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Volume 619: debated on Wednesday 18 January 2017

I beg to move,

That this House has considered future arrangements for S4C.

I am grateful to serve under your chairmanship, Mr Hanson, and pleased to see the Minister taking his place for this important debate. Perhaps predictably, I want to set out the importance of S4C to Wales, talk about some of its aspirations and plans for the future, show how it hopes to continue playing an important role in the life and culture of Wales, and then talk specifically about funding needs and the announced review of its remit.

S4C is the only Welsh-language TV channel in the world and has made a huge contribution to the culture of Wales and the Welsh language. Indeed, it has been pivotal in helping to maintain spoken Welsh throughout Wales and develop its use in a positive and forward-looking way. Usually, in debates such as this—perhaps lengthier ones—there will be some on the Government side who remind us that the creation of S4C in 1982 was a Conservative achievement. I do not dispute the date but I will say at the outset that of course many people from all political parties were involved in the creation of S4C. A more critical point is that since 1982 the channel has enjoyed strong cross-party support, as we can partly see from attendance in the Chamber today. S4C is critical to Wales’s 562,000 Welsh speakers—and the UK’s estimated 700,000; to learners such as me; and to those interested more generally in the nation of Wales.

Although S4C has had a fundamental and primary role in helping to preserve the language, it has focused on new and innovative ways to spread Welsh-language broadcasting, which has helped its programming to extend beyond Welsh speakers and learners. Since 2015 there has been a 107% increase in S4C’s viewers from outside the UK, through its S4C/Gwylio online platform. A fantastic example of the type of content that has spread beyond Welsh-speaking communities is S4C’s innovation in drama, such as the now internationally renowned “Y Gwyll”, or “Hinterland”, which was filmed in my constituency. I should perhaps declare an interest: my 10-year-old twins came home from school one day at the end of last year and announced that they were “on ‘Hinterland’”. They are extras in one of the recently filmed editions; we shall see what happens. They have not been paid a penny, but I declare it. “Y Gwyll” has won numerous awards including the main award at last year’s New York international film and television awards.

There have been other high-quality Welsh language productions, such as the political drama “Byw Celwydd”, focusing on a dramatised version of the Welsh Assembly. The mind boggles. The production of “Y Gwyll”, which has now been sold internationally, has had a huge impact on my constituency, but also more generally in Wales. The hon. Member for Montgomeryshire (Glyn Davies) often reminds me, when I talk about that great advertisement for Ceredigion, that usually the plots are dark, with clouds building up, and a murder. Quite how that promotes Ceredigion I do not know, but it has done, and I celebrate that.

The programme’s impact, and that of much of S4C’s innovative content, should not be underestimated. Investment in S4C has been shown to have a huge multiplier effect on the Welsh economy. Independent research has shown that during 2014-15, every £1 that was invested by S4C in the creative industries in Wales was worth more than £2 to the economy—double the value. Using the example of the first series of “Hinterland”, its impact on the economy alone was more than £1 million in my locality; S4C’s total impact across the UK in the period was estimated at a staggering £170 million.

That has to be seen in the context of a television channel that is increasingly lean. Some members of the Select Committee on Welsh Affairs went last year to the headquarters of S4C in Cardiff and saw how lean the operation is, and what is achieved on limited resources: overheads of just 4.2% compared with 11.3% across the public sector, fewer than 150 staff, and a 35% reduction in the cost of commissioned content since 2009. It is indeed value for money. With the change in how many people consume content, S4C has also been successful in moving away from traditional scheduled television programming to catch-up services and social media.

I congratulate the hon. Gentleman on securing this important debate. He and many in the Chamber have campaigned for S4C for many years. The Minister is in charge of the digital economy; the new media that the hon. Member for Ceredigion (Mr Williams) has mentioned are difficult to obtain in many areas of Wales, for infrastructure reasons. I welcome the Digital Economy Bill but there is a need for greater emphasis not just on rural but peripheral and Welsh-speaking areas, so that they can enjoy S4C content.

I very much agree; the hon. Gentleman is right. I represent a peripheral and Welsh-speaking area, and he has hit the nail on the head. I am sure that the Minister will respond to the point.

I was talking about catch-up services and social media and want to make the point that S4C has been hugely responsive in catering for demand. In just a few months, the viewing figure for S4C video content on social media alone, notwithstanding what the hon. Member for Ynys Môn (Albert Owen) has said, has more than doubled—almost trebled—from 737,000 views in September 2016 to more than 2.235 million by December 2016. It is vital, more generally, that public service broadcasters respond to the change in demand, and S4C has been doing just that. It is with that in mind that I welcome the Government’s commitment to an independent review of S4C’s remit, funding and accountability arrangements. It is something that many hon. Members of all parties have called for. The industry has called for it, and it is important that we achieve it.

In recent years substantial cuts have been made to the funding that S4C receives through the BBC licence fee and the direct funding that it receives through the Department for Culture, Media and Sport. Through the licence fee, it receives £74.5 million annually, and will do until 2021-22, although that is likely to represent a 10% cut by the end of the period. The Government’s 2015 Budget made an attempt to cut the direct funding to S4C from DCMS from £6.7 million to £5 million. In view of what I have said about the lean operation, that is a substantial sum and would have had a heavy impact on S4C.

I congratulate the hon. Gentleman on securing the debate. DCMS funding is now only 8% of S4C’s funding; does he agree that people in Wales, Welsh-speaking or not, pay taxes too and that any further cut would be totally unacceptable to us?

I very much agree and will develop a more extensive answer to that comment in the rest of my speech. I think that that view is widely shared, including, I am pleased to say, on the Conservative side. The hon. Lady will remember, as I do, the 2 am debate in the Chamber last January, initiated by the hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart). I was grateful for the opportunity of that debate, despite its being at 2 in the morning. Notwithstanding bleary eyes, we saw strong opposition from Members across the House to an attempt to make a severe cut to S4C’s funding from DCMS. We were relieved that staying up was worth while, because spending was frozen at the original level for 2016-17, pending a review into S4C’s remit. According to the then Digital Minister, the right hon. Member for Wantage (Mr Vaizey), that would:

“ensure financial stability—”

critically, now—

“through the review process.”

Although it represents a real-terms cut, I greatly welcome, with the caveats I mentioned, the decision to give S4C stability over its funding through the licence fee for the next few years. I also welcome the freezing of the cut to the DCMS portion of its funding last year.

Does the hon. Gentleman agree that the Government could immediately grant S4C borrowing powers, which it has asked for and which would not have a detrimental effect on budgets? None of us can see any reason why that should be rejected. Perhaps the Minister will respond to that during the debate.

I am not averse to that suggestion at all; it would be a positive step forward. However, I will develop how I intend to achieve for the coming year what the hon. Member for Clwyd South (Susan Elan Jones) achieved last year.

There is little doubt in my mind or, I think, in the minds of Members from other parties, that cuts to S4C have been almost to the bone, not only making it extremely difficult for the broadcaster to meet the obligations of its remit, but making it particularly challenging to be innovative and to cater to the changing demands of the Welsh public. However, S4C has to date, with increasing difficulty, continued to meet its obligations and the changing demands.

With the difficulties facing the broadcaster as a result of those cuts, it is absolutely right that a review takes place to ensure that it has the necessary funding to fulfil its remit and strategy over the longer term. A comprehensive review into S4C announced in February of last year by the former Secretary of State, the right hon. Member for Maldon (Mr Whittingdale), along with a reversal of the cuts prior to the outcome of the review, was welcome. However, we are now in 2017, and we still waiting for that promised review. There is cross-party concern about the delay, as well as concern in the creative industries that rely so heavily on a strong Welsh broadcasting sector.

I hope the Minister will enlighten us as to the reason for the delay. Why is a statement from February 2016, made in the early hours of the morning during the debate called by the hon. Member for Carmarthen West and South Pembrokeshire, only now being actioned? Critically, can he also give us details about when the review is likely to take place, its timetable and when it is anticipated to conclude? With that in mind, and with the former Secretary of State’s commitment, I would also appreciate the Minister’s assurance that cuts to Government funding of S4C that were frozen under the previous Secretary of State will continue to be frozen at least until the review gives its recommendations.

One big issue that requires Government assurance is on the specifics of the review. Many hon. Members, and many people outside the Chamber, hope for confirmation from the Minister that the review will be chaired by an independent individual with a thorough understanding of Wales, the Welsh language and broadcasting. It is also important that the remit of the review considers the need to update S4C’s remit, to reflect changes in the broadcasting industry and to ensure that the channel meets the needs of its audience, both in the short and long term.

Does the hon. Gentleman also hope that the review will look at devolving the funding that S4C gets from this place? It might more properly be the responsibility of the Welsh Assembly in Cardiff, as recommended by the Silk commission.

As the hon. Gentleman knows, I have always regarded Sir Paul Silk’s work as a political bible—not only for members of his party but mine. As he suggested, devolution of that funding would be a good thing. It is something that should be considered as part of the review, which is why we asked the question about its remit. My concern about broadcasting being devolved to the National Assembly in its entirety—it is a different issue, but I will raise it—is whether our friends working in the Assembly would guarantee the required level of funding for S4C. However, there is merit in what the hon. Gentleman says in his question.

I am sure the Minister understands that S4C’s future funding is certainly one of its big concerns. As such, I would appreciate if he would set out whether the review will make recommendations on the process by which the Secretary of State for Culture, Media and Sport decides on the sufficiency of funding for S4C, as required by the Public Bodies Act 2011, to ensure that S4C remains competitive in the public service broadcasting market and is able to continue to meet audience expectations over the long term. The hon. Member for Arfon (Hywel Williams), because he was on the Public Bodies Bill Committee with me, will remember the concern expressed at the time when the funding formula for S4C was abandoned and replaced by a clause stating that the Secretary of State would decide on the sufficiency of funding. That is why this fits in neatly with the DCMS element of the budget.

Will the review consider the most appropriate mechanisms by which S4C should be funded? It is important that that includes the UK Government’s direct contribution to S4C. Security and visibility of funding for S4C over a reasonable period to prevent unnecessary uncertainty and to allow it to plan for the future is vital. Will the Minister ensure that that is reviewed, both in the context of the funding it receives directly and any potential governance and accountability changes to the BBC that could have an impact on S4C’s funding through the licence fee?

I have had many concerns, as has, I think, almost every Member here, about cuts to S4C’s funding over the years. However, that is not the subject of the debate. On a positive note, I still—as I did in the early hours during that debate in February 2016—welcome the review and the budget being frozen. However, we need answers to those questions. Many questions have yet to be answered, and I know that it will help to clarify the situation if the Minister is able to provide those answers to Members today. S4C is too important a working, practical, achieving institution to have any more delays in these matters.

It is a great pleasure to respond to this debate on the importance of S4C and its future. Although I grew up on the Welsh borders, I am still in the early stages of learning Welsh. My vocabulary runs to only a few words, most of which were learned from road signs—“Araf” is something I will never forget. This is something that is close to my heart and to the Government’s heart as well. Mae’r iaith Gymraeg ac S4C yn bwysig iawn i’r Deyrnas Unedig. I hope the record will show that I said that the Welsh language and S4C are very important to the United Kingdom.

I will respond to the questions from the hon. Member for Ceredigion (Mr Williams) and from elsewhere. On his comments about S4C’s origins, it was of course a Conservative Government who brought in S4C. I acknowledge that success has many fathers, and there was a lot of support at the time for S4C’s introduction, but that its introduction was a Conservative achievement shows the heritage of the Government’s support for the Welsh language and for S4C.

The hon. Gentleman also mentioned borrowing powers and asked when the review would take place. It will take place shortly. We are aware of the issues around borrowing powers and we are looking at options. The TV licence fee funding for S4C is being protected in cash terms. That means it will be flat over the spending review period. The advantage of that is, first, that it is not being cut and, secondly, that there is certainty over a long period to allow for planning. I hope that that helps.

I have read the transcripts of the debates on this issue before I came into this post. I pay tribute to the work of my hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart), who has really led the charge. While awaiting the review, the funding was frozen rather than cut last year, essentially after the lobbying of a large group of people, led by my hon. Friend, who stands up for his constituency so powerfully.

We will be announcing the review shortly. We will certainly take into account the comments that my hon. Friend and others have made as to what the review should consider. I can commit to the reviewer having a thorough understanding of Wales and an interest in the Welsh language. Of course, the review needs to look into how S4C can succeed in the short term and long term. The licence fee now contributes the vast majority of funding—more than £74 million. The direct funding from DCMS is currently just over £6 million, which, as the hon. Member for Clwyd South (Susan Elan Jones) said, is a relatively small element of the overall funding. We are aware of the commitments given by a predecessor on timing, and the Secretary of State is currently considering that issue.

I thank the Minister for his kind comments, but in his letter to me on 14 December he said:

“this year the Government gave over £6 million and we will be giving over £6 million next year.”

Can he be a bit more precise? That could mean £6.9 million in 2016 and £6.1 million in 2017. If he could tighten that up, we would be much relieved.

That is an incredibly tempting invitation. In this financial year, the DCMS funding is £6.762 million, and the funding next year is set to be £6.058 million. I know that my hon. Friend is suggesting that those two figures ought to be closer—

Or, as my hon. Friend says, the same.

In terms of timing, we always said that the review of S4C would follow the BBC charter renewal, which is now complete. In fact, the Select Committee on Culture, Media and Sport today announced its support for the new chair of the BBC unitary board. That decision now needs to go to the Privy Council. It would be unusual and constitutionally interesting should the Privy Council not approve that decision. We are now in a position to push on with the S4C review shortly.

I did not quite hear the figures that the Minister read out. My understanding was that it is a cut, not a freezing, of the budget from this year to next year. Will he confirm those figures again?

Yes, of course. The figures set out in the spending review 2015 are £6.762 million for this financial year and £6.058 million for the next financial year. It is thanks to the efforts of my hon. Friend the Member for Carmarthen West and South Pembrokeshire and others—not least those who called this debate today—that the Secretary of State is looking at that issue.

We are considering the question of borrowing powers. The Silk commission said that we should consider the devolution of S4C. Of course, all broadcasting is a reserved matter, rather than a devolved one. That is the basis on which we have been operating, but we accepted that Silk review recommendation, so that consideration will happen.

On the overall question of the link to the licence fee, moving the funding from direct taxpayer support to licence fee funding was controversial at the time. However, since the S4C-BBC link started after 2010, it has been a huge success, not least because S4C can use some of the BBC’s digital technology. For instance, its content is now on iPlayer, and I understand that viewing figures have increased by over 3,000%.

As was mentioned, the impact of digital technology is incredibly important in this area, not least so that we can get broadcast material to people who live outside Wales where S4C is broadcast, in the rest of the UK and the rest of the world. For lovers of the Welsh language, that link-up and the fact that S4C can partner with the BBC in getting its content out are very positive. It is reasonable to say that the decision to move the majority of S4C funding over to the licence fee has generated further partnerships and been a success.

The S4C’s economic impact was a big part of the case made by hon. Members. The contribution made by S4C to the Welsh economy is not only through the direct impact of the broadcasting but through its work with the TV production industry. The success of Welsh TV production has been impressive in the past few years, in both the English and Welsh languages. We heard a few examples. Welsh-made TV shows and formats are now sold worldwide. As well as being the home of dynamic independent producers, Wales has become a hub of creativity and a desirable place to make programmes. For instance, Wales is the production centre for “Dr Who” —an iconic British success, aired in 200 countries around the world. Children’s programmes such as “Ludus” are shown on CBBC, with the spin-off app winning a BAFTA Cymru award. S4C’s “Fferm Ffactor” is now licensed and produced in Denmark, Sweden and China. “Y Gwyll”, or “Hinterland”, is screened in both Welsh and English, showing the innovations and economies of scale by using both languages.

When I was in Los Angeles the week before last, some of the film producers there were at pains to point out to me what an innovative, powerful and increasingly impressive TV and film production system there is in Wales and how they are looking to Wales to expand into some of the new areas of production—so Hollywood goes to the Welsh valleys. We have seen some of that theme in the past few years, and I hope that we will see much more of it. S4C plays its role in developing that TV production centre. Wales is home to more than 50 TV and animation companies that collectively generate around £1 billion for the Welsh economy, of which S4C alone directly contributed £114 million in 2015-16.

As well as the impact on the Welsh language and economy, the other reason to support S4C is its importance in Wales’s media plurality, which ensures that the public have access to a wide range of views, news and information about the world in which we live, while specifically focusing on what is happening in Wales. While the media landscape and technology change, our support for S4C remains resolute and will continue as we hold it in its place in Wales’s broad landscape of media and TV production and in the hearts of the Welsh people. I hope that we can continue this dialogue and can continue across the House to support S4C.

Question put and agreed to.

Sitting suspended.