Motion to Consider
My Lords, the Government are committed to a strong and vibrant community radio sector. Since the sector’s establishment in 2004, it has developed into an important and integral part of the modern radio landscape—valued by the communities that it serves and reflecting a diverse mix of cultures and interests.
Stations range from those targeted at a particular community, those run for our forces and those targeted at students and hospitals to stations serving small and rural communities. Community radio stations are required, by legislation, to be run by not-for-profit organisations and to provide original, distinctive and, crucially, local output. Two hundred and twenty-three stations are currently on air. This is made possible by the huge amount of effort and support that stations receive from their army of volunteers—on average, the equivalent of 214 volunteering hours per week, every week. Community radio also attracts young volunteers, who gain really valuable skills.
Although demand for community radio licences up and down the country has remained high, the position for existing licences has not been easy. We have received representations that community stations have had to turn down sponsorship—not advertising—from local businesses. For the 19 stations not allowed to take any income from sponsorship or advertising, such as Swindon 105.5, the issues are particularly acute.
The other concern expressed was the position of stations launched in 2005, whose licences would, under the current law, start to expire from October this year. Quite rightly, community radio stations wanted to know whether they would be able to renew their licences or whether they would need to go through an open competition for a new licence.
In the Connectivity, Content and Consumers strategy paper, published in July 2013, the Government said that they would consult on possible changes to the restriction on commercial funding of community stations. We also said that we would look at whether there was a case to allow community stations that continued to fulfil their remit to have licences renewed for a third five-year period. We carried out this consultation between February and April last year and received more than 100 responses. We published our response to the consultation in January this year. It is fair to say that there was strong support from community radio stations for the changes, although some were concerned that the changes might affect the characteristics of community stations. RadioCentre and commercial radio stations were, overall, opposed to the changes. In essence, they wanted to maintain the precautionary approach taken when the Community Radio Order was adopted in 2004.
Given the lack of common ground, we took further soundings from both RadioCentre and the Community Media Association before publishing the conclusions to the consultation. I acknowledge the frustrations of the community radio sector about the delay, but it was important that we should make sure that, in setting the new arrangements, we got the absolutely right balance between the legitimate needs of both sides.
We need to ensure that there remain protections for the smallest independently run commercial stations, and we have reflected that in our conclusions. We therefore believe that the so-called “absolute rule”, which enables Ofcom to place restrictions on some community stations, preventing them receiving any income from sponsorship or advertising, should be modified but not removed entirely. Instead, the order introduces a new arrangement allowing all community radio stations, including the 19 stations currently subject to the “absolute rule”, as a minimum to raise up to £15,000 per year from those commercial sources. This figure represents a quarter of the average revenues for community stations. Stations not subject to restrictions will be able to raise 50% of income above that level from commercial sources. This increases the headroom for all community stations, but helps most those community stations with smaller average revenues.
The final aspect is that those stations that were subject to restrictions due to being in the same area as a small commercial station where that commercial station is now part of a larger group will also be able to raise up to 50% of their annual income from those sources. The effect is that, where restrictions are no longer needed because of consolidation with commercial radio groups that are taking advantage of the ability to share premises and network content, those community stations should be treated the same as community stations with no restrictions.
Finally, the order recognises that many community stations need a 15-year rather than a 10-year window to establish themselves fully, given a station’s set-up cost and the effort involved in creating and establishing services. In recognising this problem, the Government have decided to address this concern by giving Ofcom the power to renew licences. Licences are currently awarded for up to five years with one further period of up to five years, making a total of 10 years. This order permits Ofcom to renew licences for one further period of up to five years, allowing community radio stations to operate for up to 15 years, provided licensees meet their licence conditions. The order also permits holders of local TV licences also to hold a community radio licence.
The purpose of the order is to give community radio stations more scope to raise funding from commercial sources while protecting the characteristics of community radio. The changes are quite modest. There are no changes to the basic requirement that community stations must be run by not-for-profit organisations for social gain and we have retained protections for smaller independent commercial radio stations. We believe that there will be minimal impacts on small commercial stations, but we will keep the position under review. The changes also allow the longest established community stations, which are valued by their communities, to apply for a further five-year renewal of their licences—something strongly welcomed by community radio stations. I commend the order to your Lordships.
I thank the Minister for that extremely clear introduction to the issue. By and large, we welcome the order. The Minister is quite right to say that it is modest. I would like to press him on the fact that it perhaps needs to be less modest.
I come at this partly from having been an activist in the 1980s on community radio, where I worked with the sociologist Michael Young, who believed that there was great scope for community-controlled radio stations in tower blocks with common aerials. He was technically right: getting a licence from the Home Office, as was the case then, was impossible. It took a very long time from then, until about 10 or 15 years ago, for community radio to become truly accepted.
Community radio is a great thing and we should be helping it to happen. It is clear that Article 5(5) is the important one: it gives provision for holders of community radio licences to extend their licences twice; provision to allow one organisation to be the holder of a local digital television programme licence, as well as a community radio licence; and provision to allow certain community radio stations to receive income from the takings of advertising and sponsorship of their programme output, when they were previously prevented from doing so. I remember when this legislation went through your Lordships’ House; I thought it was restrictive then and I think it is still restrictive.
I point the noble Lord to the Government’s notes—the Explanatory Memorandum. Paragraph 7.2 states:
“Notwithstanding this apparent success”—
of community radio stations under the current regime—
“many community radio stations are struggling to build a long term sustainable business model”.
The question that we need to ask is: will the £15,000 limit help to make community radio stations more sustainable? Was there an examination of the business case for this? How will that help them?
The Community Media Association believes that this is a modest step forward but not necessarily one that will provide community radio stations with sufficient. Why is there a limit of £15,000 and why set the level at 50% for community radio stations earning revenues through advertising and sponsorship? Back in 2003, the Everitt report recommended that there should be greater flexibility and I wonder why the Government have not picked up those recommendations and run with them. Those are my questions to the Minister but, as I say, they are within the context of supporting the order as a further step in recognising the important role that community radio plays in our local communities. In Bradford, we have Sunrise Radio, which is absolutely wonderful and brilliant.
My Lords, it is a pleasure to reply to the noble Baroness because she clearly knows very much more about these matters from her long-standing experience of activism, which always helps to colour the debates. I am delighted by her welcome, and I do identify the noble Baroness as an activist. From reading about the many community radio stations that exist up and down the country, I know that that activism has been of great benefit to the communities with which it has been seeking to communicate. On the point about tower blocks, one of the issues that we have always had is how to retain a sense of community and communicate well there. The arrival of community radio stations has been of great social benefit to those communities.
In terms of building a sustainable business model, there have been discussions with the commercial sector and the Community Media Association about the £15,000 and the 50%, and about trying to get the balance right. Like all these things, in the end it is about where to strike the balance. The Government felt that we should move in a direction that we thought would not adversely impact on the commercial radio sector, but would very much help the community radio sector to prosper and enable it to raise funds. To answer the question: it was to try to keep some distinction of retaining this not-for-profit, for-social-gain community sector, but wanting it to prosper more and to have the ability for revenue generation. The £15,000 represents a quarter of the average revenue of a community radio station, and we thought that that was an appropriate level at this stage. No one wants to rule anything in or out; we have all moved since 2004 into thinking that we need to do a bit more to help the community radio sector. That is the Government’s move, and, as I say, I am most grateful to the noble Baroness for her welcome of the provisions.
The main point is that I am sure that any future Government will want to keep these matters under review; that would be the appropriate response. We want to see how the provisions bed in. We want community radio to prosper. When I received my first brief on this matter, there were 219 community radio stations on air; by the time I had my final briefing, there were 223. That shows that this sector commands the attention of, and is of great interest to, the communities which they serve, and I wish it well. In the mean time, I commend the order.