Considered in Grand Committee
My Lords, community radio was established in the UK in 2005 following the Community Radio Order 2004. In a relatively short period of time the community stations have established themselves as an essential part of the radio landscape. More importantly, they have become both a voice and a focal point for the communities they serve.
To date, the regulator, Ofcom, has awarded over 200 community radio licences, of which approximately 150 stations are currently broadcasting. Stations can be heard the length and breadth of the country, from Orkney to the Isles of Scilly, Wales and Northern Ireland, and the range of programming they produce is equally as broad.
A station produces on average 77 hours per week of live broadcasting. Over 30 per cent of daytime output is speech-based, the vast majority of which is highly localised. Stations play a wide range of musical styles, often promoting local musicians and bands. What makes community radio unique, though, is that this content is delivered by an army of volunteers—on average, 75 volunteers per station per year. For these reasons we believe that community radio, while still in its infancy, has already proved a valuable addition to the local cultural and social landscape.
The Community Radio Order 2004 placed limitations on the sources of revenue and licensing of community radio stations. These restrictions were intended to reflect our concerns that a new tier of local radio that would have access to public funding could have a detrimental impact on existing local stations. More fundamentally, the restrictions sought to ensure that community radio be complementary, rather than just a new tier of competition, to the existing radio industry.
However, we have kept these restrictions under review to assess both their impact and the extent to which the protection they afforded remained appropriate. The most recent of these reviews, published in late 2007 by Ofcom, recommended a relaxation of the current regime. Recommendations were also made in the Government’s own review of local radio, conducted as part of the Digital Britain programme. It is in the light of these recommendations and our own subsequent consultation that we now propose the changes set out in the draft Community Radio (Amendment) Order 2010.
The draft order addresses three main issues, as well as some more minor points. I propose to deal with the key issues first. The first proposal is to remove the restriction that currently prohibits community radio stations from taking more than 50 per cent of funding from any one source. This restriction was put in place to prevent stations from becoming overly reliant on a single source of funding and, to a lesser extent, to protect against a majority funder influencing the editorial content of a station.
We still believe these principles to be valid, although we also now accept that they can be achieved in different ways. Not least of these are the impartiality rules set out in the Communications Act 2003, which provide a sufficient safeguard of editorial impartiality for all other types of broadcasting. We also note that Ofcom’s decision in 2008 to allow volunteer time to be offset against revenue has in practice already allowed stations to take single-source funding of greater than 50 per cent.
The second set of proposed changes would remove the restriction prohibiting a community radio station from being licensed in an area that overlapped with a commercial station with a coverage area of 50,000 adults or fewer. The effect of this has been to prevent some areas where there is obvious demand from having access to a community station. In light of our experiences to date, we are now satisfied that the advertising and sponsorship restrictions are sufficient to protect even the smallest of stations. This restriction can therefore be removed.
The third major change would allow existing community radio licence-holders to apply for an extension of their licence for a period of up to five years. This is because we recognise that, in many cases, community radio stations are taking longer than anticipated to become fully established, particularly in building relationships within communities and a volunteering network. We will keep this change under review, alongside the others introduced in this order, to consider their impact.
We have also taken the opportunity of a new order to clarify the licensing regime set out in the Community Radio Order 2004. This sets out more clearly for licence-holders and Ofcom the considerations that need to be made before a community radio licence is granted. However, these two minor amendments are entirely consistent with the policy as we agreed it in 2004.
We believe that the changes set out in the draft order, taken together, will help to build on the successes of community radio and to establish a more sustainable sector for the longer term. I assure the Committee that I am satisfied that the draft order is compatible with convention rights. I beg to move.
My Lords, I thank the Minister for his thorough explanation of the effect of this order. However, I wish to make one or two points. We on these Benches are very positive about the future of radio. We think that local and community radio will continue to make up an integral part of this media sector. These stations provide a vital service that can cater for very specific tastes or a very specific area and so fill a need which risks being overlooked by larger national or commercial broadcasters who deal with broader areas or tastes.
Of these local community stations, 14 per cent, for example, are aimed at minority ethnic groups, 9 per cent are aimed at young people and 7 per cent at religious groups. Local community radio is, therefore, clearly an important part of the network of media available in this country. It helps to define local communities by allowing increased local involvement and a focus on local issues. For example, in Newport on the Isle of Wight there is a station catering specifically for the needs of the elderly; in Belfast there is a station particularly for Irish Gaelic speakers; and in London there is a station for those people interested in experimental radio art. I do not know whether the Minister knows what that is; I certainly do not. There is something for all tastes.
The demand for, and popularity of, these stations is shown by the fact that since the Community Radio Order 2004, Ofcom has licensed 214 stations—the Minister mentioned that—159 of which are already broadcasting. Stewart Purvis, Ofcom's content and standards partner, said:
“Community radio is now an established third tier of radio broadcasting in the UK. This new tier of radio adds richness and variety to the services already provided by the BBC and commercial radio and offers opportunities for people to get involved in local broadcasting”.
With this in mind, we are very supportive of two of the substantive amendments which this order makes. Article 5 modifies the 2003 Act in relation to community radio. It introduces new Section 253A, which gives Ofcom the power to extend community radio licences for one period of not more than five years. We approve of this development because we think that a regulatory regime which is light touch and allows genuinely successful local radio stations to operate as part of a viable local media business is an important development and is to be encouraged. For this reason, we also support the first part of Article 3, which, as the Explanatory Note states, would remove,
“the restriction that a community radio licence may not be granted to an applicant who proposes to receive more than 50 per cent of the income the applicant needs to provide the proposed service from any one source”.
This change is also a step in the right direction towards lighter regulation and allows freedom to grow for genuinely successful local stations which attract significant investment and donation from one source.
However, the Minister will not be surprised to hear that our support is not unequivocal. We have reservations about the change the order brings in which would allow Ofcom to award licences to community radio stations in areas that overlap with small commercial stations; in other words, those with a potential audience of fewer than 50,000 adults. We object to this amendment because, in this instance, the commercial station operates on a very local level anyway. These stations will often be not-for-profit, very locally focused and have significant community involvement. To allow another publicly funded community station a licence in this area would simply mean that it would have the potential to upset the fragile economic balance of this station by competing for listeners. We think it is very important to create a regulatory regime which helps rather than hinders the commercial radio sector—particularly in this difficult economic climate, with the additional instability caused by the big switchover from analogue to digital.
In response to the Government's consultation on this matter, RadioCentre quoted the then Secretary of State for Culture Media and Sport, the right honourable Andy Burnham, who, on 2 March 2009, stated:
“We already have established radio stations that provide an excellent service to their community and we want to work pragmatically to ensure not only that community radio can continue to develop but, with one eye on the rest of the media industry, that it does not threaten the development of commercial services”—[Official Report, Commons, 2/3/09; col. 570.]
Can the Minister inform us what effect this change to the Community Radio (Amendment) Order is expected to have on the status of small, locally based commercial stations? Does he not agree that this amendment will have a potentially damaging impact on their survival by allowing small community stations to compete with local commercial stations which are already suffering? Given the supposedly reassuring words above, and the fact that currently local stations are already handing licences back to Ofcom because they cannot make their businesses work, why do the Government think that this is an appropriate change? What other action is being taken to ensure that the development of commercial services is not threatened?
In more general terms, my Lords, can the Minister give us some idea of hopes for the future regarding community stations and the small commercial stations as we move into the digital age? What impact do the Government expect the switchover to have on local radio? Moreover, what is being done actively to ensure that successful local radio stations can survive to become part of a viable local media sector?
My Lords, I thank the Minister for his introduction to the order. As he said—and we agree—community radio forms a vital part of the broadcasting landscape. Indeed, as both he and the noble Lord, Lord Luke, said, its growth since 2004 has been a great success story, with now more than 200 community stations. We on these Benches share the motives and agree with most of the actions of the Government and with their intent in the order.
The lead-up to the order has not been for want of documentation: there is the Ofcom review of 2007; the interim Digital Britain review; the Myers independent review of the rules governing local content on commercial radio; the final report of Digital Britain; the consultation on amendments to the community radio licensing regime in June; the summary of responses to the consultation and the Government's response of October; and the impact assessment and Explanatory Memorandum to the order. The Government have made their position and their motives clear in the run-up to the order.
We share what the Government have to say, particularly in respect of loosening the regulation on sources of funding, licensing overlap and extension of licence periods. The key thing that the Government have done is to maintain the restrictions on advertising. That is a vital safeguard. We support the general thrust of the amendments, including the retention of those advertising restrictions.
At the same time, we understand the concerns of RadioCentre and others about the impact on small commercial radio stations. Although the impact assessment is welcome as such, it is very thin; it says very little about the impact on smaller radio stations. It states:
“The effect of allowing community radio stations to co-exist with the smallest commercial stations is difficult to quantify. However, it is likely that community radio stations will attract some listeners from local commercial stations. This could affect the value of an advertising slot to a local commercial station”.
The request of the commercial industry for impact assessments when new licences are granted to community radio stations is a valid one that the Minister needs to answer. The general impact assessment is not adequate; the impact in a particular area, however, will be crucial. I hope that the Minister will be able to give a favourable response on that.
The issue of funding for local community radio in this context is very important. I can see the Government’s motives in wanting to allow single-source funding up to a greater figure—75 per cent, I think—but one of the key sources of funding has been the community radio fund. That started off, rather disappointingly, at £500,000; since then, the spending commitments of that fund have increased massively from something like 14 stations to over 200, as we heard today. If the Government are changing regulations and wishing the community radio industry well, I hope that at the same time they will give some indication that the funding for community radio will be improved. It is all very well to wish community radio well and say what an important part of the broadcasting landscape it is but, without willing some additional resource to it, it will be difficult, particularly in the current climate, for it to sustain itself.
I hope that the Minister will be able to answer those two questions, which are highly pertinent to both the future of small commercial radio stations and the community radio movement itself.
My Lords, I thank both noble Lords for their contributions to this debate and for the general welcome that they have given to the order. There is no disagreement between us on the value of community radio or on the value of the small local commercial stations which feel that they are in competition with it.
I will not go over the points that the noble Lord, Lord Luke, covered when he effectively endorsed what is in the order and which I covered in my speech. However, I will attempt to address the questions that he asked, particularly about the proposal to allow community radio in areas of 50,000 or fewer where a commercial station is already in existence. This is indeed in contradiction to one of the majority views in the consultation. The proposals set out in the draft order have been made following significant discussions with the commercial radio sector, and it was a recommendation of the former chief executive of GMG Radio that this change should be made. The advertising and sponsorship restrictions that will apply to all the community radio stations with audience potential of up to 150,000, including the newer stations that will come in with this order, will, we believe, provide the protection for the commercial stations that the noble Lord is seeking and to which the noble Lord, Lord Clement-Jones, also referred.
I will return to the question of the impact assessment in a moment. The noble Lord, Lord Luke, asked about the future of community radio after the digital switchover. The intention is that the digital radio upgrade programme will retain a proportion of FM to help what one might call the ultra-local stations to stay in existence and continue to provide community radio. In practice, we believe that the vacated spectrum will allow for a greater number of community radio stations in future, particularly in areas where stations have been limited by a lack of spectrum.
The noble Lord, Lord Clement-Jones, referred to the funding of community radio through the community radio fund. He raises a good point. The availability of funding is committed until 2010-11. Decisions beyond 2011 have still to be taken but the Government have been working closely with Ofcom and the community radio sector to ensure that we make the best use of the funding that is available by promoting best practice and employing fund raisers. In addition, the Minister for Creative Industries has met representatives of the community radio sector to discuss the future of the community radio fund. He has agreed to write to other government departments to highlight the benefits of community radio in delivering wider government objectives and to seek a financial contribution from them to the fund.
On the impact assessment, we accept that there is little evidence which qualifies the impact of community radio on small commercial stations. However, we are not aware of any commercial station that has closed as a result of the licensing of a community station. Ofcom is required to consider the impact of a community radio station on a commercial station before a community licence can be granted. I understand that Ofcom’s watch on this will be maintained and, if there is an impact on commercial radio stations, Ofcom will intervene and act on it.
I hope that I have answered the questions raised by both noble Lords in this brief debate. If I have missed anything I shall, of course, write to them.