them regularly and this has fostered significant economic and creative growth across the UK since 2003. Quotas are critical to ensuring that the infrastructure of the thriving creative industries that have been so successfully built up over the last two decades is maintained and not jettisoned. Quotas are essential to ensuring that our PSBs truly reflect, on-screen, the voices and stories of the people they serve throughout the different parts of our United Kingdom. This is in the best long-term interests of those broadcasters. If the Minister is not minded to accept my amendments as tabled today, I ask him and his team to work with me and the regional agencies to ensure that the commitment to representation throughout the UK for public service broadcasting is reflected robustly within the provisions of this Bill.

Photo of Lord Wigley Lord Wigley Plaid Cymru

My Lords, I am delighted to follow the noble Baroness, Lady Fraser. I agree with very many of the points she made, particularly the emphasis that she has. I wish to speak to my Amendment 54, which stands in my name and those of my noble friend Lady Smith of Llanfaes and the noble Baroness, Lady Humphreys, whose support I welcome. It proposes a new clause entitled “Evaluation of nations-based production”, and was tabled by my colleague Hywel Williams MP in Committee in the other place but did not get debated.

Over the past two generations, television broadcasters from Wales have made a significant mark on the world of broadcasting, in these islands and further afield. From the days of Huw Wheldon back in the 1950s to today, BBC television programmes with a Welsh dimension have contributed to cultural diversity within a UK setting and, within Wales, the BBC has contributed to our ability to speak to ourselves in both languages and to report on our national life. Since the advent in 1982 of S4C, there has been a considerable contribution by the BBC to that as well.

A range of broadcasting leaders from Wales have helped to mould the BBC centrally into what it is today: one thinks of the contribution of Elan Closs Stephens over the past 12 months, in particularly difficult times. The BBC has opened an impressive new Broadcasting House bang in the middle of Cardiff, with state-of-the-art technology and facilities. That has helped Cardiff to become a significant broadcasting hub, with programmes ranging from “Doctor Who” to “Keeping Faith” and “Tree on a Hill” produced in Wales. Independent television has also had significant roots in Wales, from the early days of TWW, through the golden era of HTVHarlech Television, which I see being acknowledged from the Government Front Bench—and more recently ITV Wales.

By now, a plethora of small production companies make a contribution to these high-profile platforms, both in Wales for Wales, and from Wales to the UK and the wider world. Some of these have enjoyed huge success: one has only to think of the “Hinterland” series, which has been sold to dozens of countries around the globe, and currently new productions have every promise of emulating that success. There are also smaller Wales-based companies which have grown significantly—companies such as Rondo Media, Telesgop, Wildflame Productions, Tinopolis, Vox Pictures and Cwmni Da are all Welsh-grown businesses. The label “made in Wales” on television and radio output has acquired, to some degree, a resonance that “made in England” once had in motor manufacturing—I hope it does not have the same fate—so it is hardly surprising that there are people who take advantage of this through success by association.

This is all to the good if they come and generate their programmes in Wales, contributing to the Welsh economy, helping to give new experiences to Welsh participants and increasing the skills and facilities base within our country. However, as always, there is a real danger of people cashing in on the opportunities that the Welsh brand offers. There are also some who are driven to Wales by the quota approach but want to use us only for their own narrow purposes and do not try to maximize any contribution to the Welsh economy. In other words, they brass-plate Wales, using their links to Wales for their own benefit but contributing only a minimal amount to our economy.

The new clause that I propose is intended to deal with this abuse of the system. TAC—Teledwyr Annibynnol Cymru—represents 50 companies in Wales which employ, train and develop local skills in that sector. They make shows for all the UK public sector broadcasters including Channel 4, the BBC, ITV, Channel 5 and, of course, S4C. In 2021, the Welsh screen sector had a turnover of £575 million, an increase of 36% on the previous year.

TAC tells us that there is now a growing phenomenon of television companies from outside Wales setting up satellite presence in Wales to win network PSB commissions. TAC told the Welsh Affairs Committee in the Commons last June that, of 71 productions it studied that qualified under current rules as justifying the “made in Wales” designation, no fewer than 41 had their headquarters elsewhere. TAC is concerned because the profits from such productions disappear from Wales. Talent is brought from outside Wales, limiting the benefits to local participants. The intellectual property is held outside Wales, which means that Wales will benefit less, if at all, from future monetisation. The Welsh profile is weakened, thus losing marketing opportunities.

TAC feels that the rules laid down by Ofcom are too weak, so much so that by now a majority of the companies claiming to have a presence in Wales fall into the brass-plating category. The demands made by TAC in the context of this Bill are very reasonable. The first is that Ofcom’s reporting system should be contemporaneous and not based on dated historic information, which makes it next to impossible to verify. Secondly, it asks for a tightening of Ofcom’s guidance—in particular, that a company should be based in a qualifying location for a defined threshold period of time before it can be allowed to claim that it has a “substantive presence” in that region, with an exception for start-up companies rooted in that region. The amendments provide a means of evaluation of “nations-based production” in order to close this loophole. The proposed new clause would place firmer restrictions on companies undertaking commissions aimed at fulfilling regional quotas in Northern Ireland, Scotland and Wales. It would require Ofcom to ensure that the applicant company had a substantial base in the relevant nation and had had a presence within that nation for at least 36 months, with an exception for new start-ups that could demonstrate that they were rooted in that nation and/or had a commitment to remaining there.

The current rules are that to qualify for out of London status or as making products specifically produced in a nation—that is the terminology—the company must, first, have a substantive production base in the UK outside the M25, with the production being managed from there. Secondly, at least 70% of the production spend must be outside the M25. Thirdly, at least 50% by cost of the production talent must have their usual place of employment within the UK outside the M25. Currently, while the letter of such stipulations may be technically followed, their spirit certainly is not. The purpose of these quotas is to encourage development of regional production centres, better reflect the lives and perspectives of people across the UK, and to provide economic, social and cultural benefits to those areas.

In its Broadcasting in Wales report, the Welsh Affairs Committee in the other place recommended clamping down on brass-plating and specifically called for the Bill to be the avenue by which this could be achieved. I hope that the Minister replying to this debate will take it on himself to give very serious consideration to this issue. It would gain the Government a resonance in Wales, Scotland and Northern Ireland—and I suspect in the northern regions of England—which they very much need at this point in time.

Photo of Viscount Colville of Culross Viscount Colville of Culross Deputy Chairman of Committees, Deputy Speaker (Lords) 3:45, 20 Mai 2024

My Lords, I declare my interests in the register. I am also an officer of the Channel 4 APPG.

I am pleased to have put down my name to Amendments 16 and 17 in the name of the noble Baroness, Lady Fraser of Craigmaddie. I very much support the principal aim of these amendments, which is to push content commissioning towards the regions and nations. I will also focus my comments on the publicly owned Channel 4.

These amendments complement my amendments in the previous group, which demanded more support for small independent television producers. The majority of SMEs are in the regions and nations, which Channel 4 should support. In doing so, it will support SMEs. These small companies are the lifeblood of the television production industry. They are often in areas where stories and lives are not covered by the mainstream media. It is in these places that the untold stories from an underserved audience will spring. After all, fresh ideas and stories from places overlooked by the metropolitan-based companies are surely central to the PSBs’ remit.

The production base in the nations and regions has come a long way in the last 20 years. With the growth of STV and the establishment of a Channel 4 lifestyle programmes production base in Glasgow, there has been a big increase in the number of people employed in the industry in Scotland, but the regional hubs in Cardiff and Scotland are struggling in the present climate. Now is the time for Channel 4 to play its part in the continued expansion of production talent across the industry.

It is a long-held view by many in the industry that it is expensive to commission from the nations. They say that staff have to be sent up from London, with all the extra costs that incurs. Surely, the response to that is to ensure that Scottish and Welsh independent companies are commissioned. They will employ producers and talent they know and trust, who will most probably be local. They will carry out post-production locally and employ indigenous Scots, Welsh or Yorkshire editors, graders and sound engineers in facilities houses based near them. The aim of these amendments is to build a big enough indigenous talent base that local staff can be employed and their work can go some way to reflect the parts of the United Kingdom they live in.

The present crisis of commissioning in the industry, for both scripted and unscripted programmes, has meant that not just small companies but medium-sized companies are closing. As a result, the Scots, Welsh and regional facilities houses are also closing and struggling. The lack of work has meant that people are leaving the industry, and the promises of expanding production bases in the regions and nations are dying. At this rate, the naysayers in the industry will be right: it will be too expensive to produce programmes in the nations and regions, because talent will have to come from London and the south-east, if not from abroad.

In my speech on the first day in Committee on the need for Channel 4 to focus on commissioning from SMEs, I read out the channel’s submission to Ofcom for licence renewal, which claimed that the smaller scale of the production sector outside London meant that the companies in the regions and nations were not able to develop or realise big ideas. This statement reflects badly on Channel 4’s view of television production in the parts of the country affected by Amendments 16 and 17. Not surprisingly, Scots indies responded that, far from being unable to develop and deliver big ideas, they were capable of making programmes for the biggest streamers and broadcasters in the world. I can say from personal experience of working with American commissioners that they are very demanding. If a company can supply a streamer or an American broadcaster, it can almost certainly supply Channel 4.

However, unfortunately, while those international commissions prove that the indies in the nations have talent and capacity, the revenues generated from them are not sufficient to sustain the production bases. They often pay a straight production fee with little back end, unlike the terms of trade that British channels use when dealing with indies, guaranteeing them the back-end revenue to build their businesses.

The letter by the Scots production companies continued:

“As a publicly owned public service broadcaster with a stated ‘strong commitment to represent the whole of the UK’ and ‘to stand up for diversity across the UK’, Channel 4 must fulfil its remit for the benefit of the UK as a whole and support the sustainable growth of the industry outside of London”.

The CEO of Channel 4, Alex Mahon, responded shortly afterwards, in April this year, when she told the Creative Cities Convention in Bristol that there had been questions about making the quota bigger. She said:

“We will try and do more because we need to think more carefully about how we represent people on air. It is time to make that shift to support companies more sustainably”.

Since then, Channel 4 has issued a statement to me, saying that

“we are announcing that we would support, in principle, a managed timely and carefully considered increase in our commitment to programme making in the nations”.

However, Channel 4 did not go any further on the detail of this proposal, or reveal by how much it would increase its spend in the nations and regions. It is leaving it up to Ofcom to decide the appropriate quota.

Once again, Parliament is leaving an important decision to be made by Ofcom. As Bills pass through this House giving Ofcom increasing power, it is beholden on us parliamentarians to give the regulator guidance. Parliament, not Ofcom, should decide the national and regional quotas for content commissioning. We must do what we can to encourage one of our great public service broadcasters to stand by its chief executive’s words, to support companies more sustainably and to increase the quota to the nations beyond 9%. I ask the Minister to support the figure of a 16% quota in the nations and 50% outside London.

Channel 4 reset itself in 2020, with the slogan “4 All the UK”. At the time, Ofcom increased its quota for the nations from 3% to 9%. However, now is the time to go further. Channel 4 aims its commissioning strategy at fewer, bigger, better programmes. I ask noble Lords to consider where that leaves the middle ground—the hundreds of hours of television annually filled by content with a medium spend. These companies are the backbone of the industry outside London and are suffering from the present commissioning strategy. As one of the leading figures in Scottish television, Alan Clements, who runs the independent production company Two Rivers Media, said:

“If you make your corporate slogan 4 All The UK, then you really need to walk the walk as well as talk the talk”.

Photo of The Bishop of Newcastle The Bishop of Newcastle Bishop 4:00, 20 Mai 2024

My Lords, I rise to speak to Amendments 16 and 17, tabled by the noble Baroness, Lady Fraser of Craigmaddie, to which I am pleased to have added my name in support.

Our country is one of diversity. The four nations that make up the UK include many regions, each with its own culture, sense of humour, accent, concerns and interests. As public service broadcasters are owned by the whole of the UK public, it is important that they truly reflect the public they serve in all their regional diversity.

I regrettably could not be present for the first day in Committee to support the amendments from the noble Lord, Lord Dunlop, seeking to ensure that our PSBs reflect the diversity of this nation through the protection of Gaelic broadcasting, which is part of the wider landscape that these amendments speak to. I hope that I will be present to express my support on Report.

With Channel 4’s current quotas, 91% of its production is reserved for England and 65% for London. Its London-centric attitude to production is confirmed through its claim that

“the UK production sector continues to be significantly smaller outside London … there are fewer production companies, often smaller in scale, and therefore with less capacity to develop creative ideas and produce them”.

Along with independent production companies across the country, I dispute this. The BBC has not faced difficulties adhering to its higher regional quotas, and indeed demonstrates that significantly expanding production networks outside London is possible and yields positive results that attract interest and further investment.

Ensuring support for the creative sector outside London requires intentionality. New and smaller production companies cannot grow without regular and sustained employment. Implementing quotas would ensure that these businesses receive regular income in the longer term, allowing them to grow while nurturing local talent and skills.

As the noble Baroness, Lady Fraser, outlined in her excellent speech, quotas work. The BBC now aims for 60% of its TV production to take place outside London by 2027-28, and its production bases in cities throughout the country demonstrate how the industry is capable of diversifying its production locations, employing staff from local economies. These amendments would simply place the same quotas on other public service broadcasters.

In March the Government confirmed funding towards the development of Crown Works Studios in Sunderland—a very welcome investment. The potential for the north-east in this sector is at last gaining recognition. It should be partnered with legislation to ensure that studios outside London, such as Crown Works, are fully utilised by public service broadcasters. With Northumbria University ranking second in the Guardian’s latest university league table for film production, our region is not lacking in talented, skilled and creative minds in this sector; what is lacking is opportunity. Those who want to pursue a career in broadcasting are being pulled away from the region to London, taking their skills with them. Those who remain in the region face a lack of opportunity. For many, their talent and potential are left unfulfilled. These amendments seek to change this narrative.

By placing a requirement on Ofcom to ensure that PSBs produce 50% of their programmes outside London and 16% outside England, in proportion to each UK nation’s relative population and measured by both hours broadcast and expenditure, these amendments would equitably spread opportunity across the country’s regions. The different regions and nations throughout the UK are rich in creative skills, and we are all left poorer if we continue to neglect them.

Photo of Baroness Humphreys Baroness Humphreys Liberal Democrat Lords Spokesperson (Wales)

My Lords, this group of amendments is of great importance to the independent television production sector in Wales. Amendments 16 and 17 relate to how much commissioning is done outside of London by channels 3, 4 and 5. Amendment 54 relates to the issue of brass plating. I thank the noble Baroness, Lady Fraser of Craigmaddie, and the noble Lord, Lord Wigley, for tabling these amendments. I have added my name to Amendment 54 and support all three amendments, as do my colleagues on these Benches.

Teledwyr Annibynnol Cymru represents the independent sector of Wales and is made up of some 50 companies of varying sizes. They produce content for BBC, ITV, Channel 4, Channel 5 and Sky. They also produce almost all the original television and online media content for S4C. Their continued success helps the Welsh and UK economies. They do, however, rely on the continued support of our UK public service broadcasters, including Channel 4, which has brought greater resource to working with TV production companies throughout the UK in recent years. Over the last five years, the resource from Channel 4 has never fallen below 54% in the commissioning of out of London hours, and never below 45% in spend. Channel 4 has committed to a future level of 50% of spend and hours outside of London against the 35% requirement in its licence, and has created hubs throughout the UK to enable this. There is nothing to indicate that it will deviate from this commitment.

I can understand the disappointment felt by many in the sector who have learned that Ofcom has not opted to raise the out-of-London quota from its present level of 35% in its proposed new licence for Channel 4. It appears that Ofcom perhaps does not recognise that Channel 4 has changed its commissioning structure and approach. This failure to recognise the reality of Channel 4’s current out-of-London commissioning commitments leaves the independent television production sector in Wales in a quandary. It believes that the 35% quota level set by Ofcom is not fit for purpose.

The reality is that Channel 4 has, over the last five years, achieved a level of out-of-London hours commissioned of between 54% and 66%. To retain the 35% level within the new licence is very much in direct contrast to the current reality. Amendments 16 and 17 would put a commitment in the Bill to the 50% figure for hours and spend by Channel 4.

Amendment 54, in the name of the noble Lord, Lord Wigley, deals with brass plating and calls for a new clause to be inserted after Clause 36. This new clause would protect Wales’s production companies. These companies are set up by local production and business talent, have their headquarters in Wales, employ locally and spend in their communities. However, the present situation allows a TV company from outside Wales, or any of the devolved nations, to establish a small satellite presence in the nation in order to win a network PSB commission and qualify for the out-of-London commissioning quota. This, of course, is what is referred to as brass plating.

Welsh independent production companies acknowledge that the aim of the present system is to grow production services around the UK and that, in so doing, it seeks to ensure that a wide range of voices, stories, talent and perspective is delivered to UK audiences. But there are concerns within the sector in Wales that brass-plating has a number of downsides, which have already been referred to by the noble Lord, Lord Wigley. First, the profits from the production flow back out of Wales, leading to less investment in the sector in Wales. Secondly, talent ends up being recruited from outside Wales, limiting the opportunities for Welsh production talent to work on UK-wide and international shows. Thirdly, in some cases, the programme will have less of a Welsh identity or even make factual errors.

Amendment 54 ensures that there are clearer guidelines as to what constitutes a substantive base in a devolved nation, that there is a commitment by a production company to remain in the nation for a specified amount of time and whether a production company has had a presence in the nation for at least 36 months. The independent television production sector in Wales is clear that these amendments are not a deterrent to inward investment. That inward investment is welcome, but on its present basis it encourages a hit-and-run approach by companies from outside Wales and puts Welsh independent production at a disadvantage.

Taken together, these amendments seek to regularise how much commissioning is done outside London and seek to create a more level playing field for those independent production companies operating in the devolved nations.

Photo of Baroness Bloomfield of Hinton Waldrist Baroness Bloomfield of Hinton Waldrist Ceidwadwyr

I support all three amendments in this group, particularly Amendment 54 in the name of the noble Lord, Lord Wigley, and agree with almost all that has been said already. I apologise to the Committee for having been unable to speak at Second Reading, so I shall be brief.

This amendment seeks to ensure that production companies which claim to have a base in Northern Ireland, Scotland—and of course Wales—in order to win their share of out-of-London commission, do genuinely have a base in wherever they claim to be. Naturally, the focus of my concern is for the impressive TV and film production sector in Wales, although my comments could apply equally to the other devolved nations.

There are some 50 TV production companies in Wales active at any one time, making shows for all the UK public service broadcasters, including the Welsh language channel, S4C, so very useful for us Welsh learners, with or without its subtitles. Some are also involved in international coproduction and commissions. Indeed, Cardiff is the third-largest production base in the UK.

Indigenous TV production companies invest heavily in the Welsh sector, spending in the local economy, training and developing staff as well as investing in facilities. For example, Rondo Media recently partnered with S4C and Creative Wales to set up the Aria Film Studios in north Wales. We also have Wolf, Dragon, Swansea’s Bay Studios and Gorilla—there is a theme here—Wales’s largest post-production company, based in Cardiff Bay. This makes it all the more the important that brass-plating—that is, as we have heard, companies setting up a small satellite presence specifically to win a PSB commission—is prevented.

Although Ofcom already publishes guidelines which set out three criteria, any two of which should be met to qualify, it is felt that although the letter of the guidelines might be being followed, perhaps the spirit of them not so much. This amendment is not intended in any way to inhibit inward investment. It is more designed to ensure that there is a clearer guideline as to what constitutes a substantive base in terms of the company being well established in Wales. This means not only that more talent can be homegrown, but that the profits from Welsh productions may flow back into the sector in Wales, providing a virtuous circle. It might also have the additional benefit of ensuring that mistakes are not made in relation to Welsh culture, nor stereotypes reinforced. I wholeheartedly support all these amendments.

Photo of Baroness Bull Baroness Bull Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, I support Amendments 16 and 17 in the name of the noble Baroness, Lady Fraser of Craigmaddie. I will not repeat the excellent arguments that she and her co-signatories and indeed others around the Committee have already made. I would like to briefly underscore one important aspect of her amendments: the importance of regional production and commissioning in levelling up opportunities for creatives and communities.

On the first day in Committee, I spoke to my Amendment 2, which aimed to recognise and enshrine the symbiotic relationship between public service broadcasting and the broader stimulation of a thriving creative economy across the UK. What gets shown on screen is a very important part of that, and Amendments 16 and 17 would help to ensure that programmes indeed reflected the lives and concerns of communities across the UK, as the first clause requires.

The impact of the amendments goes beyond what is seen on screen; they would also impact what we see on the ground—marked regional inequality in the creative industries, which has worsened since the pandemic. The policy and evidence centre’s 2023 report, Geographies of Creativity, revealed that the concentration of the UK’s creative industries in London and the south-east remained unvaried throughout the pandemic. The same cannot be said about the creative industries outside that area. The north-east presents a particularly worrying picture, as it experienced a growth rate of 81% between 2011 and 2019, the highest across the country, but the most severe decline during the pandemic. The region’s share of the UK’s creative economy was 1.9% in 2011, rising to 2.7% in 2019 but falling back to 2% in 2022. The pictures in other regions outside London and the south-east are not dissimilar. That data tells us something compelling: while the creative industries hold immense economic potential across the UK, that economic potential is at risk without adequate support and protection.

As we have heard, regional production quotas for PSBs have played a vital role in the emergence and development of the UK’s independent TV production sector across the nations and regions. They have been key to the development of creative industries and creative clusters in regions outside London. In doing so, they have helped to change attitudes towards creative careers. Research commissioned by Channel 4 in 2021 showed that the establishment of Channel 4’s headquarters in Leeds was impacting young people’s views of the industry, helping them to believe that it is possible to pursue a career in the sector without having to relocate to London. As we have heard, current trends are less rosy, and Channel 4’s recent redundancies mean that there are no longer any senior positions held in Leeds. That sends a terrible message that perhaps Dick Whittington was right all along that successful career paths will, eventually and inevitably, lead to London.

These amendments would see Ofcom held accountable for ensuring that PSBs met their regional commitments and that there was no further sliding back to a London-centric focus. Specifying the quotas would build in longer-term protection against further regression, which risks further damaging the creative sector outside London and the south-east. The amendments would support the growth of regional representation and equity on-screen and off-screen, helping to level up opportunities in, and access to, creative industries careers. That is why I strongly support Amendments 16 and 17 and look forward to the Minister’s response.

Photo of Lord Dunlop Lord Dunlop Ceidwadwyr 4:15, 20 Mai 2024

My Lords, I rise briefly to support Amendments 16 and 17, introduced persuasively by my noble friend Lady Fraser of Craigmaddie, and, not least, to add another Scots voice to the many Welsh voices that we have heard already.

The independent production sector has naturally been concerned about the implications for Channel 4’s commissioning role of the removal of the existing publisher-broadcaster division. However, following the decision not to proceed with privatisation, providing Channel 4 with the flexibility to make its own content is a logical step that deserves support. As my noble friend made clear, one of the strengths of Channel 4 is its commitment to represent the whole of the UK in all its diversity. It would be a backward step if, in giving Channel 4 greater flexibility, its role as an innovator and investor, stimulating the production sector in all parts of the country, was compromised. We often question whether our news media organisations sufficiently reflect the full diversity of the UK, and the same concern exists for the making of programmes. That is why we ask the BBC to meet quotas for network programming outside England and in each of the home nations.

As we have heard, there is tremendous creative talent outside the M25, including a vibrant sector in Scotland. That is also why some of the biggest global brands commission programmes from independent producers in the nations and regions, as indeed Channel 4 has done historically. However, if in this new world producers in the nations and regions are to remain at the forefront of the minds of Channel 4 commissioners, quotas as proposed by my noble friend are a proven means of providing them with the right incentives without unduly constraining Channel 4’s future room for manoeuvre.

Channel 4, while commercially funded, is a public asset. I believe that quotas are a proportionate measure to reflect its special place in our media landscape. I hope that my noble friend the Minister will be able to work with my noble friend Lady Fraser to provide the reassurance that the independent producers in the nations and regions are seeking.

Photo of Lord McNally Lord McNally Democratiaid Rhyddfrydol

My Lords, one of the great values of Committee stage for Ministers and regulators is that it gives them a warning of trouble ahead if they do not listen to what is said during it. This debate has been a very good example of that. I do not think Parliament is satisfied yet that we have the balance right in the ecology that we are trying to create.

It is interesting to remember that our broadcasting system is a child of Parliament and not of government or regulators. Over the last 100 years, Parliament has tweaked the market to do various good things. It created a national broadcaster under royal charter; most social historians would say that the BBC as created did much to unify the nation—it certainly brought certain accents to the fore, such as those of Wilfred Pickles and JB Priestley, which had not been heard before in London.

We are at a kind of turning point again. Of course, we are going through a revolution, the management of which is perilous for many in the major companies. As has been said in some of the briefings to us from ITV and others, the more we put demands and conditions on public service broadcasters, the more difficult it is for them to compete. It is about getting a balance right between the benefits we get and the benefits we give to PSBs and their ability to compete in this rapidly changing world.

I went to the meeting that the noble Baroness, Lady Fraser, organised, and it was very interesting to hear the passionate interventions from Northern Ireland, Wales and Scotland. However, as has also been said today, the development of talent outside London has also been significant. I still think of myself as coming from “Granadaland”; it is very difficult now to realise just what an impact Granada had on the north-west and on its confidence. In a way, there was no great plan, but it was a magnificent piece of genius to create ITV as a federation of regional companies, and from those regional companies came many benefits.

I am not sure how deeply Willie Whitelaw and others thought when they created Channel 4 and gave it that commissioning role, but it has certainly had a massive impact on the creative sector. I want us to make sure—this is the only intervention I make on this—that the Minister accepts the invitation from the noble Baroness, Lady Fraser, and that Ofcom, if it is listening, also realises that there is deep concern in Parliament that what comes out of the Bill retains what has been one of the great benefits of our development of the media, which is that we have found, nurtured and developed talents in the regions. The real danger in saying that we are going to concentrate on big productions and so on is that we get the bland and the international, and not what has been the great benefit of the development of our television and our broadcasting—the talent and the voice of the regions.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Shadow Spokesperson (Science, Innovation and Technology), Shadow Spokesperson (Culture, Media and Sport)

My Lords, this debate has been a fascinating example of how the nations and regions are well represented in the Committee. We have heard contributions from Wales, Scotland, Newcastle and across the country.

The noble Baroness, Lady Fraser, argued very persuasively that quotas work. These amendments are aimed in a targeted and precise way at the hours and expenditure on programmes broadcast that are made and produced outside London. Amendment 17 additionally reflects this by reference to

“the nations of the United Kingdom”.

Amendment 54, tabled by the noble Lord, Lord Wigley, seeks to ensure that there is a proper evaluation of companies that claim to operate in the nations of the UK by reference to criteria based on staff numbers, a published commitment to remain and a background of time spent in that nation.

We on these Benches have a great deal of sympathy and offer our encouragement and support to the principle behind these amendments. The last 20 or so years have seen, as we touched on in earlier debates, the growth of production outside London. As the noble Lord, Lord McNally, reminded us, regional production was a great strength of the federated ITV companies. Their big opportunity in the late 1950s and 1960s led to such great companies as Granada Television and Harlech Television. Surely the latter is the only time that a Lord has given his name to a TV company, but the grandfather of the noble Lord, Lord Harlech—who is in his place—was clearly a pioneer. Independent production companies now work from all over the country; although some of them are suffering the difficulties that have developed from the direction of travel for advertising revenue, that is one of the great strengths of our media landscape.

The Government have chosen to change the way in which the provider of a licensed public service channel delivers its regional production quotas. The key question for the Committee and the Government to consider is whether the percentages set out in the amendment are the right ones for Ofcom to work to and how best to ensure that the necessary flexibility is retained within the quota system. We see regional production in the context of reflecting the diversity of the nations that make up the UK—diversity in a wider sense—and the need to reflect better our rich regional cultural diaspora, which a number of noble Lords have made wonderful reference to this afternoon.

It is also important to ensure that we recognise the value that TV production can bring in levelling-up. Why should TV production be concentrated in the wealthier parts of the UK and overconcentrated in the south-east and London? There are big disparities in regional wealth in this country—some of the biggest, largest and most extensive across Europe—and TV can do much to address that. To their credit, the PSBs have all made attempts in the last decade or so to decentralise production and bring about a transformed media landscape—Channel 4 in Leeds and Glasgow, the BBC with its MediaCityUK, and ITV devolving some of its production and major locations. As legislators, surely our role is to strengthen and enhance this. For that reason and others, these amendments are very welcome. I hope that the Minister responds positively to the spirit of these amendments.

On the issue of regional TV and its importance to production, has the Minister given any thought to the future of the 34 hyperlocal TV services licensed by Ofcom? These small operators were enabled by Labour’s Communications Act 2003, but they are not included in the definition of public service channels. These small channels do an important job in local news production at a time when, as we all know, local news is diminishing. Collectively, their reach is considerable, with over half a million viewers. Is this omission an oversight by the Government? If it is, would the Minister agree to meet and discuss this with representatives of the local TV companies to see what can be done to reinstate their public service broadcasting designation? I appreciate that this is not an amendment before us this afternoon, as no such amendment has been tabled, but debates on the Bill might be the opportunity to give a little sunshine to local TV companies and for the Government to put that on record.

We have had an impressive and wide-ranging debate. I know that the Minister has been busying away this weekend, and I hope he is sufficiently recovered to rise to the occasion and give us some positive views on the Government’s approach to regionalisation.

Photo of Lord Parkinson of Whitley Bay Lord Parkinson of Whitley Bay Parliamentary Under Secretary of State (Department for Culture, Media and Sport) 4:30, 20 Mai 2024

My Lords, I hear often talk about how we need an assembly of the nations and regions, but, as the noble Lord, Lord Bassam, has said, we have had a great display of that today from your Lordships’ Committee, with contributions from across the United Kingdom.

As I set out on our first day in Committee, His Majesty’s Government are committed to stimulating growth in our world-leading production sector throughout the length and breadth of the UK. As the noble Lord, Lord Wigley, pointed out, there is a long and proud tradition of that happening across the UK; he gave many examples from Wales, understandably, and pointed to the north of England as well. We have this month lost Gudrun Ure, who played the eponymous Super Gran—a production I enjoyed in my childhood, made by Tyne Tees Television and filmed along the north-east coast in Whitley Bay, Cullercoats, Tynemouth and many other places. It was a powerful example of the emotional pull of TV production in inspiring tourism and encouraging people to visit but also in bringing production closer and, I hope, awakening sparks in people wherever it is made.

As noble Lords have alluded to, it is important to point out that the picture at the moment is a strong one. In 2022, all of our public service broadcasters exceeded their regional production quotas, and some significantly so. We have seen good and significant growth in production outside England and outside our capital. Production spending in Scotland is now worth over £266 million, supported by developments including Channel 4 opening one of its creative hubs in Glasgow in 2019. Television production in Wales continues to make impressive strides forward, with the proportion of hours of BBC content produced in Wales increasing year on year, in part thanks to major productions such as “Wolf” and the rest of the menagerie of animals that my noble friend Lady Bloomfield of Hinton Waldrist mentioned. Northern Ireland’s production industry is making a significant contribution, as shown by the rise in hours of content produced there and broadcast on public service broadcasters, which has increased consistently over the past five years. The BBC, Channel 4 and Channel 5 all increased their production expenditure in Northern Ireland in 2022. The growth in production outside London in recent years is a great success story, and our public service broadcasters have been one of the significant contributors to that growth.

We are also encouraged by commitments to go further, such as the BBC’s pledge in its BBC Across the UK strategy to increase its production expenditure outside the capital to 60% by 2027, and Channel 4’s pledge to continue to spend 50% of its main channel commissioning budget outside London. However, it is right that we keep this progress under review, and I welcome the opportunity we have had to debate these issues this afternoon, thanks to the amendments that have been tabled in this group.

Let me start by addressing Amendments 16 and 17 in the name of my noble friend Lady Fraser of Craigmaddie and acknowledge the support that she expressed on behalf of the noble Baroness, Lady Foster of Aghadrumsee, with whom I have had the opportunity to discuss some aspects of the Bill outside the Chamber. The regulatory system proposed in the Bill will continue to support the success of the industry in several ways. The Bill is explicit in Clause 1 of its intention to recognise the need for programmes produced outside London through our new public service remit. Underpinning this is the detailed system of quotas on which this amendment focuses. This system already creates the mechanisms to hold public service broadcasters to account, and the success of the UK production sector demonstrates this.

The level of these quotas is set by Ofcom, which has broad powers to amend them as it sees appropriate. Should the success of the UK production sector not continue, Ofcom has the power to take action. It could, for example, increase regional production quotas over time, in much the same way as envisaged by the amendments that my noble friend has proposed, or it could tie the quotas to population shares. I can see why it might be tempting to pre-empt or constrain Ofcom’s consideration of these matters and to legislate directly as these amendments suggest and as the noble Viscount, Lord Colville of Culross, set out in his contribution.

I agree with the noble Viscount that there is an important role for Parliament. We are all grateful that the chairman of Ofcom, the noble Lord, Lord Grade of Yarmouth, is in your Lordships’ House and is in his place to hear these debates. Even if he were not a Member of your Lordships House, Parliament has the opportunity to express its views directly and indirectly through the Select Committees and through my department. I hope the noble Viscount would agree that it is also important that Ofcom can act with agility in this dynamic and often fast-changing sector.

It is essential that Ofcom has the flexibility to calculate regional quotas on broadcasters independently, weighing the evidence and balancing the different equities in the sector. That approach allows Ofcom to alter quotas smoothly over time to react to developments that it sees. As the financial position of both the public service broadcasters and the sector more broadly changes over time, we want Ofcom to be able to take this into account and adjust quotas accordingly, without the need for primary legislation on each occasion.

However, I reassure noble Lords that I, and my colleagues in DCMS, have heard the strength of feeling on this issue from the sector, particularly in relation to Channel 4’s “out of England” quota, which is set at 9% of eligible programmes and expenditure. I note that Ofcom is currently consulting on the terms of Channel 4’s next licence, which will come into force from 1 January next year, and also that Channel 4 has said that it would support a managed and carefully considered increase to its programme-making commitments in the other home nations. His Majesty’s Government look forward to the outcome of the licence renewal process and seeing how the sector’s concerns have been addressed.

For our part, the Government will continue our broad support for the screen industries across the United Kingdom through generous tax reliefs, as we saw in the last Budget and previous ones, through investment in studios such as the Crown Works Studios, which the right Reverend Prelate the Bishop of Newcastle rightly reminded us of, supporting innovation and promoting independent content through the UK Global Screen Fund.

We want to see the production sector continue to thrive. When it comes to our public service broadcasters’ contribution to that goal, we believe that the existing system of regional production quotas, which, as I say, our public service broadcasters can and do exceed—some of them significantly—remains the best way to continue to drive the growth that we have seen in recent years in every part of the UK.

For these reasons, I am not able to accept the amendments that my noble friend Lady Fraser of Craigmaddie has set out, but I accept the invitation that the noble Lord, Lord McNally, reiterated on her behalf and, if I may, I extend it to the noble Lord, Lord Grade, or one of his colleagues at Ofcom, so that we can talk in more detail and, I hope, seek to reassure her further about how the existing system provides for the concerns that she has set out.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Shadow Spokesperson (Science, Innovation and Technology), Shadow Spokesperson (Culture, Media and Sport)

The noble Viscount, Lord Colville, made a good point about Parliament being consulted. I wonder if the noble Lord could say something about how both Houses—and Select Committees—could be consulted and considered in the question of quotas and the distribution of regional production. I do think that is an important element of this debate, and I am sure noble Lords around the Committee will want to hear something positive on that.

Photo of Lord Parkinson of Whitley Bay Lord Parkinson of Whitley Bay Parliamentary Under Secretary of State (Department for Culture, Media and Sport)

I hope the meeting I have just indicated I am very happy to hold will be an opportunity to do that, with representatives of both the Government and Ofcom present, and an opportunity for noble Lords to ask questions on the issues of quotas, and not just in relation to the Bill that is before us. As the noble Lord says, Select Committees on an ongoing basis allow for the scrutiny of Ofcom’s work.

Turning to Amendment 54, in the name of the noble Lord, Lord Wigley, I recognise the intention behind his amendment, which seeks to address concerns about the programmes that our public service broadcasters are counting towards their regional programme-making quotas. As he and my noble friend Lady Bloomfield said, this has been referred to as “brass plating”, and I am grateful in particular to the Welsh Affairs Committee in the other place for exploring this issue in its recent report, Broadcasting in Wales. As he noted, the trade association TAC has also raised this issue and has done so with my department directly.

My officials have raised the matter with Ofcom again following the publication of the Select Committee’s report. Ofcom has confirmed that, in order to qualify as a regional production, relevant productions must meet two of three criteria. These include the “substantive base” criterion, which is one of the focuses of the noble Lord’s amendment. However, productions are not able to rely on this criterion alone; they must also meet one of the two other criteria relating to production spending. Ofcom has also confirmed that it strengthened and clarified the requirements associated with the “substantive base” criterion when it updated its guidance on regional productions for public service broadcasters in 2019. This guidance came into effect for productions broadcast from 1 January 2021.

Having reflected on this advice, we remain of the view that Ofcom has the necessary powers to identify, examine and, if necessary, close any loopholes related to the regulatory regime for regional programme making. We do not, therefore, see the need to legislate in the area of the noble Lord’s amendment.

Photo of Lord Wigley Lord Wigley Plaid Cymru

I am grateful to the Minister for the consideration he and his officials have given and the discussions that have taken place. Would he, however, accept that those at the sharp end have perhaps the most detailed knowledge of the problems that arise and the means used by some people using brass plating to get around regulations? Would he be prepared to meet some of these people to understand more directly the exact nature of this problem and some of the ideas they have that might be useful in overcoming them?

Photo of Lord Parkinson of Whitley Bay Lord Parkinson of Whitley Bay Parliamentary Under Secretary of State (Department for Culture, Media and Sport)

Perhaps if the noble Lord has some examples, he might like to bring them to the discussion with Ofcom that I mentioned. It would be helpful for the regulator to hear, as well as for us in government as policymakers to understand and see, whether it is on the enforcement and assessment side or the policy-making side that we need to consider this further. I hope he will be able to join us for that.

Photo of Lord Empey Lord Empey UUP

On the amendment of the noble Lord, Lord Wigley, assuming there are a few scraps left for the rest of us, could the Minister tell us what infrastructure role is played when the quotas are being assessed? Some infrastructure needs to be on a massive scale, even a national scale. To what extent is that taken into account when the quotas are being assessed?

Photo of Lord Parkinson of Whitley Bay Lord Parkinson of Whitley Bay Parliamentary Under Secretary of State (Department for Culture, Media and Sport)

To qualify as a regional production, at least two of the following three criteria must be met: a production company must have a substantive business and production base in the UK outside the M25; at least 70% of the production budget, excluding some specific costs, must be spent in the UK outside the M25; or at least 50% of the production talent, by cost, must have their usual place of employment in the UK outside the M25. Two of those three criteria have to be met for the assessment to qualify.

The noble Lord, Lord Bassam, rightly used the opportunity to point to the importance of local television providers. The Government recognise the important role that they play, such as Latest TV in his home city of Brighton, in providing excellent local news and content, often to viewers who are digitally excluded. That is why we introduced secondary legislation earlier this month to give Ofcom powers to renew the licences for the local TV multiplex and local TV services. This legislation was informed by the results of a public consultation and will ensure that local TV services continue to receive the valuable regulatory benefits they have received since 2013. That includes not only access to and prominence on Freeview but prominence on regulated electronic programme guides for simulcast satellite, cable and internet protocol television services. I am grateful to him for the opportunity to raise that in the context of the Bill.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Shadow Spokesperson (Science, Innovation and Technology), Shadow Spokesperson (Culture, Media and Sport)

Might the noble Lord be prepared to meet them at some point? That might have some value.

Photo of Lord Parkinson of Whitley Bay Lord Parkinson of Whitley Bay Parliamentary Under Secretary of State (Department for Culture, Media and Sport)

Yes, either I or, I am sure, my colleague in another place who has direct responsibility for this, not just in relation to the Bill but more broadly, will be happy to speak to them further.

Photo of Baroness Fraser of Craigmaddie Baroness Fraser of Craigmaddie Ceidwadwyr 4:45, 20 Mai 2024

My Lord, I thank everybody from around the Committee who contributed to this debate. As the noble Lord, Lord McNally, said, I think we have given due warning of trouble ahead to the Minister. I am grateful for that. The noble Viscount, Lord Colville, reminded the Minister of the very strong feelings in the sector across the nations and the regions. As the noble Baroness, Lady Bull, said, despite the rosy picture we may be able to paint, there are marked inequalities in the system. To ensure that this moves in the right direction we need intentionality, as the right reverend Prelate mentioned.

I note that the Minister mentioned figures up to 2022 and the creative hubs in the regions, but they are no good if the commissioning relationships are not made from those hubs. I put to my noble friend that that is what the sector has been concerned about since 2022. Frankly, Channel 4 sees quotas as a target, not as a minimum—the figures from PACT show that it is just making it, year on year—so they do work and it is important that we build on what is there and do not jettison it.

I am very grateful to the Minister for his offer of further discussions with us and Ofcom, but I am mindful of the question from the noble Lord, Lord Bassam: where is the parliamentary scrutiny and where are we setting this? We have heard the strength of feeling. Do we really want to leave it to Ofcom yet again? As many Peers said, we need to ensure that the spirit, not just the letter, is setting the right direction. I thank the Minister for his offer of further talks. On that basis, I beg leave to withdraw.

Amendment 16 withdrawn.

Amendment 17 not moved.

Clause 14 agreed.

Clauses 15 to 17 agreed.

Schedule 1 agreed.

Clause 18 agreed.

Clause 19: Amount of financial penalties: qualifying revenue