Lord Parkinson of Whitley Bay:

Moved by Lord Parkinson of Whitley Bay

52: Schedule 3, page 130, line 16, at end insert—“1A In section 393 (general restrictions on disclosure of information), in subsection (6), in paragraph (a), after “137A” insert “, 362AG(7), 362AW”.”Member's explanatory statementThis amendment adds a consequential amendment relating to Clause 28.

Amendment 52 agreed.

Schedule 3, as amended, agreed.

Clauses 29 and 30 agreed.

Clause 31: Involvement of C4C in programme-making

Debate on whether Clause 31 should stand part of the Bill.

My Lords, I declare an interest that I was a TV journalist and executive and worked for the BBC and ITV and made programmes for Channel 4.

We on these Benches are pleased that this Government’s attempt to privatise Channel 4 failed. However, one of the conditions of that attempt, removing its publisher-broadcasting status and allowing it to make its own programmes, has made it into this Bill as Clause 31, which we oppose.

As has been pointed out often to the Minister from these Benches, Channel 4 was created in 1982 by a Government led by Margaret Thatcher. Channel 4 certainly succeeded in fulfilling her business and economic philosophy, in that our world-beating independent production sector owes a huge debt to its creation. As for whether Mrs Thatcher was quite so happy with its creative content, I suspect not.

Channel 4 was conceived as a publisher-broadcaster, not like the BBC/ITV duopoly which existed at that time and made its own programmes in its own studios, but commissioning entirely from what was then a small and innovative band of producers. As a consequence, the television industry in this country diversified as it provided new and exciting opportunities to creative entrepreneurs throughout the UK. In the TV world, it empowered and nurtured small independent producers and start-ups—the companies we were talking about in our first debate today. It played a pivotal role in driving the growth, competitiveness and creative diversity of UK indies. These companies were one of the UK creative industries’ greatest success stories.

Channel 4 invests a greater proportion of its revenue in independent UK commissions than any other PSB or commercial broadcaster, and its publisher-broadcaster status has also meant that Channel 4’s commercial revenues are reinvested in UK content production. As well as being the incubator of our thriving independent production sector, Channel 4 is also the broadcaster of “Channel 4 News”. One hour of in-depth news and current affairs at the heart of peak time on a commercial channel is unheard of anywhere else.

And then, of course, there is its pioneering coverage of the Paralympics. I believe that Channel 4’s championing of this event has led to a worldwide change in the attitude towards disability—a view confirmed by Dame Sarah Storey on Radio 4’s “Desert Island Discs” this weekend about her experience at the Beijing Olympics. She revisited Beijing a year after the Olympics and went to a disabled sports club where she was told that the transformation in the way the disabled were treated in Chinese society was immeasurable.

Due to its expansion of digital channels, Channel 4’s viewing demographic is young and diverse. We believe the cost of establishing a new in-house production outfit would disrupt its business plan—these things that it has achieved—and take money away from commissioning from others.

I do not think we should change Channel 4. It was conceived for a reason: to grow the UK independent TV sector and to represent the voice of minorities. It has done that spectacularly. Channel 4 is a vital part of our creative economy, providing invaluable support to smaller independent production companies throughout the nations and regions, although, as mentioned earlier, this needs to be underpinned. It is a platform for exciting new programming, quality news and current affairs, and pioneering coverage of the Paralympics. Why change its remit?

My Lords, I too oppose Clause 31. Channel 4—what a brilliant initiative, how extraordinary, and what a success. It is a cauldron of innovative and original talent, fundamental to our brilliant, creative country, providing a stream of talent for use by all the others, streaming, literally, into our country. It was created to foster competition and innovation in the broadcast sector, and it did. The approach allowed independent production companies to compete for contracts to create programmes rather than relying on in-house production by the channel itself—an approach the Government now seem to want it to adopt. In that independence, it still had to maintain high editorial standards, ensuring accuracy and impartiality and fairness. It had to reflect the diversity of the United Kingdom and to fulfil certain public service obligations to educate, inform and entertain with social responsibility. That model, rather than an in-house production facility and staff, enabled Channel 4 to operate efficiently.

Of course there are challenges. Channel 4 itself had become a bit reliant on production companies that have now grown big, but it is a cauldron of creative opportunity. Right now it is not having the easiest of times, but if it was producing in-house, cuts would be swingeing and challenging. As a commissioning body, it can better cut its cloth to meet the vagaries and ups and downs of its and our economy.

If the Government’s desired change were to take place, it would reduce the opportunities for independent producers, impacting the diversity and range of voices represented. It would risk creative stagnation. It would have financial implications and require investment in additional production facilities, staff and resources at a time when it is cash poor. And any shift in its programming strategy would impact its ability to attract and retain audiences. There would also be an impact on the independent production sector if this significant source of commissioning independent production companies were to be reduced, particularly the smaller ones and the ones producing risky and innovative content.

My Lords, the clause stand part debate tabled by the noble Baroness, Lady Bonham-Carter, for whom I have immense respect, is, I am sure, well intentioned. As she said, it relates to the primary purpose of Channel 4, which is to be a commissioning public service broadcaster.

The Government’s desire to enable Channel 4 to produce programmes in-house as well as through its tried and tested commissioning route is undoubtedly novel and a new departure for the channel, but it is not without risk. As I recall, and as the noble Baroness, Lady Bonham-Carter, reminded us, it was announced as part of the Government’s decision not to privatise the channel. We all cheered that, but we were left uncertain as to the real intent behind the announcement.

I am sure that it is in part designed to broaden the economic opportunities for Channel 4 and to assist it in finding new revenue streams. I recall that, when the Minister was defending Channel 4’s privatisation, he argued that the channel needed to find a broader base for its revenue so that its future could be secured. On the one hand, it is welcome that this opportunity has been afforded it through the ability to make programmes in-house, but, on the other, I wonder if it can really achieve that objective without damaging the whole ecosystem of independent production.

I am going to be kind to the Government and presume that they must have done some financial modelling before determining this policy position. I am hoping that the Minister can share some of the financial thinking with your Lordships’ House, because this is one of those areas where some tried and tested thought needs to be applied to a new departure for this public service broadcaster. How much of that modelling can the Government share with us? How much potential do they see for Channel 4 to become an in-house producer of content, and what impact do they think that might have on the rest of the public service broadcasters?

Another point worth exploring today is just how much consultation was undertaken with the sector before the announcement. Did the Government talk to the BBC, ITV and Channel 5? I do not recall soundings being taken, and I rather suspect that Channel 4 was somewhat surprised at the time about this new offer.

I have another concern. If this change to the ecosystem of an important and well-reputed public service broadcaster is to succeed, how do the Government see it being rolled out? What sort of timescales will be involved? What percentage of production will be in-house and what percentage left to independent producers?

Channel 4 has been a wonderful innovation. I was around when it was rolled out; I was sceptical at the time, I confess, but I cheered as it grew, became more challenging and produced content that was genuinely thought-provoking, as I think we all did. We on our side do not wish to fetter opportunity. We appreciate that this is a probing deletion of a clause, and I should make it clear that we would not support it, but we share some of what I described earlier as the well-meaning intentions behind it. I look forward to what the Minister has to say and to getting some more detail and flesh on the bones of what was a strange announcement in context that has given rise to some uncertainty in the sector.

My Lords, Clause 31 forms an essential component of our plans to support Channel 4’s long-term sustainability so that the channel remains an important and distinctive part of our broadcasting system for many years to come. It is always a pleasure to hear praise from the Benches opposite for the legacies of the Thatcher Governments.

The publisher-broadcaster restriction, as set out in Section 295 of the Communications Act, is unique to Channel 4 and prevents it from being involved in the making of programmes for the Channel 4 service, except to such an extent as Ofcom may allow. As a result, Channel 4 is significantly more dependent on advertising revenue than other commercial broadcasters—a point that we have touched on, as the noble Lord, Lord Bassam, rightly reminds us, in the debates that we have had on alternative means for securing money for the channel’s long-term sustainability. In particular, two-thirds of Channel 4’s revenue comes from linear television advertising, the market for which is both highly cyclical and in long-term structural decline because of the declining number of people watching linear television.

In response to these challenges, last year the Government announced a package of reforms that would help to support Channel 4’s long-term sustainability while retaining it in public ownership. The removal of the publisher-broadcaster restriction is a key element of that package that will open up opportunities for Channel 4 to further diversify its revenues away from advertising by making its own programmes, should it choose to do so. The Government undertook an assessment of the impact of that and published it on GOV.UK. We will happily direct the noble Lord and others to that so that they can see the assessment that we set out when bringing the package of mitigations forward.

I understand the concerns set out by the two noble Baronesses about how the change might affect Channel 4’s support for the independent production sector across the UK, which were also raised when this issue was discussed in the other place, and we touched on it in our first group of amendments today. That is why, when we announced our intention to remove the restriction, we were clear that we would work closely with the production sector to ensure that Channel 4’s important role of driving investment into the sector would be safeguarded. The outcome of that work was a substantial package of mitigations that we announced in November, some of which, such as the introduction of new Channel 4 commissioning duties and an Ofcom-led review, are included in the Bill. Those mitigations, which also include increasing the level of Channel 4’s independent production quota, will be implemented in the event that Channel 4 incorporates a production company.

Channel 4 itself has welcomed the removal of the restriction and has said that in-house production could offer good long-term support for financial sustainability, while reaffirming its commitment to continue to invest in and champion independent producers, as it has done for the last 40 years. Ultimately, a stronger and more resilient Channel 4 will be best placed to continue playing its integral role in our broadcasting ecosystem for many years to come. By contrast, failing to remove Channel 4’s publisher-broadcaster restriction would mean passing up an opportunity to help it to deliver on that important ambition. That is why Clause 31 is an important clause and should stand part of the Bill.

What sort of costs does the Minister anticipate the channel will face in setting up its own production company? Has any estimate been made of that? What discussions have the Government had with the company to ensure that it can secure that in the most cost-efficient way?

I have no estimate of my own, but I will happily find out and provide the noble Lord with any estimates that have been made.

Clause 31 agreed.

Clauses 32 to 36 agreed.

Amendment 53 had been withdrawn from the Marshalled List.

Amendments 54 and 54A not moved.

Schedule 4: Chapter 2 of Part 3: minor and consequential amendments