Amendment proposed [23 January]: No. 603, in

Clause 302, page 261, line 19, at end insert—

'(7A) Before drawing up or revising the code, OFCOM shall have regard to the extent to which matters they are required to secure under this section are, or may be, secured by effective self-regulation; and, in the light of that, to consider to what extent it would be appropriate not to draw up, modify or withdraw a code under this section.

'(7B) In determining for the purposes of this section whether procedures for self-regulation are effective OFCOM may take account not only of self-regulation independent of those to whom it applies, but also of the extent to which the matters to be secured under this section are being, and are likely to be, secured without the further imposition of a code.'

Question again proposed, That the amendment be made.

I remind the Committee that with this we are taking the following:

Clause stand part.

New clause 41—Local content of local sound broadcasting services

'(1) It shall be the duty of OFCOM to secure that appropriate local content is included in the programmes broadcast by local sound broadcasting services.

(2) In carrying out its duty in subsection (1), OFCOM shall—

(a) take all local sound broadcasting services receivable in any area together as a whole; and

(b) take into account the results of research carried out under subsection (7)(a); and

(c) take into account the extent to which the expectations of listeners for local content (under subsection (7)(a)) are being met by other services receivable within the area; and

(d) take into account the degree to which any action taken by OFCOM pursuant to this section may affect competition between local sound broadcasting services and any other class of service.

(3) OFCOM must draw up or agree a code giving guidance as to how the requirements of subsection (1) should be satisfied and, in doing so, shall have particular regard to the desirability referred to in section 3(3)(c) of promoting and facilitating the development and use of effective forms of self-regulation.

(4) The code may, in particular include guidance as to the relevance of different descriptions of local content included in local sound broadcasting services.

(5) From time to time, OFCOM may revise the code or direct that it should be revised.

(6) The code and every revision of the code should be published in such manner as OFCOM considers appropriate.

(7) Before drawing up or revising the code, OFCOM must—

(a) conduct research into listeners' expectations of local sound broadcasting services and other services receivable within any area concerned, including the extent to which they expect local content to be broadcast; and

(b) consult with persons holding licences to provide local sound broadcasting services or persons appearing to represent such persons, or both.

(8) In this section, ''local content'', in relation to a local sound broadcasting service, means content (including news or information) which is of particular interest—

(a) to persons living or working within the area or locality for which the service is provided; or

(b) to persons living or working within a part of that area or locality; or

(c) to particular communities living or working within that area or locality.

(9) References in this section to persons living or working in an area or locality include references to persons undergoing education or training in that area or locality.

(10) A code drawn up as a result of subsection (3) shall not have the effect of varying an existing sound broadcasting licence.'.

Good morning, Mr. Atkinson. We have spent a little time already on amendment No. 302 and I shall do my best not to recap the arguments that have already been made. Nevertheless this is an important part of the Bill as it sets the framework in which local radio will have to operate in future. The Government have made some movement from their original proposals for ownership restrictions on radio stations and that is very welcome. In their place, this clause is there to protect the local character of a station. The Government are correct to focus less on who owns the station than what its programme output should be.

Rather like my hon. Friend the Member for South Cambridgeshire (Mr. Lansley), I was struck by the Minister's remarks when we were debating clause 301, particularly when he said:

''This is meant to be a deregulatory piece of legislation and we do not want to be too prescriptive in dictating how Ofcom . . . should draw up a localness code.''——[Official Report, Standing Committee E, 23 January 2003; c. 727.]

That is a very welcome principle, and perhaps it should also be applied to clause 302.

It has been argued that to provide the protection of localness against any possible risk that might be posed by the liberalisation of ownership and permitting overseas ownership, Ofcom should have a duty to protect and promote localness.

Hon. Members might remember that I referred to one of my local stations in Chelmsford, Dream 107, and the way in which it was committed to participation in its local community. The character of the station was very much based upon its local links and its participation in community activities. That was its selling point. That brings me to my central point:

for successful commercial radio operators, localness is a key component of their programming for commercial market-driven reasons and not because Ofcom has told them that that is what it should be. Anyone running a radio station recognises that.

I think that my hon. Friend the Member for Lichfield (Michael Fabricant) made the interesting observation that Clear Channel—and a lot of the discussion around ownership seems to get back to what Clear Channel might or might not do—had had to recognise in Australia that localness did matter, and having started off by rather abandoning the local identity of their stations, that had proved very unsuccessful, so they had to move back in that direction.

Is not one of the lessons of that that it is very hard to rebuild that localness having lost it and should we not be doing something to prevent it from being lost in the first place?

I am not sure whether that is true. In particular, I point to my own experience in Chelmsford, where Dream 107 has recently been taken over by Tindle Radio. It has rapidly won back audience share because the station had not previously been identified as being locally based. There is a great willingness on the part of listeners to respond to local appeal. The dilemma is how to achieve that—whether it requires the intervention of Ofcom to prescribe local content or whether we should leave it to the market. Ralph Bernard, who addressed the Westminster Media Forum about the Bill last December, said:

''Localness is a key selling point to listeners—it has to be when our competitors are generally regional or national—and advertisers in an area are much more likely to support a radio station that is a vibrant local business with its roots deep in the local community. So we're experts on what makes a local station really hum, which aspects are relevant to our listeners, which events are going to draw a crowd, which local institutions deserve support.''

He continued:

''Against this background of in-depth local expertise, the Bill proposes that a regulator—based principally in London—should judge whether a station is local enough. The clause seeking to deliver another bit of dynamism to consumers takes no fewer than ten sub-paragraphs to meander its way through the subject—and yet this is something that, if we get it wrong, will cause our stations to lose audience and advertisers faster than any regulatory process could react to.''

I am grateful to the hon. Gentleman. I presume that he is now about to make the point that the market alone is most likely to provide localness. However, Red Dragon FM in Wales and its sister station in London, Capital FM are virtually identical in terms of their play list. The only difference between them relates to a few populist events in the summer. So is it not essential to make sure that we jig the market a little bit? It will not do it all on its own.

Obviously, I am not familiar with Red Dragon FM, although clearly if the situation is as the hon. Gentleman describes, listeners will look elsewhere for a local service.

I am familiar with Red Dragon FM as I was involved in setting it up—[Interruption.] That was before I became a Member of Parliament. One of the reasons why Capital Radio took it over was that its audience figures were falling. The play list that the hon. Member for Rhondda (Mr. Bryant) referred to is more popular with its audience than it was previously.

Because it is not local.

Order. This is an intervention, not a debate on Red Dragon radio station.

My hon. Friend's intervention is most helpful. Perhaps we should attempt to find a radio station in Britain that he did not play a part in setting up. However, I am in some agreement with the hon. Member for Rhondda on one point. Nobody is saying that there should not be a requirement for some degree of local content and that is a trade-off for the relaxation in ownership rules, which most people would accept. It brings me to the key question: what is local? Most people who listen to a local radio station would say that local means that there should be regular local news items and local traffic reports saying what is happening in Acacia avenue. A local station should participate in local community events, and provide a platform for local musicians and entertainment groups. All that relates to content—about what is broadcast. I am not sure whether, in order to ensure that a station is local, it is necessary to prescribe the location of its studios, who it should employ and measures which are not to do with the content of what is broadcast, but its production.

I would be absolutely delighted if Red Dragon, FM which I listen to every day when I am in Wales, provided a platform for local bands. I admit that Kylie Minogue has family from Maesteg, but I do not think that that makes her a local musician that Red Dragon FM is positively promoting by playing her and Robbie Williams 25 times a day. The play list is very prescriptive. That applies to many commercial stations, as they know that it is what succeeds in the market.

I do not think that there is a great distance between the hon. Gentleman and myself. I agree with him that content is important and I do not dispute the duty on Ofcom to promote local content, although I suspect that if Red Dragon FM played nothing except local bands in garages in the Rhondda and none of Kylie Minogue it might lose listeners rather rapidly, although I am sure that there are extremely good bands in the garages around the Rhondda.

When Swansea Sound, the radio station based in Gorseinon, got its licence, its licence was concerned with the provision of Welsh language programming as well as ordinary programming. It built a recording studio as part of its radio station and now finds it under-utilised. Although people like hearing the news in Welsh, they are not so concerned about listening to Welsh music.

I am sure that the listeners and owners of Red Dragon FM will be fascinated that we have spent so much time arguing about whether or not

it is local. Let me move on to a more general point. My concern is not so much about content, but about the additional prescriptive nature of the clause in relation to the other factors that the Government appear to consider necessary to prescribe in order for a station to be local. Those are essentially contained in clause 302(4), which says:

''Those factors are—

(a) the employment or other use for the purposes of the service of persons living in, or otherwise having connections with, the area or locality;

(b) the provision to such persons, in connection with the provision of the service, of opportunities for training and development'

(c) the use of premises within the area''

It seems to me that who the station employs, how much they train them and how they use their premises are not central to whether or not the station could be defined as local. For that reason a number of the commercial radio companies regard clause 302 as far too prescriptive and that this provision is against the spirit of light-touch regulation. Indeed, the Commercial Radio Companies Association said:

''This is an astonishing leap from a proposed duty to protect output to a recipe for interfering in microregulation.''

It continues:

''Perhaps 302's greatest weakness is its apparent abandonment of listeners. Nowhere in these 10 sub-clauses is there any requirement for them actually to go out and canvass the views of real listeners. It is an entirely subjective clause which lets OFCOM decide whether or not it thinks that a station is genuinely serving its local listeners.''

I thank the hon. Gentleman and I have enjoyed listening to him. If he puts down his brief from Mr. Ralph Bernard and his colleagues, is he saying that nobody from a locality should be employed by a radio station, nobody should be trained and that the premises should be somewhere other than the locality?

Of course I am not saying that. I am saying that it should not be necessary to write into the Bill that Ofcom should be able to judge whether or not a radio station has premises that are local enough to its area in order for it to meet the requirements of the Bill. The broadcasters themselves should decide those matters and as long as the broadcaster is providing a content output that the listener believes to be local, that is what should determine whether or not they meet the local requirement.

The logic with which the hon. Gentleman is enticing us is that he would be quite happy if Capital FM broadcast Red Dragon from central London, with nobody based in Cardiff or indeed South Wales. As far as he is concerned, it would still be a local broadcaster.

My suspicion is that Capital FM would find it very difficult to meet the local content requirement if it were broadcasting from London and did not employ anybody from the Rhondda. However, if that were the case and if the listeners turned to the hon. Gentleman and said ''We think that Red Dragon is a brilliant local station. Its programming is becoming essential to our lives and to understanding the workings of our local community'', the fact that it

happened to be broadcast out of London rather than the Rhondda valley would not be very important. It might be quite difficult to achieve, but the important factor is what people are listening to. It is the key.

I am sorry to harry the hon. Gentleman, but it seems to me that most commercial radio stations have learned in the past 10 years that it is valuable to them physically to place themselves somewhere where there a lot of footfall as local radio is about ownership. However that does not necessarily come from the market. Sometimes commercial broadcasters have to be told.

The hon. Gentleman is right that broadcasters have learned that that is the case.

Totally wrong!

My hon. Friend is disagreeing with me now.

No. The hon. Member for Rhondda (Mr. Bryant) is totally wrong. My hon. Friend is right.

That is all right then.

The central point that I am trying to make is that the provision in the Bill should apply to the content of the programmes. I see no reason why the factors listed in subsection (4) should be necessary to be prescribed by statute in order to meet the local content requirement. If they fail to meet the local content requirement they will be in breach of the conditions laid down by Ofcom.

Even if, despite my hon. Friend's articulate rendition of all the arguments against the clause, the Minister still wants to keep the clause in the Bill, as he implied in his own intervention, does my hon. Friend not think that the Committee should consider the amendment tabled by my hon. Friend the Member for South Cambridgeshire on the basis that it provides an opportunity for a self-regulatory regime with the powers in clause 302 merely as a long stop should the kind of problems that the hon. Member for Rhondda is suggesting might occur. My hon. Friend and I do not think that they will, but if they did that would be a long-stop power. Surely this should be a self-regulatory matter.

My hon. Friend is absolutely right. My preferred option would be that the Government take away clause 302, redraft it in a way that is far less prescriptive and less likely to micromanage the workings of individual radio stations. If the Minister is unwilling to do that, the amendment tabled by my hon. Friend the Member for South Cambridgeshire will at least represent an improvement on the way in which Ofcom will operate in future, so I would certainly strongly support it.

Does it not demonstrate the ignorance of the hon. Member for Rhondda about the way in which broadcasting works, and indeed that of Labour Members, that Swansea Sound is based in Gorseinon near Gowerton, and not in Swansea and Southern Sound is based in Portslade and not in Brighton. The reason for that is that what is important

is what comes out of a radio loudspeaker and not footfalls as the hon. Member for Rhondda said.

I agree entirely with my hon. Friend, whose knowledge of the location of Welsh radio stations leaves me in amazement.

Just to correct the hon. Gentleman, it is self-evident that the ''rocking tower'' which was Capital FM was a significant part of how that station sold itself. It would not have chosen to move to Leicester square unless it thought that its location was important.

I have probably tried your patience for long enough, Mr. Atkinson. It is now for the Minister to respond.

One of the aspects of local radio that we value most is its localness—its ability to be part of the communities it serves, as my hon. Friend the Member for Rhondda pointed out. To support his argument, let me say that it is sometimes a lot quicker to get from Leicester square to the middle of Cardiff than to get from Treherbert in his constituency to the middle of Cardiff, because the economy is booming, the roads are packed and the railways are full. It is precisely because we value the quality of localness that we want to have a long-stop power to preserve it, and that is what the clause provides. It is not about imposing new obligations on local radio stations, nor about getting involved in the detailed management of stations. It is about ensuring that local radio continues to play a strong and valuable local role. The clause is essentially forward looking. It represents no criticism of what local radio is currently doing; it is about encouraging radio operators to preserve and develop precisely the aspects that make local radio good.

Let me try to put the change in context. We have taken enormous steps in the Bill to liberalise the radio market. From the current 70 owners of local radio, the new rules make it possible for us, in time, to have only two dominant owners of local radio in the United Kingdom—both of which, incidentally, could be foreign owned. We believe that those changes will allow the industry to grow. They will be in the interests of the listener, but only if localness is not the victim. While the existing companies argue persuasively that it is in their interests to be local, that could change in a dramatically changed market. The duty in the clause is the safeguard of localness and the quid pro quo for greater liberalisation in the radio market.

The clause places a duty on Ofcom. It is designed, first and foremost, to ensure that Ofcom takes seriously its duties towards localness. It requires Ofcom to draw up a code giving guidance to ensure the local content and character of local radio broadcasting. Ofcom will have to consult on that with both the industry and the listeners. The guidance will, in essence, codify and define the requirements already in existing licences: for example, licences may refer to material that is ''locally produced and presented'', and the code could define in greater detail what that means. The code may also influence

the way in which Ofcom considers matters such as requests for derogations from licence obligations, or its approach to issues such as an acceptable level of networking.

The intention underlying new clause 41 appears to be to prevent Ofcom, when drawing up a code on localness, from considering what might be regarded as ''inputs'' and make it concentrate instead on the extent to which a service takes into account ''the expectations of listeners''—a point made by the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale). Even if we wanted to, we could not accept the new clause at this stage because it duplicates much of the effect of clause 302 without repealing it, thus causing great uncertainty about what Ofcom's duties will be.

Clause 302 allows the code to take into account matters such as local advertising, local employment, opportunities for training and development, and the use of premises in the area. It has been argued that the code goes too wide and that Ofcom has no business involving itself in matters such as premises and the amount of local advertising—a subject that we have just debated briefly—but I strongly believe that such arguments miss the point. The boundaries of the area that Ofcom will be able to examine have deliberately been drawn wide so as to catch all the matters that might be considered to influence the localness of a service. Ofcom does not have to include such matters in the code—that is for Ofcom to decide, but the decision lies largely in the hands of the industry. If it continues to provide good local services, the code is unlikely to touch on those matters; were the industry to drift away from localness, the code might need to be revised. That is the point. The code must be able to include all matters that might be relevant.

I should add that I do not accept the basic premise of the amendment, that inputs do not matter. It has long been recognised in broadcast regulation that inputs have a clear and definite effect on outputs. A moment ago, my hon. Friend the Member for Rhondda mentioned the importance of location; I agree that that is important. I would not want the example quoted by the hon. Member for Lichfield in a previous sitting, of an American company that tried to centralise production in Australia—the attempt failed miserably—to come to pass here

My hon. Friend the Member for Lichfield said America. I said Australia.

Perhaps I should have said, ''The example quoted by the Opposition, between them.''

I hope that the Minister accepts that I intend no discourtesy to him or to the Committee, but I have to head out to lead a debate of my calling in Westminster Hall on the film industry. I hope that when I read the record, I will find that he recognised the value of self-regulation in the context of the localness code and bent towards amendment No. 603. Unhappily, rather than hear it, I shall have to wait to read it. I apologise to you, Mr. Atkinson, and to the Committee.

I wish the hon. Gentleman well in his debate on the film industry. I am sorry that I shall be

unable to answer it—I understand that my right hon. Friend the Minister for Sport is to do so. I think he went to the pictures once, in the 1960s.

It is reasonable that Ofcom should be able to take a view on these matters. We expect it to take an interest in, for example, the degree of networking that is consistent with maintaining localness. It must be remembered that local radio broadcasters get valuable spectrum for free. In return, it is right that the regulator, acting on behalf of the Government, should be able to take a view on how the spectrum is used.

I am sorry that the hon. Member for South Cambridgeshire is not here to hear my response to amendment No. 603, which would require Ofcom to consider the extent to which the matters it is required to secure under the clause could be, or are already being, secured by self-regulation, and therefore whether it is necessary to draw up a code. I have some sympathy with the general thrust of the amendment, but I do not think that it is necessary. I hope that the industry will welcome the general thrust of the duty and take an active role in developing the code, which offers an excellent opportunity for the industry and the regulator to work together to develop a co-regulatory approach.

I welcome the comments made by the ubiquitous Mr. Ralph Bernard, the head of GWR, the largest radio group in the United Kingdom. He said:

''OFCOM and the industry work together to develop a sensible code, all agree on how the output of the codes will be judged a success or not, and then the industry gets on with operating the system without the need for much further input from the regulator. Trust us to regulate to pre-agreed rules and I am sure we will get a positive result with benefits for consumers, advertisers and the public as a whole''.

I could not have put it better myself. While I cannot pre-empt Ofcom's precise approach to that duty, I am sure that the Committee agrees that Mr. Bernard's approach is admirably positive, and equally sure that Ofcom will be encouraged by his words. The Radio Authority has stated:

''The new duty to be imposed on OFCOM, to safeguard the local character and content of local radio services, places the Radio Authority's existing approach into the context of modern regulation. We welcome the proposal which will in effect codify existing rules and requirements. We hope and expect that OFCOM will look to the station operators to give effect to these regulations largely on a co-regulatory basis, which will include a consultative approach to developing the required localness Code.''

I should add that clause 6 places Ofcom under a duty to review regulatory burdens. Subsection (2) states that Ofcom has to have regard to the extent to which its duties can be secured or furthered by effective self-regulation. I hope that the hon. Member for South Cambridgeshire will be reassured by those comments and agree that the amendment is unnecessary.

We are lucky to have such a good and successful local radio industry in the United Kingdom, and we want to keep it that way. Local radio stations have nothing to fear from a localness code. Localness is what they are good at, and the code will ensure that they continue to be good at it in a changing world.

I have to say that I am somewhat disappointed by the Minister's response. He seemed to recognise some of our arguments, stressing that it will be for Ofcom to decide what to include in the code as to what should be local. However, the fact that the Bill specifies in black and white various provisions to do with premises and employment seems to suggest that Ofcom will take it that those factors are important must be included.

The Minister quoted, with approbation, Ralph Bernard, but Mr. Bernard said, in the paragraph before the one that Minister read out, that the clause

''is akin to the regulator setting up a division to make sure that we remember to switch the microphone on when we want to broadcast an announcement.''

The clause seems far too prescriptive. I am disappointed that while the Minister accepted the thrust of the amendment, which sought co-regulation and the self-regulatory principle, he was unwilling to accept it. Although my hon. Friend the Member for South Cambridgeshire has had to leave us, the Opposition are keen to press the amendment.

Question put, That the amendment be made:—

The Committee divided: Ayes 4, Noes 14.

Question accordingly negatived.

Clause 302 ordered to stand part of the Bill.

Before we move on to clause 303, I was remiss in not telling Members not present at the Programming Sub-Committee that the effect of its decision is that instead of the Questions on clauses being put at 11.25 am, whether or not they have been debated, those Questions will now be put at 5 pm.

Clause 303 ordered to stand part of the Bill.