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Volume 516: debated on Wednesday 20 October 2010

When I requested this debate on the future funding of S4C, I had not anticipated that events would move so quickly. It is fair to say that for many in Wales, the future funding arrangements for S4C have been a very visible and easily understood example of the hard choices that we as a country now face in dealing with the deficit and the debt problems. This coalition must get to grips with those issues and the mess that the previous Labour Government left us with.

No one can deny that S4C has an important place in the cultural landscape of Wales. It is important to be aware that the way in which the channel came into being is a key reason why its future funding arrangements are extremely important for many people in Wales. After all, it is the only Welsh language broadcaster in the world. Let me give a bit of historical context. The channel was launched in 1982 following a long and very public campaign, which was supported by all strands of Welsh society. It is worth noting that the decision to establish S4C was taken by a Conservative Government back in 1980.

Despite all the doubts that were expressed about the viability of a Welsh television channel, it is important to note that initially S4C proved to be a great success. The success of the channel in the early years was very much a reflection of the fact that there was a mix of Welsh programmes during the peak hours and Channel 4 programming that also attracted non-Welsh speakers. There is no doubt that the initial few years of S4C were very successful. There was a period in the 1980s and 1990s in which audience figures were often in excess of 150,000 for peak-time viewing.

On a point of order, Mrs Brooke. May we adjourn the debate for a moment because there is a Division in the main Chamber?

Sitting suspended for a Division in the House.

On resuming—

As I was saying, Mrs Brooke, S4C’s initial period was successful, but it is important to note that it was more than just a television channel. The establishment of S4C unleashed creativity across Wales that led to the creation of a Welsh independent television sector, which prospered not only in Cardiff but in west Wales and Caernarfon in north Wales. That was undoubtedly a successful period for the channel, and that sustained period of success resulted in changes to S4C’s funding arrangements in 1991 that established a link with the retail prices index. That link has been questioned recently, and has been in the news.

Is my hon. Friend aware that the document that S4C presented to the Department for Culture, Media and Sport on the request for budget savings said that the link with RPI went back to 1982? Is he not surprised that the document contained such a factual inaccuracy? Is it not indicative of the quality of the document submitted to the Department?

That might be surprising. The point that I want to make is that I believe that the RPI link has been a double-edged sword for the channel in many ways. In my view, the RPI link was crucial to giving S4C operational independence, because it created a feeling that the broadcaster would be independent of Government intervention. Anybody who believes that a public broadcaster should be free to broadcast whatever it desires would obviously welcome that link and the freedom that it gave S4C to pursue its own requirements. In many ways, therefore, the RPI link was a positive thing.

However, S4C had to pay a price for that link. The problem with a funding arrangement allowing for year-on-year increases was that it created a growing feeling that the channel and its management were becoming divorced from the people whom they served. When S4C’s viewing figures fell, the channel felt that there was no need for S4C to respond, because regardless of whether it was successful and getting the required audience figures—although in many cases it was—it was almost immune to the realities of falling audience share, because year on year its budget would increase.

Although I believe that the RPI link gave S4C a degree of independence from Government, which is crucial, it also created a comfort zone for the channel, so I do not mourn the loss of the RPI link in determining how the channel is funded. However, little did I know when I was putting together my notes that the RPI link would be the least of the issues that we would discuss today.

I am enjoying the hon. Gentleman’s history lesson about S4C’s funding, but as he said, we have been overtaken by events today. There are more pressing matters of funding that need to be addressed, and that is what my intervention is about. Is it not true that regarding S4C, today’s announcement was a shambles in terms of detail? A rather more interesting and important problem with the documentation is that two versions of the comprehensive spending review are currently available, one of which includes figures about S4C and how much funding it will receive from DCMS and the licence fee. There is a suggestion that £70 million will come from the licence fee—

Well, then, it is a question for the hon. Member for Aberconwy (Guto Bebb). Would he like to answer a question about the figures?

I believe, obviously, that one reason for having this debate is that the Minister is here and can respond in due course. The fact that there was a leak last night was problematic, but I am sure that the Minister will respond in due course.

I congratulate the hon. Gentleman on securing this debate on this important day, although I know that he did not plan it to coincide with the announcement. He said that independence was important and allowed diversity in Welsh media broadcasting. Does he therefore agree that giving ownership to the BBC will diminish S4C’s independence in future? Before the general election, the then shadow Secretary of State, now the Secretary of State, said that plurality was the most important thing. Will the developments harm or increase plurality?

I am coming to the question whether the decision to link S4C to the BBC will affect its independence.

Sitting suspended for a Division in the House.

On resuming—

May I point out that interventions should be short? Mr Guto Bebb, you must watch how much time you are leaving for the Minister to respond when accepting interventions.

On a point of order, Mrs Brooke. This debate is hugely important for Wales, and for once Welsh MPs have the opportunity to say something of significance at a time when doing so will have some effect. Is there any way it is within your powers to award us double injury time, given that we have had so much disruption?

Further to that point of order, Mrs Brooke. This is a very important debate because one of Mrs Thatcher’s great reforms was to try to ensure that the Welsh language was not a party political matter and that it was put in a place where we could all agree consensually on the subject. Now that the Government have decided to play fast and loose with the Welsh language in this way, is it not appropriate that we should have a longer period to debate the subject? That would allow all hon. Members who have come along to show an interest in the issue the opportunity to contribute their thoughts.

Order. I am sure that hon. Members who have been in the House for some time are aware of the limitations of the Chair. Of course, any hon. Member here could have applied for an hour and a half Adjournment debate and they could still do so in the future—a course of action I would recommend. Obviously, all the time lost from the Divisions will be added to the end of the debate. I call Mr Guto Bebb.

I shall just finish responding to the intervention by the hon. Member for Ynys Môn (Albert Owen). Yes, the plurality and the independence of S4C are important; I will ask a question on that subject at the end of my speech.

The fact that the RPI link has gone means that we are in a much more serious situation. I would like to point out that the issue of the audience figures became very important during the review of funding for S4C. The RPI issue contributed to a lack of regard for the audience figures, but we still need to clarify the fact that some of the S4C audience figures that have been bandied around are not particularly accurate. I have my own concerns about the fact that the Broadcasters’ Audience Research Board viewing panel in Wales is possibly not sufficient to provide a proper audience figure.

I congratulate the hon. Gentleman on initiating this important and timely debate. On the point about viewing figures, would he acknowledge that one of the great successes of S4C that should be recognised—this is not borne out by the viewing figures—is the work that is being done in relation to young people’s and children’s television? That work is very important to the Welsh-speaking communities that many of us represent, and it is not acknowledged in the figures.

The hon. Gentleman jumps ahead of me. That is exactly the point I was going to make. In addition to the question marks we have over the BARB panel in Wales, my family are a very good example of why there are problems with the viewing figures. It is true to say that S4C has made an important decision to invest in the content of children’s television, and I think all hon. Members in the Chamber would welcome that. In my family, seven people live at home; five watch a lot of S4C and two unfortunately do not watch a lot of S4C. The two people who do not watch a lot of S4C are counted in the figures, whereas the five people who do are not included because they are children. My twin boys, who are six years old, would certainly be very annoyed that their viewing habits, which involve Cyw, are not included in the figures. So there are question marks over the S4C audience figures—specifically, the serial viewing figures. In addition, we should not deny that there are serious question marks over the audience figures at peak times.

Would my hon. Friend not acknowledge that if the figures are as large as S4C sometimes makes out, it should be raising more than £3 million from advertising, which is roughly just 3% of its total budget—as of today, anyway?

That is an interesting contribution. The viewing figures are a cause for concern in many ways. There are good reasons to defend some of them, but we have a situation in which occasionally as few as 19% of programmes manage a figure of more than 10,000 during peak time viewing. That is a real concern. As a result, there has been a serious discussion about whether S4C can justify the funding that it receives. I believe passionately that S4C can justify that funding.

The hon. Gentleman is being very generous in accepting interventions. Whatever we might think about the viewing figures or the funding formulae that have been used in the past, today’s announcement has been made without any consultation whatsoever with S4C. He surely must agree that that is reprehensible and possibly leaves the matter open for a judicial review.

The hon. Gentleman should possibly allow the Minister to explain what sort of discussions have taken place. If there have been no discussions, I am sure that will be made clear in no time at all.

My view is obviously that any decision of this nature should involve a degree of consultation. We need to be aware of the fact that there is a question mark over the matter, when the viewing figures indicate that the contribution of the channel to the Welsh language is not as important as it should be. So, we are where we are and we need to think carefully about the way forward.

Although the hon. Gentleman’s points are fascinating, we should go back to why S4C was set up. I was very much involved in the matter at the time because I was chairman of the Broadcasting Council for Wales. S4C was set up by Mrs Thatcher as a volte-face. She was reading Irish history at the time, and there was a very strong reason why she decided that S4C should be put in place: it was to avoid linguistic divisions in Wales. S4C was established to provide a full service for both communities in Wales—those who speak English predominantly and those who speak Welsh. We cannot judge the value of S4C purely on the basis of the number of viewers it has; there is a much deeper reason why it exists.

I acknowledge that there were deeper reasons for establishing S4C, but we must also recognise that the channel needs to serve the people of Wales, whether they are Welsh speakers, Welsh learners or non-Welsh speakers. There are question marks over whether the viewing figures are disappointing at times and whether the channel is doing what it should be doing. The feeling that the channel has moved away from the people it is supposed to serve is demonstrated, I believe, in the campaign that we have seen during the past few weeks in response to the potential threat to the channel. Even the Welsh Language Society, which no one could doubt is committed to the channel, is arguing for fair funding and a new S4C, because it believes that the current channel is perhaps not performing as it should.

When we talk about S4C, we often mention the wider cultural and economic implications, but it is interesting to note that the channel’s economic contribution has changed considerably over the past 20 years. The way that it once created new industries in parts of west and north-west Wales has certainly changed dramatically, and the loss of the Barcud studios in Caernarfon is an indication of that change and shows that the economic argument needs to be looked at again.

It is crucial that we move on and consider the future challenges that we face. Last night it was announced that the BBC would be taking over the funding of the channel, so there is now a need for clarity on the nature of the proposed settlement. We should acknowledge that the Department for Culture, Media and Sport has accepted the argument for having S4C, which I appreciate. It is likely that the channel’s funding will be transferred to the BBC from 2014, so I would like to ask the Minister a few questions on what we have heard in the media and from the Chancellor this afternoon.

Will the funding for S4C be safeguarded within the BBC, and by what mechanism? It is all very well saying that the money will be forthcoming from the BBC licence payer, but by what mechanism will the S4C budget be protected within that licence fee? We are all aware that during the past four months the BBC has announced a 17% cut in its programming for S4C, with very little consultation, so I would like some clarification on that point. With regard to my earlier point on plurality and editorial independence, if there is a change in the funding mechanism for the channel, it is imperative that there is clarity about editorial and programming independence. I am sure that the Department can respond to that point.

Despite what I have said about S4C’s economic contribution, the channel does play a key role in supporting the cultural industries in Wales, especially independent television producers. If a pot of money from the BBC licence fee is to be made available for S4C, would the Minister clarify whether it will be ring-fenced for the independent producers, rather than swallowed by the BBC? Finally, we need assurances on the future funding for the channel, because if the decision for the BBC to take responsibility for that funding is to go ahead, I would like to know where we will stand not only in 2014, but in 2016 and beyond.

Before the hon. Gentleman concludes his remarks, would he tell Members whether he agrees with the scale of the cuts—25%—that have been reported? What is his opinion on that matter?

I have made it fairly clear to many constituents that I believe that a cut in S4C’s funding can be justified, as long as it is in keeping with the general cuts that the Department is facing. Having spoken with numerous television companies in Wales, I believe that the feeling is that, with greater efficiency, a cut of around 20% is manageable, but that anything more would be problematic. I hope that the cut will be about 20%, and no more than 25%.

I could ask the Minister many more questions, but I think that he has probably realised from the debate that there is a degree of concern about the transparency of the announcements, which I believe is no fault of the Department—the BBC got hold of the story. However, we need some clarity on the announcement. I have asked several questions, but I should be delighted if he would expand on those and comment on the critical issues that have been raised by other Members. Ultimately, we need to remember that we are all here because we are convinced of the need for a television channel broadcasting in Welsh and feel that, whatever settlement is made as a result of today’s announcements, it should be a long-term settlement, not a short-term response to a current fiscal crisis.

It is an honour and a privilege to serve under your chairmanship, Mrs Brooke. I congratulate my hon. Friend the Member for Aberconwy (Guto Bebb) on securing this timely debate, which has allowed Members to consider the future not only of S4C, but of Welsh language programming and its funding levels. I want to put on the record the Government’s support for Welsh language programming and S4C’s continuing role in it.

On that point, I point out to the Minister that S4C’s headquarters are based in my constituency and that I have met its executives to discuss the situation on a number of occasions. I have advised them to engage with him. I have a copy of a statement made by S4C’s chair:

“I am astounded at the contempt that the London government has shown not just towards S4C, but also towards the Welsh people and indeed the language itself.”

Would the Minister like to deal with that statement?

I will use my hon. Friend’s intervention to make it absolutely clear that my hon. Friends have been assiduous in putting the case for S4C, and they have been not a little successful in doing so. If anyone is to be accused of contempt for S4C, it is certainly not Conservative Members in Wales; as my hon. Friend the Member for Aberconwy noted, S4C was established by a Conservative Government. I do not want to make the debate any more heated, so I will not comment on the chair’s specific remarks—my hon. Friend the Member for Cardiff North will have to forgive me, but discretion is the better part of valour. I will point out, however, that we are not a “London Government” but the Government of the United Kingdom, and we have to make decisions with the interests not only of the Welsh people at heart, but of the people of the whole United Kingdom.

Would the Minister tell Members when the chairman of S4C and the Welsh Assembly Government’s Minister for Heritage were informed of the Government’s decision?

I cannot give the hon. Gentleman an answer off the top of my head, but I will do so as soon as my officials make that clear to me. Alternatively, I can let him know in writing, or by answering a written parliamentary question.

Before the Minister rewrites history, I remind him that the Conservative Government turned down the idea of a fourth channel in 1979. Mrs Thatcher changed her mind under duress because Gwynfor Evans was touring Wales and claimed that he would starve himself to death if there was no fourth channel. She had been reading Irish history at the time and did not want a martyr in Wales, which could have caused all kinds of problems. It was not an act of generosity or good sense on the part of the Conservatives.

We can spend the debate looking backwards or forwards. I want to look forward, as I believe that S4C has a bright future under the Government’s proposals. As so much of our discussions come down to funding, I will make it clear that in the financial year 2011-12, S4C will receive £90 million, which is a substantial sum of money. By 2014-15, the channel will receive a total of £83 million, which is still a substantial sum of money. My hon. Friend the Member for Aberconwy referred to S4C’s £3 million of commercial income, which he felt was a low sum of money. Nevertheless, it is £3 million, and S4C has £27 million in reserve, which is available to spend on its statutory duty. To my mind, that is a substantial sum of money for securing the future of Welsh programming.

I congratulate the Minister on the figures that he just announced, because they are a significant pledge of support to S4C. How do they compare with the cuts that the Department and the Government have had to make as a result of the financial position that we inherited? Will all of that money be output-focused and spent on independent production companies? Will the BBC in any way be able to siphon it away under the suggested arrangement?

My hon. Friend makes very important points. Overall, the Department agreed with the Treasury a 24% to 25% cut, so S4C is not being singled out. In fact, in mentioning the BBC, he reminded me that if we take the £90 million, the £3 million of commercial income and the £27 million of reserves, we still have not counted the equivalent of £20 million of free programming that is already available from the BBC for S4C. That is a substantial sum.

Given the important representations made by my hon. Friends over the past few weeks on the future of S4C, and the interest that the people of Wales take in the future of S4C, I know that parts of this debate will play on the news tonight in Wales. People in Wales will be watching this debate, perhaps on BBC Parliament, and I want them to know about the £90 million next year, the equivalent of £20 million in programming from the BBC, £3 million in commercial income and £27 million in reserves. I have enough faith in the people of Wales to believe that they will look at the funding figures for S4C and think that they are generous, so for the Opposition to depict this move as an attempt to undermine S4C is an outrageous travesty of the truth. [Interruption.]

May I point out that the Chancellor today announced that the funding for the London Olympics of £9.3 billion will be maintained, that there will be capital spending on Tate Modern, the British Museum and the British Library—all in London—and that the Arts Council England and Sport England budgets will be reduced, but only by 15%? Those institutions are of huge cultural significance to the United Kingdom in general and specifically to England, yet a similar institution in Wales, S4C, is being cut by 25%. How can the Minister defend that position?

The hon. Gentleman knows that the 25% cut is the same as the Department’s cut, and he will no doubt be delighted, given how he wants to portray the situation, that culture is a devolved matter for Wales. However, let us also discuss future arrangements. [Interruption.] I want to move on to a new point.

People have talked about a lack of consultation. The BBC will not take over responsibility for S4C until 2013-14. The Welsh Affairs Committee has announced an inquiry into S4C, so there will be plenty of time for people to make representations about the situation. [Interruption.] Let me set out a few markers so that when interventions are made by the Opposition they can be made in a timely and forensic fashion.

First, the editorial independence of S4C will be guaranteed, regardless of the fact that it will be funded by the BBC. In response to my hon. Friend the Member for Vale of Glamorgan (Alun Cairns), absolutely 100% of the content budget will be spent on independent production, as it is at present. That, of course, is the content budget, and S4C obviously has an administration budget as well. The BBC will not be in a position to siphon off money for promotion on BBC channels. It will be for the BBC and S4C, in the two years that they have to put the arrangement in place, to talk through the exact details of how the money will be used.

On a point of clarity, will the changes that the Minister is rattling through at the moment require legislation?

As the hon. Gentleman knows, the public bodies Bill will include a clause to break the retail prices index link. I have no doubt that he and his colleagues will be able to get on their feet during its passage and state what the Labour party’s position is. Will Labour Members table an amendment to retain the link with inflation, and to insulate S4C from the difficult financial decisions that many other bodies are planning to take? If not, what is the Labour party’s position? Is it to restore the funding of S4C to 2010-11 levels and take it up to what it might have been in 2014-15? Does it not support the BBC taking responsibility for the funding of S4C, although it remains independent?

The hon. Gentleman calls that sophistry. I call it simple, direct questions. Opposition Members are playing politics when they know full well that S4C has a very generous funding settlement, has substantial reserves, has a place in the heart of the Welsh people, and has huge support from Conservative Members of Parliament in Wales who have lobbied Ministers assiduously on behalf of S4C. If that is sophistry, I would like to know what is not.

The Minister talked about S4C and the BBC consulting over a two-year period. When will the legislation be brought forward? Will that be a matter of weeks?

We are introducing a public bodies Bill, and under the coalition Government, Parliament has plenty of time to debate Bills in a way that was impossible under the previous Government, who seemed to find the guillotine almost as attractive as Robespierre.

I look forward to hearing Labour Members making their points, and I leave the debate with this reassurance for hon. Members. The Government are committed to Welsh language programming, we are committed to the future of S4C, and we have put in place a generous settlement for S4C. I have been bowled over by the energy and enthusiasm of my Welsh colleagues and their defence of S4C. It will be interesting to hear the Select Committee inquiry under the excellent stewardship of my hon. Friend the Member for Monmouth (David T. C. Davies). We are moving forward with a bright future for S4C.

Question put and agreed to.

Sitting adjourned.